BILL ANALYSIS                                                                                                                                                                                                    Ó



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          CONCURRENCE IN SENATE AMENDMENTS
          AB 2167 (Hill)
          As Amended  July 6, 2012
          Majority vote
           
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          |ASSEMBLY:  |74-0 |(May 10, 2012)  |SENATE: |37-0 |(August 13,    |
          |           |     |                |        |     |2012)          |
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           Original Committee Reference:    L. GOV.  

           SUMMARY  :  Allows the Bay Area Water Supply and Conservation 
          Agency (BAWSCA) to issue bonds to repay the costs of capital 
          facilities.

           The Senate amendments  revise the contents of the bill, as 
          follows:

          1)Allow BAWSCA to prepay all or a portion of any unpaid 
            principal balance relating to the existing capital assets as 
            of June 30, 2009, on behalf of BAWSCA members, as provided in 
            the July 2009 Water Supply Agreement.

          2)Allow BAWSCA to acquire from the City and County of San 
            Francisco the right to receive all or a portion of the amounts 
            payable by BAWSCA members under the July 2009 Water Supply 
            Agreement.

          3)Allow the City and County of San Francisco to sell to BAWSCA 
            its right to receive amounts payable by BAWSCA members under 
            the July 2009 Water Supply Agreement.

          4)Provide that, if BAWSCA acquires, and the City and County of 
            San Francisco sells, the right to receive amounts payable, as 
            specified, if requested by BAWSCA, the City and County of San 
            Francisco shall continue to collect amounts payable by BAWSCA 
            members under the July 2009 Water Supply Agreement in 
            accordance with the terms of that agreement and the City and 
            County of San Francisco shall transfer amounts so collected to 
            BAWSCA on a monthly basis or on a periodic bases agreed to by 
            BAWSCA and the City and County of San Francisco.

          5)Provide that BAWSCA apply amounts received pursuant to the 
            bill's provisions to pay debt service on any bonds issued by 








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            the agency for an authorized use, as specified, and to satisfy 
            all other obligations of the agency related to these bonds.

          6)Allow BAWSCA to distribute any amounts received pursuant to 
            the bill's provisions not needed to BAWSCA members, and 
            provide that BAWSCA may condition any distribution upon BAWSCA 
            members' agreement to waive any right of prepayment respecting 
            any amounts purchased that the member may have under the July 
            2009 Water Supply Agreement.

          7)Allow BAWSCA to use bond proceeds as follows:

             a)   For the construction, reconstruction, or improvement of 
               any works carried out by the agency on behalf of a BAWSCA 
               member;

             b)   For the purpose of assisting in the repayment of any 
               existing capital assets, if those assets were designed and 
               intended in whole or in part to furnish water to BAWSCA 
               members, whether those assets were carried out jointly by 
               the agency and other local public agencies, or solely by 
               those other public agencies; 

             c)   To make a prepayment, or acquisition, as specified; and,

             d)   To pay the costs of issuance of the bonds and to fund 
               reserve funds securing the bonds.

          8)Allow, in addition to existing authority, BAWSCA to do all of 
            the following:

             a)   Impose reasonable rates, fees and charges on BAWSCA 
               members for any program or service provided or work 
               performed by the agency;

             b)   Impose rates, fees, and charges on BAWSCA members and 
               any entity that subsequently serves a BAWSCA member's 
               service area in an amount as shall be necessary, together 
               with the other available sources of funds, to pay debt 
               service on any bonds issued by the agency for a specified 
               use, and to satisfy all other obligations of the agency 
               related to these bonds, including, but not limited to, 
               funding and maintaining reserve funds and complying with 
               financial covenants; and,









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             c)   Distribute any amounts collected that are not needed for 
               the purposes of this article to BAWSCA members.

          9)Require the City and County of San Francisco, if requested by 
            BAWSCA, to collect any rates, fees, and charges imposed by 
            BAWSCA pursuant to the bill's provisions as a surcharge under 
            the July 2009 Water Supply Agreement.

