BILL ANALYSIS
SENATE AGRICULTURE & WATER RESOURCES COMMITTEE
Senator Jim Costa, Chairman
BILL NO: AB 2058 HEARING: 6/18/02
AUTHOR: Papan FISCAL: Yes
VERSION: 6/11/02 CONSULTANT: Brent
Walthall
Regional Water Supply and Conservation Agency.
BACKGROUND AND EXISTING LAW
In 1913 Congress passed the Raker Act which gave the City of San
Francisco and other bay area municipalities and water districts
a grant of right-of-way to construct a dam and reservoir system
in Yosemite National Park and the Stanislaus National Forest.
The grant extended to dam sites and reservoirs, roads, power
generation and transmission facilities, communication
facilities, and trails, bridges and railways. Under the terms
of the grant, San Francisco was required to make annual payments
to the National Park Service for the privilege of constructing a
water system in a national park. Currently the city pays
$30,000 per year as required by the Raker Act and approximately
$2 million annually in services and in-kind contributions.
San Francisco's Hetch Hetchy Water System was built in the
1920's and 30's and today provides domestic and industrial water
supplies to 2.4 million people in Alameda, San Francisco, San
Mateo, and Santa Clara counties. Water from Hetch Hetchy
reservoir travels 160 miles via gravity from Yosemite to the San
Francisco Bay Area. The regional system consists of over 280
miles of pipelines, 60 miles of tunnels, 11 reservoirs, 5 pump
stations, and 2 water treatment plants. The entire system
delivers approximately 260 million gallons of water per day to
its customers.
Eighty-five percent of the water delivered to the SFPUC's
customers comes from Sierra Nevada snowmelt stored in the Hetch
Hetchy reservoir situated on the Tuolumne River in Yosemite
National Park. The remaining 15 percent comes from runoff in
the Alameda and Peninsula watersheds. This "local" water is
captured in reservoirs in San Mateo and Alameda Counties.
Water from the Hetch Hetchy system is delivered to residents and
businesses in the City and County of San Francisco and to 29
other bay area cities and water districts, commonly referred to
as the "suburban customers". Approximately one-third of the
water is used by residents of the City and County of San
Francisco and two-thirds of the water is used by the suburban
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customers.
The infrastructure of the Hetch Hetchy system is more than 70
years old and little has been done to upgrade the system since
its construction. As a result, the city is facing a $4.6
billion capitol improvement program to address increased water
demand, seismic retrofit, and system rehabilitation. The city
is currently examining options for placing a bond issue before
city voters to fund the capital improvement program.
The water system is operated by the San Francisco Public
Utilities Commission (SFPUC). The SFPUC is made up of five
members who are appointed by San Francisco's mayor. The SFPUC
appoints a general manager to manage the water system's
day-to-day affairs.
The water system's state of disrepair has been frustrating to
the city's suburban customers. At their urging, Assemblyman
Papan requested the Joint Legislative Audit Committee to audit
the SFPUC to determine if it was acting appropriately in
beginning, planning, and completing necessary capital projects
on the Hetch Hetchy system. In February 2000, that review
concluded that the SFPUC has made little progress in completing
capital projects, did not develop a water supply plan in a
timely manner, and has a shortage of staff available to work on
capital projects.
Since the completion of the audit, the SFPUC hired the Bechtel
engineering firm to assist the SFPUC in implementing its capital
improvement program. A news article from the Sunday, April 28,
2002, San Francisco Chronicle reports that the San Francisco
Board of Supervisors has taken action to stop payment to the
engineering firm in a effort to remove them from the job. The
SFPUC's executive director states in the article that the Board
of Supervisors' decision to remove Bechtel will delay the
capital improvement program by another eight to nine months.
PROPOSED LAW
General Provisions
The bill adds Division 31 to the Water Code as the Bay Area
Water Supply and Conservation Agency Act.
The bill makes findings and declarations including: a variety
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of separate districts that deliver water to bay area residents;
those districts depend on the Hetch Hetchy system for imported
water supplies; the Hetch Hetchy system is vulnerable to
earthquakes; the lack of an intergovernmental agency to
coordinate bay area water needs leads to inefficiencies; it is
the intent of the Legislature to allow the bay area districts to
establish a multi-county agency to meet the region's water
needs.
The bill provides definitions for words used elsewhere in the
bill. The definitions include a list of the existing public
entities that may be included in the Bay Area Water Planning and
Conservation Agency.
Formation of Agency
The bill would allow any eligible entity, as defined, to declare
its intention to form the Agency by a majority vote of its
board. The resolution passed by the board must include specific
items including the time and place of the public hearing at
which the eligible entity will decide whether or not to become a
member of the Agency, direction to publish notice of the time
and date of the hearing, and the name of all other eligible
public entities that would be part of the Agency. Upon passing
the resolution of intention, the eligible entity must send a
copy of the notice of all of the other eligible entities
identified in the bill.
