HomeMy WebLinkAboutStaff Report 2508-5114CITY OF PALO ALTO
CITY COUNCIL
Monday, October 20, 2025
Council Chambers & Hybrid
5:30 PM
Agenda Item
5.Approval of an Increase of Construction Contingency for Contract No. C24189237 with
SAK Construction, LLC in the amount of $1,000,000, funded by the Wastewater Treatment
Enterprise Fund for the Joint Intercepting Sewer Rehabilitation (Phase 1) Project (WQ-
24000), and Approval of Addendum 13 to the Basic Agreement Between Mountain View,
Los Altos, and Palo Alto for the Acquisition, Construction, and Maintenance of a Joint
Sewer System to Increase the Maximum Authorized Project Funding of $8.9 million to
$12.6 million; CEQA Status – Exempt under CEQA Guidelines Section 15301 (Repairs to
Existing Facilities)
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Public Works
Meeting Date: October 20, 2025
Report #:2508-5114
TITLE
Approval of an Increase of Construction Contingency for Contract No. C24189237 with SAK
Construction, LLC in the amount of $1,000,000, funded by the Wastewater Treatment
Enterprise Fund for the Joint Intercepting Sewer Rehabilitation (Phase 1) Project (WQ-24000),
and Approval of Addendum 13 to the Basic Agreement Between Mountain View, Los Altos, and
Palo Alto for the Acquisition, Construction, and Maintenance of a Joint Sewer System to
Increase the Maximum Authorized Project Funding of $8.9 million to $12.6 million; CEQA Status
– Exempt under CEQA Guidelines Section 15301 (Repairs to Existing Facilities)
RECOMMENDATION
Staff recommends that the City Council:
1. Approve an increase in construction contingency for Contract No. C24189237 with SAK
Construction, LLC in an amount not to exceed $1,000,000, for a total contract
contingency amount not to exceed $3,534,770 for the Joint Intercepting Sewer
Rehabilitation (Phase 1) Project (WQ-24000); and
2. Authorize the City Manager, or their designee, to execute Addendum No. 13 to the Basic
Agreement between the City of Palo Alto, the City of Mountain View, and the City of Los
Altos for the Acquisition, Construction, and Maintenance of a Joint Sewer System to
increase the maximum authorized funding for the Joint Intercepting Sewer
Rehabilitation (Phase 1) Project (WQ-24000) from $8.9 million to $12.6 million.
EXECUTIVE SUMMARY
Since 1968, the Cities of Palo Alto, Mountain View, Los Altos, and Los Altos Hills have shared
rights to the Palo Alto Regional Water Quality Control Plant’s (RWQCP) treatment capacity and
costs under a longstanding Basic Agreement. Under this framework, the City of Palo Alto
manages capital projects including the Joint Intercepting Sewer Rehabilitation (Phase 1) Project,
which addresses critical structural deterioration in a 72-inch trunk sewer that conveys
wastewater flows from Mountain View, Los Altos, Los Altos Hills and a portion of Palo Alto,
which together comprise more than half of the influent to the RWQCP.
In December 2023, City Council approved Addendum No. 12 to the Basic Agreement, which
established a maximum authorized project funding of $8.9 million, and concurrently awarded a
$7,347,700 construction contract with SAK Construction, LLC. and approved a 10% construction
contingency of $734,770.
During construction, unforeseen site conditions, contractor sequencing challenges, and
necessary design clarifications required multiple change orders that exhausted the original
contingency. In August 2025, City Council approved an increase of $1.8 million in contingency to
allow isolation and evaluation of a major junction structure at the RWQCP.1 After evaluation
and testing, two of the gates used to control wastewater flows to the RWQCP were corroded
beyond repair and required full replacement. Based on the construction schedule associated
with these gate replacements, staff anticipates additional costs of approximately $1,000,000 for
extended time and contract close-out. Staff recommends increasing the contingency for
Contract No. C24189237 with SAK Construction, LLC. by $1,000,000, bringing the total
authorized contingency to $3,534,770 and the total potential contract not-to-exceed amount to
$10,882,470.
