For City Council Meeting April 23, 2024
TO: Honorable Mayor and City Council
APPROVAL: Tanya Williams, Acting City Manager
FROM: Stephen Dopudja, P.E., Interim Utilities Manager
Toyasha Sebbag, Assistant to the City Manager
...Title
Final Agreement With Inland Empire Utilities Agency For the Long-Term Sale of Wastewater Effluent for Recycled Water Purposes.
(ACTION)
...Body
RECOMMENDATION
It is recommended that the City Council and Rialto Utility Authority Board Approve the Final Agreement with the Inland Empire Utilities Agency Consistent with the Term Sheet and All Related Documents for the Long-Term Sale of Wastewater Effluent for Recycled Water Purposes.
BACKGROUND
The City of Rialto owns and operates a Wastewater Treatment Plant (WWTP) located in the southern area of the City just north of the Santa Ana River and south of Santa Ana Ave. The WWTP currently treats domestic sewage and generates recycled water meeting state regulations that are discharged to the Santa Ana River. Generally, the City’s WWTP produces approximately 7,000,000 gallons per day of recycled water and has a maximum capacity to treat up to 11,700,000 gallons per day at the build-out of the City.
The Santa Ana River is an important ecosystem and part of the Upper Santa Ana River Multi-Species Habitat Conservation Plan (HCP). The City has obligations to continue discharging a certain amount of recycled water into the Santa Ana River to support the ecosystem, currently 7 cubic feet per second (cfs) or 3,800,000 gallons per day. However, the conveyance system of the City’s recycled water from the WWTP to the Santa Ana River includes a concrete-lined drainage channel, and in the summer months the temperature of the City’s recycled water increases and may harm the sensitive ecosystem within the Santa Ana River.
The Inland Empire Utilities Agency (IEUA) is a regional wastewater treatment agency and wholesale distributor of imported water. IEUA is responsible for serving approximately 875,000 people over 242 square miles in western San Bernardino County, with one of its core missions to develop recycled water, local water resources, and conservation programs to reduce the region’s dependence on imported water supplies, thus enabling the service area to become drought resilient.
IEUA currently has 56,800 acre-feet per year (AFY) of recycled water supply, however, these supplies are insufficient to support their demand for recycled water during the summer months between May and October. IEUA anticipates the need for up to 6,000 AFY of additional external supplies to shoulder the increased demand during the summer months. In an effort to obtain the additional external supplies, the City and IEUA began exploratory discussions that resulted in the Principles of Agreement, which were approved by the City Council on March 8, 2022. A copy of the Principles of Agreement is included in ATTACHMENT 1.
The Principles of Agreement outlined the framework for compensation by IEUA to the City, and IEUA capital improvement contributions for the required infrastructure to convey the water. The Principles of Agreement served as the foundation for the Term Sheet that was approved by the City Council and Rialto Utility Authority Board on September 27, 2022. A copy of the Term Sheet is included in ATTACHMENT 2.
Preliminary engineering and evaluation of the conveyance facilities between the City’s WWTP and IEUA’s system are substantially completed under a preliminary design report (PDR) effort by IEUA. This final Agreement is consistent with the PDR and substantially conforms with the Term Sheet. Some minor modifications from the Term Sheet are proposed for further clarity and/or reflect additional information since approval of the Term Sheet. For example, IEUA has agreed to further participation in cost sharing of facilities that provide mutual benefit. This includes grading and site improvements in the vicinity of the proposed IEUA pump station.
The effective date of this Agreement will be based on mutual execution of the Final Agreement vs. the previously approved Term Capital Sheet.
ANALYSIS/DISCUSSION
Taking into account obligated flows from the WWTP to the Santa Ana River, the City has available recycled water produced from the WWTP that is discharged to the Santa Ana River. This recycled water is a high-value commodity and can be redirected for other suitable purposes. Therefore, the commodity has value, and it is in the City’s interests to pursue opportunities to monetize the recycled water to its highest and best use.
There is an alignment of goals and objectives between the City and IEUA in the City’s availability of recycled water during the summer months and IEUA’s demand for recycled water at the same time. Understanding this synergy, the City and IEUA have collaboratively negotiated for the long-term exchange of recycled water that ensures the sensitive ecosystem in the Santa Ana River is protected while the available recycled water is allocated to better use.
The proposed Final Agreement is included in ATTACHMENT 3. IEUA approved the Final Agreement at its April 17, 2024, Board Meeting.
On September 27, 2022, the City Council authorized the City Manager to execute the Final Agreement in a form acceptable to the City Attorney consistent with the Term Sheet. Staff is returning this item to the City Council to accept the proposed modifications and to approve the Final Agreement.
ENVIRONMENTAL IMPACT
The requested City Council action is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has the potential to result in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. According to Section 15378(b), a Project does not include (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
A separate change of use permit will be required for the ultimate diversion to IEUA. The City and IEUA will work collaboratively in obtaining the future permit.
GENERAL PLAN CONSISTENCY
Approval of this action complies with the following:
Our City government will lead by example and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
LEGAL REVIEW
The City Attorney has reviewed and approved the staff report and agreement to form.
FINANCIAL IMPACT
Operating Budget Impact
Under the Final Agreement, IEUA will own and operate the proposed pump station and conveyance pipeline. The City will own and operate the proposed well. Because the well sizing will be performed as part of the infrastructure analysis, operations, and maintenance costs are not yet established. However, costs are expected to be substantially less than a normal City well operation, due to partial operations only six months out of the year, between May to October.
The City is responsible for the cost of obtaining the necessary permits upon execution of this agreement, the City will retain the necessary consulting services which will be included in the FY 2024-2025 Operating Budget.
Capital Improvement Budget Impact
Under the Term Sheet, IEUA is funding the planning, design, and construction of a proposed pump station and conveyance pipeline from the City’s Wastewater Treatment Plant to IEUA’s Regional Recycling Plant (RP-4), located approximately 12 miles away in the City of Rancho Cucamonga. The City’s financial participation in the capital improvements is through the differential or discounted initial price of $275 per acre-foot for the first 3,500 acre-feet of effluent, versus $400 per acre-foot for any flows over 3,500 acre-feet. As a result, the City is not expected to provide an out-of-pocket financial contribution to the pump station or pipeline.
During the six months of summer diversions to IEUA (May through October), it is anticipated that some flows to the Santa Ana River will be necessary to maintain the City’s obligations under the HCP. This is largely anticipated during the transitional months of May and October. To accomplish providing these flows, IEUA is contributing $1 million towards the construction of a well, at a location of the City’s choice. The well is currently anticipated to be located at the City’s Wastewater Treatment Plant. Therefore, no property acquisition costs are anticipated. Under the Final Agreement, the City would cover costs over the $1 million contribution. As the City grows to its ultimate build-out, flows into the WWTP will increase and supplemental water from the proposed well would be reduced and could possibly be eliminated.