HomeMy WebLinkAboutE-2.1. Approve Water Budget and BPOs_APPROVEDCONSENT CALENDAR
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: TIKAN SINGH, GENERAL MANAGER
DATE: MAY 31, 2022
SUBJECT: APPROVE BUDGET AMENDMENT TO WATER DIVISION’S OPERATION AND
MAINTENANCE FUND AND AMENDMENT OF RELATED BLANKET
PURCHASE ORDERS TO SUPPORT OPERATIONS FOR THE REMAINDER OF FY
2021-2022
BACKGROUND:
On June 21, 2021, the City Council approved the adopted Water Fund Operating Budget and Blanket
Purchase Orders for FY 2021-2022. The approval of the Water Fund Operating Budget included
$1,009,137 under account 32-40-723-751. Due to unanticipated increases in costs of materials, labor,
fuel and special supplies related to the COVID-19 pandemic, inflation and supply chain issues, the
current budget is insufficient to fund operations for the remainder of FY 2021-2022. Budget
Amendments in the amounts of $300,000 to Outside Services and Repairs and $50,000 to
Supplies/Special are required. The proposed actions would replenish the Water Division’s Operation
and Maintenance Fund by a total amount of $350,000 and increase four corresponding exhausted
Blanket Purchase Orders in order to continue operations through June 30, 2022.
RECOMMENDATION:
Staff recommends the Utility Board take the following actions:
1) Approve a budget amendment to the Water Division’s Operation and Maintenance Fund in
the total amount of $350,000 to support operations for the remainder of FY 2021-2022; and
2)Approve an amendment to G.M. Sager Construction Co. Blanket Purchase Order 035181,
from $279,000 to $579,000, to support permanent asphalt and concrete restoration through
June 30, 2022; and
3)Approve an amendment to Vulcan Materials Blanket Purchase Order 035707, from $74,999
to $100,000, to support the purchase of crusher base, temporary asphalt and backfill materials
through June 30, 2022; and
E-2Approved
Utility Board
05/31/2022
Budget Amendment to Water Fund
May 31, 2022
Page 2
4) Approve an amendment to Univar Solutions USA Inc. Blanket Purchase Order 035704, from
$75,000 to $125,000, to support the purchase of treatment chemicals through June 30, 2022;
and
5) Approve an amendment to SC Fuels Blanket Purchase Order 035690, from $65,600 to
$100,000, to support purchase of fuel for the Water Division Fleet through June 30, 2022.
ANALYSIS:
The Water Division’s Operation and Maintenance Fund supports the treatment and delivery of safe and
clean drinking water to 23,736 accounts throughout ALW service area including the City of Azusa and
portions of Glendora, Irwindale, Covina, West Covina and Unincorporated Los Angeles County. Funds
in the Water Distribution “Outside Services and Repairs” and Water Distribution “Supplies/Special”
accounts support expenses necessary to successfully operate and maintain the Water System and ensure
continued service to residents and customers.
The approved FY 2021-2022 Water Distribution Operating Budget for account 32-40-723-751 is
$938,051 which includes $363,000 for Water Distribution Outside Services and Repairs (32-40-723-
751-6493), and $300,000 for Water Distribution Supplies/Special (32-40-723-751-6563). As of May 17,
2022 the balance of 32-40-723-751 is only at $110,000. Due to unprecedented increases in costs of
materials, labor, fuel and special supplies related to the COVID-19 pandemic, inflation and supply chain
issues, the current budget is unable to fund operations for the remainder of FY 2021-2022. Approving
the Budget Amendments to increase the overall Water Distribution Operating Budget by $350,000 is
required for continued operations and will be allocated as follows: $300,000 to Outside Services &
Repairs (6493) and $50,000 to Supplies/Special (6563).
Coinciding with the necessary budget amendments, four Blanket Purchase Orders (BPO’s) require
amending in order to maintain operations for the remainder of the current fiscal year. The four Blanket
Purchase Orders are for: G.M. Sager Construction, Vulcan Materials, Univar Solutions USA, and SC
Fuels.
Changes in labor rates, availability, and scarcity of materials have greatly impacted Water Distribution’s
“Outside Services & Repairs” expense account, one of the two major accounts used to support the ALW
Water System. This account is used to pay for a wide array of services needed to maintain the safe
delivery of clean water to ALW residents. The majority of services paid through this account are to
G.M. Sager Construction Co., through BPO 035704, for the permanent restoration of asphalt and
concrete patches caused by the repair and installation of water distribution main and service lines on
streets, sidewalks and resident driveways. Without an increase, G.M. Sager BPO 035704 will not be
able to support pavement and concrete restoration through June 30, 2022.
Increased costs of materials and supplies have exhausted the “Supplies/Special” expense account, which
funds the purchase of the majority of parts and supplies needed to install and repair aging Water System
infrastructure. This includes purchases of specialized water materials and supplies from United Water
Works; crusher base and temporary asphalt from Vulcan Materials (BPO 035707); welding supplies,
meter lids, valves, fittings, and other supplies from vendors such as Alternative Hose, Azusa Plumbing,
Home Depot, and Lowes. An increase for Vulcan Materials BPO 035707 is required in order to support
purchases of materials necessary for the remainder of this fiscal year.
Budget Amendment to Water Fund
May 31, 2022
Page 3
The scarcity and price increase of raw materials used in the manufacture of chemicals, required by the
Water Treatment Division in order to meet drinking water standards, has exhausted Univar Solutions
USA Inc. BPO 035704. Univar Solutions USA Inc. supplies chemicals which are used to control taste,
odor, water clarity, cleaning of filtration modules, and to maintain State mandated free chlorine residual
within the distribution system. The chemicals purchased by ALW Water include, 12.5% Sodium
Hypochlorite used for treated water disinfection; Aluminum Chlorohydrate used in the solids
coagulation process at the Filter Plant; Sodium Permanganate used for taste and odor control as well as
organic oxidation process; Citric and Sulfuric Acid used for filter module cleaning; Sodium Hydroxide
for neutralization of spent cleaning chemicals and polymer for drying of sludge collected during the
treatment process.
Increased fuel costs, labor shortages, and the volatility of the current market has exponentially increased
fuel costs. These cost increases have depleted the Water Division’s Fuel and Oil BPO 035690 with SC
Fuels, which supports the purchase of fuel for the Water Division Fleet comprised of thirty-five
vehicles, standby power generators, and construction equipment. Amending BPO 035690 will allow the
Water Division to keep the Water Division Fleet in service.
The proposed actions would replenish the Water Division’s Operation and Maintenance Fund by a total
amount of $350,000 and increase corresponding exhausted Blanket Purchase Orders in order to continue
operations through June 30, 2022.
FISCAL IMPACT:
The fiscal impact is an additional $350,000 needed to close out this fiscal year for account number 32-
40-723-751. The $350,000 allocation is split between $300,000 to Outside Services & Repairs (32-40-
723-751-6493) and $50,000 to Supplies/Special (32-40-723-751-6563). The four increased blanket
purchase orders are required to pay our existing vendors and suppliers.
Budget Amendment to Water Fund
May 31, 2022
Page 4
Prepared by: Prepared by:
Melissa Barbosa, PE Gabriela Enriquez
Interim Assistant General Manager Senior Administrative Technician
- Water Operations
Reviewed and Approved:
Tikan Singh
General Manager
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachments:
1) Water Budget: 32-40-723-751