State Water Board holds workshop on 2025–26 Clean Water SRF intended‑use plan; staff proposes loan capacity, Prop 4 allocations and new stormwater principal‑for

The State Water Resources Control Board held a workshop June 17 on the draft 2025–26 Clean Water State Revolving Fund (CWSRF) Intended Use Plan (IUP). DFA deputy director Lisa Hong and staff reviewed the program’s funding sources, recent financing, proposed loan and grant priorities, and requests for public comment before a final IUP is scheduled to come back for board adoption.

Nut graf: The draft IUP proposes maintaining a $600 million long‑term sustainable loan capacity for the CWSRF, restoring the Water Recycling Funding Program construction grant cap to $15 million, enlarging small community wastewater grant eligibility (including higher grant amounts and higher cost‑per‑connection limits), using Prop 4 appropriations for water recycling and wastewater projects where applicable, and allocating $20 million of principal forgiveness to stormwater projects this year. The plan also outlines the need to select new projects to meet federal equivalency requirements tied to the federal capitalization grant and the need to coordinate Prop 4 appropriations when finalized by the state budget.

Staff presented program details: the IUP consolidates federal capitalization grants (base program and IIJA/“BIL” funds), required state match and bond‑leveraging capacity; it shows FY 24–25 activity and current pending agreements. For loans, staff proposed a fundable cutoff score (draft recommendation scenario D) with a score cutoff of 13 to bring 10 new projects into the loan fundable list; staff noted the fundable list must include projects equivalent to the federal grant to meet equivalency and Build America, Buy America requirements. For small community wastewater, staff proposed a larger pool of principal forgiveness and grants (totaling approximately $456 million from combined sources in the draft), expanded eligibility beyond septic‑to‑sewer and violation remedies, and a 50% grant maximum for eligible projects. For water recycling, staff proposed restoring the grant cap to $15 million and adding a “large‑scale” category (≥10,000 acre‑feet/year) eligible for phased $15 million per phase awards; staff emphasized recent reversions and restorations of general‑fund appropriations for recycling in prior years and that Prop 4 may supply additional funds.

Stormwater: staff proposed $20 million in principal forgiveness for stormwater projects this year plus related federal small grant funds; staff noted that Prop 4 includes large stormwater allocations expected to roll out via a separate solicitation next year.

Public commenters included representatives of utilities, regional projects and trade groups. Common themes: support for restoring the water recycling grant cap, requests to expedite certification and recognition processes, appeals to prioritize shovel‑ready regional projects and septic‑to‑sewer solutions for disadvantaged communities, calls to increase technical assistance funding, and a request from several groups to consider scenario E (adding Windsor) to the loan fundable list. Staff said written comments are due June 30 and that the final IUP will be scheduled for board consideration in August after incorporation of the final state budget.

Ending: The workshop was informational; staff will revise the draft IUP as appropriate and bring it back for board consideration of adoption after taking public comments and when final state budget appropriations are known.