GROVE LAND UTILITIES, LLC

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1 GROVE LAND UTILITIES, LLC Financial Feasibility Study of the Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study FINAL Report Photo courtesy of the St. Lucie County Media Relations and St. Lucie County Tourism Offices Prepared for Grove Land Utilities, LLC August 27, c004 In association with:

2 August 27, 2014 H.M. Ridgely Contract Manager GROVE LAND UTILITIES, LLC 660 Beachland Boulevard, Suite 301 Vero Beach, Florida Phase 2 Financial Feasibility of the Grove Land Reservoir and Stormwater Treatment Area (STA) Final Report Dear Mr. Ridgely: Per our contract with Grove Land Utilities, LLC dated May 16, 2013, we are pleased to submit the final report that describes the Phase 2 financial feasibility of the Grove Land Reservoir and STA Project. We have conceptualized this Project and estimated its benefits, costs, potential revenue, and financial feasibility. We thank the Peer Review Group members for their guidance and for the information they provided to assist us in completing this study and report. These members are Hector Herrera and Maurice Sterling with the St. Johns River Water Management District and Beth Kacvinsky and Kathryn LaMartina with the South Florida Water Management District. In addition we thank Lewis Hornung, you, and Ron Edwards for the valuable information and insight you all provided. We enjoyed working with Grove Land Utilities, LLC and the Peer Review Group. Sincerely, HAZEN AND SAWYER, P.C. Robert B. Taylor, P.E. Vice President Enclosure

3 Executive Summary Grove Land Utilities, LLC (GLU) was certificated by the Florida Public Service Commission (PSC) in 2012 as a water and wastewater utility with a service area that includes certain properties of its parent company, Evans Properties, Inc., in Okeechobee, Indian River and St. Lucie counties. Certain portions of these lands are located in an area that is very favorable to providing water storage, water supply, and water quality benefits via a surface water reservoir and stormwater treatment area (STA). This water management project has the potential to provide numerous benefits to a variety of entities that could be involved in financing its construction and operation. The entities include the St. Johns River and the South Florida Water Management Districts; the Florida Department of Environmental Protection; the Federal Government; landowners; and numerous water utilities. The water management districts are State of Florida agencies charged with the protection of the State s water resources. The purpose of this study was to assess the financial feasibility of a proposed Grove Land Reservoir and Stormwater Treatment Area, herein referred to as the GLRSTA Project. This study includes a conceptualization of the Project components, estimation of the dollar value of benefits and costs, evaluation of the Project s economic and financial feasibility, and identification of potential issues that would need to be addressed during further evaluations of this Project. This study includes both a financial feasibility analysis and an economic feasibility analysis. A project is economically feasible if the present value of revenues over time is greater than or equal to the present value of costs over time. A project is financially feasible if a person or entity is willing to invest in the project, has the capability to raise the needed money to create and operate the project, and develops a method to successfully collect sufficient revenue from the Project to recover all costs, including opportunity costs. Opportunity cost is the income, wealth or profit that could have been earned from other investment opportunities. For a project to be developed, it should be both economically and financially feasible R5_sec ES This study is the first to describe and evaluate the benefits, costs, and economic and financial feasibility of this Project. Estimates of the physical benefits and the dollar values of the benefits and costs are based on a conceptualization of the Project using the best available information absent a detailed design study. The values for potential water supplies/deliveries, flow attenuation, and nutrient removal are estimates commensurate with a preliminary feasibility study. There are likely times/periods when design values cannot GROVE LAND UTILITIES, LLC Page ES-1

4 Executive Summary August 2014 be met due to operational issues, extreme weather, etc. However, meeting the estimated levels of delivery and treatment over the long term and at a statistically high percentage are expected. Similarly, the values used to estimate the benefits and costs for determining return on investment include various assumptions and risk factors that will have to be refined as project development proceeds. The GLRSTA Project, its water source, and ultimate water supply destinations are provided in Figure ES-1. The project would be located in northern Okeechobee and southern Indian River counties on land owned by Evan s Properties, Inc. The project site is 7,788 acres historically and currently used to grow citrus. The reservoir water supply would consist of excess stormwater runoff captured from the C-25, C-24, and C-23 basins via the C-25, C-24, and C-23 Canals owned by the South Florida Water Management District (SFWMD). This excess runoff is causing environmental degradation of the Indian River Lagoon (IRL), including the St. Lucie Estuary (SLE). When stormwater flows exceed the capacity of the Upper St. Johns River Basin Project, the reservoir would also be able to store water flows from the C-52 watershed via the C- 52 flow-way owned by the St. Johns River Water Management District (SJRWMD). As part of this Project, the hydraulic connection between these two water management districts would be improved. Water from the reservoir would enter the STA sited to the north. The STA would reduce total phosphorus (TP) and total nitrogen (TN) concentrations in the water. This treated water could be discharged to the SJRWMD C-52 flow-way (and subsequently north to the St. Johns River) or to the SFWMD s C-25 Canal (and subsequently south to the C-24 and C-23 Canals) for water supply and environmental deliveries. Construction of the project is envisioned to be completed by the year This time frame is feasible if Project engineering design begins no later than the end of year 2015 so that construction begins no later than the end of year The anticipated construction period is two years. The Project would begin operation in The Project is expected to provide the following benefits to water utilities, landowners and government agencies R5_sec ES Reduction or Improved Timing of Water Discharges to Estuaries. The Project would reduce environmental harm to the IRL and SLE in the SFWMD by diverting and storing 155,000 acre-feet of wet season stormwater flows each year. This quantity is about 37 percent of the total discharge through the SFWMD s S-99, S-49 and S-97 Structures that control water flows to these estuaries. Local residents and businesses from Ft. Pierce to Stuart are expected to benefit from this Project feature. GROVE LAND UTILITIES, LLC Page ES-2

5 GROVE LAND UTILITIES, LLC R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure ES-1 Conceptual Diagram of the Grove Land Reservoir and Stormwater Treatment Area Project Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

6 Executive Summary August 2014 Water Supply. From these diverted and stored flows, the Project would provide an estimated 136 mgd of water on an average daily basis for surface water augmentation and groundwater recharge. The GLRSTA Project would be selling storage and treatment, not water. The stored flows would be sent through the St. Johns River, existing canals, and/or constructed conveyance infrastructure to surface or ground water storage areas in close proximity to existing utility infrastructure. Water utilities and their customers located in the SJRWMD and the SFWMD would benefit from this Project feature. Nutrient Reduction. All water stored by the Project would be sent through an STA to reduce the total phosphorus (TP) concentration of water entering the STA from its current level of about 275 part per billion (ppb) to about 76 ppb which is a 73 percent reduction from current levels. The total nitrogen (TN) concentration of water entering the STA would be reduced from its current level of about parts per million (ppm) to about ppm or 22.5 percent of current levels. The Project is expected to remove about 38 to 55 metric tons of TP and from 67 to 303 metric tons of TN that would otherwise flow into the IRL and SLE, depending on the amount of water that is permanently diverted from these estuaries. The SFWMD, the Florida Department of Environmental Protection (FDEP), local agencies, and agricultural landowners in the St. Lucie Basin would benefit from this Project feature. The local tourism industry and the regional economy would benefit from the improved wildlife habitat. The estimated nutrient reductions reported above assume certain proportions of water from the C-23, C-24 and C-25 Canals will be stored in the reservoir. The actual inflow nutrient concentrations in the water entering the Reservoir and STA will depend on the timing and proportions of flow from the C-23, C-24 and C-25 Canals and will vary due to variations in nutrient concentrations among the canals and during the year. MFL Compliance. The SJRWMD would benefit as the Project provides additional freshwater to the St. Johns River that may help to maintain compliance with minimum flows and levels (MFLs) regulations. Water Management Flexibility. Because the GLRSTA Project reservoir extends into both the SJRWMD and the SFWMD, the hydraulic connection between the water management networks of these two districts would be improved. The SJRWMD and the SFWMD would benefit as the Project increases the flexibility of managing water systems in the area R5_sec ES Replace Some Components of Indian River Lagoon South CERP Project. The GLRSTA Project will provide 75,000 acre-feet of reservoir storage and includes a 2,000 acre STA. This Project would provide the same benefits that would have been provided by the proposed C-25 Reservoir and STA and a portion of the benefits provided by the C- GROVE LAND UTILITIES, LLC Page ES-3

7 Executive Summary August /24 Reservoir and STAs which are part of the Comprehensive Everglades Restoration Plan (CERP). The engineering design and construction of these projects have been indefinitely delayed and none of the land has been acquired for the C-25 Reservoir and STA. The Federal government, as a CERP partner, would benefit from the GLRSTA Project because it would replace some components of the IRL South CERP Project. In order for the GLSTA Project to receive CERP-related funding and also provide the SFWMD with in-kind CERP credits, the Corps would need to agree on the GLRSTA Project s conceptual plan, engineering design, and cost estimates. Other Potential Beneficiaries. Other entities might also benefit from the GLRSTA Project including the Florida Department of Transportation (FDOT) that could benefit from improved stormwater drainage through the Turnpike Canal (C-25 Canal). This canal runs parallel to Florida s Turnpike in between the Grove Land Reservoir and the Grove Land STA. The Project s nutrient reduction benefits to FDOT are described in Section 2.5 of this report. Another potential beneficiary is FPL. In the event that it chooses to site a new power plant in northeast Okeechobee County, water from the GLRSTA Project could be used for power plant cooling. The potential GLRSTA Project beneficiaries are listed as follows: Water utilities in the SJRWMD Water utilities located near the GLRSTA Project, including those in the SFWMD Water use permittees and applicants located near the Project s groundwater recharge areas SFWMD / FDEP / State of Florida SJRWMD / State of Florida Local agencies and agricultural landowners in the St. Lucie River and Estuary Basin Federal Government under the CERP Other beneficiaries including FDOT and FPL The GLRSTA Project would be able to serve these beneficiaries as customers of GLU. For these beneficiaries to become GLU customers, their payments made to GLU would need to be such that the value of the benefits received by the customer is greater than the price paid by the customer R5_sec ES Other beneficiaries of the Project include residents of and visitors to coastal communities in the IRL and SLE from Ft. Pierce to Stuart; water utility customers in areas that would GROVE LAND UTILITIES, LLC Page ES-4

8 Executive Summary August 2014 benefit from the Project s water supply; and environmental organizations concerned with the environmental health of the IRL, SLE and the St. Johns River and its tributaries. For this financial feasibility study, these beneficiaries are represented by the water utilities, water management districts, and government agencies listed above. The dollar value of benefits and costs estimated during this study were used to evaluate the economic and financial feasibility of the GLRSTA Project. The annual revenues and costs were calculated each year from 2015, the presumed year when project design begins, to the year 2020, when the project becomes operational, through the year 2070 which would be the 50 th year of project operation. The annual revenue that could be collected each year is a portion or all of the total physical benefits provided by the project times a portion or all of the total per unit benefit values. Given the quantity of benefits provided by the Project and estimates of these benefit values (or maximum willingness-to-pay), the maximum potential revenue from the Project would be about $174 million per year in 2013 dollars. Over half of this revenue, 64 percent, is from the provision of stored water to utilities and other large water users. In order to attract customers, the Project s prices will need to be less than or equal to the customer s maximum willingness-to-pay. The lower the price, the greater will be the customer s consumer surplus (willingness-to-pay minus price) and the greater will be the amount of services purchased. There is the possibility that not all of the benefit capacity of the Project would be purchased during the year and/or that customers would not pay their entire willingness-to-pay for the Project s benefits. Therefore, to get an idea of the economic and financial feasibility of the Project, a range of revenues was used where the annual revenue is equal to a proportion of the maximum potential annual revenue of $174 million. The proportions are 100 percent, 85 percent, 75 percent, 60 percent, 50 percent, and 30 percent. The present values of the GLRSTA annual revenues and costs were calculated at a 7.18 percent annual real discount rate which is an estimate that reflects the real minimum riskfree private discount rate. For each revenue scenario, the net present value, the internal rate of return, and the payback period were calculated. The results are provided in Table ES.1. The definitions of these terms are provided in the footnotes to this table R5_sec ES GROVE LAND UTILITIES, LLC Page ES-5

9 Executive Summary August 2014 Table ES.1 Economic Feasibility Results Under Six Alternative Revenue Scenarios Financial Metric Net Present Value at 7.18% real discount rate (a) % of Production Capacity Sold x % of Full Benefit Values Per Unit Collected 100% 85% 75% (1) (2) (3) (4) $756,000,000 $609,000,000 $511,000,000 Internal Rate of Return, Real Annual (b) 18.38% 16.49% 15.17% Benefit-to-Cost Ratio at 7.18% real discount rate (c) Payback Period in Years (d) Financial Metric Net Present Value at 7.18% real discount rate (a) % of Production Capacity Sold x % of Full Benefit Values Per Unit Collected 60% 50% 30% (1) (5) (6) (7) $364,000,000 $266,000,000 $23,000,000 Internal Rate of Return, Real Annual (b) 13.10% 11.64% 7.54% Benefit-to-Cost Ratio at 7.18% real discount rate (c) Payback Period in Years (d) (a) Net present value is the annual revenue minus annual cost discounted to present value over the 55 year period at 7.18% annual discount rate. This discount rate is an estimate of the real private minimum risk-free rate of return on investment (b) The Internal Rate of Return is the discount rate that causes the Net Present Value to be $0 (Present value of benefits is equal to the present value of costs). (c) The Benefit-to-Cost Ratio is the present value of benefits divided by the present value of costs, using a 7.18 percent discount rate. (d) The Payback Period is the number of years for the discounted capital, finance and land costs to be recovered through the discounted annual net income where the real annual discount rate is 7.18 percent R5_sec ES GROVE LAND UTILITIES, LLC Page ES-6

10 Executive Summary August 2014 The net present value of the GLRSTA Project is significant under the 60 percent to 100 percent revenue scenarios. Under the 60 percent revenue scenario, the net present value at 7.18 percent discount rate is $364 million over the 55 year period and the real internal rate of return is 13 percent. This return is net of inflation. So if inflation were three percent then the nominal rate of return would be 16 percent. The estimated real internal rate of return under the six revenue scenarios is plotted in Figure ES-2. The real internal rate of return ranges from 7.5 percent when 30 percent of the Project s maximum potential revenue is collected to 18.4 percent when all of the Project s maximum revenue potential is collected. If the inflation rate is 3 percent, then the nominal internal rates of return would range from 10.5 percent to 21.4 percent. Internal Rate of Return, real annual 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Figure ES-2 Estimated Real Internal Rate of Return of the GLRSTA Project 7.5% 11.6% 13.1% 15.2% 16.5% 18.4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Revenue as a Percent of Maximum Potential Revenue This study found that the GLRSTA Project has the potential to be economically and financially feasible depending on the technical and financial risk associated with investing in the Project. Technical risk is associated with the success of the Project in providing the anticipated benefits. Financial risk is associated with being able to collect sufficient revenue to recover all Project costs, including opportunity costs and will depend on the quantity, duration, and security of the actual customer commitments R5_sec ES GROVE LAND UTILITIES, LLC Page ES-7

11 Executive Summary August 2014 Some of the risk at this time is related to several issues that will need to be addressed in future studies of this Project. They are listed as follows. Additional issues are discussed in Section 5.0 of this report. (a) GLU will need a SFWMD water use permit and/or a SFWMD water reservation in order to secure the availability of water from the C-23, C-24 and C-25 Canals. (b) GLU s water customers will need a water use permit from ground or surface water sources for that portion of their water supply that comes from the GLRSTA Project. (c) A permit duration of 50 years for GLU and its water customers, instead of the current regulatory maximum of 30 years for alternative water sources, would reduce the uncertainty associated with recovering GLU and customer investments in the Project. (d) The amount of water needed by the GLRSTA Project cannot be constrained by the CERP Assurance of Project Benefits Agreement signed by U.S. President George W. Bush and Florida s Governor Jeb Bush (President s and Governor s Agreement) in (e) The GLRSTA Project will need a sufficient and reliable supply of water while complying with: (i) the water reservation for the North Fork of the St. Lucie River; (ii) the President s and Governor s Agreement for the CERP projects; (iii) the MFLs for the St. Lucie Estuary and the St. Johns River; and (iv) the Restricted Allocation Area Rule for the C-23, C-24 and C-25 Canal System. (f) The Project s withdrawal-to-recharge ratios used to obtain additional permitted quantities from ground and surface water sources, including the St. Johns River, must be high enough to maintain the Project s technical and financial feasibility R5_sec ES Risk is typically incorporated into the minimum required rate of return on investment. If the minimum acceptable real rate of return is 15 percent, then the Project is economically feasible for revenue scenarios as low as 75 percent of the Project s estimated maximum revenue potential. If the minimum acceptable real rate of return is 11 percent, then the Project is economically feasible for revenue scenarios as low as 50 percent of the Project s estimated maximum revenue potential. Bear in mind that none of the benefit values, costs, discount rates, and internal rates of return presented in this report include inflation. To obtain the nominal rate of return, the inflation rate should be added to the real rate of return. GROVE LAND UTILITIES, LLC Page ES-8

12 Executive Summary August 2014 This study also finds that the financial success of the Project, as it is conceptualized in this report, will depend on the amount of stored water that is sold to water utilities and other large water users. If this Project is used as a regional water supply project with significant financial contributions from beneficiaries, then it is likely to be an economically and financially feasible investment. The GLRSTA Project as conceptualized in this study has the potential to be financially feasible to the Project s owner and economically feasible to the beneficiaries. These beneficiaries would be the Project s customers and would have the opportunity to use this Project to achieve cost-effective and socially beneficial methods to increase water supply and improve the environmental conditions of surface water bodies and estuarine systems R5_sec ES GROVE LAND UTILITIES, LLC Page ES-9

13 Table of Contents Executive Summary...ES-1 Section 1.0 Study Purpose and Project Description Study Purpose Description of the Grove Land Reservoir and Stormwater Treatment Area Project 1.3 Conceptual Project Configuration and Physical Benefits 1.4 Report Organization Section 2.0 Beneficiaries and Benefit Values The GLRSTA Project and Its Beneficiaries Benefits of Water Supply from the GLRSTA Project Estimated Dollar Value of Water Supply from the GLRSTA Project 2.4 Benefits and Estimated Dollar Value to Florida Agencies of Protecting the St. Lucie River Watershed 2.5 Benefits and Estimated Dollar Value to Local Government Agencies 2.6 Estimated Benefit Value to the Federal Government under the CERP IRL-South Project 2.7 Estimated Benefit Value to Agriculture Summary of GLRSTA Project Values Potential Payment Methods Conclusions Section 3.0 Project Conceptual Plan and Lifecycle Cost Estimates R5_toctoc 3.1 GLRSTA Project Components GLRSTA Capital and Annual O&M Costs Grove Land Reservoir Grove Land Stormwater Treatment Area (STA) GROVE LAND UTILITIES, LLC TOC-1

14 Table of Contents August GLRSTA Project Conveyance Improvements GLRSTA Project Administration Summary of Capital, Annual O&M and Administrative Costs Section 4.0 Physical Benefits of GLRSTA Project Water Supply Phosphorus Reduction to Receiving Waters Nitrogen Reduction to Receiving Waters Estimates of Flow and Nutrient Load Reductions to the IRL and SLE 4.5 Other Considerations and Assumptions Summary of GLRSTA Physical Attributes and Benefits Section 5.0 Issues Affecting GLRSTA Project Feasibility Inter-District Water Transfers Consumptive Use Permit and Water Reservation Project Withdrawal-to-Recharge Ratio Water Use Permit and Water Shortage Regulations Water Management and Quality Impacts to Other Persons and Entities U.S. Army Corps of Engineers and Federal Funding Water Discharges from the GLRSTA Section 6.0 Economic and Financial Feasibility Evaluation Annual Project Revenue Annual Project Cost Economic and Financial Feasibility of the GLRSTA Project Section 7.0 Impact to Economy and Society of a Do Nothing Scenario Section 8.0 Conclusions R5_toc_toc Appendix A Representative Alternative Water Supply Project Costs GROVE LAND UTILITIES, LLC TOC-2

15 Table of Contents August 2014 Appendix B Appendix C Economic Evaluation Using 60 Percent of Maximum Potential Revenue, 2013 Dollars Cash-Flow Evaluation Using 60 Percent of Maximum Potential Revenue, 2013 Dollars Tables Table ES.1 Table 1.1 Economic Feasibility Results Under Six Alternative Revenue...ES-6 Scenarios Physical Attributes and Estimated Benefits of the GLRSTA Project R5_toc_toc Table 2.1 Water Utilities that Might Benefit from Grove Land Reservoir and STA Water Supply Table 2.2 St. Johns River (SJR) Alternative Water Sources, Costs are in dollars Table 2.3 Willingness to Pay to Avoid Water Shortage Restrictions by Residents in the Orlando, Florida Area, in 2011 dollars Table 2.4 Calculation of Value of Water to Orlando Residents per 1, Gallons Table 2.5 Weighted Average Cost per 1,000 gallons for St. Johns River Water Supply and Treatment, 2013 dollars Table 2.6 Calculation of 2012 Estimated Water Utility Cost per 1,000 Gallons with Hypothetical Water Production from St. Johns River (SJR) Alternative Water Supply (AWS), Costs in 2012 dollars Table 2.7 Average Cost of Sewer Service per 1,000 Gallons from City of Orlando Sewer Rate Structure, 2014 Table 2.8 Net Willingness to Pay for Water per 1,000 gallons of Water Consumed, 2013 dollars Table 2.9 Summary of Costs Associated with Alternative Water Supplies in Eastern Florida, 2013 dollars (includes source and treatment) Table 2.10 Total Capital and O&M Cost per Pound of Total Phosphorus Removed SFWMD Regional Stormwater Treatment Areas (STA) Table 2.11 Estimated Cost of Reduced Water Discharges per Acre-foot from Two Existing Water Storage Projects in the SFWMD Table 2.12 Phosphorus and Nitrogen Reduction Projects by MS4s, WCDs and Non-MS4s Located in St. Lucie and Martin Counties, 2013 dollars Table 2.13 Summary of Additional Nutrient Reduction Needed from MS4s, WCDs and non-ms4s in the St. Lucie River and Estuary Basin as Required by the 2013 BMAP GROVE LAND UTILITIES, LLC TOC-3

16 Table of Contents August 2014 Table 2.14 Estimated Avoided Cost of the GLRSTA Project to the Federal Government under CERP Table 2.15 Estimated Avoided Cost of Obtaining Additional irrigation Water From C-23, C-24 and C-25 Canals Table 2.16 Summary of Estimated Benefit Values Associated with the GLRSTA Project Table 2.17 Summary of Estimated Physical Benefits from the GLRSTA Project Table 3.1 Summary of GLRSTA Improvements included in Cost Table 3.2 Estimated Capital and Annual O&M Costs of the Grove Land Reservoir (75,000 acre-feet of storage), 2013 dollars Table 3.3 Estimated Capital and Annual O&M Costs of the Grove Land Stormwater Treatment Area (STA), 2013 dollars Table 3.4 Estimated Capital Cost to Increase the Conveyance Capacity of the Intake Water Sources of the SFMWD and Improve Hydraulic Connection, 2013 dollars Table 3.5 Estimated Capital Cost and Annual O&M Cost of Improvements to Move GLRSTA Water through the Upper St. Johns River Basin, 2013 dollars Table 3.6 Estimated Administration Cost Associated with the GLRSTA Project, 2013 dollars Table 3.7 Total Estimated Capital and Annual O&M Costs of the Grove Land Reservoir and Stormwater Treatment Area, 2013 Dollars R5_toc_toc Table 4.1 SFWMD DBHYDRO Water Quality and Flow Monitoring Data Table 4.2 Summary of Predicted GLRSTA TP Reduction Performance mgd (or 210 cfs) Treatment Capacity Table 4.3 Simulated Outflow FWM Total Phosphorus from the Grove Land STA (ppb) Table 4.4 Simulated Total TP Removed from Water Leaving the Grove Land STA (metric tons, including rainfall loads) Table 4.5 Comparison of Historic Average Wet Season, Dry Season, And Annual FWM TP Concentrations in Combined C-25, C-24 and C-23 Canal Flows (62/19/19) in ppb Table 4.6 Summary of Estimated GLRSTA TN Reduction Performance Table 4.7 Estimated TN Removal from the Grove Land STA (Metric tons per year, based on WY2009 to 2013 for the existing STA 5 average of 22.5% TN removed) Table 4.8 Summary of Estimated Annual Tidal Discharge and Nutrient Reductions to IRL and SLE Due to Operations of the GLRSTA Project Table 4.9 Physical Attributes and Estimated Benefits of the GLRSTA Project GROVE LAND UTILITIES, LLC TOC-4

17 Table of Contents August 2014 Table 5.1 Estimated Cost of ASR Wells at GLRSTA Project, 136 mgd capacity Table 6.1 Maximum Annual Revenue Potential of the GLRSTA Project Table 6.2 Revenue Scenarios - Annual Revenue in Dollars Using Percent of Maximum Revenue Potential Table 6.3 Percent of Maximum Revenue Potential Collected Based on Combinations of Percent of Full per Unit Benefit Values Collected and Percent of Production Capacity Sold Table 6.4 Price per Unit of Benefit when 100 Percent of Project Benefit Capacity is Sold for the Six Revenue Scenarios Evaluated Table 6.5 Total Estimated Capital, Financing and Annual O&M Costs of the Grove Land Reservoir and Stormwater Treatment Area, 2013 Dollars Table 6.6 Financing Cost Estimate for Constructing the GLRSTA Project Table 6.7 GLRSTA Project Components That Are Replaced Before Year Table 6.8 Economic Feasibility Results Under Six Alternative Revenue Scenarios Table 6.9 Relationship Between Net Revenue from Benefit-Cost Analysis and Net Income From Cash Flow Analysis For 60% of the GLRSTA Project s Maximum Revenue Potential Table 7.1 Estimated Annual Values of the Indian River Lagoon to Residents And Visitors of Martin County, Environmental Condition of Lagoon in 2007 Table 7.2 Estimated Annual Values of the Indian River Lagoon to Residents And Visitors of St. Lucie County, Environmental Condition of Lagoon in 2007 Table 7.3 Estimated Annual Values of the Indian River Lagoon to Residents And Visitors of Indian River County, Environmental Condition of Lagoon in 2007 Table 7.4 Estimated Annual Values of the Indian River Lagoon to Residents And Visitors of Martin, St. Lucie and Indian River Counties, Environmental Condition of Lagoon in 2007 Table 7.5 Changes in the Economic Contribution of the Indian River Lagoon As the Lagoon's Environmental Quality Reduces Recreational Use R5_toc_toc Table 8.1 Summary of Estimated Benefit Values Associated with the GLRSTA Project Table 8.2 Total Estimated Capital, Financing and Annual O&M Costs of the Grove Land Reservoir and Stormwater Treatment Area, 2013 Dollars Table 8.3 GLRSTA Project Components that are Replaced Before Year GROVE LAND UTILITIES, LLC TOC-5

18 Table of Contents August 2014 Figures Figure ES-1 Figure ES-2 Figure 1-1 Figure 1-2 Figure 1-3 On or After Page Conceptual Diagram of the Grove Land Reservoir and Stormwater...ES-2 Treatment Area Project Estimated Real Internal Rate of Return of the GLRSTA Project...ES-7 Conceptual Diagram of the Grove Land Reservoir and Stormwater Treatment Area Project Grove Land Reservoir and Stormwater Treatment Area Proposed Site Sub-watersheds of the St. Lucie River Watershed Protection Plan (SLRWPP) area and four regions of the St. Lucie Estuary (SLE): North Fork, South Fork, Middle Estuary, and Lower Estuary Figure 2-1 Schematic Diagram of Current Water Flow through Canals to IRL and SLE Figure 2-2 Schematic Diagram of Water Flow from Canals to GLRSTA Project Figure 2-3 Location of SFWMD Upper East Coast Planning Area (from SFWMD) Figure 2-4 Geographic Area of the Central Florida Water Initiative, CFWI (from Figure 2-5 St. Johns River Water Management District Water Supply Planning Regions Figure 2-6 Flow Path from GLRSTA through Upper St. Johns River Basin to channelized St. Johns River Figure 2-7 Water Flow from GLRSTA to projects such as Taylor Creek Reservoir Figure 2-8 Potential to Augment Water Supply Projects in Middle St. Johns River Basin Figure 2-9 Potential of GLRSTA Project to Augment Water Supply at Lower St. Johns River Figure 2-10 Location of the Indian River Lagoon South Projects of the CERP R5_toc_toc Figure 3-1 Schematic Diagram of Water Flow from Canals to GLRSTA Project Figure 3-2 Locations of C-25 Canal that would be widened and deepened Figure 3-3 Locations of Box Culverts and STA Outflow Gate at Southeast corner of STA Figure 3-4 Proposed improvements for water inflow to Reservoir and outflow to STA Figure 3-5 Path of Water Flows from the GLRSTA Project through the Upper St. Johns River Basin to the channelized St. Johns River GROVE LAND UTILITIES, LLC TOC-6

19 Table of Contents August 2014 Figure 3-6 STA Outfall Gate and S-253 Pump to move water from STA to the Upper St. Johns River Basin Figure 3-7 Location of New Structures in the Upper St. Johns River Basin to move water from the GLSTA Project Figure 3-8 Water Flow from STA to C-25 Canal Figure 3-9 Cross-Section of Reservoir Levee Figure 4-1 Specific Conductance at S-50 Structure Over Time Figure 4-2 Predicted flow-weighted annual average chloride levels after blending waters of the C-25, C-24 and C-23 Canals in the GLRSTA Figure 4-3 Predicted flow-weighted annual average conductance levels after blending waters of the C-25, C-24 and C-23 Canals in the GLRSTA Figure 6-1 Estimated Real Internal Rate of Return of the GLRSTA Project R5_toc_toc GROVE LAND UTILITIES, LLC TOC-7

20 Section 1.0 Study Purpose and Project Description 1.1 Study Purpose Grove Land Utilities, LLC (GLU) was certificated by the Florida Public Service Commission (PSC) in 2012 as a water and wastewater utility with a service area that includes certain properties of its parent company, Evans Properties, Inc., in Okeechobee, Indian River and St. Lucie Counties. Certain portions of these lands are located in an area that is very favorable to providing water storage, water quality, and water supply benefits via a surface water reservoir and stormwater treatment area (STA). This water management project has the potential to provide numerous benefits to a variety of entities that could be involved in financing its construction and operation. The entities include the St. Johns River and the South Florida Water Management Districts; the Florida Department of Environmental Protection; the Federal Government; landowners; and numerous water utilities. The water management districts are State of Florida agencies charged with the protection of the State s water resources. The purpose of this study is to assess the financial feasibility of a proposed Grove Land Reservoir and Stormwater Treatment Area, herein referred to as the GLRSTA Project. This study includes a conceptualization of the Project components, estimation of the dollar value of benefits and costs, evaluation of the Project s economic and financial feasibility, and identification of potential issues to be addressed during further Project evaluations. This study includes both a financial feasibility analysis and an economic feasibility analysis. A project is economically feasible if the present value of revenues over time is greater than or equal to the present value of costs over time. A project is financially feasible if a person or entity is willing to invest in the project, has the capability to raise the needed money to create the project, and develops a method to successfully collect sufficient revenue from the Project to recover all costs, including opportunity costs. Opportunity cost is the income, wealth or profit that could have been earned from other investment opportunities. For a project to be developed, it should be both economically and financially feasible R5_sec 01 GROVE LAND UTILITIES, LLC Page 1-1

21 1.0 Study Purpose and Project Description August Description of the Grove Land Reservoir and Stormwater Treatment Area Project The GLRSTA Project, its water source, and ultimate water supply destinations are provided in Figure 1-1. The project would be located in northern Okeechobee and southern Indian River counties on land owned by Evan s Properties, Inc. The project location is ideal for providing a variety of water supply and environmental benefits. The reservoir water supply would consist of excess stormwater runoff captured from the C-25, C-24, and C-23 basins via the C-25, C-24 and C-23 Canals owned by the South Florida Water Management District (SFWMD). This stormwater is currently being discharged to the Indian River Lagoon (IRL), including the St. Lucie Estuary (SLE), at the outlets of the C-23, C-24 and C-25 Canals. These Canals are located south of the Project and provide flood protection to the properties within the three sub-watersheds by draining surface runoff and stormwater from the land. However, the excess runoff from these Canals is causing environmental degradation of the IRL and SLE. When stormwater runoff flows exceed the capacity of the Upper St. Johns River Basin Project, the reservoir would also be able to store water flows from the C-52 watershed via the C-52 flow-way owned by the St. Johns River Water Management District (SJRWMD). As part of this Project, the hydraulic connection between these two water management districts would be improved to increase the flow capacity. Water from the reservoir would enter the stormwater treatment area (STA) which would be sited north of the reservoir. The STA would reduce the total phosphorus (TP) concentration to below 80 ppb. This threshold was suggested by the SJRWMD to provide an assurance that the water quality in the St. Johns River would comply with its 90 ppb concentration standard. The STA would reduce the total nitrogen (TN) concentration to below 1.22 ppm. There is no specific numeric criteria for TN in the St. Johns River because TP was determined by the State of Florida as being the nutrient causing water quality impairment in the river. The treated water from the STA could be discharged to the SJRWMD C-52 flow-way (and subsequently north to the St. Johns River) or to the SFWMD s C-25 Canal (and subsequently south to the C-24 and C-23 Canals) for water supply and environmental deliveries. The GLRSTA Project would be capable of providing an average annual daily water supply of 136 mgd R5_sec 01 The values for potential water supplies/deliveries, flow attenuation, and nutrient removal are estimates commensurate with a preliminary feasibility study. There are likely times/periods when design values cannot be met due to operational issues, extreme weather, etc. However, meeting the estimated levels of delivery and treatment over the long term and at a statistically high percentage are expected. Similarly, the values used to estimate the GROVE LAND UTILITIES, LLC Page 1-2

22 GROVE LAND UTILITIES, LLC R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 1-1 Conceptual Diagram of the Grove Land Reservoir and Stormwater Treatment Area Project Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

23 1.0 Study Purpose and Project Description August 2014 benefits and costs for determining return on investment include various assumptions and risk factors that will have to be refined as Project development proceeds. The project is expected to provide the following benefits to water utilities, landowners and government agencies. 1. Surface Water Augmentation. Water Utilities in the SJRWMD and the SFWMD would benefit as the Project provides supplemental water supplies using the St. Johns River, existing canals, and/or constructed conveyance infrastructure to move the water to surface or ground water storage areas in close proximity to the utilities. 2. Groundwater Recharge. Water Utilities and other water use permittees in the SJRWMD and the SFWMD would benefit as the Project s water is used for groundwater recharge allowing these entities to withdraw additional freshwater from the aquifer. 3. Reduction or Improved Timing of Water Discharges to Estuaries. The SFWMD and local communities from Ft. Pierce to Stuart would benefit as the Project is used to reduce or to change the timing of stormwater flows to the IRL and SLE to reduce environmental harm to coastal estuaries. 4. Nutrient Reduction. The SFWMD, the Florida Department of Environmental Protection (FDEP), local agencies and agricultural landowners in the St. Lucie Basin would benefit as the Project reduces the amount of total phosphorus (TP) and total nitrogen (TN) entering the IRL and SLE. The local tourism industry and the regional economy would benefit from the improved wildlife habitat. 5. MFL Compliance. The SJRWMD would benefit as the Project provides additional freshwater to the St. Johns River that may help to maintain compliance with minimum flows and levels (MFLs) regulations. 6. Water Management Flexibility. The SJRWMD and the SFWMD would benefit as the Project improves the flexibility of managing water systems in the area. 7. Replace Some Components of Indian River Lagoon South CERP Project. The Federal government would benefit as the Project provides the same benefits that would be provided by the proposed C-25 Reservoir and STA and a portion of the benefits provided by the proposed C-23/24 Reservoir and STAs. The engineering design and construction of these projects have been indefinitely delayed and none of the land for the C-25 Reservoir and STA has been acquired R5_sec 01 GROVE LAND UTILITIES, LLC Page 1-3

24 1.0 Study Purpose and Project Description August Conceptual Project Configuration and Physical Benefits The Project site, as depicted in Figure 1-2, is 7,788 acres of land historically and currently used to grow citrus. The Grove Land Reservoir would be constructed on a 5,683 acre parcel where the north portion is located in the SJRWMD and the south portion is located in the SFWMD. The reservoir storage area would be 5,000 acres with a water height of 15 feet. The remaining 683 acres would be used for the perimeter embankment and roadway, seepage collection ditches, and a buffer zone to minimize seepage impacts on adjacent properties. The reservoir would have a storage capacity of 75,000 acre-feet. Water from the reservoir would enter the stormwater treatment area (STA) which would be sited north of the reservoir on 2,105 acres located in the SJRWMD. The effective treatment area of the STA would be 2,000 acres of water surface area and the remaining 105 acres would consist of embankments, canals, and other accessory features. The STA wetland treatment technology would consist of floating aquatic vegetative tilling or FAVT in the front-end of the system, and traditional submersed aquatic vegetation in the backend. The treated water would move either north or south. If the water is sent to the Upper St. Johns River Basin then it will move north. If the water is sent back through the C-25 Canal, then it will move south. This study identified improvements to the Upper St. Johns River and to the southern canals to facilitate flows into and out of the Project. The GLRSTA Project would be designed, permitted, constructed, operated and maintained by GLU through a public-private partnership with the SFWMD and/or the SJRWMD. The partnership has yet to be defined. Project beneficiaries would make payments for water management services to cover project costs. Construction of the project is envisioned to be completed by the year 2020, or six years from the date of this report. This time frame is feasible if Project engineering design begins no later than the end of year 2015 so that construction begins no later than the end of year The anticipated construction period is two years. The Project would begin operation in A summary of the estimated physical attributes and benefits of the GLRSTA Project is provided in Table 1.1. The basis for these estimates is provided in this report R5_sec 01 GROVE LAND UTILITIES, LLC Page 1-4

25 GROVE LAND UTILITIES, LLC W E S ' BUFFER 50' BUFFER 25' BUFFER 520' WMD Boundary 2,000 ACRES STA TOTAL SITE 2,105 ACRES 50' BUFFER 520' 520' 5,000 ACRES RESERVOIR R4 520' TOTAL SITE 5,683 ACRES Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 1-2 Grove Land Reservoir and Stormwater Treatment Area Proposed Site Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

