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Community Development Agency <br />www.santa-ana.org/cd <br />Item # 22 <br />City of Santa Ana <br />20 Civic Center Plaza, Santa Ana, CA 92701 <br /> Staff Report <br />February 15, 2022 <br />TOPIC: Increase Spending Capacity for the Homeless Navigation Center Construction <br />AGENDA TITLE: <br />Approve Increase in Spending Capacity with Dyer 18 LLC for Unforeseen Tenant <br />Improvement Costs Relating to the Homeless Navigation Center (Non-General Fund) <br />RECOMMENDED ACTION <br />Authorize the City Manager to increase spending capacity with Dyer 18, LLC for tenant <br />improvements at the Homeless Navigation Center, in the amount of $2,000,000. <br />DISCUSSION <br />On March 2, 2021, the City Council approved a lease agreement with Dyer 18 LLC for an <br />industrial building located at 1815 Carnegie Avenue to be used as a homeless navigation <br />center. This lease agreement included tenant improvements (construction), as well as a <br />purchase option. The original tenant improvement costs were estimated as $8,500,000 <br />with an additional contingency of $850,000. <br />It has become apparent that the original estimate to complete the tenant improvements <br />will be insufficient to complete the work on this site based on reoccurring unanticipated <br />costs, COVID-19 pandemic-related expenses, and changes in scope. For example, the <br />COVID-19 pandemic has posed significant challenges for supply chains and goods <br />nationwide. Furthermore, there was a disruption in service when goods were unavailable, <br />along with an increase in costs of goods. Specifically, when the current contractor <br />evaluated and estimated construction related costs to make the location habitable, <br />various items were believed to have been completed by a prior construction. It was <br />determined, however, that all work performed by the prior construction entity needed to <br />be re-addressed and or altered. Costs associated with these unforeseen issues were not <br />originally part of the original cost estimate. Additionally, with the goal of opening the site <br />as quickly as feasible, overtime pay was approved as a contingency response. The totality <br />of issues at the site have created these unforeseen financial impacts, and therefore <br />necessitate increased expenditures in the amount of approximately $2,000,000, for a total <br />of $11,350,000 to complete construction and allow occupancy.