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COOPERATIVE FUNDING AGREEMENT FOR BRACKISH FACILITY AT WATER TREATMENT PLANT #2 (N176)AGREEMENT NO. 10000000097 COOPERATIVE FUNDING AGREEMENT BETWEEN THE SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT AND CITY OF CLEARWATER FOR BRACKISH FACILITY AT WATER TREATMENT PLANT #2 (N176) THIS COOPERATIVE FUNDING AGREEMENT is made and entered into by and between the SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT, a public corporation of the State of Florida, whose address is 2379 Broad Street, Brooksville, Florida 34604-6899, for itself and on behalf of the Pinellas-Anclote River Basin Board, hereinafter collectively referred to as the "DISTRICT," and the CITY OF CLEARWATER, a municipal corporation of the State of Florida, whose address is 112 South Osceola Avenue, Third Floor, Clearwater, Florida 33756, hereinafter referred to as the "CITY." WITNESSETH: WHEREAS, the CITY proposed a project to the DISTRICT for funding consideration under the DISTRICT'S cooperative funding program; and WHEREAS, the project consists of the design and construction of a brackish groundwater wellfield, reverse osmosis treatment facilities, and byproduct treatment and discharge well that will have the capacity to produce up to 5.0 million gallons per day (mgd) of potable water on an annual average basis, hereinafter referred to as the "PROJECT"; and WHEREAS, the DISTRICT considers the PROJECT worthwhile and desires to assist the CITY in funding the PROJECT. NOW THEREFORE, the DISTRICT and the CITY, in consideration of the mutual terms, covenants and conditions set forth herein, agree as follows: 1. PROJECT MANAGER AND NOTICES. Each party hereby designates the employee set forth below as its respective Project Manager. Project Managers will assist with PROJECT coordination and will be each party's prime contact person. Notices and reports will be sent to the attention of each party's Project Manager by U.S. mail, postage paid, by nationally recognized overnight courier, or personally to the parties' addresses as set forth below. Notice is effective upon receipt. Project Manager for the DISTRICT: John Ferguson 2379 Broad Street. Brooksville, Florida 34604 Project Manager for the CITY: Robert S. Fahey, P.E. 100 South Myrtle Avenue, Suite 220 Clearwater, Florida 33756 Any changes to the above representatives or addresses must be provided to the other party in writing. Page 1 of 9 1.1 The DISTRICT'S Project Manager is hereby authorized to approve requests to extend a PROJECT task deadline set forth in this Agreement. Such approval must be in writing, explain the reason for the extension and be signed by the Project Manager and his or her Department Director, or Deputy Executive Director if the Department Director is the Project Manager. The DISTRICT'S Project Manager is not authorized to approve any time extension which will result in an increased cost to the DISTRICT or which will exceed the expiration date set forth in Paragraph 7, Contract Period. 1.2 The DISTRICT'S Project Manager is authorized to approve the use of contingency funds and adjust a line item amount of the Project Budget contained in the Project Plan set forth in Exhibit "B" or, if applicable, the refined budget as set forth in Paragraph 3.2 below. The authorization must be in writing, explain the reason for the use of the contingency funds or adjustment, and be signed by the Project Manager, his or her Department Director and Deputy Executive Director. The DISTRICT'S Project Manager is not authorized to make changes to the Scope of Work and is not authorized to approve any increase in the amounts set forth in the funding section of this Agreement. 2. SCOPE OF WORK. Upon receipt of written notice to proceed from the DISTRICT, the CITY will perform the services necessary to complete the PROJECT in accordance with the Special Project Terms and Conditions set forth in Exhibit "A" and the CITY'S Project Plan set forth in Exhibit "B." Any changes to this Scope of Work and associated costs, except as provided herein, must be mutually agreed to in a formal written amendment . approved by the DISTRICT and the CITY prior to being performed by the CITY, subject to the provisions of Paragraph 3, Funding. The CITY will be solely responsible for managing the PROJECT, including the hiring and supervising of any consultants or contractors it engages in order to complete the PROJECT. The parties agree that time is of the essence in the performance of each obligation under this Agreement. 3. FUNDING. The parties anticipate that the total cost of the PROJECT will be Thirty Million Four Hundred Thirty-Three Thousand Seven Hundred Eighty Dollars ($30,433,780). The DISTRICT agrees to fund PROJECT costs up to Fifteen Million Two Hundred Sixteen Thousand Eight Hundred Ninety Dollars ($15,216,890), subject to Subparagraph 3.9, and will have no obligation to pay any costs beyond this maximum amount. The CITY agrees to provide all remaining funds necessary for the satisfactory completion of the PROJECT. The CITY will be the lead party to this Agreement and pay PROJECT costs prior to requesting reimbursement from the DISTRICT. 