BILL ANALYSIS �
AB 1527
Page 1
Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 1527 (Perea) - As Amended: April 9, 2014
SUBJECT : Public water systems: drinking water.
SUMMARY : Establishes new requirements for the Department of
Public Health (DPH)when administering programs to fund
improvements of small community water systems, including a
requirement to review and consider specified documents and
recommendations made by the affected local agency formation
commission (LAFCO). Specifically, this bill :
1)Establishes new requirements for DPH when administering
programs to fund improvements of small community water
systems, including a requirement to review and consider
specified documents and recommendations made by LAFCO.
2)Requires DPH, in administering existing programs to fund
improvements and expansions of small community water systems
and other water systems, to promote service delivery
alternatives that improve efficiency and affordability of
infrastructure and service delivery, including, but not
limited to, the consolidation of governmental agencies,
consolidation of water systems, and the extension of services
in and to disadvantaged communities where service delivery
options will help affected agencies, communities, and the
state meet specified goals.
3)Provides that DPH, pursuant to 2), above, shall require that
funding for feasibility studies performed prior to a
construction project include studies of service delivery
alternatives that improve efficiency and affordability of
capital improvements and service delivery, if at least one of
the potentially affected agencies serves, or would serve by
extraterritorial service extension, a disadvantaged community,
unless DPH makes a written determination that the service
delivery alternatives are not feasible under the
circumstances.
4)Requires DPH, during its assessment of feasibility pursuant to
3), above, to do the following:
AB 1527
Page 2
a) Review and consider the determinations and
recommendations made by the affected LAFCO, within the
previous five calendar years, as follows:
i) A special study of governmental agencies;
ii) A sphere of influence study; and,
iii) A service review.
b) Consult with the executive officer of the affected LAFCO
to determine whether any circumstances have changed since
the studies and reviews were conducted and completed
pursuant to a), above, and if there is any additional
information that would assist DPH in its determination;
and,
c) Review and consider the conclusion and recommendation of
other local and regional studies designed to develop and
identity regional solutions for drinking water delivery.
5)Requires DPH, if it is shown that an alternative service
delivery option will further the specified goals in current
law, to fund construction projects that include alternative
service delivery options, unless DPH makes a written
determination that the alternative service delivery option is
not feasible under the circumstances.
6)Specifies, if an applicant submits an application that
includes a service delivery alternative that furthers the
goals specified in current law, the applicant does not need to
be a small community water system and allows DPH to increase
the priority of the application.
7)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, and
specifies that the SGC must give priority to funding projects
proposed by a disadvantaged community.
8)Provides the financial assistance provided in 7), above, shall
be funded by moneys made available pursuant to Proposition 84
AB 1527
Page 3
(2006).
9)Declares it is the intent of the Legislature to encourage
LAFCOs to focus on the consolidation, merger, or extension of
public water systems, especially those located in
disadvantaged communities, by seeking financial assistance in
order to perform the necessary service reviews and other
appropriate studies.
10)Makes other technical and conforming changes.
EXISTING LAW :
1)Establishes, pursuant to the federal Safe Drinking Water Act
(SDWA), the Safe Drinking Water State Revolving Fund (SDWSRF),
which provides states with a financing mechanism to ensure
safe drinking water to the public.
2)Requires DPH, in administering these 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
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,
AB 1527
Page 4
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.
3)Defines "small community water system" to mean a community
water system that serves no more than 3,300 service
connections or a yearlong population of no more than 10,000
persons.
4)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.
5)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;
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
AB 1527
Page 5
service delivery.
6)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.
7)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.
8)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.
9)Requires SGC to manage and award grants and loans to support
the planning and development of sustainable communities.
FISCAL EFFECT : This bill is keyed fiscal.
COMMENTS :
1)Current law and purpose of this bill . Current law [AB 783
(Arambula), Chapter 614, Statutes of 2007] requires DPH to
prioritize funding of water projects in disadvantaged
communities and directs 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 service delivery alternatives which may include the
consolidation of small community water systems. Under this
bill DPH can increase the priority of an application that
includes a service delivery alternative that furthers the
AB 1527
Page 6
goals specified in current law, even if the applicant is not a
small community water system. This bill also requires DPH to
consider findings made through a recent study or a municipal
service review (MSR) undertaken by a LAFCO, in their
determination of the feasibility of service delivery
alternatives.
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 MSR is a comprehensive study designed to better
inform LAFCO, local agencies, and the community about the
provision of municipal services. MSRs 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 MSR is a prerequisite to a sphere of influence
determination and may also lead a LAFCO to take other actions
under its authority.
This bill also adds LAFCOs to the list of applicants that are
eligible for funding awarded by the SGC under the Safe
Drinking Water, Water Quality and Supply, Flood Control, River
and Coastal Protection Bond Act of 2006 (Proposition 84) for
the preparation, planning and implementation of a public water
system consolidation, merger or extension of services for
projects for the purposes of promoting water conservation and
to support the planning and development of sustainable
communities. This bill is author-sponsored.
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 a
metropolitan planning organization or other eligible local
agency for grants that support the preparation of sustainable
community strategies from Proposition 84.
AB 1527
Page 7
2)Author's statement . According to the author, "According to
the State Water Resources Control Board AB 2222 report,
Communities That Rely on a Contaminated Groundwater Source for
Drinking Water, over 2 million Californians do not have access
to safe drinking water. Treating contaminated water is
unaffordable for many disadvantaged communities. Many
Californians cannot access funding to address their drinking
water problems because they (a) rely on private wells, (b)
rely on a water system that has fewer than 15 connections, (c)
live in disadvantaged communities that simply do not have the
technical and managerial capacity to support its own drinking
water infrastructure.
