Upper Bee Branch Creek Channel, Streets and Utilities Project Award Copyright 2014
City of Dubuque Action Items # 1.
ITEM TITLE: Award Upper Bee Branch Creek - Channel, Streets and Utilities
SUMMARY: City Manager recommending City Council award the construction contract
for the Upper Bee Branch Creek — Channel, Streets, & Utilities Project to
the low bidder, Portzen Construction.
RESOLUTION Awarding Public Improvement Contract for the Upper Bee
Branch Creek — Channel, Streets, & Utilities Project
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt Resolution(s)
ATTACHMENTS:
Description Type
❑ Upper Bee Branch Creek-Channels Streets and Utilities-MVM Memo City Manager Memo
❑ Staff Memo Staff Memo
❑ Resolution Resolutions
❑ Strand Letter Supporting Documentation
❑ IIW Letter Supporting Documentation
THE CITY OF Dubuque
U E I
erica .i
Masterpiece on the Mississippi 2007-2012-2013
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Upper Bee Branch Creek - Channels, Streets & Utilities Project
(CIP#7201654 & 3401654)
DATE: May 15, 2015
City Engineer Gus Psihoyos is recommending City Council award the construction
contract for the Upper Bee Branch Creek — Channel, Streets, & Utilities Project to the
low bidder, Portzen Construction, in the amount of $27,819,266.00, which is 50.2%
greater than the $18,518,300.00 engineer's estimate. I also recommend modifying the
Bee Branch Watershed Flood Mitigation Project construction schedule so that awarding
the contract can be done without increasing planned debt and without increasing
previously adopted Stormwater Utility rates.
Since 1999 there have been six Presidential Disaster Declarations which included the
Bee Branch Creek Watershed. More than 50% of Dubuque's population either lives or
works in the watershed. The Drainage Basin Master Plan, completed and adopted by
the City Council in 2001, established that there are more than 1,100 properties at risk of
flood damage as a result of the flash flooding. Based on a subsequent study in 2009 by
the Federal Emergency Management Agency (FEMA), 1,373 properties are at risk. In
addition to homes, there are over 70 businesses in the at-risk area with over $500
million in annual sales. Eighty -five percent (85 %) of the impacted properties have
buildings that are potentially eligible for listing on the National Register of Historic
Places, the official list of the Nation's historic places worthy of preservation. In fact, fifty-
seven percent (57%) of the buildings are more than 100 years old. The flood prone area
in the Bee Branch Watershed encompasses historic neighborhoods offering some of the
community's most affordable workforce housing. Most residents are working families,
and many are elderly -- those least likely to recover from repetitive flood loss. Repetitive
flood damage leads to disinvestment. From 2004 to 2009, while commercial property
values grew by 39% citywide, they fell by 6% in the Bee Branch Watershed flood prone
area. Residential property grew city wide by 21% during the same period, but only grew
by 14 % in the flood prone area.
Since 2001, the City has implemented many of the improvements outlined in the
Drainage Basin Master Plan. But since 2001, several intense rain storms have occurred
in the Dubuque metropolitan area so that revisiting the predicted hydrology and
hydraulic behavior of the Bee Branch Watershed was appropriate. Over a 12-year
period starting in 1999, there have been three 100-year storms, two 50-year storms,
one 25-year storm, and one 10-year storm. Finally, it is important to consider how
additional flood mitigation efforts undertaken by the City since 2001 fit with the overall
effort to mitigate flooding. Therefore, work began to update/amend the Drainage Basin
Master Plan.
On November 18, 2013 the City Council adopted the 2013 Drainage Basin Master Plan
Amendment. The 2013 Amendment did not replace the 2001 Drainage Basin Master
Plan. Instead, it built upon its foundation. The amended Drainage Basin Master Plan
outlined several improvements throughout the Bee Branch watershed to mitigate the
effects of future flooding and disasters. Collectively, the improvements form the basis of
the Bee Branch Watershed Flood Mitigation Project. The subject of this bid is the Upper
Bee Branch Creek Restoration component of the Watershed Project.
With a total estimated cost of$179 million, the Bee Branch Watershed Flood Mitigation
Project will prevent an estimated $582 million in damages over the 100-year design life
of the project. That represents a return on investment of roughly $3 for each $1 spent.
The Bee Branch Watershed Flood Mitigation Project represents a multi-phased, fiscally
responsible investment. It reflects a holistic approach to mitigate flooding as it will
improve water quality, stimulate investment, and enhance the quality of life of watershed
residents.
On February 3, 2014 the City Council approved the execution of a funding agreement
with the State of Iowa Flood Mitigation Board authorizing the City's use of$98.5 million
of state sales tax increment funding for the Bee Branch Watershed Flood Mitigation
Project. The funding agreement incorporates the 20 year Project Plan and established
the schedule as to when the various elements of the plan will be completed.
The Upper Bee Branch Creek Restoration Project (Phase 7 of the Bee Branch
Watershed Flood Mitigation Project) will be constructed through multiple contracts with
the Upper Bee Branch Creek — Channel, Streets, & Utilities Project as the first. As the
name suggests, the improvements associated with this contract are generally
associated with the channel grading, the reconstruction of streets, and the relocation of
City utilities (storm sewer, sanitary sewer, and water main) from Garfield Avenue to 24h
Street.
The grading work involves the removal and hauling away of roughly 200,000 cubic
yards of soil to create the 2,000-foot long creek and flood plain area. To create the
design flood capacity, creek construction includes the installation of retaining walls at
various points along the length of the project. The creation of the flood plain involves the
planting of over 300,000 square feet of vegetative surface restoration and the planting
of over 550 trees and shrubs. The plantings are not purely aesthetic. They enhance the
flood mitigation capabilities of the project, the overall health of the restored creek, and
help prevent erosion.
2
The streets to be reconstructed as part of the project include Garfield Avenue at Kniest
Street, Kniest Street between Rhomberg Avenue and Lincoln Avenue, Lincoln Avenue
near Kniest Street, and finally 24th Street between Washington Street and Prince Street.
Limited portions of Rhomberg Avenue and 22nd Street will also be reconstructed where
they intersect the creek corridor. Prince Street, between 22nd Street and 24h Street, will
be resurfaced with new curb and gutter.
The utility work will include the relocation/reconstruction of roughly 4,000 feet of 8-inch
through 36–inch sanitary sewer and roughly 3,000 feet of 6-inch through 20-inch water
main at various locations. Storm sewer relocation includes roughly 3,000 linear feet of
12-inch through 72-inch storm sewer sizes. Included in the storm sewer work is the
installation of baffle boxes at locations where storm sewers will discharge into the
proposed creek. The baffle box system will capture trash, yard waste, and sediment in
the storm sewer and prevent it from entering into the creek. The location of each
collection system can be easily accessed by city maintenance equipment for the
collection and proper disposal of waste material. This will help minimize long-term
maintenance costs.
Additional site work associated with this contract includes the installation of over 10,000
feet of conduit and fiber optic cable, over 60 lights, over 50 security cameras, drinking
fountains, bike racks, benches, and interpretive signs.
On April 20, 2015 the City Council adopted Resolution 135-15 approving the proposed
plans, specifications, form of contract and estimated cost for the Upper Bee Branch
Creek — Channel, Streets & Utilities Project in the estimated amount of$22,360,847.00
which includes construction ($18,518,300), construction contingency ($925,915), and
engineering ($2,916,632).
The City received two sealed bids on May 7, 2015, for the Upper Bee Branch Creek –
Channel, Streets, & Utilities Project.
One from Portzen Construction, Inc. of Dubuque, Iowa in the amount of$27,819,266.00
and one from Tricon General Construction of Dubuque, Iowa in the amount of
$29,996,861 .77.
The plan holder's list included 18 prime contractors but only two submitted bids. Also,
thirty-three (33) sub-contractors were on the plan holder's list.
The design engineers, Strand Associates, provided their findings relating to their review
of the bids. Six work items accounted for 77.7% of the $9,300,966 difference between
the engineer's estimate and the low bidder.
The design engineer is at a disadvantage when trying to arrive at an opinion of probable
cost. They can look at past, similar work and adjust for inflation or increases in material
costs. For example, the unit price to install 36-inch diameter sanitary sewer as part of
the Lower Bee Branch Creek Restoration Project let in 2010 was $202 per linear foot.
3
The Engineering News Record Construction Cost Index increased a total of 14.8% from
2010 to the present. Therefore, for similar work, the 2015 estimate for the same work
would be roughly $232 per linear foot. Strand Associates estimated that the work would
cost $340 per linear foot. Based on the low bid, the cost of this work is $402 per linear
foot which represents nearly a 100% cost increase since 2010. Moreover, the 2010 unit
price of$202 included the placement and compaction of backfill whereas the 2015 unit
price of$402 did not. The engineer's estimate also reflects information obtained from
potential contractors, sub-contractors, and suppliers. But the estimates provided by
these firms are not binding, nor is there a guarantee that these firms will actually place a
bid reflecting the very estimates provided to the engineer.
