CITY COUNCIL STAFF REPORT
DATE: March 25, 2026 CONSENT CALENDAR
SUBJECT: APPROVAL OF ADMINISTRATIVE CONTRACT MEMORANDA NOS. 4, 5, AND 6 TO THE WASTEWATER SERVICES AGREEMENT (OPERATIONS
& MAINTENANCE NO. A6804) BETWEEN VEOLIA WATER WEST
OPERATING SERVICES, INC., A DELAWARE CORPORATION, AND
THE CITY OF PALM SPRINGS
FROM: Scott C. Stiles, City Manager
BY: Engineering Services Department
SUMMARY:
Staff is requesting approval of three Administrative Contract Memoranda (ACM) to the City's existing agreement with Veolia Water West Operating Services, Inc. The memoranda updates the annual operations and maintenance (O&M) fee associated with street sweeping services to account for increased operational costs; establishes a new O&M fee for the Bogert Trail Lift Station (Lift Station No.6); and establishes an O&M fee for newly installed biogas and digester systems and sets an annual procurement budget for ferrous chloride.
RECOMMENDATION:
1. Approve the Administrative Contract Memoranda authorizing the budget increases; and
2. Authorize the City Manager or their designee to execute all required documents.
BUSINESS PRINCIPAL DISCLOSURE:
The Public Integrity Disclosure Form from Veolia is included in Attachment A.
BACKGROUND:
The current agreement for the operation and maintenance of the City’s wastewater facilities was entered into with Veolia Water West Operating Services, Inc. (Veolia) on November 4, 2015. Veolia’s responsibilities include operation of the wastewater treatment plant (WWTP), the sewer collection system, and management of the City’s street sweeping services. The agreement entered its final automatic five-year renewal term on
City Council Staff Report
March 25, 2026 -- Page 2
Approve Veolia Administrative Contract Memoranda
January 1, 2026. Per Section 5.39(h) of the Agreement, the City uses Administrative Contract Memoranda to periodically update contract terms. These ACMs ensure that Veolia’s Performance Guarantees and Operation and Maintenance (O&M) fees remain aligned with the evolving technical requirements of the WWTP, sewer collection system, and street sweeping operations.
On February 21, 2021, Administrative Contract Memorandum No. 1 was approved by the City Council to set the annual budget limit for Biosolids Services established at $200,000 effective January 1, 2021.
On May 12, 2022, the City awarded a construction contract to Rados Inc., for the replacement of Digester No. 2, and the biogas system at the Wastewater Treatment Plant.
These assets are an important investment in modernizing WTTP infrastructure and meeting environmental regulations. This project is currently in its final commissioning stage.
On June 16, 2022, the City Council received and filed Administrative Contract Memoranda Nos. 2 and 3. These updates aligned the street-sweeping schedule with current operations and revised the Waste Discharge Requirements to reflect the latest CRWQCB permit respectively. There was no fiscal impact for this action.
On May 28, 2025, City Council formally accepted City Project 18-18, Bogert Trail Sewage Lift Station (Lift Station No. 6). Lift Station No. 6 replaced a deficient siphon with a force main, providing a more efficient conveyance system for the service area.
STAFF ANALYSIS:
Staff recommends that City Council approve Administrative Contract Memoranda Nos. 4, 5, and 6 to the Wastewater Services Agreement between the City and Veolia Water West Operating Services, Inc. These are necessary to keep up with operational price increases, and the additions of new assets to the City’s wastewater treatment operations. The ACMs are detailed below and summarized in Table 1.
Table 1
ACM Subject Annual Increase
ACM No.4 Street Sweeping O&M Fee Update $75,000 (from $375,000 to $450,000) ACM No.5 Bogert Trail Lift Station No.6 O&M Fee $14,915 (new fee) ACM No.6 Biogas & Digester Systems O&M Fee $218,692 (new fee) ACM No.6 Ferrous Chloride (FeCl₂) Budget $250,000 (new fee) Total Increase $558,607
ACM No.4 proposes an update to the Operation and Maintenance fee for the City's street sweeping services. The current annual budget, established under ACM No. 2, is $375,000; however, actual sweeping costs have risen to $394,415 in 2023 and are projected to reach $438,243 by 2026.