26 1.0 Study Purpose and Project Description August 2014 Table 1.1 Physical Attributes and Estimated Benefits of the GLRSTA Project Row No. Type of Physical Attribute or Benefit Value (1) Physical Size: (2) Site Area of Reservoir in acres 5,683 (3) Site Area of STA in acres 2,105 (4) Size of Reservoir in acres Height of water in feet 5, feet (5) Size of STA in acres - Treatment technology 2,000 - FAVT (6) Storage Capacity of Reservoir in acre-feet 75,000 (7) Water flows into Reservoir (% of water from each water source): (8) C-25 Canal 62% (9) C-24 Canal 19% (10) C-23 Canal 19% (11) (12) Water Supply from STA (average daily outflow from Reservoir and STA) in MGD and cfs 136 mgd (210 cfs) Annual reduction in stormwater flow at the coastal outflow structures in acre-feet when there is no return flow: (13) C-25 Canal s S99 Structure (IRL) 80,464 acre-feet (14) C-24 Canal's S49 Structure (SLE) 50,467 acre-feet (15) C-23 Canal's S97 Structure (SLE) 24,123 acre-feet (16) Total 155,054 acre-feet (17) Total reduction in stormwater as a percent of 145,409 acre-feet of average annual discharge through SFWMD s S-99 structure from % to 2005 (18) Total reduction in stormwater as a percent of 139,070 acre-feet of average annual discharge through SFWMD's S-49 structure from 1965 to % (19) (20) Total reduction in stormwater as a percent of 133,581 acre-feet of average annual discharge through SFWMD's S-97 structure from 1965 to 2005 Total reduction in stormwater as a percent of 418,060 acre-feet of average discharge through all three SFWMD structures from 1965 to % 37% R5_sec 01 (21) TP concentration of Reservoir inflow in ppb (FWMC): (22) C-25 Canal 239 ppb (23) C-24 Canal 332 ppb (24) C-23 Canal 321 ppb (25) Composited Reservoir inflow, FWMC TP in ppb 275 ppb (26) Outflow TP concentration from STA in ppb 76 ppb GROVE LAND UTILITIES, LLC Page 1-5

27 1.0 Study Purpose and Project Description August 2014 Table 1.1 Physical Attributes and Estimated Benefits of the GLRSTA Project Row No. Type of Physical Attribute or Benefit Value (27) Percent TP reduction, including TP from rainfall 73% (28) Annual amount of TP reduction (inflow versus outflow) in metric tons 38 metric tons (29) Annual amount of TP reduction at the coastal outflow structures in metric tons (with 100% return flow / with no return flow): (30) C-25 s S99 Structure (IRL) 17 / 24 metric tons (31) C-24's S49 Structure (SLE) 14 / 21 metric tons (32) C-23's S97 Structure (SLE) 7 / 10 metric tons (33) Total 38 / 55 metric tons (34) TN concentration of Reservoir inflow in ppm (FWMC): (35) C-25 Canal ppm (36) C-24 Canal ppm (37) C-23 Canal ppm (38) Composited Reservoir inflow, FWMC TN in ppm ppm (39) Outflow TN concentration from STA in ppm ppm (40) Percent TN reduction, including TN from rainfall 22.5% (41) Annual amount of TN reduction (inflow versus outflow) in metric tons 67 metric tons (42) Annual amount of TN reduction at the coastal outflow structures in metric tons (with 100% return flow / with no return flow): (43) C-25 s S99 Structure (IRL) 34 / 152 metric tons (44) C-24's S49 Structure (SLE) 22 / 103 metric tons (45) C-23's S97 Structure (SLE) 11 / 48 metric tons (46) Total 67 / 303 metric tons Physical Project Size and Water Sources. The physical sizes of the project components are presented in Rows (1) through (6) of the table. These sizes were described above. For the purposes of this study, it was assumed that 62 percent of the water supplied to the reservoir would come from the C-25 Basin through the C-25 Canal and 19 percent each would come from the C-24 and C-23 Basins through the C-24 and C23 Canals. This distribution is provided in Rows (8) through (10). Project Water Supply. The estimated amount of water supply from the Project is provided in Row (11) and is 136 mgd or 210 cfs. If all of this water can be beneficially used for water supply or otherwise discharged into the Upper St. Johns River or stored underground, then no water discharges would be made back through the C-25 Canal and into the estuaries. Otherwise, some of this water would need to be discharged to the estuaries at non-damaging rates during the dry season (November through May) to free up reservoir capacity to accept water during the wet season (June through October) when estuarine R5_sec 01 GROVE LAND UTILITIES, LLC Page 1-6

28 1.0 Study Purpose and Project Description August 2014 damage from stormwater flows typically takes place. Water discharges during the dry season would avoid this estuarine damage. Stormwater Flow Reductions to Estuaries. The annual estimated reductions in stormwater flows at the coastal outflow structures in acre-feet are provided in Rows (13) through (16) and the percentage reductions in flow are provided in Rows (17) through (20). Most, if not all, of the flow reduction would take place during the wet season. These quantities assume no flow back to these estuaries during the dry season. The estuaries and outflow structures are identified in Figure 1-3 and discussed as follows. Flows through the C-25 Canal s S-99 and S-50 Structures enter the IRL at the Ft. Pierce Inlet. The Project s estimated flow reduction at the Ft. Pierce Inlet is 80,500 acre-feet per year or a 55 percent reduction in total average water discharge into this area of the IRL. Water flowing through the C-24 Canal ultimately enters the northern part of the SLE through the SFWMD s S-49 Structure. The Project s estimated flow reduction to the northern SLE is 50,500 acre-feet per year or a 36 percent reduction in total average water discharge into this area of the SLE. Water through the C-23 Canal ultimately enters the central SLE at the SFWMD s S-97 Structure. The Project s estimated flow reduction to the central SLE is 24,100 acre-feet per year or an 18 percent reduction in total average water discharge. The total flow reduction through all three structures is 155,054 acre-feet per year which is a 37 percent reduction in the total water flows through these structures each year. TP Reduction. The TP concentrations in water from the three Canals are provided in Rows (22) through (24). The composited flow-weighted mean concentration (FWMC) of TP is provided in Row (25) and is 275 ppb. This is the inflow TP concentration used to estimate the TP reductions from the STA. The estimated TP reductions as water leaves the STA are provided in Rows (26) through (28). The outflow TP is estimated to be 76 ppb or a 73 percent reduction in TP including the TP generated from rainfall. Given that 136 mgd will be flowing from the STA, the annual TP reduction is estimated to be 38 metric tons R5_sec 01 The annual metric tons of TP reduction at the coastal outflow structures with and without 100 percent return flows from the STA are provided in Rows (30) through (33). The TP reduction to the IRL at the Ft. Pierce Inlet is estimated to range from 17 to 24 metric tons, depending on the amount of water that is released to the IRL from the STA. If no water is released to the IRL from the STA, then the TP reduction is 24 metric tons. If all of the water is released to the IRL, then the TP reduction is 17 metric tons. GROVE LAND UTILITIES, LLC Page 1-7

29 GROVE LAND UTILITIES, LLC 441 C-25* S.J.R.W.M.D. S.F.W.M.D. TPK 95 NORTH BASIN 1 COASTAL C-25 ATLANTIC S-99 S-50 OCEAN G-81 1 Five Mile Ten Mile Creek Creek C-24 C-24 G-79 Gordy Rd Structure NORTH FORK St. Lucie MID COASTAL Lake Okeechobee 0 Okeechobee Co. Kilometers St. Lucie Co. Martin Co S-308 S-153 G-78 C-23 Martin Co. Palm Beach Co. C-23 C-44 C-44 S-49 St. Lucie North Fork North Fork S-97 S BASINS North Fork Mid Estuary Lower Estuary South Fork SOUTH SOUTH TPK FORK COASTAL S-80 Area of South Coastal Drains To SLE Miles 10 Disclaimer: The South Florida Water Management District does not warrant, guarantee, or make any representations regarding the use of information on this map. St. Lucie River Watershed Protection Plan Sub-Watersheds Basins North Fork C-23 South Coasta C-24 South Fork C-44 & S-153 C-25* Indian River Lagoon Sub-Watersheds Basin 1 Mid Coastal North Coastal *Considered part of the St. Lucie watershed when discharging to the St. Lucie Estuary R4 Figure 1-3 Sub-watersheds of the St. Lucie River Watershed Protection Plan (SLRWPP) area and four regions of the St. Lucie Estuary (SLE): North Fork, South Fork, Middle Estuary, and Lower Estuary (From SFWMD, 2012 South Florida Environmental Report, Appendix 10-1) Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

30 1.0 Study Purpose and Project Description August 2014 The TP reduction range for the northern SLE at the S49 Structure is 14 to 21 metric tons annually. The TP reduction range for the central SLE at the S97 Structure is 7 to 10 metric tons annually. The total TP reduction at all three Structures ranges from 38 to 55 metric tons per year. TN Reduction. The TN concentrations in water from the three Canals are provided in Rows (35) through (37). The composited flow-weighted mean concentration (FWMC) of TN is provided in Row (38) and is ppm. This is the inflow TN concentration used to estimate the TN reductions from the STA. The estimated TN reductions as water leaves the STA are provided in Rows (39) through (41). The outflow TN is estimated to be ppm or a 22.5 percent reduction in TN including the TN generated from rainfall. Given that 136 mgd will be flowing from the STA, the annual TN reduction is estimated to be 67 metric tons. The annual metric tons of TN reduction at the coastal outflow structures with and without 100 percent return flows from the STA are provided in Rows (43) through (46). The TN reduction to the IRL at the Ft. Pierce Inlet is estimated to range from 34 to 152 metric tons, depending on the amount of water that is released to the IRL from the STA. If no water is released to the IRL from the STA, then the TN reduction is 152 metric tons. If all of the water is released to the IRL, then the TN reduction is 34 metric tons. The TN reduction range for the northern SLE at the S49 Structure is 22 to 103 metric tons annually. The TP reduction range for the central SLE at the S97 Structure is 11 to 48 metric tons annually. The total TP reduction at all three Structures ranges from 67 to 303 metric tons per year. 1.4 Report Organization This report is comprised of an executive summary, eight sections and three appendices. Section 1.0 is this section and describes the purpose of this study, the GLRSTA conceptual plan, and its estimated physical benefits. Identification of Project beneficiaries and the estimated dollar value of benefits are provided in Section 2.0. Further detail describing the GLRSTA Project components and the estimated Project lifecycle costs are provided in Section 3.0. The physical benefits of the project including estimates of total phosphorus and total nitrogen reductions and estimates of stormwater flow reductions to estuaries are presented in Section 4.0. The issues and constraints that need to be addressed in future studies of this Project are provided in Section 5.0. The financial feasibility evaluation and the impact of a do nothing scenario are provided in Sections 6.0 and 7.0, respectively. This study s conclusions are provided in Section 8.0. AWS costs and financial tables are provided in the appendices R5_sec 01 GROVE LAND UTILITIES, LLC Page 1-8

31 Section 2.0 Beneficiaries and Benefit Values This Section describes the potential beneficiaries, estimated benefit values, revenue sources, and payment metrics associated with the GLRSTA Project. 2.1 The GLRSTA Project and Its Beneficiaries Currently, excessive stormwater flows into the IRL and SLE each year during the wet season causing environmental damage to the IRL and SLE coastal estuaries. Negative effects documented include large algae blooms, fish and animal die offs, and poor water quality. The SFWMD and the SJRWMD recognize the IRL and the SLE (which is a part of the IRL) as the most diverse estuarine environment in North America with more than 4,000 plant and animal species, including manatees, oysters, dolphins, sea turtles and seahorses. These estuaries provide a variety of recreation opportunities to residents and visitors including fishing, swimming, boating, and picnicking. The IRL Economic Assessment and Analysis Update completed for the Indian River Lagoon National Estuary Program in found that the estimated total annual economic value of the IRL in Martin, St. Lucie, and Indian River counties is $1.6 billion in 2013 dollars, including the value of recreation, resident income, and impact on property values. In the event that the environmental quality of the IRL deteriorates, so too will its economic value. Many of these lagoon users would spend their vacation and recreation time visiting other places that have the same types of recreational opportunities but where the quality is better. They would reduce their recreational expenditures in the counties surrounding the IRL, resulting in reduced income to county residents. Environmental damage to these estuaries would also cost residents more money to enjoy recreational activities as they venture farther from home. The appeal of the Lagoon as an amenity and recreational playground would fall resulting in lower residential property values along the coast. A schematic diagram of current water flow through the C-23, C-24 and C-25 Canals is provided in Figure 2-1. The G-81 Structure, included in this diagram, is capable of moving R5_sec 02 1 Hazen and Sawyer, Indian River Lagoon Economic Assessment and Analysis Update, Final Report, for the Indian River Lagoon National Estuary Program in cooperation with the St. Johns River Water Management District and the South Florida Water Management District, August 18, GROVE LAND UTILITIES, LLC Page 2-1

32 GROVE LAND UTILITIES, LLC 700 Yeehaw Junction Okeechobee Lake Okeechobee 441 G78 G81 G79 Vero Beach C-25 Canal S50 Indian River Lagoon S99 Fort Pierce A1A S49 Port St Lucie S97 Stuart St. Lucie Estuary Port Salerno C-23 Canal C-24 Canal R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 2-1 Schematic Diagram of Current Water Flow Through Canals to IRL and SLE Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

33 2.0 Beneficiaries and Benefit Values August 2014 water north or south and has been used to divert C-24 Canal flows away from the SLE and into the IRL at the Ft. Pierce Inlet. A schematic diagram of water flow with the proposed GLRSTA Project is provided in Figure 2-2. During south Florida s wet season, which runs from June to October, the Project would divert the excessive stormwater flows away from the IRL and SLE and reduce the nutrient loads in this water. The water would then be used for beneficial purposes or discharged back to the IRL and SLE at a non-damaging rate during the dry season. As a result, the coastal estuaries would receive lower stormwater flows and nutrients and the water would instead become a valuable water supply for many Florida utilities and large water users. The Project beneficiaries were summarized in Section 1.0 of this report. The potential beneficiaries are listed as follows: Water utilities in the SJRWMD Water utilities located near the GLRSTA Project, including those in the SFWMD Water use permittees and applicants located near the Project s groundwater recharge areas SFWMD / FDEP / State of Florida SJRWMD / State of Florida Local agencies and agricultural landowners in the St. Lucie River and Estuary Basin Federal Government under the CERP The GLRSTA Project would be able to serve these beneficiaries as customers of GLU. For these beneficiaries to become GLU customers, their payments made to GLU would need to be such that the value of the benefits received by the customer is greater than the price paid by the customer. Other beneficiaries of the Project include residents of and visitors to coastal communities in the IRL and SLE from Ft. Pierce to Stuart; water utility customers in areas that would benefit from the Project s water supply; and environmental organizations concerned with the environmental health of the IRL, SLE and the St. Johns River and its tributaries. For this financial feasibility study, these beneficiaries are represented by the water utilities, water management districts, and government agencies listed above R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-2

34 GROVE LAND UTILITIES, LLC 700 Yeehaw Junction 60 Vero Beach Grove Land STA Grove Land Reservoir C-25 Canal S50 G81 G79 S99 Fort Pierce A1A 70 G78 Okeechobee Port St Lucie S49 S97 Stuart Port Salerno Lake Okeechobee C-23 Canal C-24 Canal R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 2-2 Schematic Diagram of Water Flow from Canals to GLRSTA Project Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

35 2.0 Beneficiaries and Benefit Values August Benefits of Water Supply from the GLRSTA Project Water utilities in Florida may benefit from the Project as it provides supplemental water supplies to serve current and growing populations. The utilities addressed in this study that could potentially benefit from the Project are located in one of three geographic areas: (1) the Upper East Coast planning area of the SFWMD (UEC); (2) the Central Florida Water Initiative Area (CFWI); and (3) SJRWMD utilities other than those in the CFWI. A description of the water supply issues in each of these areas is provided as follows. Upper East Coast Planning Area of SFWMD (UEC). The UEC includes all of Martin and St. Lucie counties and the northeastern portion of Okeechobee County (which is the location of the Grove Land Reservoir). This area is depicted in Figure 2-3 and includes the St. Lucie River Watershed and the sub-watersheds drained by the C-23, C-24, C-25 and C-44 Canals. Through the 2030 planning horizon, the SFWMD expects growth in the resident population and irrigated citrus acreage. Even though citrus acreage declined from 2004 to 2009 due to hurricane damage, the proliferation of citrus diseases, and the conversion of citrus land for the C-44 Reservoir Project, the UEC s primary crop is expected to recover as new rootstock and production techniques are adopted. 2 According to the SFWMD s UEC Water Supply Plan Update 2011 (page v): Three primary water supply issues influence water supply planning to meet 2030 projected water needs in the UEC Planning Area: 1. Increased withdrawals from the surficial aquifer system are limited due to potential impacts on wetlands, as well as the increased potential for saltwater intrusion. 2. Surface water availability in the C-23, C-24, and C-25 canals during the dry season is not sufficient to meet projected agricultural demands. 3. Freshwater discharges (minimums and maximums) are affecting the health of the St. Lucie River and Estuary, and southern Indian River Lagoon. The UEC Water Supply Plan Update provides a summary of potential future water sources through 2030 (page v). It states that public water suppliers will be able to continue the use of fresh groundwater from the surficial aquifer at current levels with increased supply provided by continued development of the brackish Floridan aquifer which has become a R5_sec 02 2 South Florida Water Management District, Upper East Coast Water Supply Plan Update Planning Document, 2011, pages iv and 28. GROVE LAND UTILITIES, LLC Page 2-3

36 GROVE LAND UTILITIES, LLC R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 2-3 Location of SFWMD Upper East Coast Planning Area (from SFWMD) Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

37 2.0 Beneficiaries and Benefit Values August 2014 primary water source of UEC utilities. Landscape irrigation needs can be met with continued use of the surficial aquifer at current levels and increased use of reclaimed water. For agricultural irrigation, the use of surface water from the primary canals (C-23, C-24, C-25 and C44) supplemented with water from the brackish Floridan aquifer is expected to be sufficient to meet projected future water needs during a 1-in-10 year drought event. The mixing of freshwater with brackish water is needed to achieve acceptable water quality for crop production. However, the use of brackish water for irrigation, even if mixed with freshwater, creates a risk of salt buildup in the soil over time that can negatively affect crop production. The water sources of the GLRSTA Project are the water flows through the C-23, C-24 and C-25 Canals. During the dry season and other periods of low flow, water stored in the GLRSTA Project could be routed back through these canals to provide water for agricultural irrigation, water utilities, and industrial users. The increase in water available from these canals could allow growers to avoid the need to use brackish water from the Floridan aquifer and reduce fresh surficial groundwater withdrawals thus allowing water utilities and other industrial users to increase pumping from the fresh surficial aquifer. This option has the potential to reduce utility water treatment costs as less brackish water from the Floridan aquifer is used and increase the amount of water available to be withdrawn from the surficial aquifer for other reasonable, beneficial uses. Central Florida Water Initiative Area (CFWI). In 2006, the SJRWMD, the SFWMD and Southwest Florida Water Management District agreed to a Central Florida Coordination Area (CFCA) action plan to address the near-term and long-term development of water supplies in the Central Florida Region, including Orange, Osceola, Seminole, Polk and southern Lake counties. In Phase I of the action plan, a framework was established to deal with short-term water resource issues. Phase I concluded with interim water use regulations limiting groundwater withdrawals to no more than projected 2013 demands and requiring development of alternative water supplies (AWS) for future needs. These interim rules sunset on December 31, R5_sec 02 Phase II of the action plan was undertaken in This phase involved coordinated activities on a variety of issues including: regional water supply planning; investigations and development of traditional and alternative water supply projects; assessment of environmental impacts and groundwater sustainability; and development of water use rules and permitting criteria. In 2011, the Executive Directors of the affected water management districts, in consultation with public water suppliers, created a new collaborative process known as the Central Florida Water Initiative (CFWI). The guiding principles of the CFWI include: identification of sustainable quantities of traditional groundwater sources, development of strategies to meet water demands that are in excess of the sustainable yield of GROVE LAND UTILITIES, LLC Page 2-4

38 2.0 Beneficiaries and Benefit Values August 2014 traditional groundwater sources and recommending consistent rules and regulations for the three water management districts. The area of the CFWI is depicted in Figure 2-4. The draft CFWI Regional Water Supply Plan 3 published in April 2014 reports that an estimated 850 mgd is available to be withdrawn from fresh groundwater in the CFWI on a sustainable basis. According to the Plan, projected 2035 water demand in the CFWI will be about 1,100 mgd resulting in a 250 mgd water supply deficit. This deficit will need to be met using alternative water sources such as surface water, reclaimed water, water conservation and desalination of brackish ground water and seawater. As the population in the CFWI continues to grow after 2035, the amount of water that will need to be obtained from alternative sources will continue to increase. SJRWMD Utilities other than those in the CFWI. The SJRWMD established four water supply planning regions for the purpose of evaluating the water demands and water resources within its geographic area. These Regions are depicted in Figure 2-5. Region 3 is part of the CFWI, described above. The other SJRWMD utilities are in Regions 1, 2 and 4. The water supply issues associated with these three regions through the year 2035 are described as follows. Region 1 is comprised of eight counties that form the North Florida Regional Water Supply Partnership area which also includes the eastern Suwannee River basin portion of the Suwannee River Water Management District (SRWMD). The SJRWMD and the SRWMD are collaborating to develop a North Florida Regional Water Supply Plan. The counties are, from north to south, Nassau, Baker, Duval, Clay, St. Johns, Alachua, Putnam and Flagler. The SJRWMD s draft Water Supply Plan 4 reports that groundwater demand projections for Region 1 exceed fresh groundwater availability by 74 mgd. The Plan identifies alternative water supply projects to address this unmet demand that include reclaimed water, seawater desalination, and surface water. Water management techniques have also been identified to supplement the available fresh groundwater and include aquifer recharge, wetland hydration, and silviculture practices. Region 2 includes the counties just south of Region 1: Marion, Volusia, and Lake. The draft District Water Supply Plan reports that groundwater demand projections for Region 2 exceed fresh groundwater availability by 64 mgd. The Plan identifies alternative water supply projects to address this unmet demand that include reclaimed water, reclaimed R5_sec 02 3 St. Johns River Water Management District, South Florida Water Management District and Southwest Florida Water Management District, Central Florida Water Initiative Regional Water Supply Plan, Final Draft April St. Johns River Water Management District, District Water Supply Plan 2013, draft, no date. GROVE LAND UTILITIES, LLC Page 2-5

39 GROVE LAND UTILITIES, LLC R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 2-4 Geographic Area of the Central Florida Water Initiative, CFWI (from Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

40 GROVE LAND UTILITIES, LLC R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 2-5 St. Johns River Water Management District Water Supply Planning Regions (From SJRWMD, District Water Supply Plan) Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

41 2.0 Beneficiaries and Benefit Values August 2014 water augmentation, seawater desalination, and surface water. Water management techniques have also been identified to supplement the available fresh groundwater and include aquifer recharge, wetland hydration, and water supply system optimization and interconnection. Region 4 includes the counties just southeast of Region 2: Brevard and Indian River. The draft District Water Supply Plan reports that groundwater demand projections for Region 4 exceed fresh groundwater availability by 3 mgd. The Plan identifies alternative water supply projects to address this unmet demand that include brackish groundwater, reclaimed water, and surface water. Water management techniques have also been identified to supplement the available fresh groundwater and include wetland hydration and water supply system optimization and interconnection. In Regions 1 and 2, the Plan identifies the Ocklawaha River as a potential source of water supply. A preliminary estimate of 30 mgd of water may be available from this river. The District anticipates that MFLs will be adopted for this river which will affect the amount of water available to be withdrawn. For all four Regions, the Plan identifies the St. Johns River as a potential source of water supply. In Region 1, the lower St. Johns River is brackish and the water quality varies due to tidal changes, wet and dry seasons, and algae blooms. Therefore, multiple water treatment processes may be needed to provide a reliable water supply that meets state and Federal drinking water standards. In Region 2, the St. Johns River south of Deland is fresh and a water treatment plant site near Deland has been considered for regional water supply development. In Region 3, which is located in the CFWI, several water supply sites along the river have been considered by utilities, including expansion of the Taylor Creek Reservoir. In Region 4, two Upper St. Johns River projects, the Fellsmere Water Management Area and the Canal 1 Rediversion, are expected to provide an estimated 10 mgd of additional flow to the St. Johns River in Brevard County. Projected Water Supply Shortfall. The potential water utilities that might find the GLRSTA Project a cost-effective water supply source are listed in Table 2.1, which provides the name of the water utility, its county location, and its projected 2035 water demand. These 30 utilities are located in one of the three areas described above: (1) the SFWMD UEC Planning Area; (2) the CFWI area; and (3) the SJRWMD utilities other than those in the CFWI R5_sec 02 All water utilities in the SFWMD UEC Planning Area were selected to be included in this evaluation. They are located in St. Lucie and Martin counties. Water utilities located in GROVE LAND UTILITIES, LLC Page 2-6

42 2.0 Beneficiaries and Benefit Values August 2014 the CFWI or located in the SJRWMD outside of the CFWI with expected water demand greater than 10 mgd by 2035 were included in this evaluation. The exception is the City of Vero Beach which has a projected 2035 water demand of 5.1 mgd. Because of the City s close proximity to the Project, it might benefit from the water supply and was, therefore, included in this evaluation. These utilities projected water supply shortfalls in 2020, 2025, 2030, 2035 and 2040 were estimated as the difference between the projected water demand of the utility minus the end of permit (EOP) water allocation. The unit of measurement is average daily mgd. The projected water demands and the EOP water allocations are from the SJRWMD and the SFWMD, including water use permit files. The results are provided in Table 2.1 where the data sources are described in the endnotes to this table. These water demands represent raw water quantities (prior to water treatment). The total projected water supply shortfall of these 30 utilities is 12.6 mgd in 2020, 25.7 mgd in 2025, 44.3 mgd in 2030, 70.7 mgd in 2035 and 93.4 mgd in Unless these utilities can obtain additional permitted ground or surface water quantities from their respective water management district, they will need to develop alternative water supplies (AWS). Most of these utilities began planning for these shortfalls years ago and have identified AWS projects to develop. The projects include those that would store and treat water from the St. Johns River, Lake Apopka and smaller lakes and rivers, thereby potentially reducing flows and levels in these water bodies. Other projects being evaluated are those that would withdraw and treat water from deep brackish aquifers; and those that would reclaim wastewater for non-potable water uses. Water production from these types of projects can be relatively expensive. The GLRSTA Project would benefit water utilities and the State of Florida by augmenting water supply in the St. Johns River thereby allowing for additional withdrawals without reducing the original flow. In addition, by providing needed water during the dry season, the Project would improve the reliability of water supply from the St. Johns River. The Project could also benefit agricultural landowners and water utilities in the UEC by providing additional water to the C-25, C-24 and C-23 Canals that could be withdrawn by growers in exchange for ground water supply to UEC water utilities R5_sec 02 In March 2014, the study team presented a progress report of the GLRSTA Financial Feasibility Study to the CFWI Solutions Group. Following the presentation, the GLRSTA Project was assigned to the CFWI Surface Water Team for further review. Later in March, the study team presented a similar progress report to the CFWI Surface Water Team which has now included the GLRSTA Project for evaluation as a potential alternative water supply for the CFWI. GROVE LAND UTILITIES, LLC Page 2-7

43 2.0 Beneficiaries and Benefit Values August 2014 Table 2.1 Water Utilities that Might Benefit from Grove Land Reservoir and STA Water Supply Projected Water Supply Shortfall in mgd = 2035 Water Demand minus EOP WUP Allocation (b) County Demand (a) Utility (Includes all service areas and WUPs in all WMDs) Water Utilities Located in the SFWMD UEC Planning Area St. Lucie County North St. Lucie Port St. Lucie, City of St. Lucie Fort Pierce Utility Authority St. Lucie City of Stuart Martin Martin County Martin Total Water Supply Shortfall (sum of positive values): Water Utilities Inside the Central Florida Water Initiative (CFWI) Area City of Cocoa Brevard Lake Utility Services Inc. Lake City of Leesburg Lake Orange County Public Utilities Orange City of Apopka Orange Reedy Creek Imprmt District Orange Orlando Utilities Commission Orange City of Winter Park Orange St. Cloud Utility Osceola Toho Water Authority Osceola City of Winter Haven Polk Polk County Utilities Polk City of Lakeland Polk Sanlando Utilities Corp. Seminole Seminole Co. Environ. Srv. Seminole Total Water Supply Shortfall (sum of positive values): SJRWMD utilities other than those in the CFWI Indian River County Utilities Indian Rvr City of Vero Beach Indian Rvr City of Palm Bay Brevard City of Melbourne Brevard City of Palm Coast Flagler City of Ocala Marion St Johns County Utilities St. Johns City of DeLand Volusia R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-8

44 2.0 Beneficiaries and Benefit Values August 2014 Table 2.1 Water Utilities that Might Benefit from Grove Land Reservoir and STA Water Supply Utility (Includes all service areas and WUPs in all 2035 Water Projected Water Supply Shortfall in mgd = Demand minus EOP WUP Allocation (b) WMDs) County Demand (a) City of Deltona Volusia City of Daytona Beach Volusia Total Water Supply Shortfall (sum of positive values): Grand Total Water Supply Shortfall: (a) Average daily mgd during a 5-in-10 rainfall year. For the utilities in St. Lucie and Martin counties, these values are 2030 water demands increased by the proportional increase in demand from 2025 to (b) Water supply shortfall is utility's permitted water quantity at the end of the permit period (EOP) minus utility's projected water use. Projected water demands by utility were provided by SJRWMD as part of its 2013 Regional Water Supply Plan and are from Table 5. Public Supply Population Projections for , 5-in-10 Year Demand Projections for by County and Utility. Utility water use projections for utilities in the UEC planning area are from the SFWMD, UEC Water Supply Plan Update 2011, Appendices, page 27. The utility permitted quantities at EOP are from the CFWI, the SFWMD, and permit files of selected utilities. Projected demands in 2040 were increased by the % population growth from 2035 to 2040 for the county as provided by the University of Florida Bureau of Economic and Business Research 2013 projections. GLRSTA Project Water Supply Augmentation. Within the SJRWMD, two potential alternative water sources for utilities are the St. Johns River and its major tributary, the Ocklawaha River. Water from the GLRSTA Project could be used to augment water flows to the St. Johns River to offset the impacts of withdrawals and to increase the amount of water than can be withdrawn for water supply potentially benefiting many of the utilities listed in Table 2.1. Water from the Grove Land STA would enter the Upper St. Johns River and flow through specific areas of the Upper River as provided by the improvements that would be made to this area of the river as described in Section 3.0 of this report. The water flow from the GLRSTA Project to the Upper St. Johns River is depicted in Figure 2-6. The water would flow downstream toward an expanded Taylor Creek Reservoir, as depicted in Figure 2-7, to provide additional water supply to this reservoir. The SJRWMD recently used its HSPF (Hydrological Simulation Program Fortran) Model to investigate the impact of water from the GLRSTA Project on the St. Johns River from Florida s Turnpike in the upper reaches of the Upper St. Johns River to the inflow of Lake Harney at SR 46. The conclusions and caveats of this investigation are as follows. The conceptual plan for the proposed GLRSTA was analyzed for four areas of concern: Long term hydrology in the affected project areas, flood control opera R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-9

45 GROVE LAND UTILITIES, LLC S-96D C-65 Canal STA R4 Water Flow from GLRSTA Figure 2-6 Flow Path from GLRSTA through Upper St. Johns River Basin to channelized St. Johns River (map from SJRWMD) Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

46 GROVE LAND UTILITIES, LLC 528 Cocoa 520 Lake Poinsett 1 Cape Canaveral Merritt Island 95 Taylor Creek Reservoir 519 St. Johns River 404 Satellite Beach Lake Washington 518 Melbourne R4 Lake Hell n Blazes Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC 95 Palm Bay Figure 2-7 Water Flow from GLRSTA to projects such as Taylor Creek Reservoir Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

47 2.0 Beneficiaries and Benefit Values August 2014 tions, environmental hydrologic criteria, and water quality. For the long term hydrology, the impacts were slight, since inflows to the project are matched by discharges through the two Water Management Areas. For flood control, there are two issues: the operation of the major flood control structures and the anticipated impact on St. Johns Irrigation District (SJID) discharges. Both of these concerns may be easily addressed by including criteria for cutting off GLRSTA releases during large storm events and/or the approach of tropical storm systems, with the possibility of increased discharges after stages have dropped back below critical levels. For the environmental criteria and water quality performance, the initial analyses showed no negative impact, and the possibility of a net benefit to the St. Johns Marsh Conservation Area (SJMCA). The modeling showed some losses in the Upper St. Johns, as the increased flow can at times push the river further out into its floodplains, thus increasing surface area subject to direct evaporation. Also, this will at times replenish the floodplain wetlands, allowing them to transpire more water. The losses are primarily downstream of the Water Management Areas, and amount to percent of the GLRSTA releases at Puzzle Lake, which is located just upstream of the inflow to Lake Harney. Losses downstream of the Upper Basin were not estimated in this preliminary analysis. The WSIS hydrodynamic model of Middle/Lower Basin is not suited to estimate such increases in evaporative losses, as it assumes a fixed footprint for the river. However, it is expected that these would be small, as there are only a few areas with significant floodplain wetlands where increased flows might be expected to cause increased surface area. Thus, in all cases, the anticipated impacts were considered either relatively minor and readily addressable, or possibly beneficial. However, there are important caveats to remember: (a) The long term evaporative losses estimated here are provisional, and could change, due to improved model representation of the SJMCA in the future, to improvements made in the SJMCA, and to actual changes to the C-40 canal that are expected in the next couple of years. (The C- 40 Canal runs north-south and bisects the Three Forks Marsh Conservation Area.) R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-10

48 2.0 Beneficiaries and Benefit Values August 2014 (b) Acceptable criteria for cutting off discharges during storm events would need to be developed, in order to avoid pushing S-96D discharges above the design maximum (1400 cfs). 5 (c) Since only the SPF was examined in terms of impact on SJID stages and discharges, further analysis would be required to determine critical stages for cutting off GLRSTA releases to avoid problems here, which may be higher or lower than those developed in item (b). The lower of the two would necessarily be the binding one. If the SJID criteria are too tight for successful GLRSTA project operation, then physical alterations around the SJID discharge point may be worth considering. (d) The water quality model has not been calibrated in the range of flows being considered here, so a way would need to be found to address the additional uncertainty. Finally, there are also a couple of general caveats regarding the limited scope of this analysis: (e) The impacts and feasibility of acquiring the source water in the C-25 and adjacent basins has not been examined by SJRWMD. (f) Increasing a downstream average flow by a given amount does not guarantee that average withdrawals of that amount will meet MFL criteria, as timing and duration are important factors. Therefore, any proposals for withdrawals by customers of GLRSTA would have to be evaluated in detail for MFL criteria and other possible CUP regulations. Future investigations could include the feasibility of moving water from the GLRSTA Project downstream of Lake Harney to augment water supply at proposed and other potential water treatment plants along the river as depicted in Figure 2-8. In addition, if the GLRSTA water could reach the Lower St. Johns River, particularly where it meets the Ocklawaha River, then water supply might be augmented in this area as depicted in Figure 2-9. Three proposed projects that will store and treat large quantities of water from the St. Johns River are: (1) increasing inflows to the Taylor Creek Reservoir located southwest of the City of Cocoa; (2) expanding the Yankee Lake Regional Surface Water Treatment R5_sec 02 5 The GLRSTA Project is expected to reduce stormwater runoff from the SFWMD into the SJRWMD, thus reducing flood impacts to the Upper St. Johns River Basin. GROVE LAND UTILITIES, LLC Page 2-11

49 GROVE LAND UTILITIES, LLC R4 44 St. Johns River DeBarry SJR at Yankee Lake WTF 431 Wekiva Springs Longwood Apopka Altamonte Springs Deltona SJR near SR 46 Sanford WTF Lake Monroe Osteen Sanford 415 Lake Jesup Oviedo Geneva 46 Lake Harney 4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 2-8 Potential to Augment Water Supply Projects in Middle St. Johns River Basin Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

50 GROVE LAND UTILITIES, LLC R4 Sante Fe Lake St. Johns River Gainesville Newnans Lake Palatka 19 Rodman Reservoir Lochloosa Lake Lake Ocklawaha 15 1 Orange Lake Ocklawaha River Lake Kerr Lake George Ocala Lake Dexter Lake Woodruff Palm Coast A1A Figure 2-9 Potential of GLRSTA Project to Augment Water Supply at Lower St. Johns River Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

51 2.0 Beneficiaries and Benefit Values August 2014 Facility located northwest of the City of Sanford; and (3) a building a Regional Water Treatment Facility just north of the City of Sanford near State Road 46. Water production and costs of these and other smaller projects using water from the St. Johns River are provided in Table 2.2. The total amount of water that is contemplated to be produced from the six St. Johns River projects listed in Table 2.2 is mgd. In 2012, the St. Johns River Water Supply Impact Study (WSIS) was completed by the SJRWMD. This study found that up to 155 mgd may be withdrawn from the St. Johns River without any moderate, major or extreme effects to water quality, submersed aquatic vegetation and plankton under 2030 land uses. This result is predicated on an anticipated 14 cm sea level rise and completion of three SJRWMD projects in the upper St. Johns River Basin (Fellsmere, C1-Sawgrass Lakes and Three Forks Marsh). The WSIS study evaluated impacts from water withdrawals and did not consider impacts from increased nutrient loading as natural lands are developed over the next 16 years. A similar recent study regarding the impacts to the Ocklawaha River of water withdrawals from this river has not been published but the SJRWMD in its Water Supply Plan estimates that about 30 mgd may be available for withdrawal. Because of the uncertainty associated with modeling the complex dynamics of the St. Johns River, the WSIS recommends an adaptive management approach to ensure that water withdrawals do not negatively affect the River. The study states Since future water withdrawals would most likely occur incrementally over time, this uncertainty can be addressed by employing a feedback loop, using monitoring data, to verify predictive tools developed in this study and to make refinements when needed (adaptive management). 6 While the WSIS model and the study are very useful planning tools, there is still local citizen concern that the amount of water that can be withdrawn from the St. Johns River without harmful impacts is limited to much less than 155 mgd. The GLRSTA Project can augment freshwater flows into the St. Johns River to supply raw water for currently proposed and other additional withdrawal and treatment projects along the river. During periods of heavy flooding in the upper St. Johns River Basin, excess stormwater can be diverted to the Grove Land Reservoir, as needed, to reduce flood damage-related environmental and economic losses R5_sec 02 6 St. Johns River Water Management District, St. Johns River Water Supply Impact Study, Palatka, Florida, February 14, 2012, page 1-12 and GROVE LAND UTILITIES, LLC Page 2-12

52 2.0 Beneficiaries and Benefit Values August 2014 County Orange Seminole Seminole Seminole Seminole Seminole R5_sec 02 WMD SJRWMD/ SFWMD SJRWMD SJRWMD SJRWMD SJRWMD SJRWMD Table 2.2 St. Johns River (SJR) Alternative Water Sources, Costs are in 2013 dollars (a) Project Name St Johns River/Taylor Creek Reservoir St. Johns River Near SR 46 Project Sanford SWTP on Lake Monroe Project Sanford ASR Well for Surface Potable Water Storage St. Johns River Near Yankee Lake Project PHASE II Lake Jesup Reclaimed Water Augmentation Implementing Agency or Entity Orange County, OUC, Cocoa, TWA, ECFS Orange County, Casselberry, Deltona, Maitland, Oviedo, and Sanford Sanford Sanford Seminole County, SJRWMD Winter Springs Project Description Regional AWS project withdrawing surface water from the Taylor Creek Reservoir and the St. Johns River. Major components include intake structure, reservoir, treatment, storage and transmission facilities. Includes an intake for brackish surface water from the St. Johns River, water treatment and concentrate management facilities, point-ofconnection ground storage, and a potable water transmission system. This project will develop a brackish surface water source. Store water withdrawn from traditional source, most likely brackish surface water from the St. Johns River. Expansion of existing Phase I footprint of Yankee Lake Regional Surface Water Treatment Plant for additional treatment, ground storage & concentrate management. Potential for additional reuse augmentation. Includes surface water from Lake Jesup, surface water treatment, tank storage and transmission lines. Project Type Water Generated (mgd) (b) Total Capital ($M) PWS 42 $628.7 PWS and Reuse Unit Cost ($/1,000 gallons) GROVE LAND UTILITIES, LLC Page 2-13 N/A Completion Date $548.3 $4.07 TBD PWS 4 $13.8 $0.62 TBD PWS 1 $4.17 N/A TBD PWS 30 $217.9 $4.09 TBD Total $8.5 $2.07 Reuse Augmentation Construction 2013 (a) Source: South Florida, St. Johns River and Southwest Florida Water Management Districts, "Central Florida Water Initiative (CFWI) Regional Water Supply Plan 2014, Public Draft, Appendices, Table F-1, no date. (b) The estimated water generated reflects the project's ability to deliver "new" water from project construction.

