The County Water Authority Act provides for the formation of county water authorities and grants to those authorities specified powers with regards to providing water service. The act provides 2 methods of excluding territory from any county water authority, one of which is that a public agency whose corporate area as a unit is part of a county water authority may obtain exclusion of the area by submitting to the electors within the public agency, at any general or special election, the proposition of excluding the public agencys corporate area from the county water authority. Existing law requires that, if a majority of the electors approve the proposition, specified actions take place to implement the exclusion.

This bill, the Water Ratepayers Protections Act of 2023, would additionally require the public entity to submit the proposition of excluding the public agencys corporate area from the county water authority to the electors within the territory of the county water authority. The bill would require the 2 elections to be separate; however, the bill would authorize both elections to run concurrently. The bill would require the ballot materials to include a fiscal impact statement, as described. The bill would also require the ballot materials for the election encompassing the territory of the county water authority to include a statement describing the annual aggregated fiscal impact to remaining members of the county water authority as a result of the reorganization. The bill would require the county water authority to prepare that statement. By imposing a higher level of service on a local agency, the bill would impose a state-mandated local program. The bill would require a majority vote for withdrawal in both elections for the withdrawal of the public agency from the territory of the county water authority.

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.

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 the statutory provisions noted above.

The County Water Authority Act provides for the formation of county water authorities and grants to those authorities specified powers with regards to providing water service. The act provides 2 methods of excluding territory from any county water authority, one of which is that a public agency whose corporate area as a unit is part of a county water authority may obtain exclusion of the area by submitting to the electors within the public agency, at any general or special election, the proposition of excluding the public agencys corporate area from the county water authority. Existing law requires that, if a majority of the electors approve the proposition, specified actions take place to implement the exclusion.

This bill, the Water Ratepayers Protections Act of 2023, would additionally require the public entity to submit the proposition of excluding the public agencys corporate area from the county water authority to the electors within the territory of the county water authority. The bill would require the 2 elections to be separate; however, the bill would authorize both elections to run concurrently. The bill would require the ballot materials to include a fiscal impact statement, as described. The bill would also require the ballot materials for the election encompassing the territory of the county water authority to include a statement describing the annual aggregated fiscal impact to remaining members of the county water authority as a result of the reorganization. The bill would require the county water authority to prepare that statement. By imposing a higher level of service on a local agency, the bill would impose a state-mandated local program. The bill would require a majority vote for withdrawal in both elections for the withdrawal of the public agency from the territory of the county water authority.

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.

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 the statutory provisions noted above.

The County Water Authority Act provides for the formation of county water authorities and grants to those authorities specified powers with regards to providing water service. The act provides 2 methods of excluding territory from any county water authority, one of which is that a public agency whose corporate area as a unit is part of a county water authority may obtain exclusion of the area by submitting to the electors within the public agency, at any general or special election, the proposition of excluding the public agencys corporate area from the county water authority. Existing law requires that, if a majority of the electors approve the proposition, specified actions take place to implement the exclusion.

This bill, the Water Ratepayers Protections Act of 2023, would additionally require the public entity to submit the proposition of excluding the public agencys corporate area from the county water authority to the electors within the territory of the county water authority. The bill would require the 2 elections to be separate; however, the bill would authorize both elections to run concurrently. The bill would require the ballot materials to include a fiscal impact statement, as described. The bill would also require the ballot materials to include a statement describing the annual aggregated fiscal impact to remaining members of the county water authority as a result of the reorganization. The bill would require the county water authority to prepare that statement. By imposing a higher level of service on a local agency, the bill would impose a state-mandated local program. The bill would require a majority vote for withdrawal in both elections for the withdrawal of the public agency from the territory of the county water authority.

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.

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 the statutory provisions noted above.

The County Water Authority Act provides for the formation of county water authorities and grants to those authorities specified powers with regards to providing water service. The act provides 2 methods of excluding territory from any county water authority, one of which is that a public agency whose corporate area as a unit is part of a county water authority may obtain exclusion of the area by submitting to the electors within the public agency, at any general or special election, the proposition of excluding the public agencys corporate area from the county water authority. Existing law requires that, if a majority of the electors approve the proposition, specified actions take place to implement the exclusion.

This bill, the Water Ratepayers Protections Act of 2023, would additionally require the public entity to submit the proposition of excluding the public agencys corporate area from the county water authority to the electors within the territory of the county water authority. The bill would require the 2 elections to be separate; however, the bill would authorize both elections to run concurrently. The bill would require the ballot materials to include a fiscal impact statement, as described. The bill would also require the ballot materials to include a statement describing the annual aggregated fiscal impact to remaining members of the county water authority as a result of the reorganization. The bill would require the county water authority to prepare that statement. By imposing a higher level of service on a local agency, the bill would impose a state-mandated local program. The bill would require a majority vote for withdrawal in both elections for the withdrawal of the public agency from the territory of the county water authority.

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

Existing law requires every state and local law enforcement agency to report all vehicle pursuit data, as specified, to the Department of the California Highway Patrol no later than 30 days after a pursuit.

This bill would instead require every state and local law enforcement agency to report vehicle pursuit data to the department no later than 45 days after a pursuit.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 399

Author:(Boerner)

As Amended Ver:September 1, 2023

Majority vote

SUMMARY

Requires a member agency of a county water authority (CWA) to receive majority voter approval of the entire CWA electorate, in addition to a requirement under existing law to receive majority voter approval of the member agency's electorate, before it can it can exclude its territory from a CWA.

Senate Amendments

1. Delete the content of this bill.
2. Specify that, in addition to receiving majority voter approval of its electorate in a separate election, the governing body of any member public agency may submit to the electors within the territory of the CWA at any general or special election the proposition of excluding from the CWA the corporate area of the public agency. Notice of the election shall be given as prescribed in the County Water Authority Act (CWA Act). The election shall be conducted and the returns thereof canvassed in the manner provided by law for the conduct of elections in the public agency. If a majority of electors within the territory of the CWA voting thereon vote in favor of withdrawal, the result thereof shall be certified by the governing body of the public agency to the board of directors of the CWA.
3. Provide that the elections described in 2), above, shall be separate elections; however, they may be run concurrently with one another. A majority vote in both elections is necessary for the withdrawal of the public agency from the territory of the CWA.
4. Require the ballot materials submitted to the electors in the elections described in 2), above, to contain certain information, including a fiscal impact statement, and the ballot materials shall be prepared as specified.
5. Provide that the requirement in 2), above, does not apply to a public agency that is a "federal military reservation" or a "military reservation" as defined in the Act, or a "military installation," as defined in United State Code Title 10, Section 2801.

COMMENTS

1. County Water Authorities. In 1943, the Legislature enacted the CWA Act [SB 1079 (Fletcher), Chapter 545, Statutes of 1943]. The San Diego County Water Authority (SDCWA) is the only agency organized under this principal act and provides wholesale water services. In 1944, member agencies passed resolutions to petition the San Diego County Board of Supervisors to create SDCWA. According to SDCWA, it serves approximately 3.3 million residents through a multi-decade water supply diversification plan. In 1946, SDCWA annexed into the Metropolitan Water District of Southern California (MWD) and received 13% of its water supplies from MWD in 2022. MWD is a regional wholesale water district in Southern California that delivers water to 26 member public agencies.

SDCWA has 24 member agencies, including 11 municipal water districts, three public utility districts, three irrigations districts, 6 cities, and one military base (Camp Pendleton). Combined, the SDCWA provides about 80% of the water used in the county. A 36-member board of directors governs SDCWA, and each member agency must have at least one representative on the board appointed by the member agency. A majority of the members of the governing body of an agency may not be appointed to serve as representatives on a SDCWA. Member agencies can appoint one additional representative for each additional 5% of total assessed value of property taxable by SDCWA. The City of San Diego, SDCWA's largest member, has 10 directors on SDCWA. A member agency's vote is based on an agency's total financial contribution to the SDCWA, including amounts paid in taxes, assessments, fees, and charges. Each member casts one vote for each $5 million of total financial contribution.

