Delta Legislation Fiscal Analysis 10-12-09

The New Costs Triggered by The Delta Legislation Are Simply Unaffordable The legislature has embarked on a major reform of the state’s water system, heedless of the enormous costs involved, just when the state’s financial condition has never been more dire. A realistic assessment of the total costs of the Delta legislation comes to $52B to $78B or more. This $52B to $78B range of costs is the sum of three major components: • • •

$18B–$44B for conveyance; $16B for new programs and projects in the Delta; and $18B in new statewide costs associated with a proposed $12.375B bond measure plus required matching.

A series of huge capital projects would be initiated by the Delta legislation including: new Delta conveyance, construction of several new surface storage reservoirs, construction of other local water management and delivery projects, Delta levee strengthening, ecosystem restoration, and creation of three new state agencies and expanded state programs to prepare and implement the Delta Plan.

The exporters have repeatedly stated they will pay the cost of new conveyance. The $18B - $44B Delta conveyance cost estimate is based on “The Sacramento San Joaquin Delta – 2009, An Exploration of Costs, Examination of Assumptions and Identification of Benefits,” by Steve Kasower. These costs include the construction cost of building a canal or tunnel on an eastern or western alignment, plus necessary levee upgrades to continue through Delta operations, new rights of way, mitigation and relocation of impacted facilities/infrastructure. The reason for the wide range of estimated costs ($18B-$44B) is that a tunnel will be substantially more expensive than an open canal. •

The $18B estimate comes from information in Table 1, second column: o $4.2B for Isolated Conveyance (eastern alignment) based on DWR work in 2008; plus o $9.8B for Through Delta Conveyance based on DWR work in 2008; plus o $4B for Mitigation Costs characterized as “mid-range.”

•

The $44B estimate comes from information provided in Table 1, third column: o $9.8B for Through Delta Conveyance (DWR); plus o $33B for Tunnel Conveyance based on actual construction costs for the London– Paris Channel Tunnel or “Chunnel;” plus o $2B for mid-range Mitigation Costs.

1

All users of water from the Delta watershed will have to pay the $16B cost of new programs and projects in the “Delta Plan.” It is expected that the $16B cost of new programs and projects in the “Delta Plan” will be funded through a surcharge or fee on water use. •

$16B in state water fees spread over 30 years is approximately $530M per year in new state water fees, not counting the likely fee increases over time.

•

For the same urban customers south of the Delta who are financing the new Delta conveyance, this fee would come to $11B more on their water bills. $11B is approximately 70% of $16B and represents the share of new Delta costs attributable to urban users south of the Delta.

This $16B would provide: •

$14B in levee repair and strengthening, plus new staffing costs for the Delta Plan. o The estimated cost for Delta levees is based on preliminary work conducted under the Delta Risk Management Strategy where costs for improving Delta levees to a variety of standards were estimated in 2008. The cost to improve the Delta levees to a seismically resistant standard is $13.812B in 2008 dollars. o Sections 85305(a) and 85306 of the Delta bill, AB 68, direct the Delta Plan to promote strategic levee investments and to recommend priorities for state investments in levee operation, maintenance, and improvements in the Delta, including both project and nonproject levees. o Levee repairs and maintenance will be necessary in order to maintain and protect costly ecosystem restoration projects, especially those projects that will be implemented on Delta islands. o The costs for new agencies and staff can be tabulated by reviewing the enacted budgets of current agencies such as the CALFED Bay Delta Authority, the Water Rights Division of the State Water Resources Control Board and the California Integrated Waste Management Board.

•

$2B for ecosystem restoration not included as part of the new Delta conveyance. o The $2B for Delta ecosystem restoration is the amount not accounted for when the $2B proposed under a $12.375B General Obligation Bond (draft SB 371 – 9/3/09) is subtracted from the $4B estimated cost of restoration presented by Kasower (2009), Table 1 - second and third columns, Restoration line item.

2

A General Obligation bond of $12B has been proposed which has been linked to the “Delta package” but the actual price tag of the water projects identified in this GO bond measure is an additional $18B. The proposed $12.375B bond measure (Cogdill, draft SB 371 9/3/09) contains several chapters where new costs and matching requirements are identified for delta improvements and infrastructure throughout the state: • • • • • •

Chapter 6 - $2.325B for water supply reliability that would fund water supply management programs in hydrologic regions throughout the State with a required match of $1.19B in nonstate funds. Chapter 8 - $3B for Delta Sustainability, including $2B for ecosystem restoration and $1B for local improvements, including levee improvements. Chapter 9 - $4B for the public benefit portion of qualified storage projects and groundwater projects. Matching is required by SB 371 and draft AB 893 (9/11/09, Sec. 79745) requires it to be at least 50% (i.e. $4B for $8B of total costs). Chapter 10 - $1.5B for watershed and coastal protection throughout the state. Chapter 11 - $1.05B for groundwater cleanup and water quality improvement. Of this amount $0.3B devoted to stormwater quality may require matching of up to $0.3B. Chapter 12 - $0.5B for water recycling projects and requires non-state matching of at least $0.5B.

Due to the local match requirements of the bond bill, water customers will also have to pay another $6B to be eligible for state assistance in three major categories set forth in the bond measure. Therefore, the actual cost of the various proposed water infrastructure projects identified in the existing bond measure is $18B. This bond measure would provide: • • • • • •

Over $2B for local water supply reliability projects, requiring a local match of up to 50%. $3B for Delta sustainability, including projects to improve water quality, and protect and restore fish and wildlife. $4B in continuous appropriations for surface water storage. This funding is for the public benefit portion of any project and requires a $4B match. $1.5B for conservation and watershed protection (including outside the Delta), and protect the Delta from invasive species. Over $1B for groundwater protection and water quality. $0.5B for water recycling and advanced treatment technologies, requiring a local match of at least 50%.

