Fort Walton Beach Council agenda — 06-12-2007 workshop agenda — reading text

issue later this summer. It is very likely that the revised cost estimates for the plant renovation work will place the cost for all the needed work above $ 10 million. This is due in large part to industry-wide construction trends highlighted later in this report. In addition, the scope of work for the project increased from the time that the original WWTP Facilities Plan was developed. Safety concerns related to the sludge handling facilities at the treatment plant must be addressed now through this effort to avoid catastrophic failures in the near future. These same facilities were thoroughly evaluated in 2002 and found to be in good working order, with no apparent metal loss or fatigue. Based on our initial assessment of these facilities and the current replacement costs, the added cost to the project for this element is approximately $1.5 to $2 million. 3 Additional Water and Sewer Infrastructure Work Included in the list of Bond projects were two of the City' s on- going Capital Improvement Projects: CIP 5056 - 2 1/4" Water Line Replacement and CIP 5032 - Sewer Line Rehabilitation. Since the inception of the Utility Bond program, the City has accomplished the following projects: Relocation of the Cinco Bayou Force Main: Council approved this award on May 23, 2006, and Hemphill Construction Company completed the work in September at a total cost of $257,950. Slip-lining, Root Control, and Point Repairs: In addition to the Cinco Bayou Force Main project, the City's Utilities Department personnel have completed several annual projects related to field infrastructure repairs. The total cost to date is $ 339, 180. 65 for the projects identified above. Replacement of low-volume 2 1/4" water lines: Each year, City crews replace several hundred feet of aging 2 1/4" water lines with higher volume 6" water lines. Over the past three years, crews have replaced small diameter lines along Reed Place, Sellers Place, Highland Drive, Laurie Drive, Gardner Drive, and portions of other streets. The total cost to date is $ 141, 751.02 for these improvements. Of the $ 800,000 originally appropriated for sewer line replacement work through the Series 2005 Bonds, the City has spent $ 597, 130. 65, with $ 202,869. 35 remaining for future work. Of the 225,000 originally appropriated for 2 1/4" water line replacement work through the Series 2005 Bonds, the City has spent $141, 751.02, with $83,248.98 remaining for future work. The following table indicates the original budget for each project and the monies appropriated to accomplish each objective ( actual dollars may change as each objective is completed): Pro' ect Elevated Water Tanks 18" Transmission Main Water Tank Demolition 2 1/ 4" Water Line Re lacement Subtotal- Water Pro' ects WWTP Design WWTP Renovations Sewer Main Rehabilitation Subtotal - Sewer Pro' ects I Factors Driving the Cost of Major Infrastructure Projects For the purpose of developing a probable opinion of cost for each of the major projects identified in the Series 2005 Utility System Revenue Bonds, staff and the City's consulting engineers updated the estimated construction cost for each project in February 2005 prior to entering the bond market. During this time, the area enjoyed a relatively stable bidding environment for large scale projects. The pricing included for each of the projects was, at the time, consistent with pricing for similar projects of similar scope in the surrounding area. Since the time that the bonds were delivered, 4 consttuction prices have increased dramatically due to a number of circumstances in the worldwide and regional markets including: Instability in the petroleum market - higher petroleum prices have a direct relationship on the cost of materials such as PVC and ductile iron pipe ( a major element of our infrasttucture projects). The central Florida Panhandle is not a favorable location for major infrasttucture work - In April 2006, the unit cost for 30" jack and bore for 18" water transmission main project was $ 750 per LF. Recendy, the unit cost for 66" jack and bore in Escambia County was $ 500 per LF. Desttuctive weather patterns in the northern Gulf of Mexico have substantially limited the ability to hire cheap labor. The enormous amount of consttuction in foreign countries has limited the availability of common consttuction materials - Many of the world' s raw materials supply for items such as cement, iron, and plastic is being diverted to explosive growth countries such as China. As a result, the costs for these materials have increased substantially over 2005 levels as follows: 8" Ductile Iron Pipe - $ 28/ LF in 2005, $ 66/ LF today Sttuctural Cement - $ 200/ yd3 in 2005, $ 400/ yd3 today 8" PVC Pipe - $ 22/ LF in 2005, $ 50/ LF today The City of Fort Walton Beach is not alone in experiencing escalating consttuction costs. Based on conversations with County staff, the cost for their new WWfP to replace the aging Gamier' s WWTP has substantially increased from the original estimate of $40 million developed in 2005, to the current estimate for the same scope