REPORT TO STADIUM AUTHORITY BOARD
SUBJECT
Title
Report from the Stadium Authority for Action Regarding Stadium Manager’s Request to Award Agreement to Blocka Construction Inc. to Replace the Variable Frequency Drives for Cooling Towers and Pumps at Levi’s Stadium (Variable Frequency Drive(s) CapEx Project) and Related Budget Amendment
Report
BOARD PILLAR
Ensure Compliance with Measure J and Manage Levi’s Stadium
BACKGROUND
On October 8, 2019, the City Council approved Ordinance No. 2005 amending Chapter 17.30 (Stadium Authority Procurement Policy) of the Santa Clara City Code, which rescinded the delegation to the Executive Director to enter into agreements without prior Stadium Authority Board (Board) approval. As a result of Ordinance No. 2005, the Stadium Manager is also required to request Board approval before entering into agreements on behalf of the Stadium Authority. As of the effective date of the Ordinance (November 8, 2019), all Stadium Authority agreements for services, supplies, materials, and equipment require the approval of the Stadium Authority Board.
As the Stadium Manager, Forty Niners Stadium Management Company, LLC, is responsible for maintaining “the Stadium in the Required Condition and operate the Stadium as a quality NFL and multi-purpose public sports, public assembly, exhibit and entertainment facility” as required by the Stadium Management Agreement between the Stadium Authority, Stadium Manager, and Forty Niners SC Stadium Company (StadCo).
The Stadium Manager is requesting approval for the following actions related to the Variable Frequency Drive(s) Capital Expense (CapEx) Project:
1. Award a one-time agreement to Blocka Construction Inc. in the amount of $118,000 to replace the variable frequency drive for cooling towers and pumps at Levi’s Stadium;
2. Approve a budget amendment to increase the total budget amount for this CapEx project by $22,434, from $107,366 to $129,800. The Stadium Authority FY 2023/24 CapEx Budget includes $107,366 for the Variable Frequency Drive(s) CapEx line item;
3. Authorize the Stadium Manager to execute any and all documents associated with, and necessary for the award, completion, and acceptance of the project; and
4. Authorize the Stadium Manager to execute change orders up to $11,800 for a total not to exceed construction agreement amount of $129,800.
A variable frequency drive is a device used in a drive system that controls speed and torque by varying the frequency of the input electricity. The variable frequency drives that are being replaced are for the cooling towers, which control the cooling functions for the Stadium.
The proposed budget amendment will cover the costs of the one-time agreement ($118,000) and a 10% contingency for change orders ($11,800).
DISCUSSION
Stadium Authority staff reviewed the Stadium Manager’s Recommendation for Award memo (attached to corresponding report #23-376) and supporting documents for consistency against the Stadium Authority Procurement Policy and Santa Clara City Code Chapter 2.105.140(d) (Competitive requirements for purchases - Formal request for bids). The Stadium Manager’s Request for Bids (RFB) received four bids and the Stadium Manager is recommending award to the lowest responsible and responsive bid (Blocka Construction Inc.). As explained in the Recommendation memo, the two lowest bidders were deemed nonresponsive.
Based on the documentation provided and additional discussions with the Stadium Manager, staff recommends approval of the Stadium Manager’s request to award a one-time agreement to Blocka Construction Inc. in the amount of $118,000 for the Variable Frequency Drive(s) CapEx Project and approval of a budget amendment to increase the existing line item in the Stadium Authority FY 2023/24 CapEx Budget by $22,434 to $129,800.
Regarding the Stadium Manager’s request for authority to execute any and all documents related to the project and change orders up to $11,800 for a total not to exceed construction agreement amount of $129,800, staff recommends that the authority be delegated instead to the Executive Director’s Office. Currently, the Executive Director has no delegated authority under the Stadium Authority Procurement Policy; however, staff is presenting an Ordinance for Council adoption as part of the March 21, 2023 agenda that will provide the Executive Director with delegated authority to enter into contracts with amounts up to one hundred thousand dollars ($100,000) as allocated to and authorized by the Stadium Authority by adoption of the annual budget. While the contract and contingency together exceed the $100,000 threshold, staff recommends providing the Executive Director’s Office with authority to approve the Stadium Manager’s execution of all documents related to CapEx projects and change orders up to $11,880 to achieve the expediency that the Stadium Manager seeks.
