HomeMy WebLinkAbout16 - Reimburse Project Costs from the Proceeds of the Issuance of Bonds for Assessment District No. 120-2 / No. 124Q SEW Pp�T
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<,FORN'P City Council Staff Report
February 14, 2023
Agenda Item No. 16
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: David A. Webb, Public Works Director - 949-644-3311,
dawebb@newportbeachca.gov
PREPARED BY: Michael J. Sinacori, Assistant City Engineer
msinacori@newportbeachca.gov
PHONE: 949-644-3342
TITLE: Resolution No. 2023-13: Resolution of Intention to Reimburse Project
Costs from the Proceeds of the Issuance of Bonds for Assessment
District No. 120-2 (West Newport Heights) and Assessment District
No. 124 (Balboa Island — Phase 0) at a Future Date and Award of
Contract No. 7977-2
ABSTRACT:
The City of Newport Beach (City) has received construction bids for the Underground
Utility Assessment District No. 120-2 (West Newport Heights) and Underground Utility
Assessment District No. 124 (Balboa Island — Phase 0) project. Staff requests City
Council approval to award the construction contract to Hot Line Construction, Inc.
(Hot Line). In addition, staff recommends the City Council declare its intention to
reimburse project costs from the proceeds of the issuance of bonds for Assessment
Districts No. 120-2 and No. 124 (Phase 0) at a future date.
RECOMMENDATIONS:
a) Acknowledge the project is exempt from the California Environmental Quality Act
(CEQA) pursuant to Class 2 Section 15302 (d) (conversion of overhead electrical
utility distribution lines where the surface is restored to the condition existing prior to
the undergrounding) of the CEQA Guidelines, California Code of Regulations,
Title 14, Chapter 3, because it will not have an adverse effect on the environment;
b) Approve the project plans and specifications;
c) Adopt Resolution No. 2023-13, A Resolution of the City Council of the City of Newport
Beach, California, Declaring Its Intention to Reimburse Project Costs from the
Proceeds of the Issuance of Bonds for Assessment District No. 120-2 and
Assessment District No. 124;
d) Award Contract No. 7977-2 to Hot Line Construction, Inc. for the bid amount of
$5,097,207 for the Underground Utility Assessment District No. 120-2 (West Newport
Heights) and Underground Utility Assessment District No. 124 (Balboa Island —
Phase 0) project, and authorize the Mayor and City Clerk to execute the contract; and
e) Establish a contingency of $250,000 (approximately 5 percent of total bid) to cover the
cost of unforeseen work not included in the original contract.
16-1
Resolution No. 2023-13: Resolution of Intention to Reimburse Project Costs from the
Proceeds of the Issuance of Bonds for Assessment District No. 120-2 (West Newport
Heights) and Assessment District No. 124 (Balboa Island — Phase 0)
at a Future Date and Award of Contract No. 7977-2
February 14, 2023
Page 2
DISCUSSION:
Underground Utility Assessment District No. 120-2 (AD 120) is the West Newport Heights
area along Santa Ana Avenue between Old Newport Boulevard and Cliff Drive and was
approved by the property owners on April 13, 2021. Underground Utility Assessment
District No. 124 — Phase 0 (AD 124) is the Balboa Island area along the North Bay Front
Alleys between the Grand Canal and Collins Avenue including the South Bay Front Alley
east of Agate Avenue and was approved by the property owners on July 27, 2021.
Originally part of the larger Balboa Island Utility Undergrounding District No. 87, which
was considered by property owners at the April 28, 2009 public hearing and ultimately
rejected, AD 124 was redistricted at the request of the project proponents and consists of
966 parcels in central Balboa Island. Due to the district's large size, construction work is
being phased in order to minimize traffic disruptions, utility company resource demands,
as well as potential supply chain issues. AD 124 (Phase 0) will underground the areas
along the North Bay Front and a small portion of the South Bay Front near Agate Avenue.
Completing the underground infrastructure on North Bay Front ahead of the rest of the
project will provide a clear traffic circulation option for the entire Island during the
subsequent phases.
Historically, utility undergrounding projects have been bid and overseen by Southern
California Edison (SCE). Due to high costs and prior failed negotiations with SCE's
contractors, the City requested and undertook the bidding and construction of the
underground infrastructure portion of these projects in an effort to reduce costs. AD 120
and AD 124 (Phase 0) will be the fifth undergrounding project directly constructed and
managed by the City.
