REPORT TO THE CITY COUNCIL
June 21, 2018
FROM: MICHAEL CARBAJAL, Interim Assistant Director
Department of Public Utilities - Utilities Planning & Engineering
BY: DEJAN PAVIC, Supervising Professional Engineer
Department of Public Utilities - Utilities Planning & Engineering
SUBJECT
Title
***RESOLUTION - 70th Amendment to the Annual Appropriation Resolution (AAR) No. 2017-165 to appropriate $1,950,000 to the State Revolving Fund Low Interest Loan Fund for the Friant-Kern Canal Pipeline Project (Council District 6 and County) (Requires 5 affirmative votes) (Subject to Mayor’s veto)
Body
RECOMMENDATION
Staff recommends that City Council adopt the 70th Amendment to the Annual Appropriation Resolution (AAR) No. 2017-165 to appropriate $1,950,000 in additional funds for construction contract change orders and project costs to construct City of Fresno’s (City) Friant-Kern Canal Pipeline Project (Project).
EXECUTIVE SUMMARY
On April 21, 2016, City Council awarded a contract to Mountain Cascade Inc., for construction of the Project in the amount of $15,157,862. Notice to Proceed (NTP) with construction was issued on May 31, 2016. Change Orders (CCOs) No. 1 through No. 7 have been approved for necessary modifications to various added and deleted work items and appurtenances in meeting design intent and Project operational, safety, and security requirements. The seven CCOs have been incorporated into the construction contract with a net total increase of $929,515.22 (6.13%), resulting in a new total construction contract value of $16,087,377.22. The additional $1,020,484.78 (for a combined total appropriation of $1,950,000) is needed for additional staff, project management, construction management, and project inspection costs already incurred or projected to be incurred through the end of the current fiscal year, necessitated by Project modifications and construction time extensions due to weather and environmental compliance. The additional costs will be funded through the State Revolving Fund (SRF) Low Interest Loan previously approved for the construction of the Project.
BACKGROUND
On February 26, 2015, the City Council adopted a five-year water utility rate plan to finance the construction of a five-year water capital plan totaling approximately $429 million. The five-year capital plan included the construction of the Project to allow the City to more effectively use its existing surface water allocations and entitlements from Millerton Lake and Pine Flat Reservoir. Consistent with the Council approved rate plan and capital plan, the Project is a 4.5-mile long, 60-inch diameter raw water pipeline from the Friant-Kern Canal to the existing Northeast Surface Water Treatment Facility (NESWTF). It will replace the Enterprise Canal as the primary conveyance system for the NESWTF’s source of raw water supply, while the Enterprise Canal remains a backup supply. The new pipeline alignment extends from a new turnout (intake) structure on the Friant-Kern Canal on the east, westerly to point of connection with the existing 60-inch diameter raw water pipeline’s easterly terminus located southwest of the Willow and Copper Avenues intersection. This Project will greatly reduce the threat to water quality, reduce reliance on groundwater, reduce operating power consumption (as it is gravity-fed), improve facility utilization, and remedy canal seepage losses.
On May 31, 2016, the City executed a $26,520,000 SRF Low Interest Loan through the State Water Resources Control Board for construction of the Project. In addition to the SRF Low Interest Loan, the project was awarded a $1,000,000 WaterSMART Water and Energy Efficiency Grant from the United States Department of Interior’s, Bureau of Reclamation. The construction contract is fully funded through SRF loan and WaterSMART grant.
Mountain Cascade Inc., submitted the low bid price of $15,157,862 on November 17, 2015, and a contract to construct the Project was awarded on April 21, 2016, and NTP was issued on May 31, 2016. The Project was substantially complete and put in operation in November 2017. Subsequent to NTP, a total of seven CCOs have been approved and executed (attached), resulting in a cumulative contract value increase of $929,515.22 (for CCOs No. 1 through No. 7). CCOs No. 1 through No. 7 incorporate necessary modifications to various miscellaneous added and deleted work and appurtenances in meeting design intent and Project operational, safety, and security requirements, resulting in a new total construction contract value of $16,087,377.22. The additional $1,020,484.78 (for a combined total appropriation of $1,950,000 per this 70th amendment to AAR No. 2017-165) is needed for additional staff, project management, construction management, and project inspection costs already incurred or projected to be incurred through the end of the current fiscal year, necessitated by Project modifications and construction time extensions due to weather and environmental compliance. These increased costs will be funded from loan proceeds available through the approved Friant-Kern Canal Pipeline SRF Low Interest Loan.
ENVIRONMENTAL FINDINGS
Adoption of this amendment to AAR is not a “project” for the purposes of the California Environmental Quality Act (CEQA), and does not involve commitment to any specific project which may result in a potentially significant physical impact on the environment as contemplated by CEQA Guidelines Section 15378.
LOCAL PREFERENCE
Local preference was not implemented because this action pertains to an existing construction contract.
FISCAL IMPACT
There is no impact to the General Fund. The approval of an amendment to the AAR is required to appropriate additional funds for construction contract change orders and support costs within the SRF low interest loan fund. The cost of debt service for this state low interest loan was incorporated into the water rate model used to create the five-year utility rate plan that was adopted by City Council on February 26, 2015.
Attachments:
70th Amendment to the Annual Appropriation Resolution (AAR) No. 2017-165 (Attachment 1)
Change Orders No. 1 through No. 7 (Attachment 2)