ITEM 4: APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN AND A SMALL COMMUNITIES GRANT (SCG) FOR THE HUMBOLDT COUNTY RESORT IMPROVEMENT DISTRICT NO. 1 (DISTRICT), SHELTER COVE TREATMENT PLANT, SRF PROJECT NO. C-06-4262-110 AND SCG PROJECT NO. SCG 699

DISCUSSION: In accordance with the State Water Resources Control Board's (SWRCB) Policy for Implementing the State Revolving Fund for Construction of Wastewater Treatment Facilities (SRF Policy), adopted on February 16, 1995, and amended on January 18, 1996; and the SWRCB Implementation Policy for the Small Communities Grant Program (SCG Policy), adopted on January 23, 1997, and amended on April 30 and May 14, 1997, projects on the adopted SRF priority list and the adopted SCG priority list need SWRCB approval to receive a SRF loan and/or a SCG for construction. Loans can be approved by the SWRCB after the Division of Clean Water Programs (Division) has approved the facilities plan, including: (1) the project report; (2) the environmental documents; (3) the draft revenue program; and (4) the water conservation plan. Construction grants can be approved by the SWRCB after the Division of Clean Water Programs (Division) has approved the facilities plan and the 90 percent design submittal.

The Urban Water Management Planning Act does not require communities with populations less than 3,000 to prepare a urban water management plan. Costs to prepare a document to satisfy the SRF Policy requirements would prove burdensome to the District and the benefits are not cost-effective. The District does have a reliable water source drawn from Telegraph Creek, a local waterway, which will provide adequate water through the design year of 2018.

The estimated total project cost per household is $6,200. Therefore, the proposed project is not considered a high cost project as defined by the SCG Policy.

On April 3, 1998, the Division approved 90 percent plans and specifications for the Shelter Cove Treatment Plant project.

Shelter Cove is a coastal community located at Point Delgado in southern Humboldt County 25 miles west of the City of Garberville. The District serves a population of approximately 800 and the 1996 median household income is $30,293. The treatment plant average flow is about 56,000 gallons per day.

The existing Shelter Cove treatment plant is situated directly on bluffs above the Pacific Ocean. The bluffs have experienced significant erosion over the years and there is a substantial risk of sudden plant failure during storm events. Solids carryover to the chlorine contact basin, due to inadequate size of the sedimentation basin and no ability to waste sludge, results in inadequate disinfection of effluent. The plant is also located in dangerous proximity to the Shelter Cove airport, as two documented cases of aircraft contact with the plant, one incident involving loss of life, can attest. These problems pose a health threat to the public and the Regional Water Quality Control Board has adopted a time schedule for improvement proposed by the Humboldt County Department of Public Health. The proposed project will remove and replace the treatment plant to a nonhazardous location and install adequate treatment facilities to prevent future threats to public health.

The estimated project cost is $3,418,930, the estimated loan eligible cost is $1,800,000, and the estimated total grant eligible cost is $1,618,930. The District has already received a Planning Grant of $45,874 and will receive a Design Grant of $81,673. Therefore, the Construction Grant request is $1,491,383.

Humboldt County Resort Improvement District No. 1 prepared a Mitigated Negative Declaration/Initial Study (MND/IS) which was distributed to the public and circulated through the State Clearinghouse (SCH# 97032087) for review from March 28 through April 28, 1997. During the review period, comment letters were received from two agencies and one individual commented verbally at the public hearing. The City provided adequate responses to the comments. The City Council approved the project and adopted the MND/IS on May 15, 1997. A Notice of Determination was filed with the Humboldt County Clerk's Office and the Governor's Office of Planning and Research on May 15, 1997.

The State Historic Preservation Officer (SHPO) notified the Division on March 25, 1998, that more information would be needed to obtain SHPO concurrence that the project is in compliance with Section 106 of the National Historic Preservation Act. Additional studies have been completed and the resultant information has been forwarded to the SHPO for a 30-day review period. If SHPO clearance includes any special conditions, such conditions will be contained in the loan contract for this project.