The State Treasurer has recommended user fees as the preferred financing tool, which is the method of financing used over the last hundred years to construct and operate California’s water storage and delivery infrastructure. The State Treasurer has recently issued a report concluding that general obligation bonds are not the appropriate financing tool for new water infrastructure. Some of the financing for these $12B in water projects identified in the GO Bond measure may instead be paid for with additional user fees. 3

Urban SWP and CVP customers located south of the Delta will pay the majority of the costs for this Delta legislation. There are an estimated 24 million urban SWP and CVP customers located south of the Delta that comprise about 70% of the state’s population and will pay between $42B and $68B, which will likely to be amortized over thirty years. This $42B to $68B estimate includes the full cost of conveyance at $18B - $44B. It also includes $24B comprised of 70% of the $16B in costs for new Delta projects or programs and 70% of the $18B in new statewide costs associated with a proposed $12.375B bond measure plus the required matching.

The agricultural water districts have repeatedly told the Legislature that they can pay neither the costs of the new Delta conveyance, nor any fee on water use. This would shift all the costs enumerated above onto urban water customers in California. As a result, urban water customers south of the Delta would carry the full cost of a new Delta conveyance, two-thirds of the cost of the Delta Plan, plus their share of surface storage and regional projects. In the absence of drastic cost-cutting, the debt service for these urban customers could come to more than $4B/year. This debt service estimate is based on the 6.5% benchmark used by the Legislative Analyst’s Office or $65 million per $1B borrowed. Based on the full share of costs for south of Delta urban customers of $42B to $68B, the debt service would range from $2.7B - $4.2B. Paying this huge price tag via water user fees on the water bill will result in more than doubling of the water rates for these urban customers, as well as additional huge annual water rate increases for many years into the future. The projected 2010 water sales revenues for the largest SWP urban contractor that serves more than half of the urban water customers south of the Delta are $1.1B (reference Metropolitan Water District Budget 2009/2010, page 30). To raise its $2B or more annual share of $4B/year in debt service, it would need at least an additional $2B over its $1B in current annual water sales revenues.

The money to pay the entire $52B to $78B price tag for the programs and projects associated with the Delta legislation will be demanded from the same Californians who are enduring the worst recession since the 1930s. The state share of any bond repayments will strain the state’s already overburdened General Fund. This long-term over-commitment of taxpayer and ratepayer dollars must be rigorously scrutinized by the Legislature, and the costs scaled down to meet financial reality.

4

S T R AT E G I C E C O N O M I C A P P L I C AT I O N S C O M PA N Y R E S O U R C E

S O L U T I O N S

W I T H

V I S I O N

A N D

V A L U E

T H E S A C R A M E N T O S A N J OA Q U I N D E LT A – 2 0 0 9 AN EXPLORATION OF COSTS, EXAMINATION OF ASSUMPTIONS, AND IDENTIFICATION OF BENEFITS THIS IS A DRAF T D OCUMENT PREPARED BY STEVEN KASOWER, PRINCIPAL

ST RAT EGIC EC ONOMIC APPLICAT IONS CO MPANY 1720 Q STREET S AC R A M E N T O, C A 9 5 8 1 1 - 6 7 1 7

Table 1 - Delta Facilities, Summary of Costs Features

Configurations

User Pays Isolated and Through Delta

Conveyance, Isolated East

$4.2 B

Conveyance, Through Delta

$9.8 B1,2

Tunnel and Through Delta

Isolated and Through Delta

Tunnel and Through Delta

$4 B

$4 B

$4.2 B

$9.8 B

$9.8 B

$33 B3

Conveyance, Tunnel

Public Pays

$9.8 B

$33 B

Mitigation

$4 B4

$2 B5

Restoration

$4 B7

$4 B

Off-Stream Storage

$5 B8

$5 B

$2.59

$2.5

$2.5

$2.5

Total

$23 B

$53.8 B

$20.5 B

$47.3B

$6.5 B

$6.5 B

1

$46

$2

Through Delta Improvements include levee earthwork, setback levees, channel dredging, intake, siphon, operable gates from California Department of Water Resources, “An Initial Assessment of Dual Delta Water Conveyance As requested by the Delta Vision Blue Ribbon Task Force,” May 2008 [online] http://deltavision.ca.gov/BlueRibbonTaskForce/June2008/Item_7_Attachment1.pdf

Both isolated as well as through Delta Facilities are required to provide the protection and yield from the Delta. This was from testimony of Greg Gartrell, Assistant General Manager, Contra Costa Water Agency, at the Joint Legislative Hearing on the 2009 Proposed Delta/Water, August 18, 2009 3 From text 4 This is a mid-range estimate. Estimates range from $2 Billion to $6 Billion from various sources. 5 Assumed to be in the midrange of values. 6 Users will pay for mitigation according to the testimony of Roger Patterson, Deputy General Manager, Metropolitan Water District of Southern California, at the Joint Legislative Hearing on the 2009 Proposed Delta/Water, August 18, 2009. 7 This is a guess only for tabular use. This number could be greater due to the political characteristics of “restoration” and the definition that is finally agreed upon. 8 Cost estimates presently are explained as ranges. For the purposes of this table, a total slightly lower than maximum was selected. 9 Discussions on off-stream storage options include discussions on a 50/50 split between project beneficiaries and the general obligations of the public. 2

3|Page

An Initial Assessment of Dual Delta Water Conveyance

As requested by the Delta Vision Blue Ribbon Task Force Prepared by California Department of Water Resources

April 2008

Initial Dual Conveyance Assessment Delta Vision Report

Table 1 – Estimated Costs for Dual Conveyance Configurations A through D ($ Billion)

FEATURES Eastern Alignment 1 – Canal, intake, fish screen, pumping plant, control structure, siphons, bridges, culverts, utility relocation, railway impacts, forebay, land, some mitigation Western Alignment 2 – Canal, pipeline, pumping plant, pipeline, tunnel, forebay, no mitigation Through-Delta Improvements 1 3 – Levee earthwork, setback levees Through-Delta Improvements 2 – Channel dredging, intake, siphon, operable gates TOTAL

