BILL ANALYSIS Ó AB 30 Page 1 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 AB 30 Page 2 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 AB 30 Page 3 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 Page 4 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