BILL NUMBER: SBX2 2 INTRODUCED BILL TEXT INTRODUCED BY Senators Perata, Machado, and Steinberg SEPTEMBER 19, 2007 An act to add Division 26.7 (commencing with Section 79700) to the Water Code, relating to financing a water supply reliability and environmental restoration 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 2, as introduced, Perata. Water Supply Reliability Bond Act of 2008. Under existing law, various measures have been approved by the voters to provide funds for water protection, facilities, and programs. This bill would enact the Water Supply Reliability Bond Act of 2008 which, if approved by the voters, would authorize, for the purposes of financing a specified water supply reliability and environmental restoration program, the issuance of bonds in the amount of $5,800,000,000 pursuant to the State General Obligation Bond Law. The bill would provide for submission of the bond act to the voters at the February 5, 2008, statewide primary election. 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) is added to the Water Code, to read: DIVISION 26.7. WATER SUPPLY RELIABILITY BOND ACT OF 2008 CHAPTER 1. SHORT TITLE 79700. This division shall be known and may be cited as the Water Supply Reliability Bond Act of 2008. CHAPTER 2. DEFINITIONS 79702. Unless the context otherwise requires, the definitions set forth in this section govern the construction of this division, as follows: (a) "Bay-delta" means the San Francisco Bay/Sacramento-San Joaquin Delta. (b) "Bay Delta Conservation Plan" means the plan prepared pursuant to the Planning Agreement regarding the Bay Delta Conservation Plan, dated October 6, 2006. (c) "Bay-Delta Estuary" means the delta, Suisun Bay, and Suisun Marsh. (d) "CALFED" means the consortium of state and federal agencies with management and regulatory responsibilities in the San Francisco Bay/Sacramento-San Joaquin Delta Estuary. (e) "CALFED Bay-Delta Program" means the undertaking by CALFED to develop and implement, by means of the final programmatic environmental impact statement/environmental impact report, the preferred programs, actions, projects, and related activities that will provide solutions to identified problem areas related to the San Francisco Bay/Sacramento-San Joaquin Delta Estuary ecosystem, including, but not limited to, the bay-delta and its tributary watersheds. (f) "Committee" means the Water Supply Reliability Finance Committee created by Section 79782. (g) "Delta" means the Sacramento-San Joaquin Delta as defined in Section 12220. (h) "Department" means the Department of Water Resources. (i) "Director" means the Director of Water Resources. (j) "Disadvantaged community" means a community with a median household income that is less than 80 percent of the statewide average. (k) "Fund" means the Reliable Water Supply Bond Fund of 2008 created by Section 79720. (l) "Integrated regional water management plan" means a comprehensive plan for a defined geographic area, the specific development and content of which shall be defined by guidelines adopted by the department. At a minimum, an integrated regional water management plan describes the major water-related objectives and conflicts within a region, considers a broad variety of water management strategies, and identifies the appropriate combination of water demand and supply management alternatives, water quality protections, and environmental stewardship actions to provide long-term, reliable, and high-quality water supplies and to protect the environment at the lowest reasonable cost and with the highest possible benefits to the environment and to water users. (m) "Nonprofit organization" means an organization qualified to do business in California and qualified under Section 501(c) (3) of Title 26 of the United States Internal Revenue Code. (n) "Public agency" means a state agency or department, district, joint powers authority, city, county, city and county, or other political subdivision of the state. (o) "Secretary" means the Secretary of the Resources Agency. (p) "State General Obligation Bond Law" means 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). CHAPTER 3. GENERAL PROVISIONS 79710. An amount that equals not more than 5 percent of the funds allocated for a grant program pursuant to this division may be used to pay the costs to administer that program. 79711. Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code does not apply to the development or implementation of programs or projects authorized or funded under this division. 79712. (a) Prior to disbursing grants pursuant to this division, the department shall develop project solicitation and evaluation guidelines. The guidelines may include a limitation on the dollar amount of grants to be awarded. (b) Prior to disbursing grants, the department shall conduct two public meetings to consider public comments prior to finalizing the guidelines. The department shall publish the draft solicitation and evaluation guidelines on its Internet Web site at least 30 days before the public meetings. One meeting shall be conducted at a location in northern California and one meeting shall be conducted at a location in southern California. Upon adoption, the department shall transmit copies of the guidelines to the fiscal committees and the appropriate policy committees of the Legislature. 