Clean Water Facility Update

Clean Water Facility
City Council Workshop – March 5, 2018

• Project Summary
• Clean Water Facility Update
• City Council Questions
• GC/CM Delivery Method Review
• Schedule
• Current Project Cost Estimate
• Funding
• Rates
• Windjammer Park Phase 1
• Next Steps and Questions
Agenda
3/5/2018City Council Workshop 2

• 2008 Sewer Comp Plan indicates
need for new wastewater treatment
plant by 2017
• 2010 NPDES permit included a
deadline for developing a facilities
plan
Project Summary

• 2013 Facilities Plan accepted by DOE
and adopted by City Council
• 2014 Former Whidbey Island Bank
building purchased to locate new
plant
• 2015 Construction begins
Project Summary

• Project Summary
• Schedule
• Funding
• Rates
Agenda

1. What caused our last final cost estimate of $121.9
million to be underestimated?
2. Please reconcile and outline the budgets for GMPs
10 through 13.
3. What was the reference to the $2 million over
budget in the GMP#11 presentation?
City Council Questions
from 2/15 workshop

4. How are we going to pay for the increase in cost?
5. How will bonding affect our debt ratios and bond
ratings going forward?
6. How will taking more loans effect our debt ratios
and credit ratings? Will it take longer to repay the
loans?

7. Going forward, please provide a chart showing:
• What we’ve contracted to spend
• What we have actually spent
• Same for soft costs
• Estimates for any [work] not yet contracted
• How has project contingency been used?

8. What is the plan going forward to keep a tight rein
on costs?
9. When has information been presented about the
cost increases?
10.As often as we give a report, make sure all costs
are included and described.

11.What will the monthly rate be, if known?
12.How will work in Windjammer Park affect events?

• Project Summary
• Schedule
• Funding
• Rates
Agenda

• What is GC/CM?
• Alternative to Design-bid-build
• The project must be approved by the state
• Introduces the contractor early in the project
• Majority of work competitively bid
• Guaranteed Maximum Price = GMP
• GMP components are not Change Orders
• GMP is a component of an overall scope of work
General Contractor /
Construction Manager

• Why did we choose GC/CM?
• Concerns about cultural resources in the area
• Early equipment procurement
• Complex site conditions
• Better value for the City
• Ability to manage project risk sooner

• Design-Bid-Build – Traditional Public Works Process
• General Contractor / Construction Manager (GC/CM)
– Alternative Public Works Process
Design Bid Build
Design
Bring on Contractor
Build

• Has it worked? YES!
• Allowed early site exploration
• Started deep excavation before design was complete
• Reserved the crane before Seattle construction boom
• Relocated odor control facilities to the north
• Early bidding to beat red hot construction market
• Allowed City to secure low interest funding in stages
over multiple years

• Has it worked? YES! (Cont.)
• Self performed work (Heavy Civil)
• Early site work to address cultural resource concerns
• Early equipment procurement
• MBR / UV / Dryer
• Allowed engineers to design around specific equipment
• Concrete work (no bids on GMP 8)
• Admin Building Framing (received zero bids – TWICE!)

• Project Summary
• Schedule
• Funding
• Rates
Agenda

We are here

We are here
If this project was Design-
Bid-Build we wouldn’t
have bid the project until
here

March 2016
January 2017
January 2018

• City Beach Street will be closed for reconstruction
• Restrooms and kitchen will be closed
• Access to Windjammer Park will be limited
• Increased communications with City Council
• Community notifications and updates will continue
• Ribbon cutting celebration
What to Expect in 2018

• Project Summary
• Schedule
• Funding
• Rates
Agenda

• When we started the project our finance software was not set up
for project cost tracking
• BARS ≠ Project Cost Tracking
• City’s process for project cost reporting was not set up for a multi-
year project of this complexity and magnitude
• Initial project cost tracking was performed by KBA
• Costs were reconciled with City’s financial system at the end 2016
• Initially, total project budgeted cost was difficult to track or predict
Project Cost Tracking

• Acquisitions (e.g., real property, property leases, etc.)
• Administration
• Finance
• Professional Services - Design
• Professional Services - Construction
• Construction
Cost Categories

• The following items are not included in the total project cost:
• Facilities Plan / Engineering Report
• Planning documents are not typically included in the total project cost
• Outfall Design and Construction
• The outfall had collapsed and would have been repaired regardless
• Windjammer Park Phase 1 elements funded by General Fund
• Elements of Phase 1 not required by permit
Not Included!

