ITEM: 7

SUBJECT
CONSIDERATION OF APPROVAL OF A RESOLUTION TO PROVIDE A STATE REVOLVING FUND LOAN OF $1,527,500 TO THE SACRAMENTO VALLEY OPEN SPACE CONSERVANCY FOR THE CLEAN WATER AND WETLANDS PROTECTION PROJECT--SACRAMENTO PRAIRIE VERNAL POOL ACQUISITION (LOAN NO. C-06-6055-110)

DISCUSSION
The Sacramento Valley Open Space Conservancy (SVOSC) applied for a State Revolving Fund (SRF) loan for the Clean Water and Wetlands Protection Project--Sacramento Prairie Vernal Pool Acquisition (Project). The SRF loan is to purchase two critical parcels of 184 and 160 acres containing significant amounts of vernal pools and other associated wetlands.

The SVOSC intends to eventually create a contiguous preserve of 2,000 to 3,000 acres containing dense and rare, old and young terrace, northern hardpan vernal pools and related wetlands in the Northern Laguna Creek Watershed. SRF funding of the proposed parcels will bring the total protected area to over 1,200 acres. The preserve area is within the Sacramento Urban Services Boundary (USB).

The Project site is located in south Sacramento County between Highway 16, Eagles Nest Road, Grant Line Road, Calvine Road, and Excelsior Road. On the accompanying map, the properties to be purchased are the WPT Group property which is 184 acres and the Sylva property which is 160 acres. The WPT Group property will be purchased for $1,351,000 or $7,342 per acre. The Sylva property will be purchased for $852,000 or $5,325 per acre. The SVOSC identified these two parcels as high priority because they contain the highest density of vernal pools within the preserve, and they are adjacent to existing preserve lands.

The amount of the SRF loan request is $1,527,500. This is to pay for the entire price of the Sylva property and one half the price of the WPT Group property. The SVOSC will receive a grant from the Packard Foundation to pay for the other half of the WPT Group property. The Packard Foundation grant is contingent upon SVOSC providing 50 percent matching funds for the WPT Group property. The SRF loan provides the matching funds for the Packard Foundation Grant.

The primary purpose of the Project is to protect water quality in the Northern Laguna Creek Watershed including the associated vernal pools and wetlands. The Project will mitigate for water quality impacts from development before it occurs. Mitigation usually occurs after development and is not as effective. According to the Sacramento Regional Council of Governments, residential permits equaled about 3,600 in 1995. In 1998 residential permits increased to about 6,000. A contiguous preserve within the USB will act as a buffer and a natural filter and drainage system to remove pollutants from runoff from imminent residential and commercial development which will eventually surround the preserve.

The Project is in one of the 17 regions identified in the Framework Agreement for the Interagency Vernal Pool Stewardship Initiative (Initiative). The State Water Resources Control Board (SWRCB) and California Environmental Protection Agency (Cal/EPA) are signatories to this Initiative. Other cooperating agencies include the California Department of Food and Agriculture, the California Resources Agency, the California Department of Fish and Game, the U.S. Bureau of Land Management, the U.S. Environmental Protection Agency, the U.S. Bureau of Reclamation, the Natural Resources Conservation Service, the U.S. Army Corps of Engineers, the U.S. Fish and Wildlife Service (USFWS), the U.S. Forest Service, and the U.S. Geological Survey. Through this Initiative, all of the above agencies agreed to: ensure the protection of California’s vernal pool ecosystems, both for their intrinsic value and for future generations; integrate regulatory and planning activities to address economic concerns; and promote an ecosystem management approach that is feasible, flexible, and cost-effective.

The Project is an important component of the South Sacramento Habitat Conservation Plan (HCP). The HCP involves all stakeholders in the study area including developers, environmentalists, agriculturalists, and government agencies. The goals of the HCP are to: ensure long-term viability of sensitive habitat areas; accomodate development in appropriate sites with a fair and reasonable mitigation cost structure; and protect agricultural lands from constraints associated with the HCP implementation.

The Project will complement the goals and benefits of the Cosumnes River Preserve of which the SWRCB is a partner by providing an SRF loan to the Nature Conservancy for purchase of the Howard Ranch. The Project, like the Cosumnes River Preserve, will include grazing as part of the management strategy for this preserve. This will help retain the local ranch economy of the land.

The Project will provide critical habitat for several endangered species. Plants and animals found on the properties include Sacramento Orcutt grass (found only within the USB and at Rancho Seco), tadpole shrimp, fairy shrimp, and a nesting colony of tri-colored blackbirds. There are also endangered species found on properties close to the Project. These include Swainson’s Hawk found on the Cosumnes River Preserve, approximately 1.5 miles away, and the California Tiger Salamander and the Western Spade Foot Toad found several miles to the south near Rancho Seco.

The Project will create a mitigation bank according to guidance established by the USFWS to mitigate habitat destruction and endangered species takes by developers and other entities. In order to develop one acre of wetlands with endangered species, the USFWS stipulates that the developer may purchase from the owner of an approved mitigation bank two acres of comparable land. The mitigation bank will simplify the permitting process for developers. Otherwise, the developer is required to locate, acquire, monitor, and manage wetlands on an independent site approved by the USFWS. The payment by the developer to the owner of the mitigation bank essentially buys the developer credits which are used to minimize the impacts to endangered species under the federal Endangered Species Act.

