HomeMy WebLinkAbout08-28-19 Desal Project Committee PacketOTAY WATER DISTRICT
DESALINATION PROJECT COMMITTEE MEETING
and SPECIAL MEETING OF THE BOARD OF DIRECTORS 2554 SWEETWATER SPRINGS BOULEVARD
SPRING VALLEY, CALIFORNIA
Boardroom
WEDNESDAY August 28, 2019 12:00 P.M. This is a District Committee meeting. This meeting is being posted as a special meeting in order to comply with the Brown Act (Government Code Section §54954.2) in the event that a quorum of the Board is present. Items will be deliberated, however, no formal board actions will be taken at this meeting. The committee makes recommendations to the full board for its consideration and formal action. AGENDA
1. ROLL CALL 2. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JU-
RISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA
DISCUSSION ITEMS 3. INFORMATIONAL UPDATE FOR THE ROSARITO DESALINATION PLANT AND
THE OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM PROJECTS (MARTIN) 4. ADJOURNMENT
BOARD MEMBERS ATTENDING: Mitch Thompson, Chair Tim Smith
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All items appearing on this agenda, whether or not expressly listed for action, may be delib-erated and may be subject to action by the Board.
The Agenda, and any attachments containing written information, are available at the Dis-trict’s website at www.otaywater.gov. Written changes to any items to be considered at the open meeting, or to any attachments, will be posted on the District’s website. Copies of the Agenda and all attachments are also available through the District Secretary by contacting
her at (619) 670-2280.
If you have any disability that would require accommodation in order to enable you to partici-pate in this meeting, please call the District Secretary at 670-2280 at least 24 hours prior to
the meeting.
Certification of Posting I certify that on August 27, 2019 I posted a copy of the foregoing agenda near the reg-
ular meeting place of the Board of Directors of Otay Water District, said time being at least 24 hours in advance of the meeting of the Board of Directors (Government Code Section §54954.2).
Executed at Spring Valley, California on August 27, 2019.
/s/ Susan Cruz, District Secretary
STAFF REPORT
TYPE MEETING:Desalination Committee MEETING DATE:August 28, 2019
SUBMITTED BY:Dan Martin
Assistant Chief of Engineering
PROJECT:P2451-
001101
DIV.
NO.
APPROVED BY: Rod Posada, Chief, Engineering
Mark Watton, General Manager
SUBJECT:Informational Update for the Rosarito Desalination Plant and
the Otay Mesa Conveyance and Disinfection System Projects
GENERAL MANAGER’S RECOMMENDATION:
No recommendation. This is an informational item only.
COMMITTEE ACTION:
Please see Attachment A.
PURPOSE:
To update the Otay Water District (“District”) Desalination Committee
(Committee) on the progress of the Rosarito Desalination Plant and
the Otay Mesa Conveyance and Disinfection System Projects (“Project”)
(see Exhibit A for District Project location).
ANALYSIS:
This item was last presented to the Committee as an update at a
meeting held on July 15, 2019. The updates or significant milestones
that have been reached since the last update to the Committee
include:
On November 13, 2012, the District entered into a Letter of Intent
(LOI) between the District and NSC Agua, the previous entity owning
the Rosarito Desalination Plant.
AGENDA ITEM 3
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Aguas de Rosarito S.A.P.I. de C.V. (“AdR”), the special purpose
company formed to own the Project, signed a 40-year definitive public-
private partnership agreement with the State of Baja California
(State) on August 25, 2016 to build a desalination plant and
conveyance pipeline (Rosarito Project) and operate it for 37 years.
This would be one of the first water projects delivered under the
State’s Asociaciones Público Privadas (“APP”) law.
