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HomeMy WebLinkAbout1998-11-02 City Council (10)City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: PUBLIC WORKS 5 DATE:NOVEMBER 2, 1998 CMR:404:98 SUBJECT:APPROVAL OF AMENDMENT NO. TWO TO THE SEWER CONSTRUCTION AND SERVICE CONTRACT NO. C869 BETWEEN THE CITY OF PALO ALTO AND STANFORD UNIVERSITY TO DEFINE STANFORD’S OBLIGATIONS WITH REGARDS TO REIMBURSING PALO ALTO FOR COSTS OF INCINERATOR REHABILITATION AND INCREASE THE ANNUAL ONGOING CAPITAL IMPROVEMENT BUDGET CAP RECOMMENDATION Staff recommends that Council approve and authorize the Mayor to execute Amendmem No. 2 to the Sewer Construction and Service Contract between the City of Palo Alto and the Trustees of Leland Stanford Junior Urfiversity (Stanford). Amendment No. 2 defines Stanford’s obligations to reimburse Palo Alto for the future costs of debt service for bond financing of the incinerator rehabilitation projecL and increases the annual budget cap for ongoing capital improvements at the Regional Water Quality Control Plant (RWQCP). BACKGROUND On February 23, 1998,Council approved a project to rehabilitate the incinerators at the RWQCP (CMR:141:98). The financial responsibility will be shared by the RWQCP Partners - the cities of Palo Alto, Mountain View, and Los Altos. On March 16, 1998, Council approved the amendment to the Partners’ Agreement that defines each partner’s obligations for bond financing the incinerator rehabilitation project, and increased the annual budget cap for ongoing capital improvements at the RWQCP (CMR: 165:98). DISCUSSION Palo Alto’s share includes the obligationsof three subpartners - East Palo Alto, Stanford University, and Los Altos Hills. Palo Alto has a separate contract with each of the subparmers. Palo Alto’s contract with Stanford was originally written in 1956, and has been amended once. Changes to Stanford’s contract are needed for Palo Alto to recover Stanford’s share of the City’s obligations in the approved Amendment to the Partners’ Agreement. The obligations of East Palo Alto and Los Altos Hills will be addressed in separate forthcoming staff reports.. CMR:404:98 Page 1 of 2 The proposed amendment will defme Stanford’s obligations to reimburse Palo Alto for the debt service to pay for the incinerator rehabilitation project, and increase the annual budget cap for ongoing capital improvements, consistent with the commitments Palo Alto made with the plant Partners. RESOURCE IMPACT Funds for the incinerator rehabilitation project will be debt financed. POLICY IMPLICATIONS The recommendation of this. staff report is consistent with the City policies. TIMELINE Issuance of bond is anticipated in August 1999. ATTACHMENTS Attachment A Amendment No. 2 to the Sewer Construction and Service Contract between the City of Palo Alto and the Trustees of Leland Stanford Junior University Attachment B CMR: 141:98 Attachment C CMR:165:98 PREPARED BY: DEPARTMENT HEAD: Bill Miks, Manager RWQCP GLENN S. ROBERTS Director of Public Works CITY MANAGER APPROVAL: EMILY HARRISON Assistant City Manager CMR:404:98 Page 2 of 2 ATTACHMENT A AMENDMENT NO. TWO TO CONTRACT NO. C869 BETWEEN THE CITY OF PALO ALTO AND THE BOARD OF TRUSTEES. OF ~THE LELAND STANFORD JUNIOR UNIVERSITY This Amendment No. Two to Contract No. C869 ("Contract") is entered into -, by and between the CITY OF PALO .ALTO, a chartered city and a municipal corporation of the State of California (~City"), and THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVEKSITY, a body having corporate powers under the laws of the State of California ("Stanford). RECITALS: WHEREAS, the parties entered into a Sewer Construction and Service Agreement (~Contract") on November 30, 1956 and an addendum thereto on June 9, 1971; and WHEREAS, the parties wish to amend the Contract; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: ~. The following ~paragraphs shall be added to the Agreement to read as follows: ~P.~. !~ipl_ ementation of the Solids FaCilitz P__~.. The City and Stanford shall approve, in writing, a two-phase project to rehabilitate the Palo Alto Regional Water Quality Control Plant incinerators, promptly, upon the execution of this Amendment No. Two, and to add a dryer for peak loads in approximately ten (I0) years from the date of execution of this Amendment No. Two in accordance with the provisions of a three- volume, spiral-bound Palo Alto~Regional Water Quality Control Plant Solids Facility Plan, dated May 1997, including-Appendix A and Appendix B, prepared by CH2M Hill, Inc., consulting engineers, which is incorporated herein by reference and made a part hereof. Each party shall use best efforts to secure sufficient funding to pay for its proportionate ~share of work to rehabilitate the incinerator in a timely manner, and shall defer, temporarily, separate efforts to secure adequate funding to pay for work to .rehabilitate the dryer. Each party shall-pay for the cost of rehabilitating the incinerator in an amount equal to its proportional share of capacity in the Joint System or portion thereof, as more fully described in Exhibit ~H", attached hereto and incorporated herein by reference. If Stanford will pay for its share of the costs of the rehabilitation of the incinerator through its voluntary participation in the City’s issuance of debt securities, if any, to finance .the work, then Stanford shall pay to the City for its share of the City’s debt service in an amount equal to its proportional share of~capacity in the Joint System."i~~ 980810 ayn 0071474 "ParaGraph 22. Capital additions for the replacement of obsolete or worn-out units, or minor capital additions to improve the efficiency of the Palo Alto Regional Water Quality Control Plant operations, shall not exceed the amount specified for the base year adjusted, annually, in accordance with the Consumer Price Index [Urban Wage Earners and Clerical Workers] (base year 1982- 1984 = i00) for the San Francisco-Oakland-San Jose CSMA (~CPI"), published by the United States Department of Labor, Bureau of Labor Statistics ("Index"), most immediately preceding the twelve-month period beginning in the month of July of each following fiscal year ("Extension Index"), and which shall be compared with the Index published most immediately preceding the twelve-month period beginning the July of each preceding fiscal year (~Beginning Index"). The capital addition amount for the base year is set at one million nine hundred thousand dollars ($1,900,000.00)." SECTION 2. Except as herein modified, the Contract and the addendum thereto shall remain unchanged and in full force and effect, and they are hereby-ratified and confirmed. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment No. Two on the date first above written. ATTEST CITY OF PAJ~OALTO City Clerk Mayor APPROVED AS TO FORM: Senior Asst. City Attorney. APPROVED: Assistant City Manager THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY Name : ~//~.,/~,s,-~,-~/ Title : ."q~’P ,~,~ F,~," " TaxpayerNo. Director of Public Works Director of Administrative Services By: Name: Title: Risk Manager 980810 syn 0071474 2 CERTIFICATE OF ACKNOWLEDGMENT (Civil Code ~ 1189) On~/--//~, 1998, before me, _~,[~ /0 /~/Z~ ; a Notary .Public ~n and for said County and State, personally appeared C~V~" ~ 4 ~ ,’J-/-, ~/".,~ ~ ,-~, personally ~o~ to me or~roved t- -. ~. ~’ ~~o~ evidence to be the person~whose n~e(~ isle s~scribed to the within inst~ent and ac~owledged to me that h=/o~=,,_~, ....,~= executed the s~e in-~=,=~,~=/~-/+~q~_~ authorized capacity~), and that by his~ir signature ~) on the inst~ent the person(s), or the entity upon behalf of which the person(~) acted, executed the inst~ent. WITNESS my hand and official seal. Comm #1046159ARY PURLIC CALIFORNIA~I8AN MATEO COUNTYComm E~p~ros D,~C. 12, 1998 ’S~gn~ture of Notar~ ~ublic 980810 syn 0071474 EXHIBIT H Capacity Rights and ’Estimated Solids Facility Plan Cash flow Projections User Agency Palo Alto EPASD Stanford LAH Mountain View Los Altos TOTALS MGD* 15.30 3.06 2.11 _0.63 21.1 15.1 3.8 40.0 Capacity 38.2 7.65 5.27 1.57 52.6 37.9 9.5 I 00.0 Estimated Construction and Engineering. Fee Allocations by Fiscal Year 1998/1999 $ 267,400 $ 53,550 $ 36,890 $ 10,990 $ 368,200 $ .265,300 $ 66,500 700,000 1999/2000 $ 764,000 $. 153,000 $ 105,400 $ 31,400 $ 1,052,000 $ 758,000. $ 190,000 $ 2,000,000 2000/2001 $ 1,337,000 $ 267,750 $ 184,450 $ 54,950 $ 1,841,000 $ 1,326,500 $ 332,500 $ 3,500,000 * Capacity expressed in A .nnual Average Flow, Million Gallons per Day ATTACHMENT B City of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: PUBLIC WORKS DATE: SUBJECT: FEBRUARY 23, 1998 CMR: 141:98 ADOPTION OF THE NEGATIVE DECLARATION - REGIONAL WATER QUALITY CONTROL PLANT, AND APPROVAL OF THE SOLIDS FACILITY PLAN’S RECOMMENDATION TO REHABILITATE THE INCINERATORS REPORT IN BRIEF The Solids Facility Plan evaluates options and recommends a plan to manage the solid residue at the Regional Water Quality Control Plant (RWQCP). The RWQCP currently uses two incinerators to bum and reduce the sludge to a manageable amount of ash product for beneficial reuse. After 26 years of continuous operation, the incinerators have deteriorated significantly prompting the preparation of the Plan. The Plan examines the environmental, economic, and operational impact of sludge treatment options and recommends rehabilitation of the two incinerators immediately, with the addition of a sludge dryer in the future, if needed. Certain environmental advocacy groups have serious reservations about the continuation of sewage sludge incineration. However, following extensive discussions with such groups and further data-gathering, staff was unable to conclude that other options are environmentally better.. Staff believes the RWQCP should continue to analyze future options, reevaluate and adopt a set of long range goals that are responsive to the communities and in context with future regulations. Major changes in plant design and policy should not be made until long range goals are complete. CMR: 141:98 Page 1 of-~ RECOMMENDATIONS Staffrecommends that Council: o Approve the recommendations of the Solids Facility Plan to rehabilitate the sewage ¯ sludge incinerators at the RWQCP immediately, and add a thermal dryer when peak loading capacity is required, or if pilot testing of a sludge dryer is desired. Adopt the negative declaration for the recommended project to rehabilitate the ¯ incinerators at the RWQCP immediately, and add a thermal dryer, if needed. °Direct staff to forward the amendments to the Partners’ Agreements to Partner agencies for approval. Direct staff to develop policies .for reducing environmental releases of mercury, dioxins, polychlorinated biphenols. 4 Direct staff to establish a process for developing long term goals for the RWQCP, and thenreturn to Council for approval of the process. BACKGROUND The RWQCP is required to continuously process all incoming sewage. It currently operates two incinerators to treat the solid residue (sludge) of the sewage. The sludge is burned and reduced to a manageable amount of ash suitable for beneficial reuse. The sludge, before burning, is unsuitable for disposal in landfills. The incinerators are the RWQCP’s only means to treat and prepare the sludge for proper disposal. The reliability and redundancy of these incinerators are extremely important to the RWQCP. Concerns with the incinerators were discussed in earlier staffreports, (CMR:278:96 and CMR:236:97), and are summarized below. The first concern is reliability: The incinerators were constructed in 1971 and have become more and more difficult to keep in operating condition. Large cracks have developed in the half-inch steel shell, and the chances of both incinerators being down at the same time have increased to a point of very serious concern. Given the 24ohour per day, 365 day per year nature of the operation, inability to operate the incinerators would present immediate emergency conditions and, within 24 hours, human health concerns. The second concern is redundancy: The wastewater flow going into the RWQCP varies daily and seasonally. While the two existing incinerators are permitted to operate concurrently to meet varying flow requirements, this operating mode does not"allow for emergencies or repairs. Currently, one of the incinerators is so fi’equently under repair that a back-up almost never exists. The RWQCP is required to provide reliable, uninterrupted service. CMR: 141:98 Page 2 of 8 The third concern is pollutant releases: TheRWQCP incinerators are in compliance with current regulations. However, the existing emission control devices on the incinerators are outdated and therefore, maximum reduction of pollutants cannot be achieved. The solids treatment and disposal options are currently heavily regulated, and future regulations are uncertain. The issues associated with the pollutant releases to air, land, and water from sludge treatment and disposal continue to be a concern with the public and regulatory agencies. These concems prompted the preparation of the Solids Facility Plan(Plan). The Plan examines the current and future potential regulations, and evaluates the environmental and economic impact of several options. DISCUSSION RWQCP staff and staff from Partner agencies worked as technical advisors in preparing the Plan. The Plan was developed through two studies, which have been under way since 1994. The first study evaluated the feasibility of the full realm of technologies for handling the sludge, and reduced down the number of feasible options. The recommendation of the feasibility study formed the basis of the second study, the Plan. Two technologies are considered feasible options besides incineration: sludge digestion and sludge drying. Sludge digestion is the anaerobic breakdown of sludge in large holding tanks over long periods. The end product is digested sludge, commonly called biosolids. Sludge drying uses low heat to evaporate the water out of the sludge