CC 2024-04-09_11a City Water Supply CCB Future Resources_Budget Adjustment RequestItem 11.a
MEMORANDUM
TO: City Council
FROM: Matthew Downing, City Manager
Bill Robeson, Assistant City Manager/Public Works Director
Nicole Valentine, Administrative Services Director
Shannon Sweeney, City Engineer
Shane Taylor, Utilities Manager
SUBJECT: Discussion of City Water Supply, Central Coast Blue, and Future
Resources; and Consider Approval of a Budget Adjustment Request
DATE: April 9, 2024
SUMMARY OF ACTION:
Since 2021, the City of Arroyo Grande has been committed to augmenting the regional
water supply, most recently by participating in a Joint Powers Authority (JPA) with the
Cities of Grover Beach and Pismo Beach to recycle wastewater through the Central Coast
Blue (CCB) project. Since then, significant progress has been made toward that goal.
Recent financial updates regarding funding availability and implementation cost
necessitate City Council review. Staff recommends a budget adjustment to pay for costs
in FY 2023-24, presents this discussion of the City’s water supply, and seeks Council
input on next steps.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
The JPA Cost Sharing Agreement obligates the City to pay for 25% of the total costs of
the CCB Project. The City of Pismo Beach will pay 39% of the costs and the City of Grover
Beach will pay 36% of the costs. The range of estimated CCB Project costs increased
from $85-$112 million in 2022 to $134-$159 million in 2024, with most of the escalation
attributed to inflation. The last review of the City’s Water Rates incorporated the CCB
Project construction cost estimate at $93 million.
Based upon the JPA Cost Sharing Agreement, the City currently owes approximately
$409,000 in pre-construction costs to the City of Pismo Beach, with an estimated
$105,200 the remainder of FY 2023-24. A budget adjustment totaling $514,200 from the
Water Enterprise Fund Balance is needed to fund the City’s share of the CCB project pre-
construction costs for FY 2023-24.
Item 11.a
City Council
Discussion of City Water Supply, Central Coast Blue, and Future Resources; and
Consider Approval of a Budget Adjustment Request
April 9, 2024
Page 2
RECOMMENDATION:
1) Receive and file a discussion of City water supply and future water resources ;
2) Approve a budget amendment totaling $514,200; and
3) Provide direction as necessary.
BACKGROUND:
The City of Arroyo Grande has evaluated its water supply and demand several times.
The 2021 Water Supply Alternatives Study Update references and summarizes previous
work, including the 2004 City of Arroyo Grande Water Supply Alternatives Study. That
report analyzed seventeen water supply alternatives the City could implement to increase
water supply and meet future demands. The 2021 report is included as Attachment 1.
One of the main recommendations of that report is continued participation in a regional
recycling project as a source of an additional permanent water supply, such as Central
Coast Blue (CCB).
CCB is a regional recycled water project. The Project has been a multi-agency effort
between three of the four Northern Cities Management Area agencies (the Cities of
Arroyo Grande, Grover Beach, and Pismo Beach) to construct a regional recycled water
project that will enhance supply reliability by injecting advanced purified water i nto the
Santa Maria Groundwater Basin (SMGB). The Project will reduce vulnerability to drought
and seawater intrusion by creating a seawater intrusion barrier and supplementing the
naturally occurring groundwater.
The inception of a recycled water project began in 2014 with the San Luis Obispo County
Regional Recycled Water Strategic Plan. This concept was further augmented in 2015
with the Pismo Beach Recycled Water Facilities Planning Study and in 2016 with the
South San Luis Obispo County Sanitary District Recycled Water Facilities Planning Study.
A final environmental impact report and preliminary attentional report were completed in
2021.
On March 23, 2021, the City Council considered a proposed CCB Operating Agreement.
After receiving public comment and conducting discussion and deliberation, the City
Council approved the Operating Agreement and adopted Statements of Overriding
Considerations and a Mitigation, Monitoring, and Reporting Program.
On September 14, 2021, the City Council discussed eight preliminary water supply
alternatives and directed staff to complete an analysis of these potential water supply
alternatives. On November 23, 2021, the City Council received the 2021 Water Supply
Alternatives Study Update. The recommended long-term water supply alternative in that
report was continued participation in a regional recycling project such as CCB, as a
source of additional permanent water supply.
Item 11.a
City Council
Discussion of City Water Supply, Central Coast Blue, and Future Resources; and
Consider Approval of a Budget Adjustment Request
April 9, 2024
Page 3
On January 11, 2022, the City Council approved a Water and Wastewater Rate Study.
The study proposed a water rate increase of 6.4% beginning on April 19, 2022, and
increases each January 1 through 2026 to provide sufficient revenue for ongoing
operations as well as participation in the CCB project. The water rates include the City’s
full costs to participate in CCB without additional grant funding based on the estimated
costs at that time, which are shown in Table 1:
Table 1 – CCB Total Cost Incorporated in the 2021 Water & Wastewater Rate
Study
On January 25, 2022, the City Council authorized entering into a Cost Sharing Agreement
with the other JPA participants and applying for financial assistance to the State’s Clean
Water State Revolving Fund.
On September 14, 2022, the first joint City Council meeting called for in the Cost Sharing
Agreement was held. At that meeting, the City Councils and the public received an update
from the Project’s design and engineering consultant regarding the Project components
and purpose, preliminary design of the Advanced Treatment Facility, updated cost
estimates, grant funding opportunities and awards, and permitting requirements. At this
meeting, the total construction cost estimates for the Project increased to $93 million.
On September 27, 2022, the City Council approved the CCB JPA Agreement, creating
the CCB Regional Recycled Water Authority (CCBRRWA), and appointed Mayor Ray-
Russom to be the City Council’s representative CCBRRWA Board of Directors. On June
5, 2023, a second joint City Council meeting was held. At that meeting, the City Councils
and the public received an update from the CCBRRWA General Manager and the
Project’s design and engineering consultant that included a Status Report and Project
Update. Additionally, a Report was presented on alternatives and considerations to
advance local hiring for construction of the CCB Project, while no formal action was taken.
On August 8, 2023, the City Council authorized staff to apply to the Environmental
Protection Agency (EPA) for a Water Infrastructure Finance and Innovation Act (WIFIA)
loan to fund the City’s share of CCB project costs, incur costs related to the application,
and appropriated $55,000 from the Water Enterprise Fund Balance to support these
actions. The total construction costs used for the WIFIA loan were estimated at $93
million, of which $39 million would be paid by grants and $54 million would be financed
by Arroyo Grande, Grover Beach, and Pismo Beach. Arroyo Grande’s share of CCB is
25% and, after adding the City’s estimated preconstruction payments of $2 million, the
City would need to finance up to $14.3 million for the remaining portion of preconstruction
Pre-Construction Costs 8,288,607$
Construction Phase Costs 43,407,577$
51,696,183$ Total Costs
Item 11.a
City Council
Discussion of City Water Supply, Central Coast Blue, and Future Resources; and
Consider Approval of a Budget Adjustment Request
April 9, 2024
Page 4
and construction costs. During the WIFIA application process, the City had a 10-year
proforma completed by Tuckfield and Associates to confirm current Water Rates were
sufficient to sustain the construction cost increase with current rates and into the future.
The 10-year proforma analysis stated that in FY 2026-27 through FY 2029-30 water rates
would need to increase by 9% each year.
The CCBRRWA Board of Directors met on March 18, 2024, at which time they received
an update on the Project. The project update included discussion related to Water Supply
Conditions, Funding and Financing, and Project Costs.
Water Supply Conditions
Current water supply conditions for the CCB Partner Agencies have improved since the
2019 to 2022 historic drought, experienced Statewide . Lake Lopez is at capacity,
groundwater levels are at a 10-year high, and State Water Project allocations are at 30
percent as of March 22, 2024. While the recurrence of drought conditions in the future is
likely, this temporary improvement in water supply conditions has afforded the CCB
Partner Agencies the opportunity to revisit and refine the Project delivery strategy to
provide the most cost-effective project to the ratepayers.
Funding and Financing
In January 2024, the State Water Resources Control Board (“State Board”) Division of
Financial Assistance informed the City of Pismo Beach that the $15 million Water
Recycling Funding Program Grant awarded in September 2023 would be reduced to $5
million. This reduction is part of a Statewide effort to address the State budget deficit and
is not unique to CCB. All ten projects initially awarded Water Recycling Funding Program
(WRFP) Grants in the State Board’s FY 2023-24 Clean Water State Revolving Fund
Intended Use Plan are facing grant reductions. The $10 million grant reduction has
resulted in a significant funding gap that will necessitate revisions to the Project funding
plan and the overall funding and financing strategy. It is important to note that t he
remaining $5M of the WRFP Grant is at risk until secured by an agreement with the State
Board.
Project Cost
Construction costs for water and wastewater projects continue to increase throughout the
State, especially for water reuse projects employing specialized treatment technologies
with extensive mechanical and electrical distribution equipment. This reality has
increased the estimated CCB Project costs since the last cost estimate was prepared.
The range of estimated CCB Project costs increased from $85-$112 million in 2022 to
$134-$159 million in 2024, with most of the escalation attributed to inflation and supply
chain issues. The Project team has been exploring opportunities for cost reduction
through value engineering and collaborative delivery m ethods. Additionally, efforts are
being made for each Partner Agency to conduct a water supply strategy evaluation along
with project management efforts that include pursuit of additional funding, a temporary
Item 11.a
City Council
Discussion of City Water Supply, Central Coast Blue, and Future Resources; and
Consider Approval of a Budget Adjustment Request
April 9, 2024
Page 5
pause to detailed design and permitting, re-evaluation of the Project implementation
schedule, and analysis of value engineering and collaborative delivery options to reduce
overall Project cost.
Additionally, CCBRRWA staff and Project consultants have dedicated significant time and
resources over the past several months to respond to questions and concerns from
community members and Project stakeholders. This increased interest in the CCB
Project, coupled with limited staff resources, has led the Project team to identify the need
to implement a more robust communications strategy, including the potential for the
support of a professional community engagement firm. This would require additional
preconstruction costs to the City not previously anticipated.
ANALYSIS OF ISSUES:
The CCB project design involves injecting recycled water into the basin at key locations
near the seawater interface (Project) to help address the threat of seawater intrusion.
