City of Santa Monica

Staff Report

Authorization for the City Manager to Accept a Funding Agreement from the State Water Resources Control Board Clean Water State Revolving Fund Program for the Sustainable Water Infrastructure Project (SWIP) and Authorization to Negotiate and Execute an Agreement with MWH/Stantec Consulting to Serve as Owner's Engineer for the SWIP Project


Department:Public Works, Water ResourcesSponsors:
Category:03. Consent Calendar

Recommended Action

Recommended Action

Staff recommends that the City Council:

1.     Authorize the City Manager to accept and execute a funding agreement in the amount of $56,885,903 from the State Water Resources Control Board (State Water Board) Clean Water State Revolving Fund (CWSRF) program for the City of Santa Monica’s Sustainable Water Infrastructure Project (SWIP), and to accept all renewals.

2.     Authorize the City Manager or his/her designee to execute all necessary documents to accept the funding agreement and all renewals.

3.     Authorize the Director of Public Works, as the City’s Authorized Representative pursuant to State Water Resources Control Board requirements, to issue any necessary amendments to the agreement within contract authority.

4.     Award RFP# SP2456 to MWH/Stantec, a California-based company, to serve as the Owner’s Engineer for the SWIP.

5.     Authorize the City Manager to negotiate and execute an agreement with MWH/Stantec, in an amount not to exceed $1,649,920 (including a 10% contingency of $149,992) over a 5-year period.

Staff Report Body

Executive Summary

The City has proposed the Sustainable Water Infrastructure Project (SWIP) to help meet the City’s objective of water self-sufficiency by the year 2020. Water sustainability cannot rely on local groundwater alone. To achieve long-term water sustainability, the City will need to harvest and treat non-conventional resources such as stormwater and urban runoff and brackish groundwater. The SWIP increases water supply for reuse by harvesting and advance treating municipal wastewater, brackish groundwater, and stormwater and urban runoff. As designed, the SWIP would produce approximately 1,680 acre feet/year (AFY) or1.5 million gallons/day (MGD) of new water for immediate non-potable reuse, and when appropriately permitted, for indirect potable reuse via aquifer recharge. This volume is a critical first step in the City’s strategy for achieving water sustainability.


The estimated cost of the project is $69,893,435. Of this, $56,885,903 of the total project costs would be funded through a Clean Water State Revolving Fund (CWSRF) agreement that provides low-interest financing and will forgive $4 million of the principal. The remainder of the project costs would be paid through the Clean Beaches and Ocean Parcel Tax Fund, the Stormwater Management Fund and the Wastewater Fund. Staff recommends Council accept the proposed CWSRF agreement to allow the SWIP project to move forward. The project construction is expected to be completed by late 2020.


The SWIP is one project in a series of strategic elements for water sustainability that include the adjacent Clean Beaches Project. Other projects under study include improving the efficiency of the Arcadia Treatment Plant to produce an additional 1.0 MGD of drinking water and exploration of the water resources available in the Coastal Subbasin. Taken together, these elements will help culminate in long-term sustainability. 


The SWIP cost estimate and funding include services for an Owner’s Engineer. The SWIP Owner’s Engineer would, among other things, assist the City with various aspects related to project management, construction, regulatory permitting, and commissioning of the SWIP and permitting for the associated aquifer recharge component of the project. A Request for Proposal (RFP) for the SWIP Owner’s Engineer was issued on July 20, 2017. One firm, MWH/Stantec, responded. Because the Owner’s Engineer would be precluded from competing as the design-build contractor for the SWIP project, other qualified firms decided not to participate in the Owner’s Engineer RFP. Staff recommends Council authorize Professional Services Agreement with MWH/Stantec in an amount not to exceed $1,649,920 (including contingency) over five years.



Partnership with State

The State Water Board is committed to assisting its stakeholders in building resiliency to drought and climate change. Similarly, the City has established among its sustainability goals the objective of reaching water self-sufficiency by the year 2020, concurrent with addressing the water conservation measures made necessary by drought influenced impacts to groundwater (Attachment A). The City’s SWIP would align with these objectives while simultaneously increasing water supply for reuse and enhancing flexibility in the management of the City’s water resources.


Council has taken action three times to help move this SWIP project and the partnership with the State forward.  On January 26, 2016, City Council adopted a resolution that authorized the submittal of an application for funding consideration from the State Water Board in the amount of up to $57,050,000 from the CWSRF and State Proposition 1 funding programs, and authorized the City Manager to execute all necessary documents to apply and negotiate for funding (Attachment B). On September 27, 2016, City Council adopted a resolution certifying the California Environmental Quality Act (CEQA) Mitigated Negative Declaration for the SWIP as well as the Mitigation Monitoring and Reporting Program (Attachment C). On December 6, 2016, City Council adopted a resolution approving pledged revenues and reimbursement of any State CWSRF financing if accepted by the City (Attachment D).  The action here would enable the City to formalize the agreement with the State and secure funding for the project.


