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HomeMy WebLinkAbout6 Biomass cost Agenda Item # 6 UCKEE f Public Utility District Memorandum To: Board of Directors From: Peter Holzmeister Date: February 2,2007 Subject: Biomass plant cost overruns Why this matter is before the Board: This matter involves a request from the Truckee Donner Park and Recreation District that TDPUD pay the cost of contract overruns associated with construction of the building housing the biomass plant at Regional Park. History: It is my understanding that the history of this project is as follows. Western Area Power Administration contacted a group of public utilities and informed them that there was money available from the California Energy Commission (CEC) for a variety of possible projects. This District was contacted and Scott Terrell worked with McNeil Technologies Inc, a consultant working for CEC, and applied for a grant to construct a biomass plant in Truckee. A grant was approved in the amount of $240,000. It is my understanding that a firm named Community Power Corporation had already been identified as the supplier of the actual biomass plant. McNeil Technologies was to oversee installation of the plant and perform data gathering to ultimately prepare a report on the feasibility of the plant. The plant was not like other biomass plants that exist. This plant was to use a gasification technology which might reduce the emission of pollutants common to other biomass plants. Truckee Donner Recreation and Park District was contacted and agreed to allow the plant to be constructed at Regional Park. They agreed to operate the plant during its study period. Wood chips from the Forest Service would be the fuel. Eventually the project team realized that no plan had been made for a building to house the biomass plant. Additional money was secured from the U.S. Forest Service ($30,000), the CEC ($90,000) and the TDRPD ($10,000) for a total of $130,000 for a building. McNeil prepared plans for the building, which were woefully inadequate. Michael Horn Company of Kings Beach was contracted to acquire and erect a steel building for a contract price of $125,450.00. Since the building was to be erected at Regional Park, the contract was between Michael Horn Company and the Recreation and Park District. A copy of that contract is attached. A series of problems then occurred. The site initially chosen for erection of the building turned out to be an old dump site, so the building could not be placed in that location. The 1 Biomass building needed to be re-permitted. Michael Horn processed the new permits. He also needed to secure the building, which had been delivered, so he rented a fence. The new site chosen for the building was sloped, so the foundation needed to be redesigned and additional foundation work needed to be done. Because of the slope of the land a deck had to be constructed according to Fire District requirements. When it came time to connect up, the biomass plant in the building the electrical system that had been specified by McNeil and installed by Michael Horn was inadequate and needed to be reworked. A series of other changes needed to be made to the building. The end result is that Michael Horn requests payment in the amount of $28,803.36 to cover the cost of the overruns. Attached is an analysis of extra costs submitted by Michael Horn. The list totals $32,446.89, but he is requesting payment in the amount of $28,803.36 by reducing his claim for profit and overhead by $3,643.53. See the attached letter dated August 9, 2006 from Michael Horn to Scott Terrell. believe that Michael Horn is entitled to payment of $28,803.36. The question is who should pay? Truckee Donner Recreation and Park District believes that it is not their obligation to pay the bill. It is their position that they were simply cooperating with TDPUD in a demonstration project. Their participation was an overwhelming burden because operation of the biomass plant was labor intensive and produced very little electricity. The Recreation and Park District hoped to break even, that their labor investment in operating the plan would equal the value of electricity generated for their facility. In fact, they lost money. For every $78.12 of labor expended by the Recreation and Park District, the plant produced $4.17 worth of electricity. During the entire year that the plant was operational, it produced a total of 660 kilowatt hours of electricity. The plant had a capacity factor of about 1.5%. They are fed up with the plant and want it removed as soon as possible. Once the biomass plant is removed from the building, the building remains the property of the TDRPD. They believe that since this project was pushed by TDPUD, we should pay the cost overruns. If TDPUD agrees to pay the bill, it can come from public benefits. There are some costs that benefit TDRPD directly that should be paid by them. Water line extension amounting to $660, and a gas line amounting to $210.55 should be paid by the Recreation and Park District. McNeil may have some obligation to pay portions of this bill, although it may be difficult and costly to collect from them. Recommendation: I recommend that TDPUD pay Michael Horn $27,932.81 and that the remaining $870.55 be paid by TDRPD 2 Biomass CONSTRUCTION CONTRACT 1. Parties. This Contract is between Truckee