City of Laredo



City Council Chambers

1110 Houston Street

Laredo, Texas  78040

February 19, 2002


I.          Call to order.


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


II.        Pledge of Allegiance


            Mayor Flores led in the Pledge of Allegiance.


III.       Roll Call


            In attendance:


            Elizabeth G.  Flores,                                                                 Mayor

            Alfredo Agredano,                                                                    Council Member, District I

            Louis H.  Bruni,                                                                        Council Member, District II

            John C.  Galo,                                                                          Council Member, District III

            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

            Juan Ramirez,                                                                           Council Member, District VIII

            Gustavo Guevara, Jr.,                                                               City Secretary

            Larry Dovalina,                                                                         City Manager

            Cynthia Collazo,                                                                       Assistant City Manager

            Jaime Flores,                                                                            City Attorney


            1.  Discussion and review of ground water proposals.


                 Mike Engle, from CH2MHILL, made the presentation before the Council:



                 Groundwater Source Study - November 1999.

                 Qualification statements - November 1999.

                 Preliminary priced proposals - March 2000.

                 Request for detailed proposals - July 2001.

                 Proposals - January 2002.


                 Risk Allocation


                 Assigned to project developer.

                 Proposals received

                 Shared implementation risk.

                 Long-term risk to City


                 Proposals Received

                 Montgomery Watson Harza

                 US Filter/Killam Water Company


                 Montgomery Watson Harza

                 Responsive to the RFP.

                 Development in northern Webb County.

                 Acess and development rights indicated.

                 City to acquire land or water rights.

                 Water purchase price - 33 cents/1,000 gallons.

                 Delivered cost - $1.50 to $2.50/1,000 gallons.

     Potable quality water expected.

     Moderate to high sustained yield.


     U S. Filter/Killam Water Co.

     An alternative proposal.

     Development close to Laredo.

     Access and development rights indicated.

     Water purchase price not indicated.

     Delivered cost - $2.50 to $3.50/1,000 gallons.

     Saline water expected - treatment required.

     Low to moderate sustained yield.



                 Montgomery Watson Harza Project

                 Moderate to high volumes of water potential.

                 Expect potable water quality.

                 Long-term sustainability potential.

                 Extensive treatment not expected.

                 Cost of water delivered in acceptable range.

                 Advantage of pipeline to northern Webb Co.


                 Project Verification

                 Verification procedures reviewed.

                 Verification scope and budget reviewed.

                 Minor modifications to proposed program.


     Development Agreements

  Advance Authorization to Proceed (AATP)

     AATP being prepared.

     Council action no later than March 11, 2002.

     Design/Build agreement.

     MWH agreed to sign modified RFP agreement.

     RFP agreement as base.

     Negotiations in process.



Mr.  John Dantony and Wayne Hunter gave the following presentation for Montgomery Watson Harza: 


Montgomery Watson Harza


Transforming Laredo's Vision for a Secondary Water Supply into Reality


                  Our Project provides the Best Solution for Laredo's Secondary Water Supply System

                  Reliable Partner in MWH

                  Lowest Cost System

                  Fastest Delivery

                  Maximum City Control

                  Significant Local Benefits


                  MWH has the Financial Stability to ensure Project Success

                  5.500 employees worldwide

      $750 million in annual revenue

      50 years of continuous growth in USA

      $1 billion of on-going design-build work

      An independent and Employee owned Company


      A Proven Track Record

      Bexar MET IBPWTP

      $20 million DBO Surface Water Supply and treatment project

      Houston NEWPP $100 Million DBO Waterplant with 20 miles of pipeline

      SAWS ASR Well Field $20 Million 17 wells and pipeline


Our Project provides the Best Solution for Laredo's Secondary Water Supply System

      Reliable Partner in MWH

                  Lowest Cost System

                  Fastest Delivery

                  Maximum City Control

                  Significant Local Benefits


      MWH's 1999

      Evaluations have stood the Test of Time

      78 locations evaluated

      Defined well cost +

      Treatment cost +

      Transport Cost


     Geospatial Analysis Compares the value of different solutions

     Cumulative Effect defines least cost


A Trusted Partner


     MWH  has the financial stability to ensure the success of this project. 


MWH means financial strength and experience and we have successfully partnered with many cities on other design-build projects.  These projects are a success because of our close working relationship with out clients and our adherence to principles of integrity, high quality of service and commitment. 


·        50 years of continuous growth and service

·        750 million – annual revenue from engineering – construction projects

·        $1,000 million on going design build work

·        30,000 million programs managed

·        5,500 employees in nations


     As an Employee-owned company – MWH is inherently stable and more capable of     

     managing DBO project risks than publicly-owned company. 


