Proposition 1 Water Quality Supply and Infrastructure Improvement

Proposition 1 Water Quality, Supply, and Infrastructure Improvement Act of 2014 Pure Water San Diego Program Phase 1 – North City Water Storage Investment Program Public Benefit Ratio (PBR) review May 2, 2018 California Water Commission

Pure Water = Water Supply Diversification § Diversificat ion is our goal § San Diego’s selfreliance reduces imported water demands 2

Pure Water is a phased project Total 93, 000 AF/YR 3

Who Supports Pure Water? 4

Pure Water is WSIP-eligible under Prop. 1 Water Code 79751. Projects for which the public benefits are eligible for funding under this chapter consist of only the following: (a) Surface storage projects identified in the CALFED Bay-Delta Program Record of Decision, dated August 28, 2000, except for projects prohibited by Chapter 1. 4 (commencing with Section 5093. 50) of Division 5 of the Public Resources Code. (b) Groundwater storage projects and groundwater contamination prevention or remediation projects that provide water storage benefits. (c) Conjunctive use and reservoir reoperation projects. (d) Local and regional surface storage projects that improve the operation of water systems in the state and provide public benefits. 5

Recycled Water Projects are WSIP-eligible Section 6003. Application Submittal (1) The application shall consist of the following: (A) Maximum 20 page executive summary describing: 1. The project facilities and operations; 2. How the project is integrated into one or more state water systems, including use of new water sources such as recycled water or storm water capture. The summary must include information such as the project’s inclusion in an integrated regional water management plan, other integrated planning documents, or interactions with existing projects and operations that support the description of integration; 6 6

Projects outside the Delta are WSIP-eligible Section 6003. Application Submittal (1) The application shall consist of the following: (L) Documentation, analytical methods and results that support, substantiate, and quantify all public and non-public claimed physical benefits, as further defined in section 6004, including measurable improvements to the Delta ecosystem or to the tributaries to the Delta. If a project is not within the watershed of the Delta, the applicant shall identify specific water rights or water contracts that would be created or amended to ensure public benefits to the Delta ecosystem and shall provide supporting documentation of the parties’ willingness to enter into such contracts or amendments including an explanation of how these changes would assure measurable improvements to the Delta ecosystem; 7 7

The City of San Diego’s Request § The City accepts CWC’s staff recommendation on Point Loma benefits § The City requests CWC include the Delta public benefits of the San Diego component of the Pure Water program (Increased Delta Outflow & Reduced Delta Exports) § The City requests CWC make a finding regarding the definition of ‘associated with, ’ and include the public benefits of our in-Delta partnership § The City requests to revise Pure Water’s requested WSIP funding amount 8 8

Pure Water Reduces Demand on the Delta We asked ourselves the following questions: § Does Southern California Get Water from the Delta? § Is Offloading Water Demands on the Delta in the most strenuous dry-weather conditions a benefit? § Does a project that can keep reservoirs filled during multiple dry years provide statewide benefits? § Does Pure Water supply water for a reservoir? THE BASIC PREMISE OF NO MEASUREABLE DELTA BENEFIT IS NOT REASONABLE OR LOGICAL 9

New SD supply Reduces Delta Demand Both our application and appeal included monetized Delta improvement benefits yielded by the San Diego components of our project. San Diego 10

What does ‘associated with’ mean? Water Operations Review Response: 1. In the appeal, the applicant provides information regarding a new water supply of approximately 15 TAF. This supply would be the result of the Ecosystem Improvement program developed for the applicant by The Freshwater Trust. The applicantdoes not demonstrate that the benefits of the proposed Ecosystem Improvementprogram submitted in the appeal areassociated with the water storageproject as required by Proposition 1 (Water Code section 79750(b)). 11 11

What does ‘associated with’ mean? 12 12

What does ‘associated with’ mean? CHAPTER 8. Statewide Water System Operational Improvement and Drought Preparedness [79750 - 79760] ( Chapter 8 added by Stats. 2014, Ch. 188, Sec. 8. ) 79750. (a) Notwithstanding Section 162, the commission may make the determinations, findings, and recommendations required of it by this chapter independent of the views of the director. All final actions by the commission in implementing this chapter shall be taken by a majority of the members of the commission at a public meeting noticed and held pursuant to the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code). (b) Notwithstanding Section 13340 of the Government Code, the sum of two billion seven hundred million dollars ($2, 700, 000) is hereby continuously appropriated from the fund, without regard to fiscal years, to the commission for public benefitsassociated withwater storage projectsthat improve the operation of the state water system, are cost effective, and provide a net improvement in ecosystem and water quality conditions, in accordance with this chapter. Funds authorized for, or made available to, the commission pursuant to this chapter shall be available and expended only for the purposes provided in this chapter, and shall not be subject to appropriation or transfer by the Legislature or the Governor for any other purpose. 13 13

