HomeMy WebLinkAboutRes2011-005 Sponsored by Oates
CITY OF SEWARD, ALASKA
RESOLUTION 2011 -005
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AUTHORIZING THE CITY MANAGER TO EXTEND THE
MAINTENANCE AND OPERATING AGREEMENT WITH SEWARD
SHIP'S DRYDOCK, INC. THROUGH AUGUST 31, 2011
WHEREAS, the current Maintenance and Operating Agreement between Seward Ship's
Drydock and the City of Seward for the Shiplift Facility is set to expire January 31 2011; and
WHEREAS, on June 22, 2009, the City Council adopted Resolution No 2009 -049
authorizing the City Manager to enter into an agreement for the Renewal of Term of the Maintenance
and Operating Agreement containing a temporary extension; and
WHEREAS, the City has allowed for additional time for Seward Ship's Drydock to apply
the protective coating of the pipe piling and the cofferdam cells in the splash zone as outlined in
Exhibit A of the Agreement describing deferred maintenance obligations; and
WHEREAS, the City has contracted with a NACE certified inspector to inspect the
protective coating and has found that the coating is not complete, therefore the City will not grant
full lease credits until the coating is complete; and
WHEREAS, the City and Seward Ship's Drydock have not completed a thorough review of
the Maintenance & Operating Agreement to complete revisions and updates to the terms outlined in
the Agreement; and
WHEREAS, additional time is sought by both parties to evaluate and update the language in
the Maintenance & Operating Agreement.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD, ALASKA, that
Section 1. The City Manager is authorized and directed to sign, on behalf of the City of
Seward, the Maintenance and Operating Agreement with the Seward Ship's Drydock, Inc. for a
period from January 31, 2011 to September 30, 2011 in substantially the form presented at this
meeting.
Section 2. This resolution shall take effect immediately after adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 28
day of January, 2011.
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CITY OF SEWARD, ALASKA
RESOLUTION 2011 -005
THE CITY OF SEWARD, ALASKA
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Willard E. Dunham, Mayor
AYES: Bardarson, Smith, Keil, Shafer, Cassagranda, Dunham
NOES: None
ABSENT: Valdatta
ABSTAIN: None
ATTEST:
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Manna Kinney, City Clerk
(City Seal)
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Council Agenda Statement
Meeting Date: January 24, 2011 / sett,
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To Phillip Oates, City Manager 4 y
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From: Kari Anderson, Harbormaster
Agenda Item: Extending the Maintenance & Operating Agreement
with Seward Ship's Drydock through August 31, 2011
BACKGROUND & JUSTIFICATION:
' The City of Seward has long pursued the development of the Seward Marine Industrial Center,
and has expended over $40 million in construction of improvements to the area, including a
Syncrolift Shiplift System, Ship Transfer System, and related rails, dock, and breakwater. An
initial agreement was signed between the City and the Operator (Seward Ship's Drydock, Inc.) on
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April 25, 1995 relating to the Shiplift Premises regarding Maintenance and Operating standards.
A second Maintenance and Operating Agreement was signed again on March 30, 2000, and
several agreements were signed to continue this agreement in following years. This 7` agreement
to extend the Maintenance and Operating agreement is set to expire January 31, 2011.
i
On June 1, 2009 the Seward City Council went into Executive Session again to discuss possible
litigation with Seward Ship's Drydock. Council announced that they had given direction to the
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City Manager on how to proceed with Seward Ship's Drydock in regards to their Maintenance
and Operating Agreement. The City Manager has discussed the status of the splash zone coating
on the piling and the cofferdam cells and the need for this area to be coated. The coating was
applied by Seward Ship's Drydock and the City contracted with a NACE- certified coatings
t inspector to evaluate the application and condition of the coatings during September 2010. This
report is attached. The coating of the splash -zone on the sheet piling is not complete, and at a
minimum the coating must extend to mean low water. Full lease credits will not be granted for
1 the splash zone coating until it is complete.
4 This eighth extension to the maintenance and operating agreement provides the City time to
negotiate a new agreement, rather than extending the existing document and piecing together
revisions through each separate extension. If the City and Seward Ship's Drydock cannot agree
on revisions and updates to this document, the Maintenance and Operating Agreement will
expire on August 31, 2011. Updates to the Agreement include defining the term managed parcel
(with the 2002 re -plat and current lease language), eliminating references to deferred
maintenance if it is deemed completed, and defining continuing maintenance. If the Operating
Agreement is not extended, the City would be faced with operating the Shiplift facilities on its
own or shutting it down until a new operator is in place.
