SR 09-12-2017 3K
City Council Report
City Council Meeting: September 12, 2017
Agenda Item: 3.K
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To: Mayor and City Council
From: Susan Cline, Director, Public Works, Water Resources
Subject: Authorization for the City Manager to Accept a Funding Agreement from the
State Water Resources Control Board Clean Water State Revolving Fund
Program for the Sustainable Water Infrastructure Project (SWIP) and
Authorization to Negotiate and Execute an Agreement with MWH/Stantec
Consulting to Serve as Owner's Engineer for the SWIP Project
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to accept and execute a funding agreement in the
amount of $56,885,903 from the State Water Resources Control Board (State
Water Board) Clean Water State Revolving Fund (CWSRF) program for the City
of Santa Monica’s Sustainable Water Infrastructure Project (SWIP), and to
accept all renewals.
2. Authorize the City Manager or his/her designee to execute all necessary
documents to accept the funding agreement and all renewals.
3. Authorize the Director of Public Works, as the City’s Authorized Representative
pursuant to State Water Resources Control Board requirements, to issue any
necessary amendments to the agreement within contract authority.
4. Award RFP# SP2456 to MWH/Stantec, a California-based company, to serve as
the Owner’s Engineer for the SWIP.
5. Authorize the City Manager to negotiate and execute an agreement with
MWH/Stantec, in an amount not to exceed $1,649,920 (including a 10%
contingency of $149,992) over a 5-year period.
Executive Summary
The City has proposed the Sustainable Water Infrastructure Project (SWIP) to help
meet the City’s objective of water self-sufficiency by the year 2020. Water sustainability
cannot rely on local groundwater alone. To achieve long-term water sustainability, the
City will need to harvest and treat non-conventional resources such as stormwater and
urban runoff and brackish groundwater. The SWIP increases water supply for reuse by
harvesting and advance treating municipal wastewater, brackish groundwater, and
stormwater and urban runoff. As designed, the SWIP would produce approximately
1,680 acre feet/year (AFY) or1.5 million gallons/day (MGD) of new water for immediate
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non-potable reuse, and when appropriately permitted, for indirect potable reuse via
aquifer recharge. This volume is a critical first step in the City’s strategy for achieving
water sustainability.
The estimated cost of the project is $69,893,435. Of this, $56,885,903 of the total
project costs would be funded through a Clean Water State Revolving Fund (CWSRF)
agreement that provides low-interest financing and will forgive $4 million of the principal.
The remainder of the project costs would be paid through the Clean Beaches and
Ocean Parcel Tax Fund, the Stormwater Management Fund and the Wastewater Fund.
Staff recommends Council accept the proposed CWSRF agreement to allow the SWIP
project to move forward. The project construction is expected to be completed by late
2020.
The SWIP is one project in a series of strategic elements for water sustainability that
include the adjacent Clean Beaches Project. Other projects under study include
improving the efficiency of the Arcadia Treatment Plant to produce an additional 1.0
MGD of drinking water and exploration of the water resources available in the Coastal
Subbasin. Taken together, these elements will help culminate in long-term
sustainability.
The SWIP cost estimate and funding include services for an Owner’s Engineer. The
SWIP Owner’s Engineer would, among other things, assist the City with various aspects
related to project management, construction, regulatory permitting, and commissioning
of the SWIP and permitting for the associated aquifer recharge component of the
project. A Request for Proposal (RFP) for the SWIP Owner’s Engineer was issued on
July 20, 2017. One firm, MWH/Stantec, responded. Because the Owner’s Engineer
would be precluded from competing as the design-build contractor for the SWIP project,
other qualified firms decided not to participate in the Owner’s Engineer RFP. Staff
recommends Council authorize Professional Services Agreement with MWH/Stantec in
an amount not to exceed $1,649,920 (including contingency) over five years.
Background
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Partnership with State
The State Water Board is committed to assisting its stakeholders in building 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 measures made necessary by drought influenced
impacts to groundwater (Attachment A). The City’s SWIP would align with these
objectives while simultaneously increasing water supply for reuse and enhancing
flexibility in the management of the City’s water resources.
Council has taken action three times to help move this SWIP project and the partnership
with the State forward. On January 26, 2016, City Council adopted a resolution that
authorized the submittal of an application for funding consideration from the State Water
Board in the amount of up to $57,050,000 from the CWSRF and State Proposition 1
funding programs, and authorized the City Manager to execute all necessary
documents to apply and negotiate for funding (Attachment B). On September 27, 2016,
City Council adopted a resolution certifying the California Environmental Quality Act
(CEQA) Mitigated Negative Declaration for the SWIP as well as the Mitigation
Monitoring and Reporting Program (Attachment C). On December 6, 2016, City Council
adopted a resolution approving pledged revenues and reimbursement of any State
CWSRF financing if accepted by the City (Attachment D). The action here would
enable the City to formalize the agreement with the State and secure funding for the
project.
