In a special meeting set for tonight, city staff Herb Niederberger and Dianna Jensen have recommended that the WAC “recommend to the City Council that Davis is committed to going forward with participation of the Woodland-Davis Clean Water Agency (WDCWA) Joint Powers Authority 30 mgd surface water supply project with modification of the cost sharing as discussed herein.”
Despite the increased cost in the West Sacramento option, staff estimates there is a 12.5 percent cost differential between the options, in favor of the West Sacramento Alternative.
The Woodland alternative, with revised allocations, results in a $102.32 million cost as compared to a $90.94 million cost for the West Sacramento option.
However, staff believes, “There is considerable risk associated with changing the point of diversion for our water rights to allow it to be diverted at West Sacramento’s Bryte Bend Water Treatment Plant.”
They add, “There are addition regulatory requirements imposed with compliance with NEPA and CEQA associated with changes in the point of diversion to West Sacramento, as well as with a pipeline alignment across the Yolo Bypass.”
And they finally note, “There is significant delay, on the order of 3-6 years, associated with a change in the point of diversion and other steps necessary to utilize a water supply from the City of West Sacramento.”
The move comes barely a week after West Sacramento was asked by two city council members to put a more realistic alternative back on the table and West Sacramento offered a permanent water contract with a connection fee of $19.4 million.
“The cost for Davis to purchase permanent capacity is approximately $19.4 million for 12 million gallons per day. If Davis wished to purchase less capacity, it would be at the same rate of approximately $1.6 million per million gallons per day of demand,” staff reported.
In their analysis, they write: “Davis’ original negotiation strategy with West Sacramento hinged upon three key items: 1) a reduced connection fee of $6 million, down from West Sacramento’s original request of $12.656 million; and 2) a long-term 30-year contract with clauses regarding renewability; and 3) input and control of O&M and replacement costs allocated to the Davis portion of water use.”
West Sacramento’s counteroffer, staff writes, resulted in an increase in the connection fee by $6.7444 million instead of a reduction to $6 million.
“While West Sacramento’s offer to treat Davis similar to any customer in order to consider this a permanent source of supply removes the need for a long-term contract, it eliminates Davis’ ability to negotiate a rate and removes any ability to control rate impacts and increases,” staff writes. “If West Sacramento were to elect to contract out their operations and maintenance, or privatize the utility, Davis’ status as a customer would not allow any more say in these decisions than any other residential or commercial customer within West Sacramento’s service area.”
In a communication to the city from the Referendum Leadership Committee, Michael Harrington writes, “We just read the staff report sent to the Water Advisory Committee for tomorrow night’s meeting. It was quite disappointing. The Staff Report recommends proceeding full steam ahead with the Woodland JPA project.”
Mr. Harrington and the unnamed members of the Committee instead recommend, “The CC immediately halts moving towards a March 2013 ballot, and informs Woodland and the JPA that the City of Davis is not ready to proceed with that specific project.”
He argues, “The City has not worked out a realistic number for how much new potable water we will need, and the current rate system is unconstitutionally disproportional.”
Instead, he suggests, “The City immediately focuses on establishing a constitutional rate structure, either by amending the current structure or going with a new structure, including but not necessarily that proposal made by Williams and Loge to the WAC.”
Mr. Harrington counters: “When a structure is basically agreed to by all interested parties, that new structure is implemented by a Prop 218 legal notice process. We do not anticipate the City will receive very many protests or controversies.”
He further recommends that the City retain independent experts who have not been associated with the current project.
“Those new, unbiased and universally respected and agreed-to experts shall issue reports telling us how to make the maximum and cost effective use of available ground water supplies for the foreseeable future, and at what price,” he argues.
“Once we have the rate structure and current system repair and long term improvement plan in place, and we know whether, and how much, supplemental water we might need from a conjunctive use supplemental water supply system, we can publicize a Request for Proposals where the City reaches out to neighboring jurisdictions to enter into thoughtful, deliberate, and professional discussions for long term supply of those well-documented water needs,” he adds.
“We believe that the CC is unnecessarily rushing ahead with the Woodland JPA project, based on dubious assumptions, and self-political interests and is not acting to promote the best interests of the ratepayers of Davis,” Mr. Harrington concludes. “We submit this proposal in the hopes that the City Council will work in good faith with us and the WAC, slow the process down, adopt a plan similar to the above, and respect and treat the voters and ratepayers of Davis with respect and dignity going forward.”
He adds: “A settlement is much preferable to what we see as a very contentious and divisive process ahead if the CC continues to attempt to force the Woodland JPA upon our community.”
