BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 208


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          Date of Hearing:   June 30, 2015


                  ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE


                                 Marc Levine, Chair


          SB  
          208 (Lara) - As Amended June 1, 2015


          SENATE VOTE:   30-5


          SUBJECT:  Integrated regional water management plans: grants:  
          advanced payment.


          SUMMARY:  Allows the Department of Water Resources (DWR), under  
          specified conditions, to provide advance funding of Integrated  
          Regional Water Management Plan (IRWMP) grants where the project  
          proponent is a nonprofit organization or a disadvantaged  
          community, or the project benefits a disadvantaged community.   
          Specifically, this bill:  


          1)Requires a regional water management group (RWMG), within 90  
            days of receiving notice that it is awarded an IRWMP grant, to  
            provide DWR with a list of projects to be funded by the grant  
            funds where the project proponent is a nonprofit organization  
            or a disadvantaged community, or the project benefits a  
            disadvantaged community.   Requires the list to provide  
            specific information for each project, including how the  
            project is consistent with the adopted IRWMP.










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          2)Requires DWR, within 60 days of receiving the project  
            information from the RWMG, to provide advanced payment of 50  
            percent of the grant award for those projects that satisfy  
            both of the following criteria:


             a)   The project proponent is a nonprofit organization or a  
               disadvantaged community, or the project benefits a  
               disadvantaged community.


             b)   The grant award for the project is less than $1 million.


          3)Requires that the recipient of the advanced payment place the  
            funds in a noninterest-bearing account until expended.


          4)Mandates that the funds be expended within six months of the  
            date of receipt, unless DWR waives this requirement.


          5)Requires the advanced funding recipient to provide, on a  
            quarterly basis, an accountability report to DWR regarding the  
            expenditure and use of any advanced grant funds that provides,  
            at a minimum, the following:


             a)   An itemization of how the advanced payment funds were  
               expended.


             b)   A project itemization as to how any remaining advanced  
               payment funds will be expended over time.











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             c)   Whether the funds are placed in a noninterest-bearing  
               account, and if so, the date that occurred and the dates of  
               withdrawals of funds from that account.


          6)Specifies that if funds are not expended, the unused portion  
            of the grant shall be returned to DWR within 60 days after  
            project completion or the end of the grant performance period,  
            whichever is earlier.


          7)Allows DWR to adopt additional requirements for the recipient  
            regarding the use of advanced payment to ensure that the funds  
            are used properly.


          8)Sunsets on January 1, 2025.


          EXISTING LAW:


          1)Provides $810 million in Chapter 7 of Proposition 1, the Water  
            Quality, Supply, and Infrastructure Improvement Act of 2014  
            (Prop. 1), for projects that are included in and implemented  
            in an adopted IRWM plan.

          2)Requires that not less than 10% of Proposition 1 IRWM funds  
            are allocated to projects that directly benefit disadvantaged  
            communities.

          3)Allocates $510 million of Prop. 1 IRWM funds by hydrologic  
            region.

          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee:










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          1)Unknown potential losses, potentially in the hundreds of  
            thousands of dollars, of bond/General Fund (GF) monies for  
            advanced funds that are spent on ineligible uses and are  
            unrecoverable.


          2)Unknown costs, but potentially in the tens of thousands of  
            dollars, from the GF for increased administrative costs to DWR  
            for the administration and oversight of advanced funds.


          COMMENTS:  This bill would establish a process whereby DWR could  
          provide advance funding of IRWMP grants where the project  
          proponent is a nonprofit organization or a disadvantaged  
          community, or the project benefits a disadvantaged community,  
          under specified circumstances.


          1)Author's statement:  The author states that this bill is  
            needed as, currently, IRWM funding represents a pay-as-you-go  
            system where groups with approved plans provide funding for  
            water projects up front and are reimbursed later.  The author  
            adds that while this mechanism is intended to save state  
            general funds it instead threatens the success of regional  
            programs and the continued participation of stakeholders  
            because smaller communities and nonprofit organizations are  
            disproportionately impacted when pre-financing a water project  
            requires a lager budget than these stakeholders are often able  
            to fund.  The author concludes that this bill will improve  
            equity by advancing grant funds to nonprofit organizations and  
            disadvantaged communities under limited circumstances.
          
