BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 246
                                                                  Page  1

          Date of Hearing:  August 14, 2013

                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
                           K.H. "Katcho" Achadjian, Chair
                    SB 246 (Fuller) - As Amended:  August 7, 2013

           SENATE VOTE  :  37-0
           
          SUBJECT  :  Bighorn-Desert View Water Agency.  

           SUMMARY  :  Revises the special act governing the Bighorn-Desert  
          View Water Agency, and makes other changes to existing law that  
          governs the Bighorn-Desert View Water Agency.  Specifically,  
           this bill  :    

          1)Repeals the Desert View Water District-Bighorn Mountains Water  
            Agency Consolidation Law that required the Desert View Water  
            District and the Bighorn Mountains Water Agency to separately  
            account and use funds, and deletes cross-references to the  
            consolidation law from the Bighorn-Desert View Water Agency's  
            special act. 

          2)Requires the Bighorn-Desert View Water Agency (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, and declares that its  
            provisions must not be construed to impair any contract  
            entered into prior to January 1, 2014. 

          3)Decreases, from 3 months to 60 days, the period that any legal  
            action may contest, question, or deny the validity of the  
            Agency's bonds, improvement districts, annexations, or other  
            proceedings.  

          4)Decreases, from six to three, the number of public places that  
            the Agency must post specified hearing notices.  

          5)Makes changes to existing law that governs the Agency's power  
            to enter into contracts, and deletes a requirement that the  
            Agency must get two-thirds voter approval for specified  
            contracts that incur long-term debt.  

          6)Allows the Agency to file legal actions, pursuant to specified  
            statutes in the Code of Civil Procedure, to determine the  








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            validity of the Agency's bonds, warrants, promissory notes,  
            contracts, or other evidences of indebtedness.  

          7)Specifies in addition to defined powers in existing law, the  
            Agency may do the following:  

             a)   To take by condemnation or to lease, with or without the  
               privilege of purchase, or sell real and personal property  
               useful or necessary to produce water;  

             b)   To construct, maintain, and operate water wells; and,  

             c)   To enlarge any waterworks or waterworks system acquired  
               by the Agency.  

          8)Deletes the requirement in existing law that the Agency's  
            board shall regulate the use of recreational facilities by  
            ordinance and repeals the violation of those regulations as a  
            misdemeanor, and makes a violation of the specified  
            regulations an infraction, punishable by a fine not to exceed  
            $300.  
               
          9)Increases annual interest rate not to exceed 12%, establishes  
            a total aggregate amount of notes outstanding not to exceed  
            $5,000,000, and requires the maturity of the notes shall not  
            be later than five years for the Agency to issue negotiable  
            promissory notes.   

          10)Increases the annual interest rate to not exceed 12%,  
            pursuant to existing law, for the Agency to incur debt and  
            issue bonds.  
               
          11)Clarifies that the Agency's power to levy taxes, fees,  
            charges, assessments, and incur debt are subject to  
            constitutional and statutory requirements.  

          12)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.  

          13)Authorizes the Agency to issue bonds in accordance with the  
            Municipal Improvement Act of 1913, the Refunding Assessment  
            Bond Act of 1935, the Improvement Act of 1911, the Improvement  
            Bond Act of 1915, and the Revenue Bond Law of 1941.  








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          14)Allows the Agency to sell bonds through negotiated sale or  
            private sale subject to specified conditions, and prohibits  
            bonds from being sold for less than 94% of par value.

          15)Specifies the manner in which the Agency can record liens for  
            unpaid water service charges.  

          16)Clarifies that bond proceeds and surplus revenues from water  
            rates can be used to pay for replacement of the Agency's  
            works.  

          17)Repeals the Agency's right of eminent domain to take any  
            property necessary to supply the agency with water, which is  
            currently authorized.  

          18)Deletes provisions in existing law 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.

          19)Requires the Agency's board to adopt a resolution specifying  
            the date, time, and place of its meetings and deletes  
            redundant provisions in existing law that relate to board  
            meetings.

          20)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.  

          21)Removes the requirement that the board of directors must  
            include in a resolution to incur bonded indebtedness the  
            designation of precincts, the location of polling places, and  
            the names of the officers selected to conduct the election, as  
            specified.  Deletes the seven-day timeframe following the  
            election to incur bonded indebtedness that the returns of the  
            election must be made, and the votes canvassed by the board of  
            directors. 
          22)Deletes the provision in existing law that requires the board  
            to adopt an ordinance to exercise specified powers related to  
            pensions.  

          23)Deletes compensation provisions in existing law for  
            directors, and instead, provides that directors may receive an  
            amount not to exceed $100 per day for each day's attendance at  








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            meetings of the board, if established by an adopted ordinance  
            by the governing board.  

          24)Requires the board to appoint, define duties, and establish  
            compensation, by a majority vote, for an attorney, chief  
            engineer, general manager, and auditor.  Provides each of  
            these positions serve at the pleasure of the board.  Prohibits  
            a member of the board of directors from serving as any of the  
            positions above.  Deletes existing law that authorizes the  
            board to appoint a treasurer and to consolidate specified  
            offices.  

          25)Requires the board of directors at the first meeting in  
            January in each even numbered year to choose a vice president  
            and secretary from among its members.  

          26)Requires the board to adopt an annual appropriations limit  
            and budget.  

