BILL NUMBER: AB 1834 CHAPTERED 09/29/00 CHAPTER 888 FILED WITH SECRETARY OF STATE SEPTEMBER 29, 2000 APPROVED BY GOVERNOR SEPTEMBER 28, 2000 PASSED THE SENATE AUGUST 31, 2000 PASSED THE ASSEMBLY AUGUST 31, 2000 CONFERENCE REPORT NO. 1 PROPOSED IN CONFERENCE AUGUST 28, 2000 AMENDED IN SENATE JUNE 6, 2000 AMENDED IN ASSEMBLY MAY 11, 2000 AMENDED IN ASSEMBLY MAY 8, 2000 INTRODUCED BY Assembly Members Havice and Calderon (Coauthor: Assembly Members Lowenthal and Robert Pacheco) (Coauthor: Senator Karnette) FEBRUARY 3, 2000 An act to add and repeal Section 60233.5 of, and to add Part 8 (commencing with Section 60600) to Division 18 of, the Water Code, relating to water. LEGISLATIVE COUNSEL'S DIGEST AB 1834, Havice. Water Replenishment District of Southern California. (1) The Water Replenishment District Act authorizes the formation of water replenishment districts and grants specified powers and duties to those districts. This bill would make legislative findings and declarations and a statement of legislative intent relating to the Water Replenishment District of Southern California. The bill would require the State Auditor to perform an audit with regard to operations and management of the district, as specified. The bill would prohibit the district from incurring indebtedness on or after January 1, 2001. The bill would authorize the district to increase a specified water replenishment assessment only to reflect increases in the Consumer Price Index, as prescribed. The bill would require the district to pay for any capital project undertaken by the district with existing reserves or with funds generated from the imposition of the water replenishment assessment. The bill would require the formation of a technical advisory commission for the purposes of evaluating projects proposed by the district, as specified. The bill would repeal these provisions on January 1, 2003. The bill would impose additional requirements on the district in connection with competitive bidding. By imposing requirements on the district, the bill would create a state-mandated local program. (2) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement, including the creation of a State Mandates Claims Fund to pay the costs of mandates that do not exceed $1,000,000 statewide and other procedures for claims whose statewide costs exceed $1,000,000. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions. (3) The bill would become operative only if SB 1979 of the 1999-2000 Regular Session is enacted and becomes operative on or before January 1, 2001. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) In December 1999, the State Auditor released a report entitled "Water Replenishment District of Southern California: Weak Policies and Poor Planning Have Led to Excessive Water Rates and Questionable Expenses." (b) The State Auditor concluded in its report that the Water Replenishment District of Southern California has accumulated an unwarranted financial surplus by consistently overestimating the amount that the district collects from ratepayers for water replenishment and clean water programs. The district has not taken into consideration unused cash balances to offset the high replenishment assessments, and has maintained excessive cash reserves. The district has been unable to explain how much of the financial surplus is attributable to capital improvement projects, and has employed a flawed process for determining the economic feasibility of its capital projects. (c) The State Auditor also concluded in its report that the district's management decisions were negligent and inadequate in light of its fiduciary responsibilities and administrative functions. The district has failed to implement sound contracting practices, including contracting for construction, materials, equipment, supplies, and professional services. The board of the district had failed to exercise control over administrative policy regarding staff positions, personnel costs, and consulting needs. (d) To ensure that the people who are served by the district are protected from the excessive rates and benefit from appropriate control on contracting policies, maintenance and operation expenses, and discretionary spending, and to ensure that the district conducts its meetings and performs its business in a professional manner, it is necessary to enact reforms that implement the recommendations set forth in the State Auditor's report. (e) The district's actions have not been responsive to the district's constituents. It is the intent of the Legislature to review the governance structure of the district and to create a governance structure that is responsive to the needs of the district' s constituents. SEC. 2. Section 60233.5 is added to the Water Code, to read: 60233.5. (a) This section applies to the Water Replenishment District of Southern California. (b) (1) The State Auditor shall perform an audit with regard to the operations and management of the district. (2) The audit shall include an evaluation of the extent to which the district has complied with the