Phase 1 of the Project proposes to treat wastewater from the City of Pismo Beach to an
advanced purification level to create approximately 900 acre-feet of additional water per
year. This new developed water would be injected into the basin at key locations to help
ensure that a sufficient barrier exists within the basin to keep seawater from flooding into
the aquifer and contaminating the wells used by the NCMA parties. As a result, the Project
will support the City’s ability to rely on groundwater to supply water to its residents and
businesses into the future. The Project could secure an estimated 225 acre-feet per year
of reliable groundwater for the City.
As identified above, each of the Partner Agencies will be evaluating their individual water
supply strategies in light of the changing conditions surrounding the region’s water supply
and the Project’s financial changes. This discussion is to evaluate the City’s water supply
strategy.
Water Supply and Demand
In an ever-changing, semi-arid climate like California, cities must evaluate and plan for
water supply and demand scenarios over a variety of time periods. One strategy for
meeting long-term water supply needs is conservation. Significant conservation has
already been accomplished by Arroyo Grande residents and businesses.
Current conditions do not negate the need to prepare for future potential drought
conditions similar to the ones experienced from 2013 to 2022. In December 2022, storage
in Lopez Lake was depleted to 22% of capacity, approximately 10,800 acre-feet. These
levels neared the point where no further water from Lake Lopez could be delivered for
municipal supply, even with the conservation achieved. Had the drought extended one
more year, the City would have been forced to rely solely on its groundwater supply, which
was similarly depleted. Accordingly, the City should consider water supply options during
this current period in order to capitalize on this recent period of significant precipitation.
Item 11.a
City Council
Discussion of City Water Supply, Central Coast Blue, and Future Resources; and
Consider Approval of a Budget Adjustment Request
April 9, 2024
Page 6
Short-, Mid-, and Long-Term Options
2023 and 2024 rains have filled Lopez Lake and, through active management, have
secured the City’s water supply needs for at least approximately seven years. In light of
this, there are no additional short-term options needed to be considered at this time.
If drought conditions occur in the mid-term of approximately 7 to 12 years, staff have
identified three potential options for City action:
1. Implement progressively severe conservation measures to maintain water supply
for as long as possible. This is seen as a standard action previously implemented
and would be one of the first actions recommended at the appropriate time in a
future drought scenario.
2. Temporary Purchase of State Water from Oceano Community Services District
(OCSD). This option was exercised in 2009 when the City and OCSD entered into
a five-year agreement for 100 acre-feet per year Oceano water supply be delivered
to the City. The cost was 105% of the Lopez water cost at the time. The ability to
pursue this option in the future will depend on OCSD’s needs, availab ility, and
willingness.
3. Purchase State Water from San Luis Obispo County. The Department of Water
Resources recently modified rules for the purchase and exchange of State Water.
San Luis Obispo County (SLOC) and Central Coast Water Authority (CCWA)
recently entered into an agreement for the exchange of State Water supply for
pipeline capacity. Because of these changes, the City has an opportunity to
potentially participate in the purchase of a portion of that water in future times of
need, should this be of interest to the City Council now or in the future.
As stated previously, California is an ever-changing, semi-arid climate. As responsible
stewards of public resources, the City needs to continue working towards long-term water
resiliency because multiple-year drought conditions will occur again. CCB has been the
City’s and region’s best long-term water supply option. In light of recent years of significant
rain, and with loss of grant funding and increased project cost estimates, this affords the
City and Partner Agencies the opportunity to continue evaluating the Project
implementation schedule, potential additional phasing, opportunities for additional grant
funding, potential for additional project partners, and analysis of value engineering and
collaborative delivery options to reduce overall Project cost .
Water Rates Status
The current water rates and the 10-year proforma completed in August 2023 show that
the current and future water rates could sustain the CCB project at the estimated $93
million construction cost. With the updated estimates project costs totaling in the range of
$134 - $159 million, the 10-year proforma would need to be updated once cost estimates
have been updated with value engineering and an updated timeline for construction to
begin work has been completed. To date the City has spent $2,006,027, as shown in
Table 2 below:
Item 11.a
City Council
Discussion of City Water Supply, Central Coast Blue, and Future Resources; and
Consider Approval of a Budget Adjustment Request
April 9, 2024
Page 7
Table 2 – Expenditures spent towards the CCB Project
The current FY 2023-24 did not include additional funds for the CCB project because the
original intent was to include all FY 2023-24 costs for pre-construction as part of the WIFIA
financing. With this updated Project information, financing will not be completed in FY
2023-24. Accordingly, a budget amendment totaling $514,200 for FY 2023-24 pre-
construction costs is requested for approval from the Water Enterprise fund , bringing the
Project total to $2,520,227, as shown in Table 3 below:
Table 3 – Expenditures spent towards the CCB Project with the
Proposed Budget Adjustment
Next Steps
Dependent upon any direction provided by the City Council, staff will continue engaging
with Partner Agencies to deliver a cost-effective project resulting in a reliable water supply
for the City’s Water Supply.
ALTERNATIVES:
The following alternatives are provided for the Council’s consideration:
1. Approve the budget amendment;
2. Do not approve the budget amendment; or
3. Provide other direction to staff.
ADVANTAGES:
Approving the budget amendment and pursuing water supply strategies as outlined have
the following advantages:
Demonstrates the City’s commitment to reliable water supplies.
Recent rains have provided relief to immediate water supply needs but do not
eliminate the need to continue working towards long-term water supply reliability.
Recent improvements to the City’s immediate water supply provides tim e to
determine next best steps.
Expenditure Programs
FY 2017-18 through
FY 2021-22 FY 2022-23 FY 2023-24 CCB Total
CCB JPA O&M - 19,645 83,528 103,173
Land Purchase - Calvin Court - 50,181 - 50,181
CCB Pre-Construction Costs 302,637 1,550,036 - 1,852,673
302,637 1,619,862 83,528 2,006,027
Expenditure Programs
FY 2017-18 through
FY 2021-22 FY 2022-23 FY 2023-24 CCB Total
CCB JPA O&M - 19,645 83,528 103,173
Land Purchase - Calvin Court - 50,181 - 50,181
CCB Pre-Construction Costs 302,637 1,550,036 514,200 2,366,873
302,637 1,619,862 597,728 2,520,227
Item 11.a
City Council
Discussion of City Water Supply, Central Coast Blue, and Future Resources; and
Consider Approval of a Budget Adjustment Request
April 9, 2024
Page 8
Work already completed by the JPA supports future water reliability projects.
Some elements of the CCB project, constructed in a phased manner, can continue
working towards the long-term needs while considering current budget limitations.
Using work to date, project framework could be developed that can support a
modular solution in short order, should environmental situations change more
rapidly than anticipated.
Continues progress using the momentum of the JPA structure and regional
framework already established.
DISADVANTAGES:
Approving the budget amendment enables the City to pay costs already incurred as a
participant in the JPA. However, this expenditure will not result in project completion or
any increase in water supply. The CCB project as originally scoped has exceeded existing
and anticipated funding. At this time, project completion as currently designed appears
untenable. However, some grant funding has already been secured. There may be value
in determining how such funding may be applied to elements associated with a long-term,
permanent, reliable regional water supply.
ENVIRONMENTAL REVIEW:
This recommended course of action is not a project subject to the California
Environmental Quality Act (CEQA) because it has no potential to result in either a direct,
or reasonably foreseeable indirect, physical change in the environment. (State CEQA
Guidelines, §§ 15060, subd. (c)(2)-(3), 15378.)
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted at City Hall and on the City’s website in accordance with
Government Code Section 54954.2.
ATTACHMENTS:
