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    Santa Paula: Sewer and Water Rates to Rise

    By Sheryl Hamlin

    Santa Paula’s ad hoc Water and Sewer Rate committee consisting of Mayor Garman and Council Member Crosswhite met on Thursday 10:00 am to discuss the rate study. Others in attendance were: Thai Chai, City Engineer, Cristy Ramirez, Finance Director, Ikani Taumoepeau, Assistant CM, Michael Rock, City Manager,and Jackie Nunez, Assistant to City Manager. Three staff members from NBS, consulting firm, attended on conference call. One person from the public, Sheryl Hamlin, attended.

    In order to understand the rate increases proposed for the wastewater plant, it is ESSENTIAL that citizens understand the history and important milestones in the “new” wastewater plant which commenced operations in 2010. This material was not part of the meeting.

    Important Dates in Wastewater History

    Source: Council Minutes July 16, 2007

    People of the State of California ex. rel. California Regional Water Quality Control Board, Los Angeles Region v. City of Santa Paula (not yet filed); Santa Paula Wastewater Treatment Facility; alleged exceedances of effluent limitations set forth in City’s NPDES permit between 2000 and 2007. Number of cases: one.

    It was the threat of these NPDES based fines (not chlorides) that triggered the building of the new plant which went live in 2010; however, council minutes and citizen testimony reflect concern about chloride levels. There was even a suggestion that Santa Paula might tie in to the Calleguas brine line. Minutes: 7cc07_16

    Source: WASTE DISCHARGE REQUIREMENTS FOR CITY OF SANTA PAULA, ORDER NO. R4-2007- 0028,(Santa Paula Wastewater Recycling Facility),(File No. 06-189)

    Source: Los Angeles Water Quality Control Board, 2007

     

    There is nothing on the Los Angeles Quality Control Board website indicating dispensation for the chloride requirement of 110 mg/L. The Environmental Impact Report (EIR) for the new plant is posted neither to the City of Santa Paula website nor to the Los Angeles Regional Quality Control Board website.

    Source: WASTE DISCHARGE REQUIREMENTS FOR CITY OF SANTA PAULA, ORDER NO. R4-2007- 0028,(Santa Paula Wastewater Recycling Facility),(File No. 06-189)

    The Discharger believes that eliminating the need for the home water softeners will reduce the concentration of the chloride entering the existing SPWRF and new SPWRF. Consequently, the Discharger has adopted Ordinance No. 1160 (copy attached and incorporated herein by reference) which prohibits the installation or replacement, of residential self-regenerating water softeners discharging to the City sanitary sewer system within the City of Santa Paula. Ordinance No 1160 authorizes the City Manager to promulgate administrative polices and procedures designed to enforce the Ordinance and to establish a buy-back program to assist in reducing the number of existing residential self-regenerating water softening appliances. To improve water quality and reduce discharges of self-regenerating water softener brines, the Discharger is analyzing alternatives to construct a centralized well water treatment system. A membrane technology is currently an alternative being considered. The Discharger will select an appropriate softening technology that can be the most cost effective treatment

    Source: WASTE DISCHARGE REQUIREMENTS FOR CITY OF SANTA PAULA, ORDER NO. R4-2007- 0028,(Santa Paula Wastewater Recycling Facility),(File No. 06-189)

    Subsequently, however, the Discharger has become concerned that it may not be able to meet the groundwater quality objective of 110 mg/L for chloride. The Regional Board is considering either a regional solution for the area of Fillmore, Santa Paula, and Piru, or a case by case approach solution for those facilities with chloride issues in the area. Therefore, an amendment to this chloride limit may be made according to TMDL studies as explained in Finding 32. The reconsideration and action taken is tentatively scheduled for reopener by September 2008. A new water quality objective for chloride is expected for the Santa Paula area by the time this new SPWRF is in operation and discharging to the infiltration ponds and/or subsurface irrigation.

    This document is extremely significant. In 2007, the City of Santa Paula realized the new plant would NOT mitigate chlorides and is hoping for help from the Los Angeles Regional Water Quality Control Board by reducing the standards.

    Source: July 23, 2007 RFQ Santa Paula Wastewater

    The document does not contain a requirement for chloride mitigation.

    Click here for RFQ/RFP links.

    Source: October 2007 RFP Santa Paula Wastewater

    The document does not contain a requirement for chloride mitigation.

