Currrent as of February 4, 2022

Senate Bill No. 634

CHAPTER 833

An act to repeal Section 57114.5 of the Government Code, to amend Sections 21530 and 21531 of the Public Contract Code, to repeal the Castaic Lake Water Agency Law (Chapter 28 of the First Extraordinary Session of the Statutes of 1962), and to create the Santa Clarita Valley Water Agency, and prescribing its boundaries, organization, operation, management, financing, and other powers and duties, relating to water districts.

[ Approved by Governor October 15, 2017. Filed with Secretary of State October 15, 2017. ]

LEGISLATIVE COUNSEL’S DIGEST

SB 634, Wilk. Santa Clarita Valley Water Agency.

Existing law, the Castaic Lake Water Agency Law, created the Castaic Lake Water Agency and authorizes the agency to acquire water and water rights, including water from the State Water Project, and to provide, sell, and deliver water at wholesale for municipal, industrial, domestic, and other purposes.

This bill would repeal the Castaic Lake Water Agency Law.

Existing law, the County Water District Law, authorizes the formation of county water districts and authorizes those districts to appropriate, acquire, and conserve water and water rights for any useful purpose and to operate water rights, works, properties, rights, and privileges useful or necessary to convey, supply, store, or make use of water for any purpose authorized by that law.

This bill would reorganize the Newhall County Water District and the Castaic Lake Water Agency into the Santa Clarita Valley Water Agency, which this bill would create, and prohibit the Castaic Lake Water Agency and the Newhall County Water District from operating as separate entities or exercising independent functions. The bill would generally specify the powers and purposes, as well as the boundaries, of the Santa Clarita Valley Water Agency and would provide that the purpose of the agency is to provide, sell, manage, and deliver surface water, groundwater, and recycled water at retail or wholesale within the agency’s territory. The bill would prescribe the composition of the board of directors of the agency.

Existing law authorizes the Castaic Lake Water Agency to prescribe methods for the construction of works and for the letting of contracts for the construction of works, structures, or equipment, or the performance or furnishing of labor, materials, or supplies, for carrying out specified provisions. Existing law requires all contracts for any improvement or unit of work when the cost estimate exceeds $5,000 to be let to the lowest responsible bidder or bidders. Existing law authorizes the agency to have work done by force account without advertising for bids and to purchase in the open market materials and supplies when the estimated cost of the work or the cost of the materials and supplies does not exceed $5,000.

This bill would instead make these provisions applicable to the Santa Clarita Valley Water Agency and would increase these cost and cost estimate limits to $30,000.

Existing law requires, for any proposal involving the dissolution of the Newhall County Water District, that the local agency formation commission forward the change of organization or reorganization for confirmation by the voters if the commission finds that a petition requesting that the proposal be submitted for confirmation by the voters has been signed, as prescribed.

This bill would repeal that provision.

Existing law, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (act), provides the sole and exclusive authority and procedure for the initiation, conduct, and completion of changes of organization and reorganization for cities and districts.

This bill would require the agency to submit an application for conditions addressing the creation of the agency to the Local Agency Formation Commission for the County of Los Angeles, as specified, and require the commission to prepare a written report, which may contain specific conditions to which the agency would be subject and which the commission deems appropriate under the act. The bill would require the agency to reimburse the Local Agency Formation Commission for the County of Los Angeles for all costs associated with the submittal, review, consideration, preparation, and determination associated with the application for conditions and the preparation of the written report.

By imposing duties on the agency and a county in connection with the operation of the agency, the bill would impose a state-mandated local program.

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 no reimbursement is required by this act for specified reasons.

Vote: majority Appropriation: no Fiscal Committee: yes Local Program: yes

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1.

The Legislature finds and declares as follows:

(a) Residents and businesses of the Santa Clarita Valley are served by several separate retail water providers. It is an inherently fragmented structure with noncontiguous service areas that has resulted in redundancies, interagency conflict, and barriers to integrated regional water management. Despite these challenges, the region’s water providers continue to provide reliable and cost-effective water service.

(b) Castaic Lake Water Agency was created pursuant to the Castaic Lake Water District Law (Chapter 28 of the First Extraordinary Session of the Statutes of 1962). The agency is a State Water Project contractor and provides wholesale water service to the Santa Clarita Valley region, which has a population of over 270,000.

(c) The agency provides retail water service to a portion of the valley through its Santa Clarita Water Division, which has approximately 30,700 service connections.

(d) Newhall County Water District is a county water district formed pursuant to the County Water District Law (Division 12 (commencing with Section 30000) of the Water Code). The district provides retail water service in the valley to approximately 9,750 service connections.

(e) Castaic Lake Water Agency is the owner of all of the outstanding stock of Valencia Water Company, which is a private company that provides retail water service in the valley to approximately 31,350 service connections.

(f) Representatives from the agency and the district began meeting in 2015 for the purpose of settling litigation between the entities arising from the agency’s purchase of the company’s stock. As the settlement discussions progressed, both sides began to see merit in and discuss the possibility of combining the two entities into a new public agency.

(g) Beginning in February 2016, the agency and the district began conducting an extensive evaluation and public process to determine whether creating a new combined public entity is in the best interest of the residents of the Santa Clarita Valley. This effort included a series of joint meetings and public workshops to gather information and public input.

(h) The agency and the district also launched an Internet Web site dedicated to the subject to inform the public and seek input, conducted two public opinion surveys, commissioned an independent third party to conduct a financial evaluation of a proposed new entity, prepared a comprehensive joint new public water district formation study, and presented to many groups and at events across the valley throughout 2016.

(i) The independent financial evaluation determined that both the agency and the district are in sound financial condition and that the formation of a new combined district would achieve operational cost efficiencies and economies of scale in project costs and pave the way for savings. The public opinion surveys also showed support for creating a new combined public entity, and the joint study determined that in addition to foundational efficiencies and cost savings, a new combined district would be much better positioned to provide improved regional water resource management.

