MSR - 2025

LAFCO of Monterey County _ LOCAL AGENCY FORMATION COMMISSION OF MONTEREY COUNTY 2025 Municipal Service Review and Sphere of Influence Study: • Pajaro/Sunny Mesa Community Services District • Castroville Community Services District • East Garrison Community Services District • Ocean View Plaza Community Services District • Pebble Beach Community Services District • Santa Lucia Community Services District • Spreckels Community Services District • Spreckels Veterans Memorial District Adopted by the Commission on October 27, 2025 COMMISSIONERS Chair Ian Oglesby, City Member Vice-Chair Wendy Root Askew, County Member Mike Bikle, Alternate Public Member Kate Daniels, County Member Dennis Donohue, City Member Matt Gourley, Public Member David Kong, Alternate Special District Member Mary Ann Leffel, Special District Member Chad Lindley, Special District Member Chris Lopez, Alternate County Member Anna Velazquez, Alternate City Member STAFF Kate McKenna, AICP, Executive Officer Darren McBain, Principal Analyst Jonathan Brinkmann, Senior Analyst Francisco Estrada, Temporary Clerk to the Commission/Analyst COUNSEL Reed W. Gallogly, General Counsel LOCAL AGENCY FORMATION COMMISSION OF MONTEREY COUNTY 132 W. Gabilan Street, Suite 102, Salinas, CA 93901 P.O. Box 1369, Salinas, CA 93902 (831) 754-5838 www.monterey.lafco.ca.gov LAFCO of Monterey County 2 Table of Contents Executive Summary Introduction………………………………………………………………………4 Key Findings………………………………………………………………….....7 Recommended LAFCO Actions……….…………………………..8 Regulatory Framework……………………….………………………….9 District Profiles Pajaro Sunny Mesa Community Services District......11 Castroville Community Services District.....................17 East Garrison Community Services District...............23 Ocean View Plaza Community Services District.......29 Pebble Beach Community Services District.................33 Santa Lucia Community Services District....................39 Spreckels Community Services District........................45 Spreckels Veterans Memorial District...........................51 Determinations, as Required by State Law...............................55 Sources and Acknowledgements...............................................58 2025 MSR & Sphere Study: Community Services Districts – Page 3 Executive Summary This Executive Summary begins with an Introduction and Background, followed by Key Findings, Recommended LAFCO Actions, and Regulatory Framework sections. Introduction and Background Study’s Scope This study provides information about the operations, services, and spheres of influence1 of the seven community services districts and the Spreckels Memorial District, listed below: • Pajaro Sunny Mesa Community Services District • Castroville Community Services District • East Garrison Community Services District • Ocean View Plaza Community Services District (inactive) • Pebble Beach Community Services District • Santa Lucia Community Services District • Spreckels Community Services District • Spreckels Veterans Memorial District2 This study meets LAFCO’s requirements, under state law, for conducting periodic service reviews and sphere of influence studies. The study also includes a list of recommended actions on page 8. Role of CSDs Community Services Districts (CSDs) provide a broad range of services, to unincorporated residents, that are not provided – or are not provided to the same extent – countywide. A CSD can provide almost any service that a city can provide, subject to LAFCO approval of any new service through an activation of a latent power. Within their service areas, CSDs provide essential services such as water and sewer, fire protection, parks and recreation, street lighting, solid waste management, and emergency medical services. CSD board members generally live within CSD boundaries and are elected by CSD residents. Exceptions include East Garrison CSD, which is governed by the County Board of Supervisors until residents pass a measure moving to elections for their own local CSD board, and Pajaro Sunny Mesa CSD, which is governed by board members appointed by the Board of Supervisors from CSD residents. CSDs allow communities to address their unique needs and maintain a higher level of control over the services that directly impact their daily lives. This ability to tailor services to specific local needs makes CSDs a flexible and vital tool for enhancing the quality of life for communities in the County of Monterey. Service Capacity Special districts must ensure their facilities and services meet current and future community needs. This study evaluates each district's ability to serve existing development and support anticipated growth or other needs. It also identifies potential infrastructure or service delivery deficiencies, such as limitations in 1 A Sphere of Influence is defined by LAFCO of Monterey County as “A plan for the probable physical boundaries and service area of a local agency, as determined by LAFCO ([California Government Code] section 56076). The area around a local agency eligible for annexation and extension of urban service within a twenty-year period.” 2 Not a CSD but being included in this study since Spreckels CSD and Spreckels Memorial District have integrated their operations to the extent permissible by law. LAFCO of Monterey County 4 water supply or wastewater treatment capacity, and considers the impact of evolving state regulations that may require upgrades. The table on page 6 summarizes each district’s service capacity, compliance with state legal requirements, and alignment with best practices. More detailed information about state legal requirements and best practices can be found in the Regulatory Framework section on page 9. Seven Community Services Districts and Spreckels Veterans Memorial District Map (inactive) 2025 MSR & Sphere Study: Community Services Districts – Page 5 Service Capacity, State Legal Requirements and Best Practices Summary Table Description LAFCO of Monterey County 6 orajaP ynnuS aseM ellivortsaC tsaE nosirraG elbbeP hcaeB atnaS aicuL slekcerpS slekcerpS lairomeM Service Capacity: Are there any deficiencies in District capacity to meet service needs N Y N N N N N of existing development within its existing territory? Are there any issues regarding your District’s capacity to meet the N Y N N N N N service demand of reasonably foreseeable future growth? Are there any concerns regarding public services provided by the N Y N N N Y N District being considered adequate? Are there any significant infrastructure needs or deficiencies to be Y Y N N N Y Y addressed? Are there changes in state regulations on the horizon that will Y N N N N N N require significant facility and/or infrastructure upgrades? Are there any other service delivery issues that the agency wants Y Y N N N Y N addressed in LAFCO’s service and sphere review process? State Legal Requirements: District adopted an annual budget for each of the last five years? Y Y Y Y Y Y Y District completed annual audits for each of the last five years? Y Y Y Y Y N N District Board and designated staff completed Form 700 filings in Y Y Y Y Y Y Y the current year? District Board and designated staff completed ethics and Y Y Y Y Y N N harassment prevention training in the last two years? District maintains a compliant website? (available contact Y Y Y Y Y Y Y information, current agenda, financial transaction reports, and compensation reports) Best Practices: District meets the best practices listed in the Special District N Y Y Y Y N N Leadership Foundation’s (SDLF) High Performing District Checklist? District received SDLF’s District Transparency Certificate of N N N Y N N N Excellence in the last three years? District received the Government Finance Officers Association’s N N N Y N N N Certificate of Achievement for Excellence in Financial Reporting Program, SDLF’s District of Distinction Accreditation, or similar recognition in finance in the last three years? District has an adopted Will-Serve Letter Policy for water and/or N Y NA NA* Y N N sewer services? District policies strengthen or add restrictions to the one-year ban N N Y N** Y Y Y (per California Government Code Section 87406.3), prohibiting former officials from representing others for compensation to influence agency decisions in administrative or legislative actions? Y=Yes; N=No; and NA = Not Applicable * Will serve letters are no longer issued by PBCSD as all present and future lot development has been approved and accounted for per the Del Monte Forest Preservation and Development Plan. ** Future revisions to PBCSD’s Administrative Code will include policy for former officials to adhere to California Government Code Section 87406.3. Key Findings The following key findings highlight the study’s most significant observations and conclusions. 1) Districts are effectively carrying out their missions of providing essential services to their communities. The districts under review are fulfilling their missions to provide essential services to their communities. A number of service delivery highlights include: PSMCSD serves over 9,700 residents across several communities, including Pajaro, Moss Landing, and Prunedale, focusing on water quality improvements and regional water system consolidation efforts to strengthen infrastructure resiliency. CCSD provides water and wastewater services to approximately 7,000 residents in Castroville and Moss Landing, building reliable water supplies to address seawater intrusion and rehabilitating aging infrastructure. EGCSD supports the East Garrison community by managing road maintenance, storm drains, and other critical services, helping to ensure that the community’s infrastructure meets the needs of the existing and future residents. PBCSD ensures high-quality fire and EMS services and wastewater collection and treatment by partnering with multiple public agencies. SLCSD has significantly upgraded its water infrastructure with the completion of a new water treatment plant and two new wells in 2022 to ensure a reliable water supply. SCSD and Spreckels Veterans Memorial District are effectively providing services to Spreckels through oversight and strategically planning for the future. 2) Districts are actively working toward addressing identified challenges. Each district is actively addressing challenges within their service areas. PSMCSD is improving water systems and addressing flood risks, particularly through its regional consolidation project and water system upgrades like the Springfield Improvement project to address nitrate contamination. CCSD is addressing seawater intrusion through projects like the CCSD Emergency Well #6 initiative, which will provide safe and reliable drinking water. SCSD and Spreckels Veterans Memorial District are working to address their infrastructure and facility needs through pursuing potential funding resources. 3) Most districts are meeting state legal requirements and best practices. With the exceptions of SCSD and Spreckels Veterans Memorial District, the districts are meeting state legal requirements and, in many cases, are following best practices in their respective operations. 4) SSCD and Spreckels Veterans Memorial District are not in conformance with state legal requirements for completing annual audits and ethics/harassment prevention training. Both districts face similar challenges: There are no recent financial audits from the previous three to five years available and ethics/harassment prevention training has not been completed by all board members and designated staff. It’s essential for both districts to complete financial audits to confirm the revenue received and ensure proper management of public funds. Factors beyond the control of both districts have impeded completion of recent financial audits, including the passing of the contracted principal auditor and a statewide shortage of Certified Public Accountants/audit firms. Representatives for both districts indicated that each of the two districts maintains a positive fund balance and will continue to make full efforts to comply with audit requirements and other state legal requirements. SCSD has hired a new audit firm and its FY 2020-21 audit is currently underway. 5) No changes to the districts’ spheres of influence or active powers are recommended at this time. Based on current service delivery and infrastructure needs, no changes to the spheres of influence or active powers of the districts are recommended. None of the districts are immediately seeking these types of changes at this time. Staff recommends that no sphere or active powers changes are currently warranted. 2025 MSR & Sphere Study: Community Services Districts – Page 7 Recommended LAFCO Actions Based on the analysis and in this study, the Executive Officer recommends adoption of a resolution to: 1. Find that, pursuant to Section 15306 of the California Environmental Quality Act (CEQA) Guidelines, the service review and sphere of influence study is categorically exempt, in that the study consists of basic data collection, research, management, and resource evaluation activities that will not result in a serious or major disturbance to an environmental resource, and pursuant to Section 15061(b)(3), because it can be seen with certainty that there is no possibility that this study may have a significant effect on the environment; 2. Adopt the study and its recommended determinations in accordance with Government Code sections 56430(a) and 56425(e); 3. Affirm the currently adopted spheres of influence of the eight districts (Castroville, Pajaro/Sunny Mesa, East Garrison, Ocean View Plaza, Pebble Beach, Santa Lucia, and Spreckels Community Services Districts, and Spreckels Memorial District) with no changes at this time, and 4. Authorize the Executive Officer to proceed with a range of corrective measures to address the Spreckels Community Services and Veterans Memorial Districts’ non-compliance with state legal requirements and best practices, as follows. a. Request that the two districts, as a first priority, take immediate actions to meet legal requirements for financial management: • Retain a qualified audit consulting firm to perform financial audits for FY 2022-23 and 2023-24, as an immediate priority, and other uncompleted financial audits in the last three to five years. b. Request that the two districts, as a first priority, take actions to comply with other state legal requirements: • Complete required ethics and harassment prevention training for Board members and staff. c. If the two districts have not substantially met State legal requirements for completing final audits within approximately six months of adoption of this study and for completing required trainings by July 31, 2025, involve other regulatory oversight agencies, as necessary, to pursue compliance with legal requirements; and d. Request that the two districts: • Adopt bylaw amendments that promote compliance with training requirements, • Retain a qualified audit consulting firm to conduct a performance audit (evaluations of the District’s fiscal practices and processes), and • Review and implement best practices recommended by the performance audits and