Project Approach

Staff has implemented a two-phase approach for the SWIP project. The first phase, which is complete, was project concept development. Phase I included, among other things, obtaining CWSRF loan funding, concept development, feasibility, permitting, obtaining environmental clearance, initiation of the aquifer recharge permitting process with the State Water Board and State Division of Drinking Water (DDW), development process design, and influent/effluent water quality criteria.


Phase II is project implementation. Staff has determined that a design-build process would best serve the City’s needs due to the complexity of the SWIP below-grade construction and CWSRF deadlines, which expect project construction to be complete by the end of 2020. The design-build approach is the most common project delivery method for water/wastewater facilities. It offers efficient project delivery, diverse expertise, team member continuity and accountability. This is a trusted approach used by the City in recent years to design and build a number of projects, including the Arcadia & Charnock Water Treatment Plants, the Big Blue Bus Facility Expansion, the Main Library construction, and the Tongva Park and Ken Genser Square projects.



City of Santa Monica Sustainable Water Infrastructure Project (SWIP)

The SWIP is composed of three integrated project elements to help improve drought resiliency, increase water supply and enhance flexibility in the management of the City’s water resources.

·         SWIP Element 1 is the installation of a containerized brackish/saline reverse osmosis and enhanced disinfection at the SMURRF. When operational, the reverse osmosis/disinfection unit would be utilized to advance treat non-conventional water resources such as urban and wet weather runoff harvested by the separate and recently approved Clean Beaches Initiative (CBI) Project to be constructed below ground at the Deauville Parking Lot. The CBI stormwater harvest tank would capture runoff from the 106-acre Pier Drainage Area that would normally be discharged to the ocean at the Pier Outfall. When runoff is scarce, the tank would be replenished with brackish groundwater collected from shallow horizontal sub drains installed beneath the CBI stormwater tank. This water would also be treated for reuse at the SMURRF.


·          SWIP Element 2 includes the construction of a below ground Advanced Water Treatment Facility (AWTF) at a location beneath the Civic Center Parking Lot. The AWTF would advance treat approximately 1.0 MGD of municipal wastewater for reuse. Treatment processes would include, among other things, a membrane bio-reactor, membrane filtration, reverse osmosis and advanced oxidation.


·         SWIP Element 3 consists of two below-grade stormwater harvest tanks. One tank (3.0 MG) would be constructed beneath Memorial Park. The other below-grade tank (1.5 MG) would be located adjacent to the AWTF described in SWIP Element 2 above. Project elements to be located under the Civic Center Parking Lot would be constructed to accommodate future development on the site. The harvested stormwater would be used as a supplemental feed source for treatment at the AWTF described in Element 2 above. Benefits provided by the stormwater harvest tanks include capturing stormwater and urban runoff for treatment and reuse, improving beach water quality and complying with State Water Board Enhanced Watershed Management Plan (EWMP) requirements. Together, the Project elements would produce approximately 1.5 MGD (1,680 acre-feet/year) of new water for immediate non-potable reuse, and when appropriately permitted, for indirect potable reuse via aquifer recharge. All treated water would be distributed via the City’s existing non-potable water “purple pipe” system. The proposed locations of project elements 1, 2 and 3 are shown in Attachment E.


The estimated cost of the SWIP is $69,893,435. The State Water Board has reviewed the City’s CWSRF application and provided a preliminary funding agreement to the City in the principal amount of $56,885,903 for a 30-year term, low-interest loan. The preliminary CWSRF agreement also provides for $4.0M in principal forgiveness, contingent on project completion. The preliminary funding agreement has been reviewed by staff and is recommended for approval.  The interest rate for the SWIP CWSRF loan would be 1.8% per annum. The City would utilize the Wastewater (31) Fund to service the CWSRF debt, estimated at $2,298,945 annually for 30 years starting in FY 2020/2021. As modeled in the City’s 5-year fund forecast, no sewer service charge rate increases are planned through calendar year 2019.  Pending a rate study to be completed in 2019 to set water and sewer rates for calendar years 2020 to 2024, the City currently anticipates that the annual SWIP debt service will be able to be accommodated by the Wastewater Fund with sewer service charge rate increases in line with CPI during the next rate study period. Other City financial sources that would be utilized to fund construction of the SWIP include the Clean Beaches and Ocean Parcel Tax (06) Fundand the Stormwater Management (34) Fund. Separate from the CWSRF financing, the City will apply for stormwater grant funds from Round 2 of Proposition 1 in late 2018.  Although not currently necessary to complete construction, if the Round 2 of Proposition 1 stormwater grant application is successful, these monies, which would reportedly become available in 2019, could ultimately help reduce the total amount of CWSRF financing required to complete the SWIP. 


