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Minutes 02-01-11 MINUTES OF THE SPECIAL COMMUNITY REVELOPMENT AGENCY BOARD MEETING HELD ON TUESDAY, FEBRUARY 1, 2011, AT 6:00 PM IN CITY COMMISSION CHAMBERS, BOYNTON BEACH, FL PRESENT: Jose Rodriguez, Chair Vivian Brooks, Interim Executive Director Marlene Ross, Vice Chair Jim Cherof, Board Attorney Woodrow Hay Steven Holzman William Orlove I. Call to Order – Chairman Jose Rodriguez Chair Rodriguez called the meeting to order at 6:03 p.m. II. Roll Call The Deputy City Clerk called the roll and all Board members were present. III. Kaufman Lynn, Inc. Construction Manager at Risk Presentation Mike Kaufman, Bruce Cavossa, President, andDirector of Operations for Kaufman Lynn were present. Mr. Kaufman reviewed the firm has been in business for 24 years, has a strong financial capability and a good record of accomplishment for quality construction. They constructed over 75 projects; many of them for municipalities. Ten of their projects were constructed for first-time Construction Manager at Risk (CMAR) clients, also comprised of municipalities. They have received positive recognition for the firm’s quality and safety. The local AIA Chapters recognized the firm as a collaborative contractor in the industry. The firm has often been called back to do other projects. Kaufman Lynn has completed 850 projects with 30% of them as interior renovations. They also did many exterior renovations. The construction manager has good cost control practices that are transparent. Monthly billings are manifest billings so payment would not be made on anything that was not constructed. The firm becomes an extension of the staff. Examples of projects having additional cost savings were reviewed. A cultural art center had $400,000 saved which returned to the client. Mr. Kaufman had a listing of projects completed ahead of schedule. Kaufman Lynn provides a dashboard to their 1 Meeting Minutes Special Community Redevelopment Agency Board Boynton Beach, FL February 1, 2011 clients on a monthly basis, which allows staff to understand where the project is at all times from a scheduling and financial perspective. They identify key indicating factors, both trailing and leading, as well as projected and actual cash flows. It allows the Agency to manage the money with the most effective method. As to quality control, they started an in-house program called “Building Better Buildings”, which begins in the preconstruction phase and continues on through to completion. An independent consultant works with the building and sustainability of the details and then moves onto onsite direction regarding the labor to install the product. They wrap up the program with infield testing to ensure the project is suitable for a long life. The process eliminated callbacks for the last four years. Public safety for all involved is the superintendent’s first priority. They have a mod rate of .82, which is an industry-leading rate. It results in about an 18% savings to the City through the cost of Worker’s Compensation insurance. The firm was recognized nationally for its safety and was one of seven firms in the country to be awarded the ABC’s National Safety Award recognition last year. They also employ an independent safety inspector for each job each month to ensure the workers and public are safe. An important aspect of the project involves the use of local contractors. Kaufman Lynn supports their involvement and provided a sample of local contractors that are on current jobs. Each subcontractor was solicited to work on the project and Kaufman Lynn will make it their mission to ensure they have a high percentage of local contractors. Slides of the three projects were viewed. Each site is evaluated independently and the set up for access and other constraints are considered. Before starting the job, they meet with the staff to ascertain their needs. They publish the information to the subcontractors and staff to ensure they are in compliance throughout the project. Kaufman Lynn was confident the projects could be staged properly and have appropriate parking. The schedule is laid out including the duration of the construction of about eight weeks for each project. The three projects can be completed for under $1 million as noted in their estimate. They finished the preconstruction planning and the benefit to selecting Kaufman Lynn was much of the work was already completed; they have the lowest construction prices. They have cost saving ideas implemented already. Mr. Holzman inquired about maximizing local contractors. Mr. Kaufman responded they will bring in the best subcontractors who responded and discuss their scopes in further detail. They will set a goal and meet or exceed it regarding local participation. Approximately 30 subcontractors were solicited for the project. If the Board sets a 15% or 20% participation rate, they can meet or exceed it. He could not identify which subs or qualified respondents from the subcontractor list would be used. The projects were relatively small projects and it opens the field up for local subcontractorss in a big way because they can bring smaller subcontractors in and 15% may be very shy of what they could obtain. 