without burning the organics. The residue from the dryer is in the form of pellets. The residue from both processes are typically used on agricultural land as soil supplement. Virtually all sewage treatment plants the size of the RWQCP use incineration, digestion, or drying. In the West, almost all plants use digestion, with land application of the digested sludge. The RWQCP chose incineration 27 years ago because incineration takes less land and produces less odor and ~’esidue. Recent studies demonstrate that another advantage of incineration is that pathogens, and most organic pollutants in the sludge such as polychlodnated biphenols (PCBs) and organochlorine pesticides (e.g. DDT), are destroyed in the incinerators. Thus, when the ash from the incinerators is applied to land, it contains less pollutants than the residue from digestion or drying. It is difficult to compare the environmental effects of the three options. Staffwas unable to conclude that one technology is "better" for the environment than another. All options have certain negative environmental impacts. Each releases, different pollutants to different media - air, land or water. Incineration produces air pollutants, consumes energy, and does not preserve the organic material for sludge reuse. Digestion does not destroy organic pollutants, or dioxin. Dryers cbnsume even more energy and apparently .have never been tested for dioxin air emissions. The inability to draw conclusions is also due to the difficulty of comparing different types of environmental releases. The pathways for the final impact CMR:141:98 -Page 3 of~ resulting from initial pollutant releases are numerous and difficult to trace. All three options can meet all current environmental, health and safety requirements Therefore, staff focussed on the following criteria in comparing the options: Cost Land use Visual impact Potential odor The table below is the comparison of the three options: Options Incinerator Rehab. Plus Dryer Total Cost $11.4 million Footprint 800 sf> existing Visual Impact Low Odor. Low Digesters $29.7 million 45,000 sf> existing High High $17.2 million Low1500 sf > existingDryers Medium The incinerator rehabilitation, plus dryer option, will meet the current and the known future regulations; it is the lowest cost, has the smallestfootprint, least visual impact, and least odor. Staff, therefore, recommends the project to rehabilitate the incinerators immediately, and to add the dryer if needed. The project will include three major elements: 1.Repair the existing incinerators to ensure safe and reliable operation. Relocate the emission control device to outside of the’ incinerator to allow full utilization of the entire incinerator for combustion. The improved efficiency will enable a single incinerator to take care of the varying flow most of the time, leaving one incinerator as a reliable standby. A dryer may be installed, if the City decides to pilot test the dryer, or when it is needed to help treat the solids. Replace the existing emission control devices with new state-of-the-art devices to improve the emission. The Partners’ staff support City staff’s recommendation and have agreed to participate in a joint financial plan entailing debt financing: City staffis presently working with the Partners on the amendment to finance the project. Palo Alto would issue the debt, and Partner agencies would pay Palo Alto in accordance with the amendment to the Partners’ CMR: 141:98 Page 4 of"-----~ agreements, which is consistent with past capital financing. The draft, amendment was prepared jointly by Palo Alto’s City Attorney’s office and outside counsel at Jones, Hall, Hill & White. It incorporates comments from the City’s financial advisor, Stone & Youngberg. The amendment will be presented to the Council in March 1998. Many environmental advocacy groups (EAGs) raised the concern that a non-incineration option may be better for the environment (CMR:356:97). In response to their concerns, additional data was collected and a Response Study was prepared. Many of the EAGs made the point that, if the sludge were made substantially cleaner by keeping pollutants out of the wastewater, non-incineration technologies (principally sludge digestion or sludge drying) would be better for the environment. The non-incineration option uses less energy, produces less air emission, and would allow reuse of the organic matter as a soil supplement without the Current negative side-effect of putting pollutants on the soil as well, if the wastewater is "cleaner." While this logic is sound, it depends upon making the sludge cleaner through source control. Staff investigated the potential for source control of key pollutants (dioxins, mercury, organochlorine pesticides, polychlorinated biphenols - PCB ) and found that there was no. reason to assume that .major reductions would occur quickly. Action items for implementation by Palo Alto were developed, but it is not anticipated that those reductions will be greater than approximately 20 percent. Thus, non-incineration optiong will continue to have the draw-back of placing the pollutants on the soil. For this and other reasons described in the Response Study, staff’s recommendation has not been changed. Given currently available data, the current pollutant levels in sludge, and the current ability to evaluate impact on the environment, staff believes this recommendation to be the appropriate one. However, .it is not at all certain that incineration should be the long term technology of choice for the RWQCP. Air emissions, high energy use, and failure to reuse organic matter are features of incineration that raise significant concerns about its long term use. Therefore, staffis also recommending the development of long term goals to guide future design work at the RWQCP. Staff is also recommending the development of specific policies to achieve reductions of releases of mercury, dioxins, and organochlorine pesticides to the environment. These policies will also assist staff in the long term planning that must be accomplished for the RWQCP: ALTERNATIVES TO STA I If Council does not adopt the Negative Declaration and approve the recommendations, the RWQCP would continue to attempt to keep the incinerators in operation. Downtime, repair costs, and safety issues.would continue to escalate. Should an ineineratorfail, the RWQCP is required by law to repair the incinerator immediately. At that time, the cost of the repair would almost certainly be. higher than the planned repair, and any work to improve the air emissions would most likely not be implemented because of the urgency of the situation. CMR: 141:98 Page 5. of 8 With respect to the alternatives to incineration, both digestion and drying options would have a significant affect on the environment, odor control, and visual impact. Without full environmental review by the public, these options cannot be considered as an alternate project. Therefore, staff would be required to restar~ data gathering, conceptual design and environmental review. It would be several years before staff could return to Council with an alternative digestion or drying option. RESOURCE IMPACT The capital project is estimated to cost approximately $6.2 million for the rehabilitation of the incinerators, and $5.2 million for the dryer (in1998 dollars). The attached cash flow analysis (Attachment B) shows the Partners’ share of a twenty-year bond funding for the project. If the rehabilitation is constructed in 1999 it is estimated that the sewer rate impact to the Palo Alto rate payers will be an increase of less than three percent. POLICY IMPLICATIONS The recommended project is consistent with City policies. The recommendation to establish a process for determining long term goals will lead to the adoption of new policies. If approved, the.rehabilitation of the incinerators will proceed immediately at the following schedule: Final design .starts Permitting Debt financing Bid Construction starts Bond Sale May 1998 February 1999 May 1999 May 1999 August 1999 Fall 1999 ENVIRONMENTAL REVIEW An environmental check list was prepared for the recommended project (Project). Compared to the existing incinerators, the check list showed that the Project has no major increase in impact. The Project will result in better emissions compared to the existing facility. There will be some temporary impact due to construction activities that will be mitigated. A Negative Declaration (N.D.) has, therefore, been prepared for the Project. The N.D. (Attachment A) was distributed and notice was given to the public for review and comments. The review period started on January 16, 1998 and ended on February 14, 1998. Staff received some questions related to the details of the design and repair. A pre-design was performed on the Project prior to the preparation of the N.D. Final design will be CMK: i 41:98 Page 6 of~ performed upon Council approval of the Project. The final design will include all the details for the repair and the construction. A letter was received from the League of Women Voters of Pale Alto. The letter stated that the incinerator rehabilitation project is probably the appropriate solution at the present time, and urged the RWQCP to continue to evaluate other options and work on the long range plan. A copy of the letter is attached (Attachment C). A second letter (Attachment D) was received from Bay Area Action with the following five suggestions: 1.Develop dioxin reduction policy for the City of Pale Alto, and request neighboring cities to do the same. 2.Build a solids thermal dryer to pilot test a non-dioxin creating alternative to handling sewage sludge. 3. Explore alternatives to safely dispose of sludge or ash which contains dioxins. 4.Educate other public agencies and the public about dioxins and .provide information on how to reduce them. 5. Continue to monitor the influent and effluent from the RWQCP for dioxins. Staff believes that these suggestions can be addressed in the long-term goals and policy development process described in gtaffreeommendations 4 and 5. ATTACHMENTS A - Initial Study/Negative Declaration B - 20 year cash flow analysis C - Letter from the League of Women Voters of Pale Alto. D - Letter from Bay Area Action E - November informational booklet Response Study - A copy is available for review at the Public Works Engineering, 6th floor counter PREPARED BY: Bill Miks, Manager Regional Water Quality Control Plant Phil Bobel, Manager Environmental Complianee Division CMR:!41:98 -" Page 7 of~---------’~ REVIEWED BY: GLENN S. ROBERTS Director of Public Works CITY MANAGER APPRoVAL:_~~~_ ~i~ M~ager CMR: 141:98 Page 8 of 8 ATTACHMENT A Initial Study/Negative Declaration (IS/ND) Palo Alto Regional Water Quality Control Plant Solids Facility Plan City of Palo Alto o Project Title: Palo Alto Regional Water Quality Control Plant (PARWQCP) Solids Facility Plan Lead Agency Name and Address:City of Palo Alto, Public Works Department Regional Water Quality Control Plant 2501 Embarcadero Way Paio Alto, California 94303 Contact Person and Phone Number: Daisy Stark, PARWQCP Engineer, 650-329-2598 o Project Location: 2501 Embarcadero Way, Palo Alto, California Application Number(s): Not Applicable Project Sponsor’s Name and Address: City of Palo Alto, PuNic Works Department, Regional Water Quality Control Plant, 2501 Embarcadero Way, Palo Alto, California, 94303 7.General Plan Designation: Major Institution/Special Facilities ’ 8.Zoning: Public Facilities with Site Design overlay (PF(D)) 9.Desc.ription of Project: PARWQCP Background The Palo Alto Regional Water Quality Control Plant (PARWQCP) provides advanced wastewater treatment for Palo Alto, Mountain View, Los Altos, Stanford University, Los Altos Hills, and much of East Palo Alto (Figure 1). The Project is located atthe PARWQCP in the City of Palo Alto at the east end of Embarcadero Way, east of Highway 101 (Figure 2). The PARWQCP separates the solid substances from the incoming wastewater (influent) EAST PALO ALTO SANITARY DIST. To San Francisco WATER QUALITY CONTROL PLANT San Francisco Bay Not To Scale PALO ALTO oooo ~o ~n Jose PALO ALTO Figure 1 Service Area Palo Alto Regional Water Quality Control Plant (see Figure 3). The liquid and solid portions are then treated. The treated wastewater is discharged via an outfall to the San Francisco Bay. The solid substance removed from the wastewater is called sewage sludge and is treated in the solids facility of the PARWQCP.The solids facility includes gravity thickeners and belt presses which remove more of the water from the sludge, two existing incinerators which burn the sludge to an ash product, and an ash storage silo and bagging system. The ash product is trucked to the Central Valley and applied to agricultural lands as a soil amendment. Figure 3 Sirnplified PARWQCP Schematic PARWQCP Wastewater Wastewater Treatment Processes Solids Incineration Treated San Francisco Wastewater Bay Ash ~. Farmland A more detailed discussion of the incineration process and the need for the Project is provided in the following sections of this IS/ND. 4 The Incineration Process and the Need for Project The Incineration Process Figure ,4 shows the location of the incineration building at the PARWQCP. The incineration process, depicted graphically in Figure 5, consists of two multiple-hearth incinerators, each with two air pollution control device~ to minimize emissions into the atmosphere. The two incinerators each consist of six hearths (separate chambers) in a vertical column where natural gas can be used in varying amounts to ignite the residual solids. Currently, the top hearth in each incinerator is used as an afterburner to bum organic molecules .in the stack gas and prevent their, release into the environment. In addition, each .incinerator has a wet scrubber that removes pollutants from the incinerator stack gases. Need for the Proiect The PARWQCP incinerators, which have been in service since 1971, have become more and more difficult to maintain in recent years and require frequent, costly repairs. Equipment downtime has increased dramatically because of the frequent repairs. The chance of both inci.nerators being out of service at the same time has increased to the point, of causing concerns about safe operations of the plant. The wastewater treatment plant must be hble to continuously process all incoming sewage. Given the 24-hour-per-day, 365-day-per-year nature of the. operati6n, the inability to operate the incinerators would present immediate emergency conditions and, within 24 hours, human.health concerns. Project Goals The proposed Project involves improvements to the solids facility., and is designed to meet the following goals: Repair the two existing incinerators to ensure a safe operating environment. Improve the efficiency of the incinerators so that only one incinerator needs to operate at a time, leaving one incinerator as a firm,.reliable standby. Upgrade the. air pollution control devices to improve the emissions of the incinerators. 