3.1 Any federal, state, local or grant monies received by the CITY for this PROJECT will be applied to equally reduce each party's share of PROJECT costs. The CITY will provide the DISTRICT with written documentation detailing its allocation of any such funds appropriated for this PROJECT. In the event the DISTRICT provides funding for the PROJECT in excess of the DISTRICT'S share after all federal, state, local and grant monies have been applied as set forth herein, the CITY will promptly refund such overpaid amounts to the DISTRICT. Page 2 of 9 3.2 The DISTRICT will reimburse the CITY for the DISTRICT'S share of the PROJECT costs in accordance with the Project Budget contained in the Project Plan set forth in Exhibit "B." The CITY may contract with consultant(s), contractor(s) or both in accordance with the Special Project Terms and Conditions set forth in Exhibit "A." Upon written DISTRICT approval, the budget amounts for the work set forth in such contract(s) will refine the amounts set forth in the Project Budget and be incorporated herein by reference. The CITY will not use any contingency funds allowed under this Agreement unless approved by the DISTRICT in accordance with Paragraph 1.2 of this Agreement. The DISTRICT will reimburse the CITY for 50 percent of all allowable costs in each DISTRICT approved invoice received from the CITY, but at no point in time will the DISTRICT'S expenditure amount under this Agreement exceed expenditures made by the CITY. Payment will be made to the CITY within forty-five (45) days of receipt of an invoice with adequate supporting documentation to satisfy auditing purposes. Invoices will be submitted to the DISTRICT every two (2) months electronically at invoices(c?WaterMatters.ora, or at the following address: Accounts Payable Section Southwest Florida Water Management District Post Office Box 1166 Brooksville, Florida 34605-1166 In addition to sending an original invoice to the DISTRICT'S Accounts Payable Section as required above, copies of invoices may also be submitted to the DISTRICT'S Project Manager in order to expedite the review process. Failure of the CITY to submit invoices to the DISTRICT in the manner provided herein will relieve the DISTRICT of its obligation to pay within the aforementioned timeframe. 3.3 Any travel expenses which may be authorized under this Agreement will be paid in accordance with Section 112.061, F.S., as may be amended from time to time. 3.4 The DISTRICT will not reimburse the CITY for any purpose not specifically identified in Paragraph 2, Scope of Work. 3.5 Surcharges added to third party invoices are not considered an allowable cost under this Agreement. 3.6 The DISTRICT will have no obligation and will not reimburse the CITY for any design costs for the wellfield under this Agreement until a water use permit is obtained and construction of the wellfield (Activity 4, Table 2) has commenced. The DISTRICT will have no obligation and will not reimburse the CITY for any design costs for the treatment plant under this Agreement until construction of the treatment plant (Activity 6, Table 2) has commenced. 3.7 Each CITY invoice must include the following certification, and the CITY hereby delegates authority by virtue of this Agreement to its Project Manager to affirm said certification: Page 3 of 9 "I hereby certify that the costs requested for reimbursement and the City's matching funds, as represented in this invoice, are directly related to the performance under the Brackish Facility at Water Treatment Plant #2 agreement between the Southwest Florida Water Management District and the City of Clearwater (Agreement No. 10000000097), are allowable, allocable, properly documented, and are in accordance with the approved project budget. The City has been allocated a total of $_ in federal, state, local or grant monies for this PROJECT. $_ has been allocated to this invoice, reducing the DISTRICT'S and CITY'S share to $_ / $_ respectively." 3.8 The DISTRICT'S performance and payment pursuant to this Agreement are contingent upon the DISTRICT'S Governing Board appropriating funds in its approved budget for the PROJECT in each Fiscal Year of this Agreement. The CITY recognizes that the DISTRICT has approved $758,415 for the PROJECT through Fiscal Year 2010. 3.9 The DISTRICT will limit funding to a finished potable water design capacity commensurate with groundwater withdrawal quantities that are not expected to cause adverse environmental impacts. In the event that the finished potable water design capacity of the PROJECT is less than 5.0 mgd annual average, the DISTRICT reserves the right to reduce its share of design and construction funding in an amount equivalent to the percentage of capacity not attained. 