The federal government is poised to invest as much as $492 million to get Pure Water, the city of San Diego’s effort to turn sewage into drinking water, off the ground.

Today, the U.S. Environmental Protection Agency is expected to announce that San Diego is one of a dozen applicants chosen to participate in a low-interest loan program under the Water Infrastructure Finance and Innovation Act. The invitation, which comes after initial vetting by the EPA, doesn’t guarantee funding but signals a very high likelihood of acceptance. Invited applicants from past years routinely obtained the funding amounts they sought.

The $492 million would go toward paying for the first phase of Pure Water — a $1.2 billion facility to be constructed across the street from the North City Water Reclamation Plant near Miramar Road. Officials have said consumers will get the first drops of recycled water by 2021, when the plant is slated to produce 30 million gallons a day.

“This is a tremendous boost to our efforts to create an independent, drought-proof water supply for San Diego,” Mayor Kevin Faulconer said Tuesday. “The EPA is showing its strong support for our Pure Water recycling program and providing us an opportunity to secure low-cost financing for one of the biggest infrastructure projects in city history.”


Entering into the loan agreement would be the city’s largest financial commitment to the water-recycling project to date. The EPA announcement comes after the mayor decisively declared in May that the project would break ground in 2018 and be competed within the next two decades.

San Diego is expected to finish Pure Water’s entire infrastructure by 2035, at a total cost of roughly $3 billion. The completed network would include up to two more facilities and produce a third of the city’s drinking water from treated sewage.

The EPA low-interest loan program is looking to provide about $2.3 billion in loans to 12 applicants next year, for projects that would cost a total of about $5.1 billion. Other local governments that applied to the program include the Orange County Water District and the city of Morro Bay, which are also aiming to fund water-recycling projects.

Now, San Diego must go through a credit assessment and then negotiate terms for the loan. City officials said they expect the interest rate will be significantly lower than the roughly 5 percent currently paid on bonds for water and wastewater projects.


“The rate for San Diego will be set when we close the loan, but based on today’s rates it would be something under 3 percent for a 30-plus-year loan,” said Jorianne Jernberg, director of the EPA loan program. “We essentially lend at the government rate.”

San Diego’s water-recycling project has been decades in the making, resulting from legal wrangling and tough negotiations between elected officials and environmental groups that wanted to see upgrades to the Point Loma Wastewater Treatment Plant.

While that facility is the last of its kind in the country to not meet federal clean-water standards, independent scientific studies have found that its discharges into the ocean have little to no impact on the marine environment.

In lieu of spending billions of dollars to upgrade the Point Loma treatment plant, the city has agreed to recycle a sizable portion of that wastewater, diverting effluent that would have been partially treated and dumped into the sea.


This year, San Diego received an EPA waiver to the Clean Water Act that allowed it to avoid an overhaul of the plant for at least five more years. Federal and state water regulators have signaled that the waiver is contingent on the Pure Water project continuing to make progress.

Local environmental groups have promised not to litigate the issue, and they even reached out to other green groups around the state and nation to ensure support for the deal.

San Diego has already boosted water prices by double digits over several years as it has inched toward Pure Water, and it has warned ratepayers to expect even bigger hikes as the plan moves into full construction and operations mode.

The city has said those expenses are comparable to what it would’ve had to pay to upgrade the Point Loma treatment plant.


Environmentalists have also argued that water recycling is cost-effective when compared to technologies, such as desalination, that the region has invested in to insulate itself from long-term water shortages. California recently experienced the most severe drought in recorded history, and many scientists predict that global warming could dramatically increase the likelihood of such events over time.

San Diego city, like much of the county, currently relies on imports for most of its drinkable water supply.

“When you look at climate change and long-term drought, this is a no-brainer, said said Marco Gonzalez of Encinitas, an attorney with the Coast Law Group and Coastal Environmental Rights Foundation who has long been at the center of the water-recyling talks with San Diego.

City officials had hoped to secure a permanent waiver through EPA rule-making or ideally from Congress. Despite a lobbying campaign, its efforts have so far fallen short.


The situation has raised concerns that the city could eventually be forced through a lawsuit to upgrade the Point Loma facility, further spiking water rates for customers who already had to endure rate hikes to pay for Pure Water.

Both Faulconer and local environmental groups have downplayed this fear, insisting that the city is on solid legal ground as long as regulators continue to grant their support for the water-recycling efforts.


Twitter: @jemersmith

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Email: joshua.smith@sduniontribune.com