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HomeMy WebLinkAboutStaff Report 14650 City of Palo Alto (ID # 14650) City Council Staff Report Meeting Date: 9/12/2022 Report Type: Study Session City of Palo Alto Page 1 Title: Report and Discussion on Valley Water’s Purified Water Project Including Location of the Advanced Water Purification Facility at the Former Los Altos Treatment Plant Site, Reverse Osmosis Concentrate Management, Upcoming Agreements and Decisions From: City Manager Lead Department: Public Works Recommendation This is a study session, and no action is required from Council at this time. Background The purpose of this study session is to provide the Council with a status update on the City’s efforts with the Santa Clara Valley Water District and the City of Mountain View to improve the quality of recycled water produced by the Regional Water Quality Control Plant (RWQCP) and increase water reuse in the region. Local Salt Removal Facility: Improving Existing Recycled Water Quality at the RWQCP The RWQCP treats wastewater from six communities, including Palo Alto. Currently, much of the treated effluent is discharged into the Bay rather than being reused. The RWQCP produces and distributes approximately 230 million gallons per year of tertiary-treated recycled water to the City of Mountain View, several City-owned parks and facilities, and a commercial truck fill standpipe at the RWQCP. Following public concerns regarding the irrigation of redwood trees and other salt-sensitive species with recycled water, the City prepared an Environmental Impact Report (EIR) focused on water quality issues and salinity impacts. On January 25, 2010, Council approved the Recycled Water Salinity Reduction Policy (Staff Report ID #111:10, Resolution 9035), including a goal of reducing the recycled water total dissolved solids level to 600 parts per million. In 2017, Valley Water, Palo Alto, and Mountain View finalized a feasibility study and the preliminary design report for a local salt removal facility (Staff Report ID #10627). Highly treated water produced by the local salt removal facility would benefit landscapes currently irrigated with recycled water in Palo Alto, enable Palo Alto to expand its non-potable distribution system, and/or provide a first step toward small-scale potable water production for direct or indirect potable reuse in Palo Alto. The local salt removal project was estimated in 2017 to cost approximately $20.0 million. Under the terms of the Agreement, Valley Water will City of Palo Alto Page 2 contribute $16.0 million (Staff Report ID #10627) toward the design and construction of the facility with the balance split between Palo Alto and Mountain View at 25% and 75%, respectively. Partnership Agreement to Advance Resilient Water Reuse Programs in Santa Clara County In order to increase the quality of recycled water in Palo Alto and increase water reuse in Santa Clara County, a Partnership Agreement to Advance Resilient Water Reuse Programs in Santa Clara County between Valley Water and the Cities of Palo Alto and Mountain View (Agreement) was executed at the end of 2019 (Staff Report ID # 10627). The Agreement includes three major components: Partial funding by Valley Water ($16 million) for a local salt removal facility at the RWQCP; a Valley Water option to use about half of the effluent from the RWQCP to be treated at a regional purification facility and used elsewhere in the county; and a water supply option for the cities of Palo Alto and Mountain View to request additional water supply if needed. Palo Alto agreed to assist with siting a regional purification facility in the City and to make best efforts to accommodate reverse osmosis concentrate (ROC) discharge to the wastewater treatment plant’s outfall. Per the terms of the Agreement, Valley Water has been making annual payments of $0.2 million since 2020 for the effluent transfer option. Valley Water will provide an annual payment of $1.0 million for the effluent once the project is complete. Another collaborative effort between Valley Water and Palo Alto was the Northwest County Recycled Water Strategic Plan (Strategic Plan), completed in 2019 and presented to Council on March 2, 2020 (Staff Report ID # 10913). The Strategic Plan included a preliminary design and business plan for a recycled water distribution system expansion to customers in the Stanford Research Park. Variations of the project, contemplating recycled water service to parts of Los Altos, Los Altos Hills, Mountain View, and East Palo Alto, were also evaluated and compared to potable reuse alternatives. Proposed Regional Purified Water Project at the Former Los Altos Treatment Plant Site Area B The Purified Water Project is part of Valley Water's water resources strategy to provide a reliable water supply from a variety of sources consistent with its Water Supply Master Plan 2040. Valley Water’s objectives are to: • Implement an indirect potable reuse supply project that provides 10 million gallons per day (MGD) production capacity (11,200 AFY, or acre-feet per year) of sustainable water supply for long-term and future demands. • Design-construct-operate the project so that it reduces or minimizes environmental impacts. • Deliver the project in a manner that is cost-effective and provides value to the ratepayers. The Purified Water Project would include the construction of a new advanced