Damaging floods are more common in California than you might think; over the past 60 years, every county has been declared a state or federal flood disaster area multiple times.  Central Valley levees have failed on more than 70 occasions and more than 7 million residents and hundreds of billions of dollars in assets are at risk.  A changing climate is likely to bring larger and more frequent floods, increasing pressure on flood management systems that were designed for conditions in the early 20th century.

The Central Valley Flood Protection Act of 2008 (SB-5)  was an aspiration to achieve a 200-year level protection for the urban areas in the system and a mandate for DWR to develop the Central Valley Flood Protection Plan and the Central Valley Flood Protection Board to adopt it.   The resulting Central Valley Flood Protection Plan, first adopted in 2012, is the most comprehensive flood management planning effort ever undertaken in California, addressing flood risks in an integrated manner while concurrently improving ecosystem functions, operations and maintenance practices, and institutional support for flood management.  The 2017 update of the Central Valley Flood Protection Plan included an update to the investment strategy to fund the enhancements to the flood system to protect high risk communities and to also achieve the State Plan of Flood Control design capacity which it was originally designed for.

However, flood management projects are often large-scale, lengthy, and expensive.  In the past, federal funds have paid for a large part of the costs; however, times have changed.  While the need for increased flood protection is widely acknowledged, there is a large and growing gap between flood infrastructure needs and rates of investment, and the state is not well-positioned to cover the funding shortfall.  Additionally, the 2003 Paterno v. State of California decision held the state liable for damages caused by failure of a locally maintained levee, exposing taxpayers to billions of dollars in potential costs.

The 2017 Central Valley Flood Protection Plan’s Investment Strategy looked at the different options for finding the necessary funding, one of which was to investigate the feasibility of retooling the  Sacramento-San Joaquin Drainage District (SSJDD) to provide a small continuous funding stream for ongoing expenditures of the flood management system.  At the April meeting of the Central Valley Flood Protection Board, consultants discussed the upcoming feasibility study.

THE FUNDING NEEDS

Laura Byrd with Jacobs Engineering, a consultant who was involved with the development of the Investment Strategy, began with the findings on the investment needs for the adopted Central Valley Flood Protection Plan.

The Central Valley Flood Protection Plan estimated an investment need for of $17 to $21 billion over 30 years, which consisted of $250-$310 million per year for ongoing investments such as operations and maintenance and another $12 to $16 billion over the 30 years for capital improvements.  These estimates were derived from various supporting efforts for the plan, including RFPs, basin wide feasibility studies, regional workgroups, small community projects, state operations, emergency management costs, and state floodplain management costs.

The 2017 Plan identified $250-310 million per year in ongoing investments, which includes emergency management, reservoir operations, routine maintenance, and other activities such as risk awareness campaigns, plans and studies.  Estimated current spending on these types of activities (above, right) is about $117 million per year, with the state’s share in red, the federal share in blue, and the local share in green.  The plan recommends increasing spending to $250-310 million per year by the end of 30 years, as shown in the right hand column (Phase 3).

“There are large amounts of needs currently unfunded and would need to be funded in the future,” Ms. Byrd said. 

For capital investments, the reported need was $12 to $16 billion over the next 30 years, which includes large system-wide improvements such as Paradise Cut on the San Joaquin River, projects in the Yolo Bypass, urban levee improvements, rural levee improvements and repairs, multi-benefit improvements, and small community improvement projects.  The left hand column shows the current capital investment which is about $4 billion from state, federal, and local sources, so a significant gap that needs to be filled to improve and enhance the State Plan of Flood Control.

“These figures present a large list that needs to be filled by state, federal, and local partners,” said Ms. Byrd.  “It’s a significant list that needs to be funded going into the future, so the 2017 investment strategy that accompanies the plan looked at ways to do that and what would need to be established from each of those funding partners to make this possible.”

Listed across the top of the slide at the bottom left are the existing sources for funding from state, federal, and local sources.  The bottom half of the slide shows three new funding mechanisms for the state that were identified in the 2017 investment strategy, one of those being reutilizing the Sacramento-San Joaquin Drainage District, which could potentially generate $25 million per year to contribute towards capital and ongoing investments. 

Breaking down the state investments, the left column on the slide on the above right shows the current funding level from that funding mechanism and the right hand column is the recommended funding level by the end of the 30 year period that was recommended in the 2017 update.  General obligation bond funds have provided about $180 million per year, mostly from Prop 20 and Prop 84.  The recommended funding level proposed by the Central Valley Flood Protection Plan was one $2.5 billion every decade, which comprises a significant share of the state’s contribution towards the Central Valley Flood Protection Plan.

Although the Sacramento-San Joaquin Drainage District (SSJDD) is listed as a state mechanism and would be more than likely administered by the state, it would be locally funded.  Ms. Byrd noted that it’s not attributed to the local share right now, but it’s a relatively small portion compared to the larger state general fund and state general obligation amounts that make up the state’s share.

