BILL ANALYSIS �
AB 118
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Date of Hearing: April 10, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 118 (Committee on Environmental Safety and Toxic Materials)
As Introduced: January 14, 2013
Policy Committee: Environmental
Safety and Toxic Materials Vote: 7-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill makes numerous changes to the Safe Drinking Water
State Revolving Fund (SDWSRF) administered by the Department of
Health (DPH). Specifically, this bill
1)Authorizes DPH to adopt interim regulations for the SEWSRF not
subject to the provisions of the Administrative Procedures Act
(APA) and that may remain in effect for up to three years.
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)Declares that severely disadvantaged communities are unable to
afford SDWSRF loans and are 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
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
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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
financial capacity to operate and maintain its water system
(SDWSRF).
4)Possible minor DPH workload reduction from simplifying the DPH
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process for determining a community cannot afford a SDWSRF
loan (SDWSRF).
COMMENTS
1)Purpose . This bill is intended 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. This bill is a re-introduction of the
May 1, 2012 version of AB 2529 (Wieckowski) which passed off
of this committee's Suspense File. It was later amended to
modify the California Global Waters Solutions Act.
Analysis Prepared by : Jennifer Galehouse / APPR. / (916)
319-2081