The companies that make up AdR include a Mexican company called
N.S.C. Agua S.A. de C.V. (“NSCA”), that is a subsidiary of Cayman-
Islands based Consolidated Water (“CWCO”), together with one or more
affiliates of Greenfield SPV VII, S.A.P.I. de C.V. (“Greenfield”), a
Mexico company managed by an affiliate of a leading U.S. asset
manager, and Suez Medio Ambiente México, S.A. de C.V., ("Suez"), a
subsidiary of SUEZ International, S.A.S. In June 2018, AdR and Suez
executed a contract whereby Suez will serve as the engineering,
construction, and procurement contractor for the Rosarito Project,
with such contract becoming effective on the effective date of the
APP Contract.
The APP Contract does not become effective until the State
establishes and registers various payment trusts, guaranties, and
bank credit lines for specific use by the Rosarito Project.
Now, the Project is in the final stages of financial closing and the
District is exploring if the government of Baja California is
interested in having discussions for the District to acquire
desalinated water from the Project. To that effect, the District is
sending a letter (Exhibit B) to the Comisión Estatal del Agua de Baja
California (“CEA”), the Baja California state’s agency in charge of
the Project.
The District anticipates that the letter will initiate a dialogue
with Baja California State and Federal Agencies (“CILA/IBWC”) to
determine timelines and cost of desalinated water. Staff will
periodically update the Committee about the progress of the
conversations and meetings.
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
No fiscal impact as this is an informational item only. See
Attachment B - Budget Detail.
Staff has continued doing minimal work related to this project;
reduced only to maintain contacts with the Project developers and
stakeholders from the State of Baja California, to collect media
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reports on the Project, and to periodically report any developments
to this Committee.
GRANTS/LOANS:
Not applicable.
STRATEGIC GOAL:
This Project supports the District’s Mission statement, “To provide
exceptional water and wastewater service to its customers, and to
manage District resources in a transparent and fiscally responsible
manner” and the General Manager’s Vision, "To be a model water agency
by providing stellar service, achieving measurable results, and
continuously improving operational practices."
LEGAL IMPACT:
None.
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P:\WORKING\CIP P2451 Desalination Feasibility Study\Staff Reports\Committee Desal Update 2019-1a\Committee 8-28-2019
Staff Report.docx
Attachments: Attachment A – Committee Action
Attachment B – Budget Detail
Exhibit A – Project Location
Exhibit B – Letter dated August 28, 2019 to Comisión
Estatal del Agua de Baja California, Otay
Water District’s Interest in Acquiring
Desalinated Potable Water Resources to
Supplement the Otay Water District’s
Potable Water Supply
ATTACHMENT A
SUBJECT/PROJECT:
P2451-001101
Informational Update for the Rosarito Desalination Plant
and the Otay Mesa Conveyance and Disinfection System
Projects
COMMITTEE ACTION:
The Desalination Committee (Committee) reviewed this informational
item at a meeting held on August 28, 2019.
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for Board approval. This report will be sent
to the Board as a Committee approved item, or modified to reflect any
discussion or changes as directed from the Committee prior to
presentation to the full Board.
ATTACHMENT B – Budget Detail
SUBJECT/PROJECT:
P2451-001101
Informational Update for the Rosarito Desalination Plant
and the Otay Mesa Conveyance and Disinfection System
Projects
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OTAY
August 28,2019
EXHIBIT B
...^Dedicated to Community Sew/tee
2554 SWEETWATER SPRINGS BOULEVARD,SPRING VALLEY,CALIFORNIA 91978-2004
TELEPHONE:670-2222,AREA CODE 619 WWW.Otaywater.gov
Ing.Enrique Ruelas Lopez
Director General
Comision Estatal del Agua de Baja California
Boulevard Anahuac No.1016
Colonia El Vidrio,C.P.21080
Mexicali,Baja California,Mexico
Subject:Otay Water District's Interest in Acquiring Desalinated Potable Water
Resources to Supplement the Otay Water District's Potable Water Supply
Dear Ing.Ruelas Lopez:
Your project is potentially very valuable for both Mexico and the United States,and
in particular the Southern California region.The Otay Water District ("District")remains
very interested in this Project and,more specifically,in acquiring desalinated potable
water to augment its current potable water supply.As you may be aware,the District
previously entered into a Letter of Intent executed by the District and NS Agua on
February 5,2009 and renewed its intent in 2012 when Consolidated Water Cooperatief,
U.A.acquired a 50%interest in N.S.C.Agua,S.A.de C.V.("NSC Agua").
