4c
PORT OF SEATTLE MEMORANDUM COMMISSION AGENDA Item No. 4c ACTION ITEM Date of Meeting February 10, 2015 DATE: February 3, 2015 TO: Ted Fick, Chief Executive Officer FROM: Dave Soike, Director, Aviation Facilities and Capital Program Wayne Grotheer, Director, Aviation Project Management Group SUBJECT: Parking Garage Lighting (CIP #C800581) Amount of This Request: $4,952,000 Source of Airport Development Funds: Fund (ADF) Est. Total Project Cost: $6,235,000 Est. State and Local Taxes: $340,000 ACTION REQUESTED Request Commission authorization for the Chief Executive Officer to (1) advertise, award, and execute a major public works contract for the construction of the project; and (2) authorize the purchase of LED retrofit kits to be installed by Port Maintenance in an amount not to exceed $4,952,000. This request is in addition to the previous design authorization of $1,243,000 and brings the total project authorization to $6,235,000. SYNOPSIS This project is an energy conservation project that will retrofit or replace all the lights on normal power circuits on all eight floors of the Airport parking garage. In addition, this project will install additional fixtures on the first floor and in the fourth floor plaza area to increase light levels and provide a better customer experience. Use of LED lighting technology will reduce energy consumption by over 60 percent while maintaining or improving existing lighting levels. This project was included in the 2015-2019 capital budget and plan of finance. BACKGROUND Lighting technology in the parking garage is over 15 years old. New LED technology enables lighting levels to remain the same or improve while decreasing energy consumption. In 2013, an initial garage energy conservation project was undertaken that reduced energy consumption by 60 percent on the emergency lighting circuits by retrofitting fixtures with LED kits. This project will retrofit the remaining fixtures in the garage to realize the same energy savings for lights on normal power circuits. Template revised May 30, 2013. COMMISSION AGENDA Ted Fick, Chief Executive Officer February 3, 2015 Page 2 of 5 PROJECT JUSTIFICATION AND DETAILS Project Objectives Install new lighting technology to reduce energy consumption in the parking garage by over 60 percent while providing the same or better lighting levels. Scope of Work Perform full design for all eight floors; Upgrade lighting on the first floor and provide additional lights to the fourth floor plaza to increase light levels and retrofit existing lights on fourth floor normal power circuits through a major construction contract; and Retrofit existing lights on normal power circuits on all remaining floors and access helices to be performed by Port Maintenance Electricians. Schedule Design 2nd Quarter 2014 2nd Quarter 2015 Commission Authorization for Construction 1st Quarter 2015 Construction Major Construction 1st and 4th floor 3rd Quarter 2015 3rd Quarter 2016 Construction Port Maintenance 2nd Quarter 2015 - 4th Quarter 2019 FINANCIAL IMPLICATIONS Budget/Authorization Summary Capital Expense Total Project Original Budget $5,000,000 $0 $5,000,000 Previous Budget Increase $1,235,000 $0 $1,235,000 Revised Budget $6,235,000 $0 $6,235,000 Previous Authorizations $1,283,000 $0 $1,283,000 Current request for authorization $4,952,000 $0 $4,952,000 Total Authorizations, including this request $6,235,000 $0 $6,235,000 Remaining budget to be authorized $0 $0 $0 Total Estimated Project Cost $6,235,000 $0 $6,235,000 Project Cost Breakdown This Request Total Project Construction $4,347,000 $ 4,347,000 Construction Management $265,000 $ 265,000 Design $0 $ 979,000 Project Management $0 $ 283,000 Permitting $0 $ 21,000 State & Local Taxes (estimated) $340,000 $ 340,000 Total $4,952,000 $ 6,235,000 COMMISSION AGENDA Ted Fick, Chief Executive Officer February 3, 2015 Page 3 of 5 Budget Status and Source of Funds This project was included in the 2015 2019 capital budget and plan of finance. The funding source will be the Airport Development Fund Financial Analysis and Summary CIP Category Renewal and Enhancement Project Type Renewal and replacement and customer service Risk adjusted discount rate 7% Key risk factors Low risk Project cost for analysis $5,532,000 (cost excluding additional light fixtures) Business Unit (BU) Landside Effect on business performance When all floors are completed, it is anticipated that annual energy savings will exceed annual depreciation resulting in an increase in NOI. IRR/NPV NPV = $1.1 million, Modified IRR = 11% CPE Impact None The financial analysis is based on the scope and cost of retrofitting lighting fixtures to achieve energy savings (excludes scope and cost for added light fixtures) and assumes a total of $750,000 