After receiving the resolution, the other eligible entities must
also adopt resolutions that schedule a time and date for a vote
on whether to form the Agency and whether or not to become a
member.
The bill requires all of the eligible entities to hold public
hearings to decide whether to form and become a member of the
Agency. If the resolution is adopted, a copy must be forwarded
to the San Mateo County Board of Supervisors. Adoption or
rejection of the resolution to form and become a member of the
Agency is subject to referendum.
Establishment of Agency
The San Mateo County Board of Supervisors must determine if at
least 15 eligible entities have adopted a resolution to form and
become a member of the Agency, and if those 15 represent at
least 60 percent of the total water deliveries to all of the
eligible entities. The Board shall declare that the Agency has
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been formed if it finds that at least 15 eligible entities
representing at least 60 percent of total water deliveries to
all eligible entities have adopted the resolution to form and
become a member of the Agency.
If the Board finds that fewer than 15 eligible entities adopt
the resolution, then the Agency is not formed and the eligible
entities can undertake the formation process again at any time.
Resolutions in favor of forming the Agency may stay in effect
for the time specified in the resolution.
The San Mateo County Board of Supervisors must notify the
Secretary of State of the formation of the Agency, the Agency's
name, and the names of all eligible entities that are members of
the Agency, and a map showing the boundaries of the Agency. The
formation of the Agency shall be effective on the date the
Secretary of State issues a certificate to each eligible entity
that it is a member of the Agency.
Any action to invalidate the formation of the Agency must be
within 90 days of the Secretary of State's certification.
The bill would establish a board of directors to govern the
Agency. Each eligible entity (now a member public entity) would
appoint one director. Each director must be a registered voter
within the boundaries of the member public entity. The Board of
Supervisors of San Mateo County would appoint one director to
represent the California Water Service Company. The Board of
Supervisors of Santa Clara County would appoint one director to
represent Stanford University.
The Agency may enter into contracts with Stanford University or
the California Water Service Company only if: (1) the director
appointed by the San Mateo County Board of Supervisors does not
participate in the vote, and (2) the contract is affirmed by a
majority of directors other than the San Mateo County appointee.
The bill states that contracts entered into in this manner do
not violate the state's conflict of interest code (sections 1090
or 1097 of the Government Code).
Each director would serve a term of four years, and directors
may be re-appointed for successive terms. Vacancies must be
filled within 90 days. Directors may receive up to $100 per day
for attendance at meetings, but not more than 4 meetings in any
month. Directors may be reimbursed for actual expenses.
A majority of the board constitutes a quorum for purposes of
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conducting business. The board may act by ordinance,
resolution, or motion. The board must elect a chair and
vice-chair from among its members.
Each director has one vote and a majority of the directors
present and voting is required to pass an ordinance, resolution,
or motion.
The bill would allow any director to call for a vote based on
weighted voting. Weighted voting would be based on the amount
of water delivered to the member public entity from the City and
County of San Francisco during the 2000-01 fiscal year. The
votes are weighted in a manner that ensures a minimum of one
vote for all member public entities and allocates additional
votes for member pubic entities in direct proportion to the
percent of water they receive out of the total delivered to all
member public entities.
The bill requires an affirmative weighted vote to consist of a
majority of the members of the board present and voting and a
majority of the number of votes allocated under the weighted
voting system.
The board may establish alternative procedures for weighted
voting by a two-thirds vote of all of the directors, each having
one vote, and at least 51 votes under the weighted voting
system.
The bill requires the board to appoint a general manager, a
financial officer, and a secretary. The board must describe the
duties, compensation, and terms and conditions of all officers.
The board may employ other employees and may delegate hiring to
the general manager. The state's conflict of interest code
applies to all officers and employees of the Agency and the
Agency is a local government agency for the purpose of the
Political Reform Act of 1974.
Powers and Functions of Agency
The measure authorizes the Agency to exercise the powers
provided by the bill and any implied powers necessary and proper
to carryout the Agency's duties. The Agency may adopt a seal,
adopt regulations, make contracts, and contract with any agency
of the state or federal government or any public or private
person. The Agency may own real or personal property within or
without the Agency and has the right of eminent domain.
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The Agency may plan and construct water works and has the
authority to carryout projects. The Agency may apply for and
receive state and federal funding.
The Agency board must adopt a budget annually and the Agency's
accounts must be audited annually. The Agency may borrow money,
incur indebtedness, and issue bonds. Revenue bonds require a
two-thirds vote of the board and at least 51 votes under the
weighted voting system. The Agency does not need the approval
of voters to issue bonds, but must provide notice to the public
of its intent to issue revenue bonds.