1. 2021 Water Supply Alternatives Study Update
CITY OF ARROYO GRANDE
WATER SUPPLY
ALTERNATIVES STUDY UPDATE
November 12, 2021
City of Arroyo Grande
300 E. Branch St.
Arroyo Grande, CA 93420
PREPARED BY:
MKN
530B Paulding Circle
Arroyo Grande, CA 93420
805 . 904 . 6530
ATTACHMENT 1
CITY OF ARROYO GRANDE
WATER SUPPLY
ALTERNATIVES STUDY UPDATE
November 12, 2021
Report Prepared Under the Responsible Charge of:
____________________________________
Michael K. Nunley, PE C61801
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City of Arroyo Grande – Water Supply Alternatives Study Page | i
Table of Contents
1.1 Introduction ............................................................................................................................................ 1-1
1.2 Water Supply .......................................................................................................................................... 1-1
1.3 Water Demand ....................................................................................................................................... 1-1
1.4 Supplemental Water............................................................................................................................... 1-3
2.1 2004 City of Arroyo Grande Water Supply Alternatives Study .............................................................. 2-1
2.2 2006 Water Supply Study: Desalination ................................................................................................. 2-6
2.3 2006 Supplemental Water Supply Study: Nacimiento Pipeline Extension ............................................. 2-7
2.4 2009 Final Recycled Water Study ........................................................................................................... 2-8
2.5 Recycled Water Facilities Planning Study ............................................................................................... 2-8
3.1 State Water ............................................................................................................................................. 3-1
3.1.1. Background ............................................................................................................................................... 3-1
3.1.2. Water Quality and Reliability.................................................................................................................... 3-1
3.1.3. Institutional or Legal Constraints ............................................................................................................. 3-1
3.1.4. Infrastructure............................................................................................................................................ 3-2
3.1.5. Cost ........................................................................................................................................................... 3-2
3.1.6. Feasibility .................................................................................................................................................. 3-2
3.2 Oceano CSD ............................................................................................................................................ 3-2
3.2.1. Background ............................................................................................................................................. 3-2
3.2.2. Water Quality and Reliability .................................................................................................................. 3-2
3.2.3. Institutional or Legal Constraints ........................................................................................................... 3-3
3.2.4. Infrastructure .......................................................................................................................................... 3-3
3.2.5. Cost ......................................................................................................................................................... 3-3
3.3 Interagency Connections ........................................................................................................................ 3-3
3.3.1. Background ............................................................................................................................................. 3-3
3.3.2. Water Quality and Reliability .................................................................................................................. 3-4
3.3.3. Institutional and Regulatory Constraints ................................................................................................ 3-4
3.3.4. Infrastructure .......................................................................................................................................... 3-4
3.3.5. Cost ......................................................................................................................................................... 3-4
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City of Arroyo Grande – Water Supply Alternatives Study Page | ii
3.4 Nacimiento Water Project ...................................................................................................................... 3-5
3.4.1. Background ............................................................................................................................................. 3-5
3.4.2. Institutional and Regulatory Constraints ................................................................................................ 3-5
3.4.3. Infrastructure .......................................................................................................................................... 3-5
3.4.4. Feasibility ................................................................................................................................................ 3-5
3.5 Central Coast Blue .................................................................................................................................. 3-5
3.5.1. Background ............................................................................................................................................. 3-5
3.5.2. Water Quality and Reliability .................................................................................................................. 3-6
3.5.3. Institutional or Legal Constraints ........................................................................................................... 3-6
3.5.4. Infrastructure .......................................................................................................................................... 3-6
3.5.5. Cost ......................................................................................................................................................... 3-6
3.5.6. Additional Considerations ...................................................................................................................... 3-7
3.6 Recycled Water “Scalping Plant” Concept .............................................................................................. 3-7
3.6.1. Background ............................................................................................................................................. 3-7
3.6.2. Water Quality and Reliability .................................................................................................................. 3-7
3.6.3. Institutional or Legal Constraints ........................................................................................................... 3-7
3.6.4. Infrastructure .......................................................................................................................................... 3-8
3.6.5. Cost ......................................................................................................................................................... 3-8
3.6.6. Feasibility ................................................................................................................................................ 3-8
3.7 Water Conservation ................................................................................................................................ 3-9
3.8 Stormwater Capture ............................................................................................................................... 3-9
3.8.1. Background ............................................................................................................................................. 3-9
3.8.2 Water Quality and Reliability .................................................................................................................. 3-9
3.8.3 Infrastructure and Regulatory Constraints ............................................................................................. 3-9
3.8.4 Cost ....................................................................................................................................................... 3-10
3.8.5 Feasibility .............................................................................................................................................. 3-10
4.1 Conclusions ............................................................................................................................................. 4-1
4.2 Recommendations .................................................................................................................................. 4-2
List of Tables
Table 1-1 – Historical Water Delivery and Production by Category (AFY)…………………………………….….………….1-2
Table 1-2 – Water Delivery Projections from 2015 UWMP…………………………………………………………….………….1-2
Table 1-3 – Future Water Production Projections ………….…………………………………………………………….………….1-3
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City of Arroyo Grande – Water Supply Alternatives Study Page | iii
Table 2-1 – 2004 Alternatives……………………………………………………………………………………..…………….…………..2-2
Table 2-2 – Update to 2004 Water Supply Alternatives Study…………………………………………………..…….………..2-6
Table 3-1 – First Year Operation and Maintenance Costs for 280 AFY Recycled Water Treatment Facility….3-8
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City of Arroyo Grande – Water Supply Alternatives Study Page | 1-1
INTRODUCTION AND OVERVIEW
1.1 Introduction
Michael K. Nunley and Associates, Inc. (MKN) was retained by the City of Arroyo Grande (City) to update the
City’s 2004 Water Supply Alternatives Study Report. In 2004 the City performed an analysis of potential
additional water sources to supplement the City’s existing groundwater and Lopez Reservoir supplies and to
meet the projected future needs of the City. This report categorized water supply alternatives as “short term”,
“intermediate term”, and “long term” with the objective of identifying one or more for implementation in each
category. The purpose of this report is to provide a summary of previous studies performed to date, provide a
preliminary list of current available water options, and provide an updated list of the most promising options.
1.2 Water Supply
The City has developed a water supply that utilizes groundwater from two separate formations and water from
the Lopez Project. Wells 1, 3, 4, 5, 7 & 8 extract water from the Santa Maria River Valley Groundwater Basin.
As part of the Groundwater Management Agreement between the City of Arroyo Grande, Grover Beach, Pismo
Beach and Oceano Community Services District (Oceano CSD), the City is entitled to groundwater extractions
of 1,323 acre-feet per year (AFY). 160 AFY of groundwater is also available from Pismo Formation Wells 9 and
10.The City has a contract entitlement of 2,290 AFY from the Lopez Project.
A maximum combined total of 3,773 AFY of water is available from the City’s wells and the Lopez Project. The
2015 Urban Water Management Plan (UWMP) noted only 3,584 AFY would be available during the third year
of a multiple dry year event. This includes 2,061 AFY of water from the Lopez Project and 1,523 AFY of
groundwater. However, current groundwater modeling results indicate significantly less water may be available
from the Santa Maria River Valley Groundwater Basin than the current entitlement.
1.3 Water Demand
The City provided annual reports for the State Water Resources Control Board Division of Drinking Water (DDW)
to provide historical water billing information. Table 1-1 summarizes water delivery by use category compared
with total production. For purposes of this study, the difference between production and delivery is considered
to be non-revenue water (NRW).
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City of Arroyo Grande – Water Supply Alternatives Study Page | 1-2
Table 1-1 Historical Water Delivery and Production by Category (AFY)
Category 2016 2017 2018 2019 2020
Water Delivered
Single-family Residential 1,259.1 1,380.8 1,409.0 1,369.9 1,500.4
Multi-family Residential 219.1 251.0 213.5 280.1 246.4
Commercial/Institutional 200.7 355.7 277.6 321.8 246.4
Industrial 0 0 0 0 0
Landscape Irrigation 145.8 104.5 234.8 103.6 245.2
Other 0 0 0 0 0
Total Urban Retail Delivered 1,824.7 2,092 2,134.9 2,075.5 2,238.5
Agricultural 0 0 0 0 0
Other Public Water Systems 0 0 0 0 0
Total Water Production 1948.1 2193.7 2212.5 2138.0 2318.5
Non-Revenue Water (NRW) 123.4 101.7 120.5 62.5 80.0
NRW as Percentage of Delivery 6.8% 4.9% 5.6% 3.0% 3.6%
The City’s 2015 UWMP summarized current water deliveries and predicted future water deliveries as follows:
Table 1-2 - Water Delivery Projections from 2015 UWMP (AFY)
Category 2015 2020 2025 2030 2035
Single-family Residential 1,517 1,957 2,013 2,083 2,113
Multi-family Residential 190 245 252 261 264
Commercial/Institutional 178 230 236 245 248
Industrial 0 0 0 0 0
Landscape Irrigation 169 217 224 231 235
Institutional/ Governmental 53 69 71 73 74
Total Urban Retail 2,106 2,718 2,796 2,893 2,934
Agricultural 0 0 0 0 0
Other Public Water Systems 0 0 0 0 0
Non-Revenue Water 133 150 154 159 161
Total Water Use 2,239 2,867 2,949 3,052 3,096
As shown, the UWMP predicted 2020 water deliveries of 2,718 AFY and total production of 2,867 AFY
including NRW. An annual increase of 42.9 AFY in production per year was projected through 2035. The City
recorded 2020 production of 2,318.5 AFY, which is approximately 24% lower than predicted (2,867 AFY). This
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City of Arroyo Grande – Water Supply Alternatives Study Page | 1-3
difference indicates implementation of the City’s water conservation program has had a significant impact on
water demand.
For this study, future water usage was projected based on historical demand in units of gallons per capita per
day (gpcd). Approximately 99% of the City population is within the City’s water service area, with very few
customers outside City limits. Therefore, City population is a close approximation of service area population.
California Department of Finance estimated a 2020 population of 17,617 for the City of Arroyo Grande.
Dividing 2020 water use of 2,318 AFY by 2020 population resulted in 117 gpcd usage. The 2015 UWMP
calculated average three-year water usage (2013-2015) of 138 gpcd and projected this per capita usage
through General Plan buildout (population of 20,000). Applying future water demand of approximately 127
AFY, or the average of 138 and 117 gpcd, to a future 20,000 service area population yielded a conservative
future demand of 2,540 AFY.
1.4 Supplemental Water
The City anticipates having sufficient water available through buildout based on the average year and multiple
dry year scenarios presented in the 2015 UWMP. However, securing an additional 250 AFY (approximately
10% of projected future demand) would allow the City to reduce groundwater usage and further protect the
groundwater basin. The following table predicts water delivery to meet future demand of 2,540 AFY assuming
the City has acquired an additional 250 AFY of supplemental water. For future production estimations it is
assumed Lopez Project deliveries are reduced during a multiple dry year scenario as discussed in Section 1.2,
whereas full City entitlement is 2,290 AFY.
This water supply portfolio would allow the City to reduce groundwater pumping to approximately 15% of their
combined 1,323 AFY Santa Maria River Valley Groundwater entitlement and 160 AFY Pismo Formation
production capacity in a multiple year drought scenario.
Table 1-3 – Future Water Production Projections During Multiple Dry Year Scenario
Source Supply
(AFY)
Lopez Project 2,061
Supplemental Water 250
Groundwater 229
Total Production 2,540
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City of Arroyo Grande – Water Supply Alternatives Study Page | 2-1
REVIEW OF PREVIOUS STUDIES
The City of Arroyo Grande has partnered with surrounding water agencies such as the South San Luis Obispo
County Sanitation District (SSLOCSD), City of Grover Beach, City of Pismo Beach, and Oceano CSD to prepare
multiple water supply studies to assess the feasibility of potential water supply projects. This section provides
a synopsis of previous water supply studies conducted by the City and partnering agencies.
2.1 2004 City of Arroyo Grande Water Supply Alternatives Study
The 2004 City of Arroyo Grande Water Supply Alternatives Study prepared by the Wallace Group analyzed
seventeen water supply alternatives the City could implement to increase water supply and meet future
demands. The study identified nine short term alternatives that could be implemented within a five-year period
with low complexity and cost, three intermediate alternatives that could be implemented over a ten-year period
with moderate complexity and cost, and three long term alternatives that could be implemented within a ten
to fifteen-year time frame with high complexity and cost. For each alternative, the study considered
infrastructure needs, water quality and supply reliability, and cost. The objective of the report was to provide
a preliminary analysis of each alternative, identify the most viable options, and advise City Council to conduct
further studies of the supply alternatives that were identified as the most feasible and cost effective. The
following table summarizes findings from that study.
Table 2-1 Summary of Findings from Water Supply Alternatives Study for City of Arroyo Grande (Wallace Group, 2004)
2004 Alternative Background Water Quality/Reliability Required Infrastructure Required
Agreements 2004 Cost Additional Considerations
Short-Term Alternatives
Private Well for
Cemetery Irrigation
• Arroyo Grande Cemetery District currently
uses potable water from City for irrigation.
