Client Alert: Proposition 1 Funding for New Water Storage Projects

On December 14, 2016, the California Water Commission (“Commission”) adopted regulations implementing the Water Storage Investment Program (“WSIP”) established under Proposition 1, commonly known as the California Water Bond, that voters approved in November of 2014. Chapter 8 of Proposition 1 requires the Commission to adopt regulations for the investment of funds in publicly beneficial water storage projects. The adopted regulations describe the application process to obtain Proposition 1 funding for qualifying water storage projects. The regulations will go into effect 30 days from December 14, 2016, the date of their adoption.

When voters approved Proposition 1, they funded a $7.545 billion bond for water projects and programs in California. The bond dedicated $2.7 billion of that money to water storage projects. Following the passage of Proposition 1, the Commission began a two-year process to draft and adopt regulations for WSIP. Working with a broad array of stakeholders, the Commission developed regulations and guidelines for WSIP and will continue to seek public participation and feedback during the WSIP funding process.

Applications

The Commission has not released a date that it will begin accepting applications for WSIP, but indicates that the application period will begin in early 2017. A flowchart illustrating the anticipated timeline for the WSIP program is available here. Once the application process begins, the Commission will post notice of the application submission procedures on its website. The application window will be open for a minimum of five months from the date the notice is published. Applications must be submitted through the Department of Water Resources’ Grant Review and Tracking System on-line application submittal tool. Commission staff will post all received applications on the Commission’s website within 30 days after the close of the solicitation period.

Eligibility Criteria

To be considered for funding, a project must meet minimum eligibility criteria established in the regulations. Eligibility is determined using a two-step process. First, the Commission determines if the proposed project meets basic eligibility requirements. Then the Commission undertakes a technical review of the application to ensure that the project meets additional requirements. The two separate categories of eligibility factors are summarized below.

Basic Eligibility Criteria
In order to proceed to the technical review phase of the eligibility determination, an application must:

  1. Be eligible under Water Code sections 79712, 79759, and 79751.
  • Water Code section 79712 provides that eligible applicants include public agencies, nonprofit organizations, public utilities, federally recognized Indian tribes, state Indian tribes listed on the Native American Heritage Commission’s California Tribal Consultation List, and mutual water companies.
  • Water Code section 79759 extends eligibility to local joint powers authorities formed by irrigation districts and other local water districts and local governments.
  • Water Code section 79751 requires that funding be used for projects that include surface storage projects, groundwater storage projects and groundwater contamination prevention or remediation projects that provide water storage benefits, conjunctive use and reservoir reoperation projects, and local and regional surface storage projects that improve the operation of water systems in the state and provide public benefits.
  1. WSIP’s cost share must be less than or equal to 50 percent of the proposed project’s total capital costs.
  1. The project’s ecosystem improvement benefits must comprise at least 50 percent of the public benefits for which funding is requested from WSIP.

Technical Eligibility Criteria
Factors considered in the technical eligibility criteria review include:

  1. The project does not adversely affect any river afforded protection pursuant to the California Wild and Scenic Rivers Act or the Federal Wild and Scenic Rivers Act.
  1. The project will provide measureable improvements to an ecosystem as described in the application.
  1. The project improves the operation of state water systems.
  1. The project is cost effective.
  1. The project provides a net improvement in ecosystem and water quality conditions.

Scoring Criteria to Determine what Projects will be Funded

Once Commission staff determines a project is eligible for funding, they will evaluate and score applications based on four criteria: (1) public benefit ratio and non-monetized public benefits; (2) relative environmental value; (3) resiliency; and (4) implementation risks. The most strongly weighted element of the scoring system is the first element, the public benefit of the project. To ensure that a project scores well and is more likely to be funded, applicants should clearly outline the public benefits of the project such as contributions to sustainable groundwater management, benefits to sensitive ecological resources, and any ability to expand the project in the future.

Implications

The newly adopted regulations will provide agencies interested in constructing water storage projects the opportunity to apply for state funding for those projects. If your agency is interested in seeking WSIP funding, in need of assistance in doing so, or wants to learn more about WSIP funding, please contact Barbara A. Brenner at (916) 468-0950 or barbara@churchwellwhite.com or Kerry A. Fuller at kerry@churchwellwhite.com or (916) 468-0620.