HomeMy WebLinkAbout11/21/1989, 3A - WHALE ROCK COMMISSION MEETING, MONDAY, NOVEMBER 27, 1989 9Original Agenda Report f-- 11/14/89 Council meeting.
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city QT SanIUiS OgIspO November 1989
COUNCIL AGENDA REPORT MU NUMBER:
FROM: William T. Hetland, Utilities Director
SUBJECT: WHALE ROCK COMMISSION Meeting, Monday, November 27, 1989
RECOMMENDATION: Review and give direction to staff as necessary.
RECEIVED
NOV 9 1969
CITY CLERK
SAN LUIS OAISPO,CA A
MEEnN
aI�INI1f1��81��AI►���� ��� city of San LUIS OBISPO November
DATE:
COUNCIL
21 1989
COUNCIL AGENDA REPORT 17 -
FROM: William T. Hetland, - PREPARED BY Allen Short
Utilities Director W Water Division Manager
SUBJECT: Coastal Streams Diversion- and Storage Project:
Analysis of Institutional and Financial Issues
RECOMMENDATION:
Staff recommends that the City Council receive and
review the report and direct Whale Rock Commission
members to authorize Whale Rock Commission to:
1. Proceed in the negotiation phase.
2. Establish a negotiation team.
3. Obtain independent counsel to periodically review
the agreement.
BACKGROUND:
The Coastal Streams Diversion and Storage Project (CSP) is a
proposed water supply project involving eight (8) streams in the
Morro bay area. The concept of the project is to capture excess
runoff, which would otherwise flow into the Pacific Ocean. This
would be accomplished by constructing low concrete diversion dams
in the stream channels. The water would then be conveyed either
to the Whale Rock Conduit and to Whale Rock Reservoir or to the
San Luis Obispo or Morro Bay water treatment plants.
A key element of the CSP is the development of a formal agreement
among the agencies that will participate in the project. The
agreement must identify the level of participation of each
. agendy's operational responsibilities, yield allocation and cost
distribution. The type of formal agreement and the cost sharing
are identified under the institutional and financial issues of
the project.
Leedshill-Herkenhoff, Inc. as part of the scope of work under
Part D, per the contract dated November 28, 1988 , has identified
and analyzed the institutional .and financial issues. The final
report has been completed and issued to the various staffs for
distribution. The purpose of the- report was to provide an
indepth analysis of the complex institutional and financial
issues related to the implementation and operation of the CSP.
*snores act;on by Lead Person
CMMI
d ARECEIVED
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Ao NOV 2 1 1989
I �r cm CLERK
V SAN LUIS OBISPO,CA
1111011palg city of San lues OBISpo
COUNCIL AGENDA REPORT
Page 2
Certain key equity concepts are:
1. The Whale Rock Reservoir is owned and operated by the State
of California and the City of San Luis Obispo. While other
agencies should be allowed to benefit from the facility, new
agencies should pay their fair share contribution for the
use of the present facilities and unless this is done should
have no right to the present water supply.
Agencies not participating in the Whale Rock Agreement
should not benefit from what others have created, unless
they provide for equitable reimbursement for use and
benefit.
2 . The Coastal Streams Diversion project will substantially add
new water to the reservoir. The new water should be
accounted for and allocated on the basis of the percentage
of financial participation in the project necessary to
create the new water. Overall, the goal is to separate the
existing situation from the prospective situation and to
base receipt of the new water on percentage of contributions
for the construction costs necessary to create the new
} water.
The report by Leedshill-Herkenhoff identifies two key issues
which can be separated into two distinct categories; a) Water
Sharing and b) Cost Allocation. Under the Water Sharing category
the issues are:
1. Method - There are two basic choices behind the water
sharing policy. 1) The annual entitlement which allows each
agency to use any amount of water up to a pre-determined
maximum limit in each one year period or 2) the storage
volume accounting method which allocates a portion of the
existing storage volume at the time an Operating Agreement
becomes effective. Currently the Whale Rock. Project operates
under the Storage Volume Accounting Method. Staff' s
recommendation is to continue to use the Storage Volume
Accounting Method.
2. Definition of Yield. - The average annual yield
attributable to the project will vary significantly
depending on the operation of Whale Rock Reservoir. The
yield must be defined. Do we get what we pay for is the
policy issue. Staff recommends that additional analysis be
performed by the City during negotiations to make sure the
final project is in the best interests of the City. � .
miWNlllllrll����I city of San Luis OBISPO
COUNCIL AGENDA REPORT
Page 3
3 . Natural Inflow - Natural inflow to Whale Rock Reservoir
will be a primary source of replenishment. Additionally,
this will be the primary manner in which each agency's
storage account can be increased. Under the entitlement
allocation method natural inflow need not be accounted for
or identified. Under the Storage Volume Accounting Method
which is current policy, the natural inflow could be shared
among all participating agencies. We should keep what we
now get and properly share the increase. Staff recommends
the Storage volume Accounting Method and that all natural
inflow be shared among all existing Commission Agencies, but
not the Coastal Streams agencies.
