Template revised January 10, 2019.
COMMISSION
AGENDA MEMORANDUM
Item No.
8e
ACTION ITEM
Date of Meeting
April 12, 2022
DATE: April 4, 2022
TO: Stephen P. Metruck, Executive Director
FROM: Eileen Francisco, Interim Director - Aviation Facilities and Capital Programs
Wayne Grotheer, Director - Aviation Project Management Group
SUBJECT: Concourse C Temporary Air Handling Units (CIP#801149)
Amount of this request:
$1,000,000
Total estimated project cost:
$2,980,000
ACTION REQUESTED
Request Commission authorization for the Executive Director to (1) increase the project budget
for the Concourse C Temporary Air Handling Units project in the amount of $1,000,000; (2)
prepare, advertise, and execute a major works construction contract; and (3) use Port crews
and small works contracts to assist with the project. The total estimated cost of this project is
$2,980,000.
EXECUTIVE SUMMARY
The existing Air Handling Units (AHUs) on Concourse C are at maximum capacity and are no
longer able to meet current demands. Additional air is needed for tenant buildouts of
additional Airport Dining and Retail (ADR) spaces and new restrooms. Two additional AHUs will
be added on the roof of Concourse C to provide additional air until a planned future project will
upsize all the existing AHUs on Concourse C. These temporary units are needed now to meet
existing lease agreements with tenants and to support the new restrooms that are currently
under construction. As the project progressed with design, it identified the need for additional
funding because of current market conditions and increased material costs, specifically in the
piping and AHUs.
JUSTIFICATION
Three ADR leases have been signed to replace a single existing restaurant space. The new leases
consist of two restaurants and a retail space which requires additional air capacity as compared
to the previous single restaurant. The restrooms on Concourse C are being replaced to provide
better passenger experience and are increasing the turnover rate of air in the restrooms from
eight times per hour to twenty times per hour. These modifications exceed the existing
system’s capacity. Restrooms in public buildings typically require ten to twelve times per hour
COMMISSION AGENDA – Action Item No. 8e Page 2 of 4
Meeting Date: April 12, 2022
Template revised June 27, 2019 (Diversity in Contracting).
air change rate for standard use, so a higher turnover rate for the Concourse C restrooms will
maintain fresh air and lower odors for the improved passenger experience.
Adding the two temporary units will provide the additional capacity for the next five to ten
years until the future project to upgrade all the air handlers, including the addition of smoke
control, can be completed. This larger project will also replace and upgrade all the AHUs on
Concourses B and D which are at the end of useful life.
Multiple cost drivers regarding materials have increased the budget need. These additional
materials include HVAC components, seismic upgrades, roofing costs, chill water piping and
piping costs, and an increase in the cost of demolition. Both the air handling units and
associated piping have doubled in cost in the last 18 months. Lastly, a 10% market contingency
was added based on current conditions. In total, the construction bid estimate will increase by
around $1 million.
Diversity in Contracting
The project team with the Diversity in Contracting Department determined a six percent
aspirational goal for WMBE participation for the major works construction contract.
DETAILS
This project installs two new energy efficient AHUs to provide additional air capacity to
Concourse C to improve passenger experience.
Scope of Work
The project requires additional air capacity in two zones at Concourse C. To accomplish the
work:
(1) Two, 4,900 CFM AHUs will be installed on the roof of Concourse C and have heating
and chilled water connected from the campus systems, along with direct digital
controls wiring for control and monitoring of the equipment. A major public works
construction project will be used to perform the work.
Schedule
Activity
Construction start
2022 Quarter 3
In-use date
2023 Quarter 1
Cost Breakdown
This Request
Total Project
Design
$0
$250,000
Construction
$1,000,000
$2,730,000
Total
$1,000,000
$2,980,000
COMMISSION AGENDA – Action Item No. 8e Page 3 of 4
Meeting Date: April 12, 2022
Template revised June 27, 2019 (Diversity in Contracting).
ALTERNATIVES AND IMPLICATIONS CONSIDERED
Alternative 1 – Defer the project
Cost Implications: Approximately $200,000 would need to be expensed.
Pros:
(1) No capital investment.
Cons:
(1) Does not provide the needed air for new restrooms currently under construction.
(2) Does not provide the needed air for ADR spaces that are currently leased and soon to
be constructed.
This is not the recommended alternative.
Alternative 2 – Approve the increased budget.
Cost Implications: $3,000,000
Pros:
(1) Provides the air required for restrooms and ADR spaces.
Cons:
(1) Highest capital investment.
This is the recommended alternative.
FINANCIAL IMPLICATIONS
Cost Estimate/Authorization Summary
Capital
Expense
Total
COST ESTIMATE
Original estimate
$2,000,000
$0
$2,000,000
Art Transfer
-20,000
-20,000
Current change
$1,000,000
$0
$1,000,000
Revised estimate
$2,980,000
$0
$2,980,000
AUTHORIZATION
Previous authorizations
$1,980,000
$0
$1,980,000
Current request for authorization
$1,000,000
$0
$1,000,000
Total authorizations, including this request
$2,980,000
$0
$2,980,000
Remaining amount to be authorized
$0
$0
$0
Revised Project Budget
$2,980,000
$0
$2,980,000
COMMISSION AGENDA – Action Item No. 8e Page 4 of 4
Meeting Date: April 12, 2022
Template revised June 27, 2019 (Diversity in Contracting).
Annual Budget Status and Source of Funds
This project, CIP C801149, was included in the 2022-2026 capital budget and plan of finance
with a budget of $1,980,000. A budget decrease of $1,000,000 was transferred from the
Aeronautical Reserve CIP (C800753) resulting in zero net change to the Aviation capital budget.
The funding sources will be Airport Development Fund (ADF) and 2018 revenue bonds.
Financial Analysis and Summary
Project cost for analysis
$2,980,000
Business Unit (BU)
Terminal Building
Effect on business performance
(NOI after depreciation)
NOI after depreciation will increase due to inclusion of
capital (and operating) costs in airline rate base
IRR/NPV (if relevant)
N/A
CPE Impact
$.01 in 2024
Future Revenues and Expenses (Total cost of ownership)
This project will add additional equipment and will impact current Aviation Maintenance O&M
costs.
ATTACHMENTS TO THIS REQUEST
(1) Presentation
PREVIOUS COMMISSION ACTIONS OR BRIEFINGS
• August 11, 2020 – The Commission authorized $2,000,000 for design and construction.
