BILL ANALYSIS Ó AB 2167 Page 1 ASSEMBLY THIRD READING AB 2167 (Hill) As Amended April 23, 2012 Majority vote LOCAL GOVERNMENT 8-0 ----------------------------------------------------------------- |Ayes:|Smyth, Alejo, Bradford, | | | | |Campos, Davis, Gordon, | | | | |Hueso, Knight | | | ----------------------------------------------------------------- SUMMARY : Modifies the Bay Area Water Supply and Conservation Agency's (BAWSCA) enabling act to allow BAWSCA to issue bonds under special circumstances. Specifically, this bill : 1)Revises provisions in BAWSCA's enabling act which allow BAWSCA to make bond proceeds available to other local public agencies to require that the bonds be for the purpose of assisting in the repayment of any existing capital assets, or in the construction, reconstruction, or improvement of works, if those assets were, or the works are, designed and intended in whole or in part to furnish water to members of BAWSCA, whether those assets were, or works are, carried out jointly by the agency and other local public agencies, or solely by those other public agencies. 2)Authorizes BAWSCA, with regard to rates, fees and charges, to impose those rates, fees, or charges, as a surcharge collected by the City and County of San Francisco and transferred to BAWSCA. EXISTING LAW : 1)Establishes BAWSCA, the membership of the Board of Directors of BAWSCA (Board), board member terms and compensation, and subjects meetings of BAWSCA to the Ralph M. Brown Act. 2)Defines, as "eligible entities" for purposes of BAWSCA's membership, the 24 public entities in San Mateo County, Alameda County, and Santa Clara County that purchase water from San Francisco pursuant to the July 2009 Water Supply Agreement, or any subsequent water supply contract, that AB 2167 Page 2 include Alameda County Water District, City of Brisbane, City of Burlingame, Coastside County Water District, City of Daly City, City of East Palo Alto, Estero Municipal Improvement District, Guadalupe Valley Municipal Improvement District, City of Hayward, Town of Hillsborough, City of Menlo Park, Mid-Peninsula Water District, City of Millbrae, City of Milpitas, City of Mountain View, North Coast County Water District, City of Palo Alto, Purissima Hills Water District, City of Redwood City, City of San Bruno, City of San Jose, City of Santa Clara, City of Sunnyvale, and Westborough Water District. 3)Establishes the powers and duties of BAWSCA. 4)Requires the Board to adopt an annual budget and requires BAWSCA's accounts to be audited annually. 5)Allows BAWSCA to borrow money, incur indebtedness, and issue notes and bonds. 6)Allows BAWSCA to issue revenue bonds upon the adoption of an ordinance by a two-thirds vote of all of the members of the Board, as specified, and does not require BAWSCA to conduct an election or otherwise secure approval of the voters within the boundaries of the agency. 7)Requires BAWSCA to publish a notice in a newspaper of general circulation at least 15 days before the meeting at which issuance of revenue bonds is to be considered, and requires BAWSCA to provide an opportunity for public comments during that meeting prior to the vote on the issuance of the bonds. 8)Allows BAWSCA to issue bonds for the purpose of refunding any revenue bonds of BAWSCA, whether due or not due. 9)Allows BAWSCA to use proceeds of bonds for the construction, reconstruction, or improvement of any works BAWSCA carries out. 10)Allows BAWSCA to make proceeds of bonds available to other local public agencies on mutually satisfactory terms and conditions to assist in the construction, reconstruction, or improvement of works designed or intended in whole or in part to furnish water to the members of BAWSCA, whether those works AB 2167 Page 3 are carried out jointly by BAWSCA and other local public agencies, or solely by those other public agencies. 11)Allows an action to determine the validity of any contract, or any bond, note, or other evidence of indebtedness to be brought pursuant to Validating Proceedings, as specified in Chapter 9 of the Code of Civil Procedure. FISCAL EFFECT : None COMMENTS : Owned and operated by the City and County of San Francisco, the Hetch Hetchy system is a regional asset that delivers water to millions of Bay Area residents. When the suburban water purveyors wanted to help finance improvements to the Hetch Hetchy system, the Legislature created the San Francisco Bay Area Regional Water System Financing Authority (SB 1870 (Speier), Chapter 846, Statutes of 2002). To coordinate the suburban purveyors' efforts, the Legislature created BAWSCA in AB 2058 (Papan), Chapter 844, Statutes of 2002. BAWSCA is a regional water district and was designed by the State Legislature to help protect the health, safety and economic well-being of 1.7 million residents, businesses and community organizations in Alameda, San Mateo and Santa Clara counties who depend on the San Francisco Bay Area regional water system. BAWSCA is currently governed by a 26-member Board of Directors comprised of members representing the 24 cities and water districts that are member agencies of BAWSCA, and two private utilities that also have appointees to the Board, Stanford University and California Water Service Company. BAWSCA is currently authorized to issue bonds for specific purposes and according to the author, those purposes need to be amended in order for the agency to carry out its functions. The existing authority to issue bonds does not specifically cite authority to repay existing capital assets for which BAWSCA's 26-member agencies have contractually agreed to pay. According to BAWSCA, the sponsor of the bill, there was an agreement in 2009 between San Francisco and its wholesale customers (BAWSCA's member agencies) that required that the wholesale customers repay their share of the cost of existing capital assets over the term of the agreement. This bill expands BAWSCA's bonding authority to include issuing AB 2167 Page 4 bonds for the purpose of repaying San Francisco for the costs of existing capital assets. BAWSCA notes that current market conditions would enable BAWSCA's member agencies and their water companies to save millions of dollars over the next 25 years if BAWSCA were to issue for that purpose. Additionally, the bill allows BAWSCA to impose rates, fees, and charges as a surcharge collected by the City and County of San Francisco and would then be transferred to BAWSCA. This would create efficiency because San Francisco already charges a water management line item. Support arguments: The sponsor writes that this bill will allow BAWSCA to increase San Francisco's reserves and also allow it to reduce its future rate increases for customers in San Francisco. Opposition arguments: None on file. Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958 FN: 0003479