4 . Stream Diversions to Reservoir - Stream Diversions to
the reservoir need not be accounted for or identified if the i
Entitlement Allocation Method is used. If the Storage
Volume Accounting Method is used, the water allocated by
diversion into the reservoir from the project must be
addressed. The concept is that the present members of the
Whale Rock Commission get what would normally flow to Whale
Rock Reservoir and that the Coastal Streams increase be
allocated on the basis of who pays the cost of obtaining it.
Staff recommends that the Storage volume Accounting Method I .
be used and storage of project diversions should be j
accounted for based on project cost allocations.
i
5. Direct Diversions' to WTP - Direct Diversions would not
require the use of Whale Rock Reservoir but would require
use of the project facilities and Whale Rock Conduit.
Direct diversions could be treated in the same manner as
stream diversions to the reservoir, or direct diversions
could be considered to be completely separate from
diversions and not be subject to the accounting procedures
for the reservoir. Staff recommends:
I
1. That direct diversions be considered separate from
storage.
2. Development of a specified section of the
agreement to use the Whale Rock project facilities for
direct diversions.
3. A priority schedule be developed to determine
whether reservoir diversions or direct diversions
have first priority in the event adequate stream
flow is not available or the systems hydraulic
configuration does not allow both types of
diversions simultaneously.
city of San Luis OBispo
NiZ COUNCIL AGEN®A REPORT
Page 4
6. Evaporation - Evaporation loss constitutes a significant
amount of the water supply. Staff recommends that the
Storage volume Accounting Method be used and allocate the
loss to all parties in proportion to the amount of stored
water for each agency.
7 . Downstream Releases - Downstream releases is an
obligation of the Commission to release up to 660 Acre Feet
per year to downstream users. Under the Entitlement
Allocation Method, downstream releases do not need to be
accounted for or identified. Under the Storage Volume
Method the water released to the downstream users should be
considered as unavoidable. Staff recommends that the
Storage Volume Accounting Method be used in addressing the
downstream releases and allocate the loss to all parties in
proportion to the amount of stored water for each agency.
8. Reservoir spills - If the Entitlement Allocation Method
is' used, they will not be accounted for or identified.
Under the Storage Volume Accounting Method all storage
accounts are reset in proportion to the contract percentages
if the reservoir spills. The concept is that non-member
agencies would spill their water first and Whale Rock
members would spill only after all Coastal Streams water was
lost. The "old water" for Whale Rock will take precedent
over the Coastal Streams "new water" . Staff recommends that
the Storage volume Accounting Method be used in addressing
reservoir spills. For non-member agencies, their storage
accounts would be depleted in proportion to the volume in
storage before the member commission agencies.
9. Reservoir "Trigger" levels - There will be many
occasions when the project streams will have adequate stream
flow but diversion to Whale Rock Reservoir will not be
possible or prudent. Staff recommends that this issue be
addressed in the negotiation process and alternatives be
considered and the one selected be in the best interest of
the City.
10. Minimum Pool - Minimum Pool storage volumes are
currently being addressed. Staff recommends a minimum pool
level of 2000 Acre Feet.
11. SIA Storage Deficiency - The City-SLO's coordinated
operation of Salinas Reservoir and its share of Whale Rock
Reservoir may have a significant impact on the project yield
and operation. Staff recommends that no storage be given up
or lost unless the net effect is an increase in the City's
safe annual yield.
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Page 5
Under the Cost Allocation, the issues which need to be addressed
are:
1. Capital Costs - Capital Costs include engineering
design, legal and administrative assistance, construction,
and construction management. Staff recommends that the
allocation of these costs to individual agencies be in
proportion to their share of the new allocated water.
2 . Operation and Maintenance Costs - Operation and
Maintenance Costs for the project consists of energy for
pumping water into and out of Whale Rock Reservoir, labor
and equipment costs for operating the project facilities.
Staff recommends that costs associated with power, chemical,
O&M and labor be allocated to the individual agencies in
proportion to the allocated amounts of new water.
3 . Energy Costs - Energy Cost for pumping water into Whale
Rock Reservoir from project diversions facilities and for
conveying water through the conveyance system(s) will
constitute a high percentage of overall operating costs.
Staff recommends that the Storage Volume Accounting Method
be used and the costs associated with energy consumption,
labor and O&M be allocated to the individual. agencies in
proportion to the allocated amounts of new water.
4. Financing - Morro Bay is attempting to secure a low-
interest loan up to $5 million from the State for use in
financing the project. Staff recommends that the City
support using the Morro Bay low interest loan and negotiate
an appropriate rate of return to Morro Bay.