At 10 a.m. on December 20, 2022, the City Clerk opened and read the following bids:
BIDDER
TOTAL BID AMOUNT
Low
Hot Line Construction, Inc.
$ 5,097,207.00
2nd
As lundh Construction
$ 5,352,643.00
3rd
Danella Power Services of CA., Inc.
$ 7,250,000.00
4th
Arizona Pipeline Company
$ 7,770,000.00
The apparent low bidder for this project, Hot Line Construction, submitted a bid
approximately 10.8 percent above the Engineer's Estimate of $4,600,000. The disparity
between the bid and the Engineer's Estimate is attributed to higher costs for materials
caused by the current high inflationary environment as well as lingering nationwide supply
shortages due to the COVID-19 pandemic. Hot Line Construction submitted all the
necessary forms and possesses a Classification "A" California State Contractors License
as required by the project specifications. A check of the contractor's references indicates
satisfactory completion of similar projects for SCE, the City and other public agencies.
Hot Line Construction recently successfully completed the AD 113 project located on
West Balboa Island.
16-2
Resolution No. 2023-13: Resolution of Intention to Reimburse Project Costs from the
Proceeds of the Issuance of Bonds for Assessment District No. 120-2 (West Newport
Heights) and Assessment District No. 124 (Balboa Island — Phase 0)
at a Future Date and Award of Contract No. 7977-2
February 14, 2023
Page 3
After this bid opening, staff received a bid protest from the second lowest bidder,
Asplundh Construction, noting that the low bidder failed to identify a dewatering
subcontractor and believes they do not have the in-house capabilities to perform the
necessary dewatering work. Hot Line Construction provided a response and both letters
are included as Attachment C. Staff has reviewed the bid protest as well as the low
bidder's response and determined the low bidder does comply with the contract
specifications for this project. As noted above, Hot Line Construction has successfully
completed the AD 113 undergrounding project for the City and utilized the dewatering
services from a qualified dewatering sub -contractor, as it intends to do on this project.
Staff recommends the City Council declare Hot Line Construction as the lowest
responsible bidder and award the construction contract.
Work necessary to complete this contract consists of trenching; installing conduit, vaults,
handholes, and pull boxes; removing existing overhead wiring, transformers and poles;
repaving; and all other incidental items of work to complete the work in place. The
contractor will have 200 working days to complete the work once given the notice to
proceed. Construction will be scheduled to minimize impacts to residents and businesses.
Work is planned to begin on Balboa Island the week of February 20, 2023, with the
AD-120-2 area to follow. The contractor will have multiple crews work on Balboa Island
so most work can be completed before Memorial Day and the busy summer season on
the Island.
In effort to support continuity and the successful implementation of this project, the Public
Works Department is teaming with the consulting firm NV5 for construction administration
and residential permit support services. NV5 worked on the AD 117, 116, 116b, 111,
UUD22 Phase 1 and 2, McFadden Alleys and Court Street utility undergrounding projects
and continues to provide support for AD 113.
The project plans and specifications will be available for review at the February 14, 2023
City Council meeting or upon request.
FISCAL IMPACT:
Sufficient funding is available from AD 124 property owner pre -payments and the
proposed bond issuance for AD 120 and AD 124, scheduled for summer 2023. Staff
recommends having bonding done for both districts (entire AD 124 area) now in order to
minimize issuance cost by sharing the necessary financial administration costs, such as
bond counsel and a financial advisor. AD 124 is the first and only district where phased
construction will be necessary due to its size. Provided that recent accelerated inflation
trends have peaked, and construction cost have stabilized (and potentially even decrease
to some degree) in the next few years, staff believes that sufficient funding will be
available for all future phases in the approved district, based on current pricing received
with this Phase 0 bid. If not, and construction costs continued to increase at a rate beyond
normally expected cost increases, a supplemental assessment vote may be required to
make up any funding shortfalls to allow completion of this resident -requested and funded
underground improvement project.
16-3
Resolution No. 2023-13: Resolution of Intention to Reimburse Project Costs from the
Proceeds of the Issuance of Bonds for Assessment District No. 120-2 (West Newport
Heights) and Assessment District No. 124 (Balboa Island — Phase 0)
at a Future Date and Award of Contract No. 7977-2
February 14, 2023
Page 4
Any possible supplemental vote requirement will not be known until the last AD 124 phase
is bid and the project proponents have been made aware of the possible need for a
supplemental vote and increased property assessment.
