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HomeMy WebLinkAbout04-26-1999sp IA2 Partners' Meeting ~r~ OFAU~U, Monday, April 26, 1999 ;S OFFICE In Attendance: City of Auburn - Mayor Booth, Public Works Committee/Councilmember Rich Wagner, Public Works Committee/Councilmember Fred Poe, Public Works Committee/Councilmember Gene Cerino, Finance Director Diane Supler, Public Works Director Christine Engler, City Engineer Dennis Dowdy, Utilities Engineer Dwight Holobaugh, Water Utility Engineer Lara McKinnon, Engineering Aide Pam Miller, Attorney Tom Mortimer, Cathy Carr, Tracy Wentz of HCW-L Water District 111 - Board President Gary Cline, Larry Bradbury, Charley Wilson Covington Water District - Board President Lys Hornsby Commissioner David Knight, Judy Nelson, Duane Huskey, Attorney Kam Cayce The meeting was called to order by Councilman Rich Wagner at 7:05 p.m. He stated the meeting was instigated in response to a letter from Judy Nelson and was coordinated with Christine Engler. Nelson stated that the three issues brought up in the letter came about from a meeting held between the two Boards (WD111 and Covington) and are the areas of most concern in regard to the IA2 project. The purpose of the letter was to give Auburn a "heads up" on their concerns so that Auburn staff could address them. Issue 1 - Costs Councilman Wagner suggested addressing the issues one by one, beginning with costs. Commissioner Hornsby began the discussion stating the original cost estimate was $5.4 million, and attributing responsibility for that estimate to Auburn, while the latest estimate, dated April 1999, is at $10.2 million. Director Engler distributed copies of a memo that she sent to the Mayor in which she addressed the concerns raised in the letter from WD111 and Covington. The Mayor stated it is important to remember that the memo is an interoffice memo addressed to him and should be read in that light. Engler stated ttlat she was unfamiliar with the history of the IA2 parmership, so she researched it, starting with two reports from EES, which was under contract to Water District 111 and Covington. That work formed the basis for the IA2 parmership. The preliminary engineering report is significant because it contained the basis for the estimate used in the original agreement. Although the costs in the report do not correspond 1-to-1 to what the parmers subscribed to, Engler performed a comparison (copy included with memo to the Mayor). All three parmers were represented by managerial and technical staff, who used the report to determine what would be included in the project and revised some estimated costs of construction to arrive at Exhibit D. In 1997, Exhibit D was adjusted based on better cost information, both actual and estimated. In December of 1998, Exhibit D was adjusted for the Well 6 strategy. In April of 1999, Exhibit D was adjusted downward because most of the Well 6 strategy does not need to be exercised. The original estimate in the EES preliminary engineering report, adjusted at 4% per year for inflation, would have experienced a cost growth of about 13%. Engler stated she is comfortable with the estimate. IA2 Partner's Meeting - 2 - April 26, 1999 Homsby said it was her understanding that the project cost estimate, which was signed in late 1996, was $5.4 million. She asked if that wasn't the cost estimate. Engler responded that the original cost estimate came from the EES report and while the estimate was adopted wholly in some cases, in other cases it was substantially decreased. In addition, some of the scope was taken out. The three IA2 partners, Water District 111, Covington, and Auburn, massaged the estimate to create Exhibit D. The starting point (estimate from EES) was a better estimate than the one that was agreed to, in which the pump stations and wells were severely underestimated. Hornsby stated that, grouping by type of work, they did an analysis to see what areas were problematic. They analyzed the information in various ways and what they found interesting were the costs for piping, pump stations, supply facilities, and allied costs. Engler stated that the costs of supply facilities and pump stations in the first Exhibit D were estimated to be almost half of what was earlier published in the EES report. Hornsby stated they assumed allied costs are administration, basically Auburn. Cathy Carr responded that the allied costs include all of non-construction such as engineering, permits, sales tax, and administration (not just Auburn, but also HCW-L). Hornsby stated they found significant increases that seem excessive, such as pump stations at 171% and that Covington and WD111 are paying the lion's share of the project - $.80 on the dollar versus Aubum's $.20. The two water districts expected to pay $5.4 million for interruptible supply and now, a few years later, they are paying $10.2 million for interruptible supply. It has quite a different feel, and that is why they are concerned. Engler responded that the growth in costs depends on what estimate you use. The allied costs predicted in 1995 by EES are very close to what the actual costs are today. She stated that she could not give an explanation for the poor estimate - that Exhibit D was not the estimate prepared by EES, it was work developed by the IA2 partners. Commissioner Cline commented the issue is a touchy one and he understands Engler's efforts to prepare information relative to the documents. His issue is that as they look at the partnership that theoretically developed these cost figures, his primary difficulty is that the City was the lead agency and, as lead agency, is responsible for the project. His people attended a lot of meetings, as did Aubum, in which everyone attempted, in good faith, to get to "this is the number we