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Board Briefing Book FY 20-21 oard reiefi* ng I Y2 0 i 2 1 } Id p 7 . 41 FI ' O <<<C�CENTRAL SAN CENTRAL CONTRA COSTA SANFARY C:S-R!CT Page 56 of 112 BOARD BRIEFING BOOK CENTRALSAKORG Table of Co ,n�s 1 Strategic Plan 2 COVID-19 Response Labor Negotiations Succession Plan for General Counsel 5 Unfunded Actuarial Accrued Liability 6 Cost of Service Enterprise Resource Planning Wholesale Contract with City of Concord 9 Comprehensive Wastewater Master Plan 10 Solids Handling Facilities Improvement Project and Associated State Revolving Fund General Recycled Water Program Refinery Recycled Water Exchange Project DERWA Temporary Wastewater Diversion Project 14 Diablo Country Club Satellite Water Recycling Facility Demonstration Project 15 AgLantis/CoCo Sustainable Farm Bay Area Clean Water Agencies 17 Eight Largest Water Agencies in the Bay Area January 14, 2021 Special Board Meeting Agenda Packet- Page 82 of 149 Page 57 of 112 Strategic Issue Central San's Strategic Plan provides overall direction on how Central San will achieve its vision and mission. It provides a plan of action and associated tracking mechanism for the Board of Directors to review progress towards goals. The Strategic Plan helps guide other :f District-wide efforts such as the budget. Each Strategic Plan covers two fiscal years (FYs), so there is a recurring " two-year strategic planning process. L ikgroi Central San has developed two-year strategic plans since 2014. Each Strategic Plan document covers five broad areas: Goals, Strategies, Initiatives, Key Success Measures, and Key Metrics. The Goals are set by the Board to identify the key focus areas upon which staff should base the rest of the Strategic Plan. The Strategies outline Central San's approach to achieve its Goals, overcome its challenges, accomplish its mission, and meet the community's needs in the most efficient and effective ways. The Initiatives describe the actions staff will take within each Strategy. The Key Success Measures exemplify the types of tasks that can fulfill the Initiatives. The Key Metrics set targets, track progress, and evaluate performance toward achieving the Goals. • Each two-year strategic planning process begins with the • Board reviewing and updating Central San's Vision, Mission, Values, and Goals as needed. Then, staff holds a workshop to update the previous Strategic • Plan to execute the Board's direction, reflect • current priorities, set and adjust performance Fiscal Year targets, and make progress on the issues of 2020-22 g p g GOALS importance to Central San's customers. The initial • draft of strategic Goals, Strategies, Initiatives, Key Success Measures, and Key Metrics is presented to • the Administration Committee. The full Board does • not review this initial draft; however, all Board Members receive a copy as part of the Administration Committee agenda packet. Staff integrates Board member feedback into the final Strategic Plan and presents it to the Board for approval, via the Administration Committee, concluding the process of creating each new Strategic Plan. Strategic Plan January 14, 2021 Special Board Meeting Agenda Packet- Page 83 of 149 Page 58 of 112 During the FY, staff logs and reports its progress into color-coded Key Success Measures and Key Metrics Trackers. After the close of the first, second, and third quarters of each FY, these trackers are provided to the Administration Committee (all Board members receive a copy as part of the Administration Committee agenda packet). After the close of each FY, an annual report is provided to the full Board, via the Administration Committee, which highlights achievements within each Goal and Strategy, communicates final performance in the key metrics against the targets, and outlines priorities for the next FY. Impact to Central San Customers Employees The Strategic Plan is the primary planning document that lays out what Central San is to achieve for customers for the next two FYs. The document also serves as a workplan for staff. Each Key Success Measure and Metric is assigned to an accountable person, who, along with their team, is responsible for meeting the targets. As a result, the Strategic Plan facilitates alignment from the Board to individual employees as to what is important. The Strategic Plan also factors into the budgeting process; key budget priorities are aligned with Strategic Plan Goals, and strategic accomplishments and objectives are listed in each division's budget. Outstanding Decisions • Key Success Measures and Key Metrics Trackers are provided to the Administration Committee as an information item after the close of the first, second, and third quarters of each FY. The full Board receives these trackers as part of the Administration Committee agenda packet. • An annual report is received by the full Board, via the Administration Committee, after the close of each FY. • The planning process for the next two-year Strategic Plan, covering FYs 2022-23 and 2023-24, will begin in late 2021, when the Board will be asked to review and make any necessary updates to Central San's Vision, Mission, Values, and Goals. The Administration Committee is projected to provide input on the draft Goals, Strategies, Initiatives, Key Success Measures, and Key Metrics in early spring 2022, and the Board can expect to adopt the final FY 2022-24 Strategic Plan in late spring 2022. January 14, 2021 Special Board Meeting Agenda Packet- Page 84 of 149 Page 59 of 112 • • Response Issue As a result of, and in response to the COVID-19 pandemic, Central San has modified its operations. The health and safety of employees and the public remain the highest priority as Central San navigates the pandemic while continuing to maintain critical essential services to the community. Background Central San's response to COVID-19 ' consists of three main components: ' ,f 1. COVID-19 Exposure Prevention Plan includes basic preventative �-�•-- measures, hazard assessment and controls, guidance for exposure reporting, and safe return-to-office protocols (based v on local, state, Centers for Disease Control, and Cal-OSHA 1` guidelines). This document is updated periodically with any significant changes in regulations and Nam other changes. Training is provided to staff with each new update via virtual Q&A sessions and shared with the Administration Committee. 2. Engineering Controls Plan identifies proposed workspace modifications to limit the spread of COVID-19. Central San contracted with HDR, an architectural consulting firm, to develop the plan based on best practices and employee feedback. Staff has begun implementing several aspects of the controls outlined in the plan, including installing signage for social distancing purposes and capacity limits; plexiglass barriers; hand sanitizing stations; and limiting restrooms to single occupancy. Staff will continue implementing the controls identified in the plan. 3. Cleaning/Disinfecting Schedule/Matrix defines trigger points based on capacity in employee workspaces and proposes cleaning schedules based on those trigger points. At the beginning of the Shelter-in-Place in March, Central San sent home employees who were considered at-risk individuals including those over sixty-five years old. Central San also directed other employees to telework if they could perform the full scope of their duties remotely or who had the ability to work remotely, and staggered/rotated shifts for those employees who remained onsite. COVID-19 Response January 14, 2021 Special Board Meeting Agenda Packet- Page 85 of 149 Page 60 of 112 Currently, staff is working as follows: 10 ways to manage 15% are working remotely respiratory full-time if yeu b. f br ,Jb ua __2-1.1—1--id.r- 71Ywq—.y_"T.-t.—.—X.V. ,c.rw fr b.—F.11—cb...sip.: 25% are working in a hybrid 1. St�h.m.kFNnwwk.x'trntx, 6. f.w,.wll,Nwlgn... remote/onsite capacity '•ari llywr moat Fpuul vexr7,nnrl.nY NNN1 n1 r • 60% are working onsite. 1.1111U i 2. fawwltot su..tn.mm, 7 �nllvww>..na witw.winr rIy ""''°A1"'Y�""" ` lwul sa"rr•c'samwxNl'nJlwklal."e.,aN"ne e"dIMlk`.,"drdywa'~Nrl .ioN'r ca lMost employees working i1-0nFA a l onsite are those that cannot - 3. Gwtetl ..t.y 8. w,wr.-n..nr,awtd.:.a perform their duties remotely '�rlr.•Wrn n'.w" °" "p,ryOlr SIg, Y! n•Ilr,rxnrl J wu-.ilw,elr.11 yn.r (Operations and nMIFnIV n.w�nrnn""�' d Wbk11•n/FIN.t1wrX•.Nh`dF •Ilxarruak Maintenance staff, Plant Nu Ylwr•fneJaa nIN+mF.n.m rW tkw Operators, sewer Collection M.mrNlrxNv..•YrnrIt.nJhlN...x.w.ilawY.w/rwitNsW"luer." `� lMnmr".I'Nwx•nnmWi•IwI1UwnI,vII.JIN,PrKn^•'M a1NlJ+rNis, System workers, and airwy 10. QwM w17fW1wtw"th..F.•r I.x1a1N>J dlcrr.Illw•awplls. diOwlFtl P+tYw.l.wl llwl wf .' .� Fa1.Wr.Mn .I algxkrrWaa Household Hazardous =" n"n�"•"' V """""""""""n'" i,Vlf1.1v tw<,Ys a wln+`f a[eorJnui to uw wa:l ar,uawuwo Waste employees). fuwywillattnl,l www.cdc.gov/COilID19 Impact to Central San, Customers, Employees ,i As an essential service, Central San continues working 24/7 to provide wastewater collection and a cleaning for the community. Some services have been modified or suspended to ensure the safety of employees and the public. Those modifications include „ - changes to the hours of operation of some services, ■ ' limiting the number of people onsite by having COVID 19 Operating Schedule, meetings and events virtually, implementing staggered Mon-frij-00e&to2:00m working schedules to facilitate social distancing for Servin9byAAAoinimerjtOnly employees, and adjusting construction schedules of capital projects as needed. t ; Public-facing services have been adjusted to continue F.