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Agreement with OCWD for Partial Basin Equity Assessment Exemption January 20, 2015 Page 2 In March 2013 the City retained Tetra Tec, Inc., to study options for nitrate treatment and provide a cost analysis for restoring the service of Well 32. After the evaluation was completed, a water blending alternative was recommended. The blending alternative was the most cost effective and is one of the technologies currently accepted by the California Department of Public Health. The estimated capital cost for these improvements is $4.6 million, which includes well rehabilitation, well house reconstruction, new electrical and mechanical appurtenances, and construction of a water transmission line to the nearby Garthe Pump Station. On May 8, 2013, the City requested that the Orange County Water District (OCWD) consider and support the implementation of the high nitrate mitigation and remediation of Well 32 through a partial exemption from payment of the BEA. Under the proposed agreement, OCWD would remove pumping limits on this more cost - effective water source (i.e. pump more than 70 percent) and partially exempt the City from BEA fees. It is anticipated that the City will fully recover the estimated $4.6 million capital cost within a four -year period. The benefits of bringing Well 32 back into service also include providing an additional groundwater source to the City's water system, allowing the City to distribute groundwater pumping throughout the water system, and reducing wear and tear on other City groundwater wells. On July 24, 2013, the OCWD Board directed their staff to prepare an agreement with the City for a Basin Equity Exemption for Well 32 for future Board action. The OCWD Board will be considering this agreement in its regularly scheduled meeting on January 21, 2015. Staff is recommending execution of this agreement in order to realize the significant investment already made in Well 32, restore it to service, and continue to utilize and benefit from the asset. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #6 Community Facilities & Infrastructure; Objective #1 (establish and maintain a Community Investment Plan for all City assets), Strategy C (invest resources and technology to extend the service life of existing infrastructure to protect the City's investment and support a high quality of life standard). ENVIRONMENTAL IMPACT There is no environmental impact associated with this action 251 -2