04/30/2007 - City Council Finance CommitteeAgenda Information Memo
April 30, 2007 Finance Committee Meeting
II. REVIEW MARCH 29, 2007 FINANCE COMMITTEE MEETING
NOTES
ACTION TO BE DISCUSSED:
No action is needed. The enclosed meeting notes are for the review of the committee.
FACTS:
• Per the request of the City Council, meetings notes are being taken at each City
Council standing committee meeting in order that the City Council can review staff's
understanding of the discussions and recommendations made at each of the
committee meetings.
• The Committee meeting notes will be forwarded the City Council after the committee
has had the chance to review the notes.
ATTACHMENTS:
• Enclosed on pages ~ through '~ are the meeting notes from the March 29, 2007
Finance Committee meeting.
Meeting Notes
Finance Committee Meeting
March 29, 2007
Attendance: Mayor Maguire, Councilmember Carlson, City Administrator
Hedges, Director of Public Works Colbert, City Engineer Matthys, Director of
Communications Garrison, Director of Community Development Hohenstein, and
Director of Administrative Services VanOverbeke.
I. Agenda/Meeting Notes
City Administrator Hedges opened the meeting at 7:45 a.m. requesting feedback
on the Finance Committee meeting notes for the March 6, 2007 meeting.
Members responded that the notes were appropriate to forward to the full City
Council. Administrator Hedges also outlined the need to keep the full Council
informed of all of the actions resulting from the various committee meetings.
Il. Review TH149 Bids and Bid Alternate for Fiber Conduit
The Finance Committee asked that the Highway 149 bid be discussed before the
fiber conduit alternate since the conduit could not proceed without the base
project. City Administrator Hedges asked that Director of Public Works Colbert
or City Engineer Matthys review the results of the bid opening. Director Colbert
reported that the bid news was favorable with the results being $1.7 million less
than the most recent estimate and that only $120,000 separated the three lowest
bidders. Mr. Matthys explained spread sheets showing the results of the bidding
against earlier estimates and the impact on the 5-year CIP projections.
The results of continuing discussion with MNDoT were explained and it was
noted that MNDoT is agreeable to providing inspection services on the project at
no cost to the project. This should generate approximately $450,000 to $500,000
in total savings, although the net savings is probably closer to $300,000 since
Bonestroo will need to continue to be involved in certain aspects of the project as
they completed the design and know the easements, etc.
Historically, the City participation on these types of projects has been in the
range of 10 to 20% of the total cost compared to the +35% on this project;
however, today the determining factor is more who initiates the project
demonstrating the greatest desire to have it completed. In response to a
question, it was noted that Inver Grove Heights has not been asked for a position
on accepting the bids and what their position is on honoring the agreement in
place with that City. Finance Committee members directed that Eagan is not to
absorb any costs that are the responsibility of Inver Grove Heights.
General consensus was reached that the City has been somewhat effective in
getting MNDoT on board and that they would follow through on the revised
commitment. Mr. Matthys suggested that a new agreement for the in kind
services would be in place before the work begins, but not before the contract is
o~
awarded. Per Russ delay of the acceptance of the bids would result in additional
costs of approximately $750,000, if the project extends over the winter. He noted
that this project should not be susceptible to a large number of change orders
due to the tight plans and specs reflected in the limited comments from
contractors. Based on the available information, the Finance Committee is
recommending to the full City Council that the bid be awarded and that the
project proceed at this time. Assuming a contract award on April 5, 2007,
construction should start the end of April or the first part of May.
The financial impact of this project will be discussed as part of the CIP review
scheduled for the May 8 Special City Council Meeting.
After additional discussion about the actual bid award and the bidder qualification
system, the Finance Committee directed staff to proceed with the independent
review and to recommend the award of the bid to the lowest qualified bidder to
the full City Council.