5 <o Figure 5 Current Incinerator Process Residual Solids ~ Incinerator j Atmosphere Afterburner Cooling Hearth Ash Farmland Residual Solids ~ Air Scrubber Afterburner Cooling Hearth Burning Hearths Incinerator The first goal of the proposed Project is to make repairs to the two incinerators that will eliminate the frequent and costly short’term repairs, greatly reduce .equipment downtime, and insure a safe operating environment for plant personnel. This will include repair of cracks that have developed in the half-inch steel shell of the incinerators. The second goal of the proposed Project is to provide redundancy in the incineration process, allowing one of the incinerators to be held in reserve as a back up to deal with emergency situations. The wastewater flow going into the PARWQCP varies daily and seasonally. While the two existing incinerators are permitted to operate concurrently to meet the varying 7 flow requirements, this operating mode does not allow for emergencies or repairs. Currently, one of the incinerators is under such frequent .repair that a back-up incinerator almost never exists and urgent conditions are the norm. To relieve these urgent .conditions, two Project components are proposed~ The first component, a mac (separate) afterburner, will be constructed to allow the top hearth to be used to bum the solids. This will increase the throughput (the amount of solids that can be handled by one incinerator) and will also reduce the need to run both incinerators simultaneously. The second component, a solids thermal dryer, will be added if the City decides to pilot test the dryer or when it is needed to help treat the solids from anticipated population growth in the PARWQCP service area. The dryer will further reduce the water content of some of the solids before feeding the solids to the incinerators. The drier solids are much easier for the incinerator to handle and further decrease the likelihood that both incinerators would have to be operated simultaneously. The third goal of the proposed Project is to upgrade the solids facility’s air pollution conu’ol equipment. This goal will be met with two Project components for each incinerator. First, the new afterburners, which will help to meet the second goal, will be more efficient than the current afterburner and will operate at a higher temperature to completely oxidize .the organics in the stack gas. Second,, new two-stage wet scrubbers will be installed that capture substantially more gases and particulate matter than the current scrubbers. Figure 6 shows the improved incineration-system upon completion ofthe Project. Impact of the Proposed Proiect on PARWQCP Treatment Capacity The proposed project will not increase the-PARWQCP’s treatment capacity. The incineration system is a component of the PARWQCP, and a modification to the incineration system would only cause an increase in the PA!~WQCP capacity if it were currently the only limiting e0mponent of the plant. The average dry weather flow to the PARWQCP in 1996 was 24 million gallons per day (MGD) from the PARWQCP’s service area of approximate 220,000 Figure 6 Proposed IncineraObn System Residual Sol Incinerator Atmosphere 2-Stage Scrubber A.fterbumer Stack Gas Stack Gas Cooling Hearth Residual Solids ~ Cooling Hearth Ash % % Burning Hearths Farmland Incinerator people. The wastewater treatment processe~ (as distinguished from the incineration system shown in Figure 3) have a design capacity of 38 MGD average dry weather flow, which could serve a population of approximately 350,000. By contrast, the incineration system has a current approved maximum capacity of 60 dry tons per day (DT/D) (30 DT/D per incinerator), with a 1996 usage of approximately 17 DT/D to serve 220,000 people. The proposed Project will increase the peak capacity of one incinerator to 32 DT/D. While it could be argued that the capacity of incinerator system would then be 64 DT/D (32 X 2 incinerators), this is not the case for two reasons. First, only one incinerator would be operated at a time. The purpose of the project components is to insure a back-up incinerator is ready at all times. Second, the Bay Area Air Quality Management District (BAAQMD) Permit to Operate for the PARWQCP limits maximum throughput to 60 DT/D. No modification to that permit is being sought. Therefore, the incinerator system capacity would remain at 60 DT/D. This system could serve a population as great as approximately 410,000. The incinerator capacity can support a larger additional population than the available capacity in the wastewater treatment processes. The incineration system could serve a population as great as approximately 410,000, while the wastewater treatment process could only serve a population of approximately 350,000 (see Table I). Therefore, it is the wastewater treatment Table 1 Current Throughput and Maximum Capaci~, Wastewater Treatment Processes Incineration System 1996 VALUES Throughput Average 24 MGD 17 DTD *Average Population 220,000 220,000 CURRENT MAXIMUM CAPACITY Throughput Capacity 38 MGD* 60 DTD** Approximate Population 350,000 410,000 "60 DTD = Maximum Peak Daily Capacity. Average capacity associated with this peak capacity used to determine P~opulation Equivalency ~ l0 processes, not the incineration system, that limit the PARWQCP’s capacity. The proposed Project does not increase the capacity of the PARWQCP. A major capital improvement project for the wastewater treatment processes and regulatory agency approval would both be required to increase the capacity of the wastewater.treatment processes and thus increase the capacity of the PARWQCP. Such a project is unlikely within the next several decades because the current PARWQCP capacity exceeds current demand by almost 100%, while the anticipated growth in the service area during the 20-year life of the proposed Project is less than 10%. Project Approach Following are additional details on the proposed Project components. R.epair of Existing Incinerators The two incinerators are 18.75 foot diameter, 6-hearth furnaces. The interior of each incinerator is lined with refractories of firebrick and insulation material, Dewatered solids are introduced into the furnace for combustion. An ash handling system conveys the ash to a storage silo. The repair of the incinerators, all taking place within the existing building, will consist of the .following measures: Identify hot spots on the steel shell and flaws in the refractory and insulation Add steel plate patches on the shell Replace hearths (including flattened hearth) as needed Repair~t incinerator steel shells Replace fans and dueting to the stack, incinerator control systems, and furnace draft control system Add new sludge feed conveyor 11 Modification of Incineration System The modification will .increase the efficiency of the existing incinerators and improve air emissions. It will consist of the following: Construction of a new structure (possible location shown .on Figure 4) immediately adjacent to the existing building to house the new air pollution control equipment, including an external afterburner, Venturi-Pak scrubber, and exhaust ducting. The new structure will be an 800 square foot addition to the existing 5,300 square foot incinerator building. It-will be about the same height as the existing building (46 feet), and will be sheltered from the street and the public by other treatment plant structures and trees surrounding the plant. The new air pollution control equipment .will provide significant reductions in emissions compared to current emissions. Operational changes to use the top hearth as a burning hearth. Installation of an equalization storage tank. The quantity of dewatered sludg~ to be incinerated will vary hourly. The ability to temporarily store, or equalize, these variations will enhance operating results, particularly at peak conditions. A new equalization storage tank will be constructed adjacent to the south side of the incinerator building as shown on Figure-4. It will consist of a-steel storage tank with a closed top and mixers. Itwill be 25 feet in diameter and 30 feet tall, providing 100,000 gallons of storage. It will be sized for the projected average annual day’s sludge production of 18.5 DT/D. The tank will be vented to the incinerator inlet combustion air to make use of the incinerators’ new air pollution control equipment. The height of the .tank is lower than the existing incinerator building and the surrounding structures. It will not be visible from the street or by the public. Addition of a Thermal .Dryer A small thermal dryer unit would be added if the City decides to pilot test the dryer or when a single incinerator is unable to meet peak loads during the project life (through 2020). The purpose of the thermal dryer is to increase the dryness of sludge beyond that which can be 12 achieved with the existing beltpress dewatedng. Available incinerator capacity is greater with drier solids. The sludge dried by the thermal dryer during peak periods would be added to the remaining dewatered sludge before incineration. The thermal dryer is expected to be operated only sporadically during peak loading conditions, for a total of about 4 weeks during the year. This will typically occur during the wet weather months in the winter after periods of particularly heavy storms. Thermal drying involves removal of moisture from the solids to a heated air stream. There are certain issues associated with drying that can be successfully addressed with proper design and operational procedures. The product from the dryers is organic and very dry, which can cause dust. Since organic dust can be a source of explosions, thereby creating a potential safety problem, the system will be designed and constructed with dust handling systems that bring the level of dust down below the hazardous level and that meet all applicable safety requirements. Also, the dried’ sludge product is initially hot. If it is placed directly into a storage hopper, there is a potential for heat buildup, which may eventually cause the pellets to catch fire.Two measures will be included to reduce the fire hazard. First, the pellets will be cooled before being placed in storage to reduce the fire hazard. Second, nitrogen padding of the storage hopper air space can also be implemented as a means to reduce the fire hazard. The proposed thermal dryer uses indirect drying, in which fuel is eombusted in a boiler to produce steam or in a thermal oil heater to heat oil. The steam or heated oil is passed through an indirect dryer, where hollow metal disks or paddles are heated from the inside and conduct heat to the solids on the. outside of the paddles. The thermal drying facility can be located inside or outside the existing sludge incinerator building. A site just north of and adjacent to the existing incinerator bullding, as shown in Figure 4, has been identified for an outside location. Conveyors will be installed to transport 13 the dewatered solids to the thermal drying system from the belt presses and to return the dried solids to the incinerator. Also, for odor control, the foul air created during the thermal drying process will be discharged to the incinerator inlet air stream as part of the inlet combustion air. This air eventually flows to the incinerator air emissions control system and helps in fuel savings in incinerator operations since it is heated. The dryer unit includes abatement equipment for the boiler, which bums natural gas to heat the dryer. If the outdoor location is selected, the facility will be lower in height than the existing incinerator building and other surrounding structures. It will be sheltered from the street and the public by other treatment plant structures and trees surrounding the plant. California Environmental Quality Act (CEQA) Requirements The California Environmental Quality Act (CEQA) requires that potential significant environmental effects of a project proposed by a public agency be identified and disclosed to the public. A significant effect on the environment is generally defined as a "substantial or potentially substantial adverse change in the physical environment." "Environment" means the physical conditions, including both natural and man-made conditions, that exist within the area affected by a proposed project. . ~ The environmental assessment for the proposed project has identified no significant environmental effects. A Negative Declaration must include a written statement briefly explaining why a proposed project will not have a significant environmental effect when compared to the existing environment. It must include a description of the project and location, identification of the project proponent, and proposed finding of no Significant effect. It must also include a copy of the Initial Study checklist that justifies the finding of no significant effect. This Negative Declaration contains all of the required information. 