1. CALFED Finance Planning

2. Need for Finance Planning Status quo approach to rely so heavily on State bond funds unlikely in the future Existing funding significantly declining Legislative direction on new water user fee Benefits-based financing principle in ROD Avoid piecemeal finance planning

3. California Bay-Delta Program Years 1-4 Program Funding

4. California Bay-Delta Program Years 1-5 Cumulative Funding

5. California Bay-Delta Program Years 5-8 Estimated Funding

6. Finance Planning Reports Finance Options Report –Expand understanding of benefits and costs –Develop financing options Ten Year Finance Plan –Develop specific funding targets –ID unmet needs –ID financing strategy

7. Finance Planning Reports Draft Finance Options Report provides Foundation for 10 year plan discussion: Annual funding targets for each element and task/project Schedule and readiness of projects Potential benefits and beneficiaries Possible finance strategies for each element and task/project

8. Finance Planning Outreach Stakeholder and agency workgroups & informal meetings Legislative hearings & meetings Public meetings and workshops Independent Review Panel –8 member panel of academics and practitioners

9. Analysis For Developing Finance Plan 1.What are the reasonable funding needs/targets? 2.What are the benefits? 3.Who are the beneficiaries? 4.How should costs be allocated? 5.What are the finance tools?

10. 10 Year Finance Plan Funding Targets & Unmet Needs

11. What are the Benefits? –Water supply (yield & reliability) –Drinking Water Quality –Ecosystem Improvement –Flood Protection –Hydropower –Recreation

12. Measuring “Economic” Benefits More Easily Measured: Water supply, water quality and flood protection More Difficult to Measure: ecosystem improvements

13. Finance Tools For the Public Share –State General Obligation Bonds –General Funds –Federal appropriations For the User Share –Self Liquidating GO Bonds –State Revenue Bonds –SWP & CVP contractor charges –JPA Revenue Bonds –Local matching contributions –New State Administered Fees

14. New State Administered Fees Fee versus Tax: Need a Nexus between level of benefits and amount paid in fees Each program in CALFED has different set of beneficiaries that would result in varying fee levels among water users

15. New Benefits Based Water User Fee Finance Options Report suggests that a water user fee is best suited to programs with diffuse water user benefits & not able to identify individual beneficiaries such as: Ecosystem Restoration Environmental Water Account Drinking Water Quality Delta Levees Watershed

16. Example Finance Strategies Surface Storage Construction Groundwater Storage WUE (Conservation, Recycling, & Desalination) Ecosystem Restoration Program Financing negotiated project by project based on willing beneficiaries GW and WUE Grant Programs – Primarily local funding, Public share for broader statewide benefits Public share - Future State bonds & Fed appropriations, Water User share - fee possible, Local cost shares

17. 10 Year Finance Plan Next Steps Before mid-October Refine funding targets and available funds Develop proposed cost sharing plan Continue outreach with agencies and stakeholders

18. Finance Planning Issues /Challenges Measuring or understanding benefits to support cost sharing Philosophical differences--property right vs. public trust Ensuring balance & linkages across Programs Large gap, no easy money, numerous interest groups & timeframe condensed