The District requests the SWRCB approve a SRF loan of $1.8 million and a SCG grant of $1,491,383 for this project.

POLICY ISSUES: (1) Should the SWRCB approve a SRF loan commitment for the proposed project, including a twenty (20) year repayment period, with the first repayment due one year after completion of construction, and should the SWRCB, in accordance with Section IX (J) of the SRF Policy, condition this approval by requiring expiration of the preliminary loan commitment if this project does not receive SHPO clearance by June 30, 1998, unless the Division approves a ninety (90) day extension for good cause? (2) Should the SWRCB approve a SCG construction grant for the proposed project?

RWQCB IMPACT: None

FISCAL IMPACT: SCG funds are available for this project and the other SCG proposals being considered for approval by the SWRCB in May 1998.

Current SCG fund balance as of March 31, 1998: $21,861,711

Project approvals under consideration by the SWRCB in May 1998:

According to SWRCB Resolution No. 97-001 (Approval of a Staff Proposal to Better Manage the SRF Repayment Account), the SWRCB may approve preliminary loan commitments against the current FFY account and against 125 percent of future repayment funds based on scheduled loan dates.

The SRF account balances, anticipated repayment amounts, and project approvals under consideration by the SWRCB in May 1998 are as follows:

STAFF RECOMMENDATION: That the SWRCB adopt a resolution approving a SRF loan and a SCG for construction of the proposed project. The loan shall have a repayment period of twenty (20) years, with the first repayment due one (1) year after completion of construction. In accordance with the February 16, 1995, revisions to the SRF Policy, the proposed resolution includes an expiration date for the preliminary loan commitment if the date for SHPO clearance is not met.

DRAFT MAY 4, 1998

WHEREAS:

1. The State Water Resources Control Board, on February 16, 1995, adopted the Policy for Implementing the State Revolving Fund (SRF) for construction of Wastewater Treatment Facilities, and amended it on January 18, 1996;

2. The State Water Resources Control Board, on September 18, 1997, adopted the FFY 1998 SRF Loan Program Priority List which included the Shelter Cove Treatment Plant, Humboldt County Resort Improvement District No. 1 in Priority Class D;

3. The State Water Resources Control Board, on January 23, 1997, adopted the Implementation Policy for the Small Communities Grant Program, and revised it on April 30 and May 14, 1997;

4. The State Water Resources Control Board, on May 14, 1997, adopted the Small Communities Grant Program Priority List which included the Shelter Cove Treatment Plant, Humboldt County Resort Improvement District No. 1 in Priority Class B;

5. The Division of Clean Water Programs has approved the project report, environmental documents, and draft revenue program for the Humboldt County Resort Improvement District No. 1 project;

6. The Urban Water Management Planning Act does not require communities with populations less than 3,000 to prepare a urban water management plan;

7. The Division of Clean Water Programs has approved plans and specifications for the Humboldt County Resort Improvement District No. 1 project; and

8. The Humboldt County Resort Improvement District No. 1 adopted a Mitigated Negative Declaration for the proposed project (State Clearinghouse No. 97032087) which has been reviewed and considered by the SWRCB, and it has been determined that the proposed project will not result in significant negative environmental impacts.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board:

1. Approves a preliminary SRF loan commitment of $1.8 million to the Humboldt County Resort Improvement District No. 1 for construction of the Shelter Cove Treatment Plant project, the repayment period is twenty (20) years, the first payment due one (1) year after completion of construction; and

2. Will withdraw this preliminary loan commitment if SHPO clearance for this project is not received by June 30, 1998, unless the Division approves a ninety (90) day extension for good cause; and

3. Will not require the District to prepare a Water Conservation Plan; and

4. Approves a SCG grant of $ 1,491,383 to the Humboldt County Resort Improvement District No. 1 for construction of the Shelter Cove Treatment Plant project.

The undersigned, Administrative Assistant to the Board, does hereby certify that the foregoing is a full, true, and correct copy of a resolution duly and regularly adopted at a meeting of the State Water Resources Control Board held on May 27, 1998.

Maureen Marché

Administrative Assistant to the Board