14 11.Other agencies whose approval is required (e.g., permits, financing approval, or participation agreement.) Agency .:~.!. ¯ State/Regional Agencies Bay Area Air Quality Management District San Francisco Bay Regional Waler Quality Control Board City of Palo Alto City of Palo Alto Public Works Department . City of Palo Alto Department of Planning and Community ’ Development City of Palo Alto Architectural Review Board City of Palo Alto Fire’ Department Other Local Agencies City .of Mountain View City of Los Altos East Palo Alto Sanitary District Town of Los Altos Hills iPermits/Issue Authority to Construct (A/C) and Permit to Operate(P/O) - if grandfather statusis not maintained, then will be needed (existing facility attained grandfather status because it was constructed before 1972, and will retain this status as long as it is not modified in a manner that results in an air emission increase of a regulated pollutant or the repair costs are not greater than 50% of the capital cost of a new incinerator) Clean Water Act: 40 CFR Part 503 Rules--proposed revisions to CWA Part 503 will be incorporated into the existing NPDES Permit; will require Continuous Emissions Monitoring for CO and NOx along with existing requirements for Total Hydrocarbons by 2000 Grading and Drainage Review Building Use Permit Site and Design Review Architectural Review Hazardous Materials Disclosure Checklist/Inspection .Approval and Funding Approval and Funding App’roval and Funding Approval and Funding 15 Environmental Factors Potentially Affected: The environmental factors checked below would be potentially affected by this project as indicated by the checldist on the foIlow~ng pages. []Land Use and Planning []Population and Housing ~g]Geologic PrOblems [] Water [] Air Quality [] Transportation/Circulation I’-I Biol0gieal Resources [] Energ’y and Mineral Resources [] Hazards [] Noise ElMandatory Findings of Significance []Public Services []Utiliiies and Service Systems []Aesthetics []Cultural Resources []Recreation 16 Determination: On the basis of this initial evaluation: I find that the proposed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared. I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because the mitigation measures described on an attached sheet have been added to the project. A NEGATIVE DECLARATION will be prepared. I find .that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required. I find that the proposed project MAY have a significant effect(s) on the environment, but at least one effect 1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets, if the effect is a "potentially significant impact" or "potentially significant unless mitigated." An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed. Project Planner Director of Planning & Community Environment Date Date 17 Evaluation of Environmental Impacts: 1) 2) 3) 4) 5) 6) A brief explanation is required for all answers except "No Impact" answers that are adequately supported by the information sources a lead agency cities in the parentheses following each question. A "No Impact" answer is adequately supported if the referenced information sources show that the impact simply does not apply to projects like the one involved (e.g. the project falls outside a fault rupture zone). A "No Impact" answer should be explained where it is based on project-specific factors as well as general standards (e.g. the project will not expose sensitive receptors to pollutants, based on a project- specific screening analysis). 7) All answers must take account of the whole action involved, including off-site as well as on-site, ¯ cumulative as well as project-level, indirect as well as direct, and construction as well as operational impacts. "Potentially Significant Impact" is appropriate if there is substantial evidence that an effect is significant. If there are one or more "Potentially Significant Impact" entries when the determination is made, an EIK is required. "Negative Declaration: Potentially Significant Unless Mitigation Incorporated" applies where the incorporation of mitigation measures has reduced an effect from "Potentially Significant Impact" to a "Less than Significant Impact." The lead agency must describe the mitigation measures, and briefly explain how they reduce the effect to a less than significant level (mitigation.measures from Section XVII, "Earlier Analyses," may be cross-referenced). Earlier analyses may be used where, pursuant to the tiering, program EIR, or other CEQA process, an effect has been adequately analyzed in an earlier EIR or negative declaration. Section 15063(c)(3)(D). Earlier analyses are discussed in Section XVII at the end of the checklist. Lead agencies are encouraged to incorporate into the checklist references to information sources for potential impacts (e.g. general plans, zoning ordinances). Reference to a previously prepared or outside document should, where appropriate, include a reference to the page or pages-where the statement is substantiated. See the sample question below. A source list should be attached, and other sources used or individuals comaeted should be cited in the discussion. This is only a suggested form, and lead agencies are free to use different ones. 18 Issues (and Supporting Information Sources): I. LAND USE AND PLANNING. Would the proposal:. a) b) c) !1. d) e) a) b) c) Conflict with general plan designation or zoning? Conflict with applicable environmental plans or policies adopted by agencies with jurisdiction over the project? Be incompatible with. existing land use in the vicinity? Affect agricultural resources or operations (e.g. impacts to soils or farmlands, or impacts from incompatible land uses)? Disrupt or divide the physical arrangement of an established community (including a low-income or minority community? POPULATION AND HOUSING. Would the proposal: ~umulatively exceed official regional or local population projections? l’nduce substantial growth in an area either directly or indirectly (e.g. through projects in an undeveloped area or extension of major infrastructure)? Displace existing housing, esl~ciaily affordable housing? IlL GEOLOGIC PROBLEMS. Would the proposal result in or expose people to potential impacts involving: a) Fault rupture? b) Seismic ground shaking? Sources 1,2 3 3 Potentially Significant Impact Negative Declaration: Potentially Significant Unless Mitigatibn Incorporated Less Than Significant Impact NO Impact 19 Issues (and Supporting Information Sources): c) Seismic ground failure, including liquefaction? d) Seiche, tsunami, or volcanic hazard? e) Landslides or mudflows? f) Erosion, changesin topography or unstable soil conditions from excavation, grading, or fill? g) Subsidence of the land? h) Expansive soils? i) Unique geologic or physical features? Sources 3 3 1,3 3 3 .1,3 Potentially Significant Impact Negative Declaration: Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact IV. WATER. Would the proposal result in: a)Changes in absorption rates, drainage patterns, or the rate and amount of surface runofI?. h) d) Exposure of people or proper~y to water related hazards-such as flooding? Discharge into surface waters or other alteration of surface.water quality (e.g. temperature, dissolved oxygen or turbidity)? Changes in the amount of surface waier in any water body? Changes in currents, or’the course or direction of water movements? Chang’~ in the quantity of ground waters,’ either through direct additions or withdrawals, or through interception of an aquifer by cuts or excavations or through substantial loss of groundwater recharge capability? g) h) Altered direction or rate of flow of groundwater? Impacts to groundwater quality? l l 20 Issues (and Supporting Information Sources): i) Substantial reduction in the amount of groundwater otherwise available for pt~blic water supplies? V. AIR QUALITY. Would thc proposal: a)Violate any air quality standard or contribute to an existing or projected air quality viola.tion? b) Expose sensitive receptors to pollutants? c)Alter air movement, moisture, or temperature, or cause any change in climate? d) Create objectionable odors? VI. TRANSPORTATION/CII~CULATION. Would the proposal result in: a) increased vehicle trips or traffic congestion? b)Hazards to safety from design features (e.g. sharp curves or dangerous intersections) or incompatible uses (e.g. farm equipment)? c)Inadequate emergency access or access to nearby uses? d) Insufficient parking capacity on-site or off-site? e) Hazards or barriers for pedestrians or bicyclists? f) Conflicts with adopted policies supporting alternative transportation (e.g. bus turnouts, bicycle racks)? Rail, waterborne or air traffic impacts? BIOLOGICAL RESOURCES. ¯Would the proposal result in impacts to: a)Endangered, threatened or rare species or their habitats (including but not limited to plants, fish, insects, animals, and birds)? So u rces l i 1 1 1,2 !,2 1,2 Potentially Significant Impact Negative Declaration: Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact NO Impact 21 Issues (and Supporting Information Sources): b) c) viii. a) b) c) LoCally designated species (e.g. heritage trees)? Locally designated natural communities (e.g. oak forest, coastal habitat, etc.).’? Wetland habitat (e.g. marshl riparian and vernal pool)? Wildlife dispersal or migration corridors? ENERGY AND MINERAL RESOURCES. Would the proposal: Conflict with adopted energy conservation plans? Use non-renewable resources in a Wasteful and inefficient manner? Result in the loss of availability of a known mineral resource that would be of future value to the.region and the residents of the State? IX. HAZARDS. Would the proposal involve: a) b) ) d) e) A risk of accidental explosion or release of hazardous substances (including, but not limited to: oil, pesticides, chemicals or radiation)? Possible interference with an emergency response plan or emergency evacuation plan? The creation of any heali’h hazard or potential health hazards? Exposure of people to existing sources of potential health hazards? Increased fire hazard in areas with flammable brush, grass, or trees? X. NOISE. Would the proposal result in: ’ a) increasesin existing noise levels? Sources 1 I 1,2 I ¯ PotentiallySignificant Impact Negative Declaration: Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact Impact 22 Issues (and Supporting Information Sources): b) Exposure of people to severe noise levels? XI.PUBLIC SERVICES. Would the proposal have an effect upon, or result in a need for new or altered government services in any ofihe following areas a) Fire protection? b) Police protection? c) Schools? d) Maintenance of public facilities, including roads? e) Other governmental services? XlI.UTILITIES AND SERVICE SYSTEMS. Would the proposal result in a need fo~, new systems or supplies, or substantial alterations to the following a) .Power or natural gas? b) Communications systems? c)Local or regional water treatment or distribution facilities? d) Sewer or septic tanks? e) Storm water drainage?, f) Solid waste disposal? g) Local or regional water supplies? XIlI. AESTHETICS. Would the proposal: a) Affect a scenic vista or scenic highway? b) Have a demonstrable negative aesthetic effect.’? Sources I I ! 1 | 1 I 1 ! 1 i Potentially Significant Impact Negative Declaration: Potentially Significant Unless Mitigation Incorporated’ Less Than Significant Impact No Impacl 23 Issues (and Supporting Information Sources): c) Create light or glare? XIV. CULTURAL RESOURCES. Would the proposal: a) DistUrb paleontological resources? b) Disturb archaeological resources? ...... c) ’Affect historical resources? d)Have the potential to cause a physical change which would affect unique ethnic cultural values? e)Restrict existing religious or sacred uses within the potential impact area? X’V. RECREATION. Would the proposal: a)Increase the demand for neighborhood or regional parks or other recreational facilities? b) Affect existing recreational opportunities? xVI. MANDATORY FINDINGS OF SIGNIFICANCE. a)Does the project have Ihe potential’’to degrad’e the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? Sources l l 1,2 1,2 1,2 1,2 Potentially Significant Impact Negative Declaration: Potentially. Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact 24 b)Does the project have the. potential to achieve short- term, to the disadvantage of long-term, environmental goals? c).Does the project have impacts that are individually limited, but cumulatively considerable? ("Cumulatively considerable" means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects) d)Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? XVII.EARLIER ANALYSES. Earlier analyses may be used where, pursuant to the tiering, program EIR, or other CEQA process, one or more effects have been adequately analyzed in an earlier EIR or negative declaration. Section 15063(C)(3)(D). In this case a discussion should identify the following on attached.sheets: a) Earlier analyses used. Identify earlier analyses and state where they are available for review. - b)Impacts adequately addressed. Identify which effects from the above checklist were within the scope of and adequately analyzed in an earlier document pursua.nt tot he applicable legal standards, and state whether such effects were addressed by mitigation measured based on the earlier analysis. c)Mitigation measures. For effects that are "Negative Declarations: Less than Significant with Mitigation Incorporated," describe the mitigation measures which were incorporated or refined from the earlier document and the extent to which they address site-specifiC conditions for the project. XVIII. SOURCE REFERENCES ! 2 4 Palo Alto Regional water Quality.Control Plant, Solids Facility Plan, May 1997 Paio Alto Comprehensive Plan, 1980- ! 