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Council Communication

Title:	Update on Remaining Wastewater Treatment Plant Construction Work and Approval of Clean Water State Revolving Fund Loan Increase
Dept:	Finance and Public Works Departments
Date:	September 3, 2002
Submitted By:	Lee Tuneberg and Paula Brown
Reviewed By: ........................	Greg Scoles, City Administrator

Synopsis:	The City has been constructing major improvements to the Wastewater Treatment Plant facility under a contract with Slayden Construction (Slayden) since September 1998. Originally the wastewater treatment plant improvements were designed as two distinct pieces; the initial phase as process improvements at the wastewater treatment plant site (Project A), and the second phase (Project B) for facilities to be constructed on the City's hillside farmland for effluent reuse and biosolids application. Council has directed the process improvements to include new membrane filtration facilities and centrifuge biosolids handling facilities that will not depend on land application of either the treated effluent or biosolids. Staff met the Department of Environmental Quality's (DEQ) mandated completion for the new membrane filtration improvements so that permit limits to meet the strict phosphorous restrictions for Bear Creek were achieved by May 1, 2002. The project is partially funded through an Oregon Clean Water State Revolving Fund (CWSRF) Loan. Substantial completion on the process improvements was reported as of July 30, 2002, and accepted by DEQ. Payments on this loan must begin within six months and are budgeted to begin in November 2002. The interest rate per the agreement is 3.43%, which remains as an advantage to the city despite recent fluctuations in the markets. As construction onthe biosolids/dewatering facility is just beginning, the final application for CWSRF funding is being processed. The final amount of $500,000 is being requested from the DEQ through the CWSRF program. This communication is consistent with the past practice to come to Council for approval before amending the loan.
Recommendation:	It is recommended that the Council approve the resolution for additional loan obligatio'n, increasing the authorized amount to $23,920,068.
Fiscal Impact:	A year ago, staff estimated the additional facilities to be between $10 - 10.5 Million (for a grand total of $26.6 Million plus design, redesign and construction management; $31.8 - for the total project). Current cost analysis includes all of the costs to date and are shown on the attached document. The facilities costs remain at $26.5 Million. Design costs have increased to $5.2 Million and the prior land and wetlands demonstration project bring the grand total for the WWTP Upgrade project to $33.2 Million.
Background:	Membrane Facilities: Council approved staff and Carollo's recommendation to sole-source the purchase of the Zenon Zeeweed membrane filtration unit as it operated well during the pilot testing and met all treatment objectives during the entire pilot period. The Zenon technology provides necessary operational flexibility. The submerged design of Zenon has the advantage of providing additional flocculation time in the membrane tank. The Zenon Zeeweed is a vacuum system in which air is used to agitate and clean the membranes. This air agitation injects dissolved oxygen into the final effluent as required in the City's NPDES discharge permit. The Zenon system requires no additional facilities for tertiary clarification. Staff, Carollo and Slayden Construction collaborated on a fast track design and building project, and met the construction completion date of May 1, 2002. The costs of the facility, piping, pumping, ancillary equipment were negotiated a section at a time with Slayden Construction. Each change order had an independent review of costs and was further negotiated. All of the construction, including the prior yard piping changes incurred a total cost of $3,881,695. The Zenon Zeeweed unit itself was negotiated for a total of $2,512,500. The total membrane facility costs are $6,394,195 and are consistent with the original estimate of $6 million.   Dewatering and Biosolids Management: The biosolids management portion at the wastewater treatment plant is the final piece of a multi-year project. At the September 19, 2000 Council meeting, Council directed staff to pursue biosolids options that would not utilize land application, specifically not use the City's off-site EFU properties for any biosolids application. Several options have been explored and evaluated to provide the best options for the City. At the August 8, 2001 meeting, staff advised and received Council's approval to use a centrifuge system that allows both thickening and dewatering. Building the facility at the wastewater treatment plant ensures long-term quality control and the ability to modify operations for a higher class material should the City consider reusing the biosolids. Constructing a permanent dewatering facility will allow the City the options of either: continuing to dewater and haul to the landfill, mixing the material with lime slurry for a Class B material with limited reuse potential, or creating a Class A material suitable for unlimited reuse and potentially selling the product. The design of the dewatering facility is complete and Slayden is in the process of excavating for the building. Staff, with Carollo's assistance, has negotiated a price for the construction at $2,350,000 and the facility should be completed in June 2003. Slayden Construction is scheduled to have all of the final landscaping and site work completed by August 2003. CWSRF Funding: The City obtained a loan from the Oregon Department of Environmental Quality, Clean Water State Revolving Fund loan program. The original loan amount was $17,969,671. This amount was increased to $21,767,068 in December 2000, again in December 2001 to $23,420,068, and subject to Council's approval of the attached resolution, will be revised again to a new loan amount of $23,920,068. The CWSRF program offers the City excellent rates for repayment. The additional loan encumbrance will be repaid through rates and the meals tax. Remaining Issues: 1) A new permit for discharge to Ashland/Bear Creek is currently being developed. Staff has received approval on a temperature management plan. The temperature limits have not yet been specifically determined for Bear Creek and because of the basin wide approach, may not be firmed up for a year or more. This is still an issue to be negotiated with DEQ. 2) The future use or disposition of the City's EFU land is still pending. The current use of that land is through a contract with a farmer for cattle grazing.

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RESOLUTION NO. 2002-

A RESOLUTION AUTHORIZING AND APPROVING AN INCREASE IN THE AMOUNT BORROWED FROM THE CLEAN WATER STATE REVOLVING  FUND FOR THE WASTEWATER TREATMENT FACILITIES PROJECT AND REPEALING RESOLUTION 2002-01.

RECITALS:

A. The City of Ashland (the "City") has entered into negotiations with the State of Oregon Department of Environmental Quality (the "DEQ") for a loan to the City from the Clean Water State Revolving Fund in the amount of $23,920,068, which increases the previously adjusted loan value by$500,000.

B. The DEQ has provided to the City a form of the amended Clean Water State Revolving Fund Agreement. ("CWSRF")

C. The City Attorney and Finance Director are finalizing this agreement.

THE CITY COUNCIL OF THE CITY OF ASHLAND RESOLVES:

Section 1. City authorizes and approves the form of the CWSRF Loan Agreement for the increased amount to finance the Wastewater Treatment Facility Project.

Section 2. City authorizes and approves the establishment and funding of a designated reserve account to meet the "Loan Reserve" requirement of the CWSRF Loan Agreement, and directs the Finance Director to establish this Loan Reserve.

Section 3. City authorizes and approves the establishment and funding of a Wastewater Rate Stabilization Account. The purpose of this account is to mitigate rate shock when the Food and Beverage Tax sunsets. City directs the Finance Director to establish this account.

Section 4. City authorizes and directs the Finance Director and the City Administrator, acting for and on behalf of the City, to execute the final CWSRF Loan Agreement and such other and additional documents as may reasonably be required for the consummation and closing of the Loan, and any amendments required thereafter.

Section 5. Resolution 2002-01 is repealed.

Section 6. This resolution takes effect upon signing by the mayor.

This resolution was read by title only in accordance with Ashland Municipal Code 2.04.090 duly PASSED and ADOPTED this ________day of September, 2002.
Barbara Christensen, City Recorder

SIGNED and APPROVED this ____day of September, 2002.
Alan W. DeBoer, Mayor

Reviewed as to form:
Paul Nolte, City Attorney

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