BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 30
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          Date of Hearing:   February 12, 2013

           ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
                                Luis A. Alejo, Chair
                    AB 30 (Perea) - As Amended:  January 24, 2013
           
          SUBJECT  :  Water Quality: Small Community Grant Fund.

           SUMMARY  :   Removes the sunset date for the Small Community Grant  
          (SCG) Fund, which provides grants to small communities for the  
          construction of wastewater collection, treatment, or disposal  
          projects.  Specifically,  this bill  :

             1)   Eliminates the sunset date of December 31, 2013, from  
               the State Water Resources Control Board's (SWRCB's)  
               authorization to collect a charge on specified loans in  
               lieu of interest that provides revenue to the SCG Fund.

             2)   Removes the current $50 million limitation on the total  
               revenue that can be allocated to the SCG Fund.   

           EXISTING LAW:  


             1)   Authorizes SWRCB to assess a surcharge on loans issued  
               from the Clean Water State Revolving Fund, in lieu of  
               interest on the loans (Water Code § 13477.6).  

             2)   Requires revenue from the surcharge to be deposited into  
               the SCG fund for the purpose of providing grants to small  
               communities for the construction of wastewater collection,  
               treatment, or disposal projects. 


             3)   Provides that grants from the SCG fund will give  
               priority to projects that serve severely disadvantaged  
               communities.

             3)   Limits the total revenue to be deposited into the SCG  
               fund at $50 million.  

             4)   Provides that the authorization to charge a surcharge in  
               lieu of interest sunsets December 31, 2013.

           FISCAL EFFECT  :   Not Known








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           COMMENTS  :   

           Need for the bill  .  According to sponsors of the bill, a  
          coalition of community and environmental groups, "Many  
          disadvantaged communities are in dire need of new wastewater  
          facilities to protect drinking water and deal with an aging  
          wastewater system.  These small communities lack sufficient  
          funds needed to independently finance wastewater projects and  
          are dependent upon the timely disbursement of approved state and  
          federal grant and loan funds to improve and replace inadequate  
          wastewater systems. 

          "Unfortunately, there is little funding available to assist  
          these communities.  The Clean Water State Revolving Fund (CWSRF)  
          has historically been a loan-only program, and therefore  
          inaccessible to low-income communities. To address those  
          community needs, the State Water Board created the Small  
          Community Wastewater Grant Fund in 1984.  Over the years, bond  
          funding was made available to address projects in the fund, but  
          no funding has been made available since the passage of  
          Proposition 50 in 2002, and more than $1 billion in projects are  
          currently on the waiting list."   

          The SWRCB, in its June 16, 2008, Water Boards' Draft Small  
          Community Wastewater Strategy, reported that, "? Small  
          communities face specific challenges related to their drinking  
          water and wastewater systems.  Many are currently on failing  
          septic systems or have old and undersized wastewater treatment  
          plants that cannot meet current water quality standards.  Such  
          systems can cause significant health and safety problems,  
          endanger surface water uses, and pose a threat to groundwater  
          supplies.  Many small communities lack the resources and  
          in-house expertise necessary to apply for grants and loans to  
          help make wastewater projects more feasible.  Even if  
          communities are able to secure financial assistance, they often  
          do not have access to technical expertise to determine the best  
          project alternative or to appropriately plan for long-term  
          operations and maintenance needs.  Therefore, more financial,  
          technical, and regulatory assistance is needed to bring small  
          communities into compliance."  The current SCG provides the  
          SWRCB a tool to help small disadvantaged communities rectify  
          their critical wastewater system needs.

          AB 2356 (Arambula) Chapter 609, Statutes of 2008, created the  








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          Clean Water State Revolving Fund  (CWSRF) Small Community Grant  
          (SCG) Fund, which authorized the SWRCB to assess an annual  
          charge on existing CWSRF financing agreements for deposit into  
          the SCG Fund.  The annual charge is in lieu of interest that  
          would otherwise be charged in association with a CWSRF financing  
          agreement.  AB 2356 authorizes the SWRCB to deposit up to $50  
          million into the SCG Fund by 2014. 

          Due to restrictions on federal funding and bond revenues,  
          provisions regarding collection of the annual charge can only be  
          incorporated into CWSRF financing agreements funded solely by  
          CWSRF repayments resulting in approximately $12 million in  
          deposits through the end of 2011/12, and approximately $30  
          million in deposits projected by the December 2014 sunset date.  
          The SWRCB will be unable to collect the full $50 million without  
          legislative action to extend the deadline. 

           Status of the SCG program:   According to the SWRCB, as of  
          12/31/12, there was a total of $16,413,960 in the Small  
          Community Wastewater Grant Fund.  Of that amount, $4 million was  
          earmarked for a loan to the General Fund, and $1,163,100 is  
          going to impending disbursements. In addition, $6,145,301 is  
          committed to projects, but has not yet been disbursed.  
           
          The SWRCB had the authority to spend $1 million in SCG funds  
          during 2010/11, plus $1 million in 2011/12.  The SWRCB is  
          authorized to commit $12 million in SCG funds during fiscal year  
          (FY) 2012/13.

          The SWRCB collected approximately $5 million in FY 2010/11 and  
          $7 million in FY 2011/12 in fees.  The SWRCB is projected to  
          collect a total of approximately $30 million by the end of 2014.  
           With the assumption of collecting at least $5 million per year  
          in 2015 and subsequent years, the fund will reach $50 million at  
          the end of 2018.

           

          Prior legislation
           
          AB 2208 (Perea) of 2012, proposed to extend the sunset date for  
          the SCG fund from 2014 to 2019.  The provisions to extent the  
          SCG program were amended into the bill in August of 2012 and the  
          bill was held in the Senate Rules Committee.









                                                                  AB 30
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           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          California Rural Legal Assistance Foundation
          Clean Water Action
          Community Water Center
          Environmental Justice Coalition for Water
          Environmental Working Group
          Pesticide Action Network
          Policy Link
          Sierra Club California
          Winnemem Wintu Tribe

           Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Bob Fredenburg / E.S. & T.M. / (916)  
          319-3965