Fort Walton Beach Council agenda — 02-12-08 regular agenda — reading text

estimate for this renovation work is appro3dnu y $13,500,000, which exceeds the $ 5,142,600 budgeted as part of the Series 2005 Unity System Revenue Bonds issued in April 2005. I he report further detailed specific reasons for the escalation of costs in the construction market relative to this project. Earlier ties year the County's Water and Sewer Director approached staff regarding the City's sewage treatment needs and the posaility of the County treating the City's influent waste stream at their proposed new treatment facility. The County is currently designing a 10 MGD treatment facility immediately east of the City's current WVM and the proposed new facility has sufficient capacity to serve the City's wastewater trot needs. City and County staff spoke on numerous occasions dating back to 1999 regarding a wastewater, treatment ccooperttive; however, a mutual vtewater treatment P , getnent never materiralized due to a number of reasons previously outlined in the October 9' staff presentation to Council, the remainder of this memorandum addresses the County's latest offer to treat the City's influent Waste stream and staff's recommendation for the preferred course ofaction to proceed With a comprehensive evaluation. Discossioa: Q= nt coma mfr i1terlocal en During a meeting earner this summer, County staff proposed establishing a large-user rate for a dayasyou -go" option for wastewater treatment Conceptually, the City would pay a percentage of the County's con u rcial rate for every IOW goons of wastewater sent to the new facility for treatment County stafffotaialized this offer byvay ofa draft intedocal went which City staff received on October 11" ( see attached document tided Wastewater Service A,gmecnent). Since taking receipt of the draft interlocal, several departments including the City Managers office, Finance, City Attorney's office, and Utilities have reviewed the docurnent and compiled numerous comments to be addressed by County staffand others. 10 Iq .  As outlined m the draft intedocal agreement, the County is proposing a rate for wastewater treatment only ( costs of collection, t+ ansrnnission, and billing would still have to be borne by the City). The rate currently proposed by the County is raWy $239 per 1, 000 gallons, or 75% of their current base commercial rate of $3.18 per 1, 000 gallons. In comparison, the City charges its customers a corxnnmemial rate of $4.38 per 1, 000 gallons and a residential rate of $3.66 per 1, 000 gallons which is inclusive of collection, transmission, and treatment. However, the cost of treatment rate of $239/ 1, 000 gallons offered by the County would have to be added to -the Citfs portion of the rate for collections, tra gmission, and b7ling to determine the final wastewater rate assessed City 9m users. Please refer to the October stuff presentation on this issue for fixrtier explanation on the existing rate structure and proposed rate scenarios should the City elect to outsource wastewater treatment. 1. Monthly Ser®ioe Rates The County is proposing a rate for sewage treatment equal to 75% of their commercial rate per 1, 000 gallons. As stated previously, this would equate to approximately $239 per 1, 000 gallons of sewage delivemd to the facility for treatment In addition to this rate, the County is also proposing a monthly Readiness to Serve Fee of $3,750, or 75% of their base fee for a 20 -inch interconnection with the Citys sewage influent force main. The County will not charge a headiness to Serge pee for every individual service connection ai the City. Ustllr, the draft agreement from the County states that the City "... agrees to ' make payment based on any amended rates as they apply to all County customers.'-* While we are not certain at this time what these rate increases may be, the County has indicated that the annual multiplier will be in the range of 3.5 %. As part of our staff-level discussions on this issue, the Finance Department calculated our cost of treatment plus debt service for the Series 2005 Bonds at approximately $ 1. 83 per 1, 000 gallons. ' T'aking on additional debt to fully fund the projected WWJL improvements will increase this cost even more depending on the overall scope of work and the construction market at the titne of bidding All things cot idered, std believes we have sufficient Ieverage Within our rate sttactme to further reduce the rate oarrendtly proposed by the County. however, this would best be deternnined through a comprehensive evaluation performed by an independent consultant. Staff will present a recommendation in this regard later in this report. 