August 16, 2013

To: Mayor George NugentMayor Pro Tem Heather CaruthersCommissioner Danny KolhageCommissioner David RiceCommissioner Sylvia Murphy

CC Roman Gastesi, County AdministratorKevin Wilson, County Engineer Kevin Madok, Strategic Planning

From: Walter P. Drabinski, Cudjoe Key, FL.

Re: Review FKAA Gravity Analysis

Dear Commissioners;

The residents of Cudjoe Gardens and other subdivisions in the CRWS started a dialogue with FKAA in late January this year when we learned that some Subdivisions were being treated in an inconsistent manner. After months of trying to work with the management and engineers of FKAA, we were told we must address our concerns to the Board of County Commissioners. You have listened to us on two occasions and your staff has facilitated a number of meetings. During all of this time, FKAA has refused to provide us with documents we requested and analysis that would clarify our concerns. On August 14th, after waiting five weeks for FKAA to provide a number of documents that we requested, seven members of the Sir Isaac Newton Coalition visited the FKAA offices, and in accordance with State law were given access to the entire set of CRWS related files. While we were limited in time and some documents are still being assembled, our visit revealed some extraordinary information.

Let me summarize our findings and then provide some detail for your technical experts to review. In fact, might I propose that we meet with two of your experts who have been involved to give a full briefing? Kevin Wilson and Kevin Madok have been in most of our meetings and understand the technical and financial aspects of what we have prepared.

First, let me summarize our major findings:

1. Cudjoe Gardens, Cudjoe Shores, and Lower Sugarloaf have been treated different than other homogeneous subdivisions in CRWS.

These three subdivisions, which are at the center of the discussion, are all

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being treated different than almost all other subdivision in the CRWS. We have had a chance to review the Layne design, for the Outer Islands, and it appears that they have treated every subdivision as a homogenous group of EDUs. They are either all gravity or all low pressure. All other dense subdivisions within the Inner Island group designed by Giannetti are done in a similar manner. Lower Sugarloaf, which is in the Outer Island group, was partially designed in the 2006 period and all streets completed were gravity. Then, when the design was completed in 2009-11, the balance of streets were designed as all Low Pressure. We have been unable to find any documentation on how the hybrid mix was arrived at for Cudjoe Gardens or Cudjoe Shores.

2. The updated Matthews analysis has mistakes, incorrect and biased assumptions.

During our visit we uncovered a memo and analysis from Matthews dated June 18, 2013. This analysis included a construction cost and LifeCycle study of Cudjoe Gardens, and two other small subdivisions. Mr. Matthews concludes in his cover letter that the 20 year analysis still showed a hybrid system as cost effective for all three areas, while a 30 year analysis showed the costs being closer.

We have done a review of the analysis for Cudjoe Key and find that once errors are corrected, paving costs are normalized, and some assumptions are updated with current information, that Cudjoe Gardens is significantly more cost effective as all gravity. We do not have the resources or time to evaluate the other subdivisions at this time. The graphs following this summary show the new results.1

A list of the errors is provided along with the revised construction cost and LifeCycle summary sheet. To thoroughly understand the mistakes, I propose a briefing as stated above.

3. The original design of Cudjoe Gardens as all gravity showed the gravity lines going under the culverts as we have suggested.

We have repeatedly suggested that the sewer line on 2nd Ave. West and 4th Ave., West in Cudjoe Gardens could be installed below each of the culverts that the residents installed in 1995. We discovered a design drawing, from 2009, in the files at FKAA that showed this exact configuration. Why is it important? The two lift stations not only cost $100,000 each, but according to Matthews, they require $7,500 per year each for maintenance and must be rebuilt every five years at a price of $6,000 each. A section of the drawing is attached with my notes on it.

4. The residents of these three subdivisions were never informed that we were getting a hybrid system until January 2013.

1 Spreadsheets and copy of Matthews June 17, 2013 memo are on the Isaac Coalition Website at www.isaaccoalition.com

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In May 2102, in accordance with Florida DEP requirements, FKAA conducted two public meetings in which we were provided details on the options, costs and rationale for the system we were to receive. Any person reading that information would assume that these densely populated subdivisions would be all gravity. Eight months later, after the contracts were awarded, we learned that this was not the case.

