REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Al Zelinka, City Manager
VIA: Sean Crumby, Director of Public Works
PREPARED BY: Chris Davis, Senior Management Analyst
Subject:
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Approve and authorize execution of Amendment #2 to the Limited Partial Basin Equity Assessment Exemption Agreement between the Orange County Water District (OCWD) and City of Huntington Beach (Huntington Beach Well No. 9)
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Statement of Issue:
On October 4, 2017, the Orange County Water District (OCWD) Board approved an agreement to allow the City to obtain full cost recovery for the City’s Well No. 9 Treatment Project. On November 5, 2018, Amendment #1 was approved to add an additional $720,000 to the original project cost. Amendment #2 extends the expiration date of the original agreement.
Financial Impact:
This Agreement facilitates savings to Water Fund 506 by allowing the City to pump groundwater at a lower cost than purchasing imported water. These savings are dependent upon the amount of water extracted from Well No. 9. Through the end of Calendar Year 2022, the City has saved $1,852,509 out of a total project cost of $4,320,000.
Recommended Action:
recommendation
Approve and authorize the Mayor and City Clerk to execute “Amendment #2 to the Limited Term Partial Basin Equity Assessment Exemption Agreement between the Orange County Water District and City of Huntington Beach (Huntington Beach Well No. 9).
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Alternative Action(s):
Do not approve Amendment #2 and direct staff accordingly. Failure to approve Amendment #2 will limit groundwater pumping up to the Basin Pumping Percentage (BPP) and will force the City to purchase import water for the remaining demand. Import water costs $1,209 per acre-foot compared to a Replenishment Assessment (RA) cost of $558 per acre-foot plus $95 in utility costs.
Analysis:
The City reduced water production from Well No. 9 in the 2010s due to the detection of hydrogen sulfide. Though hydrogen sulfide is not hazardous, it does have an odor and unpleasant taste, and requires treatment to make it palatable. The City successfully piloted a Biological Activated Carbon (BAC) treatment system that reduced the hydrogen sulfide concentrations in the water to a level that it could be used.
Since this project treats water from the groundwater basin that OCWD manages, the City requested OCWD to fund 100 percent of the project. On October 4, 2017, OCWD approved the financial aid agreement to help the City recover the total project costs of $4,320,000 until the agreement expiration date of June 30, 2023.
Funding for the project is provided by allowing the City to produce water above the BPP at a cost less than imported water, thereby allowing the City the avoided cost of purchasing more expensive imported water. The City has avoided costs of $1,852,509 through the end of calendar year 2022.
Amendment No. 2 extends the term of the agreement through June 30, 2027. Based on current water usage demands, staff anticipates that the extended duration is sufficient to facilitate full cost recovery for the remaining reimbursable amount.
Environmental Status:
Pursuant to CEQA Guidelines Section 15378(b)(5), administrative activities of governments that will not result in direct or indirect physical changes in the environment do not constitute a project.
Strategic Plan Goal:
Infrastructure & Parks
Attachment(s):
1. Amendment #2 to the Limited Term Partial Basin Equity Assessment Exemption Agreement between the Orange County Water District and City of Huntington Beach (Huntington Beach Well No. 9)
2. PowerPoint Presentation