4. COMPLETION DATES. The CITY will commence the PROJECT by December 31, 2009, will complete the PROJECT by December 31, 2015 and will otherwise meet the milestones established in this Agreement, as may be extended by the DISTRICT in accordance with Paragraph 1 of this Agreement. In the event of hurricanes, tornados, floods, acts of God, acts of war, or other such catastrophes, or other man-made emergencies such as labor strikes or riots, which are beyond the control of the CITY, the CITY'S obligations to meet the time frames provided in this Agreement will be suspended for the period of time the condition continues to exist. During such suspension, this Agreement will remain in effect. The suspension of the CITY'S obligations provided for in this provision will be the CITY'S sole remedy for the delays set forth herein. 5. FAILURE TO COMPLETE PROJECT. The CITY will repay the DISTRICT all funds the DISTRICT paid to the CITY under this Agreement, if: a) the CITY fails to complete the PROJECT in accordance with Paragraph 4 of this Agreement; b) the DISTRICT determines, in its sole discretion and judgment, that the CITY has failed to maintain scheduled progress of the PROJECT thereby endangering the timely performance of this Agreement; or c) the CITY fails to appropriate sufficient funds to complete the PROJECT. The CITY will be obligated to pay attorneys' fees and costs incurred by the DISTRICT, including appeals, as a result of CITY'S failure to repay the DISTRICT in accordance with this Paragraph. 6. OPERATION AND MAINTENANCE. After construction is completed, the CITY will operate and maintain the PROJECT for a minimum of twenty (20) years, in such a manner that the resource benefits as described in the Project Plan are achieved. In the event the PROJECT is not operated and maintained in accordance with these Page 4 of 9 requirements, the CITY will pay to the DISTRICT an early termination fee. The fee will be five percent (5%) of total DISTRICT monies contributed to the PROJECT for each year or a fraction thereof for early termination of the PROJECT. The CITY will be obligated to pay attorneys' fees and costs incurred by the DISTRICT, including appeals, as a result of CITY'S failure to repay the DISTRICT in accordance with this Paragraph. The rights and remedies in this provision are in addition to any other rights and remedies provided by law or this Agreement. 7. CONTRACT PERIOD. This Agreement will be effective December 31, 2009 and will remain in effect through December 31, 2016, or upon satisfactory completion of the PROJECT and subsequent reimbursement to the CITY, whichever occurs first, unless amended in writing by the parties. The CITY will not be eligible for reimbursement for any work that is commenced, or costs that are incurred, prior to the effective date of this Agreement. 8. PROJECT RECORDS AND DOCUMENTS. Each party, upon request, will permit the other party to examine or audit all PROJECT related records and documents during or following completion of the PROJECT. Payments made to CITY under this Agreement will be reduced for amounts found to be not allowable under this Agreement by an audit. The CITY will refund to the DISTRICT all such disallowed payments. If an audit is undertaken by either party, all required records will be maintained until the audit has been completed and all questions arising from it are resolved. Each party will maintain all such records and documents for at least three (3) years following completion of the PROJECT. Each party will allow public access to PROJECT documents and materials made or received by either party in accordance with the Public Records Act, Chapter 119, F.S. Should either party assert any exemption to the requirements of Chapter 119, F.S., the burden of establishing such exemption, by way of injunctive or other relief as provided by law, will be upon the asserting party. 9. REPORTS. The CITY will provide the DISTRICT with copies of any and all reports, models, studies, maps or other documents resulting from the PROJECT. Additionally, two (2) sets, electronic and hardcopy, of any final reports must be submitted to the DISTRICT as Record and Library copies. 10. LIABILITY. Each party hereto agrees to defend, indemnify and hold the other harmless, to the extent allowed under Section 768.28, F.S., from all claims, loss, damage and expense, including attorneys' fees and costs and attorneys' fees and costs on appeal, arising from the negligent acts or omissions of the indemnifying party's officers, employees, contractors and agents related to its performance under this Agreement. The indemnified party will have the right to approve counsel selected by the indemnifying party. This provision does not constitute a waiver of either party's sovereign immunity under Section 768.28, F.S. or extend either party's liability beyond the limits established in Section 768.28, F.S. Additionally, this provision will not be construed to impose contractual liability on either party for underlying tort claims as described above beyond the limits