Template revised September 22, 2016. COMMISSION AGENDA MEMORANDUM Item No. 4 d A CTION ITEM Date of Meeting May 23, 2017 DATE: April 12, 2017 TO: Dave Soike , Interim Chief Executive Officer FROM: Jeff r e y Brown, Director Aviation Facilities and Capital Programs Wayne Grotheer, Director Aviation Project Management SUBJECT: Variable Frequency Drive Renewal and Replacement (C I P #C 8008 01 ) Amount of this request: $ 1,975,000 Total estimated project cost: $ 6,834,000 ACTION REQUESTED Request Commission authorization for the Chief Executive Officer to ( 1 ) prepare design and construction bid documents for the Variable Frequency Drive Renewal and Replacement project at Seattle - Tacoma International Airp ort ; and ( 2 ) utilize Port of Seattle c rews and small works contracts for preliminary work if required . The amount of this request is $ 1,975,000 . The total estimated project cost is $6,834,000. EXECUTIVE SUMMARY This capital project will replace 47 of the oldest Variable Frequency Drives (VFDs) installed at Seattle Tacoma International Airport. VFDs control critical Heating, Ventilation and Air - conditioning (HVAC) systems throughout the airport, including air handling supply fans in the Terminal Building s and pumps in the Cooling Towers . The new VFD s are more energy efficient and will also result in reduced Greenhouse gas emissions. JUSTIFICATION The VFDs have a n - conditioning Engineers (ASHRAE) recommended useful life of ten (10) to fifteen (15) years and all 47 of the se drives have been in operation for more than 15 years , s everal have been in operation for more than 21 years. The manufacturer no longer supports these older VFD s , and f ailures have occurred depleting repair parts from maintenance inventory. dditional failures o f these 47 VFD s could result in extend ed outag es of HVAC systems in the Terminal Buildings that would affect travelers and employee comfort . COMMISSION AGENDA – Action Item No. _ 4 d ___ Page 2 of 5 Meeting Date: May 23, 2017 Template revised September 22, 2016; format updates October 19, 2016. The 47 VFD s this project will replace are located throughout the airport terminal building . The new VFD s will be c onnect ed to the airport ’s Direct Digital Control (DDC) system for energy consumption and performance monitoring . These new VFD s will reduce energy consumption by as compared to the older technology V FD s . S uccess for this project will be achieved when all 47 of these VFD s are replaced , fully commissioned and connected to the DDC system . Scope of Work The scope of work for this project includes:  R eplace 47 existing VFD s that have exceeded their useful life.  Connect new VFD s to the existing DDC system .  Provide wiring, testing, commissioning and associated equipment for a fully functional system.  Salvage components from the se 47 VFD s and add those components to the Ports s pare parts inventory . Small Business To maximize small business participation, Port staff will be providing additional outreach efforts through the Port of Seattle’s Small Business Generator (PortGen) program. This small business program will not only provide information about the project scope of work , but will provide training about the Port’s procurement processes . Working with Economic Development Division Small business section, the Port will establish proj ect. Schedule Design s tart 3 rd Quarter 2017 C ommission construction a uthorization 2 nd Quarter 2017 Construction s tart 3 rd Quarter 2018 In - u se d ate 2 nd Quarter 20 20 Cost Breakdown This Request Total Project Design $ 2, 0 25,000 $ 2,025,00 0 Construction $ 0 $4,8 0 9,000 Total $ 2,025,000 $ 6,834,00 0 COMMISSION AGENDA – Action Item No. _ 4 d ___ Page 3 of 5 Meeting Date: May 23, 2017 Template revised September 22, 2016; format updates October 19, 2016. ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 – Do not replace these VFD s . Cost Estimate: $0 Pros: (1) No capital investment required Cons: (1) VFD s have an ASHRAE recommended useful life of ten (10) to fifteen (15) years . A ll 47 of these VFD s have between 15 - (2) Increase s likelihood of extended HVAC system outage s affecting travelers and employee comfort due to t hese VFD s hav ing exceeded their recommended useful life. ( 3 ) Manufacture r s no longer provide repair parts for VFD s manufactured 15 - 20 years ago and the Port ’ ( 4 ) Does not provided energy and performance monitoring through conn ection to the DDC system . ( 5 ) Does not provide energy savings or reduction in related Greenhouse g as emissions. This is not the recommended alternative Alternative 2 – Replace 131 VFD s that have exceeded the ASH RAE recommended useful life. Cost Estimate: $13.8 million Pros: (1) Reduce s the likelihood of extended HVAC system outage due to these VFD s failing. (2) Provides energy and performance monitoring through c onnect ion to the DDC system . (3) E fficient VFD s will reduce energy usage and related Greenhouse gas emissions. Cons: (1) Significant capital investment required. This is not the recommended alternative Alternative 3 – Replace the 47 oldest VFDs that have exceeded the ASHR AE recommended useful life . Cost Estimate: $6.8 million Pros: (1) Reduces the likelihood of extended HVAC system outage due to these VFD s failing. (2) Provides energy and performance monitoring through connection to the DDC system. COMMISSION AGENDA – Action Item No. _ 4 d ___ Page 4 of 5 Meeting Date: May 23, 2017 Template revised September 22, 2016; format updates October 19, 2016. (3) C omponents from the se 47 VFD s will be salvaged and add ed to the Port’s spare parts inventory in support of the remaining end of useful life obsolete VFD s . ( 4 ) E fficient VFD s will reduce energy usage and related Greenhouse gas emissions . Cons: (1) Requires capital investment . (2) Does not replace 84 remaining end - of - life VFD s . This is the recommended alternative FINANCIAL IMPLICATIONS Project estimate has been updated based on project notebook development Cost Estimate /Authorization Summary Capital Expense Total COST ESTIMATE Original estimate $ 5,0 0 0,00 0 $ 0 $ 5,00 0 ,000 Previous changes $ 1,834,000 $ 1,834,000 Revised estimate $6,834,00 0 $ 0 $6,834,00 0 AUTHORIZATION Previous authorizations $50,00 0 $ 0 $50,00 0 Current request for authorization $1,975,00 0 $ 0 $1,975,00 0 Total authorizations, including this request $2,025, 0 00 $ 0 $2,025,00 0 Remaining amount to be authorized $4,809,000 $0 $ 4,809, 00 0 Annual Source of Funds This project (CIP #C800801 ) was included in the 201 7 – 20 21 with a budget of Allowance CIP (C800753), resulting in no net change to the airport capital budget. The funding source for this project will be th e Airport Development Fund (ADF) and future revenue bonds, to be issued in 2017. Financial Analysis and Summary Project cost for analysis $6,834,000 Business Unit (BU) Terminal Building Effect on business performance (NOI after depreciation ) NOI after depreciation will decrease IRR/NPV (if relevant) N/A CPE Impact $ 0 .02 in 20 20 COMMISSION AGENDA – Action Item No. _ 4 d ___ Page 5 of 5 Meeting Date: May 23, 2017 Template revised September 22, 2016; format updates October 19, 2016. Future Revenues and Expenses ( Total cost of ownership ) This project replaces existing e quipment that is old and dated. Replacement of the equipment will require a similar level of maintenance (or slightly less) & does not have a material impact on current Aviation Maintenance O&M costs. ATTACHMENTS TO THIS REQUEST (1) Presentation slides PREVIOUS COMMISSION ACTIONS OR BRIEFINGS None