HomeMy WebLinkAbout04/21/1992, 1A - STATE WATER PROJECT PARTICIPATION MEETING DATE:
MY Of San LUSS OBISPO Aril 21 1992
COUNCIL AGENDA REPORT ITEM NUMBER:/ w
FROM: William T. Hetland, Utilities Director
SUBJECT: STATE WATER PROJECT PARTICIPATION
CAO RECOMMENDATION: Authorize the City's further consideration of
participation in the State Water Project
REPORT IN BRIEF
The City of San Luis Obispo has identified a need for 6665 acre feet of additional
water in order to meet water supply requirements under the City's current General
Plan. A number of proposed projects have been identified that will contribute to this
needed supply. Those projects include the Salinas Reservoir Expansion Project,
Nacimiento Reservoir, and the State Water Project (SWP). This reports identifies a
number of issues associated with the SWP emphasizing reliability, water quality,
growth inducement, costs, and environmental impacts. The City held an advisory
election in April 1991 which had 53% against the SWP and 47% for the SWP. After
analyzing the advantages and disadvantages of the SWP and the possibilities and the
unknowns about other potential water supply options, staff recommends that the
Council authorize further consideration to participate in the SWP.
DISCUSSION
City approval of the State Water Project is a three step process. The first step is to
authorize the City's further consideration of participation in the SWP. That is the
purpose of this agenda report. If the Council decides to consider the SWP then it
will be necessary to go to the second step of the process which involves making
certain environmental determinations for City participation in the SWP. This step is
necessary prior to any formal approval on the SWP. The third step is to then
authorize execution of two agreements with the San Luis Obispo County Flood
Control and Water Conservation District. The two agreements are the proposed
Water Supply Agreement for state water and a Water Treatment and Local Facilities
Agreement. Separate agenda reports discuss these determinations and authorizations.
If the City decides not to further consider participation in the SWP, then no
additional action is required. The City must make a decision on the SWP and notify
the County by May 15, 1992.
This agenda report outlines the City's water needs for full build out of the City's
current General Plan. It then reviews the various water supply projects the City has
analyzed and provides a status of each project. Finally it addresses the SWP and
associated issues.
CURRENT WATER SUPPLY
The City receives it water from the Salinas and Whale Rock Reservoirs and from
several groundwater wells. The safe annual yield of these supplies is 7,735 afy. This
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is the City's revised, coordinated safe annual yield including groundwater and is based
on analysis of rainfall/water storage for the time period from 1946 through 1991,
which includes the recent 1986 - 1991 drought period. The safe annual yield is the
amount of water that the City could use annually during our historical worst case dry
period and not run out of water. The safe annual yield is a measure of the City's
available water supply to meet the current needs of the community and future
requirements. It is also the level at which the City may safely issue building permits.
FUTURE WATER SUPPLY REQUIREMENTS
The City's future water supply requirements were developed by determining the future
population for the City and multiplying that by the unit amount of water needed for
each city resident. An adjustment factor for siltation and a planning reserve were
then added to determine the City's total water requirements.
The water supply requirements were determined for a specific study area
encompassing the Urban Reserve Line as established by the City Council in 1977 and
reaffirmed in the current general plan update process. The City s Residential Growth
Management Regulations adopted in 1982 are the basis for developing future
population projections. These regulations set population growth at an average annual
rate of two percent during the 1980's, declining to one percent after 1990.
Table I lists the population Table z POPULATION PROJECTION
projection from 1990 to 2015,
basically increasing at a 1%
compounded rate. Under the 1990 1995 2000 2005 2010
City's General Plan, full 2015
development would accommodate 41,500 43,500 45,400 47,700 50,100 53,000
a population within the City limits
of 46,000 people and 53,000 within
the urban reserve limit. The city
limit population level is estimated to occur around 1997 and the urban reserve limit
around 2015. Using appropriate population levels in planning supplemental water
supplies will assure San Luis Obispo that adequate water supplies are available when
needed in the future. This planning will minimize problems during water deficient
periods and mitigate the need to implement stringent water conservation measures.
An increased supply will also provide more flexibility to the City regarding its future
water needs. An inadequate supply will necessitate rationing, will stop development,
and will do harm to local economic activity.
Development of major water supply facilities requires extensive lead time with time
periods of ten years or more being common. It is therefore customary to review
water needs on a long-term planning period of many years. We have chosen a
planning period of 25 years, from 1990 to the year 2015. But it must also be
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understood that additional water requirements will likely extend beyond this period.
These additional long-term water needs are not included in this analysis, but will have
to be faced by future community decision-makers.
