California Assembly Bill AB983 Amended / Bill

 BILL NUMBER: AB 983AMENDED BILL TEXT AMENDED IN SENATE SEPTEMBER 2, 2011 AMENDED IN SENATE JULY 1, 2011 AMENDED IN ASSEMBLY MAY 5, 2011 AMENDED IN ASSEMBLY MARCH 31, 2011 INTRODUCED BY Assembly Member Perea (Coauthors: Assembly Members Eng, Fong, Mendoza, V. Manuel Prez, and Solorio) (Coauthor: Senator Wolk) FEBRUARY 18, 2011 An act to amend Sections 116760.20,  116760.40, 116760.70, 116761.24, and 116761.50 of   116760.70, and 116761.23 of, and to add Section 116760.39 to,  the Health and Safety Code, relating to public health, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 983, as amended, Perea. Safe Drinking Water State Revolving Fund. Existing law, the California Safe Drinking Water Act, requires the State Department of Public Health to administer provisions relating to the regulation of drinking water to protect public health, including, but not limited to, conducting research, studies, and demonstration programs relating to the provision of a dependable, safe supply of drinking water, enforcing the federal Safe Drinking Water Act, adopting and enforcing regulations, and conducting studies and investigations to assess the quality of water in domestic water supplies. Existing law establishes the Safe Drinking Water State Revolving Fund, which is continuously appropriated to the department for the provision of grants and revolving fund loans to provide for the design and construction of projects for public water systems that will enable suppliers to meet safe drinking water standards. Existing law requires the department to establish criteria for projects to be eligible for the grant and loan program. This bill would authorize the department to take specified actions to improve access to financial assistance for  projects serving small community water systems   small community water systems and not-for-profit nontransient noncommunity water systems serving severely disadvantaged communities  , as defined. The bill would require the department to give priority in funding to projects that include consolidation with a small community water system and that will enable that system to meet drinking water standards, without regard to the project proponent, as provided. Under existing law, not less than 15% of the fund is required to be expended for providing loans and grants to eligible projects by public water systems that regularly serve fewer than 10,000 persons.  This bill would authorize the department to fund up to 100% of the project costs for small community water systems serving severely disadvantaged communities, as defined, in the form of principal forgiveness or grant, if needed to ensure affordable water rates.   Existing law authorizes the department to enter into contracts with applicants for loans, the term of which may not exceed the useful life of the project or 20 years, whichever is shorter.   This bill would authorize the department to agree to extend the term of a loan to a disadvantaged community, as defined, beyond 20 years, but not beyond the life of the project or 30 years, whichever is less, in order to improve affordability.   This bill would require small community water systems or nontransient noncommunity water systems, owned by a public agency or private not-for-profit water company, serving severely disadvantaged communities to be   eligible to receive up to 100% of eligible project costs in the form of a grant, to the extent the system cannot afford a loan.  By authorizing additional uses for moneys in a continuously appropriated fund, this bill would make an appropriation.  This bill would incorporate additional changes in Section 116761.23 of the Health and Safety Code proposed by AB 938, which would become operative only if AB 938 and this bill are both chaptered and become effective on or before January 1, 2012, and this bill is chaptered last.  Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 116760.20 of the Health and Safety Code is amended to read: 116760.20. Unless the context otherwise requires, the following definitions govern the construction of this chapter:  (a) "Cost-effective project" means a project that provides long-term access to safe drinking water at a reasonable cost, which shall be calculated based upon the capital costs and long-term viability of the project as well as the affordability of continuing operation and maintenance charges to ratepayers.   (a) "Acceptable result" means the project that, when constructed, solves the problem for which the project was placed on the project priority list established pursuant to Section 116760.70, ensures the owner and operator of the improved or restructured public water system shall have long-term technical, managerial, and financial capacity to operate and maintain the public water system in compliance with state and federal safe drinking water standards, can provide a dependable source of safe drinking water long-term, and is both short-term and long-term affordable, as determined by applicable regulations adopted by the department.   (b) "Cost-effective project" means a project that achieves an acceptable result at the most reasonable cost.   (b)   (c)  "Department" means the State Department of Public Health.  (c)   (d)  "Disadvantaged community" means a community that meets the definition provided in Section  79505.5 of the Water Code   116275  .  (d)   (e)  "Federal Safe Drinking Water Act" or "federal act" means the federal Safe Drinking Water Act (42 U.S.C. Sec. 300f et seq.) and acts amendatory thereof or supplemental thereto.  (e)   (f)  "Fund" means the Safe Drinking Water State Revolving Fund created by Section 116760.30.  (f)   (g)  "Funding" means a loan or grant, or both, awarded under this chapter.  (g)   (h)  "Matching funds" means state money that equals that percentage of federal contributions required by the federal act to be matched with state funds.  (h)   (i)  "Project" means proposed facilities for the construction, improvement, or rehabilitation of a public water system, and may include all items set forth in Section 116761 as necessary to carry out the purposes of this chapter. It also may include refinancing loans, annexation or consolidation of water systems, source water assessments, source water protection, and other activities specified under the federal act.  (i)   (j)  "Public agency" means any city, county, city and county, whether general law or chartered, district, joint powers authority, or other political subdivision of the state, that owns or operates a public water system.  (j)   (k)  "Public water system" or "public water supply system" means a system for the provision to the public of water for human consumption, as defined in Chapter 4 (commencing with Section 116270), as it may be amended from time to time.  (k)   (l)  "Reasonable amount of growth" means an increase in growth not to exceed 10 percent of the design capacity needed, based on peak flow, to serve the water and fire flow demand in existence at the time plans and specifications for the project are approved by the department, over the 20-year useful life of a project. For projects other than the construction of treatment plants including, but not limited to, storage facilities, pipes, pumps, and similar equipment, where the 10-percent allowable growth cannot be adhered to due to the sizes of equipment or materials available, the project shall be limited to the next available larger size.  (l)   (m)  "Safe drinking water standards" means those standards established pursuant to Chapter 4 (commencing with Section 116270), as they may now or hereafter be amended.  (m) "Small community water system" has the same meaning as set forth in subdivision (aa) of Section 116275.   (n) "Severely disadvantaged community" means a community with a median household income of less than 60 percent of the statewide average.   (n)  (o)  "Supplier" means any person, partnership, corporation, association, public agency, or other entity that owns or operates a public water system.  SEC. 2.   Section 116760.40 of the Health and Safety Code is amended to read: 116760.40. The department may undertake any of the following actions to implement the Safe Drinking Water State Revolving Fund: (a) Enter into agreements with the federal government for federal contributions to the fund. (b) Accept federal contributions to the fund. (c) Use moneys in the fund for the purposes permitted by the federal act. (d) Provide for the deposit of matching funds and other available and necessary moneys into the fund. (e) Make requests, on behalf of the state, for deposit into the fund of available federal moneys under the federal act. (f) Determine, on behalf of the state, that public water systems that receive financial assistance from the fund will meet the requirements of, and otherwise be treated as required by, the federal act. (g) Provide for appropriate audit, accounting, and fiscal management services, plans, and reports relative to the fund. (h) Take additional incidental action as may be appropriate for adequate administration and operation of the fund. (i) Enter into an agreement with, and accept matching funds from, a public water system. A public water system that seeks to enter into an agreement with the department and provide matching funds pursuant to this subdivision shall provide to the department evidence of the availability of those funds in the form of a written resolution, or equivalent document, from the public water system before it requests a preliminary loan commitment. (j) Charge public water systems that elect to provide matching funds a fee to cover the actual cost of obtaining the federal funds pursuant to Section 1452(e) of the federal act (42 U.S.C. Sec. 300j-12) and to process the loan application. The fee shall be waived by the department if sufficient funds to cover those costs are available from other sources. (k) Use money returned to the fund under Section 116761.85 and any other source of matching funds, if not prohibited by statute, as matching funds for the federal administrative allowance under Section 1452(g) of the federal act (42 U.S.C. Sec. 300j-12). (  l  ) Establish separate accounts or subaccounts, as required or allowed in the federal act and related guidance, for funds