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HomeMy WebLinkAbout02/12/2008, BUS. 1 - TANK FARM GRAVITY SEWER, LIFT STATION AND FORCE MAIN PROJECT councit °February 12,2008 j acEnaa REpont 1�N.6 CITY OF SAN LUI S OBI SPO FROM: Department Head: John Moss, Utilities Director Prepared By: David Hix Wastewater Division Manager SUBJECT: TANK FARM GRAVITY SEWER, LIFT STATION AND FORCE MAIN PROJECT CAO RECOMMENDATION 1. Approve the plans and specifications for the Tank Farm Gravity Sewer, Lift Station and Force Main Project, specification number 99703 and authorize staff to advertise for bids. 2. Authorize the CAO to award the construction contract if the recommended bids are within the engineer's estimate of$10,942,400. 3. Authorize an increase in the total project budget$8,415,428 to $13,242,900 and; 4. Adopt a resolution authorizing staff to submit an application to the California Infrastructure Bank(I-Bank) and a loan amount of$10,000,000. 5. Approve funding the remaining$2,245,900 needed to finance this project through bonds, most likely to be issued through private placement; and direct staff to return to Council for approval of appropriate bond documents once bids are received and we have received loan approval from the I-Bank. DISCUSSION The Tank Farm Gravity Sewer, Lift Station and Force Main Project (Tank Farm Project) has been under study and design for the last four and a half years. The project will replace two aged and over capacity lift stations with one large lift station that will serve existing customer needs in the southeastern portion of the City, and provide service to the Orcutt Annexation Area, eastern portion of the Airport Annexation Area and a portion of the Margarita Annexation Area per the City's General Plan. The Tank Farm Project was identified in the City's Wastewater Master Plan update approved by Council in 2001. The master plan analyzed the City's General Plan, proposed annexation areas, and existing customers to determine the most efficient and reasonable facility to replace the existing over capacity infrastructure and serve new annexation areas. Project Design, Changes and Environmental Issues In July of 2003 Council approved a contract for design services for the Tank Farm Project with Brown and Caldwell engineers. The project runs from the southeastern portion of the City west to the Water Reclamation Facility (WRF). The gravity sewer portion of the project will run South on Broad Street from Rockview Place to Tank Farm Road, then West along Tank Farm Road for approximately one mile to the lift station site. The lift station site is located on the southeastern comer of the property immediately west of the Chevron property on Tank Farm Plans and Specifications for Tank Farm Lift Station Page 2 Road. The force main will run overland north from the lift station and connect with Sueldo, Bonetti, Empressa and Prado Road. The force main will discharge at Prado to a gravity line that flows to the WRF. The gravity line on Prado Road to the WRF.will require replacement and is part of the scope of this project. The project is estimated to have a 13 to 14 month construction period. Attachment 2 is a map of the project, a beter presentation of the alingment wil be provided during the Council Meeting. The new lift station is a proven design that utilizes submersible pumps with a self cleaning wet well design. The City currently operates a smaller version of this pump station design and staff is pleased with its design, maintenance requirements and reliability. Staff has also visited other municipalities with this lift station design to see first hand how it operates, and to discuss operations and maintenance with other municipal staff. A small building will house control and telemetry equipment along with an emergency generator to ensure reliable operation during all conditions. Since beginning the initial study and design of the project, several issues have resulted in significant project changes and delays. Below is a summary of the major changes to the project. Alignment Changes and Easement Acquisition. In May of 2005, City staff met with County engineering staff to discuss the project and receive comments. At this meeting County staff informed the City that they would not issue an encroachment permit for construction on Tank Farm Road for the gravity sewer because there was no reasonable alternative route to detour traffic. Tank Farm Rd is a critical connector between South Higuera and Broad Street and is the only connector in that Southern portion of the City. The County was also concerned with the possibility of trench failure during construction or other problems that could lead to closure of Tank Farm Rd for a prolonged period of time. After analysis of the County's concerns and realizing that no viable alternative was available, staff directed the consultant to redesign the Tank Farm gravity sewer outside of the roadway and onto the