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Economic Summary of Proposed Waste Water Recycling Facility

The City of Coronado released the “Coronado Golf Course Modernization Project – 2018 Final Feasibility Study Report” which recommends the City build a waste water treatment facility in two phases.  Phase A would be a facility sized to produce 160 million gallons of recycled non-potable water per year to irrigate the golf course, the Orange Avenue medians, Tidelands Park, and Spreckels Park. Phase B would increase the facility’s output by an additional 52 million gallons to irrigate “TBD” land on Coronado.  Based on this report and other reports, the golf course, city and port authority could end up increasing their combined annual water bill by $1 million to $1.7 million per year, or $30 million to $51 million over 30 years.

CORO Feasibility Report Final 20190306
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The Report shows that Phase A would lead to a substantial increase in water prices in the first year.  The golf course would see its water rate per acre-foot raise from the $2,933 it currently pays California American Water Company (“CalAm”) for potable water to $4,254 per acre-foot for recycled non-potable water.  That is a 45% increase in price.  The remaining properties of Orange Avenue and the two parks would see their rates rise 170% from the same $2,933 per acre-foot to a whopping $7,927 per acre-foot.  This is because they would have to pay CalAm the retail price of recycled non-potable water that includes the $4,254 wholesale price plus an additional $3,673 to cover CalAm’s costs to deliver the water from the golf course to the properties.  All said and done, the combined water bill for the four properties would increase by $1 million per year or $30 million over the life of the project.

The Report also shows that Phase B could help reduce the price of non-potable recycled water by increasing the output of the facility by 52 million gallons.  This additional water would be sold by the golf course to CalAm at a wholesale rate and then resold by CalAm at a higher retail rate to other irrigation water users on island, such as the hotels, other city parks or the Navy.  If successful, the golf course would see its water rate per acre-foot raise from the current $2,933 to $3,517 per acre-foot for non-potable recycled water.  That is a 20% increase in price (instead of the Phase A 45%).  The remaining properties of Orange Avenue, the two parks and the hotels/navy/city would see their rates rise 80% from the same $2,933 per acre-foot to a still whopping $5,269 per acre-foot. All said and done, the combined water bill for the four properties would increase by $460 thousand per year and the water bill for the new hotel/navy/city customers would increase by $378 thousand per year.


Phase B is only viable if the new customers actually agree to have their potable water replaced with non-potable water and have their rates increase by 80%.  Ideally such agreement would be made before the facility is built and come in the form of a commitment covering the life of the facility.  If these sales fail to materialize, then the City of Coronado would be responsible for the costs of Phase B with no offsetting benefits and it would be even worse off than it would be with only Phase A.


There is a possibility that the Feasibility Report’s O&M costs are understated by about $700 thousand per year or $21 million over 30 years.  That report assumes the facility uses 744,000 kwh/year and pays $0.11 per kwh while the DRAFT MITIGATED NEGATIVE DECLARATION released by the city in September 2020 assumes the facility will use 3 million kwh of electricity per year and the current SDG&E all-in rate the golf course actually pays is about $0.26 per kwh. If it turns out that the actual annual electricity costs are $700 thousand higher, then the project’s cost would increase by an additional $21 million over 30 years.

Draft MND - Golf Course 9-2020
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Who will pay for these cost increases? The cost increases will roughly fall 50% to the golf course, 30% to The Port Authority and 20% to the City of Coronado. While the golf course has indicated it could raise its green fees by $10 per round to cover its costs, the City of Coronado has not indicated how it would pay for its share of the cost increases relating to Spreckels Park and Orange Avenue nor have they indicated that the Port Authority has agreed to pay the cost increases relating to Tidelands Park.  Additionally, Coronado has not discussed its possible responsibilities in the event anything with the project goes materially wrong.  Presumably the City of Coronado and its citizens are going to be the backstop guarantor of the whole project in one way or another.

by Andrew Troxel


Resident letters submitted to Coronado Electorate News & Commentary (CEN&C) are the opinions of the author and do not necessarily reflect the opinions of CEN&C. Submit letters to CoronadoElectorate@gmail.com

Click on the link below to view the City's notice of intent and draft mitigated negative declaration docs:

https://www.coronado.ca.us/government/departments_divisions/community_development/public_review


Comments regarding the Mitigated Negative Declaration must be submitted in writing and received no later than 5:00 P.M. on October 16, 2020. Please address comments to: MaeColleen Balcobero, 1825 Strand Way, Coronado, CA 92118 or at: mbalcobero@coronado.ca.us

 

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