(1) There is hereby created in the authority the drinking water revolving fund that the authority shall maintain and administer for the purposes stated in this section. The authority may: (a) Establish procedures to administer the drinking water revolving fund in accordance with the safe drinking water act and state law; (b) Create separate accounts in the drinking water revolving fund and pledge and assign the accounts as security for the payment of the bonds of the authority; (c) To the extent permitted by the safe drinking water act, transfer moneys to and divide moneys between the drinking water revolving fund and the water pollution control revolving fund created in section 37-95-107.6. (2) (a) Subject to any applicable provisions of the safe drinking water act and agreements with the holders of bonds of the authority, the authority shall deposit in the drinking water revolving fund: (I) Any grants from the federal government or its agencies allocated to the state for deposit in said fund; (II) State matching funds, if required; (III) Loan principal, interest, and penalty payments received with respect to loans made from the drinking water revolving fund; and (IV) and (V) (Deleted by amendment, L. 2001, p. 1279, § 52, effective June 5, 2001.) (VI) Any other moneys as determined by the authority. (b) Moneys in the drinking water revolving fund shall be spent in a manner consistent with the terms and conditions of any state revolving program fund established by the safe drinking water act and may be used: (I) To provide assistance to governmental agencies and private nonprofit entities for projects that appear on the drinking water project eligibility list, referred to in this section as "eligible projects"; and (II) For any other purposes permitted by the safe drinking water act. (c) The authority may spend moneys in the drinking water revolving fund for financial assistance to governmental agencies and private nonprofit entities for eligible projects, including expenditures by any of the following means: (I) Any means specified in the safe drinking water act; (II) Making loans to governmental agencies and private nonprofit entities; (III) Purchasing or refinancing obligations of governmental agencies and private nonprofit entities if the debt obligations were incurred after October 14, 1993, or for a project to comply with amendments to regulations enacted by the 1986 amendments to the safe drinking water act; (IV) Securing or purchasing insurance for debt obligations; (V) Securing or providing moneys for payment of the principal and interest on bonds of the authority; (VI) Securing or providing moneys for payment of the principal and interest on other bonds issued to finance eligible projects; (VII) Providing for the costs of administering the drinking water revolving fund, including the administrative costs of state agencies; (VIII) Investing money that is not currently needed for the operation of the drinking water revolving fund in the manner determined by the authority. All interest earned on these investments shall be credited to the specified account, if any, in the drinking water revolving fund. (IX) Providing for any other expenditure that is consistent with the safe drinking water act and state law. (3) (a) (I) The authority may make and contract to make loans to governmental agencies and private nonprofit entities in accordance with and subject to this section to finance the cost of eligible projects that the governmental agency or private nonprofit entity may lawfully undertake or acquire under state law and for which the governmental agency or private nonprofit entity is entitled by law to borrow money. The authority may make the loans subject to terms and conditions determined by the authority to be consistent with the purposes of the loans, and, to the extent that moneys originating in grants from the federal government are the source of the loans, consistent with the provisions of the safe drinking water act. (II) Loans by the authority and the terms and conditions of the loans are subject to financial analysis by the division of local government in the department of local affairs. The financial analysis must include an analysis of the capacity to repay a loan and the need for financial assistance. The loans must be evidenced by notes, bonds, or other obligations of the borrower that are issued to the authority. In the case of a governmental agency or private nonprofit entity, notes and bonds to be issued to the authority must be authorized and issued pursuant to this paragraph (a). (III) All notes, bonds, or other obligations evidencing a loan from the authority may be sold at private sale to the authority at any price, whether or not less than par value. The denominations, the times for payment of principal and interest, and the provisions for redemption prior to maturity of the notes, bonds, or other obligations are as agreed by the authority and the borrower. Each loan to a governmental agency or private nonprofit entity and the notes, bonds, or other obligations thereby issued must bear interest at a rate or rates per annum at or below the market interest rate and be for terms that are agreed upon by the authority and the borrower and are in compliance with the safe drinking water act. (b) From moneys in the drinking water revolving fund, the authority may purchase or refinance or purchase insurance for the payment of all or any portion of the principal and interest on bonds, notes, or other obligations issued by a governmental agency to finance an eligible project that the governmental agency may lawfully undertake or acquire under state law and for which the governmental agency is authorized by law to borrow money. The purchase or refinancing or purchase of insurance by the authority is subject to financial analysis by the division of local government in the department of local affairs. The financial analysis shall include an analysis of the capacity to repay a loan and the need for financial assistance. (c) The authority may charge to and collect from governmental agencies provided financial assistance from the drinking water revolving fund fees and charges in connection with the authority's loans or other services, including, but not limited to, fees and charges sufficient to reimburse the authority for all reasonable costs it necessarily incurred in providing financial assistance from the drinking water revolving fund, including, but not limited to, costs of financing and the establishment and maintenance of reserves or other funds as the authority may determine is reasonable. (4) (a) The initial drinking water project eligibility list shall be developed by the division of administration in the department of public health and environment. (b) Additions or modifications to the drinking water project eligibility list shall be developed by the water quality control commission and shall be submitted to the general assembly on or before January 15 of each year. The additions or modifications shall conform to applicable provisions of the safe drinking water act and state law. On or before April 1 of each year, the additions or modifications shall be adopted by the passage of a joint resolution that is approved by a majority vote of both houses of the general assembly and that is presented to the governor in accordance with section 39 of article V of the state constitution. (c) Moneys shall not be spent from the drinking water revolving fund or bonds issued by the authority pursuant to subsection (6) of this section for any project unless the project is on the drinking water project eligibility list approved in accordance with this subsection (4) or is an emergency project in accordance with paragraph (d) of this subsection (4). Financial assistance for a project pursuant to this section may be provided regardless of the rank, if any, of the project on the eligibility list; except that any priority for eligible projects established or required by the safe drinking water act shall apply in the issuance of financial assistance if the source of the financial assistance is grant moneys from the federal government. (d) The water quality control commission may amend the drinking water project eligibility list at any time, pursuant to its regular procedures, to include drinking water projects that it determines and declares to be emergency projects needed to prevent or address threats to the public health or environment. No later than January 15 of each year, the authority shall provide to the general assembly a listing of all emergency projects for which moneys from the drinking water revolving fund have been expended in the preceding calendar year. (5) (a) The division of local government in the department of local affairs, the division of administration in the department of public health and environment, and the authority shall develop an intended use plan that complies with the safe drinking water act. (b) (Deleted by amendment, L. 2005, p. 40, § 3, effective March 23, 2005.) (6) The authority may issue bonds pursuant to this article to finance the cost of providing financial assistance from the drinking water revolving fund and to provide reserves therefor pursuant to subsection (3) of this section. (7) On behalf of the state and with the written approval of the water quality control commission, the authority may enter into any agreements with the federal government as necessary to comply with any provisions of the safe drinking water act and if otherwise required to provide for any capitalization of the drinking water revolving fund from federal grant moneys. (8) Sections 37-95-107 and 37-95-107.5 shall not apply to any project on the drinking water project eligibility list approved in accordance with subsection (4) of this section. (9) The authority may, acting in its discretion and with the approval of the governor, transfer moneys from the drinking water revolving fund to the water pollution control revolving fund created and administered pursuant to section 37-95-107.6, if the transfer of such moneys is permitted by applicable federal law and the terms of any agreement between the state and the United States relating to the drinking water revolving fund.
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