It is difficult to factor in the bidding environment when providing an estimate because it
is impossible to know the number of bidders who will submit a bid and actually compete
for the job. Based on recent conversations with contractors and suppliers, there are
other economic forces that cause bids to exceed estimated costs, including:
• A regional concrete pipe supplier stated April, 2015 was the best April for
shipping and production that his company has ever had. In fact, it exceeded their
record April by over 15%. Last year their company had the best year ever in Iowa
for sales.
• A local general contractor stated that last year their company had their best year
ever which exceeded previous year's work by over 15%. This year they are
anticipating a record breaking year with an increase of work by 20%.
• A local church went out for bids for an expansion project. The engineer's
estimate was $1 .2 million. The low bid received in the fall of 2014 of$1 .7 million
was 41 .7% over the engineer's estimate. The church re-bid the project including
alternates and re-engineered plans anticipating bids to be lower in the spring of
2015. The low bid received in March 2015 was 2.2 million, 83.3% over the
original engineer's estimate.
• A city in southeast Iowa is currently taking bids on water plant improvements.
According to a local contractor, only one bidder is showing any interest in the
project. That city is currently in the process of attempting to find other suitable
bidders.
• A local contractor said that they have lost employees to other contractors in Iowa
that are starting to pay above prevailing wages to workers. This is exacerbated
by a $1 .8 billion fertilizer plant in southern Iowa that is using thousands of
construction workers.
• According to the U. S. Department of Labor, the unemployment rate for
experienced construction workers is at its lowest since 2007. In last month's
national employment numbers approximately one fourth of all new jobs created
were in the construction industry with approximately 45,000 new jobs.
4
It is likely that risk also played a role in limiting the number of bidders and in the prices
associated with the two actual bids. Due to the physical location of the Upper Bee
Branch Creek Project in the heart of the flood prone area and the flooding history, there
are inherently higher risks of damage to contractor operations and adjacent structures
than are typically found on other construction projects. Construction risk can generally
be defined as the potential for unknown, negative events to occur while the contractor is
working on a project. The primary sources of risk on this project generally fall into three
categories — local rainfall, Mississippi River levels, and the proximity of adjacent
buildings to the project work area.
The primary sources of risk impact the contractor's work in the following ways:
• Intense localized rainfall during construction will generally flow toward the project
area. Both overland rainfall and stormwater in pipes entering the project work
area can cause flash flooding damage to work that is in the middle of being
completed. Contractors have to mitigate this risk by building additional
temporary stormwater handling facilities and controls greater than what is
normally required on a typical construction project.
• Some stormwater will ultimately enter the new open channel as it is being
excavated, causing ground soils to become overly saturated so that contractors
will not be able to operate heavy equipment until the soils have dried out. Work
stoppages could be in the range of 3-7 days before excavation work can resume
after a large rain storm. It is difficult for contractors to mitigate this risk. They can
only pump dry the excavation hole after the rain event is over.
• A secondary impact of local rainfall is a rise in the groundwater levels. The
groundwater in the project area is also influenced by the Mississippi River stage.
Groundwater trending measurements indicate that as the river level goes up,
groundwater levels in the project area also increase. Additionally long-term
groundwater monitoring data indicates that groundwater levels within the project
area can rise and fall as much as 8 feet. In order for any deep utility or channel
excavation work to occur on the project, a dewatering pump system will need to
be installed by the contractors to artificially reduce the groundwater levels below
the bottom of the excavation by an additional 2-4 feet. This means natural
groundwater levels in the area will have to be lowered by as much as 15 feet.
High groundwater levels result in additional dewatering pumping costs for
contractors. The only practical way to mitigate this risk is to have additional
dewatering pumping capability available to respond in a timely manner when
groundwater levels increase.
• There are several locations within the project limits that will require deep
excavations in near proximity to adjacent buildings. The primary areas of
concern include Garfield Avenue, 22nd Street and 24th Street. Advanced
technology sheet piling and shoring systems will be required to ensure adjacent
5
buildings remain stable during excavation work. High groundwater levels in
these same areas add to the overall complexity of the shoring systems. Risk
mitigation strategies primarily consist of the selection of more expensive shoring
systems to support the excavation work and active monitoring for excessive
ground vibration and ground settlement.
As part of the design phase, the project team conducted a risk assessment to identify
major sources of risk during construction. After the areas of risk were identified, their
potential of probability to occur along with their impact to project scope, quality,
schedule, and cost were evaluated. Areas with high risk ratings were further evaluated
and considered while making final updates to the design. Bid item 2 (Project
Coordination & Administration), which was intended to quantify the contractor's costs
associated with contract administration, coordination with others, etc. was bid at $2.4
million more than estimated. This is where the bidding contractors included some of the
costs related to the higher risks associated with this project. The bid prices for sanitary
sewer, storm sewer, and water main were also higher than expected indicating that risk
concerns were reflected in these bid items as well.
When the low bid exceeds the engineer's estimate by a significant amount such as
50%, the immediate thought is that the bids should be rejected. Typically the belief is
that if the work is re-bid, it will result in lower bids and cost savings to the City. Because
the Upper Bee Branch Creek — Channel, Streets, & Utilities Project is not a typical
project, it is prudent to consider whether rejecting the current bids would actually result
in cost savings to the City.
The Upper Bee Branch Creek — Channel, Streets, & Utilities Project is just one of
several improvement projects associated with the Bee Branch Creek Restoration
Project and the larger, more encompassing Bee Branch Watershed Flood Mitigation
Project. Rejection of the bids would prevent the City from moving forward with other
improvement projects. Rejection of the bids would necessitate the rejection of the bids
for the Upper Bee Branch Creek — Structures Project because the structures (bridges)
cannot be constructed without the relocation of utilities and other work to be done as
part of this bid. Without first completing this component of the creek project, the 22nd
Street Storm Sewer and North End Storm Sewer projects would provide no flood
mitigation benefit.
In addition to simply delaying the completion of the improvements, rejecting the bids
could result in the loss of$5,327,138 in grant funding due to scheduling requirements.
The loss of grant funding will further delay the construction of improvements. The
delays are due both to the time it takes to re-bid or re-package a project and to the loss
of grant revenue.
A typical course of action following the rejection of bids is to employ a value engineering
process to try and reduce costs associated with the project in an attempt to re-bid the
work and obtain more favorable bids. The estimated cost to re-package and re-bid the
6
current design would be approximately $150,000. Due to the loss of$5.3 million in grant
funding, even if value engineering and more competitive bids were realized, so that the
bids came in $5 million less than the current bids, the City would be no better off than it
if it awarded the current bid.
Based on the current bidding market, it is likely that rejecting the bids and value
engineering might not result in lower bids, even if project elements were removed. For
example, the difference in costs between the lowest bidder and the second low bidder
to build the two bridges associated with the Upper Bee Branch Creek — Structures
Project was over $1 million. With a report of 20 to 30 bridge projects to be let in the next
several months, the low bidder might not re-bid on the City job if it has secured
alternative work. Therefore, any potential savings would be offset by a higher cost to
construct the bridge.
Inflation is also a factor. According to many economists, the national unemployment rate
of 5.5% reported in February, 2015 represents "full employment." As reported in the
Wall Street Journal, if the unemployment rate drops below the "full employment' rate, it
could result in inflation.
Two major projects in SE Iowa and Central Iowa are sapping up the available work
force. A $1 .8 billion fertilizer plant is still under construction in Wever, Iowa.
Construction of a $700 million Alliant Energy Plant is drawing workers to Marshalltown,
Iowa. IIW, P.C. states in the attached letter that "construction industry associations are
indicating a growing shortage of qualified workers consistent with reports from some
local contractors. One example is the Associated General Contractors of America,
2015 Construction Hiring and Business Outlook provided a survey and reported 81% of
construction firms expect it will either become harder or remain difficult to find qualified
workers in the next 12 months."
These bid results show that is difficult to predict what will happen in terms of bidding in a
few months if the project is re-bid. It is certain that rejecting the bids would delay the
construction of incremental flood mitigation improvements, will result in the loss of grant
funding so the City would have less money for improvements, and might not result in
cost savings as the result of future lower bids. Despite being significantly more costly
than anticipated, awarding the contract deserves consideration.
Most importantly, awarding the bid will provide another incremental increase in the flood
protection, just as the completed Carter Road Detention Basin, the completed W. 32"d
Street Detention Basin, and the completed green alley systems do. Based on the
hydraulic model, the improvements associated with the Upper Bee Branch Creek —
Channel, Streets, & Utilities Project and the Upper Bee Branch Creek — Structures
Project will reduce the depth of floodwaters by two feet from Garfield Avenue to 24th
Street.
Since the bid opening on May 7, City staff looked into the potential options associated
with awarding the contract without an increase to planned debt or previously adopted
7
Stormwater Utility rates. The determination was that this could be accomplished by
shifting funding from other phases of the Bee Branch Watershed Flood Mitigation
Project to this phase. This would result in delaying improvements such as the work
related to the railroad property and the flood protection for the Eagle Point Water Plant.