Investment in Laredo Community


     Local Area sub consultants

     Robber S.  Kier Consulting

     Foster Engineering Company

     Archaeological Consultants, Inc.

     Raba-Kistner Consultants, Inc.

     Associated Broker Realty


     Border Title Company

     Local Contractors (as determinted)


     Our team structure is centered around local business participation:

     Our diverse team includes several local firms that will provide both design and

     construction support for this project.  Significant portion of the project dollars will be

     pumped right back in the community, fostering business growth. 


     Our proposal includes community involvement program.


     We propose to bring “WET in the City” to Laredo. 

     Outreach Profile:

     WET in the City:

     As a national partner with WET in the City Program, Montgomery Watson has found

     that increasing educational opportunities, while providing service to the client, is an  

     essential element of program success.  This program, developed by the Council for

     Environmental Education is a K-12 urban environmental education program that focuses

     on water resources. 


     Benefits include:

·        CEE is one of the 10 partners selected to participate in the EPA’s Office of Environmental Education.

·        Part of key topics outlines in NPDES education requirement.

·        Developed “Water on the Web” internet site for the student/teacher information. 


     MWH evaluated over 50 source locations to find the best secondary water supply for the      

     City of Laredo.  Our choice offers the best and the least cost supply for the City.


     Water Quality                      Better water quality found 43 miles from the City is current source of drinking water for other users. 


     Water Commitment             Availability commitment as $.00 per 1,000 gallons of water adjacent sources may offer lower cost water, at City’s option.  The option available for additional water in the future.


     Oper.  Simplicity                  City can operate the System with its current staff

                                                Conventional well water system is easy to operate

                                                City has the option to assign operation to others


     Water Cost Analysis            Average total cost of water supply is about $1.50 per 1,000 gallons Cost of desalinization (RO system) expected to be nearly twice this value


     Flexibility of Use                  Can be used as a base-load flow system or for peak flows


     Ease of Implementation:       City has bid price proposal from MWH City can proceed with cost certainty.  


No Surprises

     International Business Park Water Treatment Plan; Bexar Metropolitan Development

     Corp.,San Antonio, Texas.  A design-built-operation (BDO) Project Total Value of



     $20 Million.


     Water Works Park II; City of Detroit, MI – A design-Build-Maintain (DB) Project Total

     Value of Project $275 Million.


     Willamette River Water Plant, City of Wilsonville, or A design-Build (DB) Project

     Total Value of Project:  $44 Million.


     Water Treatment and transmission System Southern Nevada Water Authority, Las

     Vegas, NV.  A design Bid Build – (DBB) Project Total Value of Project: $80 Million.


     Mohawk Water Treatment Plant Tulsa Municipal Utility Authority, Tulsa, Oklahoma A

                 design – Bid – Build – (DBB) Project Total Value of Project:  $80 Million.


     Greater Houston Wastewater Program,, Cheshire, UK a Design-Build-Operate (DBO)

     Project Total Value of Project:  $1.2 Billion.


     North West Water Capital Program, Cheshire, UK A design-Build-Operate (DBO)

     Project Total Value of Project:  $3.5 Billion


     Upgrade and Operation of Wastewater Plants East Scotland Water Authority,

     Edinburgh, Scotland A design-Build-Operate (DBO) Project Total Value of Project: 

     $284 Million.


     Cm.  Galo asked Beto Ramirez, Acting Utilities Director, to do an analysis of what the

     overall average cost will be for the consumer.


     Charles Martens from U. S. Filter/Killiam Water Company, stated that he sincerely

     believes that Killiam’s proposal provides for the only City private partnership.  He said

     that Killiam

                 has a phase approach where they can allocate cost without exceptions.  He encouraged

     Council to investigate further.  He gave his opinion of the proposals submitted by other



     Larry Dovalina,, City Manager, advised that there is a verification process on the onset

     of the project.  He affirmed that the contract will reflect the maximum price of $2.75

     price per 1,000 gallons. 


     Denise Chenen, Attorney for the City of Laredo, stated that in the 1990 the City went

     Out on the request for proposals process, but in 2001 they decided to proceed with the

     Project through a Local Government Corporation.  The City assigned all of its rights to

     the requests for proposals and to the Local Government Corporation.  She said

     technically the contract will be between the Local Government Corporation and the

     successful proposer.  She noted that on February 25, 2002 the City will post an agenda

     for a meeting for Council and the Local Government Corporation.  The Local

     Government Corporation will enter into a contract with the successful proposer.  The

     Local Government Corporation will provide the City services and it will contract with

     the propose to provide it with services that pass through to the City.  The City will pay

     the Local Government Corporation and they will pay the successful proposer. 


