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HomeMy WebLinkAboutItem 11e - Budget Appropriation for CNG ProjectReso No. 7553 Supplemental Budget Appropriation for CNG Project April 16, 2024 Page 1 of 4 DATE: April 16, 2024 TO: Honorable Mayor and City Council FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director Paul Cranmer, Public Works Services Director By: Alana Johnson, Transportation Services Manager SUBJECT: RESOLUTION NO. 7553 AMENDING THE FISCAL YEAR 2022-23 CAPITAL IMPROVEMENT PROGRAM BUDGET (PROJECT 41850823), AUTHORIZING A SUPPLEMENTAL BUDGET APPROPRIATION FOR DESIGN AND CONSTRUCTION SERVICES FOR THE NEW COMPRESSED NATURAL GAS FACILITY AT THE PUBLIC WORKS SERVICES YARD IN THE AMOUNT OF $1,130,000, OFFSET BY A REDUCTION IN FEDERAL SECTION 5307 AND PROPOSITION A FUNDS CEQA: Exempt Recommendation: Adopt SUMMARY At the September 19, 2023, City Council Meeting, the City Council approved a design- build contract with Clean Energy for design and construction services for a compressed natural gas (“CNG”) facility at the Public Works Services yard. The project was approved in the amount of $2,843,487, plus a 10% contingency, totaling $3,127,835.70. The project was previously budgeted in the City’s Fiscal Year 2022-23 Capital Improvement Program (“CIP”) with a total project cost of $2,000,000. Although the City Council approved the project and its total overall cost at the September 19 meeting, in order to appropriate the additional funds needed for the project, a resolution must be adopted documenting this change. It is recommended that the City Council adopt Resolution No. 7553 amending the Fiscal Year 2022-23 Capital Improvement Program (“CIP”) budget (Project 41850823), authorizing a supplemental budget appropriation for design and construction services for the new CNG facility at the Public Works Services yard in the amount of $1,130,000, offset by a reduction in Federal Section 5307 and Proposition A funds. BACKGROUND As part of the feasibility study that was conducted for this project in December 2021, a conceptual cost of $2 million was projected. As a result of the details and cost estimate specified in the feasibility study, a U.S. Department of Transportation (“DOT”)/Federal Reso No. 7553 Supplemental Budget Appropriation for CNG Project April 16, 2024 Page 2 of 4 Transit Administration (“FTA”) grant was awarded to the City, and the project was budgeted in the City’s FY 2022-23 CIP. In May 2023, the City issued a Request for Proposal (“RFP”) for the project, ultimately receiving two proposals in return. Both cost proposals were more than $1 million over the original grant award of $2 million. After careful consideration, the evaluation panel unanimously determined that Clean Energy offer the better proposal and was more qualified of the two firms. Clean Energy presented a cost proposal of $2,843,487. Due to the high cost of the project and revisions to the original project scope, the City amended the original DOT/FTA grant award in order to use additional Section 5307 funds. The grant amendment received authorization from the Department of Labor (“DOL”) in September 2023. At the September 19, 2023, City Council meeting, the City Council approved and authorized the City Manager to execute a Design-Build contract with Clean Energy for the CNG fueling facility at the Public Works Services yard, in the amount of $2,843,487, plus a 10% contingency, which brought the maximum cost of the project to $3,127,835.70. As previously stated, due to the complexities and long lead times to amend a DOT/FTA grant award, and to meet the granting agency’s funding parameters, the City rounded up the total project cost to $3,130,000 in the requested grant amendment. The project was approved in its entirety at the September 19 meeting, and a contract has subsequently been developed between the City and Clean Energy. In order to be consistent with the City’s policy for supplemental budget appropriations, a resolution is needed to reflect the approval. DISCUSSION As described in the Staff Report for the September 19, 2023, City Council meeting, the City’s Federal Section 5307 fund would be the main funding source for the CNG project. Federal Section 5307 is a funding program used specifically to support transportation- related activities. In addition to using Section 5307 funds for the project, a 20% match of local funds is required. The City plans to use a combination of two transportation-related local return fund sources, Measure M and Proposition A, as the local match for the project. Like Section 5307 funds, these local funds are allocated to the City on an annual basis and are to be used for transit related