BILL ANALYSIS �
AB 2238
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 2238 (Perea) - As Amended: April 11, 2012
SUBJECT : Public water systems: drinking water.
SUMMARY : Places new requirements on local agency formation
commissions (LAFCOs), in their municipal service reviews, to
assess alternatives for improving efficiency and affordability
of infrastructure and service delivery for drinking water and
wastewater services, and adds new requirements to the Department
of Public Health for programs related to small community water
systems. Specifically, this bill :
1)Requires LAFCOs, in conducting a municipal service review
(MSR), to comprehensively assess various alternatives for
improving efficiency and affordability of infrastructure and
service delivery for drinking water and wastewater services.
2)Requires the Department of Public Health (DPH), in
administering existing programs to fund improvements and
expansions of small community water systems, to promote the
consolidation or merger of small community water systems that
serve disadvantaged communities where consolidation or merger
will help at least one of the affected agencies.
3)Specifies that DPH, in promoting the consolidation or merger
of small community water systems, shall require that funding
for feasibility studies performed prior to a construction
project to include studies of the feasibility of consolidating
two or more community water systems or merging a community
water system with a city water system, if at least one of the
water systems is a small community water system that serves a
disadvantaged community, unless DPH makes a written
determination that consolidation or merger is not feasible
under the circumstances.
4)Prohibits DPH from making a determination of infeasibility if
a LAFCO conducted a study, including an MSR, within the
previous five calendar years, found the consolidation or
merger feasible.
5)Requires DPH to give priority to funding construction projects
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that involve the physical restructuring and managerial
consolidation of two or more community water systems or merger
of one or more community water systems, if it shown that small
community water system consolidation or merger will further
the goals of improving the quality and reliability of water
delivered and reduce costs for ratepayers.
6)Requires the Strategic Growth Council (SGC) to manage and
award financial assistance to a city, county, LAFCO, special
district, nonprofit organization, or other specified entity,
for the preparation, planning, and implementation of a public
water system consolidation, merger, or extension of services
project for the purposes of promoting water conservation.
7)Specifies that the SGC must give priority to funding projects
proposed by an economically disadvantaged community.
8)Specifies that reimbursement to local agencies shall be made
if the Commission on State Mandates determines that this bill
contains costs mandated by the state.
EXISTING LAW :
1)Requires LAFCOs to initiate and make studies of existing
governmental agencies including, but not limited to,
inventorying those agencies and determining their maximum
service area and service capacities.
2)Allows LAFCOs, or the board of supervisors on behalf of a
LAFCO, to apply for and accept, or both, any financial
assistance and grants-in-aid from public or private agencies
or from the state or federal government or from a local
government.
3)Requires LAFCOs, in order to prepare and to update spheres of
influence, to conduct a service review of the municipal
services provided in the county or other appropriate area
designated by the LAFCO, and shall prepare a written statement
of its determinations with respect to each of the following:
a) Growth and population projections for the affected area;
b) The location and characteristics of any disadvantaged
unincorporated communities within or contiguous to the
sphere of influence;
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c) Present and planned capacity of public facilities,
adequacy of public services, and infrastructure needs or
deficiencies including needs or deficiencies related to
sewers, municipal and industrial water, and structural fire
protection in any disadvantaged, unincorporated communities
within or contiguous to the sphere of influence;
d) Financial ability of agencies to provide services;
e) Status of, and opportunities for, shared facilities;
f) Accountability for community service needs, including
governmental structure and operational efficiencies; and,
g) Any other matter related to effective or efficient
service delivery.
4)Requires LAFCOs to comprehensively review all of the agencies
that provide the identified service or services within the
designated geographic area and allows LAFCOs to assess various
alternatives for improving efficiency and affordability of
infrastructure and service delivery within and contiguous to
the sphere of influence, including, but not limited to, the
consolidation of governmental agencies.
5)Defines, for purposes of LAFCO law, the term "disadvantaged
unincorporated community" to mean inhabited territory, as
defined, or as determined by LAFCO policy, that constitutes
all or a portion of a "disadvantaged community" as it is
defined in the Water Code, which defines "disadvantaged
community" as a community with an annual median household
income that is less than 80% of the statewide annual median
household income.
