Agenda Item - 2022-02-15 - Number 5.2 - Wastewater Treatment Project Update 5.2
erCOUNCIL REPORT
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Subject: Progress Update on the New Wastewater Treatment Facility in the Foothills Area
Meeting Date: February 15, 2022 Staff Member: Anthony Hooper, Deputy City Manager
Department: City Manager's Office
Action Required Advisory Board/Commission Recommendation
❑X Motion ❑ Approval
❑ Public Hearing ❑ Denial
❑ Ordinance ❑ None Forwarded
❑ Resolution ❑X Not Applicable
❑ Information Only Comments:
❑ Council Direction
❑ Consent Agenda
Staff Recommendation: Approve submitting an application for a WIFIA loan and pay the
application fee; Continue to Task 3 (60% Design).
Recommended Language for Motion: Move to approve submitting an application for a Water
Infrastructure Finance and Innovation Act loan for the Tyron Creek Wastewater Treatment Facility
project, and pay the $100,000 application fee.
Project/ Issue Relates To:
❑X Council Goals/Priorities EAdopted Master Plan(s) ❑Not Applicable
BACKGROUND
The existing Tryon Creek Wastewater Treatment Plant (TCWTP) was built in 1964 and is owned and
operated by the Portland Bureau of Environmental Services (BES). It is aging and parts of the plant
are at the end of their useful life cycle.
The plant needs significant investments to continue to reliably meet current and potentially more
stringent Oregon Department of Environmental Quality (ODEQ) permit requirements and protect it
against climate change. The cities of Lake Oswego and Portland are actively exploring the option
of designing, building, financing, operating, and maintaining a new wastewater treatment facility to
replace the existing Tryon Creek plant under an innovative progressive public-private partnership
(P3). It is anticipated that the proposed new facility will deliver significant added benefits for the
community at a similar annual cost to that of operating the old plant with new upgrades.
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeosweao.citv
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The project was initiated by Council in December 2018 by the authorization of a special
procurement to enter into a competitive procurement process to select a private firm to be
contracted under the terms of a P3 project. Since that time, the City staff project team has
provided updates and presented action items to the Council a total of 10 additional times.
The last three times that staff has come to Council were (1) in May 2021, where Council authorized
EPCOR Foothill Water Partners (EFWP) to begin the first phase of work (Preliminary Services)
towards advancing a new Wastewater Treatment Facility; and (2) in July 2021, where the City
Council approved a special procurement for Carollo Engineers to provide technical advisory services
and oversight of the deliverables resulting from the Preliminary Services with EFWP; and (3) in
October 2021, for a Council study session on progress to-date.
Since those meetings, the project team has accomplished the following items of note:
• Completed 30% design drawings that are currently under review by the project team;
• Submitted a Development Review land use pre-application packet and held a pre-
application meeting;
• Initiated preliminary conversations with the Federal Emergency Management Agency
(FEMA) on flood mitigation and cut/fill;
• Submitted a Flows and Loads Memorandum ODEQ and received positive feedback.
• Created a draft Outfall memo, providing part of the basis for the submittal to Oregon
Department of Environmental Quality (ODEQ) in February.
• Submitted a Letter of Interest loan application for EPA's Water Infrastructure Finance and
Innovation Act financing and been notified of acceptance into the program;
• Revised the preliminary estimates for capital and O&M;
• Updated the preliminary Affordability Cap Analysis;
• Hired Universal Field Services to provide property acquisition and relocation services;
• Submitted applications to the Energy Trust of Oregon to enroll in their incentive programs;
• Initiated drafting the Intergovernmental Agreement between Lake Oswego and Portland;
• Initiated drafting the Project Agreement between EFWP and the City for final design,
construction, financing, operation and maintenance of the treatment facility over a 32-year
period;
We are now at the 30% Design Phase, under Task 2 of Appendix 1 of the Preliminary Services
Agreement. This check in is an opportunity for Council to decide to proceed to Task 3 or to exercise
an off-ramp, consistent with our agreement with EPCOR.
There are a few items that need to be highlighted in more detail, such as the concept plans for the
new facility, Water Infrastructure Finance and Innovation Act (WIFIA) loan program, Affordability
Cap, public outreach, and Council Meeting schedule.
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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30% Design Conceptual Renderings
The rendering view of the new facility is from Foothills Road. As compared to the existing plant,
the treatment processes for the new facility are fully enclosed, which is made possible by the
compact AquaNereda technology. By enclosing everything within building structures, and including
odor filtration devices, odor can be controlled at a very high level.
