Existing law, the Safe Drinking Water State Revolving Fund Law of 1997, establishes the Safe Drinking Water State Revolving Fund to provide grants or revolving fund loans for the design and construction of projects for public water systems that will enable those systems to meet safe drinking water standards.

This bill would require the State Water Resources Control Board to establish a program to provide low-interest loans and grants to local agencies for low-interest loans and grants to eligible applicants for specified purposes relating to drinking water and wastewater treatment. This bill would create the Water and Wastewater Loan and Grant Fund and provide that the moneys in this fund are available, upon appropriation by the Legislature, to the board for expenditure for the program. This bill would transfer to the Water and Wastewater Loan and Grant Fund $10,000,000 from the General Fund.

This bill would declare that it is to take effect immediately as an urgency statute.

Existing law, the Safe Drinking Water State Revolving Fund Law of 1997, establishes the Safe Drinking Water State Revolving Fund to provide grants or revolving fund loans for the design and construction of projects for public water systems that will enable those systems to meet safe drinking water standards.

This bill would require the State Water Resources Control Board to establish a pilot program to provide low-interest loans and grants to local agencies for low-interest loans and grants to eligible applicants for specified purposes relating to drinking water and wastewater treatment. This bill would prohibit the board from issuing these loans or grants on or after January 1, 2026. This bill would create the Water and Wastewater Loan and Grant Fund and provide that the moneys in this fund are available, upon appropriation by the Legislature, to the board for expenditure for the pilot program. This bill would transfer to the Water and Wastewater Loan and Grant Fund $20,000,000 $10,000,000 from the General Fund. This bill would require moneys in the Water and Wastewater Loan and Grant Fund after January 1, 2026, to revert to the General Fund.

Existing law, the Safe Drinking Water State Revolving Fund Law of 1997, establishes the Safe Drinking Water State Revolving Fund to provide grants or revolving fund loans for the design and construction of projects for public water systems that will enable those systems to meet safe drinking water standards.

This bill would require the State Water Resources Control Board to establish a pilot program to provide low-interest loans and grants to local agencies for low-interest loans and grants to eligible applicants for specified purposes relating to drinking water and wastewater treatment. This bill would prohibit the board from issuing these loans or grants on or after January 1, 2026. This bill would create the Water and Wastewater Loan and Grant Fund and provide that the moneys in this fund are available, upon appropriation by the Legislature, to the board for expenditure for the pilot program. This bill would transfer to the Water and Wastewater Loan and Grant Fund $20,000,000 from the General Fund. This bill would require moneys in the Water and Wastewater Loan and Grant Fund after January 1, 2026, to revert to the General Fund.

Existing law, the Safe Drinking Water State Revolving Fund Law of 1997, establishes the Safe Drinking Water State Revolving Fund to provide grants or revolving fund loans for the design and construction of projects for public water systems that will enable those systems to meet safe drinking water standards.

This bill would require the State Water Resources Control Board to establish a pilot program to provide low-interest loans and grants to local agencies for low-interest loans and grants to eligible applicants for specified purposes relating to drinking water and wastewater treatment. This bill would prohibit the board from issuing these loans or grants on or after January 1, 2026. This bill would create the Water and Wastewater Loan and Grant Fund and provide that the moneys in this fund are available, upon appropriation by the Legislature, to the board for expenditure for the pilot program. This bill would transfer to the Water and Wastewater Loan and Grant Fund $20,000,000 from the General Fund. This bill would require moneys in the Water and Wastewater Loan and Grant Fund after January 1, 2026, to revert to the General Fund.

Existing law, the Water Quality, Supply, and Infrastructure Improvement Act of 2014, approved by the voters as Proposition 1 at the November 4, 2014, statewide general election, authorizes the issuance of general obligation bonds in the amount of $7,545,000,000 to finance a water quality, supply, and infrastructure improvement program.

This bill would state the intent of the Legislature to enact legislation to implement this bond act.

SENATE COMMITTEE ON APPROPRIATIONS

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 954 (Mathis) - Water and Wastewater Loan and Grant Program

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 954 would establish a program to provide funding for local agencies to offer low-interest loans and grants to eligible applicants for projects that provide access to drinking water or wastewater treatment.

Fiscal Impact:

• Onetime appropriation of $10 million from the General Fund for the financial assistance program.

• Ongoing costs of $490,000 annually to Water and Wastewater Loan and Grant Fund (General Fund) to the SWRCB to administer the grant program.

Background:

The SWRCB is charged with administering the Drinking Water Program.

