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2014-07-10 Work Session Kodiak Island Borough Assembly Work Session Thursday, July 10, 2014, 7:30 p.m., Borough Conference Room Work Sessions are informal meetings of the Assembly where Assembly members review the upcoming regular meeting agenda packet and seek or receive information from staff.Although additional items not listed on the work session agenda are discussed when introduced by the Mayor,Assembly,or staff,no formal action is taken at work sessions and items that require formal Assembly action are placed on regular Assembly meeting agenda.Citizen's comments at work sessions are NOT considered part of the official record.Citizen's comments intended for the"official record"should be made at a regular Assembly meeting. Page 1. CITIZENS' COMMENTS (Limited to Three Minutes per Speaker) 2. AGENDA ITEMS 2 - 37 a. Furniture, Fixtures, and Equipment (FF&E) Procurement Process. (a) Managers Memo.pdf (b) 7-3-14 Letter to Stewart.pdf (c) Email from Bud 6-13.pdf (d) Foster Pepper Letter.pdf (e) Stewart's letter 6-4-14.pdf (f) KHS Bond Ordinance.pdf (g) DEED Agreement.pdf (h) Amendment to CIP Contract-DR-12-100 DRAFT 130604.pdf (i) Email To Stewart to Stop purchases.pdf 3. PACKET REVIEW a. PACKET REVIEW NEW BUSINESS CONTRACTS Contract No. FY2015-06 Four Schools (Port Lions, Karluk, Old Harbor, and North Star) Generators Project. Contract No. FY2015-07 Aerial Imagery Acquisition. ORDINANCES Ordinance No. FY2015-02 Authorizing the Borough to Issue General Obligation Bonds in the Principal Amount of Not to Exceed $10,230,000 to Finance the Renewal and Replacement Schedule Related to Borough Owned School Facilities, Projects Which are 70% Reimbursable by the State of Alaska, and to Submit the Question of the Issuance of Such Bonds to the Qualified Voters of the Borough at the October 7, 2014 Regular Borough Election. Ordinance No. FY2015-01A Amending Ordinance No. FY2015-01 Fiscal Year 2015 Budget by Amending the General Fund (Fund 100) and the Replacement and Renewal Fund (Fund 469) to Fund Painting of the Port Lions School. EXECUTIVE SESSION Manager's Performance Evaluation 4. MANAGER'S COMMENTS 5. CLERK'S COMMENTS 6. MAYOR'S COMMENTS 7. ASSEMBLY MEMBERS COMMENTS Page 1 of 37 AGENDA ITEM #2.a. occirts- ti Kodiak Island Borough A;ro- * P- '`,lt •� OFFICE of the MANAGER . ,S 4 Bud Cassidy,Borough Manager ,�.. r -- , C k " = . k MEMORANDUM N. .r i.i.1•7 Date: July 7,2014 To: Mayor Friend and Members of the Assembly From: Bud Cassidy, Borough Manager 61 Re: FF&E Purchases This memo is written requesting that the Assembly establish a clear path forward for the Borough and the School District as Furniture, Fixtures and Equipment (FF&E) for the KHS Addition and Renovation project are purchased. It is important that there is an agreed upon methodology so that these items can be purchased and the project not be delayed. The heavy lifting aspect of the project is the construction of the 4—story tower and the renovation of the existing space and should not be the purchase of desks and chairs. The school district has asked KIBSD Attorney William D. Falsey to be present to discuss what he sees as a solution, He will describe what he sees as the differences between items purchased as part of the project versus items that are purchased based on normal renewal and replacement(R&R) schedule and items purchased outside the project. The Assembly concern expressed at various meetings on the subject is that FF&E for the KHS project be purchased in a manner consistent with Borough ordinance FY2010- 03,specifically that section that states: "If additional funding becomes available for the projects from grants or other sources, only enough bonds to finish the projects will be sold." The borough attorney, as well as the bond attorney, suggests that the way forward is an interpretation of the language on the ballot by the Assembly. It is a policy call.To date, the Assembly's interpretation is based on a strict reading of the ballot language as well as their desire to pass the"red face"test when speaking to members of the public about FF&E purchases. The Assembly does not want the perception by members of the public that FF&E for the KHS project has been purchased outside the intent of the voters. Page 2 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. P. -.1 1 s..,4. _..S. _'�"" I Kodiak Island Borough School District 722 Mill Bay Road Kodiak,Alaska 99615 (907)481-6202 July 3,2014 Bud Cassidy,Manager Kodiak Island Borough 710 Mill Bay Road,Room 125 Kodiak,Alaska 99615 bcassidy@kodiakak.us Re: KIBSD Purchases, the KHS Renovation&Addition Project,and KIB Ordinance FY2010-03 Bond Sales Dear Manager Cassidy: This letter responds to your emails of June 12 and 13, 2014. I appreciate your summarizing for me the discussion that took place at the Assembly's June 12 work session, and your sharing with me a copy of the June 12 memorandum you received from your bond counsel. The School District is concerned that the Assembly: (1) was asked to approve a contract for KHS furniture that the School District does not want or need, and now (2) may be poised to take an action - not required by DEED or Ordinance- that would effectively prevent the Borough from receiving maximum State reimbursement of KFIS Project Funds. The School District further believes: (3) that if, in the KHS Project, the Borough and School District are going to deviate from customary and usual procedures applicable to the procurement of furniture, fixtures and equipment ("FF&E"), greater clarity is needed regarding how the substitute processes will work. The School District would like to find a time to make a presentation to the Assembly and discuss these issues further. In the spirit of open communication, I am providing courtesy copies of this letter,and its enclosures, to Assembly members. In advance of future discussions, the following may be helpful. I. THE SCHOOL DISTRICT DOES NOT BELIEVE THE$1.3 MILLION IN NEW FURNITURE PURCHASES EMBEDDED IN THE ASSEMBLY'S MAY 15,2014 APPROVAL OF CONTRACT FY2014-33 IS NECESSARY OR APPROPRIATE. Page 3 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy July 3,2014 Page 2 In its May 15, 2014 meeting, the KIB Assembly approved Contract No. FY2014-33. The action authorized the Borough to enter into a contract with School Specialty for Furniture, Fixtures, and Equipment for the KHS Addition and Renovation Project in an amount not to exceed$1,334,923.87. As KIB Staff noted for the Assembly, the $1,334,923.87 contract price was based on a 171-page "detailed list of room-by-room furnishings." It is the School District's understanding that the 171-page list called for every piece of furniture in the new KHS building to be purchased brand new; it assumed that nothing—no desks, tables or chairs from the existing KHS building—would be carried forward to the new building. That is not a sensible or appropriate approach. From the beginning, it has been the School District's view that as many legacy assets as possible from existing school should be repurposed for the new building. We appreciate that KIB staff is now working with the School District to revise the room-by-room purchases list, and that the list now contemplates that many existing KHS items will be reused. • The School District remains concerned, however, that developments of this sort could have the effect of constraining the KHS Project- requiring dollars to be spent on unnecessary items, while forcing critical needs to go unmet. II, THE BOROUGH WILL NOT RECEIVE THE MAXIMUM STATE REIMBURSEMENT FOR THE KHS PROJECT IF- DESPITE THERE BEING No LEGAL REQUIREMENT TO Do So - THE BOROUGH REDUCES ORDINANCE FY2010-03 BOND SALES EVERY TIME THE SCHOOL DISTRICT USES NON-KHS PROJECT FUNDS TO PURCHASE ASSETS THAT WILL ULTIMATELY BE CARRIED FORWARD TO THE NEW SCHOOL. As I outlined at greater length my letter to you of June 4, items purchased by the School District with its operational funds, much like old furniture that can be used in the new KHS building, are not a part of the KHS Project funding structure (defined by Appendix A to the Project KHS Agreement), and do not have direct Project-Budget effects. Because KIBSD Operating Funds are not"grants,""industry-based tax incentive programs," "reimbursement options," or proceeds from prior bond sales, their expenditure also should not reduce the amount of bonds sold under KIB Ordinance FY2010-03, For the benefit of the Assembly members, I have included with this response a copy of my June 4 letter, which discusses these issues in greater detail. I was pleased to see that, after his review of my June 4 letter, your bond counsel issued a legal opinion consistent with those facts, As your counsel advised: Page 4 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Pieces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy July 3, 2014 Page 3 If. . . the [School District's] proposed expenditures are neither [a) part of the project . . . nor [b] included in the project budget, then those expenditures would not necessarily restrict the ability of the Borough to issue bonds.. . The issuance of bonds [under KIB Ordinance FY2010- 03] is within the absolute discretion of the Assembly.' The opinion from your bond counsel confirms that there is no legal reason to reduce Ordinance FY2010-03 bond sales in response to School District's expenditures. Moreover,doing so would essentially be self-defeating. As you confirmed in the Assembly's June 12 Work Session, the State of Alaska's Department of Education and Early Development has indicated that it will not treat the School Districts expenditure of operating funds as part of the KHS Project, absent some"political" direction from the Assembly to do so.2 The financial bottom-line is clear. If the Assembly: (1) refrains from instructing DEED that School District purchases should count against line-items in the KHS Project Memo from Marc Greenburg, Foster Pepper LLC to Bud Cassidy, KIB Manager • re:School District Operating Fund Expenditures(June 12, 2014). 