in the Special District Leadership Foundation’s “High Performing District” checklist In addition to these recommendations, LAFCO staff will continue to coordinate with and assist the County of Monterey in achieving the goal of the East Garrison Community Services District becoming an independent special district. Although East Garrison Community Services District has been a dependent district of the County, governed by the County Board of Supervisors since its formation in 2005, the District was formed with the intention of becoming an independent special district with a governing board comprised of District residents. To date, election measures to move the District to independent district status have not yet achieved the required majority votes. An example of LAFCO staff coordination would be encouraging the County to conduct a feasibility analysis within five years and every five to seven years thereafter to provide information to residents for making an informed decision regarding becoming an independent special district. LAFCO of Monterey County 8 Regulatory Framework This section offers a brief overview of the important legal requirements set by state law, recommended best practices, and the roles of regulatory oversight for public agencies in California. The Spreckels Community Services and Spreckels Veterans Memorial Districts are currently working towards compliance with legal standards for completion of financial audits and ethics/harassment prevention training. The recommended corrective actions listed in this report are included to help the two districts achieve full compliance. State Law Requirements The California State Legislature has enacted various laws establishing fundamental legal obligations for special districts, many of which also apply to counties and cities. In summary, special districts are generally required to: • Adopt annual budgets • Complete financial audits • Submit annual financial and compensation reports to the California State Controller’s Office • Maintain a website • Hold open public meetings in accordance with the Brown Act • Implement ethics and harassment prevention training for board members • File an annual Form 700 (Statement of Economic Interests) by board members and key staff, and adopt a conflict-of-interest code • Adopt Bylaws for conducting district meetings and proceedings Best Practices In addition to legal requirements, local public agencies are encouraged to adopt best practices that promote public trust and minimize the risk of errors or missteps. The Special District Leadership Foundation’s High Performing District checklist outlines recommended practices in Finance and Human Resources. Key examples of recommended Finance practices include: Establish and periodically review sound fiscal and internal control policies; regularly assess revenue and expenses for compliance with the annual budget; approve capital improvement plans and ensure compliance; and utilize a competitive process for awarding contracts. Regulatory Oversight Local Agency Formation Commissions (LAFCOs) provide oversight of cities and special districts by conducting periodic municipal service reviews and sphere of influence studies, including the current assessment. These studies aim to enhance efficiency and reduce the costs of providing municipal services. LAFCOs commonly inform local agencies of their legal requirements and offer educational resources to promote compliance. However, if non-compliance continues, other oversight agencies may need to become involved. Additional oversight entities include the County Auditor-Controller, the Civil Grand Jury, the District Attorney, the State Controller’s Office, and the State’s Fair Political Practices Commission. 2025 MSR & Sphere Study: Community Services Districts – Page 9 District Profiles LAFCO of Monterey County 10 Pajaro/Sunny Mesa Community Services District Formation Date January 29, 1992 Community Services District Law, Government Code, Sections 61000- Legal Authority 61250 Five members, appointed to four-year terms by the County Board of Board of Directors Supervisors Approximately 8,389 acres or 2.55 square miles in several discontiguous District Area areas of Pajaro, Moss Landing, Elkhorn, and portions of Prunedale Sphere of Influence Same as District boundaries Population Approximately 9,771 Authorized Powers/ Potable water service; park services; and street lighting services Services Provided Annual Revenues $3,464,990 (Fiscal Year 2024-2025 Budget) Approximate Annual $355 Revenue Per Resident General Manager Judith Vazquez-Varela Employees 13 full-time 136 San Juan Road Address Royal Oaks, CA 95076 Regular Board meetings are held the fourth Thursday of the month at 5:30 Meetings PM at the District offices Website www.pajarosunnymesa.com Summary and Background Introduction The Pajaro/Sunny Mesa Community Services District (PSMCSD) was created by LAFCO action in 1992 by dissolving the Pajaro Community Services District, the Sunny Mesa County Water District, and County Service Area 73 and forming the Pajaro/Sunny Mesa Community Services District. LAFCO approved a significant (approximately 2,150-acre) sphere of influence amendment and annexation to the District in 2015 after the District’s court-ordered acquisition of five separate water systems in Moss Landing and the Prunedale area, which were previously owned and operated by ALCO. The District provides potable water service, street lighting, and park services to the unincorporated communities of Pajaro, Moss Landing, portions of the unincorporated community of Prunedale, and areas adjacent to these communities. According to AMBAG’s 2026 Regional Growth Forecast, the unincorporated area of Monterey County is expected to experience a slight decrease of population (-1%) and a moderate growth in the number of housing units (6%) through the year 2050. This is primarily due to a decrease in the average household size through 2050. Most of the anticipated development is projected to take place within incorporated cities, rather than in the unincorporated parts of the county. As part of its Draft Sixth Cycle Housing Element Update, the County identified inventory sites for potential growth and development. In Pajaro specifically, the draft housing element identified the potential for 185 new dwelling units. Facilities and Services The District office is located at 136 San Juan Road in Pajaro. 2025 MSR & Sphere Study: Community Services Districts – Page 11 Potable Water: Most of the District’s operations are devoted to providing water service since the District is the only public agency providing potable water services in the Pajaro, Moss Landing, and Prunedale areas. The District operates nine separate water systems and serves 9,771 customers through 1,474 water service connections to residential, industrial, commercial, and government users. The District’s water systems include 16 domestic water production wells, 26 water storage tanks, and related facilities such as small structures, pumps, water treatment equipment, generators, and control equipment. The majority of the District’s boundaries are within the Pajaro Valley subbasin, a critically overdrafted subbasin (due to seawater intrusion) that is managed by the Pajaro Valley Water Management Agency. The remaining district areas are within the 180/400 foot aquifer (critically overdrafted) and Langley subbasins (estimated to be in overdraft), managed by the Salinas Valley Basin Groundwater Sustainability Agency. Both agencies are working to address seawater intrusion through regional planning and partnerships. The District’s existing water production wells are not being impacted by seawater intrusion. Parks: PSMCSD has developed community pride and engagement through owning and maintaining Pajaro Park. The District partners with the YMCA, which offers a range of organized activities, including youth soccer leagues, tournaments, and fitness programs for all ages. Additionally, the District ensures that the park is equipped with various amenities, such as a full-size basketball court, a youth soccer field, a baseball diamond, a running and walking track, and two ADA-compliant play areas. The County of Monterey’s Department of Emergency Management allocated $1.2 million for park maintenance and repairs after flooding in 2023. The District also owns and maintains Cayetano and Memorial Park. Street Lighting: The District is responsible for maintaining 204 Pacific Gas & Electric Company-owned streetlights in the Pajaro, Sunny Mesa, Struve Road, and Hudson Landing communities. Streetlight outages need to be reported to the District. 2023 Flooding Impacts In March 2023, catastrophic flooding from the Pajaro River levee breach severely impacted PSMCSD’s water systems. The March 10 levee failure led to widespread evacuations and property damage in the Pajaro area. The District’s facilities and office were damaged, complicating response and recovery efforts. A District report estimated $1.3 million in permanent repair costs for the Pajaro and Sunny Mesa water systems. The disaster emphasized the need for stronger infrastructure. In response, PSMCSD worked to restore safe drinking water and supported recovery efforts staged at Pajaro Park. Community Improvements To improve infrastructure resilience and meet water facility needs, the District has completed several key projects over the past decade and is advancing additional improvements. In 2016, corrosion control and disinfection treatment were added to the NORMCO water system to address high copper levels. A 600,000-gallon water storage tank for the Pajaro system was completed in 2021. The Springfield water system improvements project, which includes a new potable water source, storage and treatment facilities, and distribution system upgrades, has completed environmental review and is entering the construction phase. The Springfield water system improvements will address nitrate contamination, enhance system reliability during floods and power outages, and may support service extensions to nearby residents. The District secured $15 million in grant funding, started construction, and expects to request a LAFCO out- of-agency service extension. The District also identified hexavalent chromium levels in the Sunny Mesa water system that exceed new regulatory standards. To address this, the Pajaro-Sunny Mesa-Springfield Area Regional Consolidation project will merge three separate water systems—Pajaro, Sunny Mesa, and Springfield—into a single, more reliable system. The project also seeks to incorporate nearby small systems and private wells, ultimately LAFCO of Monterey County 12 serving about 88 households in northern Moss Landing, some of which are located outside current District boundaries. A $30 million grant application has been submitted to the State Water Resources Control Board for this project, and the District anticipates filing a LAFCO application for a sphere of influence amendment and annexation to support the project’s implementation. Governance, Staffing, and Shared Facilities The District is managed by a five-member board of directors. Board members are appointed by the County of Monterey Board of Supervisors and serve four-year terms consistent with the District’s formation documents, District bylaws, and State law. The District is compliant with key requirements of State law for local government agencies. The District prepares and approves an annual budget and files the required Financial Transaction Reports with the State Controller’s Office. District audits are regularly and professionally completed. The most recent audit was completed for Fiscal Year 2023- 2024. Board meetings are open and accessible and are publicly noticed in accordance with the Brown Act. The District holds Board meetings at 5:30 PM on the fourth Thursday of each month at the District offices. District meetings are guided by a set of adopted bylaws. The District’s website meets all state legal requirements and supports transparency by offering access to budgets, audits, board meeting packets, staff information, current projects, water quality data, rates, and other resources. While these features fulfill legal obligations, the District has not yet met all of the best practices outlined in the Special District Leadership Foundation’s High Performing District Checklist. In addition, the District does not currently have an adopted Will Serve Letter Policy for water services, nor policies that go beyond the one-year post-employment lobbying ban set by Government Code Section 87406. Although these best practices are not legally required, the District is encouraged to work toward their implementation. The District employs 13 full-time staff and contracts with an attorney for legal services as needed. The District collaborates with public agencies, including the County of Monterey, the Monterey County Water Resources Agency, the North Monterey County Fire Protection District, and Castroville Community Services District, to provide services and offer support to neighboring districts when needed. Financial Summary The District’s most recent available audit (Fiscal Year 2023-2024) indicated a net position of $10,495,692 as of June 30, 2024. The District conducts regular rate studies to adjust water rates in line with anticipated system expenses through Proposition 218 process every five to six years. The District’s next rate study is planned for 2026. Fiscal Year Revenues Expenses End-of-Year Net Position* 2019-2020 (audited) $4,112,000 $2,977,000 $11,253,000 2020-2021 (audited) $3,006,000 $3,071,000 $11,188,000 2021-2022 (audited) $2,966,000 $3,308,000 $10,845,000 2022-2023 (audited) $2,961,000 $3,460,000 $10,346,000 2023-2024 (audited) $3,545,000 $3,395,000 $10,496,000 2024-2025 (budgeted) $3,465,000 $2,909,000 * The District’s annual audits use the metric of “End-of-Year Net Position” and not “End-of-Year Fund Balances.” Boundaries and Sphere of Influence 2025 MSR & Sphere Study: Community Services Districts – Page 13 The District’s sphere of influence is the same as its boundaries, which cover an area of approximately 8,389 acres. The land surrounding the District is primarily used for agricultural purposes. Although there are several potential areas where the District may grow in the future, this study does not recommend amending the District’s current sphere since the timing would be premature. District representatives have expressed an interest in extending potable water services to areas within three parcels north of Moss Landing as part of the District’s Springfield water system improvement project. In the near-term, the District intends to submit either an administrative out-of-agency service extension application, if the District obtains the requisite letter from the Monterey County Health Department documenting an existing or impending threat to human health or safety; or, alternately, the District will submit a standard sphere amendment and out-of-agency service extension for Commission consideration. In the long-term, the District anticipates submitting a sphere amendment and annexation application to implement its Pajaro-Sunny Mesa-Springfield Area Regional Consolidation