March 17, 2026
Public Works
DATE: March 17, 2026
TO: Mayor Martinez and Members of the City Council
FROM:
Daniel Chavarria, P.E. Director of Public Works
Robert Armijo, P.E. Deputy Director of Public Works/City Engineer
Tawfic Halaby, P.E. Deputy Director of Public Works
Bradley Harms, Environmental Manager
Subject:
Options to Deliver Wastewater and Stormwater Services
beyond May 2027
FINANCIAL IMPACT: There is no immediate financial impact associated with receiving this presentation. Future fiscal impacts will depend on City Council direction, including costs related to procurement, transition, and long-term operations and maintenance for wastewater and stormwater services.
PREVIOUS COUNCIL
ACTION:
December 3, 2024
STATEMENT OF THE
ISSUE:
In 2002, the City of Richmond entered into an exclusive agreement with Veolia Water North Americal Operating
Services to operate the City’s wastewater treatment
plant. In 2004, the agreement was amended to include
the City’s sanitary sewer collection system and
stormwater collection system. The original contract term was through 2022, and the term was extended for five
years with a new expiration date of May 15, 2027. The
City faces an urgent decision regarding how to structure wastewater and stormwater operations beyond May 15,
2027, requiring City Council direction on which service delivery pathway best balances regulatory, operational, financial, and transition risks.
AGENDA
REPORT
March 17, 2026
RECOMMENDED ACTION:
RECEIVE a presentation and DIRECT City staff to initiate procurement of a new agreement through a competitive
procurement process to hire an operator to operate,
maintain, and improve the City’s: a) wastewater
treatment plant; b) wastewater collection system; and c) stormwater collection system – Public Works Department
(Daniel Chavarria 510-620-5478/Tawfic Halaby 510-620-
5482/Bradley Harms 510-307-8094).
DISCUSSION:
Background
The Richmond Wastewater Treatment Plant was constructed in the early 1950s to serve the growing population and industrial base of the City of Richmond and provides treatment for municipal sewage before discharge to San Francisco Bay.
The City of Richmond is served by three wastewater districts:
1) Richmond Municipal Sewer District serves central Richmond with its own wastewater treatment plant. West County Wastewater District and Richmond Municipal Sewer District share a deep wastewater outfall pipeline into San Francisco Bay;
2) Stege Sanitary District serves the southern portion of the City and adjacent communities and conveys wastewater to the East Bay Municipal Utility District (EBMUD) for treatment and disposal; and
3) West County Wastewater District serves the northern portion of the City and adjacent communities and operates its own wastewater treatment plant.
More information on the three districts can be found on the City’s Sanitary Districts webpage: https://www.ci.richmond.ca.us/174/Sanitary-Districts.
In 2002, the City entered into a long-term operations and maintenance contract with Veolia Water North America (Veolia) to operate and maintain the wastewater treatment plant and implement improvements in order to remain in compliance with the California State Water Resources Control Board regulations. In 2004, the City amended this contract to include operation and maintenance of the sanitary sewer and stormwater collection systems, placing the treatment plant, sewer collection system, and storm drainage system under a unified operations program. The original contract term was through 2022, and the term was extended for five years with a new expiration date of May 15, 2027. More information on the operations and maintenance contract with Veolia Water North America can be found on the City’s Veolia Services page:
https://www.ci.richmond.ca.us/2326/Veolia-Services.
In December 2024, the City contracted with Watearth Inc. (Watearth), to perform an analysis of, and provide a recommendation for, the potential pathways for future operations and maintenance of the City’s wastewater and stormwater systems.
March 17, 2026
In 2023, City Council formed the Wastewater and Stormwater Ad Hoc Committee to review wastewater and stormwater infrastructure issues and provide oversight and policy recommendations. The Ad Hoc Committee currently includes Mayor Eduardo Martinez, Vice Mayor Doria Robinson, and Councilmember Cesar Zepeda. The Watearth pathway analysis was presented to the Ad Hoc Committee in February 2026, and the committee reached a consensus to proceed with Pathway 1.
Under the current arrangement, Veolia has been responsible for operating the treatment plant (secondary treatment, disinfection, 20 million gallons per day capacity), maintaining and improving the sewer collection system (196 miles of sewer pipelines, 2,771 sewer manholes, and 15 sewer pump stations), maintaining and improving the stormwater collection system (169 miles of stormwater pipelines, 1,686 storm drain manholes, 7 storm pump stations, 188 inlets, 22 miles of drainage channels, and 117 outfalls), responding to system emergencies, providing annual reports to the San Francisco Bay Regional Water Quality Control Board (Water Board), and assisting the City with capital improvement projects designed to rehabilitate aging infrastructure and improve environmental performance.
The City is currently paying Veolia about $600,000 per year for operating and maintaining the stormwater collection system from stormwater revenues, and about $13 million per year for operating and maintaining the wastewater treatment plant and sanitary sewer collection system from wastewater enterprise fund revenues. In addition, the City also pays for stormwater collection system, wastewater treatment plant, and wastewater collection system capital improvement projects, pass-through costs, emergency projects, and fines, representing multiple categories of additional costs that vary from year to year.
