Spalding Community Services District MSR - 4/8/24

Spalding Community Services District municipal service review adopted april 8, 2024 Prepared by: Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 TABLE OF CONTENTS ............................................................................................................................................ 1 LIST OF FIGURES 4 ACRONYMS AND DEFINITIONS ............................................................................................................................. 5 PREFACE 6 CONTEXT .................................................................................................................................................................... 6 CREDITS ...................................................................................................................................................................... 6 1. EXECUTIVE SUMMARY .............................................................................................................. 7 OVERVIEW .................................................................................................................................................................. 7 FINANCIAL ABILITY TO PROVIDE SERVICES .......................................................................................................................... 8 GOVERNANCE STRUCTURE OPTIONS ................................................................................................................................. 9 RECOMMENDATIONS ..................................................................................................................................................... 9 2. BACKGROUND ........................................................................................................................ 13 LAFCO OVERVIEW ..................................................................................................................................................... 13 MUNICIPAL SERVICES REVIEW LEGISLATION ..................................................................................................................... 13 MUNICIPAL SERVICES REVIEW PROCESS .......................................................................................................................... 14 SPHERE OF INFLUENCE UPDATES .................................................................................................................................... 14 DISADVANTAGED UNINCORPORATED COMMUNITIES ......................................................................................................... 15 3. AGENCY OVERVIEW ................................................................................................................ 17 SPALDING COMMUNITY SERVICES DISTRICT (CSD) ............................................................................................................ 17 Boundaries and Sphere of Influence .................................................................................................................. 19 4. ACCOUNTABILITY AND GOVERNANCE ..................................................................................... 21 GOVERNANCE ............................................................................................................................................................ 21 ACCOUNTABILITY ........................................................................................................................................................ 22 Brown Act .......................................................................................................................................................... 22 SCSD Policy on Board Meetings Agenda and Minutes ...................................................................................... 22 Proposition 218 ................................................................................................................................................. 23 Ethics Training and Form 700 ............................................................................................................................ 26 Financial Reporting and Compilation ................................................................................................................ 27 Public Records Act ............................................................................................................................................. 27 Fiscal Responsibility .......................................................................................................................................... 28 5. PLANNING AND MANAGEMENT .............................................................................................. 31 STAFFING .................................................................................................................................................................. 31 ORGANIZATIONAL STRUCTURE ....................................................................................................................................... 31 PLANNING EFFORTS .................................................................................................................................................... 33 Financial Planning Practices .............................................................................................................................. 33 Management Planning Practices ...................................................................................................................... 34 Operational Planning Practices ......................................................................................................................... 34 6. GROWTH AND POPULATION PROJECTIONS ............................................................................. 36 LAND USE ................................................................................................................................................................. 36 HISTORIC POPULATION TRENDS ..................................................................................................................................... 36 POPULATION PROJECTIONS ........................................................................................................................................... 37 1 Table of Contents Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 GROWTH STRATEGIES .................................................................................................................................................. 37 7. DISADVANTAGED UNINCORPORATED COMMUNITIES ............................................................. 39 8. FINANCIAL ABILITY TO PROVIDE SERVICES .............................................................................. 40 Balanced Budget ............................................................................................................................................... 47 Fund Balances, Reserves, and Liquidity ............................................................................................................. 47 Net Position ....................................................................................................................................................... 48 Rates and Charges ............................................................................................................................................ 48 Long-term Debt ................................................................................................................................................. 52 Capital Assets .................................................................................................................................................... 52 9. WASTEWATER SERVICES ......................................................................................................... 54 TYPE AND EXTENT OF SERVICES ..................................................................................................................................... 54 Services Provided .............................................................................................................................................. 54 Services to Other Agencies ................................................................................................................................ 55 Contracts for Services ........................................................................................................................................ 55 Overlapping Service Providers ........................................................................................................................... 55 WASTEWATER INFRASTRUCTURE AND FACILITIES ............................................................................................................... 55 Collection and Treatment System ..................................................................................................................... 55 Capacity ............................................................................................................................................................ 56 Infrastructure Needs ......................................................................................................................................... 60 Shared Facilities ................................................................................................................................................ 60 WASTEWATER FLOW ................................................................................................................................................... 61 SERVICE ADEQUACY .................................................................................................................................................... 61 Sewer System Integrity ...................................................................................................................................... 62 Regulatory Compliance ..................................................................................................................................... 63 10. FIRE SERVICES ......................................................................................................................... 65 SERVICES OVERVIEW ................................................................................................................................................... 65 Contracts for Services ........................................................................................................................................ 67 Overlapping Service Providers ........................................................................................................................... 68 Collaboration .................................................................................................................................................... 68 Staff ................................................................................................................................................................... 69 Facilities ............................................................................................................................................................ 71 Dispatch ............................................................................................................................................................ 71 Service Demands ............................................................................................................................................... 71 Infrastructure Needs ......................................................................................................................................... 72 Challenges ......................................................................................................................................................... 73 Service Adequacy .............................................................................................................................................. 73 11. RECREATION AND MARINA ..................................................................................................... 74 SERVICES OVERVIEW ................................................................................................................................................... 74 Existing Demand or Challenges ......................................................................................................................... 74 12. MAILBOX SERVICES ................................................................................................................. 75 SERVICES OVERVIEW ................................................................................................................................................... 75 Challenges ......................................................................................................................................................... 75 13. GOVERNANCE STRUCTURE OPTIONS ....................................................................................... 77 14. MUNICIPAL SERVICE REVIEW DETERMINATIONS ..................................................................... 78 GROWTH AND POPULATION PROJECTIONS ....................................................................................................................... 78 2 Table of Contents Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 THE LOCATION AND CHARACTERISTICS OF DISADVANTAGED UNINCORPORATED COMMUNITIES WITHIN OR CONTIGUOUS TO THE AGENCY’S SOI ........................................................................................................................................................... 78 PRESENT AND PLANNED CAPACITY OF PUBLIC FACILITIES AND ADEQUACY OF PUBLIC SERVICES, INCLUDING INFRASTRUCTURE NEEDS AND DEFICIENCIES ....................................................................................................................................................... 78 Fire .................................................................................................................................................................... 79 Sewer ................................................................................................................................................................ 79 Marina .............................................................................................................................................................. 80 Mailbox ............................................................................................................................................................. 80 FINANCIAL ABILITY OF AGENCIES TO PROVIDE SERVICES ...................................................................................................... 80 STATUS OF, AND OPPORTUNITIES FOR, SHARED FACILITIES .................................................................................................. 81 ACCOUNTABILITY FOR COMMUNITY SERVICE NEEDS, INCLUDING GOVERNMENTAL STRUCTURE AND OPERATIONAL EFFICIENCIES ...... 81 APPENDIX A: SCSD MARINA SITE VISIT, 2023 ...................................................................................................... 83 APPENDIX B: SCSD FIRE AND EMS FACILITY ........................................................................................................ 85 APPENDIX C: SDLF TRANSPARENCY CERTIFICATION CHECKLIST AND APPLICATION ............................................. 88 3 Table of Contents Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 FIGURE 3-1: SPALDING COMMUNITY SERVICES DISTRICT OVERVIEW .......................................................... 18 FIGURE 3-2: SPALDING COMMUNITY SERVICES DISTRICT BOUNDARIES AND SOI ........................................ 20 FIGURE 4-1: TRANSPARENCY AND ACCOUNTABILITY INDICATORS .............................................................. 29 FIGURE 5-1: SPALDING COMMUNITY SERVICES DISTRICT ORGANIZATIONAL CHART ................................... 32 FIGURE 8-1: SPALDING CSD FINANCIAL SUMMARY FYS 21 AND 22 ............................................................. 45 FIGURE 8-2: SPALDING CSD CURRENT RATE STRUCTURE ............................................................................. 49 FIGURE 8-3: SPALDING CSD PROPOSED RATES ............................................................................................ 50 FIGURE 8-4: SPALDING CSD COMPARISON OF SEWER RATES ...................................................................... 51 FIGURE 9-1: SPALDING CSD MONTHLY WASTEWATER FLOWS IN GALLONS (2021-2022) ............................. 61 FIGURE 10-1: SPALDING CSD FIRE SERVICES ................................................................................................. 65 FIGURE 10-2: LIMITED POLICY TRANSPORT POLICY RISK ASSESSMENT ......................................................... 68 FIGURE 10-3: SPALDING CSD FIRE DEPARTMENT EQUIPMENT ...................................................................... 71 FIGURE 10-4: SPALDING CSD FIRE SERVICE CALLS 2021- 2022 ....................................................................... 72 4 List of Figures Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 CDP: Census Designated Place CEQA: California Environmental Quality Act CIP: Capital Improvement Plan or Program CKH: Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 CPRA: California Public Records Act CSD: Community Services District DAC: Disadvantaged Community DOF: California Department of Finance DUCs: Disadvantaged Unincorporated Communities EIR: Environmental Impact Report FFPC: The State of California Fair Political Practices Commission FY: Fiscal year GIS: Geographic Information Systems GP: General Plan I/I: Infiltration and Inflow JPA: Joint Powers Authority or Agency LAFCo: Local Agency Formation Commission MSR: Municipal Service Review NA: Not applicable RFP: Request for Proposals RWQCB: Regional Water Quality Control Board SCADA: Supervisory Control and Data Acquisition SCSD: Spalding Community Services District SOI: Sphere of Influence SSMP: Sewer System Management Plan SSO: Sanitary Sewer Overflow SWRCB: State Water Resources Control Board USDA: U.S. Department of Agriculture ZWF: Zero Water Footprint 5 Acronyms and Definitions Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Prepared for the Lassen Local Agency Formation Commission (LAFCO), this report is a Municipal Services Review (MSR) covering the Spalding Community Services District (SCSD). An MSR is a state-required comprehensive study of services within a designated geographic area. This MSR focuses on one special district in Lassen County that provides wastewater collection and treatment, fire and emergency medical, recreation and marina, and mailbox housing services. Lassen LAFCO is required to prepare this MSR by the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Government Code §56000, et seq.), which took effect on January 1, 2001. The MSR examines services provided by Spalding CSD, whose boundaries and governance are subject to LAFCO. The authors extend their appreciation to those individuals at Spalding CSD that provided the information and documents used in this report and made time for interviews and document review to ensure the accuracy of the report. The authors also would like to thank the members of the public that provided extensive input and feedback throughout the process. This report was prepared by Policy Consulting Associates, LLC and was co-authored by Jennifer Stephenson and Melat Assefa. Jennifer Stephenson served as project manager. 