The District understands that the Project water will be a resource controlled by
the State of Baja California and we remain interested in acquiring Project water through
Comision Estatal del Agua de Baja California ("CEA").We anticipate that any
agreement for the sale of Project water will require the involvement and consent of the
federal governments of our respective nations,likely through the International Boundary
and Water Commission ("IBWC")/Comision International de Limites y Agua ("CILA").
Notwithstanding the above,it is our understanding that Aguas de Rosarito ("AdR")
is continuing its Project development activities and,based on technical,financial,
environmental,and engineering studies conducted by AdR and others to date,it has been
determined that it is feasible to develop a seawater desalination plant capable of
delivering desalinated potable water meeting specified water quality standards applicable
to customers in the United States,at a reasonable price.
Ing. Enrique Ruelas López Otay Water District's Interest in Acquiring Desalinated Potable Water Resources to Supplement the Otay Water District's Potable Water Supply
August 28, 2019
Page 2 of 3.
(1) The District is not empowered to contract directly with CEA, and is looking for options to go through IBWC/CILA.
Based on the foregoing assumptions and preliminary understandings, the District
hereby expresses and renews its interest in acquiring Project water. The District desires
to acquire no less than:
Minimum Desalinated Potable Water Demands (Seasonal Variability, Annual Demand) Year 2023: 8.0 MGD (30,300 M3/Day)
Year 2035: 12.0 MGD (45,400 M3/Day) Year 2050: 15.0 MGD (56,800 M3/Day) Any water acquired by the District would be delivered to the District at a delivery point at the United States border with Mexico, as mutually agreed to by the parties prior
to any such acquisition and would be subject to such further terms and conditions set forth in a mutually satisfactory, legally binding water supply purchase agreement (hereinafter, "Agreement" (1)) that would include, but not be limited to: a. A purchase commitment by the District for a certain quantity in acre-feet, subject
to seasonal demand, of desalinated potable water annually;
b. Desalination water must qualify for an amended permit for Otay from California
agencies for the new source water from Mexico.
c. A price for the desalinated potable water including any and all fees and charges
associated with the delivery of the water at the point of delivery agreed to by the
parties; we contemplate that the pricing will be within a range of projected pricing
of alternate potable supplies available to the District;
d. An appropriate guarantee from CEA or other obligated party, in form and
substance satisfactory to the District, verifying the source, the supply, and the
quality of the desalinated water;
e. An initial minimum term of thirty (30) years, with no less than two (2) options to
renew for equal terms each that are mutually agreed to by the District and CEA;
f. The delivery of the desalinated potable water to a specified location and pressure
at the United States border with Mexico, at which point the District shall arrange
for the delivery of the desalinated potable water to its distribution system;
g. Such other terms and conditions as the parties deem necessary or advisable in light of any information or condition relevant to the Agreement.
Ing. Enrique Ruelas López Otay Water District's Interest in Acquiring Desalinated Potable Water Resources to Supplement the Otay Water District's Potable Water Supply
August 28, 2019
Page 3 of 3.
P:\WORKING\CIP P2451 Desalination Feasibility Study\Staff Reports\Committee Desal Update 2019-1a\Exhibit B - Interest in Acquiring Desal Water_OTAY_ 8.28.2019.docx
Thank you for keeping us apprised about the Project and for continuing to explore
the purchase and sale of desalinated potable water for the benefit of both our regions.
Sincerely, OTAY WATER DISTRICT
Mark Watton General Manager
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