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Attorney General Concludes That California Water Districts May Contract With Developers For The Construction And Reimbursement Of Oversized Water Facilities

By: Alfred E. Smith
10/21/05

On October 12, 2005, the California Attorney General issued an opinion concluding that water districts organized under the California Water District Law (Water Code §§ 34000 et seq.) may contract with the first developer in an area for the construction of oversized water facilities.  The opinion further concludes that water districts may enter into agreements with subsequent developers to reimburse the first developer for the construction costs of the excess capacity.

The opinion clarifies the extent to which water districts may contract with developers to support anticipated growth.  Critics argued that the Legislature did not intend for water districts to enter into such contracts.  Whereas the Legislature authorized cities, counties and county waterworks districts to enter into similar arrangements under the Government Code and the Public Contracts Code, it did not include a similar authorization for California water districts.  (Government Code  §§ 66410-66499.37; Public Contract Code § 20609-20612).

The Attorney General acknowledged that the Water District Law does not "expressly" authorize such arrangements, but disagreed that the lack of express authorization precludes water districts from executing these contracts.  Instead, the Opinion finds that the statutory schemes governing other agencies validate the agreements in question by indicating "the Legislature’s support for the use of such agreements to address the growing needs of a community in a reasonable and practical manner."  In support of its conclusion, the Attorney General further noted the "implied" power of special districts to act as "necessary for the due and efficient administration of powers expressly granted by statute."

The Attorney General cautioned, however, that the board of directors of a district must not act in an "arbitrary, capricious, or unreasonable manner.  Instead, the board must exercise sound judgment in taking into account the financial burden placed upon the first land developer and fashion agreements that are fair, nondiscriminatory, proportioned, and reasonable in light of the needs of the community as a whole."

To view the full text of the Opinion, click here.

Alfred E. Smith, II is a Partner in Nossaman's Los Angeles office who specializes in environmental, water and complex commercial litigation.  He represents public and private water purveyors, major water users, corporations and public agencies on matters including environmental compliance, water rights disputes, conjunctive use, public utility regulation, groundwater management and litigation over allegedly contaminated water and soil.  Alfred is an appointed member of the Association of California Water Agencies’ (ACWA) Legal Affairs Committee.  He can be reached at (213) 612-7800 or
asmith@nossaman.com.

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