MEMORANDUM 07-46

To: Walt Wrede, City Manager

From: Carey Meyer, Public Works Director

Date: March 5, 2007

Subject: Homer Water Treatment Plant Improvements Project

Budget Approval – Funding Expectations – Project Status

Background: Water treatment plant capacity struggles to meet summer peak water demand. More stringent federal drinking water regulations are now in effect and the plant struggles to comply with these new standards (especially in the summer). The Homer Water/Sewer Master plan documents the difficulties the system has had meeting the new regulations, presents evidence that summer reservoir raw water quality continues to deteriorate, and suggests that more capacity and better treatment capabilities are needed.

The City (starting in 2005) secured funding for this project. In FY 06, $480,000 was obtained (70% State/30% City) for design. In FY 07, $2,072,000 was obtained (50% State/50% City) for final design and construction. Currently the Governor’s budget includes an additional $2,500,000 (50% State/50% City) for construction. Total funding in place - $5,052,000 ($2,572,000 State/$2,430,000 City). The City can secure low interest loans (2.5%) through the Alaska Drinking Water Fund (ADWF) for the remainder of the cost of the project

In 2006, the Consultant (HDR) completed a Design Recommendations Report that identified the need for a new plant. This February, HDR completed the preliminary design. Based on this design, Public Works has established the total expected project cost at $7,490,000.

Discussion: The project consists of the construction of a new water treatment plant that will utilize membrane filtration technology. The construction of the project will consist of two parts; competitive procurement of the membrane treatment equipment (through a RFP process); and construction of the building facility and installation of the membrane treatment equipment through the normal competitive bidding process.

Attached are drawings showing the proposed site plan for the facility, a floor plan of the treatment plant building, and exterior view of the facility.

Public Works, in conjunction with this project, is attempting to acquire large pieces of property within the Bridge Creek Water Shed. This ownership of this property will protect the watershed from development and provide for a small parcel on which the new treatment plant facility will be constructed. Funding for this acquisition will be through a loan from the ACWF.

The schedule for the project is anticipated as follows:

Issue Equipment Procurement Documents to suppliers March 13, 2007

Initiate Final Design of WTP facility March 13, 2007

Make application for ADWF loan March 30, 2007

Receive Equipment Procurement Proposals April 15, 2007

Award Equipment Procurement Contract April 23, 2007

Complete Final Design of WTP facility May 10, 2007

Open Bids for Construction of WTP facility June 12, 2007

Award Bids for Construction of WTP facility June 18, 2007

All Grant and Loan Funds in Place June 20, 2007

Issue Notice to Proceed for WTP facility June 26, 2007

Start Construction of WTP facility July 9, 2007

Procured Treatment Equipment Arrives in Homer August 30, 2007

Construction of WTP facility Complete November 20, 2007

Funding for the project is anticipated as follows:

City Portion State Portion Total

ADEC FY 06 Grant $ 144,000 $ 288,000 $ 480,000

ADEC FY 07 Grant $ 1,036,000 $ 1,036,000 $ 2,072,000

ADEC FY 08 Grant $ 1,300,000 $ 1,300,000 $ 2,600,000

ACWF Loan $ 2,338,000 $ 0 $ 2,338,000

$4,818,000 $ 2,624,000 $ 7,490,000

(Note: The City has requested additional federal grant funding assistance through our federal representatives that could reduce the amount of loan funding required for this project.)

Recommendations:

1) The City Council establish the overall budget for the water treatment plant improvement project at $7,490,000.

2) The City Council approve the award of the final design of the project to HDR, authorize the City Manager to execute all appropriate documents (current contract amount $300,899; increase by $254,356).

3) City Council be prepared to award the procurement of membrane water treatment plant equipment April 23, 2007. (estimated cost $3,000,000)

4) City Council be prepared to authorize the acceptance of a loan offer from the ADWF early in May in the amount of $5,000,000.

5) City Council be prepared to award contract for construction of the water treatment plant facility June 18, 2007. (estimated cost $3,900,000)

6) City Council be prepared to award a construction inspection/administration contract to HDR in June, 2007. (estimated cost $200,000)