SUPPLEMENTAL BOARD AGENDA MEMORANDUM P3 Related...July 28, 2015: Board approved Dual Track strategy for P3 and continuing planning and design of the SVAWPC expansion project. Attachment

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Meeting Date: 09/22/15 Agenda Item No.: Manager: G. Hall Extension: 2750 Directors: All

SUPPLEMENTAL BOARD AGENDA MEMORANDUM

SUBJECT: Expedited Purified Water Program

REASON FOR SUPPLEMENTAL MEMORANDUM:

This Supplemental Agenda Memorandum is required to transmit: (1) PowerPoint presentation for the Expedited Purified Water Program; and (2) Draft Standard Consultant Agreement between Santa Clara Valley Water District and HDR Engineering, Inc.

RECOMMENDATION:

A. Receive and discuss the Expedited Purified Water Program updates and provide direction to staff as needed.

B. Authorize the Chief Executive Officer (CEO) to negotiate and execute a consultant agreement with HDR Engineering, Inc., (HDR) of Walnut Creek, California, for project management services for the Expedited Purified Water Program for a fee up to $2,400,000.

C. Receive and discuss information regarding environmental review and permitting services.

D. Approve a budget reallocation/adjustment of $1,300,000 from the Indirect Potable Reuse Projects—Planning (IPR) to the Silicon Valley Advanced Water Purification Center (SVAWPC) Expansion Project, a program element, to allow staff to proceed with planning and design of the Expansion Project.

SUMMARY:

This Supplemental Agenda Memorandum is to provide the Board with the PowerPoint presentation and draft Standard Consultant Agreement, which was not available at the time of posting the regular agenda memorandum.

FINANCIAL IMPACT CHANGE:

No changes.

CEQA:

No changes.

FC 1703 (08-17-11)

SUBJECT:

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ATTACHMENTS:

Attachment 1: PowerPoint Presentation on Expedited Purified Water Program Attachment 2: Draft Standard Consultant Agreement

Expedited Purified Water ProgramExpedited Purified Water Program

September 22, 2015

Attachment 1Page 1 of 28

Organization of Presentation

Staff Recommendation

Program Background

Program Updates

HDR Project Management ContractHDR Project Management Contract

Environmental review/permitting services

Budget Reallocation/Adjustment

Attachment 1Page 2 of 28

Recommendation

A. Receive and discuss Program updates and id di tiprovide direction

B. Authorize CEO to negotiate and execute contract with HDR, up to $2.4M

C Receive and discuss environmental review C. Receive and discuss environmental review and permitting services

D. Approve budget reallocation/adjustment of $1.3M from IPR to SVAWPC Expansion Project

Attachment 1Page 3 of 28

$ 3 S C p j

Program Backgroundg g

Attachment 1Page 4 of 28

Key Drivers of the Expedited Program

California in fourth year of drought

Urgent need to develop drought-proof, reliable, and locally controlled water supply

Risk of subsidence and significant impact on infrastructure and economy of the countyinfrastructure and economy of the county

Environmental benefits of purified water use

Attachment 1Page 5 of 28

Potential Groundwater Impacts Due to Extended Drought

Projected Continued Drought

Water Shortage

Contingency Plan Stage

NORMALAbove 300,000

AF

Projected Continued DroughtPlan Stage

20% Conservation ( ith 25 000 AF dditi l i t d t )ALERT

250,000 – 300,000 AF

SEVERE 20%

(with 25,000 AF additional imported water)

e

200,000 – 250,000 AF

CRITICAL150 000 – 200 000

%

Su

bsi

den

ceR

isk 0%

13%

IPR could raise groundwater

storage by 35 000

35,000 AF

150,000 – 200,000 AF

EMERGENCYBelow 150,000 AF In

crea

sed R storage by 35,000

AF each year

Attachment 1Page 6 of 28

2014 2015 2016 2017 2018 2019

Program Background

March 12, 2015: Board receives information on the opportunity for an Expedited Purified Water Programpp y p g

April 28, 2015: Board authorizes single source contracts and contract amendments to expedite Program

June 22, 2015: Program updates and presentation on the Project Delivery Method Evaluation

July 28, 2015: Board approved Dual Track strategy for P3 and continuing planning and design of the SVAWPC expansion project

Attachment 1Page 7 of 28

The ProgramD li t 45 000 f t ifi d t f t bl b 2020Deliver up to 45,000 acre-feet purified water for potable reuse by 2020

Planned Potable Water Reuse Projects SJ/SC Regional

Wastewater FacilityFacility

Palo Alto WPCP Sunnyvale WPCP

Legend

IPR/DPR Purified Water Pipeline

Mid-Basin Injection Wells IPR - 5,600 AFY

Future Wolfe Road Pipeline

Existing Recycled Water Pipeline

District Raw Water Pipeline

Expanded SVAWPC

Water Pollution Control Plant

Water Treatment Plant

Pump Station

DPR to Central

Pipeline -5,000 AFY

Sunnyvale yIPR

Westside Injection

Wells IPR

Los Gatos Recharge Ponds IPR - 20,200 AFY

Ford Recharge Pond

IPR – 4,200 AFY

Attachment 1Page 8 of 28

Estimated Cost

Attachment 1Page 9 of 28

Expedited Purified Water Program StrategiesAdministrative

StrategicPlanning

Operations & Capital Program

Board Support & Outreach

Administrative and Financial Management

1. Complete & 5. Deliver projects 8. Support Board 11. Develop and 1. Complete & Implement Master Plans

5. Deliver projects in CIP

8. Support Board engagement in policy & governance

11. Develop and implement financing plan

2 Promote & 6 Expedite purified 9 Build community 12 Develop District 2. Promote & conduct research to support potable reuse

