STATE WATER RESOURCES CONTROL BOARD
WORKSHOP SESSION--DIVISION OF WATER QUALITY
October 6, 1999
SUBJECT
CONSIDERATION OF APPROVAL OF A RESOLUTION TO ESTABLISH A LINKED DEPOSIT PROGRAM FOR THE GLENN COUNTY RESOURCE CONSERVATION DISTRICT FOR THE DAIRY LOAN PROGRAM TO PROTECT WATER QUALITY (LOAN NO. C-06-6063-110)
DISCUSSION
The Glenn County Resource Conservation District (GCRCD) requested State Revolving Fund (SRF) funding for $1 million to finance the Dairy Loan Program to Protect Water Quality (Project). The Project objective is to assist individual dairy operations to meet water quality objectives and protect beneficial uses.
The Project area includes parts of Glenn, Tehama, Colusa, and Butte Counties, as shown on the accompanying map. There are approximately 150 dairies within the Project area and many of them are small family dairies of approximately 300 cows. Many of these small dairies were constructed before the development of current guidelines on best management practices (BMPs) for managing manure and wastewater. The Project will provide low-interest loans to these dairies to implement BMPs through a linked deposit program managed by the State Water Resources Control Board (SWRCB) in conjunction with the GCRCD.
According to the U.S. Environmental Protection Agency’s “Guide Manual on NPDES Regulations For Concentrated Animal Feeding Operations” (40 CFR 122.23), low-interest loans cannot be provided to dairies that exceed 1,000 animal units (750 dairy cows). GCRCD has stated that there are only five dairies within the Project area that exceed 1,000 animal units.
There is an estimated production of 600,000 tons of wet manure annually in the Project area. Wastewater generation is approximately 2,100 acre feet annually. Through the implementation of BMPs on individual dairies, the Project will reduce nitrogen and other nutrient contamination to ground and surface waters in the Stony Creek fan and Colusa Basin Drain, which are tributaries to the Sacramento River. Ground water supplies are especially at risk due to the porous soils in the Project area.
The loans to dairy operations will be for on-site structural improvements to protect water quality. These improvements will be in accordance with guidelines established by the University of California, Davis, Cooperative Extension Dairy Manure Management Series (1997). Examples of projects that would be funded include:
Constructing or increasing the size of
lagoons;
Lining lagoons;
Redesigning or resloping facilities such as corrals, pole barns, loafing barns, and similar structures so
they will drain into the lagoon
Constructing canals that drain into the lagoon;
Providing cover to keep rain off cows or piles of manure that will cause uncontrolled runoff; and
Installing irrigation equipment that will uniformly distribute lagoon water over crops.
In order to protect surface and ground water quality, all facilities on the dairy must drain into a lagoon of adequate size and must have adequate crop field acreage to absorb the annual increase of nutrients in the lagoon. The GCRCD will establish a subcommittee to review each facility design to ensure that the operation will implement appropriate measures to protect water quality. The subcommittee’s findings will be a requirement for loan funding. The Central Valley Regional Water Quality Control Board (CVRWQCB) will be included on the subcommittee. The GCRCD does not have staff to perform credit evaluations and to administer numerous loans to dairies. Therefore, it is proposed that this project be implemented under a linked deposit program, managed by the SWRCB, by contracting with one or more banks or other financial institutions to process the individual loans.
The SWRCB has used the linked deposit program three times previously to address other types of nonpoint source pollution. The basic features of this proposed linked deposit program are as follows:
The SWRCB deposits SRF funds into time deposits at a participating financial institution for a term of one year at below market rates. The reduction below market rates is three points in the currently established linked deposit programs. The one year time deposit will be renewed annually to match bank loans to dairies.
A dairy operator with a design approved by the subcommittee established by GCRCD applies to the financial institution for a loan under the linked deposit program.
The financial institution uses its normal lending guidelines to approve the loan. The financial institution assumes all the risk for the loan. However, in this situation, a dairy operator that does not meet the bank’s lending criteria may receive assistance from the Farm Services Agency (FSA) under the U.S. Department of Agriculture. The FSA works with banks to underwrite loans to farmers that have credit problems.
If approved, the interest rate on the loan to the dairy operator will be reduced by the same reduction on the rate for the SWRCB’s time deposit (historically, three points).
The SRF funds are fully insured by the Federal Deposit Insurance Corporation up to $100,000. Any SRF invested funds over $100,000 will be collateralized by the financial institution in accordance with State Banking Laws.
The GCRCD has completed a Notice of Exemption under Section 15302(c) of the California Environmental Quality Act requirements.
POLICY ISSUE
Should the SWRCB approve a resolution to establish a linked deposit program for $1 million for the Project with the following contingencies?
