New Wastewater Treatment Ideas Blocked

by Jack McCurdy

No one likes to read about, much less think about, a "sewer plant" because it involves human waste. Right?

But when it comes to a big chunk of taxpayers' money, increases in already-high sewer rates, possible exposure to unhealthy odors, potential pollution of the ocean by discharges and wasting water that could be recycled--Morro Bay and Cayucos residents may have to think about what kind of wastewater treatment plant is going to be built to serve them--and the crucially-important alternatives that are available.

Why? Because their elected representatives won't. Morro Bay City Council and the Cayucos Sanitary District, who jointly own and operate the plant that must be upgraded, have voted against taking one hour to look at alternatives to their proposed plant upgrade, which is in the planning stage--even if a potentially more efficient approach based on advanced technology, which produces valuable recycled wastewater, could save up to $10 million off the estimated $28 million cost of the project.

The plant upgrade is considered the largest single investment in public infrastructure in the history of both Morro Bay and Cayucos and would serve the two communities for generations.

But if the Council and District board can say "no" to examining alternatives, so can the California Coastal Commission say no to the conventional plan that is in the design stage.

"If Morro Bay and Cayucos approve a permit that throws reusable water into the ocean, it is likely that the Sierra Club will appeal that permit to the Coastal Commission, and we won't be alone," Andrew Christie, director of the local Santa Lucia Chapter of the Sierra Club said after speaking at a joint meeting of the Council and Caycucos board on April 8. Christie cited a letter from the Commission to the county regarding the Los Osos wastewater project, which states . . .  "a project that does not fully return tertiary treated effluent to the basin (beneath ground) would be inconsistent with applicable LCP (Local Coastal Plan) policies." Inconsistency is legal grounds for rejection by the Commission, which must approve any wastewater plant upgrade since it is within the Coastal Zone, over which the Commission has jurisdiction.

The upgrade plan being developed by the Morro Bay Council and Cayucos board, who make up the Joint Powers Agreement (JPA) board of directors, would discharge waste water processed by the plant (located on the Morro Bay shoreline) into Estero Bay, while an alternative approach that they will not listen to a presentation about would recycle the waste water for use on landscapes in Morro Bay and nearby farms. The availability of recycled water could reduce Morro Bay's need to import state water, which is costly and in diminishing supply statewide.

The JPA board voted against listening to a one-hour presentation in May by a possible contractor, PERC Water, which claims it could save the JPA up to $10 million on the plant upgrade with the design, build, operate and finance functions all rolled into one. Plus PERC Water claims it also would produce a much superior product. The board was not being asked to direct their staff to investigate the alternative, not to authorize a new plant redesign, not to put out such an alternative for bids, and certainly not approve any such alternative--just to hear a PERC Water presentation while existing upgrade planning continues uninterrupted.

(See below for a comparison of the JPA plan that is under development and of the plan that PERC Water would propose.)

Almost as surprising as that JPA vote was the complete absence at the meeting of any mention about the accusations of significant overbilling and possible contract improprieties against the engineering consultant for the planned JPA plant upgrade, which is Montgomery, Watson and Harza Engineers (MWH). Those alleged irregularities involve another construction project in New Orleans, LA, for which MWH is the contractor. And now, just since the April 8 JPA meeting, a Louisiana state agency "has suspended all reimbursement payments to the city (New Orleans) for fees charged by" MWH and has launched a review of the MWH contract with the city.

After years of debate over what kind of new wastewater plant to build and a 2007 landmark decision to use advanced water-processing technology (tertiary treatment), the JPA has been moving toward planning a conventional plant upgrade until PERC Water unveiled its new technological design at a community meeting in Morro Bay last March. It featured, among other things, a brand new idea: recycling wastewater, which could be a big cost saver.

