2007 California Water Code Chapter 10.7. California Safe Drinking Water Bond Law Of 1986

CA Codes (wat:13895-13898.5)

13895.  This chapter shall be known and may be cited as the
California Safe Drinking Water Bond Law of 1986.



13895.1.  The Legislature hereby finds and declares all of the
following:
   (a) The State Department of Health Services has discovered toxic
chemicals in 126 of California's large public drinking water systems.

   (b) Many of the chemical contaminants in California's drinking
water supplies are known or suspected of causing cancer, birth
defects, and other serious illnesses.
   (c) Following the passage of the California Safe Drinking Water
Bond Law of 1984, the State Department of Health Services received
1,359 requests for eight hundred twenty-five million dollars
(5,000,000) to improve public drinking water systems.  The
department has determined that an additional five hundred million
dollars (0,000,000) is needed immediately for public water systems
to correct deficiencies which pose a health hazard to enable
hundreds of systems to meet mininum health standards.
   (d) New monitoring programs for small public water systems are
expected to identify many new toxic contamination problems.  It is
unlikely that these problems can be solved without financial
assistance from the State of California.



13895.2.  The Legislature further finds and declares that the
protection of the health, safety, and welfare of the people of
California requires that water supplied for domestic purposes be at
all times pure, wholesome, and potable, and that it is in the
interest of the people that the State of California provide technical
and financial assistance to the end that the people of California
are assured a safe, dependable, and potable supply of water for
domestic purposes and that water is available in adequate quantity at
sufficient pressure for health, cleanliness, and other domestic
purposes.



13895.3.  The Legislature further finds and declares that it is the
intent of the Legislature to provide for the upgrading of domestic
water supply systems to assure that all domestic water supplies at
least meet minimum domestic water supply standards established under
Chapter 4 (commencing with Section 116275) of Part 12 of Division 104
of the Health and Safety Code.



13895.4.  The State General Obligation Bond Law (Chapter 4
(commencing with Section 16720) of Part 3 of Division 4 of Title 2 of
the Government Code) is adopted for the purpose of the issuance,
sale, and repayment of, and otherwise providing with respect to, the
bonds authorized to be issued pursuant to this chapter, and the
provisions of that law are included in this chapter as though set out
in full in this chapter, except that notwithstanding anything in the
State  General Obligation Bond Law, the bonds authorized hereunder
shall bear the rates of interest, or maximum rates, as may, from time
to time, be fixed by the Treasurer, with the approval of the
committee, and the maximum maturity of bonds shall not exceed 50
years from the date of the bonds, or from the date of each respective
series.  The maturity of each respective series shall be calculated
from the date of the series.



13895.5.  As used in this chapter, and for purposes of this chapter
as used in the State General Obligation Bond Law (Chapter 4
(commencing with Section 16720) of Part 3 of Division 4 of Title 2 of
the Government Code), the following terms shall have the following
meanings:
   (a) "Committee" means the Safe Drinking Water Finance Committee
created by Section 13895.6.
   (b) "Department" means the Department of Water Resources.
   (c) "Domestic water system" means a system for the provision to
the public of piped water for human consumption, if the system has at
least five service connections or regularly supplies water to at
least 25 individuals.  The term includes any water supply, treatment,
storage, and distribution facilities under the control of the
operator of the system.
   (d) "Fund" means the California Safe Drinking Water Fund.
   (e) "Supplier" or "supplier of water" means any person,
partnership, corporation, association, or other entity or political
subdivision of the state which owns or operates a domestic water
system.
   (f) "Federal assistance" means funds available, or which may
become available, to a supplier either directly or through allocation
by the state from the federal government as grants or loans for the
improvement of domestic water systems.
   (g) "Treatment works" means any devices or systems used in the
treatment of water supplies, including necessary lands, which render
water supplies pure, wholesome, and potable for domestic purpose.
   (h) "Project" means proposed facilities for the construction,
improvement, or rehabilitation of the domestic water system, and may
include water supply, treatment works, and all or part of a water
distribution system, if necessary to carry out the purpose of this
chapter.
   (i) "Public agency" means any city, county, city and county,
district, joint powers authority, or other political subdivision of
the state which owns or operates a domestic water system.  For
purposes of this chapter, Chapter 10.2 (commencing with Section
13810), Chapter 10.5 (commencing with Section 13850), and Chapter
10.6 (commencing with Section 13880), a political subdivision of the
state may be any public agency.



