The District is guided by the following principles when studying potential water system consolidations:

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2 1 Introduction and Purpose Snohomish County Public Utility District No. 1 Feasibility Study for Potential Consolidation of Warm Beach Water Association PWS ID# 93000F September 2016 This study was prepared at the request of Warm Beach Water Association (WBWA) to determine improvements and costs that would be involved in consolidating the WBWA water system with Snohomish PUD s adjoining Kayak water system. The goal is to provide information to aid decisionmaking, should WBWA wish to pursue consolidation with Snohomish PUD (the District) as opposed to continuing with its own water system operations and improvements. The District is guided by the following principles when studying potential water system consolidations: The request to consider a potential water system consolidation must come from the community that would be served. The potential consolidation must be found to be technically and financially feasible before further steps can be taken. o o Technically feasible means water system facilities and water quality are on par with the District s other water systems, or it must be possible to improve the water system to achieve an equal footing with the District s other systems. It also must be possible for the District to operate the system in a manner equivalent to its other water systems. This does not mean that the system must be perfect, just that it will be sufficiently comparable to the District s water systems after initial improvements are implemented. Financially feasible means it must be possible to cover the costs associated with the water system acquisition, improvement and operation from the customer base in that system. The District strives to provide similar rates for all of its water customers, but may apply an additional surcharge at the time of a water system acquisition to repay the costs of initial improvements to bring the system equal to the District s other systems. The customers concept of financially feasible may be different than the District s perspective, depending on individual needs and priorities. In general, financial feasibility for customers means the water rates are considered acceptable in return for the services that would be received. Such decision-making is beyond the scope of this study, but the community can use this study as a basis for its decisions. After completing a study, the District will only proceed with acquiring a water system if requested and supported by the water system owners and/or a majority of the customers/members. The District s Board of Commissioners must also approve the transaction. 1

3 2 Background, Methods and References As background for this study, the District Reviewed WBWA s Water System Plan (WSP), which was finalized in February 2016 Revisited an earlier feasibility study conducted by the District in 2005 Requested supplemental records from WBWA Toured the water system facilities Secured the services of attorney Thomas D. Mortimer to review water rights (Appendix 1) Secured the services of Confluence Engineering Group to examine water quality and treatment (Appendix 2) WBWA has its own improvement program laid out in its WSP and very good operations and engineering services provided by Water & Wastewater Services, LLC (WWS) and Davido Consulting Group (DCG). Mention of WBWA throughout this report typically reflects a joint effort of the WBWA Board of Directors, WWS and DCG. This study was conducted in accordance with principles described previously and in accordance with the District s Policies & Procedures, 32TUhttp:// Most of the improvements recommended by this study are consistent with the improvement plan laid out in WBWA s WSP. Differences between the District s and WBWA s proposed improvements and schedules are result of applying the District s standards, which are described in greater detail throughout this document. For reference, a list of abbreviations is provided at the end of this report. Figures 1 and 2, at the end of this report, show WBWA s water service area and the locations of proposed improvements. Figure 1 was prepared by DCS for a service area agreement signed in February 2016 between WBWA, the District, and the Seven Lakes Water Association. Figure 2 was obtained from the WSP and marked up to reflect the recommendations of this study. The numbered improvements on Figure 2 correspond to the District s cost estimate in Section For proposed projects in this study that are also planned by WBWA, the callouts on Figure 2 include WBWA s corresponding Capital Improvement Project (CIP) number. 3 Customer Count and Water Demands 3.1 Customer Count and Growth Projections When identifying improvements for a water system consolidation, the District focuses on facilities for current customers plus a moderate amount of near-term growth. Longer-term growth-related improvements are funded by fees collected from new customers. In this way, the District employs a concept of growth pays for growth and monthly water bills are not used to subsidize additional facilities needed to support future users. According to WBWA s WSP, there were 590 water connections in 2014 and approximately 43 of these connections were considered inactive. There is an obligation to serve all connections where fees have been paid and services installed. For water connections that use little or no water (less than 100 gallons 2

4 over two months), WBWA bills for half of its base rate plus any surcharges that are in effect, so that all customers are contributing toward the water system upkeep. The District considers WBWA to be presently committed to serve about 605 water service connections. In March 2016, WWS updated the count of installed water service connections to 603, and a couple more services were added since then. Many homes in the Warm Beach are occupied less than full-time. It is difficult to distinguish between full and part-time occupancy based on water usage alone, but here is a breakdown from WBWA s 2015 billing records: Classification of WBWA Bi-Monthly Meter Readings in 2015 # of Accounts Accounts with all meter readings greater than 1,000 gallons 437 Accounts with at least one meter reading between 100 and 999 gallons 44 Account with at least one meter reading <100 gallons or meter not read, and usage >100 gallons in other readings Accounts where all meter readings have essentially no usage or meter was not read for the entire year Total number of accounts in The 612 total number of accounts in 2015 support the 605 service commitments the District is counting for 2016, because some service connections can have more than one account during a year due to customer turnover. The 42 accounts with no usage in 2015 are similar to the 43 inactive services reported in the WSP for Subtracting 42 from 605 installed connections leaves approximately 563 active services, including homes with both full-time and part-time occupancy. WBWA is projecting growth at 10 new connections each year on average. The District agrees this is a reasonable growth estimate, considering past trends and recent activity. There are no major developments in process. The largest potential future development could be an elementary school on 15 acres owned by Stanwood-Camano School District #401 on Marine Drive at the north end of the system. The City of Stanwood s 2015 Comprehensive Plan says the School District continues to use its 2008 Capital Facilities Plan (CFP) because enrollment is declining. The School District s 2008 CFP said there was excess elementary school capacity at that time and the excess was expected to continue through Therefore, the new school in Warm Beach is not on a schedule for construction. WBWA considered the future elementary school in its water facilities analysis. The District is also considering the school when sizing water mains it would replace as part of a water system consolidation. However, the needs for the school are not a driving force for water improvements. If or when the school is built in the future, the School District would be responsible for the cost of any further water facilities needed to support their project. As can be seen in Figure 1, WBWA is restricted on all sides by Puget Sound and other water purveyors. WBWA estimates that its water system will serve less than 1,000 service connections at build-out, considering current land use rules for properties that are not yet connected to the system. The District agrees this is a reasonable number of customers that might be served within the existing WBWA service area boundary in the long term. 3

5 3.2 Water Usage Water usage by multi-family and non-residential customers in the WBWA system is similar to usage by its single family residential customers. Therefore, each connection is considered to be one equivalent residential unit (ERU). For sizing the water facilities, the WSP used an average day demand (ADD) of 178 gallons per day (gpd) per ERU and a maximum day demand (MDD) of 480 gpd/eru. These values include leakage and unbilled water usage, such as flushing and fire-fighting, in addition to the water used by the customers. The District examined WBWA s 2015 billing records to confirm the planning-level water demands. Because many homes in the area are seasonally occupied, the 2015 usage was determined for the groupings of customers presented earlier. Grouping of 2015 Customer Accounts ADD for Group (gpd/eru) Cumulative ADD (gpd/eru) 437 accounts where all meter readings are greater than 1,000 gallons accounts with at least one meter reading between 100 and 999 gallons (481 cumulative accounts, including above) 89 accounts with usage less than 100 gallons or meter not read in at least one bill (570 cumulative accounts, including above) accounts with no usage (612 cumulative accounts) The 178 gpd/eru planning-level ADD is 11% above the 160 gpd/eru average of accounts using more than 1000 gallons every two months in the 2015 billings. The 160 gpd/eru usage could be considered to represent year-round customers. The difference between 160 and 178 gpd/eru is enough to allow for leakage plus unbilled water usage if the remaining accounts start to use more water. Therefore, the District agrees an ADD of 178 gpd/eru is an acceptable basis for sizing the WBWA water system facilities. WBWA reported that its actual leakage was 6.6% in Further strides in water conservation may push usage down. However, home occupancy may increase and new customers may use more water because many will be on larger lots. The District will use the 178 gpd/eru system ADD for all WBWA connections in this feasibility study to assure that the facilities can support the water service commitments that have been made. As the water system approaches capacity, the actual water demands can be re-examined at that time. For comparison, in 2015, the District s Kayak water system experienced a system ADD of 258 gpd/eru (including leakage) and MDD of 780 gpd/eru (MDD/ADD ratio of 3.0). Because 2015 was a drought year, these demands were higher than typical. Over , the Kayak system experienced and average ADD around 212 gpd/eru and average MDD around 550 gpd/eru (MDD/ADD ratio of 2.6). These values are still 15-20% higher than WBWA s water demands due to larger average lot sizes in the Kayak system. The District s 2011 WSP used planning-level system demands around 270 gpd/eru ADD and 700 gpd/eru MDD for the Kayak system (including leakage), based on data. The 270 gpd/eru ADD is slightly more than the actual ADD experienced in the 2015 drought year. The 700 gpd/eru MDD is somewhat less than the MDD experienced in 2015, but significantly more than and the

