REPORT TO THE CITY COUNCIL October 25, 2018 FROM: MICHAEL CARBAJAL, Director Department of Public Utilities THROUGH: DEJAN PAVIC, Supervising Professional Engineer Department of Public Utilities - Utilities Planning & Engineering BY: MARTIN WENDELS, Project Manager Department of Public Utilities - Utilities Planning & Engineering SUBJECT ..Title ***RESOLUTION - 13th Amendment to the Annual Appropriation Resolution (AAR) No. 2018-157 to appropriate $2,803,100 to provide additional funding for construction contract change orders and support services costs for the Kings River Pipeline Project (District 5 and Fresno County) (Requires 5 affirmative votes) (Subject to Mayor's Veto) ..Body RECOMMENDATIONS Staff recommends that City Council adopt the 13th Amendment to the Annual Appropriation Resolution (AAR) No. 2018-157 to appropriate $2,803,100 in additional funds for the construction Contract Change Orders (CCO) and project costs to construct the City of Fresno's (City) Kings River Pipeline Project (Project). EXECUTIVE SUMMARY On May 12, 2016, City Council awarded a contract to Garney Pacific Inc., for construction of the Project in the amount of $45,583,750. Notice to Proceed (NTP) with construction was issued on June 27, 2016. 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 for a net total increase of $705,553 (1.55%), resulting in a new total construction contract value of $46,289,303. The additional $2,097,547 (for a combined total additional appropriation of $2,803,100) 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. The additional costs will be covered by contingencies within the Project budget and funded by the State Revolving Fund (SRF) Low Interest Loan 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. Consistent with the Council approved rate plan and capital plan, the Project is a 13-mile 72-inch diameter pipeline that conveys raw water for treatment from a diversion on the Fresno Canal No. 3 to the Southeast Surface Water Treatment Facility. The diversion facility is located near the intersection of Trimmer Springs Road and the Fresno Irrigation District Fresno Canal No. 3 about 3,800 feet downstream of the Fresno Canal No. 3 headgates on the Kings River. The Project will allow the City to more effectively use its existing Kings River water allocations and reduce reliance on ground water. On March 15, 2016, the City received eight bids from pre-qualified contractors in response to the City's solicitation for construction bids for the Project. Based on the City's evaluation of the construction bids submitted, Garney Pacific Inc., was determined to be the lowest responsive and responsible pre-qualified bidder for construction of the City's Project in the amount of $45,583,750. On May 15, 2016, a contract to construct the Project was awarded, and NTP was issued on June 27, 2016. The Project was substantially complete June 15, 2018. Subsequent to NTP, a total of seven CCOs have been executed to date (attached), resulting in a cumulative increase to the contract value of $705,553 and a substantial completion extension of 200 days (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 $45,289,303. The additional $2,097,547 (for a combined total additional appropriation of $2,803,100 per this 13th amendment to AAR No. 2018-157) 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. These increased costs will be covered by contingencies within the Project budget from loan proceeds available through the approved SRF Low Interest Loan. ENVIRONMENTAL FINDINGS Adoption of an amendment to AAR is not a "project" for the purpose 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 Project is located in Council District 5 and Fresno County. 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 SRF 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: 13th Amendment to the Annual Appropriation Resolution No. 2018-157 (Attachment 1) Contract Change Orders No. 1 through No. 7 (Attachment 2)