Los Banos MSR - 2025

Final Report City of Los Banos Municipal Service Review Update Prepared for: Merced County Local Agency Formation Commission Prepared by: Economic & Planning Systems, Inc. September 2025 EPS #231016 Table of Contents 1. Introduction and Background ..................................................................... 1 Legal Context and LAFCO Policies .................................................................... 2 MSR Methodology ......................................................................................... 3 Summary of Municipal Service Review Determinations ....................................... 4 Best Practices ............................................................................................... 6 Organization of the MSR ................................................................................ 7 2. Summary of Service Issues and Trends ....................................................... 8 City General Plan and Sphere of Influence Expansion ......................................... 9 Growth and Development ............................................................................. 12 Fiscal Conditions ......................................................................................... 16 3. Police Department .................................................................................. 19 Description ................................................................................................ 19 Determinations ........................................................................................... 21 4. Fire Department ..................................................................................... 25 Description ................................................................................................ 25 Determinations ........................................................................................... 30 5. Storm Drainage ...................................................................................... 34 Description ................................................................................................ 35 Determinations ........................................................................................... 38 6. Wastewater............................................................................................ 41 Description ................................................................................................ 42 Determinations ........................................................................................... 45 7. Water .................................................................................................... 48 Description ................................................................................................ 50 Determinations ........................................................................................... 53 8. Parks and Recreation .............................................................................. 57 Description ................................................................................................ 57 Determinations ........................................................................................... 64 List of Appendices Appendix A: LAFCO MSR and Sphere of Influence History and Local Policy Appendix B: Merced LAFCO Comment Letter on City of Los Banos 2024 General Plan Final EIR (Dated 10/13/2022) Appendix C: Acronyms and Glossary of Terms List of Tables Table 1 Merced County LAFCO Commissioners ...................................................... 3 Table 2 Los Banos Police Department Annual Operations Funding .......................... 20 Table 3 Police Development Impact Fees (2024$) ............................................... 21 Table 4 Los Banos Fire Department Funding, FY 2024-25 (2024$) ......................... 29 Table 5 Fire Development Impact Fees (2024$) .................................................. 29 Table 6 Storm Drain Development Impact Fees (2024$) ...................................... 37 Table 7 Wastewater Development Impact Fees (2024$) ....................................... 44 Table 8 Water Development Impact Fees (2024$) ............................................... 52 List of Figures Figure 1 Los Banos Population from 1990 to 2024 .................................................. 8 Figure 2 General Plan Land Use Designations and Proposed SOI ............................. 10 Figure 3 City of Los Banos Current SOI and Proposed Expansion ........................... 11 Figure 4 Los Banos Year-Over-Year Population Growth Rate 1991-2024 .................. 13 Figure 5 City of Los Banos Historical and Projected Employment Growth .................. 15 Figure 6 Los Banos Sales Tax Revenues FY2018-19 through FY 2024-25 ................. 17 Figure 7 Police and Fire Stations in Los Banos ...................................................... 27 Figure 8 Fire Department ISO Ratings in California, 2024 ...................................... 28 Figure 9 City of Los Banos Existing Storm Drainage Systems ................................. 34 Figure 10 City of Los Banos Wastewater Collection System ...................................... 41 Figure 12 Water Distribution System in Los Banos ................................................. 49 Figure 13 Los Banos Parks and Recreation Facilities ............................................... 58 Figure 14 Los Banos Citywide Park and Recreation Acreage ..................................... 59 Figure 15 Los Banos Parks Maintenance and Rec. Dept. Funding .............................. 61 Figure 16 Parks Maintenance and Recreation Funding History .................................. 61 Figure 17 Los Banos Parks Development Impact Fee (2024) .................................... 62 1. Introduction and Background State law requires that Local Agency Formation Commissions (LAFCOs) review and update a sphere of influence every five years or “as necessary” for all agencies within their jurisdiction. A sphere of influence is defined as a “plan for the probable physical boundaries and service area of a local agency, as determined by the commission” (Government Code section 56076). In addition, to support reviews of city, district, and jurisdictional spheres of influence (SOIs) the commission must conduct a regional analysis of municipal services called a Municipal Service Review, or MSR.1 The Commission may assess options for improving effective infrastructure and service delivery within and contiguous to the agencies’ SOIs including, but not limited to, the consolidation or dissolution of agencies. MSRs provide a tool for LAFCOs to evaluate the adequacy of public services and providers, and to improve the organization and provision of services. MSRs support LAFCOs’ mission to plan and shape “the logical and orderly development and coordination of local governmental agencies.”2 Merced County LAFCO retained Economic & Planning Systems, Inc. (EPS) to update the City of Los Banos MSR. The current MSR and SOI were adopted by LAFCO in 2004. An updated MSR was prepared in 2012 but was not adopted, pending discussions between the City and County on the expansion of the City SOI boundary, which never occurred. In October 2022, the City of Los Banos adopted an updated General Plan referred to as the “2042 General Plan”, which again contemplates an expansion of the SOI. The proposed SOI requires LAFCO approval, which cannot occur without preparation of a current MSR. It also requires the representatives of the City to meet with representatives from the County to meet to discuss the proposed new SOI boundaries and explore methods to reach agreement on development in the sphere to promote logical and orderly development as required in Government Code section 56425(b). This MSR document addresses the Government Code contents for a “service review” contained in Government Code section 46430. While the document references the relationship to the City’s proposed SOI expansion in various sections, it does not contain the contents of the related sphere of influence review required under Government Code section 56425(e). Merced LAFCO addresses the SOI update in a separate evaluation and action with consideration of the City’s Environmental Impact Report (EIR) in compliance with the California Environmental Quality Act (CEQA). However, because of the direct relationship 1 Government Code Section 56425 directs LAFCOs to review and update agencies’ SOIs, as necessary, every 5 years, and Section 56430 requires MSRs to be conducted before or in conjunction with the sphere updates. 2 Government Code Section 56425. Economic & Planning Systems, Inc. 1 Introduction and Background CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 between this MSR and the proposed expansion of the City’s SOI, a copy of the Commission’s comment letter on the Final EIR is attached in Appendix B to this MSR as a means to identify issues that will be considered at the SOI review stage. Legal Context and LAFCO Policies Merced County LAFCO is required to prepare this MSR update prior to updating the City’s SOI, pursuant to the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Government Code §56000, et seq.), which took effect on January 1, 2001 and was substantially amended in 2011 under Senate Bill 244 (SB 244) (Wolk). The Commission must adopt written determinations with respect to seven factors identified in the Government Code section 59430(a). These are summarized in detail starting on Page 3 of this MSR. LAFCO Overview LAFCO regulates - through approval, denial, conditions, and modifications - boundary changes proposed by public agencies or individuals. It also regulates the extension of public services by cities and special districts outside their boundaries. LAFCO is empowered to initiate updates to the SOIs and proposals involving the dissolution or consolidation of special districts, mergers, establishment of subsidiary districts, formation of a new district or districts, the incorporation of new cities, and any reorganization including such actions. Other LAFCO actions, such as annexations and detachments, must originate by petitions or resolutions from affected registered voters, landowners, or local agencies (i.e., counties, cities, or districts). Merced County LAFCO was formed by the State legislature as a countywide agency to discourage urban sprawl, encourage the orderly formation and development of local government agencies, and promote the conservation of agricultural and open space resources. Merced County LAFCO consists of five regular members and three alternates: two members from the Merced County Board of Supervisors with one alternate, two City Council members appointed by the city selection committee with one alternate, and one member (with an alternate) representing the general public appointed by other members of the commission. All Commissioners are appointed to four-year terms. Current Commission members are shown in Table 1. Economic & Planning Systems, Inc. 2 Introduction and Background CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Table 1. Merced County LAFCO Commissioners Jurisdictional Term Term Member Name Title Representation Commencement Expiration Scott Silveira Chairman County Member 2019 2025 Robert Bertao Vice Chairman Public Member 2013 2025 Brian Raymond Commissioner City Member 2024 2028 Katy Reed Commissioner City Member 2024 2026 Daron McDaniel Commissioner County Member 2015 2027 Josh Pedrozo Alternate County Member 2024 2029 Scott Hunter Alternate Public Member 2015 2027 Michael Amabile Alternate City Member 2024 2026 Source: Merced County LAFCO, as of September 2025 MSR Methodology Interviews with each relevant City service provider, those being the Police, Fire, Public Works, Parks and Recreation, and Finance departments, were conducted. EPS evaluated the data and assembled the information into a Public Review Draft MSR with MSR determinations for each City service. In addition to a service review of each City service, this report also evaluates Los Banos’ SOI. Figure 3 later in this chapter shows the current boundaries for the City along with the current and proposed SOI. A prior version of this document, the Public Review Draft, was publicly posted in August 2025 and was considered by the LAFCO Commission in September 2025. This Final MSR reflects comments received in response to the Public Review Draft and September 18, 2025 public hearing. Economic & Planning Systems, Inc. 3 Introduction and Background CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Summary of Municipal Service Review Determinations The MSR analysis provides the basis for making determinations about the adequacy of facilities and services, governance structures and efficiencies, and opportunities for greater coordination and cooperation between providers. The MSR determinations are prerequisites to SOI determinations and may lead to subsequent LAFCO and agency actions. Below is a general summary of the required MSR determinations. Specific determinations of relevance to City departments are provided in each department’s chapter. 1. Growth and population projections This determination evaluates future growth and demand and whether agencies can adequately serve increased populations. 2. The location and characteristics of any disadvantaged communities (DACs) or disadvantaged unincorporated communities (DUCs) within or contiguous to the Sphere of Influence (SOI) Identifying disadvantaged communities allows public agencies, cities, and counties to address municipal service and infrastructure deficiencies that are known to exist in some disadvantaged communities. A disadvantaged community (DAC) is defined as either a community in which the median household income is 80% or less than the statewide median household income, or a community that is disproportionately affected by environmental pollution and other hazards leading to negative health effects, exposure, or environmental degradation.3 A disadvantaged unincorporated community (DUC) is an inhabited community containing 12 or more registered voters that constitutes all or a portion of a “disadvantaged community.” This determination assesses the prospect of including neighboring DUC(s) when an agency’s SOI is updated or expanded. In 2011, SB 244 began requiring cities and counties to address the infrastructure needs of unincorporated disadvantaged communities in city and county general plans, MSRs, and annexation decisions. Approximately 75% of the City limits, and all territory outside the City within the General Plan designated “Urban Growth Boundary” are identified as DACs (Disadvantaged Communities) meeting the definition in Section 39711 of the State Health and Safety Code. According to the State Office of Environmental Health Hazards Assessment mapping tool “CalEnviroScreen” most of the City and the Urban Growth Boundary are at an 85%-90% percentile score. 3 California Code, Health and Safety Code - HSC § 39711. Economic & Planning Systems, Inc. 4 Introduction and Background CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 There are also two disadvantaged unincorporated communities (DUCs) outside of the City of Los Banos’ current Sphere of Influence. Unincorporated Community #12, which consists of 11 parcels on 5 acres, is located one-half mile south of Pioneer Road and is outside of the SOI. Unincorporated Community #13, which consists of 22 parcels on about 58 acres, is located two miles west of the City on the west side of Volta Road which is in the proposed SOI in the City’s 2042 General Plan.4 Neither DUC currently receives services provided by the City. 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 SOI This determination refers to the adequacy of existing and planned public facilities in relation to how public services are, and will be, provided to residents. Infrastructure can be evaluated in terms of capacity, condition, availability, quality, and plans for future improvement and/or expansion. 4. Financial ability of agencies to provide services This determination evaluates whether the agency has the financial ability to provide adequate services now and in the future. 5. Status of, and opportunities for, shared facilities This determination reviews current sharing arrangements with other service providers, if any, and whether opportunities exist to improve the efficiency and effectiveness of services through sharing, collaboration, or functional consolidation. 6. Accountability for community service needs, including governmental structure and operational efficiencies This determination reviews whether a service provider follows "best practices" to a) facilitate cost effective and efficient delivery of services; and b) enable review and input by residents, LAFCO and other agencies and stakeholders, including adequate and transparent reporting documents, and website access. This determination can also consider governance options (e.g., consolidation) to improve efficiency and accountability. 7. Any other matter related to efficient service delivery, as required by commission policy This determination is an opportunity to highlight other relevant concerns. 4 Disadvantaged Unincorporated Communities SB 244 Analysis: County of Merced; March 28, 2024. Economic & Planning Systems, Inc. 5 Introduction and Background CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Best Practices Achieving transparency and public accountability standards dictates that service providers provide easily accessible and clear documentation of their activities, including planning and financial information. The Government Finance Officers Association (GFOA) publishes a list of best practices and lists key documents that public agencies should be publishing regularly (see https://www.gfoa.org/best- practices). Transparency • Websites - Websites are increasingly the first place to go to find information about an agency or a district. Websites should provide information about the governance structure including the names and terms of Council members or commissioners, services provided, staff, and contact information. Websites should provide meeting schedules, agendas, and minutes.5 Copies of current and past budgets, financial statements and supplemental reports, and audits should be available as well. Accounting and Financial Reporting • Annual Budget – Budgets should provide a comprehensive and detailed view of the budget, including comparisons to recent years. Budget documents should include a “Fiscal Health Report” with an explanation of trends and conclusions regarding fiscal health. • Financial Policies – Budgets should summarize policies for the establishment, maintenance and use of various General Fund and Capital Improvement Program (CIP) reserves. • Annual Audited Financial Statements – Financial statements should be prepared in a timely manner and provide a clear and comprehensive picture of agency financials consistent with Generally Accepted Accounting Principles (GAAP). • Capital Improvement Plan – A CIP with identified improvements, costs, and timeframe should be prepared, with some discussion of funding sources and funding priorities. The CIP can be a stand-alone report, or it can be included in the budget documents. • Cost of Service/Rate Studies – Fees and charges for service should be reviewed regularly and adjusted as needed. 