will need to get this done and these numbers total this amount of money." But, as they reflected on the process, they didn't feel they had a significant amount of decision-making authority. Their input was, at times, ignored and was maybe even acknowledged as this is the way we [Auburn] see it, this piece has to be this way, and as lead agency we're going to do it this way. People came back frustrated and angry at the process. Cline posed the question, "how do you get decision making authority in a group partnership when the lead agency says no?" Engler stated the 1995 estimate prepared by an engineer (EES) is the actuality. Because the number became $5.4 in Exhibit D does not mean you can hold that number in reality. $5.4 million was not adequate to cover the cost of the project. The cost of the project is almost exactly what was predicted back in 1995 [by EES]. The City does not expect much further cost growth. IA2 Parmer's Meeting - 3 - April 26, 1999 Hornsby stated that when an estimate is used in 'a contract, you must feel sure and comfortable with the estimate, and she said she didn't understand how the estimate could be put forward in writing if that was not the case. Engler responded that the estimate was revised downward by some of the people in the room, and she wasn't sure why. However, the project is costing what the engineering firm had predicted. Hornsby stated that EES did the original estimate and report, but that estimate was later set aside and other estimates came to the table that ended up being embodied in Exhibit D, which goes to what Cline was talking about - the districts did not have a very large voice in the decision as to what numbers went into Exhibit D ($5.4 million). They started with the EES estimate, then went on to Exhibit D in the agreement, and the numbers in Exhibit D were developed by someone other than the two districts. Engler responded that she has staff that were at the meeting where the partners adjusted the estimate downward. Wagner commented that he, too, has been hot under the collar when the issue would come before the Public Works Committee with increases in allied costs and Holobaugh has taken a beating at those meetings. They [the Committee] are not happy with the costs either, but have grilled staff and asked if staff have met with the partners to see how they feel. Wagner stated that Carl Every (former Water Utility Engineer) and Holobaugh have always assured the Committee that there were substantive and collaborative meetings with the water districts' technical staff. While Wagner said he didn't know if the information was getting to the Boards, staff have made every effort to make sure the two parmers are still on board with the way the project is going. He understands their anger - that was his first reaction, too - and can sympathize with their displeasure; however he believe Engler has laid it out clearly. Had the three staffs been more conservative in accepting the EES estimate, there would have been more questions on whether or not to do the project. Hornsby related that they have had the same feelings, but even more so because they're not calling the shots. They have had very little control over the project, so it's even more frustrating to see things go the way they are. The cost issue leads into their other concems- they're into it, the money has already been paid, but the bottom line is, what did they really buy? What have they really purchased other than significant improvements to Aubum's system if, indeed, their place in line is changing downward and firming of water supply seems in question. Issue 2 - Place in Line Wagner stated that Algona has negotiated an agreement that puts a limit on their ability to get water; Pacific is in the process of doing the same thing, and Kent is an emergency supply only. The unknown is the Muckleshoot Indian Tribe (MIT). Engler's memo referred to the tribe's Winters rights. Wagner asked Tom Mortimer for a description of what might be expected from the tribe. Mortimer stated that Winters rights is a non-treaty right that transcends Indian tribes to all federal properties and any reserved federal land (park, monument, reservation). It is construed, at a minimum, to include that amount of water to provide for the practically-irrigated acreage of the tribe' s irrigatable lands. That has been expanded to include that amount of water needed to support instream flows to hatcheries and economic ventures, including casinos. He expects. the MIT, based on their water system plan, to assert in one form or another, over the next 50-100 years, up to 3-5mgd from Aubum and IA2 Partner's Meeting - 4 - April 26, 1999 possibly from every water system in the subbasin that has some sort of development within the usual and accustomed area (Renton to Pierce County). Homsby stated they were more concerned with other perceived commitments, such as those outlined in the memo. Engler responded that the agreements in the memo were taken out of the IA2 agreement - there aren't any other agreements. Homsby questioned Auburn supplying water to Lakeland. She had understood Bonney Lake would be supplying that water, but has heard that Auburn may be supplying it. Engler stated that the City' s retail service area is first in line. Lakeland is not a new customer - they are direct residential connects. The area of Lakeland that is in Pierce Cotmty will be receiving water from Bonney Lake. The City has only an emergency intertie with Bonney Lake. Hornsby raised the question of lA3 being signed with Algona for uninterruptible supply, even though IA2 was being negotiated prior to IA3. Cost to Algona was about $411,000, which included some storage and an average daily demand of .4mgd and .9mgd at peak, while Covington and WD111 getting 1.5mgd interruptible