Sanitary Sewer System Capacity Assurance Program (CAP) Task Force Meeting Notes

Date of Meeting: Time of Meeting: Location of Meeting: May 3, 2012 (Meeting #1) 2:00 p.m. Council Chambers, Second Floor Government Center 200 East Main Street; Lexington, KY 40507

Task Force Voting Members Present: Councilmember Tom Blues, Chair Vice Mayor Linda Gorton, Vice Chair Councilmember Steve Kay Councilmember Kevin Stinnett Commissioner Derek Paulsen Task Force Voting Members Not Present: Councilmember Chuck Ellinger Councilmember Bill Farmer Jr. Stakeholder Representatives Present: Emma Tibbs, Fayette County Neighborhood Council Tyler Campbell, Commerce Lexington Todd Johnson, Lexington Home Builders Association Others: Carolyn Plumlee, LFUCG Planning Commission Marie Copeland, LFUCG Planning Commission LFUCG Representatives: Richard Maloney, CAO Shaye Rabold, Mayors Office Charles Martin, Water Quality Chris King, Planning Marwan Rayan, Engineering Rod Chervus, Tap-on Desk Hillard Newman, New Development Paul Schoninger, Council Staff Julie Mantrom, Water Quality Consultants: Joe Herman, Stantec Bret Lavey, Stantec Eddie Mesta, Integrated Engineering Frank Harscher, ERI International The first meeting of the Capacity Assurance Program (CAP) Task Force was called to order by the Chair, Councilman Blues, at 2:00 p.m. Introductions and opening remarks were made by Chairman Blues.

CAP Presentation & Overview Joe Herman gave a presentation on the purpose and mission of the CAP Task Force. (Please see copy of PowerPoint presentation that is included as an attachment to these meeting notes.) Mr. Herman provided a general overview of the CAPwhich is a requirement of LFUCGs Consent Decree with EPA. The general purpose of the CAP is to ensure that there is adequate hydraulic capacity in the sanitary sewer system before new development or additional taps are permitted to connect. The CAP provision in the Consent Decree requires LFUCG to certify adequate capacity exists in the sanitary sewer system before authorizing new connections (flow increases). Under the CAP, LFUCG must certify that the proposed new flow combined with existing flow (and previously authorized connections) will not result in unpermitted bypasses, flow diversions or noncompliance. Hydraulic capacity certification includes verifying that: a pumping station (and force main) receiving new flow has the capacity to transmit the one-hour peak flow; the gravity sewers receiving new flow have the capacity to transmit one-hour peak flow without causing surcharged conditions; and the receiving treatment plant has capacity. The one-hour peak flow is based on a 2-year, 24-hour design storm. If adequate capacity cannot be certified, the Consent Decree includes provisions for LFUCG to utilize a banked credits system in lieu of certification. Under the banked credit system, LFUCG earns capacity credits for repairs/upgrades to the sanitary sewer system, construction of off-line storage, or removal of existing connections. Earned credits can be used to offset the flow contributions from new connections, whereby allowing development to continue without worsening existing sanitary sewer overflows (SSOs). Mr. Herman outlined key concepts and decisions that will need to be addressed by the Task Force to develop the CAP, and explained key terminology that will be used in CAP development. He also mentioned that this process could identify opportunities for the overall improvement of LFUCGs current and proposed sanitary sewer extension policies/tap-on permit issuance processes. The CAP Consultant will prepare a final report detailing Task Force recommendations with respect to policies for: o o o o o o Approving sanitary sewer extensions; Tap-on permit issuance and processes; Allocation of hydraulic capacity; Allocation of capacity credits; The return, purchase or trading of allocated capacity or capacity credits; and Any other related recommendations of the Task Force.

The CAP must be submitted to the EPA by January 3, 2013. No later than 30 days after EPA approval, LFUCG shall commence implementation of the CAP. Key Terminology of the CAP: o Recurring SSO A sanitary sewer overflow (SSO) that occurs in the same location more than once per 12 month rolling period. One Hour Peak Flow The greatest flow in a sewer averaged over a 60 minute period at a specific location expected to occur for the 2-year, 24-hour storm event.

