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HomeMy WebLinkAbout06. Policy questions regarding Zone 1 Recycled Water connectionstp ' Central Contra Costa Sanita ry District July 7, 2015 TO: REAL ESTATE, ENVIRONMENTAL & PLANNING COMMITTEE VIA: ROGER S. BAILEY, GENERAL MANAGER H?u JEAN -MARC PETIT, DIRECTOR OF ENGINEERING & TECH. SVCS. J n FROM: DANEA GEMMELL, PLANNING & DEVELOPMENT SVCS MGR.`D &—/a-,,,p MELODY LABELLA, PROVISIONAL ASSOCIATE ENGINEER giI4 SUBJECT: POLICY QUESTIONS REGARDING ZONE 1 RECYCLED WATER CONNECTIONS In 1995, Central Contra Costa Sanitary District (District) and Contra Costa Water District (CCWD) entered into an agreement that allows the District to distribute and sell recycled water to a specific geographic area in Martinez, Concord and Pleasant Hill, known as "Zone 1." The District currently serves 41 metered connections and provided more than 150 million gallons of recycled water to the Zone 1 area last year. There are a number of policy issues surrounding the District's financial criteria and approach to evaluating new retail recycled water customer connections in Zone 1. These issues are described below and staff looks forward to receiving your guidance and direction at the July 14, 2015, Real Estate, Environmental & Planning (REEP) Committee meeting, prior to presenting them to the full Board. Cost Recovery (Payback Policy) Background Recycled water in Zone 1 is used primarily for landscape irrigation and for some non - irrigation uses such as truck washing at CONCO, concrete manufacturing at County Quarry and kennel wash down at the County Animal Shelter. When the Zone 1 Program was initially planned and scoped in the early 1990s, a payback period of 30 years was used as a return on investment to justify installing the backbone pipeline and Filter Plant upgrades. However, as the Zone 1 project was implemented and the distribution pipelines were built and treatment plant improvements completed, it became evident that the project would not payback in 30 years as originally envisioned. This was because some of the originally planned customers could not be connected causing a reduction in projected revenue, volumetric usage for connected customers had been overestimated and capital costs were higher than expected. Real Estate, Environmental & Planning Committee July 7, 2015 Page 2 of 4 In the mid- 2000s, the District's previous Director of Engineering implemented a 15 -year payback practice at staff level. The practice was implemented by considering the District's previous mainline distribution system and treatment plant investment as sunk and only considered the cost for the subsequent main extension (if any) and the onsite retrofit work in determining if new connections in Zone 1 were economically feasible. This evaluation includes the City of Concord's share ( -30 %) in the Recycled Water Program. Policy Questions • Should the District establish a payback policy on new Zone 1 recycled water connections? Considerations • Absent an infusion of external grant funding and continuing the current staff practice of a 15 -year payback means that the Zone 1 area is essentially built out. Future connections will be minimal. • Zone 1 is comprised of predominantly landscape irrigation customers, which represents seasonal demand. Backflow Preventers Background When alternate sources of water (recycled, canal, well) are brought onto a property with existing potable water service, state and local backflow prevention requirements are triggered to protect the public drinking water supply. As the Zone 1 water purveyor, CCWD is responsible for water service and protection of potable water quality for its customers; as such it has a requirement to prevent cross contamination between potable and recycled water. Existing drinking water supply lines are required to be upgraded to a full reduced - pressure (RP) device and fire service supply lines are required to be upgraded to double check valves. In the District's Zone 1 Project Agreement with CCWD, financial responsibility for backflow prevention upgrades is assigned to either the customer or CCCSD on the customer's behalf (see paragraph b.(2) in Attachment 1 — an excerpt from the District's Zone 1 Agreement). In the past, the District has taken on some of these costs and included them in the payback analysis. Due to its high cost, the Chevron Office Park on Diamond Boulevard took responsibility to install its backflow preventer. This issue has surfaced more recently on the Concord Landscape Project, due to the varying complexity of the businesses and their use of fire systems. Real Estate, Environmental & Planning Committee July 7, 2015 Page 3 of 4 Policy Question • Should the District take financial responsibility for upgrading backflow prevention devices at sites receiving recycled water? Considerations • Typically, backflow prevention devices are paid by developers and turned over as contributed assets to CCWD. All devices installed with new recycled water connections will be owned and maintained by CCWD. • In the Concord Landscape Project area, prospective customers signed letters of intent that state that "CCCSD will connect your irrigation system to recycled water at no cost to your business." (See Attachment 2 for a sample signed letter of intent from Concord Hilton.) • The level of financial responsibility for upgrading the backflow prevention devices can vary. Staff has put together a summary of some options for consideration: 1. District pays for all costs of upgrading backflow prevention device. 2. Due to complexity of each customer's water system and the varying cost, an allowance may be established towards backflow prevention that is the same for each connection. 3. District includes some or all of the cost of backflow prevention device up to amount to meet approved payback period. 4. Customer is solely responsible for backflow prevention device. 5. Customer is solely responsible for backflow prevention device; however District finances the costs similar to existing Contractual Assessment District (CAD) program guidelines. . 