Title
Adopt a Resolution to Approve the Water Pollution Control Plant 10-Year Capital Improvement Program (CIP) Plan and a Fiscal Year 2024-2025 Appropriation of $2,660,000 from the Water Pollution Control Fund
Staffreport
COUNCIL PRIORITY
• Infrastructure
• Sustainability & Resiliency
SUMMARY
Review the 2025 to 2034 Capital Improvement Program (CIP) Plan and adopt a resolution to appropriate $2,660,000 from the Water Pollution Control Fund to fund the 2024-2025 CIP projects.
RECOMMENDATIONS
Staff recommends the City Council review the Water Pollution Control CIP Plan and adopt a resolution to appropriate an additional $2,660,000 from the Water Pollution Control Fund for fiscal year 2024-2025.
BACKGROUND
The City’s Water Pollution Control Plant (WPCP) processes wastewater for the northern two-thirds of San Leandro. The wastewater is collected via a network of 125 miles of sewer pipes and 12 lift stations. The WPCP processes about 5 million gallons of wastewater per day. The WPCP was originally constructed in the 1930s and has been upgraded multiple times since then, most recently in the 2015 rehabilitation project.
WPCP operations and capital needs are funded through sewer fees. As required by Proposition 218, sewer fees are kept in the Water Pollution Control enterprise fund and are only used for that purpose.
To properly maintain critical infrastructure like the WPCP and sewer collection system, it is necessary to periodically review the status of that infrastructure and plan for potential capital outlays that will enable it to continue to provide consistent and reliable service. This plan should identify needs for renewal as well as ways to extend the useful life of the current facilities. In addition, changes in regulation and climate change also require advance planning.
City staff worked with Jason Warner, a wastewater engineer with extensive experience with treatment plants, to create a plan that has three main goals: respond to changing regulations; maintain a high-functioning and reliable facility; and set a basis for ongoing cash flow management and an upcoming sewer rate study.
The staff report is intended to provide an overview of the WPCP’s Capital Improvement Program Plan for informational purposes. Staff also proposes that the City Council adopt a resolution for an appropriation in fiscal year 2024-2025 to fund the current year’s projects. The plan was not yet complete for the mid-cycle budget requests and several urgent items were included in the first year of the plan. Funding for future years will be included in the biennial budget process.
Analysis
The WPCP’s CIP was developed with three overarching goals:
1. Respond to changing regulations.
In July 2024, the San Francisco Bay Regional Water Quality Control Board (“Water Board”) imposed limits for the first time on the quantity of nitrogen that can be discharged into San Francisco Bay. Complying with this requirement will require changes to the WPCP. The plan sets forth a strategy for identifying cost-effective changes while maintaining flexibility to meet lower limits if necessary.
2. Maintain a high-functioning, reliable facility.
The WPCP and the collection system have a strong history of permit compliance. To continue this, the plan identifies areas of the plant and collection system that will need upgrades or replacement in the next 10 years. In addition, it recommends measures to extend the life of the current assets. By carefully managing the City’s assets, the plan seeks to provide the greatest value over the long term.
3. Set a basis for ongoing cash flow management and an upcoming sewer rate study.
Proposition 218 requires that sewer rates be justified by expenses incurred in the collection and processing of wastewater, including capital expenses and reserve requirements. The City has entered into an agreement with a consultant to analyze the sewer rates and propose any necessary sewer rate increases. Proposed rates will be brought before the City Council Finance Committee in Spring 2025.
On average over the past 5 years, $4.1 million was spent per year on CIP for the WPCP. This plan recommends increasing the expenditure to an average of $9.2 million per year over the 10-year period. This will be funded through a combination of grants, drawing down the Water Pollution Control Plant Fund Undesignated Fund Balance and debt financing.
It will be necessary to increase sewer fees to fund the CIP plan. Financial consultants have been hired to prepare a model of the recommended fee increases. This model will be presented to Council in early 2025 before initiating the balloting process as required by Proposition 218.
Applicable General Plan Policies
• Policy EH-1.8 Sea Level Rise. Consider the effects of projected sea level rise in the design and planning of all development, recreational improvements, and infrastructure along the San Leandro shoreline.
• Action EH-1.8. A: Adaptation Plans. Develop long-term adaptation plans which minimize the potential for coastal flooding on public and private properties near the San Leandro shoreline. Periodically evaluate the risk to homes, businesses, parks, and other features and take steps to protect or fortify these areas to reduce damage potential.
• Policy CSF-6.4 Wastewater Collection and Treatment. Maintain efficient, environmentally sound, and cost-effective wastewater collection and treatment services in San Leandro.
Committee Review and Actions
• City Council Finance Committee, September 25, 2024: The Finance Committee received a presentation on the WPCP CIP Plan and voted to forward the recommendation to Council to appropriate $2,660,000 from the Water Pollution Control Undesignated Fund Balance.
Financial Impacts
Staff requests City Council adopt a resolution to appropriate $2,660,000 from the Water Pollution Control Plant Undesignated Fund Balance into Account 593-52 for the WPCP’s Fiscal Year 2024-2025 CIP. This will draw down the Water Pollution Control Fund’s undesignated fund balance and has no General Fund impact.
ATTACHMENTS
Attachment A: Draft Resolution to Appropriate $2,660,000 from the Water Pollution Control Fund Balance for Fiscal Year 2024-2025 Capital Improvement Needs
Attachment B: Draft 2024-2025 Water Pollution Control Capital Improvement Plan
PREPARED BY:
Hayes Morehouse
Water Pollution Control Manager
City Manager’s Office