To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Jeff Brauer, Director of Parks and Recreation
Title
Resolution Approving the Letter Agreement by and Between CD-ACME, LLC and the Town of Castle Rock Regarding the Construction of the Castle Rock Sports Center Project
Body
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Executive Summary
Parks and Recreation Department staff seek Town Council approval of a Resolution approving the Recreation Center Development Agreement with CD-Acme, LLC and a Letter Agreement Preceding the Castle Rock Sports Center. These agreements outline the necessary steps for the construction of the Castle Rock Sports Center ("Project"), which will be built on property currently owned by Acme and later conveyed to the Town.
Discussion
Letter Agreement Preceding the Castle Rock Sports Center
Due to the parties’ desired construction schedule and potential cost escalations, Acme and the Town have agreed to enter into a letter agreement permitting early procurement of trade agreements and materials. This agreement allows Acme to:
• Execute necessary trade agreements and order materials to maintain the Project schedule and minimize budget increases.
• Authorize expenditures up to a maximum aggregate of $5,000,000 for essential procurement.
• Ensure that only cost-saving and schedule-preserving expenditures are approved under this authorization.
• Submit invoices to the Town for reimbursement, with payments to be made within 30 days upon receipt and substantiation of costs.
• Credit all expenditures against the final Guaranteed Maximum Price (GMP) budget of the Project.
Rec Center Development Agreement
The Rec Center Development Agreement formalizes the arrangement between Acme and the Town for the construction of the Castle Rock Sports Center, a 145,177-square-foot recreation facility. Key provisions include:
1. Property Conveyance
o Acme agrees to dedicate and transfer ownership of the property to the Town through a special warranty deed.
o The Town grants Acme construction access to the property until the opening of the facility.
2. Project Development
o Acme is responsible for overseeing construction, obtaining permits, and managing stakeholders.
o The Town’s architect will develop the construction plans, subject to approval by both the Town and Acme.
o The facility’s construction will include utilities, infrastructure, landscaping, and parking.
3. Construction Oversight and Budget
o Acme will negotiate a GMP construction contract with a selected contractor (Saunders Construction, unless otherwise agreed).
o Acme will ensure that all construction costs, up to the agreed-upon GMP, are appropriately managed and monitored.
o The Town will provide full funding for the construction costs through the issuance of Certificates of Participation.
o The agreement includes contingency provisions for both the contractor and the Town to manage budget adjustments.
4. Project Timeline
o Construction is expected to commence on or about July 1, 2025.
o The completion deadline is set for 25 months from the commencement date.
o Acme will take commercially reasonable measures to expedite completion while adhering to safety and budget constraints.
5. Ownership and Operations
o Upon completion, the Town will assume ownership of the recreation center.
o Acme and the designated Development Manager will be released from obligations once construction is finalized.
o The Town will be responsible for facility operations and any warranty-related matters with the contractor.
6. Financial and Contractual Provisions
o The agreement ensures a payment and performance security for 100% of construction costs.
o A final construction budget will be approved by the Town before contract execution.
o The Town retains approval rights over amendments to the construction contract and change orders affecting costs.
o Any cost savings in construction will be allocated between the Town and the contractor.
Budget Impact
The Guaranteed Maximum Price (GMP) for the Project was initially presented as $72 million during the Brickyard Zoning hearing. The contract amount included a 2.5% owner's contingency. However, to address potential costs associated with upcoming tariffs, Acme is proposing to increase the contingency to 5% for a total GMP of $74,711,319.41. This adjustment aims to mitigate financial risks stemming from market volatility and ensure that unforeseen expenses do not compromise project completion. The Town will need to evaluate and approve this proposed increase to ensure proper budget management and cost control.
The Letter Agreement Preceding the Castle Rock Sports Center will authorize Acme to expend up to a maximum aggregate of $5,000,000 for essential procurement for project trade agreements to be executed and materials ordered, in each case as needed to minimize increases in the Project GMP budget.
Conclusion and Next Steps
The Letter Agreement Preceding the Castle Rock Sports Center and the Rec Center Development Agreement establish a framework that enables early-stage procurement, maintains budget efficiency, and ensures the timely development of the Castle Rock Sports Center. Council approval and oversight will be critical to ensuring the successful execution of this agreement.
Staff Recommendation
Staff recommends Town Council approve the Resolution.
Proposed Motion
“I move to approve the resolution as introduced by title.”
Alternative Motions
“I move to approve the resolution as introduced by title, with the following conditions: (list conditions).
“I move to continue this item to the Town Council meeting on _____ date to allow additional time to (list information needed).”
Attachments
Resolution
Rec Center Development Agreement
Letter Agreement Preceding the Castle Rock Sports Center