City of Gonzales
PUBLIC WORKS / CITY ENGINEER DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: November 7, 2022
FROM: Patrick Dobbins, Acting City Manager
THROUGH: Carmen Gil, Interim City Manager
SUBJECT: Progress Report on Industrial Wastewater Project
RECOMMENDATION
Receive presentation from City staff on the funding and schedule for the Industrial Wastewater System Project and provide any feedback.
BACKGROUND
The Industrial Wastewater System (IW System) Project is a key component of the City’s approach to expanding the wastewater system beyond the current 1.3 million gallons/day permitted capacity. The various ag-processing facilities (Taylor Farms, Del Monte, Braga Fresh, etc.) within the City’s Business Industrial Park discharge approximately 800,000 gallons/day of agricultural wash water into the city sewer system. This is approximately two-thirds of the flow to the City wastewater treatment plant.
Chlorine, sanitizers, and buffers in ag-wash water hinder the effectiveness of the biological treatment process at the City’s wastewater treatment plant causing it to take longer and use additional energy. Agwash water is better treated at a dedicated Industrial Wastewater Treatment Facility. The IW System will convey, treat and dispose of agricultural “wash water” discharged from the processing facilities in the City’s Industrial Business Park.
Completion of the new IW System will restore capacity at the existing wastewater treatment plant (WWTP) and allow for the facility to be upgraded to meet new Regional Board permit requirements.
REVIEW & ANALYSIS
The City operates the wastewater system under a Waste Discharge Permit issued by the Central Coast Regional Water Quality Control Board. As required by the City’s Waste Discharge Permit, a Long-Term AGENDA
ITEM
12 Wastewater Management Plan (LTWMP) was prepared in 2018 that aggregated relevant information contained in various technical studies. The LTWMP recommended expanding the City’s wastewater capacity by constructing a separate industrial treatment facility with a collection system solely for agricultural industrial wastewater.
The IW System will be comprised of a new pipeline ranging in size from 24 to 27-inches from the Business Park to the new treatment facility located on City-owned property east of the City’s municipal wastewater treatment plant just east of the Salinas River. The IW System will have an initial flow of 1.0 MGD with the ability to expand as needed with an expected maximum capacity of 3.0 MGD. The WWTP process sequence will include pretreatment at the processing facilities, 10,000 feet of pipelines, influent pump station, mechanical screens, aerated ponds and percolation beds.
Because treated ag-wash water does not include pathogens (bacteria, viruses, and parasites) present in domestic sewage, it is easier to recycle. The vision is: once the 1MGD plant is up and running to start planning the next phase of adding the additional infrastructure necessary to recycle the water for irrigation of row crops on adjacent farmland and/or return to the Ag-Processors.
The IW System is estimated to cost approximately $27 million (hard and soft costs). The cost estimate includes:
• Hard costs (Construction contracts)
• Soft costs which include consultants (Designer, Program and Construction Managers, Environmental, Surveying), temporary and permanent easements, legal support, and preparation of the project EIR
• Contingency for unforeseen costs
• Escalation to the mid-point of construction
The project will be constructed under two separate construction contracts:
1. Pipeline contract estimated to cost $6,000,000
2. Treatment facility estimated to cost $18,000,000
Staff pursued grant funding for the project and learned that while grant funding is available for domestic wastewater projects, grant funding isn’t available for industrial wastewater projects. However, staff is continuing to pursue the potential for principal forgiveness of the SRF loan in attempt to reduce the debt service for the project. Funding for the project is being pursued through the State Revolving Loan Program with the State Water Resource Control Board.
The City’s SRF application was submitted in fall of 2021 and favorably reviewed in the spring of 2022.
There are four parts of the review; Environmental, Technical, Financial and Legal. The technical review is completed, the Environmental review is nearly complete and financial review is in progress. The Legal review is the process of negotiating the final terms of the loan agreement and takes place last. The current schedule is to complete the Environmental and Financial reviews by the end of 2022 and execute a funding agreement in the first quarter of 2023.
The term of the SRF loan is usually 30 years with an interest rate that is fixed when the loan agreement is signed. The State Water Board’s interest rate for SFR loans is currently 2.00%.
How Recommendation Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.
Explain: Constructing an Industrial Wastewater System supports our vision to expand the city’s wastewater system capacity and support economic development that will provide more local employment opportunities for City residents.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ____ No____ N/A
Explain: Constructing an Industrial Wastewater Treatment Facility will enhance the community’s quality of life by providing for the continued treatment and safe disposal of the wastewater generated by the processing facilities in the Industrial Business Park.
City services will be delivered in a cost-effective, respectful and friendly manner to insure the safety and well-being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner. X Yes ____No ____ N/A Explain: See Vision explanation above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety Yes __X__ No ___ N/A
• Housing X Yes ____ No ___ N/A
• Recreation Yes _X___ No ___ N/A
• Environment X Yes ____ No ___ N/A
• Education Yes __X__ No ___ N/A
ALTERNATIVES
Staff presented alternatives on the different ways to expand and upgrade the City’s wastewater system at the August 14, 2020 Council meeting. The decision at that time was to pursue building an Industrial Wastewater System. Therefore, alternatives are no longer considered.
BUDGET IMPACT
There is no budget impact to this evening’s presentation. The loan from the State Water Resource Control Board will be repaid from Sewer Impact Fees and Wastewater Enterprise monies.
The SRF process requires a review of the City’s sewer rate structure and so staff will be bringing a future item to the Council asking for approval to award a contract to a consultant firm to review the city water and sewer rates, operational budgets and debt obligations and provide a rate study detailing recommended changes to the rate structure.
CONCLUSION
Receive presentation from city staff on the funding and schedule for the Industrial Wastewater System Project and provide any feedback.