HomeMy WebLinkAbout2023-01-26; Grant and Low-Interest Loan Awards for Recycled Water Funding (Districts - All); Gomez, PazTo the members of the:
CITY COUNCIL
Date\/2"')23CA~CC /
CM __uACM v"bCM (3) L
January 26, 2023
CMWD Board Memorandum
To:
From:
Via:
Carlsbad Municipal Water D ict
Paz Gomez, Deputy City Manag r
Vicki Quiram, General Manage
Scott Chadwick, Executive Man ge
Ccarlsbad
Municipal Water District
Memo ID# 2023007
Re: Grant and Low-Interest Loan Awards for Recycled Water Funding (Districts -All)
This memorandum provides information related to recent positive developments for the funding
of recycled water infrastructure to serve the Carlsbad Municipal Water District (CMWD)
customers.
Background
On November 27, 2012, the CMWD Board authorized an application to the California State Water
Resources Control Board's Clean Water Revolving Fund for a low-interest loan and grant to
finance the Phase Ill Recycled Water project. The loan was awarded at approximately $29 million
with an interest rate of 1%.
Most of the construction work on the project has been completed, and the recycled water
system is in operation. As a result, the CMWD customers enjoy one of the most developed
recycled water distribution systems in the county, which provides a drought-proof local water
supply to irrigate medians, golf courses and most residential areas managed by homeowner
associations (HOAs). The agreement is amended from time to time as portions of the project are
built and loan disbursement requests are prepared. Since the loan application, the CMWD has
been successful in pursuing grants as both an alternative to and in addition to loan
disbursements.
Discussion
Grant applications over the past two years have resulted in $3.2 million in unanticipated grant
funding toward the recycled water enterprise. In addition, the CMWD will receive a
disbursement of approximately $12 million from the State of California State Revolving Fund
Loan Agreement.
On January 4, 2023, the State of California executed Amendment Five to the State Revolving
Fund loan agreement. As a result, the CMWD will now be permitted to submit for another
disbursement request for the most recently completed portion of the recycled water system
expansion. The disbursement is expected to be approximately $12 million and is being
Carlsbad Municipal Water District
5950 El Camino Real I Carlsbad, CA 92008 I 442-339-2722 t
Board Memo -Grant and Low-Interest Loan Awards for Recycled Water Funding (Districts -All)
January 26, 2023
Page 2
incorporated into the recycled water financial model to inform decision-making on future rate
increases.
On November 29, 2022, the California Department of Water Resources announced funding
awards for recycled water projects through the Integrated Regional Water Management Program
via Proposition 1, Round 2 funding. As a result, the CMWD expects to receive about $1 million
toward building the D-4 recycled water reservoir. This funding can supplement the loan financing
for the project, since costs have gone up considerably compared to the budget that was
estimated in the 2012 loan application. This grant application was completed as part of the North
San Diego Water Reuse Coalition. The Coalition's lead agency is the Olivenhain Municipal Water
District (OMWD), so while the CMWD Executive Manager approved participation, the OMWD
Board approved the application via resolution.
The CMWD's participation in the Coalition has also resulted in federal money for recycled water
funding. On February 14, 2023, the CMWD Board will have an opportunity to approve an
agreement with subrecipients of the U.S. Title XVI Water Reclamation and Reuse fiscal year 2021
grant award for the North San Diego Water Reuse Coalition Regional Recycled Water Program.
This agreement will result in funding of an additional $800,000 for the D-4 recycled water
reservoir project.
As the lead agency, the OMWD is still negotiating the agreement with the U.S. Bureau of
Reclamation for the federal fiscal year 2022 award, which will provide $2.2 million in grant funds
toward already built recycled water pipeline in the city. Both rounds of grant funding have the
potential to reduce the amount of debt that the CMWD will have from the State Revolving Fund
approved line of credit and offset a portion of future recycled water rate increases.
Next Steps
Staff will prepare the disbursement request for the State Revolving Fund loan. The CMWD Board
will consider the subrecipient agreement for federal recycled water funding on
February 14, 2023.
cc: Geoff Patnoe, Assistant Executive Manager
Cindie McMahon, General Counsel
Laura Rocha, Deputy City Manager, Administrative Services
Zach Korach, Finance Director
Kristina Ray, Communication & Engagement Director
Shoshana Aguilar, Senior Management Analyst