The water requirement for each resident is called per capita water use and is a unit
measurement of the water used by a
community. It is calculated by
Per Capita Water Use 1970 to 1989 dividing the total water used by the
Gily of San Luis Obispo _ community population. This measure
----=^ - �ISO includes residential, commercial,
42- ;:' governmental and industrial water
., `•,.:' uses, as well as water unaccounted for
F 36 such as leakage, fire flows and meter
o x under registration of water use.
M L 3° �..-A,-..-•
Ai
The three years prior to conservation
30 '� the per capita consumption approached
28 A' 200 gallons per capita as seen in
7° 75 TW
Figure 1. This sharp increase in the
• PUlMllnlgn + Au
r ---- per capita consumption is largely
Figure 1 Gallons Per Capita Use, 1970 - attributed to an increase in
1989 commercial and industrial development
and an escalated commuter population.
Due to the drought, per capita water use over the last three years has decreased to
the 100 to 120 gpcd range. There are no predictions as to the level of conservation
sustainable upon the end of the drought. Based on this analysis and the assumption
that water conservation will slightly reduce consumption and offset commuter
influences, 195 gpcd per capita is used for projecting future water requirements.
Water requirements, based on the Water Resource Requirement
q City of San Luis Obispo
population projections and 195 gpcd
use, are shown in Figure 2. The City �� 72
requires 10,050 afy of water for full 5 � ,a
development within the existing city _
limits and 11,580 afy by 2015 when the A 011L" " � � ' g LL
urban reserve limit population is a € °5
reached, given current zoning. ° ; A 7
It should be noted if the City were ,� AA ,_ 90 95
Based on i 95 GPC
not involved in water conservation °° '° ° '° °
efforts, the water consumption would
•-Population Eshmnlad Pat).'0-Adual AF �-Eshmnlcd AF 1
exceed the currently adopted safe �_ —. J
annual yield. Therefore, development Figure 2 Resource Need at 195 gpcd
of additional yield will be required for
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the City to issue new building permits, not including those due to the retro-fit
program.
Studies have shown reservoir siltation reduces the storage capacity and safe annual
yield over time. Since it is not economically practical to remove the silt, it is
necessary to develop supplemental water supplies to offset the siltation losses.
Siltation loss at Salinas and Whale Rock reservoirs is estimated at about 820 of total
over the next 25 years.
The City revised its safe annual yield determinations in the 1992-93 Annual Water
Operational Plan. Changes may occur in the future due to 'live stream" requirements,
new hydrological data based on future droughts, changes in water rights law, and
other factors. For these reasons, it is prudent to have a planning reserve of
additional water supplies to account for future unexpected conditions. The City
adopted an additional 25% increase, or about 2,000 of of its safe annual yield as a
planning reserve.
The City must develop a total of 14,400 Table II Total Safe Annual Yield
afy or an additional 6665 afy over the Requirement for 2015
next 25 years, summarized in Table II.
The City established a policy to obtain a
safe annual yield of 14,400 afy in order Source AF
to meet its current and 25-year future
water needs, account for siltation in its Existing Safe Annual Yield 7,735
reservoirs and to include a planning Urban Reserve
reserve for any unexpected future events. Deficit 3,845
By the year 2015, when the Urban Siltation Deficit 820
Reserve Limit population will be Planning Reserve 2.000
reached, only 55% of the water needed
will come from sources now on-line. Total 14,400
This means over 45% of the water the
City will need has yet to be developed
and this does not take into account
water required for any annexation areas outside of the current urban reserve limits.
WATER SUPPLY PROJECTS
In an effort to meet the City's future water resources requirement, a number of
alternatives have been analyzed since the City began exceeding its safe annual yield in
1986. The City has adopted a multi-source water supply policy which encourages the
development of alternative water resource projects. The project alternatives that have
been considered and a brief status report on each are discussed below.
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EXPANSION OF SALINAS RESERVOIR
The City retained the firm of Woodward Clyde Engineers to perform a feasibility
study for increasing the storage at the Salinas Reservoir. The study covered three
basic areas; geotechnical and dam stability, hydrology and costs, and permit
requirements and significant environmental issues identification.
The stability of the dam during an earthquake and its ability to handle a maximum
probable flood was reviewed and determined to be satisfactory. Raising the spillway
would inundate additional areas behind the dam. This increased body of water would
enhance both the fishery and the habitat.for aquatic wildlife. It would also impact
and require relocation of some of the existing recreational facilities around the
reservoir. Water quality from the Salinas Reservoir would not likely change after
increasing the level of the spillway. The initial environmental analysis has not
indicated any significant environmental impacts that would preclude development of
the project. Initial discussions with the State Water Rights Board indicate the City's
water right permit would not have to be amended for the increased storage.