regional water purification facility, associated pump station, and conveyance pipelines. Conveyance will be needed to move effluent from the RWQCP to the purification facility and from the facility to Valley Water’s existing Los Gatos Recharge System complex located in the City of Campbell. The City of Palo Alto Page 3 Valley Water Board of Directors directed Valley Water staff in December 2021 to finalize agreements with Palo Alto to locate the facility on the City’s property on San Antonio Road (the former Los Altos Treatment Plant (LATP) site). Valley Water plans to implement the Purified Water Project via a Public-Private Partnership (P3) to harness private sector innovation. The benefits to Palo Alto include payments for treated wastewater and a land lease, as well as increased use of treated wastewater to further regional sustainability and climate adaptation goals. Discussion The Project includes several components and will require extensive coordination between the participating agencies. The following table outlines the components and the responsibilities of Valley Water, Palo Alto, and Mountain View. Project Component Valley Water Role Palo Alto Role Mountain View Role Local Salt Removal Facility -Funding -Support Valley Water’s goal to increase recycled water use within the County -Funding -Design, construction, operation, and maintenance; Distribute enhanced recycled water -Funding -Offtake treated water Regional Advanced Water Purification Facility • Regional Water Purification Facility -Funding, design, construction, operation, and maintenance of project -Provide effluent -Receive and discharge ROC N/A • Site Location -Environmental review and mitigation including clean-up; wetland mitigation -Design -Lessee for LATP site -Property Owner -Negotiate lease agreement with Valley Water N/A • Pump Station Funding, design, construction, operation and maintenance -Designate location -Negotiate lease and operations and maintenance agreement with Valley Water N/A • Conveyance system Funding, design, and construction Review and approval Review and approval • Reverse Osmosis -Co-negotiate with -Co-negotiate with N/A City of Palo Alto Page 4 Project Component Valley Water Role Palo Alto Role Mountain View Role Concentrate (ROC) regulators to discharge at Palo Alto outfall location -Assume liability associated with discharge of ROC regulators to discharge at Palo Alto outfall location -Determine where ROC will enter effluent Regulatory approvals Lead agency on CEQA and permits for the Regional Purification Facility Coordinate withy lead federal agency on NEPA compliance Support Valley Water efforts on receiving regulatory approval specifically from the Regional Water Quality Control Board N/A Local Salt Removal Facility at the RWQCP In 2021, the City of Palo Alto hired Black & Veatch to design the local salt removal facility (Staff Report ID # 11782). In May 2022, staff received a cost estimate for the 60% design that is significantly higher than the original estimate developed in in 2017. A comparison of the two estimates is shown in the table below: Table 1: SRF Application and 30% Design Cost Estimates Estimate SRF Application (2017) (10% Project Definition) B&V Design Submittal (2022) (60% Project Definition) Facility 1.125 MGD AWPS 1.125 MGD AWPS Indexed Dollar Value 2020 2023 Construction Costs Direct and Contractor Costs $13,904,000 $33,191,000 Design Contingency and Market Volatility $4,900,800 $4,735,000 Escalation $698,200 $1,977,000 Estimated Bid Price $19,503,000 $40,523,000 Other Project Costs Owner Controlled Change Order Contingency, Engineering Services, Construction Management, and Program Management $2,850,000 $12,139,000 Total Project Costs $22,353,000 $52,622,000 AACE Estimate Class (Anticipated Bid Price Class 3 (-20% to +30%) Class 3 (-20% to +30%) City of Palo Alto Page 5 Accuracy) The updated cost estimate from Black & Veatch reflects the volatility and increases in construction prices since 2017 and the progression of the design from conceptual level to a fuller design that includes elements not initially considered. For example, the 60% design includes modifications of required foundations for the facility that require pile driving rather than a mat foundation and raising electrical equipment in alignment with the City’s Sea Level Rise policy requirements. Because this project will receive some funding from Valley Water ($16.0 million), and anticipates receiving a WaterSMART: Title XVI WIIN Act Water Reclamation and Reuse Projects (USBR Grant for $12.9 million) the remainder of the project will be funded three quarters by Mountain View (approximately $18.5 million) and one quarter by Palo Alto (approximately $6.2 million) if the project moves forward. Mountain View and Valley Water staff are part of the review process during the design of this project. The 90% design and cost estimate is expected by the end of September 2022, and the cost estimate will be evaluated prior to moving forward with construction. Site Location and Lease of the Regional Water Purification Facility The proposed site for the regional water purification facility in Palo Alto is the former LATP Area B site located at the end of San Antonio Road in Palo Alto. The environmental work has included the delineation of existing wetlands and characterization of hazardous material site conditions. The geotechnical work included a field exploration