REPORT TO MAYOR AND COUNCIL

Transcription

1 AGENDA ITEM NO. AGENDA ITEM NO. 3.f REPORT TO MAYOR AND COUNCIL TO THE HONORABLE MAYOR AND COUNCIL: DATE: May 28, 2013 SUBJECT: ADOPT RESOLUTION NO TO APPROVE A REDUCTION IN LEASE PROCEED FUNDS IN THE AMOUNT OF $435,000; APPROVE AND APPROPRIATE A BUDGET ADJUSTMENT IN THE AMOUNT OF $538,172 TO VARIOUS CITYWIDE ENERGY EFFICIENCY PROJECTS; AND APPROVE A BUDGET TRANSFER OF EXISTING PROJECT FUNDS IN THE AMOUNT OF $291,018, TO VARIOUS ESCO PROJECTS (FUNDED BY: GENERAL FUND) Report in Brief In 2011, the City contracted with Chevron Energy Solutions as an Energy Service Company (ESCO) to manage citywide energy efficiency projects. The projects were partially financed through an Equipment Lease/Purchase Agreement with Chevron. The Contract between the City and Chevron specifies that all Change Orders require City Council approval at a regularly scheduled hearing. Background Staff recommends that the City Council adopt Resolution No which includes the following: 1. Approving a reduction in Lease Proceed Project Funds in the amount of $435,000; 2. Approving and appropriating General Fund monies to the Citywide Energy Efficiency projects in the total amount of $538,172 for the following: $435,000 to replace Lease Proceeds funding, $15,000 as a contingency to complete Project No (Police Building Management System), $88,172 for a Change Order to the Citywide Energy Services Company Energy Efficiency contract for revisions to Project No (Install Back-up Pump at Concord Community Pool); and 3. Approving a budget transfer of remaining project funds from Project No (Solar at Concord Community Park) in the amount of $291,018, to various ESCO projects. On January 25, 2011 the City Council approved the execution of a Contract with Chevron as an ESCO to implement several energy conservation measures, following a comprehensive citywide audit to assess feasible utility conservation projects. Chevron s Energy Audit identified six viable energy efficiency projects:

2 APPROVE A CONTRACT CHANGE ORDER WITH CHEVRON ENERGY SOLUTIONS AND RELATED BUDGET ADJUSTMENTS FOR VARIOUS ESCO PROJECTS May 28, 2013 Page 2 Project No Energy Efficiency Lighting Improvements Project No Install Back-up Pump at Concord Community Pool Project No Replacement of HVAC at Various City Buildings Project No Police Department Building Management System Project No Replacement Lighting at Various Locations Project No Solar at Concord Community Park The total cost of the original contract with Chevron to complete these six projects was $9,852,781. This original contract was funded through ten different funding sources, although the majority of the contract was funded by the Equipment Lease/Purchase Agreement which provided over $8 million for the project, and is discussed later in this report. On December 13, 2011, the City Council ratified and approved three change orders (Attachment 1) to address a number of scope revisions and unforeseen conditions for five of the six ESCO projects. Project No (Replacement of Electrical Pull Boxes at Several City Parks) was added to the Chevron contract to replace over 25,000 lineal feet of wire stolen from light standards with the associated electrical pull boxes damaged during the copper wire thefts. The wire replacement project was added to the ESCO contract because the project scope already included replacement of existing high pressure sodium lights in the City parks with energy efficient induction light fixtures. Adding the installation of replacement light poles, hardened signal boxes, and copper wire to the Chevron contract was the most efficient and cost effective strategy because the two projects required close coordination. In April 2012, a fourth no-cost change order was negotiated with Chevron to substitute installation of fifteen induction streetlights on Enea Circle with an anycomm LED product to serve as a demonstration project for anycomm, a new Concord-based company located in that area. On November 13, 2012, the City Council approved a fifth change order to address additional project scope in the City s parks, as well as additional code and safety requirements at the Civic Center and Police Department. These changes included the addition of project scope to both Project No (Replacement of Electrical Pull Boxes and Wire at Several City Parks) to cover costs associated with the replacement of stolen wire and associated pull boxes at additional parks; and Project No (Police Department Building Management System) to cover the addition of fire and life safety improvements for the Police Department Building. Through these five change orders, the original Chevron contract increased by 17% ($2,151,204) to a total of $12,004,085 (Attachment 1). Financial and Energy Impact of the ESCO Projects The ESCO project includes a performance guarantee from Chevron that the energy efficiency improvements that have been constructed throughout this project will generate sufficient utility savings to pay for the cost of the improvements. If the anticipated energy savings do not occur, Chevron must reimburse the City for the amount of the shortfall. Additionally, initial analysis of the lease/purchase agreement showed that, with an interest rate of 4.75%, the City would receive over $600,000 above its lease payments during the fifteen year life of the Equipment Lease/Purchase Agreement.

