Score: +1 (2/0/1)
Ventura County Grand Jury • 2012-2013

(perc). The 2012-2013 Ventura County Grand Jury (Grand Jury) investigated the policies,

Published: June 26, 2013 13 pages
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Findings and Recommendations 32 findings

F01
The Council’s actions have been made with the City’s best interest in mind. There was no evidence of wrongdoing. (FA-01-04, 06, 08, 17-18) [Ref-03, 10, 11, 14, 16, 22]
No recommendations for this finding
F02
PERC had a superior design and process that utilized six acres less land, created an aesthetic building and guaranteed financing for the project. (FA-05, 09-13, 15, 16, 19, 20, 23-29) [Ref-11, 16, 21, 27]
No recommendations for this finding
F03
Veolia had more building experience, a less sophisticated design and their projected user rate was lower. (FA-07, 12-14, 16, 21, 22) [Ref-10, 11] Recommendations
No recommendations for this finding
F04
The finalists in the WWTP bids were PERC and Veolia. [Ref-06-09]
No recommendations for this finding
F05
Several senior members of the Staff had ties to a major Veolia subcontractor. The Council sought an independent analysis. [Ref-03, 10-13]
No recommendations for this finding
F06
The Council hired Carollo to evaluate the bids. Carollo’s report favored PERC. [Ref-11, 14]
No recommendations for this finding
F07
The Council hired FCS to provide an independent financial analysis. The FCS analysis favored PERC. [Ref-10]
No recommendations for this finding
F08
City Staff recommended Veolia due to an overall lower price, lower user rates and perceived contractor experience. [Ref-07, 08, 15]
No recommendations for this finding
F09
A Special Meeting took place on April 15, 2008, to choose a final bidder. [Ref-06, 16]
No recommendations for this finding
F10
The Council chose the PERC bid, in part, after PERC agreed to enlarge the plant, when needed in the future, at no expense to the City. [Ref-06, 16]
No recommendations for this finding
F11
City Staff continued to negotiate terms and costs with PERC until May 5, 2008. [Ref-16, 17, 21, 23]
No recommendations for this finding
F12
On May 5, 2008, the Council, on a 3 to 2 vote approved the contract with PERC. [Ref-18-20]
No recommendations for this finding
F13
On the date of the award, May 5, 2008, Veolia’s BAFO was $127.4 million for thirty years and PERC’s BAFO was $125.5 million for thirty years. [Ref-02, 16-19, 21]
No recommendations for this finding
F14
The FCS financial analysis stated that Veolia’s lower level of equity investment and reliance on debt financing would create uncontrollable costs to the City. In contrast, PERC would provide less variability in its financing plan and would include specific costs. [Ref-10, 16, 23]
No recommendations for this finding
F15
The Carollo engineering report found that the Veolia design lacks redundancy for the coarse screens and grit removal. The Veolia design also relies on a common blower to back up the aeration basins and the membrane bioreactor filtration system (MBR) tanks. [Ref-11, 14, 16] 4 Santa Paula Waste Water Treatment Plant
No recommendations for this finding
F16
PERC provides facilities to potentially produce biosolids that would be acceptable for disposal at the County’s landfill drying facility. [Ref-11, 16]
No recommendations for this finding
F17
The PERC ultraviolet disinfection design produces unrestricted reuse water quality, whereas, the Veolia design would require additional disinfection improvements to meet the RWQCB requirements. [Ref-11, 14, 16, 24]
No recommendations for this finding
F18
The final Council decision occurred on May 5, 2008, and was consistent with the revised recommendations of City Staff. [Ref-16, 21, 25]
No recommendations for this finding
F19
City Staff changed their recommendation to the PERC BAFO due to significant contract improvements subsequent to April 15, 2008. [Ref-16, 21, 25]
No recommendations for this finding
F20
PERC agreed to decrease the BAFO by $24.2 million. Contract language had been modified to further protect the City’s interests. With these changes, the Staff recommended that the City contract with PERC. [Ref-16, 19, 21, 25, 26]
No recommendations for this finding
F21
