OFFICE OF THE CITY ADMINISTRATIVE OFFICER

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1 REPORT from OFFCE OF THE CTY ADMNSTRATVE OFFCER Date: Aprl 6, 2016 CAO Fle No To: The Councl The Mayor Councl Fle No Councl Dstrct: 14 From: Subject: Mguel A. Santana, Cty Admnstratve Offcer ASPHALT PLANT 1 REPLACEMENT AND MODERNZATON PROJECT REQUEST FOR MUNCPAL MPROVEMENT CORPORATON OF LOS ANGELES (MCLA) AUTHORTY SUMMARY Ths Offce s requestng approval of an addtonal $28 mllon n Muncpal mprovement Corporaton of Los Angeles (MCLA) fnancng for the Asphalt Plant 1 Replacement and Modernzaton Project (Project) located at 2484 East Olympc Boulevard. n the Adopted Budget, the Councl and the Mayor authorzed $10 mllon n MCLA fnancng for the retroft of Asphalt Plant 1. On June 13, 2013, Councl reauthorzed the use of these funds through the Fourth Constructon Projects Report (C.F S4). On March 2, 2016, the Board of Publc Works receved bds for the Project. At ts meetng of March 31, 2016, the Muncpal Facltes Commttee (MFC) approved the recommendatons contaned n a Bureau of Engneerng (BOE) report dated March 31, 2016, regardng the Project scope, constructon schedule wth an estmated completon date of August 2018, and budget of $38 mllon (Attachment A). Ths matter s hereby transmtted for Councl consderaton. An addtonal $28 mllon n MCLA fnancng s recommended to fully fund the Project. t should be noted that the BOE report ncluded a recommendaton to authorze the Department of General Servces (GSD) to negotate a long-term lease for the parkng lot adjacent to Asphalt Plant 1. Ths property s currently beng used by the Cty plant operatons on a month-to-month arrangement. The new plant wll not requre ths property to operate the plant, but contnung to have control of the property may ncrease operatng effcency. GSD wll report back to the MFC, and subsequently to Councl, on proposed lease terms. The Project wll replace and modernze the exstng Bureau of Street Servces (BSS) faclty nto a new hghly effcent plant whch s antcpated to ncrease the recycled asphalt pavement usage from 7.5 percent to 50 percent usage. Accordng to the GSD Standards Dvson, the structural ntegrty of the asphalt pavement s mproved when recycled asphalt pavement s used n the asphalt mx. Ths faclty wll also sgnfcantly reduce ol/natural gas usage and the Cty s dependence on havng to purchase asphalt. The project s antcpated to be awarded by the end of June 2016, wth Desgn/Buld Constructon antcpated to be completed n August A four month commssonng perod wll be requred upon completon of constructon.

2 CAO Fle No PAGE 2 RECOMMENDATONS That the Councl, subject to the approval of the Mayor: 1. Approve a project budget of $38 mllon for the Asphalt Plant 1 Replacement and Modernzaton Project; 2. Approve a constructon completon date of August 2018; 3. Approve addtonal MCLA fundng authorty n an amount not to exceed $28 mllon, for a total MCLA fundng authorty of $38 mllon, for the Asphalt Plant 1 Replacement and Modernzaton Project; 4. Authorze the Controller to ncrease appropraton wthn MCLA Fund 298, Department 50, Account No 50LTAP, Account Name Asphalt Plant No. 1 Project, n the amount of $28 mllon, n order to mplement Recommendaton 3 above; and, 5. Authorze the Cty Admnstratve Offcer to make techncal correctons as necessary to the transactons ncluded n ths report to mplement Mayor and Councl ntentons. FSCAL MPACT STATEMENT The total ssuance of $38 mllon n MCLA wll be an oblgaton of the General Fund. The estmated annual debt servce s $3.01 mllon over 20 years. DEBT MPACT STATEMENT The ssuance of MCLA bonds s a General Fund oblgaton. The authorzaton of MCLA fnancng wll cause the Cty to borrow approxmately $38 mllon (ncludes project cost and costs of ssuance) at a 5 percent nterest rate. The total estmated debt servce s $60.2 mllon whch ncludes the borrowng amount and nterest ($23 mllon). Durng the lfe of the bonds, the estmated average annual debt servce s $3.01 mllon over 20 years.

