TO: Mayor and Members of City Council
THRU: Douglas J. Hewett, ICMA-CM, City Manager
FROM: Kristoff Bauer, Deputy City Manager
DATE: March 19, 2018
RE:
Title
Stadium Construction Manager At Risk (“CM@R”) Contract With Barton Malow Fourth Amendment, Capital Project Ordinance Amendment 2018-50
end
COUNCIL DISTRICT(S):
Council District(s)
All
b
Relationship To Strategic Plan:
Goal 4: Desirable Place to Live, Work and Recreate
Executive Summary:
The final GMP amendment will be provided to the Baseball Committee for consideration at 5:00 pm on Monday, March 19th for recommendation to Council. The Council will be asked to act on the Committee’s recommendation during the Regular Meeting that follows.
Background:
The Council has taken several steps along the path of constructing a minor league baseball stadium and entertainment venue including:
• The approval of a financing plan for stadium construction,
• The execution of a thirty year operating agreement with the Astros,
• The Initiation of project design after selecting and contracting with the project architect,
• The adoption of capital project ordinance to support construction
• The execution of a CM@R contract with Barton Malow, and
• The execution of a Downtown Development Agreement with PCH.
The Astros agreement requires the stadium to be completed in advance of the 2019 baseball season which starts on April 4, 2019.
Baseball in Fayetteville
In June 2016, the Council reviewed a Minor League Baseball Feasibility Study (excerpt attached). The study concluded that Fayetteville would likely be an attractive market for a minor league team. The City received an inquiry from the Huston Astros regarding locating their Single A+ affiliate team in Fayetteville shortly thereafter. The Study also estimated the construction cost of a stadium on the current site at just under $47 million.
The Study went on to estimate that the economic impact of just the stadium alone would be:
Construction:
149 Jobs
$.5 million in taxes
$6.5 million in labor income
$20 million in local economic output
Stadium Operation (Annually):
91 Jobs
$.365 million in taxes
$1.7 million in labor income
$7.2 million in economic output
It also suggested that the stadium could provide the following economic benefits:
• Catalyst for economic development (attract/retain businesses)
• Ancillary redevelopment opportunities
• National (and potentially international) exposure
• Civic/community pride and identity
• Prestige associated with facility/teams/events
• Improved quality of life/additional entertainment alternatives
• Contributions and donations to local charities/causes
• Marketing/advertising opportunities for local (and national) businesses
This analysis was based on analysis of what had occurred in other markets similar to Fayetteville.
At the time this Study was completed, the City already had a Memorandum of Understanding in place with Prince Charles Holdings, LLC, (“PCH”) to explore the redevelopment of the historic Prince Charles Hotel and bring in a new hotel and mixed use development in the downtown, but that project had been hampered by changes in state tax credit legislation and sluggish economic activity. PCH also owned land that would be needed in order to construct the stadium at the preferred location.
Unlike most cities that have to wait and hope for “ancillary redevelopment opportunities,” the PCH partnership allowed the City to secure over $65 million in private investment to be completed as the stadium is constructed. This was secured through past Council actions in approving the Downtown Development Agreement with PCH. The total revised economic impact is discussed below:
Robert Van Goens, Fayetteville-Cumberland Economic Development Corp. President:
Construction of the Ball Park, Hotel, Office building, Parking Deck and Prince Charles Renovation:
Represents more than $100,500,000 of investment in Fayetteville and will directly support more the equivalent of 1,086 full time jobs during the construction, projected to provide more than $50 million in wages and benefits to the workers.
Once complete, operations of the Ball Park, hotel, retail, and office buildings are projected to bring more than 580 full time jobs to our downtown, with estimated annual wages exceeding $16 million.
The projected 150 - 200 part time jobs during home games and events will add more than $500,000 in local wages annually.
In a recent survey 75% of Corporate Executives ranked "Quality of Life" as a top consideration when evaluating communities for a new location (Area Development Magazine)
A 2013 Study of projects in communities of our size have shown a direct connection to increased property values, between 6-8%.
Investment in a City's core, demonstration of successful public private partnerships, and our ties to a successful major league team catapults and redefines our marketing message when reaching out to companies, site selectors and corporate decision makers.
A vibrant downtown is viewed as a direct corollary to a community's economic and cultural health by companies and recruited talent.
John Meroski, Fayetteville Area Convention and Visitors Bureau President:
Property values around the Greenville Drive stadium have increased in value 30%.
Minor League ball is a regional draw, or day trippers, they will tend to spend $30 pre or after event.
Any tournament that we put in the stadium, economic impact is derived with the formula of attendance x nights x $120.
20-30 rooms for teams traveling and fans or boosters for attached hotel.
Assists CVB in getting people to possibly extend their trip.
GMP Process
The initial scope of work authorize in Barton Malow’s contract is for the “pre-construction” phase of the project. This focuses on cost estimation, managing the schedule, subcontractor outreach, and bidding. Information developed during the “pre-construction” process typically culminates in the development and adoption of a GMP Amendment.