Energy saving measures that PERC has implemented since the award of the contract has reduced projected costs by approximately $5 million over thirty years. [Ref-16]
No recommendations for this finding
F22
The Veolia bid offered a short-term construction loan to the City for approximately $8 million which required the City to sell bonds for the entire construction costs. [Ref-10, 16]
No recommendations for this finding
F23
The year 2008 was a catastrophic time in the financial markets. Selling bonds in that business climate was difficult or impossible. [Ref 10, 16]
No recommendations for this finding
F24
PERC’s contract provided for a future expansion when needed from 3.4 million gallons per day (MGD) to 4.2 MGD at no additional cost to the city. This provides capacity for approximately 3,200 additional homes and was valued at approximately $3 million. [Ref-06, 16, 21, 25, 27]
No recommendations for this finding
F25
PERC provided a recreational vehicle (RV) dump station for residents’ use valued at approximately $100,000. [Ref-16]
No recommendations for this finding
F26
PERC’s design used approximately seventy percent less land than the Veolia design. [Ref-14, 33]
No recommendations for this finding
F27
PERC provided guaranteed capital replacement cost for the term of the contract with no inflation risk to the City. [Ref-10, 16, 21, 25, 27]
No recommendations for this finding
F28
PERC had never built a MBR plant in California. PERC had performed over twenty design, build and operate (DBO) projects for the activated sludge processes. PERC’s MBR consultant, Trussel Technologies, is a national leader in MBR technology. [Ref-14, 16, 28]
No recommendations for this finding
F29
PERC offered a buyout clause at five-year intervals for the thirty-year contract. [Ref-16-21, 23, 25, 26, 33]
No recommendations for this finding
F30
The City finances the WWTP at a variable rate; currently near eight percent. Santa Paula Waste Water Treatment Plant 5
No recommendations for this finding
F31
The City failed to address, in the PERC contract, the high levels of chloride in the WWTP discharge. [Ref-23, 29-34]
Related Recommendations (2)
R01
The Grand Jury recommends that the City take advantage of record low bond rates to purchase the City’s WWTP. (FI-01-02)
R02
The Grand Jury recommends that the City immediately start the process to remove excess chlorides from the water. (FI-02) Response Response Required From: City Council, City of Santa Paula (FI-01, FI-02, FI-03), (R-01, R-02) Commendations The 2012-2013 Ventura County Grand Jury would like to commend the City of Santa Paula Management and Staff for their knowledge and insight as well as their co-operation during this investigation. References Ref-01. The Superior Court of California, County of Ventura. Case Summary. “PEOPLE OF THE STATE OF CALIF vs City of Santa Paula.” Case Number: 56-2007-00304441-CU-MC-VTA. September 24, 2007. Ref-02. Rea, Marsha M. “Inquiring minds want to know.” Column. Santa Paula Times. August 24, 2012. Ref-03. City of Santa Paula. Response to the Report. Fred Robinson, Mayor. September 7, 2011. Santa Paula Waste Water Treatment Plant Ref-04. Kelly, Peggy. “$470,000 fines, costs: S.P. City Council, BWQCB enter into WWTP consent decree.” Santa Paula Times. August 10, 2007. Ref-05. Kelly, Peggy. “Santa Paula’s new water recycling facility officially completed.” Santa Paula Times. December 15, 2010. Ref-06. Santa Paula, CA. Santa Paula City Council. “Special Meeting of the City of Santa Paula.” DVD. April 15, 2008. Ref-07. Santa Paula, CA. Santa Paula City Council. Special Meeting of the City of Santa Paula. “Staff Report on Water Recycling Facility Requests For Proposal.” April 15, 2008. Ref-08. Santa Paula, CA. Santa Paula City Council. Special Meeting of the City of Santa Paula. “Water Recycling Facility (WRF) – Selection of Team to Design, Build, Operate and Finance the new WRF.” April 13, 2008. Ref-09. Kelly, Peggy. “List Shortening, 2nd DBOF team pulls out of WWTP proposal process.” Santa Paula Times. December 26, 2007. Ref-10. FCS Group. Project Memorandum. April 2, 2008. Ref-11. Carollo Engineers. Project Memorandum. April 1, 2008. Ref-12. Staff writer. Ventura County Star. “Santa Paula responds to grand jury report over waste water treatment plant.” September 8, 2011. Ref-13. City of Santa