Regarding the conduit, in response to the overall concern about laying out money
without knowing where revenues will be coming from i.e. a complete business
plan, Director of Communications Garrison provided background on the option of
installing conduit in the Highway 149 corridor while the road is under
construction. Given the combination of the desire for bandwidth capacity and
speed, fiber will probably be a component of any subsequent business plan,
although certain elements may change with new technology. It was the
conclusion of the Eagan Technology Working Group that while not every
roadway constructed generates an opportunity for a high speed backbone,
conduit in the Highway 149 corridor is an important component of any plan.
Timing is important since MNDoT says Highway 149 will not be open or torn up
again for 40 - 50 years. The most conservative business plan at this point is to
install this strategically located conduit in the City and to sell it to the private
sector to recover the base investment. This is the same logic applied when the
decision to proceed with installation was made for the entrepreneurial ISD 196
City loop. Development of the business plan will explore other options in addition
to this most conservative approach.
Director Garrison noted the continuing attempts to have discussions with Quest
and Comcast regarding their potential interest in more fiber. After deliberation,
the Finance Committee determined that at this point it would be prudent to install
the conduit, since there is the opportunity to cost share with the larger project.
The rest of the "whole picture" will come in incremental stages and will allow for
the establishment of priorities. The installation is to be funded in the same
manner as the 11.5 mile City owned (entrepreneurial) conduit in the ISD 196 loop
from the newly created enterprise fund. The new fund will require- internal
borrowing until such time as it is capitalized through future revenues with the
parameters to be determined as part of the business plan to be developed.
3
III. Update on Nicols Ridge Concept Revision Proposal
Director of Community Development Hohenstein presented background
information regarding inquiries from Lennar (USHomes) about the possibility of
requesting modifications to the approved development agreement for
construction of housing units in the Cedar Grove Redevelopment TIF District.
The Finance Committee is interested primarily in maintaining total unit counts
and valuation for the area. Staff was given direction to continue to meet with
Lennar officials to solicit more information and to work out potential mutually
beneficial solutions. Members reiterated that there is a housing construction
correction taking place, but the overall market is not that bad and the City has no
obligation to guarantee developer profits.
Director Hohenstein noted that the deadline for responses to the Cedar Grove
Redevelopment RFP has been extended to April 30, 2007 to allow respondents
to take advantage of the information to be provided in the market study that is
underway and due to the City on April 10.
Agenda Information Memo
April 30, 2007 Finance Committee Meeting
I. REVIEW NEW TH149 BIDS AND BID ALTERNATE FOR FIBER CONDUIT
ACTION TO BE DISCUSSED:
Review results of new bid solicitation and provide a recommendation for Council consideration
of Contract Award on May 1.
FACTS:
On March 22, formal bids were received for Contract 06-01 (Reconstruction of TH 149)
which included a bid alternate for the installation of empty conduit for future Fiber. The road
construction bid and the alternate bid for future Fiber were presented to the Finance
Committee for:
o Review of its impact to the City's Major.Street Fund and
o A recommendation of funding sources for the installation of the Fiber conduit
alternate.
• The Committee recommended that, based on the favorable bids received (15.3% under the
Engineer's Estimate), the road contract be awarded to the lowest "qualified" bidder and that
the funding for the Fiber conduit alternate be funded from the newly created enterprise fund
(which will require interim internal borrowing).
• The bid results were scheduled to be considered by the Council at its regular Council meeting
of Apri15. However, due to objections raised by 2 disqualified lower bid contractors and the
Federal Highway Administration's threat to rescind their funding if the City awarded the
contract as is, the Council subsequently rejected the bids at their April 10 workshop and
directed a new solicitation (without the bidder qualification criteria) for April 24. They also
requested the Finance Committee to review the new bids prior to the Council's scheduled
reconsideration at their May 1 meeting.
• On Apri124, formal bids were received from 7 of the original 15 bidders. The new low bid of
$8,979,506 came in $380,900 (4.1%) less than the previous low bid from the same contractor
(previously disqualified). This results in the construction bid being $2.08 million (18.8%)
less than our Engineer's estimate. The alternate bid for the Fiber conduit of $131,945 came in
$19,078 (12.6%) less than the previous "qualified" low bidder.
