SR 12-06-2016 11A
Ci ty Council
Report
City Council Meeting : December 6, 2016
A genda Item: 11.A
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To: Mayor and City Council
From: Susan Cline, Director , Public Works, Water Resources
Subject: Adoption of Reimbursement Resolution and Pledged Revenue and Fund(s)
Resolution for the Sustainable Water Infrastructure Project
Recommended Action
Staff reco mmends that the City Council adopt the Reimbursement Resolution and
Pledged Revenue and Fund(s) Resolution for the City of Santa Monica’s proposed
Sustainable Water Infrastructure Project (SWIP).
Executive Summary
On January 26, 2016, the City Council ado pted a resolution (Attachment A) authorizing
City staff to file applications with the California State Water Resources Control Board
(State Water Board) requesting funding from a combination of various State programs
including Proposition 1 grant programs and the Clean Water State Revolving Fund
(CWSRF), and to negotiate funding for the proposed SWIP with the State Water Board.
The State Water Board is currently reviewing the financial section of the City’s CWSRF
application for low interest financing. Befo re the State Water Board provides a funding
proposal for review, City Council adoption of the attached Reimbursement Resolution
(Attachment B) and Pledged Revenue and Fund(s) Resolution (Attachment C) is
required. The preliminary estimated cost of the proj ect is approximately $57,0 50,000 .
Staff has determined that the Wastewater Fund has the financial capacity to pledge
future revenues towards payment of any and all CWSRF financing for the SWIP,
thereby completing an important step in the funding applicatio n process for the SWIP.
Adoption of the subject resolutions has no fiscal impact. Staff will return to City Council
for review and approval for any project funding agreement.
Background
The State Water Board is committed to assisting its stakeholders buil d resiliency to
drought and climate change. Similarly, the City has established among its sustainability
goals the objective of reaching water self -sufficiency by the year 2020, concurrent with
addressing the water conservation requirements made necessary by the on -going
drought. The City’s proposed SWIP would align with these objectives, while
simultaneously helping to improve drought resiliency, increase water supply for reuse,
and enhance flexibility in the management of the City’s water resources, by al lowing for
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the treatment and reuse of brackish/saline groundw ater, municipal wastewater, and
stormwater. City Council previously approved staff applying for State Water Board grant
and low interest financing on January 26, 2016. City Council adopted the SW IP
environmental documents on September 27, 2016.
Currently, the City’s water supply is a combination of imported water and local
groundwater. Long term, the City seeks to become sustainably independent from
imported water through continued conservation a nd increasing reliance on its
groundwater resources. The SWIP takes a forward thinking approach to help secure
the City’s water future by leveraging use of existing City infrastructure and by linking
together three distributed water reuse elements into a single cohesive and
comprehensive project to harvest, treat, and reuse non -conventional water resources .
Advanced treated water produced from the SWIP would be used to meet existing
permitted non -potable reuse demands. When properly permitted, a significan t portion of
the advanced treated water would be utilized for indirect potable reuse via aquifer
recharge. Combined, these three elements would produce approximately 1,680 acre -
feet per year (AFY) of new water.
The SWIP has three basic elements (Attachme nt D) all designed to function as a
cohesive and integrated system for the harvesting, treatment and conjunctive reuse of
all nonconventional water resources that are available to the City (i.e. stormwater,
brackish/saline impaired groundwater, and municip al wastewater).
SWIP Element 1, a shallow brackish/saline impaired groundwater supply well, would
be installed to replenish a City stormwater harvest tank near the Santa Monica Pier
during dry weather. The City recently received a $3.7M Clean Beaches Initiative
(CBI) grant to construct this 1.6 million gallon tank. Runoff and impaired
groundwater from the CBI tank would be piped to the City’s existing Santa Monica
Urban Runoff Recycling Facility (SMURRF). As part of Element 1, the SMURRF
would also b e upgraded with the installation of a containerized reverse osmosis
(RO) unit capable of treating both captured stormwater and brackish/saline impaired
groundwater for permitted non -potable distribution and future permitted indirect
reuse (aquifer recharge ).
SWIP Element 2 would provide a source of recycled water for permitted conjunctive
reuse via the construction of a new below ground Advanced Water Treatment
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Facility (AWTF) to treat up to 1 million gallons per day (MGD) of municipal
wastewater. Trea tment would include, among other things, membrane bioreactors,
membrane filtration, reverse osmosis, and advanced oxidation.
SWIP Element 3 would include added infrastructure to further improve stormwater
harvesting and reuse. Two below -grade runoff h arvest tanks totaling 4.5 million
gallons would reduce ocean discharges and divert the harvested runoff to the new
AWTF. One tank would be constructed upgradient beneath Memorial Park and the
other below ground at a location on the Civic Center Parking Lot . The subject tanks
also provide for compliance with new State Enhanced Watershed Management Plan
(EWMP) for Jurisdictional Group 2 and 3 and Municipal Separate Storm Sewer
System (MS4) permit requirements for nonpoint source pollution control, and would
h elp improve beach water quality.