53 2.0 Beneficiaries and Benefit Values August Estimated Dollar Value of Water Supply from the GLRSTA Project This section provides an estimate of the value of water supply from the GLRSTA Project to residential water customers as the Project eliminates future water supply shortfalls and avoids the need for the water utility to develop other AWS projects. The GLRSTA Project will provide water storage, nutrient reduction, and delivery to a point at which the utility may withdraw, treat and distribute potable water to customers. The GLRSTA Project provides additional water to the water supply and treatment system at a cost that is in addition to all other costs associated with providing water to customers. The benefit of the GLRSTA Project is the value of potable water to customers minus the cost of water and sewer services that would still be needed. These water and sewer services include the withdrawal, treatment, transmission, and distribution of water from its source to the water customer and the collection, transmission, treatment, and disposal of wastewater from the customer. This Project avoids the need to obtain water from other alternative water sources such as reclaimed water, surface water, and brackish or seawater desalination. The value of water to customers in Florida was estimated using the survey results of 448 residential water customers in the Orlando, Florida area that were reported in the Water- Reuse Research Foundation Report, The Value of Water Supply Reliability in the Residential Sector, 2013, Appendix F. This study included the design and implementation of a stated preference survey administered in 2011 and statistical analyses to develop estimates of household willingness to pay to avoid certain levels of water shortage. The results for water customers in Orlando, Florida are provided in Table 2.3. The estimated average willingness to pay per household per year to avoid a mandatory 15 percent water use reduction one summer out of the next 20 summers is $9.05 per household per year. To avoid a mandatory 20 percent water use reduction one summer out of the next 20 summers, households in Orlando, Florida would be willing to pay an average of $20.20 per year. The incremental value of moving from a 15 percent reduction avoidance to a 20 percent reduction avoidance is large, $11.15 ($20.20 minus $9.05). This means that the first 15 percent of water use reduction is not as valuable as the next five percent water use reduction. This result is to be expected under the economic theory of demand. As the amount of water use reduction increases beyond 20 percent, the incremental willingness-to-pay to avoid the reduction would be even greater. The marginal willingness-to-pay to avoid a water shortage increases as the percent of the mandatory water reduction increases because more costly and/or less convenient emergency water use reduction behaviors would be needed R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-14

54 2.0 Beneficiaries and Benefit Values August 2014 Choice Table 2.3 Willingness to Pay to Avoid Water Shortage Restrictions by Residents In the Orlando, Florida Area, in 2011 dollars (a) Estimated Average Willingness to Pay Per Year Per Household Robust Standard Error (b) 95% Confidence Interval Eliminate Level 1 restrictions (15% water use reduction) by 1 summer out of the next 20 $ to Eliminate Level 2 restrictions (20% water use reduction) by 1 summer out of the next 20 $ to Source: WateReuse Research Foundation, "The Value of Water Supply Reliability in the Residential Sector", Alexandria, VA, 2013, page 261, Table 19 (number of observations = 3,813). (a) These households are water customers of the Orlando Utilities Commission. The model used 3,813 observations, an expansion of the 448 respondents by nine choices (3 choice questions and 3 choices per question), less 219 observations due to questions that were left unanswered by respondents (page 260 of Report). (b) A "robust" standard error estimator means that it is reasonably efficient with reasonably small bias and is asymptotically unbiased, meaning having a bias tending towards 0 as the sample size tends towards infinity. The annual $20.20 household willingness-to-pay was converted to the average value of water per 1,000 gallons for this 20 percent of water use. This water use would be the least valuable of the household water using activities which includes outdoor uses and inefficiencies associated with indoor water use, such as leaving the kitchen or bathroom faucet running when the water is not immediately needed. Higher valued water uses such as for sanitation and drinking are not included in this value estimate. The calculations are provided in Table 2.4 and are explained in Column (1) and the footnotes to this table. The $20.20 annual willingness-to-pay implies that the average value of the lowest-valued 20 percent of water use is $17.19 per 1,000 gallons in 2013 dollars. While this water use value may seem high, it reflects the value that households place on having a reliable and safe water supply even for the customer s lowest-valued uses and is consistent with results reported in similar studies R5_sec 02 7 WateReuse Research Foundation, "The Value of Water Supply Reliability in the Residential Sector", Alexandria, VA, 2013, page 15. GROVE LAND UTILITIES, LLC Page 2-15

55 2.0 Beneficiaries and Benefit Values August 2014 Table 2.4 Calculation of Value of Water to Orlando Residents Per 1,000 Gallons (a) Row No. Item Value (1) (2) Water Use Reduction from No Shortage Restriction to Stage 2 Shortage Restriction: 20.00% Average per capita water use of Orlando households in 2010 (gallons per person per day) (b): 83 (3) Average household size in Orlando in 2008 to 2012 (persons) (c ): 2.74 (4)= (2) x (3) Average daily water use per household: (5) = (4) x 365/12 Average Monthly Water Use per Household 6,917 (6) = (1) x (4) Avoided Average Daily Reduction in Water Use (gallons): (7) = (6) x 365 Avoided Annual Reduction in Water Use 1 time in 20 years (gallons): 16,602 (8) Present Value of $20.20 per year over 20 years at 4% real discount rate): $ (9) = (8) / [(7) / 1000] Estimated Value of Water Per 1,000 gallons (2011 dollars): $16.54 (10) = (9) x 1.04 Estimated Value of Water Per 1,000 gallons (2013 dollars): $17.19 (a) From the information provided in Table 2.3. This estimated water value represents outdoor water uses and some indoor use and is lower than the average value of all water used by the household. This value does not reflect the value of water to owners of industrial and commercial establishments. (b) From Orlando Utilities Commission, Financial and Statistical Information Report 2012, Orlando, Florida, page 44. (c) From U.S. Census, County Quickfacts for Orlando, Florida, To obtain the net value of water, the costs of water and sewer services that are needed to supply water and dispose of the wastewater and that are charged to the customer must be subtracted from the $17.19 per 1,000 gallon value. One component of this cost will be the water infrastructure needed to withdraw and treat the water provided by the GLRSTA Project. For this evaluation, water from the GLRSTA would be transported down the St. Johns River where it would be withdrawn and treated to potable water standards R5_sec 02 The weighted average capital and O&M cost per 1,000 gallons to withdraw and treat water from the St. Johns River was calculated using the costs for three proposed water facilities that were described in Table 2.2: SJR at Taylor Creek; SJR near SR 46; and SJR at Yankee Lake. All three of these projects include withdrawal, storage where needed, treatment to potable water standards, and transmission. The calculation of the weighted average cost per 1,000 gallons for these three facilities is provided in Table 2.5. The weighted average cost is $4.44 per 1,000 gallons which is comprised of a weighted average capital cost of $2.41 per 1,000 gallons and a weighted average O&M cost of $2.02 per 1,000 gallons. GROVE LAND UTILITIES, LLC Page 2-16

56 2.0 Beneficiaries and Benefit Values August 2014 Project Name Table 2.5 Weighted Average Cost per 1,000 gallons for St. Johns River Water Supply and Treatment, 2013 dollars (a) Project Type Estimated Water Generated (mgd) Capital cost in dollars Annualized Capital Cost per 1,000 gallons (b) Annual O&M cost per 1,000 gallons Total Capital and O&M cost per 1,000 gallons St Johns River/Taylor Creek Reservoir PWS 42 $628,700,000 $3.29 $1.88 (c) $5.17 St. Johns River Near SR 46 Project PWS and reuse 55 $548,260,000 $2.19 $1.88 $4.07 St. Johns River Nr Yankee Lake Project - PHASE II PWS 30 $217,900,000 $1.60 $ Total 127 Weighted Average based on Estimated Water Generated $2.41 $2.02 $4.44 (a) Data and information from Table 2.2. (b) The project's capital cost was amortized over 20 years at 5% annual interest. (c) The annual O&M cost was not provided in the CFWI Regional Water Supply Plan so the $1.88 O&M cost per 1,000 gallons that was provided for the St. Johns River near SR 46 Project was used R5_sec 02 These weighted average costs were incorporated into the 2012 cost structure of the Orlando Utilities Commission (OUC) to obtain the total water utility cost per 1,000 gallons as water is withdrawn from the St. Johns River. OUC water utility costs were chosen because the Orlando residents surveyed were OUC customers. The water utility cost calculations are provided in Table 2.6 for five water supply scenarios: (1) Actual water sales in 2012 of 25.3 billion gallons with no production from AWS; (2) Actual water sales in 2012 increased by 10 percent resulting in 9 percent of production from AWS (in this example the AWS is the SJR); (3) Actual water sales in 2012 increased by 25 percent resulting in 20 percent of production from AWS; (4) Actual water sales in 2012 increased by 50 percent resulting in 33 percent of production from AWS; and, (5) Actual water sales in 2012 increased by 100 percent resulting in 50 percent of production from AWS. The methods used for the calculations in Table 2.6 are provided in Column (1) and the Table s footnotes. GROVE LAND UTILITIES, LLC Page 2-17

57 2.0 Beneficiaries and Benefit Values August R5_sec 02 Table 2.6 Calculation of 2012 Estimated Water Utility Cost per 1,000 Gallons with Hypothetical Water Production from St. Johns River (SJR) Alternative Water Supply (AWS), Costs in 2012 dollars (a) Scenario: Row No. Item Actual 2012 (1) (2) (3) (4) (5) = [(4)/(1)] (6) (7) = (4) x $2.02 (8) (9) = (4) x $2.41 (10) = (6) + (7) + (8) + (9) (11) (12) = (10) - (11) (13) = (12) / (1) Actual 2012 with 10% Growth Actual 2012 with 25% Growth Actual 2012 with 50% Growth Actual 2012 with 100% Growth Total water sales in 1,000 gallons 25,302,000 27,832,200 31,627,500 37,953,000 50,604,000 Growth in water sales from 2012 Actual 0% 10% 25% 50% 100% Sales of water from 2012 sources 25,302,000 25,302,000 25,302,000 25,302,000 25,302,000 Sales of water from SJR AWS 0 2,530,200 6,325,500 12,651,000 25,302,000 Percent of water sales from AWS 0 9% 20% 33% 50% Production Expenses, 2012 supply sources $13,555,000 $13,555,000 $13,555,000 $13,555,000 $13,555,000 Additional Production Expenses, AWS (b) $0 $5,120,437 $12,801,093 $25,602,186 $51,204,372 All Other Expenses, 2012 supply sources $51,508,000 $56,658,800 $64,385,000 $77,262,000 $103,016,000 Additional All Other Expenses, AWS (b) $0 $6,109,333 $15,273,333 $30,546,666 $61,093,332 Total operations, maintenance and other expenses $65,063,000 $81,443,570 $106,014,426 $146,965,852 $228,868,704 Non-operating net income $10,355,000 $10,355,000 $10,355,000 $10,355,000 $10,355,000 Net revenue requirements $54,708,000 $71,088,570 $95,659,426 $136,610,852 $218,513,704 Net revenue requirement in dollars per 1,000 gallons $2.16 $2.55 $3.02 $3.60 $4.32 (a) Actual 2012 water sales and expenses are from OUC, "Financial and Statistical Information Report, 2012", page 38. All water sales are in 1,000 gallons. All expenses, income and net revenue requirements are in dollars. Production expense represents the day-to-day expenses of the water supply withdrawal and treatment facilities. All Other Expenses for Actual 2012 includes operations and maintenance of the distribution system, customer service, general and administrative, utility/property tax, revenue-based payments to City of Orlando and Orange County, bond interest & related expenses & depreciation & amortization of the 2012 utility system. For columns titled "Actual 2012 with XX% Growth", the 2012 Actual was increased by the percent growth in water sales from Actual 2012 (Row (2) of the Table). Non-operating income is interest and other net income. (b) From Table 2.5. GROVE LAND UTILITIES, LLC Page 2-18

58 2.0 Beneficiaries and Benefit Values August 2014 The average water utility cost per 1,000 gallons of water sold (net of non-operating net income) was $2.16 in This value is referred to in the table as net revenue requirement in dollars per 1,000 gallons. If water sales were to grow by 10 percent over Actual 2012 sales and this increase was supplied by water from the SJR AWS, then the average water utility cost would be $2.55 per 1,000 gallons. If water sales were to grow by 100 percent over Actual 2012 sales and this growth was supplied by water from the SJR AWS, then the average water utility cost would be $4.32 per 1,000 gallons. The customer cost of sewer service must also be deducted from the estimated water value. For this evaluation, the City of Orlando s sewer rate structure was applied to the average monthly household water use of 6,917 gallons per month that was calculated in Table 2.4. The average sewer service cost is $6.89 per 1,000 gallons as calculated in Table 2.7. Table 2.7 Average Cost of Sewer Service Per 1,000 Gallons From City of Orlando Sewer Rate Structure, 2014 (a) Row No. Item Value (1) Average Monthly Water Use per household in gallons (From Table 2.4, Row (5)) 6,917 (2) Capacity Charge Per Customer Per Month $17.84 (3) Commodity Charge, $ per 1,000 gallons (up to 14,000 gallons) $4.31 (4) = (2) + (3) x (1) Monthly Sewer Bill $47.65 (5) = (4) / [(1)/1,000] Average sewer service cost per 1,000 gallons $6.89 (a) Source of sewer charges from City of Orlando Wastewater Division Billing Rates on the City s website. The willingness to pay for water per 1,000 gallons net of the cost of water and sewer service and prior to paying for water from the GLRSTA Project is calculated in Table 2.8. The calculations are provided for Scenarios (2) through (5) listed above. For 2012 actual sales with 10 percent sales growth, the net willingness-to-pay for water per 1,000 gallons of water consumed is $7.75. When water sales growth is 100 percent, net willingness-topay is $5.98. These values represent the consumer surplus associated with water use. Households are willing-to-pay up to this amount of money to obtain additional services that provide a safe and reliable water supply for their lowest valued household water uses R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-19

59 2.0 Beneficiaries and Benefit Values August 2014 Row No. (1) (2) (3) (4) (5) = (2) - (3) - (4) Table 2.8 Net Willingness to Pay for Water Per 1,000 gallons of Water Consumed, 2013 dollars (Residential Value of Water Minus Water and Sewer Cost Paid) Item Scenario: Actual with 10% Growth 2012 Actual with 25% Growth 2012 Actual with 50% Growth 2012 Actual with 100% Growth Percent of water from SJR AWS (from Table 2.6, Row (5)) 9% 20% 33% 50% Estimated Value of Water Per 1,000 gallons (2014 dollars) (from Table 2.4): $17.19 $17.19 $17.19 $17.19 Total water utility cost per 1,000 gallons (from Table 2.6, Row (13)) $2.55 $3.02 $3.60 $4.32 Total sewer utility cost per 1,000 gallons (from Table 2.7, Row (4)) $6.89 $6.89 $6.89 $6.89 Net Willingness to Pay for Water Per 1,000 gallons of Water Consumed (Residential Value minus Water and Sewer Bill) $7.75 $7.28 $6.70 $5.98 The values provided in Row (5) of Table 2.8 are the estimated maximum values of water from the GLRSTA Project that are associated with the lowest-valued residential water uses. This means that when water demand is greater than water supply, water customers would be willing-to-pay as much as $5.98 to $7.75 per 1,000 gallons for water from the GLRSTA Project. The range is based on the percent of water that comes from the more expensive alternative water sources, such as the St. Johns River. As the proportion of this alternative water supply increases, the average cost of water increases and reduces the net willingness-to-pay. However, if a new water supply could be developed that costs less than these values, then the relevant value of water from the GLRSTA Project would be the avoided cost of the new water supply R5_sec 02 The cost of developing new water supplies would be a component of the cost of AWS projects because the estimated costs of some AWS projects, such as surface water and desalination, include the cost of potable water treatment. The costs of new water supplies and AWS projects will vary from utility to utility and over time. A summary of the costs of AWS Projects is provided in Table 2.9 and is based on AWS cost estimates provided in CDM Smith, Integrated Water Resource Planning Project, Final Report, prepared for JEA, February 2013, Appendix D and the SJRWMD, District Water Supply Plan, 2005, GROVE LAND UTILITIES, LLC Page 2-20

60 2.0 Beneficiaries and Benefit Values August th Addendum, May 12, 2009, Technical Publication SJ2006-2D, Tables 13 and 14. These two documents provide the most complete information regarding the capital and annual O&M costs associated with AWS Projects in eastern Florida that are not in draft form. The calculation of the values in this table is provided in Appendix A of this report. Table 2.9 Summary of Estimated Costs of Alternative Water Supplies in Eastern Florida 2013 dollars Alternative Water Supply (AWS) Project Type Capital and O&M Cost per 1,000 gallons Low High Average Reclaimed Water Offsets By Providing Irrigation Water (a) (b) $0.37 $2.34 $0.98 Indirect Potable Reuse by Recharging Groundwater (c) $3.98 $4.08 $4.03 Surface Water from the St. Johns River (cost includes potable water treatment) (a) $4.07 $5.17 $4.44 Desalination (includes treatment to potable water standards) (d) Brackish Groundwater $1.88 $2.36 $2.12 Brackish St. Johns River Water $2.98 $3.75 $3.36 Seawater from the St. Johns River $6.55 $7.72 $7.13 Ocean water $6.75 $8.07 $7.41 (a) The average value is the weighted average cost calculated using the unit costs and capacities provided in Table A.5. (b) A reclaimed water offsets occurs when the use of reclaimed water reduces the need for potable water. (c) From Table A.4 for a 15 mgd plant. (d) From Table A.2 for a 30 mgd plant under the Low category and a 15 mgd plant under the High category. The first two types of AWS projects in Table 2.9 directly supply reclaimed water for uses that replace potable water and indirectly supply reclaimed water by using it to recharge groundwater aquifers. None of these types of projects include potable water treatment in their estimated costs. Instead, they represent the cost of developing a new water supply. The rest of the project types listed in the table include potable water treatment cost. Therefore, an estimate of the cost of a new water supply was developed using the $0.98 per 1,000 gallon cost of reclaimed water offsets and the $4.03 cost of indirect potable reuse. Averaging the two costs yields an average cost of $2.50 per 1,000 gallons of new water supply not including potable water treatment or distribution R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-21

61 2.0 Beneficiaries and Benefit Values August 2014 For the purposes of this study, it was assumed that after allocating all of the available water supply from the St. Johns River, water supply is still lower than water demand and therefore, new water supplies would need to be developed at an average cost of $2.50 per 1,000 gallons. In conclusion, the value of the GLRSTA Project in terms of providing potable water ranges from about $6.00 to $7.75 per 1,000 gallons depending on the percent of water that will come from relatively expensive AWS projects in the future. Of course, the lower the cost of additional water supplies, the greater will be the net value of water to customers. If the water utility can obtain new water supplies from an AWS project that costs less than $6.00 to $7.75 per 1,000 gallons, then the portion of the AWS cost that produces the raw water supply prior to potable treatment is the relevant value, or avoided cost, of water from the GLRSTA Project. For the purposes of this study, the avoided cost of developing new water supplies that would be replaced by the GLRSTA Project is $2.50 per 1,000 gallons. 2.4 Benefits and Estimated Dollar Value to Florida Agencies of Protecting the St. Lucie River Watershed The St. Lucie River Watershed, located in St. Lucie and Martin counties, was depicted in Figure 1-3. It includes the C-25 Canal outlet to the IRL and the C-24 and C-23 Canal outlets to the SLE. This area is also part of the Northern Everglades and Estuaries Protection Program. Florida law requires that State of Florida agencies protect and restore watershed ecosystems based on the established total maximum daily loads and encourages the use of public-private partnerships. These ecosystems include the IRL and the SLE R5_sec 02 The SFWMD and its fellow Coordinating agencies that include the Florida Department of Agriculture and Consumer Services and the FDEP are required to comply with Florida Statute, Chapter , Northern Everglades and Estuaries Protection Program. Under this Program: (l) It is the intent of the Legislature to protect and restore surface water resources and achieve and maintain compliance with water quality standards in the Lake Okeechobee watershed, the Caloosahatchee River watershed, and the St. Lucie River watershed, and downstream receiving waters, through the phased, comprehensive, and innovative protection program set forth in this section which includes long-term solutions based upon the total maximum daily loads established in accordance with s This program shall be watershed-based, shall provide for consideration of all water quality issues needed to meet the total maximum daily load, and shall include research and monitoring, development and implementation of best management practices, GROVE LAND UTILITIES, LLC Page 2-22

62 2.0 Beneficiaries and Benefit Values August 2014 refinement of existing regulations, and structural and nonstructural projects, including public works. (m) It is the intent of the Legislature that this section be implemented in coordination with the Comprehensive Everglades Restoration Plan project components and other federal programs in order to maximize opportunities for the most efficient and timely expenditures of public funds. (n) It is the intent of the Legislature that the coordinating agencies encourage and support the development of creative public-private partnerships and programs, including opportunities for water storage and quality improvement on private lands and water quality credit trading, to facilitate or further the restoration of the surface water resources of the Lake Okeechobee watershed, the Caloosahatchee River watershed, and the St. Lucie River watershed, consistent with s The legislation further establishes the: (4) CALOOSAHATCHEE AND ST. LUCIE RIVER WATERSHED PROTEC- TION PROGRAM. A protection program shall be developed and implemented as specified in this subsection. In order to protect and restore surface water resources, the program shall address the reduction of pollutant loadings, restoration of natural hydrology, and compliance with applicable state water quality standards. The program shall be achieved through a phased program of implementation. In addition, pollutant load reductions based upon adopted total maximum daily loads established in accordance with s shall serve as a program objective. In the development and administration of the program, the coordinating agencies shall maximize opportunities provided by federal and local government cost-sharing programs and opportunities for partnerships with the private sector and local government. The plan shall include a goal for salinity envelopes and freshwater inflow targets for the estuaries based upon existing research and documentation. The goal may be revised as new information is available. This goal shall seek to reduce the frequency and duration of undesirable salinity ranges while meeting the other water-related needs of the region, including water supply and flood protection, while recognizing the extent to which water inflows are within the control and jurisdiction of the district. The legislation also addresses water diversions to estuaries, as follows. (8) RESTRICTIONS ON WATER DIVERSIONS. The South Florida Water Management District shall not divert waters to the St. Lucie River, the Indian R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-23

63 2.0 Beneficiaries and Benefit Values August 2014 River estuary, the Caloosahatchee River or its estuary, or the Everglades National Park, in such a way that the state water quality standards are violated, that the nutrients in such diverted waters adversely affect indigenous vegetation communities or wildlife, or that fresh waters diverted to the St. Lucie River or the Caloosahatchee or Indian River estuaries adversely affect the estuarine vegetation or wildlife, unless the receiving waters will biologically benefit by the diversion. However, diversion is permitted when an emergency is declared by the water management district, if the Secretary of Environmental Protection concurs. The Legislature s direction in establishing and implementing total maximum daily loads (TMDLs) is provided in s , Florida Statutes, as follows Establishment and implementation of total maximum daily loads. (1) LEGISLATIVE FINDINGS AND INTENT. In furtherance of public policy established in s , the Legislature declares that the waters of the state are among its most basic resources and that the development of a total maximum daily load program for state waters as required by s. 303(d) of the Clean Water Act, Pub. L. No , 33 U.S.C. ss et seq. will promote improvements in water quality throughout the state through the coordinated control of point and nonpoint sources of pollution. The Legislature finds that, while point and nonpoint sources of pollution have been managed through numerous programs, better coordination among these efforts and additional management measures may be needed in order to achieve the restoration of impaired water bodies. The scientifically based total maximum daily load program is necessary to fairly and equitably allocate pollution loads to both nonpoint and point sources. Implementation of the allocation shall include consideration of a cost-effective approach coordinated between contributing point and nonpoint sources of pollution for impaired water bodies or water body segments and may include the opportunity to implement the allocation through non-regulatory and incentive-based programs. The Legislature further declares that the Department of Environmental Protection shall be the lead agency in administering this program and shall coordinate with local governments, water management districts, the Department of Agriculture and Consumer Services, local soil and water conservation districts, environmental groups, regulated interests, other appropriate state agencies, and affected pollution sources in developing and executing the total maximum daily load program R5_sec 02 The Legislature further directs the FDEP and the water management districts in developing Basin Management Actions Plans (BMAPs) to manage TMDLs as provided in s , Florida Statutes which states: GROVE LAND UTILITIES, LLC Page 2-24

64 2.0 Beneficiaries and Benefit Values August 2014 (7) DEVELOPMENT OF BASIN MANAGEMENT PLANS AND IMPLEMEN- TATION OF TOTAL MAXIMUM DAILY LOADS. (a) Basin management action plans. 1. In developing and implementing the total maximum daily load for a water body, the department, or the department in conjunction with a water management district, may develop a basin management action plan that addresses some or all of the watersheds and basins tributary to the water body. Such plan must integrate the appropriate management strategies available to the state through existing water quality protection programs to achieve the total maximum daily loads and may provide for phased implementation of these management strategies to promote timely, cost-effective actions as provided for in s The plan must establish a schedule implementing the management strategies, establish a basis for evaluating the plan s effectiveness, and identify feasible funding strategies for implementing the plan s management strategies. The management strategies may include regional treatment systems or other public works, where appropriate, and voluntary trading of water quality credits to achieve the needed pollutant load reductions. According to Rule , F.A.C., St. Lucie Basin TMDLs - The TMDL is mg/l total phosphorus (TP) and 0.72 mg/l total nitrogen (TN) at: (1) St. Lucie Estuary (Lower & Middle Estuary) at Roosevelt Bridge; (2) North Fork St. Lucie River (Freshwater); (3) North Fork St. Lucie Estuary (Estuarine North Fork); (4) C-24 Canal; (5) C-23 Canal; (6) South Fork St. Lucie Estuary; (7) South Fork St. Lucie River; (8) Bessey Creek; and (9) C-44 Canal. Nutrient TMDLs have not been established for the C-25 Canal. The Basin Management Action Plan (BMAP) for the St. Lucie River and Estuary Basin was developed in 2013 to implement TP, TN, and related BOD load reductions to achieve the TMDLs for the St. Lucie River and Estuary Basin. 8 The BMAP addresses the C-23, C-24 and C-44 Canals. This plan identifies specific projects that have provided or will provide TP and TN load reductions and an implementation schedule for the first five-year phase of the BMAP. The BMAP document also describes the methods by which progress in reducing TP and TN loads will be measured. TP and TN load reductions may be obtained through regional stormwater treatment areas and through smaller, local projects that detain or retain stormwater. By providing TP and R5_sec 02 8 St. Lucie River and Estuary Basin Technical Stakeholders in cooperation with the Florida Department of Environmental Protection, Final Basin Management Action Plan for the Implementation of Total Maximum Daily Loads for Nutrients and Dissolved Oxygen by the Florida Department of Environmental Protection in the St. Lucie River and Estuary Basin, Tallahassee, Florida, May GROVE LAND UTILITIES, LLC Page 2-25

65 2.0 Beneficiaries and Benefit Values August 2014 TN reductions to the IRL and the SLE, the GLRSTA Project would avoid the need for Florida agencies, local governments, and landowners to implement some of the local and regional nutrient reduction projects. The dollar value of this benefit is the avoided cost of constructing stormwater treatment facilities to serve the region. For the purposes of this study the estimated avoided cost is based on the costs associated with constructing and operating three SFWMD stormwater treatment areas: Taylor Creek STA; Nubbin Slough STA; and Lakeside Ranch STA. These STAs are located just northeast of Lake Okeechobee. The costs of these projects are provided in Table The total cost per pound of total phosphorus removed ranges from $115 to $134 with an average cost of $124. Assuming that this cost represents the SFWMD s cost to build and operate additional STAs, State of Florida agencies would save about $124 per pound of TP removed if the GLRSTA Project could provide these phosphorus reduction benefits instead. Because the focus of Florida Everglades restoration has been to reduce TP loads, the data needed to calculate the avoided cost per pound of TN removed is not available R5_sec 02 Row No. Table 2.10 Total Capital and O&M Cost per Pound of Total Phosphorus Removed SFWMD Regional Stormwater Treatment Areas (STA) (a) Item Taylor Creek STA Nubbin Slough STA Lakeside Ranch STA (1) Capital Cost (50 yr. life) $6,126,005 $18,322,849 $111,981,610 (2) Initial Monitoring Cost (10 yr. life) $434,233 $629,496 $0 (3) = (1) annualized (4) = (2) annualized Annualized Capital Cost (4.125% discount rate over 50 years) $291,298 $871,270 $5,324,837 Annualized Initial Monitoring Cost (4.125% discount rate over 10 yrs) $53,871 $78,095 $0 (5) Annual O&M Cost $106,964 $346,366 $914,844 (6) Annual Monitoring Cost $93,583 $121,576 $64,557 (7) = sum of (3) to (6) Total Annual Cost $545,715 $1,417,306 $6,304,238 (8) Phosphorus Reduction, average (9) Metric tons per year (10) = (9) x 2, Pounds per year 4,586 11,023 56,879 (11) = (7) / (10) (12) = (11) x 1.04 Total Cost per Pound of Phosphorus Reduction, 2011 $ $119 $129 $111 Total Cost per Pound of Phosphorus Reduction, 2013 $ $124 $134 $115 Average Cost per Pound of Phosphorus Removed $124 (a) Source of costs, phosphorus reduction, discount rate and useful life is Hazen and Sawyer, Compilation of Benefits and Costs of STA and Reservoir Projects in the South Florida Water Management District, Prepared for the World Wildlife Fund acting on behalf of the Florida Ranchlands Environmental Services Project, Washington, D.C., July 2011, pages 2-5, 3-5, and 4-5. GROVE LAND UTILITIES, LLC Page 2-26

66 2.0 Beneficiaries and Benefit Values August 2014 In addition to the reduction in TP and TN, the GLRSTA Project is expected to significantly reduce stormwater discharges to the IRL and SLE. The value of the reduced water discharges to the IRL and/or SLE is the avoided cost of water storage to provide this same benefit. The capital and operations costs associated with two SFWMD reservoirs were considered in estimating the avoided cost per acre-foot of water discharge reduction. The costs of these two reservoirs are provided in Table The two reservoirs are the Caloosahatchee (C-43) West Basin Storage Reservoir with an annual capital and O&M cost per acre-foot of storage capacity of $189 in 2013 dollars and the St. Lucie Canal (C-44) Reservoir with an annual cost of $338 per acre-foot of water storage. Water Storage Project Table 2.11 Estimated Cost of Reduced Water Discharges per Acre-foot from Two Existing Water Storage Projects in the SFWMD Annual Cost per Acre-foot of Storage Capacity in 2013 Dollars (a) Acre-Feet of Storage or Retention Capacity (1) (2) (3) Acre-Feet of Discharge Reduction (4) = (3) x 1.5 (a) Cost per Acre- Foot of Discharge Reduction (5) = (2) x (3) / (4) Caloosahatchee (C-43) West Basin Storage Reservoir (b) $ , ,000 $ St. Lucie Canal (C-44) Reservoir (b) $338 50,800 76,200 $ (a) From: Hazen and Sawyer, "Compilation of Benefits and Costs of STA and Reservoir Projects in the South Florida Water Management District", for the World Wildlife Fund acting on behalf of the Florida Ranchlands Environmental Services Project, July 2011, Table 8.1 on pages 8-1 to 8-2 where the cost per acre-foot of storage capacity was converted from 2011 to 2013 dollars. This cost includes amortized capital cost (amortized over the project s useful life of 50 years at percent discount rate) and annual O&M cost. These costs represent only the reservoir and does not include the STA. (b) For the two storage reservoirs, the acre-feet of storage capacity was multiplied by a rough estimate of 1.5 to convert storage to reduced discharge to coastal areas. This assumes that about one-half of the stored water is beneficially used as a water supply each year while the remainder of the stored water is released to the estuary during periods of low flow to protect the Caloosahatchee Estuary. It also accounts for evaporation from the reservoir R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-27

67 2.0 Beneficiaries and Benefit Values August 2014 The C-43 Reservoir s 170,000 acre-feet of storage capacity was multiplied by 1.5 to convert water storage to a 255,000 acre-feet of water discharge reduction to the Caloosahatchee Estuary. This 1.5 factor assumes that 50 percent of the water stored is used for water supply during the year so that 1.5 times the storage capacity is available over a 12 month period. The C-44 Reservoir s 50,800 acre-feet of storage capacity was also multiplied by 1.5 to obtain 76,200 acre-feet of water discharge reduction to coastal areas. The cost per acre-foot of stormwater discharge reduction was calculated as the annual cost per acre-foot of storage reported in Column (2) of Table 2.11 times the amount of storage reported in Column (3) divided by the acre-feet of discharge reduction provided in Column (4). The cost per acre-foot of discharge reduction using the Caloosahatchee West Basin Storage (C-43) Reservoir is $126 and the cost using the St. Lucie Canal (C-44) Reservoir is $225. Neither of these projects are in operation or are completed. Some peripheral parts of the C-44 Project are under construction. The C-43 project is not under construction. The C- 44 Reservoir is located about 35 miles south of the GLRSTA Project location while the C- 43 Reservoir is located about 60 miles southwest of the GLRSTA Project on the west side of Lake Okeechobee. To best represent the geologic and hydrologic conditions of local reservoirs that could be used to store stormwater discharges to the IRL and SLE, the $225 per acre-foot C-44 Reservoir was used as the avoided cost to obtain stormwater discharge reduction benefits. 2.5 Benefits and Estimated Dollar Value to Local Government Agencies Many municipalities and water control districts (WCDs) surrounding the GLRSTA Project site are regulated by the NPDES 9 Municipal Separate Storm Sewer System (MS4) program because they discharge stormwater to waters of the State of Florida or of the United States. The stormwater conveyance systems can be roads and municipal streets with stormwater systems, catch basins, curbs, gutters, ditches, constructed channels, or storm drains that have the following characteristics: Owned or operated by a state, city, town, county, special district, association, or other public body (created by or under state law) having jurisdiction over the management and discharge of stormwater and that discharges to surface waters of the state; R5_sec 02 9 NPDES stands for National Pollutant Discharge Elimination Program which is regulated by the US EPA and the Florida Department of Environmental Protection. GROVE LAND UTILITIES, LLC Page 2-28

68 2.0 Beneficiaries and Benefit Values August 2014 Designed or used for collecting or conveying stormwater and is not a combined sewer; and Not part of a Publicly Owned Treatment Works (POTW). 10 The significant stormwater management efforts of these communities reflect the basic requirements of Florida s NPDES program. In addition to the MS4s, there are other entities in the Basin that discharge stormwater but are not subject to NPDES permitting. These entities include agricultural landowners, water control districts (WCDs), community development district (CDDs), and parts of counties that are not part of an MS4 (non-ms4). Because these stormwater discharges are considered to be pollutant sources, these entities are subject to BMAP requirements. During the BMAP development process, a subset of these entities were excluded from being required to reduce TP and TN loads in stormwater discharges under the BMAP for the time being because it was concluded that any reductions would be insignificant. The remaining MS4s, WCDs and non-ms4s located in the watershed of the SFWMD s St. Lucie River Watershed Protection Plan are being required to reduce the TN and TP concentrations in their stormwater discharges to comply with the State of Florida s TMDLs of 0.72 mg/l for TN and mg/l for TP. The initial lists of approved projects to achieve the TN and TP load reductions assigned to each entity are provided in Tables D-3 through D-15 of Appendix D of the Final Basin Management Action Plan of the St. Lucie River and Estuary Basin (BMAP, May 2013). More projects may be added in future BMAP updates that may further increase costs to these entities. Cost of TP and TN Reductions. The costs and the estimated reductions in TP and TN of many of these projects, as reported by each entity, are also provided in some of these tables (Tables D-3 through D-12). From these costs and nutrient reductions, the unit costs were calculated and are summarized in Table The reported project cost was annualized over 20 years at a 3.75 percent real annual discount rate. This value was added to the reported annual O&M cost and the result was divided by one of three values: (1) the pounds of TN removed per year; (2) the pounds of TP removed per year; and (3) the total pounds of TN and TP removed per year. These metrics are presented in the table R5_sec POTW means any device or system used in the conveyance and treatment of municipal sewage or industrial wastes of a liquid nature, which is owned by a state or municipality. GROVE LAND UTILITIES, LLC Page 2-29

69 2.0 Beneficiaries and Benefit Values August 2014 The types of approved projects are water control structures, wet detention areas, wetlands with chemical treatment, stormwater retention, exfiltration trenches and swales, catch basin cleaning, and wet detention with alum injection. They are the projects being constructed or are already constructed by the City of Fort Pierce, Martin County, the North St. Lucie River Water Control District, the City of Port St. Lucie, the City of Stuart, and St. Lucie County. Table 2.12 Reported Costs of Phosphorus and Nitrogen Reduction Projects by MS4s, WCDs and Non- MS4s Located in St. Lucie and Martin Counties, 2013 dollars (a) Project Type (number of projects) Cost per Pound of TN Removed Water Control Structures (3) $4 $188 Cost per Pound of TP Removed Cost per Pound of TN or TP Removed (b) Low High Low High Low High Not Applicable Not Applicable $4 $188 Wet detention (16) $40 $5,142 $46 $8,119 $21 $3,148 Wetlands, chemical treatment (1) $48 $123 $34 Stormwater retention (2) $77 $82 $130 $390 $48 $68 Catch basin cleaning (1) $159 $257 $98 Exfiltration trenches and swales (2) $176 $709 $822 $2,651 $145 $560 Wet detention with alum injection (3) $187 $1,217 $488 $2,950 $126 $862 Median cost per lb of TN removed $327 Median of Costs Among All 28 Projects Median cost per lb of TP removed $952 Median cost per lb of TN or TP removed $240 (a) Based on cost data provided by entities in the Basin Management Action Plan for the Implementation of Total Maximum Daily Loads for Nutrients and Dissolved Oxygen by the FDEP in the St. Lucie River and Estuary Basin, developed by the St. Lucie River and Estuary Basin Technical Stakeholder in cooperation with the FDEP, May 2013, Tables D-3 through D-12. (b) The total annualized cost was divided by the sum of the annual TN and TP reductions in pounds R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-30

