W.O. 04-26--Zone 4 Reservoir involves the construction of a new pump station and water storage tank in Northwest Billings (near Ironwood Subdivision) to provide service to water distribution pressure Zones 4 and 5 West.  The project site is a parcel of land with very rugged terrain and rimrocks on either side of the tank site.  The land and a permanent easement (to install associated water lines and to access the site) were purchased from GSK Partners, LLP (Shane Gundlach).

The project requires an ample amount of space for construction staging to provide a place to store steel, piping materials, road materials, contractor office trailers, etc.  There is no space within the City-owned parcel or easement to feasibly use as a staging area during construction activities.  There is an area of land adjacent to the existing easement and City parcel, also owned by Mr. Gundlach, that is fairly flat and ideal to be used as a staging area.  Mr. Gundlach has agreed to lease this small piece of land, approximately 1.45 acres in size, to the City for the duration of the Zone 4 project.

The Council may:

• Lease approximately 1.45 acres of land from Shane Gundlach to be used as a staging area during construction on the Zone 4 Reservoir project.  This land is adjacent to the project site, making it practical for storing equipment and materials and for contractors to receive deliveries needed on the job site.
• Not lease any land from Shane Gundlach and attempt to locate a staging area somewhere else.  There are no other sites available in the remote vicinity of the job site, which would cause the contractors greater burden to get all required equipment and materials to the job site, corresponding to increased costs.

The cost to lease the desired piece of land is $44,000, which permits use of 1.45 acres for a period of up to 26 months (terminating October 31, 2011 and the approximate duration of the project).  The terms of the Lease Agreement also allow the City, if necessary, to extend the Lease on a monthly basis for up to another six months in return for a monthly payment of $2,000 per acre per month.

The project budget has adequate funds available to cover the costs of the Lease.

Staff recommends that Council approve a Lease Agreement with GSK Partners, LLP, for the lease of 1.45 acres of land to be used as a staging area during construction on the Zone 4 Reservoir project and authorize the Mayor to execute the respective Lease Agreement.