AGENDA
DEBORAH ALE FLINT GILDA GONZALES Acting Executive Director PORT OF OAKLAND President JAMES W. HEAD BOARD OF PORT COMMISSIONERS First Vice-President DANNY WAN 530 Water Street 1 Oakland, California 94607 ALAN S. YEE Port Attorney (510) 627-1696(w)1(510) 839-5104(f)1TDD/TTY 711 Second Vice-President CESTRA BUTNER ARNEL ATIENZA Commissioner Port Auditor E-Mail: [email protected] EARL HAMLIN Website: www.portofoakland.com Commissioner JOHN T. BETTERTON BRYAN R. PARKER Secretary of the Board Commissioner SUPPLEMENTAL AGENDA VICTOR UNO Commissioner
Regular Meeting of the Board of Port Commissioners Thursday February 28, 2013 – 1:00 p.m. Board Room – 2nd Floor
Commissioner Butner will participate in Closed Session by telephone from the Omni Fort Worth Hotel (Downtown Fort Worth) at 1300 Houston Street, Fort Worth, Texas 76102
Commissioner Parker will participate in Closed Session by telephone from Boca Raton Resort and Club, 501 East Camino Real Boca Raton, Florida, 33432
Each teleconference location will be accessible to the public.
ROLL CALL
1st Vice President Head, 2nd Vice-President Yee, Commissioner Butner, Commissioner Hamlin, Commissioner Parker, Commissioner Uno and President Gonzales.
1. CLOSED SESSION
Closed Session discussions and materials may not be disclosed to a person not entitled to receive it, unless the Board authorizes disclosure of that confidential information.
1.1 CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION. Pursuant to Subdivision (a) of California Government Code Section 54956.9.
SSA Terminals, LLC and SSA Terminals (Oakland), LLC v. the City of Oakland, Acting by and Through its Board of Port Commissioners Docket No. 09-08
1.2 CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION. Significant Exposure to Litigation Pursuant to Subdivision (b) of California Government Code Section 54956.9: 2 matter
1.3 PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Tittles: Acting Executive Director, Port Auditor, Board Secretary
1 AGENDA
1.4 CONFERENCE WITH REAL PROPERTY NEGOTIATOR - As provided under California Government Code Section 54956.8:
Property: Former Oakland Army Base – Buildings 803-808 and Adjacent Yards Negotiating Parties: Port of Oakland, and Industrial Railways Company (“I.R.C.”), Impact Transportation, Pacific Coast Container and Port Transfer, Inc. (“P.T.I.”) Agency Negotiator: Acting Director of Maritime, Deputy Executive Director, Jean Banker Under Negotiation: Price and Terms of Tenancy
ROLL CALL/OPEN SESSION (approximately 3:00 p.m.)
1st Vice President Head, 2nd Vice-President Yee, Commissioner Butner, Commissioner Hamlin, Commissioner Parker, Commissioner Uno and President Gonzales.
CLOSED SESSION REPORT
The Port Attorney or Board Secretary will report on any final actions taken in Closed Session.
2. MAJOR PROJECTS
This segment of the meeting is reserved for action and discussions regarding the status of Major Projects and issues of special importance.
3. BUDGET & FINANCE
This segment of the meeting is reserved for action or discussion regarding the status of Budget and Finance issues.
4. STRATEGY & POLICY
This segment of the meeting is reserved for action or discussion on Strategy and Policy Issues.
4.1 PULLED Report: HR Study Update (Administration)
5. CONSENT ITEMS
Action by the Board under “Consent Items” means that all matters listed below have been summarized and will be adopted by one motion and appropriate vote. Consent Items may be removed for further discussion by the Board at the request of any member of the Board.
5.1 Authorization to Enter into Agreements for the Investigation of the Rolls-Royce Engine Services, Oakland, and Test Cell Facility. (Environmental)
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2 AGENDA
5.2 Ratification of the Extension of the Contract Award Period for the Project to Furnish and Install Pre-conditioned Air (PCA) Units on Terminal 1 Passenger Boarding Bridges, South Field, Oakland International Airport (Aviation/Engineering)
5.3 Authorize Extension of the Parking Revenue Control System Maintenance Agreement with ACS Transport Solutions Inc. from April 2013 to December 2014; and Assign this Agreement to Xerox (Aviation)
5.4 Cancellation of Programmer Analyst III Eligible List (Administration)
5.5 Extension of the Eligible List for Wharfinger from March 8, 2013 through March 8, 2014. (Administration)
5.6 Building Permit Application: SSA Marine, Installation of new turnstile with TWIC reader for pedestrian access, and new TWIC reader at the entrance gate., 1 Market Street, Howard Terminal (Engineering)
5.7 Building Permit Application: United Airlines, 1 Airport Drive, Restoration of ticket counters to pre-lease condition., Terminal 1, M101 (Engineering)
6. REMAINING ACTION ITEMS
Remaining Action Items are items not previously addressed in this Agenda that may require staff presentation and/or discussion and information prior to action by the Board.
6.1 FedEx Approval of 5-Year Extension of Term and Supporting Agreements (Aviation)
6.2 Approval of a Lease with I Scream Scoop, Inc., dba Ben & Jerry's, for Premises Located at 505 Embarcadero West, Oakland, California (CRE)
7. UPDATES/ANNOUNCEMENTS
The President, Members of the Board and the Executive Director will report on noteworthy events occurring since the last Board Meeting.
8. SCHEDULING
This segment of the meeting is reserved for scheduling items for future Agendas and/or scheduling Special Meetings
OPEN FORUM
The Board will receive public comment on non-agenda items during this time. Please fill out a speaker card and present it to the Secretary of the Board.
ADJOURNMENT
The next Regular Meeting of the Board will be held on March 1st at 1:00 PM 3
3 AGENDA
PUBLIC PARTICIPATION
To Speak on an Agenda Item You may speak on any item appearing on the Agenda. Please fill out a Speaker’s Card and give it to the Board Secretary before the start of the meeting or immediately after conclusion of Closed Session. Cards received after the start of the meeting will be treated as a single request to speak in Open Forum. All speakers will be allotted a minimum of one minute.
To Receive Agendas & Related Materials Should you have questions or concerns regarding this Agenda, or wish to review any of the Agenda Related Materials, please contact the Board Secretary, John Betterton, at: (510) 627-1696, or visit our web page at: www.portofoakland.com
To receive Port Agendas and Agenda Related Materials by email, please email your request to: [email protected]
Disability Related Modifications Any person who requires a disability-related modification or accommodation, including auxiliary aids or services, in order to participate in the meeting, may submit a written request, electronic request, or telephone request [via the California Relay Service (telephone) for the hearing impaired at (800) 735-2922], to the Secretary of the Board no later than five working days prior to the scheduled meeting date. John Betterton, Secretary of the Board 530 Water Street, Oakland, CA 94607 [email protected] (510) 627-1696
Language & Interpretive Services As a grantee of federal aid grant funds from the US Department of Transportation, the Port is responsible for ensuring equal access to its programs, services, and benefits. To request bilingual interpreters or materials in alternate formats, please contact the Assistant Secretary of the Board no later than five working days prior to the scheduled meeting date.
Daria Edgerly, Assistant Secretary of the Board 530 Water Street, Oakland, CA 94607 [email protected] (510) 627-1337
Scented Products Please refrain from wearing scented products to this meeting so attendees who experience chemical sensitivities may attend.
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4 AGENDA
Commissioner’s Statement of Intention
We are a governing Board whose authority lies with the entirety of the Board.
We govern in accordance with our fiduciary duty to the Port of Oakland.
We conduct ourselves with clarity and transparency, grounded in the principles of integrity, trust, and respect.
We reach our decisions through candid, open, and deliberative debate, and hold both staff and ourselves accountable for implementing them.
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5 MAJOR PROJECTS Tab 2
MAJOR PROJECTS This segment of the meeting is reserved for action and discussions regarding the status of Major Projects and issues of special importance.
6 BUDGET & FINANCE Tab 3
BUDGET & FINANCE This segment of the meeting is reserved for action or discussion regarding the status of Budget and Finance issues.
7 STRATEGY & POLICY Tab 4
STRATEGY & POLICY This segment of the meeting is reserved for action or discussion on Strategy and Policy Issues.
8 CONSENT ITEMS Tab 5
CONSENT ITEMS Action by the Board under “Consent Items” means that all matters listed below have been summarized, and are considered to be perfunctory in nature, and will be adopted by one motion and appropriate vote. Consent Items may be removed for further discussion by the Board at the request of any member of the Board.
9 CONSENT ITEMS Tab 5.1
BOARD MTG. DATE: 02/28/13
AGENDA REPORT
TITLE: Authorization to Enter into Agreements Concerning Environmental Issues at the Rolls-Royce Engine Services–Oakland, Inc. Facilities
AMOUNT: New Contract Amount: Not to Exceed $300,000 ($150,000 paid by Port); Reimbursement Amount From Previous Study to the Port: $179,290.81 (paid by Rolls-Royce Engine Services – Oakland, Inc.)
PARTIES INVOLVED:
1B1B1BCorporate Name/Principal 0B0B0BLocation Rolls-Royce Engine Services-Oakland, Inc. 6701 Old Earhart Road, Oakland, CA Geosyntec Consultants, Inc. 1111 Broadway, 6th Floor, Oakland, CA
TYPE OF ACTION: Resolution
SUBMITTED BY: 2B2B2BRichard Sinkoff, Director of Environmental Programs & Planning
APPROVED BY: Deborah Ale Flint, Acting Executive Director
SUMMARY
Rolls-Royce Engine Services–Oakland, Inc. (“RRESO”), a tenant of the Port of Oakland (“Port”), conducts service, maintenance and testing of aircraft engines at two locations at the North Field of Oakland International Airport (“OAK”). RRESO operates under two lease agreements with the Port: (A) one for the Main Building dated January 23, 1991, and subsequently modified by the First Supplemental Agreement and Second Supplemental Agreement dated November 22, 1991 and June 19, 2001, respectively (collectively, the “Main Building Lease”); and (B) one for the Test Cell Facility dated January 23, 1991 and subsequently modified by the First Supplemental Agreement entered into June 19, 2001 (collectively, the “Test Cell Lease”). Both leases generally provide, among other matters, that RRESO is responsible for environmental contamination at both sites that might arise from their operations. An environmental baseline study has already been completed for the Main Building; a second environmental baseline study is required at the Test Cell Facility to determine environmental baseline conditions prior to RRESO’s 1969 occupancy.
Pursuant to the terms of the Test Cell Lease, the environmental baseline study must be “conducted by an environmental consultant mutually acceptable to the Port and (RRESO)”. This Agenda Report requests authorization to dispense with the Port’s standard bidding procedures for professional services contracts and for the Executive Director to execute a Professional Services Agreement (“PSA”) with RRESO and Geosyntec Consultants, Inc (“Geosyntec”) to prepare the required environmental baseline study.
