Russian River Flood Control and Watershed Conservation Improvement District, 2025

Mendocino County Russian River Flood Control and Water Conservation Improvement District Photo Credit: CJ Watt 2023. 2025 Municipal Service Review and Sphere of Influence Update Prepared By/For: Workshop: April 7, 2025 Mendocino LAFCo Public Hearing: May 5, 2025 200 South School Street Adopted: May 5, 2025 Ukiah, California 95482 LAFCo Resolution No: 2024-25-15 http://www.mendolafco.org/ [This page intentionally left blank] Resolution No. 2024-25-15 of the Mendocino Local Agency Formation Commission Approving the Mendocino County Russian River Flood Control and Water Conservation Improvement District Municipal Service Review and Sphere of Influence Update 2025 WHEREAS, the Mendocino Local Agency Formation Commission, hereinafter referred to as the “Commission”, is authorized to conduct municipal service reviews and establish, amend, and update spheres of influence for local governmental agencies whose jurisdictions are within Mendocino County; and WHEREAS, the Commission conducted a municipal service review to evaluate the Mendocino County Russian River Flood Control and Water Conservation Improvement District, hereinafter referred to as the “RRFC or District”, pursuant to California Government Code Section 56430; and WHEREAS, the Commission conducted a sphere of influence update for the District pursuant to California Government Code Section 56425; and WHEREAS, the Commission held a public workshop on April 7, 2025 to receive public and agency comments and provide direction on revisions to the District’s Draft MSR/SOI update; and WHEREAS, the Executive Officer gave sufficient notice of a public hearing to be conducted by the Commission in the form and manner prescribed by law; and WHEREAS, the Executive Officer’s report and recommendations on the municipal service review and sphere of influence update were presented to the Commission in the manner provided by law; and WHEREAS, the Commission heard and fully considered all the evidence presented at a public hearing held on the Municipal Service Review and Sphere of Influence update on May 5, 2025; and WHEREAS, the Commission considered all the factors required under California Government Code Sections 56430 and 56425. NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the Mendocino Local Agency Formation Commission, as follows: 1. The Commission, as Lead Agency, finds the municipal service review categorically exempt from further review under the California Environmental Quality Act pursuant to Title 14 of the California Code of Regulations §15306 (Class 6 Exemption). This finding is based on the use of the municipal service review as a data collection and service evaluation study. There are no land use changes or environmental impacts created or recommended by the MSR. The information contained within the municipal service review may be used to consider future actions that will be subject to additional environmental review. 2. The Commission, as Lead Agency, finds the sphere of influence update exempt from further review under the California Environmental Quality Act pursuant to Title 14 of the California Code of Regulations §15061(b)(3) (General Rule). This finding is based on the Commission LAFCo Resolution No. 2024-25-15 05-05-2025 CANYON ROAD ·|}þ 20 Willits EAST HIL V L A R L O LE A Y D RD EAST SIDE ROAD RIDGEWAYHIGHWAY MUIRMILLROAD WILLIAMSRANC D HR BLACKHAWKDRIVE TOMKIROAD BUSCH LANE GIBSONLN EEL RIVER ROAD MIDMOUNTAINRD Potter VMaAlIlNeyST £¤ 101 REEVES CANYON ROAD ROAD N E T W S D R AO ROA R V D a e l d J le R w R y O O o A A o D D d D I EAST SIDE POTTER VALLEY ROAD BURRIS LANE NORTHSTATEST R R O O A A D D B A MARINADR Calpella LMaeknedocino ·|}þ 20 ORR SPRINGS ROAD AP ROAD VICHYSPRINGSRD Ukiah ·|}þ 222 Talmage MILLCREEKROAD ROBINSONCREEKRD ·|}þ 128 AE C P HLANDRD ·|}þ 253 MCNABRANCHROAD Russian River £¤ 101 Boonville OLDRIVERROAD FELIZCREEKROADHopland UNIVERSITYRD ·|}þ 175 ROAD 110 OLDTOLLROAD HIBBARDRD Yorkville ·|}þ 128 MOUNTAINHOUSE D ROA LE KHORNROAD PINEMOUNTAINROAD ytnuoC onicodneM ytnuoC ekaL Exhibit "A" Mendocino County Sonoma County Russian River Flood Control District Russian River Flood Control District Highways Sphere of Influence Roads o Incorporated City Streams Source: This map was prepared by the Mendocino County Division of Information Services GIS Program, December 18, 2024. 2 1 0 2 Note: This map is not a survey product. Parcels Miles TABLE OF CONTENTS 1 INTRODUCTION .................................................................................................................................. 1-1 1.1 Local Agency Formation Commission ........................................................................................ 1-1 1.2 Mendocino LAFCo ...................................................................................................................... 1-1 1.3 Municipal Service Review .......................................................................................................... 1-2 1.4 Sphere of Influence .................................................................................................................... 1-3 1.5 Additional Local Policies ............................................................................................................. 1-3 1.5.1 Mendocino County General Plan – Ukiah Valley Area Plan ................................................. 1-3 1.6 Senate Bill 215 ............................................................................................................................ 1-3 2 AGENCY OVERVIEW ........................................................................................................................... 2-1 2.1 History ........................................................................................................................................ 2-1 2.1.1 Formation ............................................................................................................................. 2-1 2.1.2 Boundary .............................................................................................................................. 2-1 2.1.3 Services ................................................................................................................................. 2-2 2.1.4 Facilities ................................................................................................................................ 2-2 2.2 Government Structure ............................................................................................................... 2-6 2.2.1 Governing Body .................................................................................................................... 2-6 2.2.2 Public Meetings .................................................................................................................... 2-7 2.2.3 Standing Committees ........................................................................................................... 2-7 2.2.4 Public Outreach .................................................................................................................... 2-7 2.2.5 Complaints ........................................................................................................................... 2-8 2.2.6 Transparency and Accountability ......................................................................................... 2-8 2.3 Operational Structure ................................................................................................................ 2-8 2.3.1 Management and Staffing .................................................................................................... 2-8 2.3.2 Agency Performance ............................................................................................................ 2-9 2.3.3 Regional and Service-Specific Participation ......................................................................... 2-9 2.3.4 Shared Service Delivery ...................................................................................................... 2-11 2.3.5 Governmental Structure and Community Needs............................................................... 2-12 2.4 Finances ................................................................................................................................... 2-15 2.4.1 Current Fiscal Health .......................................................................................................... 2-15 2.4.2 Long Term Financial Considerations .................................................................................. 2-16 2.5 Growth ..................................................................................................................................... 2-17 2.5.1 Present and Planned Land Use and Development ............................................................. 2-17 2.5.2 Existing Population ............................................................................................................. 2-19 2.5.3 Projected Growth ............................................................................................................... 2-19 2.5.4 California Housing Goals .................................................................................................... 2-20 2.6 Disadvantaged Unincorporated Communities ......................................................................... 2-20 3 MUNICIPAL SERVICES ......................................................................................................................... 3-1 3.1 Service Overview ........................................................................................................................ 3-1 3.1.1 Services ................................................................................................................................. 3-1 3.1.2 Service Area .......................................................................................................................... 3-2 3.1.3 Outside Agency Services ...................................................................................................... 3-3 3.2 Water ......................................................................................................................................... 3-3 3.2.1 System History ..................................................................................................................... 3-3 3.2.2 Service Overview .................................................................................................................. 3-3 3.2.3 Facilities and Infrastructure ................................................................................................. 3-4 3.2.4 Service Adequacy ................................................................................................................. 3-5 3.3 Determinations .......................................................................................................................... 3-6 4 SPHERE OF INFLUENCE ....................................................................................................................... 4-1 4.1 Mendocino LAFCo Policies ......................................................................................................... 4-1 4.2 Existing Sphere of Influence ....................................................................................................... 4-4 4.2.1 Study Areas .......................................................................................................................... 4-4 4.2.2 Area of Interest Designation ................................................................................................ 4-5 4.3 Proposed Sphere of Influence .................................................................................................... 4-5 4.4 Consistency with LAFCo Policies ................................................................................................ 4-5 4.5 Determinations .......................................................................................................................... 4-6 4.5.1 Present and planned land uses ............................................................................................ 4-6 4.5.2 Present and probable need for facilities and services in the area ....................................... 4-6 4.5.3 The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide .................................................................................................. 4-7 4.5.4 The existence of any social or economic communities of interest in the area if the Commission determines that they are relevant to the agency ......................................................... 4-7 4.5.5 The present and probable need for public facilities and services of any disadvantaged unincorporated communities ............................................................................................................ 4-7 4.6 Recommendation ....................................................................................................................... 4-8 5 REFERENCES ....................................................................................................................................... 5-1 6 ACKNOWLEDGEMENTS ...................................................................................................................... 6-1 6.1 Report Preparation .................................................................................................................... 6-1 6.2 Assistance and Support .............................................................................................................. 6-1 7 APPENDICES ....................................................................................................................................... 7-1 7.1 Appendix A – Open Government Resources .............................................................................. 7-1 7.2 Appendix B – Website Compliance Handout ............................................................................. 7-2 7.3 Appendix C – Housing Legislation Trends and Results ............................................................... 7-3 7.4 Appendix D – District Financial Audits ....................................................................................... 7-6 LIST OF TABLES Table 1-1: Current Mendocino LAFCo Commissioners, 2025 .................................................................... 1-1 Table 2-1: RRFC Profile ............................................................................................................................... 2-1 Table 2-2: RRFC Board of Trustees ............................................................................................................. 2-6 Table 2-3: RRFC Financial Summary ......................................................................................................... 2-15 Table 2-4: RRFC Cash Accounts ................................................................................................................ 2-16 Table 2-5: Population Within RRFC Boundary ......................................................................................... 2-19 Table 3-1: RRFC Licenses ............................................................................................................................ 3-1 Table 3-2: Summary of RRFC Water Supply Agreements .......................................................................... 3-4 Table 7-1: Mendocino County RHNA Allocations ...................................................................................... 7-4 LIST OF FIGURES Figure 2-1: Russian River Flood Control and Water Conservation Improvement District Boundary ........ 2-4 Figure 2-2: Mendocino County Water and Sanitation Districts and Companies ....................................... 2-5 Figure 2-3: RRFC and Contracted Water Providers .................................................................................. 2-14 ACRONYMS AB Assembly Bill ACS American Community Survey ACWA Association of California Water Agencies ADU Accessory Dwelling Unit AOI Area of Interest AF Acre-feet AFA Acre-feet per annum AMI Area Median Income APR Annual Progress Report AVCSD Anderson Valley Community Services District BOS Mendocino County Board of Supervisors CALAFCO California Association of Local Agency Formation Commissions CDFW California Department of Fish and Wildlife CDP Census-Designated Place CEQA California Environmental Quality Act CIP Capital Improvement Plan CKH Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 CLASS California Cooperative Liquid Assets Securities System CPA Certified Public Accountant CSDA California Special Districts Association CWD County Water District DOF California Department of Finance DUC Disadvantaged Unincorporated Community DWR California Department of Water Resources ELEC California Elections Code ERPA Eel-Russian Project Authority FERC Federal Energy Regulatory Commission FY Fiscal Year GC California Government Code GHG Greenhouse Gas GSA Groundwater Sustainability Agency GSP Groundwater Sustainability Plan HCD California Department of Housing and Community Development HE Housing Element IWPC Mendocino County Inland Water and Power Commission JPA Joint Powers Authority LAFCo Local Agency Formation Commission LAIF Local Agency Investment Fund MCOG Mendocino Council of Governments MHI Median Household Income MOU Memorandum of Understanding MPO Metropolitan Planning Organization MSR Municipal Service Review OPR California Governor’s Office of Planning and Research PG&E Pacific Gas and Electric Company PMIA Pooled Money Investment Account PVID Potter Valley Irrigation District PVP Potter Valley Project RHNA Regional Housing Needs Assessment RRFC Mendocino County Russian River Flood Control and Water Conservation Improvement District RTP Regional Transportation Plan RVCWD Redwood Valley County Water District RVIT Round Valley Indian Tribes SAFER Safe and Affordable for Equity and Resilience SB Senate Bill SDUC Severely Disadvantaged Unincorporated Community SDRMA Special District Risk Management Authority SGMA Sustainable Groundwater Management Act of 2014 SOI Sphere of Influence SWRCB State Water Resources Control Board USACE U.S. Army Corps of Engineers URRWA Upper Russian River Water Agency UVAP Ukiah Valley Area Plan UVB Ukiah Valley Basin UVB GSA Ukiah Valley Basin Groundwater Sustainability Agency UVSD Ukiah Valley Sanitation District UVWA Ukiah Valley Water Authority WAT California Water Code INTRODUCTION 1-1 1 INTRODUCTION 1.1 Local Agency Formation Commission Local Agency Formation Commissions (LAFCos/Commissions) are quasi-legislative, independent local agencies established by State legislation in 1963 to oversee the logical and orderly formation and development of local government entities including cities and special districts. There is one LAFCo for each county in California. LAFCo is responsible for implementing the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (CKH) under California Government Code (GC) Section (§) 56000 et. seq. with goals to promote orderly growth, prevent urban sprawl, preserve agricultural and open space lands, and oversee efficient provision of municipal services. LAFCo has the authority to establish and reorganize cities and special districts, change their boundaries and authorized services, allow the extension of public services, perform municipal service reviews, and establish spheres of influence. Some of LAFCo’s duties include regulating boundary changes through annexations or detachments and forming, consolidating, or dissolving local agencies. 1.2 Mendocino LAFCo The CKH Act provides for flexibility in addressing State regulations to allow for adaptation to local needs. Each LAFCo works to implement the CKH Act to meet local needs through the flexibility allowed in how state regulations are implemented through establishment of local policies to address the unique conditions of the county. Accordingly, Mendocino LAFCo has adopted policies, procedures, and principles that guide its operations. These policies and procedures can be found on Mendocino LAFCo’s website.1 Mendocino LAFCo has a public Commission with seven regular Commissioners and four alternate Commissioners. The Commission is composed of two members of the Mendocino County Board of Supervisors, two City Council members, two Special District Board of Directors members, and one Public Member-At-Large. The Commission also includes one alternate member for each represented category. Table 1-1 below lists the current Commissioners, the category they represent, if they are an alternate, and the date their term expires. Table 1-1: Current Mendocino LAFCo Commissioners, 2025 Commissioner Name Position Representative Agency Term Expires Madeline Cline Commissioner County 2028 Gerardo Gonzalez Commissioner City 2026 Candace Horsley Commissioner Special Districts 2026 Susan Mahoney Commissioner Special Districts 2028 Maureen Mulheren Chair County 2026 Mari Rodin Commissioner City 2025 Gerald Ward Vice-Chair/Treasurer Public 2026 Douglas Crane Alternate City 2025 John Haschak Alternate County 2027 Raghda Zacharia Alternate Public 2027 Vacant Alternate Special Districts 2026 1The Mendocino LAFCo Policies and Procedures Manual can be found here: Policies & Procedures - Mendocino LAFCo. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update INTRODUCTION 1-2 1.3 Municipal Service Review The CKH Act requires each LAFCo to prepare a Municipal Service Review (MSR) for its cities and special districts (GC §56430).2 MSRs are required prior to and in conjunction with the update of a Sphere of Influence (SOI) (Assembly Committee on Local Government 2023). This review is intended to provide Mendocino LAFCo with the necessary and relevant information related to the services provided by Mendocino County Russian River Flood Control and Water Conservation Improvement District (RRFC/District). An MSR is a comprehensive analysis of the services provided by a local government agency to evaluate the capabilities of that agency to meet the public service needs of their current and future service area. An MSR must address the following seven factors: 1. Growth and population projections for the affected area. 2. The location and characteristics of any disadvantaged unincorporated communities within or contiguous to the sphere of influence. 3. Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs or deficiencies including needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any disadvantaged unincorporated communities within or contiguous to the sphere of influence. 4. Financial ability of agencies to provide services. 5. Status of, and opportunities for, shared facilities. 6. Accountability for community service needs, including governmental structure and operational efficiencies. 7. Any other matter related to effective or efficient service delivery, as required by commission policy. MSRs include written statements or determinations with respect to each of the seven mandated areas of evaluation enumerated above. These determinations provide the basis for LAFCo to consider the appropriateness of a service provider’s existing and future service area boundary. This MSR Update studies the water services provided by RRFC. This review also provides technical and administrative information to support Mendocino LAFCo’s evaluation of the existing boundary for RRFC. With this MSR, Mendocino LAFCo can make informed decisions based on the best available data for the service provider and area. Written determinations (similar to ‘findings’), as required by law, are presented in Chapter 3.3. LAFCo is the sole authority regarding approval or modification of any determinations, policies, boundaries, spheres of influence, reorganizations, and provision of services. Ideally, an MSR will support LAFCo’s directives and deliberations and will also provide the following benefits to the subject agencies: • Provide a broad overview of agency operations including type and extent of services provided; • Serve as a prerequisite for an SOI Update; • Evaluate governance options and financial information; 2 GC §56430 (2024) can be found here: California Government Code § 56430 (2024) :: 2024 California Code :: US Codes and Statutes :: US Law :: Justia. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update INTRODUCTION 1-3 • Identify areas within the factors noted above that may benefit from improvement; • Demonstrate accountability and transparency to LAFCo and to the public; and • Allow agencies to compare their operations and services with other similar agencies. 1.4 Sphere of Influence The CKH Act requires LAFCo to adopt a Sphere of Influence (SOI) for all local agencies within its jurisdiction. An SOI is “a plan for the probable physical boundary and service area of a local agency or municipality as determined by the Commission” (GC §56076).3 When reviewing an SOI for a municipal service provider, GC §56425(e),4 LAFCo will consider the following five factors: 1. The present and planned land uses in the area, including agricultural and open space lands. 2. The present and probable need for public facilities and services in the area. 3. The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. 4. The existence of any social or economic communities of interest in the area if the commission determines that they are relevant to the agency. 