SUBJECT

APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR ELSINORE VALLEY MUNICIPAL WATER DISTRICT (DISTRICT) REGIONAL WASTEWATER RECLAMATION FACILITIES EXPANSION, SRF LOAN PROJECT NO. C-06-4686-110

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 on the adopted priority list need SWRCB approval to receive a SRF loan. 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; (3) the draft revenue program; and (4) water conservation plan or the schedule for the local adoption of a water conservation plan

The Division issued Facilities Plan Approval on August 26, 1999, to the District for the regional wastewater reclamation facilities expansion. The District agreed in writing with the approval on August 27, 1999.

The District’s service area is located in western Riverside County about 100 miles east-southeast of Los Angeles along the Interstate 15 corridor. The District’s regional wastewater treatment plant (plant) is located in the City of Lake Elsinore (City) and provides wastewater treatment for most of the City and surrounding areas within the Lake Elsinore Basin.

The current average daily flow at the plant is 3.7 million gallons per day (mgd). The plant is expected to reach its current capacity of 4 mgd in early 2001. The proposed project will expand the treatment capacity to 8 mgd and will provide a reserve treatment capacity of about 13 years as estimated from the date of initiation of construction of February 21, 2000. The estimated construction cost of the project is $31 million. The estimated loan eligible construction cost of the project is $28.8 million. The estimated total eligible construction cost including allowances is $33.5 million.

The proposed project will consist basically of the construction of the following: a new headworks, a new influent pumping station, two new oxidation ditches with attached anaerobic compartments, a new secondary clarifier, a new disinfection facility, new power supply and distribution facilities and a new operations building.

In accordance with the SRF Policy requirements for water conservation, the District has submitted a schedule for the preparation and adoption of its water conservation plan. The District has indicated December 22, 1999, as the scheduled date for adoption of the water conservation plan by the District’s Board of Directors. In accordance with Section IX (C) of the Policy, the draft resolution includes the condition that the loan contract for the project will not be issued until the District’s Board of Directors has adopted a water conservation plan acceptable to the Division.

The District provides potable water to about 90 percent of the water users in its service area and has indicated that it has adequate available water supplies to last over the life of this project (13 years). The sources of water for the District are its groundwater wells, imported water from Eastern Municipal Water District, local surface run-off to Canyon Lake, and Western Municipal Water District raw water discharged to Canyon Lake.

The District has provided the Division with a schedule containing project milestones. These dates are included in the Division’s facilities plan approval letter. In accordance with Section IX (I) of the SRF Policy, the draft resolution includes February 21, 2000, as the deadline for initiation of construction. The Division may approve up to a 90-day extension for good cause.

The District prepared a Mitigated Negative Declaration/Initial Study (MND/IS) for the proposed project, which was distributed for public review and circulated through the State Clearinghouse (SCH# 99041123) from April 29, 1999, through May 28, 1999. The District held a public hearing on May 26, 1999. During the review period, the District received comments from one state agency, and two county agencies. The District provided adequate responses to the comments. The District’s Board of Directors approved the project and adopted the MND on July 14, 1999. The District filed a Notice of Determination with the Riverside County Clerk and the Governor’s Office of Planning and Research on July 16, 1999.

The District has applied for the full estimated eligible SRF loan amount of $33.5 million for the project. However, due to the current funding cap of $25 million per year per agency, the District requests the SWRCB to approve a loan of $25 million for this project for state fiscal year 2000, with a 20 year repayment period and with the first SRF loan repayment due one year after completion of construction.

POLICY ISSUE

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? 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 construction of the project is not initiated by February 21, 2000? Should the SWRCB, in accordance with Section IX (C) of the Policy require that the loan contract for the project not be issued until the District’s Board of Directors has adopted a water conservation plan that is acceptable to the Division.

RWQCB IMPACT

The Santa Ana Regional Water Quality Control Board has prescribed waste discharge requirements for the plant to protect the beneficial uses of Temescal Creek, Reach 5; Santa Ana River, Reach 3; and the Elsinore Groundwater Subbasin underlying the discharge. The proposed project will ensure continued compliance with the discharge requirements.

FISCAL IMPACT

The SWRCB adopted Resolution No. 99-40 on May 20, 1999, which changed the method for determining the amount of funding available for new loans to a system based on the availability of cash to make disbursements to the project under consideration by the SWRCB. A minimum cash balance of $25,000,000 will be maintained. The SRF account balances, anticipated repayment amounts, and project approvals under consideration by the SWRCB in October 1999 are as follows:

	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

STAFF RECOMMENDATION

That the SWRCB adopt a resolution approving a SRF loan of $33.5 million for the District’s project, with $25 million from the SFY 2000 account, with a repayment period of 20 years, and with the first repayment due one year after completion of construction. In accordance with the February 16, 1995, revisions to the SRF Policy, the proposed resolution includes (a) an expiration date for this preliminary loan commitment if the date of initiation of construction of the project is not met; and (b) the requirement that the loan contract for the project will not be issued until the District’s Board of Directors has adopted a water conservation plan that is acceptable to the Division.

_______________________________________________________________________________________

DRAFT September 27, 1999

STATE WATER RESOURCES CONTROL BOARD

RESOLUTION NO. 99 –

APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN

FOR ELSINORE VALLEY MUNICIPAL WATER DISTRICT (DISTRICT)

REGIONAL WASTEWATER RECLAMATION FACILITIES EXPANSION

SRF LOAN PROJECT NO. C-06-4686-110

WHEREAS:

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

2. The SWRCB, on June 18, 1999, adopted the state fiscal year 1999/2000 SRF Loan Program Priority List which included the Regional Wastewater Reclamation Facilities Expansion Project for the District in Priority Class C;

3. The Division of Clean Water Programs (Division) has approved the Facility Plan for the District’s Project; and

4. The District has adopted a Mitigated Negative Declaration (State Clearinghouse No. 99041123) prepared for the project, which has been reviewed and considered and it has been determined that the project will not result in any significant environmental impacts.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board:

1. Approves a SRF loan of $33.5 million with $25 million from the state fiscal year 2000 account for the District’s Regional Wastewater Reclamation Facilities Expansion, with a repayment period of 20 years, and the first repayment due one year after completion of construction;

2. Will withdraw this preliminary SRF loan commitment if the District does not initiate construction of the project by February 21, 2000. The Division may approve up to a 90 day extension for good cause; and

3. Directs the Division to allocate the remaining $8.5 million consistent with the construction schedule and availability of funds.

4. Directs the Division not to issue the loan contract until the District’s Board of Directors has adopted a water conservation plan that is acceptable to the Division.

CERTIFICATION

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

Administrative Assistant to the Board

[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.