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10 CONSENT ITEMS Tab 5.1
BOARD MTG. DATE: 02/28/13
In addition, this Agenda Report requests authorization for the Executive Director to execute a proposed (i) Third Supplemental Agreement to the Main Building Lease which defines the amount RRESO will reimburse the Port for its share of costs associated with the environmental baseline study already completed for the Main Building site ($179,290.81) and (ii) Second Supplemental Agreement to the Test Cell Lease which incorporates specific terms and conditions for the 50% cost share responsibilities between the Port and RRESO for the required environmental baseline study for the Test Cell Facility. Conducting an environmental baseline study for the Test Cell Facility will establish the environmental baseline conditions prior to RRESO’s 1969 occupancy, and assist in the evaluation of RRESO’s environmental responsibilities related to its occupancy of the site.
FACTUAL BACKGROUND
Main Building
The Main Building, located at 7200 Earhart Road at the North Field, OAK, was constructed in 1927 on reclaimed land created by hydraulically filling the former tidal marsh with dredge materials from San Francisco Bay. In the mid-1940s, the U.S. Navy took over the North Field for wartime purposes. Based on available information, it is estimated that the Navy operated the North Field until 1962.
In 1969, National Airmotive Corporation (“NAC”) leased the Main Building and performed engine repair and maintenance for the next three decades until 1999. In 1999, RRESO acquired NAC’s operations throughout the U.S., which included the Main Building (See Figure 1). The Main Building area went through a series of expansive developments beginning in 1985, leading to the current configuration. The Main Building area includes buildings, paved parking lots, roadways, walkways and minimal landscaping (see adjacent photograph). RRESO operates the Main Building under the Main Building Lease which requires the retroactive determination of environmental baseline conditions1 from the commencement of NAC’s lease in 1969.
1 The quality (level of contamination) in soil and groundwater in 1969. 2
11 CONSENT ITEMS Tab 5.1
BOARD MTG. DATE: 02/28/13
There are no known environmental contaminant releases associated with the period of the Navy’s occupancy of the site prior to 1969. Removal of an underground storage tank (“UST”) and a storm drain system in 1999, and environmental investigations from 1999 to 2010 have occurred at the Main Building area since NAC’s occupancy. In 2007, the San Francisco Bay Regional Water Quality Control Board (“Water Board”) began providing oversight for the Main Building and subsequently required that the Port conduct a soil and groundwater investigation to determine if any remediation was necessary as a result of potential contamination from the removal of the UST and storm drain system. After a year of sampling and monitoring the soil and groundwater, analytical results indicated that the concentrations of chemical constituents were below regulatory environmental screening levels. Therefore, no further soil or groundwater monitoring or remediation was required, and the Water Board issued a “Closure/No Further Action” letter for the Main Building in June 2012.
In coordination with RRESO, the Port conducted an environmental baseline conditions study for the Main Building to determine the background conditions prior to RRESO’s occupancy. The study commenced in October 2000 and was completed in December 2012.
Test Cell Facility
The Test Cell Facility, located at 6701 Old Earhart Road at the North Field, OAK, was constructed during World War II by the Navy to test aircraft engines. In 1969, NAC entered into a lease for the Test Cell Facility (along with the Main Building) and performed aircraft engine testing for the next three decades to 1999. As noted above, RRESO acquired NAC’s operations throughout the U.S., which also included the Test Cell Facility (See Figure 1). The Test Cell Facility consists of six engine test cells2 (see adjacent photograph) along with sheds, wastewater sumps, an above-ground oil/water separator, cooling towers, and associated auxiliary structures. RRESO operates the Test Cell Facility under the Test Cell Lease which also requires the retroactive determination of environmental baseline conditions from the commencement of NAC’s lease in 1969, similar to the Main Building.
There are no known environmental contaminant releases associated with the period of the Navy’s occupancy of the site prior to 1969. There have been four
2 A “test cell” combines industrial machinery with precision control and laboratory-quality measurements to replicate real-world environments for individual components, system of components, and complete vehicles. 3
12 CONSENT ITEMS Tab 5.1
BOARD MTG. DATE: 02/28/13 documented releases at the Test Cell Facility since NAC occupied the site, as described below:
1. 1969 to 1978: Discharges of water (potentially containing oil from engine wash- down operations) occurred near the southwest corner into an unlined drainage ditch (swale) leading off the leased property site;
2. September 1992: 1,143 gallons of jet-A fuel3 were released in the northwestern portion. The spill was mostly contained but some fuel was suspected to have entered unpaved areas in the vicinity of the spill location;
3. April/May 1994: A discharge of water (potentially containing oil from engine wash-down operations) occurred near the southwest corner into the unlined drainage ditch (swale); and
4. October 1998: Petroleum hydrocarbons (identified as a mixture of degraded motor oil, diesel, and/or kerosene) were discovered during trenching operations conducted during upgrades to the 10,000-gallon jet-A fuel UST and to associated product lines.
The Alameda County Department of Environmental Health (“ACDEH”) has provided regulatory oversight since 1996 and RRESO continues to perform groundwater and soil monitoring at the site.
ANALYSIS OF THE RECOMMENDED ACTION
Professional Services Agreement (PSA) with Geosyntec and RRESO for an Environmental Baseline Study for the Test Cell Facility
To comply with the Test Cell Lease, the environmental baseline conditions as of the commencement of RRESO’s occupancy in 1969 must be identified. Some soil and groundwater data exist through preliminary investigations, but a full assessment of historical operations on the Test Cell Facility has not been conducted to date. The scope of work for the environmental baseline study comprises two phases:
Phase I: Prepare three alternative work plans for an environmental baseline study intended to identify the contaminants that were released at or from the Test Cell Facility before and after the Test Cell Facility was occupied by NAC in 1969. This may include additional soil and groundwater sampling.
Phase II: Perform the environmental baseline study based upon the work plan selected by the Port and RRESO.
The Port and RRESO agreed to retain an independent technical consultant with expertise in soil, groundwater, and surface water investigation to perform the
3 Aviation fuel used by aircraft that are powered by gas-turbine engines.
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13 CONSENT ITEMS Tab 5.1
BOARD MTG. DATE: 02/28/13 environmental baseline study. Specifically, the consultant must have experience in conducting forensic studies of contaminated sites, including studies of the fate and transport4 of contaminants in soil, groundwater and surface water, as well as studies of past and present industrial processes and other activities associated with the release of contaminants to the environment in order to identify the likely sources and time periods of releases at the Test Cell Facility. In addition, the Port and RRESO agreed that the consultant must not be currently working (preferably including during the last five years) on any projects for the Port or RRESO. Based on these restricted criteria, the Port and RRESO requested statement of qualifications from the following consultants in March 2012:
Local Impact Area (LIA) Consultant Firm Name Location or Local Business Area (LBA)5 certified? AMEC Environment & Oakland, CA Yes – LIA Infrastructure, Inc. The Bodhi Group La Mesa, CA No Erler & Kalinowski, Inc. Oakland, CA YES – LIA ERM West Walnut Creek, CA No Geosyntec Consultants, Inc. Oakland, CA Yes – LIA Integral Consulting, Inc. Larkspur, CA No Treadwell & Rollo Oakland, CA YES – LIA
After review and analysis of the qualifications and the fee schedules submitted, the Port and RRESO mutually agreed that Geosyntec is best qualified to perform the required environmental baseline study.
Based on the restricted criteria and to accommodate RRESO’s consultant selection process, Port staff requests that the Board of Port Commissioners (Board) authorize dispensing with the Port’s standard bidding procedures, specifically Port Ordinance 1606, which requires formal advertising and bid for professional services greater than $150,000 and authorize the Executive Director to execute the PSA with Geosyntec.
Pursuant to the First Supplemental Agreement to the Test Cell Lease, RRESO is responsible for reimbursing the Port 50% of the costs6 of the environmental baseline study for the Test Cell. Since the environmental baseline study will be managed and funded by both the Port and RRESO, RRESO will be included as a party to the PSA with Geosyntec; this contractual arrangement is described in the proposed Second Supplemental Agreement to the Test Cell Lease. Coordination efforts with RRESO will incorporate approval of all Geosyntec submittals, including reports, invoices, and any other documentation generated from the environmental baseline
4 Fate and transport refer to the way a chemical moves through the environment. 5 LIA: Oakland, Alameda, San Leandro and Emeryville; LBA: Cities within Alameda and Contra Costa counties 6 RRESO pays the Port approximately $600,000 in rent annually.
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14 CONSENT ITEMS Tab 5.1
BOARD MTG. DATE: 02/28/13 study. The PSA establishes the responsibilities and the agreement between Port and RRESO.
Supplemental Agreements with RRESO
Main Building Lease: Pursuant to Section 8(h) of Exhibit E to the First Supplemental Agreement of the Test Cell Lease, RRESO agreed to pay the Port its 50% share of costs associated with both the Main Building and Test Cell Facility baseline studies. After negotiations between the parties and their counsel as to which categories of costs are included in the baseline studies, the Port and RRESO have tentatively agreed upon the 50% share that RRESO owes the Port for the Main Building environmental baseline study work plus preliminary work for the Test Cell Facility; Port staff recommends that the Board accept $179,290.81 from RRESO as full compensation. This amount will be documented in the proposed Third Supplemental Agreement to the Main Building Lease, along with the clean-up and the cost of clean- up of all contaminants released at the Main Building during RRESO’s occupancy.
Test Cell Facility Lease: In addition, the Port and RRESO have agreed upon the terms and conditions for the 50% split of the costs of the environmental baseline study for the Test Cell Facility, which will be documented in the proposed Second Supplemental Agreement to the Test Cell Lease. The total cost of this baseline study (proposed to be conducted by Geosyntec pursuant to the proposed PSA outlined above) is capped at $300,000 with the Port’s share not to exceed $150,000.
4B4B4BRELATIONSHIP TO STRATEGIC PLAN
The Strategic Plan (adopted by the Board on October 5, 2010) operates on a fiscal year (FY) schedule for five years. Each FY represents a stage in implementation. For FY 2012-2013, Stage 3: “Build”, the focus is on “implementing solutions reflective of marketing and design efforts (i.e. “...solutions that deliver price, value, and service to Port customers”).”7 Approving the PSA with RRESO and Geosyntec to perform the required environmental baseline study of the Test Cell Facility will help determine RRESO’s responsibility to remediate the Test Cell Facility, thereby potentially increasing the value of the property. In addition, approving both the (i) Third Supplemental Agreement to the Main Building Lease and the (ii) Second Supplemental Agreement to the Test Cell Facility Lease will provide reimbursement to the Port for past and future costs of the required baseline studies.
In addition, this action meets Goal G of the Strategic Plan (refer to the table below).
7 Port of Oakland Strategic Plan, “Five Stages of Plan Implementation”, p.16.
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BOARD MTG. DATE: 02/28/13
Strategic Priority Goals Objectives How (and When) this Action Areas Implements the Goals and Objectives
Stewardship and G: Sustain healthy #2: Partner to share Accountability communities risk, accountability, Performing the environmental through leading benefits and baseline study at the RRESO Test edge environmental improve Cell Facility creates a relationship stewardship environmental and between the Port and RRESO for safety compliance. remediation responsibilities and holds RRESO accountable for its contamination releases.
