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HomeMy WebLinkAbout01.c. Approve minutes of meeting held 08-26-2021 Page 1 of 7 Item 1.c. CENTRALSAN jdf A- hom CENTRAL CONTRA COSTA SANITARY DISTRICT September 2, 2021 TO: HONORABLE BOARD OF DIRECTORS FROM: KATIE YOUNG, SECRETARYOF THE DISTRICT SUBJECT: AUGUST26, 2021 SPECIAL BOARD MEETING MINUTES Attached are the draft minutes of the above Board meeting. ATTACHMENTS: 1. Draft Minutes of 08-26-21 meeting September 2, 2021 Regular Board Meeting Agenda Packet- Page 18 of 199 Page 2 of 7 CENTRAL SAN CENTRAL •NTRA COSTA SANITARY DISTRICT 5019 • MINUTES* BOARD OF DIRECTORS: TAD J.PILECKI President SPECIAL BOARD MEETING DAVID R. WILLIAMS Virtual Workshop President Pro Tem Thursday, August 26, 2021 BARBARA D.IIOCKETT 3:00 p.m. MTZEN A HAELR.AHN MCGILL DRAFT Open Session (Video recorded) NOTICE In accordance with the Governor's Executive Order N-29-20, which suspended certain requirements of the Brown Act due to the ongoing COVID-19 pandemic, all Board Members participated in this meeting via videoconference. Members of the public were provided options to participate in the meeting as provided on the agenda. ROLL CALL A special meeting of the Board of Directors was called to order by President Pilecki at 3:00 p.m. Secretary of the District Katie Young called roll: PRESENT: Members: Hockett, Lauritzen (joined during Public Comment Period), McGill, Williams, Pilecki ABSENT: Members: None PUBLIC COMMENT PERIOD None. SOLIDS HANDLING FACILITY IMPROVEMENTS PROJECT WORKSHOP 2. Hold an informational workshop regarding the Solids Handling Facility Improvements, District Project 7348. The following will be presented for discussion: • Receive a status update of the project and recent bid period activities; These summary minutes are supplemented by a corresponding video recording available on the District's website at centralsan.org. September 2, 2021 Regular Board Meeting Agenda Packet- Page 19 of 199 Page 3 of 7 CENTRAL CONTRA COSTA SANITARY DISTRICT August 26, 2021 Special Board Meeting Minutes-Page 2 • Consider a staff proposed recommendation to award a construction contract, at a future meeting, to Kiewit Infrastructure West Co., the lowest responsive and responsible bidder, in the amount of $179,841,000; • Consider alternatives; • Consider staff proposed need for additional engineering support services during construction, including amendments to existing agreements and execution of two new agreements; and • Hold a Questions and Answers session General Manager Roger S. Bailey advised that the Solids Handling Facility Project has been in the District's Master Plan for some time. He noted that the bids came back fairly high, and assessments and decisions will need to be made in order to complete this project. Director of Engineering and Technical Services Jean-Marc Petit reviewed an updated presentation included in the agenda material. In response to a question posed by Member Williams, Mr. Petit reviewed Slide 15 which included the progression of the project cost estimate. There was a large increase in the project overall, plus significant increases in commodity price. Mr. Petit provided the Board with the reasons for the increase. First mentioned was the risk to contractors stating that it was an extremely large, complex, and long project. Other significant factors were: • Sequencing for seismic improvements • Multiple Hearth Furnace (MHF) sludge hauling for 18 months at a cost of $19 million • Deferred design elements • Electrical work is a critical path and very complex • Limited number of pre-qualified contractors submitted a bid (three general contractors and two electrical subcontractors) • Temporary electrical system added by addendum • Market impacts • Global supply disruption during COVID-19 This project is a one-of-a-kind project and was bid in a difficult environment. A cost breakout of the $261.4 million estimate was given ($211 million for construction, $34 million for construction management and $15.9 million for pre-bid expenditures). Mr. Petit reviewed slide 21 which showed the complexity of the Air Pollution 129 Rule/50% trigger for when additional air pollution upgrades would be needed for stricter compliance. It showed that some cost elements of the project are exempt, likely exempt or not exempt. September 2, 2021 Regular Board Meeting Agenda Packet- Page 20 of 199 Page 4 of 7 CENTRAL CONTRA COSTA SANITARY DISTRICT August 26, 2021 Special Board Meeting Minutes-Page 3 Member Pilecki noted that a portion of the high bid is due to COVID impacts. He asked if the bid can be adjusted to back that out of the cost as it is a unique situation. Kiewit's Senior Vice President Matt Scott clarified the question for the 129 Rule to ask about backing that out in the cost analysis. Mr. Petit noted that issues like this would be assessed in the proposed value engineering phase. Mr. Petit noted that there was previously an $11 million buffer on building work that kept the District below the limit triggering more stringent regulatory work. This too would be addressed in the value engineering work. Project financing was covered, showing that a $77.5 million variance would need to be covered in some manner. Mr. Petit reviewed slides 23 and 24 that provided the updated assumptions in the Financial Plan. Discussion was held regarding deferring projects or funding the project through rate increases, which was not recommended. Member Williams clarified that when work is deferred it will cost more in the future. President Pilecki asked that the rate analysis include what the rate impacts would be if the District were to also fund additional recycled water work, such as the Refinery Recycled Water Exchange Project. Mr. Petit noted that staff had already run numbers on these scenarios as well and would be providing the Board that information at the February 2022 Financial Workshop. Alternatives • Alternative 2: Reject Bids and a) Rebid the project (not recommended) b) Rebid within approved budget (not recommended) c) Consider design build project delivery (not recommended) d) Repackage project in multiple phases (not recommended at this time) • Alternative 1: Award the contract with a multiple step Notice-to-Proceed (NTP) which included an initial phase of value engineering. In this phase, Mr. Petit cited the scenario "if you save a dollar you spend a dollar."Mr. Petit advised that there was discussion about value engineering outcomes that may terminate the contract