Accept the Bull Run Treatment Projects 2024 Annual Report

The purpose of this legislation is to allow Council the opportunity to review and accept the Bull Run Treatment Projects 2024 Annual Report to Council. This report informs Council of progress made over the 2023–24 fiscal year. The Water Bureau is responsible for delivering the Bull Run Treatment Projects, which include the Improved Corrosion Control Treatment (ICCT) Project and the Bull Run Filtration Projects (Filtration). These projects will protect public health and bring the City of Portland into compliance with federal drinking water regulations—the Lead and Copper Rule (LCR) and the Long Term 2 Enhanced Surface Water Treatment Rule (LT2). The Water Bureau has two compliance agreements with the Oregon Health Authority (OHA) that establish schedules for complying with the LCR and LT2. In April 2022, the Water Bureau successfully met the ICCT Project’s OHA compliance deadline. September 30, 2027, is the final compliance deadline for Filtration, which includes both the planned water Bull Run Filtration Facility Project (Filtration Facility) and Bull Run Filtration Pipelines Project (Filtration Pipelines). Together these projects will provide multiple benefits to the nearly 1 million people currently served by the Water Bureau, including protecting public health, improving water quality, and enhancing water system reliability. In April 2022, the Water Bureau brought ICCT online at our Lusted Hill Facility to further reduce potential levels of lead at customers' taps. Since then, the Water Bureau has gradually increased the pH and alkalinity of Bull Run water to make it less corrosive to lead and other metals found in some home and building plumbing. The OHA has confirmed that our corrosion control treatment for lead is optimized, bringing the Water Bureau in full compliance with the Environmental Protection Agency's LCR. Once complete, Filtration will remove Cryptosporidium and enhance the Bull Run water supply’s resilience to potential water quality impacts from fires, landslides, large storms, and other future risks. The Annual Report to Council is one way the Water Bureau shares progress with the community and City Council. The 2024 annual report is the seventh Annual Report to Council; the first was submitted in June 2018. Previous key Council and government actions related to the Bull Run Treatment Projects: May 2017: OHA approved the Water Bureau’s schedule to implement ICCT. June 2017: City Council held a work session on the variance revocation and treatment options, including comparative costs. August 2017: The Water Bureau provided additional analysis to City Council, and Council approved Resolution 37309 to submit a compliance plan for design and construction of a filtration facility. September 2017: City Council authorized the design contract for the ICCT Project (Ordinance 188620). December 2017: The Water Bureau signed a bilateral compliance agreement with OHA that requires the filtration facility to be operational by September 30, 2027. June 2018: The Water Bureau submitted the first Annual Report to Council. August 2018: City Council held a work session on Filtration. August 2018: City Council authorized use of the alternative contracting method Construction Manager/General Contractor (CM/GC) in connection with the Filtration Facility Project (Ordinance 189146). August 2018: City Council authorized the program management contract for Filtration (Ordinance 189147). December 2018: City Council authorized Resolution 37402 choosing the location, technology, capacity, and procurement method for the filtration program. June 2019: The Water Bureau submitted the second Annual Report to Council. October 2019: City Council authorized the acquisition of 1.87 acres of real property (Ordinance 189749). November 2019: City Council approved Resolution 37460 that set priority values, expectations, and a recommended option to guide the design and implementation of Filtration. November 2019: City Council authorized the design contract for the Filtration Facility (Ordinance 189778). April 2020: City Council authorized the Water Bureau to acquire certain permanent and temporary property rights necessary for construction of ICCT through negotiation or the exercise of the City’s eminent domain authority. April 2020: City Council authorized water revenue bonds to finance water system capital improvements and refund water revenue bond to utilize Water Infrastructure Finance and Innovation Act (WIFIA) financing (Ordinance 189922). June 2020: The Water Bureau submitted the third Annual Report to Council. July 2020: Report to Council recommending award of a CM/GC contract and guaranteed maximum price (GMP) for construction of the ICCT Project. December 2020: City Council authorized the design contract for the Filtration Pipelines (Ordinance 190242). December 2020: City Council authorized use of the alternative contracting method CM/GC in connection with the Filtration Pipeline Project (Ordinance 1900245). February 2021: The Water Bureau signed a WIFIA agreement with the Environmental Protection Agency. March 2021: City Council authorized purchase of two acres of real property (Ordinance 190322). June 2021: The Water Bureau submitted the fourth Annual Report to Council. July 2022: The Water Bureau submitted the fifth Annual Report to Council. December 2022: City Council authorized the Water Bureau to acquire certain permanent and temporary property rights necessary for construction of the Bull Run Filtration Projects through negotiation or the exercise of the City’s eminent domain authority (Ordinance 191094). June 2023: The Water Bureau submitted the sixth Annual Report to Council. June 2023: Report to Council recommending extension of contract with Brown and Caldwell, Inc for program management and support. June 2023: Report to Council recommending award of a CM/GC contract and GMP1 for construction of the Filtration Facility. June 2023: Report to Council recommending award of a CM/GC contract and GMP1 for construction of the Filtration Pipelines July 2023: City Council authorized the Water Bureau to construct the Filtration Facility in two phases with two GMPs (Ordinance 191368). July 2023: City Council authorized the Water Bureau to construction the Filtration Pipelines in two phases with two GMPs (Ordinance 191369). March 2024: City Council authorized the Water Bureau to amend Ordinance 191094 to acquire certain permanent and temporary property rights necessary for construction of the Bull Run Filtration Projects through negotiation or the exercise of the City’s eminent domain authority (Ordinance no. pending). March 2024: City Council authorized an emergency contract for arborist services (Ordinance 191665).

