ITEM 4: APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR THE COUNTY SANITATION DISTRICTS OF LOS ANGELES COUNTY, VALENCIA WATER RECLAMATION PLANT STAGE V EXPANSION, SRF PROJECT NO. C-06-4082-120, AND VALENCIA AND SAUGUS WATER RECLAMATION PLANTS UPGRADES FOR NITRIFICATION AND DENITRIFICATION, SRF PROJECT NOS. C-06-4082-140 AND C-06-4082-150

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 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 April 9, 1998, the Division issued Facilities Plan Approval to the County Sanitation Districts of Los Angeles County (CSDLAC - Districts) for the Stage V Expansion project at the Valencia Water Reclamation Plant (VWRP). The approved project also includes upgrades at both the VWRP and Saugus Water Reclamation Plant (SWRP) for nitrification and denitrification. The CSDLAC agreed with the Division's facility plan approval letter in writing on April 16, 1998.

The CSDLAC is comprised of 25 separate districts operating under a Joint Administration Agreement. Two of these districts (Nos. 26 and 32) jointly operate the Santa Clarita Valley Joint Sewerage System (SCVJSS) which provides wastewater treatment service to the City of Santa Clarita and unincorporated areas of Los Angeles County. The Valencia and Saugus Water Reclamation Plants provide treatment for the service area. Both plants discharge effluent to the Santa Clara River.

Planning and Southern California Association of Governments (SCAG) studies have forecasted population increase within the service area which would generate wastewater flow exceeding the treatment capacity of the VWRP and SWRP. The District's engineers have determined the cost-effective alternative project to accommodate the projected wastewater flow is an expansion at the VWRP. Additionally, in accordance with Regional Water Quality Control Board requirements, both treatment facilities must include nitrification-denitrification capability to reduce the effluent ammonia toxicity for receiving waters.

The proposed project includes a nine million gallon per day expansion at the VWRP and modification of existing facilities at the VWRP and SWRP to implement nitrification-denitrification for ammonia reduction. Major proposed construction for the Stage V expansion will include incremental expansion or modification to support facilities such as maintenance buildings, and primary and secondary sedimentation tanks, aeration tanks, tertiary filters, chlorine contact tank, digesters, and filter press. Nitrification-denitrification modifications at both plants will consist of retrofit of the existing aeration tanks including pumps, pipes, baffles, and mixers to provide the needed capability for ammonia reduction. The estimated SRF loan eligible project cost including engineering and administration is $35.16 million.

The Santa Clarita Valley sources its domestic water supply from the State Water Project (SWP) and local groundwater. The Castaic Lake Water Agency wholesales water to four purveyors for distribution to the local users. The combined yield of the two local aquifers, the SWP, and reclaimed water from the VWRP and SWRP will meet the expected water demand. The CSDLAC meets the requirements of the Policy that more than 75 percent of the service area water users are covered by either the State Memorandum of Understanding Regarding Urban Water Conservation in California (State MOU) or equivalent water conservation plan or urban water management plans.

There are three construction contract packages proposed for this project. The CSDLAC has provided the Division with a schedule of submittal dates for 100 percent plans and specifications (P&S) and other milestones for the three construction packages. These submittal dates are contained in the milestone schedule in the Division's facility plan approval letter. The scheduled P&S submittal dates are: (1) Valencia Stage V Expansion, November 1, 1999, (2) VWRP Upgrade for Nitrification-Denitrification, April 1, 2001, and (3) SWRP Upgrade for Nitrification-Denitrification, April 1, 2001. In accordance with Section VIII(J) of the SRF Policy, the Division will add eight (8) weeks to each submittal date for completing the review and approval process. The Division may approve up to a ninety (90) day extension on any P&S submittal for a good cause.

County Sanitation Districts 26 and 32 of Los Angeles County prepared a Draft EIR for the proposed project which was circulated through the State Clearinghouse (SCH # 96041084) for a 45-day review period beginning July 17, 1997, and ending September 3, 1997. During the review period, the Districts received 15 written comments from federal, state, and local agencies, and private parties. The Districts made EIR revisions, and gave appropriate answers and explanations in response to comments received during the review period. The Districts prepared a final EIR and certified it on January 29, 1998. On February 4, 1998, the Districts filed a Notice of Determination with the Los Angeles County Clerk and the Governor's Office of Planning and Research.

The Districts request the SWRCB approve a loan of $35.16 million for this project and agrees to pay back the loan in accordance with the Policy.

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. The CSDLAC has provided plans and specifications submittal dates which are contained in the facilities plan approval letter. Should the SWRCB, in accordance with Section VIII(J) of the February 16, 1995 Policy, condition this approval by requiring expiration of the preliminary loan commitment if the Final Plans and Specifications are not submitted by November 1, 1999, for the Valencia Stage V Expansion, and April 1, 2001, for both the VWRP and SWRP Upgrades for Nitrification-Denitrification?

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 June 1998 are as follows:

STAFF RECOMMENDATION: That the SWRCB adopt a resolution approving a SRF loan of $35.16 million 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 Policy, the proposed resolution includes expiration dates for this preliminary loan commitment if the Final Plans and Specifications submittal dates for each contract are not met.

DRAFT May 22, 1998

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"(Policy), 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 County Sanitation Districts of Los Angeles County (CSDLAC - Districts) Valencia Water Reclamation Plant - Stage V Expansion in Priority Class D;

3. The Division of Clean Water Programs (Division) has approved the project report, environ-mental documents, and draft revenue program for the District's projects;

4. In accordance with the Policy, the Districts certify that seventy five (75) percent of the service area is covered by water conservation plans;

5. Sanitation Districts 26 and 32 of Los Angeles County certified an EIR (State Clearinghouse No. 96041084) which has been reviewed and considered, and its has been determined that:

(a) As stated in the EIR, the project may result in an unavoidable and significant impact with respect to a potential short-term increase in emissions of inhalable particulates resulting from construction activities at the Valencia Water Reclamation Plant. Adopted mitigation measures will reduce PM10 emissions; however, reduction of the impact to a non-significant level is not practically achievable.

The SWRCB hereby adopts the following statement of overriding considerations to address the unavoidable significant impact that may potentially occur from approval of the project:

Implementation of the wastewater treatment facilities improvement project would result in the following benefits: (1) providing adequate wastewater management facilities and protecting public health and the environment,

(2) complying with water quality regulations, (3) increasing the availability of reclaimed water, and (4) increasing employment.

In balancing the project benefits against the potential significant impact regarding air quality, the SWRCB finds that the public benefits of the project outweigh the unavoidable impact 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 runoff and erosion impacts which will be mitigated by preparing and implementing a Stormwater Pollution Control Plan including an Erosion Control and Rehabilitation Plan with measures such as limiting construction areas, using silt fences or straw bales, revegetating, locating covered material storage areas away from drainage channels, avoiding construction during wet periods, and water quality monitoring as necessary.

(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 SWRCB. 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 $35.16 million to the County Sanitation Districts of Los Angeles County for the construction of the Valencia Water Reclamation Plant Stage V Expansion project, and the Upgrades at the Valencia and Saugus Water Reclamation Plants for Nitrification-Denitrification. The repayment period shall be 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 biddable plans and specifications are not submitted to the Division of Clean Water Programs (Division) by November 1, 1999, for the Valencia Stage V Expansion, and April 1, 2001, for both the VWRP and SWRP Upgrades for Nitrification-Denitrification. The Division may approve up to a ninety (90) day extension for either contract 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 June 18, 1998.

Maureen Marché

Administrative Assistant to the Board