3 APPROVE A CONTRACT CHANGE ORDER WITH CHEVRON ENERGY SOLUTIONS AND RELATED BUDGET ADJUSTMENTS FOR VARIOUS ESCO PROJECTS May 28, 2013 Page 3 Since the implementation of the completed ESCO projects, the City of Concord has received approximately $222,870 in energy savings rebates. In addition, since 2011, the City s energy bills have decreased and reflected approximately $5,000/month in savings at certain facilities, which is on target for the energy cost savings anticipated with the project. These savings are based on the average of monthly charges prior to the inception of the ESCO projects, vs. current charges. Each of the ESCO projects has produced a monetary savings to the City and replaced non-functional or highly inefficient infrastructure with new. At least two of the projects have also improved life safety conditions at City facilities. The City Council will continue to be updated annually on the cost/energy savings gained as a result of the ESCO projects as staff monitors the savings to the City to ensure the Chevron guarantee is met. Discussion Energy Lease Agreement Proceeds Funding Construction of six of the seven ESCO projects is fully complete. Work on the final ESCO project, which was added with Change Order #5, should be completed in late May This work includes the repair and replacement of the fire and life safety systems within the Police Department Building (Project No. 2198, Police Department Building Management System). As the ESCO program nears completion, staff has been working to reconcile all of the multiple funding accounts and project budgets against Chevron s invoices. Through this process staff determined that several of the individual ESCO project budgets contained insufficient funds. An extensive review/reconciliation of each project budget was conducted by staff accounting for all retention payments, cost recovery charges, and prior invoices paid against Chevron s past and current invoices. Based on this review, staff identified a $435,000 funding shortfall in the existing budget that is needed to complete payment of the Council approved Chevron contract for a total of $12M (Attachment 1). This shortfall was traced back to an error in early April 2011, when the original project budget was approved. The original project budget was largely funded by Equipment Lease/Purchase Agreement proceeds, which were secured by the City through the Banc of America. The original project budget was built on the assumption of $8.5M in proceeds from the Lease Agreement. However, the first debt-service payment and various initiation fees, totaling approximately $435,000, were charged against the Lease proceeds prior to the City receiving the funds for the ESCO project. Therefore, the project budget actually received $8,065,000, rather than $8.5M. This reduction in available project funding was never updated in the subsequent project budgets, and must be corrected now that the program is nearing completion and Chevron is owed final payments. This requires adjusting the ESCO budget to lower the amount of Lease Proceeds Agreement funding by $435,000 and the transfer of $435,000 of general fund money to the project to replace this funding. It should be emphasized that this adjustment does not expand the total contract budget, nor the scope of work for the seven ESCO projects. Project No (Police Building Management System) Contingency Allocation The Fire and Life Safety Improvements portion of Project No (Police Building Management System) is very complex and is still under construction. This project currently has no contingency funding. Because of this, staff requests that an additional $15,000 be built into the ESCO project budget as a