6 Preface Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 This report is a municipal service review (MSR) covering the Spalding Community Services District, prepared for the Lassen Local Agency Formation Commission (LAFCO). An MSR is a State-required comprehensive study of services that special districts or cities provide. The MSR requirement is codified in the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Government Code §56000 et seq.). The most recent MSR for the District was adopted on October 18, 2021. The Eagle Lake Community Services District was formed by Lassen LAFCO on June 11, 1985, and included both the Stones-Bengard area and the Spalding Tract. Lassen LAFCO adopted the Sphere of Influence for the Eagle Lake CSD on November 16, 1989. Lassen LAFCO approved the Stones-Bengard Reorganization on January 10, 1990, removing the Stones-Bengard community from Eagle Lake CSD and forming the Stones-Bengard CSD. In 1991, the Spalding Tract was declared an "On-site Wastewater Zone" within the Eagle Lake Community Services District to allow the District to monitor and regulate the existing wastewater disposal systems. The name of the District was changed to the Spalding Community Services District on September 1, 1992. The Spalding Community Service District was formed according to California Government Code §61000- 61850. On July 20, 2000, Lassen LAFCO approved an annexation to the Spalding CSD by Resolution 2000-02 for land to be used for wastewater treatment facilities and land at Spalding Airport. Currently, Spalding CSD provides wastewater collection and treatment, fire and emergency medical, recreation, and mailbox housing services. There have been complaints of compromised mailboxes in the community center mailroom. The District reports that USPS is slowly removing mailboxes from the District building and placing them outside as resources allow. The District also faces several challenges in maintaining the Marina, including staffing and financial issues. As a result, the Marina and all the other facilities are currently non-operational. To ensure proper and effective implementation of the recommendations and determinations outlined in this MSR, the District is to give a progress update one year after the MSR's 7 Ch. 1 Executive Summary Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 adoption date. Additionally, after the initial update, SCSD shall provide annual updates on the status of their services, including any challenges and changes. Spalding CSD has struggled with a steady increase in the cost of operations coupled with a stagnant income for the past ten years. As a result, the District is proposing a sewer rate adjustment. The District undertook a Cost-of-Service Analysis (COSA) or Rate Study to determine the appropriate rate structure. The Study recommended a $10 per month increase be enacted for FY 23-24 and a rate increase of $6.00 for FY 24-25. There will be up to a four percent annual increase adjustment based on the Cost-of-Living Index for FYs 24-25 through 27-28). The proposed rate was considered at a public hearing on September 15, 2023, at noon, and was adopted with only 188 written protests received out of 726 notices that were sent out by the District on August 21, 2023. The proposed rate took effect on January 1, 2024. The only increase in sewer fees that the District has implemented since the sewer system installation was a three percent increase in 2012. It is apparent based on review of the District's audited financial statements that current rates do not cover all costs associated with operations of the wastewater system and the proposed rate increase is necessary to adequately fund the services. Some residents have expressed concerns that the District did not follow the Prop 218 process for the rate increase. It is reported that SCSD's rate increase process has been forwarded to the District Attorney for review of the District's compliance with Prop 218. The District also faces financial and staffing challenges in maintaining the Marina. According to the District, the Marina's fee-based income was not sustainable to fund operations. Currently, the Marina and all the other related facilities are non-operational due to water levels. There is also no district staff to operate and maintain the facilities. Historically, the District has had to supplement the Marina's operations with wastewater funds in the past. The District's rent for the land the Marina occupies is $671 per year, payable to the State Lands Commission. According to the District, it has four years left on the current lease but only has the funds to cover a year of rent. SCSD is determining the Marina's future given the significant financing challenges. The District's transparency and accountability challenges have also been a concern for Spalding CSD residents. Although the District is making efforts, it struggles to meet the 8 Ch. 1 Executive Summary Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 requirements outlined in State laws regarding the Brown Act, website materials, and best practices to ensure easy access to significant planning documents and financial reports. These challenges include missing agendas, minutes, financial reports, annual budgets, late annual budgets, misdated items, and lack of content related to fire services and emergency medical services provided by the District. Most of these documents are available on request; however, due to the District's dependence on part-time personnel, it has struggled to have them readily available on the website. It has also struggled to process voluminous public records requests. It is recommended that SCSD have an online record of public record requests to provide a tracking system, avoiding duplication of requests and ensuring transparency. Many of these missing documents and noncompliance with certain reporting requirements can be primarily attributed to significant staff turnover, particularly in the General Manager role. There are limited governance structure options for Spalding CSD, due to its rural location. Depending on the interests of agencies in the County, a countywide Joint Powers Authority (JPA) could help better utilize and manage the limited resources available for fire and EMS services for SCSD as well as other participating agencies. This structure can be tailored to meet the needs of the member agencies and can range from specific functions such as shared training to all operational functions. Any efforts to form a JPA would have to be initiated by the agencies. Another option that was identified in the previous MSR and continues to be a suggestion is for SVFD to work with the Lassen County Board of Supervisors, the Lassen County LAFCO and other districts in the County to see if a Countywide CSA or Countywide fire protection district, or at a minimum consolidation with the Stones–Bengard Fire Protection District would be a benefit. Another option may be staff or resource sharing for wastewater services with Stones-Bengard CSD to better leverage scarce personnel resources and maximize purchasing power. Below are various recommendations for SCSD to consider to address the issues identified throughout this report. 9 Ch. 1 Executive Summary Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • It is recommended that the District ensure essential documents such as agendas, minutes, annual budgets, financial statements, Ethics Certifications, Form 700s, and Sanitary Sewer Management Plan (SSMP) are readily available on its website to ensure compliance with the law and facilitate transparency. • It is recommended that SCSD complete the Special District Leadership Foundation's (SDLF) Transparency Certificate of Excellence to show case the District's commitment to transparency. The application is free, and the certification is valid for three years from the date of award. Requirements for certification are shown in Appendix C of this report. • Due to limited personnel, SCSD has struggled to process voluminous public records requests from the public. It is recommended that SCSD have an online record of the public record requests that the District is and has processed to provide a tracking system for the public to avoid duplication of requests, clearly report status of the request, and ensure transparency. • SCSD's FY 23-24 preliminary or finalized budget was late per the District's policy. It is recommended that the District align its policy with the requirements for CSDs as outlined in Government Code Section 61110 to ensure transparency and provide clarity on budget deadlines. • SCSD does not adopt an annual budget for its wastewater services. It is recommended that the District also adopt an annual budget for wastewater services at the same time that it considers funding for other services. • Currently, none of the District's annual audits are available on the website. It is recommended that the District makes annual audits available on the website to ensure transparency. • Generally, the District seems to struggle to meet the requirements outlined in State laws regarding the Brown Act. It is recommended that the District review the Brown Act §54952.2 Ch. III law with Board Members to ensure that concerns from residents regarding unofficial meetings are addressed, as needed. • It is recommended that all Directors complete timely ethics training to minimize the District's liability. • It is recommended that every elected official and public employee who makes or influences governmental decisions submit Form 700 on time, as FPPC requires. Additionally, the District should review its Policy Article 2.08.010 to ensure all the designated positions complete and file Form 700 to ensure compliance and foster transparency. Additionally, a new Form 700 should be filed each year, even if economic interests have stayed the 10 Ch. 1 Executive Summary Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 same. It is recommended that the District makes available up-to-date ethics training certifications and Form 700 forms for each Board member and other required staff on the website and/or at the District's office. • SCSD does not have management planning practices. It is recommended that SCSD adopt a strategic plan that illustrates the District's core mission, goals and priorities, and work plan for staff and the public. • The District's fire department (SVFD) has had challenges meeting community expectations in providing EMS services. It is recommended that the District periodically reviews the status of the required certification for each volunteer in the Fire Department. Additionally, having a fire roster on the website to illustrate the certification and status of volunteers can help increase the community's confidence in the services provided. • Information related to SCSD's fire services is not available on the District's website. It is recommended that the District incorporates this information, including contract agreements, into its website in an easily accessible location to increase transparency. • Due to missing documents and information on the website, it is recommended that SCSD comprehensively update and organize its website, making all required and prepared documents available to the public. This update may help to minimize the numerous requests for information. • It is recommended the Fire Department establishes a standard criterion for volunteers such as selection metrics, training, and certification requirements to ensure consistency of services. • It is also recommended that SVFD consider countywide JPA opportunities to utilize limited resources effectively. Another option is for SVFD to explore a shared services agreement or an Auto Aid agreement with the Stones-Bengard CSD for EMS and fire prevention and suppression services. • The District also has challenges in communicating with residents about the role it plays in mail services. It is recommended that the District communicate clearly to residents that the mail-related service provided by the District is only the provision of space for this use in its facilities. • Some residents have indicated concerns about the District borrowing or transferring money from one fund to another. It is recommended that SCSD complies with the California Constitution Article XIII D, Section 6, subdivision (b)(2), which requires that revenues derived from a specific fee not be used for any purpose other than that for 11 Ch. 1 Executive Summary Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 which the fee is imposed. The District indicated it has already ceased the practice of transferring between funds to comply with the law. • To ensure compliance and prevent interruption of wastewater services, it is recommended that each property owner's responsibility, including maintenance, inspections, and spill reporting requirements, be clearly outlined, and posted to the SCSD's website in an easily accessible location. Furthermore, in instances of system failure, instructions for residents to request help from the District for inspection and repairs are available on the District's website and at the District's office. • It is recommended that the District review and update its existing protocols for responding to spills to ensure that they are promptly and efficiently addressed without interruption of services. Additionally, it is recommended SCSD ensure it reports all SSOs to the SWRCB as required to ensure compliance. • The District's Sanitary Sewer Management Plan (SSMP) is not available on its website. It is recommended that the District make an effort to upload all produced documents and audit reports on its website to enhance transparency and inform the public. • 12 Ch. 1 Executive Summary Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 LAFCO regulates boundary changes proposed by public agencies or individuals through approval, denial, conditions, and modification. It also regulates the extension of public services by cities and special districts outside their boundaries. LAFCO is empowered to initiate updates to the SOIs and proposals involving the dissolution or consolidation of special districts, mergers, the establishment of subsidiary districts, and any reorganization, including such actions. Otherwise, LAFCO actions must originate as petitions or resolutions from affected voters, landowners, cities, or districts. The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 requires LAFCO to review and update SOIs every five years, or as necessary, and to review municipal services before updating SOIs. The requirement for service reviews arises from the identified need for a more coordinated and efficient public service structure to support California's anticipated growth. The service review provides LAFCO with a tool to study existing and future public service conditions comprehensively and to evaluate organizational options for accommodating growth, preventing urban sprawl, and ensuring that critical services are provided efficiently. Government Code §56430 requires LAFCO to conduct a review of municipal services provided in the county by region, sub-region, or other designated geographic area, or by type of service, as appropriate, for the service or services to be reviewed, and prepare a written statement of determination with respect to each of the following topics: • Growth and population projections for the affected area; • The location and characteristics of any disadvantaged unincorporated communities (DUCs) within or contiguous to the SOI; • Present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies (including needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any DUCs within or contiguous to the sphere of influence); • Financial ability of agencies to provide services; • Status of and opportunities for shared facilities; 13 Ch. 2 Background Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • Accountability for community service needs, including governmental structure and operational efficiencies; and • Any other matter related to effective or efficient service delivery, as required by commission policy. The MSR process does not require LAFCO to initiate changes in an organization based on service review findings, only that LAFCO identifies potential government structure options. However, LAFCO, other local agencies, and the public may subsequently use the determinations to analyze prospective changes in organization or reorganization or to establish or amend SOIs. Within its legal authorization, LAFCO may act with respect to a recommended change of organization or reorganization on its initiative (e.g., certain types of consolidations) or in response to a proposal (i.e., initiated by resolution or petition by landowners or registered voters). MSRs are exempt from the California Environmental Quality Act (CEQA) pursuant to §15306 (information collection) of the CEQA Guidelines. LAFCO's actions to adopt MSR determinations are not considered "projects" subject to CEQA. The Commission is charged with developing and updating the SOI for each city and special district within the county. SOIs must be updated every five years or as necessary. In determining the SOI, LAFCO is required to complete an MSR and adopt the seven determinations previously discussed. An SOI is a LAFCO-approved plan that designates an agency's probable future boundary and service area. Spheres are planning tools used to provide guidance for individual boundary change proposals and are intended to encourage efficient provision of organized community services and prevent duplication of service delivery. Territory cannot be annexed by LAFCO to a city or a district unless it is within that agency's sphere. The purposes of the SOI include the following: to ensure the efficient provision of services, discourage urban sprawl and premature conversion of agricultural and open space lands, and prevent overlapping jurisdictions and duplication of services. LAFCO cannot regulate land use, dictate internal operations or administration of any local agency, or set rates. LAFCO is empowered to enact policies that indirectly affect land use decisions. On a regional level, LAFCO promotes logical and orderly development of 14 Ch. 2 Background Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 communities as it considers and decides individual proposals. LAFCO has a role in reconciling differences between agency plans so that the most efficient urban service arrangements are created for the benefit of current and future area residents and property owners. The Cortese-Knox-Hertzberg (CKH) Act requires to develop and determine the SOI of each local governmental agency within the county and review and update the SOI every five years. LAFCOs are empowered to adopt, update and amend the SOI. They may do so with or without an application and any interested person may submit an application proposing an SOI amendment. LAFCO may recommend government reorganizations to particular agencies in the county, using the SOIs as the basis for those recommendations. In addition, in adopting or amending an SOI, LAFCO must make the following determinations: • Present and planned land uses in the area, including agricultural and open-space lands; • Present and probable need for public facilities and services in the area; • Present capacity of public facilities and adequacy of public service that the agency provides or is authorized to provide; • Existence of any social or economic communities of interest in the area if the Commission determines these are relevant to the agency; and • Present and probable need for water, wastewater, and structural fire protection facilities and services of any DUCs within the existing sphere of influence. By statute, LAFCO must notify affected agencies 21 days before holding the public hearing to consider the SOI and may not update the SOI until after that hearing. The LAFCO Executive Officer must issue a report including recommendations on the SOI amendments and updates under consideration at least five days before the public hearing. LAFCO is required to evaluate disadvantaged unincorporated communities (DUCs) as part of this service review, including the location and characteristics of any such communities. The purpose of Senate Bill (SB) 244 (Wolk, 2011) is to begin to address the complex legal, financial, and political barriers that contribute to regional inequity and infrastructure deficits within DUCs. Identifying and including these communities in the long-range planning of a city or a special district is required by SB 244. 15 Ch. 2 Background Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The CKH requires LAFCO to make determinations regarding DUCs when considering a change of organization, reorganization, sphere of influence expansion, and when conducting municipal service reviews. For any updates to an SOI of a local agency (city or special district) that provides public facilities or services related to sewer, municipal and industrial water, or structural fire protection, LAFCO shall consider and prepare written determinations regarding the present and planned capacity of public facilities and adequacy of public services, and infrastructure needs or deficiencies for any DUC within or contiguous to the SOI of a city or special district. CKH prohibits LAFCO from approving an annexation to a city of any territory greater than 10 acres if a DUC is contiguous to the proposed annexation, unless an application to annex the DUC has been filed with LAFCO. An application to annex a contiguous DUC shall not be required if a prior application for annexation of the same DUC has been made in the preceding five years or if the Commission finds, based upon written evidence, that a majority of the registered voters within the affected territory are opposed to annexation. Government Code §56033.5 defines a DUC as 1) all or a portion of a "disadvantaged community" as defined by §79505.5 of the Water Code, and as 2) "inhabited territory" (12 or more registered voters), as defined by §56046, or as determined by commission policy. 