Member agencies can propose to separate from SDCWA. To do so, current law requires the member agency to ask for voter approval of its own electors. If a majority of electors vote in favor, the member agency's board must certify the results and notify the SDCWA board, and file it with the Secretary of State (SOS). Once filed with SOS, the agency is no longer part of SDCWA. However, the member agency's taxable property must continue to be taxable by SDCWA for the purpose of paying the bonded and other indebtedness outstanding or contracted for at the time of exclusion and until the bonded or other indebtedness has been satisfied.

1. Fallbrook PUD and Rainbow MWD. Fallbrook Public Utility District (Fallbrook PUD) was formed in 1922 and joined the SDCWA as a charter member in 1944. Today, Fallbrook PUD provides imported water and sewer service to 35,000 residents living on 28,000 acres in Fallbrook. The Rainbow Municipal Water District (Rainbow MWD) was formed in 1953 and provides water and sanitation services to its approximately 23,000 residents across over 50,000 acres. Agricultural customers presently represent 36% of all retail sales in Fallbrook PUD and 65% of all retail sales in Rainbow MWD.
2. LAFCOs. The Cortese-Knox-Hertzberg (CKH) Act controls how local officials change the boundaries of cities and special districts, putting local agency formation commissions (LAFCOs) in charge of the proceedings. LAFCOs' boundary decisions must be consistent with spheres of influence (SOIs) that LAFCOs adopt to show the future boundaries and service areas of the cities and special districts. Before LAFCOs can adopt their SOIs, they must prepare municipal service reviews (MSRs) which analyze population growth, public facilities, and service demands. LAFCOs may also conduct special studies of local governments.

Most boundary changes begin when a city or special district applies to LAFCO, or when registered voters or landowners file petitions with a LAFCO. In limited circumstances, a LAFCO can initiate some special district boundary changes: consolidations, dissolutions, mergers, subsidiary districts, or reorganizations [AB 1335 (Gotch), Chapter 1307, Statutes of 1993]. The process for boundary changes can differ based upon a number of factors, including the type of reorganization and whether or not special circumstances apply. Additionally, a LAFCO can determine that certain agencies are not districts or special districts, including CWAs, for the purpose of the reorganization provisions of the CKH Act, meaning reorganizations can proceed according to their principal acts.

1. Detachment. According to a SD LAFCO staff report dated June 5, 2023, SD LAFCO received separate resolution of applications submitted in March 2020 from Fallbrook PUD and Rainbow MWD each requesting SD LAFCO approval to transfer wholesale water supply responsibilities within their jurisdictional boundaries from the SDCWA to Eastern Municipal Water District (EMWD). EMWD currently provides water services to residents in Riverside County. The purpose stated in the LAFCO report of the proposed reorganizations is to accommodate cost-savings for Fallbrook PUD and Rainbow MWD and, by extension, their retail ratepayers by transitioning wholesale water services within their jurisdictional boundaries from SDCWA to EMWD.

At its June 2020 meeting, SD LAFCO approved the establishment of an advisory committee to help review disputes and/or controversies associated with the proposal. The Ad Hoc Committee subsequently held 13 public meetings between December 2020 and April 2023. Most of the meetings were dedicated to addressing water supply reliability, and potential exit fees.

On June 5, 2023, and again on June 14, 2023, the SD LAFCO met to consider Fallbrook PUD's and Rainbow MWD's separation from the SDCWA. The SD LAFCO staff recommendation was to approve both reorganization proposals with special conditions, which included exit fees spread over five years. On July 10, 2023, the SD LAFCO approved the proposed detachments with the condition that each district pay $24.3 million in exit fees over the next five years. Now that SD LAFCO has approved the detachment and annexation to EMWD, the question of detachment goes to voters of those districts. According to the San Diego County Registrar of Voter's website, the election for voters to weigh-in on the detachment is set for the November 7, 2023 election.

According to the Author

According to the author, "AB 399, at its core, is a good governance bill that seeks to give ratepayers a voice in decisions that impact the cost of one of their most basic needs: water. The bill would require, as an additional condition to the Local Agency Formation Commission (LAFCO) process for allowing the detachment of a public agency from their relevant county water authority, that the majority of the voters within the jurisdiction of the county water authority vote to approve the detachment at a scheduled election. Essentially, it would align the process for water agencies that want to detach from a County Water Authority with what any other municipality would need to go through when it wants to break away and form (or join) another incorporated city. In short, AB 399 would give voters within a County Water Authority the chance to have a voice, through the electoral process, over governance decisions that impact their rates."

Arguments in Support

According to the City of San Diego, "Two local water agencies in San Diego County have sought to detach from the San Diego County Water Authority and connect to a wholesale water supplier in Riverside County. The San Diego Local Area Formation Committee (San Diego LAFCO) recently voted to approve the detachment. Despite significant opposition from leaders and interest groups throughout the county, their action will cause water rates of virtually every household in the region to increase. The San Diego Local Area Formation Committee (San Diego LAFCO) staff are interpreting the statutory requirements to recommend only a vote of the service areas that seek to detach would be required for the measure to go through, rather than also requiring a second vote of the entire affected service area.

"AB 399 would amend the County Water Authority Act to make clear that two votes are required, and that service area voters have a say when a proposal to depart through San Diego LAFCO impacts them. The bill would require a vote for the entire territory of a County Water Authority in addition to a vote of the service area(s) that seek to detach. It is our firm belief that if a governance reorganization action such as a detachment will have significant impacts on vast majority of residents, they should be consulted at the ballot box. This is currently the case under statute for cities who seek to incorporate and this legislation would make clear that this should be the case for public agencies that provide vital services such as water.

"AB 399 is prudent, good government legislation that promotes democracy and will help protect the residents of San Diego County as well as the residents of the State of California, should they experience a similar issue such as this in the future."

Arguments in Opposition

According to Fallbrook PUD and Rainbow MWD, on a prior version of this bill, "...The Act provides two methods of excluding territory from any county water authority, one of which is that a public agency whose corporate area as a unit is part of a county water authority may obtain exclusion of the area by submitting to the electors within the public agency, the proposition of excluding the public agency's corporate area from the county water authority. Existing law requires that, if a majority of the electors approve the proposition, specified actions take place to implement the exclusion.

"AB 399, the Water Ratepayers Protections Act of 2023, would require the public agency to also submit the proposition of excluding the public agency's corporate area from the county water authority to the electors within the territory of the entire county water authority, rather than just the area within the specific public agency. The bill would require two separate elections and would require a majority vote for withdrawal in both elections for the withdrawal of the public agency from the territory of the county water authority.

"We are concerned that AB 399 seeks to bypass local control and also bypass local applications that have been before the San Diego Local Agency Formation Commission (SDLAFCO) for potential exclusion of territory from our current wholesale water agency (the San Diego County Water Authority (SDCWA)) for 3½ years. Fallbrook Public Utility District and Rainbow Municipal Water District are primarily agricultural agencies in northernmost San Diego County. The high cost of water from SDCWA has been extremely challenging for our ratepayers to manage. Under State law, our Districts have the ability to have our service territories excluded from SDCWA if approved by SDLAFCO, and if ultimately approved by our voters. We submitted applications to SDLAFCO to make this change in early 2020. Now that the process is being addressed locally with SDLAFCO set to make its decision on July 10, 2023, AB 399 seeks to change the way in which public agencies like ours can pursue excluding their territory from a county water authority."