2 Meeting Minutes Special Community Redevelopment Agency Board Boynton Beach, FL February 1, 2011 Mr. Kaufman commented the figures he provided were the guaranteed maximum price, (GMP). If the City wants a different percentage of local contractors involved, they would work with the subcontractors to keep the price within the estimate. If they have to use a subcontractor who was not the most responsive on price and scope, he expected that to be the City’s responsibility. Mr. Kaufman explained what he was presenting was the goal for local participation was 15% at a minimum. They will try to achieve 100% local subcontractors within the GMP. It was clarified if Kaufman Lynn used less or more than 15% local contractors, the price was still the same. As to moving historic structures, Mr. Kaufman responded they have not moved a historic building; but they have completed five National Historic Preservation restorations. Mr. Hay inquired if a contingency budget was included with the project. Mr. Kaufman responded no. The firm could do the projects concurrently, if the City would allow them to do so. Each project was anticipated to take eight weeks. The GMP provided was based on the plans as approved at this stage. Mr. Orlove noted the firm worked on the current Boca Museum of Art and he had to do reconstruction. Mr. Kaufman commented it was restoration work, with the majority of it being maintenance, painting, refinishing wood floors, change out air conditioning chiller systems, and it was called a restoration. The client was satisfied with their building, and they have a 10-year threshold maintenance program. They received a grant from the County for maintenance and efficiency upgrades. It was completely the Museum’s request for help with the restoration. Mr. Kaufman could not account for the disparity between the two respondents proposals. Mr. Kaufman indicated his belief his firm was more confident of the project. He was almost certain they had much greater subcontractor participation as it pertained to the pricing, and those factors would move the numbers. They also priced the project a few months back and the subcontractors agreed to hold the price, although some material costs have increased. Mr. Kaufman anticipated being able to work within the GMP provided. Mr. Kaufman reviewed two of the five National Historic Register properties they worked on. One was the building that housed the Addison’s Restaurant in Boca Raton, Dixie Highway, Camino Real, which was Addison Mizner’s, first administration building for the resort. Another was a historical restoration on the Freedom Tower in Miami, a 27-story iconic building, gateway to the Americas from Cuba. Mr. Kaufman clarified when they reviewed the RFP, they had previously responded to the information and they made a bad decision of assuming the staff would recognize it as a response. He apologized for the misunderstanding. 3 Meeting Minutes Special Community Redevelopment Agency Board Boynton Beach, FL February 1, 2011 Vice Chair Ross spoke about moving a historic structure. Mr. Kaufman responded moving a structure was a highly specialized subcontract niche. Only three or four subcontractors in south Florida do that work. A price from one of those subcontractors was included in the estimate. Vice Chair Ross noted the firm had a reputation for coming in as the low bid and inquired why. Mr. Lynn commented the firm was competitive over a broad range of projects having different types and sizes. The reputation within the industry is if the firm is shortlisted, all have to be on top of their game. The firm utilizes an extraordinarily talented and hardworking preconstruction department that is passionate about estimating. The other facet is the firm has 60 years of experience between Mr. Kaufman and Mr. Cavossa. They review every bid that leaves their office. Chair Rodriguez inquired about minority involvement in the subcontractor process. Mr. Kaufman responded on average, the firm attains a 21% to 22% Small Business Minority rate. The firm would set a 15% goal and look to exceed it. The GMP also reflected that 15%. The price was also based on the percentage of plans that were approved, which to Mr. Kaufman’s knowledge, two of the three projects were approved. The documents are 100% construction documents, but it was unknown if the City would make changes to the third project. Since 66% of the plans were approved, Chair Rodriguez wanted to know where the remaining 33% was price-wise. Mr. Lynn could not hypothesize where the process would end up, but the documents, as reviewed with the two that have been permitted, appeared to be in good shape. Mr. Kaufman indicated they were paid under $5,000 for their preconstruction work. Chair Rodriguez inquired why they did not respond to the RFP and noted no one from the firm indicated there was a mistake and there was a miscommunication. The representative, when questioned, only responded they did not know. The response concerned Chair Rodriguez who commented the firm might not have been on top of their game administratively. Mr. Kaufman reiterated the fact that because they responded to the RFP in detail, they felt they were in compliance and if the Board had any reservations about using the firm, they should not select them. Mr. Kaufman repeated the firm responded to the RFP for a continuing CMAR contractor; however, Chair Rodriguez pointed out the firm was also present when the Board indicated they would go out to RFP for the project. Mr. Kaufman expressed the firm feels the process has been antagonistic at the last meeting and again at this meeting. The firm does not want to disrespect the Board if there is any reservation about the firm. He was concerned if they do go to contract that the antagonism will continue. The firm does not want to build for an entity that does not want them to build, and he respectfully requested some type of understanding be reached if the firm is selected. It was important the firm be given the confidence and comfort that they are acting on the Board’s behalf. Larry Celon , JMW Construction, explained the process has taken an unusual route. Kaufman Lynn’s price was attractive and he reviewed Kaufman Lynn’s pricing structure. 