� during the pandemic. For instance, the Permit Counter has remained open and assists customers virtually and with contactless drop off and pick up of plans. The r; ;; Household Hazardous Waste Collection Facility and Residential Recycled Water Fill Station reopened in June with new safety procedures in place. Virtual outreach and education programs have been implemented to continue spreading Central San's important environmental and pollution prevention messaging. Outstanding Decisions The Board receives informational updates at every Board meeting, and when a decision is needed, the item is agendized at a Committee and/or Board meeting. COVID-19 Response January 14, 2021 Special Board Meeting Agenda Packet- Page 86 of 149 Page 61 of 112 Labor Negotiations Issue Central San's three recognized bargaining units: Management Group, Management Support/Confidential Group (MS/CG), and Public Employees Union, Local #1 (Local #1) will be expiring and negotiations will commence in 2021 for successor Memoranda of Understandings (MOUs). MEMORANDUM MEMORANDUM of of UNDERSTANDING UNDERSTANDING �r Central Contra Costa Sanitary District Central Contra Costa Sanitary District Management Support/ Confidential Group 0--b-18,2017 th- BA Employees'Association, Public Employees Union,Local tti April 17,2022 0-mb-186 2017 r7Wrl 119,Wk Aprr11vn17.20 2022 Background Pursuant to Government Code 3500-3511 and Central San's Employer-Employee Relations Ordinance (Chapter 4.24 of the District Code), there is a requirement to negotiate all matters related to wages, hours, and other terms and conditions of employment. The Management Group's current MOU expires on December 17, 2021, and Local #1 and MS/CG MOU's expire on April 17, 2022. Central San will need to meet with bargaining unit representatives to negotiate the terms of employment, and all provisions within the MOUs can be considered for negotiations. Impact to Central San Customers Employees Central San remains committed to engaging all good faith efforts to ensure productive working relationships with the bargaining units, including their membership, and to ensure a successful completion to the negotiation process. The financial impact of negotiations is dependent upon the agreement(s) made between the bargaining units and Central San and any changes to negotiable items such as cost-of-living adjustments and benefits. Labor Negotiations January 14, 2021 Special Board Meeting Agenda Packet- Page 87 of 149 Page 62 of 112 Outstanding The Board of Directors will need to make several decisions throughout the _ negotiations process. These tasks ""'"�"'� include but are not limited to: 1. Selecting a negotiator, 2. Conducting various studies and analyses (i.e. total compensation study), ti , 3. Developing proposals, 4. Reviewing bargaining unit proposals, 5. Ratifying and adopting the MOUs. Labor Negotiations January 14, 2021 Special Board Meeting Agenda Packet- Page 88 of 149 Page 63 of 112 Successionfor Counsel Issue Counsel for the District, Kenton L. Alm, Esq. has announced his intention to work through 2021, with a mid-year update in 2021 as to his plans for 2022. In order to have a smooth transition and transfer of knowledge upon his eventual retirement, Central San has begun succession planning for the next Counsel for the District. Background Central San has been receiving general legal services from Mr. Alm since 1986. From 2002 to 2019, Mr. Alm served Central San as a principal in the firm of Meyers Nave. As of January 2019, Mr. Alm retired from Meyers Nave, at which point he was contracted directly to act as Counsel for Central San. This was in addition to a separate contract for Meyers Nave to provide backup Counsel for Central San services, provide assistance to Mr. Alm, and provide specialty legal services on an as- needed basis. In late 2020, the Administration Committee and full Board of Directors discussed a strategy for a succession plan for Mr. Alm. On September 18, the Board directed Mr. Alm to conduct a solicitation of interest within his personal contact, including the California Association of Sanitation Agencies and other related networks, focusing on the following candidate types: a sole proprietor who would be exclusive to Central San (similar to the current arrangement with Mr. Alm); a sole proprietor with more than one client; or a small law firm. Any of these candidates could then apply through either of Central San's options below, whichever is applicable: Option 1 - Perform a recruitment and contract with an individual attorney as an independent contractor who is not a member of a larger public law firm, or who may currently be a member of a law firm but open to making the transition to a sole proprietorship with only Central San as a client or up to a few clients in total. Option 2 - Issue a Request for Proposal (RFP) for legal counsel services and contract with an independent law firm. This would be similar to Central San's previous contract with Meyers Nave when Mr. Alm was a principal at the firm. Succession Plan for General Counsel January 14, 2021 Special Board Meeting Agenda Packet- Page 89 of 149 Page 64 of 112 As the Board proceeds in determining the succession plan for Mr. Alm, the following criteria (in no particular order) can be taken into consideration: 1. Cost 2. Consistency of coverage 3. Availability and responsiveness 4. Experience in public law (including municipal, water, and wastewater), regulatory and environmental compliance, litigation, contracts, etc. 5. Conflicts (real or perceived) 6. Familiarity with the community served 7. Continuity of services in the event of a change in representation Impact to Central San, Customers, Employees Mr. Alm has been an invaluable member of Central San's Executive Management Team for over 30 years. It is imperative for Central San, its customers, and its employees to select and on-board a successor swiftly upon Mr. Alm's retirement to ensure a smooth transition and transfer of knowledge. 'ytstanding Decisions Following Mr. Alm's informal solicitation of interest among his personal contacts in early 2021 and, at the point where it would be prudent to begin the official process of searching for his replacement (Option 1: Recruitment or Option 2: RFP), the Board will be asked to consider which of the two options to pursue. The full Board may then conduct interviews or appoint an Ad Hoc Committee to conduct these interviews as part of the selection process. The Board will enter into a contract with the successful candidate. Succession Plan for General Counsel January 14, 2021 Special Board Meeting Agenda Packet- Page 90 of 149 Page 65 of 112 Unfunded - • Liability Issue Central San has unfunded actuarially accrued liabilities (UAAL) for both the Contra Costa County Employees' Retirement Association (CCCERA) pension and the Other Post-Employment Benefits (OPEB) Trust (for retiree healthcare). These liabilities peaked in 2012 and since then have been brought CCCEM steadily downward through conscientious monitoring and actions by the Board of Directors. Continued ContmLosuCounty bj b)m oversight by the Board for these obligations is 114 rwntAssctatim necessary. Background Significant progress has been made in recent years in bringing these employee-related liabilities under control. Unfunded pension liabilities have been brought down from a high of$142.5 million in 2012 (when they were 56% funded)to $70.7 million as of December 31, 2019 (and down to $60.4 million inclusive of$10.3 million of assets in a Pension Prefunding Trust established by the Board in 2017). As of December 31, 2019, Central San's pension funding status was 84%, or 85.8% inclusive of assets totaling $10.3 million in the pension prefunding trust. In 2017, funding for OPEB obligations was 22%, with an UAAL of$78 million. As of June 30, 2020, OPEB obligations were funded at an 87% level, with a UAAL of$10.4 million. Central San continues to make strong progress toward addressing unfunded obligations based on Board-directed efforts, which have included: • In each of the past several years, supplemental payments have been made to CCCERA, the pension prefunding trust, or the OPEB trust, above and beyond those required. • Central San also participates in a prepayment program for its retirement contributions to CCCERA, which gives plan sponsors the option of paying all their estimated retirement contributions in exchange for a discount on the employer's contribution rate. • Establishment during FY 2017-18 of an IRS Code Section 115 pension prefunding trust for additional contributions toward pension obligations apart from direct contributions to CCCERA. This has the added benefits of allowing for increased pension funding flexibility to manage required CCCERA pension funding requirements by better managing sewer service charge rate volatility, and for making contributions toward pension obligations without the risk of"super-funding" concerns (which would require full pension contributions even as CCCERA funding status is brought closer to 100%). Unfunded Actuarial Accrued Liability January 14, 2021 Special Board Meeting Agenda Packet- Page 91 of 149 Page 66 of 112 • Adoption of a Pension and OPEB Funding Policy in 2020 (BP 041, 042). The Pension Funding policy contains a matrix which calls for additional contributions to be made at specified funding shortfalls. On July 27, 2020, Central San paid $18.6 million to CCCERA toward its FY 2019-20 contributions, which included the $12.1 million budgeted toward Central San's UAAL. Staff keeps the Board apprised of the status of Central San's unfunded liabilities in the quarterly financial reporting package, and through discussions at periodic financial planning workshops. What the Board has invested to pay down How much of it has been from URAL? additional contributions? Total contributions towards UAAL in total were: The first additional contributions $112 million from FY 2011/12 to FY 2019/20, beyond required amounts) took place consisting of$105.4 budgeted ($84.1 million in FY 2013-14. To date, total required payments and $21.3 additional additional contributions towards budgeted contributions) and $6.6 million employee related liabilities have been unbudgeted contributions (from year-end $27.9 million, consisting of$12.5 variances). These were applicable to pension million to CCCERA, $9.1 million to and OPEB liabilities. Pension Trust, $6.25 million to OPEB Trust. Of the $27.9 million, $21.3 These amounts were contributed to CCCERA, illion was budgeted, and $6.6 million and the OPEB and Pension Prefunding Trusts: was unbudgeted. o Discretionary payments made to CCCERA were $12.5 million, in addition Further discretionary payments to the required UAAL payments based on towards reducing pension liability the 18-year amortization. have been made to the Section 115 o The Pension Prefunding Trust now has a Pension Prefunding Trust, with assets balance of$10.3 as of 6/30/20, of which f$10.3 million as of 6/30/20. ($9.1 $9.1 million in additional discretionary Tiillion contribution, $1.2 million from contributions were made since its nvestment returns). With inception in 2017 