Case Study City of Gallup Wastewater Treatment Plant

Case Study: City of Gallup Wastewater Treatment Plant and Collection System Upgrades New Mexico Infrastructure Conference October 24, 2019

Agenda Background Summary Past of Problems Approaches Current Approach Original Project Scope Current Project Scope Financing Questions and Answers

Background – City of Gallup Founded Historic in 1881 – Mc. Kinley County Rt. 66 City 2018 Population of 21, 929 13. 4 square miles Wastewater Flows WWTP Influent Average Daily Flows – 2. 25 MGD WWTP Influent Peak Flows – 3. 0 to 3. 5 MGD WWTP Permitted for 3. 5 MGD Age of Collection System Oldest Lines in use circa 1925

Background – Typical WWTP Operation

Background – City of Gallup Wastewater Treatment Plant Activated Sludge Plant Upgrade Project in early 2000’s created problems Primary Treatment Capacity Overbuilt – Four Primary Clarifiers No As-built Drawings provided by contractor or engineer Problems developed with electrical systems over time BIGGEST Problems – (1) ODOR caused by improper Primary Treatment (2) High Quality Effluent was not being produced

WWTP Summary of Problems – Symptoms and Causes Symptoms Excessive odors Large amount of biological scum floating in the chlorine contact basin Treated effluent discharging significant quantities of foam and solids Causes Design and operation of the digesters were cause of excessive odors Solids from the primary clarifiers are routed directly to the uncovered aerobic digester – NOT Common – Known to cause excessive ODOR Digester aeration system is significantly undersized – confirmed by the supplier of the aeration equipment Overloaded digester aeration system acts as an ‘air stripper’ to drive odorous gases into the air

Problems – Current Approach Advertised Request for Proposals (RFP) in June 2016 – Design, Build, Operate (DBO) Selected CH 2 M for award transitioned into O&M Role in October 2016 Immediate Repairs to a Number of Systems at WWTP Immediate Change in Treatment Process

Problems – Current Approach WWTP Operations and Processes were modified Administrative Changes Fats, Oils and Grease (FOG) ordinance enforcement moved from Code Enforcement under Planning and Zoning to Water and Sanitation Department FOG compliance inspections are now the norm in the City Spot checks of septic haulers dumping at WWTP Compliance Audits are now part of everyday business Upgrades to Wastewater Collection System as part of ICIP process Have replaced three of five lift stations Completed projects in areas with hydraulic and SSO issues Capital Improvement Project at WWTP

Project Scope Part of the DBO contract award to CH 2 M (now Jacobs) involved the design and build out of improvements at the WWTP (1) Improve Quality of Treated Effluent (2) Reduce Odor (3) Improve Energy Efficiency

Project Scope Improve Quality of Treated Effluent Convert Primary Clarifier (one of four) to a Grit Removal Chamber Install Cyclone Separator Install Grit Washer Reduce Odor Grit Removal Process eliminates movement of Primary Sludge to Digestors Management of RAS/WAS and Solids reduces odor potential Increase Energy Efficiency – LOWER OPERATIONS COSTS Less electrical usage for aeration basin and oxidation ditch Brought entire plant up to current electric code Installation of Motor Control Center and Control panels – increase O&M efficiency

Project Scope Capital Improvements – Great Idea, but how do we pay for it? ! Wastewater Rates had been stagnant for years One of the lowest sets of rates in New Mexico Rate increase? Can’t move to quickly – economic development could be hindered

Project Scope - Finances City Utility contracted Royal Bank of Canada’s (RBC) Albuquerque Office for financial plan development for all utilities Recommended immediate 40% rate increase to meet all capital needs at once Not acceptable – initial 9% increase was approved – capital projects are being phased Project Finance? !? New Mexico Environment Department Clean Water State Revolving Fund (CWSRF) Loan $2. 3 million Amortized over 20 years 0. 6% Interest Rate