70 2.0 Beneficiaries and Benefit Values August 2014 The unit cost of each project identified in Appendix D for which costs and nutrient reductions were provided was calculated as the cost annualized over 20 years at 3.75 percent discount rate 11 divided by the pounds of TN, TP or TN & TP reduction. For TN, the unit cost ranges from $4 to $5,142 per pound of TN removed with a median among the 28 projects of $327. For TP, the unit cost ranges from $46 to $8,119 per pound of TP removed with a median of $952. For TN & TP the unit cost ranges from $4 to $3,128 per pound of TN & TP removed with a median of $240. For some entities, the costs of additional measures to reduce nutrients in stormwater may be higher than reported in this table, especially where land needed for water control structures and wetlands is not available. If the GLRSTA Project can make significant reductions in the amount of TN and TP in water entering the SLE, then some entities may be able to lower their compliance costs by purchasing nutrient reduction credits instead of making more costly investments in local TN and TP reduction projects. Survey of MS4s and WCDs. During this GLRSTA Project Financial Feasibility Study, seven MS4s and WCDs that ultimately discharge surface water to the C-23 or C-24 Canals were ed a survey that inquired as to the types of nutrient reduction projects that are being planned to make the required TP and TN load reductions agreed to under the St. Lucie River and Estuary BMAP. These load reductions for each entity are summarized in Table 2.13 and are in addition to the load reductions that were credited to each agency from existing projects or those under development. Of the seven entities, six will be required to achieve additional TP and TN load reductions under the second and third BMAP iterations which will be developed in five year increments from 2018 to 2022 and from 2023 to Other entities who were not required to make nutrient load reductions during the first BMAP iteration (2013 to 2017) may be required to achieve load reduction in later BMAP iterations. The total TP and TN load reductions that will be required of these six entities from 2018 to 2027 is 44,197 pounds per year of TP reduction and 78,309 pounds per year of TN reduction. By comparison, the GLRSTA Project is expected to reduce TP in the C-23 and C-24 canals by 46,000 to 68,000 pounds per year and TN by 73,000 to 333,000 pounds per year R5_sec This is the 2013 discount rate for Federal water projects from USDA Natural Resource Conservation Service ( GROVE LAND UTILITIES, LLC Page 2-31

71 2.0 Beneficiaries and Benefit Values August 2014 Table 2.13 Summary of Additional Nutrient Reduction Needed from MS4s, WCDs and non-ms4s In the St. Lucie River and Estuary Basin as Required by the 2013 BMAP MS4 or Water Control District Total Additional Reduction Needed from 2018 to 2027, lbs/year Total Phosphorus (TP) Total Nitrogen (TN) Florida Department of Transportation, District ,078 City of Fort Pierce (a) -3,840-4,246 Martin County 9,453 17,529 North St. Lucie River Water Control District 15,341 21,710 City of Port St. Lucie 14,527 28,117 St. Lucie County (MS 4 and Non-MS4) 3,833 7,032 City of Stuart Total Required Reduction (sum of positive values) 44,197 78,309 Source: Based on required nutrient load reductions and assigned nutrient load reduction credits for projects specified in the St. Lucie River and Estuary BMAP, May 2013, Table 13 on page 38, Table 14 on page 39 and Tables D-3 through D-12. (a) The nutrient credits assigned to the City of Ft. Pierce more than offset their required nutrient reductions. If the FDEP developed a framework for allowing nutrient credit trading through the St. Lucie River and Estuary BMAP, obtaining TN and TP reduction credits from the GLRSTA Project could be a tool to assist local government agencies in achieving their nutrient reduction allocations. The survey also inquired as to the entity s potential interest in obtaining nutrient reduction credits for TP and TN from the GLRSTA Project if they were found to be affordable to the agency. Of the seven entities, five responded to the survey and four of them will need to make additional nutrient reductions during the second and third BMAP iterations. Three of these four entities have not yet identified or are in the process of identifying projects and one believes that it has identified projects that are sufficient to meet their BMAP requirements. All four said that, in the future, they may be open to the possibility of obtaining credits from the GLRSTA Project if they are needed to meet their nutrient load reductions R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-32

72 2.0 Beneficiaries and Benefit Values August Estimated Benefit Value to the Federal Government Under the CERP IRL- South Project The Indian River Lagoon South (IRL-S) is a Project conceptualized by the U.S. Army Corps of Engineers (Corps) in collaboration with the SFWMD as part of the Comprehensive Everglades Restoration Plan (CERP). The Project s purpose is to improve surface water management in the C-23, C-24, C-25, and C-44 basins for habitat improvement in the SLE and southern portions of the IRL. According to the Project s feasibility report, the project is expected to provide significant water quality improvement benefits to the IRL and the SLE by reducing the load of nutrients, pesticides, and suspended materials from basin runoff. Several of the Project s components are indefinitely delayed including the C- 25 Reservoir and STA, the C-23/C-24 North Reservoir and STA, and the C-23/C-24 South Reservoir. The locations of these proposed projects are depicted in Figure These CERP projects would to capture and treat water from the C-23, C-24, and C-25 Canals. The GLRSTA Project would be located at a site that could provide the same benefits as the IRL-South plan by replacing the C-25 Reservoir and STA and reducing the required capacity of the C-23/24 Reservoirs and STAs. The capital cost of these CERP Projects were estimated by the Corps in The cost of the Corps project components that would be replaced by the GLRSTA Project would be the avoided cost of the GLRSTA Project. The weighted average avoided cost per acre-foot of storage capacity is calculated and presented in Table If the GLRSTA Project provides 75,000 acre-feet of storage along with the attendant TP and TN reductions, the avoided cost to the Corps would be $220 per acre-foot of water storage. Because the Federal Government is authorized by Congress to finance 50 percent of the capital costs of the CERP projects, the $220 was multiplied by 0.50 to obtain the avoided costs to the Federal Government of $110 per acrefoot of water storage per year. This avoided cost includes capital cost only which is the cost of construction, land, contingencies, engineering design, construction management and administration. The SFWMD would also benefit from the GLRSTA Project through its CERP participation. CERP authorization allows the SFWMD to cover all or a portion of its 50 percent share of the total capital cost through in-kind work. The SFWMD s participation in a public-private partnership to construct the GLRSTA Project would create a credit that the SFWMD could apply to other projects R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-33

73 GROVE LAND UTILITIES, LLC R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 2-10 Location of the Indian River Lagoon South Projects of the CERP (from Everglades.org) Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

74 2.0 Beneficiaries and Benefit Values August 2014 Table 2.14 Estimated Avoided Cost of the GLRSTA Project to the Federal Government Under CERP CERP Project Capital Cost in 2013 Dollars (a) Acre-feet of Water Storage (a) Capital Cost per Acre-foot of Water Storage (1) (2) (3) (4) = (2) / (3) Annualized Capital Cost per Acre-foot of Water Storage (5) = (4) amortized over 50 years at 3.75% C-25 Reservoir and STA $55,308,945 5,392 $10,258 $ C-23/C24 Reservoir North & South and STA $415,976,163 91,900 $4,526 $ Avoided Cost up to 5,392 acre-feet of storage: $ Avoided Cost for water storage in excess of 5,392 acre-feet of storage: $ Avoided Cost: Weighted Average Cost for 75,000 acre-feet of storage (7% from C-25 reservoir & STA and 93% from C-24/C-24 Reservoir & STA): $ GLRSTA Avoided Cost - 50% Cost Share: $ (a) From Final IRL - South Project Implementation Report and EIS, USACE and SFWMD, March 2004 (PIR). The capital costs were increased by a factor of 1.25 to convert 2003 dollars to 2013 dollars using the GDP Chained Price Index. Capital cost includes construction, land, contingencies, engineering design, construction management and administration. 2.7 Estimated Benefit Value to Agriculture Agricultural operations with access to the C-23, C-24 and C-25 Canals would benefit from the availability of additional water from these sources. According to the SFWMD s UEC Water Supply Plan Update discussed in Section 2.1, agricultural irrigation water from these sources will need to be supplemented with water from the Floridan aquifer in the foreseeable future. If additional water can be supplied through these canals, growers would save about $0.10 per 1,000 gallons of water withdrawn. The calculation of this avoided cost estimate is provided in Table 2.15 based on Florida data from the U.S. Census of Agriculture, 2008 Farm and Ranch Irrigation Survey (USCA). The energy cost to pump 1,000 gallons of water from groundwater wells in 2008 dollars averages about $0.13 per 1,000 gallons in Florida while the energy cost to pump 1,000 gallons of water from surface sources is about $0.04 per 1,000 gallons. The cost difference is $0.09 per 1,000 gallons in 2008 dollars or $0.10 per 1,000 gallons in 2013 dollars. Thus, growers would be willing to pay up to $0.10 per 1,000 gallons to obtain additional water supply from the C-23, C-24 and C-25 Canals R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-34

75 2.0 Beneficiaries and Benefit Values August 2014 Table 2.15 Estimated Avoided Cost of Additional irrigation Water From C-23, C-24 and C-25 Canals Row No. Item Wells Surface Water Source (1) Energy expense per acre, in 2008 dollars (a) $59.53 $15.40 Table 20 of USCA (2) Average acre-feet of irrigation water per acre (a) Table 11 of USCA Average 1,000 gallons of irrigation water per (3) acre (3) = (2) x 325,851 (4) Energy expense per 1,000 gallons, in 2008 $ $0.13 $0.04 (4) = (1) / (3) (5) Energy Cost Savings from Using Surface Water Instead of Groundwater in 2013 dollars, $ per 1,000 gallons $0.10 (a) From U.S. Census of Agriculture, 2008 Farm and Ranch Irrigation Survey (USCA). (5) = [$ $0.04] x Summary of GLRSTA Project Values A summary of the dollar value of benefits associated with the GLRSTA Project is provided in Table These values were used during the financial feasibility evaluation provided in Section 6.0 of this report. Table 2.16 Summary of Estimated Benefit Values Associated with the GLRSTA Project Beneficiaries Benefit Value Source Water Utilities Potable Water Supply ($ per 1,000 gallons) $2.50 Minimum of net value of potable water to customer and cost of new water supply = Minimum($6.00 per kgal, $2.50 per kgal) from Tables 2.8 and 2.9 SFWMD / FDEP / State of Florida TP Reduction Benefit ($ per pound of TP removed) $124 Table 2.10 SFWMD / FDEP / State of Florida MS4s, WCDs, CDDs, non-ms4s Federal Government Agricultural Irrigators using C-23, C- 24 and C25 Canals for water source R5_sec 02 Estuarine Water Discharge Reduction ($ per acre-foot of discharge reduction) $225 Table 2.11 TP or TN Reduction Benefit ($ per pound of TP or TN reduction) $240 Table 2.12 Avoided cost of CERP Projects ($ per acre-foot of water storage) $110 Table 2.14 Water Supply - $ per 1,000 gallons $0.10 Table 2.15 low estimate of benefit value GROVE LAND UTILITIES, LLC Page 2-35

76 2.0 Beneficiaries and Benefit Values August Potential Payment Methods There are potentially three methods by which customers would pay for the services provided by the Project: (1) Lump sum; (2) Periodic payments; and (3) Combination of (1) and (2). For a Project beneficiary to choose to become a customer, the payment for services would need to be less than the minimum of: (1) the dollar value of benefits provided by the service and (2) the cost of an alternative method of obtaining the service. The potential methods by which the GLU customers would pay for the water and other services provided by the Project are discussed below for each beneficiary. These beneficiaries are: 1. Water utilities in the SJRWMD for additional surface water supply 2. Water utilities located near the GLRSTA Project 3. Water use permittees and applicants located near the Project s groundwater recharge areas 4. SFWMD / FDEP / State of Florida 5. SJRWMD / State of Florida 6. Local agencies and agricultural landowners in the St. Lucie River and Estuary Basin 7. Federal Government under the CERP Water Utilities in the SJRWMD for Additional Surface Water Supply. Water utilities that can access additional water supply from the St. Johns River could pay for water from the GLRSTA Project based on the amount of water allocated from the Project that is used to determine the utility s additional permitted water quantity from the St. Johns River. For example, suppose 20 mgd of water from the Project results in 20 mgd of additional permitted quantity from the River. The water utility would make payments based on 20 mgd from the Project. If the price of Project water is $2.00 per 1,000 gallons, then the cost to the utility would be $14.6 million per year or $2.00 per 1,000 gallons of permitted water R5_sec 02 The relationship between the amount of Project water entering the St. Johns River and the additional permitted water quantity is an important assumption in determining the economic feasibility of being a Project customer. For example, if 20 mgd of water from the Project resulted in 18 mgd of additional permitted quantity from the River, then at $2.00 per 1,000 gallons, the true cost to obtain the additional permitted quantity would be $2.22 per 1,000 gallons ($2 x 20/18). If this amount is greater than the dollar value of benefits to the utility or the cost of an alternative water source, then the utility would choose not to purchase water from the Project. GROVE LAND UTILITIES, LLC Page 2-36

77 2.0 Beneficiaries and Benefit Values August 2014 Alternatively, the price could be based on the additional permitted quantity provided by the increased St. Johns River flows provided by the Project. In this case, the pricing scheme would need to incorporate the withdrawal-to-recharge ratio of each customer or the ratio of all customers as a whole. In addition to the price per unit, the beneficiaries may desire to purchase a share of the Project s water production capacity via a capacity allocation agreement. This agreement would specify the amount of Project water that would be guaranteed to the beneficiary and the amount of lump sum money that would be paid by the beneficiary for Project construction. In the event that the minimum flow and level (MFL) is not met at a certain segment of the river, then the SJRWMD could pay for the water flows from the Project that bring the flow or lake level up to the MFL. Then Project water beyond that needed to satisfy the MFL would be available to the utilities. The Project has been conceptually designed to deliver 136 mgd ninety percent of the time. In the event that water supply from the Project is insufficient to supply all contracted demands, a previously developed water shortage plan would need to be activated that specifies actions that would be taken by GLU, the water management districts, and the Project s customers during the water shortage. Some water utilities may desire to reserve the right to obtain Project water in the future. To satisfy this demand, GLU could collect an annual payment from the utility in exchange for a guaranteed quantity of future water supplied for this utility. The payment would be used to recover a portion of the capital cost of the project. The total amount of water guaranteed to all utilities could be based on the Project s existing capacity or the Project s ultimate capacity. Water Utilities Located Near the GLRSTA Project. There are two ways in which a water utility located near the Project could obtain additional permitted groundwater quantities as follows. 1. The Project provides additional water supply through the C-25, C-24 and/or C-23 Canals so that agricultural irrigators could use this - their preferred - surface water source instead of groundwater sources, thus freeing up groundwater for use by water utilities R5_sec The Project recharges a part of the aquifer that can be accessed by one or more water utilities. GROVE LAND UTILITIES, LLC Page 2-37

78 2.0 Beneficiaries and Benefit Values August 2014 The water utility payment mechanism would be similar to that used for the St. Johns River recharge. Water utilities could pay based on the amount of water allocated from the Project that is used to determine the utility s additional permitted water quantity from the groundwater source. As with the St. Johns River, the withdrawal-to-recharge ratio associated with aquifer recharge would determine the water price that would be economically feasible to the utility. Water use Permittees and Applicants located near the Project s groundwater recharge areas. For water uses that require a water use permit from the SJRWMD or the SFWMD, the payment mechanism would be the same as that for the water utilities described above. The payment could be based on: (1) the amount of Project water used to obtain the permitted quantity, or (2) the amount of the additional permitted water quantity that could be obtained when the Project water is provided to the groundwater areas. SFWMD / FDEP / State of Florida. The Project would provide significant benefits to the SFWMD, FDEP and the State of Florida. The estimated nutrient reductions and estuarine discharge reductions anticipated from the Project are provided in Table These derivations of these estimates are provided in Section 3.0 of this report. Table 2.17 Summary of Estimated Physical Benefits from the GLRSTA Project Description Annual Value Water Supply mgd 136 mgd (210 cfs) TP Reduction when 100% of flow does not discharge 55 metric tons (36% reduction) to IRL or SLE TP Reduction when 100% of flow is discharged to IRL 38 metric tons or SLE during the dry season TN Reduction when 100% of flow does not discharge 303 metric tons (37% reduction) to IRL or SLE TN Reduction when 100% of flow is discharged to IRL 67 metric tons or SLE during the dry season Estuarine Discharge Reduction when 100% of flow 155,054 acre-feet does not discharge to IRL or SLE (37 % reduction) Payments for Nutrient Reduction. Because TN reduction occurs simultaneously with TP reduction and because the estuaries would benefit from the removal of both nutrients, the nutrient reduction payment made by SFWMD / FDEP / State of Florida could be based on the amount of TP removed. TP was chosen because, unlike TN removal, reasonably reliable estimates of the costs to remove TP from stormwater in the regional area, and thus estimates of avoided costs, are available as was presented earlier in this Section R5_sec 02 Payments to GLU could be based on the amount of TP removed from stormwater discharges to the IRL and SLE in the prior year. The amount removed would be based on GROVE LAND UTILITIES, LLC Page 2-38

79 2.0 Beneficiaries and Benefit Values August 2014 the TP reduction performance of the STA and the amount of water that was prevented from entering the estuaries due to the Project. Because all of the source water is from the three canals (C-23, C-24 and C-25), all of the water leaving the Project through these canals would either be withdrawn by water users such as agriculture or would enter the IRL and SLE. Therefore, a protocol for measuring the amount of water entering the IRL and SLE due to the Project would need to be developed based on the amount of water leaving the Project through the C-25 Canal and either the metered amount or an estimate of the amount of water withdrawn by agriculture and other users. Also, a TP reduction monitoring system and water meters at the discharge points of the STA would need to be included in the Project design. Once the amount of TP reduction is calculated, the payment would be determined and paid by the SFWMD, the FDEP and/or the State of Florida (through legislative appropriation) on an annual or periodic basis. For the first year of the Project s operation, an estimate of TP reduction for the year could be made and the initial payment based on this estimate. After the year is completed, GLU would true up the first year s invoice using the actual TP reduction to the estuaries. Alternatively, or in addition, these agencies could provide a lump sum amount to help finance the Project s construction that would be drawn upon over the years based on the actual amount of TP reduction. Payments for Estuarine Water Discharge Reduction. The GLRSTA Project would reduce stormwater discharges to the IRL and SLE during the wet season resulting in improved estuarine conditions and recreational opportunities. If 100 percent of the flows captured by the Project were used to augment water supplies to utilities and the environment, then total annual flows to the IRL and SLE would be reduced by 37 percent (from Table 2.17). The SFWMD / FDEP / State of Florida would pay for the water discharge reduction benefit based on the amount of water discharge reduction to the IRL and SLE during the wet season. The payment would be the same regardless of whether the water is used for water supply or if it is discharged back to the IRL and SLE during the dry season. Dry season discharges are not likely to harm the ecosystems and at times may provide treated freshwater when needed by these ecosystems. A protocol for measuring this discharge reduction would be developed based on the amount of water routed to the Project during the wet season and the amount of water released from the Project to the Canals during the wet season (if any) that was not used for water supply R5_sec 02 Cost Sharing Between the SFWMD and FDEP / State of Florida. If the SFWMD contributes to the payment, then regional residents of the SFWMD would be paying for the nutrient and stormwater discharge reduction costs of the Project. If FDEP or the State of Florida contributes to the payment, then all Floridians would be paying for the nutrient and stormwater discharge reduction costs of the Project. GROVE LAND UTILITIES, LLC Page 2-39

80 2.0 Beneficiaries and Benefit Values August 2014 The cost allocation between the regional SFWMD and the FDEP/State of Florida could be based on the benefits received by Florida residents outside of the SFWMD. These benefits include increased income and employment as residents and visitors spend money on IRL and SLE recreational activities including boat purchases and repair that are provided by Florida businesses outside of the SFWMD. Another important benefit to Floridians is the public relations aspect where the environmental health of the IRL and SLE in St. Lucie and Martin counties contributes to the stellar reputation of Florida as an enjoyable waterbased recreation area. SJRWMD / State of Florida. The benefit of the Project to the SJRWMD is the additional water supply created by the Project that can be beneficially used by the water utilities located within this District. Because the MFL criteria in the St. Johns River Basin must be met before water from the Project can be withdrawn from the river, the SJRWMD could pay for the Project s water supply that is used to achieve compliance with MFLs. Local agencies and agricultural landowners in the St. Lucie River and Estuary Basin. Entities who are or will be required to reduce TP and/or TN in water leaving their properties under the BMAP for the St. Lucie River and Estuary Basin could benefit from the Project especially if the FDEP developed a framework for allowing nutrient credit trading in this Basin. Water quality credit trading is addressed in section , Florida Statutes as follows. (8) WATER QUALITY CREDIT TRADING. (a) Water quality credit trading must be consistent with federal law and regulation. (b) Water quality credit trading must be implemented through permits, including water quality credit trading permits, other authorizations, or other legally binding agreements as established by department 12 rule. (c) The department shall establish the pollutant load reduction value of water quality credits and is responsible for authorizing their use. (d) A person who acquires water quality credits ( buyer ) shall timely submit to the department an affidavit, signed by the buyer and the credit generator ( seller ), disclosing the term of acquisition, number of credits, unit credit price paid, and any state funding received for the facilities or activities that generate the credits. The department may not participate in the establishment of credit prices R5_sec Department is FDEP. GROVE LAND UTILITIES, LLC Page 2-40

81 2.0 Beneficiaries and Benefit Values August 2014 (e) Sellers of water quality credits are responsible for achieving the load reductions on which the credits are based and complying with the terms of the department authorization and any trading agreements into which they may have entered. (f) Buyers of water quality credits are responsible for complying with the terms of the department water discharge permit. (g) The department shall take appropriate action to address the failure of a credit seller to fulfill its obligations, including, as necessary, deeming the seller s credits invalid if the seller cannot achieve the load reductions on which the credits were based in a reasonable time. If the department determines duly acquired water quality credits to be invalid, in whole or in part, thereby causing the credit buyer to be unable to timely meet its pollutant reduction obligations under this section, the department shall issue an order establishing the actions required of the buyer to meet its obligations by alternative means and a reasonable schedule for completing the actions. The invalidation of credits does not, in and of itself, constitute a violation of the buyer s water discharge permit. (h) The department may authorize water quality credit trading in adopted basin management action plans. Participation in water quality credit trading is entirely voluntary. Entities that participate in water quality credit trades shall timely report to the department the prices for credits, how the prices were determined, and any state funding received for the facilities or activities that generated the credits. The department may not participate in the establishment of credit prices. Water quality trading is a market-based approach to achieving nutrient removal goals at the lowest possible cost by allowing the voluntary exchange of nutrient credits for money. Under the right circumstances, a well-designed and properly implemented water quality trading system can be an effective tool to achieve water quality goals. Consideration of many specific issues is necessary to evaluate, design and implement a successful water quality trading program R5_sec 02 Water quality trading is an approach supported by the U.S. EPA for controlling pollutants from multiple sources that collectively impact water quality conditions in a designated water body. The U.S. EPA has supported the concept and implementation of water quality trading for many years, including the watershed-based trading efforts on the Tar-Pamlico River (North Carolina), the Long Island Sound, the Chesapeake Bay, and the Lower Boise and Snake Rivers in Idaho. Several water quality trading markets that are under operation focus on either phosphorus or nitrogen-based trading. GROVE LAND UTILITIES, LLC Page 2-41

82 2.0 Beneficiaries and Benefit Values August 2014 If the FDEP allowed nutrient credit trading through the St. Lucie River and Estuary BMAP, local government agencies could obtain TN and TP reduction credits from the GLRSTA Project at costs that are lower than those associated with local projects. Federal Government under the CERP. The Federal Government is authorized by Congress to finance fifty percent of the capital costs of the CERP Projects. According to the Indian River Lagoon - South Project Implementation Report (PIR) Final - March 2004 (page 7-41) prepared by the U.S. Army Corps of Engineers (US ACE): Public-Private Partnerships The SFWMD, with coordination with the U.S. Army Corp of Engineers, is exploring opportunities to involve private enterprise into the restoration planning, construction and operations. These new relationships are being identified as public-private partnerships (PPP). No specific ways of accomplishing PPP have been developed, but there is general agreement to investigate alternate means of designing, building and operating the vast array of components required for restoration. Agency staff will need to develop processes consistent with federal authority that can allow non-traditional involvement of private interest while maintaining compliance with existing procurement regulations protecting fair and unbiased contracting procedures. The GLRSTA Project would be located at a site that could provide the same benefits as portions of the CERP s IRL-South plan that have been indefinitely delayed. The project could replace the delayed C-25 Reservoir and STA and reduce the required capacity of the delayed C-23/24 Reservoir and STAs. While the GLRSTA Project differs from the IRL- South plan, US ACE plans are commonly refined to optimize benefits during the design process. It may be possible to avoid the need for and cost of all or a portion of these CERP projects by constructing and operating the GLRSTA Project. Under a public-private partnership, it should be possible to build the project faster than the current schedule of these CERP projects. If the GLRSTA Project is adopted into the Federal plan, it may be eligible for Federal cost sharing (50/50 for design, construction, and land acquisition) R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-42

83 2.0 Beneficiaries and Benefit Values August Conclusions This study concludes that there is a need for 100 percent of the nutrient and estuarine stormwater discharge reductions provided by the Project once it becomes operational in the year The demand for water supply from the Project will be primarily dependent on the ability of the St. Johns River to transport the Project water to satisfy utility water demands that cannot be met with existing water sources. Initially, the demand for water from the Project might be short of the Project s capacity and need to release water. When this occurs, some water will need to be routed back through the C-25, C-24 and/or C-23 Canals to the IRL and SLE during the dry season. However, given projections of the amount of water that will be needed from alternative water sources for public supply and agricultural irrigation, it is very likely that by 2035 all of the available supply of water from the Project could be beneficially used R5_sec 02 GROVE LAND UTILITIES, LLC Page 2-43

84 Section 3.0 Project Conceptual Plan and Lifecycle Cost Estimates This Section describes the components of the GLRSTA Project and presents its estimated lifecycle costs. 3.1 GLRSTA Project Components The components of this project are as follows: Water Source to Reservoir: The reservoir would capture and store excess stormwater runoff from the C-25, C-24 and C-23 Canals. To obtain sufficient flow to the reservoir from these canals, a new 260 cfs pump station would be installed at the SFWMD s G-81 Structure located on the C-24 Canal and a new 260 cfs pump station would be installed at the G-78 Structure on the C-23 Canal. These pump stations would move water from the C- 24 and C-23 Canals into the C-25 Canal. The locations of these two structures with respect to the overall Project are provided in Figure 3-1 which is a schematic diagram of water flow from the Canals to the GLRSTA Project. To accommodate increased water flows through the C-25 Canal, the 8,140 foot section of the C-25 Canal southern extension beginning just north of the G-81 Structure to where it joins the main east-west section of the canal would need to be widened to a bottom width of 25 feet. In addition, the first 3,500 feet of the main canal as it heads east would be widened to a bottom width of 25 feet and deepened to a bottom elevation of 0.6 feet NGVD These sections and the location of the new G-81 pump station are depicted in Figure R5_sec 03 Water would flow north along the C-25 Canal and through a new 12-foot by 16-foot box culvert road crossing placed under a private road over the canal near the southwest corner of the STA just west of the existing plug that separates the two water management districts. The location of this feature is indicated as 1 Box Culvert Road Crossing in Figure 3-3. Water would pass through this culvert and enter the reservoir through a 700 cfs capacity inflow pump station that would be installed at the reservoir s northeast corner. This pump station would withdraw water from the C-25 Extension / Turnpike Canal as shown GROVE LAND UTILITIES, LLC Page 3-1

85 GROVE LAND UTILITIES, LLC 700 Yeehaw Junction 60 Vero Beach Grove Land STA Grove Land Reservoir C-25 Canal S50 G81 G79 S99 Fort Pierce A1A 70 G78 Okeechobee Port St Lucie S49 S97 Stuart Port Salerno Lake Okeechobee C-23 Canal C-24 Canal R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 3-1 Schematic Diagram of Water Flow from Canals to GLRSTA Project Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

86 GROVE LAND UTILITIES, LLC Florida s Turnpike 3,500 feet widened and deepened 3,140 8,140 feet widened G-81/Orange Avenue Pump Structure cfs (new) R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 3-2 Locations of C-25 Canal that would be widened and deepened Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

87 GROVE LAND UTILITIES, LLC Grove Land STA 5B - STA Outflow Gate C-52E Flow-way C-25 Canal 1 - Box Culvert Road Crossing R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 3-3 Locations of Box Culverts and STA Outflow Gate at Southeast corner of STA Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

88 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 in Figure 3-4 and identified as 2 Reservoir Inflow Pump. In addition, a 5,800 foot section of the C-25 Canal near the proposed reservoir would be enlarged. Reservoir to STA: Untreated water would flow by gravity out of the north central part of the Reservoir through the Reservoir Outflow Gate into an existing canal that crosses north under the Florida Turnpike to the southwestern part of the STA. The water would enter the STA through the 230 cfs STA Inflow Pump Structure. These features are depicted in Figure 3-4 and identified as 3 Reservoir Inflow Gate and 4 STA Inflow Pump. Once in the STA, the water would flow by gravity to the northern end of the STA. Water Flow Out of the STA: The treated water would move either north or south. If the water is sent to the Upper St. Johns River Basin, then it will move north. If the water is sent back through the C-25 Canal, then it will move south. (1) North: The water would flow from the STA through the Upper St. Johns River Basin to the channelized St. Johns River at Lake Hell n Blazes as depicted in Figure 3-5. The process by which this water would flow to Lake Hell n Blazes is as follows. The water would leave the STA through the Outflow Gate located at the north end of the STA as depicted in Figure 3-6 identified as 5A STA Outflow Gate C-52 Flow-way. The existing S-253 weir structure would be improved and a 210 cfs pump station would be constructed as depicted in Figure 3-6 identified as 6A S-253 Pump. The water would then flow north through the L-79 Canal to State Road 60. The L-79 channel and adjacent ground between the STA and State Road 60 would be cleared of vegetation in order to improve conveyance capacity. Stormwaters from the St. Johns Irrigation District (SJID) discharge into the L-79 Canal through an unnamed water control structure just south of the SR 60 Bridge as identified in Figure 3-7. Water flowing north from the Grove Land STA in the L-79 Canal could interfere with discharges from the SJID during high water flow events. There are potentially at least two methods to prevent this from happening: (1) During high flow conditions, water flowing at 210 cfs from the STA would be pumped into the Fort Drum Marsh Conservation Area (FDMCA), thus bypassing the SJID outflow structure; or (2) Improvements would be made to increase the water storage capacity of the SJID by modifying the existing outlet structure and raising levees as necessary. This would reduce SJID discharges during high flow events R5_sec 03 In order for the STA flow to enter the FDMCA, the SJRWMD would need to perform hydrologic modeling to confirm that the additional water would not compromise performance GROVE LAND UTILITIES, LLC Page 3-2

89 GROVE LAND UTILITIES, LLC Grove Land STA 4 - STA Inflow Pump 3 - Reservoir Outflow Gate C-25 Canal 2 - Reservoir Inflow Pump Grove Land Reservoir R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 3-4 Proposed improvements for water inflow to Reservoir and outflow to STA Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

90 GROVE LAND UTILITIES, LLC S-96D C-65 Canal STA R4 Water Flow from GLRSTA Figure 3-5 Path of Water Flows from the GLRSTA Project through the Upper St. Johns River Basin to the channelized St. Johns River (map from SJRWMD) Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

91 GROVE LAND UTILITIES, LLC 6A - S-253 Pump 5A - STA Outflow Gate C-52 Flow-way Grove Land STA R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 3-6 STA Outfall Gate and S-253 Pump to move water from STA to the Upper St. Johns River Basin Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

92 GROVE LAND UTILITIES, LLC Kenansville Lake 7 - Lift Gate Stick Marsh Blue Cypress Lake Blue Cypress WMA SJID Water Control Structure R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 3-7 Location of New Structures in the Upper St. Johns River Basin to move water from the GLSTA Project Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

93 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 standards in the FDMCA and the Blue Cypress Marsh Conservation Area (BCMCA) which is down stream of the FDMCA. The low nutrient wetlands in the BCCA cannot function at an 80 ppb TP concentration. Therefore, water flows through the GLRSTA Project may need to be reduced from 136 mgd (210 cfs) to 92 mgd (142 cfs) during high flow periods in order for the STA to reduce TP in the water to 47 ppb which is the TP target for the BCCA. In the event that the identified standards cannot be met, SJID s stormwater storage infrastructure could be improved so that the SJID could accommodate water flows from the STA during high flow periods. This conceptual financial feasibility study recognizes that additional modeling and research will be needed to address this SJID issue and includes the assumption that a feasible solution can be found. The GLRSTA cost estimates provided in this report are believed to be sufficient to cover the cost of the most feasible solution to address STA flows past the SJID outfall. North of State Road 60, the treated water would flow into the southwest corner of the Blue Cypress Water Management Area traveling along the western side. The water would continue through the C-65 Canal between L-76 and L-75, through the S-96D Structure and into the southeast corner of the St. Johns Water Management Area also known as Stick Marsh. This path was identified in Figure 3-5. The water would then flow northwest through the Stick Marsh. At the northwest corner of Stick Marsh, a 10 foot by 10 foot vertical lift gate would be constructed to discharge water into the St. Johns Marsh Conservation Area (SJMCA) as depicted in Figure 3-7 and identified as 7 Lift Gate. After flowing through the SJMCA, the water would enter an unnamed channel that would carry it west to Lake Hell n Blazes where it would join the channelized St. Johns River. (2) South: Treated water in the STA may also exit the STA via a second Outflow Gate located at the southeast corner of the STA as depicted in Figure 3-8 identified as 5B STA Outflow Gate. Here, a 10 foot vertical lift gate would be installed to discharge treated water to the C-25/C-24/C-23 Canal system. The water discharge would be located on the north side of the Turnpike but there is no existing structure at the discharge location to convey the water directly to the C-25 Canal on the south side of the Turnpike. Therefore, an existing flow-way (C-52E) in the SJID would convey the water east to a SJID canal at 122nd Ave. SW, which would then convey it south to the C-25 Canal. This path is identified in Figure 3-8. After consultation with the SJID Executive Director, no improvements to the SJID canals are expected to be needed and no payment to the SJID has been requested R5_sec 03 A summary of the GLRSTA components and their sizes is provided in Table 3.1. GROVE LAND UTILITIES, LLC Page 3-3

94 122 Avenue Avenue SW SW GROVE LAND UTILITIES, LLC Grove Land STA Grove Land Reservoir 5B-STA Outflow Gate C-52E Flow-way C-25 Canal R4 Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC Figure 3-8 Water Flow from STA to C-25 Canal Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

95 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 Improvement Table 3.1 Summary of GLRSTA Improvements included in Cost Value Cost Items Associated with Reservoir: G-78 Pump Station (new) 260 cfs G-81 Pump Station (new) 260 cfs Reservoir Inflow Pump Station Reservoir Outflow Gate Structure Reservoir Seepage Collection Pump Reservoir Size Cost Items Associated with STA: STA Inflow Pump Station STA Internal Water Control Structures STA Outflow Gate Structures (to C-52 and C-25) STA Seepage Collection Pump STA Size/Type Cost Items Associated with Re-established WMD Connection: 700 cfs (qty. 2) 20 ft & 20 ft 25 cfs 5,000 acres, 15 feet 230 cfs (qty. 26) gated culverts (qty. 2) 10 ft vertical lift gate 25 cfs 2,000 acre FAVT S-253 Weir To be improved Pump Station at S-253 Weir Lift Gate at NW corner of Stick Marsh 210 cfs 10 ft. The GLRSTA Project would provide a raw water supply that would need to be treated to potable water standards and distributed to customers. The project costs provided in this report do not include this treatment or distribution. 3.2 GLRSTA Capital and Annual O&M Costs This section presents the estimated capital and annual O&M costs of the Grove Land Reservoir, STA, and Other Improvements needed to facilitate water supply to the reservoir from the C-25, C-24 and C-23 Canals and to send water flows to the Upper St. Johns River Basin. These costs are in 2013 dollars. The levels of detail and accuracy of the cost estimates increase as the project nears design completion. Because this study is a conceptual project evaluation, the cost estimates are generally on the order of -30 percent to +50 percent of actual project cost. For the purposes of this financial feasibility study, the time period of analysis for the GLRSTA Project is 50 years or from 2020 to R5_sec 03 GROVE LAND UTILITIES, LLC Page 3-4

96 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 An enhanced Phase 1 environmental site assessment was conducted in 2006 by Dunkelberger Engineering & Testing, Inc. (DET) at the proposed Grove Land Reservoir site. 1 That report identifies minor areas that potentially require cleanup of petroleum and copperrelated contaminants. An estimated cost for removing contaminated soil is included in the cost estimates, assuming that only minor areas will require clean up Grove Land Reservoir The reservoir has a total storage capacity of 75,000 acre-feet covering 5,000 acres to a depth of 15 feet. Cost estimates were prepared using recent cost estimates and bid prices for other CERP-related projects in south Florida, cost curves developed in the HDR 2009 study 2, unit prices provided by contractors based on recent bids for similar projects, and vendor quotations for specific construction materials and equipment. The following site-specific information was utilized in preparing the cost estimates: Topographic information based on surveys made for Evans Properties and USGS topographic maps; Subsurface information from a site investigation made by Dunkelberger Engineering & Testing in 2006; and Geologic information from Florida Geological Survey publications, well logs, and the Natural Resources Conservation Service soil survey maps. A site visit was made to observe the physical conditions at the site and to better understand the potential construction issues. Excavation quantities and costs for earthwork construction were estimated based on the available topographic and soils information, superimposed on a preliminary drawing of the reservoir and STA layout. A conceptual cross-section of the reservoir, as shown in Figure 3-9, was used to calculate the quantities of the major earthwork items needed to complete the construction. The cross-section meets the requirements of Design Criteria Memorandum 4 (DCM-4), Minimum Dimensions of Dams and Embankments, and DCM-2 Free R5_sec 03 1 Preliminary Geotechnical Exploration: +6,000 acre parcel, Okeechobee County, FL, Prepared for DiVosta Homes, L.P., Prepared by Dunkelberger Engineering & Testing, Inc., Port St. Lucie, FL., May 31, HDR, St. Lucie and Indian River Counties Water Resources Study, Final Summary Report, prepared for the SFWMD and the SJRWMD, November GROVE LAND UTILITIES, LLC Page 3-5

97 R4 27.0' Hazen and Sawyer in association with Federico, Lamb & Associates and AMEC 15.0' KH=5x10-4 cm/s KV /KH=0.5 1 Seepage flow at blanket drain 4.16 ft³/day Drain sand [SP] KH=3.5x10-2 cm/s KV /KH=1.0 K H=1x10-4 cm/s KV/KH=0.5 K H=5x10-4 cm/s KV/KH=0.5 Hor. C - Intermediate sands [SP-SM/SM/SP-SC/SC] Hor. D - Deep sands with occasional silt layers [SP-SM/SM/ML] KH=5x10-5 cm/s KV /KH=0.5 Roadway Hor. B - Hardpan [SP-SM/SM w. some cementation] Hor. A - Surficial sands [SP/SP-SM] KH=1x10-3 cm/s KV /KH=0.5 Levee Fill [SP/SP-SM] Wave Break Total seepage flow 6.37 ft³/day Seepage flow at trench drain 1.53 ft³/day 0 Scale: 1" = 30' 40' 80' 15 pool, 27 crest, 8 x 40 wave break, 16.5 spillway Seepage flow at collection canal 0.68 ft³/day GROVE LAND UTILITIES, LLC Figure 3-9 Cross-Section of Reservoir Levee Grove Land Reservoir and Stormwater Treatment Area, Phase 2 Study

