BILL ANALYSIS Ó SENATE COMMITTEE ON ENVIRONMENTAL QUALITY Senator Wieckowski, Chair 2015 - 2016 Regular Bill No: AB 1588 ----------------------------------------------------------------- |Author: |Mathis and Alejo | ----------------------------------------------------------------- |-----------+-----------------------+-------------+----------------| |Version: |6/15/2016 |Hearing |6/29/2016 | | | |Date: | | |-----------+-----------------------+-------------+----------------| |Urgency: |Yes |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Rachel Machi Wagoner | | | | ----------------------------------------------------------------- SUBJECT: Water and Wastewater Loan and Grant Program. ANALYSIS: 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. c) 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): AB 1588 (Mathis) Page 2 of ? 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 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 (SWRCB) 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 Safe Drinking Water State Revolving Fund (SDWSRF) from the Department of Public Health to SWRCB effective July 1, 2014. 5)Under the California Safe Drinking Water Act, a) Requires SWRCB to protect the public from contaminants in drinking water. b) Establishes the SDWSRF which is partially capitalized by federal contributions from the federal AB 1588 (Mathis) Page 3 of ? 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. 6)Proposition 1, the Water Quality, Supply, and Infrastructure Improvement Act of 2014 (Prop. 1), includes $260 million, upon appropriation by the Legislature to the SWRCB 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. 7)AB 91 (Budget Committee, Chapter 1, Statutes of 2015) appropriates $19 million to the SWRCB, for grants and direct expenditures for emergency drinking water projects, including hauled water, bottled water, design and construction of connections to adjacent public water systems, new wells and well rehabilitation. This bill: transfers $10 million from the General Fund to a newly created fund, and requires 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 from the 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 AB 1588 (Mathis) Page 4 of ? 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 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. AB 1588 (Mathis) Page 5 of ? 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. Background 1) Privately owned property is not eligible under 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, sewer laterals, or septic systems have not been funded by the CWSRF or SDWSRF programs. Comments 1) Purpose of Bill. 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. The author states that 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 AB 1588 (Mathis) Page 6 of ? 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. 2) General Fund Appropriation. This legislation identifies an unfunded water quality need for Californians and appropriates $10 million from the General Fund for this purpose. Should this legislation be approved by the Senate Environmental Quality Committee, the Senate Appropriations Committee will need to consider if this is an appropriation expenditure of General Fund and if the revenue is available to fund this new program. AB 954 (Mathis, 2015), is substantially similar to this bill and was held on the Senate suspense file. Additionally, the Assembly Appropriations has identified $700,000 to $800,000 administration costs for SWRCB to administer this program annually. Should this legislation pass, the Legislature should be prepared to address this need in the 2017-2018 and subsequent budgets. Related/Prior Legislation AB 954 (Mathis) of 2015 was held in the Senate Appropriations Committee. This bill is substantially similar to AB 954. The difference between the two bills is the process by which the SWRCB will establish the programs and reporting requirements under the programs to the SWRCB. AB 1588 (Mathis) Page 7 of ? AB 91 (Committee on Budget, Chapter 1, Statutes of 2015), appropriates $19 million to SWRCB, for grants and direct expenditures for emergency drinking water projects, including hauled water, bottled water, design and construction of connections to adjacent public water systems, new wells and well rehabilitation. 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), 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. SOURCE: Author SUPPORT: Association of California Water Agencies California Food Policy Advocates California Association of Realtors Clean Water Action Community Water Center El Quinto Sol De America Environmental Working Group Kings River Conservation District Kings River Water Association Mission Springs Water District Pacific Water Quality Association Trust for Public Land OPPOSITION: None received AB 1588 (Mathis) Page 8 of ? -- END --