REPORT TO THE CITY COUNCIL
FROM: BROCK D. BUCHE, PE, PLS, Director
Department of Public Utilities
BY: PAUL AMICO, PE, Assistant Director
Department of Public Utilities - Administration
SUBJECT
Title
Actions pertaining to a treatment system for Well 345-1 (Unincorporated Fresno County):
1. Adopt a finding of Categorical Exemption pursuant to Section 15301(b)/Class 1 of the California Environmental Quality Act (CEQA) Guidelines;
2. ***RESOLUTION - Authorizing an application to the United States Department of the Interior, Bureau of Reclamation, and authorizing the Director of Public Utilities to execute a financial assistance agreement, and any amendments thereto, with the United States Department of the Interior, Bureau of Reclamation in the amount of $734,452 for a WaterSmart Drought Resiliency Projects Grant for Fiscal Year 2024 for the Well 345-1 Wellhead Treatment System Project. (Subject to Mayor’s Veto);
3. Approve the Second Amendment to the Consultant Services Agreement with Michael K. Nunley & Associates, Inc., a California Corporation, in the amount of $3,600.00 for a total increased contract amount not to exceed $141,400.00 and extend the term of the agreement to June 29, 2026, for the design of the Well 345-1 Treatment System and authorize the Director of Public Utilities, or designee, to execute the amendment;
4. ***RESOLUTION - Authorizing an exception to formal bidding procedures and award of a sole source purchase agreement with ATEC Water Systems, LLC, in an amount not to exceed $206,772.13 (Subject to Mayor’s Veto);
5. Approve the award of a Sole Source Product Purchase Contract to ATEC Water Systems, LLC, in the amount of $206,772.13, to provide and deliver the ATEC Water Filtration System to Pump Station 345-1 and authorize the Director of Public Utilities, or designee, to execute the contract.
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RECOMMENDATIONS
Staff recommends City Council adopt a finding of Categorical Exemption pursuant to Section 15301(b)/Class 1 of the California Environmental Quality Act (CEQA) Guidelines; adopt a resolution authorizing the application to the United States Department of the Interior, Bureau of Reclamation (USBR), and authorizing the Director of Public Utilities, or designee, to execute a financial assistance agreement, and any amendments thereto, with USBR in the amount of $734,452.00 for a WaterSmart Drought Resiliency Projects Grant for Fiscal Year 2024 for the Well 345-1 Wellhead Treatment System Project (Project); approve the Second Amendment to the Consultant Services Agreement with Michael K. Nunley & Associates, Inc., (MKN) a California Corporation, in the amount of $3,600.00 for a total increased contract amount not to exceed $141,400.00 and extend the term of the agreement to June 29, 2026 for the design of the Well 345-1 Treatment System and authorize the Director of Public Utilities, or designee, to sign the Second Amendment on behalf of the City; adopt a resolution authorizing an exception to formal bidding procedures and award of a sole source Product Purchase Contract with ATEC Water Systems, LLC (ATEC), in an amount not to exceed $206,772.13; and award a sole source Product Purchase Contract to ATEC, in the amount of $206,772.13, to provide and deliver the ATEC Water Filtration System (System) to Pump Station (PS) 345-1 and authorize the Director of Public Utilities, or designee, to sign the agreement on behalf of the City.
EXECUTIVE SUMMARY
The Department of Public Utilities (DPU) applied for and received a Bureau of Reclamation (BOR) WaterSMART Drought Response Program grant to construct a treatment system at PS 345-1 to treat for a manganese concentration that exceeds the secondary Maximum Contaminant Levels (sMCL). The well has remained inactive since shortly after startup, and restoring it is critical for system pressure, reliable drinking water supply, and fire suppression. The $1,468,904.00 project is funded equally by the federal grant and the DPU Water Enterprise Fund. To proceed, DPU must adopt a resolution authorizing the Director of Public Utilities, or designee, to execute and administer the funding.
DPU is also seeking approval to extend the Consultant Services Agreement with Michael K. Nunley & Associates, Inc. from June 29, 2025, to June 29, 2026. This extension will continue engineering services for the bidding, construction, and startup phases of the treatment system.
DPU recommends a sole source Product Purchase Contract for the ATEC System, which has proven effective in removing manganese at five city well sites. Utilizing the ATEC System will streamline training and allow DPU to maintain a standard parts inventory for the multiple ATEC treatment systems currently in use.
BACKGROUND
PS 345-1 is located at 185 South Burgan Avenue in an unincorporated area of Fresno County, within the City’s Sphere of Influence (SOI). The well was drilled in December 2012, and the pump station was fully commissioned in May 2020 after onsite improvements were completed.
Elevated manganese concentrations exceeding the sMCL for drinking water were identified during water quality testing after the well was commissioned. The presence of manganese poses no direct health risk, but manganese can impact the taste and aesthetic quality of the water. DPU removed the well from service and evaluated different options for manganese treatment before selecting the ATEC System to maintain consistency with the other five ATEC systems currently in service.
