ESCONDIDO — The City Council approved the application of a $25 million state loan for the Wohlford Dam improvements Wednesday night.
Once city staff applies for the loan, they’ll need to come back before the council to get approval to accept the loan.
The loan comes from a state revolving fund and will have an interest rate of 1.6 percent. Over 20 years, the loan will cost the city $4.4 million in interest.
The design of a new dam will be done in June.
In 2010, the water level of the lake was lowered by half because a dam assessment showed that the upper portion of the dam wasn’t earthquake proof and could lead to catastrophic flooding of the city.
The lower portion of the dam now would hold the amount of water in the dam, should an earthquake hit.
The cost of the design and construction of the dam replacement is estimated between $38.5 million and $43.5 million.
In 2010, the cost was estimated at $30 million. The increase is due to uncertainty in what they’ll excavate once construction goes underway.
If there isn’t sufficiently sound bedrock to build on, further excavation will be needed.
Director of Utilities Christopher McKinney said the new dam would restore the capacity lost after the water level was lowered in 2010.
McKinney said he will return to council May 20 to request approval of the design contract amendment, which is necessary to address concerns from the Department of Safety of Dams and the Federal Energy Regulatory Commission.
The city contracted with Black and Veatch to design the dam.
The city received a state grant from the Department of Water Resources that will fund half of the project although it came with stipulations.
The city couldn’t receive any other state funds for the project, so McKinney said it took a lot of convincing of the state to become eligible for the loan.
Staff had to argue that the loan wasn’t a form of funding, since it is going to be paid back.
The state loan is much cheaper than bond alternatives, which is why it was important to qualify for the loan, McKinney told the council.
Another point city staff made to the state was the state revolving fund is largely funded by federal money, so Escondido wouldn’t really be getting additional state funding.
The city has about two years to complete the construction of the dam before the $14.9 million grant expires.