Adopt Resolution #15-03-075 Approving Change Order #2 and Partial Payment to Kuechle Underground, Inc. for Riverdale Drive Reconstruction and Extension - Armstrong Boulevard to Traprock Street, Improvement Project #12-22

Purpose:
The purpose of this case is to approve Change Order #2 and Partial Payment Estimate #4 to Kuechle Underground, Inc. for Riverdale Drive Reconstruction and Extension - Armstrong Boulevard to Traprock Street, Improvement Project #12-22.

Background:
Project Background
City Improvement Project #12-22 includes the reconstruction of Armstrong Boulevard between Highway 10 and Riverdale Drive, the reconstruction of Riverdale Drive between Armstrong Boulevard and the cul-de-sac east of Alpaca Street, and the extension of Riverdale Drive east to Traprock Street.  Riverdale Drive is being constructed with concrete curb and gutter, bituminous pavement, and storm sewer throughout.  Watermain was also constructed throughout to provide water service to adjacent parcels and to allow for a future connection to Ramsey Boulevard/Riverdale Drive.  Sanitary sewer was also extended to the end of the reconstructed portion of Riverdale Drive, east of Alpaca Street, to provide sanitary sewer service to adjacent parcels and to provide for a future sewer connection to the large undeveloped parcels to the east, although gravity sewer cannot be extended further east due to minimal ground cover so a sanitary sewer lift station will be required to serve the undeveloped parcels to the east.  Bituminous trails are also being constructed along both sides of Riverdale Drive.  A 10’ bituminous trail is being constructed as part of this project within City right-of-way north of Riverdale Drive.  This project also includes grading and pedestrian curb ramps to allow a future 10’ bituminous trail to be constructed within the right-of-way south of Riverdale Drive.  This trail, which will be part of the Mississippi River Trail system, will be constructed immediately following completion of the Riverdale Drive project as recently approved by Council.
 
This project also includes the removal of the Alpaca Street connection to eastbound Highway 10, as well as construction of a modified three-quarter access to Highway 10 at Traprock Street, replacing the current full access connection. These access changes will increase safety for motorists on Highway 10 and are a large reason why MnDOT awarded the city $702,000 in Cooperative Agreement funding for this project, along with the promotion of a south frontage road to Highway10 which will remove local traffic from Highway 10. Ultimately, Riverdale Drive will serve as the south frontage road to Highway 10 between Armstrong Boulevard and Ramsey Boulevard.
 
On July 22, 2014 the City awarded a construction contract to Kuechle Underground, Inc. in the amount of $2,649,722.45.  The engineer’s construction cost estimate was $2,990,700.00 based on the construction plans prepared by City staff with assistance from Hakanson Anderson.
 
Construction on this project began in August of 2014.  During construction it was discovered that the common excavation plan quantity was roughly 46% less than what was required, that multiple work items identified in the plans did not have associated pay items, and that several pay items related to the adopted Memorandum of Understanding needed to be added to the project or needed to be significantly reduced or increased in the case of existing pay items.  The resulting change order items are discussed in detail below and can be categorized under the following three categories; Common Excavation Over-run, Added Pay Items, and Memorandum of Understanding Related Pay Items.  In aggregate, these items form the basis for Change Order #2 which is attached for reference, and are included in the attached partial payment request.
 
Common Excavation Over-run
During construction it was discovered that the Common Excavation bid quantity was significantly less than what was needed to complete the project per plan.  And to complicate matters, the common excavation quantity is a Plan Quantity (P) which does not allow for quantity increases at the bid unit price.  The common excavation plan quantity is 52,276 cubic yards, whereas the actual final quantity upon project completion is estimated to be 97,297 cubic yards.  The final estimated quantity was generated using survey data gathered after most of the grading work was completed, together with plan quantity information based on unfinished work to date.  It is therefore estimated that the final common excavation quantity will over-run by 45,021 cubic yards.  The contractor has agreed to complete this work at their unit bid price of $4.49 per cubic yard.
 
The total amount of this category of change order items is $202,144.29.