“Potentially anything that could be funded by the SSJDD would be activities that would be funded on a stable and consistent basis,” said Ms. Byrd.  “We’ve heard in the past that with the general fund, funds can sometimes be diverted for other purposes or in times like right now when there’s an emergency that takes precedence.  Really the SSJDD would be looking for a stable funding stream for some of those activities in our system that are either not funded right now or underfunded.”

THE SACRAMENTO-SAN JOAQUIN DRAINAGE DISTRICT (SSJDD)

The Sacramento San Joaquin Drainage District (SSJDD) was formed in 1913 to provide funding for operations and maintenance of the state’s flood control projects.  The assessment was collected up until the mid-30s until hard economic times with foreclosures and collections made collections problematic.  The Sacramento-San Joaquin Drainage District does have authorized land and right of way acquisition; its primary function today is to hold lands for the state.

The black dashed line that runs up and down the valley on the map shown on the left is the legal boundary of the SSJDD.

“We found that when we overlay some of the regional study areas, there were inconsistencies with the boundary and so part of the feasibility will not only look at the funding stream but also whether adjustments to that boundary will be required,” said Scott Brown, principal with Larsen Wurzel and Associates.

The SSJDD has the authority in Water Code Section 8750 to levy an assessment on lands; that assessment is governed currently by Prop 13, which has a proportional benefit requirement, so the assessment has to be apportioned according to the benefit.  Mr. Brown noted that it is different than Prop 218 that local agencies are required to follow; there are some flexibilities for who is assessed and what properties are assessed under Prop 13 that aren’t available under Prop 218.

The SSJDD’s authority allows for an assessment to be proportional to an entire endeavor, meaning the entire system can be apportioned based on a defined project within the system. 

“What that would allow is that we could be evaluating regional assessments through the SSJDD versus a system-wide assessment and we’ll be looking at that,” said Mr. Brown.

FEASIBILITY STUDY

The objectives of the study are to evaluate whether it’s feasible to levy an assessment on properties through the Sacramento-San Joaquin Drainage District (SSJDD) to provide ongoing funding for O&M or capital improvements, and if it is determined to be feasible, they will develop an implementation process for the Board to move on and consider beyond the feasibility study.

Per discussions with Board staff, they’ve identified the key requirements for testing feasibility:

• Stakeholder buy in: Stakeholder buy-in from Local Maintaining Agencies and municipalities is key, because without stakeholder buy-in, there is likely to be significant push back at the legislative level. 
• Supplement, not compete with, existing state and local agency funding: The funding requirements need to supplement and not compete with existing state and local agency funding.  “The investment strategy had a certain level of funding coming from the general fund or GO bonds and this should be supplemental to that and not be a replacement for any of those funding streams,” said Mr. Brown.
• Affordable for local landowners: It needs to be affordable for local landowners; they will be looking at both tax burden and residual land value. 
• Sufficient Return on Investment: It needs to be sizeable enough to provide a decent return on investment for the Board in terms of staff administrative time and annual administrative costs.
• Politically viable / legally possible: It needs a political pathway to be viable and there needs to be a legal defense for the actions the Board will undertake. 
• Defined path for implementation: “We’re not looking to put a study on the shelf; we’re looking for an action plan to come out as well,” he said.

He presented a slide with the schedule.  They are currently in the middle of phase one; they have initiated stakeholder meetings, presentations to the coordinating committee, regional meetings, and a meeting with the Flood Association. 

“During this stage, we’re looking for services that have buy-in from local stakeholders and those services would be what would be reviewed further in terms of feasibility,” said Mr. Brown.  “We’re developing the background information that sets the stage for what we’ll be testing and how we’ll be testing that.”

They hope to wrap up phase one by June, but the timeline had to be pushed back a month due to meeting delays from the pandemic stay at home orders, but they are trying to maintain schedule moving forward. 

For the next phase, they will develop beneficiaries associated with the services and start to identify test cases; they will then go back out to stakeholders again and solicit feedback.  Following that, they would start developing the methodology and testing those specific test cases through the remainder of the year and into early next year.  They will then refine the implementation plan and bring the report findings to the board in April of 2021 with a final report out for public review and presented to the Board for final action in June of 2021.

“That’s the scheduled we laid out and committed to, and we’ll see how we move through this next couple of months and if there are any further delays from the stay at home orders, but we’re hoping to maintain that,” said Mr. Brown.

STAKEHOLDER ENGAGEMENT PLAN

Kim Floyd with Kim Floyd Communications then discussed the plan for stakeholder outreach. 

“When the board went out with the RFP for this particular project, what was interesting was that stakeholder engagement was the highest priority service listed in the RFP,” said Ms. Floyd.  “So from a stakeholder outreach perspective, we agree with the Board assessment of the value of that effort.  We are planning to have many rounds of discussion that’s necessary to developing a shared understanding of the opportunities, the constraints, the issues, and the concerns.  We did not go into this with any preconceived notion of feasibility; we’re relying on our stakeholders to arrive at an outcome, whatever that may be.”

