Amended in Senate June 19, 2014

Amended in Assembly May 23, 2014

Amended in Assembly March 18, 2014

California Legislature—2013–14 Regular Session

Assembly BillNo. 2636


Introduced by Assembly Members Gatto and Skinner

(Coauthors: Assembly Members Bocanegra, Rendon, Rodriguez, Ting, Wieckowski, and Williams)

February 21, 2014


An act to add Division 30 (commencing with Section 81000) to the Water Code, relating to water.

LEGISLATIVE COUNSEL’S DIGEST

AB 2636, as amended, Gatto. CalConserve Water Use Efficiency Revolving Fund.

The California Constitution requires the reasonable and beneficial use of water.

This bill would establish the CalConserve Water Use Efficiency Revolving Fund and provide that the moneys in the fund are available to the Department of Water Resources, upon appropriation by the Legislature, for the purpose of water use efficiency projects. This bill would require moneys in the fund to be used for purposes that include, but are not limited to, at-or-below market interest rate loans and would permit the department to enter into agreements with local agencies, as defined, that provide water or recycled water service to provide loans.

Existing law, the Costa-Machado Water Act of 2000, a bond act approved by the voters as Proposition 13 at the March 7, 2000, statewide primary election, authorizes the issuance of general obligation bonds in the amount of $1,970,000,000 for grants, loans, and direct expenditures for the purposes of financing a safe drinking water, clean water, watershed protection, and flood protection program.

This bill would transfer to the CalConserve Water Use Efficiency Revolving Fund from the bond act specified bond proceeds issued and available for agricultural water projects. This bill would require the department to use these moneys for loans and grants to local agencies to acquire and construct agricultural water conservation projects consistent with provisions of the bond act.

Existing law, the California Global Warming Solutions Act of 2006, designates the State Air Resources Board as the state agency charged with monitoring and regulating sources of emissions of greenhouse gases. The act authorizes the state board to include use of market-based compliance mechanisms. Existing law requires all moneys, except for fines and penalties, collected by the state board from the auction or sale of allowances as part of a market-based compliance mechanism to be deposited in the Greenhouse Gas Reduction Fund and to be available upon appropriation. Existing law requires the Department of Finance, in consultation with the state board and any other relevant state agency, to develop, as specified, a 3-year investment plan for the moneys deposited in the Greenhouse Gas Reduction Fund. Existing law permits moneys from the fund to be allocated for the purpose of reducing greenhouse gas emissions in this state through specified investments.

This bill would provide that the Legislature may appropriate moneys in the Greenhouse Gas Reduction Fund for water-use efficiency projects under the CalConserve Water Use Efficiency Revolving Loan Program that reduce greenhouse gas emissions.begin insert The bill would prohibit the encumbrance of any funds appropriated in accordance with these provisions until the board, in consultation with the department, publishes findings on how all operational aspects of the projects result in greenhouse gas emission reductions, and reports those findings to the Legislature.end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

The Legislature finds and declares all of the
2following:

P3    1(a) Water is a finite resource in California, and dry hydrologic
2conditions caused by drought and climate change increase the
3uncertainty of water supplies.

4(b) Reliable water supplies are essential for public health and
5safety, stability of local, regional, and statewide economies, and
6food security.

7(c) Water use efficiency, including conservation and recycling
8of water, is an effective strategy to improve management of water
9resources at the local and regional levels. Improved resource
10management will help local communities withstand drought and
11other conditions that limit water supplies.

12(d) Water use efficiency projects will become more complex
13and costly in order to increase the water savings potential.

14(e) A sustainable source of funding is needed for urban and
15agricultural water use efficiency projects to assist water and
16recycled water providers in expanding local and regional programs.

17(f) A revolving fund program is a mechanism to provide a
18sustainable funding source that provides incentives for matching
19local funds and accelerates local water supply development.

20

SEC. 2.  

Division 30 (commencing with Section 81000) is added
21to the Water Code, to read:

22 

23Division 30.  CalConserve Water Use Efficiency
24Revolving Loan Program

25

25 

26PART 1.  General Provisions

27

 

28

81000.  

(a) It is the intent of the Legislature in establishing the
29CalConserve Water Use Efficiency Revolving Fund to create a
30sustainable funding source for water use efficiency projects.

31(b) It is further the intent of the Legislature that the funds from
32the CalConserve Water Use Efficiency Revolving Fund be used
33for the following purposes:

34(1) Measurable reductions in urban per capita water use.

35(2) Improvements in agricultural water use efficiency and
36 measurable reductions in agricultural water use.

37(3) Increased use of recycled water.

38(4) Reductions in greenhouse gas emissions and water and
39energy use.

P4    1(c) It is the intent of the Legislature that any public funds made
2available by this division to private water companies regulated by
3the Public Utilities Commission should be for the benefit of the
4ratepayers or the public and not the investors pursuant to oversight
5by the Public Utilities Commission.

6

81005.  

For purposes of this division, the following terms have
7the following meanings:

8(a)  “Fund” means the CalConserve Water Use Efficiency
9Revolving Fund established pursuant to Section 81020.

10(b) “Local agency” means a city, county, city and county,
11municipal utility district, community services district, sanitary
12district, sanitation district, water district as defined in Section
1320200, public water system as defined in Section 116275 of the
14Health and Safety Code, or private water company under the
15jurisdiction of the Public Utilities Commission.