The Port is required under local, Stewardship and G: Sustain healthy #5. Develop state and federal regulations to Accountability communities effective remove hazardous materials when through leading relationships with mandated by a regulatory agency, edge environmental regulatory and such as the ACDEH. Currently, stewardship resource agencies. RRESO is monitoring the existing site conditions at the Test Cell Facility through soil and groundwater sampling. Performing the environmental baseline study can assist ACDEH in determining the extent of cleanup, if required.
6B6B6BBUDGET & FINANCIAL IMPACT
The cost of the environmental baseline study for the Test Cell Facility is not to exceed $300,000. This cost was established from previous environmental baseline studies performed for other Port properties and includes a prudent contingency. 50% of the total cost will be RRESO’s responsibility, as established through the PSA and the Second Supplemental Agreement. The Port’s share will be paid from the Port’s general fund (operating budget) and applied against the environmental liability account that the Port established for soil remediation activities at RRESO. This environmental liability account complies with the Governmental Accounting Standards Board Statement No. 49, which requires the Port to assess and disclose remediation liabilities such as hazardous material removal. With limited exceptions, costs associated with such environmental liabilities cannot be capitalized.
Additionally, the Third Supplemental Agreement ratifies a settlement of $179,291 to the Port from RRESO for its share of prior Main Building and Test Cell environmental baseline study costs. RRESO will submit payment to the Port within 30 days of the effective date of the Second Supplemental Agreement.
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BOARD MTG. DATE: 02/28/13
7B7B7BSTAFFING IMPACT
Because of the technical complexity of the environmental baseline study which may include additional sampling and analysis (and to remove any biases from either parties), the Port and RRESO plan to use a specialized consultant. The Division of Environmental Programs and Planning (“EP&P”) will have lead project management responsibility for the environmental assessment at the Test Cell facility. The Port and RRESO established a team of aviation, environmental and legal staff to address contractual, environmental and legal issues. Overseeing the work of the consultant and managing the requirements contained in the Third Supplemental Agreement for the Main Building and the Second Supplemental Agreement for the Test Cell Facility is within the normal range of EP&P staff duties. This action will not increase Port-wide Full-Time Equivalents (“FTEs”).
11B11B11BSUSTAINABILITY
The Port works to improve the environmental conditions on Port property. Determining RRESO’s responsibility for the release and remediation of contaminants generated from RRESO activities will assist in the improvement of the site for current and potential future uses.
12B12B12BENVIRONMENTAL
The California Environmental Quality Act (“CEQA”) Guidelines Section 15378(2), Project states that a “Project” means the “whole of an action”, which has potential for resulting in either direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. The General Rule in Section 15061(b)(3) of the CEQA Guidelines also states that CEQA applies only to activities that have a potential for causing a significant effect on the environment. Because here it can be seen with certainty that there is no possibility that dispensing with the standard bidding procedures, executing the PSA with RRESO and Geosyntec, and approving the Third Supplemental Agreement for the Main Building and the Second Supplemental Agreement for the Test Cell Facility will result in a physical change in the environment, it is not subject to further CEQA review. If remediation is required due to reported releases, regulatory action, or as defined by the lease, additional CEQA review will be conducted.
MARITIME AND AVIATION PROJECT LABOR AGREEMENT (“MAPLA”)
These Agreements do not include construction testing and inspection; and, therefore, the provisions of the Port of Oakland Maritime and Aviation Project Labor Agreement (“MAPLA”) do not apply to this work.
OWNER CONTROLLED INSURANCE PROGRAM (“OCIP”)
The Owner Controlled Insurance Program (“OCIP”) will not apply to this contract because it is not a capital improvement project. Geosyntec will be required to provide insurance in accordance with the coverage and limits specified in the PSA. 8
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BOARD MTG. DATE: 02/28/13
8B8B8BGENERAL PLAN
The services authorized by this action do not change the use of any existing facility or create new facilities, and therefore the action does not require a General Plan conformity determination pursuant to Section 727 of the City of Oakland Charter. Where such services support development projects, those projects will be subject to separate findings of conformity with the City of Oakland General Plan.
9B9B9BLIVING WAGE
Living wage requirements, in accordance with the Port’s Rules and Regulations for the Implementation and Enforcement of the Port of Oakland Living Wage Requirements (the “Living Wage Regulations”), do not apply to this agreement as the service providers does not employ 21 or more employees working on Port-related work. However, the service providers will be required to certify, that should living wage obligations apply, the service providers shall comply with the Living Wage Regulations.
OPTIONS
The Board of Port Commissioners has the following options:
Option 1. Authorization (1) to accept $179,290.81 from Rolls-Royce Engine Services– Oakland, Inc. (“RRESO”) as reimbursement to the Port in full compensation for prior baseline studies as documented in the proposed Third Supplemental Agreement and the proposed Second Supplemental Agreement; (2) to dispense with standard bidding procedures; (3) for the Executive Director to execute a Professional Services Agreement (“PSA”) with RRESO and Geosyntec Consultants, Inc. (“Geosyntec”) to complete an Environmental Baseline Study at RRESO’s Test Cell Facility in an amount not to exceed $300,000 (Port’s share of reimbursement to Geosyntec not to exceed 50% of maximum amount, or $150,000); (4) to execute the proposed Third Supplemental Agreement with RRESO for the Main Building; and (5) to execute the proposed Second Supplemental Agreement with RRESO for the Test Cell Facility. This is the recommended option.
Option 2. Do not provide authorization (1) to accept $179,290.81 from RRESO as reimbursement to the Port in full compensation for prior baseline studies as documented in the proposed Third Supplemental Agreement and the proposed Second Supplemental Agreement; (2) to dispense with the standard bidding procedures; (3) for the Executive Director to execute a PSA with RRESO and Geosyntec; (4) to execute the proposed Third Supplemental Agreement with RRESO for the Main Building; and (5) to execute the proposed Second Supplemental Agreement with RRESO for the Test Cell Facility. If not authorized, the Port will be required to proceed with the standard bidding procedures to contract for an environmental baseline study that must be conducted by an environmental consultant 9
18 CONSENT ITEMS Tab 5.1
BOARD MTG. DATE: 02/28/13
mutually acceptable to the Port and RRESO. However, RRESO must agree to the Port’s selection process. If RRESO does not approve the Port’s selection process and/or a consultant is not mutually accepted after Port’s the selection process, the Port and RRESO will not be able to comply with the terms of the Test Cell Lease. 10B10B10
RECOMMENDATION
It is recommended that the Board approve Option 1 to accept $179,290.81 from Rolls-Royce Engine Services–Oakland, Inc. (“RRESO”) as reimbursement to the Port in full compensation for prior baseline studies as documented in the proposed Third Supplemental Agreement and the proposed Second Supplemental Agreement, to dispense with standard bidding procedures, authorize the Executive Director to execute a Professional Services Agreement with RRESO and Geosyntec Consultants, Inc. to complete an environmental baseline study at RRESO’s Test Cell Facility, in an amount not to exceed $300,000 and to execute the Third Supplemental Agreement for the Main Building and the Second Supplemental Agreement for the Test Cell Facility with RRESO, with all agreements subject to approval as to form and legality by the Port Attorney.
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19 CONSENT ITEMS Tab 5.1
BOARD MTG. DATE: 02/28/13
Figure 1: Rolls Royce Engine Services-Oakland
Test Cell Facility
Main Building
Source: Agenda Report: Authorization to Enter into Agreements Concerning Environmental Issues at the Rolls-Royce Engine Services-Oakland, Inc. Facilities
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to 22 CONSENT ITEMS Tab 5.2
BOARD MTG. DATE: 2/28/13
AGENDA REPORT
TITLE: Ratification of the Extension of the Contract Award Period for the Project to Furnish and Install Pre-conditioned Air (PCA) Units on Terminal 1 Passenger Boarding Bridges, South Field, Oakland International Airport
AMOUNT: No Amount Involved
PARTIES INVOLVED:
Corporate Name/Principal Location N/A
TYPE OF ACTION: Resolution
SUBMITTED BY: Chris Chan, Director of Engineering Kristi McKenney, Acting Director of Aviation
APPROVED BY: Deborah Ale Flint, Acting Executive Director
SUMMARY
This Agenda Report requests the Board approve and ratify the extension of the award period from sixty (60) to one-hundred-eighty (180) days for the project to Furnish and Install PCA Units on Terminal 1 Passenger Boarding Bridges at Oakland International Airport to allow sufficient time to receive award of a Federal Aviation Administration Airport Improvement Program - Voluntary Airport Low Emission Grant (VALE) to fund up to 80% of the project costs.
FACTUAL BACKGROUND
On November 1, 2012, by Resolution No. 12-140, the Board of Port Commissioners delegated authority to the Director of Engineering to approve Plans and Project Manual, authorized the advertisement for bids, and authorized the Executive Director to award the contract to Furnish and Install PCA Units. The Board also authorized application for and acceptance of a VALE grant to fund up to 80% of the project costs.
The project was issued for bid on December 12, 2012; bids are scheduled to be received on February 20, 2013. Port Ordinance No. 1606 stipulates that the contract shall be awarded by the Board to the lowest responsible bidder any time not exceeding sixty (60) days after bid opening unless said time is extended by the Board. Failure to award the contract within the sixty (60) days after receipt of bids would result in the expiration of bids (i.e., bidders would no longer be required to hold their bid prices).
1
23 CONSENT ITEMS Tab 5.2
BOARD MTG. DATE: 2/28/13
Current circumstances in the federal government budgeting process may cause VALE grant program funding may be delayed pending future congressional authorizations. Therefore, it is recommended that the Port extend its standard contract award period to one-hundred-eighty (180) days from the bid opening in order to avoid having to re-bid the project due to a potential delay in receiving grant funding as a result of congressional action. VALE grant program funding approval is expected to occur within the one-hundred-eighty (180) day period.
ANALYSIS
To ensure that FAA will have sufficient time to determine and award the Port’s funding allocation, staff recommends that the Board extend the time to award the subject contract to one-hundred-eighty (180) days after bid opening, in lieu of the sixty (60) days stipulated in Port Ordinance No. 1606.
For this reason, on December 19, 2012, per Addendum No. 1, the award period was increased to stipulate that bids will remain subject to acceptance for one-hundred-eighty (180) days after the day of the Bid opening, effectively requiring the bidders to hold their bid prices for the duration of said award period.
By approving and ratifying the extension of the contract award period, the Port will minimize the risk of the bids expiring prior to the securing of the potential FAA funding.
BUDGET & FINANCIAL IMPACT
There are no budget and financial impacts associated with this action. However, the budget authorized by the Board on November 1, 2012 by Resolution No. 12-140 to Furnish and Install PCA Units project was as follows:
Project + Contractor Cost * Consultant Cost Port Labor Cost Total Project Cost
Furnish and $2,200,000* $90,000 $610,000 $2.9 million Install PCA Units
* Includes 10% contingency per Port Ordinance 1606 ** Includes permit fees, OCIP, non-labor overhead + The figures presented are based on estimates. Staff recommends that the total amount shown be adhered to, but that there be flexibility within the items in terms of balancing overages with under-runs.
