[Approved by Governor September 29, 2014. Filed with Secretary of State September 29, 2014.]
AB 2636, 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 to local agencies, as defined, and would permit the department to enter into agreements with local agencies 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.
The people of the State of California do enact as follows:
The Legislature finds and declares all of the following:
(a) Water is a finite resource in California, and dry hydrologic conditions caused by drought and climate change increase the uncertainty of water supplies.
(b) Reliable water supplies are essential for public health and safety, stability of local, regional, and statewide economies, and food security.
(c) Water use efficiency, including conservation and recycling of water, is an effective strategy to improve management of water resources at the local and regional levels. Improved resource management will help local communities withstand drought and other conditions that limit water supplies.
(d) Water use efficiency projects will become more complex and costly in order to increase the water savings potential.
(e) A sustainable source of funding is needed for urban and agricultural water use efficiency projects to assist water and recycled water providers in expanding local and regional programs.
(f) A revolving fund program is a mechanism to provide a sustainable funding source that provides incentives for matching local funds and accelerates local water supply development.
Division 30 (commencing with Section 81000) is added to the Water Code, to read:
(a) It is the intent of the Legislature in establishing the CalConserve Water Use Efficiency Revolving Fund to create a sustainable funding source for water use efficiency projects.
(b) It is further the intent of the Legislature that the funds from the CalConserve Water Use Efficiency Revolving Fund be used for the following purposes:
(1) Measurable reductions in urban per capita water use.
(2) Improvements in agricultural water use efficiency and measurable reductions in agricultural water use.
(3) Increased use of recycled water.
(4) Reductions in greenhouse gas emissions and water and energy use.
(c) It is the intent of the Legislature that any public funds made available by this division to private water companies regulated by the Public Utilities Commission should be for the benefit of the ratepayers or the public and not the investors pursuant to oversight by the Public Utilities Commission.
For purposes of this division, the following terms have the following meanings:
(a) “Fund” means the CalConserve Water Use Efficiency Revolving Fund established pursuant to Section 81020.
(b) “Local agency” means a city, county, city and county, municipal utility district, community services district, sanitary district, sanitation district, water district as defined in Section 20200, public water system as defined in Section 116275 of the Health and Safety Code, or private water company under the jurisdiction of the Public Utilities Commission.
(c) “On-bill financing” means a utility-based method for providing low-interest or no-interest financing for water use efficiency improvements through the monthly utility bill.
(d) “Technical assistance” means costs incurred for providing advice, training, or other assistance to local agencies, such as the following:
(1) Conducting specialized studies to identify water conservation opportunities that meet the intent of Section 81000.
(2) Planning of specific remodeling, renovation, repair, replacement, or other projects related to water conservation.
(3) Developing a project proposal for funding from the fund.
The CalConserve Water Use Efficiency Revolving Fund is hereby created in the State Treasury. Moneys in the fund are available, upon appropriation by the Legislature, to the department for expenditure in accordance with this division. The department is the state agency responsible for administering the fund.
The proceeds of any bonds authorized to be issued and available for the purposes of Section 79157 shall be transferred to the fund and used by the department for loans and grants to local agencies to acquire and construct agricultural water conservation projects consistent with Article 3 (commencing with Section 79157) of Chapter 8 of Division 26.
The department may undertake any of the following:
(a) Provide for the deposit of any available and necessary moneys into the fund.
(b) Enter into agreements with local agencies that provide water or recycled water service to provide loans for the purposes described in subdivision (b) of Section 81000.
(c) Provide for appropriate audit, accounting, and fiscal management services, plans, and reports relative to the fund.
(d) Take additional incidental action as appropriate for the adequate administration and operation of the fund.
(e) Make requests on behalf of the state for deposit into the fund of available federal moneys.
(f) Enter into agreements with the federal government for federal contributions to the fund.
(g) Accept federal contributions to the fund.
(h) Provide technical assistance to local agencies.
(a) The department may enter into an agreement with the federal government for federal contributions to the fund only if both of the following conditions are met:
(1) The state identifies any required matching funds.
(2) The department is prepared to commit to the expenditure of any minimum amount in the fund in the manner required by the federal government.
(b) Any agreement between the department and the federal government shall contain those provisions, terms, and conditions required by the federal government and any implementing federal rules, regulations, guidelines, and policies, including, but not limited to, agreement to expend moneys in the fund in an expeditious and timely manner.
Moneys in the fund shall be used for the following purposes:
(a) Loans to local agencies that meet all of the following requirements:
(1) Are made at or below market interest rates.
(2) Require annual payments of principal and any interest, with repayment commencing not later than one year after loan funding and full amortization not later than 20 years after loan funding. Full amortization for loans to disadvantaged communities shall be not later than 25 years after loan funding.
(3) Require the loan recipient to establish an acceptable dedicated source of revenue for repayment of a loan.
(b) To guarantee, or purchase insurance for, local obligations if that action would improve credit market access or reduce interest rates.
(c) As a source of revenue or security for the payment of principal and interest on revenue or general obligation bonds issued by the state, if the proceeds of the sale of those bonds will be deposited in the fund.
(d) To earn interest.
(e) Technical assistance.
(f) For payment of the department’s reasonable costs of administering the fund, not to exceed 4 percent of the fund.
(g) Grants, principal forgiveness, negative interest rates, and any other type of, or variation on, the types of assistance described in this section that is authorized by a federal capitalization grant deposited in the fund to the extent authorized and funded by that federal capitalization grant.
Funds made available pursuant to this division to a local agency shall not be used for that local agency’s administrative costs.
Any repayment of fund moneys, including interest payments, and all interest earned on, or accruing to, any moneys in the fund, shall be deposited in the fund and shall be available for expenditure for the purposes and uses authorized by this division.
Projects shall have one or more of the following benefits:
(a) Measurably reduce urban per capita potable water use.
(b) Measurably reduce agricultural water use.
(c) Increase the use or availability of recycled water supply.
(d) Reduce greenhouse gas emission and water and energy use.
Subject to all applicable constitutional restrictions, a local agency may borrow money and incur indebtedness pursuant to this division.
The department may adopt rules and guidelines necessary or convenient to implement this division.
A local agency may implement water use efficiency loan programs pursuant to this section through on-bill financing.
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