3 CAO Ffe No PAGE 3 BACKGROUND Snce 1947, the BSS has operated Asphalt Plant 1 at 2484 East Olympc Boulevard. The ste s approxmately two acres and s located n an ndustral area south of downtown. The exstng plant uses batch" hot mx asphalt technology and s permtted to produce up to 584,000 tons per year, but ts producton capacty s approxmately 175,000 tons per year. The asphalt mx s currently used by BSS for new pavement constructon and general street mantenance. n the Adopted Budget, the Councl and the Mayor authorzed $10 mllon n MCLA fnancng for the retroft of Asphalt Plant 1. On June 13, 2013, Councl reauthorzed the use of these funds through the Fourth Constructon Projects Report (C.F S4). The Adopted Budget ncluded nstructons to BSS, BOE, and ths Offce to provde a report to Mayor and Councl on the potental retroft of Asphalt Plant 1. n November 2014, Councl Dstrct 15 ntroduced a moton nstructng ths Offce and the Department of Publc Works to report on a tmelne and process for retrofttng Asphalt Plant 1 (C.F ). n March 2015, BOE hred CH2M Hll consultants to prepare the 30 percent desgn document whch would be used as the brdgng document for the bd and award process to select the lowest responsve and responsble desgn-buld general contractor. On May 26, 2015, n response to the moton, ths Offce provded an update on the status of the project, as well as the proposed desgn-buld project delvery and tmelne for completon of the project. The Project wll replace and modernze the exstng faclty utlzng the latest drum mx technology to produce asphalt at a rate of up to 700,000 tons per year. To reduce the Cty s consumpton of raw materals, the replacement plant wll be desgned to use 50 percent recycled asphalt pavement materals n the fnal product. The area of the Cty covered by Asphalt Plant 1 requres approxmately 600,000 tons of asphalt per year. Of that, 175,000 tons s produced through the exstng Asphalt Plant 1 and the remander s acqured through thrd-party asphalt vendors. The overall cost to the Cty for the producton and acquston of asphalt s approxmately $46 per ton, or $28 mllon annually for 600,000 tons of asphalt. The new Asphalt Plant wll ncrease ts producton capacty from 175,000 tons to 700,000 tons of asphalt per year. n ths scenaro, t would cost the Cty approxmately $34 per ton, or $20 mllon annually to produce 600,000 tons of asphalt. Ths s a savngs of approxmately $8 mllon annually, and also reduces the Cty s dependence on thrd-party vendors for asphalt. By usng thrd-party vendors, the Cty has sometmes experenced delays n acqurng suffcent asphalt for ts operatons due to the nablty of thrd-party vendors meet the Cty s hgh demand for asphalt. t should be noted that the ncreased producton capacty wll also allow the Cty to contnue ts asphalt operatons even f the other Asphalt Plant s beng mantaned. Currently, f one of the Cty s two Asphalt Plants s down for mantenance, the entre operaton at the Asphalt Plant beng mantaned s shut down for that perod of tme. On December 11, 2015, the Project was advertsed as a desgn-buld project. On March 2, 2016, bds were receved on the project. The Offce of Contract Complance s n the process of evaluatng all bds to determne the lowest responsve and responsble bdder. The proposed Project budget, based on the lowest bd receved, s as follows:

4 CAO Fle No PAGE 4 Contractor s Bd: $30,565,000 Add Alternates: $508,000 Consultant Fee: $2,500,000 Project Contngency: $4,427,000 Total Cost: $38,000,000 The proposed Project schedule s as follows: Actvty Scheduled Completon CEQA Process/Certfcaton May 2016 Bd and Award June 2016 Desgn/Buld Constructon August 2018 Commssonng December 2018 MAS:REM: Attachments

