ITEM 6

SUBJECT

APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR THE CITY OF THOUSAND OAKS (CITY) FOR CONSTRUCTION OF THE HILL CANYON WASTE-WATER TREATMENT PLANT PHASE II EXPANSION AND UPGRADE PROJECT, SRF LOAN PROJECT NO. C-06-4429-120

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 amended on June 18, 1998, projects on the adopted Statewide 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 December 23, 1999, the Division issued Facilities Plan Approval to the City for construction of the Hill Canyon Wastewater Treatment Plant (HCWTP) Phase II Expansion and Upgrade Project and the City agreed in writing with the approval on December 27, 1999.

The City is located in southern California in Ventura County about 35 miles northwest of central Los Angeles. The City owns and operates the HCWTP, a 10.8 million gallon per day (MGD) tertiary wastewater treatment plant. The HCWTP discharges effluent to the North Fork of the Arroyo Conejo Creek. Existing and potential beneficial uses of the receiving waters include municipal and domestic water supply, groundwater recharge, contact and non-contact water recreation, freshwater and wildlife and wetland habitat, and commercial and sport fishing.

The HCWTP is currently operated under Waste Discharge Requirement (WDR) Order No. 96-044, National Pollutant Discharge Elimination System (NPDES) No. CA0056294 issued by the Los Angeles Regional Water Quality Control Board (LARWQCB). The requirements of the City’s NPDES permit necessitate a capacity increase because influent flows are nearing the plant’s design capacity of 10.8 MGD. In addition, the permit requires the HCWTP to comply with acute and chronic effluent toxicity limitations. In its current configuration, the plant does not comply with these requirements because of high effluent ammonia concentrations. The effluent ammonia concentrations are high because the plant must inhibit ammonia to nitrate conversion in order to meet its nitrogen discharge limitation to protect groundwater quality.

The City has developed a three-phased improvement project to meet the requirements of the NPDES permit. Phase I was approved for a preliminary loan commitment by the SWRCB on November 19, 1998, and a SRF loan contract was executed for the project on May 20, 1999. Phase II is construction of the expansion and regulatory compliance facilities and general plant infrastructure and support facilities improvements. Phase III is construction of the nitrification/ denitrification facilities which will address the ammonia effluent toxicity requirements contained in the WDRs.

Under LARWQCB Order No. 97-123 (amending Orders 96-044 and 97-061), the City was directed to undertake a “Watershed Characterization Study” with other agencies to develop a site specific ammonia objective for the receiving waters as an alternative to meeting the upcoming Basin Plan ammonia objective. The study is to be completed by July 1, 2002, and will characterize the Calleguas Creek Watershed system so that water quality objectives for ammonia which protect the watershed and its beneficial uses can be developed. At that time, the City will be able to determine the cost-effective management techniques (the Phase III project) for controlling its ammonia discharge.

The Phase II project consists of expanding the HCWTP from 10.8 MGD to 14 MGD and upgrading the plant processes and infrastructure to meet the requirements of the current WDRs. The upgrade consists of construction and/or installation of tertiary filters, secondary clarifiers, flocculation basin, solids thickening, and other unit processes. Other facilities include instrumentation and control systems, operations and maintenance buildings, electrical and mechanical equipment, and site/yard piping improvements. The final plans and specifications have been approved by the Division.

The City has provided the Division with a milestone schedule including a date for construction start (Notice to Proceed). In accordance with the SRF Policy Section IX.(I), the sunset date for beginning construction is hereby established as May 1, 2000. The Division may approve up to a 90-day time extension of this date for good cause.

The City’s domestic water supply is provided through purchase of imported water from the Calleguas Municipal Water District which receives its supply from the Metropolitan Water District of Southern California (MWD). The MWD’s supply is imported from either the State Water Project or the Colorado River. The City is also working on the Conejo Creek Diversion Project which would deliver more than 10,000 acre-feet per year (AFY) for beneficial uses in surrounding areas. This project could reduce groundwater pumping and seawater intrusion in these areas thereby reducing the need for imported water. The City is also working on a plan to utilize 2,000 to 4,000 AFY of local available groundwater without impacting the basin.

The MWD has adopted long term plans designed to ensure the adequacy and reliability of water supplies to their service areas beyond the next 20 years. In accordance with the SRF Policy requirements for water conservation, the City is a signatory to the State Water Coalition’s Memorandum of Understanding Regarding Urban Water Conservation in California (State MOU) and is a member agency of the California Urban Water Conservation Council (CUWCC). Signatories to the State MOU must submit an annual report to the CUWCC outlining progress in implementing the best management practices for water conservation.

