Report Prepared by: Joe Cardoso, P.L.S., City Surveyor, Engineering
Title
SUBJECT: Approval of a Contract Change Order No. 3 in the Amount of $184,376 with Diede Construction Inc. for CP230052 - Stephen Leonard Building Rehab
REPORT IN BRIEF
Considers approving Contract Change Order No. 3 in the amount of $184,376 with Diede Construction Inc. for extra work to the Stephen Leonard Building due to Fire, Vandalism, and Owner Betterments.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving Contract Change Order No. 3 in the amount of $184,376 with Diede Construction Inc. for extra work to the Stephen Leonard Building due to Fire and Vandalism damage; and,
B. Authorizing City Manager to execute the necessary documents
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to conditions other than recommended by staff (identify specific findings and/or conditions amended to be addressed in the motion); or,
3. Deny; or,
4. Refer to staff for reconsideration of specific items (specific items to be addressed in the motion); or,
5. Continue to a future meeting (date and time to be specified in the motion).
AUTHORITY
Charter of the City of Merced, Article XI, Section 1109 - Contracts on Public Works, and Merced Municipal Code Chapter 3.04, Article IV - Public Works Contracts.
CITY COUNCIL PRIORITIES
As provided for in the 2025-26 Adopted Budget
DISCUSSION
The Stephen Leonard Park Community Center, located at 640 T Street, Merced, was severely damaged by a fire on the evening of May 17, 2022. The damage was extensive, and a claim was submitted to our property insurance broker, Alliant (APIP). Alliant submitted the claim to McLarens Property Insurance Company to contract hazardous material clean up, work with the City. Partial payments totaling $735,938.01 have been received and accepted by City.
Under the direction of City staff, Teter, LLP, in collaboration with North Star Engineering Group, Inc., prepared plans and specifications for the structural repairs. On November 21, 2022, City Council awarded the construction contract to Harris Builders, Inc., in the amount of $252,550 for the structural and roof repairs to prevent future damages from the weather and future deterioration. Contract Change Order No. 1 was subsequently approved in the amount of $22,322.32 for additional work to the roof section. This portion of work was completed on June 7, 2023.
On October 10, 2024, Council awarded the construction contract to Diede Construction Inc. for the rehabilitation of Stephen Leonard Building in the amount of $1,515,720.
As requested by McLarens Property Insurance for tracking of each insurance claim, the project was split by multiple categories due to the fire damage, vandalism damage, code upgrades, and owner betterments. The following is a breakdown of each category:
• Fire Damage - ($782,151.66) is for the repair of the fire damage minus the $274,872.32 in repairs Harris Builders performed in November 2022. Which include demolition, sealed concrete, roofing, painting, HVAC, and electrical.
• Vandalism Damage - ($245,991.18) During the design phase of the project, the building suffered a significant amount of vandalism, such as removal of electrical wiring, plumbing, fixtures, windows, drywall, doors, and some structural damage.
• Code Upgrades - ($392,489.18) is for any code upgrades to the building such as fire sprinklers, electrical, plumbing, HVAC, fixtures, painting, restrooms, and underground utilities such as gas, electrical, and plumbing.
• Owner Betterments - ($95,087.98) is for the main switch board, fire sprinklers outside of the building, upgrade the roof not damaged by the fire, and some rough carpentry. The main switch board was inspected during construction to determine to require replacement.
Upon review of required work to reopen the facility it was determined that not all costs associated would be covered by insurance claims. On May 5, 2024, Council allocated $150,000 from American Rescue Plan Act (ARPA) for any additional cost for the project rehab that was not being covered by the insurance company such as the owner betterments.
On December 9, 2024, Council allocated an additional $58,343 of ARPA for extra unforeseen costs on the project.
One December 24, 2024, Change Order No. 1 was approved (attachment # 1) for $122,179.00 which included the remodel of the two exterior restrooms, and remove and replace the exterior wood panel facia with metal panels and fully replace the roof gutters.
On June 2, 2025, Council allocated $350,000 from the General Fund and $29,000 from Fund 1017- Economic Development Opportunity Fund 1017 totaling $379,000.
At that meeting project staff received Council direction to address several outstanding issues with the renovation. A second change order was approved which covered the following:
• Change Order No. 2 (attachment # 2)- $91,558.00 which included:
o Replacing the damaged interior doors,
o Resurfacing floors
o Installing a partition wall in the great room to add more functionality to the space.
Before Council is consideration of a 3rd Change Order with Diede Construction and other subcontractors to address remaining priorities. Those costs are as follows:
• Change Order No. 3 (attachment # 3) for $184,376.00 which includes:
o Adding the front foyer
o Removing existing barn door window coverings and replace with security screens
o Add baseboards to the restrooms,
o Pay for the extra work to connect the new Main Switchgear to PG&E service lines.
Additional costs have included a change order for $20,000 to NorthStar Engineering to provide design services and the installation of Security Camera and equipment for $60,532.28, and the installation of a Fire Alarm and Intrusion Alarm for $11,446.00
If Change Order 3 is approved, the total cost to date will be $367,912.28 leaving $11,087.72 of unexpended funds from the $379,000 that was approved on June 2 ,2025.
The facility has seen significant improvements since the project’s inception. All Council priorities will be complete with the completion of this change order save for any work on the kitchen. This shortfall will require potential betterments offered by any organization requesting the use the facility in the future or additional allocations for funding.
IMPACT ON CITY RESOURCES
CP230052 was created as a Capital Improvement Project and there are sufficient funds in the project to proceed. No appropriation of funds is needed.
ATTACHMENTS
1. Original Contract
2. Contract Change Order No. 1
3. Contract Change Order No. 2
4. Contract Change Order No. 3