98 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 board Determination developed by the SFWMD and USACE for CERP projects. The design should also satisfy other CERP requirements regarding construction materials, compaction requirements, etc. The facilities must have a design life of at least 50 years. Preliminary analyses of seepage, slope stability, and wind-driven wave effects were made to assist in developing design cross sections. The embankment designs used for cost analysis also reflect the experience of the study team, derived from the design, permitting, and construction of several CERP projects, both reservoirs and STAs. The typical reservoir cross section includes slopes of 3 Horizontal:1 Vertical (3H:1V), with a blanket drain for capturing seepage through the embankment, a seepage collection trench drain for foundation seepage control, a seepage collection ditch near the property boundary to minimize impacts, and soil cement armoring on the upstream slope. It is likely that additional protection including an emergency spillway (to release rainfall events greater than the 100-year storm) and erosion protection on the downstream slope (to accommodate potential overtopping in an extreme hurricane event) will also be needed. The cost estimate for the reservoir includes these items. The reservoir and STA construction will utilize soils excavated from the interior of the facility in order to minimize haul distances. They will be constructed using local sandy soils, compacted at optimum moisture content to 95 percent or higher relative compaction. Prior to the embankment construction, the sites will be cleared and grubbed of vegetation, existing infrastructure will be demolished and removed, and any existing soil contamination will be remediated as required by permit conditions. The interior slopes of the reservoir will have soil cement armoring to protect from erosion due to wind-driven waves. A 0.5-mile long soil cement emergency spillway will be constructed with a fixed weir two feet above normal operating level. The spillway will prevent overtopping of the earth embankment during extreme precipitation events and hurricane winds. The crest and exterior slopes will be protected by anchored High Performance Turf Reinforcement Mats (HPTRM) to minimize erosion during hurricanes and potential overtopping events. The reservoir will have a 700 cubic foot per second (cfs) inlet pump station at the C-25 Extension Canal, and vertical lift gates for discharging water to the STA R5_sec 03 The construction cost estimates include the cost of pump stations and outlet structures, as well as fencing, sod, roadways, instrumentation, and miscellaneous site improvements. A contingency estimate of 30 percent of the construction cost has been included for both the reservoir and STA. Non-construction items such as land costs, engineering and design and construction management are also included. GROVE LAND UTILITIES, LLC Page 3-6

99 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 Annual operating and maintenance costs include labor, equipment, supplies, electricity, and contract services. These costs were estimated based on recent similar projects, adjusted for size. Electricity costs for pumps and other items were based on current costs paid by grove owners in the area. A conceptual cost estimate for annual operations and maintenance (O&M) of the Grove Land Reservoir was prepared using the information provided as follows. Improvement Reservoir Inflow Pump Station Reservoir Outflow Gate Structure Reservoir Seepage Collection Pump Station Value 700 cfs (qty. 2) 20 ft & 20 ft 25 cfs Sources of cost information considered in the preparation of this O&M cost estimate include the 2011 Hazen & Sawyer Report titled Compilation of Benefits and Costs of Reservoir and STA Projects 3 and professional judgment based on experience with similar projects. The capital cost and annual O&M cost estimates of the reservoir are provided in Table 3.2. The capital cost includes earthwork, pump stations, inflow and outflow structures, controls, instrumentation and telemetry, demolition, remediation, construction contingency (30%), land cost, engineering design (10%), and construction management (8%). The land cost per acre reflects an estimate of the land s value as a mature citrus crop located in Florida south of Volusia County. The estimate was obtained from the University of Florida, IFAS Extension s 2010 Florida Farmland Value Survey published in April This is the most recent survey available. The $10,000 per acre is the midpoint of the $12,000 per acre value in 2009 and the $8,000 per acre value in The year 2010 was the year following the Great Recession of The value of land in citrus is expected to be greater in 2014 than it was in To improve this land value estimate, a land appraisal will need to be conducted as the Project nears design completion R5_sec 03 3 Hazen and Sawyer, Compilation of Benefits and Costs of STA and Reservoir Projects in the South Florida Water Management District, Prepared for the World Wildlife Fund acting on behalf of the Florida Ranchlands Environmental Services Project, Washington, D.C., July Rodney L. Clouser, Charles Moss, Ronald Muraro, Laila Racevskis, and Robert A. Morris, 2010 Florida Land Value Survey: Farmland Prices Still Down, EDIS document FE893, a publication of the Food and Resource Economics Department, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL, Table 1, page 6. GROVE LAND UTILITIES, LLC Page 3-7

100 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 The total estimated capital cost of the Grove Land Reservoir is $320,750,000. The annual O&M cost includes operations staff, grounds maintenance, water control structure maintenance, aquatic vegetation maintenance, electricity, water quality monitoring and permit compliance. The estimated annual O&M cost is $865,000. Table 3.2 Estimated Capital and Annual O&M Costs of the Grove Land Reservoir (75,000 acre-feet of storage), 2013 dollars Item Description Number of Units Cost Per Unit Cost Construction Cost Capital Cost Earthwork 1 $159,494,000 $159,494,000 Pump stations 1 $16,500,000 $16,500,000 Outflow Structures 2 $215,000 $430,000 Controls, Instrumentation, Telemetry 1 $300,000 $300,000 Demolition of Existing Infrastructure 1 $100,000 $100,000 Remediation of Soil Contamination 600 acres $2,500 $1,500,000 Total Construction Cost $178,324,000 Non-Construction Cost Construction Contingency $178,324,000 30% $53,497,200 Current Market Price of Land (ac) 5,683 $10,000 $56,830,000 Engineering Design $178,324,000 10% $17,832,400 Construction Management $178,324,000 8% $14,425,520 Total Non-Construction Cost $142,425,520 Total Capital Cost $320,749,520 Annual O&M Cost Operations Staff $75,000 Grounds Maintenance $127,778 Water Control Structures Maintenance $21,000 Aquatic Vegetation Maintenance $40,000 Electricity $550,723 Monitoring/Permit Compliance $50,000 Total Annual O&M Cost $864, R5_sec 03 GROVE LAND UTILITIES, LLC Page 3-8

101 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August Grove Land Stormwater Treatment Area (STA) Approximately 2,105 acres is available for the Grove Land Stormwater Treatment Area (STA). The STA would have 2,000 acres of water surface area (or effective treatment area). The STA wetland treatment technology would consist of floating aquatic vegetative tilling or FAVT in the front-end of the system, and traditional submersed aquatic vegetation (SAV) in the back-end. The remaining acreage would consist of embankments, seepage collection ditches, and other accessory features. Untreated water would flow to the STA from the Reservoir in an existing channel beneath the Turnpike. The STA would be capable of discharging treated waters to either the C-25/C-24/C-23 Canals or to the Upper St. Johns River Basin. The treatment capacity of the STA would be 210 cfs on a daily average basis and the daily inflow to the STA from the Reservoir would be 230 cfs to allow for evapotranspiration and seepage losses. The STA would be comprised of two parallel treatment trains of 1,000- acres each with an interior divider berm and a surrounding perimeter berm. The berm cross-section would have 3H:1V side slopes, a 14-foot wide crest, and a levee height of 6 feet above natural ground. Normal operating water level would be no higher than 2 feet, which would allow storage of a 100-year rainfall event (11 inches) and still maintain the minimum required freeboard of 3 feet. Within each treatment train, the front-end would be FAV and the back end would be SAV. The total FAV size would be 660 acres and the total SAV size would be 1,340 acres. In addition to the pre-construction activities described in the previous section for the reservoir, the interior of the STA site would be graded by leveling the existing citrus beds to a gradual slope of approximately 1 foot per mile to facilitate flow from the inlet to outlet. The STA would be designed for a minimum operating life of 50 years. It would include erosion protection consisting of anchored High Performance Turf Reinforcement Mats on the inside slopes of the perimeter berm and both slopes of the interior divider berms. Untreated water would flow from the vertical lift gates at the Reservoir through an existing channel beneath the Turnpike to the STA. A 230 cfs pump station would be installed at the STA to lift the untreated water into the STA distribution channel, which would have gated inlet/outlet structures to control and distribute water through the treatment area R5_sec 03 Capital and annual O&M cost estimates for the STA are provided in Table 3.3. These costs estimates were based on available sources, including recent estimates and bids for other CERP related projects in south Florida, cost curves developed in the 2009 study by HDR, unit prices provided by contractors based on recent bids on similar projects, and vendor quotations for specific construction materials and equipment. GROVE LAND UTILITIES, LLC Page 3-9

102 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 Construction Cost Table 3.3 Estimated Capital and Annual O&M Costs Of the Grove Land Stormwater Treatment Area (STA), 2013 dollars Item Description Capital Cost Number of Units Cost Per Unit Earthwork 1 $21,574,000 $21,574,000 Pump stations (Inflow 230 cfs) 1 $7,060,000 $7,060,000 Pump stations (seepage collection 25 cfs) 1 $1,123,000 $1,123,000 FAVT Initial stocking of floating vegetation 1 $200,000 $200,000 Inflow Structures 26 $25,000 $650,000 Outflow Structures 2 $185,000 $370,000 Controls, Instrumentation, Telemetry 1 $300,000 $300,000 Demolition of Existing Infrastructure 1 $100,000 $100,000 Remediation of Soil Contamination (ac) 200 $2,500 $500,000 Total Construction Cost $31,877,000 Non-Construction Cost Construction Contingency $31,877,000 30% $9,563,100 Current Market Price of Land (ac) 2,105 $10,000 $21,050,000 Engineering Design $31,877,000 10% $3,187,700 Construction Management $31,877,000 8% $2,550,160 Total Non-Construction Cost $36,350,960 Total Capital Cost $68,227,960 Annual O&M Cost Operations Staff $75,000 Grounds Maintenance $34,500 Water Control Structures Maintenance $16,000 Aquatic Vegetation Maintenance (includes annual refurbishment of the FAV cells) $100,000 Electricity $345,620 Monitoring/Permit Compliance $100,000 Total Annual O&M Cost $671,120 Cost Every 25 Years SAV Refurbishment (upper bound cost estimate) 1,340 acres $20,000 $26,800, R5_sec 03 GROVE LAND UTILITIES, LLC Page 3-10

103 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 The cost to refurbish the SAV portion of the STA of $20,000 per acre every 25 years was taken from the Progress Toward Restoring the Everglades: The Third Biennial Review 2010 prepared by the Committee on Independent Scientific Review of Everglades Restoration Progress; National Research Council. This cost is considered to be a high-end cost estimate. Sources of cost information considered in the preparation of the annual O&M cost estimate include the 2011 Hazen & Sawyer Report titled Compilation of Benefits and Costs of Reservoir and STA Projects and professional judgment based on experience with similar projects. The capital cost includes earthwork, pump stations, inflow and outflow structures, controls, instrumentation and telemetry, demolition, remediation, construction contingency (30%), land cost, engineering design (10%), and construction management (8%). The total estimated capital cost of the STA is $68,228,000. The annual O&M cost includes operations staff, grounds maintenance, water control structure maintenance, aquatic vegetation maintenance, electricity, water quality monitoring, and permit compliance. The estimated annual O&M cost is $671, R5_sec GLRSTA Project Conveyance Improvements As described at the beginning of this Section, certain conveyance improvements will be needed south and north of the GLRSTA Project. These improvements were allocated to one of two categories as follows. 1. Increase conveyance capacity of water sources (south of the Project) and improve hydraulic connection: 2. Increase conveyance capacity in Upper St. Johns River Basin (USJRB) (North of the Project): (a) New 260 cfs pump station at the SFWMD s G-81 Structure (b) New 260 cfs pump station at the SFWMD s G-78 Structure (c) Widen the 8,140 foot section of the C-25 Canal from north of G-81 to curve. (d) Widen and deepen the first 3,500 feet of the C-25 Canal from the curve as it heads east (e) Install 12 ft. x 16 ft. box culvert road crossing under private road that passes over the C-25 Canal near the SW corner of the STA (f) Enlarge a 5,800 foot section of the C-25 Canal near the proposed reservoir (a) New 210 cfs pump station at the S-253 weir structure on the L-79 Canal adjacent to STA (b) Clear vegetation from the L-79 channel and adjacent ground between the STA and SR 60 (c) Install 10 ft. x 10 ft. vertical lift gate at NW corner of Stick Marsh (d) Improvements to move GLRSTA water past SJID outflow during high water flow events. GROVE LAND UTILITIES, LLC Page 3-11

104 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 The estimated capital and annual O&M costs of improvements that increase conveyance capacity of water sources and re-establish the hydraulic connection between the two districts are provided in Table 3.4. The total capital cost is estimated to be $29,110,000. The annual O&M cost is estimated to be $128,000. Table 3.4 Estimated Capital Cost to Increase the Conveyance Capacity of the Intake Water Sources of the SFMWD and Improve Hydraulic Connection, 2013 dollars Construction Cost Items Unit Qty $ or $/Unit Total Mobilization / Demobilization (% of construction cost) % 5% $18,732,008 $936,600 Excavation (widen and deepen canals) CY 467,144 $5 $2,335,720 Seed & Mulch SY 26,133 $1 $26,133 Dewatering LS 1 $25,000 $25,000 Box Culvert Bridge Structure 12ft X 16ft (see item 1 - Box Culvert Road Crossing in Figure 3-3) LS 1 $1,200,000 $1,200,000 G-81/Orange Ave Pump Station 260 cfs LS 1 $7,422,578 $7,422,578 G-78 Pump Station 260 cfs LS 1 $7,422,578 $7,422,578 Controls, Instrumentation, Telelmetry LS 1 $300,000 $300,000 SUB-TOTAL - Construction $19,668,608 Non-Construction Cost % Construction Contingency % 30% $19,668,608 $5,900,583 Engineering Design % 10% $19,668,608 $1,966,861 Construction Management % 8% $19,668,608 $1,573,489 SUB-TOTAL - Non-Construction $9,440,932 TOTAL Capital Cost $29,109,541 Annual O&M Cost Electricity $117,806 Structure Maintenance $10,000 Total Annual O&M Cost $127, R5_sec 03 The estimated capital and annual O&M costs of improvements to the Upper St. Johns River Basin are provided in Table 3.5. The total capital cost is estimated to be $10,400,000. The annual O&M cost is estimated to be $230,000. GROVE LAND UTILITIES, LLC Page 3-12

105 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 Table 3.5 Estimated Capital Cost and Annual O&M Cost of Improvements to Move GLRSTA Water Through the Upper St. Johns River Basin, 2013 dollars Items Unit Qty $ or $/Unit Total Mobilization / Demobilization (% of construction cost) % 5% $6,682,976 $334,149 L-79 Canal - Vegetation Clearing LS 1 $250,000 $250,000 North Stick Marsh Vertical Gate (10ft X 10ft) EA 1 $185,000 $185,000 S253 Weir Structure - Pump Station 210 cfs LS 1 $6,247,976 $6,247,976 SUB-TOTAL Construction $7,017,125 Non-Construction Cost % Construction Contingency % 30% $7,017,125 $2,105,137 Engineering Design % 10% $7,017,125 $701,712 Construction Management % 8% $7,017,125 $561,370 SUB-TOTAL - Non-Construction $3,368,220 TOTAL Capital Cost $10,385,345 Annual O&M Cost Electricity $225,069 Structure Maintenance $5,000 Total Annual O&M Cost $230, GLRSTA Project Administration In addition to the annual operation and maintenance of the Project, the project benefits and customers will need to be managed on a day-to-day basis. Management includes the measurement of benefits to customers; the calculation and distribution of customer bills and payment collection; and operations oversight. Other costs include liability insurance, office rent, utilities, office supplies and transportation. These annual cost estimates are provided in Table 3.6 and assume one full-time project director, one full time employee to assist the director with data collection and analysis, among other activities, and the parttime services (50 percent of a full-time-equivalent) of an accountant, bookkeeper and attorney. Due to the lack of a defined market for private reservoir liability insurance, the estimated premium for reservoir liability insurance is a placeholder that will need to be further developed in future studies. The total annual administration cost is estimated to be $744, R5_sec 03 GROVE LAND UTILITIES, LLC Page 3-13

106 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 Table 3.6 Estimated Administration Cost Associated with the GLRSTA Project 2013 dollars Item Value Sub-Total Personnel Director - 1 FTE $150,000 Support Staff - 1 FTE $80,000 Accountant, Bookkeeper, Legal FTE $50,000 Sub-Total Personnel $280,000 Social Security, Medicare and Unemployment Taxes (8.25% of salaries) $23,100 Health, Dental and Life Insurance (8.00% of salaries). $22,400 Retirement Plans (7.00% of salaries) $19,600 Sub-Total Employee-Related Taxes, Insurance and Retirement $65,100 Office Rent $48,000 Utilities $6,000 Transportation - auto $4,400 Office Supplies $7,200 Office equipment depreciation $5,000 Reservoir Liability Insurance $300,000 Other expenses and overhead (10% of personnel salaries) $28,000 Subtotal - Non-Employee Related Expenses $398,600 Total Annual Administrative Cost $743, Summary of Capital, Annual O&M and Administrative Costs A summary of the capital, annual O&M and annual administrative costs is provided in Table 3.7. Total capital cost is estimated to be $428 million. The annual O&M and administrative cost is estimated to be $2.6 million. These costs do not include the financing costs and the renewal and replacement costs which will be addressed in Section 5.0, Financial Feasibility Evaluation R5_sec 03 GROVE LAND UTILITIES, LLC Page 3-14

107 3.0 Project Conceptual Plan and Lifecycle Cost Estimates August 2014 Table 3.7 Total Estimated Capital and Annual O&M Costs of the Grove Land Reservoir and Stormwater Treatment Area, 2013 Dollars Item Capital Cost: Value Reservoir $320,749,520 Stormwater Treatment Area $68,227,960 Other Improvements: Increase Capacity of Intake Water Sources (SFWMD) $29,109,541 Improvements at Upper St. Johns River Basin (SJRWMD) $10,385,345 Total Capital Cost $428,472,365 Annual O & M Cost: Reservoir $864,501 Stormwater Treatment Area $671,120 Other Improvements: Increase Capacity of Intake Water Sources (SFWMD) $127,806 Improvements at Upper St. Johns River Basin (SJRWMD) $230,069 Project Administration $744,000 Total Annual O&M and Administrative Cost $2,637, R5_sec 03 GROVE LAND UTILITIES, LLC Page 3-15

108 Section 4.0 Physical Benefits of GLRSTA Project The GLRSTA Project would provide four types of physical benefits. These are: (1) water supply; (2) phosphorus reduction to receiving waters; (3) nitrogen reduction to receiving waters; and (4) stormwater flow reduction to the IRL and SLE. The quantities of physical benefits expected from the GLRSTA Project are discussed for each type of benefit as follows. 4.1 Water Supply The GLRSTA Project would be capable of providing an average daily flow 136 mgd. This water could be provided during all times of the year to increase water supply to utilities and increase the water supply reliability of alternative water sources, such as water treatment plants along the St. Johns River. A flow analysis of this water through the Upper St. Johns River Basin conducted by the SJRWMD during this study found that about 10 percent of this water would be lost to evaporation. Is it expected that very little flow would be lost once the water reaches the channelized part of the river at Lake Hell n Blazes. 4.2 Phosphorus Reduction to Receiving Waters A variation of the Dynamic Model for Stormwater Treatments Areas Version 2 (DMSTA2) was created to provide a simplified means of evaluating the long-term average phosphorus removal performance of the proposed GLRSTA Project. The simplified model assumes steady-state conditions on an annual time step instead of the daily time step normally used in the unmodified version of DMSTA2. Long-term average values for inflow rate and inflow total phosphorus (TP) concentration are as follows. Average Daily Inflow Rate is 136 mgd (or 210 cfs). Average Annual Inflow TP is 275 ppb R5_sec 04 This TP concentration represents a blended (or composite) value of flow weighted mean concentrations (FWMC) from the three watersheds providing water to the GLRSTA Project (SFWMD C-25, C-24 and C-23 Canals). The average annual FWMC for each canal was calculated using monitoring data cited in Table 4.1 from the entire period of record (POR) of the water quality data. The POR average annual TP concentration values were then composited using an assumed ratio of 62/19/19 for the C-25, C-24 and C-23 Canals, respectively. This assumed ratio was based on the proposed pump capacities, whereby GROVE LAND UTILITIES, LLC Page 4-1

109 4.0 Physical Benefits of the GLRSTA Project August 2014 the 700 cfs reservoir inflow consists of 260 cfs (or about 38 percent of 700 cfs) from the G-81 structure that moves water from the C-24 and C-23 Canals and the remaining 62 percent is from the C-25 Canal. The water coming through the G-81 Structure was assumed to be split 50/50 between the C-24 and C-23 Canals. Based on the reservoir routing model results (further described later in this Section), the distribution of reservoir inflows for the POR simulation is 52/32/16. Actual distribution of reservoir inflows will vary depending on operations. Table 4.1 SFWMD DBHYDRO Water Quality and Flow Monitoring Data Watershed Data Type Station DBKEY Period of Record C-25 Canal C-24 Canal C-23 Canal TP S-50 C25S50 1/19/1979 to 3/6/2014 NOx and TKN S-50 C25S50 1/19/1979 to 3/6/2014 Flow (Avg. Daily) S /1/1965 to 4/21/1987 Flow (Avg. Daily) S /22/1987 to 5/20/1994 Flow (Avg. Daily) S /21/1994 to 12/31/2005 TP S-49 C24S49 1/19/1979 to 3/6/2014 NOx and TKN S-49 C24S49 1/19/1979 to 3/6/2014 Flow (Avg. Daily) S-49 JW223 1/1/1965 to 12/31/2005 TP S-48 C23S48 1/19/1979 to 3/6/2014 NOx and TKN S-48 C23S48 1/19/1979 to 3/6/2014 Flow (Avg. Daily) S-97 JW225 1/1/1965 to 12/31/2005 The 2,000-acre traditional STA, in which the front-end is emergent aquatic vegetation (EAV) such as cattails and the back-end is submerged aquatic vegetation (SAV), produces a TP outflow concentration of 112 ppb, which does not meet the 80 ppb TP discharge criteria. In order to meet the delivery target of 136 mgd (or 210 cfs) utilizing the existing 2,000-acre footprint, the front-end EAV cell of the STA would be replaced with an alternative wetland treatment technology known as floating aquatic vegetative tilling (FAVT). The back-end of the STA would remain as an SAV treatment cell. Studies have shown that FAVT is capable of achieving TP settling rates about three times greater than EAV 1 and this higher settling rate was modeled in the DMSTA R5_sec 04 1 See for example, Cory W. Catts, Water Hyacinth Treatment Systems in Agricultural Watersheds: Influence of Biomass Incorporation into Soil on Phosphorus Retention, A thesis presented to the Graduate School of the University of Florida in partial fulfillment of the requirements for the degree of Master of Science, University of Florida, GROVE LAND UTILITIES, LLC Page 4-2

110 4.0 Physical Benefits of the GLRSTA Project August 2014 FAVT systems use a novel approach to enhance N and P removal from surface water. Many species of FAV are known to rapidly assimilate N and P, but their high nutrient uptake rate can only be sustained if the plants are maintained at an optimal density. The ideal coverage is usually achieved by periodic harvesting. However, since FAV sites are predominantly water, removal is costly and inefficient by traditional FAV harvesting methods. FAVT overcomes these constraints in the following manner: (1) the FAV wetland is operated for an initial growing season, during which time the FAV assimilate nutrients and grow to a high density; (2) the wetland is drained during the dry season, thereby stranding the FAV on the soil; (3) after a natural drying process, the plant material is tilled into the soil; (4) the wetland is reflooded; and, (5) FAV that are stored in deeper zones are used to repopulate the wetland for the subsequent growth period. During this post-tilling process, water is held in the wetland without discharge to provide time for the vegetation and water column nutrient levels to equilibrate. Tilling is performed on a yearly basis (approximately), which is adequate time for the bulk of the tilled biomass to decompose, leaving behind residual organic matter and its associated P. The front-end of the STA would be split into multiple parallel FAVT cells, such that portions of the system can be taken offline for harvesting while the remainder stays online providing continuous treatment. The steady-state model was setup to simulate phosphorus removal based on three single treatment cells configured in a series to simulate (1) the reservoir; (2) a 660-acre floating aquatic vegetation (FAV) cell and (3) a 1,340-acre submerged aquatic vegetation (SAV) cell. The DMSTA-predicted TP reduction is summarized in Table 4.2. The DMSTA results show the GLRSTA Project is capable of meeting the 80 ppb TP criteria for discharges from the SFWMD s C-25, C-24 and C-23 watersheds to the Upper St. Johns River basin watershed consistent with SJRWMD water quality goals. Measurement Table 4.2 Summary of Predicted GLRSTA TP Reduction Performance 136 mgd (or 210 cfs) Treatment Capacity Value C-25 Canal, Inflow FWMC TP, ppb (FWMC 1980 to 2013) 239 C-24 Canal, Inflow FWMC TP, ppb (FWMC 1980 to 2013) 332 C-23 Canal, Inflow FWMC TP, ppb (FWMC 1980 to 2013) 321 Composited Reservoir Inflow, FWMC TP (FWMC 1980 to 2013) 275 Total Annual TP Removed (including rainfall loads) in metric tons (MT) 38 MT Annual Outflow FWMC TP, ppb 76 Total Annual TP Load Reduction, % 73% R5_sec 04 GROVE LAND UTILITIES, LLC Page 4-3

111 4.0 Physical Benefits of the GLRSTA Project August 2014 MGD of Water Treated To evaluate the sensitivity of the GLRSTA phosphorus removal performance relative to the primary input parameters (inflow rate and inflow TP concentration), the model was setup up to produce the TP reduction output tables provided in Tables 4.3 and 4.4. Table 4.3 Simulated Outflow FWM Total Phosphorus From the Grove Land STA (ppb) Inflow Parts per Billion of Total Phosphorus (TP in ppb) Outflow Parts per Billion of TP (ppb) (a) (a) The red highlighted cells indicate the outflow TP concentrations that are greater than 80 ppb. MGD of Water Treated R5_sec 04 Table 4.4 Simulated Total TP Removed from Water Leaving the Grove Land STA (metric tons, including rainfall loads) Inflow Parts per Billion of Total Phosphorus (TP in ppb) Metric Tons of TP Reduction GROVE LAND UTILITIES, LLC Page 4-4

112 4.0 Physical Benefits of the GLRSTA Project August 2014 These tables provide the simulated outflow flow-weighted mean (FWM) Total Phosphorus (TP) concentration and the metric tons of TP reduction for alternative inflow concentrations and water flows (in mgd). Note that the model results represent long-term average performance, and the results provide no indication of potentially substantial annual performance variation. The actual inflow TP concentrations to the STA will depend on the timing and proportions of flow from the C-23, C-24 and C-25 Canals and will vary due to variations in TP concentrations among the canals and during the year. The TP concentration of the water as it leaves the reservoir and enters the STA will depend on the amount of rain falling on the reservoir and the reservoir mixing characteristics. Some particulate phosphorus will settle out in the reservoir. More detailed modeling will be required during additional studies of this Project to identify the best feasible combination of water sources and STA treatment methods that will achieve at or below the 80 ppb TP concentration threshold. Future studies would include the modeling of daily TP concentrations entering the reservoir, reservoir mixing, and operational management. A comparison of historic average wet season, dry season, and annual flow weighted mean TP concentrations for a 62/19/19 distribution of flows from the C-25, C-24 and C-23 Canals, respectively, is provided in Table 4.5 under three periods of record. The 1980 to 2013 period of record was used in this study because it encompasses the widest range of variability in rainfall and stormwater discharge and is less influenced by the TP concentration spikes associated with the recent hurricanes in 2004 (Hurricanes Frances and Jeanne) and 2005 (Hurricane Wilma). The historic data demonstrate an increasing trend in TP concentrations in the C-25 and C-23 canals and relatively stable TP concentrations in the C-24 Canal. Table 4.5 Comparison of Historic Average Wet Season, Dry Season and Annual FWM TP Concentrations in Combined C-25, C-24 and C-23 Canal Flows (62/19/19) in ppb Period of Record Wet Season Dry Season Annual 1980 to to to R5_sec 04 From the reservoir routing model used in this study, on average 40 percent of the water enters the reservoir during the dry season and 60 percent enters during the wet season. A constant daily disposal rate from the reservoir was assumed in the study. If the reservoir contained wet season water only, then (based on Table 4.3 and provided the STA size remained the same) the 312 ppb TP concentration would reduce the water output capacity of the STA from 136 mgd (210 cfs) to 123 mgd (190 cfs). At inflow TP concentrations in GROVE LAND UTILITIES, LLC Page 4-5

113 4.0 Physical Benefits of the GLRSTA Project August 2014 the range of 388 to 410 ppb, more advanced water treatment methods would likely be needed to achieve the 80 ppb concentration threshold while delivering a treated water supply sufficient in quantity to maintain an economically feasible project. 4.3 Nitrogen Reduction to Receiving Waters Unlike phosphorus, there are no models readily available for predicting Total Nitrogen (TN) removal for the GLRSTA Project. TN removal will be highly dependent upon many local water chemistry variables, evaluation of which is beyond the scope of this financial feasibility study. A simpler method is used herein to estimate TN removal of the GLRSTA Project, whereby the historical TN removal performance of SFWMD s STA 5 in Hendry County is assumed to be representative of the GLRSTA Project. STA 5 is located south of Lake Okeechobee along the western edge of the Everglades Agricultural Area (EAA) and is a sandy soil-based system, similar to the GLRSTA site, whereas the other EAA STA s are primary peat based systems. Also, the long-term flowweighted mean TN concentration of STA 5 inflow water is approximately 1.77 ppm (or 1.77 mg/l), which is similar to the GLRSTA inflow FWMC TN of 1.57 ppm. The long-term average historical TN reduction performance of STA 5 is approximately 22.5 percent (from WY2009 through 2013 according to data obtained from the latest SFER). Long-term average values for inflow rate and inflow TN concentration at the GLRSTA are as follows. Average Daily Inflow Rate is 136 mgd (or 210 cfs). Average Annual Inflow TN is 1.57 ppm (or 1.57 mg/l). This TN concentration represents a blended (or composite) value of flow-weighted mean concentrations (FWMC) from the three watersheds providing water to the GLRSTA (SFWMD C-25, C-24 and C-23 canals). The average annual FWMC for each canal was calculated using monitoring data cited in Table 4.1 above from the entire period of record (POR) of the water quality data. The POR average annual values were then composited using an assumed ratio of 62/19/19 for the C-25, C-24 and C-23 canals, respectively, as was done above for phosphorus. The estimated TN reduction is provided in Table 4.6. To evaluate the sensitivity of the GLRSTA nitrogen removal performance relative to the primary input parameters (inflow rate and inflow TN concentration), the DMSTA model was setup up to produce the TN R5_sec 04 GROVE LAND UTILITIES, LLC Page 4-6

114 4.0 Physical Benefits of the GLRSTA Project August 2014 reduction output table shown in Table 4.7. Note that the results represent long-term average performance, and the results provide no indication of potentially substantial annual performance variation. Table 4.6 Summary of Estimated GLRSTA TN Reduction Performance Inflow Concentrations and TN Reduction Results 136 mgd (or 210 cfs) C-25 Canal, Inflow FWMC TN ppm C-24 Canal, Inflow FWMC TN ppm C-23 Canal, Inflow FWMC TN ppm Composited Reservoir Inflow, FWMC TN Total Annual TN Removed Mean Annual Outflow TN Concentration ppm 67 MT ppm Total Annual TN Load Reduction 22.5% Studies have shown that FAVT is capable of achieving increased TN removal performance compared to that of emergent vegetation. However, for the purposes of this study the GLRSTA TN reduction estimate assumes the same TN reduction performance for both the traditional STA and the FAVT of 22.5 percent. Table 4.7 Estimated TN Removal From the Grove Land STA (Metric tons per year based on 2009 to 2013 existing STA 5 average of 22.5% TN removed) MGD of Water Treated Milligrams per Liter of Total Nitrogen (TN) Metric Tons of TN Reduction R5_sec 04 GROVE LAND UTILITIES, LLC Page 4-7

115 4.0 Physical Benefits of the GLRSTA Project August Estimates of Flow and Nutrient Load Reductions to the IRL and SLE A spreadsheet routing model was provided by GLU at the onset of this financial feasibility study for use in estimating the water supply potential and tidal discharge reduction performance of the proposed reservoir. The model employs a mass balance computation of the reservoir on a daily time step, accounting for inflows, outflows and the change in reservoir storage. The model simulates a 40-year period of record with the proposed reservoir capturing inflows from historic tidal discharges (flow data cited in Table 4.1 above), historic rainfall, evapotranspiration losses, reservoir leakance, and reservoir discharges/releases. The spreadsheet model captures discharges to tide from the C-25 and C-24 Canals up to the amount allowed by the reservoir inflow pump station and reservoir storage capacity. Tidal discharges from the C-24 Canal are captured by a proposed pump station at G-81 and routed into the reservoir through the reservoir inflow pump station (in series with C-25 Canal water). An average daily reservoir discharge (or water supply delivery target) is specified by the user in the model. The discharge empties the reservoir at a constant rate until the reservoir storage is depleted, upon which discharges cease. Note: The 2009 HDR report included a hydrologic evaluation to determine the flows available for capture by a hypothetical reservoir using other modeling software. The reservoir routing spreadsheet model described above was configured to match the Phase 1 reservoir identified in the 2009 HDR report (30,000 acre-feet storage and 500 cfs reservoir inflow), and the spreadsheet model results were found to be comparable to the 2009 HDR Phase 1 hydrologic performance results. The spreadsheet model was modified to also capture tidal discharges from the C-23 Canal, in addition to the C-24 and C-25 Canals. A proposed pump station at the G-78 Structure captures water in the C-23 Canal and routes it into the C-24 Canal if there is capacity at the G-81 pump station. In other words, if the C-24 Canal is discharging to tide in excess of the G-81 pump station capacity, then zero water is captured from the C-23 Canal on that day because the G-81 pump station is already pumping water from the C-24 Canal into the C-25 Canal at full capacity. The GLRSTA Project can allow for flexibility to prioritize the source of water pumped to the reservoir. For example, the SFWMD may prefer to prioritize flows from the C-23 Canal and/or the C-24 Canal to help meet the SLE TMDL. The distribution of flows from the three canals evaluated in this study, 62/19/19 for C-25, C-24 and C-23 Canals, is one of many possible scenarios of water source distributions R5_sec 04 A summary of estimated tidal discharge reductions to the IRL and SLE on an average annual basis for the entire period of record is provided in Table 4.8 along with estimates GROVE LAND UTILITIES, LLC Page 4-8

116 4.0 Physical Benefits of the GLRSTA Project August 2014 of the nutrient loads prevented from going to tide. The nutrient loads were estimated by multiplying the long-term average nutrient concentrations (FWMC) from Tables 4.2 and 4.6 presented above by the annual average flow discharged to tide as computed in the spreadsheet model. The corresponding flow and nutrient load reductions reported in Table 4.8 assume that 100 percent of the flow and nutrients captured by the reservoir are prevented from reaching the IRL and SLE (via water supply consumption, discharges to the St Johns River, or other non-tidal reservoir disposal means). Table 4.8 Summary of Estimated Annual Tidal Discharge and Nutrient Reductions to IRL and SLE Due to Operations of the GLRSTA Project Tidal Discharge Total Average Annual Value C-25 Canal/ IRL C-24 Canal/ SLE C-23 Canal/ SLE C-25, C-24 and C-23 Canals / IRL and SLE Flow Without GLRSTA in acre-feet 145,409 Flow Reduction in acre-feet (%) 80,464 (55%) TP Load Without GLRSTA in metric tons 43 TP Load Reduction in metric tons (%) 24 (55%) TN Load Without GLRSTA in metric tons 274 TN Load Reduction in metric tons (%) 152 (55%) Flow Without GLRSTA in acre-feet 139,070 Flow Reduction in acre-feet (%) 50,467 (36%) TP Load Without GLRSTA in metric tons 57 TP Load Reduction in metric tons (%) 21 (36%) TN Load Without GLRSTA in metric tons 283 TN Load Reduction in metric tons (%) 103 (36%) Flow Without GLRSTA in acre-feet (%) 133,581 Flow Reduction in acre-feet (%) 24,123 (18%) TP Load Without GLRSTA in metric tons 53 TP Load Reduction in metric tons (%) 10 (18%) TN Load Without GLRSTA in metric tons 264 TN Load Reduction in metric tons (%) 48 (18%) Flow Without GLRSTA in acre-feet 418,060 Flow Reduction in acre-feet (%) 155,054 (37%) TP Load Without GLRSTA in metric tons 153 TP Load Reduction in metric tons (%) 55 (36%) TN Load Without GLRSTA in metric tons 821 TN Load Reduction in metric tons (%) 303 (37%) R5_sec 04 GROVE LAND UTILITIES, LLC Page 4-9

117 4.0 Physical Benefits of the GLRSTA Project August 2014 The GLRSTA Project could reduce stormwater flows to the IRL through the C-25 Canal by about 80,000 acre-feet per year or 55 percent of current flows with a 24 metric ton or 55 percent TP reduction and a 152 metric ton or 55 percent TN reduction per year. Likewise, the GLRSTA Project could reduce stormwater flows to the SLE through the C- 24 Canal by 50,000 acre-feet per year or 36 percent with a 21 metric ton TP reduction and a 103 metric ton TN reduction each year. These reductions in TP and TN are 36 percent of total TP and TN entering the SLE through the C-25 Canal. The SLE would also benefit from reduced stormwater and nutrient discharges from the C- 23 Canal where annual flows would be reduced by 24,000 acre-feet per year or 18 percent and TP and TN would be reduced by 10 and 48 metric tons per year, respectively, for an 18 percent reduction in nutrient loads. The overall estimated flow reduction to the IRL and SLE is 155,000 acre-feet per year or a 37 percent flow reduction. The total nutrient reduction is 55 metric tons per year and the TN reduction is 303 metric tons per year. These reductions are 37 percent of the current nutrient loads. 4.5 Other Considerations and Assumptions A cursory review of historical calcium concentrations in the C-25 Canal was made to verify that the STA inflow waters will exceed 50 mg/l (needed to support the SAV community). The long-term average at structure S-99 is 96 mg/l, which is sufficient to support SAV within the STA. Historically, the C-25 watershed is known to have elevated chloride and specific conductance levels. The STA (and reservoir) will provide no reduction in chlorides or conductance. The Upper St. Johns River Basin is a Class III water body at the point of discharge from the GLRSTA Project and, therefore, is not subject to chloride water quality standards. It is assumed that sufficient mixing will occur such that the chloride water quality standards are not violated in the Class I water segments located downstream on the St. Johns River. From SFWMD s DBHYDRO database, chloride concentrations at Structure S-50 in the C- 25 Canal ranged from 43 mg/l to 632 mg/l during the period 2/7/79 to 6/4/12 (a total of 376 samples), with an average of 195 mg/l R5_sec 04 Regarding specific conductance, the Upper St. Johns River Basin has averaged 628 us/cm during the period from 2007 to Grab samples collected at Structure S-50 within the C-25 Canal during the period 1/19/79 through 8/22/13 (456 samples; data source DBHYDRO) show field measured specific conductivity averaged 1077 us/cm (with a median value of 1080 us/cm) ranging from 286 us/cm to 2010 us/cm. Figure 4-1 provides a plot of the time series data. GROVE LAND UTILITIES, LLC Page 4-10

