San Diego launched on Tuesday its application for $1.7 billion in low-interest state loans to pay for an ambitious plan to boost the city’s water independence by recycling treated sewage into drinking water. Seeking such loans will soften hikes in sewer and water rates San Diego officials say will be necessary to pay for the Pure Water recycling system, which is expected to be complete by 2035. The loans are expected to carry interest rates of less than 2 percent, compared to about 5 percent for typical sewer and water projects that aren’t eligible for money from the state’s clean water revolving loan fund.