TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Brian Crawford, Municipal Services Director
PREPARED BY: Brian Crawford, Municipal Services Director
SUBJECT:
title
Murrieta Children's Library Expansion Project Financing, Award of Construction Contract, Amendment of the Architect’s Contract, and Authorization for Project Management Services
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RECOMMENDATION
recommendation
Amend the Fiscal Year 2025/26 Operating and Capital Improvement Plan budgets to provide an additional budget appropriation for Capital Improvement Project No. 21027 as detailed in the fiscal impact statement; and
Appropriate $3,500,000, from the Measure T Sustainability Reserve Account;
Adopt Resolution No. 25-4884 entitled: A Resolution of the City Council of the City of Murrieta, California, to Approve an Interfund Loan up to $3,500,000, from the Measure T Fund to the Library Development Impact Fee Fund to Partially Fund the Children’s Library Expansion Project (CIP 21027);
Approve a Second Amendment and Change Order to Purchase Order P03681, SVA Architects, Inc., in the amount of $55,603, for architectural design services and out-of-scope work;
Award the construction contract for the Murrieta Children's Library Expansion, Capital Improvement Project No. 21027, to the lowest responsible bidder, R.C. Construction, in the amount of $5,188,600, plus a 15% contingency; and
Authorize the Mayor to execute the agreements.
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PRIOR ACTION/VOTE
On June 6, 2023, the City Council approved and authorized the City Manager to execute an Agreement with SVA Architects, Inc., for architectural design services for the Murrieta Public Library Expansion Project in the amount of $302,300 (Vote: 4-0-1).
On May 7, 2024, the City Council approved Agreements for On-Call Vertical Construction/Project Management Consulting Services between the City of Murrieta and RWBID Construction Management LLC, Griffin Structures, and Transtech Engineering (Vote: 5-0).
On June 18, 2024, the City Council approved moving forward to the next phase of project design for the Murrieta Children’s Library Expansion; approved a recommended project financing strategy, including the use of an interfund loan, grant funds, already established Development Impact Fees, and donations; authorized the City Manager to approve a change order for $222,700 to SVA Architects, Inc., for the next phase of design services; and approved a purchase order for $475,000 to RWBID Construction Management, LLC, for project and construction management services (Vote: 4-0-1).
On June 3, 2025, a Joint Resolution was adopted by the City Council and the Boards of Directors of the Murrieta Library District, Murrieta Community Services District, the Successor Agency to the Murrieta Redevelopment Agency, and Murrieta Housing Authority, approving the Operating Budget for Fiscal Years 2025/26 and 2026/27. Resolution Nos. 25-4837, MLB 25-201; CSD 25-285, RSA 25-35, MHA 25-45 (Vote: 5-0).
On June 3, 2025, a Joint Resolution was adopted by the City Council and the Boards of Directors of the Murrieta Library District, Murrieta Community Services District, and the Successor Agency to the Murrieta Redevelopment Agency, Approving the Capital Improvement Plan Budget for Fiscal Year 2025/26, Approving the Fiscal Years 2025/26 to 2029/30 Capital Improvement Plan. Resolution Nos. 25-4836, MLB 25-200, CSD 25-284, RSA 25-34 (Vote: 5-0).
CITY COUNCIL GOAL
Coordinate and deliver responsive, effective community services.
DISCUSSION
The Murrieta Public Library (Library) fulfills a wide array of purposes for the community, all based on encouraging the love of reading and lifelong learning. Through the Library and its collections, services, technology, and programs, children of all ages have an excellent environment to meet, study, and learn about the world in a non-academic setting. It is where adults can expand their skills and find the answers and resources to resolve personal and professional dilemmas. The Library is where community members can gather formally and informally for cultural events and workshops or to share stories. It is a place where positive memories are created and where the foundation of a culturally, educationally, and economically developed community is successfully established.
The Library, constructed in 2007, does not currently have the space and facilities to adequately meet the increased community needs stemming from the City's increased population, with current programming over 100% of the attendance levels in 2007. The existing children's area is only 2,700 square feet (sf) and does not have a space dedicated to story time or children's specific programming. The Library's multipurpose community room is used for meetings, events, and adult and children's programming needs.
