ITEM:		ACTION ITEMS
16.	CONSIDER APPROVAL OF SCOPE OF WORK AND EXPENDITURE OF FUNDS FOR PHASE 2 STUDIES RELATED TO MPWMD 95-10 DESALINATION PROJECT
Meeting Date:			December 8, 2008	Budgeted:	No
From:			Darby Fuerst,	Program:	Water Supply Projects
			General Manager	Line Item No.:
Prepared By:			Andrew M. Bell,	Cost Estimate:	$734,242 - $1,649,000
General Counsel Approval: N/A
Committee Recommendation: The Administrative Committee reviewed this item on November 24, 2008 and recommended that the scope of work contained in Exhibit 16-A, and other alternatives for proceeding with the 95-10 Project, be considered by the full Board of Directors.
CEQA Compliance: N/A

SUMMARY: In August and October 2008, the Board received reports from District consultants Camp Dresser & McKee Inc. (CDM) and ICF Jones & Stokes Associates (JSA) regarding the feasibility of the MPWMD 95-10 Desalination Project (95-10 Project). These Phase 1 studies for this project were a constraints analysis and additional policy review regarding the potential for the project. No “fatal flaws” in the potential for development of the project were identified in the Phase 1 studies. At the October 20, 2008 meeting, the Board directed staff to bring a scope of work, costs, and schedule for the next phase of studies for the project.

Provided as Exhibit 16-A is the scope of work, costs, and schedule prepared by CDM and JSA for conducting Phase 2 studies for the 95-10 Project. The Phase 2 studies would include field hydrogeologic investigations of seawater extraction sites in the coastal area of the Fort Ord Dunes State Park west of Highway 1, to include installation and testing of a production well, groundwater modeling, and a study of the use of the regional treatment plant outfall for disposal of brine from the desalination plant. Phase 2 would also include development of a detailed project description suitable for analysis in accordance with the California Environmental Quality Act, as well as planning-level capital and annual operation and maintenance costs of the project. The scope of work includes five optional tasks (Tasks 1.A through 1.E) which could be authorized at a future date if findings of the basic scope determine that the optional tasks would be necessary or beneficial.

At the November 24, 2008 Administrative Committee meeting, the committee members recommended that the Board consider alternative approaches to the next stage of investigations of the project. The basic approach would be to proceed first with the hydrogeologic investigations to determine the potential for a supply of seawater from coastal wells without adversely affecting the Salinas Valley or Seaside Groundwater Basins. Depending on the outcome of those investigations, engineering and environmental review could follow.

RECOMMENDATION: The Board should receive a presentation by staff, receive public comment, and discuss the scope of work, costs, and schedule as presented in Exhibit 16-A. If the Board decides to proceed with studies for the 95-10 Project, staff recommends that the Board select one of the two following alternatives:

1. Authorize staff to contract with CDM and JSA for the basic scope of work provided in Exhibit 16-A, not including the five optional tasks, at a cost not to exceed $775,000. This includes a contingency of approximately 5.5% over the proposed costs for the basic scope of work. As this expenditure is not included in the FY 2008-2009 budget, the Board must designate a source of funds. Staff recommends drawing from the District’s $2.5 million line of credit, and that the Board determine the method of repayment at a future meeting.

2. Direct staff to solicit proposals for obtaining permits for and conducting hydrogeologic investigations to determine the potential for a supply of seawater from coastal wells for the 95-10 Project. The scope of work, costs, and schedule for performing this work would be considered by the Board at the January or February 2009 meeting.

BACKGROUND: At the January 24, 2008 Board meeting, the Board endorsed Director Brower’s request to direct staff to prepare a report on requirements to update the MPWMD 95-10 Project, a seawater desalination project proposed to be located in Sand City that was most recently studied by MPWMD in 2004. At the April 21, 2008 Board meeting, the Board authorized Phase 1 studies of the project, termed a “constraints analysis,” to be conducted by JSA and CDM. Representatives of these two firms presented their report at the August 18, 2008 Board meeting. At that meeting, the Board directed that the consultants be authorized to address additional policy issues related to the feasibility of the project. The report on the consultants’ findings and conclusions regarding these issues was received by the Board at the October 20, 2008 meeting. At the October 20 meeting, the Board directed staff to bring a scope of work, costs, and schedule for the next phase of studies for the project.

JSA and CDM prepared a proposed scope of work with input by District staff and with information obtained at a meeting with Mat Fuzie and Ken Gray of the California Department of Parks and Recreation. Exhibit 16-A contains the scope of work, estimated costs, and a schedule for the Phase 2 studies developed by CDM and JSA.

At the November 24, 2008 Administrative Committee meeting, members of the committee did not make a formal recommendation to the Board, but rather directed that the item be presented to the full Board for consideration. The committee members requested that staff describe alternative approaches to investigation of the project, including proceeding with the hydrogeologic investigation but not the engineering portion of the project (detailed project description and cost estimates) until more is known regarding the potential for obtaining a supply of seawater from coastal wells without adversely affecting the Salinas Valley or Seaside Groundwater Basins. Committee members also suggested that the hydrogeologic investigation could be contracted to a firm or individual other than CDM and that environmental review and permitting could be conducted by JSA, another firm, or MPWMD staff. If the Board decides to take this approach, staff will come back with detailed scope, cost, and schedule for a more limited approach for consideration at the January or February 2009 Board meeting.

As part of this approach, the District’s Legislative Committee could consider methods of soliciting support for the project. For example, District representatives could meet with high-level representatives of the primary permitting agencies, including the Director of the California Department of Parks and Recreation.

IMPACT TO DISTRICT STAFF/RESOURCES: No funds for additional investigations for the MPWMD 95-10 Project are included in the FY 2008-09 budget. If the Board decides to proceed with additional studies, the $2.5 million line of credit authorized earlier in 2008 could be used to fund it at the outset. At present, there are a number of uncertainties regarding the most advantageous method of repaying funds drawn from the line of credit. For example, FY 2008-09 user fee revenues could be significantly greater than anticipated in the budget. The Board would determine at a future meeting whether it is necessary to increase the user fee rate, or to use another source of revenue.

The “Budgeting Cost Estimate” shown in Table 1 of Exhibit 16-A includes a total amount of $734,242 for the basic scope of work (Tasks 1, 2, and 3). Optional Tasks 1.A through 1.E would add approximately $915,000, for a total of approximately $1,649,000.

EXHIBITS

16-A MPWMD 95-10 Project, CDM and UCF/Jones & Stokes Scope of Work – Phase 2 Field Program, Permitting, and Engineering Support

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