• Definitions for presentation
• Contracted/Estimated Budget= Contracted &
Estimated Costs
• Expenses thru 1/31/2018 = Invoices for work
performed through January 2018
• Balance = Remainder to be spent on project
Project Costs Glossary

Total Estimated Project Costs
ACQUISITIONS
$3,396,326
ADMINISTRATI
ON
$692,852
FINANCE
$258,638
PROFESSIONAL
SERVICES DESIGN
$9,446,427
PROFESSIONAL
SERVICES
CONSTRUCTION…
CONSTRUCTIO
N
$116,738,781
$140,725,906

Contracted/Estimated Budget
CONTRACTED/ESTIMATED
BUDGET
$49,947,187
35%
Thru 1/31/2018
$90,778,718
65%
$140,725,906

Estimated Project Budget vs. Actual
CATEGORY
CONTRACTED /
ESTIMATED
BUDGET
ACTUAL THRU
1/31/2018
REMAINING
BALANCE
BUDGE
T % of
CONST
ACQUISITIONS $3,396,326 3,349,689 $46,636 2.9%
ADMINISTRATION $692,852 $461,262 $231,590 0.6%
FINANCE $258,638 $216,173 $42,466 0.2%
PROFESSIONAL
SERVICES DESIGN $10,191,582 $6,521,947 $3,669,635 8.7%
PROFESSIONAL
SERVICES
CONSTRUCTION $9,447,727 $9,233,605 $214,122 8.1%
CONSTRUCTION $116,738,781 $70,996,042 $45,742,739
TOTAL $140,725,906 $90,778,718 $49,947,188

Total Estimated Project Costs
CATEGORY
Sept 2016
Estimate
Jan 2018
Estimate
ACQUISITIONS $3,496,000 $3,396,326
ADMINISTRATION $12,000 $692,852
FINANCE $879,000 $258,638
PROFESSIONAL SERVICES DESIGN $9,515,000 $9,446,427
PROFESSIONAL SERVICES
CONSTRUCTION $10,093,000 $10,191,582
CONSTRUCTION $97,997,000 $116,740,081
TOTAL $121,992,000 $140,725,906

Why have costs changed?
• Facilities Plan Adoption
• Included ±55 acres
• Freund property added
late in the process
• Did not account for
specific site conditions

• 30% CWF Design – 4/7/15
• EI&C Increased to high end estimate
• Site size reduced
• Different solids handling
• City Beach Street
• Bayshore Drive included
• 200-seat training facility
• Park not included
• Whidbey Island Bank demo not included
4/7/2015
$135M Estimated Total Project Cost
Using Hoffman’s 30% Estimate

• 60% CWF Design – 9/30/15
• Reduced deep-ex footprint
• Combined buildings
• Greater detail in drawings
• Better vendor quotes
• Completed Site Prep A
• Confirmed soils
• Mitigation not included
• Selected different dryer
9/30/2015$131M Estimated Total Project Cost
Using Hoffman’s 60% Estimate

• 90% CWF Design – 9/27/16
• Reconfigured MBR sump
• Deleted 98 stone columns
by moving odor control
• Includes some work outside
CWF footprint
• Park mitigation not designed
• Odor control design not
complete 9/27/2016
Using Hoffman’s June 2016 Estimate

• March 5, 2018
• Historically, previous estimates had different assumptions
• May or may not have included type of solids handling,
Bayshore extension, removal of bank building, Windjammer
Phase 1, etc.
• GMPs 10, 11 & 12 were competitively bid in a hot market
• Dramatic cost increases in Seattle market, drew bidders
and workforce away from Oak Harbor
• Unanticipated cost increase in materials

• Estimated direct cost vs. bid results
Sept 16 Est. Award Difference
GMP 10 – Concrete #3 $ 3,047,680 $4,809,815 $ 1,762,135
GMP 11 -
Superstructure
$ 11,492,566 $ 17,934,490 $ 6,442,049
GMP 12 – Odor Control $ 1,728,659 $ 3,957,515 $ 2,228,856
Total $ 16,268,905 $ 26,701,820 $ 10,433,040*Reflects comparison of bids received and their respective estimates.
Estimate prepared in June 2016 and awarded Dec 2016 to Feb 2016