Discussion
The preliminary estimated cost of the project is approximately $57,0 50,000 . The City is
pursuing a combination of grants and low interest financing from the State Water Board
to fund the proposed SWIP. In additi on to applying for Proposition 1 grant funding, City
staff submitted an application seeking CWSRF low interest financing. The current
CWSRF interest rate is approximately 1.7% per annum. If the entire project were funded
via the CWSRF, debt service costs t o the Wastewater Fund may be as much as $2.5
million per year. Grant funding or principal forgiveness by the State would lower
repayment costs. Staff has determined that the Wastewater Fund has the financial
capacity to pledge future revenues toward paymen t of any and all CWSRF financing for
the SWIP and still maintain adequate reserves. This new debt service cost would be
almost entirely offset after one year, when the existing Wastewater Revenue Bonds
reach maturity and no longer require debt payments.
Th e CWSRF application consists of four packages: General, Environmental, Financial,
and Technical. The State Water Board has completed the review of the General and
Environmental Packages for the SWIP and is currently completing its review of the
Technical a nd Financial Packages. In order to complete the Financial Package review
and provide a funding proposal, City Council adoption of the Reimbursement Resolution
and Pledged Revenue and Fund(s) Resolution is required.
Financial Impacts and Budget Actions
T here is no immediate financial impact or budget action necessary as a result of the
recommended action. Staff will return to City Council for review and approval for any
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project funding agreement.
Prepared By: Thomas Watson, Water Resources Protection Pr ograms
Coordinator
Approved
Forwarded to Council
Attachments:
A. January 26, 2016 Staff Report - City Council Resolu tion
B. Reimbursement Resolution
C. Pledged Revenue and Fund(s) Resolution
D. SWIP Project Elements
City Council Meeting: December 6, 2016 Santa Monica, California
RESOLUTION NUMBER ___ (CCS}
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MQNICA
APPROVING PLEDGED REVENUES AND FUND(S) FOR THE SUSTAINABLE
WATER INFRASTRUCTURE PROJECT
WHEREAS, the City of Santa Monica ("City"} desires to finance the costs of
constructing and/or reconstructing certain public facilities and improvements relating to
its water and wastewater system, including certain treatment facilities, pipelines and other
infrastructure as part of its proposed Sustainable Water Infrastructure Project (the
"Project"); and
WHEREAS, the City intends to finance some or all of the construction and/or
reconstruction of the Project with moneys ("Project Funds") provided by the State of
California, acting by and through the State Water Resources Control Board (State Water
Board); and
WHEREAS, the State Water Board may fund the Project Funds with proceeds from
the sale of obligations the interest upon which is excluded from gross income for federal
income tax purposes (the "Obligations"), and
WHEREAS, prior to either the issuance of the Obligations or the approval by the
State Water Board of the Project Funds the City may desire to incur certain capital
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expenditures (the "Expenditures") with respect to the Project from available moneys of
the City; and
WHEREAS, the City has determined that those moneys to be advanced on and
after the date hereof to pay the Expenditures are available only for a temporary period
and it may be necessary to reimburse the City for the Expenditures from the proceeds of
the Obligations; and
WHEREAS, the City has the authority to enter into contracts with the State Water
Resources Control Board for construction and repayment of the Sustainable Water
Infrastructure Project.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AS FOLLOWS:
SECTION 1. The City hereby dedicates and pledges the Wastewater Fund (Fund
31) to payment of any and all Clean Water State Revolving Fund and/or Water Recycling
Funding Program financing for the Project (State Water Board No. 8211-110). The City
commits to collecting such revenues and maintaining such fund(s) throughout the term of
such financing and until the City has satisfied its repayment obligation thereunder unless
modification or change is approved in writing by the State Water Resources Control
Board. So long as the financing agreement(s) are outstanding, the City's pledge
hereunder shall constitute a lien in favor of the State Water Resources Control Board on
the foregoing fund(s) and revenue(s) without any further action necessary. So long as the
financing agreement(s) are outstanding, the City commits to maintaining the fund(s) and
revenue(s) at levels sufficient to meet its obligations under the financing agreement(s).
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SECTION 2. The City Clerk shall certify to the adoption of this Resolution, and
thenceforth and thereafter the same shall be in full force and effect.
APPROVED AS TO FORM:
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SWIP Project Elements
SWIP
Element 1
SWIP
Element 3
SWIP
Element 2
Pico -Kenter
Outfall
Reference:
Resolution No. 11011
(CCS)
&
Resolution No. 11012
(CCS)