10b Measure to Authorize Purchase of State WaterMEMORANDUM
TO: CITY COUNCIL
FROM: STEVEN ADAMS, ClTY MANAGER #
SUBJECT: CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT
THE JUNE 5, 2012 ELECTION TO AUTHORIZE PURCHASE OF
STATE WATER
DATE: FEBRUARY 14,2012
RECOMMENDATION:
It is recommended the Council 1) adopt a Resolution calling for the holding of a
special municipal election to be held on Tuesday, June 5, 2012, for the submission to
the voters of a question relating to the authority to purchase water from the California
State Water Project; 2) adopt a Resolution requesting consolidation of the Special
Municipal Election with the Statewide Primary Election; 3) adopt a Resolution setting
priorities for filing written arguments for City measures and directing the City Attorney
to prepare an impartial analysis; 4) adopt a Resolution providing for the filing of
rebuttal arguments; 5) approve the ballot argument in support of the measure; and 6)
appropriate $35,000 from the Water Availability Fund for the estimated cost of placing
the measure on the ballot and preparing and distributing public education materials.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
The estimated cost of State water is approximately $1,250 to $1,350 per acre foot of
water. Of this amount, holding costs are estimated to make up $200 to $300 per acre
foot and the remaining $1,050 is the cost to transport and deliver the water. There
would be an additional cost of approximately $84 per acre foot if the City chose to
purchase drought insurance, which would be recommended. A one-time capital cost
to pay the City's share of capital investments in the system that other contractors
have been making through the life of the project is estimated to be approximately
$25,000 to $30,000 per acre foot. The City has requested the State water purchase
be structured so only holding costs be charged until the water is needed and used.
There is currently approximately $1.4 million available in the Water Availability Fund
to cover costs for acquisition of new water supply.
The City is currently in the third year of a five-year temporary water purchase
agreement with the Oceano Community Services District (OCSD) for the purchase of
100 acre feet of water. The current annual cost is approximately $1 55,000. This is
Agenda Item 10.b.
Page 1
CITY COUNCIL
CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5,
2012 ELECTION TO AUTHORIZE PURCHASE OF STATE WATER
FEBRUARY 14,2012
PAGE 2
based on the current cost for Lopez water of $1,470 per acre foot and a 5% fee.
Staff's intent is to time the purchase of State water with the expiration of the OCSD
temporary water purchase agreement. The actual amount of water recommended to
be purchased will depend upon the terms agreed upon by the County and Central
Coast Water Authority (CCWA). The objective is to maintain costs relatively close to
what is currently paid to OCSD in order to avoid any additional impact on the City's
water rates.
The cost of placing the measure on the ballot is approximately $45,000 to $50,000.
However, if it is accompanied with the Police Station ballot measure, the costs of the
two measures can be shared. It is proposed to fund this cost from the Water
Availability Fund. It is also recommended that $10,000 be appropriated for public
education. Therefore, the total cost irr~pact of the election to this fund will be
approximately $35,000.
There will be impacts on staff resources. However, the work will be accomplished as
part of ongoing efforts to coordinate City water resources. Water supply measures
are one of the priorities identified in the City's Critical Needs Action Plan.
BACKGROUND:
An Arroyo Grande ballot measure passed by the voters in 1990 requires a public vote
before the City can purchase State water. The question on the ballot was as follows:
Shall an affirmative vote of the voters of Arroyo Grande be required before the City of
Arroyo Grande is authorized to participate in the California State Water Project?
In June 2010, staff presented a water analysis and strategies to the City Council. It
identified a projected need for approximately 400 additional acre feet of water to
meet the community's needs when it reaches its buildout population under the
current General Plan. It was agreed to address these needs by expanding water
conservation efforts, seeking purchase of State water, and to continue working on the
potential for a water recycling project in the future. The City Council directed staff to
prepare a ballot measure for the June 2012 election to enable purchase of State
water. A copy of that staff report is attached.
County officials are negotiating with the CCWA for the State water purchase. While
the County has over 15,000 acre feet of excess water supply, the CCWA controls the
distribution system. Staff has developed a strategy to mitigate the impact of the State
water purchase on water rates by: 1) timing the purchase with the expiration of the
OCSD temporary water purchase agreement; and 2) requesting the CCWA to defer
capital and transportation costs until the water is needed so the majority of costs can
be assumed by new development and new customers. Therefore, the amount of
water recommended to be purchased will depend upon the amount of costs that can
be deferred.
Agenda Item 10.b.
Page 2
ClN COLlNClL
CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5,
2012 ELECTION TO AUTHORIZE PURCHASE OF STATE WATER
FEBRUARY 14,2012
PAGE 3
Staff presented these recommendations to the City Council at the January 24, 2012
meeting. The City' Council continued the item and requested additional information
regarding the potential impact on developers' costs from the State water purchase.
ANALYSIS OF ISSUES:
Two issues were raised during the Council discussion of this item at the last meeting.
The first was the issue of the cost. The second was potential impact on the Police
Station bond measure.
Cost
Since Lopez water is currently more expensive than State water, it was concluded
that there would be an ongoing water cost savings if a purchase of 100 acre feet was
timed with the expiration of the temporary water purchase agreement with OCSD.
Therefore, the issue identified involves how the one-time capital costs would be paid
and whether it would impact the economic viability of new projects. A number of
factors affect the ultimate cost impact of the purchase of State water.
There are currently two separate development impact fees charged to new
construction projects that provide revenue that could be used toward such costs.
The first is the Water Availability charge. It generates revenue to ensure the City's
availability of its water supply. The second is the Water Neutralization Fee. It is
charged to "neutralize" the impact of new development on the City's water supply.
The rate is established based upon, and used for, the cost of water conservation
programs.
The current cost of the Water Availability charge is $2,050 per water connection. The
cost of the Water Neutralization Fee varies from $1,546 to $4,459 per unit depending
upon lot size. An average unit on a lot .I to .25 acres would be charged a fee of
$2,200. Therefore, for purposes of this analysis, it can be assumed that a typical unit
will pay approximately $4,250 for these fees. Since the majority of water need is still
proposed to be addressed through conservation, it is recommended to maintain
Water Neutralization Fee revenues for the water conservation program.
