Tuolumne Utilities District needs $1.7 million from the state of California for the planning and design portion of a long-discussed project to restore Phoenix Lake, the often murky-looking holding pond for the city of Sonora's water.

The state Department of Water Resources is expected to make a decision by early October on a $3.6 million grant application for nine watershed-related projects, which includes the district's Phoenix Lake Preservation and Restoration Plan. TUD General Manager Pete Kampa said he felt positive about the district's chances, especially given that the recent Rim Fire incident burned through a large swath of the watershed.

"These projects will take some financial heat off the agencies that might have to use some of their own funds toward Rim Fire projects," he said. "It's always good when money is given to an area that's recently had a disaster, and it's always much-appreciated by the Legislature."

The money for the Phoenix Lake project would go toward planning and design, conducting environmental assessments and obtaining requiredpermits, which all need to be done before construction can begin.

Roughly 4,600 cubic yards of sediment is transferred to Phoenix Lake annually due to erosion from the watershed, according to Ted Allen, associate district engineer and Phoenix Lake project manager.

"Some of the erosion is naturally occurring and some of it is due to development in the area over the years," Allen said. "That's why we've also identified areas for restoration throughout the watershed to try and reduce the sediment loading at the lake."

One aspect of the restoration plan is to remove 400,000 cubic yards of sediment from the lake. The plan also suggests ways to reduce future water quality problems by preventing erosion and runoff in the 24-square-mile watershed.

The erosion causes "sediment-loading," which decreases storage capacity at the 88-acre lake and allows the sun to penetrate the water at a shallower depth, Allen explained. This increased sun exposure promotes the growth of aquatic vegetation - such as algae blooms - which can affect taste and odor.

"The water is definitely treatable and meets all the state's standard and requirements, but there are things that can be done to improve the quality, habitat around the lake and ultimately reduce our treatment costs," Allen said. "It's a very important project because Phoenix Lake is the raw water source for our largest system, which includes Sonora and Jamestown."

The project has already received a $100,000 grant from the Sierra Nevada Conservancy for the initial evaluation, for which TUD also provided $120,000 in matching funds. The $1.7 million for planning would make the project "shovel ready," which would help attract funding for the more expensive construction phase, said TUD General Manager Pete Kampa.

The grant that would fund the pre-construction work was submitted by a group composed of local water agencies and nonprofit organizations that has worked since 2007 to develop the Tuolumne-Stanislaus Integrated Regional Management Plan.

Money for other projects included in the grant application would benefit the Tuolumne River Trust, U.S. Forest Service, Amador-Tuolumne Community Action Agency, Murphys Sanitary District, Calaveras County Water District, Tuolumne County Resource Conservation District and Groveland Community Services District.

These so-called IRWMP groups are allowed to form and seek funding under the Integrated Regional Water Management Act of 2002, which was created by the state Legislature to encourage cooperation among local agencies when it comes to managing various aspects of watershed-related resources in a region.

Dozens of IRWMPs have been developed in a number of areas throughout the state, all competing for funding through Proposition 84, which was passed by voters in 2006 to provide $1 billion in IRWMP grants through 2015. A pool of $10 million is available in the current round of funding through the state DWR.

TUD has paid nearly $10,000 for the past three years to help fund the IRWMP group's budget, which is typically between $45,000 and $60,000. Dues from each of the involved agencies are calculated based upon the number of connections served.

The third and final round of IRWMP funding could have up to $25 million available in 2015. However, Kampa said the $12 million needed for the construction portion of the Phoenix Lake project will likely need to come from multiple sources.

"When it's over $10 million, you typically can't get it from one place," he said. "And there's no way TUD customers can afford that with everything else that's going on."

The cash-strapped district has faced issues related to its aging water system infrastructure. Kampa said many of the district's internal planning efforts will likely be expedited over the next 18 months in order to take advantage of any funding that might become available.

Five to seven more years of IRWMP grant funding could become available with the passage an $8 billion water bond proposal slated for the November 2014 ballot. The proposal is a leaner version of a twice-delayed $11.1 billion proposal that was postponed in 2010 and 2012 due to lack of public support.

The Tuolumne-Stanislaus IRWMP's total combined wishlist for future funding adds up to about $96 million.