118 4.0 Physical Benefits of the GLRSTA Project August S-50 Specific Conductivity, Field (us/cm) /19/1979 1/19/1980 1/18/1981 1/18/1982 1/18/1983 1/18/1984 1/17/1985 1/17/1986 1/17/1987 1/17/1988 1/16/1989 1/16/1990 1/16/1991 1/16/1992 1/15/1993 1/15/1994 1/15/1995 1/15/1996 1/14/1997 1/14/1998 1/14/1999 1/14/2000 1/13/2001 1/13/2002 1/13/2003 1/13/2004 1/12/2005 1/12/2006 1/12/2007 1/12/2008 1/11/2009 1/11/2010 1/11/2011 1/11/2012 1/10/2013 Figure 4-1: Specific Conductance at S-50 Structure Over Time State water quality criteria for Class III surface waters states specific conductance shall not be increased more than 50% above background or to 1275, whichever is greater. On average, water in the C-25 Canal is below the 1275 limit. However, it periodically exceeds the limit as shown in the time series graph provided in Figure 4-1 above (blue line represents the 1275 limit). Among other solutions, a permitted mixing zone could be established, or else GLRSTA Project operations may need to be conditioned to maintain compliance with specific conductance criteria at the outflow point. Mixing C-25 waters with C-24 and C-23 waters (each having lower chloride and conductance levels than C-25) will improve the levels in the GLRSTA. For example, Figure 4-2 and Figure 4-3 present a graph the annual flow weighted chloride and specific conductance values, respectively, after mixing the reservoir inflow waters at a ratio of 62/19/19 from the C-25, C-24 and C-23 Canals, respectively R5_sec 04 GROVE LAND UTILITIES, LLC Page 4-11

119 4.0 Physical Benefits of the GLRSTA Project August Chloride (mg/l) Figure 4-2: Predicted flow-weighted annual average chloride levels after blending waters of the C-25, C-24 and C-23 Canals in the GLRSTA. The 250 mg/l plotted in Figure 4-2 is the state water quality standard for chlorides in class 1 water bodies. There is no standard for a class 3 water body, but parts of the St. Johns River downstream are class 1. Further detailed analysis is required to determine if blending is sufficient to eliminate all daily occurrences of chloride and/or specific conductance exceedances in the GLRSTA, and to better understand the extent to which operations of the GLRSTA may be affected, if at all R5_sec 04 GROVE LAND UTILITIES, LLC Page 4-12

120 4.0 Physical Benefits of the GLRSTA Project August ,400 Field Specific Conductivity (us/cm) 1,200 1, Figure 4-3: Predicted flow-weighted annual average conductance levels after blending waters of the C-25, C-24 and C-23 Canals in the GLRSTA. 4.6 Summary of GLRSTA Physical Attributes and Benefits A summary of the physical attributes and benefits of the GLRSTA Project is provided in Table 4.9. The results provided in this table are described in detail in Section 1.0 of this report R5_sec 04 GROVE LAND UTILITIES, LLC Page 4-13

121 4.0 Physical Benefits of the GLRSTA Project August 2014 Row No. (1) Physical Size: Table 4.9 Physical Attributes and Estimated Benefits of the GLRSTA Project Type of Physical Attribute or Benefit Value (2) Site Area of Reservoir in acres 5,683 (3) Site Area of STA in acres 2,105 (4) Size of Reservoir in acres Height of water in feet 5, feet (5) Size of STA in acres - Treatment technology 2,000 - FAVT (6) Storage Capacity of Reservoir in acre-feet 75,000 (7) Water flows into Reservoir (% of water from each water source): (8) C-25 Canal 62% (9) C-24 Canal 19% (10) C-23 Canal 19% (11) (12) Water Supply from STA (average daily outflow from Reservoir and STA) in MGD and cfs 136 mgd (210 cfs) Annual reduction in stormwater flow at the coastal outflow structures in acre-feet when there is no return flow: (13) C-25 Canal s S99 Structure (IRL) 80,464 acre-feet (14) C-24 Canal's S49 Structure (SLE) 50,467 acre-feet (15) C-23 Canal's S97 Structure (SLE) 24,123 acre-feet (16) Total 155,054 acre-feet (17) Total reduction in stormwater as a percent of 145,409 acre-feet of average annual discharge through SFWMD s S-50 structure from % to 2005 (18) Total reduction in stormwater as a percent of 139,070 acre-feet of average annual discharge through SFWMD's S-49 structure from 1965 to % (19) (20) Total reduction in stormwater as a percent of 133,581 acre-feet of average annual discharge through SFWMD's S-97 structure from 1965 to 2005 Total reduction in stormwater as a percent of 418,060 acre-feet of average discharge through all three SFWMD structures from 1965 to % 37% R5_sec 04 (21) TP concentration of Reservoir inflow in ppb (FWMC): (22) C-25 Canal 239 ppb (23) C-24 Canal 332 ppb (24) C-23 Canal 321 ppb (25) Composited Reservoir inflow, FWMC TP in ppb 275 ppb (26) Outflow TP concentration from STA in ppb 76 ppb GROVE LAND UTILITIES, LLC Page 4-14

122 4.0 Physical Benefits of the GLRSTA Project August 2014 Table 4.9 Physical Attributes and Estimated Benefits of the GLRSTA Project Row No. Type of Physical Attribute or Benefit Value (27) Percent TP reduction, including TP from rainfall 73% (28) Annual amount of TP reduction (inflow versus outflow) in metric tons 38 metric tons (29) Annual amount of TP reduction at the coastal outflow structures in metric tons (with 100% return flow / with no return flow): (30) C-25 s S99 Structure (IRL) 17 / 24 metric tons (31) C-24's S49 Structure (SLE) 14 / 21 metric tons (32) C-23's S97 Structure (SLE) 7 / 10 metric tons (33) Total 38 / 55 metric tons (34) TN concentration of Reservoir inflow in ppm (FWMC): (35) C-25 Canal ppm (36) C-24 Canal ppm (37) C-23 Canal ppm (38) Composited Reservoir inflow, FWMC TN in ppm ppm (39) Outflow TN concentration from STA in ppb ppm (40) Percent TN reduction, including TN from rainfall 22.5% (41) Annual amount of TN reduction (inflow versus outflow) in metric tons 67 metric tons (42) Annual amount of TN reduction at the coastal outflow structures in metric tons (with 100% return flow / with no return flow): (43) C-25 s S99 Structure (IRL) 34 / 152 metric tons (44) C-24's S49 Structure (SLE) 22 / 103 metric tons (45) C-23's S97 Structure (SLE) 11 / 48 metric tons (46) Total 67 / 303 metric tons R5_sec 04 GROVE LAND UTILITIES, LLC Page 4-15

123 Section 5.0 Issues Affecting GLRSTA Project Feasibility Several issues have the potential to constrain the benefits that could be generated from the GLRSTA Project which could impact the Project s technical and/or financial feasibility. These issues will need to be addressed in future studies. In summary they are listed as follows. 1. Inter-District Water Transfers. The Project can only be operated if the hydraulic connection between the SFWMD and the SJRWMD is utilized and water is allowed to flow north and south across the boundary of the two Districts. 2. Consumptive Use Permit and Water Reservation. The Project must have a sufficient and reliable supply of water commensurate with the Project s size. 3. Project Withdrawal-to-Recharge Ratio. This metric addresses the proportion of the Project s water discharge to surface water bodies and underground aquifers that can be beneficially withdrawn for water supply or can be used to maintain minimum flows and levels thresholds (MFLs). The financial feasibility of the Project is dependent on the amount of water from the Project that can be beneficially used. 4. Water Use Permitting and Water Shortage Regulations. Permitting and regulatory decisions by the SJRWMD and the SFWMD should facilitate the Project s ability to provide water supply and water resource benefits. 5. Water Management and Quality. The Project should be operated in a manner consistent with the water management activities of the SJRWMD and the SFWMD. Treated water from the Project must meet all relevant water quality criteria. The FDEP would need to approve water quality credit trading in the St. Lucie River and Estuary Basin. 6. Impacts to Other Persons and Entities. The Project must not increase flooding, harm nearby properties, or impact existing legal water users R5_sec U.S. Army Corps of Engineers and Federal Funding. In order for the GLSTA Project to receive CERP-related funding and provide SFWMD in-kind CERP credits, the Corps would need to agree on the GLRSTA Project s conceptual plan, engineering design, and cost estimates. GROVE LAND UTILITIES, LLC Page 5-1

124 5.0 Issues Affecting GLRSTA Project Feasibility August Water Discharges from the GLRSTA. To obtain sufficient benefits from the project so that it is financially feasible, there should be enough discharge capacity to water bodies so that the reservoir can be drained prior to the next wet season. Each of these issues is discussed as follows. 5.1 Inter-District Water Transfers (a) The SFWMD and the SJRWMD must agree to utilize the hydraulic connection between the two Districts at the Project site. Otherwise the Project is not operable as was envisioned for this study. (b) Results of the State/Federal Numeric Nutrient Criteria rule development process may limit the ability to transfer water between basins in the future, which could limit the amount of source water, or increase the cost to treat water prior to basin transfer. 5.2 Consumptive Use Permit and Water Reservation (a) The GLRSTA Project is selling storage and treatment, not water. (b) GLU will need a SFWMD water use permit and/or a SFWMD water reservation in order to secure the availability of water from the C-23, C-24 and C-25 Canals. (c) GLU s water customers will need a water use permit from ground or surface water sources for that portion of their water supply that comes from the GLRSTA Project. (d) A permit duration of 50 years for GLU and its water customers, instead of the current regulatory maximum of 20 years, would reduce the uncertainty associated with recovering GLU and customer investments in the Project R5_sec 05 (e)the amount of water reserved or permitted to the the GLRSTA Project cannot be constrained by the CERP Assurance of Project Benefits Agreement signed by U.S. President George W. Bush and Florida s Governor Jeb Bush (President s and Governor s Agreement) in This agreement states: The signatories to this agreement hereby affirm that: As required by the Water Resources Development Act of 2000, water made available by each project in the Comprehensive Everglades Restoration Plan will not be permitted for a consumptive use or otherwise made unavailable by the State of Florida until such time as sufficient reservations of water for the restoration of the natural system GROVE LAND UTILITIES, LLC Page 5-2

125 5.0 Issues Affecting GLRSTA Project Feasibility August 2014 are made by regulation or other appropriate means pursuant to Chapter 313, Florida Statutes, and in accordance with the project implementation report for the project and consistent with the Comprehensive Everglades Restoration Plan. To effectuate this agreement, the Federal party agrees to include within the President's budget submissions to the Congress requests for Federal appropriations in the amount the President deems necessary to implement the Federal share of the Plan's implementation. The GLRSTA Project is meant to replace the CERP C-25 Reservoir and STA and a portion of the C-23/C-24 Reservoir North and South and STA. Therefore, the water reservation that would have been provided to the C-25 Reservoir and a portion of the C-23/24 Reservoir would instead be provided to the GLRSTA Project. (f) The GLRSTA Project will need a sufficient and reliable supply of water while complying with: (i) the water reservation for the North Fork of the St. Lucie River; (ii) the President s and Governor s Agreement for the CERP projects; (iii) the MFLs for the St. Lucie Estuary and the St. Johns River; and (iv) the Restricted Allocation Area Rule for the C-23, C-24 and C-25 Canal System. 5.3 Project Withdrawal-to-Recharge Ratio (a) The Project s withdrawal-to-recharge ratios used to obtain additional permitted quantities from ground and surface water sources, including the St. Johns River, must be high enough to maintain the Project s technical and financial feasibility. The financial feasibility conclusions of this study assume that the average withdrawal-to-recharge ratio is This means that 90 percent of the 136 mgd is available for water supply and compliance with MFLs, where needed. This does not include the 90 percent water supply reliability of the Project caused by drought conditions (1-in-10 year rainfall). (b) The SJRWMD used its HSPF (Hydrological Simulation Program Fortran) Model to investigate the impact of water from the GLRSTA Project on the St. Johns River from Florida s Turnpike in the upper reaches of the Upper St. Johns River (USJR) to the inflow of Lake Harney at SR46. The study found that no negative impacts are expected and only about 10 percent of the Project s water that enters the USJR will be lost to evaporation by the time it reaches Puzzle Lake, which is located just upstream of the inflow to Lake Harney. No additional losses are anticipated once the water reaches the channelized part of the river R5_sec 05 GROVE LAND UTILITIES, LLC Page 5-3

126 5.0 Issues Affecting GLRSTA Project Feasibility August 2014 However, additional modeling downstream of Lake Harney should be conducted to determine the impact of Project water on river flows and the availability of project water north of Lake Harney. (c) If water from the GLRSTA Project enters a part of the St. Johns River that has MFLs, and the water level or flow is STILL below the MFL, then that GLRSTA water cannot be permitted for withdrawal. So the GLRSTA Project would first need to satisfy all limiting MFLs before it could provide additional water for permitted withdrawals. This financial feasibility study assumes that the SJRWMD or the State of Florida would pay for all Project water needed to achieve the MFL thresholds when there is demand for water supply that would be provided by the Project. This expenditure could be considered a water resource development cost. The locations of MFLs along the St. Johns River are: i. Lake Washington MFLs are limiting factor on City of Melbourne s withdrawals from this lake; ii. iii. iv. SR 520 just northwest of Lake Poinsett - Proposed MFL is limiting factor for groundwater withdrawals and impacts the reliability of water supply to a proposed expanded Taylor Creek Reservoir (50 mgd); SR 50 MFLs would limit withdrawals during certain low flow conditions; Lake Monroe MFLs have not yet constrained water withdrawals; and, v. SR 44 at Deland MFLs are limiting factor on proposed water withdrawals from Yankee Lake project affecting reliability of yield. Water in St. Johns River is brackish north of this point. (d) The GLRSTA Project might be successfully used as a storage reservoir to provide water to utilities via the St. Johns River during times when it is needed by water utilities but otherwise would not be available from the River because water levels or flows are below the MFLs. In other words, the GLRSTA might significantly improve the reliability of yields from the St. Johns River. 5.4 Water Use Permit and Water Shortage Regulations (a) If the GLRSTA Project can provide water to agriculture through the C-23, C-24 and C-25 Canals, SFWMD permitting regulations should allow agricultural water use permittees to use this water instead of their permitted ground water quantities and also allow water utilities to obtain permits for these ground water quantities. A reduction in the amount of groundwater used for irrigation by R5_sec 05 GROVE LAND UTILITIES, LLC Page 5-4

127 5.0 Issues Affecting GLRSTA Project Feasibility August 2014 agricultural operators is expected to reduce the chloride concentrations and specific conductance in the C-25 Basin. (b) A regulatory rule change will be needed to allow the GLRSTA Project s customers to withdraw water supplied by the GLRSTA Project through the C-23, C-24 and C-25 Canals during a water shortage declaration. This change would be a revision to the REGIONAL WATER SHORTAGE PLANS, CHAPTER 40E- 22, F.A.C. to allow water conveyance to participating users when the C-23, C- 24 and/or C25 canals are slightly below the mandatory cut-off of 14 feet to allow the participant to obtain Project water. 5.5 Water Management and Quality (a) The GLRSTA Project will need to be operated to manage flooding at receiving water bodies and to optimize water inflows and discharges from the Project. GLU would like to operate the GLRSTA Project. The SFWMD, the SJRWMD and GLU will need to produce an operations agreement. (b) The Grove Land STA should be designed to comply with all applicable water quality standards at the discharge water bodies. (c) The FDEP would need to approve a water quality credit trading system for the St. Lucie River and Estuary Basin. 5.6 Impacts to Other Persons and Entities (a) The GLRSTA Project must not impact the permitted water quantities of existing legal users. (b) The GLRSTA Project must not increase flooding at nearby properties or along its flow routes including the canals and outlet structures of the SJID and the SFWMD C-23, C-24 and C-25 Canals. (c) The impact of the GLRSTA Project on local government including zoning, land use, taxes, and public safety should be addressed as the Project moves closer to final design. (d) Fish entrainment could be a problem at the water intake structures of the St. Johns River which should be addressed during design of the intake structures R5_sec 05 GROVE LAND UTILITIES, LLC Page 5-5

128 5.0 Issues Affecting GLRSTA Project Feasibility August U.S. Army Corps of Engineers and Federal Funding (a) In order for the GLSTA Project to receive CERP-related funding and provide SFWMD in-kind CERP credits, the Corps would need to agree on the GLRSTA Project s conceptual plan, engineering design, and cost estimates. 5.8 Water Discharges from the GLRSTA (a) The water stored by the Grove Land Reservoir can be discharged out of the reservoir using one or more of the following methods: i. Discharge to St. Johns River for water supply, environment, and/or disposal ii. iii. iv. Send water to utilities and other large water users through the C-25 Canal Store water in the aquifer for later use (aquifer storage and recovery) Use floating spray evaporators in the reservoir v. Send water back to the estuaries through the C-24 and C-25 Canals during the dry season (b) During times when water flows are high, the St. Johns River could still take water from the GLRSTA. However, there may be a limit to how much water the river could take. This limit will need to be determined during future study. (c) Aquifer Storage and Recovery (ASR) could be used to expand the storage capacity at the GLRSTA Project site, further reducing discharges to tide and nutrient loading to tidal waters. An estimate of the cost of an ASR system at the GLRSTA Project site is provided below. The reservoir routing model assumes a constant discharge at the average daily flow target delivery rate of 210 cfs (136 mgd), when the reservoir has water available (defined in the model as having a water depth greater than 1 foot). Constant releases from the STA are necessary in order to recover reservoir storage between storm events to achieve the full benefits of tidal discharge reductions to the IRL and the SLE R5_sec 05 Based on communication with SJRWMD staff, the Upper St. Johns River basin will not be able to receive GLRSTA Project water at all times, particularly during the wet season. Therefore, alternative means of managing water outflows from the GLRSTA Project for recovery of reservoir storage should be considered. Aquifer storage and spray evaporation are two such alternatives for moving the water out of the STA in the event that other water release op- GROVE LAND UTILITIES, LLC Page 5-6

129 5.0 Issues Affecting GLRSTA Project Feasibility August 2014 tions are not available. Additional modeling efforts that incorporate and identify operational limitations of receiving bodies will be required to quantify the extent to which alternative disposal means are necessary. For the purposes of this financial feasibility study, an estimated cost of an ASR system that stores 136 mgd is provided in Table 5.1. The ASR system would store water in the Upper Floridan Aquifer System (FAS) for use by agricultural irrigators who use the upper FAS and/or to withdraw for later use by water utilities and other large water users. For this study, the following assumptions were used to estimate the ASR costs: 1 Diameter of final casing is 24-inches 2 Casing is inch thick steel 3 Pit casing to 30 feet 4 Conductor casing to 250 feet 5 Final casing to 1,000 feet with open hole to 1,600 feet 6 One well yields 10 mgd (6,940 gpm) 7 One monitor well needed per three ASR wells 8 Monitor wells will be 6 5/8-inch diameter 9 Wells will be drilled with open discharge to surface reservoir after settling 10 Pumping cost for recharge is not included 11 Assume wells will flow by gravity without pumping 12 No pre-filtration or UV disinfection included 13 Aeration needed upon recovery but not included The ASR System would be capable of recharging the Upper FAS at a maximum daily rate of 136 mgd. This is the daily flow of treated water from the STA. The additional assumptions used to estimate this ASR System is as follows. 2-A Total capacity is 136 mgd 2-B Number of ASR wells is 14 2-C Redundancy wells needed is 3 based on 20% backup 2-D Total of 17 wells 2-E Total number of monitor wells is five (5) R5_sec 05 GROVE LAND UTILITIES, LLC Page 5-7

130 5.0 Issues Affecting GLRSTA Project Feasibility August 2014 Table 5.1 Estimated Cost of ASR Wells At GLRSTA Project 136 mgd capacity Item Description Units Cost Total 1 Mobilization 1a General mobilization 1 $1,500,000 $1,500,000 1b Permitting 1 $250,000 $250,000 Sub-total $1,750,000 2 Aquifer Storage and Recovery Wells, Pre-treatment and Recovery 2a Mobilization 17 $100,000 $1,700,000 2b ASR Well with 10 mgd capacity 17 $750,000 $12,750,000 2c Pump test 17 $5,000 $85,000 2d Water quality sampling 17 $3,000 $51,000 2e Aeration structure 17 $100,000 $1,700,000 2f Demobilization 17 $25,000 $425,000 2g Pre-treatment and Recovery Percent of Well Cost (sum of 2a to 2f) 20% $16,711,000 $3,342,200 Sub-total $20,053,200 3 Monitor well 3a Mobilization 5 $25,000 $125,000 3b Monitor Well 5 $250,000 $1,250,000 3c Water quality sampling 5 $3,000 $15,000 3d Demobilization 5 $5,000 $25,000 Sub-total $1,415,000 TOTAL $23,218,200 4 Construction Contingency 30% $6,965,460 5 Engineering Design and Construction Management 15% $3,482,730 Total Capital Cost $33,666,390 The total estimated capital cost of a 136 mgd ASR system to recharge the Upper FAS is $34 million. The annual O&M cost is about three percent of capital cost or about $1 million R5_sec 05 GROVE LAND UTILITIES, LLC Page 5-8

131 Section 6.0 Economic and Financial Feasibility Evaluation The benefit value and cost estimates provided in Sections 2.0 and 3.0 of this report were used to evaluate the economic and financial feasibility of the GLRSTA Project. The annual revenues and costs were calculated each year from 2015, the presumed year when project design begins, to the year 2020, when the project becomes operational, through the year 2070 which would be the 50 th year of project operation. While the Project s cost each year is relatively straight forward to estimate, the Project s revenues that would be generated each year will depend on the demand for the Project s benefits and the availability and cost of alternative methods to obtain the benefits. These issues were described in Section 2.0 of this report. 6.1 Annual Project Revenue The annual revenue that could potentially be collected each year would be a portion or all of the total physical benefits provided by the project times a portion or all of the total per unit benefit values. The total benefits and total per unit benefit values from the Project that were estimated in Section 2.0 were used to calculate the maximum revenue potential. This calculation is provided in Table 6.1. Each year the GLRSTA Project is expected to provide 44.7 million 1,000 gallons of water; 121,000 pounds of TP reduction; 155,000 acre-feet of stormwater discharge reduction; and 75,000 acre-feet of water storage. The potential Project beneficiaries estimated maximum willingness-to-pay for these benefits are $2.50 per 1,000 gallons of water; $124 per pound of TP reduction for State of Florida agencies; $240 per pound of TP or TN reduction for local entities; $225 per acre-foot of stormwater discharge reduction; and $110 per acrefoot of water storage per year. Given the quantity of benefits provided by the Project and estimates of these benefit values (or maximum willingness-to-pay), the maximum potential revenue from the Project would be about $174 million per year in 2013 dollars. Over half of this revenue, 64 percent, is from the provision of stored water to utilities and other large water users R5_sec 06 In order to attract customers, the Project s prices will need to be less than or equal to the customer s maximum willingness-to-pay as was estimated in Section 2.0 of this report and summarized in Column (5) of Table 6.1. The lower the price, the greater will be the customer s consumer surplus (willingness-to-pay minus price) and the greater will be the amount of services purchased. GROVE LAND UTILITIES, LLC Page 6-1

132 6.0 Economic and Financial Feasibility Evaluation August 2014 Table 6.1 Maximum Annual Revenue Potential of the GLRSTA Project Unit of Benefit Measure Production Capacity - Units Provided Per Year Benefit Value Per Unit of Benefit Measure (b) Annual Full Benefit Value Per Year Benefits Benefit Type Provided (a) (1) (2) (3) (4) (5) (6) = (4) X (5) Water Supply TP Reduction to Estuaries and Surface Waters - SFWMD / FDEP / State of Florida TP Reduction to Surface Waters MS4s, WCDs, CDDs, and non- MS4s Reduced Water Discharge to Estuaries Federal Government (CERP) 136 mgd x 0.90 (c) 70% of 55 metric tons per year 30% of 55 metric tons per year 155,054 acrefeet per year 75,000 acrefeet of storage 1,000 gallons 44,676,000 $2.50 $111,690,000 Pounds of TP reduction 84,893 $124 $10,527,000 Pounds of TP reduction 36,383 $240 $8,732,000 Acre-feet of water discharge reduction 155,054 $225 $34,887,000 Acre-feet of Storage per year 75,000 $110 $8,250,000 Total $174,086,000 (a) From Table 4.9 in Section 4.0 of this report. (b) From Table 2.16 in Section 2.0 of this report. (c) The 136 mgd of water leaving the Grove Land STA was multiplied by 0.90 to reflect the 10 percent estimated evaporation losses as the water moves down the Upper St. Johns River as was described in Section 5.0 of this report. There is the possibility that not all of the benefit capacity of the Project would be purchased during the year and/or that customers would not pay their entire willingness-to-pay for the Project s benefits. Therefore, to get an idea of the financial feasibility of the Project, a range of revenues were used where the annual revenue is equal to a proportion of the maximum potential annual revenue of $174 million. The proportions are 100 percent, 85 percent, 75 percent, 60 percent, 50 percent, and 30 percent R5_sec 06 The latter percent, 30 percent, is the revenue that provides an internal rate of return close in value to this study s estimate of the real minimum risk-free private discount rate of 7.18 percent per year. This discount rate is equal to a nominal risk-free private discount rate GROVE LAND UTILITIES, LLC Page 6-2

133 6.0 Economic and Financial Feasibility Evaluation August 2014 estimate of percent minus the annual average inflation over the past 30 years (1984 to 2013) of 2.82 percent from the U.S. Government Printing Office (GPO), Economic Report to the President, 2013, Table B-64. The internal rate of return is the discount rate that equates the present value of benefits to the present value of costs. Its calculation requires that an investment is made at the beginning of the period that is recovered through a future stream of annual revenue as well as other costs that may be incurred each year. These revenues are presented in Table 6.2 for the six revenue scenarios. For example, if the annual project revenue is 85 percent of the maximum revenue potential, then $148 million in revenue would be collected each year. If 30 percent of the maximum revenue potential is collected, then the annual revenue would be $52 million. Benefit Type Table 6.2 Revenue Scenarios - Annual Revenue in Dollars Using Percent of Maximum Revenue Potential Revenue Scenario - % of Production Capacity Sold x % of Full Benefit Value Per Unit Collected 100% 85% 75% (1) (2) (3) = (2) x 0.85 (4) = (2) x 0.75 Water Supply $111,690,000 $94,940,000 $83,770,000 TP Reduction to Estuaries and Surface Waters - SFWMD / FDEP / State of Florida $10,530,000 $8,950,000 $7,900,000 TP Reduction to Estuaries and Surface Waters - MS4s, WCDs, CDDs, non-ms4s $8,730,000 $7,420,000 $6,550,000 Reduced Water Discharge to Estuaries $34,890,000 $29,650,000 $26,170,000 Federal Government (CERP) $8,250,000 $7,010,000 $6,190,000 Total $174,090,000 $147,970,000 $130,580,000 Benefit Type Revenue Scenario - % of Production Capacity Sold x % of Full Benefit Value Per Unit Collected 60% 50% 30% (1) (5) = (2) x 0.60 (6) = (2) x 0.50 (7) = (2) x 0.30 Water Supply $67,010,000 $55,850,000 $33,510,000 TP Reduction to Estuaries and Surface Waters - SFWMD / FDEP / State of Florida $6,320,000 $5,260,000 $3,160,000 TP Reduction to Estuaries and Surface Waters - MS4s, WCDs, CDDs, non-ms4s $5,240,000 $4,370,000 $2,620,000 Reduced Water Discharge to Estuaries $20,930,000 $17,440,000 $10,470,000 Federal Government (CERP) $4,950,000 $4,130,000 $2,480,000 Total $104,450,000 $87,050,000 $52,240, R5_sec 06 GROVE LAND UTILITIES, LLC Page 6-3

134 6.0 Economic and Financial Feasibility Evaluation August 2014 The combinations of the percent of production capacity sold and the percent of the full per unit benefit value collected that would provide the revenue for these six revenue scenarios are provided in Table 6.3. Because most of the maximum potential revenue is from water supply, this table is useful if one considers the percentages as pertaining to the amount of water supplied, the per unit price collected from this supply, and the resulting revenue generated from this water supply. The revenue scenarios are highlighted in this table. For example, selling 90 percent of the production capacity of the Project at 55 percent of the full per unit benefit value, or vice versa, would result in collecting 50 percent of the Project s maximum revenue potential. Alternatively, 51 percent could be collected by selling 60 percent of the production capacity at 85 percent of the full per unit benefit values. Table 6.3 Percent of Maximum Revenue Potential Collected Based On Combinations of Percent of Full Per Unit Benefit Values Collected and Percent of Production Capacity Sold % of Full Per Unit Benefit Values Collected % of Production Capacity Sold % of Total Potential Revenue Collected R5_sec 06 GROVE LAND UTILITIES, LLC Page 6-4

135 6.0 Economic and Financial Feasibility Evaluation August 2014 To get an idea of the potential per unit benefit values associated with each revenue scenario, Table 6.4 provides the price per unit of benefit for each scenario when 100 percent of the Project s benefit capacity is sold each year. For water supply, the price ranges from $0.85 per 1,000 gallons under the 22.1 percent revenue scenario to $3.26 per 1,000 gallons under the 85 percent revenue scenario. For TP reduction, the price ranges from $27.34 per pound of TP removed under the 22.1 percent scenario to $ per pound of TP removed under the 85 percent scenario. Table 6.4 Price Per Unit of Benefit When 100 Percent of Project Benefit Capacity is Sold For the Six Revenue Scenarios Evaluated Benefit Type Revenue Scenario - % of Full Benefit Value Per Unit 100% 85% 75% (1) (2) (3) = (2) x 0.85 (4) = (2) x 0.75 Water Supply - $ per 1,000 gallons $2.50 $2.13 $1.88 TP Reduction to Estuaries and Surface Waters - $ per pound of TP reduction paid by State agencies $ $ $93.00 TP Reduction to Estuaries and Surface Waters - $ per pound of TP reduction paid by MS4s, WCDs, CDDs, non- MS4s $ $ $ Reduced Water Discharge to Estuaries - $ per acre-foot of discharge reduction $ $ $ Federal Government (CERP) - $ per acre-foot of storage $ $93.50 $82.50 Benefit Type Revenue Scenario - % of Full Benefit Value Per Unit 60% 50% 30% (1) (5) = (2) x 0.60 (6) = (2) x 0.50 (7) = (2) x 0.30 Water Supply - $ per 1,000 gallons $1.50 $1.25 $0.75 TP Reduction to Estuaries and Surface Waters - $ per pound of TP reduction paid by State agencies $74.40 $62.00 $37.20 TP Reduction to Estuaries and Surface Waters - $ per pound of TP reduction paid by MS4s, WCDs, CDDs, non- MS4s $ $ $72.00 Reduced Water Discharge to Estuaries - $ per acre-foot of discharge reduction $ $ $67.50 Federal Government (CERP) - $ per acre-foot of storage $66.00 $55.00 $ R5_sec 06 GROVE LAND UTILITIES, LLC Page 6-5

136 6.0 Economic and Financial Feasibility Evaluation August Annual Project Cost The lifecycle cost of the GLRSTA Project was presented in Section 3.0 of this report. A summary of these costs is provided in Table 6.5 which includes the capital and annual O&M costs that were presented in Table 3.7 of Section 3 plus an estimate of the cost to finance the project through the sale of bonds. Alternatively, the Project could be financed through a combination of bonds and equity. For the purposes of this study, the cost of bond financing is used to represent borrowing costs. Table 6.5 Total Estimated Capital, Financing and Annual O&M Costs of the Grove Land Reservoir and Stormwater Treatment Area, 2013 Dollars Item Capital Cost: Value Reservoir $320,749,520 Stormwater Treatment Area $68,227,960 Other Improvements: Increase Capacity of Intake Water Sources (SFWMD) $29,109,541 Improvements at Upper St. Johns River Basin (SJRWMD) $10,385,345 Financing Cost $120,051,481 Total Capital Cost $548,523,846 Annual O & M Cost: Reservoir $864,501 Stormwater Treatment Area $671,120 Other Improvements: Increase Capacity of Intake Water Sources (SFWMD) $127,806 Improvements at Upper St. Johns River Basin (SJRWMD) $230,069 Project Administration $744,000 Total Annual O&M and Administrative Cost $2,637, R5_sec 06 GROVE LAND UTILITIES, LLC Page 6-6

137 6.0 Economic and Financial Feasibility Evaluation August 2014 The estimated finance cost is $120 million which is calculated in Table 6.6. The finance cost includes the bonded debt cost of issuance, the debt service reserve, and interest on debt during the first five years. The interest on the debt during the first five years of project design and construction is included in the finance cost assuming that no income is earned during this period to make annual principal and interest payments toward the debt. The interest is estimated assuming that the engineering design cost is borrowed in year 1 and the remaining non-land capital cost of the Project is borrowed over years 3, 4, and 5. The assumed bond interest rate is 7.18 percent. The debt service reserve is initially treated as a cost but once the debt is retired, in Year 35, the reserve is treated as income in Year 36. In practice, the required debt service reserve would fall each year as the principal is repaid. The effect of treating it as income in Year 36 will slightly underestimate the net present value of the Project. This underestimate would not change the conclusions of this study. Table 6.6 Financing Cost Estimate for Constructing the GLRSTA Project Non-Land Capital Cost - NLCC (Capital Cost Less Row no. Cost Item Land Cost) (1) = $744,000 x 5 years Administration - First 5 years of Project design and construction $3,720,000 (2) Reservoir $263,919,520 (3) Stormwater Treatment Area $47,177,960 (4) Increase Capacity of Intake Water Sources (SFWMD) $29,109,541 (5) Improvements at Upper St. Johns River Basin (SJRWMD) $10,385,345 (6) = Sum of (1) through (5) Total Non-Land Capital Cost $354,312,365 (7) = (6) x Bonded Debt Cost of Issuance (1.5% of NLCC) $5,314,685 (8) = (6) x Debt Service Reserve (8.0% of NLCC) $28,344,989 (9) based on (6) with 7.18% annual interest Interest first five years $86,391,806 (10) = Sum of (7) through (9) Total Finance Cost $120,051,480 (11) = (6) + (10) Total Bonded Debt $474,363,846 (12) = (11) amortized over 30 years at 7.18% interest Annual Debt Service $38,920, R5_sec 06 GROVE LAND UTILITIES, LLC Page 6-7

138 6.0 Economic and Financial Feasibility Evaluation August 2014 In addition to these costs, certain components of the Project are replaced during the Project s 50 year life. The replacement schedule used in the benefit-cost and cash-flow analyses is provided in Table 6.7. Table 6.7 GLRSTA Project Components That Are Replaced Before Year 55 Item Description Number of Units Cost Per Unit Reservoir Cost (a) Useful Life In Years Year Replaced Pump Stations 1 $16,500,000 $16,500, (2046) Controls, Instrumentation, Telemetry 1 $300,000 $300, STA 21 (2036) 36 (2051) Pump Station (Inflow of 230 cfs) 1 $7,060,000 $7,060, (2046) Pump Stations (seepage collection 25 cfs) 1 $1,123,000 $1,123, (2036) 36 (2051) FAVT - Initial stocking of floating vegetation 1 $200,000 $200, (2046) Controls, Instrumentation, Telemetry 1 $300,000 $300, (2036) 36 (2051) SAV Refurbishment 1,340 $20,000 $26,800, (2046) Increase Conveyance Capacity of Water Sources G-81/Orange Ave Pump Station 260 cfs 1 $7,422,578 $7,422, (2046) G-78 Pump Station 260 cfs 1 $7,422,578 $7,422, (2046) Controls, Instrumentation, Telelmetry 1 $300,000 $300, Upper St. Johns River Basin Improvements 21 (2036) 36 (2051) S253 Weir Structure - Pump Station 210 cfs 1 $6,247,976 $6,247, (2046) (a) For all items except SAV Refurbishment, the cost was increased by 30 percent to account for contingencies consistent with the estimation of capital cost. The cost of SAV Refurbishment is considered to be a worse-case scenario and in the upper range of the potential cost so no further cost increase was included. The economic and financial feasibility analysis includes a deduction of the estimated Federal and State income taxes that would be owed by the partners of a Limited Liability Company (LLC) or that would be owed by a Corporation. In the case of an LLC, Federal income tax can be paid as if the firm were a corporation or can be paid, instead, by the R5_sec 06 GROVE LAND UTILITIES, LLC Page 6-8

139 6.0 Economic and Financial Feasibility Evaluation August 2014 LLC partners as part of their personal income tax payment. In the case of a Corporation, the firm would owe Federal income taxes. For Federal taxable personal income greater than $405,100 and less than or equal to $457,600, the 2014 marginal Federal personal income tax rate is 35 percent. For Federal taxable corporate income greater than $335,000 and less than or equal to $10 million, the 2014 marginal corporate income tax rate is 34 percent. For Federal taxable corporate income greater than $10 million and less than or equal to $15 million, the marginal corporate income tax rate is 35 percent. In Florida, corporations and LLCs that are classified as a corporation for Florida and Federal income tax purposes are subject to the Florida corporate income tax. The 2014 Florida corporate income tax rate is 5.5 percent of Federal taxable income. The estimated Federal taxable income used to calculate the estimated income tax was based on the cash flow analysis described below where taxes are paid beginning in the first year of project operation. The initial capital costs and the renewal/replacement costs are reflected in the Project s cost deductions through straight line depreciation over 20 years and 10 years, respectively, with salvage values equal to $0. The estimated net income each year was multiplied by 0.41 to reflect a 41 percent marginal tax rate for Federal and State income tax payments (35 percent plus 5.5 percent rounded up to 41 percent). 6.3 Economic and Financial Feasibility of the GLRSTA Project A project is economically feasible if the present value of revenues over time is greater than or equal to the present value of costs over time. A project is financially feasible if a person or entity is willing to invest in the project, has the capability to raise the needed money to create the project, and develops a method to successfully collect sufficient revenue from the Project to recover all costs, including opportunity costs. Opportunity cost is the income, wealth or profit that could have been earned from other investment opportunities. For a project to be developed, it should be both economically and financially feasible. For this study, an economic feasibility analysis, which is also called a benefit-cost analysis, was conducted that compares the initial Project cost to the future flow of revenue and other costs over time. A cash-flow analysis is also provided to demonstrate the cash-flow characteristics of the Project, its potential value to investors, and its financing plan. Following this analysis, a discussion of the Project s potential financial feasibility is provided R5_sec 06 The time series of revenues and costs begin in Year 1 which is 2015 and end in Year 55 which is the year For the purposes of this evaluation, the Project is designed in 2015 and 2016 and constructed in 2017 through It becomes operational in This study s period of analysis is 50 years. GROVE LAND UTILITIES, LLC Page 6-9