5. For an update of a sphere of influence of a city or special district that provides public facilities or services related to sewers, municipal and industrial water, or structural fire protection, that occurs pursuant to GC §56425(g)4 on or after July 1, 2012, the present and probable need for those public facilities and services of any disadvantaged unincorporated communities within the existing sphere of influence. SOI studies include written statements or determinations with respect to each of the five mandated areas of evaluation enumerated above. These determinations provide the basis for LAFCo to consider the appropriateness of establishing or modifying a service provider’s SOI or probable future boundary. 1.5 Additional Local Policies 1.5.1 Mendocino County General Plan – Ukiah Valley Area Plan The Mendocino County General Plan was originally adopted in November 1985 and last updated in November of 2021. In 2011, the County adopted the Ukiah Valley Area Plan (UVAP) as an element of the Mendocino County General Plan governing land use and development on the unincorporated lands in the Ukiah Valley. UVAP provides the comprehensive, long term policy direction for growth and development by refining and supplementing the policies in the County General Plan to focus on issues of importance in the Ukiah Valley. Section 6 of the UVAP focuses on water management and includes various policies specific to the area served by RRFC (County of Mendocino 2011). 1.6 Senate Bill 215 Senate Bill (SB) 215 (Wiggins) requires LAFCo to consider regional transportation plans and sustainable community strategies developed pursuant to SB 375 before making boundary decisions. SB 375 3 GC §56076 (2024) can be found here: California Government Code § 56076 (2024) :: 2024 California Code :: US Codes and Statutes :: US Law :: Justia. 4 GC §56425 (2024) can be found here: California Government Code § 56425 (2024) :: 2024 California Code :: US Codes and Statutes :: US Law :: Justia. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update INTRODUCTION 1-4 (Sustainable Communities and Climate Protection Act) requires each Metropolitan Planning Organization (MPO) to address regional greenhouse gas (GHG) emission reduction targets for passenger vehicles in their Regional Transportation Plan (RTP) by integrating planning for transportation, land use, and housing in a sustainable communities strategy. Mendocino County is not located within an MPO boundary and therefore is not subject to the provisions of SB 375. However, the Mendocino Council of Governments (MCOG) supports and coordinates the local planning efforts of Mendocino County and the Cities of Fort Bragg, Point Arena, Ukiah, and Willits to address regional housing and transportation needs and helps provide a framework for sustainable regional growth patterns through the 2018 Mendocino County Regional Housing Needs Plan and Vision Mendocino 2030 Blueprint Plan. MCOG is also responsible for allocating regional transportation funding to transportation improvement projects consistent with the 2017 RTP for Mendocino County. Mendocino County and the cities of Fort Bragg, Point Arena, Ukiah, and Willits are the local agencies primarily responsible for planning regional growth patterns through adoption and implementation of general plan and zoning regulations. While Mendocino County is not subject to the provisions of SB 375, LAFCo will review applicable regional transportation and growth plans when considering a change of organization or reorganization application Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-1 2 AGENCY OVERVIEW Table 2-1: RRFC Profile Agency Name: Mendocino County Russian River Flood Control and Water Conservation Improvement District General Manager: Elizabeth Salomone Office Location: 304 North State Street, Ukiah, CA 95482 Mailing Address: PO Box 2104, Ukiah, CA 95482 Phone Number: (707) 462-5278 Website: www.rrfc.net Email: DistrictManager@rrfc.net Date of Formation: 1955 Agency Type: Flood Control and Water Conservation Improvement District Enabling Legislation Special Act Legislation SB 1649 Mendocino County Flood Control and Water Conservation District Act Board Meeting Schedule: First Monday of the month at 5:30 PM. 2.1 History 2.1.1 Formation The Mendocino County Russian River Flood Control and Water Conservation Improvement District (RRFC/District) was formed by the Mendocino County Board of Supervisors (BOS) and by voters in 1955 to serve, along with the Sonoma Water, as the local sponsor for the development of Coyote Dam and Lake Mendocino. Lake Mendocino is the reservoir impounded by Coyote Valley Dam on the East Fork Russian River in Mendocino County and is owned and operated by the U.S. Army Corps of Engineers (USACE). The District was established by the County of Mendocino (County) via statutory formation process set forth by Act 4830. On January 30, 1956 by Resolution No. 1983, BOS declared the results of a special election upon the proposition of a formation of an Improvement District within the Mendocino County Flood Control and Water Conservation District, to be known as the Mendocino County Russian River Flood Control and Water Conservation Improvement District, and the incurring of the bonded indebtedness in the principal amount of $650,000 and for the election of the first trustees of said District, and declaring and ordering the formation of said District. The District is governed by a Statutory Authority G.L. 1949 Chapter 995 (Senate Bill (SB) 1649 Mendocino County Flood Control and Water Conservation District Act of 1949, signed by the Governor in 1949). Proceeds of the 1957 bond issue in the amount of $650,000 were used to help finance the construction of Coyote Dam, which is owned and operated by USACE. In exchange for the fund proceeds, the District obtained rights to a portion of the water storage capacity held in Coyote Dam. 2.1.2 Boundary The District boundary encompasses approximately 51,000 acres along the Russian River and Highway 101 corridor from just north of the Sonoma County line to the north side of Calpella and including much of the City of Ukiah and Ukiah Valley area, as well as the community of Hopland in the Sanel Valley (see Figure 2-1). The current jurisdictional boundary is coterminous with the District’s State Water Resources Control Board (SWRCB) water right licensed place of use, except that the place of use includes the Redwood Valley Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-2 County Water District (RVCWD), which is not in the District boundaries, but for which an annexation application is being prepared. 2.1.2.1 PROPOSED BOUNDARY CHANGE On April 1, 2024, RRFC adopted Resolution No. 24-01 (Commitment to Collaborate with Redwood Valley County Water District in Developing a Local Agency Formation Commission Annexation Application). 5 On April 18, 2024, RVCWD adopted a similar resolution, Resolution No. 24-01 (Commitment to Collaborate Developing a Local Agency Formation Commission Annexation Application). RRFC and RVCWD entered into a memorandum of understanding (MOU) regarding the development of an annexation application to LAFCo, effective August 1, 2024.6 On April 1, 2024, the RRFC Board of Trustees approved Resolution No. 24-01 to prepare an application to Mendocino Local Agency Formation Commission (LAFCo/Commission) proposing District annexation of the RVCWD service area.5 The proposed annexation will allow for regular contracting of water, creating a more stable water supply for RVCWD and benefiting both districts and their customers. 2.1.2.2 BOUNDARY CHANGE HISTORY There have been no changes to the District boundary since the original formation in 1955. 2.1.3 Services The District provides raw water for domestic, municipal, industrial, and irrigation uses to private contractors and municipal water purveyors within its boundaries and SWRCB-issued water right licensed place of use. The municipal service providers then treat and distribute the water to its customers. In addition to the water use contracts, the District also provides surplus water outside District boundaries to RVCWD, which is included in the RRFC’s place of use. For more information regarding services, refer to Section 3.1.3. 2.1.4 Facilities The District does not own or operate any facilities or infrastructure except for approximately 55 meters; its contractors are responsible for their own infrastructure and delivery systems. See Section 3.2.3 for additional information. 2.1.4.1 LATENT POWERS Latent powers are those services, functions, or powers authorized by the principal act under which the District is formed, but that are not being exercised and have not been authorized by LAFCo. The Mendocino County Flood Control and Water Conservation District Act of 1949 identifies the following potential powers: a) The control and disposition of storm and flood waters. 5 RFFC Resolution No. 24-01 can be found here: Resolution+#24- 01+Confirming+Committment+to+Collaborate+on+Annexation,+signed.pdf. 6 The MOU between RRFC and RVCWD can be found here: 2024,+8-5+MOU,+RVCWD+&+RRFC,+final.pdf. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-3 RRFC is a single-service provider delivering raw water services only, including for irrigation and to municipal water purveyors, and no other latent powers have been authorized by LAFCo under its principal act. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-4 Figure 2-1: Russian River Flood Control and Water Conservation Improvement District Boundary Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-5 Figure 2-2: Mendocino County Water and Sanitation Districts and Companies Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-6 2.2 Government Structure 2.2.1 Governing Body The Board of Trustees is the governing body for the District and is responsible for establishing policy, adopting and amending the annual budget, enacting ordinances, adopting resolutions, and appointing committees. The District’s governance structure is comprised of a five-member Board of Trustees elected at-large to serve staggered four-year terms. See Table 2-2 for the current trustees and their term limits. Eligible Board candidates must be registered voters residing within the District boundaries. If there are insufficient candidates for election of Board vacancies, or if the number of filed candidates is equal to the number of Board vacancies, then District Board members may be appointed in lieu of election by BOS per California Elections Code (ELEC) Section (§) 10515.7 New Board members take office at noon on the first Friday in December following the election. California Government Code (GC) §1780-1782 governs the process for appointment of Board of Trustees seats vacated prior to the scheduled term expiration date.8 The District Board of Trustees has 60 days to appoint an interested and qualified individual to a vacant seat if proper notice requirements have been met. If the District cannot fill the seat within the 60-day period, BOS may appoint a trustee to the District Board during a 30-day period following the initial 60-day period. If the vacant seat is not filled during the total 90-day period, the vacant seat remains empty until the next election. The District Board of Trustees elects officers annually at the December regular meeting to serve the following year. Officers include a president, vice president and treasurer. The Board president serves as the representative for the District. Board trustees are eligible to receive compensation for their public service, a stipend, for attending meetings as per District Ordinance No. 24-01;9 California Water Code (WAT) §55305 sets allowable compensation for the Board of Trustees.10 The stipend amounts to $100 per day for four or more hours and $50 for less than four hours of service in a day; services are defined in the Ordinance (LAFCo 2024). Table 2-2: RRFC Board of Trustees Name Office/Position Term Expiration Christopher Watt President Nov 2026 Tyler Rodrigue Vice President Nov 2028 John Bailey Treasurer Nov 2026 John Reardan Trustee Nov 2026 Dave Koball Trustee Nov 2028 Source: LAFCo 2024. 7 ELEC §10515 (1994) can be found here: California Code, ELEC 10515. 8 GC §1780 – 1782 (2008) can be found here: California Code, GOV 1780. 9 RRFC Ordinance No. 24-01 can be found here: Ordinance+#24- 01+Est+Regulations+&+Rules+for+Trustee+Compensation,+signed.pdf. 10 WAT §55305 (2023) can be found here: California Code, Water Code - WAT § 55305 | FindLaw. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-7 The Board is currently fully seated and generally does not have difficulty filling vacancies. Several of the Board members have served the District for multiple consecutive terms which can be a significant benefit in establishing long-standing positive working relationships in the community, understanding the history and unique aspects of the organization, and maintaining institutional knowledge. 2.2.2 Public Meetings Regular Board meetings are usually held on the first Monday of the month at 5:30 PM at District offices at 304 North State Street in Ukiah, with some exceptions for holidays. In accordance with the Brown Act, all District Board meetings are open to the public and are publicly posted a minimum of 72 hours prior to regular meetings, or a minimum of 24 hours prior to special meetings. Public comments are accepted at each meeting. Meeting summaries are kept for all District Board of Trustees meetings and are adopted at a subsequent meeting. Regular board meetings, records, annual budgets, and financial audits are kept current and maintained by the Board president and general manager. Public meeting information, including past agendas, reports, resolutions, and approved meeting minutes are available on the District’s website11 and upon request from the District. 2.2.3 Standing Committees Committees assist in carrying out various functions of local government. There are no standing committees of the Board. Each elected trustee serves as an advisor in one of the following areas: Operations, Finance & Audit, Personnel & Organization, Public Information & Government Activities, and Policy. Trustees also support the District in their related areas of expertise such as agriculture, business, etc. (LAFCo 2024). Additionally, ad hoc committees are appointed as needed and typically consist of two trustees and the general manager. Ad hoc committees are temporary assignments to support its organization with a specific task. 2.2.4 Public Outreach With the passage of SB 929 in 2018, all special districts are required to establish and maintain a website with specific information and accessibility requirements by January 2020 (a compliance handout is included in Appendix B – Website Compliance Handout). SB 929 does allow for a special district to be exempt from the website requirements if the District has adopted a resolution declaring that a hardship exists that prevents the district from establishing or maintaining a website; the District has done so. The District currently maintains a robust website,11 which provides updated information including meeting notices and agendas, financial information, rates, studies, customer services, and other pertinent information related to the District. The District contracts with Streamline, a company providing a 11 The RRFC website can be found here: Russian River Flood Control & Water Conservation Improvement District. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-8 comprehensive website platform tailored for special districts to ensure websites remain compliant with the ever-increasing accessibility and transparency laws and regulations. 2.2.5 Complaints Complaints can be directed to the general manager, a trustee, and/or the Board as a whole. Complaints may be submitted in person, by phone, or through the website’s contact page. No complaints have been received since the current general manager was engaged in 2019 and no record of previous complaints has been identified (LAFCo 2024). 2.2.6 Transparency and Accountability The District continues to increase transparency and accountability through its website, meeting reports, and outreach efforts. The RRFC Board maintains adopted policies related to general, personnel, operations, Board of Trustees, conflict of interests, Board meetings, and financial matters. The District is currently converting individual adopted policies into a policy manual and sections are posted to the District website11 as they are adopted (LAFCo 2024). The Political Reform Act requires all state and local government agencies to adopt and promulgate a Conflict-of-Interest Code pursuant to GC §87300 et seq.12 Further, the Political Reform Act also requires persons who hold office to disclose their investments, interests in real property, and incomes by filing a Statement of Economic Interests (Fair Political Practices Commission Form 700) each year pursuant to GC §87203.13 The District maintains that trustees, legal counsel, and the general manager are current on their required Form 700 filings with the Mendocino County Clerk’s Office (LAFCo 2024). According to Assembly Bill (AB) 1234, if a local agency provides compensation or reimbursement of expenses to local government officials, then all local officials are required to receive two hours of training on public service ethics laws and principles at least once every two years and establish a written policy on reimbursements pursuant to GC §53235.14 The District trustee compensation is regulated by District Ordinance No. 24-01 and Policy No. 4126, and trustees and the general manager attend Brown Act/ethics training as required (LAFCo 2024). Educational resources regarding open government laws and website compliance are included in this report in Appendix A – Open Government Resources and Appendix B – Website Compliance Handout for information. 2.3 Operational Structure 2.3.1 Management and Staffing Operations are performed year-round by one full-time employee, a general manager. the general manager is responsible for implementing the Board’s policies and direction, developing budget proposals and work programs, customer service, public and agency outreach, and maintaining the day-to-day operations of the District (LAFCo 2024). 12 GC §87300 et seq. (2011) can be found here: Codes Display Text (ca.gov). 13 GC §87200 (2011) can be found here: Codes Display Text (ca.gov). 14 GC §53235 (2025) can be found here: California Code, GOV 53235. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-9 2.3.1.1 CONTRACT STAFFING AND SERVICES The District maintains contracts for legal counsel, accounting, engineering, and funding analysis services. On occasion, the District engages professional services such as human resources support, strategic planning, and employment agencies for temporary workers (LAFCo 2024). The District also engages an independent certified public accountant (CPA) for annual audits (LAFCo 2024). 2.3.2 Agency Performance A component of monitoring agency performance is routinely evaluating staff productivity. The District Board conducts annual performance evaluations for the general manager in accordance with District Policy No. 3200 (LAFCo 2024). The District also monitors and evaluates agency operations through regulatory reporting and review of District databases and records. 2.3.2.1 CHALLENGES The District states they are experiencing no challenges in providing services. 2.3.2.2 DISTINGUISHED SERVICE The District participates in regional and statewide water supply and conservation strategies. During the severe drought of 2021-2022, RRFC collaborated with regional water interests and SWRCB to develop the first Upper Russian River Voluntary Water Sharing Program with water users to proactively participate in managing water resources rather than the traditional regulatory model. 15 The Water Sharing Program is a locally driven approach for addressing water shortages. The first of its kind, the program protects supplies and enables individuals enrolled in the program who still have water under their water rights to share with other participants who do not, effectively serving as an alternative to SWRCB-issued curtailments, which are a blanket restriction on water diversions for those with lower priority rights when there is insufficient water supply. 2.3.2.3 STRATEGIC OR SUCCESSION PLAN The District has an established strategic plan including mission statement, vision statement, and values. The current strategic plan for 2023- 2025 is posted on the District website and the general manager’s monthly report to the Board included in the meeting materials provides updates in each priority area.16 The strategic plan and monthly implementation reports demonstrate accountability, transparency, and a clear roadmap of the District’s goals and priorities to its customers and residents (LAFCo 2024). 2.3.3 Regional and Service-Specific Participation RRFC participates in numerous local, regional, and statewide organizations and water supply resiliency planning efforts. The District works cooperatively with other government agencies including municipalities, joint powers authorities (JPAs), other water districts, and regional and service-specific organizations: • Mendocino County Inland Water and Power Commission (IWPC) JPA 15 Information about the Upper Russian River Voluntary Water Sharing Program can be found here: Upper Russian River Voluntary Water Sharing Program - Russian River Flood Control & Water Conservation Improvement District. 16 The 2023-2025 RFFC Strategic Plan (adopted on September 19, 2022) can be found here: Strategic Planning - Russian River Flood Control & Water Conservation Improvement District. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-10 • Ukiah Valley Basin Groundwater Sustainability Agency (UVB GSA) JPA • Association of California Water Agencies (ACWA) • California Special Districts Association (CSDA) • Special Risk Management Authority (SDRMA) JPA • Sonoma Water The District is a member of IWPC,17 a JPA that includes RRFC, Mendocino County Water Agency, City of Ukiah, RVCWD, and Potter Valley Irrigation District (PVID). The agency was formed in 1996 to serve as stewards of the Russian and Eel River watersheds, safeguarding the water for the region’s economic development, environmental quality, and public interest. IWPC continues to focus on directing the future of the Potter Valley Project (PVP), historically owned and operated by Pacific Gas and Electric Company (PG&E) and regulated by the Federal Energy Regulatory Commission (FERC). PG&E announced their intent to abandon the PVP in 2019 and FERC is overseeing the license surrender process that is currently underway. IWPC is a member of the Eel-Russian Project Authority (ERPA),18 a JPA formed between the County of Sonoma, Sonoma Water, and IWPC with the Round Valley Indian Tribes (RVIT) holding one of the five ERPA Board seats. ERPA will have the power to negotiate with PG&E as the utility moves ahead with plans to surrender operations of the Potter Valley Hydroelectric Project and to decommission the Scott and Cape Horn dams on the Eel River. The new authority will also have the legal capacity to own, construct, and operate a new water diversion facility near the Cape Horn Dam. Additionally, IWPC is involved in plans to modernize the Coyote Valley Dam at Lake Mendocino as a local non-federal project sponsor contributing funding and support. The District is also a member of the Ukiah Valley Groundwater Sustainability Agency (UVB GSA/Agency),19 a JPA created to serve as the official Groundwater Sustainability Agency (GSA) for the Ukiah Valley Basin (UVB) as required by the Sustainable Groundwater Management Act of 2014 (SGMA). UVB was identified as a medium priority groundwater basin (California Department of Water Resources (DWR) Bulletin 118), which necessitates establishing a Groundwater Sustainability Plan (GSP) for the basin. The purpose of the Agency is to take actions deemed necessary to ensure sustainable management of the basin under the regulatory requirements of SGMA. The Agency is responsible for development and implementation of the GSP for the UVB. The UVB GSP was adopted by the GSA on December 15, 2021 and approved by DWR on July 27, 2023. The District is an active member of ACWA,20 a statewide coalition of public water agencies providing comprehensive leadership, advocacy, and resources for California public water agencies to ensure a high quality and reliable water supply in an environmentally sustainable and fiscally responsible manner. ACWA serves the water industry and the public by promoting local agencies as the most efficient means of providing water service; sharing reliable scientific and technical information; tracking and shaping state and federal water policy; advocating for sound legislation and regulation; and facilitating cooperation and consensus among all interest groups. Current District General Manager Elizabeth Salomone has served in 17 IWPC website can be found here: Home - Inland Water & Power Commission of Mendocino County. 18 ERPA website: Eel-Russian Project Authority. 19 UVB GSA website: Ukiah Valley Basin Groundwater Sustainability Agency. 20 ACWA website: Home - Association of California Water Agencies. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-11 regional and statewide leadership of ACWA since 2020 including serving as the Regional Board Chair and on the statewide ACWA Board (LAFCo 2024). The District is also a member of CSDA. The general manager and trustees utilize training courses available through CSDA. The general manager actively uses the CSDA forum for peer-sharing of information and resources, has attended CSDA events, and utilizes the CSDA policy manual template. The District works with Sonoma Water21 to monitor water levels in Lake Mendocino behind Coyote Valley Dam and Russian River flows for regulatory compliance with wildlife agencies and SWRCB. In 2022, the District and Sonoma Water entered a MOU concerning Lake Mendocino Storage Planning and Russian River Management. The MOU was developed in response to the regional drought that began in the spring of 2020 and establishes planning and management activities related to the shared water supplies in Lake Mendocino. As determined in the MOU, when conditions are met a technical memorandum will be developed to document the approach in assessing reservoir storage and water supply conditions for the Upper Russian River. The District was a member of the Upper Russian River Water Agency (URRWA) from 2016 to 2020. URRWA is a JPA formed to consolidate water district activities and to provide a vehicle for consolidation of all the participating special districts into a single regional water agency. Other members of the URRWA JPA during that time were Calpella County Water District (CWD), Millview CWD, Redwood Valley CWD, and Willow CWD. The District withdrew from URRWA after determining the goals and objectives of the JPA were oriented towards water retailers, though RRFC remains supportive of the JPA’s purpose of consolidation into a single regional water agency to provide municipal water services. The District participates in a JPA with SDRMA for insurance purposes. SDRMA is a JPA formed under GC§ 6500 et. seq.22 and is comprised of California special districts and agencies including such districts. The relationship between the District and JPA is such that the JPA is not a component of the District for financial reporting issues. SDRMA’s purpose is to jointly fund and develop programs to provide stable, efficient, and long-term risk financing for special districts. These programs are provided through collective self-insurance, the purchase of insurance coverage, or a combination thereof. The District purchases insurance through SDRMA but does not currently have any debt with SDRMA or any other lender. 2.3.4 Shared Service Delivery 2.3.4.1 ADJACENT PROVIDERS RRFC is the sole entity in Mendocino County with the legal right to store water in Lake Mendocino for future use, making its water right license a unique and valuable resource for the District and its customers. The District boundary encompasses multiple private retail and municipal water suppliers, some of which purchase wholesale water from the District. See Figure 2-3 for the location of the water providers that contract with the District. 21 Sonoma Water’s website can be found here: Sonoma Water - Home Page. 22 GC§ 6500 et. seq. (2012) can be found here: California Code, GOV 6500. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-12 Wastewater service within the District boundaries is currently provided by multiple providers including Calpella CWD, Ukiah Valley Sanitation District (UVSD), City of Ukiah, and Hopland Public Utility District; landowners outside those service providers rely on private on-site septic systems. For a regional map of Mendocino County’s water and sanitation districts and companies see Figure 2-2. Fire protection for properties within RRFC is provided by four districts, Redwood Valley-Calpella Fire Protection District, Ukiah Valley Fire Protection District, Anderson Valley Community Services District (AVCSD), and Hopland Fire Protection District (also known as the Sanel Valley Fire Protection District) (LAFCo 2018b). 2.3.4.2 SHARED SERVICES AND FACILITIES As previously stated, the District offers raw water sales via contracts to water users within its boundaries. The contracts are offered through a Uniform Water Sale & Purchase Agreement for delivery of the District’s licensed direct diversion and stored water through authorized points of re-diversion. As of 2024, the District has water contracts with seven municipal customers and 52 agricultural/other customers under License 13898. The remaining uncontracted water supply is made available as surplus first to District customers and then to the RVCWD, as per the conditions of a 1980 Stipulated Judgement23 between the two entities. See Chapter 3 for more detail. 2.3.4.3 DUPLICATION OF SERVICES There are no overlapping or duplicating services of wholesale water suppliers within the District boundary. 2.3.4.4 INTERAGENCY COLLABORATION As previously stated, the District currently has multiple uniform water supply & purchase agreements with private and municipal customers. Each year, customers submit water use projections to the District for planning purposes. Customers can offer to make some or all of their contract quantity available to other District customers and RVCWD as surplus through a transfer agreement. The benefits of making unused contracted water available for transfer include aiding in the health of the District’s water license by putting licensed water to beneficial use, reducing the customer’s annual invoice by the amount of any offered surplus water sold, and providing RVCWD with much-needed additional water supply. 2.3.5 Governmental Structure and Community Needs 2.3.5.1 ENHANCED SERVICE DELIVERY OPTIONS The District provides raw water for domestic, municipal, industrial, and irrigation uses to private contractors and municipal water purveyors within its boundaries and SWRCB-issued water right licensed place of use via uniform water supply & purchase agreements. 23 The 1980 Stipulated Judgement between RRFC and RVCWD specifies that of the 8,000 AF of stored water in Lake Mendocino that the RRFC is entitled to under its water right permit, any surplus water not put to beneficial use must be made available to the RVCWD. The Judgement is available on the RRFC website: https://www.rrfc.net/files/64ab4a941/1980+Stiplulated+Judgement+between+MCRRFC%26WCID+and+Redwood+Valley+Co unty+Water+District.pdf. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-13 As the only licensed wholesale water supplier in the region, no opportunities for the District to achieve organizational or operational efficiencies were identified during the preparation of this MSR. 2.3.5.2 GOVERNMENT RESTRUCTURE OPTIONS Government restructuring options should be pursued if there are potential benefits in terms of reduced costs, greater efficiency, better accountability or representation, or other advantages to the public. The District is partnering with the RVCWD to apply to LAFCo for annexation of RVCWD into RRFC. Given that the District already provides surplus raw water service to the District when available and RVCWD is within RRFC’s SWRCB-issued license place of use, annexation of RVCWD into the District boundary would allow for regular contracting of water creating a more stable water supply for RVCWD and benefiting both districts and their customers. On April 1, 2024, the District adopted Resolution No. 24-01, a Commitment to Collaborate with Redwood Valley County Water District in Developing a Local Agency Formation Commission Annexation Application. Subsequently, on April 18, 2024, RVCWD adopted a similar resolution (Resolution No. 24-01). In August of 2024, the two entities entered a MOU to establish roles and responsibilities for coordinating the development of an annexation application to LAFCo.6 Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-14 Figure 2-3: RRFC and Contracted Water Providers Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-15 2.4 Finances 2.4.1 Current Fiscal Health The District reports its activities as an enterprise fund, where the intent of the District is that the costs of providing goods and services (including depreciation expense) on a continuing basis be financed or recovered primarily through user charges. The primary funding source for the District is contracted water sales, which is generally a reliable and reoccurring revenue source, provided that annually adopted rates are sufficient to cover the District’s actual expenses. The District also receives a portion of Mendocino County property taxes. In addition to preparation of an annual budget, the District also carefully manages its finances by having independent audits of its financial statements. The audits are conducted in accordance with auditing standards generally accepted in the United States. The last financial audit prepared for the District was completed in 2025 for Fiscal Year (FY) 2023-24. This MSR utilizes audited financial statements for five FYs: 2019-2020 through 2023-2024. It also utilizes the budget for FY 2024-2025 as the primary source of information for this section. See Table 2-3 for the financial summary. Table 2-3: RRFC Financial Summary FY 19-20 ($) FY 20-21 ($) FY 21-22 ($) FY 22-23 ($) FY 23-24 ($) Operating Revenue Water Sales 341,434 365,904 350,454 374,233 535,439 Total Operating Revenue 341,434 365,904 350,454 374,233 535,439 Revenue Property Taxes 54,085 58,039 58,950 62,376 69,706 Shared Costs 19,570 0 37,601 17,658 15,368 reimbursement Investment earnings 11,259 4,680 4,347 10,319 26,760 Total Revenue 427,548 428,623 442,658 464,586 647,263 Operating Expenses Salaries and wages (128,765) (123,564) (140,583) (150,300) (151,454) Employee benefits (17,536) (30,258) (17,761) (71,324) (35,574) Facilities & operations (17,821) (9,391) (9,121) (8,761) (19,612) General & administrative (96,710) (104,599) (138,413) (155,031) (187,986) Insurance (8,530) (9,392) (8,531) (10,552) (6,452) Total Operating Expenses (269,362) (277,204) (278,887) (395,968) (401,078) Depreciation Expense (15,583) (19,313) (21,960) (20,939) (24,430) Non-Operating Expenses USGS JFA payments (19,300) (29,551) (28,346) (28,950) (28,950) IWPC JPA payments (25,000) (100,000) (25,000) 0 (110,000) UVB GSA JPA payments - - (68,750) (68,750) (98,750) Total Non-Operating (45,800) (129,551) (395,968) (97,700) (237,700) Expenses Total Expenses (315,162) (426,068) (422,943) (514,607) (667,208) Sources: Rick Bowers, CPA 2021 and Nigro & Nigro 2022-2025. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-16 The District’s cash accounts are summarized in Table 2-4. Table 2-4: RRFC Cash Accounts Type FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 General Operations-Checking $253,518 $308,894 $483,865 $265,565 $323,108 General Operations – Savings $267,649 $267,783 $100,055 $250,110 $250,222 LAIF Reserve Account $485,604 $489,085 $491,085 $499,602 $518,653 Total Cash $1,006,771 $1,065,762 $1,075,005 $1,015,277 $1,091,983 Sources: Rick Bowers, CPA 2021 and Nigro & Nigro 2022-2025. 2.4.1.1 REVENUES AND EXPENDITURES The District’s revenues and expenditures for FYs 2019-2020 through 2023-2024 are summarized in Table 2-3. In the last year, the District’s total operating and non-operating revenues increased 39 percent from $464,586 to $647,263, primarily from the increase in water sales due to a rate increase. During the same time, the District’s total expenses increased 29.65 percent from $514,607 to $667,208, primarily due to contributions to the UVB GSA and to IWPC for work to continue the diversion through alternatives to PVP. The top expenditures included salaries, employee benefits, and general administrative costs. 2.4.1.2 ASSETS AND LIABILITIES The only infrastructure assets for the District are approximately 55 meters and one vehicle, a 2016 Ford Escape. The District’s liabilities are limited to accounts payable. 2.4.1.3 NET POSITION The District has remained operating at a net positive for the last five consecutive years. 2.4.2 Long Term Financial Considerations 2.4.2.1 RESERVES In August of 2024, the District Board adopted updated financial policies (District Resolution No. 24-07) including a reserve policy to maintain a prudent level of financial resources and provide cost-effective, efficient public services through a stable rate structure and gradual rate increases. The District is a voluntary participant in the State’s Local Agency Investment Fund (LAIF). The California State Treasurer, through the Pooled Money Investment Account (PMIA), invests its funds to manage the State’s cash flow and strengthen the financial security of local public agencies. PMIA’s policy sets as primary investment objectives safety, liquidity, and yield. Through the PMIA, the Investment Division manages the LAIF. LAIF allows cities, counties, and special districts to place money in a major portfolio and, at no additional cost, use the expertise of Investment Division staff. Participating agencies can withdraw their funds from LAIF at any time as LAIF is highly liquid and has a dollar-in, dollar-out amortized cost methodology (Nigro & Nigro 2023). Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-17 The District has also recently become a voluntary participant in the California Cooperative Liquid Assets Securities System (CLASS),24 a JPA investment pool that provides public agencies the opportunity to invest funds on a cooperative basis in rated pools that are managed in accordance with state law with the primary objectives of offering participants safety, daily and next-day liquidity, and optimized returns. As of January 2025, the District maintains $254,273 in its CLASS reserve account and $530,725 in its LAIF reserve account. 2.4.2.2 OUTSTANDING DEBT/COST AVOIDANCE The District currently has no debt. 2.4.2.3 RATE SETTING The District contracts with its customers at a flat rate per acre-foot (AF) that is set annually by the Board with the adoption of the FY budget. The price per AF of water is determined by the Board each year during the fiscal year budget adoption and subject to District Ordinance No. 00-01. The customer is obligated to pay for the quantity of water contracted annually regardless of the amount of water actually diverted by the customer under the District’s water rights. However, the customer is not required to pay for any portion of the contract quantity that is not available for diversion as set forth in water shortage determinations by the Board. In FY 2023-2024, a rate increase was implemented and reflects the increase in basic operational costs of the District. Further, the new rate addresses a shortfall that was a result of inadequate revenue generated from the previous rate that had not been adjusted since 2009 ($47 per AF). A combination of a rate increase and use of reserves was used to meet the projected 2023 deficit as summarized below: • EXPENSES: $761,700 • REVENUE: $567,906 • USE OF RESERVES: $200,000 • WATER RATE FOR 2023: $68 per AF Total increase from $47 to $68 = $21 per AF o $14 per AF to meet operational deficit o $7 per AF for water supply reliability projects o Additionally, the Board allocated $250,000 in 2023 to address water supply reliability issues. Most of the projects identified by the Board through the strategic plan are conducted in collaboration with other entities and dependent on external influences for work scope and budget. 2.4.2.4 CAPITAL IMPROVEMENT PLAN Because the District owns no infrastructure or facilities, no capital improvement plan (CIP) is necessary or appropriate. 2.5 Growth 2.5.1 Present and Planned Land Use and Development The RRFC boundaries consist primarily of the unincorporated area of Mendocino County and includes the incorporated City of Ukiah, which is the County seat and has the highest concentration of population in 24 The California CLASS website can be found here: https://californiaclass.com/. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-18 the County. Mendocino County has land use authority over privately-owned, unincorporated lands within the District boundary and land use decisions are governed by the County’s General Plan and Zoning Code regulations. Parcels within the City of Ukiah are subject to the City’s General Plan and Zoning Code regulations. Any proposed changes to the land use or development patterns within the unincorporated areas of the District must be approved by BOS and may require an amendment to the General Plan and/or Zoning Code. Likewise, any changes to land use within the incorporated areas of Ukiah would require approval from Ukiah’s City Council and potentially a subsequent amendment to its General Plan and/or Zoning Code. 2.5.1.1 LAND USE The District provides raw water to approximately 51,000 acres of land within the County and a portion of the City of Ukiah. Specific land uses within the District include every land use designation of the Mendocino General Plan (20 designations total categorized as ‘agriculture’ ‘forest land’, range land’, ‘open space’, ‘public service’, ‘public land’ ‘commercial’, ‘industrial’, ‘residential’, and ‘rural community’). Portions of the District that are located within the City of Ukiah are subject to the City of Ukiah General Plan. Land use designations include Downtown Core (DC), Mixed Use: Brush Street (MUBST), Mixed Use: AIP-PD (AIP-PD), Neighborhood Commercial (NC), Community Commercial (CC), Highway Commercial (HC), Industrial (I), Public (P), Recreational (REC), Open Space (OS), Agriculture (AG). (Ukiah, 2022) 2.5.1.2 DEVELOPMENT Future growth and development within the District are subject to Mendocino County land use regulations. The County has adopted plans and policies to regulate growth, including a General Plan and a Zoning Code. The County’s Zoning Code contains three major geographical zones (Inland, Coastal, and Mendocino Town); the District area is included in the Inland Zone (County of Mendocino 2024). The County’s zoning map shows an evenly distributed mix of uses throughout the District, with the most prevalent use being agriculture and open space uses. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-19 2.5.2 Existing Population The population of the District can be estimated from the population of the zip codes contained in the RRFC boundaries. RRFC spans three zip codes: 95449 which covers the rural area from Hopland to the Sonoma County border (Census Reporter 2023c), 95482 which covers all of Ukiah (Census Reporter 2023e), and 95470 which covers the Redwood Valley area (Census Reporter 2023d). The population of each zip code according to the 2023 U.S. Census Bureau American Community Survey (ACS) is summarized in Table 2-5 below: Table 2-5: Population Within RRFC Boundary Zip Code Population 95449 1,828 95482 33,396 95470 6,122 Total 41,346 Sources: U.S. Census Bureau 2023a. Based on the census numbers, the estimated population for the District is 41,346. 2.5.3 Projected Growth The District’s population spans a wide area of land that has a handful of large commercial and residential developed areas that are located amongst agricultural lands. The anticipated growth of the District is limited to development of mostly already built out commercial and rural residential areas located in the communities served by the District including Calpella, Millview, and other unincorporated communities. Much of the land within the District is agricultural in use, and therefore future development of this land is expected to be limited. According to the City of Ukiah’s 2022 General Plan, the City of Ukiah had an estimated annual growth rate of approximately 0.3 percent (City of Ukiah 2022). The California Department of Finance (DOF) projects that the population of Mendocino County will decline by a little more than 2.7 percent in the next 10 years, from 91,601 in 2023 to 89,091 in 2033, and 89,139 in 2043 (DOF 2024). The overall projected decline of 2.7 percent throughout the County suggests that buildout of any undeveloped residential parcels will likely not occur until well beyond the planning horizon of this document (DOF 2024). Given the current estimated population of the District is 41,346 and DOF projects that the population of the County will decline throughout the County, the District is prepared for the anticipated growth in the region through 2045. However, changes to California housing laws could result in a slight increase in development and density within the District above what is discussed above. Despite the development trends in the greater Ukiah area, it is unlikely retailers will increase use of District water. Due to the efforts of the Ukiah Valley Water Authority (UVWA) to consolidate water retailer services and obtain funding through the SWRCB Safe and Affordable for Equity and Resilience (SAFER) Drinking Water program,25 the retailers will increasingly depend on groundwater and may even reduce 25 More information on the SWRCB’s SAFER Drinking Water program can be found here: https://www.waterboards.ca.gov/safer/. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-20 contract quantities with RRFC. This potentially uncontracted water would then be made available to agricultural customers. 2.5.4 California Housing Goals In 2017, the State of California passed SB 299 and SB 1069 to address the increasingly desperate need for affordable housing in the State. The legislation allowed local ordinances for accessory dwelling unit (ADU) construction in districts zoned for single and multifamily residential uses. An ADU is a secondary dwelling unit for one or more persons on the same parcel as a larger, primary dwelling. An ADU can either be attached or detached to the primary residential structure on the property but must include complete independent living facilities (including permanent provisions for entry, living, sleeping, eating, cooking and sanitation, and adequate water service and sewage disposal systems). As codified by GC §65852.150,26 the California Legislature found and declared that, among other things, allowing ADUs in zones that allow single-family and multifamily uses provides additional rental housing and is an essential component in addressing California’s housing needs. In the years since, state ADU law has been revised to improve its effectiveness in creating more housing units. New laws have since been passed which address barriers to their implementation at scale; for example, setting development criteria for ADUs, streamlined permit processing, and limiting impact fees. Implementation of state law requires updating local ordinances, estimating ADU capacity when used to address regional housing needs assessment (RHNA) allocations in housing element (HE) updates, and an HE program to incentivize and promote ADUs that can be offered at affordable rents. As the state continues to pass legislation to help tackle the ongoing housing crisis, the inevitable impacts to service providers as a result of development will continue to mount. It is imperative that water providers such as RRFC stay up to date on legislative changes. For additional information and data on housing legislation see Appendix 7.3. 2.6 Disadvantaged Unincorporated Communities SB 244, which became effective in January 2012, requires LAFCo to evaluate any disadvantaged unincorporated communities (DUCs), including the location and characteristics of any such communities, when preparing an MSR that addresses agencies that provide water, wastewater, or structural fire protection services.27 A DUC is an unincorporated geographic area with 12 or more registered voters with a median household income (MHI) that is less than 80 percent of the State MHI. According to the ACS 2023 1-Year Estimates, the statewide MHI for California was $95,521 (U.S. Census Bureau 2023d). Thus, the MHI DUC threshold is $76,417 and the threshold for severely disadvantaged unincorporated communities (SDUCs), defined as less than 60 percent of the State MHI, is $57,313. Although RRFC is a raw water service provider, because it provides raw water under contract to several municipal water providers, the DUC analysis is included in this study. 26 GC §65852.150 (2023) can be found here: California Government Code § 65852.150 (2023) :: 2023 California Code :: US Codes and Statutes :: US Law :: Justia. 27 Technical advisory on SB 244 can be found here: https://opr.ca.gov/docs/SB244_Technical_Advisory.pdf Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-21 DUCs are identified to address a myriad of issues from environmental justice to land use planning. Linking these disparate issues together, the sole statutory criterion for determination of a DUC is MHI. The smallest geographic units for which MHI data is publicly available are census block groups. Outside of heavily urbanized areas, however, census block groups are geographically expansive. They often include both incorporated and unincorporated territory and do not necessarily coincide with typically understood community boundaries. Although a block group might be identified as having a MHI of less than 80 percent, various portions of that block group could be significantly wealthier in rural areas, or the block group could split an otherwise contiguous community. As a result, within rural areas, such as Mendocino County, assembling income data for specific unincorporated communities is not always straightforward. In Mendocino County, identifying and mapping DUC locations is a complex process because the delineation of DUC boundaries often differ from those common to the local agency and the public. Some entities, such as Sonoma County LAFCo and Stanislaus County, utilize census-designated place (CDP) communities to help provide usable geographies for DUC boundaries, but even then, mapping and data challenges persist. In particular, MHI ratios are subject to adjustment over time and can result in a change to a community's disadvantaged status. Similarly, the number of registered voters can fluctuate during election years causing further variability. SB 244 describes the general characteristics of DUCs, but it does not provide specific guidance or methodology for how to identify them, other than providing the following criteria: • Contains 10 or more dwelling units in close proximity to one another; • Is either within a city SOI, is an island within a city boundary, or is geographically isolated and has existed for more than 50 years; and • Has an MHI that is 80 percent or less than the statewide MHI. • For this analysis, per the California Association of Local Agency Formation Commissions (CALAFCO) recommendation, calculated the “MHI Threshold” i.e. 80 percent of the statewide MHI as $76,417, per the ACS MHI data (the MHI for the State of California is $91,521) (U.S. Census Bureau 2023d). • Income data was sourced from ACS 5-year Estimates dataset for 2019-2023 and the 2023 ACS 1-Year Estimates. This State legislation is intended to ensure that the needs of these communities are met when considering service extensions and/or annexations in unincorporated areas. The City of Ukiah prepared a comprehensive DUC analysis within the Ukiah Valley during its 2040 General Plan Update in 2022. The results of the analysis are presented in Appendix C of the 2040 General Plan (City of Ukiah 2022, pg. 5). Five DUCs were identified in the analysis and are located within the District jurisdictional boundary. It should be noted that the DUCs of ‘Talmage’ and ‘The Forks’ were identified by the County of Mendocino in their sixth cycle Housing Element and were included in the City of Ukiah’s 2040 General Plan Update for consistency. • Ukiah SXSW • Norgard/Airport South • Empire Gardens (Alexander Estates) • Talmage (County identified) Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update AGENCY OVERVIEW 2-22 • The Forks (County identified) In addition to Appendix C, the 2022 City of Ukiah MSR and SOI Update provides further discussion on the identified DUCs (LAFCo 2022, pgs. 2-68 – 2-71). Despite large areas of the District being classified as DUC, the residents within the District boundary receive adequate services with respect to fire, which is provided by four districts: Redwood Valley-Calpella Fire Protection District, Ukiah Valley Fire Protection District, AVCSD, and Hopland Fire Protection District (also known as the Sanel Valley Fire Protection District) (LAFCo 2018b). Wastewater services are provided by four wastewater providers serving the region including Calpella CWD, UVSD, City of Ukiah, Hopland Public Utility District, as well as private on-site septic systems. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update MUNICIPAL SERVICES 3-1 3 MUNICIPAL SERVICES A Municipal Service Review (MSR) is a comprehensive analysis of the services provided by a local government agency to evaluate the capabilities of that agency to meet the public service needs of their current and future service area. The MSR determinations inform the Sphere of Influence (SOI) Update process and assist the Local Agency Formation Commission (LAFCo/Commission) in considering the appropriateness of a public service provider’s existing and future service area boundary. The information and analysis presented in Chapters 2 and 3 of this document form the basis for the MSR determinations provided under Chapter 3.3. 3.1 Service Overview This is the third MSR prepared for the Mendocino County Russian River Flood Control and Water Conservation Improvement District (RRFC/District); the first was adopted in the 2013 Ukiah Valley Special Districts MSR and the second was the combined MSR/SOI study adopted by the Commission on May 1, 2017. 3.1.1 Services The District provides raw water for domestic, municipal, industrial, and irrigation uses to private contractors and municipal water purveyors within its boundaries and State Water Resources Control Board (SWRCB) issued water right licensed place of use. In total, the District currently holds three SWRCB-issued water rights, as detailed below in Table 3-1. In 2011, SWRCB determined that RRFC put permit 12947B to full beneficial use and a water right license was issued to the District. A license is significant because it documents and confirms that the permittee has diverted and applied water to beneficial use as proposed in the permit application.28 Table 3-1: RRFC Licenses License Source Storage Purpose and Use Other License 13898 East Fork 82,600 acre- 7,940 AFA may be diverted Up to 4,000 AFA (Application 012919B, Russian feet per (direct diversion plus of surplus water Permit 12947B) River annum (AFA) redivision of stored water may be used in from in Lake Mendocino) and Redwood Valley Priority date: 1949 October 1- used for domestic, County Water September municipal, industrial, District (RVCWD) 30 in Lake irrigation, and recreation service area. Mendocino within the District’s Place of Use, which is nearly concurrent with the District boundary. 28 SWRCB defines the difference between a water right permit and a water right license: “a water right permit is an authorization to develop a water diversion and use project. The right to use water is obtained through actual use of water within the limits described in the permit. After you have received a water right permit, constructed your project, and used water, we will inspect your project. If you have used water beneficially and if you comply with all of the conditions in your permit, you will be offered a water right license. The water right license is a vested right that confirms your actual use. If you have not used all the water allowed by your permit, or if you have used water unreasonably, you will receive a license for less water than your permit allowed. You will receive a license for only that water that has been reasonably and beneficially used” (SWRCB 2024d). Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update MUNICIPAL SERVICES 3-2 Table 3-1: RRFC Licenses License Source Storage Purpose and Use Other License 3870 Russian None 144.4 AFA may be diverted Not currently (Application 013974, River for industrial use within a used. Permit 8450) underflow limited Place of Use surrounding the licensed Priority Date: 1950 point of diversion. License 4783 Russian None 72.7 AFA may be diverted Not currently (Application 014160, River for agricultural use within used. Permit 8668) underflow a limited Place of Use surrounding the licensed Priority Date 1951 point of diversion. Both Sonoma Water and the District each hold appropriative water rights to divert and use water stored in Lake Mendocino. Sonoma Water’s relevant water right is reflected in Permit 12947A, priority date January 28, 1949. Sonoma Water’s permit terms require that Sonoma Water maintain certain minimum stream flows below the dam in the East Fork Russian River and downstream on the mainstem of the Russian River. Seasonally over the summer and longer during dry years, Sonoma Water maintains those stream flows by releasing stored water from Lake Mendocino. License 13898 authorizes the District to appropriate up to 7,940 acre-feet (AF) annually from the East Fork Russian River, including storing water in and rediverting water from Lake Mendocino. The District’s License 13898 does not contain minimum streamflow requirements, but Sonoma Water’s need to release stored water to meet such requirements under Permit 12947A physically affects the volume of stored water available to the District under License 13898. 3.1.2 Service Area The current District boundary encompasses the City of Ukiah and unincorporated communities of Calpella, the Forks, Talmage, Hopland, portions of Redwood Valley, and various surrounding unincorporated communities of Mendocino County. RRFC is in the Russian River hydrologic unit, which consists of 1,485 square miles in Mendocino and Sonoma Counties, bounded by the Coast Range on both the east and west. The main stem Russian River is approximately 110 miles long and flows southward from Redwood Valley and Potter Valley (north of Ukiah) to its confluence with Mark West Creek in Sonoma County, where it turns west to cut through the Coast Range and empty into the Pacific Ocean at Jenner (SWRCB 2017). Two reservoirs provide flood protection and water supply storage: 1) Lake Mendocino impounded by Coyote Dam on the East Fork Russian River northeast of Ukiah, and 2) Lake Sonoma impounded by Warm Springs Dam on Dry Creek west of Healdsburg. A diversion from the main stem Eel River through the Potter Valley Project (PVP)29 flows through Potter Valley into the East Fork and Lake Mendocino (SWRCB 2017). 29 More information about the PVP may be found at https://pottervalleyproject.org/overview/ and https://mendoiwpc.com/. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update MUNICIPAL SERVICES 3-3 Substantial data collection and watershed restoration efforts have been undertaken, and are continuing, in the watershed through the efforts of private and industrial landowners and local, state, and federal agencies. 3.1.3 Outside Agency Services The District does not provide services outside of its boundaries with the exception of the sale of surplus water to RVCWD, located just north of the District boundary, which is included within the District’s SWRCB- issued Water Right License 138989 place of use. In some instances, municipal water providers (customers of the District) serve water outside District boundaries but do so with water from non-District sources. 3.2 Water 3.2.1 System History RRFC was formed by voters in 1955 to serve, along with Sonoma Water, as the local sponsor for the development of Coyote Dam and Lake Mendocino. Sonoma Water operates Coyote Valley Dam and Lake Mendocino. 3.2.2 Service Overview The District offers water sales contracts to water users within its boundaries through a Uniform Water Sale & Purchase Agreement for delivery of the District’s licensed direct diversion and stored water through authorized points of re-diversion. The water is diverted and sold as raw water to customers for municipal water service uses, private agricultural entities for irrigation and frost/heat protection purposes, and to others for industrial and domestic use. The Uniform Water Sale & Purchase Agreement (Agreement) entered between the District and customer specifies the amount of water that can be diverted annually, from what locations (or points of diversion), the purpose of use, and where the contracted water may be used. The Agreement defines terms for purchasing surplus water, measuring and reporting use, and responsibilities of each party to comply with all relevant laws and regulations by third parties. The term of the Agreement is twenty (20) years with an option to renew. RRFC contractors are required to notify the District by December 31 of each year if they want to increase, decrease, or terminate their water supply contracts. Consequently, allocations of the contract amount change from year to year, depending on the hydrologic conditions and specific needs of each contractor. Table 3-2 below summarizes the details of the uniform water supply & purchase agreements (contract) the District currently maintains as of January 2025: Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update MUNICIPAL SERVICES 3-4 Table 3-2: Summary of RRFC Water Supply Agreements Agency Annual Contract Amount (AF) Municipal (7 Customers) • Calpella County Water District • Henry Station Mutual Water Company • Hopland Public Utility District 2,305.15 • Millview County Water District • River Estates Mutual Water Company • Rogina Water Company • Willow County Water District Individual Agricultural, Industrial, Domestic (52 Customers) 5022.00 Subtotal 7327.15 Total Water Right 7,940.00 In addition to these contracts, any remaining uncontracted water supply is made available as surplus first to District customers as per the Uniform Water Supply & Purchase Agreement, and then to RVCWD, as per the conditions of the 1980 Stipulated Judgement between the two entities.23 3.2.3 Facilities and Infrastructure The District does not own or operate any facilities or infrastructure; its contractors are responsible for their own infrastructure and delivery systems. The District’s main office building where meetings are held is in a rented office space in downtown Ukiah. A meter installation program was initiated in 2017 in response to water measurement and reporting regulations (Senate Bill (SB) 88).30 The District owns approximately 55 meters and has an Alternative Compliance Plan to the SWRCB water measurement and reporting regulations that outlines determinations for data collection. SWRCB is currently developing the Russian River Telemetry Pilot Project31 that will explore and refine water monitoring practices, gaining knowledge from water diverters and evaluate real-world conditions for telemetered water monitoring. If the District approves participation in the pilot, the District will likely receive a number of new meters at no cost to the District. Upon the proposed consolidation of the Ukiah Valley water districts under the Ukiah Valley Water Authority (UVWA), infrastructure associated with the District via water contracts will be comprehensively analyzed within a Plan of Services to identify needs, deficiencies, redundancies and opportunities for efficiency. 3.2.3.1 CAPACITY AND DEMAND FOR SERVICES In 2024, District customers contracted a total of 7,277.15 AF of the total 7,940 AF available under District License 13898. The remaining uncontracted supply was made available as surplus to District customers and then to RVCWD. While the amount of water RRFC contracts to its customer remains fairly steady, the 30 The water measurement and reporting regulations can be viewed here: https://www.waterboards.ca.gov/waterrights/water_issues/programs/diversion_use/water_measurement.html. 31 Information about the Russian River Telemetry Pilot Project may be viewed here: https://www.waterboards.ca.gov/telemetry/pilot-project.html. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update MUNICIPAL SERVICES 3-5 amount of water customers actually divert for use varies year to year based on customer needs, and hydrologic conditions. 3.2.3.2 SYSTEM IMPROVEMENTS As RRFC has no infrastructure or facilities, no needs or deficiencies are noted. The City of Ukiah (City) implemented a recycled water (“purple pipe”) project in 2019 that supplies and distributes reclaimed water from their wastewater treatment plant to agricultural customers within and surrounding the City. Although there is some customer overlap, there has been no significant impact to the RRFC. 3.2.4 Service Adequacy Based on information provided by the District regarding operations, management practices, accountability, and financing, RRFC’s service is adequate. 3.2.4.1 REGULATORY PERMITS AND COMPLIANCE HISTORY As required by its SWRCB water rights permit, the RRFC submits annual water use reports via the state’s Electronic Water Rights Management System website. 3.2.4.2 DROUGHT CONTINGENCY PLANNING In the time since the last MSR/SOI report was prepared for the District, drought conditions throughout the state have ebbed and flowed, leaving some smaller service providers in dire positions. During the 2020-2022 extreme drought conditions, the District enacted the Water Conservation Program under Ordinance #00-1 and had no surplus water supply to provide to RVCWD in all of 2021 and most of 2022. As the drought severity deepened and Lake Mendocino storage levels dropped, the District requested voluntary reductions from its customers to avoid SWRCB curtailment of the District’s stored water. Customers rose to the challenge and mandatory curtailment of stored water was avoided. In 2022, the District and Sonoma Water entered a memorandum of understanding (MOU) concerning Lake Mendocino Storage Planning and Russian River Management. The MOU was developed in response to the regional drought that began in the autumn of 2019 and establishes planning and management activities related to the shared water supplies in Lake Mendocino. RRFC also continues to work collectively to adapt the Upper Russian River Voluntary Water Sharing Program. 3.2.4.3 NEEDS AND DEFICIENCIES No needs or deficiencies have been identified by the District during preparation of this MSR. However, as Pacific Gas and Electric Company (PG&E) implements the decommissioning of PVP, the full impact on water supply stored and released from Lake Mendocino is unknown. RRFC, as part of the Mendocino County Inland Water and Power Commission (IWPC) and the Eel-Russian Project Authority (ERPA) remains actively engaged in the planning efforts underway to ensure a continued diversion of Eel River water into the Russian River watershed. In February 2025, Round Valley Indian Tribes (RVIT), the California Department of Fish and Wildlife (CDFW), Humboldt County, IWPC, Sonoma Water, California Trout, and Trout Unlimited established a MOU to advance a water diversion agreement associated with PG&E’s decommissioning of PVP. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update MUNICIPAL SERVICES 3-6 The MOU details how Russian River water users can continue to divert water, without harming the recovery of salmon species on the Eel River. It commits the parties to support the removal of the last two dams on the Eel River, which will make it the longest free flowing river in the state. Key provisions of the MOU include: • The flow schedule for diversions from the Eel River to the Russian River that is ecologically protective, designed to meet performance metrics, includes continuous real time monitoring, and allows for adaptive management; • All water rights not destined for delivery will be permanently dedicated in stream in the Eel River; • A water diversion facility designed to mimic a free-flowing Eel River; • An initial term of 30 years, with a conditional second 20-year term; • RVIT will hold senior water rights on the Eel River and receive payment of up to $2M a year; and • A unified joint commitment to support the completion of the water diversion facility and restoration projects in the Eel River through mutual support of state, federal, and philanthropic fundraising efforts (Glenwright 2025). 3.3 Determinations This section presents the required MSR determinations pursuant to GC §56430(a) for RRFC.32 3.3.1.1 GROWTH Growth and population projections for the affected area 1. Based on the latest census numbers, the 2023 population for the District was 41,346 (U.S. Census Bureau 2023a). The overall projected decline of 2.7 percent throughout Mendocino County over the next 10 years suggests that buildout of any undeveloped residential parcels will likely not occur until well beyond the planning horizon of this document (California Department of Finance 2024). Furthermore, much of the land within the District is agricultural in use, and therefore future development of this land is limited. 2. Mendocino County and the City of Ukiah have land use authority within the District boundary and make land use decisions based on the County and City General Plans and Zoning Code regulations. 3.3.1.2 DISADVANTAGED UNINCORPORATED COMMUNITIES The location and characteristics of any disadvantaged unincorporated communities within or contiguous to the sphere of influence 3. The intent of Senate Bill (SB) 244 is to identify communities of interest, which were studied in detail within the Ukiah Valley by the City of Ukiah during its 2040 General Plan Update. The analysis identified several small disadvantaged unincorporated communities (DUCs) in the Ukiah Valley and around the City, many of which receive water, fire, and/or sewer services from special districts. Five DUCs were identified in the analysis and are located within the District’s jurisdictional boundary. The 32 GC §56430(a) (2023) can be found here: California Government Code § 56430 (2023) :: 2023 California Code :: US Codes and Statutes :: US Law :: Justia. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update MUNICIPAL SERVICES 3-7 RRFC provides raw water under contract to municipal and private water service providers, which in turn provide treated water supply to the majority of the identified DUCs. 4. Residents within the District boundary receive adequate services with respect to fire, which is provided by four districts: Redwood Valley-Calpella Fire Protection District, Ukiah Valley Fire Protection District, Anderson Valley Community Services District, and Hopland Fire Protection District (also known as the Sanel Valley Fire Protection District) (LAFCo 2018b). Wastewater services are provided by four wastewater providers serving the region including Calpella County Water District, Ukiah Valley Sanitation District, City of Ukiah, Hopland Public Utility District, as well as private on-site septic systems. Municipal water services are provided by a combination of public and private water providers: City of Ukiah, Hopland Public Utility District, Willow County Water District, Millview County Water District, Calpella County Water District, Redwood Valley County Water District (RVCWD), River Estates Water Company, and Rogina Water Company. 3.3.1.3 CAPACITY OF FACILITIES AND ADEQUACY OF SERVICES Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs or deficiencies including needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any disadvantaged unincorporated communities within or contiguous to the sphere of influence 5. The District does not own or operate any facilities or infrastructure; customers are responsible for their own infrastructure and delivery systems. 6. The District’s main office building where meetings are held is a rented office space in downtown Ukiah. 7. In 2024, District customers contracted a total of 7,277.15 acre-feet (AF) of the 7,940 AF available under District License 13898. The remaining uncontracted supply was made available as surplus to District customers and then to the RVCWD. 8. RRFC has historically had sufficient capacity to serve its customers. However, because of PG&E’s notice of intent to surrender and decommission the Potter Valley Project (PVP), the future of water storage for the District is somewhat uncertain. The District is working closely with multiple partners including Sonoma Water, in a joint effort with the Mendocino County Inland Water and Power Commission (IWPC) to identify potential future availability options. 3.3.1.4 FINANCIAL ABILITY OF AGENCY Financial ability of agencies to provide services 9. The primary funding source for the District is contracted water sales, which is generally a reliable and reoccurring revenue source, provided that annually adopted rates are sufficient to cover the District’s actual expenses. The District also receives a portion of Mendocino County property taxes. 10. According to financial information from Fiscal Years (FYs): 2019-2020, 2020-2021, 2021-2022, 2022- 2023, and 2023-2024, the District is fiscally healthy and able to meet its ongoing financial obligations without assistance. 3.3.1.5 SHARED SERVICES AND FACILITIES Status of, and opportunities for, shared facilities Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update MUNICIPAL SERVICES 3-8 11. The District works cooperatively with a number of other water agencies such as the districts within the Ukiah Valley Water Authority (UVWA), the Ukiah Valley Basin Groundwater Sustainability Agency (UVB GSA), IWPC, and Sonoma Water. 12. The District provides raw water from the East Fork Russian River, which flows into and through Lake Mendocino. What isn’t needed to meet downstream demand on the mainstem Russian River is stored in Lake Mendocino. 13. The District currently provides water to 7 municipal customers and 52 individual agricultural, industrial, and domestic water customers. 14. In addition to the water contracts, any remaining uncontracted water supply is made available as surplus first to District customers as per the Uniform Water Supply & Purchase Agreement, and then to RVCWD, as per the conditions of the 1980 Stipulated Judgement23 between the two entities. Additionally, customers may transfer surplus water from their contracts on an annual basis. 15. The District is actively engaged with RVCWD to develop an application to LAFCo to annex the entirety of the RVCWD service area. Annexation of RVCWD into the District boundary would allow the District to contract directly with RVCWD and increase water supply stability for RVCWD. 16. On April 1, 2024, the District adopted Resolution No. 24-01 (a Commitment to Collaborate with Redwood Valley County Water District in Developing a Local Agency Formation Commission Annexation Application).5 Subsequently, on April 18, 2024, RVCWD adopted a similar resolution (Resolution No. 24-01). Most recently, the two entities entered a memorandum of understanding (MOU) to identify roles and responsibilities for development of an annexation application to the LAFCo, effective August 1, 2024.6 3.3.1.6 ACCOUNTABILITY, STRUCTURE AND OPERATIONAL EFFICIENCIES Accountability for community service needs, including governmental structure and operational efficiencies 17. RRFC is governed by a five-member Board of Trustees elected at large to four-year staggered terms. The District operates in compliance with the Brown Act. 18. The District Board performs annual evaluations of the District’s general manager. 19. The District currently maintains a robust website,11 which provides updated information including meeting notices and agendas, financial information, rates, studies, customer services, and other pertinent information related to the District. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update SPHERE OF INFLUENCE 4-1 4 SPHERE OF INFLUENCE The Local Agency Formation Commission (LAFCo/Commission) prepares a Municipal Service Review (MSR) prior to or in conjunction with the Sphere of Influence (SOI) review process. An SOI study considers whether a change to the SOI, or probable future boundary, of a local government agency is warranted to plan the logical and orderly development of that agency in a manner that supports the Cortese-Knox- Hertzberg Local Government Reorganization Act of 2000 (CKH) Law and the policies of the Commission. The MSR and required determinations are presented in Chapters 2 and 3 of this document and form the basis of information and analysis for this SOI review. This chapter presents the SOI Update and required determinations pursuant to California Government Code (GC) Section (§) 56425(e).33 4.1 Mendocino LAFCo Policies In addition to making the necessary determinations for establishing or modifying an SOI consistent with the CKH Act, the appropriateness of an agency’s SOI is also based on an evaluation of consistency with local LAFCo policies. The SOI policies can be found in the Mendocino LAFCo Policies and Procedures Manual, adopted November 5, 2018, and as updated.34 10.1.1 Legislative Authority and Intent A sphere of influence is the probable 20-year growth boundary for a jurisdiction’s physical development. The Commission shall use spheres of influence to: a) Promote orderly growth and development within and adjacent to communities; b) Promote cooperative planning efforts among cities, the County, and special districts to address concerns regarding land use and development standards, premature conversion of agriculture and open space lands, and efficient provision of public services; c) Guide future local government reorganization that encourages efficiency, economy, and orderly changes in local government; and d) Assist property owners in anticipating the availability of public services in planning for the use of their property. 