Added Pay Items
During construction it was discovered that numerous pay items were missing from the plans but were necessary to pay for associated work as directed by the plans.  The list of pay items that need to be added to the project to pay for this completed work include numbers 1 – 4, 5, 6 – 8, 11, 12, 14, 17, 20 – 22, and 24 – 30 as shown in the Change Order #2 section of attached Partial Pay Estimate #4.
 
The total amount of this category of change order items is $100,580.70.
 
Memorandum of Understanding Related Pay Items
On May 13^th, 2013, the City adopted a Memorandum of Understanding with the two Limited Liability Corporations (LLC’s) that own the two large undeveloped parcels south of Riverdale Drive between Alpaca and Traprock Streets.  A copy of the executed MOU is attached for reference.  The MOU addresses numerous conditions and obligations of both the City and the LLC’s as related to this project.  The MOU also provides for required roadway right of way, trail, drainage and utility easements as needed to extend Riverdale Drive through the Outlot A Tooth Acres and Lot 1, Block 1 Diamonds parcels.
 
During construction it was discovered that numerous conditions and requirements outlined within the MOU were never addressed therefore changes needed to be made in the field to allow construction to continue without costly delays. Among the necessary changes were several storm sewer revisions required to meet certain conditions of the MOU to ultimately allow the north end of the Anoka County owned Outlot B Tooth Acres parcel to be filled in for development, denoted as "A" in the attached figure showing the MOU related storm sewer and ponding improvements.  The benefits of this work include the additional taxes that will be generated by returning this 1.5 acre parcel to the tax rolls, providing for cross-access between the two large parcels so upon development traffic will not need to access Riverdale Drive for short trips between the two parcels, and allowing the City to maintain only two regional stormwater ponds in perpetuity rather than three, saving the City significant maintenance costs over time.
 
City staff is working with the LLC’s to execute a cost-share agreement to cover the LLC’s share of all MOU related project costs which total $166,422.70.  Staff is also working with the LLC’s to execute the required permanent drainage and utility easements over the pond on the south end of the Lot 1, Block 1 Diamonds site as required to mitigate the ponding lost due to the extension of Riverdale Drive, and to accommodate the additional required ponding needed due to the extension of Riverdale Drive.  Anoka County will also be party to this easement.
 
Staff continues to work with Anoka County to allow the northerly 1.5 acres at the north end of the Anoka County owned Outlot B Tooth Acres parcel to be transferred by title to the City, after which the City will convey the parcel to the LLC’s per the MOU.
 
The total amount of this category of change order items is $145,927.00.
 
The total cost of Change Order #2 is the sum of these three categories, or $448,651.99.  Attached is a copy of Change Order #2 as prepared by City staff.

Alternatives:
Alternative #1 - Motion to adopt Resolution #15-03-075 approving Change Order #2 and Partial Payment to Kuechle Underground, Inc. for Riverdale Drive Reconstruction and Extension - Armstrong Boulevard to Traprock Street, Improvement Project #12-22.

Alternative #2 - Motion denying adoption of Resolution #15-03-075 at this time.  This action would result in delaying payment to the contractor for work previously completed therefore this alternative is not recommended.

Funding for this project includes a combination of funding sources including:
 

• $702,000 in Cooperative Agreement funds
• $275,000 in TIF 4 funds
• $158,238 in Municipal State Aid (MSA) funds
• $179,824 in Sewer funds (sanitary sewer construction)
• $759,660 in Water funds (watermain construction)
• $350,000 in Stormwater Management funds
• $225,000 in Stormwater Utility funds (storm sewer and ponding construction)

 
No assessments are being levied with this project.  The MOU with the two LLC’s does not allow any assessments to these properties.
 
Staff estimates the final construction cost for this project will be $2,895,377.47 which is $245,655.02 over the awarded contract amount of $2,649,722.45.  However, after the two LLC’s reimburse the City in the amount of $166,422.70 for their MOU related improvements, the final cost over-run for the City is estimated to be $79,232.32 or 3% of the contract amount.  Any cost over-runs are proposed to be funded from State Aid funds.

Motion to approve or deny adoption of Resolution #15-03-075 approving Change Order #2 and Partial Payment to Kuechle Underground, Inc. for Riverdale Drive Reconstruction and Extension - Armstrong Boulevard to Traprock Street, Improvement Project #12-22.