The South Coast Water District will seek board approval to spend $48,465 for a consultant to write applications for a loan to help fund a sewer tunnel stabilization project, a district staff report said.

The project, which will shore up an existing 2-mile-long underground tunnel and replace a sewer line in an area from Three Arch Bay north to Aliso Beach Park, is expected to cost up to $90 million, according to district officials. It will be paid for from a variety of sources, including reserves, operating revenues, loans and grants, according to district spokeswoman Linda Homscheid.

Three firms responded to a bid request from the district in July, and a district committee made up of the contracts officer and directors of finance and operations, evaluated the candidates and selected two to interview — Elan and Associates and Anderson Penna, the staff report said.

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The committee recommended Anderson Penna because its rates are better — the firm's price was less than Elan and Associates' $73,000 — and in line with the expected scope of the work.

The project manager is a former city engineer and has experience managing and securing federal, state and local funds, including 14 state revolving fund loans, which offer low-interest financing for water quality projects.

District officials consider the 59-year-old tunnel unsafe, deteriorated and undersized and say it could break, releasing sewage onto the beach, according to a project description on the district's website.

The tunnel project is expected to account for 54% of the district's total capital improvement costs during the next six years, the staff report said.

The board meeting will begin at 6 p.m. Thursday in Dana Point council chambers, 33282 Golden Lantern.

To help pay for the project, the board plans to review a consultant's recommendation that onetime hookup rates be decreased in conjunction with reduced water use, while onetime sewer connection rates be increased, Homscheid wrote in an email.

The district, which serves 40,000 full-time residents, including 2,000 in South Laguna, would boost rates to establish sewer connections for all its meters, including an increase from $15,020 to $21,444 for customers with 2-inch meters, Homscheid said.

Meter size corresponds with the size of the water pipe used, and the current rates have been in effect since November 2009, according to the report.

"These onetime charges apply to developers or a customer building a house," she said of the rates, also called capacity charges.

The proposed decrease for water hookups does not apply to 4-inch meters, which are used for large projects, such as hotels or hospitals, Homscheid said. So if a new hotel in town expects to use 20,000 gallons per day, then the cost now would be that number multiplied by $8.64. It's a one-time charge.