• While the City must still wait for concurrence from the FHWA before awarding the contract,
staff does not anticipate any objections.
ISSUES:
The FHWA requirement to solicit new bids (without bidder qualifications) has resulted in a
minimum one month delay to an already tight construction schedule. While the new bid
specifications allowed extended work days, included significant delay penalties and
limitations on change orders associated with potential winter suspension costs, it is still
possible that the final costs may exceed the low bid amount. Therefore, staff is
recommending that a $500,000 contingency be budgeted for the project.
JC-'
Meeting Notes
Finance Committee Meeting
April 30, 2007
Attendance:
Mayor Maguire, Councilmember Carlson, City Administrator Hedges,
Director of Public Works Colbert, City Engineer Matthys, and Director of Administrative
Services VanOverbeke.
City Administrator Hedges opened the meeting at 8:10 a.m. asking City Engineer
Matthys to provide background on the City?s bidder qualification process in light of the
recent letter from the Association of General Contractors (AGC). Mr. Matthys explained
previous conversations with the AGC and that he plans to write them another letter to
address the most recent concerns. He also explained the relationship and the evolving
understanding or the bidder qualification process across City, State and Federal
interests.
Mr. Matthys provided background on the most recent Park Construction bid and their
earlier compliance issues with the bidder qualification process. After having met with
th
Park representatives on Friday the 27 and reviewing their qualifications including
employees dedicated to this City project, City staff is confident that Park Construction is
a qualified bidder and can satisfactorily complete the Highway 149 project.
Director of Public Works Colbert explained a spread sheet showing the results of this low
bid against earlier estimates and bids and the revised impact on the current 5-year
Capital Improvement Program (CIP) projections. The Finance Committee reinforced the
need to consider the potential total impact of the Highway 149 project on the 2008 ?
2012 CIP which will be discussed at the Special City Council Meeting on May 8, 2007.
Mr. Colbert noted a reduction of approximately $400,000 in the most recent Park
Construction bid and expressed concern about the potential for change orders with this
contract as well as the possibility for winter suspension unless all construction conditions
are favorable. In general, most bids came in lower in this round of bidding. Mr. Colbert
noted that there are no AGC concerns with this bid award as the bidder qualification
system was not used. Staff explained that Park Construction has initiated early
coordination/work with the utility companies as well as suggesting some different road
closure phasing to enhance completion of the project.
City Administrator Hedges noted that approval of this contract is on the Consent Agenda
for the May 1, 2007 Regular City Council Meeting. Based on the available information,
the Finance Committee is recommending to the full City Council that the bid be awarded
and that the project proceed at this time.
Director of Public Works Colbert explained that the alternate bid for the installation of
empty fiber conduit also came in lower. The Finance Committee reaffirmed its earlier
recommendation to proceed with that installation at this time as well.
The Finance Committee notes from the March 29, 2007 meeting were approved.
The meeting was adjourned at 8:40 a.m.
Agenda Information Memo
April 30, 2007 Finance Committee Meeting
I.REVIEW NEW TH149 BIDS AND BID ALTERNATE FOR FIBER CONDUIT
ACTION TO BE DISCUSSED:
Review results of new bid solicitation and provide a recommendation for Council consideration
of Contract Award on May 1.
FACTS:
?
On March 22, formal bids were received for Contract 06-01 (Reconstruction of TH 149)
which included a bid alternate for the installation of empty conduit for future Fiber. The road
construction bid and the alternate bid for future Fiber were presented to the Finance
Committee for:
Review of its impact to the City?s Major Street Fund and
o
A recommendation of funding sources for the installation of the Fiber conduit
o
alternate.
?
