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(continued)
(b) The project sponsors must provide an opportunity for public comment, unless the Department waives this requirement for good cause. A public meeting held to adopt a resolution to support the project or accept a grant will satisfy this requirement. Grants that involve trash and debris clean up only may be exempted from the public comment requirement. A contract will be signed by the Department only after the sponsor provides copies of resolutions from the sponsor and all co-sponsors accepting the grant and authorizing specific individuals to sign the contract on the behalf of each.
(c) The Department may enter into a contract before the sponsors and/or co-sponsors have obtained all applicable permits, but may not disburse any funds to be used for project construction until the sponsors and/or co-sponsors have complied with all applicable federal, State and local laws, rules and regulations, and obtained all required permits.
(d) All applicable requirements of the California Environmental Quality Act (California Public Resources Code sections 21000-21177) and applicable regulations shall be compiled with prior to entering into a contract.
(e) If a contract is not signed within six months of the date the priority list is approved, the grant may be withdrawn or revised.
(f) All contracts shall be signed by all the sponsors and co-sponsors. If the sponsor is a citizens' group that is not a non-profit corporation, it must designate a fiscal agent to act on it's behalf, and provide evidence that the fiscal agent agrees to so act.
(g) The contract shall require the sponsors and/or co-sponsors to submit a written report of the project to the Department upon completion. The report must include photographs of planning and restoration activities and techniques.
(h) The contract shall include, as part of the work .plan, a plan for the long-term management or maintenance of the stream which the project will affect.
(i) The Department may withhold up to 10 percent of the grant amount until the project and final report are complete to the Department's satisfaction.
(j) During planning and construction the Department may inspect the project at any reasonable time to ensure it is being carried out in accordance with the work plan, and after completion to ensure that it is being properly maintained.

Note: Authority cited: Section 7048, Water Code. Reference: Section 7048, Water Code, Sections 5907(e)(3), 5917, 5918 and 5919, Public Resources Code.




s 455. Definitions.
The words used in this subchapter have the meanings provided in Water Code Sections 13857 and 13881 and set forth below:
(a) "Act" means the California Safe Drinking Water Bond Law of 1976 as set forth in Chapter 10.5, of Division 7 of the Water Code (commencing at Section 13850), and the California Safe Drinking Water Grant Program as set forth in Chapter 10.6 of Division 7 of the Water Code (commencing at Section 13880) and any amendments thereto.
(b) "Department of Health" means the State Department of Health Services.
(c) "Regularly supplies water to at least 25 individuals" as used in Section 13857(c) and13881(b) of the Act, means, when applied to a school, that a school must have an attendance of at least 25 students during a minimum school year of at least 175 days.
(d) "Community Water System" means a water system which serves at least 15 year-round residential service connections or regularly serves at least 25 year-round residents.
(e) "Applicant" means any person or entity applying for financial assistance under the Act.
(f) "Eligible Supplier" means a supplier eligible to apply for assistance under the Act and this subchapter.
(g) "Eligible Project" means a project for the construction, improvement, or rehabilitation of a domestic water system determined to be eligible under the Act and meeting the requirements of this subchapter.
(h) "Eligible Project Costs" means costs associated with (g) above, including the engineering, legal and administrative fees associated with the construction, and also including those reasonable costs incurred by the applicant to prepare the application and establish eligibility. Eligible Project Costs do not include:
(1) Operation and maintenance costs;
(2) Costs of providing water for industrial use;
(3) Purchase of equipment or payment of rentals. However, reasonable maintenance and depreciation allowances for equipment or machinery currently owned or acquired for project purposes by a supplier shall be allowed.
(4) Purchase of existing systems.
(5) Payment of principal or interest of existing indebtedness or any interest payments unless:
(A) The debt is incurred after issuance of a letter of commitment of funds by the Department; and
(B) The Department agrees in writing to the eligibility of the costs for reimbursement before the debt is incurred; and
(C) The costs for which the debt is incurred are otherwise eligible project costs.
(6) Establishment of a reserve fund.
(i) "Environmental Documentation" means written documentation prepared in accordance with the California Environmental Quality Act (Division 13, Public Resources Code commencing with Section 21000) and the State EIR Guidelines (Title 14, Division 6, Chapter 3, Register 78, No. 5). "Environmental Documentation" includes, but is not limited to Notices of Exemption, draft and final EIRs, Initial Studies, Negative Declarations, Notices of Completion and Notices of Determination (Title 14, Section 15026.5, Register No. 78, No. 5).
(j) "Eligible Domestic Water System" or "Eligible Community Water System" means the total water system for which an independent water permit has been issued by the Department of Health Services.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13857, 13861, 13868, 13881 and 13882, Water Code.