The SVOSC will enter into a Mitigation Bank Project Agreement with the USFWS to establish a mitigation bank on the properties within the preserve. Once the mitigation bank is established, the owner of the mitigation bank is required to place a perpetual conservation easement on the property and establish an endowment to provide for monitoring and enforcement by a qualified third party conservation organization. The owner of the mitigation bank markets the credits to developers or other groups needing to mitigate for destruction of wetlands that are endangered species habitat within an approved service area. The private market sets the price of the credits.

The dedicated repayment source for the loan will be the sale of mitigation credits from the mitigation bank established through this Project. The SVOSC hired the Center for Natural Lands Management to prepare a market study for mitigation bank credits within Sacramento County. The study found that 42 credits have been sold from four different mitigation banks since the first one was created in July 1996. If a mitigation bank is created for the proposed parcels, there is expected to be over 300 credits available from all mitigation banks. The Sylva property will provide 24 credits, and the WPT Group property will provide 18 credits to this supply. The study estimates that the demand for mitigation from developers will require that 17 to 21 credits will be sold each year through the year 2005. The proposed parcels are expected to provide five to six credits a year to be sold. Historically, according to the study, the minimum price for a credit is $50,000.

Since the properties are within the USB, they are in strong demand for residential and commercial development. Unless the SRF is used to purchase these properties, the opportunity to protect vernal pools and other associated wetlands in the upper Northern Laguna Creek Watershed may be lost forever.

The Project is exempt from the California Environmental Quality Act, Public Resources Code Section 21000 et seq., as a project to protect natural resources and the environment (California Code of Regulations, title 14, §§15307 and 15308).

POLICY ISSUE
Should the SWRCB approve an SRF loan to the SVOSC for $1,527,500 for the Clean Water and Wetlands Protection Project--Sacramento Prairie Vernal Pool Acquisition?

FISCAL IMPACT
The SWRCB adopted Resolution No. 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 project approvals under consideration by the SWRCB in August 1999 are as follows: (note you may need to print the table in landscape)
 

	SFY	SFY	SFY	SFY	SFY
	1999-00	2000-01	2001-02	2002-03	2003-04
	___________	__________	__________	__________		_________
Beginning Balance:	599,276,134	464,961,692	223,772,509	93,686,601	94,497,968
Repayments:	75,274,470	92,820,506	112,461,408	129,494,697	130,786,861
Cap Grants:	0	0	0	0	0
SMIF Interest:	12,000,000	7,000,000	1,000,000	1,000,000	1,000,000
Disbursements:	-220,061,412	-341,009,689	-243,547,316	-129,683,330	-146,961,593
City of Patterson * 4508-111	0
Sac Val Open Space Conserv 6055-110	-1,527,500
Balance:	$464,961,692	$223,772,509	$93,686,601	$94,497,968	$79,323,236

*This previously approved project has a change in disposal site and a revised EIR.

RWQCB IMPACT
Yes, Central Valley Regional Water Quality Control Board.

STAFF RECOMMENDATION
That the SWRCB approve an SRF loan of $1,527,500 to the SVOSC for the Clean Water and Wetlands Protection Project--Sacramento Prairie Vernal Pool Acquisition.

Note: The maps are not available electronically. For copies, contact:  Paul Roggensack, Division of Water Quality, SWRCB, P.O. Box 944213, Sacramento, CA 94244-2130(916) 657-0673 or FAX (916) 657-2127.  e-mail: roggp@dwq.swrcb.ca.gov

WHEREAS:

1.  The Sacramento Valley Open Space Conservancy (SVOSC) requested a State Revolving Fund (SRF) loan of $1,527,500 for the The Clean Water and Wetlands Protection Project--Sacramento Prairie Vernal Pool Acquisition (Project).

2.  The Project will protect valuable vernal pools and habitat in the upper Northern Laguna Creek Watershed.

3.  The Project will protect water resources in the upper Northern Laguna Creek Watershed.

4.  The Project will complement the Cosumnes River Preserve, which the State Water Resources Control Board (SWRCB) is a partner and has provided SRF funding.

5.  The Project is in accordance with the Framework Agreement for the Interagency Vernal Pool Stewardship Initiative.

6.  The Project is part of the South Sacramento Habitat Conservation Program to help mitigate development impacts.

7.  The Project is exempt from the California Environmental Quality Act, Public Resources Code section 21000 et seq., as a project to protect natural resources and the environment (California Code Regulations, title 14, §§15307 and 15308).

THEREFORE BE IT RESOLVED THAT:

The SWRCB approves an SRF loan of $1,527,500 to the SVOSC for the Clean Water and Wetlands Protection Project-Sacramento Prairie Vernal Pool Acquisition.
 

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 August 19, 1999.

_____________________________________
Maureen Marché
Administrative Assistant to the Board