1
INTENT: To approve the City Manager to sign the eighth extension to the Maintenance &
Operating Agreement with Seward Ships DryDock.
I
CONSISTENCY CHECKLIST: Where applicable, this agenda statement is consistent with the
Seward City Code, Charter, Comprehensive Plans, Land Use Plans, Strategic Plan and City Council
Rules of Procedures or Other Plans or Policies:
1
Yes (List Below) No
1. Comprehensive Plan
Economic Development...
2. Strategic Plan
Economic Base...
FISCAL NOTE:
Section 3.06 of the 2000 Maintenance and Operating Agreement states "Prior to the beginning of
each Fiscal Year, Operator shall prepare and file with the City an operating plan for the ensuing
Fiscal Year. The operating plan shall include an estimate of revenues and expenses and a schedule of
repairs and maintenance and Deferred Maintenance to be performed during the Fiscal Year." Section
3.08 of the 2000 Maintenance and Operating Agreement states "With each annual operating plan
submitted to City, Operator shall propose rates and charges for use of the Shiplift Facility. Such rates
and charges shall not discriminate among users of a class of service or among different classes of
service. Rates and charges do not discriminate among classes of service if they are reasonably related
to the cost of providing each class of service, allocated according to Generally Accepted Accounting
Principles. City shall adopt rates and charges proposed by Operator that conform to the standards in
this section." No rates or charges have been proposed by the Operator.
Approved by Finance Department:
ATTORNEY REVIEW: Yes No X
RECOMMENDATION:
City Council approve Resolution 2011- authorizing the City Manager to sign the Eighth
Amendment to the Maintenance and Operating Agreement with Seward Ship's Drydock.
EIGHTH AGREEMENT TO EXTEND THE TERM OF MAINTENANCE AND
OPERATING AGREEMENT WITH SEWARD SHIP'S DRYDOCK
The Maintenance and Operating Agreement effective March 30, 2000, as amended
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October 26, 2001 (the "Agreement ") was entered into between the City of Seward, Alaska, an
Alaska municipal corporation ( "City ") whose address is P.O. Box 167, Seward, Alaska 99664
and Seward Ship's Drydock, Inc. ( "Operator ") whose address is P.O. Box 944, Seward, Alaska
99664.
WHEREAS, the Operator has been maintaining and operating the City's shiplift facility
since 1995, consisting generally of a Syncrolift Shiplift System, Ship Transfer System, dock, and
related rail systems (the " Shiplift Facility "); and
WHEREAS, the Operator and the City have entered into a Lease Agreement ( "Lease "),
to operate a vessel repair and construction facility on land adjacent to the shiplift facility; and
WHEREAS, the operator has taken steps toward completing the coating application on
the pipe pile and cofferdam cells but agrees that some additional coating remains to be applied ,
particularly to the mean low tide area of the pile and cells, and there are areas that need
additional surface preparation and possible reapplication of the coating to meet the
manufacturer's standards; and
WHEREAS, on June 22, 2009, the City Council adopted Resolution No. 2009 -049
authorizing the City Manager to enter into an agreement for the Renewal of Term of the
Maintenance and Operating Agreement containing a temporary extension until September 30,
2010; and
WHEREAS, on September 27, 2010, the City Council adopted Resolution No. 2010 -085
authorizing the City Manager to enter into an agreement for the Renewal of Term of the
Maintenance and Operating Agreement containing a temporary extension until January 31, 2011;
and
WHEREAS, additional time is sought by both parties to evaluate and update the
language in the Maintenance & Operating Agreement.
NOW THEREFORE, the parties agree as follows:
Section 1. The Operator will complete the application of coating on the sheet pile and
cofferdam cells during the period of this Amendment to no less than 2 feet above mean low
water, and to a lower level when tides and weather permit, to the manufacturer's
recommendations, as set forth in Exhibit A to this Amendment and incorporated herein by
reference The City contracted with QA Services, Inc. to visit the site and inspect the coating.
The results of that inspection are attached as Exhibit B hereto. In case of a dispute between the
City and the Operator concerning the coating, the coating manufacturer or the manufacturer's
representative, at the City's expense, shall verify whether the coating has been properly applied.