6 average Kayak MDD. This study will use the 270 gpd/eru ADD and 700 gpd/eru MDD planning level numbers when evaluating the Kayak facilities. The Kayak planning level MDD/ADD ratio of 700/270 = 2.6 is identical to the MDD/ADD ratio from the more recent Kayak data. It is not possible to determine WBWA s MDD for 2015 because the well meters were not read daily during the summer. Because WBWA s planning level MDD/ADD ratio of 480/178 = 2.7 is very similar to the Kayak ratio of 2.6, the District accepts WBWA s MDD of 480 gpd/eru for purposes of sizing facilities. 4 Water Supply 4.1 Annual Water Right Limits Appendix 1 contains the water rights analysis conducted for the District by Thomas D. Mortimer. The analysis confirms WBWA is allowed to pump 135 acre-feet per year (AFY) as a combined amount from all of its wells each year. This equals 44,000,000 gallons per year, or 120,500 gpd on average. Dividing this daily average by the ADD of 178 gpd/eru suggests this annual allowance could support up to 677 ERUs. This is close to the 700 ERUs Ecology considered when issuing the water right permit for Well 4. If WBWA grows at 10 connections per year, 677 connections could be reached in about 7 years. WBWA also holds surface water certificates for Lake Martha, which allow an annual withdrawal of 216 AFY. WBWA s groundwater rights are supplemental to its Lake Martha surface water rights. This means if the wells are pumped to their 135 AFY limit, the balance of 216 AFY (which is 81 AFY) might be available from Lake Martha. WBWA discontinued use of Lake Martha as a potable water supply in the mid-1980s due to the cost and complexity of meeting treatment requirements. Efforts could be made to transfer the balance of the Lake Martha water rights to the wells to support more customers. Because the 135 AFY groundwater allowance is sufficient for current commitments, transferring the remaining Lake Martha water rights to the groundwater supplies would not be a requirement for consolidation with the District. However, the District would pursue this transfer separately to support the long-term water supply needs of WBWA s service area. Because prospects for making use of the remaining Lake Martha water right capacity cannot be guaranteed, the District would not commit to serving more connections than can be supported by 135 AFY until such transfer is achieved. The District s Kayak water system is also restricted by the annual withdrawal limit of its water rights. A water right certificate allows withdrawal of 156 AFY from Kayak s Wells 2 and 3, which equates to 139,258 gpd. When divided by the Kayak 270 gpd/eru ADD, this could support 515 ERUs. The Kayak system is approved by DOH to serve up to 481 ERUs, and the District has obligations for 395 ERUs as of this time. This leaves ERUs available in the Kayak service area based on either the DOH approval or the annual withdrawal limit of the Kayak water rights. Considering recent inquiries, it is foreseeable that water needs within the Kayak service area could outstrip ERUs. Therefore, additional yearround supply might not be available from the Kayak system to supplement WBWA s wells. But, the Kayak wells do have capacity to serve as a backup supply to the WBWA area during abnormal operating conditions. 4.2 Instantaneous Water Rights Limits and Well Capacities WBWA is currently using its Wells 2 and 4 to supply its customers. A water right certificate allows Well 2 to pump at 50 gallons per minute (gpm) and a water right permit allows Well 4 to pump at 200 gpm. 5

7 Well 2 is confirmed to be operating at 50 gpm, but the WSP says Well 4 has been operating at 165 gpm and it appears Well 4 is now pumping in a range of gpm. WBWA replaced the Well 4 pump in 2008, with a goal to operate at 200 gpm, but the selected pump seems to be undersized. Since WWS began working for WBWA in 2014, the operator has been unable to measure the water level in Well 4 due to a blockage in the port for inserting the measuring device. Therefore, it is not possible to determine if an issue with the well is contributing to the lower production. However, based on the pump curve for the installed pump, the District believes pump capacity is the more likely cause of the reduced production. As pointed out in Appendix 1, the water right for Well 4 is in permit status. There is a June 30, 2019 deadline to submit Proof of Appropriation (PA) to demonstrate that amounts allowed by the Well 4 permit have been put to beneficial use. To protect WBWA s right to pump Well 4 at 200 gpm and to gather data needed for the PA, replacing the pump would be a required condition of consolidating with the District. While replacing the pump, the District would engage services to take a video of the well and would perform any identified remediation. When installing the new pump, the District would include a level measurement probe to continuously monitor and record the water level. These improvements are identified as project #14 on Figure 2 and in the cost estimate in Section 10. With a combined capacity of 250 gpm, the WSP determined Wells 2 and 4 could support 750 ERUs at 480 gpd/eru. This would involve both wells pumping continuously for 24 hours. However, it should be considered that the filters at Well 4 are backwashed for 40 minutes after every 8 hours of operation. As described in the WSP, this results in a 92% duty cycle. So, the maximum amount that Well 4 could deliver into the system in a 24-hour period would be 200 gpm x 1440 min/day x 92% = 265,000 gpd. Because Well 2 is not filtered, the full amount of its 50 gpm flow can be delivered continuously to the system on a peak day. So, the amount that can be produced by Well 2 is 50 gpm x 1440 min/day = 72,000 gpd. When added to the 265,000 gpd from Well 4, the combined amount of 337,000 gpd could support the 480 gpd/eru MDD for 702 ERUs. This is larger than 677 ERUs that can be supported with 135 AFY. So, the annual withdrawal limit of the water rights remains the more restrictive factor for the water system capacity. WBWA holds other water right certificates for Well 1 (35 gpm) and Wells 3/3R (33 gpm), which are not in operation. If these wells are returned to service, their use would be subject to the 135 AFY annual withdrawal limit in combination with Wells 2 and 4. Also, Well 5 has a potential capacity of 140 gpm, but does not have a water right. There are benefits to putting these or future wells into service; but, because such projects are not essential to meet current customer commitments, the District would not include such efforts in cost of water system consolidation. The WSP also describe benefits of seeking an emergency intertie with Seven Lakes. If Seven Lakes is amenable to an intertie, the District would gladly work with them to accomplish this, but such an intertie is not essential for consolidation of the WBWA and Kayak water systems. Because of the importance of preserving well capacities and water rights, ownership all existing wells, water rights, and land associated with the wells and Lake Martha intake and storage tank site would need to be transferred to the District if a consolidation proceeds, to preserve these assets for the water system until capacity is assured for build-out. 6

8 5 Water Quality and Treatment The District hired Confluence Engineering Group to help examine water quality and treatment. Their technical memorandum is in Appendix 2. If WBWA chooses to consolidate, the District would aim to contract with Confluence to further assist with the recommendations outlined in the memorandum. The treatment-related study and improvements are identified as project #s 12, 13 and 15 on Figure 2 and in the cost estimate in Section Well 4 Treatment A challenging aspect of WBWA s water quality is the naturally occurring ammonia in Well 4. Chlorine is used as an oxidant in the Well 4 treatment process to convert the naturally occurring iron and manganese to solid forms so that they can be removed by the filters. The ammonia in the Well 4 water combines with the chlorine and forms chloramines (also known as combined chlorine), which are a less powerful oxidant than the free chlorine. Also, chloramines can have objectionable taste and odor in the distribution system. One way to deal with the ammonia and chlorine is to try the keep the chloramines predominantly within the mono-chloramine chemical species, trying to avoid the formation of di-chloramine and trichloramine that have stronger taste and odor. This balancing act is more difficult when the water is blending with other water in distribution that does not contain ammonia. Another approach is to add more chlorine to completely react with the ammonia to drive it off as nitrogen gas, leaving a free chlorine concentration. The District would prefer to use this breakpoint reaction approach to Well 4 treatment. Operating with a free chlorine residual would give the best compatibility for blending with other water sources and could improve the effectiveness of the iron and manganese removal treatment. As described in Appendix 2, this would take more study to determine the appropriate methods and related equipment upgrades. 5.2 Well 2 Treatment When examining the water from Well 2, it was found that the ph is in the low to mid 6 s compared to ph above 7 in the Well 4 water. Water with ph in this range is often corrosive toward copper plumbing. WBWA has not exceeded the copper action level since Well 4 was placed in service, although a few isolated elevated copper results have occurred. Also, no chlorine is presently added at the Well 2 site. The District s practice is to add chlorine at all of its water sources to control bacteria growth within the distribution system. Adding chlorine at Well 2 would also help to balance out the water quality when blending with Well 4. Therefore, the District is including chlorination and ph adjustment in its proposed improvements for Well Treatment for Other Wells Returning WBWA s other wells to service or pursuing new wells would also involve treatment. But since the capacities of Wells 2 and 4 are sufficient to support existing commitments, such improvements are not proposed for the initial water system consolidation projects. The District may pursue treatment for WBWA s Wells 1, 3R, 5 and/or future wells as it seeks to increase capacity for future water demands within the service area. 7

