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CITY COUNCIL AGENDA ITEM NO. 29

Meeting Date: September 12, 2006

Subject/Title: Adopt a Resolution approving and authorizing the City Manager to execute an amendatory agreement with the Contra Costa Water District pertaining to long term treated water services as a part of the Surface Water Treatment Facility - Phase II, CIP Project No. 562-56290 and amend the CIP and Water Enterprise Budgets.

Prepared by: Public Works: P. Eldredge

Submitted by: Public Works: B. Grewal

RECOMMENDATION
Adopt a Resolution approving and authorizing the City Manager to execute an amendatory agreement with the Contra Costa Water District pertaining to long term treated water services as a part of the Surface Water Treatment Facility - Phase II, CIP Project No. 562-56290, authorize staff to reimburse Contra Costa Water District for certain expenditures as depicted in Attachment “A” to the Resolution and amend the CIP and Water Enterprise Budgets.

PREVIOUS ACTION
On September 26, 1995, City Council approved Resolution No. 95-215, authorizing the execution of an agreement with the Contra Costa Water District for water supply.

On March 10, 1998, City Council approved Resolution No. 98-41, approving the principles of the agreement between East Contra Costa Irrigation District (ECCID), Contra Costa Water District (CCWD) and the City of Brentwood for Long-Term Water Supply and authorizing the City Engineer to continue negotiations with ECCID and CCWD to reach a mutually beneficial agreement for all parties.

On December 14, 1999, City Council approved Resolution No. 99-254, approving the agreements between East Contra Costa Irrigation District (ECCID), Contra Costa Water District (CCWD) and the City of Brentwood for long-term water supply, conveyance and treatment.

On August 12, 2003, City Council approved Resolution No. 2949, authorizing the City Manager to execute the amendment to the agreement with the Contra Costa Water District pertaining to treated water services.

On August 12, 2003, City Council approved Resolution No. 2944, authorizing the City Manager to execute a Professional Services Agreement with Raines, Melton & Carella, Inc. for the Design Contract for the Surface Water Treatment Facility – Phase I, CIP Project No. 562-5629.

On August 24, 2004, City Council approved Resolution No. 2004-206, authorizing the City Manager to execute an agreement with the Contra Costa Water District pertaining to long term treated water services as a part of the Surface Water Treatment Facility - Phase II, CIP Project No. 562-5629.

On December 14, 2004, City Council approved Resolution No. 2204-283, authorizing the City Manager to execute a Professional Services Agreement for The Covello Group, Inc. to provide construction management assistance for the Surface Water Treatment Facility – Phase I, CIP Project No. 562-5629.

On January 25, 2005, City Council approved Resolution No. 2005-23, approving the contract documents and awarding the construction contract for the Surface Water Treatment Facility – Phase I, CIP Project No. 562-5629, to Tidelands Construction Company and authorizing the City Manager to execute the agreement and necessary documents.

BACKGROUND
The agreement between ECCID and Brentwood, approved by the City Council in December of 1999, provided the City with the first right of refusal of 14,800 acre-feet of water annually to be used for municipal and industrial purposes. Additionally, the City Council approved an agreement with CCWD in December of 1999 to: 1) resolve overlapping service boundaries, 2) provide interim treatment of this water source at CCWD’s Randall-Bold Water Treatment Plant (RBWTP) and 3) require both agencies to continue discussions for long treatment possibilities.

Staff from CCWD and the City have analyzed several options to provide the long term treatment of this water. The options ranged from the City constructing its own facility adjacent to the Randall-Bold Water Treatment Plant (RBWTP), to jointly expanding RBWTP with CCWD or jointly constructing a facility with CCWD. During the analysis of these alternatives it was determined that a “hybrid” approach was the most optimal and cost effective solution for both the City and CCWD. This approach consists of the City purchasing 3,200 acre-feet/year of existing treatment capacity in the RBWTP and then constructing a scaled down water treatment facility adjacent to the RBWTP.

The purpose of the amendatory agreement is to update, amend and further clarify portions of the August 24, 2004 agreement between the City and CCWD that identified the responsibilities of each agency as it pertains to this proposed water treatment facility. More specifically, the City’s financial responsibility related to shared facilities and land could not be accurately calculated and finalized until the design of the treatment plant was sufficiently along. With the exception of the clarifications related to shared facilities and land, the remainder of the agreement is unchanged form the previous version approved by Council.