2, Q= cns Lion for Wet Watha Flow Staff' expressed cmcerns regarding excessive monthly changes related to extreme wet weather flow events during initial discussions with County staff In response, the County addressed extreme wet weather (EW flow events in the draft interlocal agreement presented to the City. However, the language in the draft agreement only relates to wet weather events in excess of a 100 -year storm event. Staff does not believe that this adequately addresses most extreme weather events sutch as 25 -year and 50 -year storm events and the agreement offers little protection against excessive charges resulting from most weather anomalies. Based on the most recent annual flaw report, the City's WWI? treats an average of 66.29 million gallons per rnonta,. or 2.18 MGD. To more accurately account for weather anomalies, staff believes the County should refine their methodology to include a reduced rate per 1, 000 gallons for processed above the average montl* amount phis a seasonal variance of r^  10 %. Again, staff would work with an independent consultant to develop language to be included in the aWeernent which best serves the Cfs interests. 3. $ eclaimed Wastewater Service As stated in the October 9d' staff presentation, the County does not have the capability to treat sewage effluent to a tertiary standard for discharge to a public-access facility such as the City's Golf Club. With this understanding, the County has proposed to take over full ownership, operation, and maintenance of the Cit s +existcag sand filtration system. In return, the County agrees to supply reclaimed water from this fac Rity to the City's GolfClub for irrigation purposes at no additional charge to the City. At issue presently, is whether to transfer ownership of the sand filter system to the County or to lease the facility to the County through a long-irrm lease arrangement. Another option is for the City to retain ownership and operational response for the tutmry component of the plant only and operate the facility with a reduced stab'. The County would, in turn, provide source water from their new facility to the City for further treatment through the sand filter system. Currently, staff is waiting for a reply from the FDEP District office in Pensacola as to the Based on our initial contact with FDEP staff, all ofthe for each option. permitting ramifications options presented are likely permissible. In addition to the above referenced issues, staff opposes any charges levied by the County on the City for expansion of the reuse distribution rietwork within City -owned properties or wish public to systern, - rights-of-way. Should the County, through exclusive ownership of the tertiary develop a reuse distribution network comprised ofprivate properties: staff does not object to However, if reuse /redairned water is extended to public the County chatging for this service. areas within our Jurisdiction, the City should not be charged for such use as long as the facility does not have to be expanded to meet the proposed need. PotewW TMt3= Rmul = fromfn's RUL InWathm In an effort to derive more income on the local levael, the Department of Defense now requires military installations to charge annual lease flees for all out grants - where Federal lands are utilized by non -DoD entities. nis directive, commonly referred to as the Enhanced Use Lease program, affects Governmental entities as well as private utility companies, non -profit agencies, and others. Since the late 1970's, the City,has leased, or licensed, 490 acres of Fghn range property for use as a sewage effluent sprayfield. Last week, the Mayor and Utilities Director meet with representatives ofthe Department of the .Air Force at Eglin Air Force Base to gain a better understanding of the EUL process and how it might is set to expire in affect the City in the future. The City's current Real Estate License with 9& November, 2010. After meeting vith Air Force officials last weer, we do expect to be charged for the continued use of the Iand. Furthermore; the appraisal will likely reflect highest and best use for the property which vvM certamy drive the cost of the aimuai fee. Although it is much tooinearly to tern-is 500,000. determine, we should expect annual lease payments in the range of $300,,000 to $ 0.44 per of how this might affect the City's users, the Finance Department estimates an additional $ 1, 000 gallons would need to be assessed each customer of the system. From stafFs perspective, the knowledge of hefty lease fees on the horizon sigiffieantly complicates this analysis. Should the City elect to continue with renovawns to the WW1'P, staff believes the D  City would be better served by exploring alterative means of effluent disposal. Various methods such as Rapid Infiltration Basins and Deep Well Injection are cumn* in use in other parts of the State and can substantially reduce and/ or eliminate the lease area. Should Council decide to conduct an independent analysis of the County's offer, staff recommends tasking the consultant with exploring the cost benefit of implementing an alternative effluent disposal practice. D-Le— rEactors to be Evaluated_ During last