Even the amendments to the InterLocal Agreement made in July and August of 2012 continued to show a map that suggested we were getting all gravity.

5. The Decision Tree, used by Matthews to make decisions on technology options is not appropriate and has no support for its parameters.

We believe that the Layne approach makes sense. Layne does not use a Decision Tree. In fact in discussions with the Layne Project Manager, he stated that the Decision Tree was not an appropriate tool. FKAA has been unable to provide any basis for its development or support for the decision constraints. We have concluded that it was borrowed from an academic paper or another project and was never really designed or updated for the CRWS.

Modeling of complex systems requires careful consideration of inputs and accuracy of calculations. One must also consider wider policy issues, such as the need to pave all roads, as well as long term reliability and environmental hazards. A gravity system is considered the best of alternatives for a lot of reasons. When LifeCycle costs of gravity compared to other technologies are even close, it should be the alternative chosen. The analysis used both in 2009 and today by Matthews does not stand up against a detailed scrutiny and should be viewed as a flawed document unless errors are corrected and assumptions are justified.

Commissioners, we sincerely request that our three subdivisions be treated the same way as the rest of the CRWS. The decision you are faced with is one that we will have to live with for generations. It should be based on accurate and well founded information. Please consider giving direction to FKAA to change the design of these three subdivisions to all gravity, so that they are consistent with the rest of the CRWS. While there may be an incremental cost for the three subdivisions initially, the long-term savings will more than make this up.

Sincerely,

Walter P. Drabinski, PresidentSir Isaac Newton Coalition

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Gravity Hybrid$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

Gravity Versus Hybrid for Cudjoe Gardens

Homeowner ElectricOperating CostPaving costBuild-out costsInitial Construction Cost

Gravity Hybrid$0

$5,000

$10,000

$15,000

$20,000

$25,000

Gravity Versus Hybrid for Cudjoe Gardens

Homeowner ElectricOperating CostPaving costBuild-out costsInitial Construction Cost

Why do the graphs show construction costs as being almost equal? There are a number of reasons that the numbers are different from those provided by the FKAA on August 1st.

1. There are corrections to errors in the Matthews analysis. Math errors, the wrong number of grinders, and other quantity errors are corrected.

2. Paving costs are normalized. Our analysis provides the cost of paving all roads from curb to curb.

3. These construction estimates include buildout costs for future EDUs. A grinder pump must be installed and a line run to the main pressure line for each unit, while gravity only requires a short run from the sewer line to the property edge.

4. We have reduced the number of lift stations by two with a savings of $200,000.

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5. This analysis only includes the area off of Drost Ave. The houses on Colson and Rt. 1 were not addressed in the Mathews analysis..

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ISSUES WITH JUNE 2013 MATTHEWS ANALYSIS OF CUDJOE GARDENS (THE DEVIL IS IN THE DETAILS)

The errors and mistakes in assumptions vary and have different impacts on the results.

1. Number of EDUs - Matthews uses the wrong number of EDUs in this analysis. The houses evaluated, all of which are off Drost Ave., actually total 270 Current EDUs and 34 Buildout EDUs. All of Cudjoe Gardens totals approximately 349 Current and 59 Buildout. Matthews assumed there were only 238 current EDUs.

2. Math Errors – There are four cases where the Matthews analysis simply added the columns incorrectly.

3. Cost Errors and Questions –There are many places where Matthews increases costs for all gravity in an illogical manner.

a. Mobilization costs are higher for all gravity.b. Bonds and Insurance are higher for gravity.c. As-built drawings are higher for gravity.d. The number of 6” laterals for gravity is wrong.e. The all gravity estimate still contained 2” ball valves even though all 2”

lines are removed from the design.f. The number of simplex grinder units in the hybrid example is 129 and

should have been 135.4. Number of Lift Stations - In the revised design, Matthews increases the

number of lift stations from four to eight. We have argued, and earlier all gravity designs show that this can be done with six lift stations. Why is this important? As FKAA itself stated, they must pay the contractor $100,000 per lift station regardless of how large they are, and according to the Matthews operating assumptions on lift stations, which we disagree with, it will cost $7,500 per year to maintain each of them and they must be rebuilt every five years at a cost of $6,000 each.

