7.6 Discontinue CMAR Agreement for Salina Field HouseA k W991 M -Ma 4 10 .
REQUEST FOR CITY COMMISSION ACTION DATE TIME
02/22/16 4:00 P.M.
AGENDA SECTION ORIGINATING DEPARTMENT: FISCAL APPROVAL:
NO: 7
PARKS & RECREATION
ITEM 6 FINAL APPROVAL:
NO:
Page 1 BY: Steve Hardesty BY:
ITEM: Resolution No. 16-7324
Consider a resolution discontinuing the City of Salina's utilization of the construction manager at risk ("CMAR")
delivery method for the downtown field house project and, therefore, terminating the Construction Manager At Risk
Agreement ("CMAR Agreement") with McCown Gordon Construction, L.L.C. ("McCown").
BACKGROUND:
On September 14, 2015, the City Commission approved a CMAR Agreement with McCown, under which the City
retained McCown to provide construction manager at risk services to construct the field house project. The CMAR
project delivery method is distinct from the traditional design/bid/build approach in that the CMAR contractor works
with the City, owner's representative and the architect from the beginning to assist with the design, cost estimates,
and feasibility. Once the scope of work has been determined and the design is nearing completion, the CMAR
contractor provides the City with a guaranteed maximum price ("GMP") to construct the project. The GMP is legally
established by the parties' execution of a "GMP Amendment," which is a written amendment to the CMAR
Agreement establishing the final scope of work, the GMP amount, and the construction schedule and completion
date. If the total cost to complete the agreed scope of work is ultimately more than the GMP amount, the CMAR
contractor is responsible for the cost overrun. Any cost savings are retained by the City. During the construction
phase, the CMAR contractor's role is essentially that of a general contractor.
The CMAR Agreement distinguishes between and contains different contractual provisions for two distinct phases of
the overall construction project: (1) the preconstruction phase, and (2) the construction phase. The preconstruction
phase ends, and the construction phase begins, when a GMP Amendment is executed by the parties. The field
house project is still in the preconstruction phase.
During the preconstruction phase, the City may voluntarily terminate the CMAR Agreement, without cause, upon
seven days' written notice. Upon the City's voluntary termination, the CMAR Agreement states that McCown is
entitled to be equitably compensated for its preconstruction phase services performed prior to the date of
termination, in an amount not to exceed the agreed total preconstruction phase fee of $25,000, which was to be
earned over a period of five months. Because McCown provided preconstruction phase services from September
14, 2015 through February 14, 2016, McCown has already earned the entire $25,000 preconstruction phase fee.
McCown would be paid additional fees on a pro -rated basis beyond February 14, 2016 at a rate of $5,000 per month.
If the City Commission elects to discontinue the CMAR delivery method for the field house project and terminate the
CMAR Agreement with McCown, the project could then be delivered by the traditional design/bid/build approach,
with SFS Architecture and Frew Development Group providing the services necessary for that delivery method, in
conjunction with a contractor to be selected through a sealed competitive bid process. All contractors and
subcontractors would be pre -qualified during this process.
FISCAL NOTE:
As discussed above, the CMAR Agreement obligated the City to pay McCown $25,000 for preconstruction phase
services over a period of five months, which has already been earned by McCown. The City has received funds from
the private donor group to cover all the costs for the preconstruction services. Aside from this $25,000 payment
obligation and the pro -rated fees beyond February 14, 2016, no additional compensation will be owed to McCown if
the City terminates the CMAR Agreement.
If the City Commission elects to continue with the CMAR delivery method, then the City Commission will be asked to
separately consider a GMP Amendment in the near future, which will commit the City to paying McCown to construct
the project. Under the GMP Amendment, the City would be obligated to pay McCown for two separate items, the
combined value of which may not exceed the GMP. First, the City would be obligated to pay McCown for the actual
AGENDA SECTION
NO:
ITEM
NO:
Page 2
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
02/22/16 4:00 P.M.
ORIGINATING DEPARTMENT
PARKS & RECREATION
BY: Steve Hardesty
FISCAL APPROVAL:
BY:
FINAL APPROVAL:
BY:
cost of the work, which includes items such as labor costs, subcontractor costs, and costs of materials and
equipment to construct the project. Second, the City would be obligated to pay McCown a construction phase fee
equal to 2.75% of the total cost of construction.