(j) On December 13, 2016, the agency and the district held a joint public board meeting and voted to enter into an agreement to settle litigation between the two agencies. The settlement agreement includes a commitment to seek state legislation to combine the agency and the district into a new public entity.

(k) The agency and the district concluded in the settlement agreement that they conducted an open and transparent process and that ratepayer value and multistakeholder benefits have been the central priority. Based on this process, the agency and the district anticipate there will be multiple benefits to the ratepayers resulting from combining the two entities into one new water entity, including, but not limited to, economies of scale such that the new water entity’s expenses will be less than the total expenses of the individual entities.

(l) The two agencies further concluded that, given the importance of watershed-based water resource management and local regional planning, a single entity would build on and lead to greater success in water conservation, groundwater management, including conjunctive management of groundwater and surface water supplies, formation and participation in a groundwater sustainability agency, and future recycled water expansion across the Santa Clarita Valley.

(m) A single entity would also facilitate greater cooperation between the new water entity, the Santa Clarita Valley Sanitation District, and the Los Angeles County Waterworks Districts to better manage all water resources, including stormwater, and promote stewardship of natural resources in the Santa Clarita Valley.

(n) It is the intent of the Legislature that, following the enactment of this act, Valencia Water Company will be dissolved and integrated into the entity.

SEC. 1.5.

Section 57114.5 of the Government Code is repealed.

SEC. 2.

Section 21530 of the Public Contract Code is amended to read:

21530.

The provisions of this article shall apply to contracts by the Santa Clarita Valley Water Agency.

SEC. 3.

Section 21531 of the Public Contract Code is amended to read:

21531.

(a) The Santa Clarita Valley Water Agency shall have power to prescribe methods for the construction of works and for the letting of contracts for the construction of works, structures, or equipment, or the performance or furnishing of labor, materials, or supplies, necessary or convenient for carrying out any of the purposes of this act or for the acquisition or disposal of any real or personal property; provided, that all contracts for any improvement or unit of work, when the cost according to the estimate of the engineer will exceed thirty thousand dollars ($30,000), shall be let to the lowest responsible bidder or bidders as provided in this article. The board shall first determine whether the contract shall be let as a single unit or divided into severable parts. The board shall advertise for bids by three insertions in a daily newspaper of general circulation published in the agency or by two insertions in a nondaily newspaper of general circulation published in the agency or, if no newspaper is published in the agency, in any newspaper of general circulation distributed in the agency, inviting sealed proposals for the construction or performance of the improvement or work. The call for bids shall state whether the work shall be performed in one unit or divided into parts. The work may be let under a single contract or several contracts, as stated in the call. The board shall require the successful bidders to file with the board good and sufficient bonds to be approved by the board conditioned upon the faithful performance of the contract and upon the payment of their claims for labor and material. The bonds shall comply with Title 3 (commencing with Section 9000) of Part 6 of Division 4 of the Civil Code. The board may reject any bid.

(b) In the event all proposals are rejected or no proposals are received, or the estimated cost of the work does not exceed thirty thousand dollars ($30,000), or the work consists of channel protection, maintenance work, or emergency work, the board may have the work done by force account without advertising for bids. In case of an emergency, if notice for bids to let contracts will not be given, the board shall comply with Chapter 2.5 (commencing with Section 22050).

(c) The agency may purchase in the open market without advertising for bids, materials and supplies for use in any work, either under contract or by force account; provided, however, that materials and supplies for use in any new construction work or improvement, except work referred to in subdivision (b), may not be purchased if the cost exceeds thirty thousand dollars ($30,000), without advertising for bids and awarding the contract to the lowest responsible bidder.

SEC. 4.

The Castaic Lake Water Agency Law (Chapter 28 of the First Extraordinary Session of the Statutes of 1962, as amended by Chapter 1715 of the Statutes of 1963, Chapter 443 of the Statutes of 1970, Chapter 561 of the Statutes of 1971, Chapter 1252 of the Statutes of 1975, Chapter 1128 of the Statutes of 1984, Chapter 832 of the Statutes of 1986, Chapter 1119 of the Statutes of 1987, Chapter 1181 of the Statutes of 1988, Chapter 910 of the Statutes of 1989, Chapter 562 of the Statutes of 1991, Chapter 841 of the Statutes of 1997, Chapter 170 of the Statutes of 1998, Chapter 929 of the Statutes of 2001, Chapter 27 of the Statutes of 2007, and Chapter 328 of the Statutes of 2010), is repealed.

SEC. 5.

This section shall be known and may be cited as the Santa Clarita Valley Water Agency Act and reads as follows:

SANTA CLARITA VALLEY WATER AGENCY ACT

Section 1.

This act shall be known and may be cited as the Santa Clarita Valley Water Agency Act.

Sec. 2.

The Santa Clarita Valley Water Agency is hereby created, organized, and incorporated. The agency shall be managed as expressly provided in this act and the agency may exercise the powers in this act that are expressly granted or necessarily implied. The agency may include contiguous or noncontiguous parcels of both unincorporated and incorporated territory and territory included in any public district having similar powers. As used in this act and unless otherwise indicated by its context, “agency” means the Santa Clarita Valley Water Agency.

Sec. 2.5.

The purpose of the agency is to unify and modernize water resource management within the Santa Clarita Valley through the efficient, sustainable, and affordable provision, sale, management, and delivery of surface water, groundwater, and recycled water for municipal, industrial, domestic, and other purposes at retail and wholesale within the territory of the agency and to do so in a manner that promotes the sustainable stewardship of natural resources in the Santa Clarita Valley.

Sec. 3.

For purposes of this act, the initial boundaries of the agency shall be the boundaries of the Castaic Lake Water Agency, as those boundaries existed on December 31, 2017, and as confirmed by the Local Area Formation Commission for the County of Los Angeles in its final written report pursuant to Section 30.

Sec. 4.