The Army Corps of Engineers (Salinas Reservoir owners) has just recently indicated
they are reluctant to support the project due to their long standing desire to dispose
of the dam and reservoir. Therefore the City will have to work with local agencies to
resolve the ownership issue before the project will be completed.
The City's consultant is currently developing the draft EIR which is scheduled to be
completed in March 1993.
HANSEN AND GUL4RTE CREEK
Hansen and Gularte Creeks are two small creeks which run off the Cuesta Grade
north of San Luis Obispo. The City obtained water rights on the creeks from private
property owners in the early 1900's. This supply was used for many years by adding
chlorine for disinfection and discharging the water into Reservoir #1. This practice
continued until the State Department of Health Services required full treatment
before the water could be consumed. Since treatment was very expensive and other
sources were available, the City stopped diverting the water into its reservoir and
instead discharged it into San Luis Creek. An engineering feasibility study and an
environmental impact report on reestablishing the Hansen and Gularte supply were
developed. The EIR concluded that significant environmental impacts on the creeks
would occur if the City proceeded with the project. The City's water rights attorney
also concluded that the City had lost its water rights due to nonuse. For these
reasons this project was terminated.
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STATE WATER PROJECT
The State Water Project is a system of reservoirs, pumping plants, canals and
pipelines, and power plants that deliver water from Oroville Reservoir and the
Sacramento-San Joaquin Delta to the State's 30 water service contractors. San Luis
Obispo County Flood Control and Water Conservation District has an annual
entitlement of 25,000 afy. The City has requested 3000 afy of that amount. It is
proposed this water would be delivered to San Luis Obispo together with Santa
Barbara County's entitlement through the Coastal Branch of the California Aqueduct.
The final EIR for this project and the required local projects has been completed and
undergone extensive public review. The SWP is discussed in detail later in this
report.
GROUNDWATER
The current groundwater program uses seven municipal wells and two or more
irrigation wells. Approximately 40%, about 160 of per month, of current domestic
demand is being met from groundwater supplies. Four of the existing wells showed
declines in pumping water elevation during extended drought periods which require
operation on a rotational basis. The opportunity for developing additional well
capacity within the City is limited. The City's current identified yield of 500 afy from
groundwater is realistic. The City can extract an additional 1,000 to 2,000 afy of I
groundwater for short-term emergencies if steps are taken to properly manage the
basin. Additional long-term sustained yield from groundwater is not practical.
The City is still pursuing the use of some private and public wells in order to spread
out the wells within the basin and to obtain a site for relocation of the existing
carbon filtration tanks.
COASTAL STREAMS DIVERSION PROJECT
The Coastal Streams Diversion and Storage Project was a joint project with the
Whale Rock Commission and the City of Morro Bay. The project proposed a series
of small seasonal dams on the three coastal creeks between Morro Bay and the
Whale Rock Reservoir. High runoff flows during the winter would be pumped back
to the Whale Rock Reservoir for storage. The study includes review of the impacts
to the fishery and habitat along the streams.
The City contracted with Leedshill-Herkenhoff to review the project in light of the
City's current water resources and to determine the direct benefit to the City of San
Luis Obispo. Their analysis shows the City could receive from 60 afy to 230 afy.
The limiting factor in the yield of the project for the City is a constraint in the
Whale Rock pipeline. The cost of the project was estimated to be $83 million with
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resulting water costs from $1,900 to $9,500 per af. Because of the low yield and high
cost this project was dropped from further consideration.
NACIMIENTO RESERVOIR
The Nacimiento Reservoir is owned and operated by the Monterey County Flood
Control and Water Conservation District. San Luis Obispo County Flood Control and
Water Conservation District has an agreement with Monterey for 17,500 afy. About
1,300 afy is used around the lake area, leaving 16,200 afy for distribution to other
parts of the county. There are currently no specific allocations for the Nacimiento
water to the other agencies in the county, though tentative planning requests have
exceeded the total available supply. This project has not had the extensive review i
and investigation that the SWP has experienced. The City has requested an allocation
of 4390 afy and encouraged the County to proceed with the pre-design and
environmental work for this project. The County has retained an engineer to begin
this work which is scheduled to be completed in the spring of 1993.
WASTEWATER RECLAMATION
In the past, reclaimed water was not considered a cost effective water supply and
subsequently was not included as a viable option in the Water Management Plan.
The changing environment in water resources, combined with the high quality water
that can be produced by upgraded wastewater treatment facilities, has made reclaimed
water a potentially cost effective and available water supply. Reclaimed water is not
considered potable water and cannot be used for human consumption but can be used
for groundwater recharge and landscape irrigation purposes. Reclaimed water should
now be considered a component of the overall water management plan for the City.
