BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 954 (Mathis) - Water and Wastewater Loan and Grant Program
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|Version: July 6, 2015 |Policy Vote: E.Q. 7 - 0 |
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|Urgency: Yes |Mandate: No |
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|Hearing Date: August 17, 2015 |Consultant: Marie Liu |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 954 would establish a program to provide funding
for local agencies to offer low-interest loans and grants to
eligible applicants for projects that provide access to drinking
water or wastewater treatment.
Fiscal
Impact:
Onetime appropriation of $10 million from the General Fund for
the financial assistance program.
Ongoing costs of $490,000 annually to Water and Wastewater
Loan and Grant Fund (General Fund) to the SWRCB to administer
the grant program.
Background: The SWRCB is charged with administering the Drinking Water
Program.
AB 954 (Mathis) Page 1 of
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Proposed Law:
This bill would establish a program at the SWRCB to give
low-interest loans and grants to local governments to administer
their own low-interest loan and grant program to eligible
applicants for the following purposes:
Extending or connecting service lines from water or wastewater
system to the applicant's resident or plumbing.
Costs to connect to a water or wastewater system.
Paying costs to close abandoned septic tanks and water wells
to protect health and safety.
Deepening an existing groundwater well.
Improving an existing groundwater well.
Installing a water treatment system.
Eligible applicants would have a household income below the
statewide median household income, have ownership interest in
the residence, be unable to obtain financial assistance at
reasonable terms and conditions from private lenders, lack the
personal resources to undertake the project, and demonstrate an
ability to repay the loan. Any loan must be secured by a
mortgage on the residence and repaid within 20 years. Loan
interest would be capped at one percent.
If the applicant has a household income that is 60% or less of
the statewide median household income, the applicant would be
eligible for a grant. Grant recipients would be required to
repay the grant in full if the residence is sold less within
five years from the date that the grant agreement was signed.
This bill would allow the SWRCB to enter into a contract with a
private financial institution to provide loans consistent for
this purpose.
The SWRCB would be authorized to adopt regulations that are not
subject the Administrative Procedures Act to implement the
program.
The program would be funded by the Water and Wastewater Loan and
Grant Fund (fund), which would be created in this bill. Interest
AB 954 (Mathis) Page 2 of
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in the fund and monies repaid to the SWRCB pursuant to the
program would be deposited into the fund.
This bill would appropriate $10 million from the General Fund to
the fund.
This bill is an urgency measure.
Staff
Comments: The author has submitted amendments to the committee
that would delete the authority for the SWRCB to enter into a
contract with a private institution to provide loans consistent
with this program (see proposed author amendments). As such,
this analysis does not consider these provisions.
Staff notes that this bill establishes a financial assistance
program for local financial assistance programs. That is, the
state will be giving funds to locals who will then distribute
assistance to individual homeowners. The SWRCB estimates that it
would need approximately $490,000 for 3.5 positions to
administer a $10 million grant program. These costs are assuming
that the local agencies administering the program will be doing
all of their own program development including establishing loan
and grant repayment terms and vetting of homeowner applicants.
Staff notes that the bill does not establish any parameters
regarding how the SWRCB will determine how much each local
agency applicant can receive from the program, how the SWRCB is
to prioritize local agency requests for funds assuming that the
program will be oversubscribed, whether the SWRCB issues a grant
or a loan to the local agencies, and whether the local agencies
can use part of the financial assistance for their own
administrative costs. The SWRCB costs assume that they would
only issue grants to locals and grants would be issued to local
agencies based on their "readiness to proceed" and the severity
of the deficiencies the water systems Administrative costs may
change if the author requires the SWRCB to run the program
differently.
AB 954 (Mathis) Page 3 of
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Staff notes that this bill is silent on whether the state or the
local agency bears the risk if a homeowner defaults on a loan
and the costs cannot be recovered from the mortgage. However,
this is only an issue that needs to be resolved if the author
intends for the SWRCB to issue loans instead of or in addition
to grants to local agencies.
Proposed Author
Amendments: The author has submitted amendments to the
committee that would specify that the local agency would set the
terms of loan and grant repayments, not the SWRCB, and would
delete the provision that would give the SWRCB the authority to
enter into a contract with a private institution to provide
loans consistent with the program. The amendments would also
make technical changes.
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