HB2096 - Forgivable financial assistance; cesspool remediation

Senate Engrossed House Bill forgivable financial assistance; cesspool remediation State of Arizona House of Representatives Fifty-seventh Legislature Second Regular Session 2026 CHAPTER 80 HOUSE BILL 2096 AN ACT amending sections 11-671, 49-1201, 49-1203, 49-1204, 49-1223 and 49-1243, arizona revised statutes; relating to the water infrastructure finance authority of arizona. (TEXT OF BILL BEGINS ON NEXT PAGE) Be it enacted by the Legislature of the State of Arizona: Section 1. Section 11-671, Arizona Revised Statutes, is amended to read: START_STATUTE 11-671. Financing wastewater treatment facilities and nonpoint source projects; financial assistance loan repayment agreements; financial assistance; definitions A. Notwithstanding any other law, a county that is authorized to operate a sewage system pursuant to section 11-264 or that identifies and remediates a cesspool pursuant to subsection G of this section may construct or improve a wastewater treatment facility or nonpoint source project with monies borrowed from or financial assistance provided by the water infrastructure finance authority of Arizona. B. To repay financial assistance from the water infrastructure finance authority of Arizona , a county may enter into a financial assistance loan repayment agreement with the authority. A financial assistance loan repayment agreement is payable from any revenues otherwise authorized by law to be used to pay long-term obligations. If revenue from a property tax assessment is the designated source of repayment under the agreement, the property tax assessed and levied is a secondary property tax levy for the purposes of article IX, Constitution of Arizona. C. The county board of supervisors shall submit the question of entering and performing a financial assistance loan repayment agreement to the qualified electors voting at a regular or special general election in the county, except that if revenue from a secondary property tax levy is the designated source of repayment or if the project is constructed with an improvement district, the question shall be submitted to the qualified electors at an election held on the first Tuesday following the first Monday in November. Otherwise, an election is not required if voter approval has previously been obtained for substantially the same project with another funding source. If a majority of the qualified electors voting on the question: 1. Approves, the board of supervisors may execute, deliver and perform the financial assistance loan repayment agreement. 2. Disapproves, the board of supervisors shall not execute a financial assistance loan repayment agreement. D. Payments made pursuant to a financial assistance loan repayment agreement are not subject to section 42-17106. E. A financial assistance loan repayment agreement entered into pursuant to this section shall contain the covenants and conditions pertaining to the construction of a wastewater treatment facility or nonpoint source project and repayment of the loan as the water infrastructure finance authority of Arizona deems proper. Financial assistance loan repayment agreements may provide for the payment of interest on the unpaid principal balance of such agreement at the rates established in the agreement. The agreement may also provide for payment of the county's proportionate share of the expenses of administering the clean water revolving fund established by section 49-1221 and may provide that the county pay financing and loan administration fees approved by the water infrastructure finance authority of arizona . These costs may be included in the levy or assessment amounts pledged to repay the financial assistance. Counties are bound by and shall fully perform the financial assistance loan repayment agreements, and the agreements are incontestable after the loan is funded by the water infrastructure finance authority of Arizona. The county shall also agree to pay the authority's costs in issuing bonds or otherwise borrowing to fund a loan. F. A financial assistance loan repayment agreement under this section does not create a debt of the county, and the authority shall not require that payment of a financial assistance loan agreement be made from other than those sources permitted allowed in subsection B of this section. G. A county may apply for and receive financial assistance, including forgivable principal, from the water infrastructure finance authority of Arizona for the remediation, closure or replacement of cesspools that present a demonstrated risk to surface water, groundwater or public health. The water infrastructure finance authority of arizona may award financial assistance, including forgivable principal, using monies from the clean water revolving fund established by section 49-1221 or the drinking water revolving fund established by section 49-1241. financial assistance, including forgivable principal, received pursuant to this subsection may be used only for projects that eliminate existing cesspools and replace the existing cesspool with an on-site wastewater system that is approved by the department of environmental quality or that has a connection to a wastewater treatment facility. A county that receives financial assistance, including forgivable principal, pursuant to this subsection shall prioritize the remediation, closure or replacement of cesspools that are located within areas of known groundwater vulnerability, that are near surface waters or that are in communities with low-to-moderate income households. A county may establish income-based eligibility criteria for owner-occupied properties but may not apply means testing to the remediation of abandoned or uninhabitable properties. A county shall coordinate with the department of environmental quality to ensure that each project that has received financial assistance, including forgivable principal, pursuant to this subsection is consistent with the county's water quality management plan or the department of environment quality's nonpoint source management plan developed pursuant to section 319 of the clean water act. A county that receives financial assistance, including forgivable principal, pursuant to this subsection is not required to obtain voter approval to accept the financial assistance, including forgivable principal. G. H. A county may employ attorneys, accountants, financial consultants and such other experts in their field as deemed necessary to perform services with respect to the financial assistance loan repayment agreement. H. I. This section is supplemental and alternative to any other law under which a county may borrow money monies or issue bonds. This section shall is not be construed as the exclusive authorization to enter into loan agreements with the authority. I. j. A county may borrow additional monies or enter into additional financial assistance loan repayment agreements with the water infrastructure finance authority of arizona in an amount up to the amount approved by the voters pursuant to subsection C of this section less the amount that the county is already obligated to repay to the water infrastructure finance authority of arizona pursuant to a financial assistance loan repayment agreement. J. k. For the purposes of this section : , 1. "clean water act" has the same meaning prescribed in section 49-1201. 