The construction contract will be funded from the following sources:
Account Description
AD 120 Construction
AD 124 Construction
Account Number
66902-941032
67502-941032
Total: $
Amount
2,164,315.00
3,303,407.00
5,467,722.00
Staff recommends establishing $250,000 (approximately 5 percent) for contingency
purposes to cover the cost of unforeseen conditions associated with construction.
Proposed expenditures are as follows:
\/anrinr
Hot Line Construction, Inc.
Hot Line Construction, Inc.
NV5
Various
ENVIRONMENTAL REVIEW:
Purpose Amount
Construction Contract $ 5,097,207.00
Construction Contingency $ 250,000.00
Construction Administration &
Residential Permit Support & Material $ 118,915.00
Testing
Printing & Incidentals $ 1,600.00
Total: $ 5,467,722.00
On February 23, 2021, the City Council deemed the AD-124 project exempt from the
California Environmental Quality Act (CEQA) pursuant to Section 15302(d) (conversion
of overhead electric utility distribution system facilities to underground including
connection to existing overhead electric utility distribution lines where the surface is
restored to the condition existing prior to the undergrounding). On October 12, 2021, the
City Council deemed the AD-120-2 project exempt for the same reasons.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Location Maps
Attachment B — Resolution No. 2023-13
Attachment C — Bid Protest from Asplundh and Response from Hot Line
16-4
Attachment A
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UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 120 (WEST NEWPORT HEIGHTS)
UNDERGROUND UTILITY ASSESSMENT DISTRICT
CITY OF NEWPORT BEACH
NO. 120 AND 124 - PHASE 0
LOCATION MAP
PUBLIC WORKS DEPARTMENT
1.
C-7977-2
1 /24/23 16-5
Attachment A
ASSESSMENT DISTR CT
BOUNDARY
ASSESSMENT DISTRICT
BOUNDARY
UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 124 (BALBOA ISLAND - PHASE 0)
UNDERGROUND UTILITY ASSESSMENT DISTRICT
NO. 120 AND 124 - PHASE 0
LOCATION MAP
CITY OF NEWPORT BEACH
PUBLIC WORKS DEPARTMENT
C-7977-2
1 /24/23 16.6
ATTACHMENT B
RESOLUTION NO. 2023- 13
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH, CALIFORNIA, DECLARING ITS
INTENTION TO REIMBURSE PROJECT COSTS FROM
THE PROCEEDS OF THE ISSUANCE OF BONDS FOR
ASSESSMENT DISTRICT NO. 120-2 AND ASSESSMENT
DISTRICT NO. 124
WHEREAS, proceedings were previously undertaken under the provisions of the
Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways
Code (the "Act"), to form the City of Newport Beach Assessment District No. 120-2 ("AD
120-2"), and the City of Newport Beach Assessment District No. 124 ("AD 124");
WHEREAS, AD 120-2 was formed on January 11, 2022, and AD 124 was formed
on July 27, 2021 (collectively, the "Assessment Districts");
WHEREAS, the purpose of the Assessment Districts is to fund the
undergrounding of certain existing overhead utilities located within each of the
Assessment Districts;
WHEREAS, the City Council of the City of Newport Beach (the "Issuer") desires
to finance the costs of acquiring certain public facilities and improvements, as provided in
Exhibit A, Description of Project, which is attached hereto and incorporated herein by this
reference (the "Project"), relating to the undergrounding of the utilities within Assessment
Districts;
WHEREAS, the Issuer intends to finance the acquisition of the Project or portions
of the Project with the proceeds of the sale of obligations the interest upon which is
excluded from gross income for federal income tax purposes (the "Obligations"); and
WHEREAS, prior to the issuance of the Obligations, the Issuer desires to incur
certain expenditures in furtherance of the Project, to be advanced by Issuer, which
expenditures are desired to be reimbursed by the Issuer from a portion of the proceeds
of the sale of the Obligations.
NOW, THEREFORE, the City Council of the City of Newport Beach resolves as
follows:
16-7
Resolution No. 2023-
Page 2 of 4
Section 1: The Issuer hereby states its intention, and reasonably expects, to
reimburse Project costs incurred prior to the issuance of the Obligations with proceeds of
the Obligations. Exhibit A, Description of Project, generally describes the Project
expenses that will be advanced by the Issuer and reimbursed from a portion of the
proceeds of the forthcoming sale of the Obligations.
Section 2: The reasonably expected maximum principal amount of the
Obligations is $2,620,250 with respect to the portion of the Project relating to AD 120-2,
and $32,815,700 with respect to the portion of the Project relating to AD 124.
