CITY COMMISSION AGENDA MEMO March 6, BJ Edmonston, P.E., Management Assistant

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1 CITY COMMISSION AGENDA MEMO March 6, 2014 FROM: BJ Edmonston, P.E., Management Assistant MEETING: March 25, 2014 SUBJECT: PRESENTERS: Award Contract for Water Meter Replacement and Automation (WA1114) Rob Ott, P.E., Director of Public Works Randy DeWitt, P.E., Assistant Director of Public Works BACKGROUND The City of Manhattan has been transitioning its water metering network towards a fully automated system for a number of years. Currently, the City has a substantial investment in existing infrastructure, which had previously converted approximately one-third of the City s water meters to a City-wide wireless network (Aclara s Fixed-Base Star Network). The Water Meter Replacement and Automation Project is intended to outfit the City s remaining manual and radio-read water meters, two inches and under, with equipment capable of being automatically read by the Fixed-Base Network; as well as replace aging meters to improve accuracy. In May 2011, City Administration submitted a Kansas Public Water Supply Loan Fund (KPWSLF) Project Submittal Form for the Water Meters Replacement and Automation Project. In July 2011, the City was notified that the Water Meter Replacement and Automation Project had been identified in the Kansas Department of Health and Environment (KDHE) 2012 Intended Use Plan (IUP) to receive a loan in the amount of $3,084, Projects in the IUP which addressed green infrastructure, energy, or water efficiency qualified for up to 40% principal forgiveness. The Water Meter Replacement and Automation Project is considered by KDHE to be a 100% Categorical Green Project and is eligible for 40% principal forgiveness. In September 2011, the City Commission conducted a public hearing and approved Resolution No A, authorizing the submittal of an application to KDHE for a loan from KPWSLF for the Water Meter Replacement and Automation Project, and the City Administration submitted the loan application to KDHE. KDHE then performed and approved an environmental assessment and a financial capacity analysis and drew up a loan agreement.

2 On January 22, 2013, the City Commission approved execution of the loan agreement with KDHE, and KDHE returned the executed loan documents with a letter dated February 19, Following the receipt of the executed loan agreement, City Administration reviewed the project needs and sought authorization for the purchase of metering equipment from the City Commission in May The City Commission authorized the negotiation and execution of agreements with Salina Supply Company and Mountain States Pipe and Supply for the purchase of equipment and network services to accompany this installation contract on May 21, The scope of these purchases included updates to network equipment, updates to the network software interface, automation devices for each individual water meter, and the purchase of water meters for replacement of the existing equipment. Details of the equipment and service purchases were outlined and agreements were executed in September A purchase agreement for water meters from Salina Supply Company was executed on August 1, 2013, in the amount of $989, A purchase agreement for Fixed-Base Network upgrades and meter automation equipment was executed with Mountain States Pipe and Supply, an authorized Aclara dealer, on October 1, 2013, in the amount of $948, City Administration requested approval to make the purchases of metering equipment and network upgrades directly from distributors to avoid an additional markup which is common on equipment purchased through general contractors. By acquiring the meters, automation equipment, and network services separate from the contract for installation, the City was able to reduce the project costs significantly. The estimated savings recovered by these purchase agreements and avoiding the contractor markup is $291, The installation phase of this project was developed so the City could solicit bids for the labor and ancillary parts required to complete the conversion or replacement of the City s existing manual and radio-read water meters. This phase would install the equipment which was purchased by the City under the agreements authorized on May 21, The meter installation phase would also include some additional work items for replacement of existing valves and service lines identified as non-functional or needing repairs during completion of the work. As part of the overall scope of the Water Meter Replacement and Automation Project, the City plans to pursue an additional construction agreement. This agreement would be for the installation of a self-supporting tower near Kimball Avenue and North Manhattan Avenue in an effort to improve the communication of the Fixed-Base Network in the Northview area. The northeast part of Manhattan has been a location where topography had restricted radio communication, and the coverage of the Fixed-Base Network was historically less effective due to the location of Bluemont Hill. This tower will reduce the signal shadow created by the nearby topographical ridge and potentially provide a location for future communication needs for the City.

3 DISCUSSION City Administration recently solicited bids for the meter installation phase of the Water Meter Replacement and Automation Project. The project is intended to provide installation services for water meters and automation devices for the City s manual and radio-read meters sizes two inches and less. The contract included a Bid Alternate which would allow the contractor to retain and salvage materials removed from the project. Following the review of the bids submitted, City Administration believes it is in the best interest of the City to incorporate the Bid Alternate into the awarded contract. The low bidder on the project is US Bronco Services, Inc., of Fairfield, Ohio. The company provided a Base Bid of $585,123.00, and a Bid Alternate value of $30, as a reduction to the Base Bid. This results in a Grand Total contract value of $555, The Engineer s Opinion of Probable Cost was $1,085, The Water Meter Automation and Replacement Project is scheduled to replace 5,900 existing water meters and convert another 2,459 existing meters to the Fixed-Base Automation Network. In total, this installation contract will convert 8,359 existing meters in the City s water distribution system from manual or short-range radio read to the Fixed-Base Network. To take advantage of the principle forgiveness included in the project s KDHE loan funds, the replacement of non-functioning service valves, in addition to automating meters, has been included in the contract to address some of the water service connections that may be found in poor condition. Currently, the project s expenses are less than the original project costs estimated in the planning stages of the program, and operating costs are anticipated to improve following completion of the work. This project has allowed an upgrade of the City s Fixed-Base Network equipment, including antennae, servers, field programming devices, and the network software interface. Upon completion, the project will reduce the water losses in the City s distribution system, improve the coverage area of the City s Fixed-Base Network, and improve the efficiency of the City s meter reading and billing processes. It is also anticipated that this project will reduce the labor, vehicle, and fuel expenses required to read meters, including reducing City meter reading staff by two members. In essence, this meter replacement and automation project completes work which needed to be completed whether the loan funding was utilized or not. The City needed to expand the use of current technology that facilitates the lowest operating cost and conserves the City s resources. Additionally, the project will complete the replacement of older meters which is necessary to ensure accurate readings and prevent loss of revenue. This program has provided a reduction in costs for the purchase of equipment and services due to principal forgiveness, it has accelerated the expansion of the Fixed-Base Network by using a contractor to complete the installations, and it has maintained a project cost within the budgeted amount.

