BILL ANALYSIS Ó AB 2167 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 2167 (Hill) As Amended July 6, 2012 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |74-0 |(May 10, 2012) |SENATE: |37-0 |(August 13, | | | | | | |2012) | ----------------------------------------------------------------- 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 AB 2167 Page 2 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, AB 2167 Page 3 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 AB 2167 Page 4 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 AB 2167 Page 5 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 AB 2167 Page 6 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 AB 2167 Page 7