ARTICLE 6. Loans [12885. - 12885.9.]

Cal. Water Code - WAT 6.

in effect

Cal. Water Code - WAT § 12885. Section 12885.

The department is authorized to make state loans to public agencies for the construction of projects from moneys available for such loans. Loans in excess of four million dollars ($4,000,000) for any one project may be made by the department only upon specific approval of the Legislature, by an act enacted after the receipt of copies of the project report filed pursuant to Section 12882. 4 and upon such additional terms and conditions as the Legislature may prescribe.

Cal. Water Code - WAT § 12885.1. Section 12885.1.

Loans may be made only for projects primarily for domestic, municipal, agricultural, industrial, recreation, or fish and wildlife enhancement purposes. Such loans may be made for all or any part of the construction cost of any such project but in no event shall any such loan be in an amount which is greater than the portion of the construction cost of the project which the department finds to be beyond the reasonable ability of the public agency to finance from other sources. Such loans shall be repayable over a period not to exceed 50 years. A period of development of not exceeding 10 years may be allowed in addition to such maximum 50-year repayment period, during which no payments on the principal of or the interest on such a loan shall be required, when in the department’s judgment such development period is justified under the circumstances. If the payment of interest is deferred pursuant to this section, no interest shall be charged on the interest amounts for which payment is deferred. The accrued interest may, at the option of the public agency, be paid in annual installments during the remainder of the loan repayment period.

Cal. Water Code - WAT § 12885.2. Section 12885.2.

The department is authorized to make state loans to public agencies for the acquisition of interests in lands that are necessary for the construction, operation, or maintenance of proposed projects that would meet water needs of the public agencies. Such loans may be made separate and apart from loans that may be made under this chapter for the construction of proposed projects by public agencies. The making of each loan pursuant to this section shall be subject to the following conditions: (a) The loan may be made for all or any part of the cost of acquiring interests in lands for a proposed project but in no event shall any such loan be in an amount which is greater than the portion of such cost which the department finds to be beyond the reasonable ability of the public agency to finance from other sources. (b) The loan shall not exceed four hundred thousand dollars ($400,000) for any one project. A loan in excess of that amount for any one project may be made by the department only upon specific approval of the Legislature, by act enacted after the receipt of copies of the project report filed pursuant to Section 12882.4 and upon such additional terms and conditions as the Legislature may prescribe. (c) Each loan is subject to the provisions of Article 9 (commencing with Section 12889) of this chapter.

Cal. Water Code - WAT § 12885.3. Section 12885.3.

Each loan that is made pursuant to Section 12885.2 shall be repayable with interest upon the same terms as are applicable to construction loans that are made pursuant to this chapter, as set forth in Sections 12885.1 and 12885.8, except that each contract which the department enters into for a loan under this article shall provide for the sale of the interests in lands that are acquired with the loan if, in the department’s determination, the construction of the proposed project has not commenced within a period of 10 years from the date of the first disbursement of loan funds under the contract or within any extension of said period that the department may allow shall provide that, under that eventuality, such interests in lands shall be offered for sale within six months from the termination of such 10-year period or of any extension thereof, and shall provide that the proceeds of the sale shall be applied toward the repayment of the principal amount of the loan and toward the payment of the accrued interest thereon. Any remaining proceeds, after deducting administrative costs of the public agency in the purchase and sale of the interests in lands shall be repaid to the state.

Cal. Water Code - WAT § 12885.4. Section 12885.4.

Notwithstanding any provision of law to the contrary, any land acquired with a loan made pursuant to this chapter, which land is located outside the boundaries of the public agency acquiring the land and which was subject to taxation at the time of acquisition thereof, shall remain subject to taxation.

Cal. Water Code - WAT § 12885.5. Section 12885.5.

In furtherance of the policy set forth in Section 12881.4, no funds shall be loaned for either irrigation distribution system projects or municipal distribution system projects, except in cases which, in the judgment of the department and the commission, involve extreme hardship which jeopardizes the public health, safety or welfare. Distribution facilities which are a necessary and integral part of an overall water development project may be covered by a state loan.

Cal. Water Code - WAT § 12885.6. Section 12885.6.

The department is authorized to make state loans to public agencies for the preparation of feasibility reports on proposed projects, from any moneys available for such loans, in an amount for any one feasibility report on a proposed project not exceeding 2 percent of the estimated cost of the proposed project or fifty thousand dollars ($50,000), whichever is less; provided, that only one such loan may be made to a public agency in relation to any one proposed project. A loan in excess of said amount for any one feasibility report may be made by the department only upon authorization by the Legislature and upon such additional terms and conditions as the Legislature may prescribe.

Cal. Water Code - WAT § 12885.7. Section 12885.7.

Loans may be made for all or any part of the cost of the preparation of proposed feasibility reports on proposed projects, but in no event shall any such loan be in an amount which is greater than the portion of the cost of the preparation of the proposed feasibility report which the department finds to be beyond the reasonable ability of the public agency to finance from other sources. Such loans shall be repayable over a period not to exceed 10 years.

Cal. Water Code - WAT § 12885.8. Section 12885.8.

The department shall require the payment of interest on each loan that is made pursuant to this chapter after the effective date of the 1967 act amending this section, at a rate of 2 1 2 percent per annum.

Cal. Water Code - WAT § 12885.9. Section 12885.9.

The department, without the prior approval of the California Water Commission, is authorized during the calendar years 1976, 1977, and 1978 to make loans in amounts not to exceed two hundred thousand dollars ($200,000) to public agencies to provide emergency facilities needed to maintain water supplies in order to relieve drought situations. Such loans shall be repayable over a period of not to exceed 10 years and shall be repayable with interest at the rate specified in Section 12885.8. Loans may be made pursuant to this section only if no other funds are reasonably available for meeting the emergency and all other sources of emergency funding have been exhausted. Such loans may be made only to public agencies having the financial ability to repay and serving an area with a population of 200,000 or less. The Legislature finds that public agencies serving areas with a population of over 200,000 are able financially to relieve drought situations without assistance from the state. Notwithstanding any statutory limitations on its existing powers and except as restricted by the California Constitution, any public agency is authorized, without an election, to borrow and expend funds pursuant to this section to relieve water shortage emergencies within its boundaries.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026