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2017 12 06 BAWA Minutes, Special MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY December 06, 2017 The Board of Directors of the Baytown Area Water Authority(BAWA)met in a Special Meeting on Wednesday, December 06, 2017, at 9:04 A.M., in the Council Chamber of the Baytown City Hall, 2401 Market Street, Baytown,Texas with the following in attendance: Brenda Bradley Smith President Mike Wilson Vice President Harland Forrest,Jr. Director Frank McKay Director Rick Davis General Manager Ignacio Ramirez, Sr. General Counsel Leticia Brysch Assistant Secretary President Bradley Smith convened the December 06, 2017, BAWA Board Special Meeting with a quorum present at 9:04 A.M., all members were present with the exception of Director Benoit who was absent. 1. PROPOSED RESOLUTIONS President Bradley Smith turned the meeting over to the General Manager Davis to provide comments and information. General Manager Davis stated that at the last meeting, staff brought forth information relative to the construction of a water plant to the east side of the community, known as "the Beast". He stated that staff also presented information specific to the need that the community faces, specific to the construction of this plant of what would initially be six (6)million gallons per day(MGD) once the plant is brought online. He noted that this project started with a cost of$52 million and staff successfully engineered the cost down to $46.1 million. He stated that staff gave the Board choices,which were the same as presented before them at this meeting to include the following: • direct staff to move forward with the construction of the plant by awarding the contract; • direct staff to seek additional consultation, in an effort seek a lower price through additional value engineering; or • direct staff to rebid the project. General Manager Davis stated that at the last meeting he advised the Board that given the absence of irregularities in the bidding, as well as, other economic factors associated with price increases specific to various elements of the project and the very low standard of deviation with the bids received that there was a very low possibility that re-bidding the project would yield a lower cost. He further stated that all of these components combined do not give staff a lot of hope that rebidding the project will be a better option. BAWA Board Special Meeting Minutes December 06,2017 Page 2 of 6 General Manager Davis stated that the first item before the Board awards a construction contract to Pepper Lawson, and if approved, would render no action necessary on agenda items 1.b. and 1.c. He stated that staff requested direction from the Board on how to proceed and was ready to present a PowerPoint regarding the various options if the Board desire its review before making a final decision. President Bradley Smith stated that she would like for staff to present the information in order for all members of the Board to have an understanding of the history, timelines and how we got to this point. General Manager Davis advised the Board to keep in mind that in addition to the $46.1 million, staff anticipate a change order specific to a secondary power source from CenterPoint that staff anticipates would be less than$100,000. Engineering Director, Jose Pastrana stated that looking at current and future capacity, the plant is needed now. He stated that when staff started the planning process; capacity was at 21 MGD when this project began, and the contractual obligation to the MUDs was 21.6 MGD, which is above the production capacity. He further stated that staff decided to re-rate the existing BAWA plant by re-rating the filters and the basins, in order to gain more capacity. Mr. Pastrana stated that through the re-rating process with TCEQ, it gave the City, on paper, the ability to produce up to 26 MGD. He noted that while this re-rate gave BAWA additional capacity, it's not enough as BAWA's obligations continue to grow. He stated there's a TCEQ rule that if your plant is at 80% capacity begin the design for expansion and if the plant is at 90% of capacity, in which BAWA is, begin the construction of plant expansion or next plant. Mr. Pastrana stated that during the drought, specifically in 2011, the plant functioned above the allowed capacity on a regular basis and that the plants projected consumption continues to go up. He stated that between 2017 and the next few years, the consumptions rate goes from 22 MGD to about 30 MGD. He further stated that at this point the next phase of this construction should be online in the next few years. Mr. Pastrana stated that on September 26, 2017, BAWA received three (3) bids on this project with Pepper Lawson being the low bidder at $52,186,000, in which, they had a math error that was corrected, which