Section 3: This resolution is adopted on, or prior to, the date that the Issuer will
expend monies for the portion of the Project costs to be reimbursed from proceeds of the
Obligations (the "Expenditure Date").
Section 4: Except as described below, the expected date of issue of the
Obligations will be within eighteen months of the later of the Expenditure Date and the
date the Project is placed in service; provided, that the reimbursement may not be made
more than three years after the original expenditure is paid. For Obligations subject to
the small issuer exception of Section 148(f)(4)(D) of the Internal Revenue Code, the
"eighteen -month limit" of the previous sentence is changed to "three years" and the
limitation of the previous sentence beginning with "; provided, ...." is not applicable.
Section 5: Proceeds of the Obligations to be used to reimburse for Project costs
are not expected to be used, within one year of reimbursement, directly or indirectly to
pay debt service with respect to any obligation (other than to pay current debt service
coming due within the next succeeding one year period on any tax exempt obligation of
the Issuer (other than the Obligations) or to be held as a reasonably required reserve or
replacement fund with respect to an obligation of the Issuer or any entity related in any
manner to the Issuer, or to reimburse any expenditure that was originally paid with the
proceeds of any obligation, or to replace funds that are or will be used in such manner.
Section 6: This resolution is consistent with the budgetary and financial
circumstances of the Issuer, as of the date hereof. No monies from sources other than
the Obligation issue are, or are reasonably expected to be reserved, allocated on a
long-term basis, or otherwise set aside by the Issuer (or any related party) pursuant to
their budget or financial policies with respect to the Project costs. To the best of its
knowledge, this City Council is not aware of the previous adoption of official intents by the
Issuer that have been made as a matter of course for the purpose of reimbursing
expenditures and for which tax exempt obligations have not been issued.
.:
Resolution No. 2023-
Page 3 of 4
Section 7: The limitations described in Section 3 and Section 4 do not apply to
(a) costs of issuance of the Obligations, (b) an amount not in excess of the lesser of
$100,000 or five percent (5%) of the proceeds of the Obligations, or (c) any preliminary
expenditures, such as architectural, engineering, surveying, soil testing, and similar costs
other than land acquisition, site preparation, and similar costs incident to commencement
of construction, not in excess of twenty percent (20%) of the aggregate issue price of the
Obligations that finances the Project for which the preliminary expenditures were incurred.
Section 8: This resolution is adopted as official action of the Issuer to comply
with Treasury Regulation § 1.150-2 and any other regulations of the Internal Revenue
Service relating to the qualification for reimbursement of Issuer expenditures incurred
prior to the date of, issue of the Obligations, is part of the Issuer's official proceedings, and
will be available for inspection by the general public at the main administrative office of
the Issuer.
Section 9: The recitals provided in this resolution are true and correct and are
incorporated into the operative part of this resolution.
Section 10: If any section, subsection, sentence, clause or phrase of this
resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not
affect the validity or constitutionality of the remaining portions of this resolution. The City
Council hereby declares that it would have passed this resolution, and each section,
subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses or phrases be declared invalid or
unconstitutional.
Section 11: The City Council finds the adoption of this resolution is exempt from
environmental review under the California Environmental Quality Act ("CEQA") pursuant
to Section 15302(d) (conversion of overhead electric utility distribution system facilities to
underground including connection to existing overhead electric utility distribution lines
where the surface is restored to the condition existing prior to the undergrounding) of the
CEQA Guidelines, California Code of Regulations, Title 14, Division 6, Chapter 3,
because it has no potential to have a significant effect on the environment.
16-9
Resolution No. 2023-
Page 4 of 4
Section 12: This resolution shall take effect immediately upon its adoption by the
City Council, and the City Clerk shall certify the vote adopting the resolution.
ADOPTED this 14th day of February, 2023.
Noah Blom
Mayor
ATTEST:
Leilani I. Brown
City Clerk
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
off` C. # C'--=
Aadon C. Harp
City Attorney
Attachment(s): Exhibit A - Description of Project
16-10
EXHIBIT A
DESCRIPTION OF PROJECT
ASSESSMENT DISTRICT NO. 120-2
The conversion of certain overhead electrical, cable and communication facilities to
underground locations located within and around AD 120-2, together with appurtenant
work.
