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HomeMy WebLinkAbout03/07/2006, C4 - WATER TREATMENT PLANT MASTER PLAN IMPROVEMENTS councit �D� 3-7-06 j agenda Report CITY OF SAN LUIS OBISPO FROM: John Moss, Utilities DirectoryA Prepared By: Gary W. Henderson, Water Division Manager I SUBJECT: WATER TREATMENT PLANT MASTER PLAN IMPROVEMENTS CAO RECOMMENDATION 1. Approve the plans and specifications for the Water Treatment Plant Improvement Project Specification No. 90225C and authorize staff to advertise for bids. 2. Authorize the CAO to award the construction contract if it is within the engineer's estimate. 3. Adopt a resolution of intent to issue bonds and allow their use to reimburse any related project expenditures incurred prior to their issuance. 4. Approve amended agreements with Jones Hall for bond counsel services and Fieldman, Rolapp &Associates for financial advisor services as necessary for the bond.issuance. DISCUSSION The Water Treatment Plant Improvement Project has been under study and design for the last three years. On January 17, 2006, the Council considered the project scope and the revised cost estimate and directed staff to proceed with finalization of the plans and specifications. The plans and specifications are now complete and the project is ready to advertise for bids. The recently revised total project budget for studies, design, construction and construction management is $13,406,800. The engineer's construction estimate, including contingencies, for the construction contract is $9,611,300. This amount does not include the previous contract with Kruger Inc. for the design and delivery of the equipment and systems for the new ballasted flocculation system,(Actiflo). Staff is currently negotiating with our design consultants (Black and Veatch) for office engineering support anal onsite construction inspection services. Assuming acceptable negotiated terms, staff will return to Council in the near future with a recommended contract with them for the construction management services that are required for the project. FISCAL IMPACT On January 17, 2006, the City Council approved an increase in the project budget to $13,406,800. The engineer's estimate for construction is shown below and the total project costs and funding sources are shown in Table 1 and 2: cy� Water Treatment Plant Master Plan Improvements Page 2 Engineer's Estimate: $8,711,300 Contingencies: 900.000 TOTAL $9,611,306 Table 1• Project Budget Table 2: Funding Sources Phases Projectosts Type Amount___ Study $91,100. Paid for to date $1,311,500 -5esign 1,220,400 Working Capital 595,300 Construction 9,611,300 Debt Financed 11,500,000 "Actiflo"S stem 1,384,000 U TOTAL $1394062800 Const. Mana ement 1,100,000 TOTAL .:$13,406180.0_ The majority of the funding for the treatment plant improvements will be accomplished by the issuance of bonds. The exact amount of the bond issuance will be determined following receipt of the bids for the project and the annual water fund review, which will determine the amount of working capital that is available to support a portion of the project funding. Resolution for Reimbursement of Costs Incurred Prior to Completion of Debt Financing. Construction of the project is anticipated to begin in June 2006. While we will be proceeding With the debt financing process, it is possible that some limited costs related to the project may be incurred prior to the completion of the bond issuance. In order to preserve our ability to include these costs in the subsequent bond issue, federal rules require adoption of the attached resolution. Amendments to Agreements with Bond Counsel and Financial Advisor. The City currently has agreements in place for bond counsel services with Jones Hall and financial advisor services with Fieldman, Rolapp & Associates. Both firms have provided competent services to the City associated with a variety of bond issuances and refinancings. On September 6, 2005, the Council extended the agreements with both firms until the completion of the financing for the 919 Palm parking/office project. Since they are currently under contract and we need to move forward with construction for the water treatment plant project, we recommend the continued use of our current bond counsel and financial advisor for assistance with the bond issuance needed for this project. Role of Development Impact Fees in Funding this Project. Based on a detailed analysis prepared as part of the Water System Master Plan prepared in October 2000, 29.4% of the cost of this project is attributable to new development (the balance is required to meet the needs of existing residents and businesses). As such, given the significant increase in the cost of this project, we plan to return to the Council within 90 days after bid opening with recommended revisions to our water development impact fees, in accordance with our policy that the Finance Director do so whenever significant changes in the basis for the fees are identified. However, since the current fee is largely based on water supply costs (accounting for about 90% of the total e z Water