San Benito Regional Wastewater MSR Draft Final 9 5 25

San Benito Wastewater Municipal Service Review Draft Final September 5, 2025 San Benito Wastewater MSR Draft Final TABLE OF CONTENTS .............................................................................................................................................................. 1 LIST OF FIGURES ........................................................................................................................................................................ 4 ACRONYMS AND DEFINITIONS ......................................................................................................................................... 6 PREFACE .......................................................................................................................................................................................... 7 CONTEXT ......................................................................................................................................................................................................... 7 CREDITS ............................................................................................................................................................................................................ 7 1. EXECUTIVE SUMMARY ............................................................................................................................................ 8 PROVIDERS ...................................................................................................................................................................................................... 8 WASTEWATER SERVICES ............................................................................................................................................................................ 9 RECYCLED WATER ....................................................................................................................................................................................... 11 FINANCIAL ABILITY TO PROVIDE SERVICES ...................................................................................................................................... 12 KEY ISSUES ..................................................................................................................................................................................................... 13 GOVERNANCE STRUCTURE OPTIONS ................................................................................................................................................ 17 2. BACKGROUND ......................................................................................................................................................... 30 LAFCO OVERVIEW .................................................................................................................................................................................. 30 MUNICIPAL SERVICES REVIEW LEGISLATION .................................................................................................................................. 30 MUNICIPAL SERVICES REVIEW PROCESS ........................................................................................................................................... 31 SPHERE OF INFLUENCE UPDATES .......................................................................................................................................................... 31 DISADVANTAGED UNINCORPORATED COMMUNITIES ................................................................................................................ 32 3. OVERVIEW .................................................................................................................................................................... 34 STUDY AREA ................................................................................................................................................................................................. 34 GROWTH AND POPULATION PROJECTIONS .................................................................................................................................... 34 LOCAL AND REGIONAL PLANNING CONTEXT ............................................................................................................................... 42 REGULATION OF WASTEWATER PROVIDER AGENCIES ............................................................................................................... 44 WASTEWATER REGULATIONS ................................................................................................................................................................ 44 RECYCLED WATER REGULATIONS ...................................................................................................................................................... 48 WASTEWATER SERVICES ......................................................................................................................................................................... 49 4. CITY OF HOLLISTER .............................................................................................................................................. 53 AGENCY OVERVIEW ................................................................................................................................................................................. 53 ACCOUNTABILITY AND GOVERNANCE ............................................................................................................................................. 54 PLANNING AND MANAGEMENT PRACTICES ................................................................................................................................... 58 GROWTH AND POPULATION PROJECTIONS .................................................................................................................................. 62 DISADVANTAGED UNINCORPORATED COMMUNITIES ................................................................................................................ 84 FINANCIAL ABILITY TO PROVIDE SERVICES .................................................................................................................................... 85 RECYCLING SERVICES .............................................................................................................................................................................. 94 WASTEWATER SERVICES ......................................................................................................................................................................... 95 WASTEWATER FACILITIES AND CAPACITY ..................................................................................................................................... 100 WASTEWATER FLOW ............................................................................................................................................................................... 103 SERVICE ADEQUACY ............................................................................................................................................................................... 103 GOVERNANCE STRUCTURE OPTIONS ............................................................................................................................................ 106 CITY OF HOLLISTER MSR DETERMINATIONS ................................................................................................................................. 113 5. CITY OF SAN JUAN BAUTISTA ......................................................................................................................... 116 AGENCY OVERVIEW ................................................................................................................................................................................. 116 ACCOUNTABILITY AND GOVERNANCE ........................................................................................................................................... 120 PLANNING AND MANAGEMENT PRACTICES .................................................................................................................................. 124 GROWTH AND POPULATION PROJECTIONS ................................................................................................................................. 129 DISADVANTAGED UNINCORPORATED COMMUNITIES ............................................................................................................... 140 FINANCIAL ABILITY TO PROVIDE SERVICES .................................................................................................................................... 141 WASTEWATER SERVICES ........................................................................................................................................................................ 149 WASTEWATER FACILITIES AND CAPACITY ...................................................................................................................................... 152 Table of Contents 1 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final WASTEWATER FLOW ............................................................................................................................................................................... 155 SERVICE ADEQUACY ............................................................................................................................................................................... 156 GOVERNANCE STRUCTURE OPTIONS ............................................................................................................................................. 159 CITY OF SAN JUAN BAUTISTA MSR DETERMINATIONS ............................................................................................................ 160 6. SAN BENITO COUNTY WATER DISTRICT ................................................................................................ 163 AGENCY OVERVIEW ................................................................................................................................................................................ 163 ACCOUNTABILITY AND GOVERNANCE ........................................................................................................................................... 164 PLANNING AND MANAGEMENT PRACTICES .................................................................................................................................. 169 GROWTH AND POPULATION PROJECTIONS ................................................................................................................................. 