16 Ch. 2 Background Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The Eagle Lake Community Services District was formed by Lassen LAFCO on June 11, 1985, and included both the Stones-Bengard area and the Spalding Tract. Lassen LAFCO approved the Stones-Bengard Reorganization on January 10, 1990, removing the Stones-Bengard community from Eagle Lake CSD and forming the Stones-Bengard CSD. On September 1, 1992, the Eagle Lake Community Service District's name was changed to the Spalding Community Service District (SCSD). As SCSD presently exists, it is comprised of two non- contiguous areas, one area immediately adjacent to Eagle Lake and one area next to Eagle Lake Road, where the wastewater evaporation ponds are located. Spalding (formerly Spalding Tract and Spaulding Tract) is a census-designated place located on the west side of Eagle Lake, 2.1 miles east-northeast of Whaleback Mountain and three miles northeast of Eagle Lodge, at an elevation of 5,138 feet. In 1914, John S. Spalding laid out the town, and it was subdivided in 1924. Spalding is now an unincorporated resort community located about eight miles south of Stones Landing on the western shore of Eagle Lake and about 45 miles northwest of the City of Susanville. Spalding is a summer home tract of approximately 360 acres surrounded on three sides by the Lassen National Forest and on the east by Eagle Lake. The Community comprises full-time residents, seasonal residents, and vacationers. According to SCSD's FY 21-22 Budget, the District serves a permanent population of approximately 150 residents and a seasonal population of roughly 1,000 summer residents and visitors.1 The 2020 Decennial Census reports a higher population of 206 for Spaulding CDP. The area's recreational opportunities heavily influence the community of Spalding. Historically, during some high-use summer weekends, the Community and surrounding area population can exceed 1,500. However, this is unique and has not happened for a number of years, due to drought and the absence of recreational conveniences like restaurants and hotels. There are no schools in the Spalding Community, and school buses are not provided. The school children must be transported 10 miles to Stones Landing to take a school bus 30 miles into Susanville. 1 Spalding Community Services District Budgets, FY21-22, p.4. 17 Ch. 3 Agency Overview Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The District provides fire protection, emergency medical service, wastewater collection and treatment, space for mailboxes, and recreational and marina facilities to the community of Spalding.2 The last MSR for Spalding CSD was adopted on October 18, 2021. Figure 3-1: Spalding Community Services District Overview spalding community services district (csd) Contact Information Contact: Marlane Morse, General Manager Address: 502-907 Mahogany Way, Susanville CA 96130 Website: https://www.spaldingcsd.org/ Formation Information Independent Date of Formation: 1985 Agency Type: Special District Governing Body Governing Body: Board of Directors Members: 5 Manner of Selection: Elected Length of Term: 4 Eagle Lake Third Friday of Meetings Location: Meetings Date: Community Center each month 3 p.m. Mapping and Population GIS Date: 2018 Population FY21-22: ~150 Purpose Powers CSDs are California empowered to Enabling Legislation: Government Code Latent Powers: provide but not §61000- 61850 actively providing as of 1/1/06. Municipal services Fire, Emergency Medical Services, Wastewater Collection and provided Treatment, Recreation and Marina, and Mailbox Space Area Served Boundary Size: 360 acres Location: Spalding Tract Most recent SOI Update: 2021 Municipal Service Reviews Past MSRs: 2021 2 Spalding Community Services District Services. https://www.spaldingcsd.org/services. 18 Ch. 3 Agency Overview Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Spalding CSD encompasses a total area of approximately 360 acres. SCSD is comprised of two non-contiguous areas—one area immediately adjacent to Eagle Lake and one to the west of Eagle Lake Road where the wastewater evaporation ponds are located. The Sphere of Influence (SOI) for Spalding, then known as Eagle Lake CSD, was initially established by LAFCO on November 16, 1989. The SOI for the District is conterminous with the municipal boundary. The District's current SOI was last reaffirmed on October 18, 2021.3 3 Lassen Local Agency Formation Commission Resolution No. 2021-0005 19 Ch. 3 Agency Overview Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Figure 3-2: Spalding Community Services District Boundaries and SOI R 10 E Eagle Lake Rd Spalding Rd Eagle Lake Rd The Strand Spalding Rd kj Spalding Palmetto Wy M ahogany W y 20 Ch. 3 Agency Overview Policy Consulting Associates, LLC N 23 T LASSEN LOCAL FORMATION COMMISSION Spalding Community Services District R 11 E kj kj kj kj kj kj kj kj kj kjCanby ·|}þ 395 Eaglevillekj Lookoutkj·|}þkjAdin kjLikely kj Pittvi kj Nllue kj bBi 2 iee 9 b 9 beerr kjMadeline kjLittle Valley ·|}þ 139 kjTe kj rm Ra o vendale A L Ston S e p s a l L d a in n g din kj gkj ·|}þ 395 S S E L M a o s d s o e c n C C o o u u n n t t y y Legend 4 Clear Creek kj L kjW ak e e s J F t o w o h o r n e o s s d t t o kj nvil kj lekjSu kj sa J n a S v n kjta i e lkj n l s kj e M d v L i i i i s l t l l c f h e o h kj r kjf d ie W l H d e ekj n r d lo e n l g O C U N N T kj H C C i o o g u m h n w m ty a u y B n s i o ti u e n s dary Spalding Community Services District Herlong Junction DkjoyleY Spalding CSD ·|}þ 395 Sectional Grid P 0 ar 4 c 3 e 7.5 ls 875 1,750 2,625Feet Hallelujah Junction kj (MDB&M) Source: Modoc LAFCo Map Created 7/22/2020 N 33 T Roads Spalding CSD MSR Adopted April 8, 2024 Spalding CSD is overseen by a five-member Board of Directors elected to serve for four years. The Spalding CSD Board meets the third Friday of each month at 3 p.m. in the Eagle Lake Community Center at 502-907 Mahogany Way, Susanville, CA 96130. Agendas and minutes for most board meetings as far back as 2017 are available on the Spalding website. However, minutes for a few 2023 BOD meetings (September 15, October 20th, November 17th) and all 2024 BOD meetings are not readily available online. Ethics training is required once every two years, beginning with an odd-numbered year (AB 1234, Chapter 700, Statutes of 2005). Training is available online at the State of California Fair Political Practices Commission (FPPC) website. An up-to-date Ethics Training Certificate for Director Ted Thomas, Director Larry Doss, and Director Ed Lawson is available on the District's website. Director Frank Muse and Director Barbara Willard currently have no proof of Ethics training on the website. It is important to note Director Frank Muse's term began in November 2023 while Director Barbara Willard's term began in March 2024. It is recommended that both Directors complete the required Ethics training as soon as possible to ensure compliance and limit liability for the District. Statement of Economic Interest, or Form 700, must be submitted annually to indicate transparency in economic interests as required by the Political Reform Act of 1974 (California Government Code Sections 81000-81003). Each Board Member is recommended to submit a new Form 700 each year, even if the economic interests have stayed the same. Form 700s are completed for the previous year, so a 2024 reporting covers January 1 through December 31 of the previous calendar year unless otherwise noted. Director Ted Thomas, Director Larry Doss, and Director Ed Lawson have 2023 Form 700 filings available on the District's website, while Director Frank Muse and Director Barbara Willard have no records of Form 700s. It is recommended that all board members complete an updated filing of Form 700 before the due date of April 2024. It is also recommended that all completed Form 700s be available on the District's website to increase transparency. 21 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Generally, Spalding CSD seems to struggle to meet the requirements outlined in State laws regarding the Brown Act, website materials, and best practices to ensure easy access to significant planning documents and financial reports. Residents have expressed concerns regarding board members having non-official meetings. Brown Act §54952.2 Ch. III defines meetings as any gathering of a quorum of a legislative body to discuss or transact business under the body's jurisdiction; serial meetings are prohibited. Alternatively, the following are exempt from being considered a meeting: 4 • Individual contacts between board members and others that do not constitute serial meetings; (54952.2(c)(1), Ch. III • Attendance at conferences and other gatherings that are open to the public so long as members of legislative bodies do not discuss among themselves business of a specific nature under the body's jurisdiction; 54952.2(c)(2), (3) and (4) • Attendance at social or ceremonial events where no business of the body is discussed 54952.2(c)(5) While it does not appear that the District is failing to comply with this law, it is recommended that the District review the above law with Board Members for clarity on what is considered a meeting and ensure open meeting requirements are being met at all times. Agenda and meeting minutes for some SCSD Board meetings are not readily available on the District's website. The District also does not live stream its recordings or make available archived meeting recordings on its website. Residents have also indicated concerns regarding inconsistent meeting minutes and agendas posted without the necessary attachments. According to SCSD's policy handbook, SCSD's policy 5020.1 indicates that the General Manager, in cooperation with the Board President, shall prepare an agenda for each regular and special meeting of the Board of Directors in accordance with the Ralph M. Brown Act (California Government Code Section 54950). Any Director may contact the General 4 The Brown Act, Open Meetings For Local Legislative Bodies. California Attorney General's Office. 2003. p.vii. https://oag.ca.gov/system/files/media/the-brown-act.pdf. 22 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Manager and request any item to be placed on the agenda no later than 5:00 p.m. on the day that is 48 hours prior to the closing of the agenda for the next meeting date (per Section 5020.4). Section 5020.4 requires that at least 72 hours prior to the time of all regular meetings, an agenda, which includes but is not limited to all matters on which there may be discussion and/or action by the Board, shall be posted in a place that is freely accessible to members of the public (California Government Code 54954.2 (a)(1)). If the District maintains a website, the agenda shall be posted on the website for public information at the same time. All information made available to the Board of Directors (except confidential information allowed by State law per legal counsel authority) shall be available for public review prior to the board meeting. Section 5020.4.1 of the policy handbook requires that the agenda for a special meeting shall be posted at least 24 hours before the meeting in the same location as for Regular Meeting agendas (California Government Code Section 54956). Generally, the District is in compliance with the agenda posting requirements, however, the website has some missing agendas and minutes over the years. The District does not have a formal policy regarding rate studies and is following Proposition (Prop) 218 provisions in conducting the proposed rate increase. Residents had concerns whether the rate increase was properly initiated, noticed, and processed according to Prop 218 requirements. Prop 218 Tax Reform radically changed how local governments raise revenues by ensuring taxpayer approval of changes and increases to existing charges. Proposition 218 sets out detailed rules for local governments to follow in levying or increasing fees and assessments. Article XIII D, Section 6 requires that a local government comply with the following procedures before imposing or increasing property-related fees or charges: 5 • Identify the parcels upon which a fee or charge is proposed for imposition; • Calculate the amount of the fee proposed to be imposed on each parcel; • Provide written notice by mail to the record owner of each identified parcel; 5 League of California Cities: Proposition 26 and 218 Implementation Guide. p.82. 23 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • Conduct a public hearing on the proposed fee not less than 45 days after the mailing; • Consider all protests against the proposed fee or charge; and • If written protests against the fee are presented by a majority of owners of the identified parcels, the fee cannot be imposed. Under Prop 218, agencies must send written notice of a proposed increase to property owners 45 days in advance of a scheduled public hearing. The notice must contain (a) the amount of the fee or charge proposed to be imposed; (b) the basis upon which it was calculated; (c) the reason for the fee or charge; (d) the date, time, and location of the public hearing.6 Per Government Code, § 53755, subdivision (b), a protest may be submitted by either an owner of a parcel or a tenant directly liable for the proposed fee or charge, but only one protest per parcel is counted in calculating a majority protest to a proposed new or increased fee or charge. Sewer, water, and refuse collection fees are exempt from Article XIII D, section 6, subdivision (c)'s election requirement. 7 In 2019, after submissions of RFPs, the District commissioned NorthStar Designing Solution to complete a rate study. Despite the District's efforts, the process was delayed on NorthStar's end until 2023. 8 Completed on July 27, 2023, the Rate Study analyzed the current and future revenue requirements and the rate structure that should be adopted to proportionately allocate the costs of providing sewer service to its customers. The 2023 Rate Study determined that the existing sewer system revenues are and will be insufficient to cover current and projected increases in the operational and maintenance costs of the District's sewer systems and the capital infrastructure improvements needed to repair, replace, and update the District's aging Systems, which would include acquisition of materials and supplies; labor and administration, and maintenance of adequate cash reserves.9 The completed 2023 Rate Study was included on the SCSD Board's July 31, 2023 special meeting agenda. The study recommended a $10 per month increase for FY 23-24 and a rate 6 California Special District Association (CSDA) Proposition 218 Guide for Special Districts, 2013, p.35. 7 League of California Cities: Proposition 26 and 218 Implementation Guide. p.97. 8 Spalding MSR interview, August 29, 2023. 9 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 24 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 increase of $6.00 for FY 24-25. There will be up to a four percent increase based on the Cost- of-Living Index in FYs 24-25 through 27-28, dependent on Board approval.10 The public hearing regarding proposed sewer service rate increases was set to be held on September 15, 2023. The July 31, 2023 Board meeting agenda included a notice for the public hearing and the procedures residents can take to protest the changes, including an protest form that must be submitted before or on September 15, 2023, at noon. The proposed rate was considered at a public hearing on September 15, 2023, and were adopted with only 188 written protests received out of 726 notices that were sent out by the District on August 21, 2023. The proposed rate took effect on January 1, 2024. One of the concerns from residents regarding SCSD's Prop 218 process was that there was no disclosure to voters that the proposed rate would pass if they did not return a written protest. However, page 2 of the Prop 218 notice for a public hearing that the District sent out to residents indicates that the rates are subject to majority protest and that renters/ lessees who are financially responsible for the bill and impacted by the rate change must submit written and signed protests opposing the increase before or on September 15, 2023, at noon. Another concern was that the proposed sewer fee increase was not scheduled to be held at the general election. However, as mentioned above the additional election requirement applies to all newly imposed or increased property-related fees except those for sewer, water, and refuse collection services.11 The California Special Districts Association Proposition 218 Guide for Special Districts highlights this exemption from the procedures and ballot protest approval process of Article XIII D section 4.12 The District reported that on the day of the hearing, it would set up a space for designated resident(s) to count any written protests. If a majority of property owners submit written and signed protests opposing the increase, then the proposed rate would not pass. Finally, there were concerns raised by residents pertaining to unsealed ballots prior to tabulation. However, unlike proposed assessments, for which Article XIII D, § 4 requires local governments to adopt and provide notice of the procedures for the consideration of ballots, Proposition 218 provides little guidance and few requirements for the majority protest procedure and tabulation related to proposed new or increased property-related fees or charges. 10 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 11 League of California Cities: Proposition 26 and 218 Implementation Guide. p.82, p.95. 12 California Special Districts Association Proposition 218 Guide for Special Districts. p.22. 25 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Instead, Article XIII D, § 6, subdivision (a)(2) requires only that the agency consider any written protests received. So long as a local government provides adequate notice, as described above, and takes account of all written protests, Prop 218 is satisfied.13 Tabulation procedures, such as ballots remaining sealed until the protest hearing, are only explicitly mandated for assessment ballots. Based on the information received from the public and the District and the Prop 218 requirements for wastewater rates, as previously outlined, it appears that the District met all legal mandates when processing its rate increase. Board members are required to complete Ethics Training once every two years. Of the five SCSD board members, three—Chairman Mike Arnold, Director Larry Doss, and Director Ed Lawson—completed the Ethics Training in 2023, while Director Ted Thomas has a 2022 Ethics Training Certificate of Completion available online. Director Randy Aubrey currently has no proof of Ethics Training for any year. It is recommended that all Directors complete timely ethics training to minimize the District's liability. Additionally, FPPC requires every elected official and public employee who makes or influences governmental decisions to submit Form 700. While SCSD's Policy Article 2.08.010 lists the following as designated positions that must complete and file Form 700: • Board members • General Manager • Fire Chief • District Counsel • District Engineer All of Spalding CSD's Board members is recommended to complete current filings of Form 700 with the California Fair Political Practices Commission prior to the April 2024 deadline to indicate transparency in their economic interests. Copies of these filings is also recommended to be available online on the District's website. Furthermore, besides the board members, only Fire Chief Cliff Spediacci's completed Form 700 is available on the District's website. However, the filing date is shown as January 2022, 13 League of California Cities: Proposition 26 and 218 Implementation Guide. p.85. 26 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 although the Fire Chief used a 2023 Form 700 that must be filed by April 2023, covering the time frame from January 2022 through December 2022.14 It is recommended that the Fire Chief upload an updated Form 700 to the SCSD website. 15 Additionally, Form 700 forms filed by staff in the other designated positions are not available on SCSD's website. It is recommended that the District review the status of Form 700s for all designated positions and update them as necessary to meet its legal obligations and foster transparency with residents. Note that although it is listed as a designated position that must file a Form 700, SCSD does not have a District Engineer. The District is struggling with complying with certain financial document compilation, adoption, and reporting requirements. The District has its annual budgets from as far back as FY 18-19 until FY 23-24 on its website, however, annual budget for FY21-22 is not readily available on SCSD's website. Additionally, there have been inconsistencies with the annual audits available online. For instance, the 2018 annual audit had missing pages from 23-31. While on the 2019 audit, the auditor's report indicated that a separate report, as required by Government Auditing Standards, was issued on November 15, 2019, to describe the scope of the independent auditor's testing of internal control over financial reporting and compliance and the results of that testing. However, that report was unavailable on the District's website for the public to access. The District also has been delayed in meeting annual audit requirements in a timely fashion, however, it is making efforts to get up-to-date. Currently, none of the annual audits are available on the District's website. SCSD residents can request documents unavailable on the District's website per the California Public Records Act Policy. The policy passed by the California Legislature in 1968 requires that government records be disclosed to the public upon request unless there are privacy and/or public safety exemptions that would prevent doing so. Government Code §7920.530 defines a public record as "any writing containing information relating to the conduct of the 14 Fair Political Practices Commission 2022-2023 Statement of Economic Interests, Form 700.https://www.fppc.ca.gov/content/dam/fppc/NS-Documents/TAD/Form%20700/2022-23/Form_700_2022.pdf. p.4. 