79713. It is the intent of the people that the investment of public funds pursuant to this division should result in public benefits. CHAPTER 4. RELIABLE WATER SUPPLY BOND FUND OF 2008 79720. The proceeds of bonds issued and sold pursuant to this division shall be deposited in the Reliable Water Supply Bond Fund of 2008, which is hereby created. CHAPTER 5. DELTA SUSTAINABILITY 79730. (a) The Bay-Delta Estuary is a unique and irreplaceable combination of environmental and economic resources. Current management and use of the delta is not sustainable, and results in a high level of conflict among various interests. Future delta sustainability is threatened by changing hydrology, climate change, flood risk, seismic events, nonnative species, toxics, and other environmental problems. Future management of the delta must improve delta ecosystem health and improve the means of delta water conveyance in order to protect drinking water quality, improve water supply reliability, restore ecosystem health, and preserve sustainable agricultural and recreational values in the delta. Many sources of funding will be needed to implement improved delta management. (b) This chapter provides state funding for public benefits associated with projects needed to assist in the delta's sustainability as a vital resource for fish, wildlife, water quality, water supply, agriculture, and recreation. (c) It is the intent of the Legislature that the department implement, pursuant to current authority and the recommendations of the Bay Delta Conservation Plan and the Blue Ribbon Task Force established by Executive Order S-17-06, a comprehensive delta sustainability program, including both water conveyance and ecosystem improvements, that meets the following criteria: (1) Reduces impacts to native fish caused by the operation of the export pumps and improves the operational flexibility and ability of the State Water Project and the Central Valley Project to provide the benefits described by this subdivision. (2) Provides conditions that will allow for habitat improvements for fish and wildlife in the delta. (3) Provides improved water supply reliability and conveyance for the State Water Project and the Central Valley Project and for market water transfers. (4) Reduces the quantity of bromide, total organic carbon, and total dissolved solids in the water pumped at the Harvey O. Banks and C.W. "Bill" Jones pumping plants to protect the public health and improves the ability of the State Water Project and the Central Valley Project to manage salinity. (5) Reduces vulnerability to seismic events in or near the delta and provides flexibility to manage uncertainties associated with climate change and future fishery needs. (d) Funds provided by this chapter may not be expended for the design or construction of delta water transfer facilities. 79731. The sum of two billion four hundred million dollars ($2,400,000,000) shall be available for appropriation by the Legislature from the fund to the department for grants and direct expenditure, as follows: (a) One billion dollars ($1,000,000,000) for projects to do any of the following: (1) Ensure that urban and agricultural water supplies derived from the delta, including water supplies used within the delta to support beneficial uses, are not disrupted because of catastrophic failures of delta levees resulting from earthquakes, floods, land sinking, rising ocean levels, or other forces. (2) Improve the quality of drinking water derived from the delta. (3) Physical improvements or other actions to create waterflow conditions within the delta to provide adequate habitat for native fish and wildlife. (4) Create sustainable land use patterns and flood structures in the delta. (5) Protect transportation and other vital infrastructure in and around the delta. (6) Facilitate other projects that provide public benefits and support delta sustainability options approved by the Legislature, including costs associated with planning, monitoring, and design of alternatives, and project modifications and adaptations necessary to achieve the goals of this paragraph. (b) One billion four hundred million dollars ($1,400,000,000) for projects to protect and enhance the sustainability of the delta ecosystem, including any of the following: (1) Projects for the development and implementation of the Bay Delta Conservation Plan and projects that are consistent with the findings of the Blue Ribbon Task Force established by Executive Order S-17-06. The plan shall identify projects for the enhancement and sustainability of selected fish species and shall be developed to meet the requirements of Chapter 10 (commencing with Section 2800) of Division 3 of the Fish and Game Code. The projects shall be implemented through a cooperative effort among regulatory agencies, regulated and potentially regulated entities, and affected parties, including state and federal water contractors. These funds may be expended for the preparation of environmental documentation and environmental compliance, and for implementing projects identified in the plan. (2) Other projects to protect and restore native fish and wildlife dependent on the delta ecosystem, including the removal or reduction of undesirable invasive species. (3) Projects to reduce greenhouse gas emissions from exposed delta soils. (c) Expenditure of any portion of the funds provided pursuant to this chapter is contingent on the adoption of a comprehensive plan for delta sustainability. CHAPTER 6. WATER SUPPLY RELIABILITY 79760. The sum of two billion dollars ($2,000,000,000) shall be available for appropriation by the Legislature from the fund to the department for competitive grants for water supply reliability in accordance with this chapter. 