Regional water pollution control authorities: Receipt of Clean Water Fund disbursements

(a) An authority created under sections 22a-500 to 22a-519, inclusive, shall be a public authority having power to make charges for its authorized function and shall be considered a municipality as defined in section 22a-475. (b) The initial project undertaken by a new authority shall receive (1) a grant of twenty-five per cent of the cost of the project, unless such project is a combined sewer project, in which case a new authority shall receive a grant of fifty-five per cent of the cost of the project. In either case such cost shall be the cost the United States Environmental Protection Agency uses in making grants pursuant to Part 35 of the federal Construction Grant Regulations Act and Titles II and VI of the federal Water Pollution Control Act, as amended; and (2) a loan for the remainder of the costs of the project, not exceeding one hundred per cent of the eligible water quality project costs. All loans made in accordance with the provisions of this section shall bear an interest rate of two per cent per annum. The Commissioner of Energy and Environmental Protection may allow any project fund obligation to be repaid by a borrowing authority prior to maturity without penalty.