Donner Recreation and Parks District (hereinafter"Parks" or"Owner") as Owner, and The Michael Horn Company,Inc. (hereinafter"Horn"or"Contractor")as Contractor. Owner's address is: Truckee Donner Recreation and Parks District 10046 Church St. Truckee, CA 96161 Horn's address is: The Michael Horn Company, Inc. Post Office Box 628 Kings Beach, CA 96143 2. Description of Work(Scope of Work). Except as set forth herein, Horn will furnish labor,material,tools, scaffolding and safety equipment to construct and complete in a good, expeditious, and workmanlike manner,the work necessary for the proposed Biomass Generator Building in the Truckee River Regional Park located at 10500 Brockway Rd. The Work shall consist of construction of a 48'x 30' steel building purchased and paid for by Truckee Donner Recreation and Parks District from the Michael Horn Company, Inc. on June 30th, 2004. The construction shall include the following: Design services, engineering, plans,permits, excavation,transformer pad(transformer supplied and installed by TDPUD), special inspections, foundation,build erection, insulation, framing labor and material for chip storage stalls inside and 3'-6"x I P deck and stairs to grade outside, 1-3' x 7' walk door 1-4'x4' window, 1-10'x10' sectional steel garage door, electric from new meters to bio max unit(including lighting and outlets),ventilation fans,hydronics to park office, approximately 900sq ft of paving for chip storage and snow removal, snow melt between park office and biomax building, cleanup and rental equipment. 3. Contract Price; Labor Rates; Statements; Payments. a. Contract Price. Owner shall pay Horn for the performance of the contract the sum of ONE HUNDRED TWENTY FIVE THOUSAND FOUR HUNDRED FIFTY DOLLARS ($125,450.00)and pursuant to the procedures set forth in Section 3.c., below,to complete the Work requested by Owner pursuant to this Contract. It is hereby acknowledged that the above contract price includes the cost of the 1 48'x30'steel building and the Contractor received full payment of$22,728.55 on June 30th, 2004 for the building. b. Labor Rates. Owner shall pay Horn for extra labor, if any, at the following rates: - $70.00 per hour for Michael Horn - $65.00 per hour for carpenters - $48.00 per hour for apprentice carpenters - $32.00 per hour for laborers Owner shall also pay Horn for the cost of extra material and subcontractors, if any, incurred by Horn in the performance of its duties under this Contract, plus fifteen percent (15%). The 15% shall only apply to material and subcontractors and not to Horns labor. c. Billing Statements and Payment. Horn shall transmit to Owner or Owners Agent billing statements (invoices) approximately every two (2)weeks for work completed as of the cut off date shown on each statement. Payment is due Five (5) working days from date of statements (invoices). 4. Commencement and Completion Dates. Horn shall commence work on the project June 6t , 2005. Horn shall reach substantial completion by August 1st, 2005 Substantial completion means the new building is ready for installation of bio max generator. There may be some minor pick up work to finish. 5. Materials and Subcontractors. Horn shall supply and pay for all subcontractors and construction materials, including lumber, for the Project. Owner shall reimburse Horn for the above Subcontractors materials in accordance to section 3.c. of contract documents. 6. Extra Work, Changes, and Deletions. If Owner, Owner's agent, Construction lender, or any public agency or inspector directs Horn to perform any modification or addition to Horn's scope of work under this contract Owner shall pay Horn the cost of that work pursuant to the rates and procedures set forth in Sections 3.b. and 3.c., above. All changes or deviations from the Plans, additional work, or deletions to the Project shall be affected by written change orders. These change order forms shall be provided by the Contractor and signed by both Owner and Contractor. 7. Job Information. The name and address of the project owner, the original contractor, construction lender, and Owners Agent(if any) are as follows: Project Owner: 2 Truckee Donner Recreation and Parks District 10046 Church Street Truckee, CA 96161 Contractor: The Michael Horn Company,Inc. P.O. Box 628 Kings Beach, CA, 96143 Construction Lender: Owners Agent: 8. Right to Stop Work; Right to change Contractors. If Owner fails to make any payment when it is due, Horn may stop work, and keep the Project idle until all amounts owing have been paid. If Horn does not perform work at the Project without valid reason for a period of ten (10) business days, Owner may give Horn a written notice advising Horn that if Horn does not resume work within five (5) business days of notice, Horn will be in breach of this Contract that Horn may be terminated from the Project, and that Owner will be entitled to engage another contractor to complete Hom's scope of work under this Contract. In the event that Owner decides to take the above action, Horn shall be paid for all cost incurred to the date of termination. If Owner terminates this contract for any reason Horn shall draft a letter of release of any liability and interest as Contractor of record and supply this letter to Owner upon receipt of final payment to Horn as stated above. 