ITEM 13:  EXTENSION OF THE EXPIRATION DATE FOR THE STATE REVOLVING FUND (SRF) LOAN COMMITMENT FOR THE LOS OSOS COMMUNITY SERVICES DISTRICT, LOS OSOS/BAYWOOD PARK WASTEWATER PROJECT, SRF PROJECT NO. C-06-4014-110

DISCUSSION: By Resolution No. 90-19 dated February 15, 1990, the State Water Resources Control Board (SWRCB) provided a funding commitment for this project for $47 million ($40 million from Federal Fiscal Year (FFY) 1992 funds and $7 million from FFY 1993 funds) to San Luis Obispo County (County) representing the Los Osos/Baywood Park area. The proposed project consists of sewage collection, treatment, and disposal for approximately 6,900 existing residences. Project construction will prevent further groundwater nitrate contamination caused by on-site systems and remedy existing violations of the Basin Plan and Regional Water Quality Control Board Orders.

Due to legal actions by some property owners in opposition to the project, the project experienced extensive delays in 1990 through 1992. On January 21, 1993, the SWRCB adopted Resolution No. 93-7 amending Resolution No. 90-19 by exchanging the earlier SWRCB’s commitment for FFY 1992 and FFY 1993 funds to FFY 1995. In addition, Resolution No. 93-7 granted the project first priority for funding from the available 1995 SRF repayment money.

In 1993, legal actions were resolved in favor of the County. However, due to the continuing organized opposition by the same property owners, and lengthy additional studies conducted by consultants at the direction of the County, the project sustained more delays. On January 18, 1996, the SWRCB adopted Resolution No. 96-4 amending Resolution No. 93-7 by exchanging the SWRCB’s commitment from FFY 1995 SRF repayment funds to FFY 1998 SRF repayment funds. Resolution No. 96-4 also required the County to submit biddable plans and specifications (P&S) by September 1, 1997, or the preliminary loan commitment would be withdrawn.

The County did not meet the September 1, 1997, deadline for submittal P&S. In July 1997, the County appeared before the California Coastal Commission (Commission) to address an appeal of the construction permit for the project. Due to voiced opposition at the meeting from members of the Los Osos/Baywood Park Community, the Commission postponed its decision until a full hearing could be held. (Delays continued, and in January 1999, the Commission denied the construction permit.)

On November 18, 1997, the SWRCB adopted Resolution No. 97-108 amending Resolution No. 96-4 by exchanging the SWRCB’s commitment from FFY 1998 SRF repayment funds to FFY 1999 and FFY 2000 SRF repayment funds. Resolution No. 97-108 also required the County to start construction by April 1, 1999, or the preliminary loan commitment would be withdrawn.

Although the design of the County’s selected project was nearly complete, in the November 1998 general election, the local voters overwhelmingly approved the formation of the Los Osos Community Services District (District), which now has jurisdiction over the project area. On January 1, 1999, the District was established and assumed responsibility for constructing the project. On January 13, 1999, two of the new District board members met with Division of Clean Water Programs (Division) staff concerning their plans. The District has decided to examine additional project alternatives in an effort to reduce the cost of the proposed project. The District, by letter dated March 11, 1999, requested the SWRCB extend the expiration date of the SRF loan commitment again. The Division, by letter dated April 1, 1999, extended the deadline 90 days, to July 1, 1999, in order to have time to process the District’s request and develop a realistic new schedule. The District has projected the completion of planning by July 2000 and completion of design and commencement of construction by July 2001. Therefore, an extension of more than two years would be needed for submittal of biddable P&S.

POLICY ISSUE; Should the SWRCB extend the SRF loan commitment of $47 million for the Los Osos/Baywood Park project, and should the SWRCB, in accordance with Section IX(I) of the SRF Policy, condition this approval by requiring expiration of the preliminary loan commitment if biddable plans and specifications are not submitted by August 1, 2001?

RWQCB IMPACT: Central Coast Regional Water Quality Control Board; Completion of project will allow the District to comply with Cease and Desist Orders No. 89-125, 89-126, and 89-127. These orders require compliance with the Basin Plan mandate to cease discharging from individual on-site waste treatment systems, which are contaminating the groundwater.

FISCAL IMPACT: $47 million currently committed to the County would be "assigned" to the District and remain unavailable to other projects ready for construction, but lack funding.

STAFF RECOMMENDATION: That the SWRCB deny the District’s request to extend the SRF loan commitment and allow the loan commitment to expire. This will enable available funds to be used for projects that are now ready to proceed with design and construction. After the District has completed the planning stage and has received a new Facilities Plan Approval, the SWRCB will give the District top priority for a new preliminary loan commitment (possibly the October 2000 SWRCB meeting).

1. The State Water Resources Control Board (SWRCB) adopted Resolution No. 97-108 on November 18, 1997, amending Resolution No. 96-4 by exchanging the SWRCB’s commitment from Federal Fiscal Year (FFY) 1998 SRF repayment funds to FFY 1999 and FFY 2000 SRF repayment funds. Resolution No. 97-108 also included a "sunset date" of April 1, 1999, for commencement of construction or the preliminary loan commitment would be withdrawn. The "sunset date" was extended by the Division of Clean Water Programs to July 1, 1999;

2. The Los Osos Communities Services District (District), approved in the November 1998 elections, was established in January 1999 and has assumed responsibility for construction the Los Osos/ Baywood Park Wastewater project from San Luis Obispo County;

3. The SRF loan commitment has been extended three times by the SWRCB since the original resolution was adopted on February 15, 1990 (Resolution No. 90-19); and

4. The District’s current project schedule indicates planning will be complete by July 2000, design complete by July 2001, and construction complete by July 2003. This is approximately ten years behind the schedule included in the original facilities plan approval letter, dated January 31, 1990.

THEREFORE BE IT RESOLVED THAT:

1.  The State Water Resources Control Board denies the request for an extension and will allow the SRF loan funding commitment, approved by Resolution No. 97-108 for Los Osos/Baywood Park project, to expire on July 1, 1999; and

2.  The State Water Resources Control Board will provide the Los Osos Communities Service District first priority for a new funding commitment after the District has completed the planning process.

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 May 20, 1999.

Maureen Marché
Administrative Assistant to the Board