California Legislature—2013–14 Regular Session

Assembly Bill No. 2738

Introduced by Committee on Environmental Safety and Toxic Materials (Assembly Members Alejo (Chair), Bloom, Stone, and Ting)

February 26, 2014

An act to amend Sections 116760.40, 116760.44, and 116761.70 of the Health and Safety Code, relating to drinking water, and making an appropriation therefor.

LEGISLATIVE COUNSEL’S DIGEST

AB 2738, as introduced, Committee on Environmental Safety and Toxic Materials. Safe Drinking Water State Revolving Fund: accounts.

Existing law, the Safe Drinking Water State Revolving Fund Law of 1997, authorizes the State Department of Public Health to administer the Safe Drinking Water State Revolving Fund, which is established in the State Treasury and continuously appropriated to the department to provide grants or revolving fund loans for the design and construction of projects for public water systems, as defined, to enable compliance with safe drinking water standards. Existing law authorizes the department to enter into an agreement with the federal government for matching federal contributions into the fund. Existing law requires federal funds to be deposited in the special accounts that are continuously appropriated to the department.

This bill would, in addition, establish the fees and charges account within the fund for deposit of prescribed administrative fees to be expended for administrative costs of providing assistance under these provisions, to the extent consistent with federal law.

Existing law authorizes the department to establish a reasonable fee schedule of administrative fees for loans to be paid by grant applicants, not to exceed 4% of the capitation grant.

This bill would, instead, authorize the administrative fees to include an applicant fee to reimburse the department for the costs of reviewing and approving applications, and a loan disbursement fee to reimburse the department for all other costs. The bill would authorize the department to annually adjust the fee schedule.

Existing law requires payment of charges incurred by the Attorney General in protection of the state’s interest in the use of funds under these provisions, not to exceed1⁄2 of 1% of the fund, to be paid as program expenses rather than administrative costs.

This bill would delete this requirement.

By changing the purposes for which continuously appropriated funds may be expended, this bill would make an appropriation.

Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 116760.40 of the Health and Safety Code
is amended to read:

116760.40.  

The department may undertake any of the following
actions to implement the Safe Drinking Water State Revolving
Fund:

(a) Enter into agreements with the federal government for federal
contributions to the fund.

(b) Accept federal contributions to the fund.

(c) Use moneys in the fund for the purposes permitted by the
federal act.

(d) Provide for the deposit of matching funds and other available
and necessary moneys into the fund.

(e) Make requests, on behalf of the state, for deposit into the
fund of available federal moneys under the federal act.

(f) Determine, on behalf of the state, that public water systems
that receive financial assistance from the fund will meet the
requirements of, and otherwise be treated as required by, the federal
act.

(g) Provide for appropriate audit, accounting, and fiscal
management services, plans, and reports relative to the fund.

(h) Take additional incidental action as may be appropriate for
adequate administration and operation of the fund.

(i) Enter into an agreement with, and accept matching funds
from, a public water system. A public water system that seeks to
enter into an agreement with the department and provide matching
funds pursuant to this subdivision shall provide to the department
evidence of the availability of those funds in the form of a written
resolution, or equivalent document, from the public water system
before it requests a preliminary loan commitment.

(j) Charge public water systems that elect to provide matching
funds a fee to cover the actual cost of obtaining the federal funds
pursuant to Section 1452(e) of the federal act (42 U.S.C. Sec.
300j-12) and to process the loan application. The fee shall be
waived by the department if sufficient funds to cover those costs
are available from other sources.

(k) Use money returned to the fund under Section 116761.85
and any other source of matching funds, if not prohibited by statute,
as matching funds for the federal administrative allowance under
Section 1452(g) of the federal act (42 U.S.C. Sec. 300j-12).

(l) Establish separate accounts or subaccounts as required or
allowed in the federal act and related guidance, for funds to be
used for administration of the fund and other purposes. Within the
fund the department shall establish the following accounts,
including, but not limited to:

(1) A fund administration account for state expenses related to
administration of the fund pursuant to Section 1452(g)(2) of the
federal act.

(2) A water system reliability account for department expenses
pursuant to Section 1452(g)(2)(A), (B), (C), or (D) of the federal
act.

(3) A source protection account for state expenses pursuant to
Section 1452(k) of the federal act.

(4) A small system technical assistance account for department
expenses pursuant to Section 1452(g)(2) of the federal act.

(5) A state revolving loan account pursuant to Section 1452(a)(2)
of the federal act.

