SUBJECT
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Approve the Second Injection Well for the Southeast Wellfield Water Production Facility and Approve Staff to Initiate Amendment 1 to the Southeast WIFIA Loan (Action)
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DESCRIPTION
In September 2022, the PRWC Project Board authorized staff to publish an advertisement for a qualified well driller to construct Southeast Injection Well #1 (SE-IW-1). The injection well is necessary to manage the brackish concentrate from the SE Water Production Facility’s (WPF) Reverse Osmosis facility. Successfully completed in 2024, SE-IW-1 testing concluded that it was capable of accepting the target concentrate flow (1.875 MGD to 2.5 MGD) for a 7.5 MGD Phase 1 WPF.
During Phase 1 operation, participating members are expected to have adequate firm capacity to deliver potable water to customers in the event of an interruption in PRWC SE WPF supply. This reason, combined with the high cost of injection well construction, enabled staff to obtain a permit for the facility without a backup well. However, as demands grow, system reliability will become critical, and a second injection well will be required for future plant expansions.
In January and March of 2026, the PRWC Board was presented with a business plan that included the cost of a second injection well. Even with the addition of this second injection well, member annual costs will be lower than originally predicted in 2026. Estimated at $22M, the injection well cost is offset by significant reductions in pipeline bids as compared with the GMPs presented in the previous, 2025 business plan. These, and other cost updates, resulted in a 2026 program estimate that is approximately $11M lower than that presented in 2025. Funds for the well construction costs are available in the existing SE WIFIA loan, but an Amendment to the loan project description will be required.
The updated business plan is also based on amendments to the WIFIA loan previously discussed with the PRWC Board in 2025 and 2026. These amendments include moving the substantial completion date from December 31, 2026 to the fall of 2028 and moving out the first interest and principal payment dates. Staff will review the potential benefit of extending the final maturity of the WIFIA loan by two years and make a recommendation to the PRWC Board.
Due to the addition of the 20-year SRF loans since the WIFIA loan agreement was entered into, we will also be modifying the WIFIA principal amortization to wrap around the SRF debt service to create more overall level debt service payments. The Debt Service Reserve Fund required by WIFIA can also be funded from WIFIA loan proceeds instead of member payments. All of these proposed changes provide lower annual debt service payments to the members in the current business plan.
With approval of this item, staff will include the costs of a second injection well in the preliminary budget information to be presented in July 2026. Staff will also initiate planning and procurement of a driller for the injection well, and initiate a request to WIFIA for an amendment to SE Loan 19139L that will update the scope of work, new estimated dates, and the loan amortization schedule. The amendment will return to the board for final execution.
RECOMMENDATION
Approve staff to initiate the financial planning and procurement of a driller for Southeast Injection Well #2 and to submit a request to WIFIA for loan amendment.
FISCAL IMPACT
A second injection well at the Southeast Wellfield site is estimated to cost $22M. This action item will allow staff to include the injection well costs in the preliminary 2027 PRWC budget and modify the WIFIA loan scope to include a second injection well. The scope change will have no impact on the total loan value, as the additional cost is expected to offset by reductions in SETM costs.
CONTACT INFORMATION
Mary Thomas
Eric DeHaven