City staff is currently developing the EIR and engineering report for the water
reclamation project. A key issue is the establishment of minimum creek flows to
meet environmental considerations. This is critical in developing the amount of water
that may be reclaimed.
WATER PROJECT SUMMARY
Table III provides a summary of the amount of water the City would receive if it was
able to develop the balance of all the currently proposed water projects. Given the
City's past experience in developing new water resources and realizing that our
options are quickly diminishing, staff is concerned that only a few reasonable choices
may be left. Though the three projects together could meet the City's general plan
needs, there is no guarantee the City will be able to complete these projects nor
receive the amount of water requested. It is important for the City to avail itself of
every available water supply. This summary and the previous discussion is presented
to provide a perspective on the City's required and available water resources when
making a decision on the State Water Project. See Exhibit A for Water Projects
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Table III Water Project Summary
Comparison between the SWP and
Nacimiento Reservoir projects.
STATE WATER PROJECT Pr— Potential Yield (afv)
I
In 1947, the State Legislature funded the Salinas Expansion 1650
water resources investigation that led to tate to 4390
S
the development of the SWP. The State Waater Project 3000
outcome of that study was The Califomia Total 9040
Water Plan, which presented preliminary
plans to meet the State's ultimate water
needs. Financing and construction of
the SWP facilities was authorized in 1959. The first SWT water was delivered in
1962, two years after construction began. The SWT is a complex combination of
dams, reservoirs, pump stations, aqueducts and power plants that stretch almost the
length of California.
San Luis Obispo County entered into a SWP contract in 1963 for 25,000 acre feet.
The County has been unable to utilize SWP water because of the lack of the coastal
aqueduct to deliver the water to San Luis Obispo and Santa Barbara Counties. The
County has been paying for their portion of the SWP since 1964 and paid $1,247,001
in 1992 alone. After a number of efforts to get approval of the SWP and begin
construction of the Coastal aqueduct, finally in 1987 work was begun on the
Environmental Impact Report for the Coastal Aqueduct. That report was completed
in 1991 and a local facilities EIR was completed in 1992. The City of San Luis
Obispo had an advisory election in April 1991. The results were 4,198 (53%) against
the SWP and 3,716 (47%) in favor of the SWP.
PROJECT DESCRIPTION
If the City chooses to participate in the SWP, it will receive its requested allocation
of 3000 afy through two connections to the 54" Coastal Branch of the SWP. One
connection will be in the Reservoir Canyon area. It will be a 10" to 12" pipeline
which will discharge to a hydroelectric plant and then enter the City's reservoir #1
located north of San Luis Obispo next to Highway 101. The second pipeline will be
a 8" pipeline southeast of town which will run along Orcutt Road into town.
Treatment of the water will be provided by a regional water treatment plant located
in Palonio Pass off of Highway 46 east of Shandon.
ENVIRONMENTAL IMPACT
Two EIRs have been written for the SWP. One is the State Water Project Coastal
Branch Phase II and Mission Hills Extension and the second is the State Water
Project Coastal Branch Local Distribution Lines and Facilities. These EIRs for the
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SWP identified impacts associated with the project. The issues have been very
controversial and the subject of many debates. This report has attempted to
summarize those issues that have developed the most concern for the City of San Luis
Obispo. The report also suggests alternatives to mitigate some of these concerns.
Though there are a number of issues associated with the SWP, the key five issues
most often discussed regarding the City of San Luis Obispo are:
- Reliability
- Water Quality
- Environmental Concerns
- Growth Inducement
- Costs
Each of these issues is discussed in more detail below.
RELIABILITY
The SWP has contract commitments for 4.2 million acre feet per year. It currently
has facilities to be able to deliver 2.4 million acre feet. In order to meet its full
contractual obligation it is necessary for the state to develop a number of additional
facilities including storage reservoirs, pumping stations, conservation facilities, and
mitigation measures. In the last two years the SWP has had problems meeting
delivery requests. In 1990 water deliveries to agriculture were reduced but full
deliveries were made to municipal and industrial (M&I). In 1991 no deliveries were
made to agriculture and M&I customers experienced a 70%, reduction in water
deliveries. In 1992 the final delivery figures have not been determined, but it is
estimated that a reduction will also occur.
This is a very uneasy situation for a water agency to be in if they are dependent on
the SWP as a primary source of water. However, an important point that seems to
be overlooked because of the recent prolonged drought situation is the fact that the
SWP has been able to meet its contract deliveries for the past 25 years and has even
been able to provide surplus water in 8 of those years. Because of increased
demands in the future it is unlikely that this track record will be continued.