(a) The Castaic Lake Water Agency created pursuant to the Castaic Lake Water District Law (Chapter 28 of the First Extraordinary Session of the Statutes of 1962) and the Newhall County Water District created pursuant to the County Water District Law (Division 12 (commencing with Section 30000) of the Water Code), shall be reorganized into the Santa Clarita Valley Water Agency and shall no longer operate as separate entities or exercise independent functions.

(b) The agency shall be the successor to the Castaic Lake Water Agency and the Newhall County Water District for the purpose of succeeding to all of the rights, duties, obligations, contracts, responsibilities, assets, entitlements, and liabilities of the Castaic Lake Water Agency and the Newhall County Water District, including, but not limited to, the performance or payment of any outstanding bonds described in Section 53350 of the Government Code.

(c) All property, whether real or personal, and including all moneys such as cash on hand and moneys due uncollected, and assets and liabilities of the Castaic Lake Water Agency and the Newhall County Water District shall be transferred to and vested in the agency.

(d) All employees of the Castaic Lake Water Agency and the Newhall County Water District shall become employees of the agency.

(e) If the agency establishes a contract with the Public Employees’ Retirement System, the agency shall be the successor to the Castaic Lake Water Agency and the Newhall County Water District for the purpose of providing continuation of membership in the Public Employees’ Retirement System for agency employees, and shall succeed to the former agencies’ assets and liabilities for Public Employees’ Retirement System benefits, consistent with Section 20508 of the Government Code.

(f) The agency may continue to levy, impose, or fix and collect any previously authorized charge, fee, assessment, or tax approved, imposed, and levied by the Castaic Lake Water Agency or the Newhall County Water District, or both, including, but not limited to, any rates, fees, and charges for the provision of water. Any charge, fee, assessment, or tax authorized and in effect for the Castaic Lake Water Agency or the Newhall County Water District shall remain in effect until otherwise modified, increased, or terminated by the board of directors of the agency.

(g) The agency shall be the successor in interest to the Castaic Lake Water Agency’s water supply contract with the Department of Water Resources dated August 3, 1962, as thereafter amended, for a water supply from the State Water Resources Development System, including all of the rights, responsibilities, and obligations contained in the contract, and the agency shall succeed to the legal authority held by the Castaic Lake Water Agency for the performance and enforcement of that contract.

(h) The indebtedness of the Newhall County Water District and the Santa Clarita Water Division, a retail division of the Castaic Lake Water Agency, that exists as of December 31, 2017, including acquisition costs, tax obligations, and debt financing of capital improvement projects, shall be borne by retail divisions of the agency that correspond with the Newhall County Water District and Santa Clarita Water Division areas, respectively, and paid for from the revenues of the corresponding retail divisions. Any indebtedness incurred by the agency shall not be limited by this subdivision.

(i) The agency shall continue to supply water at wholesale to Los Angeles County Waterworks District No. 36, Val Verde, but shall not serve water at retail within the boundaries of that waterworks district without that waterworks district’s consent or annexation or consolidation into the agency. Los Angeles County Waterworks District No. 36, Val Verde, upon mutual agreement between it and the agency, may be annexed or consolidated into the agency following appropriate procedures under the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Division 3 (commencing with Section 56000) of Title 5 of the Government Code). Any proposed future change of organization or reorganization involving the agency and the Los Angeles County Waterworks District No. 36, Val Verde, or any other public agency under the Local Agency Formation Commission for the County of Los Angeles on or after January 1, 2018, shall be subject to the filing with the Local Agency Formation Commission for the County of Los Angeles and shall be subject to review, consideration, and determination by the Local Agency Formation Commission for the County of Los Angeles consistent with the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Division 3 (commencing with Section 56000) of Title 5 of the Government Code).

(j) The agency shall continue to supply water at wholesale to Valencia Water Company. No later than January 31, 2018, the agency, as the successor in interest to Castaic Lake Water Agency, shall take the appropriate steps together with the board of directors of Valencia Water Company to authorize the dissolution of Valencia Water Company and the transfer of the company’s assets, property, liabilities, and indebtedness to the agency, consistent with the requirements of subdivision (k) and any other obligations of the parties. The dissolution and transfer shall be finalized no later than May 1, 2018, but the board of the agency may postpone this deadline until no later than July 1, 2018, if, by resolution, the board of the agency finds that specific circumstances require additional time. A transfer pursuant to this subdivision is not subject to the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Division 3 (commencing with Section 56000) of Title 5 of the Government Code).

(k) If Valencia Water Company or any other retail water supplier is integrated into the agency, the indebtedness of the retail water supplier that exists immediately before the integration shall be borne by the customers in the area that corresponds with the boundaries of the retail water supplier and paid for from the revenues of that area.

(l) The agency may treat the retail divisions as a single unit for purposes of operations and expenses to the extent that it is economically beneficial for the operations of the agency as a whole, but as long as any preexisting indebtedness of a retail division remains outstanding, that indebtedness shall continue to be allocated to that retail division and paid from that retail division’s rates and charges. When all such preexisting indebtedness has been retired, the agency shall dispense with the retail divisions for all purposes as soon as feasible.

Sec. 5.

