CITY COUNCIL AGENDA REPORT

Transcription

1 CITY COUNCIL AGENDA REPORT TO: FROM: Honorable Mayor and City Council Members Jeff Schneider, Deputy Director of Public Works Tina Folch, Contracts Administrator Agenda Item No.: Meeting Date: December 10, 2018 ACTION REQUESTED: Motions to Approve bids and authorize award contracts for rebuilding of Incinerator Building, MRF equipment upgrades and Shredders. 1. Motion to approve five Refuse Derived Fuel (RDF) Building construction contract awards totaling $3,602, Motion to Approve two equipment agreements totaling $4,060,014 ATTACHMENTS: LS Black Constructors Agreement Award $2,666,000 Overhead Door Company of Olmsted County Agreement Award $115,000 Fireline Sprinkler Agreement Award $59,000 Ryan Mechanical Agreement Award $414,000 Parker Electric Agreement Award $348,810 SSI Shredding Systems Agreement Award $842,914 RDF Equipment Upgrades: CP Group of Companies Agreement Award $3,217,100 Solid Waste Processing Agreement Between the City of Red Wing, Minnesota and Goodhue County, Minnesota Designation Ordinance Closed Landfill Legislation Language BACKGROUND: A. HISTORY OF SOLID WASTE CAMPUS REHAB PROJECT MAJOR MILESTONES Over the last three years, Staff have provided the City Council with information related to the City s Vision for Solid Waste Campus operations. This information included an overview of necessary building improvements and operational enhancements: Phase 0 - Decontamination & Deconstruction of Existing Boiler Units Page 1

2 Needed to be Completed to Close Out the City s Air Permit Provided the City with A Building Shell & Critical Building Improvements for Code Phase I - Building Improvements Filled in Voids Left by Removal of Boiler Equipment Brought the Floor Level & Sets Stage for Process Improvements Makes Necessary Changes to Building Infrastructure and Exterior Phase II - Process Improvements of Existing Operations for Efficiency & Increase Capacity MSW Processing Improvements to Increase Recovery Shredding Improvements to Improve Fuel Modification of Recycling Processing for Single Sort Option Phase 2 of the project is the development of a permanent Refuse Derived Fuel production facility that would significantly enhance existing operations. Phase 2 of this project aligns with the notification from the Xcel Renewable Energy Development Fund that the City has been selected to receive a grant of $2,000,000 to be used for the cost of these upgrades. Staff has been working with RRT Design & Construction in the development of a conceptual design to incorporate necessary upgrades to the Municipal Solid Waste (MSW ) processing operations. On January 23, 2017, Council approved a $1,999,500 Grant Agreement from Xcel Energy/NSP to Fund Portions of the Solid Waste Campus MRF Improvements. Also on this date, the Council approved a Design and Engineering Service Contract for Phase II Solid Waste Campus with RRT Design & Construction for $594,394. Having completed Phase 0 over the winter of , the City was half way through the implementation of the Phase I - Building Improvements, when a significant fire occurred on June 7, Inspections and assessments of the damage were performed and it was determined the existing Incinerator Building must be demolished to prevent further damage to the facility. On October 9, 2017, Council approved that the Incinerator Building be demolished and the bid package be let out for its removal. On October 23, 2017, the Council approved professional services to design a new replacement building that meets the needs of current day operations. On August 13, 2018, Council approved acceptance of the LMCIT settlement payment for the Incinerator Building Replacement in the amount of $1,560,710 for the repairs/rebuild of this section of the facility. Over the past several months, Staff members have been working with project engineers to design a building that would increase operational efficiencies and move the facility forward for decades to come. On September 10, 2018, the Council approved a budget adjustment to the 2018 CIP and authorized letting of bids for the new design of the Incinerator Building and MRF equipment upgrades. Motions approved included the following items: an overall MRF Rehabilitation and Renovation, CIP budget increase of $755,000 to bring the overall budget to $12.8 million dollars; placement of the new building design out for bids to construct the new Incinerator replacement building; and placement of the MRF equipment renovations out for bid and acquire replacement shredder equipment. Page 2

