(a) The Arkansas Natural Resources Commission is authorized to use the funds deposited into the Arkansas Water Resources Cost Share Revolving Fund for grants to local governments with limited financial capacity.
(b) In selecting the recipients for state grants authorized in this subchapter, the following factors shall be taken into consideration by the commission:
(1) The financial ability of the local government applicant to provide the cost-sharing funds for the water resources development project, including all available tax sources or assessments;
(2) The burden placed on low income, elderly, and unemployed persons if the local government applicant participates in a cost-sharing project and pays for the nonfederal share through a user fee or property tax; and
(3) The amount of fair user fees or other revenues which the water resources development project may reasonably be expected to generate in excess of those which would amortize the local share of the initial cost and provide for its successful operation and maintenance, including depreciation.
(c) No grant under this subchapter shall be awarded until the local government applicant has furnished the commission with sufficient proof of the exhaustion of all other funding sources and established that a deficiency exists in the amount of local funds necessary for the water resources development project.