Title
Adopt a Resolution to Approve and Authorize the City Manager to Execute a $2,250,000 Construction Contract to Armer-Norman & Associates for Public Works Service Center (PWSC) Replace Fuel Tanks Project, Project No. 2020.3600; to Authorize the City Manager to Negotiate and Approve Individual Change Orders Up to 5% (or $112,500) of the Original Contract Amount; to Authorize the City Manager to Negotiate and Approve Change Orders up to a Cumulative Value not to Exceed 15% (or $337,500) of the Original Contract Amount; and to Appropriate an Additional $1,872,020 to the Subject Project
Staffreport
COUNCIL PRIORITY
• Infrastructure
SUMMARY
This contract provides for the removal of two (2) 20,000 gallon and two (2) 12,000 gallon single-walled underground storage tanks (USTs), and the subsequent replacement of these tanks with two (2) 12,000 gallon double-walled USTs to comply with State mandates.
RECOMMENDATIONS
Staff recommends the following actions:
• Approve a construction contract to Armer-Norman & Associates in the amount of $2,250,000 for PWSC Replace Fuel Tanks Project, Project No. 2020.3600 and authorize the City Manager to execute and take all actions necessary to effect the purpose and
• Authorize the City Manager to negotiate and approve individual change orders up to 5% (or $112,500) of the original contract amount
• Authorize the City Manager to negotiate and approve change orders up to a cumulative value of 15% (or $337,500) of the original contract amount; and
• Appropriate an additional $1,872,020 to the subject project
BACKGROUND
The City’s Public Works Service Center currently operates four single-walled underground storage tanks (USTs) containing diesel fuel and unleaded fuel. These tanks supply fuel to four fuel pumps that serve the City’s fleet of vehicles and equipment. In compliance with SB 445 passed in 2014, the State Water Board requires all single-walled tanks and associated plumbing to be permanently decommissioned by December 2025.
This project will remove and replace existing single-walled fuel storage tanks with new compliant double-walled tanks designed to meet the station’s current fuel demand. The new system will consist of one (1) 12,000-gallon fuel tank and one (1) 12,000-gallon split tank with 6,000 gallons designated for diesel and 6,000 gallons for unleaded fuel. In addition, the four (4) existing fuel dispensers will be replaced with two (2) new and modern dispensers.
Analysis
Bids were opened on January 23, 2025, with only one (1) bid received in the amount of $2,250,000. The pre-bid engineer’s estimate was $1,566,580.50.
Staff recommends award to the lowest responsible bidder, Armer-Norman & Associates, in the amount of $2,250,000. This recommendation considers ongoing uncertainties in the construction market, particularly the impending tariff increase, which is expected to drive up bid prices. Analysis of the construction market by staff has also revealed that only a limited number of contractors specialize in this type of work, evidenced by the single bid received. Other agencies, including San Francisco have faced similar challenges securing bids for projects under the same mandate, with some agencies having to go out to bid multiple times before receiving any bids. In addition, with the upcoming deadline set by the SB 445 mandate, many fuel stations are also under construction, further constraining contractor availability. Although rebidding the project was considered, the current construction climate will not guarantee that lower bids will be received and that rebidding the project could delay the project from meeting the mandated December 2025 deadline.
Staff verified that the contractor holds a valid Contractor’s State License Board license and is registered with the California Department of Industrial Relations.
The sole bidder has its office in San Leandro, qualifying it as a local business per the Local Inclusion Policy Ordinance. Therefore, the good-faith outreach efforts for local business participation goals are not included in the bid package and are not needed.
As is standard in the construction industry, staff balanced site investigation costs with the risk of finding unforeseen conditions during construction, as well as balanced the design costs with the level of detail on the plans. As a result, unforeseen conditions may be encountered during construction and plan details may need to be adjusted or clarified. To minimize delays to the project and ensure that the scope of work is adjusted as needed to provide the highest quality project for the City, staff requests authorization to negotiate and approve individual change orders up to 5% ($112,500) of the original contract amount and cumulative change orders up to 15% (or $337,500) of the original contract amount. This will help to ensure efficient completion of the project on budget and on schedule.
Failure to approve this contract award request may result in the City failing to comply with SB 445 and the State Water Board’s requirements, leading to the mandatory closure of the City’s fuel station until compliance is achieved. Consequently, the City will be forced to meet its fleet fuel needs by purchasing fuel from private vendors at a higher price.
Current Agency Policies
• Maintain and enhance San Leandro’s infrastructure
Previous Actions
• On December 19, 2022, by Resolution No. 2022-218, the City Council awarded a Consultant Services Agreement to TAIT & Associates for a design fee of $118,512, including authorization of amendments up to 15% of the design fee amount, or $17,777
Permits and/or Variances Granted
Permits will be obtained from the following agencies before the construction of this project:
• Building Permit from City of San Leandro Permit Center
• Underground Storage Tank (UST) Closure Package from City of San Leandro Permit Center
• Alameda County Fire: Removal and Installation of UST’s
• Bay Area Air Quality Management District (BAAQMD)
Applicable General Plan Policies
Policy EH-5.1 Regulatory Compliance. Work with the appropriate county, regional, state, and federal agencies to develop and implement programs for hazardous waste reduction, hazardous material facility citing, hazardous waste handling and disposal, public education, and regulatory compliance.
Policy EH-5.3 Design of Storage and Handling Areas. Require that all hazardous material storage and handling areas are designed to minimize the possibility of environmental contamination and adverse off-site impacts. Enforce and implement relevant state and federal codes regarding spill containment facilities around storage tanks.
Environmental Review
This project is categorically exempt from the California Environmental Quality Act (CEQA) per sections 15301b, 15301d, and 15302c. The Notice of Exemption was filed with the Alameda County Clerk Office on September 18, 2023.
Summary of Public Outreach Efforts
The Notice to Bidders was published in the East Bay Times, World Journal, and Visión Hispana. Staff also notified builders’ exchanges and construction data firms, as well as a list of contractors that asked to be notified of bidding opportunities via email. The project is described on the Public Works-Engineering Division website.
Two mandatory pre-bid meetings were held on January 9, 2025 and January 14, 2025. The intent of these meetings was to inform bidders of the project details, including the City’s Local Inclusion Ordinance and address any questions bidders may have.
Financial Impacts
Staff recommends an additional Council appropriation in the amount of $1,872,020 in Fiscal Year 2024-2025 from the Equipment Repair and Maintenance Fund to fund construction of the Public Works Service Center Replace Fuel Tanks Project, Project No. 2020.3600. The Equipment Repair and Maintenance Fund is the internal service fund responsible for the operation, repair, and replacement of the municipal fleet and equipment. As an internal service fund, expenditures will be allocated to end user funds based on proportionate use. There is sufficient undesignated fund balance in the Equipment Repair and Maintenance Fund to cover this expense.
The cost of this multi-funded project is detailed below:
Consultant Design & Construction Fees $118,512
Construction Contract $2,250,000
Construction Contingency $337,500
Permit & Utility Fees $16,000
Construction Management and Inspection $150,000
TOTAL $ 2,872,012
The project is funded as follows:
Account No. Reso and Source Amount
210-18-152 2022-218, Capital Improvement Fund $1,000,000
Total $1,000,000
Appropriation requested by this action:
690-xx-xxx Equipment Repair and Maintenance Fund $1,872,020
Total $2,872,020
Attachments
Attachment A - Reso
Attachment B - Bid Summary
PREPARED BY: Bennett Sanderson, Assistant Engineer, Public Works-Engineering