(a) The department, in conjunction with the authority shall administer a program for loans to water systems and the department may adopt regulations to govern the application procedure for loans under this part as well as to effectuate the purposes of this part.

(b) The department shall recommend to the authority an appropriate financing method for each water system which has applied for financial assistance under this part and which appears on the drinking water priority list established under this section. In recommending the interest rate for a loan, the department shall utilize the affordability criteria developed pursuant to this section. Water systems serving jurisdictions falling within the lower economic scale on the index shall be eligible for lower interest rates.

(c) Priority System. The department shall, after notice and opportunity for public comment, establish a priority system for loans under this part that to the maximum extent practicable, gives priority for the use of funds to projects that:

(1) Address the most serious risk to human health;

(2) Are necessary to ensure compliance with the requirements of the federal and state acts (including requirements for filtration); and

(3) Assist systems most in need on a per household basis according to state affordability criteria.

(d) Priority List. The department shall, after notice and opportunity for public comment, publish and periodically update a list of projects in the state that are eligible for assistance under this part, including the priority assigned to each project.

(e) The department shall, after notice and opportunity for public comment, establish affordability criteria for loans under this program which shall utilize an economic index based on factors which include, but are not limited to, per capita income and property values of the jurisdiction to be served.

(f) After providing for public review and comment, the department shall annually prepare a plan that identifies the intended uses of the amounts available to the fund. An intended use plan shall include:

(1) A list of the projects to be assisted in the first fiscal year that begins after the date of the plan, including a description of the project, the expected terms and schedule of financial assistance, and the size of the community served;

(2) The criteria and methods established for the distribution of funds, including the priority system; and

(3) A description of the financial status of the fund and the short-term and long-term goals of the fund.

(g) The department shall present to the authority its recommendations for loans to water systems. Prior to making a recommendation for loans to water systems, the department may ensure through an environmental review that loan funded projects shall be environmentally sound. The authority shall have final approval of such loans. Both the department and the authority shall be parties to the contracts with water systems concerning loans.

(h) The comptroller of the treasury shall make an annual audit of the fund as part of the comptroller of the treasury's annual audit of the authority and the department pursuant to § 9-3-211.

(i) The authority and the department shall have such other authority as may be necessary and appropriate for the exercise of the powers and duties conferred by this part.

(j) Notwithstanding any other provision of this part to the contrary, the department, in conjunction with the authority, may develop alternative financial assistance programs, which may include the issuance of the authority's revenue bonds, for water systems using the funds appropriated herein to effect the legislative intent of providing low-cost financial assistance to water systems, provided such programs are permissible under the federal act.

(k) Water systems and the authority shall have the powers discussed in § 68-221-1005(g), (h), (i), and (k), and may use such powers in the manner stated therein in relation to projects receiving loans under this part; provided, that this subsection (k) does not apply to privately owned for-profit community public water systems.

(l)

(1) The department and the authority may use any federal funds allocated to the state to make loans and to subsidize loans made through the program authorized by this part, through such mechanisms as forgiveness of principal and negative interest rates;

(2) The department and the authority may administer the program using the funds in accordance with the criteria set by the federal government; and

(3) The department may promulgate rules and develop forms that may be deemed necessary for the program.