for $4 million, and that price is not firm. Engler referred to page 2 of her memo to the Mayor, stating that Aubum is Algona's only source of supply, since the one well that they had has been capped. The agreement sets quantities of water at year 2014. This latest agreement with Algona quantified the maximum capacity, which was not quantified before. Homsby asked when water will be interruptible. Councilmember Poe stated that Bonney Lake is serving an area proposed to be annexed to Auburn. After 7 years, Aubum has an option to provide water to the area. Homsby said that in reading Auburn's Comp Plan, which is where Dwight Holobaugh referred them, it was her understanding it didn't go into that area. This is a new concem for them in that the Comp Plan didn't go into Pierce County. Engler said the City does not supply water to the Pierce County area, and may not assume responsibility for the supply, and that as far as when to expect water to be interrupted, that hasn't changed since 1995. An lnterrupt Perspective was distributed by Dwight Holobaugh. He explained that barring any emergency occurring, 2012 is when interruptibility is predicted. He explained that the bottom horizontal line indicates that if Auburn loses its largest source (Coal Creek Springs), there will be interruption of water to IA2 recipients in 2012 if that situation is not corrected. The top horizontal line indicates that upon completion of the IA2 project, the City will have the capacity to operate at 33mgd, while the middle line indicates delivery of 23mgd, limited by capacity rights as issued by water fights issued by DOE. That is the line that needs to change to avoid interruptibility. The City presently uses 8.6mgd, and the historical peak has been 16.3mgd, which was reached last summer. These numbers are taken directly from the Comp Plan and are merely a reflection of that information. They do show, as discussed in the early years of this contract, interruptibility in 2012. IA2 Partner's Meeting - 5 - April 26, 1999 Cline asked if wells 6 and 7 were righted by DOE, would that quantity be added to capacity? Holobaugh responded that if well 6 & 7, as perceived today, were approved by DOE, that would bring Auburn's capacity to the top line of the Interrupt Perspective. Once wells 6 and 7 are certificated, the whole issue of intermptibility becomes moot. If the City's largest course, Coal Creek Springs (CCS) goes out, Wells 6 and 7 can't be turned on as a source without further negotiation with DOE because CCS comes from Lake Tapps and 6 and 7 are capacity from the deep aquifer. Cline said it has been indicated there has already been some decline in CCS and asked if it was going to drop any further. Holobaugh responded that it could drop according to the issue with the MIT since the courts awarded, in the late 80s, partial use of CCS water for hatcheries. Cline asked how the issue was going to be resolved to everyone's satisfaction as to place in line, which is an issue this evening and has been all along. He said he had difficulty understanding why the City is reluctant to deal with this simple, straight forward administrative task. What is their place in line? Engler responded that their place in line is exactly the same as spelled out in the IA2 agreement; in fact, it's better because a cap has been placed on the water to Algona, and the City is working on a similar agreement with Pacific. Cline said he was comfortable with that today, but asked where they'll be at in 2010. What will occur between now and then? The Mayor asked Mortimer to address the two variables affecting water issues. Mortimer stated the two issues are relative to ESA and George T.; however, he stated he was puzzled by the discussion. He understands the purpose of a priority list, and stated that the commitments the partners are concerned about existed prior in time. The partners will get their source from Wells 6 and 7, which are represented outside of these commitments. Algona was on the list in 1995, and it is on the list now. However, in 1995, the agreement was open ended and it now has a cap on it. It was a management decision to revise the open-ended agreement, and the decision was reached before the listing. The City has been negotiating with Pacific for two years to re-negotiate their open-ended agreement. The issue the parmers formed around was Well 6 and 7 and it was disclosed that there would be a demand/supply intersection in 2012. To his knowledge, nothing has changed. The issues to be dealt with now are relative to whether or not new water rights can be secured ,absent some type of ESA-consistent permitting process with DOE. Commissioner Knight asked why it took this meeting to get an answer. He stated the parmers have been asking their staff these questions for a number of years and not getting those types of answers from Aubum staff. Engler pointed out that they have not been getting answers from their staff. Mayor Booth commented that the electeds should talk to each other more often, and that there were two issues that must be looked at every time we discuss water - statute and rights under ESA. Hornsby said they had not known the details about the Algona contract. It appeared to them a big jump from 10,500mgd to much more than that. They see these contracts being signed for uninterruptible service, while they signed a contract for interruptible service because they were desperate, and now they are still waiting in the wings and would appreciate it if Auburn would take them into consideration, because every time Auburn annexes it affects them. IA2 Partner's Meeting - 6 - April 26, 1999 The~ Mayor responded that Aubum already serves the Lea Hill area, and has for generations. The City does not provide service in Lakeland, except for one little