ITEM 7:APPROVAL OF A STATE REVOLVING FUND LOAN FOR THE MOULTON NIGUEL WATER DISTRICT, PHASE 4 EXPANSION OF RECLAIMED WATER DISTRIBUTION SYSTEM, STATE REVOLVING FUND LOAN PROJECT NO. C-06-4150-120

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), adopted on February 16, 1995 and amended on June 18, 1998, projects on the adopted priority list need SWRCB approval to receive a SRF loan. 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) environmental documents; (3) draft revenue program; and (4) the water conservation plan.

The Moulton Niguel Water District (MNWD) loan application for the Phase 4 Expansion of Recycled Water Distribution System, including retroactive funding for partially eligible facilities in the Phase III R Project (Phase 4 Expansion Project) has met the legal and policy requirements of both the Water Recycling Loan Program (WRLP) and State Revolving Fund loan programs. The MNWD's proposed construction of the Phase 4 Expansion Project has received facilities plan approval by the Division.

The MNWD is located at Laguna Niguel in Orange County. The proposed project includes converting an existing potable water pump station to reclaimed water service, constructing new reclaimed water pump stations, expanding two existing reclaimed water pump stations, converting an existing potable water operational reservoir to reclaimed water service, installing pressure reduction stations, installing additional distribution pipelines, and performing minor piping modifications at Plant 3A. It also includes retroactively funding previously ineligible Phase III R capacity for tertiary treatment, equalization storage and piping, now eligible because of Phase 4 user demands. The Phase 4 Expansion Project will deliver 2,686 acre-feet of recycled water for landscape irrigation by year 2002.

The estimated eligible cost of the proposed Phase 4 Expansion Project is $17.12 million, and the estimated loan eligible cost is $17.12 million. Of this amount, the estimated eligible retroactive construction cost is $2.56 million based on initial review of Approval to Award documents and allowances.

In accordance with the SRF Policy requirements for water conservation, the MNWD is a signatory to the "Memorandum of Understanding Regarding Urban Water Conservation in California".

The District has complied with CEQA guidelines by adopting a Negative Declaration. The District filed a Notice of Determination with the Orange County Clerk and the Governor's Office of Planning and Research. The information has been reviewed by Division of Clean Water Programs staff and they concur with the District's finding. Federally designated agencies have been given the opportunity to comment as required. Clearance under Section 106 of the National Historic Preservation Act has been obtained from the State Historic Preservation Officer and adequate public participation was provided through public hearings.

The MNWD 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 will expire if Plans and Specifications Approval has not been issued by November 1, 1999, for Group A facilities and May 1, 2000, for Group B facilities of this project. In accordance with Section IX(I) of the SRF Policy, the Division of Clean Water Programs may approve up to a 90 day extension for good cause.

POLICY ISSUE: Should the SWRCB approve SRF loan funding for the proposed project, including a 20 year repayment period, with the first repayment due one year after completion of construction? Should the SWRCB, in accordance with Section IX(I) of the SRF Policy, condition this approval by requiring expiration of the preliminary loan commitment if Plans and Specifications Approval has not been issued by November 1, 1999, for Group A facilities and May 1, 2000, for Group B facilities?

RWQCB IMPACT: None

FISCAL IMPACT: 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 September 1998 are as follows:

STAFF RECOMMENDATION: That the SWRCB adopt a resolution approving a SRF loan of $17.12 million from the FFY 2000 and FFY 2001 accounts for the proposed project, as outlined above, with a repayment period of 20 years, and with the first repayment due one year after completion of project construction. In accordance with the June 18, 1998, revisions to the SRF Policy, the proposed resolution includes an expiration date for this preliminary loan commitment if the milestone dates for the Plans and Specifications Approvals are not met.

DRAFT August 21, 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, and June 18, 1998;

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 MNWD Phase 4 Expansion of Reclaimed Water Distribution System in Priority Class C;

3. The Division of Clean Water Programs (Division) has approved the project report, environmental documents, draft revenue program, and request for retroactive funding for the MNWD's Project;

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

5. The MNWD adopted a Negative Declaration (State Clearinghouse No. 97011056) prepared for the project, which has been reviewed and considered and it has been determined that the project will not result in any significant environmental impacts.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board:

1. Approves a SRF loan of $6,984,795 from the FFY 2000 account and $10,135,205 from the FFY 2001 account to the MNWD for the construction of the Phase 4 Expansion of Reclaimed Water Distribution System, including retroactive funding, with a repayment period of 20 years, and the first repayment due one year after completion of construction; and

2. Will withdraw this preliminary SRF loan commitment if the Plans and Specifications Approval has not been issued by November 1, 1999, for Group A facilities and May 1, 2000, for Group B facilities of this project. The Division of Clean Water Programs may approve up to a 90 day extension for good cause.

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 September 17, 1998.

Maureen Marché

Administrative Assistant to the Board