6)Requires DPH, in administering programs to fund improvements
and expansions of small community water systems, to do all of
the following:
a) Give priority to funding projects in disadvantaged
communities;
b) Encourage the consolidation of small community water
systems that serve disadvantaged communities in instances
where consolidation will help the affected agencies and the
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state to meet all of the following goals:
i) Improvement in the quality of water delivered;
ii) Improvement in the reliability of water delivery;
and,
iii) Reduction in the cost of drinking water for
ratepayers.
c) Allow funding for feasibility studies performed prior to
a construction project to include studies of the
feasibility of consolidating two or more community water
systems, at least one of which is a small community water
system that serves a disadvantaged community; and,
d) In instances where it is shown that small community
water system consolidation will further specified goals,
give priority to funding construction projects that involve
the physical restructuring of two or more community water
systems, at least one of which is a small community water
system that serves a disadvantaged community, into a
single, consolidated system.
7)Establishes SGC in state government to consist of the Director
of State Planning and Research, the Secretary of the Resources
Agency, the Secretary for Environmental Protection, the
Secretary of Business, Transportation and Housing, the
Secretary of California Health and Human Services, and one
member of the public to be appointed by the Governor.
8)Requires SGC to identify and review activities and funding
programs of member state agencies that may be coordinated to
improve air and water quality, improve natural resource
protection, increase the availability of affordable housing,
improve transportation, meet the goals of the California
Global Warming Solutions Act of 2006, encourage sustainable
land use planning, and revitalize urban and community centers
in a sustainable manner.
9)Requires SGC to manage and award grants and loans to support
the planning and development of sustainable communities, and
allows SGC to do all of the following:
a) Develop guidelines for awarding financial assistance,
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including criteria for eligibility and additional
consideration;
b) Develop criteria for determining the amount of financial
assistance to be awarded, as specified;
c) Provide for payments of interest on loans, as specified;
d) Provide for the time period for repaying a loan;
e) Provide for the recovery of funds from an applicant that
fails to complete the project for which financial
assistance was awarded;
f) Provide technical assistance for application
preparation; and,
g) Designate a state agency or department to administer
technical and financial assistance programs for the
disbursing of grants and loans to support the planning and
development of sustainable communities.
FISCAL EFFECT : Unknown. This bill is keyed fiscal and contains
a state-mandated local program.
COMMENTS :
1)According to the author, this bill sets up a comprehensive
approach to increase efficiency
of service delivery and access to clean and affordable water and
wastewater services in disadvantaged communities. First, the
bill requires DPH to promote the consolidation of small water
systems that serve disadvantaged communities and prioritizes
funding for projects involving consolidation to promote safe
and affordable drinking water. Second, the bill requires
LAFCOs to assess various alternatives for improving efficiency
and affordability of service delivery and compliance in
specified studies performed by LAFCOs. And third, the bill
allows LAFCOs to access existing grant funds that support the
planning and development of sustainable communities.
2)According to the sponsor, the California Rural Legal
Assistance Foundation, there are hundreds of thousands of
Californians who live in disadvantaged communities without the
most basic features of a safe and healthy environment such as
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clean and affordable drinking water, adequate wastewater
treatment, or storm water drainage. The author notes that
these problems disproportionately affect families that live in
disadvantaged unincorporated communities, which can range from
remote but concentrated settlements of industrial or
agricultural laborers, to neighborhoods at the fringes of
cities and towns that have been left out of city islands, to
islands within cities, surrounded on all sides by an
incorporated city but excluded from the city's services.
3)Current LAFCO law specifies various ways that special
districts and other agencies can be reorganized and modified,
including consolidation, dissolution, including dissolution
with annexation, a merger, or establishment of a subsidiary
district. Service reviews (MSRs) were added to LAFCO's
mandate with the passage of the Cortese-Knox-Hertzberg Act in
2000.
A service review is a comprehensive study designed to better
inform LAFCO, local agencies, and the community about the
provision of municipal services. Service reviews attempt to
capture and analyze information about the governance
structures and efficiencies of service providers, and to
identify opportunities for greater coordination and
cooperation between providers. The service review is a
prerequisite to a sphere of influence determination and may
also lead a LAFCO to take other actions under its authority.
4)This bill contains new mandates for LAFCOs to "assess various
alternatives for improving efficiency and affordability of
infrastructure and service delivery for drinking water and
wastewater services." According to the California Association
of Local Agency Formation Commissions (CALAFCO), the bill
contains a new research mandate to LAFCO that is unlikely to
result in any improvement in service. CALAFCO, in opposition
to the bill, notes that "nearly half of the thousands of MSRs
conducted by LAFCO include the review of water or wastewater
agencies, and that LAFCOs do not have the resources or
expertise to study reorganizations in all of these cases.
