Memorandum

City of Lawrence

City Manager’s Office

 

TO:

David L. Corliss, City Manager

 

FROM:

Diane Stoddard, Assistant City Manager

 

Date:

January 14, 2014

 

CC:

Cynthia Wagner, Assistant City Manager

 

RE:

Santa Fe Station Project Update re Timing and Ineligible Grant Expenses

 

In the summer of 2013, the City of Lawrence received a letter from KDOT indicating that its grant application for the Santa Fe Station project was approved in full.  The original grant application included the entire building preservation project (roof, HVAC, ADA improvements, sidewalk improvements around the building and site improvements).  The site improvements included landscaping surrounding the historic fountain base on the west side, removal of asphalt parking on the west side and the creation of a new parking lot area on the east side of the building.  The total of the approved project was approximately $1.5 million, with a grant of $1.2 million and a City match of approximately $302,000 plus design and construction bidding costs that brought the City’s total commitment to approximately $350,000. 

 

Change in Project Administration and Timing Update

In early December 2013, staff met with KDOT officials regarding the project.  At that time, KDOT staff indicated that there had been some changes in the Transportation Enhancement (TE) program and one of those changes required KDOT to bid and administer the project directly.  All previous TE projects had been reimbursement projects with the local jurisdictions bidding and administering the project and then being reimbursed by KDOT with the grant funds at the completion of the project.  The change in project administration will require that bid documents be in the KDOT format and follow KDOT process.  Also, KDOT requires continuous construction engineering (project inspection) throughout the entire construction.  This requirement will add cost to the project, approximately $64,000 in additional costs for the continuous inspection of the building improvements over the approximately $21,000 included in the original figures for spot inspection. These additional costs would be covered at 80% grant/20% City.  The inspection of the site improvements can be handled in-house by Public Works Department staff. 

 

Another item relayed in early December was that the grant required the project to be bid in September 2014 with bids being awarded in October 2014.  This timeframe requires that the property transaction with the railroad must be completed by July 1, 2014.  All design regarding the project must be completed by March 1, 2014.

 

Ineligible Expenses

In mid-December 2013, staff received notification from KDOT that certain aspects of the original grant application would not be eligible for grant funding.  It was previously not clear that these items would not be eligible. As a result of some clarifications back and forth between the City and KDOT between mid-December and mid-January, the City now understands the following from KDOT:

 

·         Any work on the east side involving the parking lot, fencing or any sidewalk not connected to the building will be ineligible

·         Work on the west side involving restoration of the green space area surrounding the historic fountain base will be eligible, subject to final review of eligible components

·         Any shared systems (HVAC, fire suppression) in the building will need to be allocated out by floor space and the BNSF floor space portion of these shared systems will be ineligible (approximately 30% of floor space is BNSF space)

·         Any work within the BNSF space that isn’t related to the structure such as the exterior windows will be ineligible (this is approximately $35,000)

·         KDOT is willing to look at covering construction engineering with grant funds, subject to the City’s match

 

KDOT also provided correspondence outlining the ineligible costs.     

 

Project Impacts

The project will be impacted by these changes.  If the original scope remains the same, the increased ineligible costs will increase the City’s match requirement.  However, there are options regarding reduction of project scope that would keep the project generally within the original City funding allocation.  Staff has re-examined the project scope in light of the ineligible expenses. 

 

Option 1 would maintain the current scope of the project, allocating the shared system costs such as HVAC related to the BNSF area floor space to the City, assuming 100% of the cost of parking lot/sidewalk on the east side would be paid by the City, including improvements to the BNSF portion of the building at City cost, factoring additional costs relating to meeting KDOT bidding requirements and inspection, and additional design costs. The additional cost to the City under this scenario would be approximately $300,000 over the original $350,000 budgeted in the 2014 capital improvements program, requiring a $650,000 total commitment from the City. 

 

Option 2 scales back the project to stay closer to the City’s original commitment to the project.  Option 2 reduces the scope by deferring the improvements on the east side of the site, including the parking lot area and the sidewalk improvements, not completing any interior improvements to the BNSF portion of the building, and also includes the increased shared systems costs, the additional costs relating to meeting KDOT bidding requirements and inspection and design costs. Option 2 would cost approximately $35,000 more than the $350,000 the City has budgeted in the 2014 capital improvements program, for a total City commitment of $385,000.  With the deferral of the east side site improvements, the construction of the east parking lot and sidewalk could occur at a future time with it possibly being constructed in-house or be included in the TE grant that the City plans to submit this year for a trail grant to extend the Burroughs Creek Trail connection to the north and west.  Under that proposal, the parking lot and sidewalk at the Santa Fe Station would be considered a trail head and could be an eligible expense under the trail grant category. Option 2 includes the design of this parking lot and sidewalk area in order to enable the City to be ready to take advantage of future construction opportunities.  The application included a concept site design, though the final design of the site improvements will be subject to discussion of rail setback requirements with the BNSF. 

 

Design Costs:

In order to complete the project, some additional design work will be undertaken, most of which was originally anticipated.  Design costs are 100% the responsibility of the City and not eligible for grant funding. The estimates for the increased design costs are taken into account in the Option 1 and Option 2 scenarios noted above. The City Commission will recall that the building restoration project has already been completed under another previous project.  However, the site improvements have not yet been designed.  In order to meet KDOT’s design timeframe and its bidding requirements, some additional design work will need to be undertaken. 

 

Staff requests authority to authorize an additional estimated $14,000 in work for Hernly Associates regarding building plan design changes requested by KDOT.  The majority of these changes relate to the configuration and content of the project sheets to meet KDOT bidding requirements.  There are also some changes to the plans required which relate to federal requirements concerning the incorporation of US steel into certain components.  Additionally, staff requests the authority to execute an agreement up to $35,000 with Bartlett & West for site improvement design and site planning work.  Staff believes it is advantageous to work with Bartlett & West given their work with Hernly Associates on the original Santa Fe Station Historic Structures report and also that they have significant contacts with the BNSF Railway.

 

Status Update regarding BNSF real estate transaction:

·            The BNSF documents have been returned to BNSF with the latest round of changes which incorporate feedback from an environmental attorney the City had engaged.  Also, the changes reflect the desire from the City Commission to minimize the City liability.  BNSF is aware of the City’s timeframe to meet KDOT’s July 1 date on the property transfer.  The City is checking in with BNSF regularly regarding the status of review.

·            An agreement will also need to be completed with Amtrak regarding Amtrak’s continued operation in the building.  A draft agreement has been received by Amtrak to date.

·            The Phase 1 Environmental Study was completed this fall.  The study recommends no further investigation.

 

Staff Recommendation:

Staff recommends that the City Commission proceed with Option 2 outlined above and authorize staff to sign agreements with Hernly Associates and Bartlett & West regarding the required design work on the project.

 

Requested Action: 

Direct staff to pursue Option 2 for the Santa Fe Station project and authorize staff to execute agreements with Hernly Associates and Bartlett & West regarding the design work on the project.