Cal. PRC § 5540.2 — California Code / Code prc / Division 5 / Chapter 3 / Article 3 / Section 5540.2
Section 5540.2
Status: in_force

(a) The Legislature finds and declares as follows:

(1) The sale of private watershed lands owned by the water company in the Upper Guadalupe watershed, including the Los Gatos Creek and Saratoga Creek watersheds, to the district offers an abundance of benefits to the public and wildlife.

(2) The transfer of these lands will ensure that several significant land conservation priorities will be addressed through active land management by the district.

(b) For the purposes of this section:

(1) “District” means the Midpeninsula Regional Open Space District.

(2) “Water company” means the San Jose Water Company.

(c) Notwithstanding any other law, the water company may sell lands in the Upper Guadalupe watershed, including the Los Gatos Creek and Saratoga Creek watersheds, to the district in accordance with the following conditions:

(1) The district shall commit to improve open-space trail connectivity, encourage forest management practices to promote late seral or old-growth habitat conditions, maintain wildland fire safety, preserve open space, and protect the downstream beneficial uses of water, including, but not limited to, critical elements of the public drinking water supply, in perpetuity.

(2) The water company shall retain all its existing water rights and a necessary fee title or easement interest, in perpetuity, to make certain that the customers of the water company have access to safe and reliable drinking water. The fee title or easement interest shall include all facilities owned and operated by the water company, including, but not limited to, treatment plants, delivery systems, reservoirs, and main tributaries.

(d) (1) If a sale of land occurs pursuant to this section, the water company shall invest the net proceeds, if any, from the sale in water system infrastructure, plant, facilities, and properties that are necessary or useful in the performance of the water company’s duties to the public.

(2) For the purposes of tracking the net proceeds and their investment, the water company shall maintain records necessary to document the investment of the net proceeds pursuant to this section.

(3) All water utility infrastructure, plant, facilities, and properties constructed or acquired by, and used and useful to, the water company by investment pursuant to this section shall be included among the water company’s other utility property upon which the Public Utilities Commission authorizes the water company the opportunity to earn a reasonable rate of return.

(4) This subdivision shall apply to the investment of the net proceeds from the sale of land pursuant to this section for a period of eight consecutive calendar years beginning with the calendar year immediately following the calendar year in which the water company receives the net proceeds. The balance of any net proceeds and interest on the proceeds that is not invested after the eight-year period shall be allocated solely to the water company ratepayers.

(5) The Public Utilities Commission retains continuing authority to determine the used, useful, or necessary status of any and all infrastructure improvements and investments by the water company.

(e) Section 851 of the Public Utilities Code shall not apply to the transfer of lands pursuant to this section.

(f) The authority for the water company to sell lands to the district pursuant to subdivision (c) is inoperative on January 1, 2023.