 Board of Commissioners Meeting Minutes ODOT Regional Office Conference Room 350 West Marine Drive, Astoria, Oregon Monday, May 13, 2003 |
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| CALL TO ORDER | ||||||||||||||||||||||||||||||
| Chair Shannon called the meeting to order at 9:30 am | ||||||||||||||||||||||||||||||
| ROLL CALL | ||||||||||||||||||||||||||||||
| Commissioners Present: | ||||||||||||||||||||||||||||||
| Chair David Shannon Vice-Chair Bob Gannaway Secretary/Treasurer Jack Harris Commissioner Rae Goforth Commissioner Charlotte Mendenhall |
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| Commissioners Excused: | ||||||||||||||||||||||||||||||
| Commissioner Vic Kee | ||||||||||||||||||||||||||||||
| Staff Present: | ||||||||||||||||||||||||||||||
| Cindy Howe, Executive Director
Patsy Chapel, Executive Secretary |
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| CHANGES TO AGENDA: | ||||||||||||||||||||||||||||||
| Chair Shannon stated he would be adding the appointment of Rae Goforth to the Agenda as the first item under old business so that the Board could make a motion for her appointment. The Board agreed. | ||||||||||||||||||||||||||||||
| a. | Appointment to the Board Chair Shannon apologized to the Board for not calling for a Motion and a vote at the last meeting to approve his appointment of Rae Goforth to the Board. | |||||||||||||||||||||||||||||
| Board Action: Motion by Secretary/Treasurer Harris, second by Commissioner Mendenhall to appoint Rae Goforth to fill vacant Position 5 on the SETD Board of Commissioners. Chair Shannon, Vice-Chair Gannaway, Secretary/Treasurer Harris and Commissioner Mendenhall voted yes. Motion passed. | ||||||||||||||||||||||||||||||
| Commissioner Goforth and Chair Shannon signed the Oath of Office Certificate | ||||||||||||||||||||||||||||||
| b. | Consideration of Owner's
Representative Contract with OTAK Ms. Howe introduced Ken Krieger, PE from OTAK explaining that he would go over the proposed amendment and answer any questions the Board might have regarding it. Mr. Krieger gave the Board copies of the contract document; a spreadsheet and narrative he said he hoped would make it easier to understand the proposed amendment. Mr. Krieger explained that CM/GC is not normally a part of Construction Services but was included here at Ms. Howe's request. He went on to say Construction Service entails work by a select group of people on the job site while work is going on. This includes a Construction Manager and at times an Inspector and includes all four Design Team members and three sub-contractors, a structural sub, an electrical/mechanical sub and a geotech sub when their expertise is needed. Commissioner Goforth asked what was meant by CM/GC and Mr. Krieger explained that it meant Construction Manager/General Contractor. He said Baugh-Skanska is providing cost estimating and value engineering services and is working with the Team to minimize the construction budget. |
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| Chair Shannon said he understood there would be 125 days for construction and asked where Mr. Krieger came up with the number of hours. Mr. Krieger said the 840 hours was his best estimate. He explained that at the beginning of the job there would be a flurry of activity, including fill in the current parking lot and demolition inside the building. During that time the Construction Manager would be on site for eight hours every day. Mr. Krieger said once the fill is in, no one would be here full time, but would be present when ever there was a critical operation. He said the Construction Manager does not just stand and watch but will do frequent tests and inspections. | ||||||||||||||||||||||||||||||
| Chair Shannon asked if having a Construction Manager is a duplication of services with the CM/GC. Mr. Krieger stated the Federal Government would not allow a contractor to certify his own work. He said the inspector certifies that all materials used are up to the specifications, then the Contractor builds it and then the inspector certifies the work. The Construction Manager will review the Shop Drawings submitted by the Contractor and if he sees something on the drawings that is not right he will go back to the Design Team for briefing and then pass on what he learns to the contractor. Mr. Krieger expressed his concerns that there are still many unknown elements on the site and if a problem is identified then the Design Team can be called in. Mr. Krieger stated that if the estimated hours for the Design Team are not used, they will not be billed. Chair Shannon expressed his concern that this was an estimate of hours and the cost could go over the estimated amount. Ms. Howe replied that it was based on a not-to-exceed total price. Mr. Krieger assured the Board that OTAK could not bill for service over the contract price without authorization and that portions of the services estimated may not be needed. | ||||||||||||||||||||||||||||||
| Chair Shannon asked why the Contract could not be a lower number for the cost-not-to-exceed figure. He asked if Staff could just come back for approval for expenditures over that lower figure. Ms. Howe stated it would be difficult because every time something came up a Board meeting would have to be advertised and convened with a quorum and it would make it nearly impossible to keep up with the construction schedule. She went on to say that these figures are estimates. Vice-Chair Gannaway asked if this meant the final amount could be anywhere between $50,000 and $230,000 and Ms. Howe said yes but that $50,000 was too low for the bottom figure. | ||||||||||||||||||||||||||||||