What does ‘associated with’ mean? Article 1 Purpose and Definitions Section 6000. Chapter 2 of Proposition 1, Water Code section 79701(e), declares the will of Californians that funding within Proposition 1 is provided to obtain three objectives of the California Water Action Plan: more reliable water supplies, restoration of important species and habitat, and more resilient and sustainably managed water infrastructure. Chapter 8 of Proposition 1, Water Code section 79750 et seq. requires the Commission to adopt regulations governing the investment of public funds for public benefits associated with water storage. The regulations in this chapter describe the application process to obtain public funding for water storage projects that would provide public benefits, and the methods and criteria to be used by the Commission to evaluate those proposed projects. Commission actions and meetings are performed in accordance with the Bagley Keene Open Meeting Act (Government Code sections 11120 – 11132) (Bagley-Keene). Decisions made by the Commission for the Water Storage Investment Program shall be made by majority vote in a public meeting after the Commission has heard public comment. Staff informs the Commission decisions by providing technical comment and preliminary recommendations for the Commission’s consideration. Supporting information shall be made available to the Commission in advance of the meeting, consistent with Bagley-Keene. 14 14

What does ‘comment’ mean? Water Operations Review Response: 1. In the appeal, the applicant provides information regarding a new water supply of approximately 15 TAF. This supply would be the result of the Ecosystem Improvement program developed for the applicant by The Freshwater Trust. The applicant does not demonstrate that the benefits of the proposed Ecosystem Improvement program submitted in the appeal are associated with the water storage project as required by Proposition 1 (Water Code section 79750(b)). In addition, this proposed Ecosystem Improvement program is not responsive to the Water Operations review comment. Per regulation section 6008(a)(1)(C-D), new information can only be considered by the reviewers if it is in response to reviewers’ comments. The Water Operations review comment was about the applicant’s Cal. Sim II model analysis and concluded that the model analysis did not dedicate the foregone SWP Table A demand as Delta outflow. As a result, the model showed low net increase in Delta outflow and export reductions compared to the amount of reduction in SWP Table A demand. For these reasons, reviewers cannot evaluate this Ecosystem Improvement program. 15 15

What does ‘comment’ mean? Economics reviewers removed monetization of the invasive species management and ecosystem improvements physical benefits. The applicant did not monetize benefits for the invasive species management and other ecosystem improvements programs using one of the acceptable approaches specified in the regulation and TR, such as avoided cost, alternative cost, or WTP. The applicant assumes the cost of each program is equal to its benefit. 16 16

What does ‘comment’ mean? Ecosystem Improvement Monetized Ecosystem Benefit The applicant did not quantify the physical changes and resulting ecosystem benefits as required by section 6004, subdivision (a). 17 17

Pure Water is a Unique Project § Unique Project– Our project is unique and difficult to review Traffic Controlbenefits Plan: in limited time § Staff were challenged to fully understand the project’s § Applicant received limited feedback about particular questions and issues related to the Pure Water application § Challenging Schedule - compressed time frame for proper evaluation of unique project § Delta Benefits – The in-Delta benefits of Pure Water were not fully considered § Freshwater Trust collaboration- The instream flow partnership program data was not reviewed by the State or included in the PBR § Ecosystem Benefits– If properly evaluated with both State and City staff working together closely, ecosystem benefits can be fully recognized 18

Cheers to the Future! ü Diverse Benefits ü Environmental ü Financial ü Reliability ü Increased Benefits to the Delta ü Wide-Range of Support ü Environmental Groups ü Businesses ü Legislative Leaders ü Operational in 2022 19

The City of San Diego’s Request § The City accepts CWC’s staff recommendation on Point Loma benefits § The City requests CWC include the Delta public benefits of the San Diego component of the Pure Water program (Increased Delta Outflow & Reduced Delta Exports) § The City requests CWC make a finding regarding the definition of ‘associated with, ’ and include the public benefits of our in-Delta partnership § The City requests to revise Pure Water’s requested WSIP funding amount 20 20

Additional Information Traffic Control Plan: 21

Challenged Timeframe Review Comments Received § 3 weeks for Appeal § 2 working days from Appeal Response to Staff Meeting § 1 week from Staff Meeting to Commission Meeting 23 Feb 1 12 The Process has a challenging schedule 22 Commission Meeting 2018 Jan 4 g 1 Au Appeal Submitted Meeting with CWC Staff 2017 Clarification Meeting with State Staff Ap r Ap 20 r 24 Ma y 2 Application Submitted Appeal Comments Received