15 Spalding Community Services District. Staff page. https://www.spaldingcsd.org/cliff-spediacci-volunteer-fire-chief 27 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 public's business prepared, owned, used or retained by any state or local agency regardless of physical form or characteristics." The California Government Code §6254 outlines several documents exempt from disclosure, including personnel, medical, or similar files, which would constitute an unwarranted invasion of personal privacy. The Public Records Act requires public agencies to respond to a record request within ten calendar days; however, this time limit may be extended by 14 days in certain circumstances. Due to the limited personnel that SCSD has, it has struggled to process voluminous requests from the public. It is recommended that SCSD have an online record of the public record requests that the District has processed to provide a tracking system for the public to avoid duplication of requests and ensure transparency. Also, a substantial and comprehensive update of the District's website would make many documents readily available to the public, thereby limiting requests. Additionally, some residents have indicated concerns about financial misappropriation, specifically borrowing, or transferring money from one account to another. For example, residents have reported that due to the financial constraints of the Marina, money has been transferred from the sewer fund to cover costs associated with the Marina services. While the audit report for FY 21-22 indicates that the District is recording most expenditures to the sewer fund when sending the claim to the County and then reallocating to the other funds.16 California Constitution Article XIII D, Section 6, subdivision (b)(2) forbids revenues from property-related fees and charges to be used for any purpose other than that for which they are imposed. In concert with subdivision (b)(1), it ensures the proceeds of property-related fees and charges are not transferred from a utility's account and used for non-utility purposes, such as general fund purposes of a city.17 This means revenues derived from the fee must not be used for any purpose other than that for which the fee is imposed. In the case of SCSD, Operation and Maintenance (O&M) fees are collected to cover the costs of providing sewer services; income from the O&M fees should only be utilized for that purpose. 16 Spalding Community Services District, Financial Statements for the Fiscal Year Ended June 30, 2022.p. 2-5. 17 League of California Cities, Propositions 26 and 218 Implementation Guide. May 2019. p.90. 28 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The District does not make available the Annual Compensation Reports nor the State Controller's Office Financial Transaction Reports on its website, as required. Figure 4-1 identifies efforts by SCSD to meet State laws to ensure transparency and accountability. It is recommended that the District thoroughly review these transparency and accountability indicators to ensure it is meeting state laws, as well as fostering public trust. Additionally, it is recommended that SCSD complete the Special District Leadership Foundation's (SDLF) Transparency Certificate of Excellence. The certification's purpose is to promote transparency in the operations and governance of special districts to the public/constituents and provide special districts with an opportunity to showcase their efforts in transparency. The application is free, and the certification is valid for three years from the date of award. The application and the requirements are available on the Special District Leadership Foundation's website. Appendix C illustrates the transparency checklist and sample application. Figure 4-1: Transparency and Accountability Indicators Special District Leadership Foundation Spalding Agency website (GC §53087.8) Yes Contact information available on website (GC §53087.8 (a)(3)) Yes Annual Compensation Report (GC §53891 and 53908) No Adopted budget available on website Yes State Controller's Office Financial Transaction Report available on No website (GC §53891 and 53893) Yes – but could be Notice of public meetings provided more comprehensive Yes- but some are Agendas posted on website (GC §54954.2) missing Public meetings are live streamed No Most minutes are Minutes and/or recordings of public meetings available on website available, No recording available Master Plan available on website No Strategic Plan available on website No Sanitary Sewer Management Plan available on website No Enterprise System Catalogue available on website (GC §6270.5 (a)) No Efforts to engage and educate the public on the services to the None community 29 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Staff and governing board member ethics training and economic Yes- but a few are interest reporting completed missing Yes- but certain Compliance with financial document compilation, adoption, and missing items on reporting requirements website Adherence to open meeting requirements Yes 30 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The District employs six part-time employees—a General Manager, an Office Manager, a Receptionist/ Clerk, a Wastewater System Operator, a General Maintenance Worker, and a Fire Chief. Additionally, SCSD has 11 volunteer firefighters (as of the drafting of this report). Staffing has fluctuated from the time of drafting of this report with some resignations. The District also utilizes contract personnel for legal advice and bookkeeping services.18 Figure 5-1 shows SCSD's organizational chart. When filling a vacancy, the District first reviews the job description for the role and makes updates as needed. The job descriptions for existing positions are available in the District's policy handbook. The District posts vacancies on the Spalding or Lassen News websites for about two weeks. However, due to its rural location, if the District does not receive any applications, vacancies are posted on Indeed and may be posted on the websites for up to a month. The Fire Department conducts interviews for fire-specific positions. The General Manager conducts interviews for all other roles. Other staff members may also participate in the interview process if their role is expected to work closely with the new hire. The General Manager can hire personnel without the Board's approval. The District has no policies or procedures concerning background checks; it is not a required part of its hiring process.19 Three distinct functional areas or Departments are managed by the Spalding CSD Board, including wastewater, fire protection, and recreation. The District also provides mailbox services by making space available in its office building for mailboxes operated by the U.S. Postal Service. 18 Spalding Community Services District Budgets, FY21-22, p.4. 19 Spalding MSR interview, August 29, 2023. 31 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Figure 5-1: Spalding Community Services District Organizational Chart, October 2023 32 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The District maintains an annual budget that discusses the funds for different services and the District's financial goals for the fiscal year. According to Article 2.03.100 of SCSD's policy, the District's General Manager is responsible for preparing and submitting the proposed annual budget to the District Board no later than the first meeting in May of each year. All financial practices and procedures shall comply with the requirements of Lassen County (Auditor's Office) and the California State Controller's guidelines for Special Districts and the California Government Code.20 SCSD's Policy 3105 requires the General Manager to prepare an annual budget proposal for the Board's consideration. The proposed annual budget, as reviewed and amended then, must be reviewed by the Board at its regular meeting at the beginning of June. As amended by the Board during its review, the proposed annual budget shall be adopted at its regular meeting at the end of June. Alternately, Government Code Section 61110(a) requires that on or before July 1 of each year or, for districts using two one-year budgets or a biennial budget, every other year, the Board of Directors may adopt a preliminary budget that conforms to generally accepted accounting and budgeting procedures for special districts. Government Code Section 61110(f) requires that on or before September 1 of each year, the Board of Directors adopt a final budget that conforms to generally accepted accounting and budgeting procedures for special districts. SCSD's FY 23-24 preliminary or finalized budget is available however, it was two months late per the District's policy. It is recommended that the District aligns its policy with the requirements for CSDs as outlined in Government Code Section 61110 to ensure transparency and provide clarity on budget deadlines. SCSD also has an annual audit that is carried out by an independent auditor that reviews the District's financial statements of the governmental activities, the business-type activities, each major fund, the aggregate remaining fund information, and the fiduciary fund of SCSD each fiscal year. Currently, none of the District's annual audits are available on the website. It is 20 Spalding Community Services District Ordinance No. 4. May 6,2013. P.22. 33 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 recommended that the District makes annual audits available on the website to ensure transparency. As discussed previously, the District also undertook a rate study to analyze the current and future revenue requirements and the rate structure that should be adopted to proportionately allocate the costs of providing sewer service to its customers. The rate study is available online as an attachment on the Board's July 31, 2023, special meeting agenda. SCSD does not have management planning practices. It is recommended that SCSD adopt a strategic plan that illustrates the District's core mission, goals and priorities, and work plan for staff and the public. SCSD can refer to other similar municipalities or special districts in the County with strategic plans to identify essential elements that could be included in the planning document. A strategic plan can be vital in communicating the District's vision and each Department's priorities to the public and increasing transparency. The strategic plan could also provide an opportunity to engage with the public to identify and address the right priorities. Spalding has developed a Sanitary Sewer Management Plan (SSMP) as mandated by the State Water Resources Control Board Order No. 2022-0103-DWQ, Statewide General Waste Discharge Requirements for Sanitary Sewer Systems. The purpose of the Order is to require agencies to prepare a plan and schedule for measures to be implemented to reduce sanitary sewer overflows and measures to clean up and report sanitary sewer overflows effectively. Spalding's SSMP was most recently updated in 2023. As required by law, the District must also conduct periodic SSMP audits at least every three years. The audit is intended to evaluate the effectiveness of the SSMP's programs, identify potential weaknesses, and determine improvement opportunities for use in future SSMP modifications. Due to staffing constraints, the District has struggled with conducting these annual audits and is presently focused on updating the SSMP and meeting related requirements moving forward. According to the District's 2023 SSMP, at a minimum, the District will update its SSMP every six years after its last Plan Update due date. The Legally Responsible Official (CPO) shall upload and certify the approved updated plan in the online CIWQS Sanitary Sewer Database per General Order No. 2022-0103-DWQ. 34 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Additionally, beginning in June 2026 and every three years thereafter, the CPO and District Engineer will audit the effectiveness of all elements of the SSMP. The audit will document findings and recommend changes to the SSMP in a written report to the District Board of Directors. These audit reports will be kept on file and made available to the public upon request. Minor changes to the SSMP, such as changes to the operation and maintenance element, will be made at the staff level. Significant changes, such as changes to legal authority, must be reviewed and approved by the District Board of Directors.21 The District's SSMP is not available on its website. It is recommended that the District make an effort to upload all produced documents and audit reports on its website to enhance transparency and inform the public. SCSD has no capacity plan; however, the District has an Environmental Impact Report (EIR) for its Wastewater services that was completed in 2000. The EIR provides a detailed record concerning project effects and includes alternatives analyzed, legal, economic, and technical considerations, operational descriptions, and other information crucial to understanding the Project proposal, and sets forth the basis for including or excluding mitigation measures for various identified impacts. Total buildout characteristics for population, wastewater flows, and evaporation pond sizing are all addressed in the EIR.22 No other operational plans, such as a master plan, are available for any of the services SCSD provides. However, the 2023 rate study comprehensively discusses the District's sewer system and its current needs. 21 SCSD, Sanitary Sewer Management Plan (SSMP). 2023.p.17. 22 SCSD, Wastewater Collection and Treatment Facilities Project Final EIR, April 17, 2000. p.2-1. 35 Ch. 5 Planning & Management Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 This section reviews historical and recent population and economic growth, projected growth, and growth areas. The Spalding CSD encompasses a total area of approximately 360 acres and is in Lassen County surrounded on three sides by the Lassen National Forest and on the east by Eagle Lake. The Lassen County General Plan (GP) shows the Spalding area designated for housing within the CSD, but the surrounding area is for various types of open space. The Eagle Lake Area Plan, completed in 1982, is a component of the Lassen County General Plan. The Area Plan states the following: To ensure the integrity and long-term protection of Eagle Lake and the interest of the public as reflected by the policies of the Eagle Lake Area Plan, Lassen County should rezone the remaining private lands of the Eagle Lake Basin located outside of the Planning Area that are not under Timber Preserve Zoning to ensure the continuation of open space use and protection of the watershed. The zoning for the residential lots in the Spalding CSD is Single Family Residential. It is the intention of Lassen County, as stated in the Eagle Lake Area Plan, that no new residential lots will be created in areas where there is no fire protection and per the above-mentioned policy, to ensure the continuation of open space uses and watershed protection in the Eagle Lake Basin. The Spalding CSD area is, for the most part, zoned for residential lots. Seasonal residents occupy the majority of the homes in the District.23 The District had a population of 178 as of the 2010 Census, while the 2020 Decennial Census reports an increased population of 206 or 15 percent for Spaulding CDP. Accordingly, SCSD's average annual population growth rate (AAGR) from 2010 to 2020 was approximately 1.5 percent. 23 Spalding Sphere of Influence. Adopted December 12, 2011.LAFCo Resolution 2011-0009. p.7. 36 Ch. 6 Growth Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 In comparison, the 2010 Census shows a total population of 34,895 for Lassen County, while the 2020 Census shows a decline in population to 32,730, indicating a six percent decrease in the overall county population. The countywide population experienced an average annual growth rate of negative 0.64 percent for the same period. According to the Department of Finance (DOF), countywide growth projections for Lassen County are expected to see an approximately negative two percent average annual growth rate (AAGR) from 2020 through 2060. Utilizing the County's AAGR and SCSD's 2020 population estimates, the population within SCSD is anticipated to decrease to 100 by 2060. The land use authority for the Spalding area is the County, and as such the growth strategies for the area are outlined in the County's General Plan and Eagle Lake Area Plan, as previously mentioned. Although the population projections do not indicate population growth within SCSD over the next few decades, strategies to improve services are essential to provide adequate services to residents. SCSD's annual budget lays out the district goals for each fiscal year, many of which relate to meeting existing and future service demands. The most recent fiscal year budget outlines district goals for FY 22-23, including: 24 • Maintain and improve the District's infrastructure. • Continue the process to close one sewer pond. • Continue making needed deferred maintenance repairs to the District's sewer system. • Complete the Sewer Rate Study and continue with any changes to sewer rate structures. • Improve the District's fiscal status: • Seek out and apply for grants to fund the District's projects within the Sewer, Fire, and Recreational components. • Create a 5-year Strategic Plan for the CSD. • Bring the community closer together and make Spalding a safe and desirable place to live, visit, and recreate: 24 Spalding Community Services District Budgets, FY22-23, p.3. https://www.spaldingcsd.org/files/a3e8161dc/proposed+budget.pdf 37 Ch. 6 Growth Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • Rewrite and update the district's policies and ordinances to make the community a more desirable place for community members and visitors to live, visit, and recreate. No other District document is available pertaining to strategies and service improvements. 38 Ch. 6 Growth Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 LAFCO is required to evaluate disadvantaged unincorporated communities as part of this service review, including the location and characteristics of any such communities. The intent and history of this requirement are outlined in the Background Section of this report. A disadvantaged unincorporated community is defined as any area with 12 or more registered voters, or as determined by commission policy, where the median household income is less than 80 percent of the statewide annual median.25 The California Department of Water Resources (DWR) has developed a mapping tool to assist in determining which communities meet the disadvantaged community's median household income definition. DWR is not bound by the same law as LAFCO to define communities with a minimum threshold of 12 or more registered voters. Because income information is not available for this level of analysis, disadvantaged unincorporated communities with smaller populations that meet LAFCO's definition cannot be identified at this time. The DWR Mapping Tool is an interactive map application that allows users to overlay the following three US Census geographies as separate data layers—Census Place, Census Tract, and Census Block Group. The specific dataset used in the tool is the US Census American Community Survey Five-Year Data: 2016 - 2020. Only those census geographies that meet the DAC definition are shown on the map (i.e., only those with an annual median household income (MHI) that is less than 80 percent of the Statewide annual MHI). The statewide MHI for 2017-2021 according to Census Bureau data is estimated at $84,097, and hence the calculated threshold of $67,277 defines whether a community was identified as disadvantaged. The entirety of the Spaulding Census Designated Place is considered to be a disadvantaged community with a median income of $36,328 and 129 residents. 25 Government Code §56033.5 defines a DUC as 1) all or a portion of a "disadvantaged community" as defined by §79505.5 of the Water Code, and as 2) "inhabited territory" (12 or more registered voters), as defined by §56046, or as determined by commission policy. 