ITEM:

ACTION ITEMS

23.

Receive MPWMD Staff Report on Requirements to Update MPWMD 95-10 Project (Seawater Desalination Project in Sand City Area) and Consider Approval of Preliminary Expenditures

Meeting Date:

##### April 21, 2008

Budgeted:

No

From:

Darby Fuerst,

Program/

N/A

General Manager

Line Item No.:

Prepared By:

Andrew M. Bell,

Cost Estimate:

Phase 1 - $170,000 District Engineer Grand Total:$1,029,250 to $2,125,250 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 95-10 Project, a seawater desalination project proposed to be located in Sand City that was 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. In February 2008, MPWMD staff requested proposals from Camp Dresser & McKee Inc. (CDM) for engineering and geotechnical services and from ICF Jones & Stokes Associates (JSA) for environmental review services. 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. The proposal for engineering and technical services by CDM is provided as Exhibit 23-A, and the proposal for environmental review and CEQA compliance services by JSA is provided in Exhibit 23-B. Each proposal provides the proposed scope of work, estimated costs, and timeline, as well as a listing of the individuals proposed to do the work and their qualifications, background on the firm, and experience relevant to the project. Each proposal provides a three-phase approach. RECOMMENDATION: The Board should receive staff’s presentation, ask questions, and open the meeting to the public for comment. The Board should then determine whether it desires to authorize the General Manager to enter into agreements with CDM and JSA for a portion or the entirety of their respective proposals. Staff recommends that if the Board wishes to proceed with the MPWMD 95-10 Project, the authorization and work be done in phases, with the first phase being as follows: • Phase 1 of CDM’s proposal (Constraints Analysis - scope shown on pages 1-2 through 1-4 of Exhibit 23-A), at a cost not-to-exceed$110,000; and
• Phase 1 of JSA’s proposal (Constraints Analysis - scope shown on pages 18 through 20 of Exhibit 23-B), at a cost not-to-exceed $60,000. BACKGROUND: Proposal Process and Summary: Pursuant to MPWMD Board direction on January 24, 2008, staff issued Requests for Proposals to CDM and JSA on February 7, and proposals were received from both firms on March 10. In order to refine the scope of work, anticipated costs, and timelines, MPWMD staff met with CDM and JSA in mid- and late March. Revised proposals were received from CDM and JSA in early April. The proposals are attached as Exhibit 23-A for CDM and Exhibit 23-B for JSA. A summary of the phases of work, costs, and timelines in the CDM and JSA proposals is as follows: Consultant Costs Timeline Phase 1 – Conduct Constraints Analysis CDM$  106,900                                                          May - July 2008

JSA                                57,000

Phase 1 Subtotal        $163,900 Phase 2 – Develop Detailed Facilities Plan CDM$  700,000 to $1,770,000 Aug. 2008 - 2010 JSA 0 (all work in Phase 2 is by CDM) Phase 2 Subtotal$  700,000 to $1,770,000 Phase 3 – Prepare Draft and Final EIR CDM$    36,000 to $62,000 JSA$  129,350                                              6-8 months following Phase 2

Phase 3 Subtotal        $165,350 to$    191,350

Grand Total                         $1,029,250 to$2,125,250

The ranges of costs for CDM’s work in Phases 2 and 3 are explained in their proposal.

Staff recommends that if the Board wishes to proceed with the project, only the first phase (constraints analysis) be authorized at this time.  In conducting the constraints analysis, the consultants will review critical components of the project, including determining feasible methods of seawater intake, determining whether the Monterey Regional Water Pollution Control Agency’s treatment plant outfall is available for brine discharge, and under what conditions, and confirming available locations for intake facilities, treatment plant, and storage.  The consultants will also meet with permitting, resource, and land use agencies to learn their requirements and concerns.  The findings of the constraints analysis will be presented in a report by JSA.  One benefit of limiting the initial authorization to Phase 1 is that following the Phase 1 work, the consultants will be able to make preliminary conclusions regarding the feasibility of the project.  The constraints analysis will also result in reduced uncertainties about the project, and the consultants will also be better able to develop the scope of work for subsequent phases of the project.

It should be noted that the timeline for CDM’s Phase 2 work, (Exhibit 23-A, page 2-1) includes a range of 2009 to 2010 for the Phase 2 field program (Task 2.5: Perform Detailed Hydrogeologic, Ocean Outfall Investigation, and Collection Well Pilot Testing).  The footnote for this work states as follows:

“It may be possible to accelerate the field program for a smaller project that relies on maximizing use of existing field data and minimizing new field work.  This accelerated program would require consensus from Technical team experts on the viability of the proposed project alternative and the extent of potential impacts from the project.”

Staff asked CDM to provide an estimate of the time required to complete final design and construction of a project of this magnitude.   CDM estimates that the timeline for final design through the bid issuance and award process would be three years, and the construction period would be two years.  The construction time estimate assumes that various parts of the project would be done in parallel (e.g., collector wells, raw water transmission, water treatment plant, treated water transmission).  If it were decided to wait until completion of a Final EIR, it would add five years to the schedule shown above.  This would mean the project would be in operation in 2015 to 2016.  Final design could conceivably begin prior to completion of the CEQA process, but doing so would risk having to change the final project based on issues raised by those commenting on the Draft EIR and by permitting agencies.

Previous Work by the Consultants:  The earlier reports prepared by CDM and JSA on this project for MPWMD 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 Notice of Completion and circulation of a 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 the 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-feet 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.  This project’s intake facilities are currently under construction and testing.

3.   The Seaside Groundwater Basin has been the subject of an adjudication proceeding.  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 (i.e., perpendicular to the shoreline) would not be feasible.  Alternatives identified were along-shore HDD wells (i.e., parallel to the shoreline) and radial wells (e.g., 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.  These factors would need to be addressed during development of the MPWMD 95-10 Project.

IMPACT TO DISTRICT STAFF/RESOURCES:   No funds for this consulting work are included in the Fiscal Year 2007-08 MPWMD budget.  If the Board wishes to proceed with the MPWMD 95-10 Project, there would be a workload impact on Planning & Engineering Division (P&E) and Water Resources Division (WRD) staff in two areas:  (1) P&E and WRD staff would assist CDM and JSA in gathering information and meeting with permitting agencies and property owners to provide information needed to conduct the studies; and (2) P&E staff would administer the consultant contracts.  These are work efforts not previously anticipated by either division.  They would have an impact on the P&E Division office staff’s current highest priority, which is to process the existing backlog of approximately 60 Water Distribution System permit applications and pre-applications that have been received by the District.  The WRD is currently strained by the move of the former division manager to General Manager position and ongoing work by the current Division Manager and others related to the Phase 1 ASR Project and MPWMD’s contractual obligations in support of the Seaside Basin Watermaster.  If the Board decides to proceed with the 95-10 Project studies, staff suggests that current priorities be re-examined and adjusted.

As can be seen in the proposals, 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 Seaside Basin 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 general operating reserves to pay for the additional environmental and engineering work required to finalize the EIR for the MPWMD 95-10 Project, the Board would need to either temporarily borrow the amount from one of the District’s designated reserves such as the Flood/Drought Reserve, or do some other type of short-term borrowing.  In either case the funds would need to be recovered by a User Fee increase to cover the engineering and environmental consultant costs to complete a Draft and Final EIR for the MPWMD 95-10 Project.

EXHIBITS

23-A    CDM Proposal for Update of MPWMD 95-10 Project, April 10, 2008

23-B    JSA Proposal for CEQA Compliance for MPWMD 95-10 Project, April 9, 2008

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