To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, P.E., Director of Castle Rock Water
Title
Resolution Approving 3.0 MGD Capacity Expansion Agreement between the Town of Castle Rock, Plum Creek Water Reclamation Authority, Castle Pines Metropolitan District, and Castle Pines North Metropolitan District for Design and Construction of the Wastewater Treatment Plant Expansion [4255 North U.S. Highway 85, Castle Rock]
Body
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Executive Summary
Castle Rock Water is seeking Town Council approval of a Resolution (Attachment A) approving the 3.0 MGD Capacity Expansion Agreement (Exhibit 1) with Plum Creek Water Reclamation Authority (PCWRA), Castle Pines Metropolitan District (CPMD), and Castle Pines North Metropolitan District (CPNMD) for the wastewater treatment plant 3.0 million gallons per day (MGD) capacity expansion.
PCWRA governing documents stipulate execution of an expansion agreement by its members at the time when additional capacity is needed at the wastewater treatment plant. The Town provided notice to the PCWRA board of additional treatment capacity needs and has been working with PCWRA and the other members to implement design and construction of the project. The PCWRA board negotiated terms of the expansion agreement and determined appropriate project participation rates and corresponding allocation of costs for the project.
The total estimated cost for design and construction of the project is $36,166,532. The Town’s portion of these costs is estimated at $30,835,072 (85.3 percent). Funding for most of Castle Rock’s portion of the expansion is coming from wastewater system development fees on new development. A small portion of the project (nine percent for Castle Rock) will be used to improve the entire plant and make it more efficient. These costs will be funded by the entire rate base.
Through previously executed agreements, the Town contributed $14,406,217 from 2017 and 2018 budgets into multiple PCWRA-managed escrow accounts dedicated to expansion project obligations (design, preconstruction, work package one construction, and construction phase engineering). The expansion agreement will consolidate remaining funds in these escrow accounts to a single PCWRA-managed expansion fund escrow account.
Additional contributions to this account will be required from the Town, CPMD, and CPNMD, in a timely manner to ensure that funds are at all times sufficient to meet remaining payment obligations of the project as they become due. It is anticipated that the Town will contribute additional funding in the amount of $16,497,214 from 2018 and 2019 budgets for the project into escrow in 2019. As construction of the expansion project is completed (anticipated August of 2020), a final reconciliation of project costs and funding contributions will be completed and approved by the Town, CPMD, CPNMD, and PCWRA.
History of Past Town Council, Boards & Commissions, or Other Discussions
On June 20, 2017, Town Council was briefed on the PCWRA 2017 Capacity Study Update and the need for expansion of the treatment plant.
On August 23, 2017, the Castle Rock Water Commission unanimously voted to recommend Town Council approval of a Resolution approving a Professional Services Agreement between PCWRA and Burns and McDonnell Engineering Co., Inc. (Burns and McDonnell), for the design of the PCWRA plant expansion.
On September 5, 2017, Town Council voted to approve and fund a Professional Services Agreement between PCWRA and Burns and McDonnell for the Design of the PCWRA Plant Expansion in amount of $1,317,414.
On March 26, 2018, the PCWRA Board approved entering into contract negotiations with Moltz for preconstruction services for the 3 MGD Capacity Expansion, in the amount of $70,363, contingent upon Town of Castle Rock funding approval.
On May 18, 2018, the Town Manager’s Report provided a project update to council regarding selection of Moltz for CM/GC services for the 3 MGD Capacity Expansion.
On July 25, 2018, the Castle Rock Water Commission voted unanimously to recommend Town Council approval of a Resolution approving Work Package One Construction Escrow Agreement with PCWRA, CPMD, and CPNMD in the amount of $13,907,353. Note that this amount represented the Town’s share before the PCWRA entities approved in principle the cost sharing split.
On August 21, 2018, Town Council voted to approve Work Package One Construction Escrow Agreement and fund the Town’s share of the costs in the amount of $11,837,637.
On October 24, 2018, the Castle Rock Water Commission voted unanimously (7-0) to recommend Town Council approval of the escrow agreement for construction phase engineering services for the wastewater treatment plant 3.0 MGD expansion.
On November 6, 2018, Town Council voted to approve a Construction Phase Engineering Agreement with PCWRA to fund a contract for construction phase engineering services with Burns and McDonnell in the amount of $1,078,323 for the wastewater treatment plant 3.0 MGD expansion.
On November 28, 2018, this topic was presented to the Castle Rock Water Commission. The Commission voted unanimously to recommend Town Council approval.
Discussion
Castle Rock Water has been planning for a capacity expansion of the PCWRA wastewater treatment facility since 2015. A 2017 capacity update study revealed that an expansion of three million gallons per day (MGD) of average day capacity may be needed as early as 2020, with construction beginning in late 2018 to meet Colorado Department of Public Health and Environment (CDPHE) regulations. Original conceptual level estimates for the expansion were in excess of $47 million.
Design of the plant expansion began in August 2017 with the award of the design contract to Burns and McDonnell in the amount of $1,317,414. Burns and McDonnell staff completed thirty percent design documents in early 2018. The design includes improvements that will increase the rated hydraulic and treatment capacity of the plant from 6.44 MGD to 9.44 MGD. The design encompasses significant improvements to the plant headworks, tertiary filtration, ultra violet (UV) disinfection, and solids handling systems.