The total project costs, including project delivery costs, are now projected to reach up to $12.6
million. Addendum No. 13 is required to increase the maximum authorized project funding
accordingly and update partner funding obligations. This project is critical to RWQCP
operations, as this junction structure conveys flows from all six partner agencies, and staff must
retain the ability to isolate influent flows to ensure the integrity and reliability of plant
infrastructure.
BACKGROUND
The Joint Intercepting Sewer (JIS) is a 72-inch diameter reinforced concrete trunk sewer
constructed in 1972 that conveys wastewater from Mountain View, Los Altos, Los Altos Hills,
and a portion of Palo Alto, representing more than half of the influent flow to the RWQCP. The
JIS extends approximately 9,000 feet parallel to Highway 101, through the Baylands Nature
Preserve and along the closed City landfill, before discharging into the RWQCP. Other sewer
trunklines conveying wastewater to the RWQCP are maintained separately by the City of Palo
Alto Utilities Department, Stanford University, and the East Palo Alto Sanitary District, and are
not included within the scope of this Project.
A 2020 field investigation, which included closed-circuit television, sonar, and visual inspection,
revealed corrosion, cracks, exposed rebar, and other structural defects. Based on those
1 City Council, August 11, 2025; Agenda Item #10; SR #2505-4733
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83528&dbid=0&repo=PaloAlto
findings, the highest-priority 2,364-foot section of pipe was selected for rehabilitation as Phase
1 of the JIS Rehabilitation Project.
On May 16, 2022, Council approved a contract with Jacobs Engineering Group for design
services.3 On December 11, 2023, City Council approved Addendum No. 12 to the Basic
Agreement between Palo Alto, Mountain View, and Los Altos, which set a maximum authorized
project funding of $8.9 million, authorized execution of a construction contract with SAK
Construction, LLC in the amount of $7,347,700 with a 10% contingency of $734,770, and
amended the construction management contract with Tanner Pacific, Inc.4
Construction began in winter 2024 using cured-in-place (CIPP) lining to rehabilitate the
designated section of pipe. During construction, the contractor encountered unforeseen site
conditions, including difficult access, bypass pumping complications, obstructions not identified
during pre-construction investigations, as well as contractor schedule and sequencing
challenges. These issues caused delays, required multiple change orders, and pushed field
activities into the 2025 dry season. On June 9, 2025, City Council approved amendments to
related contracts with Jacobs Engineering Group, Inc., Tanner Pacific, Inc., and Carollo
Engineers, Inc. to support continued engineering and construction management services
through the extended schedule.5
To complete the final portion of the rehabilitation, the contractor installed a partition plate to
isolate wastewater flow at Junction Box No. 0 (JB-0), a 25-foot-deep concrete structure that
receives the 72-inch and 42-inch sewer pipelines before discharging into the RWQCP. After
installation of the partition plate, a suspected bottom slab failure at JB-0 was discovered,
preventing completion of the remaining pipelining segment. At that time, additional unforeseen
work at JB-0, including deteriorated gates that isolate influent flows to the RWQCP’s pump
stations, required extended bypass operations, structural evaluation, and design of corrective
measures. To address these conditions, on August 11, 2025, City Council approved an increase
to the construction contingency in the amount of $1,800,000, for a total contingency not-to-
exceed $2,534,770.6
ANALYSIS
C24189237 Construction Contract with SAK, LCC Additional Contingency
3 City Council, May 16, 2022; Agenda Item #7; SR #14164,
https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=81838
4 City Council, December 11, 2023; Agenda Item #2; SR #2308-1879,
https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82522
5 City Council, June 9, 2025; Agenda Item #11; SR #2504-4519,
https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=83447
6 City Council, August 11, 2025; Agenda Item #10; SR #2505-4733,
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83528&dbid=0&repo=PaloAlto
During the initial inspection and testing at JB-0, staff determined that interior concrete coating
had deteriorated, particularly in the upper half of the box where surfaces are exposed to a
corrosive atmosphere. Further inspection and testing of concrete cores revealed that the
coating had failed in most areas throughout JB-0 and that upper concrete surfaces have
experienced acid attack typical of wastewater conveyance systems. Additionally, these
inspections identified that two existing gates that control the flow into the RWQCP’s influent
pump stations were severely corroded and required replacement. The RWQCP’s On-Call
Emergency Construction contractor mobilized to enter JB-0 to determine if any repair work
could be done to salvage the gates, but corrosion was so advanced that further work risked
rendering the gates inoperable. Although the additional contingency authorized on August 11,
2025 anticipated the cost of inspections and recoating, subsequent investigation confirmed
that full gate replacement was necessary.11
Procurement and installation of the new gates will be performed under the RWQCP’s On-Call
Emergency Construction contract. However, associated work inside JB-0, including gate
manufacturing and installation, requires that a section of the temporary bypass system used
during the main relining phase of the Project remain in operation to keep JB-0 isolated. Because
the bypass system is already installed under the SAK contract, staff recommends extending
bypass operations under SAK’s existing contract. This approach reduces contractor mobilization
costs and avoids duplicative future expenses associated with reinstalling temporary bypass
facilities.
