ITEM:		ACTION ITEM
12.	CONSIDER EXPENDITURE FOR THE SANTA MARGARITA WATER TREATMENT FACILITY PROJECT CONSTRUCTION AND SUPPORT SERVICES
Meeting Date:			October 21, 2019	Budgeted:	Partially
From:			David J. Stoldt	Program/	Water Supply Projects
			General Manager	Line Item:	35-04-786004
Prepared By:			Maureen Hamilton	Cost Estimate:	$5,277,250
General Counsel Review: N/A
Committee Recommendation: The Administrative Committee reviewed this item on October 14, 2019 and referred this item to the Board of Directors for action.
CEQA Compliance: The addendum to the ASR EIR/EA for this project was adopted by the Board on July 15, 2019 by Resolution 2019-11.

SUMMARY: Staff proposes to complete the Santa Margarita Water Treatment Facility Project (Project) at MPWMD’s Santa Margarita site located at 1910 General Jim Moore Boulevard (GJMB) south of Coe Avenue/Eucalyptus Road. The Project work includes construction of:

· A 1500 square foot CMU building with a cellar suited to house three different chemicals.

· Pipe work including above ground pipe removal, installation of laterals, chemical injection manifold, blow-off line for the GJMB area, and associated appurtenances.

· Electrical equipment for chemical treatment and facility improvements.

· Chemical truck delivery road, off loading pad, off loading facility.

· Perimeter fencing, gates, low impact development (LID) works, basin access ramp, and other minor site improvements.

MPWMD advertised for bids to construct the Project on August 8, 2019. Bids were opened on September 24, 2019. The apparent responsible bidder with the lowest responsive bid is Specialty Construction Incorporated.

During construction the designer is required to review and respond to Requests for Information (RFIs), review and respond to change order requests, and support startup. Staff proposes to enter into a contract for engineering services during construction (ESDC) for the Project.

RECOMMENDATION: Staff recommends that the Board take action to approve items 1 – 3 listed below. On October 14, 2018, the Administrative Committee referred this item to the Board of Directors for action.

1. Authorize the General Manager to enter into a contract with Specialty Construction Incorporated for the amount of $4,649,400.

2. Authorize the General Manger to enter into a contract with Pueblo Water Resources for the amount of $148,100 for engineering services during construction.

3. Authorize the General Manager to approve change orders to the construction and service contracts or to enter into new contracts for the Project to allow for unforeseen items up to $479,750.

Funding for the unbudgeted portion of this project will come from the District’s general fund balance. This project was previously budgeted in the FY 2019-2020 budget at $2,450,000. This request combined with the August 19, 2019 award for Construction Management services and material pre-purchase in the amount of $315,385.14, leaves an unbudgeted portion of $3,142,635.14. District’s general fund balance at June 30, 2020 was estimated to be $12,324,065. Funding the additional amount of $3,142,635.14 using the general fund balance will reduce the fund balance at June 30, 2020 to $9,181,429.86.

DISCUSSION: The first ASR well on the Monterey Peninsula, ASR-1, was built in 2002 on a 0.23 acre parcel easement from the United States Army (Army), referred to as the Santa Margarita site. During the next 5 years staff coordinated well testing, Regional Water Quality Control Board approval, water rights, the Environmental Impact Report (EIR), and an additional land easement. The second ASR well, ASR-2, was constructed on the expanded 1.04 acre easement in 2007. Over the following 5 years the underground pipe and electrical were installed, the electrical building was constructed, the 30” distribution pipeline was constructed in GJMB, and electrical service was completed. The building was set back from the road for City planning purposes, was reviewed by the City of Seaside Board of Architectural Review, designed in the Spanish style as selected by Seaside City Council, had high-end finishes, and met non-combustible requirements from the fire department.

In 2010 a third well, ASR-3, was constructed at a parcel located at the Seaside Middle School. California American Water (Cal Am) was required to construct a small water project as a part of the State Water Resources Control Board Order WR 2009-0060. Cal Am received an easement from the Monterey Peninsula Unified School District in 2011 and funded construction of what is now referred to as the Middle School site. A backflush basin was not feasible due to the elevated siting and the cost to ensure structural integrity during an earthquake. Chemical storage was disallowed due to the elevated siting above a playground. Over the next 4 years a second ASR well, ASR-4, was constructed, and a small electrical building, lateral piping, and all electrical were installed at the site.

Two additional wells have been planned for construction at the Fitch Park site as a part of the Coastal Water Project and Monterey Peninsula Water Supply Project (MPWSP). The EIR for the MPWSP was adopted by California Public Utilities Commission in September 2018. The EIR stated that backflush water and produced water would be conveyed to the Santa Margarita site for infiltration and disinfection respectively; at that time chemical storage was disallowed at the Fitch Park site by the Army.

The 3 ASR sites are shown in the following figure.