10.1.2 Definitions The Commission incorporates the following definitions: a) An “establishment” refers to the initial development and determination of a sphere of influence by the Commission. b) An “amendment” refers to a limited change to an established sphere of influence typically initiated by a landowner, resident, or agency; and c) An “update” refers to a comprehensive change to an established sphere of influence typically initiated by the Commission. 33 GC §56425(e) (2023) can be found here: California Government Code § 56425 (2023) :: 2023 California Code :: US Codes and Statutes :: US Law :: Justia. 34 The Mendocino LAFCo Policies and Procedures Manual can be found here: Policies & Procedures - Mendocino LAFCo. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update SPHERE OF INFLUENCE 4-2 10.1.3 Sphere Updates In updating spheres of influence, the Commission’s general policies are as follows: a) The Commission will review all spheres of influences every five years for each governmental agency providing municipal services. Municipal services include water, wastewater, police, and fire protection services. b) Sphere of influence changes initiated by any agency providing a municipal service shall generally require either an updated or new service review unless LAFCo determines that a prior service review is adequate. c) Spheres of influence of districts not providing municipal services including, but not limited to, ambulance, recreation, hospital, resource conservation, cemetery, and pest control shall be updated as necessary. 10.1.4 Reduced Spheres The Commission shall endeavor to maintain and expand, as needed, spheres of influence to accommodate planned and orderly urban development. The Commission shall, however, consider removal of land from an agency’s sphere of influence if either of the following two conditions apply: a) The land is outside the affected agency’s jurisdictional boundary but has been within the sphere of influence for 10 or more years; or b) The land is inside the affected agency’s jurisdictional boundary but is not expected to be developed for urban uses or require urban-type services within the next 10 years. 10.1.5 Zero Spheres LAFCo may adopt a “zero” sphere of influence encompassing no territory for an agency. This occurs if LAFCo determines that the public service functions of the agency are either nonexistent, no longer needed, or should be reallocated to some other agency (e.g., mergers, consolidations). The local agency which has been assigned a zero sphere should ultimately be dissolved. 10.1.6 Service Specific Spheres If territory within the proposed sphere boundary of a local agency does not need all of the services of the agency, a “service specific” sphere of influence may be designated. 10.1.7 Agriculture and Open Space Lands Territory not in need of urban services, including open space, agriculture, recreational, rural lands, or residential rural areas shall not be assigned to an agency’s sphere of influence unless the area’s exclusion would impede the planned, orderly and efficient development of the area. In addition, LAFCo may adopt a sphere of influence that excludes territory currently within that agency’s boundaries. This may occur when LAFCo determines that the territory consists of agricultural lands, open space lands, or agricultural preserves whose preservation would be jeopardized by inclusion within an agency’s sphere. Exclusion of these areas from an agency’s sphere of influence indicates that detachment is appropriate. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update SPHERE OF INFLUENCE 4-3 10.1.8 Annexations Are Not Mandatory Before territory can be annexed to a city or district, it must be within the agency’s sphere of influence (G.G. §56375.5). However, territory within an agency’s sphere will not necessarily be annexed. A sphere is only one of several factors that are considered by LAFCo when evaluating changes of organization or reorganization. 10.1.9 Islands or Corridors Sphere of influence boundaries shall not create islands or corridors unless it can be demonstrated that the irregular boundaries represent the most logical and orderly service area of an agency. 10.1.10 Overlapping Spheres LAFCo encourages the reduction of overlapping spheres of influence to avoid unnecessary and inefficient duplication of services or facilities. In deciding which of two or more equally capable agencies shall include an area within its sphere of influence, LAFCo shall consider the agencies’ service and financial capabilities, social and economic interdependencies, topographic factors, and the effect that eventual service extension will have on adjacent agencies. Where an area could be assigned to the sphere of influence of more than one agency, the following hierarchy typically applies: a) Inclusion within a city’s sphere b) Inclusion within a multi-purpose district’s sphere c) Inclusion within a single-purpose district’s sphere Territory placed within a city’s sphere indicates that the city is the most logical provider of urban services. LAFCo encourages annexation of developing territory (i.e., area not currently receiving services) that is currently within a city’s sphere to that city rather than to one or more single-purpose special districts. LAFCo discourages the formation of special districts within a city’s sphere. To promote efficient and coordinated planning among the county’s various agencies, districts that provide the same type of service shall not have overlapping spheres. 10.1.11 Memorandum of Agreements (For City Sphere Amendments and Updates) Prior to submitting an application to LAFCo for a new city sphere of influence or a city sphere of influence update, the city shall meet with the County to discuss the proposed new boundaries of the sphere and explore methods to reach agreement on development standards and planning and zoning requirements as contained in GC §56425.33 If an agreement is reached between the city and County the agreement shall be forwarded to LAFCo. The Commission shall consider and adopt a sphere of influence for the city consistent with the policies adopted by LAFCo and the County, and LAFCo shall give great weight to the agreement to the extent that it is consistent with LAFCo policies in its final determination of the city sphere. 10.1.12 Areas of Interest LAFCo may, at its discretion, designate a geographic area beyond the sphere of influence as an Area of Interest to any local agency. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update SPHERE OF INFLUENCE 4-4 a) An Area of Interest (AOI) is a geographic area beyond the sphere of influence in which land use decisions or other governmental actions of one local agency (the "Acting Agency") impact directly or indirectly upon another local agency (the "Interested Agency"). For example, approval of a housing project developed to urban densities on septic tanks outside the city limits of a city and its sphere of influence may result in the city being forced subsequently to extend sewer services to the area to deal with septic failures and improve city roads that provide access to the development. The city in such a situation would be the Interested Agency with appropriate reason to request special consideration from the Acting Agency in considering projects adjacent to the city. b) When LAFCo receives notice of a proposal from another agency relating to the Area of Concern, LAFCo will notify the Interested Agency and will consider its comments. c) LAFCo will encourage Acting and Interested Agencies to establish Joint Powers Agreements or other commitments as appropriate. 4.2 Existing Sphere of Influence The Mendocino County Russian River Flood Control and Water Conservation Improvement District (RRFC/District) provides raw water for domestic, municipal, industrial, and irrigation uses to private contractors and municipal water purveyors within its boundaries and its State Water Resources Control Board (SWRCB) issued water right licensed place of use. The municipal service providers then treat and distribute the water to its customers. The District SOI was established by LAFCo through the Zion SOI Study of 1984 and reaffirmed by LAFCo in October 1991 and 2017. The District’s current SOI encompasses 312,675 acres (261,675 acres larger than the District’s boundary of 51,000 acres) and generally follows the watershed boundaries of the Russian River from the top of Ridgewood grade to the north, to the southern and eastern Mendocino County borders, and to the top of the watershed above the Ukiah valley to the west (see Figure 2-1). The SWRCB-issued Water Right License 138989 dictates the area in which the District’s water right may be used (place of use) and includes the 2017 LAFCo affirmed boundary of the Redwood Valley County Water District (RVCWD) service area. 4.2.1 Study Areas Study areas are unique to a specific agency and are used to define the extent of one or more locations for SOI analysis purposes. Study areas may be created at different levels of scope and/or specificity based on the circumstances involved. The following descriptions demonstrate the array of scenarios that may be captured by a SOI study area. • An area with clear geographic boundaries and scope of service needs based on years of interagency collaboration or public engagement and a project ready for grant funding or implementation. • An area involving broader community regions or existing residential subdivisions with a large or long- term vision in need of fostering and/or establishing interagency partnerships. • An area in early stages of conception that is not currently geographically well-defined and generally involves one or more ideas identified by agency or community leaders needing further definition. • An area geographically defined by a gap between the boundaries of existing public service providers. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update SPHERE OF INFLUENCE 4-5 • An area adjacent to an existing agency’s boundary slated for development needing urban services. Study areas can result in a proposed SOI or sphere expansion area or the designation of an Area of Interest to earmark areas for enhanced interagency coordination or for future SOI consideration. There are no study areas in or immediately surrounding RRFC. 4.2.2 Area of Interest Designation LAFCo’s AOI Policy, per Section 10.1.12, provides for the designation or identification of unincorporated areas located near to, but outside the jurisdictional boundary and established SOI of a city or district, in which land use decisions or other governmental actions of another local agency directly or indirectly impact the subject local agency. An AOI designation serves as a compromise approach that recognizes situations involving challenging boundary or municipal service delivery considerations, or for which urbanization may be anticipated in the intermediate or long-range planning horizons. It is a tool intended to enhance communication and coordination between local agencies. An AOI designation is most helpful when the county and city or district can reach agreement that development plans related to LAFCo designated AOI will be treated the same as if these areas were within the city or district SOI boundary, particularly regarding notification to and consideration of input from the city or district. As mentioned in the MSR, the District is partnering with RVCWD to apply to LAFCo for annexation of RVCWD into RRFC. Given that the District already provides surplus raw water service to RVCWD when available and RVCWD is within RRFC’s SWRCB-issued water right license place of use, annexation of RVCWD into the District boundary would allow for regular contracting of water, creating a more stable water supply for RVCWD and benefiting both districts and their customers. On April 1, 2024, the District adopted Resolution No. 24-01 (Commitment to Collaborate with Redwood Valley County Water District in Developing a Local Agency Formation Commission Annexation Application).5 Subsequently, on April 18, 2024, RVCWD adopted Resolution No. 24-01, a similar resolution of commitment. Most recently, the two entities entered a memorandum of understanding (MOU)6 regarding the development of an annexation application to the Mendocino LAFCo, effective August 1, 2024. 4.3 Proposed Sphere of Influence There are no proposed changes to the SOI with this Update. The District and LAFCo staff recommend the Commission affirm the existing coterminous sphere. 4.4 Consistency with LAFCo Policies Mendocino LAFCo has established local policies to implement its duties and mandates under the CKH Act. This section identifies potential inconsistencies between the proposed SOI and local LAFCo policies. The proposed District SOI is consistent with Mendocino LAFCo Policies (refer to Chapter 4.1 for the specific SOI policies). Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update SPHERE OF INFLUENCE 4-6 4.5 Determinations In determining the SOI for an agency, LAFCo must consider and prepare written determinations with respect to five factors as outlined in GC §56425(e).33 These factors are as follows: 1. The present and planned land uses in the area, including agricultural and open space lands; 2. The present and probable need for public facilities and services in the area; 3. The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide; 4. The existence of any social or economic communities of interest in the area if the Commission determines that they are relevant to the agency; and 5. The present and probable need for public facilities and services (including sewers, municipal and industrial water, or structural fire protection) of any disadvantaged unincorporated communities within the existing Sphere of Influence. LAFCo staff propose no change to the existing SOI for the District and recommend the Commission approve the SOI determinations as presented below. 4.5.1 Present and planned land uses The RRFC boundaries consist primarily of the unincorporated area of Mendocino County (County) and include the incorporated city, the City of Ukiah. Mendocino County has land use authority over privately- owned, unincorporated lands within the District boundary and land use decisions are governed by the County’s General Plan and Zoning Code regulations. Parcels within the City of Ukiah are subject to the City’s General Plan and Zoning Code regulations. The District provides raw water to approximately 51,000 acres of land within the County and a portion of the City of Ukiah. Specific land uses within the District include every land use designation of the Mendocino General Plan (20 designations total categorized as ‘agriculture’ ‘forest land’, ‘range land’, ‘open space’, ‘public service’, ‘public land’ ‘commercial’, ‘industrial’, ‘residential’, and ‘rural community’). Land use designations within the City of Ukiah include Downtown Core (DC), Mixed Use: Brush Street (MUBST), Mixed Use: AIP-PD (AIP-PD), Neighborhood Commercial (NC), Community Commercial (CC), Highway Commercial (HC), Industrial (I), Public (P), Recreational (REC), Open Space (OS), Agriculture (AG) (City of Ukiah 2022). The County’s zoning map shows an evenly distributed mix of uses throughout the District, with the most prevalent use being agriculture and open space uses. 4.5.2 Present and probable need for facilities and services in the area Based on the latest census numbers, the 2023 population for the District was 41,346 (U.S. Census Bureau 2023a). The District’s population spans a wide area of land that has a handful of large commercial and residential developed areas that are located amongst agricultural lands. The anticipated growth of the District is limited to development of mostly already built out commercial and rural residential areas located in the area served by the District including Calpella, Millview, and other unincorporated communities. According to the City of Ukiah’s 2022 General Plan, the City of Ukiah had an estimated annual growth rate of approximately 0.3 percent (City of Ukiah 2022). The California Department of Finance (DOF) projects that the population of Mendocino County will decline by a little more than 2.7 percent in the next 10 years, from 91,601 in 2023 to 89,091 in 2033, and 89,139 in 2043 (DOF 2024). Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update SPHERE OF INFLUENCE 4-7 The overall projected decline of 2.7 percent throughout the County suggests that buildout of any undeveloped residential parcels will likely not occur until well beyond the planning horizon of this document (DOF 2024). Furthermore, much of the land within the District is agricultural in use, and therefore future development of this land is not anticipated. Given the current estimated population of the District is 41,346 and the DOF projections that the population of the County will steadily decline, the District is prepared for the anticipated growth in the region through 2045. 4.5.3 The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide The District provides raw water for domestic, municipal, industrial, and irrigation uses to private contractors and municipal water purveyors within its boundaries and SWRCB-issued water right licensed place of use. The municipal service providers then treat and distribute the water to its customers. In addition to the water use contracts, the District also provides surplus water to RVCWD located outside District boundaries and within its licensed place of use. RRFC and RVCWD are currently developing an application to annex RVCWD into the RRFC boundaries, making the RRFC boundaries and its water right license place of use coterminous. As of 2024, the District has water contracts with 7 municipal customers and 52 agricultural/other customers under License 13898. In 2024, District customers contracted a total of 7,277.15 acre-feet (AF) of water (of 7,940 AF available under District License 13898.) In addition to these contracts, any remaining uncontracted water supply is made available as surplus first to District customers as per the Uniform Water Supply & Purchase Agreement, and then to the RVCWD, as per the conditions of the 1980 Stipulated Judgement between the two entities.23 The District does not own or operate any facilities. Daily operations of the District are performed by the District’s general manager. 4.5.4 The existence of any social or economic communities of interest in the area if the Commission determines that they are relevant to the agency The District is located within the unincorporated inland zone of Mendocino County just south of the Redwood Valley community. Given its proximity, the District currently has an agreement with RVCWD to provide surplus water to the District. As a result of the long maintained working relationship, the two entities entered a MOU regarding the Development of an Annexation Application to the Mendocino County LAFCo effective August 1, 2024.6 The two entities agree that an annexation between the two could create benefits in terms of reduced costs, greater efficiency, better accountability or representation, or other advantages to the public. No additional communities of interest have been identified for the District. 4.5.5 The present and probable need for public facilities and services of any disadvantaged unincorporated communities The intent of Senate Bill (SB) 244 is to identify communities of interest, which were studied in detail within the Ukiah Valley by the City of Ukiah during its 2040 General Plan Update. The analysis identified several small disadvantaged unincorporated communities (DUCs) in the Ukiah Valley and around the city limits, many of which receive water, fire, and/or sewer services from special districts. Five DUCs were identified in the analysis and are located within the District’s jurisdictional boundary. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update SPHERE OF INFLUENCE 4-8 4.6 Recommendation Pursuant to GC §56425(i),35 the Commission does hereby establish the functions and classes of services provided by RRFC as limited to providing raw water for irrigation and to municipal water purveyors within its boundaries and place of use. Based upon the information contained in this report, it is recommended that the District’s existing SOI, which roughly follows the Russian River watershed and County boundaries to the southeast and south, be affirmed with no changes. 35 GC §56425(i) (2013) can be found here: California Code, GOV 56425. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update REFERENCES 5-1 5 REFERENCES Assembly Committee on Local Government Honorable Juan Carrillo, Chair. Guide to the Cortese-Knox- Hertzberg Local Government Reorganization Act of 2000. 2023. Association of California Water Agencies (ACWA). “Homepage.” Association of California Water Agencies. Accessed April 22, 2025. Home - Association of California Water Agencies. California Cooperative Liquid Assets Securities System (CLASS). “Home.” California Cooperative Liquid Assets Securities System, 2023. Accessed April 22, 2025. Home - California CLASS. California Department of Finance (DOF). Demographic Research Unit. Report P-2A: Total Population Projections, California Counties, 2020-2070 (Baseline 2023 Population Projections; Vintage 2024 Release). Sacramento: California. September 2024. P2A_County_Total.xlsx (live.com). California Department of Housing and Community Development (HCD). “Housing Element Annual Progress Report (APR) Data by Jurisdiction and Year”. California Open Data Profile. October 8, 2024. Housing Element Annual Progress Report (APR) Data by Jurisdiction and Year - Dataset - California Open Data. Census Reporter a. "BG 1, Census Tract 111.02, Mendocino CA." Census Reporter, 2023. Accessed 2024. BG 1, Tract 111.02, Mendocino, CA - Profile data - Census Reporter. ----b. "Census Tract 110.01, Mendocino, CA." Census Reporter, 2023. Accessed 2024. Census Tract 110.01, Mendocino, CA - Profile data - Census Reporter. ----c. "Zip Code 95449." Census Reporter, 2023. Accessed 2024. 95449 - Profile data - Census Reporter. ----d. "Zip Code 95470." Census Reporter, 2023. Accessed 2024. 95470 - Profile data - Census Reporter. ----e. "Zip Code 95482." Census Reporter, 2023. Accessed 2024. 95482 - Profile data - Census Reporter. County of Mendocino. County of Mendocino General Plan. August 2009. Current General Plan | Mendocino County, CA. ----. Mendocino County General Plan, Coastal Element. November 9, 2021. https://www.mendocinocounty.gov/home/showpublisheddocument/56978/638167184738370 000. ----. "Mendocino County Zoning Map" [Web Map]. Scale Not Given. "County of Mendocino, California". Mendocino County Zoning Map (arcgis.com) (March 17, 2025). ----. Ukiah Valley Area Plan: Section 6, Water Management. August 2011. Accessed 2024. showdocument. City of Ukiah. Ukiah 2040 General Plan Update. December 2022. UKGP_EntireGP.pdf. E Mulberg & Associates. Municipal Service Review: Ukiah Valley Special Districts, May 6, 2016. ACRONYMS AND ABBREVIATIONS. Eel-Russian Project Authority (ERPA). “Home.” Eel-Russian Project Authority. Accessed April 22, 2025. Eel- Russian Project Authority. Glenwright, K. "Press Release: Regional Partners Sign Historic MOU on Eel River Recovery." CalTrout News, February 13, 2025. Press Release: Regional Partners Sign Historic MOU on Eel River Recovery | California Trout. Mendocino County Local Agency Formation Commission (LAFCo) a. "Commission." LAFCo, 2025. https://mendolafco.specialdistrict.org/commission. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update REFERENCES 5-2 ----a. Mendocino Local Agency Formation Commission, Policies & Procedures Manual, November 5, 2018. Resolution No. 2018-19-03. Policies & Procedures Manual. ----b. Multi-District Fire Protection Services Sphere of Influence, May 7, 2018. Resolution No. 2017-18-07. Microsoft Word - Multi-District Fire SOI Update Adopted FINAL. ----. Request for Information (RFI) with the RRFC General Manager, September 2024. ----. Russian River Flood Control and Water Conservation Improvement District Municipal Service Review and Sphere of Influence Update, May 1, 2017. Resolution No. 16-17-08. 2017,+5- 1+Adopted+Update+RRFC+MSR-SOI.pdf. Mendocino County Inland Water and Power Commission (IWPC). “Home.” Mendocino County Inland Water and Power Commission. Accessed Apil 22, 2025. Home - Inland Water & Power Commission of Mendocino County. Mendocino County Russian River Flood Control and Water Conservation Improvement District (RRFC). The Mendocino Russian River Flood Control & Water Conservation Improvement District, 2023-2025 Strategic Plan. Russian River Flood Control and Water Conservation Improvement District, September 12, 2022. Accessed April 22, 2025. Strategic Planning - Russian River Flood Control & Water Conservation Improvement District. ----. “Upper Russian River Voluntary Water Sharing Program.” Russian River Flood Control and Water Conservation Improvement District, 2025. Accessed April 22, 2025. Upper Russian River Voluntary Water Sharing Program - Russian River Flood Control & Water Conservation Improvement District. ----. “1980 Stipulated Judgement between Mendocino County Russian River Flood Control and Water Conservation Improvement District and Redwood Valley County Water District.” United States Superior Court of the State of California, In and For the County of Mendocino. Accessed April 22, 2025. 