California Legislature—2015–16 Regular Session

Assembly BillNo. 1340

Introduced by Assembly Member Chau

(Coauthor: Senator Mendoza)

February 27, 2015

An act to add and repeal Section 37420.5 of the Government Code, and to add and repeal Section 10051.5 of the Public Utilities Code, relating to water utilities, and declaring the urgency thereof, to take effect immediately.


AB 1340, as introduced, Chau. Local government: sale of water utility property.

Existing law provides a procedure that is generally applicable for a city to sell its real property. Existing law also establishes specific procedures for the sale of public utility property owned by a municipal corporation with certain provisions applicable to the sale of property of a water utility.

This bill would authorize the City of Montebello to sell all or part of its water utility pursuant to the procedures that are generally applicable to a sale of real property by a city, if certain requirements are met.

This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Montebello.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1


Section 37420.5 is added to the Government
, to read:



(a) The City of Montebello may sell all or part of its
4water utility pursuant to this article as provided in Section 10051.5
5of the Public Utilities Code.

6(b) This section shall remain in effect only until July 1, 2017,
7and as of that date is repealed, unless a later enacted statute, that
8is enacted before July 1, 2017, deletes or extends that date.


SEC. 2.  

Section 10051.5 is added to the Public Utilities Code,
10to read:



(a) Notwithstanding any other provision of this
12article, the City of Montebello may sell all or part of its water
13utility property pursuant to Article 3 (commencing with Section
1437420) of Chapter 5 of Part 2 of Division 3 of Title 4 of the
15Government Code, subject and pursuant to the following additional
16provisions, limitations, and requirements:

17(1) The governing body of the city shall not sell the water utility
18property for less than its fair market value determined as set forth
19in the Public Water System Investment and Consolidation Act of
201997 (Chapter 2.5 (commencing with Section 2718) of Part 2 of
21Division 1).

22(2) A majority of the members of the governing body of the city
23 must approve the sale.

24(3) The entity acquiring the water utility property shall be a
25public utility, as defined in Section 216, which is presently
26authorized by the commission to provide water utility service
27within the corporate limits of the city pursuant to a certificate of
28public convenience and necessity and the area of the one or more
29certificates includes or surrounds all or part of the city’s water
30utility system.

31(4) As a condition of acquiring the city’s water system, the
32acquiring public utility shall file a revised service area map with
33the commission that shows the area formerly served through the
34city’s water utility system as part of the acquiring public utility’s
35service area. The acquiring public utility shall submit the map by
36filing a tier-one advice letter with the commission and, upon this
37filing, shall be deemed authorized and bound to render public
38utility water service to all persons in the area formerly served
P3    1through the city’s water utility system on the same terms,
2conditions, and rates that the commission has found to be just and
3reasonable for the acquiring public utility’s other customers in the

5(b) This section shall remain in effect only until July 1, 2017,
6and as of that date is repealed, unless a later enacted statute, that
7is enacted before July 1, 2017, deletes or extends that date.


SEC. 3.  

The Legislature finds and declares that a special law
9is necessary and that a general law cannot be made applicable
10within the meaning of Section 16 of Article IV of the California
11Constitution because of the unique circumstances applicable to
12the City of Montebello. The City Council of the City of Montebello
13believes it is no longer in the public interest to own and operate
14all or part of a water utility and desires to sell its water utility.
15However, the city would be unable to do so in a timely manner
16because the Legislature has enacted statutes that may conflict with
17one another and with the City of Montebello’s urgent financial
18requirements, thereby preventing the City of Montebello from
19selling and the acquiring public utility from purchasing the water
20utility without an election and performance of other procedures.
21In order to clearly state the law with respect to the City of
22Montebello, a special statute is needed and a general statute cannot
23be made applicable.


SEC. 4.  

This act is an urgency statute necessary for the
25immediate preservation of the public peace, health, or safety within
26the meaning of Article IV of the Constitution and shall go into
27immediate effect. The facts constituting the necessity are:

28The City of Montebello’s water utility infrastructure is aging
29and is experiencing numerous leaks and equipment failures. The
30aging and failing water utility infrastructure impairs the safety and
31reliability of the city’s water utility system, including its ability to
32provide water for public fire-fighting purposes. The city’s water
33utility serves only a small fraction of the city’s residents and is
34losing money despite significant recent rate increases. The city’s
35budget and general fund cannot make up for that revenue shortfall
36or the cost of the urgently needed water supply infrastructure
37upgrades and repairs of its water utility system. The City of
38Montebello desires to sell all or part of the city-owned water utility
39to a public utility capable of operating, managing, and upgrading
40the water system while financial conditions are favorable to the
P4    1city, however, the Legislature has adopted statutes governing the
2sale of municipal property which may conflict with each other and
3the urgent needs of the city. In order to provide the City of
4Montebello with the clear statutory authority to sell its water utility
5without an election as soon as possible, it is necessary that this act
6take effect immediately.