Update on the Morro Bay - Cayucos Waste Water Treatment Plant

by Jack McCurdy

Synopsis: Has planning for the multi-million dollar Morro Bay-Cayucos wastewater treatment plant suddenly gotten off track? And your sewer rates could head upward as a result? It looks like it.

The Morro Bay-Cayucos plan for a multi-million dollar new wastewater treatment plant seemed to be headed down the right road toward a fair consideration of traditional and advanced designs—an investigation that could save residents significant amounts of money in sewer rates and other costs for many years to come—until the joint agency last month hired a project manager, which has some wondering whether it has taken a wrong turn.

Two members of the Morro Bay City Council are troubled, and one, Betty Winholtz, walked out of the special meeting on July 15 where the manager was approved. The other, Noah Smukler, didn't attend because at the previous meeting on July 8, he said a majority of the Morro Bay-Cayucos board verbally committed, without adequate information, to hiring the staff's recommendation. Winholtz's objections were over the process used to select the manager, not just who was picked.

One key question that has been raised: is the new project manager biased in favor of the traditional design, which could cost millions more, produce a less efficient plant, release more odors that residents must breathe and fail to provide recycled water capable of being used for outdoor irrigation and thereby saving the city of Morro Bay from having to buy as much very costly state water?

The potential builder of a plant with an advanced design, PERC Water, contends it could cut the cost of replacing the present, outmoded plant, which dumps partially-treated, toxic waste water into Estero Bay, by $10 million from the now-projected cost of $31 million (meaning lower sewer rates). And PERC Water has said it would guarantee the cost it quotes, whereas the potential builder of a traditionally-designed plant, Montgomery, Watson Harza Engineers (MWH), has stated that it would not.

And that advanced-designed plant, PERC Water claims, also would use a smaller site on the Morro Bay shoreline (leaving more valuable property for the city to utilize), enclose the processing of waste water so odors do not escape and produce more than a million gallons of pristine recycled water a day to regenerate the city's own wells and reduce the need for state water, which is in dwindling supply.

Questions were raised about the project manager, engineer Dennis Delzeit of Nipomo, former public services director for the city of Pismo Beach, because he was on the selection committee that chose MWH as the design contractor for the new plant. And he also made a remark seemingly favorable to MWH at the July 15 meeting of the Joint Powers Agreement (JPA) board (composed of members of the Morro Bay City Council and the Cayucos Sanitary District board) where he was approved as manager.

"I think you are headed in the right direction with an oxidation ditch and reclamation." That describes what MWH is proposing. By making that statement, he seems to imply a judgment—now as project manager—that PERC Water's design is inferior.

This, despite the fact that the JPA board on June 15 agreed unanimously for the first time to consider PERC Water as a possible builder of the plant by asking for a "customized design report" from that company so it could be evaluated in comparison with MWH. That comparison by way of an independent "peer review" of both designs by Kitchell CEM was authorized at that meeting by the board and presumably is in progress.

Delzeit also raised eyebrows when he thanked the JPA board repeatedly at the July 15 meeting for awarding him the management contract—before board members had even voted to do so.

Another question is why should a manager be hired at this time before that key comparison of the two designs has been completed? How does Delzeit or the JPA board know what kind of plant will be decided on until that information is available and a decision is made—and the kind of plant that needs managing?

A third question is why does the board think a manager necessarily will be needed? PERC Water routinely manages the plants it builds under its design/build/operate (and even finance, if desired) methodology of operation.

Delzeit's contract is not to exceed $250,000, although his cost estimate was $263,000.

The Slo Coast Journal posed those question to members of the City Council. Winholtz had already made her feelings known with this statement when she left the JPA board meeting before the vote on the management services contract:

"This is the second contract in a row on this project where staff has narrowed the field by bringing only information about their preference in the staff report to the board, in essence asking the board to rubber stamp staff's decision. Their decision, not this board’s. The board does not hire staff to tell the board what to do, but to give advice about what we choose to do. Giving advice does not mean making my choice for me.

"We, the board, are not allowed to select from a culled list of experts pre-evaluated by staff. Staff would not give us recommendations of unqualified experts.

"I am disappointed that the board is willing to go along with this way of doing business. I have expressed this concern before. I take it very serious that the elected body should evaluate the choices and this is not happening. Since my words are not working, I will show my deep concern by not participating in this pre-determined choice."

Smukler said after the meeting:

"I did not attend the specially-scheduled JPA board meeting to hire the project manager on July 15 because a majority of the board had previously made clear they would accept whomever staff recommended. I chose not to disrupt a planned family commitment because the decision for the one-issue meeting was predetermined.

"The project must have equal and fair evaluation of the MWH and PERC Water designs and project delivery methods. The focus of the new project manager's contract is to deliver the MWH-designed oxidation ditch system. Therefore, it is essential for the integrity of the project that the new manager not be involved in the upcoming evaluation and decision process. To minimize such conflicts of interest, the JPA board, on a parallel track, authorized future contracting with a non-biased third party to conduct a 'peer review' of the MWH and PERC Water designs."

None of the other Council members, mayor Janice Peters and Carla Borchard and Rick Grantham, responded to the emailed questions. They all voted for the contract with Delzeit.

However, Smukler says he thinks even if PERC Water is chosen to construct the new plant, a project manager may still be warranted to facilitate the process and balance the interests of Morro Bay and Cayucos.

City attorney Rob Schultz was asked about the wisdom of hiring a manager at this time, and he responded:

"Regardless of the method of delivery, this is the single biggest project the City of Morro has ever undertaken. Therefore, it is staff's position that a project manager is needed to make certain the project runs smoothly and correctly. Staff simply does not have the time, resource, or expertise to manage a project this magnitude."

He noted that the contract with Delzeit contains a clause that allows the city or Delzeit to cancel with 10 days notice, although the city would be obligated to pay Delzeit for his services up to that time.

Others agree with Schultz that the Morro Bay public services department staff does not have the expertise to manage a project as complex and important as replacement of the wastewater treatment plant, especially with the preparation of a required environmental impact report so far behind schedule, which could expose the JPA to fines. It was understood that the environmental review would be required to consider PERC Water's design as an option, even if MWH's design is submitted as the preference by the JPA.

Belted Kingfisher on Banner by Cleve Nash