onsideration of these assets, the o The OPEB Trust now has a balance of ension funded ratio would be about $69.8 million (comprising contributions 5.8%. and investment growth). $6.25 million of additional discretionary contributions were made since 2011. Unfunded Actuarial Accrued Liability January 14, 2021 Special Board Meeting Agenda Packet- Page 92 of 149 Page 67 of 112 Impact to Central San, Customers, Employees If UAAL is not appropriately managed, the impacts are as follows: • Central San/Customers: o Central San ratepayers in the future end up paying for an obligation that related to service in a past period, resulting in intergenerational inequity. o Fluctuating/increasing payments for UAAL can cause volatile rates. The recent establishment of the pension prefunding trust can help mitigate this. • Employees: o Assets should be available to cover promised benefits. A sizable UAAL jeopardizes the sustainability of the benefits employees have planned on for their retirement. Outstanding Decisions Regular reporting on the status of the UAAL is provided. The Board should continue to review the UAAL, the anticipated timeframe by which it will be paid down, and potential actions to pay it down earlier. Considerations for these matters is to be given during: • The budget process (considering whether to include a budgeted additional contribution toward UAAL). • When rates are set (reviewing assumptions in the financial plan about additional UAAL contributions). • At the close of the fiscal year, when variances are reviewed; funds from positive variances can be directed to multiple uses, including paying down UAAL. • When the board policies (BP 041, 042) related to UAAL are reviewed on an annual basis. Unfunded Actuarial Accrued Liability January 14, 2021 Special Board Meeting Agenda Packet- Page 93 of 149 Page 68 of 112 Cost of Service Issue Central San operates a wastewater utility, funded in party by rates charged to customers based on cost of service principles. There are legal requirements which govern how charges and fees are set. This includes the requirement that the fees cannot exceed the cost of providing the associated services. Our annual Sewer Service Charge (SSC) is one such fee. Periodic Cost of Service (COS) reviews ensure that the SSC rates do not exceed the cost of providing service for each customer class. COS requirements are found in Article XII D of the California Constitution and Government Code Section 54999.7. In April of 2019, the Board of Directors adopted a four-year rate schedule which extends through FY 2022-23, with average annual rate increases of 5.25% in years 1-2, and 4.75% in years 3-4. The Board will consider, in the spring of 2021, whether to continue with the 4.75% rate increase specified for year 3 of the four-year plan. Background Central San's revenue (for the operating, capital, self-insurance and debt service funds) comes primarily from four sources: SSC for the retail and wholesale customer(Concord), ad valorem property taxes, and capacity fees. Together, these sources provide 95% of the Central San's revenue. Several other miscellaneous sources such as permit fees, lease income, and interest provide the balance. Central San retained Raftelis Financial Consultants to conduct a comprehensive COS study in 2015 that has Co"A served as the basis for subsequent rate adjustments. The study defined Central San's revenue requirements, reviewed the customer classes, reviewed costs and allocated them to flow and strength components, distributed the costs to each customer class, and adjusted rates for each customer class to reflect the cost for providing services to that class. Staff and Raftelis prepared a COS update to the study in the spring of 2019. The update included a simplification of non- residential customer classes into five primary categories, based on business type and include numeric limits for wastewater strength. As required by Proposition 218, notice of the updated rates and the new non-residential categories was mailed to property owners, and a public hearing was held to receive protests and feedback from property owners and stakeholders. The updated rate ordinance went into effect on July 1, 2019 and contained a requirement that the Board have an annual public hearing to consider whether the upcoming annual rate increase is still necessary based on Central San's finances at that time. These annual reviews are typically conducted in the April. The rates adopted in April 2019 would be imposed for the upcoming year unless a super majority Cost of Service January 14, 2021 Special Board Meeting Agenda Packet- Page 94 of 149 Page 69 of 112 of the Board elects to change them. If a lower rate increase is adopted, that may be done without a new Proposition 218 process. If a rate higher than proposed for that year in the four-year rate plan is needed, a new Proposition 218 notification and public hearing process would be necessary. There is no expectation of presenting a higher rate increase than the 4.75% anticipated for FY 2021-22. The primary driver for rate increases in recent years has been the need for increased capital spending. In addition to ongoing renovation and replacement, a number of facilities and much of the equipment is nearing the end of their useful life. A Comprehensive Wastewater Master Plan was prepared in 2017. This plan serves as a guide for the 10-Year Capital Improvement Program (CIP) which is updated each year. Capital spending, which was budgeted at $30.8 million in FY 2015-16, has increased to $88 million per year for FY 2020-21 and $110.4 million for FY 2021-22. Board Policy BP 030 addresses how often COS studies should be updated. In short, staff are to review key COS assumptions each time rates are changed. In practice, we expect COS updates at least once every five years. Impact to Central San, Customers, Employees • Central San: Rates calculated in accordance with cost of service principles and implemented consistent with the requirements of Proposition 218 fund most Central San's costs. • Customers: The COS study ensures that each customer class pays their fair share of Central San's costs based on their usage of the system. The SSC currently generates approximately $100 million towards Central San's $182 million budget. Charges to the City of Concord for services provided accounts for another 31 million. • Employees: Relevant staff are involved in the process for determining Central San's revenue requirement as part of the financial planning process. Rates are proposed for Board.consideration/approval based on assumptions in the cost of service study. Outstanding Decisions • In April 2021, the Board will consider whether to continue the planned increase in the SSC to the levels specified in the third year of the four-year rate plan. • In April 2022, the Board will consider whether to continue the planned increase in the SSC to the levels specified in the fourth year of the four-year rate plan. • In April 2023, staff will present an updated rate proposal for the year or years beyond the current four-year rate plan. Rate adjustments on the order of about 3% to 4% annually are current) Distribute Develop and Y @Xj)(jkDis:t�ribcate Costscosts Design s to anticipated. Causative Customer Schedule of mponents Classes Rates and Charges Cost of Service January 14, 2021 Special Board Meeting Agenda Packet- Page 95 of 149 Page 70 of 112 Enterprise Resource Planning In 2019, Central San started work on replacing its Enterprise Resource Planning (ERP) system. Most of the major modules were implemented in 2020. The remainder of the project will be completed by early 2021. The Oracle Fusion Cloud ERP replaces the Sungard HTE system that was implemented in the early 1990s. Background Central San's ERP is the system used for maintaining financial, human resources, and customer/permitting information. In late 2018, Central San released a Request for Proposal inviting vendors to propose potential systems to meet the needs of Central San. About six vendors proposed, and two finalists were selected for more detailed discussions. Central San selected the Oracle Fusion Cloud system, with Emtec as the implementer to configure and implement the system. The Board of Directors approved the contracts with Oracle and Emtec in June 2019, and ,,,,�_r implementation kicked off in August 2019. The implementation is staged, RpR�s �G with various modules implemented ENt p1.P� from April 2020 through early R�c�pU�C`uQ 2021. The modules, both completed and pending include: Module Completed Targeted Core Human Resources (Phase I —Core System, March 2020 Onboardin Finance (Core Finance, Cash Management, Fixed Assets, September General Ledger, Payables, Project Financials, Receivables, 2020 Procurement, Inventory, P-Card, and Travel Permitting & Community Development - anua 2021 HR Benefits - anua 2021 Payroll - January 2021 Budget - February 2021 Goals/Performance, and Learning Management System ril 2021 The project had a total capital budget of$5.205 million, consisting of$3.35 million for external vendors and $1.9 million of capitalized internal labor cost. The project is on track for completion within budget. January 14, 2021 Special Board Meeting Agenda Packet- Page 96 of 149 Page 71 of 112 Ongoing annual Operations & Maintenance (O&M) related costs are approximately $536,440 per year, detailed as follows: Module Oracle E rr Core HRS stem Finance & HR 300,000 Cloud Software $130,440 Support Permitting & Community $50,000 Cloud Software Development $56,000 Support Totall $536,440 hp Central San, Customers,_ Employe The new ERP was implemented to reduce risk from maintaining an old system, provide a platform for improved efficiency and to provide improved service to users. Interest Benefits Central San • Improved ability to maintain system/ reduced risk from reliance on old technology Improved efficiency and information reporting Customers • Will have enhanced access to information/ability to interact with Central San (for payments, permitting) Employees • Industry standard, modern technology Improved efficiency/ less paper/ better information availability Outstanding Decisions • The Board may be asked to approve a solution for the billing function during the first half of 2021. This is functionality that existed in the previous HTE ERP, which has not been replicated in Oracle. • The Board will be apprised