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APPROVE A MOTION AUTHORIZING AN AMENDMENT TO THE MASTER ON-CALL BUILDING PROFESSIONAL SERVICES AGREEMENT FOR ON-CALL CONTRACT SUPPORT FOR BUILDING CODE PLAN REVIEW, STRUCTURAL ENGINEERING PLAN REVIEW, AND INSPECTION SERVICES
recommended action
RECOMMENDATION
It is recommended that the City Council approve a motion to authorize the City Manager to:
1. Approve proposed Amendment No. 1 to the existing Professional Services Agreement No. 422000862 with CSG Consultants, Inc. of Foster City, CA, and BPR Consulting Group, LLC, Granite Bay, CA, to do the following:
a. Increase funding by $1,400,000.00 for a revised total contract amount not to exceed $3,900,000.00 across the entire vendor pool; and
b. Amend the Option to Renew section of the contract to allow for a one- or two-year extension.
2. Authorize the City Manager to take all necessary and appropriate actions to carry out the purpose and intent of the motion.
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Summary
Due primarily to the cyclical nature of development, the Community Development Department (CDD) regularly contracts for various types of on-call services. In the past three years, the demand for building code plan review and inspection services has outpaced staffing levels. Further, CDD requires the services of an array of various experts that are not needed in a full-time capacity but are accessible through consultants. Structural and Mechanical Engineers and Certified Access Specialists (CASp), for example, are necessary for operations but are only needed on a case-by-case basis.
In 2022, the City entered into Professional Services Agreement No. 422000862 with CSG Consultants, Inc. of Foster City, CA and BPR Consulting Group, LLC, of Granite Bay, CA to provide such services. Both consulting firms have performed well during the course of the original three-year agreement.
Staff recommends Council take the recommended action to approve Amendment No. 1 to Agreement No. 422000862 to increase the contract amount by $1,400,000.00 for a total amount not to exceed $3,900,000.00, and extend the agreement by two (2) years with an expiration date of June 30, 2027. The cost of additional on-call services is paid for by the permit fees collected for projects and has no impact or additional cost to the City’s General Fund.
DISCUSSION
Background
It is the Department’s strategy to maintain a balance between permanent staff and on-call staff to support project types that are not consistent in volume from year-to-year while maintaining customer service levels. In the past, if workload increased consistently in a three-year period, adding full-time staff was often considered as a solution. However, the Great Recession, COVID, and other economic factors have made predicting construction cycles more challenging. Therefore, it is the Department’s practice to have full-time City staff more allocated on predictable project permit type workloads and augment full-time City staff with on-call services on an as-needed basis.
While the Department regularly recruits and onboards full-time positions in the building safety group, there continues to be increased demand for on-call building inspectors, plan examiners, and structural engineers during peak periods. Further, the Department faces continued challenges recruiting full-time staff, as the hiring market remains highly competitive, posing challenges in recruiting full-time staff, and positions often remain vacant for longer periods of time. On-call services provide a needed flexibility to address these challenges.
As part of fiscal year budget development, the continued use of consulting services was determined to be the most appropriate way to supplement demand for CDD’s Building Division services. These services include building code plan review, structural engineering plan review, and inspection services. Augmenting staff in this way allows the building workgroup greater flexibility to provide high-level customer service in response to the demands of cyclical development activity without reactively over-hiring permanent staff. Consultant services are used on an as-needed basis whereas permanent staff has long-term fiscal implications due to City-provided insurance and retirement benefits.
City Council approved a three-year Agreement on May 24, 2022 (Attachment A), with two (2) companies to provide on-call building code plan review, structural engineering plan review, and inspection services. The approved compensation for services and reimbursable expenses totaled $2,500,000 across all consulting companies for the term of the contract. That current contract will expire on June 30, 2025.
Consultant services are necessary to keep pace with substantial development activity (Table 1) while providing high-level customer service over the term of the agreement. Development construction valuation is a measure of the demand for Building services. Valuation totals in Table 1 are a reflection of the volume, type, and complexity of projects requiring Building services. Development construction valuation increased by 24% from FY2022-23 to FY2023-24 and is projected to increase an additional 13% by the end of this fiscal year. Because these totals can vary based on the volume of large projects proposed, a conservative approach of assuming a 5% decrease over fiscal years 2025-2027 was used for forecasting.
Table 1. - Development Construction Valuation 2022-2027
|
Fiscal Year |
Valuation |
|
2022 - 23 |
$725.8 million |
|
2023 - 24 |
$924 million |
|
2024 - 25 (as of 3/31/25) |
$793.4 million |
|
2024 - 25 (estimated) |
$1.057 billion (estimated) |
|
2025 - 26 |
$1.008 billion (projected) |
|
2026 - 27 |
$954.7 million (projected) |
Maintaining an agreement with several vendors affords the Department the ability to quickly change the scale and scope of staffing support levels to respond to workload demand while maintaining high levels of customer service. Having a pool of qualified firms also allows the City to provide a better spectrum of services and enable the Department to respond to short-term increases in building activity, staff vacancies, and adhere to established timelines, policies, and legal requirements. Fees are collected from the applicant before any plan review or inspection services are performed.