This project was included in the 5-year Capital Needs Assessment (CNA) for FY 2013-2017 to occur in fiscal year 2015-2016 as part of a larger passenger boarding bridge replacement project. Airline demand for PCA equipment at all bridges has increased sufficiently in recent years to reduce fuel use, causing staff to advance the project sooner to meet demand. On November 1, 2012 by Resolution No. 12-140, staff obtained the authorization to add $2.9 million to the FY 2012-13 CNA. Approximately 80% of these costs will be reimbursable with AIP funds through the VALE grant program, if the grant application is successful. Any costs not reimbursed would be paid with Port cash or debt as necessary. 2
24 CONSENT ITEMS Tab 5.2
BOARD MTG. DATE: 2/28/13
STRATEGIC PLAN
The Strategic Plan adopted by the Board on October 5, 2010 is a cornerstone of the overall alignment of the Port. It provides the framework for focusing the work of staff and the Board, and serves to guide an organization-wide redesign to better match the skills and talents of Port employees with the overall strategic goals of the organization in the key areas of Sustainable Business and Economic Development, Stewardship and Accountability, Port Workforce and Operations, and Communications and Information.
As previously detailed in the November 1, 2012 Board Agenda Report authorizing the advertisement for bids to Furnish and Install PCA Units, the following is staff’s assessment of how this project supports the strategic priority areas, goals and objectives of the Strategic Plan:
STRATEGIC HOW THIS PROJECT PRIORITY GOAL OBJECTIVE IMPLEMENTS + WHEN AREAS Goal A: Create Installation of PCA units will extend Sustainable Economic 1. Maximize the use of existing the useful life of the Terminal 1 gates Growth For The Port assets. and boarding area, when installed And Beyond later this year. Sustainable Economic and PCA units will be installed on a Business 1. Retain existing customers common use passenger boarding Development Goal B: Maintain And and tenants. bridge this year, benefitting both Aggressively Grow 2. Market strategically and existing and future airline users by Core Businesses aggressively to attract new increasing operational efficiency and customers and tenants reducing fuel consumption costs, for all users.
Sustainable PCA provides a necessary and Economic and expected amenity provided by Goal D: Improve the Business 1. Improve Port’s cash position airports that support efficient airline Port’s financial position. Development operations, and reduced fuel (cont.) consumption.
Goal F: Aggressively obtain maximum 1. Seek out and pursue all A successful partnership with FAA’s amount of external promising and prospective VALE grant program on this project grant and government grants and external funding will result in 80% of total project funding and regulatory sources. costs. relief.
Stewardship and PCA units supply heated and cooled Accountability air to aircraft parked at passenger Goal G: Sustain boarding bridges enabling parked 2. Partner to share risk, healthy communities aircraft to forego use of auxiliary accountability, benefits and through leading edge power units, reducing fuel improve environmental and environmental consumption and associated safety compliance. stewardship. emissions. This step helps to meet the Port’s long-term goal of providing PCA on 100% of OAK’s gates.
3
25 CONSENT ITEMS Tab 5.2
BOARD MTG. DATE: 2/28/13
STAFFING IMPACT
It is anticipated that this project can be accomplished within the current Port staffing levels.
SUSTAINABILITY
The contract to Furnish and Install PCA Units is consistent with the Port’s Sustainability Policy, as it will ensure the most efficient use of valuable Port funds and resources. This project will provide the option for airlines to forego use of their jet fuel-powered auxiliary power units and plug in to PCA units, thereby reducing emissions from jet-fuel at the airport.
ENVIRONMENTAL
The California Environmental Quality Act (CEQA) Guidelines Section 15378(2), Project states that a “Project” means the “whole of an action”, which has potential for resulting in either direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. The General Rule in Section 15061(b)(3) of the CEQA Guidelines also states that CEQA applies only to activities that have a potential for causing a significant effect on the environment. Because here it can be seen with certainty that there is no possibility that extending the contract award period will result in a physical change in the environment, it is not subject to further CEQA review.
The project to furnish and install PCA units was analyzed in the November 1, 2012 Board Agenda (Resolution 12-140), and was determined to be categorically exempt from the California Environmental Quality Act (CEQA) Guidelines pursuant to Section 15301, Existing Facilities, which exempts the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination.
MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)
The FAA, the agency anticipated to partially fund this work through a VALE grant, is an agency of the U.S Department of Transportation (DOT). The provisions of the Port of Oakland Maritime and Aviation Project Labor Agreement (MAPLA) apply to this FAA-funded work with the following exception - the provisions of MAPLA that permit the possible imposition of sanctions and/or binding arbitration for failure to demonstrate “good faith” efforts to meet local hiring goals do not apply.
OWNER CONTROLLED INSURANCE PROGRAM (OCIP)
Since this is a capital improvement project, the contractor(s) will be required to enroll in the Port’s Owner Controlled Insurance Program (OCIP).
4
26 CONSENT ITEMS Tab 5.2
BOARD MTG. DATE: 2/28/13
GENERAL PLAN
Pursuant to Section 727 of the City of Oakland Charter, this project has been determined to conform to the policies for the transportation designation of the Oakland General Plan.
LIVING WAGE
Living wage requirements, in accordance with the Port’s Rules and Regulations for the Implementation and Enforcement of the Port of Oakland Living Wage Requirements (the “Living Wage Regulations”), do not apply because the contract is a construction contract covered by federal prevailing wage rules and the prevailing rate of wage is higher than the wage required by the Living Wage Regulations.
OPTIONS
The following options are provided for the Board’s consideration:
1. Approve and ratify the extension of the contract award period. This is the recommended option.
2. Take no action. However, if the Port is unable to secure the FAA’s VALE grant funding within the current sixty (60) day period, the bids will expire, jeopardizing the FAA funding.
RECOMMENDATION
It is recommended that the Board approve and ratify the extension of time to award this contract to one-hundred-eighty (180) days after the date of the bid opening.
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BOARD MTG. DATE: 2/28/2013
AGENDA REPORT
TITLE: Approval to Execute an Extension of the Parking Revenue Control System (“PARCS”) Maintenance and Service Agreement from April 1, 2013 to December 4, 2014 with Xerox Inc., dba Affiliated Computer Services, Inc. Transport Solutions (”ACS”), Inc. (Contract No. X2006-05- A1) and Authorize the Executive Director to Execute an Option for an Extension by up to Two Additional Years through December 4, 2016.
AMOUNT: Up to $650,000
PARTIES INVOLVED:
Corporate Name/Principal Location Xerox Inc., dba ACS Transport 12410 Milestone Center Dr., Solutions, Inc. Germantown, MD 20876
TYPE OF ACTION: Resolution
SUBMITTED BY: Kristi McKenney, Acting Director of Aviation
APPROVED BY: Deborah Ale Flint, Acting Executive Director
SUMMARY
The ACS-supplied PARCS is a networked Airport special system of proprietary hardware and software which continuously oversees and regulates Airport public parking access and revenue control, in real time. Accurate, reliable and uninterrupted PARCS operations are essential to managing this critical Airport activity and revenue stream.
PARCS service and maintenance is provided and staffed on-site by ACS, who designed and installed the system, through a five-year service and maintenance agreement with the Port. This contract covers both preventative and non-scheduled maintenance, and is necessary for continuous operations. The original Board resolution authorized this agreement through March 31, 2013 based on a five-year contract to begin after the one- year warranty period and an expected system acceptance date in 2007. The final acceptance was delayed and the five-year agreement should now run through December 4, 2014. However, the Board authorization is required to change the expiration date extending the agreement from April 1, 2013 through December 4, 2014, and to spend up to $1,383,509, the amount authorized by the Board in 2006, to realize the benefit of the full five-year service period. Of that amount, $253,210 is included in the adopted FY 2012-13 budget and the remainder is budgeted in future fiscal years 2013-2014 and 2014-2015.
Under Article 3, Section 3.1.3 of the Port-ACS service and maintenance agreement, the Port also has the option of extending the term of the agreement by up to two years after the completion of the first five years. Staff is therefore also seeking the Board’s
1
29 CONSENT ITEMS Tab 5.3
BOARD MTG. DATE: 2/28/2013
authorization and delegation of authority to the Executive Director to exercise the option of extending this agreement by an additional two years, based on continuation of current contract terms and conditions, through December 4, 2016, at the Port’s sole discretion. The additional two-year extension is estimated to cost $650,000.
FACTUAL BACKGROUND
On-Airport Parking generated $29.7 million in gross revenue during CY 2012, the second largest source of Aviation revenue after commercial airline fees. Managing this economic activity accurately and efficiently requires an integrated, networked system of entry and exit gates, cameras, ticket dispensers, cashier and self-service collection terminals, and associated, proprietary computer hardware and software. Collectively this system is known as the Parking Revenue Control System ("PARCS").
In 2005 ACS was selected through a competitive procurement process to supply the PARCS by Turner Construction Co. (“TCCO”), the Port’s prime contractor for the Airport’s Terminal and Roadway Expansion (“TEx”) Program. On April 4, 2006 the Board authorized staff to execute a service and maintenance agreement with ACS, which supplied, installed and activated the PARCS in 2007 as a TCCO subcontractor. System purchase and installation totaled approximately $8 million. In 2009 ACS was acquired by Xerox, Inc., but continues to do business with the Port as ACS Transport Solutions, Inc., a Xerox company.
Due to the proprietary nature of the PARCS the Port entered into a five-year service and maintenance agreement with ACS, to ensure on-going operations, revenue and data security, and system reliability. The expected service life of this PARCS, designed for an Airport operating environment, is approximately ten years.
The five year period specified in the Board-approved maintenance and service agreement in the Port-approved agreement was April 1, 2008 through March 31, 2013. This timeframe was specified in 2006 based on the then scheduled timeframe of formal system acceptance. However the PARCS was not activated until September 2007, and was not formally accepted by TCCO and the Port until December 4, 2008. As described in Port contract no. X2006-05-A1, a one-year warranty service period followed formal system acceptance, and as a result the five-year maintenance and service agreement did not go into effect until December 5, 2009. As a result the five-year maintenance and service period shifted accordingly and now runs through December 4, 2014.
ANALYSIS
PARCS systems designed for middle and large-hub Airports contain proprietary hardware components and software. As with many Airport special systems, PARCS vendors such as ACS generally do not authorize others to service and maintain their systems; and vendor- supplied PARCS maintenance service is commonplace.
TCCO solicited and procured PARCS installation and a long-term service and maintenance commitment, although the terms of that maintenance agreement were negotiated by Port
2
30 CONSENT ITEMS Tab 5.3
BOARD MTG. DATE: 2/28/2013
staff. Work performed under this agreement includes scheduled preventive maintenance and unscheduled corrective/repair work on the PARCS at all Airport public parking lots. The Port may also exercise an option of extending this agreement by an additional two years, from December 5, 2014 to December 4, 2016. Should the Board authorize staff to extend the agreement to a full seven years, all current contract provisions shall apply. Fees for the sixth and seventh contract years will be based on the fees displayed in the Port-ACS agreement, as adjusted based on the Construction Cost Index (“CCI”) of the Engineering News Record (San Francisco).
