By Jorge Casuso

June 12, 2019 -- Moving quickly to lock in the price, the Santa Monica City Council on Tuesday approved a $37 million contract to lay the groundwork for a new City Yards.

The amendment to the contract with Hathaway Dinwiddie Construction Company -- which brings the total contract to $47 million -- guarantees a maximum price to lay the underground foundations and site utility work at the yards at 2500 Michigan Avenue.

Rendering of proposed City Yards (Courtesy City of Santa Monica)

By locking in the price and beginning demolition and construction work in July, the City would save an estimated $4 million to $5 million in "construction market escalation costs," Public Works officials said.

The department, which is overseeing major capital projects including the new Fire Station Downtown, the City Hall annex and the proposed Pier bridge, is ready to tackle a project, officials said.

"Staff has been working on this for a couple of decades," Public Works Director Susan Cline told the Council.

Waiting for construction prices to drop during a possible recession also could prove a costly gamble, since major public projects financed with bonds will likely keep the construction industry busy, officials said.

"We either just have to say stop and say we like the yards as they are for ten years or wait til we have a recession," City Manager Rick Cole told the Council.

"So I think it's almost less work to move forward than to go backwards," he said.

Built 70 years ago, the City Yards -- which is the primary base for City maintenance services -- has "become woefully outdated, unsafe and a poor fit for today’s operational demands," staff said in its report to the Council.

"Simply put, the City Yards is the heart of our public works functions –- and this overworked 70-year-old heart is long overdue for major surgery," staff wrote.

Replacing the City Yards will take place in phases as the existing 16 buildings and structures built over the years are demolished and new buildings are put up.

The new facilities will relocate staff currently scattered throughout the 14.7-acre site and make it easier for people to safely travel through the site using different modes of transportation.

It also will use current building standards and meet the City's goal of Net Zero Energy use by not increasing energy and water use.

The maintenance services run out of the City Yards include water, resource recovery and recycling, fleet maintenance and fire training, staff said.

The site also houses storage facilities and has served other industrial uses since the 1940s.

"Over that time, Santa Monica’s population and workforce have grown, there have been consistently increasing updates in technology, and the City has completely overhauled the equipment and practices used for servicing our citywide infrastructure," staff said in its report.

Staff plans to return to the Council in December with another Guaranteed Maximum Price agreement with Hathaway Dinwiddie for the remaining $64.6 million required to complete the project.

Funding will be paid by issuing Lease Revenue Bonds and using money from certain City enterprise funds, staff said.