REPORT TO THE CITY COUNCIL
FROM: PAUL AMICO, PE, Director
Department of Public Utilities
BY: AHMED ALY, PE, Assistant Director
Department of Public Utilities- Utilities Planning & Engineering
DEBBIE KHOUNSAVATH, Project Manager
Department of Public Utilities-Utilities Planning & Engineering
SUBJECT
Title
Actions pertaining to a water connection to serve Three Palms Mobile Home Park (Council District 3):
1. Approve the First Amendment to the Water System Consolidation Agreement between Three Palms MH Park, LLC and the City of Fresno to amend the scope of work to add provisional language related to well destruction, and adjust the monthly billable amount; and authorize the Director of Public Utilities, or designee, to execute the Amendment;
2. ***RESOLUTION - Adopting the 39th Amendment to the Annual Appropriations Resolution No. 2025-179 to appropriate $629,600.00 for the Drinking Water State Revolving Fund Construction Grant for the Three Palms Mobile Home Park Drinking Water Consolidation Project. (Requires Five Affirmative Votes) (Subject to Mayor’s Veto)
Body
RECOMMENDATION
Staff recommends that City Council (Council) approve the First Amendment to the Water System Consolidation Agreement (WSA) between Three Palms MH Park, LLC (Three Palms MHP) and the City of Fresno (City), and authorize the Director of Public Utilities, or designee, to execute the amendment on behalf of the City; and adopt the 39th Amendment of the Annual Appropriations Resolution (AAR) to appropriate $629,600 for the Three Palms Mobile Home Park Drinking Water Consolidation Project (Project).
EXECUTIVE SUMMARY
Three Palms MHP was issued a compliance order by the State Water Resources Control Board (SWRCB) for exceeding the 1,2,3- Trichloropropane (1,2,3 TCP) maximum contaminant level (MCL) in its private groundwater well. To comply with the order, Three Palms MHP desires to connect to the City’s drinking water distribution system. The cost to connect is eligible for 100 percent grant funding under the SWRCB’s Drinking Water State Revolving Fund (DWSRF) program. On January 2, 2024, the City executed a Drinking Water Construction Grant Agreement (Grant Agreement) with the SWRCB to fund 100 percent of the work. Prior to commencement of work, the SWRCB requires Three Palms MH Park, LLC., the owners of Three Palms MHP, and the City to enter into a WSA. On January 30, 2025, City Council approved the WSA between Three Palms Mobile Home Park, LLC, and the City for a water connection to serve Three Palms MHP. The WSA was fully executed on February 25, 2025. The next step of the project is amending the WSA and appropriating $692,600 for the project.
BACKGROUND
The SWRCB administers the DWSRF program, which assists public water systems in financing the cost of drinking water infrastructure projects needed to achieve or maintain compliance with Safe Drinking Water Act (SDWA) requirements. The DWSRF’s Intended Use Plan identifies financing programs that prioritize and assist disadvantaged communities (DAC) to solve their drinking water problems.
The Three Palms MHP community, located within Council District 3, qualifies as a DAC per SWRCB Division of Financial Assistance criteria. The community of approximately 300 residents is located between North Golden State Boulevard and the State Route 99, north of West McKinley Avenue and south of West Clinton Avenue. The community is currently served by a single, private well and is not connected to the City’s drinking water distribution system.
In March 2018, Three Palms MHP was issued a compliance order by the SWRCB for exceedance of the 1,2,3-TCP MCL in the domestic well water. Concentrations of 1,2,3-TCP in domestic well water samples collected between February 2018 and November 2020 have been 9 to 24 times greater than the MCL allowed in drinking water, representing a persistent health risk to Three Palms MHP residents.
To come into compliance with the SWRCB and mitigate the health risk to Three Palms MHP residents, the City initiated the process of applying to the SWRCB DWSRF program to fund the consolidation of the Three Palms MHP with the City water system.
On April 28, 2021, Council approved Resolution 2021-110 authorizing the Department of Public Utilities (DPU) to submit a financial assistance agreement application to the SWRCB for a water connection to Three Palms MHP. The City subsequently submitted a grant application in the amount of $344,696. Resolution No. 2021-110 also authorized the DPU Director, or designee(s), to represent the City in carrying out the City's responsibilities under the financing agreements, including certifying disbursement requests on behalf of the City and compliance with applicable state and federal laws.
On June 8, 2023, City Council adopted Resolution No. 2023-174 authorizing the DPU Director, or designee(s), to accept funds and execute the financial assistance agreement and any amendments thereto with the SWRCB on behalf of the City for a water connection to serve Three Palms MHP.
On January 2, 2024, the City executed a Grant Agreement with the SWRCB and was awarded $392,461 in grant funding for the project. The Grant Agreement requires that the City enter into a WSA with the legal owner of Three Palms MHP water systems, Three Palms MH Park, LLC.
Prior to commencement of work, the SWRCB requires that Three Palms MH Park, LLC., the owners of Three Palms MHP, and the City enter into a WSA. On January 30, 2025, Council approved the WSA, which was executed on February 25, 2025.
Following the review of the design, DPU determined that the Scope of Work outlined in the Water System Consolidation Agreement needed to be revised. As a result, DPU is requesting approval of the first amendment to the agreement to add provisional language related to well destruction, and adjust the monthly billable amount.
On February 3, 2026, the SWRCB sent a Final Budget Approval Checklist to the City with the updated grant funding amount of $629,605, which reflects final project cost. DPU is requesting an AAR to reflect the changes in grant funding.
The City Attorney’s Office has reviewed the First Amendment to the WSA and approved as to form.
ENVIRONMENTAL FINDINGS
Staff has performed an environmental assessment for this project in accordance with the requirements of the California Environmental Quality Act (CEQA) Guidelines and have determined it is consistent with Categorical Exemption Section 15301/Class 1, Existing Facilities. The Project involves the consolidation of the Three Palms MHP’s water system into the City’s water system through minor alterations to the Three Palms MHP’s existing water distribution system and the City’s existing infrastructure. These minor alterations represent a negligible expansion in use of the impacted facilities. Furthermore, none of the exceptions to the exemption apply. This finding was formally adopted by the Council on June 8, 2023, and a Notice of Exemption was subsequently filed with the Fresno County Clerk on June 16, 2023.
The proposed action is amending the WSA to reflect the updated Scope of Work, and to appropriate money for the project. No further assessment pursuant to CEQA is required at this time.
LOCAL PREFERENCE
Local preference was not implemented because this action does not include a bid or an award of a construction or services contract.
FISCAL IMPACT
This Project has no impact on the General Fund. No matching funds are required under this financial assistance agreement.
Attachments:
First Amendment to Water System Consolidation Agreement & Grant Agreement
Resolution Adopting the 39th Amendment to AAR No. 2025-179
Resolution 2021-110
Resolution 2023-174
Final Budget Approval Checklist
Notice of Exemption
Vicinity & Location Map