SB 349
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader
Senate Bill 349 (Chair, Education, Health, and Environmental Affairs
Committee)(By Request - Departmental - Environment)
Education, Health, and Environmental Affairs Environment and Transportation
Environment – Drinking Water Revolving Loan Fund – Use of Funds
This departmental bill makes changes to the statute governing the Maryland Drinking
Water Revolving Loan Fund (DWRLF) to conform State law to federal law. The bill
increases the maximum term limit for loans made from DWRLF and increases the
maximum amount of loan subsidies that can be issued to disadvantaged communities. In
addition, the bill increases the time period after the completion of a drinking water facility
when annual principal and interest payments begin. Finally, the bill clarifies the authorized
uses of funds in DWRLF to include uses authorized or required by relevant provisions of
the federal Safe Drinking Water Act (SDWA).The bill takes effect July 1, 2021.
Fiscal Summary
State Effect: There is no material fiscal impact on State finances. The Maryland
Department of the Environment (MDE) can implement the bill’s changes with existing
resources.
Local Effect: Meaningful benefit for local governments that have access to longer loan
terms and/or additional subsidies under the bill. These changes will make projects more
affordable for local governments, particularly in the long term.
Small Business Effect: MDE has determined that this bill has minimal or no impact on
small business (attached). The Department of Legislative Services concurs with this
assessment.
 Analysis
Bill Summary:
The bill specifies that, for loans made at or below market rates from DWRLF, loan terms
cannot exceed 30 years, or with respect to disadvantaged communities, the lesser of
40 years after completion of the project or the design life of the project; under current law,
the maximum loan term is generally 20 years. The bill also increases the time period after
the completion of a drinking water facility when annual principal and interest payments
begin (from one year to 18 months). Finally, the bill repeals a provision that limits loan
subsidies for disadvantaged communities from exceeding 30% of the annual federal
capitalization grant received for DWRLF and instead specifies that they must comply with
SDWA and any federal appropriations or authorization acts. (Under SDWA, the total
amount of loan subsidies made to disadvantaged communities generally may not exceed
35% of the annual capitalization grant received by the state.)
Current Law/Background:
DWRLF was created in 1993 to provide below-market-rate loans for drinking water
projects. The revolving loan fund provides financial assistance for a wide variety of
projects to facilitate compliance with national primary drinking water standards that protect
or improve the quality of the State’s drinking water resources. MDE’s Water Quality
Financing Administration (WQFA) oversees DWRLF, which receives federal
capitalization grants and other funding from the U.S. Environmental Protection Agency
(EPA).
Under current law, all loans must be fully amortized within 20 years of the completion of
any drinking water facility (except as specified), and annual and interest payments must
begin within one year of completion of the facility. For loan subsidies for disadvantaged
communities, which can include loan forgiveness, the loan subsidy amount cannot exceed
30% of WQFA’s annual federal capitalization grant. To qualify as a disadvantaged
community, a community must meet one of the following criteria: (1) have a median
household income that is less than 70% of Maryland’s median household income; (2) have
county unemployment in the upper 1/3 percentile; (3) have population decline since the
last census; or (4) identify a project that is located in, or that benefits, an MDE
environmental benefits district.
According to MDE, the bill is necessary to conform State law to federal law, as noted by
EPA in its most recent program review. Recent federal legislation (America’s Water
Infrastructure Act of 2018) made changes to DWRLF, including increasing loan terms and
increasing subsidy amounts to disadvantaged communities. The bill makes corresponding
changes to State law. MDE anticipates that the bill’s changes will make projects more
SB 349/ Page 2
affordable for local jurisdictions by providing longer loan terms and increasing loan
forgiveness options for disadvantaged communities.
Local Fiscal Effect:
Local governments are among the primary recipients of assistance from DWRLF. Under
the bill, MDE can offer local governments longer loan terms and additional subsidies,
which will make drinking water projects more affordable. The bill also increases the time
period after the completion of a drinking water facility when annual principal and interest
payments begin, which reduces initial project costs.
Additional Information
Prior Introductions: None.
Designated Cross File: None.
Information Source(s): Maryland Department of the Environment; Department of
Legislative Services
Fiscal Note History: First Reader - January 11, 2021
rh/lgc Third Reader - February 2, 2021
Analysis by: Kathleen P. Kennedy Direct Inquiries to:
(410) 946-5510
(301) 970-5510
SB 349/ Page 3
 ANALYSIS OF ECONOMIC IMPACT ON SMALL BUSINESSES
TITLE OF BILL: Environment – Maryland Drinking Water Revolving Loan Fund –
Use of Funds
BILL NUMBER: SB 349
PREPARED BY: Jeffrey Fretwell
PART A. ECONOMIC IMPACT RATING
This agency estimates that the proposed bill:
_X_ WILL HAVE MINIMAL OR NO ECONOMIC IMPACT ON MARYLAND SMALL
BUSINESS
OR
WILL HAVE MEANINGFUL ECONOMIC IMPACT ON MARYLAND SMALL
BUSINESSES
PART B. ECONOMIC IMPACT ANALYSIS
This legislation will have minimal impact on Maryland small businesses.
SB 349/ Page 4


Statutes affected:
Text - First - Environment – Drinking Water Revolving Loan Fund – Use of Funds: 91-605.1 Environment
Text - Third - Environment – Drinking Water Revolving Loan Fund – Use of Funds: 91-605.1 Environment