project. This project would address an existing water quality issue for the Sunny Mesa water system, consolidate three of District’s separate water systems (Pajaro, Sunny Mesa, and Springfield water systems) into one, provide additional service connections to existing residences north of Moss Landing, and implement other capital improvements. A potential future growth project adjacent to the District, known as the Parks Legacy project, is undergoing a development application process with the County of Monterey. The potential project, located at the Pajaro Valley Golf Club on Salinas Road in Las Lomas, initially involved creation of an approximately 107- unit modular home community, a campground and recreational vehicle (RV) park, and complete refurbishment of the golf course. If the project completes environmental review and entitlements, a possible condition of County approval would be annexation of the project into the adjacent PSMCSD’s boundaries. This would involve submission of a sphere of influence amendment and annexation proposal to LAFCO. In 2015, Pajaro/Sunny Mesa Community Services District (PSMCSD) annexed the Moss Landing Water System. Moss Landing is also within the Castroville Community Services District (CCSD) boundaries, which has owned the Moss Landing wastewater system since consolidating with the Moss Landing County Sanitation District in 2014. In the future, it may benefit both districts to transfer the Moss Landing Water System to CCSD, which is geographically closer to the area and already provides wastewater services to the community. Consolidating both water and wastewater services under one agency could improve efficiency in management, engineering, maintenance, and customer service. Initial discussions between the Board Members and staff of both districts have occurred, but have not resulted in any decision. Acknowledging that potential boundary change proposals are anticipated in the future, District representatives believe the current boundaries and sphere of influence are appropriate. District representatives are not requesting changes to the active powers/services that they are currently providing. LAFCO staff concurs with the District’s conclusions. Recommended LAFCO Actions Based on the information and analysis in this study, the LAFCO Executive Officer recommends that the Commission reaffirm a coterminous sphere of influence (i.e., no sphere of influence beyond the District’s existing jurisdictional boundary). LAFCO of Monterey County 14 2025 MSR & Sphere Study: Community Services Districts – Page 15 (blank page) LAFCO of Monterey County 16 Castroville Community Services District Formation Date October 22, 2007 Community Services District Law, Government Code, Sections 61000- Legal Authority 61250 Board of Directors Five members, elected to four-year terms District Area Approximately 2.55 square miles Sphere of Influence Approximately 105 acres beyond existing District boundary Population 7,752 (2020 Census) Potable water, sewer, stormwater, recreation facilities, community Authorized Powers/ recreation, street lighting, street maintenance, pest control, and open Services Provided space/habitat maintenance services Annual Revenues $4,346,210 (Fiscal Year 2024-2025 Budget) Approximate Annual $560 Revenue Per Resident General Manager James Derbin Employees Seven full-time 11499 Geil Street Address Castroville, CA 95012 Regular Board meetings are held the third Tuesday of the month at 4:30 PM Meetings at the District offices Website www.castrovillecsd.org Summary and Background Introduction The Castroville Community Services District (CCSD) was created by LAFCO action in 2007 to assume the boundaries and responsibilities of the Castroville Water District and County Service Area 14 (CSA 14) after their dissolutions. The District provides potable water, wastewater, stormwater, recreation facilities, community recreation, street lighting, street maintenance, pest control, and open space/habitat maintenance services to the unincorporated communities of Castroville, a nearby residential area (Moro Cojo), North Monterey County High School, and Moss Landing. According to AMBAG’s 2026 Regional Growth Forecast, most of the anticipated development is projected to take place within incorporated cities, rather than in the unincorporated parts of the county. As part of its Draft Sixth Cycle Housing Element Update, the County identified housing inventory sites for 395 new dwelling units in Castroville and its surrounding area. Facilities and Services The District office is located at 11499 Geil Street in Castroville. Potable Water: The District currently serves over 7,000 customers through 2,145 water connections in the Castroville community, providing around 780 acre-feet of water annually to residential, industrial, commercial, and government users. 2025 MSR & Sphere Study: Community Services Districts – Page 17 The District operates three domestic water production wells with a combined capacity of more than 3.88 million gallons per day. The water system includes approximately 13 miles of pipeline and two water storage tanks, totaling a capacity of 1.1 million gallons. Currently, the District sources 72 percent of its water from the 400-foot aquifer and 28 percent from Site #2, which draws from the deeper 900-foot aquifer. The District is located entirely within the 180/400-foot aquifer, a groundwater basin that has been critically overdrafted due to seawater intrusion. This aquifer is managed by the Salinas Valley Basin Groundwater Sustainability Agency (SVBGSA), which is actively working to address the issue through regional planning and collaboration. Although seawater intrusion impacted a District well in the past, the District’s current water production wells are not affected at this time. Wastewater: The sewer system consists of 18 miles of main lines and five lift stations, three located in Castroville (Zone 1) and two in the Moro Cojo subdivision (Zone 2). In 2014, the District took over the Moss Landing Wastewater system which includes four lift stations. Stormwater: The stormwater system spans about 16 miles of main lines, featuring four Vortec units and 187 catch basins. The District cleans the storm drains twice annually by contracting with a private company and coordinates with Monterey County Public Works for street sweeping to prevent buildup of debris. Street Lighting: The District is only responsible for the electrical cost of the street lights to PG&E in the township of Castroville and the Moro Cojo subdivision. Street light outages need to be reported to PG&E. Street & Open Space Maintenance: The District only provides street and open space maintenance services to the Moro Cojo subdivision through assessed user fees. In 2013/2014, the District resurfaced these streets and stenciled street lines. The maintains approximately three acres of open space fronting the subdivision twice per year through a qualified contractor or North County Recreation and Park District. Recreation: The District directs its recreational services funding to North County Recreation and Park District. Recent Community Improvements In 2016, CCSD partnered with the Rural Community Assistance Corporation to complete an income survey confirming that Castroville qualifies as a severely disadvantaged community, making it eligible for various federal and state funding programs. CCSD has faced water quality issues in the past due to seawater intrusion. The Emergency Well 6 project, which is grant-funded and currently pending drilling, will provide an additional 300 acre-feet of safe drinking water annually and improve long-term water supply reliability. The CCSD’s wastewater collection system is at capacity and requires upgrades, which are being addressed through the Washington Bypass project. CCSD is securing easements and grant funding to move forward with design, construction, and permitting. In Moss Landing, the wastewater collection system needs full replacement, which will be addressed through the Moss Landing Sewer Improvements project; grant funding is also pending. Additionally, CCSD collaborated with Monterey County on the Measure X Community Street Repair Project to rehabilitate and resurface several Castroville streets, enhancing local infrastructure. Governance, Staffing, and Shared Facilities The District is managed by a five-member board of directors. Board members are elected by District residents. The Board of Supervisors may fill Board vacancies by appointment when there are not multiple challengers for open positions. If more than two candidates seek a single seat, an election is required. The District is compliant with key requirements of State law for local government agencies. The District prepares and approves an annual budget and files the required Financial Transaction Reports with the LAFCO of Monterey County 18 State Controller’s Office. District audits are regularly and professionally completed. The most recent audit was completed for Fiscal Year 2023-2024. Board meetings are open and accessible and are publicly noticed in accordance with the Brown Act. The District holds Board meetings at 4:30 PM on the third Tuesday of each month at the District offices. District meetings are guided by a set of adopted bylaws. The District’s website complies with state legal requirements and offers key information such as budgets, audits, Board meetings, forms, policies, water quality, and water rates. While these features meet legal standards, the District also adheres to many best practices such as the Special District Leadership Foundation’s High Performing District Checklist and an adopted Will Serve Letter Policy for both water and sewer services. While not legally required, the District is encouraged to consider a best practice of adopting policies that strengthen the one-year post-employment lobbying ban set by Government Code Section 87406. The District operates with seven full-time staff and a contracted attorney as needed. The District collaborates with public agencies, including the County of Monterey, the Monterey County Water Resources Agency, the North County Recreation and Park District, and Marina Coast Water District, to provide services and offers support to neighboring districts when needed. The District and Marina Coast Water District have entered into a Mutual Assistance Agreement to strengthen their water service capabilities. This agreement enables both districts to share resources and support, ensuring the delivery of reliable water services to their communities. It includes provisions for mutual aid during emergencies, equipment sharing, and other necessary assistance to maintain uninterrupted water service. The agreement was approved by the MCWD Board of Directors on October 17, 2022. This collaboration highlights the commitment of both districts to work together, combining their resources and expertise to better serve their communities. Financial Summary The District’s most recent available audit (Fiscal Year 2023-2024) indicated a net position of $24,301,000 as of June 30, 2024. The District conducts regular rate studies to adjust water and sewer rates in line with anticipated system expenses through Proposition 218. Increases of revenues over expenses during the past five to six years has been largely due to increased property tax revenue. End-of-Year Fund Balance End-of-Year Net Fiscal Year Revenues Expenses (governmental funds) Position 2019-2020 (audited) $2,710,000 $1,964,000 $396,000 $18,537,000 2020-2021 (audited) $2,810,000 $2,063,000 $443,000 $19,284,000 2021-2022 (audited) $3,407,000 $1,119,000 $546,000 $21,572,000 2022-2023 (audited) $3,569,000 $2,784,000 $650,000 $22,357,000 2023-2024 (audited) $4,333,000 $2,388,000 $692,000 $24,301,000 2024-2025 (budgeted) $4,346,000 $2,619,000 Boundaries and Sphere of Influence The District’s boundaries and sphere of influence are nearly identical. Only two areas of the District’s sphere extend outside of its boundaries – an approximately 100-acre area consisting of several agricultural properties on the southwest edge of Castroville and an approximately 5.5-acre area one mile north of Moss Landing along Struve Road. The 100-acre area is designated for primarily residential development in the County’s Castroville Community Plan (adopted in 2007). LAFCO approved the addition of the 5.5-acre area to the CCSD sphere as part of the District’s sphere of influence amendment and out-of-agency service extension proposal to extend wastewater services to existing agricultural support facilities. With the 2025 MSR & Sphere Study: Community Services Districts – Page 19 exception of industrial and habitat lands east of Moss Landing, the land surrounding the District is primarily used for agricultural purposes. The Pajaro/Sunny Mesa Community Services District (PSMCSD) annexed the Moss Landing water system in 2015. Meanwhile, the Castroville Community Services District (CCSD) has effectively maintained the Moss Landing wastewater system, which it has owned since consolidating with the Moss Landing County Sanitation District in 2014. Looking to the future, transferring the Moss Landing water system to CCSD could enhance operational efficiencies, as CCSD is geographically closer to Moss Landing and already provides wastewater services to the community. By consolidating both water and wastewater services under one agency, CCSD would streamline management, engineering, maintenance, and customer service. Under the right circumstances, CCSD might be able to acquire the Moss Landing water system from PSMCSD. Although initial discussions have taken place between the boards and staff of both districts, no decisions have been made. In December 2024, the County of Monterey circulated a draft Moss Landing Community Plan Update and Notice of Preparation of an Environmental Impact Report for the plan. The plan update contemplates Coastal Heavy Industry land use within the District’s “Future Study Area,” east of Highway One, and that new development in the Future Study Area would need to annex into CCSD’s boundaries and connect to the District’s wastewater system. Aside from potential boundary change applications discussed above, District representatives have not indicated an interest in adjusting the existing boundaries or sphere of influence. District representatives are not requesting changes to the active powers/services that they are currently providing. LAFCO staff agrees that there are no nearby areas that currently warrant an expansion of the District’s boundaries or sphere, nor changes needed to the District’s active powers/services. Recommended LAFCO Actions Based on the information and analysis in this study, the LAFCO Executive Officer recommends that the Commission reaffirm the District’s sphere of influence. LAFCO of Monterey County 20 2025 MSR & Sphere Study: Community Services Districts – Page 21 (blank page) LAFCO of Monterey County 22 East Garrison Community Services District Formation Date October 10, 2005 Legal Authority Government Code, Sections 61000-61250 The County of Monterey Board of Supervisors, until District residents vote Board of Directors to become an independent special district and