A drone provides a view of the Tehachapi Control Structure and the Tehachapi Afterbay, part of the California State Water Project. Photo by Ken James / DWR

CA WATER COMMISSION: Regional conveyance workshop overview; Financing mechanisms

In recent months, the California Water Commission has been gathering public and expert input related to conveyance projects as part of their work in assessing the state’s role in financing water conveyance projects that can help meet needs in a changing climate, a task assigned to the Commission in action 19.4 in the Water Resilience Portfolio.  

At the February Commission meeting, Commissioners received a briefing on the recent regional public conveyance workshops and heard from an expert panel on funding mechanisms and challenges.

Regional conveyance workshop overview

Lisa Beutler, an executive facilitator with Stantec, presented a synthesis of the stakeholder discussions from the four regional conveyance workshops.  These workshops, held in December of 2020 and January of 2021, sought public input on water-related challenges, impacts of and preparation for climate change, criteria for assessing resilience, public benefits of conveyance, utilization of partnerships, and financing mechanisms and challenges.

The workshops were broken up into four regions.  The Southeastern California workshop focused on the Eastern Sierras, Inyo, and Mono Counties south to the Imperial Valley.  The Southern California workshop included all of the significant urban Southern California water systems. The Northern California workshop included the Sierra foothills as well as the North Coast.  The Central California workshop included the San Joaquin and the Sacramento Valley. 

Altogether, there were about 500 participants.  Ms. Beutler noted that although they did location-specific invitations, many of the workshops were attended by people statewide.  She attributed this to a general interest in the topic and interest in what people in other regions were saying.

The workshops were an opportunity to provide definitions, a need identified in their pre-workshop interviews, where one of the first questions was, what do you mean by ‘resilient conveyance.’ So at the beginning of each workshop, Executive Officer Joe Yun provided definitions of resilience, conveyance, and other terms related to the discussion.

Our definition of conveyance included both green and gray infrastructure, as well as governance,” said Ms. Beutler. “By making that topic a little bit more expansive, we were able to get a very robust conversation.”

Workshop Themes

Ms. Beutler then recapped some of the overall themes, noting that while there was some regional variation, there were consistent themes across all of the workshops.

One size does not fit all

Clearly, there were considerable differences in the size of the agencies, the resources that were available to them, the demographics and their customer base, so how people were talking about conveyance had a lot to do with who their customer was and setting in which they were working.

Some of the solutions that would work in one place simply would not work in another because of the hydrology, the climate, the physical location within the conveyance systems, or where the systems were being operated, so it was important to take in this nuance,” said Ms. Beutler.

Conveyance across space and time

Participants noted that conveyance happens at all scales, from watershed to premise plumbing.  So in thinking holistically about the approach to a policy on conveyance, there are many options about where to intervene and what to support in the system.

Conveyance includes all kinds of different structures, both green and gray. It includes natural infrastructures like the forest meadows, rivers, and aquifers that provide conveyance services that aren’t typically thought of in the older definitions of conveyance. 

Conveying water across time, particularly for people that are working with extensive systems or thinking about the systems from mountain to tap, the idea of when things occurred was really important,” said Ms. Beutler. “Time was an important factor – how things were delivered, what time they were delivered, and the way that related to other needs and uses was a key part.  This offers you a lot of ideas about ways that you can provide support for a conveyance system that maybe weren’t available under some of the more traditional conversations.”

An expansive view of public benefits

There was an ongoing conversation as to what a public benefit is.  Workshop participants thought about benefits in large ways, such as job creation for an economy trying to recover from a pandemic, improving watershed function, restoring aquifer health, or flood management.

Most people, when they talked about conveyance, were talking about water supply, but there was one area in particular where they said, ‘you have to think about this in terms of flood as well,'” said Ms. Beutler. “An improvement in emergency response would be a public benefit and more. So this more holistic and flexible view of benefits expands the list of potential projects.”

Achievement of environmental and social justice

Environmental and social justice were raised continuously throughout the workshops.

I’ve been doing these kinds of meetings for many years,” Ms. Beutler said. “This year, in particular, across all of the public settings that I’m working in, the awareness of all of the communities about the importance of this topic has really increased.  Environmental and social justice is not an end state; it’s a continuous process. It’s a journey; it’s not a destination.”

Participants also said it was essential to incorporate members of the community into the publicly-funded projects not as just recipients but as designers and as decision-makers, as well as recipients of the benefits, so things are not done to people, but with them. 

Participants also said it was to understand the historical context of conveyance, who has been left out, who has been passed by, and who has been disadvantaged by historic legacy decisions.  The state also has a robust and thoughtful human right to water policy that continues to expand as well as people’s understanding of it.

Stakeholders and partnerships

Stakeholders and partnerships are critical, not just for disadvantaged communities but for everyone. 

The concept of co-creation, the idea of bringing in multiple benefits and financing just increases what your options are, and it’s a great way to improve your outcomes,” said Ms. Buetler.

