BILL ANALYSIS �
AB 21
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CONCURRENCE IN SENATE AMENDMENTS
AB 21 (Alejo and V. Manuel P�rez)
As Amended February 14, 2013
Majority vote
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|ASSEMBLY: |77-0 |(May 28, 2013) |SENATE: |38-0 |(September 9, |
| | | | | |2013) |
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Original Committee Reference: E.S. & T. M.
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. Authorizes
the monies in the grant fund to be for grants for emergency
drinking water projects that meet the requirements stated in the
Emergency Clean Water Grant Fund (ECWGF) provisions that serve
disadvantaged and severely disadvantaged communities.
The Senate amendments limit the amount of funds that may be
placed in the ECWGF to no more that $50 million.
EXISTING LAW :
1)Authorizes, pursuant to the federal Safe Drinking Water Act
(SDWA), the US Environmental Protection Agency to make funds
available to drinking water systems to finance infrastructure
improvements.
2)Requires, pursuant to the Safe Drinking Water State Revolving
Fund Law, DPH to implement the SDWSRF, which provides funding
to correct public water system deficiencies.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)Unknown on-going costs, possibly in hundreds of thousands to
millions of dollars, in the form of reduced revenues to the
Safe Drinking Water State Revolving Fund (SDWSRF) (special)
due to forgone interest payments.
2)One-time costs of approximately $100,000 from the SDWSRF for
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the development of regulations guiding the allocation of the
fund.
3)Unknown, but likely minimal, increases administrative costs to
SDWSRF for the administration of the fund.
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 state 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
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, "Consider establishing a
fee in lieu of interest assessed on a portion of the repayment
stream to provide continuous funding for eligible (capital)
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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 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 often onerous disbursement and grantee qualification
requirements of the revolving funds. Revolving fund monies
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.
Analysis Prepared by : Bob Fredenburg / E.S. & T.M. / (916)
319-3965
FN:
0002208