Section 6. (a) Subject to limitations in other laws respecting the use of particular monies in the fund and any trust agreement for bonds of the trust, the board may also apply and disburse monies and revenues in the fund or segregated accounts therein: (i) after taking account of any grant made by the department under section 33E of chapter 21 to provide, and enter into binding commitments to provide, a subsidy for, or to otherwise assist local governmental units in the payment of, debt service costs on loans and other forms of financial assistance made by the trust; and (ii) to provide reserves for, or to otherwise secure, amounts payable by local governmental units on loans and other forms of financial assistance made by the trust under this chapter.

(b) The board shall apply and disburse monies in the fund and in the Drinking Water Revolving Fund, established under section 18, as applicable, including contract assistance provided in this section, or shall otherwise structure the debt service costs on loans and other forms of financial assistance made by the trust to provide a subsidy or other assistance to local governmental units or other eligible borrowers in the payment of debt service costs on such loans and other forms of financial assistance that shall be the financial equivalent of a loan made at an interest rate equal to 2 per cent. Notwithstanding the foregoing, but subject to the limit on contract assistance provided in this section and the availability thereof after taking into account committed contract assistance, the board may commit such available contract assistance to provide additional financial assistance to local governmental units or other eligible borrowers that shall be the financial equivalent of a loan made at an interest rate less than 2 per cent and which additional subsidy may include principal forgiveness; provided, that principal forgiveness committed under this section in any year shall not exceed 25 per cent of the total costs of all projects on that year's applicable clean water or drinking water intended use plan; and provided further, that a loan or other form of financial assistance that qualifies for an additional subsidy shall receive such additional subsidy in the amount and at a rate as determined by the board, which shall not exceed the financial equivalent of a 75 per cent subsidy as compared to a market rate loan as calculated at the time of board approval of such loan or other form of financial assistance.

(c) The department of environmental protection shall promulgate regulations, under section 7 establishing the types of eligible projects and criteria that the department shall use to evaluate applications for additional subsidies equivalent to a loan made at an interest rate of less than 2 per cent. The additional subsidies shall be made available to eligible projects appearing on the department's intended use plan the year following the release of regulations by the department and subsequent years. The criteria shall be reflective of: the board's current priorities; best management practices; and sustainability criteria, as determined by the United States Environmental Protection Agency and required by the Water Resources Reform and Development Act of 2014. Notwithstanding the foregoing regulations, all permanent loans and other forms of financial assistance made by the trust, which finance the costs of certain water pollution abatement projects on the department's intended use plan for calendar year 2009 to calendar year 2069, inclusive, and meet the criteria listed below, shall provide for an additional subsidy or other assistance in the payment of debt service such that the loans and other forms of financial assistance shall be the financial equivalent of a loan made at a 0 per cent rate of interest; provided, that the costs of water pollution abatement projects on an intended use plan that are eligible for a permanent loan or other financial assistance from the trust at the financial equivalent of a loan made at a 0 per cent rate of interest shall not exceed 35 per cent of the total costs of all water pollution abatement projects on the intended use plan.

(d) Projects shall be eligible for 0 per cent rate of interest loans if the department verifies that:

(1) the project is primarily intended to remediate or prevent nutrient enrichment of a surface water body or a source of water supply;

(2) the applicant is not currently, due to a violation of a nutrient-related total maximum daily load standard or other nutrient based standard, subject to a department enforcement order, administrative consent order or unilateral administrative order, enforcement action by the United States Environmental Protection Agency or subject to a state or federal court order relative to the proposed project;

(3) the applicant has a Comprehensive Wastewater Management Plan approved by the department of environmental protection or the department of environmental protection determines that the project is consistent with an areawide waste management plan approved under section 208 of the federal Clean Water Act;

(4) the project has been deemed consistent with the regional water resources management plans, including but not limited to a current areawide water resources management plan adopted under section 208 of the federal Clean Water Act, if such a plan exists; and

(5) the applicant has adopted land use controls, subject to the review and approval of the department in consultation with the executive office of housing and economic development and, where applicable, any regional land use regulatory entity, intended to limit wastewater flows to the amount authorized under zoning and wastewater regulations as of the date of the approval of the CWMP.