CONFIGURATIONS B C

D

$4.2 B

$4.2 B

--

--

--

--

$7.4 B

$7.4 B

--

$8.6 B

$8.6 B

$1.2 B

$1.2 B

A

$4.2 B

5.4 B $14 B

$7.4 B

8.6 B $17.2 B

All estimates include a contingency cost for engineering, construction management, legal, and project administration costs of approximately 30%. The cost estimates do not include possible near-term through-Delta improvements being considered in the BDCP process. For configuration A, the cost for construction of the canal is the highest at 26% of the total cost, followed by the radial gates for the siphons at 17%. For configuration C, the cost of the tunneling is more than 50% of the total cost. For configuration D, the cost of the setback levees is the highest at 40% of the total cost, followed by tunneling at 27%. Retrofitting existing levees and constructing setback levees for the Through-Delta improvements are the most expensive features. Both of these costs were originally included to maintain the Through-Delta Component after a catastrophic earthquake. Due to the high cost associated with this approach, relying on the Isolated Conveyance 1

Cost estimates for the eastern alignment include real estate, environmental documentation, and mitigation.

2

Cost estimates for the western alignment include real estate.

3

Cost estimates for the through-Delta improvements include environmental documentation and mitigation.

April 23, 2008

16

DWR Bay-Delta Office

Levee References Levee cost estimate – CALFED Delta Levees and Habitat Subcommittee Handout 6/08 Total cost to repair the 87 islands identified by the Delta Risk Management Strategy to a seismically resistant standard = $13,812M Levee work is included in the Delta Plan - SB 68 9/11/09 85305. (a) The Delta Plan shall attempt to reduce risks to people, property, and state interests in the Delta by promoting effective emergency preparedness, appropriate land uses, and strategic levee investments. 85306. The council, in consultation with the Central Valley Flood Protection Board, shall recommend in the Delta Plan priorities for state investments in levee operation, maintenance, and improvements in the Delta, including both levees that are a part of the State Plan of Flood Control and nonproject levees. Fees are intended to fund the implementation of the Delta Plan - PP SB 1 8/4/09 Chapter 3. Other Users of Water from the Bay-Delta Watershed 85405. (a) There is hereby imposed an annual fee on each person or entity who holds a right, permit, or license to divert water within the watershed of the San Francisco Bay/Sacramento-San Joaquin Delta. The fee shall apply to holders of water rights, including riparian rights, appropriative rights without regard to the date on which those rights were perfected, pueblo rights, or any other rights to use water within the Delta watershed. (b) Until December 31, 2012, the council shall establish fees in an amount that provides only for the funding necessary to complete the Delta Plan, establish the council, and implement the early actions identified in Part 2 (commencing with Section 85080). The council shall establish these fees initially by emergency regulation. (c) Commencing January 1, 2013, and each year thereafter, the council shall, by regulation, set the fee schedule authorized by this section so that the total revenue collected from the fees equals the appropriate proposed annual budget; or, so that the total revenue collected from the fees equals the amount needed in the council’s judgment to accomplish both the following: (1) To pay the costs of facilities and program activities intended to mitigate damage to fish populations and other natural resources in the Delta and its tributaries that are reasonably related to the diversion of water and other activities of the holder of water rights subject to this section. (2) To pay the administrative costs and other costs of the council related to council activities financed pursuant to this part, including all costs incurred by the council or any other agency in establishing, administering, defending, or collecting the fees authorized pursuant to this section.

