ITEM 7: APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR THE CITY OF GRASS VALLEY (CITY), WASTEWATER TREATMENT PLANT EXPANSION, STATE REVOLVING FUND (SRF) LOAN PROJECT NO. C-06-4085-130

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 schedule.

On July 3, 1998, the Division issued Facilities Plan Approval to the City for the Wastewater Treatment Facility Expansion, and the City agreed in writing with the approval July 6, 1998.

The City is located about 50 miles northeast of Sacramento, and lies within the County of Nevada. The City's present wastewater treatment facilities were originally constructed in 1950 and in the late 1970's and early 1980's some major improvements were completed using state and federal grants funds. The City owns and operates the facility that serves a current population of about 12,500. The current wastewater flow to the facility is about 1.6 million gallons per day (mgd). The facility discharges the treated effluent to Wolf Creek. The current wastewater flows to the plant during the wet weather have exceeded its design treatment capacity on several occasions and the plant is not capable of providing the required ammonia removals resulting in violations of the Regional Water Quality Control Boards' (RWQCB) waste discharge requirements. The proposed project will expand the treatment capacity to 1.84 mgd and will provide a reserve treatment capacity for 12 years (to the year 2011).

The City has determined that an expansion and upgrade of the existing treatment system is the cost-effective solution for bringing the plant into compliance with RWQCBs' standards. The proposed project would also include improvements to the headworks, addition of a new activated sludge treatment system, a secondary clarifier, improved return sludge pumping facilities, and modifications to the chlorination and de-chlorination facilities. The estimated SRF loan eligible project cost including engineering and administration is $9 million.

The City receives its water supply from Nevada Irrigation District (NID), a publicly owned utility company which pumps water from Scotts Valley Reservoir into above-ground storage tanks within the City. The City has indicated that it has enough water resources available to serve the projected population.

In accordance with the SRF Policy requirements for water conservation, the City became a signatory to the "Memorandum of Understanding Regarding Urban Water Conservation in California" on September 9, 1998.

The City has provided the Division with a schedule of submittal dates for 100 percent plans and specifications and other milestones for the wastewater treatment 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 SRF Policy, the draft resolution includes August 20, 1999, 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 EIR for the proposed project that was distributed for public review and circulated through the State Clearinghouse (SCH #93042024) from May 23, 1995, through July 7, 1995. During the review period, comment letters were received from three agencies and four individuals. A wide variety of environmental issues were raised by the public.

On February 29, 1996, 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 March 26, 1996, and filed a Notice of Determination with the Nevada County Clerk and the Governor's Office of Planning and Research on April 24, 1996.

The total project cost is $9.52 million. The City requests the SWRCB approve a loan of $9 million for 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 SRF Policy, condition this approval by requiring expiration of the preliminary loan commitment if construction is not initiated by August 20, 1999?

RWQCB IMPACT: Central Valley RWQCB. The proposed expansion will provide a reserve treatment capacity for 12 years and the capability of meeting both the existing and the future National Pollution Discharge Elimination System requirements.

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 November 1998 are as follows:

* Minimum Cap. Grant expected for FFY 98-99, based on anticipated Federal Budget.

STAFF RECOMMENDATION: That the SWRCB adopt a resolution approving a SRF loan of $9 million for the proposed 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 January 18, 1996, the proposed resolution includes an expiration date for this preliminary loan commitment if the date of initiation of construction is not met.

DRAFT 26 October 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," and revised it on June 18, 1998;

2. The SWRCB, on June 18, 1998, adopted the FFY 1999 SRF Loan Program Priority List which included the Wastewater Treatment Facility Expansion for the City in Priority Class C;

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. 93042024) which has been reviewed and considered, and its has been determined that:

a) The project could result in the following indirect growth inducement impacts related to the construction of residential and commercial developments throughout the district service accommodated by the proposed plant expansion:

i) Biological impacts involving the cumulative loss of wildlife habitat;

ii) Traffic impacts involving cumulative increases in congestion on some roadways;

iii) Air quality impacts involving ozone and suspended particles emissions;

iv) Increases in traffic-related noise; and

v) Aesthetic impacts involving alteration of views and visual character of the City.

The project will result in the following benefits:

i)Avoiding public health problems and a possible Cease and Desist Order and connection ban resulting from the discharge of inadequately treated sewage;

ii) Providing adequate wastewater treatment facilities for future anticipated growth described in the City's 1982 General Plan thereby avoiding serious economic consequences; and

iii) Protecting the Wolf Creek environment and maintaining beneficial uses downstream.

Having balanced the benefits of the project against its unavoidable environmental impacts it has been determined that the benefits of the project outweigh the unavoidable adverse environmental effects and the project is therefore 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: (i) water quality impacts which will be mitigated by limiting construction to the dry months; mulching, seeding, or other soil stabilization measures; properly depositing excavated materials to avoid runoff; establishing staging areas to avoid discharge of petroleum spills into the stream; maintaining machinery to prevent spills and leaks; reporting and cleaning up any spills; obtaining and complying with a General Industrial Storm Water Permit; designing and implementing appropriate treatment technologies as necessary to ensure compliance with Waste Discharge Requirements; and requiring future project developers to conduct detailed drainage studies for implementation of drainage facility designs, and to comply with SWRCB General Industrial Storm Water Permit requirements or implement a comprehensive erosion control and storm water management plan; and (ii) 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 and 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.

(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 commitment of $9 million to the City of Grass Valley for the construction of the 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 Grass Valley does not initiate project construction by August 20, 1999. The Division may approve up to a 90 days 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 November 19, 1998.

Maureen Marché

Administrative Assistant to the Board