Chevron property, resulting in a major change and delay for the project. During the re- alignment process it was determined that crossing Tank Farm Rd several times would minimize contact with oil contamination and threatened/endangered species in the sewer's path. Construction on the Chevron property also triggered the need for additional easement acquisition and an environmental study of the resources found on the old tank farm, Legal descriptions and appraisals are now being completed and will be brought to Council in the next two months. Environmental Issues and Permitting. After it was determined that the Tank Farm Road gravity sewer would need to be placed outside of Tank Farm Rd. and onto Chevron property an environmental document was needed to ensure protection of resources that may be encountered during construction of the project. This required an environmental consultant to perform a study, and develop a mitigated negative declaration to ensure adequate protection of the identified resources. Two plants; Congdon's Tarpalnt and San Luis Obispo Morning Glory, along with Fairy Shrimp were identified as possibly being impacted by the construction. To avoid possible impacts, the plans show the location of these resources and require the contractor to fence off and avoid these areas and work only during the drier portions of the year. The City's biologist will J Plans and Specifications for Tank Farm Lift Station Page 3 also act as a biological monitor to ensure the requirements of the environmental document are being fulfilled. This project has required permits from the California Dept. of Fish and Game, the Army Corp of Engineers, the Calif. Regional Water Quality Control Board, the San Luis Obispo County Air Pollution Control District, Cal OSHA, the Division of Mines and Tunneling, as well as encroachment permits from the County and Cal Trans. Contaminated Materials and Agreements. The Chevron property hasextensive petroleum contamination from years of oil storage and the 1926 fire. City staff and Chevron have been working together to coordinate activities and ensue proper handling of abandoned pipelines, contaminated materials, groundwater and environmental resources. Chevron will have staff on site to test and coordinate disposal of all contaminated soils and will treat contaminated groundwater. In 2006 Chevron had requested an analysis of alternatives to conventional open trenching to minimize the cost of contaminated material and groundwater. If an alternative trenchless method was cost effective Chevron had suggested they would pay the difference between conventional and trenchless methods. The analysis determined that a trenchless method was.not a cost effective alternative to pursue. Special provisions have been placed in the plans and specifications to use petroleum resistant piping and to control migration of contaminants down the trench line. Abandoned oil and water pipelines have been mapped and are shown on the plans. An agreement is being finalized that identifies responsibilities and roles of all parties and staff hopes to bring the agreement to Council for approval in the next several months. Cost Estimate. Over the past several years construction costs have seen significant escalation attributed to a variety of factors including materials costs, labor, fuel and the recent construction bidding "climate". Accurate cost estimates were difficult to prepare because of the previous discussed changes and delays, and have only recently been completed and finalized with the bid plans and specifications. This along with the complicated nature and scheduling of this project has resulted in the project cost increasing significantly over previous estimates provided to Council. Staff and the consultant have made all attempts to control costs wherever possible. Next Steps Easements. Because construction alignments were not finalized until this last November, legal descriptions and appraisals are just now being completed. The City's right-of-way consultants have been in contact with the property owners and they are aware of the project and expecting proposals for easements on their properties. Staff will also be seeking dedications where appropriate, based on anticipated future road alignments, and returning to Council with agreements in the next several months. Permits. The City has received its Calif. Dept of Fish and Game agreement, is awaiting approval from the Army Corp, and is in the process of being approved for the remainder of its permit applications. Staff has been working very closely with all regulatory agencies to ensure rapid �-3 Plans and Specifications for Tank Farm Lift Station Page 4 turnaround of these permits. All required permits needed to begin construction will be acquired prior to construction. Construction Management and Office Engineering. Staff will be utilizing proposals submitted for the City's recent Request of Qualifications for