17

2137.5

7.4

21,630

96

46

0

6

1

7

10

-7

-23

12644.6 2331.2

41.1

216,612

1639

646 51

4

4

8

17 19

-11 -2

-24 -13

9

Bradford Island

10 Brannan-Andrus Island MERGE Upper Andrus Island 11 Byron Tract

5182.8

9.8

189,059

47

13

2

1

4

15

-2

-15

18

0.10

Hwy 4

11910.7

16.1

80,278

137

29

2

4

3

8

20

10

-4

10

0.10

nat. gas

5251.6

10.6

20,757

35

7

1

0

1

2

14

0

-16

14

14 Clifton Court Forebay South

745.5

13.0

4,278

20

12

1

0

1

20

2

-6

17

15 Coney Island

962.9

5.5

21,921

24

18

0

0

0

13

-5

-14

18

4350.1

16.4

29,277

35

10

4

7

15

15

15

-8

-1

0.10

nat. gas, Hwy 5

17 Deadhorse Island

208.5

2.6

998

4

2

0

0

1

18

-5

-10

23

0.10

nat. gas

18 Dutch Slough

491.1

3.8

1,326

0

0

0

0

0

9

0

-8

9

0.10

nat. gas

18

0.10

nat. gas

12 Cache Haas Area 13 Canal Ranch

16 Cosumnes River Area

19 Egbert Tract 20 Little Egbert Tract 21 Ehrheardt Club 22 Elk Grove

4

5910.6

5.4

33,603

210

50

22

4

441.3

10.3

847

105

25

0

1

1

22

10

3

12

9.5

16,027

22

9

0

0

0

27

8

-15

19

17.4

1,347,255

9531

3415

10

10

20

19

23 Empire Tract

3629.4

10.5

9,790

38

11

0

1

24 Fabian Tract 25 Fay Island

7171.8 93.5

18.8 1.6

39,116 22

168 0

41 0

3 0

1 0

26 Glanville Tract

1

2356.8 16525.0

0

5

9814.0

11.5

52,804

134

39

1

2

5

1

3

27 Glide District

1298.4

6.3

7,676

8

2

1

0

28 Grand Island

16421.4

28.3

253,978

1137

404

2

1

0.02

127.0

20.8

136.1

22.3

12.8

2.1

74.3

12.2

0.128

0.408

684.3

38.2

937.9

52.3

72.7

4.1

246.1

13.7

0.253

0.785

356.8

33.0

370.9

34.3

30.3

2.8

142.7

13.2

0.176

0.553

292.7

39.4

417.6

56.2

32.7

4.4

111.4

15.0

0.176

0.552

1584.6

38.6

2123.3

51.7

163.5

4.0

563.3

13.7

0.270

0.834

348.7

35.6

363.7

37.1

27.4

2.8

129.3

13.2

0.182

0.572

497.6

30.8

557.8

34.6

44.9

2.8

211.4

13.1

0.122

0.391

376.9

35.6

393.2

37.1

29.7

2.8

139.8

13.2

0.156

0.493

462.3

35.6

482.3

37.1

36.4

2.8

170.1

13.1

0.180

0.564

208.6

38.1

272.2

49.8

21.1

3.9

72.2

13.2

0.184

0.577

58.6

22.6

59.6

23.0

7.3

2.8

34.2

13.2

0.226

0.702

190.9

35.6

199.1

37.1

15.0

2.8

70.8

13.2

0.184

0.577

390.3

37.7

493.9

47.7

38.2

3.7

146.9

14.2

0.132

0.422

389.5

22.3

36.6

2.1

212.7

12.2

0.190

0.596

35.6

388.9

37.1

29.3

2.8

138.3

13.2

0.249

0.773

26.1

518.1

27.6

44.1

2.3

229.1

12.2

0.198

0.618

17

10

0.10

nat. gas, Hwy 5

1

30

10

0

20

4

24

-6

-17

30

0.10

nat. gas, Hwy 160 & 220

0.10

nat. gas

6

-6

13

-7

-18

19

31 Hotchkiss Tract

2857.4

8.7

126,855

968

396

1

3

4

10

1

-13

8

0.10

nat. gas

0.10

nat. gas

32 Jersey Island

3464.0

15.5

24,614

13

6

1

8

11

11

-7

-24

18

33 Kasson District

1186.2

3.8

6,153

79

28

0

0

0

34

26

17

8

34 King Island

3214.5

9.1

44,049

237

96

0

0

0

12

-9

-18

21

389.9

3.7

19,259

176

63

0

1

1

24

9

-6

15

36 Liberty Island

4518.3

14.9

14,599

0

0

0

3

4

14

5

-5

9

37 Lisbon District + Glide

5879.3

12.3

78,015

149

55

1

1

1

30

7

-5

23

305.9

4.3

0

0

0

0

0

0

0

3

-6

-3

-18

0.10 0.10

296.9

25.9

361.7

31.5

31.2

2.7

148.7

13.0

0.096

0.311

1007.4

35.6

1051.0

37.1

79.3

2.8

373.6

13.2

0.284

0.878

East side only

512.8

30.0

549.3

32.2

44.3

2.6

220.1

12.9

0.143

0.452

400.8

36.6

459.9

41.9

35.1

3.2

144.7

13.2

0.194

0.606

295.6

34.0

309.0

35.5

23.7

2.7

113.9

13.1

0.107

0.345

591.5

38.2

776.7

50.2

60.3

3.9

214.1

13.8

0.188

0.589

5.3

79.8

20.8

85.5

22.3

8.0

2.1

46.7

12.2

0.099

0.323

323.1

35.6

337.0

37.1

25.4

2.8

119.8

13.2

0.210

0.655

0.8

132.1

35.6

137.8

37.1

10.4

2.8

49.0

13.2

0.162

0.510

663.9

35.6

692.6

37.1

52.2

2.8

246.2

13.2

0.218

0.679

564.4

39.4

805.2

56.2

63.0

4.4

211.2

14.8

0.246

0.763

301.6

34.6

314.2

36.0

24.4

2.8

115.1

13.2

0.171

0.538

nat. gas 6.6

18.7

507,972

284

1

2

1

4

12

22

0.10

nat. gas

13

-6

-17

19

0.10

nat. & liqu. gas

14.3

5,212

0

0

0

8

1

9

11

-14

-23

25

41 McCormack Williamson Tract

1615.0

8.7

4,093

0

0

0

0

1

6

20

4

-4

16

42 McDonald Tract

6062.5

13.7

36,246

103

0

0

2

1

3

13

-14

-24

27

0.10

nat. gas

43 McMullin Ranch

4476.3

9.3

52,028

194

56

0

1

1

33

26

6

7

0.10

nat. gas

11

-10

0.10

nat. gas, Hwy 4 Hwy 4

-18

15.7

8 mi rd

5213.8

5

-10

28.0 32.0

40 Mandeville Island

20

7.1

1.7

19

MERGE Holt Station

0.386

20.8

12

0

0.503

0.120

489.7

13

3

0.725

0.159

12.5

372.8

10

1

0.233

13.2

108.3

363.4

2

1

13.8

151.5

2.3

nat. gas

1

23

198.0

2.8

20.1

8 Mile Rd

7

nat. gas, Hwy 160 & 5 Yes

4

8,559

3.8

32.1

25.6

0.10

9

5.9

54.1

37.1

221.5

0.10

-9

0.10

6

1165.4

48.8

426.2

24.1

26

1

44 Medford Island

699.1

35.6

208.4

19 14

30

46 Middle Roberts Island MERGE Drexler Tract

37.9

408.5

-7 -6

11

45 Merritt Island

543.3

-9

83

5

0.285

-25

27

6

0.087

4 -4

13,584

6318.1

12.2

13

15,787

5813.2

36.3

-15

17.1

MERGE Upper Jones Tract

2.1

11

11.0

39 Lower Jones Tract

6.2

24 11

8136.1

1

18.7

32

4217.5

38 Little Mandeville

55.6

2

29 Hastings Tract

35 Libby McNeil Tract 1

10.5

3

17.2

1.8

30 Holland Tract

1

East side only 18.6

1 51.2

4 0 3 1

-8

18.0 11.2

3-Foot of Levee Raise

-18

1-Foot of Levee Raise

-24

-4

Urban/Cost Per Mile

-14

12

Urban Levee Standards

-16

12

5

PL84-99/Cost Per Mile

10

5

1

PL84-99

21

1

2

Seismic Resistant/Cost Per Mile

2

2

1

Seismically Resistant

1

2

24

nat. gas

Seismic Repair/Cost Per Mile

1

0

108

2.7

Levee Raise Cost (

Seismically Repairable

nat. gas, Hwy 12 & 160

2437

0

14,021

5327.6

Sesismic improvement length (miles)

