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throughout the Irby Ranch development. City staff is confident J & M, Inc. can perform the additional work in conformance with the approved plans. However, an expense such as this for the water pipeline was not expected by Meritage Homes. In discussions, Meritage Homes has indicated they cannot absorb the additional cost into their development. They understood they need to pay for the construction of the pipeline in the new section of roadway but thought that involved only the connections to the existing pipelines as described. They did not expect the additional pipeline installation that is now necessary. At the same time, they know this pipeline is necessary for their project, and even more necessary for the City's overall distribution system. (The Irby Ranch development could operate with only the connections on the Stanley Boulevard that have been constructed, although they would also benefit from the project as it improves the overall water delivery system in this area.) So, while they cannot absorb the total cost, Meritage Homes has agreed to work with the City on the pipeline installation and share in some of the unexpected cost. Meritage Homes agrees to accomplish the work under an amended subdivision improvement agreement as the agreement contains all required provisions, and already includes a bond to ensure performance. They agree to bear the cost of design, construction survey staking, and project construction management. This includes $40,000 for the design already accomplished, and approximately 10 percent of the construction cost for construction survey staking and project management, or a total including design of approximately $116,500. The work will be inspected by the City's Public Works Inspection for conformance with the approved plans. In accordance with the subdivision improvement agreement, when complete the work will be accepted by the City as public infrastructure for operation and maintenance, just as all the other infrastructure associated with the Irby Ranch development will be accepted. The City will pay the actual cost of construction up to a not-to-exceed amount of $840,930. While the bid cost is $764,479, staff is recommending the City Council approve the amount of $840,930, which includes a 10 percent contingency to cover any unforeseen conditions, if discovered, while the work is being accomplished. If the subdivision improvement agreement were not amended to complete the work, the option to accomplish the installation would be for the City to purchase the plans and advertise the project for construction bid. City staff recommends amending the subdivision improvement agreement to have Meritage Homes accomplish the work for many reasons. Meritage Homes and J & M, Inc. are ready to mobilize immediately and accomplish this work over the next couple of months. The City cannot advertise this work for bid and get it accomplished as rapidly as Meritage Homes can mobilize and complete the work. The bid cost is consistent with staff's estimate of the value of the work based upon other work recently bid by the City. Completing the work as soon as possible and being able to deliver water from the Zone 7 turn-out, as described, will provide relief as the efforts are underway to solve the emerging PFAS issue associated with City Well 5. The alternative source of water will also reduce some of the scheduling pressures to accomplish needed repairs at the well. Finally, the Irby Ranch improvement plans include a sewer pipeline to be installed in Nevada Street from the Page 4 of 5