ITEM 6: APPROVAL TO AMEND LOAN COMMITMENT FOR THE CITY OF ESCONDIDO, STATE REVOLVING FUND LOAN PROJECT NO. C-06-4156-110

DISCUSSION: In accordance with the State Water Resources Control Board’s (SWRCB)
Policy for Implementing the State Revolving Fund (SRF) for Construction of Wastewater Treatment Facilities (Policy) dated January 1993, the City of Escondido (City) received SWRCB approval for a SRF loan in 1993 after the Division of Clean Water Programs approved the facilities plan. In total, the City received a $36.5 million SRF loan commitment in federal fiscal years 1993, 1994, and 1995.

Because of various delays, the water-supply type recycling project was not constructed. In early 1998, there was a need to make available additional SRF funds for projects ready for loan commitments and scheduled to start construction in the summer of 1998. A decision was made to split fund the cost of the City project with $16 million for the tertiary treatment funded by a SRF loan and $12 million for the recycled water distribution system by a Water Recycling Loan Program (WRLP) loan. The Board approved this action February 19, 1998.

Since then, the City has requested that the funding source for the distribution system be reverted back to the SRF Program to enable them to obtain a local match loan for the entire recycling project. The bond laws, which are the source of the WRLP, do not allow for a local match loan.

On May 25, 1999, the Division issued an amended Facilities Plan Approval for the City’s Water Reclamation Project. The estimated project cost is $45 million, and the revised estimated loan eligible cost is $25 million. Construction of this project is scheduled to commence in 1999 and be completed in 2002. It involves tertiary treatment, storage, pumping, and a distribution system. The project will deliver 2,525 acre-feet per year of recycled water to users in both the City and the Rincon del Diablo Municipal Water District. This is a reduction from the previously approved 3,232 acre-feet per year for this project because of fewer users.

This project received environmental clearance from the Environmental Services Unit on June 3, 1993. The project changes result in a reduced project and therefore represent a reduction in potential impacts previously addressed by existing environmental documents. With the understanding that no additional impacts or mitigation will result from these changes, staff has determined that the information and analysis in the previously prepared environmental documents is still valid and complete and no additional environmental analysis is necessary.

The current SRF Policy imposes a "sunset" clause on the loan commitment. The City has provided the Division with a schedule for the final plans and specifications and other project milestone dates.

SWRCB staff proposes that the preliminary loan commitment expire if biddable plans and specifications are not received for the entire distribution system by October 15, 1999.

POLICY ISSUE: Should the SWRCB approve changing the funding source for the distributionsystem from the WRLP to the SRF loan program, increase the current SRF loan commitment from $16 million to $25 million, and include a 20 year repayment period with the first repayment due one year after completion of construction? Should the SWRCB condition this approval by requiring expiration of the preliminary loan commitment if biddable plans and specifications for the entire distribution system have not been received by October 15, 1999?

RWQCB IMPACT: San Diego Regional Water Quality Control Board

FISCAL ISSUE: The SWRCB adopted Resolution 99-40 on May 20, 1999, which changed the method for determining the amount of funding available for new loans to a system based on the availability of cash to make disbursements to the project under consideration by the SWRCB. The SRF account balances, anticipated repayment amounts, and the project approvals under consideration by the SWRCB are as follows:
 

		SFY^		SFY		SFY		SFY			SFY
		1999-00		2000-01		2001-02		2002-03			2003-04
Beginning Balance		$611,806,927		$475,381,593		$280,452,690		$200,753,381			$248,505,191
Repayments		$ 83,636,078		$ 80,080,786		$ 97,848,007		$111,435,140			$130,511,124
Cap Grants		$ 0		$ 66,,000,000		$ 66,000,000		$ 66,000,000			$ 66,000,000
Disbursements		(
City of Escondido 4156-110	$ 9,000,000	($5,670,000)		($2,700,000)		($360,000)		($270,000)
City of Brentwood 4585-110	$25,000,000	($15,750,000)	($7,500,000)		($1,000,000)		($750,000)
City of Brentwood 4585-110	$10,000,000			($6,300,000)		($3,000,000)		($400,000)		($300,000)
Ending SRF Balance		$475,381,593		$280,452,690		$200,753,381		$248,505,191		$297,754,722
Cash Status
Repayment Fund	$235,271,750
Undrawn Cap Grant Cash*	$376,535,177
Total	$611,806,927

* 1989 Thru 2000 Cap Grants

STAFF RECOMMENDATION: That the SWRCB adopt a resolution reverting the funding source for the distribution system from a WRLP to a Local Match SRF loan, increase the present SRF loan commitment from $16 million to $25 million with a repayment period of 20 years, and with the first repayment due one year after completion of project construction. The proposed resolution will include an expiration date for this preliminary loan commitment if biddable plans and specifications for the entire distribution system have not received by the milestone date.

WHEREAS:

1. The State Water Resources Control Board, on August 18, 1988, adopted the "Policy for Implementing the State Revolving Fund (SRF) for Construction of Wastewater Treatment Facilities," and amended it on September 20, 1990, and January 21, 1993;

2. The State Water Resources Control Board, on June 18, 1998, adopted the State Fiscal Year 1998/99 SRF Loan Program Priority List which includes the City of Escondido Water Reclamation Project in Priority Class C;

3. The Division of Clean Water Programs (Division) has approved the previously submitted project report, environmental documents, and the City of Escondido’s draft revenue program for the Water Reclamation Project;

4. The City of Escondido is a signatory to the "Memorandum of Understanding Regarding Urban Water Conservation in California";

5. This project received environmental clearance from the Environmental Services Unit on June 3, 1993. The project changes result in a reduced project and therefore represent a reduction in potential impacts previously addressed by existing environmental documents. With the understanding that no additional impacts or mitigation will result from these changes, staff has determined that the information and analysis in the previously prepared environmental documents is still valid and complete and no additional environmental analysis is necessary;

6. The SWRCB gave the City of Escondido a $36.5 million SRF loan commitment in federal fiscal years 1993, 1994, and 1995;

7. The SWRCB revised the loan commitment on February 19, 1998, to $28 million (based on lower eligible project costs), split funded the project with a $16 million SRF loan for tertiary treatment and a $12 million WRLP loan for the distribution system, and imposed sunset dates for Plans and Specifications Approvals; and

8. The estimated eligible project cost has been further reduced to $25 million.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board:

1. Approves reverting the funding source for the distribution system from a WRLP to a Local Match SRF loan and increasing the present SRF loan commitment from $16 million to $25 million, with a repayment period of 20 years, and with the first repayment due one year after completion of construction; and

2. Will withdraw this preliminary SRF loan commitment if biddable Plans and Specifications for the entire distribution system have not been received by October 15, 1999. The Division of Clean Water Programs may approve up to a 90 day extension for good cause.

Maureen Marché
Administrative Assistant to the Board