0.10

9301

25,897

Brack Tract

Recommended for improvement By SC Sub-Committee

28 21

1,645,372

10.8

Bouldin Island

8

Criticality Rating with Water Expor

nat. gas

6.1 17.9

Boggs Tract

7

Criticality Rating w/o Water Export

0.10

2152.2 5937.3

6

Normalized Criticality Rating with Water Export

17

2 0

1

Criticality Rating with Water Export

4.1

Hwy 12 nat. gas

1 0

Repair Cost Estimate ($M) Normalized Criticality Rating w/o water exp.

liqu. gas, Hwy4 Yes

0.10

7

1 0

Criticality Rating = Importance rating * Vulnerability rating

0.10 0.10

1

1

355 0

Vulnerability Rating = Flood risk + Seismic risk

11 26

0

1069

1041 0

1

Seismic risk (annual frequency of

1.9

0

2228

141,119 1,161

1

Flood risk (annual frequency of fai

Hwy 5, 8 mi rd Yes

180

254,118

8.7 3.3

1

Importance rating with water export

nat. gas

0.10

43,916

11.5

3664.9 608.8

4 5

1

Importance Rating w/o water Export= W1*(Asset Rating) + W2*(Envir. importance) + W4*(Life Safety)

0.10

10 4

14.3

3463.6

Bishop Tract Bixler Tract

3

Hwy 5 Yes

Environmental Importance (normalized by Elk Grove)

0.10

15

-17 -3

5530.6

Bethel Island

2

1

Asset Rating (normalized by Smith Tract)

24

-19

2 10

Bacon Island

Weights Atlas Tract

Life Safety (normalized by Smith Tract)

Connectivity

-20

-3

2466

1

Water Export Importance

Average levee height (ft)

-13

12 13

8139

Federal flood control levee (miles)

Lowest land elevation (NAVD88)

11 12

778,030

Urban Levee Program

Average land elevation excluding levees (NAVD88)

2 8

3.0

Comments on Connectivity

Average levee crest elevation (NAVD88)

0.10

Sum of environmental assets (existing & potential)

6

Households (Census 2000)

Preserved Land (TNC/BLM)

-7

Population (Census 2000)

Restoration opportunites (norm.)

10

896.7

ID Name

Criticality Rating

16

Total assets ($1000)

0

Others

Levee length (miles)

1

Levee geometry

Area (acres)

Existing habitat (alkali marsh, wetlands, and uplands) (norm.)

Environmental Threatened or endangered: # of unique species within levee boundaries (norm.)