The most significant component changes related to flood mitigation are the Bee Branch
Creek Railroad Culverts and the pervious pavement systems (green alleys). In the case
of the 240 alleys, the project plan showed them being completed within 20 years, but
that time line could be extended. The design team also reviewed the bids to determine
why the bids are so high. If awarded, two project improvements relating to soil handling
and disposal could reduce the project cost by up to $1 .6 million.
Awarding the contract also allows the City to award the Upper Bee Branch Creek —
Structures contract which came in at just 4.2% over the engineer's estimate.
Awarding the contract will not require the issuance of additional debt outlined in the
already adopted Project Plan and will not require an increase in the stormwater utility
rate structure already established by Ordinance 16-14.
The recommendation outlines a plan that will allow the contract to be awarded and the
project to proceed without increasing planned debt for the project and without increasing
previously adopted stormwater utility rates. The recommendation will, however, include
rescheduling other phases of the overall Bee Branch Watershed Flood Mitigation
Project because it includes shifting funding for other phases of the project to this phase.
The project will be funded by the Fiscal Year 2016 appropriation in the amount of
$43,359,000 for the Bee Branch Creek Restoration Project — Phase 4 and Phase 7 of
the Bee Branch Watershed Flood Mitigation Project.
The City will continue to seek additional outside funding assistance. To date, the City
has successfully secured $127 million in funding for the improvements associated with
the Bee Branch Watershed Flood Mitigation Project.
The $98,494,178 in sales tax increment funding from the state as part of the State Flood
Mitigation Program will not be disbursed in one lump sum or as the City incurs
expenses. Instead, the City is to receive the funding over a twenty-year period starting
in 2014. The legislation enacting the program recognized that the issuance of debt
might be required in order to immediately realize the flood mitigation improvements. In
fact, a new type of revenue bond was born: a sales tax increment revenue bond to be
issued this month.
In accordance with the adopted Fiscal Year 2016 budget, the Upper Bee Branch Creek
Restoration Project will be funded through the issuance of sales tax increment and state
revolving loan fund (SRF) debt to be retired utilizing the schedule of annual payments of
sales tax increment from the state.
8
I concur with the recommendation and respectfully request Mayor and City Council
approval.
Mic ael C. Van Milligen'
MCVM:sv
Attachment
cc: Barry Lindahl, City Attorney
Maureen Quann, Assistant City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Gus Psihoyos, City Engineer
Jennifer Larson, Budget Director
Deron Muehring, Civil Engineer
Steve Brown, Project Manager
Randy Gehl, Public Information Officer
Alexis Steger, Confidential Account Clerk
9
buque
THE CITY OF E DU
DUB 111.CRY
Masterpiece on the MIssissippi 2007.2012.2013
TO: Michael C. Van Milligen, City Manager
FROM: Gus Psihoyos, City Engineer
DATE: May 15, 2015
SUBJECT: Upper Bee Branch Creek— Channel, Streets, & Utilities Project
(CIP#7201654 & 3401654)
INTRODUCTION
The purpose of this memorandum is to recommend awarding the construction contract
for the Upper Bee Branch Creek— Channel, Streets, & Utilities Project to the low bidder,
Portzen Construction, in the amount of$27,819,266.00, which is 50.2% greater than the
$18,518,300.00 engineer's estimate. I also recommend modifying the Bee Branch
Watershed Flood Mitigation Project construction schedule so that awarding the contract
can be done without increasing planned debt and without increasing previously adopted
Stormwater Utility rates.
BACKGROUND
Since 1999 there have been six Presidential Disaster Declarations which included the
Bee Branch Creek Watershed. More than 50% of Dubuque's population either lives or
works in the watershed. The Drainage Basin Master Plan, completed and adopted by
the City Council in 2001, established that there are more than 1,100 properties at risk of
flood damage as a result of the flash flooding. Based on a subsequent study in 2009 by
the Federal Emergency Management Agency (FEMA), 1,373 properties are at risk. In
addition to homes, there are over 70 businesses in the at-risk area with over $500
million in annual sales. Eighty -five percent (85 %) of the impacted properties have
buildings that are potentially eligible for listing on the National Register of Historic
Places, the official list of the Nation's historic places worthy of preservation. In fact, fifty-
seven percent (57%) of the buildings are more than 100 years old. The flood prone area
in the Bee Branch Watershed encompasses historic neighborhoods offering some of the
community's most affordable workforce housing. Most residents are working families,
and many are elderly -- those least likely to recover from repetitive flood loss. Repetitive
flood damage leads to disinvestment. From 2004 to 2009, while commercial property
values grew by 39% citywide, they fell by 6% in the Bee Branch Watershed flood prone
area. Residential property grew city wide by 21% during the same period, but only grew
by 14 % in the flood prone area.
Since 2001, the City has implemented many of the improvements outlined in the
Drainage Basin Master Plan. But since 2001, several intense rain storms have occurred
in the Dubuque metropolitan area so that revisiting the predicted hydrology and
hydraulic behavior of the Bee Branch Watershed was appropriate. Over a 12-year
period starting in 1999, there have been three 100-year storms, two 50-year storms,
one 25-year storm, and one 10-year storm. Finally, it is important to consider how
additional flood mitigation efforts undertaken by the City since 2001 fit with the overall
effort to mitigate flooding. Therefore, work began to update/amend the Drainage Basin
Master Plan.
On November 18, 2013 the City Council passed Resolution 335-13 adopting the 2013
Drainage Basin Master Plan Amendment. The 2013 Amendment did not replace the
2001 Drainage Basin Master Plan. Instead, it built upon its foundation. The amended
Drainage Basin Master Plan outlined several improvements throughout the Bee Branch
watershed to mitigate the effects of future flooding and disasters. Collectively, the
improvements form the basis of the Bee Branch Watershed Flood Mitigation Project
outlined in Table 1 below. The subject of this bid is part of Phase 7, Upper Bee Branch
Creek Restoration.
Table 1. Twelve phases of the Bee Branch Watershed Flood Mitigation Project
Phase Description
1 Carter Road Detention Basin Complete
2 West 32nd Street Detention Basin Complete
3 Historic Millwork District Complete
4 Lower Bee Branch Creek Restoration Functional
5 Flood Mitigation Gate Replacement
6 Impervious Surface Reduction (Green Alleys) Under Construction
7 Upper Bee Branch Creek Restoration
8 22nd Street Storm Sewer Improvements
9 Flood Mitigation Maintenance Facility
10 North End Storm Sewer Improvements
11 Water Plant Flood Protection
12 17th Street Storm Sewer Improvements
With a total estimated cost of$179 million, the Bee Branch Watershed Flood Mitigation
Project will prevent an estimated $582 million in damages over the 100-year design life
of the project. That represents a return on investment of roughly $3 for each $1 spent.
The Bee Branch Watershed Flood Mitigation Project represents a multi-phased, fiscally
responsible investment. It reflects a holistic approach to mitigate flooding as it will
improve water quality, stimulate investment, and enhance the quality of life of watershed
residents.
On February 3, 2014 the City Council adopted Resolution 31-14 authorizing the
execution of a funding agreement with the State of Iowa Flood Mitigation Board and
authorizing the City's use of sales tax increment funding for the Bee Branch Watershed
Flood Mitigation Project. The funding agreement incorporates the Project Plan and
established the schedule as to when the various elements of the plan will be completed.
2
The Upper Bee Branch Creek Restoration Project (Phase 7 of the Bee Branch
Watershed Flood Mitigation Project) will be constructed through multiple contracts with
the Upper Bee Branch Creek– Channel, Streets, & Utilities Project as the first. As the
name suggests, the improvements associated with this contract are generally
associated with the channel grading, the reconstruction of streets, and the relocation of
City utilities (storm sewer, sanitary sewer, and water main) from Garfield Avenue to 24th
Street.
The grading work involves the removal and hauling away of roughly 200,000 cubic
yards of soil to create the 2,000-foot long creek and flood plain area. To create the-
design flood capacity, creek construction includes the installation of retaining walls at
various points along the length of the project. The creation of the flood plain involves the
planting of over 300,000 square feet of vegetative surface restoration and the planting
of over 550 trees and shrubs. The plantings are not purely aesthetic. They enhance the
flood mitigation capabilities of the project, the overall health of the restored creek, and
help prevent erosion.
The streets to be reconstructed as part of the project include Garfield Avenue at Kniest
Street, Kniest Street between Rhomberg Avenue and Lincoln Avenue, Lincoln Avenue
near Kniest Street, and finally 24th Street between Washington Street and Prince Street.
Limited portions of Rhomberg Avenue and 22nd Street will also be reconstructed where
they intersect the creek corridor. Prince Street, between 22nd Street and 24th Street, will
be resurfaced with new curb and gutter.
The utility work will include the relocation/reconstruction of roughly 4,000 feet of 8-inch
through 36–inch sanitary sewer and roughly 3,000 feet of 6-inch through 20-inch water
main at various locations. Storm sewer relocation includes roughly 3,000 linear feet of
12-inch through 72-inch storm sewer sizes. Included in the storm sewer work is the
installation of baffle boxes at locations where storm sewers will discharge into the
proposed creek. The baffle box system will capture trash, yard waste, and sediment in
the storm sewer and prevent it from entering into the creek. The location of each
collection system can be easily accessed by city maintenance equipment for the
collection and proper disposal of waste material. This will help minimize long-term
maintenance costs.
