Report Prepared by: Ken F. Elwin, PE, Director of Public Works
Title
SUBJECT: Authorization to Submit an Application to the California Clean Water State Revolving Fund (CWSRF) Program to Provide Financing, for Improvements to the Merced Wastewater Treatment Facility
REPORT IN BRIEF
Considers authorizing an application to the California Clean Water State Revolving Fund Loan Program, for certain improvements to the wastewater treatment facility.
RECOMMENDATION
City Council - Adopt a motion:
A. Authorizing staff to apply for Wastewater Treatment Facility Phase VI Improvements, Project No. 8798-110, funding through the California Clean Water State Revolving Fund Loan Program, in an amount of $61,855,000; and,
B. Adopting Resolution 2025-04, A Resolution of the City Council of the City of Merced, California, authorizing the filing of a loan/grant application with the State Water Resources Control Board for the upgrade of the wastewater treatment facilities, pipelines and other infrastructure, stating its intention to reimburse expenditures paid prior to the issuance of the obligation, and designating the City Manager as the authorized representative to execute necessary documents; and,
C. Authorizing the City Manager to execute any other necessary documents.
Body
ALTERNATIVES
1. Approve, as recommended by staff; or,
2. Approve, subject to modifications as conditioned by City Council; or,
3. Refer to staff for reconsideration of specific items; or,
4. Deny.
AUTHORITY
Charter of the City of Merced, Section 200 et seq.
Services with an estimated value greater than $36,000.00 are made by written contract in accordance with Merced Municipal Code, Title 3 - Revenue and Finance, Chapter 3.04.
CITY COUNCIL PRIORITIES
As provided for in the 2024-25 Adopted Budget.
DISCUSSION
Wastewater Treatment Facility Improvements Status
Wastewater generated within the City of Merced city limits is processed at the Wastewater Treatment Facility (WWTF), located southwest of the City at 10260 Gove Road. Currently, the WWTF is designed with a capacity of 12 million gallons per day (MGD).
On June 15, 2020, the City Council approved an agreement with Stantec Consulting Services, Inc. (“Stantec”) to evaluate alternatives for cost effective upgrades to achieve a 16 or 20 MGD capacity and meet regulatory requirements. Future regulatory items of concern include, but are not limited to: virus disinfection, salinity control, ammonia control, recycled water use, and nitrogen loading to groundwater due to land application of generated waste solids.
At the June 21, 2021, Council meeting, a report presentation was delivered to communicate and discuss the results of the Stantec “WWTF Phase VI Preliminary Design Report” findings. The presentation included projects that are designed to improve water treatment reliability, enhance biogas utilization, and reduce energy costs. As stated in the Preliminary Design Report- “Existing Aeration Basins No. 1 and 2 have thin sloped concrete walls and thin concrete floors to which fiberglass baffles have been connected…These basins have served the City for over 40 years…during which the risks of seismic damage have existed and continue to exist. To mitigate the risk of failure…the City should consider replacing Reactor Basins 1 and 2.” (Note- “aeration basin” is synonymous with ‘reactor basin”).
Council direction was provided to Staff during the meeting to proceed with the design elements as presented for approval. Stantec subsequently prepared a proposal to complete the engineering design tasks and the City Council approved their first contract amendment at the November 1, 2021, meeting. Stantec has since completed the design phase to an approximate 95% Design Plans and Specifications level. This includes the design of the new aeration basins to meet current seismic codes.
At this time there is a funding opportunity for seismic improvements to public facilities for which the City’s Wastewater Treatment Facility’s aeration basins represent a 95% “shovel ready” project.
Cal OES Hazard Mitigation Grant Program Funding Opportunity
At the July 3, 2023, Council meeting the Council approved the application for grant funding through the Federal Emergency Management Agency’s (FEMA) Hazard Mitigation Grant Program. Under the authority of the Robert T. Stafford Disaster and Emergency Assistance Act, the President of the United States issued a major disaster declaration, FEMA-4683-DR-CA, for the State of California on January 14, 2023. This action, with subsequent amendments, was taken in response to severe weather, flooding, and mudslides, and it authorizes financial assistance to the State of California. The financial assistance program is funded through the Federal Emergency Management Agency’s (FEMA) Hazard Mitigation Grant Program.
The California Office of Emergency Services (Cal OES), Hazard Mitigation Grant Program, is designed to provide funding to reduce the effects of future natural disasters such as earthquakes. Cal OES will be administering the funding provided by the Presidential Disaster Declaration to the State of California. On March 1, 2023, they issued a Notice of Funding Opportunity, and subsequently accepted Hazard Mitigation Grant Program Notice of Interest (NOI) submissions on their internet Cal OES Engage Portal starting March 31, 2023. The NOI submissions afforded Cal OES a preliminary screening opportunity to discuss grant projects with prospective applicants.
Stantec’s Project Manager informed City staff of the funding opportunity and subsequently coordinated a conference call with Cal OES staff on April 18, 2023. The Cal OES staff were generally receptive to the City’s aeration basin replacement project and submission of an NOI. Staff proceeded to establish an account with the State grant on-line web portal, and Stantec compiled initial project technical information for an NOI electronic submittal. The NOI was completed and submitted to Cal OES on May 5, 2023.
Cal OES reviewed the NOI and issued the City of Merced an email correspondence response on May 9, 2023. The email stated that the City WWTF project was eligible for the Hazard Mitigation Grant Program and invited the City to submit a full application for consideration. The Cal OES Hazard Mitigation Grant Program would be for the replacement of the existing aeration basins and blower building located at the Wastewater Treatment Facility. As outlined above, these facilities were constructed in the 1970’s and do not conform to the 2022 Uniform Building Code. In the event of a significant seismic event, the anticipated result could include the damage or complete collapse of the basins, or blower building. This would result in an extended interruption of wastewater treatment services for the City’s residents and businesses.
Cal OES evaluated the grant applications, and then in January 2024, the City was short listed and the applications were forwarded to FEMA for final review and potential award.
Stantec’s has provided an estimate of $29,846,000 for the project cost. The grant program requires a 25% match, or $7,461,000, by the City. However, eligible applicants, may concurrently apply for Prepare California Match Initiative funding through Cal OES. This would fund the City’s 25% match requirement. Unfortunately, due to the State’s 2024 deficit budget, there is no longer funding for the Prepare California Match.
In addition to the abovementioned Cal OES grant application, this only covered a very specific portion of the overall improvements needed. Staff advises the City to apply for the California Clean Water State Revolving Fund Loan Program, for improvements to the wastewater treatment facility as recommended in the December 20, 2023 WWTF Phase VI improvement Project Report. If the City is successful with the Cal OES Hazard Mitigation Grant Program, the grant amount would lessen the total amount needed from the CWSRF loan program.
IMPACT ON CITY RESOURCES
This project was established as a CWSRF Project No. 8798-110 and Wastewater Treatment Facility Plant and Lines accounts, 60006070-591003 and 60056095-591003 respectively, loan program repayment would be funded through the above line accounts rate structure.
ATTACHMENTS
1. Resolution 2025-04