140 6.0 Economic and Financial Feasibility Evaluation August 2014 The six revenue scenarios are associated with the same costs that were presented in Table 6.5 and Table 6.7 and includes estimated Federal and State income taxes. The present values of these revenues and costs were calculated at a 7.18 percent annual discount rate which is an estimate that reflects the real minimum risk-free private discount rate as discussed earlier in this section. For each revenue scenario, the net present value, the internal rate of return, the benefitto-cost ratio, and the payback period were calculated. The results are provided in Table 6.8. The definitions of these terms are provided in the footnotes to this table. The full economic analysis spreadsheet that provides the annual cost and revenues under the 60 percent of maximum revenue potential scenario is provided in Appendix B. Table 6.8 Economic Feasibility Results Under Six Alternative Revenue Scenarios % of Production Capacity Sold x % of Full Benefit Values Per Unit Collected Financial Metric 100% 85% 75% (1) (2) (3) (4) Net Present Value at 7.18% real discount rate (a) $756,000,000 $609,000,000 $511,000,000 Internal Rate of Return, Real Annual (b) 18.38% 16.49% 15.17% Benefit-to-Cost Ratio at 7.18% real discount rate (c) Payback Period in Years (d) % of Production Capacity Sold x % of Full Benefit Values Per Unit Collected Financial Metric 60% 50% 30% (1) (5) (6) (7) Net Present Value at 7.18% real discount rate (a) $364,000,000 $266,000,000 $23,000,000 Internal Rate of Return, Real Annual (b) 13.10% 11.64% 7.54% Benefit-to-Cost Ratio at 7.18% real discount rate (c) Payback Period in Years (d) (a) Net present value is the annual revenue minus annual cost discounted to present value over the 55 year period at 7.18% annual discount rate. This discount rate is an estimate of the real private minimum risk-free rate of return on investment (b) The Internal Rate of Return is the discount rate that causes the Net Present Value to be $0 (Present value of benefits is equal to the present value of costs). (c) The Benefit-to-Cost Ratio is the present value of benefits divided by the present value of costs, using a 7.18 percent discount rate. (d) Payback Period is the number of years for the discounted capital, finance and land costs to be recovered through the discounted annual net income where the real annual discount rate is 7.18 percent R5_sec 06 GROVE LAND UTILITIES, LLC Page 6-10

141 6.0 Economic and Financial Feasibility Evaluation August 2014 The net present value of the GLRSTA Project is significant under the 60 percent to 100 percent revenue scenarios. Under the 60 percent revenue scenario, the net present value at 7.18 percent discount rate is $364 million over the 55 year period and the real internal rate of return is 13 percent. This return is net of inflation. So if inflation were three percent then the nominal rate of return would be 16 percent. The estimated real internal rate of return under the six revenue scenarios is plotted in Figure 6-1. The real internal rate of return ranges from 7.5 percent when 30 percent of the Project s maximum potential revenue is collected to 18.4 percent when all of the Project s maximum revenue potential is collected. If the inflation rate is 3 percent, then the nominal internal rates of return would range from 10.5 percent to 21.4 percent. Internal Rate of Return, real annual 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Figure 6-1 Estimated Real Internal Rate of Return of the GLRSTA Project 7.5% 11.6% 13.1% 15.2% 16.5% 18.4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Revenue as a Percent of Maximum Potential Revenue A pro-forma cash flow analysis was conducted under the six revenue scenarios. The results for the 60 percent revenue scenario are provided in Appendix C of this report. The relationship between the benefit-cost evaluation and the cash flow evaluation is provided in Table 6.9 which is discussed as follows R5_sec 06 GROVE LAND UTILITIES, LLC Page 6-11

142 6.0 Economic and Financial Feasibility Evaluation August 2014 The undiscounted net revenue over the 55 year study period obtained from the benefitcost analysis is $3.2 billion or $58.5 million per year, on average. From this amount, interest on all debt service used to finance the Project is deducted. Under the cash-flow analysis, the non-land capital costs would be borrowed over 30 years at 7.18 percent annual interest and the land cost would be repaid to the landowner over 50 years at 7.18 percent annual interest. The total interest that would be paid is $693 million for the non-land borrowing and $330 million for the land repayment. The result is $2.2 billion in total undiscounted net income, including returns to risk, over the 55 year period. The present value of this net income at the real discount rate of 7.18 percent is $364 million. Table 6.9 Relationship Between Net Revenue from Benefit-Cost Analysis and Net Income From Cash Flow Analysis For 60% of the GLRSTA Project s Maximum Revenue Potential Row No. Item Total Undiscounted Value Over 55 Years Annual Average Value over 55 years Percent of Net Revenue (1) Net Revenue From Benefit- Cost Analysis $3,216,000,000 $58, % (2) Less Debt Service Interest (non-land) (over 30 years at 7.18% annual interest) $693,000,000 $12,600,000 22% (3) Less Interest on Land Debt (over 50 years at 7.18% annual interest) $330,000,000 $6,000,000 10% (4) = (1) (2) (3) Net Income, including returns to risk from Cash Flow Analysis $2,193,000,000 $39,900,000 68% R5_sec 06 GROVE LAND UTILITIES, LLC Page 6-12

143 Section 7.0 Impact to the Economy and Society of a Do Nothing Scenario This section describes the estimated economic value of the IRL and the potential economic impacts from a deterioration in its environmental quality. This type of deterioration would be expected in the event that the GLRSTA Project is not built and there are no other effective means used to reduce nutrient concentrations and stormwater discharges at the SFWMD s water control structures that drain water to the IRL. The economic impact if the GLRSTA Project is not used to provide additional water supply would be the increased cost associated with other alternative water sources as described in Sections 2.3 and 2.7 of this report as well as other potential costs and economic impacts associated with an increased frequency of water shortages. Such costs and impacts would vary from utility to utility and were not quantified in this study except to the extent of valuing water supply from the GLRSTA Project as provided in Section 2.0 of this report. The IRL spans 156 miles and five counties from Ponce de Leon Inlet in Volusia County to Jupiter Inlet in Palm Beach County and includes the SLE. Stormwater discharge reductions through the S-49 Structure would benefit the SLE in St. Lucie County. Reductions through the S-97 Structure would benefit the SLE in Martin County. Stormwater discharge reductions through the S-99 Structure would benefit the IRL at Fort Pierce in St. Lucie County but to a lesser extent than stormwater reductions to the SLE due to the strong influence of tidal mixing at Fort Pierce. The GLRSTA Project may also benefit the IRL in Indian River County during times when the GLRSTA Project provides needed freshwater to the IRL during hot, dry years when freshwater is needed for environmental protection. Because of the treatment provided by the STA, the TP and TN concentrations of the water discharged from the GLRSTA Project would meet State water quality standards for the IRL R5_sec 07 The economic value of the IRL in Martin, St. Lucie and Indian River counties in 2007 was estimated and reported in the Indian River Lagoon Economic Assessment and Analysis Update, prepared in 2008 by Hazen and Sawyer for the SJRWMD and the SFWMD. This 2008 study estimated the 2007 economic value of the IRL in terms of its contribution to resident income, recreational use values, and property values. Survey research, including contingent valuation surveys, of 1,400 residents and visitors of the five counties surrounding the Lagoon was used to estimate many of these values. He- GROVE LAND UTILITIES, LLC Page 7-1 HAZEN AND SAWYER, P.C., AMEC AND

144 7.0 Impact to the Economy and Society of a Do Nothing Scenario August 2014 donic analysis of property values was used to estimate the impact of the Lagoon on real estate values. These values were estimated for each of the five counties surrounding the IRL: Volusia, Brevard, Indian River, St. Lucie and Martin. These values can be used to demonstrate the societal costs associated with a no action scenario in which runoff continues to be discharged to the IRL and SLE with the associated nutrient loading, sedimentation, and disruptions of natural salinity regimes. The economic values for Martin County, for St. Lucie County and for Indian River County are provided in Table 7.1, Table 7.2 and Table 7.3, respectively. The type of IRL benefit is provided in Column (1) of these tables. The estimated 2007 dollar values of benefits (in 2007 dollars) are provided in Column (2). These values are from the economic valuation report cited above. They were converted to 2013 dollars and 2013 economic conditions, as presented in Column (3), using the GDP Chained Price Index and the ratio of 2013 to 2007 U.S. per capita real disposable personal income. The conversion factors were 1.11 and , respectively. 1 Because economic values are affected by personal and household income, this conversion is an attempt to correct for differences in the economy between the two years (2007 and 2013). These values represent the environmental condition of the IRL as it existed in The sums of the economic values for all three counties are provided in Table 7.4. The definitions of the values presented in Tables 7.1 through 7.4 are as follows. (1) Recreational Expenditures This value is the expenditures by residents of and visitors to the IRL associated with using the Lagoon for recreation. The expenditures include those made in Martin, St. Lucie and Indian River counties on the day of Lagoon recreation and those made in Florida in 2007 for boat purchases, boat repairs, marina slip rental fees, and dockage fees that are attributable to recreational use of the IRL. (2) Recreational Use Value This value is recreators willingness to pay to visit the Lagoon in addition to their recreational expenditures. The sum of recreational expenditures and recreational use value is the total annual value to recreators from recreating on the Lagoon R5_sec 07 1 The 1.11 is / These values are the U. S. Gross Domestic Product (GDP) Chained Price indices in 2013 and 2007, respectively, and are from the U.S. Office of Management and Budget. The is $36,815/$35,866. These values are U.S. real per capita disposable personal income in chained 2009 dollars in 2013 and 2007, respectively, and are from the U.S. Bureau of Economic Analysis. GROVE LAND UTILITIES, LLC Page 7-2

145 7.0 Impact to the Economy and Society of a Do Nothing Scenario August 2014 (3) Non-Use Value of the Lagoon This value is the willingness of all residents and visitors in the counties to pay to maintain the Lagoon in its existing environmental condition even if they never recreate on the Lagoon. This annual value is in addition to their recreational expenditures and use values. Non-use value is the annual value of the one-time tax they would be willing to pay to protect the Lagoon in its existing condition. People outside of the county are also willing to pay to protect the Lagoon but this value was not included in the study. (4) Real Estate Values This annual value is based on the contribution of the Lagoon to property values for homes located on and within 0.30 miles of the Lagoon and represents residents annual willingness to pay to live on or near the Lagoon. This annual value was calculated as total contribution of the Lagoon to property values annualized at a two percent annual discount rate. (5) Income Earned by Residents This value is the income received by residents in the counties as visitors and residents spend money to recreate on the Lagoon. The definition of income is provided in the paragraph below. (6) Economic Contribution of the Daily Recreation Expenditures These values include the direct, indirect and induced effects of the activity to the counties. Output is defined as the value of the additional goods and services produced in the counties due to the Lagoon-related activities. Income is the sum of wages, salaries, proprietors income, profits, rents, royalties and dividends due to the Lagoon-related activities (prior to deducting income and capital gains taxes). Employment includes the number of full-time and part-time jobs created due to the Lagoon-related activities. Tax revenue is the sum of the excise taxes, property taxes, fees, licenses, and sales taxes collected due to the Lagoon-related activities. It excludes taxes on profit and income because these values are included in the income contribution reported in the table R5_sec 07 GROVE LAND UTILITIES, LLC Page 7-3

146 7.0 Impact to the Economy and Society of a Do Nothing Scenario August 2014 Table 7.1 Estimated Annual Values of the Indian River Lagoon to Residents and Visitors of Martin County, Environmental Condition of Lagoon in 2007 Indian River Lagoon Related Value in 2007 in 2007 Dollars (a) Value in 2013 in 2013 Dollars (b) (1) (2) (3) (1) Recreational Expenditures Daily Expenditures $60,888,000 $69,450,000 Boat Expenditures in Florida $65,857,000 $75,118,000 (2) Recreational Use Value $98,224,000 $112,036,000 (3) Non-Use Value in Existing Condition $271,000 $309,000 (4) Real Estate Value, annualized $127,000,000 $144,858,000 (5) Income Generated in IRL Counties From Daily Recreation Expenditures $17,776,000 $20,276,000 Total Economic Value $370,016,000 $422,047,000 (6) Economic Contribution of the Daily Recreation Expenditures: Output $38,567,000 $43,990,000 Income $17,776,000 $20,276,000 Employment, number of full and part time jobs Tax Revenue $2,691,000 $3,069,000 Number of Recreation Person-Days (c) 1,145,000 1,175,000 (a) Hazen and Sawyer, "Indian River Lagoon Economic Assessment and Analysis Update", for the Indian River Lagoon National Estuary Program in cooperation with the St. Johns River Water Management District and the South Florida Water Management District, Final Report, August 18, 2008, pages ES-9. (b ) This value was obtained by multiplying the Value in 2007 in 2007 Dollars by and by The is the ratio of real disposable personal income in 2013 and in 2007 (from U.S. Bureau of Economic Analysis) and was the method used to adjust the values to reflect the 2013 economy. The 1.11 is the 11 percent inflation that occurred from 2007 to 2013 and converts the 2007 dollars to 2013 dollars. (c) A person-day is one person participating in a recreation activity for all or a part of one day. Only the primary recreation activity that day was counted. If a person participated in more than one recreation activity that day only the primary activity, as chosen by the survey respondent, was counted R5_sec 07 GROVE LAND UTILITIES, LLC Page 7-4

147 7.0 Impact to the Economy and Society of a Do Nothing Scenario August 2014 Table 7.2 Estimated Annual Values of the Indian River Lagoon to Residents and Visitors of St. Lucie County, Environmental Condition of Lagoon in 2007 Indian River Lagoon Related (1) Recreational Expenditures Value in 2007 in 2007 Dollars (a) Value in 2013 in 2013 Dollars (b) (1) (2) (3) Daily Expenditures $78,068,000 $89,046,000 Boat Expenditures in Florida $78,950,000 $90,052,000 (2) Recreational Use Value $119,532,000 $136,340,000 (3) Non-Use Value in Existing Condition $491,000 $560,000 (4) Real Estate Value, annualized $244,000,000 $278,311,000 (5) Income Generated in IRL Counties From Daily Recreation Expenditures $24,022,000 $27,400,000 Total Economic Value $545,063,000 $621,709,000 (6) Economic Contribution of the Daily Recreation Expenditures: Output $52,706,000 $60,117,000 Income $24,022,000 $27,400,000 Employment, number of full & part time jobs Tax Revenue $3,399,000 $3,877,000 Number of Recreation Person-Days (c) 1,424,000 1,462,000 (a) Hazen and Sawyer, "Indian River Lagoon Economic Assessment and Analysis Update", for the Indian River Lagoon National Estuary Program in cooperation with the St. Johns River Water Management District and the South Florida Water Management District, Final Report, August 18, 2008, page ES-10. (b) This value was obtained by multiplying the Value in 2007 in 2007 Dollars by and by The is the ratio of real disposable personal income in 2013 and in 2007 (from U.S. Bureau of Economic Analysis) and was the method used to adjust the values to reflect the 2013 economy. The 1.11 is the 11 percent inflation that occurred from 2007 to 2013 and converts the 2007 dollars to 2013 dollars. (c) A person-day is one person participating in a recreation activity for all or a part of one day. Only the primary recreation activity that day was counted. If a person participated in more than one recreation activity that day only the primary activity, as chosen by the survey respondent, was counted R5_sec 07 GROVE LAND UTILITIES, LLC Page 7-5

148 7.0 Impact to the Economy and Society of a Do Nothing Scenario August 2014 Table 7.3 Estimated Annual Values of the Indian River Lagoon to Residents and Visitors of Indian River County, Environmental Condition of Lagoon in 2007 Indian River Lagoon Related (1) Recreational Expenditures Value in 2007 in 2007 Dollars (a) Value in 2013 in 2013 Dollars (b) (1) (2) (3) Daily Expenditures $128,439,000 $146,500,000 Boat Expenditures in Florida $59,408,000 $67,762,000 (2) Recreational Use Value $90,220,000 $102,907,000 (3) Non-Use Value in Existing Condition $275,000 $314,000 (4) Real Estate Value, annualized $117,000,000 $133,452,000 (5) Income Generated in IRL Counties From Daily Recreation Expenditures $42,949,000 $48,988,000 Total Economic Value $438,291,000 $499,923,000 (6) Economic Contribution of the Daily Recreation Expenditures: Output $89,897,000 $102,538,000 Income $42,949,000 $48,988,000 Employment, number of full & part time jobs 1,232 1,265 Tax Revenue $5,741,000 $6,548,000 Number of Recreation Person-Days (c) 1,422,000 1,460,000 (a) Hazen and Sawyer, "Indian River Lagoon Economic Assessment and Analysis Update", for the Indian River Lagoon National Estuary Program in cooperation with the St. Johns River Water Management District and the South Florida Water Management District, Final Report, August 18, 2008, pages ES-9. (b) This value was obtained by multiplying the Value in 2007 in 2007 Dollars by and by The is the ratio of real disposable personal income in 2013 and in 2007 (from U.S. Bureau of Economic Analysis) and was the method used to adjust the values to reflect the 2013 economy. The 1.11 is the 11 percent inflation that occurred from 2007 to 2013 and converts the 2007 dollars to 2013 dollars. (c) A person-day is one person participating in a recreation activity for all or a part of one day. Only the primary recreation activity that day was counted. If a person participated in more than one recreation activity that day only the primary activity, as chosen by the survey respondent, was counted R5_sec 07 GROVE LAND UTILITIES, LLC Page 7-6

149 7.0 Impact to the Economy and Society of a Do Nothing Scenario August 2014 Table 7.4 Estimated Annual Values of the Indian River Lagoon to Residents and Visitors of Martin, St. Lucie and Indian River Counties Environmental Condition of Lagoon in 2007 (a) Indian River Lagoon Related (1) Recreational Expenditures Value in 2007 in 2007 Dollars Value in 2013 in 2013 Dollars (1) (2) (3) Daily Expenditures $267,395,000 $304,995,000 Boat Expenditures in Florida $204,215,000 $232,931,000 (2) Recreational Use Value $307,976,000 $351,283,000 (3) Non-Use Value in Existing Condition $1,037,000 $1,183,000 (4) Real Estate Value, annualized $488,000,000 $556,621,000 (5) Income Generated in IRL Counties From Daily Recreation Expenditures $84,747,000 $96,664,000 Total Economic Value $1,353,370,000 $1,543,677,000 (6) Economic Contribution of the Daily Recreation Expenditures: Output $181,170,000 $206,646,000 Income $84,747,000 $96,664,000 Employment, number of full & part time jobs 2,562 2,630 Tax Revenue $11,831,000 $13,495,000 Number of Recreation Person-Days 3,991,000 4,097,000 (a) From the sum of Tables 7.1 through 7.3. As presented in Tables 7.1 through 7.4, the total estimated annual economic value of the IRL is approximately $422 million in Martin County, $622 million in St. Lucie County and $500 million in Indian River County for an estimated total annual economic value of about $1.5 billion. In the event that the environmental quality of the IRL deteriorates, so too will its economic value. The reduction in economic value over time will track the deterioration of the IRL but with a likely lag of several years as residents and visitors become aware of the reductions in the Lagoon s environmental quality R5_sec 07 Because the annual recreational use value is relatively large about $112 million in Martin County, $136 million in St. Lucie County, and $103 million in Indian River County - many of these lagoon users will spend their vacation and recreation time visiting other places that have the same types of recreational opportunities but where the quality is better. They will reduce their recreational expenditures in the three counties, resulting in reduced income to county residents. It will also cost residents more money to enjoy recreational activities as they venture farther from home. The appeal of the Lagoon as an GROVE LAND UTILITIES, LLC Page 7-7

150 7.0 Impact to the Economy and Society of a Do Nothing Scenario August 2014 amenity and recreational playground will fall resulting in lower residential property values nearby. If there were a reduction in the environmental quality of the IRL that reduced its value by one percent, then the annual value of the IRL in these three counties would fall by approximately $15 million R5_sec 07 The impact of a deteriorating IRL on the local economy is demonstrated in Table 7.5. Here, the changes in the annual number of person-days, output, income, employment and tax revenue generated in the counties are provided for four levels of reduction in recreational lagoon use. This use reduction could be due to the reduced environmental quality of the lagoon such as reduced water clarity, increased incidence and extent of algal blooms, reductions in the number of live marine mammals and large fish, and lower fishing success. Table 7.5 Changes in the Economic Contribution of the Indian River Lagoon as the Lagoon's Environmental Quality Reduces Recreational Use Percent Change in Recreational Lagoon Use From Lower Environmental Quality of Lagoon Area of Impact -1.00% % % % Change in Annual Number of Recreation Person-Days Martin County -11, , , ,600 St. Lucie County -14, , , ,800 Indian River County -14, , , ,800 Total - 3 Counties -41, ,700-1,024,100-2,048,200 Change in Annual Output, 2013 dollars Martin County -$439,900 -$4,399,000 -$10,997,600 -$21,995,100 St. Lucie County -$601,200 -$6,011,700 -$15,029,400 -$30,058,700 Indian River County -$1,025,400 -$10,253,800 -$25,634,500 -$51,269,100 Total - 3 Counties -$2,066,500 -$20,664,500 -$51,661,500 -$103,322,900 Change in Annual Income to Residents, 2013 dollars Martin County -$202,800 -$2,027,600 -$5,068,900 -$10,137,800 St. Lucie County -$274,000 -$2,740,000 -$6,850,000 -$13,700,000 Indian River County -$489,900 -$4,898,800 -$12,247,100 -$24,494,200 Total - 3 Counties -$966,700 -$9,666,400 -$24,166,000 -$48,332,000 Change in Employment, number of full and part time jobs Martin County St. Lucie County Indian River County Total - 3 Counties ,315 Change in Annual Tax Revenue, 2013 dollars Martin County -$30,700 -$306,900 -$767,400 -$1,534,700 St. Lucie County -$38,800 -$387,700 -$969,200 -$1,938,500 Indian River County -$65,500 -$654,800 -$1,637,100 -$3,274,100 Total - 3 Counties -$135,000 -$1,349,400 -$3,373,700 -$6,747,300 GROVE LAND UTILITIES, LLC Page 7-8

151 7.0 Impact to the Economy and Society of a Do Nothing Scenario August 2014 A one percent reduction in recreational uses of the IRL would result in an estimated 41,000 fewer recreational person-days each year resulting in a $2.07 million reduction in the annual demand for goods and services in the local area as measured by the value of output. Annual income to residents would fall by about $967,000 and there would be 26 fewer full- and part-time jobs. Annual tax revenue collected in the three counties would fall by about $135,000. A fifty percent reduction in recreational uses of the IRL would result in an estimated 2.05 million fewer recreational person-days each year resulting in a $103 million reduction in the annual demand for goods and services in the local area. Annual income to residents would fall by about $48 million and there would be about 1,300 fewer full- and part-time jobs. Annual tax revenue collected in the three counties would fall by about $6.7 million. The IRL in Martin, St. Lucie and Indian River counties is of great benefit to the residents of eastern Florida. One percent of the estimated 4.1 million annual person-days spent recreating on the IRL in these counties is 41,000 person-days or 112 people per day. Every 41,000 person-day increase in the recreational uses of the lagoon during the year generates about $967,000 in income to local residents and creates about 26 local jobs. The 41,000 person-days is comprised of 11,800 person-days in Martin County; 14,600 person-days is St. Lucie County and 14,600 person-days in Indian River County. In Martin County, every 11,800 person-day increase during the year generates about $203,000 in income to local residents and creates about 6 local jobs. A 14,600 person-day increase in St. Lucie County increases local income by about $274,000 per year and creates about 8 local jobs. In Indian River County, an estimated $490,000 in local income and about 13 local jobs are created with every 14,600 person-day increase in IRL recreation. The dollar value of the benefits from protecting and improving the environmental quality of the IRL will offset and potentially could be much greater than the cost of investments that improve the health of this large estuary R5_sec 07 GROVE LAND UTILITIES, LLC Page 7-9

152 Section 8.0 Conclusions This study developed and evaluated a conceptual plan for diverting and storing environmentally damaging stormwater discharges to coastal estuaries and, instead, using this water to benefit Florida residents and businesses. The location of this Grove Land Reservoir and Stormwater Treatment Area (GLRSTA) Project in northern Okeechobee and southern Indian River counties is ideal for providing stormwater management and water supply benefits to entities throughout eastern Florida. The conceptual project described in this report was developed to provide the maximum possible benefits from the 7,788 acres of land on which the Project would be sited. The Project is expected to provide the following benefits to water utilities, landowners and government agencies. Reduction or Improved Timing of Water Discharges to Estuaries. The Project would reduce environmental harm to the Indian River Lagoon (IRL) and St. Lucie Estuary (SLE) in the SFWMD by diverting and storing 155,000 acre-feet of wet season stormwater flows each year. This quantity is about 37 percent of the total discharge through the SFWMD s S-99, S-49 and S-97 Structures that control water flows to these estuaries. Local residents and businesses from Ft. Pierce to Stuart are expected to benefit from this Project feature. Water Supply. From these diverted and stored flows, the Project would provide an estimated 136 mgd of water on an average daily basis for surface water augmentation and groundwater recharge. The stored flows would be sent through the St. Johns River, existing canals, and/or constructed conveyance infrastructure to surface or ground water storage areas in close proximity to existing utility infrastructure. Water utilities and their customers located in the SJRWMD and the SFWMD would benefit from this Project feature R5_sec 088 Nutrient Reduction. All water stored by the Project would be sent through a stormwater treatment area to reduce the total phosphorus (TP) concentration in the water entering the STA from its current level of about 275 part per billion (ppb) to about 76 ppb which is a 73 percent reduction from current levels. The total nitrogen (TN) concentration in the water entering the STA would be reduced from its current level of about parts per million (ppm) to about ppm for a 22.5 percent reduction from current levels. The Project is expected to remove about 38 to 55 metric tons of TP and from 67 to 303 metric tons of TN that would otherwise flow into the IRL and SLE, depending on the amount of water that is permanently diverted from these estuaries. The SFWMD, the Florida Department GROVE LAND UTILITIES, LLC Page 8-1

153 8.0 Conclusions August 2014 of Environmental Protection (FDEP), local agencies, and agricultural landowners in the St. Lucie Basin would benefit from this Project feature. The local tourism industry and the regional economy would benefit from the improved wildlife habitat. MFL Compliance. The SJRWMD would benefit as the Project provides additional freshwater to the St. Johns River that may help to maintain compliance with minimum flows and levels (MFLs) regulations. Water Management Flexibility. Because the GLRSTA Project reservoir extends into both the SJRWMD and the SFWMD, the hydraulic connection between the water management networks of these two districts would be improved. The SJRWMD and the SFWMD would benefit as the Project increases the flexibility of managing water systems in the area. Replace Some Components of Indian River Lagoon South CERP Project. The GLRSTA Project will provide 75,000 acre-feet of reservoir storage and includes a 2,000 acre STA. This Project would provide the same benefits that would have been provided by the proposed C-25 Reservoir and STA and a portion of the benefits provided by the C- 23/24 Reservoir and STAs which are part of the Comprehensive Everglades Restoration Plan (CERP). The engineering design and construction of these projects have been indefinitely delayed and none of the land has been acquired for the C-25 Reservoir and STA. The Federal government, as a CERP partner, would benefit from the GLRSTA Project because it would replace some components of the IRL South CERP Project. This study estimated each beneficiary s maximum willingness-to-pay per unit of benefit for the Project services. The prices charged for these services will need to be less than or equal to these benefit values. The benefit values estimated as part of this study are provided in Table 8.1. The benefit value associated with water utilities, $2.50 per 1,000 gallons, is an estimate of the utility s cost to obtain raw water using sources and methods other than the GLRSTA Project. It was used for this study because it is lower than the water utility customer s maximum willingness-to-pay for this water. This value ranges from $6.00 to $7.75 per 1,000 gallons. This range is an estimate of the value of the lowest valued water uses to customers (outdoor use and some indoor uses) net of all costs associated with potable water treatment, water distribution, utility administration, and the provision of sewer services R5_sec 088 GROVE LAND UTILITIES, LLC Page 8-2

154 8.0 Conclusions August 2014 Table 8.1 Summary of Estimated Benefit Values Associated with the GLRSTA Project Beneficiaries Benefit Unit of Measurement Value Water Utilities SFWMD / FDEP / State of Florida SFWMD / FDEP / State of Florida MS4s, WCDs, CDDs, non-ms4s Federal Government Potable Water Supply ($ per 1,000 gallons) $ per 1,000 gallons $2.50 $ per pound of TP removed TP Reduction Benefit $124 Estuarine Water Discharge Reduction TP or TN Reduction Benefit Avoided cost of CERP Projects $ per acre-foot of discharge reduction $225 $ per pound of TP or TN reduction $240 $ per acre-foot of water storage $110 Agricultural Irrigators Surface Water Supply $ per 1,000 gallons $0.10 The benefit values associated with the other beneficiaries are based on estimates of their costs to obtain these same services via other projects. This method was used because current Florida Statutes require that Florida agencies protect and restore watershed ecosystems including the IRL and the SLE. For the Federal government, the benefit value is the avoided cost of building certain components of the IRL South CERP Project. The benefit value for agriculture is the avoided energy cost of pumping water from the Floridan aquifer. This study concludes that there is a need for 100 percent of the nutrient and estuarine stormwater discharge reductions provided by the Project once it becomes operational in the year The demand for water supply from the Project will be primarily dependent on the ability of the St. Johns River to transport the Project water to satisfy utility water demands that cannot be met with existing water sources. Preliminary investigations by the SJRWMD found that water from the Project can move through the Upper St. Johns River with only about a 10 percent water loss due to evaporation and no water losses are expected once the water enters the channelized part of the river. This estimated 10 percent reduction was included in the financial feasibility investigation R5_sec 088 Initially, the demand for water from the Project might be short of the Project s capacity and need to release water. When this occurs, some water will need to be routed back to the IRL and SLE during the dry season. However, given projections of the amount of water that will be needed from alternative water sources for public supply and agricultural irrigation, it is very likely that by 2035 all of the available supply of water from the Project could be beneficially used. GROVE LAND UTILITIES, LLC Page 8-3

155 8.0 Conclusions August 2014 The lifecycle cost of the GLRSTA Project is summarized in Table 8.2 and Table 8.3. These cost data were used to evaluate the economic and financial feasibility of the Project. The estimated capital and finance cost of the Project is $548 million and the annual O&M cost estimate is $2.6 million. Certain project components have useful lives of 15 and 25 years and were replaced as needed during the benefit-cost and cash-flow analyses. The salvage value of the entire project is assumed to be zero because all components would have reached the end of their useful lives by year 55 of the study period. Table 8.2 Total Estimated Capital, Financing and Annual O&M Costs of the Grove Land Reservoir and Stormwater Treatment Area, 2013 Dollars Item Value Capital Cost: Reservoir $320,749,520 Stormwater Treatment Area $68,227,960 Other Improvements: Increase Capacity of Intake Water Sources (SFWMD) $29,109,541 Improvements at Upper St. Johns River Basin (SJRWMD) $10,385,345 Financing Cost $120,051,480 Total Capital Cost $548,523,846 Annual O & M Cost: Reservoir $864,501 Stormwater Treatment Area $671,120 Other Improvements: Increase Capacity of Intake Water Sources (SFWMD) $127,806 Improvements at Upper St. Johns River Basin (SJRWMD) $230,069 Project Administration $744,000 Total Annual O&M and Administrative Cost $2,637, R5_sec 088 GROVE LAND UTILITIES, LLC Page 8-4

156 8.0 Conclusions August 2014 Table 8.3 GLRSTA Project Components That Are Replaced Before Year 55 Useful Item Description Number of Units Cost (a) Life In Years Reservoir Year Replaced Pump stations 1 $16,500, Controls, Instrumentation, Telemetry 1 $300, and 36 STA Pump Station (Inflow of 230 cfs) 1 $7,060, Pump stations (seepage collection 25 cfs) 1 $1,123, and 36 FAVT - Initial stocking of floating vegetation 1 $200, Controls, Instrumentation, Telemetry 1 $300, and 36 SAV Refurbishment 1,340 $26,800, (2046) Increase Conveyance Capacity of Water Sources G-81/Orange Ave Pump Station 260 cfs 1 $7,422, G-78 Pump Station 260 cfs 1 $7,422, Controls, Instrumentation, Telemetry 1 $300, and 36 Upper St. Johns River Basin Improvements S253 Weir Structure - Pump Station 210 cfs 1 $6,247, (a) For all items except SAV Refurbishment, the cost was increased by 30 percent to account for contingencies consistent with the estimation of capital cost. The cost of SAV Refurbishment is considered to be a worse-case scenario and in the upper range of the potential cost so no further cost increase was included. Several issues have the potential to constrain the benefits that could be generated from the GLRSTA Project which could impact the Project s technical and/or financial feasibility. These issues will need to be addressed in future studies. They are listed as follows. 1. Inter-District Water Transfers. The Project can only be operated if the hydraulic connection between the SFWMD and the SJRWMD is improved and water is allowed to flow north and south across the boundary of the two Districts. 2. Consumptive Use Permit and Water Reservation. The Project must have a sufficient and reliable supply of water commensurate with the Project s size R5_sec Project Withdrawal-to-Recharge Ratio. This metric addresses the proportion of the Project s water discharge to surface water bodies and underground aquifers that can be beneficially withdrawn for water supply or can be used to maintain minimum flows and levels thresholds (MFLs). The financial feasibility of the Project is dependent on the amount of water from the Project that can be beneficially used. GROVE LAND UTILITIES, LLC Page 8-5

157 8.0 Conclusions August Water Use Permitting and Water Shortage Regulations. Permitting and regulatory decisions by the SJRWMD and the SFWMD should facilitate the Project s ability to provide water supply and water resource benefits. 5. Water Management and Quality. The Project should be operated in a manner consistent with the water management activities of the SJRWMD and the SFWMD. Treated water from the Project must meet all relevant water quality criteria. 6. Impacts to Other Persons and Entities. The Project must not increase flooding, harm nearby properties, or impact existing legal water users. 7. U.S. Army Corps of Engineers and Federal Funding. In order for the GLSTA Project to receive CERP-related funding and provide SFWMD in-kind CERP credits, the Corps would need to agree on the GLRSTA Project s conceptual plan, engineering design, and cost estimates. 8. Water Discharges from the GLRSTA. To obtain sufficient benefits from the project so that it is financially feasible, there should be enough discharge capacity to water bodies so that the reservoir can be drained prior to the next wet season. The per unit dollar value of benefits, the quantity of physical benefits from the Project, and the Project s lifecycle costs estimated during this study were used to evaluate the economic and financial feasibility of the GLRSTA Project. The annual revenues and costs were calculated each year from 2015, the presumed year when project design begins, to the year 2020, when the project becomes operational, through the year 2070 which would be the 50 th year of project operation and the last year of the study period. The annual revenue that could be collected each year is a portion or all of the total physical benefits provided by the project times a portion or all of the total per unit benefit values. Given the quantity of benefits provided by the Project and estimates of these benefit values (or maximum willingness-to-pay), the maximum potential revenue from the Project would be about $174 million per year in 2013 dollars. Over half of this revenue, 64 percent, is from the provision of stored water to utilities and other large water users. In order to attract customers, the Project s prices will need to be less than or equal to the customer s maximum willingness-to-pay. The lower the price, the greater will be the customer s consumer surplus (willingness-to-pay minus price) and the greater will be the amount of services purchased R5_sec 088 There is the possibility that not all of the benefit capacity of the Project would be purchased during the year and/or that customers would not pay their entire willingness-to-pay for the Project s benefits. Therefore, to get an idea of the financial feasibility of the Project, a GROVE LAND UTILITIES, LLC Page 8-6

158 8.0 Conclusions August 2014 range of revenues was used where the annual revenue is equal to a proportion of the maximum potential annual revenue of $174 million. The proportions are 100 percent, 85 percent, 75 percent, 60 percent, 50 percent, and 30 percent. These six revenue scenarios are associated with the same costs that were presented in Table 8.2 and Table 8.3 and including the estimated Federal and State income taxes. The present values of these revenues and costs were calculated at a 7.18 percent annual real discount rate which is an estimate that reflects the real minimum risk-free private discount rate. For each revenue scenario, the net present value, the internal rate of return, the benefit-to-cost ratio, and the payback period were calculated. Under the 100 percent revenue scenario, the net present value of the GLRSTA Project is $756 million in 2013 dollars. The real internal rate of return is 18.4 percent and the Project s payback period is ten years. Under the 85 percent revenue scenario, the net present value of the GLRSTA Project is $609 million in 2013 dollars. The real internal rate of return is 16.5 percent and the Project s payback period is 12 years. Under the 75 percent revenue scenario, the net present value of the GLRSTA Project is $511 million in 2013 dollars. The real internal rate of return is 15.2 percent and the Project s payback period is 12 years. Under the 60 percent revenue scenario, the net present value of the GLRSTA Project is $364 million in 2013 dollars. The real internal rate of return is 13.1 percent and the Project s payback period is 15 years. Under the 50 percent revenue scenario, the net present value of the GLRSTA Project is $266 million in 2013 dollars. The real internal rate of return is 11.6 percent and the Project s payback period is 17 years. Under the 30 percent revenue scenario, the net present value of the GLRSTA Project is $23 million in 2013 dollars. The real internal rate of return is 7.5 percent and the Project s payback period is 38 years. These internal rates of return are net of inflation. So if inflation were three percent then the nominal rates of return would be 21.4 percent, 19.5 percent, 18.2 percent, 16.1 percent and 14.6 percent and 10.5 percent, respectively R5_sec 088 The economic and financial analysis results demonstrate that the GLRSTA Project has the potential to be economically and financially feasible depending on the technical and financial risk associated with investing in the Project. Technical risk is associated with the GROVE LAND UTILITIES, LLC Page 8-7

159 8.0 Conclusions August 2014 success of the Project in providing the anticipated benefits. Financial risk is associated with being able to collect sufficient revenue to recover all Project costs, including opportunity costs and will depend on the quantity, duration, and security of the actual customer commitments. Risk is typically incorporated into the minimum required rate of return on investment. If the minimum acceptable real rate of return is 15 percent, then the Project is economically feasible for revenue scenarios as low as 75 percent of the Project s estimated maximum revenue potential. If the minimum acceptable real rate of return is 11 percent, then the Project is economically feasible for revenue scenarios as low as 50 percent of the Project s estimated maximum revenue potential. Bear in mind that none of the benefit values, costs, discount rates, and internal rates of return presented in this report include inflation. To obtain the nominal rate of return, the inflation rate should be added to the real rate of return. This study also finds that the financial success of the Project, as it is conceptualized in this report, will depend on the amount of stored water that is sold to water utilities and other large water users. If this Project is used as a regional water supply project with significant financial contributions from beneficiaries, then it is likely to be an economically and financially feasible investment. The GLRSTA Project as conceptualized in this study has the potential to be financially feasible to the Project s owner and economically feasible to the beneficiaries. These beneficiaries would be the Project s customers and would have the opportunity to use this Project to achieve cost-effective and socially beneficial methods to increase water supply and improve the environmental conditions of surface water bodies and estuarine systems R5_sec 088 GROVE LAND UTILITIES, LLC Page 8-8

160 Appendix A Representative Alternative Water Supply Costs Grove Land Reservoir and STA Project Appendix A Cover GROVE LAND UTILITIES, LLC