4 Meeting Minutes Special Community Redevelopment Agency Board Boynton Beach, FL February 1, 2011 One item that caught his eye, which may account for why their bid was significantly lower than JMW’s or Morganti’s price, was the landscaping for the entry feature. Kaufman Lynn quoted $28,504 from Sunny State. Mr. Celon contacted Sunny State who confirmed they do a lot of work for Kaufman Lynn but they were not familiar with the project and had not bid on the job. Mr. Celon provided the drawings to Sunny State and received a landscape price of $85,000. The irrigation estimate was for $7,500 and Sunny State provided an irrigation quote of $15,230. He indicated he was uncomfortable with the information he received. Ms. Brooks explained the estimate Mr. Celon had obtained was for the 211 project and it was prior to the Board retaining Kaufman Lynn to work on the projects. Mr. Celon felt Kaufman Lynn was not bidding the same project. Sunny State had provided him with a price for a job with Kaufman Lynn a year ago. Ms. Brooks clarified at that time, the 211 project was slated to be an office and it was predated prior to the Board retaining them. Mr. Orlove inquired if an apples to apples comparison was made. Mr. Kaufman stated for the record Sunny State was included in the GMP because Sunny State quoted the job directly to them. He felt trying to create doubt in one’s mind was ridiculous. There was no incentive to list Sunny State as a subcontractor if they did not bid the job. There was no hocus-pocus. There was no incentive to list Sunny State for a set of documents that are listed as part of the contract and have them bid something else. Many factors affect a price for one subcontractor as opposed to another. There is likely a big difference in the scope of work that JMW has and Mr. Kaufman stood by the price quoted. James AuldKamal Cooper and of Morganti Construction were present. Mr. Auld provided a thorough breakdown of the difference in the price provided by Morganti and Kaufman Lynn. Kaufman Lynn’s fee was 15%. Morganti’s was 4% and JMW’s was 5%. There was immediately a $100,000 fee paid to Kaufman Lynn. With Morganti or JMW, the $100,000 goes into the project. As to the landscaping, Mr. Auld agreed with JMW about the estimate. The date on the top of the estimate reflected a revision to the estimate from July 26, 2010. All of the drawings were issued after July, but the items were based on the drawings from before. Mr. Auld pointed out they responded in good faith. They submitted a price in writing and Kaufman Lynn came back and said they can do it for less. Although there was a task order, there was a form Morganti had to sign, date, and notarize indicating that the information supplied was their bid. He asserted that was not what Kaufman Lynn presented. He explained he enjoys Kaufman Lynn as a competitor but the process has made them a protagonist and the comparison was not apples to apples. Morganti submitted on a full set of documents, but they are not complete as of today. Mr. Auld recommended if staff reviews the list item by item, and investigates the scope, he would guarantee that at the end of the day, what would be constructed would be much less than what was on the plans. He explained there was no way to bid 30% less on a project and then have an additional 10% fee and obtain the same result. There 5 Meeting Minutes Special Community Redevelopment Agency Board Boynton Beach, FL February 1, 2011 was a 40% spread and there was no way it could be the same project. The document also referred to a base document, which was Kaufman Lynn’s continuing service contract, and they expect, as noted in the backup, there are agreements for preconstruction services, which were already signed and agreed to by the Board and Kaufman Lynn. It indicates they are to provide for review and final acceptance, a final GMP at 100% construction documents. At 100% of everything, Kaufman Lynn gets another chance at the contract. Mr. Auld commented that was where Morganti stood and they did not appreciate someone being able to come back and sharp shoot their numbers after they, in good faith, filed a form and made a commitment on documents. Kaufman Lynn had an estimate of $700,000 to $900,000 and was still open ended. Mr. Auld explained if the Board wants to go outside of the process, that was their prerogative, but the firm wanted to work and create a relationship with the Community Redevelopment Agency. Mr. Orlove commented last month, a representative from Morganti indicated they could meet the Board’s need or price. He noted they had an estimate that was lower than Morganti’s and inquired if Morganti could go lower. Mr. Auld commented the estimates were not for the scope in the document or for the commitment Morganti and JMW made. If they wanted to change the rules and ask Morganti the same thing, Morganti would agree. Morganti guarantees 100% local participation and he believed the minority participation was 30% or 40%. Motion Mr. Orlove moved to table the item for the next Community Redevelopment Agency meeting. Mr. Holzman seconded the motion. Mr. Orlove explained the Board had