5. Whale Rock "Buy-in or User Charge.- The existing Whale
Rock facilities are worth several millions of dollars and
provide critical elements to the feasibility of the project.
Staff recommends that "Buy-in or User Chargee be negotiated
to compensate the commission for use of its facilities.
6.Water Rights- The City of Morro Bay has filed an
application for the water rights on all project streams.
Staff recommends that the yield from the project be split by
percentage and that the water rights permit itself include
the names of each water rights participant.
i
. I.
� �NIII ►j � city of san Luis osispo
COUNCIL AGENOA REPORT
Page 6
RECOMMENDATION•
Staff recommends that the City Council receive and review the
report and provide Whale Rock Commission members with the
direction to:
1. Proceed in the negotiation phase.
2. Establish a negotiation team.
3. Obtain independent counsel to periodically review
the agreement.
i
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Mf11fG AGENDA SA
DATE ITEM #
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city of sAn
luis oaspo
990 Palm Street/Post Office Box 8100 • San Luis Obispo, CA 93403-8100
November 20, 1.989 F Denotes action by Lead Person
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ouncil
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MEMORANDUM ity Atty.
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TO: City Council ji✓�
John Dunn, City Administrative Officer
112
FROM: Allen Short, Water Division Manager
SUBJECT: Whale Rock Staffing Requirements
During the November 14, 1989 City Council meeting Councilperson
Pinard questioned the staffing requirements and personnel who serve
as Whale Rock Commission staff. Attached for your review is the
memorandum addressing the staffing requirements, time allocated,
and personnel assigned to those responsibilities. This document
was submitted to both the Whale Rock Commission and City Council
prior to the budget review process in June and was approved by the
Whale Rock Commission at their June 13, 1989 meeting.
Additionally, the City Council had previously on numerous occasions
strongly expressed that William T. Hetland, Utilities Director
reduce his staff time and responsibilities to the Whale Rock
Commission. In accomplishing this objective he has delegated a
majority of the Whale Rock staffing time and responsibilities to
the Water Division Manager.
The City of San Luis Obispo has historically provided the staffing
requirements for the Whale Rock Commission. The relationship has
been mutually positive, productive and beneficial to all involved
agencies.
If I can be of further assistance please contact me at ext: 208 or
William T. Hetland at ext. 215.
Enclosures
c: William T. Hetland, Utilities Director
� RECEIVED
WRPER0NALCC\WP\#1 NOV 2 1 1989
.2=00-P
CITY CLERK
SAN LUIS OBISPO,CA
MEETING DATE:
JUNE 13 1989
WHALE ROCK COMMISSION REPORT 'TE
^NU39EA:
FROM: ALLEN SHORT, WATER DIVISION MANAGER
SUBJECT:
Whale Rock Staffing Evaluation
BACKGROUND:
Within all organizations periodic review is needed to insure that
the organization is operating in .the most efficient and effective.
manner. An evaluation of the present mode of operation and
responsibility was undertaken to determine if the current staffing
arrangement is in the best interest of. the Whale Rock Commission.
The City of San Luis Obispo's Water Division Staff performs a dual
function. The majority of the time is spent dealing with the issues
and day to day operations of the City of San Luis Obispo. In
addition, the Water Division personnel are also the staff of the
Whale Rock Commission. The present arrangement has been in place
since the Commission was established in 1957. Paragraph 4 of the
"Agreement for Construction and Operation of the Whale Rock Project"
established the City of San Luis Obispo as the agency to "operate
and maintain the project mutually satisfactory to the parties" .
To date, this arrangement has been positive and successful. The
purpose of the Whale Rock Commission staff is to provide information.
to assist in the development of policy, to update projects, operate
the Whale Rock Reservoir in the most efficient manner possible, and
act in the best interest of the Whale Rock Commission.
The City of San Luis Obispo currently is entitled to 55 percent of
the volume of water that is contained behind the dam. The City's
current share of the safe annual yield is 2057 acre feet of the 4400
acre feet. There has been a concern regarding the ability of the
City's Water Division staff to remain neutral and act in the best
interest of the Whale Rock Commission when the City of San Luis
Obispo is in times of water shortage and mandatory water
conservation.
2 . 0 Existing Staffing:
The existing City staffing for the Whale Rock Commission is
identified in table 1.0. The numbers in parenthesis indicate the
percent of time/budget that each employee spends on Whale Rock
operations. The organizational structure is headed by the. Utilities
Director who is supported by clerical, and engineering staff.
Financial services including budget, payroll, purchase orders, etc. ,
are provided by the City Finance Department. Legal services are
provided as needed by either the City Attorney or outside counsel,
depending on the issue or requirement. The Water Division
-,WHALE ROCK COMMISSION REPORT
Page 2 .
