AGENDA REPORT. Attachments: 1. Resolution No. 18-R Joint Community Letter Dated April 17, 2018

Transcription

1 AGENDA REPORT Meeting Date: November 20, 2018 Item Number: E 15 To: From: Honorable Mayor & City Council Vincent Chee, Project Manager Subject: A CONTINUATION OF DECLARATION THAT THE PUBLIC INTEREST AND NECESSITY REQUIRES CERTAIN WORK TO BE PERFORMED WITHOUT COMPETITIVE BIDDING PURSUANT TO PUBLIC CONTRACT CODE SECTIONS AND Attachments: 1. Resolution No. 18-R Joint Community Letter Dated April 17, 2018 RECOMMENDATION Staff recommends that City Council determine, by four-fifths vote, a continuation declaration that the public interest and necessity requires certain work to be performed without competitive bidding pursuant to Public Contract Code sections and INTRODUCTION The City is managing a project on behalf the Beverly Hills Unified School District (BHUSD) to properly secure and plug 19 oil wells located on School District property adjacent to the Beverly Hills High School. The project s objectives are to ensure the long-term well-being and safety the high school and surrounding areas and to properly plugging all oil wells located at the site. Pursuant to Public Contract Code Section 22050, at each regularly scheduled meeting, City Council shall determine, by four-fifths vote, that there is a need to continue this action until the project is completed As such this will remain a standing item that will be included on each agenda. DISCUSSION At the February 20, 2018, City Council Regular Meeting, City Council adopted Resolution No. 18-R (Attachment 1) declaring that the public interest and Page /14/2018

2 MeeUng Date: November20, 2018 necessity requires certain work to be performed without competitive bidding pursuant to Public Contract Code Sections and Additionally, City Council authorized the City Manager to execute all necessary contracts and documents with a qualified contractor(s) or vendor(s) and the Beverly Hills Unified School District (BHUSD) for plugging the wells, as well as any ancillary work necessary to remediate the Site, subject to the joint approval City Manager, City Staff and City Attorney. The City retained WZI, Inc., (WZI) an environmental consultant specializing in petroleum engineering, to provide technical assistance and oversight the well plugging process. In April 2018, the City and BHUSD contracted with ARB, Inc. to provide oil well monitoring and abandonment services. ARB continuously monitors the oil wells and maintains the pressure at a safe level. The oil well derrick was removed in July and the oil well plugging operation began in August Three wells have been plugged to date: BH-15, HS-1A and HS-3A. Work began on well BH-15 on July and was complete on September 21, 2018 Cementing HS 1A began on October 5, 2018, and was completed on October 28, Plugging well HS-3 began on November 1, 2018, and was anticipated to be completed by November 7. In the case BH-15, crews were not able to remove a plug from the line. The DOGGR district fice agreed to allow cementing above the plug location at a depth 7,410 feet and approved classifying this as abandoned (as opposed to suspended); this decision is pending concurrence by DOGGR headquarters in Sacramento. To expedite decision making as the plugging process moves to the remaining wells, three methodologies have been approved by DOGGR for fishing out the equipment, drilling the cement retainer, milling down non-metallic structures and cementing in place. The fishing method will be required for Well OS-i 2, OS-i 0 and OS-6. Drill out the cement retainer is approved for Well OS-9 and OS-i4. Cement in place was approved for Well OS-5 and OS-8. COMMUNITY ENGAGEMENT BHUSD in coordination with the City distributed a letter dated April 17, 2018, to all addresses within a 1,000-foot radius the site, including those within the City Los Angeles and to all parents/guardians School District students (Attachment 2). This notice informs stakeholders the project and the upcoming SCAQMD notice. The City and BHUSD have developed a communications plan, which will include project updates through the School District website social media and other appropriate outlets Staff is working with the BHUSD to develop an update regarding the DOGGR s change the well status from abandonment to suspension as well as the progress the well plugging project to the stakeholders. Staff is coordinating closely with the BHUSD on all matters related to the project, including safety and community outreach efforts. Staff is coordinating with BHUSD s Construction Manager providing project update to the BHUSD Board at their monthly meetings. Staff will continue to provide project updates as part these standing Consent Agenda Items. A Community meeting was held at the Roxbury Community Center on June Approximately 25 residents attended the meeting; they expressed their concerns related to the venting gas during depressurization the oil wells. City staff and the City s consultant addressed their concerns and answered questions. The City received one Page /14/2018

