Update on GMP 9 for the Clean Water Facility in Oak Harbor, WA.

1. Clean Water Facility
City Council Workshop – September 27, 2016

2. • GC/CM construction method
• Schedule
• Cost update
• Funding update
• Rates
• Milestones
• Questions
Agenda
9/27/2016City Council Workshop 2

3. • GC/CM construction method
• Schedule
• Cost update
• Funding update
• Rates
• Milestones
• Questions
Agenda
9/27/2016City Council Workshop 3

4. • General Construction / Construction Manager (GC/CM) allows the City
to introduce a contractor before a project has finished design.
• GC/CM benefits a project by providing –
• Value engineering
• Cost estimating and scheduling
• Constructability review
• Ability to start construction as design progresses
• Reduce project risk by starting critical phases early
Using GC/CM Construction
9/27/2016City Council Workshop 4

5. • Recent Bid Openings (9/21/16)
• Electrical, Instrumentation and Controls
• Package Estimate = $15,525,295
• Low Bid = $10,954,500
• Mechanical
• Package Estimate = $25,015,165
• Low Bid = $18,794,212
• GMP #9 = $33,265,589 + Sales Tax ($2,894,106)
• City Council to consider approval on October 4th
• Assumed approved for the purpose of this presentation
Using GC/CM Construction
9/27/2016City Council Workshop 5

6. • GC/CM construction method
• Schedule
• Cost update
• Funding update
• Rates
• Milestones
• Questions
Agenda
9/27/2016City Council Workshop 6

7. 9/27/2016City Council Workshop 7
We are here

8. • GC/CM construction method
• Schedule
• Cost update
• Funding update
• Rates
• Milestones
• Questions
Agenda
9/27/2016City Council Workshop 8

9. • Definitions for presentation
• Total Project Cost = Construction + Professional Services + Overhead
• Expenses thru 9/13/16 = Invoices paid by the City through this date
• Encumbered = Amount contracted but not expended
• Anticipated = An estimate of the remaining costs
Project Costs Glossary
9/27/2016City Council Workshop 9

10. • The following items are not included in the total project cost
• Facilities Plan / Engineering Report
• Preceded full project definition and cost estimate
• Outfall Design and Construction
• “Outside the box” of new facility, essential facility independent of new WWTP
• Windjammer Park phases unrelated to the Clean Water Facility
• “Outside the box” of new facility
Non-project Costs
9/27/2016City Council Workshop 10

11. • Acquisitions (e.g., real property, property leases, etc.)
• Administration
• Finance
• Professional Services - Design
• Professional Service - Construction
• Construction
Cost Categories
9/27/2016City Council Workshop 11

12. 9/27/2016City Council Workshop 12
ACQUISITIONS
$3,496,000
ADMINISTRATION
$12,000
FINANCE
$879,000
PROFESSIONAL SERVICES DESIGN
$9,515,000
PROFESSIONAL SERVICES CONSTRUCTION
$10,093,000
CONSTRUCTION
$97,997,000
Total Estimated Project Costs
TOTAL Estimated Project
Cost $121,992,000

13. 10/20/2015City Council Meeting 13
ACQUISITIONS
$3,153,000
ADMINISTRATION
$12,000
FINANCE
$805,000
PROFESSIONAL SERVICES
DESIGN…
PROFESSIONAL SERVICES
CONSTRUCTION…
CONSTRUCTION
$12,741,000
Expenses through 9/13/16
TOTAL Expenses through 9/13/16
$26,979,000

14. 10/20/2015City Council Meeting 14
ACQUISITIONS
$3,153,000
ADMINISTRATION
$12,000
FINANCE
$879,000
PROFESSIONAL SERVICES
DESIGN…
PROFESSIONAL SERVICES
CONSTRUCTION…
CONSTRUCTION
$77,728,000
Expended and Encumbered
TOTAL Expended and
Encumbered $101,094,000

15. 10/20/2015City Council Meeting 15
ACQUISITIONS
$ 343,000
PROFESSIONAL SERVICES
DESIGN…
CONSTRUCTION
$ 20,269,000
Estimate to Complete Project
Estimated Cost to Complete
Project $20,898,000

16. Category
Expenses Thru
9/13/16 Encumbered Anticipated Total
ACQUISITIONS $3,152,000 $0 $343,000 $3,496,000
ADMINISTRATION $12,000 $0 $0 $12,000
FINANCE $805,000 $74,000 $0 $879,000
PROFESSIONAL SERVICES DESIGN $8,335,000 $895,000 $285,000 $9,515,000
PROFESSIONAL SERVICES CONST $1,933,000 $8,160,000 $0 $10,093,000
CONSTRUCTION $12,741,000 $64,986,000 $20,269,000 $97,997,000
TOTAL $26,979,000 $74,116,000 $20,898,000 $121,992,000
Project Cost Breakdown
9/27/2016City Council Workshop 16
22% 61% 17% 100%