2. "Nonpoint source project" has the same meaning as prescribed in section 49-1201. END_STATUTE Sec. 2. Section 49-1201, Arizona Revised Statutes, is amended to read: START_STATUTE 49-1201. Definitions In this chapter, unless the context otherwise requires: 1. "Authority" means the water infrastructure finance authority of Arizona. 2. "Board" means the water infrastructure finance authority board established by section 49-1206. 3. "Bonds of a political subdivision" means bonds issued by a political subdivision as authorized by law. 4. "Clean water act" means the federal water pollution control act amendments of 1972 (P.L. 92-500; 86 Stat. 816), as amended by the water quality act of 1987 (P.L. 100-4; 101 Stat. 7). 5. "Concession agreement" means any lease, ground lease, franchise, easement, permit or other binding agreement transferring rights for the use or control, in whole or in part, of water-related facilities by the authority to a private partner in accordance with this chapter. 6. "Drinking water facility": (a) Means a community water system or a nonprofit noncommunity water system as defined in the safe drinking water act of 1974 (P.L. 93-523; 88 Stat. 1660; P.L. 95-190; 91 Stat. 1393; P.L. 104-182; 110 Stat. 1613) that is located in this state. (b) Does not include water systems owned by federal agencies. 7. "Financial assistance loan repayment agreement" means an agreement to repay a loan provided to design, construct, acquire, rehabilitate or improve water or wastewater infrastructure, related property and appurtenances or a loan provided to finance a water supply development project. 8. "Imported water" means any water that originates outside of this state and that is made available to water users within this state by conveyance or exchange or otherwise through projects that are funded or financed in whole or in part with monies from the long-term water augmentation fund. 9. "Import water" means to make water originating outside of this state available to water users within this state by conveyance or exchange or otherwise through projects that are funded or financed in whole or in part with monies from the long-term water augmentation fund. 10. "Indian tribe" means any Indian tribe, band, group or community that is recognized by the United States secretary of the interior and that exercises governmental authority within the limits of any Indian reservation under the jurisdiction of the United States government, notwithstanding the issuance of any patent and including rights-of-way running through the reservation. 11. "Long-term water augmentation bonds" means bonds that are issued by the authority in accordance with article 4 of this chapter. 12. "Long-term water augmentation fund" means the fund established by section 49-1302. 13. "Nonpoint source project" means a project designed to implement a certified water quality management plan or this state's nonpoint source management plan that is developed pursuant to section 319 of the clean water act and approved by the united states ENVIRONMENTAL protection agency . 14. "Political subdivision" means a county, city, town or special taxing district authorized by law to construct wastewater treatment facilities, drinking water facilities or nonpoint source projects. 15. "Private partner" means a person, entity or organization that is not the federal government, this state or a political subdivision of this state. 16. "Public-private partnership project" means any water supply development project that is the subject of a public-private partnership agreement in accordance with this chapter. 17. "Safe drinking water act" means the federal safe drinking water act of 1974 (P.L. 93-523; 88 Stat. 1660; P.L. 95-190; 91 Stat. 1393; P.L. 104-182; 110 Stat. 1613), as amended in 1996. 18. "Technical assistance loan repayment agreement" means either of the following: (a) An agreement to repay a loan provided to develop, plan and design water or wastewater infrastructure, related property and appurtenances. The agreement shall be for a term of not more than three years and the maximum amount that may be borrowed is limited to not more than $500,000. (b) An agreement to repay a loan provided to develop, plan or design a water supply development project. 19. "Wastewater treatment facility" means a treatment works, as defined in section 212 of the clean water act, that is located in this state and that is designed to hold, cleanse or purify or to prevent the discharge of untreated or inadequately treated sewage or other polluted waters for purposes of complying with the clean water act. 20. "Water provider" means any of the following: (a) A municipal water delivery system as defined in section 42-5301. (b) A county water augmentation authority established under title 45, chapter 11. (c) A county water authority established under title 45, chapter 13. (d) An Indian tribe. (e) A community facilities district as established by title 48, chapter 4. (f) A public water system as prescribed in section 49-352. (g) A county with a population of less than three hundred thousand persons. (h) A natural resource conservation district. (i) For purposes of funding from the water supply development revolving fund pursuant to article 3 of this chapter only, a county that enters into an intergovernmental agreement or other formal written agreement with a city, town or other water provider regarding a water supply development project. 21. "Water-related facilities" means any facility related to the production, delivery, conservation or storage of water, including any canals, pipelines, desalination plants, pumping stations, storage projects, recovery wells, delivery and retention projects, water and wastewater treatment plants, and other equipment and facilities installed for water conservation purposes, together with any land, buildings or other improvements and equipment or personal property related thereto. 22. "Water supply development" means any of the following: (a) Acquiring water or rights to or contracts for water to augment the water supply of a water provider, including any environmental or other reviews, permits or plans reasonably necessary for that acquisition. (b) Planning, designing, building or developing water-related facilities, including any environmental or other reviews, permits or plans reasonably necessary for those facilities, for any of the following purposes: (i) Conveyance or delivery of water. (ii) Storage or recovery of water under title 45, chapter 3.1. (iii) Reclamation, remediation and reuse of water, including by a reclamation or remediation project that is approved by the United States environmental protection agency and that increases the availability of water. (iv) Replenishment of groundwater. (v) Active or passive stormwater recharge structures that increase water supplies. (c) Conservation through reducing existing water use or more efficient uses of existing water supplies. END_STATUTE Sec. 3. Section 49-1203, Arizona Revised Statutes, is amended to read: START_STATUTE 49-1203. Powers and duties of authority; definition A. The authority is a corporate and politic body and shall have an official seal that shall be judicially noticed. The authority may sue and be sued, contract and acquire, hold, operate and dispose of property. Notwithstanding any other law and unless expressly waived by the auth [Text truncated for display. Full text available on LegiScan.]