Under the scenario of purchasing 100 acre feet of water, it would likely require a one-
time payment of historical capital costs of approximately $2,750,000 ($2,750 per acre
foot x 100 acre feet). It is estimated that the City has water capacity to serve
construction all projects that have been approved, which will use a projected 200
acre feet of water. Therefore, it is likely the City can obtain fees from new
development using up to 300 acre feet of water to help fund this cost (200 acre feet
of existing capacity plus 100 acre feet of additional supply).
For planning purposes, the projections are based on residential development and it is
assumed that an average of 2.5 units will utilize one acre foot of water. This would
Agenda Item 10.b.
Page 3
CITYCOUNCIL
CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5,
2012 ELECTION TO AUTHORIZE PURCHASE OF STATE WATER
FEBRUARY 14,2012
PAGE 4
equate to 750 units, which would enable the City to generate a total of $1,537,500 in
the Water Availability Fund for the one-time costs associated with the water
purchase. The City currently has $1.4 million available in the Water Availability Fund,
which would bring the total projected revenues to $2,937,500. If capital costs are not
deferred, staff will likely recommend some form of financing be used to delay the full
cost until additional revenues are received.
The following table provides a summary of this cost analysis:
One-time costs for 100 acre feet:
Historical capital costs $2,750,000
Total one-time costs $2,750,000
One-time revenues for 300 acre feet:
Existing Water Availability funds
Water Availability charges before water is needed
(200 acre feet = 500 units)
Water Availability charges after water is needed
(1 00 acre feet = 250 units)
Total one-time revenues
Remaining Water Availability Fund Balance $1 87,500
As a result, the City could purchase 100 acre feet of water and pay the capital
costs with no increase in developer fees and continue to maintain the Water
Neutralization Fee for water conservation efforts. Government Code Section
38743 limits the amount the fee can be raised by only $50 per year, which means ,the
City could not increase the purchase of State water much over 100 acre feet without
irr~pacting existing rates or utilizing Water Neutralization funds.
There is the potential the City could purchase State water from an existing State
water contractor with excess supply, which would be the first attempt by staff if the
measure is approved. Agencies that staff has contacted thus far are either interested
in only selling water on a temporary basis or would want comparable one-time
payments. There would also not likely be the ability to defer capital payments.
However, it is possible that an opportunity could present itself where a seller would
be willing to enter into a permanent agreement at a reduced rate for historical capital
costs. Therefore, staff recommends the measure seek the authorization to purchase
up to 200 acre feet of water to provide some flexibility in case such an opportunity
arose.
The real unknown cost factor is not State water, but conservation efforts. The current
fee was based upon costs for the retrofit programs. The cost at this time to save one
acre foot of water is $5,946, already above the current fee amount. It is unknown
Agenda Item 10.b.
Page 4
CITY COUNCIL
CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5,
2012 ELECTION TO AUTHORIZE PURCHASE OF STATE WATER
FEBRUARY 14,2012
PAGE 5
what level of funding will be required to reach higher levels of water conservation. It
will also be dependent largely on what amount of the decrease is achieved through
voluntary measures and what amount through mandatory measures, which will
become a policy consideration for the City Council.
The important factor to consider regarding this issue is that the Council is not being
asked at this time to approve any terms regarding the purchase of State water or
fees. The recommendation is simply seeking authorization from the voters to
purchase a limited amount of State water if it becomes available.
The City has contracted' for independent studies on multiple options and while
expensive, State water currently provides the lowest cost alternative for acquiring
additional water supply. It is the only option feasible to accomplish independently
without financial participation from neighboring jurisdictions. Since the City's need is
relatively small, it is also important because it is the only option that can provide
additional supply without constructing a large capital project.
The only other feasible option is to rely entirely on water conservation efforts to
address the City's projected water need through reduced demand rather than
increased supply. Staff believes it would be a dangerous approach, but would
continue to be the backup alternative if the measure were to fail. This may provide a
much more severe impact on new development if another moratorium becomes
necessary. It also may require additional environmental review costs if the City does
not have an adequate plan in place to demonstrate the availability of necessary water
resources.
It is important to emphasize that water projections can be highly unreliable
given the impact of changing weather conditions. The recommendations seek to
provide a reliable future supply at the lowest cost to the customer based upon staffs
best estimates. As a result, it provides a buffer amount, but not excess supply
sufficient to address unforeseen extreme conditions. However, the proposed
measure would provide the ability to obtain additional supply on a temporary or
ongoing basis if available under emergency conditions, which would be an important
tool to potentially help address such serious situations.
Timing
Staff does agree that timing is an important consideration. On the one hand, placing
the measure-on the June ballot would help share the cost impact of the election and
avoid confusion with a long list of controversial State and Federal issues in
November. On the other hand, placing the measure on the June ballot will impact the
amount of staff time that can be devoted to education efforts.
Therefore, given concerns expressed at the last meeting, the City Council may want
to consider placing the measure on the ballot at the November election instead. Staff
Agenda Item 10.b.
Page 5
CITY COUNCIL
CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5,
2012 ELECTION TO AUTHORIZE PURCHASE OF STATE WATER
FEBRUARY 14,2012
PAGE 6
recommends against delaying it beyond that time. If State water does become
available, the City will likely be a lower priority to receive the water behind cities and
other entities that are existing State water contractors since the City rejected
participation in the State water project when it became available in San Luis Obispo
County. As a result, a two-year delay to the next election would increase the risk of
losing the opportunity for obtaining an allocation of water that may become available.
If the Council decides to delay the measure to November, staff recommends fundirlg
for public education be allocated now and staff be directed to initiate public education
efforts. The City Council may also want to consider allocating additional funding for a
professional telephone survey. It could be used to determine public opinion
regarding different options. The estimated cost is $25,000. Questions regarding the
proposed City Charter measure could also be added.
