(a) Of the funds transferred pursuant to Section 79076, at least thirty-five million dollars ($35,000,000) shall be for grants to small communities.

(b) For the purposes of this article, “small community” means a municipality with a population of 10,000 persons or less, a rural county, or a reasonably isolated and divisible segment of a larger municipality where the population of the segment is 10,000 persons or less, with a financial hardship as determined by the board.

(c) If the board determines that any of the funds made available for grants under this section will not be encumbered for that purpose on or before January 1, 2007, the board may use these funds for other purposes of this article.

(Added by Stats. 1999, Ch. 725, Sec. 1. Approved in Proposition 13 at the March 7, 2000, election.)