13895.6.  The Safe Drinking Water Finance Committee is hereby
created.  The committee shall consist of the Governor, the Treasurer,
the Director of Finance, the Director of Water Resources, and the
State Director of Health Services or their designated
representatives.  A majority of the committee may act for the
committee.



13895.7.  There is in the State Treasury the California Safe
Drinking Water Fund, which fund is hereby created.



13895.8.  The committee may create a debt or debts, liability or
liabilities, of the State of California, in an aggregate amount of
one hundred million dollars (0,000,000) in the manner provided in
this chapter.  The debt or debts, liability or liabilities, shall be
created for the purpose of providing the money to be used for the
objects and works specified in Section 13895.9.



13895.9.  (a) An aggregate amount of one hundred million dollars
(0,000,000) of the moneys in the fund are hereby continuously
appropriated and shall be used for the purposes set forth in this
section and Section 13898.
   (b) The department may enter into contracts with suppliers having
authority to construct, operate, and maintain domestic water systems,
for loans to suppliers to aid in the construction of projects that
will enable the supplier to meet, at a minimum, safe drinking water
standards established pursuant to Chapter 4 (commencing with Section
116275) of Part 12 of Division 104 of the Health and Safety Code.
   (c) Any contract entered into pursuant to this section may include
provisions as agreed by the parties thereto, and the contract shall
include, in substance, all of the following provisions:
   (1) An estimate of the reasonable cost of the project.
   (2) An agreement by the department to loan to the supplier, during
the progress of construction or following completion of construction
as agreed by the parties, an amount that equals the portion of
construction costs found by the department to be eligible for a state
loan.
   (3) An agreement by the supplier to repay the state over a period
not to exceed 50 years, (A) the amount of the loan, (B) the
administrative fee as described in Section 13897, and (C) interest on
the principal, that is the amount of the loan plus the
administrative fee.
   (4) An agreement by the supplier, (A) to proceed expeditiously
with, and complete, the project, (B) to commence operation of the
project upon completion thereof, and to properly operate and maintain
the project in accordance with the applicable provisions of law, (C)
to apply for, and make reasonable efforts to secure, federal
assistance for the project, (D) to secure approval of the department
and of the State Department of Health Services before applying for
federal assistance in order to maximize and best utilize the amounts
of that assistance available, and (E) to provide for payment of the
supplier's share of the cost of the project, if any.
   (d) Bond proceeds may be used for a grant program in accordance
with this chapter, with grants provided to suppliers that are
political subdivisions of the state that are otherwise unable to meet
minimum safe drinking water standards established pursuant to
Chapter 4 (commencing with Section 116275) of Part 12 of Division 104
of the Health and Safety Code.  The total amount of grants made
pursuant to this chapter shall not exceed twenty-five million dollars
(,000,000).
   (e) Notwithstanding any other provision, the proceeds of any bonds
authorized to be issued under the California Safe Drinking Water
Bond Law of 1976 (Chapter 10.5 (commencing with Section 13850)), and
the California Safe Drinking Water Bond Law of 1984 (Chapter 10.2
(commencing with Section 13810)) that are unissued and uncommitted on
the effective date of this chapter, shall be used for loans and
grants to suppliers in accordance with the terms, conditions, and
purposes of this chapter.  Loans made after November 6, 1984,
pursuant to Chapter 10.2 (commencing with Section 13810) shall carry
an interest rate calculated as prescribed in Section 13897.3.



13896.  (a) The department may make state grants to suppliers that
are political subdivisions of the state, from moneys in the fund
available for that purpose pursuant to subdivision (d) of Section
13895.9, to aid in the construction of projects that will enable the
public agency to meet, at a minimum, safe drinking water standards
established pursuant to Chapter 4 (commencing with Section 116275) of
Part 12 of Division 104 of the Health and Safety Code.  A grant may
be made by the department only upon the specific approval of the
Legislature, by an act enacted after the receipt of a report filed
pursuant to Section 13896.2.
   (b) Any contract for a grant entered into pursuant to this chapter
may include provisions as agreed by the parties thereto, and the
contract shall include, in substance, all of the following
provisions:
   (1) An estimate of the reasonable cost of the project.
   (2) An agreement by the department to grant to the public agency,
during the progress of construction or following completion of
construction as agreed by the parties, an amount that equals the
portion of construction costs found by the department to be eligible
for a state grant.
   (3) An agreement by the public agency, (A) to proceed
expeditiously with, and complete, the project, (B) to commence
operation of the project upon completion thereof, and to properly
operate and maintain the project in accordance with the applicable
provisions of law, (C) to apply for, and make reasonable efforts to
secure, federal assistance for the project, (D) to secure approval of
the department and of the State Department of Health Services before
applying for federal assistance in order to maximize and best
utilize the amounts of that assistance available, and (E) to provide
for payment of the public agency's share of the cost of the project,
if any.



