Vancouver City Council

ADMINISTRATIVE REPORT

Date: April 25, 2003
Author/Local: F. Crudo/323-7690

P. Bremner/ 6720

RTS No. 03370

CC File No. 2606
Meeting Date: June 24, 2003

TO:	Vancouver City Council
FROM:	General Manager of Engineering Services
SUBJECT:	900 East Kent Avenue Yard

RECOMMENDATION

THAT Council approve the increased scope for development of the Precast Plant and Kent Yard improvements at the Kent Avenue Yard as outlined in this report at a cost of $1,308,000 with financing to be provided from the Capital Financing Fund on terms acceptable to the Director of Finance and with repayment to be provided from revenues generated by the yard operation.

GENERAL MANAGER'S COMMENTS

The General Manager of Engineering Services recommends approval of the foregoing.

COUNCIL POLICY

It is Council policy to utilize internal financing for capital projects that demonstrate a viable business case. Financing terms are generally consistent with the current market conditions (terms and rates) as established by the Director of Finance. The use of internal financing for projects and program initiatives is subject to Council approval.

The City has many policies which encourage sustainable practices such as energy efficiency, environmental stewardship and improved building performance.

SUMMARY

The Kent Avenue Yard has been developed as a group of business units, each with positive economic returns. This group currently includes the Asphalt Plant, Aggregate Handling Facility and Materials Transfer Facility. In June 2002, Council approved funding for design and construction to relocate the existing Cambie Yard Precast Plant as an additional business unit at the Kent Ave Yard. The Precast Plant was approved based on a positive business case.

Through the Precast Plant conceptual design stage a number of opportunities and recommended changes to the scope have been identified. These include improvements to the Precast Plant equipment, refinements to the foundation design and water treatment, construction of office space to consolidate management resources at Kent Yard, and incorporation of building and site sustainability initiatives.

Increased capital costs will be funded through a Capital Financing Fund loan with repayment from operating revenues from the Asphalt Plant, Aggregate Handling Facility, Materials Transfer Facility and Precast Plant with no net increase to existing operating or capital budgets.

PURPOSE

The purpose of this report is to recommend:

· an increase in scope to the Precast Plant project at the Kent Avenue Yard and plant site improvements including approval of additional financing of $ 743,000.
· approval for the development of office space, a first aid room and sustainability initiatives for the Kent Yard including additional financing of $565,000.

BACKGROUND

· Operations at the Kent Avenue Yard have been developed as business units based on positive business cases. Operations include the Asphalt Plant, the Aggregate Handling Facility, and the Material Transfer Facility.
· In June 2002, Council approved construction of a small ready mix concrete facility at the Kent Avenue yard based on a positive business case. The facility would produce small batches of ready mix concrete and precast concrete products for use by City crews (Sewer, Water, Streets).
· A total of $1,705,000 was approved as a Capital Financing Fund loan with $399,000 for land and $1,306,000 for development of the facility.
· Loan repayment would be over 20 years repaid through operating savings to the Sewer, Water and Streets crews. Annual savings when compared to private supply of ready mix and precast products are estimated to be $242,500 and the annual repayment is estimated at $146,500.
· In January 2003 Council awarded a design consulting contract to Westmar Consultants for the new precast plant.
· The new facility is scheduled for completion in early 2004 and will replace the existing Cambie Yard Precast facility.

DISCUSSION

This report discusses four areas of funding for improvements to the Kent Avenue Yard:

a. additional equipment requirements for the Precast Plant;
b. a number of additional site improvements,
c. development of office space to consolidate yard administration and support; and,
d. enhanced environmental improvements.

A) Precast Equipment

Following approval by Council to proceed with design and construction of the new Precast facility, conceptual design and an equipment review was carried out. This identified three opportunities for improvements and future cost savings.

