Wat. Code, § 12986

(a) The department, upon appropriation by the Legislature, shall reimburse an eligible local agency pursuant to this part for costs incurred in any year for the maintenance or improvement of project or nonproject levees as follows:

(1) Costs incurred shall not be reimbursed if the entire cost incurred per mile of project or nonproject levee is either of the following:

(A) Two thousand five hundred dollars ($2,500) or less for a project or nonproject levee in an urban area.

(B) One thousand dollars ($1,000) or less for a project or nonproject levee in a rural area.

(2) Not more than 75 percent of any costs incurred in excess of the amount per mile of project or nonproject levee specified in paragraph (1) shall be reimbursed.

(3) In addition to project plans approved by the board, the department shall require the local agency to provide information to the department that may include, but is not limited to, a detailed engineer’s report prepared pursuant to subdivision (b) of Section 4 of Article XIII D of the California Constitution, audited financial statements, or an assessment commissioners’ report. The information provided to the department shall be the basis for determining the maximum allowable reimbursement eligible under this part. Nothing in this paragraph shall be interpreted to increase the maximum reimbursement allowed under paragraph (2).

(4) Reimbursements made to the local agency in excess of the maximum allowable reimbursement shall be returned to the department.

(5) All final costs allocated or reimbursed under a plan shall be approved by the Central Valley Flood Protection Board for project and nonproject levee work.

(6) Costs incurred pursuant to this part that are eligible for reimbursement include construction costs and associated engineering services, financial or economic analyses, environmental costs, mitigation costs, and habitat improvement costs.

(b) Upon completion of its evaluation pursuant to Sections 139.2 and 139.4, by January 1, 2008, the department shall recommend to the Legislature and the Governor priorities for funding under this section.

(c) Reimbursements made pursuant to this section shall reflect the priorities of, and be consistent with, the Delta Plan established pursuant to Chapter 1 (commencing with Section 85300) of Part 4 of Division 35.

(d) For the purposes of this section, the following definitions apply:

(1) “Rural area” means an area that is not an urban area.

(2) “Urban area” means an area in which 10 percent or more of the land area within the project area is used for residential use.