BOARD OF AIRPORT COMMISSIONERS

Transcription

1 N/A I 'Los Angeles World Airports REPORT TO THE BOARD OF AIRPORT COMMISSIONERS < Meeting Date: Approved by: Kendrick Okuda,.nd Environmental Affairs -irector of Planni L AO..1(.)2-/V Reviewd by7. Samañtha':ricker,, Deputy Executive Director 2,,.-----T A' 1 ity ' ' 0 - D b rah Flint -C.- xecutive Officer 4/20/2017 Completed CAO Review: Pending Reviewed for Date Approval Status By Finance CEQA Procurement Guest Experience 1 ' I 1 4/6/2017 Y N NA 4/3/2017 4/3/2017 4/4/2017 MY NY EN MY ON N Cond RW AE MT AW SUBJECT: First Amendment to Contract No. DA with Evolution Markets, Inc. for Emission Credit Trading Services Approve the First Amendment to a three -year Contract No. DA with Evolution Markets, Inc. to increase the not -to- exceed amount by $500,000, from $375,000 to $875,000, for the purchase and trading of emission credits on behalf of Los Angeles World Airports. RECOMMENDATIONS: Management RECOMMENDS that the Board of Airport Commissioners: 1. ADOPT the Staff Report. 2. DETERMINE that this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Article II, Section 2.i of the Los Angeles City CEQA Guidelines. 3. FIND that the work can be performed more economically or feasibly by an independent contractor than by City employees. 4. APPROVE the First Amendment to Contract No. DA with Evolution Markets, Inc. for $500,000 for the purchase and trading of emission credits to increase the not -to- exceed amount to $875, AUTHORIZE the Chief Executive Officer or designee to execute the First Amendment with Evolution Markets, Inc. upon approval as to form by the City Attorney. Page 1

2 DISCUSSION: 1. Purpose Increase the contract authority with Evolution Markets, Inc. to facilitate the purchase and trading of emission credits on behalf of Los Angeles World Airports (LAWA), which will be designated for use by the Midfield Satellite Concourse (MSC) Project. 2. Prior Related Actions 3. Current Action December 8, Resolution No (DA -5037) The Board of Airport Commissioners (BOAC) approved the award of a three -year Contract to Evolution Markets, Inc. to provide emission credit purchase and trading services for an overall contract amount not -to- exceed $375,000. The Evolution Markets, Inc. contract expires on December 7, LAWA is required to purchase emission credits under Title V requirement of the Federal Clean Air Act when installing new stationary equipment that generates emissions. The MSC will install new stationary equipment and additional LAWA emission credits are needed. LAWA released a Request for Proposals (RFP) for emission credit trading services in April Through a competitive proposal review and interview process, LAWA selected Evolution Markets, Inc. and the BOAC approved a three -year contract in the amount of $375,000. This amount was estimated using prior emission purchases and was planned for use on Central Utility Plant (CUP) and LAX campus -wide emission obligations through December The $375,000 did not include the emission credits needed for the new MSC. There are no emission credits available from the LAX campus to apply to the new MSC stationary equipment installation. The current market pricing for emissions trading is fairly static. However, the total cost of the emission credits will reflect actual pricing on the open market at the time of purchase. Since market conditions can change at any time, Evolution Markets, Inc. will seek opportunities for strategic purchases as they may arise. The actual emission purchases are based on open market conditions and are performed to achieve the lowest price with favorable terms. This funding increase includes a contingency for potential market fluctuations. The new MSC stationary equipment consists of an aircraft fueling hydrant system that will support 12 new gates. The new MSC aircraft hydrant system provides efficiency for airline ground handlers, minimizes turnaround times, and improves aircraft utilization. Furthermore, it generates less emission than fueling trucks and is safer to operate. The estimation of MSC emission credit involves the calculation of the monthly fuel throughput (fuel used) by the 12 new MSC gates. Fuel throughput is determined by the FAA Aircraft Group classification operating from each gate (Groups V and VI) and the number of daily departures per gate (6 departures). This information wasn't finalized until recently. Page 2

