ESTERO BAY NEWS | October 8 through October 22, 2020 | Archive Edition
Documents referenced in OPEN LETTER re: WRF size — are found through the following URLs.
…the new WRF has two separate units for treating incoming sewage and each one has the capacity to process 8.14 million gallons a day.1 https://www.morrobayca.gov/DocumentCenter/View/12476/Filanc–Black–Veatch-DB-Contract—Exhibit-B–Scope-of-Work-with-Attachments (Enter search for: 8.14.)
…plans the City submitted to the Coastal Commission say “The Project includes construction of a new one million gallons per day (mgd) advanced treatment facility …”.2 https://morrobaywrf.com/wp-content/uploads/ConstructionPlan.pdf (See page 2 section 2.)
…funding agreement with the United States Environmental Protection Agency… states that the money is for “Design and construction of 0.97 million gallons per day (MGD) WRF [that] will provide preliminary, secondary, tertiary, and advanced treatment.”3 https://morrobaywrf.com/wp-content/uploads/Credit-Agreement-Water-System-Execution-Version.pdf (Search for MGD.)
…Environmental Impact Report for the project says that “The WRF would treat a maximum peak daily flow of 2.75 million gallons per day (MGD) …”4 https://morrobaywrf.com/wp-content/uploads/Draft-Environmental-Impact-Report-EIR-March-2018.pdf (See page 2-6.)
…City’s website tells ratepayers that “The project includes construction of a new one million gallon per day advanced treatment facility …”.5 http://morrobaywrf.com/about-the-project/project-overview/
Documents referenced in OPEN LETTER re: Estuary — are found through the following URLs.
…the new sewage treatment…be built on an unstable hillside on the bank of a stream that flows directly into the Morro Bay National Estuary. This hillside is unstable and has the potential for landsliding. Storm water flowing in this stream could lead to erosion, mud flows, and stream bank instability.1 http://www.morrobayca.gov/DocumentCenter/View/11644/WRF-Draft-EIR—Appendix-E-Geotech-Report?bidId= (See pages 12 and 13.)
…project plans show that the water reclamation involves delivery, transfer, storage, and use of chemicals including sulfuric acid, liquid ammonium sulfate, sodium hypochlorite, antiscalant, citric acid, polymer, sodium bisulfite, and sodium hydroxide.2 https://morrobaywrf.com/wp-content/uploads/Water-Reclamation-Facility-Basis-of-Design-Report-May-2019.pdf (See pages 4-22 and 4-44.)
…Runoff from the hillside and runoff from the sewer plant will be dumped into this stream.3 https://morrobaywrf.com/wp-content/uploads/Water-Reclamation-Facility-Basis-of-Design-Report-May-2019.pdf (See pages 5-1 and 5-2 “Hillside Drainage and Plant Site Drainage”.)
…Environmental Impact Report (EIR) for the project, which excluded the Estuary, as seen in the red line diagram that also concealed the stream that flows into the Estuary.4 http://www.morrobayca.gov/DocumentCenter/View/11644/WRF-Draft-EIR—Appendix-E-Geotech-Report?bidId= (See pages 12 and 13.)
FOOD FOR THOUGHT WHILE PAYING OUR SEWER BILLS
According to Indeed Hire, a national recruiting service, the top engineering companies in California pay civil engineers between $135,128 and $282,479 per year. See: https://www.indeed.com/career/civil-engineer/salaries/CA
Morro Bay ratepayers have been paying some Carollo engineers $260 an hour, which translates into $499,200 a year. (40 hrs. / week for 48 weeks / year = 1,920 hrs. x $260). Assuming 48 work weeks per year, this is over three times the annual salary paid to engineers by the City and County of San Francisco ($148,018) and the County of Marin ($ 135,128). (See the Indeed Hire site.) The record shows that the Morro Bay City Council hired Carollo Engineers in April 2018 to take over the WRF construction “program management” from Michael Nunley.
