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California Voters Approve Water Bond; Additional Measure on November Ballot

June 6, 2018

California voters approved yesterday a $4.1 billion bond measure that will fund significant new water-related projects in California and creates new opportunities for public and private investment in water-related infrastructure projects.   

California voters approved Proposition 68, which was sponsored by the state legislature and authorizes the issuance of $4.1 billion of California state bonds to fund, among other things, a variety of water infrastructure projects, environmental protection and restoration projects, and flood protection projects. In particular, approximately $1.3 billion will be allocated to increase flood protection, recharge and clean up ground water, and provide safe drinking water. Another approximately $800 million will be used for river and waterway improvements, ocean and coastal protection, climate preparedness, and habitat resiliency. The funds will be made available to a number of public departments and agencies, conservancies, and nonprofit organizations, in some cases through the implementation of competitive grant programs. The text of the approved legislation can be found here.  

California voters likely will be asked to consider an even larger and more broad-ranging water bond measure in just a few months. A privately backed initiative authorizing issuance of approximately $8.9 billion of California state bonds to fund a variety of water-related infrastructure projects has qualified for California’s November general election ballot. Among other projects, this measure would provide approximately $3.0 billion for safe drinking water and water quality projects, approximately $2.9 billion for improvements to watersheds and fisheries, approximately $685 million for groundwater sustainability and storage, and approximately $855 million for improved water conveyance. Entities eligible to receive bond funds under this measure include public agencies and departments, public utilities, mutual water companies, public water systems, nonprofit organizations, and conservation districts. As with the Proposition 68 funds, certain funds from the November bond initiative will be made available through competitive grant programs. The text of the proposed bond measure can be found here

Although private enterprises are generally not directly eligible to receive bond funds under Proposition 68 or the November bond initiative, these new measures do provide new opportunities for private sector involvement and investment in California’s water industry; both bond measures explicitly provide that, in appropriating and expending funds authorized by the applicable proposition, priority will be given to projects that leverage private, federal, or local funding. Therefore, these new measures should provide an incentive for public, non-profit, and private entities to work together in jointly developing proposals for advancing desired water projects.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. M. Elizabeth Dubeck, an O'Melveny partner licensed to practice law in California, Buzz Thompson, an O'Melveny of counsel licensed to practice law in California, Matt Kline, an O'Melveny partner licensed to practice law in California, Gregory Thorpe, an O'Melveny partner licensed to practice law in California, Heather Welles, an O'Melveny associate licensed to practice law in California, and Amber Cruz, an O'Melveny associate licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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