The agency is divided into three electoral divisions as follows:

(a) The first electoral division shall include the real property described as follows:

Beginning at the intersection of Newhall Ranch Road and Interstate 5; thence proceeding easterly along Newhall Ranch Road to Golden Valley Road; thence proceeding northerly along Golden Valley Road to Ermine Street; thence proceeding easterly along Ermine Street and Ermine Place and the extension of Ermine Place to Whites Canyon Road; thence proceeding along Whites Canyon Road to Nadal Street; thence proceeding easterly along Nadal Street to Bermina Avenue; thence proceeding southerly along Bermina Avenue to Delight Street; thence proceeding westerly along Delight Street to Bakerton Avenue; thence proceeding southerly along Bakerton Avenue to the Bakerton Avenue right-of-way just south of the power lines approximately 135 feet south of Kimbrough Street; thence proceeding westerly and southerly along the right-of-way behind the parcels on the east side of Crossglade Avenue until Allenwick Avenue; thence proceeding southerly along Allenwick Avenue to Vicci Street; thence proceeding westerly along Vicci Street to Crossglade Avenue; thence proceeding southerly along Crossglade Avenue to its dead end and continuing due south into the parking lot until its conclusion; thence proceeding westerly and southerly and easterly along the northern, western, and southern borders of Census Block 060379200351017, going around the two apartment buildings; thence proceeding easterly along the riverbed to Highway 14; thence proceeding northeasterly along Highway 14 to the agency’s eastern border; thence proceeding clockwise along the agency’s border to the intersection of Highway 14 and the agency’s southern border; thence proceeding northerly along Highway 14 to Newhall Avenue; thence proceeding northwesterly along Newhall Avenue to Main Street; thence proceeding northerly along Main Street to Lyons Avenue; thence proceeding westerly along Lyons Avenue to Orchard Village Road; thence proceeding northerly along Orchard Village Road to McBean Parkway; thence proceeding westerly along McBean Parkway to Interstate 5; thence proceeding northerly along Interstate 5 to the point of origin.

(b) The second electoral division shall include the real property described as follows:

Beginning at the intersection of the agency’s northern border and the Los Angeles Aqueduct easement on the western border of Census Block 060379200152002, between Harmony Way and Evening Star Court; thence proceeding southerly along the Aqueduct easement to Copper Hill Drive; thence proceeding westerly along Copper Hill Drive to McBean Parkway; thence proceeding southerly along McBean Parkway to Newhall Ranch Road; thence proceeding easterly along Newhall Ranch Road to Golden Valley Road; thence proceeding northerly along Golden Valley Road to Ermine Street; thence proceeding easterly along Ermine Street and Ermine Place and the extension of Ermine Place to Whites Canyon Road; thence proceeding along Whites Canyon Road to Nadal Street; thence proceeding easterly along Nadal Street to Bermina Avenue; thence proceeding southerly along Bermina Avenue to Delight Street; thence proceeding westerly along Delight Street to Bakerton Avenue; thence proceeding southerly along Bakerton Avenue to the Bakerton Avenue right-of-way just south of the power lines approximately 135 feet south of Kimbrough Street; thence proceeding westerly and southerly along the right-of-way behind the parcels on the east side of Crossglade Avenue until Allenwick Avenue; thence proceeding southerly along Allenwick Avenue to Vicci Street; thence proceeding westerly along Vicci Street to Crossglade Avenue; thence proceeding southerly along Crossglade Avenue to its dead end and continuing due south into the parking lot until its conclusion; thence proceeding westerly and southerly and easterly along the northern, western, and southern borders of Census Block 060379200351017, going around the two apartment buildings; thence proceeding easterly along the riverbed to Highway 14; thence proceeding northeasterly along Highway 14 to the agency’s eastern border; thence proceeding counter-clockwise along the agency’s border to the point of origin.

Sec. 6.

The board of directors shall adjust the electoral division boundaries described in Section 5 by resolution pursuant to Chapter 8 (commencing with Section 22000) of Division 21 of the Elections Code.

Sec. 7.

As used in this act:

(a) “Private corporation” means and includes any private corporation organized under federal law or the laws of any state.

(b) “Public agency” means and includes the federal government, the State of California, a county, a city, a public corporation, the Metropolitan Water District of Southern California, or other public district of this state.

(c) “Purveyor” means the Los Angeles County Waterworks District No. 36, Val Verde, which is a retail water supplier that has facilities connected to the agency’s water transmission system and is under contract with the agency for water.

Sec. 8.

(a) The agency shall be governed by a board of directors that shall initially consist of 15 members as follows:

(1) The five members of the Newhall County Water District board of directors in office as of December 31, 2017.

(2) The appointed member representing the purveyor described in subdivision (a) of Section 10 and the nine elected members of the Castaic Lake Water Agency board of directors in office as of December 31, 2017.

(b) Each elected member of the board of directors shall be a resident within the agency’s service territory and shall hold office until his or her successor is elected pursuant to Section 9.

(c) Each of the initial members of the board of directors of the agency, except for the initial appointed member, are deemed to be designated as a director from the electoral division, as described in Section 5, in which his or her residence is located.

(d) Each of the initial members of the board of directors of the agency, except for the initial appointed member, shall hold office as follows:

(1) The initial terms of directors whose respective terms as a member of the Castaic Lake Water Agency or Newhall County Water District board of directors would have expired following the 2018 general election shall expire following the 2020 general election.

(2) The initial terms of directors whose respective terms as a member of the Castaic Lake Water Agency or Newhall County Water District board of directors would have expired following the 2020 general election shall expire following the 2022 general election.

(3) If any elected initial member of the board of the agency resigns, vacates, or is removed from office before the expiration of his or her initial term, the board may, in its discretion, decide not to appoint a successor. The board shall appoint a successor if the electoral division in which the vacancy occurs will have less than four members representing the electoral division on the board of directors.

Sec. 9.

(a) All elected successors of the first board of directors shall be elected at the time and in the manner provided in the Uniform District Election Law (Part 4 (commencing with Section 10500) of Division 10 of the Elections Code).

(b) Successors to the first board of directors shall be elected by the voters for each electoral division as follows:

(1) Two directors elected for each electoral division at the 2020 general election, and at every election on that four-year election cycle thereafter.

(2) One director elected for each electoral division at the 2022 general election and at every election on that four-year election cycle thereafter.

(c) Each elected director shall have his or her primary residence in and be an elector in the electoral division he or she represents. Each elected director shall serve a four-year term from the date of taking office and until the election and qualification of a successor. A director shall take office on the first Monday of the January after an election.

