ITEM:		PRESENTATION/DISCUSSION ITEMS
2.	RECEIVE mpwmd STAFF REPORT ON REQUIREMENTS TO UPDATE MPWMD SEAWATER DESALINATION PROJECT in sand city
Meeting Date:			March 27, 2008	Budgeted:	No
From:			Darby W. Fuerst	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Andrew Bell	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: At the January 24, 2008 Board meeting, the Board endorsed Director Brower’s request to direct staff to prepare a report on requirements to update the MPWMD Seawater Desalination Project, a project proposed to be located in Sand City most recently studied by MPWMD in 2004. The Board requested information on the anticipated scope of consultant services for engineering, geotechnical, and environmental studies and the associated costs and timeline to complete a Final Environmental Impact Report (EIR) on the project. MPWMD staff requested proposals from Camp Dresser & McKee Inc. (CDM) for engineering and geotechnical services and from Jones & Stokes Associates (JSA) for environmental review services. The project description and scope of work provided to the consultants in February 2008 are contained in Exhibit 2-A. These firms and their subconsultants conducted the most recent studies on the MPWMD Seawater Desalination Project. A list of reports prepared in 2003 and 2004 by these consultants is provided in the “Background” section below. MPWMD staff members have a number of questions regarding the consultants’ proposals, and discussions have begun to clarify the proposed scope, estimated costs, and timeline.

RECOMMENDATION: The Board should receive staff’s presentation, ask questions, and open the meeting to the public for comment. Staff recommends that the Board direct staff to refine the information provided in proposals by CDM and JSA, in cooperation with the consulting firms, and to present that information to the Board at the April 21, 2008 meeting.

BACKGROUND: The reports prepared by CDM and JSA for MPWMD on the MPWMD Desalination Project are as follows:

CDM - March 2003, MPWMD, Monterey Peninsula Water Supply Project Alternatives, Final Phase 1 Technical Memorandum

JSA - December 2003, Board Review Draft, MPWMD Water Supply Project Draft EIR

CDM - April 16, 2004, Monterey Peninsula Water Management District, Sand City Desalination Project, Feasibility Study

CDM - June 23, 2004, Monterey Peninsula Water Supply Project, Project Facilities Alternatives for the Sand City Desalination Project, 7.5 million gallons/day (8,400 acre-feet/year)

JSA’s Board Review Draft EIR was received by the MPWMD Board of Directors in December 2003, but the Board did not direct staff to proceed with preparation of a public review Draft EIR for public comment at that time. The Board did, however, direct that engineering and geotechnical studies then underway by CDM be completed. CDM completed the two 2004 reports listed above. Since December 2003, there have been three significant occurrences that affect this project:

1. Geotechnical and engineering studies by CDM in 2004 determined that certain aspects of the originally-proposed seawater intake and brine discharge facilities were infeasible, and CDM identified alternative methods and facilities. The April 2004 CDM report, titled “Monterey Peninsula Water Management District, Sand City Desalination Project, Feasibility Study,” concluded that additional study of the use of radial wells or along-shore horizontal directionally drilled wells and several other aspects of the project is needed to determine their appropriateness for use in this project. CDM also developed significant new information regarding geology and hydrogeology of formations where intake and discharge facilities were proposed to be located.

2. The City of Sand City has received permits for and is beginning construction of facilities for a 300 acre-foot per year (AFY) brackish water desalination project located in the area proposed for the MPWMD project. The city has certified a Final EIR, obtained a Coastal Development Permit from the California Coastal Commission and a Water Distribution System permit from MPWMD, and negotiated an initial agreement with California American Water (CAW) for operation and maintenance of the project.

3. The Seaside Groundwater Basin has gone through an adjudication proceeding, and users of water from the Basin are under court order to reduce or replace their pumpage from the basin and to conduct a number of monitoring and reporting activities.

Technical feasibility concerns addressed in the April 2004 CDM report resulted in CDM concluding that the 8,400 AFY yield of the project originally set by the Board may not be achievable. CDM’s analysis determined that a seawater intake system using horizontal directionally-drilled (HDD) wells extending offshore would not be feasible. Alternatives identified were along-shore HDD wells and radial wells (Ranney collectors), possibly extending northward into the former Fort Ord area that is now dedicated to the California Department of Parks and Recreation. It is not known if construction of project facilities in this area would be permitted. In addition, CDM suggested that additional study be made of methods for and impacts of brine disposal, including investigating the use of the Monterey Regional Water Pollution Control Agency’s wastewater treatment plant outfall north of Marina. CDM’s April 2004 report states that project yields using these alternative methods could range from 3,900 AFY to 8,400 AFY. In this report, CDM also identified “... data gaps that could be evaluated to further assess project feasibility and water supply yields.”

CDM made these conclusions prior to the second and third significant occurrences listed above: development of the City of Sand City’s 300 AFY brackish water desalination project, and the issuance of the Decision in the Seaside Groundwater Basin adjudication. In June 2006, MPWMD’s General Counsel prepared a memorandum providing an overview of water rights associated with desalination projects proposed for the Sand City area. This memorandum, provided as Exhibit 2-B, was prepared at the request of the MPWMD Board in order to anticipate potential problems of interference between or among project facilities, and to provide possible remedies if such interference or other effects were to occur. In recognition of this potential, staff requested that CDM include the following item in their scope of work:

“4. Conduct studies as necessary to determine potential effects of the proposed project facilities and their operation on the City of Sand City’s desalination project or the resources of the Seaside Groundwater Basin. Identify possible ways to reduce or eliminate negative impacts.” (See Exhibit 2-A, page 3.)

MPWMD staff wishes to confer with CDM and JSA regarding their initial proposals. In order to refine the scope of work, anticipated costs, and timelines, staff plans to meet with the consultants during the week of March 31, and to present the refined information to the Board for the April 21, 2008 meeting.

No funds for this consulting work are included in the Fiscal Year 2007-08 MPWMD budget.  

IMPACT TO DISTRICT STAFF/RESOURCES: If the Board approves staff’s recommendations, the next task for Planning & Engineering staff would be to work with CDM and JSA to refine the scope of work and cost proposals for consultant services needed to complete the project EIR. This is a work effort not currently anticipated by the Planning & Engineering Division, which would have a modest near-term impact on the Division’s highest office staff priority, i.e., processing the existing backlog of approximately 60 Water Distribution System permit applications and pre-applications that have been received by the District.

There is no anticipated, direct financial impact on the District of approving preparation of the proposed staff report. However, the consultant costs to finalize the project EIR would be significant. At its December 10, 2007 meeting, the Board approved a “pay-as-you-go” approach as an alternative to financing the $1.7 million estimated cost to complete the District’s Phase 1 ASR Project, which will reduce the District’s general operating reserve below the Board’s 5% minimum for the next 12 to 24 months. Since the District would have insufficient reserves to pay for the additional environmental and engineering work required to finalize the EIR for the MPWMD Seawater Desalination Project at Sand City, the Board would need to either: 1) use the same financing strategy that was used to fund Phase 1 ASR Project completion; or 2) authorize a one-time increase in the District’s user fee to cover the additional environmental and engineering consultant costs to complete a Draft and Final EIR for the MPWMD Seawater Desalination Project at Sand City.

EXHIBITS

2-A Project Description and Scope of Work Provided to Consultants, February 7, 2008

2-B June 22, 2006 Memorandum from David C. Laredo, District Counsel, to Andrew M. Bell, District Engineer, Re: Water Rights Relating to Sand City Desalination Projects

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