REPORT TO THE CITY COUNCIL
December 17, 2015
FROM: THOMAS C. ESQUEDA, Director
Department of Public Utilities
THROUGH: MICHAEL CARBAJAL, Division Manager
Department of Public Utilities - Water Division
BY: GLENN A. KNAPP, PE, Professional Engineer
Department of Public Utilities - Water Division
SUBJECT
Title
Acceptance of a $2,932,600 State Revolving Fund Low-Interest Loan through the State Water Resources Control Board Consolidation Incentive Program for construction of water main pipelines for connection of the Orange Center School District to the City of Fresno’s water distribution system.
Body
RECOMMENDATIONS
Staff recommends that City Council:
1. Accept a $2,932,600 State Revolving Fund Low-Interest Loan through the State Water Resources Control Board Consolidation Incentive Program for construction of water main pipelines for connection of the Orange Center School District to the City of Fresno’s water distribution system.
2. Authorize the Director of Public Utilities, or designee, to sign all contract documents on behalf of the City of Fresno.
EXECUTIVE SUMMARY
The State Water Resources Control Board (SWRCB) has extended a State Revolving Fund (SRF) Low Interest Loan Consolidation Incentive Program construction funding offer to the City of Fresno (City) in the amount of $2,932,600. This funding is for construction of water mains for connection of the Orange Center School District (OCSD), to the City of Fresno’s (City’s) water distribution system to remediate school system water quality issues and supply a safe and reliable source of potable water.
Currently, the school’s 410 staff and students are being supplied drinking water through a separate State funded “Emergency Bottled Water Program”. Since the school is a severely disadvantaged community, the SWRCB will provide funding at zero percent (0%) interest with “principle forgiveness”. This funding mechanism essentially provides project construction funding in the form of a grant.
Council’s affirmative action on this agenda item will provide the necessary avenue for remediation of the current health and safety risk to the students and staff at the Orange Center School District.
BACKGROUND
In May 2013, pre-applications for the Fall State Fiscal Year 2013-2014 Safe Drinking Water State Revolving Fund (SDWSRF) funding cycle became available. On June 27, 2013, the City’s Department of Public Utilities submitted a pre-application for construction funding of its proposed Southeast Surface Water Treatment Facility (SESWTF). Upon review of pre-application information, the SWRCB ranked the project into Category “M” on the Project Priority List (PPL). Although SWRCB funding categories typically range from Category “A” to “O”, eligible funding categories for this funding cycle were restricted to Categories “A” to “G” (with Category “A” being the highest health and safety concern).
Shortly thereafter, the SWRCB presented the opportunity for possible project “re-ranking” for the City’s SESWTF to a fundable category through their SDWSRF-Consolidation Incentive (CI) funding program. In short, a public water system (PWS) with a project ranked in a lower PPL category (less serious health concern) that agrees to physically consolidate a disadvantaged PWS with the higher ranked project, could be re-ranked into the same PPL category as the disadvantaged PWS. During this time, the SWRCB identified the OCSD as a severely disadvantaged community experiencing “higher ranked” health and safety risks due to ongoing water quality issues.
In coordination with the OCSD, and in accordance with SWRCB Consolidation Incentive Program requirements, the OCSD Board of Trustees approved and signed OCSD Resolution No. 14-8-8, on April 8, 2014, allowing the City (as lead agency), to submit an additional funding application on behalf of the school district that will result in the abandonment of the component of OCSD’s existing water system currently used for potable water use, construction of a water utility service pipeline for consolidation with the City’s water system, and resolution of on-site water contamination issues.
Subsequent to Council approval on June 19, 2014, construction funding applications for the City’s SESWTF and OCSD were submitted, where after the City’s application for its SESWTF was re-ranked to a fundable category.
As part of the CI Loan requirements, an Extraterritorial Service Agreement (ETA), between the City and OCSD was developed and since approved by Council on July 30, 2015.
The OCSD is a K-6 school and has operated its own water system under SWRCB Permit Number 03-23-12P-007 since the early 1950’s. the school is located at 3530 South Cherry Avenue (within the City’s Sphere of Influence), and is currently unable to provide potable water for approximately 410 students and staff. The school is classified as a severely disadvantaged community and has experienced water system contamination issues (lead and coliform) over the last six (6) years. The school’s on-site water well was installed in the early 1950’s , later modified in the early 1980’s, and has exceeded its useful service life in providing potable drinking water. School students and staff are currently provided bottled water through a separate “Emergency Bottled Water Program” through the SWRCB.
In brief summary, construction work will include remediation on on-site water quality issues and construction of new water mains within the existing rights-of-way of South Cherry Avenue, East Central Avenue, and South East Avenue, with connection to existing water mains extending approximately 2,000 feet south of North Avenue. The proposed pipeline configuration will provide the school two (2) points of connection to the City’s distribution system to accommodate any unanticipated system maintenance requirements.
Installation of this water service pipeline will allow the school to discontinue use of its onsite well as a source of potable water and the schools dependency on the SWRCB’s Emergency Bottled Water Program. The OCSD will continue using its onsite well for landscape irrigation purposes until its operation is no longer feasible. Thereafter, the OCSD may request a separate landscape irrigation connection to the City system subject to the terms of the ETA. At that time, the well shall be sealed and abandoned.
The Funding Agreement for this project has been approved as to form by the City Attorney’s Office. Finalized acceptance of this SRF Loan is necessary to proceed with construction of the project.
ENVIRONMENTAL FINDINGS
A Mitigated Negative Declaration (MND) EA No. 14-013 was adopted by the Council on July 30, 2015, for this Project. An analysis has been performed pursuant to CEQA Guidelines §15162 to determine whether subsequent environmental review is required for the Project. Based on this analysis the following findings are made to support the determination that no subsequent environmental review is required:
1. No substantial changes are proposed in the Project which will require major revisions of the previous MND due to the involvement of new significant environmental effects, or a substantial increase in the severity of previously identified significant effects.
2. No substantial changes occur with respect to the circumstances under which the Project is undertaken which will require major revisions of the previous MND due to the involvement of new significant environmental effects, or a substantial increase in the severity of previously identified significant effects.
3. There is no new information which was not known or could not have been known at the time of the previous MND that the Project will have significant effects not discussed in the MND.
Furthermore, since a MND was previously adopted for this Project, the considerations set forth in CEQA Guidelines §15162(a)(3)(C) and (D), related to the adequacy and feasibility of previously adopted mitigation measures, are not applicable. Based upon these findings, it has been determined that no further environmental documentation is required for this Project.
LOCAL PREFERENCE
The local preference was not implemented because this is not a competitive bid award.
FISCAL IMPACT
There is no impact to the General Fund or other City debt service obligations. Typical SRF interest rates are at or near 2% with an assumed loan term of 20 years. As the school is a severely disadvantaged community, the SWRCB will provide funding at zero percent (0%) interest with principal forgiveness. This funding mechanism essentially provides project construction funding in the form of a grant.
Attachment:
SRF Installment Sales Agreement for the OCSD