FISCAL COMMENTS

According to the Senate Appropriations Committee, "Unknown state mandated local costs. Specifically, this bill imposes new duties on the San Diego County Water Authority (SDCWA) by requiring it to prepare a statement describing the annual aggregated fiscal impact to remaining members of the SDCWA as a result of the reorganization, and include it with ballot materials submitted to electors within the territory of the SDCWA. In addition, county elections officials would incur significant costs to submit the proposition of excluding the territory of specified public agencies from the SDCWA to the county water authority's electors. Costs to submit the question to a public agency's own electors would be covered by that public agency, and are not likely to be found to be state-reimbursable, but it is unclear who would pay the costs of the election presented to the electors of the broader territory of the entire SDCWA. To the extent the Commission on State Mandates determines that the provisions of this bill create a new program or impose a higher level of service on local agencies, those entities, including the SDCWA and San Diego County, could claim reimbursement of those costs from the state. The magnitude of costs that could be borne by the state General Fund is unknown, but potentially significant." (General Fund)

VOTES:

ASM PUBLIC SAFETY: 8-0-0

YES: Jones-Sawyer, Alanis, Bonta, Bryan, Lackey, Ortega, Santiago, Zbur

ASM APPROPRIATIONS: 14-0-2

YES: Holden, Megan Dahle, Calderon, Wendy Carrillo, Dixon, Mike Fong, Addis, Lowenthal, Papan, Pellerin, Robert Rivas, Sanchez, Weber, Wilson

ABS, ABST OR NV: Bryan, Mathis

ASSEMBLY FLOOR: 74-0-6

YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Megan Dahle, Davies, Dixon, Essayli, Flora, Mike Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Wallis, Ward, Weber, Wicks, Wood, Zbur, Rendon

ABS, ABST OR NV: Cervantes, Vince Fong, Friedman, Villapudua, Waldron, Wilson

SENATE FLOOR: 23-10-7

YES: Allen, Archuleta, Atkins, Becker, Blakespear, Bradford, Cortese, Durazo, Eggman, Gonzalez, Hurtado, Laird, McGuire, Menjivar, Min, Padilla, Portantino, Skinner, Smallwood‑Cuevas, Stern, Umberg, Wahab, Wiener

NO: Caballero, Dahle, Glazer, Grove, Jones, Nguyen, Niello, Ochoa Bogh, Seyarto, Wilk

ABS, ABST OR NV: Alvarado-Gil, Ashby, Dodd, Limón, Newman, Roth, Rubio

UPDATED

VERSION: September 1, 2023

CONSULTANT: Jimmy MacDonald / L. GOV. / (916) 319-3958 FN: 0001881

 THIRD READING  

Bill No: AB 399

Author: Boerner (D)

Amended: 9/1/23 in Senate

Vote: 21

SENATE GOVERNANCE & FIN. COMMITTEE: 5-3, 7/12/23

AYES: Caballero, Blakespear, Durazo, Skinner, Wiener

NOES: Seyarto, Dahle, Glazer

SENATE APPROPRIATIONS COMMITTEE: 5-2, 9/1/23

AYES: Portantino, Ashby, Bradford, Wahab, Wiener

NOES: Jones, Seyarto

ASSEMBLY FLOOR: Not relevant

SUBJECT: Water Ratepayers Protections Act of 2023: County Water Authority Act: exclusion of territory: procedure

SOURCE: City of San Diego

DIGEST:

This bill enacts the Water Ratepayers Protections Act of 2023, which requires a member agency to receive majority voter approval of its electorate, and the entire county water authority’s electorate, before it can detach from a county water authority.

ANALYSIS:

Existing law:

1. Enacts the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, which:
   1. Controls how local officials change the boundaries of cities and special districts, putting local agency formation commissions (LAFCOs) in charge of the proceedings; and,
   2. Directs LAFCOs to ensure that services are effectively and efficiently delivered, and local governments can only exercise their powers and provide services where allowed to by LAFCO, including the formation of new cities and special districts, modifications of existing boundaries, and dissolutions of unsustainable special districts.
   3. Provides a process for LAFCOs to approve changes of organization, including consolidations of districts, which generally includes a public hearing, and protest process.
2. Enacts the County Water Authority Act, which:
   1. Allows two or more public agencies in any county to form a county water authority (CWA) to exercise specified powers to provide water and waste water service.
   2. Allows member agencies to separate from the CWA. To separate from the CWA, the member agency must ask for approval from its own electors. If a majority vote in favor, the agency’s board must certify the results, notify the CWA board, and file it with the Secretary of State (SOS). Once filed with SOS, the agency is no longer part of CWA. However, the agency’s taxable property must continue to be taxed by CWA until the authority pays off bonds and other debts outstanding or contracted for at the time of the separation.

This bill enacts the Water Ratepayers Protections Act of 2023, which:

1. Requires the member agency seeking separation, in addition to approval of its own electorate, to submit the proposition of separating from the CWA to the all electors within the entire CWA’s territory.
2. Requires a majority vote in both elections for a member agency’s separation from the CWA.
3. Provides that the elections can be separate, but may run concurrently.
4. Provides that the requirement for the election of the entire territory of the CWA does not apply to a public agency that is a federal military reservation, military reservation, or military installations, as specified.
5. Requires the ballot materials for the election of the electorate of a public agency seeking separation to include a fiscal impact statement in the statement of the ordinance to be voted upon, which the public agency must prepare. The fiscal impact statement must include an estimate of the measure’s impact on the public agency’s water rates, any anticipated exit fees the member public agency expects to pay to the county water authority, and the amount and duration of any bonded and other indebtedness the public agency is required to pay.
6. Requires the ballot materials for the election of the CWA’s electorate to include:
   1. The fiscal impact statement the public agency seeking separation included in its ballot materials; and
   2. A statement describing the annual aggregated fiscal impact to remaining members of the CWA because of the reorganization. The CWA must prepare that statement.

Background

Local government boundaries. The Legislature has the authority to create, dissolve, or otherwise modify the boundaries and services of local governments. Beginning in 1963, the Legislature delegated the ongoing responsibility to control the boundaries of cities, county service areas, and most special districts to local agency formation commissions (LAFCOs) in each county. The responsibilities and authority of LAFCOs have been modified in subsequent legislation, including a major revision of the LAFCO statutes in the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (AB 2838, Hertzberg) (CKH Act). The courts often refer to LAFCOs as the Legislature’s watchdog over boundary changes.

Local governments can only exercise their powers and provide services where LAFCO allows them to. LAFCOs’ boundary decisions must be consistent with spheres of influence (SOIs) that LAFCOs adopt to show the future boundaries and service areas of the cities and special districts. Before LAFCOs can adopt their SOIs, they must prepare municipal service reviews (MSRs) which analyze population growth, public facilities, and service demands. LAFCOs may also conduct special studies of local governments.

County water authorities. The San Diego County Water Authority (SDCWA) is the only agency organized under the CWA Act. In 1944, member agencies passed resolutions to petition the San Diego County Board of Supervisors to create SDCWA. After an election, SDCWA began to provide a supplemental supply of water as San Diego’s civilian and military population grew to meet wartime activities, including supplemental supplies from the Colorado River. Over the next few decades, SDCWA created pipelines to connect to the Metropolitan Water District’s (MWD) distribution system. MWD is a regional wholesale water district in Southern California that delivers water to 26 member public agencies, including SDCWA. SDCWA is the county’s primary water wholesaler, supplying 75% to 95% of the region’s wholesale water needs depending on various climate factors.

SDCWA has 24 member agencies. Members range from the City of San Diego, the county’s largest city with nearly 1.4 million residents, to smaller cities like Poway with just shy of 50,000 residents. Other members include various water districts, irrigation districts, and public utilities districts. Camp Pendleton, a U.S. Marine Corps base, is also a member. Combined, the SDCWA provides about 80% of the water used in the county. Through its 24 member agencies, it serves 97% of the county’s population, or 3.3 million people. A 36-member board of directors governs the authority. Each member agency has at least one representative.

