REPORT TO THE CITY COUNCIL
FROM: PAUL AMICO, PE, Director
Department of Public Utilities
BY: JOSEPH DE GEORGE, PMP, Project Manager
Department of Public Utilities - Utilities Planning & Engineering
SUBJECT
Title
Cancellation of the Construction Contract between the City of Fresno and Avison Construction, Inc., of Madera, California, in the amount of $2,584,590 for the Site Improvements for the Department of Public Utilities Operations and Maintenance Facility (Bid File 12500107) (Council District 3).
Body
RECOMMENDATION
Staff recommends that the City Council cancel the Construction Contract between the City of Fresno (City) and Avison Construction, Inc. (Avison), of Madera, California in the amount of $2,584,590 for the Site Improvements for the Department of Public Utilities (DPU) Operations and Maintenance Facility (Facility) located on the former Fresno Bee property located at 1626 E Street.
EXECUTIVE SUMMARY
The Department of Public Utilities (DPU) acquired the former Fresno Bee property at 1626 E Street with the goal of consolidating the Water, Solid Waste, and Administration Divisions into a single location. The pavement was significantly deteriorated in large portions of the parking lot, security fencing needed to be upgraded, and other site improvements were needed to update the site for use. Following a competitive bidding process, City Council awarded a construction contract for these improvements to Avison Construction, Inc. for $2,584,590 on May 22, 2025. Before work began, the Facility’s central air conditioning system suffered a catastrophic failure, and it cannot be cost-effectively replaced. Staff recommends terminating the contract with Avison under City of Fresno Standard Specifications Section 6-6 while the options for future site use are evaluated.
BACKGROUND
In April 2021, DPU purchased the former Fresno Bee property at 1626 E Street, a 14.84-acre site with a 295,227-square-foot industrial building. The Facility was intended to house multiple DPU divisions, including Solid Waste Management and Water, to improve operational efficiency. DPU Administration, Utilities Planning and Engineering (UP&E), and Beautify Fresno staff moved into the existing building in 2022, occupying approximately 15,000 square feet of the existing building. Other City departments use portions of the building and site for storage or overflow operations.
To support this transition, DPU initiated a competitive bid process for site improvements. A Notice Inviting Bids was published March 14, 2025, and six proposals were received on April 15, 2025. Avison Construction submitted the lowest responsive bid of $2,584,590, which was 1.8% below the engineer’s estimate. City Council awarded the contract on May 22, 2025.
On June 23, 2025, the building’s existing central air conditioning system failed catastrophically and cannot be restored. Building climate control is provided by centralized systems designed to condition the building’s entire occupied office space, and the equipment was installed in the early 1990s. The equipment is beyond its service life and cannot be scaled to condition only the currently occupied space. DPU retained a site master plan consultant and the first phase of the master plan evaluated the existing building and site’s suitability for renovation and redevelopment. Climate control system replacement, parking capacity, and inefficient site circulation were identified as the key issues that will control alternatives for building reuse and limit future site redevelopment.
DPU staff has temporarily relocated to several different City facilities while options for consolidating operating divisions are being evaluated. Staff analyzed operational costs compared to current needs, and combined with the master plan consultant’s evaluation, concluded that the building should be demolished to make the site available for DPU’s long-term use or for future redevelopment. Therefore, staff recommends terminating the contract with Avison pursuant to Section 6-6 of the City’s Standard Specifications while the evaluation is being completed.
ENVIRONMENTAL FINDINGS
By the definition provided in the California Environmental Quality Act (CEQA) Guidelines Section 15378, the termination of this agreement is not a “project” as defined by CEQA.
LOCAL PREFERENCE
Local preference was not implemented as this is a Construction Contract termination.
FISCAL IMPACT
There is no impact on the General Fund. Approval of the amendment to the AAR No. 2024-122 established funds for this Project in the DPU Operations and Maintenance Budget Fund 5200-5253. This Project is in Council District 3.
Attachments:
Construction Contract
City of Fresno Standard Specifications (referencing Section 6-6)