In March 2022, the California State Library (CSL) released the Building Forward Infrastructure Grant Program (Grant) that supports California's public libraries for capital projects addressing critical maintenance needs, improving energy efficiency and sustainability, and expanding access digitally and physically. Library staff applied to fund an expansion of the children's area and a new story time space, and the CSL approved a grant award for $1,505,625, with City matching funds for $752,813. The funding award was the catalyst for beginning the process to expand the Library's children's section.
The planning and design for the Murrieta Children's Library Expansion Project (Project) has been in progress since July 2023. City staff, along with the design team from SVA Architects, have worked closely with community stakeholders, including members of the Murrieta Library Foundation, the Friends of the Murrieta Library, parents, and library staff, to plan a modest expansion that will meet the community's needs for the future. The team went through several rounds of value engineering, including reducing the size of the expansion and replacing some design elements with more budget-conscious solutions, to ensure the Project fit within a reasonable budget.
The result is a creative 4,500 square foot expansion space incorporating a multipurpose Storytime room that can be split into two separate spaces, a roomy area for book stacks, restrooms, staff offices, and storage. The plans also call for remodeling the existing children's library space to transform it into an engaging section for tweens. Lastly, the Carol Carson Garden of Verses outdoor space on the north end of the Library will be expanded, and features will be added to activate the space for a variety of exciting, year-round programming. Attachment 5 includes images of the floorplan for the expansion, as well as renderings of the interior, exterior, and garden.
On June 18, 2024, staff reviewed with the City Council the various design concepts as well as the cost estimates and proposed financial strategy to proceed. Based on City Council direction at that time, staff advanced to the next phase of detailed design to prepare for the construction bid process based on the selected design.
The team recently completed the plans, specifications, and final bid documents for the Project. On June 13, 2025, a bid opportunity was published on PlanetBids and was also publicly advertised twice in a regional newspaper on June 18, 2025, and again on June 28, 2025. A total of eight construction bids were received:
|
Contractor |
Bid |
|
R.C. Construction Services |
$5,188,600 |
|
Bilbro Construction Company, Inc |
$5,431,000 |
|
OptimaRPM |
$5,455,304 |
|
R2BUILD |
$5,567,400 |
|
Spec Construction Co Inc |
$5,583,000 |
|
PCN3INC |
$5,997,000 |
|
KYA Services, LLC |
$6,451,671 |
|
Newman Midland Corp. |
$8,671,353 |
The bids were reviewed, and the item prices were determined to be consistent with today's construction market.
Contractors were required to provide two alternative bid items. The first was a deductive bid item for replacing the specified interior architectural lighting on the ceiling of the book stacks area with standard lighting. The second was an additive bid item to replace the specified floor carpeting with upgraded carpeting that is easier to maintain and is expected to have a longer life span. The above bid amounts assume the City will retain the specified architectural lighting and upgrade the carpeting.
Staff recommends that the contract be awarded to the lowest responsive bidder, R.C. Construction Services, for $5,188,600, plus a fifteen percent (15%) contingency of $778,290, for a total contract amount of $5,966,890.
No bid protests were received for the Project.
Project Budget
In June 2024, staff presented the City Council with an estimated all-in Project budget (including hard costs, like construction expenses, and soft costs, like design, project management, furnishings, and permitting) of $7,053,000 based on a comprehensive construction estimate conducted at the time. These estimates were an educated guess based on the real bid results of hundreds of other regional projects. Making estimation even more difficult was uncertainty in the construction sector pricing, driven by inflation and possible tariffs on critical construction materials. A more recent estimate, conducted in March 2025, put the all-in budget for the Project at almost $9 million. Fortunately, the construction bids came in lower than expected, and the resulting all-in budget is just over $8 million.
It is important to note that the budget includes a 15% contingency on the value of the construction contract, which is considered industry standard and amounts to $778,290. This amount is requested to be committed to the Project for any unforeseen circumstances that may arise during construction. However, if only minimal issues are encountered, then the entire contingency amount may not be spent.