| Secretary/Treasurer Harris asked what the difference was between a change order and a time authorized change. Mr. Krieger explained that a change order is a document that goes to the Contractor that says build it differently than the drawings. If the time is authorized the design team will do drawings and write specifications to give to the contractor paralleling work efforts. Mr. Krieger went on to talk about Shop Drawings and stating they were what the Contractor turns in. He said sometimes the Contractor does things wrong and this is a way to catch it. It gives the Design Team an opportunity to accept or refuse any changes the Contractor wants to make and the drawings keep the Designers aware of what is going on. | ||||||||||||||||||||||||||||||
| Mr. Krieger discussed quality control items and the importance of testing of materials. He stated some tests that will need to be done on this job will require equipment that the Contractor may not have and that is when the specialized Sub-Contractor members of the Design Team will be called in. He illustrated this point by discussing the load capabilities of concrete where the buses will drive. | ||||||||||||||||||||||||||||||
| Mr. Krieger stated that the survey in the contract will be beneficial at the beginning of the project when settlement is a key element and it will make sure everyone is using the same numbers. | ||||||||||||||||||||||||||||||
| Chair Shannon asked what the low figure of the estimate would be and Mr. Krieger stated that with more help from Ms. Howe it would be $125,000. He went on to say this figure assumes that inspection help could come from the City and from ODOT and that staff assistance and office space would be provided by the District. Ms. Howe stated that both the City and ODOT could only promise minimal assistance. Chair Shannon asked if the amount listed for vehicle expenses was accurate and was assured by both Mr. Krieger and Ms. Howe that it was. | ||||||||||||||||||||||||||||||
| Ms. Howe stated that it was important to remember that the Board has to answer to the public and that, if the District gets to the end of the contract and OTAK goes away, she will have to depend on someone who is not familiar with the project. She stated that if the District put an engineer on staff they would have to pay benefits, purchase a computer and software and would still have to pay lab costs and travel expenses for someone who does not know the project. She stated that time is a factor to be considered here too and if this position was to be advertised and interviewed for it would set the project back thirty days and cut into the construction season. Ms. Howe said OTAK has laid out every item honestly and they may not necessarily spend $230,000. Chair Shannon asked if it would be feasible for the Board to approve expenditures over $150,000? Mr. Krieger stated that they could have milestones for contract adjustments and that the document before the Board starts out with the full amount approved but expenditures paid on a month to month basis with the approval of Ms. Howe. Chair Shannon asked Mr. Krieger if he had to have Ms. Howe's approval for everything and Mr. Krieger explained to him that they would meet with Ms. Howe regularly and that at any point in time she will know where they are financially and if they are on schedule. He reminded the Board that the Owner always has the opportunity to say stop - that's it. | ||||||||||||||||||||||||||||||
| Secretary/Treasurer Harris asked how involved the Construction Manager would be with the neighbors and if they would be able to contact him if there was a problem. Ms. Howe told the Board that Staff will be holding a meeting for the neighborhood on Wednesday evening, May 21st at 7 pm at Pier 11 to answer questions and for the neighbors to be able to talk to Steve Anderson from Baugh-Skanska and to a representative from OTAK. She said she felt most of their questions would be about on street parking, fences during construction and the direction of bus traffic. She encouraged Board members to attend. Mr. Krieger stated that Steve Dixon would be representing OTAK at the meeting. | ||||||||||||||||||||||||||||||
| Secretary/Treasurer Harris inquired about the desk, chair, phone and general project administrative services that were mentioned in the contract and if the District had room for this. Ms. Howe assured him that there was room in Ms. Chapel's office for another desk and that the District already has the furniture. She assured the Board it would be no problem. | ||||||||||||||||||||||||||||||
| Commissioner Mendenhall asked if the Board would receive monthly updates and Ms. Howe said she would be talking to the Construction Manager regularly and would provide monthly reports to the Board. | ||||||||||||||||||||||||||||||
| Commissioner Goforth stated she felt strongly that OTAK is doing a good job and she is impressed with what looks like overall control. Chair Shannon stated he is concerned that if there is a ceiling price costs will rise to meet that price. Vice-Chair Gannaway stated he has attended a lot of meetings recently with OTAK and he feels the District could safely trust them. He stated that no one on the Board is a construction expert and that it is important to choose carefully. He went on to say he did not think anyone locally was qualified to be the Construction Manager on this job and he feels comfortable with OTAK and does not think they would take advantage of the District. | ||||||||||||||||||||||||||||||