• Could provide 38 AFY and 48 AFY at buildout
Adequate for intended use • New well
• Piping
• Pump and electrical
Equipment
• Cemetery District
Approval
• City Council
Approval
• County
Environmental
Health Services
Department permit
required
Less than City
water
Implementation schedule
anticipated to be less than a
year
Pismo Formation Well • The City currently uses Well No. 9
• Proposed Well No. 10 could allow City to
extract 160 AFY or more (total) from Pismo
Formation
Adequate for intended use with
treatment, but lower yield and
lower quality when compared to
other City groundwater
• New well
• Treatment plant
• Piping
• Pump and electrical
Equipment
• Currently planned by
the City
• County
Environmental
Health Services
Department permit
required
$425,000
(installed costs)
• Implementation schedule
would be approximately two
years
• Basin is low yield and lower
quality
Rancho Grande Pismo
Formation Well
(Irrigation)
• Well would serve Rancho Grande Park
• Active well is owned by Castlerock
Development and supplies construction water
• City could obtain the well or drill a separate
well at the park
Adequate for intended use City could obtain the well and
construct a pipeline or drill a
new well and construct a
pipeline. New well would
require pump and electrical
equipment.
County
Environmental
Health Services
Department permit
required
-- • Implementation schedule
would be approximately two
years
• Basin is low yield and lower
quality
Purchase Water – Santa
Barbara County
• Potential to purchase 400 AFY from a Santa
Barbara County Water Contractor
• Pipeline capacity from contractors north of
the City is limited
• Pipeline is sized to supply flow from State
Water contractors south of City
• Deliveries can be as low as 30%
of the entitlement but “drought
insurance water” can be
purchased for up to 100% of
contract amount.
• State Water is offline one month
per year
• Water quality is adequate for
intended use
Existing infrastructure could
be used to deliver State Water
to Lopez Water Treatment
Plant (WTP). County staff
stated Lopez pipeline capacity
is sufficient but must be
confirmed.
State Water
entitlement holder,
Santa Barbara
County, DWR, and
Central Coast Water
Authority (CCWA)
must approve.
Contract would likely
include paying sunk
costs of State Water
to entitlement
holder.
$1400/AF + Buy-
in costs
• Several years to implement this
option
• Would require voter approval
per Measure A
Purchase water – SLO
County
• 20,170 AF available from SLO County
• No excess pipeline capacity according to
County staff
• 140 AFY may be available from Pismo Ranch
development
• County had begun discussions with CCWA.
• Deliveries can be as low as 30%
of the entitlement but “drought
insurance water” can be
purchased for up to 100% of
contract amount.
• State Water is offline one month
per year
• Water quality is adequate for
intended use
Requires engineering
evaluation to determine
hydraulic capacity of existing
system
State Water
entitlement holder
and County must
approve.
-- • Several years to implement this
option
• Would require voter approval
per Measure A
Table 2-1 Summary of Findings from Water Supply Alternatives Study for City of Arroyo Grande (Wallace Group, 2004)
2004 Alternative Background Water Quality/Reliability Required Infrastructure Required
Agreements 2004 Cost Additional Considerations
Additional Groundwater
Entitlement
City is limited to 1,323 AFY of groundwater
extraction by the Basin Management
Agreement
Very reliable •Would require a
hydrogeologic study
•Wells with excess capacity
already exist but additional
wells or pipelines may be
needed
•Would require
modifying the Basin
Management
Agreement
-- If the additional entitlement is
available, option would be the
most cost effective, reliable,
and easily implemented long
term solution
Purchase private well
water
Safe yield in the Basin Management
Agreement is 5,300 AFY for applied irrigation
Quality consistent with existing
groundwater supply
•New wells required to meet
County Environmental Health
Department requirements
•Treatment infrastructure
•Pipeline construction
•Supply agreements
with landowners
•County
Environmental
Health Services
Department permit
required
-- •Potential pipelines across
environmentally sensitive areas
•Less than two years to
implement
Lease State Water Short-term 3- to 5-year contracts for surplus
water sales are allowed by DWR
Reliable in the short term Same requirements as
purchasing water from SLO or
Santa Barbara County.
Agreement between
City and State Water
entitlement holder
•May violate State law if
provided to new developments
•Can be utilized until long-term
source is secured
•Several years to implement this
option
•Would require voter approval
per Measure A
Reclaimed Price Canyon
Oil Field Water
•Water produced during oil extraction must be
returned to the reservoir unless it can be
treated and disposed
•Anticipated flows of 730 AFY for 10 years
•Potential exchange for Lopez Water released
to sustain habitat and fisheries. Extracted and
treated water would be released to Arroyo
Grande Creek. Exchanged raw water would
be treated at Lopez WTP for use by City.
•Only viable for ~ 10 years
•Water quality is adequate for
intended use
•Treatment plant at oilfield
•Pump Station
•Electrical equipment
•Pipeline
•Capacity of the Lopez pipeline
and WTP would need to be
investigated
•EIR
•Impact to Habitat
Conservation Plan
•Agreements with
Landowners for
pipeline easements
•Agreement with
Plains (owner)
•Permits with
resource agencies
and County
departments
$850/AF •Could compromise steelhead
fingerprinting of Arroyo Grande
Creek for spawning purposes
•SLO County would own the
pipeline after 7,300 AF had
been delivered
Water Conservation •Water Conservation Program is anticipated to
save 10% of usage
•Phase 1 100 AFY savings
•Phase 2 will involve irrigation retrofits
N/A None -- Decreases City
revenue
--
Table 2-1 Summary of Findings from Water Supply Alternatives Study for City of Arroyo Grande (Wallace Group, 2004)
2004 Alternative Background Water Quality/Reliability Required Infrastructure Required
Agreements 2004 Cost Additional Considerations
Intermediate Alternatives
Additional Stormwater
Basins
(Irrigation)
•Modify stormwater basins to serve as storage
basins for irrigation use
•Rancho Grande Park, AG Cemetery, Caltrans
ROW potential users with approximately 75
AFY
•Low reliability, low quality
•Irrigation water is not typically
required after large storm events
•New basins may be required
to preserve storage capacity
or infiltration capacity in
existing basins
•Improvements to existing
basins would include cleaning,
lining, pumps, electrical
equipment, and pipelines.
-- -- Protected wildlife may
complicate modification of
existing basins
Increased Lopez
Entitlement
Amount of surplus water is currently limited
until the Habitat Conservation plan (HCP) is
completed
Surplus water not considered a
reliable supply
•Additional treatment capacity
at the Lopez WTP
•Additional conveyance may
be needed in the Lopez
pipeline
•SLO County approval
•HCP Adoption
$350/AF +
infrastructure
improvements
Nacimiento Project Currently 6,120 AFY of unallocated raw water
supplied to SLO County
•High reliability
•Requires local treatment
•Scheduled shut-downs every 2-3
years
Either:
•Additional City of SLO
treatment and pipeline
connecting downstream of
Lopez WTP; or
•Increase Nacimiento pipeline
capacity south of San Luis
Obispo to SLO Airport and
extend pipeline to Lopez WTP
•Treated water
scenario would
require wheeling
agreement with City
of SLO
•Agreement with
County
•Approval by
Nacimiento
participants
•Between $1,800
and $3,300 / AFY
•Other parties
could share in
project cost
Cost would be less if the City
participates during project
inception
Long-Term Alternatives
Desalination •Potential joint venture between South County
Agencies to construct a Regional Facility
•Grover Beach and other agencies have
expressed interest in participation
•Adequate for intended use
•High reliability
Seawater extraction,
treatment, pumping, storage,
and pipeline facilities would
be required
Significant
environmental
issues associated
with new ocean
outfall if required
$3,000 to
$4,000/AFY (2001
reference)
Recycled SSLOCSD
Water (Secondary-23)
•Secondary SSLOCSD water could be used for
landscape irrigation on restricted areas
•Approximately 2,250 AFY of recycled water
available
•Adequate for intended use
•High reliability
•Pumping facilities
•Transmission pipeline
Agreement with
SSLOCSD
$1.4 million or
$3,800/AF
Secondary recycled water
market is very small with
combined cemetery and
freeway landscaping use of 45
AFY
Recycled SSLOCSD
Water (Tertiary)
•Highly treated effluent can be used for
landscape irrigation of unrestricted areas such
as golf courses and public parks
•Estimated use of 595 AFY
•Adequate for intended use
•High reliability
•Pumping facilities
•Transmission pipeline
•Significant plant upgrades
Agreement with
SSLOCSD
$16.3 million or
$3,100/AF
Table 2-1 Summary of Findings from Water Supply Alternatives Study for City of Arroyo Grande (Wallace Group, 2004)
2004 Alternative Background Water Quality/Reliability Required Infrastructure Required
Agreements 2004 Cost Additional Considerations
Recycled SSLOCSD
Water
(Tertiary-demineralized)
•Uses include: SSLOCSD area landscape
irrigation, groundwater recharge, agricultural
irrigation, potential augmentation of Arroyo
Grande creek
•Available flow 950 AFY
•Adequate for intended use
•High reliability
•Pumping facilities
•Transmission pipeline
•Significant plant upgrades
including salt removal
Agreement with
SSLOCSD
$25.6 - $29.1
million or $4,900 -
$5,200/AF
Alternatives Considered But Not Evaluated
Nacimiento/State
Water Exchange
•Alternative considered but not further
evaluated
•City would contract with County to receive
Nacimiento Water
•Nacimiento Water would be exchanged for
State Water by a current State Water
entitlement holder who has the ability to
receive Nacimiento Water
Adequate for intended use •Existing infrastructure could
be utilized to convey water
•Additional treatment and
conveyance capacity may be
needed for Lopez WTP and
pipeline
•Agreement with SLO
County for
Nacimiento Water
•Agreement with
State Water
entitlement holder
-- --
Conoco-Phillips Refinery
Well Water
•Alternative considered but not further
evaluated
•New wells would be required on Conoco-
Phillips Refinery property
Very low reliability Wells and conveyance
infrastructure
Agreement with
Conoco-Phillips
Refinery
-- Existing wells have experienced
drawdown and two have lost
production. Representatives of
the refinery have concluded
they are not in a position to sell
water or allow additional wells
to be drilled on their property.