2 See Audio from K113 Assembly June 12, 2014 Work Session at 13:55, 15:58, 18:42 available at httpJ/wwµ,.koc)iakak.us/DocumentCenter/View/5961 The [bond) attorney has said it's really a political decision. And we called DEED. They're not concerned about School District purchasing. They've given us an amount of money in the budget -$2 million right now - to be able to spend. They're happy to reimburse all$2 million. From what I'm hearing, DEED is not going to weigh in on the issue. They just want to pay us the money. The bond attorney has said any amount of bonds that you authorize to sell for the project are going to be reimbursable—reimbursed. So you decide: at the full amount of the$2 million or at$2 million "minus" . . . See also id. at 24:10, 24:29: DEED won't differentiate. They have basically said this is a political decision. Page 5 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy July 3,2014 Page 4 budget, and (2) issues bonds in the amount of $68.7 million (as authorized by Appendix A to the Project Agreement and Ordinance FY2010-03), then the Borough will be reimbursed at 70% of$68.7 million, or $48.1 million—and it will receive that $48.1 million from the State, however the School District spends its funds. The Assembly could go another way, however. Despite there being no legal requirement to do so, and despite its being in tension with original understandings, the Assembly could: (1) instruct DEED that School District purchases, despite their being made with non-Project Funds, should count against line-items in the KHS Project budget, and (2)correspondingly reduce Ordinance P12010-03 bond sales, dollar for dollar, for each School District expenditure. But if it does so, the Borough will not receive the maximum $48.1 million from the State. School District expenditures, unlike bonds proceeds, are not subject to any reimbursement from the State. To the extent that the Borough refuses, for political or any other reasons, to issue Ordinance FY2010-03 bonds, it will leave State dollars on the table. Moreover, if the Assembly instructs DEED to score the School District's use of non-Project Funds against the KHS Project Budget, the School District would likely also have to take action to prevent its expenditures from adversely affecting that Budget—if money the District would have spent even in the absence of the KHS Project (to, for instance, replace broken computer monitors) is scored against line items in the KHS Project Budget (which was not designed to cover such expenses), the School District would likely have to make efforts to redirect its funds to other needs. That would allow the KHS Project to be "finished" as designed and budgeted, but it would virtually guarantee that the building would be hamstrung by significant deficiencies on the day of its ribbon cutting (with, perhaps, broken monitors sitting in a beautiful new computer lab, for instance). This is not a desirable outcome, and is certainly not what voters who supported the KHS Project believed they were approving. Voters did not expect or require the Assembly to adopt unnecessary constraints that will: (1) reduce State funding, or (2) impair the finished project. Nor does the School District believe that the Assembly, after the benefit of further discussion of the matter, will choose that course. Page 6 of 37 Furniture, Fixtures, and Equipment (FFBE) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy July 3, 2014 Page 5 III. IF THE BOROUGH AND SCHOOL DISTRICT ARE GOING To DEVIATE FROM CUSTOMARY AND USUAL FF&E PRACTICES, GREATER CLARITY IS NEtUED REGARDING HOW THE SUBSTITUTE PROCESSES WILL WORK. Finally, you are aware that the Borough and the School District have had a significant amount of discussion regarding how FF&E purchases for the KHS Project should be made. The School District believes that greater clarity would help the process proceed more smoothly. When it comes to the expenditure of"project funds"—which, again, are defined by the KHS Project Agreement to be only the proceeds of certain, specified bond sales and two specific legislative grants, and not the School District's operating funds3- DEED Guidelines make clear that FF&E purchases for "new or rehabilitated school facilities," are"normally the responsibility of the school district": Identifying Needed Equipment The general scope of necessary equipment purchases . . . should be a part of the educational specification developed for the project. . . . If the project architect's professional services include responsibilities for preparing furnishing, fixtures and equipment (often referred to as FF&E) documents, . . . The project's design documents should identify types and quantifies of equipment which conform to the district's established standards. The actual selection and purchase of this equipment is normally the responsibility of the school district in which the school facility is located unless otherwise agreed when a municipality is the project manager.4 Cf id. at 6. (emphasis added) ("It is the responsibility of the school district to actually purchase the equipment and to make specific cost-benefit value decisions and product selections.") See Project Agreement,Appendix A at§ 3. 4 STATE OF ALASKA, DEPARTMENT OF EDUCATION & EARLY DEVELOPMENT, GUIDELINES FOR SCHOOL EQUIPMENT PURCHASES at 3 (2005 ed.) (emphasis added). As noted in its opening sentences, this guidance governs, and is limited to, "the use of capital project funds for the purpose of equipping new or rehabilitated school facilities." See id. at 2. Page 7 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy July 3,2014 Page 6 The Guidelines acknowledge that a school district and municipality may agree to shift responsibility for FF&E purchases in circumstances where the municipality (and not the school district) serves as the project-manager role. In the KHS Project, the Borough has assumed a significant role in FF&E discussions, but there is no formal agreement in place to govern FF&E procurement generally, or the Borough and School District's respective roles in the process in particular. It is fair to say that this arrangement has led to some confusion. To offer but one example, the School District has long-established practices and policies for shipping and receiving, but some purchases for the KHS Project have not been run through that framework. The District is not clear what processes have been adopted in their place. Lack of a clear agreement on respective roles and responsibilities has also led to substantive confusion regarding whether particular items are actually needed (such as the all-new furniture called for in Contract No. FY2014-33, as noted above). If the use of project funds to make FF&E purchase is not to be"the responsibility of the school district," as usual and customary in these circumstances, but is instead to be a responsibility shared with the Borough, the School District would like to propose, at a minimum, that purchases be forwarded to the Assembly for approval only on the joint recommendation of the School District and Borough staff. And, further, that the Borough and School District should come to a more explicit agreement about what procedural practices and protocols will govern FF&E procurement. The School District believes discussions and agreements along these lines could serve as a helpful baseline for future projects, as well. • Again, it is my hope that through these and future discussions we can continue to clarify the role of the School District and its purchases in the KHS Project. The School District appreciates its good working relationship with KIB and the Assembly, and it remains committed to working with you to see the KHS Project through to a successful completion. Please let me know when the School District can meet with the Assembly about this important subject. Page 8 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy July 3,2014 Page 7 Sincerely, KODIAK ISLAND BOROUGH SCHOOL DISTRICI .._..i Stewart McDonald Superintendent Enclosures Letter of KIBSD to Cassidy, June 4, 2014 (with KILS Project Agreement and Ordinance FY2010-03 attachments) Memo of Marc Greenburg, Foster Pepper LLC to Cassidy re: School District Operating Fund Expenditures,June 12, 2014. Cc John Sedor William D. Falsey Page 9 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Bud Cassidy From: Bud Cassidy Sent: Tuesday,May 27,2014 7:26 AM To: Stewart McOdonald(smcdonald01 @kibsd.org) Subject: FF&E Purchases-KHS Addition and Renovation Stewart- I am asking that you and your staff stop from purchasing any additional equipment that could be construed to be part of the KHS project and refrain from entering into any contracts that would lead to the acquisition of additional FF&E.I think you would agree that there is a need to halt further acquisitions and address what has already been spent before moving forward with additional FF&E purchases, Of critical importance is how these expenditures may affect the sale of future bonds for the project, lam also requesting a full accounting of the money spent as well as the items purchased by the school district on FF&E to date.It is only then we will know the amount of bonds we can legally sell to complete the project as well as be consistent with the ballot language that approved this construction.That ballot language,as you know,states:"if additional funding becomes available for the projects from grants or other sources,only enough bonds to finish the projects will be sold".That language dictates that the remaining sale of bonds sold to complete the project will be reduced by an equal amount of money that the school district has expended on FF&E outside of the project budget. I have discussed this specific bond language with a bond attorney and with the borough attorney and they too see this as the proper way forward. There is no clear explanation that I can make to the Assemlby or you to the School Board about why the project budget was exceeded or that a project related expenditure would not be reimbursed by the state. You and I are well aware of the Assembly's concerns associated with this most expensive public works project ever