Based on the construction schedule for the installation of these new gates, staff anticipates that
continued operation of the bypass system and related contract close-out will cost
approximately $1,000,000, consisting of a $800,000 estimate to run the bypass system and
$200,000 to cover any additional unforeseen work to be completed during the installation of
the gates.
Staff recommends increasing the total authorized contingency for Contract No. C24189237 with
SAK Construction, LLC by $1,000,000 to $3,534,770, resulting in a revised total potential not-to-
exceed contract amount of $10,882,470. Funding is available in the Wastewater Treatment
Fund Adjusted Capital Budget Joint Intercepting Sewer Rehabilitation (Phase 1) project (WQ-
24000). This additional contingency amount of $1,000,000 will cover the repair work of JB-0
and the operation of the temporary bypass within the RWQCP.
Addendum 13 to Basic Agreement Between Palo Alto, Mountain View and Los Altos
Addendum No. 13 (Attachment A) is necessary to increase the maximum authorized project
funding from $8.9 million, as established in Addendum No. 12 (approved December 2023), to a
new total of $12.6 million, reflecting the updated estimated cost to complete the project.
The revised maximum authorized project funding amount incorporates:
11 City Council, August 11, 2025; Agenda Item #10; SR #2505-4733,
https://portal.laserfiche.com/Portal/DocView.aspx?id=212556&repo=r-704298fc&searchid=b483acf8-dc35-49c9-
a95a-79d5f754ddd1
The previously approved $1.8 million increase in construction contingency (August
2025);
The previously approved $0.8 million increase in project delivery costs for engineering
and construction management services by Jacobs Engineering Group, Tanner Pacific,
and Carollo Engineers (June 2025); and
The currently recommended $1.0 million increase in contingency to support continued
bypass operations and contract close-out.
Staff from the partner agencies have coordinated regarding the increased costs and are
recommending approval of Addendum No. 13. The cities of Mountain View and Los Altos have
Addendum No. 13 scheduled for approval by their city councils on October 14, 2025. The City’s
agreement with Los Altos Hills does not require separate approval for capital improvement
projects. Once approved, Addendum No. 13 will formalize the updated project budget and
funding obligations under the Basic Agreement. Without this addendum, the three cities would
lack the necessary budget authority to complete the Project.
FISCAL/RESOURCE IMPACT
The Joint Intercepting Sewer Rehabilitation (Phase 1) Project is a cost-shared capital
improvement project among the four primary partner agencies—Palo Alto, Mountain View, Los
Altos, and Los Altos Hills—based on previously approved cost-sharing percentages as shown in
Table B-1 of Attachment B. Certain project expenses, including bypass pumping required inside
the RWQCP to complete the rehabilitation and subsequent work at JB-0, are allocated across all
six partner agencies—Palo Alto, Mountain View, Los Altos, Los Altos Hills, Stanford University,
and East Palo Alto Sanitary District—because the RWQCP uses the JIS to convey plant-wide
internal return flows to the headworks (Table B-2 of Attachment B).
