ITEM 7

SUBJECT

APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR THE CITY OF SAN DIEGO (CITY) FOR CONSTRUCTION OF THE POINT LOMA DIGESTERS C1 AND C2 UPGRADE PROJECT, SRF LOAN PROJECT NO. C-06-4718-110

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 April 24, 2000, the Division issued Facilities Plan Approval to the City for construction of the Point Loma Digesters C1 and C2 Upgrade Project, and the City agreed in writing with the approval on April 27, 2000.

The City’s Metropolitan Wastewater Department is responsible for maintaining, upgrading, and expanding the Metropolitan Sewerage System (Metro System). The largest wastewater treatment plant in the Metro System is the Point Loma Wastewater Treatment Plant (PLWTP), which currently treats about 190 million gallons per day.

The PLWTP is currently undergoing upgrading and expansion of its treatment processes and support facilities. The PLWTP, in its current configuration, has an estimated design treatment capacity of 240 MGD based on the size of the primary clarifiers. The PLWTP provides wastewater treatment for most of the Metro System. The current average influent flow to the plant is about 190 MGD. The purpose of this project is to upgrade the existing central anaerobic digesters, C1 and C2, to convert them to primary digesters. They are currently operated as secondary digesters without heat. The upgrade and conversion is necessary to enable digesters C1 and C2 to operate as primary digesters with the same volatile solids destruction capability as the other digesters at the plant, and meet the Section 503 Sludge Regulations for pathogen reduction of Class B Biosolids.

The proposed project, when completed and operational, will expand the plant’s treatment capacity, including anaerobic digestion to accommodate year 2020 forecasted wastewater flows. The proposed project will include retrofitting the existing digester shells with new fixed steel covers replacing the floating steel covers, the addition of gas mixing and sludge heating systems, and minor modifications to the control building.

In accordance with the SRF Policy Section IX.(I), the City and the Division have agreed to establish a sunset date, for issuing Notice to Proceed for the start of construction, of September 1, 2000. The Division may approve up to a 90-day time extension of this date for good cause.

The City meets about 75 percent of its water needs through purchases of imported water from the San Diego County Water Authority (Water Authority). The remainder of the water supply demand is provided by local surface water supplies and recycled water. The Water Authority is a member agency of the Metropolitan Water District of Southern California, which imports water from the State Water Project and the Colorado River. Both the Water Authority and the Metropolitan Water District have adopted long term plans designed to ensure the adequacy and reliability of water supplies to their service areas beyond the next twenty years. The City is a signatory to the “Memorandum of Understanding Regarding Urban Water Conservation in California”, and therefore meets the SRF Policy requirements for water conservation.

The City prepared an EIR for the Point Loma Wastewater Treatment Plant Digesters C1 and C2 and Associated Facilities Project which included an environmental analysis for the proposed project. The EIR was distributed to the public and circulated through the State Clearinghouse (SCH# 95011057) for a 45-day review period in May 1995. During the review period the City received comments from two federal agencies, three state agencies, and five private organizations or interested parties. No environmental concerns related to the proposed project were raised.

The City provided adequate responses to all comments received during the review period. On November 20, 1995, the City Council certified the EIR. On November 22, 1995, the City filed a Notice of Determination with the San Diego County Clerk and the Governor’s Office of Planning and Research.

The estimated SRF loan eligible project cost is $10.1 million. The City requests the SWRCB approve a loan of $10.1 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 September 1, 2000?

RWQCB IMPACT

San Diego Regional Water Quality Control Board (SDRWQCB). The project will enable the City’s Point Loma Wastewater Treatment Plant to meet the SDRWQCB NPDES waste discharge requirements and enable compliance with the Section 503 Sludge Regulations for pathogen reduction of Class B Biosolids.

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 June 2000 are as follows:

	SFY	SFY	SFY	SFY	SFY
	1999-00	2000-01	2001-02	2002-03	2003-04
	___________	__________	__________	_________	_________
Beginning Balance:	$518,269,168	$332,195,654	$108,002,086	$77,396,183	$108,612,913
Est. Repayments:[1]	74,678,106	92,052,254	104,533,398	127,794,710	150,951,638
Cap Grants:[2]	111,339,383	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]	-382,091,003	-363,745,822	-196,139,301	-97,577,981	-6,601,507
Subtotal:	$332,195,654	$130,302,086	$81,196,183	$108,612,912	$253,963,043

City of San Diego 4718-110		-6,300,000	-3,800,000
Cal St Coastal Conservancy 6065-110		-16,000,000



Balance:	$332,195,654	$108,002,086	$77,396,183[5]	$108,612,912	$253,963,043

STAFF RECOMMENDATION

That the SWRCB adopt a resolution approving a SRF loan of $10.1 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 September 1, 2000. The Division may approve up to a 90-day time extension of this date for good cause.

DRAFT May 22, 2000

STATE WATER RESOURCES CONTROL BOARD

RESOLUTION NO. 2000 -

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

CITY OF SAN DIEGO (CITY) FOR THE POINT LOMA DIGESTERS C1 AND C2

UPGRADE PROJECT, SRF LOAN PROJECT NO. C-06-4718-110

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 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

4. The City certified an EIR (State Clearinghouse No. 95011057) which included an analysis for the proposed project. The EIR has been reviewed and considered, and it has been determined that changes or alterations have been required in, or incorporated into the proposed project which avoid or reduce to less than significant levels potentially significant environmental effects identified in the EIR. These changes or alterations are not within the responsibility and jurisdiction of the SWRCB and 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 $10.1 million to the City for the construction of the Point Loma Digesters C1 and C2 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 September 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 June 15, 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 for SFY 2000 is $95,982,227. State match funds are $19,196,445. $3,839,289 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 as 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.

[5] The cash balance on June 30, 2002, is estimated to be $52,396,183 above the level needed to maintain a $25,000,000 reserve.