HomeMy WebLinkAboutIR 7124 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7124
f kr, To the Mayor and Members of the City Council
X Subject: STATUS OF REGIONAL WASTEWATER COLLECTION
AND TREATMENT FACILITIES
Over the course of the last several months, the staff has briefed the City Council on the
need to proceed with improvements to the Fort Worth regional wastewater system including
major interceptor sewer mains and the Village Creek Wastewater Treatment Plant. Questions
concerning possible methods of funding these projects such as Federal grants, capital recovery
fees, rates, and the adequacy of existing customer-city contracts also have been addressed.
This informal report provides additional background material and updated information
concerning the status of these issues.
Background
On September 30, 1963, the Fort Worth City Council adopted a fundamental policy entitled
"Intergovernmental Cooperation". Later in that year on October 14 the City Council adopted
a more detailed wastewater policy entitled "Sale of Sewerage Service to Other Communities"
in recognition of the eight (8) then existing suburban city contracts and the negotiations
which were ongoing with other cities at the time. That policy, which has not been revised,
states:
The City of Fort Worth is ready, willing, and able to furnish sewage transporting
and treating facilities to neighboring communities, at a reasonable price, which
will fully recover the cost of services furnished by the City of Fort Worth. In
so doing the interests of the citizens of Fort Worth and adjacent municipalities
will be advanced because such action will reduce:
(1) the number of treatment facilities
(2) treatment facilities operating cost, and
(3) the number of sources of stream pollution and the resultant
threat to public health.
In 1969, the local governments of north central Texas initiated a cooperative effort through
the North Central Texas Council of Govenments (NCTCOG) to address long-range wastewater
and water quality needs. The results of this effort was the "Upper Trinity River Basin
Comprehensive Sewerage Plan" (UTRBCSP) approved by the Governor of Texas in 1971.
UTRBCSP was the first regional plan in the nation approved by the U. S. Environmental
Protection Agency (EPA) under the regional planning provisions of the Federal Water Quality
Act of 1965 and has been utilized by EPA as a model for such planning across the country.
The plan recommended a comprehensive areawide wastewater facilities system, a program
for interceptor and trunk sewers, and wastewater treatment facilities in much of the 11,000
square mile area of the Upper Trinity River Basin. The recommended wastewater facilities
program of the UTRBCSP included the Fort Worth Village Creek joint system, with the Village
Creek plant and associated interceptor sewers. The plan also recommended the phasing
out of many smaller, publicly-owned treatment plants in Tarrant County and connection
to the Fort Worth Village Creek facilities.
ISSUED BY THE CITY MANAGER FORT WORTH,TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7124 --p,2
to*? To the Mayor and Members of the City Council
Subject: STATUS OF REGIONAL WASTEWATER COLLECTION
poll
AND TREATMENT FACILITIES
The City Council policy on intergovernmental cooperation and the UTRBCSP have.been
successful in eliminating the number of wastewater treatment plants in Tarrant County.
The number of wholesale contracts have grown from 8 in 1963 to 21 today. These cooperative
arrangements are at least partially responsible for Fort Worth obtaining $70 million of federal
grants for regional Wastewater interceptor and treatment plant improvements.
In 1983 the City Council approved a Wastewater Facilities Plan that recommended system
improvements which would be necessary to the year 2005. That facilities report, which
was a prerequisite for federal grant assistance, was developed over a three-year period and
involved a Citizens Advisory Committee, including customer city representatives, and also
several public hearings. Significantly, the report recommended $193 million of needed
improvements over the planning period.
contract issues
Faced with the prospect of such significant capital expenditures over the planning period,
the Water Department staff began analyzing the financial capability to fund the effort. One
of the first steps taken in 1984 was to refund the existing debt to remove restrictive bond
coverage requirements which could hinder the ability to issue additional bonds. The next
step was to analyze the potential rate impacts of such a capital improvement program, and
the City Council was briefed on these estimates. During the briefing the staff was questioned
about how the region, i.e., customer cities, would share in the costs of these improvements.
The Council was informed that the existing wholesale contracts provide for the recovery
of regional type capital expenditures with a 31% interest factor over a 35 year period and
therefore would not adequately cover the borrowing costs.
At the direction of the City Council, the Water Department staff undertook a concerted
effort to renegotiate the terms of the existing wholesale wastewater contracts. The contract
discussions began in October, 1984, with onsite visits to each customer city. The discussions
with the city managers, public works and/or utility directors, and some mayors, focused
on the facilities plan recommendations, the prospect of reduced federal funding, and the
need to find a regional solution to the funding dilemma. During the visits, the staff urged
all of these officials to review their wastewater contracts with Fort Worth so that subsequent
workshop activities would be fruitful.
The initial workshop with the customer cities was held on January 23, 1985, and included
a historical review of the Fort Worth Regional Wastewater System. The staff discussed
the federal grant prospects, and the terms of the existing contracts. Representatives from
the firm of Black and Veatch, which had been retained to analyze the cost of regional
wastewater service, also were introduced at the meeting.
