Amended in Senate March 24, 2014

Senate Bill No. 1370

Introduced by Senator Galgiani

February 21, 2014

An act to repeal and add Division 26.7 (commencing with Section 79700) of the Water Code, and to repeal Section 2 of Chapter 3 of the Seventh Extraordinary Session of the Statutes of 2009, relating to a surface water storage program, by providing the funds necessary therefor through an election for the issuance and sale of bonds of the State of California and for the handling and disposition of those funds, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

SB 1370, as amended, Galgiani. Reliable Water Supply Bond Act of 2014.

(1) Existing law creates the Safe, Clean, and Reliable Drinking Water Supply Act of 2012, which, if approved by the voters, would authorize the issuance of bonds in the amount of $11,140,000,000 pursuant to the State General Obligation Bond Law to finance a safe drinking water and water supply reliability program. Existing law provides for the submission of the bond act to the voters at the November 4, 2014, statewide general election.

This bill would repeal these provisions.

(2) Under existing law, various measures have been approved by the voters to provide funds for water supply programs.

This bill would enact the Reliable Water Supply Bond Act of 2014, which, if adopted by the voters, would authorize the issuance of bonds in the amount of begin delete $5,100,000,000 end delete begin insert $6,260,000,000 end insert pursuant to the State General Obligation Bond Law to finance surface water storage projects.

The bill would provide for the submission of the bond act to the voters at the November 4, 2014, statewide general election.

(3) This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Division 26.7 (commencing with Section 79700)
of the Water Code, as added by Section 1 of Chapter 3 of the
Seventh Extraordinary Session of the Statutes of 2009, is repealed.

SEC. 2.  

Division 26.7 (commencing with Section 79700) is
added to the Water Code, to read:

 

Division 26.7.  RELIABLE WATER SUPPLY BOND ACT
OF 2014

 

Chapter  1. Short Title

 

79700.  

This division shall be known and may be cited as the
Reliable Water Supply Bond Act of 2014.

 

Chapter  2. Findings

 

79701.  

The Legislature finds and declares all of the following:

(a) The snowpack’s statewide water content is at about 20
percent of average for this time of year, which is a mere 7 percent
of the average April 1 measurement when the snowpack normally
is at its peak before melting into streams and reservoirs to provide
one-third of the water used by California’s cities and farms.

(b)  begin insert In end insert 2013 begin insert , California end insert had the lowest rainfall amounts on record
in many areas.

(c) The Department of Water Resources estimates it will be able
to deliver only 5 percent of the slightly more than 4 million
acre-feet of State Water Project water requested for the begin insert 2014 end insert
calendar year begin delete 2014 end delete by the 29 public agencies that collectively
supply water to more than 25 million Californians and nearly begin delete a end delete
begin insert one end insert million acres of irrigated farmland.

(d) The irrigation-dependent San Joaquin Valley farms and
some other areas will be hard hit if we have another dry year
without the reservoir storage.

(e) Many farmers are feeling the effects of the drought, and are
forced to irrigate orchards during a time of year that water is not
usually required.

 

Chapter  3. Reliable Water Supply Bond Fund of 2014

 

79702.  

The proceeds of bonds issued and sold pursuant to this
division shall be deposited in the Reliable Water Supply Bond
Fund of 2014 begin insert (hereafter the end insert begin insert “fund end insert begin insert ”) end insert , which is hereby created in
the State Treasury.

 

Chapter  4. Surface Water Storage Projects

 

79703.  

(a) For the purposes of this chapter, “account” means
the Water Storage Development Account created by subdivision
(b).

(b) The Water Storage Development Account is hereby created
in the fund.

(c) The sum of begin delete five billion one hundred million dollars
($5,100,000,000) end delete begin insert six billion two hundred sixty million dollars
($6,260,000,000) end insert is hereby transferred from the fund to the account.
Notwithstanding Section 13340 of the Government Code, the funds
in the account are hereby continuously appropriated to the
Department of Water Resources, without regard to fiscal years,
for the design, acquisition, and construction of surface water
storage projects. The following surface water storage projects
identified by the department in the CALFED Bay-Delta
Programmatic Record of Decision, dated August 28, 2000, are
eligible for funding pursuant to this chapter:

(1) Sites Reservoir located in the Counties of Colusa and Glenn,
as identified in the North-of-the-Delta Offstream Storage
Investigation Initial Alternatives Information Report, dated May
2006.

