ITEM 11: STATE FISCAL YEAR (SFY) 1998/99 INTENDED USE PLAN (IUP) AND FEDERAL FISCAL YEAR (FFY) 1999 FEDERAL CAPITALIZATION GRANT ACCEPTANCE

DISCUSSION: Federal regulations (40 CFR 35.3150) require the State to submit an annual IUP to the United States Environmental Protection Agency (EPA). The Division of Clean Water Programs (DCWP) has prepared a proposed SFY 1998/99 IUP consistent with federal rules which describes the intended uses of State Revolving Fund (SRF) monies for SFY 1998/99. A copy of the SFY 1998/99 IUP based on a FFY 1999 federal appropriation of $96,314,427 is contained in Exhibit A.

The DCWP proposes that the Executive Director be authorized to accept the FFY 1999 Capitalization Grant in the amount of about $96,314,427.

The federal appropriation requires a 20 percent state match. The match money ($19,262,885) for the FFY 1999 Capitalization Grant will be provided from the $80 million contained in the Safe, Clean, Reliable Water Supply Act passed by the voters on November 5, 1996, or by the local match contribution paid by local agencies participating in the local match program.

In addition, the states are allowed to transfer any unused Title II Grant Program funds to the SRF. California currently has a balance of $8,161,062 in the Title II funds considered to be excess that can be transferred to the SRF. The 20 percent state match is $1,632,212 which can be provided from assets in the Water Quality Control Fund (WQCF), the Local Match Program, or from proceeds of the 1996 Bond Law. This action would increase the SRF account by $9,793,274. As of July 31, 1998, a total of $3,108,127 is available for match in the WQCF account. The staff proposes to use this source for the required $1,632,212 state match. The federal Title II funds can be transferred to the SRF either by amendment to the FFY 1998 Capitalization Grant or with submittal of the FFY 1999 Capitalization Grant application.

POLICY ISSUE: Should the State Water Resources Control Board (SWRCB); 1) approve the

SFY 1998/99 IUP; 2) authorize the Executive Director to accept, if necessary, the FFY 1999 SRF Capitalization Grant; and 3) authorize the Executive Director to accept the Title II funds transfer to the SRF?

FISCAL IMPACT: The State match of $19,262,885 for the FFY 1999 Capitalization Grant will be provided from the $80 million in general obligation bonds made available for the SRF Loan Program in the Safe, Clean, Reliable Water Supply Act passed by the voters on November 5, 1996. For the Title II money transfer, an additional $1,632,212 in match funds from the WQCF will be needed.

RWQCB IMPACT: None

STAFF RECOMMENDATION: That the SWRCB adopt a resolution 1) approving the SFY 1998/99 IUP; 2) authorizing the Executive Director to accept the FFY 1999 SRF Capitalization Grant; 3) authorizing the Executive Director to accept transfer of excess Title II Construction Grant Funds to the SRF; and approving the transfer of $1,632,212 from the WQCF for the required state match.

[Attached documents not available electronically but can be obtain by calling Eric Torguson at (916) 227-4449.]

DRAFT December 28, 1998

WHEREAS:

1. The Division of Clean Water Programs has prepared a draft SFY 1998/99 IUP in compliance with federal rules, and such plan must be submitted to the United States Environmental Protection Agency annually;

2. A total of $8,161,062 in unused Title II Grant Funds is available for transfer to the SRF and the Division of Administrative Services will make application for the funds;

3. A total of $1,632,212 in funds from the Water Quality Control Fund (WQCF) is available to match the transferred Title II funds;

4. Congress is expected to appropriate FFY 1999 SRF monies in the amount of $96,314,427 and the Division of Administrative Services will make application for the funds;

5. The state match totaling $19,262,885 is available for use from the Safe, Clean, Reliable Water Supply Act or from the local match program; and

6. Authorization to accept the FFY 1999 SRF Capitalization Grant award and the Title II fund transfer is needed.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board:

1. Approves the SFY 1998/99 IUP;

2. Approves the transfer of $8,161,062 in Title II Grant Funds to the SRF and the transfer of $1,632,212 from the WQCF for the required state match; and

3. Authorizes the Executive Director to accept the FFY 1999 SRF Capitalization Grant including the Title II funds transfer.

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 January 21, 1999.

Maureen Marché

Administrative Assistant to the Board