Report Prepared by: Laura Ivancich, Management Analyst, Engineering Department
Title
SUBJECT: Approval and Ratification of an Agreement with Belfor USA Group, Inc., dba Belfor Property Restoration and an Increase in Contingency in the Amount of $89,950 for Change Order 1 with CVE Demolition, Inc. for Additional Work Related to the Sun Star Building Demolition Project, CP250067
REPORT IN BRIEF
Considers approving to ratify the agreement with Belfor Property Restoration for emergency mitigation services and approving an increase to the contingency in the amount of $89,950 for Change Order 1 due to the additional scope of work to demolish the existing foundation at the Sun Star Building.
RECOMMENDATION
City Council - Adopt a motion:
A. Ratifying an Agreement with Belfor USA Group, Inc., dba Belfor Property Restoration in the amount of $118,116.36; and,
B. Approving of the Increase in Contingency of $89,950 for a total contingency amount of $132,305, which is approximately 62.47% of the original agreement amount, for Change Order 1 with CVE Demolition. Inc., for demolition of the foundation at the Sun Star Building; and,
C. Authorizing the City Manager to execute and sign the necessary documents.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to conditions other than recommended by staff; or,
3. Deny; or,
4. Refer to staff for reconsideration of specific items; or,
5. Continue to a future meeting.
AUTHORITY
Article XI - Fiscal Administration and Municipal Code Section 3.04.210 - Exemptions from Competitive Bidding.
CITY COUNCIL PRIORITIES
As provided in 2024-2025 Adopted Budget.
DISCUSSION
The Sun Star Building was damaged by a structure fire on the evening of August 27, 2024. The damage was extensive, and a claim was submitted to the City’s property insurance broker, Alliant (APIP). Alliant submitted the claim to McLarens Property Insurance Company to contract hazardous material clean up, work with the City and contractors to develop a scope of work for repairs, and payment of the claim.
On August 28, 2024, McLarens contacted Belflor Property Restoration for Emergency mitigation of the Sunstar Building. Mitigation services were performed in the main office area which included, water extraction, dehumidifiers, air movers, and air filtration devices. This was implemented to begin immediate stabilization and dry-down of the building structure. The City received an invoice in the amount of $118,116.36 for the mitigation services rendered.
On November 20, 2024, McLarens requested the processing of a partial proof of loss to the City of Merced for the actual cash value of the building minus the $25,000 deductible. The amount of the payment was $1,401,256.94. The City also expects to receive additional payments from McLarens for immediate emergency work that had been completed in response to the fire.
On February 18, 2025, City Manager, Scott McBride, declared an emergency per Merced Municipal Code Section 3.04.300 which determined that there was an urgent necessity for the preservation of life, health, and property. Since the building was severely damaged by the fire, it left it structurally unsafe and dangerous to enter. Attempts had been made to secure the building from unauthorized access but there were reports that it was continuously being broken into. This not only tied up police resources daily but also created a liability for the City.
On March 17, 2025, City Council approved a statement of services in the amount of $211,775 with CVE Demolition Inc to perform asbestos abatement and demolish the Sun Star building to the foundation. A 20% contingency of $42,355 was also approved at this meeting. Since then, staff determined it was necessary to demolish the foundation due to potential hazards and it would also clear the site for any future development for an additional cost of $89,950.
Due to the risk of life and safety and the emergency order in place, the Belfor Agreement for remediation services and the change order to demolish the foundation of the Sun Star building have been executed by the City Manager or his designee to ensure the project is completed in a timely manner.
Staff is requesting ratification of both the Belfor Property Restoration agreement and Change Order 1 including the approval of the increase in contingency of $89,950 to CVE Demolition for the demolition of the foundation, leaving the remaining original contingency amount of $42,355 for any potential unforeseen changes that may arise during the demolition.
IMPACT ON CITY RESOURCES
CP250067 has been established as a Capital Improvement Project and has sufficient funding with the use of pooled cash until reimbursement is received by the insurance company.
ATTACHMENTS
1. Belfor Property Restoration Agreement
2. Belfor Invoice
3. Executed Statement of Services with CVE Demolition
4. Change Order 1 with CVE Demolition