Adequate Capacity The condition in the sanitary collection system (gravity sewers), transmission system (pumps and force mains), and treatment plant where there are no unpermitted bypasses, SSOs, or surcharge condition exists for the 2-year, 24-hour storm event. Surcharge Condition The condition when the wastewater flow in a pipe segment is greater than the pipe to carry it and the surface of the wastewater flow in a manhole rises to greater than 2 feet above the top of the pipe or within 3 feet of the manhole rim elevation, and the sewer is under pressure. (See slides 10 and 11 of PowerPoint presentation for reference diagrams.) Trade Ratio The ratio of the flow that must be removed from the sewer system (through capacity enhancing projects, storage, etc.) for each addition of flow (from new taps or development). The trade ratios were established in the Consent Decree and are geographic and activity based. Examples of these are: 1:1 for off-line storage and removal of connections in all sewersheds (with the exception of West Hickman, where it is 1.5:1); 3:1 for capacity enhancing and I/I removal projects related to a recurring SSO for all sewersheds (with the exception of West Hickman, where it is 4:1); 2:1 for capacity enhancing and I/I removal projects not related to a recurring SSO in all sewersheds. Credit Is a general term that refers to the amount of flow removed from the sewer system from a capacity enhancing project, storage, removal of connections, etc. It is calculated as the product of the flow removed and the applicable trade ratio. It is also commonly used to express the amount of flow removal needed to support a proposed flow addition. Credit Earning Activity Is an activity that removes flow from the sewer system. Examples include: sewer rehabilitation, removal of existing connections, and the addition of off-line storage for wet weather flows. Credit Spending Activity Is an activity that adds flow to the sewer system. Examples include: new tap connections and flow increases from redevelopment activity. Credit Bank Is a defined area or location within the sanitary sewer system where credit transactions are recorded. This is also referred to as the banking unit. Essential Services This is defined in the Consent Decree as health care facilities, public safety facilities, public schools, or other facilities as agreed upon in writing by the EPA and EPPC.

CAP Process Overview: o o A customer submits a request to LFUCG for capacity allocation. The request is reviewed, the additional flow is calculated, and the proposed discharge location is identified. It is determined whether there is adequate collection, transmission, and treatment capacity within the system to accommodate the additional capacity allocation.

If it is determined that adequate capacity is available , then the applicant is notified that the capacity allocation request has been approved. If it is determined that adequate capacity is not available but the capacity allocation request is from a defined essential facility, then the transaction for the capacity allocation request is deducted from the credit ledger. The applicant will then be notified that the capacity allocation request has been approved. For essential facilities, the transaction is recorded and the applicant approved regardless if there is sufficient banked credits to offset the flow addition. In cases where insufficient credits exist to offset the proposed flow addition from an essential facility, a negative account balance will result. If it is determined that adequate capacity is not available and the capacity allocation request is not from a defined essential facility, then it will be determined if there are sufficient banked credits available to offset the additional flow associated with the capacity allocation request. If it is determined that there are sufficient credits available to offset the additional flow request, then the transaction for the capacity allocation request is deducted from the credit ledger. The applicant will then be notified that the capacity allocation request has been approved. If it is determined that there are not sufficient credits available to offset the additional flow request, but there are specific short-term projects that will earn sufficient credits to offset the flow addition, then a conditional approval may be granted to the applicant. In this case, the request is approved, but is conditional upon the completion of the planned project(s) before the flow increase is allowed to occur. If it is determined that there are not sufficient credits available to offset the additional flow request, then the additional flow request will be added to a waiting list and the applicant is notified of the denial.

Mr. Herman presented an example of the CAP process using the current redevelopment of the Lexington Mall property and the potential redevelopment of the now vacant Pennington Place Apartment Complex. Both properties are in the vicinity of the Richmond Road / New Circle Road interchange. Results from recent Capacity Analysis and Sanitary Sewer Assessment reports for the area indicate that the sanitary sewer systems do not have adequate capacity, have recurring SSOs, and have prior and potential credit earning opportunities through the Remedial Measures Plan and rehabilitation programs. The example illustrated some key points that will need to be addressed during CAP development and implementation. For example: o o o o In the absence of adequate capacity and banked credits, what options does the developer have so that the project can go forward? How long will the developer have to wait for capacity to become available? How long will the developer have to construct the project before allocated capacity/credits expire? Can reserved capacity/credits be exchanged between the two properties?

What protocols will LFUCG develop to efficiently handle the Capacity Assurance Program?