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City of Arroyo Grande – Water Supply Alternatives Study Page | 2-6
The following table summarizes work completed after the 2004 Alternative Study for the alternatives
determined to be the most feasible.
Table 2-2 - Update to 2004 Water Supply Alternatives Study
2004 Alternative Final Action or Conclusion
Private Well for Cemetery
Irrigation
This alternative was determined infeasible because groundwater does not
exist under the property.
Pismo Formation Wells
The construction of a well at the Deer Trail site (Well No. 10) is completed.
Wells No. 9 and 10 require treatment and can provide a combined 160
AFY. Well No. 11 and treatment system were completed for an additional
40 AFY but is not yet permitted. The development of irrigation wells to
serve the Park was not pursued.
Water Purchase or Lease from
SLO County
The City understands various agencies have had discussions with SLO
County about acquiring additional water from the State Water Project, but
no decision has been determined. An updated analysis is provided in this
study.
Water Purchase or Lease from
Santa Barbra County
No update. This alternative has not been further evaluated since the
2004 Study.
Additional Groundwater
Entitlement
While 1,323 AFY of groundwater is entitled to the City under the
Groundwater Management Agreement, recent groundwater modeling
indicates significantly less water may be available.
Purchase Private Well Water
Wells in the upper Arroyo Grande Valley Sub-Basin may be available but
projects have not been pursued. The Groundwater Sustainability Plan is
underway for the Arroyo Grande Valley Sub-basin. A well pump was
designed for the irrigation of Strother Park, but not yet constructed. It is
anticipated to provide 8 - 9 AFY. It is assumed a future developer will fund
the project.
Reclaimed Price Canyon Oil
Field Water
Currently the treatment facility discharges Price Canyon Oil Field Water to
Pismo Creek. It was determined to be too expensive to extend the pipeline
to Arroyo Grande Creek for exchange with Lopez Water.
Conservation
The City documents progress on the conservation program monthly and
reports to the City Council. Currently, the City is saving 400 - 500 AFY due
to conservation and has spent $2.0M on retrofits and rebate programs.
Additional Stormwater Basins
This alternative has been implemented. Poplar Basin was expanded to
handle runoff from the Applebee’s and Rite Aid development on Grand
Avenue. The Elm Street Sport Complex uses storm water as irrigation water
when available. The City’s low impact development standards have added
underground retention to new developments.
Increased Lopez Entitlement
A study conducted by Stetson Engineers evaluated raising spillway to
increase storage and determined that raising the dam would be subject to
Bureau of Dam Safety requirements. Each foot of height would add
approximately 1000 AF of storage.
2.2 2006 Water Supply Study: Desalination
The 2006 Water Supply Study: Desalination prepared by the Wallace Group for the City, Oceano CSD, and City
of Grover Beach further analyzed the construction of a desalination facility as recommended in the 2004
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City of Arroyo Grande – Water Supply Alternatives Study Page | 2-7
Water Supply Alternatives Study. The report assumed the desalination project would be a joint project among
the three agencies to meet future demands. The study made the following assumptions:
• Facility will be located at the South San Luis Obispo County Sanitation District Wastewater Treatment
Plant (SSLOCSD WWTP).
• Source water will be extracted from new beach wells near the SSLOCSD WWTP.
• Brine will be disposed using the existing ocean outfall.
• The facility will use reverse osmosis (RO) as the desalination method.
The study determined that treated water from the facility should match existing water quality standards, be
distributed to each agency’s storage tanks, and all costs would be divided among the agencies. The report
outlined the permitting process for relevant regulatory agencies such as the Regional Water Quality Control
Board and California Coastal Commission, discussed applicable policies of the Coastal Act, and concluded
multiple permits and an Environmental Impact Report were required. The estimated capital cost of the facility
was approximately $17 million, and the 20-year life cycle cost analysis determined the cost per acre foot of
desalinated water would be $2,675/AF 1. The timeline for the project from the completion of a feasibility study
through construction was estimated to be 86 months (7+ years).
2.3 2006 Supplemental Water Supply Study: Nacimiento Pipeline Extension
The Nacimiento Water Supply Project (or “Nacimiento Pipeline Project”) was intended to deliver raw water
from Nacimiento Reservoir to agencies in San Luis Obispo County, ultimately extending from the Reservoir to
the City of San Luis Obispo and terminating at the City Water Treatment Plant. The 2006 Supplemental Water
Supply Study: Nacimiento Pipeline Extension prepared by the Wallace Group for City of Grover Beach, Oceano
CSD, and the City evaluated the viability of the Nacimiento Pipeline Project to supply approximately 2,300 AFY
of potable water to meet future demands, as reported in the 2004 Water Supply Study. The study presented
two alignments of the extension, identified and discussed the design and regulatory requirements of the
project, and provided a 20-year life cycle cost analysis including capital and O&M costs for the project. The
report compared two pipeline alignments: Orcutt Road to Lopez Reservoir (Alignment A, 17.5 miles long) for
treatment at Lopez WTP; and Plains Oilfield to Arroyo Grande Creek (Alignment B, PXP 18.07 miles long) for
exchange of Arroyo Grande Creek and Lopez Project water. The study concluded that the Plains Oilfield pipeline
was the most cost-effective method but was uncertain of the time frame for availability of the pipeline. The
Orcutt Road alignment had a significantly higher cost but considerably reduced the construction schedule. The
project required improvements to the Lopez WTP for treatment of raw water such as the installation of
chemical pretreatment, new membrane filtration system, and disinfection to meet state and federal water
quality standards. The existing Lopez Project pipeline also would require pumping improvements to increase
capacity and maintain adequate delivery rates and pressure to all users. Agencies would be required to sign
the Nacimiento Project Water Delivery Entitlement Contract, which defines the operation and maintenance,
delivery entitlement, and regulatory requirements for each agency. The estimated capital cost of the Orcutt
Road alignment was $30,100,000 with estimated annual O&M cost of $5,960,000 and 20-year life cycle cost
of $3,827/AF. The estimated capital cost of the Plains Pipeline alignment was $11,860,000 with an estimated
$5,800,000 annual O&M cost and 20-year life cycle cost of approximately $3,010/AF. The cost for this
alignment was lower since a water discharge pipeline constructed by Plains Exploration (PXP) would be reused
for part of the project. The report concluded the project would require a minimum of 5 years to complete
planning, permitting, design, and construction if the Orcutt Road alignment was selected. However, if the
recommended Plains Pipeline alignment was selected, the timeline could increase by 10 years since the
pipeline would be necessary for oil water production during that period. The report concluded that more
information was required regarding the timeline for the Plains Pipeline due to the high uncertainty before a
feasibility study is conducted.
1 Estimated capital and 20-year life cycle costs in 2006 dollars
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City of Arroyo Grande – Water Supply Alternatives Study Page | 2-8
2.4 2009 Final Recycled Water Study
The 2009 Water Recycling Update Report prepared by the Wallace Group for the SSLOCSD reevaluated
previous recycled water studies and proposed alternative projects for the District in response to the 2004
Water Supply Alternatives Study. The SSLOCSD provides wastewater services to the City of Arroyo Grande, City
of Grover Beach, and community of Oceano and operates a wastewater treatment plant with a capacity of
5,600 AFY. The report provided a detailed overview of each agency’s water supply systems, wastewater
characteristics of the District, recycled water regulations, and described the potential for a recycled water
market. The report evaluated the viability of recycled water use within the District through multiple proposed
projects and evaluated the cost, water quality impacts, public perception, constructability, and construction
impact for each project. The recycled water projects considered were landscape irrigation for the Elm Street
Park/Soto Sports Complex, groundwater recharge and stream augmentation at the Arroyo Grande Creek,
direct agricultural irrigation of food crops, and toilet flushing. All the proposed projects would require upgrades
to the existing SSLOCSD WWTP. Turf irrigation, direct food crop irrigation, and indirect potable reuse projects
required adding coagulation and sedimentation ahead of filtration and disinfection or adding a direct filtration
process with disinfection. The report determined that a full-scale direct agricultural irrigation project, possibly
in combination with an indirect potable reuse project, was the most cost effective and viable recycled water
project with an estimated cost of $1,200 to $1,400 per AF. The SSLOCSD WWTP would require process
improvements including microfiltration, reverse osmosis, and advanced oxidation using ultraviolet light. These
improvements would have an estimated construction cost of $14.3 million 2. The report concluded with five
near-term recommendations for the recycled water projects: conduct additional feasibility studies regarding
aquifer recharge, begin to request Title XVI funding for recycled water projects, develop a conceptual design
for the recycling facility, develop a public outreach plan, and coordinate with Regional and State Boards to
secure project funding.
2.5 Recycled Water Facilities Planning Study
The 2016 Recycled Water Facilities Planning Study prepared by Water Systems Consulting, Inc. for the
SSLOCSD and the City to identified, evaluated, and analyzed two potential locations for an advanced treatment
plant (ATP). The report describes the current and projected water system and water use characteristics,
identifies permitting requirements, potential project funding, and illustrates an implementation plan for the
two potential locations. The project plan, regardless of the alternative site locations, consist of a two-phase
implementation plan. Phase 1 is to construct the ATP to treat flows from Pismo Beach WWTP and Phase 2 will
expand treatment to include flows from the SSLOCSD WWTP. Alternative 1 included construction of the ATP
onsite at the existing WWTP to provide water for groundwater recharge and or agricultural irrigation. Alternative
2 included construction of an offsite ATP to treat secondary effluent from the Pismo Beach WWTP and the
District’s WWTP to provide water for groundwater and or recharge agricultural irrigation. The report
recommended that an Environmental Impact Report be prepared to further evaluate the location and
discussed advantages and disadvantages for both options. Key benefits of the onsite ATP (Alternative 1)
compared to an off-site ATP (Alternative 2) were less infrastructure for conveyance, no additional property was
needed for the onsite location, and O&M costs were lower. Alternative 1 was estimated to cost $3,900 per AF
for Phase 1 and $2,800 per AF for Phase 2. The main disadvantage of this alternative was increased regulatory
restrictions and permits needed to upgrade the existing facility. The report stated the key advantage of the
offsite location (Alternative 2) was less regulatory restrictions, but the capital and O&M costs were higher than
the onsite option. Alternative 2 was estimated to cost $4,400 per AF for Phase 1 and $3,000 per AF for
Phase 2. The report also compared cost between using recycled water for groundwater recharge only and for
a hybrid approach that included groundwater recharge and agricultural irrigation with both project location
options. The groundwater recharge-only projects would have a lower capital cost and higher O&M costs but
provide higher water quality to the basin long term. The hybrid projects would result in higher capital cost, but
lower O&M costs once a framework for participating agencies to contribute to project costs was developed.