|
Item |
Amount |
|
Construction |
$5,188,600 |
|
Construction Contingency (15%) |
778,290 |
|
Inspection Services |
98,000 |
|
|
|
|
Architectural Design Services (SVA) |
580,603 |
|
Project/Construction Management, Labor Compliance (RWBID) |
375,000 |
|
Water/Wastewater Capacity Fees (estimated) |
50,000 |
|
|
|
|
Moving/Storage of Books & Materials |
25,000 |
|
Fixtures, Furnishings & Equipment (Jan 2026) |
620,000 |
|
Low Voltage/IT Services (Mar 2026) |
300,000 |
|
|
|
|
Total |
$8,015,493 |
Now that the actual construction cost is known, some adjustments need to be made to the fees negotiated with the City's design team, SVA Architects (SVA). A sliding scale fee was negotiated with SVA, which means their design service fees decrease as construction costs increase. A purchase order for $302,300 was initially issued to SVA in June 2023 and was based solely on the amount of funding the City had for the Project at the time, which was $2,250,000. In June 2024, SVA presented an estimate for construction based on a cost estimate developed during the schematic design phase, and the City agreed to a reconciliation of the fee and issued a change order increasing the fee for services to $500,000. The change order also included additional funding for out-of-scope survey work and reworking the schematic design after the City decided to reduce the square footage of the expansion, totaling $25,000. Now that the construction cost is known, an additional reconciliation change order is needed to increase the total fee to $544,803, or 10.5% of construction costs, plus an additional out-of-scope task for $10,800 for additional topography work, bringing the total agreement amount to $580,603, a portion of which has already been expended to get to this point of the project. A Second Amendment to the SVA agreement is needed to authorize these services and costs.
RWBID Construction Management (RWBID) has provided pre-construction project management services for the Project since June 2024. RWBID was selected through a Request for Proposals process in 2023-2024 and awarded a contract for on-call vertical construction management services. In June 2024, RWBID presented a proposal for the library expansion project with not-to-exceed fees of $475,000, divided into pre-construction and construction phases, and the City Council approved the full expenditure. The City issued a purchase order (PO) for only pre-construction services for $215,000. Approximately $90,000 remains in the PO, which will be closed and the funds disencumbered. RWBID will be issued a new PO for construction management services during the construction phase for $250,000. At the conclusion of construction, the total value of RWBID’s services for the entire project is anticipated to be $375,000.
Funding for some Project costs will not be needed until a later date. The purchase of Fixtures, Furnishings, and Equipment (FF&E) for bookcases, seating, desks, and staff workstations can wait until winter 2026, depending on order lead times. Low-voltage wiring and information technology-related services will not be needed until the building expansion is almost entirely constructed and includes installing low-voltage wiring and data cabling for key card access points, Wi-Fi access points, data connections for workstations, and security cameras. Staff will bring those purchase and service contracts to the City Council for consideration at a later date. The anticipated cost for these elements is included in the full project budget, reflected in the table above.
Fundraising
In addition to securing funding through grants, development impact fees, and an interfund loan, the City has been working with numerous supporting groups, including the Murrieta Public Library Foundation and the Friends of the Murrieta Library, to raise awareness of the Children’s Expansion project and to raise funds. These efforts aim to enhance the Project’s scope, reduce reliance on City funds, and foster deeper community engagement. The fundraising strategy developed by staff and the supporting groups aimed to raise between $550,000 to $1.5 million. Over the course of the past year, outreach efforts have included staffing booths at 13 local events, presentations to local community groups (approximately 10), social media, a project newsletter, direct solicitation, and school partnerships. As of the beginning of August, the fundraising campaign has achieved the following:
|
Source |
Amount Raised |
|
Murrieta Public Library Foundation |
$135,000 |
|
Friends of the Murrieta Library |
$103,400 |
|
Pending private sector commitments |
$ 40,000 |
|
Water district support (including in-kind contributions and lawn removal rebate) |
$110,000 |
|
TOTAL COMMITMENTS |
$388,400 |
Staff and the Foundation continue to fundraise for the Children’s Library Expansion project and will provide up-to-date donation figures when staff returns to the City Council to seek approval for contracts related to the FF&E and Low Voltage/IT Services.
Project Funding
A portion of the funding required to proceed with the construction of the Murrieta Children’s Library Expansion Project has already been allocated to CIP 21027 during the Capital Improvement Plan budgeting process, and previous City Council actions:
|
Funding Source |
Amount |
|
|
|
|
California State Library Building Forward Grant |
$1,505,625 |
|
Grant Matching Funds from Library Development Impact Fees (DIF) |
752,813 |
|
Additional Library DIF |
802,300 |
|
Interfund Loan |
3,500,000 |
|
Donation Commitments |
388,400 |
|
|
|
|
Subtotal |
$6,944,326 |
|
|
|
|
Estimated Additional Funding Required |
|
|
|
|
|
Measure T Unassigned Funds |
1,075,000 |
|
|
|
|
Total |
$8,019,326 |
To provide the remaining funding for the Project, staff is recommending an Interfund Loan between the Measure T Fund and the Library DIF Fund, and a budget appropriation from Unassigned Fund Balance from the Measure T Fund.