5. Paving - We normalize paving by assuming all streets will be fully paved as part of the project at a cost of $12/SY. This comports with plans that are underway. The funds for the paving come from the same sources, so a legitimate analysis must treat them properly.

6. Operating Assumptions – When we first analyzed the Matthews work in May, we had very limited information on the technical elements of the project. We have now reviewed over 10,000 pages of design, bid, operating, and policy information and are prepared to effectively challenge some assumptions. We believe that the problem with some assumptions is that they were established in the 2003-2006 timeframe before final designs and equipment were selected. While we challenge these assumptions on valid grounds, the results show that even if the numbers are somewhere in between, the all gravity decision is the right one.

Please understand that the CRWS Low Pressure System is based on the exclusive use of EnviroOne technology. Each of the 2,800 LPS grinder pumps and control units is provided by EnviroOne, as well as every pump in the almost 300 lift stations in the CRWS. Every pump is a one horsepower,

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progressive cavity pump with a 220V motor that pumps into a pressure line. Think of the system as a 20 mile long line, with almost three thousand identical pumps pumping into it in parallel. It is a bit more complicated, as there are booster stations as well, but the hydraulics are very straightforward.

Each pump requires electricity, the LPS must receive regular maintenance, and the grinders must be repaired when any of their components fail. In our earlier work we refer to this as the “claptrap factor”. EnviroOne suggests, in company literature, that failures occur between 8-12 years. The EPA suggests 4-8 years. In our previous analysis, we suggested that the tropical climate and the impact of storms should warrant the lower end of the range. Matthews maintains that 12 years is the correct number. I discussed this with Mr. Matthews and he uses the mean time to failure of the motor stator as the basis for his analysis. As an Electrical Engineer, I can say with authority, that motor failure does not simply occur because of the number of hours it is operated, it fails because of the environment and thermal stresses.

Regardless of the expected duration, maintenance plans must be made and budgeted. Let’s look at some of Matthews operating assumptions:

a. Grinder pump failure cost . Based on their 12 year projection, Matthews calculates that it will cost $2,390 per repair. This includes $390 for an emergency callout, and $2,000 for the cost of parts and labor to repair the unit. This is a reasonable amount. Parts cost between $80 for a check valve to $1,200 for a pump and motor, the most common failure. The balance of the cost is to remove, clean, disassemble, repair, test and place the repaired unit back into inventory.

b. LPS Maintenance of $40/year – This cost is for cleaning the low pressure lines as needed, responding to alarms, providing generator services during and after storms, and other work that is associated with a system of 2,800 grinder pumps. Mathews proposes a cost of $40 per year per grinder. This will amount to $84,000 annually to maintain the entire system. This is less than one-half of a full time employee’s loaded cost. We disagree with this estimate. We believe it will take 4-5 FTEs to maintain the system, as well as parts and equipment. Based on this we have raised the maintenance cost to $1143 per grinder per year in our analysis. This is based on 4 FTEs.

c. Lift Station Maintenance of $7,500/year – Each lift station is a concrete vault, installed in the right of way, with between three and five EnviroOne pumps in it. These are identical pumps to the ones used in every grinder. Matthews proposes that the maintenance of the Lift Stations will be $7,500 per station per year, or 188 times the cost to maintain a grinder pump at our home. (This amounts to $2.25 million per year for the CRWS) This is unreasonable. Each lift station has multiple pumps, including a spare pump. Therefore there are no emergency callouts required. Second, the units are on the ROW and can be accessed with ease and the controls are above ground. With the proposed telemetry being added, maintenance costs will be

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less. We propose using a cost of $2,500 per unit per year.d. Lift Station 5 year Replacement Duration – Matthews argues that

the grinder pumps will last 12 years before needing a replacement at a cost of $2,390, but that the same pumps in the lift stations need to be replaced every five years at a cost of $6,000. While the lift stations have more units and controls, we believe the five year duration is too low. We use 10 years at $6,000 per unit.