The Board may impose assessments to cover its budgeted expenses.
The assessments must be proportional to the water deliveries
received by each member public entity.
The Agency may use the proceeds of bonds to construct,
reconstruct, or improve any works built by the Agency or may
give the proceeds of bonds to other local public agencies for
the construction of works intended to provide water to the
Agency's members. The Agency may request the City to impose a
surcharge on its members to pay the debit service on bonds
issued by the Agency and the Agency's operating expenses. The
City shall impose that surcharge on the water bills it issues to
the Agency's member public entities.
Water Supply
The Agency may: acquire water and water rights; develop, store,
and transport water; sell water at wholesale within the
boundaries of the Agency; acquire, construct, maintain and
improve any facilities within and without the Agency necessary
or convenient to carry out the purposes of this act. The Agency
may conduct studies of water supply, determine current demand,
and project future demand. The Agency may sell water surplus to
the needs of its member public entities. The Agency may not
sell water to any retail user. The Agency may not use its
powers of eminent domain to acquire property owned by the City.
Changes in Organization
The bill provides that any area annexed to or detached from a
member public entity is similarly annexed to or detached from
the Agency. Public entities that are not members of the Agency
upon its formation may become members with the approval of the
Agency board under terms that ensure equitable standing with
existing Agency members. The new member shall appoint one
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director to the Agency board. The Agency must notify the
Secretary of State of the new member.
Miscellaneous
The bill provides that membership in the Agency does not enhance
or diminish the legal status of a member public entity.
The bill establishes the average annual water deliveries each
member public entity received form the City during 2000-01.
These amounts are used to determine weighted voting and the
share of costs each member public entity will incur for the
operation of the Agency.
The bill clarifies that nothing in this act changes the
governance, control, or ownership of the Hetch Hetchy system.
The bill includes a waiver of claims for state mandated local
program costs.
COMMENTS
1.The Hetch Hetchy system is wholly owned and operated by the
City and County of San Francisco. No other entity has any
control of the system's operation. However, as much as
two-thirds of the water from the Hetch Hetchy system is used
and paid for by people that do not reside in the City.
Because these residents do not live in the City, they do not
vote in City elections and therefore are not able to vote for
the leaders that do control the Hetch Hetchy system. Nowhere
else in the state are so many people served by a water system
over which they do not even have a minimal say. This bill
does not remedy that inequity. It does take a first step by
establishing an agency that would speak with one voice
representing all of the non-city residents and businesses that
use water from the Hetch Hetchy system.
2.The bill would give the Agency, if formed, the authority to
borrow money, issue bonds, and incur indebtedness. This
authority would duplicate the authority given to the San
Francisco Bay Area Regional Water System Financing Authority
established in SB 1870 (Speier) and passed by this committee
on May 7, 2002 (SB 1870 is currently in the Assembly Local
Government Committee). Because both bills have the same
sponsor, the committee should question witnesses about the
need for two separate entities each with the ability to borrow
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money, incur indebtedness, and issue bonds to construct the
same water projects.
3.If this bill is enacted, the Agency it creates will have many
of the same duties as a metropolitan water district (currently
the Metropolitan Water District of Southern California is the
only entity organized under the Metropolitan Water District
Act). The committee may want to question witnesses about the
need for special legislation rather than reliance on the
state's generally applicable Metropolitan Water District Act.
4.The Senate Rules Committee has assigned the bill to this
committee and the Senate Local Government Committee.
Therefore, if this measure is approved by this committee, the
motion should include the action to re-refer the bill to the
Senate Committee on Local Government.
PRIOR ACTIONS
Assembly Floor 75-0
Assembly Appropriations 23-0
Assembly Water, Parks, and Wildlife14-0
Assembly Local Government 11-0
SUPPORT
Alameda County Board of Supervisors
Alameda County Water District
Bay Area Economic Forum
Brisbane
Burlingame
California Water Service Co.
Chambers of Commerce Coalition
Coastside County Water District
Daly City
East Palo Alto
Foster City (Estero)
Guadalupe Valley Municipal Improvement District
Hayward
Hillsborough
Los Trancos County Water District
Menlo Park
Mid-Peninsula Water District
Millbrae
Milpitas
Mountain View
North Coast County Water District
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Palo Alto
Purissima Hills Water District
Redwood City
San Bruno
San Jose Chamber of Commerce
San Mateo Board of Supervisors
San Mateo County Fire Chiefs Association
Santa Clara
Santa Clara Board of Supervisors
Santa Clara County
Santa Clara County Cities Association
Silicon Valley Manufacturing Group
Skyline County Water District
Stanford
Sunnyvale
Westborough Water District
OPPOSITION
None received