161 Appendix A Representative Alternative Water Supply Project Costs Representative estimates of the annualized costs per 1,000 gallons for AWS projects were obtained using AWS cost data provided in the following documents. JEA s Integrated Water Resource Planning Project, Final Report dated February 2013, Appendix D Option Factsheets. St. Johns River Water Management District s 2005 Water Supply Plan - 4th Addendum dated May 12, 2009, Tables 13 and 14 and page 17. The unit cost includes the capital cost and the annual O&M cost that are reported in these documents. All capital costs were annualized (amortized) over 20 years at 5.00 percent annual interest. The costs reported in the JEA document are in 2013 dollars. The costs reported in the SJRWMD document were converted from the dollars they were reported in (2005 dollars or 2009 dollars depending on the project), to 2013 dollars. The capital and O&M costs for desalination and indirect potable reuse were provided in the JEA document. These costs were used to calculate the total costs per 1,000 gallons of water produced. The desalination costs provided in the JEA document included costs for brackish groundwater; brackish water from the St. Johns River; seawater quality water from the St. Johns River; and ocean water. These costs are provided in Table A.1 and were used to calculate the costs per 1,000 gallons which are provided in Table A.2. Cost Item Table A.1 Estimated Capital and O&M Costs of Desalination by Treatment Capacity from JEA's Integrated Water Resource Planning Project Final Report, 2013 Dollars Treatment Capacity (mgd) Brackish Groundwater (a) Capital $43,100,000 $88,800,000 $136,000,000 $207,000,000 O&M Fixed Costs per Year $520,000 $1,160,000 $1,940,000 $2,840,000 O&M Variable Costs per MG $1, $ $ $ Brackish St. Johns River Water (a) Capital $85,500,000 $160,000,000 $238,000,000 $335,000,000 O&M Fixed Costs per Year $640,000 $1,540,000 $2,700,000 $4,060,000 O&M Variable Costs per MG $1, $1, $ $ Seawater Quality Water from St. Johns River (a) Capital $173,000,000 $352,000,000 $562,000,000 $795,000,000 O&M Fixed Costs per Year $1,120,000 $2,800,000 $5,320,000 $8,680,000 O&M Variable Costs per MG $2, $2, $1, $1, Ocean Water (a) Capital $185,000,000 $376,000,000 $590,000,000 $825,000,000 O&M Fixed Costs per Year $1,120,000 $2,800,000 $5,320,000 $8,680,000 O&M Variable Costs per MG $2, $2, $1, $1, (a) These cost data are from CDM Smith, "Integrated Water Resource Planning Project, Final Report", prepared for JEA, February 2013, Appendix D Option Factsheets. O:\ HWD\Wpdocs\R5 Financial Feasibility - Phase 2 FINAL\Appendix A AWS Costs.docx A-1

162 Appendix A Representative Alternative Water Supply Project Costs Table A.2 Estimated Total Costs Per 1,000 Gallons of Desalination by Treatment Capacity Using Cost Data from JEA's Integrated Water Resource Planning Project Final Report, 2013 Dollars Cost Item Treatment Capacity (mgd) Brackish Groundwater (a) Annualized Capital Cost $3,458,456 $7,125,542 $10,912,992 $16,610,216 O&M Fixed Costs Per Year $520,000 $1,160,000 $1,940,000 $2,840,000 O&M Variable Costs per Year $2,080,007 $4,640,008 $7,760,046 $11,360,078 Total Annualized Cost $6,058,463 $12,925,549 $20,613,038 $30,810,293 Total Cost per 1,000 gallons $3.32 $2.36 $1.88 $1.69 Brackish St. Johns River Water (a) Annualized Capital Cost $6,860,741 $12,838,814 $19,097,736 $26,881,267 O&M Fixed Costs per Year $640,000 $1,540,000 $2,700,000 $4,060,000 O&M Variable Costs per Year $2,560,001 $6,159,977 $10,799,985 $16,239,945 Total Annualized Cost $10,060,742 $20,538,791 $32,597,721 $47,181,212 Total Cost per 1,000 gallons $5.51 $3.75 $2.98 $2.59 Seawater Quality Water from St. Johns River (a) Annualized Capital Cost $13,881,968 $28,245,391 $45,096,334 $63,792,857 O&M Fixed Costs per Year $1,120,000 $2,800,000 $5,320,000 $8,680,000 O&M Variable Costs per Year $4,479,992 $11,199,989 $21,280,011 $34,720,078 Total Annualized Cost $19,481,959 $42,245,379 $71,696,345 $107,192,934 Total Cost per 1,000 gallons $10.68 $7.72 $6.55 $5.87 Ocean Water (a) Annualized Capital Cost $14,844,879 $30,171,213 $47,343,126 $66,200,134 O&M Fixed Costs per Year $1,120,000 $2,800,000 $5,320,000 $8,680,000 O&M Variable Costs per Year $4,479,992 $11,199,989 $21,280,011 $34,720,078 Total Annualized Cost $20,444,870 $44,171,201 $73,943,137 $109,600,212 Total Cost per 1,000 gallons $11.20 $8.07 $6.75 $6.01 (a) These unit costs were calculated using the cost data from Table A.1 which are from CDM Smith, "Integrated Water Resource Planning Project, Final Report", prepared for JEA, February 2013, Appendix D Option Factsheets. The annualized capital cost was amortized over 20 years at 5 percent annual interest. The estimated costs of an indirect potable reuse project where treated water from one of JEA s large wastewater treatment facilities would be used to recharge groundwater, from which additional potable water quantities could be withdrawn, are provided in Table A.3. The costs are provided for JEA s North Grid and JEA s South Grid. From these costs, the costs per 1,000 gallons of reclaimed water were calculated and these calculations are provided in Table A.4. A one-toone ratio of reclaimed water to additional groundwater withdrawal was assumed. O:\ HWD\Wpdocs\R5 Financial Feasibility - Phase 2 FINAL\Appendix A AWS Costs.docx A-2

163 Appendix A Representative Alternative Water Supply Project Costs Table A.3 Estimated Capital and O&M Costs of Indirect Potable Reuse by Treatment Capacity from JEA's Integrated Water Resource Planning Project Final Report 2013 Dollars (a) Cost Item Treatment Capacity (mgd) North Grid (b) Capital $98,000,000 $175,700,000 $295,800,000 $587,800,000 O&M Fixed Costs per Year $1,280,000 $3,080,000 $5,400,000 $8,120,000 O&M Variable Costs per MG $1, $ $ $667.4 South Grid (b) Capital $101,600,000 $182,700,000 $309,800,000 $498,300,000 O&M Fixed Costs per Year $1,280,000 $3,080,000 $5,400,000 $8,120,000 O&M Variable Costs per MG $1, $ $ $667.4 (a) An indirect potable reuse project is one that treats water from one of JEA s large wastewater treatment facilities and uses this treated water to recharge an aquifer from which additional potable water quantities could be withdrawn. (b) These cost data are from CDM Smith, "Integrated Water Resource Planning Project, Final Report", prepared for JEA, February 2013, Appendix D Option Factsheets. Table A.4 Estimated Unit Costs of Indirect Potable Reuse by Treatment Capacity from JEA's Integrated Water Resource Planning Project Final Report 2013 Dollars Cost Item Treatment Capacity (mgd) North Grid (a) Annualized Capital Cost $7,863,774 $14,098,623 $23,735,757 $47,166,593 O&M Fixed Costs per Year $1,280,000 $3,080,000 $5,400,000 $8,120,000 O&M Variable Costs per Year $1,919,991 $4,620,024 $8,100,044 $12,180,050 Total Annualized Cost $11,063,765 $21,798,647 $37,235,801 $67,466,643 Total Cost per 1,000 gallons $6.06 $3.98 $3.40 $3.70 South Grid (a) Annualized Capital Cost $8,152,647 $14,660,321 $24,859,154 $39,984,881 O&M Fixed Costs per Year $1,280,000 $3,080,000 $5,400,000 $8,120,000 O&M Variable Costs per Year $1,919,991 $4,620,024 $8,100,044 $12,180,050 Total Annualized Cost $11,352,638 $22,360,345 $38,359,197 $60,284,931 Total Cost per 1,000 gallons $6.22 $4.08 $3.50 $3.30 (a) These unit costs were calculated using the cost data in Table A.3. The annualized capital cost was amortized over 20 years at 5 percent annual interest. O:\ HWD\Wpdocs\R5 Financial Feasibility - Phase 2 FINAL\Appendix A AWS Costs.docx A-3

164 Appendix A Representative Alternative Water Supply Project Costs The AWS projects provided in the SJRWMD document that were used to develop representative AWS cost estimates are provided in Table A.5. This list includes four reclaimed water projects, three surface water projects and one seawater desalination project. The information for the three surface water projects are from the CFWI Regional Water Supply Plan 2014 draft report. Table A.5 Cost Estimates of Selected Proposed Alternative Water Source (AWS) Projects In the St. Johns River Water Management District Costs in 2013 Dollars Water Supply Project Capacity, average daily flow (mgd) Capital, $ Annual O&M, $ per year Annualized Capital Cost Annual Total Cost (1) (3) (4) (5) (6) = (4) at 20 years, 5% (7) = (5) + (6) Reclaimed Water Projects Unit Cost, $/1000 gallons (8) = (7) / (3) x 365 x 1,000 Apopka and Winter Garden Reuse Partnership Project 3 $10,085,175 $82,810 $809,261 $892,071 $0.81 Eastern Orange and Seminole Counties Regional Reclaimed Reuse System 20 $63,859,869 $425,880 $5,124,281 $5,550,161 $0.76 Orange County Southeastern Reclaimed Water System Expansion Project 13 $15,627,430 $414,050 $1,253,985 $1,668,035 $0.37 Orlando Utilities Commission Project RENEW 9 $74,233,250 $1,904,630 $5,956,668 $7,861,298 $2.34 Surface Water Projects St. Johns River Near Yankee Lake Project 30 $217,900,000 $27,265,500 $17,484,860 $44,750,360 $4.09 St. Johns River Near SR 46 Project 55 $548,260,000 $37,741,000 $43,993,801 $81,734,801 $4.07 St. Johns River/ Taylor Creek Reservoir Water Supply Project 42 $628,700,000 $28,820,400 $50,448,515 $79,268,915 $5.17 Seawater Desalination Projects Coquina Coast Seawater Desalination Project 64 $1,361,742,047 $68,087,102 $109,269,705 $177,356,807 $7.56 Source: For all projects except Surface Water Projects, the information source is St. Johns River Water Management District, District Water Supply Plan, 2005, 4th Addendum, May 12, 2009, Technical Publication SJ2006-2D, Tables 13 and 14. For Surface Water Projects the information source is South Florida, St. Johns River and Southwest Florida Water Management Districts, "Central Florida Water Initiative (CFWI) Regional Water Supply Plan 2014, Public Draft, Appendices, Table F-1, no date. All costs were updated to 2013 dollars. O:\ HWD\Wpdocs\R5 Financial Feasibility - Phase 2 FINAL\Appendix A AWS Costs.docx A-4

165 Appendix A Representative Alternative Water Supply Project Costs The 14 utilities with 2035 unmet demands and which are currently evaluating these alternative water sources are listed in Table A.6. Other utilities are also beneficiaries of these projects. The projects and costs listed in Table A.5 is believed to provide reasonable high level estimates of the costs of AWS to the water utilities listed in Section 2.0, Table 2.1 of this report. Table A.6 Potential Water Supply Beneficiaries of Selected Proposed Alternative Water Source (AWS) Projects in the St. Johns River Water Management District Water Supply Project Reclaimed Water Projects Apopka and Winter Garden Reuse Partnership Project Eastern Orange and Seminole Counties Regional Reclaimed Reuse System Orange County Southeastern Reclaimed Water System Expansion Project Orlando Utilities Commission Project RENEW St. Johns River Near Yankee Lake Project St. Johns River / Taylor Creek Reservoir Water Supply Project Coquina Coast Seawater Desalination Project Potential Water Supply Beneficiaries City of Apopka Surface Water Projects Seawater Desalination Projects Orange County Public Utilities, Orlando Utilities Commission Orange County Public Utilities, Orlando Utilities Commission City of Apopka, Orlando Utilities Commission City of Apopka, Orlando Utilities Commission Orange County Public Utilities, Orlando Utilities Commission City of Palm Coast, City of Leesburg Source: St. Johns River Water Management District, District Water Supply Plan, 2005, 4th Addendum, May 12, 2009, Technical Publication SJ2006-2D, Table 14. A summary of the costs per 1,000 gallons reported in Table A.2, Table A.4, and Table A.5 is provided in Table A.7. Table A.7 Summary of Estimated Costs of Alternative Water Supplies in Eastern Florida, 2013 dollars Capital and O&M Cost per 1,000 Alternative Water Source (AWS) gallons Low High Average Reclaimed Water Offsets By Providing Irrigation Water (a) (b) $0.37 $2.34 $0.98 Indirect Potable Reuse by Recharging Groundwater (c) $3.98 $4.08 $4.03 Surface Water from the St. Johns River (cost includes water treatment) (a) $4.07 $5.17 $4.44 Desalination (includes treatment to potable water standards) (d) Brackish Groundwater $1.88 $2.36 $2.12 Brackish St. Johns River Water $2.98 $3.75 $3.36 Seawater from the St. Johns River $6.55 $7.72 $7.13 Ocean water $6.75 $8.07 $7.41 (a) The average value is the weighted average cost calculated using the unit costs and capacities provided in Table A.5. (b) A reclaimed water offsets occurs when reclaimed water use reduces the need for potable water. (c) From Table A.4 for a 15 mgd plant. (d) From Table A.2 for a 30 mgd plant under the Low category and a 15 mgd plant under the High category. O:\ HWD\Wpdocs\R5 Financial Feasibility - Phase 2 FINAL\Appendix A AWS Costs.docx A-5

166 Appendix B Economic Evaluation Using 60 Percent of Maximum Potential Revenue, 2013 Dollars Grove Land Reservoir and STA Project Appendix B Cover GROVE LAND UTILITIES, LLC

167 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Capital Cost Year Time STA Reservoir Inflow Canals - Increase in Conveyance Capacity USJRB Improvements Opportunity Cost of Land Total Capital Cost $1,593,850 $8,916,200 $983,430 $350,856 $0 $11,844, $1,593,850 $8,916,200 $983,430 $350,856 $0 $11,844, $14,663,420 $82,029,040 $9,047,560 $3,227,877 $77,880,000 $186,847, $14,663,420 $82,029,040 $9,047,560 $3,227,877 $0 $108,967, $14,663,420 $82,029,040 $9,047,560 $3,227,877 $0 $108,967, $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $1,849,900 $390,000 $390,000 $0 $0 $2,629, $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $36,238,000 $21,450,000 $19,298,702 $8,122,369 $0 $85,109, $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $1,849,900 $390,000 $390,000 $0 $0 $2,629, $0 $0 $0 $0 $0 $0 O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-1

168 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Capital Cost Year Time STA Reservoir Inflow Canals - Increase in Conveyance Capacity USJRB Improvements Opportunity Cost of Land Total Capital Cost $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $0 Total $87,115,760 $286,149,520 $49,188,242 $18,507,714 $77,880,000 $518,841,236 Present Value at 7.18% $41,069,931 $205,483,031 $24,747,000 $8,929,212 $63,253,518 $343,482,692 Net Present Value at 7.18% real annual discount rate: Internal Rate of Return, Real Annual: Benefit-to-Cost Ratio: Payback Period in Years: $363,570, % O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-2

169 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project O&M, Administrative, Taxes, and Financing Cost Year Time Administration Financing Federal and State Corporate Income Taxes STA O&M Reservoir O&M Inflow Canals - Increase in Conveyance Capacity $743,700 $0 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $0 $743,700 $40,017,160 $0 $0 $0 $0 $743,700 $40,017,160 $0 $0 $0 $0 $743,700 $40,017,160 $0 $0 $0 $0 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,251,995 $671,120 $864,501 $127,806 $743,700 $0 $15,144,169 $671,120 $864,501 $127,806 $743,700 $0 $15,144,169 $671,120 $864,501 $127,806 $743,700 $0 $15,144,169 $671,120 $864,501 $127,806 $743,700 $0 $15,144,169 $671,120 $864,501 $127,806 $743,700 $0 $15,144,169 $671,120 $864,501 $127,806 $743,700 $0 $22,331,312 $671,120 $864,501 $127,806 $743,700 $0 $22,331,312 $671,120 $864,501 $127,806 $743,700 $0 $22,331,312 $671,120 $864,501 $127,806 $743,700 $0 $22,331,312 $671,120 $864,501 $127,806 $743,700 $0 $22,331,312 $671,120 $864,501 $127,806 $743,700 $0 $18,949,666 $671,120 $864,501 $127,806 $743,700 $0 $18,949,666 $671,120 $864,501 $127,806 $743,700 $0 $18,949,666 $671,120 $864,501 $127,806 $743,700 $0 $18,949,666 $671,120 $864,501 $127,806 $743,700 $0 $18,949,666 $671,120 $864,501 $127,806 $743,700 -$28,344,989 $34,799,374 $671,120 $864,501 $127,806 $743,700 $0 $34,799,374 $671,120 $864,501 $127,806 O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-3

170 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project O&M, Administrative, Taxes, and Financing Cost Year Time Present Value at 7.18% Total Administration Financing Federal and State Corporate Income Taxes STA O&M Reservoir O&M Inflow Canals - Increase in Conveyance Capacity $743,700 $0 $34,799,374 $671,120 $864,501 $127,806 $743,700 $0 $34,799,374 $671,120 $864,501 $127,806 $743,700 $0 $34,799,374 $671,120 $864,501 $127,806 $743,700 $0 $38,288,846 $671,120 $864,501 $127,806 $743,700 $0 $38,288,846 $671,120 $864,501 $127,806 $743,700 $0 $38,288,846 $671,120 $864,501 $127,806 $743,700 $0 $38,288,846 $671,120 $864,501 $127,806 $743,700 $0 $38,288,846 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $743,700 $0 $38,396,672 $671,120 $864,501 $127,806 $40,903,500 $91,706,491 $1,260,313,471 $33,556,007 $43,225,030 $6,390,297 $10,129,370 $88,783,348 $172,408,135 $6,402,301 $8,247,098 $1,219,234 O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-4

171 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Year Time USJRB Improvements Total O&M, Admin & Finance Cost Total Costs Discounted Total Costs $0 $743,700 $12,588,037 $11,744,763 $0 $743,700 $12,588,037 $10,957,980 $0 $40,760,860 $227,608,757 $184,862,027 $0 $40,760,860 $149,728,757 $113,461,941 $0 $40,760,860 $149,728,757 $105,861,113 $230,069 $17,889,190 $17,889,190 $11,800,711 $230,069 $17,889,190 $17,889,190 $11,010,180 $230,069 $17,889,190 $17,889,190 $10,272,607 $230,069 $17,889,190 $17,889,190 $9,584,444 $230,069 $17,889,190 $17,889,190 $8,942,381 $230,069 $17,889,190 $17,889,190 $8,343,330 $230,069 $17,889,190 $17,889,190 $7,784,409 $230,069 $17,889,190 $17,889,190 $7,262,931 $230,069 $17,889,190 $17,889,190 $6,776,386 $230,069 $17,889,190 $17,889,190 $6,322,435 $230,069 $17,889,190 $17,889,190 $5,898,895 $230,069 $17,889,190 $17,889,190 $5,503,727 $230,069 $17,889,190 $17,889,190 $5,135,032 $230,069 $17,889,190 $17,889,190 $4,791,035 $230,069 $17,889,190 $17,889,190 $4,470,083 $230,069 $17,781,365 $20,411,265 $4,758,621 $230,069 $17,781,365 $17,781,365 $3,867,787 $230,069 $17,781,365 $17,781,365 $3,608,683 $230,069 $17,781,365 $17,781,365 $3,366,937 $230,069 $17,781,365 $17,781,365 $3,141,386 $230,069 $24,968,508 $24,968,508 $4,115,618 $230,069 $24,968,508 $24,968,508 $3,839,912 $230,069 $24,968,508 $24,968,508 $3,582,676 $230,069 $24,968,508 $24,968,508 $3,342,672 $230,069 $24,968,508 $24,968,508 $3,118,746 $230,069 $21,586,862 $106,695,932 $12,434,305 $230,069 $21,586,862 $21,586,862 $2,347,196 $230,069 $21,586,862 $21,586,862 $2,189,957 $230,069 $21,586,862 $21,586,862 $2,043,252 $230,069 $21,586,862 $21,586,862 $1,906,374 $230,069 $9,091,580 $11,721,480 $965,800 $230,069 $37,436,570 $37,436,570 $2,877,976 O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-5

172 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Year Time Present Value at 7.18% Total USJRB Improvements Total O&M, Admin & Finance Cost Total Costs Discounted Total Costs $230,069 $37,436,570 $37,436,570 $2,685,180 $230,069 $37,436,570 $37,436,570 $2,505,300 $230,069 $37,436,570 $37,436,570 $2,337,469 $230,069 $40,926,041 $40,926,041 $2,384,163 $230,069 $40,926,041 $40,926,041 $2,224,447 $230,069 $40,926,041 $40,926,041 $2,075,431 $230,069 $40,926,041 $40,926,041 $1,936,398 $230,069 $40,926,041 $40,926,041 $1,806,678 $230,069 $41,033,867 $41,033,867 $1,690,090 $230,069 $41,033,867 $41,033,867 $1,576,871 $230,069 $41,033,867 $41,033,867 $1,471,236 $230,069 $41,033,867 $41,033,867 $1,372,678 $230,069 $41,033,867 $41,033,867 $1,280,722 $230,069 $41,033,867 $41,033,867 $1,194,926 $230,069 $41,033,867 $41,033,867 $1,114,878 $230,069 $41,033,867 $41,033,867 $1,040,192 $230,069 $41,033,867 $41,033,867 $970,510 $230,069 $41,033,867 $41,033,867 $905,495 $11,503,453 $1,487,598,250 $2,006,439,486 $632,866,973 $2,194,795 $289,384,281 $632,866,973 O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-6

173 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Revenue Year Time Water Supply TP Reduction to Estuaries and Surface Waters Reduced Water Discharge to Estuaries Federal Government (CERP) Total Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-7

174 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Revenue Year Time Present Value at 7.18% Total Water Supply TP Reduction to Estuaries and Surface Waters Reduced Water Discharge to Estuaries Federal Government (CERP) Total Revenue $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 $3,350,700,000 $577,754,100 $1,046,614,500 $247,500,000 $5,222,568,600 $639,295,109 $110,232,301 $199,688,283 $47,221,637 $996,437,330 O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-8

175 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Year Time Discounted Total Revenue Net Revenue Discounted Net Revenue Discount Factor Payback Period Calculation Payback Period Years $0 -$12,588,037 -$11,744, $11,744,763 1 $0 -$12,588,037 -$10,957, $22,702,742 1 $0 -$227,608,757 -$184,862, $207,564,769 1 $0 -$149,728,757 -$113,461, $321,026,710 1 $0 -$149,728,757 -$105,861, $426,887,824 1 $68,901,969 $86,562,182 $57,101, $369,786,565 1 $64,286,218 $86,562,182 $53,276, $316,510,527 1 $59,979,678 $86,562,182 $49,707, $266,803,456 1 $55,961,632 $86,562,182 $46,377, $220,426,267 1 $52,212,757 $86,562,182 $43,270, $177,155,892 1 $48,715,018 $86,562,182 $40,371, $136,784,203 1 $45,451,594 $86,562,182 $37,667, $99,117,019 1 $42,406,786 $86,562,182 $35,143, $63,973,163 1 $39,565,951 $86,562,182 $32,789, $31,183,598 1 $36,915,424 $86,562,182 $30,592, $590,609 1 $34,442,455 $86,562,182 $28,543, $27,952,951 0 $32,135,152 $86,562,182 $26,631, $54,584,376 0 $29,982,414 $86,562,182 $24,847, $79,431,758 0 $27,973,889 $86,562,182 $23,182, $102,614,612 0 $26,099,915 $86,562,182 $21,629, $124,244,443 0 $24,351,479 $84,040,107 $19,592, $143,837,301 0 $22,720,171 $86,670,007 $18,852, $162,689,685 0 $21,198,144 $86,670,007 $17,589, $180,279,146 0 $19,778,078 $86,670,007 $16,411, $196,690,287 0 $18,453,142 $86,670,007 $15,311, $212,002,043 0 $17,216,964 $79,482,864 $13,101, $225,103,390 0 $16,063,598 $79,482,864 $12,223, $237,327,076 0 $14,987,496 $79,482,864 $11,404, $248,731,896 0 $13,983,482 $79,482,864 $10,640, $259,372,706 0 $13,046,727 $79,482,864 $9,927, $269,300,686 0 $12,172,725 -$2,244,560 -$261, $269,039,106 0 $11,357,273 $82,864,510 $9,010, $278,049,183 0 $10,596,448 $82,864,510 $8,406, $286,455,673 0 $9,886,591 $82,864,510 $7,843, $294,299,012 0 $9,224,287 $82,864,510 $7,317, $301,616,924 0 $8,606,351 $92,729,892 $7,640, $309,257,475 0 $8,029,811 $67,014,802 $5,151, $314,409,309 0 O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-9

176 Table B-1 Economic Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Year Time Present Value at 7.18% Total Discounted Total Revenue Net Revenue Discounted Net Revenue Discount Factor Payback Period Calculation Payback Period Years $7,491,893 $67,014,802 $4,806, $319,216,022 0 $6,990,010 $67,014,802 $4,484, $323,700,732 0 $6,521,748 $67,014,802 $4,184, $327,885,011 0 $6,084,856 $63,525,331 $3,700, $331,585,704 0 $5,677,231 $63,525,331 $3,452, $335,038,487 0 $5,296,912 $63,525,331 $3,221, $338,259,968 0 $4,942,072 $63,525,331 $3,005, $341,265,642 0 $4,611,002 $63,525,331 $2,804, $344,069,965 0 $4,302,110 $63,417,505 $2,612, $346,681,985 0 $4,013,911 $63,417,505 $2,437, $349,119,026 0 $3,745,019 $63,417,505 $2,273, $351,392,809 0 $3,494,140 $63,417,505 $2,121, $353,514,271 0 $3,260,067 $63,417,505 $1,979, $355,493,616 0 $3,041,675 $63,417,505 $1,846, $357,340,365 0 $2,837,913 $63,417,505 $1,723, $359,063,399 0 $2,647,800 $63,417,505 $1,607, $360,671,008 0 $2,470,424 $63,417,505 $1,499, $362,170,922 0 $2,304,930 $63,417,505 $1,399, $363,570,357 0 $996,437,330 $3,216,129,114 $363,570, $350,655,840 $363,570,357 Net Present Value O:\ HWD\Eng\Phase 2 FINANCIAL MODEL\GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2 Fin Analysis 60% Full Benefits B-10

177 Appendix C Cash-Flow Evaluation Using 60 Percent of Maximum Potential Revenue, 2013 Dollars Grove Land Reservoir and STA Project Appendix C Cover GROVE LAND UTILITIES, LLC

178 Table C-1 Cash-Flow Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Income Year Time Capital Loan Water Supply TP Reduction to Estuaries and Surface Waters Reduced Water Discharge to Estuaries Federal Government (CERP) Total Income $71,709,265 $0 $0 $0 $0 $71,709, $0 $0 $0 $0 $0 $ $134,218,193 $0 $0 $0 $0 $134,218, $134,218,193 $0 $0 $0 $0 $134,218, $134,218,193 $0 $0 $0 $0 $134,218, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $28,344,989 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $132,796, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2/Cash Flow 60% Full benefits C-1

179 Table C-1 Cash-Flow Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Income Year Time Capital Loan Water Supply TP Reduction to Estuaries and Surface Waters Reduced Water Discharge to Estuaries Federal Government (CERP) Total Income $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451, $0 $67,014,000 $11,555,082 $20,932,290 $4,950,000 $104,451,372 Total $502,708,835 $3,350,700,000 $577,754,100 $1,046,614,500 $247,500,000 $5,725,277,435 Present Value at 7.18% $374,855,054 $639,295,109 $110,232,301 $199,688,283 $47,221,637 $1,371,292,385 GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2/Cash Flow 60% Full benefits C-2

180 Table C-1 Cash-Flow Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Expenses Year Time Capital Cost Debt Service Interest (nonland) Debt Service Principal (nonland) Administration Financing $11,844,337 $0 $0 $743,700 $8,026,421 $11,844,337 $0 $0 $743,700 $8,026,421 $108,967,897 $0 $0 $743,700 $34,666,213 $108,967,897 $0 $0 $743,700 $34,666,213 $108,967,897 $0 $0 $743,700 $34,666,213 $0 $34,059,324 $4,861,489 $743,700 $0 $0 $33,710,269 $5,210,544 $743,700 $0 $0 $33,336,152 $5,584,661 $743,700 $0 $0 $32,935,173 $5,985,640 $743,700 $0 $0 $32,505,405 $6,415,409 $743,700 $0 $0 $32,044,778 $6,876,035 $743,700 $0 $0 $31,551,079 $7,369,734 $743,700 $0 $0 $31,021,932 $7,898,881 $743,700 $0 $0 $30,454,792 $8,466,021 $743,700 $0 $0 $29,846,932 $9,073,881 $743,700 $0 $0 $29,195,427 $9,725,386 $743,700 $0 $0 $28,497,144 $10,423,669 $743,700 $0 $0 $27,748,725 $11,172,088 $743,700 $0 $0 $26,946,569 $11,974,244 $743,700 $0 $0 $26,086,818 $12,833,995 $743,700 $0 $0 $25,165,338 $13,755,476 $743,700 $0 $0 $24,177,694 $14,743,119 $743,700 $0 $0 $23,119,138 $15,801,675 $743,700 $0 $0 $21,984,578 $16,936,235 $743,700 $0 $0 $20,768,557 $18,152,257 $743,700 $0 $0 $19,465,224 $19,455,589 $743,700 $0 $0 $18,068,313 $20,852,500 $743,700 $0 $0 $16,571,104 $22,349,710 $743,700 $0 $0 $14,966,395 $23,954,419 $743,700 $0 $0 $13,246,467 $25,674,346 $743,700 $0 $0 $11,403,049 $27,517,764 $743,700 $0 $0 $9,427,274 $29,493,540 $743,700 $0 $0 $7,309,638 $31,611,176 $743,700 $0 $0 $5,039,955 $33,880,858 $743,700 $0 $0 $2,607,310 $36,313,504 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2/Cash Flow 60% Full benefits C-3

181 Table C-1 Cash-Flow Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Expenses Year Time Capital Cost Debt Service Interest (nonland) Debt Service Principal (nonland) Administration Financing Total Present Value at 7.18% $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $0 $0 $0 $743,700 $0 $350,592,365 $693,260,554 $0 $40,903,500 $120,051,480 $269,480,774 $239,177,060 $96,207,308 $10,129,370 $93,410,567 GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2/Cash Flow 60% Full benefits C-4

182 Table C-1 Cash-Flow Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Expenses Year Time STA O&M Reservoir O&M Inflow Canals - Increase in Conveyance Capacity O&M USJRB Improvements O&M Opportunity Cost of Land Interest $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $671,120 $864,501 $127,806 $230,069 $7,983,608 $671,120 $864,501 $127,806 $230,069 $7,970,673 $671,120 $864,501 $127,806 $230,069 $7,956,810 $671,120 $864,501 $127,806 $230,069 $7,941,951 $671,120 $864,501 $127,806 $230,069 $7,926,025 $671,120 $864,501 $127,806 $230,069 $7,908,956 $671,120 $864,501 $127,806 $230,069 $7,890,661 $671,120 $864,501 $127,806 $230,069 $7,871,053 $671,120 $864,501 $127,806 $230,069 $7,850,037 $671,120 $864,501 $127,806 $230,069 $7,827,511 $671,120 $864,501 $127,806 $230,069 $7,803,369 $671,120 $864,501 $127,806 $230,069 $7,777,493 $671,120 $864,501 $127,806 $230,069 $7,749,759 $671,120 $864,501 $127,806 $230,069 $7,720,034 $671,120 $864,501 $127,806 $230,069 $7,688,175 $671,120 $864,501 $127,806 $230,069 $7,654,028 $671,120 $864,501 $127,806 $230,069 $7,617,429 $671,120 $864,501 $127,806 $230,069 $7,578,203 $671,120 $864,501 $127,806 $230,069 $7,536,160 $671,120 $864,501 $127,806 $230,069 $7,491,099 $671,120 $864,501 $127,806 $230,069 $7,442,802 $671,120 $864,501 $127,806 $230,069 $7,391,037 $671,120 $864,501 $127,806 $230,069 $7,335,556 $671,120 $864,501 $127,806 $230,069 $7,276,091 $671,120 $864,501 $127,806 $230,069 $7,212,356 $671,120 $864,501 $127,806 $230,069 $7,144,046 $671,120 $864,501 $127,806 $230,069 $7,070,830 $671,120 $864,501 $127,806 $230,069 $6,992,358 $671,120 $864,501 $127,806 $230,069 $6,908,252 $671,120 $864,501 $127,806 $230,069 $6,818,106 $671,120 $864,501 $127,806 $230,069 $6,721,489 $671,120 $864,501 $127,806 $230,069 $6,617,934 $671,120 $864,501 $127,806 $230,069 $6,506,943 $671,120 $864,501 $127,806 $230,069 $6,387,984 GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2/Cash Flow 60% Full benefits C-5

183 Table C-1 Cash-Flow Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Expenses Year Time STA O&M Reservoir O&M Inflow Canals - Increase in Conveyance Capacity O&M USJRB Improvements O&M Opportunity Cost of Land Interest Total Present Value at 7.18% $671,120 $864,501 $127,806 $230,069 $6,260,484 $671,120 $864,501 $127,806 $230,069 $6,123,829 $671,120 $864,501 $127,806 $230,069 $5,977,362 $671,120 $864,501 $127,806 $230,069 $5,820,379 $671,120 $864,501 $127,806 $230,069 $5,652,124 $671,120 $864,501 $127,806 $230,069 $5,471,789 $671,120 $864,501 $127,806 $230,069 $5,278,505 $671,120 $864,501 $127,806 $230,069 $5,071,344 $671,120 $864,501 $127,806 $230,069 $4,849,309 $671,120 $864,501 $127,806 $230,069 $4,611,331 $671,120 $864,501 $127,806 $230,069 $4,356,267 $671,120 $864,501 $127,806 $230,069 $4,082,889 $671,120 $864,501 $127,806 $230,069 $3,789,883 $671,120 $864,501 $127,806 $230,069 $3,475,839 $671,120 $864,501 $127,806 $230,069 $3,139,246 $671,120 $864,501 $127,806 $230,069 $2,778,486 $33,556,007 $43,225,030 $6,390,297 $11,503,453 $330,307,881 $6,402,301 $8,247,098 $1,219,234 $2,194,795 $71,938,157 GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2/Cash Flow 60% Full benefits C-6

184 Table C-1 Cash-Flow Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Expenses Year Time Opportunity Cost of Land Principal Federal and State Corporate Income Taxes Renewal & Replacement Total Expenses Net Income, including returns to risk $0 $0 $0 $20,614,458 $51,094,808 $0 $0 $0 $20,614,458 -$20,614,458 $0 $0 $0 $144,377,810 -$10,159,617 $0 $0 $0 $144,377,810 -$10,159,617 $0 $0 $0 $144,377,810 -$10,159,617 $180,150 $15,251,995 $0 $64,973,761 $39,477,611 $193,085 $15,251,995 $0 $64,973,761 $39,477,611 $206,948 $15,251,995 $0 $64,973,761 $39,477,611 $221,807 $15,251,995 $0 $64,973,761 $39,477,611 $237,733 $15,251,995 $0 $64,973,761 $39,477,611 $254,802 $15,251,995 $0 $64,973,761 $39,477,611 $273,097 $15,251,995 $0 $64,973,761 $39,477,611 $292,705 $15,251,995 $0 $64,973,761 $39,477,611 $313,721 $15,251,995 $0 $64,973,761 $39,477,611 $336,246 $15,251,995 $0 $64,973,761 $39,477,611 $360,389 $15,251,995 $0 $64,973,761 $39,477,611 $386,265 $15,251,995 $0 $64,973,761 $39,477,611 $413,998 $15,251,995 $0 $64,973,761 $39,477,611 $443,724 $15,251,995 $0 $64,973,761 $39,477,611 $475,583 $15,251,995 $0 $64,973,761 $39,477,611 $509,730 $15,144,169 $2,629,900 $67,495,835 $36,955,537 $546,328 $15,144,169 $0 $64,865,935 $39,585,437 $585,555 $15,144,169 $0 $64,865,935 $39,585,437 $627,598 $15,144,169 $0 $64,865,935 $39,585,437 $672,659 $15,144,169 $0 $64,865,935 $39,585,437 $720,956 $22,331,312 $0 $72,053,079 $32,398,293 $772,721 $22,331,312 $0 $72,053,079 $32,398,293 $828,202 $22,331,312 $0 $72,053,079 $32,398,293 $887,667 $22,331,312 $0 $72,053,079 $32,398,293 $951,401 $22,331,312 $0 $72,053,079 $32,398,293 $1,019,712 $18,949,666 $85,109,070 $153,780,503 -$49,329,131 $1,092,927 $18,949,666 $0 $68,671,433 $35,779,939 $1,171,399 $18,949,666 $0 $68,671,433 $35,779,939 $1,255,506 $18,949,666 $0 $68,671,433 $35,779,939 $1,345,651 $18,949,666 $0 $68,671,433 $35,779,939 $1,442,269 $34,799,374 $2,629,900 $48,230,227 $84,566,134 $1,545,824 $34,799,374 $0 $45,600,327 $58,851,045 $1,656,814 $34,799,374 $0 $45,600,327 $58,851,045 $1,775,773 $34,799,374 $0 $45,600,327 $58,851,045 GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2/Cash Flow 60% Full benefits C-7

185 Table C-1 Cash-Flow Evaluation Using 60% of Maximum Revenue Potential, 2013 Dollars Grove Land Reservoir and STA Project Expenses Year Time Opportunity Cost of Land Principal Federal and State Corporate Income Taxes Renewal & Replacement Total Expenses Net Income, including returns to risk Total Present Value at 7.18% $1,903,274 $34,799,374 $0 $45,600,327 $58,851,045 $2,039,929 $38,288,846 $0 $49,089,799 $55,361,573 $2,186,396 $38,288,846 $0 $49,089,799 $55,361,573 $2,343,379 $38,288,846 $0 $49,089,799 $55,361,573 $2,511,634 $38,288,846 $0 $49,089,799 $55,361,573 $2,691,969 $38,288,846 $0 $49,089,799 $55,361,573 $2,885,252 $38,396,672 $0 $49,197,625 $55,253,747 $3,092,414 $38,396,672 $0 $49,197,625 $55,253,747 $3,314,449 $38,396,672 $0 $49,197,625 $55,253,747 $3,552,426 $38,396,672 $0 $49,197,625 $55,253,747 $3,807,490 $38,396,672 $0 $49,197,625 $55,253,747 $4,080,868 $38,396,672 $0 $49,197,625 $55,253,747 $4,373,875 $38,396,672 $0 $49,197,625 $55,253,747 $4,687,919 $38,396,672 $0 $49,197,625 $55,253,747 $5,024,511 $38,396,672 $0 $49,197,625 $55,253,747 $5,385,271 $38,396,672 $0 $49,197,625 $55,253,747 $77,880,000 $1,260,313,471 $90,368,870 $3,532,716,756 $2,192,560,679 $5,941,843 $172,408,135 $10,748,400 $987,505,043 $383,787,342 GLRSTA Costs and Benefits Model 8_21_2014 FINMODEL P2/Cash Flow 60% Full benefits C-8

186 Photo courtesy of the St. Lucie County Media Relations and St. Lucie County Tourism Offices In association with: