BILL ANALYSIS Ó
AB 1585
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Date of Hearing: April 12, 2016
ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE
Marc Levine, Chair
AB 1585
(Alejo) - As Amended April 4, 2016
SUBJECT: Monterey County Water Resources Agency: Lake
Nacimiento and Lake San Antonio
SUMMARY: Appropriates $25 million to the Monterey County Water
Resources Agency (MCWRA) for construction of a water conveyance
tunnel between Lake Nacimiento and Lake San Antonio in Monterey
and San Luis Obispo Counties. Specifically, this bill:
1)Appropriates $25 million from an unidentified state fund
source to the MCWRA for the purpose of constructing, in
accordance with a specified design-build process, a water
conveyance tunnel between Lake Nacimiento and Lake San
Antonio, and spillway modifications at Lake San Antonio to
increase storage by 60,000 acre feet.
2)States legislative findings and declarations regarding the
drought, water supply, water quality, and flood risk
challenges facing the state, and specifically the Monterey
County region. States further legislative findings and
declarations regarding capacity and overflow challenges
experienced at Lake Nacimiento and Lake San Antonio, two
reservoirs that provide water supply, groundwater recharge,
flood control, prevention of saltwater intrusion, and
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recreational benefits to the Salinas Valley, and plans to
construct a tunnel or pipeline between the two reservoirs to
mitigate these challenges. Finally, makes legislative
findings regarding the area's status as a disadvantaged
community, and states that the area is a distressed community
that is a priority for state funding.
3)States legislative findings and declarations that a special
law is necessary to address the emergency circumstances of the
drought and the benefits these projects will provide to the
region.
4)Includes an urgency clause stating that it is necessary that
this statute take effect immediately in order to responsibly
store water during California's prolonged drought; to protect
the Salinas Valley from flooding; and to protect water supply,
water quality, distressed communities, and urban and rural
property and structures during the El Nino.
EXISTING LAW:
1)The Water Quality, Supply, and Infrastructure Improvement Act
of 2014 (Proposition 1) makes available $7.45 billion in
general obligation bond funds for various state water needs,
including $810 million for integrated regional water
management projects, $43 million of which is allocated to the
central coast region of the state. Proposition 1 also makes
available $2.7 billion for water storage projects. These
funds are continuously appropriated to the California Water
Commission, which is tasked with selecting the projects to be
funded through a competitive public process, as specified.
2)Provides that, subject to regional priorities, eligible
projects for the integrated regional water management funds
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made available in Proposition 1 include, among other things,
local and regional surface and underground water storage
projects, and regional water conveyance facilities that
improve integration of separate water systems.
3)Provides that the integrated regional water management funds
shall be for expenditures on, and competitive grants and loans
to, projects in an integrated regional water management plan.
Expressly prohibits the Legislature from appropriating funding
made available by Proposition 1 to a specific project.
FISCAL EFFECT: Appropriates $25 million from an unidentified
state fund for a specific project in Monterey County.
COMMENTS: This bill would appropriate $25 million from an as
yet unidentified funding source for the purpose of constructing,
in accordance with a specified design-build process, a water
conveyance tunnel between Lake Nacimiento and Lake San Antonio,
and for spillway modifications at Lake San Antonio that would
increase storage capacity by 60,000 acre feet.
1)Author's Statement: The author notes that in the midst of the
worst drought California has ever experienced, increasing
water capture capacity in the Salinas Valley watershed is
important regionally and statewide. Any water not captured
through the reservoirs at Lake San Antonio and Lake Nacimiento
in Monterey and San Luis Obispo counties simply floods nearby
areas. The author emphasizes that much of the damage from
past floods in the area has impacted the most economically
disadvantaged parts of the Salinas Valley. In addition, the
inability to capture more water impacts agriculture which is a
major source of jobs and economic activity in the area. An
Interlake Tunnel (Tunnel) would allow for excess water from
Lake Nacimiento to flow to Lake San Antonio in order to
maximize the capture of water in the Salinas Valley watershed.
