CA Health & Safety Code Section 116761.20

(a)

Planning and preliminary engineering studies, project design, and construction costs incurred by community and not-for-profit noncommunity public water systems may be funded under this chapter by loans or other repayable financing, and, if these systems are owned by public agencies or private not-for-profit water companies, by grants, principal forgiveness, or a combination of grants and loans or other financial assistance.

(b)

(1)The board shall determine what portion of the full costs the public agency or private not-for-profit water company is capable of repaying and authorize funding in the form of a loan or other repayable financing for that amount. The board shall authorize a grant or principal forgiveness only to the extent the board finds the public agency or not-for-profit water company is unable to repay the full costs of the financing.

(2)

Notwithstanding any other provision of this chapter, where a public agency or private not-for-profit water company serving a severely disadvantaged community with fewer than 200 service connections owns a small community water system or nontransient noncommunity water system, the public agency or private not-for-profit serving the severely disadvantaged community is deemed to have no ability to repay any financing for a project serving the severely disadvantaged community.

(c)

At the request of the board, the Public Utilities Commission shall submit comments concerning the ability of suppliers, subject to its jurisdiction, to finance the project from other sources and to repay the financing.