or incorporate findings from the value engineering and field verifications where an updated scope of work could lead to a second NTP to begin construction with potential cost savings. Kiewit concurs this approach is a good option, especially to allow for procurement of the long lead equipment for construction. Member Williams stated that value engineering could contain cost savings but may not be completed within the 120 days noted. Mr. Scott stated that chances are some September 2, 2021 Regular Board Meeting Agenda Packet- Page 21 of 199 Page 5 of 7 CENTRAL CONTRA COSTA SANITARY DISTRICT August 26, 2021 Special Board Meeting Minutes-Page 4 vendor pricing may go up, but because there is no commitment from the vendors they can still compete and are not sole sourced, which takes some risk away. He noted that there is a good chance prices could go down. Member Hockett observed that the value engineering will allow the District more time to review the project and take perspectives from a builder, so it would be very helpful and worthwhile, a point that Mr. Petit confirmed. Mr. Petit noted that the value engineering can only proceed with a NTP in place once the construction contract is awarded to Kiewit. Member Williams asked about compensation to Kiewit, noting that it would only be time, not sharing the savings that Central San would obtain. Mr. Scott stated that it is a fairly normal process, and they would work collaboratively with the District to get costs down as long as they are getting paid for their efforts. All cost savings would go back to the District and not shared with Kiewit. President Pilecki suggested if the District completed value engineering it should not cut components out of the project, but rather look at the constraints and methodology. Mr. Petit concurred with the objective. • Alternative 3 (long-term approach) 3a. - Mr. Petit advised that the challenge with adding anaerobic digestion process is biosolids disposal. It was noted that a preference would be to have a third- party consultant team, who has not been involved in the project, look at the disposal implications and consider anaerobic digestor and abandon the steam system and incineration. 3b. - Mr. Petit advised that Alternative 3.b. is a similar approach but would use a public private partnership (P3) such as with Anaergia that uses digester gas and puts it into the power grid. It was noted that this is not a recommendation but a suggestion to consider. A P3 process would need to be publicly advertised if that path was selected. In response to a question from Member McGill, Mr. Petit discussed how the two recommended paths could unfold, in terms of using biogas to replace natural gas. Mr. Bailey clarified that the two paths would need to be coordinated carefully to avoid reaching a point of no return relative to the value engineering to be completed by Kewitt. Member McGill suggested running Alternative 1 and 3 in parallel but questioned whether the value engineering and 3a/3b alternatives could be done along the same timeframe. Mr. Petit acknowledged it is ambitious, but Central San already has some data that will be useful in evaluating the latter alternatives. He showed a timeline of how the two workstreams could be completed in about three months. Member Williams noted that Alternative 1 results may have to wait until results from Alternative 3 are available. The latter analysis may also need to look at the cost of September 2, 2021 Regular Board Meeting Agenda Packet- Page 22 of 199 Page 6 of 7 CENTRAL CONTRA COSTA SANITARY DISTRICT August 26, 2021 Special Board Meeting Minutes-Page 5 extending the life of the furnaces for another 10 years. He also noted several other risks and matters to be coordinated. Mr. Petit noted that the District would not want to haul Class B solids to landfills or for land application as this is getting more and more complicated. President Pilecki stated that he was pleased that staff is looking at many alternatives, including the digestion option. He advised that a greenfield project costs may now be significantly less than a very complex rehab of an existing facility. There was a discussion about the funding of the project. Staff was informed that the State Revolving Fund (SRF) Loan may be fully approved by next week's Board meeting. Mr. Bailey stated that a recommendation needed to be added for Board approval regarding the greenfield assessment and that it is important to tie them together. Member Williams asked for confirmation that should the outcomes of the evaluations come back differently than anticipated that the Board would still have the option to repackage the project in phases. Mr. Petit confirmed that was correct. Regarding Alternative 2d, President Pilecki asked should the Board elect to repackage, what the outcome of the SRF Loan would be. Mr. Petit responded that the best chance to retain the SRF loan is to go with Alternative 1. He stated that breaking up the project into multiple projects, the District may not get the same funding over the six-eight year span, and may not have all funding available. He stated that if the Board chooses Alternative 3, the District would have to restart the application process and get back in line for the loan approval, which would impact construction timing. Member McGill stated that the staff report was very well done and that he agreed with the 15% contingency. He stated that this project needs to be completed for the rate payers and he is comfortable supporting staff's recommendation of Alternative 1. He was also supportive of Alternatives 3a and 3b, but not if it would delay the project six-eight months. Member Williams stated that he was supportive of Alternatives 1 and 3 as presented. President Pilecki concurred with Member McGill and stated that the presentation today was much clearer and thanked staff for all of their efforts in conducting this workshop. BOARD ACTION: Conducted the workshop and provided input to staff. September 2, 2021 Regular Board Meeting Agenda Packet- Page 23 of 199 Page 7 of 7 CENTRAL CONTRA COSTA SANITARY DISTRICT August 26, 2021 Special Board Meeting Minutes-Page 6 ANNOUNCEMENTS None. ADJOURNMENT The meeting was adjourned at 4:42 p.m. Tad J. Pilecki President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED: Katie Young Secretary of the District Central Contra Costa Sanitary District County of Contra Costa, State of California September 2, 2021 Regular Board Meeting Agenda Packet- Page 24 of 199