specified in Section 768.28, F.S. 11. DEFAULT. Either party may terminate this Agreement upon the other party's failure to comply with any term or condition of this Agreement, including the failure to meet specific milestones established in this Agreement, as long as the terminating party is not Page 5 of 9 in default of any term or condition of this Agreement at the time of termination. In addition to the above, the DISTRICT may terminate this Agreement if, in its sole discretion and judgment, it determines that the CITY has failed to maintain scheduled progress of the PROJECT thereby endangering the timely performance of the PROJECT. To effect termination, the terminating party will provide the defaulting party with a written "Notice of Termination" stating its intent to terminate and describing all terms and conditions with which the defaulting party has failed to comply. If the defaulting party has not remedied its default within thirty (30) days after receiving the Notice of Termination, this Agreement will automatically terminate. If a default cannot reasonably be cured in thirty (30) days, then the thirty (30) days may be extended at the non-defaulting party's discretion, if the defaulting party is pursuing a cure of the default with reasonable diligence. The rights and remedies in this provision are in addition to any other rights and remedies provided by law or this Agreement. 12. RELEASE OF INFORMATION. The parties agree not to initiate any oral or written media interviews or issue press releases on or about the PROJECT without providing advance notices or copies to the other party. This provision will not be construed as preventing the parties from complying with the public records disclosure laws set forth in Chapter 119, F.S. 13. DISTRICT RECOGNITION. The CITY will recognize DISTRICT funding and, if applicable, Basin Board funding in any reports, models, studies, maps or other documents resulting from this Agreement, and the form of said recognition will be subject to DISTRICT approval. If construction is involved, the CITY will provide signage at the PROJECT site that recognizes funding for this PROJECT provided by the DISTRICT and, if applicable, the Basin Board(s). All signage must meet with DISTRICT written approval as to form, content and location, and must be in accordance with local sign ordinances. 14. PERMITS AND REAL PROPERTY RIGHTS. The CITY must obtain all permits, local government approvals and all real property rights necessary to complete the PROJECT prior to commencing any construction involved in the PROJECT. The DISTRICT will have no obligation to reimburse the CITY for any costs under this Agreement until the CITY has obtained such permits and property rights necessary to undertake the PROJECT. 15. LAW COMPLIANCE. Each party will comply with all applicable federal, state and local laws, rules, regulations and guidelines, including those of the DISTRICT, related to performance under this Agreement. If the PROJECT involves design services, the CITY'S professional designers and the DISTRICT'S regulation and projects staff will meet regularly during the PROJECT design to discuss ways of ensuring that the final design for the proposed PROJECT technically complies with all applicable DISTRICT rules and regulations, however, the DISTRICT undertakes no duty to ensure compliance with such rules and regulations. 16. DIVERSITY IN CONTRACTING AND SUBCONTRACTING. The DISTRICT is committed to supplier diversity in the performance of all contracts associated with DISTRICT cooperative funding projects. The DISTRICT requires the CITY to make good faith efforts to encourage the participation of minority owned and woman owned Page 6 of 9 and small business enterprises, both as prime contractors and subcontractors, in the performance of this Agreement, in accordance with applicable laws. 16.1 If requested, the DISTRICT will assist the CITY by sharing information to help the cooperator in ensuring that minority owned and woman owned and small businesses are afforded an opportunity to participate in the performance of this Agreement. 16.2 The CITY agrees to provide the DISTRICT with a report indicating all contractors and subcontractors who performed work in association with the PROJECT, the amount spent with each contractor or subcontractor, and to the extent such information is known, whether each contractor or subcontractor was a minority owned or woman owned or small business enterprise. If no minority owned or woman owned or small business enterprises were used in the performance of this Agreement, then the report shall so indicate. The MinorityMomen Owned and Small Business Utilization Report form is attached as Exhibit "C." The report is required upon final completion of the PROJECT prior to final payment, or within thirty (30) days of the execution of any amendment that increases PROJECT funding, for information up to the date of the amendment and prior to the disbursement of any additional funds by the DISTRICT. 