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File #: 24-818    Version: 1 Name:
Type: Resolution Status: Passed
File created: 8/19/2024 Departments: GOVERNING BOARD
On agenda: 10/22/2024 Final action: 10/22/2024
Title: Acting as the County of San Mateo and the Governing Board of the Crystal Springs County Sanitation District, adopt a resolution authorizing: A) The County Executive Officer or designee to execute an Interim Agreement for Payment of Capital Costs of Clean Water Program Projects (Interim Agreement) among the City of San Mateo, Crystal Springs County Sanitation District, and the County of San Mateo for the costs incurred by City of San Mateo for the design and construction of downstream improvement projects; and B) The County Executive Officer or designee to execute amendments to the Interim Agreement among the City of San Mateo, Crystal Springs County Sanitation District, and the County of San Mateo with any non-substantive additions, clarifications and other changes as the County Executive Officer, or designee, deems necessary or advisable after consultation with the County Attorney.
Attachments: 1. 20241022_r_Interim Sewer Service Agreement, 2. 20241022_a_ Interim Agreement, 3. 0029_1_20241022_r_Interim Sewer Service Agreement.pdf, 4. 0029_2_20241022_a_ Interim Agreement.pdf

Special Notice / Hearing:                         None__

      Vote Required:                         Majority

 

To:                      Honorable Board of Supervisors, Acting as the County of San Mateo and the Governing Board of the Crystal Springs County Sanitation District

From:                      Ann M. Stillman, Director of Public Works

Subject:                      Interim Agreement for Payment of Capital Costs of Clean Water Program Projects Between the City of San Mateo, Crystal Springs County Sanitation District, and the County of San Mateo

 

RECOMMENDATION:

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Acting as the County of San Mateo and the Governing Board of the Crystal Springs County Sanitation District, adopt a resolution authorizing:

 

A)                     The County Executive Officer or designee to execute an Interim Agreement for Payment of Capital Costs of Clean Water Program Projects (Interim Agreement) among the City of San Mateo, Crystal Springs County Sanitation District, and the County of San Mateo for the costs incurred by City of San Mateo for the design and construction of downstream improvement projects; and

 

B)                     The County Executive Officer or designee to execute amendments to the Interim Agreement among the City of San Mateo, Crystal Springs County Sanitation District, and the County of San Mateo with any non-substantive additions, clarifications and other changes as the County Executive Officer, or designee, deems necessary or advisable after consultation with the County Attorney.

 

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BACKGROUND:

On July 18, 1989, acting as the County of San Mateo (County) and the Governing Board of the Crystal Springs County Sanitation District (District), this Board entered into a Sanitary Sewage Agreement (1989 Agreement) with the Town of Hillsborough (Hillsborough), and the City of San Mateo (San Mateo). The 1989 Agreement set forth the parties’ respective rights and obligations for the use and ownership of sewage conveyance and treatment facilities jointly used by the four agencies.

 

In 2009, the California Regional Water Quality Control Board issued a Cease and Desist Order R2-2009-0020 (CDO) to Hillsborough, San Mateo, and the District due to sewage overflows emanating from, among other places, the Crystal Springs/El Cerrito Trunk Sewer (Trunk Sewer). The CDO requires that the three parties improve performance and capacity of the sewer facilities within their jurisdictions. Some of the sewer facilities identified in the CDO are subject to the 1989 Agreement; specifically, the regional wastewater treatment plant (WWTP) and the Dale Avenue Pump Station (DAPS) owned and operated by San Mateo, and the Trunk Sewer owned and operated by Hillsborough and San Mateo.

 

On September 28, 2010, this Board adopted Resolution No. 071055 that approved execution of an amendment to the 1989 Agreement (Amendment No. 1). Amendment No. 1 committed the County and District to paying their respective shares of the cost for the environmental study and design for the Trunk Sewer Improvements within Hillsborough and San Mateo. The Amendment included a total cost of $1,400,000 with the County’s and District’s shares being $84,000 (6%) and $518,000 (37%), respectively.

 

On April 23, 2013, this Board adopted Resolution No. 072459 that approved execution of an amendment to the 1989 Agreement (Amendment No. 2). Amendment No. 2 committed the County and District to paying their respective shares of the additional cost to complete the environmental study and design for the Trunk Sewer Improvements within Hillsborough and San Mateo. Amendment No. 2 included a total cost of $2,032,299 with the County’s and District’s shares being $121,938 (6%) and $751,951 (37%), respectively.

 

On February 11, 2014, this Board adopted Resolution No, 073002 that approved execution of an amendment to the 1989 Agreement (Amendment No. 3) for costs associated with construction and completion of the Trunk Sewer Improvements. Amendment No. 3 included the remaining total cost of $10,134,111 for the project with the County’s and District’s shares being $1,414,062 and $8,720,049, respectively.

 

On June 11, 2024, this Board adopted Resolution No. 080388 setting the sewer service rates for the District for fiscal years 2024-25 through 2027-28.