3 B. PERMITTING & EAW DISCUSSION The City of Red Wing is updating the solid waste permit for their Red Wing Recycling and Recovery Facility currently operating under MPCA solid waste permit number SW-661. Modifications to the permit include the removal of the former waste-to-energy (WTE) facility requirements associated with the MPCA Air Permit ( ) and the addition of the solid waste processing of municipal solid waste (MSW) into refuse derived fuel (RDF). In accordance with Minnesota Rules , subp. 17, the proposed conversion to an RDF facility falls under a mandatory category for an EAW and stipulates that the RGU is the MPCA as follows: E. For construction or expansion of a mixed municipal solid waste compost facility or a refuse-derived fuel production facility with a capacity of 50 or more tons per day of input, the PCA is the RGU. Minnesota Rules stipulate that the project proposer is required to submit the completed data portions of the EAW to the RGU. The completed data portions include the issues listed on the EAW form and outlined in Guidelines prepared by the Environmental Quality Board (EQB). The EAW form provides information about a project that may have the potential for significant environmental effects. The EAW Guidelines provide additional detail and resources for the EAW form. In addition, the EAW must address cumulative potential effects. The completed draft EAW form constituting the completed data portions must be submitted to the MPCA, as the RGU, to finalize and distribute for public review. The MPCA will have 30-days to determine whether the data portions are substantially complete. In accordance with MN Rules , if the MPCA determines that the submittal is complete, the MPCA shall notify the proposer of the acceptance of the submittal within five days. The MPCA shall have 30 days from notification to add supplementary material to the EAW, if necessary, and to approve the EAW for distribution. The final draft EAW will be placed on public notice for a 30-day period for which the MPCA will receive written comments and may hold a public meeting. Following the completion of the comment period, the MPCA will prepare a findings of fact that includes specific responses to all substantive and timely comments on the EAW. The MPCA will make a decision on whether a negative declaration or a positive declaration for an Environmental Impact Statement (EIS) based on the information gathered during the EAW process and the comments received on the EAW. With a negative declaration from the MPCA, the project is allowed to go forward with facility permitting. Discussions with MPCA staff indicate that it may be beneficial to place the EAW and the permit on public notice at the same time. Therefore, the Consultant is proposing to complete the permitting documents and the EAW at the same time. C. CLOSED LANDFILL PROGRAM In 1994, the Minnesota Legislature passed the Landfill Cleanup Act (LCA) which created the Closed Landfill Program (CLP). Under the CLP, the Minnesota Pollution Control Agency MPCA) is responsible for the long-term care of 112 closed, municipal solid waste landfills throughout Minnesota. Page 3