GCRCD must begin the Project by November 1, 2000;
Dairies within the Project area with more than 1,000 animal units as defined by the U.S. Environmental Protection Agency’s “Guide Manual on NPDES Regulations For Concentrated Animal Feeding Operations” (40 CFR 122.23) will not be eligible to participate in the Project; and
The SWRCB Executive Director or his representative will be authorized to enter into contracts with banks, financial institutions, or other agencies to implement this Project.
|
|
SFY |
SFY |
SFY |
SFY |
SFY |
|
|
1999-00 |
2000-01 |
2001-02 |
2002-03 |
2003-04 |
|
|
___________ |
__________ |
__________ |
_________ |
_________ |
|
Beginning
Balance: |
$527,645,913 |
$273,799,338 |
$88,764,928 |
$30,297,438 |
$83,190,774 |
|
Est.
Repayments:[1] |
74,275,604 |
92,681,564 |
102,745,219 |
116,211,062 |
139,765,070 |
|
Cap
Grants:[2] |
55,000,000 |
0 |
0 |
0 |
0 |
|
Est.
SMIF Interest: |
10,000,000 |
6,000,000 |
1,000,000 |
1,000,000 |
1,000,000 |
|
Est.
Disbursements:[3] |
-379,722,179 |
-254,015,974 |
-142,112,709 |
-64,317,726 |
-0 |
|
Subtotal: |
$287,199,338 |
$118,464,928 |
$50,397,438 |
$82,690,774 |
$223,455,844 |
|
City
of Escondido
4156-310 |
-5,400,000 |
-10,800,000 |
-10,600,000 |
|
|
|
City
of Patterson
4508-110 |
0 |
|
|
|
|
|
Bodega
Bay PUD
4615-110 |
|
-1,900,000 |
|
|
|
|
Elsinore Valley MWD 4686-110 |
-8,000,000 |
-17,000,000 |
-8,500,000 |
|
|
|
Glenn Co. Res. Con.
Dist. 6063-110 |
|
|
-1,000,000 |
|
|
|
|
|
|
|
|
|
|
Balance: |
$273,799,338 |
$88,764,928 |
$30,297,438[4] |
$83,190,774 |
$223,955,844 |
RWQCB IMPACT
Yes, CVRWQCB.
STAFF RECOMMENDATION
That the SWRCB approve a resolution to establish a linked deposit program for $1 million for the Project with the following contingencies:
GCRCD must begin the Project by November 1, 2000;
Dairies within the Project area with more than 1,000 animal units as defined by the U.S. Environmental Protection Agency’s “Guide Manual on NPDES Regulations For Concentrated Animal Feeding Operations” (40 CFR 122.23) will not be eligible to participate in the Project; and
The SWRCB Executive Director or his representative will be authorized to enter into contracts with banks, financial institutions, or other agencies to implement this Project.
Note: The Project area map is not available electronically. For copies, contact: Paul Roggensack/Division of Water Quality/SWRCB/P.O. Box 944213/Sacramento, CA 94244-2130/(916) 657-1043 or FAX (916) 657-2127
________________________________________________________________________________________
September 27, 1999 DRAFT
STATE WATER RESOURCES CONTROL BOARD
RESOLUTION NO. 99-__
APPROVAL OF A RESOLUTION TO ESTABLISH
A LINKED DEPOSIT PROGRAM FOR
THE GLENN COUNTY RESOURCE CONSERVATION
DISTRICT FOR
THE DAIRY LOAN PROGRAM TO PROTECT WATER
QUALITY
(LOAN NO. C-06-6063-110)
WHEREAS:
1. The Glenn County Resource Conservation District (GCRCD) submitted an application to establish a linked deposit program for $1 million for the Dairy Loan Program to Protect Water Quality (Project).
2. The Project will provide assistance to up to 150 small dairies in the Project area to meet water quality standards.
3. The District has completed a Notice of Exemption under Section 15302(c) of the California Environmental Quality Act.
THEREFORE, BE IT RESOLVED THAT:
The State Water Resources Control Board approves the use of the SRF to establish a linked deposit program for $1 million for the Project with the following contingencies:
GCRCD must begin the Project by November 1, 2000;
Dairies within the Project area with more than 1,000 animal units as defined by the U.S. Environmental Protection Agency’s “Guide Manual on NPDES Regulations For Concentrated Animal Feeding Operations” (40 CFR 122.23) will not be eligible to participate in the Project; and
The SWRCB Executive Director or his representative will be authorized to enter into contracts with banks, financial institutions, or other agencies to implement this Project.
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 October 21, 1999.
_____________________________________
Maureen Marché
[1] Est. repayments include repayments from existing loans and from loans expected to be executed in the next few years for projects with existing commitments.
[2] An EPA Capitalization Grant of $55,000,000 for SFY 2000 is anticipated. However, the federal budget is not approved at this time.
[3] Estimated disbursements includes disbursements remaining on existing loans as well as disbursements anticipated on loans executed for projects with existing commitments (including FY2000 commitments). The Division will revise the estimated disbursements total each month as cash draw forecasts are updated.
[4] The cash balance on June 30, 2002, is estimated to be $5,297,438 above the level needed to maintain a $25,000,000 reserve.