to be used for the administration of the fund and other purposes. The department shall establish the following accounts within the fund, including, but not limited to: (1) A fund administration account for state expenses related to administration of the fund pursuant to Section 1452(g)(2) of the federal act. (2) A water system reliability account for department expenses pursuant to Section 1452(g)(2)(A), (B), (C), or (D) of the federal act. (3) A source protection account for state expenses pursuant to Section 1452(k) of the federal act. (4) A small system technical assistance account for department expenses pursuant to Section 1452(g)(2) of the federal act. (5) A state revolving loan account pursuant to Section 1452(a)(2) of the federal act. (6) A wellhead protection account established pursuant to Section 1452(a)(2) of the federal act. (m) Deposit federal funds for administration and other purposes into separate accounts or subaccounts, as allowed by the federal act. (n) Determine, on behalf of the state, whether sufficient progress is being made toward compliance with the enforceable deadlines, goals, and requirements of the federal act and the California Safe Drinking Water Act, Chapter 4 (commencing with Section 116270). (o) Improve access to financial assistance for projects serving small community water systems by doing both of the following: (1) Establishing a payment process pursuant to which the recipient of financial assistance would receive funds within 30 days of the date on which the department receives a project payment request, unless the department, within that 30-day period, determines that the project payment would not be in accordance with the terms of the program guidelines. (2) Utilizing wire transfers or other appropriate payment procedures to expedite project payments.  SEC. 2.   Section 116760.   39 is added to the   Health and Safety Code   , to read:   116760.39. In addition to the actions described in Section 116760.40, the department may, to implement the Safe Drinking Water State Revolving Fund, improve access to financial assistance for small community water systems and not-for-profit nontransient noncommunity water systems serving severely disadvantaged communities by doing both of the following: (a) Working to establish a payment process pursuant to which the recipient of financial assistance would receive funds within 30 days of the date on which the department receives a complete project payment request, unless the department, within that 30-day period, determines that the project payment would not be in accordance with the terms of the program guidelines. (b) Investigating the use of wire transfers or other appropriate payment procedures to expedite project payments.  SEC. 3. Section 116760.70 of the Health and Safety Code is amended to read: 116760.70. (a) The department, after public notice and hearing, shall, from time to time, establish a priority list of proposed projects to be considered for funding under this chapter. In doing so, the department shall determine if improvement or rehabilitation of the public water system is necessary to provide pure, wholesome, and potable water in adequate quantity and at sufficient pressure for health, cleanliness, and other domestic purposes. The department shall establish criteria for placing public water systems on the priority list for funding that shall include criteria for priority list categories. Priority shall be given to projects that meet all of the following requirements: (1) Address the most serious risk to human health. (2) Are necessary to ensure compliance with requirements of Chapter 4 (commencing with Section 116270) including requirements for filtration. (3) Assist systems most in need on a per household basis according to affordability criteria. (b) The department may, in establishing a new priority list, merge those proposed projects from the existing priority list into the new priority list. (c) In establishing the priority list, the department shall consider the system's implementation of an ongoing source water protection program or wellhead protection program. (d) In establishing the priority list categories and the priority for funding projects, the department shall carry out the intent of the Legislature pursuant to subdivisions  (e) and (f)   (e) to (h), inclusive,  of Section 116760.10 and do all of the following: (1) Give priority to upgrade an existing system to meet drinking water standards. (2) After giving priority pursuant to paragraph (1), consider whether the applicant has sought other funds when providing funding for a project to upgrade an existing system and to accommodate a reasonable amount of growth. (3) Give priority to projects that include consolidation with a small community water system and that will enable that system to meet drinking water standards without regard to the project proponent, provided that the proponent is an eligible entity as defined in this chapter. (e) Consideration of an applicant's eligibility for funding shall initially be based on the priority list in effect at the time the application is received and the project's