At its November 6, 2019 Special Wednesday Meeting, the City Council approved a second amendment to this Carollo contract within which ratepayers are now paying up to $292 per hour for the work of some engineers. https://www.morro-bay.ca.us/ArchiveCenter/ViewFile/Item/5174 (Click on the agenda notice of Item II and go to pages 143 and 144 in the staff report where you can see – if you expand the size – tables showing salaries of each engineer, tasks, and hours the task is expected to take.) Using the same formula with a year of 48 work weeks, $292 per hour translates into an annual salary of $560,640 for the work of an engineer to manage a “program” for building a sewer plant. For example, the contract amendment of hourly pay for the “program management” engineer in charge of “permitting” went up to $292 per hour.
This raise was approved by the City Council even though the WRF project is currently being delayed because whoever was in charge of “permitting” failed to apply for and obtain required permits including a permit from the Army Corps of Engineers. Divided by 1,920 hours (40 hrs. / week x 48 weeks / year) the annual salary of $282,479 noted above being paid by a top engineering firm in California is $147.12 per hour.
The November 6, 2019 staff report cited above shows on page 111 that between the April 2018 contract start date and November 6, 2019 – the period of time covered by the original Carollo contract and the first amendment of it – Carollo was paid $1,898,948 which, divided by 20 months = $94,947 a month. On this same page you can see that the approved cost of the second amendment is $2,381,968 bringing the total to $4,280,916.
But this is not the last of it. According to this staff report, the estimated amount to be paid to Carollo within the original contract over time is $7,640,000. However, because “elements of the WRF Project have evolved ….. the level of effort for Program Management has increased” that will add another $1,157,894 in payments to Carollo engineers. These increased efforts and payments include, for example, $576,628 more for public outreach, $457,843 more for technical oversight, and $525,840 more for management and oversight of construction. The extra $576,628 for public outreach is for dealing with traffic impacts caused by construction on Quintana and Main Street – another cost due to the South Bay Boulevard site. $7,640,000 + $1,157,894 = $8,797,894. See pages 112 and 113 of the November 6th staff report.
What do you think is going on here?
Meanwhile, as you probably know, the Cayucos Sanitary District is busy on the construction phase of its new sewer plant and, according to their web site, they still expect to pay $25,000,000 for it. The City’s contract with Carollo is roughly a third of the total cost of Cayucos’s new sewage treatment plant. And this just one of a number of consulting contracts related to this project.
Written by Cynthia Hawley, Attorney
WHAT IS GOING ON WITH MORRO BAY’S WRF MANAGEMENT FEES?
Is the City of Morro Bay paying too much for project/construction management (PM/CM) services for their new sewer?
I think so, and here’s why:
Professional Service Fees are market driven and negotiable.
Project Owner’s (Morro Bay City) can control hourly rates and fees through negotiation at any time.
Project Owner’s (Morro Bay City) can control costs by dictating staffing levels at any time.
Project Owner’s (Morro Bay City) can control costs by saying no to additional services or fee increases at any time.
Project Owner’s (Morro Bay City) can control overall costs by ensuring billing rates for each position, correspond with the experience and background of the person providing the service (i.e. most firms routinely bill out lower paid, less experienced staff members at billing rates that indicate greater levels of experience).
Project Owner’s (Morro Bay City) can control costs by directly hiring an experienced “owner’s representative” to manage items 1-5 above.
Item 6 above is the primary reason Morro Bay City is overpaying for the PM/CM sewer project services. There is NO owner’s representative overseeing the City’s checkbook.
BACKGROUND: How Project/Construction Management Companies Operate — Program/Construction Management (PM/CM) companies, like most “professional service firms” grow by paying their employees as little as possible, while billing as much as possible for them. That’s good business, right? Here’s an overview of how this works.
Base Salary: In spite of the information on the internet, actual employee compensation rates are generally quite confidential. The base salary is the amount the employee will be paid. This amount is reported on their W-2 form.
Labor Burden: This is the amount the employer pays on top of the base salary, as required by law. Most companies work hard to keep their “burden” as low as possible.
Base Salary + Labor Burden: THE COST OF THE EMPLOYEE TO THE COMPANY. The difference between “cost of the employee” and the amount “billed” for the employee is the company’s gross margin.
Gross Margin: This accounts for all operating costs (overhead, etc.) + profit. Good companies grow their gross margin by keeping their operating costs low, and billing as much as the market will bear for the services they provide.