s 456. Application Fee.
No application fee is required to accompany any request for financial assistance.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13868, 13883 and 13892, Water Code.




s 457. Administrative Fee.
Payment of an administrative fee for approved loans shall be required as authorized by Section 13862 of the Water Code. The administrative fee shall be paid by the supplier in the amount of 3 percent of the approved loan. The fee may be paid on the same terms and conditions to be used for repaying the amount of the loan.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Section 13862, Water Code.




s 458. Environmental Fee.
(a) In addition to any administrative fee, the Department may charge a reasonable fee where it prepares environmental documentation in accordance with the State EIR Guidelines (Title 14, Section 15053).
(b) The environmental fee shall be calculated and collected as set forth in the Department's Regulations for Implementation of the California Environmental Quality Act of 1970 (Title 23, Section 503).

Note: Authority cited: Section 21082, Public Resources Code; and Section 13868, Water Code. Reference: Section 21089, Public Resources Code.




s 459. Ability to Finance Determination.
The inability to reasonably finance project construction costs from other sources will be determined by the Department to have been established when the Department finds that all of the following conditions exist:
(a) Financial assistance from the Federal Government is not available on a timely basis commensurate with the need for the project.
(b) The applicant cannot market bonds or obtain loans at an interest rate which will not impose an unreasonable burden on the supplier or water consumer. Voter denial of a bond issue where voter approval is required to issue bonds does not in itself demonstrate inability to reasonably finance from other sources.
(c) The supplier has no other funds, or sources of funds available on reasonable terms, to finance the proposed project. The supplier shall finance that portion of the proposed project for which it is able to obtain funds on reasonable terms.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13868, 13886 and 13889, Water Code.




s 460. Eligible Project Determination.
An eligible project must meet the following criteria:
(a) The project is needed in order for the system to meet water quality standards specified in Title 17, California Administrative Code, Part 1, Chapter 5, Subchapter 1; or, the project is needed in order for the system to meet water quantity and pressure requirements of the Waterworks Standards, Title 17, California Administrative Code, Chapter 5, Group 1.1.
(b) The scope of the project is commensurate with the need of the existing community served. Reasonable allowance may be made for future water supply needs and additional capacity when excessive cost would be incurred by later enlargement.
(c) The project meets the needs of the community effectively and economically, and other means to meet the needs such as consolidation with adjacent water systems or development of alternative sources, are not reasonably available or economical.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13855, 13861, 13864, 13868, 13880, 13885 and 13886, Water Code.




s 461. Application.
Applicants for a loan or grant under the Act shall file duplicate applications simultaneously with the Department of Water Resources and the Department of Health on a form provided by the Department of Water Resources. A complete application consists of the form provided by the Department and the supporting information required in Section 462. The specified supporting information must be attached to, or bound with, the application form.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13868.5 and 13883, Water Code.




s 462. Supporting Information.
Each application form filed shall be accompanied by the following supporting information. The purpose of the supporting information is to provide a basis for the Department of Health to place the applicant on the priority list and for the Department to determine the applicant's financial eligibility. The supporting information should be based on facts readily and reasonably available to the applicant.
(a) Description of the need for the project including information concerning system deficiencies.
(b) Description of proposed project and a sketch map showing project features and service areas. (Detailed plans need not be submitted with the application, but shall be required after the applicant becomes reachable on the priority list.)
(c) Estimated cost of the project and proposed timetable for project completion.
(d) The amount of financial assistance requested and amount of other financing available, such as from local, state or federal sources, internally generated funds, and the issue of bonds.
(e) Information demonstrating inability to reasonably finance the project or some portion of the project from other sources of funding.
(f) Provide such financial documents as needed to determine the ability to repay loan, including tax revenue, and a schedule for repayment.
(g) Description of measures undertaken, or that will be undertaken as part of proposed project, to reduce water consumption, such as use of water-saving devices, meters, etc.
(h) The basis for applicant's belief that an adequate supply of water is available. (Evidence that the applicant has a right to use the water required for the project must be submitted before any funds are disbursed.)
(i) (1) If the applicant is a public agency, state the form of the documentation that the applicant will use to satisfy the requirements of the California Environmental Quality Act (Public Resources Code Section 21000 and following) and the State EIR Guidelines (Title 14, Division 6, Chapter 3, Register 78, No. 5). Appropriate documentation may consist of any of the following: a Notice of Exemption, a Negative Declaration supported by an Initial Study, or a final Environmental Impact Report. The applicant must provide the appropriate documentation before the Department will approve a loan or grant and execute a contract.
(2) If the applicant is not a public agency, state whether any public agency, other than the Department of Health Services has prepared, or will prepare the Environmental Documentation for the project. Environmental documentation must be prepared by the Department of Health Services as the Lead Agency, or another public agency, having authority over the project and acting as the Lead Agency, before the Department may approve the loan and execute a contract.
(j) Adopt a resolution by the governing body authorizing the supplier of water to enter into an agreement with the State and appointing representatives who can sign such agreement.
(k) Legal opinion as to the applicant's ability to contract with the State for a loan shall be supplied to the Department.
(l) A statement from applicant's Bond Counsel on salability of bonds, including interest rates, discounts, terms and associated costs.
(m) Provide your water rates and those for surrounding communities for the past three years.
(n) Indicate how the water users will be: (1) fully apprised of the project; (2) offered an opportunity to comment on the desirability of the project; and (3) able to indicate their willingness to pay for the loan for the proposed project. (See Section 472.)
(o) Include other available information to aid in establishing priority of the project. (See Section 467.)
(p) Provide such other information as the Department or the Department of Health Services may require.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13861, 13864, 13865, 13868, 13868.7, 13880, 13882, 13883, 13885 and 13886, Water Code; and Sections 21002(d), 21080.1-21080.4, 21081 and 21165-21166, Public Resources Code.




