Port reports unexpected costs for project changes

PALMETTO - Some unexpected discoveries will cost Port Manatee extra money, the Port Authority learned at its meeting on Thursday.

In Warehouse 2, port executive director David McDonald said Fresh Quest, which recently began leasing the building, needs a palletized cargo storage rack system, but installation of this system has run into a fire code issue that will cost $200,000.

McDonald said Fresh Quest will pay for and install the racking and the fire suppression system, and the port will reimburse the company up to 50 percent of the cost, not to exceed 50 percent of the costs or $200,000, whichever is less.

He said the port was able to get a grant from the Florida Department of Transportation of up to $200,000, and the money would be applied to the port's cost. In the event that Fresh Quest leaves, he said, the improvements will belong to the port.

A big question raised by Port Authority members was why the situation wasn't known before. John Chappie said that it would have been good to know about when Fresh Quest took a tour of the warehouse.

"I would have hoped it would have been discovered before," Chappie said.

Joe McClash recommended that the fire department be brought into such situations as early as possible to ensure that buildings are compliant with new fire codes.

Gwendolyn Brown agreed, noting that health department and fire department inspectors come into new day-care centers while they're still under construction to avoid a frustrating discovery and delay.

McDonald said that Fresh Quest's season begins in November, and that the new rack system will enable the company to seek other cargoes, possibly out of season, meaning more work and more revenue for the port, but McClash said that grant money was money that could have been used for something else.

Authority members voted 7-0 to approve the lease agreement addendum.

Pipeline crossing changes

An erroneous "As Built" drawing, which tells where infrastructure is buried so future work is done without disturbing older infrastructure, will cost the port $43,600, McDonald said.

"As happens sometimes," he said, "the contractor found some unforeseen conditions in the middle of the road."

Spectrum Underground is doing the South Channel Extension pipeline crossing installation, he said, and they discovered that the county's force main on the east side of U.S. 41 is much lower in elevation than the "As Built" drawing used to prepare for the work indicate. A change order to raise the pipe to eliminate the conflict was presented to the Port Authority.

"When you're remodeling a house, you don't always know what's in there, and that's kind of what's happening," McDonald said. "Everyone swore that this pipeline was at this elevation, and they actually dug it up, it was at a different elevation."

McClash said that this reminded him of a situation a few years ago. "When plans are done, don't rely totally on 'As Builts' being accurate. There is inexpensive ways to go out and double-check an 'As Built," he said, including boring holes or using sonar. It's a very small price you would have to pay to ensure that a pipe is supposed to be where it is, he said.

Ron Getman agreed, and the authority voted 7-0 to approve the expenditure from the port's cash reserves.

Heavy crane stressing ground

McDonald said that Berth 8, built in the 1970s before the big crane was installed, is not directly affected by the weight of the crane, but the pavement the crane is on is being affected, and he asked the authority to approve $9,300 for testing of the ground, subject to the review of and approval of the state DOT.

The authority voted 7-0 to approve the expenditure from the port's cash reserves.

Another issue McDonald mentioned is that there is a need for more soil and groundwater contamination testing at the mill scale sites, and he asked the authority to approve $33,094 for a supplemental site assessment, which is required by the Florida Department of Environmental Protection.

The authority voted 7-0 to approve the expenditure.

Financial matters

John White, the port's financial adviser, told the authority that he had initiated a study of the port's debt when he took the job recently and offered some recommendations on what the authority could do about the bonds and commercial paper the port has issued.

The county borrowed about $33.2 million with bonds, he said, and about $21 million with commercial paper. Of the $33.2 million borrowed with bonds, the port owes $23.6 million, but the problem with the commercial paper is that none of the principal has been paid, just the interest.

Since interest rates are very low now, things can be done with the debt from the commercial paper, White said, and he noted that while the port is talking with Bank of America, Wachovia has expressed interest in a loan, and rolling it over.

The situation is more of a decision than a crisis, McClash said, and members agreed on the need for a meeting.

A recommendation that port and county staff meet to discuss the debt and that it take place before the end of the year passed 7-0.

Insurance and other matters

Board member Donna Hayes pulled an item about the port's insurance renewals off the consent agenda to commend the port for saving $22,000 on insurance.

Also, Three of the four phases of the South Channel Extension are finished, and the digging will soon go out to bid, McDonald said, and can be discussed at the November and December meetings.

"You're not committed to anything at this point," he said. "I'm just trying to give you previews of coming attractions."

On the consent agenda, the Port Authority approved the following:

• Budget Resolution - FY 2008-09

• Budget Resolution - FY 2009-10

• Port Manatee Warehouse Lease Amendment #2

• Changes to Port Manatee Tariff No. 3 & Port Manatee Railroad Local Freight Tariff No. MAUP 80-J

• Annual Uncollectible Accounts

• South Port Intermodal Terminal - South Channel Extension

• General Engineering Services