AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: GABINO C. LUNA
PUBLIC WORKS DIRECTOR
SUBJECT:
title
BUDGET ADJUSTMENT FOR GUNDRY RESERVOIR ROOF REPLACEMENT AND REHABILITATION (PROJECT NO. 95.23001)
summary
Summary:
Originally constructed in 1929, Gundry Reservoir, located within Reservoir Park at 3315 Gundry Avenue, is a concrete water storage tank with a capacity of five-million gallons. Over several decades, the reservoir has undergone multiple upgrades, including the replacement of its original wooden roof framing with a steel structure. In March 2022, an interior and structural inspection identified failing structural roof members, requiring a complete roof replacement and recoating to maintain water quality and structural integrity. In June 2025, the City Council awarded a Public Works contract to Spiess Construction Company, Incorporated to construct the project. The Gundry Reservoir rehabilitation project is now approximately 80% complete, with the new aluminum panel roof and steel columns system installed over both the reservoir and sand basin structure. During the preparation of the existing concrete surface, staff and the contractor encountered unforeseen conditions, including three prior surface sealer coats underneath the existing lining, which prevented the repair of the surface and found to be chemically and mechanically incompatible with the new coating system. Staff recommends the City Council authorize a $185,000 budget appropriation, for a total project budget of $8,033,717. If approved, staff would use the funds to process a change order for the additional labor and material required to sandblast the reservoir walls and complete the project.
Strategic Plan Goals:
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Goal No. 1 |
Ensure the City’s long-term financial stability and resilience. |
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Goal No. 2 |
Maintain community safety by supporting public safety services and increasing emergency preparedness. |
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Goal No. 3 |
Improve the local economy, support local businesses, and create a downtown core. |
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Goal No. 4 |
Infrastructure: Maintain and improve the City’s physical Infrastructure, water system, and recreational spaces. |
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Goal No. 5 |
High-Functioning Government: Strengthen internal communications, recruitment, retention, systems, and processes to increase the effectiveness and efficiency of City services. |
recommendation
Recommendation:
Adopt a Resolution, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, AMENDING THE ADOPTED BUDGET AND AUTHORIZING BUDGET APPROPRIATIONS FOR FISCAL YEAR 2026-27.
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Fiscal Impact:
The Gundry Reservoir Roof Replacement and Rehabilitation Project (Project No. 95.23001) has an approved project budget of $7,848,717, funded through the Water Fund and two General Fund loans. The Water Rate Study and Master Plan anticipated a total allocation of $8,268,750 for this project; therefore, the total project budget up to $8,268,750 is consistent with the Water Master Plan. To complete the project, staff recommends increasing the approved project budget to $8,033,717 by appropriating an additional $185,000 from the Water Enterprise Fund Balance to the FY 2026-27 Water Fund Capital Improvement Project budget.
The proposed recommendation to increase the allowable amount spent on Project No. 95.23001 would decrease the Water Fund balance; however, sufficient reserves are available to absorb the increase without impacting fund operations. In addition, staff identified savings within the Water Enterprise Fund to offset these additional costs in the Capital Improvement Program’s Valve Replacement Project by analyzing real-world project costs and valve replacement quantities. Savings realized at the completion of the Valve Replacement Project would help offset the additional costs of the Gundry Reservoir project and replenish the Fund Balance.
Background:
Gundry Reservoir, located on the south side of Reservoir Park and north of 33rd Street, is a partially buried cylindrical concrete water storage tank with a capacity of five million gallons. The reservoir measures approximately 200 feet in diameter and 20 feet in height. Since its original construction in 1929, the reservoir has undergone several significant improvements. In the 1990s, the City replaced the original wooden roof framing system with a steel truss and plate system. In 2006, the City applied a watertight interior coating and completed a partial roof replacement, resulting in two distinct roof structures.
Over time, the steel roof plate and several structural components deteriorated, causing certain framing members and exhaust fan penetrations to fail. In March 2022, the City inspected the reservoir’s interior and structural elements to ensure compliance with routine maintenance and ongoing water quality standards. After thoroughly assessing both the interior and exterior structure, staff determined that the project requires a complete roof replacement, as well as the removal and reapplication of the existing watertight coating, to preserve water quality standards and maintain the facility’s structural integrity.
Analysis
Over the past three years, staff has taken the appropriate steps to prepare for this significant project by initiating an exploratory evaluation, engaging in extensive design work, and securing funding. On April 25, 2023, the City Council awarded a professional consulting services agreement to Ardurra Group, Incorporated (Ardurra) to develop engineered plans and specifications for the Gundry Reservoir Roof Replacement and Rehabilitation Project (Project), with a design cost not-to-exceed $299,313. Subsequently, in July 2024, Ardurra provided the final bid-ready plans and specifications, approved by the Public Works Department and the City Engineer.
On June 24, 2025, the City Council awarded a Public Works contract to Spiess Construction Company, Incorporated (Spiess) with a construction cost, including contingency, not to exceed $7,377,851. To support project delivery, the City assembled a project team by retaining active on-call contract consultants with specialized expertise. Associated Soils Engineering, Incorporated (ASE) provided materials testing services, KPFF Consulting Engineers for construction support services, and MCM Management Company for construction management services.
Spies commenced construction on January 26, 2026, beginning with the decommissioning of the treatment plant and demolition activities. After the contractor successfully demolished the existing roof cover and original coating systems, Public Works staff and City consultants entered the reservoir to inspect the exposed concrete surface walls and slab. During the removal of the existing surface coating, the contractor encountered unforeseen conditions on the reservoir walls discovering that up to three prior surface sealer coats were buried underneath the existing lining in different states. The construction team also discovered that an unknown bituminous material was placed within many of the floor joints which required complete removal to properly repair the joints. These legacy sealer coats and joint materials would prevent the successful repair of the concrete surface and are chemically and mechanically incompatible with the new interior coating system.
Due to these unforeseen conditions, the construction contractor required the use of additional labor and materials to extensively sandblast the wall surfaces to properly prepare the concrete for the new reservoir lining and to extract the existing bituminous material from the joints. Based on the review of change orders to date, completing this necessary surface preparation alongside previously authorized concrete and slab coating changes, increased the projected construction contract value to $7,239,181. The following table evaluates the anticipated project costs, including all additive and deductive change orders processed to date, the proposed change order for the sandblasting effort, and other soft costs such as design, construction management, and engineering support.
Staff identified potential savings in the Valve Replacement Project, and if savings are realized, the funds would offset the additional costs of the Gundry Reservoir project and replenish the Fund Balance.
As shown in the project cost analysis table above, processing the required change orders for the sandblasting and surface preparation creates a project budget deficit of $136,218. Staff recommends mitigating this shortfall and including a project close-out contingency by requesting a budget appropriation totaling $185,000. The revised project budget of $8,033,717 will continue to be funded through the Water Fund and two General Fund loans.
Staff recommends approval of the budget resolution to increase the project capital improvement budget to support the project completion.
Reviewed for Fiscal Impact:
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Siamlu Cox
Attachment:
A. Budget Resolution
B. Exhibit A - Budget Adjustment Status Report (as of 11-10-26)