Some Key Decisions to be made by the CAP Task Force: o o o o o o o Will there be a fee / deposit associated with capacity requests / reviews? Will reserved credits or tap-on permits have an expiration date? What is a reasonable review time for capacity determinations? How will the waiting list be managed? Will existing ordinances and land development processes support CAP implementation? How will disputes regarding capacity determinations be resolved? Can reserved credits be transferred / sold?

Questions and Discussion Items Throughout Mr. Hermans presentation there were several questions made by Task Force Members and Stakeholders: Councilmember (CM) Stinnett asked what is considered an essential facility? Mr. Herman answered that essential facilities are defined in the Consent Decree as hospitals, public schools, and other critical public facilities. Mr. Herman said that while EPA will permit connection of these facilities if adequate capacity does not exist, a deduction from the credit ledger must be recorded, even if it results in a negative account balance. Vice Mayor (VM) Gorton asked if the EPA mandated this ruling on defining essential facilities. Mr. Herman said the Consent Decree only permits these specific facilities to connect if there is not adequate capacityit does not mandate LFUCG to do so, and LFUCG can add other essential facilities that create a credit deficit with written approval by EPA and the state. He said it would be up to the Task Force if they wanted to further define how the essential facilities are addressed in the CAP. CM Kay asked if an existing area that once had sewer capacity is redeveloped, does that capacity remain with the property at the same level? Mr. Herman noted that we can determine the historical sanitary sewer contribution from the property and, depending on the proposed flow contribution of the proposed development, the required capacity is calculated as the net increase. The Task Force can consider what happens to unused capacity. VM Gorton asked how sanitary sewer flows are calculated. Mr. Herman explained that there are different ways to calculate sanitary sewer flows. Sewer flows can be calculated from industry standards based on the type of development. As an example, a church sewer flow is typically calculated based on the number of seats in the sanctuary. Mr. Martin also noted that Kentucky American Water records can be used in projecting sanitary sewer flows. VM Gorton asked how long Cincinnati MSDs CAP has been in place? Mr. Herman said that he thought it has been in place since 2001 / 2002. VM Gorton asked if Cincinnati MSDs CAP been audited. Mr. Herman said yes, and he was involved in that audit. VM Gorton wanted to know if the larger developers bought up all the sanitary sewer credits with Cincinnati MSDs program. Mr. Herman said that was not the case. He said that Cincinnati MSD has a one year expiration date on their sanitary sewer credits. The applicant can also apply for an

additional one year extension. However, after the one year extension expires a new application must be submitted. CM Stinnett asked if reserving sanitary sewer credits would involve a cost or fee. Mr. Herman said that in Knoxville there is a reservation fee and deposit, but in Cincinnati there is no fee. Chris King, LFUCG Planning Director, asked where the CAP would be implemented in the Planning & Zoning Approval process. Mr. Herman answered that will need to be determined by the Task Force. He stated that Cincinnati has all of their permitting and planning process tied into one overall system. CM Kay asked what our current sanitary sewer credit status is as a baseline. Charlie Martin, Director of Water Quality, said that we are in the process of calculating upgrades to the system since the Consent Decree was lodged, and approval for these credits could be submitted to EPA with the CAP in January 2013. He added that additional information on this will be covered at a future Task Force Meeting. VM Gorton asked if the sanitary sewer credits are transferrable amongst third parties. Mr. Herman said that in Cincinnati, Louisville, and Knoxville credit transfer/trading is not allowed. CM Blues wanted to know where were credits banked? Mr. Herman answered that it has been done differently in Cincinnati, Louisville, and Knoxville. In Cincinnati they identify known sanitary sewer overflows (SSOs) and everything upstream of that SSO is a bank. In other words, any new connection upstream of an SSO would have to be offset by credits earned upstream of that SSO. In Louisville they take an overall watershed approach. Each watershed would serve as a separate bank. If Lexington applied Louisvilles banking approach, there would be seven banks to represent one in each of the seven existing watersheds in the Urban Service Area. Under all programs, credit transactions (whether earned or spent) are recorded at the appropriate bank. Consequently, multiple banks will be present throughout the system and is why it is important to identify where the new connection (flow increase) is located, so that the appropriate bank is identified. Mr. Martin noted that the Task Force will need to adopt a process of tracking credits across all LFUCG Divisions (i.e. Streets & Roads, Division of Engineering, and Division of Water Quality) to make sure that all improvements are being accounted for. CM Blues asked the Task Force Members if they have any additional questions in preparation for the next meeting. CM Blues then requested the consultants provide information on the Capacity Assurance Programs in Cincinnati, Louisville, and Knoxville at the next meeting. VM Gorton asked if in other cities the local government jurisdictions must participate in the credits program? Mr. Herman and Mr. Martin said yes, LFUCG must determine if there is adequate capacity for our projects unless the new LFUCG facility is identified as an essential facility, such as a fire station. Mr. Martin emphasized the primary deliverable for the Task Force will be the Capacity Assurance Plan (CAP) Plan due to EPA by January 3, 2013. Mr. Martin explained that all of the enabling ordinances do not necessarily need to be in place by that time. He said the implementation of the CAP must begin within 30 days of the EPAs approval of the CAP Plan, but approval from EPA may take time and LFUCG can work on an implementation strategy immediately after the CAP is submitted. Mr. Martin added that it is important the Council concur with the CAP prior to submittal to the EPA so that conflicts dont arise later when Council is asked to adopt ordinances related to CAP implementation.

