ITEM 1: REQUEST FOR RELIEF FROM RETROACTIVE FUNDING PROVISIONS OF THE POLICY FOR IMPLEMENTING THE STATE REVOLVING FUND (SRF) FOR CONSTRUCTION OF WASTEWATER TREATMENT FACILITIES, AMENDED JUNE 18, 1998, BY THE CITY OF SACRAMENTO (CITY) FOR THE UNIVERSITY OF CALIFORNIA DAVIS MEDICAL CENTER, REGIONAL STORAGE PROJECT, SRF PROJECT NO. C-06-4652-110

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 (SRF Policy), adopted on February 16, 1995, and amended on June 18, 1998, projects where construction has been initiated prior to Division of Clean Water Programs (Division) approval of plans and specifications (P&S) are not eligible for Retroactive Funding. Section VI of the amended SRF Policy reads as follows: "Retroactive funding will be provided for only those projects where the applicant has submitted all required program documents and such documents have been approved before initiation of construction, but due to a lack of funds or other reasons, the applicant initiated construction after the approval of either plans and specifications or Request for Design-Build Proposals, but prior to issuance of the loan contract. Projects where construction is initiated before Division approval are not eligible for retroactive funding." Construction of the City's University of California Davis Medical Center Regional Storage project has commenced, but the necessary approvals from the Division have not yet been received.

The City currently has two SRF loan contracts totaling approximately $40 million for improvements to Sumps 1/1A and 2, and pump stations. The City also has two projects on the SRF Priority List for an additional $15 million. The subject project is estimated to be $7 million. All of these projects are part of the City's Combined Sewer System (CSO) Improvement Plan. In order to receive a SRF loan from the SWRCB, each project must first receive Facilities Plan Approval (FPA), and subsequent P&S Approval from the Division. FPA is issued by the Division upon approval of a project report, a draft revenue program, environmental documents, and a water conservation program. The Division cannot approve the environmental documents until it receives and approves the adopted final document, the Notice of Determination filed with the Governor's Office of Planning and Research, and the resolution adopting the final document. The City has not submitted the required environmental documents for the project. The project report was received by the Division on August 31, 1998. The P&S were received by the Division on September 16, 1998. Eight weeks are typically necessary to review the project report and the P&S. The construction contract was awarded by the City on September 22, 1998, and construction began October 6, 1998. In cases where planning and design work has been conducted by an applicant agency without concurrent review by the Division, the intent of the SRF Policy amendment was to, a) assure timely compliance with CEQA and NEPA environmental requirements, and b) provide sufficient time for the Division staff to review and approve P&S prior to construction. Under the previous version of the SRF Policy, the applicant lost eligibility only for the portion of the work completed before P&S Approval. Both of the City's previous SRF loan projects lost a portion of the otherwise eligible project costs under the previous SRF Policy.

Allowing the City relief from Retroactive Funding provisions would set a potential precedent for other applicants, thereby reintroducing the possibility that additional late submittals of SRF documents would force the Division to conduct expedited reviews.

POLICY ISSUES: Should the SWRCB grant relief from Retroactive Funding provisions of the SRF Policy for the subject project?

RWQCB IMPACT: Central Valley Regional Water Quality Control Board. If the project does not receive SRF funds, it could impact the City's ability to complete the CSO

IMPACT: improvements.

FISCAL IMPACT: None at this time. If the City's request is granted, and in the future the SWRCB approves a preliminary loan commitment for this project, there would be an as yet undetermined fiscal impact to the SRF program.

STAFF RECOMMENDATION: That the SWRCB deny the City's request for relief from the Retroactive Funding requirements of the SRF Policy.

DRAFT January 25, 1999

WHEREAS:

1. The State Water Resources Control Board, on February 16, 1995, adopted the Policy for Implementing the State Revolving Fund for Construction of Wastewater Treatment Facilities (SRF Policy) and amended it on June 18, 1998;

2. The SRF Policy as amended on June 18, 1998, provides that there will be no Retroactive Funding of projects where construction is initiated prior to Division of Clean Water Programs (Division) approval of plans and specifications;

3. The project report was received three weeks prior to award of the construction contract and the plans and specifications were received only six days prior to the award of the construction contract for the project;

4. The Division has not approved Facilities Planning for the project;

5. The Division has not approved plans and specifications for the City of Sacramento, University of California Davis Medical Center Regional Storage project;

6. Construction of the City of Sacramento, University of California Davis Medical Center Regional Storage project has been initiated; and

7. Approving relief from the Retroactive Funding provisions of the SRF Policy could set precedent for circumventing this SRF Policy provision.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board denies the City of Sacramento's request for relief from the Retroactive Funding provisions of the SRF Policy.

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 February 18, 1999.

_____________________________________

Maureen Marché

Administrative Assistant to the Board