TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
title
Construction Contract to Pacific Hydrotech for State Street Water Treatment Plant (WA212) and Amendments to Professional Services Agreements for the Project.
end
RECOMMENDATION
recommendation
Approve (1) Appropriate $38,708,159 from the Water Fund Balance (520); (2) Increase the project budget of the State Street Water Treatment Plant Project (WA212) by $38,708,159 for a revised project budget amount of $58,494,712; (3) Approval to waive bid irregularities and award a Construction Contract to Pacific Hydrotech Corporation, for $44,063,900, for the construction of the State Street Water Treatment Plant Project (WA212); (4) Authorize expenditures of up to $4,406,390 for 10% construction contract contingencies as allowable per the Public Contract Code; (5) Approve a fifth amendment to the Design Professional Services Agreement with Hazen and Sawyer, (Agreement No. 2021-234, for $997,840 for additional engineering and construction support services; (6) Approve an amendment to the Construction Management and Inspection Professional Services Agreement with Butier Engineering, Inc., (Agreement No. 2024-253), for $607,000 for additional construction management and inspection services; (7) Award a Native American Monitoring Service Agreement with Kizh Nation Resources Management for $290,000; and (8) Authorize the City Manager to execute the necessary documents on behalf of the City.
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FISCAL IMPACT
The State Street Water Treatment Plant Project (WA212) requires an appropriation of $38,708,159 from the Water Fund (520) balance with a corresponding increase to the Fiscal Year 2024-25 project budget for WA212 for a revised project budget amount of $58,494,712.
The City Council adopted Resolution No. 2025-001 authorizing staff to apply for a low-interest federal loan administered through the State Water Resources Control Board under the “Drinking Water State Revolving Fund” (DWSRF) Program for WA212 and the Resolution was approved on January 7, 2025. The State Water Resources Control Board (State Water Board) Financial Assistance Funding Program determined that the WA212 project is eligible for an Emerging Contaminants Grant in the amount of $10,000,000 and a DWSRF Loan amount not to exceed $50,000,000 to be paid back over a 30-year term. The loan award notice is anticipated to occur in the fourth quarter of FY 2024-25. The City would be obligated to repay expended loan funding in accordance with the terms of the DWSRF financing agreement and program documents. DWSRF loans are offered at low interest rates (anticipated to be 1.9% upon the execution of the agreement) compared to other lending sources.
This Agreement and any compensation payable by the City, is expressly conditioned and dependent upon the City’s receipt of Federal funds through the State Water Board Financial Assistance Agreement, as described in IFB #2024-018. Until the funds are awarded, an appropriation of $38,708,159 from the Water Fund is necessary to facilitate preliminary administrative processes. However, if the City does not receive the expected Federal funds, or an adequate amount to fulfill the obligations of this Agreement, a formal termination notice will be issued. Once the final DWSRF loan is awarded, a final agreement will be presented to the City Council for approval, formalizing the acceptance of the awarded funds and authorizing the reappropriation of loan proceeds.
Upon receipt of loan and grant disbursement funds for eligible expenditures (e.g. all construction activities, soft costs associated with construction such as engineering design, project management, construction management, inspection, permit fees, and engineering support through construction), current project fund appropriations will be returned to Fund 520 - Water Fund balance.
|
Project WA212 - Current Project Budget |
|
Fund |
Adopted Budget |
Expenditures |
Available Budget |
|
520 - Water Fund |
$19,036,553.00 |
($3,205,873.06) |
$15,830,679.94 |
|
G7211 - WaterSMART Grant |
$750,000.00 |
|
$750,000.00 |
|
TOTALS: |
$19,786,553.00 |
($3,205,873.06) |
$16,580,679.94 |
|
Project WA212 - Proposed Appropriations |
|
Fund |
Remaining Budget |
Appropriation |
Available Budget |
|
520 - Water Fund |
$15,830,679.94 |
$38,708,159.00 |
$54,538,838.94 |
|
G7211 - WaterSMART Grant |
$750,000.00 |
- |
$750,000.00 |
|
TOTALS: |
$16,580,679.94 |
$38,708,159.00 |
$55,288,838.94 |
The Estimated Expenditure Plan is shown in the Table below:
|
Project WA212 - Projected Expenditures |
|
Project Costs |
Vendor |
Amount |
|
Design |
Hazen & Sawyer |
$2,938,035.00 |
|
Construction |
Pacific Hydrotech |
$44,063,900.00 |
|
Construction Contingency (10%) (1) |
Pacific Hydrotech |
$4,406,390.00 |
|
Well Rehabilitation for Wells 12 and 14 |
General Pump Company |
$1,788,100.00 |
|
Well Rehabilitation Contingency |
General Pump Company |
$215,720.00 |
|
Project Management |
Transtech |
$244,725.00 |
|
Construction Management & Inspection |
Butier |
$1,934,012.00 |
|
Tribal Monitoring |
Kizh Nation |
$290,000.00 |
|
NRWS Brine Discharge Capacity Purchase |
Inland Empire Utility Agency (IEUA) |
$216,944.00 |
|
Administrative Soft Costs (2) |
Various |
$2,396,886.00 |
|
Project Grand Total: |
$58,494,712.00 |
Note: (1) Note that, as in all the City's public works contracts, the contract itself provides the Director of Public Works authority to issue change orders of up to 10% of the original contract amount. When the City Council approves the contract, it approves this authority. Ten percent is generally considered within the normal range of changed conditions on a public works construction project and, by providing change order authority upfront, City Council helps to reduce the possibility of delay on a construction project.
