If the department determines that a loan commitment pursuant to Section 12894 will not enable any eligible public agency specified in Section 1 of Chapter 842 of the Statutes of 1968 to obtain the funds necessary to construct projects utilizing water from the State Water Resources Development System or water obtained through an exchange of water from the system, the department may make loans from the funds appropriated by Section 12894 for the construction of such projects. Such loans shall be made upon the terms and conditions specified in Sections 12894.4, 12894.5 and 12894.6.
Source:
Section 12894.3, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=WAT§ionNum=12894.3..