1980+Stiplulated+Judgement+between+MCRRFC&WCID+and+Redwood+Valley+County+Water+ District.pdf. Nigro & Nigro. "Mendocino County Russian River Flood Control & Water Conservation Improvement District: Financial Statements and Independent Auditor's Report for the Fiscal Year Ended June 30, 2021 (With Comparative Amounts as of June 30, 2020)." August 31, 2022. ----. "Mendocino County Russian River Flood Control & Water Conservation Improvement District: Financial Statements and Independent Auditor's Report for the Fiscal Year Ended June 30, 2022 (With Comparative Amounts as of June 30, 2021)." January 31, 2023. ----. "Mendocino County Russian River Flood Control & Water Conservation Improvement District: Financial Statements and Independent Auditor's Report for the Fiscal Year Ended June 30, 2023 (With Comparative Amounts as of June 30, 2022)." January 15, 2024. ----. "Mendocino County Russian River Flood Control & Water Conservation Improvement District: Financial Statements and Independent Auditor's Report for the Fiscal Year Ended June 30, 2024 (With Comparative Amounts as of June 30, 2023)." January 15, 2025. O'Malley, M. "Understanding Proposition 218." Legislative Analyst's Office. Legislative Analyst's Office, December 1, 1996. Understanding Proposition 218 (ca.gov). Potter Valley Project (PVP). “Overview.” Potter Valley Project. Accessed April 22, 2025. Overview – Potter Valley Project. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update REFERENCES 5-3 Rick Bowers, CPA. ""Mendocino County Russian River Flood Control & Water Conservation Improvement District: Financial Statements, Year Ended June 30, 2020." September 8, 2021. Sonoma Water. “Home.” Sonoma Water. Accessed April 22, 2025. Sonoma Water - Home Page. Sperka, N. Senate Bill 244 Technical Advisory: Land Use, General Plans, and Disadvantaged Communities. California Governor’s Office of Planning and Research, February 15, 2013. Accessed April 22, 2025. SENATE BILL 244: Land Use, General Plans, and Disadvantaged Communities. State Water Resources Control Board (SWRCB). "Russian River." North Coast Regional Water Quality Control Board (RWQCB). October 16, 2017. Accessed September 2024. https://www.waterboards.ca.gov/northcoast/water_issues/programs/watershed_info/russian_r iver/. ----a. “SAFER Drinking Water.” State Water Resources Control Board, January 22, 2025. Accessed April 22, 2025. SAFER Drinking Water | California State Water Resources Control Board. ----b. “Telemetry Pilot Project.” State Water Resources Control Board, February 21, 2025. Accessed April 22, 2025. Telemetry Research Unit | California State Water Resources Control Board. ----c. “Water Measurement and Reporting Regulation.” State Water Resources Control Board, December 11, 2024. Accessed April 22, 2025. Water Measurement and Reporting Regulation | California State Water Resources Control Board. ----d. “Water Rights: Frequently Asked Questions.” State Water Resources Control Board, September 30, 2024. Accessed April 22, 2025. Water Rights FAQs | California State Water Resources Control Board. Ukiah Valley Basin Groundwater Sustainability Agency (UVB GSA). “Home.” Ukiah Valley Basin Groundwater Sustainability Agency. Accessed April 22, 2025. Ukiah Valley Basin Groundwater Sustainability Agency. U.S. Census Bureau a. U.S. Department of Commerce, "Age and Sex," 2023. American Community Survey, ACS 5-Year Estimates Subject Tables, Table S0101, 2023, accessed on April 23, 2025, https://data.census.gov/table/ACSST5Y2023.S0101?g=860XX00US95449,95470,95482&y=2023. ----b. U.S. Department of Commerce, "Income in the Past 12 Months (in 2023 Inflation-Adjusted Dollars)," 2023. American Community Survey, ACS 1-Year Estimates Subject Tables, Table S1901, 2023, accessed on April 23, 2025, https://data.census.gov/table/ACSST1Y2023.S1901?g=040XX00US06. ----c. "Profile - Albion CDP, California." United States Census Bureau. United States Census Bureau, 2023. Accessed 2024. Albion CDP, California - Census Bureau Profile. ----d. "Profile - California." United States Census Bureau, 2023. Accessed 2024. California - Census Bureau Profile. ----e. "Profile - Mendocino County, California." United States Census Bureau. United States Census Bureau, 2023. Accessed 2024. Mendocino County, California - Census Bureau Profile. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update ACKNOWLEDGEMENTS 6-1 6 ACKNOWLEDGEMENTS 6.1 Report Preparation This Municipal Service Review and Sphere of Influence Update was prepared by Hinman & Associates Consulting, Inc., contracted staff for Mendocino LAFCo. Uma Hinman, Executive Officer Spencer Richard, Analyst Jen Crump, Analyst 6.2 Assistance and Support This Municipal Service Review and Sphere of Influence Update could not have been completed without the assistance and support from the following organizations and individuals. Mendocino County Russian River Flood Control and Elizabeth Salomone, General Manager Water Conservation Improvement District Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update APPENDICES 7-1 7 APPENDICES 7.1 Appendix A – Open Government Resources The purpose of this appendix is to provide a brief list of some educational resources for local agencies interested in learning more about the broad scope of public interest laws geared towards government transparency and accountability. This appendix is not intended to be a comprehensive reference list or to substitute legal advice from a qualified attorney. Feel free to contact the Mendocino LAFCo office at (707) 463-4470 to make suggestions of additional resources that could be added to this appendix. The websites listed below provide information regarding the following open government laws: (1) Public Records Act (Government Code §6250 et seq.), (2) Political Reform Act – Conflict-of-Interest regulations (Government Code §81000 et seq.), (3) Ethics Principles and Training (AB 1234 and Government Code §53235), (4) Brown Act – Open Meeting regulations (Government Code §54950 et seq.), and (5) Online Compliance regulations (Section 508 of the US Rehabilitation Act and Government Code §11135). Refer to the State of California Attorney General website for information regarding public access o to governmental information and processes at the following link: https://oag.ca.gov/government. Refer to the State of California Attorney General website for information regarding Ethics Training o Courses required pursuant to AB 1234 at the following link: https://oag.ca.gov/ethics. The Fair Political Practices Commission (FPPC) is primarily responsible for administering and o enforcing the Political Reform Act. The website for the Fair Political Practices Commission is available at the following link: http://www.fppc.ca.gov/. Refer to the California Department of Rehabilitation website for information regarding Section o 508 of the US Rehabilitation Act and other laws that address digital accessibility at the following link: http://www.dor.ca.gov/DisabilityAccessInfo/What-are-the-Laws-that-Cover-Digital- Accessibility.html. Refer to the Institute for Local Government (ILG) website to download the Good Governance o Checklist form at the following link: www.ca-ilg.org/post/good-governance-checklist-good-and- better-practices. Refer to the Institute for Local Government (ILG) website to download the Ethics Law Principles o for Public Servants pamphlet at the following link: www.ca-ilg.org/node/3369. Refer to the Institute for Local Government (ILG) website for information regarding Ethics Training o Courses required pursuant to AB 1234 at the following link: http://www.ca-ilg.org/ethics- education-ab-1234-training. Refer to the California Special Districts Association (CSDA) website for information regarding o online and website compliance webinars at the following link: http://www.csda.net/tag/webinars/. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update APPENDICES 7-2 7.2 Appendix B – Website Compliance Handout Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update California Website Compliance Checklist Use this checklist to keep your district's website compliant with State and Federal requirements. Public Records Act SB 929 SB 272 AB 2853 (optional): Our district has created and Our Enterprise System Catalog is We post public records to our maintains a website posted on our website website Passed in 2018, all independent special All local agencies must publish a catalog This bill allows you to refer PRA requests districts must have a website that listing all software that meets specific to your site, if the content is displayed includes contact information (and all requirements—free tool at getstream- there, potentially saving time, money, other requirements) by Jan. 2020 line.com/sb272 and trees The Brown Act State Controller Reports AB 392: AB 2257: Financial Transaction Report: Compensation Report: Agendas are posted to A link to the most recent A link to the Controller’s A link to the Controller’s our website at least 72 agenda is on our home “By the Numbers” PublicPay website is hours in advance of page, and agendas are website is posted on posted in a conspicuous regular meetings, 24 searchable, machine- location on our website our website hours in advance of readable and platform Report must be submitted by special meetings independent Report must be submitted April 30 of each year—you within seven months after the This 2011 update to the Act, Required by Jan. 2019— close of the fiscal year—you can also add the report to originally created in 1953, text-based PDFs meet this can add the report to your your site annually, but added the online posting requirement, Microsoft Word site annually, but posting a posting a link is easier requirement docs do not link is easier Healthcare District Section 508 ADA Websites Open Data Compliance AB 2019: AB 169: CA gov code 7405: If we’re a healthcare district, we Anything posted on our website State governmental entities maintain a website that includes that we call “open data” meets the shall comply with the accessibility all items above, plus additional requirements for open data requirements of Section 508 requirements of the federal Rehabilitation Act Defined as “retrievable, downloadable, of 1973 Including budget, board members, indexable, and electronically searchable; Municipal Service Review, grant policy platform independent and machine Requirements were updated in 2018—if and recipients, and audits readable” among other things you aren't sure, you can test your site for accessibility at achecker.ca Website compliance made easy csda.net getstreamline.com The Brown Act: new agenda requirements Tips for complying with AB 2257 by January, 2019 Placement: What it says: An online posting of an agenda shall be posted on the primary Internet Web site ​​ homepage of a city, county, city and county, special district, school district, or political subdivision established by the state that is accessible through a prominent, direct link to the current agenda. What that means: Add a link to the current agenda directly to your homepage. It cannot be in a ​​ ​ ​​ menu item or otherwise require more than a single click to open the agenda. Exception: What it says: A link to the agenda management platform may be added to the home page instead of a ​​ link directly to the current agenda, if the agency uses an integrated agenda management platform that meets specified requirements, including, among others, that the current agenda is the first agenda available at the top of the integrated agenda management platform. What that means: If you use an agenda management system, you may add a link to that system ​​ directly to your homepage (again, not in a menu item), if the format of the agenda meets the requirements below, and if the current agenda is the first at the top of the list. Format: What it says: [agenda must be] Retrievable, downloadable, indexable, and electronically searchable by ​​ commonly used Internet search applications. Platform independent and machine readable. Available to the public free of charge and without any restriction that would impede the reuse or redistribution of the agenda. What that means: You cannot add Word Docs or scanned (image-based) PDFs of your agenda to your ​​ website–Word Docs are not platform independent (the visitor must have Word to read the file), and scanned PDFs are not searchable. Instead, keep your agenda separate from the packet and follow ​ ​​ these steps: 1. From Word or other document system: Export agenda to PDF 2. Add that agenda to your website (or to your agenda management system), and include a link to that agenda on your homepage 3. Then, you can print the agenda, add it to your pile of documents for the packet, and scan that to PDF - just keep the packet separate from the agenda (only the agenda must meet AB 2257) 4. Keep the link on the homepage until the next agenda is available, then update the link Questions? Contact sloane@getstreamline.com or dillong@csda.net ​ ​ ​ California 2024 Web Accessibility Checklist UpdatedMay1,2024.Downloadthelatestatgetstreamline.com/ada Congratulationsonyourcommitmenttoensuringthatyourdistrict’swebsiteisaccessibletoyourentirecommunity, includingthosewithdisabilities.ThischecklistwillhelpyouensurecompliancewithTheUnruhActandAB434. Before you begin Performaninitialscantocheckforknownissuesusingcheckmydistrict.orgoranothertool Haveyourwebsiteprovider'scontactinformationtoreportanyissues One-time actions -examplesavailableathttps://getstreamline.com/accessibility-policy 1. Designateanaccessibilityofficer-Wehavedesignatedonestaffmemberastheaccessibilityofficerwho willbethego-tocontactforaccessibilityissues. 2. Approveanaccessibilitypolicy-Ourboardhasapprovedanaccessibilitypolicythatincludesthelevelof accessibilityyouareadheringto,likeWCAG2.1AA. 3. Createandpostanaccessibilitypage-Wehavecreatedadedicatedaccessibilitywebsitepagetohouse allaccessibility-relatedcontent,includingthepolicyandplan.Ifwehavecomponentsthatarenotyet compliant,wehaveaddedinformationaboutourremediationplanandtimelinetogetcompliant. 4. Createaprocessforcommunityconcerns-Wehaveaprocessinplacewhereacommunitymembercan submitaconcernviaform,phonenumber,and/oremailaddress. 5. Enableclosedcaptionsonyourvideos-Ourvideosallhaveclosedcaptions,andwehaveaprocessfor includingclosedcaptionsinfuturevideos.(YouTubeincludesthisforfreewhenenabled.Learnhow.Itis importantthatahumanverifiesthegeneralaccuracyofthecaptions.) Ongoing actions -recommendedoncepermonth 6. Scanyourwebsitepageseachmonth-Wehavescannedeverypageofourwebsite,everypagehasa scoreandlistofissuestoremediate. Freetoolsincludecheckmydistrict.org,GoogleChromeLighthouse (F12willactivate),andwave.webaim.org.Demandyourwebdeveloperaddressanyissuesthatarise. 7. Checkyourattachments.Wehavecheckedallofourattachmentsandwehaveremovedoraddeda writtenadisclaimerforanythird-partyattachmentsthatweareunabletoremediate. 8. Performremediations-Wehavetakenactiontofixissuesdetectedbyascan/reportedbyourcommunity Other actions to consider ● Third-partyADAaudit-largerdistrictsshouldconsiderhiringanoutsidefirmtoconductanaudit.Manual testingbyuserswithdisabilitiesisthegoldstandardtoensureaccess. ● Indemnification-Choosingaplatformorinsurancethatindemnifiesorinsuresyouagainsttheriskoffines *Remember,Streamlineisonlyasoftwarecompany,andStreamline'stemplatesandguidesarenotasubstituteforgettingyourown competentlegaladvice. APPENDICES 7-3 7.3 Appendix C – Housing Legislation Trends and Results Mendocino County and ADUs In response to State legislation aimed at encouraging affordable housing, the County of Mendocino (County) has taken a number of steps to facilitate accessory dwelling unit (ADU) construction and operation in an attempt to address the local housing crisis. The County adopted an ADU ordinance, which outlines specific development standards. Per County Municipal Code Section 20.458.040 – Public Health and Safety Requirements, both an adequate water supply and sewage capacity must be available to serve the proposed new residence as well as existing residences on the property. Most notably, if the property is located in a service district, the property owner must provide written approval from the service district specifically authorizing the connection of the ADU. The Larger Picture As for how ADUs fit into the larger picture of the Mendocino County population trends, the housing data provided in the County’s General Plan Annual Progress Report (APR) provides a reliable snapshot. Required by the California Governor’s Office of Planning and Research (OPR) and the California Department of Housing and Community Development (HCD), every jurisdiction is required to provide an annual report detailing the progress made towards implementing their housing element and meeting their regional housing needs assessment (RHNA) allocations. The data provided in the most recent APR for unincorporated Mendocino County (adopted June 6, 2023 by the Mendocino County Board of Supervisors (BOS)) suggests that despite strict development regulations in some places, ADUs are certainly a factor in local housing development trends. Out of the 143 housing development applications received in the 2022 reporting year, 38 were for ADUs; in 2021 a total of 102 housing development applications were received, of which 35 were for ADUs. The number of ADUs compared to single-family home applications suggests that there could continue to be some limited development of ADUs throughout the unincorporated areas of the County. This type of development could very slightly increase demand for water services provided by the Mendocino County Russian River Flood Control and Water Conservation Improvement District (RRFC/District). However, any new development requires written approval from the service provider to authorize services, providing the District the opportunity to limit development if capacity is not available. Regional Housing Needs Assessment (RHNA) It is worth noting that in response to statutory requirements, policy direction from the HCD, and mandated deadlines for delivery of housing need allocation numbers to local jurisdictions within Mendocino County, the Mendocino Council of Governments (MCOG) adopted a Regional Housing Needs Plan in 2018. Although MCOG does not typically involve themselves in housing issues, they have been designated by HCD as the appropriate regional agency to coordinate the housing need allocation process. The political jurisdictions that comprise the region consist of the Mendocino County unincorporated area and the cities of Ukiah, Fort Bragg, Willits, and Point Arena. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update APPENDICES 7-4 The Regional Housing Needs Plan went through numerous iterations prior to being adopted, which took into account different allocation factors for the methodology. Throughout the process, each member jurisdiction provided statements of constraints to HCD that detailed the land-constraints that challenge residential development in unincorporated Mendocino County. Water resources and availability was cited by multiple MCOG member jurisdictions as a constraint and contributed to the adjustments made by the State on the region’s required housing allocations. The RHNA allocations for unincorporated Mendocino County are projected for a planning period between August 15, 2019, and August 17, 2027. Since adopting the Regional Housing Needs Plan in 2018, the County has made progress across all income levels; the number of housing units developed and how many remain with respect towards its RHNA allocation are detailed below, broken down by income level and deed restricted versus non-deed restricted. Table 7-1: Mendocino County RHNA Allocations Projection Total Total RHNA Period - Units to Income Level 2019 2020 2021 2022 Remaining Allocation 01/01/2019- Date (All RHNA 08/14/2019 Years) Deed -- -- 39 -- 21 Restricted Very Low 291 125 166 Non-Deed -- -- -- 65 -- Restricted Deed -- -- -- -- -- Restricted Low 179 21 158 Non-Deed -- - -- 21 Restricted Deed -- -- -- -- -- Restricted Moderate 177 156 21 Non-Deed 4 -- -- -- -- Restricted Above 702 46 40 67 51 58 262 440 Moderate Total RHNA 1,349 Total Units 50 60 149 186 119 564 785 Extremely Low-Income 145 15 26 21 62 83 Units* *Progress toward extremely low-income housing need, as determined pursuant to Government Code 65583(a)(1). Source: HCD 2024. With respect to how RHNA requirements may affect RRFC, the State continues to push for more housing across the state including in communities located along the Russian River. While much of the District is agricultural and open space uses, there are residential parcels that could be affected by evolving legislation allowing for increased development potential that supports the State’s housing goals. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update APPENDICES 7-5 Additional Recent State Housing Legislation In addition to the Legislature’s concerted effort to progress ADU development statewide, there have been numerous other housing bills passed in recent years aimed at addressing the housing affordability crisis. • Senate Bill (SB) 9 - Authorizes a property owner to split a single-family lot into two lots and place up to two units on each new lot. Therefore, the bill permits up to four units on properties currently limited to single-family houses. SB 9 also mandates that local agencies approve development projects that meet specified size and design standards. • SB 10 - Establishes a process for local governments to increase the density of parcels in transit- rich areas or on urban infill sites to up to 10 residential units per parcel. Such an ordinance must be adopted between January 1, 2021, and January 1, 2029 and is exempt from the California Environmental Quality Act (CEQA). • SB 35 - Applies in cities that are not meeting their RHNA goal for construction of above-moderate income housing and/or housing for households below 80 percent area median income (AMI). SB 35 amends California Government Code Section 65913.4 to require local entities to streamline the approval of certain housing projects by providing a ministerial approval process. Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update APPENDICES 7-6 7.4 Appendix D – District Financial Audits Mendocino County Russian River Flood Control and Water Conservation Improvement District 2025 Municipal Service Review and Sphere of Influence Update MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS’ REPORT For the Fiscal Year Ended June 30, 2024 (With Comparative Amounts as of June 30, 2023) MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT For the Fiscal Year Ended June 30, 2024 Table of Contents FINANCIAL SECTION Page Independent Auditors’ Report ................................................................................................................................................................ 1 MANAGEMENT’S DISCUSSION AND ANALYSIS Management’s Discussion and Analysis .............................................................................................................................................. 4 BASIC FINANCIAL STATEMENTS Basic Financial Statements: Balance Sheets ......................................................................................................................................................................................... 9 Statements of Revenues, Expenses and Changes in Net Position ................................................................................... 10 Statements of Cash Flows ................................................................................................................................................................. 11 Notes to Financial Statements ........................................................................................................................................................ 13 REQUIRED SUPPLEMENTARY INFORMATION Schedule of the District’s Proportionate Share of the Plan’s Net Pension Liability ....................................................... 29 Schedule of the District’s Contributions to Pension Plan .......................................................................................................... 30 OTHER INDEPENDENT AUDITORS’ REPORTS Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ..................................................................................................................................................... 31 Financial Section INDEPENDENT AUDITORS’ REPORT Board of Directors Mendocino County Russian River Flood Control & Water Conservation Improvement District Ukiah, California Opinion We have audited the accompanying financial statements of the Mendocino County Russian River Flood Control & Water Conservation Improvement District (District), which comprise the balance sheet as of June 30, 2024, and related statements of revenue, expenses, and changes in net position, and cash flows for the year then ended, and related notes to the financial statements, as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the District as of June 30, 2024, and the respective changes in its financial position and cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 1 Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:  Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the District’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Schedule of the District’s Proportionate Share of the Plan’s Net Pension Liability, and Schedule of the District’s Contributions to the Pension Plan be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 2 Prior‐Year Comparative Information The financial statements include partial prior-year comparative information. Such information does not include sufficient detail to constitute a presentation in accordance with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the District’s financial statements for the year ended June 30, 2023, from which such partial information was derived. