EXECUTIVE COMMITTEE AGENDA SEPTEMBER 27, :00 AM SALINAS COUNCIL CONFERENCE ROOM, 200 LINCOLN AVE., SALINAS

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1 EXECUTIVE COMMITTEE AGENDA SEPTEMBER 27, :00 AM SALINAS COUNCIL CONFERENCE ROOM, 200 LINCOLN AVE., SALINAS 1. Call to Order 2. Roll Call 3. General Public Comment Members of the public may comment on matters within the jurisdiction of the agency that are not on the agenda. Public comments generally are limited to two (2) minutes per speaker; the Chair may further limit the time for public comments depending on the agenda schedule. Comments on agenda items should be held until the items are reached. To be respectful of all speakers and avoid disruption of the meeting, please refrain from applauding or jeering speakers. 4. Scheduled Items 4.a Consider approving the August 23, 2018 Executive Committee meeting minutes Executive Committee Meeting Minutes.pdf 4.b Consider items related to GSA Fee Study: 1. Consider recommendation to Board on reimbursement of SVBGSA Agency Member Contributions; 2) Consider recommendation to Board on fee methodology for Groundwater Sustainability Plan development. SVBGSA Fee approach.pdf SEP and OCT WORKSHOPS Final, pdf 4.c Consider recommending Board approval of request from Monterey County to have Errol L. Montgomery and Associates complete studies associated with hydrology of the Salinas Basin. 1

2 Errol L. Montgomery and Associates contract with the County of Monterey.docx 5. General Manager s Report 6. Future Agenda Items 7. Adjournment.Accommodation, Agenda Posting Disability-related modification or accommodation, including auxiliary aids or services, may be requested by any person with a disability who requires modification or accommodation in order to participate in the meeting. Requests should be referred to Ann Camel, Clerk of the Board at camela@svbgsa.org or as soon as possible, but by no later than 5 p.m. two business days prior to the meeting. Hearing impaired or TTY/TDD text telephone users may contact the Agency by dialing 711 for the California Relay Service (CRS) or by telephoning any other service providers CRS telephone number. AGENDA POSTING The meeting agenda was posted at the Salinas City Clerk s Office and City Hall Rotunda, Monterey County Offices at 1441 Schilling Place, Salinas, CA on September 21,

3 Executive Committee Meeting August 23, 2018 Unofficial Minutes 1. The meeting was called to order at 10 a.m.. 2. Roll Call: Present: Chair McHatten, Directors Pereira, Stefani. During Roll call Director Alejo and McIntyre were absent. Director Alejo arrived during item 4.d and McIntyre during item 4.e. 3. No general public comment. 4. Scheduled items were taken out of order. 4.b. Director Pereira moved to approve the June 28, 2018 meeting minutes. The motion was seconded and passed. Ayes: Directors Pereira, Stefani, and Chair McHatten 4.d. and 4.e. Mr. Peterson provided documents to the Directors and public on the fees studies and to show direction of the Groundwater Sustainability Plan. He informed the Directors he has had great input on initial fees as listed on page 24c. Mr. Petersen informed the Committee that during the Joint Meeting, the report will outine three different funding alternatives, including a 90%/10% municipal/agricultural cost allocation. Public Comment: Cal Water representative noted the fee study will be discussed during the September 13, 2018 Joint Meeting. 4.a. Chair McHatten requested to return to item 4.a, Elect Chair and Vice Chair The Committee elected Director McIntyre as Chair and Director Alejo as Vice Chair. Ayes: Directors Alejo, McHatten, McIntyre, Pereria, and Stefani 4.c. The Committee returned to item 4.c Interlake Tunnel. Mr. Petersen requested the Interlake Tunnel and Groundwater Sustainability Plan be an open discussion between the Directors. The Directors agreed more general data is needed and to bring the item back to the Board. 5. General Manager Report: Mr. Petersen advised he was invited to Denmark. No public comment. 6. Future Agenda Items: Interlake Tunnel 3

4 Public comment: In response to inquiry about the dates of the outreach meetings for September,Mr. Petersen advised the first meeting is September 18, 2018and the dates will be listed on the website. 7. Meeting Adjourned: 11:10 am 4