Section 2. The Operator agrees to diligently work with the Seward City Manager to
evaluate and update language in the Maintenance and Operating Agreement during the term of
this extension agreement.
Section 3. The Agreement Term as described in Section 2.01 of the Agreement is hereby
extended from January 31, 2011 to September 30, 2011.
Section 4. In consideration for an additional extension of time, Section 4 of the Sixth
Amendment to the Agreement is revised as follows:
Upon completion of the coatings, the term of the Maintenance and Operating Agreement
shall be extended for a full five year term and the City will withdraw its March 2009 notice of
default. The Agreement shall be amended to delete Section 3.02(b). Section 3.03 is deleted and
replaced with the following language: Section 3.03 — Operator's Administrative Overhead.
Amounts considered to have been expended by Operator for purposes of the Agreement and the
Lease shall include only Operator's direct costs for performing maintenance, and providing
replacements and improvements, without any allowance for markup or profit. Such amounts
may include an allowance for administrative overhead which shall not exceed 10 %, provided that
the allowance may be increased to a maximum of 13.5% if Operator documents the basis for the
increased allowance to the City's satisfaction.
Section 5. The extension of time allowed by this amendment shall not constitute a waiver
of any rights of the City or Operator.
Section 6. All other provisions of the Agreement remain in full force and effect.
Section 7. This Agreement is subject to approval by the Seward City Council and shall
become effective upon the signatures of both parties.
DATED this 28 day of January, 2011.
City: Operator:
CITY OF SEWARD SEWARD SHIP'S DRYDOCK, INC.
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Phillip ates, City Manager
es T. Pruitt, President
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Product Data Sheet FGI - 6500 Corrosion Protection Coating
FGI - 6500 Corrosion Protection Coating
Unique Coatings - Extreme Results
Description
FGI - 6500 is an extremely unique ultimate performance corrosion protection coating. An epoxy
resin polyamide coating especially developed to withstand extreme corrosive and abrasive
conditions which quickly destroy conventional type protective paint coatings. FGI - 6500 was
originally developed to prevent corrosion to steel surfaces. The chemical, abrasion and
undercreep resistance characteristics of this product have proven so outstanding that it is
considered to be the least expensive method to prevent corrosion. This product has been in
constant use for over 40 years in applications as diverse as offshore platforms to subways. FGI -
6500 is designed for adhering to almost any clean surface including: aluminum, wood, metals of
all types, concrete, plastic, brick, glass, and transites. The few surfaces FGI -6500 is not
recommended for are Teflon, high - plasticized vinyls, polyethylene, and silicone rubber. FGI -
6500 has excellent anti - corrosion qualities and hardness yet it remains extremely flexible so as
not to crack. This is the ultimate corrosion protection on hot steam pipes that have much
expansion and contraction of the metal. The flexibility of the FGI -6500 prevents it from cracking.
Outdoor durability and color stability is excellent. FGI -6500 is extremely Weather, UV, Chemical,
Salt, and Abrasion resistant providing for an unsurpassed durable wear surface with superior
adhesion properties that promotes a nearly indestructible coating surface. FGI - 6500 requires
little surface preparation thus reducing the time, labor and the TOTAL cost of your project.
ASTM Test Battery:
ASTM 8117 500 hour Salt fog test — Passed
ASTM D -2240 Hardness 85 Shore Durometer
ASTM E108 -91A UBC32 -7 Class A Fire Rated
ASTM D -638 Tensile Strength 1393 PSI
ASTM E -96 Water Vapor Transmission 0.7 perms
ASTM G -53 500 hour accelerated weathering test, bend double with no cracking, highly flexible
ASTM 1640, D -92, D- 1644A, D -2196, D -696, D -570, C -836, D -1652, D -1259
Flexibility is retained in sub —zero conditions (down to —92 F)
Features & Benefits
> Easy to Apply by Brush, Roller, Spray or Dipping on Dry or Wet substrates
> Can be applied over Wet Surface and remain under water
> Very Little Prep Work over Rusty Metal
> UV, Weather, Chemical, Salt and Abrasion Resistant
y Extreme Adhesion to Substrate, adhering to almost any clean surface including:
aluminum, wood, metals of all types, plastic, brick, glass, transites
> Extremely Durable Wear Surface
• No Top -Coat necessary
> Contains No Zinc, Lead or Chromates
> Typical Applications: Marine environments, structural steel, welding repair, scaffolds,
automobiles, truck beds, tanks, pipes, industrial and farm equipment, fawn mowers, snow
plows, air conditioner parts, concrete floors and walls, decks, stairs, steps, railings, walls
and ceilings of subways and any metal surface.