39 Ch. 7 DUCs Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The majority of SCSD's funding comes from benefit assessments and fees for services. The District makes use of the wastewater rates collected to fund wastewater operations within the District. Assessment revenues are directed to fire protection and emergency medical services. SCSD does not receive revenue from ad valorem property taxes. Spalding CSD's budgets are formally adopted by the Board of Directors for the General (Fire) and Recreation Funds and take effect the following July 1. The budget for the Sewer Fund is a management tool and not a legal requirement; and, while not required to have an adopted budget for the proprietary funds, it is a recommended best practice to 1) review the services that have been provided over the last year, 2) ensure adequacy of revenue sources to cover operational and a portion of future capital costs, 3) inform any necessary annual cost-of-living increases to the wastewater rates, and 4) enhance transparency to constituents. SCSD does not adopt an annual budget for its wastewater services. It is recommended that the District also adopt an annual budget for wastewater services at the same time that it considers a budget for other services. The District has two major governmental funds – the General Fund and the Special Revenue- Recreation Fund. The General Fund accounts for all the financial resources not required to be accounted for in another fund. The General Fund consists primarily of the general government- type fire department activities. The Special Revenue-Recreation fund accounts for the Marina activities. Spalding also has a Sewer Fund, which is a proprietary fund that accounts for activities to provide sewer service to District residents. This activity is financed primarily by user charges and is accounted for similar to the private sector. Additionally, the District has a fiduciary fund that accounts for assets held by the District as an agent for the limited obligation USDA bond assessment collections, administration, and bond payments. For FY 21-22, revenue sources for the governmental fund were benefit assessments (45 percent), intergovernmental revenues (45 percent), use of money and property (about nine percent), and other revenues (about one percent). Governmental fund expenditures for the fiscal year ending on June 30, 2022, were about 97 percent for public protection-fire and three percent for community services. 40 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The benefit assessment is collected by Lassen County when residents pay their property taxes. The assessment is considered restricted use funds for obtaining furnishing, operating, and maintaining fire suppression equipment or apparatus, or for paying the salaries and benefits of firefighting personnel, or both. The fee was approved by Spalding residents in February 1998 and the specific uses for the funds are covered in Government Code Section 50078 through 50078.20. According to the adopting resolution, the assessment is $65 per year per parcel.26 The District's proprietary funds distinguish operating revenues and expenses from non-operating items—operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal revenues and expenses. The sole revenue source for wastewater operations was sewer fees. Sewer fees are further described later in this section. Non-operating revenue sources were grants (21 percent), contributions from other agencies (75 percent), and interest revenue (four percent). Operating expenses for wastewater services were salaries and benefits (13 percent), services and supplies (24 percent), and depreciation expenses (63 percent). Financially, the District has faced challenges in recent years to cover wastewater operational costs and marina service costs. Over the past ten years, Spalding CSD has struggled with a steady increase in the cost of wastewater operations coupled with a stagnant income resulting from unchanged wastewater rates. As a result, the District proposed a sewer rate adjustment. The District undertook a Cost-of-Service Analysis (COSA) or Rate Study to determine the appropriate rate structure. The COSA reviewed audited financial reports for the past four years, indicating that the number of wastewater system users has remained steady at about 726. Consequently, the average annual projected income from Sewer Fees has been approximately $226,000. However, yearly operating expenses are increasing due to inflationary demands and are now projected at $280,101 for FY 23-24. The COSA found that annual expenses would exceed annual income by approximately $54,000 for FY 23-24. Under the then-existing rate structure, SCSD would operate at a loss for FY 23-24 and beyond. As such, the COSA recommended a rate increase to fund this shortfall. The study recommended a $10 per month per connection increase be utilized for FY 23-24 and a rate increase of $6 per month for FY 24-25. Furthermore, the study recommended up to a 26 Resolution 2014-1: Resolution to enact a new special tax equitably against all real property for the purpose of providing fire protection equipment replacement and fire prevention programs; and to call a special election thereon. https://www.spaldingcsd.org/files/2b4cdac28/RESOLUTION_2014_1_Amended_Fire_Tax.pdf 41 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 four percent increase annually based on the Cost-of-Living Index (FYs 24-25 through 27-28). The proposed rate was considered at a public hearing on September 15, 2023, at noon, and per Proposition 218, the proposed sewer rates were subject to majority protest. Sufficient protest to prevent the rate increase was not received with 188 protest ballots returned out of 726 mailed; consequently, the new sewer rates became effective beginning January 1, 2024. The Proposition 218 rate increase process is discussed further in the Rates and Charges section of this chapter. Marina services continue to be unfunded due to low water levels leaving the marina non- operational and without a revenue source from use fees. The District has had to make use of transfers from the Wastewater Fund in order to cover marina services in prior years. SCSD has ceased this practice but continues to face a financing shortfall that needs to be addressed. The District reported that it only has sufficient funds to cover one year of its four-year lease with the State Lands Commission. The District is considering other revenue sources to cover the remaining years and is evaluating the future of marina services. Exacerbating these funding shortfalls, the FY 22-23 budget highlights that there are still substantial dollars of uncollected revenue from sewer fees and unpaid taxes for the Sewer Bond. The budget also indicates that new revenue sources must be explored so the District can upgrade, maintain, and/or purchase equipment or provide new programs within the District. The District reports that grants are a priority for the fiscal year, especially for replacing the Fire Department's mobile equipment.27 However, funding levels for the District's fire services are proven to be consistently sufficient with total revenues exceeding total expenditures in both FY 21-22 and FY 20-21. Additionally, overall, the fire department's existing equipment and storage are in good condition and can adequately serve current emergency services demands. Regarding financial controls and practices, as reviewed in the FY 21-22 audit, several significant deficiencies were identified, which is defined as a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, which illustrates a deficiency or a combination of deficiencies in internal control, such that there is a reasonable possibility that material misstatement of the entity's financial statements will not be prevented or detected and corrected on a timely basis, yet important enough to merit attention by those charged with governance. 27 Spalding Community Services District Budgets, FY22-23. p.5. https://www.spaldingcsd.org/files/a3e8161dc/proposed+budget.pdf. 42 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The following significant deficiencies were identified in the most recent audit:28 • Deposit Support—The District could not provide auditors with the daily receipt registers showing who the daily receipts were collected from, the amounts collected, the total collected, and the batch receipt total deposited to the bank. The auditor's report recommended retaining daily registers and deposit slips to support the funds collected by the District being deposited to the bank. The District responded that it will develop a more thorough process for retaining supporting documentation. • Capital Assets — The District's QuickBooks did not reflect the modified accrual basis of accounting for the fire fund and the recreation fund, which would not include long-term assets such as capital assets. The District responded that they will work with their new CPA to implement these adjustments to their accounting routine. • Sewer Fund Cash Position — The audit reflects that the sewer fund revenue does not appear to be sufficient to cover expenses and, as such, recommended a rate study to propose a rate increase. As mentioned previously, the rate study was conducted, and a rate increase subsequently passed. • Fund Accounting — The District's QuickBooks accounting software is not set up to correctly record a self-balancing set of accounts for each fund. The audit recommends that the District procure accounting software specifically developed for fund accounting. The District, however, reported financial constraints in getting new software. Instead, it plans on developing each fund as a separate "company" so that the accounts can be more suitably reconciled. • Sewer Account Receivable — The audit showed that a customer, also a Board member, had three accounts with an outstanding balance on June 30, 2022, totaling $19,843.20. The District indicated that it was a mistake in their accounting, and the customer does not owe anything to the District. The District will resolve this in their software as soon as possible. • GAAP Knowledge — The District relies on the external auditor to ensure its financial statements are by Generally Accepted Accounting Procedures (GAAP). SCSD should consider training staff or hiring an externally qualified accountant to prepare the GAAP financial statements. The District hired a contract CPA to help implement proper accounting standards to prepare governmental financial statements. 28 Spalding Community Services District, Financial Statements for the Fiscal Year Ended June 30, 2022.p. 2-5. 43 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • Sewer Account Receivables — The audit reports deficiencies with the District's billing system, including past customers' accounts being billed, resulting in an overstating of receivables and revenue balances. The audit adjusted the balances for accounts that did not appear to be valid receivables. Additionally, the District has no policies or procedures for collecting past-due accounts, and it is recommended to adopt one. The audit report also recommends that the District review each customer account to determine whether the receivable balance is supported and whether they are active customers and should be billed. The District reported developing policies and procedures related to past-due accounts is a priority through the next fiscal year. Additionally, the District has implemented a process for the legal counsel to send letters to those customers who are delinquent on their Bond payments, which are collected through Lassen County. • Journal Entries — The audit proposed several journal entries. It recommended that the District perform year-end procedures to record all known journal entries so that all account balances agree to the underlying support. With the assistance of the CPA, the District plans to implement the above recommendation in the next fiscal year. • Expense Allocation — The audit indicates that the District records most expenditures to the sewer fund when sending a claim to the County and then reallocates to the other funds. Additionally, there seems not to be a district policy for allocating indirect expenses, such as utilities and staff admin pay, between funds. The audit recommends the District record each direct expense to the proper fund when a claim is prepared. The District also should consider providing staff direction on allocating indirect expenses to all funds. With the assistance of the CPA, the District plans to implement the above recommendation. • Segregation of Duties — The District lacks segregation of duties, which increases the risk of potential errors or irregularities occurring without being detected. However, the audit acknowledges that this requires additional expenses. The District recently hired an Office Assistant who takes direction from the General Manager and Office Manager, which increased the District's ability to perform all aspects of processing transactions from beginning to end. Training regarding bookkeeping and bond accounts is expected to continue for the new hire in the upcoming fiscal year. • Annual Assessment — The District has been crediting/reducing the assessment for customers who prepay for an entire year by $12 as an incentive. According to the District, the $12 credit has already been removed from the options for the next fiscal year. The District has informed all customers of this change for the past three quarters, and it has not been challenged. 44 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 In April 2023, the District removed its funds from the County's accounting system and now has sole responsibility for the management of those funds. The General Manager has been appointed the District's Treasurer/Controller with the power to manage district finances. Figure 8-1: Spalding CSD Financial Summary FYs 21 and 22 fy 20-21 fy 21-22 Governmental Activities Budget Revenues Assessment $35,266 $33,339 Intergovernmental $54,160 $33,385 Use of Money and Property $2,861 $6,100 Charges for Current Services $1,111 Other $12,648 $696 Total Revenues $106,046 $73,520 Expenditures Public Protection - Fire $27,170 $18,420 Community Services $7,834 $649 Capital Outlays $0 $0 Total Expenditures $35,004 $19,069 Other Financing Sources (Uses) Operating Transfer ins $7,818 Operating Transfer outs ($10,607) ($1,628) Total other financing sources ($10,607) $6,190 Change In Net Position $60,435 $60,641 Prior Period Adjustment ($5,119) Ending Fund Balance $140,490 $196,012 Unassigned Fund Balance $118,530 $171,218 Unassigned Fund Balance as % of Operating Revenues 111% 232% Wastewater Enterprise Budget (Proprietary/ Business- Type Activities) Revenues Operating Revenues (Wastewater Rates) $188,752 $197,118 45 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Non-Operating Revenues $5,069 $75,167 Other Financing Sources $10,607 ($6,190) Total Revenues $204,428 $266,095 Operating Expenditures Salaries and Benefits $110,376 $92,806 Services and Supplies $ 149,113 $165,343 Depreciation Expense $432,897 $431,913 Total Operating Expenses $692,386 $690,062 Operating Income (Operating Revenue less Operating Expenses) ($503,634) ($492,944) Net Operating Income less Depreciation ($70,737) ($61,031) Change In Net Position ($487,958) ($423,967) Prior Year Adjustments — $26,412 Ending Fund Balance (including Capital Assets) $8,313,795 $7,916,240 Unrestricted Assets $328,468 $362,826 Unrestricted Assets as % of Operating Revenues 174% 184% Typical Monthly Rate for Single Family Residence $26 $26 Median Monthly Household Income, 2017-2021 (not in thousands) $3,027 $3,027 Monthly Wastewater Rates as a % of Household Income 0.81% 0.81% 46 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Recurring operating deficits are a warning sign of fiscal distress. In the short term, reserves can backfill deficits and maintain services. However, ongoing deficits eventually will deplete reserves. Spalding's governmental activities operating revenue (excluding other financing sources) for FY 21-22, exceeded total expenditures by $54,451 or about 26 percent. In comparison, operating revenue (excluding other financing sources) for FY 20-21 exceeded total expenditures by $71,042 or about 33 percent. Alternately, the District's operating revenues for business-type activities did not cover operating expenditures for wastewater services for the past two fiscal years. In FY 21-22, Spalding's total expenditures (excluding depreciation expenses) for business-type activities, exceeded operating revenue (excluding non-operating revenues and other financing sources) by $61,031 or about 130 percent. Similarly, in FY 20-21 total expenditures (excluding depreciation expenses) for business-type activities, exceeded operating revenue (excluding non-operating revenues and other financing sources) by $70,737 or about 137 percent. Fund balances and reserves should include funds for cash flow and liquidity, in addition to funds to address longer-term needs. Cash reserves should be adequate to respond to system emergencies, temporary deficits, economic downturns, and fiscal emergencies, as well as to fund needed capital improvements. Fund balance is the total accumulation of operating surpluses and deficits since the beginning of a local government's existence. The District's balance for governmental activities increased by about $55,522 from FY 20-2129 to FY 21-2230, from an ending balance of $140,490 to an ending balance of $196,012. The $55,522 reflects a net position calculated by deducting expenses and other prior-year adjustments from the total revenue. This amount is added to the beginning fund balance (the previous year's ending fund balance) to reflect the lifetime accumulation of operating surpluses and deficits for government-type activity funds. 29 Spalding Community Services District, Financial Statements for the Fiscal Year Ended June 30, 2021.p. 7. 30 Spalding Community Services District, Financial Statements for the Fiscal Year Ended June 30, 2022.p. 7. 47 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Alternately, the balance for business activities including capital assets decreased by about $397,555 from FY 20-2131 to FY 21-2232, from an ending balance of $8,313,795 to an ending balance of $7,916,240. The balance reflects the $423,967 deficit net position for business-type activities (total revenue less total expenses including depreciation expenses) and the $26,412 previous year adjustment. SCSD's liquidity ratio, which is positive (current assets exceed current liabilities), indicates the short-term (less than one year) availability of these funds if needed. However, the largest portion of SCSD's net position (95 percent and 96 percent for FY 21-22, and FY 20-21, respectively) reflects its net investment in capital assets. Furthermore, SCSD does not maintain any reserves and has no savings when ending a fiscal year to weather any contingencies such as unexpected expenditures, or to offset temporary fluctuations in revenues. SCSD also has no formal reserve policies. An agency's "Net Position" represents the amount by which assets (e.g., cash, capital assets, other assets) exceed liabilities (e.g., debts, unfunded pension and OPEB liabilities, other liabilities). A positive Net Position indicates financial soundness over the long term. SCSD had a total net position of $12,581,582 million at the end of FY 21-22. SCSD's net position decreased by $477,388 during FY 21-22 from FY20-21. The main cause of the decrease was a decline in total assets from business-type activities by $400,433 compared to the previous year primarily due to depreciation.33 SCSD is mandated to be self-sufficient. Self-sufficiency means revenue generated must meet all expenses of the District. All user fees must reflect the actual cost of providing services rendered. The adopted user fee rate structure must proportionally distribute the approximate service cost to those who benefit from the service. Wastewater services include—system maintenance and repair, permit compliance, water quality monitoring, testing and reporting, small and large-scale capital improvements, insurance utilities, regulatory fees, and legal and accounting services. The District relies on revenues from sewer service rates to support operations and maintenance of the wastewater system while maintaining sufficient operational, 31 Spalding Community Services District, Financial Statements for the Fiscal Year Ended June 30, 2021.p. 9-10. 32 Spalding Community Services District, Financial Statements for the Fiscal Year Ended June 30, 2022.p. 9-10. 33 Spalding CSD, Financial Statements, For the Fiscal Year Ended on June 30, 2021, p.3. Spalding CSD, Financial Statements, For the Fiscal Year Ended on June 30, 2021, p.3. 