Manager reports directly to the Utilities Director, and is supported
by the Water Supply Supervisor. The Water Supply Supervisor is
responsible for the day to day operations of the Whale Rock project.
When problems or concerns arise within the City structure, staff is
able to call upon a number of resources and expertise for
assistance. The ability to call upon the required resources greatly
reduces down time or project start up, and as a result, adds to
operations efficiency. In addition, a number of projects or- tasks
can be done in-house. instead of contracting to an outside service
because of the variety .of resources available to the Commission
The Whale Rock Commission is the direct recipient of those resources
and expertise when the need is required.
3 . 0 Alternatives
As a result, staff investigated a number of operational and staffing
configurations. A list of alternative modes of operation are listed
below.
1. Contract Management - Staffing and operational
requirements are handled by an independent private.
contractor.
2 . Composite Agency - Select individuals from each member
agency to meet staffing requirements.
3 . Rotational Staffing - Staffing requirements are rotated
among member agencies on a set time frame.
4. Independent Staffing - Selection by the Whale Rock
commission of independent_ employees to meet staffing
requirements.
4.0 Evaluation Criteria
To fully evaluate the alternative operational methods and to
determine the advantages and disadvantages, criteria were
established which are identified below:
1. Streamlined and practical. A minimum number of levels
and or agencies required to preform the required functions.
The most useful and usable approach to meet staffing
requirements.
2. Communication. The ability to obtain quick, accurate
information concerning policy, system operations, or
problems/solutions.
INHALE ROCK COMMISSION REPORT
Page 3 .
3 : Costs. The amount of money expended for the services and
staff members obtained.
4 . Sensitivity to Commission members requirements. There are
a number of political issues and concerns that are priorities
of individual commission members. Each must be addressed in a
manner which provides equality and sensitivity to all of the
member agencies.
5. 0 Evaluation Matrix
An evaluation matrix was developed taking into account the selected
criteria for each of the alternatives. Each is rated on a scale of
1-5 with 1 being the lowest rating and 5 being a high rating.
EVALUATION CRITERIA
Mode of Operation 1 2 3 4 Total Rank
Existing 4 4 3 4 15 1
1. Contract 3 3 2 5 13 2/3
2 . Composite 2 3 3 4 12 4
3 . Rotation 2 3 3 4 12 5
4 . Independent 3 3 2 5 13 2/3
Based upon a subjective analysis of each alternative method of
operation, the Existing mode of operation ranked the highest. The
Contract and Independent modes tied for second and third. The
Composite and Rotation modes were fourth and fifth respectfully.
The Existing method of operation is the most streamlined and practical
as compared to the other options. It possesses the minimum number of
levels for efficient and productive project operation. In addition,
the maximum use of available resources to meet staffing needs and
system operation is best identified with this option.
The Existing mode of operation is able to quickly obtain and dispense
accurate information regarding system operation, policy, agreements,
and problems/solutions. The other options would require additional
research and time to obtain and comply with informational request.
The same would be true when important information or decisions are to
be disseminated.
Existing, Composite, and the Rotation options have the capability to
provide additional resources and staff when required for a minimum
additional cost. The other two options (Contract and Independent)
i
,WHALE ROCK COMMISSION REPORT
Page 4
would require additional expenditures as service and staff
requirements fluctuated.
Finally, the Existing, Composite, and Rotation options are all
sensitive to the needs and requirements of the Commission members and
member agencyies. The Contract and Independent options, because of
the tenuous position, would be extremely concerned about the
Commission needs and requirements.
If the Whale Rock Commission decides to select one of the alternative
options identified in Section 3 . 0, the advantage to changing from the
current method of operation to any one of those is primarily
theoretical. In theory an independent agency may offer a more
equitable and fair administration of policy.
The disadvantages to changing the current method of operation are
numerous. Changing the method of- operation is not the most
streamlined, practical and feasible. The addition of an outside
agency will slow down the method and mode of communication concerning
commission business and policy.
Presently, difficulty is experienced when the existing operational
agency tries to schedule commission events, prepare and administrate
commission business and projects. An additional outside agency will
compound the existing problems.
The City of San Luis Obispo currently provides all administrative,
secretarial staffing, legal requirements. Independent operation may
require additional staffing to efficiently and productively perform
the administrative functions for the commission.
6.0 Requirements to Chancre The Present Mode of Operation:
when the Commission was established in 1957 an agreement for the
construction and operation of the project was instituted. This
agreement established the City- of San Luis Obispo as the agency which
was to operate and maintain the Whale Rock Project. To change the
existing staffing arrangement would require an. amendment to the
Construction and Operation Agreement.
7.0 Consequences of Not taking Action:.
The current mode of operation will continue. Additional
administrative costs will not be incurred to properly manage the
commission affairs.
8.0 Action Recommended:
Staff recommends that the Commission continue the current method of
operation of using the City of San Luis Obispo staff.
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