Meeting_Body
CONSTRUCTION COMMITTEE
SEPTEMBER 18, 2024
Subject
SUBJECT: METRO TRAINING & INNOVATION CENTER (MTIC)
Action
ACTION: APPROVE RECOMMENDATIONS
Heading
RECOMMENDATION
Title
CONSIDER:
A. INCREASING the Life of Project Budget for the Metro Training & Innovation Center (Project) by $1,409,000, from $19,900,000 to $21,309,000; and
B. AUTHORIZING the Chief Executive Officer to amend the FY25 Budget in the amount of $1,091,000 to fund operational costs for the Metro Training & Innovation Center.
Issue
ISSUE
The Life of Project (LOP) budget for the Metro Training & Innovation Center Project requires an increase of $1,409,000 for additional costs related to tenant improvements and furniture, fixtures, and equipment for the office space. The FY25 Budget will also need to be amended in the total amount of $1,091,000 to pay for the Project’s first year operations. The LOP budget increase and FY25 budget amendment will be funded by the FY2023 Transit Infrastructure Grant for $2,500,000 which is eligible for use on both capital and operating costs associated with the Metro Training & Innovation Center.
Background
BACKGROUND
The Evermont mix-used development located at Vermont Avenue and Manchester Avenue consists of a six-story mixed-use affordable housing and community-serving retail, an open transit plaza, a job training center, a six-story SEED boarding school with faculty residential units, full-service grocery store, and 383 parking spaces located at the ground-level and within a 3.5-level parking structure.
The Project features 15,000 square feet of office space and includes five large rooms designed as flexible conference spaces that can be utilized as a computer lab, training room, and to host a number of professional development programs. The Project has 60 dedicated parking spaces, passenger elevator, Metro signage, and transit-related amenities throughout the Transit Plaza.
In October 2020, the Board approved a Life of Project budget of $19,900,000 and authorized the Chief Executive Officer to finalize negotiations on ancillary terms, execute agreements, and to authorize construction and funding Metro’s share of the mixed-use development. Since that time, Metro executed an Office Lease with the Developer, Primestor, and include the following:
• Metro to design and fund the construction of the tenant improvements in an amount not to exceed $11,600,000.
• Owner to construct the shell and exterior of the space.
• Owner to construct the tenant improvements according to Metro’s approved final design.
• Duration of a 15 year lease with four five year options.
• Annual base rent starting at $630,000 and subject to CPI increases not to exceed 3%.
• Base rent includes janitorial service, trash removal, pest control, electricity, natural gas, water, and sewer (if applicable).
• Metro will have access to 60 reserved parking spaces throughout the term of the agreement.
• The location of the reserved parking spaces is subject to Metro’s approval.
• The term of the Parking Rights Agreement is 35 years.
As of this report, the Project is approximately 55% complete and is on schedule for completion before December 2024.
Discussion
DISCUSSION
LOP Increase
The approved LOP budget was based on the conceptual design prepared during final office lease negotiations with the Developer. Since then, Project staff have completed the design and authorized construction of the tenant improvements. The Developer and Project Staff have been working diligently to complete the project within the approved budget; approximately $11,751,000 has been expended to date however, the LOP as established prior to the contract notice-to-proceed has been determined to be inadequate given the complexity of the Project.
During the construction, several unanticipated design issues and different site conditions resulted in impacts to the project budget. For example, the field condition of the ceiling height and structural beams of the core and shell conflicted with the design of the tenant improvements. This led to extensive redesign of mechanical, electrical, and plumbing (MEP) lines and elimination of interior walls. As a result, construction and design support during construction increased by $636,000. In addition, the estimated cost to procure the furniture, fixtures, and equipment needed to open the center is $773,000. The total forecast of costs for additional design services during construction, furniture, fixtures, and equipment necessary for project opening is $1,409,000.
This LOP increase addresses all current and future direct and indirect cost impacts and will provide sufficient funding to cover the increased costs through completion of the project.
Budget Amendment
Once complete, the Metro Training & Innovation Center will provide professional development resources and job training for existing Metro employees and residents from across the County seeking employment and professional advancement. Metro Staff are designing programming for the Metro Training & Innovation Center to build the future’s infrastructure workforce.
An FY25 budget amendment of $1,091,000 is needed for operational costs, including the lease, staffing needed to operate the MTIC five days a week, marketing, and community outreach, and administrative costs related to opening and the day-to-day operations.
MTIC Programming
The Metro Training & Innovation Center will provide resources and job training for existing Metro employees and residents from across the County seeking employment and professional advancement.
• For existing Metro employees, staff have designed workforce development programming to include skills training (resume and interview workshops), a testing center, professional development programming (Metro Leadership Academy and EnoMAX), internship programs and youth initiatives. MTIC will provide computer lab access for employees to conduct mandatory and specialized trainings related to their job functions.
