ITEM 10: CONSIDERATION OF APPROVAL OF A RESOLUTION TO RESCIND STATE WATER RESOURCES CONTROL BOARD (SWRCB) RESOLUTION NO. 97-65 AND TO REAUTHORIZE A STATE REVOLVING FUND (SRF) LOAN FOR $20 MILLION TO THE METROPOLITAN WATER DISTRICT FOR PHASE I OF THE DRAINAGE WATER QUALITY MANAGEMENT PLAN FOR THE LAKE MATHEWS WATERSHED PROJECT (LOAN NUMBER C-06-6011-110)

DISCUSSION: On July 17, 1997, the SWRCB approved Resolution No. 97-65 to authorize a $20 million SRF loan to the County of Riverside Flood Control and Water Conservation District (District) for the Drainage Water Quality Management Plan (DWQMP) for the Lake Mathews Watershed Project (Project).

The DWQMP, among other things:

• Protects Lake Mathews from nonpoint source and storm water pollution originating in the upstream watershed by providing the Metropolitan Water District (MWD) and the District with the Project facilities;
  
• Updates the Lake Mathews Community Plan that limits development to one lot per 2.5 acres within the Lake Mathews Watershed without an interceptor channel bypassing Lake Mathews; and
  
• Allows future development that will comply with National Pollutant Discharge Elimination System (NPDES) requirements.

The District received support and established a partnership with MWD for the Project. Funding the Project with the SRF will provide MWD the facilities specified in the DWQMP.

The arrangements between MWD and the District are that MWD will own and operate Phase I of the Project, and the District will own and operate Phase II of the Project. Phase I of the Project consists of construction of the following facilities:

• Lake Mathews Sediment Basins--Four wetland basins designed to collect sediment from four sub-watersheds directly tributary to Lake Mathews. These basins do not flow into Cajalco Creek.
  
• Cajalco Creek Dam and Detention Basin--A dam with an extended detention basin immediately upstream from Lake Mathews to reduce nonpoint source pollution.
  
• Cajalco Creek Sediment Basin--A sediment basin located on Cajalco Creek to collect sediment upstream from the Cajalco Creek Dam and Detention Basin.
  The estimated cost for Phase I is $36.9 million. The projected completion date of Phase I is December 2000.
  Phase II of the Project consists of construction of the following facilities:
  
• Lake Mathews Estates Water Quality Pond--A first-flush diversion facility located downstream of the Cajalco Creek Wetlands to reduce drainage pollutant levels from existing nonpoint sources and to mitigate the water quality impact of currently planned adjacent development.
  
• Cajalco Creek Wetlands--A series of wetlands to provide diffusion, filtration, and treatment of storm water flows.
  
• The Tailings Water Quality Wetland--A first-flush and nuisance flows treatment wetland.
  
• The Alexander Street Water Quality Wetland--A flow-through wetland to treat first flush storm water and nuisance flows.

The estimated cost for Phase II is $7 million. The projected completion date of Phase II is June 2005 and will not begin until the completion of Phase I. MWD will provide the dedicated revenue for Phase I, and the District will provide the dedicated revenue for Phase II.

MWD revised the cost for the Project for the following two reasons: (1) MWD completed a preliminary design for Phase I in Fall 1997. Geological borings determined that there was no bedrock on the left side of the Cajalco Creek Dam site, thus requiring a much deeper excavation and a more complex and costly dam foundation; and (2) in November 1997, MWD did a redelineation of wetlands impacted by the Project to renew the Section 1601 agreement issued by Department of Fish and Game (DFG). The original agreement expired in January 1998. The delineation resulted in a five-fold increase in impacted wetlands over those identified in the original agreement.

In addition, the original U.S. Army Corps of Engineers' (Corps) Clean Water Act (CWA) Section 404 permit did not account for the four Lake Mathews Sedimentation Basins. Accordingly, MWD is presently seeking the following regulatory approvals:

• DFG Section 1601 Streambed Alteration Agreement.
• Corps CWA Section 404 permit.
• CWA Section 401 water quality certification from the Executive Director of the SWRCB or a Waiver of Waste Discharge Requirements from the Santa Ana Regional Water Quality Control Board (SARWQCB).

