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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/05/2019 - SECOND READING OF ORDINANCE NO. 026, 2019, AUTHORIAgenda Item 5 Item # 5 Page 1 AGENDA ITEM SUMMARY March 5, 2019 City Council STAFF Eileen Dornfest, Special Projects Manager Carol Webb, Deputy Directory, Utilities Gerry Paul, Director of Purchasing & Risk Management Eric Potyondy, Legal SUBJECT Second Reading of Ordinance No. 026, 2019, Authorizing the Purchasing Agent to Enter into Contracts for Services, Professional Services and/or Construction in Excess of Five Years for the Proposed Enlargement of Halligan Reservoir. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on February 19, 2019, authorizes the Purchasing Agent, pursuant to City Code Section 8-186(a), to enter into contracts greater than five years in length for services, professional services, and/or construction of the proposed enlargement of Halligan Reservoir. Contracts authorized under the proposed ordinance could be extended up to the life of the project. Preliminary design of an enlarged Halligan Reservoir will likely begin in late 2019, and construction could begin four years later. Construction is anticipated to last approximately two years. Under this scenario and without this proposed ordinance, the design contract would expire while the Halligan Reservoir enlargement is under construction, a situation that would result in logistical, and cost ramifications for the City and the project. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, February 19, 2019 (w/o attachments) (PDF) 2. Ordinance No. 026, 2019 (PDF) Agenda Item 11 Item # 11 Page 1 AGENDA ITEM SUMMARY February 19, 2019 City Council STAFF Eileen Dornfest, Special Projects Manager Carol Webb, Deputy Directory, Utilities Gerry Paul, Director of Purchasing & Risk Management Eric Potyondy, Legal SUBJECT First Reading of Ordinance No. 026, 2019, Authorizing the Purchasing Agent to Enter into Contracts for Services, Professional Services and/or Construction in Excess of Five Years for the Proposed Enlargement of Halligan Reservoir. EXECUTIVE SUMMARY The purpose of this item is to authorize the Purchasing Agent, pursuant to City Code Section 8-186(a), to enter into contracts greater than five years in length for services, professional services, and/or construction of the proposed enlargement of Halligan Reservoir. Contracts authorized under the proposed ordinance could be extended up to the life of the project. Preliminary design of an enlarged Halligan Reservoir will likely begin in late 2019, and construction could begin four years later. Construction is anticipated to last approximately two years. Under this scenario and without this proposed ordinance, the design contract would expire while the Halligan Reservoir enlargement is under construction, a situation that would result in logistical, and cost ramifications for the City and the project. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION The Halligan Water Supply Project (Halligan Project) is currently in the regulatory permitting phase, with federal permitting being led by the United States Army Corps of Engineers (Corps). The enlargement of Halligan Reservoir is the City’s preferred alternative for meeting water supply needs, due to relatively low costs and environmental impacts, and significant opportunities for environmental improvements downstream. Other alternatives considered have lower water quality, a larger construction footprint and infrastructure requirements, higher operations and maintenance costs, and overall higher cost per unit of water. The Corps is finalizing the Draft Environmental Impact Statement (EIS), which is scheduled for release in mid-2019. The overall schedule for the Halligan Project is primarily dictated by the federal permitting process, and the City has very limited control of the schedule until all permitting is complete. Federal permitting with the Corps began in 2006 and preliminary indications are that permitting could be complete in 2022. In addition to the federal permitting process led by the Corps, several other permits are needed from other federal, state, and county agencies prior to construction. Design of the dam raise will begin in 2019 in order to collect data to refine cost estimates and identify construction risks. Design for a project of the size and complexity of the enlargement of Halligan Reservoir typically takes several years and is conducted in phases. The first phase of design, Preliminary Design, is scheduled for 2019-2020 ATTACHMENT 1 Agenda Item 11 Item # 11 Page 2 and will provide critical information needed to verify current Halligan Project assumptions, refine the current construction cost estimate, and provide information needed for several permits required for construction. A Request for Proposals for a design team will be released in 2019. This design team will not only design the enlargement of Halligan Reservoir, but will also play a critical role during construction to ensure that construction is performed in accordance with the design. If, for example, the contract for design is executed in 2019, the five- year contract limit for multi-year contracts stated in City Code Section 8-186(a) prohibits renewal of the contract beyond 2024 unless authorized by ordinance. A preliminary project schedule is included in the latest Halligan Project update attached and shows that construction is anticipated