48 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 improvement, and emergency reserves. The previous rate structure and the rate structure that took effect on January 1, 2024, are shown in Figure 8-2. Figure 8-2: Spalding CSD Current Rate Structure fee after item fee before 11/01/203 11/01/203 Sewer Connection/ Disconnect $200.00 $200.00 Sewer Operations and Maintenance Fee, Annual $312.00 $432.00 Sewer Operations and Maintenance Fee, Quarterly $78.00 $108.00 Wastewater Assistance $35.00 per hour $35.00 per hour In 2023, NorthStar Engineering conducted a Cost-of-Service Analysis for SCSD, evaluating the District's five-year budget projection and analyzing its capacity to implement its capital improvement and replacement plan while maintaining debt service and reserve requirements.34 According to the Sewer Study, an equitable rate structure must consider all user classes, and rates must be placed according to benefit and use. There are a number of factors that should be considered when developing or updating a rate structure. The rate structure should:35 • Generate sufficient revenue to pay for the actual total cost of providing service, including all operational costs, as well as funding of necessary reserve accounts and debt service, • Rates must distribute the costs of the system fairly across all user classes, • Enable the customer accounting to be easily performed, and • Be easily understood and accepted by the consumer. The Study recommended increasing sewer service rates (O&M fees) to meet the revenue requirements of the District and addresses forecasts for increasing expenditures. The District's Board of Directors formally accepted this Study at a Special Meeting of the Board on July 31, 2023. The Rate Study can be viewed online at spaldingcsd.org and is also on file and available for public review at the Spalding Community Service District, 502-907 Mahogany Way, Susanville, CA 96130. As part of the Rate Study, budget requirements and proposed rates have been projected for the next five-year period, beginning with FY 23-24 and running through FY 27-28. A two-step rate increase was proposed to meet the minimum financial needs of the District, based on 34 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 35 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 49 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 these projected budget expenses. The first step will balance the budget in year one with nominal reserves accrued. The second step will fully fund reserve accounts. In year one, rates were increased by38.48 percent in FY 23-24. Rates in FY 24-25 will increase by 16.67 percent , followed by four percent cost-of-living only increases for the following three years.36 Figure 8-3 shows the approved rate change. The new sewer service rate for FY 23-24 is $108 quarterly ($432.00 per year). For FY 24-25, the rate will increase by $6.00 monthly, with rates totaling $42/month, $126/quarter, and $504/year. Each year thereafter, for the following three years, from July 1, 2025, to June 30, 2028, the rates may be adjusted by a percentage increase of not more than four percent annually.37 The Study also recommended policy changes to the current wastewater assistance fee, which is currently set at an hourly rate of $35.00. According to the Study, it should be revised to a fully loaded hourly rate that recovers actual cost to the District. The recommendation is for the District to establish and adopt a recoverable rate for field staff and a separate rate for administrative staff. Additionally, regarding service callouts, the study recommends that if it is discovered that the reason for the service callout is on the customer side of the system, then the customer should be billed for the Service Callout.38 These changes are generally adjusted with each budget cycle and are subject to board approval. Figure 8-3: Spalding CSD Proposed Rates fiscal year sewer operations and maintenance fee 23-24 $432.00 Annually $108.00 Quarterly $36.00 Monthly 24-25 $504.00 Annually $126.00 Quarterly $42.00 Monthly 25-26 $524.00 Annually $131.00 Quarterly $43.68 Monthly 26-27 $545.16 Annually $136.29 Quarterly $45.43 Monthly 27-28 $567.00 Annually $141.75 Quarterly $47.25 Monthly The Rate Study also compared the proposed sewer rate for SCSD and other wastewater districts. As shown in Figure 8-4, after five years of rate increases as proposed, SCSD rates will still be lower than most other districts of relatively similar size and function. 39 36 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 37 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 38 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 39 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 50 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Figure 8-4: Spalding CSD Comparison of Sewer Rates approximate number of annual monthly sewer name fee fee accounts Spalding Community Services District 726 Former Rate $312.00 $26.00 23-24 $432.00 $36.00 24-25 $504.00 $42.00 25-26 $524.00 $43.68 26-27 $545.16 $45.43 27-28 $567.00 $47.25 Tehama County Sanitation District No. 1 (23-24) $72.24 182 Donner Summit PUD (23-24) $95.15 234 Sutter County Waterworks District No. 1 (Robbins) $103.50 74 (Tulare County Resource Management Agency (2023) $59.61 98 Gualala Community Services District (23-24) $901.11 $75.09 343 City of Portola $47.25 920 Geyserville Sanitation Zone $1,310.00 $109.17 212 Sea Ranch Sanitation Zone $1,400.00 $116.67 750 Penngrove Sanitation Zone $1,828.00 $152.33 101 Westwood Community Services District (adopted 2019) $39.31 741 Plumas Eureka Community Services District $89.56 282 McCloud Community Services District $56.00 619 American Valley Community Services District (Quincy) $69.32 690 City of Alturas $42.79 1028 Jamestown Sanitary District $81.55 378 The public hearing for the proposed rate increase was set for September 15, 2023, at noon. Per Proposition 218, if a majority of property owners submit valid written protests against the proposed service rates and cost allocation adjustments, the District Board shall not adopt the proposed sewer rates. The proposed rate was passed on September 15 as only 188 written protests were received out of 726 notices that were sent out by the District on August 21, 2023. The new rates took effect on January 1, 2024. 51 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 SCSD has no total long-term obligation as of June 30, 2022. However, the District acts as an agent on behalf of the United States Department of Agriculture assessment bonds. The District is not liable for the debt repayment, but is merely acting as the property owner's agent in handling the debt service transactions by collecting assessments and forwarding them to the bondholders. The County collects the bond while the District operates as a pass-through with zero admin fee to Willdan and the U.S. bank. The bond payment goes on the property owner's tax form. The bond funds were originally used to finance major improvements to the sewer system. This bond is not related to the O&M fee. The District reports that certain replacement and repair projects can be financed out of the bond payments; however, it is unclear how much can be dedicated to these projects.40 The $9,427,703 USDA assessment bonds were initially issued in 2007 and were refinanced in 2017 through the issuance of $7,940,000 in new debt. Interest is payable semi-annually on March 2 and September 2 at interest rates ranging from 3.875 percent to 5 percent, with principal payments through 2047. The bond transactions are accounted for in an Agency Fund. The outstanding principal on June 30, 2022, was $7,106,400.41 SCSD reports that it does not have a Capital Improvement Plan. The District had previously started a needs assessment and had completed the first portion, however, the process was halted due to lack of funds. SCSD has the required reserve funds for the USDA assessment bonds. However, the District has no formal reserve policy or reserves in the budget. The District also reports there are no savings on the SCSD budget. If there is any budget left from the previous year, it usually goes towards repairs and equipment. These financial constraints are a significant factor in prompting the Rate Study. Furthermore, as illustrated previously, the District's financial standing reflects that it is unable to cover the deprecation of assets which indicates that future infrastructure needs will not be 40 Spalding MSR interview, August 29, 2023. 41 Spalding CSD, Financial Statements, For the Fiscal Year Ended on June 30, 2021, p.21. 52 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 sufficiently covered by existing revenues and that the district will have to find additional revenue sources to cover any significant capital costs. 53 Ch. 8 Finance Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 SCSD is committed to providing its customers with a safe, affordable, and reliable wastewater collection, treatment, and dispersal system. To accomplish this, the District levies a simple user fee rate for services provided. Sewer rates are required to be set at levels sufficient to cover the costs of: • Ongoing operations and maintenance, • Repair of system facilities, • Acquisition of materials and supplies, • Labor and administration, • Capital improvements, and • Maintenance of adequate cash reserves. The SCSD wastewater system is known as a STEP/STEG system. The system starts with individual septic tanks located at each customer's property. The septic tank provides primary treatment to the wastewater, basically removing the solid material found in the waste (sludge) and passing through the remaining liquid. The nearly clear liquid moves by gravity or is pumped through a screen into a collection system of pipes. The sludge stays in the tank until it is necessary to have it pumped out. The liquid discharge from the septic tanks is called "effluent" and is gravity-fed and/or pumped through the pipe system to twenty acres of lined evaporation ponds (three ponds total) located across County Road A1 at Spalding Road. These ponds, nearly odor-free, take oxygen from the air and use sunlight to provide a secondary level of treatment, removing carbon, nitrogen, phosphorous, and other nutrients from the effluent. There is enough evaporation to keep up with the inflow so that no water is discharged into the groundwater. The system is rated to handle 25.8 million gallons annually. The average annual flow since 2010 is 3.98 million gallons.42 42 Cost of Service Analysis for Spalding Community Services District Sewer Rates. July 27, 2023. 54 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 SCSD does not provide wastewater treatment sewer system services to other agencies. SCSD does not have contracts for services. There are no overlapping wastewater service providers in the SCSD area. The wastewater system consists of approximately 576 "users" representing approximately 726 equivalent dwelling units (EDUs), which are typically billed quarterly for the O&M Fee.43 The collection system includes four pumping stations, each with a backup generator. Approximately 62 sewer service locations require pumps at the septic tank. Maintenance of septic tanks and pumps is the responsibility of the owner.44 Each residential or commercial connection maintains and operates an individual septic tank that provides partially treated wastewater to the collection system. The individual septic tanks are not under the ownership or control of the District. The District ensures that each septic tank connected to the sewage collection system has a filter installed to prevent solids above a certain size from entering the collection system.45 The collection system conveys the sewage to three evaporation ponds that are located approximately two miles north of the Spalding Tract. Pond 1 is 9.2 acres, and Ponds 2 and 3 are 5.5 acres.46 43 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 44 Cost of Service Analysis for Spalding Community Services District, Sewer Rates. July 27,2023. 45 California Regional Water Quality Control Board Lahontan Region, Board No. R6T-2006-0020, WDID NO 6A180506011, Waste Discharge Requirements for Spalding Community Services District. 46 California Regional Water Quality Control Board Lahontan Region, Board No. R6T-2006-0020, WDID NO 6A180506011, Waste Discharge Requirements for Spalding Community Services District. 55 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 All ponds are constructed to a minimum depth of seven feet (five feet of storage) and have a 60-mil high-density polyethylene liner. All of the ponds both store and evaporate liquids. Total storage with two feet of freeboard is estimated to be between 32 and 33 million gallons. The net pan evaporation rate is approximately 41 inches per year.47 The 2000 EIR includes a population estimate, based on homesites derived from available lots and observed development patterns. The total number of estimated households year-round, including seasonal population, was 809 plus 76 additional units for commercial wastewater for a total of 885 equivalent dwelling units.48 The Spalding Tract occupancy values were used to estimate the domestic wastewater volume generated each month under buildout conditions. Resident flow rates were estimated at 70 gallons per person per day, while non-resident flow rates were estimated to be 47 gallons per person per day. The Regional Water Quality Control Board accepted these values for wastewater estimation of communities surrounding Eagle Lake. 49 The potential monthly wastewater volumes were generated by households and commercial establishments of Spalding Tract at buildout conditions at the time. According to the EIR, the estimated monthly residential wastewater flow was 64,597 gallons. 50 The EIR estimated the average annual wastewater flow to be 70,700 gallons per day, with a peak-month average daily flow of 117,800 gallons per day. A peaking factor of 3.5 (peak day to peak month) provides an estimated peak daily flow of 412,200 gallons per day. The peaking factor allows for the sizing of conveyance facilities, but the overall estimate of annual wastewater volume of approximately 26 million gallons and the average daily inflows were the most important values for pond sizing. 51 The sizing of the evaporation pond accounted for variable inflow rates of wastewater, precipitation inputs, and potential evaporation rates. The calculations were based on a water balance equation that "balances" all inputs versus the singular output of evaporation. The 47 California Regional Water Quality Control Board Lahontan Region, Board No. R6T-2006-0020, WDID NO 6A180506011, Waste Discharge Requirements for Spalding Community Services District. 48 SCSD, Wastewater Collection and Treatment Facilities Project Final EIR, April 17, 2000. p.2-2. 49 SCSD, Wastewater Collection and Treatment Facilities Project Final EIR, April 17, 2000. p.2-3. 50 SCSD, Wastewater Collection and Treatment Facilities Project Final EIR, April 17, 2000. p.2-4. 51 SCSD, Wastewater Collection and Treatment Facilities Project Final EIR, April 17, 2000. p.2-6. 56 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 ponds were sized to dispose of all water (wastewater inflows and precipitation) during normal- year conditions, although the pond heights are sized for 100-year precipitation conditions (yearly precipitation that has the probability of occurring one percent of the time during any given year). Therefore, under normal year conditions, all inflows and precipitation would evaporate, while during 100-year annual precipitation, the ponds would gain water volume, but it would be sufficiently contained within the ponds due to the extra volume of the configured ponds. 52 According to the Waste Discharge Requirements (WDID NO. 6A180506011) for SCSD's sewage evaporation ponds, the ponds' volume will not be able to accommodate the entire wastewater flow at build-out without evaporation enhancement. The analysis concluded that about 52% of the maximum (build-out) wastewater flow could be accommodated by the ponds as designed but without evaporation enhancement. This equates to approximately 37,500 gallons per day of wastewater, which translates to 13.7 million gallons annually. The design flow rates are based on assumed rates for occupancy (year-round/seasonal), wastewater generation, and growth (to build out). 53 According to SCSD's FY 22-23 budget, the wastewater system currently has approximately 830 users. The number of users has not changed significantly since the 2000 EIR estimates; therefore, the estimated necessary annual wastewater capacity of 25.8 million gallons was significantly overestimated. For instance, the annual wastewater flow for 2021 and 2022 was approximately 3.97 million and 4.3 gallons, respectively. These actual annual flows indicate that roughly 74 percent of the 25.8 million gallons in capacity is remaining. According to Article 5.07.010 of SCSD's ordinance, a sewer lateral or line connected to the District's sewer system can only be used to flow effluent after it has passed a preliminary and final inspection. Additionally, annual inspections and servicing are required per the District's Ordinance. Each property owner connected to the District's sewer system shall annually inspect and service their septic tank to ensure it is functioning correctly and to service and/or replace the filter system on the tank in compliance with the procedures established by the District. Owners may request that the District perform the inspection and servicing, which will be done as time permits and at a time and materials rate. Failure to perform the annual inspection and servicing shall 52 SCSD, Wastewater Collection and Treatment Facilities Project Final EIR, April 17, 2000. p.2-4 - 2-5. 53 California Regional Water Quality Control Board Lahontan Region, Board No. R6T-2006-0020, WDID NO 6A180506011, Waste Discharge Requirements for Spalding Community Services District. 57 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 constitute a violation of this Ordinance and shall be subject to the penalties and District remedies as otherwise provided for in this Ordinance.54 It is recommended that each property owner's responsibility, including maintenance, inspections, and spill reporting requirements, be clearly outlined and posted to the SCSD's website in an easily accessible location. Furthermore, in instances of system failure, instructions for residents to request help from the District for inspection and repairs are available on the District's website and at the District's office. With regard to the District's collection and treatment system, there is a scheduled inspections and conditions assessment that is to be carried out by district staff, according to the SSMP.55 The following tasks are done on a daily basis: • Check daily flows and record, and • Check for alarms at lift stations. The following are done on a weekly basis: • Visually check ponds and pump flows, • Check pond levels, • Check evaporation pans, • Check operation of lift stations and pumps, • Check coolant, oil, and fuel levels in emergency generators, and • Inspect street venting. The following are completed on a monthly basis: • SSO reporting, and • Prepare a report to the board on current issues being addressed. The following are done on a quarterly basis: • Exercise valve ponds, • Conduct monitoring of well tests, • Conduct monitoring of pond tests and perform testing, and 54 Spalding Community Services District Ordinance No.4. Article 5.07.010 - 5.07.030 .https://www.spaldingcsd.org/files/3ec13f5b8/Complete_Code_-_2013.pdf. p.53-54. 55 Spalding CSD, Sanitary Sewer Management Plan (SSMP). 2023.p.5. 58 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • Weeding as necessary. Although SCSD's SSMP has a maintenance plan, staffing issues and the District's financial constraints prevent regular maintenance. The primary capacity constraint is staffing issues, mainly because SCSD's facility is significantly oversized for the community's needs, and a larger system requires increased staffing and funds for maintenance. According to the District, the sewer system operations require at least two full-time certified personnel. The District reports that the sewer system operations have only one part-time operator that is not certified or licensed. The recent rate increase is expected to assist with certification and licensing expenses. The District periodically works with the California Rural Water Association and a contract engineering firm, STUT Engineering, to mitigate this gap. Currently, SCSD's sole operator does quarterly and annual reports, including water tests at the ponds, well tests, and recording flows to ponds and the four pump stations. The operator also tracks work in a daily journal. The District was rewarded in 2022 with an exemption from past requirements to utilize a State Certified Wastewater Treatment Operator Grade II to gain compliance. Typically, it has been necessary for the District to contract with a Grade I Operator to gain compliance for operation.56 The exemption expires on October 11, 2026. The wastewater ponds are in use but far from capacity. In 2019, the District hired a consultant to figure out how to shut down one of the three ponds, since the District is upkeeping the pond even though there is barely any wastewater flow. However, the District reports that closing the pond would cost more than the maintenance, and due to financial constraints, the project halted.57 Additionally, the District reports that no lines have been replaced since 2000. Since the facility is not utilized up to its capacity, replacement may not be required as much as maintenance efforts such as flushing the line. The operator has reportedly flushed one line to date.58 56 Spalding MSR interview, August 29, 2023. 