17. ASSIGNMENT. Except as otherwise provided in this Agreement, no party may assign any of its rights or delegate any of its obligations under this Agreement, including any operation or maintenance duties related to the PROJECT, without the prior written consent of the other party. Any attempted assignment in violation of this provision is void. 18. SUBCONTRACTORS. Nothing in this Agreement will be construed to create, or be implied to create, any relationship between the DISTRICT and any subcontractor of the CITY. 19. THIRD PARTY BENEFICIARIES. Nothing in this Agreement will be construed to benefit any person or entity not a party to this Agreement. 20. LOBBYING PROHIBITION. Pursuant to Section 216.347, F.S., the CITY is hereby prohibited from using funds provided by this Agreement for the purpose of lobbying the Legislature, the judicial branch or a state agency. 21. PUBLIC ENTITY CRIMES. Pursuant to Subsections 287.133(2) and (3), F.S., a person or affiliate who has been placed on the convicted vendor list following a conviction for a public entity crime may not submit a bid, proposal, or reply on a contract to provide any goods or services to a public entity; may not submit a bid, proposal, or reply on a contract with a public entity for the construction or repair of a public building or public work; may not submit bids, proposals, or replies on leases of real property to a public entity; may not be awarded or perform work as a contractor, supplier, subcontractor, or consultant under a contract with any public entity; and may not transact business with any public entity in excess of the threshold amount provided in Section 287.017, F.S., for Category Two, for a period of 36 months following the date of being placed on the Page 7 of 9 convicted vendor list. The CITY agrees to include this provision in all subcontracts issued as a result of this Agreement. 22. DISCRIMINATION. Pursuant to Subsection 287.134(2)(a), F.S., an entity or affiliate who has been placed on the discriminatory vendor list may not submit a bid, proposal, or reply on a contract to provide any goods or services to a public entity; may not submit a bid, proposal, or reply on a contract with a public entity for the construction or repair of a public building or public work; may not submit bids, proposals, or replies on leases of real property to a public entity; may not be awarded or perform work as a contractor, supplier, subcontractor, or consultant under a contract with any public entity; and may not transact business with any public entity. The CITY agrees to include this provision in all subcontracts issued as a result of this Agreement. 23. GOVERNING LAW. All aspects of this Agreement are governed by Florida law and venue will be in Hernando County, Florida. 24. SURVIVAL. The provisions of this Agreement that require performance after the expiration or termination of this Agreement will remain in force notwithstanding the expiration or termination of this Agreement including Subparagraph 3.1 and Paragraphs 5, 6, and 10. 25. ENTIRE AGREEMENT. This Agreement and the attached exhibits listed below constitute the entire agreement between the parties and, unless otherwise provided herein, may be amended only in writing, signed by all parties to this Agreement. 26. DOCUMENTS. The following documents are attached and made a part of this Agreement. In the event of a conflict of contract terminology, priority will first be given to the language in the body of this Agreement, then to Exhibit "A," then to Exhibit "B," and then to Exhibit "C." Exhibit "A" Special Project Terms and Conditions Exhibit "B" CITY'S Project Plan Exhibit "C" MinorityMomen Owned and Small Business Utilization Report Form The remainder of this page intentionally left blank. Page 8 of 9 IN WITNESS WHEREOF, the parties hereto, or their lawful representatives, have executed this Agreement on the day and year set forth next to their signatures below. SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT By: David L. Moore, Executive Director CITY OF CLEARWATER Frank V. Hibbard, Mayor-Commissioner Date By: _ :]" AUAA_? „ .. . Bill Horne, City Manager Date Approved as to form: Attest: "Vt., City Attorn Ch ia-E- eetr, City Clerk Rosemarie Call, Date COOPERATIVE FUNDING AGREEMENT BETWEEN THE SOUTHWEST FLORIDA WATER MANAGEMENT DISTRICT AND CITY OF CLEARWATER FOR BRACKISH FACILITY AT WATER TREATMENT PLANT #2 (N176) OF 7# TER DISTRICT APPROVAL INITIALS DATE LEGAL RISK MGMT CONTRACTS DEPT DIRECTOR i DEPUTY EXEC DIR /D GOVERNING BOARD Iz SO - fd z9a11190 Date Page 9 of 9 AGREEMENT NO. 10000000097 EXHIBIT "A" SPECIAL PROJECT TERMS AND CONDITIONS 1. CONTRACTING WITH CONSULTANT AND CONTRACTOR. The CITY may engage the services of a consultant(s), hereinafter referred to as the "CONSULTANT," and a contractor(s), hereinafter referred to as the "CONTRACTOR," to perform the services in accordance with the CITY'S Project Plan previously submitted to the DISTRICT and attached as Exhibit "B." The CITY will be responsible for administering the contracts with the CONSULTANT and CONTRACTOR. 