(d) Any vacancy in the board of directors shall be filled by a majority vote of the remaining directors in accordance with subdivision (d) of Section 1780 of the Government Code.

(e) If a director’s place of residence, as defined in Section 244 of the Government Code, is moved outside of that director’s electoral division where elected from an electoral division, and if within 180 days of the move the director fails to reestablish a place of residence within the director’s electoral division, it shall be presumed that a permanent change of residence has occurred and that a vacancy exists on the board of directors pursuant to Section 1770 of the Government Code.

Sec. 10.

(a) The initial board of directors of the agency shall include the Castaic Lake Water Agency director who was nominated by the purveyor and in office as a Castaic Lake Water Agency director as of December 31, 2017. This initial appointed director shall serve an initial term of one year that expires on January 1, 2019. The subsequent terms for the director nominated by the purveyor shall be four years.

(b) After the initial appointed director’s term expires on January 1, 2019, the office of the appointed director shall be filled as follows:

(1) Not more than 90 or less than 30 days before the expiration of the term of office of the appointed director, the purveyor shall submit a nominee for a successor appointed director to the board of directors. A nominee of the purveyor may be a director, officer, agent, or employee of the purveyor and shall be a registered voter within the County of Los Angeles or the County of Ventura. Any appointed director whose term is expiring may be nominated by the purveyor for reappointment by the board of directors as the successor appointed director. If a vacancy occurs in the office of appointed director, the purveyor shall nominate a person for appointment to the vacant office not more than 60 days after the occurrence of the vacancy.

(2) The board of directors shall appoint the nominee within 30 days after the nomination is submitted, or may within the same time period by resolution reject the nominee for cause, which shall be documented in the resolution by a detailed statement of reasons. If the board of directors rejects the nominee, the purveyor shall promptly submit a second and different nominee to the board of directors. The board of directors shall appoint the second nominee within 30 days after the second nomination is submitted, or may within the same time period by resolution likewise reject that second nominee for cause, which shall be documented in the resolution by a detailed statement of reasons. If the board of directors rejects the nominee, the purveyor shall select a third and still different nominee, which nominee shall be entitled without further board action to take an oath of office as required by law and to thereafter serve as an appointed director of the agency. A successor appointed director shall take office on the first Monday in January in odd-numbered years, or as soon thereafter as qualifying by taking the required oath of office. A successor appointed director appointed to or otherwise entitled to fill a vacancy shall take office immediately upon taking the required oath of office. A nominee of a purveyor who is the general manager of the purveyor shall be rejected for appointment only on the ground that the nominee is legally disqualified from holding the office of director by a provision of applicable law.

(c) An incumbent in the office of appointed director shall be subject to recall by the voters of the entire agency in accordance with Division 11 (commencing with Section 11000) of the Elections Code, except that any vacancy created by a successful recall shall be filled in accordance with subdivision (b).

(d) Notwithstanding anything to the contrary in this act, the position of appointed director shall be eliminated and abolished effective January 1, 2023. The position of appointed director shall be eliminated and abolished before January 1, 2023, if any of the following conditions are met:

(1) The agency acquires the purveyor or the purveyor is annexed or consolidated into the agency.

(2) The Board of Supervisors of the County of Los Angeles by an affirmative vote of a majority of its membership eliminates the appointed director position.

(e) Notwithstanding any other law, the provisions of Article 4.7 (commencing with Section 1125) of Chapter 1 of Division 4 of Title 1 of the Government Code shall not be applicable to the appointed director. The fact that the appointed director is simultaneously a director, officer, agent, or employee of the purveyor shall not in any way constitute the holding of incompatible offices under or for purposes of any common law doctrine prohibiting the simultaneous holding of these offices, and shall not disqualify the director from serving as a director of the agency or from discharging fully the responsibilities of the office of appointed director with respect to any matter coming before the board of directors of the agency for consideration, decision, determination, or other form of action.

Sec. 11.

(a) A person who may vote at any agency election held under the provisions of this act shall be a voter within the meaning of the Elections Code, residing in the electoral division of the agency in which he or she casts his or her vote. For the purpose of registering voters who shall be entitled to vote at agency elections, the county elections official is authorized, in any county in which the agency is located, to indicate upon the affidavit of registration whether the voter is a voter of the agency.

(b) In case the boundary line of the agency crosses the boundary line of a county election precinct, only those voters within the agency and within the precinct who are registered as being voters within the agency shall be permitted to vote, and for that purpose the county elections official may provide two sets of ballots within those precincts, one containing the names of candidates for office in the agency, and the other not containing those names, and it shall be the duty of the election officers in those precincts to furnish only those persons registered as voters within the agency with the ballots upon which are printed the names of the candidates for office in the agency.

(c) In a county in which the agency is located, the county elections official is hereby given authority to have printed upon the official ballots provided for voters at elections for directors a heading in the same form as that provided by the Elections Code for nonpartisan officers, which heading shall be marked “Santa Clarita Valley Water Agency,” with a subheading “For a Member of the Board of Directors, Division ____” (here inserting the number of the electoral division).

Sec. 12.

The board of directors shall hold its first meeting as soon as possible at which it shall choose one of its members to be president. The board of directors may appoint from its members additional officers and may define the duties of those officers. The board of directors shall provide for the time and place of holding its meetings and the manner in which its special meetings may be called. A majority of the board of directors shall constitute a quorum for the transaction of business.

Sec. 13.

(a) The board of directors may act by ordinance, resolution, or motion. On all ordinances the roll shall be called and the ayes and noes recorded in the journal of the proceedings of the board of directors. Resolutions and motions may be adopted by voice vote, but on demand of any member the roll shall be called. Except as provided in Section 14, an ordinance, motion, or resolution shall not be passed or become effective without the affirmative vote of a majority of the membership of the board.