4 The mission of the CLP is to manage the risk to public health and the environment that is associated with these landfills. This is accomplished by undertaking cleanup actions, long-term operation and maintenance, and monitoring ground water contamination and landfill gas that exist at most of these sites. In addition, the risk to public health and safety is also mitigated by implementing land-use planning measures that minimize public exposure to landfill hazards and protect the state s response action equipment. The risks at closed landfills include landfill gas migration and ground water contamination which can be serious issues associated with some landfills. These problems can pose a threat to the health and safety of those living or occupying land nearby. In addition, chemicals leaching from these landfills can degrade ground water and surface water resources surrounding these sites. The MPCA addresses the risk to public health and the environment at the closed landfills by implementing and maintaining remediation systems (engineered covers, gas collection and ground water treatment systems) and monitoring ground water, surface water and landfill gas. Proper management and regulation of land use at and near these closed landfills is another important part of assuring long-term protection from the risks posed by these facilities. Managing closed landfills and planning for future use of property at and around closed landfills needs to be planned carefully and responsibly. Because general authority for land-use planning lies with Minnesota s local government units (LGUs) (i.e. cities, counties, townships) and tribal authorities, the MPCA seeks to partner with the LGUs and tribal governments that have this authority for planning in the vicinity of the closed landfills. Due to legislation passed in 2014 Goodhue County and the City the State of Minnesota is offering the opportunity for relief from the liability associated with long term care and management, including contingency costs for future cleanups through entry into the CLP. This will require the City to stop using the Bench Street Landfill by January 1, Additionally it will require the City to provide necessary Financial Assurance Funds to the State estimated to be in the area of $750,000 to $1,000,000. A portion of this funding, $250,000, will come from the agreement with Lab USA the City will need to cover the additional cost once it is determined from the 603 Fund. D. SOLID WASTE PROCESSING AGREEMENT BETWEEN RED WING & GOODHUE COUNTY This information is related to the City s long term operation of the Red Wing Waste Campus through the delivery of all waste generated in Goodhue County. This agreement is largely predicated on Statutory language that will bring the Bench Street Landfill into the State of Minnesota s Closed Landfill Program which will shield the County and the City from long term liability associated with environmental impacts resulting from waste placed into an unlined sanitary landfill. Furthermore this agreement will provide the City with sufficient waste volumes to ensure the achievement of economic efficiencies and environmental goals of the City and State. Over the last 15 years the City has been working with Goodhue County and the State of Minnesota to find common ground with which to achieve the goals of the State s Waste Management Act through the enactment of waste designation. This effort began with the County s Solid Waste Advisory Commission and eventually led to statutory language that offered significant liability relief from the State in the form of allowing the Bench Street Landfill Page 4

5 into the State s Closed Landfill Program. Designation allows for a more stable, predictable waste processing system that can help better manage various risks and control costs. Goodhue County and the city of Red Wing are working to find ways to create a modern waste processing system that offers more stability and predictability, and ultimately ensures greater control of our costs. Designation gives the County the legal authority to oversee where and how that waste is processed and to ensure that it is done so in a way that manages environmental and public health risks and avoids putting the costs and risks of today s waste management on future generations. Designation is necessary to secure sufficient waste supply to support the reliable operation of and long-term financial viability of the Red Wing Waste Campus. It will ensure that all waste from the County is delivered to the Waste Campus where materials are removed from the waste stream for recycling and waste is made into fuel to be converted to electricity using waste in the highest and best use. E. CITY OF RED WING COMMITMENT TO CREATE A SUSTAINABLE COMMUNITY. City leaders have made a commitment to advance projects that protect our environment and promote sustainability including a long term commitment to manage waste according to the State of Minnesota s Waste Management Act and Waste Hierarchy. The waste management goal of the state is to foster an integrated waste management system in a manner appropriate to the characteristics of the waste stream and thereby protect the state's land, air, water, and other natural resources and the public health. The following waste management practices are in order of preference: 1) waste reduction and reuse; 2) waste recycling; 3) composting of source-separated compostable materials, including but not limited to, yard waste and food waste; 4) resource recovery through mixed municipal solid waste composting or incineration; 5) land disposal which produces no measurable methane gas or which involves the retrieval of methane gas as a fuel for the production of energy to be used on site or for sale; and 6) land disposal which produces measurable methane and which does not involve the retrieval of methane gas as a fuel for the production of energy to be used on site or for sale. Landfills are one of the primary sources of ground water impacts and methane generation with methane being roughly 30 times more potent as a heat trapping greenhouse gas than carbon dioxide. As the City looks to move towards sustainability, there will be a need for long term disposal system that not only reduces the impacts to ground water and global warming but also serves as a renewable energy decreasing the need for fossil fuels for energy production. Managing waste in close proximity to its point of generation is also sustainable while recovering commodities from the waste stream to offset the need for virgin raw materials. Page 5