to determine soil conditions at the site. Valley Water and Palo Alto are negotiating a land lease of the 6.4-acre portion of the larger 13.2-acre LATP for construction of the facility and siting of a pump station at the RWQCP. A Comprehensive Plan amendment for a portion of the Area B site and a parcel subdivision will be needed. The lease agreement and operations and maintenance agreements will be presented to Council for consideration at a future date. The project will be subject to discretionary review by the Architectural Review Board. Reverse Osmosis Concentrate Management Reverse Osmosis is a process that removes minerals, viruses, and other constituents; the same technology is used to convert seawater into fresh drinking water. The average efficiency of Reverse Osmosis is 85 percent. That means, for every 100 gallons of treated wastewater feedwater, the purification facility will produce 85 gallons of purified water and 15 gallons of Reverse Osmosis Concentrate (ROC). ROC contains all the dissolved constituents that were in the feedwater already with no chemicals or other constituents added. Valley Water has been operating a large, advanced water purification facility in San Jose since 2014. The Silicon Valley Advanced Water Purification Center (SVAWPC) is capable of producing up to 8 MGD of highly purified water. The ROC produced at the SVAWPC is blended with the wastewater effluent at the San Jose-Santa Clara Regional Wastewater Facility (RWF) and discharged to the Bay under their existing wastewater permit. This approach has been used City of Palo Alto Page 6 without any negative environmental impact since 2014. Valley Water is working closely with the Palo Alto RWQCP staff and the regulators on an approach for discharging the ROC from the regional water purification facility in Palo Alto in a similar fashion. The San Francisco Bay Regional Water Quality Control Board (Regional Board), which issues the RWQCP’s discharge permit, has been very supportive of the proposed Water Purification Project and this blending approach. The Regional Board has concurred with a suite of technical studies that will be conducted by Valley Water to inform the renewal of the RWQCP’s permit required to support the ROC discharge. The Regional Board will require further studies and may require pretreatment of ROC through feasible means in the future, for example horizontal levees. Palo Alto will ensure risk associated with the discharge of ROC will be borne by Valley Water in the final ROC management agreement. Homekey Palo Alto Project As part of the planning process for the Project, the City recognizes a need to coordinate the construction and operation of any new facilities with the emergency shelter project that is also planned for development on another part of the former LATP site (part of Area C). Last month, the City and its project partner, LifeMoves, received a $26.6 million grant from the State Department of Housing and Community Development (HCD) for an 88-unit interim transitional housing shelter on a portion of Area C. The design is reflected in the most recent documents through the Architectural Review Board on July 21, 2022 (ARB Staff Report 14546). Staff is working with LifeMoves and Valley Water to ensure that both projects are compatible on the site. Project Homekey will be located on a portion of Area C of the LATP site whereas the purification project will be located on Area B (Figures 1 and 2). Staff is working to find a suitable construction staging area outside of the LATP site, or Valley Water will stage within Area B for the purification project. The staging area concern will require further discussion during the project’s design stage. Staff believes these two projects can coexist since, unlike the RWQCP, the purification plant does not emit any odors and is relatively quiet. Staff also recognizes a need to address the impacts associated with the construction of the purification facility. Homekey Palo Alto will be adjacent to the Greenwaste operation yard, which is another commercial (sorting) facility currently planned through June 20, 2026, the term of the Greenwaste contract. City of Palo Alto Page 7 Figure 1. Current use of the old Los Altos Treatment Plant site Area C; Greenwaste and Homekey Palo Alto will share Area C; Area B is anticipated for the future Valley Water Regional Purification Facility. City of Palo Alto Page 8 Figure 2. Potential future layout of Area C with Homekey Palo Alto and Greenwaste Yard. Timeline Valley Water’s procurement process is ongoing. A Request for Qualification (RFQ) was released, and eight statements of qualifications were submitted. Four teams were shortlisted. A Request for Proposals (RFP) and the draft EIR are anticipated to be released in late 2022. Valley Water’s preferred tentative timeline is as follows: • Fall 2022: Decisions by City Council on the LATP site for the regional AWPF and Reverse Osmosis Concentrate management • Winter 2023: Initiate Comprehensive Plan amendment and parcel subdivision (City) • Winter 2023: Final EIR (Valley Water) and approval of lease agreement (City) • Fall 2023: Selection and contract award (Valley Water) • 2023 – 2024: Design by selected entity with Valley Water oversight and Palo Alto site and design review • 2025-2028: Construction and beginning of operations Resource Impact Significant City of Palo Alto staff resources are required in support