5 AB 2257, approved on September 9, 2016, requires district and governmental websites to include Board meeting agendas for all meetings occurring on or after January 1, 2019. Economic & Planning Systems, Inc. 6 Introduction and Background CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Organization of the MSR This Introduction lays out the basic MSR framework, methodology, required MSR findings, and report structure. To promote improved service provider efficiency, service efficacy, and operational transparency, this chapter contains a discussion of “best practices.” Chapter 2 provides a general overview of the City of Los Banos’ service issues and trends, and Chapters 3 through 8 provide more detailed information and determinations for Police, Fire, Storm Drainage, Wastewater, Water, and Parks and Recreation services. Appendix A provides a history of LAFCO and MSRs. Appendix B presents the Merced LAFCO comment letter on the City's Final EIR as a means to identify issues that will be considered at the SOI review stage. Appendix C provides a list of the key acronyms and a glossary of terms used in this report. Economic & Planning Systems, Inc. 7 Introduction and Background 2. Summary of Service Issues and Trends The City of Los Banos is located in the western part of Merced County, near the communities of Dos Palos, Gustine, and Santa Nella. Highway 152 transects the City and serves as a major connection between Interstate 5 to the west and Highway 99 to the east. The City experienced substantial growth beginning in 1990, more than tripling its population between 1990 and 2024 as shown in Figure 1, and revised its General Plan to accommodate growth while providing mechanisms to help fund expansion of services. General Plans are forward-looking documents, often looking 20 or more years into the future and are typically updated every ten years or so. The most recently updated and adopted General Plan was prepared in 2022 with a planning horizon of 2042 and was prepared against the backdrop of a statewide housing crisis and emergence from the COVID-19 pandemic. The 2042 General Plan seeks to accommodate population and job growth while enhancing quality of life for residents and protecting the environment. The City of Los Banos provides a full range of municipal services, including water, wastewater, and storm drainage systems as well as police, fire, parks and recreation, and general government services. This MSR evaluates the provision of these services. Figure 1. Los Banos Population from 1990 to 2024 Economic & Planning Systems, Inc. 8 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 City General Plan and Sphere of Influence Expansion The City’s 2042 General Plan, adopted in October 2022, proposes a reconfigured and expanded SOI. Figure 2 shows a map of the City’s existing City limit boundary, the City’s land use designations as adopted in the 2042 General Plan, and the City’s proposed SOI expansion. Figure 3 shows the expansion proposal compared to the existing SOI. Adoption of the revised MSR is required before LAFCO approval of an expanded SOI. The City’s proposed SOI is five square miles larger than the current SOI for a total of approximately 23 square miles; most of the proposed expansion area is located west of the current City boundary.6 The City applied to expand the SOI which will be acted upon following adoption of this MSR update. The LAFCO Commission will analyze this increase in the SOI in accordance with Section 56425 of the Cortese/Knox/Hertzberg Act. 6 Los Banos General Plan 2042 Draft EIR Page 4.13-7 Economic & Planning Systems, Inc. 9 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 2. City of Los Banos General Plan Land Use Designations and Proposed Sphere of Influence Economic & Planning Systems, Inc. 10 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 3. City of Los Banos Current Sphere of Influence and Proposed Expansion Source: Los Banos General Plan 2042 Draft EIR Economic & Planning Systems, Inc. 11 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Growth and Development Population and Housing As of 2024, the population of the City is 47,419.7 The City of Los Banos’ General Plan 2042 does not include a population projection, but the City’s 2019 Development Impact Fee Justification Study cites a projected City population of about 56,400 by 2038.8 This would equate to an annual growth rate of 1.24 percent over the next 14 years. As mentioned previously, the City has experienced rapid growth over the past 35 years, tripling its population of 14,519 in 1990 to its current 2024 population (at an average annual growth rate of 3.54 percent). However, the year-over-year population growth rate in Los Banos has declined steeply since the early nineties, as displayed in Figure 4. As shown, the annual population growth rate of Los Banos averaged almost six percent in the 1990s, dropping to four percent in the 2000s, two percent in the 2010s, and has averaged only 1.3 percent since 2020. While the City’s population has increased every year since 1990, its growth has slowed dramatically in recent years. 7 California Department of Finance, Table E-5 City/County Population and Housing Estimates, 1/1/2024. 8 DTA, Development Impact Fee Justification Study Prepared for the City of Los Banos, 11/11/2019. Economic & Planning Systems, Inc. 12 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 4. Los Banos Year-Over-Year Population Growth Rate 1991-2024 According to the City’s General Plan, household size decreased between 2010 and 2020, while the number of nonfamily households and renters increased. The General Plan identifies that these changes point to a need for a more diverse housing stock to meet the needs of different types of households. The growth is expected to be accommodated as much as possible in infill locations within the City’s existing neighborhoods and new “complete neighborhoods.” However, the 2042 General Plan “Urban Growth Boundary” identifies lands anticipated for future annexation within the next 20 years.9 According to the 2042 General Plan Draft Environmental Impact Report (DEIR), the General Plan can accommodate an increase of 8,900 housing units - a 74.8 percent increase over the 11,900 dwelling units as of 2021. The corresponding population that the Urban Growth Boundary can accommodate at buildout is 72,500.10 This number far exceeds the growth anticipated in the Development Impact Fee Justification Study, even though the horizon year of 2042 is only four years longer. In terms of land use patterns, the land use designation map in the General Plan shows new residential neighborhoods organized around neighborhood centers. 9 Los Banos Draft General Plan 2042 Environmental Impact Report, Pg. 3-12. 10 Los Banos Draft General Plan 2042 Environmental Impact Report, Table. 3-3. Economic & Planning Systems, Inc. 13 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Each neighborhood center features commercial uses as well as publicly oriented uses and gathering spaces surrounded by residential development. The General Plan provides sites for several neighborhood-oriented centers in both new and existing areas. The large growth area to the west extending past Volta Road includes some single- and multi-family housing, but primarily consists of regional commercial, office park, and other employment-oriented land uses centered around a formerly proposed interchange on the Highway 152 Bypass extending north around the City. However, this significant regional transportation project is no longer contemplated in the Regional Transportation Plan by the Merced County Association of Governments (MCAG). As an alternative, the City is contemplating the creation of a regional truck route to the south of the City along Pioneer Road in order to ease congestion through the center of town on Pacheco Boulevard (Highway 152). At the present time, there are two annexation projects in the planning stages. The first is located north of Pioneer Road and west of Mercey Springs Road, within an unincorporated peninsula area. The second is located north of Pioneer Road and west of Center Avenue, adjacent to the Los Banos Cemetery District. A Specific Plan is being prepared for both projects in conformance with the City’s Annexation Ordinance, per Section 9.3.2337 of the Los Banos Municipal Code. Other potential annexations are also under consideration on the west and north sides of the City. Employment The City of Los Banos had 7,437 jobs as of 2022 according to Census Longitudinal Employer-Household Dynamics (LEHD) data. Between 2005 and 2022, the City gained 2,189 jobs, which represents a compound annual growth rate of 2.0 percent over that 18-year period. A 2016 forecast summary by the University of the Pacific Eberhardt School of Business projected that Los Banos would have 9,725 jobs by 2045, representing a compound annual growth rate of 1.1 percent between 2022 and 2045. Figure 5 displays the historical job count for Los Banos from 2005-2022, as well as the projected employment through 2045. Economic & Planning Systems, Inc. 14 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 5. City of Los Banos Historical and Projected Employment Growth The General Plan anticipates that job growth in the City will occur in both larger campuses and smaller, individual office buildings. Data retrieved from JobsEQ indicate that, in the past five years, Los Banos has experienced the greatest net increases in job numbers in the Health Care and Social Assistance (255 jobs), Accommodation and Food Services (171 jobs), and Educational Services (166 jobs) industries. Assuming these trends continue, this data supports the assumption that future job growth will be located in the types of areas indicated by the General Plan. Economic & Planning Systems, Inc. 15 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 The Land Use Element of the General Plan provides significant acreage for flexible Employment Park uses to attract firms with long-term growth potential, primarily west of town within a proposed Sphere of Influence expansion area. Specifically, three employment centers are planned in the following locations: 1. The undeveloped areas to the southwest of the Planning Area near the intersection of Volta Road and SR-152. 2. Area near Merced Community College (Los Banos Campus). 3. The area west of the city center at the site of the Los Banos Municipal Airport, which is under consideration for possible closure. The City’s airport is not addressed in this MSR but is operated by the City’s Public Works department with a financial appropriation of $400,176 in FY 2023- 24, according to the City’s Annual Comprehensive Financial Report.11 Fiscal Conditions Sustaining the City’s fiscal health and ensuring that the City has the financial resources to develop and maintain high-quality public infrastructure and services is a key priority in the General Plan and an important component of the MSR evaluation. Unlike many cities in the state of California, the City of Los Banos did not experience a significant decline in General Fund revenues stemming from the COVID-19 pandemic, despite the fact that the largest source of General Fund revenue is sales and use tax. Total General Fund revenues increased by 30 percent from Fiscal Year (FY) 2018-19 to FY 2019-20, and by an additional four percent in the following fiscal year. However, while the General Fund boasted a surplus of between $2.7 million and $6.9 million between FY 2018-19 and FY 2021-22, there was a deficit of about $2.5 million in both FY 2022-23 and 2023- 24, but FY 2025 projects a return to surplus territory by about $400,000. While the general Bradley-Burns Sales and Use Tax revenues decreased very slightly from FY 2018-19 to FY 2019-20, this deficit was more than covered by the new voter-approved Measure H (a voter-approved half-cent sales tax measure intended for Fire, Police, and Recreation funding that went into effect April 2019), bringing total General Fund sales tax revenue (from the general rate, Measure H, and Proposition 172, which funds public safety services) for FY 2021-22 and beyond to almost twice the level of the pre-pandemic FY 2018-19. Figure 6 shows these revenues over time, including Measure P sales tax revenues, which, unlike the revenues discussed above, are not allocated to the General Fund but are split evenly between the Police and Fire Augmentation Funds. 11 City of Los Banos Annual Comprehensive Financial Report for the Fiscal Year ending June 30, 2024. Available at: https://losbanos.org/wp-content/uploads/2025/07/City-of-Los-Banos-Annual- Comprehensive-Financial-Report-2024.pdf. Economic & Planning Systems, Inc. 16 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 6. Los Banos Sales Tax Revenues FY2018-19 through FY 2024-25 Los Banos maintains a 30 percent General Fund Reserve balance and is fiscally healthy from a cash flow perspective, in part because the City has policies in place to limit the use of debt even though it has the capacity to issue a substantial amount of municipal debt. Municipal bonds are commonly used by cities to help fund Capital Improvement Plan (CIP) items, such as major infrastructure improvements, and Public Safety and Recreation facilities. The City Manager’s letter in the most recent budget states that “cautious and measured spending will continue to be the focus,” indicating that this is an intentional policy choice. Property taxes and Sales and Use taxes have somewhat stagnated in recent years and are not projected to grow substantially in the near future, but, according to the City Manager’s letter Economic & Planning Systems, Inc. 17 Summary of Service Issues and Trends CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 in the FY 2024-25 Adopted Budget, the City is exploring other revenue sources such as user fees and long-term investment strategies. The City has utilized residential subdivision landscape and lighting districts since 1988 to provide funding for services. Currently the City maintains sidewalks, landscaping, parks, street signs, street lights, trees, fences, storm drains and professional services needed in 18 districts, which contain 70 percent of the City’s homes. These services are funded through an annual assessment that is added to district homeowners’ annual property tax bill. The City charges the actual costs for personnel. There is only one district projected to end with a deficit, due to the limitations on fee increases.12 Community Facilities Districts (CFDs) are annual special taxes and represent another mechanism utilized by Los Banos which is applied to homeowners’ property taxes to fund city services. Los Banos CFDs fund Police and Fire personnel required to serve new CFD-covered developments. The City promotes financial transparency and accountability through annual public budget hearings, financial reporting to the City Council following external audits, and regular reporting to the public, State controller, and financial institutions. The City has conducted external audits regularly and the audits have typically not yielded any major findings. Financial oversight is supported by departmental, administrative, and budgetary controls, with a structured process in which departments initiate budget requests that are reviewed by the Finance Department and approved by the City Manager, who serves as the City’s purchasing agent per ordinance. The Finance Department also monitors compliance with financial regulations, including US Office of Management and Budget (OMB) requirements. 12 Los Banos 2024-2025 Adopted Budget. Economic & Planning Systems, Inc. 18 Summary of Service Issues and Trends 3. Police Department The Los Banos Police Department (LBPD) operates out of a single, centralized Police Headquarters office located on G Street near Mercy Springs Road. The building was recently constructed and opened in the fall of 2023. The new facility is expected to be able to accommodate future growth in the City through 2050. The LBPD budget represents approximately 50 percent of the City’s General Fund expenditures for Fiscal Year 2024-2025. In addition, the LBPD receives funding for services related to new development from impact fees and from special taxes collected by Los Banos CFD No. 2002-01, which assesses special taxes for fire and police public safety services. Description The Police Chief reports to the City Manager, and the budget is subject to annual approval by the elected City Council. Responsibilities of the LBPD include responding to crime, code enforcement, traffic enforcement, jail operations, and providing police patrols within the city limits. The LBPD also maintains several programs, including the Police Activities League, Volunteers Interacting to Advance Law Enforcement, Youth Police Explorers Program, and community involvement groups and events. The new headquarters centralizes all LBPD functions in an efficient and modern space. Funding for the new facility came primarily from a half-cent sales tax (Measure P), with additional funding provided through the General Fund, Measure H, and development impact fee revenue. As of 2023, LBPD has also upgraded its shooting range and began upgrades to its animal shelter.13 The locations of LBPD facilities are shown in Figure 7 (two additional LBPD facilities, the Animal Shelter (1000 Airport Road) and Shooting Range, are not indicated in Figure 7), as well as the Merced County Sheriff’s Office substation that is located in Los Banos. 13 Los Banos Police Department Year in Review 2023. Economic & Planning Systems, Inc. 19 Police Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 The department employs 51 authorized sworn personnel, 31.5 non-sworn staff, and 6 Code Enforcement employees, including clerks, maintenance staff and office support to provide public safety services within the City limits.14 In 2023, the department received over 24,000 calls for service, marking the lowest annual call amount since 2019.15 Part 1 crimes (a specific group of serious crimes, such as murder, robbery, etc.) also hit a 5-year low in 2023 at 870, down from a high of 1,455 recorded in 2021.16 For Fiscal Year 2024-25, the police department has a General Fund budget of about $12 million and like most cities, police protection is one of the largest General Fund expenditures, accounting for nearly 50 percent of the budget.17 Additional funding for annual operations is received from grants, Community Facility District annual special taxes, and City-approved tax measures. Table 2 presents the amount that the Police Department received in total city funding in FY 2024-25 by source. The General Fund accounts for 65 percent of the department’s total budget. Table 2. Los Banos Police Department Annual Operations Funding, FY 2024-25 (2024$) Source FY 2024-25 Percent General Fund Police $12,042,230 62% Code Enforcement $622,862 3% Measure H Police $1,794,945 9% Code Enforcement $434,912 2% Special Revenue Funds Prevention Underage Drinking $2,000 0% Police Augmentation $2,712,137 14% SLESF Cops Program $221,850 1% Jag Edward Byrne Grant $12,959 0% PD Capital Improvement Fund $566,290 3% Traffic Safety Fund $59,262 0% Police CFD $918,440 5% TOTAL $19,387,887 100% Source: City of Los Banos Adopted Budget FY 2024-25; Economic & Planning Systems The City charges development impact fees to fund new police facilities to serve new development. Impact fees were last updated in 2019 and adjust annually to keep pace with inflation. The Police development impact fees for 2024 are shown in Table 3. 14 Communication with City staff. 15 Los Banos Police Department Year in Review 2023. 16 Los Banos FY 2024-25 Adopted Budget. 