(6) A wellhead protection account established pursuant to
Section 1452(a)(2) of the federal act.

begin insert

(7) A fees and charges account for state expenses in providing
assistance under this chapter.

end insert

(m) Deposit federal funds for administration and other purposes
into separate accounts or subaccounts as allowed by the federal
act.

(n) Determine, on behalf of the state, whether sufficient progress
is being made toward compliance with the enforceable deadlines,
goals, and requirements of the federal act and the California Safe
Drinking Water Act, Chapter 4 (commencing with Section 116270).

(o) To the extent permitted under federal law, including, but
not limited to, Section 1452(a)(2) and (f)(4) of the federal Safe
Drinking Water Act (42 U.S.C. Sec. 300j-12(a)(2) and (f)(4)), use
any and all amounts deposited in the fund, including, but not
limited to, loan repayments and interest earned on the loans, as a
source of reserve and security for the payment of principal and
interest on revenue bonds, the proceeds of which are deposited in
the fund.

(p) Request the Infrastructure and Economic Development Bank
(I-Bank), established under Chapter 2 (commencing with Section
63021) of Division 1 of Title 6.7 of the Government Code, to issue
revenue bonds, enter into agreements with the I-Bank, and take
all other actions necessary or convenient for the issuance and sale
of revenue bonds pursuant to Article 6.3 (commencing with Section
63048.55) of Chapter 2 of Division 1 of Title 6.7 of the
Government Code. The purpose of the bonds is to augment the
fund.

SEC. 2.  

Section 116760.44 of the Health and Safety Code is
amended to read:

116760.44.  

begin insert (a) end insert begin insert   end insert The department may deposit administrative
fees and charges paid by public water systems and other available
and necessary money into the administrative account of the fund.

begin insert

(b) (1) Notwithstanding subdivision (a), the department may
deposit the following moneys into the fees and charges account:

end insert begin insert

(A) Administrative fees received pursuant to Section 116761.70.

end insert begin insert

(B) Notwithstanding Section 16475 of the Government Code,
interest earned upon the moneys deposited into the fees and
charges account.

end insert begin insert

(2) The department may expend moneys in the fees and charges
account for administrative costs of providing assistance under this
chapter, to the extent consistent with federal law and regulations.

end insert

SEC. 3.  

Section 116761.70 of the Health and Safety Code is
amended to read:

116761.70.  

(a)  Not more than 4 percent of the capitalization
grant may be used by the department for administering this chapter.
The department may establish a reasonable schedule of
administrative fees for loans, which shall be paid by the applicant
begin insert and recipient, as appropriate, end insert to reimburse the state for the costs
of the state administration of this chapter.

begin delete

(b)  Charges incurred by the Attorney General in protection of
the state’s interest in the use of repayment of grant and loan funds
under this chapter shall be paid. These charges shall not be paid
from funds allocated for administrative purposes, but shall be
treated as a program expense not to exceed one-half of 1 percent
of the total amount deposited in the fund.

end delete begin insert

(b) The fee schedule authorized pursuant to subdivision (a) shall
be designed to generate total annual revenue in an amount that,
as closely as practicable, approximates without exceeding, the
total annual cost to the department for administration of this
chapter, including, but not limited to, the costs of servicing loans
made pursuant to this chapter.

end insert begin insert

(c) The fee schedule may contain, and the department may
assess, both of the following administrative fees:

end insert begin insert

(1) An application fee, to be paid by all applicants, to reimburse
the department for the costs of reviewing and approving the
application. The application fee shall be collected at the time of
submission of the application.

end insert begin insert

(2) A loan disbursal fee, to be paid by loan recipients, to pay
all other costs of the department associated with administering
this chapter, including, but not limited to, costs associated with
servicing the loan. In total, the loan disbursal fee shall not exceed
1 percent of the principal loan amount and may be assessed on,
or at the time of, each disbursement of loan funds. The department
may invoice the funding recipient for the loan disbursement fee.
The fee shall be due and payable by the funding recipient within
90 days following the date of the invoice. Loan disbursal fees shall
not be deferred during project construction.

end insert begin insert

(d) Notwithstanding subdivision (a), (b), or (c), if a funding
recipient demonstrates to the department that the assessment of
administrative fees would make the costs of the loan unaffordable
to a recipient, the department shall waive or reduce the fees, as
appropriate.

end insert begin insert

(e) The department shall annually adjust the fee schedule of
charges for loans to be issued in that fiscal year to set the fees at
a rate that will generate total annual revenue in an amount that,
as closely as practicable, approximates without exceeding, the
total annual cost to the department for administration of this
chapter during that fiscal year, including, but not limited to, the
costs of servicing loans made pursuant to this chapter.

end insert