Levee Funding Feasibility Study

The Delta Protection Commission has initiated a study to identify feasible financing options to pay for levee improvements and other methods of reducing flood risk in the Delta.  The Study will evaluate the potential of assessing a variety of entities with an interest in preventing Delta flooding to share in the capital investment and maintenance of Delta levees, and recommend the most feasible procedures. The Factsheet gives a brief summary of the project in downloadable format.

Study Objective

This Study supports the Delta Plan recommendation that “the Legislature should create a flood risk management assessment district to provide adequate flood control protection and emergency response for the regional benefit of all beneficiaries, including landowners, infrastructure owners, and other entities that benefit from the maintenance and improvement of Delta levees, such as water users who rely on the levees to protect water quality.”(Delta Plan Chapter 7, Recommendation RR R2, emphasis added). In addition, the Department of Water Resources, which funded the Study, has had a long interest in a beneficiary pays system for Delta levee improvement and maintenance. As the study proceeds, a small group of stakeholders will advise the team by providing feedback on work products and the feasibility analysis.

The Study will:

  • Consider the legal, institutional, financial, and political feasibility of each mechanism;
  • Identify the classes of relevant beneficiaries and their tangible and intangible assets (e.g., farms, pipelines, roads, through-Delta conveyance, etc.);
  • Characterize their level of benefit and ability to contribute financially (although these estimates will be of orders of magnitude); and
  • Describe institutional and legal constraints that could influence their ability to make a fair and equitable payment.

Because this is a feasibility study, the project will produce illustrative examples that reflect the Delta’s complexity, and which are sufficient to draw broad conclusions about the feasibility of a range of financial mechanisms. To move forward to implementation, the State will need to obtain more precise and comprehensive information, and the Legislature will need to consider the various policy options that the feasibility study generates.

Feasibility Study Documents

The Delta Flood Risk Management Assessment District Feasibility Study is being developed in collaboration with State agencies, local reclamation districts, Delta landowners and businesses, and other stakeholders. During 2016 and 2017 there were several discussion drafts and the Commission received several public comment letters.

Status of Study

Responding to recommendations in the 2009 Delta Plan and the California Water Action Plan requesting such research, the study evaluates the most feasible finance mechanisms that could be part of a “beneficiary-pays” system for Delta levees. Beneficiary-pays acknowledge that Delta levees serve far more beneficiaries than just those whose property is protected from flooding. Additional beneficiaries include owners and users of infrastructure, the statewide economy, and those who receive water from the Delta. The study does NOT recommend changing the existing funding programs or immediately implementing any of the feasible funding mechanisms. The study calls for further in-depth analysis of the benefits to various beneficiaries, how such beneficiaries would contribute, and ways in which such a system could be administered.

Almost immediately, the research proved that a single assessment district would not be feasible.  There was no way to establish such a district under current State law. The study did, however, clearly identify the benefits to out-of-Delta beneficiaries, and several feasible financial mechanisms for further exploration. This study provides a significant contribution to better understanding of Delta levee funding and financing options.

For next steps, the study recommends additional analysis to look at the details of the benefits, cost allocations, potential fees, and comparative feasibility of the several funding options identified by the study. This analysis would be undertaken as a collaborative effort, including peer agencies and stakeholders as well as potential “beneficiaries” identified by the study, to examine these details before recommending action on any of the options under discussion.

Here are a few highlights of the work done to date:

1)  Four consultant-led workshops were held with stakeholders in February, May, June and September 2016 (see box below).

2)  The Commission’s Subcommittee has held meetings twice in March 2016, and once in May 2016, June 2016, December 2016, and February 2017.

3)  The full Commission heard an informational item about the Feasibility Study at their October 20, 2016 meeting in West Sacramento.

4)  The draft DFRMADFS study was released on December 6, 2016 for public comment.

2016 Project Workshops

Working Group Workshop #1 – Building Blocks March 9, 2016

This workshop presented the team’s understanding of the context and data, and included a review of the current status of levee funding and legal issues.

Working Group Workshop #2 – Economic Aspects – May 24, 2016

This workshop introduced the team’s approach to estimating the economic factors that enter into assessing the feasibility of different financing mechanisms.  This included estimation of existing economic benefits by activity, linkage of beneficiaries to hazards and risks, flood protection cost estimates, and descriptions of the available and applicable cost allocation methods.

Working Group Workshop #3 – Financing Mechanisms – June 15, 2016

This workshop presented the preliminary assessment of feasible financing mechanisms based on the building blocks and economic aspects described in the first two workshops.

Working Group Workshop #4 – Presentation of Results – September 27, 2016

This workshop presented the results of the analysis in the previous three workshops. The team summarized the process and findings, and requested broader public input on implementing the approaches developed in the planning process.