City Code Section 13-500, City Contracts, outlines several requirements and limitations on contracting for equipment, services or facilities.  Section 13-502 (b) limits the City Administrator's authority to execute changes and amendments to contracts.  These limits are that the City Administrator may not execute changes that exceed the lowest dollar amount of 1) 10% of the project cost; 2) $500,000, or; 3) the budgeted contingency.  Section 13-502 (c) provides an exception to those limits.  The section acknowledges that on large and complex public infrastructure projects, many change orders may be required and responding to changing construction conditions promptly can be important for keeping a project on schedule and within its budget.  Under this section, the City Council has the authority to authorize the City Administrator to exceed the limits in 502 (b) on specific projects.  The Empire Parking Garage is one of the large, complex projects that 502 (c) anticipates.  The original design-build contract with Sletten Construction was not to exceed $11,500,000.  The City Administrator approved Change Order #1 for $410,000 and Council approved Change Order #2 for $330,000 in January, 2013.  The City Administrator could not approve Change Order #2 without violating 502 (b).  In those two change orders, only one element of the project was unexpected; $275,000 to line storm and sanitary sewers in the alley.  Public Works reimbursed the project for $170,000 since the improvements also benefited the two utilities, resulting in net contingency usage of $105,000.   Change Order #3 for $234,435.10 was presented to Council on May 13.  This should be the last large change order since all of the demolition work and a lot of the site work is done.  New building costs are more predictable than for the demolition and site work.  However, staff believes that there will be at least one and probably more, relatively small change orders.  In order to permit the City Administrator to exceed the limits in 502 (b), staff is recommending that the City Council approve the attached resolution which establishes a City Administrator Empire Garage Change Order authority of $1,300,000.  This is approximately $302,000 above change orders that have already been approved and it is still within the budgeted project contingency.   

The City Council may approve or disapprove the resolution.  Approving it will allow the City Administrator to execute change orders in order to keep the project on schedule and to remain within the total project budget, including contingency.  Not approving the resolution will force all future change orders to be approved by Council, which may cause project delays and increase costs.

The three project change orders have added almost $973,000 to the Sletten contract, but $470,000 of that expense was anticipated and part of the project budget.  Since Public Works reimbursed the project for $170,000 of sewer work, approximately $333,000 of the project contingency has been used to date.  The project has a remaining contingency of over $361,000 and the resolution extends the City Administrator's authority by about $302,000.  

Staff recommends that the City Council approve the attached Resolution that extends the City Administrator's change order signing authority to $1,300,000 for the Empire Garage project.