BILL ANALYSIS Ó
AB 240
Page 1
Date of Hearing: April 17, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 240 (Rendon) - As Introduced: February 5, 2013
SUBJECT : Mutual water companies.
SUMMARY : Allows mutual water companies to record a notice of a
lien against a shareholder's property if specified conditions
are met, and requires board members to repeat specified training
courses every six years. Specifically, this bill :
1)Permits the board of directors of a mutual water company, if
authorized by its articles or bylaws, to record a notice of
lien against a shareholder's property if the shareholders has
not timely paid any rate, charge or assessment arising from,
or related to water services provided by the mutual water
company to the shareholder's property, if the shareholder was
given at least 20 days' notice of the lien.
2)Requires board members to repeat, every six years, a training
course required in existing law regarding the duties of board
members of mutual water companies.
3)States the intent of the Legislature to encourage
collaboration among mutual water companies that operate public
water systems in the City of Maywood to create a public agency
that can consolidate drinking water services for the people
and business of that city.
EXISTING LAW :
1)Specifies that any corporation organized for or engaged in the
business of selling, distributing, supplying, or delivering
water for irrigation purposes or for domestic use must be
known as a mutual water company.
2)Requires each mutual water company operating as a public water
system to, no later than December 31, 2012, submit to the
Secretary of State and the Local Agency Formation Commission
(LAFCO) a map depicting the boundaries of the property that
the corporation serves.
3)Requires a mutual water company that operates a public water
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system, if the LAFCO or a county department requests
information, to, within 45 days of the request, provide all
reasonably available, nonconfidential information and explain,
in writing, why any requested information is not reasonably
available.
4)Requires a mutual water company that operates a public water
system to maintain a financial reserve fund to be used for
repairs and replacements to its water productions,
transmission and distribution facilities at a level sufficient
for continuous operation of facilities in compliance with the
federal Safe Drinking Water Act.
5)Authorizes the LAFCO to approve with or without amendment,
wholly, partially, or conditionally or disapprove the
annexation of territory served by a mutual water company
operate a public water system, to a city or special district.
6)Authorizes the LAFCO, in conducting a service review, to
include a review of whether the agencies under review,
including any public water system, are in compliance with
California Safe Drinking Water Act (SDWA).
7)Authorizes the LAFCO to request information, as part of a
service review, from identified public or private entities
that provide wholesale or retail supply of drinking water,
including mutual water companies and private utilities.
8)Requires each board member of a mutual water company operated
as a public water system to, within six months of taking
office, complete a four-hour course, as specified.
9)Authorizes fines pursuant to the SDWA to be imposed on
directors of a mutual water company if the mutual water
company has received notice of a violation as specified.
FISCAL EFFECT : None
COMMENTS :
1)This bill permits the board of directors of a mutual water
company, if authorized by its articles or bylaws, to record a
notice of lien against a shareholder's property if the
shareholder has not timely paid any rate, charge, or
assessment related to services provided by the company to the
shareholder's property, and only in the event that that
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shareholder was given at least 20 days' notice. The bill also
requires board members of a mutual water company to repeat a
specified training course every six years regarding the duties
of board members of mutual water companies. Lastly, the bill
declares the intent of the Legislature to encourage
collaboration among mutual water companies that operate public
water systems in the City of Maywood, in order to create a
public agency that can consolidate drinking water services.
This bill is author-sponsored.
2)According to the author, this bill will give mutual water
companies an additional tool to protect their financial
interests without shutting off the water to those who use it.
For example, in the City of Maywood, many people who receive
water from mutual water companies are tenants. The author
notes that the primary tool of mutual water companies for
those who do not pay their bill is to assess the shares of
stock, which cuts off the right to receive water, which hurts
tenants more than it affects property owners who own the
shares of stock.
Existing law requires board members of mutual water companies
that operate public water systems to complete a two-hour
course offered by a qualified trainer regarding the duties of
board members of mutual water companies. This training is
required to be completed within six months of taking office.
According to the author, because mutual water company
directors are often elected every year, the provisions of
current law may require the training to occur each year. The
author argues that putting a requirement for training to occur
every six years will allow mutual water companies to focus
their resources on their water service and not on training of
directors.
3)Recent legislation [AB 54 (Solorio), Chapter 512, Statutes of
2011] added additional requirements on mutual water companies,
authorized LAFCOs to include mutual water companies in their
municipal service reviews, and provided the California
Department of Public Health more guidance regarding issuing
Safe Drinking Water Revolving Fund money.
4)According to Union de Vecinos, in support, "The people of
Maywood have suffered from poor quality water from their taps
for several years. Maywood water often comes out of the tap
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as brown, smelly liquid that tastes bad. The groundwater
coming out of wells and imported surface water have various
primary and secondary contaminants, including manganese,
perchlorate, and arsenic?the people and business in the City
of Maywood received their drinking water from three separate
mutual water companies, which are private companies controlled
by landowners."
The 2011-12 State Budget appropriated $7.5 million in state
bond funds for improving water quality in the cities of
Maywood and Santa Ana, conditioned on a public agency assuming
responsibility for operation of the water systems from the
mutual water companies. The City of Santa Ana has completed
its improvements, expending approximately $1.5 million and
leaving approximately $6 million for Maywood to improve its
water quality. This bill states the intent of the Legislature
to encourage collaboration among mutual water companies that
operate public water systems in the City of Maywood to create
a public agency that can consolidate drinking water services.
The Committee may wish to ask the author to discuss the status
of these efforts in the City of Maywood.
5)Support arguments : This bill takes some initial steps to
address the problems with mutual water companies that deliver
poor drinking water quality to the residents of Maywood.
Opposition arguments : None on file
REGISTERED SUPPORT / OPPOSITION :
Support
Union de Vecinos
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958