A proposal to create a watchdog for South Los Angeles County’s dozens of disjointed and struggling water systems has stirred fear among public agencies and companies further down the pipeline that they could be the target of hostile takeovers.
AB 1195, introduced by Assemblywoman Christina Garcia, would establish the Southern Los Angeles County Regional Water Agency and grant it authority to assist failing water systems with aging infrastructure, or to take control if a system is no longer able to provide affordable, clean drinking water.
But the lack of clear criteria for what qualifies for a takeover has led to concerns that this new agency, if formed, would have sweeping powers that could usurp local control.
“Everybody is nervous because it is written so broadly,” said Alex Rojas, general manager of the Central Basin Municipal Water District. “You shouldn’t just have everybody living in fear of the boogeyman.”
Dozens of water agencies
There are 29 small water systems that serve disadvantaged or severely disadvantaged communities in this region, largely wrapped around the outskirts of Los Angeles. Years of deferred maintenance and poor management led to the catastrophic failure of one such system, the Sativa Water District, in 2018. An unchecked manganese contamination in Sativa’s pipes resulted in the delivery of rust-colored, foul smelling and sediment-filled water to customers in Compton and Willowbrook that year and sparked outrage.
State officials struggled to find another agency willing to take on the burdensome costs of operating Sativa, and Los Angeles County eventually stepped in.
Central Basin supports the bill’s goal of preventing another failure on the level of the Sativa Water District, but in its current form, it needs guardrails and a fair process to protect agencies, Rojas said.
Garcia and the local water agencies have a rocky history. She authored a bill that reformed Central Basin’s board to include appointed board members in 2016. Last year, she unsuccessfully pushed to dissolve the district during a period when the board fired nearly all of its employees. She also signed on to a letter criticizing the Water Replenishment District of Southern California for a controversial attempt to hire former Carson Mayor Albert Robles as that district’s general manager. Rumors of legislation to reform WRD and Central Basin have circulated for months.
Rojas said the district, under his leadership since late 2020, is back on track and is rebuilding its relationship with legislators, including Garcia.
Bill still in early stages
In an interview, Garcia acknowledged the lack of detail in her bill and said it is still in an early stage. She is willing to work with the districts and companies in the region — which covers 43 cities from from Montebello to the Palos Verdes Peninsula — to iron out the key components, such as how the regional agency would be funded and what could trigger a takeover.
The bill provides another option for a failing agency to stay under public control and avoid privatization, she said. It will not supplant properly managed agencies, she stressed.
“If you’re doing your job, you’re being responsible, a bill like this shouldn’t worry you,” she said.
The end goal, for Garcia, is to stop failures like Sativa from occurring, but if one does occur, this agency would exist as a potential administrator, she said.
Wait-and-see stand
Central Basin and WRD, two of the larger water agencies in the bill’s footprint, have not taken official stances against the bill yet, but both have publicly expressed concerns. Their current wait-and-see stance is driven largely by assurances that another revision is coming in the near future, officials said. The bill is particularly of concern for WRD as it states the Southern Los Angeles County Regional Water Agency would be the “leader in inter-agency collaboration on water resources issues” and have a “jurisdictional territory coextensive to the jurisdictional territory of the Water Replenishment District of Southern California.”
WRD’s external affairs committee, which includes all five board members, unanimously opposed the bill because it overlaps with WRD’s responsibilities and there is a possibility appointees to the agency could come from outside the service area. The proposed regional agency’s five-member board would be selected by the governor, the county Board of Supervisors, the Gateway Cities Council of Governments, the South Bay Cities COG and the San Gabriel Valley COG.
Only four of the supervisors and one city in the San Gabriel Valley COG — Montebello — are within the boundaries.
WRD is already working on an assessment of the “technical, managerial and financial” capacity of drinking water systems serving disadvantaged communities in its jurisdiction through an $800,000 grant from the state.
“AB 1195 should not prejudge the outcome of this important work,” wrote Ted Johnson, WRD’s assistant general manager, in a letter to the board.
Last week, however, the WRD’s board tabled plans to formally oppose the bill until April in response to planned talks with Garcia.
“We’re going to take a position after we talk with the assemblywoman,” said John Allen, WRD’s board president. “We’re certainly willing to listen and we hope she will listen to us.”
At a special WRD meeting Friday, March 19, George Perez, CEO of 180 Tract Mutual Water Co., which serves Bell and Cudahy, also criticized AB 1195. He said granting power over water to appointees would “disenfranchise millions of voters” and create another layer of government.
The State Water Resources Control Board, WRD and Central Basin already are capable of taking care of the problems the bill aims to fix, Perez argued. WRD offers programs that assist with funding repairs and restoration of water systems in disadvantaged communities.
Malfeasance at Sativa
AB 1195 is largely driven by a recent study from UCLA’s Water Resources Group that dug into the failures at Sativa and the challenges faced by the 29 other disadvantaged community providers in the same area. In Sativa’s case, auditors found the district had no books, nor documentation for its receipts. It had been filing fabricated reports to the state Controller’s Office for years, according to a presentation by Madelyn Glickfeld, executive director of the UCLA Water Resources Group and one of the UCLA report’s authors.
While other agencies knew Sativa was struggling to some degree, there was a lack of action, in part, because there wasn’t a suitable owner to take over the system. UCLA’s study found neighboring investor-operated utilities — the companies most willing to take on a failing, costly water system — typically had water rates 22-26% higher.
L.A. County ultimately took over Sativa with $200,000 in funding from the state. But the county’s costs ballooned to more than $8 million within a year and it has struggled to get reimbursement from California, according to UCLA. As a result, the county is unlikely to step up in the same way again, the report states.
“The high cost of fixing Sativa is what makes it urgent to identify other DAC (disadvantaged community) systems that are failing,” Glickfeld said during a presentation to WRD’s board Friday, March 19. “They waited too long for Sativa, until it got to be way more than anyone could afford.”
The UCLA report recommends the formation of a joint powers authority to serve as administrator for all troubled water systems countywide. AB 1195’s structure is not among the recommendations.
“That doesn’t mean its not a good solution, but the more solutions that we get out on the table, the better,” Glickfeld said of AB 1195. “None of us wants to see another Sativa.”