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17140 South Avalon Blvd Suite 210
Carson, CA 90746-1296
Phone: (310) 660-6256
PFM Financial Advisors LLC | Public Financial Management, Inc.
601 S. Figueroa St., Suite 4500 | Los Angeles, California 90017
Douglas S. Brown
Stradling Yocca Carlson & Rauth, P.C.
500 Capitol Mall, Suite 1120 | Sacramento, CA 95814</span>
660 Newport Center Drive, Suite 1600 | Newport Beach, CA 92660
To effectively respond to the needs of West Basin’s various water supply systems, West Basin administers a Capital Improvement Program (CIP) that focus on the installation of new infrastructure and equipment, or the restoration of existing assets. A comprehensive recycled water Capital Implementation Master Plan (CIMP) is used as a guide to best meet long-term planning and reliability objectives for the recycled water system. In general, the West Basin’s CIP Projects seek to support the following:
• The addition of future recycled water customers,
• Safeguarding recycled water system capacity and reliability,
• Preserving water quality obligations,
• Responding to changing regulatory requirements
New infrastructure and equipment are added to the recycled water system for reasons that may include the following:
• Increasing customer connections through distribution system expansions and customer lateral construction.
• Increasing system capacity through expansion of existing treatment systems or inclusion of new treatment systems.
• Addressing water quality or regulatory requirements with new treatment technologies, unit processes, or equipment.
With an aging infrastructure, the rehabilitation and replacement of existing equipment and systems is critical to long term achievement of quality and capacity goals. For this reason, West Basin’s capital improvement program includes an R&R component intended to extend the useful life of existing facilities and equipment.
In this fiscal year, West Basin has continued to take an active approach to replace and refurbish critical parts of the aging infrastructure that provides recycled water to our customers. By undertaking this large replacement and refurbishment effort, West Basin hopes to continue to enhance the recycled water process, provide reliability to the customers and implement cost savings through a more efficient operation. To assist in this effort, West Basin is working with a consultant to identify, prioritize and plan for these improvements.
Each and every project delivered by West Basin is subject to rigorous planning and detailed design before construction. This not only ensures that projects stay on schedule and within budget, but it also guarantees high quality deliverables.
Feasibility studies are undertaken in order to assess the practicality of the proposed project. In general, these studies will assess five areas of feasibility; technical feasibility, economic feasibility, legal feasibility, operational feasibility, and schedule feasibility.
Once a project has been identified as feasible, it may move into the design phase. The designers will define the project through detailed specification documents and construction drawings. The final deliverable from the design phase is the Ready-To-Advertise bid package. This package is a complete design (design analysis, specifications, and drawings,) including annotated design submittal review comments that answer and/or incorporate review comments resulting from the review of the final design submittal.
The majority of West Basin’s construction projects are considered Public Works Construction Projects. Public works in general means:
• Construction, alteration, demolition, installation, or repair work done under contract and paid in whole or in part out of public funds.
• It can include preconstruction and post-construction activities related to a public works project.
• For a full definition of public works refer to Labor Code section 1720.
Anyone working on a public works project must be paid prevailing wages as determined by DIR. Projects of $30,000 or more must meet DIR's apprenticeship requirements. Failure to comply with public works requirements can result in civil penalties, criminal prosecution, or both.
New pipeline alignments and customer laterals are necessary to expand the system. West Basin works ceaselessly to find ways in which to partner with potential customers and begin the planning, design and construction of new laterals which will result in increased recycled water demand, thereby further lowering our future reliance on imported water. West Basin’s fiscal budget has benefited from funds for the construction of recycled water pipelines and customer connections that will be funded through state (California’s Proposition 84) and federal programs (United States Bureau of Reclamation, Army Corp of Engineers), and even local partnerships (cities, water retailers, and customers).
These projects are in various stages of the implementation process.
