City of Laredo

                                               City Council Workshop

                                                          2001-W-04

                              Public Works Service Center Training Room

                                                        5512 Thomas

                                                        July 17, 2001

                                                            5:30 p.m.

 

I.          Call to order.

 

            With a quorum present, Elizabeth G.  Flores called the meeting to order.

            In attendance

 

            Elizabeth G.  Flores,                                                     Mayor

            Alfredo Agredano,                                                        Council Member, District I

            Louis H.  Bruni,                                                            Council Member, District II

            Johnny Amaya,                                                             Council Member, District IV

            Eliseo Valdez, Jr.,                                                         Mayor Pro Tempore, District V

            Joe A.  Guerra,                                                             Council Member, District VI

            Jose A.  Valdez, Jr.,                                                     Council Member, District VII

            Gustavo Guevara, Jr.,                                                   City Secretary

            Larry Dovalina,                                                             City Manager

            Cynthia Collazo,                                                           Assistant City Manager

            Homero Martinez,                                                        Assistant City Attorney

 

            Motion to excuse Cm.  Galo and Cm.  Ramirez.

 

            Moved:  Cm.  Agredano

            Second:  Cm.  J.  Valdez

            For:     6                                               Against:  0                                            Abstain:  0

 

            Presentation on the direction and progress of the Secondary Water Supply Project.

 

            Fernando Roman, Utilities Director, presented the following persons in attendance:

 

            Mike Milan – H . B. Zachary

            Ken Olson –  H. B. Zachary

            David Ortiz – United Water

            Dana Batiste - United Water

            Charles Martens – Killiam Water Company

 

            Fernando Roman, Utilities Director, gave the following presentation:

 

                        Secondary Water Supply Structured Procurement Process

 

Procurement Process Status & Required Decisions

Project Sizing and Verification Process

Procurement Process Options

 

 

̃    DBO by September 1, 2001

̃    Traditional Delievery by late 2002

̃    Hybrid Structure by early 2002

 

Procurement Documents & Process

 

̃    Request for Proposal

̃    Service Agreement & Schedules (included price)

̃    Evaluation & Selection

̃    Contract Negotiation & Approval

 

                                    Future Council Transactions

 

                                                      Preliminary Price Proposal Costs

                                                     For 20 MGD Delivery, Million Dlls.

 

 

Zachry

United Water

U. S. Filter

Engineering

$                13.9

$                   1.6

$                9.6

Cost of Wells

$                12.2

$                   7.5

$              15.8

Collection Lines

$                  6.2

$                   0.8

$                2.1

Conveyance Lines

$                20.4

$                 18.3

$                2.1

Pumping and Controls

$                13.0

$                   0.2

$                2.9

Treatment

$                  0.1

$                   0.2

$              30.1

Total

$                66.0

$                 28.7

$              70.5

 

 

 

 

Operation and Maintenance Cost,

$/1000 gal

$                 2.60

$                 0.32

$              9.60

 

            February 8, 2001:  Industry Workshop

            March 5, 2001:  DBO procurement process Contract approved

            June 26, 2001:  Council direction on sizing and requirements of proponents

July 3, 2001:  Request for Proposal (RFP) for 20 MGD supply via DBO delivery issued

with addendum noticing Council direction

July 9, 2001:  Revised RFP for 5-10 MGD supply issued

September 1, 2001:  SB 510 effective

Key Decisions:

 

1.  Project Sizing:

 

§         Previously indicated 20 MGD contract

§         June 26th Council direction for 5 – 10 MGD

 

            2.  Groundwater Verification Process

 

§         Proposed Scope of Work required in RFP

§         June 26th option for ‘certification letter’

 

 

3.  Procurement Process

 

§         Original RFP contemplates DBO by September 11, 2001

§         Traditional Design – Bid – Build with adjustments to reflect ownership of

land, water rights, selected assets

§         Hybrid Option – modification of DBO process to ensure compliance with

SB 510 via qualification based selection of engineering services

 

Project Sizing Decision

Recommend 20 MGD

 

Jefferson plant capacity will max out in 2010

Plans to expand should begin in 2004

Minimum plant expansion should be 25 MGD at a cost of $30 million

Construction of a 20 MGD groundwater project will defer construction of treatment plant capacity

20 year planning horizon

Economies of scale available

Potential for treatment plant deferrals

 

Groundwater Verification Decision

         Recommend Verification

 

June 26th Direction allows for:

 

            1.  Certify with Letter of Credit

 

If later proved not a Sustainable Supply, Company incurs penalties outlined

in Service Agreement.

