BILL ANALYSIS �
AB 2011
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Date of Hearing: April 24, 2012
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Jared Huffman, Chair
AB 2011 (Gatto) - As Amended: April 18, 2012
SUBJECT : Water conservation grants for local revolving fund
programs
SUMMARY : Allocates $50 million from the Safe, Clean, and
Reliable Drinking Water Supply Act of 2012 (2012 Water Bond) to
fund grants that will allow local agencies to make low-interest
loans that assist their customers in carrying out water
conservation retrofit projects. Specifically, this bill :
1)Allocates $50 million from the 2012 Water Bond, if it should
pass, to the Department of Water Resources (DWR) to establish
the CalConserve program.
2)Provides that the CalConserve program shall provide grants to
urban retail water suppliers and agricultural water suppliers
for the implementation of local and regional water
conservation loan programs.
3)Requires DWR to develop program criteria, including but not
limited to geographic distribution of funds and minimum
requirements for local revolving loan programs.
4)Conditions grants to local water agencies on the following:
a) The local agency providing at least a 30% cost share
from nonstate sources;
b) Eligible projects demonstrating that they maximize
conservation benefits and are consistent with an adopted
integrated regional water management plan (IRWMP);
c) Eligible projects including, but not be limited to,
those that comply with DWR's model water efficient
landscape ordinance or an adopted local ordinance that is
at least as efficient as DWR's model landscape ordinance;
and,
d) A 15 year or less loan repayment period that may be paid
in equal installments added to a customer's regular bill.
5)Requires DWR to establish a uniform low interest rate that
local agencies shall charge for loans that is equal to half of
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the most recent General Obligation Bond rate.
6)Allows local water agencies administering revolving loan
programs to charge a reasonable administration fee repaid over
a loan's lifetime.
7)Becomes inoperative on January 1, 2015 unless a general
obligation bond act containing the funds specified under this
title is passed.
EXISTING LAW :
1)Places the 2012 Water Bond on the November 6, 2012 general
election and provides up to $11.4 billion in proceeds from the
sale of general obligation bonds.
2)Requires the state to achieve a 20% reduction in urban per
capita water use in California by December 31, 2020 and
requires each urban retail water supplier to comply with that
target.
FISCAL EFFECT : Unknown
COMMENTS : There is no existing program like CalConserve in
DWR, but comparisons to the State Water Resources Control
Board's Clean Water State Revolving Fund Program (CWSRF) are
useful. The CWSRF received money from the federal government
pursuant to the Clean Water Act and disburses $200 to $300
million annually for the construction of publicly-owned
wastewater, stormwater, and water reclamation facilities. The
CWSRF also charges a rate that is equivalent to 1/2 of the most
recent General Obligation Bond Rate.
In 2010 the federal government added a new CWSRF requirement
that, provided there were sufficient eligible projects, at least
20% of the grants should be used for projects to address green
infrastructure, water or energy efficiency improvements or other
environmentally innovative activities. However, the federal
program does not allow for the funding of projects on private
property.
Support Arguments : The author states that while the Department
of Public Health and the State Water Resources Control Board
both administer grant programs which offer low-cost loans for
public entities to finance high water-use efficiency retrofits,
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there are no similar low-cost loan programs available to private
entities, including homeowners, to finance retrofits. The
author also points out that a revolving fund would provide "a
self-renewing source of funding for water-use efficiency, which
would continue to be available to the public between water
bonds" while also "leveraging private investment in water-use
efficiency" and helping "cities, counties, and water districts
meet the state's 20% by 2020 water-use reduction goals."
Supporters state that "unfortunately, property owners are
finding themselves short on equity to draw from for these types
of home improvement projects. AB 2011 establishes a new program
that would not only assist property owners with achieving water
efficient landscapes," it would also help homeowners "who need
to reach compliance with existing retrofit mandates."
Why now? There is great uncertainty at this point as to whether
the Water Bond will remain on the November 2012 ballot. The
Water Bond was part of an historic 5-bill package of legislation
in 2009 aimed at resolving some of California's most pressing
water issues. However, polling in 2010 revealed that with
California's economy in poor condition voters had little
appetite for an $11.4 billion bond. In 2010, AB 1265
(Caballero) made some substantive changes to the bond language
and moved it to the November 2012 ballot. However, the slow
economic recovery has once again called the viability of a bond
into question.
This bill does not currently specify which title of the 2012
Water Bond would fund the CalConserve program. However, at least
one title explicitly directs $250 million towards expenditures,
grants, and loans for water conservation and water use
efficiency plans, projects, and programs. Historically, DWR
administers those types of funds through competitive grants
aimed at projects and programs that are consistent with a water
agency's IRWMP. This bill is consistent with that practice in
that it requires DWR to develop program criteria and specifies
that eligible projects must be consistent with an IRWMP.
Committee staff suggests that the bill be amended to clarify
which title of the 2012 Water Bond would fund CalConserve.
REGISTERED SUPPORT / OPPOSITION :
Support
AB 2011
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California Association of Realtors
Opposition
None on file.
Analysis Prepared by : Tina Cannon Leahy / W., P. & W. / (916)
319-2096