elect a five-member Board of Directors East Garrison CSD Five-members appointed to three-year terms by the County Board of Advisory Committee Supervisors District Area Approximately 244 acres Sphere of Influence Same as district boundaries Population 1,636 (2020 Census) Road maintenance, storm drainage facilities maintenance, street lighting, Authorized Powers/ transit facility maintenance, recreation program funding, library, law Services Provided enforcement, and open space/parks maintenance services Annual Revenues $2,056,804 (Fiscal Year 2024-2025 Budget) Approximate Annual $1,257 Revenue Per Resident General Manager Bryan Flores, Chief of Parks for the County of Monterey Employees One part-time manager and one full-time management analyst Public Works, Facilities and Parks Address 1441 Schilling Place Salinas, CA 93901 The Board of Directors (County Board of Supervisors) meet twice per year to consider and approve the draft and final annual budget. The Board also Meetings meets as needed throughout the year to act on District business items. The EGCSD Advisory Committee meetings are held at the East Garrison Fire Station on the second Wednesday every other month at 6:00 PM. Website www.countyofmonterey.gov Summary and Background Introduction The East Garrison Community Services District (EGCSD) was created by LAFCO action in 2005 to provide various government services to the unincorporated community of East Garrison, located approximately three miles from the Cities of Salinas (to the east) and Marina (to the northwest). The District provides perimeter public road maintenance, storm water, drainage and flood control facilities maintenance, street lighting, sheriff protection, and open space/parks maintenance services to the community. The County of Monterey provides basic County services, recreation programming, library operation and sheriff custody/coroner operations. The East Garrison Home Owners Association (HOA) 2025 MSR & Sphere Study: Community Services Districts – Page 23 provides transit services, private road maintenance and private storm water and drainage facilities maintenance. AMBAG’s 2026 Regional Growth Forecast indicates that the majority of future development in the region is expected to occur within incorporated cities, with less growth projected in unincorporated areas of the county. Monterey County’s Draft Sixth Cycle Housing Element Update includes identified inventory sites in East Garrison to accommodate 325 potential new dwelling units. Dependent District Status One of the most significant challenges facing the District is that it has remained a dependent district of the County longer than anticipated, which creates additional strain on County resources (Board and staff). Since its formation in 2005, EGCSD was not intended to remain a dependent district of the County of Monterey, governed by the County Board of Supervisors and staffed by a County Department (Department of Public Works, Facilities, and Parks – Parks and Lakes Division). Rather, EGCSD was formed with the purpose to become an independent special district through an affirmative majority vote for independence from the electorate within the District boundaries and election of a new Community Services District Board of Directors from among District residents. The dependent district status of EGCSD was only envisioned as an interim measure until District population rose to a threshold to trigger a district-wide vote for independence. Due to a population growth trigger in 2017 and a governance decision in 2022, voters residing in EGCSD voted on ballot measures in both of the years, 2017 and 2022, that could have resulted in the District becoming an independent special district. However, both measures did not gain the requisite majority affirmative vote needed to pass. In the future, residents of East Garrison can petition for an election by submitting signatures from at least 10% of registered voters. As discussed in the recommended actions at the end of this District Profile, staff will coordinate with and encourage the County to conduct a feasibility analysis every 5-7 years to provide information to residents for making an informed decision regarding becoming an independent special district. A feasibility analysis would show a comparison of the potential costs for an independent special district vs. the current dependent district costs. This feasibility analysis will be paid for by the District’s funds. Facilities and Services Road Maintenance: EGCSD manages the upkeep of County-owned perimeter roads. This includes patching potholes, repaving, maintaining road signage, signals, lighting, and perimeter road sidewalks. Major projects have included: significant road resurfacing (slurry seal) within the community, paid for from the District’s reserve funds. Over the next few years, the District will move forward with additional road resurfacing (slurry seal) within the community, as required on a prescheduled basis, paid for from the District’s funds. Storm Drainage Facilities Maintenance: The historical East Garrison storm drainage system required near total replacement to accommodate East Garrison community development. There are six basins located within and near the District’s boundaries. Four of the basins are owned by the District and two basins at the intersection of Reservation Road and Intergarrison Road are owned by the County of Monterey but are funded and maintained by the District. A network of pipes connects certain basins, directing low and high flows to designated storage areas. Due to its location near steep slopes and its function as a retention basin with a pump system, Basin 3 is equipped with a geosynthetic liner. Other ponds in the area handle detention and infiltration of runoff, while runoff that enters Basin 1A, situated at the northwestern edge of the project, infiltrates into the ground at that location. All storm water generated in the District remains onsite. Street Lighting: The District manages the replacement, maintenance, and operation of streetlights on the perimeter roads, aiming to provide an effective and energy-efficient system for the East Garrison community. Transit Facility Maintenance: In accordance with the 2006 Urban Services Agreement between the County and EGCSD, the East Garrison Homeowners’ Association (HOA), in coordination with the Monterey- LAFCO of Monterey County 24 Salinas Transit District, funds local and regional transit services and maintains transit facilities, including bus stops on East Garrison roadways. Recreation Program Funding: Consistent with 2013 first amendment to the Urban Services Agreement, the County of Monterey provides recreational maintenance and programming with County General Funds. While the County of Monterey has not developed specific recreation programming, the District does hold and fund community events such as a spring egg event, 4th of July celebration, and parade & a tree lighting ceremony in December. Monterey County Free Libraries stages the Bookmobile at different locations throughout the District each month. Library Services: The East Garrison Library is undergoing architectural designs and will be constructed within the next few years. After construction, the library will be operated by the Monterey County Free Libraries and funded with General Fund dollars. Law Enforcement Services: The Monterey County Sheriff’s field office will be located inside the East Garrison Library. As such, it is on a similar design and construction schedule to the East Garrison Library. Once built and operational, the Sheriff’s field office will enhance law enforce presence and response times to the community. Parks and Open Space Maintenance: The District is responsible for maintaining six neighborhood parks, one community park, and two dog parks with funding provided by the CFD special tax. The landscape maintenance services include other open space, multi-use paths, adjacent sidewalks, entryways, and frontage areas. EGCSD and County Parks work together to reduce wildfire hazards to the East Garrison community. This includes maintaining nearby fuel breaks and conducting periodic vegetation control through goat grazing in areas adjacent to the community. The HOA also owns and maintains various open space parcels throughout the District. Tax Structure EGCSD’s facilities and services are funded by a tax structure designed to be revenue neutral to the County. This means that EGCSD relies on funding through fees and taxes generated from within the East Garrison community and does not receive a portion of the 1% property tax levied on the assessed property value, as established by Proposition 13 in 1978. Whether EGCSD continues to be governed by the County Board of Supervisors as a dependent district or eventually elects to be governed by its own independent special district board, the obligations of the bonds and the underlying agreements must be met. Community Buildout In June 2024, the County Board of Supervisors approved an East Garrison Final Environmental Impact Report addendum, East Garrison Specific Plan amendment, and project entitlement amendments to modify project components in Phase 3 of the overall project originally approved in 2005. These actions reduced the total number of residential units by 16 and reduced commercial development by 45,000 square feet (sf). This resulted in overall modified entitlements allowing construction of 1,384 residential units, plus up to 70 carriage units (dependent on water availability), 30,000 sf of commercial development, 11,000 sf of institutional uses, and 100,000 sf of artist studio/public use space in 23 renovated historic buildings. The East Garrison project has been implemented in three phases. Phases 1 and 2 are nearly completed. Phase 3, which includes the commercial town center, is approximately 70% completed. Governance, Staffing, and Shared Facilities The District is managed by the County of Monterey Board of Supervisors until District residents pass a ballot measure to become an independent special district and elect a five-member Board of Directors from its own residents. For additional community involvement and oversight, the County Board of Supervisors established a five-member East Garrison CSD Advisory Committee appointed by the County of Monterey Board of Supervisors and to serve three-year terms. The District is compliant with key requirements of State law for local government agencies. The District prepares and approves an annual budget and files the required Financial Transaction Reports with the State Controller’s Office. District audits are regularly and professionally completed. The most recent audit 2025 MSR & Sphere Study: Community Services Districts – Page 25 was completed for Fiscal Year 2023-2024. Board meetings are open and accessible and are publicly noticed in accordance with the Brown Act. District meetings are guided by a set of adopted bylaws. The District meets best practices listed in the Special District Leadership Foundation’s (SDLF) High Performing District Checklist and has policies that strengthen or add restrictions to the one-year ban prohibiting former officials from representing others for compensation to influence agency decisions in administrative or legislative actions (per California Government Code Section 87406). District staffing consists of one part-time Chief of Parks (serving the role of General Manager) and one full-time Management Analyst II. The District contracts for various county services and private sector service providers to fulfill its responsibilities. The District also contracts with County Counsel’s Office for legal services as necessary. The District collaborates with public agencies, including the County of Monterey, the Monterey County Regional Fire District, and Marina Coast Water District, to provide services and offer support to neighboring districts when needed. Financial Summary The District’s most recent available audit (Fiscal Year 2023-2024) indicated an End-of-Year Fund Balance of $2,528,000 as of June 30, 2024. Fiscal Year Revenues Expenses End-of-Year Fund Balances* 2019-2020 (audited) $1,656,000 $1,955,000 $2,462,000 2020-2021 (audited) $1,793,000 $1,443,000 $2,813,000 2021-2022 (audited) $1,602,000 $1,811,000 $2,604,000 2022-2023 (audited) $1,504,000 $1,524,000 $2,585,000 2023-2024 (audited) $1,618,000 $1,675,000 $2,528,000 2024-2025 (budgeted) $2,057,000 $2,057,000 * The District’s annual audits (a subcomponent of the County of Monterey’s annual audit report) use the metric of “End-of-Year Fund Balances” and not “End-of-Year Net Position.” Boundaries and Sphere of Influence The District’s sphere of influence is the same as its boundaries, which cover an area of approximately 244 acres. The land surrounding the District consists of primarily habitat or open space lands owned by the County of Monterey. No future development is currently planned on lands adjacent to the District’s boundaries. The northern portion of East Garrison (north of Sherman Boulevard) is currently within the City of Marina’s sphere of influence. The City’s sphere has not been changed since 1985 to reflect the decisions made, over the last 20 years, to develop East Garrison as an unincorporated community that will eventually have its own independent community services district providing comprehensive municipal services. Leaving part of East Garrison in the City’s sphere is inconsistent with LAFCO policies that promote logical and orderly growth and discourage dividing a community. Therefore, LAFCO’s approved 2024 MSR for Monterey Peninsula-Area Cities included a recommendation that encourages the City of Marina to clarify, as part of its ongoing General Plan update, that the City does not intend to annex East Garrison in the foreseeable future, and to consider requesting that LAFCO remove the northern third of East Garrison from the City’s sphere of influence. LAFCO of Monterey County 26 District representatives identified areas where EGCSD’s boundaries may not fully include a retention basin used by the District and other infrastructure. Boundary changes may not be necessary since the areas of concern are currently owned by the District or County of Monterey. District representatives believe the current boundaries and sphere of influence are appropriate and no changes to their active powers/services are needed. LAFCO staff concurs with the District’s conclusions. Recommended LAFCO Actions Based on the information and analysis in this study, the LAFCO Executive Officer recommends that the Commission reaffirm a coterminous sphere of influence (i.e., no sphere of influence beyond the District’s existing jurisdictional boundary). In addition to this recommendation, LAFCO staff will continue to coordinate with and assist the County of Monterey in achieving the goal of the East Garrison Community Services District becoming an independent special district. For example, staff will encourage the County to conduct a feasibility analysis within five years and every five to seven years thereafter to provide information to residents for making an informed decision regarding becoming an independent special district. 