Because there is no funding for these studies, the costs would
be passed on to counties, cities and special districts."
CALAFCO believes that current law is sufficient to meet the
desired goals of the bill.
The author recently took amendments to strike provisions in
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the bill to allow an opt-out for a LAFCO for the new mandate
of assessing various alternatives for improving efficiency and
affordability?for drinking water and wastewater services.
Previously the bill would have allowed a LAFCO to opt out of
the new mandate if the "commission or executive officer makes
a written determination that the assessment is not reasonable
under the circumstances."
CALAFCO believes that this opt-out language would have opened
their member LAFCOs up to legal action by those wanting a
reorganization. However, with the striking of the opt-out
language, concerns have arisen by both the Association of
California Water Agencies (ACWA) and the California Special
Districts Association (CSDA) that there is now no ability of a
LAFCO to opt out from the assessment even if there are
circumstances which cause the new duty by the LAFCO to be
unnecessary.
The Committee may wish to ask the author and sponsor to keep
working with CALAFCO, ACWA, and CSDA to come up with a set of
specific criteria in which a LAFCO could opt out of the new
mandate that this bill places on LAFCOs. If the goal of the
bill is to truly give LAFCOs a way to opt out of doing the
assessment, more specific language is necessary to ensure that
LAFCOs will not be held liable for opting out.
5)AB 783 (Arambula), Chapter 614, Statutes of 2007, required DPH
to prioritize funding of water projects in disadvantaged
communities and directed DPH to promote, provide funds for
studies on, and prioritize funding for projects which
consolidate small public water systems in certain situations.
This bill builds upon those existing provisions to require DPH
to promote the consolidation or merger of small water systems
and in essence ties the hands of DPH to make a determination
that consolidation is infeasible, if specified studies done by
the LAFCO, including an MSR have found that consolidation or
merger is indeed feasible.
The Committee may wish to consider whether studies done by
LAFCOs regarding feasibility of consolidation or merger of
water systems should trump similar studies done by DPH.
6)This bill provides that LAFCOs intending to fund
consolidation, merger or extension of services for projects
for the purposes of promoting water conservation and to
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support the planning and development of sustainable
communities are eligible for funding under the Safe Drinking
Water, Water Quality and Supply, Flood Control, River and
Coastal Protection Bond Act of 2006 (Proposition 84). SGC is
currently tasked with identifying and reviewing
activities and funding programs of member state agencies that
may be coordinated to improve air and water quality, improve
natural resource protection, increase the availability of
affordable housing, improve transportation, meet the goals of
the California Global Warming Solutions Act of 2006, encourage
sustainable land use planning, and revitalize urban and
community centers in a sustainable manner.
Currently LAFCOs can only apply through an MPO or other
eligible local agency for grants that support the preparation
of sustainable community strategies from Proposition 84.
The Committee may wish to consider whether limiting a LAFCO's
ability to apply for Proposition 84 funding for the narrow
purposes of funding a public water system consolidation,
merger, or extension of services for projects for the purposes
of promoting water conservation makes sense, given all that is
examined in an MSR. For instance, in some cases, MSRs done by
LAFCOs may contain baseline information for regional
transportation plans (RTPs) and sustainable community
strategies, in addition to information about water systems and
other special district services.
7)This bill is the latest in a series of bills to insert the
concerns of disadvantaged communities into local government
planning. SB 1174 (Wolk) of 2010 concentrated on local
general plans; the bill died on the Assembly Appropriations
Committee's suspense file. AB 853 (Arambula) of 2010 focused
on the LAFCOs' municipal service reviews, spheres of
influence, and city annexation procedures; Governor
Schwarzenegger vetoed the bill as "unnecessary." SB 194
(Florez) of 2010 looked at disadvantaged communities' needs
for public works funding; Governor Schwarzenegger vetoed the
bill as "unnecessary."
Another bill, SB 244 (Wolk), Chapter 513, Statutes of 2011,
mandates new duties for LAFCOs, cities, and counties.
