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Home My WebLink About01 23 2017 Joint Water Treatment Facility Discussion PresentationWater Planning & Joint Water Facility City Council Work Session January 23, 2017 Purpose •Review City water supply needs •Review options to meet needs •Partnership with SMSC •Agreement Terms •Funding •Council direction to inform agreement negotiations Prior Lake Existing Water System Water Treatment Plant (WTP) –7.5 MGD Seven (7) wells 6 wells pump to WTP 1 well not connected (Well 6 –Wilds well) Used during peak times, not treated (has Fe and Mn) Firm pumping capacity is pumping rate with largest well out of service Firm pumping capacity is 5.26 MGD (24 hour pumping) Storage 3.25 MG of storage (elevated and ground storage) 2012 Water Issues Summer of 2012 high water demand Hot weather and little to no rain Towers (storage) balance the system Draw from towers during day (peak usage period) Fill towers during night (lower usage period) Risk of Water Ban Ran all wells during high demand Not meeting demands Could not keep towers full At Risk for water shortage if we lose a well Added pressure on aquifer (extended pumping) Prior Lake Existing Agreement Prior Lake has an agreement with SMSC for water supply Original agreement for 1 MGD SMSC constructed a 3rd well in 2015 Revised agreement for 1.2 MGD Additional well increases Prior Lake’s firm capacity Allows postponement of Well 10 in CIP Planning for Water Infrastructure Significant planning and preparation required for water infrastructure (WTP, wells and storage) Permitting (MDH, DNR, water appropriations, etc.) Design Construction Coordination of wells with SMSC Possible interference (close proximity of wells) Geology of the area -challenging Planning for Water Infrastructure 2020 Projected Peak Day Demand 6.95 MGD Additional Source, Treatment and storage will be needed at this time Estimated $16.0 million for: Two additional wells WTP Storage What are the options? Prior Lake builds WTP, wells and storage Seek a Partnership SMSC Savage Currently have 2 interconnects Different water quality Cost of Water Option 1 –Prior Lake Build Construct new WTP Use well 6 –pipe to new WTP Drill new wells (at least 2 to provide firm capacity) Storage requirements Elevated Ground (part of WTP) Option 2 –Partnership w/SMSC Size new WTP for both SMSC and Prior Lake Fe and Mn removal for both Prior Lake and SMSC Reverse osmosis for SMSC Use existing wells Prior Lake Well #6 SMSC –3 existing wells Meet firm pumping capacity requirements Storage requirements Elevated Ground (part of WTP) Benefit of Partnership Prior Lake Only SMSC Only Joint Prior Lake/SMSC 4.74 MGD Backwash Pumps Chemical Feed Reclaim Tanks 4 Wells Storage Prior Lake HSPs SMSC RO HSPs 2.10 MGD 3 -Filters 3 -HSPs 3 Wells Storage 2.64 MGD 3 –Filters RO 3 -HSPs 3 Wells Storage Estimated Costs Estimated Construction Costs Water Treatment Facility June 2016 ITEM NO. ITEM DESCRIPTION ESTIMATED COST SMSC Prior Lake Joint Facility 1 Performance Bond & Insurance $250,000 $250,000 $425,000 2 Mobilization $420,000 $420,000 $550,000 3 Excavation, Utilities, Roads, Landscaping $2,180,000 $1,450,000 $2,650,000 4 Reinforcing Steel, Concrete Work, Precast $2,150,000 $1,950,000 $2,750,000 5 Masonry $950,000 $950,000 $1,250,000 6 Structural & Miscellaneous Metals $250,000 $250,000 $325,000 7 Rough & Finished Carpentry $75,000 $75,000 $85,000 8 EPDM Roofing, Insulation, Caulking $145,000 $145,000 $245,000 9 H.M. Doors, Overhead Doors $110,000 $110,000 $140,000 10 Painting and Interior Finishes $250,000 $250,000 $325,000 11 Process Equipment $2,275,000 $1,750,000 $3,150,000 12 Process Piping & Mechanical $2,320,000 $2,100,000 $2,950,000 13 Electrical, Controls & Generator $2,150,000 $1,950,000 $2,700,000 14 2 –Additional Wells $0 $1,500,000 $0 15 Raw Water Lines $0 $1,000,000 $1,000,000 Subtotal $13,525,000 $14,150,000 $18,545,000 Contingency –5%$675,000 $707,500 $927,250 ESTIMATED CONSTRUCTION COST $14,200,000 $14,857,500 $19,472,250 Estimated Costs Construction Cost Comparison Estimated Construction Cost Community’s Share of Joint Facility Total Savings with Joint Facility SMSC $14,200,000 $10,804,238 $3,395,762 Prior Lake $14,857,500 $8,668,013*$6,189,487 Joint $19,472,250 *Current Agreement includes capital in volume wholesale rate ($/1,000 gallons purchased). No up front capital was required. Partnership with SMSC Prior Lake owns source water Prior Lake only pays for treatment of water Prior Lake responsible for building wells and raw watermains to SMSC WTP Prior Lake responsible for operation and maintenance of wells Potential sale of raw water to SMSC Agreement Terms Responsibilities Design and Construction SMSC with approvals by the City at key points in the process. Operation The SMSC will own and operate the plant. A separate operational agreement will be drafted such that treatment at all three plants is optimized. Water Allocation Perpetual Right The City will have a perpetual right to treatment of water. Allocation Amount 2.1 million gallons per day (MGD). Payments Fixed Annual The City’s share of the permanent assets is estimated to be $9.968 million (includes engineering, admin, legal). The City will make fixed annual payments for 25 years financed at 3%. Operation, Maintenance and Replacement Actual cost to operate and maintain the Prior Lake portion of the treatment plant paid at a rate per 1,000 gallons actually pumped. Fixed for first five years with annual review and adjustment thereafter. Permanent Asset Replacement Addresses financing or reserve of funds for future replacements or expansions not accounted for in the OM&R. Agreement Terms Enforcement and Remedy Limited Waiver of Sovereign Immunity SMSC has indicated a willingness to provide a limited waiver of sovereign immunity in lieu of a cash escrow. Should the SMSC default on the agreement, the City would have the right to bring suit against the SMSC in Scott County District Court using Minnesota Laws specially related to this agreement. Option B for Default If the SMSC does not agree to a limited waiver of sovereign immunity, the other remedy option for default is the use of an escrow account. In this option the SMSC would establish an escrow account which will increase annually to equal the amount of the City’s Fixed payments. These funds would be available to the City in case of an SMSC default. Other Term The agreement has a perpetual term. Termination Termination of the agreement must be mutually agreed upon. Annexation Area The agreement will address SMSC purchase of land in the City’s comprehensively planned areas for annexation and development. Funding Sources Fixed Payment Water Storage Fund ($1.5 million) Trunk Fund ($900,000) 3 Primary Sources Trunk Water Charge (Acre) Water Tower Charge (Unit) Water Connection Charge (Unit) Secondary Funding Source –Water Fund Operation, Maintenance, and Replacement User Rates Next Steps Additional Negotiation based on Council Input SMSC Business/General Council Approval March 2017 City Council Approval March/April 2017 Design 4-6 Months Regulatory Review ~6 Weeks Construction 20 months (Start late summer 2017) WTF online Spring 2019