The Committee recommended that, based on the favorable bids received (15.3% under the
Engineer?s Estimate), the road contract be awarded to the lowest ?qualified? bidder and that
the funding for the Fiber conduit alternate be funded from the newly created enterprise fund
(which will require interim internal borrowing).
?
The bid results were scheduled to be considered by the Council at its regular Council meeting
of April 5. However, due to objections raised by 2 disqualified lower bid contractors and the
Federal Highway Administration?s threat to rescind their funding if the City awarded the
contract as is, the Council subsequently rejected the bids at their April 10 workshop and
directed a new solicitation (without the bidder qualification criteria) for April 24. They also
requested the Finance Committee to review the new bids prior to the Council?s scheduled
reconsideration at their May 1 meeting.
?
On April 24, formal bids were received from 7 of the original 15 bidders. The new low bid of
$380,900 (4.1%) less
$8,979,506 came in than the previous low bid from the same contractor
(previously disqualified). This results in the construction bid being $2.08 million (18.8%)
less than our Engineer?s estimate. The alternate bid for the Fiber conduit of $131,945 came in
$19,078 (12.6%) less
than the previous ?qualified? low bidder.
?
While the City must still wait for concurrence from the FHWA before awarding the contract,
staff does not anticipate any objections.
ISSUES:
?
The FHWA requirement to solicit new bids (without bidder qualifications) has resulted in a
minimum one month delay to an already tight construction schedule. While the new bid
specifications allowed extended work days, included significant delay penalties and
limitations on change orders associated with potential winter suspension costs, it is still
possible that the final costs may exceed the low bid amount. Therefore, staff is
recommending that a $500,000 contingency be budgeted for the project.
Agenda Information Memo
April 30, 2007 Finance Committee Meeting
II.REVIEW MARCH 29, 2007 FINANCE COMMITTEE MEETING
NOTES
ACTION TO BE DISCUSSED:
No action is needed. The enclosed meeting notes are for the review of the committee.
FACTS:
?
Per the request of the City Council, meetings notes are being taken at each City
Council standing committee meeting in order that the City Council can review staff?s
understanding of the discussions and recommendations made at each of the
committee meetings.
?
The Committee meeting notes will be forwarded the City Council after the committee
has had the chance to review the notes.
ATTACHMENTS:
?
Enclosed on pages ___ through ____ are the meeting notes from the March 29, 2007
Finance Committee meeting.
AGENDA
FINANCE COMMITTEE MEETING
MONDAY
APRIL 30, 2007
CONFERENCE ROOM 2A&B
8:00 A.M.
I.AGENDA ADOPTION
II.REVIEW MARCH 29, 2007 FINANCE COMMITTEE
MEETING NOTES
III.REVIEW REVISED NEW TH149 BIDS AND BID ALTERNATE
FOR FIBER CONDUIT
IV.OTHER BUSINESS
V.ADJOURNMENT
"To
l lite
AGENDA
FINANCE COMMITTEE MEETING
MONDAY
APRIL 30, 2007
CONFERENCE ROOM 2A&B
8:00 A.M.
I. . AGENDA ADOPTION
II. REVIEW MARCH 29, 2007 FINANCE COMMITTEE
MEETING NOTES
III. REVIEW REVISED TH149 BIDS AND BID ALTERNATE FOR
FIBER CONDUIT.
IV. OTHER BUSINESS
V. ADJOURNMENT
Agenda Information Memo
April 30, 2007 Finance Committee Meeting
II. REVIEW MARCH 29, 2007 FINANCE COMMITTEE MEETING
NOTES
ACTION TO BE DISCUSSED:
No action is needed. The enclosed meeting notes are for the review of the committee.
FACTS:
Per the request of the City Council, meetings notes are being taken at each City
Council standing committee meeting in order that the City Council can review staff's
understanding of the discussions and recommendations made at each of the
committee meetings.
The Committee meeting notes will be forwarded the City Council after the committee
has had the chance to review the notes.
ATTACHMENTS:
• Enclosed on pages Q— through 4 are the meeting notes from the March 29, 2007
Finance Committee meeting.
