CC 2021-07-27_08m Supplemental No 1
MEMORANDUM
TO: CITY COUNCIL
FROM: BILL ROBESON, ASSISTANT CITY MANAGER/PUBLIC WORKS
DIRECTOR
SUBJECT: SUPPLEMENTAL INFORMATION
AGENDA ITEM 8.m. – JULY 27, 2021 CITY COUNCIL MEETING
MONTHLY WATER SUPPLY AND DEMAND UPDATE
DATE: JULY 27, 2021
Attached is correspondence received by 4:00 PM for the above referenced item.
cc: City Manager
Utilities Manager
City Attorney
City Clerk
City Website (or public review binder)
J. H. EDWARDS COMPANY A REAL PROPERTY CONCERN
Specializing in Water Neutral Development
P.O. Box 6070, Los Osos, CA 93412 (805)235-0873 jhedwardscompany@gmail.com
ACQUISITION MARKETING LAND USE REDEVELOPMENT
July 26, 2021
Oceano Community Services District
1655 Front Street
Oceano, CA 93445
RE: July 28, 2021 agenda item 9.A. Drought Issues and Review of Water Supply
Dear Board of Directors,
The premise of the staff report for the above referenced agenda item relates to
“current drought conditions” and the need to review the District’s water supply and
possible impacts of an extended drought. Rather than drought related implications,
the impetus for reviewing the District’s water supply should consider the water
demands from fellow NCMA members, especially the City of Arroyo Grande. The
OCSD has an opportunity to enhance its water portfolio for current demands and
future build-out while also generating additional revenues for the district.
The staff report, while fairly detailed, fails to discuss the cost of the various sources
in the District’s water portfolio. Moreover, the staff report neglects to explore the
opportunities for the OCSD to secure additional Table A and/or Drought Buffer from
the San Luis Obispo County Flood Control and Water Conservation District (SLO CO
FC&WCD) related to State Project Water (SPW). The SLO CO FC&WCD is currently
determining how to deploy almost 15,000 AFY of unallocated SPW.
Currently the OCSD subscribes annually to 750 acre feet of Table A water and 750
acre feet of Drought Buffer. According to the 21-22FY proposed budget for the
District, the combined cost of SPW is $1,151,000. The Table A cost is approximately
$1,019,750 or $1,360.00 per acre foot. The Drought Buffer cost is approximately
$131,250 or $175 per acre foot.
The OCSD should consider acquiring 250 acre feet of additional Table A SPW and
750 acre feet of additional Drought Buffer. The total entitlement would become
1,000 acre feet of Table A SPW and 1,500 acre feet of Drought Buffer. Consequently,
by way of example, in a year with 40 percent or greater deliveries of SPW, the
District would receive up to 1,000 acre feet of guaranteed water.
Table A 1,000AFY
Drought Buffer +1,500AFY
2,500AFY (0.40) = 1,000AFY of delivered water
J. H. EDWARDS COMPANY A REAL PROPERTY CONCERN
Specializing in Water Neutral Development
P.O. Box 6070, Los Osos, CA 93412 (805)235-0873 jhedwardscompany@gmail.com
ACQUISITION MARKETING LAND USE REDEVELOPMENT
The cost of the additional Table A water is 250AFY x $1,360/AF = $340,000
The cost of additional Drought Buffer is 750AFY x $175/AF = $131,250
$471,250
The combined additional cost equates to approximately $1,000/AFY
The City of Arroyo Grande may be willing to pay as much as $2,000AF for 400 acre
feet of water, or $800,000 per year. By way of comparison, Arroyo Grande was
going to pay $1,606,334 per year for 400 AF of water from Pismo Beach’s Central
Coast Blue project. This represents an opportunity for Arroyo Grande to secure
permanent additional water supplies for half the price. This also has the potential to
generate over $300,000 ($800,000-$471,250) per year in revenue for the OCSD to
deploy for various water infrastructure improvements such as new water tank(s),
water transmission pipeline repair and well upgrades. Without this additional
revenue the OCSD will have to rely on grants or water rate increases to accomplish
much of the water infrastructure improvements contemplated. This arrangement
could be a “win-win” for both the OCSD and the City of Arroyo Grande.
Other issues not discussed in the staff report include:
1. The cost and benefit of the Delta Conveyance Project. Early indications
are the cost will be approximately $255 per acre foot; however it is likely
to result in a benefit of increased reliability by approximately 10 percent.
2. The majority of the current cost of Table A water at $1,360/AFY is
comprised of $1,050/AF for the Coastal Branch of the SPW. In 2035 the
Coastal Branch will be paid in full and the associated cost will cease. So,
Table A water will then likely cost $1,360 - $1,050 + $255 = $565.00/AFY.
3. State Project Water stored in Lopez Lake becomes Zone 3 water, making
it readily to the City of Arroyo Grande without constraints.
This strategy would not only generate additional revenues for the District, but it
would enhance the water portfolio for their own current demands and future build-
out.
OCSD Water Portfolio,
1. Groundwater 900AFY
2. Lopez Lake 303 AFY
3. SPW (proposed) Table A 1,000AFY plus Drought Buffer 1,500AFY
J. H. EDWARDS COMPANY A REAL PROPERTY CONCERN
Specializing in Water Neutral Development
P.O. Box 6070, Los Osos, CA 93412 (805)235-0873 jhedwardscompany@gmail.com
ACQUISITION MARKETING LAND USE REDEVELOPMENT
Example: Groundwater at 30% = 270AFY
Lopez at 80% = 242AFY
SPW at 40% = 1,000AFY
1,512AFY
-400AFY City of Arroyo Grande
1,112AFY
-743AFY OCSD Current Demand
369AFY Surplus water for build-out
Why Arroyo Grande?
The OCSD and the City of Arroyo Grande have a historical relationship in connection
with the sale or transfer of water. In March of 2009, the OCSD entered into an
agreement with the City of Arroyo Grande for the temporary sale (rental) of water.
Arroyo Grande could pump the water from their own wells or take delivery of OCSD
Lopez water at the turnout. The agreement was for 100AFY over five (5) years.
A wholesale water supply agreement could be structured between the OCSD and the
City of Arroyo Grande to facilitate the suggested scenario related to multiple sources
of the OCSD water portfolio. The delivery of 400AFY to the City of Arroyo Grande
could incorporate groundwater and Lopez water similar to the 2009 agreement
with the addition of SPW; as a third source of water or any combination thereof, for
transfer to the City. Any such agreement with the City would likely be consistent
with the 2012 Oceano voter initiative regarding the sale of water, in that the
transfer would include water secured over and above that contemplated by the
initiative and resulting ordinance.
Conclusion
The OCSD should consider requesting augmentation of their Table A and Drought
Buffer allocations from the SLO CO FC&WCD as soon as possible. Furthermore, the
OCSD should initiate discussions and negotiations with Arroyo Grande with the
prospect of entering into a long-term wholesale water supply agreement
Sincerely,
Jeff Edwards
Cc: Whitney McDonald, City Manager-City of Arroyo Grande
John Diodati, SLO County Public Works Director-FC&WCD
J. H. EDWARDS COMPANY A REAL PROPERTY CONCERN
Specializing in Water Neutral Development
P.O. Box 6070, Los Osos, CA 93412 (805)235-0873 jhedwardscompany@gmail.com
ACQUISITION MARKETING LAND USE REDEVELOPMENT