17 Los Banos 2024-2025 Adopted Budget. Economic & Planning Systems, Inc. 20 Police Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Table 3. Police Development Impact Fees (2024$) Type Fee Unit Single Family $2,845.18 per unit Multi-Family $2,275.86 per unit Age-Restricted $1,539.82 per unit Retail $1,620.80 per 1,000 sq. ft. Office $1,215.90 per 1,000 sq. ft. Institutional $607.94 per 1,000 sq. ft. Industrial $404.91 per 1,000 sq. ft. Source: City of Los Banos 2024 Adjusted Development Impact Fees; Economic & Planning Systems Determinations 1. Growth and population projections for the affected area As of FY 2024, the City had 48 sworn personnel and 47,419 residents, equivalent to just over 1 officer per 1,000 residents. With a projected population of 56,400 for buildout conditions, the City will need to add about nine additional sworn officers and six additional non-sworn support personnel to maintain the current ratio of sworn police officers to population and provide support services, although there is no police officer service standard stated in the latest General Plan. New demand for police facilities and services will be driven primarily by new development. The City’s development impact fee is structured to provide funding for capital improvements, including the new Headquarters office completed in 2023, animal shelter, range facility, fleet vehicles, and firearms stock. The City has also created a Services CFD required for all new development, which provides annual funding for police operations. New development in the City would generate CFD revenue which could provide much of the needed funding to support additional Police personnel to serve the projected population increases for the City. 2. The location and characteristics of any Disadvantaged Communities (DUCs or DACs) within or contiguous to the SOI There are two DUCs located outside of the Los Banos city limits and its current SOI: Unincorporated Community #12 (one mile south of the City) and Unincorporated Community #13 (two miles west of the City, which is in the City’s proposed SOI). Both DUCs receive police services from the Merced County Sheriff’s Office, not the LBPD. Approximately 75 percent of the City limits, and all territory outside the City within the General Plan designated “Urban Growth Boundary” are identified as Economic & Planning Systems, Inc. 21 Police Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 DACs. Both Los Banos police buildings and the Merced County Sheriff station are located within the portion of Los Banos that is identified as a DAC, suggesting that these portions of the City receive the same level of police service as the 25 percent of the City that is not categorized as a DAC. 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 SOI A Police Facility Study Needs Assessment was completed in 2019, recommending construction of a 35,000 square foot police facility, upgrade of the animal shelter, and disposition of vacant space previously occupied by the LBPD. As of 2024, the new police headquarters has been constructed and occupied, and the animal shelter has begun Phase 1 of upgrades. Possible courses of action related to the vacant spaces contemplated in the Needs Assessment include selling the vacant spaces, redeveloping the area into a downtown park, and remodeling former police offices to serve other City purposes. The Police Department has a capital improvement plan included within the Citywide Five-Year Capital Improvement Plan. Capital equipment is acquired as needed to accommodate additional officers or replace equipment that has exceeded its useful life. Capital equipment is funded through multiple sources, including the General Fund, Measure H sales tax, and development impact fees. No additional capital facilities funding sources appear to be necessary at this time. The recently constructed police headquarters facility is well-sized and designed to serve future growth through 2050. The facility includes space for the full range of police functions, and houses all department personnel and operations with the exception of animal control. The FY 2024-25 Capital Improvement Plan identifies two minor facility upgrade projects: (1) an Animal Shelter facility upgrade, costing around $800,000 and funded by ARPA federal funding; (2) Phase 2 of the range upgrade to add restrooms, costing around $101,000 and funded by the police development impact fee. Discussions with department staff indicate there are no facility or infrastructure deficiencies at present or anticipated in the near future. 4. Financial ability of agencies to provide services The majority of the Police Department’s operational revenue comes from the City’s General Fund, which supplied 65 percent of total Police Department expenditures in the FY 2024-25 budget. Other major sources include Measure H and Measure P sales tax revenue (which makes up the vast majority of the Police Economic & Planning Systems, Inc. 22 Police Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Augmentation Fund), development impact fees, and community facilities district (CFD) revenue. In November 2004, the City voters approved by 77.9 percent a one-half cent sales tax, Measure P, to pay for 911, fire protection, and police services. Voters further approved Measure H, another half-cent sales tax, in 2018 to fund Police and Fire services and general public safety. Measure P has no sunset date but Measure H is set to automatically expire in 2033 unless extended by voter approval. The General Fund expenditures of the City of Los Banos per sworn police officer are $251,000, roughly in line with expenditures for other jurisdictions in central California.18 Discussions with departmental staff indicate the primary potential cost-saving opportunity would involve Information Technology (IT) services. The City currently participates in contracted IT services, for which the Police Department pays the majority share. Hiring in-house departmental IT personnel would result in savings for the department, but may result in increased costs for other City departments. The City has also established CFD 2002-01 to assist in the funding of public safety operations required for new development. The FY 2024-25 CFD tax amount is $411.03 per unit, with revenues split between Police and Fire. These annual special taxes are indexed to inflation and therefore will adjust over time to reflect increases in the cost of providing services. 5. Status of, and opportunities for, shared facilities The Police Department currently has no shared facilities. Although some functions overlap with the fire department, such as dispatch services provided exclusively by the Police Department for both Police and Fire, and emergency notification capability, the fire department maintains its own separate facilities. Discussions with City staff indicate, however, that the future Fire Station 3 will include a separate office for an LBPD workstation. The police dispatchers receive and direct calls from multiple sources, including 911, police, fire and ambulance calls. No opportunities for shared facilities have been identified at this time. 18 Compared with Modesto ($97.8 million, 389 sworn FTE, $251K per FTE) and Fresno ($250 million, 926 sworn FTE, $270K per FTE). Economic & Planning Systems, Inc. 23 Police Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 6. Accountability for community service needs, including governmental structure and operational efficiencies The Police Department is accountable to its service population and provides transparent governance and operations information. The Department’s website provides access to policies and annual reporting, and its finances and staffing are detailed in the citywide budget. LBPD currently serves the entire City and will serve additional areas as they are annexed by the City. As of the date of this report, the Police Department does not provide any services to areas outside the City, but does contract with the Los Banos Unified School District to provide two school resource officers. Appropriate accountability systems are established. The Police Chief reports to the City Manager, and no changes to governance are pending or contemplated at this time. 7. Any other matter related to effective service delivery, as required by commission policy No other matters have been identified at this time. Economic & Planning Systems, Inc. 24 Police Department 4. Fire Department The Los Banos Fire Department (LBFD) provides fire protection and first responder services within the City limits. The LBFD currently has two stations and plans to construct two more to serve future growth. The funding for these stations will come from development impact fees charged to new development, revenue from Measures P and H, and the General Fund. The Fire Department is grouped together with Building Code/Operations functions, and is referred to jointly as the Fire/Building Department in the City’s budget documents. The Los Banos Fire Chief directs both the Fire and Building Departments. This section focuses specifically on the Fire Department, and omits revenues and expenditures associated with the Building Department functions when discussing budget- related topics. The grouping of Building Department functions (code compliance, permitting, plan checks, and inspections) under the City Fire Chief is an uncommon organizational structure. The Fire Department budget represents approximately 12 percent of the City’s General Fund expenditures for Fiscal Year 2024-25. In addition, the LBFD receives funding for services related to new development from development impact fees and from CFD special taxes that fund both Fire and Police services. Description The Fire Chief reports to the City Manager and the budget is subject to annual approval by the elected City Council. The Fire Department provides fire protection and first responder services to the residents of Los Banos and strives to maintain a five- to six-minute response standard for fire service within a 1.5-mile radius of a fire station.19 The National Fire Protection Association states a performance objective of four minutes for the first engine to arrive on scene.20 While no data related to actual response times could be found through published City sources, discussions with LBFD staff indicate some outlying areas of the City have response times of up to six to seven minutes, although additional stations planned are intended to reduce those times. 19 Policy S-P4.1 of 20 General Plan 2042. 20 NFPA Standard 1710. Economic & Planning Systems, Inc. 25 Fire Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 LBFD also provides automatic aid for confirmed structure fires within identified proximity to city limits and mutual aid for fire/rescue and EMS services to other local agencies in Merced County. LBFD additionally participates in the statewide Master Mutual Aid plan.21 The firefighting staff consists of full-time, paid firefighters and volunteers operating out of two fire stations, shown in Figure 7. Station No.1 is located at 333 7th Street and a new Training Tower was recently constructed at Station No.1. Station No. 2 is located at 1150 West "I" Street. Merced County Fire Department operates a third station within Los Banos city limits, Station 71. The County does not provide fire services to the City. The Fire department has begun the planning phase for Fire Station #3 (to be located on the East side of Los Banos) and has obtained a site for Fire Station #4 (on the West side of the city) and has begun the design phase. Both of the City’s stations operate on a 24-hour basis with 19 career firefighters, along with two administrative staff and five volunteer firefighters responding to their respective stations.22 With the current population of 47,419, the ratio of career firefighters per 1,000 residents is around 0.40, or 0.61 including volunteer firefighters. A 2022 report by the National Fire Protection Association finds the departments serving communities with population greater 25,000 have median rates of 0.84 to 1.30 career firefighters per 1,000 people.23 Based on this standard, the LBFD is currently understaffed. 21 The California Disaster and Civil Defense Master Mutual Aid Agreement is a voluntary agreement whereby jurisdictions can share resources and facilities to prevent and combat disasters, administered through the California Office of Emergency Services. 22 Discussion with Police Chief Paul Tualla, March 13, 2024. 23 National Fire Protection Association, 2022. “U.S. Fire Department Profile 2020” Economic & Planning Systems, Inc. 26 Fire Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 7. Police and Fire Stations in Los Banos Source: Los Banos General Plan 2042 (2022). Note: Sphere of Influence shown above is the City’s proposal, see Figure 3 for current City SOI. In addition, the department employs an administrative clerk and administrative coordinator. In 2022, the Fire Department responded to 3,314 calls, which are dispatched through LBPD. As the city develops outside the current city limits, LBFD estimates that stations, equipment, and personnel will be needed to maintain the current Insurance Services Office (ISO) rating and response times.24 ISO ratings evaluate the performance of local fire services to determine property insurance premiums. The LBFD currently has a Class 3 ISO rating, on a 1 to 10 scale with 1 being the highest possible rating. This rating places LBFD among the top half of California’s 854 fire departments, as shown in Figure 8. 24 City of Los Banos 2042 General Plan, page S-16. Economic & Planning Systems, Inc. 27 Fire Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 8. Fire Department ISO Ratings in California, 2024 Source: Insurance Services Office, Inc. (2024) For FY 2024-25, the Fire Department (excluding budget related to the Building Department functions) has a total adopted operating budget of $7,414,433, with $2,895,605 (39 percent) coming from the General Fund. Like the Police department, Fire department operations are funded through multiple sources, including the General Fund, Measure H sales tax, and various special revenue funds. 25 The FY 2024-25 CFD assessment amount is $411.03 per unit, with revenues split between Police and Fire. Table 4 shows the total amount that the Fire Department received in total funding in FY 2024-25 by source. 25 Voters approved Measure H, another half-cent sales tax, in 2018 to fund Police and Fire services and general public safety. Economic & Planning Systems, Inc. 28 Fire Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Table 4. Los Banos Fire Department Funding, FY 2024-25 (2024$) Source FY 2024-25 Percent General Fund Fire $2,895,605 39% Measure H $623,812 8% Special Revenue Funds Fire Augmentation Fund $1,574,510 21% Fire Capital Improvement Fund $1,150,000 16% Fire CFD $920,506 12% Capital Project Funds Emergency Operations Center $250,000 3% TOTAL $7,414,433 100% Source: City of Los Banos Adopted Budget FY 2024-25 Funding for the Fire Department’s CIP projects comes from the General Fund, Measure H, Measure P,26 and development impact fees. The City charges development impact fees to fund new fire facilities required to serve new development. Impact fees were last updated in 2019 and adjust annually to keep pace with inflation. The Fire development impact fees for 2024 are shown below in Table 5. Table 5. Fire Development Impact Fees (2024$) Type Fee Unit Single Family $1,520.48 per unit Multi-Family $1,215.90 per unit Age-Restricted $823.10 per unit Retail $866.60 per 1,000 sq. ft. Office $650.25 per 1,000 sq. ft. Institutional $325.13 per 1,000 sq. ft. Industrial $216.34 per 1,000 sq. ft. Source: City of Los Banos 2024 Adjusted Development Impact Fees; Economic & Planning Systems 26 The City approved a one-half cent sales tax, Measure P, in November 2004 to pay for 911, fire protection, and police. Economic & Planning Systems, Inc. 29 Fire Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Determinations 1. Growth and population projections for the affected area As of 2024, the LBFD staffs 19 career firefighters and five volunteer firefighters. The ratio of career firefighters to 1,000 residents is 0.40. A 2022 report by the National Fire Protection Association finds the departments serving communities with population greater 25,000 have median rates of 0.84 to 1.30 career firefighters per 1,000 people.27 Thus, LBFD’s ratio is below the median level. To meet a service standard of 0.84 firefighters per 1,000 residents, the City would need to add 21 new career firefighters for its current population of 47,419. With a projected population of 56,400 at buildout, over time, the City would need to add 28 career firefighters for a service standard of 0.84. For FY 2024-25, the Fire Department intends to recruit two additional career firefighters. 2. The location and characteristics of any Disadvantaged Communities (DUCs or DACs) within or contiguous to the SOI There are two DUCs located outside of the Los Banos city limits and its current SOI: Unincorporated Community #12 (one mile south of the City) and Unincorporated Community #13 (two miles west of the City, which is in the City’s proposed SOI). Both DUCs receive fire service from Merced County Fire Department, not LBFD. The County maintains a fire station (#71) in Los Banos. Approximately 75 percent of the City limits, and all territory outside the City within the General Plan designated “Urban Growth Boundary” are identified as DACs. Both Los Banos fire stations and the Merced County Fire Station #71 are located within the portion of Los Banos that is identified as a DAC, suggesting that these portions of the City receive the same level of fire service as the 25 percent of the City that is not categorized as a DAC. 27 National Fire Protection Association, 2022. “U.S. Fire Department Profile 2020” Economic & Planning Systems, Inc. 30 Fire Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 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 SOI The Fire Department currently has a Class 3 ISO rating, placing it in good standing compared with other community fire departments in California and demonstrating adequate public services overall. The Department strives to maintain a five- to six-minute response standard for fire service within a 1.5-mile radius of a fire station. LBFD currently has two operational fire stations, but discussions with staff indicate that Station 2 is inadequate for current needs and call volume as it was originally meant as a volunteer station and was not designed to support a full-time squad. New development will necessitate the construction of additional facilities. The Fire Department is planning for two new fire stations in the city.28 Fire Station #3 in East Los Banos is in the planning phase, while Fire Station #4 in West Los Banos is in the design phase. These new stations and associated equipment needs are contemplated in the City’s development impact fee program and the funds to acquire them will be provided by impact fees. The new facilities and equipment are estimated to cost $12.3 million in 2024 dollars. However, it should be noted that the development impact fee program contemplates services needed to cover growth only through 2038. The Fire Department recently completed construction of a training facility at Station #1. The four-story training tower provides necessary training in fire suppression, rescue, and confined space operations. According to the FY 2024-25 Adopted City Budget, As the city grows, an upcoming priority is to form a Community Risk Reduction/Fire Prevention Division and hire staff to conduct fire inspections, technical inspections, and plan revisions to mitigate fire risk. The Budget document does not provide specific population thresholds or time horizons for implementation of this priority. 28 City of Los Banos FY 2024-25 Adopted Budget, Page 148. Economic & Planning Systems, Inc. 31 Fire Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 4. Financial ability of agencies to provide services LBFD derives operating revenue from a number of sources, including the City’s General Fund, Measure H sales tax, and the citywide CFD for public safety services. Operating costs for new development are funded in part by special taxes assessed on new development through participation in the citywide CFD 2002-01. The Fire Department projects General Fund expenditures of $2,895,605 in FY 2024-25, or $152,400 per currently staffed career firefighter. This amount is below other Fire Departments in the San Joaquin Valley.29 The City has both a development impact fee for fire capital facilities and a CFD for fire operations costs. The FY 2024-25 CFD assessment amount is $411.03 per unit, with revenues split between Police and Fire. These revenues are tied to inflation, and therefore increase roughly in line with costs. However, in recent years staff-related costs have grown at a greater rate. Discussions with departmental staff indicate that operational permit fees, a fee that is commonly charged in most jurisdictions, are not currently charged by LBFD but could be a source of additional revenue that could fully fund the future Community Risk Reduction/Fire Prevention Division. 