undertaken by the Kodiak Island Borough.So concerned were they that the Borough hired a private firm to provide additional project management in an effort to control project costs. You and I and our staffs need to be on the same page as we complete this addition and remodel project.Managing a$80 million addition and renovation project is complicated and will become even more complicated without better coordination of FF&E purchases. Lastly,the clear ballot language,the understanding of the Assemlby and the School Board and their commitment to the public about how this project will be funded and constructed is my concern. I am available to discuss this matter with you further. Bud Cassidy Manager Page 10 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. ,P FOSTER PEPPERr,,. Memorandum To: Bud Cassidy.Kodiak Island Borough From: Marc Greenough Date: June 12.2014 Subject: School District operating fund expenditures As we have discussed, School District operating fund expenditures on furniture, fixtures and equipment for the new high school project may. in the view of the Assembly. restrict the abiiity of the Borough to issue bonds for the project. We have agreed that if the School District was planning to make the expenditures regardless of whether or not the new high school was built (for example, new hand instruments), then those expenditures would not restrict the ability of the Borough to issue bonds for the project. We have also agreed that if the School District made expenditures that would have been subject to State reimbursement pursuant to the agreement with the Department of Education and Early Development if those expenditures had been made out of bond proceeds, then the Assembly could take the position that the ballot language restricts the issuance of bonds in the amount of those expenditures. The Assembly could take the position that (1)the limitation on the amount of bonds authorized was intended to limit overall expenditures on the project and (2)to the extent possible. such expenditures were intended to be reimbursed by the State, The letter from counsel to the School District dated June 4, 2014,states that(I)the School District (1)agreed to use their funds to purchase the larger equipment for rooms such as the music room. construction technology room, weighticardio room, and auto shop and (2)the School District's operating fund purchases are not part of the project's funding structure and cannot cause the project budget to be exceeded. If the Assembly takes the position that the proposed expenditures are neither part of the project that was intended to be funded with bond proceeds to assure State reimbursement nor included in the project budget. then those expenditures would not necessarily restrict the ability of the Borough to issue bonds for the project. Regardless of how the Assembly interprets the ballot language, the issuance of bonds is within the absolute discretion of the Assembly. cc: Karl Short Joe Levesque m,206.447.4400 FAX 206.447.9700 un TURD AVENUE.sure va SEATTLE,WASHINGTON comm 0.04 www.FOSTEA.cou SEATTLE w.ssiurcroi SPOKANE WASHINGTON sunny i Page 11 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. (S) 1 Kodiak Island Borough School District 722 Mill Bay Road Kodiak, Alaska 99615 (907)481-6202 l LS J{E C 2 11 V P 0 June 4,2014 Bud Cassidy, Manager 1 JUN — aov`k. Kodiak Island Borough 710 Mill Bay Road,Room 125 f(ILJ MANAGER Kodiak, Alaska 99615 bcassidy@kodiakak.us Re: KIBSD Purchases and the KHS Renovation&Addition Project Dear Manager Cassidy: This letter responds to your email of May 27, 2014, sent on behalf of the Kodiak Island Borough ("KIB"), regarding certain Kodiak Island Borough School District ("KIBSD") purchases and the Kodiak High School ("KI-IS") Renovation and Addition Project KIBSD remains excited about the KHS Project, our work with KIB, and agrees that it will be helpful to our ongoing collaboration to ensure that KIB and KIBSD are on the same page about the relationship of KIBSD purchases to the KHS Project. Your letter asks KIBSD to "stop purchasing any additional equipment that could be construed to be part of the KHS project" and requests "a full accounting of the money spent as well as the items purchased by the school district on FF&E [furniture, fixtures and equipment] to date," The request appears to stem from two concerns: (1) that KIBSD purchases have caused, or will cause, the "[ICHS] project budget [to be] exceeded," and (2) that the amount of bonds that KIB may permissibly sell under KIB Ordinance FY2010-03 must be reduced, dollar for dollar, by "the amount of money that the school district has expended on FF&E outside of the project budget" We believe both of these concerns to be misplaced. KIBSD spending has not caused, and will not cause, the KHS project to go over budget; and the referenced KIBSD expenditures should not reduce the total amount of bonds to be issued under MB Ordinance FY2010-03. This letter explains both of these conclusions in greater detail below. In the spirit of transparency and cooperation, KIBSD is nevertheless by this letter also providing KIB with a list of KIBSD purchases that likely would not have occurred Page 12 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy June 4,2014 Page 2 but-for the existence of the KHS Project Together, those purchases—related to IT installation and the procurement of certain exercise equipment—amount to $161,643.13 in payment obligations, of which $18,894 has been spent to date. A table describing these expenditures in greater detail is also set out below. DISCUSSION I. Items Recently Purchased by KIBSD with Its Operational Funds, Much Like Old Furniture That Can Be Used in the New KHS Building, Are Not A Part of the Project Funding Structure and Do Not Have Direct Project-Budget Effects. KIBSD would first like to clarify that KIBSD purchases cannot cause the "[KHS] project budget [to be] exceeded," because they are not a part of the Project Agreement funding structure. The KHS Renovation & Addition Project is governed by a February 1, 2012 Project Agreement with the State of Alaska's Department of Education & Early Development("DEED"). Appendix A and Amendment No. 1 to the Project Agreement define the Project's "Project Funds" to include proceeds from several specified bond sales, as well as two legislative grants.' The Project Funds together amount to approximately$80.5 million. Amendment No. I then also sets out a Project Budget that limits how the Project Funds can be spent Among other things, it limits purchases in the "Equipment" Cost Category to$2 million. Importantly, the $2 million budget line-item for the Equipment Cost Category applies only to the expenditure of Project Funds, and nothing else. And this has been reflected in KIBSD and Krd's working relationship and understandings to date. From the outset, KIBSD and KIB have worked from the belief that some amount of legacy KIBSD furniture in the existing KHS building would be repurposed for the new KHS Project facility. To the extent that chairs and desks already in KIBSD's possession could be reused in the new building, they would be. The carryover of legacy KIBSD assets into the new building could have an effect on the KHS Project, but only an indirect one. The repurposed assets were not purchased with "Project Funds," are not "Project Funds," and do not count as expenditures against the $2 million line-item for Equipment in the Project Budget. Indeed, if that is not the case, KIBSD and KIB would have to assign each of the repurposed items some cost basis or value, and agree on a GASB-compliant accounting See attached. Page 13 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy June 4,2014 Page 3 mechanism to document each item's transfer—both of which could prove difficult, and neither of which has been contemplated, or understood to be necessary, by KIBSD and KIB to date. Rather, repurposed assets are understood to affect the KHS Project only to the extent that their availability may alter the nature or quality of expenditures in the Equipment Cost Category that would otherwise have to be made if the new KHS Project building were truly being built from scratch. In other words, if KIBSD has 50 desks that could be used in the new KITS building, that might eliminate the need to procure 50 new desks and lead to revisions in the Project's final FF&E specifications; but the repurposing of the old desks would not change the total amount of Project Funds available,or count against the Project's$2 million Equipment line-item. In a like manner, items more recently purchased with KIBSD operating funds also have only this indirect effect on the KHS Project. KIBSD each year expends a certain amount of its operating funds on renewal and replacement expenses,whether or not new facilities are being built. KIBSD operating funds used for such expenditures are not KI-IS "Project Funds" and the items acquired with the operating funds are not expenditures under any category of the KHS Project Budget. It was on this basis that the estimated Project Budget and draft specifications for the KHS Project were prepared. The existence of some KIBSD purchases was incorporated as a background assumption. And it was also on this basis KIBSD has discussed with KIB staff, including Jessi Wolfe and Matt Gandel, its willingness and intention to make certain direct purchases of items that could be used in the new KHS facility.2 To the extent that KIBSD operating fund purchases may beneficially alter the composition of assets on hand that could be used in the new KHS Project building, the operating fund purchases may lead to a change in the composition of the Project's final specifications (which ultimately must be approved by DEED). But KIB should appreciate and have confidence that KIBSD operating fund purchases are not a part of the Project's funding structure and cannot cause the "[KHS] project budget [to be] exceeded." II. Because KIBSD Operating Funds Are Not "Grants," "Industry-Based Tax Incentive Programs," "Reimbursement Options," or Proceeds from Prior Bond 2 See, e.g., Kodiak