BILL ANALYSIS Ó
AB 954
Page 1
Date of Hearing: April 28, 2015
ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE
Marc Levine, Chair
AB 954
(Mathis) - As Amended March 26, 2015
SUBJECT: Water and Wastewater Loan and Grant Pilot Program
SUMMARY: Appropriates $20 million dollars to a newly-created
fund at the State Water Resources Control Board (State Water
Board) and requires the State Water Board to implement a pilot
program until January 1, 2026 of low-interest loans and grants
to eligible applicants for water and wastewater. Specifically,
this bill:
1)Makes findings including, but not limited to, the impacts of
drought and the need to establish a program to provide
assistance to individual homeowners who are reliant on their
own groundwater wells and may not be able to afford
conventional private loans to take care of vital water supply,
water quality, and wastewater improvements.
2)Requires the State Water Board to establish a pilot program of
low-interest loans and grants to eligible applicants for any
of the following:
AB 954
Page 2
a) Connecting to water or wastewater service.
b) Closing abandoned septic tanks or water wells to protect
health and safety.
c) Deepening an existing groundwater well.
d) Installing a water treatment system if the groundwater
doesn't meet primary or secondary drinking water standards.
3)Establishes the Water and Wastewater Loan and Grant Pilot
Program (Pilot Program) at the State Water Board with a Water
and Wastewater Loan and Grant Fund (LGF).
4)Appropriates $20 million of General Fund into the LGF and
allows moneys repaid from any grant or loan under the Pilot
Program to be deposited in the fund as well as and any
interest on those moneys.
5)Specifies that all loan or grant applicants must own their own
home and be unable to obtain a conventional loan.
6)Requires eligible loan applicants to: be below the statewide
median income; demonstrate an ability to repay the loan which
may include having a co-signer; secure the loan on the home
and repay it within 20 years.
7)Requires the State Water Board to set interest rates under the
pilot program at 1% or less and allows the Board to administer
AB 954
Page 3
the program through a private financial institution.
8)Requires eligible grant applicants to: have a household
income that is less than 60% of the statewide median; repay
the grant in full if the home is sold less than five years
from the date of the agreement; and, repay the State Water
Board any unused grant funds.
9)Terminates the State Water Board's authority to issue Pilot
Program loans and grants on January 1, 2026.
EXISTING LAW:
1)Under the federal Water Pollution Control Act (Clean Water
Act) Amendments of 1972 and 1987:
a) Establishes federal guidelines for surface water quality
protection.
b) Authorizes water quality programs; requires federal
effluent limitations and state water quality standards;
requires permits for the discharge of pollutants into
navigable waters; provides enforcement mechanisms; and
authorizes funding for wastewater treatment works,
construction grants, and state revolving loan programs, as
well as funding to states and tribes for their water
quality programs.
c) Establishes the Clean Water State Revolving Fund (CWSRF)
to offer low interest financing agreements for water
quality projects.
AB 954
Page 4
2)Under the Porter-Cologne Water Quality Control Act,
establishes the State Water Pollution Control Revolving Fund
(SWPCRF), also known as a CWSRF program, to, among other
things, implement the federal CWSRF program. Authorizes the
SWRCB to implement the program.
3)Transferred the Safe Drinking Water Program and the Safe
Drinking Water State Revolving Fund (SDWSRF) from the
Department of Public Health to the State Water Board,
effective July 1, 2014.
4)Under the California Safe Drinking Water Act, Requires the
State Water Board, in administering programs to fund
improvements and expansions of small community water systems,
to give priority to funding projects in disadvantaged
communities and encourage the consolidation of small community
water systems that serve disadvantaged communities in
instances where consolidation will help the affected agencies
and the state to meet specified goals
5)Establishes the SDWSRF which is partially capitalized by
federal contributions from the federal Safe Drinking Water
Act. Specifies that the SDWSRF provide funding for public
water systems to correct deficiencies and problems that pose
public health risks and to meet safe drinking water standards.
FISCAL EFFECT: Unknown. But seeks $20 million (General Fund) to
start the Pilot Program.
AB 954
Page 5
COMMENTS: This bill creates a pilot program at the State Water
Board to provide water and waste water project grants and loans
for owners of private homes who cannot afford conventional loans
for needed water and wastewater improvements.
