Title
Recommendation to Authorize the Interim City Manager to Negotiate and Execute a Construction Contract and Related Agreements for the 2815 San Diego Road Rehabilitation Project with a Project Budget of up to $502,700. (Housing 236)
Body
To: Honorable Mayor and Members of the City Council
From: David L. Rudat, Interim City Manager
EXECUTIVE SUMMARY
The City of Alameda (the City) owns a single-family home located at 2815 San Diego Road at Alameda Point. The home is currently uninhabitable due to a cracked foundation. In November 2017, the City Council approved $125,000 in Community Development Block Grant (CDBG) funding to repair the foundation and make the house available for refugee families being resettled in Alameda. The Housing Authority developed a scope of work to replace the foundation and put the project out to bid. The total project cost is approximately $500,000. While the cost to repair the foundation is substantially higher than anticipated, staff recommends proceeding with the foundation replacement project and encumbering the property with a 15-year affordability agreement to ensure the affordability of the home. The funds are available in the Housing budget for the Substantial Rehabilitation program.
BACKGROUND
On November 21, 2017, the City Council allocated $125,000 to replace the foundation of the City-owned four-bedroom home at 2815 San Diego Road, so that it may be habitable and then leased to Shelter in Peace, an Alameda-based non-profit organization that was founded by members of the interfaith community. Shelter in Peace offers transitional housing and other services to refugee households being resettled in Alameda. The Housing Authority is the project manager for the project and, following Council’s initial approval of the project, worked with a structural engineer to develop the project scope, draft a comprehensive construction budget, obtain permits, and prepare the Invitation for Bid (IFB). The project scope is to elevate the home, remove the existing foundation, pour a mat slab foundation, then lower the home and reconnect it to the new foundation, including reconnecting to existing utilities.
Once the foundation replacement project has been completed, Shelter in Peace will lease the property. Shelter in Peace will be responsible for any additional work necessary to lease the house, including patching interior walls, replacing carpeting, painting, etc. Due to the unknown impacts of raising and lowering the home, the scope of this additional work and the associated cost will not be known until the foundation replacement project has been completed. The project has a $60,000 contingency, which should be sufficient for a project of this scope. The foundation replacement project budget (Exhibit 1) does not include the cost of updating any building systems. However, when the home was last occupied in June 2016, the property did not require any upgrades to its building systems (electrical, plumbing, sewer, or roof).
On August 21, 2018, the Housing Authority published an IFB and received one response for more than $400,000. Receiving a single bid became more commonplace in 2017 and 2018. Construction costs also increased during this time. When the Housing Authority reached out to contractors to find out why they did not bid, the feedback was that many contractors were busy with higher-paying jobs that did not require the administrative burden of documenting adherence to federal requirements, including Davis Bacon Act wage compliance. At the direction of the Community Development Director, the Housing Authority rejected the sole bid and rebid the project. On October 26, 2018, the Housing Authority published a second IFB. Four responses were received. The lowest responsive bid was $400,000.
CDBG funds that are allocated for Substantial Rehabilitation projects may be used to fund the foundation work at 2815 San Diego Road by making a currently uninhabitable unit available for rent to low- and very low-income households. Per the 1990 Guyton Settlement Agreement, “[t]he Substantial Rehabilitation Program will be allocated funds annually in each program year.” In the current fiscal year, the City allocated $172,497, and carried forward $395,133 from previous years, resulting in a total of $567,630 allocated to the Substantial Rehabilitation program. Prior to San Diego Road, the Housing Authority borrowed $575,000 of Substantial Rehabilitation funds to create a new unit at 738 Eagle Avenue by converting a single family home into a duplex for a cost of approximately $700,000, or $534 per square foot. While the scope of the two projects differs greatly, the $502,700 project budget of San Diego Road makes a single family home available at a cost of $198 per square foot.
DISCUSSION
Consistent with the City Council’s referral to provide support services to immigrant and refugee families approved on February 7, 2017, the City’s goal to convert the City-owned home into habitable housing, to be leased by a non-profit organization serving refugees, remains the same. When the project was initially proposed, the City Council approved a foundation replacement project with an estimated budget of $125,000. Based on engineering reports and actual bids received, the total rehabilitation budget for the project is estimated to be approximately $500,000, with actual construction costs at $400,000. The balance of funds is for engineering, reports, and permit fees. See Exhibit 1 for the full project budget.