Island Borough, Agenda Statement for Contract No. FY2014-33 Furniture, Fixtures, And Equipment For The Kodiak High School Addition And Renovation Project, May 15,2014 Assembly Regular Meeting ("KIBSD has agreed to use their funds to purchase the larger equipment for rooms such as the music room, construction technology room, weight/cardio room,and auto shop."). Page 14 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy June 4, 2014 Page 4 Sales,Their Expenditure Should Not Reduce the Amount of Bonds Sold Under KIB Ordinance FY2010-03. KIBSD purchases also should not reduce the number or value of bonds that K1B Ordinance FY2010-03 permits KIB to sell. Ordinance FY2010-03 permits KIB to issue bonds to cover "the cost of planning, design, construction, furnishing and equipping of school and related capital improvements in the Borough,"3 including, without limitation, certain listed projects: "additions to Kodiak High School, renovation of Kodiak High School for instructional and School District administrative space, and demolition of the Business Department/Learning Center."' The Ordinance estimates the total "Estimated Cost' for the projects at $80.8 millions Because $4.49 million was available to the projects from proceeds of bond sales previously issued for school repair and replacement projects,6 Ordinance FY2010-03 authorizes KU13 to issue bonds in amount up to $76.31 million? The Ordinance also forthrightly notes that funding for the Projects to be bonded could alternatively come from any of four other sources, three of which could be "identified" or "applied for" by KIBSD or KIB: (1) grants, (2) industry-based tax incentive programs, and (3) other "additional . . . reimbursement options"; and the remaining source was (4) prior bond sales. Each is addressed in the Ordinance's motivating recitals: WHEREAS, the School District has identified grants and industry-based tax incentive programs which could fund millions of dollars towards the Borough's debt service for construction of Kodiak High School, but for which an application can be submitted only after a bond ordinance is approved;and WHEREAS, the Borough and School District will,continue to seek and apply for additional grants and_reimbursement options to reduce the debt service cost of the renovation and expansion of Kodiak High School; and 3 KIB Ordinance FY2010-03 at§ 2. ' Id. at§ 3. S Id. at§4. 6 Id. 7 Id. at§2. Page 15 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy June 4, 2014 Page 5 WHEREAS, $4,490,000 in p oceeds of Borough school bonds previously issued for school repair and replacements projects is available for the renovation of Kodiak High School[.je This is the only relevant discussion of alternative funding sources mentioned in the Ordinance. The Ordinance's discussion of prior bonds, grants, industry-based tax incentive programs, and additional reimbursement options for which KIBSD or KIB could apply is later referenced in language that went to the voters under section 4. Voters were told that total project costs were estimated to be$80.8 million, and that funds were available from two prior bond sales. Then, consistent with the Ordinance's recitals, ballot language informed voters that KIB would issue less than $76.31 million in bonds if "additional funding' becomes available "from grants or other sources". fAlvailable Funds in other projects KHS Exterior Insulation and Window Replacement (590,000) KHS Voc Ed Renovation&Pool Reclamation (3,900,000) Total deductions (4,490,000) If additional funding becomes available for the projects from grants or other sources, only enough bonds to finish the projects will be sold.9 The phrase"from grants or other sources" in the above-quoted language must be read in context And in that context, it is clear that the type of"additional funding" that would lead to bond-sale reductions are the four sources referenced in the Ordinance's recitals: (1) grants, (2) industry-based tax incentive programs, (3) other legislative reimbursement options, and (4) proceeds of prior bond sales.10 Id. at p.2 9 Id. at § 4. There is some question about the legal effect of this language, given that it is not mirrored in section 3 of the Ordinance, which authorizes KIB to issue bonds in the amount of$7631 million without any such limitation. Because the quoted "from grants or other sources" language in section 4 plainly was not intended to cover KIBSD's expenditure of its own operating funds, the issue need not be addressed at length, though it may further support KIBSD's position. 70 See, e.g, BLACK'S LAW DICTIONARY (2d. online ed.) (entry for the interpretive canon"uoscitur a sociis": "A Latin term for'it is known by the company it keeps', it is the concept that the intended meaning of an ambiguous word depends on the context in which it is used."). Page 16 of 37 Furniture. Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy June 4,2014 Page 6 It would also have been clear to voters that the types of "additional funding" implied by "other sources" would be sources like the two types of "additional funds" explicitly mentioned in the language before them: proceeds of prior bond sales, and "grants." That is interpretation accords with commonsense, and is certainly how a reviewing court would interpret the provision. Where general words "follow an enumeration of specific things," the general words are "not to be construed in their widest extent, but are to be held as applying only to . . . things of the same general kind or class as those specifically mentioned.""r Plainly, KIBSD operating funds are not like "grants," "industry-based tax incentive programs," other legislative "reimbursement options" or proceeds from prior bond sales. They are not something for which KIBSD or KIl3 can "seek" or"apply," and are different in kind from those targeted, external funding sources, the availability of which did not inform the design of the KHS Project specifications or Project Budget KIBSD operating funds are therefore not "other sources" for purposes of the limiting language in section 4, and so should not reduce the number or value of bonds that KIB Ordinance FY2010-03 permits KIB to sell. III. Schedule of Recent KIBSD Purchases. While KIBSD does not believe it relevant to the KI-IS Project budget, or to future bond sales, it is also willing, in the spirit of transparency and cooperation, to provide KIB with a list of KIBSD purchases that likely would not have occurred but-for the existence of the KHS Project, The relevant expenditures were made from operating funds that KIBSD placed in an account it denoted its "510 account." Some funds placed in KIBSD's 510 account were used to make purchases for district-wide purposes; others were used for unremarkable renewal and replacement expenses that would have occurred in the absence of any building project, or the KHS Project in particular. KIBSD made four expenditures—relating to IT equipment and installation, and exercise machines—from the 510 account that it arguably would not have made if the KHS Project were not underway. Those expenses are detailed below. The two entries See, e.g, BLACK'S LAW DI-IIONARY (entry for the interpretive canon "ejusdern geueris": "Of the same kind, class, or nature. In statutory construction, the 'ejusdern geueris rule' is that where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such general words are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind or class as those specifically mentioned.")(emphasis added). Page 17 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Kodiak Island Borough Manager Bud Cassidy June 4,2014 Page 7 for"cardio equipment" reflect purchases that may have been made in the absence of the KITS Project (as there were plans to place stationary bikes in the existing gymnasium), but are listed because the purchases were ultimately made with the space-availability and space-configuration of the new KHS facility in mind, and so were at least arguably influenced by the KHS Project. h3At key' Vred1 17$4, Purcase # tt'5cc ne6CAtiotiii1P Od ltdffast-6163 2014 rx<rt,.. . °aaL b°db igvumberm o 2u n nt 3 i Integrated SOW for New High 4-100-110-110- $135,335.00 34051807 517,185.00 Logic School 510-440-15 Grainger Patch Cables for HS 4-100-110-110- 57,541,23 34051957 50.00 network 510450-15 School Cardio Equipment- 4-100-110-110 58,689.50 34051450 $1,709.00 Specialty J Pal plus shipping 510-45015 School Cardio Equipment 4-100-110-110- $10,068.40 34051450 50.00 Specialty 510-510-15 Totals: , $161,643.13 ( $18,894.00 KIBSD has no present plans to obligate or expend any amount of money from its operating budget, or any other source, on items that could be fairly or accurately characterized as"part of the KITS project" or"FF&E." I hope this discussion will serve to clarify the role of KIBSD purchases in the KHS Project. KIBSD appreciates its good relationship with KIB and remains committed to working with KIB to see the KHS Project through to a successful completion. We hope that KIB can confirm KIBSD's understanding that its purchases are outside of the KHS Project funding structure; do not directly affect Project Budget line items;and will not affect, reduce or delay future KIB Ordinance FY2010-03 bond sales. I look forward to your response. Sincerely, KO S • t u ROUG„.SCHOOL DISTRICT u peri n tenden t�IT/ for S ip Enclosures Cc John Sedor William D. Falsey Page 18 of 37 Furniture, Fixtures, and Equipment(FF&E) Procurement Proces... AGENDA ITEM #2.a. 1 Introduced by: Manager Gifford — 2 Requested by: School Board/Assembly 3 Drafted by: Finance Director/Bond Counsel 4 Introduced on: 07(76/2009 5 Public Hearing: 08(062009 6 Amended: 08/06/2009 7 Adopted: 08/062009 8 9 KODIAK ISLAND BOROUGH 10 ORDINANCE NO. FY2010-03 11 • 12 AN ORDINANCE OF THE KODIAK ISLAND BOROUGH ASSEMBLY 13 AUTHORIZING THE BOROUGH TO ISSUE GENERAL OBLIGATION BONDS 14 IN THE PRINCIPAL AMOUNT OF NOT TO EXCEED $76,310,000 15 TO FINANCE THE PLANNING, DESIGN AND CONSTRUCTION OF SCHOOL 16 AND RELATED CAPITAL IMPROVEMENTS IN THE BOROUGH INCLUDING WITHOUT 17 LIMITATION THE RECONSTRUCTION AND RENOVATION OF