The city’s staff report updates the progress of talks that commenced On August 31, and October 8, 2012, between Davis Councilmembers Dan Wolk and Rochelle Swanson and Woodland Councilmembers Bill Marble and Skip Davies “to determine a basis for renegotiation of the allocations within the Woodland Davis Clean Water Agency Joint Powers Agreement (JPA).”
“The discussions concluded that there were many considerations that went into the allocation when the JPA agreement was negotiated,” staff writes. “Originally, costs were allocated based on the water right allocation and the desired ultimate capacity for each city. It was perceived that Davis and Woodland were similar in their needs and the project was meeting the needs of each city for the foreseeable future.”
“Since both cities initially perceived that their needs were close to 50/50, the 2009 general approach was a good fit, “staff writes. “However, current capacity reductions do not correlate with a similar proportional reduction in cost. Reducing the initial phase from 40 MGD down to 30MGD is a 25% reduction in capacity but reduced the cost by only about 8 – 10 %. Changing the allocation to be 60/40 for the “entire project” would mean Woodland’s costs would go up even though Woodland reduced its initial Phase 1 request from about 22 MGD down to 18 MGD.”
Staff adds that a number of parts of the project cost have no correlation to capacity.
“As such, allocation of project cost just by capacity is not a representatively fair approach. Previously, this was not much of an issue as both cities were paying about half,” staff writes.
As a result, the staff recommends keeping the percentage the same, except as noted.
These changes include: “Use 50/50 on all remaining non-construction costs and that portion of construction which has no relationship to capacity. Use 40.8/59.2% on just the capacity related portion of construction costs for the DBO work at the intake, raw water pipelines, and the RWTP. This ratio is the result of taking the non-construction related costs for regional facilities being equally split between the Cities. For construction-related costs, it is assumed that 8% of the construction costs are not based on capacity and are split equally. The remaining 92% of the cost is based on capacity (40% Davis/60% Woodland) This equates to a 40.8/59.2% cost allocation to the regional facility construction costs.”
—David M. Greenwald reporting
There are pieces of information that I believe the Staff Report needs if the WAC is going to make a decision tonight. I have sent an e-mail to Staff noting the following:
1) In the second paragraph of page 3 of the Staff Report, the statement “[i]West Sacramento’s offer to incrementally sell Davis supply at $1.6 million/mgd does not result in any cost savings.[/i]” is confusing. To use a specific example, if the actual supply that West sacramento sold to Davis is 10 mgd rather than 12 mgd, what would the Connection Fee be and how does the cost of that 10 mgd Connection Fee compare to the $19.4 million Connection Fee for 12 mgd?
2) The Staff Report is also silent about the effect of a reduction in the actual sale of water on the M&O costs West Sacramento would charge Davis as a 10mgd customer. Can Staff please provide the WAC with a table of what the West Sacramento M&O costs would be of 12 mgd through 6 mgd in 1 mgd increments?
3) In the fourth paragraph of page 3 of the Staff Report, the statement “[i]The Woodland-Davis Clean Water Agency would be required to petitions to change the authorized points of diversion in the Agency’s water-right Permit 20281 and water-right Licenses 904A and 5487A[/i]” appears to be incorrect. Based on personal conversations with the SWRCB, it is my understanding that changing the authorized points of diversion is not required. There is another much less intrusive, much less risky alternative, specifically adding a point of diversion without changing the existing points of diversion in any way. Can Staff please confirm that my understanding is correct and provide a clarification to the WAC in tonight’s meeting?
4) In the fifth paragraph of page 4 of the Staff report, the statement, “[i]Reducing the initial phase from 40 MGD down to 30MGD is a 25% reduction in capacity but reduced the cost by only about 8 – 10 %[/i]” needs additional supporting detail prior to tonight’s WAC meeting. Specifically, a before-after table showing the costs for the 40 mgd plant and the current costs of the 30 mgd plant is needed. I have pasted a desirable table format at the end of this e-mail. The format of the table is one that Dennis Diemer has used in his presentations to show project costs and is consistent with the format of the spreadsheets that Bartle Wells has provided the WAC in July and August, so producing such a before/after table should be very easy . . . and very helpful.
5) The paragraph that spans the bottom of page 5 and the top of page 6 would benefit from some expansion. Specifically was the willing seller of available land paid by the JPA for their available land, and if so, what was the price paid, and was that price a fair market price for comparable land?