of status of the ERP as additional modules go-live but no further Board action is currently necessary. Enterprise Resource Planning January 14, 2021 Special Board Meeting Agenda Packet- Page 97 of 149 Page 72 of 112 Wholesale • of • • • Issue Central San treats the wastewater from the City of Concord and City of Clayton, collectively referenced as "Concord," under a wholesale contract which accounts for approximately 30% to 35%, historically, of the total flow of the treatment plant. The services provided and cost I recovery methodology are outlined in a wholesale service agreement between Central San and Concord approved in 1974. Services for Clayton are administered by Concord under a separate agreement for those two entities. In Fiscal Year 2019-20, Concord paid $14,969,258 for Operations and Maintenance services, $11,393,000 for 7 Central San Service Area Capital Project Reimbursements, and $712,133 for Household Hazardous Wastes services for a total of Wholesale Treatment Area $27,074,391 in sewer service charges. Back f)und In the early 1970s, Central San was required to begin construction of an advanced wastewater treatment plant to remove nutrients and filter the treated wastewater before discharge to Suisun Bay. These treatment facilities, which were mostly grant funded, were required by the EPA and State Water Resources Control Board (Water Board) to meet very stringent discharge requirements imposed on Central San at that time. At the time, regionalization of treatment facilities was a priority to make effective use of limited grant funds, and to meet the new standards of the Clean Water Act. Previously, the City of Concord owned and operated its own wastewater treatment plant at the current Six Flags Waterworld site in downtown Concord. It also collected and treated Clayton sewer flows. In its allocation of the EPA grant funds, the Water Board determined that Concord would not receive grant funds to upgrade and improve its treatment plant. The Water Board provided grant funds to Central San (approximately $70 million) on the conditions that Central San's treatment plant improvements would be sized to accept Concord's sewage flows and that a fair and equitable agreement would be developed between the two agencies for treatment services. An agreement was signed in September 1974 and it has been amended five times since then. As part of the agreement, Concord owns and maintains its collection system which flows through three metering stations for treatment at Central San. The City of Concord is billed as a percentage of the Central San net influent flow volume (millions of gallons) every year per the following equation: City of Concord Percentage = Concord generated flow Central San net influent flow Wholesale Contract with City of Concord January 14, 2021 Special Board Meeting Agenda Packet- Page 98 of 149 Page 73 of 112 The agreement specifies that Concord pays for (1)flow proportional share of all operations and maintenance costs related to treatment plant and production of recycled water, including laboratory, regulatory and permitting, environmental compliance and the proportional share of administration costs; (2) flow proportional share of all capital projects related to treatment plant and recycled water; and (3) per capita share of household hazardous waste collection services. An annual bill is prepared in late July/early August after the fiscal year has ended. Concord typically pays the full amount in early September. Impact to Central San Customers Employees Interest Benefits Central San The arrangement with Concord / Clayton allows fuller utilization of the treatment plant, allowing for economies of scale Customers Customers in the service territory benefit by having a larger customer base o pay for a hi,,-ah fixed cost '=mployees Central San employees administer the arrangement with Concord / Clayton mg Decisions There are no outstanding decisions. The 25-year wholesale agreement has a renewal clause which will automatically go into effect in 2024. Wholesale Contract with City of Concord January 14, 2021 Special Board Meeting Agenda Packet- Page 99 of 149 Page 74 of 112 Comprehensive Was - Plan Issue The Comprehensive Wastewater Master Plan (CWMP) is an important document that guides Central San's capital 5AN lei program, laying out projects and their schedules, and anticipated costs needed to serve customers over the next twenty years. These projects are incorporated into t the Capital Improvement Plan (CIP) for the next 20-year planning horizon (2017-2037). The Board approves the Ten-Year CIP each year and also considers award of design and construction contracts for individual projects. The CIP is the basis for the annual Capital Improvement Budget (CIB). Back round The CWMP was completed in June 2017. The CWMP includes descriptions, rationales, and estimated costs for collection system, wastewater treatment plant and recycled water treatment capital improvement projects and ongoing r programs to address aging infrastructure, meet existing and anticipated regulatory requirements, accommodate planned growth, optimize energy use, and implement Central San's vision for the treatment plant. The CWMP is a critical tool for maintaining a high level of service, establishing long- term fiscally responsible policies and providing a clear road map for future infrastructure needs. It confirms CIP projects and site layouts for future facilities, indentifies linkages among the major capital improvement projects; and repair and replacement strategies and prioritization to reflect changes in planning assumptions. It should be noted that some of the important future projects identified in the CWMP, such as the Water Exchange (Refinery Recycled Water) Project, Concord Community Reuse Project, or Nutrient Removal Project are not currently included in the Ten-Year CIP because of uncertainty in timing or regulatory requirements. Ten-Year CIP (FY 2020 — FY 2030) Central San developed a Ten-Year CIP for capital facilities and financing needs, which is updated annually. The current Ten-Year CIP covers the period starting on July 1, 2020 and ending June 30, 2030. It incorporates the recommendations from the June 2017 CWMP. It includes planning-level cost estimates for proposed projects and projections for the various sources of revenue needed to meet the cash flow requirements. The principal purpose of the Ten-Year CIP is to provide the Board of Directors with the information needed to formulate long-range policies regarding: Comprehensive Wastewater Master Plan January 14, 2021 Special Board Meeting Agenda Packet- Page 100 of 149 Page 75 of 112 • Priority and Schedule—Accomplishing Central San's Vision, Mission, Values, and Goals. • Financing —Completing the proposed projects. The FY 20-21 Budget document includes a description of the Ten-Year CIP and provides a general description of the plan and a discussion of potential, unbudgeted future capital projects. As projects develop and are prioritized, they are grouped into the four programs (Treatment Plant, Collection System, General Improvements, and Recycled Water Program) as shown in the CIB. A brief description of each program and a list of major projects for the Ten-Year CIP are provided in the CIP sections for each of the four programs. In total, the current estimated costs for all projects listed in the Ten- Year CIP is $907.5 million. The Ten-Year CIP provides a basis for policy decisions concerning Central San's long-range CIP and management of the Sewer Construction Fund. Impact to Central San, Customers, Employees The Ten-Year CIP has a significant impact on the rate payers and is the principal driver behind the need for rate increases to cover the cost of the capital improvement projects outlined in the CIP. The implementation of the CIP requires a combination of skilled engineering staff and is often supplemented by hiring engineering consultants on a project specific basis. Outstanding Decisions Overall, the implementation of the projects outlined in the CIP is on track. One of the larger projects, Solids Handling Facilities Improvement, is nearing final design and will be advertised within the next month. More details are provided in a separate briefing memo. The CWMP will be updated periodically to make sure it stays current with the needs of Central San at the time. These updates may include new projects, or reprioritization of projects based on the drivers relevant at that time. Comprehensive Wastewater Master Plan January 14, 2021 Special Board Meeting Agenda Packet- Page 101 of 149 Page 76 of 112 Issue The Solids Handling Facility Improvements Project (Solids Project) is an important project for the continued operation of the treatment plant. Solids handling and disposal is a very critical process for our treatment facilities. While it has served Central San for many decades, it needs major upgrades, especially related to air pollution control equipment to address numerous reportable compliance activities to the Bay Area Air Quality Management District (BAAQMD) and US Environmental Protection Agency (EPA). Central San has applied for a State Revolving Fund (SRF) low interest loan which was recently updated to $173.1 million. The project design which started in 2017 is nearing completion and once the loan is approved, the Solids Project construction phase will be advertised to bid in early 2021. ;kground The Solids Project is intended to address aging infrastructure, sustainability, and regulatory issues. Results from the pre- design effort confirmed that the two existing, `' •�� _ ` multiple hearth furnaces (MHFs) have more than 20 years of service life remaining; that w M the MHFs are not capacity constrained; and ' that related solids handling systems require replacement or improvement. This work will .