December 2, 2003

SUBJECT: Award of Bid #F0307-06 for a Golf Cart Storage Building at the Sunnyvale Golf Course and Approval of Budget Modification No. 18 

REPORT IN BRIEF

Approval is requested for the award of a contract to R.C. Benson and Sons, Inc., of Mountain View for construction of the Golf Cart Storage Building Project (Project #PR-01/06-03) for the Department of Public Works Project Administration Division.  Approval is also requested for Budget Modification No. 18 for additional funding for this project. 

BACKGROUND

The present fleet of gas-powered golf carts at the Sunnyvale Golf Course was leased in February 2000.  As of June 2000, gasoline-powered carts can no longer be purchased or leased due to environmental concerns.  The present fleet is coming to the end of a life expectancy of three to five years.  The conversion of the leased fleet from gasoline to electric-powered carts will require a facility where they can be recharged on a regular basis; and the City has delayed delivery of electric carts under a pending lease agreement until this recharging facility can be constructed.

The Golf Cart Storage Building Project will enable continued golf cart rentals at Sunnyvale Golf Course. Typically, seniors and golfers with disabilities are the most frequent golf cart customers; and the fees from golf cart rentals combined with green fees are a significant source of revenue for the City.  Profits from these golf services offset costs for recreational activities for youths, seniors, and disabled and economically-challenged citizens and help reduce costs to the General Fund. 

This project will provide a recharging facility for eighty electric carts in a pre-engineered metal building.  The building will provide space for minor maintenance of the carts, and a cart washing facility will be constructed exterior to the building.  The cart wash is also a pre-engineered package that allows the wash water to be filtered and recycled. 

The project includes the placement of concrete for foundation and floors as well as site concrete for the cart wash grid and wash-water recovery facility.  The contractor will erect a metal building with metal fabrications for the electrical distribution and mounting of charging stations above the cart stalls.  The structure will have roll-up metal doors, louvers and vents.  Site work will also include site clearing and grading, asphalt concrete paving, and the installation of a new 600 amp electrical service from an existing PG&E transformer near the existing clubhouse to the new facility. 

DISCUSSION

Bid specifications were prepared by Public Works and Purchasing staff.  The Notice Inviting Bids was published in The Sun on July 30, 2003; and the bid package was distributed to the Bay Area Builders Exchanges and broadcast to potential contractors through the Demand Star by Onvia procurement network.  Sixteen contractors requested bid documents.  Sealed bids were received and publicly opened on August 20, 2003.  Seven bids were received.

Staff has reviewed the bids in comparison to the engineer's estimate as well as checked references of the low bidders. 

The initial budget for the Golf Cart Storage Building Project was developed by extrapolating cost estimates for typical prefabricated metal buildings.  Limited information was available regarding actual costs to construct electric golf cart storage and maintenance facilities, and the cost data was related to private rather than public construction.  Since that time, staff has researched cost information with other cities that are in the process of implementing similar electrical golf cart facility projects.

The City of Sacramento developed detailed cost estimates for construction of a new electrical golf cart facility at its Haggan Oaks Municipal Golf Course.  The City of Sacramento's cost estimate, which was based on using a prefabricated metal building, included total project costs of approximately $70 per square foot.  This cost is consistent with bid pricing for the new Sunnyvale Golf Cart Storage Building facility. 

Staff also contacted the City of Mountain View where they are currently designing upgrades to their Municipal Golf Course facilities, including a golf cart storage and maintenance facility.  They do not yet have detailed cost estimates, but their consultant has indicated that square footage costs for the golf cart portion of the facility could range from $100 to $200 per square foot.  The higher square footage costs identified for the Mountain View project are likely attributable to the difference between standard building construction and the use of a prefabricated building and to increased costs for architectural enhancements.

Staff believes the bids received by the City of Sunnyvale are consistent with typical costs for electrical golf cart facilities.

The time necessary to evaluate the project costs extended the normal time of sixty days for bid evaluation.  The low bidder was not amenable to extending its bid; and it is recommended that a contract be awarded to the second low bidder, R. C. Benson and Sons, Inc., who will extend its bid pricing. 

In light of the higher than originally anticipated project costs and the City’s current budget considerations, staff evaluated two alternative scenarios in addition to the proposed construction project (Scenario 1).   The three scenarios are detailed below:

Scenario 1.  Award current project

Scenario 1 would construct the new facility this fiscal year, and the City would have a new and more attractive golf cart fleet available for our golf customers.  The total funds required to complete this project are as follows:

Construction Cost (R.C. Benson & Sons, Inc.)	$469,486
Project Contingency	70,423
Consultant Fee	15,000
PG&E Install Cost	35,000
Total Project Cost	$589,909

The new golf carts would encourage continued use of the golf course by the golfing community.  Golf course revenues, including cart fees, are a significant source of revenue to the Community Recreation Fund and help decrease General Fund transfers for the costs of other recreational programs that serve seniors, youths, economically challenged citizens, and the disabled community. 