5. Status of, and opportunities for, shared facilities Many fire activities overlap with police activities, including radio needs, the dispatch center, and emergency notification capability. The police dispatchers receive and direct calls from multiple sources, including 911, police, fire and ambulance calls. While the dispatch service is shared, the call center facility itself is housed in and funded through the Police Department. The future Fire Station 3 will include a separate office for an LBPD workstation.30 In addition to LBFD, the County of Merced also has a fire station (#71) within Los Banos’ city boundaries, serving the city and unincorporated areas. LBFD provides Automatic Aid for confirmed structure fires within an identified proximity to city limits and mutual aid for fire/rescue and EMS services to other local agencies in Merced County. The Department also participates in the statewide California Disaster and Civil Defense Mutual Aid Agreement, in which participating entities make available resources and facilities to other participating entities to combat and prevent disasters. LBFD is part of a Countywide agreement to cooperate in regional emergencies as part of the Standardized Emergency Management System, a project of the California Office of Emergency Services to train for disaster preparedness. 29 Compared with Modesto ($66.8 million, 209 sworn FTE, $320K per FTE) and Fresno ($76 million, 215 sworn FTE, $353K). 30 Discussion with Police Chief Paul Tualla, March 13, 2024. Economic & Planning Systems, Inc. 32 Fire Department CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 As the Fire Department has completed a new training facility at Station #1, it is working on an agreement with the Merced Community College District on a joint Regional Accredited Fire Academy to provide training opportunities at the site for all jurisdictions in the area.31 No other opportunities for shared facilities have been identified at this time. 6. Accountability for community service needs, including governmental structure and operational efficiencies The Fire Chief is hired and evaluated by the City. No changes to government structure have been identified at this time. The majority of departmental expenditures goes toward personnel services and the department employs a small number of volunteer firefighters. The department appears to provide fire protection services effectively, evidenced by its above- average ISO rating despite its below-average per capita staffing levels, and no additional management efficiencies have been identified. As of December 2024, the City of Los Banos’ website links to the Fire Department’s website, which provides resources and contact information for Department staff. LBFD appears reasonably accountable and no changes to governance are pending or proposed at this time. 7. Any other matter related to effective or efficient service delivery, as required by commission policy No other matters have been identified at this time. 31 City of Los Banos FY 2024-25 Adopted Budget, Page 148. Economic & Planning Systems, Inc. 33 Fire Department 5. Storm Drainage The City of Los Banos’ Public Works Department manages stormwater and storm drainage in the City. The Los Banos’ Fiscal Year 2024-2025 Adopted Budget indicates the Public Works Department represents only two percent of the City’s General Fund expenditures for the year. Funding comes primarily from Business- Type Funds and Landscape and Lighting Assessment Districts (LLDs), with the City’s General Fund used for any maintenance expenses not covered, and development impact fees are used to help finance infrastructure projects. The most recent storm drainage system master plan was completed in 2008 and amended in 2010, though the City has hired Carollo Engineers to produce an updated Storm Drainage System Master Plan in 2023, which is currently underway. The existing storm drainage system is composed of neighborhood collection systems, detention basins, pump stations, and large-diameter storm drains, as shown in Figure 9. Figure 9. City of Los Banos Existing Storm Drainage Systems Economic & Planning Systems, Inc. 34 Storm Drainage CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 The City’s storm drainage system currently has only minor capacity issues, mostly relating to existing storm drain connections with the sewer system in the City’s downtown area causing sudden increases in wastewater flow during storm events.32 The City is aware of this and is planning to separate the sewer and storm drainage system in this area, which will be addressed in the forthcoming update to the Storm Drainage System Master Plan.33 Description Los Banos installed its first storm drain system in 1962, discharging storm runoff into the San Luis Canal. Subsequent development in the north of the City discharged storm runoff into Johnson Field Drain No. 1. As the City developed further, the storm drainage demands on these facilities increased and the City entered into agreements with the Central California Irrigation District (CCID) for additional discharge points into the CCID Main Canal. The majority of storm runoff is captured in storm detention basins and later discharged into water conveyance systems under agreement with the CCID and the Grassland Water District (GWD), following historic drainage patterns. There are a few existing neighborhoods where stormwater discharges directly into canals. The city streets serve as collectors for most stormwater, and a network of channels guide the runoff to detention basins and afterwards to discharge sites. The city has a number of drainage structures, including Los Banos Creek, the Mud Slough, and canals operated and maintained by GWD or CCID. Los Banos Creek, the largest natural drainage site, includes the Los Banos Creek Detention Reservoir to manage potential creek flooding. The GWD controls drainage to the Mud Slough tributary east of Los Banos, and the CCID manages several irrigation canals. Several drainage ditch facilities are shared with CCID and GWD, including the GWD San Luis Canal, the GWD Santa Fe Canal, and the CCID Main Canal. There are 17 storm basins in Los Banos, and the City currently maintains over 86 miles of storm drain lines, 51 storm pumps throughout 21 storm drain lift stations, and has 479 storm drain manholes.34 The majority of Los Banos is located outside of the 100- or 200-year floodplain and the severity of a potential flood and/or levee failure to the City is designated to be of limited magnitude.35 32 Los Banos Downtown Master Plan (October 2024), Page 9. 33 Discussion with Stacy Souza-Elms and Charles Bergstrom, April 22nd, 2024. 34 City of Los Banos Fiscal Year 2023-2024 Adopted Budget. 35 Merced County Hazard Mitigation Plan Update, 2021-2026. Annex E, Page 7. Economic & Planning Systems, Inc. 35 Storm Drainage CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 The City’s storm water system generally has sufficient capacity to convey runoff generated during the storm events, as analyzed under the 2010 Storm Drainage System Master Plan capacity evaluation. In areas such as west of downtown around K Street, storm drains either lack the capacity or are connected to the wastewater collection system and are therefore more susceptible to flooding or may cause sudden increases in the wastewater flow because storm runoff is routed directly into the sewer collection system. The Storm Drainage System Master Plan was completed in 2010 under the assumption that the City would implement the downtown storm drain projects to separate the two systems (as of December 2024 the systems have not yet been separated).36 By implementing these downtown storm drain projects and removing storm runoff from the collection system, there would be fewer wastewater capital projects that must be implemented. As previously noted, the Storm Drainage System Master Plan is currently being updated. Since the prior MSR, the City has increasingly focused on promoting the use of green infrastructure, allowing surface water to discharge into the ground and alleviating load on the stormwater drainage system by reducing stormwater flow, while simultaneously improving climate resilience and preserving biodiversity. Green infrastructure may also provide greening that reduces flood risk and lowers heat island effects. Some types of green infrastructure include green spaces, bioswales, rain gardens, planter boxes, trees, permeable pavements, collection basins, and stormwater recapture. The City has adopted a Post-Construction Stormwater Low Impact Development (LID) Standards Plan in December of 2022, intended to reduce the impact of impervious surface development on the City’s storm system.37 Drainage infrastructure maintenance is primarily funded through the city’s Landscape and Lighting assessment districts (LLDs), with any maintenance costs not covered by LLDs funded through the Wastewater Fund. Los Banos has 18 residential subdivision LLDs that cover around 70 percent of residential units in the city. The majority of stormwater basins are within LLD areas, allowing LLD revenue to fund their upkeep. The maintenance costs for the small portion of basins not located within LLDs are funded through the General Fund. The LLDs fund maintenance of local landscaping, street lighting, sidewalks, and storm drains. Revenues are collected via property tax assessments. In addition, the City has a storm drain impact fee for new development to pay their fair share of usage of citywide drainage infrastructure. In the last several fiscal years, the City collected between $100,000 and $200,000 in storm drain impact fees annually. For the FY 2024-25 budget, this fund anticipates collecting $25,000 for a total fund balance of nearly $641,000. 36 Master Plan for the City of Los Banos Storm Drainage System. Carollo Engineers. March 2010. 37 City of Los Banos Resolution No. 6598 Economic & Planning Systems, Inc. 36 Storm Drainage CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Impact fees were last updated in 2019 and adjusted annually to keep pace with inflation. The Storm Drainage development impact fees for 2024 are described below in Table 6. Table 6. Storm Drain Development Impact Fees (2024$) Type Fee Unit Single Family $3,575.19 per unit Multi-Family $2,860.88 per unit Age-Restricted $1,935.06 per unit Retail $2,037.78 per 1,000 sq. ft. Office $1,527.73 per 1,000 sq. ft. Institutional $763.86 per 1,000 sq. ft. Industrial $508.85 per 1,000 sq. ft. Source: City of Los Banos 2024 Adjusted Development Impact Fees; Economic & Planning Systems Storm drainage maintenance activities are managed by the Department of Public Works, but may be funded across multiple departments, depending on the location of the storm drain assets. For example, storm drain infrastructure in city parks are maintained with Parks and Recreation department funding. Residential areas primarily rely on the LLDs. Funding for storm drains in public street areas are funded out of the Public Works department’s budget. Additionally, discussions with City staff indicate the intent to pursue the Northeast Detention Basin CIP project which would add 500-600 acre-feet of capacity. The City is currently in the design phase and working in conjunction with the GWD.38 38 Discussion with Stacy Souza-Elms and Charles Bergstrom, April 22nd, 2024. Economic & Planning Systems, Inc. 37 Storm Drainage CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Determinations 1. Growth and population projections for the affected area The City’s most recent Development Impact Fee Study anticipates that the population will grow to 56,400 residents by buildout. The Storm Drainage Master Plan is intended to address the needs created by future development plus identify improved standards for drainage basins to serve a dual use as park and recreation spaces and detention basins. The existing Master Plan, prepared in 2010, is currently being updated to better align with the General Plan. 2. The location and characteristics of any Disadvantaged Communities (DUCs or DACs) within or contiguous to the SOI There are two DUCs located outside of the Los Banos city limits and its current SOI: Unincorporated Community #12 (one mile south of the City) and Unincorporated Community #13 (two miles west of the City, which is in the City’s proposed SOI). Neither DUC receives storm drainage service from the City of Los Banos, and storm drainage capture is limited in these communities as there is no relevant infrastructure in place (e.g., curbs, gutters, etc.).39 Approximately 75 percent of the City limits, and all territory outside the City within the General Plan designated “Urban Growth Boundary” are identified as DACs. Based on Figure 9, areas designated as DACs have a proportionate amount of storm drainage system infrastructure as the other 25 percent of the City. The Downtown area is located within a DAC and has minor capacity issues as previously mentioned, but the City plans to address this issue as stated in the most recent Storm Drainage System Master Plan. 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 SOI Discussions with city staff indicate more new wells and storage tanks are an infrastructure need. In order to serve the projected population at buildout however, new storm drains, pump stations, and detention basins will be necessary. Storm pump replacements and other maintenance projects are included in the budget and primarily funded with revenue from assessment districts or other departmental funding. Larger planned facilities needs are 39 Disadvantaged Unincorporated Communities SB 244 Analysis: County of Merced; March 28, 2024. Economic & Planning Systems, Inc. 38 Storm Drainage CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 identified in the 2019 Development Impact Fee Update, which includes 16 new sub-basins across the city, with a total projected cost of $200 million.40 The City’s storm drainage system currently has only minor capacity issues, mostly relating to existing storm drain connections with the sewer system in the City’s downtown area causing sudden increases in wastewater flow during storm events Since the prior MSR, the City has been increasingly focused on promoting the use of green infrastructure, which alleviates the load on the stormwater drainage system while simultaneously improving climate resilience. The 2042 General Plan has several policies to prioritize green infrastructure improvements in public improvement projects and new developments. 4. Financial ability of agencies to provide services The City obtains funds for stormwater maintenance from fees charged by the City’s 18 LLDs. Capital needs are constructed by each development project or the City collects a development impact fee. As of 2024, the City’s storm drainage impact fee is set at $3,575.19 per Single Family residential unit, with commercial development fees ranging from approximately $500 to $2,000 per 1,000 square feet of space. The fees are based on the Development Impact Fee Justification Study last updated in 2019, adjusted to 2024. An annual report setting the fees is prepared for the City Council by the City Engineer. Discussions with City staff indicate that there are currently no financial constraints to providing stormwater services to the City. Grants pertaining to dual-use park and stormwater facilities have been identified as a potential source of additional revenue. No additional cost avoidance opportunities have been identified at this time. 5. Status of, and opportunities for, shared facilities Several drainage ditch facilities are shared with CCID and GWD, including the GWD San Luis Canal, the GWD Santa Fe Canal, and the CCID Main Canal. The City has agreements with the CCID for additional discharge points into the CCID Main Canal to handle increases in demand. The City’s general goal for placement of storm detention basins is to place them where future parks or open space are identified in the 2042 General Plan. This will allow the City to take advantage of future parks or open space to serve a dual use as a recreation facility and detention basin. This practice is consistent with the City’s policy to construct all basins as multiple purpose basins to maximize open space and recreational opportunities. 40 DTA, Development Impact Fee Justification Study Prepared for the City of Los Banos, 11/11/2019. Economic & Planning Systems, Inc. 39 Storm Drainage CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 In the General Plan, the City has included an action to work with CCID and GWD to develop a regional plan for accommodating future stormwater runoff. No other opportunities for shared facilities have been identified. 6. Accountability for community service needs, including governmental structure and operational efficiencies. The City’s Public Works Department manages the Los Banos storm drainage system. No changes to the governmental structure are pending or proposed. The City is currently undertaking an updated storm drainage master plan which will identify areas where additional infrastructure will be needed. According to the most recent Storm Drainage Master Plan (2010), the system appeared to be managed reasonably and responsibly at that time. The Public Works Department appears reasonably accountable regarding storm drainage services and no changes to governance are pending or proposed at this time. Information about the storm drainage system is posted on the City’s webpage for the Department of Public Works. 7. Any other matter related to effective or efficient service delivery, as required by commission policy No other matters have been identified at this time. Economic & Planning Systems, Inc. 40 Storm Drainage 6. Wastewater The City provides wastewater collection and treatment services to residents, businesses, and other institutions within the city limits through the Department of Public Works and is operated as an enterprise fund. The Los Banos’ Fiscal Year 2024-2025 Adopted Budget indicates the Wastewater functions of the Public Works Department represent 29 percent of the total Department’s adopted expenditures in Fiscal Year 2024-2025, with no Wastewater activities funded by the General Fund. Adopted 2024-2025 budget projects Wastewater fund revenues of $9.1 million, consisting primarily of user fees charged for wastewater collection and treatment on end users. Development impact fees are charged to help fund new development’s fair share of future wastewater capital improvement projects. Wastewater is collected throughout the city via a network of sanitary sewer collection pipelines, shown in Figure 10. The City has a Wastewater Collection System Master Plan which was completed in 2008 and amended in 2010, though the City has hired Carollo Engineers to produce an updated plan in 2023, which is currently underway. The Wastewater Collection System Master Plan provides an overview of the wastewater collection system, evaluates system capacity and demand, assesses future needs, and identifies CIP improvements to meet wastewater needs for Los Banos. CIP improvements are primarily implemented by the Public Works Department (PWD). Figure 10. City of Los Banos Wastewater Collection System Economic & Planning Systems, Inc. 41 Wastewater CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Description Wastewater service is provided by the City of Los Banos. Water quality is governed by the California Water Code, which requires that the City implement its regional water quality control plan, the Water Quality Control Plan for the Sacramento River Basin and San Joaquin River Basin (Basin Plan). One of the two highest priorities of the Basin Plan is its Wastewater Reuse Policy, which encourages the reuse of wastewater where practicable (e.g., crop irrigation, landscape irrigation, and wetland restoration). Another high priority is the Plan’s anti-degradation directives, stating that any discharge of waste to high quality waters must prevent pollution or nuisance and must maintain a high quality of water beneficial to the region’s population. A high priority of the Tulare Lake Basin Plan, which governs the southern portion of the Central Valley Region, is the consolidation of wastewater management rather than a proliferation of small treatment plants in small communities, which lack adequate resources to properly manage, treat, and dispose of wastewater in urban environments. The City’s Public Works Department operates its wastewater collection and treatment function as an enterprise fund, meaning that the cost is covered by revenue from users, such as connection charges and monthly use charges. The Public Works Department is supervised by the City Manager and the City Council. The City maintains approximately 133 miles of sewer mains, which drain into seven treatment ponds covering approximately 500 acres. The City also uses 600 acres of pasture and 185 acres of alfalfa fields for irrigation and disposal of treated effluent, which helps to replenish the underground water supply. In total, the City processes approximately 3.5 million gallons of influent per day.41 41 City of Los Banos FY 2024-25 Adopted Budget, Page 238. Economic & Planning Systems, Inc. 42 Wastewater CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 The City last completed a Sewer System Management Plan (SSMP) in 2019, in compliance with state water agency requirements. The SSMP provides guidelines and procedures for City staff to manage the sewer/wastewater systems, including in cases of overflow. It identifies the following goals to guide staff in maintaining the wastewater system: 1. Minimize sanitary sewer overflows. 