Application Methods
FGI - 6500 may be applied by brush, roller, spray or dipping. Surfaces should be free of loose
rust, mill scale, paint, grease, oil and of any other film- forming foreign material. An example of
Rev. 06 -30 -08
1;xh�
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Product Data Sheet FGI — 6500 Corrosion Protection Coating
the prep work needed is to water blast with high - pressure (3,000 psi MIN) water to thoroughly
clean off all debris, dirt, and other contaminates. The result shall be to have a clean tight
substrate. Optimum results are obtained if the surface is dry although entirely satisfactory
protection is obtained if the surface is damp and /or wet. Surplus water should be removed to
prevent excessive bubbling of the coating. No primer is needed on metal surfaces thereby
reducing total job cost. Airless spray is the most efficient application method for larger projects.
Brushes and rollers may be used for detail work such as edge termination, filling of voids,
pinholes, and small cracks.
MIXING: Thoroughly mix (1 to 1 ratio) activator (part "A ") with base (part "B ") for 5 minutes with a
power mixer until all streaks and /or lumps disappear and the mixture has uniform color and
Fv consistency. Be sure to allow mixing blade to rub on sides and bottom of container to recombine
any settling. Allow to stand (or ingest) for 45 minutes to one hour before adding thinner or
application. Use of thinner increases possibility of sag and reduces dry film thickness. Thinner
also retards cure time. For best results, use just as it comes from the can. However, thinner (use
lacquer thinner) can be added to the product with no harm to the coating. Thinning will
necessitate applying more coats to achieve the desired mil thickness.
Any overspray and equipment must be cleaned immediately with acetone, toluene, xylene, or
MEK.
FGI -6500 is 60% solids. Approximate Pot Life: 4 to 6 hours at 80 F. Drying time 1 to 2 hours at
80 F. Curing time: Initial: 8 hours at 80 F, Complete: 3 days at 80 F. Apply 5 mils (.005 inches or
0.127mm) wet to achieve a final dry mil thickness of 3 mils (0.003 inches or 0.076 mm). FGI-
6500 will cover approximately 320 square feet per gallon at 3 mils thickness. If second coat is
needed wait till first coat is tacky dry, usually one to two hours in 80 F, The second coat may be applied at 3.5 mils (0.0035 inches or 0.089 mm) wet to achieve a dry mil thickness of 2 mils
(0.002 inches or 0.05 mm). This second coat will cover any voids in the surface due to a very
rough surface. Max of 10 mils (0.01 inches or 0.254 mm) can be applied per coat without runs if
necessary. An example of the suggested Spray Equipment: Graco 5900 with 0.021 to 0.031 tip
size with 3000 PSI capability and typically a reversible self - cleaning tip. Remove all filters from
gun and hose, including bung hose.
Use in well ventilated area; if not possible, use a NIOSH approved self contained breathing
apparatus or vapor filters on a mask. Protective gloves and safety glasses must be worn at all
times. Only very high abrasion will remove the coating. Caution: With the extreme adhesion
characteristics of this product all safety procedures must be followed.
Customers should consult FGI on all special requirement installations.
Storage Stability & Shelf Life
The shelf life of FGI -6500 is one year when stored in original, unopened container. Store cans in
a well ventilated and covered area away from extreme heat and moisture. Please contact your
FGI representative if you have any questions about product usability.
Additional information is available at www.fginternational.net
Health, safety and environmental information are provided for this product in the Materials Safety Data Sheet. This gives
details of potential hazards, precautions and First Aid measures, together with environmental effects and disposal of used
n products, Before using the product other than directed, please contact FGI for consultation.
F G International, LLC
33717 Hwy 23
Collins, Ga. 30421, USA
Email: info @fgintemational.net
Tel: +1.912.6841283
Fax: +1.630.604.7984
M1.
