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Financing Essay

1903 words - 8 pages

Finance for drinking water infrastructure
The proposed construction of a peripheral canal comes at considerable costs and the need for a cost-benefit analysis cannot be ignored. It is important to mention that a similar project had once been proposed but rejected by the voters. This move was however rejected by California voters at a time when the costs were only a meager $1.3 billion which is way below the $4 billion and $ 17 billion proposed by currently for the various construction options. However, this is now price that needs to be paid to address the ever declining Sacramento-San Joaquin Delta and also provide safe drinking water to the cities and farms in California (Piazza, 2012). ...view middle of the document...

These funding will cater for all aspects of the project.
Burns-Porter Act: Burns-Porter Act financing option originates from selling of bonds from California Water Resources Development Bonds as well as the State Tideland Oil Revenues which were deposited. This was authorized by Burns-Porter Act. The Act authorized issuance of general state obligation bonds worth $1.75 billion paid by revenues obtained from contracts on water supply. The proceeds obtained from these sales are deposited in “California Water Resources Development Bond Fund-Bond Proceeds Account.” It is from here that funds are withdrawn and used in SWP facilities construction. It is worth pointing out that more than one-third of expenditure up to 1995 in construction as well as in Davis-Grunsky Act Program was financed by the general obligation bond (Massachusetts Infrastructure Investment Coalition, 2007).
Appropriation of funds deposited into California Water Fund is done in line with the provisions of Burns-Porter Act. The deposits also originate in part from State Tideland Oil Revenues based on continuous authorization; the legislation enacted in 1989 provides for the funds payment schedule in line with Burns-Porter Act (Massachusetts Infrastructure Investment Coalition, 2007).
Revenue Bonds: This financing option originates from revenue bond sales as provided for by the Central Valley Project Act. The authority of the department to issue revenue bonds was re-affirmed by the 1963 authorization from California Supreme Court (Weiser, 2010). The proceeds from such sales are deposited into the Central Valley Water Project Construction Fund. The money is then spent for purposes outlined in resolution authorizing which authorized the sale of each bond (Weiser, 2010). Other than payment for construction, planning and management of the right of way costs, they can also be used to fund Debt Service Reserve Account, bond interest payments, as well as payment of water system costs of operation within a specified duration.
Capital resources: This originates from payments and appropriations which are authorized via special contracts, cost-sharing arrangements, as well as acts of legislation relating to SWP. Also included are accrued interests from the mentioned funds.
Integration of recycled systems with pipe replacement/maintenance to reduce costs
The aim of every project is to lower costs. This is what is achieved if integrated with replacement/maintenance costs. It is important to mention that the recycled systems form part of a larger system which constitutes the entire project. Where each is independently done, they have cross-effect on each other and as such some costs can be incurred multiple times. However, when done side by side, scheduling ensure that double costs are not incurred in the same areas.
Financing desalination of plants where necessary
Interest in desalination of water has largely increased in the recent past with up to 17 plants proposed along the Californian...

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