The URL can be used to link to this page

Home My WebLink About04.b. (Handout) Committee Item 4.b. From:Jean-Marc Petit<impetit@centralsan.org> (Handout) Sent:Tuesday,July 21, 2020 10:15 AM To: Paul Causey<pcausev@centralsan.org> Cc: Philip Leiber<pleiber@centralsan.org>; Roger Bailey<rbailey@centralsan.org>; Danea Gemmell <dgemmell@centralsan.org>; Edgar Lopez<ELopez@centralsan.org>; Katie Young <KYoung@centralsan.org> Subject: SRF For Finance DRAFT Good morning Paul, I received your question via Phil requesting explanation on why the cost of the Solids Project is apparently rising. While we still have uncertainties regarding the project cost at bid time scheduled for later this year, staff has been actively working with the Water Board Financial Assistance Funding-Grants and Loans—CWSRF. As indicated at the April Financial workshop,we are intending to submit an update application to increase the amount of the SRF loan from $89.6M to $120 M. So staff was already planning to request authorization to submit an application for the$120M. Recently,we have held several teleconference meetings with our SRF loan officer and she has indicated that there would be a possibility of funding reimbursement for moneys already spent such as the design. These reimbursement total over$8 M. While the money has already been paid with pay as you go money,there are several benefits of requesting a loan for a higher amount that originally requested. In addition, the$165.4M request is not assured, but she encouraged Central San to make a higher request and asked if we were willing to take a partial funding amount if the Water Board could not loan the full amount. The position paper is requesting the authorization for the GM to submit an updated application for an SRF loan for the higher amount. Our approach in requesting a higher amount (more than ($120 M) $165 M for the SRF is based on the following premises: 1. This SRF application will be, in essence, a line of credit to cover possible additional cost including reimbursement of design cost if so desired 2. Money will not be drawn from line of credit if not needed. Only reimburse for actual amount borrowed and the final amount will be submitted after the bid and is part of the normal SRF process. 3. SRF loan is over multi years 4-5 years starting FY 20-21 4. Reimbursement do not start until one year after first draw 5. Interest rate is very low at 1.4% may even be lower by 0.25% if 20 years instead of$30 years 6. District financial plan had two SRF loans identified: $141 -$154 M a. Loan 1: for the Solids project: $120 M-$154 b. Loan 2: for the Filter Improvements Phase 113: $21-34 M C. This higher amount would negate need for a second loan 7. Places the District in best position to respond to financial changes if needed especially since FY 20-21 SCC was not implemented. Page 1 of 4 Original basis for the$89.6M SRF application DecemberNNW— Central San Cash Requested SRF Funding Funding A Facilities Planning $2,415,000 $2,415,000 B Facilities Design $9,000,000 $9,000,000 C Construction Management $8,626,542 $8,626,542 D Value Engineering $500,000 $500,000 E Administration-Central San $3,500,000 $3,500,000 F Facilities Construction Total $77,070,305 $77,070,305 G Contingency $3,928,515 $3,928,515 H Pre-Purchase Materials I Land and Right-of-Way J Other Costs-Shop Drawings $500,000 M 040 Mill As we presented during the finance workshop in April 2020 and as stated in the FY 2020-21 Budget, the Solids project estimate have increased. Therefore,we are already planning to request an increase for a loan of up to $120M. We have been working both with B&V the design engineer and then with MWH Constructors to develop more detailed estimate of the project cost. While the scope of the project has not changed since the final design started over 18 months ago, the complexity of the construction has been highlighted by MWH. The project sequencing as outlined by B&V is very linear and has many constraints on the contractor to keep the building in operation for an estimated 42-48 months construction. A long construction period has the benefit of doing work while the building remains in operation but the longer duration has the impact of having overhead (staff, contractor, B&V and MWH)for that long period of time also. A wide range in cost estimate of$15M-$18 M was provided by MWH depending on the construction approach. We have worked diligently to further refine the best approach to construct the project. Page 2 of 4 Updated Not Eligible for Eligible for SRF SRF Funding Updated qReimbursement* Reimbursement* Request a ProjectCosts Total A Facilities Planning $2,040,000 $0 $2,040,000 B Facilities Design $3,000,000 $5,605,000 $350,000 $8,955,000 C1 Construction Management $12,400,000 $12,400,000 Construction Management- C2 ESDC $5,200,000 $5,200,000 D Value Engineering $500,000 $0 $500,000 E Administration-Central San $2,700,000 $1,500,000 $5,800,000 $10,000,000 F Facilities Construction** $107,000,000 $107,000,000 G Contingency $16,050,000 $16,050,000 H Pre-Purchase Materials I Land and Right-of-Way J1 Other Costs-Shop Drawings $460,000 $460,000 J2 Other Costs-Sludge Hauling $10,000,000 $10,000,000 J3 Other Costs-Air Permit Testing ' $500,000 $500,000 While we still have uncertainties regarding the project bid scheduled for later this year, staff has been actively working with the Water Board Financial Assistance Funding-Grants and Loans—CWSRF. As indicated at the April Financial workshop, we are already intending to submit an update application to increase the amount of the SRF loan from $89.6M to $120 M. Changes in Project Cost: Facilities Construction +/- $15M to $30.0 (depending on construction sequence) From 5%- 15%Contingency increase of over$12 M to have $16 M in contingency as discussed at Board meeting in April Sludge Hauling during Construction $5-10.0 M (We recently issued an RFP for a 5-year sludge hauling contract schedule for 8/4/20 E&C)we extrapolated potential cost for 6 to 12 months of hauling and disposal if we shut down the furnaces. Construction Management $9.0 added both design engineer and CM) Administration $6.5 Total Potential Increase $47.5-$67.5 M So, as stated above, our approach in requesting a higher amount of$165 M for the SRF is based on the requesting a line of credit to cover possible additional cost including reimbursement of design cost if so desired and places the District in best position to respond to financial changes if needed especially since FY 20-21 SCC was not implemented. Page 3 of 4 Staff will be providing an update on the Solids project at the August 4 E&0 and August 20 Board meeting. Staff is requesting that the GM be authorized to submit an application for a higher amount. It should be noted that there is no guarantee we would be able to secure the entire amount. Hope this helps framing our reasons for the request.Thank you. Jean-Marc H. Petit, P.E. Director of Engineering and Technical Services Central Contra Costa Sanitary District 5019 Imhoff Place Martinez, CA 94553 Direct: (925)229-7112 Main: (925) 228-9500 Cell: (925)-708-9364 jmpetit@centralsan.org Page 4 of 4