4 APPROVE A CONTRACT CHANGE ORDER WITH CHEVRON ENERGY SOLUTIONS AND RELATED BUDGET ADJUSTMENTS FOR VARIOUS ESCO PROJECTS May 28, 2013 Page 4 contingency to account for any unforeseen construction issues that may arise as this project is completed. This contingency funding will not be used unless unforeseen conditions mandate minor construction changes to the project. If unused, these contingency funds will be returned to the General Fund. Change Order No. 6 The original scope of Project No (Install Back-up Pump at Concord Community Pool) included replacement of the two existing pool water heaters at Concord Community Pool with four new condensing boilers, and installing two variable frequency drive pool circulation pumps and motors to provide a redundancy for maintenance and energy efficiency. Final approval of this pool project from Contra Costa County s Health Department included requirements that differed from the County s preliminary project comments and resulted in the need for last minute changes to the project in order to meet current water filtration standards. To recover a portion of the costs associated with these last minute changes, Chevron has submitted Change Order No. 6 in the amount of $88,172 for additional work completed by their subcontractor (Airco Commercial Services). Chevron has agreed to waive their administrative charges for this work ($28,849) due to the late submittal of the change order request to the City of Concord (Attachment 3). Work was completed on Project No as scheduled on January 7, Remaining Project Fund Balance Project No (Solar at Concord Community Park) was completed in May, The project scope included a 191 kw solar photovoltaic system for the Park constructed on shade structures at two locations. The original project budget allocation of $1,198,540 was based on Chevron s initial estimate to design and install the system and included contingency funds in case there were unforeseen conditions or issues during construction. The project was completed without incident with a budget of $907,523. The remaining $291,018 of existing project funds were incorporated into the budgets of Project Nos. 2141, 2148, 2197 and 2199; however the money was not formally moved to each of these projects. As all of these projects are currently being closed out, this $291,018 needs to be reallocated as described in the fiscal impact section of this report. Fiscal Impact staff: To complete the energy-efficiency projects the following financial adjustments are recommended by A. Reduce Lease Proceeds funding by $435,000 in the following projects: Project No. Project Name Amount 2148 Install Back-up Pump at Concord Community Pool ($ 79,267) 2197 Replacement of HVAC at Various City Buildings (309,659) 2198 Police Department Building Management System (46,074) Total ($ 435,000)

5 APPROVE A CONTRACT CHANGE ORDER WITH CHEVRON ENERGY SOLUTIONS AND RELATED BUDGET ADJUSTMENTS FOR VARIOUS ESCO PROJECTS May 28, 2013 Page 5 B. Add $538,172 from the General Fund for the following items: $435,000 to replace Lease Proceeds funding; $15,000 for Project No (Police Building Management System) as a contingency. This contingency funding will not be used unless unforeseen conditions mandate minor construction changes to the project. If unused, these contingency funds will be returned to the General Fund; and $88,172 to Project No (Install Back-up Pump at Concord Community Pool) for Change Order No. 6 related to improvements required by the Contra Costa County s Health Department. Staff recommends that these funds be allocated to the following projects: Project No. Project Name Amount 2148 Install Back-up Pump at Concord Community Pool (includes $88,172 for Change Order No. 6) $ 167, Replacement of HVAC at Various City Buildings 309, Police Department Building Management System 61,073 (includes $15,000 contingency) Total $ 538,172 C. Reallocate $291,018 in ESCO Lease Proceeds remaining in Project No Concord Community Park) to the following projects: Project No. Project Name Amount 2141 Energy Efficiency Lighting Improvements $ 106, Install Back-up Pump at Concord Community Pool 16, Replacement of HVAC at Various City Buildings 85, Replace Lighting at Various Locations 83,500 Total $ 291,018 As noted above and reflected in Attachment 1, with the aforementioned funding changes, the budget for the Chevron Contract was $12,004,084 and is now $12,107,256 (an increase of $103,172). Similarly, the total project budget for the ESCO Energy Efficiency projects, including expenses for other vendors and City staff charges, was $12,748,861 and is now $12,852,003 (an increase of $103,172). Public Contact The Public Hearing Notice and City Council Agenda were posted in accordance with legal requirements.