Additional site work associated with this contract includes the installation of over 10,000
feet of conduit and fiber optic cable, over 60 lights, over 50 security cameras, drinking
fountains, bike racks, benches, and interpretive signs.
On April 20, 2015 the City Council adopted Resolution 135-15 approving the proposed
plans, specifications, form of contract and estimated cost for the Upper Bee Branch
Creek— Channel, Streets & Utilities Project in the estimated amount of$22,360,847.00
which includes construction ($18,518,300), construction contingency ($925,915), and
engineering ($2,916,632).
3
DISCUSSION
The City received two sealed bids on May 7, 2015, for the Upper Bee Branch Creek—
Channel, Streets, & Utilities Project. A summary of the bid proposals received is as
follows:
Contractor Name Bid
Portzen Construction, Inc. of Dubuque, Iowa $27,819,266.00
Tricon General Construction of Dubuque, Iowa $29,996,861.77
The plan holder's list included 18 prime contractors but only two submitted bids. Also,
thirty-three (33) sub-contractors were on the plan holder's list.
As part of the bidding process and prior to opening bids, prospective bidders sought
clarifications and suggested multiple changes that would potentially result in cost
savings to the City. One suggested change involved the limestone block to be utilized to
construct the creek. The original specifications called for the creek to be constructed in
part using the limestone blocks stockpiled along Prince Street and blocks salvaged from
the sections of the limestone sewer to be removed as part of the project. It was
suggested that it might be more cost effective to supply new cut limestone blocks rather
than haul stockpiled blocks off-site, re-cut, and then returned to the construction site for
use. Therefore, through addendum, the option of supplying new cut limestone was bid
as an alternate to using the salvaged blocks. Based on the low bid, allowing for the use
of new cut limestone block resulted in a savings of$327,360. Potential bidders also
indicated that meeting the completion dates would require concrete to be poured
through two winter seasons. While doing some cold weather work is feasible, the
bidders expressed concern that heating the concrete to pour roadways and bridges in
the winter would be cost prohibitive, if not impossible, and would likely add up to
$2,000,000 in additional costs to the bid. Therefore, through addendum, the substantial
completion date was changed to July 1, 2017, and the final completion date was
changed to September 1, 2017. Even with this change, the flood mitigation
improvements associated with the Upper Bee Branch Creek Restoration Project will be
functional in time for the spring rains of 2017. In an attempt to ensure that bidders
understood the site conditions and how they would affect their work, the City took the
unusual step of holding a second pre-bid meeting. Despite these efforts, the low bid
from Portzen Construction in the amount of$27,819,266 is 50.2% over the engineer's
estimate of probable cost, which was $18,518,300.
The design engineers, Strand Associates, provide their findings relating to their review
of the bids in the attached letter. Six work items accounted for 77.7% of the $9,300,966
difference between the engineer's estimate and the low bidder as outlined in Table 2
below.
4
Table 2. Comparison of the six work items that accounted for 77.7% difference between the
engineer's estimate and the low bidder.
Work Item Estimate Low Bidder Difference % of
Overage
Project Coordination & o
Administration $10,000 $2,373,460 $2,363,460 25.4/0
Compacted Backfill $1,000,000 $2,387,820 $1,387,820 14.9%
Dewatering $200,000 $1,578,360 $1,378,360 14.8%
Storm Sewer $2,623,121 $3,686,854 $1,063,733 11.4%
Quarried Limestone Block $763,600 $1,322,017 $ 558,417 6.0%
Excavation $3,000,000 $3,479,700 $479,700 5.2%
Other $10,921,579 $12,991,055 $2,069,476 22.3%
TOTAL $18,518,300 $27,819,266 $9,300,966 100.0%
This does not fully explain why the low bid was significantly higher than the engineer's
estimate. However, the design engineer is at a disadvantage when trying to arrive at an
opinion of probable cost. They can look at past, similar work and adjust for inflation or
increases in material costs. For example, the unit price to install 36-inch diameter
sanitary sewer as part of the Lower Bee Branch Creek Restoration Project let in 2010
was $202 per linear foot. The Engineering News Record Construction Cost Index
increased a total of 14.8% from 2010 to the present. Therefore, for similar work, the
2015 estimate for the same work would be roughly $232 per linear foot. Strand
Associates estimated that the work would cost $340 per linear foot. Based on the low
bid, the cost of this work is $402 per linear foot which represents nearly a 100% cost
increase since 2010. Moreover, the 2010 unit price of$202 included the placement and
compaction of backfill whereas the 2015 unit price of$402 did not. The engineer's
estimate also reflects information obtained from potential contractors, sub-contractors,
and suppliers. But the estimates provided by these firms are not binding, nor is there a
guarantee that these firms will actually place a bid reflecting the very estimates provided
to the engineer.
It is difficult to factor in the bidding environment when providing an estimate because it
is impossible to know the number of bidders who will submit a bid and actually compete
for the job. Based on recent conversations with contractors and suppliers, there are
other economic forces that cause bids to exceed estimated costs, including:
• A regional concrete pipe supplier stated April, 2015 was the best April for
shipping and production that his company has ever had. In fact, it exceeded their
record April by over 15%. Last year their company had the best year ever in Iowa
for sales.
• A local general contractor stated that last year their company had their best year
ever which exceeded previous year's work by over 15%. This year they are
anticipating a record breaking year with an increase of work by 20%.
5
• A local church went out for bids for an expansion project. The engineer's
estimate was $1.2 million. The low bid received in the fall of 2014 of$1.7 million
was 41.7% over the engineer's estimate. The church re-bid the project including
alternates and re-engineered plans anticipating bids to be lower in the spring of
2015. The low bid received in March 2015 was 2.2 million, 83.3% over the
original engineer's estimate.
• A city in southeast Iowa is currently taking bids on water plant improvements.
According to a local contractor, only one bidder is showing any interest in the
project. That city is currently in the process of attempting to find other suitable
bidders.
• A local contractor said that they have lost employees to other contractors in Iowa
that are starting to pay above prevailing wages to workers. This is exacerbated
by a $1.8 billion fertilizer plant in southern Iowa that is using up thousands of
construction workers.
• According to the U. S. Department of Labor, the unemployment rate for
experienced construction workers is at its lowest since 2007. In last month's
national employment numbers approximately one fourth of all new jobs created
were in the construction industry with approximately 45,000 new jobs.
It is likely that risk also played a role in limiting the number of bidders and in the prices
associated with the two actual bids. Due to the physical location of the Upper Bee
Branch Creek Project in the heart of the flood prone area and the flooding history, there
are inherently higher risks of damage to contractor operations and adjacent structures
than are typically found on other construction projects. Construction risk can generally
be defined as the potential for unknown, negative events to occur while the contractor is
working on a project. The primary sources of risk on this project generally fall into three
categories — local rainfall, Mississippi River levels, and the proximity of adjacent
buildings to the project work area.
The primary sources of risk impact the contractor's work in the following ways:
• Intense localized rainfall during construction will generally flow toward the project
area. Both overland rainfall and stormwater in pipes entering the project work
area can cause flash flooding damage to work that is in the middle of being
completed. Contractors have to mitigate this risk by building additional
temporary stormwater handling facilities and controls greater than what is
normally required on a typical construction project.
• Some stormwater will ultimately enter the new open channel as it is being
excavated, causing ground soils to become overly saturated so that contractors
will not be able to operate heavy equipment until the soils have dried out. Work
stoppages could be in the range of 3-7 days before excavation work can resume
6
after a large rain storm. It is difficult for contractors to mitigate this risk. They can
only pump dry the excavation hole after the rain event is over.
• A secondary impact of local rainfall is a rise in the groundwater levels. The
groundwater in the project area is also influenced by the Mississippi River stage.
Groundwater trending measurements indicate that as the river level goes up,
groundwater levels in the project area also increase. Additionally long-term
groundwater monitoring data indicates that groundwater levels within the project
area can rise and fall as much as 8 feet. In order for any deep utility or channel
excavation work to occur on the project, a dewatering pump system will need to
be installed by the contractors to artificially reduce the groundwater levels below
the bottom of the excavation by an additional 2-4 feet. This means natural
groundwater levels in the area will have to be lowered by as much as 15 feet.
High groundwater levels result in additional dewatering pumping costs for
contractors. The only practical way to mitigate this risk is to have additional
dewatering pumping capability available to respond in a timely manner when
groundwater levels increase.
• There are several locations within the project limits that will require deep
excavations in near proximity to adjacent buildings. The primary areas of
concern include Garfield Avenue, 22nd Street and 24th Street. Advanced
technology sheet piling and shoring systems will be required to ensure adjacent
buildings remain stable during excavation work. High groundwater levels in
these same areas add to the overall complexity of the shoring systems. Risk
mitigation strategies primarily consist of the selection of more expensive shoring
systems to support the excavation work and active monitoring for excessive
ground vibration and ground settlement.