activities. The City plans to use $400,000 in Measure M funds and $226,000 in Proposition A funds as the 20% local match required for project funding. These amounts have been budgeted and are programmed in the mentioned local return fund sources. For the full analysis of the project, the September 19, 2023, Staff Report is included as Attachment No. 2. Reso No. 7553 Supplemental Budget Appropriation for CNG Project April 16, 2024 Page 3 of 4 ENVIRONMENTAL ANALYSIS This project is categorically exempt per Section 15301 (Class 1 Existing Facilities) and Section 15303 (Class 3 New Construction or Conversion of Small Structures) of the California Environmental Quality Act (“CEQA”), as a minor alteration of an existing public facility involving no expansion of use, and the construction and location of a limited number of new, small facilities, including the CNG equipment compound, gas meterset assembly (“MSA”), electrical equipment, and fast-fill and time-fill dispensers. FISCAL IMPACT Funds in the amount of $2,000,000 were budgeted in the City’s FY 2022-23 CIP for the CNG facility project (Project 41850823). In order to cover the total grant amount of $3,130,000, a supplemental appropriation of $1,130,000 is being requested from the City’s Federal Section 5307 and Proposition A funds; no General Fund monies will be used for this Project. The tables below show the original and proposed revised FY 2022- 23 CIP budget for the project, including the appropriate account assignments. Original FY 2022-23 CIP Budget for CNG Project Total Project Cost: $2,000,000 Fund Source Amount Fund/Division/Account Federal Section 5307 $1,600,000 154-4701-8508 Measure M $400,000 165-4190-8508 Proposed Revision to FY 2022-23 CIP Budget for CNG Project Total Project Cost: $3,130,000 Fund Source Amount Fund/Division/Account Federal Section 5307 $2,504,000 154-4701-8508 Measure M $400,000 165-4190-8508 Proposition A $226,000 155-4190-8508 RECOMMENDATION It is recommended that the City Council determine that this project is categorically exempt per Section 15301 (Class 1 Existing Facilities) and Section 15303 (Class 3 New Construction or Conversion of Small Structures) of the California Environmental Quality Act (“CEQA”); and adopt Resolution No. 7553 amending the Fiscal Year 2022-23 Capital Improvement Program Budget (Project 41850823), authorizing a supplemental budget appropriation for design and construction services for the new compressed natural gas facility at the Public Works Services yard in the amount of $1,130,000, offset by a reduction in Federal Section 5307 and Proposition A Funds. Reso No. 7553 Supplemental Budget Appropriation for CNG Project April 16, 2024 Page 4 of 4 Attachment No. 1: Resolution No. 7553 Attachment No. 2: Staff Report, September 19, 2023 RESOLUTION NO. 7553 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA, AMENDING THE FISCAL YEAR 2022-23 CAPITAL IMPROVEMENT PROGRAM BUDGET (PROJECT 41850823), AUTHORIZING A SUPPLEMENTAL BUDGET APPROPRIATION FOR DESIGN AND CONSTRUCTION SERVICES FOR THE NEW COMPRESSED NATURAL GAS FACILITY AT THE PUBLIC WORKS SERVICES YARD IN THE AMOUNT OF $1,130,000, OFFSET BY A REDUCTION IN FEDERAL SECTION 5307 AND PROPOSITION A FUNDS WHEREAS, on September 19, 2023, the City Council approved a design-build contract with Clean Energy for design and construction services for a compressed natural gas ("CNG") facility at the Public Works Services yard in the amount of $2,843,487, plus a 10% contingency, totaling $3,127,835.70; and WHEREAS, to be funded primarily using the City's allocated Federal Section 5307 funds, the City received a Department of Transportation ("DOT")/Federal Transit Administration ("FTA") grant award to use a portion of its Federal Section 5307 allocation toward funding this project; and WHEREAS, The City rounded up the total project cost to $3,130,000 in the grant award due to the complexities and long lead times to amend a grant request, and to meet the granting agencies' funding parameters. WHEREAS, a new compressed natural gas fueling facility project was originally included in the Fiscal Year 2022-23 Capital Improvement Program (Project 41850823) in the amount of $2,000,000; and WHEREAS, the project requires an appropriation of additional funds in the amount of $1,130,000; and 1 Attachment No. 1 DATE: September 19, 2023 TO: Honorable Mayor and City Council FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director Paul Cranmer, Public Works Services Director By: Alana Bautista, Transportation Services Manager SUBJECT: DESIGN-BUILD CONTRACT WITH CLEAN ENERGY FOR DESIGN AND CONSTRUCTION SERVICES FOR A NEW COMPRESSED NATURAL GAS FACILITY AT THE PUBLIC WORKS SERVICES YARD IN