Section 10. (a) Any local governmental unit may apply to the trust for a loan to assist in financing the cost of a water pollution abatement project. At the option of the trust, loans may be unsecured or may be secured by local governmental obligations for delivery to the trust to evidence the loan. Each loan shall be made pursuant to a loan agreement between the trust and the local governmental unit acting by and through the officer or officers, board, committee or other body authorized by law, or otherwise its chief executive officer. The department may join in any loan agreement to effectuate its powers and responsibilities provided in sections twenty-seven A and thirty-three E of chapter twenty-one.

(b) A local government unit may receive, apply, pledge, assign and grant security interests in, its general revenues and local system revenues to secure its obligations under loans and local governmental obligations as provided in this chapter and may fix, revise, charge and collect fees, rates, rents, assessments and other charges of general or special application for the operation or services of any water pollution abatement project, the system of which it is a part and any other revenue producing facilities from which the local governmental unit derives local system revenues, to meet its obligations under any loan agreement or local governmental obligation or otherwise to provide for the construction, maintenance and operation of the project and the system and facilities.

(c) For entering into a loan and establishing the authorized terms and conditions thereof, and for issuing any local government obligations a local governmental unit shall be deemed to have the powers expressly granted to local governmental units in this chapter and the powers granted to that local governmental unit in any bond act applicable to it specifically or as a member of a class of governmental instrumentalities. Liberal construction shall be given in support of the broadest interpretation of local government unit powers derived from either this chapter or any bond act, provided that nothing in this chapter shall be construed as affecting the manner of voting and other procedures relating to, or otherwise required by any bond act for, the authorization of indebtedness of any local governmental unit by the governing body thereof or any limitations on indebtedness of local governmental units.

(d) If any city or town, or any board, commission, or other public instrumentality thereof or of the commonwealth, which is a service recipient of a regional local governmental unit shall fail to pay when due and after demand any certified charges of the regional local governmental unit required to meet its obligations under this chapter, the regional local governmental unit may certify to the state treasurer the amount owing to the regional local governmental unit by such city, town or other instrumentality and the state treasurer shall promptly pay over to the regional local governmental unit without further appropriation any local aid distributions otherwise certified to the state treasurer as payable to the city or town, or in the case of any other instrumentality, as payable to all cities and towns in the service area of such instrumentality, until such time as any deficiency in the amounts due the regional local governmental unit shall have been offset by such payments from the state treasurer. In the event of a dispute between any city or town and the regional local governmental unit concerning the amount to be repaid to the regional local governmental unit by any city or town said dispute shall be arbitrated by an appeal board consisting of the commissioner of the department of revenue or his designee, the commissioner of the department of environmental protection or his designee, and a third member to be nominated by the Massachusetts Municipal Association. The state treasurer shall not offset any deficiency amount from the local aid distribution due to any city or town unless or until the appeal board has rendered its decision. Any amount paid to such local governmental unit by the treasurer under this section which is later determined, upon audit, to be in excess of the actual amount due the regional local governmental unit, shall upon demand of the local governmental unit or city or town, be repaid by the regional local governmental unit to the local governmental unit, city or town.

(e) In addition to authority otherwise provided by law, if all or any part of a project shall fail to be approved for financial assistance pursuant to this act, the local governmental unit may apply to the Massachusetts Industrial Finance Agency for a loan to finance all or any part of such project. For such purposes, any local governmental unit as defined in this chapter shall qualify as a public body under section thirty of chapter twenty-three A. The second sentence of paragraph (c) of section thirty-five of said chapter twenty-three A shall not apply to bonds issued by the agency.