BILL ANALYSIS �
AB 983
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Date of Hearing: May 18, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 983 (Perea) - As Amended: May 5, 2011
Policy Committee: Environmental
Safety and Toxics Material Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill makes several changes in the administration of the
Safe Drinking Water State Revolving Fund (SDWSRF) to the
advantage of projects that benefit small community water systems
and disadvantaged communities. Specifically, this bill:
1)Authorizes the Department of Public Health, when implementing
the Safe Drinking Water Act, to improve access to financial
assistance for projects serving small community water systems
by establishing a payment process by which the recipient of
financial assistance would receive funds within 30 days of
project payment request and by utilizing wire transfers or
other expedited payment procedures.
2)Requires DPH, in establishing the priority list categories for
funding projects from the fund, to give priority to projects
that include consolidation with a small water system that will
enable the system to meet drinking water standards.
3)Makes small water systems serving severely disadvantaged
communities eligible to receive up to 100 % of their project
costs in the form of principal forgiveness or grant from the
fund.
4)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.
5)Changes the definition of "cost-effective project" to mean one
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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.
FISCAL EFFECT
1)Minor, absorbable costs to DPH to meet payment timeframes and
prioritize projects.
2)Cost pressure to DPH of an unknown amount, but potentially in
the millions of dollars, to fund up to 100%, rather than up to
80%, of project costs for small water systems serving severely
disadvantaged communities. (SDWSRF.)
3)Potential delay in loan repayment by disadvantaged
communities, consistent with this bill. (SDWSRF.)
COMMENTS
1)Rationale . The author contends that small, disadvantaged
communities often lack the resources that would allow them to
access monies from the fund to improve their drinking water
systems, which often suffer from contamination. This
difficulty persists, the author claims, despite statutory and
regulatory guidelines meant to improve the access of such
communities to the fund. The author cites, for example, the
ability of DPH to provide grants of up to 80% of a project
cost, but notes that disadvantaged communities frequently are
unable to cover the remaining 20% of project costs. The
author also contends it is particularly important that small
and disadvantaged communities quickly receive reimbursement
for project costs as such communities have little flexibility
in managing cash flow.
2)Background. The 1987 Amendments to the Federal Clean Water
Act provide for the establishment of revolving loan programs
in each state. California's loan program, administered by
DPH, is funded by federal grants, state funds, and revenue
bonds secured by loan repayments. The revolving loan program
provides low-interest loan funding for construction of
publicly-owned wastewater treatment facilities, local sewers,
sewer interceptors, water reclamation facilities,
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implementation of nonpoint pollution source projects or
programs, development and implementation of estuary
Comprehensive Conservation and Management Plans, and
stormwater treatment. The revolving loan program typically
provides $200-300 million worth of financial assistance
annually primarily to local agencies, in the form of 20-year
loans at subsidized interest rates ranging from 2.5% to 3.5%.
Statute defines a small community water system as a system for
the provision of piped water to the public for human
consumption that serves at least five, but not more than 14,
service connections and does not regularly serve drinking
water to more than an average of 25 individuals daily for more
than 60 days out of the year. It also defines a disadvantaged
community as one with an annual median household income that
is less than 80% of the statewide annual median household
income and a severely disadvantaged community as one with a
median household income less than 60% of the statewide
average.
3)Support. This bill is supported by a long list of
organizations advocating for social and economic justice and
environmental protection, as well as local public entities,
such as the County of Tulare, in which there are many small,
disadvantaged communities suffering from poor water quality.
4)There is no formal opposition registered to this bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081