5e memo
PORT OF SEATTLE MEMORANDUM COMMISSION AGENDA Item No. 5e ACTION ITEM Date of Meeting April 1, 2014 DATE: March 19, 2014 TO: Tay Yoshitani, Chief Executive Officer FROM: Mike McLaughlin, Director, Cruise and Maritime Operations Mark Longridge, Capital Project Manager SUBJECT: Pier 34 Mooring Dolphins Project (CIP #C800090). Amount of This Request: $275,000 Source of Funds: General Fund Est. Total Project Cost: $1,611,000 ACTION REQUESTED Request Commission authorization for the Chief Executive Officer to complete design and permit process for the replacement of four (4) mooring dolphins at Pier 34. The total amount of this request is $275,000, out of a total estimated project cost of $1,611,000. SYNOPSIS The project consists of the replacement of four existing failed timber mooring dolphins with four new steel dolphin structures located at Pier 34 at the head of the East waterway. Thisproject would restore lost moorage by replacing old mooring facilities that have failed. These two redeveloped berths would be designed to accommodate up to two 400' barges and generate additional revenue to the Seaport. The preliminary design concept is for each of the four new dolphins to have sufficient strength to securely moor vessels over their 20-year expected life. In addition, the project would remove approximately 80 derelict creosote timber piles with attendant environmental benefits. Industrial moorage for barges and other commercial vessels is essential to a healthy port and harbor. The supply of industrial moorage in our harbor has declined, while demand for such moorage has grown. Federal security requirements for moorage of fuel barges and Safety of Life at Sea (SOLAS) vessels have exacerbated the shortage of suitable moorage for these sectors. This project would restore moorage capacity that was removed from service due to age and deterioration. BACKGROUND Pier 34 facility was leased prior to deteriorating into age-related disrepair, at which time the lease for these mooring dolphins expired and they ceased being used. This request is part of the Template revised May 30, 2013. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer March 25, 2014 Page 2 of 5 Seaport's Asset Stewardship Program and the "Industrial Moorage Initiative" which was presented as a Policy and Staff Briefing in public session on June 3, 2008. Prior projects under this Initiative include timber fender replacement at Terminal 91 Berths 6 and 8 and Terminal 46 North Apron, and replacement of four mooring dolphins completed as the North Harbor Island Dolphin Project. By proceeding with this project, the Port protects current industrial moorage business, provides for future revenue growth from industrial moorage and supports maritime jobs, all of which align with the Ports Century Agenda goals These improvements will also serve to recover moorage displaced from other Port facilities following the implementation of two federal security programs initiated in February 2009, the Marine Transportation Security Act (MTSA) and the Transportation Worker Identification Credential (TWIC). Activation of cruise operations at Terminal 91 in April 2009 further restricted the port's supply of industrial moorage. PROJECT JUSTIFICATION AND DETAILS Project Objectives This work, if authorized, is aligned with the Seaport's Asset Stewardship Program - to restore berth facilities in the harbor. Demand has been expressed by industry for the following uses: o Seasonal barge moorage in winter, when barge service to ice-restricted regions of Alaska stops; o Support for local shipyards by berthing vessels awaiting or upon completion of dry-dock repairs; o Daily moorage, as a preferred substitute to mooring at the Duwamish Head Buoys; and o Seasonal moorage during tribal treaty fishing periods to reduce congestion on the Lower Duwamish Waterway and Elliott Bay. Scope of Work Design & Permitting Complete geotechnical investigations, structural calculations and design drawings using both Port staff and existing IDIQ consulting contracts. Prepare a construction bid set inclusive of plans, specifications and engineers' cost estimates for completing this work and present to Commission authorization to construct. Prepare and submit all required permit applications to complete this work. Schedule For the Pier 34 to be available for the spring 2015 cruise season, all in-water work for this project will