s 463. Water Conservation.
An applicant must demonstrate that it is using or will agree to undertake all reasonable water conservation measures. Water conservation means the prudent and careful distribution and use of water to prevent waste, unreasonable use, or unreasonable method of use of water. It shall be the responsibility of the supplier to implement measures to accomplish such conservation so that the most beneficial use of water can be assured.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13868 and 13892, Water Code.




s 464. Notice to Applicants.
The Department shall notify the applicant, in writing, within 90 days of receipt of the completed application, of a determination of financial eligibility.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13861, 13864, 13865, 13866, 13868, 13880, 13882, 13886 and 13889, Water Code.




s 465. Priority List.
The Department of Health shall establish a priority list of eligible applicants that have met Department of Health eligibility criteria and shall determine the order of projects that have been found to be eligible for assistance based upon the information provided in the application and any other relevant supporting documents, information, or materials. This list shall be transmitted from time to time to the Department of Water Resources for an ability to finance determination.

Note: Authority cited: Section 13868 and 13892, Water Code. Reference: Sections 13865, 13868.3 and 13887, Water Code.




s 466. Priority List Procedures.
(a) The Department of Health, with the advice of the Department, may at any time assign a project to a higher priority in case of an emergency when improvements are needed to enable a system to produce a safe water. All agencies affected by the change in priorities will be notified of the change by the Department of Health.
(b) The Department of Health shall revise the priority listing of suppliers at least annually after public notice and hearing and with the advice of the Department.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13865, 13868.3 and 13887, Water Code.




s 467. Priority List Criteria.
The Department of Health shall use as a guide the following criteria in determining the priority of eligible projects (listed in decreasing priority):
(a) Health Considerations (listed in decreasing importance):
(1) Facilities necessary to comply with primary drinking water standards.
(2) Facilities necessary to comply with secondary drinking water standards.
(3) Facilities necessary to comply with other standards or regulations which have only a minimal relationship to the health of water users.
(b) Financial Considerations. Applications having a lesser capability to reasonably finance the proposed project through other means will receive a higher priority than competing projects.
(c) Special Considerations. In addition to the above criteria, the Department of Health may consider for priority list purposes, consolidation with adjacent water systems and the number of persons served by a system. Community water systems shall receive a higher priority than other competing applicants.
(d) Department considerations. For all other projects, the Department shall use the following priorities:
(1) First priority to projects which will serve existing urban and suburban areas and rural towns;
(2) Second priority to projects which will serve vacant and underutilized lands within existing developed areas;
(3) Third priority to projects which will serve contiguous new development.
(e) When public health hazards or immediate health problems justify the use of bond funds for projects not consistent with these priorities, the funds shall not be used to pay for additional capacity in excess of that needed to serve the existing population and the population that may reasonably be expected to occupy within ten years those lots that are presently subdivided but unimproved.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13865 and 13868.3, Water Code.




s 468. Department of Health Notice to Applicants.
The Department of Health shall notify each applicant on the priority list, in writing, of its position on the priority list and shall inform the applicant when project plans shall be submitted for approval.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13865, 13868.3, 13868.5, 13886 and 13887, Water Code.




s 469. Department of Health Approval.
The Department of Health approval of project plans required by Water Code Sections 13868.5 and 13886 shall be in writing.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13868.5 and 13886, Water Code.