There were also questions expressed at the last meeting regarding the priority of the
State water measure in corr~parison to other efforts. Water supply measures are one
of the City's top priorities as established in the Critical Needs Action Plan.
Conservation efforts have reduced the existing urgency, but part of the drop in usage
is due to heavy rainfall during the past year, a condition that has already been
reversed. Now that the economy is improving, demands are expected to increase
again and it is critical the City avoid circumstances experienced in the past when ,the
City used its entire supply, evidence of seawater intrusion occurred, and a
moratorium became necessary.
Ballot Lannuaqe
The following ballot language is proposed:
Shall the City of Arroyo Grande be authorized to purchase: 1) up to 200 acre
feet of water from the State Water Project; and 2) up to an additional 500 acre
feet of water from the State Water Project as needed to replace any existing
water supply that becomes unavailable due to drought, seawater intrusion or
other unforeseen emergencies?
Please note that this is an adjustment in the amount recommended in the January .
24, 201 2 staff report.
Agenda Item 10.b.
Page 6
CITY COUNCIL
CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5,
2012 ELECTION TO AU'THORIZE PURCHASE OF STATE WATER
FEBRUARY 14,2012
PAGE 7
ALTERNATIVES:
'The following alternatives have been identified for City Council consideration:
1. Approve staffs recommendations;
2. Postpone consideration of the measure until July in order to instead place it on
the ballot at the November 6, 2012 election, appropriate $10,000 and direct staff
to initiate public education efforts;
3. In addition to the second alternative above, appropriate an additional $25,000
and direct staff to contract for a professional telephone public opinion survey;
4. Reduce the authorization amount to 100 acre feet in order to ensure no
additional cost impact and approve the recommended actions;
5. Request staff to modify the ballot measure to authorize an unspecified amount;
6. Postpone the measure until negotiations are completed with the County and
CCWA;
7. Do not approve a ballot measure and reconsider relying entirely on conservation
measures andlor recycled water to address the City's water needs; or
8. Provide other direction.
ADVANTAGES:
State water would help diversify the City's water supply. Since the County has an
excess supply of State water, it is a reliable source. When the State reduces its
delivery during drought conditions, the County has traditionally been able to provide
delivery of the full allocation with its excess supply through the sale of drought
insurance to State water contractors. State water provides the most cost effective
and feasible option currently available to increase water supply. By requesting
authorization to purchase an increased amount of State water if necessary to
address reduced water supply, the measure will also increase the City's ability to
respond to drought, seawater intrusion or other emergency conditions.
Placing the measure on the ballot at this time will help facilitate negotiation of the
purchase because it will resolve whether the City will have the authority for the
purchase. Including the measure on the June ballot will help avoid confusion for
voters that would occur if included along with a long list of controversial State and
Federal items anticipated on the November election ballot. Placing the measure on
the ballot at the same time as the Police Station bond measure will also reduce the
cost impact on the General Fund by funding a portion of the election costs from the
Water Availability Fund.
DISADVANTAGES:
Placing the measure on the June ballot at the same time as the Police Station bond
measure will limit staffs ability to devote the time necessary to provide an effective
public education effort.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
Agenda Item 10.b.
Page 7
CITY COUNCIL
CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5,
2012 ELECTION TO AUTHORIZE PURCHASE OF STATE WATER
FEBRUARY 14,2012
PAGE 8
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, February 9 and on the
City's website on Friday, February 10, 2012. No comments were received.
Attachment:
1. Proposed Argument in Favor
2. June 8, 2010 Water Analysis Staff Report
Agenda Item 10.b.
Page 8
RESOLUTION NO.
A RESOLUTION OF THE ClN COUNCIL OF THE ClN OF ARROYO
GRANDE CALLING FOR THE HOLDING OF A SPECIAL MUNICIPAL
ELECTION TO BE HELD ON TUESDAY, JUNE 5, 2012, FOR THE
SUBMISSION TO THE VOTERS A QUESTION RELATING TO THE
PURCHASE OF STATE WATER
WHEREAS, under the provisions of the laws relating to general law cities in the State of
California, a Special Municipal Election shall be held on June 5, 2012, to submit to the
voters at the election a question relating to the purchase of water from the State Water
Project.
NOW THEREFORE, BE IT RESOLVED, that the City Council of the City of Arroyo
Grande does resolve, declare, determine, and order as follows:
SECTION 1. That the City Council, pursuant to its right and authority, does order
submitted to the voters at the June 5, 2012 Special Municipal Election the followirrg
question:
SECTION 2. 'That the ballots to be used at the election shall be in form and content as
required by law.
ClN OF ARROYO GRANDE
MEASURE -
Shall the City of Arroyo Grande be authorized to
purchase: 1) up to 200 acre feet of water from the
State Water Project; and 2) up to an ddditional
500 acre feet of water from the State Water
Project as needed to replace any existing water
supply that becomes unavailable due to drought,
seawater intrusion or other unforeseen
emergencies?
SECTION 3. That the City Clerk is authorized, instructed and directed to coordinate with
the County of San Luis Obispo Registrar-RecorderICounty Clerk to procure and furnish
any and all official ballots, notices, printed matter and all supplies, equipment and
paraphernalia that may be necessary in order to properly and lawfully conduct the
election.
YES
NO
SECTION 4. That the polls for the election shall be open at seven o'clock a.m. of the
day of the election and shall remain open continuously from that time until eight o'clock
p.m. of the same day when the polls shall be closed, pursuant to Election Code 910242,
except as provided in §I4401 of the Election Code of the State of California.
Agenda Item 10.b.
Page 9
RESOLUTION NO.
PAGE 2
SECTION 5. That in all particulars not recited in this Resolution, the election shall be
held and conducted as provided by law for holding municipal elections.
SECTION 6. That notice of the time and place of holding the election is given and the
City Clerk is authorized, instructed and directed to give further or additional notice of the
election, in the time, form and manner as required by law.
SECTION 7. That the City Clerk shall certify to the passage and adoption of this
Resolution and enter it into the book of original Resolutions.
