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ITEM 33 |
City Council Memorandum Public Works & Utilities Memo No. CP22-187
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Date: |
June 20, 2022 |
To: |
Mayor and Council |
Thru: |
Joshua H. Wright, City Manager Andy Bass, Deputy City Manager John Knudson, Public Works and Utilities Director Kimberly Moon, Capital Projects Manager |
From: |
Gina Ishida-Raybourn, Utilities Engineering Manager |
Subject: |
Resolution No. 5591 Authorizing an Amended Project Agreement No. 4 under the Public Infrastructure Master Agreement Dated May 24, 2019, Between the City of Chandler and Intel Corporation |
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Proposed Motion: |
Move City Council pass and adopt Resolution No. 5591 approving an amended Project Agreement No. 4 under the Public Infrastructure Master Agreement dated May 24, 2019, between the City of Chandler and Intel Corporation, a Delaware company, for the construction of a Reclaimed Water Interconnect Facility and related public infrastructure needed to serve Intel’s campus at 4500 S. Dobson Road. |
Background/Discussion: |
On May 23, 2019, City Council approved a Public Infrastructure Master Agreement between the City and Intel under Arizona Revised Statute (A.R.S.) § 42-5032.02 for funding and construction of public improvements necessary to support Intel's capital investment at its Ocotillo Plant, located at 4500 South Dobson Road. The Master Agreement contemplates that Intel and the City will enter into specific project agreements for funding and construction of public improvements that will be reimbursed through a combination of transaction privilege tax revenues set aside under A.R.S. § 42-5032.02 (80%) and Intel private funds (20%). This project will be funded by the Arizona Department of Revenue (ADOR), Intel, and the City of Chandler. On April 19, 2021, City Council approved Project Agreement No. 4 between the City and Intel for the funding and construction of the Reclaimed Water Interconnect Facility (RWIF). The Project Agreement identified the public infrastructure design and construction cost of $23,400,000, of which Intel would pay one half, $11,700,000, of the cost of construction. Under the terms of the Project Agreement, the City would seek 80% (up to $9,360,000) reimbursement of Intel's share from ADOR and 20% (up to $2,230,000) directly from Intel. Since that time, significant changes in the supply and demand of goods and labor markets have resulted in limited availability and increased costs for construction-related materials and services. Despite the project team’s efforts to optimize project elements and reduce scope, the overall estimated cost still significantly exceeds the amount originally estimated in Project Agreement No. 4. Therefore, the City and Intel have agreed to amend the Project Agreement for a revised public infrastructure design and construction cost of $45,000,000. Intel’s revised contribution is $22,500,000, an increase of $10,800,000. On December 6, 2021, City Council approved a construction services contract with McCarthy Building Companies, Inc., for procurement of equipment for the RWIF - GMP-1. The RWIF will be located at the Airport Water Reclamation Facility, 905 E. Queen Creek Road. The RWIF will be an advanced membrane water treatment facility to treat surface water from both Salt River Project and Colorado River sources to A+ standard. The additional supply produced from this facility will be used to supplement the City’s groundwater recharge efforts as well as supply additional water for industrial cooling at Intel’s expanded facilities. A related Professional Service Agreement Amendment with Wilson Engineers, LLC, for the RWIF Construction Management Services, is also scheduled for this City Council meeting. A related Construction Services Contract Change Order with McCarthy Building Companies, Inc., for the RWIF - GMP-2, is also scheduled for this City Council meeting. |
Evaluation: |
This amendment is needed to complete the interconnected facilities. |
Financial Implications: |
This item has no direct financial implication, as the contracts related to the public infrastructure improvements will be managed by separate agreements under CIP Project No. WW1901. The separate agreements will manage the public infrastructure design and construction cost of $45,000,000, of which Intel will pay one-half, $22,500,000, of all costs of construction. Intel's share will be the amended Public Infrastructure Improvement Project No. 4 under the terms of the Public Infrastructure Master Agreement between Intel and the City, dated May 24, 2019, which allows the City to seek 80% (up to $18,000,000) reimbursement of Intel's share from ADOR and 20% (up to $4,500,000) directly from Intel, which will be 100% reimbursed. |
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