BILL ANALYSIS                                                                                                                                                                                                    




                     SENATE GOVERNANCE & FINANCE COMMITTEE
                            Senator Lois Wolk, Chair
          

          BILL NO:  SB 246                      HEARING:  4/17/13
          AUTHOR:  Fuller                       FISCAL:  No
          VERSION:  4/4/13                      TAX LEVY:  No
          CONSULTANT:  Weinberger               

                        BIGHORN-DESERT VIEW WATER AGENCY
                                   [REVISED]


          Repeals and amends numerous state laws governing the  
          Bighorn-Desert View Water Agency. 


                           Background and Existing Law  

          The Legislature created the Bighorn Mountains Water Agency  
          as a special act special district governed by the  
          uncodified "Bighorn Mountains Water Agency Law" (SB 1175,  
          Coombs, 1969).  To allow the Agency to merge with the  
          Desert View Water District, which was governed by the  
          County Water District Law, the Legislature enacted the  
          Desert View Water District-Bighorn Mountains Water Agency  
          Consolidation Law (AB 1819, Woodruff, 1989).  The merged  
          Bighorn-Desert View Water Agency provides retail water  
          service to residents within a 45-square mile area  
          encompassing the San Bernardino County communities of  
          Flamingo Heights, Landers, and Johnson Valley.

          The 1989 consolidation bill required the Bighorn-Desert  
          View Water Agency to "separately account" for specified  
          funds of the two precursor agencies.  After two decades  
          operating as a merged district, Bighorn-Desert View  
          officials find this requirement for segregated accounting  
          to be unnecessary and burdensome.  They want the  
          Legislature to repeal the entire Desert View Water  
          District-Bighorn Mountains Water Agency Consolidation Law  
          and amend the Bighorn Mountains Water Agency Law to make it  
          a more modern, transparent, and functional statute.


                                   Proposed Law  

          Senate Bill 246 repeals the Desert View Water  
          District-Bighorn Mountains Water Agency Consolidation Law  




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          and deletes cross-references to the law from the  
          Bighorn-Desert View Water Agency's special act.

          SB 246 requires the Agency to separately account for and  
          use funds derived from the operation of the Desert View  
          Water District and the Bighorn Mountains Water Agency for  
          the purpose of bond debt service for each of the former  
          systems.  The bill declares that its provisions must not be  
          construed to impair any contract 
          entered into prior to January 1, 2014.

          SB 246 reduces, from 3 months to 30 days, the period during  
          which legal actions can be initiated to contest, question,  
          or deny the validity of the Agency's bonds, improvement  
          districts, annexations, or other proceedings.  SB 246  
          allows the Agency to file legal actions, pursuant to  
          specified statutes in the Code of Civil Procedure, to  
          determine the validity of the Agency's bonds, warrants,  
          promissory notes, contracts, or other evidences of  
          indebtedness.

          SB 246 deletes a 50-year limit on the length of the  
          Agency's contracts for selling hydroelectric energy or  
          selling the right to use falling water for electric energy.
          The bill also deletes a requirement that the Agency only  
          sell hydroelectric energy at wholesale to public agencies.

          SB 246 reduces, from 6 to 3, the number of public places in  
          which the Agency must post specified hearing notices.

          SB 246 deletes current statutory language governing  
          compensation for the Agency's board of directors.  The bill  
          requires the Agency's board members to receive compensation  
          for attending board meetings that does not exceed the  
          maximum amount authorized by specified statutes that govern  
          compensation for water districts' directors.

          SB 246 deletes current statutory language relating to  
          vacancies on the Agency's board of directors and specifies  
          that the Agency must fill vacancies on its board pursuant  
          to specified statutes in the Government Code.

          SB 246 reorganizes current statutory language allowing the  
          Agency's board to appoint, define the duties of, and  
          provide compensation for specified offices.  The bill  
          prohibits the board from appointing a sitting member of the  





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          board to one of those offices.  The bill deletes statutory  
          language authorizing the board to appoint a treasurer and  
          to consolidate specified offices.

          SB 246 requires the Agency's board to adopt a resolution  
          specifying the date, time, and place of its meetings and  
          deletes conflicting and redundant statutory language  
          relating to board meetings.

          SB 246 specifies that the Agency's board can act by minute  
          order and details specific notice, posting, and publication  
          procedures that the board must follow to adopt an  
          ordinance.

          SB 246 deletes current statutory language governing the  
          Agency's elections and allows the Agency's voter to pass an  
          initiative or disapprove of an ordinance by referendum  
          subject to specified statutes in the Elections Code.

          SB 246 specifies that the Agency's powers include the power  
          to:
                 Construct, maintain, and operate water wells.
                 Construct, maintain, and operate property useful or  
               necessary to produce water.
                 Enlarge any waterworks or waterworks system  
               acquired by the Agency.

          SB 246 deletes a requirement that the Agency's board  
          regulate specified recreational facilities' use by adopting  
          an ordinance.  The bill repeals language defining a  
          violation of those regulations as a misdemeanor.  Instead,  
          SB 246 makes a violation of the specified regulations an  
          infraction, punishable by a fine of $300 or less.

          SB 246 specifies that the Agency's board, to restrict the  
          use of water during a drought or water shortage, must  
          comply with specified statutes in the Water Code governing  
          water shortage emergencies.  The bill deletes language  
          defining a violation of specified water restrictions as a  
          misdemeanor and deletes other related statutory language.

          SB 246 deletes statutory language requiring the board to  
          adopt an ordinance to exercise specified powers related to  
          pensions.

