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SR-05-27-2014-3L - 515-000-01City Council Meeting: May 277a, 2014 Agenda Item: 3L L To: Mayor and City Council From: Martin Pastucha, Director of Public Works Subject: Contract with the South Coast Air Quality Management District for the Purchase of Three Heavy -Duty Compressed Natural Gas (CNG) Vehicles and the Installation of a Small CNG Station Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute a contract with the South Coast Air Quality Management District ( SCAQMD), a California -based entity, to receive matching grant funds in the amount of $149,925 for the purchase of three heavy -duty CNG vehicles and the installation of a small time -fill CNG station. Executive Summary On June 26, 2007 Council approved Contract No. 8730 (CCS) with the SCAQMD to receive $149,925 in matching grant funds for the purchase of three heavy -duty CNG vehicles and the installation of a small time -fill CNG station to reduce air pollution from mobile sources. The project was delayed due to the lack of availability of CNG engines for heavy -duty vehicle applications and longer than anticipated permitting process and utility coordination for the CNG station. Staff requested a contract extension, which the SCAQMD approved in a letter dated May 21, 2013. Staff did not execute the contract modification prior to the expiration of the original contract date of July 11, 2013 due to error. The SCAQMD agreed to issue a replacement contract at its October 17, 2013 meeting, resulting in a new contract term to November 30, 2016. Staff recommends that Council approve this contract with the SCAQMD to replace Contract No. 8730 (CCS) and receive matching grant funds in the amount of $149,925 for the purchase of three heavy -duty CNG vehicles and the installation of a small, time - fill CNG station to reduce air pollution from mobile sources. Background On June 26 2007 Council approved Contract No. 8730 (CCS) with the SCAQMD for $149,925 in matching grant funds for three heavy -duty CNG vehicles and funding for the installation of a small, time -fill CNG station to reduce air pollution from mobile sources. 1 After Council approval, staff began the process of identifying three heavy -duty CNG vehicles for purchase and the installation of a small, time -fill CNG station in order to comply with the grant project timeline and requirements. Discussion CNG Station FuelMaker Corporation was the only sole manufacturer of small CNG station parts and equipment and Gas Equipment Systems was the authorized FuelMaker dealer for California. A sole source agreement with Gas Equipment Systems was approved in March 2008. Staff coordinated the work with Gas Equipment Systems, worked on drawings and permits for the station, and coordinated the permitting process with the Southern California Gas Company. The permitting process was delayed because Southern California Gas Company took approximately one year to verify gas pressures, gas quality, and install a meter to service the new station. During this process Gas Equipment Systems became Mansfield Gas Equipment Systems. The permit to build the small CNG station was issued in March 2011 and the installation of the small, time - fill CNG station was completed by Mansfield Gas Equipment Systems in November 2011. The CNG station is located at the City Yards and has increased operational efficiency by allowing up to eight CNG vehicles to refuel overnight and by adding a reliable fuel source to the City's inventory. Heavy -duty CNG Vehicles The purchase of three heavy -duty CNG vehicles for Water Resources operations was also delayed because CNG engines were not available for heavy -duty vehicle applications. Staff was aware of one company that was working on California Air Resources Board (CARE) approvals for a CNG - fueled engine, but pulled out of the market. It was some time before another company came out with an engine that met all required certifications. As CNG engines for heavy -duty vehicle applications became available, staff developed specifications and went to bid in March 2009. The user group 2 determined that the bids received did not meet their needs and the specifications were modified. The new bid was released in March 2010. Council awarded the bid for the purchase of these three heavy -duty CNG vehicles to Plumbers Depot, Inc. on July 27, 2010. All three heavy -duty CNG vehicles were purchased and in service by February 2011. The construction of CNG station and the purchase of CNG vehicles are consistent with the City's Sustainable City Plan by promoting the use of an alternative fuel which reduces smog - producing pollutants and greenhouse gas emissions. Due to the delays experienced for the construction of the CNG station and the purchase of the three heavy -duty CNG vehicles, staff submitted a contract modification to the SCAQMD in early 2013 to extend the contract term by 40 months from the in- service date of the vehicles and the installation of the CNG time -fill station. The SCAQMD approved the contract modification in a letter dated May 21, 2013 but staff did not execute the contract modification prior to the expiration of the original contract date of July 11, 2013 due to error. The SCAQMD's Mobile Source Air Pollution Reduction Review Committee agreed to issue a replacement contract at its October 17, 2013 meeting, resulting in a new contract term to November 30, 2016. Staff recommends that Council approve this contract with the SCAQMD to replace Contract No. 8730 (CCS) and receive matching grant funds in the amount of $149,925 for the purchase of three heavy -duty CNG vehicles and the installation of a small time -fill CNG station. All related expenditures were made in anticipation of receiving the grant funding and the availability of the local match. The grant funds would offset the City's replacement cost of these vehicles and the installation cost of the time -fill CNG station. All three vehicles were scheduled for replacement through the City's Vehicle Replacement Program and were not enhancements to the fleet. 3 Financial Impacts & Budget Actions The total SCAQMD grant amount is $149,925. Receiving the grant will require the following budget actions in FY 2014 -15: 1. Increase revenue account 44459.407830 in the amount of $149,925 2. Appropriate funds to account IS440167.589000 in the amount of $149,925 3. Increase revenue account 54459.402660 in the amount of $149,925. The grant's required 100% local match of $149,925 is already satisfied through acquisition of the three heavy -duty CNG vehicles and the installation of the small, time- fill CNG station ($1,004,453). If renewals are awarded, budget changes will be included in subsequent year budgets, pending Council budget adoption. Prepared by: Heidi Said, Administrative Analyst Approved: Martin Pastucha Director of Public Works 10 Forwarded to Council: Rod Gould City Manager Reference: Contract No. 9911 (CCS)