(a) (1) There is hereby established in the state treasury the water projects grant fund. The fund shall be administered by the Kansas water office. Expenditures from such fund shall be used for the purposes described in subsection (b). All expenditures shall be made in accordance with appropriation acts upon warrants of the director of accounts and reports issued pursuant to vouchers approved by the director of the Kansas water office, or such director’s designee.

(2) Whenever the unencumbered balance of the water projects grant fund exceeds $35,000,000, the director of the Kansas water office shall certify such excess amount to the director of accounts and reports. Upon receipt of such certification, the director of accounts and reports shall transfer the certified excess amount from the water projects grant fund to the state general fund.

(b) The Kansas water office may provide full or partial funding in the form of grants to any municipality or special district related to water established pursuant to the laws of the state of Kansas for the following:

(1) Construction, repair, maintenance or replacement of water-related infrastructures and any related construction costs;

(2) matching moneys for grant or loan applications for water-related infrastructure projects; and

(3) grants that may be applied to an outstanding loan balance from the public water supply loan fund established in Kan. Stat. Ann. § 65-163e, and amendments thereto, or the Kansas pollution control revolving fund established in Kan. Stat. Ann. § 65-3322, and amendments thereto, subject to the provisions of subsection (c).

(c) The Kansas water office shall adopt rules and regulations to establish any necessary criteria for grants from the water projects grant fund. Such rules and regulations shall include any necessary criteria that may be applied to the selection of projects with outstanding loan balances from the public water supply loan fund established in Kan. Stat. Ann. § 65-163e, and amendments thereto, or the Kansas pollution control revolving fund established in Kan. Stat. Ann. § 65-3322, and amendments thereto. Such criteria shall be based on the following factors:

(1) The planned construction on the project with the outstanding loan balance is complete;

(2) the municipality or special district has made at least five years of payments on such project loans;

(3) awarding grants that provide repayment of up to:

(A) 90% of any remaining project loan balance for cities with fewer than 2,000 residents;

(B) 75% of any remaining project loan balance for cities with fewer than 5,000 residents;

(C) 50% of any remaining project loan balance for cities with fewer than 10,000 residents; and

(D) 25% of any remaining project loan balance for all other cities in Kansas; and

(4) any other relevant criteria including, but not limited to, the socio-economic status of the residents of any municipality, public health and the ability of any municipality to repay a loan without further assistance.

(d) No single grant awarded for a project pursuant to this section shall be greater than $8,000,000 unless specified by any appropriation act of the Kansas legislature.

(e) The Kansas water office and the department of health and environment shall coordinate the sharing of information regarding applicants for loans from the public water supply loan fund established in Kan. Stat. Ann. § 65-163e, and amendments thereto, and the Kansas pollution control revolving fund established in Kan. Stat. Ann. § 65-3322, and amendments thereto, and shall take into consideration the approval or likely approval of a grant by the Kansas water office when considering the eligibility of any municipality to receive moneys from such funds.