2. Prevent public health hazards. 3. Minimize inconveniences by responsibly handling interruptions in services. 4. Protect the large investment in collection systems by maintaining adequate capacities and extending useful life. 5. Prevent unnecessary damage to public and private property. 6. Use funds available for sewer operations in the most efficient manner. 7. Convey wastewater to treatment facilities with a minimum of infiltration, inflow, and exfiltration. 8. Provide adequate capacity to convey peak flows. 9. Perform all operations in a safe manner to avoid personal injury and property damage. The City’s most recent Wastewater Collection System Master Plan (WCSMP) was completed in 2008 and amended in 2010 and indicates that the City’s existing wastewater collection system had sufficient capacity to convey existing design flows. The document references the same issue discussed in the Storm Drainage section regarding the need to separate the storm runoff from the wastewater system, as the connected system could cause flooding in areas, particularly Downtown, when storm events caused sudden increases in wastewater flow. Additional needs identified include a sewer main replacement rehabilitation and manhole replacement projects. In 2019, the City submitted a technical report certifying the completion of an expansion project (new headworks and influent pump station) to the wastewater treatment plant, allowing an increase in the allowable discharge by 0.9 million gallons per day (mgd) to a total of 4.9 mgd.42 Current wastewater flows were most recently estimated to average 3.46 mgd.43 The recent EIR for the 2042 General Plan estimates wastewater generation at General Plan buildout of 4.57 mgd,44 indicating the City’s WWTP already has sufficient capacity to serve projected future growth. 42 California Regional Water Quality Control Board Central Valley Region, “Waste Discharge Requirements Order R5-2021-0026”, page IS.1 43 City of Los Banos FY 2024-25 Adopted Budget, Page 238. 44 Los Banos General Plan 2042 Final EIR (September 2022), Page 4-30. Economic & Planning Systems, Inc. 43 Wastewater CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 In addition to user fees collected through the Wastewater Fund, new development in Los Banos pays a one-time development impact fee, as shown in Table 7. Table 7 Wastewater Development Impact Fees (2024$) Type Fee Unit Single Family $5,858.33 per unit Multi-Family $4,687.16 per unit Age-Restricted $3,171.51 per unit Retail $3,338.29 per 1,000 sq. ft. Office $2,503.11 per 1,000 sq. ft. Institutional $1,252.16 per 1,000 sq. ft. Industrial $833.97 per 1,000 sq. ft. Source: City of Los Banos 2024 Adjusted Development Impact Fees; Economic & Planning Systems The 2024-25 CIP lists multiple planned wastewater projects (pump station rehabilitation, storm line replacements, fleet replacement, various equipment purchases) with a total cost of $26.7 million over the next 5 years and funded primarily through the Wastewater operating fund. Economic & Planning Systems, Inc. 44 Wastewater CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Determinations 1. Growth and population projections for the affected area The Wastewater Collection System Master Plan addresses the needs created by development in the next 20 years plus improved standards for drainage basins to serve dual uses as park and recreation spaces as well as storm drain facilities. The City’s most recent Development Impact Fee Study anticipates that the population will grow to 56,400 residents by buildout. Serving this population will require additional transmission and treatment infrastructure that separates wastewater from the storm water drainage system. The City’s General Plan 2042 notes that prior to any annexations, the City must ensure that adequate wastewater treatment and disposal capacity can be provided. 2. The location and characteristics of any Disadvantaged Communities (DUCs or DACs) within or contiguous to the SOI There are two DUCs located outside of the Los Banos city limits and its current SOI: Unincorporated Community #12 (one mile south of the City) and Unincorporated Community #13 (two miles west of the City, which is in the City’s proposed SOI). Both DUCs rely on individual or community septic systems and are not connected to the Los Banos wastewater system. Approximately 75 percent of the City limits, and all territory outside the City within the General Plan designated “Urban Growth Boundary” are identified as DACs. Based on Figure 10, areas designated as DACs have a proportionate amount of wastewater system infrastructure as the other 25 percent of the City. The Downtown area is located within a DAC and has minor capacity issues as previously mentioned, but the City plans to address this issue as stated in the most recent Wastewater Collection System Master Plan. 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 SOI Most of the existing wastewater collection system has sufficient capacity to convey existing design flows. However, in some locations, such as the City’s downtown, existing storm drain connections cause sudden increases in wastewater flow during a storm event. The storm water inflow could cause a few sewers to surge and potentially overflow during a large storm. The City had the Economic & Planning Systems, Inc. 45 Wastewater CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 option to either upsize the sanitary sewer system to convey storm water runoff, or to construct storm drain pipelines and separate the storm runoff from the wastewater system. There are a number of upcoming capital projects, including replacement and rehabilitation of several sewer lift stations and installation of a fresh water line to the Wastewater Treatment plant. The City’s WWTP is permitted for 4.9 mgd of wastewater discharge which is anticipated to be sufficient to serve the City’s projected population at buildout identified in the 2042 General Plan. 4. Financial ability of agencies to provide services The main source of funding for wastewater collection and treatment is the City’s Wastewater Fund, an enterprise fund which collects user fees from residents and businesses and is intended to enable wastewater operations to be self-sufficient. The Fund is anticipated to collect approximately $9 million in revenue in FY24-25, primarily through fees. Operations and maintenance of the wastewater system are funded through this. Department staff reported there are no financing constraints at this time. Effective July 2024, the City collects a monthly flat charge of $22.49 from residential development for wastewater collection and $9.78 for wastewater treatment.45 Rates for collection and treatment of commercial wastewater are a combination of a monthly flat rate plus a graduated rate based on type of use. It is the City’s policy to maintain a minimum reserve and any unappropriated fund balances in its enterprise operating funds, which includes the Wastewater Fund. The Wastewater Fund pays for all the costs of sewer collection and treatment in Los Banos, including administration, operations, maintenance, and capital improvements. In the FY 2024-25 budget, the Wastewater Fund’s beginning balance is $28.5 million and its revenues and expenditures for the fiscal year are $9.1 million and $18.1 million, respectively, for an estimated ending fund balance of $19.6 million. Capital facility needs generated by additional development are funded through a Sewer development impact fee. As of 2024 the impact fee was set at $5,858.33 per Single Family residential unit, $4,687.16 per Multi-family residential unit, and ranges from $834 to $3,338 per 1,000 square feet of commercial development. In addition to the fee, the City may also use the Wastewater Fund to supplement capital improvements. The 2010 Master Plan concluded that if the City implements storm drain projects to separate the inflow connections, then a large downtown wastewater sewer 45 Public Utility Rates from City of Los Banos Finance/Billing Department website. Economic & Planning Systems, Inc. 46 Wastewater CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 project could be avoided. The City would also reduce the capital costs required to install large diameter sewers necessary to convey combined sanitary and storm water flows. 5. Status of, and opportunities for, shared facilities The nearest sewer facilities in the City of Dos Palos are ten miles away; there does not appear to be any opportunity to share facilities. It is the City’s policy to prohibit extension of water and sewer lines beyond its SOI, except in certain cases of development regional water or sewer facilities, or areas where the City has agreements to provide services. 6. Accountability for community service needs, including governmental structure and operational efficiencies The City’s Public Works Department operates the wastewater collection and treatment system. No changes to the City’s government structure are pending or proposed. The operators of the sewer system, the City’s Public Works Department, appear accountable and no changes to governance are pending or proposed at this time. 7. Any other matter related to effective or efficient service delivery, as required by commission policy No other matters have been identified at this time. Economic & Planning Systems, Inc. 47 Wastewater 7. Water Through the Public Works Department, the City of Los Banos is the primary provider for residential, industrial, and commercial water demands and is operated as an enterprise fund. The Los Banos’ Fiscal Year 2024-25 Adopted Budget indicates the Water functions of the Public Works Department represent 24 percent of the total Department’s adopted expenditures in Fiscal Year 2024- 25, with no Water activities funded by the General Fund. The Fiscal Year 2024-25 Adopted Budget projects Water fund revenues of $8.8 million, consisting primarily of fees charged on end users. Development impact fees are charged to help fund new development’s fair share of future capital improvement projects. The City is currently under contract with Carollo Engineers to complete an update to the Water Master Plan. Water is supplied from groundwater extracted from the Delta-Mendota Subbasin, which has been designated by the Department of Water Resources (DWR) as in critical overdraft.46 The Central California Irrigation District (CCID) is the primary supplier for agricultural irrigation water, which is drawn from surface water and groundwater supplies. Grassland Water District (GWD) also provides some irrigation water within city limits. CCID requires that lands annexed into the City be detached from their District at the same time, and will allow existing agricultural uses to continue to receive irrigation water as “Class II” water, when available until development occurs. Los Banos does not sell (wholesale) water to other agencies or surrounding regions. 46 As defined by the Sustainable Groundwater Management Act, “A basin is subject to critical overdraft when continuation of present water management practices would probably result in significant adverse overdraft-related environmental, social, or economic impacts.” (per California Department of Water Resources). Economic & Planning Systems, Inc. 48 Water CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 12 shows the water distribution system in Los Banos, including locations of groundwater wells, groundwater tanks, and the network of water pipelines. Figure 11. Water Distribution System in Los Banos Note: Sphere of Influence shown above is the City’s proposal, see Figure 3 for current City SOI. Economic & Planning Systems, Inc. 49 Water CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Description The Public Works Department operates and maintains the water services for the City of Los Banos. The City of Los Banos pumps, treats, and delivers potable groundwater to city residents and commercial and industrial users, with a total of 13,490 connections. Groundwater is extracted from the Delta-Mendota Subbasin, part of the San Joaquin Valley Basin. This system includes 13 wells, 170 miles of water lines, 1,984 water valves, and 1,620 fire hydrants. On an annual basis, the City delivers 2.6 billion gallons of water to users, equivalent to 7,900 acre feet (AF). One primary issue affecting future potable water supply in Los Banos is the need to find new groundwater sources that meet drinking water standards due to naturally occurring arsenic and hexavalent chromium (chromium-6) concentrations.47 Los Banos’ 2024 Drinking Water Consumer Confidence Report registered average detected chromium-6 levels of 32 parts per billion (PPB), more than three times the current maximum contaminant level (10 PPB) set by the State Water Resources Control Board.48 Of direct significance for the City is information from the State Office of Environmental Health Hazards Assessment, which manages the State “CalEnviroScreen” tool to identify communities that are disproportionately affected by environmental pollution and other hazards in compliance with SB 1000.49 The State identified Census Tract 2201 within the City - encompassing the downtown and older parts of the City west of Mercey Springs Road and north of Pacheco Boulevard - as a 95-100% “highly disadvantaged/impacted” disadvantaged community with multiple environmental hazards present, including drinking water contamination. Most other areas within the City have an 85-90% percentile disadvantaged community rating. This is representative of various environmental indicators, including the water challenges facing the City, and the relationship with future urban growth plans. Additionally, the State of California has deemed the larger Delta-Mendota Subbasin, which includes Los Banos, as a high-priority subbasin in critical overdraft. Since the prior MSR was complete, the Sustainable Groundwater Management Act (SGMA) was passed in 2014. The SGMA requires the formation of local Groundwater Sustainability Agencies (GSAs) to oversee the development and implementation of Groundwater Sustainability Plans (GSPs) to ensure the long- term sustainable management of California’s groundwater resources. The GSP sets sustainability goals that guide the activities of agencies using the Delta-Mendota Subbasin. Los Banos is the local GSA for areas within the City limits and also a member of the San Joaquin River Exchange Contract (SJREC) 47 City of Los Banos 2042 General Plan, PFS-6. 48 California State Water Resources Control Board - Hexavalent Chromium (Chromium-6) 49 Los Banos 2042 General Plan Draft EIR, Page I-11 Economic & Planning Systems, Inc. 50 Water CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 GSP Group. Since its formation, the SJREC has implemented several projects to improve the basin and subbasin’s sustainability. One example is the Los Banos Creek Recharge and Recovery Project, which added 7,000 acre-feet of water supply to the basin and Los Banos Creek. As part of the General Plan 2042 update, the City completed a Water Supply Assessment, which found that with current infrastructure, there would be sufficient water supply for the development projected in the General Plan. However, as water usage grows, the City must continue to monitor supply and consider alternative sources for water that would supplement current groundwater usage. It is important to coordinate these ongoing efforts with other agencies such as CCID, GWD, and San Joaquin River Exchange GSP Group to monitor groundwater levels in the Delta-Mendota Subbasin. The Merced County Association of Governments (MCAG) contracted with a consultant in 2023 to complete a water and sewer infrastructure capacity assessment for the seven County jurisdictions, including Los Banos. The assessment indicated that Los Banos is pumping 7,900 Acre-Feet (AF) of groundwater annually, more than three-times greater than the sustainable yield of 2,300 AF per year as noted in the 2019 San Joaquin River Exchange GSP.50 While this conclusion directly contradicts the conclusion presented in the City’s 2042 General Plan, the MCAG document noted that the City asserts the GSP did not account for additional sources of groundwater recharge and that the City does in fact meet the sustainable yield criteria. The MCAG assessment concludes that Los Banos’ water supply is not sufficient to supply future development and recommended the City construct a new well and storage tank to increase water supply and to evaluate alternative water supply or demand reduction measures to bring the City into compliance with the target sustainable yield. In 2020, the City also updated its Urban Water Management Plan, which is a resource planning document required by the Department of Water Resources from water suppliers that serve 3,000 or more connections. Updated plans must be submitted every five years. In the most recent Plan, Los Banos identified current water demand of 8,309 acre-feet. Based on population growth projections, water demand is expected to increase to 11,233 acre-feet by 2045. The City has established a per- capita water usage goal of 165 gallons per day (gpd), or around 0.2 acre-feet per person per year. As of 2020, the actual per-capita usage was 173 gpd. 50 Merced County Water and Sanitary Sewer Infrastructure Capacity Assessment. MKN & Associates. September 2023. Page 3-4. Economic & Planning Systems, Inc. 51 Water CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 As stated in the Urban Water Management Plan, the City plans to construct a new well and a 2.5 million gallon water storage tank by 2025. Some planning documents show that the City has previously considered building a Surface Water Treatment Plant (SWTP) to treat the level of Hexavalent Chromium, improve water quality, and augment current supply. Presently, the City only has a surface water storage tank with capacity for five million gallons. In addition to the GSP, the Los Banos Public Works Department has a Water Conservation Program to conserve water supply and reduce wastewater. The State of California had a goal for cities to reduce water consumption by 20 percent by 2020. Los Banos needed to reduce water use to 165 gpd per person but, as previously mentioned, managed to reduce consumption to 173 gpd. To meet the goals, the Water Shortage Contingency Plan includes measures such as limits on watering of lawns to specific days