Proposed separation. In April 2020, two member agencies proposed to separate from SDCWA:

• Fallbrook Public Utility District (FPUD) provides water, sewer, and recycled water to its 34,000 residents across over 28,000 acres.
• Rainbow Municipal Water District (RMWD) provides water and sanitation services to its 22,000 residents across over 50,000 acres.

Both districts submitted a resolution to the San Diego County LAFCO (LAFCO) to concurrently detach from SDCWA and annex to Eastern Municipal Water District (EMWD). EMWD provides water services to around 816,000 residents in Riverside County, including the cities of Hemet, Moreno Valley, Murrieta, and Temecula.

The two districts want to separate from SDCWA because they believe they could secure less expensive water rates from EMWD. According to the LAFCO’s meeting materials on the proposed separations, the districts expect to pay less for water from EMWD compared to SDCWA. Both districts have significant agricultural customers (65% of retail sales for RMWD, 36% for FPUD), although their agricultural sales have been in decline.

On July 10, 2023, LAFCO approved the proposed detachment with the condition that each district pay $24.3 million in exit fees over the next five years. Now that LAFCO has approved the detachment, the question of detachment goes to voters of those districts. On August 10, 2023, SDCWA filed a lawsuit against LAFCO for not adequately considering the environmental impacts of the separations.

Comments

1. Purpose of the bill. According to the author, “AB 399, at its core, is a good governance bill that seeks to give ratepayers a voice in decisions that impact the cost of one of their most basic needs: water. The bill would require, as an additional condition to the Local Agency Formation Commission (LAFCO) process for allowing the detachment of a public agency from their relevant county water authority, that the majority of the voters within the jurisdiction of the county water authority vote to approve the detachment at a scheduled election. Essentially, it would align the process for water agencies that want to detach from a County Water Authority with what any other municipality would need to go through when it wants to break away and form (or join) another incorporated city. In short, AB 399 would give voters within a County Water Authority the chance to have a voice, through the electoral process, over governance decisions that impact their rates.”
2. Changing rules in the middle of the game. Local agencies joined SDCWA knowing they had the option to leave if they received approval from a majority of their electorate. AB 399 changes the rules for separation without giving member agencies a chance to weigh in on the new rules. For smaller agencies like RMUD and FPUD, gaining approval first from a majority of their electorate, and second from a majority of the roughly 1.9 million voters in SDCWA could prove an insurmountable obstacle. Additionally, since AB 399 requires the district requesting detachment to submit the question to SDCWA electors, the district could be on the hook to pay for the cost of holding the second election, making separating from the SDCWA financially difficult as well. Should the Legislature decide whether to adopt these new rules rather than leave it up to SDCWA to adopt locally?
3. Fair to whom? While the districts seeking separation do not believe AB 399 is fair, the City of San Diego and SDCWA believe it is just as unfair for a district to detach without requiring the entire authority’s electorate to weigh in. According to SDCWA’s estimates, the financial impact of the detachment on other member agencies could exceed $16 million annually, which the agencies would have to pass on to ratepayers, who would not get a say in the proposed detachment absent the enactment of AB 399. They argue AB 399 models its provisions after the process for a portion of a city to detach from an existing city. In those instances, the departing portion of a city must go through a LAFCO process that concludes with a vote of the entire city, not just a vote of electors in the area proposing to detach. On the other hand, AB 399 affects public agencies with independently elected boards, not a group of people petitioning to leave a city. The Legislature may wish to consider how to balance fairness for the agencies that want to separate with that of the rest of the ratepayers in the agency.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee:

• Unknown state mandated local costs. Specifically, this bill imposes new duties on the San Diego County Water Authority (SDCWA) by requiring it to prepare a statement describing the annual aggregated fiscal impact to remaining members of the SDCWA as a result of the reorganization, and include it with ballot materials submitted to electors within the territory of the SDCWA. In addition, county elections officials would incur significant costs to submit the proposition of excluding the territory of specified public agencies from the SDCWA to the county water authority’s electors. Costs to submit the question to a public agency’s own electors would be covered by that public agency, and are not likely to be found to be state-reimbursable, but it is unclear who would pay the costs of the election presented to the electors of the broader territory of the entire SDCWA. To the extent the Commission on State Mandates determines that the provisions of this bill create a new program or impose a higher level of service on local agencies, those entities, including the SDCWA and San Diego County, could claim reimbursement of those costs from the state. The magnitude of costs that could be borne by the state General Fund is unknown, but potentially significant. (General Fund)

SUPPORT: (Verified 9/1/23)

City of San Diego (source)

Supervisor Nora Vargas, County of San Diego

California Labor Federation, AFL-CIO

California State Association of Electrical Workers

California State Council of Laborers

City of Chula Vista

City of Encinitas

City of National City

City of Solana Beach

Cordoba Corporation

County of San Diego

Downtown San Diego Partnership

Otay Water District

San Diego County Water Authority

San Diego Gas and Electric Company

San Diego Regional Chamber of Commerce

State Building and Construction Trades Council of California, AFL-CIO

South County Economic Development Council

Southern California Rental Housing Association

United Food and Commercial Workers Western States Council

OPPOSITION: (Verified 9/1/23)

Butte Local Agency Formation Commission

CA Association of Local Agency Formation Commissions

California Avocado Commission

California Citrus Mutual

California Farm Bureau Federation

City of Oceanside

Contra Costa Local Agency Formation Commission

County of Butte

Deer Springs Fire Protection District

Elsinore Valley Municipal Water District

Fallbrook Chamber of Commerce

Fallbrook Community Planning Group

Fallbrook Land Conservancy

Fallbrook Public Utilities District

Fallbrook Regional Health District

Farm Bureau of Ventura County

Fresno County Farm Bureau

Kings County Farm Bureau

Los Angeles Local Agency Formation Commission

Madera County Farm Bureau

Monterey County Farm Bureau

Mootamai Municipal Water District

Napa Local Agency Formation Commission

Padre Dam Municipal Water District

Pauma Municipal Water District

Rainbow Municipal Water District

Riverside Local Agency Formation Commission

San Diego Local Agency Formation Commission

San Luis Obispo County Farm Bureau

San Luis Rey Indian Water Authority

Santa Barbara County Farm Bureau

Sweetwater Authority

Ventura County Agricultural Association

Ventura County Coalition of Labor, Agriculture and Business

Western Growers Association

Prepared by: Jonathan Peterson / GOV. & F. / (916) 651-4119

9/4/23 10:07:14

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SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 399 (Boerner) - Water Ratepayers Protections Act of 2023: County Water Authority Act: exclusion of territory: procedure

Bill Summary:

AB 399 would require a member agency to receive majority voter approval of (1) its own electorate, and (2) the entire county water authority’s electorate, before it can detach from a county water authority.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on September 1, 2023

Fiscal Impact:

• Unknown state mandated local costs. Specifically, this bill imposes new duties on the San Diego County Water Authority (SDCWA) by requiring it to prepare a statement describing the annual aggregated fiscal impact to remaining members of the SDCWA as a result of the reorganization, and include it with ballot materials submitted to electors within the territory of the SDCWA. In addition, county elections officials would incur significant costs to submit the proposition of excluding the territory of specified public agencies from the SDCWA to the county water authority’s electors. Costs to submit the question to a public agency’s own electors would be covered by that public agency, and are not likely to be found to be state-reimbursable, but it is unclear who would pay the costs of the election presented to the electors of the broader territory of the entire SDCWA. To the extent the Commission on State Mandates determines that the provisions of this bill create a new program or impose a higher level of service on local agencies, those entities, including the SDCWA and San Diego County, could claim reimbursement of those costs from the state. The magnitude of costs that could be borne by the state General Fund is unknown, but potentially significant. (General Fund)

Committee Amendments:

Delete the urgency clause.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2023 - 2024 Regular Session

AB 399 (Boerner) - Water Ratepayers Protections Act of 2023: County Water Authority Act: exclusion of territory: procedure

Bill Summary:

AB 399 would require a member agency to receive majority voter approval of (1) its own electorate, and (2) the entire county water authority’s electorate, before it can detach from a county water authority.