presentation from two firms at the last meeting, and did not have information from Kaufman Lynn. The Board now heard from Kaufman Lynn and he assumed the members could contemplate the information before making a decision. Mr. Orlove wanted to review his notes from the last meeting. Mr. Holzman was concerned about some of the items mentioned by the responders such as the phone call to a subcontractor. He thought staff should undertake due diligence and confirm or not confirm the comments made by the responders, particularly regarding the scope of the work. Mr. Holzman felt the estimate given and the scope of the documents had to be different. He wanted to know exactly how different they were. Chair Rodriguez was ready to make a decision but was concerned and felt strongly about the way the process took place. He felt the events did not set a climate of involvement and engagement with the development community and much needed to be done in Boynton Beach. Kaufman Lynn did not certify their proposal. Ms. Brooks confirmed they did not. Chair Rodriguez felt the issues were clear. Kaufman Lynn did not respond to the RFP, did not bid on the contract or do the work, and the other responders did. The others spent good money to respond and certify the response. Chair Rodriguez expressed he had concerns. 6 Meeting Minutes Special Community Redevelopment Agency Board Boynton Beach, FL February 1, 2011 There was a vote on the motion that passed 4-1 (Chair Rodriguez dissenting.) IV. Continuation of Construction Manager at Risk-Tabled Agenda Item from 1/11/2011 Board Meeting Motion Mr. Orlove moved to leave the item on the table. Mr. Holzman seconded the motion. The motion passed. V. Promenade Direct Incentive Agreement Status Report Ms. Brooks explained this was an informational item. The Community Redevelopment Agency Board entered into a Direct Incentive Funding Agreement (DIFA)/Tax Increment Financing (TIF) Agreement in 2004 to create certain public benefits within the project, which was public space and public parking, and reduced rental rates for a portion of the commercial space. The agreement was amended a few times. Originally, there was affordable housing included, which was removed. The second amendment was leasing a piece of property the Community Redevelopment Agency owned at Boynton Beach Boulevard and Federal Highway. The Agency incurred Ad Valorem taxes because they were leasing the property, so that amount was being deducted from the TIF agreement. The Property Appraiser had indicated the Agency would receive revenue from the properties in addition to what they received prior to the construction of the property; however, at the Property Appraiser’s website, the properties involved are listed as zero. Staff was attempting to confirm with the Property Appraiser, but has not yet received a response whether the Agency received revenue from it or not. The term of the agreement was for 10 years. The Promenade has to provide an audit every year to advise the Agency that they have met the deliverables within the agreement. Ms. Brooks and Ms. Harris, Finance Director, met with them and some of the items that have not been met were public parking. There is no signage indicating that individuals can park there. Leases with two businesses were signed; but staff was advised they did not know when they would open for business. That part of the agreement had not been fulfilled. Ms. Brooks explained if the Agency is not receiving the revenue, they cannot provide the incentive. Additionally, if they are not receiving the public benefit the Agency paid for, then Ms. Brooks expressed she did not think the Promenade should be paid. Mr. Holzman explained the item was put on the agenda after a discussion he held with legal staff. He believed no one had read the agreement and the agreement specified when certain provisions were met, the DIFA was drawn down. The 10-year DIFA occurs after certain obligations are met by the developer and the property is on the tax 7 Meeting Minutes Special Community Redevelopment Agency Board Boynton Beach, FL February 1, 2011 roles. He inquired if the audit was asked for and if there is a checklist of the deliverables that need to occur before the DIFA takes place. He asked if the developer understood he did not have a right to draw down on the DIFA until the measurables were verified. Ms. Brooks corrected that staff read the DIFA and amendments. She and Ms. Harris have met with the developer with the agreement. She inquired if legal should send a letter requiring they place tenants in the building and complete the parking requirements. Attorney Cherof commented they should be put on notice they had to comply with the provisions of the agreement. At first glance, it appeared the sequence and timing has not occurred. It may be that staff now believes that one of the four triggers for payment of the incentive has not occurred, which was the receipt of project income revenue, but it does appear that all the other conditions have occurred. He suggested he bring a draft letter to the Board at the next meeting, so the Board will understand the elements of it, and staff can answer the question of whether the four conditions have been met. Motion Mr. Hay so moved. Mr. Holzman seconded the motion. The motion passed. VI. Public Comments None. VII. Adjournment There being no further business to come before the Board, Chair Rodriguez properly adjourned the meeting at 7:15 p.m. Catherine Cherry Recording Secretary (Transcribed from one Recording) 030310 8