5 Salinas ValleyBasin Groundwater Sustainability Agency EXECUTIVE COMMITTEE STAFF REPORT MEETING DATE: September 27, 2018 AGENDA ITEM: SUBJECT: 4b Consideration of Items Related to the GSA Fee Study RECOMMENDATION: SVBGSA staff recommends that the SVBGSA Executive Committee consider taking an advisory position on two items related to the GSA Fee Study: 1) Consider recommendation to Board on schedule of reimbursement of SVBGSA Agency Member Contributions, 2) Consider recommendation to Board on fee methodology for GSA funding. BACKGROUND: The Joint Powers Authority Agreement (Agreement) that formed the Salinas Valley Basin GSA (SVBGSA) reads in part: Reimbursement of Initial Contributions To the extent the Agency is able to secure other funding sources, and to the extent permitted by law, the Agency shall reimburse these Initial Contributions to the Members on a proportionate basis in relation to their cumulative Initial Contributions to the Agency. The Agreement also reads in part: Failure to be Financially Sustainable In the event that the Agency does not take the necessary actions to create a sustainable revenue stream necessary to fully finance its operating budget by the end of Fiscal Year this Agreement shall terminate and the Agency shall be dissolved, unless otherwise agreed to by amendment to this Agreement approved unanimously by all then-existing Members. To address these matters the Board entered into an agreement with Hansford Economics to complete a fee study that could meet the criteria set forth in the Agreement. The timeline for developing fees is very short and significant progress has been made in developing methodologies for generating operational funding for the GSA. DISCUSSION: The Agreement is clear that once funding is secured, and providing that the law allows, reimbursement to member agencies for initial contributions shall be made. However, the agreement is silent on a schedule for reimbursement and does not state as to how or 5

6 when these reimbursements should be made. Initial contributions to support the formation and first two years of operations of the GSA are as follows: Section 10.4 Initial Contributions. a) Fiscal Years and In order to provide the necessary capital to initially fund the Agency during Fiscal Year , the Members identified below shall each provide the listed Initial Contribution to the Agency s Treasurer/Auditor no later than July 7, 2017: 1) County: $670,000 2) WRA: $ 20,000 3) City of Salinas: $330,000 4) City of Gonzales: $ 20,000 5) City of Soledad: $ 35,000 6) One Water Monterey $ 20,000 7) City of King: $ 30,000 8) Castroville CSD $ 20,000 In order to provide the necessary capital to fund the Agency during Fiscal Year , the Members identified below shall each provide the listed Initial Contribution to the Agency s Treasurer/Auditor no later than July 6, 2018: 1) County: $670,000 2) WRA: $ 20,000 3) City of Salinas: $330,000 4) City of Gonzales: $ 20,000 5) City of Soledad: $ 35,000 6) One Water Monterey $ 20,000 7) City of King: $ 30,000 8) Castroville CSD $ 20,000 It is important to note that the agricultural industry also contributed $250,000 that is included each year in the County of Monterey contribution. The funding has been collected for both years. The total amount required for reimbursement is $2,290,000. It is important that a decision be reached about when and how reimbursement will be made, as it is critical information required for establishing the initial fee structure. Several options for reimbursement could be considered. For example a single annual payment could be made to each contributor that could spread the cost over several years. The Board could also determine that reimbursement was a top priority and that fees be set in a way that provide for reimbursement as soon as possible. Additionally, the Board could determine that reimbursement should not begin until Groundwater Sustainability Plans were complete. This would serve to ensure that all moneys went towards the planning effort that is one of the primary purposes of the GSA. 6

7 Additionally, the methodology for generating the fees needs to be determined. During the September 13, 2018 joint meeting of the Board and Advisory Committee participants reviewed three funding scenarios with direction provided to the consultant to focus on two of the three options. Prior to the October Board Meeting, four public outreach meetings will be held. Two of the meetings have been completed. The Consultant will return in October with a full report on these meetings and recommendations to adopt a specific methodology. Prior to October Board meeting the Executive Committee could determine an advisory position stating a preference for a funding methodology. FISCAL IMPACT: Establishing a fee structure and determining a reimbursement schedule will have significant impact on the amount of funding required for operations and reimbursement. ATTACHMENT(S): Consultant Power Point Presentation PREPARED BY: Gary Petersen, General Manager SVBGSA 7

