REPORT TO COUNCIL
SUBJECT
Title
Approve a Second Amendment to Consultant Services Agreement with CDM Smith to Support the Application and Administration of a Water Infrastructure Financing and Innovation Act (WIFIA) Loan and Approve Budget Modification No. 3 in the amount of $847,007
Report
REPORT IN BRIEF
Approval is requested to amend the existing agreement with CDM Smith to support the application and ongoing administration of WIFIA loan funding for the next phase of the Sunnyvale Clean Water Program (SCWP), increasing the not to exceed amount by $847,007 for a new not to exceed amount of $16,823,046, and approve Budget Modification No. 3 in the amount of $847,007.
EXISTING POLICY
Pursuant to Section 2.08.040 of the Sunnyvale Municipal Code, Council approval is required for the procurement of goods and/or services exceeding $100,000 in any one transaction.
Pursuant to Sunnyvale Charter Section 1305, at any meeting after the adoption of the budget, the City Council may amend or supplement the budget by motion adopted by affirmative votes of at least four members so as to authorize the transfer of unused balances appropriated for one purpose to another, or to appropriate available revenue not included in the budget.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a "project" with the meaning of the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines section 15378 (a) as it has no potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.
BACKGROUND AND DISCUSSION
The Donald M. Somers Water Pollution Control Plant (WPCP) is one of the oldest wastewater treatment facilities on the West Coast. In 2016, City Council adopted a Master Plan, which serves as a guide for reconstruction of the WPCP. This Master Plan is now being implemented as the Sunnyvale Cleanwater Program, with a total cost of approximately $850 million in the FY 2019/20 Budget.
In 2016, the City successfully secured a $127 million Clean Water State Revolving Fund (CWSRF) loan for the Headworks and Primary Treatment project portion of this Program. Over the life of that loan, the savings in debt service is likely to exceed $40 million relative to traditional municipal bonds. Three other projects, now in the early stages of design, are budgeted at $231 million over the next five years.
In support of the program, staff is recommending increasing CDM Smith’s contract for the base services in the amount of $707,131 and optional services in the amount of $139,876, for a total of $847,007. The contract amendment will add scope that includes the following loan application and administration services necessary to capitalize on similar opportunities for the program including:
Obtaining a combined Water Infrastructure Finance and Innovation Act (WIFIA) loan
for the following projects in the Program:
• SCWP Existing Plant Rehabilitation-Split Flow (833150)
• SCWP Split Flow Conventional Activated Sludge System - Stage 1 (833210)
• SCWP Administration and Lab Building (833240)
• Administering the WIFIA loan
Completing individual CWSRF loan applications for the following projects in the Program
• SCWP Existing Plant Rehabilitation-Split Flow (833150)
• SCWP Administration and Lab Building (833240)
Administering individual CWSRF loan applications for the following projects in the
Program
• SCWP Existing Plant Rehabilitation-Split Flow (833150)
• SCWP Split Flow Conventional Activated Sludge System - Stage 1 (application already prepared) (833210)
• SCWP Administration and Lab Building (833240)
In addition, staff has conducted a competitive procurement for underwriting and special structuring services, and is in negotiation with the finalist before returning to Council to approve that agreement under a separate action. These services will help the City structure the WIFIA loan in a way that is most advantageous, potentially using other interim financing sources (for example Bond Anticipation Notes) to maximize savings. Lastly, the City is engaging Ross Financial, the City’s financial advisor on its most recent debt transactions, under the City Manager’s authority, to advise staff and coordinate the work between the parties.
FISCAL IMPACT
To separately and transparently capture the costs for managing the complex financings associated with this program, staff is recommending Budget Modification No. 3 to create a new Clean Water Program project to appropriate $847,007 for the CDM Smith contract amendment for the next five years during construction, and $50,000 for the Ross Financial contract. Future modifications to this project will be required to fund the underwriting and special structuring services. This project is funded by the Wastewater Management Fund.
Budget Modification No. 3
FY 2019/20
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Current |
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Increase/ (Decrease) |
Revised |
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Wastewater Enterprise Fund |
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Expenditures |
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New Project - Sunnyvale Clean Water Program Financing Support |
$0 |
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$897,007 |
$897,007 |
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Reserves |
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Rate Stabilization Reserve |
$28,139,731 |
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($897,007) |
$27,242,724 |
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City's official-notice bulletin board outside City Hall, at the Sunnyvale Senior Center, Community Center and Department of Public Safety; and by making the agenda and report available at the Sunnyvale Public Library, the Office of the City Clerk and on the City's website.
RECOMMENDATION
Recommendation
Take the following actions:
- Approve the Second Amendment to Consultant Services Agreement with CDM Smith, in substantially the same for as Attachment 1 to the report, increasing the not to exceed amount by $847,007 for a new not to exceed amount of $16,823,046
- Authorize the City Manager to execute the Second Amendment when all necessary conditions have been met
- Approve Budget Modification No. 3 in the amount of $897,007 to fund financing support for the Sunnyvale Clean Water Program
Staff
Prepared by: Gregory Card, Purchasing Officer
Reviewed by: Timothy J. Kirby, Director of Finance
Reviewed by: Chip Taylor, Director of Public Works
Reviewed by: Teri Silva, Assistant City Manager
Approved by: Kent Steffens, City Manager
ATTACHMENTS
1. Draft Second Amendment to Consultant Services Agreement