Riverbank council approves form of state loan for recycled‑water project amid calls to seek more grants and alternatives

The Riverbank City Council voted to approve the form of a construction installment sale agreement with the State Water Resources Control Board on June 10 that would allow the city to borrow to finance a portion of the Riverbank Regional Recycled Water Project Phase 1 — while asking staff to continue pursuing grants and evaluate alternatives to limit rate impacts.

Council members were divided in public remarks and during debate but ultimately approved the step that allows staff to finalize paperwork and apply for the state loan program. The agreement as presented pledges net wastewater enterprise revenues as the repayment source and would cover up to about $85 million over 30 years at an approximately 2 percent annual interest rate, according to staff presentation; repayment would begin one year after project completion.

The decision came after more than an hour of public comment and lengthy council discussion about rising construction costs, possible alternatives (including upgrades to the existing plant or sending wastewater to another regional plant), and the effect on resident sewer bills. Dozens of residents and community leaders urged caution and asked the council to delay committing to long‑term debt until additional grants or lower‑cost options were explored.

"I would rather be spending my extra money on Riverbank youth baseball and softball association and not on sewer rates," resident Danielle Banning told the council. Several speakers warned that doubling sewer fees would be unaffordable for households on fixed incomes and asked the city to exhaust grant opportunities before locking in loan repayments.

City staff and the city’s technical advisers told the council the project schedule and the state financing timeline have advanced to a point where the city needs to approve the form of the installment sale agreement to remain eligible for State Water Resources Control Board funding. Staff also said the city has already invested several million dollars in engineering and environmental work; that investment, they said, improves the city’s prospects for state funding. "We are trying to get ahead of the State Water Board’s anticipated new permit requirements," a staff member (Cody) said during technical explanations, noting recent re‑examinations of the city’s pond permits and evolving state water quality standards.

Council members pressed staff on alternatives. Vice Mayor Cindy Fosse and others asked staff to return with a more complete feasibility analysis comparing options such as upgrading the existing treatment plant, pipeline delivery to another city’s facility, or phased construction that could reduce near‑term borrowing. Mayor Rachel Hernandez said approving the agreement’s form now would preserve access to the low‑interest state loan while staff pursues additional grant funding (including Prop 4 bond funds and federal programs such as WIFIA) and further value engineering.

After two motions — one to postpone the item and request a feasibility review (which failed) and a second motion to approve the installment sale agreement form while directing staff to pursue additional grant opportunities and feasibility work — the council approved the staff‑recommended resolution. Council members who voted in favor said the step does not obligate the city to execute the loan immediately but maintains the city’s window for low‑cost state financing while staff continues to pursue grants and alternative approaches.

Public comment underscored concerns about cost, system capacity and contingency planning for the project’s river crossing. Resident Gary Pearson asked for a clear contingency plan in case of pipe failure at the Stanislaus River crossing. Several residents recommended re‑examining prior analyses that considered options such as linking to Modesto’s larger tertiary plant or incremental upgrades to the existing wastewater treatment facility.

Staff told the council it will schedule a workshop to present past design choices, updated cost estimates, and additional alternatives so the council and public can compare scenarios before final financing decisions are executed. Staff also said it will continue to apply for grants and pursue other low‑cost financings; approving the agreement’s form preserves the State Water Board option while those efforts continue.

What the vote does and does not do: the council’s approval authorized staff to complete the form of the installment sale agreement with the State Water Resources Control Board and to continue pursuing the project financing; it did not obligate the city to sign the loan documents immediately. The city manager and bond counsel must still review final loan paperwork before execution.

The city will return to council with updated feasibility and value‑engineering information, grant application results, and final financing recommendations before any construction contract is awarded.