to be underway in 2024 and will last approximately two years. Given this schedule and the multi-year contract limitations per City Code, the contract for design would expire during construction. At that point, City Council could extend the contract for a longer term, or a mid-project competitive purchasing process would be required for design. A mid-project competitive purchasing process for the design team would at the least be disruptive to the project and incur additional cost to the City. At most it could initiate uncertainties for issues that arise during design or construction. A similar scenario could develop for the construction contractor, who will join the Halligan Project team during Preliminary Design and will be responsible for providing constructability input during design as well as construction of the multi-year project. Extending the length of contracts for the Halligan Project up to the life of the project will provide the City with the continuity needed for the project team to efficiently deliver this multi-year project. This Ordinance is being requested now, because the Draft EIS is scheduled for release in 2019, as shown in the attached preliminary project schedule. (Attachment 1) After public comments are received on the Draft EIS, design is anticipated to begin in late 2019. This Ordinance is being requested now, before initiation of the competitive purchasing process for design and before any contracts are executed, in order to set the project team up for success and continuity. The preliminary estimate for total cost of the construction contracts to build Halligan are anticipated to be approximately $40 to $50 million. The total cost of the design contracts is projected to be approximately 10 percent of construction costs. Staff is preparing a presentation on the Halligan project for the April 9 work session. This presentation will include an update on the project status and schedule, past work and project costs, upcoming work and costs, and an update on the permitting process, including the current permit status and the items that will be released for public review and comment in mid-2019. CITY FINANCIAL IMPACTS This is a cost avoidance measure. Cost efficiencies will be realized by the City if the Purchasing Agent can enter into contracts for design or construction in excess of five years for the Halligan Project. BOARD / COMMISSION RECOMMENDATION At its November 15, 2018 meeting, the Water Board unanimously voted to recommend that City Council adopt a revision to the ordinance to extend contracts related to design and construction of the Halligan Project through completion of the project, due to the uncertainty related to the timeframe for permitting. ATTACHMENTS 1. Permitting and Design Process (PDF) 2. Water Board Minutes, November 15, 2018 (PDF) 3. Halligan Water Supply Project Update, January 2019 (PDF) -1- ORDINANCE NO. 026, 2019 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE PURCHASING AGENT TO ENTER INTO CONTRACTS FOR SERVICES, PROFESSIONAL SERVICES, AND/OR CONSTRUCTION IN EXCESS OF FIVE YEARS FOR THE PROPOSED ENLARGEMENT OF HALLIGAN RESERVOIR WHEREAS, City Code Section 8-186(a) states that no contract for services or professional services, including all renewals, shall be made by the City for a period longer than five years, unless authorized by ordinance, which ordinance shall not be passed as an emergency ordinance; and WHEREAS, City is pursuing the Halligan Water Supply Project (“Project”), which includes the City’s preferred alternative of the enlargement of Halligan Reservoir, an existing reservoir located on the North Fork of the Cache la Poudre River; and WHEREAS, the enlargement of Halligan Reservoir will be a substantial undertaking that will require significant design and construction work, the specifics of which depend on various investigations that are planned to be completed; and WHEREAS, the work associated with the enlargement of Halligan Reservoir, including design and construction work, will likely take more than five years due to various factors, including the scope of the Project and legal and regulatory requirements; and WHEREAS, it is in the best interest of the City and the citizens of Fort Collins, including ratepayers of Fort Collins Utilities, that the Purchasing Agent be authorized to enter into contracts for services, professional services, and/or construction in excess of five years for the proposed enlargement of Halligan Reservoir in order to, among other things, receive better proposals for the design and construction work, maintain continuity of the design and construction work throughout the Project, and therefore avoid costs related to transitions of project team members due to contract expiration. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the Purchasing Agent is hereby authorized to enter into contracts for services, professional services, and/or construction in excess of five years for the proposed enlargement of Halligan Reservoir, but not to extend beyond the completion of the project and any associated warranty periods. -2- Introduced, considered favorably on first reading, and ordered published this 19th day of February, A.D. 2019, and to be presented for final passage on the 5th day of March, A.D. 2019. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 5th day of March, A.D. 2019. __________________________________ Mayor ATTEST: _______________________________ City Clerk