Population

0.10

0.198

nat. gas 7.5

22

411.8

30.0

501.3

36.5

47.7

3.5

191.7

14.0

0.258

0.798

193.1

20.8

207.0

22.3

19.5

2.1

113.1

12.2

0.091

0.298

143.3

4774.3

17.7

40,825

216

77

1

1

1

2

27

7

-3

20

13081.6 3626.6

56.6

629,940

905

99 2

4

3

10

17

19 13

2 -2

-16 -11

17 15

17.8

-1

-8

14

liqu. gas

150.4

1

12

MERGE Lower Roberts Island

11371.6

93

15

-8

-21

22

liqu. gas

MERGE Upper Roberts Island

7511.0

44

24

10

-2

15

nat. gas

5.6

10.3

Needs further investigati

0.618

13.4

0.215

0.671

369.7

20.8

396.3

22.3

37.3

2.1

216.4

12.2

0.206

0.643

1645.1

29.1

24.3

1743.2

163.9

30.8

27.8

148.7

20.7

2.6

3.5

715.1

79.2

12.6

0.181

0.568

25307.8

41.8

204,429

1039

321

1

3

1

5

27

4

-10

22

0.10

Hwy 84

892.0

21.4

954.7

22.9

89.4

2.1

509.5

12.2

0.222

0.691

48 New Hope Tract

47 Netherlands

8128.0

13.6

88,106

689

238

1

2

1

4

19

4

-12

15

0.10

nat. gas, Hwy 5

381.5

28.1

402.1

29.7

33.2

2.4

172.2

12.7

0.162

0.510

49 Palm-Orwood Tract

4857.7

16.5

273,734

97

19

0

1

1

12

-7

-17

19

0.10

nat. & liqu. gas

563.1

34.2

588.4

35.8

45.0

2.7

215.7

13.1

0.196

0.611

50 Paradise Junction

3553.8

7.0

130,789

3917

28

1

1

2

32

21

8

11

0.10

Hwy 5

5.0

146.3

20.8

156.8

22.3

14.7

2.1

85.6

12.2

0.125

0.401

51 Pescadero

7518.7

9.0

225,692

583

187

1

1

3

26

15

0

11

0.10

nat. & liqu. gas, Hwy 5

6.5

188.3

20.8

201.8

22.3

19.0

2.1

110.2

12.2

0.130

0.416

52 Peter's Pocket

3382.8

7.5

2,138

28

8

2

1

3

18

10

0

8

0.10

nat. gas

6.8

157.2

20.8

168.5

22.3

15.8

2.1

92.0

12.2

0.105

0.341

53 Pico Naglee Tract

6595.3

10.1

388,892

1107

341

1

1

2

27

9

-5

17

0.10

nat. gas

209.7

20.8

224.8

22.3

21.1

2.1

122.8

12.2

0.180

0.565

54 Pierson Tract MERGE Randall Island

8804.4 410.4

15.9

89,103

638

157 35

1

3

5

29 28

1 12

-14 -3

28 15

0.10

Hwy 160

439.9

27.6

464.1

29.1

38.6

2.4

201.7

12.7

0.266

0.823

55 Prospect Island

2226.2

14.5

1,788

4

1

0

5

5

18

3

-5

15

56 Quimby Island

1

769.9

7.0

626

0

0

0

1

1

12

-10

-18

23

57 RD 17 (Mossdale)

9768.6

15.8

969,933

9286

2661

4

0

4

28

13

-20

14

58 Rindge Tract

6742.6

15.8

18,516

43

12

1

1

1

11

-12

-26

23

267.9 0.10

Hwy 5 Yes

59 Rio Blanco Tract

1502.9

5.8

9,988

0

0

0

0

0

12

3

-8

9

0.10

Hwy 5

60 River Junction Tract

3496.6

12.9

43,006

316

111

1

1

2

37

28

9

9

0.10

nat. gas

61 Rough and Ready Island

1412.8

6.8

103,353

0

0

1

1

2

15

6

-12

9

0.10

Repair under an existing

liqu. gas

62 Ryer Island

11776.4

20.2

61,494

276

79

1

1

2

25

-5

-13

29

0.10

27302.0

15.7

28,781,540

237968

92129

8

3

11

37

22

-14

15

0.10

nat. & liqu. gas, Hwy 5 Yes

8.0

2190.5

7.9

2,036,301

13620

5536

0

0

0

17

6

-18

11

0.10

liqu. gas, Hwy 5 Yes

4.5

10268.0

65 Sherman Island

27.2

3.9

101.2

14.4

0.223

20.8

352.2

22.3

33.1

2.1

192.3

12.2

0.156

0.493

30.6

38.2

499.2

351.1

31.7

44.1

2.8

207.9

13.2

0.229

0.711

0.694

121.2

20.8

130.0

22.3

12.2

2.1

71.0

12.2

0.112

0.361

20.3 Repair under an existing

35.6

252.6

37.1

19.0

2.8

89.8

13.2

0.112

0.360

36.3

820.5

40.5

62.5

3.1

273.6

13.5

0.279

0.860

328.2

20.8

351.8

22.3

33.1

2.1

192.1

12.2

0.161

0.507

234.9

29.8

247.0

31.3

19.9

2.5

101.0

12.8

0.126

0.402

35.7

1228.5

63.2

92.7

4.8

297.4

15.3

19.4

114,940

216

110

3

3

9

14

-9

-42

24

0.10

nat. gas

66 Shima Tract

2668.9

7.0

997,638

11392

4001

1

0

1

14

5

-27

9

0.10

Hwy 5

218.2

31.0

226.5

32.2

19.5

2.8

89.4

12.7

0.113

0.364

2160.1

6.5

12,324

9

3

3

1

4

13

4

-15

9

0.10

Hwy 5

136.3

20.8

146.1

22.3

13.7

2.1

79.8

12.2

0.113

0.364

68 Smith Tract

2897.3

11.3

2,690,573

25432

10265

1

1

1

17

12

-15

5

0.10

Hwy 5 Yes

296.5

26.1

313.7

27.7

26.7

2.4

142.4

12.6

0.078

0.260

706.1

5.1

5,199

12

5

0

0

1

70 Staten Island

9093.4

25.3

20,596

42

12

0

1

1

71 Stewart Tract MERGE Mossdale RD 2107

3985.9 1050.5

17.8

53,787

196

11 63

1

1

1

72 Sutter Island 73 Terminous Tract 74 Tinsley Island

5

9.6

242.1 734.1

67 Shin Kee Tract 69 Stark Tract

3

Hwy 220 & 84

50.0

328.5 482.1

5.4

63 Sacramento Pocket Area 64 Sargent Barnhart Tract East

1

6.8 1.8

4.1

1

23

11

3

13

0.10

nat. gas

2.9

106.4

22.3

10.7

2.1

62.3

12.2

0.142

15

-12

-22

27

0.10

nat. gas

885.9

35.0

923.5

36.4

71.0

2.8

334.6

13.2

0.262

0.809

27 28

13 18

2 5

13 10

0.10

Hwy 5

12.2 20.6

371.2

20.8

397.9

22.3

37.4

2.1

217.3

12.2

0.147

0.464

12.4

12.4

26,333

115

42

1

0

1

2

26

3

-10

23

0.10

Hwy 160

20.5

94,399

652

270

2

2

1

5

13

-5

-23

18

0.10

Hwy 12

1

0

9

-3

-9

1

2

12

-12

-21

23

0.10

nat. gas

2.4

2

15

-9

-19

25

0.10

nat. gas

12.2

20

2

-17

18

0.10

nat. gas

1.1

59.1

1.3

0

0

0

1

0

3568.3

11.9

14,493

115

55

0

1

76 Tyler Island

8798.3

22.9

92,866

101

42

1

1

77 Union Island

24685.8

33.0

3

2

Consider PL-84-99 and E

0.451

300.7

24.2

319.4

25.7

29.2

2.3

156.0

12.6

0.231

0.718

665.0

32.4

696.4

33.9

54.4

2.6

266.7

13.0

0.186

0.583

442.9

37.3

624.2

52.5

52.3

4.4

174.7

14.7

0.229

0.712

808.5

35.3

843.2

36.8

64.1

2.8

302.1

13.2

0.243

0.752

818.3

24.8

998.0

30.2

88.9

2.7

418.3

12.7

0.183

0.574

156,763

540

112

7

11

78 Veale Tract

1706.2

5.4

27,975

131

46

0

1

1

12

0

-13

11

148.9

27.7

157.1

29.2

13.0

2.4

65.6

12.2

0.131

0.418

79 Venice Island

3095.4

12.4

13,308

4

2

1

1

1

2

11

-16

-23

27

461.2

37.2

623.9

50.3

49.9

4.0

180.7

14.6

0.259

0.803

80 Victoria Island

7195.7

15.0

57,078

196

7

1

1

1

3

14

-8

-16

22

562.5

37.4

693.3

46.1

53.4

3.5

204.1

13.6

0.217

0.677

81 Walnut Grove

473.0

2.9

55,332

479

172

0

0

1

1

22

1

-15

21

1.0

87.8

30.5

94.9

32.9

8.5

2.9

38.0

13.2

0.209

0.652

82 Walthal Tract MERGE Wetherbee Lake

2763.2 63.2

6.2

52,374

333

118

1

1

1

30 30

23 20

-3 13

7 10

3.2 0.2

