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Staff Report. Trail Connector Funding PREPARED BY: Nicolle Burnham Director, Parks and Public Works Reviewed by: Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov TOWN OF LOS GATOS COUNCIL AGENDA REPORT MEETING DATE: 06/06/2023 ITEM NO: 12 DATE: May 26, 2023 TO: Mayor and Town Council FROM: Laurel Prevetti, Town Manager SUBJECT: Approve a Funding Plan for Construction of the Los Gatos Creek Trail to Highway 9 Trailhead Connector Project (CIP No. 832-4505) and take the following actions: a. Authorize the Town Manager to Execute Supplement 2 to the Agreement for One Bay Area Grant Program (OBAG II) Grant Funds for Total Compensation of $6,193,000 from the Department of Transportation (Caltrans); and b. Authorize Revenue and Expenditure Budget Adjustments in the Amount of $2,842,000 to Recognize the Receipt and the Spending of the Additional OBAG II Grant; and c. Adopt a Resolution Authorizing Receipt of $68,884 from the Transportation Development Act Article 3 (TDA3) Funding Program; and d. Authorize Revenue and Expenditure Budget Adjustments in the Amount of $68,884 to Recognize the Receipt and the Spending of the TDA3 Funding RECOMMENDATION: Approve a Funding Plan for Construction of the Los Gatos Creek Trail to Highway 9 Trailhead Connector Project (CIP No. 832-4505) and take the following actions: a. Authorize the Town Manager to Execute Supplement 2 to the Agreement for One Bay Area Grant Program (OBAG II) Grant Funds for Total Compensation of $6,193,000 from the Department of Transportation (Caltrans); and b. Authorize revenue and expenditure budget adjustments in the amount of $2,842,000 to recognize the receipt and the spending of the additional OBAG II Grant; and c. Adopt a Resolution Authorizing Receipt of $68,884 from the Transportation Development Act Article 3 (TDA3) Funding Program (Attachment 3). d. Authorize revenue and expenditure budget adjustments in the amount of $68,884 to recognize the receipt and the spending of the TDA3 Funding PAGE 2 OF 6 SUBJECT: Approve a Funding Plan for Construction of the Los Gatos Creek Trail to Highway 9 Project (CIP No. 832-4505) DATE: May 26, 2023 BACKGROUND: The Los Gatos Creek Trail to Highway 9 Trailhead Connector Project (Project) was identified as a priority in the 2017 Bicycle and Pedestrian Master Plan and the 2020 Update to the Plan. Design of the Project was started in 2018 and staff has been working on design, environmental clearance, and development of construction documents ever since. On January 17, 2023, Town Council authorized staff to issue two bids for the Project: one for construction and a second for construction management, inspection, and material testing services. Construction bids were opened on April 6, 2023 and a total of five bids were received. Bids for construction management, inspection, and material testing were based on qualifications, and cost negotiations with the preferred consultant are still in progress. For both bids, preliminary review is ongoing and a bid award memo will be brought to Town Council on August 1, 2023; however, initial analysis of the bids suggests that the construction costs for the project will exceed the total project cost presented in the January 17, 2023 report. DISCUSSION: Table 1 compares the costs presented in January 2023 with the updated costs. At this time staff believes the May 2023 costs accurately represent the Project. Table 1. Los Gatos Creek Trail to Highway 9 Trailhead Connector Project Construction Phase Services Cost Comparison The construction costs were significantly higher than expected as noted above. Staff reviewed the construction bids with the design engineering team and found that the overages are not attributed to any one specific line item, but rather than a number of items are proposed at higher costs than anticipated. Examples of this include traffic control, mobilization, handrailing systems, and structural concrete. The overages are the result of higher than expected inflation, Item Costs per 1/17/2023 Council Memo Updated Costs - May 2023 Increase Construction 4,361,984$ 6,529,396$ $ 2,167,412 Construction Contingency (10 percent) $ 436,198 652,940$ $ 216,742 Construction Management (CM) Consultant CM/RE/Inspection, Testing and Monitoring 775,926$ 1,250,000$ $ 474,074 Town Project Management 150,000$ 127,000$ $ (23,000.00) Construction Support Services from Design Engineer -$ 206,371$ $ 206,371 Other Project Delivery Costs 5,000$ 50,000$ $ 45,000 Total Costs 5,729,108$ 8,815,707$ $ 3,086,599 PAGE 3 OF 6 SUBJECT: Approve a Funding Plan for Construction of the Los Gatos Creek Trail to Highway 9 Project (CIP No. 832-4505) DATE: May 26, 2023 DISCUSSION (continued): the relatively small size of the Project compared to other transportation projects, the complexity of the work area adjacent to Route 9 and the existing trail, and worker shortages in the construction trades. Follow up conversations with staff at Valley Transportation Agency (VTA) confirmed that many transportation-related projects are seeing similar cost increases. Throughout the Project development, staff had been seeking grants and working to secure project funding. Following the bid opening, staff evaluated the existing funding and attempted to identify additional potential sources. Table 2 shows the funding sources presented in January in comparison to funding that has been identified to meet the updated total project cost. Table 2. Los Gatos Creek Trail to Highway 9 Trailhead Connector Project Funding Comparison One Bay Area Grant Cycle II (OBAG II) – In mid-April, VTA sent a message to all Santa Clara County jurisdictions that an OBAG II funded project in another jurisdiction had been cancelled. VTA asked for other potential projects