BOARD AGENDA MEMORANDUM
SUBJECT:
Title
Update on Santa Clara Valley Water District’s Membership in the San Luis and Delta-Mendota Water Authority.
End
RECOMMENDATION:
Recommendation
Receive information on the Santa Clara Valley Water District’s (Valley Water) membership in the San Luis and Delta-Mendota Water Authority (SLDMWA) and the benefits that Valley Water receives from that membership.
Body
SUMMARY:
This information item is in response to a future agenda item request from Directors Santos and Varela at the March 26, 2019, Board of Directors meeting.
Due to severe groundwater overdrafting and land subsidence early in the last century, Valley Water entered into contracts to receive water supplies from the State Water Project (SWP) in 1961, and from the federal Central Valley Project (CVP) in 1977. These imported supplies were used successfully to recharge Santa Clara County’s depleted groundwater basins, halt land subsidence, and supply high quality drinking water to the people of Santa Clara County. Today, Santa Clara County relies on water conveyed through the Sacramento-San Joaquin Delta by the SWP and CVP to meet, on average, 40 percent of its annual water needs. The San Luis & Delta-Mendota Water Authority (SLDMWA) was formed in 1990 to assume the responsibility of operation and maintenance (O&M) of certain CVP facilities. This agenda item describes the activities SLDMWA has historically engaged in and discusses recent changes to the organization and its plan for future activities.
1. Formation and Governance
The San Luis & Delta-Mendota Water Users Association (Association) was formed in 1977 to provide a forum for South of Delta CVP contractors to coordinate on efforts of common interest. Valley Water joined the Association in 1988. The Association evolved into a more formal Joint Powers Authority (now known as the SLDMWA) in 1990 in order to be eligible to enter into contracts with the United States Bureau of Reclamation (Reclamation) to perform O&M of certain CVP facilities, including Jones Pumping Plant in the South Delta. Valley Water was a founding member and executed the original agreement that created the SLDMWA, which was amended in January of 1992 to expand the scope of SLDMWA’s authorized duties.
Valley Water currently holds two seats on the 19-member Board of Directors of the SLDMWA representing the 28 member agencies. The Board is divided into five divisions, each with four appointed Directors, with the exception of Division 5, which has three. The San Felipe Division is represented by Division 4, with Valley Water and San Benito County Water District each represented by two directors on the Board, accounting for 21% of the voting capacity. In addition to being a voting member on the Board of Directors, Valley Water participates on committees that discuss policy issues related to O&M, water supply and financial matters. This includes reviewing and recommending Board approval of SLDMWA budgets.
2. SLDMWA Activities
The SLDMWA serves two purposes. One purpose is O&M of certain CVP facilities which are used to convey water to CVP customers through the Delta-Mendota Canal. In 1998, Reclamation formally transferred O&M of the Delta-Mendota Canal and self-funding responsibilities to the SLDMWA, increasing both local oversight and control and providing Valley Water, as a member of SLDMWA, with increased opportunities for input into decision making related to O&M activities.
The other purpose of the SLDMWA is to participate in State and federal administrative, judicial, and legislative processes that affect the current and future reliability and cost of water supplies provided to its member agencies. For example, the SLDMWA has been engaged in the State Water Resources Control Board process for review of the Water Quality Control Plan for the Delta, development of research studies to evaluate the causes of fish decline, and development of plans for the former Bay Delta Conservation Plan (BDCP). Valley Water and SLDMWA have been aligned on many issues associated with these and other activities.
The SLDMWA also supports the dissemination of information amongst members and participates in public information and outreach campaigns designed to raise awareness of water supply issues of common interest.
The SLDMWA engages in the acquisition of supplemental supplies for its member agencies, identifying opportunities and negotiating terms with potential sellers prior to executing activity agreements with its members to receive purchased water. This reduces the administrative burden placed on Valley Water staff and ensures fair pricing for purchased water. However, supplemental water is normally shared using a pooled approach where each member agency is allocated a proportional share based on its relative CVP agricultural contract quantity; therefore, Valley Water’s share is typically around 2 percent of available supply. One notable exception is the multi-year water transfer agreement with the San Joaquin River Exchange Contractors, which provides Valley Water an option to purchase 4,350 AF of reliable supply at a reasonable cost.
To the extent possible, the SLDMWA serves to advance policies that benefit all members and has typically abstained from taking positions on issues that would divide its member agencies. However, because the SLDMWA collective membership has primarily agricultural interests, the SLDMWA’s participation in administrative, judicial, and legislative processes as well as its support of public outreach and education efforts usually focuses on improving water supplies for agricultural usage. These efforts directly benefit Valley Water’s CVP Ag supply, and because Valley Water’s CVP M&I allocation is tiered off of the CVP Ag allocation, improvements in water supply to CVP agricultural users also increases and helps stabilize Valley Water’s M&I allocations.
3. SLDMWA Funding
The SLDMWA is funded through contributions from its member agencies. O&M expenses are recovered through a unit charge assessed on a per acre-foot basis, which varies depending on the facilities used to convey the water. This work is considered non-discretionary and cost sharing by each member is a requirement regardless of any further participation in other SLDMWA activities. Over the past five years the District’s costs for O&M on SLDMWA operated facilities has ranged from $1.2M to $2.4M.
