Wat. Code, § 12885.1

Loans may be made only for projects primarily for domestic, municipal, agricultural, industrial, recreation, or fish and wildlife enhancement purposes. Such loans may be made for all or any part of the construction cost of any such project but in no event shall any such loan be in an amount which is greater than the portion of the construction cost of the project which the department finds to be beyond the reasonable ability of the public agency to finance from other sources. Such loans shall be repayable over a period not to exceed 50 years. A period of development of not exceeding 10 years may be allowed in addition to such maximum 50-year repayment period, during which no payments on the principal of or the interest on such a loan shall be required, when in the department’s judgment such development period is justified under the circumstances. If the payment of interest is deferred pursuant to this section, no interest shall be charged on the interest amounts for which payment is deferred. The accrued interest may, at the option of the public agency, be paid in annual installments during the remainder of the loan repayment period.