Template revised September 22, 2016. AGENDA MEMORANDUM Item No. CTION ITEM April 11 , 2017 Amount of this request: Total estimated project cost: 1,795,000 ACTION REQUESTED EXECUTIVE SUMMARY ��COMMIS ION AGENDA Action Item No. 4e Page of Template revised September 22, 2016; format u dates October 19, 2016. JUSTIFICATION The elevators needing modernization serve levels 1 through 4 at the Paul Schell Center at Pier . They are integral to the operation of Bell Harbor International Conference Center (BHICC) and the ruise erminal. Two of the elevators are critical access point connecting the conference center and cruise terminal to the Bell Street garage where many attendees and travelers park. These two elevators are also used by the general public for access the rooftop deck. The third elevator is primarily used by BHICC for back of the house hospitality related access from the loading dock . These elevators were installed in 1994, and their reliability has declined to the point where action is needed to fulfill the Port’s la ndlord responsibility this property. They are required for day day operations of the facility so i t is important to minimize the time that they are out service and work must be scheduled around conference and cruise operations. The proposed proj ect will support the BHICC and cruise operations by significantly reducing service calls, improving performance, and enhancing aesthetics DETAILS Elevator #2 is a critical elevator BHICC because it handles most of the load in and out volumes required for conference and event set up and break down. It is technically classified as a service elevator but is often used as a freight elevator. This elevator requires frequent service calls in o rder to remain in operation. This is a significant burden to the terminal operators at each occurrence. Due to the age of the elevator, its heavy use, and recent performance issues, modernization of the controls and mechanical system are recommended. A consultant hired to assess the elevators in 2014 reported the following about elevator #2: This elevator is almost twenty years old and is nearing the end of its normal life expectancy. Budgeting should begin to modernize the elevator controls to a new er vintage microprocessor based controller. The car operating panel and hall buttons would be upgraded at the same time. The addition of a closed loop door operator and related hall gear will increase the reliability. These upgrades will increase the evator ’s reliability and safety and add another fifteen to twenty years of service. Elevators #3 and #4 are located at the west end of the Bell Street Bridge. They provide facility access to the public , conference attendees and cruise passengers . The e levator electrical and mechanical components are in need of upgrade in order to maintain the reliability and safety of the elevators. The consultant reports on these elevators are substantially the same as that o elevator #2 Scope of Work Modernize the elevator controls, the door operation, and the signal fixtures update the motors for all three elevators n addition , upgrade elevator #2 ’s car platform so that it s suitable for use as a freight elevator , since its users typically call u pon it to act as one ��COMMIS ION AGENDA Action Item No. 4e Page of Template revised September 22, 2016; format u dates October 19, 2016. The contract for modernization of all three elevators will be executed this year and will include the procur ement of parts and materials for all three elevators Schedule The modernizations should be completed as soon as possible in order to provide the level of customer service our tenants expect. Activity Commission design a uthorization 2016 Q2 Design tart 2016 Q2 ommission construction a uthorization 2016 Q2 Construction tart 2017 Q4 se ate 2018 Q2 Cost Breakdown This Request Total Project Design 301,000 Construction $250,000 $1,073,000 Total ,00 1,795,000 ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 Reject all bids and develop a revised , expanded scope that adds other elevators currently slated for modernization in the next two to three years. Cost Im plications: Forfeits all or part of the nearly $200,000 that has already been expended on this project. Pros (1) Including additional elevators in the contract could result in a greater number of bids and as well as more competitive bids. Cons (1) A minimum of six months will be required to get a revised scope of work back out for bid. (2) This option poses an unacceptable risk to the project schedule. The ort’s hospitality and c ruise operations tenants fully expect the elevators to be operating properly, modernized and back in service by mid spring 2018. (3) Market conditions are difficult to predict, consequently, the amount of competing elevator work could potentially increase bef ore new bids are considered, and the relative price may actually increase, resulting in the same number of, or fewer bids. (4) This alternat e would likely forfeit the ort’s effort and investment on this project, so far. This is not the recommended altern ative. ��COMMIS ION AGENDA Action Item No. 4e Page of Template revised September 22, 2016; format u dates October 19, 2016. Alternative 2 Accept the low bid and complete the project. Cost Implications: Increases the project budget by $250,000. Pros (1) Keeps the project delivery on schedule, with the modernizations complete before the 2018 cruise season. (2) The cost is more predictable, since there is currently a responsive bid. (3) Makes use of the investment of time and money the ort has already made for this project. Cons (1) The project budget is increased beyond what was previously approved This is the recommended alte rnative. FINANCIAL IMPLICATIONS Cost Estimate /Authorization Summary Capital Expense Total COST ESTIMATE Original estimate 1,300,00 1,300,00 Current change ,00 ,00 Revised estimate $1,742,000 1,742,000 AUTHORIZATION Previous authorizations $1,545,00 $1,545,00 Current request for authorization $250,00 $250,00 Total authorizations, including this request $1,795,00 $1,795,00 Remaining amount to be authorized Annual Budget Status and Source of Funds This project was included in the 2017 Plan of Finance under committed CIP # 800813 in the amount of $ 1,545,000 This request for an additional $250,000 will be funded by lower spending for CIP # 800196 T 102 Building Roof HVAC Replacement, which was also included in the 2017 Plan of Finance. Financial Analysis and Summary Project cost for analysis $1,795,000 Business Unit (BU) Economic Development and Maritime Divisions Effect on business performance (NOI after depreciation The project will not generate any incremental revenue. Total depreciation expense from this project is estimated at $89,750 per year based on a twenty year asset life. The allocation of actual project costs to specific assets ��COMMIS ION AGENDA Action Item No. 4e Page of Template revised September 22, 2016; format u dates October 19, 2016. will be finalized near the end of the project, estimated to be the end of the second quarter in 2018. Net Operating Income after depreciation for this facility will decrease by the associated depreciation expense of this project. IRR/NPV (if relevant) CPE Impact Future Revenues and Expenses ( Total cost of ownership The modernization will eliminate the frequent and costly service calls by the elevator maintenance contractor, which are currently needed to keep the elevator operating. Elevator #2 is currently requiring the most service calls. ATTACHMENTS TO THI S REQUEST one PREVIOUS COMMISSION ACTIONS OR BRIEFINGS May 2 , 201 The Commission authorized the Chief Executive Officer to complete design and permitting, prepare construction documents, advertise, award, and execute a construction contract to modernize elevators 2, 3, and 4 at Pier 66. The total approved project budget was $1,5 45,000.