HomeMy WebLinkAboutID-2914City of Palo Alto (ID # 2914)
City Council Staff Report
Report Type: Action ItemsMeeting Date: 7/2/2012
July 02, 2012 Page 1 of 8
(ID # 2914)
Summary Title: Acceptance of Long Range Plan for the RWQCP
Title: Acceptance of the Long Range Facilities Plan (LRFP); Provide Direction to
Staff to Develop a Financing Plan, and, for Biosolids, to A) Retire the
Incinerators; B) Prepare a Biosolids Facility Plan; and C) Coordinate Biosolids
Options with the Energy/Compost Facility Evaluation; Regional Water Quality
Control Plant CIP WQCP 10001
From:City Manager
Lead Department: Public Works
Recommendation
Staff recommends that Council:
1.Accept the Long Range Facilities Plan (LRFP) for the Regional Water
Quality Control Plant (Plant)(hardcopies of this report were provided
to the Council,and copies of the report are available for public
viewing on the City’s public website and at libraries and the City
Clerk’s office);
2.Direct staff to prepare a biosolids facility plan to finalize a biosolids
treatment and disposal option and retire the Plant incinerators as
soon as practical;
3.Direct staff to evaluate biosolids treatment options including potential
green waste, food waste, and other organic treatment options arising
from the Energy/Compost Facility evaluation; and
4.Direct staff to develop a Financing Plan for the LRFP.
Executive Summary
The Regional Water Quality Control Plant is aging and in order to make informed
decisions in terms of financing and operations a Long Range Facilities Plan (LRFP)
is necessary. In 2010 the City hired Carollo Engineers to prepare the LRFP.
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Staff requests that Council accept the LRFP. Implementing the projects and
recommendations of the LRFP will ensure capital reinvestment, wastewater
treatment services for six agencies, and ongoing water quality control to protect
the San Francisco Bay and local creeks. A biosolids facility plan is needed to
finalize a treatment and disposal solution for the Plant’s biosolids.The final four
options from the LRFP along with any viable biosolids treatment or disposal
options arising from private company proposals in the Energy/Compost Facility
RFP process (staff report ID # 2557) would be evaluated in the biosolids facility
plan.Additionally, a financing plan is needed to detail financing options and
further define partner shares.
Background
Palo Alto owns and operates the Plant. Approximately 39% of the treatment cost
is funded by Palo Alto sewer ratepayers, with remaining expenses covered by five
other contributing agencies (called “partners”), which include the City of
Mountain View, Los Altos, Los Altos Hills, Stanford University, and East Palo Alto
Sanitary District. The Plant treats the sewage from about 217,000 residents and
170,000 jobs. Sewage flows average 22 million gallons per day and are treated
using various industrial equipment on 25 acres of land adjacent to the airport and
Byxbee Park. Stormwater is not treated at the Plant but is instead directed to the
San Francisco Bay in separate pipes.
Most of major Plant facilities are 40 years old and operate under industrial service
conditions. Most of these facilities require major rehabilitation or replacement
within the near-term.
On July 26, 2010,Council approved a contract with Carollo Engineers to prepare
the Long Range Facilities Plan (CMR:322:10). This is the first comprehensive long
range plan for the Plant since 1966. This new long range plan will help the City
make financially and operationally wise decisions for reinvestment in capital
infrastructure, site planning, and dealing with future regulations.Staff is
requesting that Council accept the LRFP.
Numerous meetings were held with the public (10/27/10, 2/9/11, 5/4/11,
11/16/11, & 3/1/12), Plant partners (1/10/11 & 4/23/12), and Stanford
engineering professors (3/31/11). Meetings were well attended, with lively
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discussions. Meetings addressed updating long term goals, review of emerging
technologies, review of solid and liquid treatment options, and financial impacts.
Public input provided staff a roadmap for planning needed facilities.
Discussion
Source Control
The LRFP is primarily a capital infrastructure plan;however,source control efforts
clearly support operational and capital rehabilitation by extending the life of
existing facilities and improving overall Plant performance. Source control
supports capital planning. The City is a leader in protecting the Bay by identifying
and controlling harmful pollutants at the source. A few source control examples
include potable water conservation to reduce wastewater treatment equipment
wear-and-tear, traditional pollutant-specific efforts (e.g., copper,
pharmaceuticals, etc.)to avoid costs for new facilities, reduction of infiltrating
water into sewers to mitigate Plant wet-weather capacity constraints and
improve recycled water quality.