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a separate report dated January 15, 2025, on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District’s internal control over financial reporting and compliance. Walnut Creek, California January 15, 2025 3 Management’s Discussion and Analysis MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Management’s Discussion and Analysis (Unaudited) For the Year Ended June 30, 2024 Management’s Discussion and Analysis (MD&A) offers readers of Mendocino County Russian River Flood Control & Water Conservation Improvement District’s financial statements a narrative overview of the District’s financial activities for the year ended June 30, 2024. This MD&A presents financial highlights, an overview of the accompanying financial statements, an analysis of net position and results of operations, a current-to prior year analysis, a discussion on restrictions, commitments and limitations, and a discussion of significant activity involving capital assets and long-term debt. Please read in conjunction with the financial statements, which follow this section. FINANCIAL HIGHLIGHTS  The District’s net position decreased 1.90% or $19,945 from $1,051,216 to $1,031,271.  The District’s total operating and non-operating revenues increased 39.32% or $182,677 from $464,586 to $647,263, primarily from the increase in water sales.  The District’s total expenses increased 29.65% or $152,601 from $514,607 to $667,208 primarily due to a $140,000 increase in JPA payments. REQUIRED FINANCIAL STATEMENTS This annual report consists of a series of financial statements. The Balance Sheet, Statement of Revenues, Expenses and Changes in Net Position and Statement of Cash Flows provide information about the activities and performance of the District. The Balance Sheet includes all of the District’s investments in resources (assets) and the obligations to creditors (liabilities). It also provides the basis for computing a rate of return, evaluating the capital structure of the District and assessing the liquidity and financial stability of the District. All of the current year’s revenue and expenses are accounted for in the Statement of Revenues, Expenses and Changes in Net Position. This statement measures the success of the District’s operations over the past year and can be used to determine if the District has successfully recovered all of its costs through its rates and other charges. This statement can also be used to evaluate net position and credit worthiness. The other required financial statement is the Statement of Cash Flows, which provides information about the District’s cash receipts and cash payments for the fiscal period. The Statement of Cash Flows reports cash receipts, cash payments and net changes in cash resulting from operations, investing, non-capital financing, and capital and related financing activities and provides answers to such questions as where did funds come from, what was funds used for, and what was the change in funds balance during the reporting period. FINANCIAL ANALYSIS OF THE DISTRICT One of the most important questions asked about the District’s finances is, “Is the District better off or worse off as a result of this year’s activities?” The Balance Sheet and the Statement of Revenues, Expenses and Changes in Net Position report information about the District in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting. All of the current year’s revenues and expenses are taken into account regardless of when the cash is received or paid. 4 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Management’s Discussion and Analysis (Unaudited) For the Year Ended June 30, 2024 FINANCIAL ANALYSIS OF THE DISTRICT (continued) These two statements report the District’s net position and changes to it. The District’s net position is the difference between assets/deferred outflows of resources and liabilities/deferred inflows of resources. Increases or decreases in the District’s net position are one indicator of whether its financial health is improving or deteriorating. However, non-financial factors such as changes in economic conditions, population growth, zoning and the regulatory landscape needs to be taken into consideration when measuring the District’s financial health. Condensed Balance Sheets June 30, 2024 June 30, 2023 Change Assets: Current assets $ 1,105,319 $ 1,084,988 $ 20,331 Capital assets, net 25,955 47,426 (21,471) Total assets 1,131,274 1,132,414 (1,140) Deferred outflows of resources 44,599 46,819 ( 2,220) Total assets and deferred outflows of resources $ 1,175,873 $ 1,179,233 $ (3,360) Liabilities: Current liabilities $ 57,269 $ 5 3,880 $ 3,389 Non-current liabilities 85,446 71,872 13,574 Total liabilities 142,715 1 25,752 16,963 Deferred inflows of resources 1,887 2,265 (378) Net position: Investment in capital assets 25,955 47,426 (21,471) Unrestricted 1,005,316 1,003,790 1,526 Total net position 1,031,271 1,051,216 (19,945) Total liabilities, deferred outflows of resources and net position $ 1,175,873 $ 1,179,233 $ (3,360) As noted earlier, net position may serve over time as a useful indicator of an agency’s financial position. In the case of the District, assets and deferred outflows of resources of the District exceeded liabilities and deferred inflows of resources by $1,031,271 as of June 30, 2024. A portion of the District’s net position (5% as of June 30, 2024) reflects the District’s investment in capital assets (net of accumulated depreciation). The District uses these capital assets to provide services to customers within the District’s service area; consequently, these assets are not available for future spending. At the end of fiscal year 2024, the District showed a positive balance in its unrestricted net position of $1,005,316. 5 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Management’s Discussion and Analysis (Unaudited) For the Year Ended June 30, 2024 FINANCIAL ANALYSIS OF THE DISTRICT (continued) Condensed Statements of Revenues, Expenses, and Changes in Net Position June 30, 2024 June 30, 2023 Change Operating revenues $ 535,429 $ 374,233 $ 161,196 Operating expenses (401,078) (395,968) (5,110) Operating income before depreciation 134,351 (21,735) 1 56,086 Depreciation expense (28,430) (20,939) (7,491) Operating income 105,921 (42,674) 1 48,595 Non-operating revenues(expenses), net (125,866) (7,347) (118,519) Change in net position (19,945) (50,021) 30,076 Net position: Beginning of year 1,051,216 1,101,237 (50,021) End of year $ 1,031,271 $ 1,051,216 $ (19,945) The statement of revenues, expenses and changes in net position shows how the District’s net position changed during the fiscal years. A closer examination of the sources of changes in net position reveals that: The District’s net position decreased 1.90% or $19,945 from $1,051,216 to $1,031,271. The following tables present detailed breakdowns of the information presented in the condensed summary. Total Revenues Increase June 30, 2024 June 30, 2023 (Decrease) Operating revenues: Water sales $ 535,429 $ 374,233 $ 161,196 Total operating revenues 535,429 3 74,233 1 61,196 Non‐operating: Property taxes 69,706 62,376 7,330 Shared costs reimbursment 15,368 17,658 ( 2,290) Investment earnings 26,760 10,319 16,441 Total non‐operating 111,834 90,353 21,481 Total revenues $ 647,263 $ 464,586 $ 182,677 6 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Management’s Discussion and Analysis (Unaudited) For the Year Ended June 30, 2024 FINANCIAL ANALYSIS OF THE DISTRICT (continued) Total Revenues (continued) The District’s total operating and non-operating revenues increased 39.32% or $182,677 from $464,586 to $647,263 primarily from the increase in water sales. Total Expenses Increase June 30, 2024 June 30, 2023 (Decrease) Operating expenses: Salaries and wages $ 151,454 $ 150,300 $ 1,154 Employee benefits 35,574 7 1,324 (35,750) Facilities and operations 19,612 8,761 1 0,851 General and administrative 187,986 155,031 3 2,955 Insurance 6,452 1 0,552 (4,100) Total operating expenses 401,078 395,968 5,110 Depreciation expense 28,430 2 0,939 7,491 Non‐operating expenses: USGS JFA payments 28,950 2 8,950 - UVB GSA JPA payments 98,750 6 8,750 3 0,000 IWPC JPA payments 110,000 - 110,000 Total non‐operating 237,700 9 7,700 140,000 Total expenses $ 667,208 $ 514,607 $ 152,601 The District’s total expenses increased 29.65% or $152,601 from $514,607 to $667,208, primarily due to a $140,000 increase in JPA payments. Capital Assets The following provides a summary comparison of the District’s capital assets at year end. Balance Balance Capital assets: June 30, 2024 June 30, 2023 Depreciable assets $ 144,325 $ 147,784 Accumulated depreciation (118,370) (100,358) Total capital assets, net $ 25,955 $ 47,426 At the end of fiscal year 2024, the District’s investment in capital assets amounted to $25,955 (net of accumulated depreciation). The District’s investment in capital assets includes land, transmission and distribution systems, tanks, pumps, buildings, equipment, vehicles and construction-in-process. See Note 3 for further capital asset information. 7 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Management’s Discussion and Analysis (Unaudited) For the Year Ended June 30, 2024 NOTES TO THE BASIC FINANCIAL STATEMENTS The notes provide additional information that is essential to a full understanding of the data provided in the basic financial statements. FACTORS AFFECTING CURRENT FINANCIAL POSITION Management is unaware of any item that would affect the current financial position. CONTACTING THE DISTRICT This financial report is designed to provide the District’s customers, stakeholders and other interested parties with an overview of the District’s financial operations and financial condition. Contact the District’s General Manager at (707) 462-5278 with any questions. 8 Basic Financial Statements MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Balance Sheets June 30, 2024 (With Comparative Information as of June 30, 2023) ASSETS AND DEFERRED OUTFLOWS OF RESOURCES 2024 2023 Current assets: Cash and cash equivalents (Note 2) $ 1,090,072 $ 1 ,007,699 Accrued interest receivable 5,852 3,923 Accounts receivable 267 4 5,863 Property taxes receivable 8,003 2 7,503 Prepaid items 1,125 - Total current assets 1,105,319 1,084,988 Non‐current assets: Capital assets – being depreciated, net (Note 3) 25,955 4 7,426 Total non‐current assets 25,955 4 7,426 Total assets 1,131,274 1,132,414 Deferred outflows of resources: Deferred amounts related to net pension liability (Note 5) 44,599 4 6,819 Total deferred outflows of resources 44,599 4 6,819 Total assets and deferred outflows of resources $ 1,175,873 $ 1 ,179,233 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION Current liabilities: Accounts payable and accrued expenses $ 41,715 $ 41,390 Long-term liabilities – due within one year: Compensated absences (Note 4) 15,554 1 2,490 Total current liabilities 57,269 5 3,880 Non‐current liabilities: Long-term liabilities – due in more than one year: Compensated absences (Note 4) 15,554 1 2,491 Net pension liability (Note 5) 69,892 5 9,381 Total non‐current liabilities 85,446 7 1,872 Total liabilities 142,715 125,752 Deferred inflows of resources: Deferred amounts related to net pension liability (Note 5) 1,887 2,265 Total deferred inflows of resources 1,887 2,265 Net position: Investment in capital assets 2 5,955 4 7,426 Unrestricted 1,005,316 1,003,790 Total net position 1,031,271 1,051,216 Total liabilities, deferred inflows of resources and net position $ 1,175,873 $ 1 ,179,233 The notes to financial statements are an integral part of this statement. 9 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Statements of Revenues, Expenses and Changes in Net Position For the Fiscal Year Ended June 30, 2024 (With Comparative Information for the Fiscal Year Ended June 30, 2023) 2024 2023 Operating revenues: Water sales $ 535,429 $ 374,233 Total operating revenues 5 35,429 3 74,233 Operating expenses: Salaries and wages 1 51,454 1 50,300 Employee benefits 35,574 71,324 Facilities and operations 19,612 8 ,761 General and administrative 1 87,986 1 55,031 Insurance 6 ,452 10,552 Total operating expenses 4 01,078 3 95,968 Operating income(loss) before depreciation 1 34,351 (21,735) Depreciation expense (28,430) (20,939) Operating income(loss) 1 05,921 (42,674) Non‐operating revenues(expenses): Property taxes 69,706 62,376 Shared costs reimbursment 15,368 17,658 Investment earnings(loss) 26,760 10,319 USGS JFA payments (28,950) (28,950) UVB GSA JPA payments (98,750) (68,750) IWPC JPA payments (110,000) 0 Total non‐operating revenue(expense), net (125,866) (7,347) Change in net position (19,945) (50,021) Net position: Beginning of year 1,051,216 1,101,237 End of year $ 1,031,271 $ 1,051,216 The notes to financial statements are an integral part of this statement. 10 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Statements of Cash Flows For the Fiscal Year Ended June 30, 2024 (With Comparative Information for the Fiscal Year Ended June 30, 2023) 2024 2023 Cash flows from operating activities: Cash receipts from customers and others $ 581,025 $ 337,864 Cash paid to employees for salaries and wages (168,548) ( 196,701) Cash paid to vendors and suppliers for materials and services (214,850) ( 161,198) Net cash provided by (used in) operating activities 197,627 (20,035) Cash flows from non‐capital financing activities: Shared costs reimbursement 15,368 1 7,658 JFA and JPA payments (237,700) (97,700) Proceeds from property taxes 89,206 3 8,988 Net cash used in non‐capital financing activities (133,126) (41,054) Cash flows from capital and related financing activities: Acquisition and construction of capital assets (6,959) (7,244) Net cash used in capital and related financing activities (6,959) (7,244) Cash flows from investing activities: Investment earnings 24,831 7,315 Net cash provided by investing activities 24,831 7,315 Net increase(decrease) in cash and cash equivalents 82,373 (61,018) Cash and cash equivalents: Beginning of year 1,007,699 1,068,717 End of year $ 1,090,072 $ 1 ,007,699 $ - $ - The notes to financial statements are an integral part of this statement. 11 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Statements of Cash Flows (continued) For the Fiscal Year Ended June 30, 2024 (With Comparative Information for the Fiscal Year Ended June 30, 2023) 2024 2023 Reconciliation of operating income(loss) to net cash provided by (used in) operating activities: Operating income(loss) $ 105,921 $ (42,674) Adjustments to reconcile operating income(loss) to net cash provided by (used in) operating activities: Depreciation 28,430 2 0,939 Change in assets – (increase)decrease: Accounts receivable, net 45,596 (36,369) Prepaid expenses (1,125) - Change in deferred outflows of resources – (increase)decrease Deferred amounts related to net pension liability 2,220 (22,951) Change in liabilities – increase(decrease): Accounts payable and accrued expenses 325 1 3,146 Net pension liability 10,511 5 4,488 Compensated Absences 6,127 (4,557) Change in deferred inflows of resources – increase(decrease) Deferred amounts related to net pension liability (378) (2,057) Total adjustments 91,706 2 2,639 Net cash provided by (used in) operating activities $ 197,627 $ (20,035) The notes to financial statements are an integral part of this statement. 12 Notes to the Financial Statements MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 1 – DESCRIPTION OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES A. Description of Organization On January 30, 1956 in their resolution No. 1983, the board of supervisors of Mendocino County declaring the results of a special election upon the proposition of a formation of an Improvement District within the Mendocino County Flood Control and Water Conservation District, to be known as the “Mendocino County Flood Control and Water Conservation Improvement District” (the District), and the incurring of the bonded indebtedness in the principal amount of $650,000 and for the election of the first trustees of said District, and declaring and ordering the formation of said District. It is governed by a Statutory Authority G.L. 1949 Chapter 995. The District was established by the County of Mendocino via statutory formation process set forth by Act 4830. Proceeds of the 1957 bond issue in the amount of $650,000 were used to help finance the construction of Coyote Dam. In exchange for the fund proceeds, the District recovered rights to a portion of the water storage capacity held in Coyote Dam. The district mission is to steward water resources for the benefit of the people and environment of Mendocino County. The criteria used in determining the scope of the financial reporting entity is based on the provisions of Governmental Accounting Standards Board Statement No. 61, The Financial Reporting Entity (GASB Statement No. 61). The District is the primary governmental unit based on the foundation of a separately elected governing board that is elected by the citizens in a general popular election. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The District is financially accountable if it appoints a voting majority of the organization’s governing body and: 1) It is able to impose its will on that organization, or 2) There is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. B. Basis of Presentation, Basis of Accounting The District reports its activities as an enterprise fund, where the intent of the District is that the costs of providing goods and services (including depreciation expense) on a continuing basis be financed or recovered primarily through user charges. The financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements, and donations. Revenue from grants, entitlements, and donations are recognized in the year in which all eligibility requirements have been satisfied. Operating revenues are those revenues that are generated from the primary operating activities of the District. The District reports the change in net position from operations as operating income in the statement of revenues, expenses, and changes in net position. Operating activities are defined by the District as all activities other than financing and investing activities (interest expense and investment income), grants and subsidies, and other infrequently occurring transactions of a non-operating nature. Operating expenses are those expenses that are essential to the primary operating activities of the District. All other expenses are reported as non-operating expenses. 13 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 1 – DESCRIPTION OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) C. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position 1. Cash and Cash Equivalents For purposes of the balance sheet and statement of cash flows, the District considers all highly liquid investments with a maturity of 90 days or less, when purchased, to be cash equivalents. Cash deposits are reported at the carrying amount, which reasonably estimates fair value. 2. Investments Investments are reported at fair value except for short-term investments, which are reported at cost, which approximates fair value. Cash deposits are reported at carrying amount, which reasonably estimates fair value. Investments in governmental investment pools are reported at fair value based on the fair value per share of the pool’s underlying portfolio. In accordance with fair value measurements, the District categorizes its assets and liabilities measured at fair value into a three-level hierarchy based on the priority of the inputs to the valuation technique used to determine fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used in the determination of the fair value measurement fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement. Investments recorded on the balance sheet are categorized based on the inputs to the valuation techniques as follows: Level 1 – Inputs that reflect unadjusted quoted prices in active markets for identical investments, such as stocks, corporate and government bonds. The District has the ability to access the holding and quoted prices as of the measurement date. Level 2 – Inputs, other than quoted prices, that are observable for the asset or liability either directly or indirectly, including inputs from markets that are not considered to be active. Level 3 – Inputs that are unobservable. Unobservable inputs reflect the District’s own assumptions about the factors market participants would use in pricing an investment, and is based on the best information available in the circumstances. 2. Prepaids Certain payments of vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 3. Capital Assets Capital assets are stated at cost or at their estimated fair value at date of contribution. It is the District’s policy to capitalize assets costing over $2,000. The provision for depreciation is computed using the straight-line method over the estimated service lives of the capital assets. Depreciation lives of meters and equipment are seven years. 14 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 1 – DESCRIPTION OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) C. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Net Position (continued) 4. Deferred Outflows/Inflows of Resources The statement of net position reports a separate section for deferred outflows of resources. This element represents a consumption of net assets that applies to a future period and so will not be recognized as an outflow of resources until then. Also, the statement of net position reports a separate section for deferred inflows of resources. This element represents an acquisition of net assets that applies to a future period and will not be recognized as an inflow of resources until that time. 5. Compensated Absences The District's employee benefits provide for accumulation of vacation and sick leave. Liabilities for vacation leave are recorded when benefits are earned. Full cash payment for all unused vacation leave is available to employees upon retirement or termination. 6. Pensions For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the District’s California Public Employees’ Retirement System (CalPERS) plans and addition to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value. CalPERS audited financial statements are publicly available reports that can be obtained at the CalPERS’s website. Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used: Valuation Date June 30, 2022 Measurement Date June 30, 2023 Measurement Period July 1, 2020 to June 30, 2023 7. Net Position Net position is classified into two components: investment in capital assets and unrestricted. These classifications are defined as follows:  Investment in capital assets - This component of net position consists of capital assets, including restricted capital assets, net of accumulated depreciation.  Unrestricted - This component of net position consists of net position that does not meet the definition of "investment in capital assets". 15 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 1 – DESCRIPTION OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (continued) D. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reported period. Actual results could differ from those estimates. NOTE 2 – CASH AND INVESTMENTS Cash and cash equivalents were classified on the balance sheet as follows: Description June 30, 2024 June 30, 2023 Cash and cash equivalents $ 1 ,090,072 $ 1 ,007,699 Total cash and cash equivalents $ 1,090,072 $ 1 ,007,699 Cash and cash equivalents as of June 30th consisted of the following: Description June 30, 2024 June 30, 2023 Demand deposits held with financial institutions $ 573,248 $ 515,676 Local Agency Investment Fund (LAIF) 516,824 492,023 Total cash and cash equivalents $ 1,090,072 $ 1 ,007,699 16 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 2 – CASH AND INVESTMENTS (continued) Demand Deposits with Financial Institutions At June 30, 2024, the carrying amount of the District’s demand deposits was $573,248 and the financial institution’s balance was $578,423. The net difference represents outstanding checks, deposits-in-transit and/or other reconciling items between the financial institution’s balance and the District’s balance for each year. Custodial Credit Risk – Deposits Custodial credit risk is the risk that in the event of a bank failure, the District’s deposits may not be returned to it. The District has a policy for custodial credit risk for deposits. Cash balances held in banks are insured up to $250,000 by the Federal Depository Insurance Corporation (FDIC) and are collateralized by the respective financial institutions. In addition, the California Government Code requires that a financial institution secures deposits made by public agencies by pledging securities in an undivided collateral pool held by a depository regulated under State law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits and letters of credit issued by the Federal Home Loan Bank of San Francisco having a value of 105 percent of the secured deposits. Local Agency Investment Fund (LAIF) The California State Treasurer, through the Pooled Money Investment Account (PMIA), invests its funds to manage the State’s cash flow and strengthen the financial security of local public agencies. PMIA’s policy sets as primary investment objectives safety, liquidity and yield. Through the PMIA, the Investment Division manages the Local Agency Investment Fund (LAIF). The LAIF allows cities, counties and special districts to place money in a major portfolio and, at no additional costs, use the expertise of Investment Division staff. Participating agencies can withdraw their funds from the LAIF at any time as LAIF is highly liquid and has a dollar-in dollar-out amortized cost methodology. The District is a voluntary participant in LAIF. The fair value of the District’s investment in this pool is reported at an amount based upon the District’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of the portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF. LAIF is not categorized under the fair value hierarchy established by GAAP as it is held at an amortized cost basis and it is Not Rated under the current credit risk ratings format. For financial reporting purposes, the District considers funds in LAIF a cash equivalent due to its highly liquid nature and dollar-in dollar-out amortized cost methodology. As of June 30, 2024, the District held $492,023 in LAIF. 17 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 3 – CAPITAL ASSETS AND ACCUMULATED DEPRECIATION Changes in capital asset amounts for the fiscal year ended June 30, 2024, were as follows: Balance Deletions/ Balance Description July 1, 2023 Additions Transfers June 30, 2024 Depreciable assets: Equipment and vehicles $ 147,784 $ 6,959 $ ( 10,418) $ 144,325 Total depreciable assets 147,784 6,959 (10,418) 144,325 Accumulated depreciation: Equipment and vehicles (100,358) (28,430) 10,418 ( 118,370) Total accumulated depreciation (100,358) (28,430) 10,418 ( 118,370) Total depreciable assets, net 47,426 (21,471) - 2 5,955 Total capital assets, net $ 47,426 $ ( 21,471) $ - $ 25,955 NOTE 4 – COMPENSATED ABSENCES Changes in compensated absences amounts for the fiscal year ended June 30, 2024, was as follows: Balance Balance Due Within Due in More July 1, 2023 Additions Deletions June 30, 2024 One Year Than One Year $ 24,981 $ 17,263 $ ( 11,136) $ 31,108 $ 15,554 $ 15,554 18 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 5 – PENSION PLAN Summary The following balances on the balance sheet will be addressed in this footnote as follows: Description 2024 Pension related deferred outflows $ 44,599 Net pension liability 69,892 Pension related deferred inflows 1,887 Qualified employees are covered under a multiple-employer defined benefit pension plan maintained by agencies of the State of California known as the California Public Employees’ Retirement System (CalPERS), or "The Plan". A. General Information about the Pension Plan The Plan The District has engaged with CalPERS to administer the following pension plans for its employees (members): Miscellaneous Plans Classic PEPRA Tier 1 Tier 2 Prior to On or after Hire date January 1, 2013 January 1, 2013 Benefit formula 2.0% @ 55 2.0% @ 62 Benefit vesting schedule 5-years of service 5-years of service Benefits payments monthly for life monthly for life Retirement age 50 - 67 & up 52 - 67 & up Monthly benefits, as a % of eligible compensation 1.8% to 2% 1.0% to 2.0% Required member contribution rates 7.000% 6.750% Required employer contribution rates – FY 2023 10.320% 7.470% 19 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 5 – PENSION PLAN (continued) A. General Information about the Pension Plan (continued) Plan Description The District contributes to the California Public Employees’ Retirement System (CalPERS), a cost-sharing multiple-employer defined benefit pension plan. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. A full description of the pension plan, benefit provisions, assumptions (for funding, but not accounting purposes), and membership information are listed in the June 30, 2023 Annual Actuarial Valuation Reports. This report and CalPERS’ audited financial statements are publicly available reports that can be obtained at CalPERS’ website under Forms and Publications. At June 30, 2023 (Measurement Date), the following members were covered by the benefit terms: Miscellaneous Plans Classic PEPRA Plan Members Tier 1 Tier 2 Total Active members - 2 2 Transferred and terminated members 1 1 2 Retired members and beneficiaries - - - Total plan members 1 3 4 All qualified permanent and probationary employees are eligible to participate in the District’s cost-sharing multiple-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plans are established by state statute and District resolution. CalPERS issues publicly available reports that include a full description of the pension plans regarding benefit provisions, assumptions, and membership information that can be found on the CalPERS website. Benefits Provided CalPERS provides service retirement and disability benefits, annual cost of living adjustments, and death benefits to Plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for nonindustrial disability benefits after five years of service. The death benefit is one of the following the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost-of-living adjustments for each Plan are applied as specified by the Public Employees’ Retirement Law. 20 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 5 – PENSION PLAN (continued) A. General Information about the Pension Plan (continued) Contributions Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Contributions for the year ended June 30, 2024, were as follows: Miscellaneous Plans Classic PEPRA Contribution Type Tier 1 Tier 2 Total Contributions – employer $ 5,506 $ 1 0,337 $ 15,843 Contributions – members - 10,403 10,403 $ 5,506 $ 2 0,740 $ 26,246 B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions Proportionate Share of Net Pension Liability and Pension Expense The District’s net pension liability for each Plan is measured as the proportionate share of the net pension liability. The net pension liability of each of the Plans is measured as of June 30, 2023, and the total pension liability for each Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2022, rolled forward to June 30, 2023, using standard update procedures. The District’s proportionate share of the net pension liability was based on a projection of the District’s long-term share of contributions to the pension plans relative to the projected contributions of all participating employers, actuarially determined. The following table shows the District’s proportionate share of the risk pool collective net pension liability over the measurement period for the Miscellaneous Plan for the fiscal year ended June 30, 2023: Plan Total Plan Fiduciary Change in Plan Net Plan Type and Balance Descriptions Pension Liability Net Position Pension Liability CalPERS – Miscellaneous Plan: Balance as of June 30, 2022 (Measurement Date) $ 418,273 $ 358,892 $ 59,381 Balance as of June 30, 2023 (Measurement Date) $ 469,751 $ 399,859 $ 69,892 Change in Plan Net Pension Liability $ 51,478 $ 4 0,967 $ 1 0,511 21 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 5 – PENSION PLAN (continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (continued) The District’s proportionate share percentage of the net pension liability for the June 30, 2023, measurement date was as follows: Percentage Share of Risk Pool Fiscal Year Fiscal Year Change Ending Ending Increase/ June 30, 2024 June 30, 2023 (Decrease) Measurement Date June 30, 2023 June 30, 2022 Percentage of Risk Pool Net Pension Liability 0.001398% 0.001269% 0.000129% Percentage of Plan (PERF C) Net Pension Liability 0.000560% 0.000514% 0.000046% For the year ended June 30, 2024, the District recognized pension expense/(credit) of $28,196. At June 30, 2024, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows Account Description of Resources of Resources Pension contributions made after the measurement date $ 15,843 $ - Difference between actual and proportionate share of employer contributions 271 ( 1,333) Adjustment due to differences in proportions 9,379 - Differences between expected and actual experience 3,570 (554) Differences between projected and actual earnings on pension plan investments 11,316 - Changes in assumptions 4,220 - Total Deferred Outflows/(Inflows) of Resources $ 44,599 $ (1,887) The deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the subsequent fiscal year. The deferred outflows/(inflows) of resources related to the difference between projected and actual earnings on pension plan investments will be amortized over a closed five-year period. The deferred outflows/(inflows) of resources related to the net change in proportionate share of net pension liability, changes of assumptions, and differences between expected and actual experience in the measurement of the total pension liability will be amortized over the Expected Average Remaining Service Life (EARSL) of all members that are provided benefits (active, inactive, and retirees) as of the beginning of the measurement period. The EARSL for the measurement period is 3.8 years. 22 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 5 – PENSION PLAN (continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (continued) An amount of $15,843 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as a reduction to pension expense as follows: Deferred Amortization Period Outflows/(Inflows) Fiscal Year Ended June 30 of Resources 2025 $ 10,593 2026 6,712 2027 9,239 2028 325 Total $ 26,869 Actuarial Methods and Assumptions Used to Determine Total Pension Liability For the measurement period ending June 30, 2023 (the measurement date), the total pension liability was determined by rolling forward the June 30, 2020, total pension liability. The June 30, 2023, total pension liability was based on the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal in accordance with the requirement of GASB Statement No. 68 Actuarial Assumptions: Discount Rate 6.90% Inflation 2.30% Salary Increases Varies by Entry Age and Service Mortality Rate Table Derived using CalPERS’ Membership Data for all Funds. Long‐term Expected Rate of Return The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long- term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses. 23 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 5 – PENSION PLAN (continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (continued) The table below reflects long-term expected real rate of return by asset class. New Strategic Investment Type1 Allocation Real Return1,2 Global Equity - Cap-weighted 30.0% 4.54% Global Equity - Non-Cap-weighted 12.0% 3.84% Private Equity 13.0% 7.28% Treasury 5.0% 0.27% Mortgage-backed Securities 5.0% 0.50% Investment Grade Corporates 10.0% 1.56% High Yield 5.0% 2.27% Emerging Market Debt 5.0% 2.48% Private Debt 5.0% 3.57% Real Assets 15.0% 3.21% Leverage -5.0% -0.59% 100.0% 1 An expected inflation of 2.30% used for this period. 2 Figures are based on the 2021 Asset Liability Management study. Discount Rate The discount rate used to measure the total pension liability was 6.90%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current member contribution rates and that contributions from employers will be made at statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Subsequent Events There were no subsequent events that would materially affect the results in this disclosure. 24 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 5 – PENSION PLAN (continued) B. Pension Liabilities, Pension Expenses, and Deferred Outflows/Inflows of Resources Related to Pensions (continued) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability/(asset) of the Plan as of the measurement date, calculated using the discount rate of 6.90%, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.90%) or 1 percentage-point higher (7.90%) than the current rate: Plan's Net Pension Liability/(Asset) Discount Rate ‐ Discount Rate + 1% Current Discount 1% Plan Type 5.90% Rate 6.90% 7.90% CalPERS – Miscellaneous Plan $ 133,424 $ 69,892 $ 1 7,600 Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial report and can be obtained from CalPERS’ website under Forms and Publications. C. Payable to the Pension Plans At June 30, 2024, the District reported no payables for outstanding contributions to the CalPERS pension plan required for the year ended June 30, 2024. NOTE 6 – DEFERRED COMPENSATION SAVINGS PLAN For the benefit of its employees, the District participates in an IRS Code Section 457 Deferred Compensation Program. The purpose of this program is to provide deferred compensation for public employees that elect to participate in the program. Eligible employees may defer receipt of a portion of their salary until termination, retirement, death, or unforeseeable emergency. Until the funds are paid or otherwise made available to the employee, the employee is not obligated to report the deferred salary for income tax purposes. Federal law requires deferred compensation assets to be held in trust for the exclusive benefit of the participants. Accordingly, the District is in compliance with this legislation. Therefore, these assets are not the legal property of the District, and are not subject to claims of the District’s general creditors. The District has implemented GASB Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. Since the District has little involvement and does not perform the investing function for this program, the assets and related liabilities are not shown on the accompanying financial statements. 25 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 7 – JOINT POWERS AUTHORITY (JPA) AND JOINT FUNDING AGREEMENT (JFA) The Inland Water & Power Commission (IWPC) was formed as a Joint Powers Authority (JPA) to educate and advocate for the water resources in our region. The JPA is not a component unit of the District. $110,000 was paid to the IWPC during the fiscal year for operating costs, contributions to the COY feasibility study project, contributions for Trans Basin Diversion project and other contributions. The District is expensing these costs as they are incurred. The District is also a member of the Ukiah Valley Groundwater Sustainability Agency (UVB GSA), a Joint Powers Agency created to serve as the official GSA for the Ukiah Valley Basin as required by the Sustainable Groundwater Management (SGMA) Act of 2014. The Ukiah Valley Basin was identified as a medium priority groundwater basin (DWR Bulletin 118), which necessitates establishing a Groundwater Sustainability Plan (GSP) for the basin. The purpose of this Agency is to take actions deemed necessary to ensure sustainable management of the Basin under the regulatory requirements of SGMA. The Agency is responsible for the development and implementation of the GSP for the Ukiah Basin. The UVB GSP was adopted by the GSA on December 15, 2021 and approved by DWR on July 27, 2023. The District is expensing these costs as they are incurred. $98,750 was paid to the UVB GSA during the fiscal year for contributions. The District has a Joint Funding Agreement (JFA) with the United State Department of the Interior- Geological Survey (USGS), for cooperative water resources investigation in Mendocino County. The JFA dated November 1, 2020 and was accepted by the District on January 5, 2020. Total JFA costs for the fiscal year were $28,950 under this agreement, a portion of which is reimbursed by the North Gualala Water Company. 26 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 8 – RISK MANAGEMENT POOL The District is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The District is a member of the Special District Risk Management Authority (SDRMA), an intergovernmental risk sharing joint powers authority created to provide self-insurance programs for California special districts. the purpose of the SDRMA is to arrange and administer programs of self-insured losses and to purchase excess coverage. Further information about the SDRMA is as follows: A. Entity SDRMA B. Purpose To pool member contributions and realize the C. Participants As of June 30, 2024 – 503 member agencies D. Governing board Seven representatives employed by members E. District payments for FY 2024: Property/Liability policy $6,452 F. Condensed financial information June 30, 2024 Statement of net position: June 30, 2024 Total assets $ 162,354,367 Deferred outflows 1,620,957 Total liabilities 78,404,034 Deferred inflows 384,924 Net position $ 85,186,366 Statement of revenues, expenses and changes in net position: Total revenues $ 117,816,189 Total expenses (104,151,026) Change in net position 13,665,163 Beginning – net position 71,521,203 Ending – net position $ 85,186,366 G. Member agencies share of year‐end financial position Not Calculated At June 30, 2024, the District participated in the liability and property programs of the SDRMA as follows:  General and auto liability, public officials and employees’ errors and omissions: Total risk financing self-insurance limits of $2,500,000, combined single limit at $2,500,000 per occurrence. The District purchased additional excess coverage layers: $10,000,000 for general, auto and public officials’ liability, which increases the limits on the insurance coverage noted above. In addition to the above, the District also has the following insurance coverage:  Employee dishonesty coverage up to $2,500,000 per loss includes public employee dishonesty, forgery, or alteration and theft, disappearance and destruction coverages.  Property loss is paid at the replacement cost for property on file, if replaced within three years after the loss, otherwise paid on an actual cash value basis, to a combined total of $1.0 billion per occurrence, subject to a $500 deductible per occurrence.  Boiler and machinery coverage for the replacement cost up to $100 million per occurrence, subject to a $1,000 deductible per occurrence.  Public officials’ personal liability up to $2,500,000 each occurrence, with an annual aggregate per each elected/appointed official to which this coverage applies, subject to the terms. 27 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Notes to Financial Statements June 30, 2024 NOTE 8 – RISK MANAGEMENT POOL (continued) Settled claims have not exceeded any of the coverage amounts in any of the last three fiscal years and there were no reductions in the District’s insurance coverage during the years ending June 30, 2024, 2023, and 2022. Liabilities are recorded when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated net of the respective insurance coverage. Liabilities include an amount for claims that have been incurred but not reported (IBNR). There were no IBNR claims payable as of June 30, 2024, 2023, and 2022. NOTE 9 – COMMITMENTS AND CONTINGENCIES Excluded Leases – Short‐Term Leases and De Minimis Leases The District does not recognize a lease receivable and a deferred inflow of resources for short-term leases. Short-term leases are certain leases that have a maximum possible term under the lease contract of 12-months (or less), including any options to extend, regardless of their probability of being exercised. Also, de minimis lessor or lessee leases are certain leases (i.e., room rental, copiers, printers, postage machines) that regardless of their lease contract period are de minimis with regards to their aggregate total dollar amount to the financial statements as a whole. Litigation In the ordinary course of operations, the District is subject to claims and litigation from outside parties. After consultation with legal counsel, the District believes the ultimate outcome of such matters, if any, will not materially affect its financial condition. NOTE 10 – SUBSEQUENT EVENTS The District has evaluated subsequent events through January 15, 2024 the date which the financial statements were available to be issued. 28 Required Supplementary Information MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Schedule of the District's Proportionate Share of the Plan's Net Pension Liability For the Year Ended June 30, 2024 Last Ten Fiscal Years California Public Employees' Retirement System (CalPERS) Miscellaneous Plan Proportionate Plan's Share of the Fiduciary Net District's District's Net Pension Position as a Proportion of Proportionate Liability as a Percentage of the Net Share of the District's Percentage of the Plan's Measurement Pension Net Pension Covered Covered Total Pension Date Liability Liability Payroll Payroll Liability June 30, 2014 0.000382% $ 26,412 $ 118,928 22.21% 79.88% June 30, 2015 0.000382% 24,335 1 20,093 20.26% 84.79% June 30, 2016 0.000382% 33,095 1 05,000 31.52% 82.72% June 30, 2017 0.000403% 40,010 1 05,000 38.10% 80.17% June 30, 2018 0.000407% 39,263 1 17,500 33.42% 83.28% June 30, 2019 0.000436% 44,697 1 05,000 42.57% 84.17% June 30, 2020 0.000460% 50,063 1 05,000 47.68% 83.87% June 30, 2021 0.000090% 4,893 1 09,167 4.48% 98.62% June 30, 2022 0.000514% 59,381 1 17,081 50.72% 85.80% June 30, 2023 0.000560% 69,893 1 19,859 58.31% 85.12% Notes to Schedule: Benefit Changes: There were no changes in benefits. Changes in Assumptions: From fiscal year June 30, 2015 and June 30, 2016: GASB 68, paragraph 68 states that the long-term expected rate of return should be determined net of pension plan investment expense but without reduction for pension plan administrative expense. The discount rate of 7.50% used for the June 30, 2014, measurement date was net of administrative expenses. The discount rate of 7.65% used for the June 30, 2015, measurement date is without reduction of pension plan administrative expense. From fiscal year June 30, 2016 to June 30, 2017: There were no changes in assumptions. From fiscal year June 30, 2017 to June 30, 2018: The discount rate was reduced from 7.65% to 7.15%. From fiscal year June 30, 2018 to June 30, 2019: There were no significant changes in assumptions. From fiscal year June 30, 2019 to June 30, 2020: There were no significant changes in assumptions. From fiscal year June 30, 2020 to June 30, 2021: There were no significant changes in assumptions. From fiscal year June 30, 2021 to June 30, 2022: There were no significant changes in assumptions. From fiscal year June 30, 2022 to June 30, 2023: The discount rate was reduced from 7.15% to 6.90%. From fiscal year June 30, 2023 to June 30, 2024: There were no significant changes in assumptions. 29 MENDOCINO COUNTY RUSSIAN RIVER FLOOD CONTROL & WATER CONSERVATION IMPROVEMENT DISTRICT Schedule of the District's Contributions to the Pension Plan For the Year Ended June 30, 2024 Last Ten Fiscal Years California Public Employees' Retirement System (CalPERS) Miscellaneous Plan Contributions Contributions in Relation to as a Actuarially the Actuarially Contribution Percentage of Determined Determined Deficiency Covered Covered Fiscal Year Contribution Contribution (Excess) Payroll Payroll June 30, 2015 $ 13,740 $ ( 13,740) $ - $ 120,093 11.44% June 30, 2016 7,201 ( 7,201) - 1 05,000 6.86% June 30, 2017 8,045 ( 8,045) - 1 05,000 7.66% June 30, 2018 9,191 ( 9,191) - 1 17,500 7.82% June 30, 2019 9,608 ( 9,608) - 1 05,000 9.15% June 30, 2020 13,111 (13,111) - 1 05,000 12.49% June 30, 2021 15,218 (15,218) - 1 09,167 13.94% June 30, 2022 16,606 (16,606) - 1 17,081 14.18% June 30, 2023 16,067 (16,067) - 1 19,859 13.40% June 30, 2024 15,843 (15,843) - 1 34,700 11.76% Notes to Schedule: Actuarial Cost Asset Investment Fiscal Year Valuation Date Method Valuation Inflation Rate of Return June 30, 2015 June 30, 2013 Entry Age Fair Value 2.75% 7.65% June 30, 2016 June 30, 2014 Entry Age Fair Value 2.75% 7.65% June 30, 2017 June 30, 2015 Entry Age Fair Value 2.75% 7.65% June 30, 2018 June 30, 2016 Entry Age Fair Value 2.75% 7.15% June 30, 2019 June 30, 2017 Entry Age Fair Value 2.50% 7.15% June 30, 2020 June 30, 2018 Entry Age Fair Value 2.50% 7.15% June 30, 2021 June 30, 2019 Entry Age Fair Value 2.50% 7.15% June 30, 2022 June 30, 2020 Entry Age Fair Value 2.50% 7.15% June 30, 2023 June 30, 2021 Entry Age Fair Value 2.30% 6.90% June 30, 2024 June 30, 2022 Entry Age Fair Value 2.30% 6.90% Amortization Method Level percentage of payroll, closed Salary Increases Depending on age, service, and type of employment Investment Rate of Return Net of pension plan investment expense, including inflation Retirement Age 50 years (2.0%@60), 52 years (2.0%@62) Mortality Mortality assumptions are based on mortality rates resulting from the most recent CalPERS Experience Study adopted by the CalPERS Board. 30 Other Independent Auditors’ Reports INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Directors Mendocino County Russian River Flood Control & Water Conservation Improvement District Ukiah, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the Mendocino County Russian River Flood Control & Water Conservation Improvement District (District), which comprise the balance sheet as of June 30, 2024, the related statement of revenues, expenses and changes in net position and statement of cash flows for the fiscal year then ended, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our report thereon dated January 15, 2025. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District's internal control over financial reporting (internal control) as a basis for designing audit procedures to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the District's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the District's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. 31 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Walnut Creek, California January 15, 2025 32