BILL ANALYSIS Ó AB 1588 Page 1 Date of Hearing: April 6, 2016 ASSEMBLY COMMITTEE ON APPROPRIATIONS Lorena Gonzalez, Chair AB 1588 (Mathis) - As Amended March 16, 2016 ----------------------------------------------------------------- |Policy |Water, Parks and Wildlife |Vote:|13 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: Yes State Mandated Local Program: NoReimbursable: No SUMMARY: This bill transfers $20 million GF to a newly created fund, and requires the State Water Resources Control Board (SWRCB) to implement a low-interest loan and grant pilot program for counties to fund water and wastewaster facilities and improvements. Specifically, this bill: 1)Requires SWRCB to establish a program of low-interest loans AB 1588 Page 2 and grants for counties to provide funds to eligible applicants for any of the following: a) Extending or connecting service lines from a water or wastewater service to the applicants' residence or plumbing. b) Paying reasonable charges or fees for connecting to a water or wastewater system. c) Closing abandoned septic tanks or water wells to protect health and safety. d) Deepening an existing groundwater well. e) Improving an existing groundwater well, including associated equipment. f) Installing a water treatment system if the groundwater exceeds primary or secondary drinking water standards, as defined. 1)Establishes the Water and Wastewater Loan and Grant Fund (LGF). Transfers $20 million GF to the LGF for appropriation by the Legislature to the SWRCB for the purposes of the bill. Allows moneys repaid from any grant or loan under the program to be deposited in the fund as well as and any interest on those moneys. AB 1588 Page 3 2)Allows SWRCB to adopt guidelines for administering the program exempt from the Administrative Procedures Act (APA). Requires SWRCB to develop guidelines to apportion funds among the counties. 3)Allows a county to apply to SWRCB for funds to award grants and/or loans to residents within its jurisdiction. 4)Requires counties receiving Water and Wastewater Loan and Grant Funds to annually provide specified information to the board regarding projects and funding recipients. 5)Requires eligible loan applicants to meet the following criteria: a) Household income is below the statewide median. b) There is an ownership interest in the residence. c) Applicants are unable to obtain financial assistance at reasonable terms from private lenders and lack personal resources to undertake the improvements. d) Applicants are able to demonstrate the ability to repay the loan, including by having another party join the application as co-signer. AB 1588 Page 4 1)Requires loans to be secured by a mortgage on the residence and repaid within 20 years in accordance with terms established by SWRCB. Limits the loan interest rate to 1%. Requires loan recipients to maintain homeowners insurance during the life of the loan. 2)Allows counties to enter into contracts with private financial institutions to provide loans as specified. 3)Requires eligible grant recipients to meet the following criteria: a) Household income is 80% or less of the statewide median b) Applicants are unable to obtain financial assistance at reasonable terms from private lenders and lack personal resources to undertake the improvements. 1)Requires grant recipients to repay the county in full if the recipient sells the residence less than five years from signing the grant agreement. Requires the grant recipient to repay the county any unused grant funds. 2)Exempts funding received from this program from certain requirements of the law that authorize the SWRCB to order consolidations and service extensions. Specifically, the provisions that prevent residents from receiving any future water-related state grant funding until written consent to consolidate or extend service is received. FISCAL EFFECT: AB 1588 Page 5 1)This bill transfers $20 million GF to the newly created Water and Wastewater Loan and Grant Fund for appropriation by the Legislature to the SWRCB. 2)Unknown annual costs, likely in the $500,000 to $800,000 range, for SWRCB to administer the program (GF) over three years. COMMENTS: 1)Purpose. According to the author, 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. 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. Unfortunately, there are very few resources available to individual homeowners who are reliant on their own groundwater wells. 2)Drought Water System Consolidation. Last year, in response to the multi-year drought, and lack of safe, clean water in multiple communities throughout the state, the Legislature Authorized the SWRCB to require water systems serving disadvantaged communities with unreliable and unsafe drinking water to consolidate with or receive service from public water systems with safe, reliable, and adequate drinking water. This bill exempts eligible grant or loan recipients from sanctions designed to encourage consolidation and delivery of water in disadvantaged communities. This exemption may conflict with the Legislature's intent in enacting the consolidation provisions. The author may wish to consider removing or modifying this provision. AB 1588 Page 6 3)Prior Legislation. AB 954 (Mathis) of 2015 passed out of this committee but was held in the Senate Appropriations Committee. This bill is similar to AB 954 but increases the amount of funding available from $10 million to $20 million. Analysis Prepared by:Jennifer Galehouse / APPR. / (916) 319-2081