of the week depending on drought conditions. The City also performs water audits on high consumption accounts that are flagged during the billing process. Other Demand Management Measures (DMMs), including conservation pricing and water survey programs, are also implemented to assist the public with water conservation. The City monitors water quality to determine whether standards are met. Water Services staff annually visit local elementary school classrooms to share information about water and its value as a natural resource. To fund Water-related infrastructure and operations, the City has an enterprise fund for water, for which it collects user fees for service from residents and businesses in Los Banos. New development in Los Banos also pays a development impact fee to ensure adequate expansion of water infrastructure and service, shown below in Table 8. Table 8. Water Development Impact Fees (2024$) Type Fee Unit Single Family $7,635.06 per unit Multi-Family $6,108.53 per unit Age-Restricted $4,132.71 per unit Retail $4,349.93 per 1,000 sq. ft. Office $3,263.37 per 1,000 sq. ft. Institutional $1,631.67 per 1,000 sq. ft. Industrial $1,087.80 per 1,000 sq. ft. Source: City of Los Banos 2024 Adjusted Development Impact Fees; Economic & Planning Systems Economic & Planning Systems, Inc. 52 Water CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 The 2024-25 CIP lists multiple planned water projects (Ward Road water tank site fence, water line replacements, fleet and equipment replacements) with a total cost of $14.5 million over the next five years and funded primarily out of the Water Fund. Determinations 1. Growth and population projections for the affected area Although not required by law, the City conducted a Water Supply Assessment for General Plan 2042 and determined that there is sufficient water supply for the development that would be allowed under this General Plan. However, a separate water capacity assessment performed by a consultant for MCAG in 2023 concluded that the City’s current water supply is not sufficient to supply future development and recommended a new well and storage tank to increase supply. As annual use increases, the City will be faced with the challenge of finding alternative sources of water to supplement groundwater and provide good quality potable water due to concentrations of arsenic and hexavalent chromium (chromium-6) in the subbasin. The City will continue to coordinate with the Central California Irrigation District, the San Joaquin River Exchange Contractors (SJREC) GSP Group, and other agencies to monitor groundwater levels in the Delta-Mendota Subbasin and explore other means to supplement groundwater. The City will also require new development to document the availability of water supply capacity, quality, and infrastructure prior to approval of new development. Furthermore, the 2042 General Plan notes that prior to any annexations, the City must ensure that adequate water supply and service can be provided. In the 2020 Urban Water Management Plan update, the City projects total water demand of 11,200 acre-feet in annual water volume by 2045, approximately 35 percent more than the current demand of 8,309 acre-feet. However, the plan concludes that groundwater supply is sufficient to meet the City’s needs in the future (assuming sufficient groundwater recharge), consistent with claims in the 2042 General Plan’s Water Supply Assessment. 2. The location and characteristics of any Disadvantaged Communities (DUCs or DACs) within or contiguous to the SOI There are two DUCs located outside of the Los Banos city limits and its current SOI: Unincorporated Community #12 (one mile south of the City) and Unincorporated Community #13 (two miles west of the City, which is in the City’s proposed SOI). Neither DUC is provided with water by the City of Los Banos, although residents in both utilize private wells to extract groundwater through the same subbasin that supplies the City. Economic & Planning Systems, Inc. 53 Water CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 However, approximately 75% of the City limits, and all territory outside the City within the General Plan designated “Urban Growth Boundary” are identified as DACs (Disadvantaged Communities) meeting the definition in Section 39711 of the State Health and Safety Code as either low-income communities or communities that are disproportionately affected by environmental pollution and other hazards leading to negative health effects, exposure, or environmental degradation. According to the State Office of Environmental Health Hazards Assessment mapping tool “CalEnviroScreen” most of the City and the Urban Growth Boundary are at an 85%-90% percentile score. According to the 2042 General Plan Draft EIR (Pg. I-12), the State’s indicators leading to the high DAC scoring include those with high levels of fine particulate matter (PM2.5), groundwater threats, asthma risks, cardiovascular disease, and unemployment. 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 SOI The 2023 Merced County Water and Sewer Infrastructure Capacity Assessment (prepared by consultants under contract to MCAG) concluded that Los Banos’ water supply is not sufficient to supply future development and recommended the City construct a new well and storage tank to increase water supply and to evaluate alternative water supply or demand reduction measures to bring the City into compliance with the target sustainable yield. Short-term and high-priority water capital projects are identified in the City’s CIP. Other water infrastructure needs are discussed in long-range planning documents such as the Water Distribution Master Plan, the Urban Water Management Plan, and the General Plan. The Water Distribution Master Plan was last updated in 2010, and the City plans to update this study. The Urban Water Management Plan was last updated in 2020, as required by the State Department of Water Resources. Section Seven of the 2020 Urban Water Management Plan projects water supply and demand from 2025 – 2045, indicating supply will precisely meet demand through the projected 11,233 AF of water demanded by 2045. The FY 2024-25 Capital Improvement Plan identifies 32 capital improvements funded by the Water Fund, for a total cost of $14.5 million. The projects range from fleet and equipment upgrades to water line replacements. With all relevant documents from various agencies taken into consideration, it appears the City could maintain an adequate water supply through buildout if identified improvements and actions are undertaken, such as the construction of capacity- enhancing infrastructure and the implementation of demand-reduction techniques. Economic & Planning Systems, Inc. 54 Water CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 4. Financial ability of agencies to provide services The main source of funding for water services is the City’s Water Fund, an enterprise fund which collects user fees from residents and businesses used to support operations and maintenance of the waste system. For FY 2024-25, the Adopted Budget expects approximately $8.8 million in revenue, primarily through fees. It is the City’s policy to maintain a minimum reserve and any unappropriated fund balances in its enterprise operating funds, which includes the Water Fund. The Water Fund pays for all the costs of water service and supply in Los Banos, including administration, operations, maintenance, and capital improvements. In the FY 2024-25 budget, the Water Fund’s beginning balance is $46 million and its revenues and expenditures for the fiscal year are $8.8 million and $15.3 million, respectively. These estimates would result in a net impact to the fund of -$6.6 million for a FY2024-25 ending fund balance of $39.4 million. New water supply facilities for new development will be funded through a water supply development impact fee. As of June 2024, the fee ranges from $4,132.71 to $7,635.06 for residential units, and $1,987.80 to $4,349.93 for non-residential development. Los Banos collects a monthly flat rate of $25.14 for water service to residential development plus a graduated rate of $1.95 per hundred cubic feet over the allowance of 1,500 cubic feet. The rate is slightly different for single-metered multifamily units and is based on meter size for commercial development.51 The rate for water service is low compared to other cities, such as Fresno, who has a monthly water charge of $39.60 for 1,500 cubic feet of usage.52 Los Banos may have capacity for gradual water rate increases as needed to cover the cost of operations and maintenance of its water system. Because the City has an updated Urban Water Management Plan, it can be eligible for water-related grants or loans provided by the DWR. 51 City of Los Banos Finance Dept. 52 Black & Veatch Corporation, “50 Largest Cities Water/Wastewater Rate Survey,” 2009/2010. Economic & Planning Systems, Inc. 55 Water CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 5. Status of, and opportunities for, shared facilities Los Banos shares the same groundwater source, the Delta-Mendota subbasin, with other local water suppliers. However, there are currently no shared facilities. It is the City’s policy to prohibit extension of water and sewer lines beyond its SOI, except in certain cases of developing regional water or sewer facilities, or areas where the City has agreements to provide services. The City does collaborate with other agencies through the local GSA to implement projects that improve the overall sustainability of the subbasin and basin, which are critical water sources in the San Joaquin Valley. 6. Accountability for community service needs, including governmental structure and operational efficiencies The City’s Public Works Department operates the Los Banos water system. With over $7 million (excluding capital outlay and contingency budget) in operating costs for FY 2024-25, and 13,490 connections, the City of Los Banos provides water at an approximate cost of $519 per connection. The City prepared a Water Master Plan in March 2011 that identified current supply and demand, as well as expected future demand based on buildout of the General Plan and sources for that demand. The system appears to be managed reasonably and responsibly. However, the City (as recently as the City’s 2024 Drinking Water Consumer Confidence Report) is exceeding State hexavalent chromium (chromium-6) drinking water standards of 10 parts per billion with an average detected level of 32 parts per billion. The local water resources and water infrastructure capacity were additionally evaluated at the time of the Urban Water Management Plan update in 2020 and General Plan update in 2022. 7. Any other matter related to effective or efficient service delivery, as required by commission policy No other matters have been identified at this time. Economic & Planning Systems, Inc. 56 Water 8. Parks and Recreation The Los Banos Parks and Recreation Department maintains parks and open space facilities and provides recreational services to the residents of Los Banos. The Park Maintenance and Recreation Department budget represents approximately 12 percent of the City’s General Fund expenditures for Fiscal Year 2024-2025. In addition, the Department is funded through Measure H, special revenue funds, and assessment districts. The department is relatively new as a standalone department as it was a division under Public Works prior to July 2023. The Parks and Recreation Department of the City of Los Banos maintains a park system with approximately 264 acres of neighborhood, community, and pocket parks in the city serving a population of roughly 47,400 residents. This translates into a park ratio of 5.6 acres per 1,000 residents, which is above the General Plan-indicated policy of 5 acres per 1,000 residents. The Parks Master Plan, last updated in 2021, provides goals and strategies for maintaining current parks and providing new acreage as development expands. Description Los Banos’ parks and facilities are described in the Park Master Plan, which provides the following classifications based on park size and service geography: • Pocket Park: A pocket park is usually less than one acre in size and intended to serve the neighborhood within a quarter-mile radius. The 2042 General Plan lists 15 pocket parks in Los Banos. • Neighborhood Park: A neighborhood park is usually between one to ten acres and provides basic recreational amenities for neighborhoods within a half-mile radius. There are 20 neighborhood parks in Los Banos. • Community Park: Community parks are larger than pocket or neighborhood parks (usually 7 to 20 acres in size) and provides a greater level of maintained recreational amenities or facilities, such as sports fields, tennis courts, basketball courts, or picnic areas. They are intended to serve a community within a 1 to 3-mile radius. Los Banos has four community parks: 7th St. Ballpark, the AG Sports Complex, Colorado Ballpark, and Pacheco Park. • Specialized Park or Facility: A specialized use park is a recreation area or facility intended to provide the city with a specific activity or major use and are generally not determined by size. This category may include elements from neighborhood and community parks and is intended to provide amenities that could serve visitors from outside the city. Specialized parks or facilities provide residents with recreational activities or major uses and are generally not determined by their size or acreage. Examples of this include skate parks, Economic & Planning Systems, Inc. 57 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 BMX tracks, or dog parks. Los Banos has seven specialized parks or facilities, including the Los Banos Community Center. • Trail: A trail is a linear path that is along a linear feature, such as a waterway, roadway, or railroad right-of-way, and can vary in width up to 100 feet. The 2042 General Plan identifies five City-owned and maintained trails in Los Banos. Figure 13 shows a map of the parks and recreation facilities in Los Banos. Figure 12. Los Banos Parks and Recreation Facilities Source: City of Los Banos 2042 General Plan (2022). Note: Sphere of Influence shown above is the City’s proposal, see Figure 3 for current City SOI. Figure 14 shows the acreage and types of parks in the city. As of 2022, the City has 264 acres of parkland, approximately half of which is from neighborhood parks. The remaining half includes community parks (29 percent), trails (14 percent), special facilities (four percent), and pocket parks (four percent). City staff indicate there has been a spate of park additions and improvements in the past few years; since 2018, the City has more than doubled its number of playgrounds (from 17 to 37), and 20 out of the City’s 37 playgrounds have integrated shade structures since 2021. Economic & Planning Systems, Inc. 58 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 13. Los Banos Citywide Park and Recreation Acreage Source: City of Los Banos, 2042 General Plan (2022). With a 2024 population of 47,419,53 the City of Los Banos’ total park and recreation acreage of 264.35 results in 5.6 acres per 1,000 residents. This puts the City within its General Plan-identified acreage provision of between five and seven acres per 1,000 residents. According to the 2021 Parks Master Plan, this service standard is in line with that of similar California cities.54 To maintain its current ratio of 5.6 acres per 1,000 while accommodating population growth to 56,400 by 2038, the City must add 50 acres of new parkland, or around 3.9 acres per year starting in 2025. The Los Banos Park Maintenance and Recreation Department had a total budget of $12,797,120 in FY 2024-25.55 Around $2.9 million of that, or 23 percent, is sourced from the General Fund. The remaining budget comes from a combination 53 California Department of Finance, “E-5 Population and Housing Estimates for Cities, Counties, and the State, 2020-2024”, 2024. 54 Comparison cities in the Plan included the cities of El Centro, Hollister, Delano, and Manteca, which have an average standard of 3.2 acres of neighborhood and pocket parks and 1.6 acres of community parks per 1,000 residents. Los Banos’ current standard is 3.2 and 1.8 acres, respectively. 55 City of Los Banos Adopted Budget Fiscal Year 2024-2025. Economic & Planning Systems, Inc. 59 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 of Measure H funding, special revenue funds, and assessment districts. Landscape and Lighting Districts (LLDs) provide funding in 18 Assessment Districts across the city and Measure H is a local half-cent tax that allocates 15 percent of its revenue to Parks Maintenance and Recreation. The funding raised through each LLD can only be utilized in service of that LLD, so older areas of the city that are not a part of an LLD have less funding available for maintenance. City staff indicates that these areas typically have less landscaping and medians than the LLD areas and therefore require less resources to maintain but regardless are more resource constrained. The Master Plan indicates there is a need for greater funding to adequately maintain current parks and provide additional acreage. Discussions with City staff indicate that tree maintenance is a particular area where more resources are needed. Currently, the City does not have a dedicated tree maintenance division and the Parks and Recreation Department is responsible for maintaining over 13,000 trees in the City in addition to the park acreage with only nine staff members.56 American Rescue Plan Act (ARPA) funding has been used in the past to fund on-call tree trimming consultants, but as that is a one-time source, the future resources for necessary tree trimming in non-LLD areas is not specified. Figure 15 shows a breakdown of the funding sources from the FY 2024-25 adopted budget. The Parks & Recreation Department does not only fund the construction and maintenance of parks and facilities, but also supports recreation activities and programming citywide. In FY2024-25, Recreation used $1.3 million in operating budget from the General Fund but also charges fees for services for facility rentals. 