City Council Staff Report
March 25, 2026 -- Page 3
Approve Veolia Administrative Contract Memoranda
To keep pace with these increasing costs, Veolia is requesting that the City increase the annual street sweeping budget to $450,000. The request cost breakdowns and ACM are included in the letter request in Attachment B.
ACM No. 5 establishes the Operation and Maintenance fee for the newly constructed Bogert Trail Lift Station (Lift Station No. 6). With construction now complete, this amendment formally incorporates the facility into the existing agreement's operational and performance guarantee, ensuring Veolia's responsibilities and associated compensation are clearly defined for the ongoing operation of this infrastructure. The annual O&M fee for Lift Station No. 6 is $14,915 annually. The request letter and the ACM are included in Attachment C.
ACM No. 6 establishes an annual Operation and Maintenance fee for the City's newly constructed assets which include an upgraded biogas flare, gas holder system and replacement of Digester No. 2, representing major infrastructure upgrades to WWTP. The digester generates biogas as a byproduct of the anaerobic digestion process, which is captured and stored in the gas holder to buffer supply and demand fluctuations before being routed to the biogas flare for controlled combustion and emissions compliance.
Together, these three interconnected systems form an integrated biogas management system that must be operated and monitored in coordination to ensure safe, continuous, and regulatory-compliant performance. The operation of the system represents an expansion of Veolia's responsibilities under the agreement and requires additional resources due to technical complexity, time and regulatory requirements of these assets.
Veolia a provided proposal detailing operational expenses, overhead calculations, and fee projections. The proposal includes new Grade III operator Veolia employee as a cost- effective alternative in lieu of overtime, to operate the new infrastructure. The cost of these services is $218,692. The fee proposal is provided in Exhibit A of the letter of request and within ACM No. 6 in Attachment D.
ACM No. 6 also establishes an annual procurement budget for Ferrous Chloride (FeCl₂), the facility's primary treatment against Hydrogen Sulfide (H₂S), a toxic gas generated by bacterial anaerobic digestion. By dosing into anaerobic digesters, FeCl₂ binds with dissolved sulfides to form insoluble iron sulfide (FeS), preventing H₂S from entering the biogas stream and being released into the atmosphere during flaring. The City selected the addition of Ferrous Chloride as the method to meet the South Coast Air Quality M District (SCAQMD) requirements for the new flare. This process is both operationally critical and a mandatory air quality regulatory requirement. The annual cost of chemical for this treatment process is estimated at $250,000. For reference, the Contractual agreement between the City and Veolia included as Attachment E.
ENVIRONMENTAL ASSESSMENT:
In accordance with the California Environmental Quality Act (“CEQA”) Guidelines the requested City Council action is not a “Project” pursuant to Section 15378(b)(1).
Continuing administrative and maintenance activities, such as the purchase for supplies, City Council Staff Report
March 25, 2026 -- Page 4
Approve Veolia Administrative Contract Memoranda
personnel-related actions, general policy and procedure making are not considered a “Project”.
ALIGNMENT WITH STRATEGIC PLANNING:
Infrastructure and Facilities.
FISCAL IMPACT:
There are sufficient funds in the Wastewater funds to cover this yearly increase.
REVIEWED BY:
City Engineer: Joel Montalvo
Assistant City Manager: Flinn Fagg
Director of Finance & Treasurer Kristopher J. Mooney
City Manager: Scott Stiles
ATTACHMENTS:
A. Veolia Public Integrity Disclosure Form
B. ACM No.4 – Street Sweeping O&M Fee Adjustment
C. ACM No.5 – Bogert Trail Lift Station O&M Fee
D. ACM No.6 – Biogas and Digester Systems O&M Fee and Ferrous Chloride Budget E. Veolia Agreement