On Tuesday, July 21, 2020, Valley Water (formerly Santa Clara Valley Water District) will consider a proposal to renew the Safe, Clean Water and Natural Flood Protection parcel tax. The Safe, Clean Water parcel tax currently brings in about $46 million a year. The renewal will extend the parcel tax indefinitely so that the district can borrow $310 million against the Safe, Clean Water parcel tax revenue stream.
Valley Water had $506 million in revenue this fiscal year, due to reduced water sales, with $610 million in expenses. Valley Water’s Board voted to cut $44 million from the FY 2020-21 budget and borrow $136 million against the district’s water sales revenues. The district’s total indebtedness is currently about $979 million.
The Safe, Clean Water and Natural Flood Protection parcel tax is the main source of funding for the district’s fish and wildlife habitat enhancement projects, but it also funds flood protection, pollution prevention, environmental education, and seismic remediation of Anderson Dam. The April 2020 forecast for the Safe, Clean Water and Natural Flood Protection program projected a small deficit for the program starting in FY 2026, but the total was under $50M.
The Safe, Clean Water and Natural Flood Protection Program is overseen by an Independent Monitoring Committee (IMC.) The IMC requested a status update on the program in February 2020, when staff indicated that a new resolution was needed because of a shortfall of funding for large capital projects.
The IMC is surprised that Valley Water states the need for more funding after only seven years of the fifteen year program. In the FY19 report, there is no indication that projects are underfunded or that KPIs will be unmet with projected funds. The IMC recommends the Valley Water clearly update status of SCW to citizens prior to a new funding proposal.
Valley Water declined to provide an update to the IMC on the SCW program’s financial status or projected deficits in project funding.
California Water Research joined South Bay environmental and fishing groups in a letter expressing concerns about the proposed parcel tax renewal. The letter states in part:
Given Valley Water’s expressed commitment to environmental stewardship, our groups are puzzled by the refusal to address our concerns that the proposed Safe, Clean Water and Natural Flood Protection (“SCW”) program renewal has significant reductions to funding commitments for habitat enhancement, compared to the existing SCW program. As explained by CalTrout in their July 14, 2020 comment letter
“Valley Water has a duty to enact the habitat enhancement measures listed in the Parcel Tax through California Fish and Game Codes and through State Water Board provisions and/or mitigation with District funds. The Parcel Tax provisions that support fish passage and habitat improvements are listed in wide-ranging categories that give Valley Water too much discretion to fund other projects in place of these required restoration activities.”
The budget projection for the second 15 years is even more alarming than the first 15 years – showing a reduction of 50% in commitments for Priority D, Restore Wildlife Habitat and Provide Open Space.
We are alarmed that Valley Water is proposing to issue $310 million in bonds on the SCW parcel tax revenues, with no list of projects that need borrowing for timely completion. Issuing 30 year bonds without any clear explanation of need is contrary to existing Board policy, which directs that debt shall only be issued when there is demonstrated need (Executive limitations section 4.7.2.)
The out-year impacts of immediately borrowing six years of parcel tax revenues on the SCW program will be severe. Funds available for capital projects in the second 15 years could be cut by up to two thirds. We are extremely disappointed to see no proposals to address the issues that the borrowing creates with long-term funding for habitat enhancement and other SCW priorities.
A majority of our groups are opposed to a resolution with no sunset date, and we believe a measure with no sunset date is unlikely to pass. For this reason, we are very disappointed to see no evaluation of an alternative with a sunset date.
We also continue to be concerned about the consolidation of $34 million in grants the existing SCW program dedicated to environmental stewardship, pollution prevention, and volunteer creek clean-ups to the single umbrella grant program in F9. No alternative has been offered to this consolidation of grant programs.
… We request that the Board address these issues and ensure that there will be sufficient funding for Valley Water to meet its duty to fund legally required habitat enhancement projects.