HomeMy WebLinkAboutStaff Report 2512-5756CITY OF PALO ALTO
CITY COUNCIL
Special Meeting
Monday, February 09, 2026
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 $800,000 and Amend the FY 2026 Budget in the
Wastewater Treatment Fund for the Joint Intercepting Sewer Rehabilitation (Phase 1)
Project (WQ-24000); 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: February 9, 2026
Report #:2512-5756
TITLE
Approval of an Increase of Construction Contingency for Contract No. C24189237 with SAK
Construction, LLC in the Amount of $800,000 and Amend the FY 2026 Budget in the
Wastewater Treatment Fund for the Joint Intercepting Sewer Rehabilitation (Phase 1) Project
(WQ-24000); 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 $800,000 for a total contract contingency
amount not to exceed $4,334,770; and
2. Approve an amendment to the Fiscal Year 2026 Adopted Capital Budget Appropriation
for the Wastewater Treatment Fund (requires a 2/3 vote) by:
a. Increasing the Joint Intercepting Sewer Rehabilitation (Phase 1) Project (WQ-
24000) appropriation by $800,000; and
b. Decreasing the Wastewater Treatment Fund balance by $800,000.
EXECUTIVE SUMMARY
The Joint Intercepting Sewer Rehabilitation (Phase 1) Project addressed 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. During construction, unforeseen site
conditions, necessary design clarifications, and contractor sequencing challenges required
multiple change orders that exhausted the original construction contingency. Staff recommends
increasing the contingency for Contract No. C24189237 with SAK Construction, LLC. by
$800,000, bringing the total contingency to $4,334,770 and the total potential contract not-to-
exceed amount to $11,682,470.1
1 SAK Inc., Construction Contract for the Joint Intercepting Sewer Rehabilitation Project C24189237;
https://paloalto.gov/files/assets/public/v/1/public-works/rwqcp/contracts/contract-c24189237_sak_signed.pdf
Delivery delays for the two replacement gates extended the duration of the bypass system
beyond what was originally anticipated, resulting in additional rental costs. Following
completion of the work, staff initiated final change order negotiations and reviewed the original
assumptions used to budget the bypass system. This review determined that the estimated
duration for rental equipment associated with gate installation was insufficient and did not
account for additional required rental (8 days) and associated costs. In addition, additional
contingency is required to complete remaining restoration work outside of the RWQCP allowing
for reopening of trails in Byxbee Park and to fully close out the project.
BACKGROUND
3
The inspection and testing confirmed that two of the gates used to control wastewater flows to
the RWQCP were corroded beyond repair and required replacement. In addition, the junction
box’s protective concrete coating had deteriorated over the years, leaving concrete exposed in
the corrosive atmosphere. The entire box required concrete repair and recoating.
4 The costs for this
portion of the bypass system included rental of additional pumps, mechanical piping manifolds,
valves and other appurtenances in addition to costs to operate the system. Rental rates of
equipment and operations costs were negotiated with the contractor and were subject to
extension if equipment deliveries or installation activities were delayed.
2,3
3 City Council, August 11, 2025; Agenda Item #10; SR #2505-4733
https://portal.laserfiche.com/Portal/DocView.aspx?id=212556&repo=r-704298fc&searchid=04bc1591-7a68-4621-
94d3-b6f203e01141
4 City Council, October 20, 2025; Agenda Item #5; SR #2508-5114
https://portal.laserfiche.com/Portal/DocView.aspx?id=231075&repo=r-704298fc
3 City Council, August 11, 2025; Agenda Item #10; SR #2505-4733,
https://portal.laserfiche.com/Portal/DocView.aspx?id=212556&repo=r-704298fc&searchid=991e534b-ab35-4d0a-
99ec-c20b29fcc807
ANALYSIS
Staff recommends increasing the total authorized contingency for Contract No. C24189237 with
SAK construction, LLC by $800,000 to $4,334,770, resulting in a revised total not-to-exceed
contract amount of up to $11,682,470. From the total additional contingency amount of
$800,000, approximately $125,000 will cover the additional repair work in Byxbee Park and the
remaining $675,000 will be used to cover for the discrepancy in the estimate for the operation
of the temporary bypass system within the RWQCP and remaining change order items still
under discussion.