recommendations of the report prepared by the State Auditor, dated December 1999, relating to the district. (3) The State Auditor shall prepare and submit to the Legislature a report that includes its findings and recommendations resulting from the audit performed pursuant to this subdivision. (c) On or after January 1, 2001, the district may not incur indebtedness. (d) The district may increase its annual water replenishment district assessment only to reflect increases in the Consumer Price Index, for the Los Angeles-Long Beach statistical area, plus 1 percent, not to exceed 5 percent above the water replenishment assessment imposed in the previous year. (e) The district shall pay for any capital project undertaken by the district with existing reserves or with funds generated from the imposition of water replenishment assessment. (f) (1) The Central Basin Water Association and the West Basin Water Association shall appoint six professionals with expertise relating to water to a technical advisory committee. (2) The district shall consult with the technical advisory committee for the purpose of evaluating projects proposed by the district, making recommendations to the board of the district, and establishing criteria relating to the construction of projects for water quality improvement purposes. (3) The district shall maintain records regarding all proposed projects, the recommendations of the technical advisory committee, and the final decisions made by the board of the district with regard to those projects. (g) This section shall remain in effect only until January 1, 2003, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2003, deletes or extends that date. SEC. 3. Part 8 (commencing with Section 60600) is added to Division 18 of the Water Code, to read: PART 8. COMPETITIVE BIDDING 60600. This part applies to contracts by water replenishment districts established pursuant to this division. 60602. Before making any contract totaling twenty-five thousand dollars ($25,000) or more within any 12-month period, the district shall advertise for bids. 60604. When work is to be done, the district shall give notice calling for bids by publication in a newspaper of general circulation in the county once a week for four consecutive weeks. 60606. If less than the whole work provided for in the plans and specifications is to be done, the portion to be done must be particularly described in the notice. 60608. The notice shall set forth all of the following information: (a) Plans and specifications of the work to be done can be seen at the office of the district. (b) The board will receive sealed bids. (c) The contract will be let to the lowest responsible bidder. (d) The bids will be opened in public at a given time and place. 60610. (a) All bids for construction work shall be presented under sealed cover and shall be accompanied by one of the following forms of bidder's security: (1) Cash. (2) A cashier's check made payable to the district. (3) A certified check made payable to the district. (4) A bidder's bond executed by an admitted surety insurer, made payable to the district. (b) Upon an award to the lowest bidder, the security of an unsuccessful bidder shall be returned in a reasonable period of time, but in no event shall that security be held by the district beyond 60 days from the time the award is made. 60612. The board may do any of the following: (a) Let the work to the lowest responsible bidder. (b) Reject any or all bids and readvertise for proposals. (c) Proceed to construct the work under its own superintendence. 60614. In case of an emergency, if notice for bids to let contracts will not be given, the district shall comply with Chapter 2.5 (commencing with Section 22050) of the Public Contract Code. 60616. Contracts for the purchase of materials only shall be awarded to the lowest responsible bidder, except that the board may reject any or all bids for the furnishing of materials only and thereafter either readvertise for bids or solicit offers from not less than three responsible persons to furnish materials. 60618. Upon receipt of an offer for a less price than that specified in the lowest rejected bid, the board may enter into a contract for the furnishing of the materials with the person who has offered them at the lowest price. 60620. Any person to whom a contract is awarded shall enter into a bond, to be approved by the district, payable to the district for its use, for 25 percent of the amount of the contract price, conditioned for the full and faithful performance of the contract. The work shall be done under the direction and to the satisfaction of, and be approved by, the district. 60622. All contracts and other documents executed by the district shall be signed by the president and the secretary. SEC. 4. Notwithstanding Section 17610 of the Government Code, if the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund. SEC. 5. This act shall become operative only if Senate Bill 1979 of the 1999-2000 Regular Session is enacted and becomes operative on or before January 1, 2001.