ASSESSMENT DISTRICT NO. 124
The conversion of certain overhead electrical, cable and communication facilities to
underground locations located within and around AD 124, together with appurtenant work
16-11
ATTACHMENT C
ASPLUNDH
CONSTRUCTION
7431 Walnut Ave. • Buena Park, CA 90620 • Cell: (562)509-7939
Date: December 20, 2022
City of Newport Beach Public Works Department
100 Civic Center Drive
Newport Beach, CA 92658
Attn: Michael J. Sinacori
Reference: Underground Utility Assessment District No. 120 and 124
Bid Opening Date December 20, 2022
Subject: Notice of Bid Protest of Apparent Low Bidder
Dear Mr. Michael Sinacori
Please consider this as Asplundh Construction LLC's formal written bid protest regarding the apparent low
bidder, Hotline Construction Inc. for the above referenced project which was publicly bid and opened on
December 20, 2022. We hereby submit our formal bid protest to Bidders as it appears that the low bidder
is non -responsive for the following reasons noted in the Special Provisions for this project.
• Section 7-8.6.4 Dewatering
"Groundwater will be encountered during the excavation of the project for AD 124 (Balboa
Island). The Contractor will be responsible for providing, installing, maintaining, and operating a
(well -point) dewatering system in the project area when groundwater is encountered. The
contractor shall demonstrate experience with well point dewatering systems and their in-house
capabilities or list a dewatering subcontractor who will perform these services. Lack of
dewatering experience or not listing a qualified dewatering subcontractor will be grounds for
bid rejection.
Based on the information provided above and the apparent low bidder did not list a dewatering
subcontractor, and does not own and operate dewatering equipment, Asplundh Construction LLC.
respectfully requests that the City of Newport Beach reject the non -responsive bid submitted by Hotline
Construction Inc. and recognize the next lowest responsive bidder, Asplundh Construction LLC.
Should you have any questions or concerns, please do not hesitate to contact me via email at
ALEDERMAN@ASPLUNDH.COM CELL: 562-509-7939
Respectfully,
Adam LedermanlDivision Manager
16-12
Hot Line Construction, Inc 12022
12/20/2022
City of Newport Beach
Attention: Mike Sinacori
100 Civic Center Drive
Newport Beach, CA 92658
RE: Response to Bid Protest for UUAD No.'s 120 and 124, with a bid opening date of December
20, 2022
Dear Mike:
Hot Line Construction, Inc. (HLCI) is in receipt of the Notice of Bid Protest, submitted by
Asplundh Construction. In response, HLCI simply mistakenly left Rain -for -Rent (de -watering
subcontractor) off the subcontractor list, due to focusing on attempting to strategically lower
our bid pricing in time for the bid opening. It was simply an oversight and a clerical error. I offer
two (2) solutions to how we can recover from this mistake:
1. HLCI can rent the de -watering equipment from Rain -for -Rent, as we did on the last
project, UUAD No. 113. During the construction of The City of Newport Beach, UUAD
No. 113 project, Hot Line self -performed as much of the dewatering (well point
installation), as Rain -for -Rent did. We have demonstrated to the City of Newport Beach
that we can successfully achieve the de -watering work, in-house, necessary to perform
the construction of this smaller project. We do not have to list a rental company as a
subcontractor (or anywhere on the bid documents) — and by self -performing a good
percentage of the dewatering associated with UUAD No. 113, we have demonstrated
experience with well point dewatering systems in-house. This meets Section 7-8.6.4
Dewatering criteria.
2. California Public Contract Code — PCC 4109 allows for a prime contractor to add a
subcontractor that was not designated in the original bid in "cases of emergency or
necessity". In this response, I have already explained that not listing Rain -for -Rent as our
De -watering Subcontractor was simply a mistake. If the City determines it is a necessity
to use a dewatering subcontractor, then we can simply request to add them as a
subcontractor, pursuant to California Public Contract Code — PCC 4109.
HotuneConstructionlnc.com / 9020 Brentwood Boulevard, Suite H Brentwood, CA 94513 / Office: (925) 634-9333
16-131
Hot Line Construction, Inc 2022
Hot Line has recently, and successfully, demonstrated its ability to provide the City of Newport
Beach with a quality construction product. We are completely confident that we can build this
project with the same success, whichever of the two (2) options from above you choose. Please
do not hesitate to reach me with any questions or concerns.
Sincerely,
Frank Barrett
District Manager
fbarrett@hotlineconstructioninc.com
(951) 306-4684
HotUneConstructionlnc.com , 9020 Brentwood Boulevard, Suite H Brentwood, CA 94513 / Office: (925) 634-9333
16-