(b) The enacting clause of all ordinances passed by the board shall be, “Be it ordained by the Board of Directors of the Santa Clarita Valley Water Agency as follows:”

(c) Each member of the board of directors shall receive compensation equal to the amount of compensation authorized for a Castaic Lake Water Agency director as of December 31, 2017, for each meeting of the board attended and for each day’s service rendered as a director at the request of the board. This initial compensation may be adjusted in accordance with Chapter 2 (commencing with Section 20200) of Division 10 of the Water Code.

Sec. 14.

(a) The board of directors may take action on the following items only by an affirmative vote of four-fifths of the membership of the board:

(1) Authorizing the agency to support or take action to further any amendments or efforts to amend this section.

(2) Issuing new debt in excess of ten million dollars ($10,000,000) at any one time that relates to retail functions of the agency, excluding the refinancing of existing debt. The threshold of ten million dollars ($10,000,000) shall be adjusted annually in proportion to the assessed value of real property within the agency.

(3) For the retail division of the agency that corresponds with the Newhall County Water District area, changes to the volumetric, nontiered retail rate structure that existed for the Newhall County Water District area as of December 31, 2017. This paragraph does not include changes to the tiered retail rate structure.

(b) On or before January 1, 2019, the agency shall develop a ratesetting process that includes an independent ratepayer advocate to advise the board of directors and provide information to the public before the adoption of new wholesale and retail water service rates and charges. The ratepayer advocate shall be selected by and report directly to the board of directors and shall be independent from agency staff. The ratepayer advocate shall advocate on behalf of customers within the agency’s boundaries to the board of directors. The ratepayer advocate shall have access to all pertinent agency documents and information to independently advise the board of directors and inform the public. The board of directors shall develop and adopt any necessary rules and procedures to further define the role of the ratepayer advocate. The board of directors shall not eliminate the ratepayer advocate role before January 1, 2023. On and after January 1, 2023, the board of directors may eliminate the ratepayer advocate role with an affirmative vote of four-fifths of its membership.

(c) Until December 31, 2024, the board of directors may dispense with the four-fifths vote requirement for the actions described in subdivisions (a) and (b) at any time upon an affirmative vote of four-fifths of the membership of the board of directors.

(d) On and after January 1, 2025, the board of directors may at any time dispense with the four-fifths vote required for any action described in subdivisions (a) and (b) by a majority vote of the membership of the board.

Sec. 15.

(a) No informality in any proceeding or informality in the conduct of any election, not substantially affecting adversely the legal rights of any citizen, shall be held to invalidate the incorporation of the agency and the legal existence of the agency and all proceedings in respect to the incorporation and the legal existence of the agency shall be held to be valid and in every respect legal and incontestable.

(b) An action to determine the validity of any bonds, warrants, promissory notes, contracts, or other evidences of indebtedness of the kinds authorized by this act may be brought pursuant to Chapter 9 (commencing with Section 860) of Title 10 of Part 2 of the Code of Civil Procedure.

Sec. 16.

At its first meeting, or as soon as practicable, the board of directors shall, by a majority vote of the membership of the board, appoint a general manager, secretary, and treasurer or auditor. The board shall define the duties of these appointees and fix their compensation in accordance with Division 12 (commencing with Section 30000) of the Water Code. The board may employ additional assistants, employees, engineers, attorneys, professionals, and other consultants as the board deems necessary to efficiently maintain and operate the agency.

Sec. 17.

(a) Except as otherwise provided in this act and in subdivision (b), the agency has and may exercise the powers expressly granted or necessarily implied in, and may operate in accordance with, Part 5 (commencing with Section 31000), Part 6 (commencing with Section 31300), Part 7 (commencing with Section 31650), and Part 8 (commencing with Section 32200) of the County Water District Law (Division 12 (commencing with Section 30000)) of the Water Code. The agency may exercise these powers throughout its territory.

(b) The agency may exercise any functions or class of services that are not certified by the Local Agency Formation Commission for the County of Los Angeles under subdivision (e) of Section 29 only pursuant to application to, and approval of, the Local Agency Formation Commission for the County of Los Angeles, as provided in that section.

Sec. 18.

The agency shall have the power to do all of the following:

(a) To acquire, hold, and utilize water and water rights, including, but not limited to, water available from the state under the State Water Resources Development System, and to provide, sell, manage, and deliver surface water, groundwater, and recycled water for municipal, industrial, domestic, and other purposes at retail and wholesale throughout the territory of the agency.

(b) To construct, operate, and maintain works to develop energy, including, but not limited to, hydroelectric, solar, wind, and other renewable sources, inside or outside the agency for use by the agency in the operation of its works or as a means of assisting in financing the construction, operation, and maintenance of its projects for the control, conservation, diversion, and transmission of water and to enter into contracts for the sale of the energy. The energy may be marketed only at wholesale to any public agency or private entity, or both.

(c) To enter into contracts with any public agency or private entity engaged in the generation or distribution of electric energy for the right to use falling water, facilities, or real property of the agency, either inside or outside the agency, for energy generation or distribution purposes.

(d) To develop, treat, distribute, manage, and reclaim water, and to store and recover water from groundwater basins located wholly or partially inside or outside the boundaries of the agency and, in exercising that power, to make and enter into contracts allowing that storage and recovery.

(e) To join with one or more public agencies, private corporations, or other persons for the purpose of carrying out any of the powers of the agency, and for that purpose to contract with other public agencies or private corporations or persons for the purpose of financing those acquisitions, constructions, and operations. The contracts may provide for contributions to be made by each party to the contract and for the division and apportionment of the expenses of the acquisitions and operations, and the division and apportionment of the benefits, the services and products from the contract, and may provide for any agency to effect the acquisitions and to carry on the operations, and shall provide in the powers and methods of procedure for the agency the method by which the agency may contract. The contracts with other public agencies or private corporations or persons may contain other and further covenants and agreements as may be necessary or convenient to accomplish the purposes of the contract. In addition to and without limiting all of the other powers of the agency, the agency may contract with the State of California for delivery of water under the State Water Resources Development System. Contracts under this subdivision include those made with the federal government under the Federal Reclamation Act of June 17, 1902, as amended, or any other act of the United States Congress enacted permitting cooperation.

