ITEM 5: APPROVAL OF A STATE REVOLVING FUND LOAN FOR THE CITY OF RIALTO, WASTEWATER TREATMENT FACILITY EXPANSION, STATE REVOLVING FUND LOAN PROJECT NO. C-06-4648-110.

DISCUSSION: In accordance with the State Water Resources Control Board's (SWRCB)Policy for Implementing the State Revolving Fund (SRF) for Construction of Wastewater Treatment Facilities (Policy), adopted on February 16, 1995, and amended on January 18, 1996, 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 November 26, 1997, the Division issued Facilities Plan Approval to the City of Rialto (City) for the Wastewater Treatment Facility Expansion, and the City agreed in writing with the approval on December 1, 1997.

The City owns and operates a wastewater treatment facility that serves the City with a current population of about 81,000. The current wastewater flow to the facility is about 6.5 million gallons per day (mgd). The facility discharges the treated effluent to the Santa Ana River. The long-term treatment capacity of the existing facility is six mgd. However, this capacity has been temporarily increased to about eight mgd by use of equalization basins. The equalization basins will not be available in the near future when the influent will be treated to remove a higher level of nitrogen to comply with waste discharge requirements. The proposed project will expand the treatment capacity by 4.7 mgd and will provide a reserve treatment capacity for 12 years (till the year 2010). The project site is located in the City of Rialto, San Bernardino County as indicated on the attached vicinity map.

The City's existing wastewater treatment facility consists of four treatment plants that share a common headworks. The project will construct an activated sludge treatment plant with denitrification, filtration and ultra-violet disinfection facilities. The estimated total loan eligible cost of the project is $24 million.

The City provides its own water supply from its ground water wells and has indicated that it has enough water resources available over the life of the proposed project (12 years). In accordance with the SRF Policy requirements for water conservation, the City submitted an adopted water conservation plan which was approved by the Division.

The City 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 (J) of the SRF Policy, the draft resolution includes February 25, 1998, as the deadline for initiation of construction. The Division may approve up to a ninety (90) day extension for good cause.

The City prepared a Draft EIR for the proposed project which was distributed for public review and circulated through the State Clearinghouse (SCH #96091013) from June 20, 1997, through August 4, 1997. During the review period, comment letters were received from five agencies. Following the review period the City prepared an Addendum to address a change in the project capacity. The environmental analysis in the Addendum concluded that the change would not involve any new significant impacts or mitigation measures and that the increase in capacity was still consistent with growth projections.

The City prepared a Final EIR, which included comments, responses, and text revisions based on comments. The City has adequately addressed the environmental issues raised during the review period. The City Council certified the Final EIR and Addendum on November 4, 1997, approved the project on November 18, 1997, and filed a Notice of Determination with the San Bernardino County Clerk and the Governor's Office of Planning and Research on November 18, 1997.

The City requests the SWRCB approve a loan of $24 million for this project, with a twenty (20) year repayment period and with the first SRF loan repayment due one (1) year after completion of construction.

POLICY ISSUE: Should the SWRCB approve SRF loan funding for the proposed project, including a twenty (20) year repayment period, with the first repayment due one (1) year after completion of construction? Should the SWRCB, in accordance with Section IX (J) of the SRF Policy, condition this approval by requiring expiration of the preliminary loan commitment if construction is not initiated by February 25, 1998?

RWQCB IMPACT: NONE

FISCAL IMPACT: According to SWRCB Resolution No. 97-001 (Approval of a Staff Proposal to Better Manage the SRF Repayment Account), the SWRCB may approve preliminary loan commitments against the current FFY account and against 125 percent of future repayment funds based on scheduled loan dates.

The SRF account balances, anticipated repayment amounts, and project approvals under consideration by the SWRCB in January 1998 are as follows:

	Loan No.	1998	1999	2000
		SRF Account	Repayment	Repayment
Repayments:		$69,327,530	$68,384,074	$68,994,744
125% Repayments:			$85,480,092	$86,243,430
FFY 97 Carryover:		$28,688,539
FFY 98 Fed. Cap. Grant:		$77,774,121	$14,679,936
1996 Bond Funds:			$47,292,822
Previous Commitments:		-$110,588,323	-$147,452,850	-$84,895,000
Subtotal:		$65,201,867	-0-	$1,348,430
City of Gustine	4488-110	-$2,000,000
City of Rialto	4686-110	-$24,000,000
Charleston Drainage Dist.	6053-110	-$400,000	____________	___________
Balance:		$38,801,867	-0-	$1,348,430

STAFF RECOMMENDATION: That the SWRCB adopt a resolution approving a SRF loan of $24 million from the FFY 1998 account for the proposed project, with a repayment period of twenty (20) years, and with the first repayment due one (1) year after completion of construction. In accordance with the February 16, 1995, revisions to the SRF Policy, the proposed resolution includes an expiration date for this preliminary loan commitment if the date of initiation of construction is not met.

