| ITEM #: 11. DATE: 03/04/2024 AI #:1885 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | APPROVE AN AMENDMENT TO THE MULTI-PARTY AGREEMENT FOR BRINE DISPOSAL |
| STAFF PRESENTER(S): | Barbara Chappell, Water Services Director |
SUMMARY
Amend the Multi-Party Agreement between Arizona Public Service Company (APS), the City of Goodyear, and the City of Buckeye to accept Municipal Brackish Water (Brine) into the Palo Verde Nuclear Generating Stations (PVGS) water reclamation supply system pipeline to incorporate additional work, create a new capital improvement project (61015), and approve related budget transfer and expenditure.
STRATEGIC PLAN ALIGNMENT
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RECOMMENDATION
Approve the first amendment to the agreement to accept Municipal Brackish Water between APS, Goodyear, and Buckeye, create a new capital improvement project (61015), and approve related budget transfer of $15,000,000 and expenditure authority of $2,650,000. (Barbara Chappell, Water Services Director)
FISCAL IMPACT
The Brine Disposal project (60034) was approved in the FY2022 Capital Improvement Program with a total project budget of $31,000,000 including $1,000,000 in FY2022 to complete a pilot test and design of improvements necessary for PVGS to accept brackish water into its water reclamation supply system. The project included the design and construction of dedicated pipelines from the city’s two reverse osmosis (RO) facilities to the PVGS pipeline. Project 60034 is funded utilizing $31,000,000 in wastewater operational funds and wastewater bonds. This action will create a new CIP project (61015) that clearly separates the work necessary for PVGS from the pipeline projects work currently being managed by the city under CIP 60034. From a total project basis, no additional funds are being requested.
Staff is requesting expenditure authority in the amount of $2,650,000 to complete the additional scope items defined in the Amended Agreement.
| Original Budget | Changes | Amended Budget | |
| Project 60034 – Brine Disposal Project - Pipeline | 31,000,000 | (15,500,000) | 15,500,000 |
| Project 61015 – Palo Verde Nuclear Power Generating Station Improvements | 15,500,000 | 15,500,000 | |
| Total Amount: | 31,000,000 | 0 | 31,000,000 |
Staff is requesting expenditure authority in the amount of $2,650,000 to complete the additional scope items defined in the Amended Agreement.
BACKGROUND AND PREVIOUS ACTIONS
On July 18, 2022, the city council approved a multi-party agreement between APS, Goodyear, and Buckeye to accept brine into PVGS’ water reclamation supply system (WRSS) pipeline. The Agreement provided for an enhanced evaporation pilot test and development of infrastructure needed to allow Goodyear and Buckeye to deliver brine to the PVGS while mitigating the impacts of the poor-quality water. This work is referred to as the “PVGS Work.”
After the July 18, 2022, Council meeting, APS received comments with requested changes from their owners, staff reviewed the proposed changes, and concluded that they did not modify the intent of the terms of the agreement as reflected in the Council Action Report presented to Council on July 18, 2022. Council approved the modifications to the Agreement on August 29, 2022.
After the July 18, 2022, Council meeting, APS received comments with requested changes from their owners, staff reviewed the proposed changes, and concluded that they did not modify the intent of the terms of the agreement as reflected in the Council Action Report presented to Council on July 18, 2022. Council approved the modifications to the Agreement on August 29, 2022.
STAFF ANALYSIS
ANALYSIS OF AMENDMENT
The work under the current Agreement has reached a point where the city is ready to begin work on the pipelines that will allow the city to deliver brine flow to the WRSS pipeline (the “Pipeline Project”). The city will be constructing the actual pipelines to the WRSS pipeline and that will connect the Bullard Water Campus to the WRSS pipeline, but APS has to design and construct the ultimate tie-in to the WRSS pipeline.
The proposed amendment incorporates the design and construction of the tie ins for the pipeline the city will be constructing, to the WRSS pipeline. The cost of this work is the sole responsibility of the city. The proposed amendment also includes additional design work and procurement of long lead time items that will be needed once the Brine Project becomes operational. This work is part of the PVGS Work and the costs of this work is shared equally between Buckeye and the city.
The inclusion of the Goodyear Tie-In Work and the additional work described above requires a modification to various provisions in the Agreement, including Attachment A, which provides the Estimated Costs of the PVGS Work and the Goodyear Tie-In Work. The Estimated Costs of the PVGS Work is split between the work that has been completed and paid for and the work that remains to be completed.
The Agreement included a maximum amount of $2,000,000 that could be charged for the work under the agreement. The maximum amount was intended to identify the maximum exposure if either party dropped out of the agreement. Given the work that has been completed under the original scope and the additional work that is being added at Goodyear’s request, Buckeye’s maximum amount was reduced to $1,722,867 and Goodyear’s maximum amount was increased to $3,000,000 to account for the cost of the additional work for which Goodyear is solely responsible.