(2) Temperance Flat Reservoir located in the Counties of Fresno
and Madera, as identified in the Upper San Joaquin River Basin
Storage Investigation Initial Alternatives Information Report, dated
June 2005.

begin delete

(3) Expansion of Los Vaqueros Reservoir located in the County
of Contra Costa, as identified in the Los Vaqueros Expansion
Investigation Initial Alternatives Information Report, dated
September 2005.

end delete begin insert

(3) Expansion of the San Luis Reservoir located in the County
of Merced.

end insert begin insert

(4) Expansion of the storage capacity of Shasta Dam by 18.5
acre-feet in order to increase the overall storage capacity of Lake
Shasta.

end insert

 

Chapter  5. Fiscal Provisions

 

79720.  

(a) Bonds in the total amount of begin delete five billion one
hundred million dollars ($5,100,000,000) end delete begin insert six billion two hundred
sixty million dollars ($6,260,000,000) end insert , or so much thereof as is
necessary, not including the amount of any refunding bonds issued
in accordance with Section 79730 may be issued and sold to
provide a fund to be used for carrying out the purposes expressed
in this division and to reimburse the General Obligation Bond
Expense Revolving Fund pursuant to Section 16724.5 of the
Government Code. The bonds, when sold, shall be and constitute
a valid and binding obligation of the State of California, and the
full faith and credit of the State of California is hereby pledged
for the punctual payment of both principal of, and interest on, the
bonds as the principal and interest become due and payable.

(b) The Treasurer shall sell the bonds authorized by the
committee pursuant to this section. The bonds shall be sold upon
the terms and conditions specified in a resolution to be adopted
by the committee pursuant to Section 16731 of the Government
Code.

79721.  

The bonds authorized by this division shall be prepared,
executed, issued, sold, paid, and redeemed as provided in the State
General Obligation Bond Law (Chapter 4 (commencing with
Section 16720) of Part 3 of Division 4 of Title 2 of the Government
Code), and all of the provisions of that law apply to the bonds and
to this division and are hereby incorporated in this division as
though set forth in full in this division, except subdivisions (a) and
(b) of Section 16727 of the Government Code.

79722.  

(a) Solely for the purpose of authorizing the issuance
and sale pursuant to the State General Obligation Bond Law
(Chapter 4 (commencing with Section 16720) of Part 3 of Division
4 of Title 2 of the Government Code) of the bonds authorized by
this division, the Water Supply Reliability Finance Committee is
hereby created. For purposes of this division, the Water Supply
Reliability Finance Committee is begin delete “the committee” end delete begin insert the “committee end insert begin insert ” end insert
as that term is used in the State General Obligation Bond Law.
The committee consists of the Director of Finance, the Treasurer,
the Controller, the Director of Water Resources, and the Secretary
of the Natural Resources Agency, or their designated
representatives. The Treasurer shall serve as chairperson of the
committee. A majority of the committee may act for the committee.

(b) For purposes of the State General Obligation Bond Law, the
Department of Water Resources is designated the “board.”

79723.  

The committee shall determine whether or not it is
necessary or desirable to issue bonds authorized pursuant to this
division in order to carry out the actions specified in this division
and, if so, the amount of bonds to be issued and sold. Successive
issues of bonds may be authorized and sold to carry out those
actions progressively, and it is not necessary that all of the bonds
authorized to be issued be sold at any one time.

79724.  

There shall be collected each year and in the same
manner and at the same time as other state revenue is collected,
in addition to the ordinary revenues of the state, a sum in an amount
required to pay the principal of, and interest on, the bonds each
year. It is the duty of all officers charged by law with any duty in
regard to the collection of the revenue to do and perform each and
every act that is necessary to collect that additional sum.

79725.  