s 470. Contract Provisions.
(a) The following provisions apply to loan contracts and loan-grant contracts:
(1) Entities other than public agencies shall agree to provide security for repayment of the loan. This may include a provision for a lien on the domestic water system and associated facilities and improvements.
(2) Every supplier receiving a loan shall retain a Fiscal Agent to collect principal and interest payments from the supplier and transmit them to the State when due. The services of the Fiscal Agent shall be continued until the loan has been fully repaid.
(3) The term of the loan shall be as short as possible considering the ability of the supplier and its customers to repay the loan. If the supplier is a regulated public utility and the impact of the loan on water rates would be significant, consideration may be given in setting the term of the loan to the estimated useful life of the plant to be financed with the loan proceeds.
(4) The contract shall provide for accumulation of necessary reserves to assure that funds will be available to make the semi-annual payments when due. A reserve of two semi-annual payments shall be accumulated during the first ten-year period for all repayment methods except those based on the quantity of water used, for which a reserve of four semi-annual payments shall be accumulated during the first ten years. Half of the required reserve balance shall be on deposit by the end of the first five years of the repayment period, and the full required reserve balance shall be on deposit by the end of the second five years. Reserves shall be maintained at these levels thereafter until the loan is repaid in full.
(b) The following provisions shall apply to loan contracts, grant contracts, and loan and grant contracts:
(1) When the project costs exceed the loan, grant or loan-grant commitment, funds will not be disbursed until supplier demonstrates acquisition of sufficient funds to complete the project. Safe Drinking Water funds will not be disbursed until all other sources of funding are exhausted. If a supplier has received both a loan and a grant, loan funds shall be disbursed before grant funds.
(2) If a contract is not fully executed within one year after the Department transmits a letter of commitment of funds, the letter of commitment and associated contract may be withdrawn and the letter of commitment and contract renegotiated.
(3) The supplier shall use the competitive bidding process for all contracts exceeding $10,000 unless an exception in writing has been obtained from the Department.
(4) No funds will be disbursed pursuant to the contract until all conditions in the Department's letter of commitment and in the water permit issued by the Department of Health have been met.
(5) Funds withheld pending completion of project items and contracts will not be disbursed until the Department has received a certification that the specific item or contract has been completed in accordance with the plans and specifications approved by the Department of Health.
(6) The Department of Health will certify that the project has been completed in accordance with approved plans and specifications.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13861 and 13882, Water Code.




s 471. Petition for Review.
An unsuccessful applicant may petition the Department or the Department of Health for a review of an application that has been denied. The petition shall be filed within 30 days after the date of notification that the application has been denied and may include any information not previously submitted that would justify a reconsideration of the application.

Note: Authority cited: Sections 13868 and 13892, Water Code. Reference: Sections 13868, 13883 and 13892, Water Code.




s 472. Project Feasibility Meeting.
(a) To be eligible for disbursement of loan funds, the supplier must conduct a Project Feasibility Meeting to inform the public of the purposes of the proposed project and to provide a forum for public comment on the need for the project and means of financing the project. A Project Feasibility Meeting is not required if the water supplier is required by law to hold an election before entering into the loan contract. For investor-owned water companies, the meeting or hearing held by the Public Utilities Commission may serve as the Project Feasibility Meeting.
(b) Before a Project Feasibility Meeting, the water supplier shall
(1) Assemble information describing the project in a form and location that will enable the water users to review it and to make appropriate comments.
(2) Establish a date for the meeting agreeable to the Department and Department of Health.
(3) Notify the Department, the Department of Health, and appropriate county health agencies in writing at least 20 calendar days before the meeting and notify all water users and the local news media in writing at least 15 calendar days before the meeting. The notice shall state: the date, time, location, and purpose of the meeting and the location of information describing the project for review by the water users. Sample notice forms may be obtained from the Department.
(4) Obtain a meeting place of sufficient size and at a convenient location to accommodate the anticipated participants.
(c) The agenda of the meeting shall include the following matters:
(1) A discussion of applicable health and water works standards, existing and potential health hazards associated with the water system, how the proposed project will bring the system to minimum health standards, and alternative solutions to the problem.
(2) The supplier shall describe the proposed project in detail, using map, charts, etc. The discussion shall include the costs, sources of funds, how much the loan/grant will be, and increased water costs resulting from the loan.
(3) A representative of the Department may describe the Act, the Department's role in its administration and the Department's recommendation regarding the supplier's loan application. Persons present at the meeting shall be permitted to ask questions regarding all subjects discussed at the meeting.
(d) If no representative of the Department is present at the meeting, the supplier shall submit a written report to the Department describing the meeting and its outcome including the results of any vote taken.

Note: Authority cited: Section 13868, Water Code. Reference: Section 13868, Water Code.




s 473. Grants Priority.
The supplier must be listed on the Department of Health Services Safe Drinking Water Bond Law Loan Priority List before an application will be processed. In addition to the criteria set forth in Water Code Section 13887, the criteria listed in Section 467 governing priorities for loans shall govern priority for grants.