2025 MSR & Sphere Study: Community Services Districts – Page 27 LAFCO of Monterey County 28 Ocean View Plaza Community Services District (inactive) Formation Date December 28, 2005 Community Services District Law, Government Code, Sections 61000- Legal Authority 61250 City of Monterey City Council, four council members elected to alternating Board of Directors four-year terms and one mayor elected to a two-year term District Area Approximately 4.27 acres Sphere of Influence Same as district boundaries Population 0 Authorized Powers/ Potable water service from a desalination plant Services Provided Annual Revenues None Approximate Annual None Revenue Per Resident General Manager Hans Uslar, City Manager for the City of Monterey Address 580 Pacific Street, Monterey, CA 93940 Regular Board meetings are held quarterly (March, June, September, and Meetings December) integrated with City Council Regular Meetings on the second Tuesday of these months at 4:00 PM Website www.monterey.gov Summary and Background Introduction The Ocean View Plaza Community Services District is a dependent district in that its governing body is the same as the Monterey City Council. The District was created through a LAFCO of Monterey County district formation on December 28, 2005 with the purpose of owning and operating a desalination plant and water system (to be constructed by the project developer and dedicated to the District) to provide potable water to residential and commercial users within the Ocean View Plaza project. The District is inactive because it does not provide services or collect any revenues. The District is uninhabited. Discussion The Ocean View Plaza project, approved by the City of Monterey in 2004, includes 90,000 square feet of commercial space, 51 residential units, and a public education building. Though the California Coastal Commission denied permit extensions in 2019, the current developer, Ruby Falls Fund, LLC, overturned that decision through court rulings in 2023 and 2024, requiring the Commission to reconsider the extension request. The City granted a project extension until June 1, 2025, with possible further extensions. The 2009 Cease and Desist Order (CDO) by the State Water Resources Control Board restricts new water hookups due to overuse of the Carmel River, affecting development across the Monterey Peninsula. If the CDO is lifted, Cal-Am may provide water service to the Ocean View Plaza project, which would lead Ocean View Plaza Community Services District to apply to LAFCO for dissolution. 2025 MSR & Sphere Study: Community Services Districts – Page 29 Boundaries and Sphere of Influence The District’s boundaries cover an area of 4.27 acres, and its boundaries have remained unchanged since its formation. The District’s sphere of influence was established in 2005 and aligns with the current boundaries. District representatives have not indicated an interest in adjusting the existing boundaries or sphere of influence. LAFCO staff agrees that the District’s boundaries and sphere should remain unchanged. Recommended LAFCO Actions Based on the information and analysis in this study, the LAFCO Executive Officer recommends that the Commission reaffirm a coterminous sphere of influence (i.e., no sphere of influence beyond the District’s existing jurisdictional boundary), LAFCO of Monterey County 30 2025 MSR & Sphere Study: Community Services Districts – Page 31 (blank page) LAFCO of Monterey County 32 Pebble Beach Community Services District Formation Date July 1, 1982 Community Services District Law, Government Code, Sections 61000- Legal Authority 61250 Board of Directors Five members, elected to four-year terms District Area Approximately eight square miles Sphere of Influence Approximately 10 acres beyond existing District boundary Population 4,204 (2020 Census) Fire protection and emergency medical, wastewater collection and Authorized Powers/ treatment, supplemental law enforcement, recycled water supply, solid Services Provided waste collection & disposal, stormwater disposal, and undergrounding of utilities services $30,415,000 (Fiscal Year 2024-2025 Budget; this amount includes $5.55 Annual Revenues million of capital reserve appropriations) Approximate Annual $7,235 Revenue Per Resident General Manager Nicholas Becker, P.E. Employees Fifteen full-time 3101 Forest Lake Road Address Pebble Beach, CA 93953 Regular Board meetings are held the last Friday of each month (Jan. - Oct.), Meetings and the second Friday in Dec., at 9:30 AM, at the District offices Website www.pbcsd.org Summary and Background Introduction The Pebble Beach Community Services District (PBCSD) was created in 1982 to succeed County Service Area #42, which provided fire protection services, and the Pebble Beach Sanitary District, which handled wastewater treatment and discharge. The District provides fire protection and emergency medical, wastewater collection and treatment, supplemental law enforcement, recycled water supply, solid waste collection & disposal, and undergrounding of utilities services to the Pebble Beach and Del Monte Forest unincorporated gated community. AMBAG’s 2026 Regional Growth Forecast projects that the majority of future development in the region is expected to occur within cities, with less growth projected in unincorporated areas of the county. Monterey County’s Draft Sixth Cycle Housing Element Update did not identify any potential housing inventory sites in PBCSD’s boundaries. Facilities and Services Fire Protection and Emergency Medical Services: The California Department of Forestry and Fire Protection (CAL FIRE) provides fire protection and emergency medical services (EMS) by contract on behalf of the District. CAL FIRE supplies firefighting and medical personnel, as well as administrative support, while the District provides facilities, equipment, and supplies. The District owns and operates two fire stations in Pebble Beach. The main station, fully owned by the District, is located on a site shared with the District administrative offices. The District also holds a 25% ownership stake in the Carmel Hill 2025 MSR & Sphere Study: Community Services Districts – Page 33 station near the Highway One gate, alongside the Cypress Fire Protection District (25% ownership) and CAL FIRE (50% ownership). The District and Cypress Fire Protection District share capital costs and operational expenses for the Carmel Hill station. Wastewater Collection and Treatment: The District works closely with the Carmel Area Wastewater District (CAWD), whose treatment plant near the Carmel River receives and processes wastewater received from the District’s collection system. The District contributes one-third of the capital costs for major upgrades to the CAWD plant and, under contract, is allocated one-third of the plant’s treatment capacity. Wastewater is treated to tertiary standards and pumped back to the District, where it is used for landscape irrigation within Pebble Beach, effectively conserving potable water. The District is not currently utilizing its full treatment capacity under the contract with CAWD. Supplemental Law Enforcement: Through a contract with the California Highway Patrol (CHP), the District provides enhanced traffic enforcement, addressing issues that are often more prevalent in unincorporated areas. This contract has helped ensure higher levels of law enforcement presence in Pebble Beach, contributing to safer roads and better traffic management in this scenic community. In recent years, the District has seen a continued increase in traffic enforcement efforts, especially during special events related to speeding and distracted driving, which have been a focus of community concern. Recycled Water Storage and Distribution: The District provides recycled water for landscape areas at seven local golf courses and Stevenson School, through a five-party agreement involving the Pebble Beach Community Services District (PBCSD), the Monterey Peninsula Water Management District (MPWMD), the Pebble Beach Company, and Carmel Area Wastewater District (CAWD), and Independent Recycled Water Users Group (IRWUG). This partnership ensures a reliable supply of recycled water to these facilities, reducing the demand for potable water. Recent improvements to the District’s recycled water infrastructure have enhanced the system’s reliability and capacity. Reconstruction of the Forest Lake reservoir in 2006 and subsequent modifications in 2009 significantly increased storage capacity, further supporting the recycled water program and improving water resource management within the community. Potable water is supplied by California-American Water Company (Cal Am). Through its efforts, the District promotes water sustainability and long-term conservation of water resources. Solid Waste Collection, Disposal, and Recycling: Solid waste and recycling collection services are provided by a franchise agreement with the privately owned GreenWaste Recovery. Collected materials are transported to ReGen Monterey’s (Monterey Regional Waste Management District) facility north of Marina. The District holds a seat on the ReGen Monterey Board of Directors, maintaining involvement in the management and operations of the regional waste facility. The District supports new ReGen Monterey programs focused on reducing waste, promoting recycling, and incentivizing sustainable practices for residents. The District also hosts an annual household hazardous waste collection event to help residents safely dispose of materials like electronics. Stormwater Disposal: While the District was granted the authority to manage stormwater disposal when it was formed, this power has not been exercised. Undergrounding of Utilities: The District is engaged in a significant, multi-year and multi-phase effort to underground overhead electrical and telecommunications lines throughout Pebble Beach. This project is being carried out on a pay-as-you-go basis. To date, six of the 12 miles of planned underground utility lines have been completed, marking significant progress. LAFCO of Monterey County 34 Reducing Wildfire Risk PBCSD actively manages vegetation to reduce fire risk and improve forest health. Fuel buildup may have been a significant factor during the 1987 Morse Fire in Pebble Beach, which destroyed 36 homes. As a proactive approach to alleviating fire risk, the District implements its Fire Defense Plan for the Pebble Beach and Del Monte Forest areas. The plan is updated biennially with stakeholder engagement and follows science-based, ecologically sound strategies to address fire hazards and protect both the community and the natural environment. Some key components of the current fire prevention efforts include: vegetation management and fuel reduction, collaboration with experts, fire- resistant landscaping and public education, prevention of invasive species, firebreaks and defensible spaces, ongoing monitoring and evaluation, and emergency response planning. As an example of its efforts, the District contracts annually with a grazing operation that uses 300 goats to manage vegetation in inaccessible areas. Governance, Staffing, and Shared Facilities The District is managed by a five-member board of directors. Board members are elected by District residents. The Board of Supervisors may fill Board vacancies by appointment when there are not multiple challengers for open positions. If more than two candidates seek a single seat, an election is required. The District is compliant with key requirements of State law for local government agencies. The District prepares and approves an annual budget and files the required Financial Transaction Reports with the State Controller’s Office. District audits are regularly and professionally completed. The most recent audit was completed for Fiscal Year 2023-2024. Board meetings are open and accessible and are publicly noticed in accordance with the Brown Act. District meetings are guided by a set of adopted bylaws. The District meets best practices listed in the Special District Leadership Foundation’s (SDLF) High Performing District Checklist. The District received SDLF’s District Transparency Certificate of Excellence in the last three years and received the Government Finance Officers Association’s Certificate of Achievement for Excellence in Financial Reporting Program in 2024. In future revisions to its Administrative Code, the District will include a policy to strengthen adherence to the one-year ban prohibiting former officials from representing others for compensation to influence agency decisions in administrative or legislative actions (per California Government Code Section 87406). District staffing consists of 15 full-time non-fire staff, CAL FIRE contract staffing, and a contract attorney for legal services. The District collaborates with public agencies including CAL FIRE, California Highway Patrol, County of Monterey, Cypress Fire Protection District, Carmel Highlands Fire Protection District, Carmel Area Wastewater District, ReGen Monterey, and Monterey Peninsula Water Management District to provide services and offer support to neighboring public agencies when needed. Financial Summary The District’s most recent available audit (Fiscal Year 2023-2024) showed a net position of $79,348,000 as of June 30, 2024. With adoption of the Annual Fiscal Year Budget, the District Board approves updated service charges for sewer collection and treatment, solid waste collection and disposal services, and special tax for fire protection services, in compliance with Proposition 218 and State law. The District’s sewer service charges, solid waste service charges, and fire service special taxes are collected on the Monterey County’s secured property tax rolls. 