• Estimated direct cost vs. bid results
Sept 16 Est. Estimated Difference
GMP 10, 11, 12 $ 16,268,905 $ 26,701,820 $ 10,433,040
Windjammer Park Ph 1 $ 3,000,000 $ 5,300,000 $ 2,300,000
Subtotal $ 12,733,040
Risk Contingency 3.5% $ 445,656
Owner Contingency 2.5% $ 318,326
Tax 8.7% $ 1,174,241
Total $ 14,671,263

• Cost increases have been reflected in every GMP
contract component and consultant amendment
presented at various workshops and council meetings
• Total Project Cost could have been communicated
better, but every amendment included a summary for
that contract (Hoffman, Carollo, ERCI, KBA, etc.)
• Staff intends to improve how we communicate the
Total Project Cost
When has information been
presented about cost increases?

• All GMPs were competitively bid or negotiated with third
party validation
• The following items were negotiated with Hoffman:
• Negotiated Support Services (Crane rental, survey, etc.)
• Early equipment procurement (MBR, UV, Dryer)
• Based on competitive cost proposals
• Transferred risk to Hoffman
• Concrete work
• Some site work related to Archaeology
• Bid packages where no bids were received
How are project costs managed?

• All invoices are checked by:
• KBA
• Project Manager
• City Engineer
• Finance
• Dept of Ecology (if submitted for reimbursement)
• RCW requires an audit of the project at end of project
• Dept of Ecology loans require single audit yearly (fed and state)
• 2 years of clean audits
How are project costs managed?

• Two types of contingencies in Hoffman contract
• Risk Contingency – for scope gap between GMPs and subcontracts
• Owner Contingency – for owner responsible changes
• Contingencies are tracked with Construction Change
Memorandums
• Cost savings transferred to Contingency
• Unused Risk and Owner Contingencies returned to City
• Unused Negotiated Support Services will be returned to City
How have contingencies been used?

• A contingency can be added to or deducted
• For example…
• CCM73 – Reduced underdrain for deep foundation.
Lower $175,379
• CCM77 - Modified micro-piles for soil conditions.
Increased cost by $75,000, but saved $650,000 if we
had continued down that path.

• A contingency can be added to or deducted from
• For example…
• Reduced underdrain for deep foundation. Lower
$175,379
• Modified micro-piles for soil conditions (reduced
micro-pile depth). Lowered cost by $650,000

• What is the balance of the contingencies as of
January 15, 2018?
Contracted Available
Risk Contingency $ 3,087,525 $ 2,308,350
Owner
Contingency
$ 1,587,993 $ 92,620
Total $ 4,675,518 $ 2,400,970
Working on credits of ±$550,000
to the Owners Contingency

• City Council Workshop Questions
• Project Summary
• Schedule
• Funding
• Rates
Agenda

• The effective interest rate has decreased
• City initially considered 20 year bonds at 6%
• As the project progressed we considered 30 year bonds
• Completion of the Facilities Plan allowed the City to apply for
State Revolving Fund loans through DOE
• Through a series of competitive applications, the City was
able to obtain low interest loans, forgivable principal on loans
and grants that have reduced the lifetime cost of the project
Project Funding

Funding Source Amount Term (yrs) Rate
2015 SRF $8,260,000 20 2.70%
Revenue Bonds $25,720,000 30 3.43%
2016 SRF - Loan $15,631,331 20 1.90%
2016 SRF - Forgivable $463,154
2016 SRF – Centennial Grant $4,586,846
2016 DOC – Grant $2,450,000
.09 Funds - Grant $1,000,000
2017 SRF $44,766,854 20 1.60%
2018 SRF $29,124,301 20 1.20%
Sewer / SDF Cash $8,673,420
Total $140,725,906
Project Funding

• Obtaining State Revolving Fund (SRF) loans has reduced
the need to obtain additional revenue bonds
• Low interest SRF loans @ 20 years will result in a lower
lifetime cost than if we issued bonds
• Grant Funding of $8,500,000 ~ requires no repayment
• Revenue bonds will not impact our ability to obtain
general obligation bonds in the future
How will the proposed funding
impact the City?

