BELLINGHAM - The state Department of Ecology has selected the city to receive $2.6 million in loans and grants to reroute part of Squalicum Creek and improve its habitat.

Ecology announced last week it would provide Bellingham with a nearly $1.6 million low-interest loan for the second phase of the project.

That loan would be paid back over 20 years at a 2.3 percent interest rate. The remaining dollars would come from a $527,593 forgivable loan and a $500,000 grant.

Squalicum Creek doesn't meet state standards for water quality, and is listed as impaired by Ecology. Problems include fecal coliform bacteria, too-warm temperatures and dissolved oxygen levels.

Fish passage blockage in the stream also is an issue, as well as declining salmon stocks.

The project includes rerouting about 3,000 feet of Squalicum Creek between Sunset Pond, on the east side of Interstate 5, and Bug Lake, on the west side. The lake and the pond are both man-made shallow bodies of water that heat up and stay warm, and are home to non-native bass that eat salmon.

The creek now flows into Sunset Pond. The new channel would bypass the pond and take the creek under I-5 via an abandoned railroad underpass.

Right now, after entering Sunset Pond, the creek flows under I-5 via a culvert that inhibits fish passage.

Construction on the first phase, for which the city also received money from Ecology, is expected to begin in 2014, according to Renee LaCroix, ecology and restoration manager for the city of Bellingham.

Ecology included the second phase on a fiscal year 2014 draft funding list.

It was one of 72 clean water projects the agency selected to receive $162 million in loans and grants starting July 1, the state's next fiscal year.

The proposed dollars still must move through the budget process and be approved by the Legislature and the governor.

But the second phase money for Squalicum Creek likely will be approved, given that it was ranked second among the projects in the state.

"It's a great likelihood that it will be funded. It's high on the list," Ecology spokeswoman Sandy Howard said.

The second phase could begin at the same time as the first, but that's not certain.

City officials hope to complete the entire project, which includes a third phase, in 2017, but that depends on funding, LaCroix said.

"The stream will benefit because it will have improved water quality because it will have reduced stream temperatures and increased dissolved oxygen levels," LaCroix said of the effort.

"And, in turn, the fish will benefit, the bugs and the wildlife will benefit. In turn, the people benefit from a healthier environment."

LEARN MORE

Additional information about Squalicum Creek Habitat Restoration is on the city of Bellingham's website at cob.org. Type "Squalicum Creek Re-route" into the search window.

Reach KIE RELReach Kie Relyea at 360-715-2234 or kie.relyea@bellinghamherald.com.EA at kie.relyea@bellinghamherald.com or call 715-2234.