Grant/City of San Jose



Dave Kirn

341-5720

Jim Kuykendall

341-5874

STATE WATER RESOURCES CONTROL BOARD

WWORKSHOP SESSION -- DIVISION OF CLEAN WATER PROGRAMS

JANUARY 10April 10, 2002

ITEM 4

SUBJECT

APPROVAL OF A WATER RECYCLING CONSTRUCTION PROGRAM (WRCP) GRANT AND LOAN COMMITMENT TO THE DUBLIN-SAN RAMON SERVICES DISTRICTCITY OF SAN JOSE (CITYDSRSD) – EAST BAY MUNICIPAL UTILITY DISTRICT (EBMUD) RECYCLED WATER AUTHORITY (DERWA); SILVER CREEK PIPELINE AN RAMON VALLEY RECYCLED WATER PROGRAM – PRESSURE ZONE 1 PROJECT; WRCP PROJECT NO. 32085-110

DISCUSSION

On March 7, 2000, the voters approved Proposition 13, the Safe Drinking Water, Clean Water, Watershed Protection, and Flood Protection Act (2000 Bond Law). The 2000 Bond Law allocates $40 million for the year 2000 Water Recycling Subaccount to provide loans and grants for facilities, planning, design, and construction of water recycling projects, and for water recycling research and demonstration projects. The 2000 Bond Law also directs unallocated funds and loan repayments from water recycling subaccounts of 1988 and 1996 Bond Laws to be transferred and deposited into the 2000 Water Recycling Subaccount. The current total amount of the 1988, 1996, and 2000 Bond Laws is approximately $113 million. This amount, less costs for administration, research and development, and bond processing, is available for WRCP construction grants and loans and facilities planning grants.

Additionally, loan repayment and interest amounts accumulated in the 1984 Bond Law Water Reclamation Subaccount can be used for water recycling construction loans. These 1984 funds were previously used for State Revolving Fund (SRF) Loan Program “State-match” funds in accordance with Resolution No. 93-18. These funds currently exist in an independent water reclamation subaccount, now subject to both the 1984 Bond Law and SRF Loan Program requirements.

In accordance with the Water Recycling Funding Guidelines (Guidelines), adopted by the State Water Resources Control Board (SWRCB) on April 17, 1997, water recycling projects on the adopted priority list will need SWRCB’s approval to receive a WRCP grant and loan. WRCP grants and loans grant can be approved by the SWRCB after the Division of Clean Water Programs (Division) has issued a Facilities Plan Approval (FPA) letter.

The DERWA, located in Contra Costa County and Alameda CountyCity , has applied for a WRCP gGrrant and loan to construct the San Ramon Valley RecycledSilver Creek WaterRecycled Water Pipeline Program – Pressure Zone 1 Project. This project is listed on the WRCP priority list as a fundable Category 1A project., The Silver Creek Pipeline consists of approximately seven miles of pipeline from Yerba Buena Road, along Silver Creek Valley Road, to Blanchard Road. The proposed pipeline will deliver recycled water to local customers along Silver Creek Valley Road, Metclaf Energy Center (MEC), and future customers in the Coyote Valley area of the Santa Clara Valley Water District (District). which will augment the State’s water supply. Similarly, the Project is also listed on the SRF Loan Program priority list as a fundable Category IC project, with Project No. C-06-4692-110.

On November March 1215,29, 20021, the Division issued an FPA letter to the City for the DERWA’s Silver Creek waterPipeline recyclingwater-recycling project for meeting the Guidelines and SRF program requirements. . The total total estimated project cost is is $32 25.5 million, which includes DERWA’s share of $168 million for construction, $7.5 million for facilities planning, portions of the design and construction manage-ment costs, and $2 million for contingency, purchase of land and right-of-ways, and contingencies. For the remaining project cost of $24 million, DERWA requested financial assistance from the Office of Water Recycling loan and grant programs. . The estimated total eligible project cost is determined to be $18.4 million.

Pursuant to the SWRCB’s Resolution No. 2001-003, a public agency can request a WRCP grant for up to 25% percent of eligible construction costs or up to a maximum of $5 million, with the balance of the eligible project cost to be funded with WRCP loans up to $15 million. . Funds remaining in the 2000 Bond Law for Northern California water recycling loan projects amount to approximately $13.7 million. The City isDERWA’s funding requesting $4.6 million of WRCP grant, which includes 25 percent of the construction cost plus an allowance of up to 15 percent of the construction grant for Engineering, Legal, and Administration costs. exceeds the funding available in the 2000 Bond Law, as specified in the SWRCB Resolution No. 2001-003. Therefore, $5.3 million of 1984 Bond Law water recycling loan funds is proposed to augment loan funding for the project.