Fiscal Impact:

• Unknown state mandated local costs. Specifically, this bill imposes new duties on the San Diego County Water Authority (SDCWA) by requiring it to prepare a statement describing the annual aggregated fiscal impact to remaining members of the SDCWA as a result of the reorganization, and include it with ballot materials submitted to electors within the territory of the SDCWA. In addition, county elections officials would incur significant costs to submit the proposition of excluding the territory of specified public agencies from the SDCWA to the county water authority’s electors. Costs to submit the question to a public agency’s own electors would be covered by that public agency, and are not likely to be found to be state-reimbursable, but it is unclear who would pay the costs of the election presented to the electors of the broader territory of the entire SDCWA. To the extent the Commission on State Mandates determines that the provisions of this bill create a new program or impose a higher level of service on local agencies, those entities, including the SDCWA and San Diego County, could claim reimbursement of those costs from the state. The magnitude of costs that could be borne by the state General Fund is unknown, but potentially significant. (General Fund)

Background:

The San Diego County Water Authority (SDCWA) was created in 1944, and currently has 24 member agencies. Members include the City of San Diego, smaller cities nearby, various water districts, irrigation districts, public utilities districts, and Camp Pendleton, a U.S. Marine Corps base. SDCWA provides about 80 percent of the water used in San Diego County, and serves 97 percent of the county’s population, or 3.3 million people. A 36-member board of directors governs the Authority. Each member agency has at least one representative, and can appoint one additional representative for each additional 5 percent of total assessed value of property taxable by SDCWA. This formula gives the City of San Diego, the district’s largest member, 10 directors. A member agency’s vote is based on an agency’s total financial contribution to the SDCWA, including amounts paid in taxes, assessments, fees, and charges to SDCWA or MWD. Each member casts one vote for each $5 million of total financial contribution. The four largest urban water agencies, which include San Diego, Oceanside, Helix Water District and Otay Water District, combine to make up the majority of the vote total.

Member agencies can propose to separate from SDCWA. To do so, current law requires the member agency to ask for voter approval of its own electors. If a majority of electors vote in favor, the agency’s board must certify the results and notify the SDCWA board, and file it with the Secretary of State (SOS). Once filed with SOS, the agency is no longer part of SDCWA. However, the agency’s taxable property must continue to be taxed by SDCWA until the authority pays off bonds and other debts outstanding or contracted for at the time of the separation.

In April 2020, two member agencies proposed to separate from SDCWA:

• Fallbrook Public Utility District (FPUD). FPUD provides water, sewer, and recycled water to its 34,000 residents across over 28,000 acres.
• Rainbow Municipal Water District (RMWD). RMWD provides water and sanitation services to its 22,000 residents across over 50,000 acres.

Both districts submitted a resolution to the San Diego County LAFCO (LAFCO) to concurrently detach from SDCWA and annex to Eastern Municipal Water District (EMWD). The two districts want to separate from SDCWA because they believe they could secure less expensive water rates from EMWD. If the LAFCO approves the detachments, the question of detachment would be submitted to voters.

SDCWA requested that any such election not just include each district’s electors, but also all SDCWA’s electors, which would increase registered voters from around 37,000 to 1.9 million, and increase election costs, which the districts requesting the separation would bear. However, LAFCO counsel determined it did not have the authority to expand the electorate in this manner, meaning SDCWA had to follow the procedures in its principal act, which only required a vote of the electors from a district seeking separation.

At its June 2020 meeting, the LAFCO approved the establishment of an advisory committee to help review disputes and/or controversies associated with the proposal to detach from SDCWA. The Ad Hoc subsequently held 13 public meetings between December 2020 and April 2023, most of which were dedicated to addressing water supply reliability for agencies involved, financial impacts of the separation, and consider other impacts. On June 5, 2023, and again on June 14, 2023, the San Diego LAFCO met to consider Fallbrook and Rainbow’s separation from the SDCWA. The LAFCO staff recommendation was to approve both reorganization proposals with special conditions, which included exit fees spread over five years. Subsequently, LAFCO approved the detachments on July 10, 2023 and the two water districts have taken actions to put the matter before their electors at the next available general election on November 7, 2023.

Proposed Law:

This bill would enact the Water Ratepayers Protections Act of 2023. With respect to member agency separations, the bill would, in addition to approval of a district’s electorate seeking separation from SDCWA, also require the following:

• The governing body of a public agency seeking separation to also submit to the electors within the entire territory of SDCWA the proposition of excluding the member agency from SDCWA, as certified by the public agency to the SDCWA’s board of directors.
• The elections can be separate, but may run concurrently. The bill would require the ballot materials to include (1) a fiscal impact statement, as specified, and (2) a statement describing the annual aggregated fiscal impact to remaining members of the county water authority as a result of the reorganization. The bill would require the county water authority to prepare that statement.
• A majority vote in both elections is necessary for a public agency’s withdrawal from SDCWA.

Related Legislation:

AB 530 (Boerner, 2023) would have required a confirming vote of the entire electorate of the SDCWA, in addition to the vote of electors for each district. The bill’s contents were subsequently amended into AB 399, and an urgency clause was added.

Staff Comments:

As noted above, this bill would require that any separations from SDCWA require a vote of the entire SDCWA, not just the electors of the entities seeking separation. The Senate Governance and Finance Committee’s analysis of this bill notes the following potential impacts related to the separation of the FPUD and RMWD from the SDCWA:

Financial impacts. According to FPUD and RMWD, they pay SDCWA $1,565 and $1,536 per acre-foot respectively. The wholesale charges that FPUD and RMWD pay are incorporated into water rates that vary based on whether the customer is agricultural, municipal, or industrial, with some further variation within those categories. Wholesale costs from SDCWA determine 65% of FPUDs rates, and 79% of RMWD’s rates. Initial estimates of wholesale water cost savings were 23.7% for FPUD and 22.2% for RMWD. Without FPUD and RMWD as customers, SDCWA will sell less water, meaning its revenues will decline, which could impact rates for other customers. Expert analysis conducted in association with the LAFCO review estimated that every $5 million in sales equates to a 1% impact on rates. Remaining SDCWA customers could expect a 2.5% increase in rates by the end of the decade due to the detachments.

However, the overall financial impacts of the separation are in dispute, and the estimates of those impacts vary depending on who prepares the estimate. According to FPUD and RMWD, SDCWA’s estimated revenue loss as a result of the separation is $5.6 million annually. According to SDCWA, its review loss is $16.9 million annually. The LAFCO consultant estimated revenue losses of $12.6 million annually.

Other impacts. These two districts’ departure from SDCWA could have other impacts on the respective agencies. For example, reducing the service areas of SDCWA and expanding EMWD’s would shift MWD voter power between the two agencies. The reduced customer base could impact SDCWA’s plans for financing other capital projects. The separation could impact how FPUD and RMWD receive water during emergencies like an earthquake. There could also be impacts on property tax sharing agreements if the districts shift from SDCWA to EMWD.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Anna M. Caballero, Chair

2023 - 2024 Regular

Water Ratepayers Protections Act of 2023: County Water Authority Act: exclusion of territory: procedure

Enacts the Water Ratepayers Protections Act of 2023, which requires a member agency to receive majority voter approval of its electorate, and the entire county water authority’s electorate, before it can detach from a county water authority.