The site is the combination of three properties: 99, 101, and 113 Foothills Road. [These properties
are currently not owned by the City; the properties will need to be acquired and the existing
businesses relocated if the project is to move forward.] The site is approximately 5.9 acres as
opposed to the 14 acres needed to upgrade the existing site. The building materials are largely
concrete and metal paneling, with some wood accents on the administration building. The
landscaping is showing a lot of grass, however, this is just a placeholder and the 60% design will
include an updated landscaping plan that incorporates natural, sustainable, low-impact, native
plantings and ground covers.
Visual 1: Comparison View of the New Facility and Existing Plant (Concept Only)
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503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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The administrative building is about 6,300 square feet. This building is expected to house
approximately nine employees. The key rooms include testing laboratory, two bathrooms/locker
rooms/showers, lunch room, a few offices and a conference room. There are 22 parking spots in
total for the site, which are located around this building, and is the number of parking spots
needed to meet the code requirement based on gross floor area. The materials are predominately
stone, wood, and metal. The roof includes solar panels. There is the possibility of adding
additional solar panels on the treatment facility roof; however, these are not shown yet as a
feasibility study will need to be conducted in partnership with the Energy Trust of Oregon over the
next few months.
Visual 3: Administrative Building Close-up (Concept Only)
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Visual 4 shows the frontage from Foothills Road with a long concrete wall that is broken up by
some crosshatching design and stone work. The stone work is intended to emulate an iron furnace
as a nod to Lake Oswego's history. The proposed colors of the railing and embellishments are red
and the vents are yellow. [Note that the landscaping shown is currently just a placeholder and not a
deliberative or proposed approach.]
Visual 4: Frontage of Treatment Facility from Foothills Road (Concept Only)
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503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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WIFIA Application Submittal and Fee
On December 6, the Environmental Protection Agency (EPA) selected this project to apply for a
low-cost, long-term, WIFIA loan. There were three other projects from Oregon invited to apply for
WIFIA funding in the Fiscal Year 2021 funding cycle. The other projects are Ashland, Oregon City
and Tualatin Valley Water District. Of the $140 million in loans dedicated to Oregon projects, this
project accounts for$76 million.
The selection of the project by EPA is noteworthy because EFWP will be the borrower of the loan,
as opposed to the City, based on the project finance arrangement contemplated in the P3
Agreement.
The project's selection is the first step towards applying for a WIFIA loan. The next stage includes a
detailed financial and engineering review of the project, environmental reviews and approvals,
mutual negotiation of a loan agreement, and financial close.
The City and EFWP are looking to submit the WIFIA application in several weeks. The preliminary
services agreement (Section 1.9, Appendix 1) provides that the City will pay the EPA a non-
refundable fee of$100,000 as the application is being submitted on the basis of the project
financing arrangement, which has not yet been formalized in the P3 Agreement. This approach
also saves the City money, eliminating imputed financing costs associated with this application fee
during the preliminary services period. Lake Oswego and Portland would share the upfront
$100,000 fee.
The total application and closing costs associated with the WIFIA loan is anticipated to be in the
range of$300,000 to $400,000, as explained by WIFIA. These costs cover the cost of their due
diligence and negotiation of the loan agreement. The $100,000 initial application fee would be
subtracted from the total cost and the balance would be due and payable by EFWP at Financial
Close. In the event that the P3 Agreement was not formalized for some reason, the WIFIA loan
would remain with the Project and Lake Oswego and Portland would share the balance of the
closing costs on a 50/50 basis.
The project team recommends the Council authorize submitting the WIFIA application and pay the
fee pursuant to the Preliminary Services Agreement (PSA). The City was envisioned to pay the
$100,000 fee in the PSA to reduce costs by eliminating interest and mark-ups.
Preliminary Cost Estimates and the Affordability Cap
The estimates for the total capital cost have increased from $159.8 million to $165.5 million at the
30% design. The increase is principally attributable to the increase in the cost of materials.
According to the US Bureau of Labor Statistics, commodity-related items such as iron and steel and
pipe costs have risen 69% and plastic piping costs have risen 76% between December 2020 and
October 2021. It is possible these prices will normalize before the project gets to construction, but
to be conservative, the estimates are based on today's pricing.
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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The Affordability Cap is set at $484.4 million, which covers the design, construction, financing,
operation, and maintenance over the term of 32-years and is based on the projected impact to
rates from the estimated cost (last refreshed in 2020) of continuing to upgrade, modify, operate
and maintain the existing TCWTP over the next 30 years to meet National Pollutant Discharge
Elimination System (NPDES) permitting requirements and to keep the plant operating.
