DEL MAR — The City Council approved a $7.1 million contract with TC Construction this week for the next phase of utility undergrounding covering the area of Crest Canyon.
Work in the Crest Canyon undergrounding district, also known as District X1A, will involve the removal of 12,250 linear feet of overhead utility lines and 77 poles along portions of San Dieguito Drive, Oribia Road, and Crest Road, to be moved underground via 19,610 linear feet of trenching.
X1A/Crest Canyon is the third of eight total undergrounding districts in the city, following the completion of Tewa Court/10th Street in 2023 and 1A/Stratford Court South earlier this year. Construction is scheduled to begin in October and is expected to conclude in October 2026, followed by utility work by San Diego Gas & Electric through May 2027.
The city received six bids for the construction work, ranging from $6 million to $11 million, including three bids that came in under the engineer’s estimated cost of $8.9 million. Public contract code requires the city to award the contract to the party with the lowest responsive base bid.
Tri-Group Construction initially had the lowest base bid of around $6 million. However, shortly after submitting their bid, the group informed the city of a nearly $5 million clerical error, stating that the correct base bid would be just over $11 million.
After city staff allowed them to withdraw their proposal, TC Construction was the company with the second-lowest base bid at $7.128 million.
Teichert Construction, which completed work on the last undergrounding district, had the next-lowest base bid of $8.6 million. Mayor Terry Gaasterland said she appreciated their good work on District 1A and lamented that they could not be awarded the contract for X1A.
“I’ve been so impressed with 1A, with the politeness, the efficiency, the kindness that our contractor has worked with,” Gaasterland said. “I think there was a lot of sadness when Teichert did not come in the lowest, but hopefully TC Construction will be as good to you all as Teichert has been to our neighborhood.”
Totaling construction work, construction management, geotechnical services, environmental monitoring, and contingency costs, city construction costs for X1A/Crest Canyon are estimated at around $8.7 million.
SDG&E estimates that its utility work for Crest Canyon/X1A, including installation of cable and connections and service cutovers, will cost around $3.6 million.
The total anticipated project cost — including pre-construction, construction, contingencies, and utilities — has been difficult to nail down in recent months, as the city awaited construction bids and utility estimates from SDG&E.
As of Sept. 8, the total project is estimated at $13.68 million — a welcome decrease from previous estimates of $16.97 million in April and $15.75 million in June.
Councilmember Dan Quirk asked several technical questions regarding the project details and costs, expressing frustration at what he described as a lack of clarity in the contractor market regarding costs. He said the city should be pushing for more information about how costs are calculated when awarding contracts.
In the past, Quirk has demanded that the city provide a clearer breakdown of the costs of materials versus labor to facilitate accurate pricing assessments. Staff have repeatedly said that contractors are not required to provide the city with this information.
“There’s just a lot of squirreliness that we should be wary of as we’re looking to spend millions, tens of millions of dollars on city contracts, whether it’s undergrounding or other,” Quirk said. “I think this is just evidence that we should try to apply as much scrutiny as possible so that we can get the best and lowest-priced cost at the end of the day.”
Quirk also said he is specifically distrustful of SDG&E due to the lack of details in their cost estimates. During work on previous utility districts, the city has been surprised by invoices from SDG&E that were much higher than anticipated, leading the city and the agency to work more closely on obtaining accurate estimates before work begins.
Quirk also said he would like to receive more regular updates throughout the project cycle. City Manager Ashley Jones assured Quirk and other council members that any changes to the project cost or work scope due to unforeseen circumstances would be brought back to the council for discussion.
Del Mar funded the construction of its first districts with revenue from its one-cent sales tax Measure Q, passed in 2016. However, with revenues no longer keeping up with the rising costs of construction and higher-than-anticipated bids, the city has applied for an $11 million IBank loan to cover X1A/Crest Canyon and the next planned district, 1B/Stratford Court North.
While the city still needs to finalize the loan total later this month, staff said it was essential to get the contract approved now, so that crews could begin work on the first phase and avoid delays due to the bird nesting season in Crest Canyon, which starts in February.
“The City has already been approved for a loan up to $11 [million], so there is no financial risk to the City in awarding the contract in advance of finalizing the loan amount,” the city said in a staff report.
Each bidder for X1A/Crest Canyon also included an alternate bid for undergrounding along a private stretch of San Dieguito Drive, which will be completed separately.
TC Construction had an alternate bid of $1.8 million for San Dieguito Drive, which exceeded the city engineer’s estimate of $934,000. The council agreed not to award this alternate bid to TC Construction, as it would place the project approximately $1 million over budget, and to rebid the San Dieguito Drive project separately.
Principal Engineer Martin Boyd said the city is still working on obtaining the final easements needed from property owners in the district.
Councilmember Tracy Martinez thanked staff for their work and for answering questions from the council.
“You were kind of peppered with a lot of questions, and you knew all the answers, and it gives me even more confidence that our staff knows this project so well. I feel good about it,” Martinez said.
