BILL ANALYSIS �
AB 21
Page 1
ASSEMBLY THIRD READING
AB 21 (Alejo and V. Manuel P�rez)
As Amended February 14, 2013
Majority vote
ENVIRONMENTAL SAFETY 6-0 APPROPRIATIONS 17-0
-----------------------------------------------------------------
|Ayes:|Alejo, Dahle, Bloom, |Ayes:|Gatto, Harkey, Bigelow, |
| |Donnelly, Stone, Ting | |Bocanegra, Bradford, Ian |
| | | |Calderon, Campos, |
| | | |Donnelly, Eggman, Gomez, |
| | | |Hall, Ammiano, Linder, |
| | | |Pan, Quirk, Wagner, Weber |
-----------------------------------------------------------------
SUMMARY : Creates the Safe Drinking Water Small Community
Emergency Grant Fund and authorizes the Department of Public
Health (DPH) to assess an annual charge to be deposited in this
fund in lieu of interest that would otherwise be charged on Safe
Drinking Water State Revolving Fund (SDWSRF) loans.
Specifically, this bill :
1)Authorizes, for any loans made for projects meeting the
eligibility criteria of SDWSRF Law, DPH to assess an annual
charge to be deposited in the grant fund in lieu of interest
that would otherwise be charged.
2)Authorizes the monies in the grant fund to be for grants for
emergency drinking water projects that meet the requirements
stated in Emergency Clean Water Grant Fund (ECWGF) provisions
and that serve disadvantaged and severely disadvantaged
communities.
3)Requires, for the purpose of approving grants, DPH to give
equal priority to projects that serve severely disadvantaged
communities.
4)Requires that charge in lieu of interest funds be expended in
a manner consistent with federal Environmental Protection
Agency (US EPA) Drinking Water State Revolving Fund (DWSRF)
grant regulations.
EXISTING LAW :
AB 21
Page 2
1)Authorizes, pursuant to the federal Safe Drinking Water Act
(SDWA), the US EPA to make funds available to drinking water
systems to finance infrastructure improvements.
2)Requires, pursuant to Safe Drinking Water State Revolving Fund
Law, DPH to implement the SDWSRF, which provides funding to
correct public water system deficiencies (Health and Safety
Code (HSC) Section 116760 et seq.).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, potentially millions of dollars could shift from the
SDWSRF to the newly created Safe Drinking Water Small Community
Emergency Grant Fund. The bill would result in on-going
absorbable costs to DPH to administer the new grant program that
would otherwise be spent administering the SDWSRF.
COMMENTS :
Need for the bill : According to supporters, communities with a
single drinking water source are the most vulnerable to
interruption of their water supply. When that community is very
small and low-income, that vulnerability is increased, as they
lack the economies of scale and financial resources to address
their problem. While the state does provide technical
assistance and grants for capital projects, it is very difficult
for these communities to access the funding. Some water systems
have been in the waiting list for the SDWSRF since its inception
in 1998; each year they pass up the opportunity for funding
because of the onerous requirements attached to the funding.
Supporters continue that the ECWGF was created within DPH to
provide immediate relief to water systems with a disruption in
their potable water supply, including exemptions from
contracting and procurement requirements as needed. While DPH
received $10 million in funding from Proposition 84 in 2006 to
fund its emergency drinking water program, this resource is not
renewable, and DPH has only expended or allocated about half of
the funds.
Actions for addressing groundwater and drinking water
AB 21
Page 3
contamination : In June 2012, Governor Jerry Brown convened a
Drinking Water Stakeholder Group. The Drinking Water
Stakeholder Group, comprised of representatives from, among
others, California State and local agencies, the agricultural
community, the environmental justice community, academia, and
other water related entities, submitted its "Final Report to the
Governor's Office," on August 20, 2012.
On November 9, 2012, the Stakeholder Group submitted
"Recommendations for Amendments to the 2013 SDWSRF Intended Use
Plan (IUP)," which are intended to ensure that DPH's SDWSRF IUP
will most effectively implement the goals of the Stakeholder
Group. Among the recommendations was to, "Consider establishing
a fee in lieu of interest assessed on a portion of the repayment
stream to provide continuous funding for eligible (capital)
projects in the emergency fund."
This bill is intended to expedite SDWSRF funding disbursal for
drinking water solutions for disadvantaged communities, and is
based on the above recommendations of the Drinking Water
Stakeholder Group.
Fee in lieu provisions : Charging a fee in lieu of collecting
interest on loans disbursed from the revolving funds in not a
new concept in California. AB 2356 (Arambula), Chapter 609,
Statutes of 2008, created the Clean Water State Revolving Fund
(CWSRF) Small Community Grant (SCG) Fund, which authorized the
SWRCB to assess an annual charge on existing CWSRF financing
agreements for deposit into the SCG Fund. The annual charge is
in lieu of interest that would otherwise be charged in
association with a CWSRF financing agreement.
Charging a fee in lieu of interest is an alternative means of
capitalizing on revolving fund loans. This funding mechanism,
since it falls outside of the requirements associated with the
collection of interest, may enable fund disbursement to bypass
some of the oft onerous disbursement and grantee qualification
requirements of the revolving funds. Revolving fund funds
collected from loan recipients, whether in the form of interest
or a fee, likely do, however, have to follow the general funding
criteria of each fund.
This bill intends to fund those projects that meet both the
state's drinking water emergency fund criteria and DWSRF funding
AB 21
Page 4
requirements. Allowable expenditures under the emergency fund
criteria that would also likely be allowable under federal DWSRF
requirements include:
1)Improvements of the existing water supply system;
2)Hookups with adjacent water systems; and,
3)Design, purchase and installation of water treatment
technologies.
Analysis Prepared by : Bob Fredenburg / E.S. & T.M. / (916)
319-3965
FN: 0000817