Palo Alto’s share of these expenses inside the RWQCP is estimated to be approximately 37%,
and the other five agencies’ share is approximately 63%. Therefore, Palo Alto’s share of the
recommended increase in construction contingency is approximately $367,000 (37%) of the
$1,000,000.
Palo Alto’s overall share of the entire Project—including work both inside and outside the
RWQCP—is approximately $3,141,000, or 22%, reflecting the combination of cost allocation
methodologies applied to different components of the Project. Tables B-2 and B-3 in
Attachment B provide detailed breakdowns of the bypass expenses inside the RWQCP and the
updated not-to-exceed project costs by partner agency.
In addition, the Joint Intercepting Sewer Rehabilitation project is one of the projects that
receives funding from the Cost-Sharing Agreement with Santa Clara Valley Water District
Guiding Principle 5 Program funding and the increased costs to Palo Alto are therefore covered
under the cost-sharing agreement.13
STAKEHOLDER ENGAGEMENT
This Project is part of the RWQCP’s major capital improvement program funded by the City of
Palo Alto and its five partner agencies. The partner agencies are regularly consulted regarding
both the need for and progress of wastewater treatment capital work. With respect to Palo Alto
itself, the open meetings on the budget process serves as the principal vehicle for community
engagement regarding new projects and associated rate impacts.
In addition, staff has coordinated with the Community Services Department and other Public
Works Department staff to manage construction activities, bypass pumping, site access, and
trail detours in parkland and at the closed landfill. Staff provided formal briefings to the Parks
and Recreation Commission (PRC), including a February 25, 2025, presentation on construction
progress and the planned closure of the Byxbee Park Western Trail between March 30, 2025,
and November 30, 2025.14 On July 22, 2025, staff provided an update to the PRC via a
Departmental Report.
Public communications included on-site signage and detour maps for trail closures in Byxbee
Park, along with updates posted to the City’s Joint Intercepting Sewer Rehabilitation – Phase 1
Project webpage. Environmental coordination ensured wildlife-friendly fencing and related
mitigations during construction. Staff also responded to public inquiries throughout the
Project’s duration.
ENVIRONMENTAL REVIEW
Council action on this item is exempt from review under the California Environmental Quality
Act (CEQA) under CEQA Guidelines Section 15301, subsection (b) as it involves the repair and
maintenance of an existing publicly-owned utility used to provide sewerage treatment services
with no expansion on the existing facility.
ATTACHMENTS
Attachment A: Addendum No. 13 to the Basic Agreement between the City of Palo Alto, the City
of Mountain View, and the City of Los Altos
Attachment B: Partner Agencies Cost Share Summary for Construction (Revised October 2025)
APPROVED BY:
Brad Eggleston, Director Public Works/City Engineer
13 City Council, June 3, 2024; Agenda Item #6; SR 2404-2877,
https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82864
14 Parks and Recreation Commission, February 25, 2025; Agenda Item #3; SR# 2502-4115,
https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16875
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ADDENDUM NO. THIRTEEN TO THE BASIC AGREEMENT BETWEEN THE CITY
OF PALO ALTO, THE CITY OF MOUNTAIN VIEW, AND THE CITY OF LOS ALTOS
FOR THE ACQUISITION, CONSTRUCTION AND MAINTENANCE OF A JOINT
SEWER SYSTEM
This Addendum No. Thirteen (13) to the Basic Agreement for the Acquisition, Construction and
Maintenance of a Joint Sewer System is made and entered into on _________, 2025, by and
among the CITY OF PALO ALTO (“Palo Alto”), the CITY OF MOUNTAIN VIEW (“Mountain
View”), and the CITY OF LOS ALTOS (“Los Altos”) (individually, a “Party”, collectively, the
“Parties”), all municipal corporations under the laws of the State of California.