(2) Administrative soft costs include but are not limited to engineering redesign, project management, construction management, inspection, permit fees, advertisement costs, and engineering support through construction.
|
Eligible Funding Sources |
Eligible Amount |
|
Federal Grant - WaterSMART BOR-DO-20-F002 |
$750,000.00 |
|
Federal Grant Community Program Funds - Norma Torres |
$2,000,000.00 |
|
EPA Emerging Contaminants Grant |
$10,000,000.00 |
|
DWSRF Loan (Approved up to $50 Million) |
$43,740,892.00 |
|
520 - Water Fund |
$2,003,820.00 |
|
|
$58,494,712.00 |
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above furthers the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Positive City Image
• Financial Stability
• Responsible Long-Range Planning
• Effective Technology
|
Revenue: |
Expenditure: 5207310 - 48004 | 48005 | 48009 - WA212 |
|
Transfer In: |
Transfer Out: |
BACKGROUND
The City of Chino (City) owns the reservoir site property located at 10762 Benson Avenue located in the City of Ontario with an existing reservoir and groundwater well. On June 16, 2020, the City Council established a Capital Improvement Program (CIP) Project for the State Street Water Treatment Plant (State Street WTP) Project (WA212) to be constructed at this existing reservoir site.
The City’s Wells 12 and 14 have been inactive since 2018 and 2007 respectively due to impacts from contaminants. As part of the project, these two wells will be rehabilitated and put back into service. The groundwater from these two wells will be conveyed to the new State Street WTP which is a new centralized treatment plant that will treat for nitrate, perchlorate, and 1,2,3-trichloropropane (1,2,3-TCP). These contaminants have been detected at concentrations above the Maximum Contaminant Levels (MCLs) regulatory limit set by the State Water Resources Control Board (State Water Board) Division of Drinking Water (DDW). The project includes capacity for treating 4,000 gallons per minute; a 1.5-mile dual 6-inch diameter high-density polyethylene (HDPE) brine disposal pipeline, raw waterline, fiber optic line, well rehabilitation, and well equipment.
On March 2, 2021, the City Council approved an agreement for Design Professional Services in the amount of $1,697,244 with Hazen and Sawyer for the design of the State Street WTP. On January 7, 2025, the City Council authorized the fourth amendment to the Design Professional Service Agreement with Hazen and Sawyer resulting in a total agreement increase amount of $242,861 for various additional design support services. A fifth amendment is necessary to ensure continuing support by the Engineering firm through the construction phase.
On October 18, 2022, staff conducted a public hearing to adopt Resolution No. 2022-075, adopting a Mitigated Negative Declaration (MND) for the State Street WTP. The MND identified potentially significant environmental impacts from this project and proposed mitigation measures to reduce impacts to less than significant. In accordance with the California Environmental Quality Act (CEQA), a Mitigation Monitoring Reporting Program (MMRP) was also prepared and attached to Resolution No. 2022-075, which identifies each mitigation measure, the time it is required to be implemented, and the responsible party for implementation. Staff filed a Notice of Determination with the County of San Bernardino County Clerk and the California Office of Planning and Research State Clearinghouse. Additionally, to comply with a WaterSMART Drought Resiliency grant from the Federal State Bureau of Reclamation (BOR), the National Environmental Policy Act (NEPA) Categorical Exclusion No. 21-SCAO-023-CX dated July 10, 2023, included the City’s Section 106 of the National Historic Preservation Act (NHPA) submittal and State Historical Preservation Officer (SHPO) concurrence confirming that the tribal consultation was completed. The Categorical Exemption declaration by BOR will make things much simpler from an environmental compliance standpoint. An agreement is needed to ensure CEQA compliance from the cultural resource and tribal monitoring firm throughout the construction phase.
On April 2, 2024, the City Council approved an agreement for Professional Services in the amount of $1,327,012 with Butier Engineering, Inc. for the construction management and inspection of the State Street WTP. Originally, the proposal estimated a duration of 380 days for the project. Currently, the construction market for material procurement and delivery has exceeded the original project schedule estimates and is now estimated to be 705 days. Additionally, funding sources have been made available to the project that were not considered at the time of their proposal. The Butier team will ensure additional reporting compliance with all federal and state requirements of the contractors and subcontractors. An additional amendment is necessary to ensure continuing support of Construction Management through the construction phase.