9 6 Water Storage 6.1 Storage Analysis for the Bolted-Steel Tank WBWA has a 207,000-gallon bolted-steel water storage tank near Well 4, which is currently the only storage tank used for the system. The District also has a 290,000-gallon tank in the neighboring Kayak water system. In 2015, WBWA drained its tank for work on the piping and found it to be reasonably clean. A December 2013 inspection report in records obtained from WBWA includes photos of the tank interior. Since the time of that report, WBWA has cut down trees that were too close to the tank. Based on this information and observing the outside of the tank, the District has determined its condition is as good as the District s own water storage facilities. The storage analysis in the WSP describes the tank as measuring 33 feet tall with an inside diameter of 32.7 feet, so each foot of the tank height corresponds to 6,300 gallons of volume. Elsewhere, the WSP describes the tank as 32 feet tall with a 32-foot diameter, or 34 feet high with 32-foot diameter; and the inspection report describes it as 32 feet tall with a 33-foot diameter. The District did not confirm the exact dimensions, but accepts the dimensions used by WBWA s engineer in the sizing analysis. The WSP also states the tank base is at 319 feet elevation and the overflow level is at 350 feet (31 feet above the bottom). The total tank volume of gallons is based on entire 33-foot height, including air space above the water. Like WBWA, the District follows guidelines for tank sizing in the DOH 32TWater System Design Manual32T. There are five components to consider when checking the tank capacity. 1) Dead storage (DS) is the volume in the tank that is not available at minimum design pressures (described below under the other components). The WSP determined the DS volume to be 24,000 gallons, which is 3.8 feet of the tank height. 2.8 feet of the DS is air space above the pump off control level, which is located 0.8 feet below the overflow (30.2 feet above the tank floor, or ft elevation). The other foot of DS is due to the silt stop at the bottom of the tank, which is 1 foot above the tank base. The District accepts this determination of DS. 2) Operational storage (OS) is the volume of water between the "on" and "off" control settings for the pumps. The analysis in the WSP uses 4.2 feet of the reservoir height for this purpose, corresponding to an OS volume of 26,000 gallons. This allows about a 2-hour runtime for the wells and treatment system when customer demand is low. The District accepts this OS volume. Measured from the pump off level at 30.2 feet, this puts the bottom of OS at 26.0 feet (345-ft elevation). 3) Equalizing storage (ES) is additional tank drawdown when customer demand exceeds the water supply capacity. DOH recommends sizing ES by applying the peak hour demand (PHD) for 2.5 hours (150 minutes) with all normally operating wells turned on. The top of ES starts at the bottom of OS. DOH requires the water pressure to be at least 30 psi at the highest customer meter when the water level is at the bottom of ES and flow in the distribution system equals the PHD. The formula for PHD from the DOH Design Manual is PHD = (MDD/1440) * [C * ERUs + F] For more than 500 ERUs, C = 1.6, and F = 225. The table below shows the resulting PHDs and ES volumes for various numbers of ERUs, using the MDD of 480 gpd/eru with Wells 2 and 4 running together at 250 gpm. The WSP used a well capacity of 215 8

10 gpm when determining the required ES volume, based on Well 4 operating at 165 gpm. Because the District would replace the Well 4 pump to operate at 200 gpm, the combined 250 gpm flow from Wells 2 and 4 is used in this study. # of ERUs PHD (gpm) ES Volume (gal) ES Height (ft) Bottom of ES Level (ft) Bottom of ES Elevation (ft) , , , , The number of ERUS in the above table were selected as follows: 605 ERUs represents WBWA s existing water service obligations 660 ERUs is the number of connections anticipated by the end of WBWA s 6-year planning period in ERUs represents the limitation of the 135 AFY groundwater rights when an ADD of 178 gpd/eru is reserved for all installed service connections, and 785 ERUs is the number of connections DOH approved the system to serve. 4) Fire storage (FS) provides the amount of water needed to meet a design fire flow for a specified duration. The 2016 WSP has a goal to provide sufficient storage for a 1,000 gpm fire flow for 60 minutes. The 2002 WSP used a goal of 750 gpm for 60 minutes. The current goal correlates to 60,000 gallons (9.5 feet of the tank height). Water pressure must be above 20 psi at all points throughout the distribution system when the water level is at the bottom of FS during maximum day demand. The WSP stated the bottom of FS must be above 325-ft elevation to satisfy this requirement. The following table shows the level at the bottom of FS for the various scenarios, with the top of FS starting at the bottom of ES. FS is nested within the standby storage (SS) component described below, as is allowed by DOH and Snohomish County. # of ERUs FS Volume (gal) FS Height (ft) Bottom Level (ft) Bottom Elevation (ft) , , , , ) Standby storage (SS) is intended to support the water system during an abnormal event. SS should supply the water system for two average days with the largest water source out of service. When Well 4 is out of service, only 50 gpm remains available from WBWA s Well 2. Consolidating with the District would include an intertie with the Kayak system, identified as project #8 on Figure 2 and in the cost estimate in Section 10. The intertie involves about 200 feet of 8-inch DI pipe to connect from the closest Kayak pipe and a control valve that would fill the tank from the Kayak system when Well 4 is out of service. Within the Kayak system, 90 gpm is needed to support an ADD of 270 gpd/eru for the 481 approved ERUs. This leaves about 200 gpm out of the 300 gpm Kayak well capacity available to help WBWA until 9

11 Well 4 returns to service. Therefore, after an intertie with the Kayak system would result in a fully redundant water supply for the WBWA system. Even with a fully redundant water supply, DOH recommends a minimum of 200 gallons of SS per ERU. DOH requires that pressure be maintained above 20 psi throughout the water system when the water level is at the bottom of SS during an average day demand. According to the WSP, this pressure can be satisfied from the bottom of the tank, with the booster pumps running to serve homes near the tank. The following table summarizes recommended SS volumes for various scenarios when following DOH s guidance. The top of SS begins at the bottom of ES, which was determined previously. The negative levels for a couple scenarios indicate that providing 200 gal/eru would exceed the remaining volume in the tank for more than 660 ERUs. Columns to the right show the SS volumes actually available between the bottom of ES and the silt stop, one foot above the tank base. # of ERUs Vol (gal) Height (ft) 200 gal/eru SS Available SS Bottom Level (ft) Bottom Elev (ft) Vol (gal) Height (ft) Gal per ERU , , , , , , , , As noted earlier, the WSP used a 165 gpm capacity for Well 4 when calculating ES needed for 785 ERUs. This also resulted in the WSP calculating a smaller amount of available SS (112,000 gallons for 785 ERUs). WBWA chose to accept that 112,000 gallons would only provide 143 gpd/eru SS. DOH allows water purveyors to make such decisions regarding reliability goals based on customer expectations. The District s goal is to meet the 200 gpd/eru recommendation for SS. Because there is sufficient storage available for WBWA s existing 605 ERU commitments, no storage improvements would be required for consolidating WBWA with the District. To be accurate, the existing tank can meet the SS goal for up to 645 ERUs when 1-foot is reserved at the bottom of the tank for the silt stop. At a growth rate of 10 connections per year, this would leave about 4 years to work on constructing additional storage. The District is starting to think about a second tank in its Kayak system that could be shared with WBWA. Hook-up fees collected from new customers would be used toward this improvement. If it takes longer to construct more storage, or if obtaining such storage proves impractical, it could be considered that the community already chose to accept a lower reliability standard for water storage. 6.2 Lake Martha Concrete Tanks In addition to the 207,000-gallon bolted-steel tank, WBWA has two 55,000-gallon and two 20,000-gallon concrete storage tanks near Lake Martha that are not in use. These tanks were built when Lake Martha was the only water supply for the system. The overflow level of the 55,000-gallon tanks is at 232-HGL, and the overflow level of the 20,000-gallon tanks is at 200-HGL. The pipeline from these tanks to the population center of the system, along Lakewood Rd and Railroad Ave, was originally the transmission main from Lake Martha. Now that Lake Martha is no longer used for drinking water, the pipe has become a long dead-end watermain to this less densely populated area. 10