DERWA The City has demonstrated a commitment to provide a reliable recycled water supply within its jurisdiction jurisdiction with an adopted ordinance that all landscaped area in excess of 10,000 square feet shall use reclaimed water for irrigation. and developed freshwater conservation policies and mandatory use ordinance of recycled water for existing and future irrigation use. The California Energy Commission issued a license to Calpine/Becthel to construct the MEC in the Coyote Valley area of San Jose and one of the licensing conditions is that MEC use recycled water as the primary water source for its cooling tower. Additionally, the City has a draft agreement in place with the District, the recycled water wholesaler, to provide recycled water for future development. DERWA The City has also established a reliable revenue program to support the project. Therefore, because the project will provide a significant net increase of the State’s water supply, Division staff recommends that the proposed project receives full funding of the project with a $5 4.6 million 2000 Bond Law construction grant, a $13.7 million 2000 Bond Law construction loan, and a $5.3 million 1984 Bond Law construction loan. Although the loan amounts are estimates only and may increase in accordance with the actual project bid amount, the maximum grant amount for the project remains at $5 million.

DERWA is a joint powers authority created in 1995 by DSRSD and EBMUD to develop and implement the San Ramon Valley Recycled Water Program. This program is intended to provide recycled water service to irrigation customers in the San Ramon Valley service area. The initial phase of the recycled water project is referred to as the Pressure Zone 1 project.

DERWA’s Pressure Zone 1The Silver Creek Pipeline project will provide up to an average annual flow of 2.110,131-acre feet per year million gallons per day of recycled water to DSRSD local users, MEC, and the Districtand EBMUD customers within the cities of Dublin and San Ramon.. DERWA The City is responsible for planning, design, construction, and operation of the proposed pipelinetreatment facilities, along with the treatment facilitiespipeline supply system, pumping, and storage facilities. Once the proposed system pipeline is operational, the recycled water facilities will providereplace the existing potable recycled water supply for industrial, landscaping and irrigation use. The District must construct additional facilities in order to deliver the total recycled water amount for the project.

The effluent of DSRSD’s wastewater treatment plant, located in the City of Pleasanton, will be treated to comply with the requirements of Title 22 of the California Code of Regulations and the San Francisco Bay Regional Water Quality Control Board (SFBRWQCB). This project will provide an annual average supply of 2,290 acre-foot per year. The project facilities include one storage reservoir tank, a pump station, approximately eight miles of pipeline with sizes ranging from 8-inch diameter up to 30-inch diameter and recycled water treatment facilities.

Hidden Note: Wording for the next two paragraphs to be provided by Environmental Staff.

DERWA prepared a draft Environmental Impact Report (EIR), which was distributed to the public and circulated through the State Clearinghouse (SCH# 1996013028) for review from

August 22, 1996 through October 21, 1996. During the review period, DERWA received 19 comment letters regarding the project. DERWA provided adequate responses to the received comments and on December 16, 1996, DERWA approved the project and adopted the Final EIR.

The City prepared an Addendum to the Final Environmental Impact Report (EIR), which was distributed to the public and circulated through the State Clearinghouse (SCH# 1992013071) for the proposed project dated August 29, 2001. The Addendum to the EIR was not distributed to the public or circulated through the State Clearinghouse, which is consistent with California Environmental Quality Act (CEQA) Guidelines Section 15162. A Notice of Determination and public hearing are not required under CEQA Guidelines Sections 15162 and 15163 for Addendum’s to EIR’s.

A Notice of Determination was filed with the Alameda and Contra Costa County Clerks and the Governor’s Office of Planning and Research on December 17, 1996. On November 2, 2001, Division staff has determined that the review process for the EIR was complete.

The SFBRWQCB issued two separate Waste Discharge Requirements for the use and discharge of recycled water that included the areas of the Pressure Zone 1 project. The DSRSD’s service area will be covered under the Master Water Recycling Permit issued by the SFBRWQCB, Order No. 93-159 for the Tri-Valley area, while the EBMUD’s service area will be covered under the SFBRWQCB’s General Order No. 96-011.

DERWA The City has provided the Division with a schedule containing project milestones of the Pressure Zone 1Silver Creek Pipeline project. These dates are included in the Division’s FPA letter, which specifiesindicated submittal of the Final Plans and Specifications (P&S) for the pipeline construction on May June 430, , 20023. In accordance with the Guidelines, the proposed resolution will includes June  4,  2002August 1, 2003, as the deadline to submit the Ffinal Plans and SpecificationsP&S for the treatment recycled water pipeline facilities. The proposed resolution will also include a 90-day time extension from the June 4, 2002August 1, 2003, deadline for good cause without further action by the SWRCB.

