BILL ANALYSIS Ó
AB 656
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Date of Hearing: May 20, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
656 (Cristina Garcia) - As Amended May 4, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill allows a mutual water company and a public agency to
enter into a joint powers agreement for the provision of
insurance and risk-pooling, technical support, continuing
education, safety engineering, and operational and managerial
AB 656
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advisory assistance for the purpose of reducing risk
liabilities.
FISCAL EFFECT:
No state costs. Costs to local agencies to form JPAs are not
reimbursable.
COMMENTS:
1)Purpose. According to the author, "The vast majority of mutual
water companies in California are small, with many serving
less than 3,000 connections and/or less than 3,000 residents.
Many mutual water companies serve 'economically disadvantaged'
areas and do not have access to low cost insurance and other
services, such as those available to special districts under
ACWA-JPIA or other joint powers agency insurance programs.
Today, mutual water companies must purchase higher cost
insurance in the open market, and many are not provided the
opportunity to easily obtain other services that could assist
them in building operational and managerial capacity."
2)Background. JPAs were originally created to allow multiple
local governments in a region to pool resources to meet common
needs. The Act authorizes federal, state and local agencies
to create and use a joint powers agreement, which is a legal
document that allows the contracting parties to exercise
powers that are common to all of the contracting parties.
Joint powers agreements are an attractive tool for local
governments because they facilitate more efficient service
provision through collaboration, and they allow local entities
to issue bonds without voter ratification. Public officials
have created about 700 JPAs statewide. There are a few,
limited instances in JPA law allowing non-governmental
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entities (private hospitals or tribes) to join a JPA with a
public agency partner.
Mutual water companies are private entities, formed under
statutes governing corporations. They respond to their
shareholders, usually the landowners who receive water
service. Unlike local water districts and investor-owned
public utilities, neither LAFCOs nor the PUC regulate mutual
water companies.
Existing law allows a mutual water company to enter into a JPA
with any public agency for the purpose of jointly exercising
any power common to the contracting parties. Existing law
allows two or more local public entities, by a JPA, to provide
insurance coverage or self-insurance, or to obtain insurance
coverage by means of a reciprocal or inter-insurance exchange
(risk-pooling). This bill seeks to allow mutual water
companies to partner with a local agency for this purpose.
3)Related Legislation.
a) AB 1077 (Holden), pending on the Assembly Floor, makes a
number of changes to the Mutual Water Company Open Meeting
Act.
b) AB 617 (Perea), pending in this Committee, modifies
portions of last year's Sustainable Groundwater Management
Act (SGMA), including, among other things, provisions that
allow mutual water companies to join Groundwater
Sustainability Agencies (GSA) formed by one or more public
agencies pursuant to a JPA, and to exercise all of the GSA
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powers provided by SGMA.
c) AB 1260 (Thurmond), pending in this Committee, would
authorize the University of California and the City of
Richmond, and any other public agency to enter into a JPA
for purposes of collaboration on the development of a
Berkeley Global Campus at Richmond Bay, located in the City
of Richmond.
1)Prior Legislation. AB 2046 (Gomez) of 2014 would have
authorized a JPA to issue bonds and enter into loan agreements
for the financing or refinancing of a private project located
outside of the state under specified conditions, until January
1, 2021. This bill was held on the Senate Appropriations
Committee's Suspense File.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081