� ensure the reliable operation of the solids handling equipment and air emissions in compliance with all regulatory requirements. These improvements include: • Sludge Blending and Mixing • Dewatering and Cake Pumping • Ash Handling Equipment • Air Emissions Control Equipment • MHF Improvements • Seismic Improvements for both the building and MHFs • Electrical and Control Systems Improvements Construction work inside the Solids Conditioning Building (SCB)will primarily include the replacement of existing equipment, including the replacement of associated electrical power and controls infrastructure. Seismic reinforcing of the SCB and MHFs involves significant modifications to each structure, including closing in open bay floors, placement of shear walls throughout the SCB, and isolation of the MHFs from the SCB structure. The work is expected to span 4 to 5 years and will require the shutdown of the MHFs for up to a year, requiring the sludge to be hauled offsite and treated at a third- party facility. The sludge hauling is planned to be included in the construction contract and will utilize the newly updated Emergency Sludge Loadout Facility. Solids Handling Facility Improvement Project and Associated State Revolving Fund January 14, 2021 Special Board Meeting Agenda Packet- Page 102 of 149 Page 77 of 112 As part of the financing strategy for the project, staff applied for a SRF Loan in December 2018. Central San was one of 30 projects that were successful in being tentatively approved for funding for$1.3 billion in low interest loans. The State Clean Water Resources Control Board recommended 100% funding for the project in June 2019. Staff has been working with the State over the last 18 months to complete the extensive SRF loan process. With the 95% completed plans, the total budget estimate was updated to $173.1 million, which includes design, a construction estimate, including hauling costs, of$117 million, and a $16 million contingency due to the complexity of the project. MWH Constructors was hired as construction manager and has been performing constructability and project sequencing review. The project is expected to bid in Spring 2021. Staff has coordinated with the Regional Board to ensure the full project amount of $173.1 million, and anticipates preliminary loan documentation to be finalized by the end of 2020. Once preliminary loan documents are executed, the project can be advertised for bidding. After Central San has awarded a construction contract, staff can submit the final budget and required documentation to execute the final agreement and begin reimbursement up to the loan amount. Interest will accrue upon the first draw; however, debt service payments will not start until one-year after construction is completed, about 2026. Impact to Central San, Customers, Employees This project will provide Central San with a long-term reliable solids handling facility. Because of the size of the project, the high capital cost, and the extended useful life of the assets, Central San applied for a very low interest loan from the SRF instead of using cash funding or a traditional debt financing such as issuing bonds or certificates of participation. Central San's financial plan had assumed such borrowing at a 3.5% to 4% interest rate. Terms of SRF loans are much more favorable, with interest rates calculated as one-half the amount of the latest State General Obligation (GO) Bonds. A recent October 28, 2020 GO Bond for California was issued at 1.8% which is an SRF interest rate of 0.9% for a 30-year term. Central San is applying for a twenty-year term which may even be lower. This provides anticipated interest savings to Central San ratepayers of over$82 million over the life of the bonds. Outstanding Decisions There are no outstanding decisions related to this particular financing. The Board of Directors approved the necessary resolutions to submit the original SRF loan application in December 2018; the resolutions were updated to reflect the $173.1 million amount in August 2020, and the General Manager is authorized as Central San's representative with the ability to sign the loan documents. Award of a construction contract for the Solids Project and any associated SRF findings will likely be brought to the Board in May/June 2021 for consideration. •olids Handling Facility Improvement Project and Associated State Revolving Fund January 14, 2021 Special Board Meeting Agenda Packet- Page 103 of 149 Page 78 of 112 RecycledGeneral Water Program Issue The Wastewater Treatment Plant was integrated with recycled water facilities and constructed in the 1970's, in part with federal grant funds following the Clean Water Act. Due to the "major underutilization of Phase II (recycled water) facilities," and to retain the grant funds, Central San agreed as part of a settlement with the Environmental Protection Agency (EPA) on December 12, 1985 to: • Develop and submit a program, to the reasonable satisfaction of the EPA and State Water Resources + Control Board (SWRCB), for additional utilization of Phase II facilities. • Eventually develop full, cost-effective utilization of ■ Phase II facilities. • Continue to study and promote the cost-effective use of reclaimed water within its service area. , • Maintain operable condition for all Phase II facilities (Filter Plant and associated facilities) until January 1, 2000. Backgro, Central San provides landscape irrigation water that meets all the requirements of the SWRCB and the San Francisco Regional Water Quality Control Board for unrestricted landscape irrigation. All JAh `' In 1996, Central San and the Contra Costa ¢ Water District (CCWD) reached an agreement allowing Central San to supply recycled water to specific areas of Martinez, Pleasant Hill, 400 and Concord. That area is referred to as Zone 1. This project can deliver 1.5 million gallons LO f per day for irrigation use in the Pleasant Hill area when all potential commercial and industrial customers connect. Zone 1 now consists of approximately 14 miles of recycled water purple pipeline that provides 200 million gallons of recycled water annually to more than 50 metered customer use sites. Because most use is for irrigation, the production of recycled water fluctuates significantly with the seasons. Zone 1 customers include Concord, Diablo Valley Community College, an elementary school, three middle schools, a high school; and the City of Pleasant Hill, parks, playgrounds, private businesses, two golf courses, street medians, industrial processes, and commercial applications such as truck washing, concrete manufacturing, dust control, and toilet and urinal flushing. Additionally, Central San's residential customers are offered free recycled water for hand-watering lawns, gardens and landscaping. General Recycled Water Program January 14, 2021 Special Board Meeting Agenda Packet- Page 104 of 149 Page 79 of 112 The major emphasis of the Recycled Water Program for the next fiscal year will be to address aging infrastructure needs, and maintain reliable recycled water service to customers and for use at the treatment plant. This will be done by focusing on construction of the Filter Plant 1A Project and planning and preliminary design for Filter Plant 1 B Project and distribution system improvements. Central San will also continue efforts to add new cost-effective customers in Central San's Zone 1 service area, pursue outside funding assistance (such as federal and state grants for all recycled water projects), and work with water supply agencies to develop supply alternatives. The Board of Directors adopted Policy No. 019 Recycled Water to provide guidance for cost-effective projects. Impact to Central San, Customers Employees In 2019, Central San commissioned Raftelis Financial Consultants to conduct the Recycled Water Pricing Study (Pricing Study). The purpose of the study was to review all financial aspects of the recycled water operations and capital program. The Pricing Study included extensive review of the current and projected recycled water demands, operating and capital expenses, and policy issues related to the allocation of costs among recycled water, and wastewater programs. The current commodity rate for recycled water is $3.80 per thousand gallons for Class I customers (formerly on potable water) and $1.81 per thousand gallons for Class II customers (formerly on canal water/wells). The true cost of service rate exceeds both irrigation rates, however the original story of the integrated recycled water/wastewater treatment plant infrastructure grant funds and the Pricing Study has concluded that the "extra" costs needed to provide recycled water for sale are eligible as wastewater costs. In April of 2019, the Board adopted a four-year rate schedule, with average rate increases of 3.0% for each of the four years. Outstanding Decisions In March-April 2023, staff will present an updated rate proposal for the year(s) beyond the current four-year recycled water rate plan. The Board will also consider recycled water capital project construction awards from time-to-time, as well as approval of cost- effective projects in collaboration with water agencies to augment the region's water supply with treated effluent produced at Central San's treatment plant. General Recycled Water Program January 14, 2021 Special Board Meeting Agenda Packet- Page 105 of 149 19 Page 80 of 112 RecycledRefinery Water ExchangeProject Issue The Refinery Recycled REFINERY RECYCLED WATER Water Exchange Project EXCHANGE PROJECT CONCEPT (Water Exchange Project) Martinez is an innovative project to Refineries It expand the use of Central ,« Ue San's potential supply of °I'�; �e" r «t recycled water and is important to the State's = =' goals to make best use of '' Trander-Bethany a scare resource in Pipeline 5.Uth•ay California. waterDlstrk • t (prop ( Rq�OdUCL Background The Water Exchange Project seeks to produce and convey recycled water to the nearby PBF (formerly Shell) and Marathon (formerly Tesoro) refineries in Martinez. Central San would produce the recycled water and Contra Costa Water District (CCWD) would provide it to their refinery customers. In exchange, the raw Delta water supply the refineries are currently using would be freed up and conveyed to Santa Clara Valley Water District (Valley Water) via CCWD's proposed Los Vaqueros Expansion (LVE) Project Facilities and the South Bay Aqueduct. The LVE Project Facilities include a nine-mile pipeline, called the Transfer-Bethany pipeline, that will need to be in place in order for Valley Water to receive this new water supply. On April 30, 2018, Central San, CCWD, and Valley Water executed a three-way Memorandum of Understanding (MOU) to complete a preliminary feasibility evaluation of the Water Exchange Project. Following the execution of the MOU, staff from the three agencies collaborated to develop a Work Plan to define the tasks of the Preliminary Feasibility Evaluation, as