    Click here for RFQ/RFP links.

    Source: December 30,2014
    NOTICE OF VIOLATION – NEW SANTA PAULA WASTEWATER RECYCLING FACILITY,
    920 CORPORATION STREET, SANTA PAULA, CA 93060 (ORDER NO. R4-2007-0028, Cl-
    9259, FILE NO. 06~189, GLOBAL ID WDR100000849)

    Excessive chlorides and other violations, including late filing of reports, since 2011 are shown in the above listed Los Angeles Regional Water Quality Control Board report.

    From 10/31/2011, the Chloride measurement 146 mg/L to 9/30/2014 the Chloride measurement was 150 mg/L. In 2012, the chloride grab showed a measurememt of 151 mg/L.

    Source: 2015 Santa Paula Buys Wastewater Plant for $70.8 million

    Read article here: Plant Purchase

    The City sued Santa Paula, LLC saying it did not provide chloride removal, but failed in that legal endeavor, yet bought the plant in spite of this deficiency expecting to save money from lower interest costs. Read about that suit here.

    Source: Council Minutes June 22, 2015

    Santa Paula authorized a water softener buyback program.

    Source: TENTATIVE WASTE DISCHARGE REQUIREMENTS (WDRs) AND CEASE AND DESIST ORDER (COO) FOR SANTA PAULA WATER RECYCLING FACILITY – CITY OF SANTA PAULA (Cl NO. 9259, FILE NO. 06-189, GLOBAL ID WDR100000849) September 1, 2017,

    In 2017 Los Angeles Regional Water Quality Control Board issues a Cease and Desist Order for the wastewater plant, seven years after the plant was operational in 2010 and a decade after the City of Santa Paula authorized an incomplete 60% solution.

    Source: March 2019 Staff Report

    Chlorides at plant and near wells at 124 mg/L. Click here for details of staff report. See item 7.

    Source: 2019 Santa Paula files a project plan to mitigate chlorides

    The report can be read at this url:
    Geotracker

    The top choice in the consultant’s report is a pipeline to Limoneira wherein water from the plant will be sent “as-is” to Limoneira. Note that now the Chloride measurements are about 134 mg/L at the plant and at nearby wells per staff reports.

    Read summary of mitigation options here: Mitigation Options

    Only A Conceptual Mitigation Plan

    The City of Santa Paula plans to spend $1.5 million for engineering work on a “conceptual” solution to pipe the heavily chloride laden water to Limoneira. The Public Works Director said at a recent council meeting that its success is not guaranteed. See link to video where the PW Director responds to Mayor Araiza indicating there is no guarantee this plan will work. Read summary of the mitigation report alternatives here: Mitigation Report. Council approved this Capital Improvement Program (CIP) expenditure in the FY19/20 budget.

    Santa Paula Wastewater Plant Never in Chloride Compliance

    Think back to 2007, when the City of Santa Paula stated at that time the buyback program would not work to reduce chlorides.

    Given the known issue with chlorides, why would a new plant with no capability for chloride mitigation have been built? Did the Los Angeles Regional Water Quality Control Board not read the RFQ and/or RFP for the new plant? Why would it have taken a decade for the Los Angeles Regional Water Quality Control Board to produce nothing except documentation of continued chloride violation? Will the Los Angeles Regional Water Quality Control Board require a proven, workable solution to the excess chlorides?

    Now the city and ratepayers are faced with millions in capital expenditures to rectify this deficiency in the wastewater plant.

    2019 Water and Sewer Rate Study Options

    As background for the rate study, read the full rate study here.

    The options considered in the study are listed below for both water and sewer. Note that bonds for sewer relate to chloride compliance and other unnamed Capital Improvement (CIP) projects, but those for water are simply called “water supply and distribution expenses”. The NBS report did not enumerate all CIP items.

    Description of Alternatives – The following is a summary of the water alternatives currently being considered:

    • Alternative #1 – No Rate Increases. This shows what the results would be if the City were to make no rate increases.
    • Alternative #2 – 15% Annual Rate Increases for the next 5 years. Note: this means the rate will double in 5 years (not in report).
    • Alternative #3 – Annual Rate Increases to Meet Debt Coverage. This alternative only focuses on meeting debt coverage ratios.
    • Alternative #4 – Issuing $15 million in Revenue Bonds and Delaying three CIP Projects. The revenue bonds would be issued in FY 2020/21 and spent in subsequent years to reduce the use of capital reserves and avoid funding capital projects directly through rate revenue.

