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'fl_-V. .•.--...- -, •-kf 1I.11 '1 TECHNICAL MEMORANDUM CRW Engineering Group, LLC r 3940 Arctic Blvd., Suite 300 RW (9 Anchorage, 99503 (907) 562-3252 phone (907) 561-2273 fax ENGINEERING GROUP LLC www.crwenq.com Project: North Seward Water Storage Tank (20204.00) Date: March 22, 2011 Subject: Tank Sites Summary Memo (Rev. 1) By: Pete Bellezza, P.E. Introduction CRW has been providing technical support to the City of Seward for the on-going site selection effort for the new North Seward water storage tank. CRW has evaluated a number of sites separately, and this memo provides a summary for each of these sites. The summary includes a site description, advantages/disadvantages of each site, rough order of magnitude project costs, and operation and maintenance costs. The purpose of the new North Seward water storage tank is to provide additional storage capacity at the north end of Seward, and to provide chlorine contact time for disinfection of the City's water supply. The new tank can also accommodate the addition of fluoride to the water supply. The three sites evaluated are: 1) Kenai Peninsula Borough property West of Well House No. 6 (Appendix B, Sheet 1) 2) Gateway Subdivision — Northeast Corner (Appendix B, Sheet 2) 3) Gateway Subdivision — North of Unimak Circle (Appendix B, Sheet 3) Development of the new water storage tank and associated facilities will require a site area of approximately 1 to 1.5 acres. The water storage tank will have a capacity of 600,000 gallons (60 foot diameter/30 foot high tank) and will be constructed of welded steel; the tank will be insulated to protect the water from freezing. An energy efficient building will house controls, chlorination equipment, fluoridation equipment, and pressure pumps as required for each site. In addition, piping will convey water from the wells directly to the new tank. It has been assumed that each site will be developed with the pressure pumps and piping necessary to eliminate the dated Swetmann Booster Station. Existing Water System The City of Seward's water source consists of five deep groundwater wells at the Fort Raymond Well Field, which taps the Japanese Creek aquifer: 1) Well No. 2 — 800 gpm 2) Well No. 3 — 350 gpm 3) Well No. 4 — 1,300 gpm North Seward Water Storage Tank Tank Sites Summary Memo March 22, 2011 Page 2 of 7 4) Well No. 5 — 850 gpm 5) Well No. 6 — 1,200 gpm The current method of chlorination consists of chlorinating the water supply at the well source. Each well house has a gaseous chlorination system that chlorinates the water as it passes from the well directly into the distribution system. Because the treated water passes through the distribution system prior to reaching the existing water storage tanks, chlorine contact time is inadequate prior to the water reaching the first customer. The new water storage tank project will collect and chlorinate the water from all wells, and provide contact time prior to the water entering the distribution system. The City's distribution system consists of 115,000 feet of water mains sized between 4- inches and 16-inches in diameter. The well pumps pressurize the water which passes through the distribution system and fills the two water storage tanks at Lowell Canyon. The Lowell Canyon tanks "ride" on the water distribution system, that is, the wells pump water through the distribution system and up into the tanks (serving customers along the way). When the tanks are full, a signal is sent to the wells to shut them off, then the water backflows from the tanks into the distribution system meeting water demands. Once the water level in the tanks fall to a preset elevation, a signal is sent to the wells to start, completing the cycle. There are three pressure zones in the City's distribution system: 1) Pressure Zone 204 serves the majority of the City's lower elevations. The water wells pump into this pressure zone and the Lowell Canyon tanks "ride" on Pressure Zone 204. 2) Pressure Zone 343 generally serves the upper reaches of Gateway Subdivision. Water to Pressure Zone 343 is supplied from Pressure Zone 204 by the Swetmann Booster Station pumps. 3) Pressure Zone 295 serves the Forest Acres area of North Seward including the Seward High School. This pressure zone is supplied by gravity from Pressure Zone 343 at two locations: the Swetmann PRV and the Forest Acres PRV. There is a third water storage tank at Gateway Subdivision. The Gateway Subdivision tank is supplied through the Pressure Zone 343 distribution system via the Swetmann Booster Station, located near Swetmann Avenue and Benson Drive. Similar to the Lowell Canyon tanks, the Gateway Subdivision tank "rides" on Pressure Zone 343. It is assumed that the new North Seward water storage tank project will incorporate the necessary pumps and piping so the dated Swetmann Booster Station may be eliminated. The three water storage tanks have the