6 DISCUSSION: A. ACCEPTANCE OF NEW RDF BUILDING DESIGN AND PERMISSION TO BID FOR CONSTRUCTION With permission of the Council, Staff let a bid package for the new building which was broken into five Construction Packages (CP). The total amount for all five construction awards is 3,602,810. Following are the results of the bid opening by construction package, the winning bidder and the total contract award. CP1 - General: LS Black Constructors Award $2,666,000 (base award $2,566,000 with Alternate of $100,000 for interior panels) CP2 - Overhead Doors: Overhead Door Company of Olmsted County Award 115,000 CP3 - Fire Protection: Fireline Sprinkler Award $59,000 CP4 - Mechanical: Ryan Mechanical Award $414,000 CP5 - Electrical: Parker Electric Award $348,810 Below is a table depicting the estimates for building costs compared to final award results. An issue that arose during the bidding period that hadn t been considered in the planning process, was the possibility of soils under the building potentially being contaminated with hazardous materials due to previous land uses, which would require removal and disposal away from the site. Because this is an unknown expense at this time which will have to be handled with a change order through the general contractor after soil test results are conducted, the contingency for the building project is being raised from 5% to 10% to ensure enough funds are available to cover this expense. Table 1. New Building Design Cost Estimates and Final New Building Costs Estimate Bid Results New Building Cost Estimate (CPMI) $ 3,300,000 $ 3,602,810 Building Contingency ( 5% cont.) $175,000 ( 10% cont.) $360,281 Subtotal Construction/Equipment $ 3,475,000 $ 3,963,091 RRT Engineering Design Cost $ 362,295 $ 348,177 CPMI (Construction Manager) $ 13,200 $ 13,200 TOTAL COST $ 3,850,495 $ 4,324,468 B. ACCEPTANCE OF RDF EQUIPMENT AWARDS At the time of the fire in June of 2017, preliminary work to redesign the MRF processing equipment had already taken place. Because the replacement building has a different layout, engineers had to examine how to best increase operational efficiencies such as reconfiguration of conveyors. Furthermore, during the interim-time period, steel tariffs have increased on steelrelated products with pricing increases estimated to be approximately 7%. Page 6

7 To save money on the two largest pieces of equipment which are a primary and secondary shredder, Staff let a separate bid for their acquisition separate from the bulk of the equipment upgrades package. Following are the results of the bid opening by equipment package, the winning bidder and the total contract award. Primary and Secondary Shredders: SSI Shredding Systems Award $842,914 (base bid $705,200 with additional spare parts being ordered for $137,714) RDF Equipment Upgrades: CP Group of Companies Award $3,217,100 Table 2 provides costs estimates with results of the bid process. Table 2. Phase II MRF Equipment Redesign Item Estimate Results Engineering & Design $ 646,601 $ 601,894 Equipment & Labor $ 3,697,056 3,217,100 Contingency $ 248,779 10%) $321,710 Primary & Secondary Shredders 901,913 $ 842,914 Total $ 4,983,618 C. Overall Budget Projections as of September 2018 To obtain an overall picture of project expenses, Table 3 outlines budget expenditures by phases of the MRF Renovation Project. The first three rows represent actual funds spent to date on Phases which have occurred; whereas, rows 4 to 6 represent engineers estimates for phases left to be completed on the project. Staff members estimate that the overall MRF Renovation Project is within budget with an overall expense of $12,541,132 which will be offset by the LMCIT fire settlement amount of $1,560,710 resulting in a net cost of $10,980,422. Project implementation estimates and actuals to date are outlined in Table 3. Page 7