PS 345-1 is a critical component of the City’s southeast quadrant, and restoring it is a priority to maintain consistent system pressures and provide a reliable supply for customer consumption and fire protection. DPU entered into an agreement on June 10, 2022, with MKN to design a wellhead treatment system and the associated site improvements. The design has been completed and is ready to be advertised for bidding, and the funding agreement needs to be executed to proceed with construction.
The DPU seeks to pre-purchase the ATEC Water Filtration System, which has already been successfully implemented at Pump Stations 326, 329, 330, 369, and 370. The system has consistently demonstrated reliability, high treatment efficiency, and ease of maintenance. Standardizing this treatment equipment across well sites streamlines training and maintenance procedures, facilitates the use of a standard parts inventory, and allows for consistent performance across multiple well sites.
ATEC Water Systems, LLC, is the sole manufacturer and exclusive provider of this proprietary filtration system. No other vendor offers a comparable product with the same design specifications and performance characteristics. Consequently, the City must procure this system directly from ATEC to maintain compatibility with existing infrastructure and continuity of operations. DPU obtained a quote of $206,772.13 for the required filtration package, which includes eight 36-inch diameter vessels and associated components.
To offset project costs, DPU applied for and was awarded a $734,452.00 grant from the BOR WaterSMART Drought Response Program, covering 50 percent of the total project cost of $1,468,904.00. The remaining cost will be funded through the DPU Water Enterprise Fund. Timely procurement of equipment and constructing the treatment system and site improvements is essential to comply with the grant's conditions. Any delays in awarding the sole source Product Purchase Contract may jeopardize the project timeline and grant funding availability. On January 17, 2025, DPU received official notice of the grant award, and the next step is to adopt the authorizing resolution to authorize the Director of Public Utilities, or designee, to execute and administer the funding agreement. The City Attorney’s Office has reviewed and approved the authorizing resolution and the Product Purchase Contract as to form.
To continue engineering support during the bidding phase, construction, and commissioning of the Well 345-1 Treatment System, DPU is also requesting approval for a Second Amendment to the existing Consultant Services Agreement with Michael K. Nunley & Associates, Inc., to extend the contract term from June 29, 2025, to June 29, 2026.
ENVIRONMENTAL FINDINGS
Staff have performed an environmental assessment for the Project and have determined it is consistent with Categorical Exemption pursuant to Class 1, set forth in the CEQA Guidelines Sections 15301/Class 1 for Existing Facilities. Under Section 15301/Class 1, projects are exempt from CEQA requirements when they consist of the operation, repair, maintenance, permitting, leasing, licensing, or minor alteration of existing public or private structures, facilities, mechanical equipment, or topographical features, involving negligible or no expansion of existing or former use. This exemption includes work on existing facilities of both investor and publicly owned utilities used to provide electric power, natural gas, sewerage, or other public utility services.
The Project described herein represents the minor alteration of the already existing PS 345-1. PS 345-1 has been inactive since 2020 due to exceeding standard limits for manganese. The work solely entails the installation of a wellhead treatment system to remove naturally occurring manganese from an existing municipal potable water supply well and restore the well’s operation.
Construction of a wellhead treatment system will occur within the existing publicly owned drinking water well site. The Project will not expand the use of the existing facility, nor will it relocate any existing facilities or structures. PS 345-1 has not been in use since 2020 due to the presence of manganese, and constructing the treatment system and appurtenances involves negligible or no expansion of existing or former use. The City will be able to use the well as originally intended once the wellhead treatment system is complete.
Staff has determined that none of the exceptions to Categorical Exemptions set for in the CEQA Guidelines Section 15300.2 apply to this Project. BOR staff are currently performing an environmental and cultural compliance review in accordance with the National Environmental Policy Act. Project construction activities will not begin until the completion of this review.
LOCAL PREFERENCE
Local preference was not implemented due to DPU seeking approval of exception to the formal bidding process to award a sole source Product Purchase Contract to ATEC. The proposed Second Amendment to the Consultant Services Agreement with Michael K. Nunley & Associates, Inc. is an amendment to an existing contract.
FISCAL IMPACT
This Project has no impact on the General Fund. The total estimated cost for the Project is $1,468,904.00. The Federal share of Project costs is 50 percent, or $734,452.00, and the DPU share of costs is the remaining 50 percent, which will be funded by the Water Enterprise Fund. Allocations necessary for Fiscal Year 2026 and beyond will be included in the annual DPU budget. The City will submit Requests for Reimbursement to USBR as funds are expended for the Project.
Attachments:
Notice of Exemption
Environmental Assessment
Authorizing Resolution
Second Amendment to Consultant Services Agreement
First Amendment to Consultant Services Agreement
Original Consultant Agreement
Sole Source Resolution with attached Product Purchase Contract
Vicinity Map