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volume 2 - resource management Strategies

For water systems that received either low interest loans through the DWSRF program or grants through Propositions 50 and 84, these funds are used to design and build the project. The funds are not used for ongoing operation and maintenance of the water project. Water utilities must pay for the operation and maintenance costs, which can be significant, through water rates or other revenues.

Regionalization/Consolidation

One way to improve the economy of scale (resulting in the potential for many benefits including lower costs) is to increase regionalization of water supply systems. This can be achieved by physical interconnections between water systems or managerial coordination among utilities. CDPH has established a requirement for consolidation to be evaluated as part of every project funded under the available financial assistance programs. To successfully address deteriorating infrastructure for the hundreds of smaller public water systems in California, regionalization and consolidation may be necessary on a larger scale. It is not cost effective for a small system to fully replace aging and deteriorated sources, treatment plants, and distribution systems. However, with a larger rate base to spread costs across, the economies of scale improve for consolidated systems. Managerial consolidation of water districts, even where the boundaries are not contiguous, can provide great savings to the consumers by sharing the costs of oversight and management of the systems, thus freeing up funds to be used for system upgrades.

Environmental Justice

Interest in environmental justice issues has heightened as a result of nitrate contamination problems in public water systems, particularly those in agricultural areas such as the Central Valley. It is the role of the federal government to ensure that, in the development and implementation of new regulations, disadvantaged communities are protected at levels afforded to other demographic communities. Presidential Executive Order 12898 establishes a federal policy for incorporating environmental justice into federal agencies’ missions by directing agencies to identify and address disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority and low-income populations.

Each of the three major water system funding programs implemented by CDPH provide some special financing for water systems that serve areas with relatively low median household income (MHI). For example, the DWSRF can provide grant funds and zero-interest loans to water systems serving a community with a low MHI. Proposition 50 funding has a target goal of 25 percent of the funding to be provided to low-MHI communities. A significant portion of the Proposition 84 funds allocated to drinking water are specifically targeted at small disadvantaged communities with contamination problems. Funding from both Propositions 50 and 84 is limited due to the one-time allocation specified for drinking water.

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caLifoRnia WateR PLan | update 2009

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