Sparks City Council Meeting 3/14/2016 2:00:00 PM

    Monday, March 14, 2016 2:00 PM
    Council Chambers, Legislative Building, 745 Fourth Street, Sparks, NV

Consent Items: 8.5

Title: Consideration and possible approval of change order no. 1 to the Performance Contract for Energy Cost Savings, with Ameresco, Inc., at Truckee Meadows Water Reclamation Facility (AC-5022) for an amount not to exceed $267,735.60 with City of Sparks's share in the amount of $83,988.66.
Petitioner/Presenter: Neil C. Krutz – Deputy City Manager/Michael Drinkwater P.E. – TMWRF Plant Manager
Recommendation: Staff Recommends approval of the change order of the Performance Contract with Ameresco, Inc. for the Truckee Meadows Water Reclamation Facility.
Financial Impact: There is no impact to the General Fund. There remains $1,251,663.00, contained in Fund 1631, Sanitary Sewer Capital Project Fund under Project 16-6590, TMWRF Projects for Year One, FY 2015-2016, of the 5-year Capital Improvement Plan (CIP) for the City of Sparks. Appropriations will be reallocated for this obligation on the continuing project. Reimbursement will be sought from the City of Sparks for its share of expenses through the current cost sharing agreement for TMWRF capital projects, based on ownership of TMWRF, outlined in Attachment 1. Expenses of up to $83,988.66 will post to account 604090, TMWRF Construction, using CIP 14-6610J, TMWRF Performance Contract for Energy Cost Savings (Ameresco) Project- Sales Tax on Project Materials.
Total Costs: $83,988.66
Fund: Sanitary Sewer Cap Proj Fund    Account: 604090
Program: TMWRF Performance Contract for Energy Cost Savings (Ameresco) Project- Contingency (14-6610)
Amount: $83,988.66    Budget Status: Budget Exists
Business Impact (Per NRS 237):
    
A Business Impact Statement is not required because this is not a rule.
Agenda Item Brief:

City staff is asking the City Council to approve the On-going Services agreement with Ameresco, Inc.



Background:

In August of 2012, the Reno and Sparks City Councils selected Ameresco, Inc., an energy service company focused on providing clean and sustainable energy, to perform a Financial Grade Operational Audit through RFP 1425.  Ameresco has extensive experience in retrofitting and improving wastewater treatment facilities and has particular expertise in Nevada performing over $130 million in projects.  Ameresco teamed up with the local engineering firm, Carollo Engineers, to provide local job opportunities and insight while working on the TMWRF facility.

The Financial Grade Operational Audit performed by Ameresco identified $24,911,589 in Energy Conservation Measures (ECM) to maintain the integrity of the plant and lower energy, chemical, and operational costs resulting in annual savings of $1,122,887.  Portions of the ECM’s included work previously identified in the TMWRF Capital Improvement Plan (such as the digester cover refurbishment and repair) needed for proper functioning of the treatment processes.  The Cities entered into the performance- based contract on March 24, 2014.

Discussion: 

In the original construction contract approved by the Cities of Sparks and Reno, Ameresco was designated as the Cities’ agent for purchasing of Materials and Equipment for the energy savings project.  As the Cities’ agent, and in accordance with established practice, Ameresco did not pay sales tax on the purchase of materials for the project.  Subsequent to the execution of the agreement with Ameresco, the Nevada Attorney General issued an interpretation of Nevada law contrary to this practice, requiring sales tax be paid on all purchases regardless of the tax exempt status of the ultimate owner.  Assembly Bill 332 in the 2015 Legislative Session, signed into law on 8 June 2015, codified this opinion.  As a result, the Cities of Reno and Sparks directed Ameresco to pay taxes starting on purchases on or after April 29, 2015.  The resulting tax liability for the project is $267,735.60.  Since the Performance-Based Contract did not anticipate paying sales taxes, no allowance for the payment of the taxes was made in the original budged, requiring this contract amendment to cover these costs.  



Analysis:

The City of Reno will administer the contract and will be reimbursed for a portion of the costs by the City of Sparks through the Sparks – Reno cost sharing agreement for TMWRF. The City of Reno and the City of Sparks share the cost for this project based upon their pro-rata ownership of TMWRF, which is 68.63% for Reno and 31.37% for Sparks. The liability for each entity is shown in Attachment 1. 



Alternatives:

Council could direct staff to provide other alternative.



Recommended Motion:

I move to approve Change Order No. 1 to the Performance Contract for Energy Cost Savings with Ameresco, Inc. (AC-5022) for the Truckee Meadows Water Reclamation Facility in the amount not to exceed $83,988.66.



Attached Files:
     Ameresco Attachment 1.pdf
     TMWRF - COR#1 11-16-15 001.pdf
     COR Staff Report Ameresco Tax Change Order.pdf
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