Background

Local government boundaries. The Legislature has the authority to create, dissolve, or otherwise modify the boundaries and services of local governments. Beginning in 1963, the Legislature delegated the ongoing responsibility to control the boundaries of cities, county service areas, and most special districts to local agency formation commissions (LAFCOs) in each county. The responsibilities and authority of LAFCOs have been modified in subsequent legislation, including a major revision of the LAFCO statutes in the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (AB 2838, Hertzberg) (CKH Act). The courts often refer to LAFCOs as the Legislature’s watchdog over boundary changes.

Local governments can only exercise their powers and provide services where LAFCO allows them to. LAFCOs’ boundary decisions must be consistent with spheres of influence (SOIs) that LAFCOs adopt to show the future boundaries and service areas of the cities and special districts. Before LAFCOs can adopt their SOIs, they must prepare municipal service reviews (MSRs) which analyze population growth, public facilities, and service demands. LAFCOs may also conduct special studies of local governments.

Most changes of organization, including consolidations of districts, require numerous steps in the following order:

• First, there must be a completed application to LAFCO, including a petition or resolution, a “plan for service”, an environmental review document, and a property tax exchange agreement.
• Second, LAFCO must hold a noticed public hearing, take testimony, and may approve the proposed change of organization. The LAFCO may impose terms and conditions that spell out what happens to the affected agencies’ property, assets, and liabilities. If LAFCO disapproves, the proposed change of organization stops.
• Third, LAFCO must hold another public hearing to measure protests. The proposed change of organization stops if there is a majority protest; that is, if more than 50% of the affected voters file written protests.
• Fourth, if at least 25% of voters protest, but not a majority, LAFCO must order an election on the proposed change, subject to majority voter approval.
• Finally, LAFCO’s staff files documents to complete the change.

LAFCOs must approve district consolidations where each merging district passes a resolution endorsing the consolidation, but the provisions that govern protest and elections still apply.

While the CKH Act specifies that LAFCOs have sole and exclusive authority over changes in organization, it provides some exceptions. For the following districts, their principal act provides the procedures for reorganizations:

• A unified or union high school library district.
• A bridge and highway district.
• A joint highway district.
• A transit or rapid transit district.
• A metropolitan water district.
• A separation of grade district.
• For other districts, where the principal act provides, the procedures in the principal act shall supersede the procedures set forth in the CKH Act.

Additionally, a LAFCO can determine that any of the following are not districts or special districts from the purpose of the reorganization provisions of the CKH Act, meaning reorganizations can proceed according to their principal acts:

• Flood control districts;
• Flood control and floodwater conservation districts;
• Flood control and water conservation districts;
• Conservation districts;
• Water conservation districts;
• Water replenishment districts;
• The Orange County Water District;
• California water storage districts;
• Water agencies; and
• County water authorities or water authorities.

County Water Authority Act. In 1943, the Legislature enacted the County Water Authority Act (CWA Act) (SB 1079, Fletcher). The San Diego County Water Authority (SDCWA) is the only agency organized under this principal act. In 1944, member agencies passed resolutions to petition the San Diego County Board of Supervisors to create SDCWA. After an election, SDCWA began to provide a supplemental supply of water as San Diego’s civilian and military population grew to meet wartime activities, including supplemental supplies from the Colorado River. Over the next few decades, SDCWA created pipelines to connect to the Metropolitan Water District’s (MWD) distribution system. MWD is a regional wholesale water district in Southern California that delivers water to 26 member public agencies, including SDCWA. SDCWA is the county’s primary water wholesaler, supplying 75% to 95% of the region’s wholesale water needs depending on various climate factors.

SDCWA has 24 member agencies. Members range from the City of San Diego, the county’s largest city with nearly 1.4 million residents, to smaller cities like Poway with just shy of 50,000 residents. Other members include various water districts, irrigation districts, and public utilities districts. Camp Pendleton, a U.S. Marine Corps base, is also a member. Combined, the SDCWA provides about 80% of the water used in the county. Through its 24 member agencies, it serves 97% of the county’s population, or 3.3 million people. A 36-member board of directors governs the authority. Each member agency has at least one representative. Member agencies can appoint one additional representative for each additional 5% of total assessed value of property taxable by SDCWA. This gives San Diego, the district’s largest member, 10 directors. A member agency’s vote is based on an agency’s total financial contribution to the SDCWA, including amounts paid in taxes, assessments, fees, and charges to SDCWA or MWD. Each member casts one vote for each $5 million of total financial contribution. The four largest urban water agencies, which include San Diego, Oceanside, Helix Water District and Otay Water District, combine to make up the majority of the vote total.

Member agencies can propose to separate from SDCWA. To separate from SDCWA, the CWA Act requires the member agency to ask for voter approval of its own electors. If a majority of electors vote in favor, the agency’s board must certify the results and notify the SDCWA board, and file it with the Secretary of State (SOS). Once filed with SOS, the agency is no longer part of SDCWA. However, the agency’s taxable property must continue to be taxed by SDCWA until the authority pays off bonds and other debts outstanding or contracted for at the time of the separation.

Proposed separation. In April 2020, two member agencies have proposed to separate from SDCWA:

• Fallbrook Public Utility District (FPUD). FPUD provides water, sewer, and recycled water to its 34,000 residents across over 28,000 acres.
• Rainbow Municipal Water District (RMWD). RMWD provides water and sanitation services to its 22,000 residents across over 50,000 acres.

Both districts submitted a resolution to the San Diego County LAFCO (LAFCO) to concurrently detach from SDCWA and annex to Eastern Municipal Water District (EMWD). EMWD provides water services to around 816,000 residents in Riverside County, including the cities of Hemet, Moreno Valley, Murrieta, and Temecula. Around 84% of the wholesale water EMWD supplies comes from MWD, which draws water from the Colorado River and the Sacramento Bay Delta. The remaining 16% comes from district groundwater supply. In October 2019, the LAFCO and the Riverside LAFCO entered into a memorandum of understanding that the LAFCO would process the applications.

The two districts want to separate from SDCWA because they believe they could secure less expensive water rates from EMWD. According to the LAFCO’s meeting materials on the proposed separations, the districts expect to pay less for water from EMWD compared to SDCWA. Both districts have significant agricultural customers (65% of retail sales for RMWD, 36% for FPUD), although their agricultural sales have been in decline.

If the LAFCO approves the detachments, the question of detachment would be submitted to voters. While the standard LAFCO process involves a protest process that only requires an election if at least 25% of district electors protest, these separations from SDCWA would proceed straight to an election because the LAFCO approved SDCWA’s non-district status on May 4, 2020. EMWD did not make a request to the LAFCO for non-district status, meaning annexation of these territories would follow the general reorganization procedures in the CKH Act.

SDCWA requested that any such election not just include each district’s electors, but also all SDCWA’s electors, which would increase registered voters from around 37,000 to 1.9 million, and increase election costs, which the districts requesting the separation would bear. However, LAFCO counsel determined it did not have the authority to override the principal act and expand the electorate in this manner, meaning SDCWA had to follow the procedures in its principal act, which only required a vote of the electors from a district seeking separation.

At its June 2020 meeting, the LAFCO approved the establishment of an advisory committee to help review disputes and/or controversies associated with the proposal. The Ad Hoc subsequently held 13 public meetings between December 2020 and April 2023. Most of the meetings were dedicated to addressing water supply reliability for agencies involved, financial impacts of the separation, and consider other impacts.

Water supply reliability. The LAFCO analyzed how a separation would affect both district’s water supplies. FPUD currently maintains four connections from SDCWA via MWD’s Skinner Water Treatment Facility in Riverside County. Three connections are to pipelines that MWD owns. SDCWA owns the fourth connection. After separation, FPUD expects to continue receiving water via EMWD through the connections that MWD owns, and would abandon the connection SDCWA owns. RMWD currently maintains eight connections to receive wholesale water from SDCWA. MWD owns four pipelines, and SDCWA owns the other four. After reorganization, RMWD expects to continue using all eight connections, including the four SDCWA owns through a future wheeling agreement that outlines the conditions for RMWD to continue receiving water through the connections. According to expert analysis conducted for the LAFCO, shifting to EMWD’s water supply would mean shifting from a less Delta-dependent supply available through SDCWA, in favor or a more Delta-reliant mix through EMWD. The analysis indicated that in drought conditions this mix could result in a higher than anticipated price, but would likely not result in the tap running dry.