Funding beyond capital costs

When it comes to funding, participants spoke about the significant limitations, especially for smaller systems, who may get help for the capital improvements; however, project funding is needed at all stages for planning, design, facilitation, and operations and maintenance.   

One thing participants spoke about was how technical assistance could help break down barriers to entry and promote success,” said Ms. Beutler. “A lot of people feel like they can’t even compete in these processes because they don’t have sufficient tools or resources to do so.  So thinking about the full funding stream, and how you might help with that, particularly for disadvantaged communities that would include technical assistance.”

Need for technology investment

Participants spoke about the technologies becoming available, such as forecast informed reservoir operation and better use of LIDAR data and the Airborne Snow Observatory.  They also talked of location technologies and reoperation where water can be delivered more efficiently because, with better technology, the gates and time of delivery can be better managed.

Financial challenges and opportunities

Agency creditworthiness can be an issue.  For some agencies, it is relatively easy to obtain financing, while for other agencies, not so much, so helping with loan guarantees might be an option.

In terms of financial challenges, the price tag of conveyance projects is an issue.  Also, the way that grant processes work can be a barrier.  They described grant processes as creating ‘minor slices,’ making it hard to get to the holistic types of project approaches.  The way that the reimbursement requirements are set up and the financial and technical burden to apply is a barrier.  CEQA and permitting take a long time and are very costly.  Participants were interested in finding out if there was a way to improve that.

There were larger philosophical conversations about beneficiary pays, and is that always a ratepayers issue that rolls right back to the public benefits conversations,” said Ms. Beutler.

As for opportunities, participants spoke about bonds, public-private partnerships, and low-interest loans.  There was a suggestion to consider a State Revolving Fund for water supply or a state infrastructure bank.  Workforce programs like AmeriCorps might help get labor into locations that need help with operations and maintenance.  Public goods surcharge or a green tax was also mentioned.  Participants liked the idea of grants, such as the Integrated Regional Water Management Program, that allow the regions to apply the funds more directly to that region’s needs.

Regional variations

Prior to the workshops, they conducted a pre-workshop survey, which had about 250 responses. 

I want to just caution you, though, that there’s nothing about this is that statistically significant,” said Ms. Beutler. “I certainly wouldn’t use these for making any final decisions; we mostly used them to generate conversation.”

People were asked to assess the criteria the state might use if they were to move forward with conveyance projects.  Participants felt the most important thing was to look at resilient design and the degree to which climate change is embedded in the project’s design.  Two respondents said they didn’t think it was important to do multiple benefits, but Ms. Beutler said they were outliers as people absolutely thought it was important to do multiple benefits.  There was also a lower score on the importance of governance and planning; during the discussions, participants had said they didn’t know what it meant.

Breaking those results down by region, there was some variation.  Ms. Beutler pointed out that people’s thoughts about climate governance and planning didn’t really vary, depending on the location.

Another question asked what kinds of climate-resilient conveyance projects should be resourced first.  The list of options is shown on the slide below left; the responses on below, right. 

Ms. Buetler pointed out that there was a significant amount of consistency with people’s answers, except for the Central region.

In terms of the first priority, most everybody said local and regional self-sufficiency would be their priority in terms of funding priorities, except in the Central Valley,” she said. “The Central Valley picked out SGMA, which that doesn’t surprise me at all.  Another one that popped out as very important and less important to the others was the State Water Project and the Central Valley Project for the Central Valley, and obviously, that’s just going to make sense.”

Southeastern Region

During the Southeastern California workshop, they heard a lot about environmental concerns with the Salton Sea and the cross-boundary issues with the Colorado River and Mexico.

What everyone wanted us to remember is the historical context of conveyance and how it could be viewed with suspicion for this particular region,” she said. “The local geography was a problem; it was very remote, very spread out, so absolutely one size would not fit all in this particular region.”

Central region

For the Central region, subsidence issues with the State Water Project and the Central Valley infrastructure and disadvantaged communities and human right to water was a big topic.  Also, SGMA and groundwater banking.  The central workshop also included the Central Coast.   This is an area where participants spoke about flood management.

Southern California

This region spoke about partnerships with different areas of the state. This particular region has a lot of connectivity, so there were conversations about wholesalers helping retailers through interties.  There were also conversations about the relationship with the Colorado River and other basin states.  There was also a larger conversation about conveyance, recycling, and desalination.

Northern California

This region included the Mountain Counties, which have very old infrastructure that includes old flume canal systems and a limited ratepayer base.  There are natural conveyance systems that really could use support which would really benefit the overall system. This particular region felt it was essential to build a better connection of the upper and lower watersheds so that everyone understood the full system implications of decisions.

Environmental uses were discussed, as well as the impacts of wildfire on the overall conveyance system.  They also spoke about using interties to promote local resilience.  Most of the local systems in these very rural areas are stranded, something that was brought to light after the Paradise Fire, so rethinking conveyance in those terms.