But PERC Water contended it has still not even been given an opportunity to present its plan for a plant upgrade to the city staff, and that brought the matter to a head at the April 8 JPA meeting where the question of whether to listen to a PERC Water presentation would be allowed topped the agenda. The debate among JPA members was sometimes confusing. Dylan Wade, the city's utilities/capital projects manager, and one of the lead staff members on the upgrade, twice punctured his remarks with the comment: "I am oversimplifying so much." At other times, members' questions went unanswered, one being Council member Noah Smukler's question of whether the JPA has any basic criteria to guide planning for the kind of upgrade its members want and to gauge whether the final plan fulfills their desires. And there was some misinformation, too.

Most of the members of the public who made comments at the meeting urged the JPA board to hear out PERC Water and any other possible alternatives that could produce a better upgrade at a more economical cost.

Illustrating the disagreement at that meeting were exchanges like the following one.

Council member Betty Winholtz: "Is it okay for PERC to come back in a month and give a presentation?
Council member Rick Grantham: "No."
Winholtz: "We need public presentations. The public needs to know."
Grantham: "I am not interested, public or private."

Mayor Janice Peters and Council member Carla Borchard joined with Grantham to defeat Winholtz's motion "to ask PERC to make a presentation at the next (JPA) meeting in May." Smukler voted for the motion.

Smukler then made a motion to invite any firm interested in making presentations on new alternative plant designs. It also failed by the same 3-2 vote. The Cayucos board voted 3-1 against both motions.

The question likely on many minds at the meeting and in the television audience was why the JPA board would refuse to allow one hour to hear an alternative that could be cheaper and better.

Grantham, who is running for mayor in the city's June 8 primary election along with Winholtz, said "I don't want to stop the train," the process the JPA is engaged in to plan and build the plant upgrade. He implied that hearing the PERC Water presentation would interrupt that process. He also
asked if delaying could cause the JPA to lose a $425,000 planning grant from the state, and Susan Slayton, the city's administrative services director, indicated it could happen if the JPA did not spend the money by March, 2011. "I don't want to lose the grant," he said. "I want to stay on the process and look at our options."
But Slayton was not asked if the March, 2011, deadline might be extended by the grantor, the Regional Water Quality Control Board. Winholtz said she had asked a regional board staff member and was told they would consider extending the deadline, especially if the JPA wanted to authorize a more ecologically-beneficial upgrade plan.

"I believe in reclamation (presumably meaning recycling)," Grantham also said. "We are going back to drought conditions. Reclamation is something we are going to have to do." However, the upgrade plan being developed by the JPA does not provide for reclamation.

Mayor Janice Peters, another opponent of listening to alternative upgrade plans, said, "We have done all that (considered design alternatives). It's not that simple. We decided on what we want. We have experts on our staff. If PERC wanted a say, like we can do this better, it had an opportunity. I don't buy PERC didn't know (about bidding taking place). The cost is going to go up dramatically if we change now. We are on a long range, logical move forward . . .  I can't make the decision. I have to rely on people who know (the staff)." She said it is "disrespectful to (staff) people who work on this" for others to advocate alternative to what staff has proposed.

Borchard said that considering alternatives would result in "opening a whole pandora's box." But, she added, "if we are going to have a presentation, I hope it is not just by PERC." She added that "I am not interested in stopping the process," but "cost is most important."

Smukler said he plans to go on a tour of the new PERC Water plant in Santa Paula, whose officials have praised their PERC Water project and which PERC Water points to as a prime example of the features that the JPA upgrade could take advantage of. He asked others to join him on the tour. "I would hope that Noah (Smukler) goes and brings back information (on the PERC upgrade there)," Borchard said.

Grantham and Robert Enns, president of the Cayucos board, indicated they planned to join Smukler, which may leave slightly ajar the door that the JPA board has closed to listening to PERC Water. Zenns voted against listening to any presentations but said, "If there are facts out there we don't have, we need to know them." "We should not stop the train we are on. . . (but we should undertake a) parallel investigation."

