ITEM 1: APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR THE VICTOR VALLEY WASTEWATER RECLAMATION AUTHORITY (VVWRA), TREATMENT PLANT UPGRADE, STATE REVOLVING FUND LOAN PROJECT NO. C-06-4573-110

DISCUSSION: On June 18, 1998 the State Water Resources Control Board (SWRCB) adopted revisions to the Policy for Implementing the State Revolving Fund for Construction of Wastewater Treatment Facilities (Policy). Section I states that the revised Policy applies to all projects that receive Facilities Plan Approval (FPA) after June 18, 1998. This project received FPA on August 20, 1998, and is therefore subject to the revised Policy. Section VI of the Policy states that projects are eligible for retroactive funding only if construction has not started prior to our approval of all required documents. Construction on this project started in December 1997 prior to our approval of the facilities plan and the final Plans and Specifications (P&S). The VVWRA has requested relief from the SWRCB's recent policy change, which eliminates retroactive funding for projects that are already under construction when Division approvals are received. VVWRA submitted the majority of the required documents prior to the effective date of the SWRCB's policy change, and environmental clearance was provided by the Division on July 2, 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 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 August 20, 1998, the Division issued Facilities Plan Approval to VVWRA for the Treatment Plant Upgrade and the Authority agreed in writing with the approval on August 20, 1998.

The VVWRA is a California regional wastewater treatment authority which serves the high desert area that includes the cities of Adelanto, Apple Valley, Hesperia, Victorville, and San Bernardino County Service Area 42 (Oro Grange) and 64 (Spring Valley Lake). The VVWRA serves approximately a population of 99,513 and the treatment plant average flow is about 8.5 million gallons per day.

VVWRA is making a number of improvements to its plant, to comply with the effluent limitations contained in the facility's NPDES permit and to expand the capacity of tertiary treatment system from 8.3 MGD to 9.5 MGD. The NPDES permit includes a compliance requirement to meet the acute and chronic toxicity objectives in the discharge to surface waters, which becomes effective in January 1999.

The estimated project construction cost is $12.08 million and the estimated loan eligible cost is $7.2 million. (This takes into consideration that all otherwise eligible construction completed before P&S approval date is not SRF loan eligible.)

The domestic water supply for VVWRA service area is provided by potable ground water. Water supplies are adequate for the 20-year project life because the regional aquifer is recharged with the imported water from the State Water Project.

In accordance with the SRF Policy requirements for water conservation, the VVWRA has submitted a water conservation program which complies with the SRF Policy.

The VVWRA determined that the project was categorically exempt from CEQA under Category 3 pursuant to the CEQA guidelines. The VVWRA filed a Notice of Exemption with the Clerk of the County Board of Supervisors on March 26, 1997.

The VVWRA requests relief from the retroactive funding requirements of the revised SRF Policy of June 18, 1998. The VVWRA also requests the SWRCB approve a loan of $7.2 million for this project and agrees to pay back the loan in accordance with the SRF Policy.

POLICY ISSUE: Should the SWRCB relieve VVWRA of the retroactive funding requirement of the revised SRF Policy of June 18, 1998 and 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?

RWQCB IMPACT: The upgrades and tertiary treatment capacity expansion will enable the VVWRA to meet NPDES permit requirements as adopted by the Lahontan Regional Water Quality Control Board. These requirements include the acute and chronic toxicity objectives in the discharge to surface waters, which becomes effective in January 1999.

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 October 1998 are as follows:

STAFF RECOMMENDATION: That the SWRCB adopt a resolution approving a SRF loan of $7.2 million from the FFY 98 account for the proposed project, with a repayment period of 20 years, and with the first repayment due one year after completion of construction. This includes relief from Section VI of the Policy regarding retroactive funding. This is the only project with these unique circumstances that was drastically impacted by the latest SRF Policy revisions.

DRAFT September 28, 1998

WHEREAS:

1. The State Water Resources Control Board, on February 16, 1995, adopted the "Policy for Implementing the State Revolving Fund (SRF) for Construction of Wastewater Treatment Facilities," and revised it on June 18, 1998. The Policy would result in the project being ineligible for loan assistance because construction commenced before approval of the final plans and specifications;

2. The State Water Resources Control Board, on September 18, 1997, adopted the FFY 1998 SRF Loan Program Priority List which included the 9.5 MGD Treatment Plant Upgrade, Victor Valley Wastewater Reclamation Authority in Priority Class B;

3. The Division of Clean Water Programs has approved the project report, environmental documents, draft revenue program, and water conservation plan for the Victor Valley Wastewater Reclamation Authority;

4. The City filed a Notice of Exemption for the project, which has been reviewed and considered and it has been determined that the project is exempt from CEQA.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board

1. Approves SRF loan funding for all otherwise eligible construction work completed subsequent to the Plans and Specifications approval date of August 26, 1998; and

2. Approves a SRF loan of $7.2 million from the FFY 1998 account to the Victor Valley Wastewater Reclamation Authority for construction of the 9.5 MGD Treatment Plant upgrade, with a repayment period of 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 October 22, 1998.

Maureen Marché

Administrative Assistant to the Board