Financial impacts. According to FPUD and RMWD, they pay SDCWA $1,565 and $1,536 per acre-foot respectively. The wholesale charges that FPUD and RMWD pay are incorporated into water rates that vary based on whether the customer is agricultural, municipal, or industrial, with some further variation within those categories. Wholesale costs from SDCWA determine 65% of FPUDs rates, and 79% of RMWD’s rates. Initial estimates of wholesale water cost savings were 23.7% for FPUD and 22.2% for RMWD. Without FPUD and RMWD as customers, SDCWA will sell less water, meaning its revenues will decline, which could impact rates for other customers. Expert analysis conducted in association with the LAFCO review estimated that every $5 million in sales equates to a 1% impact on rates. Remaining SDCWA customers could expect a 2.5% increase in rates by the end of the decade due to the detachments.

However, the overall financial impacts of the separation are in dispute. For example, estimates of the financial impact of the detachment on SDCWA vary depending on who is estimating them. According to FPUD and RMWD, SDCWA’s estimated revenue loss is $5.6 million annually. According to SDCWA, its review loss is $16.9 million annually. The consultant who prepared a report for LAFCO estimated $12.6 million.

Other impacts. These two districts’ departure from SDCWA could have a slew of other impacts on the respective agencies. For example, reducing the service areas of SDCWA and expanding EMWD’s would shift MWD voter power between the two agencies. The reduced customer base could impact SDCWA’s plans for financing other capital projects. The separation could impact how FPUD and RMWD receive water during emergencies like an earthquake. There could also be impacts on property tax sharing agreements if the districts shift from SDCWA to EMWD.

On June 5, 2023, and again on June 14, 2023, the San Diego LAFCO met to consider Fallbrook and Rainbow’s separation from the SDCWA. The LAFCO staff recommendation was to approve both reorganization proposals with special conditions, which included exit fees spread over five years.

Simultaneously, AB 530 (Boerner, 2023) was introduced to require a confirming vote of the entire electorate of the SDCWA, in addition to the vote of electors for each district. San Diego LAFCO came out in opposition to AB 530 because it circumvented LAFCO approval of the districts’ separation. While the LAFCO expected to consider further action on the proposed separations on August 7, 2023, it moved up the meeting to July 10, 2023. AB 530’s contents were subsequently amended into AB 399, and an urgency clause was added.

The author wants to ensure that any separations from SDCWA require a vote of the entire SDCWA, not just the electors of the entities seeking separation.

Proposed Law

Assembly Bill 399 enacts the Water Ratepayers Protections Act of 2023. For purposes of member agency separations, AB 399 requires not just approval of a district’s electorate seeking separation from SDCWA, but also requires:

• The governing body of a public agency seeking separation to also submit to the electors within the entire territory of SDCWA the proposition of excluding the member agency from SDCWA, as certified by the public agency to the SDCWA’s board of directors.
• The elections can be separate, but may run concurrently.
• A majority vote in both elections is necessary for a public agency’s withdrawal from SDCWA.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. According to the author, “AB 399, at its core, is a good governance bill that seeks to give ratepayers a voice in decisions that impact the cost of one of their most basic needs: water. The bill would require, as an additional condition to the Local Agency Formation Commission (LAFCO) process for allowing the detachment of a public agency from their relevant county water authority, that the majority of the voters within the jurisdiction of the county water authority vote to approve the detachment at a scheduled election. Essentially, it would align the process for water agencies that want to detach from a County Water Authority with what any other municipality would need to go through when it wants to break away and form (or join) another incorporated city. In short, AB 399 would give voters within a County Water Authority the chance to have a voice, through the electoral process, over governance decisions that impact their rates.”

2. Changing rules in the middle of the game. Local agencies joined SDCWA knowing they had the option to leave if they received approval from a majority of their electorate. AB 399 changes the rules for separation without giving member agencies a chance to weigh in on the new rules. For smaller agencies like RMUD and FPUD, gaining approval first from a majority of their electorate, and second from a majority of the roughly 1.9 million voters in SDCWA could prove an insurmountable obstacle. Additionally, since AB 399 requires the district requesting detachment to submit the question to SDCWA electors, the district could be on the hook to pay for the cost of holding the second election, making separating from the SDCWA financially difficult as well. Should the Legislature decide whether to adopt these new rules rather than leave it up to SDCWA to adopt locally?

3. Fair to whom? While the districts seeking separation do not believe AB 399 is fair, the City of San Diego and SDCWA believe it is just as unfair for a district to detach without requiring the entire authority’s electorate to weigh in. According to SDCWA’s estimates, the financial impact of the detachment on other member agencies could exceed $16 million annually, which the agencies would have to pass on to ratepayers, who would not get a say in the proposed detachment absent the enactment of AB 399. They argue AB 399 models its provisions after the process for a portion of a city to detach from an existing city. In those instances, the departing portion of a city must go through a LAFCO process that concludes with a vote of the entire city, not just a vote of electors in the area proposing to detach. On the other hand, AB 399 affects public agencies with independently elected boards, not a group of people petitioning to leave a city. The Committee may wish to consider how to balance fairness for the agencies that want to separate with that of the rest of the ratepayers in the agency.

4. Precedent? While AB 399 models itself after the process for a portion of a city to detach, requiring an entire wholesale water agency’s electorate to decide whether to approve a member agency’s departure appears novel in the water agency world. For example, a vote of the entire Metropolitan Water District (MWD), the state’s largest water wholesaler, is not required for an individual member agency to leave, just a vote of the individual member agency’s own electors. Does AB 399 set a precedent for other agencies?

5. Sure, but will it work? AB 399 requires the second election, but does not provide many details regarding how to conduct these two elections. This raises several implementation questions:

• AB 399 allows the two elections to be separate or run concurrently, a decision that would appear to be up to districts seeking detachment. Would running the elections concurrently in RMWD and FPUD confuse these districts’ voters because they would vote on the same issue twice, especially if the two questions do not appear consecutively? Additionally, should the election of the entire authority take place before learning how voters in the districts seeking detachment feel about it?
• AB 399 does not require specific information on the overall fiscal effects of separation to be printed in information provided to voters, both in terms of the costs and savings for the district and SDCWA as a whole. Additionally, what exit fees would district’s seeking detachment have to pay? How much bond service would they have to pay over what period of time? How much will rates change over time? Does AB 399 ensure voters have sufficient information on the financial effects of a district separating from SDCWA?
• AB 399 does not specify who prepares the election materials that would be included in the two separate questions. Given the disputes about the financial effects of district detachment, how does AB 399 ensure voters get unbiased information to assess whether to vote for the detachment?

The Committee may wish to consider amending the bill to:

• Require a member agency’s electorate to approve a separation, before proceeding to the second election of the entire authority’s electorate.
• Require election materials to include an explanation of the fiscal impacts of separation.
• Clarify who prepares the election materials included with the ballot.

6. Is this grass always greener? Much of the reason why RMUD and FPUD want to leave SDCWA is because they anticipate paying lower wholesale water rates in EMWD. While some estimates find the overall per acre-foot rate is currently less expensive at EMWD, the overall cost of separation may increase depending on the conditions of the separation. For example, potential exit fees and paying for existing debt obligations could eat into any potential savings. Additionally, future costs depend on factors outside these districts’ control, like the climate and continued reliability of EMWD’s water supply.

