BILL ANALYSIS Ó AB 1588 Page 1 (Without Reference to File) ASSEMBLY THIRD READING AB 1588 (Mathis and Alejo) As Amended May 31, 2016 2/3 vote. Urgency ------------------------------------------------------------------ |Committee |Votes|Ayes |Noes | | | | | | | | | | | | | | | | |----------------+-----+----------------------+--------------------| |Water |13-0 |Levine, Bigelow, | | | | |Dababneh, Dodd, | | | | |Gordon, Cristina | | | | |Garcia, Gomez, | | | | |Harper, Lopez, | | | | |Mathis, Medina, | | | | |Olsen, Salas | | | | | | | |----------------+-----+----------------------+--------------------| |Appropriations |20-0 |Gonzalez, Bigelow, | | | | |Bloom, Bonilla, | | | | |Bonta, Calderon, | | | | |Chang, Daly, Eggman, | | | | |Gallagher, Eduardo | | AB 1588 Page 2 | | |Garcia, Roger | | | | |Hernández, Holden, | | | | |Jones, Obernolte, | | | | |Quirk, Santiago, | | | | |Wagner, Weber, Wood | | | | | | | | | | | | ------------------------------------------------------------------ SUMMARY: Transfers $10 million General Fund 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 improvements. Specifically, this bill: 1)Requires SWRCB to establish a program of low-interest loans and grants for counties to provide funds to eligible applicants for specified water or wastewater improvements. 2)Establishes the Water and Wastewater Loan and Grant Fund (LGF). Transfers $10 million General Fund to the LGF for appropriation by the Legislature to the SWRCB for the purposes of the bill. 3)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. 4)Allows a county to apply to SWRCB for funds to award grants and/or loans to residents within its jurisdiction. 5)Requires counties receiving LGF to annually provide specified AB 1588 Page 3 information to the board regarding projects and funding recipients. 6)Requires eligible loan applicants to meet the following specified criteria: a) 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. b) Allows counties to enter into contracts with private financial institutions to provide loans as specified. 1)Requires eligible grant recipients to meet the following specified criteria: a) 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. b) 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. AB 1588 Page 4 EXISTING LAW: 1)Under the federal Clean Water Act: 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. 1)Establishes the Clean Water State Revolving Fund (CWSRF) to offer financial assistance for water quality projects. 2)Under the federal Safe Drinking Water Act (SDWA): a) Establishes federal standards for contaminants in drinking water. b) Authorizes states to enter into primacy agreements with the federal United States Environmental Protection Agency (US EPA) to enforce SDWA if the state establishes drinking water standards that are at least as stringent as those developed by US EPA, as required by SDWA. c) Establishes the Safe Drinking Water State Revolving AB 1588 Page 5 Fund (SDWSRF) to offer financial assistance for safe drinking water projects. 3)Under the Porter-Cologne Water Quality Control Act: a) Establishes the State Water Resources Control Board (State Water Board) and Regional Water Quality Control Boards to regulate and protect water quality in California. b) Establishes the State Water Pollution Control Revolving Fund to, among other things, implement the federal CWSRF program. 4)Transferred the Drinking Water Program and the SDWSRF from the Department of Public Health to the State Water Board effective July 1, 2014. 5)Under the California Safe Drinking Water Act: a) Requires the State Water Board to protect the public from contaminants in drinking water. b) 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: According to the Assembly Appropriations AB 1588 Page 6 Committee: 1)Transfers $10 million General Fund to the newly created LGF 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 (General Fund) over three years. COMMENTS: 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. It is the policy of the state that every human being has the right to safe, clean, affordable, and accessible water adequate for human consumption, cooking, and sanitary purposes. 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, sewer laterals, or septic systems have not been funded by the CWSRF or SDWSRF programs. This bill provides for assistance on private property similar to what exists for public systems. AB 1588 Page 7 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. Analysis Prepared by: Ryan Ojakian / W., P., & W. / (916) 319-2096 FN: 0003313