Minutes 12/08/2020 - Laserfiche WebLink

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December 8, 2020  As a result, CRWY is requiring the City relocate the waterline.  CRWY is also requiring the City of Norfolk to relocate a 48-inch waterline from the same area.  After being advised of the situation by CRWY in 2015, Portsmouth and Norfolk determined that the best approach would be to work together on the relocation. Because the waterlines are in close proximity to each other, working jointly on the project results in an economy of scale and reduces the overall cost compared to each city undertaking its portion of the project separately.  The joint effort also includes a joint application with the Virginia Port Authority for a Virginia Rail Enhancement Fund grant to help defray a portion of the relocation cost. City Council authorized this application by Resolution R-16-02 adopted on January 26, 2016.  Based on the economy of scale achieved by partnering with Norfolk, the total cost of the relocation of the two waterlines is estimated at $19,500,000.  In addition, the Rail Enhancement Fund Grant has been approved. The Grant will cover seventy percent (70%) of the eligible project costs (approximately $13,850,000).  The balance of the project cost (approximately $5,650,000) is the responsibility of Portsmouth and Norfolk. Discussion:  The actual performance of the waterline relocation project requires: (1) design of the new lines; (2) acquisition of property interests for the placement of lines; (3) bidding for contractors to perform the installation of the lines; and (4) construction of the lines. The City and Norfolk have prepared a proposed Agreement for the performance of the relocation, with Norfolk serving as lead agency.  Under the proposed Agreement, Norfolk will take responsibility for performing and contracting for all phases of the work. Norfolk will also have responsibility for all reporting and other administrative aspects of the Rail Enhancement Fund grant. Portsmouth will pay Norfolk an administrative fee of $125,000 per year and will maintain the right to review all bid documents and monitor construction to ensure the new line is consistent with Portsmouth’s quality standards. Norfolk will ensure that all construction warranties applicable to the Portsmouth line are assigned to Portsmouth.  Because the Norfolk line is a larger size (48 inches vs. 30 inches) Norfolk will require a larger easement or other property interest for its line. Therefore Norfolk will pay 60% of the land acquisition costs and Portsmouth will pay 40%.  Despite its smaller size, Portsmouth’s line is “finished” whereas Norfolk’s line is “raw”. Because finished lines are more expensive, it is estimated that the cost of construction for the two lines will be approximately the same. Therefore, all costs not related to land acquisition will be split 50/50. However, if the construction bids demonstrate that the cost of Portsmouth’s line is substantially less than the cost of Norfolk’s, then Portsmouth will pay only 45% of the total construction costs.  If the City were performing this project without partnering with Norfolk and obtaining the Rail Enhancement Fund grant, the cost to Portsmouth would be in the neighborhood of $10,000,000, without including the substantial additional cost of staff time and resources to perform and monitor the project. The economy of scale produced by partnering with Norfolk and obtaining the Rail Enhancement Fund grant is anticipated to reduce the City’s cost by over $7,000,000, to approximately $2,750,000, and also to substantially reduce the staff time and resources that would have been required.  Funding for Portsmouth’s share of the project cost has already been appropriated as part of the Public Utilities Capital Fund Budget. Financial Impact:  Partnering with Norfolk and utilizing the Rail Enhancement Fund grant is anticipated to save the City over $7,000,000. Recommended Action:  Adoption of the resolution. Next Steps Following Council Action:  Execute the Agreement with Norfolk and commence activities under the Agreement.