San Diego approves up to $22M SRF loan (with possible $5M forgiveness) for Chollas Creek stormwater improvements

San Diego's City Council voted April 14 to accept a Clean Water State Revolving Fund (SRF) financing package for Chollas Creek green-infrastructure and storm-drain improvements. Finance staff described the project as design-complete with an estimated construction cost of $23.8 million; staff requested approval to enter a loan agreement for up to $22 million with the state and noted the project is eligible for a potential $5 million principal forgiveness award.

Kevin Warner of the Department of Finance told the council the SRF loan would carry an estimated 2% interest rate over a 30-year term, with estimated annual debt service for the currently-proposed $22 million loan of roughly $975,000 (first payment estimated in FY2030). The storm-drain revenue fund will be pledged for repayment; the fund also pays for ongoing operation and maintenance of the improvements.

City stormwater staff described the project components: replacement of aging storm-drain pipes, installation of about 3,500 linear feet of reinforced concrete pipe and the addition of six modular wetland systems to provide water-quality benefits and flood resilience. A stormwater specialist explained modular wetlands as engineered underground treatment units with layered media and surface planting designed to filter pollutants and slow runoff.

Staff said the stateboard's decision on principal forgiveness was expected later in FY2026 or early FY2027. If forgiveness is not awarded or bid results exceed estimates, staff said alternative financing (WIFIA or general-fund-backed loans) is available. The council approved the financing unanimously, 8to0, with one member absent.

What happens next: Staff will finalize loan agreements, prepare the project for bidding late in 2026, and seek principal forgiveness as available. Construction is anticipated to begin in 2027 and conclude in 2029.