The attached Bull Run Treatment Projects 2024 Annual Report to City Council does not create, eliminate, or re-classify any positions now or in the future. The Water Bureau has finalized GMP2 negotiations with the CM/GCs for the Filtration Facility and Filtration Pipelines, which provides greater certainty about the anticipated costs to build the filtration facility and pipelines. Hearings Officers in both Multnomah and Clackamas counties approved the Water Bureau’s land use applications related to the filtration facility and pipelines; however, these approvals came with numerous conditions of approval that will require additional funds to implement. Current program funding needs have increased to $2,134,000,000 due to several factors, including schedule compression, market capacity, labor shortages and labor wage increases, and continued escalation and supply chain issues, especially for some materials and equipment. The program funding includes: Final costs for the ICCT Project Final GMP2s for the Filtration Facility and Filtration Pipelines Other WIFIA-eligible costs, such as indirect and financing costs Contingency and allowances for land use conditions of approval and other known and unknown project risks During negotiation of GMP2s with the CM/GCs for the Filtration Facility and Filtration Pipelines, the Water Bureau considered value engineering and cost savings proposals that could be implemented without sacrificing water quality and resilience goals. Securing a WIFIA loan with a very low interest rate is another key step the Water Bureau has taken to maintain water rate affordability while making these important long-term investments in the future of the Bull Run water system. Information about the program funding has been shared previously through the project website, fact sheet, and briefings to interested parties, and in response to media requests. With the approval of the GMPs, the 10-Year Capital Improvement Plan will be adjusted to absorb the additional costs. Updates to the 10-Year Capital Improvement Plan will be made in the FY 2024–25 Mayor’s Proposed Budget. There is no impact to water retail rates. Funding for Filtration is from a combination of net proceeds from revenue bond sales, a low-interest Environmental Protection Agency WIFIA loan, water sales revenue, and other construction fund revenues such as system development charges.

There are no new impacts to the community. The annual report provides updates on continued community outreach and involvement over the fiscal year. The Water Bureau is considering the full spectrum of impacts to neighbors, Indigenous peoples, underrepresented communities, low-income customers, and ratepayers. Since 2017, the Portland Water Bureau has been working to keep the community informed and engaged using multiple communication tools, including monthly e-newsletters, utility bill inserts, the annual water quality report, project videos, and social media. This fiscal year, the Water Bureau performed extensive outreach to local contracting and workforce community groups including the National Association of Minority Contractors, National Association of Women in Construction, LatinoBuilt, Portland Youth Builders, Oregon Tradeswomen, and others.