| Mr. Krieger left the meeting. | ||||||||||||||||||||||||||||||
| c. | District Refinancing
Ms. Howe introduced David Ulbricht from Dain Rauscher. She explained to the Board that he works with Special Districts and has been SETD's financial expert for many years. She said he would talk about the proposal to refinance the current loan and add $700,000 to meet the requirements for construction and to build a reserve that the District can use as operational funds each year till the taxes come in to avoid borrowing against them. |
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| Mr. Ulbricht explained to the Board that he had looked at the additional requirements of transit center construction of $700,000 and how it impacts the District's debt service. He went through the documents with the Board. He stated the District is currently paying on a loan of $1,065.000 with $975,000 outstanding. He stated he had put in a 7% maximum rate, but would not get there because if you get to 6% you will not be gaining by it. He noted the schedule shows estimated cost. He stated if you put this together you won't see a bill if you do not close. You pick a date on which you sell the securities and close two weeks later. Mr. Ulbricht went on to say the schedule on page 7 would be the $700,000 incurred on the transit center debt service payments and page 2 of the schedule shows where the source of the money is coming from and where it is being expended. | ||||||||||||||||||||||||||||||
| Chair Shannon ask to what level could the District borrow and still be a responsible agency? Mr. Ulbricht replied looking at the District and knowing the history and looking forward, he felt the Board could be comfortable with what is being proposed here. Chair Shannon asked if the District's credit worthiness would affect bond rating? Mr. Ulbricht explained that the District doesn't have a credit rating and to get one the District would need to go to a credit rating agency who would do due diligence of the District. He stated that the District would pay a fee for this and it can be expensive. One of the hindering factors of the District is its size and realistically you would have to be a Tri-Met to get a credit rating. Mr. Ulbricht stated he had been in this business for 15 years and he suggested it was best to go to a group of investors who want tax rate income and to develop a prospectus and then proceed. He stated the Board was looking at the revenue sources to pay this back. | ||||||||||||||||||||||||||||||
| Chair Shannon asked what the time schedule was to complete this process and Mr. Ulbricht stated that it would work in the time-line of the District's schedule. Ms. Howe explained that before the final estimates for construction can be completed she had to know how much of the proposed building remodel could be done. She went on to say if the Board decided to go forward with the refinancing and passed the Resolution today the final estimate numbers could be completed by May 31st and then hopefully the building permit could be secured by mid June. Chair Shannon asked Mr. Ulbricht if he was comfortable and felt he could have this completed by then and Mr. Ulbricht said he was. Chair Shannon asked Mr. Ulbricht what he would be looking for in collateral for the lease. Mr. Ulbricht explained that it wasn't really a lease. He said Flex Lease had been the original title of the program which was now really a financing program at Special Districts and they had kept the name because it was a known term. He went on to say that they will rely on the pledge of the District and its tax revenues that are otherwise not pledged to be the security. Commissioner Goforth stated that she thought everything was clearly stated. | ||||||||||||||||||||||||||||||
| Vice-Chair Gannaway asked about the interest rates and Mr. Ulbricht stated that the document shows and maximum rate of 7% and if rates start going up it would not make economical sense to continue with it. Chair Shannon asked if the rates went up would Mr. Ulbricht stop it and Mr. Ulbricht said yes, he would. Chair Shannon then asked if the maximum rate had to stay at 7%. Mr. Ulbricht said it did not and the Board could put in 6% if they chose to do so. Chair Shannon asked how the Board would go about changing the rate to 6% in the document and Mr. Ulbricht told him to cross it out and write in 6% and initial the change. Vice-Chair Gannaway asked what process Mr. Ulbricht would use to raise the rate and Mr. Ulbricht explained that if Mr. Greenspan raises the rates a quarter of a percent then the Bond markets would react. He stated he would look at comparable securities and he feels he is setting the rate proper for this type of transaction. Vice-Chair Gannaway asked if the Board would have any recourse if it were raised next week? Mr. Ulbricht stated that it was his job to give the District a reasonable market rate for this type of transaction and to put together securities for investors. Commissioner Goforth asked if it was a fixed rate and Mr. Ulbricht answered yes. | ||||||||||||||||||||||||||||||
| Mr. Ulbricht left the meeting. | ||||||||||||||||||||||||||||||
| d. | Consideration of Owner's
