Legislative Background

“It is the intent of the Legislature to enable local governments responsible for water distribution in the three counties to establish a multi-county agency authorized to plan for and acquire supplemental water supplies, to encourage water conservation and use of recycled water on a regional basis, and to assist in the financing of essential repairs and improvements to the San Francisco regional water system, including seismic strengthening.”
California Water Code Section 81301(d)

What is the Bay Area Water Supply and Conservation Agency?

The Agency is a special district created by the separate, but parallel, actions of 25 local government agencies in the Bay Area, as authorized by AB 2058, enacted by the California Legislature in 2002. Its governing board includes not only representatives from each of the 25 public agencies, but also from Stanford University and the California Water Service Company, both of which are long term wholesale purchasers of water from San Francisco.

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A special district is an agency of the State formed pursuant to general law or special act for the local performance of governmental or proprietary functions within limited boundaries (Government Code Section 56036). The Bay Area Water Supply and Conservation Agency is an “independent” special district because the members of its governing board are appointed for fixed terms (Government Code Section 56044).

The special district is a familiar California institution and one that has been part of our history since the 1880s. Other examples of multi-county independent special districts in the Bay Area are the Mid-Peninsula Open Space District (San Mateo and Santa Clara Counties) and the new San Francisco Bay Area Regional Water System Financing Authority created by SB 1870 (Alameda, San Francisco, San Mateo and Santa Clara Counties).

Why did the Legislature pass the law that enabled local Bay Area government agencies to create BAWSCA?

To help protect the health, safety and economic well being of 1.7 million people. The Legislature was convinced that the communities in the Bay Area that depend on the regional water system faced serious problems which they would not be able to solve without the help of State law. In assessing the water supply situation in this part of the Bay Area, photo_capitolthe State Legislature concluded that there were problems both with the physical facilities and with the institutional arrangements for management, operation and financing of those facilities. It responded with three separate new laws, each aimed at a different part of the problem. The following descriptions of each law, ending with AB 2058, emphasize the differences in purpose, responsible entities and direction of authority.

  • AB 1823 (Authors: Assembly members Louis Papan and Joe Simitian) is aimed at solving problems with the physical facilities. In effect, it says to the City and County of San Francisco: “fix the system.” This law requires San Francisco to, among other things, do the following:

    • Formally adopt the Capital Improvement Program (CIP) prepared by SFPUC dated February 25, 2002. The CIP calls for a major overhaul of the water transmission system from pipelines crossing the Central Valley to storage tanks in San Francisco neighborhoods. At that time, rehabilitation of the regional system alone was estimated to cost at least $2.9 billion.
    • Prepare an emergency response plan, in consultation with the Bay Area Water Users Association, focusing on how water service can be restored promptly after an earthquake and prohibiting discrimination against wholesale customers in the allocation of water during such a crisis.
    • Submit annual reports to the California Department of Health Services, which oversees public water systems, on San Francisco’s efforts at, and its success in, securing contracts or other arrangements for alternative supplies of water during droughts.
    • Operate Hetch Hetchy hydroelectric power plants conservatively, so as not to generate power (all the revenues from which go to San Francisco) at the expense of water supply (two-thirds of which is used by wholesale customers).
    • AB 1823 “sunsets” on December 31, 2010 or the date that San Francisco awards contracts for construction of each of the nine key seismic projects listed in Section 73502(b), whichever is earlier.
    • Nothing in this Act changes the governance, control or ownership of the regional water system.
  • SB 1870 (Author: Senator Jackie Speier) focuses specifically on the financing of the $2.9 billion in rehabilitation/improvement projects needed on the regional water system. San Francisco’s city charter required voter approval even for water revenue bonds, until it was amended in November 2002. In 1998, San Francisco voters had passed an initiative imposing an eight-year freeze on in-city water rates. SB 1870 created the Regional Financing Authority (RFA) (of which San Francisco is a member) to provide an alternate way to raise capital for the wholesale customers’ share of the regional CIP. The RFA’s authority to issue bonds under SB 1870 “sunsets” in December 2020. Nothing in this Act changes the governance, control or ownership of the regional water system.

  • AB 2058 (Authors: Assembly members Louis Papan, John Dutra and Joe Simitian) was the Legislature’s response to problems related to the institutional framework in which decisions about regional water issues are made.

    The portion of the Bay Area reliant on the regional water system is unique in that residents of the communities in which two-thirds of water photo_sunolis used have no political representation in San Francisco and San Francisco itself is not subject to oversight by the California Public Utilities Commission as an investor-owned utility would be. In terms of the many wholesale customers who are entirely dependent on the San Francisco regional system, the SFPUC is, in effect, an unregulated monopoly.

    The Legislature noted this lack of representation, as well as its impact on water supply decisions, in the findings incorporated into AB 2058.

    • “Many separate cities, districts, and public utilities are responsible for distribution of water in portions of the Bay Area served by the regional system operated by the City and County of San Francisco. Residents in the counties of Alameda, San Mateo, and Santa Clara who depend on the water made available on a wholesale basis by the regional system have no right to vote in elections in the City and County of San Francisco and are not represented on the San Francisco commission that oversees operation of the regional system.

      The San Francisco regional system is vulnerable to catastrophic damage in a severe earthquake, which could result in San Francisco and neighboring communities being without potable water for up to 60 days. The San Francisco regional system is also susceptible to severe water shortages during periods of below average precipitation because of insufficient storage and the absence of contractual arrangements for alternative dry year supplies.

      The lack of a local, intergovernmental, cooperative governance structure for the San Francisco regional system prevents a systematic, rational, cost-effective program of water supply, water conservation, and recycling from being developed, funded and implemented.”

      California Water Code Section 81301(a), (b), (c).

Nothing in this Act changes the governance, control or ownership of the regional water system. SB 2058 has no “sunset” clause.