The Santa Margarita site would be expanded to accommodate a larger backflush basin and disinfection facility with capacity for 6 wells, referred to as the ASR Expansion project. MPWMD will be the operator for injection and backflush operations. Cal Am will be the operator for production operations including disinfection, and is in the permitting process with the Department of Drinking Water to permit ASR-3 for production. A right of entry (ROE) application was filed with Fort Ord Reuse Authority (FORA) in 2015 and a concept level design was created.

In 2016 a lease agreement was negotiated between MPWMD and the City of Seaside (City) for an expanded 1.90 acre parcel. The lease was rejected in October 2016 because the land has not officially transferred from FORA to the City. Staff obtained permission to construct and operate on the expanded parcel in November 2016. Updated ROE documents were filed in February 2017 and the ROE was received in June 2018.

Staff initiated design meetings with the Cal Am Operators and Designers in April 2017. In February 2018 the disinfection operator asked that design options be vetted for location of the offloading rack because the concept design was not consistent with current safety practices.

The ASR Expansion project was divided into two phases, a Backflush Basin Expansion project and a Water Treatment Facility project. The Backflush Basin Expansion project was substantially completed in November 2018.

During this time Cal Am re-negotiated the Fitch Park easement terms with the Army, and was given permission to have disinfection works on that site. The Santa Margarita water treatment pipe sizes would remain consistent with the 30 inch transmission pipeline capacity in order to:

1. Minimize pressure loss through the system.

2. Provide treatment capacity for additional production wells that may be required to produce Pure Water Monterey (PWM) water.

3. Provide Seaside Basin well field firm production capacity.

4. Provide backup disinfection capability for Seaside Groundwater Basin production along GJMB, now critical during the summer months as we transition water supply from the Carmel River.

In June 2018 all stakeholders agreed that construction of a second chemical treatment building was preferred to allow chemical offloading consistent with modern operational practices. The basis of design for the Water Treatment Facility project was finalized in December 2018. The new facility building would be constructed along GJMB with rooms to accommodate two chemicals. The second room could provide additional disinfection capacity for future production wells that might be constructed in the area, or for dechlorination should that be required for injected waters.

The request for re-design funds was approved by the Board of Directors in January 2019. The Class 5 planning estimate (-50% to +100%) supplied was $1.2 to $1.4M. The estimate was based on analogy and judgement (Exhibit 12-A). A Class 3 (-20% to +30%) estimate was specified in the re-design contract to provide a bid estimate, which is consistent with MPWMD historical practices. In April 2019 the 2019-20 budget was developed. The Class 5 construction estimate was rounded up to $2M for budgeting purposes. The Class 3 estimate was not issued until after the 95% design review meeting due to on-going scope changes, well after the 2019-20 budgeting process.

During the second quarter of 2019, staff was made aware that corrosion inhibitor may be required as a chemical additive to prevent metals from leaching from older pipes into water. Both PWM and desalination are new waters to the distribution system. Corrosion inhibitor should be added to produced water in advance of new water introduction in order to assure scale forms in the pipes to keep metals sequestered. Cal Am has corrosion inhibitor works at the Begonia Iron Removal Plant and plans to install corrosion inhibitor works at the Sand City desalination plant and the Ord Grove facility in Seaside.

If corrosion inhibitor is not installed in the GJMB region, two areas in the City of Seaside may be affected when new waters are produced from the ASR wells. The Fitch Park facility, which does not have corrosion inhibitor in the design, will begin construction in the spring of 2020 which does not leave sufficient time to coat the pipes before the existing ASR wells are producing new water.

ASR wells are required to be permitted for production in order to recover PWM water. Staff has been told in conversation and confirmed with Cal Am that corrosion inhibitor will be a permit condition for production from ASR wells. After numerous discussions with Cal Am and their consultant, staff authorized a change order for design of corrosion inhibitor works in May, 2019.

Additional scope changes were requested for safety and permit reasons:

· Hardwired shutoffs

· Automated pressure relief

· Retaining support wall for north driveway exit

· Low Impact Development (LID) site drainage capture requirements

· Arc flash evaluation for new and existing electrical rooms

The 95% design plans were issued on June 27, 2019 and the design review meeting was held July 23, 2019. The bid set and engineers estimate were issued on August 6, 2019. The engineers estimate was $3.6M.

The following work was deleted as a part of the value engineering effort that was ongoing from design through the last bid addendum which was issued on September 13, 2019:

• Deleted SCADA (Cal Am will fund and manage)

• Deleted operations manual (Cal Am will fund and manage)

• Deleted road paving for upper site

• Deleted cement in favor of asphalt for lower site

• Deleted separate PG&E service

• Deleted mixer/stabilizer for dechlorination during injection mode

• Deleted telemetry shed and foundation

• Deleted compressor housing and foundation

• Landscaping moved to 2020-21 contract, City approved

• Cal Am hired liaison, former Construction Manager for previous ASR construction projects

• Future – administrative approval for more cost effective gate and doors, less expensive LID

A mandatory pre-bid meeting was held on August 27, 2019, five potential bidders attended. Bids were opened on September 24, 2019; the results are shown in the following table:

	Specialty Construction	MPE	Anderson Pacific	Mercer-Fraser
Total	$4,649,400	$4,678,000	$4,724,400	$5,558,600

Specialty Construction Incorporated (SCI) is the responsible bidder with the lowest responsive bid. SCI is located on the Central Coast and has been in business since 1991. The operational executives have over 140 years of combined construction experience. SCI has been successfully working with the PWM project and is highly recommended.

