ITEM: 8

SUBJECT: CONSIDERATION OF APPROVAL OF A RESOLUTION TO PROVIDE A STATE REVOLVING FUND LOAN TO ADOPT-A-WATERSHED INC. FOR THE ADOPT-A-WATERSHED PROGRAM (LOAN NO. C-06-6059-110)

DISCUSSION: Adopt-A-Watershed Inc. (AAW) has submitted a request for a State Revolving Fund (SRF) loan for the Adopt-A-Watershed Program (Program). The amount of the request is $200,000 per year over the next three years for a total of $600,000.

AAW is a nonprofit corporation that provides training and educational kits on watershed management for school children in kindergarten through 12th grade. The Program provides the children with the opportunity to explore, manage, and restore the watershed in which their school is located. The training kits provide teachers with all the materials necessary for a progressive exposure with each school grade to the science of watershed management.

The Program curriculum incorporates a broad array of sciences and resources including botany, wildlife, soils and geology, aquatic studies, ecosystems, agriculture, and human cultures. Other aspects of the Program include field studies to help students become aware of their watershed and participate in restoration projects. Examples of restoration projects include stream bank restoration, erosion control, and planting native vegetation.

In addition to education and restoration of watersheds, the Program will assist students in community education projects. Examples include producing posters, brochures, and videos; encouraging water conservation; and labeling storm drains.

AAW has 39 regional coordinators and 68 community coordinators working with more than 1,000 teachers at over 200 schools in California. Over 3,000 teachers have been trained and more than 25,000 students per year participate in the Program. The Program has expanded to other states, but only costs in California would be eligible for SRF funding.

AAW receives funding through a number of State and federal grants, including two Federal Clean Water Act section 319 grants. It also receives funding from private grants, donations, sales, and fees from its curriculum.

Payments from reimbursable State and federal grants can take five or six months after expenses have been incurred. This makes it difficult for AAW to pay its normal operating expenses. The SRF loan will shorten the time for payment of operating expenses to no more than one month. The SRF used in this fashion will help AAW's cash flow and management and thereby make it more effective in providing watershed management training and restoration. AAW is requesting funding for only a three-year period as it goes through a transition to be less dependent upon government support.

The dedicated repayment source will be from the private grants, donations, sales, and fees from the curriculum. No State or federal grants will be used to repay the SRF loan. AAW receives private grants up front on condition that AAW does work specified by the grantors. AAW will deposit these private grants along with the other private sources into an interest bearing trust account dedicated solely for repayment of the SRF loan. The higher interest rate on the trust account will enable AAW to use SRF funds to pay for program expenses of both those created by the time lag for reimbursable State and federal grants and those specified by the private grantors. The trust account will only use investments certified by the State Treasurer's Office. SRF funds will be disbursed only if AAW has identified adequate funds for repayment.

The Program is not a "project" as defined under the California Environmental Quality Act (CEQA). First, Title 14, California Code of Regulations (14 CCR) section 15378(a) of the CEQA Guidelines defines "project" as
"an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment." Second, 14 CCR section 15378(b)(5) of the CEQA Guidelines excludes from the definition of "project", "The creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment."

POLICY ISSUE: Should the SWRCB approve an SRF loan for $600,000 to AAW for the program provided an interest bearing trust account dedicated to repaying the SRF loan is established by AAW?

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 Federal Fiscal Year (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 March 1999 are as follows:

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

RWQCB IMPACT: Yes, all Regional Water Quality Control Boards.

STAFF RECOMMENDATION: That the SWRCB approve an SRF loan for $600,000 to AAW for the Program provided an interest bearing trust account dedicated to repaying the SRF loan is established by AAW.

FEBRUARY 22, 1999 DRAFT

WHEREAS:

1. The Adopt-A-Watershed Inc. (AAW) submitted an application for a State Revolving Fund (SRF) loan for $600,000 for the Adopt-A-Watershed Program (Program).

2. The Program will provide training and education to students from kindergarten to 12th grade on watershed management and stewardship.

3. These training and educational efforts will benefit water quality throughout the State by teaching students to explore, manage, and restore watersheds and interact and educate their communities on water conservation and watershed enhancement and management.

4. AAW will invest private funds into an interest bearing trust account dedicated to and sufficient to repay the SRF loan.

5. The Program is not a project as defined in the California Environmental Quality Act.

THEREFORE BE IT RESOLVED THAT:

The SWRCB approves an SRF loan for $600,000 to the AAW for the Program provided an interest bearing trust account dedicated to repaying the SRF loan is established by AAW.

The undersigned, Administrative Assistant to the SWRCB, 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 March 18, 1999.

______________________________

Maureen Marché

Administrative Assistant to the Board