Extra Benefits: This includes bonuses, stock options, retirement plans, company car or expense account, etc. Many companies attract employees by way of their benefits, which may allow the company to pay them a lower base salary, thereby reducing the firm’s “employee cost”. Often these “benefits” are less than the employee cost reduction, resulting in an increase in the gross margin.
Example 1: By way of explanation, let’s say the PM/CM firm hires a recent graduate with a construction management degree from Cal Poly. If the starting salary is $100K/yr or $48/hr, (put your own #’s here if you like), and the “labor burden” for this employee is 20% (again—use your own number), then the “cost of the employee” to the firm is $100K+$20K=$120K/yr or $58/hr. If the firm bills this person as an “Assistant Construction Manager” at $197/hr, the company’s gross margin on this employee is $139/hr. This is equivalent to a 70% gross margin. Not bad for a company that doesn’t actually make anything. Don’t misunderstand me. These services are necessary and have real value in the market place. But what is fair and reasonable for these services?
By The Way: Do you know the PM/CM firm includes a 10% mark-up on each subconsultant? This means Morro Bay City is paying the billed rate for the PM/CM staff member to manage the subconsultants, along with paying the subconsultants billed rate + 10% more to the PM/CM firm. Industry standard, but this too is negotiable.
“INCREASED LEVEL OF EFFORT” — Morro Bay’s PM/CM management company recently upped their own estimate of the total amount of management services that will be required to complete the project. Less than two years ago, the management company estimated the total cost to be $7.6M dollars. Recently, in the quarterly report from the company (presented to and accepted by the council on 1/28/20 with a 4-1 vote), indicated a 30% increase in the total management fee requirement. The new estimate is $9.8M. The company stated that this estimated increase is based on the “increased level of effort” required to complete the project.
My first thought when I heard this euphemism? Well, maybe you all should be working harder! Increased level of effort? Is that an engineering term? Did I miss that in my course work at UCLA? The fee of $7.6M for the project you proposed twenty months ago, has not changed one iota. Yet now you tell us you need 30% more? AND—there is no guarantee this figure will not increase a year from now. Or, that the project under your management will be completed on time. Or, that the project under your management will be delivered on or under budget.
THERE IS A SOLUTION. The Morro Bay City Council needs to act now and hire a qualified owner’s representative. Give that professional full charge responsibility for the WRF program. Any Council action short of turning the project over to an experienced owner’s representative makes me wonder. WHAT IS REALLY GOING ON HERE?
Jeff Heller is a member of the Morro Bay City Council. He has assisted in the management of capital projects valued at several billions of dollars over his 40+ year experience in southern and central California. He currently represents owner’s interests for selected clientele.
LAFCO_Letter to City of Morro Bay requirements concerning Sphere of Influence Application to City of Morro Bay (Tri-W Site).
LAFCO | San Luis Obispo | Local Agency Formation Commission
LAFCOs are State of California County regional service planning agencies and exercise regulatory and planning powers to oversee the establishment, expansion, governance, and dissolution of local government agencies and their municipal service areas.
Supporting concerns from San Luis Obispo County Farm Bureau | Morro Bay Proposed SOI Amendment (Tri-W Site) Morro Bay Water Reclamation Facility (WRF). Refer to LAFCO_Letter_Farm
Additional concerns from County of San Luis Obispo Department of Agriculture | Morro Bay Sphere of Influence Amendment (3171). Refer to LAFCO_Letter_Agriculture
Fish_Wildlife_Letter to City of Morro Bay
CALIFORNIA DEPARTMENT OF FISH and WILDLIFE REGULATIONS
California’s Marine Protected Area (MPA) network uses different marine managed area (MMA) classifications. These classifications are defined in the Marine Managed Areas Improvement Act, which is used to designate marine areas intended to protect, conserve, or otherwise manage a variety of resources and their uses including living marine resources and their habitats, scenic views, water quality, recreational values, and cultural or geological resources.
California’s MPA network includes the Central California Marine Protected Areas from Pigeon Point to Point Conception, consisting of 29 protected areas covering approximately 204 square miles, or about 18 percent of Central California state waters.