called for in the MOU, by June 15, 2018. The goal of the original MOU was to complete these evaluation tasks by June 30, 2019. Since June 2018, each agency has been working to complete the tasks assigned by the Work Plan. In July 2018, after completing a competitive solicitation process, Central San hired Brown & Caldwell (B&C), under the General Manager's authority, to provide as-needed support for Central San' s technical tasks that are part of the Work Plan. B&C completed several of the technical tasks and has prepared cost estimates for several iterations of potential treatment trains that could most cost-effectively produce recycled water for the refineries. At the May 2, 2019, Board meeting, the Board of Directors authorized the creation of a capital project for the project and a $250,000 amendment to B&C' s existing contract to allow for additional analysis on the project. Since that analysis would continue beyond the original MOU's termination date of June 30, 2019, on June 20, 2019, the Board authorized the General Manager to execute Amendment No. 1 to the MOU, which extended the MOU's termination date by one year to June 30, 2020. Refinery Recycled Water Exchange Project January 14, 2021 Special Board Meeting Agenda Packet- Page 106 of 149 Page 81 of 112 On June 21, 2019, staff held and facilitated an all-day technical peer review workshop with national wastewater/recycled water industry experts to solicit their input on the most cost- effective treatment trains for implementing the Project. B&C has continued to refine the treatment trains suggested at the workshop and developed associated cost estimates, which have been shared with the partner agencies for review. In early March 2020, the General Manager got agreement from both partner agencies to assign Board liaisons from their respective agencies to meet with Central San, CCWD, and Valley Water Board liaisons (Board Member Dave Williams serves at Liaison for Central San) to discuss the project at the early May 2020 Association of California Water Agencies (ACWA) conference in Monterey, California. Unfortunately, due to COVID-19, that meeting was postponed as the ACWA conference originally scheduled was changed to a virtual conference in July 2020. In order to continue the dialogue among the partner agencies, the three partner agencies executed a second amendment to extend the MOU's termination date by one year to June 30, 2021. In August 2020, during the virtual ACWA conference, members of each agency's Boards participated in a virtual meeting to discuss forming a Water Exchange Project Board Liaison Committee. The Board members agreed to form the Committee and hold quarterly meetings to review progress on the project. The first quarterly meeting of the Board Liaisons is scheduled for November 30, 2020. Impact to Central San, Customers, Employees The Water Exchange Project presents an opportunity for Central San to work with water agency partners to leverage Central San's future investment in treatment plant upgrades, to address anticipated nutrient discharge permit regulations, and augment the region's water supply. The preliminary capital cost estimate to produce and deliver recycled water to meet the refineries' historical demand is approximately $500M. Outstandlinn Decisions The only outstanding item in the MOU Work Plan is determining the cost allocation of the project. In order to make the economics of the project work (in terms of producing a competitively priced new water supply), the Board will soon need to consider an investment in the project. Refinery Recycled Water Exchange Project January 14, 2021 Special Board Meeting Agenda Packet- Page 107 of 149 Page 82 of 112 DERWA Temporary Wastewater DiversionProject Issue The Dublin San Ramon Services District (DSRSD) — East Bay Municipal Utility District (EBMUD) Recycled Water Authority (DERWA) Temporary Wastewater Diversion Project is intended to be a temporary arrangement to allow a portion of Central San's raw wastewater supply, upstream of Central San's San Ramon Pumping Station, to be diverted to DSRSD for producing recycled water to meet DERWA's peak summer irrigation demand. While it creates an opportunity to expand the use of Central San's potential supply of recycled water, it exposes Central San to potential Proposition 218 issues and could create a situation where other agencies become reliant on Central San's wastewater supply, making unavailable for recycling at Central San's main treatment plant to meet some of its strategic initiatives. Background In January 2017, Central San received a letter from DERWA requesting development of a memorandum of understanding (MOU) to explore a potential partnership and pilot project to temporarily divert a portion of the raw wastewater from Central San's San Ramon Pump Station between May and September every year. The wastewater would be diverted through DSRSD's existing collection system to DSRSD's treatment plant, for the purpose of producing and distributing recycled water to meet DERWA's peak summer irrigation demand. According to the letter, DERWA made this request due to the need for a temporary supplemental supply to help meet recycled water demands in the EBMUD and DSRSD service areas until wastewater flows increase with development and other long-term options are identified. M5J I. ' C I kaunva PS i MID 00, IA1i Irr•ri~.J.r 3 L I d I. DERWA Temporary Wastewater Diversion Project January 14, 2021 Special Board Meeting Agenda Packet- Page 108 of 149 Page 83 of 112 After careful consideration and evaluation by Central San staff and the Real Estate, Environmental & Planning Committee, on August 16, 2018, the following Guiding Principles were adopted by Central San's Board of Directors to set forth the general terms under which Central San would enter into a wastewater diversion agreement with DERWA: • Guiding Principle 1: No Adverse Financial Impact to Central San • Guiding Principle 2: No Adverse Financial Impact to the Cities of Concord and Clayton • Guiding Principle 3: Consistency with Central San's Municipal Bond Covenants • Guiding Principle 4: Consistency with Proposition 218 • Guiding Principle 5: Community Acceptance • Guiding Principle 6: Temporary Nature of the Project • Guiding Principle 7: Mitigation of Technical and Operational Impacts • Guiding Principle 8: Benefit to Central San Customers • Guiding Principle 9: Facilitate a Sustainable Solution for the Region's Water Supply Shortage Central San, DSRSD and EBMUD staff then worked together to develop an agreement around these Central San Guiding Principles. In January 2019, Central San's Board authorized the execution of a Temporary Wastewater Diversion Agreement, which allows for the diversion of a portion (-1.3 million gallons per day) of Central San's wastewater, upstream of the San Ramon Pumping Station, to DSRSD's collection system for the purpose of producing recycled water to meet DERWA's peak summer irrigation demand for a term of three years. Fact to Central San,, Customers_, Employees Central San has funded and completed a capital project to modify the San Ramon Pumping Station, by changing out the smallest pump and its associated variable frequency drive, to allow it to operate the pump station under the lower flow conditions. Future potential impacts to Central San includes the potential for DERWA to become reliant on Central San's wastewater supply, such that it will not be available for use at Central San's main wastewater treatment plant to produce recycled water for large-scale recycled water projects (such as the Water Exchange Project), while also meeting Central San's existing recycled water supply commitments. %JULOL4..uing K The capital project to modify the interconnection between Central San's and DSRSD's collection systems is currently under construction and scheduled to be completed by the end of 2020. Once Central San accepts the constructed facilities, the three-year term of the agreement begins, with the potential to extend the agreement by two additional years upon mutual written agreement by the parties. DERWA Temporary Wastewater Diversion Project January 14, 2021 Special Board Meeting Agenda Packet- Page 109 of 149 Page 84 of 112 Diablo Country Club Satellite Water • Facility i Demonstration P Issue In August 2012, Central San and the East Bay Municipal Utility District (EBMUD) executed a Memorandum of Understanding (MOU) with the Diablo Country Club (DCC) to explore the development of a cost-effective recycled water project that would divert wastewater from Central San's collection system and treat it onsite to produce recycled water to irrigate DCC's golf course. Background PROPOSED PROJECT Currently, DCC's fairways are irrigated DIABLO COUNTRY CLUB 5WRF with 70 million gallons of drinking water UUM each year. Recognizing the need to be more sustainable and to have a more ., .„r drought resilient water supply, DCC expressed an interest in utilizing some of Central San's wastewater. Since DCC is nearly 20 miles from Central San's • wastewater treatment plant, the project •� concept is to divert wastewater from Central San's collection system, approximately one mile downstream from , the golf course (to seek greater flow), and L treat it onsite at a Satellite Water Recycling Facility (SWRF) to produce recycled water suitable for irrigating the i golf course fairways. DCC's SWRF proposed project would include construction of the following: 1. Wastewater diversion structure 2. Small diversion pump station 3. Force main pipeline 4. Combined biological filtration treatment facility 5. Disinfection facility 6. Odor control 7. Recycled water pump station and related appurtenances 8. Expanded storage ponds 9. New irrigation system In May 2015, Central San and DCC executed an agency-specific MOU that further defined the roles, responsibilities, and project understanding between Central San and DCC, which identify Central San as the lead agency for the environmental review process under the California Environmental Quality Act (CEQA) and that DCC would design and construct the facilities, with Central San's input, and then turn them over to Central San Diablo Country Club Satellite Water Recycling Facility Demonstration Project January 14, 2021 Special Board Meeting Agenda Packet- Page 110 of 149 Page 85 of 112 for ownership, operation, and maintenance. In August 2016, Central San and DCC executed a Planning Agreement, which committed each party to good-faith negotiations to develop a project, based on DCC's commitment to fund the costs associated with all of the following: 1. A contract with a Central San consultant to produce information as may be required to enable Central San to prepare any CEQA-required document and to reimburse Central San for the reasonable costs of complying with CEQA, including administrative costs and the cost of any litigation defense. 