Provisions in SB 244, which took effect January 1, 2012, added
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the following duties for LAFCOs:
a) Requires the LAFCO, in determining the sphere of
influence of each local agency, to additionally consider,
for a city or special district that provides public
facilities or services related to sewers, municipal and
industrial water, or structural fire protection, the
present and probable need for those public facilities and
services of any disadvantaged unincorporated communities
within the existing sphere of influence, beginning with the
next sphere of influence update on or after July 1, 2012.
b) Allows the LAFCO, in determining a sphere of influence,
to assess the feasibility of governmental reorganization of
particular agencies and recommend reorganization of those
agencies when reorganization is found to be feasible and if
reorganization will further the goals of orderly
development and efficient and affordable service delivery.
c) Requires the LAFCO, in the written statement of its
determinations for a municipal service review to
additionally consider the following:
i) The location and characteristics of any
disadvantaged unincorporated communities within or
contiguous to the sphere of influence; and,
ii) Present and planned capacity of public facilities
and adequacy of public services, and deficiencies
including needs or deficiencies related to sewers,
municipal and industrial water, and structural fire
protection in any disadvantaged, unincorporated
communities within or contiguous to the agency's proposed
sphere of influence.
d) Allows the LAFCO, in conducting a municipal service
review, to assess various alternatives for improving
efficiency and affordability of infrastructure and service
delivery within and contiguous to the sphere of influence,
including, but not limited to, the consolidation of
governmental agencies.
Given that SB 244 only took effect on January 1, 2012, the
Committee may wish to ask the author and sponsor to let some
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time pass to see how the implementation of SB 244 is going
before adding the new mandates on local governments that this
bill contains.
The Committee may wish to consider whether the requirements
contained in SB 244 address the goals behind AB 2238 in terms
of assessing feasibility of consolidation and further
examination of water providers in disadvantaged unincorporated
communities.
8)CSDA writes that the new mandate for LAFCOs contained in
Section 2 of the bill will "detract LAFCO's efforts by forcing
them to divert precious time and resources on mandated
workload, some of which may be unnecessary. Existing law
already directs LAFCOs, with appropriate discretion, to
perform all of the goals sought by this section."
CSDA also points out that "some of the disadvantaged
communities with applications in the pipeline at DPH have been
engaged in a multi-year struggle for resolution to critical
health threats." In order to prevent delays in the delivery
of this urgently needed core infrastructure funding for
suffering disadvantaged communities, CSDA requests the
addition of language to clarify that the bill's provisions
will not apply to any applications submitted to DPH prior to
January 1, 2013.
9)ACWA notes that they agreed to the new mandate in SB 244 that
authorizes LAFCOs, as part of an MSR, to assess various
alternatives for improving efficiency and affordability of
infrastructure and service delivery, including the
consolidation of government agencies, because they appreciate
the need to improve service delivery to disadvantaged
communities. ACWA, in their oppose unless amended letter,
requests the author to delete the mandate on LAFCOs from the
bill.
10)SB 1672 (Costa), Chapter 767, Statutes of 2002 enacted the
Integrated Regional Water Management Planning Act of 2002, in
order to authorize a regional water management group to
prepare and adopt a regional plan, in accordance with certain
procedures, that addresses programs, projects, reports, or
studies relating to water supply, water quality, flood
protection, or related matters over which any local public
agency that is a participant in that group has authority to
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undertake. The intent of this legislation was to encourage
local water agencies to cooperatively manage their water
supplies for regional benefit, to coordinate among agencies to
improve regional water management, and to facilitate overall
regional coordination.
Given the Legislature's goals of integrated regional water
management, the author and sponsor may also wish to consider
whether there are other pots of funding for water system
consolidation, like what is contained in Proposition 84 for
the Integrated Regional Water Management Grant Program (IRWM).
Also, there are several programs under the purview of the
State Water Resources Control Board that aim to assist small
and/or disadvantaged communities in meeting their wastewater
needs.
11)Support arguments : Supporters believe that consolidation of
small water systems could increase the economies of scale and
potentially reduce the costs of service delivery for the
communities being consolidated.
Opposition arguments : Opposition argues that this bill
creates an unfunded and unproductive requirement for studies,
and in light of new requirements contained in SB 244, is
potentially duplicative and unnecessary.
12)This bill is double-referred to the Committee on
Environmental Safety and Toxic Materials.
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation (CRLAF) �SPONSOR]
Clean Water Action
Community Water Center
PolicyLink
Opposition
Association of California Water Agencies �unless amended]
California Association of Local Agency Formation Commissions
California Special Districts Association �unless amended]
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Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958