79761. (a) Except as provided in subdivision (g), the department shall award grants to eligible projects that are consistent with an adopted integrated regional water management plan. (b) An urban water supplier that does not prepare, adopt, and submit its urban water management plan in accordance with the Urban Water Management Planning Act (Part 2.6 (commencing with Section 10610) of Division 6) is ineligible to receive funds made available pursuant to this chapter until the urban water management plan is prepared and submitted in accordance with the requirements of that act. (c) For the purposes of awarding a grant under this chapter, the department shall require a cost share of not less than 50 percent of project costs. (d) Eligible projects include all of the following: (1) Agricultural and urban water use efficiency implementation projects, as well as feasibility studies, technical assistance, education, and public outreach, and projects that result in water savings, increased instream flow, improved water quality, or increased energy efficiency. (2) Recycling, reclamation, desalination, and associated facilities, including distributions systems. (3) Groundwater and surface storage projects, and conjunctive use and reservoir reoperations projects. (4) Groundwater contamination prevention, cleanup, and treatment, and other water quality projects necessary to protect existing or potential water supplies. (5) Other projects that improve water supply reliability or improve the supply and delivery of safe drinking water. (e) Eligible applicants are public agencies, public utilities, and mutual water companies. To be eligible for funding under this chapter, projects proposed by public utilities that are regulated by the Public Utilities Commission and mutual water companies shall have a clear and definite public purpose and shall benefit the customers of those respective water systems. (f) Funds made available by this chapter shall be allocated pursuant to the following regional distribution based on hydrologic regions and subregions identified in the California Water Plan: (1) North Coast $70,000,000 (2) San Francisco Bay $240,000,000 (3) Central Coast $95,000,000 (4) Los Angeles subregion $369,000,000 (5) Santa Ana subregion $200,000,000 (6) San Diego subregion $161,000,000 (7) Sacramento River $131,000,000 (8) San Joaquin River $103,000,000 (9) Tulare/Kern $109,000,000 (10) North/South Lahonton $53,000,000 (11) Colorado River Basin $69,000,000 (12) Interregional $400,000,000 (g) Interregional funds may be expended directly or granted by the department to address multiregional needs or statewide priorities, including, but not limited to, any of the following: (1) Investing in new water technology development and deployment. (2) Meeting state water recycling goals. (3) Adapting to climate change impacts. (4) Reducing contributions to climate change. (5) Other projects to improve statewide water management systems. CHAPTER 7. RESOURCE STEWARDSHIP AND ENVIRONMENTAL RESTORATION PROGRAM 79770. The sum of one billion dollars ($1,000,000,000) shall be available for appropriation by the Legislature from the fund to the secretary for expenditures and grants for resource stewardship, ecosystem restoration, urban watershed, and stormwater management projects, including, but not limited to, all of the following watersheds: (a) The San Joaquin River system. (b) The Sacramento River corridor. (c) The Salton Sea watersheds. (d) The Los Angeles River watershed. (e) The San Gabriel River watershed. (f) The Santa Ana River watershed. (g) The Klamath River watershed. (h) North coast watersheds. (i) San Francisco Bay watersheds. (j) Central coast watersheds. (k) South coast watersheds. (l) Lake Tahoe Basin. (m) Kern River and Tulare Basin. CHAPTER 8. GROUNDWATER PROTECTION 79775. The sum of four hundred million dollars ($400,000,000) shall be available for appropriation by the Legislature for expenditures, grants, and loans for projects to prevent or reduce the contamination of groundwater that serves as a source of drinking water. Funds appropriated by this chapter shall be available for projects necessary to protect public health by preventing or reducing the contamination of groundwater that serves as a major source of drinking water for a community. (a) Projects shall be prioritized based upon the following criteria: (1) The threat posed by groundwater contamination to the affected community's overall drinking water supplies, including the need for treatment of alternative supplies if groundwater is not available due to contamination. (2) The potential for groundwater contamination to spread and reduce drinking water supply and water storage for nearby population areas. (3) The potential of the project, if fully implemented, to enhance local water supply reliability. (4) The potential of the project to increase opportunities for groundwater recharge and optimization of groundwater supplies. (b) The board shall give additional consideration to projects that meet any of the following criteria: (1) The project is implemented pursuant to a comprehensive basin-wide groundwater quality management and remediation plan or is necessary to develop a comprehensive groundwater plan. (2) Affected groundwater provides a local supply that, if contaminated and not remediated, will require import of additional water from outside the region. (3) The project will serve an economically disadvantaged community. (c) The Legislature, by statute, shall establish both of the following: (1) Requirements for repayment of grant funds in the event of cost recovery from parties responsible for the groundwater contamination. (2) Requirements for recipients of grants to make reasonable efforts to recover costs from parties responsible for groundwater contamination. CHAPTER 9. FISCAL PROVISIONS 79780. (a) Bonds in the total amount of five billion eight hundred million dollars ($5,800,000,000), not including the amount of any refunding bonds issued in accordance with Section 79792, or so much thereof as is necessary, 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 valid and binding obligations 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 the 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. 