Meeting Notes
Finance Committee Meeting
March 29, 2007
Attendance: Mayor Maguire, Councilmember Carlson, City Administrator
Hedges, Director of Public Works Colbert, City Engineer Matthys, Director of
Communications Garrison, Director of Community Development Hohenstein, and
Director of Administrative Services VanOverbeke.
I. Agenda/Meeting Notes
City Administrator Hedges opened the meeting at 7:45 a.m. requesting feedback
on the Finance Committee meeting notes for the March 6, 2007 meeting.
Members responded that the notes were appropriate to forward to the full City
Council. Administrator Hedges also outlined the need to keep the full Council
informed of all of the actions resulting from the various committee meetings.
II. Review TH149 Bids and Bid Alternate for Fiber Conduit
The Finance Committee asked that the Highway 149 bid be discussed before the
fiber conduit alternate since the conduit could not proceed without the base
project. City Administrator Hedges asked that Director of Public Works Colbert
or City Engineer Matthys review the results of the bid opening. Director Colbert
reported that the bid news was favorable with the results being $1.7 million less
than the most recent estimate and that only $120,000 separated the three lowest
bidders. Mr. Matthys explained spread sheets showing the results of the bidding
against earlier estimates and the impact on the 5 -year CIP projections.
The results of continuing discussion with MNDoT were explained and it was
noted that MNDoT is agreeable to providing inspection services on the project at
no cost to the project. This should generate approximately $450,000 to $500,000
in total savings, although the net savings is probably closer to $300,000 since
Bonestroo will need to continue to be involved in certain aspects of the project as
they completed the design and know the easements, etc.
Historically, the City participation on these types of projects has been in the
range of 10 to 20% of the total cost compared to the +35% on this project;
however, today the determining factor is more who initiates the project
demonstrating the greatest desire to have it completed. In response to a
question, it was noted that Inver Grove Heights has not been asked for a position
on accepting the bids and what their position is on honoring the agreement in
place with that City. Finance Committee members directed that Eagan is not to
absorb any costs that are the responsibility of Inver Grove Heights.
General consensus was reached that the City has been somewhat effective in
getting MNDoT on board and that they would follow through on the revised
commitment. Mr. Matthys suggested that a new agreement for the in kind
services would be in place before the work begins, but not before the contract is
99
awarded. Per Russ delay of the acceptance of the bids would result in additional
costs of approximately $750,000, if the project extends over the winter. He noted
that this project should not be susceptible to a large number of change orders
due to the tight plans and specs reflected in the limited comments from
contractors. Based on the available information, the Finance Committee is
recommending to the full City Council that the bid be awarded and that the
project proceed at this time. Assuming a contract award on April 5, 2007,
construction should start the end of April or the first part of May.
The financial impact of this project will be discussed as part of the CIP review
scheduled for the May 8 Special City Council Meeting.
After additional discussion about the actual bid award and the bidder qualification
system, the Finance Committee directed staff to proceed with the independent
review and to recommend the award of the bid to the lowest qualified bidder to
the full City Council.
Regarding the conduit, in response to the overall concern about laying out money
without knowing where revenues will be coming from i.e. a complete business
plan, Director of Communications Garrison provided background on the option of
installing conduit in the Highway 149 corridor while the road is under
construction. Given the combination of the desire for bandwidth capacity and
speed, fiber will probably be a component of any subsequent business plan,
although certain elements may change with new technology. It was the
conclusion of the Eagan Technology Working Group that while not every
roadway constructed generates an opportunity for a high speed backbone,
conduit in the Highway 149 corridor is an important component of any plan.
Timing is important since MNDoT says Highway 149 will not be open or torn up
again for 40 — 50 years. The most conservative business plan at this point is to
install this strategically located conduit in the City and to sell it to the private
sector to recover the base investment. This.is the same logic applied when the
decision to proceed with installation was made for the entrepreneurial ISD 196
City loop. Development of the business plan will explore other options in addition
to this most conservative approach.