A. The Parties have entered into that certain Basic Agreement Between the City of Palo Alto,
the City of Mountain View and the City of Los Altos for the Acquisition, Construction,
and Maintenance of a Joint Sewer System, executed on October 10, 1968, as amended by
the Addenda described below (collectively, the “Basic Agreement”). The Basic
Agreement has been amended twelve times by addenda, as follows:
1. Addendum No. One (1) to Basic Agreement Between the Cities of Palo Alto,
Mountain View, and Los Altos for Acquisition, Construction and Maintenance of
a Joint Sewer System, dated as of December 5, 1977;
2. Addendum No. Two (2) to Basic Agreement Between the Cities of Palo Alto,
Mountain View, and Los Altos for Acquisition, Construction and Maintenance of
a Joint Sewer System dated as of January 14, 1980;
3. Addendum No. Three (3) to an Agreement By and Between the Cities of Palo Alto,
Mountain View, and Los Altos for Acquisition, Construction and Maintenance of
a Joint Sewer System, dated as of April 9, 1985;
4. Addendum No. Four (4) to the Agreement By and Between the Cities of Mountain
View, Los Altos, and Palo Alto as further amended and dated May 30, 1991;
5. Addendum No. Five (5) to Basic Agreement Between the Cities of Palo Alto,
Mountain View, and Los Altos for Acquisition, Construction and Maintenance of
a Joint Sewer System, dated as of July 31, 1992;
6. Addendum No. Six (6) to Basic Agreement Between the City of Palo Alto, the City
of Mountain View, and the City of Los Altos for Acquisition, Construction and
Maintenance of a Joint Sewer System dated as of March 16, 1998;
7. Addendum No. Seven (7) to Basic Agreement Between the City of Palo Alto, the
City of Mountain View, and the City of Los Altos for Acquisition, Construction
and Maintenance of a Joint Sewer System dated as of April 15, 2009;
8. Addendum No. Eight (8) to the Basic Agreement between the City of Palo Alto,
the City of Mountain View and the City of Los Altos for the Acquisition,
Construction, and Maintenance of a Joint Sewer System dated as of October 17,
2016;
9. Addendum No. Nine (9) to the Basic Agreement between the City of Palo Alto, the
City of Mountain View and the City of Los Altos for the Acquisition, Construction
and Maintenance of a Joint Sewer System dated March 4, 2019;
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10. Addendum No. Ten (10) to the Basic Agreement between the City of Palo Alto, the
City of Mountain View, and the City of Los Altos for the Acquisition, Construction
and Maintenance of a Joint Sewer System dated May 17, 2021;
11. Addendum No. Eleven (11) to the Basic Agreement between the City of Palo Alto,
the City of Mountain View, and the City of Los Altos for the Acquisition,
Construction and Maintenance of a Joint Sewer System dated December 5, 2022;
12. Addendum No. Twelve (12) to the Basic Agreement between the City of Palo Alto,
the City of Mountain View, and the City of Los Altos for the Acquisition,
Construction and Maintenance of a Joint Sewer System dated December 11, 2023
(collectively, the “Addenda”).
B. Palo Alto owns and operates the sanitary sewage treatment and disposal works and system
(the “Joint System”) pursuant to the Basic Agreement and is responsible for making capital
additions to the Joint System. Under the Basic Agreement, any major capital additions for
the replacement of obsolete or worn-out units require an agreement by the Parties
amending the Basic Agreement.
C. Pursuant to Addendum No. Twelve (12), the Parties approved the construction of the Joint
Interceptor Sewer Rehabilitation Phase 1 Project. Since then, the estimated costs of the
Project have increased due to factors including design engineering, construction
management, program management, and construction expenses.
D. The Parties now desire to increase the amount authorized for the construction of the Joint
Interceptor Sewer Rehabilitation Phase 1 Project to reflect increases in Project Costs as
defined in Paragraph 43 of the Basic Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the terms, conditions and covenants set forth in this
Addendum No. Thirteen (13), the Basic Agreement is hereby amended, as follows:
Section 1. Paragraph 44 is hereby added to the Basic Agreement to read, as follows:
“44. INCREASED PROJECT COSTS FOR THE JOINT INTERCEPTOR SEWER
REHABILTIATION PHASE 1 PROJECT. The maximum amount of the Project Costs for
the Joint Interceptor Sewer Rehabilitation Phase 1 Project described in paragraph 43 is
increased from $8.9 million to $12.6 million.
