Salinas council rejects lowest bid for Sherwood Recreation Center, directs rebid; redirects CDBG funds to finish project

Salinas City Council members voted Sept. 9 to reject awarding the Sherwood Recreation Center building improvement contract to the apparent low bidder and directed staff to rebid the work, citing unresolved concerns about subcontractor compliance and the need for stronger oversight. The action came after staff recommended awarding the project to Auto Construction Inc., the apparent lowest responsive bidder.

The council’s decision came following lengthy public comment and detailed staff and legal briefings about bid responsiveness, contractor responsibility, and the city’s obligations on federally funded projects. Councilmember Gloria Dela Rosa moved to reject the staff recommendation and rebid; she told colleagues, "I would like to make a motion to not accept staff's recommendation tonight with Auto Construction, and I would like to go out again and rebid." The motion passed with six votes in favor; Councilmember Aurelio Salazar recused himself because a relative is employed by a construction company connected to the project.

Why it matters: Sherwood Hall has been under phased renovation for years, and staff told council this phase addresses roof, accessibility and window issues identified after earlier phases. The project has already consumed design and prior-phase funds, and the council debated whether to accept the lowest bid despite union and community concerns about a subcontractor’s past wage-and-hour violations.

Staff recap and legal review

Public works staff told the council Auto Construction submitted the apparent low bid of about $2,686,900 and that the bidder was "responsive and responsible" under the city’s procurement rules and the California Public Contract Code. Staff said state checks — including the Contractors State License Board (CSLB), Department of Industrial Relations (DIR) registration and the labor commissioner’s debarment lists — did not show Auto Construction or its listed subcontractors as debarred or suspended, and that apparent subcontractor violations previously reported had been rectified.

City attorneys and staff emphasized that the city must award federally funded projects to the lowest responsive and responsible bidder, and that local hiring preferences can be limited or precluded by the federal funding rules that apply to this project.

Labor and community concerns

Union representatives and other speakers urged the council to reject the bid, saying the HVAC subcontractor B & M (a less-than-1% portion of the bid, according to staff) had a repeated history of wage complaints and other problems on other projects and that promises by a prime contractor to "monitor" subs have not reliably prevented wage theft in other jurisdictions. Several workers and union representatives told the council they had ongoing, unsatisfied claims with related contractors on nearby projects.

What council decided

Councilmember Gloria Dela Rosa moved to reject the staff recommendation and rebid the project; Councilmember Margaret Broadhouse seconded. After public testimony and extended council questions about monitoring, local hire efforts and possible liability from rejecting a responsible bidder, the council voted to reject all bids and direct staff to restart the procurement. Vote: Barajas — yes; Barrera — yes; D'Arrigo — yes; Dela Rosa — yes; Salazar — recused; Sandoval — yes; Mayor Donoghue — yes.

Budget adjustment approved to keep project moving

Separately at the same meeting, council approved a first substantial amendment to the city’s FY 2023–24 Community Development Block Grant (CDBG) annual action plan to redirect $595,000 to the Sherwood Recreation Center phase 4 work. The amendment moves $550,000 from a Republic Cafe/Soledad Street project and $45,000 from unspent public service funds (tenant/landlord services) to Sherwood so the project will have funds available while it is rebid.

Staff said the Republic Cafe site is still in predevelopment, with state funding supporting initial steps; council and staff agreed to preserve that project’s funding in the CDBG pipeline for future use but to free the money now to complete Sherwood’s last phase. Staff also noted the city is working to meet federal timeliness requirements for CDBG spending and that moving funds to an active project helps that compliance.

What happens next

Staff will relaunch the solicitation, incorporate additional contract compliance and monitoring language into the bid documents, and return to council with the rebid results. The city’s labor compliance officer and the Department of Industrial Relations procedures will continue to be used to monitor certified payrolls and labor compliance on a monthly basis. Council members emphasized they want clearer assurances about subcontractor oversight and local hire outreach in the next procurement.

Ending note

Council members and staff said they want a finished Sherwood Hall available to seniors, youth and families as soon as possible while ensuring the city does not undercut labor standards or expose itself to avoidable legal or financial liability from a contested award. Staff indicated they will return to council with the rebid results and with a report on how contract monitoring and local-hire outreach will be enforced going forward.