HomeMy WebLinkAbout19 17TH ST. DESALTER 03-07-94NO. 19
3-7-94
DATE:
MARCH '7, 1994
lnter-Com
TO:
FROM:
SUBJECT:
WILLIAM HUSTON, CITY MANAGER
PUBLIC WORKS DEPARTMENT/WATER DIVISION
AWARD OF 17TH STREET DESALTER CONSTRUCTION CONTRACT
RECOMMENDATION:
Approve award of 17th. Street De.~ter construction contmctby, the.Orange County Wate? Di_s~qt_._ __
FISCAL IMPACT:
None -- Costs will be offset by reduced imported water purchases and funds from
Metropolitan Water District Groundwater Recovery Program.
BACKGROUND:
On February 18, 1992, the City Council authorized an agreement with Orange County Water District
(OCWD) for construction, operation, and acquisition of a groundwater desalter. The agreement
provides that OCWD will design and construct a desalter at the city's 17th Street yard, and that the city
will reimburse OCWD for it's direct costs over a period of 11 years. The agreement also provides that
the city can elect not to participate in the project at critical junctures, with the opening of construction
bids being the final opportunity for the city to elect not to proceed.
On June 21, 1993, the City Council authorized an amendment to this agreement which allows the city
and OCWD to participate in a State Department of Water Resources low interest (3.5 %) loan program.
This loan, in the amount of $5,000,000, has been approved.
On October 5, 1992, the City Council authorized an agreement which allows the city to participate in
the Metropolitan Water District (MWD) Groundwater Recovery Program. This agreement establishes
a formula under which MWD will reimburse the city for any Desalter capital and' operating costs which
are in excess of the MWD water rate in effect at the time.
On February 10, 1994, OCWD received construction bids on the desalter project as follows:
Ray Wilson Co.
J.W. Contracting Co.
C.W. Roen
Pascal & Ludwig Engineers
Memo Construction
Advanco Constructors
Kiewit Pacific
Sverdrup Corporation
Ionics
$4,168,931
$4,325,000
$4,569,000
$4,576,000
$4,674,000
$4,700,000
$4,767,000
$4,834,000
$5,610,000
AWARD OF 17'rH STREET DESALTER CONSTRUCTION CONTRACT
March '7, 1994
Page 2
The low bid of $4,170,000 is $930,000 below the engineer's estimate of $5,100,000.
DISCUSSION:
The total project costs for the 17th Street Desalter are estimated as follows:
Construction $4,170,000
Design & Engineering 1,072,000
Sanitation-District Connection Fee-- - 918~000 ..........
Property Purchase 120.000
Estimated Total Project Cost
$6,280,000
The total project cost will be reimbursed to OCWD through an 11 year lease arrangement. Five million
dollars will be reimbursed using the State low interest loan rate of 3.5%, and the remaining $1.48
million will be reimbursed at a 7 % interest rate, as stated in the original agreement with OCWD.
At $6,280,000, the city's annual reimbursement payment to OCWD will be $726,000. The city's Water
Rate Study and Financing Plan completed in July 1992, programmed $737,000 annually, for this
purpose.
Annual expenses and funding for the project are summarized below:
Operating and Maintenance
Capital Reimbursement (lease payment)
to OCWD
$735,000
726,000.
Total Annual Cost
$1,461,000
Cost to Alternatively Purchase
3200 Acre Feet Imported
Water in 1995/96
1.395,200
Difference Funded by MW
$65,000
Under its agreement with MWD, the city is eligible to receive up to $800,000 annually for costs which
are in excess of the MWD rate, so there is a substantial cushion if unforseen contingencies should arise.
It is important to note that the 17th Street Desalter places three inactive wells back into service, and the
water produced replaces imported water which would otherwise be purchased. It will provide a local
AWARD OF 17TH STREET DE,SALTER CONSTRUCTION CONTRACT
March 7, 1994
Page 3
supply over which the city has greater control, and will insulate the city's residents from the more
severe effects of future droughts and shortages. More importantly, it will retard the movement of
nitrates and salts to other city wells, and will insure a more reliable water supply in the future.
Under its agreement with OCWD, the city has the option to elect not to proceed further with the project
at this time. If the city were to elect this option, it would be responsible for reimbursing OCWD for
half of the design cost incurred to date, which amount to $832,369.
Bob Ledendecker
Director of Public Works/City Engineer
BL:GRV:cmc
Gary R. V~eeh
Water Service Manager