Proposed Law:

This bill would establish a program at the SWRCB to give low-interest loans and grants to local governments to administer their own low-interest loan and grant program to eligible applicants for the following purposes:

• Extending or connecting service lines from water or wastewater system to the applicant’s resident or plumbing.

• Costs to connect to a water or wastewater system.

• Paying costs to close abandoned septic tanks and water wells to protect health and safety.

• Deepening an existing groundwater well.

• Improving an existing groundwater well.

• Installing a water treatment system.

Eligible applicants would have a household income below the statewide median household income, have ownership interest in the residence, be unable to obtain financial assistance at reasonable terms and conditions from private lenders, lack the personal resources to undertake the project, and demonstrate an ability to repay the loan. Any loan must be secured by a mortgage on the residence and repaid within 20 years. Loan interest would be capped at one percent.

If the applicant has a household income that is 60% or less of the statewide median household income, the applicant would be eligible for a grant. Grant recipients would be required to repay the grant in full if the residence is sold less within five years from the date that the grant agreement was signed.

This bill would allow the SWRCB to enter into a contract with a private financial institution to provide loans consistent for this purpose.

The SWRCB would be authorized to adopt regulations that are not subject the Administrative Procedures Act to implement the program.

The program would be funded by the Water and Wastewater Loan and Grant Fund (fund), which would be created in this bill. Interest in the fund and monies repaid to the SWRCB pursuant to the program would be deposited into the fund.

This bill would appropriate $10 million from the General Fund to the fund.

This bill is an urgency measure.

Staff Comments:

The author has submitted amendments to the committee that would delete the authority for the SWRCB to enter into a contract with a private institution to provide loans consistent with this program (see proposed author amendments). As such, this analysis does not consider these provisions.

Staff notes that this bill establishes a financial assistance program for local financial assistance programs. That is, the state will be giving funds to locals who will then distribute assistance to individual homeowners. The SWRCB estimates that it would need approximately $490,000 for 3.5 positions to administer a $10 million grant program. These costs are assuming that the local agencies administering the program will be doing all of their own program development including establishing loan and grant repayment terms and vetting of homeowner applicants.

Staff notes that the bill does not establish any parameters regarding how the SWRCB will determine how much each local agency applicant can receive from the program, how the SWRCB is to prioritize local agency requests for funds assuming that the program will be oversubscribed, whether the SWRCB issues a grant or a loan to the local agencies, and whether the local agencies can use part of the financial assistance for their own administrative costs. The SWRCB costs assume that they would only issue grants to locals and grants would be issued to local agencies based on their “readiness to proceed” and the severity of the deficiencies the water systems Administrative costs may change if the author requires the SWRCB to run the program differently.

Staff notes that this bill is silent on whether the state or the local agency bears the risk if a homeowner defaults on a loan and the costs cannot be recovered from the mortgage. However, this is only an issue that needs to be resolved if the author intends for the SWRCB to issue loans instead of or in addition to grants to local agencies.

Proposed Author Amendments:

The author has submitted amendments to the committee that would specify that the local agency would set the terms of loan and grant repayments, not the SWRCB, and would delete the provision that would give the SWRCB the authority to enter into a contract with a private institution to provide loans consistent with the program. The amendments would also make technical changes.

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SENATE COMMITTEE ON ENVIRONMENTAL QUALITY

Senator Wieckowski, Chair

2015 - 2016 Regular

Bill No: AB 954

SUBJECT: Water and Wastewater Loan and Grant Program.

ANALYSIS:

Existing law:

1. Under the federal Clean Water Act:

1. Establishes federal guidelines for surface water quality protection.

2. Authorizes water quality programs; requires federal effluent limitations and state water quality standards; requires permits for the discharge of pollutants into navigable waters; provides enforcement mechanisms; and authorizes funding for wastewater treatment works, construction grants, and state revolving loan programs, as well as funding to states and tribes for their water quality programs.

3. Establishes the Clean Water State Revolving Fund (CWSRF) to offer financial assistance for water quality projects.

1. Under the federal Safe Drinking Water Act (SDWA):

   1. Establishes federal standards for contaminants in drinking water,

   2. Authorizes states to enter into primacy agreements with the federal United States Environmental Protection Agency (US EPA) to enforce SDWA if the state establishes drinking water standards that are at least as stringent as those developed by US EPA, as required by SDWA.

   3. Establishes the Safe Drinking Water State Revolving Fund (SDWSRF) to offer financial assistance for safe drinking water projects.

2. Under the Porter-Cologne Water Quality Control Act,

   1. Establishes the State Water Resources Control Board (SWRCB) and Regional Water Quality Control Boards to regulate and protect water quality in California.