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The additional water would help protect agricultural jobs in
the Valley. The Tunnel would also increase water quality by
reducing the flooding of agricultural fields, and reducing the
intrusion of seawater. The Tunnel will also reduce potential
flood damage in the region by reducing flood spillage by an
average of 11,857 acre feet per year.
2)Background: The MCWRA is responsible for managing,
protecting, and enhancing water supply and water quality, as
well as providing flood protection, in the County of Monterey.
MCWRA is a proponent of the Interlake Tunnel and Spillway
Modification Project which this bill seeks to fund. The
project would include construction of a 12,000 foot long
gravity flow water conveyance tunnel connecting Lake
Nacimiento and Lake San Antonio reservoirs. The Lake
Nacimiento reservoir fills three times faster than the Lake
San Antonio reservoir resulting in unused storage in Lake San
Antonio when Lake Nacimiento is at capacity and releasing
flood spills. In addition to the Interlake Tunnel, the
proposed project includes spillway modifications that would
increase storage capacity in Lake San Antonio reservoir. A
preliminary report prepared by the MCWRA in November 2015
concludes that the project would provide potential ecological
benefits including flood management, groundwater recharge,
surface/groundwater quality, and benefits to biological
resources. The report indicates that these potential benefits
and other effects of the project will be further identified
and analyzed in an Environmental Impact Report to be prepared
in compliance with the California Environmental Quality Act
(CEQA) which has not yet been completed. The project has been
under consideration since the late 1970s and was included in
the 2013 Greater Monterey County Integrated Regional Water
Management Plan. The MCWRA indicates that in 2014 a group of
Salinas Valley growers revitalized the urgency for the Tunnel
project due to heightened awareness from the multi-year
drought. The MCWRA report indicates that constructing the
Tunnel would add approximately 20,000 acre feet of net water
storage. Increasing the capacity of the Lake San Antonio
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reservoir would also increase the storage capacity at that
reservoir by 60,000 acre feet. This would provide additional
storage for flood control and conservation releases.
According to the MCWRA, the additional storage and controlled
releases resulting from the project would benefit the
watershed by reducing flood damage and flood safety concerns,
increasing potential for groundwater recharge, improving water
quality by reducing sediments and pesticide residues from
flooded agricultural fields, reducing salinity from sea water
intrusion, and improving instream flows benefitting biological
habitat and wildlife. Reducing reservoir spills would also
reduce the likelihood of White Bass entering the Salinas River
and the loss of juvenile Steelhead to predation.
3)Prior and Related Legislation: AB 155 (Alejo), Chapter 865,
Statutes of 2014, authorized the MCWRA to award a design-build
contract for the combined design and construction of a project
to connect Lake San Antonio, located in the County of
Monterey, and Lake Nacimiento, located in the County of San
Luis Obispo, with an underground tunnel or pipeline for the
purpose of maximizing water storage, supply, and groundwater
recharge.
4)Issues for Consideration:
a) Project Appears Eligible to Apply for Proposition 1
funding through competitive processes: The project that
would be funded through this bill would appear to be an
eligible project to compete for funding under at least
two, if not three, different categories of funding made
available for water management projects in Proposition 1.
As stated above under the existing law portion of this
analysis, Proposition 1 made available $810 million for
projects that are included in integrated regional water
management plans. $43 million of this amount is
specifically allocated to the central coast region, of
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which the Salinas Valley is a part. Eligible projects
include local and regional surface and underground water
storage projects, regional water conveyance facilities
that improve integration of separate water systems, and
watershed protection, restoration, and management
projects that improve water supply reliability. Eligible
projects also include those that provide multiple
benefits such as water quality, water supply, flood
control, or open space. The bond requires that projects
that achieve multiple benefits receive special
consideration. At least 10% of the funds authorized by
this chapter of the bond must also be allocated to
projects that directly benefit disadvantaged communities.
A 50% cost share from non-state sources is required, but
this requirement can be waived or reduced for projects
that directly benefit a disadvantaged community or an
economically distressed area. The project that this bill
seeks to fund would thus appear to be well positioned to
receive favorable consideration in a competitive process
for a share of these funds.
The project would also appear to meet the eligibility
criteria to compete for a share of the funding made
available through Proposition 1 for water storage
projects being administered by the California Water
Commission. The Water Commission is currently soliciting
concept proposals from interested parties for proposed
storage projects. Finally, the project may be eligible
for funding from the flood protection bond funds made
available under both Proposition 1 and Proposition 1E.
The Legislature in drafting Proposition 1 relied on several
core principles; one being the desire to avoid individual
project earmarks and instead rely on competitive
processes for allocating funding for projects statewide
and regionally. This principle of avoiding individual
project earmarks is a principle that applies beyond the
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context of the bond, and points more broadly to the
policy goal of having individual projects evaluated
through competitive processes that examine in detail the
merits of those projects in the context of other
statewide and regional goals.
b) Budget Appropriations v Policy bill: While the
appropriation of funding through a policy bill is not
unprecedented, the normal and preferred process for
appropriation of state funding is through the budget
process rather than through a policy bill.
c) Local Cost Share: This bill does not specify
whether the MCWRA would be required to provide a local
cost share as a match to the state appropriation for this
project. While this bill does not currently identify the
fund source that would be used, it should be noted that
Proposition 1 requires at least a 50% non-state cost
share for integrated regional water management projects
funded with bond funds. That local cost share can be
waived or reduced for disadvantaged or economically
distressed communities. The author's office indicates
that the local region intends for over two-thirds of the
anticipated $68 million in costs for the project to be
financed by local farmers and rate payers through a
Proposition 218 process, however, this bill is currently
silent as to whether a local match would be a condition
of the state appropriation.
d) Unspecified Fund Source: This bill as currently
drafted does not identify a fund source for the $25
million appropriation. As explained above, while MCWRA
is eligible to apply for available Proposition 1 funding
through the competitive processes established for
allocation of those funds, the Legislature may not
appropriate Proposition 1 funding for specific projects.
Some individual components of this project may be
eligible for funding from other fund sources. For
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example, the project may require fish screens that might
be eligible for funding from fisheries restoration grant
funds, or from other prior bond funds such as Proposition
40, to the extent there are any unencumbered funds
remaining from that bond. The project is in the coastal
zone, so it is also possible that it might be eligible to
apply to the State Coastal Conservancy for funding for
some of the restoration components of the project. The
author has also indicated that there may be some flood
benefits to the project so it is possible that components
of the project may be eligible for funding from
unencumbered Proposition 1E flood bond funds that were
previously appropriated by the Legislature, though the
entire project would not likely qualify for those funds.
In summary, while there may be other state fund sources
that might be available for different components of this
project, the only source of funds that has been
identified thus far as potentially available for the
project as a whole is the State General Fund.
5)Supporting Arguments: Supporters emphasize this bill will
help ensure that a critically needed water transfer project is
able to be constructed, and point to the enactment of AB 155
(Alejo) in 2014, which authorized the MCWRA to construct a
water transfer pipeline or tunnel between the two lakes
utilizing the design-build construction method in conjunction
with a Project Labor Agreement (PLA). PLAs are agreements
that require award of government contracts for public
construction projects to unionized firms.
6)Opposing Arguments: Opponents assert this bill would pressure
the county to use a design-build approach to construction of
the pipeline or tunnel connecting the two reservoirs, and a
PLA for the project. The opponents are self-described Merit
Shop employer associations who indicate they follow a way of
doing business that rewards employees based on performance,
and support award of contracts based on safety, quality and
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value, regardless of labor affiliation.
REGISTERED SUPPORT / OPPOSITION:
Support
State Building and Construction Trades Council of California
Opposition
Air Conditioning Trade Association
Associated Builders and Contractors, San Diego Chapter
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
Analysis Prepared by:Diane Colborn / W., P., & W. / (916)
319-2096
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