To: Honorable Mayor and Members of Town Council
From: Mark Marlowe, P.E., Director of Castle Rock Water
Title
Update: Plum Creek Water Reclamation Authority Plant Expansion
Body
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Executive Summary
Castle Rock Water has been planning for an expansion of wastewater treatment capacity since before 2015. The exact timing of the need for the expansion was reviewed in the Plum Creek Water Reclamation Authority’s 2015 capacity evaluation. That study indicated the expansion would not be needed until approximately the early 2020s. The 2017 capacity update again reviewed current flows and flow projections. Updated flow projections indicate the expansion may be needed several years sooner than contemplated in 2015. This memo is provided to give Council a high level overview of the planning process, current schedule and future financial needs.
An important component of Castle Rock’s Wastewater Enterprise is waste water treatment capacity and its related membership in the Plum Creek Water Reclamation Authority (PCWRA). Castle Rock is one of three members that make up PCWRA. The other two members include Castle Pines Metro District (CPMD) and Castle Pines North (CPN). PCWRA treats approximately 98 percent of Castle Rock’s wastewater. The remaining two percent is treated by the Pinery Water & Wastewater District. Castle Rock owns approximately 71 percent of PCWRA’s total treatment capacity (4.557 million gallons per day).
Recent and continuing growth primarily in the Town of Castle Rock, increasing infiltration and inflow in the sewer system with the aging of that system as well as openings from unfinished services associated with growth, and plans for reusing all of our treated effluent for which we have the legal right make this expansion a necessary endeavor for the Town. CPMD and CPN, on the other hand, are not currently in need of additional capacity. In accordance with State requirements, an expansion of a wastewater plant must be under construction once 95 percent of the plant’s capacity is in use. PCWRA is expected to cross this threshold in the next two to three years.
To date PCWRA, with the support of all three members, has engaged Carollo Engineers to prepare an evaluation of options for the proposed expansion. An expansion of 3 million gallons per day (MGD) of average day capacity or approximately a 66 percent increase is deemed to be the most cost effective approach to meeting the long term needs of our growing community. The project includes upgrades to the site electrical, head works, tertiary filtration and ultraviolet disinfection and a new process for treatment of the wastewater (primary clarification and fermentation) and a new process for treatment of solids generated by the treatment of the wastewater (autothermal thermophilic aerobic digestion). Another important aspect of the project is developing an alternate discharge point for PCWRA into Rueter-Hess Reservoir.
The current estimated cost for the expansion is $47.3 million which includes a 30 percent contingency ($33.1 million without the contingency). This is significantly higher than what the Town has been budgeting for over the past five years. Once design of the expansion proceeds to approximately 30 percent completion, a much more accurate cost will be available. The 2017 five year budget for Castle Rock Water included $25.8 million for this expansion. The current fund balance in the wastewater capital reserves is $20.1 million as of the end of 2016 with most of that committed for the plant expansion.
PCWRA held a special board meeting on June 15, 2017, to review financing options for the plant expansion. This meeting examined the possibility of PCWRA issuing additional debt to help finance the expansion. The Authority currently carries $10.6 million in debt in the form of two loans from the Colorado Water Resources and Power Development Authority and one series of clean water bonds through the same Authority. Additional bonding capacity will be evaluated. Current carrying costs for PCWRA’s debt are 1.46 percent which is an excellent value. Other options being considered for near-term funding of the expansion include use of Castle Rock Water’s wastewater capital reserves in combination with an interfund loan from the Water Fund or issuance of wastewater revenue bonds.
The current schedule for the project is to issue requests for proposals (RFPs) in June or early July of this year for a design engineer to move immediately into preliminary design of the selected plant expansion option. Other key planning tasks that staff will engage in 2017 will include:
• A value engineering study to look at options to reduce plant expansion costs.
• A complete review of funding and financing options and the impacts to system development fees based on those options.
• A complete evaluation on the construction delivery method and the scheduling options based on the various delivery methods.
It is anticipated that in order to meet the spirit and intent of State requirements, construction may need to start as early as January 2018 or as late as early 2019 depending on how growth proceeds.
As the need for this expansion is being driven by new growth, the cost for the expansion will ultimately be funded through capital reserves generated from previous wastewater system development fees and future wastewater system development fees. These fees will need to be evaluated closely during this year’s rates and fees study due to the increased costs estimated in the most recent engineering study for the future expansion.
History of Past Town Council, Boards & Commissions, or Other Discussions
An update on planning for the proposed expansion will be provided to Castle Rock Water Commission on June 28, 2017.
Discussion
A complete draft of PCWRA’s Wastewater Treatment Facility Capacity Increase Study is available from Castle Rock Water upon request.
Budget Impact
At $25.8 million, the 2017 five-year budget and previous rates and fees studies did not include adequate planned funding for the expansion. The 2018 five-year budget and the 2017 rates and fees study will be updated with the latest cost information, and the impact to wastewater system development fees over time will be examined. Additionally, budget and rates and fees will be evaluated in conjunction with an examination of options for funding the expansion including various debt instruments.
Recommendations
Staff recommends moving forward with design post haste to ensure that the expansion can be under construction in time to meet State requirements.