ARIZONA HOUSE OF REPRESENTATIVES

Fifty-fifth Legislature

Second Regular Session

HB 2057: water supply development fund; revisions

Sponsor: Representative Griffin, LD 14

Committee on Natural Resources, Energy & Water

Overview

Amends Water Infrastructure Finance Authority (WIFA) and Water Supply Development Revolving Fund statutes to conform with 2016 and 2021 laws.

History

Oversight of Water Supply Development Revolving Fund

In 2007, the Legislature created the Water Supply Development Revolving Fund to make loans or grants to qualified water providers for water supply development projects. A thirteen-member Water Supply Development Revolving Committee (Committee) within WIFA was created to advise on rules, procedures, and other guidelines for administering this fund and to review and approve applications for fund monies (Laws 2007, Chapter 226, §§ 3-4, 11).

In 2016, the Legislature consolidated several agencies, including WIFA, into the Office of Economic Opportunity. Within this agency, WIFA was placed under the Arizona Finance Authority (AFA) Board, which is responsible for governing it. Although the Committee was repealed in some statutes, it was not removed everywhere (Laws 2016, Chapter 372, §§ 52, 64-66). Specifically, under the current statutes for the Water Supply Development Revolving Fund:

· The Committee still sets the terms for loans made by third-party lenders as well as the rate of return on the deposit when fund monies are used to provide linked deposit guarantees through these lenders (A.R.S. § 49-1273);

· WIFA consults with the Committee when setting application procedures, criteria, and funding priorities (A.R.S. § 49-1274);

· The Committee reviews and approves applications for fund monies before any fund monies can be utilized (A.R.S. § 49-1274);

· WIFA consults with the Committee when prescribing the interest rates on loans and can recommend that WIFA adopt rules that provide for flexible interest rates and interest-free loans (A.R.S. § 49-1275); and

· The Committee can adopt resolutions allowing a water provider to secure a loan with an irrevocable pledge of shared state revenues for the loan’s duration (A.R.S. § 49-1275).

2021 Changes to the Water Supply Development Fund

A 2021 law increased the size of a single grant from the Water Supply Development Revolving Fund for planning or designing water supply development projects from $100,000 to $250,000 (Laws 2021, Chapter 262, § 2). However, it did not include a conforming change to the statute for WIFA's powers and authority, which still limits the size of a single grant to $100,000 (A.R.S. § 49-1203).

Provisions

1. Increases the cap for a single grant to plan or design a water supply development project from $100,000 to $250,000 that WIFA, through the AFA Board, can offer a water provider. (Sec. 1)

2. Allows fund monies to be used for technical assistance to water providers for planning or designing water supply development projects. (Sec. 2)

3. Replaces the committee with the AFA Board in the following provisions:

a) Requires, when fund monies are used to provide linked deposit guarantees through third-party lenders, the AFA Board to set terms for loans made by that lender as well as the rate of return on the deposit; (Sec. 2)

b) Instructs WIFA, in consultation with the AFA Board, to set procedures and criteria for approving assistance and determine the priority for funded projects; (Sec. 3)

c) Directs the AFA Board to review each application and notify the applicant whether the application was approved or not; (Sec. 3)

d) Authorizes the AFA Board to condition the approval of an application on assurances it deems necessary; (Sec. 3)

e) Requires the AFA Board’s approval of an application for fund monies to finance a project; (Sec. 3)

f) Instructs WIFA, in consultation with the AFA Board, to prescribe interest rates for loans made from the fund; (Sec. 4)

g) Authorizes WIFA, on the AFA Board’s recommendation, to adopt rules for flexible interest rates and interest-free loans; (Sec. 4) and

h) Allows the AFA Board to adopt a resolution allowing a water provider to secure a loan with an irrevocable pledge of shared state revenues for the loan’s duration. (Sec. 4)

4. Deletes any mention of the committee from a provision not holding any AFA Board member or person executing bonds personally liable for bond payments. (Sec. 5)

5. Makes technical changes. (Sec. 1, 3-5)

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9. HB 2057

10. Initials PAB Page 0 Natural Resources, Energy & Water

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