TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
title
Adopt Resolutions for Funding Eligibility of the State Street Water Treatment Plant Project (WA212); Approve the Purchase of Non-Reclaimable Wastewater System Capacity Rights from the Inland Empire Utilities Agency (IEUA) for Water Treatment System Discharge; and Approve a Fourth Amendment for Design Services with Hazen and Sawyer.
end
RECOMMENDATION
1) Adopt Resolution No. 2025-001, rescinding Resolution No. 2022-060 and authorizing the City Manager or designee to sign and submit an application to the State Water Resources Control Board, for State Water Revolving Fund eligibility, often referred to as “Drinking Water State Revolving Fund” (DWSRF) and adopt Resolution No. 2025-002, rescinding Resolution No. 2023-019 and establishing the maximum principal loan amount to be $50,000,000 2) adopt Resolution No. 2025-003, authorizing the City Manager or designee to sign and submit an application to the U.S. Environmental Protection Agency (EPA) for a Community Project Funding Program grant for $2,000,000; 3) approve a one-time purchase of Non-Reclaimable Wastewater System Capacity rights from the Inland Empire Utilities Agency (IEUA) for the discharge generated at the State Street Water Treatment Plant Project for $216,944; 4) approve a fourth amendment to contract 2021-234 for design services with Hazen and Sawyer, Irvine, CA, for $170,405 for a revised contract amount of $1,940,195;and 5) authorize the City Manager to execute the necessary documents on behalf of the City.
body
FISCAL IMPACT
The City will make a one-time payment of $216,944 to IEUA for non-reclaimable wastewater system discharge capacity rights. Additionally, $170,405 will be added to Agreement No. 2021-234 for Amendment No. 4 with Hazen and Sawyer. These expenses are covered by sufficient funding in the State Street Water Treatment Project (WA212) budget, funded through the Water Fund (Fund 520).
|
TOTAL PROJECT BUDGET - WA212 |
|
Funding Source |
Adopted Budget |
Expenditures |
Available Budget |
|
520 - Water Fund |
$19,036,553.00 |
$3,155,734.06 |
$15,880,818.94 |
|
G7211 - Watersmart Grant |
$750,000.00 |
$0 |
$750,000.00 |
|
TOTALS: |
$19,786,553.00 |
$3,155,734.06 |
$16,630,818.94 |
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above furthers the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Positive City Image
• Financial Stability
• Responsible Long-Range Planning
|
Revenue: Click or tap here to enter text. |
Expenditure: 5207310 - 48003 - WA212 |
|
Transfer In: Click or tap here to enter text. |
Transfer Out: Click or tap here to enter text. |
BACKGROUND
The City of Chino encompasses approximately 30 square-miles, with a water service area of 29 square miles. According to the U.S. Census Bureau, Chino has a population of 93,114 (2023) and a projected 2040 population of 113,333 (per Southern California Association of Governments -SCAG). The City water service area serves a population of approximately 84,560 and primarily follows the City boundary. Groundwater from the Chino Basin is produced by six (6) groundwater wells owned and operated by the City, and the wells constitute approximately 42% of the City’s water supply. Local groundwater is the most cost-effective water source the City can provide customers as it reduces reliance on purchased imported surface water.
Two of the City’s wells, Well 12 and Well 14, have been inactive for some time due to impacts from contaminants. The State Street Water Treatment Plant (WTP) includes a new centralized treatment plant that will restore the use of Well 12 and Well 14 by treating for nitrate, perchlorate, and 1,2,3-trichloropropane (1,2,3-TCP) as these contaminants have been detected at concentrations above the Maximum Contaminant Levels (MCLs) set by the State Water Resources Control Board (State Water Board) Division of Drinking Water (DDW).
On September 6, 2022, Council adopted Resolution No. 2022-060 authorizing staff to apply for a low-interest federal loan administered through the State Water Resources Control Board under the “Drinking Water State Revolving Fund” (DWSRF) Program. DWSRF is a financial assistance program for public water systems to achieve or maintain compliance with health protection objectives through drinking water infrastructure projects. The DWSRF functions as an infrastructure bank providing low-interest loans to eligible recipient agencies for drinking water infrastructure projects. As money is paid back into the State’s revolving loan fund, the State makes new loans available to other recipients/projects. These recycled repayments of loan principal and interest earnings allow the State's DWSRF to “revolve” over time. Publicly owned community water systems are eligible to apply for the loan, which has a term of up to 30 years and does not require repayment until 18 months after project completion.
On March 21, 2023, Council adopted Resolution No. 2023-018 and Resolution No. 2023-019 pledging future City Water revenue for the repayment of DWSRF loan financing and authorizing the reimbursement intent of funds for a maximum principal amount of $37,000,000. The loan application amount was based on the previous engineering estimate from 2022 prior to the design being finalized.
On March 2, 2021, Council approved an agreement 2021-234 for Design Professional Services in the amount of $1,697,244 and 10% design contingency with Hazen and Sawyer for the design of the State Street WTP. On July 1, 2024, staff executed an amendment to the Design Professional Service Agreement with Hazen and Sawyer in the amount of $72,546 from the design contingency to prepare the CEQA, fiber optic design and landscape and provide additional support design services. An additional amendment is necessary to prepare a water quality management plan (WQMP), add an emergency generator, reflect actual expenditures during design and ensure continuing support by the Engineering firm through the permitting phase with IEUA. A WQMP is a site-specific plan to protect and improve the stormwater runoff through the use of best management practices (BMPs) to reduce certain pollutants that may be formed from transitioning pervious surfaces to hardscape that would prevent the infiltration of stormwater into the ground. The power generator needed for the State Street WTP would be designed to power the treatment facility, site security equipment, and Well 14 during power outages in the area.