The report provided near term and long-term project components that all stakeholders need to address and
2 Costs in 2008 dollars
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City of Arroyo Grande – Water Supply Alternatives Study Page | 2-9
further evaluate before a project option can selected and outlines permitting steps needed to begin the next
evaluation process.
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City of Arroyo Grande – Water Supply Alternatives Study Page | 3-1
EVALUATION OF VIABLE ALTERNATIVES
3.1 State Water
3.1.1. Background
San Luis Obispo County Flood Control and Water Conservation District (SLOCFCWCD) and Santa Barbara
County Flood Control and Water Conservation District (SBCFCWCD) are State Water Project contractors. San
Luis Obispo County and Santa Barbara County subcontractors receive flow through the Coastal Branch
Aqueduct and distribution facilities operated by Central Coast Water Authority (CCWA). Water delivered in both
counties is treated at the Polonio Pass Water Treatment Plant. The distribution system of the Lopez Project is
used to deliver State Water to County Service Area 12 subcontractors (including Avila Beach CSD, Pismo
Beach, San Miguelito Mutual Water Company, and Oceano CSD).
3.1.2. Water Quality and Reliability
State Water is treated for the Coastal Branch service areas by CCWA and delivered for potable use but annual
availability for new supply is subject to drought conditions since it is an imported surface water supply. For
example, in March 2021, California Department of Water Resources (DWR) announced “Table A” deliveries
would be reduced to 5% of requested supplies 3. SLOCFCWCD has an agreement with DWR for up to 25,000-
acre feet per year (AFY) of “Table A” allocation but can currently only deliver 4,830 AFY of water through
Coastal Branch facilities 4. Undelivered “Table A” water is used by SLOCFCWCD to meet local needs in years
when statewide “Table A” water supply allocation is less than what is requested by Contractors. For example,
“Table A” allocation of 5% results in 1,250 AFY of new “Table A” water being available to San Luis Obispo
County, which the SLOCFCWCD can then use in combination with its stored carryover water (“Table A” from
previous years) to deliver up to 100% of the water supply amounts requested by their subcontractors.
3.1.3. Institutional or Legal Constraints
A City ballot measure passed in 1990 required voter approval to receive State Water. However, during the last
major drought the City passed a 2016 ballot measure to allow purchase of State Water on an emergency basis
only. Purchasing State Water on an emergency basis during drought conditions would be legal, but permanent
supply would require a new ballot measure to be passed.
For the City to obtain State Water, an existing subcontractor must develop an agreement with the City to
transfer State Water since CCWA facilities are fully subscribed. Some additional capacity may be available in
the treatment and distribution facilities but all CCWA members and San Luis Obispo County subcontractors
must approve use of this additional capacity by Arroyo Grande unless existing entitlement is transferred.
The City would need to find a willing State Water subcontractor to purchase their Table A allocation. San Luis
Obispo County Public Works staff stated they did not know of any interested subcontractors at this time. Many
existing subcontractors are interested in procuring more State Water. OCSD has expressed an interest in a
short-term transfer of State Water to the City which is discussed separately in this study (see Section 3.2).
Only State Water subcontractors downstream of Arroyo Grande on the Lopez Project could contract with the
City without requiring the City to procure capacity in either the Coastal Branch or the Lopez Project.
3 https://water.ca.gov/News/News-Releases/2021/March-21/SWP-Allocation-Update-March-23
4 “Table A” allocation refers to an agency’s contracted amount of State Water. It can be adjusted by the Department of
Water Resources each year based on overall availability of water, considering drought and other impacts to the state
surface water supplies.
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City of Arroyo Grande – Water Supply Alternatives Study Page | 3-2
3.1.4. Infrastructure
State Water can be conveyed to the Lopez Project for delivery to the City of Arroyo Grande. Based on
discussions with County of San Luis Obispo Public Works Department Staff, the capacity of Polonio Pass Water
Treatment Facility and Coastal Branch is fully subscribed by existing State Water subcontractors. The capacity
of Lopez Project is also fully subscribed by South County Zone 3 water purveyors. The 2020 Draft Urban Water
Management Plan for SLOCFCWCD Zone 3 (2020, WSC) states an additional 300 AFY capacity may be
available in the Coastal Branch and Lopez Projects when comparing existing agreements for Lopez and State
Water to the hydraulic capacity of the pipelines.
3.1.5. Cost
Assuming no treatment or distribution improvements are required to deliver State Water to Arroyo Grande,
permanent acquisition of water from a State Water subcontractor will require buy-in costs to reimburse the
subcontractor for past debt service. Historically, this has been a limitation for agencies in acquiring State
Water if they were not early subcontractors. The total cost for State Water could vary widely depending on the
specific opportunity. City staff will continue to work with subcontractors and the County to identify any willing
sellers.
3.1.6. Feasibility
This alternative is not recommended for consideration as a long-term water supply for the following reasons:
• Fully subscribed pipeline and treatment capacity in the Lopez and CCWA facilities.
• Requirement for approval by CCWA and San Luis Obispo County subcontractors.
• Impact of drought on long term reliability.
• Requirement for City to pass a new ballot measure for long-term water supply.
However, the City should continue to engage with the County in case plans are developed to acquire more
State Water, acquire additional pipeline or treatment capacity from CCWA, or new partnerships arise to
facilitate State Water exchange through the Zone 3 system.
3.2 Oceano CSD
3.2.1. Background
OCSD water sources include State Water, Lopez Water, and groundwater. Lopez and State Water are delivered
through the Zone 3 system. In 2009, the City and OCSD entered a five-year agreement for 100 AFY of either
Lopez Water or groundwater to be delivered to the City as a temporary water supply. Cost was assigned to be
105% of current Lopez Water costs with a credit of $275/AFY for any groundwater used.
From discussions with OCSD, up to 300 AFY of OCSD’s water may be available to the City on a short-term
basis. The actual amount would depend on availability of water supplies to meet OCSD’s demand on a year-
to-year basis.
3.2.2. Water Quality and Reliability
OCSD would need to assess availability of water each year before committing to deliveries to the City since all
of OCSD’s water supplies could be affected by drought conditions. State Water is treated and delivered for
potable use but is subject to drought conditions since it is supplied by imported surface water. For example,
in March 2021, California DWR announced “Table A” deliveries would be reduced to 5% of requested
supplies 5. SLOCFCWD has an agreement with DWR for 25,000-acre feet per year (AFY) of Table A allocation,
but can currently only deliver 4,830 AFY of water through CCWA facilities. Undelivered “Table A” water is used
5 https://water.ca.gov/News/News-Releases/2021/March-21/SWP-Allocation-Update-March-23
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by SLOCFCWCD to meet local needs in years when statewide “Table A” water supply allocation is less than
what is requested by Contractors. For example, “Table A” allocation of 5% results in 1,250 AFY of new “Table
A” water being available to San Luis Obispo County, which the SLOCFCWCD can then use in combination with
its stored carryover water (“Table A” from previous years) to deliver up to 100% of the water supply amounts
requested by the Subcontractors including OCSD.
OCSD has typically not taken its full 750 AFY of Table A State Water entitlement due to the high variable cost
for State Water, but has stored unused water in San Luis Reservoir, a State Water Project facility. This stored
water can be extracted when requested by OCSD, increasing reliability of this supply.
In the future, Lopez Project participants will have the ability to use State Water to offset their usage of Lopez
Water, then store their unused Lopez Water in Lopez Reservoir. Pending agreements are being finalized among
Lopez Project and State Water contractors. If the City can obtain excess OCSD water and store it in Lopez
Reservoir, it would be available for extraction in later years improving long-term reliability.
3.2.3. Institutional or Legal Constraints
A temporary agreement would be required between OCSD and the City but the arrangement would be legal for
both agencies. Purchasing OCSD water as a permanent supply could be affected by OCSD and City regulations.
OCSD has an ordinance preventing long-term sale of their State Water entitlement but has been able to enter
into short-term agreements in the past. The City of Arroyo Grande passed a ballot measure in 2016 to allow
the City to purchase State Water on an emergency basis but a previous ballot measure prevents permanent
purchase of State Water. Purchasing State Water under non-emergency conditions would require a new ballot
measure to be passed. If OCSD acquired State Water in excess of current “Table A” amounts, OCSD may be
able to legally sell this water to Arroyo Grande on a long-term basis.
3.2.4. Infrastructure
No additional infrastructure would be required as long as OCSD does not exceed their allotted capacity of
CCWA or Lopez facilities to provide water to Arroyo Grande.
3.2.5. Cost
The previous agreement between OCSD and the City established a cost equivalent to 105% of Lopez Water
price. OCSD’s current price for Lopez Water is $1674 per AF, which results in a purchase price of approximately
$1758 per AF under the original agreement. Cost would be negotiated prior to finalizing any agreement.
3.3 Interagency Connections
3.3.1. Background
The City’s water service area is located within 300 feet of Golden State Water-Cypress Ridge’s (GSWCR’s)
service area near the intersection of Cathedral Lane and Cornerstone Lane. Both agencies are members of
the California Water/Wastewater Agency Response Network (CalWARN) which promotes mutual aid during
emergencies. The City could initially rely on their joint CalWARN membership with GSWCR to provide
emergency water supply.
Developing an emergency connection could be the first step in long-term purchase of water by the City. Nipomo
CSD (NCSD) receives supplemental water under a Wholesale Agreement with the City of Santa Maria and is
completing design of interconnections to deliver water to GSWCR, Golden State Water’s other Nipomo service
area, and Woodlands Mutual Water Company. The City of Santa Maria sells a “municipal mix” of State Water
and groundwater to NCSD.
This connection could also benefit GSWCR and NCSD by allowing transfer of water from Lopez Project
contractors via Arroyo Grande’s water distribution system if needed.
