[§340E-37]  Drinking water fund; conditions.  (a)  No loan or other financial assistance shall be made from the drinking water fund for any project unless:

     (1)  The project conforms with the state intended use plan to provide safe drinking water which meets section 1452 of the Federal Act;

     (2)  The project is certified by the director as being entitled to priority over other eligible projects on the basis of financial as well as drinking water quality needs; and

     (3)  In the case of water treatment works, the applicant for the loan or other financial assistance commits to maintain the water treatment works efficiently and properly after its construction.

     (b)  Except for subsidies to disadvantaged communities made consistently with section 1452(d) of the Federal Act, all loans from the drinking water fund shall:

     (1)  Be made at or below market interest rates, including interest free loans;

     (2)  Require payments of principal and interest with repayment commencing not later than one year after completion of the project for which the loan is made, and be fully amortized not later than twenty years after project completion, except that for disadvantaged communities an extended repayment term may be provided as allowed by the Federal Act;

     (3)  Require the recipient of the loan to establish a dedicated source of revenue (or in the case of a privately owned system, demonstrate that there is adequate security) for the repayment of the loans.  For a county, the dedicated source may be a pledge of the county's full faith and credit (a general obligation payable from its general fund), of special assessments, of revenues from an undertaking, system or improvements, including user charges, or of any other source of revenue; and

     (4)  Be repaid, both principal and any interest, to the credit of the drinking water fund. [L 1997, c 218, pt of §2]