2. Reimbursement of Central San staff time. 3. A contract with a Design/Build consultant to design a SWRF subject to Central San's specifications. 4. Acquiring the site on which a SWRF will be located. 5. Dedication of the SWRF to Central San for operation and maintenance. 6. The District's operation and maintenance of the SWRF. The Planning Agreement committed Central San and DCC to negotiate, diligently and in good faith, the terms of an Operations and Property Rights Transfer Agreement, which would govern the requirements for long-term operation of the SWRF and associated facilities and address the rights to the land the facilities occupy. The Planning Agreement also addressed the issue of dedicating Central San's wastewater flow, at the Project's identified diversion location, noting that Central San's goal would be to meet both Project goals of: 1. Safely and effectively operating Central San's wastewater collection system. 2. Allowing diversion of raw wastewater flow, such that a SWRF could produce recycled water. In early 2018, DCC began its procurement process for selecting a design-build consultant. In late 2018, DCC decided to postpone implementation of the SWRF project in favor of building other improvement projects at their Country Club. The Planning Agreement between Central San and DCC has expired. During staff's last conversations with DCC on the project, DCC was planning to pursue private ownership and operation of the SWRF with Contra Costa County as CEQA lead agency. Impact to Central San, Customers, Employee� The DCC SWRF was proposed as a Demonstration (Pilot) Project to allow Central San to assess impacts from these types of projects (that remove wastewater supply from Central San's collection system and return the process solids and concentrates back to the sewer) before moving forward with other potential future SWRFs in our service area. Other entities with golf courses have expressed interest in this type of project, including Moraga Country Club and, more recently, the Golden Rain Foundation on behalf of the Rossmoor senior community in Walnut Creek. Outstanding Decisions Awaiting DCC's decision on whether to move the project forward again. Diablo Country Club Satellite Water Recycling Facility Demonstration Project January 14, 2021 Special Board Meeting Agenda Packet- Page 111 of 149 Page 86 of 112 AgLantis/CoCo Sustainable Issue Central San owns approximately 400 acres of land for operation of the treatment plant and collection system infrastructure. About 120 acres of buffer property around the treatment plant was obtained and is managed to avoid encroachment and incompatible land uses. Central San prioritizes its buffer properties for its own use to operate and maintain the sewer system. Unneeded buffer property was leased to provide additional revenue to Central San and its ratepayers or provide a comparable public benefit to the community. A 14.8-acre portion of the Kiewit property located at 5500 Imhoff Drive, across from County Quarry, is a buffer property that is currently leased to AgLantis -- a 501(c)(3) non-profit -- for use as the CoCo San Sustainable Farm. Background T Central San Board of Directors approved the lease agreement for the CoCo San I Sustainable Farm on April 17, 2014 with a 10- year term that expires on April 16, 2024. The _ rent, which includes the cost of recycled water, is $1 per year. The terms of the lease require an Annual Report and an updated Business Plan to be submitted by April 1 st of each year. One of the primary purposes of the CoCo San Sustainable Farm is to grow fresh produce and donate or sell it for a low cost to the Food Banks of Contra Costa & Solano, local non- profits who distribute food to poor and/or local schools and students needing food. 11111A. :1 I " Dr. Carolyn Phinney, Executive Director of AgLantis, created the sustainable urban farm with the following mission: • Support Central San's mission to foster sustainable and renewable practices, including recycled water. • Teach sustainable living practices, recycled water science, Delta awareness, sustainable watershed practices, integrated pest management, pollution prevention, soils science and other science related programs. • Showcase green technologies, including fostering green building practices and green jobs. • Demonstrate how to reduce the carbon and environmental footprint of food production and distribution. Central San led a lengthy land use process with Contra Costa County to allow agriculture on the heavy-industrial zoned property which delayed the start of farming. In 2019, AgLantis revised its Year 3 performance goals, which were submitted with the 2019 Annual Report, on April 1, 2020. In September 2020, staff confirmed to the Board AgLantis/CoCo Sustainable Farm January 14, 2021 Special Board Meeting Agenda Packet- Page 112 of 149 Page 87 of 112 that AgLantis had met all its 2019 goals. AgLantis stated in the Annual Report that the COVID-19 Shelter-in-Place order may delay the construction activities for its 2020 infrastructure goals. Although volunteers have been limited, AgLantis is on track to donate over 25,000 pounds of fresh produce to the Food Banks of Contra Costa & Solano and White Pony Express this year. The following is an excerpt from their 5-Year Plan: Food Equity. We (AgLantis)are going to change our focus to developing the field crops due to the extraordinary increase in the need for food and expected national food shortages. Over the next five years we hope to put about 8-10 acres of crops into production.That requires irrigation to be installed and beds to be cut, developed,weeded, planted, r� maintained, harvested and distributed. r Education. We (AgLantis)will continue to educate ■ the community through social media. If possible,we will have interns each summer and we will continue farm education events and presentations in the community. We teach our volunteers and we plan to continue to involve hundreds of people if the public health situation allows. Environment.We(AgLantis)will continue to practice regenerative agriculture to demonstrate the value of these practices. We will continue to teach - , the community methods that they can use to protect the environment and about other environmental protection issues such as recycled water. If possible, we will continue to have students engaged at the farm and demonstrate Integrated Pest Management and other sound environmental practices. Economic Development. We(AgLantis)also hope that we will be able to erect the Solar Light greenhouse and begin to equip and start some operations. Full operation will necessitate connecting to an energy source, probably a PG&E pole on the north end of the farm. Irrigation to the greenhouse must be installed to operate. impact to Central San, Customers, Employees Interest ros ons Central San emonstration project for recycled water irrigation Minimal revenues or agriculture with good public relations outreach Customers gLantis is a non-profit organization donating its issed opportunity for added roduce to local food banks. evenues Employees inimal effort is currently needed to manage the None rarm activities Outstanding Decisio- The Board will need to consider if the AgLantis lease should be renewed or if the 14.8- acre site should be used for other purposes. The lease expires in 2024 and requires a one-year advance notification for termination. January 14, 2021 Special Board Meeting Agenda Packet- Page 113 of 149 Page 88 of 112 Bay Area Clean Water Agencies - Issue The Bay Area Clean Water Agencies (BACWA) is a joint powers W agency dedicated to working with its members, state and federal regulatory agencies, and non-governmental organizations to Alf ARIA improve and enhance the San Francisco Bay environment. MAN WAttta 8 t t rCentral San is one of the five principal members with a seat on the BACWA Board. In addition to having a Board member, Central San staff also serves in leadership roles on BACWA committees. Central San's current membership dues for Fiscal Year(FY) 2021 is $315,853, including special project fees. BACWA is currently coordinating several studies which will be the subject of future discussions. Oackground BACWA is a joint powers agency, formed in 1984, under the California Government Code. The BACWA membership includes the many municipalities and special districts that provide sanitary sewer services to more than seven million people in the nine- county Bay Area. BACWA provides technical expertise, financial support, and a public utility perspective to ensure that regulations affecting its members are well-informed, thoughtful, and effective. BACWA is governed by a five-person Executive Board comprised of one representative from each of the joint powers agreement signatory agencies: Central San, East Bay Dischargers Authority, East Bay Municipal Utility District, the City and County of San Francisco, and the City of San Jose. The Executive Board meets monthly and is responsible for ensuring that the agency is fiscally responsible to its members; that BACWA activities align with the agency's founding purpose and members' needs; and that it has the technical, legal and other support necessary to fulfill its mission. BACWA and its members support committees and workgroups. These committees and workgroups facilitate communication about key issues affecting the municipal wastewater community, keep agency staff apprised of important regulatory and policy developments, and provide a venue for establishing regional collaboration. They include: Air Issues and Regulations Committee, Bay Area Pollution Prevention Group, Collection Systems Committee, Laboratory Committee, Operations and Maintenance Infoshare Group, Permit Committee, Recycled Water Committee, and Pretreatment Committee. BACWA is committed to serving its member agencies and helping them protect the San Francisco Bay environment. Through BACWA committees