Each cycle will take several months so there will be more than enough opportunities for people to engage and provide input.  Originally, there were plans to do as many face-to-face discussions as possible, but the COVID-19 situation has changed their approach, so they are doing small group meetings by Webex and by phone, and will continue to emphasize those small group meetings going forward.

They are beginning with the practitioners, the Local Maintaining Agencies, and the Central Valley Flood Control Association; next, they will be reaching out to NGOs, farm bureaus, and other special interests; then they will wrap into cities, counties, and other special districts to better understand the local capacity for additional fees and assessments. 

They will be conducting larger group meetings, mostly timed around key milestones; there will be coordinating committee updates, workshops, and meetings and reports back to the Board, and circulation of draft documents, so while they are developing a draft report, there will have been plenty of opportunity for people to provide input into that along the way, which provides for a cleaner process at the end, Ms. Floyd said.

Ms. Floyd noted that they didn’t come into this project completely blind; the 2019 Central Valley Flood Control Association’s forum focused on the SSJDD assessment district feasibility study before it had gone out to RFP, so they made very careful note of what questions were asked at that point.  They’ve also had many informal discussions with practitioners, gathered information from workgroups and discussions that stemmed from the 2017 CVFPP update as well as their kickoff meeting with board staff.  The slide lists some of the questions they have already considered moving forward.

OVERVIEW AND GENERAL OUTLINE OF THE STUDY

The first step will be to evaluate the 106 State Plan of Flood Control areas, cities and counties in terms of the facility conditions and services needed, the funding and shortfalls, and flood risk.

“We’ll have a summary of flood risk within regions and we’ll break that down as detailed as we feel necessary to feed into the beneficiary analysis,” Mr. Brown said.  “Along with that, we’ll have a full evaluation of the existing legal authority and include any restrictions that would occur there.”

Next, they will get into a discussion of the beneficiary analysis.  The first step for that is to define the services or improvements that would be or could be funded through an assessment by the SSJDD.  As part of that, they would identify from those services what the actual benefits are and who benefits from those services, and then develop a methodology that could be applied to determine how to apportion the benefit across the land. 

“We’re going to look at test cases,” said Mr. Brown.  “We’ll look at least three different types of districts and based on those test cases, we’ll be able to estimate the potential revenue that the district could provide on an annual basis.”

Their assumption and thought going into the assessment methodology is to uphold the Prop 218 beneficiary pays standard which is the standard that all of the Local Maintaining Agencies have to adhere to when they raise funds in their districts, so applying that same standard here would help to ensure stakeholder buy-in, he said. 

“The services are really what drive the benefits that are received by the specific beneficiaries who we’ll be defining that through the methodology,” said Mr. Brown.  “The methodology will also consider the attributes of the beneficiaries in terms of where they are geographically, certain districts or regions may have higher flood risks, lower flood risks, and in that all will come to fruition in the methodology.”

They are proposing to look at three test cases: a rural Local Maintaining Agency, an urban area, and an LMA on a Delta island or Delta district.  They will then do a deep dive into these districts, look at land use and flood risk, apply the methodology that’s developed, and determine what feasible level of funding could be raised from this district.  From those three test cases, they would then prorate the revenue that they think those districts could provide from an affordability and benefit received in those districts, and apportion that throughout the SSJDD based on acreage protected, miles of levee maintained, type of LMA, and any of the other attributes that are determined along the way to be key to apportioning the benefit.

The report will end with an implementation plan, once feasibility has been tested.  They will identify any legal constraints and try to set forth a pathway for any legislative changes that are needed.  They will also evaluate whether a single district-wide assessment is more prudent than a regional implementation based on an RFMP region or any other subunit of an RFMP region.  They would identify any data or analysis that would need to be performed by the board in order to establish the apportionment of costs, or the budget that would go into those services, and identify the steps the Board would need to take in order to levy that.

“As we’re defining these services, we will likely hear some ideas that are important services to fund, but those may not be appropriate to be funded through an assessment,” said Mr. Brown.  “They may provide more general benefit that doesn’t really ties down to a specific land benefit the assessment is required to have.  So we’ll table those to the side, identify those services that are there, and then try to identify potential funding sources for future study that would develop those funding mechanisms.”

As the sections are being developed, draft sections will be provided to stakeholders, board staff, and board members for review and input along the way with the hope that once a completed draft document is presented to this board, it becomes a discussion at the higher conceptual level.  The report will go out for a formal public comment period and be brought back to the board for consideration.

Mr. Brown then reiterated that they are wrapping up some of the initial stakeholder meetings, developing screening criteria to refine the list of services, soliciting input on what services or improvements that local stakeholders are supportive of, and reviewing existing data to identify funding shortfalls and needs within the LMAs.  He noted that the next step is a board workshop scheduled for May 8 where they will be soliciting input from board members in terms of what they feel should be funded in terms of services, projects, activities, and what they feel should be considered in the feasibility study.