e. Electricity costs – In the initial analysis Matthews used a rate of $.10 per kWh and an annual cost of about $32. We pointed out that current rates are $.13/kWh. Their new analysis uses $.13/kWh, but lowers the cost to under $12/year. Actual experience with the same pumps in Key Largo shows annual costs of $45 per pump. We propose $40 per unit per grinder pump.

f. Electricity for Lift Stations – The pumps in the lift stations are identical to those in each grinder. However in calculating electric consumption for the lift stations, Matthews assumes that each lift station will consume about 25 times more electricity than an individual unit. We suggest that there is a lack of fundamental understanding about the efficiency of a motor as it cycles that overstates the real cost. We do not change these costs, as they are a minimal and essentially the same for gravity versus hybrid.

g. Homeowner Electric Service Cost is Ignored – Matthews does not acknowledge that there is an incremental cost for homeowners who have grinders installed on their property. While there are undoubtedly properties with long sewer runs that benefit from LPS, this is not the case in Cudjoe Gardens. We will need to get a permit, hire an electrician and install a 30A/220V service for the grinder pump that the County owns.

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Adjustments and Questions for LifeCycle NPV analysis

Assumption:Comments Proposed

AdjustmentCurrent EDU 238 270 actual Not sure where Matthews gets its numbers.

This is an actual count of homes off Drost Ave section of Cudjoe Gardens. Sawyer and Colson bring number ot 361 current EDU and and 59 additional buildouts.

None to calculations

Buildout EDU 279 304 ActualInflation 2% OKInterest Rate 3% OKLabor/hr $100.00 Including Overhead OK$/kWh $0.13 Current Rate OKPower $11.79 Per EDU/year Way too low. Key Largo is $45/yr. Was $30

per year in previous study with $.10 powerUsed $40/yr.

Lift Pump Prevent Maintenance

$7,500.00 Per Station per year Lift stations consist of 3 to 5 Enviro One pumps that are the same as grinders. What extra maintenance is required?

Change to $2500/yr.

Lift Pump Replacement $6,000.00 Per station every five years

Pumps are same EnviroOne pumps, why more and why not every 12 years?

Change to 10 years

Grinder Pump Prevent Maintenance

$30.00 Per Pump per year. Way too low. Using this assumption, there would only be $4,050 for maintenance of all grinders in Cudjoe Gardens, or $84,000 for the entire system. This is less than one FTE

Assume 4 FTE for entire system or $143/EDU.

Public Education $2.00 Per Pump per year. This is very low, but not worth arguing. Amounts to $5,600 per year for the entire system.

Not worth changing

Emergency Callout $390.00 Per pump/12 years OK. Although we question 12 year cycle which is at top of EnviroOne range.

No change.

Grinder Pump Replacement

$2,000.00 Per pump/12 years OK amount, although12 years cycle is probably too long.

Gravity Future Construction

Electric Cost per pump

Preventive Mainenance for lift stations

Lift Station Pump Replacement

There was an error in Matthews study. They used 347 buildout gravity hookups. It should be 279. This reduces buildout cost to $121,538, and PV to $107,168.

Since Matthews assumes that the electric cost for pumping is based on the number of EDU's, with no greater efficiency for lift stations, the cost for electricity is the same for every scenario. While we disagree with his, it is les than 1% of costs and not worth arguing.

This number is unreasonable. Each lift station consists of 3 to 6 EnviroOne pumps that are identical to the grinders. They should not need significantly more maintenance than the grinders even with occational flusing of lines. Suggest reducing to$2,500 per unit/year. Reduces preventive maintenance from $892, 650 to $297,550

Since these are identical to the grinders, why would you change duration from 12 years. While VEC believes 12 years is too high, five years as an alternative is simply wrong. Change to ten years. Reduces PV cost per station to $10, 378 for 20 year

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Project Schedule shows that work will not begin in Cudjoe Gardens until January 2014, with grinder pump installation starting May 2014. Work on Cudjoe Shores in Basin B is scheduled to begin in December 2013. (Info from March 2013 public meetings.)

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