Ice Center at Gilroy Sports Park
At their June 20, 2022, meeting, the City Council approved a non-binding term sheet with Sharks Sports Entertainment (SSE) for development of a two-sheet ice facility at Gilroy Sports Park. This is a significant step in the process as the term sheet provides the framework for a final agreement between the Sharks and the City for the funding, construction, and operation of the Ice Center. To get to this point, both the Sharks and the City allocated time and resources to analyze the economic market and determine the financial viability of the project.
At this time, the project is on pause as the City awaits two significant processes – the completion of the Surplus Lands Act process and the voters' consideration of Measure D (described below) on the 2022 November General Election that would permit “design-build” contracts.
The State Surplus Land Act (Government Code Section 54220 et seq) applies generally to any “disposition” of city-owned property. It has various exceptions, but generally requires a city to notify housing developers and public agencies that may be interested in open-space uses of the land prior to any disposition of city-owned property – this is the process that the City completed for the Recreation Gateway Area (previously known as the “536”). For the City to dispose of surplus land, either through sale or a long-term lease, it is required to complete the Surplus Land Act process.
Once both the Surplus Lands Act process and the voters’ consideration of Measure D are completed, the City can re-initiate discussions with the Sharks as soon as early 2023, enabling the City and Sharks to develop a final financing, construction and operating agreement of the facility.
Recreation Gateway Area
The potential development of the unused lands around Gilroy Gardens, known as the Recreation Gateway Area, has completed the State of California Surplus Lands Act process, which requires cities to negotiate in good faith with park and housing developers prior to the disposition of surplus land. As part of this process, the City was required to make a declaration of the surplus land, receive proposals for open space and/or housing, and negotiate in good faith. The City received one proposal from Santa Clara County Parks and over the last few months, the City has been discussing the surplus property with their representatives. The County is focused on maintaining opportunities for future regional trail connections and the City also supports efforts to connect existing trails to enhance the trail system and at this time believes that both goals – trail connections and development of the property for tourism/recreational development - can be achieved.
At their September 12, 2022 meeting, the City Council approved a 12-month Exclusive Negotiating Agreement (ENA) with Select Contracts. An ENA is a condition in which each party grants the other party sole rights regarding a particular business function or product sale and/or purchase. Put another way, exclusivity is an arrangement between two parties wherein neither will explore entering a similar deal with other parties for a certain period.
The exclusivity period would also allow for both the City and Select Contracts to share information pertinent to developing a business agreement that would ultimately be subject to the approval of the City Council.
This process is very similar to the one undertaken for the Sharks Ice project.
Gourmet/Railroad Alleys
The project that is furthest along in its development is the Downton Gourmet Alley. In March 2022, the City was awarded a $3.9 million grant from the California Department of Transportation (“Caltrans”) Clean California Local Grant Program for cleanup events and infrastructure improvements along Gourmet Alley and Railroad Alley. This grant is designed to provide infrastructure investments in those downtown corridors that is anticipated to reduce/eliminate barriers to private development and improve the aesthetics in the alleys. The project is currently in the design phase and is expected to begin construction in early 2023. This project will integrate with another project that is currently under construction – The Downtown Gourmet Parking Lot on Eigleberry and 7th Street, which is expected to be completed in early 2023 and will provide a gateway to downtown for vehicles, bicycles and pedestrians. Both projects will see a total of over $6 million invested in downtown and is expected to support private development in the downtown area.
Measure D
The City Charter’s current standard bidding process requires separate contracts for different elements of the project. This is considered an antiquated approach and typical of charters of that era (1940s). In the development of a public works project over $35,000 in costs, the City would have to procure a designer to design engineered drawings and plans of a project. Once the design is complete, the City then must competitively bid for a contractor to conduct the construction. This process is called Design-Bid-Build. The additional bid time between the designer and the builder/contractor can add three to six months, possibly more, to the timeframe to complete construction. Additionally, as the project is constructed, there can be conflicts between the designer and the contractor regarding construction and design, which can lead to administrative and operational challenges in completing the project, which can drive up costs and delay the project.
Design-Build, as opposed to Design-Bid-Build, is a form of contract where the City would only have to bid a project with a contractor, which would form a team including a designer, and manage all subcontractors for design and construction. Other cities, including San Jose and Santa Cruz with similar Charter provisions, have amended their charters to include design-build as an option when it saves time and money on large projects
Design-build has the potential to save significant time and money on a project, allowing public works dollars to go farther. A Design-Build contract may not be useful in all projects but having the option for the right projects can be essential to delivering a timely and cost-efficient project. On June 20, 2022, the City Council approved the placement of a ballot measure that would amend the City’s Charter language to allow for Design-Build contracting for public projects that cost $1 million or more and follow the California Public Contract Code for Design-Build competitive bidding.
The aforementioned efforts by the City reflect efforts by the City Council and Staff to improve many of the City’s most underutilized assets and continue to implement plans developed years ago for future community improvement which will attract visitors and increase the quality of life for all Gilroyans.
Thank you,
Jimmy