At this time, EFWP is projecting to be approximately$11.3 million (2.3%) over the Affordability Cap,
with a contingency of a little over 9%. This is principally because the capital costs increased by
about $5.7 million. As an aside, every$1 of capital cost equates to about $2 to the affordability
threshold, given financing and mark-up fees. Without the contingency, EFWP would be $23 million
under the cap and it is possible that the project will not need the full contingency as currently
established. Further refinement is necessary before we can be certain of whether the Project will
fall within the Affordability Cap; however, it is relevant to not that the project team has not yet
gone through a value engineering exercise, which is expected to further reduce costs.
In the analysis of the Affordability Threshold, it is important to note the following:
• The saving provided by WIFIA were already incorporated in the financial projections
contemplated at the 15% design level (in October).
• O&M costs are estimated to be about $2.3 million per year. The electricity costs within
O&M have been refined and reduced by about $200,000 annually from the estimates
utilized at the 15% Design Level (in October).
As mentioned in the October 5, 2021 Council report, there are three additional project elements
that were not originally considered as part of the plant replacement and are being considered as
separate elements, outside the Affordability Cap: (1) demolition and remediation of the existing
plant, (2) building a new residuals treatment facility, and (3) potentially providing reclaimed water
to irrigate Foothills Park and/or George Rogers Park. These items are in development and will be
presented to the Council this summer.
With all this said, a major question is: what does this mean for ratepayers? The estimated project
costs are still projected to be within the 3.9% increases to the wastewater rates under the Portland
TCWTP upgrade model that are projected for the next 17 years. The 3.9% rate increases would be
necessary if the existing plant was upgraded and are exactly the same projected rates needed to
build and operate the new wastewater facility. This is anticipated to be the case even with the new
estimates.
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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Visual 5: Monthly Wastewater Rates for Typical Use for a Single-Family Home
$93.15
$89.65
$86.29
$83.05
$79.93
$76.93
53.00 53.35 53.50
3.9% 3.9%
2020-21 2021-22 2022-23 2023-24 2024.25 2025-26
__Typical __Annualdei__Annual
Monthly 3IIl 3.6%Increase 3.9%Increase
These rate projections cover operations and maintenance of the entire Lake Oswego wastewater
system as well as the projected costs for either upgrading the existing plant or building a new
facility. As previously mentioned, based on current projections no additional rate increase for the
new facility is forecasted. Thus, at this 30% design stage, additional work under the preliminary
services agreement should proceed.
Public Outreach and Involvement
As part of the project, the team is conducting robust public involvement and outreach that includes
multiple opportunities for the public to provide input and share feedback at key milestones
throughout the design process.
Community Information Session—October 2021
The project held its first Community Information Session in October 2021, where members of the
project provided community members an update on preliminary design work. The virtual meeting
was well-attended with 64 participants, including several councilors.
Topical presentations included how the new facility will be a good neighbor, the public-private
partnership, treatment technology selected, and sustainability features. Presenters and project
team members answered questions after each topical presentation and at the end of the meeting.
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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During the meeting, participants also had the opportunity to give feedback using interactive online
polling. Participants provided input on project values, their areas of interest, and ways to
communicate effectively with them.
To gain a better understanding of the project values that were important to the public, participants
were polled using a scale of 1 (extremely important) to 5 (unimportant). Based on poll results,
producing clean water, increasing resiliency, and energy efficiency were viewed as the three most
important project values by participants.
In addition, the top ranked areas of interest participants wanted to learn more about included the
project as a whole, public-private partnerships, water quality and treatment, and energy efficiency.
A summary of the meeting can be viewed here.
Neighborhood Meeting—February 2022
The project team recently held a required land use neighborhood meeting, open to all the
community. This meeting was held in order to seek feedback from the community on preliminary
site plans and designs, principally as relating to the land use criteria and standards, prior to
submitting a formal Development Review application. The meeting also provided an opportunity
for the community to ask questions about the project generally.
There were 58 people in attendance at the virtual meeting that was held on February 3. Questions
and feedback included the following topics: flood plain management, water quality,
decommissioning and demolition of the existing plant site, type of landscaping, architecture style,
environmental site assessment reports, outfall location, temperature of discharge into the creek,
life expectancy of the new facility, treatment process, bird collision considerations for structures,
financial details, plant capacity, FEMA requirements and site visits. A video of the meeting can be
viewed here.