Director Garrison noted the continuing attempts to have discussions with Quest
and Comcast regarding their potential interest in more fiber. After deliberation,
the Finance Committee determined that at this point it would be prudent to install
the conduit, since there is the opportunity to cost share with the larger project.
The rest of the "whole picture" will come in incremental stages and will allow for
the establishment of priorities. The installation is to be funded in the same
manner as the 11.5 mile City owned (entrepreneurial) conduit in the ISD 196 loop
from the newly created enterprise fund. The new fund will require. internal
borrowing until such time as it is capitalized through future revenues with the
parameters to be determined as part of the business plan to be developed.
3
III. Update on Nicols Ridge Concept Revision Proposal
Director of Community Development Hohenstein presented background
information regarding inquiries from Lennar (USHomes) about the possibility of
requesting modifications to the approved development agreement for
construction of housing units in the Cedar Grove Redevelopment TIF District.
The Finance Committee is interested primarily in maintaining total unit counts
and valuation for the area. Staff was given direction to continue to meet with
Lennar officials to solicit more information and to work out potential mutually
beneficial solutions. Members reiterated that there is a housing construction
correction taking place, but the overall market is not that bad and the City has no
obligation to guarantee developer profits.
Director Hohenstein noted that the deadline for responses to the Cedar Grove
Redevelopment RFP has been extended to April 30, 2007 to allow respondents
to take advantage of the information to be provided in the market study that is
underway and due to the City on April 10.
IMM
Agenda Information Memo
April 30, 2007 Finance Committee Meeting
I. REVIEW NEW TH149 BIDS AND BID ALTERNATE FOR FIBER CONDUIT
ACTION TO BE DISCUSSED:
Review results of new bid solicitation and provide a recommendation for Council consideration
of Contract Award on May 1.
FACTS:
On March 22, formal bids were received for Contract 06-01 (Reconstruction of TH 149)
which included a bid alternate for the installation of empty conduit for future Fiber. The road
construction bid and the alternate bid for future Fiber were presented to the Finance
Committee for:
o Review of its impact to the City's Major.Street Fund and
o A recommendation of funding sources for the installation of the Fiber conduit
alternate.
• The Committee recommended that, based on the favorable bids received (15.3% under the
Engineer's Estimate), the road contract be awarded to the lowest "qualified" bidder and that
the funding for the Fiber conduit alternate be funded from the newly created enterprise fund
(which will require interim internal borrowing).
• The bid results were scheduled to be considered by the Council at its regular Council meeting
of April 5. However, due to objections raised by 2 disqualified lower bid contractors and the
Federal Highway Administration's threat to rescind their funding if the City awarded the
contract as is, the Council subsequently rejected the bids at their April 10 workshop and
directed a new solicitation (without the bidder qualification criteria) for April 24. They also
requested the Finance Committee to review the new bids prior to the Council's scheduled
reconsideration at their May 1 meeting.
• On April 24, formal bids were received from 7 of the original 15 bidders. The new low bid of
$8,979,506 came in $380,900 (4.1%) less than the previous low bid from the same contractor
(previously disqualified). This results in the construction bid being $2.08 million (18.8%)
less than our Engineer's estimate. The alternate bid for the Fiber conduit of $131,945 came in
$19,078 (12.6%) less than the previous "qualified" low bidder.
• While the City must still wait for concurrence from the FHWA before awarding the contract,
staff does not anticipate any objections.
ISSUES:
The FHWA requirement to solicit new bids (without bidder qualifications) has resulted in a
minimum one month delay to an already tight construction schedule. While the new bid
specifications allowed extended work days, included significant delay penalties and
limitations on change orders associated with potential winter suspension costs, it is still
possible that the final costs may exceed the low bid amount. Therefore, staff is
recommending that a $500,000 contingency be budgeted for the project.
6—
F