It is important to note that prior to the workshop Black & Veatch had not been given specific
directions by the Fort Worth staff. Much of the workshop discussion with our consultants
focused on defining "cost of service".
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
,
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7124-j2...3
6�top T 4C To the Mayor and Members of the City Council
Subiect- STATUS OF REGIONAL WASTEWATER COLLECTION
AND TREATMENT FACILITIES
By a March 1, 1985, followup letter to each city, the Water Department director summarized
the staff understanding of the workshop discussions. That letter indicated that the cost
of service methodology employed in the wholesale water contracts had served the region
well, and would be the most famiHar and perhaps the most comparable basis to analyze the
eidsting cost of providing regional wastewater service and would therefore be employed
by Black and Veatch.
On November 7, 1985, each city was mailed a copy of the Black & Veatch report and a first
draft of a new contract. About one month later on December 5, 1985, another meeting
of customer city representatives was held to discuss the consultant report and the draft
contract. During the meeting Mayor Walt Eller of Crowley suggested that the Tarrant County
Mayors' Council be utilized as the negotiating forum for the customer cities.
Subsequent meetings of the Mayors' Council have resulted in the appointment of a Wastewater
Committee and the agreement to hire an independent rate consultant, Pannell, Kerr, and
Forster to conduct another cost of service study. It is estimated that the study will require
six (6) months.
On April 16, 1986, Mayor Bolen hosted a meeting with the Tarrant County Mayors to discuss
the status of the contract renegotiations. Following the staff background presentation,
Mayor Bolen stressed the need to move quickly to resolve the issues for the good of the
region. It was pointed out that failure to quickly resolve the contract issues may result
in notice by Fort Worth that the existing contracts would not be renewed upon their expiration
in approximately 15 years.
TEXAS WATER COMMISSION ACTION
On May 9, 1986, the Texas Water Commission officially presented the City of Fort Worth
with a "Notice of Executive Director's Preliminary Report and Petition for a Texas Water
Commission Order Assessing Administrative Penalties and Requiring Certain Actions of
the City of Fort Worth". Included in the notice were the following:
(1) A recommended civil penalty amounting to $19,060 for violations
of permit limitations.
(2) A recommended order that Fort Worth undertake certain actions
listed below:
(a) Submittal of an engineering plan and schedule for the
elimination of partially treated wastewater.
(b) By August 31, 1987, or 365 working days from the date
of the work order to begin construction, whichever comes
first, the City shall complete construction of three
additional final clarifiers.
(c) By May 30, 1988, or 540 working days from the date of
the work order to begin construction, whichever comes
first, the City shall complete construction of six additional
effluent filters.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7124 -2. 4
OTC
IP,tot To the Mayor and Members of the City Council
a.W-0
NXM,
Subject: STATUS OF REGIONAL WASTEWATER COLLECTION
AND TREATMENT FACILITIES
(d) By May 30, 1988, or 540 working days from the date of
the work order to begin construction, whichever comes
first, the City shall eliminate all now of filter backwash
to the headworks of the wastewater treatment plant.
(e) By July 1, 1988, the City shall provide instrumentation
for continuously recording, indicating, and totalizing
effluent flow and a means to manually check effluent
flow rate, or obtain a waiver to permit metering of the
influent flow rate.
(f) Whenever now measurements reach 75% of the permitted
daily flow for three consecutive months, the City must
initiate engineering and financial planning for expansion
and/or upgrading of the current domestic wastewater
treatment facilities. Whenever the average daily flow
reaches 909x6 of the permitted average daily flow for three
consecutive months, the permittee shall obtain necessary
authorization from Commission officials to commence
ell construction of the necessary additional treatment
facilities.
Discussion
The Texas Water Commission recommended projects shown above as 2.b, 2.c, 2.d are in
various stages of obtaining bids and/or approvals and represent an estimated construction
cost of $8.4 million of which $1.6 million of federal funds have been offered by the Texas
Water Development Board. On May 13, 1986, the City Council authorized an engineering
agreement for $1.9 million for the expansion of the Village Creek Plant in accordance with
item 2.f above. That expansion presently targeted for commencement in 1988 is estimated
to cost $50 million.
Future federal wastewater construction grant funding is unknown at this time. There is
increasing pressure to phase out the program. The President and the Environmental Protection
Agency have recommended program phase-out by 1990, with substantially reduced funding
for 1988 and 1989. The current bills in Congress to reauthorize the Clean Water Act
recommend funding the grant program through 1994. The new balanced budget law
(Gramm-Rudman-Hollings) will reduce the amount of federal wastewater grants available.
For 1986, a reduction of $25.8 million will be made from the $600 million appropriated for
federal wastewater grants. Future grant funds also will be reduced by the balanced budget
law. An additional $1.8 billion in construction grant funds for 1986 will not be appropriated
until the Clean Water Act is reauthorized.
