§9–1605.1.

    (a)    (1)    There is a Maryland Drinking Water Revolving Loan Fund. The Drinking Water Loan Fund shall be maintained and administered by the Administration in accordance with the provisions of this subtitle and such rules or program directives as the Secretary or the Board may from time to time prescribe.

        (2)    The Drinking Water Loan Fund is a special, continuing, nonlapsing fund which is not subject to § 7–302 of the State Finance and Procurement Article and which shall be available in perpetuity for the purpose of providing financial assistance in accordance with the provisions of this subtitle and the federal Safe Drinking Water Act.

        (3)    Subject to the provisions of any applicable bond resolution regarding the holding or application of amounts in the Drinking Water Loan Fund, the Treasurer shall separately hold, and the Comptroller shall account for, the Drinking Water Loan Fund.

        (4)    (i)    Except as provided in subparagraph (ii) of this paragraph, and subject to the provisions of any applicable bond resolution governing the investment of amounts in the Drinking Water Loan Fund, the Drinking Water Loan Fund shall be invested and reinvested in the same manner as other State funds.

            (ii)    The Administration, in cooperation with the Treasurer, may establish a linked deposit program to carry out the purposes of this subtitle and the federal Safe Drinking Water Act.

        (5)    Any investment earnings shall be retained to the credit of the Drinking Water Loan Fund.

        (6)    The Drinking Water Loan Fund shall be subject to audit by the Office of Legislative Audits as provided for in § 2–1220 of the State Government Article.

        (7)    The Administration shall operate the Drinking Water Loan Fund in accordance with §§ 9–1616 through 9–1621, inclusive, of this subtitle.

    (b)    There shall be deposited in the Drinking Water Loan Fund:

        (1)    Federal grants and awards or other federal assistance received by the State for the purpose of making loans to borrowers for water supply systems and any funds transferred from the Water Quality Fund pursuant to § 302 of the federal Safe Drinking Water Act;

        (2)    Funds appropriated by the General Assembly for deposit to the Drinking Water Loan Fund;

        (3)    Payments received from borrowers for deposit to the Drinking Water Loan Fund in repayment of a loan, including amounts withheld by the State Comptroller and paid to the Administration pursuant to a pledge made by a borrower under § 9–1606(d) of this subtitle or § 7–222 of the State Finance and Procurement Article;

        (4)    Net proceeds of bonds issued by the Administration;

        (5)    Interest or other income earned on the investment of moneys in the Drinking Water Loan Fund; and

        (6)    Any additional moneys made available from any sources, public or private, for the purposes for which the Drinking Water Loan Fund has been established.

    (c)    (1)    The Administration may establish accounts and subaccounts within the Drinking Water Loan Fund to:

            (i)    Effectuate the purposes of this subtitle;

            (ii)    Comply with the provisions of any bond resolution;

            (iii)    Meet the requirements of any federal law, or of any federal grant or award to the Drinking Water Loan Fund; or

            (iv)    Meet any rules or program directives established by the Secretary or the Board.

        (2)    (i)    The Administration shall establish a technical assistance subaccount within the Drinking Water Loan Fund.

            (ii)    Federal funds deposited in the Drinking Water Loan Fund for the purpose of providing technical assistance to small drinking water systems, as defined under the federal Safe Drinking Water Act, shall be distributed to the technical assistance subaccount.

            (iii)    The technical assistance subaccount may be used to provide financial assistance to entities specified in subparagraph (iv) of this paragraph for the purpose of providing technical assistance to small drinking water systems, with priority given to entities providing technical assistance for small drinking water systems in disadvantaged communities or communities disproportionately burdened by environmental harms and risks, including financial assistance for:

                1.    Assessing risks from water pipes made from lead;

                2.    Supporting the development of lead pipe inventories;

                3.    Supporting the development of an application for financial assistance under the Drinking Water Loan Fund; and

                4.    Supporting the development of a financing plan under the Drinking Water Loan Fund.

            (iv)    The following entities are eligible to receive financial assistance under this paragraph:

                1.    A small drinking water system, as defined under the federal Safe Drinking Water Act;

                2.    A multijurisdictional entity; or

                3.    A nonprofit organization working with a rural, small, tribal, or disadvantaged community.

    (d)    Amounts in the Drinking Water Loan Fund may be used only:

        (1)    To make loans at or below market rates on the condition that:

            (i)    The local government borrower will establish a dedicated source of revenue;

            (ii)    In the case of a water supply system owned by a borrower other than a local government, the borrower shall provide adequate security for the repayment of the loan;

            (iii)    The Drinking Water Loan Fund will be credited with all payments of the loan;

            (iv)    The loans are made at terms not to exceed:

                1.    30 years; or

                2.    With respect to disadvantaged communities as defined in the federal Safe Drinking Water Act, the lesser of 40 years after project completion or the design life of the project; and

            (v)    Annual principal and interest payments will commence not later than 18 months after completion of any drinking water facility and all loans will be fully amortized on the expiration of the term of the loan;

        (2)    To buy or refinance debt obligations of local governments issued by a local government for the purposes of financing all or a portion of the cost of a water supply system at or below market rates, if such debt obligations were incurred after July 1, 1993;

        (3)    To guarantee or purchase insurance for bonds, notes, or other evidences of indebtedness issued by a local government for the purposes of financing all or a portion of the cost of a water supply system, if such action would improve credit market access or reduce interest rates;

        (4)    As a source of revenue or security for the payment of principal and interest on bonds issued by the Administration if the proceeds of the sale of such bonds will be deposited in the Drinking Water Loan Fund;

        (5)    To earn interest on Drinking Water Loan Fund accounts;

        (6)    For the reasonable costs of administering the Drinking Water Loan Fund and conducting activities under any federal law that may apply to federal deposits to the Drinking Water Loan Fund;

        (7)    To establish a linked deposit program for loans in accordance with this subtitle and the federal Safe Drinking Water Act, including loans for:

            (i)    Controlling nonpoint sources of pollution and protecting the quality of State waters;

            (ii)    Protecting or acquiring forests or wetlands by fee or easement; or

            (iii)    Restoring forests;

        (8)    For loan subsidies for disadvantaged communities as provided by the federal Safe Drinking Water Act, including but not limited to loan forgiveness, provided that such loan subsidies comply with the limitations and requirements set forth in the federal Safe Drinking Water Act and any federal appropriations or authorization acts;

        (9)    To establish a sponsorship program that allows a local government to serve as the primary borrower and receive a loan for a publicly owned water supply system at a reduced interest rate if the loan also includes financing for a sponsored nonpoint source project managed by an organization;

        (10)    With respect to any federal funds deposited in the Drinking Water Loan Fund, to prioritize support for local governments, community water systems, and other eligible partners by:

            (i)    Serving as a guarantee for long–term pay–for–success contracts for the purchase of environmental outcomes that provide water quality benefits;

            (ii)    Supporting the delineation, assessment, or updated assessment of source water protection areas and the implementation of well head protection programs, including through grants and technical assistance; or

            (iii)    Supporting loans and loan guarantees for the protection of source water areas or the Chesapeake and Atlantic Coastal Bays watersheds through property acquisitions or easements for the purpose of controlling nonpoint sources of pollution;

        (11)    To support multiyear initiatives authorized under Title 8, Subtitle 2A of the Natural Resources Article that also involve funding from the Chesapeake and Atlantic Coastal Bays 2010 Trust Fund;

        (12)    To provide financial assistance to disadvantaged communities as defined in the federal Safe Drinking Water Act in the form of planning phase grants or design phase grants;

        (13)    For any other purpose authorized for any federal funds deposited in the Drinking Water Loan Fund including, without limitation, any purpose authorized by the federal Safe Drinking Water Act, including source water protection expenditures eligible for assistance from the Drinking Water Loan Fund; and

        (14)    To provide financial assistance in the form of grants, negative interest loans, forgiveness of principal, subsidized interest rates, and any other form of financial assistance as authorized or required by:

            (i)    The American Recovery and Reinvestment Act of 2009, as may be amended and supplemented;

            (ii)    §§ 302 and 1452 of the federal Safe Drinking Water Act;

            (iii)    Title VI of the Federal Water Pollution Control Act; or

            (iv)    Federal appropriations or authorization acts.

    (e)    In creating an intended use plan for the Drinking Water Loan Fund, the Administration shall prioritize opportunities to provide assistance to disadvantaged communities or communities disproportionately burdened by environmental harms and risks and support innovative financing partnerships to address environmental justice issues as defined in § 1–701 of this article, including through investment in:

        (1)    Water infrastructure loans designed to ensure fairer and more just opportunities to improve community health through better water service;

        (2)    Municipal consolidation efforts under § 9–707 of this title;

        (3)    Toxic lead service line replacement; and

        (4)    Green infrastructure that contributes to improved water quality and remediates or mitigates environmental and health hazards in disadvantaged communities or communities disproportionately burdened by environmental harms and risks.

    (f)    The costs of administering the Drinking Water Loan Fund shall be paid from federal grants and awards, from bond sale proceeds, and from amounts received from borrowers pursuant to loan agreements, and may not be paid from any State money appropriated to the Drinking Water Loan Fund, except general funds of the State used to match federal grants and awards to the Drinking Water Loan Fund.