2. APPROVAL OF CONSTRUCTION BID DOCUMENTS. The CITY must obtain the DISTRICT'S written approval of all construction bid documents prior to being advertised or otherwise solicited. The DISTRICT will not unreasonably withhold its approval. The DISTRICT'S approval of the construction bid documents does not constitute a representation or warranty that the DISTRICT has verified the architectural, engineering, mechanical, electrical, or other components of the construction documents, or that such documents are in compliance with DISTRICT rules and regulations or any other applicable rules, regulations, or laws. The DISTRICT'S approval will not constitute a waiver of the CITY'S obligation to assure that the design professional performs according to the standards of his or her profession. The CITY will require the design professional to warrant that the construction documents are adequate for bidding and construction of the PROJECT. 3. DISTRICT PARTICIPATION IN SELECTING CONSULTANT AND REVIEW OF CITY'S SELECTION OF CONTRACTOR. As applicable, upon notifying the CITY'S Project Manager, the DISTRICT will have the option of participating as an evaluator in the CITY'S process for selecting the CONSULTANT. The CITY will provide the DISTRICT with a tabulation of CONTRACTOR bids and a recommendation to award. The CITY must obtain the DISTRICT'S approval of the selected CONTRACTOR prior to proceeding with construction of the PROJECT and the DISTRICT will not unreasonably withhold its approval. 4. APPROVAL OF CONTRACTS. The CITY must obtain the DISTRICT'S prior written approval of any contracts entered into with its CONSULTANTS and CONTRACTORS. The DISTRICT will not unreasonably withhold its approval. Page 1 of 1 AGREEMENT NO. 10000000097 EXHIBIT "B" CITY'S PROJECT PLAN Clearwater System Overview The CITY serves approximately 117,000 people and is located along the west coast of Florida within the Tampa Bay Region. The Tampa Bay Region (Pasco, Pinellas and Hillsborough counties) has experienced rapid growth coupled with sustained drought that has placed a stress upon regional water resources. The CITY is seeking to provide a drought- resistant water supply. In addition, regional water supply system production could be offset by substituting the CITY'S current wholesale demand with local coastal brackish groundwater. Currently, the CITY'S annual average potable drinking water system demand is approximately 13 million gallons per day (mgd), of which the CITY provides approximately 4.0 mgd from three CITY-owned fresh groundwater treatment facilities. The remaining capacity is purchased from Pinellas County Utilities, a member government of regional wholesale water supplier Tampa Bay Water. Project Overview and Purpose The CITY proposed this project to replace a portion of its supply of water purchased from Pinellas County Utilities. The system capacity, as currently proposed, is being designed to provide the necessary firm capacity to meet the CITY'S projected demands. There are several drivers for the CITY'S alternative water supply project, including desire to have customizable water treatment ability, a drought-resistant water supply, and direct input on future capital projects related to water supply. The CITY has completed independent feasibility and hydrogeologic studies, which included multiple test wells in the proposed production area, conceptual facility design, and capital cost estimate. The studies have concluded that the proposed project is feasible. Project History The CITY developed a Water Supply Master Plan in 2004 and updated it in 2008 based on the study of available water resources to achieve a sustainable, quality water supply. A key component of this plan is the utilization of membrane treatment to convert brackish groundwater to drinking water. The CITY concluded that growth projections are relatively stable as the City of Clearwater is essentially built out. Historical and projected demands within the CITY'S current service area indicate the need for a finished water capacity of up to 13.0 mgd annual average flow. In October 2004, the consulting firm Parsons Water & Infrastructure, Inc. completed a report entitled Water Master Plan - Capital Improvements Implementation Master Plan. The report included a preliminary basis of design and conceptual plant layout for the purpose of developing the opinion of probable construction cost. This cost opinion included the wellfield, concentrate disposal, piping to existing distribution system, chemical feed systems, reverse osmosis treatment system, post treatment, high service pumping, ground storage, general conditions and site work, buildings, electrical and control system, and associated piping. Page 1 of 4 In January 2006, the CITY requested and paid for updated projected costs from Parsons due to a significant escalation of construction costs that were observed throughout the world-wide