Note: Authority cited: Section 13892, Water Code. Reference: Sections 13868.3 and 13887, Water Code.




s 474. Grant Applications and Legislative Report.
Applications shall be made as follows:
(a) An applicant shall apply on a form entitled "APPLICATION FOR A LOAN UNDER THE CALIFORNIA SAFE DRINKING WATER BONDS LAW OF 1976," and supply supporting information as requested. As part of the supporting information, the applicant shall submit preliminary design work including a cost estimate for the proposed project. The Department shall evaluate the application and supporting information. Upon the determination that the supplier is unable to repay the full cost of the needed improvements, the Department will transmit to the Legislature a report containing the following:
(1) Current ranking on the Department of Health Services Loan Priority List.
(2) Health problems indicated.
(3) Discussion of proposed project and alternatives, including a water conservation plan.
(4) Discussion of system adequacy and compliance with health standards after improvements are constructed.
(5) Cost of proposed project.
(6) Amount of financing available, source and terms.
(7) Amount of grant required.
(8) Demographic data.
(9) Existing water charges.
(10) Data on water charges in surrounding areas.

Note: Authority cited: Section 13868, Water Code. Reference: Sections 13883, 13884, 13886 and 13889, Water Code.




s 475. Grant Eligibility Level.
Within 90 days of the receipt of a completed application, the Department shall decide the applicant's financial eligibility for a grant. The Department shall submit a report to the legislature within 60 days of a finding by the Department that an applicant is unable to fund the entire project without a grant.

Note: Authority cited: Section 13868, Water Code. Reference: Section 13884, Water Code.



s 476. Definitions.
The words used in this subchapter have the meanings provided in Water Code Section 13815 and set forth below:
(a) "Act" means the California Safe Drinking Water Bond Law of 1984 as set forth in Chapter 10.2 of Division 7 of the Water Code (commencing at Section 13810) and any amendments thereto.
(b) "Department of Health Services" means the State Department of Health Services.
(c) "Regularly supplies water to at least 25 individuals" as used in Section 13815(c) of the Act, means, when applied to a school, that a school must have an average attendance of at least 25 students per day during a minimum school year of at least 175 days.
(d) "Applicant" means any person or entity applying for financial assistance under the Act.
(e) "Eligible Project Costs" means costs associated with an eligible project, including the engineering, legal and administrative fees associated with the project, and also including those reasonable costs incurred by the applicant to prepare the application and establish eligibility.
Eligible project costs do not include:
(1) Operation and maintenance costs.
(2) Costs of providing water for industrial use.
(3) Costs for purchase of equipment.
(4) Payment of principal or interest of existing indebtedness or any interest payments unless:
(A) The debt is incurred after issuance of a letter of commitment of funds by the Department; and
(B) The Department agrees in writing to the eligibility of the costs for reimbursement before the debt is incurred; and
(C) The purposes for which the debt is incurred are otherwise eligible project costs.
(5) Establishment of a reserve fund.
(f) "Environmental documentation" means written documentation prepared and filed in accordance with the California Environmental Quality Act (Division 13, Public Resources Code commencing with Section 21000) and the State EIR Guidelines (Title 14, Section 15000 et seq.). Environmental documentation includes, but is not limited to Notices of Exemption, draft and final Environmental Impact Reports, Initial Studies, Negative Declarations, Notices of Completion, and Notices of Determination (Title 14, Section 15022).

Note: Authority cited: Section 13834, Water Code. Reference: Sections 13815, 13819, 13820 and 13834, Water Code.



s 477. Application Fee.
No applicant shall be required to pay an application fee.

Note: Authority cited: Section 13834, Water Code. Reference: Sections 13821 and 13834, Water Code.

s 478. Administrative Fee.
Each supplier which enters into a contract for a loan will be charged an administrative fee in the amount of four percent of the loan. Administrative fees for loans shall be paid to the Department under the terms and conditions for repayment of loan principal.

Note: Authority cited: Section 13834, Water Code. Reference: Section 13830, Water Code.

s 479. Supplier's Share of the Cost.
The applicant shall share the cost of the project if the Department finds the applicant has the financial resources to provide a share of the cost without borrowing from outside sources.