of work of $ 64.5 million. While we continue to hold out hope that domestic markets will stabilize, it would not be prudent to think that the cost of the City' s WWTP renovations will decrease below our current estimates. As such, we will need to consider some source of alternative funding in order to make all of the improvements necessary for our WWTP. Recommendation: No Council action is necessary for this item at this time. The intent of Staff with this report is to update City Council on the current status of each project, the costs driving each project, the scope of improvements needed, and the estimated costs to complete each of the remaining projects. Staff will be providing future recommendations on options to proceed for each of the remaining projects as more information is gathered. 7-07 Date Lisa Absher, Finance Director Date I.vrr;) t/ 7; 1? 5  CITY COUNCIL WORKSHOP June 12, 2007 Workshop Agenda Discussion to determine Council' s interest in accepting the offer of a two- story, four bedroom home in FWB to use to help shelter the homeless, particularly women with children Council Member Garvie) Agenda Item Number: WA- 3  COUNCIL WORKSHOP 6- 12- 07 Verbatim transcription requested by City Manager REVIEW OF UTILITY SYSTEM REVENUE BOND, SERIES 2005; GENERAL OVERVIEW OF RELATED PROJECTS AND EXPENDITURES Mayor - The first item is the review of Utility System Revenue Bond, Series 2005; general overview of related projects and expenditures. Dr. Pullen requested this item and I think Mr. Hofstad will make a presentation. So Dr. Pullen do you want to lead into this? Dr. Pullen - No, I simply asked what was going on with it, I didn' t ask for it to be put on here but I think it's educational for everyone, I think it's educational for everyone to see it. I just, I wanted an update on what was going on. Mayor - Okay, so Mr. Hofstad John Hofstad, Utilities Director - I've got, I think a seventeen slide power point I want to present to you and it's an overview of all of our projects in the Series 2005 Utility Revenue Bond issuance that we had back in the spring of 05' now. First, several years ago we had to establish the need for major capital financing for our water and sewer system. The early roots of these projects actually started back in the late 90' s and in 98' we contracted with Fabre Engineering to develop design documents for various water system improvements. We followed that in 2002 by hiring Hartman & Associates to perform a Wastewater Treatment Plant Facilities Plan to analyze our wastewater treatment plant and needed improvements for that facility. The following year in 2003 the Wastewater Treatment Plant Facilities Plan was completed by Hartman & Associates and it had an estimated capital cost, bear in mind that this was done without engineering and design plans, but a conceptual capital cost of $4.2 million. In June of 04' staff presented to Council in a workshop an overview of the water and sewer, the major water and sewer projects that we had planned and we tried to identify various funding options to fund those improvements. We started with a Phase I water system improvement project of roughly $ 3. 25 million which included around 3 ' l2 miles of 18" water transmission main, two elevated storage tanks and Phase II improvements were an ozone treatment facility to be located at the Golf Club. We have since mothballed that project. We had initially sought a need, or identified a need for a higher level of treatment at the golf course if, and when, we had to augment our florid and water supply with sand and gravel water. So we needed some additional treatment capacity, or capability and we identified ozone treatment for that need. We no longer have, currently, do not have a need to to do that in the future. We also go down that road but we do have those design plans should we elect looked at two funding options, one being the State Revolving Fund and the other conventional debt financing. At the time Council didn' t view the State Revolving Fund as a viable option simply because there is quite a bit of competition for water and wastewater projects with very limited funding, plus the payback period for that is substantially shorter than conventional debt financing that you would get through a bond issuance. In March of 05' during a regular City Council meeting staff brought forward Ordinance 1633 which was authorization for the issuance of up to $ 11 million in Utility System Revenue Bonds to fund the projects I identified earlier. We had first reading in March of 05', followed that a couple of weeks later in April of 05' where that ordinance was adopted on second reading. In into the May of 2005, that same year, the revenue bonds were delivered after we completed our entry bond market to the tune of roughly $ 10. 91 million. Page 1 of 11  COUNCIL WORKSHOP 6- 12- 07 John Hofstad - When we put together the preliminary official statement back in the spring of 05' before we went into the bond market we had to identify various projects, which we did like I said around $ 11 million. When we received those proceeds this is essentially how they broke down. We started out with $