995 Palo Alto Comprehensive Plan Update Draft Environmental lmpactRepon, .December 1996 Voice mail message from Jim Gilliland (City of Palo Alto) regarding zoning, on June 24, 1997 Voice mail message from Jim Gilliland (City of Palo Alto) regarding zoning, on June 26, 1997 25 IXX. EXPLANATIONS FOR CHECKLIST RESPONSES la Ib [c Id le ’II a The proposed project is consistent with the existing Major Institution/Special Faciliiies general plan designation of the PARWQCP and the Public Facilities with Site Design Overlay (PF(D)) zoning. The PARWQCP site is bordered on the west by one- and two-story office buildings, on the south by the City. landfill, on the east by the Bay and BayIands Nature Preserve, and on the north by the Palo Alto Airport. The Pal0 Alto Golf Course is also located just west of the airpon. Much of the PARWQCP site is screened from these land uses by trees along its perimeter. However, tile access road to the landfill runs directly along the east plant boundary, so some PARWQCP facilities, such as the fixed rcactors, arc clcarly visible. The proximity to the airport places height restrictions on the treatment facilities. The lop of the existing incinerators are generally considered the maximum height allowed. The proposed project does not conflict with any applicable environmental plans or policies adopted by agencies with jurisdiction over the project. The proposed project would not be incompatible with existing land use in the vicinity. Modifications to PARWQCP facilities would be limited to the existing treatment plant site. The proposed project would not impact agricultural resources or operations. The proposed project h~,s no impact on the physical arrangement of any established communities. The proposed project will not cumulatively exceed official regional or local population projections. See .discussion for Issue 11 b below. II b [lc .i’l b III c The proposed project will not induce growth directly or indirectly. See discussion on pages 5 to 7 of the attached project description. The proposed project is limited tO the existing treatment plant site and would not displace any existing housing. The proposed project is not located on a fault and would not result in or expose people to fault rupture. The Palo Alto Comprehensive Plan designates the project area to be prone to violent shaking in the event of a major e.anhquake. This shaking could cause significant damage tostructures if not properly designed or constructed. A geotechnical report for the project will be prepared and the recommended design measures identified in that report will be incorporated into the project. Liquefaction can occur when loose, saturated, relatively clean cohesionless soils are subjected to ground vibrations. The project area is situated adjacent to the San Francisco Bay and is underlain in pan by Bay mud, an organic clay which is soft and compressible. Sand lenses are !nterspersed throughout the Bay mud; these lenses carry groundwater in the vicinity of the Bay and, during seismicevents, have the potential to liquefy. According to’the City of Palo Alto Comprehensive Plan, the site has a high liquefaction potential. The geotechnieal investigation to be prepared for the project will identify appropriate design measures that will be incorporated into the project to address liquefaction issues. 111 d 111 e 111 f !il g I11 h lll i IVa The proposed project would not result in or expose people to seiche, Tsunami, or volcanic hazard. The proposed project would not result in or expose people to.landslides or mudflows. The proposed project would not result in or expose people to erosion, changes in topography or unstable soil conditions from excavation, grading, or fill. The proposed project would not result in or expose people to subsidence of land. The proposed project would not result in ~’r expose people to potential impacts from expansive soils. No unique geologic or physical features e.xist at the project site, so the proposed project would’ not result in or expose people to potential impacts from unique geologic or physical features. ¯ The proposed project would be constructed on currently paved ground and would not add paved area. Hence the proposed project would not result in,any changes in absorption rates, drainage patterns, or the rate and amount of IXX. EXPLANATIONS FOR CHECKLIST RESPONSES IVb IVc IVd IVe 1\1 f lVg IVh IV i Vb Va surface runoff. The treatment plant site is in a flood zone; as designated by FEMA. However, the proposed project would not"resuh in any additional exposure of people or property to water related hazards such as flooding. All applicable FEMA requirements will be met. The air pollution control equipment in the proposed project would recycle trace amounts of metals from the scrubber back to the treatment plant headworks. Witl~ the addition of scrubber water treatment there will be no increase in metals in the wastewater discharged to the Bay and the adjacent Baylands Nature Preserve The wastewater discharged will still meet permit requirements for metals. The proposed project would not change the amount of surface water in any water body. The proposed project would not change currents or the course or direction of water movements. The proposed project would not change the quantity of ground waters, either through direct additions or withdrawals, or through interception of an aquifer by cuts or excavations or through substantial loss of groundwater recharge capability. The proposed project would not alter the direction or rate of flow of groundwater. The proposed project would not result in impacts to groundwater quality. The proposed project would not result in substantial reduction in the amount of groundwater otherwise available for public water supplies. Construction-related emissions, such as dust (fine paniculate mar~er, PM,0), vehicle exhaust, and equipment exhaust are expected to occur at the facility for a period of up to 6 months. Minimal dust emissions are anticipated since the facility has paved roads and conti’olled speed limits, and major demolition and grading would not occur. Some excavation will be required to pour the foundation for the project facility, but minimal dust emissions are expected because the construction area is relatively small (800 square feet for air pollution control equipment, about .500 square feet for the equalization basin). Basic dust control measures, such as watering active construction areas and water sweeping all paved access roads, parking lots, and staging areag, will be required by the Bay Area Air Quality Management District (BAAQMD) to reduce any potential dust emissions. Applying effective and comprehensive control measures during project construction would prevent violations of any air standards. There will be no net increase in emissions, as compared with current emission levels based on recent source test data. Table 1 at the end of this checklist summarizes the current and future emissions associated with this project. The project will be designed with a new air emissidns abatement system that will handle emissions from the incinerator, thermal solids dryer, scum handling system, and feed sludge equalization tank. The Solids Facility Plan describes in greater detail the. air emissions abatement system. The proposed system will be more efficient and capable of handling the projected solids increase, and will improve existing air emissions by reducing, on the average, metals by .54 percent, criteria pollutants by 48 percent, and dioxins/furans by .99 percent from current emission levels. The project does not require an increase in track pick-ups for ash. Therefore, there will be no increased truck traffic emissions beyond what is currently occurring. With operation of the new emissions abatement technology and implementation of dust control measures during construction, the project would meet all current and known potential future air quality requirements and no significant air quality impacts would occur. Because the project site is not Iocaied near sensitive receptors and no net increases in air emissions would occur based on current source test data and future emission estimates, there will be no pollutant exposure to sensitNe receptors. Sensitive receptors include schools, daycare centers, hospitals, and nursing homes. The PARWQCP staffwill adhere to 27 iXX. EXPLANATIONS FOR CHECKLIST RESPONSES Vd VI a VI b VI c proper abatement equipment installation (including scheduled Shuidown of incinerators during ins(allation), testing, and operating procedures to minimize any potential air emission impacts to workers in the light industrial businesses near the project site. The project does not include the addi’tion or modi~cation of major heat. or moisture sources and would not result in a significant alteration of air movement, moisture, temperature, or other climatic changes. "Tl~’e dryer, which wouldonly be operated only occasionally (typically maximum 4 weeks per year), is the only ~ew -- potential odor source, but is not expected to create an impact. The project will be designed to handle odor sources (i.e., dryer, scum handling, and feed tank) by venting the exhaust directly to the incinerator inlet air. There it will be combusted and then sent 1o the incinerator emissions abatement system for added destruction of combustion by- products. Because of this configuration, the potential for odor outside of the abatement system will not be creatcd. Therefore, no additional odors will be released beyond current operating conditions. Objectionable odors are not expected to occur. Facility consiruction will have a less than’significant impact on traffic. Tl~e number of trucks to haul solids by-products (ash) will be the same as the current number, which is one truck per week. Traffic related to construction activities are expected to be similar to the traffic that occurs during annual mainte~aance and rehabilitation of the Plant’s existing systems. This could include up to 8-10 workers enteringthe site per day and a limited number of trucks delivering concrete, other materials, and equipment to the site. Traffic impacts from construction would be less than significant. The proposed project does not contain any transportation design" features and would not result in hazards to safety from design features such as sharp curves o.r dangerous intersections. Project construction activities and operations at PARWQCP Wohld not inierfere with emergency access or access to nearby uses, nor are they expected to interfere with emergency access at the PARWQCP. VI d PARWQCP currently has adequate parking capacitY,’ and would not add any additional employees as a result of t’hc project. Parking needs for construction activities would not exceed current parking needs for rehabilitation and maintenance activities Vie Vl f Vl g Vll a Vil b VII c VII d Facilities at PARWQCP would not be expanded outside the current plant boundaries and wouid not be"a hazard to 9edestrians or bicyclists. There are no pedestrian or bicycle paths within the PARWQCP. The"project does not conflict ’~vith City’ of Palo Alto adopted policies supporting alternative transportation. The project Would have no impacts on rail or’waterborne traffic. Traffic at the adjacent"airport would not be impacted by the project construction or operation. Nopart of the rehabilitation or expansion would .be greater in height than the existing incinerators, which are considered the maximum height allowable to avoid impacting airport traffic. The proposed project will ’result’in a 99.9% decrease in dioxin and furan emissions, an average 54 percent decrease in metals air-emissions, and an average48 percent decrease in criteria pollutant emissions compared to current emissions, resulting in a project benefit. As a result, no impacts to endangered, threatened, or rare species in the adjacent marshes are expected. The proposed project would require the removai of~he or ~vo eucalyptus trees next’ to the incinerator on the PARWQCP site. However, these trees are not heritage trees and they are less than 20 years old, They will need to be removed with or without this project, since they pose a fire hazard due to their proximity, to the incinerator chimney, and the tree roots are invasi~ze and have the potential to damage building foundations, pipes, and high voltage conduits. The proposed project would not result in impacts to Io~allydesignated natural communities such as oak forest or coastal habitat. The incinerator abatement air scrubber would recycle trace amou’~ts of metals removed from the air stream back to the ~lant headworks. Use of scrubber water treatment to precipitate, concentrate, and remove metals from the recycle water will result in no increase in metals in the wastewater discharged to the Bay and the adjacent, Baylands Nature Preserve. This’is a mitigation measure to prevent discharge of the metals to air or water. The wastewater discharged will still 28 IXX. EXPLANATIONS FOR CHECKLIST RESPONSES meet permit requirement~"for metals. As a result, no impacts to Wetland habitat are expected. VII e VII1 VIII Vlll c IX a The proposed project would be located on the existing PARWQCP site and would not result in impacts to wildlife dispersal or migration corridors. The proposed project would not conflict with adopted energy conservation plans. Through the rehabilitation measures, the proposed project would result in greater fuel ef~ciency (i.e., less fuel use per unit of sludge processed) compared to current efficiency. The proposed project would not use non-renewable resources in a wasteful and inefficient manner. The proposed project would not result in the loss of availability of a known mineral resource that would be of future value to the region and to the residents of the State. The thermal dryer may present a small risk of accidental explosion or fire. However, the proposed project would be designed with safety measures including proper dust handling systems to reduce explosion potential, and nitrogen padding of the storage hopper air space to reduce fire hazard. With these design measures, the potential impacts are expected to be less