ISSUES/ANALYSIS
Certain requirements must be met to submit a complete financial assistance application for the DWSRF loan program, regardless of whether the City receives the financial assistance requested. The application requires the approval of three separate resolutions by City Council for eligibility of financing. In 2022 and 2023, Council approved three resolutions related to the DWSRF loan program for the Project: (1) Authorizing Resolution No. 2022-060, (2) Financing Resolution No. 2023-018, and (3) Reimbursement Resolution No. 2023-019. Resolutions (1) and (3) need to be amended for the City's DWSRF loan application to proceed.
Consistent with Council approval, staff submitted a DWSRF loan application to fund the State Street WTP construction, and construction administration phase. In its review of the City’s application, the State Water Board determined the City’s submitted resolutions were not compliant with DWSRF program guidelines. Resolution No. 2025-001 (Exhibit B) and Resolution No. 2025-002 (Exhibit D) will replace the prior resolutions and allow the City to be eligible for consideration of a DWSRF program loan for $50,000,000 and eligibility for the DWSRF “Emerging Contaminants Grant” (EC Grant) for $10,000,000. (Note: EC Grant is a financial assistance grant, not a loan.) Staff recommends the DWSRF program loan for $50,000,000 due to the current bidding climate, the specialty of a contractor to perform the work, and the fact that construction will occur primarily in the unincorporated County areas. Disadvantaged communities may receive EC Grant amounts that can cover 100% of the project cost to eliminate the contaminants. Non-disadvantaged communities are eligible for up to 50% of the project cost to remove the eligible contaminant (not to exceed $10,000,000). The estimated cost to complete the State Street WTP scope is greater than $20,000,000 however, the EC Grant per agency is capped at $10,000,000 since Chino is not classified as a disadvantaged community.
The EC Grant is part of the Infrastructure Investment and Jobs Act (IIJA) of 2021 allocated to the U.S. Environmental Protection Agency (EPA) which is administered through the DWSRF. If a DWSRF loan is awarded to the City, the anticipated notice of award would occur in the spring of 2025 and the loan agreement would be brought before Council for execution. Existing unused appropriations allocated to the project would be returned to Fund 520 - Water Fund balance upon approval of the loan and grant disbursement funds for eligible expenditures (e.g. all construction activities, soft costs associated with construction such as project management, construction management, inspection, permit fees, engineering support through construction, etc.).
In March 2023, the City was allocated a $2,000,000 grant from the EPA through the Community Project Funding (CPF) Program advocated by Congresswoman Norma Torres for the Water Treatment Plant serving Well 4 and Well 6 (WA231). A value engineering assessment and cost-benefit analysis was performed to consider the ultimate impact to the City’s water supply system if only one project were built (WA231 or State Street WTP). The evaluation determined that the State Street WTP provides a greater water supply benefit consistent with the City’s priority of investing in infrastructure that provides maximum community benefit. As the funds were initially for WA231, the City requested a technical correction with the EPA, which is administering the program funds to move the grant money to the State Street WTP. A request was approved in July 2024, however additional steps are required to secure the funding, including submitting an EPA grant application. Resolution No. 2025-003 (Exhibit E) authorizes the City Manager or designee to sign and submit an application to the U.S. Environmental Protection Agency for grant program eligibility.
The future State Street WTP will provide a treatment system to include pretreatment through sand separators followed by cartridge filters (solids removal), 1,2,3-TCP removal through Granular Activated Carbon (GAC), perchlorate and nitrate removal through a proprietary ion exchange (IX) treatment system, then disinfection and storage in the 7-million-gallon Reservoir No. 5 before distribution. The IX treatment system generates wastewater known as brine, that will be disposed of through a new connection to the Non-Reclaimable Wastewater System (NRWS) brine disposal pipeline that is managed locally by the Inland Empire Utilities Agency (IEUA) and treated at the Los Angeles County Sanitation District (LACSD). The GAC system generates a periodic backwash water when the media is replaced that will be disposed of through an onsite retention pond or by a local sewer connection.
Inland Empire Utilities Agency (IEUA) allows industries with a direct connection to the IEUA Non-Reclaimable Wastewater System (NRWS) to acquire industrial wastewater discharge rights (in capacity units) per IEUA Ordinance No. 2024-6-3 to establish the fee structure associated with that particular industry’s waste discharge. Staff has performed a cost analysis and determined that this current fee structure based on the purchase of fifty-two (52) capacity units for 16,877 gallons per day (gpd) will be necessary. The current purchase rate is $4,172 per NRWS capacity unit.
To secure Non-Reclaimable Wastewater System (NRWS) discharge capacity rights for the State Street Water Treatment Plant Project (State Street WTP), staff recommends City Council approve a one-time purchase from the Inland Empire Utilities Agency (IEUA) for a cost of $216,944 to be funded from Fund 520 (Water Fund).
During the final stages of design, City staff determined that it would be beneficial to include additional design services for the preparation of a WQMP and design of an emergency generator. Additionally, Hazen has provided continuity and support during the extended design schedule of the project that has exceeded the original contract amount. An amendment to increase Hazen & Sawyer’s engineering services would allow Hazen to implement changes to the design so that they may be incorporated into prior to construction. Staff is recommending an amendment to the design professional services agreement with Hazen & Sawyer in an increase aggregate amount of $170,405. Therefore, the total contract amount with Hazen & Sawyer is $1,940,195.
Attachments: Exhibit A - WA212 Vicinity Map
Exhibit B - Resolution No. 2025-001 (DWSRF Authorizing)
Exhibit C - Resolution No. 2023-018 (DWSRF Financing)
Exhibit D - Resolution No. 2025-002 (DWSRF Reimbursement)
Exhibit E - Resolution No. 2025-003 (EPA Grant)
Exhibit F - PSA Amendment - Hazen & Sawyer