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ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
forgivable financial assistance; cesspool remediation
Purpose
Authorizes counties to apply for and receive financial assistance from the Water Infrastructure Finance Authority of Arizona (WIFA) for the remediation, closure or replacement of cesspools that present a demonstrated risk to surface water, groundwater or public health.
Background
WIFA, through its Board, may: 1) issue negotiable water quality bonds to generate the state match required by the Clean Water Act for the Clean Water Revolving Fund and to generate the match required by the Safe Drinking Water Act for the Drinking Water Revolving Fund; 2) provide financial assistance to political subdivisions, Indian tribes and eligible drinking water facilities for constructing, acquiring or improving wastewater treatment facilities, drinking water facilities, nonpoint source projects and other related water quality facilities and projects; 3) provide financial assistance to political subdivisions and Indian tribes from monies in the Clean Water Revolving Fund to finance wastewater treatment projects; 4) provide financial assistance to drinking water facilities from monies in the Drinking Water Revolving Fund to finance these facilities; 5) guarantee debt obligations of, and provide linked deposit guarantees through third-party lenders to political subdivisions and drinking water facilities; and 6) carry out other statutorily prescribed powers (A.R.S. § 49-1203).
The Clean Water Revolving Fund and the Drinking Water Revolving Fund are established to be maintained in perpetuity and consist of: 1) monies appropriated by the Legislature; 2) monies received from the U.S. government, including capitalization grants; 3) monies received from the issuance and sale of bonds; 4) monies received from political subdivisions, Indian tribes or drinking water facilities as loan repayments, interest and penalties; 5) interest and other income received from investing monies in the funds; and 6) gifts, grants and donations received from any public or private source (A.R.S. §§ 49-1221 and 49-1241).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Allows a county to apply for and receive financial assistance, including forgivable principal, from WIFA for the remediation, closure or replacement of cesspools that present a demonstrated risk to surface water, groundwater or public health.
2. Allows a county that identifies and remediates a cesspool to construct or improve a wastewater treatment facility or nonpoint source project with monies borrowed from or financial assistance provided by WIFA.
3. Allows WIFA to award financial assistance, including forgivable principal, using monies from the Clean Water Revolving Fund or the Drinking Water Revolving Fund.
4. Allows monies in the Clean Water Revolving Fund and the Drinking Water Revolving Fund to be used for funding of financial assistance, including forgivable principal, for the remediation, closure or replacement of cesspools.
5. Allows the financial assistance, including the forgivable principal, to be used only for projects that eliminate existing cesspools and replace the existing cesspool with an on-site wastewater system that is approved by the Arizona Department of Environmental Quality (ADEQ) or that has a connection to a wastewater treatment facility.
6.
Requires a county that receives financial assistance, including
forgivable principal, to prioritize the remediation, closure or replacement of
cesspools that are located within areas of known groundwater vulnerability,
that are near surface waters or that are in communities with
low-to-moderate income households.
7. Allows a county to establish income-based eligibility criteria for owner-occupied properties.
8. Prohibits a county from applying means testing to the remediation of abandoned or uninhabitable properties.
9. Requires a county to coordinate with ADEQ to ensure that each project that has received financial assistance, including forgivable principal, is consistent with the county's water quality management plan.
10. Exempts a county that receives financial assistance, including forgivable principal, from being required to obtain voter approval to accept the financial assistance, including forgivable principal.
11. Allows WIFA, through its Board, to award financial assistance, including forgivable principal, for the remediation, closure or replacement of cesspools.
12. Requires WIFA, by January 1 of each year, to make an annual report that summarizes financial assistance, including forgivable principal, awarded by the WIFA Board.
13. Requires the financial assistance report to include:
a) the number and location of cesspools that have been remediated or replaced using financial assistance, including forgivable principal;
b) the total amount of financial assistance, including forgivable principal, that was awarded and forgiven; and
c) recommendations for improving the administration of financial assistance, including forgivable principal, that is awarded for the remediation, closure or replacement of cesspools.
14. Contains a statement of legislative findings and intent.
15. Makes technical and conforming changes.
16. Becomes effective on the general effective date.
House Action
NREW 1/20/26 DP 10-0-0-0
3rd Read 2/17/26 57-0-3
Prepared by Senate Research
February 27, 2026
SB/NRG/mg