than significant. IX b The proposed project would not interfere with an emergency response plan or emergency evacuation plans. IX c 1X d The proposed project will result in a 99.9% decrease in dioxin and furan emissions, an average 54 percent decrease in metals air emissions, and an average 48 percent decrease in criteria pollutant emissions compared to current emissions fi:om the incinerators, resulting in a project benefit. As a result, the project will result in no new impacts to health. ’ Neither the proposed project nor th~ PARWQCP create metals; any metals emissions result from metals in the plant influent. However, the metals, primarily mercury, that would be removed by scrubber water treatment discussed in Vlld may need to be recycled or handled as a hazardous waste. Amounts that.would be removed would be small and are estimated to bc approximately 0. [ Ib/year for the lightest metals and approximately 30 lb/year of the heaviest metals. Metals resulting from scrubber water treatment would be handled properly in accordance with all applicable and stringent local, state, and federal regulations that govern the use, storage, and disposal of such materials. As a result, no significant impacts are expected. Xb Xl~ XI b The proposed project would not affect or result in a need for new ~r altered police protection services. XI c The proposed project would not ’affect or result in a need for new ’or altered"schools. Xld IX e The proposed project area does not contain flammable brush~ grass, or’trees, and the proposed project would not ,ncrease fire hazard in areas with flammable brush, grass, or trees. X a The proposed project may result in short-term increases in existing noise levels associated with c.onstruction activities. However, the impacts are expected to be minor and not noticeably different than current noise associated with rehabilitation and maintenance activities. No sensitive receptors are located near the project area. Therefore, impacts to existing noise levels are expected to be less than significant. The proposed project would not result in exposure of people to severe noise levels. The proposed project would not affect or result in a need for new or altered’fire protection services. The proposed project consists of rehabilitation and modifications to a public facility (a portion of the PARWQCP). The rehabilitation and modifications are expected to improve the operations and reduce the maintenance needs of the solids handling facility. As a result, the proposed project would not affect or result in a need for new or altered maintenance of public facilities. XI e The proposed project would not affect or result in a need for any other new or altered governmental services. XII a The proposed project would not result in a need for new systems or supplies of or substantial alterations tO power or natural gas utilities. 29 IXX. EXfiLANATIONS FOR CHECKLIST RESPONSES .. Xil b The’proposed project would not result in a need for new sy~’tems or supplies of or substantial alterat’ions to XII c XII d XII e XII f XII g XIII a XIII b Xlll c XIVa XIV b XIV c XIV d XIVe XV.a XV b communications systems. The proposed project would not result in a need for n~w"systems or supplies of or substantial alterations to locai or regional water treatment or distribution facilities. The.proposed project would not result in a need for new Systems or supplies of Or substantial alterations to sewer or -- septic tanks. " The proposed project would not result in a need for new systems or supplies of or substantial alterations to storm water drainage. The proposed project would not result in a need for new systems or supplies of or Substantial aherations tO solid waste disposal. The proposed project Would not result in a need for new systems or supplies of or substantial alterations to local or regional water supplies. The proposed project would not affect a scenic vista or scenic highway. The proposed project would not have a demonstrable negative aesthetic effect. The new facilities would be within the existing plant boundaries and would not be visible to the general public. New structures would be attached or adjacent to existing structures, would match existing exteriors, would be the same as or lower in height than the existing structures, and would be sheltered from view by other existing structures in the plant and by trees that surround the plant: The proposed project would not create light or glare. The proposed project would be located on ihe existing PARWQCP site and would not disturb paleontological resources. J The proposed project would be located on the existing PARWQCP site and would not disturb archaeological resources. Th~ proposed project would be located on the existing PARWQCP site and would not affect historical resources. The proposed project would not have the potential to cause a physical change which would affect unique ethnic cultural values. The proposed project would not restrict existing religious or sacred uses within the potential impact area’. The proposed project would not eliminate any ’existing parks or ’recreational facilities and would not induce growth in the region. As a result, the proposed project would not increase the demand for neighborhood or regional parks or other recreational facilities. The proposed project would not affect existing recreational oppbrtunities. Table 1: Current and Future Emissions, PARWQCP Incinerator Rehabilitation Pollutant Curr~nt Emissions 0h/day) Criteria Pollutants Carbon monoxide ¯ Nitrous Oxides Sulfur oxides THC Particulate matter Volatile Organic Carbons Hazardous Air Pollutants Dioxin Furors I 16.98 87.96 52.99 2.16 16.2 0.54 2.34 x 10"8 1.03 X 10"7 Metals Arsenic 4.51 x I0"3 Beryllium 4.33 x 10-6 Cadmium 1.53 x 10-2 Chromium 2.34 x 10-3 Copper I °23 x 10-2 Manganese 9.01 x 10-3 Mercury 4.15 x i 0-2 Nickel 2.34 x 10"3 Selenium 8.47 x 10-3 Zinc 6.49 x 10"1 Emission’~ After incinerat~,~~~ ...... Rehabilitation (Ib/day) 22.64 37.07 1.55 1.45 12195 0.53 2.17 x 10"i’l 9.50 x 10"11 3.48 x 10-3 3.98 x 10-6 4.11 x 10"3 5.37 x 10-4 1.18 x 10.2 3.52 x 10-4 4.05 x 10.2 2.96 x 10-4 3.69 x 10-4 1.64 x 10"1 Aulhority: Public Resources Code Sections 21083 and 21087, Reference: Public Resources Code Sections 21080(¢). 21080.1.21080,3. 21082.1, 21083, 21083.3, 21093, 21094, 21151; Sundstrom v. County of Mendocino, 202 Cal. App. 3d 296 (1988); i.eonoffv. Monterey Board of Supcrvisor~, 222 Cal. App. 3d 1337 (I 990) 31 ATTACHMENT B ATTACHMENT C February 4, 1998 Palo Alto City Council 250 Hamilton Avenue Palo Alto, CA 94301 Dear Mayor Rosenbaum and members of the City Council: The League of Women Voters of Palo Alto supports comprehensive measures to provide maximum protection to human health and the environment from the adverse effects of hazardous materials. Because certain hazardous materials are associated with the treatment and disposal of sewage sludge, we have some concerns about the proposal to repair and improve the existing sewage sludge incinerators at the Palo Alto Regional Water Quality Control Plant. The proposed solution to the problem of how to handle the sludge from sewage treatment when the present incinerators are on the verge of breaking down, may not be the best solution from an environmental perspective, but when space requirements, time, and cost are considered, it is probably the appropriate solution at the present time. We are concerned that the performance figures presented in the EIR are estimates and projections that may have no relation to how the rehabilitated incinerators, with the addition of an afterburner and new scrubbers, will actually work. If you approve this proposal, we believe it is imperative that you include a .regular and frequent monitoring program to ensure that the system is working as well or better than advertised. Although the dryer is included in the negative declaration, it appears that the addition of this dryer needs more study to avoid safety problems and will not be added to the system unless volume makes it necessary. However, there is a possibility that the addition of such a dryer could act as a pilot project for possible elimination of the incinerators in the future. Thisidea should be considered in deliberations over a long range plan. The repaired system and the existing treatment plant are expected to last less than twenty years. In the context of planning for major changes, that. is not a long time. It is not necessary to wait twenty years to make changes; the establishment of long range environmental goals and the search for more effective ways to recycle the sludge should be an ongoing process. We encourage you to instruct the staff of the Regional Water Quality Control Plant to begin now to work on a long range plan for waste water management that will meet the needs of the area in an environmentally friendly way. We commend Phil Bobel and his staff for the efforts they.made to meet with local citizens to try to address the concerns of those who are worried about the effects of incineration. Dioxin production is. a major concern. The staff was able to show that so much dioxin comes into the plant in the waste water (from toilet paper, laundry water, human waste, etc.) that the proposed system will actually reduce the total.dioxin level, even though some new dioxins will likely be produced in the incinerator. We hope this reduction will be true. The League of Women Voters of Palo Alto believes that the public has the right to know the potentially harmful effects of materials they encounter in the home, the workplace and the community, and so encourages you to help educate them in ways to reduce toxins in waste water. We also encourage you to include citizens in the planning and. decision-making processes of hazardous material management. Sincerely, Ruth Lacey Geri Stewart Co-Presidents, League of Women Voters of Pal0 Alto cc:Phil Bobel, Managerl Environmental Compliance Division, PARWQCP Daisy Stark, Engineer, PARWQCP 6.~o.32z.z994 Schools Grou~ Paid Alto City.Council City, Hall 2.50 Hamilton Ave. Palo Alto, CA 94301 PEOPLE FOR Tilt t NVII ONM| NT Feb. 13, 1998 .’ "\ Dear City Council,,, On February 23, Paid Alto’ City Council i’s scheduled to consider the "WQCp Solids Management l~roject.’’ Bay Area A~tion and r.~ ~aumber of other local environmental groups it{ conjuction with City staff, have been reviewing the proposed plan to, repair.the, incinerators at th6 Paid Alto Regional Water Quality Control Plant (RWQCP). According tO reports prepared for the RWQCP, as w~ell as numerous other supporting documents, there are serious health and environmental cqne~erns’associated With dioxins contained in both the influent and effluent of the plant that need the due consideration of the Council before theft make a decisibn about this project, r .. .... .According to "Dioxins Source Identification," a report written for the RWQCP in ~ept. 1997, dioxin~ enter the RWQCP through the following sources: laundry graywater, storm water, human waste, shower water, and toilet paper. The, incineration of the..: sludge destroys some of the dioxins coming into tile plant, but also creates more in the burning process: The city staff estimates that the incinerators release hal[as many dioxins ihto the environment as come into the plant from the above mentioned soui’ces; !~owever, there is a high level of uncertainty .of how marly dioxins re-form after being released into th~ air, which may~skew~ this ~proximation. Dioxins are also released from the incinerators through the water effluefit and through tl~e ash.The water effluent pollutes the bay, and the ash is shipped to the Central Valleyand used in agriculture, thus completing the circle of. c~ntaminating our food supply.. ~ ." .. Dioxins are a highly toxic by-product created frbm the production and incineration’of"chlorine-containing products;suctl as 0rganochlorine pesticides, polyvinyl chloride’(PVC) plastics, and polychlorinaled biphenyls (PCBs),’’t Dioxins are dangerous to, humans and wildlife because they bioaccumulate in fatty, tissue. "In humans, dioxins have been shown to cause cancer, weaken ~ tile .immune system, and interfere with the endocrine system, which is responsible for making hormones needed to regulate bodily functions, including sexual development and fertility."~ We highly recommend that the council teviewthis document hs well as ¯ tlle."Dioxins Pollution Prevention Plan," which was prepared .for the RWQCP in October 1997 before the.Feb;’23 council .... ." meeting. Both docurhents eihcidate the necessity to reduce the amount of dioxins gbing to and coming fromthe RW~CP, ’ In addition to tile sources of di~xins directly affecting the RWQCP,~9% of dioxins emitted locally come from diesel-fueled’ motor vehicles, and another 15% from residential wood burning. Although these sources fall outsid~ the scope of the.WQCIi Solids Management Project, we request that the council take a comprehensive apprnaeh to addressing how to reduce the amount ofxlioxins in our environment. Some suggested approaches are as ,follows:’ "’ ’ " ~ Develop a dioxins reduet}on policy for the.City.of Paid.. Alto,. and request..., neighboring cities to do the sameBuild a solids thermal dryer tO pilot test a non-dtoxm creating alternattve to handling sewage sludge : Explore alternatives to safely dispos~ ofsludg~ or’ash which contain d, ioxins ., " Educate other p~bli~ agencies and the public abou’t~dioxins and provide information how to ~:eduee them ,. ¯Cohtinue to monitor the influent ahd effluent from the RWQCP for.dioxins , ,, Please give this serious issue your full consideration. Thank you’, Susan Stansbury ¯ I~ay Area,Action. Executive Director ~ EIP Associates. 