The subcontractor for the building construction is the same contractor who constructed the existing Santa Margarita and Middle School buildings, as well as the front retaining fence at Santa Margarita.

The 3 lowest bids were within 1% of their mean. A chart of the 3 lowest bids average price for major bid items and comparison to the estimates is shown in the following figure.

The factors increasing building price are as follows:

1. The building was expanded to accommodate 3 chemical treatments rather than 2.

2. The cellar is water tight to ensure required double containment, provide spill containment, and to keep the height of the building fronting GJMB to a minimum.

3. The building is non-combustible, matching the precedent set by the City of Seaside for the existing Santa Margarita and Middle School buildings; changes to materials would require consultation with the fire authority.

4. The building esthetic requirements have a high standard because it will be located at the very front of the property at street level on a major thoroughfare and is surrounded by land slated for development.

5. The building materials support its location within 100 yards of housing and expectation that it will house treatment for replacement water supply as we transition production from the Carmel River to the Seaside Groundwater Basin for the foreseeable future.

Staff is negotiating reduction in aesthetic conditions with the City; savings are not expected to be substantial in comparison to the bid price.

The factors increasing piping and appurtenance price are as follows:

1. Piping from GJMB and within the Santa Margarita site is space constrained and has evolved as the water supply portfolio and importance of GJMB works have evolved.

2. The Carmel River replacement water supply portfolio will travel along GJMB to serve the Monterey Peninsula, sufficient capacity is required for reliable treatment of the replacement supply regardless of the final portfolio.

3. Numerous pipe crossings are required to install the new system on the operational site.

A portion of the pipe and appurtenance cost will be reimbursed by Cal Am for installation of a shared pipeline meter outside our fence in the driveway; reimbursement will be negotiated based on the Schedule of Values and is not expected to be substantial in comparison with the bid price.

Electrical costs have skyrocketed over the past 2 years. All 4 bidders utilized the same electrical subcontractor.

All Other Work includes earthworks required for the facility. Low Impact Design required due to hardening surface area, maintenance access to the expanded basin, and stabilization of the truck exit road are included in these works.

Rationale in moving forward with the current design and bid:

• The facility is needed to recover PWM water and ensure maximum ASR water, the least expensive replacement water supplies.

• Corrosion inhibitor will be a permit condition for operation of ASR wells as recovery wells.

• Dechlorination prior to injection provides increased production capacity for the least cost when compared to drilling additional wells, provides up to two months of firm production capacity, precludes reducing ASR injection in favor of accelerating production in wet years, and facilitates maximization of the least expensive replacement waters.

• Reliable treatment for production of $100M+ replacement water supply and other replacement water supply as we transition from the Carmel River to the Seaside Groundwater Basin.

• Nexus of construction to meet the CDO and new water supply; works are required now for new water, while the portfolio and its requirements are still being developed.

• The lowest bidder has positive references and is utilizing the same builder that built the existing buildings.

Engineering and Construction Management Services

During Project construction staff or a staff representative is required to provide clarification of the plans and specifications, review and approval of contractor submittals and change order requests, and evaluation of value engineering proposals by the contractor. Engineering services are also required for assessment of unanticipated geologic conditions and/or infrastructure issues stemming from inaccurate historical records, as-built drawings, or differences between equipment and materials specified vs contractor-supplied items. Tasks include:

· Coordination with the MPWMD’s Construction Manager (CM) consultant regarding:

o Interpretation and clarification of Plans and Specifications

o Issues related to existing vs. recorded as-built conditions

o Assessment of anomalous geotechnical conditions encountered during construction

o Review of submittals

o Response to RFI’s

· Provide oversight and general consultation for the commissioning and startup of the facilities upon completion of construction, and document facility equipment performance and optimum operating parameters based on system performance trials.

· Evaluation of Value Engineering and/or Design Change requests from the Contractor.

· Site visits and/or field meetings with CM consultant or Contractor

As the design engineer, the Pueblo Water Resources Team is the appropriate entity to review, assess, approve, or re-design project details resulting from the above issues. We propose to utilize the same design team members; WRD Architects, Pacific Crest Geotechnical, Kiyoi Engineering Electrical Engineers, and MAC Design Associates for Civil Grading/Paving/Drainage issues. It is important to maintain the design team as they will collectively serve as the Engineer of record for the facility.

The agreement payment terms are time and materials. The agreement amendment will be executed only if the Project construction contract is awarded by the Board. Engineering Services proposal details can be found in Exhibit 12-B.

EXHIBITS

12-A AACE Cost Estimating

12-B Proposal for Engineering Services

12-C EPA Recommendations re Corrosion Inhibitor

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