4 FINANCING The total cost of the installation contract recommended for award is $555, A breakdown of the overall project costs are as follows: Description of Project Expenditures KDHE Loan KPWSLF Project 2743 Salina Supply Purchase Agreement $989, Mountain States Pipe and Supply Purchase Agreement $948, Sungard Billing Automation Services $12, Tower Materials Purchased $8, Water Meter Installation Contract $555, Total Project Costs To-Date: $2,513, The funds for this project were secured through KDHE and are backed by the low interest KPWSLF loan fund. The loan agreement provides a 40% principal forgiveness on eligible project funds up to the $3,084, loan amount. The estimated amount of principal forgiveness is $1,233, The amortization amount is $1,858, The interest rate for the KPWSLF loan agreement is 2.43% including the loan origination fee. Loan payments for this project have been programmed into the budget and will be paid utilizing Water Fund revenues, and repayment of the loan to KDHE is scheduled to begin in August Current project expenses are eligible for reimbursement on a monthly basis as invoiced by the contractor or equipment supplier. Currently, City Administration is submitting reimbursement requests for invoices received each month, and KDHE typically returns the reimbursement funds within two weeks of receiving each request. The original estimated project cost of the Water Meter Replacement and Automation Project was $2,871, Staff identified additional project needs and incorporated additional work to maximize the benefit of the principal forgiveness available under the loan agreement with KDHE. Early analysis of this program projected that savings through improved metering accuracy would outweigh the projected debt service beginning in the first year and will yield positive annual cash flow over the life of the loan.

5 ALTERNATIVES It appears the Commission has the following alternatives concerning the issue at hand. The City Commission may: 1. Accept the Engineer s Opinion of Probable Cost in the amount of $1,085,737.00; award a contract in the amount of $555,123.00, subject to the approval of KDHE, to US Bronco Services, Inc., of Fairfield, Ohio; and authorize the Mayor and City Clerk to execute the contract for the Water Meter Replacement and Automation Project (WA1114). 2. Accept the Engineer s Opinion of Probable Cost but do not award a contract to US Bronco Services, Inc. 3. Modify to meet the needs of the Commission. 4. Table the request. RECOMMENDATION City Administration recommends the City Commission accept the Engineer s Opinion of Probable Cost in the amount of $1,085,737.00; award a contract in the amount of $555,123.00, subject to the approval of KDHE, to US Bronco Services, Inc., of Fairfield, Ohio; and authorize the Mayor and City Clerk to execute the contract. POSSIBLE MOTION Accept the Engineer s Opinion of Probable Cost in the amount of $1,085,737.00; award a contract in the amount of $555, (base bid in the amount of $585, less the bid alternate in the amount of $30, for salvage of removed equipment), subject to the approval of KDHE, to US Bronco Services, Inc., of Fairfield, Ohio; and authorize the Mayor and City Clerk to execute the contract for the Water Meter Replacement and Automation Project (WA1114) BJE Enclosures: 1. Bid Summary 2. Letter to KDHE for Recommendation of Contract Award

6 CITY OF MANHATTAN/PUBLIC WORKS 1101 POYNTZ AVENUE MANHATTAN, KS BID SUMMARY Water Meter Replacement and Automation Project (WA1114) Wednesday, March 5, 2014 ~ 3:30 P.M. BIDDER US Bronco Services Inc. * 280 Donald Drive Fairfield, OH UWS Inc. PO Box Tate Road Trion, GA Vanguard Utility Service, Inc W. 9 th Street Owensboro, KY BID BOND ADD. NO. 1 ADD. NO. 2 BASE BID ALTERNATE GRAND TOTAL X X X $585, $30, *$555, X X X $567, $12, $555, X X X $649, $28, $620, RTS Water Solutions 9420 NW 63 rd Street, Ste 6 Parkville, MO National Metering Services Inc. 163 Schuyler Avenue, Box 491 Kearny, NJ Manhattan Trenching Inc Fair Lane Manhattan, KS Middlecreek Corporation PO Box 136 Peabody, KS X X X $734, $19, $715, X X X $867, $15, $852, X X X $959, $1,200 $958, X X X $1,333, $8,000 $1,325, Goins Enterprises, Inc. 3255N. County Lane 252 Joplin, MO X X X $1,594, $1,594, Engineer s Opinion of Probable Cost $1,085, (*) Recommend Award of Contract

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