following capacities: 1) Lowell Canyon Tank No. 1 — 200,000 gallons 2) Lowell Canyon Tank No. 2 —400,000 gallons 3) Gateway Subdivision Tank — 500,000 gallons North Seward Water Storage Tank Tank Sites Summary Memo March 22, 2011 Page 3 of 7 Site No. 1: Kenai Peninsula Borough property near Well House No. 6 Site No. 1 is located north of the Seward Elementary School and west of Well House No. 6 (Appendix B, Sheet 1). The site has good access from Hemlock Street, and is adjacent to the new distribution and well manifold piping constructed in 2010. Site No. 1 (Lot 8A-1, Fort Raymond Subdivision Replat Number 2) is owned by the Kenai Peninsula Borough (KPB). The proposed site would be 155 feet wide x 285 feet deep to accommodate the tank, a building, and the necessary yard piping. This site is located above the City's Fort Raymond Well Field aquifer and a future well could be developed at the site. The existing well manifold piping would convey water from the Fort Raymond Well Field to the site, where it would be chlorinated and fluoridated prior to passing into the tank for contact time. It may be feasible to connect the piping from all the wells through the Well No. 6 well house to utilize the existing chlorinator in that facility. It may be necessary to either throttle or replace the existing well pumps since they would be pumping against less head than they see currently. Since the elevation of Site No. 1 (88 feet) is below the elevation of the Lowell Canyon tanks (177 feet), booster pumps would be required to pressurize the water from the new tank into the Pressure Zone 204 distribution system (see Appendix A, Figure 1). The booster pumps would allow good control of the pressure in the water system with relatively simple controls: water would be pumped from the wells into the new tank as required to keep the tank full; booster pumps would pump the treated water into the distribution system until the Lowell Canyon tanks were full, then the booster pumps would turn off; once the level of water in the Lowell Canyon tanks fell to the pre-set level, the booster pumps would start again. A high demand pump would be installed to provide large flows (such as during fire events) when the Lowell Canyon tanks are out of service for maintenance. A second set of pumps along with an additional 1,800 feet of transmission main piping would be constructed to convey water from Site No. 1 to the Gateway Subdivision tank (elevation 316 feet). Operation of these pumps would be controlled by the level of the water in the Gateway tank, similar to the Lowell Canyon tank controls. These pumps and piping would eliminate the Swetmann Booster Station. The advantages of Site No. 1 are: • Site control — the site is publicly owned by KPB • Good access to the site • Pressure Zone 204 distribution system piping is adjacent to the site • Well manifold piping is adjacent to the site • Site located over Fort Raymond Well Field aquifer for development of a future well • Booster pumps allow good control of distribution system pressure with simple controls • High demand pump would allow both Lowell Canyon tanks to be taken out of service at the same time for maintenance North Seward Water Storage Tank Tank Sites Summary Memo March 22, 2011 Page 4 of 7 The disadvantages of Site No. 1 are: • Booster pumps run continuously until Lowell Canyon tanks are full • Tank elevation is below the Lowell Canyon tanks so storage volume is unavailable during power outage without an emergency generator • Existing well pumps would need to be throttled or replaced Site No. 2: Northeast Corner of Gateway Subdivision Site No. 2 is located at the northeast corner of Gateway Subdivision where the North/South segment of Hemlock Street right of way terminates (Appendix B, Sheet 2). Access to the site would be by a short section of new roadway from either Hemlock Street or Afognak Avenue. Site No. 2 (Tract C-1, Gateway Subdivision Addition No. 1) is owned by Adventure Investment (Doug Lechner & Kurt Lindsey). The property owners have indicated a willingness to sell a portion of their property for the project, but would prefer a site further to the west. The proposed site would be 250 feet x 250 feet to accommodate the tank, building and yard piping. It is unknown if development of a municipal water well is feasible at this site. Site No. 2 would require 2,100 feet of water transmission main to convey water from the Fort Raymond Well Field to the site. An additional 2,100 feet of water main would be required to convey the chlorinated and fluoridated water back to Hemlock Street at Cedar Street to connect to the Pressure Zone 204 distribution system. The elevation of Site No. 2 (200 feet) is above the elevation of the Lowell Canyon tanks (177 feet), providing an additional 10-11 psi to the system, so water will flow by gravity from the new tank to the Lowell Canyon tanks (see Appendix A, Figure 2). A control valve will be necessary at the