SECDTION 8. The City Council authorizes the City Clerk to administer said election and
all reasonable and actual election expenses shall be paid by the City upon presentation
of a properly submitted bill.
On motion of Council Member , seconded by Council Member I
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing Resolution was passed and adopted this - day of ,2012.
Agenda Item 10.b.
Page 10
RESOLU'TION NO.
PAGE 3
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, ClTY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, ClTY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, ClTY ATTORNEY
Agenda Item 10.b.
Page 11
RESOLUTION NO.
A RESOLU'I'ION OF 'THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE, CALIFORNIA, REQUESTING 'THE BOARD OF
SUPERVISORS OF 'THE COUNTY OF SAN LUIS OBISPO TO
CONSOLIDATE A SPECIAL MUNICIPAL ELECTION TO BE HELD ON
JUNE 5, 2012, WITH THE STATEWIDE PRIMARY ELECTION TO BE
HELD ON THE DATE PURSUANT TO 910403 OF THE ELECTIONS .
CODE
WHEREAS, the City Council of the City of Arroyo Grande called a Special Municipal
Election to be held on June 5, 2012, and is submitting to the voters the question of
whether the City shall be authorized to purchase State water under certain
circumstances; and
WHEREAS, it is desirable that the Special Municipal Election be consolidated with the
Statewide Primary Election to be held on the same date and that within the City the
precincts, polling places and election officers of the two elections be the same, and that
the county election department of the County of San Luis Obispo canvass the returns of
the Special Municipal Election and that the election be held in all respects as if there
were only one election.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo
Grande as follows:
SECTION I. That pursuant to the requirements of § 10403 of the Elections Code, the
Board of Supervisors of the County of San Luis Obispo is hereby requested to consent
and agree to the consolidation of a Special Municipal Election with the Statewide
Primary Election on Tuesday, June 5, 2012, for the purpose of placing a measure to
appear on the ballot as follows:
CITY OF ARROYO GRANDE
MEASURE
Shall the City of Arroyo Grande be authorized to
purchase: 1) up to 200 acre feet of water from the
State Water Project; and 2) up to an additional
500 acre feet of water from the State Water
Project as needed to replace any existing water
supply that becomes unavailable due to drought,
seawater intrusion or other unforeseen
emergencies?
YES
NO
Agenda Item 10.b.
Page 12
RESOLUTION NO.
PAGE 2
SECTION 2. That the County election department is authorized to canvass the returns
of the Special Municipal Election. The election shall be held in all respects as if there
were only one election, and only one form of ballot shall be used.
SECTION 3. That the Board of Supervisors is requested to issue instructions to the
County election department to take any and all steps necessary for the holding of the
consolidated election.
SECTION 4. That the City of Arroyo Grande recognizes that additional costs will be
incurred by the County by reason of this consolidation and agrees to reimburse the
County for any costs.
SECTION 5. That the City Clerk is hereby directed to file a certified copy of this
Resolution with the Board of Supervisors and the County election department of the
County of San Luis Obispo.
SECTION 6. That the City Clerk shall certify to the passage and adoption of this
Resolution and enter it into the book of original resolutions.
On motion by Council Member , seconded by Council Member , and
on the following roll-call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this day of , 2012.
Agenda Item 10.b.
Page 13
RESOLUTION NO.
PAGE 3
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, ClTY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, ClTY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, ClTY ATTORNEY
Agenda Item 10.b.
Page 14
RESOLUTION NO.
A RESOLUTION OF THE ClTY COUNCIL OF THE ClTY
OF ARROYO GRANDE SETTING PRIORITIES FOR
FILING A WRITTEN ARGUMENT REGARDING A ClTY
MEASURE AND DIRECTING THE ClTY ATTORNEY TO
PREPARE AN IMPARTIAL ANALYSIS
WHEREAS, a Special Municipal Election is to be held in the City of Arroyo Grande,
California, on June 5, 2012, at which there will be submitted to the voters the following
measure:
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Arroyo
Grande as follows:
ClTY OF ARROYO GRANDE
MEASURE
Shall the City of Arroyo Grande be
authorized to purchase: 1) up to 200 acre
feet of water from the State Water Project;
and 2) up to an additional 500 acre feet of
water from the State Water Project as
needed to replace any existing water
supply that becomes unavailable due to
drought, seawater intrusion or other
unforeseen emergencies?
SECTION 1. That the City Council, being the legislative body of the City of Arroyo
Grande, hereby authorizes ALL members of the City Council, to file a written argument
in favor of the City measure not exceeding 300 words, accompanied by the printed
names and signatures of the authors submitting it, in accordance with Article 4, Chapter
3, Division 9 of the Elections Code of the State of California. The argument may be
changed or withdrawn until and including the date fixed by the City Clerk after which no
arguments for or against the City measure may be submitted to the City Clerk.
The arguments shall be filed with the City Clerk, signed, with the printed names
and signatures of the authors submitting it, or if submitted on behalf of an organization,
the name of the organization, and the printed name and signature of at least one of its
principal officers who is the author of the argument. The arguments shall be
accompanied by the Form of Statement To Be Filed By Author(s) of Argument.
Yes
No
SECTION 2. That the City Council directs the City Clerk to transmit a copy of the
measures to the City Attorney, unless the organization or salaries of the Office of the
City Attorney are affected. 'The City Attorney shall prepare an impartial analysis of the
Agenda Item 10.b.
Page 15
RESOLUTION NO.
PAGE 2
measure not exceeding 500 words showing the effect of the measure on the existing
law and the operation of the measure. If the measure affects the organization or
salaries of the office of the City Attorney, the City Clerk shall prepare the impartial
analysis. The impartial analysis shall be filed by the date set by the City Clerk for the
,filing of primary arguments.
SECTION 3. That the City Clerk shall certify to the passage and adoption of this
Resolution and enter it into the book of original Resolutions.
On motion by Council Member , seconded by Council Member , and
on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this day of February, 2012.
Agenda Item 10.b.
