ITEM 5

SUBJECT

APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR THE CITY OF VACAVILLE (CITY), WASTEWATER TREATMENT PLANT EXPANSION, SRF LOAN PROJECT NO. C-06-4610-120

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 last 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) the water conservation plan.

On October 6, 1998, the Division issued Facilities Plan Approval to the City for both the Wastewater Treatment Facility Interim Improvements (Phase I) and Expansion (Phase II) projects, and the City agreed in writing with the approval October 6, 1998.

The City is located about 35 miles west of Sacramento, and lies within the County of Solano. The City’s present wastewater treatment facilities were originally constructed in 1959, and in the late 1960’s and early 1990’s some major improvements for additional capacity were completed. The City owns and operates the facility that serves a current population of about 86,000. The current wastewater flow to the facility is about eight million gallons per day (mgd). The facility discharges the treated effluent to Old Alamo Creek along the north boundary of the treatment plant. Old Alamo Creek flows to the east and joins Alamo Creek, which in turn joins Ulatis Creek, Cache Slough, and ultimately the Sacramento-San Joaquin River Delta. The current wastewater flows to the plant during the wet weather have exceeded its design treatment capacity on several occasions and, in addition, the plant is not capable of achieving full nitrification which results in violations of the Central Valley Regional Water Quality Control Boards’ (CVRWQCB) waste discharge requirements. The proposed project is Phase II of the two phase construction project, Phase I construction involved interim improvements to the existing facility. The SRF Loan funds for these improvements were approved by the SWRCB in November 1998 for $4.5 million, under Resolution Number 98-113. The subject Phase II project will add a parallel plant to expand the treatment capacity to 14.7 mgd for approximately $58 million construction cost, and will provide a reserve treatment capacity for 12 years (until the year 2012).

The City and its engineer have determined that the construction of the proposed project in two separate contracts (interim improvements & expansion) is the cost-effective solution for bringing the plant into compliance with CVRWQCB standards. The interim contract (C-06-4610-110), approved earlier by the SWRCB, consisted of interim improvements to the existing treatment system that included improvements to the headworks, addition of a new blower system, and secondary clarifier sludge withdrawal facilities. The proposed Phase II expansion project (C-06-4610-120) will provide a parallel treatment plant that would include an addition of a new influent pump station, headworks, aeration basins with blowers and mixers, secondary clarifiers, chlorine contact facilities, solids handling facilities, administration and laboratory buildings. The total estimated SRF loan eligible project cost for this contract including engineering and administration allowances is $64.3 million.

The City receives its water supply from deep water wells within the City from an acquifer which is over 1000 feet below the ground surface, and also from surface water through Solano Irrigation District, Putah South Canal, and North Bay Aqueduct. The City has indicated that it has enough water resources available to serve the projected population.

In accordance with the Policy requirements for water conservation, the City has adopted a water conservation program consistent with local ordinances and authorities.

The City has provided the Division with a schedule of submittal dates for 100 percent plans and specifications and other milestones for both construction phases of the proposed project. These submittal dates are contained in the milestone schedule in the Division’s facility plan approval letter. In accordance with Section IX (J) of the Policy, the draft resolution includes January 31, 2001, as the deadline for initiation of construction. The Division may approve up to a 90 day extension for good cause.

The City prepared a Draft Environmental Impact Report (EIR) for the proposed project that was distributed for public review and circulated through the State Clearinghouse (SCH #97062009) from October 29, 1997, through December 18, 1997. During the review period, comment letters were received from five agencies and six individuals. A wide variety of environmental issues were raised by the public.

On May 20, 1998, the City prepared a Final EIR that included comments, responses, and text revisions based on comments received. The City has adequately addressed the environmental issues raised during the review period. The City Council certified the Final EIR on June 9, 1998, and filed a Notice of Determination with the Solano County Clerk on June 10, 1998, and the Governor's Office of Planning and Research on June 12, 1998.

The City requests the SWRCB approve a loan commitment of $64.3 million for Phase II contract of this project with a 20 year repayment period and with the first 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 (J) of the Policy, condition this approval by requiring expiration of the preliminary loan commitment if construction for Phase II contract is not initiated by January 31, 2001?

RWQCB IMPACT

CVRWQCB. The proposed Phase II expansion will provide the capability of meeting the existing and future Waste 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 September 1999 are as follows:
 

	SFY	SFY	SFY	SFY	SFY
	1999-00	2000-01	2001-02	2002-03	2003-04
	___________	__________	__________	_________	_________
Beginning Balance:	$543,088,506	$247,623,915	$68,876,465	$36,327,516	$98,773,519
Est. Repayments*:	75,640,609	93,418,584	113,012,689	133,275,004	137,567,168
Cap Grants**:	55,000,000	0	0	0	0
SMIF Interest:	10,000,000	6,000,000	1,000,000	1,000,000	1,000,000
Est. Disbursements***:	-422,927,700	-246,166,034	-121,561,639	-57,529,000	-0
Previous SFY 2000 commitments:	0
City of Vacaville 4610-120		-25,000,000	-25,000,000	-14,300,000
City of San Diego 4650-110	-6,840,000	-4,560,000
City of San Diego 4650-210	-3,660,000	-2,440,000
City of San Diego 4690-110	-1,150,000
Sacto. Valley Open Space 6055-110	-1,527,500
Balance:	$247,623,915	$68,876,465	****$36,327,516	$98,773,519	$237,340,687

 * Est. repayments include repayments from existing loans and from loans expected to be executed in the next few years for projects with existing commitments.

