ITEM 4:  APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN AND A HARDSHIP GRANT (HG) FOR THE AMADOR WATER AGENCY (AGENCY), PINE GROVE WASTEWATER SYSTEM, SRF PROJECT NO. C-06-4555-110 AND HG PROJECT NO. 694-030

DISCUSSION:  In accordance with the State Water Resources Control Board's (SWRCB) Policy for Implementing the State Revolving Fund for Construction of Waste-water Treatment Facilities (SRF Policy), adopted on February 16, 1995, and amended on June 18, 1998, 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.

On February 19, 1999, the Environmental Protection Agency (EPA) approved the SWRCB application for federal assistance and offered financial support of $1,427,200, from the $50 million appropriation in the Omnibus Consolidated Rescissions and Appropriations Act of 1996. This support, referred to as the HG, is part of the Hardship Grants Program For Rural Communities. Guidelines for this program were published in the March 20, 1997, Federal Register. Key highlights of the program are that the recipient community must:

• have a population less than 3,000
• be currently unsewered
• have a per capita income of 80 percent or less than the national average (translates to $13,244)
• have a unemployment rate of at least one percent higher than the yearly national average
• must be seeking assistance for a project which will reduce an environmental risk or improve public health

The Agency asks that it not be required to follow the Water Conservation Requirements of the SRF Policy. The Urban Water Management Planning Act does not require communities with populations less than 3,000 to prepare an urban water management plan. Costs to prepare a document to satisfy the SRF Policy provisions would prove burdensome to the Agency and the benefits are not cost-effective.

The town of Pine Grove is located in Amador County, 62 miles southeast of Sacramento, near the City of Jackson, along Highway 88. Pine Grove has a population of approximately 750 and the 1996 median household income is $30,293 (approximately $12,038 per capita).

The town of Pine Grove has a history of failed septic systems due to poor soil conditions, perched groundwater, and small lot sizes. This has led to sewage entering surface water and groundwater. The Amador County Environmental Health Department (ACEHD) issued a letter April 9, 1997, supporting the need to construct a collection and disposal system for Pine Grove. ACEHD indicated that a building moratorium or other limitations on development would be necessary if progress was not made toward a solution to the problems in Pine Grove. The proposed project consists of installing a force main collection system to transport septic tank effluent to a community leachfield. This project represents a scaled back version of an earlier proposed project. There was insufficient grant funding available to construct the larger project. Therefore, this project represents an effort to remedy some of the more critical areas of Pine Grove with the funding available. The balance of the community will be sewered when additional funding sources are discovered.

The estimated project cost is $2,083,291. The Agency has already received a SCG Planning Grant of $43,391 and is expected to receive a SCG Design Grant of $46,428. The SRF Loan request is $570,000 and the HG request is $1,427,200. On April 1, 1999, the Division received 90 percent plans and specifications for the Pine Grove Wastewater System project.

The Agency prepared a Negative Declaration/Initial Study (ND/IS) which was distributed to the public and circulated through the State Clearinghouse (SCH# 99022068) for review from February 22, 1999, through March 24, 1999. During the review period, the Agency received one comment letter. The Agency provided adequate responses to the written comment. The Agency’s Board of Directors approved the project and adopted the ND/IS on March 25, 1999. A Notice of Determination was filed with the Amador County Clerk and the Governor’s Office of Planning and Research on March 25, 1999.

The Agency requests the SWRCB approve a SRF loan of $570,000 and a HG of $1,427,200 for this project.

POLICY ISSUES:  (1) Should the SWRCB approve a SRF loan commitment for the proposed project, including a 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 commence construction by September 1, 1999, unless the Division approves a 90 day extension for good cause? (2) Should the SWRCB approve the HG for the proposed project?

RWQCB IMPACT:  Central Valley Regional Water Quality Control Board. Construction of this project will enable the community of Pine Grove to eliminate the critical areas of health concern due to a failing, leaking septic tank system.

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 Federal Fiscal Year (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 1999 are as follows:
 

	FFY	FFY	FFY	FFY	FFY	FFY
	1998-99	1999-00	2000-01	2001-02	2002-03	2003-04
	SRF Account	Repayment	Repayment	Repayment	Repayment	Repayment
Repayments per Res. 99-011:	$66,706,882	$76,393,847	$85,249,811	$85,251,369	$84,913,928	$84,913,928
125% Repayments:		95,492,309	106,562,263	106,564,211	106,142,410	106,142,410
FFY 98 Carryover:	38,009,707
FFY 98 Fed. Cap. Grant:	22,146,937
FFY 99 Fed. Cap. Grant:	92,461,850
CWG funds trans. per Res. 99-011:	8,161,062
WQCF funds trans. per Res. 99-011	1,632,212
1996 Bond Funds:	39,825,821
SMIF Interest (Estimated)	12,000,000
Local Match equivalent:	17,503,926
Previous Commitments:	272,242,278	93,280,341	101,135,205	77,510,000	53,036,000	0
Subtotal:	$26,206,119	2,211,968	5,427,058	29,054,211	53,106,410	106,142,410
Amador W. A.-Pine Grove 4555-110	$570,000
Calistoga, City of 4616-110	$4,400,000
La Co. Dpw-San Pasqual 4679-110	$5,160,000
Balance:	$16,076,119	$2,211,968	$5,427,058	$29,054,211	$53,106,410	106,142,410

STAFF RECOMMENDATION:  That the SWRCB adopt a resolution approving a SRF loan and the HG for the proposed project. The loan shall have a repayment period of 20 years, with the first repayment due one year after completion of construction. In accordance with the SRF Policy, the proposed resolution includes an expiration date for the preliminary loan commitment if the date for start of construction is not met.
[Attachments not available electronically but copies can obtained by calling Eric Torgusion at
(916) 227-4449].

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 June 18, 1998;

2. The State Water Resources Control Board, on June 18, 1998, adopted the SFY 1998/99 SRF Loan Project Priority List which included Pine Grove Wastewater System, Amador Water Agency project;

3. On February 19, 1999, the Environmental Protection Agency approved the State Water Resources Control Board application for federal assistance and offered financial support of $1,427,200, from the $50 million appropriation in the Omnibus Consolidated Rescissions and Appropriations Act of 1996. This support, referred to as the Hardship Grant, is part of the Hardship Grants Program For Rural Communities;

4. The Division of Clean Water Programs (Division) has approved the project report, environmental documents, and draft revenue program for the Amador Water Agency project; and

5. The Amador Water Agency adopted a Negative Declaration for the proposed project (State Clearinghouse No. 99022068) which has been reviewed and considered, 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 $570,000 to the Amador Water Agency for construction of the Pine Grove Wastewater project, the loan repayment period is 20 years, and the first payment due one year after completion of construction; and

2.  Will withdraw this preliminary loan commitment if this project does not commence construction by September 1, 1999, unless the Division approves a 90 day extension for good cause; and

3.  Will not require the Amador Water Agency to follow the Water Conservation Requirements of the SRF Policy; and

4. Approves a Hardship Grant of $1,427,200 to the Amador Water Agency for construction of the Pine Grove Wastewater System 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 20, 1998.

Maureen Marché
Administrative Assistant to the Board