5 Attachment A UbN KORM ] 60 (Rev 6-SU) CTY OF LOS ANGELES NTER-DEPARTMENTAL CORRESPONDENCE Date: March 31, 2016 To: From: Subject: Muncpal Facltes Commttee Mahmood Karmzadeh, AA Muncpal Facltes Program Manager Bureau of Engneerng ASPHALT PLANT NO. 1 REPLACEMENT AND MODERNZATON, COMMTTEE MEETNG MARCH 31, 2016 t s recommended that the MFC: 1. Approve the Project Budget of $38 M. 2. Approve the scheduled completon date of July 31, Authorze the General Servces Department to negotate a long term lease, wth optons, wth the Southern Calforna Gas Company for the 1-acre parcel located south of the Asphalt Plant No. 1, and report back to the Commttee. Coundlmember Huzar, CD 14 X Vr* ^ V K, r-tftf' 000 (ff J r l * The Cty of Los Angeles, Bureau of Street Servces (BSS) has j operated Asphalt Plant No. 1 at ts current locaton, 2484 E. Olympc Boulevard, Los Angeles, CA 90021, snce The Asphalt Plant No. 1 ste s approxmately 2 acres and s located n an ndustral area south of downtown Los Angeles. The plant s Page 1 of 4 ~ %

6 adjacent to the Los Angeles Rver channel and the AMTRAK ralroad tracks. The ste s accessed va a frontage road mmedately south of and parallel to Olympc Boulevard. n addton to the Cty-owned Asphalt Plant No. 1 faclty, the BSS s currently leasng a 1-acre ste, located along the southern border of the Ctyowned AsphalttPlant Noh 1 ste, from the Southern Calforna Gas Company. At the present tme, the leased property s beng used for materal storage and truck parkng. The BSS plans to contnue usng the leased property n a smlar manner throughout the Asphalt Plan! No. 1 s operaton. n terms of operaton, the current plant uses batch hot mx asphalt (HMA) technology, s permtted to produce up to 584,000 tons per year, and has a producton capacty of approxmately 175,000 tons of product per year. The HMA currently produced s used by the BSS for new pavement constructon and general street mantenance. Snce 1947, Asphalt Plant No. 1 has mantaned the same operaton and no upgrades have been made to the plant. 2. Scope The project wll replace and modernze the exstng BSS asphalt plant faclty utlzng the latest drum mx technology to produce HMA at a producton rate of up to 700,000 tons per year, or 400 tons per hour. To reduce the Cty s consumpton of raw materals, the replacement plant wll be desgned to use 50 percent recycled asphalt pavement materals n the fnal product. The hgher producton of HMA wll reduce the Cty's dependence on outsde HMA vendors for new pavement constructon and general street mantenance. Drum plants are smaller requrng less space, less energy, less effort to operate, on the other hand, the batch plants are not contnuous lks drum plants and are desgned to produce a specfc amount. The desgn-buld method of projact delvery s beng used to construct the new Asphalt Plant No. 1. The exstng plant wll be completely demolshed and the ste re-graded for proper dranage. The new plant wll nclude the varous asphalt equpment necessary to meet the specfed producton rate whle complyng wth all South Coast Ar Qualty Management Dstrct emsson requrements. n addton to the asphalt producton equpment the new plant wll also nclude the followng elements: * One-story admnstraton and mantenance buldng. Fuel sland and dspensers retroft. Low mpact faclty lghtng. * Recycled asphalt storage and handlng area. Low mpact Development Best Management Practces to mtgate the mpacts of polluton due to storm water runoff. * Trees planted along the permeter of the faclty. - Utlty upgrades. Page 2 ofa