130.2

20.8

139.6

22.3

13.1

2.1

76.2

12.2

0.098

0.320

83 Webb Tract

5440.9

12.9

416

2

1

1

3

509.1

39.4

726.3

56.2

56.8

4.4

193.7

15.0

0.235

0.729

84 Weber Tract

642.4

3.8

385,752

5313

1755

1

0

12789.1

23.4

4,156,570

31606

11401

4

7

1814.9 2108.3

8.9 7.1

124,671 16,429

0 2

0 1

1 0

0 1

85 West Sacramento 86 Woodward Island 87 Wright-Elmwood Tract

2

1

0.10

5

11

-13

-30

24

1

15

16

-8

0

0.10

11

33

17

-12

16

0.10

2 1

11 12

-10 -5

-18 -17

21 17

0.10

Low-cost seismic improv

114.0

0.726

3

2533.4

20.8

0.234

7

12439.1

75 Twitchell Island

694.5

nat. gas, Hwy 4

nat. gas nat. & liqu. gas, Hwy 84 Yes liqu. gas

11.8

Repair under an existing

487.6

20.8

522.7

22.3

49.1

2.1

285.4

12.2

0.170

0.534

317.4 253.6

35.6 35.9

331.2 274.6

37.1 38.9

25.0 20.8

2.8 3.0

117.7 93.1

13.2 13.2

0.209 0.175

0.652 0.551

0.18

0.57

11,081

30.04

13,812

34.29

Average Cost per mile Total cost of repair

1,772

2.84

8,692

13.05

6-Foot of Levee Raise

($M/mile)

6 0.645 1.524 1.080 0.846 0.890 1.644 1.181 1.179 1.742 1.218 0.856 1.060 1.203 1.228 1.479 1.229 0.918 1.267 1.620 1.310 0.697 1.830 0.979 1.287 0.764 1.252 0.721 1.384 1.095

1.433 1.310 1.601 1.150 1.671 0.671 1.416 1.361 1.211

1.456 1.094 1.297 0.876 0.907 0.756 1.204 1.720

1.463 1.061 1.497 0.796 0.795 1.795 1.089 0.878 1.527 0.802 0.802 0.595 0.976 1.693 1.003 1.511 1.241 1.499 1.579 1.223 0.911 1.680 1.429 1.378 0.714 1.532 1.143 1.379 1.177

1.21

Bill Lockyer, Treasurer

California State Treasurer

October 1, 2009

Fellow Californians: The recession that has rocked the national economy and world financial markets has dealt our State and local government finances a powerful blow . In the past year, the Governor and Legislature were forced by rapidly falling revenues and rising unemployment to enact three different versions of the annual budget before completing their work on the 2009­10 spend­ ing plan . Along the way, the State was forced to suspend or delay work on more than 5,000 job­creating infrastructure projects to conserve cash for vital public services . State budget writers ultimately had to overcome an unprecedented cumulative shortfall of close to $60 billion . Doing so came at great cost to funding for our schools, universities, and health and human services programs . Cities, counties and local districts were forced to deal with losses of similar magnitude . Their finances, like State government’s, remain at risk of substantial deficits for at least the next three years as California gradually recovers from what is likely the worst and longest recession since the Great Depression . For our 2009 Debt Affordability Report, “The Investments We Need for the Future We Want: California Needs a Master Plan,” I asked our staff to survey the damage done by the recession and dysfunctional credit market to our state’s ability to finance its critical infrastructure needs . The Report assesses the effects over the near­term and the next two decades, and updates the findings of our 2007 Debt Affordability Report . That edition underscored the need for longer­range planning for capital projects and to better integrate infrastructure priority­setting within the State budget process . This year’s report concludes the fiscal earthquake that struck California in 2008 and 2009 will cause debt service to con­ sume a larger piece of the State’s General Fund . The portion will grow from the current 6 .7 percent to 10 percent or more by the middle of the next decade unless the budget improves . So it is more urgent than ever to arrive at consensus about infrastructure needs and financing costs and to incorporate careful debt planning into the budget process . The current debate about how to finance improvements to California’s water infrastructure system provides a timely and pressing case study . Some have suggested paying the entire cost with State general obligation bonds, which must be repaid from the General Fund . But this report makes clear that further increasing the General Fund’s debt burden, especially in the next three difficult budgets, would require cutting even deeper into crucial services already reeling from billions of dol­ lars in reductions . The case for user­funding for most water system improvements is compelling, both as a matter of equity and fiscal prudence . Exactly 50 years ago, the Legislature and Governor Edmund G . “Pat” Brown established a Commission on a Master Plan for Higher Education . The members included higher education leaders and expert public members . Charged with devel­ oping a blueprint for meeting the higher education demands of our rapidly growing state, the Commission completed its work within a year . The Master Plan laid out specific guidelines for financing, constructing and allocating resources . For the following four decades, it guided decisions and measured success, and California’s higher education system became the best on the planet . Today, we need the same bipartisan commitment, good will and good sense to plan and build the kind of California we want for ourselves, our children and our grandchildren . So this report urges the creation of a Commission on a Master Plan for Infrastructure Financing and Development . The Commission would complete a thorough and public assessment of the state’s infrastructure needs, costs and financing alternatives . And it would produce a blueprint and timetable for building a California that is prosperous and a great place to call home . In addition to creating the Commission, I urge the Legislature and Governor to permanently and systemati­ cally incorporate the state’s infrastructure finance needs into the annual budget process . I commend and thank the staff of the State Treasurer’s Office, and our financial advisers and economists . They helped us make sense of the rapid and often chaotic events that so profoundly changed California’s finances over the past two years . Their efforts made it possible to deal effectively with severe difficulties while keeping close watch on California’s future well­being . On their behalf and mine, thank you for the opportunity to serve the people of California .