that might use the funding. Staff notified VTA of the construction funding shortfall for the Project. VTA reviewed the Project with the Metropolitan Transportation Commission (MTC) and offered the Town additional OGAB II funding of $2,842,000 to support the Project. The Town had executed a Master Agreement with the California Department of Transportation (CalTrans) for OBAG II funding in 2019 (Attachment 1). A Supplemental Agreement (Attachment 2) was executed in February 2023 to accept $3,351,000 for construction. Staff is working with CalTrans to develop and execute a second supplement to for the additional $2,842,000, which is expected to follow the same form as shown in Attachment 2. The new supplement is expected to be available for signing in July 2023. Staff is seeking authorization for the Town Manager to execute the supplement now to allow the grant funds to be recognized before the construction award is considered by the Council on August 1, 2023. Sources per 1/17/2023 Council Memo Updated Sources - May 2023 OBAG Cycle II Grant - CMAQ 3,351,000$ 6,193,000$ GFAR 995,377$ 1,160,387$ Measure B (2016 Program Bicycle and Pedestrian Program)693,500$ 693,500$ TFCA 755,921$ 755,921$ TDA3 -$ 68,884$ Total Budget 5,795,798$ 8,871,692$ PAGE 4 OF 6 SUBJECT: Approve a Funding Plan for Construction of the Los Gatos Creek Trail to Highway 9 Project (CIP No. 832-4505) DATE: May 26, 2023 DISCUSSION (continued): General Fund Appropriated Reserve (GFAR) – With the cancellation of the Winchester Boulevard Complete Street project, staff has requested that $169,000 of GFAR be transferred to this Project. This is the amount needed to balance the project budget after all other sources were evaluated. A separate Council agenda item addresses this request. Measure B: The Project was awarded Measure B funds and the requisite funding agreement was executed in February 2023. Staff considered reallocating a portion of the Winchester Boulevard Complete Streets Measure B funding to the Project, but reallocation of Measure B funding requires an act of the VTA Board of Directors and there was not enough time for that action to occur before construction bids expire on August 4, 2023. Transportation Fund for Clean Air (TFCA): The project has received $755,921 in TFCA funds and the grant agreement has been executed. Transportation and Development Act Article 3 (TDA3): Through the MTC, VTA distributes TDA3 funding to Santa Clara County cities and towns annually. This funding can be used for any bicycle and pedestrian project. Los Gatos has $68,884 of TDA3 available and is proposing to use the funding for the Project. Use of the funding requires a Council resolution and application to MTC as noted in Attachment 3. CONCLUSION: The funding identified can fully fund the Project and staff is seeking approval of this funding plan before returning with the construction and construction inspection award contracts. If this funding plan is not authorized, then it is unlikely the project will move forward to construction at this time. COORDINATION: This memorandum was coordinated with the Finance Department and VTA. FISCAL IMPACT: The fiscal table below reflects the updated costs and budget sources for the construction phase of the project, which will be sufficient to fund the project. PAGE 5 OF 6 SUBJECT: Approve a Funding Plan for Construction of the Los Gatos Creek Trail to Highway 9 Project (CIP No. 832-4505) DATE: May 26, 2023 FISCAL IMPACT (continued): As noted in the staff report, the new OBAG supplement is expected to be available for signing in July 2023. Staff is seeking authorization now for the Town Manager to execute the supplement to allow the grant funds to be recognized before the construction award is considered by the Budget Costs GFAR 1,259,127$ OBAG Cycle II Grant - CMAQ 3,351,000$ OBAG Cycle II Grant - CMAQ 353,000$ Measure B (2016 Program Bicycle and Pedestrian Program)693,500$ TFCA Grant Funds 755,921$ Total Budget 6,412,548$ Potential Additional Funding GFAR (Requested in a Separate Council Agenda Item - Transfer from CIP No. 813-0238)169,000$ TDA3 Grant Funds (Requested with this Staff Report)68,884$ OBAG Cycle II Grant - CMAQ (Requested with this Staff Report)2,842,000$ Total 3,079,884$ Total with Potential Budget 9,492,432$ Design Phase Consultant Services - Mott MacDonald 576,747$ Part-Time Staff Cost 99,297$ Other Project Delivery Costs 490$ Design Total 676,534$ Construction Phase Construction 6,529,396$ Construction Contingency (10%)652,940$ Consultant CM/RE/Inspection, Testing, and Monitoring 1,250,000$ Town Project Management 127,000$ Construction Support Services from Design Engineer 206,371$ Other Project Delivery Costs 50,000$ Construction Totals 8,815,707$ Total Project Expenditures 9,492,241$ Remaining Budget $191 Los Gatos Creek Trail to Highway 9 Trailhead Connector CIP No. 832-4505 Construction Management PAGE 6 OF 6 SUBJECT: Approve a Funding Plan for Construction of the Los Gatos Creek Trail to Highway 9 Project (CIP No. 832-4505) DATE: May 26, 2023 FISCAL IMPACT (continued): Council on August 1, 2023. For the TDA3 grant, the use of the funding requires a Council resolution and application to MTC, which staff has attached for authorization. Approval of this funding plan would allow staff to return to Council in August with the construction and construction inspection award contracts. ENVIRONMENTAL ASSESSMENT: CalTrans opted to be the lead agency for the California Environmental Quality Act (CEQA) and National Environmental Policy Act (NEPA). This project is Categorically Exempt per Section 15301, PRC 21084; 14 CCR 15300. Attachments: 1. Master Grant Agreement for One Bay Area Grant Cycle II 2. Supplement 1 to OBAG II Agreement 3. Resolution and Grant Application for TDA3 Funding