In order to meet the accelerated schedule while delivering a quality-constructed project that maximizes value, staff recommended project delivery utilizing Guaranteed Maximum Price Construction Management (GMPCM). The GMPCM method involves hiring a construction manager/general contractor (CM/GC) to perform contract administration and guarantee a maximum price for the complete project. The owner and CM/GC agree on the price before the construction phase begins. Once construction starts, all work is awarded through a competitive subcontractor bidding process. The owner, CM/GC, and engineer work collaboratively to design a project that fits a given budget and adjustments to the project design and/or budget are made during the design phase to ensure a successful project that meets the owner’s expectations regarding cost, quality and schedule. The CM/GC’s expertise in construction, contracting, and estimating can influence decisions made by the design consultant to keep project costs to a minimum in a manner consistent with the owner’s objectives for quality and functionality. Through a publicly advertised RFQ/RFP process, Moltz was selected by PCWRA and Town staff as the top-ranked contractor to provide CM/GC services for the proposed expansion.
PCWRA and Town staff worked with Moltz to refine the budgetary construction estimate into an Initial Guaranteed Maximum Price (IGMP) for the project. The IGMP includes the cost of general conditions, overhead and profit, and the direct cost to do the work. PCWRA, Moltz, and the Town worked together to develop an agreed upon IGMP for the work based upon the thirty percent design documents. The agreed upon IGMP for the project was $32,196,804. This amount was finalized prior to execution of the CM/GC services contract between PCWRA and Moltz. The scope of services authorized by the contract was preconstruction services only with a not-to-exceed fee of $70,363. The agreed upon IGMP serves as the budgetary target for the remainder of the design process. Burns and McDonnell completed sixty percent design documents in May 2018. Moltz’s updated sixty percent construction budgetary estimate was $33,359,726. This represents a 3.6 percent increase over the original IGMP.
In order to keep the project on schedule, the team decided to split project construction into two work packages. Construction Work Package #1 is primarily process equipment procurement from vendors along with early site grading, utilities, demolition, and electrical work. PCWRA has contracted this work with Moltz and construction began in October 2018. The balance of the project scope is included in Work Package #2 and Moltz is currently bidding this work to subcontractors. This split work package configuration allows the Town to allocate funds for Work Package #1 and Work Package #2 that are within the established budgets for 2018 and 2019. Burns and McDonnell is finalizing design documents for construction, Moltz is competitively bidding various scopes of the construction work, and the project is transitioning from design to construction.
PCWRA governing documents stipulate execution of an expansion agreement by its members when additional capacity is needed at the wastewater treatment plant. The Town gave notice of additional treatment capacity needs and has been working with PCWRA and other members to implement design and construction of the project. The PCWRA board negotiated terms the expansion agreement and determined appropriate project participation rates and corresponding allocation of costs for the project. The expansion agreement will establish a single PCWRA-managed expansion fund escrow account for costs of the project.
Funding for the project to-date has been completed by a series of separate escrow agreements and accounts for each specific project obligation. The Town contributed $14,406,217 from 2017 and 2018 budgets into multiple PCWRA-managed escrow accounts dedicated to expansion project obligations (design, preconstruction, work package one construction, and construction phase engineering). Upon execution of the expansion agreement, all remaining funds in the previously established escrow accounts will be transferred into the expansion fund. A summary of project costs and funding balances is provided as an exhibit to the expansion agreement (Exhibit 1).
Additional contributions to this account will be required from the Town, CPMD, and CPNMD in a timely manner to ensure that funds are at all times sufficient to meet remaining payment obligations of the project as they become due. It is anticipated that the Town will contribute additional funding in the amount of $16,398,807 from 2018 and 2019 budgets for the project. As construction of the expansion project is completed (anticipated 2020), a final reconciliation of project costs and funding contributions will be completed and approved by the Town, CPMD, CPNMD, and PCWRA.
The total estimated cost for design and construction of the project is $36,166,532. The Town’s portion of these costs is estimated at $30,835,072 (85.3 percent), allocated between nine percent to existing customers to cover the costs of improvements, and ninety-one percent to new customers (recovered through system development fees) to cover the costs of capacity expansion. Castle Rock Water’s anticipated share of the 3.0 MGD capacity expansion is 86.3 percent, or 2.59 MGD.
Budget Impact
Funding for this project is included in the 2018 and 2019 budgets under PCWRA Capacity Expansion. Funds will be transferred to the expansion fund escrow account at amounts and timing that will ensure the fund balance is sufficient for PCWRA to meet project cost obligations. Anticipated additional Town funding for the project is as follows:
|
Project |
Account Number |
2018 Budget Balance |
2019 Budget |
2019 Anticipated Project Costs |
|
PCWRA Capacity Expansion |
213-4575-445.78-79 |
$3,525,178 |
$ 16,500,000 |
$ 16,428,855 |
Staff Recommendation
Staff requests Town Council approval of a Resolution approving the 3.0 MGD Capacity Expansion Agreement with Plum Creek Water Reclamation Authority (PCWRA), Castle Pines Metropolitan District (CPMD), and Castle Pines North Metropolitan District (CPNMD) for design and construction of the wastewater treatment plant expansion.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Attachments
Attachment A: Resolution
Exhibit 1: Agreement