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HomeMy WebLinkAbout2005-01-11; Municipal Water District; 580; Application for a Grant - Proposition 50AB# 580 MTG. 01/11/05 DEPT. ADMIN SERVICES TITLE: DEPT. HD. APPLICATION FOR A GRANT FROM THE WATER SECURITY, CLEAN DRINKING WATER, COASTAL AND BEACH PROTECTION ACT OF 2002 - PROPOSITION 50 % CITY ATTY. -5 I CITYMGR - RECOMMENDED ACTION: Approve Resolution No. 1231 the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002 (Proposition 50) for the construction of conveyance facilities to deliver desalinated water to the CMWD water system. authorizing the filing of an application for a grant from ITEM EXPLANATION: In November 2002 California voters passed Proposition 50, the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002. Under this program a pool of more than $3.4 billion was created to fund a wide variety of projects involving water security, water quality, CalFed Bay-Delta, Colorado River water system, and desalination to name just a few. A total of $50 million has been set aside to fund desalination projects to be allocated in two rounds of $25 million each. The first round of funding requires that applications be received by January 18, 2005. Projects eligible for funding under the desalination portion of Proposition 50 include those that provide for the construction of facilities related to desalination or study the feasibility of such projects. The grant process is competitive in nature. A panel composed of state agencies, stakeholders, and subject matter experts will review proposals. In the spring, a draft list of projects and the recommendations will be published and a public workshop will be held to review the panel’s recommendations. Final funding decisions are expected to occur in May 2005 following public review and comment. A maximum of $5 million may be awarded to any single project. A preference will be given to projects that incorporate ecosystem restoration and water quality benefits. The applicant is responsible for providing at least 50% matching funds. Matching funds may be in the form of cash or donated services from non-state sources. Staff is currently examining the potential sources for matching funds. One possibility is that Poseidon’s expenditures on the construction of portions of the conveyance system will qualify as matching funds. The other possibility is that CMWD could elect to undertake the construction of significant portions of the conveyance system to assure public ownership of the pipeline, pumps and related equipment. Staff will look more closely at the use of CMWD funds during the development of the 2005-06 Capital Improvement Program. The completed 2005-06 CIP will be presented to Council in May 2005. Projects receiving funding must expend Proposition 50 funds within three years of the execution of a contract. This time frame is consistent with the current development schedule for the desalination plant that calls for completion in 2008. I PAGE 2 OF AGENDA BILL NO. 580 Staff is asking that the CMWD Board authorize the submission of an application under Proposition 50 for funding of a portion of the desalinated water conveyance system that will deliver water from the desalination plant located at the Encina Power Plant to the CMWD water system. Under the Water Purchase Agreement between Poseidon Resources and CMWD, the conveyance system will be constructed by Poseidon, however, the cost per acre foot of water delivered from the plant will include a charge for delivery that reflects both the operating and capital cost related to the conveyance system. Section 9.2 of the Water Purchase Agreement allows Carlsbad to elect to own the conveyance system, and provides for a related reduction in the cost per acre-foot of water to be delivered to CMWD. The Water Purchase Agreement requires that Poseidon and Carlsbad reach an agreement on the delivery charge related to construction and operation of the conveyance system by October 2005. Staff is currently studying the various pipeline alignments as part of the project EIR. Following the completion of the EIR, and the selection of the preferred alignment, staff will be able to develop more accurate construction and operating cost estimates and determine the savings that may be generated through public ownership of the conveyance system. The current EIR schedule calls for a draft document to be available by the end of February 2005. Carlsbad is currently in negotiations with the San Diego County Water Authority (SDCWA) as part of our effort to assure that the desalination project will benefit the entire region. SDCWA intends to submit for Proposition 50 funds for a similar project (a desalinated water conveyance system), although the SDCWA project does not correspond to any of the pipeline alignments or designs currently being studied in the Poseidon/Cabrillo EIR. Should SDCWA and Carlsbad reach an agreement and select a pipeline project that serves the needs of both agencies, Carlsbad may elect to withdraw its application and support the SDCWA application to avoid having the two projects compete for the limited funds available. SDCWA staff and Poseidon have both supported Carlsbad’s submission of a grant application, and are willing to work with Carlsbad through the grant review process to meet the standards set by Proposition 50. FISCAL IMPACT: If Poseidon constructs the system, Carlsbad and Poseidon must agree on the charge to be included in the per acre-foot charge for water to fund both construction and operating costs. This charge is reduced or eliminated if Carlsbad funds the construction of these conveyance facilities through the grant program and/or its own funds. The project cost has not been determined, so the amount of the reduction is not yet known. Proposition 50 funds will reduce either the per acre-foot cost of water to Carlsbad under a Poseidon owned scenario, or the total project cost to Carlsbad under a Carlsbad owned scenario. Proposition 50 will support one-half of the project cost up to $5 million. PAGE 3 OF AGENDA BILL NO. 580 EXHIBIT: 1. Resolution No. 1231 authorizing the filing of an application for a grant from the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002 (Proposition 50) for the construction of conveyance facilities to deliver desalinated water to the CMWD water system. DEPARTMENT CONTACT: Jim Elliott, (760) 602-2409, email: jelli@ci.carlsbad.ca.us 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 1231 RESOLUTION OF THE BOARD OF THE CARLSBAD MUNICIPAL WATER DISTRICT AUTHORIZING THE FILING OF AN APPLICATION FOR A GRANT FROM THE WATER SECURITY, CLEAN DRINKING WATER, COASTAL AND BEACH PROTECTION ACT OF 2002 (PROPOSITION 50) FOR THE CONSTRUCTION OF CONVEYANCE FACILITIES TO DELIVER DESALINATED WATER TO THE CMWD WATER SYSTEM WHEREAS, the Carlsbad Municipal Water District (CMWD) has entered into an agreement with Poseidon Resources for the purchase of desalinated water from a plant to be constructed at the Encina Power Plant site; and WHEREAS, the water produced by the desalination plant will be conveyed to various delivery points within the CMWD system by pipelines to be constructed as part of the desalination plant project; and WHEREAS, the voters of the State of California passed Proposition 50, the Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002, in November 2002; and WHEREAS, the Proposition 50 program provides funding to projects related to the production and delivery of desalinated sea water in an amount up to $5 million per project; and WHEREAS, CMWD will benefit from the construction of a conveyance system to bring desalinated water from the source at the desalination plant to the CMWD delivery system; and WHEREAS, submission of an application under the Proposition 50 grant program guidelines is necessary to receive funding from this program. Ill Ill Ill Ill Lt 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOW, THEREFOREy BE IT RESOLVED by the Board of Directors of the Carlsbad Municipal Water District as follows: I. 2. That the above is true and correct. That the General Manager is hereby authorized to submit an application for Proposition 50 funds to support the construction of conveyance facilities related to the delivery of desalinated water to the CMWD water system. PASSED, APPROVED AND ADOPTED at a regular meeting of the Board of Directors of the Carlsbad Municipal Water District held on the 11th day of JANUARY 2005 by the following roll call vote, to wit: AYES: Board Members Hall, Kulchin, Packard, Sigafoose NOES: None ABSENT: Board Member Lewis CLAUDE A. LEWIS, President MATT HALL, Pr.esSd:ent PEO Tern ATTEST: LORRAINE M. WOOD, Secretary (SEAL) Ill 5’