BILL ANALYSIS �
AB 983
Page 1
Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS
Bob Wieckowski, Chair
AB 983 (Perea) - As Amended: March 31, 2011
SUBJECT : Safe Drinking Water State Revolving Fund.
SUMMARY : Authorizes the Department of Public Health (DPH) to
take specified actions, when implementing the Safe Drinking
Water State Revolving Fund (SDWSRF), to improve access to
financial assistance for projects serving small water systems
and disadvantaged communities. Specifically, this bill :
1)Updates the definition of "cost-effective project" to mean a
project that provides long-term access to safe drinking water
at a reasonable cost, which shall be calculated based upon the
capital costs and long-term viability of the project as well
as the affordability of continuing operation and maintenance
charges to ratepayers.
2)Defines a "small water system" as a public water system that
serves 3,300 or fewer connections or a population of 10,000 or
fewer.
3)Authorizes DPH, when implementing the SDWSRF, to improve
access to financial assistance for projects serving small
water systems by doing both of the following:
a) Establishing a payment process by which the recipient of
financial assistance would receive funds within 30 days of
the date DPH receives a project payment request, unless
DPH, within that 30-day period, determines the project
payment would not be in accordance with the terms of the
SDWSRF guidelines.
b) Utilizing wire transfers or other appropriate payment
procedures to expedite project payments.
4)Requires DPH, in establishing the priority list categories for
funding projects from the SDWSRF, to, after giving priority to
upgrade existing systems to meet drinking water standards,
prioritize projects that include consolidation with a small
water system that will enable that system to meet drinking
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water standards without regard to the project proponent,
provided the proponent is an eligible entity, as defined.
5)Makes small water systems serving severely disadvantaged
communities eligible to receive up to 100 percent of their
project costs in the form of principal forgiveness or grant
from the SDWSRF, if needed to ensure affordable water rates.
6)Authorizes DPH, for disadvantaged communities, to extend the
term of a loan from the SDWSRF beyond 20 years, but not beyond
the life of the project, in order to improve the affordability
of the project.
EXISTING LAW :
1)Under the California Safe Drinking Water Act (Health and
Safety Code (HSC) � 116275 et seq.):
a) Requires DPH to regulate drinking water and to enforce
the federal Safe Drinking Water Act and other regulations.
b) Requires DPH, in administering programs to fund
improvements and expansions of small community water
systems, to:
i) Give priority to funding projects in disadvantaged
communities; and,
ii) Encourage the consolidation of small community water
systems that serve disadvantaged communities in instances
where consolidation will help the affected agencies and
the state to meet specified goals (HSC � 116326).
c) Defines a "small community water system" as a community
water system that serves no more than 3,300 service
connections or a yearlong population of no more than 10,000
persons.
2)Under the Safe Drinking Water State Revolving Fund Law of 1997
(HSC � 116760 et seq.):
a) Authorizes DPH to implement the Safe Drinking Water
State Revolving Fund, as defined.
b) Requires DPH to establish a priority list of proposed
projects to be considered for funding. Requires DPH, in
doing so, to determine if improvement or rehabilitation of
the public water system is necessary to provide pure,
wholesome, and potable water in adequate quantity at
sufficient pressure for health, cleanliness, and other
domestic purposes. Requires DPH to establish criteria for
placing public water systems on the priority list for
funding.
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c) Requires that not more than 30 percent and not less than
15 percent of the total amount deposited in the SDWSRF may
be expended for grants.
d) Requires that not less than 15 percent of the total
amount deposited in the SDWSRF shall be expended for
providing loans and grants to public water systems that
regularly serve fewer than 10,000 persons, to the extent
those funds can be obligated for eligible projects.
e) Authorizes DPH to enter into contracts with applicants
for grants or loans in accordance, with the SDWSRF.
FISCAL EFFECT : Unknown.
COMMENTS :
Need for the bill : According to the author, "The California
Drinking Water State Revolving Fund provides loans and grants to
public water systems throughout the state for infrastructure and
other projects that provide safe drinking water to ratepayers.
The fund prioritizes assistance to disadvantaged communities by
allowing a small portion of the funding to be distributed as
grants, and also requires these projects to explore
consolidation with another water system as a way to resolve
their water problem and achieve an economy of scale that will
keep their water rates affordable. Currently, the state statute
allows up to 80% of a project to be funded as a grant, with the
exact percentage dependent on the community's ability to repay a
loan. Severely disadvantaged communities (those whose median
household income is 60% or less of the state median) are often
unable to repay even a 20% loan without raising their water
rates above the EPA's recommended maximum."
The author asserts, "The Department of Public Health (DPH),
while requiring that consolidation be studied as an alternative
to each project, does not provide sufficient incentive to make
consolidation occur, and restricts the capacity of the project
funded based on the size of the community most in need.