Paula, Letter to Judge Vincent O’Neill. September 7, 2011. Ref-14. Luna, Ray, Mayor. “A response to Sewer choice will cost S.P. more than necessary.” Santa Paula Times. May 2, 2008. Ref-15. City of Santa Paula. Water Recycling Facility (WRF). Wally Bobkiewicz, City Manager. April 2, 2008. Ref-16. The Suntag Law Firm. “Ventura County Final Grand Jury Report of Santa Paula City Council.” Dana A. Suntag. June 30, 2011. Ref-17. Kelly, Peggy. “City Council: PERC WWTP deal is done, or at least being finalized.” Santa Paula Times. May 9, 2008. Ref-18. Santa Paula, CA. Santa Paula City Council. “Regular Meeting of the City of Santa Paula.” DVD. May 5, 2008. Ref-19. Wilson, Kathleen. “Santa Paula Council OK’s sewer plant contract: had cut cost of the project by $24 million.” Ventura County Star. May 6, 2008. Ref-20. Wilson, Kathleen. “Santa Paula hires builder for sewer on 3-2 vote. Report shows another bidder would cost less.” Ventura County Star. April 16, 2008. Ref-21. City of Santa Paula. Water Recycling Facility DBOF Agreement Recommendation. May 4, 2008. Wally Bobkiewicz, City Manager. Ref-22. Scheibe, John. “Santa Paula responds to grand jury report over wastewater treatment plant.” Ventura County Star. September 8, 2011. Santa Paula Waste Water Treatment Plant 7 Ref-23. City of Santa Paula. “Design, Build, Operate and Finance Agreement between the City of Santa Paula, a municipal corporation and Santa Paula Water Services, LLC, a Delaware limited liability company.” 2008. Ref-24. City of Santa Paula. Final Acceptance of the Water Recycling Facility. February 15, 2011. Ref-25. City of Santa Paula. “Water Recycling Facility DBOF Agreement with Pacific Environmental Corporation (PERC).” Wally Bobkiewicz, City Manager. April 25, 2008. Ref-26. City of Santa Paula. “Water Recycling Facility DBOF Agreement with Pacific Environmental Resources Corporation (PERC).” April 25, 2008. Ref-27. PERC. Risk Matrix. September 21, 2012. Ref-28. Scheibe, John. “Santa Paula deals with financial stress-Staff cuts, pay reductions continue in city.” Ventura County Star. June 25, 2011. Ref-29. Kelly, Peggy. “Santa Paula City Council inches closer to deal.” Santa Paula Times. May 2, 2008. Ref-30. Rea, Marsha M. “Inquiring minds want to know.” Column. Santa Paula Times. September 21, 2012. Ref-31. Carollo Engineers. Memorandum, Santa Paula Water Reclamation Plant Completion Evaluation. February 9, 2011. Ref-32. Newsletter. “with PERC.” Brian D. Cullen, President. May 2, 2008. Ref-33. Carollo Engineers. “Santa Paula Reclamation Plant Completion Evaluation.” Toby Weissert, John Burris and Graham Juby. February 9, 2011. Ref-34. Santa Paula Water, LLC (PERC). “Chloride Summary.” Dennis Kasper, Ph.D., P.E. May 25, 2010. Ref-35. Nolan, Kelly. “California Debt Sale Proves Costly.” Wall Street Journal. March 14, 2013. Santa Paula Waste Water Treatment Plant Glossary TERM DEFINITION BAFO Best and Final Offer City City of Santa Paula City Staff Santa Paula City Staff Class B Biosolids The type of sludge that meets the United States Environmental Protection Agency guidelines for land application as fertilizer and restrictions Consent Decree Stipulated Consent Judgment and Final Order by the Ventura County Superior Court Council Santa Paula City Council DBO Design, Build and Operate DBFO Design, Build, Finance and Operate FCS FCS Group Financial Analysts MBR Membrane bioreactor filtration system MGD Million gallons per day PERC Pacific Environmental Resources Corporation and Santa Paula Water, LLC RWQCB California Regional Water Quality Control Board Ultra-Turbulent The period in 2008 when there was a collapse Financial Period in financial markets worldwide Veolia Veolia Water Operating Systems, Inc. WWTP Waste Water Treatment Plant Santa Paula Waste Water Treatment Plant 9 This page intentionally blank 10 Santa Paula Waste Water Treatment Plant Santa Paula Waste Water Treatment Plant 11
F32
The municipal bond market is now at the lowest level since the financial crisis in 2008. [Ref-36] Findings
Related Recommendations (1)
R01
The Grand Jury recommends that the City take advantage of record low bond rates to purchase the City’s WWTP. (FI-01-02)

Commendations 3

Agency Responses 6

Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.