Page 16
RESOLUTION NO.
PAGE 3
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, ClTY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, ClTY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, ClTY ATTORNEY
Agenda Item 10.b.
Page 17
RESOLUTION NO.
A RESOLU'TION OF THE ClTY COUNCIL OF THE ClTY OF ARROYO
GRANDE, CALIFORNIA, PROVIDING FOR THE FILING OF REBUTTAL
ARGUMENTS FOR ClTY MEASURES SUBMITTED AT MUNICIPAL
ELECTIONS
WHEREAS, Section 9285 of the Elections Code of the State of California authorizes the
City Council by majority vote, to adopt provisions to provide for the filing of rebuttal
arguments for City measures submitted at municipal elections.
NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Arroyo
Grande as follows:
SECTION 1. That pursuant to Section 9285 of the Elections Code of the State of
California, when the City Elections Official has selected the arguments for and against
the measure which will be printed and distributed to the voters, the City Elections
Official shall send a copy of an argument in favor of the measure to the authors of any
argument against the measure, and a copy of an argument against the measure to the
authors of any argument in favor of the measure, immediately upon receiving the
arguments.
The author or a majority of the authors of an argument relating to a City measure
may prepare and submit a rebuttal argument not exceeding 250 words or may authorize
in writing any other person or persons to prepare, submit, or sign the rebuttal argument.
A rebuttal argument may not be signed by more than five authors.
The rebuttal arguments shall be filed with the City Clerk, signed, with the printed
name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an
organization, the name of the organization, and the printed name and signature of at
least one of its principal officers, not more than 10 days after the final date for filing
direct arguments. The rebuttal arguments shall be accompanied by the Form of
Statement To Be Filed By Author(s) of Argument.
Rebuttal arguments shall be printed in the same manner as the direct arguments.
Each rebuttal argument shall immediately follow the direct argument which it seeks to
rebut.
SECTION 2. That all previous resolutions providing for the filing of rebuttal arguments
for City measures are repealed.
SECTION 3. That the provisions of Section 1 shall apply only to the election to be held
on June 5, 2012, and shall then be repealed.
SECTION 4. That the City Clerk shall certify to the passage and adoption of this
Resolution and enter it into the book of original Resolutions.
Agenda Item 10.b.
Page 18
RESOLUTION NO.
PAGE 2
On motion of Council Member , seconded by Council Member
, and on the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this - day of February, 201 2.
Agenda Item 10.b.
Page 19
RESOLUTION NO.
PAGE 3
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, ClTY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, ClTY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, ClTY ATTORNEY
Agenda Item 10.b.
Page 20
ATTACHMENT 1
ARGUMENT IN FAVOR OF MEASURE
Your "YES" vote on Measure - will authorize the City of Arroyo Grande to
purchase a limited amount of State water to continue to meet the needs of its
customers in the most cost effective manner. Projections indicate the City will
require approximately 400 acre feet of additional water to meet the needs of its
buildout population under the existing General Plan. The City uses all the Lopez
water it is legally entitled to and a court order prevents the City from pumping
additional groundwater. This measure is not intended to acquire water to
accommodate any growth not currently allowed or planned for.
State water represents the most cost effective approach available to obtain
additional water. The City's objective is to structure a purchase that will have
minimal impact on customers' water rates.
State water is a reliable source even in droughts because the County has excess
supply that is available to compensate for periodic reductions in deliveries from
the State. Since the City currently has only two sources of water, this will help
diversify our water supply. Conservation and other efforts are still proposed to
address the 400 acre feet needed, but given the uncertainties involving water
resources, it is dangerous to rely solely on conservation to meet the City's needs.
This will also provide the critical authorization needed to purchase emergency
water if ever needed to replace the potential loss of existing supply due to
drought or other emergency conditions.
The City has worked hard to make available the water needed to serve its
customers, but supply is restricted and options are limited. Your City Council
unanimously urges you to take the steps necessary to help ensure it can
continue to meet these needs in the future in a cost effective manner by voting
. "YES" on Measure
Tony Ferrara, Mayor Tim Brown, Mayor Pro Tem
Joe Costello, Council Member Jim Guthrie, Council Member
Caren Ray, Council Member
Agenda Item 10.b.
Page 21
ATTACHMENT 2
MEMORANDUM
TO: ClN COUNCIL
FROM: STEVEN ADAMS, CITY MANAGER @
SUBJECT: CONSIDERATION OF UPDATED ANALYSIS OF WATER SUPPLY
AND USAGE
DATE: JUNE 8,2010
RECOMMENDATION:
It is recommended the Council: 1) continue efforts to purchase temporary Lopez
water from the City of Pismo Beach andlor the Oceano Community Service District
(OCSD) if a temporary emergency purchase of State water can be obtained from
those jurisdictions; 2) direct staff to prepare modifications to the Municipal Code to
permanently establish existing mandatory conservation measures; 3) direct staff to
begin funding the half-time Water Conservation Coordinator position in the Water
Fund rather than the Water Neutralization Fund when the next rate structure is
prepared; 4) authorize staff to offer financial incentives to pay 75% of the costs of
water efficiency measures identified in the water audits of major users; 5) direct staff
to continue to work with neighboring jurisdictions on recycled water alternatives,
determine cost of obtaining use of the Conoco Phillips pipeline for recycled water,
and establish communications with agricultural property owners regarding use of
recycled water; 6) direct staff to prepare a Resolution increasing Water Neutralization
fees so that development impact fees will cover the full estimated capital costs of
acquiring State water; 7) appropriate $25,000 from the Water Fund to develop a
public education program regarding the status of the City's water supply and
proposed measures to provide adequate long-term supply; and 8) direct staff to plan
for preparation of a ballot measure at the June 2012 election to enable purchase of
up to 450 acre feet of State water if a conditional purchase can be negotiated
successfully with the County and Central Coast Water Authority (CCWA).