DERWA has applied for an eligible WRCP grant of $5 million and a WRCP loan of $19 million. DERWA requests a 20-year repayment period with the first WRCP loan repayment due two years after the date of the executed loan contract. In addition, DERWA has requested to have the approved 2000 Bond Law grant funds disbursed prior to SWRCB disbursement of approved WRCP loan funds.

POLICY ISSUE

Should the SWRCB approve a WRCP grant of $4.65 million and WRCP loans totalling $19 million for the proposed project, including a 20-year loan repayment period, with the first loan repayment due two years after the date of the executed loan contract? Should the SWRCB, in accordance with the Guidelines and SRF Loan Program policy, condition this approval by requiring expiration of the preliminary grant and loan commitments if the Final Plans and SpecificationsP&S isare not submitted to the Division by August June 41, 20023?

RWQCB IMPACT

The SFBRWQCB has prescribed waste discharge requirements for the DSRSD wastewater treatment plant in the City of Pleasanton and for the use and discharge of recycled water within DERWA’s jurisdiction. The proposed project will ensure continued compliance with the waste discharge requirements.

FISCAL IMPACT

A total of approximately $113 113 million is available in the 2000 Water Recycling Subaccount for WRCP grant and loan funding. The 2000 Bond Law allocates 50% percent of the 2000 Water Recycling Subaccount for construction grants and 50% percent for construction loans. Approximately 9%nine percent of the total construction loan monies are allocated for administration, research and development, and bond costs. In addition, both grant and loan amounts are allocated 40% percent for Northern California Counties and 60% percent Southern California Counties. DERWA’s The City’s water recycling project will be funded from the 2000 Bond Law Water Recycling Subaccount with a $4.65  million WRCP grant (Item No. 3940-101-0419). and $13.7 million WRCP loan (Item Nos. 3940-601-0419 and/or 3940-618-0419). The SWRCB’s grant and loan approval for DERWA’s the City’s project, together with previous funding commitments and additional funding commitment requests for other water recycling projects, will leave a 2000 Bond Law balance of $381,136700,000 for additional constructiongrants loans in Northern California. and a balance of $11,081,873 for additional 2000 Bond Law grants for Northern California.

The additional WRCP loan funding of $5.3 million will be funded from unallocated 1984 Bond Law Water Reclamation Subaccount funds (Item No. 3940-611-0740) for local assistance. The current balance available in the 1984 Water Reclamation Subaccount for WRCP loans is approximately $14.7 million. This balance includes loan repayments returned to the Subaccount. The SWRCB’s loan approval of $5.3 million for DERWA’s project, together with additional 1984 Bond Law funding requests for other water recycling projects at the January 2002 SWRCB Meeting, will leave a 1984 Bond Law balance of $1.1 million.

RWQCB IMPACT

The San Francisco Bay Regional Water Quality Control Board has prescribed Waste Discharge Requirements (WDRs) for the San Jose/Santa Clara Water Pollution Control Plant for the use and discharge of recycled water. The proposed project will ensure continued compliance with the WDRs.

Hidden Note: Text and numbers to be provided by Ron Blair.

STAFF RECOMMENDATION

That the SWRCB adopt a resolution approving a WRCP grant commitment of $4.65 million from the 2000 Bond Law Water Recycling Subaccount and a WRCP loan of $19 million from the 1984 and 2000 Bond Law Water Recycling Subaccounts for DERWA’s the City’s Pressure Zone 1Silver Creek Pipeline project., for a total estimated commitment of $24 million, with a loan repayment period of 20 years, and with the first loan repayment due two years after date of the executed loan contract.

In accordance with the WRCP Guidelines and the SRF Loan Program policy, the proposed resolution includes an expiration date for this preliminary loan commitment if the date for the submittal of the Final Plans and SpecificationsP&S of the project is not met. The expiration date is August 1, 2003June 4, 2002, for submittal of the Final Plans and SpecificationsP&S, with a 90-day time extension from the expiration date for good cause without further action by the SWRCB.

