(a) In reviewing an application by a political subdivision for a loan, the board shall consider the ability of the political subdivision to repay the loan and whether the loan will further water conservation in this state.
(b) To approve a loan to a political subdivision, the board must determine that:
(1) the public interest is served by providing the loan;
(2) the political subdivision has the ability to repay the loan; and
(3) the loan will further water conservation in the state.
(c) The board by rule shall establish the rate of interest it charges for a loan to a political subdivision.