6. Customer pays for installation backflow prevention device, however District provides a recycled water credit for some or all of the costs of the device as discussed below. Alternate Approaches for Funding New Recycled Water Connections /Retrofits Background There have been a few occasions over the course of the Recycled Water Program where the District has made financial arrangements with a new recycled water customer to fund the cost of onsite retrofits or new equipment. Reasons have been to expand customer base and avoid complex construction site issues. Past examples include: 1. Contra Costa Country Club Golf Course — District financed the $200,000 cost (over 20 years) to isolate the irrigation for the greens and tees from their fairways. This debt has now been paid off (as of 2010). 2. Buchanan Fields Golf Course — District issued a recycled water credit equal to the cost of new irrigation heads ($30,000) to evaluate if delivering higher volumes of Real Estate, Environmental & Planning Committee July 7, 2015 Page 4 of 4 recycled water was a viable and low -cost way to control salt build -up in sensitive areas of the course. 3. Chevron Office Park — due to the complexity of the retrofit and the high level of safety standards enforced by Chevron, the District executed a letter agreement with Chevron (reviewed by Kent Alm), who hired the construction arm of their landscape maintenance firm to make the physical connection to the District's recycled water meter. Chevron will receive a credit ($80,000) on their recycled water bill equal to the cost of their onsite retrofit. Policy Question • Should the District use this financing mechanism (paying in recycled water) to fund costs for backflow prevention upgrades? Considerations • This approach conserves capital spending and shifts more of the financial risk to the customer. • This section is a moot point if the Board determines that the customer is solely responsible for the cost of the backflow prevention upgrade. Attachments Attachment 1 b. CCWD shall be responsible for: (1) all activities related to Zone One Customers of non - recycled water service, including those activities required to maintain, disconnect, or reconnect non - recycled water services as Customers obtain or disconnect recycled water services from CCCSD. These services shall be provided in accordance with CCWD Regulation, Chapter 5.52 and Customers will pay appropriate amounts to CCWD for these installation charges as stipulated in Sections 5.52.010 through 5.52.050 of Chapter 5.52; (2) installing backflow prevention devices on non- recycled water services, as applicable in compliance with CCWD Regulation, Chapter 5.56 and Customers, or CCCSD on the Customer's behalf, will pay appropriate amounts to CCWD for these installation charges as stipulated in Chapter 5.56; (3) Maintaining and replacing backflow prevention devices and conduct- ing annual cross - connection tests of these devices in coordination with CCCSD. The cost of these services are recovered by the standard backflow prevention surcharge as stipulated in CCWD Regulation, Chapter 5.12; (4) maintaining and providing upon request by CCCSD as -built records of all customer non - recycled water service connection details. C. CCWD and CCCSD may enter into a written agreement whereby CCWD would provide meter reading, billing, revenue collection, and water quality testing services for Zone One Customers in consideration of payment of reasonable costs associated with those activities. d. Should CCWD request to participate in the Zone One project in the future, CCWD shall submit a business plan to CCCSD for consideration. CCCSD and CCWD may, by written agreement, establish mutually acceptable conditions of such participation. 5. RESPONSIBILITY FOR COMPLIANCE WITH LAW Each district shall be responsible for its own acts and omissions and for compliance with all applicable laws with respect to its respective undertakings under this Agreement, including without limitation all waste discharge requirements and warnings required by the San Francisco Bay Regional Water Quality Control Board (RWQCB) or other regulations pertaining to recycled water. Should one district learn or have reason to believe that a violation of such laws, statutes, ordinances, orders, and /or regulations by itself or the other district has occurred or is threatened, that district shall promptly so inform the other district. Project Specific Agreement Zone One Recycled Water Project Page 4 Attachment 2 central Sanitary District LETTER OF INTENT TO USE RECYCLED WATER PROVIDED BY CENTRAL CONTRA COSTA SANITARY DISTRICT The Central Contra Costa Sanitary District (CCCSD) is about to expand its recycled water system into the Diamond /Meridian Park Boulevard area of Concord. Converting your landscape irrigation to recycled water will save your business approximately 20- 30% per year. Thank you for participating in this important water conservation program. By signing this Letter of Intent, you agree to the following: 1. You have requested CCCSD's recycled water service for landscape irrigation for the business listed below. 2. You will allow CCCSD a Right -of -Entry to the property listed below for the purposes of design, construction and inspections. 3. You agree to designate a Recycled Water Site Supervisor for your business to comply with the training and use requirements for recycled water. In accepting this signed Letter of Intent, CCCSD agrees to the following: 1. CCCSD will design and construct the conversion of your landscape irrigation system to recycled water and coordinate the process with you to minimize impacts to your business. 2. CCCSD will connect your irrigation system to recycled water at no cost to your business. 3. CCCSD will provide recycled water to your business at a discounted rate. 4. CCCSD will not restrict the use of recycled water during droughts and no surcharges will be imposed. L-0 Yt L0 r ustomer Name /770 0�-01.inaK� Customer Address P-72Z /?t d'5 Customer Representative & Title 225-:920-2000 ]%� X-,a s . Customer Phone Number and Email Address Signature of Customer Representative a 0 �—v-vx L 2_ Date ® Recycled Paper