The Columbus City Council has approved allowing city departments to add a project delivery method for capital projects.
Council members passed a resolution 6-2 to allow the city to use the build-operate-transfer procurement (BOT) method for municipal capital projects. Council members Kent Anderson, R-District 5, and Jay Foyst, R-District 6, voted against. Council member Chris Bartels, R-District 1, was absent.
BOT is a public/private partnership style of procurement method where a municipality enters into an agreement with a developer who is responsible for the design, construction and operation of a project. The developer operates the project for a certain time period before the project is transferred back over to a municipality.
The city would be highly involved in the BOT process itself, but less so in the design and construction process, making an RFQ/RFP that outlines precisely what a municipality is looking for in a particular project absolutely crucial, Jason Larrison of consulting firm J.S. Held has said in city meetings over the past couple of months.
The municipality holds contracts with the developer only and the developer is responsible for the entire procurement process. Funding comes from the municipality or through financing from the developer.
“There’s good opportunities for cost-savings, because you’re able to negotiate with the developer and the developer’s able to negotiate with contractors and suppliers,” Larrison said. “And again — schedule flexibility, because they are acting as a developer, as you’re giving them the site and being able to control the site, they’re able to perhaps stagger work. If you know that they’re doing an addition, they can put foundations in place before the rest of the project is designed out, so there’s a lot of flexibility to condense the timeline.”
Unlike a traditional design-build process where there may be multiple contracts with a general contractor, there would essentially be one contract for the bulk of the project.
Director of Redevelopment Heather Pope was joined by Utilities Engineer Ashley Getz of Columbus City Utilities (CCU) and City Engineer Andrew Beckort to explain to council members why they would want to use the procurement method for certain projects.
Pope said previously that redevelopment has an interest in utilizing the BOT method for a new department of public works facility. In May, the redevelopment commission approved a $2.6 million purchase and sales agreement for 1350 Arcadia Drive, the potential site for the new facility.
Getz told the council that CCU is embarking on “about $50 million worth of capital projects” and have typically used the design-bid-build procurement method in the past, where municipal departments are locked into the lowest responsive and responsible bidder.
However in recent years, CCU has found they aren’t receiving as many bidders and prices have gone up due to inflation. Getz said as well that design-bid-build requires a lot of oversight “which is pretty expensive.”
The method CCU has opted to use is through guaranteed energy savings contracts (GESC), an agreement between a qualified provider and a building owner to reduce the energy and operating costs of a building by a specified amount, according to the Indiana Department of Local Government Finance.
“The reason I’m talking about (GESC) is because the way we would run a BOT would be very similar to how we’re doing this and I think the benefits are similar, but the BOT would allow us to do a little bit extra than we can do now and we would’ve gone with BOT if it was an option for us at the time,” Getz said to council members.
But CCU wouldn’t be able to use GESC for a planned expansion of their wastewater treatment plant, for example, because it can only be used for replacing old infrastructure, Getz said.
Using BOT would be appealing for CCU because it would make projects more collaborative, it uses qualifications-based contractor selection and increases the amount of flexibility they’d have in using different methods for different projects, Getz told the council.
Beckort echoed a lot of what Getz said and tacked on that city engineering departments around the state are increasingly using BOT.
“BOT is starting to become pretty popular in road projects — several agencies are now using it for their community crossings grant,” Beckort said, using Indianapolis as an example.
“We have limited staff and a lot of projects, so this will help with less consultant fees, less taxing on our staff and we can do more projects,” according to Beckort, adding they would intend to still use design-bid-build for smaller projects and BOT for larger infrastructure projects.
Council member Kent Anderson didn’t buy that the BOT method would result in cost-savings.
“I get where it’s quicker, I get where it saves us staff — in my book there’s no way around it, it’s going to be more expensive,” Anderson said.
Others, like council members, like Josh Burnett, R-at-large, and Elaine Hilber, D-District 2, said they would support the resolution after hearing city departments advocate for it.