BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNANCE AND FINANCE Senator Robert M. Hertzberg, Chair 2015 - 2016 Regular ------------------------------------------------------------------ |Bill No: |SB 1262 |Hearing |4/20/16 | | | |Date: | | |----------+---------------------------------+-----------+---------| |Author: |Pavley |Tax Levy: |No | |----------+---------------------------------+-----------+---------| |Version: |2/18/16 |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant|Favorini-Csorba | |: | | ----------------------------------------------------------------- Water supply planning Increases requirements that new developments must meet in order to demonstrate that its water supplies are sufficient. Background Water Supply Planning for New Development. An urban water supplier with more than 3,000 customers must adopt an urban water management plan (UWMP). An important component of a UWMP is an assessment of water service reliability during normal, dry, and multiple-dry years. Part of that analysis requires information about the availability of groundwater supplies. Cities and counties must consider information provided by water suppliers when they act on proposals for large-scale residential, commercial, hotel, industrial, or mixed-use projects (SB 901, Costa, 1995). Every large-scale development project-proposing new 500 connections or an equivalent size for other uses-must have a water supply assessment (SB 610, Costa, 2001), prepared according to the following process. First, a city or county, at the time that it determines that a development is subject to the California Environmental Quality Act (CEQA), must identify any water system that that may supply water for the project. If the proposed project was included in the UWMP of one of the identified systems, the water system prepares the water supply assessment for the project. If the SB 1262 (Pavley) 2/18/16 Page 2 of ? projected demand was not accounted for, or the city or county was not able to identify a water system to serve the project, the city or county prepares the assessment, in consultation with the local agency formation commission (LAFCO) and other relevant water systems. A water supply assessment must identify any existing water supply entitlements, water rights, or water service contracts relevant to the identified water supply for the proposed project, and describe the quantities of water received in prior years by the public water system or the city or county through its water rights or other sources. If a water supply for a proposed project includes groundwater, the water supply assessment must include additional information, including a description of any groundwater basins that will supply the project, the court or SWRCB order if the basin is adjudicated, and an analysis of the sufficiency of the groundwater from the basin or basins. The water supply assessment must be incorporated into the analysis of the project under the California Environmental Quality Act (CEQA). LAFCOs then use the water supply assessment in determining whether to authorize an annexation or extension of service to the proposed development. Greater certainty about water supplies for a proposed development is required later in the process of approving a development. Specifically, the Subdivision Map Act requires cities and counties to demonstrate that a sufficient water supply is available as a condition in their approval of a tentative map for a subdivision with more than 500 dwelling units (SB 221, Kuehl, 2001). Proof of sufficient water must be based on a written verification from the applicable public water system. In order to be sufficient, the water supply must be able to meet the demands of existing and future planned uses in addition to the subdivision's demand over the next 20 years. Sustainable Groundwater Management Act. In response to a multi-year drought, the Legislature enacted the Sustainable Groundwater Management Act (SGMA) in 2014. Composed of three bills-AB 1739 (Dickinson), SB 1168 (Pavley) and SB 1319 (Pavley)-SGMA comprehensively reformed California's groundwater laws. Among other provisions, the Act directs the Department of Water Resources (DWR) to categorize the state's groundwater basins into high, medium, low, and very low priorities, based on SB 1262 (Pavley) 2/18/16 Page 3 of ? factors such as the population overlying the basin, number of wells in the basin, and overlying irrigated acreage. DWR must also identify basins subject to critical overdraft. Under SGMA, basins designated as high or medium priority must be managed by a groundwater sustainability agency. That agency must develop a groundwater sustainability plan (GSP) to ensure that by 2040, the basin is in a sustainable condition-there can be no undesirable results (such as land sinking) from use of the basin. If a basin does not have a groundwater sustainability agency, or the agency fails to adopt or implement a GSP, the State Water Resources Control Board may designate the basin as "probationary" and can develop a plan to achieve sustainability for the basin. SGMA also took steps to integrate groundwater considerations into local planning. A GSP must take into account the most recent planning assumptions contained in the general plans of cities and counties overlying the basin, and the GSP must be provided to the legislative body of those cities and counties. If the basin is managed pursuant to a court order, SWRCB order, or SWRCB plan for a probationary basin, that order must be provided instead of the GSP. Similarly, a city or county that is proposing to amend its general plan must refer the proposed amendment to the relevant groundwater sustainability agency for comment. Some legislators want to also incorporate groundwater considerations into the water supply planning required for new developments. Proposed Law Senate Bill 1262 requires cities and counties, when making a determination of water supply sufficiency for a proposed subdivision that relies in whole or in part on groundwater, to consider certain plans and information regarding the basin. Specifically, the city or county must consider the order or decree adopted by the court or the SWRCB for a basin that has been adjudicated. For basins that have not been adjudicated, the city or county must consider: In high or medium priority basins, the most recently adopted or revised adopted groundwater sustainability plan. SB 1262 (Pavley) 2/18/16 Page 4 of ? In low or very low priority basins, whether the Department of Water Resources has identified the basin or basins as overdrafted or has projected that the basin will become overdrafted if present management conditions continue. The bill allows this information to support the agency's determination, and also provides that water from a probationary basin shall not be counted as a water supply. SB 1262 also makes conforming changes to the information required in a water supply assessment that includes groundwater from a non-adjudicated basin. In addition, in the case that the project relies on water from an overdrafted basin of low or very low priority, SB 1262 requires the water supply assessment to include a detailed description of the efforts being undertaken in the basin or basins to eliminate the overdraft. It also prohibits hauled water and groundwater from a probationary basin from being considered a source of water. In addition, if the water supply for a proposed project includes water that doesn't meet all primary and secondary drinking