   2. Establishes the State Water Pollution Control Revolving Fund to, among other things, implement the federal CWSRF program.

3. Transferred the Drinking Water Program and the Safe Drinking Water State Revolving Fund (SDWSRF) from the Department of Public Health to SWRCB effective July 1, 2014.

4. Under the California Safe Drinking Water Act,

   1. Requires SWRCB to protect the public from contaminants in drinking water.

   2. Establishes the SDWSRF which is partially capitalized by federal contributions from the federal Safe Drinking Water Act. Specifies that the SDWSRF provide funding for public water systems to correct deficiencies and problems that pose public health risks and to meet safe drinking water standards.

5. Proposition 1, the Water Quality, Supply, and Infrastructure Improvement Act of 2014 (Prop. 1), includes $260 million, upon appropriation by the Legislature to the SWRCB to be placed in the CWSRF and used for grants for wastewater treatment projects. Prop. 1 also includes another $260 million, upon appropriation by the Legislature (recipient agency not specified) for public water system infrastructure improvements and related actions to meet safe drinking water standards, ensure affordable drinking water, or both.

7. AB 91 (Budget Committee, Chapter 1, Statutes of 2015) appropriates $19 million to the SWRCB, for grants and direct expenditures for emergency drinking water projects, including hauled water, bottled water, design and construction of connections to adjacent public water systems, new wells and well rehabilitation.

This bill:

1. Appropriates $10 million dollars from the General Fund to a newly-established program at SWRCB to provide low-interest loans and grants to eligible applicants for any of the following:

1. Connecting to water or wastewater service.

2. Closing abandoned septic tanks or water wells to protect health and safety.

3. Deepening an existing groundwater well.

4. Installing a water treatment system if the groundwater doesn't meet primary or secondary drinking water standards.

1. Requires eligible loan applicants to:

   1. Own their own home and be unable to obtain a conventional loan.

   2. Be below the statewide median income; demonstrate an ability to repay the loan which may include having a co-signer; secure the loan on the home and repay it within 20 years.

   3. Have a household income that is less than 60% of the statewide median; repay the grant in full if the home is sold less than five years from the date of the agreement; and, repay the SWRCB any unused grant funds.

2. Provides that due to drought the act is an urgency statute in order to provide eligible households with access to safer, cleaner, and more reliable drinking water and wastewater treatment.

Comments

1. Purpose of Bill. The author states that this bill creates a SWRCB program to provide water and waste water project grants and loans for owners of private homes who cannot afford conventional loans for needed water and wastewater improvements.

The author believes that while catastrophic drought continues to ravage the state, Californians who are reliant on groundwater wells need access to low-interest financing and grants to undertake necessary repairs to provide safer, reliable drinking water. The author adds that this bill is needed because while there are many state and federal programs that provide financial assistance, such as low-interest loans and grants, to communities to undertake water and wastewater infrastructure improvement projects there are very few resources available to individual homeowners who are reliant on their own groundwater wells. The author highlights that many individual homeowners who rely upon private groundwater wells are often in disadvantaged communities and economically distressed areas, and so may not be able to afford conventional private financing to undertake vital water supply, water quality, and wastewater improvements

The CWSRF program provides low-interest loans and other financing mechanisms for publicly-owned wastewater treatment facilities, local sewers, sewer interceptors, water recycling facilities, and storm water treatment facilities. The SDWSRF provides funding for public water systems. But improvements to those parts of the water and wastewater infrastructure that are on private property such as wells, sewer laterals, or septic systems have not been funded by the CWSRF or SDWSRF programs.

2. General Fund Appropriation. This legislation identifies an unfunded water quality need for Californians and appropriates $10 million General Fund for this purpose. Should this legislation be approved by the Senate Environmental Quality Committee, the Senate Appropriations Committee will need to consider if this is an appropriation expenditure of General Fund and if the revenue is available to fund this new program.

SOURCE:

Author

SUPPORT:

California State Association of Counties

California League of Conservation Voters

Clean Water Action

Community Water Center

Environmental Justice Coalition for Water

Friends of the River

Kern County Board of Supervisors

Leadership Counsel for Justice and Accountability

Planning and Conservation League

Tulare County Board of Supervisors

Wholly H2O

OPPOSITION:

None received

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ASSEMBLY THIRD READING

ATR Bill Id:AB 954

Author:(Mathis)

As Amended Ver:June 2, 2015

2/3 vote. Urgency

SUMMARY: Appropriates $10 million dollars to a newly-created fund at the State Water Resources Control Board (State Water Board) to provide low-interest loans and grants to eligible applicants for water and wastewater. Specifically, this bill:

1. Makes findings including, but not limited to, the impacts of drought and the need to establish a program to provide assistance to individual homeowners who are reliant on their own groundwater wells and may not be able to afford conventional private loans to take care of vital water supply, water quality, and wastewater improvements.