2025 MSR & Sphere Study: Community Services Districts – Page 35 End-of-Year Fund Balance End-of-Year Net Fiscal Year Revenues Expenses (governmental funds) Position 2019-2020 (audited) $20,684,000 $14,980,000 $9,852,000 $65,700,000 2020-2021 (audited) $20,561,000 $16,305,000 $14,233,000 $69,956,000 2021-2022 (audited) $19,776,000 $20,129,000 $12,253,000 $69,603,000 2022-2023 (audited) $23,287,000 $19,694,000 $12,663,000 $73,196,000 2023-2024 (audited) $25,487,000 $19,335,000 $17,583,000 $79,348,000 2024-2025 $30,415,000* $30,415,000 (budgeted) *This amount includes $5.55 million of capital reserve appropriations Boundaries and Sphere of Influence The District’s boundaries and sphere of influence are nearly identical. Only one area of the District’s sphere extends outside of its boundaries – an approximately 10-acre area known as Ocean Pines. When PBCSD was formed, the District boundaries comprised unincorporated areas, which did not include this site (located within the City of Monterey). The District could potentially seek to annex the site in the future, which would likely require an agreement with the City of Monterey. The District collaborates with the City of Monterey on fire mitigation work in this area. District representatives believe that the current boundaries and sphere of influence are appropriate and no changes to the District’s active powers/services are necessary. LAFCO staff concurs with the District. Recommended LAFCO Actions Based on the information and analysis in this study, the LAFCO Executive Officer recommends that the Commission reaffirm the District’s sphere of influence. LAFCO of Monterey County 36 2025 MSR & Sphere Study: Community Services Districts – Page 37 (blank page) LAFCO of Monterey County 38 Santa Lucia Community Services District Formation Date July 13, 1998 Community Services District Law, Government Code, Sections 61000- Legal Authority 61250 Board of Directors Five members, elected at-large to four-year terms District Area Approximately 20,000 acres or 31 square miles Sphere of Influence Same as District boundaries Population 456 (2020 Census) Potable water; wastewater collection and treatment; septic tank system; fire protection and emergency medical; solid waste collection & disposal; Authorized Powers/ broadband communications; road maintenance; storm drain maintenance; Services Provided security & gate operations; recreation facilities; landscaping on public property and rights of way; transportation services; and weed, insect, and other pest abatement services Annual Revenues $9,051,000 (Fiscal Year 2024-2025 Budget) Approximate Annual $19,849 Revenue Per Resident General Manager Shaw Pick Employees 34 full-time 121 Rancho San Carlos Rd Address Carmel, CA 93923 Regular Board meetings are typically held the third Tuesday of the month, or as otherwise scheduled, at 9:00 AM, at the District’s New Corporation Meetings Yard Conference Room at 121 Rancho San Carlos Rd, Carmel CA or at the Golf Club Library at 19 Pronghorn Run, Carmel, CA Website www.santaluciacsd.org Summary and Background Introduction Formed in 1998, the Santa Lucia Community Services District (SLCSD) serves the Santa Lucia Preserve, a private, gated community covering nearly 20,000 acres of rugged terrain south of the Mid-Carmel Valley area. The Preserve includes about 300 residential estate lots, 147 of which are developed and an additional 30 of which are under construction, along with a golf course, equestrian center, and various recreational amenities. The District provides potable water, wastewater collection and treatment, septic tank system, fire protection and emergency medical, solid waste collection & disposal, broadband communications, road maintenance, security & gate operations, landscaping on public property and rights of way, and storm drain maintenance services to the gated community of the Preserve. AMBAG’s 2026 Regional Growth Forecast anticipates that the majority of future development in the region is expected to occur within cities, and not the unincorporated county. Monterey County’s Draft Sixth Cycle Housing Element Update did not identify any inventory sites for potential housing in SLCSD’s boundaries. 2025 MSR & Sphere Study: Community Services Districts – Page 39 Facilities and Services Domestic/Potable Water Service: Approximately 75 on-site wells, along with an upgraded storage and distribution system, provide water to homes, the golf course, and other essential services such as fire flow throughout the Preserve. New wells were recently added to further improve water supply capacity, ensuring reliability even during periods of high demand or emergency conditions. Wastewater Collection and Treatment: A small wastewater treatment plant on-site handles the majority of wastewater treatment for the most intensive uses, including most residences, the golf clubhouse, and the equestrian center. A portion of the treated wastewater is reclaimed for irrigation use, reducing the overall demand on water resources. Septic Tank System Services: Some homes in remote areas of the Preserve that are not connected to the District’s sewer system use individual septic tank systems. The District provides regular septic tank pumping services and maintenance for these systems to ensure their proper operation and environmental safety. Fire Protection and Emergency Medical Services: Both SLCSD and Monterey County Regional Fire District (MCRFD) provide complementary fire and emergency medical services within the boundaries of the Santa Lucia CSD. MCRFD delivers direct fire and EMS services to the community, including emergency response, staffing, equipment, administration, and other essential resources. In 2000, the Carmel Valley Fire Protection District assumed direct responsibility for fire and EMS services within SLCSD’s boundaries. This transition was formalized by LAFCO Resolution 00-07, which transferred fire service responsibilities from SLCSD to Carmel Valley Fire Protection District and incorporated the affected territory into the fire district. In 2011, Carmel Valley Fire Protection District consolidated into MCRFD. Since 2000, SLCSD has not provided direct fire or EMS response services but continues to support these services indirectly. In 2014, during the activation of SLCSD’s latent broadband powers, LAFCO approved Resolution 14-15, which listed fire protection as one of SLCSD’s active powers. SLCSD provides indirect fire protection services by furnishing physical facilities and collecting a special tax used to contract with MCRFD for supplemental fire services. Additionally, SLCSD manages fire fuel reduction activities, defensible space planning, firebreak maintenance, and supports a Community Emergency Response Team (CERT). MCRFD provides direct fire protection services through an on-site 24/7 firefighter responding from the Santa Lucia Fire Station. This station houses two fire engines for incidents within the Preserve and neighboring areas. This station is supported by additional resources from MCRFD’s other stations such as Mid Valley and Village fire stations. This division of responsibilities (indirect and direct fire protection services) is supported by LAFCO records, current practices by each district, and a 2023 agreement between both districts that increased staffing levels. Solid Waste Collection and Disposal Service: Waste Management, a private company, provides these services through a franchise agreement. The collected materials are delivered to the ReGen Monterey (Monterey Regional Waste Management District) facility north of Marina. The District’s participation in this franchise supports ReGen Monterey’s operation of innovative recycling programs and its regional waste management facility. Broadband Communications: After LAFCO activation of this latent power/service in 2014, the District moved forward with implementing broadband infrastructure (wireless and fiber optic) to improve connectivity for residents and enhance emergency communications and remote monitoring of the District's water and sewer systems. These upgrades significantly enhance the district's communication capabilities, providing more reliable service to the community. LAFCO of Monterey County 40 Reducing Wildfire Risk The Santa Lucia Preserve was directly threatened by the Dolan Fire in 2020, but thanks to swift and effective response efforts from local fire agencies, including Monterey County Regional Fire Protection District (MCRFD), the community was spared from direct destruction. SLCSD has implemented several proactive measures to reduce fire risks for the Santa Lucia Preserve community. These efforts include creating shaded fuel breaks along roadsides to limit wildfire spread and ensure safe evacuation routes. The District collaborates with the Santa Lucia Conservancy and CAL FIRE on prescribed burns, forest health initiatives, and fuel management plans. In 2022, the Conservancy received a $1.225 million CAL FIRE grant to maintain and enhance fuel breaks, further strengthening fire protection measures in the region. Additionally, the Preserve has earned recognition as a Firewise USA Community, highlighting its commitment to fire-resistant building materials, strategic structure placement, and ignition-resistant landscaping. Governance, Staffing, and Shared Facilities SLCSD is overseen by a board of five directors, all of whom are elected by the residents of the District. If there are no candidates for an election, the Board of Supervisors may appoint individuals to fill vacancies. However, if more than two candidates vie for a single seat, an election must take place. The District adheres to essential requirements under State law for local government entities. It prepares and approves an annual budget and submits the required Financial Transaction Reports to the State Controller's Office. Regular audits, conducted by professional firms, ensure the District’s financial operations are transparent and accountable. The latest audit was completed for Fiscal Year 2023-2024. Additionally, all Board meetings are open to the public, in compliance with the Brown Act, and are properly noticed. Board meetings are guided by an established set of bylaws. The District meets best practices from the Special District Leadership Foundation’s High Performing District Checklist. The District implements a Will Serve Letter policy for water and sewer services and has a policy that strengthens adherence to the one-year ban on former officials representing others for compensation in matters that could influence agency decisions (per California Government Code Section 87406). The District employs 34 full-time, non-fire staff and contracts with legal services as needed. Collaboration with public agencies such as the Monterey County Regional Fire District, CAL FIRE, the County of Monterey, and ReGen Monterey helps the District provide essential services and offer support to neighboring agencies. Financial Summary The District’s most recent audit (Fiscal Year 2023-2024) showed a net position of $34,068,000 as of June 30, 2024. In the last five years, District expenses outpaced revenues by approximately $1 million on average each year. This fiscal deficit can be attributed to annual depreciation of the District’s assets and rising operating expenses and capital costs. The District holds a reserve fund with a balance of approximately $2.5 million which assisted the District to absorb the unexpected rising costs over the past few years. The District is conducting community engagement to evaluate if the community would support a reset of its five-year financial plan (and associated fees, assessments, and special taxes) to account for higher than expected expenses and to address major repairs on the District’s aging 43 miles of roadways. SLCSD’s tax structure was developed to be revenue neutral to the County. This means that the District relies on funding through fees, assessments, and special taxes generated from within the Preserve community and does not receive a portion of the 1% property tax levied on the assessed property value, as established by Proposition 13 in 1978. 2025 MSR & Sphere Study: Community Services Districts – Page 41 Fiscal Year Revenues Expenses End-of-Year Net Position 2019-2020 (audited) $6,644,000 $7,640,000 $38,413,000 2020-2021 (audited) $6,861,000 $7,862,000 $37,413,000 2021-2022 (audited) $7,577,000 $8,450,000 $36,540,000 2022-2023 (audited) $8,090,000 $9,362,000 $35,268,000 2023-2024 (audited) $8,727,000 $9,927,000 $34,068,000 2024-2025 (budgeted) $9,051,000 $9,391,000 * The District’s annual audits use the metric of “End-of-Year Net Position” and not “End-of-Year Fund Balances.” Boundaries and Sphere of Influence The District’s boundaries and sphere of influence are the same. District representatives have not indicated an interest in adjusting the existing boundaries, sphere of influence, or active powers/services. LAFCO staff agrees that no changes are needed to the District’s boundaries, sphere, and active powers/services. Recommended LAFCO Action Based on the information and analysis in this study, the LAFCO Executive Officer recommends that the Commission reaffirm the District’s sphere of influence. LAFCO of Monterey County 42 2025 MSR & Sphere Study: Community Services Districts – Page 43 (blank page) LAFCO of Monterey County 44 Spreckels Community Services District Formation Date July 1, 1986 Community Services District Law, Government Code, Sections 61000- Legal Authority 61250 Board of Directors Five members, elected to four-year terms through at-large elections District Area Approximately 478 acres (0.75 square mile) Sphere of Influence Same as District boundaries Population 692 (2020 Census) Solid waste collection, street lighting, storm drainage, street sweeping, Authorized Powers/ sidewalk and alley maintenance, water (inactive), and sewer (inactive) Services Provided services Annual Revenues $190,000 (Fiscal Year 2024-2025 Budget) Approximate Annual $275 Revenue Per Resident General Manager Paul Ingram Two: General Manager and Facilities Manager through a service agreement Employees with Spreckels Veterans Memorial District (official employer) P.O. Box 7432 P.O. Box/ Office Spreckels, CA 93962 / Address 90 Fifth Street Spreckels, CA 93962 Regular Board meetings are held the third Wednesday of the month at 5:30 Meetings PM at the District offices Website scsd.specialdistrict.org Summary and Background Introduction LAFCO formed the Spreckels Community Services District (SCSD) in 1986 after the dissolution of County Service Area No. 40, which had been created in 1965 to manage street lighting, storm drain maintenance, and surface water disposal services. The creation of the District was intended to foster greater local participation in service delivery and strengthen the community’s sense of identity. SCSD provides solid waste collection, street lighting, storm drainage, street sweeping, and sidewalk and alley maintenance services to the unincorporated community of Spreckels, approximately 2 miles south of the City of Salinas. The District has the authority to offer services related to potable water and wastewater, although these powers are currently "inactive" because water and sewer services for the Spreckels community are provided by private companies. In 1991, the District began offering financial support to the Spreckels Volunteer Fire Company. Later, in December 2015, LAFCO approved a reorganization that transferred fire protection and emergency medical services to Monterey County Regional Fire District, removing this service from SCSD’s list of active powers/services. AMBAG’s 2026 Regional Growth Forecast projects that most future development in the region is expected to occur within cities, and not the unincorporated county. Monterey County’s Draft Sixth Cycle Housing Element Update did not identify any inventory sites for potential housing within SCSD’s boundaries. 