12 In 1998, WBWA refurbished the Lake Martha tanks and installed two 50-gpm transfer pumps and controls to return the tanks to service. The tanks were filled using an altitude valve from the 350 Zone, and then water was pumped back into the 350 Zone. Difficulty in turning over the water in the tanks on the dead-end line led to bacterial problems, and use of the tanks was again discontinued. WBWA s improvement plan includes a provision to abandon the Lake Martha intake facilities, including the two 20,000-gallon tanks, but to leave the 55,000-gallon tanks in place for potential future use. The WSP points out it might be possible to use the 55,000-gallon tanks if a new well is drilled near Lake Martha so that water could again flow through them, instead of being at a dead-end. Considering the water rights status, the District is not proposing to abandon the Lake Martha intake facilities as part of the projects for consolidation, because it might be necessary to preserve the Lake Martha source to protect the water right. Instead, the District is including a project to abandon the two 55,000-gallon tanks. If the tanks are no longer needed, then it would be best to demolish them. This is shown as project #17 on Figure 2 and in the cost estimate in Section The land would be kept for the water system, in case it could be used as part of a site for drilling a well. 7 Control System Over the years, WBWA has improved the controls for operating its water system. Most recently, 32TMission Communications32T SCADA was installed. SCADA stands for Supervisory Controls and Data Acquisition, meaning the system is used for both controlling equipment and collecting data. The WBWA SCADA system uses cellular signals to communicate between the Well 2 and Well 4 sites. The system can send alarm signals to the operator, and the operator can see the data and adjust control settings through a phone, tablet, or computer. Although WBWA has a functional control system, the District would need to modify or completely replace it to integrate with its own SCADA. Also, treatment improvements will add to the complexity of the controls. A complete replacement is assumed for the purposes of this study, and is shown as project #16 on Figure 2 and in the cost estimate in Section Land Ownership and Easements Land ownership and easements must be sufficient to assure the District can maintain and protect the water facilities for the indefinite future. As part of this study, the District compiled information related to land and easements owned by WBWA. Representatives of the District s Real Estate department visited the water system and toured critical locations. The Real Estate department is preparing a separate report on this topic, but indicates no significant issues were found that would impair the District s ability to take on the WBWA water system. It should be mentioned that the District is aware of an agreement between WBWA and the Warm Beach Community Association (WBCA) for use of the Well 3/3R/5 site owned by WBWA. Ownership of this property would need to be transferred to the District along with the other property associated with the water system, but it could be possible to continue the type of relationship that exists between WBWA and WBCA by developing a new agreement between the District and WBCA. 11

13 9 Distribution System 9.1 Distribution Issues Some key points regarding the distribution system, as described in the WSP and the District s earlier 2005 study, are as follows: WBWA s primary supply (from Well 4 and the steel tank) are in the southeast corner of the system, hydraulically remote from the area of highest residential density. This situation presents a particular problem during peak demands and fire flow events. The distance between the major supply and largest demand is exacerbated by a 6-inch asbestos cement (AC) pipe through which all water from the primary supply must pass to reach the area of highest demand. The System contains several dead end pipelines, which limit flow and contribute to stagnant conditions which impairs water quality. The lack of redundant (looped) pipes of sufficient size reduces the amount of fire flow available to some areas. An insufficient number of valves were provided at some intersections, and A number of customers are being served by what is commonly called spaghetti water lines (long, small diameter pipes to access the nearest available water main). The WSP and the District s 2005 study identified a number of recommended improvements to WBWA s distribution system to improve hydraulics, reliability, available fire flows and to eliminate dead-end water mains. This feasibility study relies heavily on the WSP and the earlier 2005 study when identifying the improvements that would be required as a condition of consolidation. The District has many areas with dead-end water mains in its water systems, so the elimination of deadends in themselves is not a requirement to bring WBWA equal to the District s systems. However, reliability is a priority, and the District aims to meet fire flow requirements wherever possible. A significant development since the 2005 study is that the District made a commitment to replace all of its AC pipes by For many years prior to 2008, the District had a 20 year plan to replace AC pipes. Although progress was made, the end of the 20 years was repeatedly extended. In 2008, the District enacted a rate increase sufficient to create a funding mechanism for the remaining water main replacements and is on track to meet the 2028 goal. Asbestos cement was a pipe material of choice in the in the 1940 s and 1950 s. This type of pipe is now the oldest in the District s water systems and is nearing the end of its useful life, with more leaks and water main breaks occurring in these pipes. There is not a health concern with the AC pipe. Asbestos sample results in the WBWA system in 1999, 2009 and 2010 are all below the reporting limit, as typical for water systems throughout Washington. However, it is important to make progress on replacing these pipes before the number of leaks get to a point where it becomes difficult to keep up with repairs and more expensive to replace the pipes. As part of a water system consolidation, the District would require that enough of WBWA s AC pipe be replaced to bring it to at least equal the status of the District s other water systems. 12

14 P St P St P Ave P Ave P St P St The following sections describe the distribution system evaluation in greater detail and present specific improvements the District would require as a condition of water system consolidation. 9.2 Hydraulics Pressure Zones The WBWA system contains three pressure zones, which are labeled in Figure 2: 350 Zone: Set by the 350-foot elevation of the tank overflow. 450 Zone: Served by a booster pump station at 320 feet elevation operating at psi ( feet HGL). 232 Zone: Fed through two pressure reducing stations from the 350 Zone. The following table shows the range of water service elevations within each pressure zone, as stated in the WSP, and the calculated minimum and maximum static pressures (when no water is flowing). The 30.3 psi static pressure at 270 feet in the 350 Zone does not leave room for pressure loss due to friction when water is flowing, to assure the 30 psi minimum pressure requirement is met. Looking at USGS nd contours, it appears there might be a couple lots near 270-foot elevation on 172P NW, at the south end of the 6-inch AC pipe from Clarence Ave. A resolution to this issue is discussed below. Zone HGL Highest Elevation (ft) Minimum static pressure psi based on pump on setting at the booster pump station psi based on bottom of ES ( ft) / 2.31 ft/psi psi based on PRV setting ( ft) / 2.31 ft/psi Lowest Elevation Maximum static pressure (ft) psi based on pump off setting ( ft) / 2.31 ft/psi + 60 psi psi based on tank overflow level ( ft) / 2.31 ft/psi psi based on PRV setting ( = 222 ft / 2.31 ft/psi) Pressure zones in the neighboring Kayak water system are: 535 Zone: Based on the Kayak tank overflow level 450 Zone: Based on settings of three pressure reducing stations feeding from the 535 Zone 370 Zone: Fed through a PRV from the 450 Zone The District intentionally designed the Kayak 450 Zone to be compatible with WBWA s 450 Zone. One of the three PRV vaults delivering water from the Kayak 535 Zone to the Kayak 450 Zone is located just th nd south of WBWA s Well 4 treatment plant, southwest of 84P NW and 172P NW. An intertie from this location was described in the standby storage analysis in Section 6.1 as project #8. Kayak system has an 8-inch diameter pipe that continues west from the PRV vault, paralleling WBWA s nd th southern boundary to the corner of 172P NW and 89P NW. Project # 5 proposes to extend this nd pipe an additional 1300 feet along 172P NW to connect to the end of WBWA s 350 Zone pipe on nd 172P P, east of Marine Dr. A pressure reducing station would be added as project #6 in a vault east of Marine Drive. After these projects are constructed, the properties mentioned earlier would be on the 450-HGL side of the PRV vault. The highest ground elevation in the remaining 350 Zone would be about 240 feet, corresponding to a minimum static pressure around 43 psi. The new PRV would be set to 13