 

                        2.  Propose SOW and perform Verification Study

 

If proved not a Sustainable Supply, Company reimbursed for 50% of

verification costs.

 

If proved a Sustainable Supply, City may or may not proceed with project. 

In either case, Company reimbursed for 100% of verification costs.

 

            Original RFP contemplated (2) only

            Low yield and low transmissivity prevails in all 3 areas of study

Long-term sustainability concerns

Water quality information required to ensure compatibility

Verification recommended:

 

delivery of critical resource

 

 

 

                                             Procurement Process Decision

                                                          Recommend

                                                  Design/Build/Operate

 

Cost saving through project delivery and efficient operations

Reduction in project delivery complexity through single point of contact - - less management effort

Encouragement of innovation by rewards coupled with project delivery – integrated delivery teams

Transfer of risk

Fixed price requirements

Reduction in potential for litigation

Design/Build/Operate approach

 

§         Contract execution must be completed by September 1, 2001

 

Traditional Design – Bid-Build delivery

 

§         City must initiate a new procurement process

§         Contract execution estimated for late 2002

§         Substantial risk transfer to the City

§         Cost impacts uncertain though likely increase in total cost

§         Legal complexities must be addressed

 

Hybrid Approach

 

§         Proposals for total project development without pricing of engineering services

§         Qualification – based engineering services selection

§         Projected contract by early 2002; substantial procurement risk

 

                                               Procurement Documents and Process

                         Request for Proposal Service Agreement & Schedules (incl. Price)

                                                           Evaluation & Selection

                                                 Contract Negotiation & Approval

 

Ownership of the Facilities

            After System Acceptance, City will purchase all Turnover Assets

§         City also pays for all Non-Capital Costs

§         Company defines the System to be purchased

 

Operations

§         Company operates and maintains entire System, irrespective of ownership

boundaries

§         Company continues system build-out consistent with technical proposal

 

Fees, Charges, and Cost Recovery

            Capacity Charge

                        Recovers costs for all Non-Turnover Assets

 

 

            Fixed O & M Fee

Recovers costs for all fixed operating expenses (MMRR, Metering, labor &

benefits, etc.

                        Variable O & M Fee

Recovers costs for all variable operating expenses (residuals disposal, electricity,

chemicals, etc.

                        Turnover Price

 

                                    Recovers all Non-Capital Costs and costs for Turnover Assets

 

                        Response to Project Definition requirements

                        Life-cycle pricing

                        Financial security/guarantees

                        Risk allocation

                        Future Council Transactions

                        Council direction on key decisions today

                        Prohibition on ex parte communications effective today

                        August 6, 2001 Status report

                        August 13, 2001 Council action on recommendation of selected proponent

                        August 27, 2001 Council authorization to execute contract

 

The providers expressed concerns that they may not be able to provide a comprehensive RFP by

September 1, 2001, but they will provide one with exceptions.

 

The Council made the recommendation of 20 million gallons per day and to execute a Letter of

Intent for August 27, 2001.

 

Motion to adjourn.

 

            Moved:  Cm.  Agredano

            Second:  Cm.  Amaya

            For:     6                                               Against:  0                                            Abstain:  0

 

I, Gustavo Guevara, Jr., City Secretary, do hereby certify that the above minutes contained in

pages 01-05 are true, complete, and correct proceedings of the City Council Workshop held

on the 17th day of July, 2001.

 

 

 

                                                                                    _______________________________

                                                                                    Gustavo Guevara, Jr.

                                                                                    City Secretary