Project Scope - Finances OK – great, we borrowed money – how do we pay it back? ! Part of DBO Contract Negotiations with CH 2 M (now Jacobs) Upon completion of construction of design/build project, annual service fee reduced $110, 000 Cost reductions due to Lower electrical costs Lower solids handling costs (hauling sludge) Loan Specifics $2. 3 million Amortized over 20 years at 0. 6% interest Annual Payment of ~$140, 000 ANNUAL COST SAVINGS CLOSE TO ANNUAL LOAN PAYMENTS

Current Scope – Close to Complete WWTP ICIP Project Construction Completed Commissioning Ongoing – moving toward Final Acceptance CWSRF Loan Repayments begin 1 Year after final acceptance

Cyclone Separator

Electrical Upgrades - MCC

Pumps – Grit Chamber

Grit Washing Process

Current Scope and Financing Had additional needs to upgrade and rehabilitate Collections and Treatment Systems 2015 Legislative Appropriation of $150, 000 Completed Preliminary Engineering Report WWTP Headworks Project would double plant capacity AND eliminate backwater issues in Collections System due to bad hydralics Bundled Headworks Project and Other Collections Systems Project together – Applied to EPA for WIFIA Financing Water Infrastructure Finance and Innovation Act

Current Project Scope and Financing EPA offered financing up to $20 million to City of Gallup at 3. 25% Interest Rate EPA also referred our application to NMED’s CWSRF Administrators in the Construction Programs Bureau NMED initially offered financing for up to $14. 2 million at 1. 25% interest rate NMED worked with City of Gallup Offer – modification of current loan Increase loan to $16. 5 million Keep 0. 6% interest rate City can submit justification on a project by project basis for 30 year amortization vice 20 year

Wait a minute…Financing? How will the City afford loan payments for more work? Current potential for cost savings $350 -500 k annually – Evoqua Odor Control System $150 k annually – Sludge hauling to landfill Need to make up ~$100 -200 k annually via rate increases Spread out over all rate payers, looking at 6 -12% increase (total) over next 3 -4 years

Current Project Scope Project WWTP CIP WWTP Headworks Main Sewer Interceptor - WWTP to Airport Wash Allison Sewer Interceptor Principle Borrowed $ $ #Effluent Pump Station Upgrades with Line Repair $ *Design, Management, QA, Planning, Cultural and Env $ Totals $ 2, 240, 000 5, 468, 387 1, 686, 978 2, 638, 762 1, 700, 748 2, 750, 000 16, 484, 875 Date Repayment Starts (Estimated) 1/1/2020 1/1/2022 1/1/2023 1/1/2024 1/1/2025 Annual Repayment $ $ $ 119, 190 290, 971 89, 764 140, 408 90, 496 $ 146, 327 $ 877, 155 Interest Rate **Term 0. 60% 20 year payback

Clean Water State Revolving Fund Administered by NMED VERY Favorable Terms Staff and Management Knowledgeable Easy to work with Efficient Innovative

Clean Water State Revolving Fund The New Mexico Environment Department manages the Clean Water State Revolving Loan Fund Program (CWSRF). The CWSRF program provides a source of low-cost financing for a wide range of wastewater and storm water projects that protect surface and ground water. Funds may also be used for projects that control non-point source water pollution, such as a solid waste and septic tank installations. The CWSRF program was established in 1986 pursuant to the Wastewater Facility Construction Loan Act and the Federal Clean Water Act and provides low-interest loans with a repayment period of up to thirty years. Repayments are cycled back into the fund and used to pay for future clean water projects.

https: //www. env. nm. gov/construction-programs/cleanwater-state-revolving-fund-cwsrf/

CWSRF Contact Information NMENV- cpbinfo@state. nm. us Call (505) 827 -2806

Conclusion “Sometimes you just have to jump out the window and grow wings on the way down. ” ― Ray Bradbury

Questions and Answers Caution – if you don’t have questions, I’m going to take you on a virtual tour of Gallup’s Wastewater Treatment Plant… https: //www. gallupnm. gov/619/Wastewater-Treatment-Plant https: //youtu. be/gq 0 d 9 K 2 f 2 pw