This scenario would allow the City to maintain the 20-year revenue projections for greens and golf cart fees currently recommended for the FY 2004/2005 budget.  FY 2004/2005 greens fees are estimated at $2.5 million, and the net operating profit from golf cart rentals is estimated at $226,650.

Scenario 2.  Defer funding of the project until July 1, 2006. 

This scenario would provide for bidding and award of the contract by October 1, 2006, with construction complete by April 2007.    The estimated total project cost under this scenario would increase by $60,000 to $649,909.

Staff anticipates an estimated design cost increase of $60,000 for repackaging the construction contract documents.  This rework would be necessary because building and construction codes and standards can change significantly over a three-year period.  It is anticipated that the current construction documents may have to be completely revised in 2006.

Staff has analyzed the potential impacts to related revenues and expenses under this scenario.  By delaying construction for three years, staff estimates the net impact to the City will be  $340,946 in lost revenues with an increase in golf cart maintenance expenses. 

The loss of revenue is due to an anticipated 2% drop in overall demand as the existing fleet would make the City’s golf course less attractive to golfers who would prefer to play at competitor courses. Furthermore, in order to keep the remaining customer base, staff recommends reducing the greens fee increases by 50% during the next three years prior to delivery of the new electric fleet. The current recommended fee increases were developed in anticipation of a new cart fleet.  Golfers are more accepting of fee increases when they see a direct connection to improvements and investments in the golf course facilities.

Continued rental of the existing, aged fleet of gasoline-powered carts would result in a need to replace tires, rebuild some engine/transmission units and replace body components.  Such repairs and renovations were not needed in past years as the fleet was replaced on a three-year cycle; and the City did not need to buy tires, engines, etc. 

Additionally, delays in moving from the aged gasoline-powered fleet to a clean electric-powered fleet would result in some adverse impacts to air quality.  The genesis of the proposed project was to comply with state laws that require new golf cart fleets to be clean-air vehicles with intended improved air quality.  However, the City can continue to operate the existing fleet without violating state law.   

Scenario 3.  Eliminate golf cart rentals.

Staff believes this scenario would be unpopular with most golfers. If the City did not have golf cart rentals, there would be no need for a cart charging and storage building and the related operating expenses. However, staff anticipates a significant drop in demand and loss of revenue if golf carts are eliminated.  Staff estimates the annual loss of greens fees and golf cart rental revenue to be in excess of $690,000 while the annual savings from golf cart maintenance and operations is estimated at $106,014.   The net loss over a three-year period from FY 2004/2005 to FY 2006/2007 is estimated at over $2.2 million.

The significant drop in demand is primarily due to the nature of the cart rental customer base.  The senior golf customer is, by far, the City's most frequent customer for cart rental; and in many cases, these customers would be unable to play golf without a golf cart.  Disabled golfers and tournament players also look to the carts to enable their activities.  Some 14,000 carts are rented each year for 28,000 golfers. Though difficult to quantify, staff anticipates that approximately 20% of existing golf course customers would play at alternate courses if carts were unavailable for rental. 

Tournament players also would be negatively impacted as many tournaments combine walking and riding players. Tournaments would likely choose competitor courses where carts are available for those who need to ride rather than walk the course. This would mean a corresponding loss in golf customers if tournaments move elsewhere.

The following table summarizes the project costs and impacts on revenue and operating expenses for the three scenarios presented above.  Detailed analysis of each scenario is included in Attachment A.

A determination was made that this project will have no significant effect on the environment in accordance with CEQA guidelines for Section 15303 Class 3 exemptions.

FISCAL IMPACT

Staff requests Council authorize Budget Modification No. 18 to appropriate $246,907 from General Fund Non-Recurring Events to fund the project as outlined in Scenario 1 discussed above.  This Budget Modification will increase the total appropriation for the Golf Cart Storage Building project to $589,909.

ALTERNATIVES

1.         Approve Scenario 1 as described in this report.  Award a contract, in substantially the same form as the attached draft and in the amount of $469,486, to R.C. Benson and Sons, Inc., for the Golf Cart Storage Building Project and approve Budget Modification No. 18 as described in this report.

2.         Approve Scenario 2 and defer the construction to July 1, 2006.

3.         Approve Scenario 3 and eliminate golf cart rentals.

4.         Other Council directed actions.

RECOMMENDATION

Staff recommends Alternative 1: 

·         Award a contract in substantially the same form as the attached draft and in the amount of $469,486 to R.C. Benson and Sons, Inc., for construction of the Golf Cart Storage Building Project;

·         Approve Budget Modification No. 18 as described in this report; and

·         Approve a project contingency in the amount of $70,423.

Prepared by:

Elaine Wesely
Purchasing Officer

Reviewed by:

Mary J. Bradley
Director, Finance

Reviewed by:

Marvin Rose
Director, Public Works

Approved by:

Robert S. LaSala
City Manager

Attachments

A.     Estimated Revenue and Operating Cost Comparison (.pdf format)

B.      Draft General Construction Contract