Project

Designed to issue rate reduction bonds to finance publicly owned utility projects.

Program Enacted by AB 850 and AB 305

The California Pollution Control Financing Authority (CPCFA) has responsibility to review the issuance of certain rate reduction bonds to finance and/or refinance water and wastewater utility projects that are approved by joint powers authorities (JPAs). These issuances allow California local agencies that own and operate water and wastewater utilities to access low-cost financing through rate reduction bonds. The rate reduction bonds issued by JPAs to local agencies to finance or refinance a water or wastewater utility project are to be secured by utility project property and repaid through a separate utility project charge imposed on the utility ratepayers’ bills.

Assembly Bill 850 (Nazarian, 2013) authorized joint power authorities to issue rate reduction bonds to finance publicly owned water utility projects until December 31, 2020 and Assembly Bill 305 (Nazarian, 2019) took effect January 1, 2020 to expand the definition of a publicly owned utility for these purposes to include publicly owned wastewater utilities and expand the eligible costs to include refinancings as well as financings.

CPCFA reviews the issuances of rate reduction bonds to local agencies which are not subject to review by a ratepayer advocate in accordance with Government Code, section 6588.7(b)(A)-(B) and section 6588.7(c), including:

• Qualification as water or wastewater utility project furnishing water service to no less than 25,000 customers or wastewater utility project furnishing wastewater service to no less than 25,000 customers is verified.
• Utility project property and the utility project charge are verified as source of payment for utility project costs and financing costs.
• The rates of the publicly owned utility plus the utility project charge are verified as expected to be lower than the rates if the project was financed by revenue bonds, or other substantial benefits to the public utility are verified if the utility has more than 500,000 retail customers.