In addition to approving the amendatory agreement staff is requesting Council to amend the CIP budget to reflect the actual low bid amount for Phase II of the project of $40,261,000 plus a 4% contingency for a total not to exceed amount of $41,871,440. A 4% change order allowance is appropriate for a project of this size and nature. The project received a total of 4 responsive responsible bids which have been summarized below:

1. Monterey Mechanical $40,261,000
2. Kiewit Pacific $42,617,000
3. Balfour Beatty $43,763,000
4. Overaa and Co. $48,475,000

The lowest responsive responsible bid was received from Monterey Mechanical and CCWD awarded the construction contract at their August 16, 2006 Board of Directors meeting with the Notice to Proceed anticipated to be issued in September.

FISCAL IMPACT
The current bidding environment is not very favorable due to the shortage of skilled labor and materials and the cost of fuel. Market factors that dictate construction costs are generally limited to one or two components (labor etc.). This is still the case; however, this is compounded by the fact that almost all of these components are influencing the market simultaneously. On average, construction costs have increased by 20% to 25% annually over the last four years, while certain materials have increased even more so. The current CIP construction budget amount shown, $43,801,037, reflects both the Phase I (Pump station and pipeline) and Phase II (Treatment Plant) construction amounts. The construction budget for the treatment plant is $34 million, which is consistent with the pre-design report adopted by City Council on June 28, 2005. Staff previously recommended that any budget adjustments be postponed until after the bid opening to ensure an amendment was warranted and to amend the construction budget to reflect the appropriate amount.

The funds associated with this work are included in the adopted 2006/07 – 2010/11 Capital Improvement Program and the budget contains funds for the construction of the Water Treatment Facility - Phase II, CIP Project No. 562-56290, in the amount of $43,801,037. The construction costs for Phase I, $9,151,037, and the apparent low bid plus contingency for Phase II of $41,871,440, for a total of $51,022,477, is necessitating an amendment to the CIP and Water Enterprise Budgets as depicted below. The budget for this project spans multiple fiscal years, thus the budget summary below reflects the overall budget increase for the entire budget, not just one particular fiscal year.

Expenditure Summary
Original Budget Amended Budget Difference
Legal $ 40,000 $ 40,000 $ 0.00
Planning & Design $ 5,240,463 $ 5,240,463 $ 0.00
Construction $43,801,037 $51,022,477 $7,221,440
Project Administration $ 4,015,000 $ 5,028, 696 $1,013,696
Land/ROW/Acquisitions $ 2,807,465 $ 2,878,877 $ 71,412
Total Project Budget $55,903,965 $64,210,513 $8,306,548

Project Funding Summary
Original Budget Amended Budget Difference
Facility Fees $38,325,093 $32,105,257 $-(6,219,836)
Enterprise $17,578,872 $32,105,256 $ 14,526,384
Total Project Budget $55,903,965 $64,210,513 $8,306,548
This proposed budget amendment of $8,306,548, includes increased construction costs, updated figures for the shared facilities, land costs and conservative estimates for Project Administration. The costs for the shared facilities have been incorporated into the construction budget shown above. In addition to the amendments in the expenditures, the budget was amended to reflect the redistribution of the project funding to ensure the Enterprise account and the Development Fee accounts were sharing in the project costs equally as this project benefits both existing customers and planned future growth. This had not been done in previous budgets due to the anticipated uncertainty with the Phase II bids. A budget amendment would have been required to equally distribute these costs between the two funds regardless if a budget increase was required and these proposed amendments are summarized above.

Per the agreement, the City is required to reimburse CCWD for the construction administration costs, including but not limited to construction management, operations and maintenance manuals, engineering services during construction, staff costs, DHS permitting plus programming of the plant controls. The amount for these services has been included in the budget and shall be paid according to the schedule shown below. This allows the City to optimize it’s cash flow over the next several years for costs that would normally have to be encumbered entirely at the beginning of the planning and design process had this been a City managed CIP project. The payments to be made to CCWD per the agreement are as follows:

Description Est. Amount Terms
Construction Services - 50% Payment $2,362,019 60 Days after Approval of the Amendatory Agreement
Construction Services - Remaining Amount $2,341,500 12 months after the First Payment
Land - Pump Station, Treated Water Pipeline and TCE's $345,181 60 Days after Approval of the Amendatory Agreement
Land - Treatment Plant and related facilities $2,351,760 Upon Acceptance of the Treatment Plant by CCWD
Solids Lagoons $700,000 Upon Acceptance of the Treatment Plant by CCWD
Emergency Generator $890,000 60 Days after Approval of the Amendatory Agreement
Main Power Supply Facilities $72,000 60 Days after CCWD's Acceptance of the Pump Station (Phase I)

The above table reflects the payments to be made to CCWD during the construction of the project. Debt service payments over and above what is shown in this table will be made once the project is complete and this debt service has been accounted for in the proposed budget amendment.