ability to proceed. If a new priority list is established during the time the application is under consideration, but before the applicant receives a letter of commitment, the department may consider the applicant's eligibility for funding based on either the old or new priority list. (f) The department may change the ranking of a specific project on the priority lists at any time following the publication of the list if information, that was not available at the time of the publication of the list, is provided that justifies the change in the ranking of the project. (g) The department shall provide one or more public hearings on the Intended Use Plan, the priority list, and the criteria for placing public water systems on the priority list. The department shall provide notice of the Intended Use Plan, criteria, and priority list not less than 30 days before the public hearing. The Intended Use Plan, criteria, and priority list shall not be subject to the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. The department shall conduct duly noticed public hearings and workshops around the state to encourage the involvement and active input of public and affected parties, including, but not limited to, water utilities, local government, public interest, environmental, and consumer groups, public health groups, land conservation interests, health care providers, groups representing vulnerable populations, groups representing business and agricultural interests, and members of the general public, in the development and periodic updating of the Intended Use Plan and the priority list. (h) The requirements of this section do not constitute an adjudicatory proceeding as defined in Section 11405.20 of the Government Code and Section 11410.10 of the Government Code is not applicable.  SEC. 4.   Section 116761.24 of the Health and Safety Code is amended to read: 116761.24. (a) Not less than 15 percent of the total amount deposited in the fund shall be expended for providing loans and grants to public water systems that regularly serve fewer than 10,000 persons to the extent those funds can be obligated for eligible projects. (b) Small community water systems serving severely disadvantaged communities, as defined in Section 75005 of the Public Resources Code, shall be eligible to receive up to 100 percent of their project costs in the form of principal forgiveness or grant, if needed to ensure affordable water rates.   SEC. 5.  Section 116761.50 of the Health and Safety Code is amended to read: 116761.50. (a) The department may enter into contracts with applicants for grants or loans for the purposes set forth in this chapter. Any contract entered into pursuant to this section shall include only terms and conditions consistent with this chapter and the regulations established under this chapter. (b) The contract shall include all of the following terms and conditions that are applicable: (1) An estimate of the reasonable cost of the project or study. (2) An agreement by the department to loan or grant, or loan and grant, the applicant an amount that equals the portion of the costs found by the department to be eligible for a state loan or grant. The agreement may provide for disbursement of funds during the progress of the study or construction, or following completion of the study or construction, as agreed by the parties. (3) An agreement by the applicant to proceed expeditiously with the project or study. (4) An agreement by the applicant to commence operations of the project upon completion of the project, and to properly operate and maintain the project in accordance with the applicable provisions of law. (5) In the case of a loan, an agreement by the applicant to repay the state, over a period not to exceed the useful life of the project or 20 years, whichever is shorter, except as provided in the federal act, or in the case of a study, over a period not to exceed five years, all of the following: (A) The amount of the loan. (B) The administrative fee specified in subdivision (a) of Section 116761.70. (C) Interest on the principal, which is the amount of the loan plus the administrative fee. (6) In the case of a grant, an agreement by the public agency or private not-for-profit water company to operate and maintain the water system for a period of 20 years, unless otherwise authorized by the department. (c) The contract may include any of the following terms and conditions: (1) An agreement by the supplier to adopt a fee structure that provides for the proper maintenance and operations of the project and includes a sinking fund for repair and replacement of the facilities in cases where appropriate. The fee structure shall also provide an acceptable dedicated source of revenue for the repayment of the amount of the loan, and the payment of administrative fees and interest. (2) If the entire project is not funded pursuant to this chapter, the department may include a provision requiring the applicant to share the cost of the project or obtain funding from other sources. (d) The department may require applicants to provide security for loan contracts. (e) The department may agree to extend the term of the loan beyond 20 years, but shall not extend the term beyond the life of the project or 30 years, whichever is less, for disadvantaged communities in order to improve the affordability of the project.   