           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)Establishes the powers and duties of BAWSCA.

          3)Requires the Board to adopt an annual budget and requires 
            BAWSCA's accounts to be audited annually.

          4)Allows BAWSCA to borrow money, incur indebtedness, and issue 
            notes and bonds.

          5)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.

          6)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.

          7)Allows BAWSCA to issue bonds for the purpose of refunding any 
            revenue bonds of BAWSCA, whether due or not due.

          8)Allows BAWSCA to use proceeds of bonds for the construction, 
            reconstruction, or improvement of any works BAWSCA carries 
            out.

          9)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 








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            to furnish water to the members of BAWSCA, whether those works 
            are carried out jointly by BAWSCA and other local public 
            agencies, or solely by those other public agencies.

           AS PASSED BY THE ASSEMBLY  , this bill:  

          1)Revised 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)Authorized BAWSCA to impose rates, fees, or charges, as a 
            surcharge collected by the City and County of San Francisco 
            and transferred to BAWSCA.

           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 








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          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 allows BAWSCA to prepay all or any portion of any 
          unpaid principal balance relating to specified capital assets, 
          on behalf of BAWSCA members, as provided in the July 2009 Water 
          Supply Agreement.  This bill allows BAWSCA to acquire from the 
          City and County of San Francisco, and allows the City and County 
          of San Francisco to sell, the right to receive amounts payable 
          by BAWSCA members under the July 2009 Water Supply Agreement.  

          If BAWSCA acquires, and the City and County of San Francisco 
          sells, the rights to specified payments, this bill requires the 
          City and County of San Francisco, upon request by BAWSCA, to 
          continue collecting the amounts payable by BAWSCA members under 
          the July 2009 Water Supply Agreement in accordance with that 
          agreement's terms.  San Francisco must transfer the amounts it 
          collects to BAWSCA on a monthly basis, or on a periodic basis 
          agreed to by both BAWSCA and San Francisco.  This bill requires 
          that the amounts BAWSCA receives from San Francisco must be 
          applied to pay debt service on specified bonds issued by BAWSCA 
          and to satisfy all of its other obligations related to the 
          bonds.  BAWSCA can distribute any amounts not needed for its 
          bond obligations to BAWSCA members.  BAWSCA can condition this 
          distribution upon BAWSCA members' agreement to waive specified 
          prepayment rights that the members may have under the July 2009 
          Water Supply Agreement.

          This bill allows BAWSCA to use bond proceeds to:

          1)Construct, reconstruct, or improve any works carried out by 
            the agency on behalf of a BAWSCA member.

          2)Assist in the repayment of any existing capital assets, if 
            those assets were designed and intended, in whole or in part, 
            to furnish water to BAWSCA members, whether those assets were 
            carried out jointly by BAWSCA and other public agencies, or 








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            solely by those other public agencies.

          3)Prepay an unpaid principal balance relating to specified 
            capital assets, on behalf of BAWSCA members, as provided in 
            the July 2009 Water Supply Agreement.

          4)Pay the bonds' costs of issuance.

          5)Fund reserve funds securing the bonds.

          This bill allows BAWSCA, in addition to other authority granted 
          by state law, to:

          1)Impose reasonable rates, fees, and charges on BAWSCA members 
            for any program or service provided or work performed by 
            BAWSCA.

          2)Impose rates, fees, and charges on BAWSCA members and any 
            entity that subsequently serves a BAWSCA member's service area 
            in an amount necessary, together with other funding sources, 
            to pay debt service on specified bonds and to satisfy all 
            other obligations related to those bonds, including 
            maintaining reserve funds and complying with financial 
            covenants.

          3)Distribute any amounts collected that are not needed for the 
            purposes of the bill's provisions to BAWSCA members.

          This bill requires the City and County of San Francisco to 
          collect any rates, fees, and charges imposed by BAWSCA pursuant 
          to a specified statute as a surcharge under the July 2009 Water 
          Supply Agreement, if requested by BAWSCA.

          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: 0004476 








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