Note: Authority cited: Section 13834, Water Code. Reference: Sections 13820(b)(3)(E), 13824, 13828 and 13834, Water Code.

s 480. Priority List.
(a) The priority list to be established by the Department of Health Services shall list suppliers in descending order of the severity of the deficiencies in their domestic water systems. The Department of Health Services may place a supplier on the priority list on the basis of such deficiencies whether or not the supplier has requested such placement.
(b) Suppliers interested in placement on the priority list shall file a priority list application with the Department of Health Services. Priority list application forms may be obtained from the Department of Health Services.
(c) After the priority list is established, the Department of Health Services shall notify each supplier of its position on the list.
(d) The Department of Health Services may solicit applications for funding under the Act from suppliers on the priority list.
(e) Placement of a supplier on the priority list does not constitute a commitment to fund a project, reserve funds for a particular project, or require projects to be funded in a particular order.
(f) A supplier must be placed on the priority list before applying for funding under Section 483.
(g) After the priority list is established, the Department and the Department of Health Services shall make a preliminary determination as to the probable number of suppliers on the list which could be given financial assistance within the funding limits of the Act. The determination shall be revised from time to time as additional information regarding project costs and actual number of applications becomes available. The determination of which suppliers are most likely to fall within funding limits shall be used to advise suppliers regarding whether or not it would be advisable to file an application for funding.

Note: Authority cited: Section 13834, Water Code. Reference: Sections 13825, 13826 and 13836, Water Code.

s 481. Priority Classes.
Each Supplier on the priority list shall be assigned to one of the following priority classes:
Class A: Action is necessary to alleviate significant and documented public health hazards involving illness or to respond to a court-ordered compliance schedule.
Class B: Action is necessary to correct documented violations of primary drinking water standards established by the Department of Health Services.
Class C: Action is necessary to correct significant physical defects that affect a system's ability to meet primary standards.
Class D: Action is necessary to correct secondary drinking water standards violations.
Class E: Action is necessary to correct physical defects or waterworks deficiencies that do not result in violations of primary or secondary standards.

Note: Authority cited: Section 13834, Water Code. Reference: Sections 13825, 13826 and 13836, Water Code.

s 482. Ranking Within Priority Class.
The Department of Health Services shall rank suppliers within a priority class according to the relative severity of the water quality problem involved. Consideration will be given to the following factors when ranking projects:
(a) Length of time violation has existed: Suppliers with chronic violations will be ranked above suppliers with recent violations.
(b) Compliance enforcement actions: Suppliers required to correct deficiencies identified in compliance enforcement actions will be ranked above suppliers not under compliance enforcement action.
(c) Population: Suppliers that serve larger populations will be ranked above suppliers serving smaller populations when other factors are equal.

Note: Authority cited: Section 13834, Water Code. Reference: Sections 13825, 13826 and 13836, Water Code.

s 483. Application for Funding.
Applicants for a loan or grant under the Act shall file a complete application in triplicate with the Department and the Department of Health Services on a form entitled "APPLICATION FOR A LOAN UNDER THE CALIFORNIA SAFE DRINKING WATER BOND LAW." A complete application consists of the above form supported by the following information:
(a) Project Eligibility:
(1) A description of the need for the project including information concerning system deficiencies shall be provided by the applicant.
(2) A description of the proposed project and a sketch map showing project features and service areas.
(b) Financial, Legal, and Contractual Eligibility:
(1) An estimated cost of the project and proposed timetable for project completion.
(2) The amount of financial assistance requested and the amount of the financing available, such as from local, state or federal sources, internally generated funds, and the issuance of bonds.
(3) A list of cash reserves and any planned uses of those reserves.
(4) All financial documents as needed to determine the ability to repay a loan, including tax revenue, a schedule for repayment, and plans for dividing costs among system users.
(5) Proof that an adequate supply of water is available to meet the needs of the project. Evidence that the applicant has a right to use the water required for the project must be submitted before an application may be approved for funding.
(6) If the applicant is a public agency, for every action which is a project within the meaning of Public Resources Code Section 21065, state which form of documentation will be used to satisfy the requirements of the California Environmental Quality Act (Public Resources Code Section 21000 et seq.) and the State EIR Guidelines (Title 14, Section 15000 et seq.). Appropriate documentation may consist of any of the following: a Notice of Exemption, a Negative Declaration supported by an Initial Study, or a final Environmental Impact Report. The applicant must provide the appropriate filed documentation including a Notice of Determination, before the Department will approve funding and execute a contract.
(7) If the applicant is not a public agency, state whether any public agency other than the Department of Health Services has prepared, or will prepare the environmental documentation for the project. Environmental documentation must be prepared by the Department of Health Services as the Lead Agency, or another public agency having approval authority over the project and acting as the Lead Agency, before the Department may approve the loan and execute a contract.
(8) A description of the applicant's water rates and those for surrounding communities for the past three years.
(9) A Legal opinion as to the applicant's authority to contract with the State for a loan and to repay the loan.
(10) A resolution by the applicant's governing body authorizing an officer to apply for a Safe Drinking Water loan.
(11) A summary of the competitive bidding requirements imposed on the applicant by statute or ordinance.
(12) Such other supporting information as the Department or the Department of Health Services may require.
(13) With the advice of the Department a description of possible capital improvements which will conserve water in a cost effective manner.

