Delta Water Supply Project September 18, 2007 Agenda Item 8.02

Presentation Summary Acceptance of the Delta Water Supply Project Cost Study Award of the Staged Design-Build Contract with Camp Dresser & McKee (CDM Constructors, Inc.) Declaration of Intent to Reimburse Expenditures from Future Bond Proceeds

Project Location Diversion Site Treatment Plant Site

Background Project Information Delta Water Supply Project New Supplemental Surface Water Supply Source Intake and Pump Station Raw Water Pipeline Water Treatment Plant Treated Water Pipelines Project approved in November 2005 Led by Council Project Committee Provides project oversight Meets monthly and also serves as Professional Services Selection Committee

Finance & Accounting

Background Financial Activities Cost Study August 2006 – Contract approved with HDR to conduct Cost Study Cost Study is one of a number of financial activities currently underway Drawdown Schedule Surface Water Split Analysis Cal Water Agreement Rate and Fee Study Long-Term Debt Issuance Short Term Financing

Financial Activities Schedule Draft Cost Study Jul. 2007 Draft Surface Water Split Analysis Sep. 2007 Secure Line of Credit Nov. 2007 Conditional Agreement with Cal Water Nov. 2007 Public Utilities Commission Review (Cal Water) Nov. 2007 – Mar. 2008 Approve Intake Construction Contract Apr. 2008 Proposition 218 and Public Outreach Mar. 2008 – Apr. 2008

Financial Activities Schedule (continued) Start Intake Construction May 2008 Adopt Rates & Fees (Public Hearing) Jun. 2008 Issue Bonds Aug. 2008 Approve Design/Build Construction Contract Sep. 2008 Start Construction of Plant and Pipeline Oct. 2008

Cost Study Deliverables: Capital Cost Estimate Intake, Plant and Pipelines Baseline Operations & Maintenance Cost Membrane and Conventional Options Membrane Option Most Applicable

Cost Study Intake & Pump Station Design & Engineering Services $ 2,200,000 Third Party Construction Management $ 1,243,500 Construction $ 12,434,969 Contingency @ 15% $ 1,865,245 Annual Escalation @ 5% $ 1,072,516 Subtotal (Intake & Pump Station) $ 18,816,230

Cost Study Raw & Treated Water Pipelines Design-Build Engineering Fees $ 5,955,157 Engineering Services During Construction $ 1,488,789 Construction $ 64,729,966 Contingency @ 15% $ 9,709,495 Annual Escalation @ 5% $ 5,582,960 Subtotal (Pipelines) $ 87,466,367

Cost Study Water Treatment Plant Design-Build Engineering Fees $ 8,480,660 Engineering Services During Construction $ 2,826,887 Construction $ 56,537,734 Contingency @ 10% $ 5,653,773 Annual Escalation @ 5% $ 4,664,363 Subtotal (Water Treatment Plant) $ 78,163,417

Cost Study Capital Cost Summary Intake and Pump Station $ 18,816,230 Pipelines $ 87,466,367 Water Treatment Plant $ 78,163,417 Total Design & Construction $184,446,014

Cost Study Other Project Costs $10.5 million expended to date $4.8 million in land acquisition $4.4 million environmental / professional services Additional $7.6 million anticipated in indirect project costs Project Administration Permitting Acquisition & Right of Way Other Services

Cost Study Operations & Maintenance Cost Operations and Maintenance (Annual Estimate): Intake $ 260,601 Pipelines $ 35,841 Water Treatment Plant $2,482,388 Total: $2,778,830 Assumes 16 full-time staff

Engineering & Construction

Treatment Plant & Pipelines March 2007 – Request for Proposals issued for Design-Build Services Water treatment plant and pipelines Two proposals received Camp Dresser & McKee (CDM Constructors, Inc.) Black & Veatch Interviews held May 2007 Professional Services Selection Committee recommended staff to negotiate with CDM Constructors, Inc.

Design-Build Contract Treatment Plant & Pipelines Stage 1 Facility design to approximately 65 percent Stage 2 lump sum construction cost Stage 2 Project construction Off Ramp Services (Optional) (A) = Complete design and prepare bid packages (B) = (A) + Provide Engineering Services during construction

Design-Build Contract Scope of Work Water Treatment Process Selection Pipeline Alignment Evaluation Field Data Collection Water Treatability Testing Basis of Design Reports Value Engineering / Constructability Permitting Stage 1 Design Packages Stage 2 Proposal Optional Tasks (Allowances) Site Study (Optional Uses for City Property) Constructability Review

Design-Build Contract Summary of Fees Stage 1 Services* Stage 2 Design and Engineering Services Stage 2 Construction Management Off-Ramp Services (Design to 100%) (Design Services During Construction) $6,279,961 5.5% of Stage 2 price, but not lower than $8,822,785 3.7% of Stage 2 price, but not lower than $5,901,783 $4,668,150 $5,118,057 *This is the only financial obligation at this time.

Design-Build Contract Summary of Terms Award of the Design-Build Contract obligates us only through Stage 1 (Stage 2 Proposal) Stage 2 and Off-Ramp Fees are negotiable prior to amending the Contract Insurance and Bonding is defined for all Stages

Reimbursement Resolution

Reimbursement Resolution Summary Debt issuance not scheduled until 2008 MUD continues to use enterprise fund revenues to fund project costs Provides ability to reimburse fund balance from future bond proceeds Recommended by Bond Counsel Reimbursement resolution does NOT obligate the City to spend funds or incur debt

Reimbursement Resolution Schedule of Costs $5.7 million expended to date (non land acquisition related costs) $4.5 million in indirect costs anticipated during Fiscal Year 07-08 $6.3 million for Staged Design-Build Contract with CDM $19 million for Intake and Pump Station Facility

Recommendation (As Recommended by the Council Project Committee on 9/6/2007:) Adopt a Resolution: Accepting the Delta Water Supply Project Cost Study Approving and authorizing the City Manager to execute a Staged Design-Build contract in the amount of $6,279,961 with CDM Constructors, Inc. for the preliminary design and development of a fixed price proposal for the water treatment plant and pipeline components of the Delta Water Supply Project Declaring the City’s intent to reimburse certain expenditures in an amount not to exceed $36 million from future bond proceeds for the Delta Water Supply Project