However, if the City had been a SWP user over the past five years the impact of the
drought upon the City would have been significantly less. If the City had been taking
its base allotment of 3000 acre feet per year since 1986, we would not have had to
implement mandatory water rationing and we would have also had an additional 8,000
acre feet of water in storage at the time the SWP had to cut back on deliveries. The
utilization of the SWP would be a significant benefit to increased flexibility of the
City's water resource operations.
Even though the State is trying to develop projects to meet their contractual
obligations, it is clear that this will be difficult. Therefore any agency that
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participates in the SWP needs to be very aware of this and should be prepared to
make adjustments as necessary. This does not mean that the SWP is not a viable
water resource, especially since the City has other water resources that it can fall
back on in difficult times.
The Governor of the State and the State Department of Water Resources have
recognized and have dealt decisively with the issue. This past year the State
developed a Water Bank which was able to obtain 800,000 acre feet of water from
agricultural users to create a Drought Emergency Pool. This water was made
available to other users for $175/acre foot. This emergency water was provided to
every agency that requested it. But the only agencies that were able to take
advantage of this offer were those connected to the SWP. The City of San Luis
Obispo could not participate in that program because it did not have physical access
to that water. This points out one of the primary benefits of the SWP is the
flexibility that the system can provide. It also emphasizes the ability of the State to
marshall its resources to respond to major emergencies.
Currently the SWP can deliver 2.4 million acre feet of water or 57% of its contract
entitlement as a firm yield during a seven year dry period. It can deliver more
during normal and wet periods. An alternative for the City to consider is to identify
a reduced amount of SWP water which could be allocated to the City's safe annual
yield. The City would still take as much of their entitlement each year as possible
which would result in additional water resources being retained in the reservoirs and
groundwater basin. It would also result in a higher unit cost for SWP water
depending on use but it would help the City avoid being at a disadvantage during
times of drought and potential cut backs in SWP deliveries.
The reliability concerns of the SWP can be dealt with through the City's flexibility of
its alternative supplies and proper water resource management and the State's ability
to respond to emergencies. The City's adopted multi-source water supply policy
means, in essence, that the City should not be solely dependent on any one source
and should seek a balance between different sources of water.
WATER QUALITY
The water currently being delivered from the SWP meets the water quality standards
established by the California Department of Health Services.
The California aqueduct water does carry trace amounts of pesticides and organic
chemicals. These constituents are measured regularly and are within the State limits.
These trace amounts can also be removed through conventional water treatment
practices.
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Asbestos exists in small quantities in the water due to storm runoff entering the
aqueduct. Average asbestos levels are well below state limits for raw water.
Occasionally, the asbestos levels are higher. While the effects of inhaled asbestos are
well known, the effects on ingesting asbestos are not. The Environmental Protection
Agency and the State Health Services have not established a limit for asbestos in
drinking water. The proposed limits will not be a problem for conventional water
treatment processes to handle. The State is reviewing an EIR/EIS on a project and
have revised interim operational standards which will eliminate the asbestos from the
aqueduct.
Another key water quality issue involves trihalomethanes (THMs). The THMs are
formed when organic compounds from peat soils or decaying vegetation react with
chlorine during the disinfection process. THMs can also be formed when bromides
and chlorine react. The bromide levels in the SWP occur during low Delta water
flows that allow ocean salt water to be pulled into the aqueduct. THM standards are
currently under review and it is expected that the standards will be strengthened. The
City of San Luis Obispo has recently completed a design to modify its water
treatment plant changing its disinfection process from chlorine to ozone which will not
generate THMs. The SWP treatment being proposed will also be using an alternate
disinfection process to limit THM formation. Provisions are also being made in the
treatment plant design to add additional treatment processes if this should become
necessary in the future.
A sanitary survey in 1990 identified a large number of drains and discharges to the
California aqueduct, though many are minor. These discharges included agricultural
drains and runoff from roads. Though their impact on the total water quality of the
SWP has not been clearly identified, the Department of Water Resources has
appointed a committee to analyze the discharges and their impact on the overall
water quality of the SWP. At this time those discharges would not impact the water
quality that the City would receive from the SWP.
Water quality is a primary concern for any water agency. The history of the water
quality of the SWP is good in that it has been able to meet state health standards for
over the 19 million customers that currently receive state water. The potential
problems that may be experienced in the future currently can be addressed with
existing water treatment technology and changes in the SWP operations.
ENVIRONMENTAL CONCERNS
Environmental concerns associated with construction of the Coastal Branch of the
SWP are typical of major water supply and construction projects of this type. Some
impacts have the potential for being significant but will be reduced to less than
significant under the proposed mitigation plan. By way of comparison, it is
anticipated that the same statement can be later made of the yet-to-be defined
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Nacimiento Water Supply Project. Two environmental impacts that are considered to
be "unavoidable significant environmental impacts" are short-term air quality and
growth inducement impacts. The short-term air quality impacts are related to
construction activities for the pipeline and the treatment plant. These impacts will be
mitigated through development of a comprehensive construction activity and
management plan in cooperation with the SLO Air Pollution Control District.