15 P and P does P St operate as an emergency backup to the WBWA 350 Zone. Project #s 5 and 6 can be seen on Figure 2 in the southwest corner of the water system Hydraulic Modeling WBWA s WSP relies on a hydraulic model from its previous 2002 WSP plus some additional modeling for its boosted pressure zone in the 2016 WSP. The District s developed a basic model as part of its 2005 feasibility study. In the 2005 study, the District agreed that the projects in WBWA s year CIP would achieve the 750 gpm fire flow goal in areas of the system where fire flow was deficient. If a consolidation proceeds, the District would incorporate WBWA into the hydraulic modeling for all of its water systems. This would be done as part of the District s normal operations, so no additional costs would be billed to WBWA customers. In the meantime, the District is relying on the previous modeling efforts for evaluating the distribution system. Following are the projects proposed as part of the improvements for water system consolidation based on their hydraulic benefits. WBWA completed most of the projects from its year CIP that involved closing critical loops. One remaining small project is shown as #3 on Figure 2 and in the consolidation cost estimate. Here is how the project is described in WBWA s 2016 WSP: 184th tie WM to 95th (or 96th). This proposed main would reinforce the distribution system by looping the main to provide increased circulation and flow paths. Approximately 1,800 LF of dead end pipe travels down 96th from 188th and then crosses over and extends up 95th. This additional loop will support the future Gulley crossing noted below by providing additional capacity downstream of the crossing. It is proposed to install 250 to 350 LF of 8 PVC C-900 at one of these locations. The gully crossing mentioned above is shown as project #4 on Figure 2. The WSP describes the project as: New Clarence Ave./Marine Dr. Gully crossing 12 WM 600 LF. This proposed main would significantly reinforce the water system distribution system by providing a second north to south transmission main. This gully crossing is a steep slope, has a salmon bearing stream and has several engineering challenges. A pre-design planning effort should investigate several routes, open cutting up and down the gully, and a bridging option incorporating a pedestrian bridge with a water main hung underneath the walkway. The District has experience in directional boring for similar gully crossings. Therefore, project #4 is estimated as a directional boring project in Section The 600 LF measurement from the WSP is used in the District s estimate. th The WSP also identified upsizing 1,300 feet of 6 AC pipe with 12 pipe along Marine Dr. between 180P P th th and 184P P, described as follows: Marine Dr. Replacement/Upsize from 180th to 184P P. This section of main is the lone existing connection between the southern and northern area of the distribution system. Hydraulic modeling has shown that this section of main limits the fire flow capacity for the northern distribution system. It is proposed to replace the existing 1,300 feet of existing 6 AC main with 12 PVC C-900. th th Replacing the pipe between 180P 184P addresses the critical stretch where a break in the pipe would cut off a majority of the customers from the main water supply, but leaves of old 6 pipe on th either side. The District s 2005 study recommended expanding this project to replace from 176P NW on the south end to Railroad Avenue on the north end, for the additional reliability and further improved hydraulics with more 12-inch diameter pipe. Replacing more of this pipe would also help 14

16 toward the goal of replacing enough AC pipe to bring the WBWA system equal to the District s water systems. Therefore, the District proposes to include the 2005 recommended version of this project in the improvements for water system consolidation. This is shown as project #2 on Figure 2 and in the cost estimate. 9.3 Condition of Distribution Facilities Water Meters and Service Lines WBWA first installed water meters for its entire system in It is expected that a vast majority of meters in the system are still from this time period. The WBWA meters register in gallons, while District water meters register in cubic feet. The District has a program to replace meters when they are more than 20 years old. Although it might be possible to convert readings from gallons to cubic feet in the District s billing system, the District would require all WBWA meters to be replaced as part of a water system consolidation because of the age of most of the meters. This is identified as project #11 in the cost estimate in Section 10. WWS has documented improvements needed for many of the water services and meters and has been gradually working on those improvements. Some needed improvements were observed by District staff during the field visit, such as meter boxes being on opposite sides of streets from homes being served. Some of these would be addressed as part of water main replacement projects. Remaining issues with service lines could gradually be addressed by District crews under the operations budget. Therefore, no amount for such improvements is included in the consolidation estimate. Like WBWA, the District also has a number of spaghetti lines within its water systems. In most cases, the customer s meter is located near the water main, hence ownership and responsibility for repair of the long service pipes lies with the property owner. The District typically requires such customers to sign an agreement at the time of hook-up that they will be responsible to relocate their service line if a water main becomes available to their property in the future. Because similar agreements do not exist for WBWA spaghetti-line customers, the District recognizes there would be a cost involved when new water mains reach these customers, but does not see expect this to be addressed at the time of water system consolidation. It appears there are some cases in the WBWA system where the meter is not adjacent to the water main and WBWA is responsible for maintaining the small diameter pipe. The District is also not requiring these to be addressed as a condition of consolidation and would deal with these pipes as needed in the course of operation Pressure Reducing Valves According to records obtained from WBWA, in August 2015, GC Systems rebuilt the 2- and 6-inch PRV valves in the pressure reducing stations serving the 232 Zone. The District did not examine these valves, but based on the knowledge that the valves were serviced by a reputable company, it is assumed these facilities are adequate and can be maintained under the District s routine maintenance program Booster Pump Station WBWA s booster pump system consists of six 86-gallon pressure tanks and two 7.5 horse power (HP) Paco brand booster pumps sized to provide 65-gpm each at 140 feet total dynamic head (TDH). The 15

17 P St P St pumps and pressure tanks are located inside the Well 4 treatment building, and a diesel generator operates these pumps during power outages. As of 2014, 20 homes were served by the booster pumps. The WSP anticipated a maximum of 43 homes in the 450 Zone based on the number of parcels in the area. PHD equals 61 gpm for 43 homes when calculated using the DOH equation: PHD = (MDD/1440) * [C * ERUs + F] For less than 50 ERUs, C = 3.0 and F = 0. Hydraulic modeling conducted for the WSP confirmed that minimum pressure would be maintained above 40 psi in the 450 Zone with a single pump in operation. The model indicated pressure could be th high at the far western end of 176P NW. New homes in that area could either use individual pressure reducing valves or connect to the nearby gravity main (350 Zone), depending on actual lot elevations. The booster system appears in good condition. In 2014, WWS repaired leaks in the piping manifold and the pumps are both functional. In the spring of 2016, WBWA constructed an improvement to move the connection to the pipe feeding the pumps from the inlet to the outlet side of the bolted-steel storage tank, so that all water now passes through the tank before being pumped to customers in the 450 Zone. While the booster pump system was out of service for these improvements, WWS took advantage of the opportunity to confirm all fire hydrants located within the boundary of the 450 Zone are actually connected to the 350 Zone pipes, so flow to the hydrants is by gravity from the storage tank and not restricted by the capacity of the booster pumps. The WSP mentions the booster pump controls need to be updated to alternate the pumps without manual involvement of the operator. If this improvement has not already been accomplished, it can be included with integration into the District s SCADA. As described previously, an intertie from the Kayak 450 Zone would be part of a water system consolidation. From a hydraulic perspective, it would be ideal to feed the boosted zone by gravity from the Kayak 450 Zone. However, given the water rights situation, the District would, at least initially, keep the booster pumps in service to maximize the use of WBWA s wells that are intended to serve the area. The booster pump system could also provide a modest amount of emergency backup supply to the Kayak system when the two booster pumps are operated together. The intertie with Kayak would slightly expand the 450 Zone within the WBWA system, but water from the Kayak system would be available to back-up the WBWA area. So, it is not necessary to examine the capacity of the pumps to serve the additional lots in the realigned pressure zone. Before the current booster pump station was installed in the Well 4 treatment building, the boosted th zone was served by equipment in vaults along 176P NW. These old booster station facilities are still in existence. WBWA identified abandoning these facilities in its CIP, and the District would require this to be completed as part of a consolidation. The project is shown as #10 on Figure 2 and in the cost estimate. 16