** An EPA Capitalization Grant of $55,000,000 for SFY 2000 is anticipated.  However, the federal budget is not approved at this time

*** Estimated disbursements includes disbursements remaining on existing loans as well as disbursements anticipated on loans executed for projects with existing commitments.  The Division will revise the estimated disbursements total each month as cash draw forecasts are updated.

**** To maintain a minimum reserve of $25,000,000, only $11,327,516 remains for commitment to projects that will draw funds prior to FY 2002.  If EPA Capitalization Grants are received in SFY 2001 or SFY 2002, additional commitments may be made.

STAFF RECOMMENDATION

That the SWRCB adopt a resolution approving a SRF loan of $64.3 million for Phase II of the two phase project 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, SRF Policy, amended on June 18, 1998, the proposed resolution includes an expiration date for this preliminary loan commitment if the date of initiation of construction is not met.

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 17, 1999, adopted the SFY 2000 SRF Loan Program Priority List which included the Wastewater Treatment Facility Interim Improvements and Expansion for the City in Priority Class D;

3.  The Division of Clean Water Programs (Division) has approved the facilities plan for the City’s project; and

4.  The City has certified an EIR (State Clearinghouse No. 97062009) which has been reviewed and considered, and it has been determined that:

a)  The project could result in the following significant and unavoidable direct impacts and indirect impacts resulting from growth inducement related to the construction of residential and commercial developments throughout the City service area accommodated by the proposed plant expansion:

• Air quality impacts from short-term emissions during construction;
• Air quality impacts from potential nuisance odor problems;
• Noise impacts from short-term construction noise;
• Noise impacts from short-duration noise events during operation; Indirect transportation and circulation impacts from increased traffic volumes beyond the existing capacity of Interstate 80;
• Indirect air quality impacts involving ozone from increased vehicle emissions;
• Indirect noise impacts from generation of excessive noise levels in residential communities along major transportation routes;
• Indirect water supply and distribution impacts from an increased demand that exceeds entitlements;
• Indirect wastewater collection and treatment impacts from increased flows;
• Indirect visual quality and community image impacts from development resulting in a change in the community’s visual character;
• Indirect open space and agricultural land impacts from the loss of prime farmland and conversion of visual open space separators; and
• Indirect biotic resource impacts from the loss of open space and agricultural land.

• Providing adequate wastewater treatment facilities for future anticipated growth, through the year 2012, as described in the City’s 1990 General Plan;
• Promoting the protection of water quality and public health by reducing peak wet weather flows and by upgrading other treatment processes to comply with applicable regulations;
• Reducing the current odor and noise impacts on local area residents and plant employees; and
• Strengthening and diversifying the local economy, advancing social goals, and promoting coordinated balanced growth, consistent with the City’s 1990 General Plan.

b)  Changes or alterations have been required in, or incorporated into the proposed project which avoid or reduce to less than significant levels the other potentially significant environmental effects identified in the EIR with respect to: (1) water quality impacts which will be mitigated by designing the wastewater treatment plant to meet Central Valley Regional Water Quality Control Board standards; (2) threatened and endangered species impacts which will be mitigated by avoiding impacts to the valley elderberry longhorn beetle and dedicating vernal pool credits within an approved wetland mitigation bank; (3) soil erosion impacts which will be mitigated by covering or watering all exposed soils and maintaining two feet of freeboard or covering all haul/dump trucks; and (4) cultural resources impacts which will be mitigated by using qualified archeologists and Native American representatives to identify and treat any cultural resources that are encountered, stopping work, notifying the County Coroner if human bones or bones of unknown origin are encountered, and notifying the Native American Heritage Commission if remains are encountered.

The State Water Resources Control Board:

1.  Approves a SRF loan commitment of $64.3 million from SFY 2001, 2002, and 2003 to the City of Vacaville for the construction of the Phase II Wastewater Treatment Facility Expansion, with a repayment period of 20 years, and the first repayment due one year after completion of construction; and

2.  Will withdraw this preliminary SRF loan commitment if the City of Vacaville does not initiate project construction by January 31, 2001. The Division may approve up to a 90 day extension for good cause.

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 September 16, 1999.

______________________________
Maureen Marché
Administrative Assistant to the Board