Activities related to legislative, administrative, and judicial processes are recovered through a dues structure that is paid bi-annually and reflects the relative benefit to each member. Historically, Valley Water has paid roughly $450,000 in annual dues to the SLDMWA. More recently, Valley Water’s share of dues has been reduced to about $130,000, which reflects actions taken to reduce costs while an evaluation of SLDMWA activities is performed, as described in the following section. The $130,000 includes Valley Water’s share of current-year costs under activity agreements, described later in this memorandum.
Actions with a more focused benefit of interest to some, but not all members of the SLDMWA, are managed through activity agreements that allow for selective participation among members. Expenses relating to activity agreements are collected from participating members under the terms and conditions described in each individual activity agreement. Currently, activities managed through activity agreements include coordination of some members’ work to comply with the Sustainable Groundwater Management Act, and Integrated Regional Water Management planning. The use of activity agreements insulates SLDMWA members that don’t benefit from these activities from cost sharing responsibilities, but also increases the overall size and scope of SLDMWA as an organization.
4. Future of SLDMWA Activities
Since inception of the SLDMWA, the scope of the both the general membership activities and activity agreements has expanded considerably. Certain members also participate in these activities independently, and concerns have been raised that work performed by SLDMWA may be duplicative of these efforts. This prompted an evaluation of the efficacy and need for the activities SLDMWA undertakes. This evaluation is in process and provides Valley Water an opportunity to help shape the future direction of the SLDMWA. It also allows for an assessment of the benefits of SLDMWA activities to Valley Water and a chance to develop a strategy for future engagement with the SLDMWA.
In the short term, the range of SLDMWA activities has been scaled back while this evaluation takes place. This is reflected in the significant reduction in dues payments over the last several years.
4.1 Strategic Planning Process
A desire to assess the focus of the organization and to evaluate the equity in cost sharing among members prompted the SLDMWA to hire a consultant in 2018 to facilitate the development of a strategic plan. From mid-2018 to early-2019 the SLDMWA Board of Directors held a series of workshops in which the mission and vision of the organization was discussed. Valley Water Board representatives and staff participated in these workshops. The workshops provided a forum for extensive deliberation on SLDMWA work priorities and engagement in state and federal issues related to CVP water supply. The strategic plan process resulted in a set of goals and objectives that was adopted by the SLDMWA Board on April 4, 2019 (Attachment 3). The goals cover the following areas, which are not listed in order of priority:
• Optimize water supplies
• Improve governance and policy direction
• Staff resources are in place to implement SLDMWA Board goals and priorities
• Effective operations
• Increase scientific and technical credibility and influence
• Effective communication and engagement with key parties
• Finances are well understood and supported by the SLDMWA Board
Most of the activities that the SLDMWA is already engaged in can be categorized into these broad goals, but the scope of each and the method of achieving them are worthy of discussion because there is still significant uncertainty with respect to how these will translate into future SLDMWA activities. The goals and objectives are meant to provide the SLDMWA Executive Director guidance for development of an implementation plan, which will include specific actionable tasks to achieve the stated goals. The implementation plan will also contain the vision and scope of each SLDMWA activity. It will be developed under the oversight of the SLDMWA Board, which will have ultimate decision-making authority related to the level of engagement for each goal, including the budgetary responsibilities of each member agency. Valley Water’s strategy for continued participation in various SLDMWA activities will depend on these decisions. A list of the strategic plan goals and an evaluation of the ways in which Valley Water derives benefits is included in the PowerPoint (Attachment 4).
There is broad agreement amongst member agencies that the SLDMWA does an excellent job performing O&M on the CVP facilities it manages and that this should continue to be a core focus of the organization moving forward.
The other goal areas will require a more thorough evaluation by the SLDMWA Board when it comes to implementation. For example, the goal of optimizing water supplies is fairly open-ended and could result in a significant shift in focus of SLDMWA depending on the desires of the member agencies. During the strategic plan workshops, Valley Water representatives advocated limiting this goal to focus only on CVP water supplies, rather than having SLDMWA take a on a broader role of water supply planning and project development for its members.
The goal of improving governance and policy direction is a positive development. The membership of the SLDMWA consists of a diverse range of CVP customers, each with its own interests. In the past, there has been a perception that the actions taken by SLDMWA focused on agricultural interests over others. The strategic planning process was meant to provide a voice to all members and encourage engagement by those entities. Over the years, Valley Water representatives have consistently requested a balanced approach that is representative of all members. Valley Water has also sought to improve the administrative functioning of the organization, especially with respect to the timeliness of information and inclusion of all members in decision making.
Other goals, such as increasing scientific and technical credibility and influence, and effective communications and engagement are also seen as important to the mission of SLDMWA, but the details of how these programs will be structured have not yet been formalized. Members are taking a cautious approach with these goals, and have reduced efforts in these areas until consensus can be reached on the appropriate scope of each. However, during the strategic planning workshops it was confirmed that it remains important for SLDMWA to participate in state and federal legislative, regulatory, and judicial proceedings, particularly those that impact CVP water supplies.
