TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
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Adopt Resolution No. 2025-080 to enter into a Funding Agreement D2502006 with the State Water Resources Control Board for the Drinking Water State Revolving Fund program to fund the State Street Water Treatment Plant Project (WA212).
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RECOMMENDATION
1) Adopt Resolution No. 2025-080, authorizing the City to enter into Agreement No. D2502006 with the State Water Resources Control Board through the Drinking Water State Revolving Fund program to fund the State Street Water Treatment Plant Project (WA212); 2) accept the Emerging Contaminates Grant included in the Agreement D2502006 and appropriate $25,000,000 to the expenditures and revenue of the Water Fund Grant G7263; 3) reduce the State Street Water Treatment Project (WA212) budget in the Water Fund (520) by $25,000,000 and; 4) authorize the City Manager to execute all necessary documents on behalf of the City.
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FISCAL IMPACT
Requires an appropriation of $25,000,000 in expenditures and revenues to the Water Fund Grant G7263 for the Emerging Contaminates Grant awarded through the State Water Resources Control Board. Concurrently, it will reduce the Water Fund (520) budget for the State Street Water Treatment Project WA212, by $25,000,000.
There is no change in the total project budget for Project WA212. This adjustment reallocates the funding from the Water Fund to the grant, thereby increasing the Water Fund (520) fund balance by $25,000,000.
City Council adopted Resolution No. 2025-001 on January 7, 2025, authorizing staff to apply for a federal loan administered through the State Water Resources Control Board (State Water Board) under the “Drinking Water State Revolving Fund” (DWSRF) Program for project WA212. The State Water Board has now determined that project WA212 is eligible not only for a DWSRF Loan amount of $35,000,000, but also for a DWSRF Emerging Contaminants Grant in the amount of $25,000,000 (previously $10,000,000). The State Water Board has formalized this determination through a Financing Agreement submitted to the City on October 31, 2025.
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PROJECT BUDGET - WA212 |
|
Funding Source |
Adopted Budget |
Expenditures |
Appropriation |
Available Budget |
|
520 - Water Fund |
$57,744,712.00 |
($3,205,873.06) |
($25,000,00.00) |
$29,538,838.94 |
|
G7211 - WaterSMART Grant |
$750,000.00 |
|
|
$750,000.00 |
|
DWSRF Emerging Contaminants Grant |
|
|
$25,000,000.00 |
$25,000,000.00 |
|
TOTALS: |
$58,494,712.00 |
($3,205,873.06) |
$0 |
$55,288,838.94 |
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above furthers the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Positive City Image
• Financial Stability
• Responsible Long-Range Planning
|
Revenue: 5207310-59500-G7263 |
Expenditure: 5207310-40010-G7263 |
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BACKGROUND
The City of Chino owns the property located in Unincorporated San Bernardino County, south of State Street, at 10762 Benson Avenue (State Street Site). The site includes an existing reservoir currently in operation and a groundwater well (Well 14) not in operation. On June 16, 2020, Council established a Capital Improvement Program (CIP) project, WA212, to construct a water treatment plant at this State Street site to bring Well 14 and Well 12 (located at Philips Site) back into production. The Project includes constructing a new water treatment plant with capacity for treating 4,000 gallons per minute; constructing a 1.5-mile dual 6-inch diameter high-density polyethylene (HDPE) brine disposal pipeline, raw waterline, fiber optic line, well rehabilitation, and well equipment.
City Council adopted Resolution No. 2025-001 on January 7, 2025, authorizing staff to apply for a federal loan administered through the State Water Resources Control Board (State Water Board) under the “Drinking Water State Revolving Fund” (DWSRF) Program for project WA212. DWSRF is a financial assistance program for public water systems to achieve or maintain compliance with public health protection objectives through drinking water infrastructure projects. Publicly owned community water systems are eligible to apply for the loan, which has a term of up to 30 years. Early in the State Water Board’s reviews, the City was notified that WA212 was also eligible for a DWSRF “Emerging Contaminants Grant” (EC Grant) amount of $10,000,000 which is a financial assistance grant, part of the Infrastructure Investment and Jobs Act (IIJA) of 2021 allocated to the U.S. Environmental Protection Agency (EPA) also administered through the DWSRF program.
During the State Water Board’s final financial review in October 2025, of the City’s WA212 project, it was determined that the City was now eligible for an additional $15,000,000 EC Grant (total grant of $25,000,000) due to a reduction of other agencies seeking EC Grant program assistance.
ISSUES/ANALYSIS
On October 31, 2025, the City received Draft Agreement No. D2502006 from the State Water Resources Control Board establishing the revised EC Grant amount to be $25,000,000 and describing the final terms (as revised in Exhibit B) for the City to utilize as needed a loan amount of up to $35,000,000 to be paid back at a 1.9% interest rate over 30 years to fund the State Street WTP project (WA212). This loan provides the City with greater financial flexibility, allowing water funds to be redirected toward other critical capital improvement projects. The City will only request funding for amounts needed for the project. A budget adjustment is necessary to reflect a return of $25,000,000 to Fund 520 - Water Fund balance, an appropriation of $25,000,000 of DWSRF Emerging Contaminant Grant funds to the Project budget, and creation of a matching revenue account for receiving reimbursements of the $25,000,000 grant.
The EC Grant will offset costs associated with treatment for nitrate, perchlorate, and 1,2,3-TCP contaminants which are a large component of the State Street WTP project. Therefore, staff recommends adopting Resolution 2025-080, which authorizes the City to enter into the Financing Agreement with the State Water Resources Control Board with the terms as described above.
Attachments: Exhibit A - WA212 Vicinity Map
Exhibit B - Draft DWSRF Financing Agreement
Exhibit C - Resolution No. 2025-080 (Authorizing Agreement)