17. • Risk and Owner Contingency funds are built in to every GMP
• Funds cover unknown situations, project emergencies and/or owner
changes
• Standard practice in large construction projects
• Currently maintaining ±$3.5 million in contingency funds
• At end of project, funds return to City or can contribute to site restoration
and the Windjammer Park Integration Plan
Contingency
9/27/2016City Council Workshop 17

18. • Project currently has “negative contingency”, meaning the money set
aside for unanticipated/planned costs is growing not diminishing.
• Recent reductions:
• Reconfiguring MBR sump reduced cost by $170,000
• Deleted 98 stone columns by moving odor control $80,000
• Reduction in micropile spoil handling reduced cost by $100,000
Contingency
9/27/2016City Council Workshop 18

19. • GC/CM construction method
• Schedule
• Cost update
• Funding update
• Rate impact update
• Milestones
• Questions
Agenda
9/27/2016City Council Workshop 19

20. 9/27/2016City Council Workshop 20
Project Funding
2015 SRF
$8,260,000
2016 SRF - Loan
$15,631,331
2016 SRF -
Forgivable…
2016 SRF - Grant
$4,586,846
2017 SRF
$44,766,854
DOC - Grant
$2,500,000
.09 Funds - Grant
$1,000,000
Bonds - Phase 1
$25,000,000
Bonds - Phase 2
$2,482,165
Rates/SDF
$17,301,894
TOTAL Estimated Project
Funding $121,992,244

21. Funding Source Amount Term Rate
2015 SRF $8,260,000 20 2.70%
2016 SRF - Loan $15,631,331 20 1.90%
2016 SRF – Forgivable Loan $463,154
2016 SRF - Grant $4,586,846
2017 SRF $44,766,854 20 1.60%
DOC - Grant $2,500,000
.09 Funds - Grant $1,000,000
Bonds - Phase 1 $25,000,000 30 3.43%
Bonds - Phase 2 (Available = $25
million) $2,482,165 30 Est 3.50%
Reserves $17,301,894
Total $121,992,244
Project Funding
10/20/2015City Council Meeting 21

22. • GC/CM construction method
• Schedule
• Cost update
• Funding update
• Rates
• Milestones
• Questions
Agenda
9/27/2016City Council Workshop 22

23. • Original rate structure established in 2009 (adopted 2010) based on $70M
project, at the Lagoon Plant, with an unknown treatment method.
• Funding strategy included $15M from reserves with the remaining coming
from bonds.
• Bonds assumed to be 20 years at 6%.
• Six of the ten years from the analysis were adopted by Council in 2010.
• In March 2016, Council adopted three additional years of rate adjustments.
Rate History
9/27/2016City Council Workshop 23

24. Utility Rates
9/27/2016City Council Workshop 24
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
2016 Ord 1760 $77.70 $89.36 $102.76 $118.17 $135.90
Current Estimate $77.70 $89.36 $102.76 $110.98 $119.86
$40.00 $42.00
$47.00
$52.00
$57.50
$64.75
$72.85
$81.95
$92.20
$118.17
$135.90
$77.70
$89.36
$102.76
$110.98
$119.86
$-
$20
$40
$60
$80
$100
$120
$140
$160
ResidentialUtilityRate

25. • Seek 2018 State Revolving Funds (SRF)
• Determine if we can refinance SRF loans at a lower rate and/or longer term
• Continue keeping actual project costs below estimates
• Manage contingency balances
• Successful use of self-performed construction
• Continue constructability reviews
• Continue management of negotiated support service (NSS) amounts
• Effective procurement practices
• Efficient plant operation
Ways to Reduce Project Cost & Rate
9/27/2016City Council Workshop 25

26. • GC/CM construction method
• Schedule
• Cost update
• Funding update
• Rates
• Milestones
• Questions
Agenda
9/27/2016City Council Workshop 26

27. • Construction:
• October 4, 2016 - GMP #9 – Electrical, Mechanical
• Q4 2016 – GMP #10 – Process Structure Concrete
• December 20, 2016 – GMP #11 – Admin / Maintenance
• Q4 2017 – GMP #12 – Mitigation and Restoration
• Design:
• November 1, 2016 – Contract Amendment for Park Design
• Costs savings or reductions:
• Completion of self-performed concrete
• Bid results for Admin / Maintenance
Upcoming Milestones
9/27/2016City Council Workshop 27

28. • Project Costs
• The project team continues to find was to reduce the project cost
• 83% of the project costs are well known
• Funding
• Staff has aggressively sought low interest funding and grants.
• Staff will continue to seek funding opportunities
• Rates
• Even though the project has changed substantially since 2010, the rates
remain in check with what was proposed 6 years ago
Summary
9/27/2016City Council Workshop 28

29. • GC/CM construction method
• Schedule
• Cost update
• Funding update
• Rates
• Milestones
• Questions
Agenda
9/27/2016City Council Workshop 29

30. Questions?
9/27/2016City Council Workshop 30

31. 9/27/2016City Council Workshop 31