Commissioner Paulsen asked how long we anticipate the approval process from the EPA to take. Mr. Martin said that the EPAs review and approval timeline is unknown, and it may depend on their backlog. He said EPA has still not commented on other LFUCG Consent Decree deliverables submitted last year. VM Gorton asked if Council had to formally approve the CAP prior to January 3, 2013. Mr. Martin said that he would at least like Council to approve the general concepts of the CAP prior to its submittal. Mr. Martin said that after the Task Force completed the CAP, he planned to do a presentation on the CAP to the Planning Commission in November. Presentations on the CAP could be made to Council in October and November, prior to a December approval. CM Kay asked if the CAP needs formal Council approval. Mr. Martin answered that the CAP is not an ordinance, thus it doesnt need formal Planning Commission and Council approval, but Council approval is important as future implementation of the CAP will require changes to LFUCG ordinances. CM Kay suggested an outline be provided of what the Task Force/Council are expected to endorse. VM Gorton agreed that the CAP should not be submitted to the EPA without Council approval to avoid future implementation problems. She added Council should be informed about the implications of what they will be voting on as it relates to future implementation of the CAP prior to LFUCGs submittal to the EPA. Commissioner Paulsen asked for clarification on what CAP implementation within 30 days of EPA approval of the CAP Plan meant. Mr. Martin suggested the CAP include an implementation schedule that EPA would approve as part of the CAP. The schedule could include ordinances be implemented within the first 6 months of EPA CAP approval. Emma Tibbs, Fayette County Neighborhood Council, asked how soon a credit will be defined and at what point trade ratios will be defined. Mr. Herman answered that the trade ratios are already defined in the Consent Decree. The banking unit is what needs to be defined by the CAP Task Force. Mrs. Tibbs also asked who the request will go to for the sewer credits. Mr. Martin explained that the CAP Task Force will need to determine this. Mr. Herman noted that we will look to Louisville, Cincinnati, and Knoxvilles CAPs to help develop our own procedures. Marwan Rayan, Director Division of Engineering, asked if LFUCG will be allowed credits for sanitary sewer storage tanks. Mr. Herman said yes. Todd Johnson, Lexington Homebuilders Association, asked if the trade ratios will change as improvements are implemented. Mr. Martin answered no, the ratios wont change, just the banking units. CM Kay asked if the trade ratios within each geographic area were already determined. Mr. Herman answered yes and they are already outlined in the Consent Decree. Mr. Herman noted that he will bring a summary of the trade ratios to the next meeting. VM Gorton asked who will be responsible for CAP implementation. Mr. Martin answered that initially the CAP Consultant will be responsible for CAP implementation, but the Task Force/Council will determine who will be responsible for implementation over the long term. Mr. Martin noted that if LFUCG wanted to implement the CAP instead of paying the CAP Consultant, then additional staff resources would be necessary to administer the program.

The following items were requested for the next meeting: Area maps showing CAP deficits; An overview of Cincinnati, Louisville and Knoxville CAPs; An outline of the expectations of the CAP Task Force; A summary of Consent Decree references to the CAP; and An overall timeline of LFUCGs proposed CAP Implementation Schedule.

The meeting adjourned at 3:30 pm. The next scheduled meeting will be on May 24th at 9:00 a.m. in Council Chambers.