As part of the design phase, the project team conducted a risk assessment to identify
major sources of risk during construction. After the areas of risk were identified, their
potential of probability to occur along with their impact to project scope, quality,
schedule, and cost were evaluated. Areas with high risk ratings were further evaluated
and considered while making final updates to the design. Bid item 2 (Project
Coordination &Administration), which was intended to quantify the contractor's costs
associated with contract administration, coordination with others, etc. was bid at $2.4
million more than estimated. This is where the bidding contractors included some of the
costs related to the higher risks associated with this project. The bid prices for sanitary
sewer, storm sewer, and water main were also higher than expected indicating that risk
concerns were reflected in these bid items as well.
When the low bid exceeds the engineer's estimate by a significant amount such as
50%, the immediate thought is that the bids should be rejected. Typically the belief is
that if the work is re-bid, it will result in lower bids and cost savings to the City. Because
the Upper Bee Branch Creek— Channel, Streets, & Utilities Project is not a typical
project, it is prudent to consider whether rejecting the current bids would actually result
in cost savings to the City.
7
The Upper Bee Branch Creek— Channel, Streets, & Utilities Project is just one of
several improvement projects associated with the Bee Branch Creek Restoration
Project and the larger, more encompassing Bee Branch Watershed Flood Mitigation
Project. Rejection of the bids would prevent the City from moving forward with other
improvement projects. Rejection of the bids would necessitate the rejection of the bids
for the Upper Bee Branch Creek— Structures Project because the structures (bridges)
cannot be constructed without the relocation of utilities and other work to be done as
part of this bid. Without first completing this component of the creek project, the 22nd
Street Storm Sewer and North End Storm Sewer projects would provide no flood
mitigation benefit.
In addition to simply delaying the completion of the improvements, rejecting the bids
could result in the loss of $5,327,138 in grant funding due to scheduling requirements
described in the Table 3 below.
Table 3. Listing of grant funding that would be lost if the bids were rejected due to mandatory
schedule requirements.
GRANT FUNDING SOURCE AMOUNT
Vision Iowa River Enhancement Community Attraction & Tourism Grant $2,060,000
RECAT
US Economic Development Administration Disaster Resiliency Grant(EDA) $1,227,138
US Federal Highways National Scenic Byways Grant NSB $1,000,000
Iowa DOT/DMATS Transportation Enhancement Funds $940,000
Iowa DOT State Recreational Trails Grant $100,000
TOTAL $5,327,138
The loss of grant funding will further delay the construction of improvements. The table
below illustrates how project improvements are delayed if the bids are rejected. The
delays are due both to the time it takes to re-bid or re-package a project and to the loss
of grant revenue. The schedule of when improvements can be constructed outlined in
the table below is based on the availability of funding and the estimated cost to
construct the improvements. The estimates for the improvements outlined in the table
below have been increased by 10 to 25 percent over the original Bee Branch
Watershed Flood Mitigation Project Plan (Project Plan) depending on the complexity of
the improvements.
8
Table 4. Comparison of the adopted Bee Branch Watershed Flood Mitigation Project Plan
schedule to the schedule if the bids are rejected.
Schedule of when improvements could be constructed based on the availability of
funding and the estimated cost to construct the improvements
Construction Construction
Schedule based Schedule based
on Adopted on Rejection of
Improvements Project Plan Bids
Flood Mitigation Gate Replacement 2015 2015
Bee Branch Creek Railroad Sanitary Sewer Crossing 2015 2015
Lower Bee Branch Basin Overlook 2015 2024
Lower Bee Branch 15th Street Overlook 2015 2024
Upper Bee Branch - Channel, Streets, Utilities 2015-2016 2016-2017
Upper Bee Branch - Structures 2015-2016 2016-2017
Bee Branch Creek Railroad Culverts 2015-2016 2020
Upper Bee Branch Site Improvements (Heritage 2016 2017-2018
Trail, Amphitheater, Embankment Slides
Upper Bee Branch Improvements north of 24` Street 2016 2017
at Comiskey Park
Bee Branch Trail Connect between 16th and Garfield 2016 2017
22nd St Parking Lot 2016 2017
North End Storm Sewer 2017 2022
22nd Street Storm Sewer 2017 2022
Flood Mitigation Maintenance Facility 2015-2018 2022-2024
17th Street Storm Sewer 2019 2020-2022
Water Plant Flood Protection 2019 2025-2026
Pervious Pavement Systems Green Alleys) 2021-2033 2026-2040*
*The number of alleys shifted beyond the original 20-year period ending in 2033 is between 50 and 70.
A typical course of action following the rejection of bids is to employ a value engineering
process to try and reduce costs associated with the project in an attempt to re-bid the
work and obtain more favorable bids. The estimated cost to re-package and re-bid the
current design would be approximately $150,000. Due to the loss of $5.3 million in grant
funding, even if value engineering and more competitive bids were realized, so that the
bids came in $5 million less than the current bids, the City would be no better off than it
if it awarded the current bid.
Based on the current bidding market, it is likely that rejecting the bids and value
engineering might not result in lower bids, even if project elements were removed. For
example, the difference in costs between the lowest bidder and the second low bidder
to build the two bridges associated with the Upper Bee Branch Creek — Structures
Project was over$1 million. With a report of 20 to 30 bridge projects to be let in the next
several months, the low bidder might not re-bid on the City job if it has secured
9
alternative work. Therefore, any potential savings would be offset by a higher cost to
construct the bridge.
Inflation is also a factor. According to many economists, the national unemployment rate
of 5.5% reported in February, 2015 represents "full employment." As reported in the
Wall Street Journal, if the unemployment rate drops below the "full employment" rate, it
could result in inflation.
Two major projects in SE Iowa and Central Iowa are sapping up the available work
force. The construction of a $1.8 billion fertilizer plant is still under construction in
Wever, Iowa. Construction of a $700 million Alliant Energy Plant is drawing workers to
Marshalltown, Iowa. IIW, P.C. states in the attached letter that "construction industry
associations are indicating a growing shortage of qualified workers consistent with
reports from some local contractors. One example is the Associated General
Contractors of America, 2015 Construction Hiring and Business Outlook provided a
survey and reported 81% of construction firms expect it will either become harder or
remain difficult to find qualified workers in the next 12 months."
These bid results show that is difficult to predict what will happen in terms of bidding in a
few months if the project is re-bid. It is certain that rejecting the bids would delay the
construction of incremental flood mitigation improvements, will result in the loss of grant
funding so the City would have less money for improvements, and might not result in
cost savings as the result of future lower bids. Despite being significantly more costly
than anticipated, awarding the contract deserves consideration.
Most importantly, awarding the bid will provide another incremental increase in the flood
protection, just as the completed Carter Road Detention Basin, the completed W. 32nd
Street Detention Basin, and the completed green alley systems do. Based on the
hydraulic model, the improvements associated with the Upper Bee Branch Creek—
Channel, Streets, & Utilities Project and the Upper Bee Branch Creek— Structures
Project will reduce the depth of floodwaters by two feet from Garfield Avenue to 24t"
Street.
Since the bid opening on May 7, City staff looked into the potential options associated
with awarding the contract without an increase to planned debt or previously adopted
Stormwater Utility rates. The determination was that this could be accomplished by
shifting funding from other phases of the Bee Branch Watershed Flood Mitigation
Project to this phase. This would result in delaying improvements such as the work
related to the railroad property and the flood protection for the Eagle Point Water Plant.
Table 5 compares the construction schedule if the bids are rejected to the schedule if
the contract was awarded. The most significant component changes related to flood
mitigation are the Bee Branch Creek Railroad Culverts and the pervious pavement
systems (green alleys). In the case of the 240 alleys, the project plan showed them
being completed within 20 years, but that time line could be extended. The design team
also reviewed the bids to determine why the bids are so high. If awarded, two project
10
improvements relating to soil handling and disposal could reduce the project cost by up
to $1.6 million. The schedule associated with this option is also reflected in Table 5.
Table 5. Comparison of the adopted Bee Branch Watershed Flood Mitigation Project Plan
schedule to alternative schedule options that would not require an increase to planned
debt or previously adopted Stormwater Utilit F rates.
Construction
Construction Construction Construction Schedule
Schedule Schedule Schedule Based on
based on based on Based on Awarding Bid
Original Rejection of Awarding with $1.6 M
Project Plan Bids Bid reduced
through Project
Improvements Improvements
Flood Mitigation Gate 2015 2015 2015 2015
Replacement
Bee Branch Creek Railroad 2015 2015 2015 2015
Sanitary Sewer Crossing
Lower Bee Branch Basin Overlook_ 2015 2024 2015 2015
Lower Bee Branch 15th Street 2015 2024 2015 2015
Overlook
Upper Bee Branch - Channel, 2015-2016 2016-2017 2015-2016 2015-2016
Streets, Utilities
Upper Bee Branch - Structures 2015-2016 2016-2017 2015-2016 2015-2016
Bee Branch Creek Railroad 2015-2016 2020 2019 2019
Culverts
Upper Bee Branch Site
Improvements (Heritage Trail, 2016 2017-2018 2016 2016
Amphitheater, Embankment
Slides
Upper Bee Branch Improvements
north of 24'" Street at Comiskey 2016 2017 2016 2016
Park
Bee Branch Trail Connect 2016 2017 2016 2016
between 16th and Garfield
22nd St Parking Lot 2016 2017 2016 2016
North End Storm Sewer 2017 2022 2017 2017
22nd Street Storm Sewer 2017 2022 2017 2017
Flood Mitigation Maintenance 2015-2018 2022-2024 2015-2017 2015-2017
Facility
17th Street Storm Sewer 2019 2020-2022 2020-2022 2019-2021
Water Plant Flood Protection 2019 2025-2026 2023-2024 2022-2023
Pervious Pavement Systems 2021-2033 2026-2040* 2024-2040* 2023-2040*
Green Alleys
*The number of alleys shifted beyond the original 20-year period ending in 2033 to between 50 and 70.
