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Drinking Water Partnerships and Consolidation


A public water system is generally defined as a system that provides water for human consumption with 15 or more connections, or regularly serves at least 25 people daily for at least 60 days out of the year. California has more than 7,500 public water systems, of which approximately 92 percent serve less than 1,000 connections. Small public water systems are often less resilient to natural disasters, such as drought and fire, have more difficulty adjusting to regulatory changes, and may struggle to fund infrastructure maintenance and replacement due to poor economies of scale and lack of staff. As a result, the State Water Resources Control Board (State Water Board) supports water partnerships whenever feasible, a component of the Safe and Affordable Fund for Equity and Resilience (SAFER) program. Water partnerships can take many forms, including: local resource sharing, physical consolidation, managerial consolidation, and full regionalization.

For more information on SAFER, visit the Safe and Affordable Fund for Equity and Resilience (SAFER) website.

How Do We Begin?

The following links provide information on water partnership tools, step-by-step processes of consolidation and regionalization, funding and funding incentives for consolidation and regionalization projects, and success stories.

What is Local Resource Sharing?

Local resource sharing can be formal and informal agreements between water systems that allow them to decrease their costs, or provide specialization that they otherwise would not be able to afford. For example, five nearby small water systems may all need billing services, operator services, and specialized equipment. Rather than each of the five water systems paying part-time staff for each of these job functions, the five water systems can work together to jointly contract for these services and thereby get a reduced rate and/or more specialized and effective staff, while maintaining their local identity. They can also agree to buy and manage expensive specialized equipment, or even things like shared water sources. All of these strategies of local resource sharing can help water systems save money so that they can spend their resources on needed improvements, funding reserves, or paying down debts.

What is Water System Consolidation?

Consolidation is the joining of two or more water systems, which includes, usually but not always, a smaller system being absorbed into a larger water system. One way to do this is through physical consolidation. For example, a small mobile home park which has its own water system may be near a city and decides it no longer wishes to be responsible for providing drinking water. The city can begin providing water to the mobile home park through an interconnection. The mobile home park can dissolve its water system and no longer be responsible for providing water. In this case, we call the city the "receiving" water system and the mobile home park the "subsumed" water system.

Managerial consolidations also exist. Managerial consolidation is when a small water system becomes part of a larger water system for all managerial purposes, but continues to use their original water supply and distribution system. For example, a small community may once have had an all-volunteer staff. The volunteer staff may be aging and no longer wants to be responsible for the water system. The water system may be too far from the large water system to make it cost-effective to physically consolidate. The larger water system can legally take over the water system functions such as regulatory reporting, billing, operations, etc., but use its existing infrastructure. The smaller water system dissolves and is no longer legally responsible for water service.

What is Regionalization?

Regionalization is a process where several local public water systems work together to form a combined public water system. It can also be used to describe a situation where several public water systems will be subsumed into one large water system. Regionalization is consolidation on a larger scale that has benefits on a much larger scale for its customers.

What are the Benefits of Consolidation or Regionalization?

Consolidated water systems can share costs such as billing and operational personnel, the cost of new water sources, and often can purchase time-saving equipment that neither system could afford to purchase alone because they can spread costs over a larger customer base. One of the benefits of physical consolidation and/or regionalization, over water partnerships, can also be lowered monitoring costs. For example, two small water systems may each be required to sample monthly for bacteriological quality in the distribution system, disinfection byproducts annually, and lead and copper every three years, etc. When a receiving water system takes in a subsumed system they may not see an increase in their sampling if the consolidation water system population does not exceed certain thresholds. The subsumed water system could therefore see a saving in monitoring costs, which could be passed on to the consumers. This can functionally reduce monitoring costs by half.  Additionally, water sources can often be shared giving the water systems more flexibility and reliability.

What are the Benefits and Protections for Receiving Water Systems?

Zero interest loans up to ten million dollars are available for water systems that complete the consolidation of a small disadvantaged water system. The zero interest consolidation incentive loans can be used for any water system infrastructure project that the receiving water system desires. The purpose of this incentive is to encourage larger water systems to support their community through consolidation and regionalization projects. Additionally, Section 116684 of the California Health and Safety Code, titled "Consolidation Liability Exemptions," provides liability protections to receiving water systems related to the past practices of the subsumed water system. These liability protections apply to both mandatory and voluntary consolidations. More information about consolidation incentives can be found on the Water Partnership Toolbox webpage.

What about our Loss of Local Control of our Water?

Many owners of small water systems feel that giving up their water systems means giving up control of a life-sustaining resource. Few people worry about the loss of local control of their wastewater systems, telephone service, and electrical services in the same way as they worry about giving up control of their water. At the same time, the burden of water costs is commonly overlooked. According to the Pacific Institute, "water utilities are more than twice as capital-intensive as electricity and nearly three times as capital-intensive as natural gas." Yet, water typically is one of the lowest cost utility services. This is because often small systems pay low water rates because they are not planning and saving for future, and sometimes even current, infrastructure needs. The true cost of the water being provided is not being accounted for, resulting in unsustainable water systems. When replacement of infrastructure is needed, small water systems do not have the customer base to spread out the costs, nor the staff, financial reserves, and/or credit histories to obtain large infrastructure loans. Therefore, consolidating or regionalizing water systems can be an opportunity for people to work together with their community in an organized way for the mutual benefit of all.

For some systems this concern may be so great that starting with local resource sharing and building relationships rather than immediately working toward consolidation or regionalization will be a more acceptable approach. The savings realized from local cost sharing can then be put toward reserves or needed infrastructure improvements.

What are the True Costs of Being a Public Water System?

Applicants to become a public water system often expect the cost of a well, distribution system, and occasional monitoring to be all that it takes to be a public water system. The amount of work and financial commitment to be a sustainable public water system should not be understated. A document titled, "What is a Public Water System" discusses many of the requirements and costs to be considered before starting and operating a public water system.

What is Mandatory Consolidation?

The State Water Board strongly supports voluntary sharing of local resources, consolidation and regionalization. Local, proactive approaches to public water system sustainability will provide the best outcomes. However, when public water systems are failing to meet water quality standards and/or have inadequate water supply, the State Water Board may order mandatory consolidations in some circumstances, in accordance with Sections 116680-116686 of the California Health and Safety Code. Please see the following link to learn more information about mandatory consolidation: Mandatory Consolidation or Extension of Service for Disadvantaged Communities.

Consolidation Verses Annexation

In drinking water terminology, consolidation and annexation have different meanings. Consolidation is the joining of two public water systems. Annexation is a legal process where boundaries are expanded to include nearby areas not already incorporated into a municipality. When an area is annexed, it is eligible to receive services from the municipality such as water and sewer service, full-time police and fire protection. Depending on the governance type of the water system, a formal annexation process may or may not be required for consolidation. The annexation process or government reorganization process is typically under the jurisdiction of each county's Local Area Formation Commission (LAFCO). LAFCO has jurisdiction over the boundaries of counties, cities and most special districts.

For assistance on water partnerships and consolidations, contact our coordinators:

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