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HomeMy WebLinkAbout16.-2 (Handout) AB 2536 Grayson - CASA CMUA Oppose Letter 03-18-22 Item 16. (Handout-2) CASA CMUA CALIFORNIA MV NIC IPAL UTI LI TI E$ A S S O C I A 7 1 0 N March 18, 2022 The Honorable Cecilia Aguiar-Curry, Chair Assembly Local Government Committee Legislative Office Building, Room 157 Sacramento, CA 95814 RE: AB 2536 (Grayson)—Oppose Dear Assembly Member Aguiar-Curry, The California Association of Sanitation Agencies (CASA) and the California Municipal Utilities Association (CMUA) both have an "oppose" position on AB 2536 (Grayson),which would impose new, unnecessary, and unworkable conditions for utilities to consider in setting connection and capacity charges for water and sewer infrastructure. Our associations represent a significant majority of local public agencies providing water and wastewater services in California. Water and sewer connection and capacity fees are unique in both their function and in the stringent statutory requirements that must be fulfilled in establishing these fees at the local level. While the Mitigation Fee Act governs these fees, along with other mitigation fees,connection and capacity have been identified as distinct and separate from other mitigation fees consistently by California courts and the State Legislature. Connection fees and capacity charges are one-time fees assessed on new customers that reflect the reasonable cost of providing service. Connection fees are assessed whenever an agency physically connects a structure to the water or sewer system. Capacity charges are assessed on the customer to cover the cost of maintaining or constructing system wide infrastructure necessary to meet the additional water or sewer demand for new users of the system.These fees are subject to significant statutory transparency and accounting requirements for local agencies to separately account for the expenditure of the revenues acquired by these fees, and annual reporting of the specific expenditure of these funds,with detailed descriptions of which anticipated and actual capital projects the revenues were expended for. Our organizations believe that AB 2536 is intended to require water and sewer connection and capacity fees to be established on a development-by-development basis, and further intends to limit the use of setting fees using the "buy-in"fee methodology.Water and sewer agencies do not establish connection and capacity fees based on the cost of extending service to each new development.These fees are intended to recover the costs of building infrastructure and procuring water supplies needed to service new development.Those investments must be made long before development occurs.That means these fees are calculated long before new development applies for a new service connection.Assessing fees on a development-by-development basis would prevent water and sewer agencies from considering future capacity needs based on long range capital outlay planning beyond a single development.This would be detrimental to agencies and their customers and result in higher costs for new development. This approach is also directly contrary to industry best practices for establishing the cost for a new user to buy in to their proportional share of and cost for utilizing the existing water and sewer system.The California Constitution under Proposition 26 requires there to be an equitable distribution of cost burden proportionally to all users, new and existing, of each individual water and sewer system. These fees are established at the local level, based on how they are defined in statute, with existing infrastructure value,generational equity, long-range population growth projections and the associated future capacity needs considered first and foremost. In short,these fees represent the cost to buy into and use the whole system—both existing and new features—not the cost of only the infrastructure to connect a new development to the whole system. All water and sewer utility fees are deliberated in an open public process that is directly impacted by input from local developers about planned future growth during the fee planning and adoption process. Information regarding a fee change is required to be posted 14 days prior to fee adoption and interested parties must be notified prior to the fee adoption, and this same information must be made available on the agency's website in perpetuity. Assessing these fees each time a new development is being considered (i.e. identifying the actual cost of additional service versus existing level of service) could result in inequities between users of the system and would be a tremendous and unnecessary administrative burden. Because water and sewer utilities do not have land use authority, they are not aware of or a party to deliberations about approvals for new development, and it is unclear what the mechanism for utilities to establish fees on a development-by- development basis would be. Furthermore, many special district utilities service multiple cities and counties, and if required to assess fees in this manner could be faced with considering dozens of pending development projects in multiple different jurisdictions at any given time. Assessing utility connection and capacity fees in this manner is unreasonable and impractical. For these reasons, CASA and CMUA must respectfully oppose AB 2536. We believe there is substantial evidence that the demonstrates that applying these new and irrelevant factors into the determination of water and sewer connection and capacity fees in unnecessary and would contradict statutory guidance and industry best practices for establishing the cost of delivering water and sewer service. Thank you for your consideration of our comments. Sincerely, Jessica Gauger Director of Legislative Advocacy and Public Affairs Danielle Blacet Deputy Executive Director California Municipal Utilities Association CC: Steven Stenzler, Office of Assembly Member Tim Grayson Assembly Local Government Committee Consultants Assembly Member Tom Lackey,Vice Chair,Assembly Local Government Committee Assembly Member Richard Bloom, Member, Assembly Local Government Committee Assembly Member Tasha Boerner-Horvath, Member,Assembly Local Government Committee Assembly Member James Ramos, Member,Assembly Local Government Committee Assembly Member Luz Rivas, Member, Assembly Local Government Committee Assembly Member Robert Rivas, Member, Assembly Local Government Committee Assembly Member Randy Voepel, Member, Assembly Local Government Committee