Staff is presenting Change Order #3 for the Empire Parking Garage.  The original contract was for a guaranteed maximum price of $11,500,000.  Change Orders #1 and #2 for $770,000 were approved in January, 2013.  Change Order #3 is due to delays that the City encountered with selling the Tax Increment bonds that are financing the project, for unanticipated conditions encountered during demolition and for extra architectural work and costs.  

The City authorized the contractor to spend or obligate up to $1.8 million prior to March 1, anticipating that it would be able to sell bonds ine early to mid-February.  Instead, the City sold the bonds on March 22 and couldn't access the money until after April 1.  The City would not allow Sletten to demolish the Northern Hotel parking garage until bonds sold and that delayed all other facets of the project.  The City is responsible for the costs that the contractor incurred from the delay such as demobilization, remobilization and delayed project completion.  The cost attributed to this part of the change order is $150,653.14.

The Windsor Court building had two sets of foundation walls and only one of them was visible until the contractor removed the building and courtyard.  A portion of the Empire Bar foundation was left on-site and had to be removed.  There were large concrete vaults under sidewalks at both sites that weren't detected until the buildings and foundations were removed.   The additional demolition work is valued at $51,151.96. 

The Sletten contract is design-build and most of the pre-design was completed before Sletten was awarded the contract.  After contract award, City staff and other stakeholders desired some design changes that affect the garage's appearance and function.  That additional work needs to be compensated and this part of the change order costs $32,630.  Since this is a design-build contract, payments are based on actual expenses with a general contractor markup.  That means that the City would have paid exactly the same demolition and design costs if they had been identified and included in the original contract and guaranteed maximum price.     

There are no viable alternatives to approving the Change Order.

The change order for $234,435.10 is funded from the project contingency.  Additional large change orders are unlikely because as the building progresses, there are fewer unknown or unanticipated factors in the construction. 

City staff recommends that the City Council approve Change Order #3 for the Empire Parking Garage project in the amount of $234,435.10.