Note — An MPA designation prohibiting (unlawful) injury, damage, take, or possess any of all marine resources (living, geologic, or cultural) including recreational and commercial take is identified as a State Marine Reserve (SMR). Refer to SMR Map
Note — PROXIMITY of City of Morro Bay SELECTED LOCATION for new Water Reclamation Facility. Refer to WRF_Map
KEY INFORMATION ON CITY DESIGNATED LOCATION FOR NEW SEWER PLANT
Morro Bay’s grassroots group, Citizens for Affordable Living (CAL), is surprised at the City’s strong emotional response to residents exercising their right to express themselves through a legitimate, state-approved referendum process. CAL collected 1,100 plus signatures in only 11 days to repeal a city council ordinance that pre-zones the yet unpurchased South Bay Blvd. site for a sewage plant. The main public objection: moving the waste facility into the Morro Bay Estuary watershed is unsound zoning.
The Estuary by definition is a sensitive ecosystem. The Marine Protected Area (MPA) designation in the Back Bay enhances the critical need for protection. Both the high-pressure, 4-pipeline, conveyance system (which carries raw sewage to the plant and brine back to the ocean outfall) and the waste facility are a 1/2 mile from the Estuary and the MPA. Sewage leaks or spills will have direct flow to this area via an adjacent creek that joins Chorro Creek, one of the Estuary’s two tributaries. The map on page 60 shows the interchange of State Route 1 with S. Bay Blvd. The proposed waste facility site is just north of this interchange. (Refer to Map on Page 62) https://nrm.dfg.ca.gov/FileHandler.ashx?DocumentID=46084
Concern was heightened recently when PG&E announced its rolling blackouts. That’s how Puget Sound was wasted in July, 2019: power outages caused two sewer plants to fail within 1 week of each other, dumping a total of 4.5 million gallons. The first incident happened after “backup pumping systems failed during a power outage” releasing in less than 30 minutes 3 million gallons of “untreated sewage.” https://komonews.com/news/local/3-million-gallon-sewage-spill-causes-several-puget-sound-area-beaches-to-close
The Morro Bay National Estuary Program (MBNEP), which is charged with protecting the Estuary, raised concerns in the 2018 Environmental Impact Report (EIR) for the proposed sewer plant. It recommended moving the project outside the watershed. Rather than addressing this concern and others directly, the City (FEIR) merely referenced back to the EIR with no new information or stated more studies would be forthcoming. Those studies were not forthcoming in the August Addendum to the FEIR nor have they been forthcoming to date. (Letter and Response begin on page 138 of 390) http://www.morrobayca.gov/DocumentCenter/View/11985/WRF-Final-EIR?bidId=
CAL does not agree with the mayor’s statement, “This project and the facility site have been fully vetted…over the last 6 years…and which will protect the estuary.” It’s worth noting that the latest rendition of the sewage plant has only been known since last year, 2018, when the EIR was circulated, not for 6 years.
The City’s threat of increasing costs should the public question their direction is an ongoing mantra. The City Council acknowledged the night they chose the South Bay Blvd. (SBB) site that it was the most expensive of the site options. If the Council had been concerned about cost, then they would have selected a different site.
No other site has the additional number of new pipelines, additional number of new pump stations, additional number of easements and encroachments as the SBB site. To eliminate the $40 million cost of this 3.5-mile pipeline conveyance system would be a savings. That’s $40 a month less on a family bill. And $40 less on everyone’s bill is double the savings that only qualified low-income households currently receive with a 10% discount ($17-20).
Consequently, in addition the Quintana Road/Roundabout business district, which is a major sales tax generator, will experience business loss, possible closure and job loss. Currently, trenching the full width and length of Quintana and under the Roundabout is scheduled to take 18 months.
The City likes to state that Morro Bay’s “water and sewer rates [are] on par with our neighbors.” This statement does not match the data in the May, 2019, Atascadero City Council staff report. Even prior to the latest rate increase, Morro Bay had the most expensive sewer rates of any SLO County city.
https://www.atascadero.org/files/PW/Prop%20218/Prop%20218%20Staff%20Report%20-%20Wastewater%20Rate%20Change.pdf (See the bar graph at the bottom of page 5)
Some residents are focused on the possible reclamation, clean water component of the proposed facility. However, the City has not produced the definitive study to show that reclamation is even possible in the Morro Valley. If a reclamation component is feasible, it is not SBB site specific.