8 Salinas Valley Basin Groundwater Sustainability Agency (GSA) Fee Study Public Workshops 8

9 Purpose of New Fee 1. Keep local control and accountability for groundwater management. 2. Avoid State intervention and imposition of very high fees. This new fee will: Fund operational (administrative) costs of running the GSA Fund preparation of the Groundwater Sustainability Plans (GSPs) (one for each basin); State grant will pay for some costs Fund a prudent reserve 9

10 Fee Study Goals 1. Establish a fair fee structure 2. Obtain maximum buy-in from stakeholders. 3. Maintain transparency throughout the project. 10

11 Fee Implementation New fee will fund costs starting July 1, 2019 GSA fiscal year is July 1 to June 30 Approvals must be completed by May 2019 Fee is a regulatory fee per Sustainable Groundwater Management Act, Water Code 10730, adopted pursuant to California Constitution Ordinance to adopt the fee requires two readings 11

12 Project Timeline 12

13 Fee Options 13

14 Fee for GSA Administration & Half GSP Costs Other options are available for implementing programs and projects after GSPs are developed Options Wellhead Fee Parcel Fee Per Acre Fee Per Connection Fee Extraction Fee Considerations Simplicity/Understandability Equity Administrative Ease Revenue Stability Enforceability 14

15 Fee Options Considerations Options Simplicity / Understandability Wellhead Fee Parcel Fee Per Acre Fee Per Connection Fee Extraction Fee Ties to users of groundwater; could be confusing if GSA implements a fee for registering wells For parcels associated with a well permit, connects to concept that all parcels benefit from groundwater availability Simple In the table below, an Simple; only works for properties with water service Understandable denotes an issue (may be surmountable or not) Equity Administrative Ease Enforceability No connection to amount of water used; may not be using standby /other wells Different land uses have different water demands; not recognized Ag and municipal water use is very different; not recognized Different land uses have different water demands; not recognized Equitable; however, larger agricultural properties pay less per acre Relatively easy; charge parcels with wells Relatively easy; could charge all parcels on factors that represent potential to use water Relatively easy; could charge all parcels on factors that represent potential to use water Water providers must submit # connections annually, otherwise receive bill based on publicly available data Pumpers report data twice OR transfer of data from MCWRA required; fees based on data at least one year old Enforceable; however, available data is unreliable Enforceable Enforceable Enforceable, but only for water service providers Unenforceable; Relies 15 on self-reporting until GSA is mature (several years)

16 Fee Structure Options (Hybrid Ideas) #1: Connection Fee / per Irrigated Acre Fee Hybrid Step 1: Allocate total annual cost (budget) to ag and municipal EITHER by a percentage split (from MCWRA published data) OR by estimated net extraction by applying CIMIS ET data to crop types. Municipal use is reported. Step 2: Agricultural Users Determine parcel fees for tax roll based on number of irrigated acres. Step 3: Municipal Users - Determine parcel fees for tax roll OR hand bill water systems based on # connections. #2: Pumping Fees Hybrid Step 1: Every well (active & standby/inactive) gets same annual base fee; exclude properties not part of a ranch and not served by a water system smaller than 2.5 acres to exclude de minimus users. Step 2: Municipal well owners and agricultural well owners providing pumping data pay per acre foot extracted. Well owners unwilling to share pumping data pay an additional flat fee based on GSA-estimated net water use by applying evapotranspiration data to crop types. Step 3: Fees would be applied to parcel the well is located on to be put on tax roll. Hand (direct) bill if well location not known. Water systems that provide service connection data could have fee applied to tax roll based on $ due each system by # connections. #3: Parcel Fee / Acreage Fee Hybrid Step 1: Determine total acres using pumped groundwater, excluding de minimum extractors. Apply minimum fees to all these acres (regardless of land use). Step 2: Parcels less than 2.5 acres with water service only pay minimum fee. Note: Threshold can be changed Step 3: Parcels greater than 2.5 acres with water service and all irrigated acres pay based on a fee per acre. The fee is 16 the same per acre whether municipal or ag use of land.