new tank to shut off the water when the Lowell Canyon tanks are full. Site No. 2 will require the water to be pumped an additional 26 feet above the elevation that the wells currently pump to at the Lowell Canyon tanks. It is anticipated that the existing well pumps will be capable of pumping water to Site No. 2 without any modifications. A set of pumps and an additional 600 feet of transmission main piping would be constructed to convey water from Site No. 2 to the Gateway water tank (Pressure Zone 343). Operation of these pumps would be controlled by the surface elevation of the water in the Gateway tank. These pumps and piping would eliminate the Swetmann Booster Station. The advantages of Site No. 2 are: • Lowell Canyon tanks can be filled by gravity from the new tank • No modifications necessary to existing well pumps • Both Lowell Canyon tanks can be taken out of service at the same time for maintenance North Seward Water Storage Tank Tank Sites Summary Memo March 22, 2011 Page 5 of 7 The disadvantages of Site No. 2 are: • Property must be acquired from private ownership • Requires 2,100 feet of dual transmission mains to connect to well manifold piping and Pressure Zone 204 distribution system piping • Requires 500 feet of new roadway to access site • Unknown potential for new well, but superior to Site No. 3 since is it further to the east Site No. 3: Gateway Subdivision — North of Unimak Circle Site No. 3 is located north of Unimak Circle and south of the Japanese Creek levee (Appendix B, Sheet 3). Access to the site would be from Unimak Circle. Site No. 3 straddles property owned by the City of Seward (Tract A, Gateway Subdivision Amended) and property owned by Adventure Investment (Tract C-1, Gateway Subdivision Addition No. 1). As noted previously, Adventure Investment (Doug Lechner & Kurt Lindsey) has indicated a willingness to sell a portion of this property for the project, and would prefer Site No. 3 over Site No. 2. The proposed site would be 250 feet x 250 feet to accommodate the tank, building, and yard piping. It is unknown if development of a municipal water well is feasible at this site. A water well siting study prepared by Golder Associates in July 2010 indicated this area has potential for a high yielding well assuming: • Bedrock is deep enough to have a significant thickness of loose alluvial deposits • A shallow water table is present to create significant thickness of available drawdown in the well • Dense, finer sediment glacial deposits are not present before encountering bedrock The further a well is placed to the east, such as near Site No. 2, the less likely it is to encounter shallow bedrock and thus the more likely the potential for a high yielding well. Site No. 3 would require 3,300 feet of water transmission main to convey water from the Fort Raymond Well Field to the site. An additional 3,300 feet of water main would be required to convey the chlorinated and fluoridated water back to Pressure Zone 204 on Hemlock Street at Cedar Street. The elevation of Site No. 3 (290 feet) is above the elevation of the Lowell Canyon tanks (177 feet), so water will flow by gravity from the new tank to the Lowell Canyon tanks (see Appendix A, Figure 3). A control valve will be necessary at the new tank to shut off the water when the Lowell Canyon tanks are full. In addition, a new PRV station will be required near the connection to Pressure Zone 204 (Hemlock Street at Maple Street) to prevent over-pressurizing the distribution system. The existing well pumps are not capable of pumping water to the elevation of Site No. 3 without an intermediate booster station. The booster station would be constructed near the Forest Acres PRV (Hemlock Street at Afognak Avenue) at elevation 180 feet. North Seward Water Storage Tank Tank Sites Summary Memo March 22, 2011 Page 6 of 7 A set of pumps and an additional 300 feet of transmission main piping would be constructed to convey water from Site No. 3 to the Gateway water tank (Pressure Zone 343). Operation of these pumps would be controlled by the surface elevation of the water in the Gateway tank. These pumps and piping would eliminate the Swetmann Booster Station. The advantages of Site No. 3 are: • Lowell Canyon tanks can be filled by gravity from the new tank • Both Lowell Canyon tanks can be taken out of service at the same time for maintenance The disadvantages of Site No. 3 are: • Property must be acquired from private ownership • Requires 3,300 feet of dual transmission mains to connect to well manifold piping and Pressure Zone 204 distribution system piping • Requires a booster station to get water from wells to site • Requires a PRV station to connect to Pressure Zone 204 distribution system piping • Higher operating cost because all City water would be pumped above Pressure Zone 204 • Potential for new well unknown Project Cost Estimates Rough order of magnitude project costs were prepared for each alternative