CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
Item No. Item No.
Item No.
Item No.
TO: Honorable City Council
FROM: City Manager
SUBJECT: Construction of a New Drinking Water Well at Commerce Station 7, Well 7-02 Meeting Date: June 28, 2022
RECOMMENDATION:
The City Council will consider adopting a Resolution approving GSI’s Second Amendment for Engineering Support Services as described in their Proposal dated April 25, 2022.
BACKGROUND:
On December 15, 2015, staff presented the City Council with the Capital Improvement Program (CIP) for the Commerce Water System. As previously reported to Council, the City is in need of a new drinking water well to replace the one at Station 4, which was constructed in 1917. At this meeting, City Council approved Cal Water’s development of a proposal for design, permitting and construction management services for a new well to be located at Station 7. This area was chosen since there is ample space for a new well, which reduces the cost by not having to purchase land for a new well site.
The well project will be completed in multiple phases as follows:
Phase 1: Well construction (includes initial well assessment, environmental clearance, permitting, design services, and drilling/construction).
Phase 2: Water quality analysis and initial treatment recommendation.
Phase 3: Final treatment design and outfitting existing facility for well operation.
On November 15, 2016, the City approved an Agreement with Cal Water to assist the City with the design, permitting, and management for the construction of the new well in the amount of $282,000. This included anticipated permit fees and a 20% contingency. Cal Water’s proposed costs are for Phase 1 only. It did not include actual drilling/construction, which is specified in the Financial Impact section below.
Cal Water’s project team provides all technical skills and operational experience and works closely with City staff. Cal Water assists with procurement services, including reviewing bids and agreement terms with contractors. A dedicated Cal Water civil engineer serves as the Project Manager who is supported by technical services staff such as in-house geologists, microbiologists, industry leading experts, and individuals with many years of experience constructing and operating water wells.
On August 1, 2017, the State of California Department of Drinking Water (DDW) conducted a site visit as part of the City’s well permit application. The DDW approved the new well location with the following conditions:
Drill a pilot borehole test and if it yields acceptable results, the new well must be designed and constructed based on the test results to minimize the downward migration of contaminants.
Include an annular seal to prevent groundwater contamination.
The City should work with the adjacent railroad company to ensure no chemicals are used such as herbicides and insecticides within 50 feet of the new well.
The City must closely track the remediation status of clean-up sites that may affect the quality of water produced by the proposed new well.
On June 23, 2017, LA Regional Water Board staff indicated that the location of the City’s new well would not pose a problem for VOC contamination. The City proceeded on August 15, 2017 with adoption of a Mitigated Negative Declaration related to the project following an environmental review in accordance with CEQA.
The LA Regional Water Board sent a letter dated March 2, 2018 to Mr. Allen Park, a Gehr representative regarding a contamination issue Water Board staff is monitoring at the Gehr Industries facility adjacent to the well location on the northern boundary. DDW requested the LA Regional Water Board staff to review the proposed well project and render an opinion. The LA Board informed the State DDW staff that they did not see a problem for VOC cross contamination.
On March 6, 2018, the City released the plans and specifications for bidding and received three bids on April 9, 2018. On May 15, 2018, the City awarded an Agreement to South West Pump & Drilling, Inc. as the lowest responsive bidder for $753,512. On July 3, 2018, in order to satisfy the State DDW, the City awarded an Agreement to GSI Environmental for $285,403 to install two monitoring wells on City property (Station 7 site) to conduct an additional water quality assessment required to satisfy the DDW in order to finalize the design for construction.
GSI prepared and submitted a Work Plan on August 9, 2018 to the DDW, which was approved on January 29, 2020. The work was completed and a Report of Findings dated June 15, 2020 was submitted to the L.A. Regional Water Board. In summary, the findings were that Volatile Organic Compounds (VOCs) including PCE, TCE, and 1,4-dioxane at varying depths were detected in very low concentrations, below the maximum contamination level to non-detect. As a result, GSI recommended that the well design be modified to include installation of a permanent protective casing during installation of COM 7-02 to a depth of approximately 210 feet to seal off the production well from overlying groundwater that contains low levels of concentrations of PCE, TCE and 1, 4-dioxane.
Following completion of the environmental assessment and monitoring well installation, Cal Water requested City consideration for approval of Amendment No. 1 to their Agreement releasing Cal Water of liability regarding potential or actual introduction of any contaminants into the Commerce Water System as a result of the Water Well Construction Project and references the aforementioned letter as “the Los Angeles Regional Board 2018 Groundwater Monitoring Report Exhibit A” in Cal Water’s proposed Amendment No. 1. The terms of the original Agreement with Cal Water remains in effect. Amendment No. 1 is solely to indemnify Cal Water from a regional contaminants issue. On February 16, 2021, Council approved Amendment No. 1 to the Cal Water Agreement. Further, Cal Water requested GSI be retained for engineering support services through completion of the new well project. A First Amendment to GSI’s On-call Agreement was made and entered into on February 16, 2021 to extend the term until June 1, 2024 to complete ongoing work in support of the well project.
During this time, staff was also responding to unforeseen COVID-19 and PFAS Treatment issues, which requires construction of a treatment system at the well location for the existing well COM 7-01, which had to be shut down until treatment could be installed. This project will be completed this year with a $2.4 million Water Replenishment District PFAS Grant.
Throughout the time that the additional environmental assessment was conducted and monitoring well installed, Cal Water and City staff periodically updated South West Pump & Drilling of the delays resulting in the City not issuing a Notice to Proceed following approval of their Agreement. Due to the schedule delays and now a modified design based on Water Board requirements, staff met with South West on October 27, 2021 to discuss the design changes and ask if they would honor their original bid amount. They said they could not due to COVID-19 and supply issues and higher costs. They were planning to review their original bid and provide an updated amount for drilling and construction of the well.
On December 10, 2021, South West provided an updated bid schedule and costs. The total cost increase was approximately 55% higher than their original bid amount. Due to the significant increase in costs, staff recommends negotiating a mutual release and termination agreement with the contractor and return to Council for execution of said agreement and rebidding for drilling/well construction services.
For now, staff recommends approving the Second Amendment to GSI’s Agreement to include engineering support services for construction of the well as outlined in their proposal dated April 25, 2022 for $209,426.
ALTERNATIVES:
Approve staff recommendation.
Disapprove staff recommendation.
Provide further direction to staff.
FISCAL IMPACT:
The Water Utility Fund currently has $3,836,425 in available cash on hand.
City Council previously approved $2 million for the Well 7-02 Project, which included Cal Water’s services for design, permitting, and construction management in the amount of $282,000 with the remaining designated for construction from the Water Utility Fund.
At this time, staff requests approval of additional funding for engineering support services in the amount of $209,426 to be funded from the Water Utility Fund.
RELATIONSHIP TO STRATEGIC GOALS:
This item is related to a specific 2016 Strategic Goal
Infrastructure and Facilities
Guiding Principle 2: Develop and implement a sustainable Capital Improvement Program to ensure the quality of existing infrastructure and to support future plans for the City.
Respectfully submitted: Edgar P. Cisneros, City Manager Approved by: Gina Nila, Acting Director of Public Works Reviewed by: Josh Brooks, Director of Finance
Approved as to form: Noel Tapia, City Attorney
ATTACHMENTS:
Resolution
GSI Second Amendment