ITEM 9: APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR THE CITY OF ESCONDIDO (CITY), PHASE 1 SECONDARY TREATMENT IMPROVEMENTS AT THE HALE AVENUE RESOURCE RECOVERY FACILITY, SRF LOAN PROJECT NO. C-06-4156-210

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 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 September 11, 1998, the Division issued Facilities Plan Approval to the City for the construction of the Phase 1 Improvements at the Hale Avenue Resource Recovery Facility (HARRF), and the City agreed in writing with the approval on September 14, 1998.

The City is located in southern California near San Diego. The City of Escondido and the City of San Diego jointly own and operate the HARRF, a 17.5 million gallon per day (MGD) secondary wastewater treatment plant. The HARRF treats an average daily flow of about 14 MGD originating from the City and the Rancho Bernardo area of San Diego and discharges its effluent to the Pacific Ocean through a 16 mile land and ocean outfall. The HARRF was originally constructed in 1959 and has undergone four upgrade/expansions, the last in 1989.

The HARRF is in need of additional upgrades, repairs, and reliability improvements. The City and its engineers have determined that process and reliability improvements and expansion at the HARRF to 18 MGD will meet the service area wastewater flow requirements for the next 20 years.

The project will consist primarily of replacement of non-operational mechanical equipment, structural repairs, installation of automated control systems, and construction of one additional anaerobic digester. Treatment units included in this contract include installation of mechanically cleaned bar screens at the headworks, replacement of the old collectors in the primary clarifiers, replacement of diffusers and piping in the aeration basins, replacement of dissolved air flotation equipment, installation of new gas flares to meet new air quality requirements for nitrogen oxides, installation of ferrous chloride system, and structural repairs and rehabilitation of primary tanks, digesters, and aeration basins.

The City meets about 70 percent of its water needs through purchases of imported water from the San Diego County Water Authority (Water Authority). 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. The remaining 30 percent of the domestic water supply demand is provided by local groundwater and/or watershed reservoirs. The water sources are secured through contracts and agreements and City water rights ownership. Additionally, the City plans to soon implement a water recycling program which will initially provide about 3,200 acre-feet per year of recycled water. 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. In accordance with the SRF Policy requirements for water conservation, the City is a signatory to the "Memorandum of Understanding Regarding Urban Water Conservation in California".

The City prepared a Draft Environmental Impact Report (EIR) for the currently proposed secondary upgrade project and for a water recycling project that was previously approved by the SWRCB. The EIR was distributed for public review and circulated through the State Clearinghouse (SCH# 90010817) from July 12, 1991, to August 26, 1991. During the review period, the City received comments from five agencies. The City prepared a Final EIR, including comments and responses, and an addendum. On December 18, 1991, the City certified the EIR, and on December 19, 1991, the City filed a Notice of Determination with the San Diego County Clerk and the Governor's Office of Planning and Research.

The improvements will cost $12.93 million. The SRF annual funding cap is $10 million per agency per year. The City therefore requests the SWRCB approve a loan of $10 million for this project and agrees to pay back the loan in accordance with the SRF Policy.

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 (1) year after completion of construction.

RWQCB IMPACT: San Diego RWQCB. Approval of this funding will allow the City of Escondido's Hale Avenue Resource Recovery Facility to reliably accommodate service area growth and meet its National Pollutant 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 for the proposed project, with a repayment period of 20 years, and with the first repayment due one year after completion of construction.

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 Treatment Plant Upgrades for the City in priority Class C;

3. The Division of Clean Water Programs (Division) has approved the facilities plan;

4. The City is signatory to the "Memorandum of Understanding Regarding Urban Water Conservation in California"; and

5. The City certified an EIR and Addendum (State Clearinghouse # 90010817) which have been reviewed and considered, and it has been determined that:

a) Changes or alterations have been required in, or incorporated into the proposed project which avoid or reduce to less than significant levels potentially significant environ-mental effects identified in the EIR with respect to: (i) water quality impacts which will be mitigated by including measures developed from hydrologic investigations such as coordination for location and maintenance of drainage facilities, use of erosion controls, seasonal grading restrictions, proper groundwater extraction and disposal, containment of effluent seepage, prevention of spills or leaks of wastewater effluent and hazardous materials, and development of spill contingency plans; and (ii) flooding impacts which will be mitigated by flood protection measures such as elevating the proposed facilities using berms, or using containment facilities.

b) With respect to other potentially significant environmental impacts identified in the environmental documents, 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 approves a SRF loan of $10 million to the City of Escondido for the construction of secondary improvements at the Hale Avenue Resource Recovery Facility. The repayment period shall be 20 years, and the first repayment due one year after completion of construction.

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