ITEM:		ACTION ITEM
17.	CONSIDER FUNDING AND REMEDIATION PLAN FOR PURE WATER MONTEREY BASELINE PROJECT (PHASE 1) INJECTION FACILITIES
Meeting Date:			September 21, 2020	Budgeted:	No
From:			David J. Stoldt,	Program/	n/a
			General Manager	Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:	$4,070,000 including 10% contingency
General Counsel Approval: N/A
Committee Recommendation: The Water Supply Planning Committee has unanimously recommended pursuing a fourth deep well for Pure Water Monterey Phase 1. The Administrative Committee has unanimously recommended funding a fourth deep well, but has asked for more information.
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines section 15378.

SUMMARY: Final deep well commissioning for Deep Injection Well (DIW)-1 & DIW-2 started on August 17th when the first deep well was taken off-line to begin the swabbing process and final conditioning. Only one existing deep well will be off-line at a time. Final commissioning should be completed by early to mid-October. Test borings for deep wells at two more already approved sites have been completed and indicate good potential.

To ensure adequate long-term recharge capacity, District and Monterey One Water (M1W) staff have recommended a third deep well (DIW-3), and possibly a fourth, to be added to the overall injection well facilities. The additional capacity will help ensure the District does not breach the Water Purchase Agreement delivery guarantees, provide operational flexibility, and create redundancy.

On August 31, 2020 the M1W Board approved proceeding with a third deep well and supports a fourth if the District will participate financially. Two days later, on September 2^nd, at the District’s Water Supply Planning Committee, the Committee recommended pursuing a DIW-4 strategy subject to funding approval by the District Board. At the September 15, 2020 Administrative Committee meeting the Committee unanimously recommended funding of this project, but asked for more information, including the following that staff hopes to be able to report on at the Board meeting:

• If Kennedy Jenks was at the 30% design point when the decision was made to go to two well pairs, yet they fully designed the other two, why is design for DIW 3 & 4 so expensive?

• Was there a 2016 consultants’ engineering report that identified the number of injection wells that were determined to be necessary to fully accommodate the water production from the initial phase of Pure Water Monterey that went into the Point of Delivery in the Water Purchase Agreement? 

• Was there any record of the decision to go to only 2 well pairs? 

• How will the USBR grant be used and what is the impact on the cost of water?

• What is the plan if bids come in higher and what are MPWMD options if they do?

Final design of DIW-3 and the associated mechanical-electrical-instrumentation hardware was advertised for construction on September 8th; the bid package will be called, Injection Wells Phase 3. DIW-4 is being designed and will be added as a bid amendment on or about September 24^th if the District approves funding

Final design for stabilizing the two existing shallow well pads is nearing completion. Construction of the shallow well improvements is initially being pursued as a change order under the current injection well construction contract. If necessary, the shallow well improvements can also be included in the DIW-3 bid package. Funding for the additional injection well facilities improvements, including DIW-3, is being expedited as a $6.1M amendment to the existing PWM Clean Water State Revolving Fund (SRF) loan agreement. DIW-4 is not budgeted within the SRF loan amendment.

In the District’s FY2020-21 budget, $3 million was set aside for potential new deep wells. However, as can be seen in the preliminary budget attached as Exhibit 17-A, DIW-4 is expected to cost $3.7 million. (Improved estimates will be provided at the September 15^th meeting if available.)

M1W has suggested that to minimize budget impacts to the District, they would look to cover some of the construction management, engineering services, and conditioning with their SRF loan, but it is advisable that the District recognize that it may have to pay all or a portion of those costs.

The project is expected to fall across two fiscal years, hence the District could budget the remainder of the cost in next year’s budget or in a mid-year budget adjustment. The cost would be paid from the District’s Water Supply Charge. The District can later make a decision to attempt to recover its investment in the cost of water, over time, or to leave it as a pay-as-you-go project in the manner of this initial funding proposal. However, current staff recommendation is the latter.

In a positive development, this would represent a District 46%/M1W 54% cost sharing ratio, instead of the traditional 75%/25%.

RECOMMENDATION: The Administrative Committee and the Water Supply Planning Committee recommend that the Board approve the funding of DIW-4 at an amount of $3,700,000 and a 10% contingency (or other amount if new information is available.)

EXHIBIT

17-A Preliminary Budget for DIW-3 and DIW-4

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