9. Interest. Overdue payments will bear interest at the rate of 1-1/2%per month. 10. Delay. Horn shall be excused for any delay in completion of this Contract caused by acts of God, of Owner, of Owner's agents or employees, or subcontractors, or of other contractors; inclement weather; labor trouble; acts of public utilities, public bodies or inspectors (but not related to possible defects in Hom's performance); changes requested by Owner; failure of Owner to make progress payments promptly; or other contingencies unforeseen by Horn and beyond its reasonable 3 control. 11. Destruction of or Damage to Premises. If the Project is destroyed or damaged by fire, storm, flood or other catastrophe,or by vandalism, Owner shall pay Horn for all work performed to date and this contract shall become void unless a written change order to proceed is signed. In the event that a change order is signed, Owner shall pay Horn in rebuilding or restoring the Project as extra work and pursuant to Section 3.b. and 3.c. above. 12. Insurance. Contractor shall keep workers compensation insurance and liability insurance policies in force throughout the Project. Owner is responsible for all other insurances. Owner is advised to check with its insurance agent for proper coverage. 13. Cleanup. Throughout the course of the Project, Horn shall keep its work area at the property organized and free from excessive accumulation of waste material or rubbish caused by its operations. On completion of the Project, Horn will remove its tools and equipment from the Project, leaving that area in a neat and broom-clean condition. 14. Dispute Resolution. (a) Mediation. The parties agree that if any dispute arises from or relates to this Agreement or the breach thereof, and if the dispute cannot be settled through direct discussions, the parties agree to endeavor first to settle the dispute in an amicable manner by mediation administered in Nevada County, California, by a mutually acceptable mediator, or if the parties are unable to agree on a mediator, by the American Arbitration Association under its Commercial Mediation Rules, before resorting to arbitration. The mediation shall be conducted by a single neutral mediator agreed to by both Parties. Any agreement achieved through mediation shall be reduced to writing and signed by all parties. Except as otherwise specifically provided, neither party shall initiate arbitration or other dispute resolution procedure unless and until the dispute resolution procedures of this subparagraph have been employed or waived. (b) Mandatory Arbitration. Thereafter, any unresolved controversy or claim arising from or relating to this Agreement or breach thereof shall at the request of any party be determined in a binding arbitration proceeding conducted in Nevada County, California, administered by a mutually acceptable arbitrator, or if the parties are unable to agree on an arbitrator, by the American Arbitration Association in accordance with its Commercial Arbitration Rules. The arbitration may be conducted by the person who served as the mediator under subparagraph (a) if all of the parties agree in writing to such appointment. If not, the arbitration 4 shall be conducted by a single neutral arbitrator agreed to by both parties. The arbitrator may award legal fees and costs and shall have the authority to grant both equitable and legal relief, and judgment upon the decision rendered by the arbitrator may be entered in any court having jurisdiction thereof. The decision of the arbitrator shall be final and binding upon all parties and in the event of any need to clarify or interpret the decision of the arbitrator, the matter will be resubmitted to the arbitrator for clarification or interpretation. (c) Provisional Remedies. No provision of subparagraph (b) shall limit the right of a party to obtain provisional or ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of any mediation or arbitration. 15. Notice. Any notice required or permitted under this Contract shall be deemed given, if in writing,upon the earlier of delivery or three(3) days following deposit in the United States mail, first-class postage prepaid and addressed to the parry at the address set forth in Section 1, above, but such addresses may be changed by written notice from one parry to the other. 16. Attorneys' Fees. In the event of litigation or arbitration between the parties to this Contract concerning any provision of this Contract, or the rights or obligations of either party in relation thereto, the prevailing party in such proceedings shall be awarded reasonable attorneys' fees in addition to such other relief as may be granted. 