To allow isolation of Junction Box No. 0 (JB-0) inside RWQCP, to evaluate structural conditions,
remove the deteriorated box concrete coating, perform concrete repairs followed by recoating
of the concrete, and replace two severely corroded gates that control influent flows, two
Contingency increases were previously approved. The contractor was requested to remove
accumulated grit in the box and in the RWQCP Influent Pump Station wet well over three
consecutive weekend nights to protect the downstream pumps and other equipment from
damage. Procurement and installation of the new gates were performed under the RWQCP’s
On-Call Emergency Construction contract. Installation of the gates inside JB-0 required that a
portion of the temporary bypass system used during the main relining phase of the Project
remain in operation to keep JB-0 isolated.
The design and cost assumptions for the temporary bypass system accounted for the
operational complexity of the work, including the requirement for continuous 24/7 monitoring
by qualified personnel to ensure system performance and protect public health and safety,
particularly important during periods of inclement weather or elevated wastewater flows.
Because the bypass system was already installed under the SAK contract, staff extended bypass
operations under SAK’s existing contract to minimize mobilization costs.
Subsequent delays in the delivery of the replacement gates extended the period during which
the temporary bypass system was required to remain in operation beyond the duration
originally assumed. As a result, additional equipment rental (8 days) and associated costs were
incurred. In November 2025, the replacement gates were successfully installed, and the bypass
system was subsequently removed. The RWQCP resumed normal operations on November 12,
2025.
Following completion of the construction work, staff initiated final change order negotiations
and determined that the estimated duration for rental equipment required to support gate
installation was insufficient. The original assumptions allowed eight weeks for gates fabrication
and shipment; however it was nine weeks until the gates arrived on site, resulting in daily rental
costs of eight more days until the actual work to install the gates began. As a result, additional
construction contingency is required to close out the project.
In addition to bypass system rental costs, additional restoration work outside the RWQCP is
required including trail restoration from the East Bayshore Road entrance to Byxbee Park and
along the JIS alignment next to Byxbee Park hill. The total estimated cost for the trail
restoration work is $125,000.
FISCAL/RESOURCE IMPACT
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
Attachment A ‐ Partner Agencies Cost Share Summary for Construction Phase (Revised December 2025)
Table A‐1: Project Costs during Construction (Less Bypass Pumping Inside The Plant)
Initial Estimated Project
(2023)
Estimated Cost Fixed Cost Share Current Project
Cost
Estimated Cost
December 2025AgencyOct 2025 %
City of Mountain View
of Palo Alto
of Los Altos
of Los Altos Hills
Subtotal:
$4,398,734 $4,808,985 62.50%$0
$0
$4,809,000
$7,037,975 $7,694,376 100.00%$7,694,000
Table A‐2: Cost for Bypass Pumping during Construction inside The Plant
Initial Estimated Project
in (2023)
Estimated Cost
2025
Est. Cost
%
Current Project
Cost
Estimated Cost
December 2025Agency
City of Mountain View
of Palo Alto
$760,885 $1,917,000 41.50%$332,000
$800,000
$2,249,000
$5,634,000
City of Los Altos
Town of Los Altos Hills
Palo Alto Sanitary District
University
Subtotal:
2.02%
$104,904
$122,736
$1,896,995
$268,000
$310,000
$4,834,000
5.78%
6.75%
100.00%
Table A‐3: Not‐to‐Exceed Cost for Partners during Construction (Sum of Table A‐1 and A‐2)
Initial Estimated Project
(2023)
Estimated Cost
2025
Overall Increase
Share %
Current Project Estimated Cost OctAgencyIncrease Cost 2025
City of Mountain View
of Palo Alto
$5,159,619 $6,726,000 41.50%$332,000
$800,000
$7,058,000
City of Los Altos
Town of Los Altos Hills
Palo Alto Sanitary District
University
Total, Not‐to‐Exceed:
2.02%
$104,904 $268,000 5.78%$314,000
$122,736 $310,000 6.75%$364,000
$8,934,970 $12,528,000 100.00%$13,328,000