Project Approach
Staff has implemented a two-phase approach for the SWIP project. The first phase,
which is complete, was project concept development. Phase I included, among other
things, obtaining CWSRF loan funding, concept development, feasibility, permitting,
obtaining environmental clearance, initiation of the aquifer recharge permitting process
with the State Water Board and State Division of Drinking Water (DDW), development
process design, and influent/effluent water quality criteria.
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Phase II is project implementation. Staff has determined that a design-build process
would best serve the City’s needs due to the complexity of the SWIP below-grade
construction and CWSRF deadlines, which expect project construction to be complete
by the end of 2020. The design-build approach is the most common project delivery
method for water/wastewater facilities. It offers efficient project delivery, diverse
expertise, team member continuity and accountability. This is a trusted approach used
by the City in recent years to design and build a number of projects, including the
Arcadia & Charnock Water Treatment Plants, the Big Blue Bus Facility Expansion, the
Main Library construction, and the Tongva Park and Ken Genser Square projects.
Discussion
City of Santa Monica Sustainable Water Infrastructure Project (SWIP)
The SWIP is composed of three integrated project elements to help improve drought
resiliency, increase water supply and enhance flexibility in the management of the City’s
water resources.
SWIP Element 1 is the installation of a containerized brackish/saline reverse
osmosis and enhanced disinfection at the SMURRF. When operational, the
reverse osmosis/disinfection unit would be utilized to advance treat non-
conventional water resources such as urban and wet weather runoff harvested
by the separate and recently approved Clean Beaches Initiative (CBI) Project to
be constructed below ground at the Deauville Parking Lot. The CBI stormwater
harvest tank would capture runoff from the 106-acre Pier Drainage Area that
would normally be discharged to the ocean at the Pier Outfall. When runoff is
scarce, the tank would be replenished with brackish groundwater collected from
shallow horizontal sub drains installed beneath the CBI stormwater tank. This
water would also be treated for reuse at the SMURRF.
SWIP Element 2 includes the construction of a below ground Advanced Water
Treatment Facility (AWTF) at a location beneath the Civic Center Parking
Lot. The AWTF would advance treat approximately 1.0 MGD of municipal
wastewater for reuse. Treatment processes would include, among other things,
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a membrane bio-reactor, membrane filtration, reverse osmosis and advanced
oxidation.
SWIP Element 3 consists of two below-grade stormwater harvest tanks. One
tank (3.0 MG) would be constructed beneath Memorial Park. The other below-
grade tank (1.5 MG) would be located adjacent to the AWTF described in SWIP
Element 2 above. Project elements to be located under the Civic Center Parking
Lot would be constructed to accommodate future development on the site. The
harvested stormwater would be used as a supplemental feed source for
treatment at the AWTF described in Element 2 above. Benefits provided by the
stormwater harvest tanks include capturing stormwater and urban runoff for
treatment and reuse, improving beach water quality and complying with State
Water Board Enhanced Watershed Management Plan (EWMP)
requirements. Together, the Project elements would produce approximately 1.5
MGD (1,680 acre-feet/year) of new water for immediate non-potable reuse, and
when appropriately permitted, for indirect potable reuse via aquifer recharge. All
treated water would be distributed via the City’s existing non-potable water
“purple pipe” system. The proposed locations of project elements 1, 2 and 3 are
shown in Attachment E.
The estimated cost of the SWIP is $69,893,435. The State Water Board has reviewed
the City’s CWSRF application and provided a preliminary funding agreement to the City
in the principal amount of $56,885,903 for a 30-year term, low-interest loan. The
preliminary CWSRF agreement also provides for $4.0M in principal forgiveness,
contingent on project completion. The preliminary funding agreement has been
reviewed by staff and is recommended for approval. The interest rate for the SWIP
CWSRF loan would be 1.8% per annum. The City would utilize the Wastewater (31)
Fund to service the CWSRF debt, estimated at $2,298,945 annually for 30 years
starting in FY 2020/2021. As modeled in the City’s 5-year fund forecast, no sewer
service charge rate increases are planned through calendar year 2019. Pending a rate
study to be completed in 2019 to set water and sewer rates for calendar years 2020 to
2024, the City currently anticipates that the annual SWIP debt service will be able to be
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accommodated by the Wastewater Fund with sewer service charge rate increases in
line with CPI during the next rate study period. Other City financial sources that would
be utilized to fund construction of the SWIP include the Clean Beaches and Ocean
Parcel Tax (06) Fundand the Stormwater Management (34) Fund. Separate from the
CWSRF financing, the City will apply for stormwater grant funds from Round 2 of
Proposition 1 in late 2018. Although not currently necessary to complete construction, if
the Round 2 of Proposition 1 stormwater grant application is successful, these monies,
which would reportedly become available in 2019, could ultimately help reduce the total
amount of CWSRF financing required to complete the SWIP.
