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Panel updates state law to let NMFA make grants from Drinking Water SRF, extends loan terms
Summary
House Bill 240 would update state law to align with federal requirements for the Drinking Water State Revolving Fund, allow the New Mexico Finance Authority to provide grants instead of the current loan‑forgiveness workaround, and extend maximum loan terms to match federal changes.
Representative Herrera presented House Bill 240 to update the statutory framework governing the Drinking Water State Revolving Loan Fund so it aligns with current federal requirements and eases delivery of federal capitalization grants.
An expert from the New Mexico Finance Authority told the committee the chief change is to permit grants from the program rather than relying on loan forgiveness to approximate federal grant requirements. The expert said the state law that governs the program had not been updated since 2001 and that federal rules now sometimes require a grant component; allowing explicit grants reduces administrative complexity for recipients. The expert also said federal changes allow longer loan terms: projects that were previously limited to 20 years would be allowed up to 30 years, and communities classified as severely disadvantaged could see terms extended from 30 to 40 years.
Questions from members focused on which entities can receive grants and loans. The NMFA representative said municipalities, counties, primary water and improvement districts, and public water systems regulated by the Environment Department are eligible; a small number of privately owned, for‑profit water systems that operate as public water systems can also qualify. The representative further explained that tribal communities can apply, though priority listing is set by the Environment Department’s drinking water bureau and that EPA sometimes provides dedicated tribal earmarks.
Representative Duncan asked about who would be eligible for grants; NMFA explained that in many current projects some portion is delivered as a grant under existing policy, and specialized EPA capitalization grants (for example for emerging contaminants) can require all or most of an award to be delivered as a grant. Representative Duncan also asked about how capital outlay interacts with the SRF; NMFA said state capital outlay can be paired with SRF assistance.
The committee’s ranking member, Representative Chatfield, moved that the bill “do bounce” (a procedural referral); Representative Garrett seconded and the motion carried with no recorded opposition in the committee transcript.
What’s next: The bill was bounced for further consideration; if adopted, the statutory changes would enable NMFA and the Environment Department to pass federal grant resources through as grants and offer longer loan terms when federal law permits.