Regionalization projects with multiple consolidations are made
even more difficult because DPH requires the communities most in
need of assistance to serve as the primary project applicant in
order to receive high priority for funding, a task generally
beyond their ability. Finally, once approved, funding is based
on reimbursement. However, that reimbursement is often subject
to bureaucratic delays. This creates a hardship for
disadvantaged communities that lack the cash flow to pay
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invoices before reimbursement is received."
Safe Drinking Water State Revolving Fund (SDWSRF) : Congress
established the SDWSRF as part of the 1996 Safe Drinking Water
Act Amendments to better enable public water systems to comply
with national primary drinking water standards and to protect
public health. The SDWSRF provides financial assistance in the
form of capitalization grants to states to provide low interest
loans and other assistance to public water systems. In order to
receive these funds, states must provide a state match equal to
20 percent of the federal capitalization grants and must create
a drinking water state revolving fund program for public water
system infrastructure needs and other drinking water-related
activities. In response, California established the SDWSRF
through SB 1307 (Chapter 734, Statutes of 1997) to help fund the
state's drinking water needs.
Expedited payment process for loans to disadvantaged
communities : Proponents of the bill argue that because of the
significance of water quality projects to the public health,
small communities need loans for water quality project
improvements for which they are qualified to be disbursed
without delay. The legislature passed, and the Governor signed,
AB 2356 (Arambula) in 2008, which requires the State Water
Resources Control Board (SWRCB) to establish a payment process
by which the recipient of financial assistance for water quality
projects receives funds within 30 days of the date on which the
SWRCB receives a project payment request. AB 983 authorizes
DPH, when implementing the SDWSRF, to establish a payment
process by which the recipient of financial assistance would
receive funds within 30 days of the date DPH receives a project
payment request.
Loans for severely disadvantaged communitie s: Proponents of the
bill argue that severely disadvantaged communities, especially,
are often unable to take advantage of existing funds for
drinking water projects because they are unable to repay even
modest loans. Last year the Legislature passed, and the
Governor signed, AB 2515 (V. M. Perez), which authorizes DPH to
provide a grant from the SDWSRF for point-of-entry and
point-of-use water treatment systems if that system serves a
severely disadvantaged community. Similarly, AB 983 makes small
water systems serving severely disadvantaged communities
eligible to receive up to 100 percent of their project costs in
the form of principal forgiveness or grant from the SDWSRF, if
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needed to ensure affordable water rates.
Consolidation : According to DPH, funding for consolidation
projects is both authorized and encouraged by the SDWSRF
program. Consistent with the SDWSRF Intended Use Plan, funds
may be used for consolidation projects that improve the safety
of public water supplies by enabling noncompliant water systems
lacking the necessary Technical, Managerial, and Financial (TMF)
capacity to achieve compliance with safe drinking water
standards by consolidating with another water system that is in
compliance. AB 983 requires DPH, in establishing the priority
list categories for funding projects from the SDWSRF, to, after
giving priority to upgrading existing systems to meet drinking
water standards, prioritize projects that include consolidation
with a small water system that will enable that system to meet
drinking water standards without regard to the project
proponent.
Similar prior legislation :
AB 2515 (V. M. Perez, Chapter 601, Statutes of 2010).
Authorizes DPH to provide a grant from the SDWSRF for
point-of-entry and point-of-use water treatment systems.
AB 2356 (Arambula, Chapter 607, Statutes of 2008). Requires the
State Water Resources Control Board (SWRCB) to take specified
actions when allocating funds to small, disadvantaged
communities for wastewater collection, treatment or disposal
projects, including establishing a payment process pursuant to
which the recipient of financial assistance receives funds
within 30 days of the date on which the SWRCB receives a project
payment request.
AB 783 (Arambula, Chapter 614, Statutes of 2007). Directs DPH
to prioritize funding of water projects in disadvantaged
communities; directs DPH to promote, provide funds for studies
on, and prioritize funding for projects which consolidate small
public water systems in certain situations.
Technical amendments:
1)Instead of creating a new definition for "small water system,"
reference the existing definition for "small community water
system" in Health and Safety Code Section 116275(aa).
2)Reference the definition for "disadvantaged community" in
Water Code Section 79505.5.
AB 983
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REGISTERED SUPPORT / OPPOSITION :
Support
Alta Irrigation District
Asociacion de Gente Unida por el Aqua (AQUA)
California League of Conservation Voters
California Rural Legal Assistance Foundation
Catholic Charities Diocese of Stockton
Clean Water Action
Committee for a Better Seville
Community Water Center
County of Tulare
Environmental Justice Coalition for Water
Food and Water Watch
Natural Resource Defense Council
Planning and Conservation League
Self Help Enterprises
Southern California Watershed Alliance
Unitarian Universalist Legislative Ministry Action Network, CA
Unitarian Universalist Service Committee
United for Change in Tooleville
Urban Semillas
Vecinos Unidos (United Neighbors)
Winnemem Wintu Tribe
J. Steven Worthley, Tulare County Board of Supervisors
Several individuals
Opposition
None received.
Analysis Prepared by : Shannon McKinney / E.S. & T.M. / (916)
319-3965