For residents across the County, Metro will host hiring and recruitment initiatives, including but not limited to Job Fairs, Room to Work Initiatives/Workforce Re-entry Trainings, and Veterans Career Transition Workshops. MTIC will offer access to Metro’s job board and online application system for job seekers. Metro is exploring partnership opportunities with community and government stakeholders who have existing job readiness programs such as work centers focused on careers in various fields from construction, logistics and transportation.
Determination_Of_Safety_Impact
DETERMINATION OF SAFETY IMPACT
Approval of these actions will have no impact on safety. The completion of this Mixed-Use Development and Transit Plaza will offer opportunities to improve safety for transit riders by installing new lighting and activating the area with new uses and transit related amenities.
Financial_Impact
FINANCIAL IMPACT
The LOP budget increase in project 405901 and FY25 budget amendment for the first year’s operating costs will be funded by the FY2023 Transit Infrastructure Grant for $2,500,000 which is eligible for use on both capital and operational costs associated with Metro Training & Innovation Center. An FY25 budget amendment is not required for the capital costs as an annual budget of $4,297,617 has been included in the FY25 adopted budget in cost center 8510 and project 405901.
In an effort to keep future costs neutral, Metro will engage community partners and issue a Request for Proposals to workforce development agencies and community-based organizations, allowing the opportunity to compete for hosting programming at the MTIC. The first year of use will be at no cost to the community and will be funded through the FY2023 Transit Infrastructure Grant. In addition, Metro will pursue additional grant funding to contribute towards future MTIC costs.
This is a multi-year Project with substantial completion in the second quarter of Fiscal Year 25. Upon approval of the revised LOP budget, staff will manage the Project within the Board approved budget. It is the responsibility of the Project Manager to budget for the MTIC project in future fiscal years.
Impact to Budget
The FY25 budget impact is $1,091,000 which includes operational costs for the Metro Training & Innovation Center. Funding sources come from the FY2023 Transit Infrastructure Grant.
Equity_Platform
EQUITY PLATFORM
The Evermont Mixed Use Project presents a unique opportunity for Metro to engage South Los Angeles community residents in the revitalization efforts aimed at transforming a site that has been vacant and undeveloped since the civil unrest of 1992 into a viable community asset. The project is located within a cluster of equity focus communities, in which, approximately 63% of residents are Latino, 36% are Black, and 39% of the households earning less than $25K a year. Additionally, less than 4% of the residents in the area have a four-year degree. There are stark disparities in employment, education, housing, and food access.
This request to increase the LOP and amend the FY25 budget would ensure that Metro fulfills its commitment to expand access to workforce development opportunities for residents living nearby, as well as disadvantaged residents from across the county seeking opportunities for job training to prepare themselves for careers in the transportation infrastructure industry. Metro’s continued investment in this historically disinvested community, and development of the MTIC will help address the community’s pronounced need for affordable housing, fresh grocery stores, access to education, job training opportunities, and providing mobility options for a community with less access to transit. This decision will help address the economic inequities that continue to plague our region.
Implementation_of_Strategic_Plan_Goals
IMPLEMENTATION OF STRATEGIC PLAN GOALS
This action directly supports the Project, which is consistent with Metro’s Strategic Plan Goals to enhance communities and lives through mobility and access to opportunity. By constructing the Metro Training & Innovation Center, the Project seeks to better connect residents to workforce development opportunities and a wider range of regional employment, travel, and cultural opportunities.
Alternatives_Considered
ALTERNATIVES CONSIDERED
The Board may choose not to adopt the proposed increase to the LOP. This would not be recommended because without the additional grant funds, Metro could not complete the tenant improvements and furniture, fixtures, and equipment for the project and meet our grant obligations. Moreover, the MTIC will not only be integral component of a larger development to help to revitalize the South Los Angeles area, but also serve as a resource for existing employees and disadvantaged community members seeking employment and professional development.
Next_Steps
NEXT STEPS
Upon approval, staff will revise the LOP budget and execute necessary modifications to the construction contract, and any necessary task orders in support of the Project. Additionally, staff will move forward with staffing and operational needs related to operating the day-to-day operations of this facility, including MTIC programming for Metro employers and LA County residents.
Attachments
ATTACHMENTS
Attachment A - Funding and Expenditure Plan
Prepared by
Prepared by: Kenyon Price, Director, Construction Management (213) 922-7446
Ayda Safaei, Deputy Executive Officer, Talent Development (213) 922-5229
Reviewed_By
Reviewed by: Tim Lindholm, Interim Chief Program Management Officer, (213) 922-2797
IIyssa DeCasperis, Chief People Officer, (213) 922- 3048