(f) To require reporting to the agency of all production, distribution, and reclamation of water within the agency in excess of 10 acre-feet per annum.

(g) To join with one or more local agencies to form a groundwater sustainability agency pursuant to Section 10723.6 of the Water Code and to participate with a groundwater sustainability agency to develop and implement a groundwater sustainability plan within the agency in accordance with Chapter 6 (commencing with Section 10727) of Part 2.74 of Division 6 of the Water Code.

(h) To contract with the purveyor or successor in interest to the purveyor.

(i) (1) To construct works along and across any stream of water, watercourse, channel, flood control channel, storm channel, canal, ditch or flume, street, avenue, highway, or across any railway that the route of the works may intersect or cross, if the works are constructed in a manner as to afford security for life and property and the agency restores the crossings and intersections to their former state as near as may be or in a manner not to have impaired unnecessarily their usefulness. This paragraph grants the agency a statutory franchise right and therefore the agency may not be charged any use fees or be made subject to any conditions that unreasonably interfere with the franchise rights.

(2) The statutory franchise right and right-of-way granted in paragraph (1) is hereby given, dedicated, and set apart to locate, construct, and maintain the works along and across any street or public highway and over and through any of the lands that are now or may be the property of this state, and to have the same rights and privileges as have been or may be granted to cities within the state. Any use under this section of a public highway shall be subject to the provisions of Chapter 3 (commencing with Section 660) of Division 1 of the Streets and Highways Code.

Sec. 19.

The financial or other interest of any appointed director in any contract between the purveyor or successor in interest to the purveyor and the agency, or the fact that an appointed director may hold the position of a director, officer, agent, or employee of the purveyor or successor in interest to the purveyor, shall not constitute a violation of Section 1090 of the Government Code, and that interest or fact shall not render the contract void or make it avoidable under Section 1092 of the Government Code, at the instance of any party, if either the fact of the interest or the fact of the relationship as director, officer, agent, or employee, or both, are disclosed to the board of directors of the agency and noted in its official records and the board authorizes, approves, or ratifies the contract by a vote of its membership sufficient for the purpose without counting the vote of the interested appointed director.

Sec. 20.

Notwithstanding any other law, the agency may fix, levy, or collect any standby or availability charge or assessment in connection with the provision of water service pursuant to the procedures set forth in the Uniform Standby Charge Procedures Act (Chapter 12.4 (commencing with Section 54984) of Part 1 of Division 2 of Title 5 of the Government Code).

Sec. 21.

The agency may impose and collect capacity charges and connection fees pursuant to Section 66013 of the Government Code.

Sec. 22.

The agency may prescribe, by resolution or ordinance, that when any capacity charges or connection fees adopted pursuant to this act become due and are unpaid under and in accordance with the rules and regulations concerning those charges and fees, the charges and fees may be secured and collected in accordance with the procedures specified in Sections 23 and 24.

Sec. 23.

The amount of any delinquent and unpaid capacity charges or connection fees shall be collected with the annual taxes next levied upon the property that is subject to the imposition of a capacity charge or connection fee, and that amount constitutes a lien on that property as of the same time and in the same manner as the tax lien securing annual property taxes. If during the year preceding the date on which the first installment of real property taxes that evidence the charges appears on the roll, any real property to which the lien would attach has been transferred or conveyed to a bona fide purchaser for value, or if a lien of a bona fide encumbrancer for value has been created and attaches to the real property, the lien that would otherwise be imposed by this section shall not be added to and become part of the annual assessment and it shall not attach to the real property. A county in which the agency is located shall deduct from the capacity charges and connection fees collected by it an amount sufficient to compensate the county for costs incurred in collecting the delinquent and unpaid capacity charges and connection fees. The amount of that compensation shall be fixed by agreement between the board of supervisors of the county and the board of directors of the agency.

Sec. 24.

(a) If delinquent and unpaid capacity charges or connection fees are determined to exist by the agency, the amount of those charges or fees may, in the discretion of the agency, be secured at any time by filing for record in the office of the county recorder of the county in which the real property is located a certificate specifying the amount of those charges and fees and the name and address of the person liable for the delinquent and unpaid charges or fees.

(b) From the time of recordation of the certificate, the amount required to be paid, together with interest and penalties, constitutes a lien upon all real property in the county owned by the person or later acquired before the lien expires. The lien shall have the force, priority, and effect of a judgment lien and shall continue for 10 years from the date of the filing of the certificate, unless sooner released or otherwise discharged. The lien may, within 10 years from the filing of the certificate or within 10 years from the date of the last extension of the lien in the manner provided in this subdivision, be extended by filing for record a new certificate. From the time of that filing, the lien shall be extended with respect to the real property in that county for 10 additional years unless sooner released or otherwise discharged.

Sec. 25.

Any bonds issued by the agency are hereby given the same force, value, and use as bonds issued by any city and shall be exempt from all taxation within the state.

Sec. 26.

(a) Except as otherwise provided in this act, the County Water District Law (Division 12 (commencing with Section 30000) of the Water Code) shall govern the formation, operation, and dissolution of all improvement districts, so far as they may be applicable.

(b) The board of directors may advance general funds of the agency to accomplish the purposes of an improvement district formed to incur bonded indebtedness or for any other purpose for which an improvement district may be created and, if the improvement district is formed to incur bonded indebtedness, may repay the agency from the proceeds of the sale of the bonds, or if the improvement district is formed for any other purpose for which an improvement district may be created, in the formation of the improvement district, provide that the agency shall be repaid with interest at a rate not to exceed the maximum rate per annum authorized by Section 31304 of the Water Code from the special taxes levied exclusively upon the taxable property in the improvement district.