NOTE: The schedule outlined above showing when improvements can be constructed
is based on the availability of funding and the estimated cost to construct the
11
improvements. The estimates have been increased by 10 to 25 percent over the original
Project Plan developed in 2013 depending on the complexity of the improvements.
Awarding the contract also allows the City to award the Upper Bee Branch Creek—
Structures contract which came in at just 4.2% over the engineer's estimate.
RECOMMENDATION
I recommend that the contract be awarded to Portzen Construction, Inc. in the amount
of $27,819,266.00 for the Upper Bee Branch Creek— Channel, Streets, & Utilities
Project. I further recommend adopting the Bee Branch Watershed Flood Mitigation
Project Plan schedule outlined Table 6 below.
Table 6. Proposed Bee Branch Watershed Flood Mitigation Project Plan schedule
Project Plan
Construction
Improvements Schedule
Flood Mitigation Gate Replacement 2015
Bee Branch Creek Railroad Sanitary Sewer Crossinq 2015
Lower Bee Branch Basin Overlook 2015
Lower Bee Branch 15th Street Overlook 2015
Upper Bee Branch - Channel, Streets, Utilities 2015-2016
Upper Bee Branch - Structures 2015-2016
Bee Branch Creek Railroad Culverts 2019
Upper Bee Branch Site Improvements (Heritage 2016
Trail, Amphitheater, Embankment Slides
Upper Bee Branch Improvements north of 24t Street 2016
at Comiskey Park
Bee Branch Trail Connect between 16th and Garfield 2016
22nd St Parking Lot 2016
North End Storm Sewer 2017
22nd Street Storm Sewer 2017
Flood Mitigation Maintenance Facility 2015-2017
17th Street Storm Sewer 2019-2021
Water Plant Flood Protection 2022-2023
Pervious Pavement Systems Green Alleys) 2023-2040*
BUDGET IMPACT
Awarding the contract will not require the issuance of additional debt outlined in the
already adopted Project Plan or require adjusting the stormwater utility rate structure
already established by Ordinance 16-14 outlined in the Table 7 below.
12
Table 7. Illustration that awarding the contract to the low bidder will not require any adjustments
to the current Stormwater Utility rates established via Ordinance 16-14.
FY16 FY17 FY18 FY19 FY20 FY21 FY22
Current Rates
Established by
Ordinance $6.38 $6.81 $7.27 $7.76 $8.29 $8.85 $9.00
16-14
Rates if
Contract is $6.38 $6.81 $7.27 $7.76 $8.29 $8.85 $9.00
Awarded
The recommendation outlines a plan that will allow the contract to be awarded and the
project to proceed without increasing planned debt for the project and without increasing
previously adopted stormwater utility rates. The recommendation will, however, include
rescheduling other phases of the overall Bee Branch Watershed Flood Mitigation
Project because it includes shifting funding for other phases of the project to this phase.
If awarded, the cost of the Upper Bee Branch Creek— Channel, Streets, & Utilities
Project will be as follows:
Engineer's Estimate Bid
Construction Contract $ 18,518,300.00 $27,819,266.00
Contingency 925,915.00 925,915.00
Engineering _ 2,916,632.00 2,916,632.00
$ 22,360,847.OQ 131,661,813.00
The project will be funded by the Fiscal Year 2016 appropriation in the amount of
$43,359,000 for the Bee Branch Creek Restoration Project— Phase 4 and Phase 7 of
the Bee Branch Watershed Flood Mitigation Project [CIP#7201654].
The City will continue to seek additional outside funding assistance. To date, the City
has successfully secured $127 million in funding for the improvements associated with
the Bee Branch Watershed Flood Mitigation Project.
For the purpose of Resolution 389-05 which establishes the City Manager's authority to
approve change orders, the budget associated with this contract would be
$27,819,266.00 if the contract is awarded.
The $98,494,178 in sales tax increment funding from the state as part of the State Flood
Mitigation Program will not be disbursed in one lump sum or as the City incurs
expenses. Instead, the City is to receive the funding over a twenty-year period starting
in 2014. The legislation enacting the program recognized that the issuance of debt
might be required in order to immediately realize the flood mitigation improvements. In
13
fact, a new type of revenue bond was born: a sales tax increment revenue bond to be
issued this month.
In accordance with the adopted Fiscal Year 2016 budget, the Upper Bee Branch Creek
Restoration Project will be funded through the issuance of sales tax increment and state
revolving loan fund (SRF) debt to be retired utilizing the schedule of annual payments of
sales tax increment from the state.
REQUESTED ACTION
I respectfully request adoption of the attached resolution awarding the construction
contract for the Upper Bee Branch Creek— Channel, Streets, & Utilities Project to
Portzen Construction, Inc. of Dubuque, Iowa in the amount of$27,819,266.00 and
modifying the construction schedule of improvements associated with the Bee Branch
Watershed Flood Mitigation Plan so that awarding the contract for the Upper Bee
Branch Creek— Channel, Streets, & Utilities Project can be done without increasing
planned debt and without increasing previously adopted Stormwater Utility rates.
Attach.
Prepared by Steve Sampson-Brown and Deron Muehring
cc: Barry Lindahl, City Attorney
Maureen Quann, Assistant City Attorney
Jenny Larson, Budget Director
Teri Goodman, Assistant City Manager
Ken TeKippe, Finance Director
Deron Muehring, Civil Engineer II
14
RESOLUTION NO. 176-15
AWARDING PUBLIC IMPROVEMENT CONTRACT FOR THE UPPER BEE BRANCH
CREEK — CHANNEL, STREETS, & UTILITIES PROJECT
Whereas, sealed proposals have been submitted by contractors for the Upper
Bee Branch Creek — Channel, Streets, & Utilities Project (theProject) )pursuant to
Resolution No. 108-15 and Notice to Bidders published in a newspaper published in the
City of Dubuque, Iowa on the 10th day of April, 2015; and
Whereas, said sealed proposals were opened and read on the 7th day of May,
2015 and it has been determined that Portzen Construction, Inc. of Dubuque, Iowa, with
a bid in the amount of $27,819,266.00, is the lowest responsive, responsible bidder for
the Project.
Whereas, awarding of the contract will be contingent upon Economic
Development Administration bid award concurrence and Iowa Department of Natural
Resources State Revolving Fund bid award approval for the Upper Bee Branch Creek —
Channel, Streets & Utilities Project.
Whereas, the Bee Branch Watershed Flood Mitigation Project Plan schedule
milestones shall be amended to reflect the dates below.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF DUBUQUE, IOWA:
That a Public Improvement Contract for the Project is hereby awarded to Portzen
Construction, Inc. and the City Manager is hereby directed to execute a Public
Improvement Contract on behalf of the City of Dubuque for the Project.
That the Bee Branch Watershed Flood Mitigation Project Plan schedule
milestones are hereby amended as follows:
Improvements
Flood Mitigation Gate Replacement
Bee Branch Creek Railroad Sanitary Sewer Crossing
Lower Bee Branch Basin Overlook
Project Plan
Construction
Schedule
2015
2015
Lower Bee Branch 15th Street Overlook
Upper Bee Branch - Channel, Streets, Utilities
Upper Bee Branch - Structures
Bee Branch Creek Railroad Culverts
Upper Bee Branch Site Improvements (Heritage
Trail, Amphitheater, Embankment Slides)
2015
2015
2015-2016
2015-2016
2019
2016
Upper Bee Branch Improvements north of 24th Street
at Comiskey Park
2016
Bee Branch Trail Connect between 16th and Garfield
2016
22nd St Parking Lot
2016
North End Storm Sewer
2017
22nd Street Storm Sewer
2017
Flood Mitigation Maintenance Facility
2015-2017
17th Street Storm Sewer
2019-2021
Water Plant Rood Protection
2022-2023
Pervious Pavement Systems (Green Alleys)
2023-2040*
Passed, approved and adopted this 18th day of May, 2015.
LynrV. Sutton, Mayor Pro Tem
Attest:
Kevin 5. 1irnstahl, (SMC,' ity Clerk
�® Strand Associates, Inc®
910 West Wingra Drive
Madison,WI 53715
(P)608-251-4843
STRAND (F)608-251-8655
ASSOCIATES`
May 14, 2015
Mr. Deron Muehring, P.E.
