April 28, 2009 SUBJECT: RESOLUTION TO SELECT THE RECOMMENDED EASTERLY. Agenda Item No.

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1 Agenda Item No. April 28, 2009 TO: FROM: Honorable Mayor and City Council Attention: Laura Kuhn, Interim City Manager David K. Tompkins, Director of Utilities SUBJECT: RESOLUTION TO SELECT THE RECOMMENDED EASTERLY WASTEWATER TREATMENT PLANT TERTIARY PROJECT ALTERNATIVE 3B FOR THE PREDESIGN AND ENVIRONMENTAL REVIEW PROCESS, AUTHORIZE THE SUBMITTAL OF A STATE REVOLVING FUND LOAN APPLICATION TO THE STATE WATER RESOURCES CONTROL BOARD, AUTHORIZE THE DIRECTOR OF UTILITIES TO EXECUTE THE CONSULTANT AGREEMENT FOR THE PREPARATION OF A PREDESIGN REPORT FOR THE EASTERLY WASTEWATER TREATMENT PLANT TERTIARY PROJECT, AND AUTHORIZE THE COMMUNITY DEVELOPMENT DIRECTOR TO PROCEED WITH PREPARATION OF THE ENVIRONMENTAL IMPACT REPORT DISCUSSION: As part of the City of Vacaville s sewer system, the City owns and operates the Easterly Wastewater Treatment Plant (Easterly Plant). The Easterly Plant operates under permit from the Central Valley Regional Water Quality Control Board (Regional Board) and in March 2001 received an updated permit that included new treatment requirements added as part of the State Implementation Plan (SIP) for the California Toxics Rule. City staff believed these new requirements to be excessively onerous and unnecessarily expensive. As a result, City staff received direction from the City Council to contest many of the permit requirements in an effort to change or eliminate them. Staff s actions over the past seven years have included an appeal of the permit to the State Water Resources Control Board (State Board), forming organized sanitation agency groups or joining with existing groups statewide who are facing similar permit issues, lobbying of State legislators and environmental agencies in California, lobbying Federal legislators and the Environmental Protection Agency in Washington, D.C., conducting studies and using the results to request that the Regional Board relax the water quality standards for the City s receiving waters with a Basin Plan Amendment, investigating the feasibility of relocating our discharge location in Cache Slough via a twelve mile pipeline, and filing litigation against the State and Regional Boards for improper implementation of the Basin Plan and excessive requirements. Our efforts were successful in mitigating some of the onerous requirements, with the added benefit of delaying any costly treatment upgrades to the Easterly Plant for over seven years. In 2007, the City completed the Easterly Expansion Project that increased plant capacity from 10 million gallons per day (MGD) to 15 MGD. Based on the City s most optimistic growth database, the plant capacity would last until 2027, eighteen years. (Reference Figure 2-3. Historical and Predicted WWTP Influent Q Values attached). Based on historical growth rates, it is expected that the plant capacity would last over 34 years. The State Revolving Fund loan ($63 million) that the City acquired for this project requires annual payments of $4.7 million (Sewer Operations $2.2 million and Sewer DIF $2.6 million). In April 2008, the Regional Board adopted a new permit for the City s Easterly Plant. This permit added new treatment requirements which include nitrate reduction, blending elimination, seasonal tertiary filtration, and trihalomethanes (THMs) reduction. These treatment requirements will necessitate costly improvements to the Easterly Plant. The Regional Board also issued the City a Time Schedule Order (TSO). This TSO requires nitrate reduction facilities to be in place, tested, and operating prior to April The permit requires tertiary level treatment and blending elimination facilities to be operating by April 2015.

2 In addition, the SIP requires that THM reduction facilities be operating by the spring of City staff is pursuing a Basin Plan revision with the Regional Board that would relax THM reduction requirements. If this revision is not approved, the City will request a five-year extension for the THM requirements as previously discussed with the Regional Board. THM reduction facilities, which include year-round filtration and ultraviolet disinfection, are estimated at over $65 million to construct and very expensive to operate. To address the TSO and permit, staff immediately began work on the preparation of a Facility Plan to achieve these new permit requirements. The Facility Plan includes pilot scale filter testing and evaluation of eight different project alternatives. Selection criteria include maximizing operational flexibility, ensuring future permit compliance, and minimizing operational and project costs. The analysis included a qualitative comparison of nine separate criteria for the eight project alternatives. Reference Table Summary of Qualitative Comparison of Alternatives attached. Based on the analysis performed, staff recommends selection of Tertiary Project alternative 3B for further design study and environmental review. This alternative includes demolition of the North Plant treatment process units and replacement of that capacity in the South Plant. This alternative does not include THM reduction facilities. During the preparation of the Facility Plan, staff initiated a selection process for the predesign and, ultimately, design of the selected alternative. In the summer of 2008, staff prepared a request for proposals and distributed the request to three qualified, national consulting firms, Carollo, CH2MHill, and HDR. The selection process included proposal review, presentations and interviews, and reference checks. HDR Engineering had the most responsive proposal and could meet the short timeline set forth in the TSO. Therefore, they were invited to negotiate a consultant agreement in January The Utilities Director requests authorization to proceed with the execution of a consultant agreement with HDR. In addition, the City has requested that the Tertiary Project be placed on the State Board s State Revolving Fund (SRF) project priority list for loan funding. SRF loans have a much lower percentage rate than conventional loans or bonds, but do not generally cover the full project cost. With City Council authorization, staff intends to submit a formal SRF application later this summer to assist in project financing. FISCAL IMPACTS: The Tertiary Project upgrades necessary to meet the permit requirements is estimated at $150 million. This will require an increase for ratepayers in the Sewer Operations and Maintenance fund, as well as an increase to Sewer Development Impact Fees. Failure to have the Easterly process improvements constructed on time would put the City in violation of the TSO. These violations would expose the City to fines of up to $25,000 per day until the treatment processes are in place and operating. In addition, the City would be subject to third party lawsuits for non-compliance. CEQA: Pursuant to Section 15378(d) of the California Environmental Quality Act (CEQA) Guidelines, the Easterly Facilities Plan provides conceptual level information to enable the City Council to provide direction to staff for the preliminary design and environmental review process. The recommended alternative 3B would be used as the basis for further study and analysis. The alternative project scenarios in the Facilities Plan, including the recommended alternative, would be analyzed in an Environmental Impact Report (EIR) to disclose and address potentially significant impacts, review project alternatives, and provide mitigation measures. The project and the EIR will be subject to the public process prescribed by the Municipal Code and State law prior to final project action. Staff selected the firm Analytical Environmental Services to prepare the EIR. The Community Development Director requests authorization to proceed with the EIR. RECOMMENDATION: By simple motion, that the City Council adopt the subject resolution.