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3.3.2. Water Quality and Reliability
A connection between the City and GSWCR could improve reliability for both agencies. Construction of an
interconnection and development of a mutual aid agreement could, at a minimum, allow transfer of water
during emergency conditions. All water conveyed to the City would be potable water.
GSWCCR utilizes groundwater and intends to receive supplemental water from NCSD as described above.
Reliability of groundwater and supplemental water could be impacted by drought, as discussed in the other
sections where State Water is considered. However, this can be mitigated by Santa Maria procuring other
available State Water, storing water in San Luis Reservoir for extraction during dry years, or supplementing
with groundwater.
3.3.3. Institutional and Regulatory Constraints
GSWCR and the City of Arroyo Grande are both signatory to CalWARN as described above, so they can provide
emergency relief to each other. This could facilitate short-term emergency water transfers between the two
systems if they are connected. A Memorandum of Understanding (MOU) or similar agreement between GSWCR
and the City would develop guidelines for design, construction, and funding a new connection.
Long-term opportunity to purchase supplemental water from NCSD and wheel it through the GSWCR system
could be explored in the future. NCSD has constructed facilities that connect and convey water from the City
of Santa Maria to NCSD’s water system. NCSD’s water system connects to and will be conveying water to
Woodlands Mutual Water Company and GSWCR. NCSD entered into a Wholesale Agreement with the City of
Santa Maria to purchase a minimum of 2,500 AFY beginning in the 2025-26 fiscal year, with a maximum
allowable delivery of 6,200 AFY. Additional infrastructure will be needed to reach the maximum allowable
delivery amount. The District is importing a minimum of 1,000 AFY in the 2021-22 fiscal year and the years
leading up to the 2025-26 fiscal year. An easement agreement with SBCFCWCD limits delivery to 3,000 AFY
at this time. This quantity includes allocations for Nipomo Mesa purveyors including GSWCR, Woodlands
Mutual Water Company, and another Nipomo GSWC service area. If the City of Arroyo Grande and NCSD pursue
a permanent sale of water, NCSD may need to revise the easement agreement to purchase additional water
beyond the 3,000 AFY limit. It is our understanding NCSD and County of San Luis Obispo staff are negotiating
with SBCFCWCD to revise this limit.
Other exchanges among the City, Lopez Project contractors, GSWCR, and NCSD could be explored but are
outside the scope of this study.
3.3.4. Infrastructure
Hydraulic grade line (HGL) elevations in the City’s Main City Pressure Zone and the primary GSWCR zone
appear to be similar (approximately 312 ft mean sea level (MSL)). An engineering study will be needed to
confirm the amount of water that could be conveyed among the three systems and to size interconnection
piping and metering facilities. A typical interconnection includes a buried vault with meter, valves, bypass
piping, instrumentation, flow control capability, and power. Additional improvements within the City or GSWCR
system may be needed depending on the design flow for the interconnection.
If long-term purchase of water is pursued in the future, additional improvements will be needed within the
NCSD water system and may be needed within the GSWCR water system.
3.3.5. Cost
Hydraulic analysis of both systems and agreement on design criteria would be required before cost can be
determined, but cost components are summarized below:
• Capital cost of interconnection facility (including planning, design, and construction).
• Operation and maintenance of interconnection facility.
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If long-term purchase of NCSD supplemental water is pursued, the following cost components may be required:
• Capital cost of GSWCR and NCSD improvements (including planning, design, and construction).
• Operation and maintenance costs to wheel water through the GSWCR and NCSD systems.
• Purchase cost for supplemental water from NCSD.
3.4 Nacimiento Water Project
3.4.1. Background
The Nacimiento Water Project can deliver 15,750 AFY of raw water through facilities including the reservoir
intake, pumping stations, tanks, and pipelines. Existing participants include San Luis Obispo County Service
Area 10A (Cayucos), Bella Vista Mobile Home Park (Cayucos), Santa Margarita Ranch Mutual Water Company,
City of Paso Robles, Templeton CSD, Atascadero Mutual Water Company, and City of San Luis Obispo. As
discussed in previous studies, the Nacimiento Water Supply Project was not extended south past the City of
San Luis Obispo.
3.4.2. Institutional and Regulatory Constraints
The project is fully subscribed by existing participants and capacity must be acquired from current participants
without adding pipelines or pumping facilities to deliver more water. However, participants are not using their
full allocations. County staff have noted the participants are working to develop a surplus water sales program
that would support transfers of Nacimiento Water Project water to non-participants within the central coast
region.
To transfer Nacimiento Water, a new pipeline would be required connecting the City of San Luis Obispo to
Lopez Reservoir for treatment at Lopez Water Treatment Plant. Another approach could be construction of a
new pipeline from the City of San Luis Obispo to the Avila area currently served by the Lopez Project.
Alternatively, if no new pipeline was constructed the City would need to be able to exchange Nacimiento Water
for State Water through existing Zone 3 partners. However, there are no Zone 3 partners who are also
customers of the Nacimiento Water Project.
3.4.3. Infrastructure
An exchange of State Water for Nacimiento Water would not require new pipelines or connections, in theory.
However, there are no partners in both projects who could facilitate this transfer other than SLOCFCWCD who
may have the potential to facilitate transfers or exchanges.
3.4.4. Feasibility
This alternative should not be explored further at this time since there are no appropriate partners engaged
in both the Nacimiento Water Project and State Water Project, and no Nacimiento Water is currently available.
San Luis Obispo County staff has noted SLOCFCWCD has the capability to purchase additional Nacimiento
water from Monterey County Water Resources Agency beyond the current Nacimiento Water Project contracted
amount. The City should continue to engage with the County in case plans are developed to extend the
Nacimiento Water Project to south San Luis Obispo County or new partnerships arise to facilitate water
exchange through the Zone 3 system.
3.5 Central Coast Blue
3.5.1. Background
The Preliminary Engineering Report for Central Coast Blue (CCB PER, WSC/Carollo, 2021) provided
background information for this Study. The Central Coast Blue Project is intended to protect the Northern Cities
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Management Area of the Santa Maria River Valley Groundwater Basin against groundwater contamination
from seawater intrusion and augment groundwater supply. The project involves the construction of an
advanced water purification facility (AWPF) that will treat effluent from the Pismo Beach Wastewater Treatment
Plant (PBWWTP) and the SSLOCSD Wastewater Treatment Plant (SSLOCSD WWTP) to Title 22 standards for
indirect potable reuse for groundwater injection into the SMGB. Participants of the project include the Cities
of Pismo Beach, Arroyo Grande, and Grover Beach which are members of the Northern Cities Management
Area (NCMA).
The project would be implemented in two phases. Phase 1 will include the construction of the AWPF, five
injection wells and associated monitoring wells, pipelines, and the conveyance system. Only effluent from the
PBWWTP would be treated in this phase. Phase 2 will increase the AWPF capacity to process effluent from
SSLOCSD WWTP and incorporate two additional injection wells. The project will increase water supply reliability
of the NCMA by injecting 900 AFY during Phase 1 and a total of 3,500 AFY when Phase 2 is completed.
3.5.2. Water Quality and Reliability
The SMGB provides groundwater for the NCMA agencies. Water supply reliability is limited by drought
conditions, seawater intrusion, and overall groundwater level reductions in the Santa Maria Valley
Groundwater Basin. Since 2009 the NCMA agencies have reduced groundwater pumping in efforts to prevent
seawater intrusion. The Central Coast Blue Project will increase groundwater supply and reliability for the
NCMA and improve the overall water quality by injecting highly purified recycled water that complies with Title
22 standards and the Central Coast Regional Water Quality Control Board requirements for minerals and
drinking water maximum contaminant levels into the SMGB.
The Central Coast blue project would inject up to 900 AFY of purified water in Phase 1 and 4,390 AFY in
Phase II. A groundwater model has been developed to determine how much water could be extracted at these
two phases of project implementation without negatively impacting the groundwater basin. Results of the
modeling analysis indicate the agencies will be able to extract as much water as they are injecting, and possibly
more, without causing seawater intrusion.
The City of Arroyo Grande has agreed to participate to a 25% level in the Phase I project, which is noted as
225 - 250 AFY of expected benefit for the City in the September 14, 2021, Staff Report to City Council.
3.5.3. Institutional or Legal Constraints
Operating and management agreements are being developed among the Cities of Arroyo Grande, Pismo
Beach, and Grover Beach for completion of permitting, design, construction, and management of Central Coast
Blue. Permitting and regulatory constraints have been identified by the project stakeholders and are being
addressed as part of the implementation strategy.
3.5.4. Infrastructure
The Central Coast Blue Project will require the construction of the AWPF which will utilize ultrafiltration, reverse
osmosis, and UV disinfection with advanced oxidation processes for water treatment and the development of
injection and monitoring wells. The project will also require additions to the PBWWTP and the SSLOCSD WWTP
infrastructure such as additional treatment facilities, a conveyance system, and multiple pump stations.
Existing extraction wells would be utilized to deliver water to the City.
3.5.5. Cost
A cost analysis was prepared for the project that assumed a 1% interest rate over a 30-year payback period.
The total cost for Phase 1 after injection is $2,400/ AF and $1,800/ AF for Phase 2. Total cost includes capital
cost, annualized capital cost, and annualized O&M cost. The PER notes the Phase 1 cost “before injection” is
$3,400 AFY, since 900 AFY would be injected but the PER states this will result in a yield of 1,700 AFY of
groundwater that can be extracted without increasing potential seawater intrusion.
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3.5.6. Additional Considerations
The City could improve reliability by exchanging Central Coast Blue allocation for State Water and/or Lopez
Water. As discussed in Section 3.2, in the future, Lopez Project participants will have the ability to use State
Water to offset their usage of Lopez Water, then store their unused Lopez Water in Lopez Reservoir. This could
allow the City to store unused water they have exchanged for their Central Coast Blue allocation.
Exchanging Central Coast Blue allocation for State Water and/or Lopez Water could also provide higher water
quality. Both surface water supplies have lower mineral content and hardness than groundwater.
