REPORT TO THE CITY COUNCIL FROM: BROCK D. BUCHE, PE, PLS, Director Department of Public Utilities BY: PAUL AMICO, PE, Assistant Director Department of Public Utilities - Administration SUBJECT ..Title Actions pertaining to a $50,000,000 Low-Interest Loan through the State Water Resources Control Board Clean Water State Revolving Fund for the Sidestream Nitrate Control Project at the Fresno-Clovis Regional Wastewater Reclamation Facility (Council District 3): 1. Adopt a Mitigated Negative Declaration (SCH 2024120578) dated December 2024, for the proposed Sidestream Nitrate Control Project, pursuant to California Environmental Quality Act (CEQA) Guidelines; 2. ***RESOLUTION - Authorizing the Director of Public Utilities or designee(s) to prepare and submit grant applications, accept funds, and execute any financial assistance agreements and amendments with the California State Water Resources Control Board on behalf of the City of Fresno for the planning, design, and construction of the Sidestream Treatment System at the Fresno-Clovis Wastewater Reclamation Facility (Subject to Mayor's Veto); 3. ***RESOLUTION - The City of Fresno, California stating its intention to be reimbursed for expenditures incurred ahead of approval of the disbursement of Clean Water State Revolving Fund funds from the State Water Resources Control Board for the Sidestream Treatment System at the Fresno-Clovis Wastewater Reclamation Facility (Subject to Mayor's Veto). ..Body RECOMMENDATION Staff recommends that City Council adopt the Mitigated Negative Declaration (SCH 2024120578) dated December 2024, for the proposed Sidestream Nitrate Control Project, pursuant to California Environmental Quality Act (CEQA) Guidelines; adopt a Resolution authorizing the Director of Public Utilities or designee(s) to prepare and submit grant applications, accept funds, and execute any financial assistance agreements and amendments with the California State Water Resources Control Board (SWRCB) on behalf of the City of Fresno (City) for the planning, design, and construction of the Sidestream Treatment System (Project) at the Fresno-Clovis Regional Wastewater Reclamation Facility (RWRF); and adopt a Resolution stating the intention of the City to be reimbursed for expenditures incurred ahead of approval of the disbursement of Clean Water State Revolving Fund (CWSRF) funds from the SWRCB for the Project. EXECUTIVE SUMMARY In 2018, the Central Valley Regional Water Quality Control Board (CVRWQCB) made changes to the Water Quality Control Plan for the San Joaquin River Basin by adding a Salt and Nitrate Management Plan (SNMP). This plan serves as the foundation for monitoring salt and nitrate levels across the Central Valley. The City has a land-based disposal operation which is approved under the CVRWQCB Waste Discharge Requirement (WDR) permit for the RWRF. To address nitrogen discharges from the RWRF and comply with the SNMP, the City is preparing to upgrade its facilities through the construction of the Project. The City has been found eligible for a low-interest loan through the CWSRF Program for the planning, design, and construction of the Project. The application process requires the adoption of two resolutions. The first resolution authorizes the Director to prepare and submit the necessary applications, accept funds, and execute the financial assistance agreements and any amendments thereto on behalf of the City. The second states the intention of the City to seek reimbursement for expenditures incurred between the adoption of the resolution and the approval for disbursement of CWSRF funds for the Project. BACKGROUND The City owns, operates, and maintains the RWRF, which treats approximately 68 million gallons of wastewater per day generated from homes and businesses located in the Fresno-Clovis metropolitan area (total population of 670,123 - US Census Bureau 2022). The City has a land-based disposal permit operating under the WDR at the RWRF and maintains 69 percolation ponds, to which it discharges approximately 56,200 acre-feet per year (AFY) of undisinfected secondary effluent. As a result of the SNMP, the City is anticipating a new WDR that will limit effluent nitrate concentrations to 10 milligrams per liter (mg/l) of nitrate nitrogen (NO3-N), with an action plan requirement of maximum effluent nitrate concentrations to be reduced to 7.5 mg/l of NO3-N. While the RWRF does remove some nitrogen, facility upgrades are necessary to meet these anticipated nitrate targets. To develop an approach for managing nitrogen discharges from the RWRF, the City completed a Nitrate Assessment and Treatment Evaluation Study (NATES) in 2020 to determine the most reasonable, feasible, and practicable option for removing nitrogen from wastewater. The recommended upgrade from the study findings was to construct a new sidestream treatment process to convert nitrogen products (ammonia, nitrite, and nitrate) found in nitrogen laden dewatering recycled flows to nitrogen gas. By removing nitrogen from the dewatering recycled flows, the overall nitrogen loading through the plant is substantially reduced, allowing the RWRF to meet the anticipated RWQCB nitrate regulatory limits, as well as supporting the objectives of the Nitrate Control Program. On May 26, 2022, the City approved a consultant services agreement with Carollo Engineers, Inc., for design of the Project. Plans and specifications for the final design have been delivered to the City and are currently under review, with advertisement for construction to begin as soon as sufficient funding is secured and the new WDR with the nitrate reduction is issued. The cost estimate to complete construction of the Project, including the construction contractor, project management and inspection, and engineering support services during construction, is $50,000,000. The SWRCB administers the CWSRF program, which provides funding for projects associated with water quality protection. The City is requesting the maximum funding available, which is a $50,000,000 low-interest loan through these available funding provisions for construction of the Project. The application process requires the adoption of two resolutions. The first resolution authorizes the Director to prepare and submit the necessary applications, accept funds, and execute the financial assistance agreements and any amendments thereto on behalf of the City. The second states the intention of the City to seek reimbursement for expenditures incurred between the adoption of the resolution and the approval for disbursement of CWSRF funds for the Project. ENVIRONMENTAL FINDINGS Pursuant to Section 15063 of the California Environmental Quality Act (CEQA), an Initial Study/Mitigated Negative Declaration (ISMND) was prepared for the City assessing the proposed Sidestream Nitrate Control Project, describing the degree of potential environmental impacts of the Project. Pursuant to California Public Resources Code (PRC) � 15070 to 15075, this Project has been evaluated with respect to each item in the Environmental Checklist to determine whether this Project may cause any additional significant effect on the environment. This process includes the required posting of a Draft IS/MND for public review and comment for a period of not less than 20-days, pursuant to CEQA Guidelines Section 15105. The Draft IS/MND was posted from December 13, 2024, to January 16, 2025. During the public review period, no public comments were received that would require further environmental analysis, implementation of new or additional mitigation measures, or otherwise cause revisions to or recirculation of the Draft IS/MND. The Initial Study considers the actions associated with the proposed Project to determine the short-term and long-term effects associated with their implementation. The Initial Study finds that by implementing Project-specific mitigation measures, any potentially significant impacts will be avoided or reduced to less than significant. The finding is, therefore, made that the proposed project will not have a significant adverse effect on the environment. Public notice has been provided as prescribed by � 15072 of the CEQA Guidelines and by � 21092 of the PRC Code (CEQA provisions). LOCAL PREFERENCE Local preference was not implemented because this action does not include a bid or an award of a construction or services contract. FISCAL IMPACT This project will have no impact on the General Fund. The total estimated cost for the project is $50,000,000 to be funded by the CWSRF low-interest loan. This project is identified in the Wastewater Management Division's Five-Year (Fiscal Year 2025 - Fiscal Year 2029) Adopted Capital Improvement Program. Future Loan repayments will be made from the Wastewater Management Division's Sewer Enterprise Fund for the term of the loan agreement. Attachments: Mitigated Negative Declaration (SCH 2024120578) Authorizing Resolution Reimbursement Resolution Vicinity Map