SEC. 4.   Section 116761.23 of the   Health and Safety Code   is amended to read:  116761.23. (a) The maximum amount of a planning grant permitted under this chapter for each participating public water system's share of the costs of the planning, engineering studies, environmental documentation, and design of a single project shall be no more than five hundred thousand dollars ($500,000). (b) Unless the department approves an increase pursuant to this subdivision, the maximum amount of a construction grant award authorized under this chapter to each participating public water system for its share of the cost of the construction of a single project shall be no more than three million dollars ($3,000,000). The department may approve an increase in the maximum amount for a construction grant award authorized under this chapter so that the maximum amount of the construction grant award does not exceed ten million dollars ($10,000,000) only if the department makes all of the following findings: (1) A public water system that serves a disadvantaged community has a defined project need that exceeds the maximum grant amount of three million dollars ($3,000,000). (2) The defined project has been bypassed in at least one funding cycle due to a lack of funds. (3) The defined project is eligible for funding pursuant to the program regulations. (4) The defined project represents the highest public health risk among unfunded projects, as determined by the department according to its standard criteria. (c) Total funding under this article for planning, engineering studies, project design, and construction costs of a single project, whether in the form of a loan or a grant, or both, shall be determined by an assessment of affordability using criteria established by the department.  (d) Subject to all other limitations of this chapter, a small community water system or nontransient noncommunity water system, owned by a public agency or private not-for-profit water company, serving severely disadvantaged communities shall be eligible to receive up to 100 percent of eligible project costs in the form of a grant, to the extent the system cannot afford a loan as determined by the department pursuant to Section 116761.20.   SEC. 4.5.   Section 116761.23 of the   Health and Safety Code   is amended to read:  116761.23. (a) The maximum amount of a planning grant permitted under this chapter for each participating public water system's share of the costs of the planning, engineering studies, environmental documentation, and design of a single project shall be no more than five hundred thousand dollars ($500,000). (b) Unless the department approves an increase pursuant to this subdivision, the maximum amount of a construction grant award authorized under this chapter to each participating public water system for its share of the cost of the construction of a single project shall be no more than three million dollars ($3,000,000). The department may approve an increase in the maximum amount for a construction grant award authorized under this chapter so that the maximum amount of the construction grant award does not exceed ten million dollars ($10,000,000) only if the department makes all of the following findings: (1) A public water system that serves a disadvantaged community has a defined project need that exceeds the maximum grant amount of three million dollars ($3,000,000). (2) The defined project has been bypassed in at least one funding cycle due to a lack of funds. (3) The defined project is eligible for funding pursuant to the program regulations. (4) The defined project represents the highest public health risk among unfunded projects, as determined by the department according to its standard criteria. (c) Total funding under this article for planning, engineering studies,  environmental documentation,  project design, and construction costs of a single project, whether in the form of a loan or a grant, or both, shall be determined by an assessment of affordability using criteria established by the department.  (d) Subject to all other limitations of this chapter, a small community water system or nontransient noncommunity water system, owned by a public agency or private not-for-profit water company, serving severely disadvantaged communities shall be eligible to receive up to 100 percent of eligible project costs in the form of a grant, to the extent the system cannot afford a loan as determined by the department pursuant to Section 116761.20.   SEC. 5.   Section 4.5 of this bill incorporates amendments to Section 116761.23 of the Health and Safety Code proposed by both this bill and Assembly Bill 938. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2012, (2) each bill amends Section 116761.23 of the Health and Safety Code, and (3) this bill is enacted after Assembly Bill 938, in which case Section 4 of this bill shall not become operative.