A1) Concrete Mixer

The original business case identified a paddle mixer based on basic concrete technology. On further review it was noted that a switch to a pan mixer would increase concrete production to meet the demand of our construction crews, and limit delays for the delivery vehicles. Additionally, the cost to supply and install the paddle mixer is higher than originally estimated. Without the pan mixer's reduced mix time, there is a risk that the original business case may lose some business due to time delays. The capital cost premium of the pan mixer and base equipment is $182,000 and the resulting operating savings are $42,649 per year over those of a paddle mixer.

A2) Aggregate Supply

The original business case assumed that a pre-blended aggregate would be purchased from an outside supplier and delivered to the site by truck. Upon review of the alternatives, it was determined that long term cost reduction and product flexibility could be achieved by installing two additional aggregate bins and using aggregates supplied by the adjacent City aggregate handling facility. The bins would allow better control of aggregate grading and blending and would have the added benefit of allowing specialized mixes to be made as and when required. The capital cost premium of the bins is $178,000 and the resulting operating savings are $37,000 per year over those obtained by purchasing premixed aggregate from an outside supplier.

A3) Fly Ash Replacement

The original business case proposed 100% cement for the mixes being produced. However, in line with the City's commitment to environmental sustainability, it is proposed to replace 20% of the cement content with fly ash. Additional experimentation with higher fly ash cement replacement will also be done. Fly ash will have long term cost benefits although the initial capital cost will be higher due to the need to install additional fly ash storage and handling equipment. The capital cost of the equipment is estimated at $108,000. The annual cost saving would be $15,200.

The Capital Cost to incorporate the three equipment recommendations above is $468,000 but will result in an annual cost savings of $95,000 over those obtained with the previously proposed equipment.

B) Precast Site Improvements

Design development is currently underway for the Precast facility. Through this stage of the project, two components have been identified to have higher than anticipated costs; water treatment and building foundations.

B1) The Kent Yard has a good water treatment system in place for removal of suspended solids from storm water runoff. However, with the addition of the Precast facility, and washing out of concrete trucks it has been recommended to supplement this with PH adjustment and sumps for removal of the finer cement particles in the Precast process water. The existing system will be used for treatment of the additional site storm water. Additional treatment is estimated to cost $115,000 which is not part of the existing budget.

B2) The Geotechnical engineer for the project has recently completed a detailed geotechnical investigation of the site. Onsite drilling and soil testing performed as part of this investigation has shown that the existing site soil conditions are more adverse than originally anticipated. This will cause an increase to the cost of building foundations. Building foundations are expected to cost $160,000 more than currently budgeted.

Foundations and water treatment will require an additional $275,000.

C) Office Space

To date, staff responsible for the management and operation of the Kent Yard facilities work from remote locations in City Hall, Manitoba Yard and the Materials lab. The Asphalt Plant and Aggregate Facility, Material Transfer Facility, and the Precast facility are all run on a business model with positive economic returns. The asphalt plant and aggregate facility has been in operation for five years. The Material Transfer Facility has been in trial operation for two years and is under construction as a permanent facility.

The Precast facility has operated out of Cambie Yard for more than 20 years and will be rebuilt in the Kent Yard later this year. This is the last component of the Kent Yard to be built. Once this work is complete, management of the Kent facilities will be reorganized and staff responsible for the operations will be located in the Kent Yard. No new staff would be added; however, no office space is currently available in the yard. It is recommended to build office space in the precast building at an estimated cost of $405,000. This move would consolidate staff into one space for better reporting, functioning and combined management of the entire yard. A first aid room will also be built to ensure coverage for the existing yard and new facilities. A trucker's washroom will also be incorporated.

D) Environmental Improvements

During review of the Precast Facility, a number of environmental improvements have been identified which were not part of the original concept.

D1) Water Re-circulation

A water re-circulation and re-use system is being proposed as part of this project. The majority of the water uses at the Kent Avenue yard will not require potable water. These uses include washing trucks, dust control; concrete mixing water and truck wheel washes. A large sediment detention pond was previously constructed as part of the Asphalt Plant and Aggregate Handling facility in order to treat storm water prior to discharge into the Fraser River. It is proposed to construct a water re-circulation system that will use this non-potable water source as the primary water source for the yard and substantially reduce the potable water requirements. The cost of this system is estimated at $70,000.