Flow / Load Projections
The LRFP utilized the Association of Bay Area Governments (ABAG) population
projections from 2009. Population estimates were translated into flow and
pollutant loads for the 50-year planning horizon. Forecasting was required to
determine if the Plant operational footprint and treatment capacity needed
expansion. Fortunately, the LRFP work concluded that the Plant has sufficient
capacity to meet the projected flow and pollutant loads and does not need to be
expanded.However, the LRFP did identify the need for major capital projects due
to rehabilitate or replace aging facilities.
Regulatory Issues
The LRFP previewed major regulatory issues that might trigger significant capital
investment. Emerging contaminants (e.g., pharmaceuticals) are a long range issue
currently being addressed by more cost-effective source control methods.
Nutrients are a key potential issue impacting capital facilities in the midterm.
Nutrients (nitrogen and phosphorous)can harm marine life if they cause too great
an increase in algae and plant growth (eutrophication). San Francisco Bay algae
levels appear to be increasing,but regulatory agencies have, so far, not concluded
that sewage treatment plants should remove nutrients, or that the Bay is
impaired. Staff is participating in studies being conducted by scientists at the
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direction of regulatory agencies. The Plant discharges nutrients into the Bay in the
treated water. If ultimately required by the regulatory agencies,the Plant would
need to install new nutrient removal equipment.The LRFP narrowed nutrient
removal solutions to three technology options. New nutrient removal facilities
would, in all likelihood, be required because source control would not likely
remove sufficient amounts of nutrients. In any case, the City will continue its
efforts working on nonpoint sources to keep nutrients out of local creeks and the
Bay (e.g., lawn fertilizer).Staff will continue to monitor regulatory developments
in this area.
Retire Incinerators
The City is one of two agencies still running a sewage sludge (biosolids)
incinerator in California. Staff recommends retirement of the 40-year old
incinerators as soon as practical as they are at the end of their useful life. The
LRFP planned for incinerator retirement by 2019.
Besides being at the end of their useful life, there are other reasons for retiring
the incinerators. They are of an older generation and are not amenable for
conversion to a renewable bioenergy facility that would recover energy from the
biosolids. The LRFP recommended anaerobic digestion and gasification options
for further evaluation in the Biosolids Facility Plan.The incinerators are the largest
source of greenhouse gas (GHG) emissions from City facilities.In contrast to
incinerators, which release the greenhouse gas carbon dioxide (CO2) to
atmosphere, the recommended technologies convert carbon from the biosolids
into renewable fuel.
Additionally, the evolving United States Environmental Protection Agency air
regulations are becoming more difficult to meet. While new requirements are not
imminent, judicial or regulatory action may enforce a regulatory limit that the City
cannot meet. Air pollution control solutions will be expensive and likely involve an
inflexible compliance schedule. Operation of the existing incinerators is difficult as
they produce a hazardous waste ash with a high level of soluble copper. Staff
efforts to reduce copper residue sufficiently to meet anticipated regulations have
been unsuccessful. Mechanical repairs on the furnace are becoming more and
more complex (e.g., the steel shell has been rusting and bricks are shifting)and
the incinerators are becoming less and less reliable.
July 02, 2012 Page 5 of 8
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Next Steps
Given the need to retire the incinerators, the LRFP narrowed down the solids
handling options to four solutions: onsite anaerobic digestion,offsite anaerobic
digestion at the San Jose wastewater plant, onsite gasification, and offsite
gasification through a regional coalition of wastewater agencies (i.e., Bay Area
Biosolids to Energy). Final evaluation of these options is needed in the proposed
Biosolids Facility Plan. The Biosolids Facility Plan will identify a recommended
solids handling treatment technology and disposal option for Council approval
leading into the CEQA process, design, and construction.
Because of timing issues with LRFP finalization and the recently passed Measure E
which permits a portion of Byxbee Park to be used for an Energy/Compost facility,
the LRFP did not evaluate use of undedicated portions of Byxbee Park for
biosolids handling options. Vendors that propose on potential solutions on the 10
acres might have viable solutions for consideration as part of any ultimate
biosolids handling solution. To this end, the Biosolids Facility Plan will evaluate
the four options from the LRFP as well as the viable biosolids treatment options
resulting from vendor proposals originating in the Energy / Compost Facility
evaluation. As a result of these two studies, a recommended solution for biosolids
will be brought back to Council along with a combined recommendation for food
waste and green waste.