1997. DioxinsSource ldentificatio’n ~ Ibid, City ATTACHMENT C City of Pal Alto Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: PUBLIC WORKS DATE: SUBJECT: MARCH 16, 1998 CMR:165:98 APPROVAL OF ADDENDUM NO. 6 TO THE WATER QUALITY CONTROL PLANT PARTNERS’ BASIC AGREEMENT TO: INCREASE THE ANNUAL ONGOING CAPITAL IMPROVEMENT BUDGET CAP; DEFINE PARTNER OBLIGATIONS WITH REGARDS TO REIMBURSING PALO ALTO FOR COSTS FOR INCINERATOR REHABILITATION Following Council’s direction to proceed with the financial planning for the rehabilitation of the RWQCP’s incinerators, staff is submitting Addendum No.6 to the Partners’ agreement for Council’s approval. The RWQCP partners (the cities of Palo Alto; Mountain View, and Los Altos) are responsible for financing the project. The financial advisor and Partners’. staff recommend that the project be bond funded to spread the cost to ratepayers over a number of years. The City of Palo Alto will be the lead agency in issuing the debt. The addendum to the Parmers’ agreement is needed prior to bond sale to clarify the financial obligations among the Partner ¯ agencies. The addendum also increases the cap for the ongoing capital improvement budget. The existing cap is ambiguous and is based on the original value of the RWQCP. The capital improvement program will continue to be reviewed by the Partner agencies prior to approval by Palo Alto City Council. CMR: 165:98 Page 1 of’~-"-’-~ Staff recommends that Council: Direct staff to proceed with the necessary steps to obtain bond financing for rehabilitating the incinerators at the Water Quality Control Plant (RWQCP). Bond financing would occur concurrently with the beginning of construction, approximately August 1999. Prior to the bond sale, staff will retum to Council for approval of the bond documents. Approve and authorize the Mayor to execute Addendum No. 6 to the Basic Partners Agreement between the City of Palo Alto, the City of Mountain View, and the City of Los Altos. Addendum No. 6 increases the annual budget cap for ongoing capital improvements, and defines Parmer obligations to reimburse Palo Alto for the future costs of debt service for bond financing of RWQCP incinerator rehabilitation project. BACKGROUND The City disposes of solid wastes treated by the RWQCP by means of incineration. In May 1996 (CMR.:278:96), staff reported to Council that a recent study.had concluded "the incinerators (at the Plant) have reached the end of their economic life, and that major rehabilitations are required if the RWQCP is to continue with incineration." Council approved staff’s selection of the consulting firms CH2M Hill andKennedy Jeneks to prepare a Solids Facility Plan (Plan) for .the RWQCP, The Plan examined the issues and solutions for continued use of incineration, and evaluated other technologies that replace incineration. In May 1997, staff returned to Council (CMR:236:97) with the results of the Plan. The Plan was approved by Council, and included: ¯A two-phase project to rehabilitate the existing incienerators immediately, and in ten years potentially add a dryer for peak loads if and when needed. Direction for staff to proceed with financial planning to implement the incinerator rehabilitation. Direction to obtain Partners’ approval of the necessary addendum to the existing Partners’ agreement and financial package needed to implement the Plan. The Partners’ Agreement was ~originally written in 1968, and has been amended five times to date. Changes are needed to clarify various financial-obligations now that the City of Palo Alto is preparing to rehabilitate the RWQCP. CMR: 165:98 Page 2 of---’-’-’-"~ Staffmet several times with the Partner agencies staffto discuss the funding of the project, and has obtained the.advice of a financial advisor, Stone and Youngberg. The financial advisor and Palo Alto’s outside counsel attended two meetings with the Partner agencies’ staff. Given the size of the improvements, and the need to spread the cost to ratepayers over a number of years, and given the varying levels of wastewater financial reserves currently available to the different Partner cities, staff recommends that the improvements be bond funded. As has been done in a previous debt issuance in early 1980, staff recommends that the City of Palo Alto, as the operator of the RWQCP, be the lead agency in issuing the debt. This approach was unanimously agreed to by the staff from all Partner agencies. Staff anticipates selling bonds prior to construction, approximately May 1999. Palo Alto has sufficient funds in its Wastewater Treatment Fund reserve for the design itself, and will be reimbursed from bond proceeds later. The attached Addendum requires that the Partner agencies reimburse Palo Alto for their share of the bond costs, including the fi’ont design costs, over the life of the bonds. The approximate cost for the design is $700,000, and is included in the proposed FY 1998-99 capital budget for the Wastewater Treatment Fund. In order to clarify the financial obligations among all Partner agencies, staffhas worked with theCity Attorney’s Office and outside counsel toamend the current Partner’s agreement. That addendum is attached to this report and is being submitted to Council for approval. Staff from the other Partner agencies are. also taking this addendum to their respective Councils concurrently. Major provisions of the addendum include the following: The revision of the annual capital improvement budget cap for ongoing repair and replacement. It will now be set ata ba~e level of $1.9 million for 1998-99, and will be adjusted annually by the Consumer Price Index (CPI). The existing cap is ambiguous, and is based on the original value of the RWQCP. This change is needed to provide for more budget flexibility in the future. The annual capital improvement program will continue to be reviewed by staff from each Partner agency prior to submission to the Palo Alto City Council. Authorization for the City of Palo Alto to implement the Solids Facility Plan, including rehabilitation of the incinerators. Each Partner city is responsible to pay Palo Alto for its proportionate share of the rehabilitation. Authorization for the City of Palo Alto to issue debt to pay for the rehabilitation, and requiring the Partners to pay Palo Alto for their proportionate share of the debt service. CMR: 163:"98 . _Page 3 of’---~ Because Palo Alto will issue the debt, it must covenant in its bond documents to raise sufficient revenues to meet annual debt service requirements. All of the requirements below are legal commitments that the Partners are making to each other, and are consistent with the legal commitments Palo Alto will have to make in its bond documents in order to issue debt. a)In order to protect the City of Palo Alto, and to reassure potential investors, the Partner agencies are required by this addendum to raisesewer revenues sufficient to pay their share of the debt service to Palo Alto in the future. These clarifications will make the debt less risky to investors, and therefore will help the City of Palo Alto obtain the highest rating it can get for the bonds. This will lower the interest rate, and therefore will lower the financing costs for the bonds. Based on discussions with Stone and Youngberg, staff expects that the bonds can be sold at around a double A rating. b)Specifies that while the bonds are to be issued by Palo Alto, the Partners will reimburse Palo Alto annually for an amount equal to their share of the debt service. c)Defines the annual Partner obligations to Palo Alto as special obligations payable "solely from the. net revenues, of the Partners’ sewer systems. (The obligations are therefore not general obligations of the Partner cities). d)States that the obligations of Mountain View and Los Altos are unconditional until the time that debt service is paid off. e)Obligates the cities of Mountain View and Los Altos to collect sufficient sewer revenues to pay for .at leastl,25 times the annual debt service requirement. Clarifies that for as long as this debt is still outstanding, no party may issue sewer bonds for its own City that are superior in credit obligation to this debt obligation. Parity debt, Or debt equal in stature to creditors to this debt may be issued provided that the Partner city continues to collect revenues at least 1.25 times its - total level of debt service. Clarifies that revenue growth due to sewer expansions by Partner cities, such as a new development, may be counted towards the.revenue requirement of 1.25 times debt service. Clarifies that neither Mountain View nor Los Altos are liable for each other’s obligations to Palo Alto. ~ESOURCE IM P A_C__T_ Funds for the capital improvements are being proposed in the 1998-99 Wastewater Treatment capital improvement budget. 1998-99 funding includes $700,000 for design, and future years’ capital budgets will include construction dollars. Those dollars and design costs, will CMR: 165:98 Page 4 of 5 be reimbursed out of bond proceeds in approximately August 1999. Capital expenditures for design and construction are estimated to cost a total of approximately $6.2 million. On February 23, 1998, Council approved the Negative Declaration and the project to rehabilitate the RWQCP’s incinerators, CMR: 141:98. Attached is a rough timeline for the project: City Councils of Partner cities approve addendum Palo Alto awards design contract Final design completed Sell bonds Begin construction Finish construction on incinerators March 1998 April 1998 February 1999 August 1999 August 1999 August 2001 pOLICY IMPLICATIONS The recommendation of this staff report is consistent with City policies, ATTACHMENTS Addendum No. 6 to Basic Agreement PREPARED BY:Bill Miks,.Manager RWQCP Jim Steele, Manager Investments and Debt DEPARTMENT HEAD: Glenn S. berts, Director Works Melissa Acting of Administrative Services CITY MANAGER APPROVAL: JUNE City Manager CMR: 165:98 Page 5 of"~ ADDENDUM NO. 6 TO BASIC AGREEMENT BETWEEN THE CITY OF PALO ALTO, THE C~TY OF MOUNTAIN VIEW ~ THE CITY OF LOS ALTOS FOR ACQUISITION, CONSTRUCTION ~ PLAINTENANCE OF A JOINT SEWER SYSTEM This Addendum No.’ 6 to ~asic Agreement is made and entered into on _ , 1998, by and among the CITY OF PALO ALTO ("Palo Alto"), the CITY OF MOUNTAIN VIEW ("Mountain View"), and the CITY OF LOS ALTOS ("Los Altos") (individually, "Party", and collectively, the "Parties"), all municipal corporations under the laws of the State of California. i. The Parties have entered into an agreement for the acquisition,-construction, and maintenance of a joint sewer system ("Joint sewer,’), executed on October I0, 1968, and as amended from time to time ("Basic Agreement"). The Basic Agreement has been amended five timeslon 1977, 1980, 1985, 1990 and 1992, respec~.ively (collectively, "Addenda"). 2. Palo Alto is the administrator of the Jofnt Sewer and is responsible for capital additions. Under the Basic Agreement and Addenda thereto, capital additions for the replacement of obsolete or worn-out units or minor capital additions to improve the efficiency of the plBnt operations shall not ~xceed two percent (2%) of the ~otal capital investment in any one year, except with the prior written approval of the Parties hereto. 3. .The Solids Management Study’of June 1995 prepared by Carollo Engineers c~ncluded that the incineration facility needs ~o be rebuilt or r~placed. The Solids Facility Plan of May 1997 prepared by CH2M H~LL recommended a two-phase projec~ to rebuild the existing incineration facility portion of the Joint sewer. The Parties desire to implement the recommended project, and, accordingly, hereby revise the Basic Agreement and ~he Addenda thereto, to provide for the rehabilitation of ~he incinerator facility portion of the Joint System, and ~ricrease~ the total Capita! investment in capital additions. NOW, THEREFOR£, in consideration of the terms, conditions and covenants set forth in this Addendum No. ~ to Basic Agreement, the Basic Agreement is hereby amended as follows: ~¢TION ~, Subparaeraoh 8(e) is hereby am_nd..d in its entirety to read as follows: CON.~ TR UCT T (e) Capital additions for the replacement of obsolete or worn-out units, or minor capital additions to improve the efficiency of the plant operations, shall not excee~ the amount specified for the base year adjusted annually, in accordance with the Consumer Price Index-Urban Wage Earners and Clerica! Workers for the SanFrancisco-Oakland-SKn Jose area ("CpI") . The base year shall be fiscal year 1998-1999. The capital addition amoun~ for the base year is set at 1.9 million dollars. The CPI for the t~.;e!ve (12) months prior to Jul.yof each fiscal year shall be used to calculate the adjusted .capital addition cost. for the following f.lscal year." $~[~_T_~. Paragraph 36 is hereby added to the Basic Agreement to read as follows: "36~ IMPLEMENTAT~ON~.[ THE ~QLIDS FA~I.LTTY PLAN. PALO ALTO, MOUNTAIN VIEW, and LOS ALTOS approve a two-phase project to immediately rehabilitate the incinerators as soon as possible an~ add a dryer for peak loads in approximately ten (I0) years accordance with the Solids Facility. Plan prepared by CH2M Hill, consulting engineers. The funding for the incinerator rehabilitation will be developed as soon as possible by each of the Pa~£ies, while the ~funding for the dryer w±ll be deferred until needed.’ As determined by each Party, each Party shall proceed to pay for ~he rehabilitation of the incinerators in proportion as the parti’es own capacity, in the Joint System or portion thereof as shown in Exhibit "H". If the Parties intend to defray the costs of rehabilitation through Palo Alto’s issuance of debt for the rehabilitation, the Parties shall pay to Palo Alto their Proportionate Share of Debt Service in accordance with Addendum 4 of the Basic Agreement, as revised by Se=tion 3 of this Addendum ,SECTION~. Section 5 of Addendum 4 to the Basic Agreement is hereby amended, in its entirety to read as follows: "(a) ~_~initions, For purposes of this Section 5, the followin~ capitalized terms shall have the meanings set for£h below. 