THE KODIAK HIGH 18 SCHOOL, AND TO SUBMIT THE QUESTION OF THE ISSUANCE OF SUCH BONDS TO 19 THE QUALIFIED VOTERS OF THE BOROUGH AT THE OCTOBER 6, 2009 REGULAR 20 BOROUGH ELECTION 21 22 WHEREAS, under the provisions of AS 29.47.190, a municipality may incur general obligation 23 debt only after a bond authorization ordinance is approved by a majority of those voting on the 24 question at a regular or special election; and — 25 26 WHEREAS, educational requirements have changed since Kodiak High School was originally 27 constructed in 1966 as a regional education center; and 28 29 WHEREAS, Kodiak High School's design shortfalls were recognized and multiple remodeling 30 projects have been completed to bring the facility into code compliance; and 31 32 WHEREAS, the last addition of vocational or academic space to Kodiak High School occurred 33 in 1972; and 34 35 WHEREAS, in the late 1980s enrollment at Kodiak High School grew beyond 500 students 36 and a four phase reconstruction project began; and 37 38 WHEREAS, the fourth phase of the above project, which would have addressed needed 39 additional academic instructional space, was never started; and 40 41 WHEREAS, enrollment at Kodiak High School has soared from 550 students to as high as 42 850 over the past twenty years and is forecasted to remain at approximately 800 students into 43 the foreseeable future;and 44 45 WHEREAS, enrollment projections demonstrate a continued enrollment of 200 or more 46 students above the capacity of the existing Kodiak High School educational facility; and 47 48 WHEREAS, providing the space that currently is needed for Kodiak High School instruction 49 requires the use of community schools facilities, auditorium space and rented space, as well as 50 overcrowding of the existing high school facilities; and Kodiak Island Borough Ordinance No, FY2010.03 Page 1 of 5 Page 19 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. • 51 52 WHEREAS, the instructional space available for Kodiak High School does not support the 53 instructional programs which are needed to prepare our high school students for success in the 54 world marketplace;and 55 56 WHEREAS, the current state debt service reimbursement plan provides that the State of 57 Alaska will reimburse the Borough for not less than sixty percent (60%) of debt service on the 58 eligible portion of bonds authorized by the qualified voters of the Borough on or after October 1, 59 2006 but before November 30, 2010, to pay costs of school construction, additions to schools, 60 and major rehabilitation projects;and; 61 62 WHEREAS, the Board of Education and Borough Assembly have commissioned an architect 63 to fully evaluate reconstruction options that support the kind of programs necessary for Kodiak 64 High School to fully meet the educational expectations defined by our community; and 65 66 WHEREAS, the conceptual process has undergone two years of refinement;and 67 68 WHEREAS, the educational facilities and space survey identified that a substantial remodel 69 and new expansion of Kodiak High School will meet instructional space needs in grades K-12 70 throughout our community;and 71 72 WHEREAS, the Kodiak Island Borough School Districts educational mission is severely 73 compromised by facility limitations at Kodiak High School;and 74 75 WHEREAS, the Board of Education believes the District would be best served by all District- 76 wide services being congregated in renovated space in the existing Kodiak High School 77 building;and 78 79 WHEREAS, public feedback since the first bond election in 2008 has yielded a more cost- 80 effective design for the renovation and expansion of Kodiak High School;and 81 82 WHEREAS, funding for further architectural design work and Cost estimation for the 83 renovation and expansion of Kodiak High School depends on voter approval of a bond 84 ordinance for the project;and 85 86 WHEREAS, the School District has identified grants and industry-based tax incentive 87 programs which could fund millions of dollars towards the Borough's debt service for 88 construction of Kodiak High School, but for which an application can be submitted only after a 89 bond ordinance is approved; and 90 91 WHEREAS, the Borough and School District will continue to seek and apply for additional 92 grants and reimbursement options to reduce the debt service cost of the renovation and 93 expansion of Kodiak High School;and 94 95 WHEREAS, $4,490,000 in proceeds of Borough school bonds previously issued for school 96 repair and replacements projects is available for the renovation of Kodiak High School;and 97 98 WHEREAS, the Borough views the school and related capital improvements authorized 99 herein as necessary and beneficial to the community; 100 Kodiak Island Borough Ordinance No. FY2010-03 Page 2 of 5 Page 20 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. 101 NOW, THEREFORE, BE IT ORDAINED BY THE ASSEMBLY OF THE KODIAK ISLAND 102 BOROUGH THAT: 103 104 Section 1: This ordinance is not of a general or permanent nature and shall not become a 105 part of the Kodiak Island Borough Code of Ordinances. 106 107 Section 2: It is hereby determined to be for a public purpose and in the public interest of the 108 Borough to incur general obligation bonded indebtedness in an amount not to 109 exceed Seventy Six Million Three Hundred and Ten Thousand Dollars 110 ($76,310,000) for the purpose of paying the cost of planning, design, 111 construction, furnishing and equipping of school and related capital 112 improvements in the Borough, including without limitation additions to Kodiak 113 High School, renovation of Kodiak High School for instructional and School 114 District administrative space, and demolition of the Business 115 Department/Learning Center, 116 117 Section 3: The Borough is authorized to borrow the sum of Seventy Six Million Three 138 Hundred and Ten Thousand Dollars ($76,310,000) to finance the capital 119 improvements described in Section 2, and the borrowing shall be evidenced by 120 the issuance of general obligation bonds of the Borough; provided that bonds 121 may not be issued for any project unless the project is eligible for debt service 122 reimbursement by the State of Alaska. The full faith and credit of the Borough 123 are pledged for payment of the principal of and interest on the bonds, and ad 124 valorem taxes upon all taxable property in the Borough shall be levied without 125 limitation as to rate or amount to pay the principal of and interest on the bonds 126 when due. 127 128 Section 4: The Borough shall submit the following proposition to the qualified voters of the 129 Borough at the October 6, 2009 regular Borough election. The proposition must 130 receive an affirmative vote from a majority of the qualified voters voting on the 131 question to be approved. 132 133 PROPOSITION NO. 1 134 GENERAL OBLIGATION BONDS-$76,310,000- KODIAK HIGH SCHOOL 135 136 Shall the Kodiak Island Borough incur debt and issue general 137 obligation bonds in an amount not to exceed Seventy Six Million 138 Three Hundred and Ten Thousand Dollars ($76,310,000) for the 139 purpose of paying the cost of planning, design, construction, 140 furnishing and equipping of school and related capital 141 improvements in the Borough, including without limitation the 142 projects described below? 143 Kodiak Island Borough Ordinance No. FY2010-03 Page 3 of 5 Page 21 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Pracas... AGENDA ITEM #2.a. Project Estimated Cost Additions to Kodiak High School $ 44,270,000 Renovate existing Kodiak High School 35,210,000 Renovate part of Kodiak High School for School District Administraion 1,100,000 Demolish Existing Business Department and Learning Center 220,000 Total 80,800,000 Less available Funds in other projects KHS Exterior Insulation and Window Replacement (590,000) KHS Voc Ed Renotetion& Pool Reclamation (3,900,000) Total deductions (4,490,000) Total amount of bond issue $ 76,310,000 144 145 The projects are expected to qualify for not less than 60% State 146 debt service reimbursement, funding for which is subject to annual 147 appropriation. The projects will be phased to limit disruption to the 148 education of students, and bonds will be sold only as needed to 149 pay project costs. If the State fully funds the debt service 150 reimbursement program,the average annual debt service payable 151 by the Borough after State reimbursement, is estimated to be 152 $2,108,152 $2,409,317. This amount of debt service may require 153 an additional annual property tax levy of$577 $660 per$250,000 154 of assessed value, or its equivalent. This example of a property 155 tax levy is provided for illustrative purposes only. 156 157 If additional funding becomes available for the projects from 158 grants or other sources, only enough bonds to finish the projects 159 will be sold. 160 161 The bonds shall be secured by a pledge of the full faith and credit 162 of the Borough. (Ordinance No. FY 2010-03) 163 164 Section 5: The proposition shall be printed on a ballot which may set forth other general 165 obligation bond propositions, and the following words shall be added as 166 appropriate next to an oval provided for marking the ballot for voting by hand or 167 machine: 168 PROPOSITION NO. 1 O YES O NO 169 170 Kodiak Island Borough Ordinance No. FY2010-03 Page 4 of 5 Page 22 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. 171 Section 6: Sections 2 and 3 of this ordinance shall become effective only if the proposition 172 described in Section 4 is approved by a majority of the qualified voters voting on 173 the proposition at the October 6, 2009 regular Borough election. The remaining 174 sections of this ordinance shall become effective upon adoption by the Kodiak 175 Island Borough Assembly. 