The new treatment facility has been accounted for in the Development Fee Program as well as in the 2006/07 – 2010-11 Capital Improvement Program Budget under the Surface Water Treatment Facility Phase I and II, CIP Project No. 562-56290. Additionally, a new plant was accounted for in the current Water Fee Study and the current water rates accommodate the appropriate debt service for this project; therefore, it is anticipated that water rates will not be adversely impacted by this project. Staff has confirmed with the Finance Department that there are sufficient funds to cover the proposed amended budget. This is a one time amendment to account for the increased construction costs of Phase II of the project based on the existing market factors and no future amendments related to this are anticipated.

Attachments:
Resolution with Attachment “A”
Agreement
Amended CIP Budget Sheet
Site Map

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD APPROVING AND AUTHORIZING THE CITY MANAGER TO EXECUTE AN AMENDATORY AGREEMENT WITH THE CONTRA COSTA WATER DISTRICT PERTAINING TO LONG TERM TREATED WATER SERVICES AS A PART OF THE SURFACE WATER TREATMENT FACILITY - PHASE II, CIP PROJECT NO. 562-56290, AUTHORIZING STAFF TO REIMBURSE CONTRA COSTA WATER DISTRICT FOR CERTAIN EXPENDITURES AS DEPICTED IN ATTACHMENT “A” TO THE RESOLUTION AND AMENDING THE CIP AND WATER ENTERPRISE BUDGETS.

WHEREAS, on September 26, 1995, City Council approved Resolution No. 95-215, authorizing the execution of an agreement with the Contra Costa Water District for water supply; and

WHEREAS, on December 14, 1999, City Council approved Resolution No. 99-254, approving the agreements between East Contra Costa Irrigation District (ECCID), Contra Costa Water District (CCWD) and the City of Brentwood for long-term water supply, conveyance and treatment; and

WHEREAS, on August 24, 2004, City Council approved Resolution No. 2004-206, authorizing the City Manager to execute an agreement with the Contra Costa Water District pertaining to long term treated water services as a part of the Surface Water Treatment Facility - Phase II, CIP Project No. 562-5629; and

WHEREAS, the purpose of the amendatory agreement is to update, amend and further clarify portions of the August 24, 2004 agreement between the City and CCWD that identified the responsibilities of each agency as it pertains to this proposed water treatment facility; and

WHEREAS, the City’s financial responsibility related to shared facilities and land could not be accurately calculated and finalized until the design of the treatment plant was sufficiently along. With the exception of the clarifications related to shared facilities and land, the remainder of the agreement is unchanged form the previous version approved by Council; and

WHEREAS, in addition to approving the amendatory agreement staff is requesting Council to amend the CIP budget to reflect the actual low bid amount for Phase II of the project of $40,261,000, plus a 4% contingency for a total not to exceed amount of $41,871,440.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood does hereby approve and authorize the City Manager to execute an amendatory agreement with the Contra Costa Water District pertaining to long term treated water services as a part of the Surface Water Treatment Facility - Phase II, CIP Project No. 562-56290, authorize staff to reimburse Contra Costa Water District as depicted in Attachment “A” to the Resolution, amend the CIP Budget and amend the 2006/07 Water Enterprise Budget in the amount of $3,799,348.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 12th day of September 2006 by the following vote:

ATTACHMENT “A” TO RESOLUTION NO._______

Pursuant to the Amendatory Agreement the following expenditures are to be paid to the Contra Costa Water District in the estimated amounts shown below and the time intervals shown. These amounts are estimates based upon the most accurate information available at the time of the approval of this Resolution. The amount actually paid may be less than that shown below, thus by approval of this Resolution Council is authorizing staff to reimburse these expenditures up to the amounts shown below.

Description Est. Amount Terms
Construction Services - 50% Payment $2,362,019
60 Days after Approval of the Amendatory Agreement

Construction Services - Remaining Amount $2,341,500
12 months after the First Payment

Land - Pump Station, Treated Water Pipeline and TCE's $345,181
60 Days after Approval of the Amendatory Agreement

Land - Treatment Plant and related facilities $2,351,760
Upon Acceptance of the Treatment Plant by CCWD

Solids Lagoons $700,000
Upon Acceptance of the Treatment Plant by CCWD

Emergency Generator $890,000
60 Days after Approval of the Amendatory Agreement

Main Power Supply Facilities $72,000
60 Days after CCWD's Acceptance of the Pump Station (Phase I)
 

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