construction management services. Because of the size of this project and current workload of the City's engineering inspection staff, a construction management consultant is necessary to manage and inspect this project. Staff will be reviewing the statement of qualifications and requesting proposals specifically for this project. Office engineering, the review.of construction submittals and engineering services while under construction will be provided by the design engineer. Staff will return to Council for approval of a contract for construction management prior to construction. FISCAL IMPACT The Tank Farm Gravity Sewer and Lift Station project budget to-date is $8,415,428. Recommended budget increases to fund additional design work and the engineer's estimate for construction and construction management total $4,827,472. The Tank Farm Gravity Sewer and Lift Station revised project budget is $13,242,900. Project Costs Budget To-Date Proposed Change Revised Budget Study 60,345 0 60,345 Environmental Review 42,000 _ 0 42,000 Land Acquisition-99703 250,000 0 250,000 Land Acquisition-55300-7227 58,167 0 58,167 Design 846,916 48,300 895,216 Construction and Contingencies 7,158,000 3,784,400 10,942,400 Construction Management&OE 0 994,772 994,772 Total 1 8,415,428 4 27 72 13442,900 The majority of funding for the Tank Farm Project will be debt financed from two sources; a $10,000,000 loan from the California Infrastructure Bank (I-Bank) and by the issuance of bonds. I-Bank maximum loan amount is $10,000,000. A combination of bond financing and pay-as- you-go funding from the Sewer Fund will fund the estimated $3;242,900 balance. The bond issuance is currently estimated at $2,245,900, with the exact amount of the bond issuance to be determined following the opening of bids for the project. The resolution, approving submittal of the loan application to the I-Bank, includes a commitment to the I-Bank for the City (applicant) to have available and commit an amount not to exceed $1,200,000. Currently, the City is contributing approximately $1,000,000 in pay-as-you-go funding to the project, with a revised amount to be determined following the opening of bids. �� 7 Plans and Specifications for Tank Farm Lift Station Page 5 Project Funding Current Proposed Change Revised Finding "Pay-As-You-Go" Financing 997,000 0 997,000 Debt Financing-I-Bank 7,200,000 2,800,000 10,000,000 Debt Financin -Bonds 0 2,245,900 2,245,900 Total 8;197,000 5 045 00 13,242 00 California Infrastructure Bank. The City has had its preliminary application for funding from the I-Bank approved for$10,000,000; the maximum the I-Bank can loan per project. The I-Bank was initially chosen because the project's original costs were within $10,000,000; the maximum that I-Bank can loan, and because of an excellent interest rate estimated at 3.25%. The I-Bank application relies on a variety of factors for qualifying the City for financing, one of the more critical factors is "leverage" or ensuring that the City pays a portion of the cost for the project. I- Bank representatives have expressed that this project should have no problems qualifying for financing from their board. Issuance of Bonds. After the final cost estimates were submitted it became clear that additional debt financing would be needed. Recently staff met with the City's financial advisor, Fieldman Rolapp and Jones Hall, to discuss selling bonds for the additional debt financing. The financing team representatives felt the City should not have difficulty debt financing the remainder of the project with bonds. However, given the relatively small size of the issuance, and the I-Bank requirement that there not be a formal credit rating for the supplemental issue, it is likely that the most effective methods of selling the bonds will be through a direct private placement. Staff will return to Council, after I-Bank approval, with the appropriate bond documents for financing the remainder of the project. Financing team representatives are also familiar with the I-Bank and will coordinate the bond financing to ensure it conforms to I-Bank criteria. Development Impact Fees. Based on the detailed analysis prepared as part of the Wastewater Master Plan Update, 67.5% of the cost of this project is attributed to new development; the remainder is attributed to existing customers. Staff is planning to bring revised wastewater impact fees to Council in the near future that will reflect this increase to the project cost. ALTERNATIVES Alternatives were evaluated in the Wastewater Master Plan. The recommended project is the superior alternative for replacing and upgrading the existing system serving this area and for meeting future development needs in the City's annexation areas. Deferring or delaying this project will result in no further development and a likely a building moratorium for the areas served by this project. ATTACWAENTS 1. Resolution with California