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Adoption of Resolution Amending Fiscal Year 2018-19 Base Reuse Fund Budget by Appropriating $538,128 from the Building Sales Proceeds for Reimbursement for Additional Work Performed While Installing a Portion of the Joint Trench at Alameda Point. (Base Reuse 858)
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.To: Honorable Mayor and Members of the City Council
From: Eric Levitt, City Manager
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EXECUTIVE SUMMARY
Staff is requesting that City Council approve a reimbursement to Alameda Point Redevelopers (APR), in the amount of $538,127 for additional work requested on the Alameda Point Joint Trench project. In February 2016, the City Council approved a lease with a purchase option with APR. In lieu of a Development Impact Fee, the tenant agreed to install approximately $1.8 million of public infrastructure improvements consistent with the Alameda Point Master Infrastructure Plan (MIP). The tenant, in consultation with staff, installed the critical backbone of utilities called the “joint trench,” which will eventually connect new service lines to the services being brought in through the Site A development. During construction, additional work was requested by Alameda Municipal Power (AMP) and the City to extend the trench an additional block, providing much-needed redundancy in the system in the event of outages. This reimbursement is for increased costs associated with this additional work.
BACKGROUND
In February 2016, the City Council approved a 10-year lease with APR for Building 8, located at 2350 Saratoga Street at Alameda Point. Building 8 is a 270,000 square foot, three-story building, located in the historic “shops” area. The lease contained a purchase option, which was executed in November 2018, and the building is now privately owned. The purchase price for the premises was $10.3 million, which included a $1.8 million infrastructure improvement credit.
The infrastructure improvement credit could only be applied to off-site infrastructure improvements done in full compliance with the MIP. APR began designing the joint trench project, which was to run from West Tower along Saratoga to West Ranger. However, during project construction, AMP requested that the trench be extended an additional block, to West Midway, to assist in providing much-needed redundancy in the system in the event of power outages. This additional work allowed the power line to be connected to an alternate transformer. During the installation of the joint trench, Alameda Point experienced two large power outages, which impacted residents and businesses outside of the base, and AMP wanted to reduce the risk of additional incidents. The trenching and installation of additional lengths of service lines resulted in costs greater than the allotted $1.8 million improvement credit. Rather than stopping construction and bringing to City Council an estimated budget overrun, staff elected to bring the overrun to City Council for reimbursement after reviewing the total cost and proof of payment.
DISCUSSION
Infrastructure is the greatest challenge in the reuse and redevelopment of Alameda Point. Many qualified developers have not been able to advance projects because of the cost, complexity and lack of the infrastructure at Alameda Point. The City has elected to address the challenge of infrastructure in development packages that gradually install new services while abandoning old non-conforming systems. Even with drawings and estimates, the true challenge and cost of installing infrastructure are not understood until construction begins. At the same time APR was installing its required infrastructure, AMP was developing solutions to existing problems in the system. The extension of the joint trench down Saratoga Road gave AMP the opportunity to ensure redundancy of service in Building 8 and eventually the other surrounding buildings.
APR agreed to undertake the additional work requested by AMP. Originally, it was thought that the additional work might be able to be done within the existing budget allocation, but the scope of solving the power outage issue expanded the project and cost. APR performed the work with the understanding that they would be reimbursed by the City for any additional cost that exceeded their $1.8 million credit. The additional work exceeded the $1.8 million credit by $538,127 and APR has now requested reimbursement for those expenses. Staff has reviewed the invoices and proof of payment for the reimbursement of the cost of additional work (Exhibit 1). The reimbursement will come from the Base Reuse Fund that currently holds the proceeds from Alameda Point building sales, which are earmarked for installing infrastructure in accordance with the MIP.
FINANCIAL IMPACT
There is no impact to the General Fund. The reimbursement of $538,127 for additional infrastructure work completed is proposed to be paid from building sales proceeds held in the Base Reuse Fund.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The recommended action is consistent with the fiscal neutrality policy for Alameda Point (the Base pays for itself).
ENVIRONMENTAL REVIEW
For purposes of compliance with the provisions of the California Environmental Quality Act, a Final Environmental Impact Report (State Clearinghouse No. 2013012043) for the Alameda Point project was certified on February 4, 2014.
RECOMMENDATION
Adopt a resolution amending Fiscal Year 2018-19 Base Reuse Fund Budget by appropriating $538,128 from the building sales proceeds for reimbursement for additional work performed while installing a portion of the joint trench at Alameda Point.
Respectfully Submitted,
Debbie Potter, Base Reuse & Community Development Director
By,
Nanette Mocanu, Assistant Community Development Director
Financial Impact section reviewed,
Elena Adair, Financial Director
Exhibit:
1. Project Cost Breakdown