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RESOLUTION NO. 2014-017 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA (A) CLOSING CAPITAL IMPROVEMENT PROJECT GG214 (THE MUNICIPAL STREET LIGHT RETROFIT PROJECT PHASE II), (B) APPROPRIATING THE PROJECT'S REMAINING $338,282 FUND BALANCE TO THE CAPITAL EXPENDITURES CATEGORY WITHIN THE AMERICAN RECOVERY & REINVESTMENT ACT FUND, AND (C) APPROVING A $338,000 DESIGN BUILD AGREEMENT BETWEEN THE CITY AND ALPHA MECHANICAL FOR THE SOUTH LIBRARY HVAC UPGRADES (4/5 VOTE REQUIRED)
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution.
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SUMMARY
Chula Vista actively manages its 1,100 municipal energy and water utility accounts to reduce long-term costs and associated greenhouse gas emissions. Staff has identified the replacement of the South Library heating, ventilation, and air conditioning (HVAC) system as a top priority due its inefficiency and pending mechanical failure. As such, staff is requesting to use the available balance from the Municipal Street Light Retrofit Project - Phase II (GG214) to fund the necessary South Library HVAC upgrades and to enter into a $338,000 Design-Build Agreement with Alpha Mechanical to complete the project.
ENVIRONMENTAL REVIEW
The Development Services Director has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Class 1(a) categorical exemption pursuant to Section 15301 (Existing Facilities) of the State CEQA Guidelines because the proposed expenditure of funds will result in the replacement of an existing heating and air conditioning system with no expansion of an existing use. Thus, no further environmental review is required.
BOARD/COMMISSION RECOMMENDATION
Not Applicable.
DISCUSSION
The City has over 1,100 energy and water utility meters associated with its municipal buildings and facilities totaling over $6.6 million in annual utility costs. As such, City staff actively tracks and manages electricity, natural gas, and water consumption and identifies opportunities to improve their efficient use, thereby reducing long-term utility costs. These efforts are aligned with the Chula Vista Municipal Building Energy Efficiency Policy (Resolution #2005-048) and the revised Climate Action Plan (Resolution #2008-177), which both highlighted energy and water efficiency retrofits as a key strategy to improving local air quality and lowering greenhouse gas emissions. Furthermore, efficiency retrofits typically produce multiple co-benefits such as increased comfort for building occupants and lower maintenance liabilities.
City staff has identified the replacement of the South Library heating, ventilation, and air conditioning (HVAC) system as a top energy management priority. In addition to being inefficient, the 18-year old existing HVAC system is on the City's "critical needs" list and its replacement would ensure that the South Library's operation would not be negatively impacted by the current system's pending mechanical failure. As such, staff is requesting approval to appropriate the available balance from the Municipal Street Light Retrofit Project - Phase II (GG214) to fund the South Library HVAC upgrades. The Municipal Street Light Retrofit Project, which was completed under budget by $338,282, was funded using Qualified Energy Conservation Bonds (QECBs).
As part of the American Recovery and Reinvestment Act, QECBs allow local governments to access "below market" interest rates to fund energy upgrade projects, because the federal government directly subsidizes 70% of the interest for the issuer. The bond debt service is repaid through the project's resulting energy cost savings. On August 16, 2011 (Resolutions #2011-162 & #2011-163), the City Council approved staff entering into an equipment lease/purchase agreement with Bank of America Leasing & Capital, LLC to purchase the bonds totaling up to $2,256,207 for the Municipal Street Light Retrofit Project. Bank of America has granted the City permission to use the remaining QECB proceeds to implement the HVAC upgrades, because the South Library's improvements would reduce the building's energy use by at least 25%, thus qualifying for QECBs. The HVAC upgrade would also generate approximately $32,600 in additional yearly cost savings, which would be used to help repay the QECB debt service.
The City released a Request for Proposals (RFP) for the South Library HVAC replacement on November 6, 2013 to three qualified companies. As a result, the City received and reviewed two contractor bids for the project. Both contractors were subsequently interviewed and further evaluated based on their proposed method for completing the project. Through this competitive bid process, Alpha Mechanical was ultimately chosen as the candidate that best met all the qualifications outlined in the RFP. As such, staff is requesting City Council approval to enter into a $338,000 Design-Build Agreement with Alpha Mechanical to perform the South Library HVAC system upgrades.
The Design Build Agreement is presented for your approval on the City's standard form, customized for this particular scope of work. Key provisions include:
1. Guaranteed Maximum Price. Design Builder is obligated to complete the Project at a cost not to exceed $338,000 ($307,500 base bid, plus $30,500 contingency).
2. Date for Completion. The Project must be completed by February 28, 2014. Unauthorized delays may result in liquidated damages of $100 per day.
3. Phased Design and Construction Work. The Project will be completed in three phases, including Design Development, Final Construction Plans and Construction.
4. Payments; Hold Back. Because of the timing for project implementation, the Design Builder shall be paid in a lump sum upon project completion and acceptance, with a 5% hold-back for 35 days to allow for processing of any subcontractor claims.
5. Bonds, Indemnity, Insurance. The contract requires bonding, indemnities and insurance per City standards in order to secure contract performance and mitigate risk.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found that Councilmember Ramirez has property holdings within 500 feet of the boundaries of the property which is the subject of this action. Although this could create a conflict for Councilmember Ramirez, pursuant to California Code of Regulations sections 18704.2, 18705, and 18705.2, it does not. Because the action solely concerns the repair or replacement of existing public facilities, the effect of the decision on Mr. Ramirez's real property is presumed not to be material. Accordingly, no conflict exists. Staff is not independently aware, nor has staff been informed by any City Councilmember, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The South Library HVAC upgrade supports the Healthy Community goal as it helps to protect natural resources and promote sustainability (Strategy 3.2) and the Connected Community goal as it will ensure uninterrupted Library programs and services (Strategy 5.2).
CURRENT YEAR FISCAL IMPACT
The proposed project's staff time will be fully covered by the City's existing SDG&E Local Government Partnership budget. The project's construction costs will be fully funded by the existing Qualified Energy Conservation Bond proceeds. Once the bond debt is repaid, the City's General Fund will realize the annual energy cost savings.
PROJECT COSTS |
A. D/B Agreement Amount (Alpha Mechanical) Project Contingency |
$307,500 $30,500 |
TOTAL PROJECT COSTS |
$338,000 |
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ONGOING FISCAL IMPACT
It is anticipated that the project's estimated utility cost savings will fully cover the QECB debt service over its 11-year term. Once the bonds are repaid, the General Fund would realize the total avoided energy costs annually. After installation is completed, the system will require routine maintenance, which is already included in the Public Works Department's annual budget.