Note: Authority cited: Section 13834, Water Code. Reference: Sections 13819, 13820, 13821, 13823, 13824, 13826, 13834 and 13838, Water Code; and Sections 21002(d), 21080.1-21080.4, 21081 and 21165-21166, Public Resources Code.

s 484. Loan Application Requirement for Grant.
A public agency is not eligible for a grant unless it has applied for a loan and has been found by the Department to be unable to repay the full amount of the loan.

Note: Authority cited: Section 13834, Water Code. Reference: Section 13828, Water Code.

s 485. Preliminary Approval of Project.
(a) Within 90 days after receipt of a completed application, the Department of Health Services shall determine whether the project as proposed is "necessary" pursuant to Water Code Section 13823 and determine whether to approve or disapprove project plans, and notify the applicant of its decision.
(b) In determining whether the project is necessary, the Department of Health Services shall consider the availability and cost of alternatives to the project such as consolidation with adjacent water systems or development of alternative sources.

Note: Authority cited: Section 13834, Water Code. Reference: Section 13823, Water Code.

s 486. Eligibility for Funding.
(a) The Department shall notify an applicant regarding eligibility for funding by loan or grant within 90 days of the Department of Health Services' approval of project plans, provided the applicant has furnished all documentation required by the Department to render a decision.
(b) Funding will not be provided to pay for additional capacity in excess of that needed to accommodate the needs of existing populations and population growth that may reasonably be expected within ten years.
(c) All other factors being equal (including degree of financial need, submission of completed applications and approval of project plans by the Department of Health Services), applicants with lower numbers (higher priority) on the priority list shall receive preference in funding over applicants with higher numbers (lower priority).
(d) Within 60 days of notifying an applicant of eligibility for a grant, the Department shall submit its report to the Legislature.

Note: Authority cited: Section 13834, Water Code. Reference: Sections 13819(b), 13820(a), 13821 and 13823-13826, Water Code.

s 487. Appeal of Denied Application.
An unsuccessful applicant may appeal for a review of an application that has been denied. The petition shall be filed within thirty days after the date of written notification that the application has been denied and may include any information not previously submitted that would justify a reconsideration of the application.

Note: Authority cited: Section 13834, Water Code. Reference: Section 13821, Water Code.

s 488. Contract Provisions.
(a) The following provisions apply to loan contracts and loan-grant contracts:
(1) Suppliers other than public agencies shall provide security for repayment of the loan. This may include a provision for a lien on the domestic water system and associated facilities and improvements, and liens on other real and personal property belonging to the supplier.
(2) Every supplier receiving a loan shall retain a Fiscal Agent to collect principal and interest payments from the supplier and transmit them to the State when due. The services of the Fiscal Agent shall be continued until the loan has been fully repaid. A public agency may employ the services of its county controller or treasurer as Fiscal Agent.
(3) The term of the loan shall be as short as possible considering the ability of the supplier and its customers to repay the loan. If the impact of the loan on water rates would be significant, consideration may be given, in setting the term of the loan, to the estimated useful life of the project to be financed with the loan proceeds.
(4) The contract shall require the supplier to deposit with its Fiscal Agent sufficient reserves to assure that funds will be available to make the semiannual payments when due. A reserve of two semiannual payments shall be accumulated during the first ten-year period for all repayment methods except those based on the quantity of water used, for which a reserve of four semiannual payments shall be accumulated during the first ten years. Half of the required reserve balance shall be on deposit by the end of the second five years. Reserves shall be maintained at these levels thereafter until the loan is repaid in full.
(b) The following provisions shall apply to loan contracts, grant contracts, and loan-grant contracts:
(1) Except as otherwise authorized by the Department, when the project costs exceed the loan, grant, or loan-grant commitment, no State funds shall be disbursed until the supplier demonstrates acquisition of sufficient funds to complete the project. No State funds shall be disbursed until all other sources of funds have been exhausted. If a supplier has received both a loan and a grant, all loan funds shall be disbursed before grant funds.
(2) If a contract is not fully executed within one year after the Department transmits a letter of commitment of funds, the letter of commitment and associated contract may be withdrawn and the letter of commitment and contract renegotiated.
(3) The supplier shall use the competitive bidding process for all contracts exceeding $10,000 unless an exception in writing has been obtained from the Department. A supplier seeking a waiver of the contractual competitive bidding requirement shall make a written request to the Department which sets forth the reasons for the request and demonstrates that no statute or ordinance imposing competitive bidding requirements on the supplier will be violated if the waiver is granted. In addition, applicants shall obtain the written consent of the Department of Health Services before using the services of their own employees to perform engineering or construction work on the project.
(4) No funds will be disbursed pursuant to the contract until all conditions in the Department's commitment and in the water permit issued by the Department of Health Services have been met.
(5) Funds withheld pending completion of project items and contracts will not be disbursed until the Department has received written certification that the specific item or contract has been completed in accordance with the plans and specifications approved by the Department of Health Services.

