BILL ANALYSIS Ó AB 1585 Page 1 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 | | | | | | | AB 1585 Page 2 | | | | | ------------------------------------------------------------------ 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. AB 1585 Page 3 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 AB 1585 Page 4 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 AB 1585 Page 5 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 AB 1585 Page 6 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. AB 1585 Page 7 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 AB 1585 Page 8 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