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  








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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