Policy Review ___________

Legal Review ___________

Fiscal Review ___________

DRAFT 3/12/02

STATE WATER RESOURCES CONTROL BOARD

RESOLUTION NO. 2002-

APPROVAL OF A WATER RECYCLING CONSTRUCTION PROGRAM (WRCP) GRANT AND LOAN FOR DERWA ( THE CITY OF SAN JOSE (CITY) –SILVER CREEK PROJECTDUBLIN-SAN RAMON SERVICES DISTRICT (DSRSD) – EAST BAY MUNICIPAL UTILITY DISTRICT (EBMUD) RECYCLED WATER AUTHORITY); SAN RAMON VALLEY RECYCLED WATER PROGRAM – PRESSURE ZONE 1 PROJECT

WRCP PROJECT NO. 3208-110

WRCP PROJECT NO. 3205-110

WHEREAS:

1. The Safe Drinking Water, Clean Water, Watershed Protection, and Flood Protection Act (2000 Bond Law), Proposition 13, allocated $40 million to the Water Recycling Subaccount to provide loans and grants to municipalities for facilities planning, design, and construction of water recycling projects;

2. The 2000 Bond Law also provided that unallocated funds and loan repayments from the Water Recycling Subaccount of the 1988 and 1996 bond laws be transferred and deposited into the 2000 Bond Law Water Recycling Subaccount and that loan repayments to the 1988 Bond Water Reclamation Subaccount be deposited into the 2000 Bond Law Water Recycling Subaccount;

The Clean Water Bond Law of 1984 established a water reclamation subaccount, which authorized up to $25 million for low-interest loans to municipalities to assist in the design and construction of water recycling projects;

3. Thhe State Water Resources Control Board (SWRCB), on January 25, 2001, adopted Resolution No. 2001-003, which included adoption of the WRCP priority list with the City’s Water Recycling Project in Category 1A;

4. DERWA’s Water Recycling Project is in the fundable category of the approved WRCP priority list and the approved State Revolving Fund priority list adopted on June 21, 2001.

5. The Division of Clean Water Programs (Division) has reviewed the draftloan and grant application and supporting documents and issued a Facilities Planning Approval letter on November March 121528, , 20021;

6. and

7. The City prepared an Addendum to the Final Environmental Impact Report (State Clearinghouse No. 1992013071) for the proposed project which has 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 environmental effects identified in the EIR with respect to: (i) impacts to water quality which will be mitigated by monitoring recycled water application rates during the dry season and not using recycled water during the wet season, minimizing surface water pollution by preserving existing vegetation or re-vegetating, limiting erosion through standard control techniques, minimizing tracking of soil onto public or private roads, outlining dust control measures to reduce wind erosion, and excluding the use of hazardous materials in excavation and de-watering activities; and (ii) impacts to soils which will be mitigated by removing material that could undergo liquefaction, densification or de-watering of surface and subsurface soils at construction sites, installing concrete supports and tie-downs to secure buried pipelines and special foundation design, buttressing the toe of slopes to provide support to slopes, utilizing retaining walls, removing and replacing unstable soils, removing native soil and replacing with an engineered fill material not prone to shrinking and swelling, treating soil with lime to alter soil properties to reduce shrink-swell potential, and deepening footings or other support structures in expansive soils to a depth where soil moisture fluctuation is minimized;

b) With respect to other potentially significant environmental impacts identified in the environmental document, 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;

c) Copies of the Addendum to the Final Environmental Report may be viewed by the general public at the Cal/EPA Building, 1001 I Street, 16th Floor, Sacramento California during normal business hours; and

6. The adequacy of the City’s environmental documents is being challenged, as of this date no stay or injunction exists, and the matter will be heard on a future date.

7. DERWA has adopted a final Environmental Impact Report (State Clearinghouse No. 1996013028) for the proposed project which has been reviewed and considered by the State Water Resources Control Board. It has been determined that the Pressure Zone 1 project will not result in any significant environmental impacts and meets all California Environmental Quality Act requirements.

THEREFORE BE IT RESOLVED THAT:

The State Water Resources Control Board:

1. Approves a WRCP 2000 Bond Law grant of $4.65 million, and a WRCP 2000 Bond Law loan of $13.7 million, and a WRCP 1984 Bond Law loan of $5.3 million to DERWA the City for the construction of the San Ramon Water Recycling Program – Pressure Zone 1Silver Creek Pipeline project. The WRCP loan contract will have a repayment period of 20 years, and with the first loan repayment will be due two years from the date of the executed loan contract; and

2. 2. Will withdraw this preliminary WRCP grant and loan commitment if DERWA the City does not submit the Final Plans and Specifications by August 1, 2003June 4,2002 issue Notice-to-Proceed the construction contract by May 20, 2003. The Division may approve up to a 90-day extension to the above deadline for good cause; and.

3. This approval is conditioned on the ruling of the adequacy of the City’s environmental documents, and any funds disbursed to the City will be returned to the SWRCB immediately upon a court’s determination that the California Environmental Quality Act document is inadequate.

CERTIFICATION

The undersigned, Clerk 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 January April 252423, 2002.

Maureen Marché

Clerk to the Board

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