ITEM 3 APPROVAL OF A STATE REVOLVING FUND LOAN FOR THE DAVENPORT COUNTY SANITATION DISTRICT (DISTRICT), DAVENPORT OLD TOWN SEWER RECONSTRUCTION PROJECT, STATE REVOLVING FUND (SRF) LOAN PROJECT NO. C-06-4329-110

DISCUSSION: In accordance with the State Water Resources Control Board's (SWRCB) Policy for Implementing the State Revolving Fund for Construction of Wastewater Treatment Facilities (Policy), adopted on February 16, 1995, and amended on June 18, 1998, projects not on the current adopted priority list need SWRCB approval to be placed in the priority list and to receive a SRF loan. The District's project is not on the adopted priority list. The District's project was on the FFY 1995 SRF Loan Program Priority List and the District asked to have the project removed because another funding source was to be utilized. The Small Communities Grant Program (SCGP) began about this time and the District's project was included on the statewide priority list for the SCGP adopted in May 1997. The District received planning and design grants, but SCGP funding ran out before the District could receive a construction grant commitment. The District has procured funding through the United States Department of Agriculture (USDA) - Rural Utilities Services for 75 percent of the construction of their project. The District requests placement on the FFY 1999 SRF Loan Program Priority List, with a Priority Class C rating, so they may obtain funding for the remainder of their project.

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; and (3) the draft revenue program. Also, the Policy requires approval of a water conservation program. However, the District requests a waiver of the water conservation requirements. The Urban Water Management Planning Act does not require Districts providing water to less than 3,000 customers to prepare a urban water management plan. Costs to prepare a document to satisfy the Policy requirements would prove burdensome to the District and the benefits are not cost-effective.

On December 21, 1998, the Division issued Facilities Plan Approval to the District for the Davenport Old Town Sewer Reconstruction Project, and the District agreed in writing with the approval on December 29, 1998.

The District is located in Santa Cruz County along Highway 1 approximately 12 miles north of Santa Cruz. The District serves a population of 300 and the treatment plant average dry weather flow is about 42,000 gallons per day.

The District's existing treatment facility consists of an influent flume, one facultative pond with four surface aerators, a continuous sand filter with polymer and hypochlorite addition, and a chlorine contact basin. Effluent is disposed of by reuse as cooling water by the adjacent Lonestar cement manufacturing plant and by transferring it to a local farmer for crop irrigation. The treatment facility has a history of violating its waste discharge requirements due to overflows from the treatment system.

The purpose of the project is to replace the gravity collection system in the part of the District referred to as "Oldtown" in order to reduce the excessive infiltration and inflow and to satisfy the Central Coast Regional Water Quality Control Board's (CCRWQCB) Cease and Desist Order No. 92-106.

Project consists of:

• Construction of a replacement gravity collection system for "Oldtown."
• Construction of a replacement pump station in the "Oldtown" section of the collection system.
• Construction of modifications to the pump station in the "Newtown" section of the collection system.

The engineer's estimated cost of the project is $885,000. The District is receiving the majority of the funding through a grant from the USDA - Rural Utilities Services and has received Planning and Design grants under the SCGP. The District is requesting a SRF loan commitment for $185,000 to fund the remaining local share costs.

The District has provided the Division with a schedule for the submittal of biddable plans and specifications and other milestones. These dates are contained in the milestone schedule in the Division's facilities plan approval letter. The Division may approve up to a ninety (90) day extension for good cause.

The District determined the project was categorically exempt from CEQA. The District filed a Notice of Exemption with the Santa Cruz County Clerk.

The District requests the SWRCB approve a loan of $0.185 million for this project and agrees to pay back the loan in accordance with the SRF Policy.

POLICY ISSUES: (1) Should the SWRCB place the District on the FFY 1999 SRF Loan Program Priority List, with a Priority Class C rating? (2) Should the SWRCB accept the District's request to have the water conservation requirements of the Policy waived? (3) 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, 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 biddable plans and specifications are not submitted by March 1, 1999?

RWQCB IMPACT: Central Coast Regional Water Quality Control Board. Completion of project will allow the District to comply with Cease & Desist Order No. 92-106.

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 February 1999 are as follows:

* Minimum Cap. Grant expected for FFY 99, based on anticipated Federal Budget.

STAFF RECOMMENDATION: (1) That the SWRCB adopt a resolution placing the District's project on the 1999 SRF Loan Program Priority List, with a Priority Class C rating. (2) That the SWRCB resolution accept the District's request to have the Policy requirements for water conservation waived. (3) That the SWRCB resolution approve a SRF loan of $0.185 million from the FFY 1999 account for the proposed project, with a repayment period of 20 years, and with the first repayment due one year after completion of construction. In accordance with Section IX(J) of the SRF Policy, the proposed resolution includes an expiration date for this preliminary loan commitment if the submittal date for biddable plans and specifications is not met.

DRAFT January 25, 1999

WHEREAS:

1. The State Water Resources Control Board, on February 16, 1995, adopted the Policy for Implementing the State Revolving Fund for Construction of Wastewater Treatment Facilities (Policy), and revised it on June 18, 1998;

2. The Division of Clean Water Programs has approved the project report, environmental documents, and draft revenue program, for the Davenport County Sanitation District's project;

3. The Davenport County Sanitation District filed a Notice of Exemption for the project, which has been reviewed and considered and it has been determined the project is exempt from CEQA under Categories 2 and 3 in the CEQA Guidelines;

4. The Davenport County Sanitation District is under Cease & Desist Order No. 92-106, issued by the Central Coast Regional Water Quality Control Board. Therefore, the Davenport County Sanitation District has requested placement of the Davenport Old Town Sewer Reconstruction Project on the FFY 1999 SRF Loan Program Priority List, with a Priority Class C rating; and

5. The Davenport County Sanitation District provides water services to a population of only 300 persons. Therefore, the Davenport County Sanitation District requests a waiver of the water conservation requirements outlined in the Policy, amended June 18, 1998.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board

1. Approves placement of the Davenport Old Town Sewer Reconstruction Project, Davenport County Sanitation District, on the FFY 1999 SRF Loan Program Priority List, in Priority Class C;

2. Approves a waiver of the water conservation requirements contained in the Policy dated February 1995, Amended June 18, 1998;

3. Approves a SRF loan of $0.185 million from the FFY 99 account to the Davenport County Sanitation District for construction of the Davenport Old Town Sewer Reconstruction Project, with a repayment period of 20 years, and the first repayment due one year after completion of construction; and

4. Will withdraw this preliminary SRF loan commitment if biddable plans and specifications are not submitted by March 1, 1999. The Division of Clean Water Programs may approve up to a ninety (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 February 18, 1999.

Maureen Marché

Administrative Assistant to the Board