"One of the best ways to provide safe, clean, affordable
drinking water delivery to small, disadvantaged communities
who rely on contaminated drinking water is to consolidate
their water system with another district or extend services
from another district. One advantage of consolidating or
extending water delivery services is that it increases
economies of scale, making water infrastructure more
affordable for ratepayers. Fortunately, many of these
communities are close to other communities that have similar
water quality concerns or have the capacity to serve them with
drinking water though service extension.
"More and more, local agencies, including LAFCO's, are
identifying how and where consolidations and service
extensions may offer the best solution to drinking water
problems, especially in disadvantaged communities. These
studies and reports to identify solutions are good, however,
the state agency responsible for funding many of these
projects, DPH, is not required to include or consider the
significant work that has been performed by LAFCO's. The
intent of this bill would be to connect the work locals have
conducted with how the state funds projects. Requiring DPH to
review and consider LAFCO's recommendations will avoid missed
opportunities to provide Californians with safe, clean, and
affordable drinking water."
3)Drinking water in disadvantaged communities . Drinking water
contamination in California disproportionally affects small,
rural and low-income communities that depend mostly on
groundwater as their drinking water source. According to the
AB 2222 SWRCB report, Communities that Rely on Contaminated
AB 1527
Page 8
Groundwater, communities that rely on contaminated groundwater
typically treat their water before it is delivered and
consumed. However, disadvantaged communities generally get
their water from small community water systems that often lack
the infrastructure and economies of scale of larger water
systems, and in some cases, cannot afford to treat or find
alternative supplies for a contaminated drinking water source.
As a result, small community water systems may be more
vulnerable to serving contaminated groundwater to their
customers than larger water systems.
4)Previous legislation . AB 2238 (Perea), as amended July 25,
2012, would have required DPH to consider specified
information from the appropriate LAFCO when processing an
application for SDWSRF funding, but was subsequently gutted
and amended to address emergency funding from the Emergency
Clean Water Grant Fund. AB 2238 failed passage in the Senate
Appropriations Committee.
AB 2356 (Arambula), Chapter 607, Statutes of 2008, required
the SWRCB to take specified actions when allocating funds to
small, disadvantaged communities for wastewater collection,
treatment or disposal projects.
AB 2222 (Caballero), Chapter 670,Statutes of 2008, required
the SWRCB to submit a report to the Legislature to identify
communities that rely on contaminated groundwater as a primary
source of drinking water, the principal contaminants in
groundwater, and potential solutions and funding sources to
clean up groundwater.
AB 115 (Perea), Chapter 630, Statues of 2013, expands the
eligibility for planning grants from the SDWSRF by allowing
multi-agency grant applications when at least one of the
communities served by the construction project will meet safe
drinking water standards.
AB 983 (Perea), Chapter 515, Statutes of 2011, made several
changes to the laws governing the state program providing
grants and loans for safe drinking water projects, including
allowing certain disadvantaged communities to be eligible for
grants up to 100% of project costs.
SB 244 (Wolk), Chapter 513, Statutes of 2011, required LAFCOs,
in determining the sphere of influence of each local agency,
AB 1527
Page 9
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.
AB 453 (Mullin) of 2013 and AB 2624 (Smyth) of 2012 both
failed passage in the Senate Appropriations Committee and
would have added LAFCOs to the list of eligible applicants for
financial assistance grants and loans made by SGC for the
purpose of developing, adopting, and implementing a regional
plan or other planning instrument to support the planning and
development of sustainable communities.
5)Policy considerations . The Committee may wish to consider the
following:
a) Priority for small community water systems . In light of
the findings in the AB 2222 report, the Committee may wish
to consider if the changes made in this bill to open up
priority funding to other water systems that provide
services to disadvantaged communities that are not small
community water systems are counterintuitive.
b) Legislative history . AB 2238 (Perea) of 2012, was
significantly amended following its passage in this
Committee. This bill is substantially similar to the June
20, 2012, version of AB 2238. The Committee may wish to
ask the author if he intends to further amend the bill to
reflect the June 25, 2012, version of AB 2238 which had no
opposition and would remove the provisions in this bill
regarding priority funding and the SGC. The Committee may
wish to consider if the provision in the bill regarding
priority funding is necessary to accomplish the author's
stated goals.
c) LAFCOs . The bill contains an incorrect cross reference
to LAFCOs formed pursuant to Government Code 56425.
d) Proposition 84 funding . There is only one more series
of grant awards to be made in June from Proposition 84
funding. SGC's Proposition 84 funds will thereafter be
completely depleted. Because this bill specifies
Proposition 84 as the funding source, this bill will not
provide LAFCOs with a new funding option.
AB 1527
Page 10
6)Arguments in support : Supporters argue that this bill would
promote the consolidation
of water systems and infrastructure expansion that could help
small and disadvantaged communities clean up their drinking
water.
7)Arguments in opposition : The California Special Districts
Association (CSDA) argues,
"If the state is to go through the time and expense to conduct
additional studies and promote the consolidation where
appropriate, CSDA believes that it would be in everybody's
interest to address some of these very real obstacles to
successfully completing consolidations."
8)Double-referral : This bill is double-referred to the
Environmental Safety and Toxic Materials Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
Sierra Club California
Opposition
California Special Districts Association (unless amended)
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958