Representative Contract with OTAK - Discussion: Chair Shannon reminded the Board the proposal was for an Amendment to OTAK's contract not to exceed $227,000 and asked if OTAK is who the Board wanted as the Owner's Representative. Secretary/Treasurer Harris stated he thought Mr. Krieger gave good answers to the questions. Chair Shannon noted that there would be change orders and asked if anyone had any questions about that. Vice-Chair Gannaway stated that in an old building particularly, they could expect change orders. Commissioner Goforth said she was impressed that OTAK had stuck with it for three years and she was prepared to agree to accept the proposal. Commissioner Mendenhall agreed that OTAK had done a good job for the District. Vice-Chair Gannaway stated he had worked in the building material industry for years and knew it was very important to have the right people on the job. Chair Shannon stated he had every confidence in OTAK but was personally uncomfortable with the maximum number and thought it would be better to have a lower target number. Ms. Howe stated that she was sure Mr. Krieger understood and she has total confidence in OTAK. She said she was sure that OTAK will do exactly as Mr. Krieger said they would. Vice-Chair Gannaway agreed. Secretary/Treasurer Harris asked about the $40,000 park and Ms. Howe explained that the park was being designed by a different company. |
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| Board Action: Motion by Commissioner Mendenhall, second by Vice-Chair Gannaway to accept OTAK to be the Owner's Representative on the Intermodal Transit Center Project. Chair Shannon, Vice-Chair Gannaway, Secretary/Treasurer Harris and Commissioners Mendenhall and Goforth voted yes. Motion passed. | ||||||||||||||||||||||||||||||
| Chair Shannon stated, for the record, that he preferred the contract to be approved for the sum of $150,000 with expenses over that figure approved by the Board. Vice-Chair Gannaway said he did not see what the District would gain from that; when they get to $150,000 there would just be change orders. Vice-Chair Gannaway stated that he was comfortable with $227,000 and that he did not believe OTAK would take advantage of the District. Chair Shannon said he had had a lot of experience with corporations and if the contract states this is our expected figure they will spend up to it. Vice-Chair Gannaway reminded the Board that they still had Ms. Howe to "ride herd" on them. Ms. Howe stated that she did not believe OTAK would not make any decisions without asking the District and that she could not reassure the Board any more than she was now that she is a part of the project and will be more so when the Owner's Rep has an office just down the hall from hers. | ||||||||||||||||||||||||||||||
| Board Action: Motion by Commissioner Mendenhall, second by Commissioner Goforth to accept the proposal of OTAK to provide Construction Management Services at a price not to exceed $227,000. Chair Shannon, Vice-Chair Gannaway, Secretary/Treasurer Harris and Commissioners Mendenhall and Goforth voted yes. Motion passed. | ||||||||||||||||||||||||||||||
| e. | Resolution Approving District
Refinancing 2003-04: Ms. Howe read Resolution No. 2003-04 to the Board. She stated that if the Board wanted to change the maximum interest rate to 6% Chair Shannon needed to cross it out, change it and initial it. Commissioner Goforth asked who would sign it and Ms. Howe replied that the Board Chair and the Executive Director would sign the document. Chair Shannon stated he thought the Board had received good advice from Mr. Ulbricht and with the change to 6% interest he did not see anything to go slow on. He went on to say that he just wanted to make sure that the Board will get to see the disclosure document before Mr. Ulbricht sends it out and Ms. Howe said she would tell Mr. Ulbricht. |
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| Board Action: Motion by Commissioner Goforth, second by Secretary/Treasurer Harris to adopt the Resolution 2003-04 with the maximum interest rate reduced from 7% to 6%. Motion Passed | ||||||||||||||||||||||||||||||
ROLL CALL VOTE
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| NEW BUSINESS | ||||||||||||||||||||||||||||||
| a. | Appointment to CEDC
Chair Shannon noted that Commissioner Kee had sent a note saying he would not be able to represent the District for CEDC and asked Ms. Howe if her work schedule would allow her to serve. Ms. Howe said she would be happy to accept. Vice Chair Gannaway said he had heard Ms. Howe speak on the radio and she had said some very nice things about the Board. |
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| Board Action: Motion by Commissioner Mendenhall, second by Secretary/Treasurer Harris to nominate Ms. Howe as the primary delegate to the CEDC with Commissioner Harris as alternate. Chair Shannon, Vice-Chair Gannaway, Secretary/Treasurer Harris and Commissioners Mendenhall and Goforth voted yes. Motion passed. | ||||||||||||||||||||||||||||||
| Ms. Howe spoke briefly to the Board about the Draft Budget that will be mailed out to the Board saying it was a hold-the-line budget. She reminded everyone that the Budget Committee Meeting would be held at 9 am on Tuesday, May 20th at the Astoria Council Chambers just before the next regular Board meeting. She also went over the details of the upcoming ride on the train that some of the Commissioners will be taking. Commissioner Goforth said she would bring Lewis and Clark informational booklets along on the train. Ms. Howe asked Commissioner Goforth to plan on doing Lewis and Clark training with the drivers in the near future. | ||||||||||||||||||||||||||||||
| There were no further questions or comments. | ||||||||||||||||||||||||||||||
| ADJOURNMENT: : Chair Shannon adjourned the meeting at 11:45 am | ||||||||||||||||||||||||||||||
| Approved: | ||||||||||||||||||||||||||||||
| Secretary/Treasurer | ||||||||||||||||||||||||||||||
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