Environmental Analysis
The California Environmental Quality Act (CEQA) Mitigated Negative Declaration, the
Mitigation Monitoring and Reporting Plan and the National Environmental Policy Act
(NEPA) documents (i.e. CEQA-Plus) for the project were certified by the Santa Monica
City Council on September 27, 2016, and the Notice of Determination was filed at the
State Clearinghouse on September 30, 2016 (Attachment F). The SWIP project was
also presented to the Water Advisory Committee on May 23, 2016 and the City’s Task
Force on the Environment on June 20, 2016.
Next Steps
A competitive bid selection process would be initiated for the design-build contractor
upon notification by the State Water Board that the SWIP CWSRF monies are available
for use. Staff would bring a recommendation for contract award to City Council for
review upon completing the design-build contract competitive bid process. A team of
builders, designers and specialty consultants would provide expertise at this critical
phase of design and cost estimating. Members of this integrated project team would
likely include construction specialists, architects, engineers, archaeological and
historical consultants, and cost estimators. Upon Council’s approval, the design-build
team could move into the construction phase based on a guaranteed maximum price.
Once the SWIP recycled water treatment plant is completed, the design-build team
would be required to operate the facility for a minimum required duration to demonstrate
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the facility performance as per the City’s requirement as well as to obtain permits
required by the State Water Board and DDW.
Authorization for a SWIP Owner’s Engineer
The SWIP will include the one of a kind construction of a completely below ground
advance water treatment facility. The technical challenges presented by the project
location and construction require specialized engineering expertise. The SWIP Owner’s
Engineer would provide engineering and technical expertise to the City on this project,
help develop the scope of the work with the design-build contractor, and facilitate state
and water board approvals of this project.
Vendor/Consultant Selection
The City published an RFP for an Owner’s Engineer for the SWIP on July 20, 2017.
The RFP was posted on the City’s on-line bidding site for 22 days, and notices were
advertised in the Santa Monica Daily Press in accordance with City Charter and
Municipal Code provisions. A total of 91 vendors downloaded the RFP. One firm,
MWH/Stantec, responded.
Staff recommends proceeding with MWH/Stantec based on the criteria in SMMC
2.24.073 as well as the following criteria: experience / technical competence, ability to
meet work plan / timelines, quality control, stability / references and value added -
breadth of service. The term of the subject contract is five years with an amount not to
exceed $1,649,920. In the past MWH/Stantec has performed following services for the
City on the SWIP; professional engineering services for siting and feasibility study,
supplemental technical reports, recycled plant process design, cost estimating,
influent/effluent water quality determination, project technical and design reports.
Project Costs
The estimated cost of the SWIP is $69,893,435. The project cost estimate includes
services for an Owner’s Engineer. The State Water Board CWSRF is providing
$56,885,903, including $4.0M in debt forgiveness on the sum of CWSRF monies utilized
for project completion. The Clean Beaches and Ocean Parcel Tax (06) Fund would
contribute $4.5M, the Stormwater Management (34) Fund would contribute $1.4M and
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the Wastewater (31) Fund would contribute approximately $7.1M. The terms of the
CWSRF are 30 years at 1.8% per annum. Estimated annual debt service is $2,298,945.
The Wastewater (31) Fund would be pledged to service the CWSRF debt.
Financial Impacts and Budget Actions
State Water Resources Control Board Funding Agreement
Beginning in FY 2020-21, the City will pledge net revenues from the Wastewater (31)
Fund for repayment of the SWIP CWSRF loan, which includes the funding for the
project Owner’s Engineer. The total amount of the annual debt service will be
approximately $2.3 million, $0.7 million of which will be reimbursed to the Wastewater
(31) Fund by the Clean Beaches and Oceans Parcel Tax (06) Fund for work related to
stormwater improvements. The Wastewater (31) Fund will finish paying all outstanding
debt in FY 2021-22 so that the fund will only be required to pay debt service on both the
outstanding Wastewater Series 2012A Revenue Bond and the CWSRF loan for one
year, after which the fund will only be paying the debt service on the CWSRF loan.
These debt service costs have been incorporated in the five-year forecasts for both the
Wastewater (31) Fund and Clean Beaches and Ocean Parcel Tax (06) Fund. With a
debt coverage ratio of 1.41%, the Wastewater (31) Fund is expected to exceed the
required debt coverage ratio of 1.2%.
Owner’s Engineer Agreement
The agreement to be awarded to MWH/Stantec is for an amount not to exceed
$1,649,920. Funds are available in the FY 2017-18 Capital Improvement Program
budget in account C319210.589000.
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Prepared By: Thomas Watson, Water Resources Protection Programs
Coordinator
Approved
Forwarded to Council
Attachments:
A. March 8, 2011 Staff Report
B. January 26, 2016 Staff Report
C. September 27, 2016 Staff Report
D. December 6, 2016 Staff Report
E. Project Location
F. Notice of Determination
G. Oaks Initiative Form
SWIP Project Elements
SWIP
Element 1
SWIP
Element 3
SWIP
Element 2
Pico-Kenter
Outfall
REFERENCE:
AGREEMENT NO. 10538
(CCS)