BUDGET & FINANCIAL IMPACT
Services performed under this agreement are budgeted as an operating expense and this expense is reflected in the Port’s three-year operating budget through FY 2014-15. Of the total $1.383,509 contract value, $253,210 is included in the adopted FY 2012-13 operating budget. Therefore, authorization to continue service under the Port-ACS agreement after March 31, 2013 would have no impact on the Port operating budget.
STAFFING IMPACT
There will be no change in Port staffing as a result of extending this agreement.
SUSTAINABILITY
There are no obvious environmental opportunities involved in extending these agreements.
ENVIRONMENTAL
The California Environmental Quality Act (CEQA) Guidelines, Section 15061(b)(3) ("the general rule") states that CEQA applies only to projects that have the potential for causing a significant effect on the environment. Extending the maintenance service agreements will not have a significant effect on the environment, and therefore, is not a project under CEQA and no environmental review is required.
Maintenance activities performed by ACS is categorically exempt from requirements of the California Environmental Quality Act (CEQA) Guidelines pursuant to Section 15301, Existing Facilities, which exempts the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination.
MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)
These contracts are for services that do not include construction or construction testing and inspection. Therefore, the provisions of the Port of Oakland Maritime and Aviation Project Labor Agreement (MAPLA) do not apply to this work
3
31 CONSENT ITEMS Tab 5.3
BOARD MTG. DATE: 2/28/2013
OWNER CONTROLLED INSURANCE PROGRAM (OCIP)
The Owner Controlled Insurance Program (OCIP), coverage does not apply to this agreement,
GENERAL PLAN
This action does not change the use of any existing facility, make alterations to an existing facility, or create a new facility; therefore, a General Plan conformity determination pursuant to Section 727 of the City of Oakland Charter is not required.
LIVING WAGE
Living wage requirements, in accordance with the Port’s Rules and Regulations for the Implementation and Enforcement of the Port of Oakland Living Wage Requirements (the “Living Wage Regulations”), do not apply to this agreement as the service providers does not employ 21 or more employees working on Port-related work. However, the service providers will be required to certify that should living wage obligations become applicable, the service providers shall comply with the Living Wage Regulations.
STRATEGIC PLAN
The Strategic Plan was adopted by the Board on October 5, 2010. One of the guiding principles the Board identified and adopted as part of the Strategic Plan is “to create sustainable economic growth for the Port and beyond”. Authorizing the proposed extension of this maintenance agreement reflects the Port’s commitment to sustainable economic growth, and directly relates to the following Port Strategic Plan goals and objectives, as adopted on October 5, 2010.
4
32 CONSENT ITEMS Tab 5.3
BOARD MTG. DATE: 2/28/2013
STRATEGIC PRIORITY GOAL OBJECTIVE IMPLEMENTATION AREAS Goal A: 1. Maximize use of existing assets. The proposed contract Create 2. Affirm Port identity as a public extensions will: Sustainable enterprise. Economic 3. Increase revenue, job creation 1. help maintain Port revenue Sustainable Growth For The and small business growth. and minimize Airport Economic and Port And 4. Pursue strategic partnerships at all operating expense Business Beyond levels: local, regional, national and Development international. 2. keep the Airport PARCS in Goal D: 1. Maximize return on investments a state of good repair Improve the (airport parking and special Port’s financial systems infrastructure). 3. maintain a high level of position 1. service to airport customers
ALTERNATIVES
1. Authorize staff to extend the existing five-year PARCS service and maintenance agreement with ACS through December 4, 2014, for a total five-year cost not to exceed $1,383,509. Also authorize the Executive Director to extend that agreement for an additional two years through December 4, 2016, based on continuation of terms and conditions in the existing agreement. The added annual contract expense for an extension period would be based on the application of the Construction Cost Index of the Engineering News Record-San Francisco, to the scheduled Year 5 annual fee of $291,751 and is estimated at up to $650,000 for two-years.
2. Authorize staff to extend the existing five-year PARCS service and maintenance agreement with ACS through December 4, 2014, for a total five-year cost not to exceed $1,383,509. Do not authorize the Executive Director to extend the agreement for an additional two-years at this time
3. Do not authorize staff to extend the existing service and maintenance agreement with ACS. Direct staff to solicit PARCS service and maintenance services from other vendors on an interim basis until a new formal solicitation for these services is conducted. However, due to the proprietary nature of the ACS PARCS, this alternative may result in the need to procure a new PARCS system which would have a significant impact on the Port’s CNA.
RECOMMENDATION
Staff recommends that the Board approve Alternative 1: authorize and delegate to the Executive Director the authority to extend the existing PARCS service and maintenance agreement with ACS to December 4, 2014, and to exercise the option to extend that agreement by two additional years, through December 4, 2016. Maximum authorized spending for the current five year agreement through December 4, 2014 is unchanged at
5
33 CONSENT ITEMS Tab 5.3
BOARD MTG. DATE: 2/28/2013
$1,383,210. Authorize an additional contract amount not to exceed $650,000 for the proposed two year extension.
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or to 36 CONSENT ITEMS Tab 5.4
BOARD MTG. DATE: 2/28/13
AGENDA REPORT
TITLE: Cancellation of Programmer Analyst III Eligible List
AMOUNT: N/A
PARTIES INVOLVED:
Corporate Name/Principal Location
TYPE OF ACTION: Resolution
SUBMITTED BY: Denyce L. Holsey, Director of Administration
APPROVED BY: Deborah Ale Flint, Executive Director (Acting)
FACTUAL BACKGROUND
Pursuant to Rule 4, Section 4.22 of the Personnel Rules and Procedures of the Port of Oakland and consistent with the practice of the Board of Port Commissioners (“Board”), it is requested that the Board approve the cancellation of the Programmer Analyst III eligible list created on December 6, 2012.
ANALYSIS
Part of the 2011-2015 Strategic Plan identifies the business and operational objectives necessary to achieve short-term and long-term sustainability. The Port made a significant investment in the purchase of the Oracle E-business Suite (Oracle), and subsequently embarked upon an Enterprise Resources Planning (ERP) effort that went live in October 2010. The Port created the Programmer Analyst III classification and added two positions in the new classification in June 2012 to become less reliant on consultant support for the maintenance of the ERP system. This newly created classification was designed to support all the business lines with the specialized skills set needed to effectively manage and maintain Oracle.
The recruitment process to fill two (2) Programmer Analyst III positions started in November 2012. Advertisements were posted in Bay Area News Group (Oakland Tribune), Monster, Dice, Craigslist and Linkedin. The application filing closed on November 29, 2012.
Seven (7) applied for the position. The Human Resources staff, in conjunction with the IT Port Principal Programmer/Analyst, assessed the candidates for minimum
1
37 CONSENT ITEMS Tab 5.4
BOARD MTG. DATE: 2/28/13 qualifications and evaluated the supplemental questions. Three (3) candidates were identified as most qualified to participate in the first round of interviews.
An external panel comprised of two public agencies, City of Concord and City of Sunnyvale, conducted the first round of interviews in December. Two (2) of the candidates achieved a passing score and were placed on the eligibility list resulting in one hire. The other candidate was subsequently hired as an IT Business Analyst II.
Since the Port’s goal is to become less reliant on utilizing consultants, it is necessary that the Port hire employees with the proper depth and breadth of skills to take over existing consultant’s duties. The Programmer Analyst III is a senior-level technical specialist. Oracle ERP is a mission-critical system at the Port used in six business areas: HR/Payroll, Finance, Projects/Grants, Procurement, Enterprise Asset Management, and Property Manager. In order to fill the remaining vacant position, it is requested that the current Programmer Analyst III eligible list be canceled and a new recruitment process begin.
As a result, and consistent with Port Personnel Rule 4 (Applications, Examinations and Eligible Lists), Section 4.22 (The Establishment of Eligible Lists) and longstanding Board practice, it is recommended that the Board cancel the Programmer Analyst III eligible list and direct staff to begin a new recruitment.
STRATEGIC PLAN
Approving the cancellation of the Programmer Analyst III eligible list supports the following goals and objectives of the Port’s Strategic Plan adopted on October 5, 2010.
Strategic Priority Area: Port Workforce and Operations
Strategic Priority How this Action Goal Objective Area Implements Goal H: 1. Identify, assess The cancellation of the Develop and and implement key Programmer Analyst III maintain a high skills and knowledge eligible list will allow for the performing required for a public creation of a new eligible list workforce. enterprise. to ensure that the most qualified candidate is Goal I: 3. Align selected to fill this critical Port Workforce responsibilities, Align the Port’s position. This action is and authorities and workforce, pursuant to Port Personnel Operations incentives to ensure organizational Rule 4, Section 4.22 and accountability and structure and longstanding Board practice. personnel transparency in management achieving the Port’s practices for optimal strategic goals. performance of the Port.
2
38 CONSENT ITEMS Tab 5.4
BOARD MTG. DATE: 2/28/13
BUDGET & FINANCIAL IMPACT
There is no budget and financial impact.
STAFFING IMPACT
There is no staffing impact.
SUSTAINABILITY
No sustainability opportunities are identified.
ENVIRONMENTAL
The California Environmental Quality Act (CEQA) Guidelines, Section 15061(b) (3) (“the general rule”) states that CEQA applies only to projects, which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment, the activity is not subject to CEQA. The cancellation of the Programmer Analyst III eligible list is not a project under CEQA, and no environmental review is required.
MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)
The matters contained in this Agenda Sheet do not fall within the scope of the Port of Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and the provisions of the MAPLA do not apply.
OWNER CONTROLLED INSURANCE PROGRAM (OCIP)
OCIP does not apply.
GENERAL PLAN
This action does not meet the definition of "project" under the City of Oakland General Plan, and no conformity determination is required.
LIVING WAGE
Neither the Port’s Living Wage Ordinance (Port Ordinance No. 3666) nor the living wage requirements set forth in Section 728 of the Charter of the City of Oakland apply to this Section because the action requested is not for a “Port Contract” as defined by the Port Ordinance No. 3666 and Charter 728.
3
39 CONSENT ITEMS Tab 5.4
BOARD MTG. DATE: 2/28/13
OPTIONS
1. Approve the cancellation of the Programmer Analyst III eligible list.
2. Do not approve the cancellation of the Programmer Analyst III eligible list.
RECOMMENDATION
It is recommended that the Board of Port Commissioners approve the cancellation of the Programmer Analyst III eligible list and direct staff to begin a new recruitment. If approved, it is anticipated that the recruitment for this critical position will be completed in May 2013.
4
40 CONSENT ITEMS Tab 5.4
2/28/13 5.4 DC:mj
BOARD OF PORT COMMISSIONERS CITY OF OAKLAND
RESOLUTION APPROVING THE CANCELLATION OF THE PROGRPNMER NALYST III ELIGIBLE LIST ND DIRECTING STAFF TO BEGIN A NEW RECRUITNENT FOR OGRAMMER ANALYST III.