6 APPROVE A CONTRACT CHANGE ORDER WITH CHEVRON ENERGY SOLUTIONS AND RELATED BUDGET ADJUSTMENTS FOR VARIOUS ESCO PROJECTS May 28, 2013 Page 6 Recommendation for Action Staff recommends that the City Council adopt Resolution No which includes the following: 1. Approving a reduction in Lease Proceed Project Funds in the amount of $435,000; 2. Approving and appropriating General Fund monies to the Citywide Energy Efficiency projects in the total amount of $538,172 for the following: $435,000 to replace Lease Proceeds funding, $15,000 as a contingency to complete Project No (Police Building Management System), $88,172 for a Change Order to the Citywide Energy Services Company Energy Efficiency contract for revisions to Project No (Install Back-up Pump at Concord Community Pool); and 3. Approving a budget transfer of remaining project funds from Project No (Solar at Concord Community Park) in the amount of $291,018, to various ESCO projects. Prepared by: Shannon Griffin shannon.griffin@cityofconcord.org Reviewed by: Jon Crawford, PE Interim City Engineer jon.crawford@cityofconcord.org Reviewed by: Jovan Grogan Budget Officer jovan.grogan@cityofconcord.org Valerie J. Barone City Manager valerie.barone@cityofconcord.org Reviewed by: Victoria Walker Director of Community & Economic Development victoria.walker@cityofconcord.org Attachment 1 Summary of Change Orders to ESCO Projects Attachment 2 Resolution No Attachment 3 Letter from Chevron Energy Services Co. dated April 16, 2013

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8 ATTACHMENT BEFORE THE CITY COUNCIL OF THE CITY OF CONCORD COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA A Resolution Approving Budget Adjustments Totaling $538,172, Redistributing Current Project Funds in the amount of $291,018, and Allocating the Funds for Various ESCO Projects Resolution No / WHEREAS, the City of Concord has contracted with Chevron Energy Solutions as an Energy Service Company (ESCO) to manage citywide energy efficiency projects; and WHEREAS, the Contract between the City of Concord and Chevron Energy Solutions specifies that all Change Orders require City Council approval at a regularly scheduled hearing; and WHEREAS, City staff has determined that a reduction in Lease Proceed Project Funds in the amount of $435,000 is necessary; and WHEREAS, City staff has determined it is necessary to appropriate General Fund monies in the amount of $538,172 to complete the remaining ESCO projects, which includes: (1) $435,000 to replace Lease Proceeds funding, (2) $15,000 as a contingency to complete Project No (Police Building Management System), and (3) $88,172 for a Change Order to the Citywide Energy Services Company Energy Efficiency contract for revisions to Project No (Install Back-up Pump at Concord Community Pool); and WHEREAS, City staff has determined it is necessary to approve a budget transfer of the remaining project funds from Project No (Solar at Concord Community Park) in the amount of $291,018, to various ESCO projects; and WHEREAS, in order to complete the energy-efficiency projects the following financial adjustments are recommended by staff: // A. Reduce Lease Proceeds funding by $435,000 in the following projects: Project No. Project Name Amount 2148 Install Back-up Pump at Concord Community Pool ($ 79,267) 2197 Replacement of HVAC at Various City Buildings (309,659) 2198 Police Department Building Management System (46,074) Total ($ 435,000) Res. No