THE AMOUNT OF $2,843,487, PLUS A 10% CONTINGENCY CEQA: Exempt Recommendation: Approve SUMMARY The City is proposing to build a compressed natural gas (“CNG”) fueling station at the Public Works Services yard, located at 11800 Goldring Road. Currently, the City’s CNG vehicles are fueled at nearby public CNG fueling stations. A City-owned fueling station would benefit the City’s entire CNG vehicle fleet, which consists of Arcadia Transit and Public Works Services Department vehicles. In order to fund this project, in September 2022, a grant from the U.S. Department of Transportation (“DOT”)/Federal Transit Administration (“FTA”) was awarded to the City. The grant requires a local match, which can be accommodated through local Proposition A and Measure M funding. In May 2023, a Request for Proposals (“RFP”) was issued soliciting bids for the design and construction of the City’s CNG fueling facility. Proposals were received by two (2) companies. It is recommended that the City Council determine that this project is categorically exempt per Section 15301 (Class 1 Existing Facilities) and Section 15303 (Class 3 New Construction or Conversion of Small Structures) of the California Environmental Quality Act (“CEQA”); and approve, and authorize the City Manager to execute a Design-Build contract with Clean Energy for a CNG fueling facility at the Public Works Services yard in the amount of $2,843,487, plus a 10% contingency. BACKGROUND Whenever possible and economically advantageous, the City seeks to utilize alternative- fuel vehicles for its fleet. One of the more available and affordable alternative-fuel options is compressed natural gas (“CNG”). The City’s fleet currently includes 15 CNG-powered Public Works vehicles, and over time, there are plans to transition more of the existing Attachment No. 2 Award Contact – CNG Fueling Facility September 19, 2023 Page 2 of 6 gasoline/diesel powered vehicles to CNG. Additionally, Arcadia Transit provides local transit service through fixed-route and demand response services, with a transit fleet of 18 vehicles, 10 of which are CNG-powered cutaway buses. Currently, the CNG vehicles are fueled at nearby public fueling stations. On average, the CNG transit vehicles and most Public Works vehicles require daily refueling. Due to available grant funding and needs from both the Development Services Department’s Transportation Division and the Public Works Services Department, it was determined that establishing the City’s own fueling station would be in the best interest of Arcadia. Most of the funding for this project will be sourced from the City’s Federal Urbanized Area Formula Funding Program, known as Section 5307. The City is a designated recipient of this fund, which makes federal resources available to urbanized areas specifically for transit capital, operating assistance, and transportation-related planning. The City is allocated a specific amount annually, which is accumulated over time and used towards larger transportation-related projects and resources. These funds have been primarily used to purchase the City’s transit vehicles when replacement is needed. Since the proposed CNG fueling station project would directly benefit Arcadia Transit, it is considered an approved activity under Section 5307 fund requirements. Another grant requirement is a 20% match of local return transportation-related funds. The City plans to use two transportation-related local return fund sources, Measure M and Proposition A, as the local match funding source for the project. On December 5, 2021, a feasibility study for the CNG fueling facility at the Public Works Services yard was prepared for the City by Stantec Consulting Services, Inc. (formerly Fuel Solutions, Inc.). The study included considerations such as fueling modes, performance and sizing, site considerations, cost of materials, and development costs. Stantec Consulting Services, Inc. provided an estimated conceptual cost of $1.89 million for the project. Based on the specifics in the feasibility study, a DOT/FTA grant application was prepared that detailed elements from the study such as equipment items and quantities, and designated station locations on the site. Based on the estimated conceptual cost, a total amount of $2 million was requested in the DOT/FTA grant application. On September 24, 2022, the City received a grant award from DOT/FTA for the CNG fueling facility in the amount of $2 million. DISCUSSION A Request for Proposals (“RFP”) was published in the City’s adjudicated newspaper on May 15, May 22, and May 29, 2023. Additionally, the RFP package was sent to seven (7) companies known to provide these specific services. On June 