56 City of Los Banos Adopted Budget Fiscal Year 2024-2025. Economic & Planning Systems, Inc. 60 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Figure 14. Los Banos Parks Maintenance and Recreation Department Funding, FY 2024-25 Source FY 2024-25 Percent General Fund Recreation $1,297,146 10% Maintenance $1,629,377 13% Measure H $1,027,458 8% Special Revenue Funds LB Park Development Impact Fund $2,305,000 18% Sunrise Ranch Park $1,338,959 10% Shaunessy Village Park $1,077,978 8% Assessment Districts $4,121,202 32% TOTAL $12,797,120 100% Source: City of Los Banos Adopted Budget FY 2024-25 Figure 16 shows the department’s annual funding since 2021. FY 2024’s total funding has been the highest of the last few years, primarily due to expanded capital outlay coming from the Special Revenue funds (impact fees) to fund priority CIP projects from the Parks Master Plan. Figure 15. Parks Maintenance and Recreation Funding History Source: City of Los Banos FY 2024-25 Adopted Budget Economic & Planning Systems, Inc. 61 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 According to the 2024 National Recreation and Park Association (NRPA) Agency Performance Review, the typical park and recreation agency has an annual operating expense of $99.47 on a per capita basis. In FY 2025-26, Los Banos’ Parks and Recreation Department has annual operating expenditures of $5,530,448, which equates to $116.63 on a per capita basis, above the national benchmark by $17.16 per capita, or 117 percent.57 Communication with City staff indicate that Los Banos Parks and Recreation Department expenditures include all landscape planters and city trees, which is not standard for parks agencies nationwide. The 2024 NRPA Agency Performance Review also finds that the typical park and recreation agency staffs 8.9 Full-Time Equivalent (FTE) employees per 10,000 residents. Communication with City staff indicates there are currently 21.5 FTEs employed by the Parks and Recreation Division. Given the City’s current population of 47,419, the Parks and Recreation Division employs 4.5 FTEs per 10,000 residents, which is 4.4 FTEs below the national median. The 2021 Parks and Recreation Master Plan suggests funding guidelines to estimate annual operational funding to maintain park acreage. Given these cost ranges and the amount of park acreage identified in the 2042 General Plan, the maintenance needs of the parks (minus athletic fields and special use facilities) range from $2.4 million to $2.8 million in costs (when adjusted for inflation). Currently, parks maintenance is primarily funded out of the General Fund and Assessment (Lighting & Landscape) Districts, and add up to $5.75 million in FY 2024, suggesting the City has above adequate park maintenance funding levels. New residential development in Los Banos pays a development impact fee for parks, ranging from $6,795 to $8,494 per unit. The City is currently constructing two parks—Sunrise Ranch Park and Shaughnessy Village Park—with development impact fee proceeds. Figure 16. Los Banos Parks Development Impact Fee (2024) Type Fee Unit Single Family $8,494.41 per unit Multi-Family $6,795.04 per unit Age-Restricted $4,597.71 per unit Source: City of Los Banos 2024 Adjusted Development Impact Fees; Economic & Planning Systems 57 Via communications with Parks and Recreation Department Staff. Economic & Planning Systems, Inc. 62 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 According to the FY 2025-29 Capital Improvement Plan, the City is planning to spend $18.3 million on capital improvements, with $8.8 million (48 percent) in expenses marked for FY 2025. Capital improvements will receive funding from several sources, including the General Fund, Measure H, impact fees, and assessment district. The highest cost improvements include the Ag Sports Complex and Colorado Ball Park, to be funded out of the Park Impact Fee Fund with supplemental funding from Measure H. The Parks Department is studying potential renovations to the Colorado Ball Park, a 70-year old Community Park featuring three baseball fields, two tennis courts, and a skate park. Staff have determined that complete renovation is necessary and that the estimated cost would range between $13 and $17 million to undertake. As previously mentioned, impact fees and Measure H funding could be utilized for parts of the renovation, and staff indicate that about $12 million in funding is being sought from the Park Development Fund (impact fee fund) with the potential to finance with a repayment plan from the Fund, unless grants or additional funding are secured. If the full $12 million is funded through the Park Development Fund, there would be $1 - $5 million in remaining funding that would need to be acquired from other sources. The ballpark is located in a census tract that qualifies as a “disadvantaged community” which allows access to certain grant opportunities that would not otherwise be available. Economic & Planning Systems, Inc. 63 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Determinations 1. Growth and population projections for the affected area The City currently has approximately 264 acres of neighborhood, community, and pocket parks in the city serving a population of roughly 47,400 residents. This translates into a park ratio of 5.6 acres per 1,000 residents. To maintain this current ratio by the projected population of 56,400 at buildout in 2038, the City would need to acquire an additional 50 acres of parkland. Staff indicate that the ideal method of meeting the additional acreage necessary would be through the development of community parks, and note that the community has expressed interest in a large sports park or swimming facility. Typically, new developments in Los Banos are in subdivisions that form LLDs. If future growth occurs in this fashion, there should be sufficient resources through the LLDs to provide new development with a level of funding consistent with current standards. 2. The location and characteristics of any Disadvantaged Communities (DUCs or DACs) within or contiguous to the SOI There are two DUCs located outside of the Los Banos city limits and its current SOI: Unincorporated Community #12 (one mile south of the City) and Unincorporated Community #13 (two miles west of the City, which is in the City’s proposed SOI). The City maintains one parks facility outside of city limits, the Page Extension Trail, which is currently in County land between South 11th Street and State Highway 165. Approximately 75 percent of the City limits, and all territory outside the City within the General Plan designated “Urban Growth Boundary” are identified as DACs. Based on Figure 13, areas designated as DACs have a roughly proportionate number of parks and recreation facilities as the other 25 percent of the City. Economic & Planning Systems, Inc. 64 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 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 SOI The present capacity of parks and recreation facilities appears to be sufficient. The 2021 Parks Master Plan compared Los Banos’ present level of parks service to similar California cities and found that the City’s current standards are equal to or better than the regional standards of comparable cities. The Parks Master Plan and the General Plan aim to provide a park within quarter-mile access for each resident and seeks to achieve a parkland goal of at least 5 acres per 1,000 residents. At 5.6 acres per 1,000 residents, the City is currently exceeding that goal. City staff indicate the importance of maintaining its current park access as the City grows. Discussions with City staff indicate that additional specialized facilities would be warranted in the future, such as multipurpose fields, splash pads, and new water facilities such as an aquatic center. Water facilities such as these would require additional specialized staffing. Additionally, the City is studying and pursuing several planned community parks. The 2021 Parks Master Plan provides concepts for these major efforts, including a regional sports facility in the southwest area of the city with multiple sports fields, courts, picnic areas, and open space; an aquatics center downtown with indoor swimming and recreational facilities; and renovation and expansion of some existing parks. The Ag Sports Complex in the northeast area of the city is proposed for expansion to potentially accommodate sports fields, a dog park, trails, and other recreational facilities. Colorado Park in the northwest area of the city would be renovated with new picnic areas, ballcourts, and hardscaped areas. New parkland areas are to be acquired by the City through private and public funding sources or through development contributions. The 2024 NRPA Agency Performance Review also finds that the typical park and recreation agency staffs 8.9 Full-Time Equivalent (FTE) employees per 10,000 residents. The 2021 Los Banos Parks Master Plan lists 18.5 FTEs employed by the Parks and Recreation Division. Given the City’s current population of 47,419, the Parks and Recreation Division employs 3.9 FTEs per 10,000 residents, five FTEs below the national median. It should also be noted that while the maintenance costs of many areas of the City are covered by LLDs, these are typically formed by new subdivisions, and some areas of Los Banos do not benefit from that coverage and must rely heavily on General Fund allocations. The City should consider mechanisms to provide equitable Parks & Recreation funding and resources across the city. Economic & Planning Systems, Inc. 65 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 4. Financial ability of agencies to provide services Data from the NRPA indicates the typical park and recreation agency has an annual operating expense of $99.47 per capita. In the FY 2024-25 Adopted Budget, the Park Maintenance and Recreation department has a budget of $12.8 million, or $269.87 per capita, suggesting the City has a very well-funded parks department on a per capita basis. Additionally, the 2021 Parks and Recreation Master Plan funding guidelines suggest that the City needs between $2.4 and $2.8 million per year for ongoing maintenance of current parks. The most recent budget allocates funding that meets and exceeds that goal. Funding sources for Parks Maintenance include the General Fund, Measure H, special revenue funds, and multiple Landscape and Lighting Districts (Assessment Districts). These funding sources are expected to provide continuous annual funding to the department. New residential development in the City also pays a one-time development impact fee to cover their share of increased demand on park improvements. City staff are interested in pursuing additional grants to supplement the current funding and prepare for future upgrades or capital projects. Issuing bonds would be an additional option to procure sufficient resources for desired capital projects, and discussions with City finance staff indicate the City has a very high debt capacity and could issue a considerable amount of municipal debt but the general policy has been to not maintain any debt. 5. Status of, and opportunities for, shared facilities Currently, there is a joint-use agreement between the school district and the City for facility use, such as the use of the high school’s gym for recreation basketball leagues, which requires agreement on intensity of use, costs, and other factors. The H.G. Fawcett Canal Trail is on land that is leased from the CCID Irrigation District (with the trail maintained by the City), and Officer Noah Jones Ballpark is a County-owned park that is leased from Merced County to Los Banos and operated by the City. The City does not currently have any regional parks in its system. However, should the City seek to establish one, the 2021 Parks Master Plan suggests the City could form a joint powers agreement or other partnership with other organizations like school districts, special assessment districts, or the County of Merced to share costs of construction and maintenance. Economic & Planning Systems, Inc. 66 Parks and Recreation CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 6. Accountability for community service needs, including governmental structure and operational efficiencies The City of Los Banos’ Parks and Recreation Department has shown accountability and responsiveness to community service needs. In 2024, the Parks and Recreation Department completed a renovation of College Greens Park, the City’s first inclusive playground which includes ramp access to meet the needs of the community, and has added a second inclusive playground at Regency Lot D Park in 2025.58 Additionally, during the tenure of the current Department Director, the City has renovated 13 of 14 playgrounds, including adding shade to five playgrounds and receiving grant funding for five more.59 Maintenance Services, a division of City’s Parks Maintenance and Recreation Department, is responsible for the maintenance of city parks, as well as the city’s street trees and landscaping. The Parks & Recreation Director reports to the City Manager and elected City Council. No changes to the City’s government structure are pending or proposed. The Parks and Recreation webpage is updated and provides a phone number for residents to report maintenance issues or service needs. 7. Any other matter related to effective or efficient service delivery, as required by commission policy No other matters have been identified at this time. 58 Communication with City staff. 59 Discussion with Joe Heim, March 13th, 2024. Economic & Planning Systems, Inc. 67 Parks and Recreation Appendices Appendix A: LAFCO MSR and Sphere of Influence History and Local Policy Appendix B: Merced LAFCO Comment Letter on City of Los Banos 2024 General Plan Final EIR (Dated 10/13/2022) Appendix C: Acronyms and Glossary of Terms Appendix A LAFCO MSR and Sphere of Influence History and Local Policy LAFCO MSR and Sphere of Influence History and Local Policy LAFCO History After World War II, California experienced dramatic growth in population and economic development. With this boom came a demand for housing, jobs, and public services. To accommodate this demand, many new local government agencies were formed, often with little forethought as to the ultimate governance structures in a given region, and existing agencies often competed for expansion areas. The lack of coordination and inadequate planning led to a multitude of overlapping, inefficient jurisdictional and service boundaries, and the premature conversion of California’s agricultural and open-space lands. Recognizing this problem, in 1959, Governor Edmund G. Brown, Sr. appointed the Commission on Metropolitan Area Problems. The Commission's charge was to study and make recommendations on the “misuse of land resources” and the growing complexity of local governmental jurisdictions. The Commission's recommendations on local governmental reorganization were introduced in the Legislature in 1963, resulting in the creation of a Local Agency Formation Commission, or LAFCO. LAFCO is responsible for coordinating logical and timely changes in local governmental boundaries, including annexations and detachments of territory, incorporations of cities, formations of special districts, and consolidations, mergers and dissolutions of districts, as well as reviewing ways to reorganize, simplify, and streamline governmental structure. The Commission's efforts are focused on ensuring that services are provided efficiently and economically while agricultural and open-space lands are protected. To better inform itself and the community as it seeks to exercise its charge, LAFCO conducts service reviews to evaluate the provision of municipal services in the County. Municipal Service Review Origins The MSR requirement was enacted by the Legislature months after the release of two studies recommending that LAFCOs conduct reviews of local agencies. The “Little Hoover Commission” focused on the need for oversight and consolidation of special districts, whereas the “Commission on Local Governance for the 21st Century” focused on the need for regional planning to ensure adequate and efficient local governmental services as the California population continues to grow. Economic & Planning Systems, Inc. A-1 Appendix A CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Little Hoover Commission In May 2000, the Little Hoover Commission released a report entitled Special Districts: Relics of the Past or Resources for the Future? This report focused on governance and financial challenges among independent special districts, and the barriers to LAFCO’s pursuit of district consolidation and dissolution. The report raised the concern that “the underlying patchwork of special district governments has become unnecessarily redundant, inefficient and unaccountable.”60 In particular, the report raised concern about a lack of visibility and accountability among some independent special districts. The report indicated that many special districts hold excessive reserve funds and some receive questionable property tax revenue. The report expressed concern about the lack of financial oversight of the districts. It asserted that financial reporting by special districts is inadequate, that districts are not required to submit financial information to local elected officials and concluded that district financial information is “largely meaningless as a tool to evaluate the effectiveness and efficiency of services provided by districts, or to make comparisons with neighboring districts or services provided through a city or county.”61 The report questioned the accountability and relevance of certain special districts with uncontested elections and without adequate notice of public meetings. In addition to concerns about the accountability and visibility of special districts, the report raised concerns about special districts with outdated boundaries and outdated missions. The report questioned the public benefit provided by health care districts that have sold, leased, or closed their hospitals, and asserted that LAFCOs consistently fail to examine whether they should be eliminated. The report pointed to service improvements and cost reductions associated with special district consolidations and asserted that LAFCOs have generally failed to pursue special district reorganizations. The report called on the Legislature to increase the oversight of special districts by mandating that LAFCOs identify service duplications and study reorganization alternatives when service duplications are identified, when a district appears insolvent, when district reserves are excessive, when rate inequities surface, when a district’s mission changes, when a new city incorporates, and when service levels are unsatisfactory. To accomplish this, the report recommended that the State strengthen the independence and funding of LAFCOs, require districts to report to their respective LAFCO, and require LAFCOs to study service duplications. 60 Little Hoover Commission, 2000, p.12. 61 Little Hoover Commission, 2000, p.24. Economic & Planning Systems, Inc. A-2 Appendix A CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Commission on Local Governance for the 21st Century The Legislature formed the Commission on Local Governance for the 21st Century (21st Century Commission) in 1997 to review statutes on the policies, criteria, procedures and precedents for city, county and special district boundary changes. After conducting extensive research and holding 25 days of public hearings throughout the State at which it heard from over 160 organizations and individuals, the 21st Century Commission released its final report, Growth Within Bounds: Planning California Governance for the 21st Century, in January 2000.62 The report examines the way that government is organized and operates and establishes a vision of how the State will grow by “making better use of the often invisible LAFCOs in each county.” The report points to the expectation that California’s population will double over the first four decades of the 21st Century and raises concern that our government institutions were designed when our population was much smaller and our society was less complex. The report warns that without a strategy, open spaces will be swallowed up, expensive freeway extensions will be needed, job centers will become farther removed from housing, and this will lead to longer commutes, increased pollution and more stressful lives. Growth Within Bounds acknowledges that local governments face unprecedented challenges in their ability to finance service delivery since voters cut property tax revenues in 1978 and the Legislature shifted property tax revenues from local government to schools in 1993. The report asserts that these financial strains have created governmental entrepreneurism in which agencies compete for sales tax revenue and market share. The 21st Century Commission recommended that effective, efficient, and easily understandable government be encouraged. In accomplishing this, the 21st Century Commission recommended consolidation of small, inefficient, or overlapping providers, transparency of municipal service delivery to the people, and accountability of municipal service providers. The sheer number of special districts, the report asserts, “has provoked controversy, including several legislative attempts to initiate district consolidations,”63 but cautions LAFCOs that decisions to consolidate districts should focus on the adequacy of services, not on the number of districts. Growth Within Bounds stated that LAFCOs cannot achieve their fundamental purposes without a comprehensive knowledge of the services available within its county, the current efficiency of providing service within various areas of the county, future needs for each service, and expansion capacity of each service provider. Comprehensive knowledge of water and sanitary providers, the report argued, would promote consolidations of water and sanitary districts, reduce water costs, and promote a more comprehensive approach to the use of water resources. Further, the report asserted that many LAFCOs lack such knowledge 62 The Commission on Local Governance for the 21st Century ceased to exist on July 1, 2000, pursuant to a statutory sunset provision. 