17. Signatures and Contractors' License Numbers. OWNER: Truckee Donner Recreation and Parks District Dated: By: (Authorized TDRPD Representative) CONTRACTOR: The Michael Horn Company, Inc. CA Contractor's License No. 671428 Dated / By: Michael Ho Its: President 5 The Michael Horn Company, Inc. Extras Invoice P.O. Box 628 Kings Beach, CA 96143 DATE JINVOICE# 1/27/2006 1 Extras BILL TO SHIP TO Truckee Donner Parks and Recreation District 582-2360 Donna 582-7724 Fax TERMS DUE DATE on receipt DISCRIPTION LINE AMOUNT Permits $ 118.10 Design Services $ 420.00 Engineering $ 1,842.50 Temporary Facilities $ 647.28 Excavation and Grading $ 5,745.27 Fence Rental $ 1,078.76 Propane $ 132.27 Foundation and site prep $ 6,007.79 MHCO Labor $ 1,318.00 Asphalt paving $ 60.00 Electrical $ 4,758.65 MHCO Labor $ 1,574.00 Fans $ 609.49 MHCO Labor $ 180.00 Rear Deck $ 2,055.13 MHCO Labor $ 2,050.00 Water Line $ 660.00 Gas Line $ 70.55 MHCO Labor $ 140.00 Muffler MHCO Labor $ 210.00 Steam trap $ 84.43 MHCO Labor $ 360.00 Profit and Overhead Overhead and profit is not charged to $ 3,643.53 MHCO labor Credit $(1,318.86) THANK YOU! TOTAL $ 32,446.89 The Michael Horn Company, Inc. General Contractor CA LIC#671428 NV LIC#0040442 August 9,2006 Cost Overruns Report Bio Mass Building Truckee River Regional Park Permits: Plan check for revised deck plan(note: there was no charge for revisions to the new site or foundation plans). SITE MOVE Design Services: Services of the Michael Horn Co., Inc. staff,to survey, draft,copy,get approval from various agencies and submit revised plans to Town of Truckee Building Dept. for the relocated site. SITE MOVE Engineering: Charges for GRC Engineering to revise the foundation engineering and add the deck to the rear of the building. SITE MOVE Temporary Facilities: Porta-Poti not in original estimate. Excavating and Grading: TTSD requested that the sewer line going under the new building be replaced with C-900 pipe and hand trenching had to be done to avoid unknown pipes that were along side the sewer line.At least one of these pipes wa.�,the main power coming from the transformer located at the old site. SITE MOVE Transformer Pad: Bio Mass generator was set up for single phase not 3 phase power and as there was no single phase to the park at that time a new transformer and pad had to be set and additional trenching performed. Lazzareschi Excavating performed the task as directed by the TDPUD. This included a tie into the existing 3 phase transformer and large boulders were encountered which added to the difficulty. SITE MOVE/TDPUD Additional gravel for backfill: Due to the height of the foundation and the large quantity of boulders that had to be removed for the foundation and sewer line replacement area, an additional amount of gravel backfill for the slab prep had to be imported. The use of a vibra plate was necessary due to the depth of the fill to insure proper compaction. SITE MOVE Fence Rental: Upon delivery,the building was set at the original site. When it was learned that the project would be delayed a fence was rented to protect the public and protect the building from traffic. SITE MOVE Propane: There was no allowance for propane as the tank was to be provided by Suburban Propane. Before the commissioning of the generator I found out that the system needed liquid propane and it was determined that a small tank would be more convenient,therefore a 10 gallon tank was purchased. Reno was the only location that had this type of tank. COMMUNITY POWER CORP. Foundation& site prep: Town of Truckee required erosion control at the new site. Foundation quote was based upon original drawings. Contractor made every effort to get the building dept.to allow use of P.O. Box 628 - Kings Beach, CA 96143 - Phone (530) 546-7865 - Fax (530) 546-2441 The Michael Horn Company, Inc. General Contractor CA LIC#671428 NV LIC#0040442 the original plans but was denied.The revised foundation plan called for a substantial increase in both rebar and concrete as well as an increase in material cost. SITE MOVE Asphalt Paving: Paving between buildings was extended adding a minimal charge. Electrical: When designing the electrical requirements for the building it was determined that a single, 125 amp circuit to the generator, several outlets along each wall and florescent lighting on the ceiling would be adequate. The estimate of$4,930.00 was more than enough for this work. It wasn't until a week before Mike Walker form Community Power arrived to commission the generator that we began to realize the complexity of the electric service needed. This came to light through many phone calls between me,Mike Walker, and Sveri Vandehei(Vanhehei Electric). Once Mike arrived to set up the system it was determined that even more circuits were needed and this continued to change with the TDPUD's requirements to make the system safe for service techs on the PUD's end of the system. Work was performed by Mick Horn,The Michael Horn Co. employees and Sveri Vandehei. COMMUNITY POWER CORP./MCNEIL TECHNOLOGIES Fans: The power vented fan at the rear of the building was included in the original quote however the chain operated vent at the front of the building was not. It was determined that it would be necessary to add this vent in the event that air flow was need through the building while the sectional door was closed, to avoid air starvation to the generator. RANDY HUNSBURGER—MCNEIL TECHNOLOGIES Rear Deck: Because the building had already been designed and manufactured before the site was changed, a rear deck was required and also deemed necessary to allow the public to see the bio mass generator while the building was closed. SITE MOVE/TRUCKEE FIRE DISTRICT Water Line: Water and sewer were added for future Parks and Rec. use. PARKS AND REC. Gas Line: A natural gas was added from the office deck to the outside of the bio mass building for future use. PARKS AND REC. Muffler: MHCO was directed to measure, have fabricated and install the muffler for the generator.The materials were paid for by McNeil Technologies. SCOTT TERRELL/MIKE