City of Dubuque
50 West 13th Street
Dubuque, IA 52001
Re: Upper Bee Branch Creek Channel, Streets, and Utilities
Contract No. 1-2015
City of Dubuque, Iowa
Dear Mr. Muehring:
Bids for the above-referenced project were opened on May 7, 2015. Two bids were received for the
project. The low base bid(plus Alternative Bid No. 1)of$27,818,891 from Portzen Construction Inc. of
Dubuque, Iowa was greater than ENGINEER'S opinion of probable construction cost (OPCC) of
$18,518,000.
Basis of ENGINEER's OPCC:
The OPCC was developed in a unit price bid format similar to other municipal street and utility projects
and very similar to the Lower Bee Branch Restoration project that was bid on May 25,2010.The majority
of the unit prices in the OPCC were developed from the bid results of the Lower Bee Branch Restoration
project adjusted for inflation over the 5 year timeframe between projects. Adjustments were also made
to account for the differences in proposed quantities, differences in the general nature of the work, and
material supplier feedback.
During the bidding process it was discovered that the cost of the following items significantly exceeded
our estimated costs:
Dewatering(Removal and pumping of groundwater below the proposed construction elevation):
OPCC= $200,000
Tricon Cost Bid=$981,085
Portzen Cost Bid=$1,578,360
Temporary Soil Retention(Shoring/Sheet Pile, etc.):
OPCC= $800,000
Tricon Cost Bid= $2,560,000
Portzen Cost Bid=$1,117,500
Erosion Control (Silt Fence, Storm sewer catch basin protection, etc.):
OPCC=$10,000
Tricon Cost Bid= $222,000
Portzen Cost Bid= $78,225
EDV:cam\R\MAD\DocumentsASpecifications\ArchiveA2015\Dubuque, IAA1154.007.1-2015.mhbA(16) Specification LettersA(a) Resulting Bid TabulationABid
Evaluation Letter.docx
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Strand Associates, Inco
Mr. Deron Muehring, P.E.
City of Dubuque
Page 2
May 14, 2015
Traffic Control (Road closures, detour signage, etc.):
OPCC= $50,000
Tricon Cost Bid=$213,790
Portzen Cost Bid=$127,050
Quarried Limestone Block Low Flow Channel Base Laver:
OPCC= $462,000
Tricon Cost Bid=$704,365
Portzen Cost Bid=$739,777
Quarried Limestone Block Low Flow Channel Upper Laver:
OPCC=$115,600
Tricon Cost Bid=$206,346
Portzen Cost Bid=$ 216,750
Quarry Limestone Blocks-Low Flow Channel Mid Layers:
OPCC=$186,000
Tricon Cost Bid=$332,010
Portzen Cost Bid=$365,490
The above items, other than the quarried limestone, are traditionally challenging to quantify. The
disparity between the two bids received for these items support this. The underestimation of the quarried
limestone items is the result of an inaccurate estimated quantity in the engineer's OPCC in combination
with higher than anticipated material prices for the limestone.
Evaluation of Bids:
The City received bids from Portzen Construction Inc. and Tricon Construction Group.
Tricon Construction is the apparent low bidder for Contract 2-2015 that was opened one week earlier on
April 30, 2015. Based on the evaluation of bid items and feedback from Tricon Construction, it is
apparent that Tricon did not decide to bid the project until approximately 5 days prior to the bid opening.
Extremely high unit prices for channel excavation and removals(pavement removal, existing bee branch
culvert removal, tree stump removal) suggested they had not identified all subcontractors or sources for
the work. Tricon's roadway, landscaping, sanitary sewer, watermain, electrical (lighting), and fiber
(security camera system) costs all were near or below the ENGINEER's OPCC.
The evaluation of Portzen's low bid for Contract 1-2015 identified that the channel excavation,removals
(pavement removal, existing bee branch culvert removal)and major utilities(sanitary sewer, water main,
storm sewer) unit bid costs were significantly higher than the unit costs in the ENGINEER'S OPCC. In
general, the bid items associated with removals and channel excavation increased approximately
70% from the low bids received on the Lower Bee Branch project from 5 years ago. Also, the bid items
EDV:cam\R\MAD\DocumentsASpecifications\ArchiveA2015\Dubuque, IAA1154.007.1-2015.mhbA(16) Specification LettersAnu Resulting Bid TabulationABid
Evaluation Letter.docx
www.strand.com
Strand Associates, Inc"
Mr. Deron Muehring, P.E.
City of Dubuque
Page 3
May 14, 2015
associated with the sanitary sewer,water main,and storm sewer increased approximately 80%from
the low bids received on the Lower Bee Branch project from 5 years ago. Portzen's roadway,
landscaping, and electrical/security utility costs all were near or below the ENGINEER'S OPCC.
The Engineering News Record Construction Cost Index increased 14.8%from 2010 to present.
Below is a list of factors that may have influenced the bid costs received:
Lack of Bidders/Competition: A lack of bidders historically results in higher construction bid prices.
Discussions with several potential bidders that did not submit bids suggested they were concerned that
they could not compete with the Prime Bidder/Excavation Subcontractor tandem of Portzen
Construction/Tschiggfrie Excavating given their access to soil disposal sites.
Timing of Bidding: Discussions with other potential bidders that did not submit bids suggested that the
number of other projects currently bidding, current workloads, and bonding capacities for the 2015
construction season influenced their decision to not submit bids as a Prime Bidder or as an Excavation
Subcontractor.
Local Source Requirements: Requirements for quarried limestone from Dubuque County and
requirements for soil disposal in the state of Iowa are examples of local source requirements that
contributed to the lack of competition on several bid items. Cost savings could be realized through value
engineering.
Discrepancies in Take-Offs: The approximate quantities provided by the low bidder for the lump sum
items of Excavation and Granular Backfill differ significantly from the ENGINEER'S approximate
quantities. Cost savings could be realized through value engineering.
Risk: Discussions with the bidders and potential bidders that did not submit bids suggested that the
unique nature of the project combined with complexities with dewatering and soil retention adjacent to
buildings during construction posed additional risk to the contractors. Line item No. 2 (Coordination,
Administration, and Meetings) was added to the bid form, just prior to bidding, to help identify the
administrative costs related to coordination and meetings required during construction.
Coordination. Administration, Meetings:
OPCC=$10,000
Tricon Cost Bid= $2,000,000
Portzen Cost Bid=$2,373,460
After discussions with the two bidding contractors, the following costs were included into this bid item:
-Profit
-Unknowns/Risk
EDV:cam\R\MAD\DocumentsASpecifications\ArchiveA2015\Dubuque, IAA1154.007.1-2015.mhbA(16) Specification LettersAnu Resulting Bid TabulationABid
Evaluation Letter.docx
www.strand.com
Strand Associates, Inc"
Mr. Deron Muehring, P.E.
City of Dubuque
Page 4
May 14, 2015
-Overall Contract Scheduling and Meeting Requirements
-Overall Contract Coordination(Contract 2-2015 and other Future contracts)
Historically, unit prices for the various elements of a construction project contain the profit and the risk
associated with a specific project element(rather than including portions of that cost in a single item as
described above).
Given the significant discrepancy in the ENGINEER'S OPCC to the apparent low bidder costs,we would
recommend the City evaluate the following options:
1. Award Contract 2-2015 and Contract 1-2015 to the respective low bidders.
2. Reject bids and consider rebidding smaller construction packages.
3. Reject bids and consider rebidding a larger(one contract)overall package.
4. Reject bids and consider rebidding the same contracts.
Please refer to the letter from IIW P.C. highlighting current and future construction cost trends when
evaluating the options listed above. Feel free to contact me with any questions.
Sincerely,
STRAND ASSOCIATES, INC.®
Eric D. Vieth, P.E.
EDV:cam\R\MAD\DocumentsASpecifications\ArchiveA2015\Dubuque, IAA1154.007.1-2015.mhbA(16) Specification LettersAnu Resulting Bid TabulationABid
Evaluation Letter.docx
www.strand.com
IIW, P. C.