Environmental Analysis

The California Environmental Quality Act (CEQA) Mitigated Negative Declaration, the Mitigation Monitoring and Reporting Plan and the National Environmental Policy Act (NEPA) documents (i.e. CEQA-Plus) for the project were certified by the Santa Monica City Council on September 27, 2016, and the Notice of Determination was filed at the State Clearinghouse on September 30, 2016 (Attachment F). The SWIP project was also presented to the Water Advisory Committee on May 23, 2016 and the City’s Task Force on the Environment on June 20, 2016.


Next Steps

A competitive bid selection process would be initiated for the design-build contractor upon notification by the State Water Board that the SWIP CWSRF monies are available for use. Staff would bring a recommendation for contract award to City Council for review upon completing the design-build contract competitive bid process. A team of builders, designers and specialty consultants would provide expertise at this critical phase of design and cost estimating. Members of this integrated project team would likely include construction specialists, architects, engineers, archaeological and historical consultants, and cost estimators. Upon Council’s approval, the design-build team could move into the construction phase based on a guaranteed maximum price. Once the SWIP recycled water treatment plant is completed, the design-build team would be required to operate the facility for a minimum required duration to demonstrate the facility performance as per the City’s requirement as well as to obtain permits required by the State Water Board and DDW.


Authorization for a SWIP Owner’s Engineer

The SWIP will include the one of a kind construction of a completely below ground advance water treatment facility. The technical challenges presented by the project location and construction require specialized engineering expertise. The SWIP Owner’s Engineer would provide engineering and technical expertise to the City on this project, help develop the scope of the work with the design-build contractor, and facilitate state and water board approvals of this project.

Vendor/Consultant Selection

The City published an RFP for an Owner’s Engineer for the SWIP on July 20, 2017. The RFP was posted on the City’s on-line bidding site for 22 days, and notices were advertised in the Santa Monica Daily Press in accordance with City Charter and Municipal Code provisions. A total of 91 vendors downloaded the RFP. One firm, MWH/Stantec, responded.


Staff recommends proceeding with MWH/Stantec based on the criteria in SMMC 2.24.073 as well as the following criteria: experience / technical competence, ability to meet work plan / timelines, quality control, stability / references and value added - breadth of service. The term of the subject contract is five years with an amount not to exceed $1,649,920. In the past MWH/Stantec has performed following services for the City on the SWIP; professional engineering services for siting and feasibility study, supplemental technical reports, recycled plant process design, cost estimating, influent/effluent water quality determination, project technical and design reports.


Project Costs

The estimated cost of the SWIP is $69,893,435. The project cost estimate includes services for an Owner’s Engineer. The State Water Board CWSRF is providing $56,885,903, including $4.0M in debt forgiveness on the sum of CWSRF monies utilized for project completion. The Clean Beaches and Ocean Parcel Tax (06) Fund would contribute $4.5M, the Stormwater Management (34) Fund would contribute $1.4M and the Wastewater (31) Fund would contribute approximately $7.1M. The terms of the CWSRF are 30 years at 1.8% per annum. Estimated annual debt service is $2,298,945. The Wastewater (31) Fund would be pledged to service the CWSRF debt. 


Financial Impacts and Budget Actions

State Water Resources Control Board Funding Agreement

Beginning in FY 2020-21, the City will pledge net revenues from the Wastewater (31) Fund for repayment of the SWIP CWSRF loan, which includes the funding for the project Owner’s Engineer. The total amount of the annual debt service will be approximately $2.3 million, $0.7 million of which will be reimbursed to the Wastewater (31) Fund by the Clean Beaches and Oceans Parcel Tax (06) Fund for work related to stormwater improvements. The Wastewater (31) Fund will finish paying all outstanding debt in FY 2021-22 so that the fund will only be required to pay debt service on both the outstanding Wastewater Series 2012A Revenue Bond and the CWSRF loan for one year, after which the fund will only be paying the debt service on the CWSRF loan. These debt service costs have been incorporated in the five-year forecasts for both the Wastewater (31) Fund and Clean Beaches and Ocean Parcel Tax (06) Fund. With a debt coverage ratio of 1.41%, the Wastewater (31) Fund is expected to exceed the required debt coverage ratio of 1.2%.


Owner’s Engineer Agreement

The agreement to be awarded to MWH/Stantec is for an amount not to exceed $1,649,920. Funds are available in the FY 2017-18 Capital Improvement Program budget in account C319210.589000.


Meeting History

Sep 12, 2017 5:30 PM  City Council Regular Meeting
draft Draft