This chapter shall be known and may be cited as the California Safe Drinking Water Bond Law of 1976.

The Legislature hereby finds and declares that it is necessary for the preservation of the health, safety, and welfare of the people of California that water supplied for domestic purposes be pure, wholesome, and potable and does not endanger the health or lives of human beings and that water is available in adequate quantity at sufficient pressure for health, cleanliness, and other domestic purposes.

The Legislature further finds and declares that a number of domestic water supply systems are inadequate and do not meet minimum bacteriological, chemical, or other basic health standards for domestic water supplies, 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.

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.

The State General Obligation Bond Law is adopted for the purpose of the issuance, sale, and repayment of, and otherwise providing with respect to, the bonds authorized to be issued by 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 such rates of interest, or maximum rates, as may from time to time be fixed by the State 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 such series.

As used in this chapter, and for purposes of this chapter as used in the State General Obligation Bond Law, the following words shall have the following meanings:

The Safe Drinking Water Finance Committee is hereby created. The committee shall consist of the Governor, the State 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.

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

The committee is hereby empowered to create a debt or debts, liability or liabilities, of the State of California, in an aggregate amount of one hundred seventy-two million five hundred thousand dollars ($172,500,000) in the manner provided in this chapter. This debt or debts, liability or liabilities, shall be created for the purpose of providing the fund to be used for the objects and works specified in Section 13861.

The Legislative Analyst shall review the grant programs and report to the Legislature not later than February 1, 1981.

For the purpose of administering this chapter, the total expenditures of the department and the State Department of Health Services may not exceed 3 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, which fees shall be paid by the supplier pursuant to Section 13861, to reimburse the state for the costs of state administration of this chapter.

The amendment to this section enacted at the 1981–82 Regular Session of the Legislature does not constitute a change in, but is declaratory of, the existing law.

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.

Loans may be made only for projects for domestic water systems. The department may make reasonable allowance for future water-supply needs and may provide for additional capacity when excessive costs would be incurred by later enlargement. Such loans may be made for all or any part of the cost of constructing, improving, or rehabilitating any such system when, in the judgment of the State Department of Health Services, such improvement or rehabilitation is necessary to provide pure, wholesome, and potable water available in adequate quantity at sufficient pressure for health, cleanliness, and other domestic purposes. No loan to an individual supplier shall be more than one million five hundred thousand dollars ($1,500,000), unless the Legislature by an act raises the limit specified in this section.

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.

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 such 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.

The department shall require the payment of interest on each loan that is made pursuant to the provisions of this chapter at a rate equal to the average, as determined by the State Treasurer, of the net interest cost to the state on the sales of general obligation bonds pursuant to the provisions of this chapter. However, when the applicable average of the net interest costs to the state is not a multiple of one-tenth of 1 percent the interest rate shall be at the multiple of one-tenth of 1 percent next above the applicable average of the net interest costs.

The department, after public notice and hearing and with the advice of the State Department of Health Services, shall adopt rules and regulations necessary to carry out the purposes of this chapter. Such regulations shall include, but not be limited to, criteria and procedures for establishing the eligibility of a supplier and a project for assistance commensurate with the need for the project and the ability of the supplier to reasonably finance the project from other sources. It shall be the duty of the department to adopt such rules and regulations as in its judgment will most effectively carry out the provisions of 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. Such 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.

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.

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.

Upon approval by the State Department of Health Services of project plans submitted by a supplier on the priority list and upon issuance to the supplier of a permit or amended permit as specified in Chapter 4 (commencing with Section 116275) of Part 12 of Division 104 of the Health and Safety Code, the department may enter into a contract with the supplier.