Note: Authority cited: Section 13834, Water Code. Reference: Sections 13819 and 13820, Water Code.

s 489. Project Feasibility Meeting.
(a) Before the contract is executed the supplier must conduct a Project Feasibility Meeting to inform the public of the purpose of the proposed project and to provide a forum for public comment on the need for the project and means of financing the project. A Project Feasibility Meeting is not required if the supplier is required by law to hold an election before entering into the loan contract. For investor-owned utilities, meetings or hearings held by the Public Utilities Commission may serve as Project Feasibility Meetings.
(b) Before a Project Feasibility Meeting, the supplier shall:
(1) Make available information describing the project in a form and location that will enable the water users to review it and to make appropriate comments. The information must be made available for a period of at least fifteen days before the Project Feasibility Meeting.
(2) Establish a date for the meeting agreeable to the Department and Department of Health Services.
(3) Notify the Department, the Department of Health Services and appropriate county health agencies in writing at least twenty calendar days before the meeting, and notify all water users and the local news media in writing at least fifteen calendar days before the meeting. The notice shall state: the date, time, location, and purpose of the meeting and the location of information describing the project for review by the water users. Sample notice forms will be provided by the Department.
(4) Obtain a meeting place of sufficient size and at a convenient location to accommodate the anticipated attendance.
(c) The agenda of the meeting shall include the following matters: (1) A discussion of applicable public health and water works standards, existing and potential health hazards associated with the water system, how the proposed project will bring the system to minimum health standards, and alternative solutions to the problem. (2) The supplier shall describe the proposed project in detail, using maps, charts, and other illustrative devices, if appropriate. The discussion shall include the costs, sources of funds, the amount of the loan-grant commitment, and changes in water costs resulting from the project.
(3) A representative of the State may describe the Act, the State's role in its administration and the Department's recommendation regarding the supplier's loan application. Persons present at the meeting shall be permitted to ask questions regarding all subjects discussed at the meeting.
(d) If no representative of the Department is present at the meeting, the supplier shall submit an official written report to the Department describing the meeting and its outcome including the results of any vote taken.

Note: Authority cited: Section 13834, Water Code. Reference: Section 13834, Water Code.

s 489.1. Plans and Specifications.
Before commencing construction, each Supplier shall provide detailed plans and specifications to the Department of Health Services for review and approval by a registered Civil Engineer employed by the Department of Health Services. Unless otherwise authorized in writing by the Department of Health Services, the supplier shall not commence construction without written notification from the Department of Health Services that the plans and specifications have been approved.

Note: Authority cited: Section 13834, Water Code. Reference: Section 13837, Water Code.

s 489.2. Certification of Completion.
Department of Health Services shall inspect the completed project and if satisfied that the project has been completed in accordance with approved plans and specifications, shall provide the supplier and the Department with written certification to that effect.

Note: Authority cited: Section 13834, Water Code. Reference: Section 13834, Water Code.





Note: Authority cited: Sections 161, 401, 403 and 6078, Water Code. Reference: Sections 401, 402 and 403, Water Code and Sections 21000 et seq., Public Resources Code.




s 490. Purpose.
(a) The State Legislature has found:
(1) that the limited supply of state waters are subject to ever increasing demands;
(2) that California's economic prosperity depends on adequate supplies of water;
(3) that state policy promotes conservation and efficient use of water;
(4) that landscapes provide recreation areas, clean the air and water, prevent erosion, offer fire protection, and replace ecosystems displaced by development; and
(5) that landscape design, installation, and maintenance can and should be water efficient.
(b) Consistent with the legislative findings, the purpose of this model ordinance is to:
(1) promote the values and benefits of landscapes while recognizing the need to invest water and other resources as efficiently as possible;
(2) establish a structure for designing, installing, and maintaining water efficient landscapes in new projects; and
(3) establish provisions for water management practices and water waste prevention for established landscapes.

Note: Authority cited: Sections 65591.5 and 65594, Government Code. Reference: Sections 65591, 65591.5 and 65597, Government Code.



s 491. Definitions.
The words used in this ordinance have the meaning set forth below: (continued)