Winholtz attempted to rebut the Peters, Grantham and Borchard arguments: "We need to hear them (PERC Water and any other contractors with potentially-better technologies) and allow them to give presentations to the community. The public can't go to Santa Paula. They (residents) have a right to hear it. We can stay on track (with the current planning process). We are not as far along as Santa Paula was (when it switched to PERC Water) and they still got it done. We are ahead of schedule. It is not going to cost us anything." The savings that PERC Water offers in the millions would more than offset any loss in grant money, she indicated.

After Slayton answered Grantham's question about the grant schedule, Winholtz asked Bruce Keogh, the city's wastewater division manager, "Are we ahead of schedule?" He replied that "we are ahead in the design schedule." If so, Smukler asked, could the JPA ask the regional board to extend the grant deadline? Wade said the board might not grant an extension and it could result in penalties. But Tim Carmel, a Cayucos board attorney, said the deadline "is not impossible to get changed. Yes we can do it, It's just not going to be easy."

As far as PERC Water having an opportunity to bid on the upgrade design, Wade said the "RFP (request for proposals) had been sent out (by the time PERC Water asked to make a presentation of what it has to offer). Five firms responded. PERC was not one." But Winholtz responded, "The RFP did not meet PERC's qualifications. So why would it apply?" Her point was that the RFP envisioned a traditional plant development procedure in which separate contractors usually do the design and construction. Whereas PERC Water only undertakes projects in which it does both design and construction. In addition, it would also operate a plant and arrange for the financing, depending on the preference of the owner.

But even had PERC Water wanted to bid, or at least show the staff and/or the JPA its alternative way of developing an upgrade plan, it couldn't because of an apparent mixup. The city posted a schedule calling for the RFP to be issued on May 31, 2010, but it was actually issued on Oct. 1, 2009 and closed to bidders just a little over four weeks later on the following Nov. 5. PERC Water says that caused it to miss any opportunity to make its expertise in maximizing benefits and minimizing the costs of wastewater processing known to the JPA or its staff.

Steve Owen, PERC Water's vice president for infrastructure development, has said he was assured prior to Oct. 1 that his company would be
given an opportunity to show what it had to offer. But then the RFP was closed eight months ahead of schedule, without him being aware, and his
company missed the chance.

How was the RFP put together and defined for a traditional technology? "We (staff) wrote the RFP for the design," Wade said in an answer to question by MIke (cq) Foster of the Cayucos board. "Were there any other designs considered?" Foster asked. "I don't know," Wade responded. "It was before my time." Wade volunteered that "we used Carollo Engineers as a consultant" to draw up the Facilities Master Plan in 2007 under its contract with JPA.
He said "we should stay the course" and not consider using PERC Water.

Wade is a former employee with MWH, and Carollo often works with MWH as contractors on the same projects.

Winholtz said that "when (the planning process) started we were trying to add on to the plant (as it is presently configured). Now it is time to look at a different technology," given PERC Water's claims to be able to build a cheaper and better upgrade.

Smukler said, "I have never seen a list of criteria" determining the design, productivity and performance of the project. "Does it exist?" Wade
and others made unrelated comments, but Smukler then said, "You have not answered my question. How do we know which is the best technology we want to use?" Wade responded, "That is an excellent thing for the board to do."

His answer indicates that the JPA never adopted or followed any set criteria or clear standard in determining the most desirable technology to
use and the most cost-effective and efficient process to follow, whether it be a separate design and contract for the construction, or a
combination of them all--plus possibly operation of the plant and financing--into a single contract, which PERC Water does and claims is the most
effective, reliable and cheapest way to do it.

Wade insisted that it would be best to stay with the project design that MWH is preparing and he would "not recommend" a different
approach, such as PERC Water has proposed. "It would take time and effort to restart,'" he said. Winholtz asked "what is the longest time to do an RFP," in case the JPA did decide to change course? Wade said "about three months."

