BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1585


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          ASSEMBLY THIRD READING


          AB  
          1585 (Alejo)


          As Amended  May 31, 2016


          2/3 vote.  Urgency


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Water           |12-1 |Levine, Bigelow,      |Harper              |
          |                |     |Dodd, Eggman,         |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |Gomez, Lopez, Mathis, |                    |
          |                |     |Olsen, Salas,         |                    |
          |                |     |Williams              |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |16-1 |Gonzalez, Bigelow,    |Obernolte           |
          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Eduardo Garcia, Roger |                    |
          |                |     |Hernández, Holden,    |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Weber, Wood           |                    |
          |                |     |                      |                    |








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          SUMMARY:  Appropriates $10 million from the General Fund (GF) 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 $10 million from the GF 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  
            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.









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          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 Niño. 





          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  
            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 Proposition 1 integrated regional water  
            management funds shall be for expenditures on, and competitive  
            grants and loans to, projects in an integrated regional water  
            management plan.  Prohibits the Legislature from appropriating  








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            funding made available by Proposition 1 to a specific project.  
             


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee,  appropriates $25 million from an unspecified state  
          account to the MCWRA .


          COMMENTS:  This bill would appropriate $10 million 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.


          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 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.  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.


          MCWRA is responsible for managing, protecting, and enhancing  








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          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 MCWRA in November 2015 concludes that the  
          project would provide potential ecological benefits including  
          flood management, groundwater recharge, surface and 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.   
          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 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 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  








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          spills would also reduce the likelihood of White Bass entering  
          the Salinas River and the loss of juvenile Steelhead fish to  
          predation.   


          AB 155 (Alejo), Chapter 865, Statutes of 2014, authorized MCWRA  
          to award a design-build contract for the combined design and  
          construction of a project to connect Lake San Antonio, and Lake  
          Nacimiento with an underground tunnel or pipeline for the  
          purpose of maximizing water storage, supply, and groundwater  
          recharge.


          The project that would be funded through this bill would appear  
          to be an eligible project to compete for funding under at least  
          two different categories of funding made available for water  
          management projects in Proposition 1.  As stated above,  
          Proposition 1 made available $810 million for projects that are  
          included in integrated regional water management plans.  Of this  
          amount, $43 million is specifically allocated to the central  
          coast region, of 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.









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          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 California Water  
          Commission is currently soliciting concept proposals from  
          interested parties for proposed storage projects.  


          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 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. 


          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.  The author's office indicates  
          that the local region intends for over two-thirds of the  
          anticipated $6 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.


          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, 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  








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          unionized firms.  




          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 value, regardless of labor  
          affiliation.


          Analysis Prepared by:                                             
                          Diane Colborn / W., P., & W. / (916) 319-2096     
                                                                  FN:  
          0003304