ITEM 4: FUNDING COMMITMENT FOR THE JOINT WATER POLLUTION CONTROL PLANT UPGRADE TO FULL SECONDARY TREATMENT; COUNTY SANITATION DISTRICTS OF LOS ANGELES COUNTY, STATE REVOLVING FUND LOAN NO. C-06-4001-220
DISCUSSION: On February 22, 1996 the State Water Resources Control Board (SWRCB) adopted Resolution No. 96-16 approving a State Revolving Fund (SRF) loan for the County Sanitation Districts of Los Angeles County (Districts). The approved project is the Joint Water Pollution Control Plant (JWPCP) Upgrade to Full Secondary Treatment. Under conditions of a Consent Decree negotiated between several agencies, including the State of California and the Districts, full secondary treatment of all the Joint Outfall System's flow is mandated by December 31, 2002.
The project consists of construction of 200 million gallons per day of secondary treatment processes including pure oxygen biological reactors, secondary clarifiers, and a cryogenic plant. The estimated total project cost is $354 million. The estimated SRF loan eligible cost is $263 million. The difference of $91 million is made up of the local share and a special federal grant.
According to the Districts' latest schedule, the construction period is expected to run from November 1997 to December 2002. There are 14 construction contracts planned. The Districts are requesting a funding commitment from the SWRCB that would meet the Districts' cash flow needs for this project until all eligible SRF funding needs are met.
The Districts have provided a schedule of loan disbursements based on their needs from Federal Fiscal Year (FFY) 1997 through FFY 2003. They are requesting that the SWRCB commit to the Districts' estimated cash flow needs per FFY. The commitment would be limited by the SWRCB's annual funding cap. An annual funding cap of $50 million per agency is assumed for the purpose of determining cash flow. In accordance with 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 monies based on anticipated construction periods. The estimated cash flow and SRF account balance is summarized as follows:
SRF Account Balance
*The actual estimated cash flow needs are shown, but the SRF account balance only reflects $50 million of these costs drawn against it for these two years. The Districts' disbursement schedule shows $121,000 and $17,718,000 needed in FFY's 1997 and 1998, respectively. However, the SWRCB has already committed $6.5 million and therefore the Districts' cash flow requirements start in FFY 1998 with $11,339,000 needed.
There is one other project approved for a SRF loan which may potentially be impacted by a funding commitment. The City of San Jose South Bay Water Recycling Project Phase I which has received funding commitments totaling $55 million pursuant to SWRCB Resolutions 96-031 and 97-010 has an estimated $75 million in unfunded eligibility remaining.
POLICY ISSUE: Should the SWRCB approve the proposed funding commitment based on the cash needs of the Districts for this project?
FISCAL IMPACT: The loan funds are available in the SRF account for the proposed capital outlay per FFY.
STAFF RECOMMENDATION: That the SWRCB adopt the proposed resolution.
DRAFT July 28, 1997
1. The County Sanitation Districts of Los Angeles County (Districts) have received a State Revolving Fund (SRF) loan commitment from the State Water Resources Control Board (SWRCB) pursuant to Resolution No. 96-16 for the Joint Water Pollution Control Plant Upgrade to Full Secondary Treatment Project;
2. The Districts are requesting a funding commitment until their eligible cash flow needs are met for this project;
3. The annual loan commitment would be based on the Districts' estimated cash flow needs or subject to the annual SRF funding cap, whichever is less; and
4. The annual encumbrance on the SRF account of the Districts' projected cash flow needs does not exceed 125 percent of the estimated corresponding annual SRF repayment stream.
THEREFORE BE IT RESOLVED THAT:
The State Water Resources Control Board:
1. Approves a resolution committing SRF funds to the County Sanitation Districts of Los Angeles County for the Joint Water Pollution Control Plant Upgrade to Full Secondary Treatment Project based on cash flow needs as follows:
SRF Account Balance
2. Will withdraw these loan commitments if biddable plans and specifications are not approved in accordance with the milestone schedule contained in the Division of Clean Water Program's Facility Plan Approval letter dated May 16, 1997. In accordance with Section VIII(J) of the SRF Policy, the Division may approve up to a ninety (90) day extension for any contract for good cause.
The undersigned, Administrative Assistance 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 August 21, 1997.
Administrative Assistant to the Board