The total Village Creek Improvements identified in the Facilities Plan have been approved
by the regulatory agencies as a segmented project. As such, some future segments, or phases
not related to expansions due to growth, are eligible for grant funding. The uncertainty
of future grant funding and the timing when some phases must be initiated may, however,
preclude any additional grant funding being available for the Village Creek Plant.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7125
'4f too,T To the Mayor and Members of the City Council
or
em-T'i
Subject: STATUS OF REGIONAL WASTEWATER COLLECTION
AND TREATMENT FACILITIES
In view of the deficiencies in the existing wholesale wastewater contracts, the capital costs
for the Village Creek Plant improvements will not be shared equally by the Fort Worth retail
customers and the end-use beneficiaries located within the customer cities; retail customers
will be impacted disproportionately by the mandated CIP program. This retail/wholesale
rate disparity could be partially mitigated with the implementation of capital facility access
fees (i.e., capital recovery fees) both in Fort Worth and the customer cities. The Water
and Wastewater Capital Cost Recovery Advisory Committee has submitted its
recommendations for such fees to the City Council and the ordinance which would implement
the fees is on the June 10 Council agenda for adoption. Customer city adoption of facility
access fees, however, will require contract amendments or letters of agreement with the
various customer cities.
The attached schedule showing a possible progression of activities and events related to
the wholesale wastewater contracts and system facility access fees is presented for discussion
purposes. In addition, a chronology of key events is attached.
The schedule addresses only one possible scenario of activities related to the wastewater
contracts. With regard to the water contracts, in accordance with the contract provisions,
it will be necessary during FY 1986/87 to employ an independent rate consultant to review
the adequacy of the wholesale water rates. Consideration of water facility access fees
implementation will be given in the study and the water fees could begin to be collected
on October 1, 1987, when the wholesale water rates would be revised.
In the above scenario, those cities which receive cancellation notices also could be subject
to the enforcement of any restrictive contract clauses. Some wholesale contracts do contain
such clauses including various flow restriction/penalty provisions and outright cancellation
terms although these have not been exercised previously. The staff is prepared to draft
a Council Resolution outlining the course of action deemed most appropriate and to provide
any additional information required on this issue.
Douglas Harman
City Manager
DH:hl
Attachments: Schedule
Chronology
ISSUED BY THE CITY MANAGER — FORT WORTH, TEXAS
FORT WORTH CITY COUNCIL APPROVES
FACILITY ACCESS FEE ORDINANCE
JUNE 10, 1986
Copy of hater and Wastewater Capital
Cost Recovery Advisory Committee
Report mailed to Customer Cities
FACILITY ACCESS FEE WORKSHOP WITH
CUSTOMER CITIES
JULY, 1986
Customer cities adopt compatible
wastewater facility access fee
ordinance
IF
DEADLINE FOR CUSTOMER CITY DECISION
REGARDING INTENT TO REMAIN PART
OF FORT WORTH REGIONAL WASTEWATER
SYSTEM/PASSAGE OF WASTEWATER FACILITY
ACCESS FEE ORDINANCE TO BE REGARDED
AS CLEAR EXPRESSION OF SUCH INTENT
OCTOBER 1. 1986
(Effective date of all ordinances)
CITIES PASSING WASTEWATER FACILITY CITIES FAILING TO PASS WASTEWATER
ACCESS FEES FACILITY ACCESS FEES
Resolution expressing Fort Worth
Continue negotiations on new long decision to not extend wastewater
term contract contracts upon expiration approved
by City Council October 7, 1986
Letters with approved resolution
sent to these cities, Texas Water
Commission, bond rating agencies,
Environmental Protection Agency
October 7-10, 1986
Chronology of Events in the Evolution
of Fort Worth's Wholesale Wastewater Contracts
0 Fort Worth City Council adopts policy entitled
"Sale of Sewerage Service to Other Communities" October, 1963
0 Development of the "Upper Trinity River Basin
Comprehensive Sewerage Plan" 1971
0 Adoption of the 201 Facilities Plan by the City Council 1983
0 $50.5 million refunding of existing water and wastewater
revenue bond debt January, 1984
0 Individual meetings conducted with chief administrators November, 1984 -
and elected officers of wholesale wastewater customers January, 1985
0 First County-wide workshop for all wholesale wastewater
customers to continue discussing new contracts January, 1985
0 Follow-up letter to customer cities confirming use of
water contracts as a model for new wastewater contracts,
and use of Black & Veatch as rate consultants March, 1985
0 Draft contract and final Black & Veatch report forwarded
to all customer cities November, 1985
0 Second County-wide workshop for customer cities to
sl>eaffically discuss draft contract December, 1985
0 Mayors' Council appoints Ad Hoc committee to review
draft contracts and rate report January, 1986
0 Mayors' Council votes to hire another consultant to perform
a second cost-of-service study March, 1986
0 Mayors' Council appoints staff steering committee to
manage second cost-of-service study March, 1986
0 Third County-wide workshop for mayors of customer cities
to discuss draft contracts April, 1986
0 Fort Worth staff forwards revised draft contract to
Mayors' Council staff steering committee May, 1986
0 Texas Water Commission fines City of Fort Worth $19,060 for
e"11 violations at Village Creek Wastewater Treatment Plant May, 1986