57 Spalding MSR interview, August 29, 2023. 58 Spalding MSR interview, August 29, 2023. 59 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 All wastewater agencies are required to report sanitary sewer overflows (SSOs) to the State Water Resources Control Board (SWRCB). Sewer overflows are discharges from sewer pipes, pumps, and manholes. Overflows reflect the capacity and condition of collection system piping and the effectiveness of routine maintenance. The sewer overflow rate is calculated as the number of overflows per 100 miles of collection piping per year. According to the SWRCB's SSO interactive tool, there are 0 SSO events in all categories for SCSD. Note that the SWRCB website shows that the most recent inspection for SCSD was conducted in 2019. Other information, such as the Regulatory Measures provided on the website is also outdated as it reflects an effective date of May 11, 2006, and an expiry date of May 12, 2011.59 As mentioned, there has not been any inspection by SWRCB since 2019, and it is unclear when the next one will be. However, the District affirms that they have never had any overflows and that the only similar incident the District experienced was earlier this year when a plugged line needed to be blown out, which the District reports was addressed promptly 60 Over the past ten years, the District has struggled with a steady increase in the cost of operations coupled with a stagnant income. Over that time period, undue inflationary pressures have significantly impacted nearly every area in the cost of providing service, resulting in the District's inability to continue to provide the sewer services it is mandated to provide. As a result, the District undertook the aforementioned Rate Study to evaluate its five-year budget projection and analyze its capacity to implement its capital improvement and replacement plan while maintaining debt service and reserve requirements. The 2023 rate study concludes that SCSD requires immediate and annual rate increases to mitigate decreasing revenue while funding projected increasing expenditures. Ultimately, the District's rate structure was updated pursuant to the rate study recommendations. There are no shared facilities. 59 State Water Resources Control Board. Facility At-A-Glance Report. https://ciwqs.waterboards.ca.gov/ciwqs/readOnly/CiwqsReportServlet?inCommand=drilldown&reportName=facilityAtAGlance &placeID=638757&reportID=9371082 60 Spalding MSR interview, August 29, 2023. 60 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 SCSD's collection system collected and conveyed approximately 3.9 million gallons of waste in 2021 and 4.3 million gallons in 2022. Figure 9-1 shows monthly flows for 2021 and 2022. Flows were higher during June and July for 2021 and 2022. The increase in flow during those times of the year is primarily due to SCSD being a "second home" community and the influx in population to the area during the summer season. Figure 9-1: Spalding CSD Monthly Wastewater Flows in Gallons (2021-2022) 600,000 500,000 400,000 300,000 200,000 100,000 0 J a n u ar y F e br u ar y M ar c h A pril M a y J u n e J ul y A u g u st S e pt e m b er O ct o b er N o v e m b er D e c e m b er 2021 2022 Significant wet weather events can impact wastewater collection systems due to infiltration and inflow (I/I). However, SCSD reports that the rainy season does not significantly affect flows. This section reviews indicators of wastewater service adequacy, including collection system integrity and regulatory compliance. Whenever available, industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. 61 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 There are several measures of the integrity of the wastewater collection system, including sanitary sewer overflows, peaking factors as a result of infiltration and inflow (I/I), and efforts to address infiltration and inflow. All wastewater agencies are required to report sanitary sewer overflows (SSOs) to SWRCB. Sewer overflows are discharges from sewer pipes, pumps, and manholes. Overflows reflect the capacity and condition of collection system piping and the effectiveness of routine maintenance. The sewer overflow rate is calculated as the number of overflows per 100 miles of the main pipeline per year. Based on the State reporting website for SSOs, SCSD has never experienced an overflow. However, residents reported that a spill had occurred on December 18, 2023, and it was not cleaned until the next day. It is recommended that the District review and update its existing protocols for responding to spills to ensure that they are promptly and efficiently addressed without interruption of services. Additionally, the lack of records on the SWRCB website about this SSO indicates that spill reports were not completed in a timely manner. It is recommended the SCSD reports all SSOs to the SWRCB as required to ensure compliance. Wastewater flow includes not only discharges from residences, businesses, institutions, and industrial establishments but also infiltration and inflow. Infiltration refers to groundwater that seeps into sewer pipes through cracks, pipe joints, and other system leaks. Inflow refers to rainwater that enters the sewer system from sources such as yard and patio drains, roof gutter downspouts, uncapped cleanouts, pond or pool overflow drains, footing drains, cross-connections with storm drains, and even holes in manhole covers. Infiltration and inflow tend to affect older sewer systems to a greater degree. Infiltration and inflow rates are highest during or right after heavy rain. They are the primary factors driving peak flows through the wastewater system and a major consideration in capacity planning and costs. The peaking factor is the ratio of peak day wet weather flows to average dry weather flows. The peaking factor is an indicator of the degree to which the system suffers from I/I, where rainwater enters the sewer system through cracks, manholes or other means. A peaking factor of up to three is generally considered acceptable based on industry practices. 62 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 SCSD reports that rain ends up in the pond, but there is no increase in inflows during rain events given the newness of the system. Additionally, the District reports that it has a gated system and is not responsible for solids. The RWQCB enforce the Clean Water Act, permit conditions and other requirements of wastewater providers. Violations of State requirements for wastewater providers and treatment facilities are recorded by SWRCB. The Board may levy fines or order the provider to take specific actions to comply with water quality regulations. The system operates under Amended Waste Discharge Requirement WDID 6A180506011 from the California Regional Water Quality Control Board Lahonton Region. The permit includes a Monitoring and Reporting Program. The most recent WDR order available on the SWRCB website expired in 2011. Although the information on the SWRCB website needs to be updated, it shows no past violations for SCSD. Additionally, the most recent enforcement action was an oral communication in 2014. It is unclear what the enforcement action was regarding. According to the RWQCB's website, there were zero violations and seven enforcement actions for SCSD from 2009-2014. It is unclear what the enforcement actions were. The District reports that it has not had any violations or enforcement actions since then.61 Similarly, the most recent inspection on the SWRCB website was completed in April 2019. The inspection was for SCSD's Sewage Evaporation Ponds. At the time of the inspection, there were no violations. However, the inspection report indicated that SCSD was facing challenges and recommended to continue helping SCSD with finding a reliable resource to continue normal operation. Some of the highlights in the report include: 62 • SCSD had lost its only operator and did not have a replacement lined up. • The CSD had hired a third-party consultant to review and update the SCADA system that controls the lift stations of the collection system. 61 Spalding MSR interview, August 29, 2023. 62 B-Type Compliance Inspection Report. California Regional Water Quality. https://ciwqs.waterboards.ca.gov/ciwqs/readOnly/CiwqsReportServlet?inCommand=drilldown&reportName=facilityAtAGlance &placeID=638757&reportID=9371082. April 10, 2019. 63 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • The facility is greatly oversized for the needs of the community. Having too much storage will result in low levels of the ponds exposing the liners, which are susceptible to temperature and UV ray degradation. • The spray evaporation system was non-operational at the time of the inspection, nor was the evaporation pan being used. Since the inspection, the District has hired an operator who works part-time or about 30 hours a week. However, as mentioned, the District still faces staffing issues. Prior to the current operator, the District had a certified staff on a stipend that helped with quarterly and annual reports. According to the District's FY 21-22 budget, the Sewer Department was able to replace its non-operational Supervisory Control and Data Acquisition (SCADA) system. The SCADA system is a local server-based system that allows the District to monitor and be remotely notified of issues related to the sewer systems ponds, lift stations, and generators. The District's computer networking system and WIFI connectivity were also upgraded.63 Currently, there are no existing issues with the system. However, due to the rural location of SCSD and internet unreliability, the District is exploring whether a radio system would be a better option. The District also confirms the SWRCB April 2019 inspection comments that the SCSD facility is oversized. Currently, the third pond is not in use. However, the District has not had any issues with liners or any visible signs of degradation. As mentioned, the California Rural Water Association and STUT Engineering have been on sight to assist the District in identifying proper maintenance for the facility. Lastly, the District reports that the evaporation pan works but is not utilized since there is not enough water. Also, the spray system is not fully set up under guidelines and was only tested by running clear water. 64 63 Spalding Community Services District Budgets, FY21-22, p.2. 64 Spalding MSR interview, August 29, 2023. 64 Ch. 9 Wastewater Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The Spalding Volunteer Fire Department (SVFD) is located within SCSD. The SVFD is an all- risk fire department responsible for emergency responses within SCSD and surrounding areas through mutual aid. The emergency responses include structure fires, wildland fires, vehicle fires, medical emergencies, hazardous material incidents, and technical rescue responses. Annually, the SVFD responds to approximately 50 requests for service. When a medical emergency call goes out, SVFD is first on the scene to quickly determine if a helicopter needs to be dispatched. SVFD's ambulance can do Basic Life Support (BLS) and transport patients to the landing strip or work with NorCal EMS to meet the transport ambulance. SVFD reports that there are no paramedics on staff. As such, SVFD will sometimes keep dispatch on the line for assistance in severe medical emergencies.65 Figure 10-1 indicates which services are provided by SVFD. Figure 10-1: Spalding CSD Fire Services SERVICE AGENCY Fire Suppression Services Structural Fire Protection SVFD Wildland Fire Protection SVFD Vehicle Fire Protection SVFD Ladder Truck Capabilities Fire Suppression Hand Crew Fire Suppression Dozer Helicopter Services – Fire Suppression Boat With Fire Suppression Capabilities Emergency Medical Services Basic Life Support Provider SVFD Advanced Life Support – Non-Transport Provider Advanced Life Support Transport Provider 65 Spalding MSR interview, August 29, 2023. 65 Ch. 10 Fire Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Continuing Education Provider – Medical SVFD Air Ambulance Transport Helicopter Services Helicopter Landing Facilities On Site Spalding CSD Vehicle Extrication Tools/Equipment SVFD Fire Prevention Fire Safety Education – Children SVFD Fire Safety Education – Adults/Seniors SVFD Juvenile Firesetter Prevention Program Fire and Life Safety Business Inspection Program Fire Protection Planning SVFD New Commercial Construction Plan Reviews Public Education Provider (CPR, First Aid, etc.) SVFD Home Fire/Safety Inspections Fire Origin and Cause Investigations Fuel Reduction/Weed Abatement Program SVFD Smoke Detector Giveaway/Installation Program Address Sign Installation Program SVFD Rescue Services First Responder Swift Water Rescue Program Water Rescue Program Ice Rescue Program Dive Rescue Program Low angle Rope Rescue Program Helicopter Short/Long Haul Rescue Capabilities Response to Boating Accidents Rescue Dog Services Hazardous Materials Hazardous Materials Emergency Response – Basic Hazardous Materials Response Team Support Services Firefighter Incident Support Unit 66 Ch. 10 Fire Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Mobile Incident Command/Communications Unit Fill Station for Self-Contained Breathing Apparatus Mobile Breathing Support Unit Community Emergency Response Team Chaplain Services Training Academy Emergency Operations Center Capabilities SVFD Miscellaneous Public Service Assists SVFD Motor Vehicle Accident Response SVFD Welfare Checks SVFD Public Safety Answering Point SVFD Fire/EMS Dispatch Susanville Interagency Fire Center/ CAL FIRE Fundraising Activities SVFD Firefighters Association – Non-Profit Auxiliary Association SVFD contracts with North Cal EMS, a Local Emergency Medical Services Agency, to provide Automated External Defibrillation (AED) services. The current agreement between SVFD and North Cal EMS was renewed on July 27, 2023, and extended until January 30, 2026. SVFD also has a limited transport agreement with North Cal EMS that involves an Alternate Vehicle Transport. According to the North Cal EMS limited transport policy, the vehicle is equipped for transporting sick or injured patients with the ability to properly secure patients on a commercially available stretcher, including proper belts and a locking mechanism. The vehicle must be Nor-Cal EMS-approved for such a purpose. North Cal EMS's limited transport policy is not meant to allow regular use of alternate transport vehicles, nor should alternate transport vehicles transport patients to a hospital except in extreme circumstances, with Base hospital physician approval.6667 67 Nor-Cal EMS Policy & Procedure Manual, Limited Transport Policy Protocols. Effective Date: 07/18/2021. 67 Ch. 10 Fire Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 Additionally, the limited transport policy outlines risk assessment steps to help determine whether the patient may need to be transported via an alternate transport vehicle to the LZ/Rendezvous point or if the patient should await normal ground ambulance transportation.68 Figure 10-2: Limited Policy Transport Policy Risk Assessment The lands within SCSD have been designated as State Responsibility Area (SRA). CAL FIRE has Direct Protection Authority for lands designated as SRA and is responsible for fire prevention and wildland fire suppression within Spalding CSD. Through the California Fire Service and Rescue Emergency Mutual Aid System, SVFD annually responds to multiple requests for mutual aid from seven different surrounding fire departments (Stones-Bengard VFD, Lake Forest FPD, CALFIRE, USFS Lassen NF, Adin VFD, Madeline VFD, and Susanville FD). Due to how rural Lassen County is and the lack of dedicated volunteer firefighters in other communities, SVFD frequently responds to assist other fire departments through mutual aid. 68 Nor-Cal EMS Policy & Procedure Manual, Limited Transport Policy Protocols. Effective Date: 07/18/2021. 68 Ch. 10 Fire Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 A typical structure fire dispatch in the Spalding Community would consist of the Spalding VFD and mutual aid from CAL FIRE and the Stones-Bengard VFD. Although there is no formal contract, SVFD works closely with Sierra Medical Services Alliance (SEMSA) regarding emergency transport. SEMSA provides Air and Ground Ambulance services with Lassen County and Shasta County bases. When a 9-1-1 call is received, both SEMSA and a helicopter are dispatched. SVFD is first on the scene to determine whether SEMSA and helicopter are needed based on the injuries. There is radio contact with the ambulance and helicopter so they can determine who responds. If one or both are needed, SVFD provides transport to where the appropriate agency is located.69 The Department currently has 11 community-based volunteer firefighters. According to SVFD's January 2023 roster, all 11 volunteers have CPR training. One volunteer has a CPR instructor certification, and one has a medical instructor certification. Four volunteers, including the Fire Chief, have a Firefighter 1 certification. Fire Fighter 1 is the first certification in the California Fire Fighter professional certification series. A California Fire Fighter 1 certification contains three levels of professional qualifications set by the National Fire Protection Association (NFPA). The three levels are NFPA 1001: Fire Fighter 1, NFPA 1051: Wildland Fire Fighter 1, and NFPA 1072: Hazardous Material Awareness and Operations.70 The Fire Fighter 1 Certification is issued to those who have completed the Fire Fighter 1 academic training and certification exams (psychomotor skills exams and cognitive exams). Candidates currently enrolled in training at an Accredited Regional Training Program (ARTP) or Accredited Local Academy (ALA) will automatically be registered for the certification exam and automatically issued certification upon successful completion.71 SVFD's Fire Chief and the Fire Captain had EMT certification years ago. According to the California Emergency Medical Services Authority, EMT certifications are good for two years 69 SCSD response to fire related questions, August 30, 2023. 70 The Office of the State Marshal (OSfM). Fire Fighter 1. https://osfm.fire.ca.gov/divisions/state-fire-training/cfstes- professional-certification/fire-fighter-1-2019/. 71 California State Fire Trainig. Fire Fighter 1 (2019) Certification Instructions. https://osfm.fire.ca.gov/media/xwxjpc4z/ff1_2019-certification-instructions.pdf. 69 Ch. 10 Fire Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 from the date issued. To renew an EMT certification before expiration, one must submit proof of either 24 hours of approved EMS continuing education (CE), or an approved 24-hour refresher course certificate taken within the past two years. A refresher course must be through an approved training program. Additionally, EMTs are to complete the EMT Skills Competency Verification Form. The California Emergency Medical Services Authority has different requirements for renewing lapsed certifications. Those with lapsed certifications can apply at their local EMS agency for reinstatement. Although local governments and departments establish different selection criteria for their volunteer firefighters, according to the California State Firefighters' Association (CSFA) general volunteer requirements, certifications are not listed. According to CSFA, many departments require that volunteers: 72 • Be at least 18 years of age, • Have a valid driver's license, • Be healthy and in good physical condition, • Complete basic fire & EMS training, • Live in close proximity to the fire district, • Have a clean criminal record, • Meet the minimum ongoing training requirements, and • Respond to a certain percentage of calls. Most departments require volunteers to obtain Firefighter I certification within the first 24 months with the fire department. EMS training is also required for those who provide patient care. Additionally, according to CSFA, volunteer time commitment will depend on several factors, such as the number of calls the Department receives, training requirements, shift versus on-call structure, and community activities in which the Department requires volunteers to participate. SVFD has seven volunteers licensed as drivers on their fire roster. Beginning on January 1, 2011, California Vehicle Code (CVC) §12804.11(a) requires an individual who has a noncommercial driver's license or a commercial Class C and operates firefighting equipment, including a tiller 72 California State Firefighters' Association (CSFA). Volunteer Firefigher Resources, https://californiavolunteerfire.org/volunteer/. 