 

DISCUSSION:

The DAPS and the WWTP are jointly used facilities, as defined in the 1989 Agreement, which transport and treat sewage collected from the County’s Tower Road facilities, the De Anza Boulevard area in San Mateo, the District, and portions of Hillsborough to San Mateo facilities. The WWTP is currently operated by San Mateo under a National Pollutant Discharge Elimination System (NPDES) permit issued in 2018 by the San Francisco Bay Regional Water Quality Control Board.

 

In addition to the improvements to the Trunk Sewer, which the previously executed three amendments to the 1989 Agreement provided cost allocations for, the CDO also required San Mateo to conduct an evaluation of options to increase capacity at the WWTP to reduce and eventually eliminate discharge of untreated or partially treated sewage into San Francisco Bay during peak wet weather conditions, a practice known as “blending”.  The requirements of the CDO relative to the WWTP capacity and the elimination of “blending” have been incorporated into the NPDES permit as special provisions.

 

In accordance with the CDO and the NPDES permit, San Mateo developed a comprehensive suite of capital improvement projects known as the Clean Water Program (CWP) to eliminate sanitary sewer overflows and increase the capacity of both its sewer collection system and the WWTP. The CWP includes the construction of an Underground Flow Equalization System (UFES) project consisting of an underground, concrete holding structure located in the east corner of the County-owned Event Center property, capable of temporarily storing up to 5.3 million gallons of wastewater to address the “blending” issue. Since October 2014, San Mateo has served as the lead agency for the CWP and is responsible for the program management as well as the day-to-day activities of program implementation, planning, design, environmental review, communications, costs and schedule tracking, and construction of the projects comprising the CWP. San Mateo has secured financing for CWP costs through a line of credit, a series of sewer revenue bonds issued in 2019, and loans through programs administered under the Federal Water Infrastructure Finance and Innovation Act and/or the Clean Water State Revolving Fund program.

 

While Hillsborough/District/County do not benefit from some components of the CWP and are not required to participate in the cost of such components, the three parties are responsible for their proportional share of the costs for the components associated with the DAPS, the UFES, and WWTP.

 

Hillsborough’s/District’s/County’s proportional share of the DAPS, UFES, and WWTP costs is calculated by dividing each party’s maximum allowable sewage flow by the maximum capacity at which a collection system or treatment facility is designed to operate.

 

Hillsborough’s/District’s/County’s proportional shares consist of the project costs incurred by San Mateo beginning in October 2014 through the completion of construction of CWP projects, which is estimated to be $1 billion. The District and County have been paying San Mateo their shares of the actual costs through quarterly billings for the past several years while the parties were in negotiations for an amendment to the 1989 Agreement or a new agreement.  In 2022 Hillsborough and San Mateo decided to enter into an interim agreement for payment of capital costs by Hillsborough while San Mateo, County and District continued to discuss terms unrelated to Hillsborough. The County, District and San Mateo now desire to enter into a separate interim agreement to recognize County and District participation in a financial arrangement with San Mateo and to begin making annual installment payments of $70,366.12 (County) and $826,273.96 (District) instead of continuing the pay-as-you-go method.

 

Under the proposed Interim Agreement, the County and District are anticipated to make the above annual debt payment amounts to San Mateo for 30 years established by the following proportional responsibilities:

 

 

Agency

CWP Section Projects *

 

WWTP

DAPS

Underground Flow Equalization System Project

Program Management Office

 Total

County (Tower Road Facilities)

$1,810,465 (0.4%)

$125,495 (0.4%)

$338,718 (0.4%)

$191,723 (0.3%)

$2,466,401

District

$23,536,039 (5.2%)

$1,756,920 (5.6%)

$4,742,064 (5.6%)

$2,492,406 (3.9%)

$32,527,428

City of San Mateo

$452,616,131 (62.68%)

$26,918,517 (85.8%)

$72,655,192 (85.8%)

$57,580,963 (78.04%)

 $609,770,804

Town of Hillsborough

$34,398,826 (7.6%)

$2,572,632 (8.2%)

$6,943,736 (8.2%)

$3,642,747 (5.7%)

 $47,557,941

Totals

$512,361,461

$31,373,564

$84,679,710

$63,907,839

$692,322,574

 

*  Project costs with percentage shares based on October 1, 2022 status update and full flow conditions. Percentages may not equal to 100% due to some cost shares by City of Foster City.

 

The Department previously communicated to this Board and the property owners, within the District, the District’s financial obligations for these improvements through the sewer service rate setting process in 2021 and most recently in June of this year. The rates set in June for the four fiscal years (2024-25, 2025-26, 2026-27 & 2027-28) for the District support the anticipated debt payments. The financial obligations of the CDO are significant and have had a substantial impact on the sewer rates required to support the District requirements.

 

County Attorney has reviewed and approved the Resolution and Interim Agreement as to form.

 

FISCAL IMPACT:

Funding for the District’s portion of the CWP costs in accordance with the Interim Agreement will be funded through the sewer service charges collected from the property owners within the District and are estimated to be approximately $826,273.96 per year for 30 years.  This equates to approximately $570 per ratepayer (connection) per year for the CWP. The County’s share of the CWP cost will be financed from the County’s Non-Departmental Reserves.