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HomeMy WebLinkAboutSS03 - San Joaquin Reservoir Capacity TransferApril 11, 2000 STUDY SESSION AGENDA ITEM NO. ss3 TO: Mayor and Members of the City Council FROM: Public Works Department SUBJECT: SAN JOAQUIN RESERVOIR CAPACITY TRANSFER RECOMMENDATION: Direct Staff to work with IRWD to establish conditions for the transfer to IRWD of the City's rights in the San Joaquin Reservoir. DISCUSSION: The Irvine Ranch Water District (IRWD) is interested in acquiring 100% capacity ownership in San Joaquin Reservoir. Their purpose in being the sole owner of this reservoir is to convert its use to reclaimed water storage. Attached is a letter from IRWD, which presents an offer to buy the City's capacity of 36 acre -feet at $360.00 per acre -foot with an estimated additional payment of $260.00 per acre -foot from reserves distribution. The City of Newport Beach only owns 1.18% of the reservoir capacity rights. This offer was also made to the other owners: the City of Huntington Beach, Mesa Consolidated Water District, Laguna Beach County Water District, South Coast Water District, The Irvine Company and Metropolitan Water District of Southern California (MWD). All of the owners except Newport Beach and Huntington Beach have agreed to accept the IRWD offer. For information purposes, San Joaquin Reservoir was constructed by IRWD in 1965. This reservoir was operated as a domestic reservoir by MWD until 1995. There are currently eight owners of capacity rights. Because of water quality problems associated with open finished water reservoirs, the State Health Department issued a requirement for the owners to cover the reservoir. Prior to 1995 the owners developed a plan to cover the reservoir at a cost of 17 million dollars. As more detailed plans were prepared the estimated costs to cover climbed to over 40 million dollars. At that price MWD would not participate in the funding. San Joaquin Reservoir has been empty for five years and MWD has determined that they no longer need the reservoir in their system. The other owners have decided that they cannot justify the cost of the cover and that it is no longer economical to keep the reservoir for domestic water uses. As the principal owner of capacity in San Joaquin Reservoir, IRWD has investigated other uses for the facility. IRWD has a surplus of reclaimed water in the winter and a shortage in the summer. With some expansion of their reclaimed water distribution system, this reservoir could provide needed capacity for seasonal reclaimed water uses. SUBJECT: San Joaquin Reservoir Capacity Transfer April 11, 2000 Page 2 Some concerns that need to be resolved before a transfer of City rights occur are: 1. Assurances and guarantees from IRWD that a reclaimed water reservoir would not have any negative impact to adjacent residents in terms of odors and stagnant water 2. Newport's rights could be repurchased if the reservoir ceases to be used to store reclaimed water 3. Favorable wholesale reclaimed water rates from IRWD be granted to Newport Beach for areas in the City that can be served with IRWD's reclaimed water It is recommended that staff be directed to work with IRWD to establish conditions for the transfer to IRWD of the City's 36 acre -foot capacity rights in San Joaquin Reservoir. Members of the IRWD staff will make a presentation at the Study Session on the history of the San Joaquin Reservoir and their plans for its redevelopment. They will be available to answer questions concerning their proposal for the transfer of rights. Respectfully submitted, PUBLIC WORKS DEPARTMENT Don Webb, Director By: X1"4. Eldon Davidson Utilities Services Manager Attachment: March 20, 2000 IRWD Letter f:luserslpbwl shared \coundllfy99-001apol- 1 11san joaquin reservoir agmt.doc m�nr: NaWn NITER IN�TPoIT 19IVE RAWH WITER DISTRICT 15600 Sand Canyon Ave .. P.O. Box 57000. Irvine, CA 92619-7000.(714)453-5300 March 20, 2000 - n Mr. Don Webb aMAR Z 3 Public Works Director City of Newport Beach <. c P.O. Box 1768 Newport Beach, CA 92658 -8915 Subject: San Joaquin Reservoir Capacity Value Dear Mr. Webb: As you know, Irvine Ranch Water District (IRWD) is interested in acquiring the remainder of capacity in San Joaquin Reservoir we do not already own with the intention of performing repairs and modifications to convert it to seasonal storage of reclaimed water. IRWD is prepared to purchase the 36 acre -feet of reservoir capacity owned by the City of Newport Beach (CNB) for $360.00 per acre -foot for a total of $12,960. The offer of $360 per acre -foot is based on our estimate of the value of the reservoir, less the costs of modifications and repairs necessary to make it serviceable as a reclaimed water reservoir. The value of the reservoir to IRWD is in the increased yield of reclaimed water, which could be used to replace untreated water we currently purchase from MWD. In addition, we understand that up to $800,000 in reserve funds are being held by Metropolitan Water District of Southern California (MWD) for current and future reservoir maintenance. We are awaiting confirmation from MWD on the exact balance in the reserve account. Upon sale of the reservoir to IRWD, we propose that any remaining reserve funds be distributed by MWD to each of the former owners in proportion to their respective ownership interest. If there is $800,000 remaining in the MWD account, this would result in an additional payment to CNB of approximately $260.00 per acre -foot, or $9,400, bringing the total payment for the CNB capacity to approximately $22,360. If this offer is satisfactory to the city, please respond as soon as possible so we may make arrangements to transfer the capacity before both of our agencies incur additional maintenance charges against our share of the MWD reserve account. If you have any questions regarding this matter, please do not hesitate to contact me Paul D. General cc: Gregory P. Heiertz Eldon Davidson Mike Sinacori F: /grm /wrd/gph/webnewport.doc