King County Department of Natural Resources and Parks Director's Office King Street Center 201 S Jackson St, Suite 700 Seattle, WA 98104-3855 May 19, 2017 The Honorable Joe McDennott Chair, King County Council Room 1200 COURTHOUSE Dear Councilmember McDemiott: This letter amends the first quarterly report under Motion 14813 that will benefit the public by protecting water quality in our region through a status update of expenditures necessary to restore the West Point Treatment Plant to full operations. The required report transmitted on May 15, 2017 did not include the cost estimate for the complete restoration. CH2M, an engineering consultant with extensive knowledge of the treatment plant, was hired to prepare a total cost estimate following the February 9 flooding event. The firm received information from multiple sources to develop this estimate, which included examining the existing contracted work orders and related equipment purchase orders, actual staff labor directly charged to the restoration efforts (excluding normal treatment plant operational staffing), asset inventories of inundated equipment, other damaged equipment identified (e.g. lighting, switches and fire alarms), net changes in fuel, electricity, water, and chemical use, and additional trucking of solids for offsite handling or disposal. Assumptions used in developing the cost estimate include having all permanent equipment and controls installed and operating by October 2017; continuing additional precautionary water quality monitoring and sampling in nearby Puget Sound locations through December 2017; and including only treatment plant and administrative staff costs dedicated to the restoration efforts, excluding those which would be part of normal treatment plant and agency operations. The cost estimate also includes delayed replacement ofnoncritical facilities (e.g. an employee locker room that was damaged) until all critical operations and controls have been installed, allowing the resumption of competitive contracting for such later work. While most equipment and staffing needs can be estimated with reasonable precision, allowances of 10 to 30 percent were factored into the estimate based on work orders issued but not yet completed. These allowances are particularly needed since few invoices have been submitted to the Wastewater Treatment Division (WTD) since contractors prioritized getting the work started. The Honorable Joe McDermott May 19, 2017 Page 2 The other two areas of risk for which contingencies were added to the estimate are related to mechanical and electrical system uncertainties. It is not yet possible to test all components that were flooded, and thus estimates of the quantity of certain replacement parts (e.g., wiring, mechanical or electrical switches, fans and pumps) is not yet known with certainty, but could have an impact on the final costs. Other potential costs related to mechanical or electrical system work depend on what will be necessary for replacement, such as responding to code changes for replacement items like the boilers. The estimate of total repair costs does not include any potential fines or penalties from regulators, additional total cable or wiring replacement that could be required beyond what has already been identified in the estimate, or any legal costs associated with finalizing an insurance settlement. Factoring in all the above, the total cost, when all restoration work and permanent facilities are complete, is estimated at between $49-$57 million, based on current information. A summary of the cost estimate is attached and more detailed information will be provided to the council staff in upcoming meetings that have been scheduled. Finally, we do expect our insurance to pay for the costs to restore the plant minus the $250,000 deductible. We do not expect them to pay for any fines or for the extra water quality monitoring we are conducting. But the extra monitoring costs are relatively small and are a good investment to make sure we understand the water quality conditions. Risk Management and representatives from WTD have been in frequent contact with our insurance carriers (first layer $25 million, FM Global, second layer $75 million, Lexington/AIG, AWAC, AXIS, Berkshire, Ironshore, Lloyds of London, and Starr, and third layer with limits of $400 million, FM Global for total coverage for $500 million) and the insurance representatives have expressed their appreciation to King County for our transparency, cooperation, and all the information that has been provided. Sincerely, Director- Enclosure ec: King County Councilmembers ATTN: Carolyn Busch, Chief of Staff Melani Pedroza, Acting Clerk of the Council Carrie S. Cihak, Chief of Policy Development, King County Executive Office Dwight Dively, Director, Office of Performance, Strategy and Budget Carolyn Whalen, County Administrative Officer, Department of Executive Services Mark Isaacson, Division Director, Wastewater Treatment Division, DNRP Wastewater Treatment Division West Point Treatment Plant Recovery Cost Estimate May 19, 2017 Expected Construction Upper Electrical Work Orders identified/underway 7,000,000 9,000,000 Mechanical Work Orders identified/underway 8,000,000 10,000,000 800,000 1,000,000 Architectural Work Orders identified/underway Cleaning & Sanitation 1,100,000 1,100,000 Non-Asset Construction - Lighting and Receptacles 2,600,000 3,000,000 Non-Asset Construction - Hand Switches and Panels 650,000 1,000,000 Non-Asset Construction - Phone and Fiber 650,000 1,000,000 Non-Asset Construction - Fire Alarm 650,000 1,000,000 Non-Asset Construction - Miscellaneous Demolition 300,000 400,000 Non-Asset Construction - Punch List Construction 350,000 400,000 Biological Systems Risk Allowance 1,000,000 1,000,000 Mechanical System Risk Allowance 2,000,000 2,000,000 3,000,000 Electrical System Risk Allowance Total Construction $ 28,100,000 3,000,000 $ 33,900,000 Non-Construction Expected Upper WTD Labor - Operations 7,400,000 9,000,000 WTD Labor - Capital 3,000,000 3,300,000 800,000 800,000 CH2M HILL Consulting Costs 3,100,000 3,100,000 WTD Expenses, Non-Contracted Equipment and Materials Purchases 1,300,000 1,500,000 250,000 300,000 Construction Management Consulting WTD Expenses, Marsh Risk Consulting 800,000 800,000 Non-Capital Risk Allowance for Biological Systems 1,250,000 1,300,000 Non-Capital Risk Allowance for Mechanical Construction 1,500,000 1,500,000 Non-Capital Risk Allowance for Electrical Construction 1,500,000 1,500,000 WTD Expenses, Personal Property Total Non-Construction $ 20,900,000 $ 23,100,000 Total Project Cost Estimate $ 49,000,000 $ 57,000,000