EREAS, the Board of Port Commiss/’Bo ‘) has reviewed and evaluated the Agenda Report Item 5 4, dated Febr ry 28, 2013 (“Agenda Report”) and related mate i s, a receiv d the expert testimony of Port of Oakland (“Po t’) s aff, and has provided opportunities for and taken public comme t; ow, therefore, be it RESOLVED, that the Board ppro s the cancellation of the Programmer Analyst III eligible \l\st. —rior fully described in the Agenda Report; and be it \ / RESOLVED, that herbSK approves and directs Port staff a new t’/ to begin recrfient tr9 Prd’rmmer Analyst III, as more fully described in the Agaa it FURTHER t in acting upon the matters contained herein, the :cised its independent judgment based on substantial record and adopts and relies upon the facts, dat findings set forth in the Agenda Report and in related in testimony received
288254
41 CONSENT ITEMS Tab 5.5
BOARD MTG. DATE: 2/28/13 AGENDA REPORT
TITLE: Extension of the Eligible List for Wharfinger from March 8, 2013 through March 8, 2014.
AMOUNT: N/A
PARTIES INVOLVED:
Corporate Name/Principal Location
TYPE OF ACTION: Resolution
SUBMITTED BY: Denyce L. Holsey, Director of Administration
APPROVED BY: Deborah Ale Flint, Executive Director (Acting)
EXTENSION OF THE ELIGIBLE LIST
It is requested that the Board approve an extension of the eligible list for Wharfinger for a period of one (1) year from March 8, 2013 through March 8, 2014.
ANALYSIS
The Maritime Division is currently engaged in an organizational assessment to sustain and grow revenue. Maintaining a sound level of service to our customers is a key component of the Maritime strategy. The Wharfinger position directly supports existing customers functioning as a liaison. Wharfingers are critical to resolving customer related issues such as facility and berth maintenance. Adequate staffing levels within the Wharfinger classification ensures Maritime is well positioned to respond to customers, as future vacancies occur within the classification.
Under Port Personnel Rules and Procedures Section 4.22, open and restricted eligible lists expire one (1) year from the effective date. No list may be extended beyond four (4) years.
The eligible list for Wharfinger was established on March 8, 2012 and will expire on March 8, 2013. The extension of the Wharfinger eligible list will provide the division with a continuous pool of qualified candidates in the event the division needs to fill the position for the duration of the extension. A sufficient number of qualified candidates remain on the eligible list to fulfill the anticipated hiring needs during the period of extension.
1
42 CONSENT ITEMS Tab 5.5
BOARD MTG. DATE: 2/28/13
STRATEGIC PLAN
Approving the extension of the Wharfinger eligible list supports the following goals and objectives of the Port’s Strategic Plan adopted on October 5, 2010.
Strategic Priority Area: Port Workforce and Operations
Strategic Priority How this Action Goal Objective Area Implements Goal H: 1. Identify, assess The extension of the Develop and and implement key Wharfinger eligible list will maintain a high skills and knowledge allow the Maritime Division performing required for a public to fill an existing vacancy workforce. enterprise. with a highly qualified individual. This action will Goal I: 3. Align alleviate the expense and Port Workforce responsibilities, Align the Port’s resources needed in and authorities and workforce, opening another recruitment, Operations incentives to ensure organizational further maximizing accountability and structure and efficiency. This action is transparency in personnel pursuant to Port Personnel achieving the Port’s management Rule 4, Section 4.22. practices for optimal strategic goals. performance of the Port.
BUDGET & FINANCIAL IMPACT
There is no fiscal impact for FY 12-13.
STAFFING IMPACT
There is no staffing impact.
SUSTAINABILITY
No sustainability opportunities are identified.
ENVIRONMENTAL
The California Environmental Quality Act (CEQA) Guidelines, Section 15061(b)(3) ("the general rule") states that CEQA applies only to projects, which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity may have a significant effect on the environment, the activity is not subject to CEQA. Extension of an eligible list is not a project under CEQA, and no environmental review is required.
2
43 CONSENT ITEMS Tab 5.5
BOARD MTG. DATE: 2/28/13
MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)
The matters contained in this Agenda Sheet do not fall within the scope of the Port of Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and the provisions of the MAPLA do not apply.
OWNER CONTROLLED INSURANCE PROGRAM (OCIP)
OCIP does not apply.
GENERAL PLAN
This action does not meet the definition of "project" under the City of Oakland General Plan, and no conformity determination is required.
LIVING WAGE
Neither the Port’s Living Wage Ordinance (Port Ordinance No. 3666) nor the living wage requirements set forth in Section 728 of the Charter of the City of Oakland apply to this Section because the action requested is not for a “Port Contract” as defined by the Port Ordinance No. 3666 and Charter 728.
OPTIONS
1. Approve the recommended extension of the eligible list. 2. Not approve the recommended extension of the eligible list.
RECOMMENDATION
It is recommended that the Board of Port Commissioners approve the extension of the eligible list for Wharfinger from March 8, 2013 through March 8, 2014.
3
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a 45 CONSENT______ITEMS Tab 5.6
SUMMARY SHEET for PERMIT APPLICATION (This Summary Agenda Sheet to be used for ALLpermits in this category for which Board approval is recommended.)
DATE: February 13, 2013 PORT PERMIT NO: 4991
BUILDINGPERMIT APPLICATION: _New Construction _Addition XAlteration _Demolition _Repair _Other, Tank
SIGN PERMIT APPLICATION _WaII Sign _PoIe Sign _New _Alter _Repair _Non-electric _Electric _Tem porary
PORT TENANT: PERMIT APPLICANT:
SSA Marine SSA Marine
LOCATION OF PROPOSED WORK: 1 Market Street, Howard Terminal BRIEFDESCRIPTIONOFPROPOSEDWORK: Installation of a new turnstile with TWIC reader for pedestrian access, and a new TWIC reader at the entrance gate. The work will include a new concrete slab on top of the existing asphalt, fence modifications, a new pedestal at the gate, and security system modifications. This project has been determined to be exempt from the requirements of the California Environmental Quality Act pursuant to Section 15301(e
SCHEDULED FOR VALUATIONOF BOARDACTION: Date: February 28, 2013 WORK: $ 22,000.
FROM: PORT PERMITS, ENGI G
Date: Rec mmend Approval
ROUTE TO: (Please sign and send to next on list ASAP)
(1) PORT ENVIRONMENTALASSESSMENT SUPERVISOR, ENVIRONMENTALPLANNING DEPARTMENT ASSESSMENT: CEQA Guidelines, Section 15301 Cat. Ex. ISec.N ., )e9,Deç.,Mit.Neg. Dec., or EIR ‘P //q/54:9/5 Recomnjnd*hDate: Approyal lZáil ,, / (2) DIRECTOR OF ENGINEERING Date: 17f /3 ecom
(3) EXECUTIVE DIRECTOR Date: ecomnd4 Approval (4) PORT PERMITS - ENGINEERING SERVICES DEPARTMENT:
Date: Received By:
BOARD APPROVAL: Resolution No: Date:
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SUMMARY SHEET for PERMIT APPLICATION (This Summary Agenda Sheet to be used for ALLpermits in this category for which Board approval is recommended.)
DATE: February 13, 2013 PORTPERMITNO: 4988
BUILDINGPERMIT APPLICATION: _New Construction _Addition _Alteration _Demolition XRepair _Other, Tank
SIGN PERMIT APPLICATION _WaII Sign _PoIe Sign _New _Alter _Repair _Non-electric _Electric _Tem porary
PORT TENANT: PERMIT APPLICANT: United Airlines United Airlines LOCATION OF PROPOSED WORK: 1 Airport Drive, Terminal 1, Ml01 BRIEFDESCRIPTIONOFPROPOSEDWORK: Restoration of ticket counters to pre-lease condition. The former tenant plans to remodel the ticket counters back to their original configuration. This project has been determined to be exempt from the requirements of the California Environmental Quality Act pursuant to Section 15301
SCHEDULED FOR VALUATIONOF BOARDACTION: Date: February 28, 2013 WORK: $ 10,000.
FROM: PORT PERMITS, ENGINE NG SERVICES DEPARTMENT
Date: Re mend Approval
ROUTE TO: (Please sign and send to next on list ASAP)
(1) PORT ENVIRONMENTALASSESSMENT SUPERVISOR, ENVIRONMENTALPLANNINGDEPARTMENT ASSESSMENT: CEQA Guidelines, Section 15301 Cat. ,. /Sec.No., Neg.ec.Mit.Neg. Dec., or EIR Z/vt-j Date: 2-/i /i 3 Recomm nd Apprói I
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BOARD APPROVAL: Resolution No: Date:
49
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REMAINING ACTION ITEMS Remaining Action Items are items not previously addressed in this Agenda that may require staff presentation and/or discussion and information prior to action by the Board.
52 REMAINING ACTION ITEMS Tab 6.1
BOARD MTG. DATE: 02/28/13
AGENDA REPORT
TITLE: Amendment to Lease with Federal Express Corporation to Extend the Term and Other Modifications, and Four New Agreements (Aviation)
AMOUNT: $799,891 per Month (No Change or Additional Revenue)
PARTIES INVOLVED:
Corporate Name/Principal Location Federal Express Corporation Memphis, TN Frederick W. Smith, Chairman, President & CEO Memphis, TN Darrell Wodowski, Senior Airport Properties Representative Memphis, TN Robin Van Gelder, Managing Director Oakland, CA Pacific Gas and Electric Company San Francisco, CA TYPE OF ACTION: Ordinance and Resolution
SUBMITTED BY: Kristi McKenney, Acting Director of Aviation
APPROVED BY: Deborah Ale Flint, Acting Executive Director
This action would give first reading to an ordinance and pass a resolution to approve the following:
• Amending certain terms and conditions of the existing Amended and Restated Lease between the Port and Federal Express Corporation (“FedEx”) dated April 1, 2009, as previously amended by the First Amendment to Amended and Restated Lease dated October 6, 2011 (collectively, the “Lease”), as documented in the proposed Second Amendment to Amended and Restated Lease;
• A Construction Reimbursement Agreement covering the cost of certain airfield improvements;
• An Exclusive Area Agreement;
• An Amendment to Generating Facility Interconnection Agreement (between FedEx and the Port) and an Amendment to Customer Generation Agreement (between Pacific Gas and Electric Company and the Port); and,
• Giving authority to the Executive Director to execute these agreements, subject to the Port Attorney’s review and approval as to form and legality.
FACTUAL BACKGROUND
The Existing Lease: At its March 17, 2009 meeting, the Board of Port Commissioners adopted Port Ordinance No. 4090 which approved the terms and conditions of an Amended and Restated Lease with FedEx covering 75.23± acres at the South Field of Oakland International Airport (“OAK”). FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 1
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At the inception of the Lease in 2009, the leased premises consisted of 24 parcels: some undeveloped land and other parcels with a variety of Port- constructed and Port-owned improvements ranging from asphalt vehicle parking, concrete aircraft apron, a 17,280± square foot hangar (originally built by Clorox for its corporate aircraft and subsequently utilized by Emery Air Freight for its air cargo operations) and a fully-developed street.
FedEx has constructed its own significant improvements including additional paving, aircraft ramp, support structures and its 200,000± square foot package sorting and distribution facility (all of these Port- and FedEx-owned improvements are collectively identified as the FedEx Oakland “Metroplex”). The leased premises also included the bulk of the length of Sally Ride Way, a Port-constructed street that is entirely surrounded by the FedEx leasehold. The Sally Ride Way parcel was incorporated into the leased premises in 2007 so that FedEx could relocate its main entrance security checkpoint building closer to the intersection with Air Cargo Way (incorporation into the leased premises also relieved the Port of any obligation to maintain the street).
