Davis residents received a friendly reminder from the Woodland-Davis Clean Water Agency this week about the progress of the project that will bring a new source of drinking water to town by 2016.
Approved by voters in March by an 8-point margin, the joint project with Woodland will pump water from the Sacramento River, treat it at a facility just east of Woodland and pipe the drinking water down to Davis and over to Woodland.
The new source of water largely will replace each city’s reliance on ground well water supplies, the quality of which are beginning to deteriorate, especially in the shallow and intermediate-depth aquifers, experts say.
State and federal regulations on drinking water quality are also driving the city’s need for the cleaner water promised by agency officials and experts through this project.
In Davis, however, at least six deep wells, where the cleanest source of ground water can still be drawn, will remain in operation to supplement the surface water.
The price tag for the project, which in 2009 was an estimated $350 million between Davis and Woodland, has been substantially reduced to $228 million. Much of those savings are thanks to the Davis Water Advisory Committee, which recommended shrinking the size of the project’s capacity by 25 percent during it yearlong investigation in 2012.
That body also recommended that the city inject fluoride into the water earlier this year, but the City Council voted to keep both Davis’ ground water and future surface river water fluoride-free.
Agency officials say the competitive bidding process for the contract to design, build and operate the plant helped dial down the cost of the overall project as well. In 2009, the project was estimated to cost Davis $155 million and now that price tag is $106 million.
Controversy swirled around the way the bidding process unfolded, however. Two of the three design-build-operate firms that were picked to compete for the project dropped out of the race before submitting a final bid. Many in the community and on the council questioned whether true competition could be fostered with only one agency offering a proposal for the work.
In effect, the company would have no incentive to submit a project at a lower price, they feared.
But agency officials said that because they set a guaranteed maximum price, a very low number that the other teams could not meet, that competition among firms still occurred.
In the end, CH2M Hill, a Colorado-based firm, won the project work. CH2M Hill will design, build and operate the treatment facility for the first 15 years of its existence at least. The reason for the 15-year period is to ensure that CH2M Hill designs the highest-quality facility possible, agency officials have said.
In addition to the cost of construction, both Davis and Woodland are on the hook to pay CH2M Hill a combined $8 million per year to operate the plant.
The agency has scheduled a “Meet the Contractor” event for Jan. 23 at the Davis Senior Center, 646 A St. The event will begin at 6:30 p.m. and residents can come and meet the team to learn about the plans for design, construction and operation activities.
Meanwhile, to pay for the city’s share of the project, the City Council has indicated that it would like to bond-finance the entire cost. The city has the financial stability to take out such loans because it raised water rates citywide, which will provide Davis with enough revenue to pay off the debt.
The council raised rates in March, two weeks after the vote on the project, enough to triple water bills in Davis by 2018. Rates, meanwhile, are expected to continue to rise thereafter.
Agency and city officials long have said that the city could be in line to receive very favorable terms on the bonds it issues if it can lock in State Revolving Fund loans, which historically carry low interest rates and short payback terms.
But the prospect of those advantageous loans or other less-costly municipal bonds that the city could choose to issue have been jeopardized somewhat by a lawsuit filed against the city and the rates the council passed in March.
A group called Yolo Ratepayers for Affordable Public Utility Services has filed a suit that claims the rates do not fairly charge all residents for the water they consume and therefore are unconstitutional under state law, or Proposition 218.
The suit also takes aim at the city’s sewer rates.
City Manager Steve Pinkerton has said that if the city approaches lenders for financing options with a lawsuit tied to the rates — rates that enable the city pay back those loans — the interest rates or terms could be hurt, potentially costing the city and its ratepayers more money in the long run.
The city’s legal team and the plaintiffs will meet in court Monday, where Yolo Superior Court Judge Dan Maguire is expected to make a ruling on the legality of the rates.
— Reach Tom Sakash at [email protected] or 530-747-8057. Follow him on Twitter at @TomSakash