Notwithstanding Section 13340 of the Government
Code, there is hereby appropriated from the General Fund in the
State Treasury, for the purposes of this division, an amount that
will equal the total of the following:

(a) The sum annually necessary to pay the principal of, and
interest on, bonds issued and sold pursuant to this division, as the
principal and interest become due and payable.

(b) The sum necessary to carry out Section 79726, appropriated
without regard to fiscal years.

79726.  

For the purposes of carrying out this division, the
Director of Finance may authorize the withdrawal from the General
Fund of an amount not to exceed the amount of the unsold bonds
that have been authorized by the committee to be sold for the
purpose of carrying out this division less any amount borrowed
pursuant to Section 79729. Any amounts withdrawn shall be
deposited in the fund. Any money made available under this section
shall be returned to the General Fund from proceeds received from
the sale of bonds for the purpose of carrying out this division.

79727.  

All money deposited in the fund that is derived from
premium and accrued interest on bonds sold shall be reserved in
the fund and shall be available for transfer to the General Fund as
a credit to expenditures for bond interest, except that amounts
derived from premium may be reserved and used to pay the cost
of bond issuance prior to any transfer to the General Fund.

79728.  

Pursuant to Chapter 4 (commencing with Section
16720) of Part 3 of Division 4 of Title 2 of the Government Code,
the cost of bond issuance shall be paid out of the bond proceeds,
including premium, if any. To the extent the cost of bond issuance
is not paid from premiums received from the sale of bonds, the
cost shall be shared proportionally by each program funded through
this division by the applicable bond sale.

79729.  

The board may request the Pooled Money Investment
Board to make a loan from the Pooled Money Investment Account,
in accordance with Section 16312 of the Government Code for the
purpose of carrying out this division less any amount withdrawn
pursuant to Section 79726. The amount of the request shall not
exceed the amount of the unsold bonds that the committee, by
resolution, has authorized to be sold for the purpose of carrying
out this division. The board shall execute any documents required
by the Pooled Money Investment Board to obtain and repay the
loan. Any amounts loaned shall be deposited in the fund to be
allocated in accordance with this division.

79730.  

The bonds issued and sold pursuant to this division
may be refunded in accordance with Article 6 (commencing with
Section 16780) of Chapter 4 of Part 3 of Division 4 of Title 2 of
the Government Code, which is a part of the State General
Obligation Bond Law. Approval by the voters of the state for the
issuance of the bonds under this division shall include the approval
of the issuance of any bonds issued to refund any bonds originally
issued under this division or any previously issued refunding bonds.

79731.  

Notwithstanding any other provision of this division,
or of the State General Obligation Bond Law, if the Treasurer sells
bonds pursuant to this division that include a bond counsel opinion
to the effect that the interest on the bonds is excluded from gross
income for federal tax purposes, under designated conditions or
is otherwise entitled to any federal tax advantage, the Treasurer
may maintain separate accounts for the investment of bond
proceeds and for the investment of earnings on those proceeds.
The Treasurer may use or direct the use of those proceeds or
earnings to pay any rebate, penalty, or other payment required
under federal law or take any other action with respect to the
investment and use of those bond proceeds required or desirable
under federal law to maintain the tax exempt status of those bonds
and to obtain any other advantage under federal law on behalf of
the funds of this state.

79732.  

The proceeds from the sale of bonds authorized by this
division are not “proceeds of taxes” as that term is used in Article
XIII B of the California Constitution, and the disbursement of
these proceeds is not subject to the limitations imposed by that
article.

SEC. 3.  

Section 2 of Chapter 3 of the Statutes of 2009, Seventh
Extraordinary Session, as amended by Section 1 of Chapter 74 of
the Statutes of 2012, is repealed.

SEC. 4.  

Section 2 of this act shall be submitted to the voters
at the November 4, 2014, statewide general election in accordance
with provisions of the Government Code and the Elections Code
governing the submission of a statewide measure to the voters.

SEC. 5.  

Section 2 of this act shall take effect upon the approval
by the voters of the Reliable Water Supply Bond Act of 2014, as
set forth in that section at the November 4, 2014, statewide general
election.

SEC. 6.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to fund a surface water storage program at the earliest
possible date, it is necessary that this act take effect immediately.