2025 MSR & Sphere Study: Community Services Districts – Page 45 Facilities and Services The District office is located at 90 Fifth Street in Spreckels. Solid Waste Collection: Since its formation in 1986, the District has had the authority to franchise waste collection services. It currently grants exclusive rights to Tri-Cities Disposal for garbage and recycling. Customers are billed directly by the provider. Street Lighting: Pacific Gas & Electric supplies street lighting to the community, billing the District monthly. Costs are passed on to property owners as user fees, collected through their property tax bills. Storm Drainage: The District oversees the community’s storm drainage system, including catch basins, pipes, pumps, and the outfall to the Salinas River. This system is funded through user fees and new tax assessment paid by property owners via property taxes. Although it is the District’s main infrastructure asset, the outfall pipeline was significantly damaged by flooding in 2023 and is in need of repairs or replacement. The system is designed to discharge untreated stormwater directly into the Salinas River. Street Sweeping: The District coordinates semi-annual street sweeping with Monterey County to meet state stormwater maintenance requirements. Sidewalk and Alley Maintenance: In 1996, voters approved giving the District responsibility for maintaining County-owned sidewalks and alleys in Spreckels. With the additional funding from CSD’s new tax assessments for zones one and two, the District is beginning to plan for needed repairs to curbs and sidewalks in the community. Water and Sewer Services: Though authorized by voters in 1989, the District has not assumed responsibility for providing water or sewer services. These remain privately managed: Spreckels Water Company, owned by Tanimura & Antle and operated by California Water Service, provides water, while California-American Water Company (Cal-Am) owns and operates the sewer system. The sewer system relies on an aeration pond adjacent to the Salinas River to dispose of effluent. The District retains the authority to pursue acquisition of the privately owned water and sewer systems in the future, though there are no current plans to do so. In the long-term, the District is interested in connecting its stormwater system and the sewer system (currently privately owned) to the Monterey One Water (M1W) regional wastewater treatment plant north of Marina, which would offer environmental and operational benefits. Over the past several years, the LAFCO Executive Officer has facilitated discussions between District and M1W representatives. M1W is planning to extend its wastewater treatment services to the community of Spreckels as part of a broader initiative to expand its service area in northern Monterey County. The expansion is part of M1W's Planned Service Area Extension Project, for which initial planning and environmental review (a Negative Declaration) were completed in 2019. 2023 Flooding Impacts In March 2023, the District’s stormwater system was severely compromised when flooding from atmospheric rivers caused the stormwater system pump to fail. The damage rendered the system inoperable, and repairs were urgently needed. The outflow of the stormwater system required replacement, including the damaged pump and about three miles of destroyed stormwater pipe stretching from Nacional Avenue to Spreckels Boulevard. At the time, the Federal Emergency Management Agency (FEMA) provided critical funding to assist with the repairs. FEMA allocated approximately $172,000 to repair two localized breakages in the outflow pipe on Tanamura & Antle property. However, the total estimated cost of replacing the entire stormwater outflow pipeline infrastructure is approximately $3 million. Although full replacement is the recommended path, FEMA funding cannot be used. The District has determined that it will not be able to perform these necessary repairs/replacements without obtaining additional grant support. LAFCO of Monterey County 46 Governance, Staffing, and Shared Facilities The Spreckels Community Services District is governed by a five-member Board of Directors elected at- large to staggered four-year terms. If the number of candidates matches the available seats—or no candidates file—the Monterey County Board of Supervisors may appoint members, eliminating the need for an election. LAFCO’s 2016 MSR/SOI Study for SCSD and Spreckels Memorial District provided recommended actions related to: (1) completing financial audits for fiscal years 2006-07 to 2014-15, (2) exploring collaboration between the two districts, (3) developing capital improvement plans and budgets, and (4) completing district websites. Subsequently, at the request of both SCSD and the Memorial District boards, LAFCO prepared a 2018 Memo that reviewed potential options for reorganization to further collaboration between both districts and to be more efficient and effective. SCSD has made significant progress in implementing nearly all of LAFCO’s recommended actions, including completing audits for previously outstanding fiscal years 2006-07 to 2014-15, completing a website, and integrating both district’s operations. While it is a matter of interpretation whether consolidating the two districts is feasible, the two districts currently share staff, administrative functions, and office and meeting space at the Memorial District’s facility. The District adheres to most requirements under state law for local government entities. The District prepares and approves an annual budget, files Form 700 statements of economic interests for Board members and designated staff, and maintains a website compliant with state law. However, the District’s most recent verified, completed audit was for Fiscal Year 2018-2019. The District has not completed required ethics and harassment prevention training in the last two years. In communications with District staff, LAFCO expressed the urgency of addressing the identified compliance issues. District staff acknowledged the need to complete annual audits, conduct biennial ethics and harassment prevention training, and implement best practices as identified in the Special District Leadership Foundation’s High Performing District Checklist. Although a statewide shortage in Certified Public Accountants has hindered the District’s financial audit compliance efforts, District staff have hired a new audit firm after the passing of its previous principal auditor. The District’s FY 2020-21 financial audit is currently underway. District staffing consists of two positions, a General Manager and a Facilities Manager. The District’s staff resources are provided by contract with the Memorial District for General and Facilities Management services. All staff for both districts are employees of Memorial District. The District also contracts with a County Counsel’s Office for legal services as necessary. The District collaborates with public agencies, including the Spreckels Veterans Memorial District and County of Monterey to provide services and offers support to neighboring districts when needed. Financial Summary The District’s most recent available audit (Fiscal Year 2018-2019) indicated a net position of $412,000 as of June 30, 2019. LAFCO has not received any recent audits or unaudited financial statements. Consequently, LAFCO staff relied on the District’s FY 2024-2025 annual budget and annual Financial Transaction Report filings available from the State Controller’s Office. In conclusion, since the District has not completed recent audits, the District’s financial status cannot be accurately determined. The information presented in the table below is incomplete and unverified. This financial information requires an audit by a qualified accounting firm for a full and precise understanding of the District's finances. Nonetheless, the limited information available indicates that the District is operating with a positive cashflow, with revenues exceeding expenses most fiscal years. 2025 MSR & Sphere Study: Community Services Districts – Page 47 Fiscal Year Revenues Expenses End-of-Year Net Position 2019-2020 (unaudited) Missing data (LAFCO did not receive a copy of $74,000 $53,000 the audit in time for the draft MSR) 2020-2021 (unaudited) $115,000 $83,000 Missing data 2021-2022 (unaudited) $77,000 $52,000 Missing data 2022-2023 (unaudited) $83,000 $113,000 Missing data 2023-2024 (unaudited) $129,000 $22,000 Missing data 2024-2025 (budgeted) $190,000 $190,000 Missing data Boundaries and Sphere of Influence In 1986, a portion of a large agricultural property within the District was designated by LAFCO as a “Sphere Exclusion Area.” According to LAFCO’s Policies and Procedures, such exclusions occur when an area inside an agency’s boundaries is not expected to require the agency’s services in the future, making detachment appropriate. This typically applies to land identified as agricultural, open space, or under agricultural preservation—where inclusion in a Sphere of Influence could threaten its continued preservation. Although this parcel still lies within the District’s boundaries, the parcel does not currently receive any services from the District. Staff recommends that this site be considered for detachment during any future boundary change proposal. District representatives believe the current boundaries and sphere of influence are appropriate and no changes to their active powers/services are needed. Except as noted above, LAFCO staff agrees that the District’s boundaries, sphere, and active powers/services should remain unchanged. Recommended LAFCO Actions Based on the information and analysis in this study, the LAFCO Executive Officer recommends that the Commission: 1. Reaffirm the District’s sphere of influence. 2. Authorize the Executive Officer to proceed with corrective measures to address the District’s areas of non-compliance with state legal requirements and best practices, as described in the Recommended LAFCO Actions section of this study. LAFCO of Monterey County 48 2025 MSR & Sphere Study: Community Services Districts – Page 49 (blank page) LAFCO of Monterey County 50 Spreckels Veterans Memorial District Formation Date March 17, 1947 Legal Authority Military & Veterans Code, Sections 1170-1259 et seq. Board of Directors Five members, elected to four-year terms through at-large elections District Area Approximately 7,409 acres (11.6 square mile) Sphere of Influence Same as District boundaries Population 692 (2020 Census) Authorized Powers/ Operating and maintaining the Spreckels Veterans’ Memorial Building and Services Provided Spreckels Memorial Park Annual Revenues $345,500 (Fiscal Year 2024-2025 Budget) Approximate Annual $499 Revenue Per Resident General Manager Paul Ingram Two: General Manager and Facilities Manager shared with Spreckels Employees Community Services District P.O. Box 7432 P.O. Box/ Office Spreckels, CA 93962 / Address 90 Fifth Street Spreckels, CA 93962 Regular Board meetings are held the first Wednesday of the month at 5:30 Meetings PM at the District offices Website spreckelsmd.specialdistrict.org Summary and Background Introduction The Spreckels Veterans Memorial District (Memorial District) was formed by an election in 1947. The District was established to construct a veterans memorial building through public funds. Construction of the memorial hall was completed in 1956. The District also owns and operates nearby Spreckels Memorial Park, built on land donated by the Spreckels Corporation in 1966 and 1974. The Memorial District’s powers/service are to operate and maintain the Spreckels Veterans’ Memorial Hall and Spreckels Memorial Park. In coordination with District Counsel and to prevent confusion with cemetery districts, the District has been able to identify as Spreckels Veterans Memorial District (Veterans added) in its advertising and publicity, such as letterhead documents. AMBAG’s 2026 Regional Growth Forecast anticipates that most future development in the region is expected to occur within cities, and not the unincorporated county. Monterey County’s Draft Sixth Cycle Housing Element Update did not identify any inventory sites for potential housing within the Memorial District’s boundaries. Facilities and Services The District office is located at 90 Fifth Street in Spreckels. The Spreckels Veterans’ Memorial Building is the primary meeting space in Spreckels and the surrounding area. Community members use the facility for quinceañeras, weddings, and funerals. The County uses the building for community meetings including those of the neighborhood design review committee. The 2025 MSR & Sphere Study: Community Services Districts – Page 51 Spreckels Memorial Hall was also used in the past as a local assistance center for residents who were impacted by the 2023 storms. Dozens of agencies from government to nonprofits were in attendance to provide services and they served nearly 1,500 families. The Memorial Building is the home of Veterans of Foreign Wars Post 6849. The hall is available to the public for banquets, balls, meetings, and other private events. Spreckels residents receive a 50% discount for renting the hall. Most weekends are booked well in advance and many weekday evenings are also scheduled. Spreckels Veterans’ Memorial Building features a spacious 4,800-square-foot auditorium complete with a stage, alongside a 1,568-square-foot banquet room and kitchen, a 1,056-square-foot conference room, a cloak room, outdoor barbecue pits, and a bar area. The main hall can comfortably accommodate up to 200 guests for banquet- style events. Situated on a 1.5-acre lot, the property also includes around 100 parking spaces for event attendees. The District is looking for ways to improve building safety and energy efficiency (such as removing asbestos and replacing doors and windows). Spreckels Memorial Park spans a full 3.2-acre city block at the heart of town. Directly across Llano Avenue to the west, the Memorial District also maintains a smaller 0.3-acre park annex. Both areas are open to the public and offer a wide variety of recreational amenities, including courts and fields for tennis, baseball, softball, and volleyball, as well as facilities for skateboarding, shuffleboard, horseshoes, jogging, walking, and running. At the center of the main park is a picnic area available for reservation by Spreckels residents. The District’s Board is currently evaluating future options for the closed handball/racquetball court, which has been deemed unsafe. The District is working with a grant writer to actively pursue funds for Spreckels Veterans’ Memorial Building and Spreckels Memorial Park improvements. Some of the challenges that the District faces are that many grants are designed for areas with larger urban population or lower household incomes. Due to its smaller population and overall demographics, the District often does not meet grant eligibility requirements. Governance, Staffing, and Shared Facilities The Memorial District is overseen by a five-member Board of Directors elected at-large to staggered four- year terms. In instances where the number of candidates equals the number of available seats, or when no one files to run, the Monterey County Board of Supervisors may appoint members, thereby avoiding the need for an election. One of the requirements for the composition of a board for a memorial district is that “the majority of the seats on the board shall be designated for veterans.” In its 2016 Municipal Service Review and Sphere of Influence Study for the Memorial District and Spreckels Community Services District (SCSD), LAFCO outlined several recommended actions, including: (1) completing financial audits for fiscal years 2006-07 through 2014-15, (2) exploring opportunities for collaboration between the two districts, (3) creating capital improvement plans and budgets, and (4) creating district websites. In response to