17 Joint Meeting of the SVBGSA Board and Advisory Committee 13 September

18 Ranking Exercise Table distributed to each Board and Advisory Committee member; asked to give points (1 to 5 with 5 being best) for each criteria Criteria Descriptions and Weighting Worksheet Criteria Description Weighting Equity How well does the fee capture users of the groundwater and spread the costs equitably? 50% Enforceability & Reliance on Data How easy is it for the SVBGSA to enforce the fee? How often is the data updated? How reliable is it? 20% Simplicity How easy is the fee to explain to the public? 10% Revenue Stability / Predictability How predictable is fee revenue given the fee structure? 10% Administrative Ease How challenging is it to determine the fee each year and send to the auditor? 10% Total 100%

19 September 13, 2018 Joint Meeting of SVBGSA Board and Advisory Committee Fee Study Approaches Ranking Matrix Results Approach Points % of Points Rank % % %

20 Direction to Fee Consultant Bring greater detail of Approaches 1 and 3 back to the Board October 11 Cost allocation method between ag & muni for Approach 1; including consideration of return flow Clarification on Approach 3 Further consideration of impacts to Disadvantaged Communities Greater description of how revenue will be collected 21 20

21 Hypothetical Fee Calculations Fee Magnitude 22 21

22 Approach #1 Fee Calculation Illustration Connection Fee / per Irrigated Acre Fee Hybrid SVBGSA Budget $1.0 Million $1.5 Million Low Range High Range Ag/Muni Split 90/10 90/10 Step 1 Total Cost a $1,000,000 $1,500,000 Agriculture b = a*% to ag $900,000 $1,350,000 Municipal c = a-b $100,000 $150,000 Step 2 Agriculture d = b $900,000 $1,350,000 Irrigated Acres e 186, ,000 Needs refining! Cost per Irrigated Acre per Year f = d/e $4.84 $7.26 Step 3 Municipal g = c $100,000 $150,000 Number Connections h 50,000 50,000 Needs refining! Cost per Connection per Year i = g/h $2.00 $

23 Approach #3 Fee Calculation Illustration Parcel Fee / Acreage Fee Hybrid SVBGSA Budget $1.0 Million $1.5 Million Low Range High Range Step 1 Number of acres served by water systems a 30,000 30,000 Needs refining! Irrigated Acres b 186, ,000 Needs refining! Total Acres Charged Minimum Fees c = a+b 216, ,000 Step 2 Total Cost d $1,000,000 $1,500,000 Percentage in Minimum Fees e 30% 30% Cost in Minimum Fees f = d*e $300,000 $450,000 Minimum Fee per Parcel g = f/c $1.39 $2.08 Step 3 Remaining Cost h $700,000 $1,050,000 Total Acres Charged Minimum Fees i = c 216, ,000 Needs refining! less acreage of parcels <2.5 acres in water systems j 16,500 16,500 Needs refining! Net Acres k = i-j 199, ,500 Estimated Cost per Acre l = h/k $3.51 $5.26 PARCEL FEE if Served by Water System and <2.5 acres PER ACRE FEE if Served by Water System and >2.5 acres, PER ACRE FEE per irrigated acre $1.39 $2.08 $4.90 $

24 Fees for Properties with Connection to a Water Service Annual Fee per Assessor Parcel (APN) If served by a water system that does not provide data to the GSA, the water system may recover fee differently Approach 1: Flat annual fee per water connection/service Approach 3: Flat annual fee if <2.5 acres; Annual fee on per acre basis if >2.5 acres 25 24

25 Illustration of Fees for Properties with Connection to a Water Service Multi-Family Apt complex = 1.4 acres $2.00-$3.00 OR $ $2.08 Community Center = 2.8 acres Approach 1: $ $3.00 OR Approach 3: $ $20.57 Home 0.3 ac. $2.00-$3.00 OR $ $2.08 City Park = 0.6 acres $2.00-$3.00 OR $ $2.08 Office building = 1 acre Ag. Wash Facility = 4.8 acres $2.00-$3.00 OR $ $2.08 Annual Fee Approach 1: $ $3.00 OR Approach 3: $ $

26 Illustration of Fees for Agriculture All irrigated acres pay the same per acre under approach 1 and the same per acre under approach 3 Strawberries = 15 Acres Row Crops = 15 Acres Vineyard = 15 Acres Annual Fee Annual Fee Annual Fee Approach 1 = $ $ Approach 1 = $ $ Approach 1 = $ $ Approach 3 = $ $ Approach 3 = $ $ Approach 3 = $ $

