BILL ANALYSIS Ó
SB 1456
Page 1
SENATE THIRD READING
SB
1456 (Galgiani)
As Amended August 18, 2016
Majority vote
SENATE VOTE: 38-0
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Environmental |7-0 |Alejo, Dahle, | |
|Safety | |Arambula, | |
| | | | |
| | | | |
| | |Beth Gaines, Gray, | |
| | |Lopez, McCarty | |
| | | | |
|----------------+-----+-----------------------+---------------------|
|Appropriations |15-0 |Gonzalez, Bigelow, | |
| | |Bloom, Bonilla, Bonta, | |
| | |Chang, Eggman, Eduardo | |
| | |Garcia, Jones, | |
| | |Obernolte, Quirk, | |
| | |Santiago, Weber, Wood, | |
| | |McCarty | |
| | | | |
| | | | |
SB 1456
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SUMMARY: Allows costs incurred by a community water system or
not-for-profit noncommunity water system for planning and
preliminary engineering studies, project design, and
construction to be funded under the Safe Drinking Water State
Revolving Fund (SDWSRF). Specifically, this bill:
1)Allows costs incurred by a community water system or
not-for-profit noncommunity water system for planning and
preliminary engineering studies, project design, and
construction to be funded under the SDWSRF.
2)Requires the State Water Resources Control Board (State Water
Board) to determine what portion of the full costs the water
system is capable of repaying and authorizes funding in the
form of a loan or other repayable financing. Authorizes the
State Water Board to provide a grant or principal forgiveness
to a community water system or not-for-profit noncommunity
water system that serves a disadvantaged community only to the
extent the State Water Board finds the water system is unable
to repay the full costs of the financing.
3)Limits, where a water system is a water corporation regulated
by a the California Public Utilities Commission (CPUC),
principal forgiveness on a loan from the SDWSRF to capital
improvements made by a water system serving disadvantaged
communities with fewer than 3,300 connections. Requires the
State Water Board, in considering principal forgiveness, to
incorporate consideration of the water system's rate of return
for the three fiscal years before the timeframe in which the
State Water Board is considering financial assistance.
4)Deems a water system, other than those regulated by the CPUC,
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serving a severely disadvantaged community with fewer than 200
service connections as having no ability to repay any
financing for a project serving a severely disadvantaged
community.
5)Requires the CPUC, at the request of the State Water Board, to
submit comments to the State Water Board concerning the
ability of water systems that are regulated by the CPUC to
finance the project from other sources and to repay the
financing.
EXISTING LAW:
1)Defines a "disadvantaged community" as the entire service area
of a community water system, or a community therein, in which
the median household income is less than 80% of the statewide
average. (Health and Safety Code (HSC) Section 116275 (ab))
2)Establishes the SDWSRF to provide financial assistance for
community water systems to achieve compliance with the Safe
Drinking Water Act. (HSC Section116760 et seq.)
3)Allows costs incurred by a community and not-for-profit
noncommunity public water system for planning and preliminary
engineering studies, project design, and construction to be
funded from the SDWSRF by loans or other repayable financing.
Allows public water systems that are owned by public agencies
or private not-for-profit water companies to be eligible for
grants, principal forgiveness, or a combination of grants and
loans or other financial assistance under the SDWSRF. (HSC
Section 116761.20 (a))
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4)Requires the State Water Board to determine what portion of
the full costs the public agency or private not-for-profit
water company is capable of repaying and authorizes funding in
the form of a loan or other repayable financing. Requires the
State Water Board to authorize a grant or principal
forgiveness only to the extent the State Water Board finds the
public agency or not-for-profit water company is unable to
repay the full costs of the financing. (HSC Section 116761.20
(b)(1))
FISCAL EFFECT: According to the Assembly Appropriations
Committee, if this bill is enacted, there would be unknown,
potentially significant, cost pressures on the SDWSRF resulting
from eligibility for grants and loan forgiveness for an
increased number of water systems.
COMMENTS:
Need for the bill: According to the author,
Water utilities regulated by the CPUC are eligible for
water-related state and federal funding programs, like the
Prop.1 Water Bond, as long as the funding is used for projects
to benefit their customers. CPUC-regulated water utilities
are eligible for loans from the SDWSRF. This program, under
the State Water Board, assists water systems in financing the
cost of drinking water infrastructure projects needed to
achieve or maintain compliance with SDWA requirements.
CPUC-regulated water utilities are not eligible for loan
forgiveness under this statute.
SB 1456 expands the eligibility for loan forgiveness for
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capital improvements to all water systems serving severely
disadvantaged communities with fewer than 200 service
connections.
Safe Drinking Water State Revolving Fund (SDWSRF): The SDWSRF
provides low-interest loans, zero-interest loans, debt
refinancing, principal forgiveness, and grants to public water
systems for infrastructure improvements to correct system
deficiencies and improve drinking water quality.
The SDWSRF is funded by annual grants from the United States
Environmental Protection Agency and a federally required 20%
match from the state. The federal and state funds are used to
provide financial assistance for eligible projects. The
proceeds from these loans are then paid back, with interest,
into the SDWSRF in later years, providing funding for new loans
in the future.
Water companies regulated by the CPUC: The CPUC is responsible
for ensuring that California's investor-owned water utilities
deliver clean, safe, and reliable water to their customers at
reasonable rates. There are 108 investor-owned water utilities
under the CPUC's jurisdiction providing water service to about
16% of California's residents. Approximately 95% of that total
is served by nine large water utilities each serving more than
10,000 connections.
Under current law, only public agencies or not-for-profit water
companies are eligible for grants or principal loan forgiveness
through the SDWSRF. This bill would expand that eligibility by
allowing all community water systems, which include water
companies that are regulated by the CPUC to be eligible for loan
forgiveness and grants for capital improvements. The author
argues that it makes sense to allow CPUC regulated water
companies to be eligible for the grant and loan forgiveness
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element of the SDWSRF in light of the fact that the customers of
these water corporations pay taxes, along with the customers of
all other public water systems, which provide funding for these
programs.
Analysis Prepared by:
Josh Tooker / E.S. & T.M. / (916) 319-3965 FN:
0004273