13896.1.  Applications for grants under this chapter shall be made
to the department in the form and with the supporting material as
prescribed by the department.



13896.2.  The department shall prepare a report on each grant
application pursuant to this chapter.  The report shall be filed with
the Legislature, if it is  in session or, if it is not in session,
with the Joint Rules Committee. The department shall be authorized to
make the grant only upon the specific approval of the grant by the
Legislature, by an act enacted after the receipt of the report from
the department.



13896.3.  (a) Loans and grants may be made only for projects for
domestic water systems.  The State Department of Health Services may
make reasonable allowance for future water supply needs and may
provide for additional capacity when excessive costs would be
incurred by later enlargement.  The loans and grants may be made for
all, or any part, of the cost of constructing, improving, or
rehabilitating any system when, in the judgment of the State
Department of Health Services, improvement or rehabilitation is
necessary to provide pure, wholesome, and potable water in adequate
quantity at sufficient pressure for health, cleanliness, and other
domestic purposes.  The State Department of Health Services shall
determine and notify applicants of eligibility of components
requested to be included in the proposed project.  The department
shall use this determination as a basis for disbursing funds.  No
single public agency shall receive grants pursuant to this chapter
totaling more than four hundred thousand dollars (0,000).  Loans
may be made to  provide for the purchase of a water system or the
purchase of watershed lands.  No loan to an individual supplier shall
exceed the sum of five million dollars  (,000,000), unless the
Legislature by an act raises the  limit specified in this section.
   (b) Upon receipt of an application for a grant or loan pursuant to
this chapter, the department shall propose to the applicant
improvements to the applicant's water development, distribution, and
utilization system which will conserve water in a cost-effective
manner.  These improvements may include, but need not be limited to,
leak detection and repair programs, valve repair and replacement,
meter calibration and replacement, physical improvements to achieve
corrosion control, distribution and installation of water
conservation devices and fixtures, and other capital improvements
which can be demonstrated to conserve water in a cost-effective
manner.  The department and applicant may agree to include these
capital improvements in the grant or loan.  Failure by the applicant
to include water conservation capital improvements in the grant or
loan application shall not be sufficient cause for the department to
refuse to make the grant or loan.



13896.4.  An application for a grant pursuant to this chapter shall
not be approved by the department, unless the department determines
that the public agency is otherwise unable to meet minimum safe
drinking water standards established pursuant to Chapter 4
(commencing with Section 116275) of Part 12 of Division 104 of the
Health and Safety Code.
   No grant shall be made by the department except upon approval by
the State Department of Health Services of project plans submitted by
the applicant and upon written approval by the State Department of
Health Services that the proposed project is consistent with Chapter
4 (commencing with Section 116275) of Part 12 of Division 104 of the
Health and Safety Code.


13896.5.  First priority for grants shall be granted to public
agencies having immediate health related problems, as certified by
the State Department of Health Services.  Additional high priority
shall be granted to projects to correct immediate problems, as
opposed to grants for construction of projects to meet future growth
needs.



13896.6.  First priority for loans shall be given to suppliers with
the most critical public health problems.  Priority for loans shall
also be given to suppliers which have a lesser capability to
reasonably finance system improvements.


13896.7.  Preliminary design work, including a cost estimate for the
project,  shall be completed before a loan or grant is awarded.
Operation and maintenance costs shall be the responsibility of the
supplier and may not be considered as part of the project cost.
Costs for planning and preliminary engineering studies may be
reimbursed following the receipt of a loan or grant, subject to
approval by the department and the State Department of Health
Services.


13896.8.  No application for a grant may be made pursuant to this
chapter unless the public agency has also applied for a loan pursuant
to this chapter. A public agency shall be eligible for a grant only
to the extent that the department finds that the agency is found
unable to repay the full costs of a loan.
   If the department has determined that the applicant is unable to
repay the full costs of a loan, the applicant may also file for a
grant.  Upon receipt of a grant application, the department shall
determine that portion of the full costs  that the applicant is
capable of repaying.  Grant funds shall only be provided for that
portion that the applicant is not capable of repaying.



13896.9.  Grant funds shall be expended by the public agency within
three years of the making of the grant.  No grant funds may be
expended by the public agency unless the public agency is able to
demonstrate to the department, within one year of the making of the
grant, supported by an acceptable bid, that the amount to be expended
for the project will be within 20 percent of the public agency's
cost estimate for the project.