On October 22, the count for verifying signatures on the referendum petition concluded. The petition had more than the minimum required 10% of voters in the last general election.
On November 12 the City Council will decide whether to rescind the prezoning ordinance themselves or put it to a vote of the people.
CONTACT – Dan Sedley, Co-Chair CAL @ (805)772-7327
MORRO BAY NATIONAL ESTUARY PROGRAM
Citizens for Affordable Living believes the commentary submitted by MBNEP, in response to the Morro Bay City’s Draft Environmental Document (DEIR) supports CAL’s referendum position — that the 27 acre parcel located at north end of South Bay Blvd., should not be pre-zoned for a public facility, i.e. wastewater treatment facility.
MBNEP to MB City
In response to MBNEP, the Final Environmental Impact Report (FEIR) pages 10-128, refers back to the DEIR, or states that environmental concerns would be addressed in future plans and permitting. WTF plans and permits were not a part of the August 2019 Addendum to the FEIR. Therefore, when such plans and permits are presented, they will not be subject to comment by the MBNEP, or the public.
ADDENDUM 2019 (EIR)
MORRO BAY’S WATER CONTAMINATION
Morro Bay, California’s Version of Flint Michigan — August 27, 2019
READ Research Anaylsis
Larry Truesdale Ph.D.
NITRATES IN DRINKING WATER
Analysis of the GSI Technical Memorandum — June 2, 2019
READ Analysis Report
Author Larry K. Truesdale holds a Ph. D in Chemistry and a Minor in Economics. During his professional career, he directed a large, multidisciplinary research group, while managing $100M collaborations of various disciplines. Following retirement, Larry has contributed as editor for international chemistry journals. He has the annual responsibility to validate data of over 100 research reports in support of the authors’ conclusions, that these research analyses meet highest scientific standards, for further scientific review and publication.
REFERENCES: 1. GSI Water Solutions, Inc. Technical Memorandum, Morro Bay Water Reclamation Facility Groundwater Modeling, April 19, 2019, From: Dave O’Rourk and Tim Thompson, To: Eric Casares with copy to Rob Livik. 2. GSI Water Solutions, Inc. Final Report, Lower Morro Valley Basin Screening-Level Groundwater Modeling for Injection Feasibility, May 16, 2017. Prepared for Michael K. Nunley & Associates and the City of Morro Bay. 3. California Coastal Commission Sea Level Rise Policy Guidance, Final adopted Science Update, November 7, 2018, Chapter 3, Sea level Rise Science. 4. DUDEK 2012 Recycled Water Feasibility Study, March 9, 2012. Prepared for the City of Morro Bay and Cayucos Sanitary District Wastewater Treatment Plant Upgrade Project. 5. Cleath & Associates Morro Basin Nitrate Study, Prepared for the City Of Morro Bay, December 2007. 6. The “Morro Bay Nitrate Study”: Issues and Concerns. Richard E. T. Sadowski, Marls Jo Burton, Brian Stedjee, April 2008. 7. Larry Truesdale, Bay News, “The Myth of Water Independence”, August 2018. https://calmorrobay.com
MORRO BAY CITY COUNCIL REGULAR MEETING – SEPTEMBER 11, 2018 – PUBLIC HEARING Item B-1
The meeting reconvened at 8:37 p.m. with all members present. https://youtu.be/-gapX14CQmE?t=5s
The Clerk announced twelve timely submitted protests had been received since the last tally, bringing the total to 2,158, not including those delivered by Ms. Donnelly. Mr. Pannone advised the Council regarding its options related to the 1,000 incomplete protests that had been submitted by Ms. Donnelly earlier in the evening.
Following discussion, there was Council concurrence not to accept those 1,000 additional incomplete protests submitted based on Ms. Hawley’s statement the votes were cast before the 218 process began, were cast on an undefined issue and did not include a date. Further, the Council determined there had been ample opportunity during the protest period to resubmit a complete protest, if desired. There was discussion about the desire to validate all the protests received based on the belief there are many invalid protests in the rough count of 2,158.
MOTION: Council Member Davis moved the Council adopt both water and sewer (wastewater) surcharges through the adoption of Resolution No. 71-18 for the proposed Water Reclamation Facility. The motion was seconded by Council Member Headding and carried unanimously, 5-0.