Other public outreach and communications activities that have been underway or are upcoming
include:
• Updating the project website www.lakeoswegowastewaterfacilitv.org;
• Sharing updates via the project e-listserv;
• Creating a project video: "Building for a Better Tomorrow: Innovative Wastewater
Treatment in Lake Oswego";
• Sharing information through communication channels, including the Hello LO, LODown,
website, factsheets, and social media;
• Coordinating with EFWP and Portland on a joint WIFIA announcement and press release:
• Attending four meetings with the Lake Oswego Sustainability Network (LOSN) and
participating in a public forum hosted by LOSN;
• Attending five meetings with the Energy Trust of Oregon;
• Presenting to the Sustainability Advisory Board on February 21, 2022;
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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• Holding an online Open House and virtual meeting in spring 2022 to share 60%design plans
with the community; and
• Attending the Lake Oswego Farmers' Market at select days in spring and summer to share
information about the project
Council Meetings
Table 1 shows the tentative schedule for check-ins.
Table 1: Council Meeting Schedule
Council Meeting Details Date
Council Study Session: 60% design, price submittal, demolition and remediation information for June 2022
the existing plant, and more.
Council Study Session (Prior to"Go/No Go" Decision): Sharing information on the definitive
project pricing, the terms of the Project Agreement (PA) with EFWP,the details of the Future Sep. 2022
Intergovernmental Agreement (IGA)with Portland, and real estate transactions for the site.
Council "Go/No Go" Decision; if"Go," move into the pre-construction Phase: Consider Sep. 2022
approving PA with EFWP, IGA with Portland, & real estate transactions.
Council Presentation on the Development Review Commission's(DRC) Decision: Assumes DRC Oct. 2022
development review approval and no Council appeal; not needed if there is a Council appeal.
Council to Consider Contract for Technical Oversight during Construction. Oct. 2022
FISCAL IMPACT
On May 4, 2021, the Council authorized the preliminary services agreement, for services projected
to cost about $7 million. As of January 31, about $4.7 million of work has been completed. EFWP
is paying for these costs out-of-pocket; these costs will be rolled into the overall project cost if the
project is a "Go" in September. If the project does not move forward, then EFWP will be
reimbursed, as provided under the preliminary services agreement and depending on the context
and reasons for cancelling the project.
In addition, the Council also authorized $1.4 million in City consulting services over the 14-month
preliminary services agreement period in May 2021. After 8 months, the total spent on consulting
is $351,000. Portland shares in the cost per the terms of the Interim IGA. The updated table of
consultant spending is included in Attachment 1.
Since the last study session, a new consultant has been added. Universal Field Services will provide
property acquisition and relocation services for the project. The contract is for a not-to-exceed
amount of$168,000.
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
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Also, there will need to be a Phase II Environmental Services Assessment conducted on the three
properties (99, 101, and 113 Foothills Rd) that make up the proposed site. The cost for this work
will be $78,885 and is outside of the preliminary services fee. EFWP will pay for this out-of-pocket
but it will need to be reimbursed.
The Hawkins, Delafield & Wood legal services contract will need to be amended to add
approximately$230,000 to cover developing the final P3 Project Agreement with EFWP, to move
on to the pre-construction, construction and O&M phase, and help the City in creating a new
intergovernmental agreement with the City of Portland. The new contract total is estimated to be
$824,000. This additional amount was already anticipated into the amount that was previously
approved by Council.
ATTACHMENT
1. Consultant Spending Table
503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.lakeoswego.city
Attachment 1: Consultant Spending on Wastewater Treatment Facility Project
Total Invoiced&Paid
Total Contract Total Paid Total Amount since EPCOR
Consultant Function Since the Start Remaining on Agreement(May
Amount of Project Contract through end of
December)
Illuminati Infrastructure Owner's Representative&
Advisors(Jill Jamieson) Financing Advisor $287,000 $210,000 $77,000 $77,000
Carollo Engineers Technical Advisor $1,132,000 $403,000 $729,000 $217,000
Hawkins,Delafield&Wood Legal Advisor $594,000 $564,000 $30,000 $56,000
Universal Field Services Property Acquisition Services $168,000 $1,000 $167,000 $1,000
Jones Lang LaSalle(Jill
Owner's Representative&
Jamieson). The contract has Financing Advisor $100,000 $88,000 N/A N/A
been terminated.
WCX(No longer in Business) Owner's Representative $10,000 $4,000 N/A N/A
Argent Management 2018 Feasibility Study $150,000 $150,000 N/A N/A
(Completed)
FCS Consulting(Completed) Wastewater Rate Model $8,000 $8,000 N/A N/A
Update
Total I $2,449,000 $1,428,000 $1,003,000 $351,000
*Hawkins,Delafield& Wood will need to be amended to add approximately$230,000 to cover developing the final agreement with
EPCOR to move on to the pre-construction,construction and O&M phase and help the City in creating a new intergovernmental
agreement with the City of Portland. The new contract total is estimated to be$824,000.
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