City staff have routinely updated the Mayor and City Council on operational and uses of reclaimed water (effluent) at TMWRF. At a budget workshop in the spring of 2016 the City Council directed staff to work on alternative uses beyond returning the water to the river system or watering landscaping or crops.  City staff has participated in the analysis of two alternative programs for reclaimed water use.  The first alternative is the indirect potable reuse which would provide a mechanism to supplement the drinking water supply with properly treated reclaimed water, and the second option analyzed is the potential increase use of reclaimed water by industrial users.

POTABLE REUSE

Staff participated with other local government agencies on a state lead endeavor to develop regulations for the placement of reclaimed water into the ground for future use as domestic supply.  The resulting regulations were approved in December 2016 by the Nevada Legislative Commission and codified in the spring of this year as NAC445A. The legislation created a new highly-treated category of reclaimed water to allow for potential groundwater recharge in the future.

However, prior to actual implementation of an indirect potable reuse program, additional work must be done to evaluate treatment technologies, perform small-scale test projects, and evaluate the water resource impacts and benefits.  UNR is currently pursuing a “Water Innovation Campus” to be developed over the next three years which could be the first step in these evaluations.  In recognition of the vital role the City of Sparks plays through TMWRF and our effluent reuse system, the City of Sparks has been asked to consider being an initial partner in this effort.

INCREASED INDUSTRIAL USE

Alternatively, staff has received requests from industrial users at TRI Center for reclaimed water for use in either cooling or industrial processing applications.  Last month, TRI Center submitted a proposal for the City’s consideration.

The Tahoe Reno Industrial General Improvement District (TRI GID) is a general improvement district and political subdivision of the State of Nevada created by Storey County pursuant to Nevada Revised Statutes Chapter 318 to provide water and sewer service to TRI Center customers, currently numbering over 160.  Like similar government entities providing community services, TRI GID does not make a profit, but does cover its expenses with revenues generated from TRI GID customer usage fees.

Tahoe-Reno Industrial Center, LLC (“TRI”), the master developer of TRI Center, has received numerous inquiries from companies, including Switch and Tesla, needing high amounts of reclaimed water for business operations and energy efficiency.  

TRI GID presented to  the City of Sparks and the City of Reno  a proposal to utilize reclaimed water generated from the sanitary sewage treatment process employed at TMWRF.  The proposed project would consist of a pipeline and associated facilities, constructed, operated and maintained at TRI GID expense. The project would  transmit treated effluent from TMWRF to TRI Center for approved reuse applications. TMWRF would reserve and supply up to 4,000 acre-feet of reclaimed water annually, to be supplied year-round for TRI GID customer use, but could deliver the water in varying amounts during the year to maximize benefits for TMWRF, river flows, and water quality. Industrial use of TMWRF’s reclaimed water  could resolve short and long term load and capacity issues for TMWRF, improve water quality in the river, and facilitate continued major future regional economic development.

TRI GID PROPOSAL

While the concept of the agreement is relatively straight forward (i.e. they build, own and maintain a pipeline, we provide reclaimed water on a year-round basis) there are many aspects of the agreement that  require negotiation.  The following list of conceptual deal points were presented by TRI GID.

1. Parties agree to substitute 4,000 acre-feet of TMWRF effluent with committed water rights from the following sources as follows:
   1. 1,500 acre-feet TRI GID water rights
   2. 1,500 to 2,200 acre-feet Nevada Department of Transportation (NDOT) water rights via State of Nevada
   3. 300 to 1,000 acre-feet TMWA “community resources” water

2. TRI GID, Switch, and the State of Nevada to agree to bond and build the effluent pipeline with no cost to the Cities of Sparks and Reno.

3. TRI GID is responsible for planning, permitting, engineering and constructing all of the Effluent Project improvements in Storey County and Washoe County. TRI GID would also be responsible for right-of-way acquisitions and system improvements within TRI Center.  Each of the Cities will grant an easement for the pipeline on their property at no charge.  The costs of this work shall be responsibility of TRI GID.

4. Cities of Reno and Sparks will reserve for TRI GID and commit to deliver from TMWRF a minimum average annual demand of 4,000 acre-feet of treated effluent for duration of agreement.  The Cities and TRI GID to enter into a separate agreement for return flow management and timing of delivery of the water based on seasonal conditions.