Wade also said the separate design and construction method for developing the project gives the JPA more staff "control" over the "quality of the proect," which could be increased through the use of a consultant to help oversee it. However, Owen has said, "The irony here is that it does just the opposite and provides far less control." This is because JPA would have to deal with several different contractors, whereas PERC Water would assume contractual responsibility for both designing and building the upgrade as well as operating the new plant under a plan that JPA would approve. And costs, quality standards and performance checks would be guaranteed in writing by PERC Water.

Whether the PERC Water model might mean the need for fewer city staff members for the upgrade project was not discussed, but the city faces a 2010-11 budget shortfall, which might result in staffing levels of all departments being reviewed in the next few months and possibly cut.
Winholtz said the issue is whether the city staff is willing to examine alternatives. "The staff is trained in a certain way," she said. "But this is an opportunity for the public (to see the alternatives). It is not stopping trains. Can we look at something different? It's almost like we are afraid to look, (because) we might find something better.

Smukler said he had a number of "concerns," "public trust being foremost. Imagine how we are being perceived if we don't give this other mode a chance. If we sidestep it, there are going to be more problems," citing a possible appeal to the Coastal Commission. The present upgrade plan was developed "five years ago and the technology has changed. It's like computers. The facility master plan. . . is five years old. PERC Water is a new generation of water treatment. If we pass on this without evaluation, we will look pretty poorly in the community. We have letters (from community groups) that want us to have the safest, best project for the community."

Comparisons of the conventional upgrade plan being developed by the JPA and the PERC Water approach, according to PERC Water:

JPA Plan:

--It would expand the plant in size, requiring acquisition of additional property,
--It would discharge all processed water into the ocean (Estero Bay).
--The processed waste water would be cleaner, if, as planned, tertiary treatment is provided, than the "secondary" effluent that is now being discharged into the ocean by the current plant.
--That water would not be as potentially clean as possible and might not involve what is called "biological nutrient removal." Therefore, it would still have some polluting effect on the ocean.
--It would have the potential for giving off some unpleasant and unhealthy odors, which could drift with the wind currents that typically flow eastward.
--The construction cost of $28 million would not be guaranteed to not exceed that amount,
--The "sewer" rates will almost certainly be raised to help pay for the design, construction and operation of the upgraded plant, no matter what plan is used.
--The plant would be operated by city staff and also managed by one or more of them, unless an outside manager were hired.

The PERC Water approach:

--It would reduce the size of the existing plant, leaving some unused property on the site for other uses, and there would be no need to purchase any additional property.
--It could recycle almost all of the processed water and discharge only a small amount. The goal would be to recycle 100% of the effluent and avoid any ocean discharge. Once the effluent is discharged into the ocean, it is an expensive process to remove the salt and make it potable again through desalination.
--PERC Water recycling will produce processed water that would meet or exceed the highest state water quality standards for reuse and, therefore, could be used for landscape watering or on nearby farms. It would include biological nutrient removal.
--Few if any odors would be released from a plant designed by PERC Water, which would be equipped with full noise and odor controls.
--A PERC Water plant would cost $8 million to $10 million less than the city's estimated $28 million cost for a conventional upgrade, if PERC Water were to design, build, operate and finance the project and, of course, if that was JPA's choice. And the stated cost agreed to by the JPA and PERC Water would be guaranteed.
--The sewer rates will increase to pay for the cost and ongoing operation of the upgraded plant, but they will not rise as much due to the fact that the facility capital cost will be lower and it will be more efficient to operate. And this does not consider the significant potential savings from using recycled water to replace likely-substantial amounts of imported state water.
--PERC Water would operate the plant if the JPA choses its design, build, operate and finance plan. Under that plan, PERC Water would operate the new plant for up to 35 years and then the facility will be transferred back to the JPA at zero cost. PERC Water would assume all risks for design, construction, cost, scheduling, completion, construction warranties, water quality performance, capital replacement, power needed, effective processing of biosolids, life-cycle costs, operation and maintenance and long-term financing.

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