          27)Authorizes the voters in the Agency to pass an initiative or  
            disapprove of an ordinance by referendum subject to specified  
            statutes in the Elections Code, and deletes current statutory  
            language governing the Agency's elections.  

          28)Clarifies that the Agency shall not dissolve until all  
            indebtedness is fully satisfied.  

          29)Specifies that the Agency is subject to the California Public  
            Records Act.  

          30)Updates the statutory metes-and-bounds description of the  
            Agency's boundaries.  

          31)Replaces 'bonded debt' with 'debt' in numerous places  
            throughout the Bighorn-Desert View Water Agency Law and  
            deletes references to bonds' interest coupons.

          32)Makes findings and declarations relative to provisions that  
            impose a limitation on the public's right of access to the  
            meeting of public bodies or the writing of public officials  
            and agencies in order for the Agency to reduces costs and  
            staff burdens associated with posting notices of specified  
            hearings, while still providing adequate notice of public  
            hearings, it is necessary to reduce the number of public  
            locations in which the agency must post specified hearing  








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            notices.  

          33)Makes numerous technical and non-substantive changes. 

           EXISTING LAW  :

          1)Establishes the Bighorn Mountains Water Agency Consolidation  
            Law to authorize a consolidation between the Desert View Water  
            District and the Bighorn Mountains Water agency.  

          2)Requires all funds derived from the operation of the former  
            county water district consolidated with the Bighorn Mountains  
            Water Agency to be separately accounted for and used  
            exclusively for the purposes of maintenance, operation,  
            betterments, and bond debt service, and prohibits funds  
            derived from the former district to be used for any other  
            purpose until all debt of that former district has been paid  
            in full or until a majority vote of the electorate of the area  
            served by the former district has authorized other  
            expenditures.  

          3)Establishes the Bighorn Mountains Water Agency Law and defines  
            its powers and duties.  

           FISCAL EFFECT  :  None

           COMMENTS  :   

          1)In 1969, SB 1175 (Coombs) established the Bighorn Mountains  
            Water Agency Law, a special act in the Water Code Appendix.   
            In 1989, the Desert View Water District-Bighorn Mountains  
            Water Agency Consolidation Law (AB 1819, Woodruff) merged the  
            Bighorn Mountains Water Agency with the Desert View Water  
            District that was governed by the County Water District Law.  

          2)This bill repeals the Desert View Water District-Bighorn  
            Mountains Water Agency Consolidation law and rewrites the  
            existing Bighorn Mountains Water Agency Law in the Water Code  
            Appendix to rename the law the Bighorn-Desert View Water  
            Agency Law to govern the Bighorn-Desert View Water Agency  
            (Agency).  This bill repeals references from the consolidation  
            law and updates the governing statute.  

            The 1989 consolidation bill required the Agency to separately  
            account for the funds of the two precursor agencies.  This  








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            bill maintains the separate accounting of debt acquired by the  
            precursor agencies prior to consolidation, but no longer  
            requires the Agency to financially operate as separate  
            entities.  This bill decreases, from three months to 60 days,  
            the amount of time public officials may initiate a validating  
            lawsuit in order to get the court to validate their actions,  
            contract, agreements, and bonds.  This bill makes several  
            changes to the requirements of the board in existing law  
            including noticing requirements, compensation, and appointing  
            authority.  This bill is sponsored by the Agency.  

          3)According to the author, "The current Water Agency Law is  
            outdated because if does not reflect important additions to  
            the California Constitution, such as Articles XIII A, B, C,  
            and D, which affect the Board of Director's authority to enact  
            taxes and adopt water rates.  Moreover, the original Act is  
            not well organized, thereby reducing its usefulness as a  
            reference for Agency staff, public officials and the general  
            public.  Additionally, the requirement to keep the two water  
            systems financially separate works against the economic  
            savings that consolidation was expected to bring to the  
            ratepayers."  

          4)The 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 Agency is also authorized to develop hydroelectric energy,  
            use falling water for electric energy, and to exercise all  
            powers granted in the County Water District Law.  The Agency  
            has several improvement districts, which are geographical  
            subdivisions through which water districts can fund capital  
            improvements that benefit those specific geographic areas.  

            Current law allows the District to raise revenue by charging  
            service fees, standby charges, and benefit assessments.  To  
            raise capital, the Agency can use general obligation bonds,  
            revenue bonds, and benefit assessment bonds.  Existing law  
            also allows the Agency to borrow money with promissory notes.   
            This bill clarifies that the Agency's ability to raise revenue  
            and capital are subject to the California Constitution and  
            state law.  

           5)Support arguments  :  Supporters argue that this bill removes  
            the requirement that the consolidated agency operate  
            financially as two separate enterprises which negated  








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            financial efficiencies expected from the consolidation and  
            modernizes the enabling act so that it is a more transparent  
            and functional statute.  
                
              Opposition arguments  :  None

           REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          Bighorn-Desert View Water Agency [SPONSOR]
          Association of California Water Agencies
          Hi Desert Water District
          Mojave Water Agency
          San Bernardino County Local Agency Formation Commission
          Special Districts Association
          Twentynine Palms Water district 
           
            Opposition 
           
          None on file

           Analysis Prepared by  :    Misa Yokoi-Shelton / L. GOV. / (916)  
          319-3958