7, 2023, two addenda were issued addressing questions and comments by potential bidders. It was requested by multiple potential bidders to extend the RFP submission deadline. This request was accommodated, and the deadline was extended from June 15, 2023, to June 26, 2023. On June 26, 2023, the City Clerk’s Office received two proposals, one by Clean Energy and one by Opal Fuels. An evaluation panel reviewed the proposals and conducted Award Contact – CNG Fueling Facility September 19, 2023 Page 3 of 6 interviews with each firm on July 6, 2023. The proposals and interviews were evaluated according to the established and stated criteria, including project technical requirements, qualifications of the company’s personnel, quality of the company’s proposed project management approach, and proposal cost. Both cost proposals were more than $1 million over the awarded amount of the grant ($2 million) as seen in the table below. Company Cost Proposal Grant Award Amount Amount Over Grant Award Amount Clean Energy $3,050,190 $2,000,000 $1,050,190 Opal Fuels $3,683,395 (initial); Approximately $3.1 million (revised) $1,683,395 (initial); Approximately $1.1 million (revised) Clean Energy determined that the needs of the City’s CNG fleet could still be met by eliminating one of the compressors from the project scope of work, so, unlike Opal Fuels, their proposal did not contain all the three compressors that were specified in the RFP. Opal Fuels was also given the opportunity to revise their proposal to eliminate one of the compressors, and they provided an estimated quote in the amount of $3.1 million. Clearly, both quotes significantly exceeded the estimated cost from the feasibility study. This is largely due to the significant increase in cost of materials (i.e., supply chain issues and discontinued products) that occurred in the 18 months between the feasibility study and the bid submittals as well as incremental increases in prevailing wage rates. After careful consideration, the evaluation panel unanimously determined that Clean Energy was the better option and more qualified of the two firms. Clean Energy presented a strong, experienced team for designing and constructing CNG fueling facilities. Additionally, the company also follows Build America, Buy America (“BABA”) Act regulations, which specifies the purchase of American-made goods for most project components. Following the BABA Act is requirement of the FTA, so in the event the grant were to be amended, the City is better positioned to potentially receive additional funding. Due to the high cost of the project, the City worked with Clean Energy to determine if changes to the original project scope were feasible. During this process, it was determined that lowering the number of time-fill stations from 16 to four (4) while retaining the dual hose fast-fill dispensing station would further reduce project costs, while still meeting the needs of the City’s CNG fleet. As a result, the City requested an updated cost proposal reflecting the revised project scope. Clean Energy’s revised proposal was $2,843,487, which is a difference of $206,703 from their original cost proposal. It is important to note that Clean Energy’s original cost proposal had already reflected significant savings with the elimination of the third compressor. Considering the modified scope and the inclusion a 10% contingency, the project cost is now $3,127,835.70. The City’s Federal Section 5307 fund would be the main funding source for the CNG project. As mentioned prior, the Section 5307 fund program is specific to transportation-related activities and has been primarily used to purchase the City’s Award Contact – CNG Fueling Facility September 19, 2023 Page 4 of 6 transit vehicles when replacement is needed. The City is a designated recipient of this fund, receiving an average annual allocation of $379,000. The City typically accumulates annual Section 5307 allocations over time to fully fund bus replacement purchases, which typically occurs every five years, or once a vehicle reaches 150,000 miles, whichever comes first. The City’s current Section 5307 fund balance is $3,730,529. The Development Services Department has analyzed the expected costs of future purchases using this fund and there will be adequate funding available over time (See Attachment No. 3). In addition to using Section 5307 funds for the project, a 20% match of local funds is required. The City plans to use a combination of two transportation-related local return fund sources, Measure M and Proposition A, as the local match for the project. Like Section 5307 funds, these local fund sources are allocated to the City on an annual basis