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.