It is recommended that the City Council authorize execution of Amendment No. 1 to City Secretary Contract No. 46258 with Freese & Nichols, Inc., in the Amount of $180,593.00 for a Total Revised Contract in the amount of $1,830,593.00 for the New Northside II 48-Inch Water Main, Phase II from Heritage Trace Parkway to Longhorn Road, with expenditures to be reimbursed from proceeds of future debt.

On December 9, 2014, (M&C C-27124) the City Council authorized an engineering agreement with Freese & Nichols, Inc., in the amount of $1,650,000.00 for Engineering and Design Services for Northside II 48-Inch Water Main, Phase II from Heritage Trace Parkway to Longhorn Road.

Amendment No. 1 will provide for the following:

• Design for the reconstruction of Old Decatur Road from McLeroy Boulevard to Bailey Boswell Road.
• Additional coordination with Oncor Electric, City of Saginaw, Texas Department of Transportation and other Franchise Utilities.
• Additional service during construction.
• Additional traffic control plans.

Freese and Nichols, Inc., proposes to provide the additional services for a lump sum fee of $180,593.00.

In addition to the amendment amount, $63,000.00 is required for project management, utility coordination, and inspection.

This project will have no impact on the Water Department's operating budget.

This project is anticipated to be included in a future revenue bond issue for the Water and Sewer Fund. Available cash within the Water and Sewer portfolio and the City's portfolio along with the appropriation authority authorized under the Direct Purchase Note (DPN) Program will be used to provide interim financing for this project until debt is issued. To the extent resources other than the Water and Sewer portfolio are used to provide interim financing, the Water and Sewer Fund will be charged interest that is equivalent to the overall rate of return being earned by the City portfolio (currently approximately one percent annually). Should the City's portfolio not support the liquidity needed to provide an interim short-term financing source, another funding source will be required, which could mean issuance of securities under the DPN Program or earlier issuance of Water and Sewer revenue bonds than is currently planned. Once debt associated with this project is sold, bond proceeds will be used to reimburse the Water and Sewer portfolio and the City's portfolio in accordance with the Reimbursement Resolution for the entire Northside II 48-inch Water Main, Phase II Improvement Project that is on today's agenda.

The City Council adopted the Water Department's Fiscal Year 2016-2020 Five-Year Capital Improvement Plan on February 2, 2016 (M&C G-18662). This City Council adopted plan includes this specific project, with funding identified through the DPN program to be reimbursed with future revenue bonds. In accordance with the provisions of the Financial Management Policy Statements, Staff anticipates presenting revenue supported debt issuances to the City Council for consideration within the next three years. This debt must be issued within approximately three years to provide reimbursement for these expenses. If that does not occur, the costs will no longer be reimbursable by issuing tax-exempt debt and the funding source will have to be made whole through other budgetary methods. The adopted resolution does not obligate the City to sell bonds, but preserves the ability to reimburse the City from tax-exempt bond proceeds.

M/WBE OFFICE: Freese & Nichols, Inc., is in compliance with the City's BDE Ordinance by committing to five percent SBE participation on this Amendment No. 1. The City's goal on this Amendment is five percent.

This project is located in COUNCIL DISTRICTS 2 and 7.