On June 18, 2024, staff presented the City Council with a comparison of options to fund a part of the Project. The first option was issuing bonds, and the second was an interfund loan. Both would be repaid using future Library DIF. At that time, the City Council conceptually approved using the interfund loan approach. Alternatively, if the City Council had preferred to issue debt and pursue a bond for the necessary funds, staff would have pursued that over the course of the past 14 months due to the required lead time.
Bond Analysis
As of July 2025, the Federal Reserve's Open Market Committee has maintained the federal funds rate within a target range of 4.25% to 4.50%. Given current bond market conditions, the estimated average interest rate for a 30-year lease revenue bond is expected to fall within the range of 5.00% to 5.50%.
These elevated market rates are driving higher interest costs, which in turn increase both the total interest expense and the annual debt service payments. Based on a 30-year lease revenue bond with an average annual interest rate of 5.00%, the estimated annual debt service payment would be approximately $227,680, with total interest paid over the life of the bond amounting to roughly $3,330,400.
Interfund Loan Analysis
Interfund loans are a common financial tool used by local government agencies. These loans should provide a reasonable benefit to the lending fund without creating a financial burden for the borrowing fund.
Under the proposed loan terms, the borrowing fund would benefit from an interest rate lower than what would typically be available through public bond financing. The loan interest rate is generally aligned with the City's long-term investment yield-what the lending fund would have earned had the funds remained invested. As of June 30, 2025, the average purchase yield on the City's long-term investment portfolio is approximately 2.0%.
Considering the annual average revenue from Library DIF, staff recommends setting the Interfund Loan interest rate at 1.0%. At this rate, the Library DIF Fund would realize an estimated $2,761,848 in interest expense savings over a 30-year period, compared to a standard bond issuance.
The opportunity cost to the Measure T Fund-resulting from investing $3.5 million at 1% instead of the typical 2%-is approximately $1,621,375 over the same 30-year term. When factoring in the interest savings for the Library DIF Fund and the opportunity cost to the Measure T Fund, the combined net benefit of the proposed loan is approximately $1,140,473, as detailed in the table below.
The term of the Interfund Loan will align with a standard 30-year bond, with an estimated annual debt service payment of $135,618. The Library DIF Fund generates revenue to support this level of debt service.
Based on this analysis, staff recommends that the City Council adopt the attached resolution authorizing execution of an Interfund Loan agreement. The agreement includes key terms such as the loan amount, interest rate, and the debt service payment schedule.
Next Steps
If the City Council approves moving forward, construction is expected to begin in September 2025 and will take approximately 12 months. A groundbreaking celebration will be scheduled for early September. The goal will be to minimize disruption to regular library operations and programming as much as possible, though it is anticipated that some adjustments will be required.
FISCAL IMPACT
The proposed $3,500,000 Interfund Loan will require a budget appropriation in the Fiscal Year 2025/26 Operating Budget to establish a transfer-out from the Measure T Fund-utilizing funds set aside in the Sustainability Reserves for this purpose-and a corresponding transfer-in to the Library DIF Fund.
A budget appropriation of $1,075,000 from the Measure T Unassigned Fund Balance is required for the balance of the funding necessary to construct the Project. If, during a future project update, donation collections are greater than the current amount, the budget appropriation from Measure T can be reduced and returned to Unassigned Fund Balance.
The Interfund Loan will be recorded in the General Ledger in accordance with Generally Accepted Accounting Principles. Associated financial impacts, including investment earnings for the Measure T Fund and interest expense for the Library DIF Fund, will be included in a future budget update and incorporated into future biennial operating budgets for the term of the loan. Additionally, the terms of the Interfund Loan will be disclosed in the Notes section of City's Annual Comprehensive Financial Report.
ATTACHMENTS
1. R.C. Construction Agreement and Bid Proposal
2. SVA Architects Amendment Proposal
3. RWBID Construction Management Proposal
4. Resolution No. 25-4884
5. Images of Library Expansion Floor Plan, Interior, Exterior, and Garden