3 In January 2017, the MSC Project Designer provided the Environmental Programs Group (EPG) their estimate for maximum MSC fuel throughput. Based on this estimate, LAWA will need to purchase up to $500,000 in emission credits. The purchased emission credits are needed to initiate an application for an MSC Permit to Construct from the South Coast Air Quality Management District (SCAQMD). Construction of the new MSC hydrant system is scheduled to begin in mid and an approved SCAQMD Permit to Construct is required to begin construction. The SCAQMD application process requires up to nine (9) months to obtain approval. Therefore, EPG is requesting for an advance authorization so the MSC emission credits can be purchased in a timely manner. Action Requested EPG staff requests the BOAC approve the first amendment to add $500,000 in contract authority to the current contract amount of $375,000 with Evolution Markets Inc. for the purchase and trading of emission credits for an overall total amount not -to- exceed $875,000, over the three -year contract term. Fiscal Impact To date, $70,000 of the current contract amount of $375,000 has been expended on emission credit purchases. The remaining balance of $305,000 will be expended on CUP and LAX campus -wide stationary emission sources, including natural gas boilers and diesel emergency generators. The $305,000 will satisfy SCAQMD emission credit obligations through December 2018 using the operating budget funds as follows: Emission Credit Need Estimated Expenditure Fiscal Year $ 95, /2017 $ 95, /2018 $ 95, /2019 Contingency $ 20,000 Various Total $305,000 The additional $500,000 in emission credits needed is designated for the MSC new stationary installation. The source of the $500,000 will be from the MSC North Project budget. Project -related costs incurred under this contract will be capitalized and when projects are put in service, those costs will be recovered through terminal rates and charges. LAWA may also receive revenues should it decide to sell emission credits. 4. Alternatives Considered Page 3

4 Take No Action An SCAQMD Permit to Construct is required in order to start construction of new stationary equipment for the MSC. LAWA is required to offset emissions generated from new stationary equipment. If emission credits are not purchased, LAWA cannot obtain the Permit to Construct for the MSC new stationary equipment. Without the MSC stationary equipment, the airlines would have to rely on fueling trucks for aircraft refueling. Stationary equipment generates fewer emissions than fueling trucks and is safer to operate. APPROPRIATIONS: Staff requests that the contract authority for Evolution Markets, Inc. (DA -5037) be increased from $375,000 to $875,000 for emission credits and that the appropriation of funds in the not -toexceed amount of $500,000 be allocated from the LAX Airport Revenue Fund to WBS Element No (Midfield Satellite Concourse) and other Board approved WBS elements as may be required. STANDARD PROVISIONS: 1. Any activity (approval of bids, execution of contracts, allocation of funds, etc.) for which the underlying project has previously been evaluated for environmental significance and processed according to the requirements of the California Environmental Quality Act (CEQA) is exempt from further review pursuant to Article II, Section 2.i. of the Los Angeles City CEQA Guidelines. The Midfield Satellite Concourse Environmental Impact Report (EIR) was certified by the Board of Airport Commissioners for this project on July 21, 2014 (Resolution No ). 2. This contract is subject to approval as to form by the City Attorney. 3. Actions taken on this item by the Board of Airport Commissioners will become final pursuant to the provisions of Los Angeles City Charter Section Evolution Markets, Inc. is required by contract to comply with the provisions of the Living Wage / Service Contractor Worker Retention Ordinances. 5. Procurement Services Division has reviewed this action (RX ). No mandatory Small Business Enterprise (SBE) goal was set for this project, as no subcontracting opportunities were identified. 6. Evolution Markets, Inc. is required by contract to comply with the provisions of the Affirmative Action Program. 7. Evolution Markets, Inc. has been assigned Business Tax Registration Certificate Evolution Markets, Inc. is required by contract to comply with the provisions of the Child Support Obligations Ordinance. Page 4

5 9. This action is not subject to the insurance requirements of the City of Los Angeles. 10. Pursuant to Charter Section 1022, staff determined the work specified on the proposed contract can be performed more feasibly or economically by an Independent Contractor than by City employees. 11. Evolution Markets, Inc. has submitted the Contractor Responsibility Program Questionnaire and Pledge of Compliance and will comply with the provisions of said Program. 12. Evolution Markets, Inc. has been determined by the Public Works, Office of Contract Compliance, to be in full compliance with the provisions of the Equal Benefits Ordinance (EBO). 13. Evolution Markets, Inc. will be required to comply with the provisions of the First Source Hiring Program for all non -trade Los Angeles International Airport jobs. 14. Evolution Markets, Inc. has submitted the Bidder Contributions City Ethics Commission Form 55, and will comply with its provisions. Page 5