There was also a change in leadership during the strategic plan process. SLDMWA hired a new Executive Director, who was able to participate in the process and is therefore well-positioned to develop an implementation plan that reflects the outcome of the strategic planning effort. Reflecting the importance of participating in legislative and regulatory proceedings, SLDMWA hired a new Water Policy Director to lead this effort.
4.2 Benefits of Continued Participation in SLDWMA
Since its creation as a JPA, the SLDMWA has provided considerable benefit to Valley Water. The transfer of O&M responsibilities from Reclamation has provided for the effective and reliable delivery of CVP water supplies at a reasonable cost. Through its participation as a member agency of the SLDMWA, Valley Water has the opportunity to provide direct input into decision making related to operating and maintaining these key CVP facilities, such as the development of budgets and the prioritization of O&M work efforts. However, if SLDMWA did not exist, Valley Water would still be required to receive and pay for these services from another entity, likely Reclamation, and would derive similar value.
Apart from its O&M role, SLDMWA is intended to provide representation on matters of common interest to its members. This often includes legislative advocacy, administrative proceedings, legal strategy and litigation, and public relations efforts.
SLDMWA can offer more efficient evaluation of water supply projects such as the enlargement of Shasta and San Luis Reservoirs. This makes sense for projects with broad benefit or on items in which Valley Water and other members are in alignment.
For activities that benefit a limited number of members, it can still be advantageous to participate through a SLDMWA activity agreement to reduce costs and administrative burden. For example, Valley Water has participated in several pooled water transfer programs through the SLDMWA, which are a small but important source of supplemental imported water supplies, particularly during droughts. Additionally, it may help secure grant funding on mutually beneficial projects through programs like the State’s Integrated Regional Water Management planning program.
The SLDMWA provides a forum for the discussion of issues that impact CVP water supplies, offering valuable insights into the perspectives of other CVP contractors. On matters of statewide significance, it is often beneficial to have SLDMWA representation so that members can speak in a unified voice. And it provides an opportunity to build relationships with other members that Valley Water may want to partner with on water supply or storage projects.
Valley Water provides funding through its membership in the SLDMWA to support research efforts that inform management actions to improve conditions for fish and wildlife as well as CVP water deliveries. Historically, this contribution was made to the State and Federal Contractors Water Agency (SFCWA), which is a Joint Powers Authority established in 2009 and consisting of the SLDMWA and several SWP and CVP contractors reliant on Delta water supplies, including Valley Water. SLDMWA’s annual budget for science and habitat restoration varied from $0.9 million to $2.7 million, with a large portion set aside to support SFCWA science efforts, as well as other directly funded science studies. The SLDMWA recently decided to withdraw from SFCWA and engage more directly in science and research efforts, and has provided ongoing financial support for studies considered to be a high priority by its members. The SLDMWA FY19-20 budget includes $0.8 million to support Delta science efforts, and the SLDMWA’s strategic planning process identified a goal of increasing scientific credibility and influence and developed several objectives intended to achieve this goal. Future contributions to science efforts are uncertain, but will be made according to the implementation plan described above, and will be developed under direction of the SLDMWA Board.
4.2 Costs of Continued Participation in SLDMWA
Irrespective of membership in the SLDMWA, Valley Water will be subject to the SLDMWA O&M rates for conveyance of CVP water as long as transfer agreement between SLDMWA and Reclamation is in place and Valley Water is receiving CVP water deliveries. O&M rates fluctuate year to year based on the water supply available from the CVP. Overall, O&M rates are expected to increase over time as important extra-ordinary maintenance work is performed, such as the refurbishment of motors at Jones Pumping Plant, or repairs to the Delta-Mendota Canal from damage due to subsidence.
In the short term, dues payments for other SLDMWA activities are expected to remain suppressed, at least until the implementation plan is complete and the direction of the organization is clear. Valley Water staff anticipates that SLDMWA will increase staffing slightly, perhaps with the addition of a science manager and an in-house public relations professional. During the strategic planning workshops, most members preferred an approach where only modest staffing changes were made initially, and where additional staff would be added only after a clearly identifiable significant benefit would be realized. Future costs will therefore depend on the level of engagement in various areas and how the SLDMWA Board choses to structure participation decisions. Valley Water will then be able to evaluate whether the benefits of continued participation justify costs.
FINANCIAL IMPACT:
There is no financial impact associated with the Board’s consideration and discussion of this item.
CEQA:
The recommended action does not constitute a project under CEQA because it does not have a potential for resulting in direct or reasonably foreseeable indirect physical change in the environment.
ATTACHMENTS:
Attachment 1: SLDMWA Service Area Map
Attachment 2: SLDMWA Member Agencies
Attachment 3: Goals and Objectives
Attachment 4: PowerPoint
*Supplemental Agenda Memorandum
*Supplemental Attachment 1: Revised Powerpoint
*Handout 4.2-A, F. Barajas, Bureau of Reclamation
*Handout 4.2-B, F. Barajas, SAVE Water Resources Act
UNCLASSIFIED MANAGER:
Manager
Garth Hall, 408-630-2750