HomeMy WebLinkAboutStaff Report 2304-13897.Staff Recommends that Council Direct Staff to Explore Purchase of Property Contiguous
to the Regional Water Quality Control Plant (RWQCP) to Meet Current and Future Needs
of the RWQCP
City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Public Works
Meeting Date: August 21, 2023
Report #:2304-1389
TITLE
Staff Recommends that Council Direct Staff to Explore Purchase of Property Contiguous to the
Regional Water Quality Control Plant (RWQCP) to Meet Current and Future Needs of the
RWQCP
RECOMMENDATION
Staff recommends that Council direct staff to:
1. Explore the purchase of property contiguous to the Regional Water Quality Control
Plant (RWQCP) to meet current and future space needs;
2. Explore funding options to enable purchase of one or more of the three properties
contiguous to the RWQCP; and
3. Return to Council with recommendations for purchase of property contiguous to the
RWQCP.
EXECUTIVE SUMMARY
The RWQCP, originally constructed in 1934, has undergone several expansions and upgrades
and has entered a period of concentrated Capital Improvement Program (CIP) projects over the
coming years with a likely total cost of over $300 million in the next five years alone. To
facilitate CIP projects and provide room for new facilities, construction, staging, consultants,
and contractors, more space will be needed at the RWQCP. The projects are a mix of
replacement, rehabilitation, and new process projects. Surrounded by roads and parkland on
three sides, the only option for more space is one or more of the three privately-owned parcels
on the west side of the RWQCP. The parcels appear in the photo below between Embarcadero
Way and the RWQCP. This report explains the need and recommended next steps, with the
recommendation to conduct due diligence, explore funding options, and bring further
recommendations back to Council.
BACKGROUND
1. The Wastewater Treatment Fund
infrastructure is owned by Palo Alto and supported by its partner agencies. The RWQCP’s core
infrastructure was built in 1972 with tanks, pumps, large pipes, industrial buildings, and
complex mechanical and electrical systems. The 1972 RWQCP had major capital additions in
1980 and 1988.
ANALYSIS
1 City Council Finance Committee, April 20, 2021; Agenda Item #3; SR #12170
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/reports/city-manager-reports-
cmrs/year-archive/2021/id-12170.pdf
processes must be added to meet the challenges of the 21st century: nutrient and toxics
removal for Bay protection, advanced recycled water production to augment water supplies,
greenhouse gas emissions reduction for climate protection, reuse of biosolids from plant
processes, and advanced treatment and testing for human health protection. To do this, more
space will be needed for many kinds of facilities, including laboratory space, new wastewater
treatment processes, advanced electrical delivery and control systems, construction lay-down
areas, ingress and egress, emergency spare parts storage, and sea level rise adaptation. Fifty
years ago, these needs were not fully foreseen, and insufficient acreage was set aside for
facility modification and expansion. Recent droughts have demonstrated that a new goal is to
remove more types of contaminants and produce water meeting increasingly stringent drinking
water standards. Even the water which will not be reused (and will be discharged to the Bay)
will need further treatment and new unit processes, as the Bay standards become more
stringent. Other facilities requiring capital improvement in the next ten years (at the end of
their useful life) include a new outfall pipe, new support facilities, relining of an aging joint
intercepting sewer, and a new headworks facility. Even when old facilities are simply being
replaced, more space is needed because today’s building standards dictate larger footprints,
and because the old facilities must continue to be used while new ones are built, in the 24/7
world of wastewater treatment. The needed new laboratory is a good example. The old
laboratory must continue to be used while a new one is designed, built, and brought online.
Staff is analyzing additional opportunities to lease adjacent space while the plant undergoes a
major rebuild and space is limited onsite over the next 10 plus years.
2. The highest priority projects are being
implemented over multiple years to effectively manage resources and costs.
2 City Council, July 2, 2012; SR #2914 https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-
reports/reports/city-manager-reports-cmrs/year-archive/2012/id-2914.pdf
utility connections, and other features could be retained, reducing development expenses,
compared to installing more expensive new infrastructure.
The need for staging, laydown areas, and contractor trailers during long periods of construction
is often overlooked. This is now an integral part of the planning at the RWQCP; the Secondary
Treatment Upgrades project, now underway, is a good example. Turning the current aeration
tanks into an organics and nitrogen removal process will require five years of staged
construction. Areas for long term materials storage and contractor operations have been set
aside at the RWQCP and at rented space offsite at the Palo Alto Airport.
After property acquisition, the RWQCP would hire an architect and/or engineering firm to plan
for remodeling or replacement of existing buildings. Staff would return to Council for approval
of the design and then again for facility construction.
While the need for space has been apparent for several years, only now do favorable conditions
exist for purchase. Staff has been tracking ownership of the two most suitable properties for
over two decades and there had not been an interest in a sale until the last two years.
Approximately two years ago, individual (and separate) longtime owners became interested in
selling and doing so quickly. 1900 Embarcadero Road (the furthest left property in the above
photo) was sold to an investment/property management firm (BioScience Property
Investments). The City has inquired about property sale with the new owner. 2415-17
Embarcadero Way (the middle property in the above photo) transferred to Redco Development
in April 2023. The third property at 2425 Embarcadero Way is a California Public Storage
Facility. Although less suitable for use by the RWQCP, its ownership is now being explored as
well.
With two of the properties likely possibilities for acquisition, staff is now recommending an
immediate effort to complete due diligence on at least the first two, and have discussions with
owners of the third, and proceed if appropriate.
Both 1900 Embarcadero Road and 2415-17 Embarcadero Way are leased to tenants. A second
reason for proceeding currently is a combination of COVID and economic impacts. The City’s
appraiser advises that these are very uncertain times in the commercial real estate market, and
investors should not expect large gains soon.
Staff is proceeding with an update to the 2012 Long Range Facilities Plan (LRFP) that will include
site and workspace planning components for the variety of needs at present and in the future,
as described in a June 19, 2023 Informational Report about the RWQCP’s Capital Improvement
Program and the LRFP update3. This planning work will provide more certainty about space
needs but will take approximately two years to complete. The timing of acquisition could
involve some risk regarding potentially acquiring land in advance of completing the LRFP
3 City Council, June 19, 2023; SR #2305-1396
https://recordsportal.paloalto.gov/Weblink/DocView.aspx?id=82414
update; however, the current opportunities to acquire land from a willing seller adjacent to the
RWQCP may justify immediate consideration.
FISCAL/RESOURCE IMPACT
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
APPROVED BY: Brad Eggleston, Director Public Works/City Engineer