(e) The department shall promulgate regulations under section 7 establishing the types of eligible projects and criteria that the department shall use to evaluate applications for additional financial assistance, including principal forgiveness and additional financial incentives, consistent with the sustainability criteria as determined by the United States Environmental Protection Agency as required by the Water Resources Reform and Development Act of 2014. The financial assistance and financial incentives provided under these regulations shall be made available to projects appearing in the department's intended use plan the year following the release of regulations by the department and subsequent years. Such criteria may include, the following requirements, any 1 of which shall be sufficient to qualify the project for assistance: (i) the project is pursuant to a regional wastewater management plan that has been adopted by a regional planning agency with regulatory authority; (ii) the project is necessary to connect a local or regional local governmental unit to a facility of the Massachusetts Water Resources Authority, if the local or regional local governmental unit has paid or committed to pay the entry fee of that authority; (iii) the project is a green infrastructure project, as defined in section 26A of chapter 21, with consideration being given to projects that effectively combine green infrastructure with wastewater infrastructure and drinking water infrastructure projects; (iv) the project uses regional water resources to offset, by at least 100 per cent, the impact of water withdrawals on local water resources in the watershed basin of the receiving community; (v) the project is a direct result of a disaster affecting the service area that is the subject of a declaration of emergency by the governor; (vi) the project is intended to provide public water supply to consumers whose groundwater or public or private wells are impacted by contamination; or (vii) the program is an innovative water project utilizing new technology, which improves environmental or treatment quality, reduces cost, increases access and availability of water, conserves water or energy or improves management, in the areas of drinking water, wastewater, stormwater, groundwater or coastal resources; provided, that the project has not been fully implemented, other than as a pilot project, previously in the commonwealth.

(f) To provide the subsidy or assistance the state treasurer, acting on behalf of the commonwealth, shall enter into an agreement with the trust. Under the agreement, the commonwealth shall provide contract assistance for debt service obligations on loans and other forms of financial assistance made by the trust, up to a maximum amount of $138,000,000 per fiscal year. The agreement shall provide for payments by the commonwealth to the trust at such times during each fiscal year and upon such terms and under such conditions as the trust may stipulate. The trust may pledge such agreement and the rights of the trust to receive amounts thereunder as security for the payment of debt obligations issued to the trust. Such agreement shall constitute a general obligation of the commonwealth, for which the faith and credit of the commonwealth shall be pledged for the benefit of the trust and of the holders of any debt obligations of the trust which may be secured by the pledge of such agreement or of amounts to be received by the trust under such agreement.

(g) Each year, the trust shall commit contract assistance for debt service obligations on loans and other forms of financial assistance made by the trust in an amount that is at least 80 per cent of the limit set forth in subsection (f). If, in any year, the trust is unable to satisfy the 80 per cent threshold, the trust shall file a written report with the office of the state treasurer, the department, the chairs of the house and senate committees on ways and means and the house and senate chairs of the joint committee on the environment, natural resources and agriculture, not later than January 1 of that fiscal year, explaining the reasons why the 80 per cent threshold will not be satisfied in that year.

(h) With respect to projects appearing on the department's intended use plan for calendar year 2016 and subsequent years: (i) the board shall not commit contract assistance to provide for the additional subsidy or other form of financial assistance referred to in subsections (c), (d) or (e) to any local governmental unit unless it has established a sewer enterprise fund or water enterprise fund, as applicable, under section 53F1/2 of chapter 44, or in lieu of the applicable enterprise fund has established a separate restricted account that is the equivalent of such fund; and (ii) any local government unit that transfers or otherwise uses money from its enterprise fund or restricted account for its local governmental operating budget, other than to pay or reimburse, valid expenses or obligations related to such fund or restricted account, will not be eligible to seek new commitments of contract assistance to provide for the additional subsidy or other form of financial assistance referred to in subsections (c), (d) or (e) for a period of 5 years following the date of such transfer or other use; provided however, this clause shall only apply if the disqualifying event occurred after January 1, 2015.