FINANCIAL IMPACT:
The future cost to the Water Fund of shifting the Water Conservation Coordinator to
that Fund will be approximately $50,000. The annual holding costs for acquiring
State water would be roughly $112,500 per year and drought insurance would be
roughly an additional $25,000 per year. However, the intent would be to replace the
cost of purchasing OCSD water, which is currently approximately $1 31,000 per year.
Therefore, there would be no initial net cost of acquiring State water if negotiations
are successful in structuring the purchase as proposed.
Agenda Item 10.b.
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CITY COUNCIL
CONSIDERATION OF UPDATED ANALYSIS OF WATER SUPPLY AND USAGE
JUNE 8,2010
PAGE 2
The current cast to purchase State water is $1,250 to $1,350 per acre foot, which is
less than the cast of Lopez water. Therefore, once the City began receiving and
using the water, the ongoing cost would be covered largely by revenue from new
customers at that time. The recommendations would increase the Water Fund
expenses by $25,000 in P/ 2010-1 1 in order to fund a public education program.
Sufficient revenue is currently available in the Water Fund for this expense. In
addition, the City's Water Neutralization Fund has an existing balance of
approximately $500,000 and the Water Availability Fund has a balance of
approximately $1,500,000.
BACKGROUND:
The Crty's long-term water supply was identified as a significant issue during
development of the City's 2001 General Plan and 2005 Urban Water Master Plan. At
the August 24, 2004 meeting, the City Council reviewed a Water Alternatives Study
identifying 17 alternatives for Council consideration. Since that time, a number of
studies have been completed on the following alternatives:
Nacimiento Water project
Price Canyon oil field recycled water
Desalination
Recycled water
Raising of the spillway at the Lopez Lake dam
Acquisition of State. water
In 2008, it was determined the City had utilized 99% of its water entitlements. At the
August 12, 2008 meeting, the City Council approved a Resolution declaring a
"severely restricted water supply condition." Mandatory conservation measures were
enacted.
Meanwhile, the City's water conservation program and tiered rate structure were
expanded, which have been successful in reducing water usage by 10% over the
past two-year period. In January 2009, the City entered into a 5-year temporary
water purchase agreement with the Oceano Community Service District (OCSD).
Efforts are also under way to activate Well #I 0 and reactivate Well #I 1.
In 2009, low groundwater levels and high chloride concentrations from water quality
tests on one of the sentry wells located along the coast indicated the potential for
seaweater intrusion. At the November 10, 2009 meeting, the City Council adopted
an Interim Urgency Ordinance establishing a development moratorium. The
moratorium was extended at the December 8, 2009 and April 13, 2010 meetings. It
is now due to expire on July 12, 2010.
Agenda Item 10.b.
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CITY COUNCIL
CONSIDERATION OF UPDATED ANALYSIS OF WATER SUPPLY AND USAGE
JUNE 8,2010
PAGE 3
ANALYSIS OF ISSUES:
Water Analvsis
One of the purposes of the moratorium was to provide staff time to update data on
water supply and water usage, which has been completed. A summary of resutts are
as follows:
Supply:
Current Supply 3,694 acre feet
Projected Additional Supply
Well #10
Well #11
Total
90 acre feet
50 acre feet -
140 acre feet
Temporary Purchase of OCSD Water acre feet
Total Supply 3,934 acre feet
Usage:
Current Usage 3,256 acre feet
Conservation Measures Proposed by Audits - 66 acre feet
Projected Increase from Projects Approved or Submitted 213 acre feet
Total 3,403 acre feet
When current proposed wells, conservation measures and development are
completed, it is estimated that water usage will be 86% of supply when factoring the
temporary water purchase from OCSD. It is projected to be 88% when not factoring
OCSD water. Therefore, staff believes current conservation efforts and new wells will
address short-term supply needs.
The General Plan projects the City's buildout population at approximately 20,000, a
growth of approximately 17% over the current population. Annual growth rate is
projected at approximately 1% per year. The water supply and building growth
outlined above is expected to accommodate about 7%. Therefore, an additional
increase in water supply or capacity of about 10% is needed. This would translate.to
about 384 acre feet if the goal is to maintain water usage around 90% or less of
supply.
Agenda Item 10.b.
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CITY COUNCIL
CONSIDERATION OF UPDATED ANALYSIS OF WATER SUPPLY AND USAGE
JUNE 8,2010
PAGE 4
Seawater Intrusion
January and April test results of the sentry wells have both demonstrated dramatic
drops in chloride levels. Therefore, it has been concluded that the threat of seawater
intrusion has been diminished at this time, but continued monitoring is necessary.
Arroyo Grande, Grover Beach, OCSD and Pismo Beach have been working with
representatives of the County and the CCWA on a temporary emergency purchase of
State water. Despite the most recent positive sentry well test results, it is proposed
to continue with this emergency purchase for at least a one-year period. If the recent
rainfall can be combined with a temporary decrease in groundwater usage, staff
believes it will effectively replenish the groundwater supply and have important long-
term benefits. The Crty of Arroyo Grande would not be able to utilize State water
without a vote of the public.. However, it is proposed that Arroyo Grande temporarily
purchase Lopez water from Pismo Beach and OCSD. They would then purchase the
additional State water. The cost of the water would be based upon the actual cost of
the emergency State water purchase. It is not expected that the emergency State
water will significantly exceed the cost to pump groundwater. Therefore, it will not
result in a substantial cost impact.
Additional upgrades to the sentry wells are being pursued to increase future accuracy
of the test results. Staff from the agencies have also been working together on
preparation of a Request for Proposal to develop a comprehensive groundwater
model that would provide valuable data in the future on groundwater levels, quality
and changes in the makeup of the groundwater table.
Water Conservation
The City has expanded its water conservation program over the past few years. The
program has been successful in reducing water usage by 10% over the past two-year
period. One-hatf of an. Associate Planner position has been temporarily assigned to
serve as the Water Conservation Coordinator. The City offers free replacements of
toilets, free water sensors and controllers, and financial incentives for high efficiency
washing machines and replacement of turf with drought tolerant plants and drip
irrigation.