63 Commission on Local Governance for the 21st Century, 2000, p. 70. Economic & Planning Systems, Inc. A-3 Appendix A CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 and should be required to conduct such a review to ensure that municipal services are logically extended to meet California’s future growth and development. MSRs would require LAFCO to look broadly at all agencies within a geographic region that provide a particular municipal service and to examine consolidation or reorganization of service providers. The 21st Century Commission recommended that the review include water, wastewater, and other municipal services that LAFCO judges to be important to future growth. The Commission recommended that the service review be followed by consolidation studies and be performed in conjunction with updates of SOIs. The recommendation was that service reviews be designed to make nine determinations, each of which was incorporated verbatim in the subsequently adopted legislation. The legislature since consolidated the determinations into six required findings. Municipal Service Review Legislation The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (“CKH Act”) requires LAFCO review and update SOIs every 5 years, as necessary, and to review municipal services before updating SOIs. The requirement for service reviews arises from the identified need for a more coordinated and efficient public service structure to support California’s anticipated growth. The service review provides LAFCO with a tool to study existing and future public service conditions comprehensively and to evaluate organizational options for accommodating growth, preventing urban sprawl, and ensuring that critical services are provided efficiently. As revised through SB 244 (Wolk) in 2011, Government Code §56430 requires LAFCO to conduct a review of municipal services provided in the county by region, sub-region, or other designated geographic area, as appropriate, for the service or services to be reviewed, and prepare a written statement of determination with respect to each of the following topics: 1) Growth and population projections for the affected area. 2) The location and characteristics of any Disadvantaged Communities (DUCs or DACs) within or contiguous to the SOI. 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 SOI. 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. Economic & Planning Systems, Inc. A-4 Appendix A CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Spheres of Influence • An SOI is a LAFCO-approved plan that designates an agency’s probable future boundary and service area. Spheres are planning tools used to provide guidance for individual boundary change proposals and are intended to encourage efficient provision of organized community services, discourage urban sprawl and premature conversion of agricultural and open space lands, and prevent overlapping jurisdictions and duplication of services. Every determination made by a commission in regard to boundary changes such as annexations and governmental reorganizations must be consistent with the SOIs of local agencies affected by that determination;64 for example, territory may not be annexed to a city or district unless it is within that agency's sphere. SOIs should discourage duplication of services by local governmental agencies, guide the Commission’s consideration of individual proposals for changes of organization, identify the need for specific reorganization studies, and provide the basis for recommendations to particular agencies for government reorganizations. Adoption, update or amendment to a sphere requires a noticed public hearing. • The CKH Act requires LAFCO to develop and determine the SOI of each local governmental agency within the county, and to review and update the SOI every 5 years, as necessary. LAFCOs are empowered to adopt, update, and amend the SOI. They may do so with or without an application, and any interested person may submit an application proposing an SOI amendment. • As authorized by the Cortese-Knox-Hertzberg Act of 2000 (Government Code Section 56000, et. sec.) Merced LAFCO has adopted local policies to implement the preparation and update of spheres of influence. The following objectives and policies guide the preparation and approval of spheres of influence in Merced County, consistent with the State Government Code. Merced LAFCO SOI Objectives and Policies • OBJECTIVE II. A: Create an urban land use pattern in the city that provides adequate areas for growth while ensuring the efficient delivery of services. • Policy 1: A City’s sphere of influence boundary should be large enough to accommodate approximately 20 years of projected growth as well as territory that represents special communities of interest for the City. • Policy 2: LAFCO will recognize areas outside the sphere of influence boundary that reflect unique coordinated planning areas agreed to between the City, County and/or urban service district which are designated “area of interest”, “joint planning area” or similar designation as identified in the City and County General Plans. • Policy 3: Cities should adopt phasing policies in their General Plans which identify priorities for growth and annexation which meet the joint objectives of extending urban services in an economic and efficient manner and avoiding the premature conversion of prime agricultural lands or other valuable open space resources. 64 Government Code §56375.5. Economic & Planning Systems, Inc. A-5 Appendix A CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 • Policy 4: Where the City and County have reached agreement on proposed sphere of influence boundaries and development standards the Commission will accept the sphere unless the Commission identifies an inconsistency with the requirements of the Cortese/Knox/Hertzberg Local Government Reorganization Act of 2000. • Implementation: When the Commission performs a periodic review of a City’s sphere of influence, or when a sphere of influence revision has been submitted at the request of a City, the current City General Plan will be evaluated to identify adopted growth, development phasing, and municipal service delivery policies. The Commission will also utilize information contained in the “service review” document that has been prepared by LAFCO consistent with Government Code Section 56430. The Commission will also consider any revenue sharing agreement mutually adopted by the City and County, which contains land use and growth policies. • • OBJECTIVE II. B: The future urbanization of a City is reviewed comprehensively at the sphere of influence amendment stage rather than during the review of individual annexation requests. • Policy 5: The following criteria will be applied to cities requesting a sphere of influence amendment which is included in their General Plans and Policies that address both the Cortese/Knox/Hertzberg Act and Merced County LAFCO policies: • a. Does the General Plan identify the City’s desired sphere of influence boundary and all planned land uses in the expanded sphere? • b. Does the City’s General Plan contain policy regarding the phasing of future annexations which is consistent with the policies of Merced County LAFCO and the Cortese/Knox/Hertzberg Act? • c. Are there local policies regarding the timing of conversion of agricultural and other open space lands and the avoidance of conversion of prime soils? • d. Does the City’s General Plan demonstrate the present and probable need for public facilities and community services (including the sequence, timing and probable cost of providing such services) within the proposed sphere of influence boundary? • e. Does the City’s General Plan identify the existence of any social or economic communities of interest within the planning area, such as the relationship between any adjacent or nearby cities or special districts which provide urban services, which may affect the boundaries or the proposed sphere of influence? • Implementation: Cities that address the above referenced criteria/issues in their General Plans will have their sphere of influence amendment proposals scrutinized more thoroughly by LAFCO. The Commission shall adopt findings for each of the criteria indicating conformance with State and local LAFCO policy. Upon approval of the sphere boundary, LAFCO’s review of future annexations within this boundary will be limited to the appropriateness and efficiency of the boundary, conformance with the City’s General Plan including relevant phasing policies, and public service availability. Economic & Planning Systems, Inc. A-6 Appendix A CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 • However, when the Commission finds that the City’s General Plan does not satisfy one or more of the above sphere of influence criteria in accordance with State and local LAFCO policy, action on the sphere will be more limiting. Approval of an amended sphere boundary will reflect the City’s interest in the future annexation of the territory but will not represent a general acceptance of future individual annexation requests. All subsequent annexation proposals will be scrutinized against the full factors outlined in the Cortese/Knox/Herzberg Act under Section 56668, including justification for annexing prime agricultural or other valuable open space lands when other non-prime or non-significant open space lands are available in the sphere; availability of public services; and the timing of the annexation in relation to vacant land availability within the existing City limits. Merced LAFCO Agricultural Policies OBJECTIVE I. A: Prime agricultural land is protected and conserved while ensuring there are adequate areas for efficient and orderly growth. • Policy 1: In determining whether a City or Special District Annexation would affect prime agricultural land, the Commission shall apply the definition of “prime agricultural land” established under Section 56064 of the Cortese/Knox/Hertzberg Reorganization Act of 2000: • Land that has not been developed for a use other than an agricultural use and that meets any of the following qualifications: • a. Land that, if irrigated, qualifies for rating as Class I or Class II in the USDA Natural Resources Conservation Service land use capability classification, whether or not the land is actually irrigated, provided that irrigation is feasible. • b. Land that qualifies for rating 80 through 100 Stories Index Rating. • c. Land that supports livestock used for the production of food and fiber and that has an annual carrying capacity equivalent to at least one animal unit per acre as defined by the United States Department of Agriculture in the National Handbook on Range and Related Grazing Lands, July, 1967, developed pursuant to Public Law 46, December 1935. • d. Land planted with fruit or nut-bearing trees, vines, bushes, or crops that have a nonbearing period of less than five years and that will return during the commercial bearing period on an annual basis from the production of unprocessed agricultural plant production not less than four hundred dollars ($400) per acre. • e. Land that has returned from the production of unprocessed agricultural plant products an annual gross value of not less than four hundred ($400) per acre for three of the previous five calendar years. Economic & Planning Systems, Inc. A-7 Appendix A CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 • Implementation: The qualifications listed in items a – e shall be used in review of all boundary changes and sphere of influence revisions. However, the applicant or property owner may submit a soil analysis that demonstrates how soil has been degraded to a less than “prime” classification. The soil analysis should focus on the actual soil rather than the specific crops that may be planted. As an option, the analysis could address the soil and its ability to support crops typically grown in the area on similar soils. The cost of the soil analysis shall be borne by the applicant or property owner. • Policy 2: At the time of adoption of a sphere of influence for a city or urban service district, efforts to direct growth away from large concentrations of prime agricultural land shall be demonstrated, recognizing that some conversion of prime lands may be inevitable. MSR and SOI Update Process The MSR process does not require LAFCO to initiate changes of organization based on service review findings, only that LAFCO identify potential government structure options. However, LAFCO, other local agencies, and the public may subsequently use the determinations to analyze prospective changes of organization or reorganization or to establish or amend SOIs. LAFCO may act with respect to a recommended change of organization or reorganization on its own initiative, at the request of any agency, or in response to a landowner or voter petition. MSRs are exempt from California Environmental Quality Act (CEQA) pursuant to §15262 (feasibility or planning studies) or §15306 (information collection) of the CEQA Guidelines. LAFCO’s actions to adopt MSR determinations are not considered “projects” subject to CEQA. LAFCO must notify affected agencies at least 21 days before holding a public hearing to consider the SOI update. The LAFCO Executive Officer must issue a report including recommendations on the SOI updates under consideration at least five days before the public hearing. Unlike the MSR process, approval of a SOI update is subject to CEQA review – and in the present case for the City of Los Banos MSR and SOI Update, the City prepared an Environmental Impact Report and it was certified by the City in October 2022. Economic & Planning Systems, Inc. A-8 Appendix A Appendix B Merced LAFCO Comment Letter on Los Banos 2042 General Plan Final EIR (Dated 10/13/2022) Appendix C Acronyms and Glossary of Terms CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Acronyms and Glossary of Terms Acronyms AF Acre Feet ARPA American Rescue Plan Act CCD Community College District CCID Central California Irrigation District CEQA California Environmental Quality Act CFD Community Facilities District CIP Capital Improvement Plan CKH Act Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 DAC Disadvantaged Community DUC Disadvantaged Unincorporated Community DWR Department of Water Resources EIR Environmental Impact Report EMS Emergency Medical Services EPS Economic & Planning Systems, Inc. FTE Full-time equivalent FY Fiscal Year GAAP Generally Accepted Accounting Principles GFOA Government Finance Officers Association GSA Groundwater Sustainability Agencies GSP Groundwater Sustainability Plan GWD Grassland Water District ISO Insurance Services Office IT Information Technology JPA Joint Powers Authority LAFCO Local Agency Formation Commission Economic & Planning Systems, Inc. C-1 Appendix C CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 LBFD Los Banos Fire Department LBPD Los Banos Police Department LID Low Impact Development LLD Landscape and Lighting Assessment Districts MCAG Merced County Association of Governments MSR Municipal Service Review NRPA National Recreation and Park Association PPB Parts Per Billion PWD Public Works Department RFP Request for Proposals SB Senate Bill SGMA Sustainable Groundwater Management Act SJREC San Joaquin River Exchange Contract SOI Sphere of Influence SSMP Sewer System Management Plan SWTP Surface Water Treatment Plant UAS Unmanned Aircraft System WCSMP Wastewater Collection System Master Plan WWTP Wastewater Treatment Plant Economic & Planning Systems, Inc. C-2 Appendix C CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Glossary of Frequently Used Terms Annexation: The inclusion, attachment, or addition of territory to a city or district. Assessment: This MSR/SOI Update uses the term “assessment” broadly, to encompass benefit assessments, special taxes, special assessments, and/or parcel taxes. In some cases, the formation documents are vague, referring to a “benefit assessment or service charge” while the annual property tax bills refer to “special taxes and assessments.” A Benefit Assessment requires a professional engineer’s report that describes the benefit, proposed costs, and presents a benefit formula that is used to determine each property’s share of the cost. A majority vote is required to approve a rate increase. A Special Tax, on the other hand, is imposed for a specific purpose and must be approved by a 2/3 majority of the qualified voters in the service area. A Special Tax is not necessarily limited to the relative benefit it provides to the property owners or taxpayers. Capital Improvement Plan: A multi-year financial plan containing appropriations for major construction projects and other fixed assets. Deficit: An excess of expenditures over revenues. Direct Debt: The total amount of general obligation debt of a municipality or local government. Disadvantaged Community or Disadvantaged Unincorporated Community (DAC or DUC): A disadvantaged community includes Census Tracts, Block Groups, and Places where the median household income is less than 80% of the statewide median household income. According to U.S. Census data (American Community Survey, 2016-2020), the statewide median household income in 2020 was $78,672; 80% of that amount is $62,938. Expenditure: The use of fund resources. Fiscal Year: The 12-month period of time to which a budget applies, typically July 1st through June 30th. Fund: A group of related accounts used to manage resources assigned for specific activities or objectives. General Fund: The main operating fund of a jurisdiction, including cities, counties, and special districts. General Plan: A local government’s long-term blueprint for the community’s vision of future growth. Intergovernmental Tax Revenue: Transfers of funds from one level of government to another. This may be to fund general government operations or for specific purposes. Economic & Planning Systems, Inc. C-3 Appendix C CITY OF LOS BANOS MUNICIPAL SERVICE REVIEW UPDATE SEPTEMBER 2025 Joint Powers Authority (JPA): A legally established entity that enables two or more public agencies to jointly exercise common powers. Governed by California Government Code §6500 under the Joint Exercise of Powers Act, JPAs may comprise two or more public agencies, which are broadly defined to include entities such as the federal government, the State and its departments, cities, counties, special districts (e.g., school and utility districts), and Native American tribes. The Act permits two types of JPA arrangements: a contractual arrangement, where agencies collaborate through a joint agreement without forming a new entity and typically designate one agency to lead administratively; and a separate entity arrangement, where agencies create a new legal entity with independent authority to make decisions, contract, own property, hire staff, and manage finances, with liabilities confined to the new entity. Municipal Service Review: A study and evaluation of municipal service(s) by specific area, subregion, or region culminating in written determinations regarding specific evaluation criteria. An MSR study is prepared before a LAFCO updates an SOI for cities and special districts. Sphere of Influence: The SOI is a plan that designates an agency’s probable future boundary and service area. SOIs are intended to encourage efficient provision of organized community services and prevent duplication of service delivery. Annexation of a territory to a city or district cannot occur unless the territory is within that agency's SOI. Economic & Planning Systems, Inc. C-4 Appendix C