(1) All applicable environmental documentation must be completed prior to entering into a contract.

(2) The Department may enter into a contract before the applicant has obtained all applicable permits, but may not disburse any funds to be used for land acquisition and/or project construction until the applicant has complied with all applicable federal, state and local laws, rules and regulations, and obtained all required permits.

(3) Applicants for all projects impacting a domestic water supply must have the project approved in writing by the State Department of Health Services before a construction contract can be executed.

(4) If a contract is not signed by the applicant within six months after the Department transmits a letter of commitment of funds, the letter of commitment may be withdrawn or revised.

(5) The Department may, at its discretion, require that final plans and specifications, certified by a registered civil engineer, be submitted to it for approval prior to execution of a construction loan contract.

(6) The term of the loan shall be as short as possible considering the ability of the applicant to repay the loan.

(1) The estimated cost of the project or feasibility study.

(2) An agreement by the Department to loan or grant the applicant an amount which equals the portion of the costs of the project or feasibility study, found by the Department to be eligible for State funding. The agreement may provide for disbursement of funds during the progress of the project or feasibility study, or following completion of the project or feasibility study, as agreed by the parties. The agreement may allow the Department to withhold up to 10 percent of the loan or grant proceeds until the project or feasibility study is completed.

(3) If the entire project or feasibility study is not being funded under this Bond law, the Department shall include a provision requiring the applicant to share in the cost of the project or feasibility study or obtain funding from other sources. This provision shall provide that no State funds shall be disbursed until the applicant demonstrates acquisition of sufficient funds to complete the project or feasibility study. It may also provide that no State funds shall be disbursed until all amounts of other funds have been exhausted.

(4) An agreement by the applicant to commence operation of the project upon completion thereof, and to properly operate and maintain the project in accordance with the applicable provisions of law.

(5) An agreement by the applicant to repay the state, over a period not to exceed the useful life of the project or 20 years, whichever is shorter, or, in the case of a feasibility study, over a period not to exceed five years, all of the following:

(6) An agreement to provide security for repayment of the loan, as deemed appropriate by the Department.

(7) An agreement to retain a fiscal agent and make deposits with that fiscal agent to assure that sufficient funds will be available for the fiscal agent to transmit semiannual payments of principal and interest to the State when due. The services of the fiscal agent shall continue until the loan has been fully repaid. The applicant may employ the services of its county controller or treasurer as fiscal agent.

(8) Unless otherwise approved by the Department, a reserve of at least two semiannual payments shall be accumulated and deposited with the fiscal agent during the first ten years of the loan repayment period. At least half of the required reserve balance shall be on deposit by the end of the first five years. Reserves shall be maintained at these levels thereafter until the loan is repaid in full.

(9) An agreement to use the competitive bidding process for all construction, materials, and equipment contracts exceeding $20,000 unless an exception in writing has been obtained from the Department. An applicant seeking a waiver of the contractual competitive bidding requirement shall make a written request to the Department, in advance of the bidding process, which sets forth the reasons for the request and demonstrates that no statute or ordinance imposing competitive bidding requirements will be violated if the waiver is granted. In addition, applicants shall obtain the written consent of the Department before using the services of their own employees to perform engineering or construction work on the project.

(10) An agreement by the applicant, where the local project has as one of its components land acquisition, to comply with Water Code Section 78680.16.

(11) An agreement that funds retained pending completion of project items and contracts shall not be disbursed until the Department has received written certification by a registered engineer that the specific item or contract has been completed in accordance with the plans and specifications.

(1) An agreement by the applicant to adopt a fee structure which provides for the proper maintenance and operation of the project and includes a sinking fund for repair and replacement of the facilities.

(2) Any other terms determined to be appropriate by the Department.