13897.  For the purpose of administering this chapter, the total
expenditures of the department and the State Department of Health
Services may not exceed 5 percent of the total amount of the bonds
authorized to be issued under this chapter.  The department shall
establish a reasonable schedule of administrative fees for loans,
which fees shall be paid by the supplier pursuant to Section 13895.9,
to reimburse the state for the costs of state administration of this
chapter.
   Charges incurred by the Attorney General in protecting the state's
interests in the use and repayment of grant and loan funds under
this chapter shall be paid from the proceeds of bond sales under this
chapter.  These charges shall not be paid from funds allocated for
administrative purposes, but shall be treated as a program expense
not to exceed 1.5 percent of the total amount of the bonds authorized
to be sold under this chapter.



13897.1.  As much of the moneys in the fund as may be necessary
shall be used  to reimburse the General Obligation Bond Expense
Revolving Fund pursuant to Section 16724.5 of the Government Code.



13897.2.  Repayment of all or part of the principal, which is the
loan plus the administrative fee, may be deferred during a
development period not exceeding 10 years within the maximum 50-year
repayment period, when, in the department's judgment, the development
period is justified under the circumstances.  Interest on the
principal shall not be deferred.  Repayment of principal which is
deferred during a development period may, at the option of the
supplier, be paid in annual installments during the remainder of the
loan repayment period.


13897.3.  The department shall annually establish the interest rate
for loans made pursuant to this chapter at 50 percent of the average
interest rate, computed by the true interest cost method, paid by the
state on general obligation bonds for the prior calendar year.  All
loans made pursuant to this chapter shall carry the established
interest rate for the calendar year in which the funds are  committed
to the loan, as of the date of the letter of commitment from the
department, and shall remain at that interest rate for the duration
of the loan.


13897.4.  (a) The department, after public notice and hearing and
with the concurrence of the State Department of Health Services,
shall adopt rules and regulations necessary to carry out the purposes
of this chapter.  The regulations shall include, but not be limited
to, criteria and procedures for establishing the eligibility of a
supplier.
   (b) The department shall adopt rules and regulations that, in its
judgment, will most effectively carry out this chapter in the public
interest, to the end that the people of California are most
efficiently and most economically provided supplies of pure,
wholesome, and potable domestic water. The rules and regulations may
provide for the denial of funds when the purposes of this chapter may
most economically and efficiently be attained by means other than
the construction of the proposed project.
   (c) Notwithstanding subdivision (a) or any other provision of law,
existing rules and regulations adopted by the department pursuant to
the California Safe Drinking Water Bond Law of 1984 (Chapter 10.2
(commencing with Section 13810)) which are in effect on the effective
date of this chapter, may, at the option of the department, be
utilized upon voter approval of this chapter for purposes of
implementing this chapter.  The department, with the concurrence of
the State Department of Health Services, may subsequently revise
those rules and regulations pursuant to Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code as necessary to implement provisions of this chapter which
differ from Chapter 10.2 (commencing with Section 13810) or for any
other reason to carry out the purposes of this chapter.



13897.5.  The State Department of Health Services shall notify
suppliers that may be eligible for loans pursuant to this chapter of
(a) the purposes of this chapter and (b) the rules and regulations
adopted by the department.


13897.6.  (a) The State Department of Health Services, after public
notice and hearing and with the advice of the department, shall, from
time to time, establish a priority list of suppliers to be
considered for financing.
   (b) Notwithstanding subdivision (a) or any other provision of law,
the priority list established by the State Department of Health
Services pursuant to the California Safe Drinking Water Bond Law of
1984 (Chapter 10.2 (commencing with Section 13810)) in effect on the
effective date of this chapter may, at the option of the State
Department of Health Services, be utilized upon voter approval of
this chapter until the State Department of Health Services adopts a
new priority list.


13897.8.  Not more than twenty-five million dollars (,000,000) of
state loans for projects shall be authorized by the department in a
single calendar quarter.  No contract shall be approved by the
department, unless the department finds that  the supplier has the
capacity to repay the loan amounts specified in the contract.
   At the request of the department, the Public Utilities Commission
shall furnish comments concerning the ability of suppliers subject to
its jurisdiction to finance the project from other sources and the
ability to repay the loan.



