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ADOPT RESOLUTION TO AUTHORIZE THE N3 PUMP STATION WARRANTY REPAIR PROJECT (SINGLE DISTRICT - DISTRICT 6)
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RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Authorize the City Manager to execute a Release and Settlement Agreement in the amount of $389,858.95 with Conco-West, Inc. for the N3 Pump Station Warranty Repair, Project No. WT26048.
2. Accept and appropriate funds in the amount of $389,858.95 from the National Fire Insurance Company of Hartford, the general liability insurer for Conco-West, Inc. to the N3 Pump Station Warranty Repair, Project No. WT26048.
3. Approve the Notice of Exemption No. NOE12-26 under the California Environmental Quality Act for the N3 Pump Station Warranty Repair, Project No. WT26048.
4. Approve findings pursuant to Stockton Municipal Code section 3.68.070 in support of an exception to the competitive bidding process.
5. Award a Construction Contract in the amount of $389,858.95 to Conco-West, Inc. of Manteca, CA, for the N3 Pump Station Warranty Repair, Project No. WT26048.
It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
The N3 stormwater detention basin, pump station, and discharge outfall structure (N3 Pump Station) located at 4611 Newcastle Road was constructed by Norcal Landco, LLC, Inc. (developer) as part of the NorCal Logistics Center North - Phase 2 Development. The developer contracted with Conco-West, Inc. (Conco) to construct the N3 Pump Station, which was a condition of approval for the development.
During the winter storms of 2022-2023, the pump station sustained significant storm-related damage during the project’s warranty period, rendering it non-operational. It was determined that Conco was responsible for the damage resulting from construction-related deficiencies. Conco accepted full responsibility for the damage and agreed to make the repairs at no cost to the City.
The City, Conco, and the National Fire Insurance Company of Hartford propose that all parties enter into a Release and Settlement Agreement, which provides the City with $389,858.95 in payment to cover the cost of damage to the N3 Pump Station and releases Conco from any future claims. Because the cost to cover the damage was treated as a third-party insurance liability claim, the insurer requires that the payment be made directly to the City. Additionally, as the total repair cost is estimated to exceed the insurance settlement claim negotiated between Conco and the National Fire Insurance Company, Conco is responsible for any additional cost required to fully restore the N3 Pump Station. Therefore, for Conco to make the warranty repairs, the City must award a separate Construction Contract to Conco.
The provisions of Stockton Municipal Code (SMC) section 3.68.070 provide a sole source exception to the competitive bidding process under certain circumstances. SMC section 3.68.070 requires that a written report, including findings upon which the determination was based, shall be provided to City Council for approval. Staff recommends that the contract be awarded as an exception to the competitive bidding process under SMC section 3.68.070.
It is recommended that Council adopt a resolution approving Notice of Exemption No. NOE12-26 under the California Environmental Quality Act (CEQA), and accepting and appropriating funds for the project.
Construction is anticipated to be completed by winter of 2026.
DISCUSSION
Background
On November 27, 2018, as authorized under Parcel Map Agreement PM COS 18-04 (Attachment A), the City entered into an agreement with Norcal Landco, LLC, Inc., developer of the NorCal Logistics Center North - Phase 2 Development for construction of improvements identified within Tentative Map P12-110, which included the N3 Pump Station located at 4611 Newcastle Road (Attachment B). The developer contracted with Conco to construct the N3 Pump Station, which was a condition of approval for the development.
During the winter storms of 2022-2023, the pump station sustained significant storm-related damage during the project’s warranty period, rendering it non-operational. Analysis of the damage identified construction-related deficiencies as the root cause of the failure, which Conco accepted full responsibility for the damage and agreed to make the repairs at no cost to the City. This resulted in Conco filing an insurance claim with its provider, National Fire Insurance Company of Hartford, to cover the damage costs.
Present Situation
Conco has accepted full responsibility for damage sustained at the N3 Pump Station and has agreed to complete all necessary repairs at their own expense. Because the N3 Pump Station was constructed as part of a development project, and the damage occurred after construction was completed but during the project’s warranty period, Conco’s insurance carrier has classified the incident as a third-party insurance liability claim. Accordingly, the insurer requires that payment for the damages be made directly to the City upon execution of the Release and Settlement Agreement.
For Conco to make the warranty repairs for the insured amount, the City must award the Construction Contract to Conco. Therefore, staff recommends that Council approve findings for an exception to the competitive bidding process under SMC section 3.68.070. The proposed findings to issue a sole source Construction Contract to Conco include:
1. The damage to the N3 Pump Station is a direct result of construction deficiencies for which Conco is responsible for under the project warranty.
2. The insurance settlement between Conco and its insurance provider will not fully fund the repair work; Conco is solely responsible for any additional costs needed to complete repairs.
3. The N3 Pump Station is currently offline and non‑operational. Any further delay in warranty repairs may expose the City to significant operational and financial liability.
Based on these factors, staff recommends that Council authorize the City Manager to execute a Release and Settlement Agreement in the amount of $389,858.95 and award a Construction Contract to Conco in the same amount for the N3 Pump Station Warranty Repair, Project No. WT26048.
The project is in conformance with the City’s General Plan, pursuant to California Government Code, section 65402, and is categorically exempt from the requirements of CEQA as specified under Section 15301(d) of the CEQA Guidelines. The activities related to this project constitute a discretionary project under the City’s jurisdiction and qualifies as a project that does not have a significant effect on the environment. The resolution will approve the filing of Notice of Exemption No. NOE12-26 under CEQA.
Construction is anticipated to be completed by winter 2026.
FINANCIAL SUMMARY
With the appropriation of funds in the amount of $389,858.95 from the National Fire Insurance Company of Hartford to the N3 Pump Station Warranty Repair, Project No. WT26048, there will be sufficient funds to award a Construction Contract in the amount of $389,858.95 to Conco for the N3 Pump Station Warranty Repair, Project No. WT26048.
Attachment A - Parcel Map Agreement
Attachment B - Vicinity Map