City Manager (Speaker 9) told the Escalon City Council at its most recent meeting that the city’s prioritized surface-water conveyance project now has an estimated funding shortfall of roughly $10 million compared with projections the city shared last year.

“I take responsibility for that, but ultimately, we…we misunderstood the rate study,” Speaker 9 said, describing how funds shown in prior summaries were not in the locations staff later identified. He said staff had applied for a $3,000,000 WaterSMART Drought Resiliency grant through the Bureau of Reclamation and a $2,000,000 congressional earmark coordinated through a senator’s office but were unsuccessful in the latest rounds. He added the city has been notified of a conditional $1,100,000 award that remains contingent on a final federal budget.

The gap matters because councilmembers warned costs will grow with construction inflation. Councilmember (Speaker 2) said every month of delay increases escalation and that delaying could double the shortfall in a few years, putting the burden on ratepayers. Another councilmember (Speaker 5) said she has opposed the project and urged caution before taking on loan obligations.

Staff outlined three near-term approaches: pursue additional grants and earmarks; pursue state or low-interest loans the city remains eligible for; or seek interim revenue by leasing the city’s allocated surface water to neighboring jurisdictions until the city can use it. "If we get a revenue stream, then we can start looking [at] how the council wants to move forward with the project," Speaker 9 said. He said he has meetings scheduled with nearby cities to discuss potential leasing arrangements.

At the same time city staff updated the council on a planned wastewater-treatment-plant upgrade, a project staff described as roughly a $40 million effort. Speaker 9 said staff are working to phase that project so compliance and operations can be maintained while upgrades proceed; he described recent operational improvements that have reduced permit compliance risk and noted industry customers make up a significant portion of plant load, so staff are exploring ways industry can contribute more to the plant’s revenue stream to help pay for upgrades. Staff also said landscaping funded by industry has been installed recently to reduce odors and screen the site from nearby properties.

What’s next: staff will continue pursuing grants and loan options, pursue meetings about leasing the water allocation, and report back to council as funding and timelines become clearer. No formal vote on the surface-water project funding package occurred at the meeting.


Speakers

- Speaker 9 — City Manager (first ref: SEG 119)
- Speaker 2 — Councilmember (first ref: SEG 002)
- Speaker 5 — Councilmember Engel (first ref: SEG 018)
- Speaker 7 — Public Works (first ref: SEG 329)


Authorities

- Bureau of Reclamation (referenced by Speaker 9)
- 2019 rate study (referenced by Speaker 9)
- Congressional earmark / Senator Padilla’s office (referenced by Speaker 9)
- State requirements on overdrafting aquifers (referenced by Speaker 9)


Clarifying details

- Funding gap estimates: Speaker 9 described a roughly $10,000,000 delta between prior public communications and current funding-position calculations; Speaker 5 noted the gap could be $11,100,000 when an expected $1,100,000 award is treated as contingent.
- Grant amounts referenced: $3,000,000 (WaterSMART Reclamation grant), $2,000,000 (congressionally directed spending), $1,100,000 (conditional award still awaiting federal budget approval).
- Wastewater project size: described by staff as about $40,000,000 and under consideration for phased implementation.


Provenance

- topicintro: SEG 119
- topfinish: SEG 249