          2)Background:  Numerous water bonds, including most recently  
            Proposition 1, provide funding for projects and programs  
            through IRWMP grants.  Typically, the Legislature appropriates  
            bond funds to DWR for a competitive grant solicitation.  DWR  









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            then issues guidelines for a round of IRWMP funding, and RWMGs  
            submit their list of local projects.  DWR ranks the projects  
            and makes the awards within each IRWMP funding region.  



            In many cases, RWMGs contract with local entities to carry out  
            projects.  The typical reimbursement process is that the local  
            entity submits invoices to its RWMG, who then submits the  
            invoices to DWR.  Upon review of the invoices, DWR then  
            reimburses the RWMG who then reimburses the local entity.   
            Depending on the specific details of the funding agreement and  
            the administrative processes of the RWMG, a number of months  
            may pass between the time the local entity incurs the expense  
            and the time they receive reimbursement from the management  
            group.  It can be a hardship for some nonprofit organizations  
            or disadvantaged communities to bear the up-front cost of the  
            project until reimbursed.   
          3)Prior and related legislation:  AB 1874 (Gonzalez) of 2014  
            would have required DWR to pass IRWMP funding appropriated by  
            the Legislature directly through to a regional group if that  
            group was eligible for, and had completed, a streamlined  
            application process and requested the funding. Like this bill,  
            AB 1874 was introduced in order to address IRWMP project  
            reimbursement delays, particularly for nonprofit organizations  
            and disadvantaged communities. AB 1874 was held in the  
            Assembly Appropriations Committee.

          4)Supporting arguments:  Supporters state that "Administration  
            of the state's [IRWMP], which is funded through state general  
            obligation bond proceeds, has created challenges for  
            implementation at the regional level that threaten the success  
            of regional programs and continued participation of all  
            interested stakeholders, including smaller nonprofit  
            organizations, watershed groups, and disadvantaged  
            communities.  Supporters add that IRWMP issues and concerns  
            relate to delayed or untimely processing of IRWM project  









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            invoice reimbursements, resulting in significantly delayed  
            reimbursement payment to those smaller nonprofit organizations  
            and disadvantaged communities that can least afford it.   
            Supporters advise that, on occasion, it has taken anywhere  
            from 60 to 330 days to process regional invoices for payment  
            and that such delays disenfranchise "smaller nonprofit  
            organizations and disadvantaged communities, which could  
            become less willing to meaningfully participate in the IRWM  
            process."  Supporters maintain that they strongly support this  
            bill because it "would focus on removing these administrative  
            challenges and allow for the continued meaningful  
            participation of all regional interests in the IRWM process."

          5)Opposing arguments:  None on file.
          
          REGISTERED SUPPORT / OPPOSITION:




          Support


          San Diego Water Authority (sponsor)


          California Municipal Utilities Association


          Central Basin Municipal Water District 


          City of Pasadena


          City of San Diego










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          Support - continued


          
          City of Signal Hill


          Clean Water Action       


          Coachella Valley Regional Water Management Group


          Coachella Valley Water District 


          Community Water Center   


          Council for Watershed Health 


          County Sanitation District of Los Angeles


          Desert Water Agency


          East Bay Municipal Utility District


          Environmental Justice Coalition for Water


          Lakeside Water District










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          Leadership Counsel for Justice and Accountability


          Los Angeles County Board of Supervisors


          Pueblo Unido Community Development Corporation


          Roots of Change  


          Rural Community Assistance Corporation


          Rural County Representatives of California


          San Jerardo Cooperative


          Sierra Club California   


          The Nature Conservancy      


          Valley Ag Water Coalition  


          Valley Center Municipal Water District of San Diego County




          Opposition









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          None on file




          Analysis Prepared by:Tina Leahy / W., P., & W. / (916)  
          319-2096