ITEM 2: APPROVAL OF A STATE REVOLVING FUND (SRF) LOAN FOR THE CITY OF PATTERSON (CITY), WASTEWATER TREATMENT PLANT EXPANSION, SRF LOAN PROJECT NO. C-06-4508-110

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 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.

On September 2, 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 September 2, 1998.

The City is located about 60 miles south of Sacramento, and lies within the County of Stanislaus. The City's present wastewater treatment facilities were originally constructed in 1950's and in the late 1960's and early 1980's some major improvements were completed. The City owns and operates the facility that serves a current population of about 10,500. The current wastewater flow to the facility is about 0.8 million gallons per day (mgd). The facility discharges the treated effluent to percolation/evaporation ponds located within the 80 acre plant site and to the San Joaquin River during winter months. 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 treatment resulting in violations of the Regional Water Quality Control Boards' (RWQCB) waste discharge requirements. The proposed project will expand the treatment capacity to 1.3 mgd and will provide a reserve treatment capacity for 12 years (till the year 2011).

The City and its engineer have 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 pond treatment system, and modifications to the chlorination and de-chlorination facilities. The estimated SRF loan eligible project cost including engineering and administration is $3.7 million.

The City receives its water supply from deep water wells within the City from an acquifer which is over 600 feet below the ground surface. 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 is a signatory to the "Memorandum of Understanding Regarding Urban Water Conservation in California."

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 September 10, 1999, as the deadline for initiation of construction. The Division may approve up to a 90 day extension for good cause.

The City of Patterson (City) prepared a Mitigated Negative Declaration/Expanded Initial Study (MND/IS) which was distributed to the public and circulated through the State Clearinghouse (SCH# 98012082) for review from January 29, 1998 through March 16, 1998. The MND/IS is tiered off the City's General Plan Master Environmental Impact Report (EIR), prepared and certified in 1992, which identified and evaluated impacts of buildout of the General Plan, including the upgrade and expansion of the WWTP.

During the review period, the City received eight comment letters. The City provided responses to the written comments. The City Council approved the project and adopted the MND on March 17,1998. A Notice of Determination was filed with the Stanislaus County Clerk's Office and the Governor's Office of Planning and Research on March 24, 1998.

The City requests the SWRCB approve a loan of $3.7 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 September 10, 1999?

RWQCB IMPACT: The proposed expansion will provide a reserve treatment capacity for 12 years and the capability of meeting Regional Board's existing and proposed Waste Discharge 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 October 1998 are as follows:

STAFF RECOMMENDATION: That the SWRCB adopt a resolution approving a SRF loan of $3.7 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 June 18, 1998, the proposed resolution includes an expiration date for this preliminary loan commitment if the date of initiation of construction is not met.

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 State Water Resources Control Board, on June 18, 1998, adopted the FFY 1999 SRF Loan Program Priority List which included the Wastewater Treatment Facility Expansion for City of Patterson (City) in Priority Class C;
   
3. The Division of Clean Water Programs has approved the project report, environmental documents, and draft revenue program for the City's project; and
   
4. The City of Patterson adopted a Mitigated Negative Declaration for the proposed project (State Clearinghouse No. 98012082) which has been reviewed and considered, and it has been determined that the proposed project will not result in significant negative environmental impacts.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board:

1. Approves a SRF loan commitment of $3.7 million to the City of Patterson 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 Patterson does not initiate project construction by September 10, 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 October 22, 1998.

Maureen Marché

Administrative Assistant to the Board