CONFORMANCE WITH STRATEGIC PLAN:
The proposed action could be considered to be in conformance with the following goals and priorities found in the
City of Salina Shared Vision Statement and Strategic Plan:
Our mission is to be a leader among Kansas city's by leveraging partnerships and economic opportunity to ensure a
safe, progressive, and healthy community that respects its natural resources, offers excellent municipal services, and
provides a high quality of life for its citizens.
Salina will be a city that is exciting to live in and thriving both economically and socially. The city will be clean,
attractive, and inviting. Local residents will demonstrate their community pride by sharing Salina's attributes with
others. As a result, Salina will be a place with a quality of life that not only appeals to residents, but also to visitors.
The city of Salina will be attractive and well maintained both within the city and along the adjacent interstate
highways. It will be evident that good housekeeping and high community standards are valued. Salina will be
environmentally conscious, balancing the expectations of a growing community with the necessity to preserve
nature's assets and our future quality of life.
The city of Salina will have master planned its assets in the Kenwood/Oakdale Park area west to the downtown
business district in order to utilize them to their fullest potential. This will include the development of a uniformly
managed, core destination complex for both residents and visitors. This complex will be surrounded by high quality,
mixed-use development with an evident connection to downtown that complements existing commercial and
residential assets.
Downtown Salina will be a thriving and vibrant place. It will include an artistic flair that complements diverse and
successful business development, including: entertainment, professional services, restaurants, and retail
development. In addition, the downtown will include residential uses and places to congregate consistent with the
desired, mixed-use activity.
RECOMMENDED ACTION:
City staff has identified the following options for consideration. If the desired outcome of the process is to produce
the highest probability for a competitive bid situation, Option 1 should be chosen. If the desired outcome is to protect
the probability of change orders with a guaranteed maximum price (GMP), then option 2 should be chosen.
1. Approve Resolution No. 16-7324, discontinuing the City's utilization of the CMAR project delivery method for
the field house project and, therefore, terminating the CMAR Agreement with McCown.
2. Do not approve Resolution No. 16-7324, continue to utilize the CMAR project delivery method for the field
house project, and retain McCown as the CMAR.
Task staff with additional research and reporting to be considered by the City Commission prior to taking
further action on this matter.
CITY OF SALINA
REQUEST FOR CITY COMMISSION ACTION DATE TIME
02/22/16 4:00 P.M.
AGENDA SECTION
ORIGINATING DEPARTMENT:
FISCAL APPROVAL:
NO:
BY.
PARKS & RECREATION
ITEM
FINAL APPROVAL.-
PPROVAL:NO:Page
NO.-
Page3
BY: Steve Hardesty
BY:
RESOLUTION NUMBER 16-7324
A RESOLUTION DISCONTINUING THE CITY OF SALINA'S UTILIZATION OF
THE CONSTRUCTION MANAGER AT RISK PROJECT DELIVERY METHOD FOR THE
DOWNTOWN FIELD HOUSE PROJECT AND, THEREFORE, TERMINATING THE
CONSTRUCTION MANAGER AT RISK AGREEMENT WITH MCCOWN GORDON
CONSTRUCTION, L.L.C.
WHEREAS, by Resolution No. 15-7275, dated September 14, 2015, the Governing Body
approved a Construction Manager at Risk Agreement ("CHAR Agreement") with McCown Gordon
Construction, L.L.C. ("McCown"), setting forth the terms and conditions related to McCown's
proposed construction of the downtown field house project via the construction manager at risk
project delivery method;
WHEREAS, the Governing Body has determined it to be in the public interest to discontinue
the City of Salina's utilization of the construction manager at risk project delivery method for the
field house project, and therefore, deems it appropriate to terminate the CMAR Agreement; and
WHEREAS, the CMAR Agreement authorizes the City to terminate the CMAR Agreement,
without cause, upon seven (7) days' written notice to McCown.
SO NOW, THEREFORE, BE IT RESOLVED by the Governing Body of the City of Salina,
Kansas:
Section 1. The City Manager is authorized and directed to deliver written notice to McCown
that the City will discontinue its utilization of the construction manager at risk delivery method for
the downtown field house project and, therefore, is terminating the CMAR Agreement.
Section 2. That this resolution shall be in full force and effect from and after its adoption.
Adopted by the Board of Commissioners and signed by the Mayor this 22nd day of February,
2016.
Jon R. Blanchard, Mayor
(SEAL)
ATTEST:
Shandi Wicks, CMC, City Clerk