Regulatory Framework
The modern framework for regulating water pollution in the United States was established by the Clean Water Act of 1972. The Act’s central goal is to restore and maintain the chemical, physical, and biological integrity of the nation’s waters. One of its primary regulatory tools is the National Pollutant Discharge Elimination System (NPDES), a permitting program that controls the discharge of pollutants from identifiable sources—such as pipes, treatment plants, and storm drain systems—into rivers, bays, and other surface waters. Under this system, discharges are prohibited unless authorized by a permit that establishes limits, monitoring requirements, and operational standards to protect water quality.
Although the NPDES program was created by the federal government through the U.S.
Environmental Protection Agency (EPA), the Clean Water Act allows the EPA to delegate permitting authority to qualified states. In California, this authority has been delegated to the California State Water Resources Control Board and its nine Regional Water Quality Control Boards, including the San Francisco Bay Regional Water Quality Control Board (Water Board). These agencies issue and enforce NPDES permits for
March 17, 2026
municipalities, industries, and wastewater treatment facilities that discharge to surface waters within the state.
The City of Richmond must obtain and comply with NPDES permits because it operates facilities and infrastructure that discharge to local waterways and ultimately to San Francisco Bay. These permits typically regulate two primary types of municipal discharges: treated wastewater from publicly owned treatment works and stormwater runoff from municipal separate storm sewer systems (MS4s).
The City has three NPDES permits that are regulated by the Water Board:
• Order R2-2024-0008, NPDES Permit CA0038539 for the wastewater treatment plant • Order R2-2022-0018, NPDES Permit CAS612008 for the municipal stormwater system • Order WQ 2022-0103-DWQ Permit for the wastewater collection system
Analysis
Amending or extending the Veolia contract is not recommended at this time given the identified performance issues, significant changes in state regulations, and the need to incorporate new provisions that would enable more effective City contract oversight.
Watearth completed a planning-level comparative analysis to support informed policy decision-making by evaluating the City’s responsibilities and risk posture under each service delivery model for the wastewater and stormwater systems and identify actions needed to preserve optionality leading up to the May 2027 contract expiration. The analysis is summarized in the Technical Memorandum: “Comparative Delivery Models, Risks, and Conditions for Success” (Attachment 1).
Under the first two pathways, the City would retain non-delegable responsibilities and would be the permittee with partial or complete legal responsibility for compliance, capital planning, governing, and enforcement. Under the third pathway, some of these responsibilities could be negotiated with the Public Agency owner/operator through a complex legal process.
Evaluation Topics Considerations
1 Operational feasibility Staffing levels needed
Budgeting requirements
Current contract expiration date
Acquisition of equipment
2 Governance and regulatory
requirements
Water Board permits
Bay Area Air District permits
Baykeeper Settlement Agreement
3 Transition risk and implementation
timing
Preparation periods
Bond Covenant
Alignment with May 2027 contract
expiration
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4 Capital and operational cost
context
Service delivery model cost
Cost predictability
5 Long-term implications for staffing,
compliance, and risk exposure
Other Post-Employment Benefits and
Public Employee Retirement System
responsibilities
Regulatory accountability
The analysis evaluated three pathways for operation and maintenance of the wastewater and stormwater systems. Watearth and City staff recommend Pathway 1 as it is the best and most feasible option for the City within the current time frame.
Pathway 1 – Hybrid City Ownership and Private Maintenance
The City retains ownership, governance, oversight, and regulatory accountability of the wastewater and stormwater infrastructure and contracts with a vendor for long-term operation and maintenance through a competitive procurement process.
Lowest overall execution risk.
Benefits: competitive procurement of vendor, new contract includes off-ramps, stronger City oversight mechanisms in the contract, clearer cost predictability, lower transition costs.
Challenges: transition and startup with a new operator, new operator relationships and workflows.
Estimated operations and maintenance costs: $15M to $25M per year Timeline: 9-12 months.
Feasible within current timeframe.
Pathway 2 – City Ownership and Maintenance
City would staff, operate, and manage the wastewater and stormwater systems. Higher execution risk.
Benefits: full operational control.
Challenges: creation of new labor classifications, labor negotiations, recruitment of certified operators, significant staffing increases, organizational restructuring, high transition complexity, and higher transition costs. Estimated operations and maintenance costs: $19M to $31M per year Timeline: 24 months or more.
Not feasible within current timeframe.
Pathway 3 – Transfer Asset Ownership and Maintenance to Another Public Agency
City would sell the wastewater/stormwater systems to a public agency. Higher execution risk
Benefits: Efficient and consolidated operation and maintenance.
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Challenges: Asset conditions requiring capital projects, bond covenants, current timeframe constraints, City and new ownership governing board approvals, regulatory agency approvals, protections for rate payers, loss of City control over assets and rates.
Estimated operations and maintenance costs: unknown.
Timeline: Several years.
Not feasible within current timeframe.
Recommended Path Forward
Based on the comparative analysis, staff believes that Pathway 1 emerges as the most feasible, lowest-risk option for ensuring continuity of wastewater and stormwater operations beyond 2027. Initiating procurement planning preserves the City’s flexibility, reduces execution risk, and avoids compressed timelines that could force emergency decisions.
Staff request City Council direction to receive the presentation and commence the competitive procurement process to hire an operator to operate, maintain, and improve the City’s wastewater treatment plant, sanitary sewer collection system, and stormwater collection system.
DOCUMENTS ATTACHED:
Attachment 1 – Watearth Technical Memorandum