• El Segundo Recycled Water Project
• Kenneth Hahn Park Recycled Water Pipeline Project
• Palos Verdes Recycled Water Pipeline Project
• Torrance Recycled Water Expansion Feasibility Study
• Caltrans (405) & Main Street Recycled Water Project
• Dominguez Tech Center Recycled Water Project
• Hollywood Park Recycled Water Project
• Northrop Grumman
• Shell Refinery Recycled Water Lateral Project
• Anderson Park Recycled Water Project
Within each of West Basin’s treatment facilities, there are more than 30 unit-treatment systems dedicated to producing West Basin’s five designer waters. Treatment plant expansions range from the addition of new unit process for redundancy or reliability, or a wholesale facility expansion intended to increase the treatment capacity of the system. Examples of these types of projects included in this fiscal year’s budget are shown below. These projects are in various stages of the implementation process.
• Recycled Water Distribution System Cathodic Protection Project
• JMMCRWRP Tesoro Expansion
• Facility-Wide Power Monitoring Project
• HSEPS Improvements Project
• Inglewood Disinfection Station
• Pall MF Expansion Project
• Phase IV MF Optimization Project
• ECLWRF Clean-In-Place Waste Discharge Project
• Recycled Water Distribution System SCADA Project
• Secondary Effluent Flow Meter Installation
• TRWRP Dechlorination System Project
Because West Basin has a substantial range of assets of varying ages, replacement and rehabilitation projects are a critical part of ensuring the health and longevity of West Basin’s infrastructure. These types of projects can include, but are not limited to simple replacement or rehabilitation for equipment such as pipes, pumps, tanks, instrumentation, or treatment process elements.
The District’s existing infrastructure requires repair and maintenance on a regular basis. Replacement or refurbishment cost to the existing capital assets under certain circumstances may be capitalized. The criteria for determining whether the expenditure is an expense or capital asset requires knowledge of the effect the repair will have on the capital asset. To be considered as a capital asset, these conditions must be met:
• Total repair or refurbishment cost of one job has to be $10,000 or more, and;
• After the repair or refurbishment, the remaining useful life of the existing asset must be extended by at least three years.
When the above conditions are not met, the cost of repair or refurbishment will be considered as operations and maintenance expenses.
Examples of these types of projects included are shown below. These projects are in various stages of the implementation process.
• Chlorine Contact Basin Rehabilitation Project
• Phase III Clearwell Rehabilitation
• Chemical Containment R&R Project
• TRWRP Waste Discharge Capacity Increase Project
• Solids Handling System Rehabilitation Project
• Facility-Wide Surge Tank Project • Welded Steel Storage Tank Rehabilitation Project
• MF Membrane Replacement
• RO Membrane Replacement
• Misc. Facility R&R
• Brewer Desalter Well Rehabilitation Project
During the budget development process, West Basin staff reviews its upcoming capital improvement projects and determines how each project will be funded. West Basin recognizes that funding for the capital improvement projects can be significant and funding may need to come from multiple sources. When determining the source of funding, West Basin considers several factors such as the useful life of the future asset, the anticipated cost of the project, if there are potential outside funding through grants or customers, and the associated timing. West Basin continues to work with its customers inside and outside its service area to find mutually beneficial ways to finance and expand the recycled water system.
Understanding that some capital assets have a short useful life, West Basin has determined that these projects will be funded through West Basin’s PAYGO designated fund. Another financing option is for West Basin to pay for construction upfront and immediately invoice the customer either monthly as cost are incurred or at the completion of construction when all costs have been reflected. A third financing option is for West Basin to issue debt either through long-term debt or to obtain a state loan. The term of the financing generally matches or is less than the estimated useful life of the capital project. More recently West Basin has utilized its Commercial Paper program to finance capital projects as the interest rate is low, and then when the market is favorable, will refund the line with long-term debt.
Expansion projects will often be debt financed as they typically have a long useful life and are expensive to construct. Repayment for these financings may come through commodity rates, a local resource program or through a fixed payment from a customer.