City Council

(4) 16­1381­S2 CD 11 ENERGY AND ENVIRONMENT COMMITTEE REPORT relative to the proposed Amendment No. 2 to Contract No. C­133194 with Walsh Construction Company II, for the design, construction, and operation of an Advanced Water Purification Facility at the Hyperion Water Reclamation Plant, and related matters. Recommendation for Council action: AUTHORIZE the President, Board of Public Works (Board), or two members, on behalf of the Bureau of Sanitation, to execute the proposed Amendment No. 2 to Contract No. C­133194 with Walsh Construction Company II, as approved by the Board on February 28, 2024, for the design, construction, and operation of a 1.5 million gallon per day Advanced Water Purification Facility at the Hyperion Water Reclamation Plant, to extend the term by two years, from May 29, 2024 to May 29, 2026, for a total term of seven years, subject to approval by the City Attorney as to form and compliance with the City’s contracting requirements. Fiscal Impact Statement: The City Administrative Officer (CAO) reports that there is no General Fund impact. A total of $88,490,372 has been budgeted for this project. The remaining funding of $5,339,191 will be provided in 2023­24 from available funds for this purpose within the Wastewater System Commercial Paper B Construction Fund No. 70X. Future funding is subject to the City’s annual budget process. The proposed Amendment includes a Financial Liability Clause limiting the City's financial obligation to the extent of appropriations made for this purpose. Financial Policies Statement: T h e C A O f u r t h e r r e p o r t s t h a t t h e recommendation complies with the City’s Financial Policies in that expenditures of special funds are limited to the mandates of the funding Wednesday source. - May 8, 2024 - PAGE 7 provided in 2023­24 from available funds for this purpose within the Wastewater System Commercial Paper B Construction Fund No. 70X. Future funding is subject to the City’s annual budget process. The proposed Amendment includes a Financial Liability Clause limiting the City's financial obligation to the extent of appropriations made for this purpose. Financial Policies Statement: T h e C A O f u r t h e r r e p o r t s t h a t t h e recommendation complies with the City’s Financial Policies in that expenditures of special funds are limited to the mandates of the funding source. Debt Impact Statement: The CAO further reports that the issuance of Wastewater System Revenue Bonds (Bonds) is an obligation of the Sewer Construction and Maintenance Fund. The issuance of Bonds to refinance the commercial paper notes included in the CAO report would cause the City to borrow $5,339,191 at an assumed interest rate of 5.5 percent over 30 years. The resulting estimated debt service is approximately $11 million including interest of approximately $5.7 million. During the life of the Bonds, the estimated average annual debt service is approximately $367,365. Actual interest rates may differ as rates are dependent on market conditions at the time of issuance. The CAO cannot fully predict what interest rates will be in the future.