6) The first full paragraph on page 6 is extremely good. The method described is indeed an excellent point of comparison. So that the WAC can understand the decision logic that Staff from both cities used in coming up with the conclusion described in the second full paragraph on page 6, can Staff pleas make copies from the historical files of the cost analysis of the equidistant alternative and provide them to the WAC at tonight’s meeting? Thank you.
7) The second full paragraph on page 6 is also an extremely good one. The location decision described appears to have been very sound. The cost decision contained in the last sentence of the paragraph appears to be a non-sequitur though. Specifically, as one reads through the bullet points at the top of page 5 and the third numbered component of the “fair and equitable approach” explained in the middle of page 5, one has to wonder why the decision to not pursue the equidistant location isn’t a common project benefit that applies to both cities. If the location decision as described in this paragraph was indeed one that made the project better and less expensive, why is that fiscal effect of that location decision not being shared equally by the two cities?
8) The third and fourth full paragraphs of page 6 fall into the same category as the fifth paragraph of page 4, and need additional supporting detail in table format.
9) The fifth full paragraph on page 6 is good as far as it goes. It needs to be expanded to include the 1) Woodland savings over the same period, which appears to be $11.22 million, 2) the dollars saved per mgd reduction for Davis, which appears to be $3.82 million, and 3) the dollars save per mgd reduction for Woodland, which appears to be $2.81 million.
10) The Staff Report is silent about the effects of the 40 mgd to 30 mgd reduction on M&O cost estimates, as well as how those M&O costs will be treated under the 18/12 scenario.
Armed with the above information, the WAC will be able to make an informed decision and act on the Staff Report recommendation.
Matt: So it is your view that with ten additional pieces of information, the WAC could make an informed decision on water? You don’t believe this is being rushed at all?
David, my focus is on having the right information to make a high quality transparent decision. Timing will only come into play if the information isn’t forthcoming.
It caught me off guard that they would be recommending this week that the WAC essentially answer the big question. It seems that the timing was rushed.
matt williams – i have a lot of questions for you.
first, is policy or are electoral issues guiding the timeline at this point?
second, what is the objective reason at this point for sticking with woodland? from what i can see their rationale is based on speculation of the timelines rather than solid policy considerations.
they argue “there is considerable risk” with changing the point of diversion but the presentation i saw earlier suggested that it would be unlikely to do anything but delay matters – but since the delay, perhaps 3 to 6 years doesn’t take us into the danger zone – why is that the only overriding concern?
if they had couched this in terms of control over the project i might get the point though i’m not certain we have a lot of control over woodland at this point.
just seems to me they need to explain away $12 million in tax payer money a bit more soundly.
Growth Issue
First, I do not know the answer. I assume we will all learn more tonight at the 6:30 WAC meeting at the Senior Center.
Second, I can not and should not and will not speak for the WAC, so my answer herein is mine alone. With that said, my personal objective reason is that to date neither West Sacramento nor Woodland has given unambiguous answers to the conditions that were in the WAC recommendation to Council. Until those answers are received the analysis is a work in process.
Third, again this answer is mine alone. You are looking at the delay from the Davis perspective rather than from the West Sacramento perspective. The 3 to 6 year delay you describe, means West Sacramento will not deliver any water to Davis for 3 to 6 years and therefore will see no payments from Davis for 3 to 6 years. That makes the fiscal incentive for West Sacramento very, very low. Their economic development plan is looking to generate that much water demand growth from increases to the West Sacramento business sector and the Port of West Sacramento customer base. That goal may be overly ambitious in this economy, but it is nonetheless their expectation. So getting the permits is not the only consideration, getting West Sacramento to want to have Davis as a customer is still as yet far from a sure thing in my opinion.
Fourth, as owners one can argue that we have more control than as customers, but I personally don’t see that as a big issue either way. I am sure there are others who do not agree with me in that personal opinion,
Fifth, now you have piqued my interest, can you elaborate on “$12 million in tax payer money”?
Matt: I assume Growth Issue was referring to this regarding the $12 million:
[i]The Woodland alternative, with revised allocations, results in a $102.32 million cost as compared to a $90.94 million cost for the West Sacramento option.[/i]
Staff and the Council majority’s “plan” was never going to change. Their reasoning is the only thing that is “transparent’If their ballot measure passes ane the inevitable referendum wins they still have a fall-back position to put the JPA on hold and truly negotiate with both West Sac and Woodland,a position that is no different than the one that they are being asked to accept now.
Perhaps it is time to put aside the term “the Council majority”
It has become a bit of a cliche.