tank site (see Appendix C). Construction costs include a 25% construction contingency. Total project costs include administration, engineering, permitting, and construction administration which are calculated based on a percentage of the construction cost: • City of Seward Administration — 5% of Construction Cost • Engineering & Permitting — 10% of Construction Cost • Construction Administration — 15% of Construction These project cost estimates do not include the cost of obtaining site control for the tank sites. Construction Total Project Cost Cost Site No. 1: KPB Property Near Well House No. 6 $3,840,000.00 $4,990,000.00 Site No. 2: Northeast Corner of Gateway Subdivision $3,330,000.00 $4,330,000.00 Site No. 3: Gateway Subdivision- North of Unimak Circle $3,940,000.00 $5,120,000.00 North Seward Water Storage Tank Tank Sites Summary Memo March 22, 2011 Page 7 of 7 O&M Cost Estimates Operation and maintenance (O&M) cost estimates were prepared for two of the alternative tank sites — Site No. 1 and Site No. 2 (see Appendix D). The O&M costs include labor, materials for routine O&M and repairs, electricity, chemicals, heating fuel, and equipment replacement costs (pumps, piping, tank, building, generator). Equipment replacement costs are based on an 80-year life for buried piping, 50-year life for the tank and building, and 20-year life for pumps and generator. Even assuming smaller well pumps (75 hp) versus the existing 125 hp well pumps, Site No. 1 uses about $43,000/year more in electricity due to the operation of the Booster Pumps (60 hp) that would be needed to fill the Lowell Canyon tanks. Labor/ Materials/ Equipment Chemicals/ Replacement Total Annual Fuel Electricity Cost O&M Cost Site No. 1: KPB Property Near Well House No. 6 $19,043 $101,107 $292,876 $413,026 Site No.2: Northeast Corner of Gateway Subdivision $18,390 $58,129 $270,494 $347,013 End of Memorandum ( Ithi July 08, 2011 North Seward Water Storage Tank A In the Mid 90's,the need for additional water storage capacity was identified. This "need" was based on the City's continual battle with maintaining adequate water levels in the two water storage tanks during high water demands during the summer months. Discussions with various administrations culminated in the desire for an engineering study to be funded by the ADEC Municipal Loans and Grants program. Reasoning for this avenue of funding was: The Water Enterprise Fund had no money. After failing to qualify for an ADEC funded grant, it was determined that the priority should be to get the Water Enterprise Fund on a sound financial foot. This resulted in a cooperative effort between Public Works staff and the Finance Department to look at fiscal solutions (studying the R.W. Beck water rate study and implementing their recommendations). Through the 2000's the Public Works Department and the Finance Department lobbied and slowly gained administration support to raise rates. Concurrently,the Public Works staff, applied for, and were denied funding on several occasions from ADEC's Municipal Loans and Grants. The theme for the denial's were consistently the financial condition of the Water Enterprise Fund. In 2004,the Department of Environmental Conservation Municipal Loans and Grants, contracted with Boise State to assist with Financial Audits and make recommendations to communities regarding rate setting and administrative changes to better leverage their financial affairs in a manner that would increase the likelihood of a successful grant and or loan application.Two of the major changes were,the separation of the Water and Sewer Enterprise Funds and a substantial rate increase. Implementing of these changes was done in 2005, and in the course of two years, the Water Enterprise Fund had gained the financial stability that was needed. As a result,the City was successful in garnering a grant for$3,600,000 (that was vetoed by the Governor)for the Third Avenue Water Line upgrade. The ADEC Municipal Loans and Grants personnel offered the City of Seward a low interest loan (1.5 %) as an alternative source of funding to complete this important project. We began payments on this loan in 2011. In 2009,the Water Department administrative staff, completed their preliminary research of the Site selection of the new North Forest Acres Water Storage Tank. During this process, it was identified that the Seward Water Distribution System was unique and required a closer look at "true" costs associated with the new water storage location. ARRA funding indicated the potential for partial funding of the new tank, and CRW was instrumental in providing final engineered drawings for Phase I of the North Forest Acres Water Storage Tank Project in time for receipt of ARRA funds. Phase I was completed in 2010 (last year), and CRW has continued to assist in the engineering and cost estimates associated with the various site selection options. The first Technical Memorandum for this