3 RESOLUTION NO. RESOLUTION TO SELECT THE RECOMMENDED EASTERLY WASTEWATER TREATMENT PLANT TERTIARY PROJECT ALTERNATIVE 3B FOR THE PREDESIGN AND ENVIRONMENTAL REVIEW PROCESS, AUTHORIZE THE SUBMITTAL OF A STATE REVOLVING FUND LOAN APPLICATION TO THE STATE WATER RESOURCES CONTROL BOARD, AUTHORIZE THE DIRECTOR OF UTILITIES TO EXECUTE THE CONSULTANT AGREEMENT FOR THE PREPARATION OF A PREDESIGN REPORT FOR THE EASTERLY WASTEWATER TREATMENT PLANT TERTIARY PROJECT, AND AUTHORIZE THE COMMUNITY DEVELOPMENT DIRECTOR TO PROCEED WITH PREPARATION OF THE ENVIRONMENTAL IMPACT REPORT WHEREAS, the City owns and operates the Easterly Wastewater Treatment Plant (Easterly Plant) which received a new discharge permit from the Central Valley Regional Water Quality Control Board (Regional Board) in March 2001; and WHEREAS, the permit included new treatment requirements which the City deemed to be excessively onerous and unnecessarily expensive and spent the past seven years contesting, appealing, and litigating many of the permit requirements with some success; and WHEREAS, in April 2008 the Regional Board adopted a new permit with treatment requirements that necessitate costly improvements to the Easterly Plant and issued the City of Vacaville a Time Schedule Order that specifies nitrate reduction facilities to be tested and operating prior to April 2013 and tertiary level treatment and blending elimination facilities to be operating by April 2015; and WHEREAS, staff immediately began preparation of a Facility Plan to achieve these new permit requirements including evaluation of eight different project alternatives; and WHEREAS, based on the analysis performed City staff recommends selection of Tertiary Project alternative 3B which includes demolition of the North Plant process units and replacement of that capacity in the South Plant, however does not include trihalomethane (THM) reduction facilities; and WHEREAS, City staff initiated a selection process for the predesign, and ultimately design of the selected alternative with the firm of HDR Engineering having the most responsive proposal and ability to meet the timeline set forth in the Time Schedule Order; and WHEREAS, City staff has requested that the Tertiary Project be placed on the State Board s State Revolving Fund project priority list for loan funding with the intent of submitting a future formal loan application to assist in project financing; and WHEREAS, Pursuant to Section 15378(d) of the California Environmental Quality Act (CEQA) Guidelines, the Easterly Facilities Plan provides conceptual level information to enable the City Council to provide direction to staff for the preliminary design and environmental review process. The project and the EIR will be subject to the public process prescribed by the Municipal Code and State law prior to final project action; and WHEREAS, in order to meet permit requirements by the imposed timeline necessary Easterly Plant upgrades are estimated to cost $150 million. Failure to construct the Easterly process improvements on time would be considered a violation of the Time Schedule Order and would subject the City to fines of up to $25,000 per day until such time the treatment processes are in place and operating, as well as the City being subject to third party lawsuits for non-compliance.

4 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Vacaville to select the recommended Easterly Wastewater Treatment Plant Tertiary Project Alternative 3B for the predesign and environmental review process, authorize the submittal of a State Revolving Fund loan application to the State Water Resources Control Board, authorize the Director of Utilities to execute the consultant agreement for the preparation of a predesign report for the Easterly Wastewater Treatment Plant Tertiary Project, and authorize the Community Development Director to proceed with preparation of the Environmental Impact Report. I HEREBY CERTIFY that the forgoing resolution was introduced and passed at a regular meeting of the City Council of the City of Vacaville, held on the 28 th day of April 2009 by the following vote: AYES: NOES: ABSENT: ATTEST: Michelle A. Thornbrugh, City Clerk

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