Since MWD will own and operate Phase I of the Project and because of the differences in construction schedules for Phase I and Phase II, it will be more expeditious to authorize an SRF loan to MWD for Phase I rather than to the District for the entire Project. To do this, it is necessary to rescind Resolution No. 97-65 and issue a new resolution authorizing an SRF loan to MWD.

Staff is not asking for the SRF loan amount to be raised to $36.9 million at this time. This is because of an anticipated shortage of funds in Federal Fiscal Year (FFY) 1997-98 and possible further delays of construction pending the Corps' CWA Section 404 permit. Also, MWD could apply for additional funds at a later date.

POLICY ISSUE: Should the SWRCB:

1. Rescind Resolution No. 97-65 authorizing an SRF loan for $20 million to the District for the Project, and

2. Authorize an SRF loan to MWD for $20 million for Phase I of the Project?

This approval is contingent upon MWD entering into (whichever comes later) a contract agreement and beginning construction by June 1999, or until MWD receives (1) a CWA Section 404 permit from the Corps, (2) a CWA Section 401 water quality certification from the Executive Director of the SWRCB or a Waiver of Waste Discharge Requirements from the SARWQCB, and (3) a Section 1601 Streambed Alteration Agreement from the DFG.

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:

RWQCB IMPACT: Yes. SARWQCB.

STAFF RECOMMENDATION: 1. That the SWRCB:rescind Resolution No. 97-65 authorizing an SRF loan for $20 million to the District for the Project.

2. Authorize an SRF loan to MWD for $20 million for Phase I of the Project.

This approval is contingent upon MWD entering into (whichever comes later) a contract agreement and beginning construction by June 1999, or until MWD receives (1) a CWA Section 404 permit from the Corps, (2) a CWA Section 401 water quality certification from the Executive Director of the SWRCB or a Waiver of Waste Discharge Requirements from the SARWQCB, and (3) a Section 1601 Streambed Alteration Agreement from the DFG.

May 22, 1998 Draft

WHEREAS:

1. On July 17, 1997, the SWRCB approved Resolution No. 97-65 for an SRF loan of $20 million to the County of Riverside Flood Control and Water Conservation District (District) for the Drainage Water Quality Management Plan (DWQMP) for the Lake Mathews Watershed Project (Project).
   
2. The District is responsible for construction and operation of Phase II of the Project, and Metropolitan Water District (MWD) is responsible for Phase I which is scheduled for completion prior to the District's involvement.
   
3. Construction of the Project will be expedited by authorizing an SRF loan to MWD for Phase I of the Project rather than an SRF loan to the District for both Phase I and Phase II of the Project.
   
4. The County of Riverside completed an Environmental Impact Report to comply with the California Environmental Quality Act.
   
5. 5. The MWD has applied for:

• Department of Fish and Game (DFG) Section 1601 Streambed Alteration Agreement.
• U.S. Army Corps of Engineers (Corps) Federal Clean Water Act (CWA) Section 404 permit.
• CWA Section 401 water quality certification from the Executive Director of the SWRCB or a Waiver of Waste Discharge Requirements from the Santa Ana Regional Water Quality Control Board (SARWQCB).

THEREFORE BE IT RESOLVED THAT:

The SWRCB:

1. Rescinds Resolution No. 97-65 authorizing an SRF loan for $20 million to the District for the Project.
   
2. Authorizes an SRF loan to MWD for $20 million for Phase I of the Project.

This approval is contingent upon MWD entering into (whichever comes later) a contract agreement and beginning construction by June 1999, or until MWD receives (1) a CWA Section 404 permit from the Corps, (2) a CWA Section 401 water quality certification from the Executive Director of the SWRCB or a Waiver of Waste Discharge Requirements from the SARWQCB, and (3) a Section 1601 Streambed Alteration Agreement from the DFG.

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