In conclusion

Ms. Beutler noted that it took a lot of logistics to do virtual workshops with about 500 people, so there was a lot of support from Commission staff and the hosts. 

People were incredibly generous with their time, and they were incredibly gracious and generous with the way they share their thoughts. So we’ve learned a lot from this process, and it was truly a joy to get to work on it.”

DISCUSSION HIGHLIGHTS

Public-private partnerships

Commissioner Curtin asked if public-private partnerships were discussed much. “One of the key elements that people talk about is the fact that most funding is focused on project completion, but management and long-term costs are left to the locals,” he said. “One thing about public-private partnerships, when done properly, is that the private sector doesn’t see the returns on their investments; they only see it in the long-run. The private sector is not only good at coming up with innovative designs; they’re interested in the long-term lifespan because if it fails in the middle somewhere, that’s where they lose. They don’t make their money upfront. Any good PPP project has a condition that the project has a lifespan. And at the end of that predicted lifespan, it should be in good shape to turn over to the public entity.”

Ms. Beutler said it wasn’t talked about much, but there was a lot of awareness about how this has been helpful in the transportation sectors and others and the idea that it could be applied in the water sector.

Commissioner Curtin noted that people consider it a financial thing, but it’s not. “It’s not a source of funding for a project so much as they get their benefits in the long term performance,” he said. 

Northern California needs

Commissioner Curtin said that local interties for Northern California are critical. “For this to be successful, we’re going to have to make sure the plans, whatever they are, meet the mission-critical needs of the locals,” he said. “But at the same time, we can’t expect them to sort out what their regional interconnectivity should be. They’re too busy trying to figure out how to maintain what they have and make it work in terms of sustainability and resilience. That’s where we have to come in and figure out how do we make the connections inter regionally in the most sustainable and resilient way? I’m not sure I’ve seen that addressed yet, because we’re just still probing what the local issues are. But at some point, there’s going to have to be an oversight of, how do we actually connect?

Commissioner Cordalis asked about the priority expressed in Northern California to make sure that the top of the watersheds are connected to the lower parts of the watershed.

One of the things that the North was trying to express was that there are tremendous investments made in lower parts of the system, but it’s the upper part of the system that makes the system work,” said Ms. Beutler. “So there’s an inherent benefit for those at the receiving end of a water system to invest in the upper part of the watershed. So they are asking that people think about the system holistically and understand that the health of the forest is going to affect the health of your water supply system at the endpoint.

Financing mechanisms and challenges

The bulk of the meeting was spent on the financing mechanisms and challenges panel, which provided information about various public and private financing mechanisms and finance-related challenges.  And here is where we part ways, my friend.   However, I’ve provided the power points, the timings on the videos, and links to more information to make your journey a little easier.

The panel presentations begin at about 2:15:00 on the webcast

PowerPoint Presentation: State Water Resources Control Board Funding Programs, State Water Resources Control Board

(about 2:15:00) Leslie Loudon, Deputy Director of the Division of Financial Assistance at the State Water Board discusses Drinking Water and Clean Water State Revolving Funds, Water recycling, Underground tank cleanup, and other funding programs.  More information here.

PowerPoint Presentation: California Infrastructure and Economic Development Bank – IBank

(about 2:25:00)  The IBank was created by the legislature in 1994 to provide financial assistance to support infrastructure and economic development in California.  Their many programs include the Climate Catalyst Revolving Loan Fund, a revolving loan fund focused on increasing the speed and scale at which technologically-proven, critical climate solutions are deployed; the California Lending for Energy and Environmental Needs Center (CLEEN) Program for climate change & green programs; a small business finance center; and bond provider.  Learn more here.

PowerPoint Presentation: Reclamation Water Infrastructure Financing, U.S. Bureau of Reclamation

(about 2:50:00) The Bureau of Reclamation has some historical operations & maintenance funding, the WIIN Act, and other programs.

PowerPoint Presentation: Enhanced Infrastructure Financing Districts Overview, Kosmont Companies

(about 4:15:00)  Provides an overview of Enhanced Infrastructure Financing Districts (EIFDs), the types of projects that can be funded, and case studies.

PowerPoint Presentation: SFPUC Green Bonds Program, San Francisco Public Utilities Commission

(about 4:44:00)  An overview of green bonds and SFPUC’s green bond program.  Green bonds are like conventional bonds in how they are sold and repaid, with proceeds are used for projects with climate mitigation and/or adaptation benefit.  

PowerPoint Presentation: Collaborative Finance Structures, Blue Forest Conservation

(about 4:59) On overview of Forest Resilience Bonds (FRBs), which as public-private partnerships to finance/fund collaborative watershed projects.  Also provides case studies.

PowerPoint Presentation: Water Financing: Considerations for Climate Resilience Projects, Public Policy Institute of California

The PPIC provides insights on water financing, water affordability, and fiscal orphans.

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