18 P St Water Mains The WSP summarized the following pipe materials and lengths within the WBWA system: Pipe Diam (in) AC (ft) PVC (ft) Total (ft) 12 4,800 4, ,300 10,700 16, ,000 14,700 23, ,200 1,200 < 3 4,000 4,000 Totals 15,500 35,100 50,600 As described in Section 9.1, the District is on track to replace all AC pipe in its water systems by In its WSP, WBWA similarly anticipates that a majority of the AC pipe in its system will need to be replaced within 10 to 20 years. The above numbers work out to about 31% of the WBWA pipe material being AC. To date, the District has replaced AC pipe to the extent that 10% of remaining pipes are AC. In order to reduce the amount of AC in the WBWA system to equal the District s water systems, at least 10,500 feet of AC pipe would need to be replaced. Some AC pipe replacement is included in previously described projects. Following is a description of additional projects selected as part of the initial consolidation improvements to achieve the AC pipe replacement goal. Pipe replacement along Soundview Dr was identified in WBWA s 20-year CIP in 2002 and is now in WBWA s 6-year CIP from the 2016 WSP. The Soundview pipe replacement is a high-priority to the community and is described in the WSP as follows: Soundview Dr. Water Main Replacement. The existing 6-inch AC mains along Soundview are nearing the end of their useful life. The location of this line is in a densely populated section of the water system. The existing water main is between the waterfront homes and the top of the bluff near Port Susan. A large break in this area could result in significant property damage. It is anticipated that 3,000 linear feet of 8 PVC C-900 pipe would be used in this replacement project. The Soundview Dr water main replacement is shown as project #1 in Figure 2. The District increased the measurement to 3,300 feet based on how the project is depicted on the figure in the WSP. The District would also propose replacing approximately 4,450 feet of 6-inch pipe with 8-inch DI pipe nd from the end of project #5 along 172P NW and Clarence Ave/Marine Dr to the location of the gully crossing in project #4. The primary reason for selecting this project for AC pipe replacement is because it would work well with project #s 4 and 5 to further enhance the reliability of transmitting water from the supply to the most densely populated area of the system. The diameter of the new pipe would be 8 inches because that is the District s minimum standard for all new pipe. This is shown as project #10 in Figure 2. Project #9 is the one remaining project that has not yet been discussed. The WSP noted that some existing hydrants have reached the end of their useful life. WBWA budgeted to replace 10 hydrants in its 6-year CIP. New hydrants would be included with all of the District s water main projects, but it is expected that some hydrants will also need replacement along the remaining water mains. Therefore, 17

19 P Ave P St the District is keeping the hydrant-replacement budget in its estimate for the water system consolidation Longer-Term Distribution Projects The preceding projects cover all of the distribution projects WBWA classified in its CIP as Near Term, to build within 1-2 years, and Medium Term, to build within 6 years. They also cover a couple distribution projects WBWA classified as Long Range, to build more than 6 years in the future. After the initial projects identified for water system consolidation are complete, the District s next priority would be to replace the remaining AC pipes by 2028, consistent with the goal for its other systems. Because funding for AC replacement is already built into the District s water rate structure, these projects would be funded from the regular rates paid by the WBWA customers, without further surcharges. The remaining AC pipes to be replaced by 2028 are highlighted in blue on Figure 2. A project that is not included in the District s scheduled improvements is the 2,300-foot extension to close the loop at the north end of WBWA s distribution system (WBWA s CIP #11). WBWA had classified this as a Medium/Long Range project. Although this project has significant hydraulic benefits, the District would reclassify it as a Developer Extension (DE) project while working to replace the remaining AC pipe. DE projects may benefit the system in the future by providing increased looping and expanded distribution network, but are not currently essential to meet minimum water pressure requirements. DE projects identified by WBWA and those reclassified by the District are highlighted in green on Figure 2. If a need for one of these projects comes up to support a development, it would be the responsibility of the developer to construct it. After the District finishes replacing the AC pipe, it could consider some of the DE projects in its longer-term CIP. Another WBWA Long Range distribution project that the District reclassified to a DE project is the 5,000 th th foot extension along 84P NW from 176P NW to Lakewood Rd, near Lake Martha (WBWA s CIP #13). This project would resolve the long dead-end line from the main body of the water system to the old Lake Martha intake. 10 Financials and Funding 10.1 Outstanding Debt and Potential Funding Sources The Association is repaying two 40-year US Department of Agriculture Rural Development (USDA) loans, which were obtained in November The loans were for engineering design ($41,500 at 6%) and construction ($750,000 at 5-3/8%). The improvements funded by these loans included equipping and treating Well 4 and constructing the tank and the building for the Well 4 treatment and WBWA s office. WBWA is past the half-way point of the loan repayment period. The remaining loan balance in early 2016 was around $580,000. According to a conversation with USDA, these loans could either be assumed by the District or paid off with no pre-payment penalty as part of consolidating WBWA into the District. USDA would encourage that the loans be paid off if more favorable terms can be found. In fact, USDA has already requested that WBWA seek alternative financing for these loans by

20 The ideal source of funding would be the Drinking Water State Revolving Fund (DWSRF) administered by DOH. In the 2016 DWSRF program Standard terms are a 20-year loan with a 1.5% annual interest rate and 1% loan fee. Consolidation projects that result in a change of ownership can qualify for 50% forgiveness of the loan principal (a 50% grant) and a 1% interest rate on the remaining balance for up to 24 years (including the construction period) with no loan fee. If a water system consolidation project scores high enough to receive a loan but money for the grant portion runs out, DOH has been known to offer the 1% interest rate with no loan fee. Eligible costs for DWSRF funding include the purchase costs for a publicly owned water system to acquire another water system. It purchase costs should include paying off debt carried by the system that is being acquired (such as WBWA s loans). Applications for the 2016 DWSRF program are due by September 30, Approximately $35 million is expected to be available statewide for the 2016 cycle; and a total of $4 million is expected to be available for use toward partial loan forgiveness. This 2016 funding pool less than was awarded in the previous two funding cycles ($53 million in 2015 and $85 million in 2014). So, obtaining DWSRF funding will be more competitive in this cycle. When talking with USDA, it was learned that, if a DWSRF loan is not successful, USDA could look at the District s financial position to determine if a USDA loan could be offered. The market rate for USDA loans is currently 2.75%. However, USDA s approach is to only offer loans when no other funding is available. If USDA determines the District has sufficient funding resources available, even if at a higher interest rate, then the fact that USDA rates are lower would not be justification in itself for USDA to approve a loan. If the District happens to qualify for USDA funding, it appears the prospects of USDA funds being available would be good because the program had unused funds in previous years. The District does have funds available that could currently be offered at a 4.5% interest rate. This rate represents the District s current cost of borrowing money on the bond market. The concept is that, even if the District uses cash on hand for WBWA, these are funds that the District would not have available for use on its other projects Cost Estimate for Proposed Improvements The table on the next page compiles cost estimates for the required improvements if WBWA would like to move forward with consolidation. Four surcharge scenarios were developed. Three scenarios relate to situations that could apply if the consolidation project qualifies for DWSRF. The fourth scenario is based on financing the project with District funds. Here are details on the estimation methods, following the order listed in the cost estimate: Estimates for water main construction are based on the average cost of projects completed by the District over the past few years. Some water main projects identified for WBWA could cost more and some could cost less, but the construction costs are expected to average out overall. The PRV station cost is based on the District s experience with similar PRV stations constructed in accordance with the District s standard specification. 19

21 Warm Beach Water Association Consolidation Cost Estimate # Description of Improvement Unit Estimated Extended Cost Amount Cost Distribution System Improvements: 1 Soundview Dr main replacement, south end to about block (8") $ $584,100 2 Marine Dr main replacement, 176th to Railroad Ave (12") $ $860,000 3 Connection 184th to 96th main extension (8") $ $61,950 4 Clarence/Marine Dr to Soundview Dr main extension (directionally drilled 12") $ $210, nd St water main extension, Kayak pipe to Marine View Dr (8") $ $230,100 6 PRV Station 450-HGL to 350-HGL, Kayak to Marine Dr $80,000 1 $80, nd St/Marine Dr/Clarence main replacement (8") $ $787,650 8 Connection with Kayak near Well 4 (~200 ft 8" DI and control valve to tank) $85,000 1 $85,000 9 Replace hydrants $7, $75, Abandon booster pump facilities along 176th $10,000 1 $10, Replace water service meters $ $150,000 Source Issues 12 Further treatment study $150,000 1 $150, Well 4 treatment improvements $200,000 1 $200, Replace Well 4 pump; Install level probe; Video and possibly clean screen $80,000 1 $80, Well 2 ph adjustment and chlorination $100,000 1 $100,000 SCADA Integration Well 4 treatment, storage, and booster pump controls $75,000 Well 2 site with treatment $75, SCADA total: $150,000 1 $150,000 Storage Issues 17 Abandon two (2) 55,000-gallon old concrete storage tanks near Lake Martha $80,000 1 $80,000 Subtotal: $3,893,800 Contingency: 10.0% $389,380 Subtotal Including Contingency: $4,283,180 Tax and Labor: WSST 8.9% $381,203 District labor for design and inspection during construction 9.5% $406,902 Existing WBWA Debts USDA Loan payoff amount estimated for 5/1/2017 $580,000 1 $580,000 Total that can be funded by Drinking Water State Revolving Fund (DWSRF) loan or grant: $5,651,285 DWSRF loan fee: 1.0% $56,513 Total DWSRF loan including loan fee (if not waived): $5,707,798 DWSRF Loan Amount after 50% DWSRF Grant: $2,825,643 Overhead expenses that cannot be reimbursed from DWSRF loan/grant: District Administration and General (A&G) expense: 11.0% $471,150 Allowance for Funds Used During Construction (AFUDC) 4.5% $192,743 Total estimated overhead expenses: $663,893 Potential WBWA Contributions Emergency Set-Aside Fund -$336,000 Capital Account -$50,000 Loan Account (funds from surcharge minus loan payments) -$50,000 Checking Account Balance -$40,000 Total estimated contributions: -$476,000 Net amount not funded by SRF: $187,893 Grand Total including DWSRF loan fee and overhead expenses: $5,895,691 Monthly per customer surcharge amounts, assuming 635 participants, 20 years: 50% grant SRF 1% SRF 1.5% No SRF SRF loan repayment $20.55 $41.10 $43.63 Repayment of PUD-funded expenses at 4.5% bond interest rate: $1.90 $1.90 $1.90 $58.91 Total Monthly Surcharge $22.44 $42.99 $45.52 $58.91