2. Requires the State Water Board to establish a pilot program of low-interest loans and grants to eligible applicants for any of the following:

   1. Connecting to water or wastewater service.

   2. Closing abandoned septic tanks or water wells to protect health and safety.

   3. Deepening an existing groundwater well.

   4. Installing a water treatment system if the groundwater doesn't meet primary or secondary drinking water standards.

3. Allows the State Water Board to adopt regulations implementing the program and makes such regulations exempt from the requirements of the California Administrative Procedures Act.

4. Establishes the Water and Wastewater Loan and Grant Program (Program) at the State Water Board with a Water and Wastewater Loan and Grant Fund (LGF).

5. Appropriates $10 million of General Fund into the LGF and allows moneys repaid from any grant or loan under the Pilot Program to be deposited in the fund as well as and any interest on those moneys.

6. Specifies that all loan or grant applicants must own their own home and be unable to obtain a conventional loan.

7. Requires eligible loan applicants to: be below the statewide median income; demonstrate an ability to repay the loan which may include having a co-signer; secure the loan on the home and repay it within 20 years.

8. Requires the State Water Board to set interest rates under the pilot program at 1% or less and allows the State Water Board to administer the program through a private financial institution.

9. Requires eligible grant applicants to: have a household income that is less than 60% of the statewide median; repay the grant in full if the home is sold less than five years from the date of the agreement; and, repay the State Water Board any unused grant funds.

10. Provides that due to drought the act is an urgency statute in order to provide eligible households with access to safer, cleaner, and more reliable drinking water and wastewater treatment.

EXISTING LAW:

1. Under the federal Water Pollution Control Act (Clean Water Act) Amendments of 1972 and 1987:

1. Establishes federal guidelines for surface water quality protection.

2. Authorizes water quality programs; requires federal effluent limitations and state water quality standards; requires permits for the discharge of pollutants into navigable waters; provides enforcement mechanisms; and authorizes funding for wastewater treatment works, construction grants, and state revolving loan programs, as well as funding to states and tribes for their water quality programs.

3. Establishes the Clean Water State Revolving Fund (CWSRF) to offer low interest financing agreements for water quality projects.

2. Under the Porter-Cologne Water Quality Control Act, establishes the State Water Pollution Control Revolving Fund to, among other things, implement the federal CWSRF program.

3. Transferred the Safe Drinking Water Program and the Safe Drinking Water State Revolving Fund (SDWSRF) from the Department of Public Health to the State Water Board, effective July 1, 2014.

4. Under the California Safe Drinking Water Act, requires the State Water Board, in administering programs to fund improvements and expansions of small community water systems, to give priority to funding projects in disadvantaged communities and encourage the consolidation of small community water systems that serve disadvantaged communities in instances where consolidation will help the affected agencies and the state to meet specified goals

5. Establishes the SDWSRF which is partially capitalized by federal contributions from the federal Safe Drinking Water Act. Specifies that the SDWSRF provide funding for public water systems to correct deficiencies and problems that pose public health risks and to meet safe drinking water standards.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. Appropriates $10 million (General Fund (GF)).

2. Unknown costs, likely in the $600,000 to $800,000 range for SWRCB to administer the program (GF).

COMMENTS: This bill creates a State Water Board program to provide water and waste water project grants and loans for owners of private homes who cannot afford conventional loans for needed water and wastewater improvements.

The author states that while catastrophic drought continues to ravage the state, Californians who are reliant on groundwater wells need access to low-interest financing and grants to undertake necessary repairs to provide safer, reliable drinking water. The author adds that this bill is needed because while there are many state and federal programs that provide financial assistance, such as low-interest loans and grants, to communities to undertake water and wastewater infrastructure improvement projects there are very few resources available to individual homeowners who are reliant on their own groundwater wells. The author highlights that many individual homeowners who rely upon private groundwater wells are often in disadvantaged communities and economically distressed areas, and so may not be able to afford conventional private financing to undertake vital water supply, water quality, and wastewater improvements

The CWSRF program provides low-interest loans and other financing mechanisms for publicly-owned wastewater treatment facilities, local sewers, sewer interceptors, water recycling facilities, and storm water treatment facilities. The SDWSRF provides funding for public water systems. But improvements to those parts of the water and wastewater infrastructure that are on private property such as wells, sewer laterals, or septic systems have not been funded by the CWSRF or SDWSRF programs.