In addition, several large projects are anticipated over the course of the next two fiscal years including the César Chávez Library remodel, Banner Island Ballpark renovations, commercial food and retail developments, buildout of residential subdivisions, affordable housing developments, and several million square feet of industrial development. To properly support the projected construction activity with plan review and inspection services, the forecasted rate of expenditure will require an additional $1,400,000.00 over the course of the next two fiscal years (FY 2025-26 & FY 2026-27).
Construction projections are based on permit activity trends and known projects. The estimates for the remainder of FY 2025-26 and FY 2026-27 assume a steadily high volume in permit activity and corresponding construction valuations. As of March 31, 2025, there are 137 permits that are approved pending payment and pickup, with a combined valuation of $170.9 million. There are an additional 351 permits in for review with a combined valuation of $164.3 million. Additionally, permits of a minor nature (reroofs, HVAC, solar, etc.) are averaging 549 permits issued per month with an average valuation of $11.1 million.
Present Situation
Development activity has remained steady over the initial three (3) year term of the Agreement. Although the Building Division is currently fully staffed in the plan review and inspection workgroups, there is still a need for supplemental on-call services to meet current workload demand and to be flexible to provide services for the more cyclical aspects of development while maintaining high levels of customer service. Complex projects requiring plan review continue at a steady pace. As projects complete the review process and permits are issued, this directly leads to a steady volume of daily inspection stops. Contract services are necessary to supplement permanent full-time staff, provide specialty support, and to maintain service levels. Extension of the current contract through FY 2026-27 would take the term to the maximum of five (5) years as allowed under the original contract. The department plans to initiate a request for proposals (RFP) in the fall of 2026 for new contract services beginning FY 2027-28.
Further, both consulting firms have performed well over the course of the original three-year term of the agreement. They continue to provide two full-time, experienced building inspectors on the same schedule as City building inspectors and continue to meet their agreed upon turnaround times for plan review services. Both firms are also highly responsive to special requests such as enhanced structural engineering oversight or site evaluations.
Each firm’s performance is continually monitored to ensure they are meeting their commitments to complete plan reviews within the City’s published turnaround timeframes. The data below shows the volume of work that has been completed as well as the performance results for each firm. Without the assistance of consultants, permanent staff would be overburdened by the workload volume and responsiveness and service levels may decline.
Table 2. - Plan Review Services Provided Since FY2022-23
|
Consulting Firm |
# Plan Reviews Completed |
Average Review Duration - First Review |
Average Review Duration - Resubmittals |
|
BPR Consulting Group |
580 |
10.3 |
5.4 |
|
CSG Consultants |
315 |
9.1 |
3.6 |
|
TOTAL |
895 |
9.7 |
4.5 |
Table 3. - Inspection Services Provided Since FY2022-23
|
Consulting Firm |
# of Inspectors Provided |
# of Inspections Completed |
|
BPR Consulting Group |
4 |
9,936 |
|
CSG Consultants |
2 |
9,615 |
|
TOTAL |
6 |
19,551 |
FINANCIAL SUMMARY
Table 4 below outlines the expenditures for the contract. The amount of $576,800.84 has been expended so far in FY 2024-25 through March 31, 2025. The remaining $296,084.10 for the fiscal year is sufficient. Based on the updated projections, there is a need for an additional $1,400,000 and a two (2) year contract extension (Attachment B - Proposed Amendment #1) to provide adequate service levels through FY 2026-27. As this will be the only allowable extension of the original contract, any excess funds not expended will be allocated back to the Department budget.
Table 4. - Contract Expenditures
|
|
Total Contract |
Fiscal Year 2022-2023 |
Fiscal Year 2023-2024 |
Fiscal Year 2024-2025 (through 3/31/2025) |
Remaining Balance |
|
Total Amounts |
$2,500,000 |
$957,823.41 |
$669,291.65 |
$576,800.84 |
$296,084.10 |
Pending adoption of the FY 2025-26 Annual Budget, funds will be available in the 220 Development Services Fund, Building and Life Safety Division (5530) for $700,000. The remaining $700,000 is expected to be appropriated and funded from the same account in the FY 2026-27 Annual Budget. Consultant services are funded by the plan review and permit fees collected on new permit applications, and therefore, there is no impact to the City’s General Fund or any other unrestricted fund from this action.
Attachment A - Professional Services Agreement 422000862
Attachment B - Proposed Professional Services Agreement Amendment 1