1)Author's statement: The author states that while catastrophic
drought continues to ravage the state, Californians who are
reliant on groundwater wells need access to low-interest
financing and grants to undertake necessary repairs to provide
safer, reliable drinking water. The author adds that this
bill is needed because while there are many state and federal
programs that provide financial assistance, such as
low-interest loans and grants, to communities to undertake
water and wastewater infrastructure improvement projects there
are very few resources available to individual homeowners who
are reliant on their own groundwater wells. The author
highlights that many individual homeowners who rely upon
private groundwater wells are often in disadvantaged
communities and economically distressed areas, and so may not
be able to afford conventional private financing to undertake
vital water supply, water quality, and wastewater improvements
2)Privately-owned facilities are not eligible under the CWSRF or
SDWSRF: The CWSRF program provides low-interest loans and
other financing mechanisms for publicly-owned wastewater
treatment facilities, local sewers, sewer interceptors, water
recycling facilities, and storm water treatment facilities.
The SDWSRF provides funding for public water systems. But
improvements to those parts of the water and wastewater
infrastructure that are on private property such as wells,
AB 954
Page 6
sewer laterals, or septic systems are not eligible for the
CWSRF or SDWSRF programs.
3)Proposition 1 could fund some solutions for private
well-related problems: Proposition 1, the Water Quality,
Supply, and Infrastructure Improvement Act of 2014 (Prop. 1),
includes $260 million, upon appropriation by the Legislature
to the State Water Board to be placed in the CWSRF and used
for grants for wastewater treatment projects. Prop. 1 also
includes another $260 million, upon appropriation by the
Legislature (recipient agency not specified) for public water
system infrastructure improvements and related actions to meet
safe drinking water standards, ensure affordable drinking
water, or both. Priority is given to projects that provide
treatment for contamination or access to an alternate drinking
water source or sources for small community water systems or
state small water systems in disadvantaged communities whose
drinking water source is impaired by chemical and nitrate
contaminants and other health hazards identified by the State
Water Board. Eligible recipients are public water systems or
public agencies and priority is given to projects that provide
shared solutions for multiple communities, at least one of
which is a disadvantaged community that lacks safe, affordable
drinking water and is served by a small community water
system, state small water system, or a private well. But,
again, the funding is focused on the public water system or
public agency solution, not the individual homeowner's
property.
4)Emergency drought package provides $19 million in funds for
emergency drinking water projects. AB 91 (Committee on
Budget), Chapter 1, Statutes of 2015 appropriates $19 million
to the State Water Board, for grants and direct expenditures
for emergency drinking water projects, including hauled water,
bottled water, design and construction of connections to
AB 954
Page 7
adjacent public water systems, new wells and well
rehabilitation. However, these funds are only available until
June 30, 2016 and are intended to address drought-related
drinking water emergencies or threatened emergencies as
opposed to long-term solutions.
5)Prior and related legislation:
AB 1471 (Rendon), Chapter 188, Statutes of 2014 placed
Proposition 1, a $7.545 billion general obligation bond for
water-related projects and programs on the November 4, 2014
ballot where it passed with 67% of the vote.
AB 964 (Huffman), as introduced February 18, 2011, sought to
improve water quality by financing the installation of onsite
sewer and septic improvements on private property including
the conversion of a property from a septic system to community
sewer collection and treatment service. AB 964 was later
gutted and amended into a water rights bill concerning Small
Irrigation Registrations after the federal Environmental
Protection Agency interpreted private property improvements to
be ineligible for CWSRF money.
6)Supporting comments: Supporters state that there are no
programs to provide assistance to individual homeowners who
rely on their own groundwater wells and cannot afford
conventional loans. Supporters advise that this bill would
bridge the gap by providing low-interests loans, grants, or
both to low-income homeowners to undertake vital water supply,
water quality, and wastewater treatment improvements.
7)Suggested Committee Amendments: Committee staff suggests the
following two amendments:
AB 954
Page 8
a) Authorize the State Water Board to make the grants and
loans to local agencies who then can administer the program
with individual homeowners. The State Water Board is not
staffed or organized in such a way that it can administer
loans and grants to, and enforce and collect against,
potentially thousands of individual people. Cities,
counties, and local water agencies, on the other hand, are
already in a billing relationship with customers and could
even enable repayment through on-bill financing.
b) Specify that unused funds and repayments on outstanding
loans revert back to the General Fund.
REGISTERED SUPPORT / OPPOSITION:
Support
Kern County Board of Supervisors
Opposition
None on file
AB 954
Page 9
Analysis Prepared by:Tina Cannon Leahy / W., P., & W. / (916)
319-2096