27 Example Payment of State Fees Collected by State Water Resources Control Board Land and Water Use Number of Wells a 1 Crop Acreage b 10 acres Small Vegetable Crop Uses c 2 acre feet per acre Annual Water Extraction d = b*c 20 acre feet per year State Fees Base Filing Fee e $300 per well Probationary Rate f $40 per acre foot Interim Plan Rate * g $15 additional per acre foot Annual Fee Base Filing Fee h = a*e $300 per well Extraction Fee i = d*f $800 based on water use Total Annual Fee j = h+i $1,100 Total Annual Fee if Interim Plan k = j+(d*g) $1,400 $110-$114 per acre * Interim plan necessary when local agencies unable to fix the issues that led to probation 28 27

28 Comparison with State Fees: Agriculture Examples Budget $1 Million both Examples Assumptions Number of Wells 1 Crop Acreage 10 acres Small Vegetables 2 acre feet per acre Annual Water Extraction 20 acre feet per year Assumptions Number of Wells 2 Crop Acreage 80 acres Strawberries 2.15 acre feet per acre Annual Water Extraction 172 acre feet per year State Fees $ per acre per year State Fees $90.00 per acre per year #1 $4.84 per acre per year #3 $4.90 per acre per year #1 $4.84 per acre per year #3 $4.90 per acre per year 29 28

29 Fee Revisions SVBGSA Board has ability to revise the fee whenever needed by following procedures in the California Constitution Recommend annual fee review with consideration of: Budget projection Potential application of Bay Area CPI (consistent with Monterey County) Updating fee methodology or changing the base data set(s) upon which annual fees are calculated due to changes in access to data (different sources, better accuracy and so forth) 30 29

30 31 30

31 Out-of-Area Property Owners Outreach Out-of-area property owners introductory postcard Distributed to more than 6,500 property owners 32 31

32 Water Systems Outreach Postcard sent to all water systems in the SVBGSA boundaries Distributed to approximately

33 Fee Study on Website Fee Study tab at svbgsa.org Information easily accessible, Spanish translation available Map shows GSA service boundaries and properties within that may be charged a fee Subscribe to the list for notifications the fee study team at GSAFeeStudy@svbgsa.org 34 33

34 Salinas ValleyBasin Groundwater Sustainability Agency EXECUTIVE COMMITTEE STAFF REPORT MEETING DATE: September 27, 2018 AGENDA ITEM: SUBJECT: 4c Consider recommending Board approval of request from Monterey County to have Errol L. Montgomery and Associates complete studies associated with hydrology of the Salinas Basin. RECOMMENDATION: SVBGSA staff recommends that Salinas Valley Basin Ground Water Sustainability Agency (GSA) Executive Committee consider taking an advisory position on the acceptability of employees of Errol L. Montgomery and Associates (ELM) contracting with the County of Monterey to complete water studies in the Salinas Valley Basin. BACKGROUND: The GSA contracted with Hydrometrics Water Resources Inc. to develop groundwater sustainability plans (GSP s) in the Salinas Valley. Recently Errol L. Montgomery and Associates (ELM) acquired Hydrometrics. The GSA Board agreed to support the acquisition provided that the project team was left intact and that the conditions of the contract would be honored by ELM. Recently the Monterey County Water Resources Agency (WRA) inquired as to the availability of ELM to develop water studies associated with a settlement agreement between agricultural interests and the Monterey County Resources Management Agency (RMA). DISCUSSION: ELM has expressed interest in working with the County to complete the studies. However, Derrik Williams GSP Project Manager for ELM expressed concern that the GSA Board have full knowledge and agree to ELM completing the studies for the County as well as the GSP s. If the Board does not agree, ELM will not complete the work for the County. GSA staff has carefully considered the County request. Given the similarities of the studies and the required use of the same data sets and models, staff has concluded that it would be beneficial to both the County and the GSA if the study and the GSP s were both completed by ELM. The primary benefit is that both of these important documents would be consistent and not conflict with each other if completed by the same consulting firm. Capacity for completing both studies is also available due to the 34

35 acquisition of Hydrometrics by ELM that resulted in an expanded work force. Timing is also critical but with the expanded work force the plans can be developed simultaneously allowing them to be released when completed without interfering with the tight timeline in the 180/400 Aquifer.. FISCAL IMPACT: There is no perceived fiscal impact from this action though it is possible that small financial benefits could be realized. PREPARED BY: Gary Petersen, General Manager SVBGSA 35