Council Approves Flawed CCB Contract - and It's Likely to Cost You
After I raised serious concerns with the Central Coast Blue water recycling design-build contract in public comment (below in italics), the city council voted unanimously to approve it without changes. Watch the video here.
The slide below, from a presentation at the meeting, indicates that less than half of the funding for the project has been secured. Even if all grants are obtained, ratepayer are still on the hook to pay for the rest via loans - and if the $15M recycling funding grant falls through, the borrowing roughly doubles. What this will cost ratepayers remains obscure.
My comments:
Central Coast Blue is moving forward to augment the city’s water supply. What residents need now is oversight: clear terms, protection of their money, and an honest picture of what this will cost them. There are several ways this contract falls short.
First, the 750 acre-foot expansion. The staff report says Option B, at $3.5 million, is included in the $39.8 million price. PERC's own cash-flow table totals $36.3 million. The difference is exactly the Option B price. But the contract doesn't mention Option B and drawings label the expansion equipment as “future.” The Design Criteria Report sets installed capacity at 500 acre-feet, and section 2.2.4 treats the expansion as a future amendment. Ratepayers would pay $3.5 million for scope the contract doesn't define.
Second, injection. The single injection well only has to accept 270 gallons per minute. That's about 435 acre-feet a year, less than the base plant. PERC told the City it couldn't guarantee injection and suggested a second well. Instead, Exhibit I lowers PERC's delivery guarantee to whatever the ground will accept. If it won't take the water, the contract doesn't reduce PERC's price, we get less water, and any second well would be a City cost.
Third, operating costs. Exhibit I's chemical and energy guarantee tables are stamped "N/A." PERC estimates chemicals alone at over $500,000 a year at buildout. Without guaranteed numbers, if the plant uses more chemicals or power than it should, it's unclear what would require PERC to fix it. Ratepayers could pay that excess every year for the life of the plant.
Fourth, limits on what the City can recover, none of which appear in the staff report:
PERC's total liability is capped at $14 million on a $40 million contract.
Late-completion damages are capped at about $2 million.
The City waives recovery for "loss of financing." If PERC's delay cost us a grant, the City couldn't recover that loss from PERC.
Finally, the staff report's $50.6 million figure excludes debt service, operations and maintenance. Council is being asked to approve this without any projection of what it means for residents' water and sewer bills.
I'm asking you to continue this item to a date certain and direct staff to return with:
Option B's scope written into the contract,
The chemical and energy guarantees restored, with numbers,
A plan for injection capacity that matches what we're buying, and
A projected rate impact for water and sewer customers.
None of this stops the project. It makes sure residents know what they're paying for, and what they'll pay going forward.