16(c) “Technical assistance” means costs incurred for providing
17advice, training, or other assistance to local agencies, such as the
18following:

19(1) Conducting specialized studies to identify water conservation
20opportunities that meet the intent of Section 81000.

21(2) Planning of specific remodeling, renovation, repair,
22replacement, or other projects related to water conservation.

23(3) Developing a project proposal for funding from the fund.

24 

25PART 2.  CalConserve Water Use Efficiency
26Revolving Fund

27

 

28

81020.  

The CalConserve Water Use Efficiency Revolving
29Fund is hereby created in the State Treasury. Moneys in the fund
30are available, upon appropriation by the Legislature, to the
31department for expenditure in accordance with this division. The
32department is the state agency responsible for administering the
33fund.

34

81022.  

The proceeds of any bonds authorized to be issued and
35available for the purposes of Section 79157 shall be transferred to
36the fund and used by the department for loans and grants to local
37agencies to acquire and construct agricultural water conservation
38projects consistent with Article 3 (commencing with Section
3979157) of Chapter 8 of Division 26.

P5    1

81023.  

begin insert(a)end insertbegin insertend insertThe Legislature may appropriate moneys in the
2Greenhouse Gas Reduction Fund created pursuant to Section
316428.8 of the Government Code for projects under this division
4that reduce greenhouse gas emissions through water use efficiency
5improvements or improved water use efficiency consistent with
6Chapter 4.1 (commencing with Section 39710) of Part 2 of Division
726 of the Health and Safety Code and Article 9.7 (commencing
8with Section 16428.8) of Chapter 2 of Part 2 of Division 4 of Title
92 of the Government Code.

begin insert

10(b) (1) Any funds appropriated in accordance with subdivision
11(a) shall not be encumbered until the State Air Resources Board,
12in consultation with the department, publishes findings, and reports
13those findings to the Legislature, on how all operational aspects
14of the projects result in greenhouse gas emission reductions.

end insert
begin insert

15(2) A report submitted pursuant to paragraph (1) shall be
16submitted in compliance with Section 9795 of the Government
17Code.

end insert
18

81024.  

The department may undertake any of the following:

19(a) Provide for the deposit of any available and necessary
20moneys into the fund.

21(b) Enter into agreements with local agencies that provide water
22or recycled water service to provide loans for the purposes
23described in subdivision (b) of Section 81000.

24(c) Provide for appropriate audit, accounting, and fiscal
25management services, plans, and reports relative to the fund.

26(d) Take additional incidental action as appropriate for the
27adequate administration and operation of the fund.

28(e) Make requests on behalf of the state for deposit into the fund
29of available federal moneys.

30(f) Enter into agreements with the federal government for federal
31contributions to the fund.

32(g) Accept federal contributions to the fund.

33(h) Provide technical assistance to local agencies.

34

81026.  

(a) The department may enter into an agreement with
35the federal government for federal contributions to the fund only
36if both of the following conditions are met:

37(1) The state identifies any required matching funds.

38(2) The department is prepared to commit to the expenditure of
39any minimum amount in the fund in the manner required by the
40federal government.

P6    1(b) Any agreement between the department and the federal
2government shall contain those provisions, terms, and conditions
3required by the federal government and any implementing federal
4rules, regulations, guidelines, and policies, including, but not
5limited to, agreement to expend moneys in the fund in an
6expeditious and timely manner.

7

81030.  

Moneys in the fund shall be used for the following
8purposes:

9(a) Loans that meet all of the following requirements:

10(1) Are made at or below market interest rates.

11(2) Require annual payments of principal and any interest, with
12repayment commencing not later than one year after loan funding
13and full amortization not later than 20 years after loan funding.
14Full amortization for loans to disadvantaged communities shall be
15not later than 25 years after loan funding.

16(3) Require the loan recipient to establish an acceptable
17dedicated source of revenue for repayment of a loan.

18(b) To guarantee, or purchase insurance for, local obligations
19if that action would improve credit market access or reduce interest
20rates.

21(c) As a source of revenue or security for the payment of
22principal and interest on revenue or general obligation bonds issued
23by the state, if the proceeds of the sale of those bonds will be
24deposited in the fund.

25(d) To earn interest.

26(e) Technical assistance.

27(f) For payment of the reasonable costs of administering the
28fund, not to exceed 4 percent of the fund.

29(g) Grants, principal forgiveness, negative interest rates, and
30any other type of, or variation on, the types of assistance described
31in this section that is authorized by a federal capitalization grant
32deposited in the fund to the extent authorized and funded by that
33federal capitalization grant.

34

81033.  

Funds made available pursuant to this division to a
35local agency shall not be used for administrative costs.

36

81035.  

Any repayment of fund moneys, including interest
37payments, and all interest earned on, or accruing to, any moneys
38in the fund, shall be deposited in the fund and shall be available
39for expenditure for the purposes and uses authorized by this
40division.

 

P7    1PART 3.  Implementation

2

 

3

81040.  

Projects shall have one or more of the following
4benefits:

5(a) Measurably reduce urban per capita potable water use.

6(b) Measurably reduce agricultural water use.

7(c) Increase the use or availability of recycled water supply.

8(d) Reduce greenhouse gas emission and water and energy use.

9

81042.  

Subject to all applicable constitutional restrictions, a
10local agency may borrow money and incur indebtedness pursuant
11to this division.

12

81044.  

The department may adopt rules and guidelines
13necessary or convenient to implement this division.

14

81046.  

A local agency may implement water-use efficiency
15loan programs pursuant to this section through on-bill financing.



O

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