In this case, the design and bid work has been divided into two phases with the site work and concrete planned for the first phase in order to get construction started consisted with the desired schedule. Unfortunately, when the first bid package was issued, two significant work items did not received desired “coverage:” that is three bids were not received for either the concrete or site work packages. Bids were not opened and the package was re-advertised.
At the second bid opening, three bids were received for concrete, but only one for site work. Bids were opened. While steel and other areas came in below estimate, both of these areas, concrete and site work, came in significantly over estimate.
The bidding process and outcome was reviewed with the Council’s Baseball Subcommittee on November 13, 2017. Due to schedule constraints, the Committee agreed to move forward with all bid work with the exception of concrete as an initial work authorization. The design team was challenged with finding additional opportunities to reduce the cost of the concrete scope. The Council approved GMP amendment one on November 27, 2017.
Shortly thereafter, a local contractor provided a lower bid on the site work package and was awarded the contract. In addition, the fencing package was acquired through direct purchase by Barton Malow from a local fencing contractor.
Council approved GMP amendment 2 January 22, 2018, authorizing the award of the concrete work initially planned for the first phase of construction.
The remaining bid packages, were put out to bid in December and January, were received in February. Barton Malow reviewed each submittal looking for errors in submissions and clarifying scope. A number of bid packages did not receive sufficient bids and had to be rebid. The final GMP was scheduled to be considered by Council on March 7, but delays in the bidding process resulted in the need for another interim step.
The Council authorize GMP amendment 3 on March 7, but it only authorized the initial shop drawing and other mobilization work for the primary trade subcontractors. This was necessary to keep the project on schedule for an on-time completion, but did not represent the total GMP.
Issues/Analysis:
Astros Contract & Design Approval: The 30 year operating agreement with the Astros obligates the City to fund and construct a stadium that will be operational by April 4, 2019. Liquidated damages for failing to do so are $1,000 per day and $50,000 per home game not played in the stadium. Failing to execute the final GMP and provide needed funding at all would breach that contract. Failing to do so on March 19 could delay the project potentially subjecting the City to liquidated damages.
The agreement with the Astros also includes a series of specific minimum characteristics that must be included in the final stadium. Representatives of the Astros have been closely involved in the design process and in the several “value engineering” efforts that have been undertaken in attempts to keep the stadium total cost within the budget established by Council. It is critical that the Astros sign off on the final design scope included as the basis of the proposed final GMP.
Local SDBE Target: The Council has set a target of achieving 40% local and/or SDBE participation in the value of the construction contract.
Stadium Financing (Bond Sale): The cost of constructing the stadium and the parking garage will be financed over 20 years through the sale of Limited Obligation Bonds (“LOB’s”). This process has several steps and the final financing cost, i.e. interest rate, will depend in part on the outcome of those steps. Attached is a calendar of these steps. The Council will hold a public hearing and vote on whether to issue the LOB’s. During those processes, the Local Government Commission (“LGC”) will be considering the City’s application to issue the debt and the S&P rating agency will be reviewing and rating the City’s credit worthiness. Both the LGC and S&P will consider the Council’s discussion regarding the projects being financed and the level of political support for those projects.
DDA Requirements: The primary commitment made by the City in exchange for the $65 million in private investment and other exchanges included in the DDA with PCH is the funding and constructing of the stadium and entertainment venue. The closing of the sale of the Festival Park Plaza is ready to close as soon as the final GMP is executed. Failure to do so would violate the terms of the DDA releasing PCH from its commitments.
Documents to be provided on March 19, 2018:
• Final GMP amendment and scope
• Proposed CPOA 2018-50
• Local SDBA Report
• Budget Summary
• Astros Design Acceptance
Budget Impact:
The Current Council appropriation is $33 million for the stadium project. That funding must support the following categories of cost:
• Construction
• Owners Preference Items
• Design
• Inspections, Permits, and Project Management
• Debt Issuance Cost
Through already approved GMP amendments a total of $11,824,061 in construction costs have been authorized. Construction costs are putting pressure on the budget and debt issuance costs will also need to be included in the final appropriation.
Options:
- Authorize the City Manager to execute the amendment to the Barton Malow contract substantially in the form attached and approve CPOA 2018-50.
- Delay action and request additional information or otherwise provide direction to staff (this will delay the construction and create significant schedule uncertainty).
Recommended Action:
Staff recommends that Council authorize the City Manager to execute the fourth Guaranteed Maximum Price amendment with Barton Malow substantially in the form attached and approve CPOA 2018-50.
Attachments:
Baseball Feasibility Study Excerpt
Limited Obligation Bond Issuance Schedule
To be provided on March 19:
• Final GMP amendment and scope
• Proposed CPOA 2018-50
• Local SDBA Report
• Budget Summary
• Astros Design Acceptance