Given the higher than anticipated cost to repair the foundation, staff evaluated the following options:
1. Do nothing
2. Find a new property to utilize the Substantial Rehabilitation funds
3. Proceed with the rehabilitation of the San Diego Road property
Do Nothing: Staff evaluated the option of doing nothing. Under this option, the City would continue to own an uninhabitable house with a failed foundation, and housing would not be provided to refugee families. Furthermore, given the rise in construction costs over the past two years, it is unlikely that a delay will result in significantly lower cost to replace the foundation, and it is possible that costs may continue to rise.
Find a New Property: Staff identified other possible projects that could potentially meet the Substantial Rehabilitation requirements and allow the City to meet the HUD-mandated timeliness test for expenditure of CDBG funds in the upcoming fiscal year. There are three Housing Authority-owned properties - China Clipper, Parrot Village and Rosefield Village - that have the potential for redevelopment with additional units. The timeline, number of units, and estimated cost are summarized below.
|
|
China Clipper |
Rosefield Village |
Parrot Village |
|
Timeline |
Break ground 2020 Lease up 2021 |
Break ground 2020 Lease up 2022 |
Assess feasibility for redevelopment and infill units (2020-2021) |
|
Number of Units |
1 |
1 |
TBD |
|
Estimated Cost |
$300,000 |
$500,000 |
TBD |
The properties listed above are owned by the Housing Authority and any new units created would provide permanent housing to very low- and low-income households, but would not specifically serve refugee families being resettled in Alameda.
Proceed with the San Diego Road Property: Replacing the foundation at 2815 San Diego Road meets the City Council’s objectives, the Guyton Settlement Agreement requirement of creating units using CDBG funds that have been set aside for substantial rehabilitation, and HUD’s timeliness deadline for the use of CDBG funds. Given this, staff recommends proceeding with replacing the foundation and requiring that a 15-year deed restriction be placed on the property to ensure the affordability of the home and its use as refugee or other housing serving low-income households.
While the foundation work is more costly than originally anticipated, this is an opportunity to provide much needed transitional housing for refugee families being resettled in the Bay Area. The high cost of housing and lack of established credit are the biggest barriers to these families gaining self-sufficiency. An affordable home will allow Shelter in Peace to serve a number of families over the next 10-15 years and will allow the City to meet its goal of providing support services to immigrant and refugee families. Therefore, staff is recommending that available CDBG Substantial Rehabilitation funds be used to replace the foundation at 2815 San Diego Road.
FINANCIAL IMPACT
There is no impact on the General Fund. The funds are available and are budgeted in the Housing budget (Fund 236). Currently, approximately $567,600 in CDBG funds are allocated and budgeted to the Substantial Rehabilitation program, of which almost $400,000 has been carried forward from previous years.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This project is consistent with the Community Development Block Grant (CDBG)/ HOME Five-Year Consolidated Plan (FY’s 15-20) and the CDBG/HOME FY17-18 Annual Action Plan previously approved by the City Council. It also implements a City Council-approved referral regarding provisions of immigrant and refugee support services.
ENVIRONMENTAL REVIEW
This project is subject to compliance with NEPA as CDBG funds are federal monies. The federal environmental review requirements have been satisfied. 2815 San Diego Road also requires Section 106 consultation as it has been deemed to be a contributor to the Main Street Neighborhood historic district, listed in the National Register of Historic Places. In a letter dated November 26, 2018, the California State Historic Preservation Officer issued a letter of concurrence with the finding of no adverse effect for the undertaking the work of making foundation repairs and improvements at 2815 San Diego Road.
RECOMMENDATION
Authorize the Interim City Manager to negotiate and execute a construction contract and related agreements for the 2815 San Diego Road Rehabilitation Project with a project budget of up to $502,700.
Respectfully submitted,
Debbie Potter, Base Reuse and Economic Development Director
By,
Lisa Fitts, Housing Authority Management Analyst
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibit:
1. Estimated Budget