Growth inducement impacts are addressed further on in this report.
The primary environmental concern of the SWP is its impact on the Sacramento/San
Joaquin Delta. The Delta is experiencing problems because of the large quantity of
water which is being pulled out of the Delta by the SWP and the federal Central
Valley Project (CVP). The winter run Salmon and the Delta Smelt are just two of I
the species that are currently being impacted. These are strong indicators of
problems to the biological systems within the delta. The two key concerns affecting
the Delta are the quantity of water needed to maintain adequate fresh water flows to
the San Francisco Bay and how to more efficiently get water through the Delta to the
SWP and CVP pump stations in the south. The federal Endangered Species Act and
the Clean Water Act are playing a major role in trying to establish and enforce Delta
standards. Governor Wilson's Water Plan includes provisions for stronger standards
for the Delta and Delta outflows. It also supports State ownership of the CVP which
will provide for flexible and coordinated operations of Delta pumping to mitigate
biological impacts. How stronger Delta standards may impact the deliveries from the
SWT is unknown at this time, but they may result in a reduction in the amount of
water taken from the Delta and or restrictions on Delta pumping schedules.
The flows for San Luis Obispo and Santa Barbara Counties, assuming their full
allotment is taken, only represent about 3% of the SWP. These flows will be met
through reallocation of existing SWP deliveries. The City of San Luis Obispo SWP
request of 3000 acre feet represents approximately one tenth of one percent of
current SWP deliveries. Whether or not the City participates in the SWP will have
no bearing on the amount of water the SWP will deliver statewide. While
recognizing the Delta water withdrawal issues as legitimate and as needing to be
properly addressed in the future, the City's participation or non-participation is of
extremely limited consequence on this issue.
GROWTH INDUCEMENT
The EIR identifies water as a constraining factor to growth for San Luis Obispo. It
also identifies that water is not the only constraining factor to growth. Other factors
influencing its ability to grow include having adequate schools, air quality, roads, and
groundwater. Mitigation measures are identified which the City is currently
implementing. Those measures include school fees, adoption of the County Air
Quality Plan, a growth management ordinance, the City's Water and Wastewater
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SUPPLY
Coastal
SWP Aqueduct TREATMENT DISTRIBUTION TOTAL
Debt Service $ 27 $198 $105 $24 $354
Administration N/A N/A $ 3 N/A $ 3
Operation and
Maintenance $ 23 $169 $ 59 N/A $251
TOTAL COST
PER ACRE FOOT $ s0 $367 $167 $ 24 $608
City Share of
Capital Costs $1,215,000 $9,020,000 $2,880,000 $727,000 $13,842,000
Figure 3 CITY OF SAN LUIS OBISPO - State Water Per Acre Foot Cost
How does ties cost dm= 4Wm utg on who participates uz the proied?
In the analysis above, the per acre foot cost of $608 assumed the County would take
12,268 acre feet of its 25,000 entitlement and the City would receive its full
subscription of 3,000 acre feet of state water. If this assumption changed, once the
number of participants and their corresponding level of participation is determined
("allocated" subscriptions) and the County decides if it will subscribe for any additional
amount ("unallocated" subscription) for those who may elect to subscribe in the future,
the cost will vary.
These varying levels of participation and unallocated subscription were analyzed by
Smith-Barney, financial advisors for the project.
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►�h�,►�H►��►�Ilililip�' �IIIIU city O� Sark �aIS OBISPO
COUNCIL AGENDA REPORT
State Water Project Participation
Page 13
Management Element, and specified objectives in the General Plan regarding sensitive
environmental areas.
Increased growth will also impact air quality and transportation within the City. This
can be mitigated by the adoption of the Clean Air Plan and transportation and land
use strategies. Loss of habitat and open space are also the result of growth, but can
be mitigated through adhering to the City's General Plan and Open Space Element
policies.
Besides the City's limited availability of land for development, the City's primary
growth mitigation is its growth management ordinance and development regulations.
Since these regulations control the rate of building permits issued when adequate
water resources are available, they tend to mitigate the availability of water as a
growth inducement factor. Therefore, the lack of water will definitely restrict growth
but the converse is not necessarily true since the City has growth limiting policies and
regulations in place. The City's adopted growth goals as embodied in the General
Plan cannot presently be met because of a lack of water, and even with the SWP we
will be short. The SWP will help meet the City's adopted growth goals and policies.
