BILL NUMBER: AB 61 CHAPTERED 10/09/01 CHAPTER 619 FILED WITH SECRETARY OF STATE OCTOBER 9, 2001 APPROVED BY GOVERNOR OCTOBER 8, 2001 PASSED THE ASSEMBLY SEPTEMBER 15, 2001 PASSED THE SENATE SEPTEMBER 14, 2001 AMENDED IN SENATE SEPTEMBER 13, 2001 AMENDED IN SENATE JULY 17, 2001 AMENDED IN SENATE JUNE 28, 2001 AMENDED IN ASSEMBLY MAY 14, 2001 AMENDED IN ASSEMBLY APRIL 17, 2001 INTRODUCED BY Assembly Member Florez DECEMBER 5, 2000 An act to amend Sections 116761.20 and 116761.50 of the Health and Safety Code, relating to drinking water, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST AB 61, Florez. Safe Drinking Water State Revolving Fund. Existing law establishes the Safe Drinking Water State Revolving Fund, administered by the State Department of Health Services, and continuously appropriates the money in the fund to that department to provide grants or revolving fund loans for the design and construction of projects for public water systems that will enable suppliers to meet safe drinking water standards. Existing law provides that planning and preliminary engineering studies, project design, and construction costs may be funded, in the case of public agencies, by grants or a combination of grants and loans. Existing law authorizes the department to enter into contracts with applicants for grants and loans with specified terms and conditions, including the requirement that in the case of a grant, the public agency agrees to operate and maintain the water system for 20 years. This bill would authorize planning and preliminary engineering studies, project design, and construction costs to be funded by grants or a combination of grants and loans in the case of private not-for-profit water companies. The bill would also require a private not-for-profit water company, upon entering into a contract with the department for a grant under these provisions, to agree to operate and maintain the water system for 20 years. By making these water companies eligible for those grants, the bill would make an appropriation. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 116761.20 of the Health and Safety Code is amended to read: 116761.20. (a) Planning and preliminary engineering studies, project design, and construction costs may be funded under this chapter by loans, or, in the case of public agencies or private not-for-profit water companies, by grants or a combination of grants and loans. (b) The department shall determine what portion of the full costs the public agency or private not-for-profit water company is capable of repaying and authorize funding in the form of a loan for that amount. The department shall authorize a grant only to the extent the department finds the public agency or not-for-profit water company is unable to repay the full costs of a loan. (c) At the request of the department, the Public Utilities Commission shall submit comments concerning the ability of suppliers, subject to its jurisdiction, to finance the project from other sources and to repay the loan. SEC. 2. 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.