development, but it's insignificant. Firming the Water Supply Wagner asked if the parmers were uncomfortable with the diligence in the way the City is pursuing water fights. Cline stated they still don't know where they're at with Wells 6 and 7. The quality has not been firmly established. Water Utility Engineer McKinnon responded that they have finished drilling the hole for Well 6 and got acceptable quantity and quality. The manganese is in the parts per billion. There is manganese in Well 7, so there will still be a need for water from Well 6 to blend with Well 7. The Public Works Committee has forwarded a contract to Council for approval to start the design process for 5mgd for well 6 only. Holobaugh stated that Well 7 is already complete with pumping capacity of 5mgd. Costs for Plans B and C of the Well 6 Strategy can be backed out of the project cost estimate. He stated they are on line relative to an extension to get Well 6 on line by May. 2000. Cline asked about there being only 5mgd at peak demand, while the contract required 7mgd. He asked if the wells will be sized to produce more than 7mgd. Holobaugh responded that Well 6 and 7 were designed and are anticipated to have 5mgd pumping rate instantaneously, and have an average annual 7mgd cumulative total. Both came in exactly as planned and are being sized for those numbers. They don't want to make them bigger for .5 to lmgd per day more. By distributing these and other new wells, reliabi. lity and redundancy are built into the system. The only negative is that Well 7 has manganese, but it can be handled by blending the water with water from Wells 2 and 6. Cline asked if the potential draw down on 2 will impact the 7 mgd withdrawal. Holobaugh responded no, that both wells have been pump tested independently and with both holes rtmning concurrently, and they observed only an additional 5-foot drawdown with both wells producing about 9mgd in a 30-foot radius. Larry Bradbury asked Mortimer what they may see happening in getting water fights. Mortimer said the City expects, next June, to apply for and receive certi~cated supplemental rights for Wells 6 and 7. There will be a listing of Bull Trout on June 10, which are evident in the White River, less evident in the Green River. Even the Department of Fish and Wildlife does not know what water flows are needed for Bull Trout. Toward the end of the year there should be a 4(d) ruling for Chinook. The draft rule from National Marine and Fishcries Services (NMFS) will require specific discussions of how it will affect us. NMFS approached the Department of Ecology to develop programmatic HCP's, so current and future water rights would go through the process; however, they were rebuffed. Fitzsimmons suggested they run ESA recovery through 2514; however, NMFS rejected that as inadequate from the standpoint of environmental protection and flow. At this point in time, the Attomey General has acknowledged his client does not have a process in place to protect itself from lawsuits once the 4(d) rule goes into effect. The permit process essentially constitutes a take within the state. Environmental groups, through third party lawsuits, will attempt to do what NMFS could not, to force IA2 Partner's Meeting - 7 o April 26, 1999 the agency into not issuing any new water rights unless they consent to determine a process to develop, under a court order, a programmatic HCP for water rights. Another approach would be for parties to work with DOE to get water rights by offering their own mini-HCP around the parties' own projects. That is the plan that Auburn intends to go forward with. From a practical standpoint, expect environmental conditions to be very similar either way you go. The Pacific Groundwater Group report is considered by DOE as the best available science for hydrogeology for this basin. The report has cost the City $3 million over the last 3 ½ years, and they expect to spend another $750,000 for this state-of- the-art project. Judy Nelson asked about transfer of existing water rights into the lower basin. Mortimer responded that he understood Covington and WD 111 had indicated interest in how water could be firmed within IA2 and raised the issue of potentially transferring existing perfected valid grotmdwater rights essentially in continuity with the White or Green as a means of creating less impact on stream flows. Presuming water fights are valid in the first part, the assumption of DOE is that if transferred to deep aquifer, would have less impacts. Auburn had asked Judy and Larry, if they have such water fights, to do their homework and tell Auburn what they are and then a meeting could be held to discuss them. In consideration for displacing Auburn retail customers, Auburn would want a proportionate share. Thus far, Auburn hasn't heard back from Covington or WD111. Assuming that water rights can be obtained, Cline asked if it was worth going after. Mortimer responded that he didn't know. The obvious way to find out would be to ask DOE or NMFS to see what their response would be. Engler stated that NMFS and DOE will not likely answer speculative questions. It would be best to present them with backup material to show what impacts our withdrawals would make on the White, Green, and Mill Creek, and present acceptable mitigation. It was announced by Auburn that on May 15 at 10:30 a.m., a dedication of the pumping facility for Well 7 would take place at City Park (4th and E Streets NE, Aubum), as well as dedication of a conservation garden. Cline reiterated the need for electeds to meet more frequently. Engler encouraged members of both Boards to call her anytime. She also stated that the staffs of the three partners talk all the time, and questions could also go through them. The meeting adjourned at 8:30 p.m.