and are to be used for transit related activities. Measure M funds are used to fund a variety of transportation-related projects such as traffic, parking, bicycle, and pedestrian improvements, all of which are programmed through the City’s Capital Improvement Program (“CIP”). A majority of Proposition A annual allocations is used to fund Arcadia Transit’s operations each year. The CNG project is considered an eligible activity under both these funding sources. For Fiscal Year 2023-24, the City has been allocated Measure M local return funds in the amount of $1,139,755 and $1,616,553 in Proposition A funds. The City plans to use $400,000 in Measure M funds and $226,000 in Proposition A funds as the 20% local match required for the funding of the project. These amounts have been budgeted and are programmed in the mentioned local return fund sources. With the changes in the project scope and the additional funding needed for the project, the City must amend the original DOT/FTA grant award. The City has submitted an amendment to the original grant award to the FTA, which has been approved and sent to the Department of Labor (“DOL”) for final authorization. Should any changes occur in this process, City staff will return to the City Council with an updated plan for the funding of the project. An anticipated cost separate from the DOT/FTA grant award is the inspection component of the project. The City will need to hire an inspector with CNG expertise as that expertise does not exist internally. This task was not detailed in the original DOT/FTA grant award because the funding need for this work was unknown. If included in the amendment, adding the task into the project scope would require additional FTA project requirements. For auditing purposes, the City will be managing this scope separately and plans to use additional Proposition A local funds towards CNG specialized inspection costs. The design and construction components of the project will be managed by the Public Works Services Department, and the Development Services Department’s Transportation Division will be responsible for the project’s grant funding and reporting, in accordance with the FTA’s requirements. Award Contact – CNG Fueling Facility September 19, 2023 Page 5 of 6 ENVIRONMENTAL ANALYSIS This project is categorically exempt per Section 15301 (Class 1 Existing Facilities) and Section 15303 (Class 3 New Construction or Conversion of Small Structures) of the California Environmental Quality Act (“CEQA”), as a minor alteration of an existing public facility involving no expansion of use, and the construction and location of a limited number of new, small facilities, including the CNG equipment compound, gas meterset assembly (“MSA”), electrical equipment, and fast-fill and time-fill dispensers. FISCAL IMPACT The cost for the design and construction of the CNG facility is $2,843,487, plus a 10% contingency, which would bring the total maximum cost to $3,127,835.70. Due to the complexities and long lead times to amend the grant request, and to meet the granting agency’s funding parameters, the City has rounded up the total project cost to $3,130,000 in the requested grant amendment. As discussed above, this project will be primarily funded using Section 5307 funds with a required 20% match in local funds. The local fund sources that will be used towards the project are Measure M and Proposition A. The table below shows the total combined amount of funds reflected in the grant amendment request and how they will be allocated to the identified funds. Fund Source Amount Federal Section 5307 Grant $2,504,000 • $1,600,000 from original award • $904,000 additional requested in grant amendment Local Match (Combination of Measure M and Proposition A local funds) $626,000 • $400,000 (Measure M) from original award • $226,000 (Proposition A) additional to be used as indicated in grant amendment RECOMMENDATION It is recommended that the City Council determine that this project is categorically exempt per Section 15301 (Class 1 Existing Facilities) and Section 15303 (Class 3 New Construction or Conversion of Small Structures) of the California Environmental Quality Act (“CEQA”); and approve, and authorize the City Manager to execute a Design-Build Contract with Clean Energy for Design and Construction Services for a new compressed natural gas facility at the Public Works Services Yard in the amount of $2,843,487, plus a 10% contingency. Award Contact – CNG Fueling Facility September 19, 2023 Page 6 of 6 Attachment No. 1: Proposed Design-Build Contract Attachment No. 2: Conceptual Design for CNG Fueling Station Project Attachment No. 3: Estimated Use of Section 5307 Funds