WALKER(C. P. C.) Steam Trap: Mike Walker and Community Power determined that a steam trap was necessary for the heat exchange unit in line with the muffler. MHCo. was directed to locate, order,purchase and install the steam trap. C. P. C. Respectfully, Michael Horn President The Michael Horn Company, Inc. P.O. Box 628 • Kings Beach, CA 96143 • Phone (530) 546-7865 • Fax (530) 546-2441 The Michael Horn Company, Inc. General Contractor CA LIC#671428 NV LIC#0040442 8/9/2006 Scott Terrell TDPUD Truckee, CA 96161 Re: Bio Mass Dear Scott,Enclosed is information pertaining to the extra costs for the Bio Mass Building.Most of this you have but I'm not sure how complete it is as you stated that you received it as a fax from Steve Randall from TDPRD. The information is a complete copy of the cost over runs invoice, report and backup documentation. Per your request,the Cost Overruns Report has red lettering after the description to help clarify where the costs came from.The amounts are on the invoice with the back up documentation following. As per our conversation,while meeting with Steve Randall,I was willing to take out the overhead and profit from the extras in order to clear this up as soon as possible. Below is the Final amount due: Invoice amount: $32,446.89 Overhead and profit - 3 643.53 Balance due $28,803.36 Two other kems you asked me to check on; 1)Check the figures on the main accounting as a couple of figures did not add up.The building cost was did not get added in,and,when done, balanced the sheet(this would not change the extras charges regardless). 2)Check to be sure that no overhead and profit was added to MHCO labor.This was checked and did not occur. I hope this clears up any question you have as I'm not sure how to be any more concise with the reports provided. Hopefully in the 3 months since our meeting you were able to get the ok on funds and this is the final info needed before I receive final payment. Respectfully, Michael Horn President The Michael Horn Company, Inc. P.O. Box 628 - Kings Beach, CA 96143 - Phone (530) 546-7865 - Fax (530) 546-2441 • ■. AI &FE Public Utility District i IF Staff Report To: Board of Directors From: Scott Terrell Date: January, 2007 Western Area Power Administration Staff formed a group called the Public Renewable Partnership made up of about 15-20 publically-owned electric utilities throughout California. PRP applied and received$6,000,000+in grant funding from the California Energy Commission.The grant money included funding to run and test a 15 kilowatt biomass unit as a research,development and demonstration project and to conduct an assessment of whether a large-scale biomass plant could be built in the Tahoe-Truckee area that could provide a reliable and economical supply of electrically generated power. The purpose of the 15 kW biomass demonstration project was to conduct research on the bio- gasification technology and to educate the community to help them understand how the technology works and the pros and cons of it's use at it's early stage of development. Staff collected a lot of data on the Biomax 15 unit's operation and maintenance to identify it's shortcomings to help in it's future development with the idea of one day becoming a dependable,commercially available technology. The grant funding did not originally include monies for a building that was needed to protect the unit and equipment from inclement weather.The need for a building caused significant delays in the project. Even after building funding was procured the project was once again delayed by the need to change the location of the project from near the tennis courts at Regional Park to land adjacent to the Park office building. Once the building was up we were able to locate the biomass unit in the building to begin the research and demonstration of this Biomax 15 technology. The first step in beginning to implement the project was unit assembly,commissioning and start-up and operator training.Community Power Corporation (CPC)performed this first step in early November, 2005.The Biomax 15 unit became grid-tied and operating in the last week in December.We were only able the run the unit for a few weeks before McNeil Technologies,the project consultant to the CEC, needed to submit the Final Report to the CEC in early January,2006. Since the project ran about one year behind schedule because of the need to build and relocate the building,TDRPD staff agreed to continue to collect data through 2006.The pilot project operation and data collection period was extended through February,2007 to collect more data and educate a few more groups about the project before it is decommissioned. The other element of the grant involved a report on the feasibility of a 1-5 Megawatt biomass plant in Truckee. This feasibility study included many elements including assessing the potentially available biomass material for a future biomass plant,a look at what large-scale, state-of-the—art plants were being tested or commercially available and the economics of running a large-scale biomass plant in Truckee as compared to the cost of other power generation resources.This report has been completed and it is available for review,TDRPD and TDPUD staff prepared a power point presentation on both the 15 kilowatt Biomax unit and the feasibility and economics of a large-scale biomass plant in Truckee.