Each Party shall pay its share of the Project Costs for the Project, excluding bypass
pumping costs inside the Plant, in the proportion to the capacity rights in the Joint System
with an increased not-to-exceed amount from $7.0 million to $7.7 million as previously
established and presented herein:
•Mountain View 62.50%
•Palo Alto 18.24%
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•Los Altos 15.00%
•Los Altos Hills 4.26%
Bypass pumping costs within the Plant shall continue to be allocated based on the annual
flow share calculated at the end of each fiscal year, in accordance with Paragraph 43.
Section 2. Except as modified herein, the Basic Agreement shall remain unchanged, and is
hereby ratified and confirmed.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this
Addendum as of the date first written above.
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//
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CITY OF LOS ALTOS
BY:
____________________________
City Manager
Gabriel Engeland
____________________________
Date
ATTEST:
__________________________
City Clerk
Melissa Thurman, MMC
____________________________
Date
APPROVED AS TO FORM:
____________________________
City Attorney
Jolie Houston
____________________________
Date
Attachment B - Partner Agencies Cost Share Summary for Construction Phase (Revised October 2025)
Agency Fixed Cost Share %Initial Estimated Project
Cost (2023)
Estimated Cost
Aug 2025
Current Project
Increase Cost
Estimated Cost
Oct 2025
City of Mountain View 62.50% $4,398,734 $4,808,985 $0 $4,808,985
City of Palo Alto 18.24% $1,283,727 $1,403,454 $0 $1,403,454
City of Los Altos 15.00% $1,055,696 $1,154,156 $0 $1,154,156
Town of Los Altos Hills 4.26% $299,818 $327,780 $0 $327,780
Subtotal: 100.00% $7,037,975 $7,694,376 $0 $7,694,376
Agency Estimated Cost
Share %
Initial Estimated Project
Cost in (2023)
Estimated Cost
Aug, 2025
Current Project
Increase Cost
Estimated Cost
Oct 2025
City of Mountain View 40.11% $760,885 $1,524,000 $393,000 $1,917,000
City of Palo Alto 34.97% $663,379 $1,371,000 $367,000 $1,738,000
City of Los Altos 10.88% $206,393 $404,000 $100,000 $504,000
Town of Los Altos Hills 2.04% $38,699 $77,000 $20,000 $97,000
East Palo Alto Sanitary District 5.53% $104,904 $212,000 $56,000 $268,000
Stanford University 6.47% $122,736 $246,000 $64,000 $310,000
Subtotal: 100.00% $1,896,995 $3,833,000 $1,000,000 $4,834,000
Agency Overall Project Cost
Share %
Initial Estimated Project
Cost (2023)
Estimated Cost
Aug, 2025
Current Project
Increase Cost
Estimated Cost
Oct 2025
City of Mountain View 57.75% $5,159,619 $6,333,000 $393,000 $6,726,000
City of Palo Alto 21.79% $1,947,106 $2,774,000 $367,000 $3,141,000
City of Los Altos 14.13% $1,262,089 $1,558,000 $100,000 $1,658,000
Town of Los Altos Hills 3.79% $338,516 $405,000 $20,000 $425,000
East Palo Alto Sanitary District 1.17% $104,904 $212,000 $56,000 $268,000
Stanford University 1.37% $122,736 $246,000 $64,000 $310,000
Total, Not-to-Exceed: 100.00% $8,934,970 $11,528,000 $1,000,000 $12,528,000
Table B-3: Not-to-Exceed Cost for Partners during Construction (Sum of Table B-1 and B-2)
Table B-1: Project Costs during Construction (Less Bypass Pumping Inside The Plant)
Table B-2: Cost for Bypass Pumping during Construction inside The Plant