a joint request from the boards of both districts, LAFCO prepared a 2018 memorandum exploring reorganization options aimed at improving collaboration and operational efficiency. Since this time, the Memorial District has made notable progress in carrying out nearly all of the recommended actions, including completion of the outstanding financial audits from fiscal years 2006-07 to 2014-15, establishing a website, and integrating operations with the SCSD. While the question of whether full consolidation is practical remains a matter of review and interpretation, the two districts currently operate with shared staff, administrative functions, and office and meeting space facilities at the Memorial District’s site. The Memorial District complies with many state requirements for special districts. The District adopts an annual budget, files Form 700 statements for board members and designated staff, and maintains a website LAFCO of Monterey County 52 compliant with state laws. However, the District’s most recent completed audit is for Fiscal Year 2020– 2021, and the District has not fulfilled its required ethics and harassment prevention training within the last two years. LAFCO has highlighted the importance of resolving these compliance gaps. The District’s efforts to meet financial audit requirements have been impeded by a statewide shortage of Certified Public Accountants. District staff acknowledged these compliance issues and committed to completing outstanding audits, fulfilling training obligations, and incorporating best practices identified in the Special District Leadership Foundation’s High Performing District Checklist. In addition to working closely with SCSD, the District partners with other public entities, such as the County of Monterey, and remains available to support neighboring districts when needed. Financial Summary As of June 30, 2021, the District's most recent audited financial statement (Fiscal Year 2020-2021) reported a net position of $673,000. No subsequent audits or unaudited financial statements have been submitted to LAFCO. In the absence of more current audited data, LAFCO staff reviewed the District’s Fiscal Year 2024-2025 budget and its Financial Transaction Reports filed with the State Controller’s Office. However, without up-to-date audited financials, it is not possible to accurately assess the District’s current financial condition. For revenues and expenses after Fiscal Year 2020-21, the financial data presented below should be considered preliminary and unverified. A thorough audit by a qualified accounting firm is necessary to gain a complete and accurate understanding of the District’s finances. Nevertheless, the limited information available suggests that the District has generally maintained positive cash flow, with revenues exceeding expenditures in most fiscal years. Fluctuations in year-to-year revenues, expenses, and fund balances is partly a result of capital improvements taking place. End-of-Year Fund Balance (governmental End-of-Year Net Fiscal Year Revenues Expenses funds) Position 2019-2020 (audited) $309,000 $244,000 $227,000 509,000 2020-2021 (audited) $463,000 $324,000 $367,000 673,000 2021-2022 (unaudited) $549,000 $710,000 Missing data Missing data 2022-2023 (unaudited) $370,000 $361,000 Missing data Missing data 2023-2024 (unaudited) $351,000 $349,000 Missing data Missing data 2024-2025 (budgeted) $346,000 $326,000 Missing data Missing data Boundaries and Sphere of Influence The District’s boundaries and sphere of influence are the same. District representatives believe the current boundaries and sphere of influence are appropriate. LAFCO staff agrees that the District’s boundaries and sphere should remain unchanged. Recommended LAFCO Actions Based on the information and analysis in this study, the LAFCO Executive Officer recommends that the Commission: 1. Reaffirm the District’s sphere of influence. 2. Authorize the Executive Officer to proceed with corrective measures to address the District’s areas of non-compliance with state legal requirements and best practices, as described in the Recommended LAFCO Actions section of this study. 2025 MSR & Sphere Study: Community Services Districts – Page 53 LAFCO of Monterey County 54 Determinations Municipal Service Review Determinations Per Government Code Section 56430(a) This section contains recommended Municipal Services determinations for the eight Community Services Districts and Spreckels Veterans Memorial District. 1. Growth and population projections for the affected area No significant population growth is currently projected for the unincorporated areas within these districts. East Garrison development is substantially complete for phases one and two, while phase three (the final phase) is 70% complete with mostly commercial development remaining. The Santa Lucia Preserve development includes 300 entitled residential estate lots, 147 of which are developed and an additional 30 of which are under construction. Most of the land within the other districts consists of residential areas that were subdivided and developed, consistent with their County land use designations, in previous decades. The majority of future development is expected to occur within incorporated cities, leaving less growth in the unincorporated county. The County has identified areas for potential housing development as part of its Draft Sixth Cycle Housing Element Update. The draft Housing Element Update identifies potential inventory sites for approximately 185 new dwelling units in the Pajaro area, 395 new dwelling units in the Castroville area, and 325 new dwelling units in the East Garrison area. 2. Location and characteristics of any disadvantaged unincorporated communities (DUCs) within or contiguous to the sphere of influence State law defines DUCs as communities with an annual median household income of less than 80% of the statewide annual median household income. Census data indicate that residential areas within Castroville and Pajaro/Sunny Mesa Community Services Districts’ (CSDs’) existing boundaries and spheres of influence have incomes below 80% of the statewide median income, meeting the definition of DUCs. The districts’ services are available to these residents, or, in the case of Pajaro/Sunny Mesa CSD, potable water service will be available to these residents through the Springfield Improvement Project (under construction) and Pajaro-Sunny Mesa-Springfield Area Regional Consolidation Project (Consolidation Project, pending). 3. Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs and deficiencies (including needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any DUCs within, or contiguous to, the sphere of influence) The Districts included in this study (with the exception of Ocean View Plaza Community Services District, which is an inactive district) have performed and continue to plan for periodic infrastructure improvements to maintain and improve service levels. Castroville CSD’s wastewater collection system is at capacity and requires upgrades, which are being addressed through its pending Washington Bypass project. In Moss Landing, Castroville CSD’s wastewater collection system needs full replacement, which will be addressed through the pending Moss Landing Sewer Improvement project. Pajaro/Sunny Mesa CSD’s Springfield Improvement Project (underway) and Consolidation Project (pending) will address water quality and system reliability needs while also extending water service connections to households within and adjacent to District boundaries. Spreckels CSD is seeking grant funding to address needed repairs or replacement of its storm drainage outfall pipe, which was damaged due to flooding in 2023. Spreckels Veterans Memorial District is planning to make safety and efficiency improvements to its memorial building and is considering options for the closed handball/racquetball court, which has been deemed unsafe. Other than areas noted above and in 2025 MSR & Sphere Study: Community Services Districts – Page 55 MSR determination #2 for Pajaro/Sunny Mesa CSD, there are no identified DUCs within or contiguous to the districts’ spheres of influence that are unserved or underserved with regard to these districts’ wastewater, water, and fire protection services. 4. Financial ability of agencies to provide services The districts in this study benefit from professional administrative and financial oversight. To varying degrees, the districts have generally experienced financial pressures from higher employment costs (such as salaries, benefits, and insurance), increased costs for capital projects, and other factors within the past five years. East Garrison and Santa Lucia CSDs were established under the principle of being revenue neutral to the County, receiving most of their funding through rates, fees, charges, and/or special taxes and assessments. The districts providing utility-type services (such as water and wastewater) typically conduct rate studies and implement Proposition 218 procedures at regular intervals to ensure that projected revenues align with anticipated expenditures. 5. Status of, and Opportunities for, Shared Facilities The districts included in this study generally collaborate with surrounding districts offering the same or different types of services. A few districts share facilities and/or staff. Specifically, Pebble Beach CSD collaborates with Cypress and Carmel Highlands Fire Protection Districts along with CAL FIRE (contract staff service provider for all three districts) to achieve operational efficiencies. Pebble Beach CSD also partners with the Carmel Area Wastewater District to achieve mutually beneficial provision of wastewater treatment and recycled water for the District. Santa Lucia CSD contracts with MCRFD for a 24/7 paramedic/firefighter who resides onsite and is supported by volunteers. Spreckels CSD and Veterans Memorial District currently share staff, administrative functions, and office and meeting space at the Memorial District’s facility. 6. Accountability for community service needs, including government structure and operational efficiencies As detailed in the Executive Summary (Key Findings) and the District Profiles, state laws outline various accountability requirements for special districts. With the exception of the Spreckels CSD and Spreckels Veterans Memorial Districts, the districts included in this study are generally in compliance with accountability requirements. The two Spreckels area districts are making genuine efforts to fulfill state legal requirements for completion of financial audits and trainings. District representatives expressed a willingness to follow LAFCO’s guidance on meeting state legal obligations. 7. Any Other Matter Related to Effective or Efficient Service Delivery, As Required by Commission Policy LAFCO staff reviewed locally adopted LAFCO policies and noted no additional matters. LAFCO of Monterey County 56 Sphere of Influence Determinations Per Government Code Section 56425(e) This section provides recommended sphere of influence determinations for the three special districts analyzed in this study. 1. Present and planned land uses in the area, including agricultural and open-space lands. Lands within these districts are primarily residential, developed, and open space (restricted from development). No impacts to agricultural or open space lands are likely to occur in relation to the districts. 2. Present and probable need for public facilities and services in the area There is a demonstrated present need for the improvement of existing public facilities provided by the Pajaro/Sunny Mesa, Castroville, and Spreckels CSDs and Spreckels Veterans Memorial District. Please refer to MSR determinations #1 and #3, above, for related discussion. 3. Present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide The facilities and infrastructure owned and operated by the districts are functional and providing services in response to current needs. However, there are needs for improvements and/or repairs that are being implemented or planned (see MSR determinations #3 and #4 above for further discussion). 4. The existence of any social or economic communities of interest in the area, if the commission determines that they are relevant to the agency As discussed under MSR determinations #2 and #3, areas within the current boundaries and spheres of influence of Castroville and Pajaro/Sunny Mesa CSDs include communities with annual household incomes below 80% of the statewide median household income. These areas appear to meet the definition of Disadvantaged Unincorporated Communities (DUCs). These areas currently have access to district services, or are included in future plans for district services (Pajaro/Sunny Mesa CSD). There are no proposed or recommended changes to the existing services or boundaries at this time. 5. For an update of a sphere of influence of a city or special district that provides public facilities or services related to sewers, municipal and industrial water, or structural fire protection, the present and probable need for those public facilities and services of any DUCs within the existing sphere of influence. Castroville and Pajaro/Sunny Mesa CSDs each appear to have residential areas within their boundaries that qualify as Disadvantaged Unincorporated Communities (DUCs). These areas currently receive services from their respective districts, or, in the case of Pajaro/Sunny Mesa CSD, will be provided potable water services through the Springfield Improvement (underway) and Consolidation (pending) projects. 2025 MSR & Sphere Study: Community Services Districts – Page 57 Sources and Acknowledgements Information that LAFCO received from district representatives (board members and staff) was of key importance in developing this study. The eight districts met with LAFCO staff and provided copies of available information and answers to technical questions and a survey regarding services, state law requirements, and best practices. After in-person meetings, district representatives continued to be available for information over the phone and by email. Without their cooperation and assistance, this report would not have been possible. LAFCO’s earlier Municipal Service Review and Sphere of Influence Studies provided additional background information about the special districts. LAFCO staff also utilized: • Information provided by the Association of Monterey Bay Area Governments (“AMBAG”) 2026 Regional Growth Forecast, accepted in October 2024; 2020 U.S. Census; • The State Controller’s By the Numbers website (https://districts.bythenumbers.sco.ca.gov/#!/year/default); • The State Controller’s “Special Uniform Accounting and Reporting Procedures” 2024 Edition (https://www.sco.ca.gov/Files-ARD-Local/spd_manual_2024_edition.pdf); • The Special District Leadership Foundation’s “High-Performing District Checklist” (https://www.co.monterey.ca.us/home/showpublisheddocument/127719/638381500908573245); • The California Special Districts Association’s “Special District Board Member Handbook” (https://www.co.monterey.ca.us/home/showpublisheddocument/127717/638381500899198137). LAFCO of Monterey County 58