Agenda Item AGENDA STAFF REPORT ASR Control 23-000913
MEETING DATE:	01/23/24
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	5
SUBMITTING Agency/Department:	OC Public Works (Approved)
Department contact person(s):	Fiona Man (714) 647-3953
	Steve Carrillo (714) 955-0129

Subject: Approve Amendment to Agreement with Caltrans for the Laguna Canyon Road Project

ceo CONCUR

County Counsel Review

Clerk of the Board

Concur

Approved Agreement to Form

Discussion

3 Votes Board Majority

Budgeted: Yes

Current Year Cost: $4,338,759

Annual Cost: N/A

Staffing Impact:

# of Positions:

Sole Source: N/A

Current Fiscal Year Revenue: N/A

Funding Source: Fund 174: 100%	County Audit in last 3 years: No
Levine Act Review Completed: N/A

Prior Board Action: 6/2/2020 #S66B, 2/28/2017 #18, 7/12/2016 #9

RECOMMENDED ACTION(S):

Approve Amendment No. 1 to the Agreement between the County of Orange and California Department of Transportation for the Laguna Canyon Road Segment 4 (Phases 2 to 4) Project, effective January 23, 2024, until project completion, to increase the County of Orange’s financial obligation by $4,338,759, for a revised cumulative total of $11,156,584.

Authorize the Director of OC Public Works or designee to execute future amendments to the Agreement provided those amendments do not increase a financial obligation on the part of the County of Orange by more than $200,000.

SUMMARY:

Approval of Amendment No. 1 to the Agreement with the California Department of Transportation for the Laguna Canyon Road Segment 4 (Phases 2 to 4) Project provides safety, drainage and aesthetic enhancements for all roadway users along State Route 133.

BACKGROUND INFORMATION:

In September 2015, the County of Orange (County), California Department of Transportation (Caltrans) and the City of Laguna Beach agreed to combine two planned agency projects into one larger project, the Laguna Canyon Road Segment 4 (Phases 2-4) Project (Combined Project), with Caltrans as the lead implementing agency as depicted on the attached Location Map (Attachment C). The Combined Project will widen the roadway shoulders along Laguna Canyon Road south of El Toro Road to State Route 73 to accommodate Class II, on-road bike lanes, undergrounding existing overhead utilities and improve drainage and safety within the state highway system.

On July 12, 2016, the Board of Supervisors (Board) approved the Preliminary Scoping Agreement MA-080-16012243 between the County and Caltrans that defined the parties’ respective rights and obligations for the development of the Project Study Report-Project Development Support (PSR-PDS). The PSR-PDS preliminary scoping document identified the purpose, need and schedule of the potential federally funded Combined Project; it did not define the design or cost. The obligations of this Preliminary Scoping Agreement have been fulfilled by both parties.

On February 28, 2017, the Board approved Agreement MA-080-17010535 (Design Agreement) between the County and Caltrans. The Design Agreement defined the parties’ respective rights and obligations for the development and completion of the Combined Project Approval and Environmental Documents; Plans, Specifications and Estimate and Right-of-Way.

On June 2, 2020, the Board approved Agreement MA-080-20011606 (Construction Agreement) between the County and Caltrans for construction of the Combined Project and adopted Resolution No. 20-067 for the County to vacate a streets and highways easement for Caltrans to acquire the rights necessary to implement the Combined Project.

While finalizing the work components of the Design Agreement, the Combined Project encountered numerous challenges, including, but not limited to, environmental litigation, difficulty obtaining approvals for drainage components and design changes related to utility undergrounding work. These challenges resulted in significant delays, which potentially jeopardized Caltrans funding if the Ready-to-List schedule was not met. To mitigate the funding risk, Caltrans moved forward with the bid and award process. Caltrans awarded the construction contract for the Combined Project to Granite Construction (Contractor) on February 23, 2021, with the lowest responsible bid of $6,845,845. Combined Project construction began on December 5, 2022, after obtaining final Combined Project approvals, finalizing the utility undergrounding, approving Contractor pre-construction submittals, addressing requests for information and mitigating resource impacts related to the COVID-19 pandemic.

Although the construction start was delayed, the Contractor continued to partner with the Combined Project team through the final Combined Project approvals. However, these delays and construction contract changes resulted in significant cost increases. For example, the construction market experienced tremendous material escalation during this time. For bid items that did not require subcontractor substitute or material cost rebid, the Contractor assumed a market escalation of 30 percent. The Contractor provided Caltrans with an updated cost estimate to complete the Combined Project for a total of $14.8 million. Caltrans independently updated their Engineer’s Estimate (EE) for today’s market to approximately $15 million, about 56 percent higher than the original EE. Both estimates include Time Related Overhead, item adjustments for the prime Contractor and its subcontractors, change orders to date and contingency for future change orders.

The Contractor continues to make progress by constructing check dams, a driveway for Anneliese School and grading to support the roadway widening. Utility undergrounding is expected to begin in February 2024. Caltrans is requesting a time extension from the California Transportation Commission (CTC) in January 2024 to complete the Combined Project by Fall 2025.

For both the Design and Construction Agreements, Caltrans is funding the roadway safety and drainage components and the County is funding the roadway shoulder widening and utility undergrounding. The Construction Agreement stipulates co-sponsorship of the construction capital and administrative support in accordance with the following percentages: Caltrans 57 percent and County 43 percent. In accordance with the Construction Agreement, the County and Caltrans desire to update and replace the Funding Summary of the Construction Agreement based on actual costs incurred and updated estimates to complete construction of the Combined Project.

On October 19, 2023, Caltrans received $5,751,378 in additional funding from the CTC for Caltrans’ sponsorship portion of the construction work. OC Public Works is recommending Board approval of Amendment No. 1 to the Construction Agreement, which increases the County’s estimated financial obligation by $4,338,759 and updates the funding table of the estimated construction costs for both parties in accordance with the original Construction Agreement co-sponsorship financial obligation percentages. OC Public Works is also recommending delegating authority to the Director of OC Public Works or designee to execute future amendments to the Construction Agreement provided those amendments do not increase a financial obligation on the part of the County by more than $200,000.

Compliance with CEQA: The proposed action is not a project within the meaning of CEQA Guidelines Section 15378 and is, therefore, not subject to CEQA since it does not have the potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. The approval of this agenda item does not commit the County to a definite course of action in regard to a project since the Construction Agreement sets forth the County’s primary financial rights and obligations concerning the Combined Project. Any future action connected to the approval of the proposed action that constitutes a project under CEQA will be reviewed for compliance with CEQA.

FINANCIAL IMPACT:

Appropriations for this Amendment are included in Fund 174, OC Road - Capital Improvements, FY 2023-24 Budget.

On October 19, 2023, the CTC approved $5,751,378 in additional funding for Caltrans’ sponsorship portion of the Combined Project. This Amendment does not change the financial obligation percentages for either party, summarized as follows: Caltrans 57 percent and County 43 percent.

STAFFING IMPACT:

N/A

ATTACHMENT(S):

Attachment A - Amendment No. 1 to Agreement MA-080-20011606 with Caltrans
Attachment B - Redline to Agreement No. MA-080-20011606 with Caltrans
Attachment C - Project Location Map