May 14, 2015
www.iiwengr.com
ARCHITECTURE
Mr. Deron Muehring, P.E. CIVIL ENGINEERING
City of Dubuque CONSTRUCTION SERVICES
50 W. 13th St ENVIRONMENTAL ENGINEERING
Dubuque, IA 52001 LAND SURVEYING
MUNICIPAL ENGINEERING
Re: Upper Bee Branch Creek STRUCTURAL ENGINEERING
City of Dubuque, Iowa TRANSPORTATION ENGINEERING
Dear Mr Muehring:
Dennis F.Waugh,PE/SE*
As requested, IIW, P.C. has prepared the following regarding the current and future construction Charles A.Cate,PE**
cost trends to assist in the City's evaluation of the alternatives for the Upper Bee Branch Creek. We Gary D.Sejkora,PE
would not consider this to be a comprehensive study, rather a recent compilation of data and Michael A.Jansen,PE/SE
reported information in conjunction with the evaluation of the Contract 1-2015 and Contract 2-2015 Ronald A.Balmer,PE/SE/AIA
P 1 Timothy J.Tranel,PE*
bids for the Upper Bee Branch. John F.Wandsnider,PE
Julie P.Neebel,PE
The Iowa Department of Transportation publishes a price trend index for Iowa highway construction. James P.Kaune,PE
The 4th Quarter 2014 Report is the latest our office was able to access as the 1 It Quarter 2015 Thomas J.Oster,PLS**
Report is pending completion in approximately 3 weeks. The 4th Quarter 2014 Annual Price Trend Wray A.Childers,PLS**
Composite Index increased from 268.4 in 2013 to 292.0 in 2014 suggesting an 8.8% increase in Geoffry T.Blandin,PE
construction cost from 2013 to 2014 for the three major categories of construction including Mark C.Jobgen, PE
Lauren N.Ray,PE/SE
Roadway Excavation, Pavement and Structures. The most notable increases occurred in concrete Cody T.Austin,PE*
pavement and concrete structures. We requested a forecasted price trend; however the IDOT Marc D.Ruden,PE
reported they do not have that information. Mark R.Fassbinder,AIA*
Michael A.Ruden,NCARBIAIA*
A sampling of recent and local projects illustrates what appears to be volatility in bids for public Craig J.Elskamp,AIA
infrastructure projects. In our opinion,this is evidenced by not only comparing the low bids to the Eric J.Helminiak,PE/SE*
estimates, but comparing the range of bids received. Examples include the Upper Bee Branch Steven J.Hunn,PE
Contract 2-2015 Structures $5.7 mil to$7.7 mil), Dubuque Airport Utilities $9.4 mil to$11.1 mil), Jeffrey J.Brandt,PLS
( ) q P ( ) Craig L.Geiser,PLS
and Lake Delhi Dam Phase 2($7.9 to$10.7 mil). We received several reports from local Adam J.Moris,PE
contractors of public infrastructure projects where the low bids were double digit percentages higher David A.Leapaldt,AIA,CID*
than estimated (e.g. Durant, Iowa WWTF), instances where bid dates were being extended to attract Nathan W.Miller,PE
more bidders(e.g. North Liberty WWTF), and one instance of a single bidder from Kentucky(e.g. Damian D.Baumhover,AIA
Ottumwa Water Treatment Plant). Nicholas A.Schneider,PE
Christian J.Hendrie,AIA
Reportedly,construction industry associations are indicating a growing shortage of qualified workers Eldon M.Schneider,PE
Whitney A.Lougheed,AIA*
consistent with reports from some local contractors. One example is the Associated General
Contractors of America, 2015 Construction Hiring and Business Outlook provided a survey and
reported 81%of construction firms expect it will either become harder or remain as difficult to find *LEED AP
qualified workers in the next 12 months. NICC was able to provide the attached Construction **Retired
Occupation and Industry Outlook(Ten Years), Dubuque County as well regarding labor shortage.
Regional demand may also be attributable to labor shortages and increases in material costs. For
example,the Iowa DOT reportedly plans a record $700 mil in 2015 for road construction in addition
to$200 mil for street&bridge repairs, and new paving. Cedar Rapids flood protection projects,
coupled with reportedly an unprecedented amount of construction in the Iowa City and Coralville
area are noted.
4155 Pennsylvania Avenue, Dubuque, IA 52002-2628 ♦ [P]563.556.2464/800.556.4491 ♦ [F]563.556.7811
A . O .
Upper Bee Branch Creek
May 14, 2015
Page 2 of 2
Once again we acknowledge this is not a comprehensive study. The intent is to provide a relatively quick compilation of information to
assist the City in evaluating the options presented in the May 14, 2015 correspondence from Strand Associates, Inc.
Sincerely,
Ilw, C.
Michael A.Jansen, P.E., S.E.
Chief Executive Officer I Principal Civil &Structural Engineer
Enc.
Cc: Strand Associates, Inc.
Bee Branch Watershed
Flood Mitigation Project Update
FLOOD MITIGATION
PROJECT
YIVIPPF111FF r1 i_119111g1 "`+ 140
Masterpiece on the Mississippi
May 15, 2015 Project Update
City Council Considers Upper Bee Branch Contract
Staff recommendation allows project to proceed without increasing planned debt and
without increasing previously adopted stormwater rates
The May 18 Dubuque City Council meeting agenda
includes consideration of two contracts for the Upper
Bee Branch Creek Restoration phase of the Bee
Branch Watershed Flood Mitigation Project.
Contract one is for the construction of the channel,
streets, and utilities and contract two is for
structures (bridges, culverts, etc.) related to the
creek restoration between Garfield Avenue and East
24th Street. This work is scheduled to begin in
June.
The engineering estimate of probable cost for
contract one was $18,518,300. Only two bids
were received for the project, with the low bid being
$27,819,266 ($9,300,966 above estimate) from
Portzen Construction, Inc. of Dubuque and the
high bid $29,996,692. City staff and the project
consultants believe only two bids were received
for the project and bids were significantly higher
than the estimate because of the complexity of the
project, the risk involved with working in a flood
zone, and the current abundance of work locally and
regionally for contractors.
Since the bid opening on May 7, City staff and
project consultants have scrutinized the bids,
reviewed estimated project costs, reviewed
impacts of rejecting the bids, and developed a
recommendation to award the low bid to Portzen
Construction, Inc.
The staff recommendation outlines a plan that will
allow the contract to be awarded and the project
to proceed without increasing planned debt for the
project and without increasing previously adopted
stormwater rates.
The recommendation will, however, include delaying
other phases of the overall Bee Branch Watershed
Flood Mitigation Project because it includes shifting
funding for other phases of the project to this phase.
The City Council has the option to award the contract
or reject the bids.
The staff recommendation includes project
improvements resulting in $1.6 million in cost
reductions through alternative soil management and
placement. To further address the $9.3 million gap
between the project estimate and the low bid, staff
are recommending that the work that is not part of
this bid involving the railroad property be delayed
from 2016 until 2019, the flood protection for the
Eagle Point Water Plant on Hawthorne Street be
delayed from 2020 until 2023, and 50-70 of the
project's 240 green alley reconstructions be delayed
beyond 2034 but completed by 2041.
These project schedule adjustments will free up for
immediate use sales tax increment funds awarded
through the Iowa Flood Mitigation Board to fund the
additional costs for the Upper Bee Branch Creek
Restoration phase of the project.
The railroad and water plant projects will still be
funded by sales tax increment funds, as planned
just later than currently scheduled. The alley
reconstructions would be funded by stormwater
utility funds and additional grants, beyond the 20 -
year watershed project period.
Awarding the contract and completing the project
work from Garfield Avenue to East 24th Street will
create incremental but significant improvements in
storage and conveyance of stormwater. The restored
creek will create additional capacity to safely move
stormwater through the flood -prone area.
If the City rejects the bids for contract one, it would
also be necessary to reject the bids for contract two
(for the structures). Other outcomes of rejecting
contract one bids include: delayed flood protection
due to a minimum one-year delay of project
completion, loss of up to $5.3 million in grant
funding due to mandatory schedule requirements,
What is the Bee Branch Watershed?
and up to $150,000 to rebid the project. Other
considerations related to rejecting the bids include
the possibility of modifying the project but not
receiving more favorable bids due to an even more
competitive bidding environment and increased labor
and material costs, resulting in a significant project
delay with no measurable cost -savings benefits or
additional flood protection.
To read the full staff recommendation, visit
www.cityofdubuque.org/beebranch. The City Council
meeting will be held on Monday, May 18, at 6:30
p.m. in the City Council Chambers on the second
floor of the Historic Federal Building at 350 W. Sixth
Street. All meetings are broadcast on CityChannel
Dubuque (channels 85.2 and 8 on the Mediacom
cable system) and streamed live and archived at
www.cityofdubuque.org/media. The complete City
Council agenda and related documents are available
at www.cityofdubuque.org/agendas.
The Bee Branch Watershed is a 6.5 square mile area of
Dubuque that drains to the Bee Branch Creek, and where over
50 percent of the city's residents either live or work. Based
on a 2009 Federal Emergency Management Agency (FEMA)
study, 1,373 homes and businesses in the watershed are prone
to flooding, including 70 businesses that employ over 1,400
people.
Progress and Future Improvements
Several Bee Branch Project infrastructure improvements are
already completed, including two detention basins, a complete
streets project in the Millwork District, and the Lower Bee
Branch Creek Restoration. In addition to the Upper Bee Branch
Creek Restoration, future infrastructure improvements include
increasing the capacity of multiple storm sewers and converting
alleys in the Bee Branch Watershed from traditional impervious
surfaces to permeable pavers that allow water to pass through
its surface and filter into the soil below.
For additional details on the Bee Branch Watershed Flood
Mitigation Project, visit www.cityofdubuque.org/beebranch.
Bee Branch Project Updates
To receive Bee Branch Project -related
updates and alerts via email and/or text,
subscribe to the Bee Branch Notify Me at
www.cityofdubuque.org/notifyme.
We also invite you to like the Bee Branch
Watershed Flood Mitigation Project
on Facebook at www.facebook.com/
beebranchdbq and/or follow it on Twitter
at www.twitter.com/beebranchdbq.
For general questions or comments,
email beebranch@cityofdubuque.org
or call (563) 690-6068.