Infrastructure Bank 2. Map of Tank Farm Project Available in Council Office for Review Plans and Specification for the Tank Farm Gravity Sewer,Lift Station and Force Main Project GAUTUCAR-CAO Repons\2008 Council Agenda Repons\TankFarmRFB.car.DOC i 1�� - -. Attachment 1 �l RESOLUTION NO. (2008 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO AUTHORIZING THE SUBMISSION OF THE APPLICATION TO THE CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK FOR FINANCING OF TANK FARM GRAVITY SEWER AND LIFT STATION, DECLARATION OF OFFICIAL INTENT TO REIMBURSE CERTAIN EXPENDITURES FROM PROCEEDS OF OBLIGATION,AND APPROVING CERTAIN OTHER MATTERS IN CONNECTION THEREWITH WHEREAS, the California Infrastructure and Economic Development Bank ("I-Bank") administers a financing program to assist local governments with the financing of Public Development Facilities as described in Section 63000 et seq. of the California Government Code (the "Act"); and WHEREAS, the I-Bank has instituted an application process for financing under its Infrastructure State Revolving Fund Program ("ISRF Program"); and WHEREAS, the City of San Luis Obispo ("Applicant") desires to submit an application ("Financing Application") to the I-Bank from the ISRF Program for the financing of the Tank Farm Gravity Sewer and Lift Station ("Project')in an amount not.to exceed $10,000,000; and WHEREAS, the Act requires the Applicant to certify by resolution certain findings prior to a Project being selected for financing by the I-Bank. WHEREAS, the Applicant expects to pay certain expenditures (the "Reimbursement Expenditures") in connection with the Project prior to incurring indebtedness for the purpose of financing costs associated with the Project on a long-term basis; and WHEREAS, the Applicant reasonably expects that a financing arrangement ("Obligation") in an amount not expected to exceed $10,000,000 will be entered into and that certain of the proceeds of such Obligation will be used to reimburse the Reimbursement Expenditures; and WHEREAS, the ISRF Program requires funding sources, other than the I-Bank financing, be identified and approved prior to Project financing approval by the I-Bank Board. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. The City of San Luis Obispo hereby approves the filing of an ISRF Program Financing Application with the I-Bank for the Project; and in connection therewith certifies: a. that the Project is consistent with the General Plan of both the City of San Luis Obispo and the County of San Luis Obispo; b. the proposed financing is appropriate for the Project; R Attachment 1 ' ( 1 Resolution No. (2008 Series) Page 2 c. the Project facilitates effective and efficient use of existing and future public resources so as to promote both economic development and conservation of natural resources; d. the Project develops and enhances public infrastructure in a manner that will attract, create, and sustain long-term employment opportunities; and e. the Project is consistent with the I-Bank's Criteria, Priorities and Guidelines for the ISRF Program. SECTION 2. The Applicant hereby declares its official intent to use proceeds of the Obligation to reimburse itself for Reimbursement Expenditures. This declaration is made solely for purposes of establishing compliance with the requirements of Section 1.150-2 of the Treasury Regulations. This declaration does not bind the Applicant to make any expenditure, incur any indebtedness, or proceed with the Project. SECTION 3. All of the Reimbursement Expenditures were made no earlier than 60 days prior to the date of this Declaration. The Applicant will allocate proceeds of the Obligation to pay Reimbursement Expenditures within eighteen (18) months of the later of the date the original expenditure is paid or the date the Project is placed in service or abandoned, but in no event more than three (3) years after the original expenditure is paid. SECTION 4. The total estimated project cost is $13,200,000 and the Applicant commits to funding the remaining$3,200,000 in project costs with other funds. SECTION 5. David C. Hix, Deputy Director of Utilities-Wastewater is hereby authorized and directed to act on behalf of the City of San Luis Obispo in all matters pertaining to this application. SECTION 6. If the application is approved, John Moss, Utilities Director is authorized to enter into and sign the financing documents and any amendments thereto with the I-Bank for the purposes of this financing. SECTION 7. This resolution shall become effective immediately upon adoption. Upon motion of seconded by and on the following vote: AYES: NOES: ABSENT: 1-7 �—, Attachmeat 1 Resolution No. (2008 Series) Page 3 The foregoing resolution was adopted this day of 2008. Mayor David F. Romero ATTEST: Audrey Hooper City Clerk APPROVED AS TO FORM: Jonathan P. Lowell City Attorney �'d Attachment 2 Z sow 14 e � p •f vs a a � , . hal ' 41 Err coo O p � rA ° f. d H rA /- 9