79781. The bonds authorized by this division shall be prepared, executed, issued, sold, paid, and redeemed as provided in the State General Obligation Bond Law, 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 Section 16727 of the Government Code shall not apply to the extent that it is inconsistent with any other provision of this division. 79782. (a) Solely for the purpose of authorizing the issuance and sale, pursuant to the State General Obligation Bond Law, of the bonds authorized by this division, the Reliable Water Supply Finance Committee is hereby created. For purposes of this division, the Reliable Water Supply Finance Committee is "the committee" as that term is used in the State General Obligation Bond Law. (b) The committee consists of the Director of Finance, the Treasurer, the Controller, the Director of Water Resources, and the Secretary for the Resources Agency. Notwithstanding any other provision of law, any member may designate a deputy to act as that member in his or her place for all purposes, as though the member were personally present. (c) The Treasurer shall serve as chairperson of the committee. (d) A majority of the members of the committee shall constitute a quorum of the committee, and may act for the committee. 79783. The committee shall determine whether or not it is necessary or desirable to issue bonds authorized pursuant to this division 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. 79784. "Board," as defined in Section 16722 of the Government Code for the purposes of compliance with the State General Obligation Bond Law, means the department. 79785. 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, and 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 which is necessary to collect that additional sum. 79786. 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 that is necessary to carry out the provisions of Section 79789, appropriated without regard to fiscal years. 79787. 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. The amount of the request shall not exceed the amount of the unsold bonds that the committee has, by resolution, authorized to be sold for the purpose of carrying out this division. The board shall execute those 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. 79788. Notwithstanding any other provision of this division, or of the State General Obligation Bond Law, if the Treasurer sells bonds 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, the Treasurer may maintain separate accounts for the bond proceeds invested and for the investment earnings on those proceeds, and 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, as may be required or desirable under federal law in order 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. 79789. For the purposes of carrying out this division, the Director of Finance may authorize the withdrawal from the General Fund of an amount or amounts 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. Any amounts withdrawn shall be deposited in the fund. Any money made available under this section shall be returned to the General Fund, with interest at the rate earned by the money in the Pooled Money Investment Account, from proceeds received from the sale of bonds for the purpose of carrying out this division. 79790. All money deposited in the fund that is derived from premium and accrued interest on bonds sold pursuant to this division shall be reserved in the fund and shall be available for transfer to the General Fund as a credit to expenditures for bond interest. 79791. 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. These costs shall be shared proportionately by each program funded through this division. 79792. 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 electors of the state for the issuance of the bonds under this division shall include approval of the issuance of any bonds issued to refund any bonds originally issued under this division or any previously issued refunding bonds. 79793. The Legislature hereby finds and declares that, inasmuch as 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, the disbursement of these proceeds is not subject to the limitations imposed by that article. SEC. 2. The Secretary of State shall submit Section 1 of this act to the voters at the February 5, 2008, statewide primary election in accordance with the provisions of the Government Code and the Elections Code governing the submission of a statewide measure to the voters. SEC. 3. (a) Notwithstanding any other provision of law, with respect to the Water Supply Reliability Bond Act of 2008, as set forth in Section 1 of this act, all ballots of the February 5, 2008, statewide primary election shall have printed thereon and in a square thereof, exclusively, the words: "Water Supply Reliability Bond Act of 2008" and in the same square under those words, the following in 8-point type: "This act will provide financing for projects to protect California's drinking water supply from natural disasters and improve water supply reliability and safe drinking water in every region of the state by authorizing a $5.8 billion dollar bond act." (b) Opposite the square, there shall be left spaces in which the voters may place a cross in the manner required by law to indicate whether they vote for or against the act. (c) Where the voting in the election is done by means of voting machines used pursuant to law in the manner that carries out the intent of this section, the use of the voting machines and the expression of the voters' choices by means thereof are in compliance with this section. SEC. 4. Section 1 of this act shall take effect only upon the approval by the voters of the Water Supply Reliability Bond Act of 2008, as set forth in that section. SEC. 5. 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 finance a critical water supply reliability and environmental restoration program as soon as possible, it is necessary that this act take effect immediately.