9 1 // B. Add $538,172 from the General Fund for the following items: $435,000 to replace Lease Proceeds funding; $15,000 for Project No (Police Building Management System) as a contingency. This contingency funding will not be used unless unforeseen conditions mandate minor construction changes to the project. If unused, these contingency funds will be returned to the General Fund; and $88,172 to Project No (Install Back-up Pump at Concord Community Pool) for Change Order No. 6 related to improvements required by the Contra Costa County s Health Department. Staff recommends that these funds be allocated to the following projects: Project No. Project Name Amount 2148 Install Back-up Pump at Concord Community Pool $ 167,439 (includes $88,172 for Change Order No. 6) 2197 Replacement of HVAC at Various City Buildings 309, Police Department Building Management System 61,073 (includes $15,000 contingency) Total $ 538,172 C. Reallocate $291,018 in ESCO Lease Proceeds remaining in Project No Concord Community Park) to the following projects: Project No. Project Name Amount 2141 Energy Efficiency Lighting Improvements $ 106, Install Back-up Pump at Concord Community Pool 16, Replacement of HVAC at Various City Buildings 85, Replace Lighting at Various Locations 83,500 Total $ 291,018 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CONCORD DOES RESOLVE AS FOLLOWS: Section 1. Approve a reduction in Lease Proceed Project Funds in the amount of $79,267 from Project No (Install Back-up Concord Community Pool). Section 2. Approve a reduction in Lease Proceed Project Funds in the amount of $309,659 from Project No (Replacement of Various City Buildings). Section 3. Approve a reduction in Lease Proceed Project Funds in the amount of $46,073 from Project No (Police Department Building Management System). Res. No

10 Section 4. Appropriate $167,439 in General Funds to Project No (Install Back-up Concord Community Pool). Section 5. Appropriate $309,660 in General Funds to Project No (Replacement of Various City Buildings). Section 6. Appropriate $61,073 in General Funds to Project No (Police Department Building Management System). Section 7. Allocate $106,034 in ESCO Lease Proceeds remaining in Project No Concord Community Park) to Project No (Energy Efficiency Lighting Improvements). Section 8. Allocate $16,065 in ESCO Bond Proceeds remaining in Project No Concord Community Park) to Project No (Install Back-up Concord Community Pool). Section 9. Allocate $85,419 in ESCO Lease Proceeds remaining in Project No Concord Community Park) to Project No (Replacement of Various City Buildings). Section 10. Allocate $83,500 in ESCO Lease Proceeds remaining in Project No Concord Community Park) to Project No (Replace Various Locations). Section 11. This Resolution shall become effective immediately upon its passage and adoption. PASSED AND ADOPTED by the City Council of the City of Concord on May 28, 2013, by the following vote: AYES: Councilmembers - NOES: Councilmembers - ABSTAIN: Councilmembers - ABSENT: Councilmembers - // // // // // // Res. No

11 1 2 I HEREBY CERTIFY that the foregoing Resolution No was duly and regularly adopted at a regular joint meeting of the City Council of the City of Concord on May 28, APPROVED AS TO FORM: Mark Coon City Attorney Mary Rae Lehman, CMC City Clerk Res. No

12 April 16, 2013 Jon Crawford City of Concord 1950 Parkside Drive Concord, CA Re: Chevron Contract Request for Change Order # 6 Chevron Energy Services (CES) is submitting Change Order No. 6 for additional work that was necessary during the installation of the new pool pump system on Project No (Install Back up Pump at Concord Community Park). This additional project scope was due to requirements received from the Contra Costa Health Department in response to the submitted permit to construct. The City has requested an explanation regarding the differences between the specs for Change Order No. 2 (CCO#2) (submitted in September, 2011) and the current request for Change Order No. 6 (CCO#6). Basically, CCO#2 included estimated pricing to complete a fully designed pool pump system. The design of this pool pump system was not available at the time of contract signing. CCO#6 includes work that was necessary after the fact, when the Contra Costa County Health Department (CCCHD) responded to Chevron s request for construction permits by adding additional requirements prior to approval of the permits and after the approval of CCO#2. CCO#2, in the amount of $172,950, was created to address the omission between the preliminary design specifications CES was given to use for pricing before contract signing, and the supplied complete pool pump design drawings received from City Staff after the contract was signed. The original cost for this omission was $345,900 but CES agreed to participate in the cost overrun because of the omission in the drawings and reduced the cost by 50%. CCO#2 was approved by the City Council on September 27, After CCO#2 was approved, CES developed a building permit ready set of drawings based upon the City s initial design package produced by Lee & Ro, Inc. (Exhibit 1) to submit to both the City of Concord s Building Department and CCCHD for approval. Once the final pool pump design drawings developed by Weston and Associates (Exhibit 2) were completed, CES submitted them to CCCHD for review and approval on November 7, CCCHD responded on November 29, 2011 (Exhibit 3, #3) requesting additional information and also stating the requirement to upsize the piping to 12 inch, as well as to add valves adequate to adjust the required turnover rate of flow (Exhibit 3, #5). CES s design engineer discussed these requirements with CCCHD directly and made the necessary changes to the drawings to: (1) increase the pipe/fitting sizes from 8 and 10 inch to 12 inch up to the intake of each pump; and (2) add two additional 12 inch valves to the intake at the pit location. CES resubmitted the drawings to CCCHD and received approval in early December, 2011.

13 The scheduled shutdown of the old and installation of the new pool pump system was December 15, 2011 through January 7, CES directed the subcontractor for the work (Airco Commercial Services) to proceed with the new design and expedite any of the additional materials needed to complete the work by January 7 th and to submit a change order for the additional costs once the work was completed. Work was completed as scheduled on January 7, 2012 and CES received a Contract Change Order from Airco Commercial Services in the amount of $88,172, for the following items: 2 ea. 12 inch valves; 4 ea. 12 inch (Schedule 80) PVC flanges; 20 ft. (Schedule 80) PVC pipe; 1 ea. 12 inch PVC tee; 2 ea. (Schedule 80) 90 degree elbows; 12 x 10 (Schedule 80) bushings; Stainless steel Flange Bolt kits; The original designed material purchased (8 and 10 inch) could not be returned; Expedited freight charges (to meet the construction deadline for pool opening); Engineering redesign charges after CCCHD required upgrades. CES feels that these additional costs and markups, which were necessary for the design upgrades required by CCCHD prior to their approval of the construction permits for the pool pump replacement project, should be reimbursed by the City (Exhibit 4). If you have any question please feel free to call me. Randy Upham Project Manager Chevron Energy Solutions Co.

14 Original design drawings from Lee & Ro, Inc., on which the original pricing was based. Exhibit 1

15 Exhibit 2 Redesigned mechanical drawings from Weston & Associates, based on requirements of the Contra Costa County Health Department. See areas clouded where piping sizing increased and added valve locations.

16 Exhibit 3

17 ITEM # ECM Installed Cost ECM 9 -Community Pool Pump % of Total Project 1 Additional Isolation valves and increase piping size from 10 inch to 12 inch required by the Contra Costa Health Dept. $88, % 2 Permit Drawing Modification for additional valves and piping 0.0% 3 Install 0.0% a (2 ea) additional 12" valves, 0.0% b (4 ea) 12" Schedule 80 flanges, 0.0% c 20' of 12" Schedule 80 pipe, 0.0% d (l ea) Schedule 80 PVC Tee, 0.0% e (2 ea)schedule 80 90's, 0.0% f (2ea)12"x 10" Schedule 80 bushings, 0.0% g Stainless steel bolts. 0.0% 4 Expedited shipping charges for materials 0.0% 0.0% 0.0% Total Sub-Contract Costs $88, % Performance and Payment Bond $1, % Design and Engineering $4, % PM/CM $7, % Rebate Management $0 0.0% Commissioning $ % Overhead $8, % Profit $5, % Under Scope Design and Construction Costs/Risk $0 0.0% Total Cost CO#6 $117, %