A. No project which will result in increased demand for water in the area of the project shall be recommended for approval by the council until the council is satisfied that the political subdivision either holds or can acquire water rights sufficient to meet the increase in demand. Nothing in this subsection shall be construed to require any political subdivision to submit information in an application under Section 11-6-6 N.M. Stat. Ann. which information would not be required under that section.

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B. The council shall not approve a grant of funds for any political subdivision unless the council is satisfied that the political subdivision has taken all reasonable steps to use other sources of funding.

C. Of the grants made in any one fiscal year, at least fifteen percent of the dollar amount shall be made to counties with populations of less than fifteen thousand and other political subdivisions with populations of less than three thousand or on behalf of areas with populations of less than three thousand. For such grants, regardless of funding source, the council may, if it finds such to be in the public interest, waive any requirements to use other sources of funding.

D. No grant in excess of five hundred thousand dollars ($500,000) for any one project shall be made to a political subdivision in any one fiscal year, provided that this maximum does not apply to state funds for matching federal wastewater treatment facility construction grants.

E. In making grants from state funds that are not limited to a particular type of project, the council shall give priority to the needs of political subdivisions impacted either by rapid growth or loss of tax base.