After further re-design, FedEx determined that utilization of the overall site would be enhanced by having the remaining portion of Sally Ride Way added to the leased premises. At its October 6, 2011 meeting, the Board adopted Port Ordinance No. 4170 authorizing the eld execution of a First Amendment to Amended and Restated Lease which added 9,037± square feet (Parcel 8A) to the leased premises. The FedEx leasehold now encompasses a total of 75.438± acres.
FedEx has been occupying portions of the Metroplex since 1985, and over the past 24 years, has constructed those improvements mentioned above. Pursuant to the terms of the Lease, effective December 1, 2011 most of those improvements (including the main package sorting and distribution building) “reverted” to Port ownership. Rental for those improvements was adjusted to reflect “facilities” rent vs. land/minimal improvement rent, and through a detailed appraisal process conducted by an independent MAI appraisal firm, the fair market rental value (“FMRV”) was established for each type of improvement1 on a
1 Eight categories of “Improvements” were defined and valued through the appraisal process: (i) Most FedEx- constructed Buildings; (ii) Port-owned former Clorox Hangar; (iii) Maintenance Building; (iv) Canopies attached to Buildings; (v) Vacant Land and Landscaping; (vi) Light Pavement; (vii) Medium Pavement; and, (viii) Heavy Pavement.
FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 2
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BOARD MTG. DATE: 02/28/13 parcel-by-parcel basis. The monthly rent payable to the Port increased from $448,333 to $799,891.
Other significant terms and conditions of the existing Lease include:
Term: Provided that FedEx makes a significant “Investment” in additional improvements and infrastructure (as described below), the Term will expire on December 31, 2031 (the “Extension Term”).
Rent: Rental for each parcel was initially determined by an appraisal. Every thirty (30) months, rental is to be increased based on changes in the Consumer Price Index (“CPI”). In addition, as detailed above, effective December 1, 2011, rental for each parcel is to be adjusted to its FMRV based on an MAI appraisal process and adjusted again ten years later as of January 1, 2022.
Investment: FedEx commits to investing approximately $50 million in the following improvements identified as the “2011 Sort Expansion”:
° Construct new entrance security building (completed);
° Widen Sally Ride Way (completed); FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 3
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° Remodel office space in existing Metroplex Building (under construction);
° Modernize ground service equipment (“GSE”) facility;
° Construct new 100,000± square foot International Sort Building (under construction);
° Convert existing International Sort Facility (former Clorox/Emery building) into Aircraft Line Maintenance Facility,
° Install new, automated sorting equipment in existing Metroplex Building;
° Improve concrete apron to accommodate B777 freighter (completed); and,
° Relocate and expand container sorting/storage deck (completed).
In exchange for the Port adding approximately twenty years to the existing Term, FedEx must expend a minimum of $30 million (out of the overall $50 million 2011 Sort Expansion investment) by December 31, 2015 in hard-cost capital and infrastructure improvements. If FedEx has not invested this amount by this deadline, then effective January 1, 2016 the Extension Term will expire and the term of the Lease will convert to a month-to-month basis (this deadline would be extended in the event of force majeure). FedEx is well on its way to meeting the $30 million threshold; with approximately $25 million spent to date. FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 4
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Deposit: The Security Deposit for the Lease was established at $1,300,000, or approximately three-times Monthly Rent. Based on FedEx’s excellent payment history, Port Finance concurred with this initial amount. Pursuant to Port Policy No. AP509, the amount of the Security Deposit will be reviewed and adjusted along with future changes in Monthly Rent. The Lease allows the Port to adjust the Security Deposit based upon FedEx’s payment and credit history, capped at six-times Monthly Rent.
Environmental: With the exception of the former Clorox/Emery building and surrounding property (portions of Parcels 3A, 3B and 3C), the balance of the Metroplex has been utilized exclusively by FedEx. Consistent with Port practice, the existing Lease contains a detailed “Environmental Responsibilities” exhibit (“Exhibit E”) which was negotiated by FedEx and the Port, and assigns various obligations and responsibilities to the parties; specifically, the environmental condition of the leased premises as of the occupancy dates and the eventual expiration date of the Lease. To determine the environmental condition of the leased premises, the Lease anticipated that a “Baseline Study” would be conducted by a third-party environmental consultant with the Port absorbing the first $50,000 of the cost and the balance divided equally between the parties.
Second Amendment – Need to Further Amend the Lease: The existing Lease was negotiated prior to the financial downturn of 2008, which has hit the air cargo industry – and FedEx’s domestic airfreight business – particularly hard. The major capital improvements required by the existing Lease are now under construction or recently completed; however, commencement of the project was delayed by at least three years while FedEx conserved cash and restructured its operations. To enhance and expand the efficiency of its hub operation at OAK, FedEx has requested that the term of the existing Lease be extended along with other modifications that will provide consistency and assurances for its investments and cash flow. The specific changes to the Lease which have been negotiated and would be included in the proposed Second Amendment are:
Term: The expiration date would be extended five years to December 31, 2036.
Rent: The rental revision process would remain as described above, with the addition of another FMRV rental adjustment at the beginning of the five- year extension term; i.e., effective January 1, 2032.
Deposit: The Security Deposit would be $1,600,000 representing two times2 current Monthly Rent. FedEx has an excellent credit rating and payment history with the Port.
2 Section III,C.2.e. of the Collections Policy No. AP509 states, “The amount of the security deposit will be based on the customer’s credit rating and shall generally be equal to three months of average monthly billings or payments due under the agreement… Amounts less than the three-month minimum standard must be approved by the Board of Port Commissioners when it approves the customer agreement.”
FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 5
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Excess Rent: In the existing Lease, the Port would be entitled to receive “75% of all sums or other economic consideration received by [FedEx] directly attributable to an assignment… or a subletting of all or a portion of the Premises…” It is proposed that the percentage of this “bonus value” due to the Port be reduced from 75% to 50%. Such a reduction would be consistent with the percentage bonus value incorporated into other long- term leases at OAK.
Exhibit E: The “Environmental Responsibilities” exhibit – specifically the condition of the Premises upon expiration of the term of the Lease – has proven to be complex. A dedicated team comprised of FedEx in-house environmental and legal staff, plus Port staff from Environmental Programs and Planning, Airport Properties, the Port Attorney and outside legal counsel has been diligently working on revising and clarifying Exhibit E. This revised Exhibit E would be incorporated into the Second Amendment.
In addition to amending Exhibit E, the Second Amendment would memorialize the amount FedEx would reimburse the Port for the costs of the above-referenced Baseline Study, which is $61,108.87. In addition to the original Baseline Study, FedEx and the Port have determined that an enhanced Baseline Study of the Clorox/Emery area is required. FedEx has agreed to pay 50% of the cost of this additional Baseline Study as described in the proposed revised Exhibit E.
Construction Reimbursement Agreement: As part of FedEx’s international airfreight expansion and modernization, it has embarked on a program of acquiring replacement, new Boeing 777 freighter aircraft, which are quieter, more efficient, and carry heavier payload. These aircraft are larger than FedEx’s existing aircraft fleet and have difficulty accessing the present aircraft parking spaces (aka “gates”) within the current configuration at the Metroplex. FedEx recently completed construction of its first gate at the only location easily converted from an existing gate.
FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 6
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To accommodate a second B777 gate at OAK, FedEx has requested that the Port construct a new taxilane as illustrated in the site plan; FedEx would construct airfield improvements on its leased premises for this second B777 gate (strengthening of concrete apron, relocation of light poles and underground fuel hydrant system, and additional electrical service) valued at approximately $5.0 million.
The estimated cost of the taxilane is $1.2 million. Port staff has determined that to optimize project coordination, it would be best for FedEx to construct the taxilane concurrent with its improvements for the second B777 gate. In exchange, FedEx would receive a rent credit for the verifiable and auditable costs of constructing the taxilane, up to $1.2 million (if FedEx were to receive a rent credit for the maximum amount it would equate to less than two months’ rental). Port staff and FedEx have negotiated a Construction Reimbursement Agreement to document this reimbursement/rent credit and other construction-related considerations.
Exclusive Area Agreement: The Transportation Security Administration (“TSA”) requires the Port to enter into an Exclusive Area Agreement (“EAA”), which must be approved by the TSA, for leaseholds where an airline – regulated under 49 CFR 1544 such as FedEx – assumes responsibility for portions of an Airport Security Program (“ASP”) required under 49 CFR 1542.101-113. Normally, the airport operator (in this case, the Port of Oakland for OAK) is responsible for carrying out and/or ensuring compliance with all aspects of the ASP.
Under this EAA, the Port intends to transfer some ASP responsibilities to FedEx, but only for its operations at the Metroplex, as required by 49 CFR 1542.111. More specifically, FedEx will assume responsibility for background checks of its employees and contractors, and some site security responsibilities (currently the responsibility of the Port through the Aviation Security Department). The TSA and the Port will audit FedEx's compliance with the specific ASP procedures outlined in the EAA (those items it is assuming from the Port), but FedEx will assume responsibility and liability for complying with TSA regulations and relevant ASP provisions at the Metroplex.
This EAA with FedEx is the first one at OAK; in the near future, staff anticipates entering into additional EAAs with United Parcel Service, Inc. (UPS), Southwest Airlines Co. (for its occupancy at the Port’s multi-tenant Cargo Building and the ground lease for its Provisioning Center), and possibly other tenants/airlines that occupy exclusive space at OAK (e.g., occupants of bays in the Port’s multi-tenant Cargo Building).
FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 7
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Amendments to Interconnection Agreements: As part of its ongoing commitment to sustainability and green power, in 2005 FedEx installed solar panels on three of the Metroplex buildings. This installation required an “interconnection” between FedEx’s new solar panels, the Port’s power distribution system, and the power grid operated by Pacific Gas and Electric Company (PG&E). The 2011 Sort Expansion, outlined above, required FedEx to install new electrical equipment and backup generators, including a second electric meter. The design for this new equipment created a need to amend the existing electric utility interconnection agreements between FedEx and the Port, and between the Port and PG&E. Most notably, the proposed new arrangement will allow the Port to combine the energy usage and demand charges on the two individual meters that serve FedEx to be viewed as a single meter. If the existing interconnection agreements are not amended, the Port would be required to bill the two FedEx meters individually. If that were the case, FedEx may incur higher demand charges that do not accurately reflect FedEx’s actual usage and demand.
To document this arrangement, it is proposed that FedEx and the Port will enter into an Amendment to Generating Facility Interconnection Agreement and the Port and PG&E will enter into an Amendment to Customer Generation Agreement.
ANALYSIS
FedEx has been – and is – a valued Port partner since it commenced operations in 1973 at OAK’s multi-tenant Cargo Building, and its subsequent relocation to the current Metroplex site in 1985. FedEx’s commitment to growth at OAK over the past 39 years is evidenced by:
• Invested over $150 million in capital expenditures including: ° $67 million in leasehold improvements (buildings, aircraft ramp and grounds); ° $59 million in sorting equipment, ground service equipment (GSE) and maintenance vehicles; and, ° $6 million in low-emission vehicles.
