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