Water audits have been prepared on the highest water users in the City, which
includes City parks. Recommendations have been prepared, which are projected to
save approximately 70 acre feet of water annually. Improvements have been
installed at Strother Park as a pilot project to determine the accuracy of the
recommendations. The City Council also approved funding to assist Wildwood
Ranch as a pilot project for the first private property improvements from the survey. It
was agreed to provide 75% of the cost. If this formula is used as the model for future
projects, the total cost of implementing the measures is projected to be approximately
$92,000 for all identified projects.
Agenda Item 10.b.
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CITY COUNCIL
CONSIDERATION OF UPDATED ANALYSIS OF WATER SUPPLY AND USAGE
JUNE 8,2010
PAGE 5
During the past year, the City has also revised its rate structure to increase water
conservation incentives and continued mandatory conservation measures under the
"Severely Restricted Water Condition" designation. It is projected that the City must
maintain these water savings on an ongoing basis. Therefore, it is recommended
staff be directed to prepare an Ordinance to make existing mandatory water
conservation measures permanent rather than to apply them only in certain
conditions. If not approved, they should be eliminated at this time because water
usage no longer falls within the criteria of a "Severely Restricted Water Condition" as
defined in the Municipal Code.
It is also recommended that a goal be established to reduce water usage by an
additional 100 acre feet through conservation measures. To do this, it is proposed to
continue to develop public education measures regarding the importance of water
conservation. It is also recommended that the half-time Water Conservation
Coordination position be funded on an ongoing basis from the Water Fund rather
than from the Water Neutralization Fund beginning in the next budget, which would
be FY 201 1-12.
Recvcled Water
Attached is the completed recycled water analysis prepared by the Wallace Group. It
assessed the feasibility and costs of utilizing existing treated secondary water from
the South San Luis Obispo County Sanitation District (SSLOCSD) wastewater
treatment plant, upgrading the plant to provide tertiary treated water in order to
expand potential uses, utilizing an existing Conoco Phillips pipeline to transport the
water, and purchasing recycled water from the City of Pismo Beach. Expansion of
the existing waste water treatment plants (SSLOCSD and City of Pismo Beach) to
tertiary quality was not included as part of this study. However, this was addressed
as part of two separate studies, the SSLOCSD recycled water study prepared by
Wallace Group in 2008 and the 2007 recycled water study conducted by Carollo
Engineers for the City of Pismo Beach waste water treatment plant. Staff also
requested the consultant determine costs of using water from the existing Five Cities
Center Val-Mart) retention basin to replace irrigation of the Five Cities Center
landscaping.
As outlined in the two separate reports, immediate recycled water options appear to
be cost prohibitive, particularly when viewed as standalone projects with no future
expansion plans. Capital costs to install necessary pipes to transport existing treated
water are high due to the extensive water delivery system required and the relatively
low demands contemplated. The sites identified as feasible include the Arroyo
Grande Cemetery and Caltrans irrigation along the freeway. This would reduce
water usage by an estimated 50 to 57 acre feet per year. If the treatment plant was
upgraded to provide tertiary treated water, the savings could be expanded to over
230 acre feet per year by adding the Five Cities Center, K-Mart Center, St. Patrick's
School, potentially Rancho Grande Park and other sites identified in the report.
However, the increase in capital costs would be approximately $5 million for a 2 mgd
Agenda Item 10.b.
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ClW COUNCIL
CONSIDERATION OF UPDATED ANALYSIS OF WATER SUPPLY AND USAGE
JUNE 8,2010
PAGE 6
tertiary recycled water plant upgrade, which is in addition to the distribution system
costs.
Conoco Phillips representatives would not discuss potential purchase price of their oil
pipelines with the consultants. However, the portions of 12-inch oil pipelines that
could be utilized for recycled water delivery would be valued at up to $2 million if
constructed new. The feasibility and costs associated with utilizing the line have not
been fully determined. Therefore, it is recommended that staff continue to work with
Conoco Phillips on negotiation of a potential agreement if the City were to proceed
with a project at some time in the future.
In addition, use of recycled water could be increased dramatically if agricultural users
were to agree to use it to augment andlor replace current groundwater wells. This
could be a particularly important measure if additional seawater intrusion concerns
occur. However, it would depend on cooperation of agricultural property owners and
associated increases in water to the City would depend on allocation adjustments to
the Santa Maria Groundwater Basin adjudication judgment. Therefore, it is
recommended staff coordinate with neighboring jurisdictions in discussions with
agricultural property owners to determine the feasibility of this option.
Lastly, the report determined that cost for recycled water would be reduced by
acquiring it from the City of Pismo Beach. Alternative pipeline routes are assessed in
the report. Feasibility would likely depend on whether Pismo Beach independently
constructs a recycled water system for their community. If so, Arroyo Grande would
be responsible for connecting to their pipeline and would purchase the water rather
than participating in the project itself. Therefore, it is recommended staff continue to
coordinate with City of Pismo Beach staff on this option.
State Water
San Luis Obispo County has maintained an excess allocation of State water.
However, approval of the capacity for allocation of any of this water would require
approval of the CCWA. Discussions regarding a permanent purchase of State water
allocation have been taking place concurrent with efforts to obtain a temporary
emergency purchase. Representatives from the County Public Works Department
are negotiating on the City's behalf. A group has been meeting on a regular basis,
which includes County staff, supervisors representing the South County area, mayors
and managers.
State water would also involve a significant one-time capital cost. To become a State
water contractor, existing contractors would require the City to pay for the estimated
capital costs they have incurred since the project inception. This is currently
estimated to be approximately $25,000 per acre foot.
However, the primary advantage identified with State water is that staff believes it
may be possible to negotiate the purchase so the City would only have to pay the
Agenda Item 10.b.
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CITY COUNCIL
CONSIDERATION OF UPDATED ANALYSIS OF WATER SUPPLY AND USAGE
JUNE 8,2010
PAGE 7
holding costs until use of the water is necessary. Holding costs are estimated to be
only $200 to $300 per acre foot, which would be roughly equal to the current cost of
the OCSD water purchase. The City's development impact fees could be established
at an amount equal to the capital cost. By doing this, the majority of costs would be
paid by developments that would require the water. Therefore, there would be little if
any cost to existing rate payers.