22 The District used WBWA s estimates for hydrant replacements and abandoning the old booster station facilities because those seem reasonable for the proposed work. For service meter installation, the District s standard meter-drop fee is $190. However, this assumes a straight-forward process of placing a meter in a recently installed meter box in a new development. The price of $250 per meter used in this estimate is intended to account for complications likely to arise with some of the older water services when replacing meters. The cost for further treatment study is based on a preliminary estimate from Confluence, if they are selected to work with the District to implement the recommendations in their memorandum. Cost was added to Confluence s estimate to include time for District staff to work with them on the studies. The estimates for treatment improvements at Wells 2 and 4 are expected to be enough to design and install equipment and controls to implement final recommendations when the additional study is complete. The cost for replacing the Well 4 pump was determined by scaling up an estimate WBWA obtained in 2008 and by adding cost for the level probe and other work that would be done while the pump is pulled out of the well. SCADA integration costs were determined based on past experience and by speaking with a contractor who typically does this type of work for the District. The cost for abandoning the two 55,000-gallon concrete tanks is based on the District s experience of having a similar size tank demolished in its Kayak water system. Contingency of 10% is typical of the District s cost estimating practices. The District designs projects in-house and uses its own inspector during construction. The estimate for this labor is also based on the average of completed projects over the past few years. These labor costs are separated from construction costs in the estimate. Sales tax rate in the WBWA area was checked using the Washington Department of Revenue Tax Rate Lookup Tool. Sales tax is applied to the construction costs, including contingency. The payoff amount for the USDA loan is based on the approximate loan balance in early It is recognized that the balance would be somewhat lower by the time a consolidation could be completed, but $580,000 is intended to be slightly conservative on the high side. The District s overhead expenses (A&G and AFUDC) are determined each year by the District s Finance division and must be applied to all District capital projects. Because this type of expense is not eligible for DWSRF, it is separated from the subtotal amount that could be funded by DWSRF. Potential cash contributions from WBWA were determined by communicating with WBWA s Secretary-Treasurer. These are the low-end estimates of balances that might be in accounts around June 2017, which is an approximate timeline of when an ownership transfer could be completed. 21

23 The potential WBWA cash contributions are subtracted from the District s overhead expenses to determine a net amount not funded by SRF. Any remaining amount not funded by DWSRF or not paid directly would be financed at the District s cost for borrowing money. The DWSRF loan fee and interest rates are based on the 2016 DWSRF application guidelines, described previously in Section The monthly surcharge estimates for the four scenarios were calculated as follows. In all cases, repayment amounts were divided by an estimated 635 participating customers repaying the loaned portion of the funding over 20 years. o o o o 50% grant scenario is based on financing half the amount that could qualify for DWSRF at 1% annual interest rate over a 20 year repayment period with no loan fee. The balance of the District s overhead expenses (remaining after WBWA cash contribution) is processed like a 20 year loan at 4.5% annual interest. The resulting components are added together to determine the total monthly surcharge amount. SRF 1% scenario is based on the full amount that could qualify for DWSRF, but with no loan fee. Reimbursement of the District s overhead expenses minus WBWA s contribution is handled in the same manner as the previous scenario. SRF 1.5% scenario uses the standard terms for the 2016 DWSRF loan program, including the 1% loan fee and a 1.5% annual interest rate for 20 years. Reimbursement of the District s overhead expenses minus WBWA s contribution is handled in the manner described in previous scenarios. No SRF scenario is based on funding the project using District funds if the consolidation project does not score high enough to receive any DWSRF funding. In this case, the entire amount that would have qualified for DWSRF plus unreimbursed overhead expenses would need to be repaid using an interest representing the District s cost of borrowing money, which is currently 4.5% Impact on Water Rates Current Water Rates and Connection Charges Beginning July 2016, WBWA s base rate is $80.30, which includes up to 8,000 gallons of usage every two months. WBWA also added a surcharge of $15 per month in WBWA has a tiered structure for consumption above the 8,000 gallon base, and customers with meter readings less than 100 gallons pay half the base rate plus the $15/month surcharge. WBWA reads its meters and bills on a bi-monthly basis. The following table shows WBWA s combined rate components for the two-month billing periods. The table includes a conversion from gallons to hundred cubic feet (CCF) for reference to the District s billing, which will be discussed next. An average year-round customer using 160 gpd would consume 9,700 gallons, or 13 CCF, over two months. (1 CCF = 748 gallons.) The usage closest to an average customer is highlighted in this and the next tables. WBWA plans to raise its base and usage rates by 10% per year for the foreseeable future. The $15/month surcharge is currently set as a flat amount for 7 years and is applied to debt servicing. WBWA expects this surcharge will also need adjustment because further loans will be needed to fund the capital improvements plan. 22

24 Warm Beach Water Association 2016 Rate Structure gallons used CCF used WBWA 2-month water bill (2016 rates) $40.15 base + 2 x $15.00/mo surcharge = $ , $80.30 base + 2 x $15.00/mo surcharge = $ ,001 11, $ $3.58 for each additional 1,000 gallons over 8,001 11,001-14, $ $4.12 for each additional 1,000 gallons over 11,001 14,001 17, $ $4.67 for each additional 1,000 gallons over 14,001 17,001 27, $ $5.23 for each additional 1,000 gallons over 17,001 27,001 - above 36 - above $ $6.60 for each additional 1,000 gallons over 27,001 For comparison, the District s 2016 water rates have a base charge of $22.57 per month ($45.14 for two months) and contain no allowance for water usage within the base. The District s usage charge is $3.46/CCF, which works out to $4.63/1,000 gallons. The District bills on a monthly basis and is performing a cost of service study to determine its water rates for the next four years. The next table shows how WBWA s rates compare to the District s 2016 water rates on a monthly basis (before any surcharge is applied to fund improvements for consolidation). The usage amounts in this table represent the upper end of each tier in WBWA s rate structure, divided in half for monthly amounts. As can be seen in the table, the District s water bills are currently less than WBWA s water bills. Without WBWA s $15/month surcharge, the rates would be within a couple dollars per month. Gallons used per month CCF used per month Comparing Warm Beach and District 2016 Water Rates ($/month) WBWA Base Charge WBWA Usage Charge WBWA Surcharge WBWA Total per month 23 PUD Base Charge PUD Usage Charge PUD Total (before surcharge) PUD bill minus WBWA bill 0 0 (no meter) $20.07 $ 0.00 $15.00 $35.07 $ 0.00 $ 0.00 $ $ (with meter) $20.07 $ 0.00 $15.00 $35.07 $22.57 $ 0.00 $ $ ,000 5 $40.15 $ 0.00 $15.00 $55.15 $22.57 $17.30 $ $ ,500 7 $40.15 $ 5.37 $15.00 $60.52 $22.57 $24.22 $ $ ,000 9 $40.15 $11.55 $15.00 $66.70 $22.57 $31.14 $ $ , $40.15 $18.56 $15.00 $73.71 $22.57 $38.06 $ $ , $40.15 $44.71 $15.00 $99.86 $22.57 $62.28 $ $15.01 Average Difference for services with meters (prior to applying surcharge): - $13.76 To hook up to the WBWA system, a customer must pay for a water share and then reimburse the actual cost for a contractor hired by WBWA to install the service connection plus an administrative fee. As of July 2016, the water share price is $9097, which increases by $20 each month. Service installation cost is typically estimated in the range of $1,900-3,400, and the administrative fee is $ Altogether, the current cost to connect to the WBWA system is approximately $11,300-13,000. To connect to a District water system, charges are currently $3,645 General Facilities Charge (GFC) $4,210 Distribution System Charge (DSC) $1,355 for service line and meter installation