     Larry Dovalina, City Manager, stated that the election of the board and other issues     

     concerning the Local Government Corporation will be on the agenda for February 25,



            2.  Presentation by Hwkins, Delafield, and Wood of Draft Service Contract and appendices

                 for the management of the City’s water and wastewater system. 


                 Rick Sapier, with Hawkins, Delefield and Woods, gave the following presentation:


Hawkins Delafield & Wood


Summary of Certain Key Provision of the Draft Service Contract


                 Exclusions from Uncontrollable Circumstances


                 Term – 2 options:


                 1.  5-year initial plus 5-year renewal

                 2.  10 year initial; no renewal


                 Transition Period following Contract Date and prior to Commencement Date:


                 1.  Transition Employees

                 2.  Obtain insurance, bond, and letter of credit

                 3.  Inventory and valuation


     Assumption of Existing City Contracts


     Transfer of Designated Employees:


     1.  Required to offer employment to all Designated Employees (subject to pas drug

          screening test.

     2.  Substantially similar responsibilities and equal or better positions.

     3.  Wages and benefits equal or better than those provided by the City, including  

          pensions benefits.

     4.  Recognition of years of service with City.

     5.  Accrued vacation, sick leave, or other paid time to carry over -0 paid by City as a

          Reimbursable Expense.

     6.  No termination of Transferred Employees without just cause.

     7.  Employee Grievance Committee.

     8.  Managed City Employees.

     9.  Right to City to Require Company to increase benefits during the term.


     “As is” Risk Assumption


     City’s rights regarding Company’s Director of Operations


     Compliance with Applicable Law


     Company has the right to change staffing levels through attrition (not layoffs) upon    

     notice to the City but may not make any such changes if it would adversely affect the

     ability of the Company to provide the Management Services in accordance with the

     Contract Standards.


     Access, Reporting, Auditing, Administrative Sanctions


     Local purchasing to develop economic development within the City


      Customer Service:

     1.  Customer service manual

     2.  24-hours manned hotline

     3.  Local customer service location

     4 . Meter quality assurance program.


     Billing and Collection:

     1.  Utilization and/or improvement in existing system

     2.  All funds collected by City


     Water Pollution Control:

     1.  IPP administration by Company

     2.  Administration of Water Conservation Program

     3.  Prevention of cross connections and Back-Flows

     4.  Water Pressure Guarantee

     5.  Unaccounted for Water Guarantee


     Wastewater System Performance:

     1.  Effluent Guarantee

     2.  Sludge Guarantee

     3.  Odor Requirement



     1.  Company responsible for all maintenance except Major Corrective Maintenance

     2.  Company responsible for cost of first $15,000 of Major Corrective Maintenance

     3.  Company prohibited from including labor cost in quotes, bids or proposals for Major

          Corrective Maintenance


     Mechanisms to ensure Managed Assets are property maintained:

     1.  Exit evaluation

     2.  Periodic Inspections

     3.  CMMS


     Residuals Management:

     1.  No on-site storage

     2.  Alternate disposal if Sludge Guarantee is not met at Company cost


     Capital Modifications:

     1.  Company Request – Company Cost

     2.  City Request – City Cost

     3.  Uncontrollable Circumstances – City Cost

     4.  Primary Procedure for Minor Capital Modifications

      5.  Primary Procedure for other Capital Modifications

     6.  Alternative Procedures

     7.  Company prohibited from including labor in quotes, bids or proposals


     Formulaic Service Fee consisting of Fixed and Variable Components of a Base      

     Operation Charge and Reimbursable Charges and Credits

     1.  Fixed Fee for fixed level of service

     2.  Variable Fee for increased levels of service

     3.  Electricity subject to maximum guarantee

                 4.  Sludge

                 5.  Managed City Employees


                 Breach, Default, Remedies, and Termination:


    Breaches, City has all remedies available under Service Contract, Security Instruments,      

     and Applicable Law


     Events of Default certain Events of Default allow termination without notice and cure    



     City Convenience Termination


     Security for Performance

     1.  Guarantor

     2.  Letter of Credit

     3.  Performance bond

     4.  Insurance




The City Council hereby reserves the right to go into executive session at any time during this public meeting, when it deems it necessary to consult privately with its attorney about any item upon this agenda, pursuant to the provision of Section 551.071 (2) of the Texas Government Code.


VI.       Motion to adjourn.


            Moved:  Cm.  Galo

            Second:  Cm..  Agredano

            For:     7                                               Against:  0                                            Abstain:  0