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, and more than 7,000 publicly-regulated drinking water systems overall. Drinking water systems serving small disadvantaged communities often lack the technical, financial, and managerial capacity to adequately provide clean and safe drinking water to their customers. Common problems faced by these small water systems include poor water quality, rising retail water rates, and an over-reliance on a single source of ground or surface water supply. As an institutional response, water system regulators increasingly are looking at consolidation of these failing systems with nearby water systems that have better water quality and greater capacity. In 2015, the California state legislature authorized the State Water Resources Control Board (the Board), via Senate Bill 88, to facilitate the consolidation of severely underperforming water systems. Despite the clear benefits, a statutory directive, and financial inducements, many small, disadvantaged communities (SDACs) have felt that consolidation is infeasible and chose not to be consolidated even while failing to effectively serve their low-income customers. Consequently, this study identified and explained the often poorly understood policies that the 58 California counties may adopt to encourage small system consolidation.

Findings of this research report are divided into two parts. The first section summarizes past cases of water systems consolidation in California. Funding from past state ballot propositions has historically been 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 consists of a review of existing county-level policy tools and an assessment of current consolidation evaluation decisions to limit community water system sprawl and encourage small system consolidation in California. Policy tools evaluated include county General Plan guidance, the roles of Local Agency Formation Commissions (LAFCOs), the roles of Local Primacy Agencies, and the roles of county Boards of Supervisors.

The author found that specific General Plan guidance for drinking water system consolidation is not available in every county, and counties appear to have adopted more specific guidance based on past water system sprawl. The involvement of LAFCOs, LPAs, and County Boards of Supervisors is critical to the success of efforts to consolidate water systems. LAFCOs are the most impactful actor at the county 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 and the cities within their remit. Without the support from the Boards of Supervisors, the roles of the LPAs are limited by their jurisdiction over only small water systems and other more influential actors in the consolidation process. The supervisors’ role is likely to have a more general impact on annexation trends 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.