To: HONORABLE MAYOR AND From: Carl W. Mosher

CITY COUNCIL

Subject: SEE BELOW Date: 7-23-03

Subject: SOUTH BAY WATER RECYCLING RETROFIT GROUP BID PROCESS FOR INDUSTRIAL AND DUAL PLUMB USES

RECOMMENDATION

Adoption of a resolution authorizing the Director of Environmental Services to:

A. Include industrial and dual plumb uses of recycled water (including cooling towers) in the previously authorized South Bay Water Recycling (SBWR) mid size group bid retrofit program, so long as the amount of each retrofit does not exceed $2,000 per acre-foot of estimated water usage, and a total of $200,000 per site; and

B. Negotiate and execute agreements with property owners to allow the retrofit construction to be done at City expense, provided that the property owner(s) agrees to assume full responsibility for operation and maintenance of improvements once constructed, and to continue to use recycled water for a period of at least five (5) years.

BACKGROUND

South Bay Water Recycling (SBWR) is a program of the San Jose/Santa Clara Water Pollution Control Plant. The purpose of the program is to divert Plant effluent from South San Francisco Bay by distributing it for reuse as non-potable water for landscaping, agricultural irrigation, and industrial reuse. The program is part of the South Bay Action Plan, approved by the Regional Water Quality Control Board in 1991, revised in 1997, and accepted by the State Water Resources Control Board as a plan to reduce discharge to the South San Francisco Bay and protect endangered species habitat.

Included in the SBWR program is assistance for connecting customers to the recycled water system. This assistance includes design, construction and grants for mitigating undue economic burden for connecting customers. These services are provided throughout the SBWR service area, which includes portions of San Jose, Santa Clara and Milpitas.

On April 23, 1996, the City Council adopted Resolution No. 66568, allocating a total of $5.4 million in SBWR funds to a retrofit grant program, and authorizing the City Manager to negotiate and execute retrofit grant agreements in individual amounts not to exceed $500 per acre-foot of estimated water usage, and a total of $150,000 per site.

On December 16, 1997, the City Council adopted Resolution No. 67837, allocating an additional $750,000 in SBWR funds for retrofits, and authorizing the Director of Environmental Services to use a group bid construction process to retrofit private properties for the use of recycled water for irrigation purposes, so long as the cost per site did not exceed $50,000 and $500 per acre foot ("small size group bid program").

On February 24, 1998, the City Council adopted Resolution No. 67930, increasing the total funding for the group bid program to $2 million, and the per site allocation to an amount not to exceed $200,000 ("mid-size group bid program").

On December 7, 1999, the City Council adopted Resolution No. 69294, revising the allocation between the two group bid programs to increase the allocation for small sites to $1,750,000 and decrease the mid size allocation to $1 million. To date $1,444,918.22 has been encumbered under the retrofit grant program; $1,050,722.46 under the small size group bid program; and $394,195.76 under the mid-size group bid program.

Now that the use of recycled water is common, and widely accepted as an alternative water supply in the South Bay, a growing number of industrial customers have requested connection to the recycled water system. This proposed action would allow the City to assist these customers by extending the current group bid retrofit construction program to include the use of recycled water for industrial purposes, including cooling tower use and dual-plumb uses. Funding for these additional retrofits would come from the $605,804.24 unencumbered funding for the mid size group bid program.

ANALYSIS

It is recommended that the adopted Retrofit Group Bid Process be amended to allow for the retrofit of properties for the use of recycled water for non-potable process, dual-plumb and cooling tower use. This would supplement the current Retrofit Grant Program and provide another option for connecting customers with industrial and dual-plumb applications to recycled water.

By authorizing the Director of Environmental Services to include retrofits for non-potable process, dual-plumb and cooling tower use in the group bid retrofit program, the administrative time needed to implement the on-site work and meet schedule objectives can be minimized. Each owner of a property that is retrofitted will be required to enter into an agreement that allows the City’s contractor to enter their property to construct the improvements; and to assume responsibility for operation and maintenance of the improvements once constructed. The property owner agreements will also require the use of recycled water for a period of at least five years after completion of the improvements; and will contain provisions protecting the City from liability related to the construction of the improvements.

PUBLIC OUTREACH

Not applicable.

COORDINATION

This memorandum has been coordinated with the City Attorney’s Office. This item is scheduled to be heard at the August 14, 2003, Treatment Plant Advisory Committee (TPAC) meeting.

COST IMPLICATION

Existing funds are available for this purpose. No appropriation action is required. Use of the funds as authorized will increase the use of recycled water, reducing the overall unit cost of the program and increasing efficiencies in conformance with the Mayor’s Budget.

BUDGET REFERENCE

Fund #	Appn #	Appn. Name	RC #	Total Appn.	Amt. for Contract	2003-2004 Proposed Capital Budget Page*	Last Budget Action (Date, Ord. No)
512	6589	Revised SBAP SBWR Extension	062873	6,400,000		178

Funding for this project is included in the 2003-2004 Capital Budget that was approved by the City Council on June 17, 2003.

CEQA

South Bay Water Recycling Nonpotable Water System Environmental Impact Report, San Jose City Council Resolution 64667.

CARL W. MOSHER

Director, Environmental Services Department