City Council Memorandum
TO: HONORABLE MAYOR AND CITY COUNCIL DATE: JANUARY 23, 2024 FROM: PUBLIC UTILITIES DEPARTMENT WARD: 1
SUBJECT: APPROVE A BUDGET TRANSFER IN THE AMOUNT OF $5,504,698 FOR SEVEN OAKS DAM ENHANCED RECHARGE PROJECT ISSUE:
Approve a budget transfer in the amount of $5,504,698 from the Public Utilities/Water Transmission Mains Account to the Seven Oaks Dam Account.
RECOMMENDATION:
That the City Council approve a budget transfer in the amount of $5,504,698 from the Public Utilities/Water Transmission Mains Account No. 6230100-470735 to the Seven Oaks Dam Account No. 6230000-470813.
BOARD RECOMMENDATION:
On January 8, 2024, the Board of Public Utilities unanimously voted to recommend that City Council approve a budget transfer in the amount of $5,504,698 from the Public Utilities/Water Transmission Mains Account No. 6230100-470735 to the Seven Oaks Dam Account No. 6230000-470813.
BACKGROUND:
Since 1994 and through the City Council and Board of Public Utilities’ actions, the Seven Oaks Dam New Conservation projects have received approximately $18 million in budget approval. Riverside has invested roughly $16.15 million in these projects, covering the Seven Oaks Dam (Initial Project) construction and two Enhanced Recharge (ER) project phases. The ER project was divided into three phases due to the lengthy multi-year environmental permitting process, which the project participants must complete before construction can begin and to allow time for participating agencies to budget for each project phase.
The ER project aims to increase the diversion and capture of stormwater by improving existing and developing new recharge facilities that divert Santa Ana River flows from the Seven Oaks Dam. These improvements will allow for diverting up to 500 cubic feet per second (cfs) and recharging, for project participants, up to 80,000 acre-feet in a single year. Stormwater recharge supports Riverside's primary drinking water supply in the Bunker Hill groundwater basin and aligns with the regional water management strategies in the Upper Santa Ana River Watershed.
The construction of the ER project 1B began in May 2023, with project completion expected in 2026. However, the project contractor has outperformed their schedule and has advanced the project completion date to January 2025. Thus, on October 27, 2023, the Board of Public Utilities approved the increased capital expenditure for Work Order No. 1329385 for $4,344,625, already authorized in the current water capital improvement program (CIP) budget. Staff initially planned to request the above-mentioned increased work order authorization to include the additional funding provided under the recently approved water rate plan and to occur as part of the fiscal years 2024/25 – 2025/26 biennial budget process. However, the accelerated project schedule requires payment of contractor invoices faster than initially planned.
DISCUSSION:
Riverside's portion of the total costs of constructing the Seven Oaks Dam Initial Conservation Project and ER project Phases 1A and 1B are estimated at $23,513,694. A budget approval of $18,008,996 has already been received, leaving the remaining project cost of $5,504,698 to be covered under the recently approved water rate plan and to be included in the fiscal years 2024/25 - 2025/26 biennial budget process. Due to the expedited project schedule, the approved funding will not cover the scheduled payments before the biennial budget is approved. Therefore, approval of a budget transfer is required to cover the remaining payments for the ER project Phase 1B.
Approval of the budget transfer will ensure RPU’s continuous commitment to participate in all phases of the ER project and allow the payment of the project invoices on schedule. In the future, the water team will bring Phase 1C of the ER project and future projects to maximize stormwater capture to the RPU Board and Council for consideration and budget approval. The ER project will secure the additional water entitlement of approximately 2,431 AFY and could start capturing and recharging some of this water as early as February 2025.
STRATEGIC PLAN ALIGNMENT:
Continued participation in the Enhanced Recharge Project projects contributes to Strategic Priority No. 4 – Environmental Stewardship and Goal 4.2 - Sustainably manage local water resources to maximize reliability and advance water reuse to ensure safe, reliable, and affordable water to our community; and Strategic Priority No. 6 – Infrastructure, Mobility & Connectivity and Goal 6. 3 - Identify and pursue new and unique funding opportunities to develop, operate, maintain, and renew infrastructure and programs that meet the community’s needs.
This item aligns with EACH of the five Cross-Cutting Threads as follows:
Community Trust – This project is a cooperative effort between Valley’s entities and Western entities where Riverside is part of the Western entities; and is intended to benefit the regional community by improving the recharge capacity. Planning and designing this project went through numerous meetings to prepare for all its phases and receive input to benefit the regional community.
Equity – The Enhanced Recharge Project will increase the export rights in perpetuity to the City of Riverside and therefore providing an equitable benefit to all RPU customers to more reliable water source.
Fiscal Responsibility – RPU’s contribution of 22.49% of the total project costs reflects its share of the total water rights for the basin. This project will maximize the value of the region’s water assets at a lower cost compared to imported water.
Innovation – The Enhanced Recharge Project is an innovative approach to use Flood protection facilities to maximize water recharge opportunities by coordinating with multi-stakeholders in the Santa Ana Watershed.
Sustainability & Resiliency – This project demonstrates the regional collaboration to provide reliable and sustainable water supply for the region and to enhance the use of local water resources.
FISCAL IMPACT:
The total fiscal impact of this action is $5,504,698. The total project cost for the completion of the Enhanced Recharge Project is $23,513,694. The increased capital expenditure is $5,504,698. A budget transfer in the amount of $5,504,698 is needed from the Water Fund, Transmission Mains Project Account No. 6230100-470735 to the Water Fund, Seven Oaks Dam Project Account No. 6230000-470813.
The funds identified to be transferred were originally programmed as part of the ten-year Utility 2.0 CIP Budget and were allocated to fund the Industrial Booster Station Feeder Project ($4,852,696) and Techite Pipe Replacement ($652,002). There is minimal impact on planned capital improvement projects for the current fiscal year:
The Industrial Booster Station Feeder Project has been delayed and is not anticipated for construction until Fiscal Year 2026/27 or Fiscal Year 2027/28. As a result of the delay, this project will be reprioritized as part of the fiscal years 2024/25 – 2025/26 biennial budget process, including the updated five-year CIP plan, which will be brought to the Board and City Council for consideration in spring 2024.
Techite pipe replacement is an ongoing capital improvement program. Repurposing these funds will not have an impact as funding is included as part of the fiscal years 2024/25 – 2025/26 biennial budget process, including the updated five-year CIP plan, which will be brought to the Board and City Council for consideration in spring 2024.
Prepared by: Todd M. Corbin, Utilities General Manager
Approved by: Todd M. Corbin, Utilities General Manager
Certified as to
availability of funds: Kristie Thomas, Assistant Chief Financial Officer/Finance Director Approved by: Rafael Guzman, Assistant City Manager
Approved as to form: Phaedra A. Norton, City Attorney
Attachment: Presentation
Enhanced Recharge Project - Page 1