• Project Summary
• Schedule
• Funding
• Rates
Agenda

• Rates are determined for the entire sewer fund
• Clean Water Facility
• RBC Plant (going away)
• Lagoons (turning over to Navy)
• Citywide Collections
• Capital Projects
• Citywide Operations & Maintenance
Rates
Rate
O&M
Funding
Capital
Projects

Rates – 2010 Estimated
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2010 Base Case $40.00 $42.00 $47.00 $52.00 $57.50 $64.75 $72.85 $81.95 $92.20
$40.00 $42.00
$47.00
$52.00
$57.50
$64.75
$72.85
$81.95
$92.20
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
ResidentialUtilityRate
Rate estimate based on $70M
treatment plant at Lagoon site
with less capacity.
Bonds 20 yrs @ 6%

Rates – 2010 Adopted
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2010 Base Case $40.00 $42.00 $47.00 $52.00 $57.50 $64.75 $72.85 $81.95 $92.20
2010 Ord 1587 $40.00 $42.00 $47.00 $52.00 $57.50 $64.75
$40.00 $42.00
$47.00
$52.00
$57.50
$64.75
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
Ordinance 1587
adopted first 6 years

Rates – March 2016 Estimated
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2010 Base Case $40.00 $42.00 $47.00 $52.00 $57.50 $64.75 $72.85 $81.95 $92.20
2010 Ord 1587 $40.00 $42.00 $47.00 $52.00 $57.50 $64.75
March '16 Estimate $77.70 $89.36 $102.76 $118.17 $135.90
$77.70
$89.36
$102.76
$118.17
$135.90
$-
$20
$40
$60
$80
$100
$120
$140
$160
Rates were evaluated in March 2016
in preparation for acquiring bonds
based on an MBR facility and a

Rates – March 2016 Adopted
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2010 Base Case $40.00 $42.00 $47.00 $52.00 $57.50 $64.75 $72.85 $81.95 $92.20
2010 Ord 1587 $40.00 $42.00 $47.00 $52.00 $57.50 $64.75
March '16 Estimate $77.70 $89.36 $102.76 $118.17 $135.90
2016 Ord 1760 $77.70 $89.36 $102.76
$77.70
$89.36
$102.76
$-
$20
$40
$60
$80
$100
$120
$140
$160
Ordinance 1760
Adopted 3 years of the March
2016 estimate

Rates – Sept 2016 Estimated
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2010 Base Case $40.00 $42.00 $47.00 $52.00 $57.50 $64.75 $72.85 $81.95 $92.20
2010 Ord 1587 $40.00 $42.00 $47.00 $52.00 $57.50 $64.75
March '16 Estimate $77.70 $89.36 $102.76 $118.17 $135.90
2016 Ord 1760 $77.70 $89.36 $102.76
Sept '16 Estimate $77.70 $89.36 $102.76 $110.98 $119.86
$77.70
$89.36
$102.76
$110.98
$119.86
$-
$20
$40
$60
$80
$100
$120
$140
$160
In Sept 2016, rates were checked
with new funding and an Estimated
Total Project Cost of $121.9M

Rates – January 2018 Estimated
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2010 Base Case $40.00 $42.00 $47.00 $52.00 $57.50 $64.75 $72.85 $81.95 $92.20
2010 Ord 1587 $40.00 $42.00 $47.00 $52.00 $57.50 $64.75
March '16 Estimate $77.70 $89.36 $102.76 $118.17 $135.90
2016 Ord 1760 $77.70 $89.36 $102.76
Sept '16 Estimate $77.70 $89.36 $102.76 $110.98 $119.86
Jan '18 Estimate $77.70 $89.36 $102.76 $106.36 $110.08
$77.70
$89.36
$102.76 $106.36 $110.08
$-
$20
$40
$60
$80
$100
$120
$140
$160
In January 2018, rates were checked
with current funding and an
Estimated Total Project Cost of
$140M

• After construction is complete
• Will be adopted before Ordinance 1760 expires
• Will likely be for an additional 3-year period
• May be impacted by Navy participation
Next Rate Adjustment

• Even though the project cost has increased, active
pursuit of additional low cost funding has maintained a
rate consistent with past projections and allowed the
City to construct a project that will serve the city for the
next 40-50 years.
Rate Summary
3/5/2018City Council Workshop 58Rate
O&M
Fundin
g
Capital
Project
s