J
Rev. 06 -30-08
QA Services , Inc. .1.0 Alaskan ()lined and Operated Testing and Inspection Company
Qualib Assurance " cid tnspectiou'° (o. tin Inspection vb Noodestructhe Testing * :API 653 Tank Inspection * Special Inspections
City of Seward, Alaska 9 September. 2010
Attn: Kari Anderson, Harbormaster
Re: Seward's Ship DryDock
Specific: Protective Coating Rehabilitation Observations
REPORT
Arrived at Seward Harbor at 0700 hours on 8 Tuesday, 2010 and met with Kari Anderson and Jim Lewis and traveled in
harbor skiff to drydock for inspection. Tide at this time was minus 1.5 and conditions were calm. We conducted
observations and inspections around sheet pile buffer and pipe piles under dock area. My observations are as follows:
• Surface preparation and coatings were very erratic in base elevation as attached photos show. The maintenance
preparation and coatings should be between high and low tide elevations as this is the most corrosive
environment. Coatings were taken to the top of all pile but the splash zone is most critical. Recommend
complete preparation and coating to low tide level
• Poor surface preparation prior to coating was encountered throughout both sheet and pipe pilings. Loose scale,
barnacles, particulate matter, etc. was observed on coated surfaces resulting in voids in coating system.
Oxidation present in these areas. Large flakes of detaminated oxidation were easily picked off, revealing
uncoated surfaces underneath. Coating manufactured recommends high pressure washing at minimum 3000
psig. Contractor was not conducting surface preparation while observations were being conducted. Due to the
levels of oxidation and surface defects observed, I would recommend surface preparation by abrasive blasting
with a nickel slag or garnet abrasive ( no EPA concerns ) or at a minimum, water jetting per SSPC -SP 12, which
requires a minimum 10.000 psig or greater and would be much more effective in removing oxidation and other
organic contamination in order to expose a solid substrate in which to coat.
• Several attempts to measure dry film thickness of maintenance coatings were indeterminate due to levels of
oxidation. Nutnerous holidays were observed as well as concentrated corrosion in the pinhole form on surfaces
prepared and coated. Manufacturer's data sheet for the product being utilized recommends a dry film thickness
of 3 -8 mils. and in my opinion, is not adequate to encapsulate the substrate. I would recommend surface
preparation as stated above and coating with a 100% solids Polyurea product to attain a dry film thickness of
60 -250 mils in order to better encapsulate the substrate and any surface defects.
• Adhesion testing of the maintenance coatings were taken at 3 locations, all high on the sheet pile, out of the
splash zone. Results were as follows
1. Inside sheet pile, 448 psi, adhesive failure
2. End sheet pile, 128 psi, coating failure
3. Outside sheet pile, 274 psi, adhesive failure
Adhesion is marginal at best and results need to be taken in the splash zone, which is difficult to attain due
to cure time of dolly adhesives.
• As no surface preparation was being conducted during our observations, no testing for surface contaminates was
conducted.
In overview, my opinion of the maintenance being conducted is very poor to poor at best. The amount of oxidation
already present on surfaces prepared and coated is disturbing. Surface preparation is the most key element in the
longevity of a properly specified and applied coating system. With what is currently being done. the extended life of the
pilings will be very little. I suggest consulting a corrosion engineering firm for further recommendations and analysis.
If you have any questions or need me to expound further on any item, please feel free to call.
Respectfully,
Tyrell C. Amberg
NACE Certified Level 3 Coating Inspector, #1808
P.O. Box 112328 * Anchorage, AK 99511-2328 * Ph: (907) 522 -1969 * FAX (907) 344 -1980
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Q%. Services Inc. An Alaskan O}tned and Operated 'Testing, and Inspection Company
Quality Assurance * Veld Inspection * Coating Inspection * \ondestructice Testing * API 653 Tank Inspection * Special Inspections
09108/2010 07:51
Poor surface preparation and inconsistent elevations under dock.
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over thinning.
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Typical oxidation due to lack of encapsulation of the substrate by coating system. Scale delamination can also be seen
with oxidation leaching from under poorly adhered scale.
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Loose scale and inadequate coating thickness.
P.O. Box 112328 - Anchorage. -AK 99511-2328 * Ph: (907) 521 -1969 * FAX: (907) 344 -1980
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Inconsistent surface preparation and coating elevations throughout piles. Preparation should cover the entire splash zone
defined as the area between low and high tides.
P.(). 130 \ 112328 ' ,-1ncltorage, .1K 99511-2328 * Ph: (907) 522-1969 * FAX: (907) 344-1980 11