176 177 ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH 178 THIS SIXTH DAY OF AUGUST, 2009 179 180 181 KODIAK ISLAND BOROUGH 182 183 18 165 5 0- 186 U ome M. Selby, Borough May 187 ATTEST: G=� 188 189 190 191 192 Nova M. Javier,MMC Borough Clerk • Kodiak Island Borough Ordinance No. FY2010-03 Page 5 of 5 Page 23 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Page 24 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. starE DF LA /Gooe,tploce SEAN PARNELL, GOVERNOR 801 West 10 Street,Suite 200 Department of Education & Early Development P.O.aU a sn Al a a811-0500 (907)455-1858 Division of School Finance (907)463-5279 fax Kimberly.Andraws@alaska.gov July 24,2012 Jessica Wolfe,Acting Project Manager Kodiak Island Borough Engineering/Facilities Department 710 Mill Bay Road Kodiak,AK 99615 Re: Kodiak HS Addition& Renovation, EED#DR-12-100 Dear Mr, Wolfe: Enclosed please find the borough's copy of a fully executed project agreement for the referenced project. We look forward to your progress on this project. • Sincerely, Jl .9(4.44x aas Kimberly M. Andrews, Architectural Assistant III Facilities Enclosure Page 25 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces.,. AGENDA ITEM #2.a. PROJECT AGREEMENT for the project Kodiak High School Renovation & Addition between The State of Alaska, Department of Education & Early Development and Kodiak Island I3oroueh School District THIS CONTRACTUAL AGREEMENT,effective February I,2012 is made between the State of Alaska,Department of Education &Early Development(hereinafter called department) and the Kodiak Island Borough (hereinafter called Recipient). The department and the Recipient arc entering into this agreement pursuant to AS 14.11.100,AS 14.07.020 and 4 AAC 31.023 et seq.. This agreement is required for authorization for debt reimbursement funding. Whereas hinds have been authorized by the Legislature for the Department of Education&Early Development to allocate to projects,and whereas the department has determined that the Project described in Appendix"A"(hereinafter also referred to as"the Project")of this agreement is eligible for state debt reimbursement, and whereas the Recipient has made a request to the department that the Project be funded under the authority of AS 14.11.100(a),and whereas the Recipient is agreeing to assume all responsibility for the planning,design and construction of the Project,and whereas the scope of this agreement consists of all contract clauses as set forth below and incorporates the provisions and requirements of Appendices A through D as listed below: Appendix A Project Scope and Budget Appendix B Laws, Codes, Regulations, Standards and Guidelines Appendix C Submittal Requirements Appendix D Budget Category Definitions The parties enter into the following agreement: Contract Clauses 1. Project Responsibility: As between the Department and the Recipient,the Recipient is responsible for planning, design, and construction of the Project.Nothing in this Agreement, express or implied, is intended or shall be construed to give any person,other than the State of Alaska and the Recipient,any right,remedy or claim under or by reason of this Agreement. The covenants,stipulations and agreements in this Agreement are and shall be for the sole and exclusive benefit of the State and the Recipient,and their successors and assigns. 2. Project Coordinator: The Recipient's coordinator for this agreement is Woody Koning, Director of Engineering and Facilities. The Recipient agrees to notify the department of any change in coordinator. � � Project tDR 12400 Page I of S P50 Initials 1 "11A) ��"" �{ Kodiak High School Renovation&Addition Project Agreement Recipient Initial /yam Page 26 of 37 Furniture, Fixtures, and Equipment(FF&E) Procurement Proces... AGENDA ITEM #2.a. PROJECT AGREEMENT 3. Governing Provisions: This agreement shall be governed by the laws of the State of Alaska. The Recipient agrees during the planning,design,and construction to comply with all provisions of state and federal law and regulation as applicable. Failure to comply with the requirements set out in this paragraph is subject to the default procedure and remedies provided in paragraph 13: The following table lists the state regulations most frequently applied to school capital projects and their citation in the Alaska Administrative Code. Accessibility 4 AAC 31.013(a)(I) Allowable Cost for Debt Reimbursement 4 AAC 31.061 &4 AAC 31.064 Bidding and Award 4 AAC 31.080 Budget Reductions 4 AAC 31.022(e) & 31.062 Project Agreement 4 AAC 31.023 Project Document Approval 4 AAC 31.040&31.062 Project Document Reviews 4 AAC 31.030&31.062 Purchase of Temporary Facilities 4 AAC 31.050 Reporting Procedures 4 AAC 31.060 School Space 4 AAC 31.020 &31.061 Site Acquisition and Selection 4 AAC 31.025 Use of Consultants 4 AAC 31.065 4. Debt Reimbursement(Bonds)Funds: The department agrees to make available the funds necessary to reimburse debt payments for the Project proportionate to the total amount appropriated for debt reimbursement by the Legislature in the fiscal year. Recipient shall submit a request for anticipated payments annually by October 15 of the year preceding the fiscal year for which payments are to be requested.The request shall include bond payment schedules showing the costs by individual project. Payments are subject to compliance with the procedures set out in 4 AAC 31.060(e). 5. Project Document Reviews: The Recipient shall submit the elements of the plan as outlined in 4 AAC 31.030 for department review as they are developed. Drawings must be submitted in Portable Document Format (PDF),and must be clearly indexed on the title sheet or in a cover letter to the department. Other project documentation must be provided in electronic format wherever practicable. Final construction document submittals shall be signed and stamped by the Registered Design Professional(4 AAC 31.040). Each applicable document shall be provided at no cost to the State. Cost estimates are required at each design phase and shall be provided in the State's standard building system estimate format(EED Cost Format). The Recipient shall also provide an Energy Consumption and Cost report, as necessary, in accordance with AS 14.07.020(a)(11). The Energy Consumption and Cost report will provide estimated annual energy consumption and cost information for electricity and heating following construction of the project in this Agreement. 6. Approvals and Permits: The Recipient shall coordinate all regulatory agency reviews and obtain all necessary written approvals from all agencies having jurisdiction over the Project. Project ORR 12-100 Page 2 of 5 ICED Initials "t�` y�" Kodiak High School Renovation d Addition Project Agreement Recipient Initial Page 27 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. PROJECT AGREEMENT 7. Safety Precautions and Programs: The Recipient shall provide for and oversee all safety orders,precautions and programs necessary to insure reasonable safety for the planning, design,and construction of the Project. In this connection,the Recipient shall take reasonable precautions for the safety of all Project employees and all other persons whom the Project might affect, all work and materials incorporated in the Project, all property and improvements on the construction site and adjacent thereto,and shall comply with all applicable laws,ordinances,rules,regulations and orders. 8. Project Scope Review: The Recipient shall ensure the Project as designed conforms to the Project scope as described in Appendix"A". Any modifications to the scope and/or budget of the Project shall be submitted to the department in a written amendment for review and approval. The Project scope may not be expanded beyond a scope permitted under AS 14.11.100(j). The Recipient shall forward copies of all final hid or proposal documents to the department prior to advertising for either as set out in 4 AAC 31.040. If any such documents conflict with the Project scope,the Recipient will be notified that further payments of reimbursement funds will not be made by the department until those conflicting aspects are corrected and an amendment is approved. 9. Project Audit: In accordance with 4 AAC 31.023(c)(3),the Recipient's performance is subject to financial audit at any time. Project records shall be maintained for three(3)years after the project completion and acceptance. Within three hundred and sixty-live (365)days after certification of beneficial occupancy and/or substantial completion,the Recipient agrees to provide an auditable accounting of expenditures of the Project. 10. Project Accounting: Project accounting shall incltide all sources of revenues and Project expenditures by every budgeted expense category. The expense categories shall conform to the categories indicated in Appendix A and defined in Appendix D. If the amount of the funding is more than$300,000,the Recipient may be required to provide an independent project audit. The cost of an audit required by the department is an allowable project expense. Accounting for the Project shall comply with the Codification of Governmental Accounting and Financial Reporting Standards as published by the Governmental Accounting Standards Board(GASB). 11. Final Inspection and Acceptance: The department may, in its discretion,participate in the final inspection. The Recipient shall furnish to the department,project documents certifying beneficial occupancy and/or substantial completion. The department shall have fifteen (15) days after final inspection or after receipt of the Recipient's project deliverables to make objections,after which time the Project shall be deemed accepted by the department. Objections will be presented in writing by the department and must he responded to in a satisfactory manner by the Recipient. 12. Project Close-out: Thirty(30) days after the issuance of a final independent audit report by the Recipient, or ninety(90) days after receipt of the auditable accounting of expenditures of the facility if an audit is not required, the reimbursement rate shall be adjusted,as necessary, to an amount not greater than the cost of legitimate project expenses. This does not preclude the Recipient from redirecting unused bond proceeds in accordance with 4 AAC 31.064. The Recipient may,within thirty (30)days after a final audit,or within ninety(90)days of the date of receipt of the auditable accounting of expenditures of the Project if no audit is Project#012 l2-100 Page 3 of 5 EED!mauls a1t�/� Kodiak High School Renovation&Addition Project Agreement Recipient lnitial4, Cp, Page 28 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. PROJECT AGREEMENT conducted,request the department to expand the scope of services to be provided by the Recipient consistent with Appendix A of this Agreement. 