7 * Asphalt and concrete pavement. 1% Art fee to be mplemented based on constructon cost. E 3. Leased Property The Cty leases a 1-acre parcel from Southern Calforna Gas (SCG), located adjacent to the Cty s Asphalt Plant No. 1 south property lne. The property s approxmately 1-acre n area. The leased property s currently beng used for a truck parkng and stagng area, and s necessary for effcent operatons of the asphalt plant and the loadng and stagng of asphalt trucks. The orgnal lease expred n 1989, and the Cty has been rentng ths property on a month to month bass snce that date. SCG rased the monthly rent from $4,720 to $14,000 effectve June 1, Because the leased property s essental to the effcent operatons of the asphalt plant, a long term lease would help to stablze the prce the Cty pays on an annual bass to SCG. Staff s explorng the possblty of purchasng ths property- However, because there are some envronmental ssues nvolved wth the SCG property, addtonal research s requred to ensure that the purchase would be n the best nterest of the Cty before a recommendaton can be made. 4. Budget The project budget based on the lowest bd (Papch Constructon Co.) receved on March 2, 2016: 5. 1 Fundng Contractor s Bd = Add Alternate -Emsson Levels Above AQMO Standards = $ 30,565,000 $ 325,000 Add Alternate - Dry We System = $ 183,000 Consultant Fee e Contngency = Total Project Cost $ 2,500,000 $ $ 38,000,000 Note: The Offce of Contract Complance s evaluatng all the bds to determne the lowest responsble and reaponave bdder. The second lowest bdder, S. J. Amoroso Constructon Co., bd n the amount of $35,477,000. The thrd lowest bdder was by Kewt nfrastructure West Co. $10,000,000 was orgnally allocated n MCLA fundng for Fscal Year 2006/07 budget, then t was authorzed through the 2012/13, 4th Constructon Projects Report. Note: $1,800,000 of the $10,000,000 above (n MCLA funds) has been encumbered for consultant s fees (CH2M Hll) for the preparaton of the 30% Brdgng Document for the Asphalt Plant No. 1 project. Addtonal fundng of $28,000,000 s requred to complete the Asphalt Plant No. 1 project. A fundng of $8,400,000 wll be adequate for Fscal Year 15/16 for the award of the project. The funds n the amount of $20,000,000 s requred for Fscal Year 16/17 and an addtonal $9,600,000 wll be requred n Fscal Year 17/16 for the total amount of $38,000,000 Page 3 of 4

8 .V, f 6. Prelmnary Schedule Actvty Pre Desgn -Approval from; Tra nsp, Commttee Start 03/20/14 Fnsh 03/20/15 [ Desgn/Buld Brdgng Documents CEQA Process / Certfcaton 03/20/15 11/20/15 07/01/15 05/30/16 Bd and Award 11/20/15 06/30/16 Desgn / Buld Constructon 06/30/16 08/30/18 Commssonng 09/01/18 12/30/18 7. j Key ssues CEQA Certfcaton by Councl Approval of Project Fundng Attachments MK/OA:ab Q:\Admn\Typed Documents\2016\MFC Report Asphalt Plant No. 1 cc: Matt Szabo, Offce of the Mayor Greg Good, Offce of the Mayor Ted Bardacke, Offce of the Mayor Emmett Me Osker, Offce of the Mayor John Chavez, Offce of the Mayor Alma Guerrero, Offce of the Mayor Nate Hayward, Offce of Counclmember Huzar, CD 14 Paul Habb, Offce of Councmember Huzar, CD 14 Stephane Magnen, Counclmember Blumenfeld, CD3 Ramon Soto, Cty Admnstratve Offcer Mara Cardenas, Cty Admnstratve Offcer Davd Hrano, Cty Admnstratve Offcer Raoul Mendoza, Cty Admnstratve Offce Cheryl Banares, Crty Legslatve Analyst Mafas Farfan, Cty Legslatve Analyst Paul Smth, Cty Legslatve Analyst Deborah Wentraub, Bureau of Engneerng Reza Bagherzadeh, Bureau of Engneerng Paul Young, Bureau of Engneerng Herbert Guevara, Bureau of Engneerng. t Candce Arnold, Bureau of Engneerng Karen Oacres, Bureau of Engneenng Page 4 of 4