BILL ANALYSIS �
AB 2529
Page 1
Date of Hearing: May 25, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2529 (Wieckowski) - As Amended: May 1, 2012
Policy Committee: Environmental
Safety and Toxic Materials Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill makes numerous changes, sought by the Department of
Public Health (DPH), to DPH's administration of the Safe
Drinking Water State Revolving Fund (SDWSRF). Most
significantly, this bill:
1)Authorizes DPH to adopt interim regulations, which are exempt
from rulemaking provisions of the Administrative Procedures
Act (APA), and which may remain in effect for up to three
years, to administer the SDWSRF and the federal Safe Drinking
Water Act.
2)Requires an applicant for SDWSRF funding to (a) demonstrate it
has technical, managerial and financial capacity to operate
and maintain its water system, including the project,
according to all legal requirements for at least 20 years,
consistent with DPH guidelines, or (b) submit a plan,
acceptable to DPH, for achieving this capacity by the time the
project is to be completed, and (c) complete a rate study.
3)Deems severely disadvantaged communities (meaning those with a
median household income (MHI) less than 60% of statewide MHI)
as unable to afford SDWSRF loans and, therefore, eligible to
receive grants.
4)Limits the proportion of grants from the SDWSRF to no more
than 30% of the annual capitalization grant provided by the
federal government.
5)Authorizes the full cost of a project to be funded by
interest-bearing loans, provided the applicant has the ability
AB 2529
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to repay the loan, as determined by DPH.
6) Authorizes DPH to, as part of its annual Intended Use Plan,
to establish a reasonable schedule of administrative fees for
loans, which DPH is authorized to levy under current law.
FISCAL EFFECT
1)Increased risk of default on loans made by DPH to cover the
full cost of a project to be funded by interest-bearing loans.
(Current DPH regulation limits interest-bearing loans to
projects of no more than $20 million. Under this bill DPH
could make interest-bearing loans for the full cost of a
project, which could exceed $20 million, thereby increasing
financial consequences to the state, potentially by millions
of dollars, resulting from default. DPH reassures that
applicants authorized to receive interest-bearing loans from
the SDWSRF are those most capable of repaying the loans and,
therefore, least likely to default.)
2)Increased viability of maintaining the SDWSRF as a revolving
fund, resulting from limiting the proportion of grants from
the SDWSRF to no more than 30% of the annual capitalization
grant provided by the federal government. Current law limits
grants to no more than 30% of the overall amount deposited in
the fund, which may diminish fund amounts over time.
3)Minor, absorbable costs to DPH, at least partially covered by
the administrative fee authorized by this bill, to:
a) Adopt interim regulations (SDWSRF).
(DPH reports that it completes the workload required to
develop interim regulations when it completes the initial
work required to develop standard regulations, which
existing law still requires DPH to do. Therefore,
development of interim regulations should not significantly
increase DPH workload.)
b) Review applicant demonstrations of its technical,
managerial and financial capacity to operate and maintain
its water system or plan to achieve such capacity (SDWSRF).
c) Adopt guidelines by which an applicant for SDWSRF
funding demonstrates it has technical, managerial and
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financial capacity to operate and maintain its water system
(SDWSRF).
4)Possible workload reduction of a minor amount to DPH resulting
from simplifying the process by which DPH determines a
community cannot afford a SDWSRF loan (SDWSRF).
COMMENTS
1)Rationale . DPH (sponsor) describes this bill as a
modification of the Safe Drinking Water State Revolving Fund
statutes to ease the process of providing funds to correct
small water system deficiencies, particularly water systems
serving severely disadvantaged communities.
2)Background. The DPH administers a safe drinking water
regulatory program for all publicly and privately owned water
systems of 15 or more service connections. The department
administers the Safe Drinking Water Revolving Fund, which
provides loans and grants to local agencies for safe drinking
water system upgrades. The fund receives federal monies, for
which the state must provide a 20% match. Recently, DPH
reported the federal drinking water allocation will be
approximately $90 million for each of the next several years.
3)Related Legislation. AB 2208 (Perea) requires DPH to give
funding priority to safe drinking water projects that
consolidate services, especially in unincorporated
communities. The bill is pending before this committee.
4)There is no opposition formally registered to this bill.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081