State Water Pollution Control Revolving Fund program: loans: outdoor eating areas: water reuse

The law lets the state offer larger below-market loans for recycled-water, wastewater, and water-quality infrastructure while retaining federally allowed financing flexibility. It also clarifies when minimal sprinkler overspray using highly treated recycled water may reach outdoor eating areas.

What the law does ​

• Authorizes the State Water Resources Control Board to charge federally permitted fees or annual service charges on revolving-fund financial assistance.
• Allows the board to apply the service rate during the financing term and removes prior state limits on changing that rate and on loan-repayment increases.
• Requires revolving-fund loans to carry below-market interest rates, replacing the former state cap tied to state general-obligation bond rates.
• Keeps zero-percent combined interest and service rates for specified applicants providing matching funds, and for qualifying refinancing after repayment of part of an existing federal loan balance.
• Allows unintended, minimal recycled-water runoff or sprinkler overspray into outdoor eating areas in parks and open spaces when the water meets the applicable disinfected tertiary treatment standard.
• Excludes runoff caused by system design, excessive or intentional application, overflow, or negligence from the incidental-runoff allowance.

Who it affects ​

• Municipalities and other applicants seeking State Water Pollution Control Revolving Fund financing.
• Recycled-water, wastewater, and water-quality infrastructure projects.
• Parks and open spaces irrigated with qualifying disinfected tertiary treated recycled water.
• People using outdoor eating areas in those parks and open spaces.

Breakdown ​

Water Fund Assistance Fees ​

AB 2777 gives the State Water Resources Control Board more flexibility to charge for services connected to water-pollution revolving-fund financial assistance. The board may charge fees instead of annual charges and may set either type of charge at any rate allowed under federal law. The bill also removes limits that prevented changes to the service rate or increases in repayment amounts after a rate was applied, and removes the requirement to align yearly revenue with the Budget Act appropriation.

Key takeaways

• The State Water Resources Control Board may charge fees instead of annual charges for financial assistance services.
• Fees or annual charges may be set at any rate permitted by federal law.
• The bill removes the rule that required the financial assistance service rate to stay unchanged throughout the assistance term.
• The bill removes the prohibition on increasing the repayment amount after the service rate is applied.
• The board no longer must set annual charge revenue to be as close as practical to the amount appropriated in the annual Budget Act.

Lower-Interest Water Fund Loans ​

This part of the bill changes the interest-rate rules for loans from the State Water Pollution Control Revolving Fund. It removes the formula that capped the combined interest and loan service rate at 50% of the rate on the state's most recent general obligation bond sale. Instead, it requires these loans to be offered below market interest rates.

Key takeaways

• The bill removes the existing interest-rate cap tied to the state's most recent general obligation bond sale.
• Loans from the fund must be made at below market interest rates.
• The bill replaces a specific rate-setting formula with a general requirement for below-market loan rates.
• The existing 0% combined interest and loan service rate for certain applicants providing matching funds is not identified as changed in this part.

Recycled Water Runoff ​

The bill allows incidental runoff from certain recycled-water irrigation to enter outdoor eating areas in parks and open spaces. It also defines incidental runoff as unintended, minimal runoff, such as sprinkler overspray that escapes the intended irrigation area.

Key takeaways

• The change applies to parks and open spaces irrigated with disinfected tertiary treated recycled water that meets the applicable irrigation regulation.
• Incidental runoff may enter outdoor eating areas under these conditions.
• The bill replaces the prior reference to incidental spray, mist, or runoff with a rule specifically allowing incidental runoff.
• “Incidental runoff” means unintended amounts of runoff, including unintended minimal sprinkler overspray outside the intended area of use.