BILL LOCKYER California State Treasurer

C a l i f o r n i a ’ s

Fiscal Outlook

LAO Projections

2008-09 Through 2013-14

LAO 6 5 Y E A R S O F S E RV I C E

www.lao.ca.gov

All LAO publications are posted on our Web site at www.lao.ca.gov. To be immediately notified when reports are released, visit the site and click on subscribe. LAO Publications To request publications call 916-319-8317. The Legislative Analyst’s Office is located at 925 L Street, Suite 1000, Sacramento, CA 95814

November 2008 Mac Taylor Legislative Analyst

California’s Fiscal Outlook

extent to which the financial and credit markets stabilize following their October disruptions.

will drop down to reflect only infrastructure bonds.

Debt–Service Ratio (DSR). The DSR for bonds—that is, the ratio of annual General Fund debt–service costs to annual General Fund revenues and transfers—is often used as one indicator of the state’s debt burden. There is no one “right” level for the DSR. However, the higher it is and more rapidly it rises, the more closely bond raters, financial analysts, and investors tend to look at the state’s debt practices, and the more debt–service expenses limit the use of revenues for other programs. Figure 7 shows what California’s DSR has been in the recent past and our DSR projections for the forecast period. We estimate that:

As noted in the figure, the DSR we are projecting is considerably higher than in past years. In part, this reflects the sharp fall-off in General Fund revenues we are projecting, which has the effect of driving the ratio up for a given level of debt service. It also is important to note that to the extent additional bonds are authorized and sold in future years beyond those already approved, the state’s debt–service costs and DSR would be higher than projected above. For example, each additional $1 billion of bonds authorized would add roughly $65 million annually to debt–service costs once they are sold.

•

•

42

The DSR for infrastructure bonds will rise to 7.8  percent in 2011–12 before falling to 7.5  percent by 2013‑14. Thereafter, it will steadily decline as outstanding bonds are paid off.

Figure 7

Projected Debt-Service Ratioa 10% 9 8 Budget-Related

7 6

If the state’s deficit–financing bonds (known as Economic Recovery Bonds) are included in DSR, it would peak at 9.4 percent in 2011‑12. It is anticipated that these bonds will be paid off following our forecast period, at which time the DSR

5 4 3 2

Infrastructure

1

90-91 92-93 94-95 96-97 98-99 00-01 02-03 04-05 06-07 08-09 10-11 12-13 Forecast aRatio of annual debt-service payments to General Fund revenues and transfers.

Legislative Analyst’s Office

Population Data Urban SWP and CVP customers located south of the Delta are about 70% of state population Source: DWR (B160-05), referencing 2000 Population. (B160-09 does not use 2005 data yet) Total State Population (2000) = 34,000,000 Those receiving water from Delta watershed = 32,000,000 (94%) Using DWR population (2000), SWP population looks close to 22,000,000 w/o double counting. Other urban receiving from CVP only = 2,000,000+ (Fresno, CCWD, Tracy, San Juan, EDID, SEWD, etc.) Urban population served by SWP & CVP = 24,000,000 (2000 Pop.); CVP is mostly North of Delta Tracy P.P. (subtract 1M) 23M/34M = 67.6% (roughly 2/3 of State population) · This percentage applies to statewide cost 23M/32M = 72% of those reliant on Delta watershed. · This percentage applies to Delta watershed costs MWD serves more than half of the urban south of Delta customers Based on population MWD population served = 18.2M (MWD “At A Glance” Fact Sheet) Total SWP CVP urban population = 24M (this is not limited to south of Delta and will yield a conservatively low estimate of MWD’s portion) (18.2M/24M)x100= 76% Based on water volume SWP Urban South of Delta (based on Table A Allocations) South Bay = Central Coast = MWD = Other So Cal =

210,000 AF 70,486 AF 2,011,500 AF 271,350 AF {at 50% split Urban-Ag}

Total Urban SWP South of Delta = 2,563,000 AF (63%) MWD share of SWP South of Delta – (2,011,500/2,563,000)x100= 78%

BUDGET 2009/10

Five-Year Financial Forecast

Figure 11 illustrates historical and forecasted sales. The expected case projection is based on normal weather (average condition). The high and low forecasts represent sales levels that could occur under dry and wet hydrologic conditions.

In addition to hydrology, other major factors affecting sales include retail demand and local supply production. The level of water sales is the most influential variable affecting future water rates.

Figure 11. Water Sales*

* Includes Exchange sales

SOURCES OF FUNDS Power sales from Metropolitan’s hydroelectric power recovery plants, excess Colorado River power, and DVL power generation are projected to average about $26.1 million per year over this period.

Water Sales Receipts Water sales receipts are expected to increase from $1.1 billion in 2009/10 to $1.5 billion in 2013/14. This increase is due to anticipated rate increases and water sales.

Interest income is projected to average about $41.5 million per year over this period. The average return on the investment portfolio is expected to be 4.5% from 2009/10 to 2013/14.

Fixed charge receipts (readiness-to-serve and capacity charge) are expected to increase from about $136.5 million in 2009/10 to $197.9 million in 2013/14. A forecast of the major receipts categories for the next five years is shown in Figure 12. Property tax and annexation revenue is expected to decrease from $91.4 million in 2009/10 to $83.2 million in 2013/14. This is based on the maximum tax rate allowed under Section 124.5 of the Metropolitan Water District Act. 2009/10 Annual Budget

31

Five-Year Financial Forecast