Adopt Resolution #24-059 Approving Change Order #1 for Improvement Project #21-09, Centralized Water Treatment Plant

On March 28, 2023 the City Council adopted Resolution #23-061 accepting bids and awarding a contract for construction of Improvement Project #21-09, Centralized Water Treatment Plant.  This contract was awarded to Magney Construction in the amount of $31,528,500.  As part of this project, the City of Ramsey has solicited outside funding sources and during the 2023 Minnesota Legislative Session, the city was awarded $3.2 million in state bonding proceeds.  A requirement of state bonding proceeds is for the project to pay workers prevailing wages.  The awarded contract did not initially include the prevailing wage requirement due to the fact that at the time of advertisement for bids, the city had not been successful in obtaining state bonding dollars.

Following the commencement of the project and obtaining state bonding dollars, city staff continued to work with our consultant engineer, AE2S, who is the design engineer and is providing construction administration and inspection services to determine the cost of applying prevailing wages to the Water Treatment Plant project.  AE2S and City Staff worked with Magney Construction to first estimate the increased contract cost to further determine whether the increased costs due to prevailing wages would be financially beneficial based on the amount of funds awarded through state bonding.  Based on the estimate, Magney Construction submitted their proposal for change order #1 to apply prevailing wages to the contract.  At this time, Magney Construction had not received finalized quotes from five of the subcontractors. However, the included change order does include a $50,000 allowance to account for these five subcontractors.

If approved, change order #1 would increase the project cost by $794,153.71, bringing the new construction cost total awarded to Magney Construction to $32,322,653.71.  Without this approval, the city would not be eligible to utilize the outside funding source that was awarded through state bonding proceeds.  Furthermore, if change order #1 is approved, the net cost paid by the city to construct the Water Treatment Plant would drop from $31,528,000 to $29,122,653.71.

Other relevant information includes efforts by the City to have legislation amended from 2023 to include language that the state bonding proceeds may be applied against trunk watermain improvements that are necessary to connect the new Water Treatment Plant to the distribution system.  These efforts are not guaranteed to be successful.

None required.

Alternative #1: Adopt Resolution #24-059, thus allowing state bonding proceeds to be applied against the project and reducing the local financial obligation.
Alternative #2: Deny Resolution #24-059. 

Staff is handling this as part of their normal duties.

Staff recommends adoption of Resolution #24-059.  Additional approvals would be required to enter into a funding agreement with the state prior to having state bonding proceeds awarded towards the project.

Motion to Adopt Resolution #24-059 Approving Change Order #1 for Improvement Project #21-09, Centralized Water Treatement Plant.