resulted in$52,755,000. He stated that staff engaged the contractor and the consultant in value engineering the project, since the bid came in well over the budget of$44 million. He noted that other Departments; such as Public Works, participated in looking at options to value engineer the project in order to reduce the costs. He stated that after a number of meetings, the parties were able to settle on a number that was reduced to the point where we could not go further without changing the process of the plant itself. He stated that the amount settled on was an estimated $46.4 million; however, the contractor on his own, did some additional work and managed to bring down the price to $46.1 million. Mr. Pastrana stated that the options available were those described by the General Manager. He stated that the first option is to reject all bids and re-bid the project, which would delay the project another six (6) months. He noted that there were no guarantees that the new bids would BAWA Board Special Meeting Minutes December 06,2017 Page 3 of 6 come in any lower than they are now as the pricing on some materials; such as, PVC have continued to increase, which increased 25% from the time of the original bid. He noted that this could be due in part to the Harvey effect, as materials and resources are limited because of much storm damage re-builds and construction in the area. He also noted that the re-bid could also result in costs increases due to the needed redesign of the project in order to re-bid the project. Mr. Pastrana stated that if the Board accepts value engineering from the low bidder, they'll also have to accept the value engineering options as developed with the low bidder. He noted that deductions are often not fair to the owner,because of being forced to negotiate terms, and further noted that BAWA is not in the best position to negotiate said terms. However, Mr. Pastrana noted that staff felt that in this instance the contractor has acted in good faith throughout the negotiations. He stated that although things would still be functional and work as expected, it would be less than what was originally design; i.e. dirt roads instead of concrete roads. Lastly, he noted that some concern was voiced over violating the spirit of the competitive bid process, but that he didn't feel that moving forward with the construction contract was illegal. Mr. Pastrana stated that the third option before the Board is to have a third party review to the value engineering options, which would add approximately one(1)month to the process in order to obtain the report from the third party reviewer. He stated that this option may result in extending the project schedule if additional reviews and approvals are required from third parties, such as TCEQ or the Army Corps of Engineers; result in getting something less than planned; has the potential of excessive design changes based on professional preferences; and violate the spirit of the competitive bid process. Director Wilson stated with regards to the TCEQ, that he thinks that staff needs to do what is required by the agency, especially if they think it is reasonable. He stated that he didn't think that neither re-bidding the project nor having a third party review was a good idea as they would just cause more delays. He stated that it's time to move forward with this project and begin the building process. Director Wilson inquired if staff was very comfortable that the change orders would not have a significant impact on the project and its operations, both short and long term. In response to Director Wilson's inquiry, Mr. Pastrana stated that this was the focus of staffs efforts to ensure that the effectiveness of the plant was not going to be diminished and that the Public Works staff did a thorough review of the final list of items being deducted or value engineered, to ensure that the changes didn't negatively impact the operations of the plant. Director Wilson stated that he felt better knowing that staff was very comfortable with the changes provided through the value engineering process. Additionally, Mr. Pastrana re-iterated that he was very comfortable with the proposed changes. Mr. Gary Rabalais, a representative for Jones & Carter, which is the engineering firm for the BAWA East Plant Project was present to answer any questions and noted that there was nothing to present as nothing has changed since the last report submitted a few weeks ago. President Bradley Smith hearing no more comments or questions moved to consider item l.a. BAWA Board Special Meeting Minutes December 06,2017 Page 4 of 6 a. Consider a resolution awarding a construction contract to Pepper Lawson Waterworks, LLC, for the BAWA 6 MGD Surface Water Treatment Plant Project and authorizing Change Order No. 1 for such project. General Manager Davis stated that