13. Maintenance, Operation,Ownership of the Completed Project: Responsibilities for maintenance,operations,and ownership of the facility shall be borne by the Recipient or their legal designee. The Recipient shall acquire from the project's designers and contractor, project documentation required to establish an effective facility management and preventive maintenance program that satisfies the requirements of AS 14.11.011(b)(4). The Recipient shall provide evidence to the State that the completed project has been incorporated in the district's facility management program and the Recipient, if required,has established legal ownership of the facility. 14.Termination of Contract for Cause: The term of the contract shall not exceed five years from the effective date of the agreement unless an extension is granted by the State. If,through any cause,the Recipient shall fail to fulfill in timely and proper manner its obligations under this contract,or if the Recipient shall violate any of the covenants,agreements or stipulations of this contract,the department shall provide written notice of the breach and an accompanying cure. If the recipient fails to cure the breach within 30 days after receiving notification,Recipient will be considered in default of this Agreement unless the cure period is extended at the discretion of the department. Upon a default by the Recipient under this Agreement,the department may reduce or terminate future debt service reimbursement, and/or recover past debt service reimbursement payments in whole or in part as the department, in its discretion, determines appropriate to the nature of the Recipient's default. 15.Termination Upon Withdrawal of Project Approval: Project approval may be withdrawn in accordance with 4 AAC 31.075. If the project approval is withdrawn,the provisions of paragraph 13 regarding contract termination shall apply. 16. Contracting: In the event the Recipient contracts any work covered by this project agreement,the Recipient shall require compliance by its contractors with AS 36.05.010 through AS 36.05.110 and shall require compliance with all federal,state,and local laws, regulations and ordinances. 17. Percent for Art: If the Project is a school construction or renovation project,the Recipient shall expend on art an amount equal to the percentage(as specified in AS 35.27.020)of the cost of construction. Art may be selected by the superintendent or a committee appointed by the superintendent,subject to approval of the school board. 18. State Held Harmless: The Recipient shall indemnify,defend,and hold harmless the State of Alaska and the Department of Education& Early Development, its officers,agents, and employees from and against any and all suits,claims, damages, losses and expenses arising out of any act or omission of the Recipient under this agreement or the Project specified hereunder. 19. Reporting Requirements: Annual reports shall be filed by October 15 each year for debt reimbursement projects using form 05-08-015 available on the department's website,or upon request. 20. In-House Requests: Recipient may request, in writing,that all or portions of the Project be completed utilizing Recipient employees. A request to utilize in-house forces to complete work on Project#DR 12-100 Page 4 of EED Initials `^ t"VA) Kodiak High School Renovation&Addition Project Agreement Recipient[Pittiots Page 29 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces_. AGENDA ITEM #2.a. PROJECT AGREEMENT the Project must be approved by the Commissioner prior to initiation of the work. [4 AAC 31.080(a)] 21, Alternative Procurement: Recipient may request, in writing, that an alternative method of procurement he utilized for construction of the Project. A request to utilize alternative procurement methods for construction of the Project must be approved by the Department in advance of advertising for construction. [4 AAC 31.080(0.1 22. Project Schedule: Project construction and closeout shall be completed within five years of the date of the projcct agreement. If the district fails to show activity on the project for one fiscal year,the department may withdraw project approval [4 AAC 31.075(b)]. OO / Recipient(Name and Title) ( Date ji)q I/!a Mite-'.—/ 'here ✓EF 2/13//2- State of Alaska, Department of Education& Early Development Date *Sf: rr-1141nfille I fVtJ1fA at Vier , eO.Q `S�P SKA it a% 7L Y-Yf}r Project tDR 12-IOU Page 5 ofd wt LED n ‘' _ KodiaA Nigh School Renovation&Addition Project.4greemetu Recipient Initials. Page 30 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. PROJECT AGREEMENT APPENDIX A 1. Project Scope of Work: (Use additional pages if-necessary) Eligible Gross Square Footage: 1181,561gsf/; 4 AAC 31.020(e) Renovation and Addition at the existing Kodiak High School with work including, but not strictly limited to: • Demolition and reconstruction of the 2-story cafeteria/commons area; • Renovation of existing high school; • Construction of a 4-story classroom wing; • Construction of an elevated, interior track around main gym; • Demolition of the business office at learning center facility(facility number 280000-03); • Completion of DR-04-120 scope of work; DR-05-117 funds incorporated in this project are now reimbursed at 70%. This project is approved at a 70%debt reimbursement rate. 2. The Recipient further agrees to comply with the following additional conditions: The District acknowledges the Municipality or Borough may assume any or all of the responsibilities of this grant. (AS 14.14.060) 3. Project Funds -Kodiak High School Renovation &Addition AS 14.11.100(a)(16) Approved Principal Amount($76,310,000 approved,using less due to other funds/grants): $68,679,814 Other-bond funds(DR-05-117) $3,577,430 Other bond funds (DR-04-120) $591,579 Other bond funds (DR-04-116) $92,186 FY13 Legislative Grant $7,000,000 FY12 Legislative Grant 12-OC-625 $538,000 Project Total $80,479,009 4. Project Budget DR-05-117,OR-04- Cost Category Leg.Grants 120,DR-04-116 DR Funds %of Const. Total Project Budget 1. CM(by consultant) $125,272 $1,103,977 2.00% $1,229,249 2. Land $0 $0 N/A $0 3. Site Investigation $0 $0 N/A $0 4. Design Services $10,000 $103,829 $6,032,418 10.00% $6,146,247 5. Construction $7,480,000 $3,407,748 $50,574,717 100.00% $61,462,465 6. Equipment $228,179 $1,624,021 3.01% $1,852,200 7. District Administrative Overhead $48,000 $150,275 $4,673,624 7.93% $4,871,899 • 8. Percent for Art $37,902 $576,723 1.00% $614,625 9. Project Contingency $207,990 $4,094,334 7.00% $4,302,324 Totals $7,538,000 $4,261,195 $68,679,814 130.94% $80,479,009 Project KDR 12-100 Page I of l EED Initials Kodiak High School Renovation c@ Addition Appendix A Recipient Initial . Page 31 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. PROJECT AGREEMENT APPENDIX B LAWS,CODES,REGULATIONS,STANDARDS,AND GUIDELINES (as applicable) LAWS P.L. 101-336 Americans with Disabilities Act of 1990; Title Il, Part 35, Section 35.151; and Title Ill, Part 36, Section 36.401-36.402 incorporating the Americans with Disabilities Act Accessibility Guidelines(ADAAG) AS 36.05.010- 110 Wages and Hours of Labor and regulations covering procurement requirements and wage rates. CODES AND REGULATIONS The building code adopted by the Department of Public Safety under 13 AAC 50.020; Title 14 CFR,Part 77,Federal Aviation Administration Airspace Restrictions as adopted and modified by the Federal Aviation Administration; The electrical code adopted by the Department of Labor under 8 AAC 70.025; The plumbing code adopted by AS 18.60.705; The mechanical code adopted by the Department of Public Safety under 13 AAC 50.023; National Boiler Inspection Code,as published by the American Society of Mechanical Engineers(ASME)and as adopted by AS 18.60.180; The fire code adopted by the Department of Public Safety under 13 AAC 50.025. NOIF: If a sut?fecl is not covered in the International Building Code, International Mechanical Code, or the International Fire Code,a recognized national standard such as NFPA Vols. 1-6, 1996 Edition will be utilized Codes adopted by the Department of Environmental Conservation 1br Wastewater and Sewer under AS 46.03.720, 18 AAC 72 and 18 AAC 80 Fuel handling requirements as specified in 40 C.F.R 112.3(a) (revised as of January I, 1992)and, if applicable,as described in 40 C.F.R I12.20(f)(6),shall comply with 40 C.F.R. 117.7.1. STANDARDS Energy Conservation Requirements A.S.H.R.A.E.90.1 State of Alaska,Department of Education and Early Development,Accounting Manual and Chart of Accounts ASTM F 1487-98,Standard Consumer Safety Performance Specifications for Playground Equipment for Public Use Project BDR 12-100 Page 1 oft BED Initials _etit Kodiak(Iigh School Renovation&Addition Appendix B Recipient Initials-fX Page 32 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. PROJECT AGREEMENT APPENDIX B A NON-EXHAUSTIVE LIST OF POTENTIALLY APPLICABLE STATUTES,CODES, REGULATIONS,STANDARDS,AND GUIDELINES GUIDELINES The Council of Educational Facility Planning International,Creating Connections:The CEFPI Guide for Educational Facility Planning State of Alaska,Department of Education&Early Development,A Guide to Writing,Educational Specifications State of Alaska,Department of Education&Early Development,Guidelines for School Equipment Purchases State of Alaska,Department of Education&Early Development,Swimming Pool Guidelines State of Alaska,Department of Education&Early Development,Site Selection Criteria and Evaluation Guideline State of Alaska Council on the Arts,Guidelines for Art Requirements for Public Buildings • Project ilDR 12-100 Page 2 of 2 RED Initials '✓*� Kodiak High School Renovation,@ Addition Appendix B Recipient Initial Page 33 of 37 Furniture, Fixtures, and Equipment(FF&E) Procurement Proces... AGENDA ITEM #2.a. PROJECT AGREEMENT .APPENDIX C SUBMITTAL REQUIREMENTS AND REQUIRED APPROVALS (as applicable) Item Agency Review Review& Only Approval I. Annual Report(Due October 15) Department of Education&Early Development X 2. Sit - - '.s- Department of Education$e-€arty Development X 3. Educational Specifications Department of Education&Early Development X 4, A/E Services Agreement Department of Education&Early Development X 5, Schematic Design Documents Department of Education&Early Development X 6. Design Development Documents Department of Education&Early Development X 7. Energy Consumption and Cost Department of Education&Early Development X Report 8. Construction Documents Department of Education&Early Development X Department of Public Safety X (unless local review authority granted) Department of Environmental X Conservation 9. Bid Documents Department of Education&Early Development X 10. Building Permit Department of Education&Early Development X 1 1, Bid Tabulation Department of Education& Early Development X 12, Construction Contract Department of Education&Early Development X Department of Labor(AS 36.05.035 Notification) X 13. Contractor's Payment/Performance Department of Education&Early Development X Bond 14, Substantial Completion Certificate/ Department of Education&Early Development X Occupancy Permit 15. Release of Liens Department of Education&Early Development X 16. Change Order Log Department of Education&Early Development X 17, Release from Contract Department of Education&Early Development X 1$. Preventive Maintenance and Department of Education&Early Development X Facility Management Documents 19, Recorded Building Title Department of Education&,Early Development X 20, Final Project Accounting Department of Education&Early Development X Evidence of the construction contractor's provision of the following items to the appropriate entity. 21. Corporate Income Tax Clearance Department of Revenue X 22. Unemployment Security Tax Department of Labor X Clearance 23. Notice of completion of public Department of Labor X works )/,�,t� Project tDR 12-100 Page 1 of! EED Initials r/"' �r3 Kodiak High School Renovation&Addition Appendix C Recipient Initials-1 Page 34 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces,.. AGENDA ITEM #2.a. PROJECT AGREEMENT APPENDIX D BUDGET CATEGORY DEFINITIONS&ACCOUNT CODES Construction Management:By Consultant(CM)includes management of the project's scope,schedule, quality,and budget during any phase of the planning,design and construction of the facility and full time onsite representation. Consultant CM should include all costs incurred by private consultant to perform • the CM work. Refer to AS 14.1 1.020(c)for the limitations on consultant CM. (EED Chart of Accounts FC 884,OC 413) Land includes actual purchase price plus title insurance, fees and closing costs. Land cost is limited to the current fair market value,by appraisal,not to exceed the amount budgeted for land in the project agreement. Land costs are excluded from project percent calculations. (FED Chart of Accounts FC 882, OC 520) Site Investigation includes land survey,geotechnical investigation,environmental and cultural survey, and site selection study costs,but not site preparation costs. Site investigation costs are excluded from project percent calculations. (EED Chart of Accounts FC 882,OC various) Design Services includes all full standard architectural and engineering services as described in AIA Documents B 102-2007,and 8201-2007, Additional A/E services such as educational specifications, condition surveys,and post occupancy evaluations should also be categorized as Design Services, however,onsite owner representation and inspections beyond the scope of work described in AEA Documents B 102-2007,and 8201-2007 should be categorized as CM. (BED Chart of Accounts FC 883. OC 416) Construction includes the cost of all material,labor,equipment,and associated expenses required to perform the project's facility construction and site development. Construction costs can be incurred via a competitively awarded contract or,with prior department approval,via the use of in-house labor and procurement of materials per local ordinances. (BED Chart of Accounts FC 885,OC 500) Equipment includes all moveable furnishings and instructional devices or aids such as classroom furniture, musical instruments,science lab and physical education equipment and stage/sound equipment. It does not include installed equipment, or consumable supplies,with the exception of the initial purchase of library books. For more information see the EED publication Guidelines for School Equipment Purchases. This item also includes Technology such as electronic and digital equipment with associated software and peripherals such as computers,printers,video projectors,digital cameras,TVNCRs, telephones,and video cameras. Consultant services necessary to make technology items operational may also he included.(EED Chart of Accounts FC 886,OC 510) District Administrative Overhead includes an allocable share of district overhead costs,such as payroll, accounts payable,procurement services,and preparation of the six-year capital improvement plan and specific project applications. It also includes In-}louse Construction Management(CM)which is similar to the CM-by Consultant,with the exception that In-house CM includes actual district/borough staff time allocated to the project,staff'travel expenses,and other direct costs of the in-house activity. (EED Chart of Accounts FC 881, OC 528) Art includes the selection,design/fabrication and installation of works of art. (EED Chart of Accounts FC 888 [new],OC various) Project Contingency is a safety factor to allow for unforeseen changes. The use of contingency funds to address budget overruns should be coordinated with the department. No costs shall be accounted for as Contingency expenditures. (EED Chart of Accounts FC 889[new],OC[budget account only]) ,�QQti Prgject MDR 12-10!I Page 1 of l EEL)/nilia(s a,�' Kodiak High School Renovation d)Addition Appendix D Recipient Initials_/arc Page 35 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... • AGENDA ITEM #2.a. EED Debt Number: xx-xxx Project Name: xxx Alaska Department of Education & Early Development Amendment No. xxx to the Project Agreement Appendix A— Budget Project Total $80,479,009 $0 580,479,009 3. Project Budget Change This Revised Total Cost Category Current Budget Amendment %of Const. Project Budget 1. CM(by consultant) $1,229,249 $105,906 2.00% $1,335,155 2. Land $0 $0 N/A $0 3. Site Investigation $0 $0 N/A $0 4. Design Services $6,146,247 $593,122 10.10% $6,739,369 5. Construction $61,462,465 $5,295,285 100.00% $66,757,750 6. Equipment $1,852,200 $147,800 3,00% $2,000,000, 7. District Administrative Overhead $4,871,899 ($3,571,899) 1.95% $1,300,000 8. Percent for Art $614,625 $52,953 1,00% $667,578 9. Project Contingency $4,302,324 ($2,623,167) 2,52% $1,679,157 Totals $80,479,009 -$1 120.55°/ $80,479,009 Page 36 of 37 Furniture, Fixtures, and Equipment (FF&E) Procurement Proces... AGENDA ITEM #2.a. Bud Cassidy From Bud Cassidy Sent Tuesday, May 27.2014 7:26 AM To: Stewart McDdonald(smcdonaldOl @kibsd.org) Subject: FF&E Purchases- IOC Addition and Renovation Stewart- I am asking that you and your staff stop from purchasing any additional equipment that could be construed to be part of the KH5 project and refrain from entering into any contracts that would lead to the acquisition of additional FF&E.I think you would agree that there is a need to halt further acquisitions and address what has already been spent before moving forward with additional FF&E purchases. Of critical importance is how these expenditures may affect the sale of future bonds for the project. I am also requesting a full accounting of the money spent as well as the items purchased by the school district on FF&E to date.It is only then we will know the amount of bonds we can legally sell to complete the project as well as be consistent with the ballot language that approved this construction.That ballot language,as you know,states:"if additional funding becomes available for the projects from grants or other sources,only enough bonds to finish the projects will be sold".That language dictates that the remaining sale of bonds sold to complete the project will be reduced by an equal amount of money that the school district has expended on FF&E outside of the project budget. I have discussed this specific bond language with a bond attorney and with the borough attorney and they too see this as the proper way forward. There is no clear explanation that I can make to the Assemlby or you to the School Board about why the project budget was exceeded or that a project related expenditure would not be reimbursed by the state. You and I are well aware of the Assembly's concerns associated with this most expensive public works project ever undertaken by the Kodiak Island Borough.So concerned were they that the Borough hired a private firm to provide additional project management in an effort to control project costs. You and I and our staffs need to be on the same page as we complete this addition and remodel project.Managing a$80 million addition and renovation project is complicated and will become even more complicated without better coordination of FF&E purchases. lastly,the clear ballot language,the understanding of the Assemlby and the School Board and their commitment to the public about how this project will be funded and constructed is my concern. I am available to discuss this matter with you further. Bud Cassidy Manager Page 37 of 37 Furniture, Fixtures, and Equipment(FF&E) Procurement Proces... KODIAK ISLAND BOROUGH WORK SESSION Work Session of: C),-ii ID Zei IV u 13- Please PRINT your name Please PRINT your/. name 0: tt sTe• 0 It 4c/J7" -): \ A R1,,, „,,,,,,,,,u3-41 0 \ /7/67-z 7-644_43,24)- P\ ‘ W e5 k--Lt 0 ky4 t4 ' Ffrvinvyi A- ty I rtl>.* D ' -Fe_(0-1,40-qa,,,ALL .. i .\.y V \■:‘ 4e,