3 Meeting Date: November 20, 2018 claim from a resident located south Olympic Boulevard for the oil depressurize activities in May. The City s Risk Manager determined the claim is contract-related and referred i to ARB s Risk Manager. FISCAL IMPACT Pursuant to the City s project management agreement with the BHUSD, the City will advance BHUSD up to $8M to monitor the site and abandon/plug the oil wells, which is subject to 50% reimbursement by BHUSD. This estimate included consulting services, insurance and site maintenance, monitoring and plugging activities. Funds in the amount $8M were appropriated from the City s General Fund to Fiscal Year 2017/18 Capital Improvement Project No. 583 to provide the necessary funding for this project. In addition, the City has procured extra general liability insurance at a premium $261,500. To date, the City has expended $4,629,954 the $8M for this project, as summarized in the table below. Half this amount, $2,314,977, is subject to reimbursement by the BHUSD to the City pursuant to the City s project management agreement with the BHUSD (Agreement ). The initial estimate $8M was based on the limited information available at the time. WZI is currently updating the financial analysis the project in consideration the rate progress for the work completed to date and more detailed information now known about the remaining wells. Due to the complications experienced with well BH-15 and the potential for similar difficulties with several the remaining wells, the total cost the project is anticipated to be two to three times the initial estimate. WZI submitted their financial analysis to BHUSD and City staff and this information was presented to the Ad Hoc Committee in early November. Staff anticipates bringing an amendment to the three-party agreement between the City, school district and ARB, Inc. in December 2018 to increase the contract not-to-exceed amount. Reimbursement to BHUSD $533,341 WZI, Inc. $452,901 ARB, Inc. $3,540,502 Terra Firma Enterprises $3,210 DOGGR Bond $100,000 Total Expenditure $4,629,954 Page /14/2018

4 Attachment 1

5 RESOLUTION NO. 1$-R-_13176 A RESOLUTION OF THE COUNCIL OF THE CITY OF DECLARING THAT THE PUBLIC INTEREST AND NECESSITY REQUIRES CERTAIN WORK TO BE PERFORMED WITHOUT COMPETITIVE BIDDING PURSUANT TO PUBLIC CONTRACT CODE SECTIONS AND 22050, AND FINDING THE EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT BEVERLY HILLS PROJECT The Council the City Beverly Hills does hereby resolve as follows: Section 1. Eighteen (1$) oil and gas wells (the wells) at 9865 Olympic Boulevard, Beverly Hills, California (Site) need to be plugged in a safe and efficient manner as soon as possible to avoid a potential hazard to the local community. The Site is owned by the Beverly Hills Unified School District (BHUSD), and had been leased to Venoco. Venoco filed bankruptcy, and abandoned the wells at the Site. BHUSD retained a consultant, WZI, Inc. (WZI), to assess safety aspects the abandoned wells. The City has also retained WZI as its consultant. WZI identified numerous deficiencies that, danger to the local community. Those deficiencies are identified in letters from WZI dated August 15, 2017 and November 20, 2017, and are on file with the City Clerk. if not mitigated, could pose a potential Section 2. In short, WZI has opined that the wells need to be plugged as soon as possible. However, the BHUSD lacks sufficient funds and expertise to currently pay for and manage this remediation. For the protection the local community, the City has made efforts to initiate the remediation in furtherance state and local regulations oil and gas extraction. Following its normal protocols, the City issued Request for Proposal to Provide Operation and Abandonment Services for Oil and Gas Wells Abandomnent at 9865 Olympic Boulevard in Beverly Hills, California, dated December 15, 2017, soliciting bid proposals to engage a contractor to, among other things, complete the abandonment the wells at the Site, including the California Department Conservation Division Oil, Gas, and Geothermal Resources approval the abandonment (REP). The REP was based upon a cost plus basis (i.e., time and materials, open book and fixed mark-up) but not to exceed $7 million. The RFP was also directly sent to contractors specializing in oil and gas well remediation. All bids for the RFP were due on or before January 2, 2018 at 2:00 p.m. Only one qualified company responded to the REP: ARE, Inc. Section 3. The type equipment necessary to perform this work, space constraints at the Site, and other factors require that the wells be plugged one at a time. The estimated total time necessary to plug all 18 wells is approximately one (1) year. Additionally, the City were to prepare plans and specifications to competitively bid this work, it would take approximately 3 to 4 months to prepare those documents, and an additional 2 months, at a minimum, is necessary to solicit bids and award a contract. WZI has opined that the 5 to 6 months necessary for bid document preparation and bid solicitation would unduly delay the plugging the wells. Further, WZI has opined that plans and specifications sufficient if B \ v3.doc