D2) Sustainable Building Design

It is proposed to use the LEED^TM rating system as a guide in considering sustainability initiatives for the new building. LEED^TM (Leadership in Energy and Environmental Design) is a measurement tool developed by the US Green Building Council (USGBC) as a means of measuring a building's sustainability and is currently being used for the new National Works Yard in the False Creek Flats. More information on LEED^TM is available through the World Wide Web at www.leedbuilding.org.

The following building sustainability goals and initiatives are proposed:

+ Reduce building energy consumption by 20% over Vancouver Building By-Law requirements.

+ Provide natural lighting, good indoor air quality and access to views for building occupants.

+ Use high recycled content building materials wherever possible for this project.

+ Establish a construction waste management and recycling program for building construction to divert 75% of construction waste from landfill.

+ Reduce building water consumption by 30% and do not provide potable water for irrigation for landscaping.

+ minimize storm water discharge to the Fraser River.

These additional items were not part of the original Precast plant budget and are recommended to be incorporated into the project at an estimated cost of $90,000.

Implementing the above building initiatives should be sufficient to obtain a LEED^TM Certified level for the building; however, formal LEED^TM certification of the building through USGBC is not proposed at this time.

Sustainability initiatives (D1 & D2) will cost an estimated $160,000.

FINANCIAL IMPLICATIONS

The existing approved funding for the Precast plant is $1,705,000 for land and improvements, with financing provided by the Capital Financing Fund and repayment from operating savings arising from the new yard operations. This report outlines a number of changes to the scope of the precast plant for equipment and plant site improvements at a total cost of $743,000 (items A and B). These changes would be financed from the Capital Financing Fund with repayment to be from increased savings and additional revenue from Precast Plant operations.

This report also recommends additional enhancements to the Kent Avenue Yard that will benefit the overall yard including the Precast Plant, the Material Transfer Facility and the Asphalt-Aggregate Plant (item C and D). These improvements total $565,000 and would also be financed from the Capital Financing Fund with repayment generated through yard operations.

Table 1 summarizes the additional financing ($1,308,000) required and how the repayments would be distributed to the respective operations.

Table 1: Capital Loan Summary

* Share based on the facility share of operating revenue

** Repayment based on 20 yr loan at 6%

Financing will be from the Capital Financing Fund on terms acceptable to the Director of Finance and will generally be consistent with current market conditions. These recommended additions to the Kent Avenue Yard financing plan result in no net increase to Operating or Capital Budgets.
Table 2 summarizes the total financing to be provided to the Precast Plant at the Kent Avenue Yard and the anticipated repayment from annual savings. This additional amount is summarized in Table 1 above.

Table 2: Revised Precast Plant Financing Plan

The revised business case for the Precast plant is able to repay the additional capital cost plus interest from operating savings. Total immediate annual cost savings are estimated at $79,000 which would increase to $294,000 once loan repayment is complete.

SUSTAINABILITY IMPLEMENTATION

With the above considerations put into place, the Kent Avenue Yard operations will be more sustainable benefiting the workers, the environment and moving Vancouver closer to being a sustainable City.

The plant equipment proposed will provide the following benefits:

+ reduced trucking for aggregate supply by mixing the required blend from our own stock of aggregates which are transported to the site by barge.

+ reduced use of cement resulting in a reduction in greenhouse gas emissions

by replacing a portion of the cement content with fly ash.

+ more efficient concrete mixing and production reducing truck queuing and idling times.

Office space will be developed to incorporate LEED^TM sustainability initiatives resulting in improved building energy efficiency with more attention to material selection and the indoor environment of the workers.

Site and environmental improvements will provide a reduction in potable water use by recirculating site water and providing improved treatment for any discharge.

CONCLUSION

Development of the Precast Facility with the noted equipment and site improvements will provide positive economic and environmental benefits to the City. Developing office space at the yard will provide better reporting, function and combined management of the entire yard. The costs of improvements are affordable with repayment of all loans paid by the Kent Yard operations.

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© 2002 City of Vancouver