EAST PALO ALTO
CITY COUNCIL
STAFF REPORT
DATE: July 18, 2023
TO: Honorable Mayor and Members of the City Council
VIA: Melvin E. Gaines, City Manager
BY: Humza Javed, Public Works Director
SUBJECT: Capital water system improvement payments to Veolia Recommendation
Adopt a resolution authorizing the City Manager to reimburse Veolia for city-wide capital water system improvements from the Water Capital Fund.
Alignment with City Council Strategic Plan
This recommendation is primarily aligned with:
Improve the City’s Water Infrastructure
Background
The City has a lease agreement with Veolia to operate and maintain the City’s water system through April 9, 2026. The lease agreement allocates up to $110,000 annually for system maintenance and repair costs. According to the lease agreement, any costs above the allocation are considered water system improvements for which Veolia must be reimbursed.
Analysis
In addition to Veolia staff, there are a number of subcontractors (including C2R and Telstar) that perform work on behalf of Veolia for the City of East Palo Alto water system operation and maintenance. This work includes repairing water leaks, upgrading water valves/boxes, replacement of fire hydrants, Gloria Way well maintenance, and maintenance of the various sampling stations citywide, etc.
In FY 2021/2022, Veolia paid its subcontractors for additional capital improvements including improving various sampling stations citywide (to bring them up to compliance and current standards), as well as replacing deteriorated fire hydrants. These costs are above and beyond the annual $110,000 allocation and Veolia has requested a reimbursement for these items.
Staff has verified the additional work and the breakdown is as follows:
C2R 11/8/2021 Water Service Capital Ave $8,223.89
C2R 10/22/2021 Hydrant Removal Bradley Way $13,295.34
C2R 9/20/2021 Raise Water Valve Box Bay Rd and Fordham $1,769.95 C2R 2/21/2022 Hydrant Removal and Installation Woodland and Clarke $13,295.34 C2R 2/21/2022 Hydrant Removal and Installation at Ralmar $13,295.34 C2R 2/21/2022 Hydrant Removal and Installation at Ikea $13,295.34 C2R 2/21/2022 Sample Station O'Brien $1,500.00
C2R 2/21/2022 Sample Station Sacramento $1,500.00
C2R 3/7/2022 Repair Leak Alberni St $6,870.00
C2R 1/13/2022 Raise Water Valve Box at Bell St $1,769.95 C2R 1/13/2022 Sample Station Wisteria $1,500.00
C2R 1/13/2022 Sample Station Forham St $1,500.00
C2R 1/13/2022 Hydrant Removal and Installation Camellia Way $13,295.34 C2R 4/12/2022 Hydrant Removal and Installation Pulgas $11,500.00 C2R 4/12/2022 Hydrant Remova and Installation Woodland Ave $11,500.00 C2R 5/17/2022 Hydrant Removal and Installation Pulgas Ave $9,500.00 C2R 6/16/2022 Raise and Install G5 Box Per Specifications Holland St. $1,996.27 C2R 5/6/2022 Excavation/backfill of New Flow Meter/box at 1200 O'Brien $13,850.00 C2R 6/16/2022 Repair at Runnymeade and Clarke $37,476.44 C2R 5/26/2022 Sawcut AC/Demo/Excavate to Locate/Repair Leak on McNair $17,291.60 C2R 6/24/2022 Hydrant Removal and Installation at Runnymede Ct. $13,295.34 C2R 6/24/2022 Mobilize/traffic Control to sawcut/excavate/raise G5 Box $1,996.27 C2R 6/24/2022 Emergency Repair of Leaking Service Saddle 677 Tulane Rd $14,932.14 $249,819.00
In FY 21/22 Veolia paid $249,819 to its subcontractors for water system improvements in the City. Because this amount exceeds the $110,000 allocation, Veolia needs to be reimbursed for the additional $139,819 according to the lease agreement.
The allocation of $110,000 for water system operation and maintenance in the lease agreement was set in 2001 (over 22 years ago), and this amount is insufficient to operate and maintain the water system in 2023. Moreover, these costs also include capital improvements to the system. Based on the additional work, Veolia requests an annual “true-up” to get reimbursed for the additional amounts.
Invoices for the items above are also included as Attachment 2 to this staff report.
Fiscal Impact
Staff recommends appropriating funds in the amount of $139,819 from Water Capital Funds which holds an adequate fund balance to cover the expenditures.
Public Notice
The public was provided notice of this agenda item by posting the City Council agenda on the City’s official bulletin board outside City Hall and making the agenda and report available at the City’s website and at the San Mateo Co. Library located at 2415 University Avenue, East Palo Alto.
Environmental
The proposed action does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines sections 15378(b)(4) and (5) in that it is a governmental fiscal, organizational or administrative activity that will not result in direct or indirect changes in the environment. Significantly, the proposed action (reimbursement decision for repairs already made) does not involve the underlying repairs; such repairs, are nevertheless exempt pursuant to CEQA Guidelines sections 15269(b) and (c) because it either involves emergency repairs to publicly or privately owned service facilities necessary to maintain service essential to the public health or consist of specific actions taken that are necessary to prevent or mitigate an emergency.
Attachments
1. Resolution
2. Attachment 2 - Veolia Invoices