Resolution No. 2017-21 awards a construction contract to Pepper Lawson Waterworks, LLC, for the BAWA 6 MGD Surface Water Treatment Plant Project (the "Project") in the amount of$52,186,000 and authorizes Change Order No. 1 in the amount of($6,093,600), which reduces the contract amount,to $46,092,400. The Project consists of the raw water intake, screens and forebay; low lift pump station; rapid mix basin; pulsed bed clarifier; disinfection basin; self-backwashing filter; transfer pump station; pre-stressed concrete ground storage tank; high service pump station; sludge pump stations; sludge lagoon; recycle pump station; backwash equalization basin; backwash pump station; backwash clarifier; backwash sludge pumps; site drainage; detention pond and storm water pump station; chemical systems; tanks; pumps; piping; valves; protective coatings; electrical systems; instrumentation and control systems; operations building; maintenance building; primary electrical building; high service pump station building; low lift pump station building; plumbing; HVAC system; concrete paving; sidewalks; site grading; site-work; generator; generators and switchgear; and all else specified and shown in the construction documents. Change Order No. 1: • removes the construction of maintenance building, • removes the backwash reclamation clarifier, • eliminates redundant electrical distribution system, • eliminates backup generator, • substitutes rock roads for concrete roads, and • adds an independent power feed from CenterPoint. General Manager Davis reminded the Board that should they move to approve agenda item 1.a., no action would be required on agenda items 1.b. and 1.c. A motion was made by Vice President Mike Wilson and seconded by Director Frank McKay III approving Resolution No. 2017-21 regarding agenda item l.a. The vote was as follows: Ayes: Director Harland Forrest, Jr., President Brenda Bradley Smith, Director Frank McKay III, Vice President Mike Wilson Nays: None Other: Director Brandon Benoit (Absent) Approved RESOLUTION NO. 2017-21 BAWA Board Special Meeting Minutes December 06,2017 Page 5 of 6 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE BAYTOWN AREA WATER AUTHORITY AWARDING THE BAYTOWN AREA WATER AUTHORITY 6 MGD SURFACE WATER TREATMENT PLANT PROJECT TO PEPPER LAWSON WATERWORKS, LLC, IN AN AMOUNT OF FIFTY- TWO MILLION ONE HUNDRED EIGHTY-SIX THOUSAND AND NO/100 DOLLARS ($52,186,000.00); AUTHORIZING CHANGE ORDER NO. 1 WITH PEPPER LAWSON WATERWORKS, LLC, FOR SAID PROJECT TO REDUCE THE CONTRACT PRICE IN THE AMOUNT OF SIX MILLION NINETY-THREE THOUSAND SIX HUNDRED AND N0/100 DOLLARS ($6,093,600.00); AUTHORIZING PAYMENT IN THE AMOUNT OF FORTY- SIX MILLION NINETY-TWO THOUSAND FOUR HUNDRED AND NO/100 DOLLARS ($46,092,400.00); MAKING OTHER PROVISIONS RELATED THERETO; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. President Bradley Smith noted that since the Board approved agenda item l.a., agenda items 1.b. and 1.c. were moot and did not need any action. b. Consider a resolution rejecting the bids received for the BAWA 6 MGD Surface Water Treatment Plant Project. c. Consider a resolution authorizing an Agreement for Professional Services with Carollo Engineers, Inc., to perform value engineering services for the BAWA 6MGD Surface Water Treatment Plant Project. 2. REPORTS a. Receive and discuss an update regarding the BAWA East Plant Project. Mr. Pastrana presented the update and stated that there was an item yet to be finalized, which staff expects the cost to be at about $100,000. He stated that the second fee coming in from CenterPoint may change and that staff didn't know the final cost as it had not been received. Additionally, he noted that the amount should come in soon and staff would work and try to make the fee reasonable. 3. MANAGER'S REPORT a. Reminder that the next Baytown Area Water Authority meeting is scheduled for Wednesday, January 17, 2018, at 9:00 A.M. in the City Council Chamber, 2401 Market Street, Baytown, Texas 77520. General Manager Davis stated that he would keep the Board informed of any developments associated with this project and reminded them that their next regularly scheduled meeting is January 17, 2018, at 9:00 A.M. 4. ADJOURN BAWA Board Special Meeting Minutes December 06,2017 Page 6 of 6 A motion was made by Director Harland Forrest, Jr. and seconded by Director Mike Wilson adjourning the December 06, 2017, BAWA Board Special Meeting. The vote was as follows: Ayes: Director Harland Forrest, Jr., President Brenda Bradley Smith, Director Frank McKay III, Vice President Mike Wilson Nays: None Other: Director Brandon Benoit (Absent) Approved With there being no further business to discuss, President Bradley Smith adjourned the December 06, 2017, BAWA Board Special Meeting at 9:21 A.M. ; ":111141 rIl Le icia Brysch, Assistant : etary , City of Baytown � :' ,r