Treatment.Plant Master Plan Improvements Page 3 fee), we do not expect this adjustment to have a significant impact on the overall fee: just the water treatment portion, which currently accounts for about 7% of the total water impact fee. ATTACHMENTS 1. Resolution of intent to issue bonds 2. Amendment to Agreement with Jones Hall 3. Amendment to Agreement with Fieldman,Rolapp and Associates Available in Council Office for Review Plans and Specifications for the Water Treatment Plant Improvement Project �y� r Attachment 1 RESOLUTION NO. (2006 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO DECLARING ITS INTENTION TO ISSUE TAX-EXEMPT OBLIGATIONS TO ASSIST IN FINANCING THE WATER TREATMENT PLANT IMPROVEMENTS AND THAT A PORTION OF THE PROCEEDS MAY USED TO REIMBURSE RELATED EXPENDITURES INCURRED PRIOR TO THEIR ISSUANCE WHEREAS, the Council of the City of San Luis Obispo (the"City") is undertaking proceedings to construct improvements at the water treatment plant(the"Project"); and WHEREAS, in order to provide finds to finance the Project the City, intends to issue and sell its tax-exempt Water Revenue Bonds in the aggregate principal amount of approximately $11.5 million for the Project (the"Bonds"); and WHEREAS, in order to use the proceeds of the Bonds to reimburse advances made by the City for the Project before the date of issuance of the Bonds, but not more than sixty(60) days before the date of adoption of this Resolution, Section 1.150-2 of the United States Income Tax Regulations requires that Council declare its intention to reimburse such advances from the proceeds of the Bonds; and WHEREAS, it is in the public interest and for the public benefit that the City declare its official intent to reimburse the expenditures referenced herein. NOW,THEREFORE,BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Declaration of Intent. The Council hereby declares that it reasonably expects the Bonds to be issued by the City, and that a portion of the proceeds thereof may be used to reimburse expenditures made by the City for the Project before the date of issuance of the Bonds, and not more than sixty(60) days before the date of adoption of this Resolution. The Bonds shall be issued in an aggregate principal amount which is sufficient to raise funds for the Project in the approximate amount of$11.5 million. SECTION 2. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. �y y ATTACHMENT 1 Resolution No. (2006 Series) Page 2 On motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted on March 7, 2006. David F. komero, Mayor ATTEST: Audrey Hooper, City Clerk APPROVED AS TO FORM: Jona . Lowell Attachment 2 AMENDMENT TO AGREEMENT NO. 3 THIS AMENDMENT TO AGREEMENT is made and entered in the City of San Luis Obispo on March 7, 2006, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, herein after referred to as City, and JONES HALL,hereinafter referred to as Contractor. WITNESSETH: WHEREAS, on November 4, 1997 the City entered into an Agreement with Contractor for bond counsel services per Specification No. 98-72, which was subsequently amended to extend the term until the debt financing for the 919 Palm parking/office project is complete;and WHEREAS, the City desires to further extend the tens of the Agreement until the debt financing for the water treatment plant improvement project is complete. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained,the parties hereto agree as follows: 1. The term of the Agreement is hereby extended until the debt financing for the water treatment plant improvement project is complete. 2. All other terms and conditions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year first written above. ATTEST: CITY OF SAN LUIS OBISPO By: . Audrey Hooper,City Clerk David F. Romero,Mayor APPROVED AS TO FORM: CONTRACTOR By: Lowell,City Attorney �y� AMENDMENT TO AGREEMENT NO. 3 THIS AMENDMENT TO AGREEMENT is made and entered in the City of San Luis Obispo on March 7, 2006, by and between the CITY OF SAN LUIS OBISPO, a municipal corporation, herein after referred to as City, and FIELDMAN,ROLAPP&ASSOCIATES,hereinafter referred to as Contractor. WITNESSETH: WHEREAS, on November 4, 1997 the City entered into an Agreement with Contractor for financial advisor services per Specification No. 98-71, which was subsequently amended to extend the term until the debt firiancing for the 919 Palm parking/office project is complete;and WHEREAS, the City desires to further extend the term of the Agreement until the debt financing for the water treatment plant improvement project is complete. NOW THEREFORE, in consideration of their mutual promises, obligations and covenants hereinafter contained,the parties hereto agree as follows: 1. The term of the Agreement is hereby extended until the debt financing for the water treatment plant improvement project is complete. 2. All other terms and conditions of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed the day and year fust written above. ATTEST: CITY OF SAN LUIS OBISPO By: Audrey Hooper,City Clerk David F.Romero,Mayor APPROVED AS TO FORM: CONTRACTOR By:. Jona Lowell,City Attorney