To 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
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