7. Don’t forget the troops. The U.S. Marine Corps’ Camp Pendleton is a member of SDCWA. Since AB 399 applies the new election requirements to all agencies, could it impose this requirement on a branch of the federal armed services? Or, could the Department of Defense decide to withdraw Camp Pendleton from SDCWA without any election? On the other hand, would providing an explicit exemption for military installations encourage other member agencies to seek exemptions from AB 399’s requirements? The Committee may wish to consider amending the bill to exempt military installations from the new election requirements.

8. Urgency. As an urgency statute, AB 399 must be approved by 2/3 vote of each house of the Legislature. Regular legislation takes effect on the January 1 following its passage, but urgency bills take effect as soon as they are passed, signed, and chaptered.

9. Gut and amend. As introduced and approved by the Assembly, AB 399 contained provisions relating to police pursuit reporting data. Amendments taken in the Senate deleted the initial contents of AB 399 and inserted the current language relating to county water authorities.

Assembly Actions

Prior Assembly votes not relevant.

Support and Opposition

(7/7/23)

Support: California Labor Federation, Afl-cio
San Diego County Water Authority
San Diego Regional Chamber of Commerce

Opposition: CA Association of Local Agency Formation Commissions
Department of the Navy
Fallbrook Public Utilities District
Rainbow Municipal Water District
Riverside Local Agency Formation Commission

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Date of Hearing: May 10, 2023

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Chris Holden, Chair

ABPCA Bill Id:AB 399

Author:(Ting) – As Introduced Ver:February 2, 2023

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill increases the time by which law enforcement agencies must report vehicle pursuit data to California Highway Patrol (CHP), from 30 days after a pursuit to 45 days after a pursuit.

FISCAL EFFECT:

Negligible costs to CHP.

COMMENTS:

1) Purpose. According to the author:

Providing agencies additional time to submit reports addresses potential workload concerns when preparing them and aids in ensuring the information provided is complete and accurate.

2) Background. All state and local law enforcement agencies are required to report to CHP, on a form approved by CHP, all vehicle pursuit data. According to CHP, a vehicle pursuit is defined as an event involving one or more law enforcement officers attempting to apprehend a suspect operating a motor vehicle while the suspect is attempting to avoid arrest by using high speed driving or other evasive tactics, such as driving off a highway, turning suddenly, or driving in a legal manner but willfully failing to yield to the officer’s signal to stop.

SB 719 (Romero), Chapter 485, Statutes of 2005, requires law enforcement agencies to establish pursuit policies, provide ongoing pursuit training to their officers, and ensure all pursuits are reported and submitted to CHP within 30 days. CHP maintains its Pursuit Reporting System, which provides the ability to automate pursuit reporting, review, and critique processes.

CHP is required to submit an annual report to the Legislature, which includes the total number of pursuits reported to CHP during that year, the total number of pursuits involving a collision in which an injury or fatality to an uninvolved third party occurred, and the total number of uninvolved third parties who were injured or killed as a result of those collisions. This bill increases the time by which law enforcement agencies must report vehicle pursuit data to CHP, from 30 days after a pursuit to 45 days after a pursuit.

Analysis Prepared by: Nikita Koraddi / APPR. / (916) 319-2081

Date of Hearing: March 7, 2023

Counsel: Liah Burnley

ASSEMBLY COMMITTEE ON

Reginald Byron Jones-Sawyer, Sr., Chair

ABPCA Bill Id:

Author:() – As Ver:

SUMMARY:

Increases the time required for law enforcement agencies to report vehicle pursuit data to California Highway Patrol (CHP) from 30 days after a pursuit to 45 days after a pursuit.

EXISTING LAW:

1. Requires every state and local law enforcement agency to report all motor vehicle pursuit data to CHP. (Veh. Code, § 14602.1, subd. (a).)
   
2. States that reporting of all motor vehicle pursuit data, shall include, but not be limited to, all of the following:
   1. Whether any person involved in a pursuit or a subsequent arrest was injured, specifying the nature of that injury;
      
   2. The violations that caused the pursuit to be initiated;
      
   3. The identity of the peace officers involved in the pursuit;
      
   4. The means or methods used to stop the suspect being pursued;
      
   5. All charges filed with the court by the district attorney;
      
   6. The conditions of the pursuit, including, but not limited to, duration, mileage, number of peace officers involved, maximum number of law enforcement vehicles involved, time of day, weather conditions, and maximum speeds;
      
   7. Whether a pursuit resulted in a collision, and a resulting injury or fatality to an uninvolved third party, and the corresponding number of persons involved;
      
   8. Whether the pursuit involved multiple law enforcement agencies; and,
      
   9. How the pursuit was terminated. (Veh. Code, § 14602.1, subd. (b).)
      
3. Provides that all motor vehicle pursuit data shall be submitted to CHP no later than 30 days following a motor vehicle pursuit. (Veh. Code, § 14602.1, subd. (d).)
   
4. Requires CHP to submit annually to the Legislature a report that includes, but is not limited to, the following information:
   
   1. The number of motor vehicle pursuits reported to CHP during that year;
      
   2. The number of those motor vehicle pursuits that reportedly resulted in a collision in which an injury or fatality to an uninvolved third party occurred; and,
      
   3. The total number of uninvolved third parties who were injured or killed as a result of those collisions during that year. (Veh. Code, § 14602.1, subd. (e).)

FISCAL EFFECT:

Unknown

COMMENTS:

1. Author’s Statement: According to the author, “Providing agencies additional time to submit reports addresses potential workload concerns when preparing them and aids in ensuring the information provided is complete and accurate.”
   
2. Vehicle Pursuit Reports: Pursuant to Vehicle Code § 14602.1, all state and local law enforcement agencies are required to report to CHP, on a form approved by CHP, all vehicle pursuit data. According to CHP, “an event involving one or more law enforcement officers attempting to apprehend a suspect operating a motor vehicle while the suspect is attempting to avoid arrest by using high speed driving or other evasive tactics, such as driving off a highway, turning suddenly, or driving in a legal manner but willfully failing to yield to the officer’s signal to stop. (CHP, Report to the Legislature (2020) <https://‌www.‌‌chp.ca.gov‌‌/Documents/‌Police_Pursuits_SB_719_%202020.pdf> [as of Feb. 24, 2023].)

SB 719 (Romero), Chapter 485, Statutes of 2005, which took effect January 1, 2006, requires law enforcement agencies to establish pursuit policies, provide ongoing pursuit training to their officers, and ensure all pursuits are reported and submitted to CHP within 30 days. CHP maintains a Pursuit Reporting System (PRS), which provides the ability to automate pursuit reporting, review, and critique processes. The PRS is comprised of a Web-based front-end application, and a Microsoft SQL database back-end application. The PRS includes information received from allied law enforcement agencies throughout California via the CHP 187A, Allied Agency Pursuit Report. The CHP 187A is submitted via mail, email or fax. (CHP, Report to the Legislature, supra, at p. 1 [as of Feb. 24, 2023].)

CHP is required to submit an annual report to the Legislature which includes, but is not limited to: the total number of pursuits reported to the CHP during that year, the total number of pursuits involving a collision in which an injury or fatality to an uninvolved third party occurred, and the total number of uninvolved third parties who were injured or killed as a result of those collisions. (Veh. Code, § 14602.1.)

This bill would increase the time required for law enforcement agencies to report vehicle pursuit data CHP from 30 days after a pursuit to 45 days after a pursuit.

1. Prior Legislation:
   1. SB 185 (Thompson), Chapter 1048, Statutes of 1991, required law enforcement agencies to report vehicle pursuit data to CHP.
      
   2. SB 719 (Romero), Chapter 485, Statutes of 2005, among other provisions, required law enforcement agencies to report vehicle pursuit data to CHP no later than 30 days following a motor vehicle pursuit.
      

REGISTERED SUPPORT / OPPOSITION:

Support

None submitted

Opposition

None submitted

Analysis Prepared by: