ITEM 5:  REALLOCATION OF STATE REVOLVING FUND (SRF) FOR THE CONSTRUCTION OF RANKIN STREET PUMP STATION AND SOUTHEAST WATER POLLUTION CONTROL PLANT (SEWPCP) IMPROVEMENTS, CONTRACTS "1", "3", "5", AND ISLAIS CREEK TRANSPORT AND STORAGE FACILITIES, CONTRACT "B", CITY AND COUNTY OF SAN FRANCISCO (CITY), PROJECT NOS. C-06-4025-220, 240, 260, AND 420

DISCUSSION:  On November 19, 1998, the State Water Resources Control Board (SWRCB) recommitted $50 million in SRF loan funds to the City for the construction of Rankin Street Pump Station and SEWPCP Improvements, Contracts "4" & "5", and Islais Creek Transport and Storage Facilities, Contracts "B" & "E" in Resolution No. 98-107 (Attachment 1). Contracts "4" and "E" have existing loan agreements with the SWRCB and these two agreements would be amended at the previous interest rate of 2.8 and 3.4 percent respectively as outlined in the SRF Policy Section XV.A. Contracts "5" and "B" have no existing loan agreement. These will be written based on the current SRF interest rate of 2.4 percent. The City would like to minimize the interest payments and has requested, in its February 1, 1999, letter, that the $50 million SRF loan funds be reallocated entirely to "new" loan agreements at the current 2.4 percent interest rate for the following contracts (Attachment 2):

4025-220; Contract "1", Rankin Street Pump Station and SEWPCP Improvements: $12 million

4025-240; Contract "3", Rankin Street Pump Station and SEWPCP Improvements: $12 million

4025-260; Contract "5", Rankin Street Pump Station and SEWPCP Improvements: $8 million

4025-420; Contract "B", Islais Creek Transport and Storage Facilities: $18 million

The Islais Creek Transport and Storage projects were approved by the Division of Clean Water Programs (Division) on April 27, 1990, and the Rankin Street Pump Station and SEWPCP Improvement projects were approved by the Division on October 22, 1992. Many portions of the Islais Creek Transport and Storage projects and the Rankin Street Pump Station and SEWPCP Improvement projects were approved by the SWRCB for SRF funding in the last decade.

POLICY ISSUE:  Should the SWRCB reallocate the SRF loan funds as requested by the City?

FISCAL IMPACT:  The present value of the savings in interest costs over a 20-year period to the City and "loss" to the SRF repayment fund is approximately $1.6 million.

RWQCB IMPACT:  San Francisco Bay Regional Water Quality Control Board (SFBRWQCB). Completion of these
projects will improve the City’s ability to comply with the SFBRWQCB’s goal of reducing the untreated wastewater overflows to the San Francisco Bay in wet weather.

STAFF RECOMENDATION:  That the SWRCB deny the City’s request and require the $50 million SRF loan commitment to be allocated as stated in SWRCB Resolution No. 98-107. Approval would give an unfair advantage to larger agencies having multiple SRF approvals, and would be contrary to the intent of Water Code, Subsection 13480(b)(1).
[Attachments are not available electronically but can be obtained by calling Patrick Lam at (916) 227-4569.]

WHEREAS:

1. On November 19, 1998, the State Water Resources Control Board recommitted (per Resolution No. 98-107) a total of $50 million of SRF to the City for the construction of Rankin Street Pump Station and Southeast Water Pollution Control Plant Improvements, Contracts "4" & "5", and Islais Creek Transport and Storage Facilities, Contracts "B" & "E";
1. Amendments to the existing loan agreements are required for the additional funding on Contracts "4" and "E";
1. The City is requesting the $50 million of SRF commitment be reallocated to Rankin Street Pump Station and Southeast Water Pollution Control Plant Improvements, Contracts "1", "3" ,"5", and Islais Creek Transport and Storage Facilities "B" (all "new" loan agreements) to minimize the City’s interest payments; and
1. The SRF Policy requires, pursuant to Subsection 13480(b)(1) of the Water Code, that the interest rate for loan agreements be set when the initial loan contract is issued.

The State Water Resources Control Board deny the City and County of San Francisco’s request and continue the $50 million SRF loan commitment as allocated in SWRCB Resolution No. 98-107.

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, 1999.

Maureen Marché
Administrative Assistant to the Board