Adopting County Policies which Limit Public Water System Sprawl and Promote Small System Consolidation

Adopting County Policies which Limit Public Water System Sprawl and Promote Small System Consolidation

Larry Lai

Executive Summary

The state of California currently contains more than 3,000 active community water systems, andmore than 7,000 publicly-regulated drinking water systems overall. Drinking water systems servingsmall disadvantaged communities often lack the technical, financial, and managerial capacity toadequately provide clean and safe drinking water to their customers. Common problems faced bythese small water systems include poor water quality, rising retail water rates, and an over-relianceon a single source of ground or surface water supply. Water system regulators increasingly viewconsolidation of these failing systems with nearby water systems that have better water quality andgreater capacity as an effective institutional response to address the issue. In 2015, the California statelegislature authorized the State Water Resources Control Board (the Board), via Senate Bill 88, tofacilitate the consolidation of severely underperforming water systems. Despite the clear benefits, astatutory directive, and financial inducements, many small, disadvantaged communities (SDACs) havefelt that consolidation is infeasible and chose not to be consolidated even while failing to effectivelyserve their low-income customers. Consequently, this study identified and explained the oftenpoorly understood policies that the 58 California counties may adopt to encourage small systemconsolidation.

Findings of this research report are divided into two parts. The first section summarized past cases ofwater systems consolidation in California. Funding from past state ballot propositions has historicallybeen the only means by which the state has subsidized the costs of consolidation for both receivingand subsumed water systems. The second part of the analysis consisted of reviewing existing countylevel policy tools and assessing current consolidation evaluation decisions to limit community watersystem sprawl and encourage small system consolidation in California. Policy tools evaluated includecounty General Plan guidance, the roles of Local Agency Formation Commissions (LAFCOs), the rolesof Local Primacy Agencies, and the roles of county Boards of Supervisors.

I found that specific General Plan guidance for drinking water system consolidation is not availablein every county, and counties appear to have adopted more specific guidance based on past watersystem sprawl. The involvement of LAFCOs, LPAs, and County Boards of Supervisors is critical tothe success of efforts to consolidate water systems. LAFCOs are the most impactful actor at thecounty level because of their authority in approving and modifying the Sphere of Influence (SOI) formunicipalities. Boards of Supervisors’ participation in the consolidation of water systems could beintegral to the success of the efforts by putting pressure on and/or encouraging the actors above andthe cities within their remit. Without the support from the Boards of Supervisors, the roles of the LPAsare limited by their jurisdiction over only small water systems and other more influential actors in theconsolidation process. The supervisors’ role is likely to have a more general impact on annexationtrends and not on specific consolidation efforts. Problems with funding support are a hindranceto the success of consolidation projects. Decreasing transaction costs for consolidation could beessential to actualizing a sizable number of consolidations in the near future.