70 Ch. 10 Fire Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 operator, to have a firefighter endorsement "F." Restricted commercial firefighter driver licenses are no longer issued. It is recommended the Department establishes a standard criterion for volunteers such as selection metrics, training, and certification requirements to ensure consistency of services. SVFD has one, three-bay fire station. The station is co-located with the Spalding CSD offices at 502-907 Mahogany Way, Susanville CA 96130. Figure 10-3 shows a breakdown of the mobile equipment staffed by the Spalding Volunteer Fire Department. Figure 10-3: Spalding CSD Fire Department Equipment vehicle description Vehicle ID make year Pick-up, Fire Chief C1200 Ford F250 4x4 2019 Engine, ICS Type 2 E1221 International 4x4 2006 Engine, ICS Type 1 E1223 HME 1996 Water Tender, ICS Type 1 WT1234 Kenworth 3,000 Gallon 2018 Rescue R1253 Ford F 350 4x4 2017 Engine, ICS Type 3 E1222 International 4x4 1987 Lassen County contracts with CAL FIRE to provide dispatch services from its Susanville Interagency Fire Center for fire departments in Lassen County. The SVFD annually pays Lassen County for its portion of the dispatch contract based on the Department's annual call volume. Figure 10-4 shows the number of service calls Spalding CSD received in 2021 and 2022 by incident type.70 Due to how rural Lassen County is and the need for dedicated volunteer firefighters in other communities, the District frequently responds to assist other fire departments through mutual aid. The number of assists for each year is also included in Figure 10-4. 71 Ch. 10 Fire Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 As shown below, total service calls (including calls within SCSD and calls for assistance) in 2021 were 44 and 54 in 2022, indicating a roughly 23 percent increase in service calls. Service calls received within the SCSD in 2021 made up 64 percent of total service calls, and assist calls made up about 36 percent. While in 2022, total service calls received within the SCSD jurisdiction made up 78 percent of total service calls, and assist calls made up about 22 percent. Medical incidents make up the majority of calls received in 2021 and 2022, with 68 percent and 76 percent of all calls, respectively. Figure 10-4: Spalding CSD Fire Service Calls 2021- 2022 2021 2022 Spalding Assist spalding assist incident type Assist, Public/Agency 1 0 1 0 False Alarm, Structure 1 0 0 0 False Alarm, Wildland/Vegetation 1 1 3 0 Fire, Derbis 0 0 1 0 Fire, Residential Structure, Single Family 0 0 1 0 Fire, Structure, Other-Fuel/ Chimney 1 0 0 0 Fire, Vehicle, Commercial 0 0 0 0 Fire, Wildland/Vegetation 2 2 2 1 Fire, Wildland/Vegetation-Lightning Response 0 1 0 0 Hazardous Condition, Gas/Aerosol 0 0 0 0 Hazardous Condition, Hazmat 0 0 0 0 Medical 21 7 33 8 Medical, Traffic Collision 0 5 1 2 Medical, Traffic Collision-Extrication Required 0 0 0 1 Medical, Violence Involved 1 0 0 0 Subtotal 28 16 42 12 Grand Total 44 54 The District reported that SVFD's existing firefighting equipment and storage are in good condition and can adequately serve current emergency service demands but may need a facility addition and modification to support future growth. The District specifically reported that 72 Ch. 10 Fire Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 it would like to buy cribbing, a temporary wooden structure to support heavy objects during construction, relocation, vehicle extrication, and urban search and rescue. SVFD has challenges meeting community expectations in providing EMS services. One primary concern from the community is emergency transportation and SVFD not having the proper license and certifications to address the community's needs. It is recommended that the District periodically review the status of the required certification for each volunteer. Additionally, having an up to date fire roster available on the website to illustrate the certification and status of volunteers can help increase the community's confidence in the services provided. The District can also solicit a written agreement from residents on whether they would like to opt out of District-provided transportation to the airstrip to meet the SEMSA helicopter. It is also essential for the District to clearly communicate with residents the extent of services provided by the SVFD to provide enough information for residents to make educated decisions. These challenges are not specific to SCSD; most rural fire districts struggle to meet certification requirements that continue to expand. There are many measures of a successful fire protection service. This section focuses on the Insurance Services Office (ISO) rating for the community. The ISO classifies fire services in the communities as an indicator of the general adequacy of coverage. Communities with the best fire department facilities, systems for water distribution, fire alarms and communications, and equipment and personnel receive a rating of 1. According to the 2020 Lassen LAFCO Fire Services MSR and SOI Study, the ISO has rated the Spalding Community as Class 8B. The Spalding Community is also designated as a Firewise Community.73 73 Lassen LAFCO Fire Protection Agencies. Adopted MSR and SOI. December 7, 2020. p.103. https://www.lassenlafco.org/uploads/1/1/4/5/11454087/a_lassen_fire-msr-soi_2020_d5_w_maps_copy.pdf. 73 Ch. 10 Fire Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The SCSD Recreation and Marina operations have two boat launching ramps, plenty of paved parking for boats and trailers, picnic tables, concrete walkways, and two full-service heated bathrooms. The District's Marina day-use fees consist of $8 for the use of the SCSD Marina facility, $75 for season-day use permits, and $10 for additional vehicles. The only revenue the District receives to maintain the Marina comes from these Day Use Fees. The District encourages those who utilize the facility regularly to purchase an Annual Permit during the fishing season.74 The District faces several challenges in maintaining the Marina, including staffing and financial issues. According to the District, the Marina had only $900 at the start of this fiscal year, and the fee-based income that the Marina relied on was never sufficient to fully fund operations. The District pays $671 per year in rent to the State Lands Commission for the land the Marina occupies. According to the District, it has four years left on the current lease but only has the funds to cover a year of rent. The District has previously tried hosting community activities such as bingo nights to fund the Marina. Additionally, the District reports that other facilities are deteriorating due to a lack of maintenance personnel. In the past, a Spalding resident had volunteered their time and equipment to periodically do some maintenance in the Marina. However, this was not sustainable nor a long-term solution. According to the District, the Board is looking for ways to make the Marina operational; however, an alternative may be transition of operations to a private company. The District also reports that the State is planning a study regarding oversight of Eagle Lake, which can also impact the future of the Marina.75 Appendix A shows the status of the Marina. 74 Spalding Recreation and Marina. https://www.spaldingcsd.org/spalding-recreation-marina. 75 Spalding MSR interview, August 29, 2023. 74 Ch. 10 Recreation and Marina Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 According to Senate Bill No. 135 or Community Services District (CSD) Law, Government Code Section 61100(z) constructing, maintaining, and operating mailboxes on a district's property or rights-of-way is one of the authorized services and facilities for CSDs.76 In an attempt to beautify Spalding, the US Postal Service has begun installing neighborhood mailboxes along Spalding Rd and the Strand. PO-type boxes have also been installed in the front lobby of the District Office for those who wish to receive their mail indoors. Residents with a property in Spalding that wish to move their mail delivery to the Spalding neighborhood mailboxes, can request that change from the US Postal Office in Susanville, CA, for free. However, there are presently limited outside mailboxes, as the U.S. Post Office is constrained by a lack of staffing to complete installation of all mailboxes. While this is a service to the Spalding Residents, Spalding CSD is not responsible for the assignment of boxes, distribution, or collection of postage from this facility.77 The service provided by the District is limited to the provision of space for this use in its facility. There have been resident complaints regarding compromised mailboxes in the community since the beginning of 2022, after a new door that was keyed with the same lock as the rest of the building was installed in the community center mailroom. USPS had suggested a short-term solution of installing a new lock by one of their postal maintenance technicians so that only their delivery carrier has keys or access to the mail room. USPS also indicated concerns affecting a viable long-term solution, including easements and placement of locking neighborhood cluster box units, concrete pads for locking mailbox units, and the shortage of maintenance staff to install these units. USPS also reported that it is looking at viable locations that are easily accessible to the public and their carrier and large enough to house units for 150 customers. 76 Community Services District Law. p.24. https://calafco.org/sites/default/files/resources/sb_135_bill_20050922_chaptered.pdf. 77 Spalding Mailbox Services. https://www.spaldingcsd.org/mailbox-services. 75 Ch. 10 Mailbox Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 The District reports that USPS is slowly removing mailboxes from the District building and placing them outside. According to the District, USPS is about halfway done with the process. The District reports that complaints and questions from residents regarding mail services continue to be directed toward the District; however, residents with questions related to mail services should contact USPS.78 78 Spalding MSR interview, August 29, 2023. 76 Ch. 10 Mailbox Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 There are limited governance structure options for Spalding CSD, precisely due to its rural location. Depending on the interests of agencies in the County, a countywide Joint Powers Authority (JPA) could help better utilize and manage the limited resources available for Fire and EMS services. Another option that was identified in the previous MSR and continues to be a suggestion is for SVFD to work with the Lassen County Board of Supervisors, the Lassen LAFCO, and other districts in the County to see if a countywide CSA, or countywide fire protection district, or at a minimum consolidation with the Stones–Bengard Fire Protection District would be a benefit. Another option may be collaboration with Stones Bengard CSD regarding wastewater services, such as staff and resource sharing to better leverage available resources. This may partially aid the District in finding certified staffing and minimizing costs associated with equipment and other regular purchases. 77 Ch. 11 Governance Options Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • The District serves a permanent population of approximately 150 residents and a seasonal population of approximately 1,000 summer residents and visitors. The 2020 Decennial Census reports a higher population of 206 for Spaulding CDP. • According to the Department of Finance, countywide growth projections for Lassen County are expected to see an approximately negative two percent average annual growth rate (AAGR) from 2020 through 2060. Utilizing the County's AAGR and SCSD's 2020 population estimates, the population within SCSD is anticipated to decrease to 100 by 2060. • The Statewide MHI for 2017- 2021 according to Census Bureau data is estimated at $84,097, and hence the calculated threshold of $67,277 (80 percent) defines whether a community is identified as disadvantaged. The entirety of the Spaulding Census Designated Place is considered to be a disadvantaged community with a median income of $36,328 and 129 residents. • SCSD provides fire, emergency medical service, sewer, and recreational facilities to the community. The District has been struggling with financial constraints and meeting community expectations with its services. 78 Ch. 12 Determinations Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • SVFD's existing firefighting equipment and storage are in good condition and can adequately serve current emergency services demands but may need a facility addition and modification to support future growth. The District's equipment needs include cribbing, a temporary wooden structure to support heavy objects during construction, relocation, vehicle extrication, and urban search and rescue. • SVFD has challenges meeting community expectations in providing EMS services. Community concerns include inadequate emergency transportation and proper licenses and certifications for SVFD volunteers to address the community's needs. • It is recommended that SVFD regularly evaluate the certifications and licenses of all department volunteers and maintain a fire roster on the SCSD website to illustrate the certification and status of volunteers to help increase the community's confidence in the services provided. • The District may wish to solicit a written agreement from residents on whether they would like to opt out of district-provided transportation to the airstrip to meet the SEMSA helicopter during emergency medical responses. • The District has struggled with a steady increase in the cost of operations coupled with a stagnant income that greatly impacted the cost of providing service, resulting in the District's inability to continue to provide sewer services. As a result, the District has approved a rate increase schedule for the next five years to ensure sustainable financing. • SCSD's facility is greatly oversized for the community's needs and requires increased staff and funds to maintain an infrastructure that is not utilized. • SCSD's sewer system operations currently have one operator working approximately 30 hours per week who is not yet certified or licensed. The District reports that the sewer system operations require at least two full-time staff for effective maintenance and operation. The District has a two-year exemption from the requirements to utilize a State Certified Wastewater Treatment Operator Grade II to gain compliance. 79 Ch. 12 Determinations Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • The District faces several challenges in maintaining the Marina, including staffing and financial issues. According to the District, the Marina's fee-based income has not been sufficient and is not sustainable to fund operations. • Currently, the Marina and all the other facilities are non-operational, and other infrastructure, such as picnic tables, are deteriorating due to a lack of maintenance personnel. • SCSD's Board is looking for ways to make the Marina operational; however, an alternative could be to have a private company take over. • There have been complaints of compromised mailboxes in the community center mailroom. The District reports that USPS is slowly removing mailboxes from the District building and placing them outside as resources allow. • It is recommended that the District communicate clearly to residents that the mail-related service provided by the District is limited to the provision of space in its facilities. • Spalding CSD has struggled with a steady increase in the cost of operations coupled with a stagnant income for the past ten years. As a result, the District has recently increased its rates to address the shortfall. • The proposed rate was considered at a public hearing per Prop 218 on September 15, 2023, at noon, and was passed after only 188 written protests were received out of 726 notices that were sent out by the District on August 21, 2023. The new rates took effect on January 1, 2024. • The District also faces financial challenges in maintaining the Marina. According to the District, the Marina's fee-based income is not sustainable to fund operations. • New revenue sources must be explored for upgrades, maintenance, equipment purchases, or for providing new programs within the District. Grants are a priority for the fiscal year, especially for replacing the Fire Department's mobile equipment. • The District's most recent audit identified certain weaknesses in SCSD's financial management practices. The District aims to address each concern over this fiscal year. 80 Ch. 12 Determinations Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • The District has no long-term financial plans. It is recommended that SCSD consider adopting a strategic plan or a Capital Improvement Plan to help with projections and serve as a community planning and fiscal management tool. • SVFD collaborates with North Cal EMS to provide Automated External Defibrillation. Additionally, SVFD has a limited transport agreement with North Cal EMS to provide sick or injured patients with the ability to properly secure patients on a commercially available stretcher. • SVFD also works closely with SEMSA to provide emergency transport. • Through the California Fire Service and Rescue Emergency Mutual Aid System, SVFD annually responds to multiple requests for mutual aid from seven different surrounding fire departments (Stones-Bengard VFD, Lake Forest FPD, CALFIRE, USFS Lassen NF, Adin VFD, Madeline VFD, and Susanville FD). • It is recommended that the SVFD consider countywide JPA opportunities to utilize limited resources effectively. • It is also recommended that SVFD explore a shared services agreement or an auto aid agreement with the Stones-Bengard CSD for EMS and fire prevention and suppression services. • Spalding CSD has faced certain struggles to meet requirements outlined in State laws regarding the Brown Act, website materials, and best practices to ensure easy access to significant planning documents and financial reports. • SCSD has ethics training and economic interest reporting for board members and adheres to open-meeting requirements. Ethics training for one board member is not available online. • Per the SCSD policy, it is recommended that the District upload updated Form 700 filed by staff in other designated positions on the website, including Fire Chief, General Manager, and District Counsel. 81 Ch. 12 Determinations Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 • Agendas and minutes for most SCSD board meetings as far back as 2017 are available on the Spalding website. However, agendas and minutes for some meetings are not readily available online. The District also does not livestream its recordings, and archived meeting recordings are not publicly available on the website. • The District is not in compliance with some of the financial document compilation, adoption, and reporting requirements. Although the District has its annual budgets as far back as FY 2011-2012 available online, annual budgets for some recent fiscal years are missing from SCSD's website. Similarly, some annual audits have pages missing. • Due to the limited personnel that SCSD has, it has struggled to process voluminous public records requests from the public. It is recommended that SCSD have an online record of the public record requests that the District has processed, or is in the process of addressing, to provide a tracking system for the public to avoid duplication of requests and ensure transparency. • Information related to SCSD's fire services is not available on the District's website. It is recommended that the District incorporate this information onto its website in an easily accessible location to increase transparency. • Due to missing documents and information on the website, it is recommended that SCSD comprehensively update and organize its website, making all required and prepared documents available to the public. This update may help to minimize the numerous requests for information. It is recommended that SCSD attain the Special District Leadership Foundation Transparency Certification to aid in mending its relationship with the constituents. • 82 Ch. 12 Determinations Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 83 Appendix A Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 84 Appendix A Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 85 Appendix B Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 86 Appendix B Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 87 Appendix B Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 88 Appendix C Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 89 Appendix C Policy Consulting Associates, LLC Spalding CSD MSR Adopted April 8, 2024 90 Appendix C Policy Consulting Associates, LLC