That the Utility Authority APPROVE AND ADOPT RESOLUTION NO. ____ ENTITLED: A RESOLUTION OF THE LA HABRA UTILITY AUTHORITY OF THE CITY OF LA HABRA, CALIFORNIA, APPROVING THE GRANT APPLICATION, ACCEPTANCE, AND EXECUTION FOR THE WATER PIPELINE REPLACEMENT PROJECT AND PILOT WELL.

The Urban Community Drought Relief Grant is a grant program under the California Department of Water Resources (DWR). In June 2022 the California State Legislature allocated $545 million to DWR for the purpose of awarding grants to local and regional jurisdictions for drought relief. If approved by the Board, the Utility Authority will apply for a $2.9 million grant and utilize any funding secured by this grant for the Authority's Water Pipeline Replacement project and Pilot Well project. The Water Pipeline Replacement project will replace aging cast iron pipelines with the goal of improving system reliability, reducing main breaks, and reducing water loss from system leaks and seepage. Staff estimates that, once complete, the Pipeline Replacement project could save the Authority up to 100 acre feet (AF) of water loss per year.

The proposed Pilot Well project would include the drilling of a new pilot water test well to help the Authority determine the feasibility of constructing a new water well in the La Habra basin, with the goal of producing approximately 1,500 Acre Feet (AF) of additional safe and reliable drinking water per year for La Habra water customers. If successful, this additional source of locally produced water would further reduce the Authority's reliance on much more expensive imported water from the Colorado River and the California Water Project. It should be noted that the pilot well will be used to determine if a new source of safe and reliable potable water production can be secured, and to evaluate the water quality to determine if treatment methods may be required to meet State and Federal water quality guidelines. As such, there is no certainty that the pilot well will lead to a future production well until further information is developed and water quality/quantity can be assessed from the pilot well location.

There is no fiscal impact to apply for the DWR grant; however, the Authority will have a 25 percent local match requirement for any grant funds that are awarded. The total combined project cost for the Pipeline Replacement project and Pilot Well project is approximately $3,867,000. If approved by the Authority and fully awarded by DWR, the grant will provide up to $2,900,250 to fund 75 percent of the project costs, with the Authority responsible to fund the local match component of up to $966,750. The Water Authority Fund balance has sufficient funding available for the potential local match amount and the Pipeline Replacement Project has already been budgeted in the Water Authority 2022-23 budget in the amount of $1,125,000, which is more than enough to cover the potential local match requirement.
 
If the grant is received and these project approved, the Authority could realize annual savings from reduced water loss, as well as reduced water costs. Upon completion of the Pipeline Replacement Project, the Authority could save as much as $125,000 per year in water costs due to the potential reduction in water leaks and seepage from old cast iron pipes. If the Pilot Well projects results in a full-scale production well, the additional water produced from La Habra Groundwater Basin could reduce demand from imported water supplies provided by the Metropolitan Water District (MWD), at significant savings depending on how much additional local water can be produced, and the future cost of imported water.