13897.9.  All bonds authorized, which have been duly sold and
delivered pursuant to this chapter, shall constitute valid and
legally binding general obligations of the State of California, and
the full faith and credit of the State of California is hereby
pledged for the punctual payment of both principal and interest
thereon.
   There shall be collected annually in the same manner, and at the
same time as other state revenue is collected, a sum, in addition to
the ordinary revenues of the state, that is required to pay the
principal and interest on the bonds, and it is hereby made the duty
of all officers charged by law with any duty in regard to the
collection of that revenue, to do and perform each and every act
which shall be necessary to collect that additional sum.
   All money deposited in the fund which has been derived from
premium on bonds sold is available for transfer to the General Fund
as a credit to expenditures for bond interest.




13898.  (a) All money repaid to the state pursuant to any contract
executed under  Section 13895.9 shall be deposited in the General
Fund and, when so deposited, shall be applied as a reimbursement to
the General Fund on account of principal and interest on bonds issued
pursuant to this chapter which has been paid from the General Fund.

   (b) The department may enter into contracts with suppliers of
water for grants or short-term loans for the purpose of investigating
and identifying alternatives for system improvements.  Any loans or
grants pursuant to this section shall be made from the fund.  No
supplier may receive for a single investigation more than twenty-five
thousand dollars (,000) in the form of a loan or grant pursuant
to this section.  The State Department of Health Services shall
review all proposed investigations and shall determine if they are
necessary and appropriate.
   (c) Any contract entered into pursuant to this section shall
include terms and conditions consistent with this chapter, and any
loan contract shall provide for a repayment period not to exceed 24
months.
   (d) Not more than three million dollars (,000,000) may be
expended for the purposes of this section, of which not more than one
million dollars (,000,000) may be used for grants  to public
agencies.  A loan or grant made for the purposes of this section
shall not decrease the maximum amount of any other loan or grant
which may be made under this chapter, Chapter 10.2 (commencing with
Section 13810), Chapter 10.5 (commencing with Section 13850), or
Chapter 10.6 (commencing with Section 13880).



13898.1.  There is hereby appropriated from the General Fund in the
State Treasury, for the purpose of this chapter, an amount equal to
the sum of the following:
   (a) The amount annually necessary to pay the principal of, and the
interest on, the bonds issued and sold pursuant to this chapter, as
the principal and interest become due and payable.
   (b) The amount necessary to carry out Section 13898.2, which
amount is appropriated without regard to fiscal years.



13898.2.  For the purpose of carrying out this chapter, the Director
of Finance  may, by executive order, authorize the withdrawal from
the General Fund of an amount or amounts not to exceed the amount of
the unsold bonds which the committee has, by resolution, authorized
to be sold for the purpose of carrying out this chapter.
   Any amounts withdrawn shall be deposited in the fund and shall be
disbursed by the department in accordance with this chapter.  Any
money made available under this section to the department shall be
returned by the department to the General Fund plus interest the
money would have earned in the Pooled Money Investment Account from
money received from the first sale of bonds sold for the purpose of
carrying out this chapter subsequent to the withdrawal.



13898.25.  Notwithstanding any other provision of this bond act, or
of the State General Obligation Bond Law (Chapter 4 (commencing with
Section 16720) of Part 3 of Division 4 of Title 2 of the Government
Code), if the Treasurer sells bonds pursuant to this bond act that
include a bond counsel opinion to the effect that the interest on the
bonds is excluded from gross income for federal tax purposes under
designated conditions, the Treasurer may maintain separate accounts
for the bond proceeds invested and the investment earnings on those
proceeds, and may use or direct the use of those proceeds or earnings
to pay any rebate, penalty, or other payment required under federal
law, or take any other action with respect to the investment and use
of those bond proceeds, as may be required or desirable under federal
law in order to maintain the tax-exempt status of those bonds and to
obtain any other advantage under federal law on behalf of the funds
of this state.



13898.3.  Upon request of the department, supported by a statement
of the proposed arrangements to be made pursuant to Section 13895.9
for the purposes stated therein, the committee shall determine
whether or not it is necessary or desirable to issue any bonds
authorized under this chapter in order to make those arrangements,
and, if so, the amount of bonds then to be issued and sold.
Successive issues of bonds may be authorized and sold to make those
arrangements progressively, and it shall not be necessary that all of
the bonds authorized to be issued shall be sold at any one time.



13898.4.  The committee may authorize the Treasurer to sell all or
any part of the bonds authorized at the time or times as fixed by the
Treasurer.


13898.5.  All proceeds from the sale of bonds, except those derived
from premiums and accrued interest, are available for the purpose
provided in Section 13898.5, but are not available for transfer to
the General Fund to pay principal and interest on bonds.  The money
in the fund may be expended only as provided in this chapter.