(c) Interest on any bonds issued by the agency coming due before the proceeds of a tax levied at the next general tax levy after the sale of the bonds are available may be paid from the proceeds of the sale of the bonds. The percentage of the proceeds of any sale of the bonds shall not exceed the maximum interest rate authorized, for other purposes, by Section 31304 of the Water Code.

Sec. 27.

The agency may contain lands situated in more than one county, and the agency may annex lands situated in another county.

Sec. 28.

The provisions of this act are severable. If any provision of this act or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

Sec. 29.

(a) On or before January 31, 2018, the agency shall submit an application for conditions addressing the creation of the agency to the Local Agency Formation Commission for the County of Los Angeles. The application shall include a copy of this act, a map and description of the boundaries of the agency, and a plan for providing services that includes the information described in Section 56653 of the Government Code, as applicable. The plan for providing services shall include Valencia Water Company, which will be integrated into the agency pursuant to subdivision (j) of Section 4. The application for conditions shall identify the functions or class of services that were being exercised by the Castaic Lake Water Agency and Newhall County Water District on December 31, 2017.

(b) The Local Agency Formation Commission for the County of Los Angeles shall hold a noticed public hearing regarding the application no later than 60 days after the submission of the application. The Local Agency Formation Commission for the County of Los Angeles shall prepare a written report, which may contain specific conditions pertaining to the formation of the agency as the commission may deem appropriate under the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Division 3 (commencing with Section 56000) of Title 5 of the Government Code). A condition specified in the written report shall be consistent with this act and shall be consistent with and subject to Sections 56853 and 56886 of the Government Code. The written report shall be completed and posted on the Local Agency Formation Commission for the County of Los Angeles Internet Web site and made available, upon request, to the public not less than five days before the date specified in the noticed hearing.

(c) Within 30 days of the public hearing, the Local Agency Formation Commission for the County of Los Angeles shall approve a final written report.

(d) Any specific conditions pertaining to the agency in the Local Agency Formation Commission for the County of Los Angeles final written report shall be applicable and binding upon the agency to the extent the conditions are not inconsistent with this act and Sections 56853 and 56886 of the Government Code.

(e) In addition to any conditions, the Local Agency Formation Commission for the County of Los Angeles shall certify in the written report the functions or class of services that were being exercised by the Castaic Lake Water Agency and the Newhall County Water District on December 31, 2017. Any other functions or class of services that are authorized by the act, but are not certified by the Local Agency Formation Commission for the County of Los Angeles, may only be exercised pursuant to application to, and approval of, the Local Agency Formation Commission for the County of Los Angeles pursuant to Sections 56824.10 to 56824.14, inclusive, of the Government Code.

(f) Section 99 of the Revenue and Taxation Code does not apply to this section.

(g) Except as provided in this section as it relates to the imposition of conditions, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 does not apply to the agency’s application for conditions.

(h) Notwithstanding any other provision in this act, the Local Agency Formation Commission for the County of Los Angeles shall not impose any condition on the agency that requires a protest proceeding or an election, as described in Part 4 (commencing with Section 57000) and Part 5 (commencing with Section 57300) of Division 3 of Title 5 of the Government Code, respectively.

(i) The agency shall reimburse the Local Agency Formation Commission for the County of Los Angeles for all costs associated with the submittal, review, consideration, preparation, and determination associated with the application for conditions and the preparation of the written report.

Sec. 30.

Nothing in this act shall affect the application of any local, state, or federal law to the development of property within the agency.

Sec. 31.

(a) As a pilot program, the agency is authorized to award contracts for recycled water program capital facilities construction projects over five hundred thousand dollars ($500,000) using the design-build contracting process or using construction manager at-risk contracts if, on or before September 30, 2018, the agency has entered into a community workforce agreement with the Los Angeles/Orange Counties Building and Construction Trades Council that applies to all recycled water program capital facilities construction contracts over five hundred thousand dollars ($500,000).

(b) The pilot community workforce agreement shall include provisions to encourage local participation in contracts from within the Santa Clarita Valley and surrounding communities to provide work opportunities within the local community workforce. The pilot community workforce agreement shall include provisions that support hiring opportunities for local military service veterans.

(c) The pilot community workforce agreement shall be for a term of five years, and may be renewed or modified for additional five-year terms upon approval of the board of directors. If the board approves the renewal or modification of the pilot community workforce agreement for additional terms, the board shall have the authority to award contracts in accordance with this section during any additional terms.

(d) The pilot community workforce agreement shall comply with Section 2500 of the Public Contract Code.

(e) Any payment or performance bond written for the purposes of this section shall be written using a bond form developed by the agency.

(f) For purposes of this section, the following definitions apply:

(1) “Best value” means a value determined by objective criteria related to the experience of the entity and project personnel, project plan, financial strength of the entity, safety record of the entity, and price.

(2) “Construction manager at-risk contract” means a competitively procured contract awarded by the agency, to either the lowest responsible bidder or by using the best value method, to an individual, partnership, joint venture, corporation, or other recognized legal entity that satisfies all of the following conditions:

(A) Is appropriately licensed in this state, including, but not limited to, having a contractor’s license issued by the Contractors’ State License Board.

(B) Guarantees the cost of a project and furnishes construction management services, including, but not limited to, preparation and coordination of bid packages, scheduling, cost control, value engineering, evaluation, preconstruction services, and construction administration.

(C) Possesses or obtains sufficient bonding to cover the contract amount for construction services and risk and liability insurance, as may be required by the agency.

(3) “Design-build contracting process” means the process described in Chapter 4 (commencing with Section 22160) of Part 3 of Division 2 of the Public Contract Code, except that subdivision (c) of Section 22164 of the Public Contract Code shall not apply.

SEC. 6.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because the only costs that may be incurred by a local agency or school district are the result of a program for which legislative authority was requested by that local agency or school district, within the meaning of Section 17556 of the Government Code and Section 6 of Article XIII B of the California Constitution.

SB 634