ISSUES/ANALYSIS
The Drinking Water State Revolving Fund (DWSRF) program is a federal-state partnership that provides communities financing for water system infrastructure improvements to correct system deficiencies and improve the quality of drinking water for the health, safety, and welfare of Californians. Consistent with City Council approval, staff submitted a DWSRF loan application to fund the State Street WTP construction and construction administration phase. Staff successfully submitted primary components of the DWSRF application package, including general; technical; environmental and financial information; and engineering documents. Concurrently with the DWSRF loan under review, the City released an invitation for bids for the State Street WTP.
On August 13, 2024, the City issued Invitation for Bids (IFB) No. 2024-0018 for the State Street Water Treatment Facility Project (Project No. WA212) via PlanetBids. On September 25, 2024, the City received three (3) bids, which were reviewed for responsiveness, bidder qualifications, and compliance with Disadvantaged Business Enterprise (DBE) participation requirements and Good Faith Effort criteria.
In accordance with the State of California Public Contract Code and the City’s Purchasing Ordinance, staff selected the proposed contractor through a competitive evaluation process. The final bid ranking is provided below:
|
Rank |
Contractor |
Location |
Cost |
|
1 |
Pacific Hydrotech Corporation |
Perris, CA |
$44,063,900 |
|
2 |
Caliagua, Inc. |
Anaheim, CA |
$45,656,150 |
|
3 |
R C Foster Corporation |
Corona, CA |
$46,368,660 |
During the bid analysis, staff identified an irregularity involving a subcontractor who lacked valid registration with the Department of Industrial Relations, in violation of Labor Code Section 1776. The apparent low bidder, Pacific Hydrotech Corporation, was directed to submit a substitution request, which was reviewed and confirmed. Pacific Hydrotech Corporation holds a valid contractor’s license and has been determined to be the lowest responsive and responsible bidder with a total bid of $44,063,900. All listed subcontractors were also evaluated and deemed responsible. Additionally, a compliance review of the required Good Faith Efforts, pursuant to the Code of Federal Regulations, confirmed responsiveness with federal DBE participation requirements.
The engineer's estimate for construction was $36,913,000. Staff reviewed the bids against the engineer’s estimate and the increased price is attributed to the scale of specialized work required to complete the project in the current bidding climate. The DWSRF loan application review process has extended beyond the anticipated timeframe and is no longer running concurrently with the bidding phase. The loan application is currently under legal review with the State having already received acceptance for the technical, environmental, and financial package submittals related to the project. Additional City Council action will be necessary to approve and execute the financing agreement with the California State Water Resources Control Board for loan funding anticipated for July of this year.
Mitigation Monitoring Reporting Program (MMRP) has been prepared in compliance with Public Resources Code (PRC) Section 21081.6 and describes the requirements and procedures to be followed by the City of Chino. To ensure that mitigation measures adopted under the Tribal Cultural Resources requirements, staff solicited the Kizh Nation Resources Management of the Gabrieleño Band of Mission Indians-Kizh (Keech-Kit’c) Nation (GBMI) to provide related monitoring services.
The engineer's estimate for construction was $36,913,000. Staff reviewed the bids against the engineer’s estimate and determined that the largest discrepancies were found in the current bid pricing construction market with the historical pricing for similar projects prior to the COVID-19 pandemic. Many factors influence bids including the current bidding climate, the contractor’s specialties, and the fact that construction will occur primarily in unincorporated County areas with the potential for unknown field conditions to occur.
Staff recommends that the City Council approve a waiver of the bid irregularity and award a construction contract to Pacific Hydrotech Corporation for $44,063,900. Staff additionally request the authorization of construction contingency funds of $4,406,390 (10% of Construction Contract) consistent with the Public Contract Code to allow the Public Works Director to authorize change orders in a timely manner so as not to incur delays for the Contractor for unknown site conditions or reasonable design modifications if needed.
To provide continuity and support during the extended construction portion of the project, City staff included a fifth amendment to increase Hazen & Sawyer’s engineering services during construction. Staff is recommending an amendment to the design professional services agreement with Hazen & Sawyer for $997,840 for a revised total contract amount of $2,938,035.
Due to the extended increased construction phase schedule, it is recommended to approve an amendment for Butier Engineering, Inc. for construction management and inspection services in the amount of $607,300 for a revised total contract amount of $1,934,012.
To comply with NEPA for Federal grant adherence, it is recommended to approve the Native American Monitoring Agreement for $290,000 to the Kithz Nation Resources Management, for cultural resource and tribal monitoring.
Attachments: Exhibit A - WA212 Vicinity Map
Exhibit B - Contract - Pacific Hydrotech
Exhibit C - PSA Amendment - Hazen & Sawyer
Exhibit D - PSA Amendment - Butier Engineering
Exhibit E - Kizh Nation Resources Management Agreement