6 specificity cannot be prepared due to the unknown subsurface conditions and other uncertainties and unknowns that may be encountered while such work is being performed. Section 4. Due to time exigencies currently existing at the Site, the particular logistics posed by the current Site conditions, and only one qualified contractor that responded to the RFP, pursuant to Public Contract Code Sections 1102, 22035, and 22050, the City Council hereby finds that a situation exists that requires the declaration that the public interest and necessity demand the immediate expenditure public money for such repair work to safeguard life, health, and property without complying with the competitive bidding requirements the Public Contract Code. This situation will not permit (1) a delay resulting from a competitive solicitation for bids; and (2) the preparation adequate plans and specifications to allow competitive bidding. Additionally, based upon the response only one qualified contractor to the RFP, no benefit to the public will be realized by attempting to solicit bids through the competitive bidding process. These findings are based on the agenda report accompanying this item, the August 15, 2017 and November 20, 2017 reports from WZI, the RFP, ARB, Inc. s response to the REP, and any additional information presented at the City Council meeting when this resolution was considered. Section 5. The City Council hereby acknowledges that it must approve this resolution by a four-fifths vote the entire City Council. Section 6. The City Council hereby waives competitive bidding under Public Contract Code and authorizes the City Manager to execute all necessary contracts and documents with a qualified contractor(s) or vendor(s) for plugging the wells, as well as any ancillary work necessary to remediate the Site. Section 7. The City Council hereby finds that the project is exempt from the California Environmental Quality Act pursuant to a) Public Resources Code Section 2l080(b)(4) as an action necessary to prevent or mitigate and emergency, and, as a separate and independent basis b) State CEQA Guidelines Section because the project is an action by the City as a regulatory agency for the protection the environment. Section 8. The City Clerk shall certify to the adoption this resolution and shall cause this resolution and this certification to be entered into the Book Resolutions the Council the City. Adopted: February 20, 2018 ATTEST ThIBOSSE Mayor the City Beverly Hills BYRON P PE, Ci Ci k (SEAL) B \ v3.doc

7 APPROVED AS TO FORM: CONTENT: m4j Laurence Wiener, City Attorney Works \ v3,doc

8 Attachment 2

9 1W Beverly [lills Unified School District RESIDENT 723 Street St. BEVERLY HILLS, CA April 17, 2018 We are writing to inform you a construction project just getting started at Beverly Hills High School that may affect your neighborhood. The oil wells, long a fixture on the campus, will be plugged. The project is expected to take approximately one year and is being conducted with the safety the campus and nearby neighborhoods as the top priority. The project will be completed by ARB, Inc., a California energy infrastructure company with decades experience in the petroleum industry construction. Plugging projects such as this one are commonly and safely conducted in a variety locations, including urban areas The most likely impact from the plugging operation is noise from the generator which powers pumps and rig equipment and when the drilling equipment is removed and racked. Environmental monitoring will take place throughout the project. The only expected impacts to traffic are occasional lane closures for the movement trucks. The derrick will be removed at some point during the project. You will receive a notification, sent by the South Coast Air Quality Management District (AQMD) to the school district, regarding the installation special equipment that is needed in order to proceed with the project. You may receive other notices from the AQMD throughout the well-plugging operation. You will be able to stay informed by visiting the BHUSD website at or by signing up for enotices at and selecting the Beverly Hills High School Oil Wells topic. A public meeting on the project will be scheduled at a later date. If you have any questions about the project, please call the BHUSD District Office at x2210 or the City Beverly Hills Public Works Customer Service at Dr. Michael Bregy, BHUSD Superintendent Schools Mahdi Aiuzri, Beverly Hills City Manager