construction market. These updated costs were included in the approved CITY budgets that will fund the proposed treatment facilities through municipal water and sewer revenue bonds for a total of up to $34 million to finance the cost of design, permitting, land acquisition and construction of well sites, pipelines and the reverse osmosis water plant project. The CITY completed Phase 1 of the Alternative Water Supply Project - RO Plant #2 in July of 2009. The study completed by Parsons Water & Infrastructure, Inc. and SDI Environmental Services, Inc. included the construction of a total of three test production wells and monitoring well clusters. The testing and preliminary modeling confirmed that the PROJECT is viable for the design withdrawal volumes in southern Clearwater, generally south of State Road 60. The CITY estimates approximately 12 wells will be completed with targeted withdrawal from lower Production Zone A of the Upper Floridan Aquifer (to a depth from between 160 feet and 250 feet below land surface) will be needed to produce 5.0 mgd of finished water on an annual average basis. Preliminary groundwater quality from the test wells indicates an average wellfield quality in a range of approximately 300 - 1,000 mg/L chlorides (approximately 600 -- 2,000 mg/L Total Dissolved Solids) can be expected. The study concluded that a properly piloted and designed advanced treatment process will produce finished water meeting all potable water standards. Project tasks completed prior to this Agreement are shown in Table 1. These tasks were wholly funded by the CITY. Table 1 CITY'S Tasks and Costs Prior to this Agreement Activity Schedule CITY Cost 1. Water Supply Master Planning -- Evaluation of alternatives and preliminary cost-benefit analysis of Completed 2004 $ 342,341 selected options. 2. Test Well Design and Permitting - Design and permitting of test production and monitoring wells with Completed 2006 $ 555,916 Aquifer Performance Testing. 3. Construction of Test Production and Monitoring Wells - Construction of three test production wells and Completed 2009 $ 790 526 associated monitoring wells, aquifer performance testing , and data collection. 4. Data Analysis and Hydrogeologic Services - Groundwater modeling and revised financial evaluation Completed 2010 $ 98,880 based upon data collection. Total -- $1,787,663 Project Benefits The CITY'S utility is currently not utilizing alternative water sources available to locally produce potable water. The brackish groundwater supply could provide a drought-resistant supply. Page 2of4 Project Scope The scope of the PROJECT includes essentially three main categories of PROJECT execution: Preliminary Engineering, Final Engineering, and Construction. The Preliminary Engineering phase includes the establishment of preliminary technical design. The end- product of this phase is completion of technical design to a level necessary to secure permits prior to construction. These include but are not limited to the following permits: Environmental Resource Permit (Florida Department of Environmental Protection (FDEP)), Public Water Supply Construction Permit (FDEP), UIC Underground Injection Control (FDEP), Well Construction (DISTRICT), and Water Use Permit (DISTRICT). The CITY will secure the reverse osmosis plant design engineering consultant through a formal Request for Qualifications selection process in Fiscal Year (FY) 2010. The scope of work for the design consultant will involve the treatment plant and all associated facilities less the concentrate injection well and raw water system. Those work items will be designed and constructed separately. The CITY is proceeding with expectations of four separate design and construction efforts: the brackish wellfield facilities, the raw water collection system, the treatment plant and the concentrate injection well. The concentrate injection well design will begin in FY2010 along with the pilot test and preliminary plant design. As stated above, plant design and wellfield design will begin in FY2011. In addition to the major permitting efforts described above, the physical project elements will include design and construction of the following: • Reverse osmosis membrane water treatment facility (including buildings, water treatment equipment, yard piping, staff offices and work areas, etc.) with a finished potable water design capacity of 5.0 annual average; • A new raw water production brackish wellfield, including 3 existing operational wells, 3 refurbished existing wells, 9 new wells, and 3 converted test wells (18 total) and related pumps; • Brackish raw water transmission system including approximately 12 miles of pipeline; • On-site product water storage including a new 2.5 to 5 mg storage tank; • On-site concentrate (by-product) deep well injection infrastructure including two injection wells and one monitor well; and • Finished water pumping and continuous flow metering. 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