0o3 i 9 i ~ ’Bond Documents’~ means the bond resolutions, indentures, t~’ust agreements, installment sale agreeme|%ts or other dozuments under whJ.ch Bonds are issued. ’Bonds’ means bonds, installment sale agreements or other obligacions already issued or to be issued by the City of Palo Alto to finance improvements, additions or extensions to the Joint System, payable from th~ ’Net Revenues’, as defined in ths Bond Documents. ’Debt Service’ means, for any period in question, the sum of the debt service on the Bonds due and payable in such period. ’Gross Revenues’ means all gross income and revenue received by either Mo~ntain View or Los Altos from the ownership and operation of its Sewer System~ including° without limiting the generality of the foregoing, (a) all income, ren~s, rates, fees, connection fees, charges or other moneys derJ.ved from th~ services, facilities and commodities sold, furnished or supplied through the facilities of its Sewer System, (b) reserves on deposit in the sewer Utility enterprise fund of Mountain View or Los Altos, as appropriate, including unrestricted cash avaiiable and (c) the earnings on and income derived fromthe investment of such income, re~%~s, rates, fees, charges or other moneys to the extent that the . use of such earnings and income is limited by or pursuant to the law to its Sewer System (including interest earnings on reserves); provided, however, ~hat the term ’Gross Revenues’ shall not.include customors’ deposits or any other deposits subject to refund until such deposits have become the property of Mbuntain View or Los Altos, as appropriate. ’Joint System’ has the. meaning given to said term in the Basic Agreement. ’Net Revenues’ means Gross Kevenues less Operation and Maintenance Expenses. ’Op~ratlon and Maintenance ~xpenses’ means all expenses and costs of management, operation, maintenance and repair of a Sewer System, but excluding debt service or other similaz payments on Parity Debt or other obligations and depreciation and obsolescence charges or reserves ~therefor and amortization of intangibles or other bookkeeping entries of a similar nature, and any exp~nse classified as discretionary by Mountain View .or Los Altos to theoperation of its- S~wcr System. 4 ’Parity Debt’ means bonds, indebtedness oi o~h_r~ ~ obligations (including leases and installment sale agocements) hereafter issue4~or incurred by Mountain View or Los Altos and secured by a pledge o£ anl .lien on Net Revenues equally and ratably with Mountain View°s or Los Altos’s P~oportionate Share of Debt Service. ¯’Party’ means the City of Palo Alto, Mountain View or Los Altos. ’Parties’ ~,.eans the Cities of Palo Alto, Mountain View and Los Altos. ’Proportionate Share’ has the meaning given to said term in the Basic AHreement. ’Sewer System, means any and all properties and assets, real and personal, aangible and intangible, of Mountain Vie~ or Los Altos, ~now or hereafter existing’ used or pertaining to the disposal or reuse of wastewater, including sewage treatment plants, intercepting and collecting sewers, outfall sewers, force mal,]s, pumping stations~ ejectorstations, pipes, valves, machinery and all othe~ appurtenances necessary, useful or convenient for the collec~ion, treatment, purification or disposal of sewage, and any necessary lands, rights of way and other real or personal property useful in connection therewith, and all additions, extensions, expansions, improvements and betterments thereto and equippings thereof. ’Subordinate Debt’ means indebtedness or other obligations (including leases and ins~allment sale agreements) hereafter issued or incurred by Mountain View or LOS Altos and secured by a pledge of and lien on Net Revenues subordinate to the obligation of Mountain View or Los Altos to pay its Proportionate Share of Debt Service. "(b) Issuan¢~._O~ Bonds by Pa I. c’’~s.of Mounta~n__V~Altos. Palo Alto has issued Bonds to finance the Joint system, and expects to issue Bonds in the future to finance improvements to the’Joint System.. Under the Bond Documents, Palo Alto is obligated. to pay 100% of th~ Debt Service. In consideration of the issuance and payment of the Bonds by Palo Alto to finance the Joint System, Mountain View and Los Altos agree to pay their proportionate Share of-Debt Service, payable solely from NetRevenues, as hereinafter proyided. 5 Mountain View’s and Los Altos’s obligation to pay their P~oportionate Share of Debt Service shall be a special obligation l~.mited solely to Net Revenues. Under no circumstances shall ~<ountain View or Los Altos be required to’ advance any moneys derived from any source ~f income other than the Net ~evcnues an~ other sources specifically identified here~n for the payment of their Proportionate Share of Debt Service, nor shall any other funds or prcperty of Mountain View or Los Altos be liable for the payment of their Proportionate Share of Debt Service. The obligation of Mountain View and Los Altos to pay their Proportionate Share of Debt Service from Net Revenues and to perfor~& and observe the other agreements contained herein shal! be absolute and unconditional and shall not be subjec~ to any defense . or any right of set-off, counterclaim or recoupment arising out of any breach of a Party of any obligation to another Party or otherwise with respect to either of thei~ Sewer systems, whether hereunder or otherwise, or out of indebtedness or.liability at any time owing to Mountain View or Los Altos by another Party. ,Until such time as all of the Debt Service shall have been fully paid or prepaid, Mountain view and Los Altcs (a) will not suspend, abate, or discontinue any payments provided for herein, (b) will perform and observe all other agreements contained in this Agreement, and (c) w~.ll not terminate this Agreement for any cause, including, without limiting the generality of the foregoing, the occurrence of any acts or circumstances ~hat may constit~te failure of consideration, eviction or constructive eviction, destruction of or damage to their Sewer Systems, the taking by eminent domain of title to cr temporary use of any or all of either of their Sewer Systems, commercial frus.tration of purpose, any change in the tax or other laws of theUnited States of America or of the State oz’ any political subdivision of either thereof or any failure of a Party to perform~ and observe any agreement, whether express or i,~plied, or any duty, liability or obligation arising out of or connected with this Agreement. (i) Pledge of Net Revenues. Moun£ain View and Los Altos hereby agree that the payment oftheir .Proportionate Share of Debt Service shall be secured.by a pledge, charge and first and prior lien upon their Net Revenues, and Net Revenues sufficient~to pay their Proportionate Share of Debt Service as the s&me becomes due and payable are hereby pledged, charged, assigned, transferred and. set over by Lcs Altos anJ Mountai:~ View to Palo Alto and its assigns for the purpose of securing pay~en~ of their Proportionate 6 Share of Debt Service. The Net Revenues shall constitute a trust fund for the security and payment .o£ Mountain View’s and Los Aitos’s Proportiorla%e Share of Debt Service, (ii) Release [rom Lien. Following the payments by ~-:.-..untain View and Los Altos to Pale Alto of their P~’opo~’tionate Si~nre of Debt Service, Net Revenues in excess of amounts requit’ed for the payment of such Proportionate Share of Debt Service, in that Fiscal Year, shall be released from .the lien of this Agreement and shall be available for any lawful purpose of Mountsin View or Los Altos, as applicable. " (d) Ra~.e Covenant. Mountain View and Los Altos hereby covenant that they shall pr. escribe, revise and collect such charges fol" the services and facilities of their respective Sewer Systems which, after allowances for contingencies and error in the~ estim.ates, shall produce Gross Revenues su£ficient’ in each Fiscal Year to provide Net ReveI~ues equal to 1.25 times ’(i) their Proportionate Share of D=~bt Service coming due and payable during such Fiscal Year, and (ii) all payments required with respect ~o Parity Debt. " (e)~Q~ure .Obligations Secured by Net’._ (i) No Obligations Superior to Debt Service. order to protect further the ava~labil±ty of the Net Revenues and the security for the Debt Service, Mountain View and Los Altos hereby agree that they shall not, so long as any Bonds are Outstanding, issue or incur any obligations payable from Gross Revenues or Net Revenues superior to their obligation to pay their Proportionate Share of Debt Service. (ii) Parity Debt. Mountain View and Los Altos.-- further covenant that, except for obligations issued or incurred to refund any obligations secured by Net Revenues, they shall not issu~ or incur any Parity Debt unless: (A)The Party proposin9 to issue the Parity Debt is not in default under the terms of this Agreement; and (B)Net Revenues, calculated on sound accounting principles, as shown by the books of the Party proposing to issue the Parity Debt, for the laiest Fiscal Year or any more recent twelve (12) month period selectel by the Party proposing to issue the Parity Debt ending not more than sixty (60) days prior to the adoption of the resolution pursuant to which instrument such Pagity Debt is issued or incurred, as shown by the book~ of the Party proposing to .issue the Parity Debt, shall have amounted to at least 1.25 times such Party’s ma×im\Im Proportionate Share of Debt Service, plus, maximum annual debt service on such Party’s Parity Debt coming due and payable in any future Fiscal Year’. (iii) Adjustment to Net Revenues. Either or both of the following ~tems may be added to such Net Revenues fo)~~ the purpose of applying ~he .restriction contained in subsection (ii) (B) of this subsection (e): An allowance for revenues from any additions to or improvements or extensions of the Sewer System to be constructed with the proceeds of snch additional obligations, and also for Net Revenues from any such additions, improvements or extensions which have been constructed from any source of funds but which, during all or any part.of suoh Fiscal Year, were not in service, all in an amount equal to estimated additional average annual Net Revenues to be derived from such additions, improvements and extensions for ~he first 36-month period following issuance of the proposed Parity Debt, all as shown by the certificate or opinion of a qualified independent consultant e~ployed by Mountain View or Los Altos, as appropriate. An allowance for earnings arising from any increase in the charges made for 8 service from the Sewer System which has become effective prior to the incurring of such additional obligations but which, during all or any part of such Fiscal Year, was not in effect, in an amount eq~]al to 100% of the amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of suc|~ Fiscal Year and any period prior to the incurring of suc|~ additional obligations, as shown by the certificate or opinion of a qualified independent consultant employed by Mountain View or Los Altos, as appropriate, or upon the mutual agreement of Zhe o~her parties. (iv) Subordinate Debt. Mountain View and Los Altos may iss~,eor incur Subordinate Debt so long as it is not in default hereunder or under any Parity Debt. The Parties agree that they shall comply with provisions of the Constitution and laws of the State of California, ancluding specifically Article X~IIC and Article XIIID of the California Constitution. In the event a P~rty fails to comply with the foregoing covenant, any other Par~y may bring an.action against the Party in breach, a~d seek all remedies available at law or in equity, including spaci£ic performance. Neither Mountain View nor Los Altos shall be liable for the debts or obligations of another Party pursuant to this Section 5,.and nothing coz%tained in this Section 5 is intended, nor shall it be interpreted, to create joint and several liability of Mountain View or Los Altos." ~-¢-T~!_~, Except as herein. modified,, the Basic Agreement and all Addenda thereto’ shall remain unchanged., and they are herebyratified and confirmed. // :i1 // // IN WITNESS ~.H,.,,EO~, the parties have by their duly authorized representatives executed this Amendment on the date first above written. ATTEST :C~TY OF PALO ALTO City Clerk APPROVED AS TO FOR24: Mayor Senior Asst. City Attorney APPROVED: Assistant City Manager Director of Public Works ActinH Director of Administrative Services Kisk Manager ATTEST: CITY OF MOD’NTAIN VIEW City Clerk APPROVED AS TO FORM~ City Attorney City Manager APPROVED AS TO CO~TTENT: Public ServicesDirectcr i0 FINANCIAL APPROVALs Finance and Administrative Services Director ATTEST:CITY OF LOS ALTOS City Clerk APPROVED AS TO FORM: City Manager APPROVED AS TO CONTEN~. : City Attorney Director of Public Works CERTIFXCATE OF ACKNOWLEDGMENT (Civil Code § 1189) STATE OF ..) )as. COUNTY OF ) On _, before me, , a notary public in and for said County, ¯ personally appeared , personally known to me (or proved to me on. the basis of satisfactory evidenze) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledsed to me that he/she/they executed the same his/her/their authorized capacity(ies), and that by his/her/their si~nature(s) on t~he instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. 980304 lac 00.~!91~ 11 CERTIFICATE OF ACKNOWLEDGMENT (civil Code § 1189) STATE OF ) COUNTY OF On ., before me, a notary public in and for said County, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person!s) whose name(s) is/are subscribed to the within instrument, and acknowledged, to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument £he persgn(s), or the entity behalf of which the person(s) acted, executed "the instrument. WIT~ESS my hand and official seal. CERTIFICATE OF ACKNOWLEDGMENT (Civil Code ~ 1189) STATE OF ) COUNTY OF ) On , be fore me, , . a notary public in and for said County, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument, ~nd acknowledged~ to me that he/she/they executed ~he Same in his/her/their authorized capacity(ies), and that by his/her/therr signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WETNESS my hand and official seal. 13