To realize these goals, significant staff, consultant, and vendor work will be
required and a strategy is needed to guide these efforts. An Organics Resource
Recovery Strategy (ORRS) is needed to define community goals for organic waste
options. For biosolids, this will include defining strategic resource and recovery
options for organics traditionally sent through public sewers (e.g., human wastes,
food wastes via garbage disposals, fats/oils/grease (FOG), screenings, etc.).Public
Works staff for both projects will oversee the ORRS and the RFP to vendors of dry
anaerobic digestion, composting,and/or energy conversion facilities (see
Energy/Compost Facility Action Plan, Staff Report 2557).
Biosolids Schedule
A timeline of next steps is shown below:
Item Anticipated Completion
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Financing Plan Framework Completed December 2012
Organics Resource Recovery Strategy April 2013
Solids Technology/Disposal Recommendation to Council February 2014
Biosolids Facility Plan Completion July 2014
CEQA Environmental Review Fall 2015
Biosolids Facility Design 2017
Startup New Biosolids Facility 2019
Resource Impact
Funds needed to construct the identified replacement and rehabilitation projects
will be provided by the Wastewater Treatment Fund. The Wastewater Treatment
Fund recovers costs from the Palo Alto Wastewater Collection Fund and from the
other five partners. The Wastewater Treatment Fund’s debt service expenses are
recovered through partner billing; the billing share is based on contract-defined
flow capacity allocations.The LRFP’s minor capital projects (about $2.6M / year)
are authorized in the partner contracts and based on annual flow shares. Minor
capital projects will continue to be authorized each year by Palo Alto City Council,
and no debt service is required for these minor capital projects. Financing for the
seven major projects most likely will require debt financing, partner contract
modification,and/or grants; these “major” projects need to be approved by
Mountain View, Los Altos, Stanford, and East Palo Alto Sanitary District as part of
a contract requirement with Plant partners.The contract with Los Altos Hills does
not require partner approval for capital projects.
The LRFP addressed the need for capital projects as summarized below:
Facility Renovation & Replacement $157M
Incinerator Replacement $13 -$89M
Total Renovation & Replacement $170 -$246M
Potential Future Regulatory Demands $146M
Total Capital Needs $316 -$392M
Both the identified and the potential regulatory needs represent significant
capital expenses. The needs are consistent with neighboring wastewater
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treatment plant capital plans (e.g., rehabilitation costs for South Bayside System
Authority in Redwood City: $151M; Sunnyvale: $225M; and San Jose:$1,800M).
Financing opportunities fall into two basic debt financing alternatives: (a) a low-
interest loan from the State Water Resources Control Board (i.e., an SRF loan), or
(b) a utility revenue bond backed by rates or charges of the system. Using partner
contract modifications to create a greater “pay-as-you-go”approach constitutes
another alternative. Grant opportunities may also be available, particularly for
recycled water and energy projects. A financing plan is required to explain
financing instruments,to detail partner shares and contract modifications, and
evaluate expected sewer rate increases. Preliminary analysis indicates low to
moderate sewer rate increases for the typical Palo Alto residential sewer bill
would cover the first four major capital projects through 2018 (see chart below).
This analysis is based on issuance of revenue bonds.Rate increases would be even
lower if a low interest State Water Board loan was obtained.It is too early to
determine state eligibility for an award of a state loan.
Palo Alto Single Family Wastewater Bill Projection
$25
$26
$27
$28
$29
$30
$31
$32
$33
$34
$35
$36
$37
$38
$39
$40
2012 2013 2014 2015 2016 2017 2018
$$/Month
Fixed Film Reactor Rehab
Environmental Services Building
Incinerator Replacement
Baseline Rate Projection
Even with new debt service, the overall monthly sewer rate will remain consistent
with residential sewer rates within San Mateo and Santa Clara Counties.
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Staff proposes to more fully analyze these options and will return to Council with
a more detailed financing plan.
Policy Implications
The recommendations of the LRFP are consistent with City policy.
Environmental Review
The LRFP is exempt from review under the California Environmental Quality Act
pursuant to Section 15262. A CEQA environmental review will be completed for
each project resulting from the LRFP.
Prepared By:Jim Flanigan, Senior Engineer
Department Head:J. Michael Sartor, Director
City Manager Approval: ____________________________________
James Keene, City Manager