in incentives and grants are received (see below). Energy savings have been calculated using the Tier II rate from Bonneville Power Administration. At the margin, this is the rate that will be in effect in future years if energy savings are not realized. Lifecycle Cost and Savings This project qualifies for $250,000 in Bonneville Power Administration (BPA) conservation incentives and has been awarded a $500,000 grant from Washington State Department of Commerce (DOC). The DOC grant award is assured as long as the project has started construction by June 2015. The yearly ongoing operations & maintenance (O&M) costs for the parking garage lighting will decrease beginning in years 2016 2018 as the garage lighting is replaced (phased in) utilizing LED lights. Year 2019 should have only minimal (incidental) O&M costs related to garage lighting. Annual O&M savings at project completion is estimated at $185,000. The estimated life of this product is eight to ten years. As such, beginning in 2023, the retrofit kits will need to be replaced in kind or with new technology. STRATEGIES AND OBJECTIVES This project aligns with the Port's objective to be the greenest and most energy efficient port in North America by meeting all increased energy needs through conservation and renewable sources. COMMISSION AGENDA Ted Fick, Chief Executive Officer February 3, 2015 Page 4 of 5 ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1) Maintain Status Quo and do not implement this project. This option foregoes the opportunity to realize a return on investment, reduce Sea-Tac Airport energy consumption, and make considerable progress towards the Airport's strategic objective to meet all increased energy needs through conservation. Based on a cost/benefit analysis, the initial cost of alternative 1 is zero with an NPV of negative $2.2 million, and there is no payback, as reference below. This is not the recommended alternative. Alternative 2) Implement this project by replacing all existing metal halide light fixtures with new LED light fixtures. Although the energy savings would be comparable to that of Alternative 3, the initial installation costs would be at least 30% more due to higher fixture cost and increased construction time. In addition, the 5,000 existing metal halide fixtures would be disposed of in the local landfill rather than reused utilizing the latest LED retrofit technology. Based on a cost/benefit analysis, the initial cost of alternative 2 is $8.1 million, with an NPV of negative $300k, and a payback period of $7.8 years, as referenced below. This is not the recommended alternative. Alternative 3) Implementing this project with LED fixtures and LED retrofit kits will provide the greatest return on investment, reduce energy consumption and further the Port's Century Agenda goals. This alternative will recycle and reuse over 5,000 outdated metal halide light fixtures eliminating a substantial waste stream from entering local landfills. This approach provides the best return on investment while minimizing landfill waste. Based on a cost/benefit analysis, the initial cost of alternative 3 is $6.2 million, with an NPV of positive $1.1 million, and a payback period of 5.6 years, as referenced below. This is the recommended alternative. gy Savings Investment New Added Grant (Today's Annual Payback Alternatives Capital Lights Funding Rates) O&M NPV IRR (Yrs) #1 $0 N.A. $0 $0 $200k (2.2M) N.A. N.A. #2 $8.1M $700k $750k $670k $15k (300k) 6% 7.8 #3 $6.2M $700k $750k $670k $15k 1.1M 11% 5.6 TRIPLE BOTTOM LINE Economic Development The project supports economic development by investing in an upgraded parking garage to serve the public need at the Airport. Environmental Responsibility This project will apply environmental sustainability principles primarily through the use of energy-efficient light fixtures. These will reduce the energy use by an estimated 60 percent while providing more than four times the lamp operating life compared to what is currently installed. COMMISSION AGENDA Ted Fick, Chief Executive Officer February 3, 2015 Page 5 of 5 Community Benefits This project aligns with the Port's Century Agenda objective to minimize the Airport's environmental impacts and reduce energy demand through conservation while operating a worldclass international airport by ensuring safe, secure, and sustainable operations. ATTACHMENTS TO THIS REQUEST None PREVIOUS COMMISSION ACTIONS OR BRIEFINGS June 24, 2014 the Port Commission authorized preparation of design and construction bid documents for the Parking Garage Lighting project at Seattle-Tacoma International Airport. That authorization was for $1,243,000 of a total estimated project cost of $6,235,700.
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