project was completed in January of 2011. Public Works staff reviewed the memorandum, made recommendations, and the final Tech. Memo was completed March 22, 2011. Upon receipt of the March 22, 2011 Technical Memorandum,the Public Works staff entered into discussions with the owners of the preferred tank site. Those discussions have moved forward, and currently we have a "Summary Appraisal Report" conducted by MacSwain Associates LLC, in hand. It is anticipated that by the end of July,the staff and the property owner will have reached a tentative agreement. Issues associated with the acquisition of the preferred property will begin at that time (platting, subdivision agreement, purchase agreement, etc.), with the package coming to the Council for approval in September/October, if all goes as expected. I/I Ill Mil Johanna Kinney From: Phillip Oates Sent: Friday, July 08, 2011 2:42 PM To: Johanna Kinney Cc: Kris Erchinger; christopher.bolton@providence.org; cbrooking@akatty.com; Michelle Weston Subject: Background Information Attachments: 750K_appropriation,justification_071111_council_meeting_V2.doc Johanna, Please provide the attachment to the Council. It is a document that provides additional background information to the Council about Resolution 2011-057 (Appropriating $750,000 to Providence Seward Medical and Care Center...). Thanks. Phillip Phillip E. Oates. DBA Major General(U.S. Army, Retired) City Manager.City of Seward Direct: 907-224-4012 Cell: 907-362-1468 poates@cityofseward.net Make a difference for our community and shop Seward first! 1 Seward City Council Meeting Discussion of Appropriation to Providence Seward Medical & Care Center July 11, 2011 Primary Take-Away: These losses of $750,000 may be entirely reimbursable if Providence Seward is deemed to have met "meaningful use" requirements for its new electronic health records implementation (under a reimbursable grant program), and if we succeed in challenging the State's arbitrary reductions in cost-based reimbursement and receive the cost reimbursements that we have anticipated under the previous reimbursement methodology. Reimbursement Rate Reduction by the State of Alaska Changes in Medicaid reimbursement methodology are resulting in lower reimbursement rates from the State of Alaska to health facilities throughout the state. You will recall that Seward's rates were rebased utilizing 2009 actual costs, and under a cost-based- reimbursement scenario, we expect to recover our costs. However, the State is refusing to reimburse us for some of the costs which we legitimately incurred in 2009, and which they have previously reimbursed us for. Since we live with the rebased rates for a four- year period, cost-reimbursement decisions at the State have a four-year impact. If we received reimbursements from the State based on their past practice of reimbursement, the current level of reimbursement would have resulted in us actually "making money" for the next four years, based on higher census in the current facility. However, the State's decision to exclude costs from reimbursement is resulting in lower reimbursements than expected for Seward Mountain Haven, causing financial losses on the order of $350K year-to-date, versus the budgeted financial gain of $234K year-to- date. The State's action is adversely impacting health facilities throughout Alaska and is not unique to Seward. For example, Valdez reports that this will result in a $400,000 annual loss in reimbursements to them. It appears that the change in methodology is not driven by any change in State law or regulation. Rather, it is based on a change in interpretation by staff at DHSS. This change however, is inconsistent with past State reimbursement practice, and is contrary to federal reimbursement guidelines. For that reason, Providence Seward — and other healthcare providers in Alaska — have appealed this change in reimbursement methodology and if we do not prevail on administrative appeal, we can expect that Providence will join with other healthcare providers to seek legal remedy to the rate issue. Ultimately, if we prevail on the appeal at either the administrative or legal level, we could expect to reverse these losses and retroactively receive reimbursement to fully cover these losses. Seward Mountain Haven (census) The number of residents at Seward Mountain Haven also has a material impact on the cost-based reimbursement of the health system. The pro forma projections show us ramping up occupancy to 34.8 in 2010 with the goal of reaching 90% occupancy by 2014 (36 elders). We have had some challenges implementing the Green House Model, as evidenced by recent federal survey results. However, those challenges are being addressed in large part by providing a stronger integration of nursing oversight into the homes. During this initial transition to Green House, we have been cautious to increase the census slowly in order to avoid issues that arise