need to be substantially completed by the start of the permit fish window on February 15, 2015. The design and permitting work covered under this authorization is COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer March 25, 2014 Page 3 of 5 expected to be completed by August 2014.All construction work is expected to be completed and the facility in service by April 2015. FINANCIAL IMPLICATIONS Budget/Authorization Summary Capital Expense Total Project Original Budget $0 $0 $0 Previous Authorizations $25,000 $0 $25,000 Current request for authorization $275,000 $0 $275,000 Total Authorizations, including this request $300,000 $0 $300,000 Remaining budget to be authorized $1,311,000 $0 $1,311,000 Total Estimated Project Cost $1,611,000 $0 $1,611,000 Project Cost Breakdown This Request Total Project Construction $0 $1,084,000 Construction & Contract Management $0 $124,000 Design $152,000 $152,000 Project Management $65,000 $65,000 Permitting $83,000 $83,000 State & Local Taxes (estimated) $0 $103,000 Total $300,000 $1,611,000 Budget Status and Source of Funds This project was included in the 2014 Draft Plan of Finance under Business Plan Prospective CIP# C800090, Pier 34 Dolphins, in the amount of $2,420,000. The project will be funded from the General Fund. Financial Analysis and Summary CIP Category Revenue/Capacity Growth Project Type Business Expansion Risk adjusted discount 8.5% rate Key risk factors The timing of in-water work is constrained by closure for the fish window, anticipated to be 2/15/15 thus . Minor delays could result in a delayed construction schedule. Construction costs may vary as steel prices remain volatile Financial performance will be lower if usage or market rates are lower than estimates used in the related financial analysis. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer March 25, 2014 Page 4 of 5 Project cost for $1,611,000 analysis Business Unit (BU) Seaport Maritime Operations Effect on business Estimated impact on Net Operating Income (NOI) and NOI after performance Depreciation for years 2014 through 2018 is shown below. NOI (in $000's) 2014 2015 2016 2017 2018 NOI $0 $90 $123 $126 $129 Depreciation $0 ($60) ($81) ($81) ($81) NOI After Depreciation $0 $29 $42 $45 $48 IRR/NPV NPV IRR Payback (in $000's) (in years) ($181) 5.8% 12 STRATEGIES AND OBJECTIVES Replace lost industrial moorage capacity essential to operating a full-service harbor. Remove the existing derelict timber dolphins at Pier 34 and replace with steel mooring dolphins. Provide moorage to a diverse spectrum of users as detailed in strategic objectives above. Provide additional moorage to alleviate the current shortage caused by the relocation of Cruise operations to T-91, Provide a convenient alternative to the current practice of rafting barges in the lower Duwamish. Provide moorage for vessels subject to Maritime Transportation Security Act (MTSA) without the added cost burden of security fees for e berths with landside requirements for a TSA Facility Security Plan. Generate additional revenues to the Seaport. ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1: Do nothing. With growing demand and the continued displacement of barge layberth space at T91 during periods of overlap between the cruise and fishing industry seasons, the Port would not have adequate barge layberth space for current and future tenants. Alternative 1 is not recommended. Alternative 2: Explore alternative sites to Pier 34 for barge moorage expansion. Initial analyses of potential sites from the Barge moorage study of 2008 indicate Pier 34 is the best alternative for this facility. Unlike other sites considered, Pier 34 has served this function in the past, is the most straightforward to permit and can meet the current schedule for 2015 completion. Alternative 2 is not recommended. COMMISSION AGENDA Tay Yoshitani, Chief Executive Officer March 25, 2014 Page 5 of 5 Alternative 3: Replace the current timber dolphins at Pier 34 to accommodate current barge layberth moorage requirements and objectives, subject to subsequent Commission authorization to award for construction. This is the recommended alternative. ATTACHMENTS TO THIS REQUEST Proposed site layout and existing condition photographs. PREVIOUS COMMISSION ACTIONS OR BRIEFINGS June 3, 2008 - Policy and Staff Briefing Industrial Moorage Initiative
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