CREATION OF NEW CAPITAL IMPROVEMENT PROJECT REQUEST
The Brine Disposal Project and Pipeline CIP (60034) was approved in the FY2022 Capital Improvement Program with a total project budget of $31,000,000. This CIP project included the costs of the Pipeline Project and the APS Brine Disposal Project. The creation of the new CIP is being requested to separate the APS Brine Disposal Project from the Pipeline Work.
If this item is approved, the existing CIP (60034) will include only the Pipeline Project and, the budget for the CIP (60034) will be reduced from $31,000,000 to $15,500,000. The new CIP (61015) will include only the APS Brine Project and, the budget for it will be $15,500,000. Although there is no change in the budget for the initial combined project, separating the work into two different CIPs is warranted because they are managed separately, with the APS Brine Disposal Project being managed and delivered by APS and the Pipeline Work being managed and delivered by city staff. The separation will allow staff to clearly document the portions of the budget for each project.
BUDGET TRANSFER REQUEST
To split CIP 60034 – Brine Disposal Project - Pipeline into the two CIPs, staff is requesting council approve a budget transfer, transferring $15,500,000 from the budget for CIP 60034 to CIP 61015 (the APS Brine Disposal Project).
EXPENDITURE AUTHORITY
In FY2022 Council previously approved a capital expenditure of $1,000,000 for CIP 60034, which included the APS Brine Disposal Project and the Pipeline Project. Staff is asking Council to approve expenditure authority in the amount of $2,650,000 for CIP 61015 (the APS Brine Disposal Project), which is needed for the costs of the remaining work under the APS Agreement as amended.
The work under the current Agreement has reached a point where the city is ready to begin work on the pipelines that will allow the city to deliver brine flow to the WRSS pipeline (the “Pipeline Project”). The city will be constructing the actual pipelines to the WRSS pipeline and that will connect the Bullard Water Campus to the WRSS pipeline, but APS has to design and construct the ultimate tie-in to the WRSS pipeline.
The proposed amendment incorporates the design and construction of the tie ins for the pipeline the city will be constructing, to the WRSS pipeline. The cost of this work is the sole responsibility of the city. The proposed amendment also includes additional design work and procurement of long lead time items that will be needed once the Brine Project becomes operational. This work is part of the PVGS Work and the costs of this work is shared equally between Buckeye and the city.
The inclusion of the Goodyear Tie-In Work and the additional work described above requires a modification to various provisions in the Agreement, including Attachment A, which provides the Estimated Costs of the PVGS Work and the Goodyear Tie-In Work. The Estimated Costs of the PVGS Work is split between the work that has been completed and paid for and the work that remains to be completed.
The Agreement included a maximum amount of $2,000,000 that could be charged for the work under the agreement. The maximum amount was intended to identify the maximum exposure if either party dropped out of the agreement. Given the work that has been completed under the original scope and the additional work that is being added at Goodyear’s request, Buckeye’s maximum amount was reduced to $1,722,867 and Goodyear’s maximum amount was increased to $3,000,000 to account for the cost of the additional work for which Goodyear is solely responsible.
CREATION OF NEW CAPITAL IMPROVEMENT PROJECT REQUEST
The Brine Disposal Project and Pipeline CIP (60034) was approved in the FY2022 Capital Improvement Program with a total project budget of $31,000,000. This CIP project included the costs of the Pipeline Project and the APS Brine Disposal Project. The creation of the new CIP is being requested to separate the APS Brine Disposal Project from the Pipeline Work.
If this item is approved, the existing CIP (60034) will include only the Pipeline Project and, the budget for the CIP (60034) will be reduced from $31,000,000 to $15,500,000. The new CIP (61015) will include only the APS Brine Project and, the budget for it will be $15,500,000. Although there is no change in the budget for the initial combined project, separating the work into two different CIPs is warranted because they are managed separately, with the APS Brine Disposal Project being managed and delivered by APS and the Pipeline Work being managed and delivered by city staff. The separation will allow staff to clearly document the portions of the budget for each project.
BUDGET TRANSFER REQUEST
To split CIP 60034 – Brine Disposal Project - Pipeline into the two CIPs, staff is requesting council approve a budget transfer, transferring $15,500,000 from the budget for CIP 60034 to CIP 61015 (the APS Brine Disposal Project).
EXPENDITURE AUTHORITY
In FY2022 Council previously approved a capital expenditure of $1,000,000 for CIP 60034, which included the APS Brine Disposal Project and the Pipeline Project. Staff is asking Council to approve expenditure authority in the amount of $2,650,000 for CIP 61015 (the APS Brine Disposal Project), which is needed for the costs of the remaining work under the APS Agreement as amended.