• Project Summary
• Schedule
• Funding
• Rates
Agenda

• Agenda
• Windjammer Park Integration Plan
• What is included?
• Schedule
• Current design/construction status
• Anticipated cost
• Funding
Windjammer Park
Phase 1 Update

3/5/2018 61
Windjammer Park Integration Plan
• Public feedback
• Community Advisory Group
• 17 members representing diverse
community interests
• 5 meetings
• Endorsed final plan
• 2 in-person and online public
meetings
City Council Workshop

62
Decembe
r 2015
Januar
y 2016
February
2016
March
2016
April
2016
May/
June
2016
Council and CAG Process
• Provide
feedback on 3
concept
alternatives
• Present WPIP
concept to
community
• Gather community
feedback (Public
Open House and
Online Open
House)
• Review preferred
plan to be
presented to City
Council
• Provide final
feedback
• CAG forms
• CAG provides
feedback on
design
guidelines
• Introduce CAG
and WPIP to
community
• Gather
community
feedback (Public
Open House)
COUNCIL
• Programming
priorities
• Approves CAG
COUNCIL
Report:
Alternatives and
Public feedback
COUNCIL
Approves plan
COUNCIL
CAG formation update
and initial priorities list/
design guidelines
3/5/2018
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



 




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Proposed
Phase 1
3/5/2018 63
Original Phase
1
To include
part of
Phase 2 & 3

Windjammer Park Phase 1
3/5/2018 64
• Includes Clean Water
Facility mitigation and
restoration
• November 15, 2016 –
City Council amended
Carollo’s contract to
include design

Windjammer Park Phase 1
Open House
3/5/2018 65
• 167 community members attended
in-person and online open houses in
January 2017
• 97 community members provided
input on park character and theme

• What does this include?
• Everything outside the Clean Water Facility within Phase 1!
• Demolition of the former Whidbey Island Bank building
• Improvements to City Beach Street
• New kitchens and restrooms
• Pathways and landscaping
• Splash park!
Windjammer Park
Phase 1 Update

Sport
Courts
Maintenanc
e Building
Increased Interior
Space
Removed
Fireplace
Removed Path
Increased Number
of Garry Oak
TreesWhat has
changed
since
60%
design?

• Current design/construction status
• Design complete
• Design split into 7 bid packages
• Bid opening on 5 packages March 1, 2018
• Water play area and feature bid opening March 15, 2018
• Vehicle and pedestrian gates bid opening on March 22, 2018
• Construction through Spring 2019
Windjammer Park
Phase 1 Update

• Anticipated cost
• 60% Design Cost Estimate ~ $10M to $15M
• Design broken into 7 bid packages to maximize
competition and local participation
• Packages further broken into schedules to allow City
flexibility in choosing which ones to construct at this
time
Windjammer Park
Phase 1 Update

70 3/5/2018City Council Workshop

• Available Sewer Funds = $5.3M
• For work around Clean Water Facility
• Restoration of disturbed areas
• Mitigation of impacts on the park
• Permit requirements
• East side kitchen and restrooms
Windjammer Park
Phase 1 Update

• Available General Funds = ?
• Splash park
• Plaza / Pavilion
• West Kitchen
• Additional Paths
• Landscaping
• Maintenance Facility
Windjammer Park
Phase 1 Update
Will likely need
to pick and
choose which
elective items
are constructed

• Potential funding gap
• Bids will likely exceed secured funding to complete non-
CWF improvements
• What can we do?
• Design has been split into multiple bid packages
• Release more general fund dollars to complete project
• Postpone some improvement and seek additional outside
funding
Windjammer Park
Phase 1 Update

• 2018 events may need to be held elsewhere
• Planning to move RV Dump Station to a new location
• Planning for Windmill relocation and future phases
• Waterfront trail will remain open
• Conversations about construction sequencing
• Community notifications and updates

• Project Summary
• Schedule
• Funding
• Rates
Agenda

• Improve communications with City Council
• Monthly update – second council meeting
• Total Project Cost summary every council meeting
• Continue to seek ways to keep project cost and rates
down
• Continue communicating with community
• Workshop in March to discuss park improvements
Next Steps

Questions?

Clean Water Facility Update

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