    Description of Alternatives – The following is a summary of the sewer alternatives currently being considered:

    • Alternative #1 – No Rate Increases. This shows what the results would be if the City were to make no rate increases.
    • Alternative #2 – Inflation-Based Annual Rate Increases of three percent for the next 5 years.
    • Alternative #3 – Issuing $20 million in Revenue Bonds in FY 2020/21, which will be spent in subsequent years to reduce the use of capital reserves and avoid funding capital projects directly through rate revenue.
    • Alternative #3B – Separate funding for the $15 million Recycled Water Distribution System. In other words, sewer rates will not fund this project, eliminating both the need for new revenue bonds and the need for rate increases over the next five years.

    Issues In Rate Study

    Separating capital from operational costs would fine tune the model; this is an option for both water and sewer.

    The study does not show a usage mixture change, nor does it attempt to address capacity issues. When will the wastewater plant hit capacity? When will EA1 growth strain the system?

    Committee Discussion

    It was noted that NBS has been retained twice previously (2014 and 2016), but no rates were changed. It was stated several times at the meeting that rates have not been raised in eight years.

    The three potentially delayed water projects are: cross-town water pipeline, Harvard pipeline and Mesa water tower. Council Member Crosswhite noted that these projects are also tied to road projects, so the road plan would be impacted.

    Council Member Crosswhite noted an inconsistency in the sewer increase relative to the water increase. The consultant said this was due to a low growth rate. City Manager Rock said the rate used in the model was too low because they expected 1500 EA1 homes in 5 to 7 years.

    There was a lengthy discussion about the perceived inequity in the rate model against large properties whose water usage is primarily exterior, because the meter only measures incoming water and sewer charges are a “cost-of-service cost allocation process”.

    The issuance of more debt versus ratepayer funded capital projects brought caution from Finance Director Ramirez who said that bonds indebt future generations. City Manager Rock said he was concerned about too much debt.

    Director Ramirez reminded that United Water Conservation District (UWCD) raised their rates 25% which is in the budget.

    City Manager Rock said that the transfers from the Enterprise Funds to the General Fund represent services used by the Enterprises provided by the City.

    The schedule must be followed precisely due to the requirements for citizen notification. The plan will be presented at the July 17, 2019 council meeting. There will be at least one citizen town hall. The last such town hall was in 2014 where several hundred attended. By mid-September Council must have agreed on an approach which will be reviewed by lawyers for Proposition 218 compliance, then mailed to 9000 plus ratepayers. There is a 45 day period for protest. The protest period would terminate by the end of October. New rates could be implemented after the protest period ends as soon as the computer system is prepared, potentially in November 2019.

    Summary of potential New Borrowings (source:NBS)

    Financial Alternatives: During the course of this study, NBS developed several sewer rate alternatives for the City to consider. As with the water rates, all rate structure alternatives were developed using industry standards and cost-of-service principles. The sewer rate alternatives developed include two significant variations: (1) one in which the City issues new revenue bonds in the amount of $20 million in FY 2020/21 to cover most of the capital expenditures over the next five years; and, (2) another that assumes the $15 million recycled water distribution project will be separately funded (not with sewer rates).
    The new $20 million revenue bond would add $1.5 million in additional debt service, thereby increasing the annual debt service from $4.9 million to $6.4 million beginning in FY 2021/22. However, it would be very difficult to adequately fund the capital improvements without this additional debt issuance, which also requires only a minor increase in the rates of 1% annually over the next five-years. Separately funding the recycled water distribution project would vastly improve the sewer utility’s financial outlook and reduce (or eliminate) rate increases. Ultimately, the City Council will need to decide which approach to implement.

    The NBS report did not enumerate the projects for which this borrowing related, except the chloride mitigation project. One idea was a sewer district assessment for funding this project.

    More history about the Wastewater Plant

    Recent Lawsuit

    Operational issues with wastewater plant.

    All communication between the City and the Los Angeles Regional Water Quality Control Board are here: Geotracker

    Previous council discussion about water and sewer rebates: Read here

    For more information on author click sherylhamlin dot com


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