8 Table 3. Overarching MRF Rehabilitation and Renovation Cost Estimate and Current Amounts Row Project Phase Estimate Amounts 1 Phase Zero $ 1,365,019 $ 1,365,019 2 Phase 1 Pre-fire $ 1,572,458 $ 1,572,458 3 FIRE Recovery/City Expenses Incurred $ 235,569 $ 235,569 4 Phase 1 Post Fire $ 4,050,495 $ 4,324,468 5 Phase 2 MRF Equip. Redesign $ 5,532,128 $ 4,983,618 6 Evaluation $ 60,000 $ 60,000 7 Total Project Cost Estimate $ 12,815,669 $ 12,541,132 8 LMCIT Settlement Reduction <- 1,560,710> <- 1,560,710> 9 Project Cost Subtotal $ 11,254,959 $ 10,980, CIP Budget Approved $ 12,815,669 Table 4 below provides an overview of estimated total project costs and revenue sources for paying those expenses. Table 4. Sources of Funding for Overarching MRF Renovations Sources of Funding Sept Approved Current Local Government Aid $ 3,000,000 $ 3,000,000 Xcel Renewable Energy Dev. Grant $ 2,000,000 $ 2,000,000 GO Bond $ 6,254,959 5,980,422 LMCIT Settlement on Building $ 1,560,710 $ 1,560,710 Total $ 12,815,669 $ 12,541,132 ONGOING OPERATION AND MAINTENANCE COSTS: Staff has developed a Pro Forma with the help of the Finance Department and our Consultant RRT, to establish a tip fee that will provide Operating Costs and Bond Payments necessary to pay debt service. The County Board and the City Council have both signed off on a Solid Waste Processing Agreement that directs waste to be brought to the Campus beginning in A significant factor in the long term economic sustainability of this operation will be the ability to operate at or near operational capacity, which entails the assurance of new incoming waste. This waste will be generated, almost exclusively, locally from within Goodhue County and Southern Dakota County. At this time, the City has an agreement with Tennis Sanitation to deliver all residential waste from the City of Hastings starting in This material combined with the anticipated waste that will be designated to the Page 8

9 Waste Campus by Goodhue County will bring the new operations greater than 30,000 tons annually. CONCLUSION: This project is the result of years of planning and cooperation between the City of Red Wing, Goodhue County, the State of Minnesota and Xcel Energy to develop a comprehensive integrated solid waste management system. The implementation of this upgrade will provide a long term recycling and disposal capacity that will serve the County, City and surrounding region for the next 20 years. The proposed system is the most environmental and economically effective solution for removing recyclable commodities from the waste stream, recover energy from the generated waste while minimizing our need for and use of land disposal through the development of refuse derived fuel and protecting our groundwater. The incentives to move forward with the project include the availability of $2,000,000 in grant funding from Xcel Energy, $3,000,000 in State appropriations and the ability to negate the potential for long term liability through the Bench Street Landfills entry into the Closed Landfill Program. Additionally, the partnership between Goodhue County and the City of Red Wing not only fulfills the State s goals set forth in the Waste Management Act, it also brings in the necessary waste volumes into the City s operations which allows for economic sustainability. Estimated Adjustment to Utility Billing In the development of the Pro Forma, City Staff took into consideration existing bond debt paid by the residents and businesses of Red Wing to consolidate all fees into a single tip fee charge eliminating the Front End Fuel Cleaning (FEFC) fee of $3.27/month in 2020, when the new tip fee is in place. This fee would be replaced by a higher disposal rate that would be calculated into the utility bill estimated to be $2.00/month for a net decrease to residents of -$1.27/month on their utility billing statement. ALTERNATIVES: 1. Staff are requesting that the Council adopt the following motions A. Motion to Approve five RDF Building construction contracts totaling 3,602,810 as follows: LS Black Constructors Award $2,666,000 Overhead Door Company of Olmsted County Award $115,000 Fireline Sprinkler Award $59,000 Ryan Mechanical Award $414,000 Parker Electric Award $348,810 B. Motion to Approve two equipment agreements totaling $4,060,014 as follows: SSI Shredding Systems Agreement Award $842,914 RDF Equipment Upgrades: CP Group of Companies Agreement Award $3,217, Do not accept Staff Recommendations and advise on how to proceed. Page 9