3.6 Recycled Water “Scalping Plant” Concept
3.6.1. Background
In a June 24, 2021, letter to City Council, Hartman Engineering identified an option for a “scalping plant”,
defined in the letter as “decentralized treatment plant(s) which can provide recycled water to the City of Arroyo
Grande without the added infrastructure of developing large scale water treatment facilities and the
associated new pipe networks.” The letter recommended locating the scalping plant near Arroyo Grande High
School and surrounding agricultural fields where raw wastewater could be extracted from a SSLOCSD sewer
trunk main and treated for irrigation use. This water would be exchanged for groundwater in order to allow the
City to extract unused groundwater. The project could be phased to produce up to 400 AFY according to the
letter.
3.6.2. Water Quality and Reliability
The development of a scalping plant would provide a reliable water supply for irrigation. The letter states that
this project could reduce groundwater pumping by agricultural businesses and naturally reduce seawater
intrusion potential by providing recycled water as an alternative.
Mineral content could be a challenge for agricultural users, depending on the crops in production. High total
dissolved solids and chlorides can present a challenge as noted in previous recycled water studies. This
concern could be alleviated by blending with groundwater. However, this would reduce the beneficial
groundwater extraction offset.
There may also be concern from potential consumers about use of treated wastewater for food crops. Users
would also be required to obtain permitting for recycled water use and meet Title 22 requirements for
placement of irrigation systems and for prevention of cross-connection with potable water supplies.
3.6.3. Institutional or Legal Constraints
The letter claims the permitting process for decentralized treatment plants have a streamlined regulatory
pathway with the Regional Water Quality Control Board (RWQCB). One of the key benefits identified in the letter
is that scalping plant designs have the ability to be scalable to meet current and future demands without
excessive permitting limitations.
Since the plant would discharge waste to the existing SSLOCSD trunk mains, no Waste Discharge Requirement
Orders would be necessary. However, a Title 22 Engineering Report will be necessary to receive RWQCB
approvals for recycled water treatment and delivery. The project would also require California Environmental
Quality Act review and any other permits for treatment, pipelines, pump stations, and storage facility
construction.
In order to provide a quantifiable water supply benefit to the City, contracts with agricultural users would be
necessary. Users would need to agree to reduce groundwater pumping by a 1:1 ratio to delivered recycled
water. The City would need to have the right to extract this exchanged water from their wells.
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3.6.4. Infrastructure
The letter notes that the key advantage of a scalping plant is its limited infrastructure requirements. The
scalping plant would not require the development of a large-scale water treatment facility. As envisioned by
the letter’s author, the scalping plant would consist of a packaged membrane bioreactor system with
disinfection and pumping and would utilize the existing network of irrigation pipe to distribute recycled water.
The letter assumes existing pipe is nearby and available for connecting to the plant.
3.6.5. Cost
Cost cannot be accurately estimated at this time due to the range of variables, but cost components are
summarized below:
•Capital cost of scalping plant (including planning, design, and construction)
•Operation and maintenance of scalping plant.
In a similar project developed for a community in Madera County, a 0.25 MGD (280 AFY) recycled water
treatment facility was constructed for $6.5M construction cost. Assuming 30-year financing at 1.5% (recent
State Water Resources Control Board State Revolving Loan Fund terms), this would result in annual debt
service of $270,000 or $970/AF. The following table summarizes operation and maintenance costs projected
for the first year of operation.
Table 3-1 Example Estimated First-Year O&M Costs for 280 AFY Recycled Water Treatment Facility
Category Cost
Labor and Materials $420,000
Utilities (Power, Water, and
Communication) $160,000
Outside Services (Sludge
Disposal, Laboratory Testing,
and Engineering)
$80,000
Regulatory Permits and Fees $33,000
Administration $74,000
Total $767,000 ($2740/AF)
Total estimated cost, including only construction and operation/maintenance, for the recycled water plant in
Madera County is $3,710/AF for this 280 AFY facility. It is likely the cost per AF for a 400 AFY facility
would be lower due to economy of scale and the ability to discharge solids back to the collection system
instead of requiring offsite disposal. First year of operation tends to be higher until a treatment system
reaches a steady state of performance and less operator time is required. However, this cost does not
include land acquisition, resource agency permits, design, financing, recycled water distribution pipelines, or
other costs beyond those identified above. This cost opinion is considered adequate as a conceptual,
planning-level cost until preliminary design is performed.
3.6.6. Feasibility
While the project is feasible, developing planning-level costs would require preliminary design. No costs were
presented in the letter addressed to Council.
The City would need to identify interested customers before proceeding with this alternative. Discussions with
potential irrigation users would be required to determine if they are likely to reduce groundwater pumping in
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exchange for recycled water. This has proven to be a challenge in similar projects since agricultural businesses
are often concerned about committing to reducing their water usage and sometimes have concerns regarding
safety and quality of recycled water, particularly mineral quality.
3.7 Water Conservation
As discussed in Section 1.3 of this Study, the City recorded 2020 deliveries that were 24% or approximately
550 AFY lower than predicted. This is due to the City’s conservation efforts, including the tiered rate structure,
restrictions to irrigation during drought conditions, rebate programs such as “cash for grass”, and retrofits of
low flow fixtures. Further reduction through water conservation would require more stringent restrictions and
penalties for using excess water. It is difficult to predict how the City could further reduce water consumption
beyond the current level of success.
3.8 Stormwater Capture
3.8.1. Background
The San Luis Obispo County Stormwater Resource Plan (SWRP, 2020, County of San Luis Obispo Public Works
Department) identified and prioritized stormwater and dry weather runoff capture projects in the County,
including the City of Arroyo Grande. The SWRP provides the basis for this discussion.
The City is located within the Arroyo Grande/Pismo Creeks Watershed Group for stormwater planning efforts.
It is one of nine Watershed Groups identified in San Luis Obispo County. The Arroyo Grande Creek watershed
has a total drainage area of 103 square miles (mi2) of which 68 mi2 is above Lopez Dam.
The SWRP identified the following projects within the Watershed Group:
•Stormwater Infiltration Basins
•Pismo Preserve Roads Improvement Project
•Oceano Drainage Improvement Project
•South Halcyon Green/Complete Street
•Corbett Creek Floodplain and Stream Restoration Project
Of these projects, only the infiltration basins were identified as having a water supply benefit. No cost was
identified but a benefit of 26 AFY was estimated across the Watershed Group, which includes the Cities of
Arroyo Grande, Grover Beach, Pismo Beach, community of Oceano, and other unincorporated areas of San
Luis Obispo County.
3.8.2 Water Quality and Reliability
Surface flow from Arroyo Grande Creek would be the primary water supply under this alternative. Arroyo
Grande Creek supply is subject to drought conditions and is strongly dependent on releases at Lopez Dam.
The SWRP notes water quality is “generally good but for high concentrations of nitrate and orthophosphate,
and marginal temperatures in the lowermost reaches.” Orthophosphate loading to groundwater would likely
be reduced through adsorption during percolation but nitrate could have an impact to groundwater if this
alternative is implemented.
3.8.3 Infrastructure and Regulatory Constraints
Arroyo Grande Creek flow is regulated by releases from Lopez Dam. Operations have been altered since the
mid-1980s to improve flow conditions in the stream in order to enhance habitat. The SWRP notes these
conditions are “likely providing a disproportionate amount of the suitable steelhead rearing habitat in the
County, and thus are potentially high priority areas for protection and habitat enhancement.” Therefore, any
attempts to retain flows to or along Arroyo Grande Creek could affect endangered species habitat and would
require environmental review.
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Permitting for new pipelines, open channels, infiltration basins, or modifications to existing basins would be
required. Project-specific review would be necessary to identify permitting and regulatory requirements.
3.8.4 Cost
Total cost and cost per AFY cannot be determined at this time, but capital cost of new basins, open channels,
and piping (including planning, design, and construction) and cost of operation and maintenance should be
considered.
3.8.5 Feasibility
Water supply benefit appears to be very low, considering the entire Watershed Group would only realize an
estimated 26 AFY of additional water supply. However, these projects could be pursued as new development
occurs or as existing basins are improved or upgraded in the future.
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CONCLUSIONS AND RECOMMENDATIONS
4.1 Conclusions
The City has adequate water supply under normal and three-year drought conditions per the 2015 UWMP.
However, acquiring an additional 250 AFY could allow the City to meet future demands while reducing reliance
on native groundwater.
This Study analyzed the following water supply alternatives to meet future water demand under drought
conditions and to provide redundancy:
•State Water Project
•OCSD Supply
•Interagency Connections
•Nacimiento Water Project
•Central Coast Blue
•Recycled Water “Scalping Plant” Concept
•Water Conservation
•Stormwater Capture
The most feasible water supply alternatives appear to be the following:
•Short-Term:
o Partnering with Oceano Community Services District on a short-term water supply agreement.
o Pursuing an emergency connection with GSWCR.
•Long Term:
o Participation in Central Coast Blue.
o Negotiation with OCSD for long-term water purchase.
o Negotiation with GSWCR and NCSD for supplemental water after an emergency connection is
pursued with GSWCR.
State Water Project and Nacimiento Water Project participation do not appear to be feasible at this time. City
staff will continue to engage with County staff to identify potential opportunities to partner and acquire water
from either supply if it becomes available.
The Scalping Plant Concept requires negotiation with potential agricultural users prior to beginning planning
and design work. Customers willing to reduce groundwater pumping in exchange for recycled water are critical
to success.
The City’s water conservation program has been very successful. It is difficult to determine how much
additional enforcement effort, rebates, or incentive programming would be required to further reduce
customer demand.
Stormwater capture does not appear to provide a significant supply of water to the City based on the San Luis
Obispo County Stormwater Resource Plan. However, it could be pursued as new development continues and
as existing stormwater basins are modified and low impact development standards are implemented.
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4.2 Recommendations
The following next steps are recommended to continue developing the City’s water supply portfolio:
•Continue to engage in Central Coast Blue. Pursue potential delivery of State Water or Lopez Water in
exchange for Central Coast Blue allocation.
•Begin development of a Memorandum of Understanding with GSWCR for planning, design, and
construction of an emergency interconnection.
•Begin initial discussions with GSWCR and NCSD for purchase of excess Nipomo supplemental water.
•Negotiate with OCSD on a temporary water supply agreement.
•Engage with OCSD to explore long-term water purchase.
•Approach potential agricultural customers to discuss exchange of recycled water for reduced
groundwater pumping. This will determine if the Recycled Water “Scalping Plant” Concept is viable.
•Continue to regularly engage with County staff in case surplus Nacimiento or State Water is available
and could be transferred to the City.