25 $ 100 Right of Way fee if the connection is located along a County road The $9,310 total of the District s connection charges is somewhat less than WBWA s connection charges. The District is reviewing its fees as part of the cost of service analysis that is currently underway. The GFC covers the cost of source, storage, and transmission to support each new customer. The DSC reimburses a portion of the cost for the distribution pipe fronting the customer s property. The District would use these fees collected from new customers toward the cost of water right changes, source capacity and additional storage that will be needed to support customers beyond the limits previously identified in this report Water Rates to Fund Water System Consolidation Surcharge amounts resulting from various funding scenarios were determined in Section The surcharges apply for the amount of time needed to repay the project costs, typically around 20 years as assumed in these estimates. After the improvements identified in this study are complete, the WBWA system would be considered on par with the District s other water systems. And, after the surcharge period ends, WBWA water rates would become the same as the District s standard water rates for all of its water systems. The table below shows how the surcharges for the various funding scenarios would impact District water bills and how the resulting bills would compare to WBWA s current water bills. The resulting PUD bill is determined by adding the surcharge amount to the regular PUD bills shown in the previous table, in Section The shaded row represents what the District considers to be average water use for a typical year-round WBWA customer. The bottom row of the table shows the average monthly increase to WBWA water bills averaged across all of WBWA s rate tiers (excluding the inactive water services with no meters, because the increase for those might be less). Gallons used per month Comparing WBWA and District Bills after Surcharge Added ($/month) Funding Scenario: 50% Grant + 1% Loan 1% Interest Rate 1.5% Interest Rate 4.5% Interest Rate Surcharge Amount: $22.44 $42.99 $45.52 $58.91 CCF used per month WBWA Bill per month Resulting PUD Bill Increase over WBWA Bill Resulting PUD Bill Increase over WBWA Bill Resulting PUD Bill Increase over WBWA Bill Resulting PUD Bill Increase over WBWA Bill 0 0 (no meter) $35.07 $ $12.63 $42.99 $7.92 $45.52 $10.45 $58.91 $ (with meter) $35.07 $45.01 $9.94 $65.56 $30.49 $68.09 $33.02 $81.48 $ ,000 5 $55.15 $62.31 $7.16 $82.86 $27.71 $85.39 $30.24 $98.78 $ ,500 7 $60.52 $69.23 $8.71 $89.78 $29.26 $92.31 $31.79 $ $ ,000 9 $66.70 $76.15 $9.45 $96.70 $30.00 $99.23 $32.53 $ $ , $73.71 $83.07 $9.37 $ $29.92 $ $32.45 $ $ , $99.86 $ $7.44 $ $27.99 $ $30.52 $ $43.91 Average Increase over WBWA bills: $8.68 $29.23 $31.76 $

26 Here is another way to view the resulting water rates, focusing just on usage around 7 CCF/month (5,500 gallons/month), which the District considers to reflect the typical year-round WBWA customer. Funding Scenario Monthly Surcharge Average Water Rate without Surcharge Average monthly bill including surcharge Impact of surcharge over current bill (per month) WBWA current rates $15 $44-46 $ % Grant+ 1% Loan $ $46-48 $ $ % Loan $ $46-48 $ $ % Loan $ $46-48 $ $ % PUD Self-Financed $ $46-48 $ $ In this table, The lower end of the surcharge range matches the previous table, based on surcharges calculated in Section The upper end of the surcharge range, is based on removing WBWA s potential cash contributions from the estimate. The range of the water rates without the surcharge reflects a monthly water bill for usage between 5,000-5,500 gallons per month (6.7 to 7.3 CCF per month). This helps to see that the District regular water rates are just about $2/month higher than WBWA rates before either the WBWA or PUD surcharge is applied. Because WBWA is already applying a $15/month surcharge, the net increase to the water bills (right hand column) would be about $13 less than the Districts monthly surcharge amount (first column). 25

27 AC ADD AFY Asbestos Cement (a pipe material) ABBREVIATIONS Average Day Demand (annual amount of water use divided by 365 days per year) Acre-feet per year (equal to an amount of water one foot deep covering one acre) ATEC The manufacturer of filtration equipment used for Well 4 ATP C CaCOR3 CCF CFP CIP Adenosine triphosphate (a molecule found around living cells, proportionate to bacteria concentration) Celsius or Carbon, depending on context Calcium Carbonate (a unit of water hardness) 100 cubic feet (unit of measurement for PUD water bills) Capital Facilities Plan (term used by Stanwood-Camano School District for its planning) Capital Improvement Project, or Capital Improvement Plan Confluence Confluence Engineering Group, LLC (performed the study in Appendix 2) DCG DE DI DIC District DOH DS DSC DWSRF Ecology ERU ES FS GFC gpd gpm HGL HP kw LCR LF MCL MDD mg/l Davido Consulting Group (WBWA s engineering consultant) Developer Extension (a water main that would be built by a developer if needed to support its development) Ductile iron (a pipe material) Dissolved Inorganic Carbon Snohomish County Public Utility District #1 (aka Snohomish PUD) Washington State Department of Health (regulates drinking water in Washington State) Dead Storage (unusable volume in a storage tank) Distribution System Charge (part of the fees to connect to a District water system) Drinking Water State Revolving Fund (a federal and state funded loan program) Washington State Department of Ecology (regulates water rights in Washington State) Equivalent Residential Unit (equivalent to usage by a single family household) Equalizing Storage (volume in a water storage tank dedicated to meeting PHD) Fire Storage (volume in a storage tank dedicated to fire-fighting, which may overlap SS) General Facilities Charge (part of the fees to connect to a District water system) Gallons per day Gallons per minute Hydraulic Grade Level (a measure of pressure, in feet of elevation) Horsepower (for electric motors 1 HP = 746 watts) Kilowatts (1000 watts) Lead and Copper Rule Linear Feet (measure of pipeline length) Maximum Contaminant Level Maximum Day Demand (peak amount of water used in a 24-hour period within a year) -3 Milligrams per liter (a milligram is 1x10P Por 1 thousandth of a gram) 26

28 P of mv ORP OS pg/ml NTU PA PHD PRV psi PVC Qi Qa ROE SCADA SS TDH TOC us/cm V W WBCA WBWA WSP WWS Millivolt (one thousandth of a volt) Oxidation Reduction Potential (measurement of ability to accept or release electrons) Operational Storage (the volume in a storage tank used for operating controls) picograms per milliliter (a picogram is 1x10P -12 a gram) Nephelometric Tubidity Units (unit of turbidity measurement) Proof of Appropriation (a step in the water rights process to show that a water right permit has been perfected so that a water right certificate can be issued for the quantity of water that has been put to beneficial use ) Peak Hour Demand (average flow rate over the peak hour of water use on the peak day) Pressure Reducing Valve Pounds per square inch (a measure of water pressure) Polyvinyl chloride (a pipe material) Instantaneous flow allowed by a water right, in units of gpm Annual volume allowed by a water right, in units of AFY Report of Exam (prepared by Ecology when evaluating a water right permit application) Supervisory Controls and Data Acquisition (common term for a telemetry system) Standby Storage (volume in a storage tank used during abnormal operating conditions) Total Dynamic Head (height that fluid is to be pumped, taking friction into account) Total organic carbon micro Siemens per centimeter (a unit of conductivity, ability to carry an electric charge) Volts Watts Warm Beach Community Association Warm Beach Water Association Water System Plan (in most cases WBWA s 2016 WSP) Water and Wastewater Services, LLC (firm providing WBWA s contract operations) 27

29 WARM BEACH CONFERENCE GROUNDS NOTE: THIS EXHIBIT DOES NOT INCLUDE THE ENTIRE SERVICE AREAS FOR THE SEVEN LAKES WATER ASSOCIATION OR SNOHOMISH PUBLIC UTILITY DISTRICT NO.1 - KAYAK. THESE SYSTEMS HAVE ADDITIONAL AREAS OUTSIDE THE AREA SHOWN. SEVEN LAKES WATER SYSTEM WARM BEACH WATER ASSOCIATION SNOHOMISH PUBLIC UTILITY DISTRICT NO 1 - KAYAK EXHIBIT FOR REVISED WATER SERVICE AREA AGREEMENT BETWEEN 1. WARM BEACH WATER ASSOCIATION 2. SNOHOMISH PUBLIC UTILITY DISTRICT NO 1 - KAYAK 3. SEVEN LAKES WATER SYSTEM