COSTS
Three key questions must be discussed to evaluate the financial impact of
participation in the State Water Project:
■ How much per acre foot will State Water cost the City of San Luis Obispo?
■ How does this cost change, depending on who participates in the project?
■ How does this cost change, if contracted delivery levels are less than 3000 aty?
How much per acre foot wiQ State Water cost the City of Sae Luis Obisno?
The County of San Luis Obispo estimates that the per acre foot cost for state water
for the City of San Luis Obispo will be between $500 and $650. A more exact cost
will be determined when the County decides its level of participation in the SWP.
Figure 3 shows a total cost of $608 per acre foot and assumes that the County will
subscribe for 12,268 acre feet, 10,286 for agencies that sign SWP contracts and 2,000
of which is unallocated or reserved for some future water users. It also assumes that
the City subscribes for 3,000 acre feet per year. These financial estimates were
provided by the financial advisor for the project, Smith-Barney, and the assumptions
were ones that they felt were conservative and representative.
I���►�,►�►�iivi►►IIIIIII►° l�Dl MY Of san LOIS OBISPO
COUNCIL AGENDA REPORT
State Water Project Participation
Page 15
COUNTY OF SAN LUIS OBISPO SUBSCRIPTION City
Allocated Unallocated Total Cost
Best Case 25,000 0 25,000 $533
17,500 0 17,500 $547
10,266 0 10,268 $564
Figure 4
Assumption 10,268 2,000 12,268 $584 1/
I
10,268 7,232 17,500 $637
Worst Case 10,268 14,732 25,000 $709
1/ The $584 cost shown here is the same as in Figure 3's $608/af. The
$584 does not include the cost for the City's local connection to
the State Water Project, a cost that is estimated at $24/af. It
assumes 3,000 of for the City of San Luis Obispo.
The range of costs between the best and worst cases is $533 to $709, a difference of
$176 per acre foot. The primary factor driving the variation in costs is the sizing of
the local water treatment plant. San Luis Obispo County is passing on the cost for
oversizing the treatment plant to the local contractors and will recapture those costs
as future users connect to the system. The plant must be large enough to treat all of
the state water subscriptions by Santa Barbara and San Luis Obispo Counties.
However, as the Santa Barbara County Flood Control and Water Conservation
District have already committed to participating at the level of 47,578 af, the
variations of San Luis Obispo County participation shown above do not significantly
change the cost of the Water Treatment Plant, and, therefore, have only a minimal
impact on the City of San Luis Obispo. (The total maximum subscription between
the two Counties is 72,578 acre feet, or 47,578 acre feet plus 25,000 acre feet.)
The worst case is only for information purposes. It is unlikely the County would
request 14,732 acre feet of unallocated state water.
How does this cost dMM if contrruteddelivery IeveIs me less that 3 000 afy?
To explore this issue, the chart below assumes the same level of subscription as in
Figure 3, with the County contracting for 12,268 acre feet, 2,000 of which is
unallocated. This generated a City of San Luis Obispo cost of $608/af ($584 plus $24
I�0•�s'
�������►r►►►�IllllflllPiall city of San LuiS OBISpo
COUNCIL AGENDA REPORT
State Water Project Participation
Page 16
for distribution) for 3,000 acre feet. The chart illustrates how this cost increases when
the State cannot deliver the City's full entitlement.
It also shows a 'blended" cost at each of the delivery levels. The blended costs
reflect the cost of purchasing additional water, making up the deficit in any delivery,
from the State's Water Bank. The assumed cost of this additional water is $175/acre
foot, based on what the State Department of Water Resources offered to urban users
last year when the state could only deliver 30% of its contractual obligations.
SUBSCRIPTION LEVEL:
County of San Luis Obispo subscribes for 12,266 acre feet, 2,000 of which are unallocated.
Amount Delivered to City of San Luis Obispo (Acre Feet)
3,000 of 2,500 of 2,000 of 1,500 of 1,000 of 500 of
SWP Costs
Per Acre Foot $584 $701 $876 $1,168 $1,752 $3,504
Blended Costs
Per Acre Foot $584 $613 $642 $ 672 $ 701 $ 730
Though the unit costs for SWP range from $584/af to a high of $730/af (at the
effective blended rate) for a single year, depending on the level of deliveries, that is
not representative of the true cost of state water. That must be analyzed over a
number of years which would include many years of full deliveries. When that is
done, the unit costs average out over time to a more reasonable leveL
These projected costs need to be placed in a larger perspective of how much it costs
to produce a new water supply on the Central Coast in the early 1990's, when it is
difficult to estimate the costs based on complexities surrounding such a project. Two
examples of present City efforts to develop a new water supply are the Coastal
Streams Division Project and the Desalination Project. Calculated costs for the
Coastal Streams Division approached $9500 per acre feet, and for the Desalination
Project, calculated costs approached $2000 per acre feet. These figures just deal with
the cost aspects and do not deal with the numerous permit and other requirements,
and with the possibility that, despite immense efforts, the ultimate answer from the
several approval agencies involved may be "no".
