That the Utility Authority:
A.  Approve to waive formal bid requirements per La Habra Municipal Code, Section 4.20.080 (B), "When a service firm has established such a successful past history of work with the city that it is clearly in the public interest not to negotiate with any other source."; and

B.  Approve and authorize the Executive Director to execute an agreement with Stetson Engineers, Inc., in the amount of $58,000 for the development of a new water well siting study.

The La Habra Utility Authority (Authority) produces and supplies water for its customers from three sources: water produced from the Main San Gabriel Basin and supplied by the California Domestic Water Company (CDWC), imported water provided by the Municipal Water District of Orange County (MWDOC), and water produced by the Authority from the La Habra Groundwater Basin (La Habra Basin). The La Habra Basin has a safe operating yield of approximately 4,500 acre-feet per year.  Safe yield is defined as the volume of groundwater that can be pumped annually without depleting the aquifer beyond its ability to recover through natural recharge over a reasonable hydrologic cycle. The Authority currently operates three water wells within the Basin which provide approximately 2,300 acre-feet of water for its customers each year. The Authority imports an additional 6,000 acre-feet of water from CDWC, and approximately 700 acre-feet of water from MWDOC. 

The cost of water varies depending on its source.  For example, water pumped from the La Habra Basin is the least expensive and is delivered at a cost of approximately $200 per acre-foot, not taking into account capital costs. For water from CDWC, the City's ownership of CDWC "Class A Preferred Shares" and "Common Stock Shares" entitles the City the right to purchase a prescribed amount of water each year, the amount of which may vary annually dependent on available supplies within the Main San Gabriel Water Basin.  During Fiscal Year 2021-2022, the City is entitled to purchase up to 4,321.82 acre-feet of water.  Delivery costs for Preferred Shares are approximately $346 per acre-foot and delivery costs for Common Shares are approximately $607 per acre-foot.  When water demand exceeds the City's CDWC entitlements, delivery costs are approximately $1,158 per acre-foot.  Water purchased from MWDOC is delivered at approximately $1,150 per acre-foot.
 
With a safe yield of 4,500 acre-feet per year from the La Habra Basin, and with only 2,300 acre-feet per year currently being produced by the Authoity, there exists the potential for greater safe extraction of water from the La Habra Basin. The addition of one or more new water wells could further diversify the City's water portfolio, reduce reliance on import water, and secure lower-cost water for the future. To evaluate this possibility, staff recommends executing an agreement with Stetson Engineers, Inc., (Stetson) to evaluate the hydrology of the La Habra Basin, identify up to three potential water well sites, and prepare a siting report which will include a cost analysis for the development of each site.

Section 4.20.080(B) of the La Habra municipal code allows for the waiver of formal bid requirements "when a service firm has established such a successful past history of work with the city that it is clearly in the public interest not to negotiate with any other source".  Stetson has had a successful work history with the Authority in helping protect and preserve the Authority and City's interests in the La Habra Basin while also supporting efforts to implement the requirements of the Sustainable Groundwater Management Act (SGMA).  Stetson's work history and their in-depth knowledge of the La Habra Basin's hydrology will provide a solid foundation for determining potential water well sites.

Approval of the agreement with Stetson has no financial impact to the General Fund.  The Water Enterprise Fund has sufficient funds within its Operations and Maintenance Budget to support the expense of $58,000 for the new water well siting study.