Proposition 1, the Water Quality, Supply, and Infrastructure Improvement Act of 2014 (Prop. 1), includes $260 million, upon appropriation by the Legislature to the State Water Board to be placed in the CWSRF and used for grants for wastewater treatment projects. Prop. 1 also includes another $260 million, upon appropriation by the Legislature (recipient agency not specified) for public water system infrastructure improvements and related actions to meet safe drinking water standards, ensure affordable drinking water, or both. But, again, the funding is focused on the public water system or public agency solution, not the individual homeowner's property.

AB 91 (Budget Committee), Chapter 1, Statutes of 2015 appropriates $19 million to the State Water Board, for grants and direct expenditures for emergency drinking water projects, including hauled water, bottled water, design and construction of connections to adjacent public water systems, new wells and well rehabilitation. However, these funds are only available until June 30, 2016, and are intended to address drought-related drinking water emergencies or threatened emergencies as opposed to long-term solutions.

Supporters state that there are no programs to provide assistance to individual homeowners who rely on their own groundwater wells and cannot afford conventional loans. Supporters advise that this bill would bridge the gap by providing low-interests loans, grants, or both to low-income homeowners to undertake vital water supply, water quality, and wastewater treatment improvements.

There is not opposition on file.

Analysis Prepared by: Tina Leahy / W., P., & W. / (916) 319-2096 FN: 0000841

Date of Hearing: May 20, 2015

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Jimmy Gomez, Chair

ABPCA Bill Id:AB 954

Author:(Mathis) – As Amended Ver:May 5, 2015

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill appropriates $20 million GF to a newly created fund, and requires the State Water Resources Control Board (SWRCB) to implement a low-interest loan and grant pilot program for water and wastewaster facilities and improvements until January 1, 2026. Specifically, this bill:

1. Requires SWRCB to establish a pilot program of low-interest loans and grants for local agencies to provide funds to eligible applicants for any of the following:

1. Connecting to water or wastewater service.

2. Closing abandoned septic tanks or water wells to protect health and safety.

3. Deepening an existing groundwater well.

4. Installing a water treatment system if the groundwater doesn't meet primary or secondary drinking water standards.

2. Establishes the Water and Wastewater Loan and Grant Pilot Program (Pilot Program) at the State Water Board with a Water and Wastewater Loan and Grant Fund (LGF). Appropriates $20 million of General Fund into the LGF and allows moneys repaid from any grant or loan under the Pilot Program to be deposited in the fund as well as and any interest on those moneys.

3. Specifies that all loan or grant applicants must own their own home and be unable to obtain a conventional loan. Requires eligible loan applicants to be below the statewide median income; demonstrate an ability to repay the loan which may include having a co-signer; secure the loan on the home and repay it within 20 years. Requires all eligible grant recipients to have a household income that is less than 60% of the statewide median; repay the grant in full if the home is sold less than five years from the date of the agreement; and, repay the SWRCB any unused grant funds.

4. Requires the SWRCB to set interest rates under the pilot program at 1% or less and allows the SWRCB to administer the program through a private financial institution.

FISCAL EFFECT:

1. This bill appropriates $20 million GF.

2. Unknown costs, likely in the $600,000 to $800,000 range, for SWRCB to administer the program (GF)

COMMENTS:

1. Purpose. According to the author, while catastrophic drought continues to ravage the state, Californians who are reliant on groundwater wells need access to low-interest financing and grants to undertake necessary repairs to provide safer, reliable drinking water.

The author adds that this bill is needed because while there are many state and federal programs that provide financial assistance, such as low-interest loans and grants, to communities to undertake water and wastewater infrastructure improvement projects there are very few resources available to individual homeowners who are reliant on their own groundwater wells.

Many individual homeowners who rely upon private groundwater wells are often in disadvantaged communities and economically distressed areas, and may not be able to afford conventional private financing to undertake vital water supply, water quality, and wastewater improvements

2. Emergency Drought Package. The Governor's May Revision includes $35 million GF and special funds for SWRCB to provide grants for emergency drinking water projects. The author may wish to expand upon this proposal to achieve the goals of this bill.

3. Other Considerations. The author may wish to provide SWRCB with an exemption from the Administrative Procedures Act to reduce administrative costs and ensure any funds are disbursed in an expedited manner.

Analysis Prepared by: Jennifer Galehouse / APPR. / (916) 319-2081