of the Purified Water Project including staff from multiple departments including Public Works, Utilities, Administrative City of Palo Alto Page 9 Services, Planning and Development Services, and the City Attorney’s Office. The project requires review from the City for the siting of the facility at the Former Los Altos Treatment Plant site; installing a new pump station at the Regional Water Quality Control Plant; installation of underground pipes to convey the effluent and reverse osmosis concentrate back and forth to the RWQCP; and the negotiation with the Regulatory Agency to ensure that Palo Alto can comply with future permit requirements. Staff is working with Valley Water on a Reimbursement Agreement with Valley Water to assist staff to comply with the added workload associated with this project. Once Valley Water executes the portion of the Partnership Agreement to start treating effluent from the RWQCP; RWQCP will receive approximately $1.0 million per year that will be divided by flow share amongst the cities that have committed their effluent, which are currently, Palo Alto, Mountain View, and Los Altos. Funding for the current design work on the small salt removal facility at the Regional Water Quality Control Plant is provided by Capital Improvement Program project WQ-19003, Advanced Water Purification Facility. The amounts currently budgeted are based on the 2017 conceptual design and will need to be adjusted. Stakeholder Engagement Palo Alto and Valley Water staff collaborate on outreach for the project. Valley Water staff conducted virtual tours of the Silicon Valley Advanced Water Purification Center for several stakeholder groups in Palo Alto and surrounding area including the following: • Oshman Family Jewish Community Center • Palo Alto Fellowship Forum • Interfaith Peninsula Climate Action Group • CA League of Cities Peninsula Division (in-person) • Public Library tours with Palo Alto and Mountain View • City of Palo Alto Public Works staff Valley Water presented a Purified Water Project update at the September 2021 City of Palo Alto Parks and Recreation Committee meeting. Valley Water staff also held informational meetings with environmental stakeholders in Mountain View and Palo Alto, and faith-based organizations such as Spark Church, First Congregational Church, Peninsula Bible Church, Etz Chayim, First Congregational Church, University AME Zion Church, and University Lutheran Church. Additionally, Valley Water worked with the Santa Clara County Medical Association (SCCMA) to coauthor a series of articles on the benefits of Purified Water. In June, SCCMA released a special Water edition of their medical journal, “The Bulletin” highlighting Purified Water as a safe and drought-proof source of local water supply. The digital version of the journal can be accessed here. City of Palo Alto Page 10 Palo Alto is working with LifeMoves on applying for Project HomeKey funding to locate an emergency homeless shelter project on a portion of the LATP Area C site. Palo Alto, Valley Water, and LifeMoves staff are collaborating to ensure compatibility of these neighboring projects. In addition, Palo Alto and Valley Water have coordinated on engaging stakeholders on the environmental review process for the proposed Water Purification Project. Valley Water, acting as the “lead agency”, has determined that an EIR is required to satisfy the requirements of the California Environmental Quality Act (CEQA). The draft EIR will evaluate the proposed project’s environmental conditions, range of alternatives, potential environmental impacts associated with the proposed project implementation, and provide mitigation measures. The Notice of Preparation (NOP) was released on March 19, 2021 and the public scoping meeting was held on March 29, 2021. Outreach was conducted to encourage attendance at the scoping meeting via an outreach mailer, announcements at tours of the Silicon Valley Advanced Purification Center, and continued engagements with staff from the cities of San Jose and Palo Alto to reach key stakeholder groups. Prior to the release of the NOP, Valley Water staff and consultants met with the planning department staff of both Palo Alto and San Jose as these cities will be the responsible agencies under CEQA. Currently, both City’s sites are being evaluated at equal level of details in the CEQA documentby Valley Water. The Valley Water Board directed staff to focus on Palo Alto at this time. In the future, Valley Water anticipates that an additional purification plant will be required to augment future drinking water supplies within Santa Clara County. The next steps after the NOP will be development a full environmental impact report, which will focus on the old Los Altos Treatment Plant Site as the proposed site; Palo Alto will be the responsible agency. Additional coordination will occur prior to release of the EIR. Environmental Review This study session is presented for information and discussion purposes only and is therefore not a project as defined by section 15378 of the CEQA Guidelines. Valley Water, acting as lead agency for the proposed Water Purification Project, has determined that an EIR is required to satisfy the requirements of CEQA. Palo Alto will be the responsible party throughout the CEQA process. Valley Water is currently in the process of preparing the Draft EIR; which the City will review prior to its release.