5. All treated effluent delivered to TRI GID shall be beneficially used in an approved manner.  Responsibility for the treated water shall pass to TRI GID at the Point of Connection.  No natural discharge of treated effluent shall be permitted.  If any occur, they will be sole responsibility of TRI GID.

6. Cities may use any unused portion of the 4,000 acre-feet allocation at other disposal sites on a temporary basis if TRI GID is not fully utilizing the allocation.

7. Cities shall be responsible for providing, operating and maintaining TMWRF facilities, and for supplying treated effluent in the amount of the allocation which meets or exceeds the Category B effluent requirements as defined in NAC 445A.276 at a cost mutually agreed to by TRI GID.  

Concept level cost estimates for the improvements are:

• Rights of way - $5,000,000;
• Pipeline - $20,000,000;
• TRI Center upgrades - $31,000,000;
• Improvements in Washoe County - $500,000; and
• Water rights title work - $250,000.

The proposal contemplates that TRI and Switch will build and dedicate all necessary improvements for the proposed project to TRI GID.  State bond financing may be available for the cost of the project and some on-site infrastructure at TRI Center; however, the Nevada Governor's Office of Economic Development requires submitted applications for these bonds before the end of June 2017.  In order to apply for bonds, a preliminary agreement must be reached by all parties. All costs, including bonds, would be the sole responsibility of TRI GID.  Additionally, TRI GID will be responsible for planning, permitting, engineering and construction of all improvements within Storey County and Washoe County, including right of way acquisition and system improvements with TRI Center.

It is contemplated that the Cities of Sparks and Reno will receive payment, including incremental operation and maintenance cost, for supplying treated effluent to TRI GID at a cost to be determined and agreed to by the parties.

BENEFIT TO THE CITIES

As TRI GID does not discharge reclaimed water into the Truckee River, this project would benefit TMWRF by significantly enhancing TMWRF’s ability to meet total maximum daily loading discharge standards.

To meet National Pollutant Discharge Elimination System standards, TMWRF must achieve a complex balance between treatment plant processes, reclaimed (i.e. effluent) reuse, water rights requirements, Truckee River water quality standards, and numerous other interrelated, regional water management objectives. Chief among those are the total maximum daily loading criteria TMWRF operates under limiting the amounts of Total Nitrogen (TN), Total Phosphorus (TP) and Total Dissolved Solids (TDS) that can be returned to the river system.  As the Council is well aware, Total Nitrogen removal is greatest challenge TMWRF faces in meeting these permit criteria.  The following table presents the actual TN data for the previous four calendar years as well as what the estimated amount would have been with the proposed pipeline in place and delivering at 4,000 acre-feet.

It’s worth noting that our Total Nitrogen limit is 500 lbs./day.  TMWRF violated the limit in 2013 and was fined as a result.  Had the reuse contemplated in this proposal been in place, no violation would have occurred.   This proposal is equivalent to a no-cost to the public TMWRF plant expansion. 

Based on the above the anticipated benefits of reaching an agreement regarding reclaimed water reuse for TMWRF, both cities and the general public are:

• Deferment of future TMWRF expansion costs of $30 to $250M resulting in savings to TMWRF customers;
• Removal of potential competition in the acquisition of Truckee River water rights; and
• Promotion of a more environmentally responsible source of industrial water used in TRI Center.
• More environmentally responsible disposal of treated effluent.

It has been recommended that the benefit of any water rights overages go to TMWA.  

Due to the nature of this agreement, if staff is directed to work with TRI GID, TMWA, TRI GID, the City of Reno, and City of Sparks will need to enter into a return flow management agreement to manage the River more holistically. The Federal Water Master will need to review and approve any use of effluent water at TRI Center from TMWRF. 

1. The City Council may find staff has not developed sufficient alternative uses for reclaimed water and therefore negotiating with TRI GID is premature;
2. The City Council may have additional questions that were not answered during consideration of this item and direct the City Manager to return at a later date with additional information; or
3. The City Council may decline the proposal.

I move to direct the City Manager to negotiate with the Tahoe Reno Industrial General Improvement District, the State of Nevada, the City of Reno and the Truckee Meadows Water Authority and to prepare a draft agreement for City Council Consideration based on the preliminary agreement terms outlined in this staff report.