          SB 246 amends the current statute governing the Agency's  





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          power to enter into contracts.  The bill deletes a  
          requirement that the Agency must get 2/3-voter approval for  
          specified contracts that incur long-term debt.  

          SB 246 deletes current statutory language allowing the  
          Agency to incur debt, issue bonds and promissory notes, and  
          impose assessments.  The bill authorizes the Agency to:
                 Borrow money, incur indebtedness, and issue bonds  
               or other evidences of indebtedness at an annual  
               interest rate that must not exceed 12%, pursuant to  
               state law.
                 Refund or retire any indebtedness or lien against  
               the agency or its property.
                 Issue negotiable promissory notes that are general  
               obligations of the Agency payable from revenues and  
               taxes in the same manner as the Agency's bonds and  
               subject to the same 12% annual interest rate limit.
                 Cause taxes to be levied to pay the Agency's  
               obligations, subject to constitutional and statutory  
               requirements.
                 To issue improvement bonds in accordance with and  
               pursuant to the:
                  o         Improvement Act of 1911
                  o         Improvement Bond Act of 1915
                  o         Municipal Improvement Act of 1913
                  o         Refunding Assessment Bond Act of 1935
                  o         Revenue Bond Law of 1941

          SB 246 specifies that the maximum allowable annual interest  
          rate on debt issued by the Agency is 12%, pursuant to  
          specified statutes in the Government Code.

          SB 246 allows the Agency to sell bonds through negotiated  
          sale or private sale subject to specified conditions.  The  
          bill prohibits bonds from being sold for less than 94% of  
          par value.

          SB 246 replaces the term "bonded debt" with the term "debt"  
          in numerous places throughout the Bighorn-Desert View Water  
          Agency Law and deletes outdated references to bonds'  
          interest coupons.

          SB 246 specifies the manner in which the Agency can record  
          liens for unpaid water service charges.

          SB 246 clarifies that bond proceeds and surplus revenues  





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          from water rates can be used to pay for replacement of the  
          Agency's works.

          SB 246 renames the special act governing the Bighorn-Desert  
          View Water Agency as the "Bighorn-Desert View Water Agency  
          Law."  Throughout the Law, SB 246 replaces the name  
          "Bighorn Mountains Water Agency" with "Bighorn-Desert View  
          Water Agency."

          SB 246 updates the statutory metes-and-bounds description  
          of the Bighorn-Desert View Water Agency's boundaries.

          The bill deletes statutory language relating to a potential  
          future consolidation of the Bighorn Mountains Water Agency  
          with the Desert View Water Agency.

          SB 246 makes numerous technical, non-substantive amendments  
          to the statutes governing the Bighorn-Desert View Water  
          Agency to conform the statutes to other changes made by the  
          bill and to modernize the statutory language.


                               State Revenue Impact
           
          No estimate.


                                     Comments  

          1.   Purpose of the bill  .  The statutes that govern the  
          Bighorn-Desert View Water Agency are outdated,  
          disorganized, and difficult to use.  Provisions of the  
          Agency's special act have been rendered obsolete by changes  
          that Propositions 13 and 218 made to the State  
          Constitution.  Although the District maintains separate  
          accounting of pre-consolidation debt, it does not operate  
          as two separate enterprise districts, as may be required  
          under its consolidation statute.  The amendments SB 246  
          makes to the Agency's governing statutes will eliminate  
          legal uncertainties, reorganizes the statutes to make them  
          more transparent, modernize the language governing some of  
          the Agency's powers, and make the statutes easier to use.

          2.   Validations  .  Public officials can file validating  
          lawsuits, asking the courts to validate their actions,  
          contracts, agreements, and bonds.  Successful validation  





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          suits reassure private investors and public agencies that  
          their decisions are reliable.  Generally, the Code of Civil  
          Procedure allows public officials to initiate a validation  
          suit within 60 days of taking the action to be validated.   
          SB 246 reduces, from 3 months to 30 days, the amount of  
          time during which members of the public can initiate a  
          legal challenge against some of the Agency's actions.  To  
          make the deadline for legal challenges consistent with the  
          Code of Civil Procedure's deadline for validation suits,  
          the Committee may wish to consider amending SB 246 to give  
          individuals up to 60 days to initiate a legal challenge to  
          specified Agency actions.

          3.   Electricity contracts  .  SB 246 deletes a 50-year limit  
          on the length of the Agency's hydroelectric contracts and  
          deletes a requirement that the Agency only sell  
          hydroelectric energy at wholesale to public agencies.   
          These deletions may raise questions about the Agency's  
          ability to enter into long-term retail contracts for  
          hydroelectricity.  To eliminate uncertainty, the Committee  
          may wish to consider amending SB 246 to restore the  
          restrictions that current law places on the Agency's  
          hydroelectric contracts.

          4.   Findings and declarations  .  Proposition 59 (2004)  
          requires that new statutes which limit public access to  
          meetings of public bodies be adopted with findings  
          demonstrating the interest protected by the limitation and  
          the need for protecting that interest.  Because SB 246  
          reduces the number of public locations in which the Agency  
          must post notices of some hearings, it could be interpreted  
          as limiting access to public meetings.  The Committee may  
          wish to consider amending SB 246 to include findings and  
          declarations that comply with Proposition 59's  
          requirements.


                         Support and Opposition  (4/11/13)

           Support  :  Bighorn-Desert View Water Agency.

           Opposition  :  Unknown.