and the use of technical experts, BACWA provides its members with region-specific information about regulatory and utility management concerns and facilitates the pooling and leveraging of member resources, talent, and expertise. As the regional "voice" for Bay Area clean water agencies, BACWA strives to ensure that the region's needs and concerns are clearly communicated at regional, state, and national forums. BACWA pursues collaborative partnerships and projects that help members fulfill regulatory requirements and conserve resources while also benefiting the San Francisco Bay and its residents. Bay Area Clean Water Agencies January 14, 2021 Special Board Meeting Agenda Packet- Page 114 of 149 Page 89 of 112 Impact to Central San, Customers, Employees Through participation on the Executive Board and through leadership and participation in committees and workgroups, Central San staff collaborate with BACWA membership and stakeholders to inform practical, science-based, and protective regional regulation in a fiscally responsible manner. Outstanding F The Board considers Central San's annual budget which includes fees for BACWA membership. Central San along with the other BACWA members are considering long- term nutrient mitigation which may require additional funding. Bay Area Clean Water Agencies January 14, 2021 Special Board Meeting Agenda Packet- Page 115 of 149 Page 90 of 112 Eight Largest Water Agencies in the Bay Area'----, Issue LA The eight largest water agencies in the Bay Area are responsible for supplying water, including recycled water, to over 6 million area residents and thousands of businesses and industries. California water laws protect water agencies' right to supply water and provide them the legal ability to assess duplication of service charges for any stranded infrastructure assets resulting from another agency supplying water in their service area. Wastewater agencies like Central San need to work collaboratively with Bay Area water agencies in order to more optimally develop recycled water projects that augment the region's water supply. Background There are eight major water supply agencies in the Bay ktl Area: J1 Alameda County Water District i (ACWD) —ACWD is a retail water n agency and a member of Bay Area Water Supply & Conservation Agency that provides water to businesses, industrial users, and more than SCUM 340,000 residents in Fremont, Newark, and Union City in Alameda County. ACWD coordinates with a counterpart wastewater supplier in their service area to serve recycled water. Bay Area Water Supply and Conservation Agency (BAWSCA) — BAWSCA was formed by legislative action in 2003 and represents 26 member agencies that include 24 cities and water districts, and two private utilities in Alameda, Santa Clara, and San Mateo counties. BAWSCA member agencies purchase water wholesale from San Francisco Public Utility Commission's San Francisco Regional Water System. These entities provide water to over 1.7 million residents and nearly 40,000 commercial, industrial, and institutional accounts in Alameda, San Mateo and Santa Clara Counties. Contra Costa Water District (CCWD) — CCWD is a retail and wholesale treated and untreated water agency that provides water to businesses, industrial users, and municipalities, serving more than 500,000 customers in eastern and central Contra Costa County, including most of the northern portion of Central San service area. CCWD also coordinates with counterpart wastewater suppliers (including Central San — see the write-up on the General Recycled Water Program for more information) in their service area on recycled water deliveries. CCWD's service area includes north, central, and east Contra Costa County, a total area of more than 140,000 acres. CCWD obtains its water supply from the Central Valley Project, direct Delta Eight Largest Water Agencies in the Bay Area January 14, 2021 Special Board Meeting Agenda Packet- Page 116 of 149 Page 91 of 112 withdrawals, and local surface water. Its water conveyance and distribution facilities include the 48-mile-long Contra Costa Canal for untreated water conveyance and approximately 800 miles of treated water distribution pipelines. In addition to treated water storage reservoirs, CCWD has four untreated water storage reservoirs, the largest of which is the Los Vaqueros Reservoir(LVR) in the Brentwood-Livermore area. CCWD is currently leading the Los Vaqueros Expansion (LVE) Project— a regional project to expand LVR (to provide local storage other water agencies) and construct a nine-mile pipeline (Transfer-Bethany) that will connect LVR with the Bethany Reservoir to provide the ability to move water south of the Delta. The LVE Project provides an opportunity to partner with CCWD and other water agencies to exchange water supply through this new regional water hub. See the briefing on the Refinery Recycled Water Exchange Project for more information. East Bay Municipal Utility District (EBMUD) — EBMUD supplies water and provides wastewater treatment for a large part of Alameda and Contra Costa counties, including over half of Central San's service area. EBMUD currently serves a population of approximately 1.4 million in a water supply service area of approximately 332 square miles in the San Francisco East Bay area. EBMUD receives its water supply via the Mokelumne Aqueducts, which convey the Mokelumne River water approximately 91 miles from the Pardee Reservoir across the Delta to local storage and treatment facilities. EBMUD's Mokelumne aqueduct system transports untreated water from the Pardee Reservoir approximately 91 miles to the EBMUD Water Treatment Plants. Once treated, the water is distributed through a network that includes 4,200 miles of pipe. Central San and EBMUD have collaborated in the past to evaluate opportunities to develop joint recycled water projects; to date, nothing has come to fruition. More recently, Central San and EBMUD have collaborated on the planning of Satellite Water Recycling Facilities in our respective service areas. See the briefing on the Diablo Country Club Satellite Facility Demonstration Project for more information. Marin Municipal Water District(MMWD) — MMWD is a retail water agency that serves the populous eastern corridor of Marin County from the Golden Gate Bridge northward up to, but not including, Novato. MMWD coordinates with one counterpart wastewater supplier in the service area to supply users with recycled water. MMWD's service area covers approximately 147 square miles and they serve a population of approximately 190,000. San Francisco Public Utilities Commission (SFPUC) — SFPUC supplies water in San Francisco and throughout the Bay Area, including BAWSCA member agencies, via its Regional Water Supply. SFPUC is a retail and wholesale water supplier, retail wastewater service provider, and municipal power supplier. SFPUC provides water service to approximately 2.6 million people in San Francisco, Santa Clara, Alameda, San Mateo, and Tuolumne counties and wastewater service within the City and County of San Francisco. Eight Largest Water Agencies in the Bay Ai January 14, 2021 Special Board Meeting Agenda Packet- Page 117 of 149 Page 92 of 112 Santa Clara Valley Water District(Valley Water or SCVWD) —Valley Water provides water and other services to businesses, industrial and agricultural users, and more than 1.9 million residents in Santa Clara County. Valley Water is a wholesale water supply, groundwater management, flood protection, and stream stewardship agency. Valley Water coordinates with counterpart wastewater suppliers in its approximately 1,300 square-mile service area in Santa Clara County to provide water reuse. Valley Water's water supply consists of local surface water, imported water from the Delta (both State Water Project and Central Valley Project), and groundwater. Valley Water also constructed and operates an advanced water purification facility capable of providing potable reuse supplies, and partners with recycled water producers to expand non-potable reuse. Central San is currently working with Valley Water(and CCWD) to evaluate the feasibility of the Refinery Recycled Water Project. See the briefing for additional details. Zone 7 Water Agency (Zone 7) —Zone 7 is one of ten active zones of the Alameda County Flood Control and Water Conservation District and the only zone that provides water services in addition to flood protection. Zone 7 is a wholesale water agency, groundwater basin manager, and flood protection agency that coordinates with counterpart wastewater agencies in the service area that provide recycled water. Zone 7's 425 square-mile service area includes a population of approximately 240,000 people in the eastern portion of Alameda County, including the Livermore-Amador Valley, Sunol Valley,.and portions of the Diablo Range. Zone 7 also serves a portion of Contra Costa County through an out-of-service area agreement with Dublin San Ramon Services District. Impact to Central San Customers Employee Two of the Bay Area's major water agencies operate in Central San's service area: CCWD and EBMUD. Two other retail water agencies, the City of Martinez (which purchases raw Delta water from CCWD, treats and retails it to its service area within the cities of Martinez and Pleasant Hill); and Dublin San Ramon Services District (which purchases and retails treated drinking water from Zone 7), also serves a portion of San Ramon. Imported water serves a substantial portion of the Bay Area's water demand. Recycled water represents a local water supply that water agencies could leverage to reduce reliance on imported water and boost the resilience of the Bay Area's water supply. Working in close collaboration with Bay Area water agencies could provide Central San with an opportunity to collaborate on a project that helps Central San meet future nutrient discharge regulations while creating new water supply. )utstandina Decisions Central San is currently working in collaboration with CCWD and Valley Water on the Refinery Recycled Water Exchange Project. Central San's Board will soon need to decide on investing in this innovative project. The results of this study, to the extent proven viable, will be brought to the Board for future policy discussion. Eight Largest Water Agencies in the Bay Area January 14, 2021 Special Board Meeting Agenda Packet- Page 118 of 149