The City charges three separate development fees associated with water, which
include the Water Neutralization Fee, the Water Availability Fee and the Water
Facilities Fee (connection fee). The purpose of the Water Neutralization Fee is to
mitigate the impact of a proposed development on the City's water supply. The
purpose of the Water Availability Fee is to ensure the availability of water to future
development by funding necessary improvements to the Lopez water system andlor
general water supply. Lastly, the Water Facilities Fee funds necessary expansion
and improvements to the City's water distribution system infrastructure to
accommodate new development.
It is recommended the Water Availabiltty Fee fund 20% of the State water capital
costs and 80% be funded from revenue from the Water Neutralization Fee. Given
the existing balance in the Water Availability Fund, no adjustment would be
necessary. The current Water Neutralization Fee is based upon an estimated cost to
reduce water usage through retrofits of approximately $6,000 per acre foot. Since
80% of the estimated $25,000 capital cost for State water equals $20,000, the fee
would need to be increased by over 300%. As a result, the fee on a typical house
would be increased from approximately $2,000 to approximately $6,600.
This represents a significant increase, but is preferable to the current moratorium.
Therefore, it is recommended Council direct staff to prepare an ordinance to increase
the fee to this amount. This will ensure the funding necessary will be in place when
the water is needed without impacting existing rate payers.
A ballot measure approved in 1990 requires a public vote before the City can use
State water. Therefore, in order to purchase State water, a ballot measure would first
need to be approved. It is recommended the City target the June 2012 election to do
this. This would provide time to determine actual costs, ensure acquisition of the
State water is feasible, and implement a public education process to inform the public
on the City's efforts and the benefits of acquiring State water. It is recommended
$25,000 be allocated for a public education program during the upcoming year. The
figures outlined above demonstrate that existing water resources can accommodate
development during the next two-year period.
'There is likely to be two typical concerns by voters. The first would be the fear that
acquisition of State water would stimulate growth. However, the ballot measure
could be structured to enable the City to purchase only the amount projected
necessary to accommodate the City's buildout as projected in the current General
Agenda Item 10.b.
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CITY COUNCIL
CONSIDERATION OF UPDATED ANALYSIS OF WATER SUPPLY AND USAGE
JUNE 8,2010
PAGE 8
Plan. Based on the figures outlined above, staff believes 300 acre feet would be
necessary. However, it is recommended to acquire 450 acre feet in order to ensure
300 acre feet is available during severe drought situations when the State reduces its
delivery amounts.
The second concern is reliability. However, the City is fortunate that San Luis Obispo
County maintains an excess capacity, which is used to make up much of the loss
when the State cuts back on its deliveries. 'They do this by offering what they refer to
as "drought insurance" or "drought buffef at relatively minimal cost. Drought
insurance is available at a cost of $70 per acre foot. It is recommended to pursue
purchase of 350 acre feet of drought insurance. Staff believes this would enable the
City to maintain delivery of 300 acre feet of water even if the State reduced its
delivery to 35%.
Development Proiect Mitiaation
Development projects are required to fully mitigate water usage, which for the past
several years has been accomplished through mitigation fees used to retrofit homes
and businesses with high efficiency toilets and other water devices. Given water
supply issues, the most recent project approvals have included conditions that
specify that in lieu fees will only be accepted if they can be demonstrated to be
utilized for a specified project that reduces usage equal to or more than the demand
of the proposed project. However, with the recommended strategies and increased
fees, staff believes this will no longer be necessary since staff can demonstrate the
fees will be utilized and will generate revenue sufficient to expand water supply. Staff
will monitor development projects and usage. If developments approved exceed
projections, per capita usage increases, or the ballot measure were to fail in 2012,
staff would then recommend returning to use of this mitigation measure language.
ALTERNATIVES:
The following alternatives are provided for the Council's consideration:
Approve staffs recommendations;
Approve the proposed strategies, but direct staff to prepare a ballot measure for
purchase of State water for the November 201 0 ballot;
Approve the proposed strategies, but direct staff to increase the requested
purchase of State water to provide an additional buffer amount;
Do not pursue State water and rely entirely on conservation efforts andlor
recycled water to address the City's future water needs;
Do not approve staffs recommendations; or
Provide other direction to staff.
ADVANTAGES:
Staff believes the recommendations will address the City's immediate and future
water needs in the most cost effective manner, while minimizing the impact on water
Agenda Item 10.b.
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CITY COUNCIL
CONSIDERATION OF UPDATED ANALYSIS OF WATER SUPPLY AND USAGE
JUNE 8,2010
PAGE 9
rates, diversifying the City's water supply, and targeting measures that are most
feasible and largely within the control of the City.
DISADVANTAGES:
The disadvantage of the recommendations is that while diversified, the City's water
supply will continue to be based on finite sources that can be impacted by drought
conditions. However, continued efforts to develop recycled water will provide
additional opportunities to incorporate other resources less impacted by drought
conditions.
ENVIRONMENTAL REVIEW:
Environmental review is not required at this time for this item, but may be involved to
proceed with particular projects in the future.
PUBLIC NOTIFICATION AND COMMENTS: .
The Agenda was posted in front of City Hall on Thursday, June 3, 2010 and on the
City's website on Friday, June 4,2010.
Attachments:
1. June 2010 Wallace Group Technical Memorandum on Recycled Water
Distribution System Conceptual Plan - South San Luis Obispo County
Sanitation District WWTP (distributed to City Council separately/ public copy
available on file in City Hall due to size of document)
2. June 2010 Wallace Group Technical Memorandum on Recycled Water
Distribution System Conceptual Plan - Clty of Pismo Beach WWrP (distributed
to City Council separately/ public copy on file in City Hall due to size of
document)
3. January 2009 Wallace Group Water Recycling Update Report (public copy on
file in City Hall due to size of document)
Agenda Item 10.b.
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