���h�i�►il�illllll�i1Q IIIIIII Cit' Of San LAS OBI SPO
COUNCIL AGENDA REPORT
State Water Project Participation
Page 17
FISCAL IMPACT
It is proposed to fund the SWP through a combination of water rates and connection
fees. The analysis presented here is based on preliminary information the City has
received from the County and their financial advisor. The assumptions are the same
as outlined above in the SWP cost section. It is assumed that SWP water will cost
the City $608 per acre feet and the capital costs are those outlined in Figure 3 on
page 13.
If the City subscribes for 3,000 acre feet per year of state water at $608 per acre foot,
it will need to generate $1.8 million each year. This would result in a monthly cost
requirement for an average single family resident of about $7.00 per month. This
amount would decline over time as connection fees and more users are added to the
system.
The connection fee is to recover the cost of the SWP from new users as they connect
to the City system and to reimburse the current rate payers over time. The City's
current connection fee of $2,627.60 per single family equivalent is adequate to fully
recover SWP costs. No increase in the connection fee would be required.
SUMMARY
The SWP is by no means the perfect water source. It does have some difficulties
with reliability, impacts on the Delta and cost issues. In this day and age it is
impossible to develop a water resource that can perfectly meet all the criteria that the
City and other agencies would hope to impose.
However, in the final analysis, these factors appear to be significant considerations:
o The Gay's present water supplies are not adequate to meet the longer-term
water needs of our community.
o The SWP pipeline will be going through the City of San Luis Obispo
o Reliability concerns are moderated by the fact that the City has alternative
water supply resources in its two reservoirs and groundwater suppply
o The water quality issues can be handled by state of the art treatment plants
and revised SWP operations.
o The City's participation will have no impact on the Delta problems which will
have to be resolved on a statewide basis.
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��uia��►�i�ilillllll jq�lllll city of san L"I S OBI SPO
COUNCIL AGENDA REPORT
State Water Project Participation
Page 18
o The City has a General Plan and existing growth regulations in place to
monitor and control growth.
o The cost variations are not significant enough to reject the project when
compared to other water supply alternatives
San Luis Obispo County has had a long history of failing to take advantage of water
supply projects for a number of reasons, only to regret it later. Three examples of
lost opportunities which have been later regretted were: the Nacimiento project built
by Monterey County; Mono Bay's decision not to participate in the Whale Rock
Project; and the City San Luis Obispo not participating in the Lopez project.
The City should not and would not be solely dependent on the SWT. State water
would be only one component of a multi-source water supply, with the City's two
existing reservoirs and our groundwater supply system being the other major
components of the system. The City Council's policy of a multi-source water supply
for the City is a correct position and should include the State Water Project.
Attachments: Exhibit #1 Water Projects Comparison
P\B111\SNP.CA0
MIBIT 1
City of San Luis Obispo
Water Projects Comparison
ISSUES STATE WATER PROJECT NACIMIENTO PROJECT
COST $240 million unknown
$608 per acre foot
WATER Water quality is generally good Water quality is very good. Will
QUALITY and meets all state standards. require standard water treatment.
Will require water treatment. Concerns about mine waste
Concerns about agricultural runoff.
contaminants and THM,s.
RELIABILITY Reliability is a major concern. Contract with Monterey County
OF SUPPLY SWP is currently over subscribed considered very reliable.
and will require additional projects
in order to meet its obligations.
GROWTH Growth impacts are minimal since Growth impacts are minimal since
IMPACTS the City has growth regulations in the City has growth regulations in
place which are not impacted by place which are not impacted by
an adequate supply of water. an adequate supply of water.
QUANTITY The City has requested 3000 acre The City has requested 4390 acre
feet per year. Additional water feet per year. The project is over
may be available since the full subscribed by about 78% which
entitlement has not been may result in a reduction of the
requested. The City would have requested allotments depending
to request an additional allotment. on other agency participation in
the SWP.
SCHEDULE 4 years after approval to begin or unknown
about 1996.
ENVIRON- Draft Environmental Impact Report No environmental work has been
MENTAL has been completed. Key issues done on this project. Preliminary
identified include: study and environmental analysis
Delta impacts with increased currently under way. Completion
water removed for the delta of draft expected spring of 1993.
pesticides, selenium and
organics in the water
minor construction impacts
which can be mitigated
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