• Current 2011 Sort Expansion Project with $50± million in improvements, including: ° Reconstruction of main entrance (Sally Ride Way) and security clearance building; ° Construct new 100,000 square foot International Sorting Facility; ° Expand GSE maintenance facility and truck parking/staging areas; ° Increase existing sorting capacity from 18,000 packages per hour to 24,000 packages per hour; and, ° Renovate existing International Sort Facility (former Clorox/Emery building) to be used as Aircraft Line Maintenance Facility.
• FedEx generates in excess of $16.8 million in Port revenue: ° $9.6 million in building, apron and land rentals (FY13 Budget); and, ° Landing fee charges of $7.0 million (FY12 Actual).
• FedEx is a major local employer: ° Direct employment of 580 full time and 740 part time Oakland area residents earning $50 million annually in wages and benefits; and, FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 8
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° Indirect employment of 45 Oakland area residents via service contracts totaling $340,000 annually for security, maintenance and janitorial.
OAK is one of FedEx’s six3 Express4 “Hub” locations in the United States, and its prior and anticipated capital investments in its Metroplex facility are reflective of its planned continuing operations. However, FedEx’s Express business has not recovered from the Great Recession and FedEx is embarking on a corporate restructuring of the division to boost profits by $1.7 billion annually by shedding jobs, aircraft and underused assets.
FedEx is carefully looking at the operational and financial performance of each of its U. S. Hubs, and has advised staff that OAK is its highest cost Hub with respect to building rent, and OAK’s costs are higher-than-average in fuel costs, landing fees and ground rents. Conversely, OAK is FedEx’s only Hub on the contiguous U. S. West Coast, which serves as its gateway for Asia-Pacific traffic. FedEx’s restructuring plans include expected saving of $700 million through a slim-down of its network – half overseas and half in the U. S. It expects to save about $300 million in fuel and other costs from using newer planes, and $400 million by making staff more efficient and eliminating redundancies.
OAK is a strategic Hub for FedEx and it requires a long-term commitment from the Port to support its on-going and future investments in the Metroplex to off-set the higher costs of doing business in California, and the Bay Area in particular. FedEx’s goal is to expand its Asia-Pacific market between OAK and initially Narita and Guangzhou utilizing its recently acquired fleet of B777 freighters; additional international routes may follow.
To cement this relationship, to keep OAK costs predictable and stable, to enhance future development and growth opportunities, and to meet the security requirements of the TSA, Port staff and FedEx have negotiated the following agreements discussed in the “Background” section and summarized as follows:
1. Second Amendment to Amended and Restated Lease:
° Extend expiration date of Lease from December 31, 2031 to December 31, 2036; ° Incorporate a FMRV rental adjustment effective January 1, 2032; the first day of the five-year extension term; ° Increase Security Deposit to $1.6 million (2× Monthly Rent); ° Reduce Assignment/Sublease “Bonus Value” from 75% to 50%; and, ° Amend “Environmental Responsibilities” Exhibit E and accept $61,108.87 as FedEx’s share of the costs associated with the Baseline Study.
3 Anchorage, Fort Worth-Alliance, Indianapolis, Memphis, Newark and Oakland.
4 “Express is where FedEx got its start in 1971, and it is still the company’s biggest segment by far. The division moves 3.5 million packages on an average day, mostly by air. It’s been hit hard as customers shift to slower delivery methods, such as truck or ships, to save money” (“Investors Get 1st Look at Big FedEx Cost Cut Plan”, Samantha Bomkamp, Associated Press, October 10, 2012).
FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 9
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2. Construction Reimbursement Agreement: Reimburse FedEx, through a rent credit, the cost of constructing an off-leasehold access taxilane to accommodate FedEx’s second new B777 aircraft gate (to be constructed on the FedEx leasehold).
3. Exclusive Area Agreement: A TSA-required agreement for airport tenants who assume and manage some portion of the secured areas at OAK.
4. Amendments to Interconnection Agreements:
° An Amendment to Generating Facility Interconnection Agreement between FedEx and the Port; and, ° An Amendment to Customer Generation Agreement between the Port and PG&E.
STRATEGIC PLAN ALIGNMENT
Approving the Second Amendment, the Construction Reimbursement Agreement, the Exclusive Area Agreement and the Amendments to Interconnection Agreements will fulfill the following strategic plan objectives:
STRATEGIC PRIORITY GOAL OBJECTIVE IMPLEMENTATION AREAS 4FedEx is investing about $50 million in improvements to expand and improve the efficiency of its OAK facilities.
4FedEx currently 1. Maximize the use of existing assets. Goal A: employs more than 1,350
Create workers, many local. Sustainable 3. Increase revenue, job creation and Sustainable Economic and small business growth. 4FedEx is one of the Economic Business Port’s major tenants Growth For The Development 4. Pursue strategic partnerships at all generating approximately Port And levels: local, regional, national and $16.8 million in annual Beyond. international. revenue (FY12-13).
4FedEx’s expansion of international freight should moderate the decrease in domestic cargo and stabilize employment and revenue.
Goal B: 1. Retain existing customers and tenants. 4FedEx has been a Maintain and tenant at OAK since Aggressively 3. Price Port services to provide a highly October 1973 and has Grow Core competitive value. invested in excess of Businesses. $150 million in capital FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 10 4. Promote effective strategic improvements to its communication with Port customers. facilities.
4Port staff is addressing 62 REMAINING ACTION ITEMS Tab 6.1
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5.Enhance Customer Service FedEx’s concerns regarding higher costs of OAK vs. alternate airports (may be attributable to cost of doing business in California; not OAK).
4Through often and scheduled teleconferences and meetings, FedEx and Port staffs have worked diligently to resolve the Exhibit E “Environmental Responsibilities” issues and the opportunities found in the Second Amendment ,the Construction Reimbursement Agreement, the Exclusive Area Agreement and the Amendments to Interconnection Agreements. 4Allowing FedEx to manage the taxilane construction (and reimburse costs through a Goal D: rent credit) will improve Improve the 2. Minimize expenditures and focus on the efficiency and cost Port’s financial core services. control of the project and position. allow Port staff to concentrate on OAK-wide projects. Larger B777 will generate increased landing fee revenue. 4FedEx will lease and be Goal E: responsible for the Improve the maintenance of significant processes for Port-owned assets for the evaluating and next 25± years. managing Stewardship 5. Prepare plans for long-term use, capital 4FedEx will construct the and development and management of Port expenditures for taxilane on unleased Accountability property and infrastructure. long-term property which will management of improve its utilization of Port property the Metroplex and and increase Port revenue infrastructure. through additional landing fees.
FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 11
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4Renegotiation of “Environmental Goal G: Responsibilities” Exhibit E Sustain health will clarify future issues communities 3. Increase cost recovery for and condition of the through leading environmental and safety compliance leased premises at edge activities. expiration of the term of environmental the Lease.
stewardship 4FedEx will reimburse the Port $61,108.87 in past environmental costs.
BUDGET & FINANCIAL IMPACT
Approving and entering into these five agreements (four with FedEx and one with PG&E) will have no revenue impact on the adopted FY2012-2013 Budget. Aviation’s forecast revenue for FY2013-2014 anticipates the $1.2 million maximum amount of the proposed rent credit associated with the Construction Reimbursement Agreement.
STAFFING IMPACT
There will be no change in Port staffing as a result of approving and entering into these five agreements.
SUSTAINABILITY
There are no obvious environmental opportunities involved with approving and entering into five agreements.
ENVIRONMENTAL
This Agenda Report involves four actions: (1) amending the existing Lease to extend the existing terms and other modifications; (2) entering into a Construction Reimbursement Agreement to construct a new taxilane to accommodate a second B777 aircraft gate at FedEx; (3) entering into an Exclusive Area Agreement to manage a portion of the secured areas, and (4) making a minor modification to the existing electric utility Interconnection Agreements. All five agreements are categorically exempt from the California Environmental Quality Act (CEQA) Guidelines pursuant to Section 15301, Existing Facilities, which exempts the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment or topographical features, involving negligible or no expansion of use beyond that existing at the time of the lead agency’s determination.
FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 12
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MARITIME AND AVIATION PROJECT LABOR AGREEMENT (MAPLA)
The Lease will include construction type work that is within the scope of the Port of Oakland Maritime and Aviation Project Labor Agreement (MAPLA) and exceeds the thresholds required for coverage under MAPLA. If the MAPLA is in effect for tenants when Port Permits are requested for future construction work under the Lease, its provisions will apply to this work.
OWNER CONTROLLED INSURANCE PROGRAM (OCIP)
Owner Controlled Insurance Program does not apply since none of the five agreements are a Capital Improvement construction project.
GENERAL PLAN
This action does not change the use of any existing facility or create new facilities, and therefore does not require a General Plan conformity determination pursuant to Section 727 of the City of Oakland Charter.
LIVING WAGE
Living wage requirements, in accordance with the Port’s Rules and Regulations for the Implementation and Enforcement of the Port of Oakland Living Wage Requirements (the “Living Wage Regulations”), apply to this Lease as the tenant employs 21 or more employees working on Port-related work and the tenancy agreement is greater than $50,000. In addition, for future construction work under the Lease, prevailing wage requirements will apply.
OPTIONS
1. Approve the terms and conditions of the following four agreements with Federal Express Corporation and one with Pacific Gas and Electric Company as described above and authorize their execution by the Executive Director:
• Second Amendment to Amended and Restated Lease; • Construction Reimbursement Agreement; • Exclusive Area Agreement; • Amendment to Generating Facility Interconnection Agreement; and • Amendment to Customer Generation Agreement.
2. Do not approve the four agreements with Federal Express Corporation and one agreement with Pacific Gas and Electric Company which would jeopardize the Port’s relationship (i) with FedEx, including its plans to expand and maximize efficiency at its Oakland Metroplex, and (ii) with the Transportation Security Administration as it relates to security at the FedEx leasehold; or,
3. Reject the terms and conditions of the five agreements as described above, but recommend different terms and conditions.
FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 13
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RECOMMENDATION
It is recommended that the Board give first reading to an ordinance and pass a resolution (i) approving the terms and conditions of the Second Amendment to Amended and Restated Lease with Federal Express Corporation, the Construction Reimbursement Agreement, the Exclusive Area Agreement, the Amendment to Generating Facility Interconnection Agreement, and the Amendment to Customer Generation Agreement, all as described above, and (ii) authorizing execution of these five agreements by the Executive Director, subject to the Port Attorney’s review and approval as to form and legality of all five agreements.
FedEx-Second Amendment-Agenda Report.F1 (2013-02-28).DOC 14
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Secretary. President are time to of other Board 288346 2 void Port (30) of not and the not the for as to of 2 78 UPDATES & ANNOUNCEMENTS Tab 7
UPDATES & ANNOUNCEMENTS The President, Members of the Board and the Executive Director will report on noteworthy events occurring since the last Board Meeting.
79 SCHEDULING Tab 8
SCHEDULING This segment of the meeting is reserved for scheduling items for future Agendas and/or scheduling Special Meetings.
80