DRAFT 12/22/97

WHEREAS:

1. The State Water Resources Control Board, on February 16, 1995, adopted the "Policy for Implementing the State Revolving Fund (SRF) for Construction of Wastewater Treatment Facilities," and revised it on January 18, 1996;

2. The State Water Resources Control Board, on September 18, 1997, adopted the FFY 1998 SRF Loan Program Priority List which included the Wastewater Treatment Facility Expansion for City of Rialto in Priority Class D;

3. The Division of Clean Water Programs has approved the project report, environmental documents, draft revenue program, and water conservation plan, for the City of Rialto's Project; and

4. The City of Rialto certified an EIR and Addendum (State Clearinghouse No. 96091013) which have been reviewed and considered, and its has been determined that:

(a) As stated in the EIR, construction and operation of the project may result in significant and unavoidable effects with respect to air quality impacts which will cause established air quality standards for pm10 to be exceeded. The City also concluded that, based on the ultimate plant expansion to 18 mgd capacity, the project may result in significant and unavoidable water quality impacts with regards to Total Dissolved Solids (TDS) as related to the state and federal anti-degradation policies and the Santa Ana River Basin Plan objectives. This conclusion was derived from the assumption that imported water supplies with a higher TDS than in current water supplies would be in use by the time sewage flows approached 18 mgd.

However, the funded project will only expand the plant capacity to 12.7 mgd which will not result in a significant change in the TDS concentration of discharge since existing low TDS water supplies (groundwater) will still meet demands. With regards to TDS, the current discharge is in compliance with the City's NPDES permit for the plant. The NPDES permit allows for an offset in TDS requirements, as allowed by the Santa Ana River Basin Plan, based on the City's participation in a TDS/Total Inorganic Nitrogen (TIN) study in cooperation with the Regional Water Quality Control Board.

The increased discharge will not result in an adverse change in the TDS levels of the receiving waters (Santa Ana River and groundwater basin) since the discharge will have a significantly lower TDS concentration than that of the receiving waters. Therefore, the funded project will not result in the lowering of receiving waters quality and does not violate the state and federal anti-degradation policies.

The State Water Resources Control Board hereby adopts the following statement of overriding considerations to address the unavoidable significant impacts that may potentially occur from approval of the project:

(i) Implementation of the wastewater treatment facilities improvement project would result in the following benefits: (1) the project will improve the nitrogen removal process to bring the plant into compliance with current and future nitrogen discharge requirements, (2) the project will allow the plant to meet other NPDES permit requirements and avoid other adverse health and water quality impacts, (3) there is a clear economic benefit to the City associated with the preferred project, and (4) implementation of the orderly and phased expansion of the wastewater treatment plant is necessary to meet future demands for service consistent with the City of Rialto's official policies and goals as stated in the General Plan.

(ii) In balancing the project benefits against the potential significant impacts regarding water quality and air quality impacts, the State Water Resources Control Board finds that the public benefits of the project outweigh any unavoidable impact, that the EIR attributes to the funded project and therefore, determines that the impact is acceptable.

(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 erosion impacts which will be mitigated by suspending excavation during rain, minimizing land exposure in area and time, covering erodible areas with vegetation, retaining existing vegetation where possible, and prohibiting clearing or grading until a firm construction schedule is known.

(c) With respect to other potentially significant environmental impacts identified in the environmental document, appropriate changes or alterations are not within the responsibility and jurisdiction of the State Water Resources Control Board. Such other changes or alterations have been adopted or should be adopted by other agencies.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board:

1. Approves a SRF loan of $24 million from the FFY 1998 account, to the City of Rialto for construction of the Wastewater Treatment Facility Expansion, with a repayment period of twenty (20) years, and the first repayment due one (1) year after completion of construction; and

2. Will withdraw this preliminary SRF loan commitment if the City of Rialto does not initiate project construction by February 25, 1998. The Division may approve up to a ninety (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 January 22, 1998.

Maureen Marché

Administrative Assistant to the Board