The Stadium Authority Counsel’s Office has reviewed the requested agreement for comparison to the Stadium Authority’s customary language. While there are some differences in the language, including portions covering compliance with laws such as prevailing wage and conflict of interest, the agreement submitted here for approval contains the necessary language which identifies these legal obligations to the vendor. The vendor expressly agrees to adhere to such obligations upon its execution of the agreement. Nothing in the proposed agreement changes the Stadium Authority’s rights under the Management Agreement and specifically with respect to any dispute that may arise from the Stadium Manager’s obligations under the Management Agreement.
In addition, per Paragraph 4(b) of the Settlement Agreement, the Stadium Authority reserves all rights to confirm and dispute charges by and payments to the Stadium Manager during a fiscal year-end reconciliation/true-up, including but not limited to changes based on improper allocation, calculation, lack of support, or failure to comply with the Parties’ contracts or California law. The Stadium Authority may raise related questions before the fiscal year-end reconciliation/true-up, which the Stadium Manager agrees to assess and respond to in good faith.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
FISCAL IMPACT
The FY 2022/23 CapEx Budget contains $133,000 for the Variable Frequency Drive(s) CapEx Project and the FY 2023/24 CapEx Budget contains $107,366 for the line item. The Stadium Manager has incurred costs for the project in FY 2022/23 related to a HKS Architects task order for design work ($29,550), City of Santa Clara permit fees ($1,144), and San Jose Mercury News publication fees ($215). There are sufficient funds in the FY 2022/23 CapEx line item to cover these costs. The Stadium Manager has an existing agreement with HKS Architects, Inc., which was approved by the Stadium Authority Board on November 9, 2021, for design work. The Stadium Manager also received Board approval on July 13, 2021 to publish legal notices in the San Jose Mercury News and Santa Clara Weekly for various solicitations.
The requested agreement and related 10% contingency will total $129,800 and require a budget amendment to increase the FY 2023/24 line item by $22,434 to a total budget amount of $129,800. The table below summarizes the budget amendment as discussed above:
|
CapEx Project |
Adopted Budget |
Increase/ (Decrease) |
Amended Budget |
|
Variable Frequency Drive Replacement for Cooling Towers and Pumps CapEx Project |
$107,366 |
$22,434 |
$129,800 |
|
Capital Expense Reserve |
$6,165,085 |
($22,434) |
$6,142,651 |
Together, the incurred FY 2022/23 costs and anticipated FY 2023/24 agreement and contingency costs will total $160,709 for the Variable Frequency Drive(s) CapEx Project.
COORDINATION
This report has been coordinated with the City’s Purchasing Manager, Stadium Treasurer’s and Stadium Counsel’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov.
RECOMMENDATION
Recommendation:
1. Approve a budget amendment for the Variable Frequency Drive(s) line item in the Stadium Authority FY 2023/24 CapEx Budget to increase the budget by $22,434 from the Capital Expense Reserve;
2. Approve the Stadium Manager’s request to award a one-time agreement to Blocka Construction Inc. in the amount of $118,000 to replace the variable frequency drives for cooling towers and pumps at Levi’s Stadium (Variable Frequency Drive(s) CapEx Project);
3. Authorize the Executive Director’s Office, consistent with properly delegated authority or existing policy, to approve the Stadium Manager’s execution of any and all documents associated with, and necessary for the award, completion, and acceptance of the project; and
4. Authorize the Executive Director’s Office, consistent with properly delegated authority or existing policy, to approve the Stadium Manager’s execution of change orders for the agreement up to $11,800, for a total not to exceed construction agreement amount of $129,800.
Staff
Reviewed by: Christine Jung, Assistant to the Executive Director
Approved by: Office of the Executive Director