6. Expedite purified water expansion program (Public Track)

9. Build community & stakeholdersupport for potable reuse

12. Develop District workforce to support expanded program

3. Integrate withgroundwatermanagement

7. Develop public-private-partnershipfor the Program

10. Promote legislation and regulations to

(P3 Track) advance potable reuse

4. Develop partnership

Attachment 1Page 10 of 28

partnership strategy for countywide system

A. Program Updates

Attachment 1Page 11 of 28

Dual Track - Financial Overview

Public Delivery MethodDistrict pro ides capital rates & chargesDistrict provides capital – rates & charges

Debt issuance

Pay as You GoPay-as-You-Go

P3 Delivery MethodPrivate partner provides capital

Project financing

District repays thru rates & charges

Hybrid Approaches

Attachment 1Page 12 of 28

P3 Project Finance

Lender

Non-Recourse Debt

Corporate Sponsor

Single-Purpose

Entity (SPE)The District

P3Agreement

C

EPC Contract

EPC Contractor

Attachment 1Page 13 of 28

P3 Project Finance – Capitalization

Lender

Loan Proceeds

Corporate Sponsor

Single-Purpose

Entity (SPE)The District

EquityContribution

C

Construction Costs

EPC Contractor

Attachment 1Page 14 of 28

P3 Project Finance – Repayment

Lender

Debt Service

Corporate Sponsor

Single-Purpose

Entity (SPE)The District

EquityReturn

P3 Agmt.Payments

O&M

Operator

Attachment 1Page 15 of 28

P3 Legal and Financial Threshold Issues

Private activity issues for tax-exempt debt under IRS regulationsIRS regulations

Mitigated by: Qualified Management Contract; federal legislative remedies; and IRS private letter ruling

Availability of tax-exempt financing

legal issues with procurement/public contractinglegal issues with procurement/public contracting

Availability of grants/low-interest loans

I t l/ t l t k h ld i t tInternal/external stakeholder interests

Attachment 1Page 16 of 28

P3 RFQ/RFP Framework

Managed in parallel with DB

Shortlist min three P3s to deliver all or parts of the Shortlist min. three P3s to deliver all or parts of the Program

Q i i 3 i i l h RFQ criteria: P3 experience; capital strength; responsiveness; client references; etc.

RFP criteria: proposed approach; allocation of risk; pricing; terms & conditions; compliance with District’s requirements; SBE

Stipend may be offered to encourage participation

Attachment 1Page 17 of 28

Preliminary Timeline – Dual Track

Attachment 1Page 18 of 28

P3 & DB RFQ/RFP Target Schedule

Calendar Year 2015 2016

Sep- Jan – Apr – Jul – Oct –pDec Mar

pJun Sep Dec

Technical Studies (Prelim. Eng.; Operations; Groundwater; Brine)

1. Publish RFQ

2. Evaluate & select P3/DB Teams

3. Pre-proposal conf. /technical updates4 Publish RFP4. Publish RFP

5. Evaluate Proposals

6. Board decision: P3 or DB

Attachment 1Page 19 of 28

B. Project Management ContractContract

Attachment 1Page 20 of 28

Project Management Contract

Project management services RFQ published on 6/18/15

Five Statements of Qualification receivedFive Statements of Qualification received

HDR ranked highest

Contract not to exceed $2.4 million

Task DescriptionTarget

ScheduleSchedule

1 Fast-Start Activities Dec. 2015

2 Core Project Management Activities Mar. 2017

3 E l V l E i i M 20163 Early Value-Engineering Mar. 2016

4 Environmental/Permit Planning Mar. 20175 Assistance with Public-Private Partnership

M 201

Attachment 1Page 21 of 28

Mar. 20176 Support Workforce Development Mar. 20177 Supplemental Services Mar. 2017

Program Management Structure

Attachment 1Page 22 of 28

C. Environmental Review and Permitting ServicesPermitting Services

Attachment 1Page 23 of 28

Environmental Review and Permitting Services

CEQA exemption available for certain

recycled water elements

CEQA consultant selection process

initiatedinitiated

Pursuing federal legislation for NEPA g g

exemption

Attachment 1Page 24 of 28

D. Budget Reallocation/AdjustmentReallocation/Adjustment

Attachment 1Page 25 of 28

Budget Reallocation/Adjustment

Board approved $16.5M for the Indirect

Potable Reuse Projects – Planning (IPR) in FY

2016 Budgetg

Reallocating $1.3M to the SVAWPC

Expansion Project for FY 2016

No change to FY 2016 Program costNo change to FY 2016 Program cost

Attachment 1Page 26 of 28

Summaryy

Attachment 1Page 27 of 28

Summary

Urgency in expediting Program due to ongoing

d h i k f b id d i drought, risk of subsidence and impacts to

infrastructure and economy of county

Approval of staff Recommendations B and D

will allow Program work to continuewill allow Program work to continue.

Attachment 1Page 28 of 28