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CITY COUNCIL AGENDA ITEM NO. 24

Meeting Date: February 13, 2001

Subject/Title: Consider the Brentwood Education and Technology Center (BETC) Proforma and Direct Staff on Future Action

Submitted by: Howard Sword, Economic Development Manager

Approved by: Jon Elam, City Manager


RECOMMENDATION
Authorize Staff to add $10,000 to the RGM construction management contract to immediately start redesign of the project and prepare a comprehensive construction management contract to build the BETC for consideration on February 27, 2001 City Council meeting.

PREVIOUS ACTIONS:
Authorize the City Manager to execute an agreement with RGM and Associates for Construction Management Services to Value Engineer the Contract Documents for the Brentwood Education and Technology Center (BETC) for $22,950; January 9, 2001.

Reject all bids for construction of the Brentwood Education and Technology Center; December 12, 2000. 

Los Medanos College Lease; June 27, 2000. 

 Kares Construction Management Contract; November 3, 1999. 

BACKGROUND:
RGM and Associates has evaluated the previously prepared plans and specifications for the Brentwood Education and Technology Center and revised them to reduce the projected cost by $774,844. This is a significant reduction from the rejected low bid considered on December 12, 2000.

Staff now feels with a revised budget for the project of $1,900,000, a more realistic plan can be implemented based on the attached financial proforma. The project now appears to be financially viable.

LMC wants to start Fall 2001 classes in the facility and we have several local businesses anxious to move into the business incubator. A construction method is now proposed to expedite the projects completion.

A construction management approach that uses RGM & Associates as a project manager for the City brings a high level of quality and cost control to the project.

Instead of having a single general contractor, the approach being suggested would have RGM & Associates oversee the solicitation of bids for a range of sub-contractors and coordinate the construction process.

Unlike a general contractor approach this fixes the construction management costs up front and puts the emphasis on securing cost efficient sub-contractor bids. All City purchasing policies would be followed (i.e. City Council approval of bids).

There is some risk to the City as undoubtedly some variations in the cost estimate by line item will occur, but the total has been prepared by RGM & Associates using up to date construction estimates, and thus is the most accurate possible.

RGM & Associates is a very experienced company and received absolutely great reviews from the public agencies that have used them, and their performance in the project so far has been excellent.

If the City Council accepts this plan, staff would return to the City Council on February 27, 2001 with a comprehensive contract with RGM & Associates to build the project.


Exhibit 1: Project Cost and Incubator Cash Flow
 Project Costs: Includes all costs to 2/1/01, construction at 55.07 per square foot (RGM’s value engineering analysis – Exhibit 8), and technology fixtures and equipment.

Incubator Cash Flow: Financial Analysis of Expense and Income of the Incubator.

Exhibit 2: LMC Lease Rent and FTES Projections: 

Cash Flow that includes Minimum Rent as specified in the CCCD / Brentwood Lease and Projected Rent based on Projected FTES (Full Time Student Equivalent) increase.


Exhibit 3: BETC Case I Proforma : 

 Total Project Cash Flow: Financial Analysis of Expense and Income of the Incubator and LMC. Both the Minimum Rent and the Projected Rent scenarios are analyzed. Case One is based on 50% Tax Exempt / 50% Taxable Financing (Please refer to Exhibit 5 for finance explanation and Exhibit 6 for Sources and Uses of Funds, Bond Debt and Net Debt Service).

Exhibit 4: BETC Case II Proforma : 

Total Project Cash Flow: Financial Analysis of Expense and Income of the Incubator and LMC. Both the Minimum Rent and the Projected Rent scenarios are analyzed. Case One is based on 100% Tax Exempt Financing (Please refer to Exhibit 5 for finance explanation and Exhibit 7 for Sources and Uses of Funds, Bond Debt and Net Debt Service).


Exhibit 5: Financing Memorandum

Memorandum from Bob Williams, Sutro & Co. Inc. explaining the financing strategy.




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