water standards, the following additional information needs to be included: A detailed description of the concentration of contaminants in the water. The proposed method for treating, blending, or otherwise ensuring that the water will meet drinking water quality standards. The project cost to achieve drinking water quality. An analysis of the affordability of water for the project's anticipated residents. SB 1262 also recasts the process for developing water supply assessments. If a city or county cannot identify a water system for a proposed project, or if the systems identified are unwilling to supply water to the project, SB 1262 requires the city or county to prepare a technical report that includes all of the following: The name of each public water system that has a service area boundary within five miles of the proposed project. SB 1262 (Pavley) 2/18/16 Page 5 of ? An analysis of the feasibility of a water system annexing, connecting, or otherwise supplying domestic water to the project. An analysis of the long-term feasibility of creating a new water system to serve the project, including, but not limited to, projecting the capacity of anticipated ratepayers to sustain a water system if there is the potential that water treatment will be required in the foreseeable future. A description of all actions taken by the city or county to secure a supply of domestic water from an existing public water system for the project. A description of all actions taken by the project proponent to pursue a contract for managerial or operational oversight from an existing public water system. If the city or county concludes, based on the technical report, that it is feasible for a water system to provide water to the project, SB 1262 requires the city or county submit their technical report to the relevant LAFCO. If the LAFCO doesn't approve an annexation or extension of service, the city or county must develop the water supply assessment for the project. State Revenue Impact No estimate. Comments 1. Purpose of the bill . Cities and counties must already consider information provided by water suppliers in their general plans, and California's water supply assessment laws, enacted through SB 610 and 221, have helped to ensure that new developments in California have sufficient water supplies. However, the passage of SGMA in 2014 introduced new plans and requirements for groundwater extraction, and the "show-me-the-water" legislation has not yet caught up. In addition, some loopholes in SB 610 and SB 211 allow new developments to skirt the requirements for sufficient water supplies by establishing new systems without consideration of their long-term sustainability. SB 1262 provides the necessary updates to harmonize new development approvals with the requirements of SGMA and creates a process to discourage the SB 1262 (Pavley) 2/18/16 Page 6 of ? creation of new water systems when it is geographically and economically feasible to connect to an existing system. 2. Burdensome requirements . Historically, some developments in California have proceeded on shaky water supply assumptions. However, since the passage of SB 610 and SB 221, developments have been required to demonstrate that they have sufficient water supplies before receiving the needed land use approvals from local governments. These laws already require cities and counties to do water supply assessments if no system is available to serve the development. SB 1262 adds a new requirement to prepare a technical report that includes analyses of future ratepayers ability to pay for a water system before ground can be broken on a project. It also requires cities and counties to look at all water systems within five miles of the proposed development, regardless of whether it makes sense for those systems to serve the project or not. The costs of this technical report will be passed along in the form of higher development fees, potentially creating a disincentive to new, more water efficient development. 3. Analysis paralysis . Under current law, the water supply assessment is a part of the CEQA process, which must precede any LAFCO action on an annexation or extension of services needed to support a development. SB 1262 upends this process by requiring a water supply assessment to be prepared after LAFCO has acted in order to encourage developments to use existing water systems even when a water system is opposed. But this structure deprives LAFCOs of important information and potentially creates a loop within CEQA that cannot be completed. For example, a city or county may prepare a water supply assessment that identifies a water system to serve the development, have an application for annexation be rejected by LAFCO, and then have to prepare another water supply assessment that must again identify the same public water system. Retaining the existing statutory language that governs the order of land use approvals for new developments may eliminate these issues. 4. Missed connections . SB 1262 intends to ensure that new developments have sustainable water supplies and ratepayer bases that can support the long term funding and effective management of a water system. However, the state's show-me-the-water statutes only apply to developments with 500 or more connections. This threshold only covers large developments; SB 1262 (Pavley) 2/18/16 Page 7 of ? according to an estimate by CALAFCO, it may only cover half the growth in the state. It may miss smaller developments that are in fact more vulnerable to water supply shocks or economic challenges due to lack of economies of scale. On the other hand, setting the threshold too low could burden small projects that tie into an existing system with adequate capacity with no adverse effects. Under state law, a public water system with 200 or fewer connections is considered a small system and can be regulated by the county health department instead of the State Water Resources Control Board. The Committee may wish to consider amending SB 1262 to lower the threshold for water supply assessments and verifications to more closely align with other state laws on water systems. 5. Incoming ! The Senate Natural Resources and Water Committee approved SB 1262 by a vote of 7-2 on March 29, 2016. 6. Mandate . The California Constitution generally requires the state to reimburse local agencies for their costs when the state imposes new programs or additional duties on them. According to the Legislative Counsel's Office, SB 1262 creates a new state-mandated local program. SB 1262 provides that if the Commission on State Mandates determines that this bill contains a reimbursable mandate, payment to local agencies must be made pursuant to an existing statutory process. 7. Related legislation . SB 1263 (Wiekowski) increases state oversight of the formation of new public water systems by requiring, among other provisions, a potential system to develop a technical report on its water sources and future costs. Support and Opposition (4/14/16) Support : Clean Water Action; Community Water Center; Desert Water Agency; Leadership Counsel for Justice and Accountability; Planning and Conservation League; Sierra Club California; Valley Ag Water Coalition. Opposition : California Apartment Association; California Association of Realtors; California Building Industries Association; California Business Properties Association; SB 1262 (Pavley) 2/18/16 Page 8 of ? California Chamber of Commerce; California Independent Petroleum Association. -- END --