The City 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# 98081038) from April 23, 1999 through May 24, 1999. During the review period, the City received comments from one federal agency, two state agencies, and three county agencies. The City made appropriate changes to the MND/IS in response to the comments. The City Council approved the project and adopted the MND/IS and a Mitigation Monitoring Program on July 27, 1999. The City filed a Notice of Determination with the Ventura County Clerk and the Governor’s Office of Planning and Research on July 28, 1999.

The estimated SRF loan eligible project cost is $29.8 million. The City requests the SWRCB approve a loan of $29.8 million for this project and agrees to pay back the loan in accordance with the SRF Policy.

POLICY ISSUES

Should the SWRCB approve SRF loan funding for the proposed project, including a 20-year period for repayment, with the first repayment due one year after completion of construction? Should the SWRCB condition this approval by requiring expiration of this preliminary loan commitment if the City does not initiate construction by May 1, 2000?

RWQCB IMPACT

LARWQCB. The project will enable the City to meet the LARWQCB discharge requirements by complying with the Basin Plan requirements for discharge of treated wastewater to surface waters.

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 February 2000 are as follows:

	SFY	SFY	SFY	SFY	SFY
	1999-00	2000-01	2001-02	2002-03	2003-04
	___________	__________	__________	_________	_________
Beginning Balance:	$517,435,127	$302,775,117	$132,694,161	$115,392,944	$170,666,449
Est. Repayments:[1]	74,109,438	91,176,831	101,709,851	120,022,664	145,926,377
Cap Grants:[2]	111,300,181	63,800,000[3]	63,800,000	0	0
Est. SMIF Interest:	10,000,000	6,000,000	1,000,000	1,000,000	1,000,000
Est. Disbursements:[4]	-400,869,629	-313,157,787	-174,111,068	-65,749,159	-0
Subtotal:	$311,975,117	$150,594,161	$125,092,944	$170,666,449	$317,592,826
City of Thousand Oaks 4429-120	-7,100,000	-13,000,000	-9,700,000
Templeton Comm Serv Dist 4486-110		-2,500,000
Stege Sanitary District 4665-110		-2,400,000
City of Westmorland 4705-110	-2,100,000


Balance:	$302,775,117	$132,694,161	$115,392,944	$170,666,449	$317,592,826

STAFF RECOMMENDATION

That the SWRCB adopt a resolution approving a SRF loan of $29.8 million for the proposed project, with a period of 20 years, and with the first repayment due one year after completion of construction. That the SWRCB, in accordance with the SRF Policy Section IX.(I), hereby establishes a sunset date for beginning construction of May 1, 2000. The Division may approve up to a 90-day time extension of this date for good cause.

DRAFT January 21, 2000

STATE WATER RESOURCES CONTROL BOARD

RESOLUTION NO. 2000-

APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR THE CITY OF

THOUSAND OAKS (CITY) FOR THE HILL CANYON WASTEWATER TREATMENT PLANT

PHASE II EXPANSION AND UPGRADE PROJECT, SRF LOAN PROJECT NO. C-06-4429-120

WHEREAS:

1. The State Water Resources Control Board, 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 Division of Clean Water Programs (Division) has approved the facilities plan;

3. The City is signatory to the “Memorandum of Understanding Regarding Urban Water Conservation in California”; and

. The City has adopted a Mitigated Negative Declaration (State Clearinghouse No. 98081038) 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 $29.8 million to the City of Thousand Oaks for the construction of the Hill Canyon Wastewater Treatment Plant Expansion and Upgrade Project. The repayment period shall be 20 years, and the first repayment due one year after completion of construction.

2. Will withdraw this preliminary SRF loan commitment if Notice to Proceed for construction is not given by May 1, 2000. The Division may approve up to a 90-day time extension for good cause.

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 February 17, 2000.

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 $95,948,432 for SFY 2000 is anticipated (the final 0.38% reduction in the federal budget is not approved at this time) plus State match funds of $19,189,686. $3,837,937 is deducted for administrative costs.

[3] An EPA Capitalization Grant of $55,000,000 for SFY’s 2001 and 2002 is forecast. The 20% state match is added and the 4% administrative allowance is deducted

[4] Estimated disbursements include 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.