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Agency slashes water project cost by almost $40 million

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From page A1 | April 26, 2012 |

The estimated cost of the surface water project has dropped by almost $40 million, or about 10 percent.

Dennis Diemer, general manager of the Woodland-Davis Clean Water Agency, announced the anticipated cost reduction at the agency’s monthly board meeting last week.

The price tag for the capital project that would siphon water from the Sacramento River, treat it and pipe it into Davis and Woodland, has fallen from an estimated $337 million to $299.6 million, with Davis now sharing $146.7 million of that total, rather than $160 million.

Diemer said that $20 million, or about half of the new savings, are thanks to his facilities procurement committee, which felt comfortable projecting a lower price after re-analyzing the project.

According to Diemer, the agency had expected similar savings all along.

“We had always added a qualitative statement that we expect significant savings from the (design-build-operate) process and this actually quantifies it,’’ Diemer said Tuesday.

The city of Woodland also saved the project $7.6 million by relocating its treated water storage facility. And the agency found a more cost-efficient location for the Regional Wastewater Treatment Facility, saving the project an additional $3.9 million.

Finally, Diemer explained last week that due to a reduction in private financing and retention costs, the project estimate realized another $8.2 million in savings.

But what a cheaper project means in terms of future water rates for Davis residents is yet to be seen. Davis City Manager Steve Pinkerton is encouraged, though he does not believe this current estimation necessarily translates into lower rates.

“It’s not going to have that big impact on rates,” Pinkerton said. “Part of rates is still an estimate based on what we think the financing costs are going to be. With these numbers you have to be careful and you just have to kind of monitor them, but until you get a little further along, it’s hard to make a judgment.

“You have to be cautious because there’s no shovels in the ground yet,” Pinkerton added. “The final cost is still a moving target but we’re very hopeful that we’ll continue moving in this direction.”

Interim Public Works Director Bob Clarke echoed that sentiment, adding that the Water Advisory Committee — which the City Council formed late last year — still must complete its work to advise the council on the project and the ongoing rate study.

“What the rate impact will be is not known yet as the water rate process is underway and being vetted through the city’s Water Advisory Committee,” Clarke said in an email. “The current schedule will have the Water Advisory Committee review rates beginning in late May and June.”

Though, according to Diemer, the agency may not be finished finding ways to reduce the overall cost of the project.

Diemer says the cities of Woodland and Davis still may reconsider the size of the intake facility and the design-build-operate candidate, when chosen, could streamline a redundancy in the water pipeline.

“I (also) can tell you that the agency is actively pursuing grant funding both for the intake facility and other components of the project and we’re actively pursuing low-interest loans from the state and those efforts,” Diemer said. “If successful, (they) will have a very positive effect on lowering the rate increases for the project.”

Meanwhile, the Woodland City Council unanimously voted to approve the first reading of an ordinance to raise its own rates last week, a move that puts the municipality in the position to pay for its entire share of the surface water project.

Through the Proposition 218 process, which regulates a local government’s ability to alter locally imposed taxes, Woodland opted to raise its rates 17 percent starting in January 2013 and then an additional 20 percent for each subsequent year until 2016.

The council built a three-tier structure into the rates and also asked its staff to develop a program that would assist those in the community who might struggle with the larger bills.

Woodland Mayor Art Pimentel wanted to stress, however, that those numbers only reflect the maximum amount the city can raise rates, which the city will determine every year.

“We’re still very optimistic that we’ll be able to garner some state and federal grants as we have been able to do so far to help us with the project,” Pimentel said. “Staff as well as the council is very committed to do as much outreach as we possibly can to get grants to reduce the overall costs so that we do not hit the ceiling of the rate increases that were proposed.”

Pimentel says the city received more than 2,000 written protests to stop the rate hike, but in order to put a halt to it, more than 7,000 water users would have needed to protest.

“It’s a very significant step in the city of Woodland obtaining quality water and being able to meet our standards as required by the state water quality board, and the regional water quality board,” Pimentel said. “It’s a significant step for our community. We’re moving in the right direction.

“Hopefully the city of Davis will also move in the right direction and meet its obligation to our partnership.”

The Davis City Council attempted to raise its water rates last fall, but a referendum on the ordinance forced the council to repeal the rates. The council subsequently opted to create the Water Advisory Committee and also to put the project as a whole to a vote on the November ballot.

If the project remains on schedule, it could be operational by 2016.

— Reach Tom Sakash at tsakash@davisenterprise.net or (530) 747-8057. Follow him on Twitter @TomSakash.

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Tom Sakash

Tom Sakash covers the city beat for The Davis Enterprise. Reach him at tsakash@davisenterprise.net, (530) 747-8057 or @TomSakash.
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