when elders become more mobile in the new living environment (e.g. slips and falls), and to avoid overwhelming the staff Seward City Council Meeting Discussion of Appropriation to Providence Seward Medical & Care Center July 11, 2011 who are learning to provide the best quality of care under a new delivery model. Currently the census is 32, but it has been as high as 38 since opening the doors in October 2009, and we expect to be able to ramp up occupancy to pro forma levels as we strengthen the implementation of this new model of care. Seward Mountain Haven (FTEs) The number of employees at Seward Mountain Haven also drives costs at the facility, although cost-based-reimbursement is intended to recover those costs once the facility is rebased. Seward was rebased in 2009, before the new model of care was fully implemented at Seward Mountain Haven (doors opened October 2009). Therefore, the additional costs associated with staffing-up the facility will not be recovered until the rebasing of rates which will take place in 2013. After that time, the full costs associated with the new model of care will be included in the reimbursement rates beginning in 2014. We initially anticipated that the Green House model of care would not be more expensive from a staffing perspective, because we would replace some of the `middle management' positions with a higher number of direct care providers (at lower cost). However, in order to ensure the highest possible patient safety, and to address the transition to a new model of care, the number of FTEs in the facility has been increased. Currently, staffing at Seward Mountain Haven is at 69.3 FTEs versus the staffing in 2009 of 56, or an increase of approximately 13.3. These staffing increases are important to ensuring patient safety, and once the model is fully implemented, we will have a better idea of whether the staffing increase will continue or can be reduced. Ultimately, under the cost-based reimbursement scenario, these costs will work into reimbursements to the facility, but there is a four-year lag before the costs are fully recovered. Electronic Health Record Implementation In 2010, the Centers for Medicare and Medicaid Services announced an American Recovery and Reinvestment Act incentive grant program to encourage critical access hospitals to implement certified electronic health record ("EHR") technology aimed at enhancing the ability of health providers to improve health care quality, efficiency, and patient safety. Providence Seward participated in that program by implementing a new EHR system which is compatible with all Providence facilities in Alaska, at a cost of approximately $300,000 in 2011 ($500K total over three years). Much of this investment in software and hardware may be eligible for reimbursement depending on whether PSMC is confirmed to have met the "meaningful use" requirements as established by the Centers for Medicare and Medicaid ARRA grant. The best case scenario shows that PSMC may be eligible for reimbursement of up to $1 million over a period of four years (in excess of direct hardware and software costs). Another significant benefit to implementing the electronic health records system in Seward is that patient billing has returned to Seward and is being done at Providence Seward rather than as it was previously done outside of Alaska. The billing system was the largest patient dis-satisfier in the past few years, so addressing that concern by purchasing a system which allowed for billing to return to Seward, was a very positive Seward City Council Meeting. Discussion of Appropriation to Providence Seward Medical & Care Center July 11, 2011 outcome for residents of Seward. Seward residents can now deal with local hospital staff to address billing questions, which should represent a significant improvement in customer service. Federally Qualified Health Center The Community Health Center ("CHC") board continues to await the outcome of the application for approval as a federally qualified health center. We understand that the federal program has been significantly pared back in the current year, based on a reduction in funding of the program aimed at new CHCs. We are now told that the announcement of grant awards will be made around August 1st. If Seward is not awarded a FQHC designation, it is still possible that the CHC board may decide to ask the City to consider establishing an FQHC "look-alike" facility. Such a facility could potentially achieve many benefits of a federally qualified health center (loan reimbursement for healthcare providers, tort insurance, clinical efficiencies), but would not be eligible for the annual $600K federal grant. However, establishing an FQHC look-alike could still result in significant cost-savings over the current clinic's employed physicians model, and it could strengthen the future application for full FQHC status. More work is required to assess this potential option.