172 GROWTH & POPULATION PROJECTIONS ....................................................................................................................................... 175 DISADVANTAGED UNINCORPORATED COMMUNITIES ............................................................................................................... 175 FINANCE ABILITY TO PROVIDE SERVICES ....................................................................................................................................... 176 RECYCLED WATER ................................................................................................................................................................................... 183 RECYCLED WATER SUPPLY ................................................................................................................................................................... 184 RECYCLED WATER DEMAND ................................................................................................................................................................ 184 RECYCLED WATER INFRASTRUCTURE AND FACILITIES ............................................................................................................... 185 RECYCLED WATER SERVICE ADEQUACY ........................................................................................................................................ 186 GOVERNANCE STRUCTURE OPTIONS ............................................................................................................................................. 186 SAN BENITO COUNTY WATER DISTRICT MSR DETERMINATIONS ....................................................................................... 187 7. SUNNYSLOPE COUNTY WATER DISTRICT ............................................................................................. 190 AGENCY OVERVIEW ............................................................................................................................................................................... 190 ACCOUNTABILITY AND GOVERNANCE ............................................................................................................................................ 191 PLANNING AND MANAGEMENT PRACTICES .................................................................................................................................. 194 GROWTH AND POPULATION PROJECTIONS ................................................................................................................................. 196 DISADVANTAGED UNINCORPORATED COMMUNITIES ............................................................................................................. 200 FINANCE ABILITY TO PROVIDE SERVICES ....................................................................................................................................... 201 WASTEWATER SERVICES ...................................................................................................................................................................... 209 WASTEWATER FACILITIES AND CAPACITY ....................................................................................................................................... 211 WASTEWATER FLOW ............................................................................................................................................................................... 212 SERVICE ADEQUACY ............................................................................................................................................................................... 213 GOVERNANCE STRUCTURE OPTIONS ............................................................................................................................................. 215 SUNNYSLOPE COUNTY WATER DISTRICT MSR DETERMINATIONS ..................................................................................... 217 8. TRES PINOS WATER DISTRICT ...................................................................................................................... 220 AGENCY OVERVIEW ............................................................................................................................................................................... 220 ACCOUNTABILITY AND GOVERNANCE ........................................................................................................................................... 221 PLANNING AND MANAGEMENT PRACTICES ................................................................................................................................. 225 GROWTH AND POPULATION PROJECTIONS ................................................................................................................................ 226 DISADVANTAGED UNINCORPORATED COMMUNITIES .............................................................................................................. 229 FINANCE ABILITY TO PROVIDE SERVICES ...................................................................................................................................... 230 WASTEWATER SERVICES ....................................................................................................................................................................... 233 WASTEWATER FACILITIES AND CAPACITY ..................................................................................................................................... 234 WASTEWATER FLOW .............................................................................................................................................................................. 235 SERVICE ADEQUACY .............................................................................................................................................................................. 236 GOVERNANCE STRUCTURE OPTIONS ............................................................................................................................................ 237 TRES PINOS COUNTY WATER DISTRICT MSR DETERMINATIONS ....................................................................................... 239 9. SAN BENITO COUNTY SERVICE AREA #22 (CIELO VISTA ESTATES) ...................................... 241 AGENCY OVERVIEW ................................................................................................................................................................................ 241 PLANNING AND MANAGEMENT ......................................................................................................................................................... 242 GROWTH AND POPULATION PROJECTIONS ................................................................................................................................ 243 DISADVANTAGED UNINCORPORATED COMMUNITIES .............................................................................................................. 243 FINANCE ABILITY TO PROVIDE SERVICES ...................................................................................................................................... 244 WASTEWATER SERVICES ....................................................................................................................................................................... 247 WASTEWATER FACILITIES AND CAPACITY ..................................................................................................................................... 248 SERVICE ADEQUACY .............................................................................................................................................................................. 248 GOVERNANCE STRUCTURE OPTIONS ............................................................................................................................................. 251 CSA #22 MSR DETERMINATIONS .................................................................................................................................................... 252 10. SAN BENITO COUNTY SERVICE AREA #45 (RANCHO LARIOS) ................................................ 254 Table of Contents 2 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final AGENCY OVERVIEW ............................................................................................................................................................................... 254 ACCOUNTABILITY AND GOVERNANCE .......................................................................................................................................... 254 GROWTH AND POPULATION PROJECTIONS ................................................................................................................................ 255 DISADVANTAGED UNINCORPORATED COMMUNITIES .............................................................................................................. 255 FINANCE ABILITY TO PROVIDE SERVICES ...................................................................................................................................... 255 WASTEWATER SERVICES ....................................................................................................................................................................... 256 WASTEWATER FACILITIES AND CAPACITY ..................................................................................................................................... 256 SERVICE ADEQUACY .............................................................................................................................................................................. 256 GOVERNANCE STRUCTURE OPTIONS ............................................................................................................................................ 257 CSA #45 MSR DETERMINATIONS .................................................................................................................................................... 259 Table of Contents 3 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final FIGURE 1-1: WASTEWATER AND RECYCLED WATER PROVIDERS IN SAN BENITO COUNTY . 8 FIGURE 1-2: SAN BENITO COUNTY GOVERNANCE STRUCTURE OPTIONS .................................. 18 FIGURE 3-1: SAN BENITO COUNTY POPULATION GROWTH, 2010-2023 .......................................... 35 FIGURE 3-2: SAN BENITO COUNTY PLANNED OR PROPOSED DEVELOPMENT PROJECTS, 2023 38 FIGURE 3-3: PROJECTED POPULATION BY SAN BENITO COUNTY JURISDICTION, 2015-2040 40 FIGURE 3-4: WASTEWATER REGULATORY AGENCIES .................................................................................. 44 FIGURE 3-5: SAN BENITO REGIONAL WASTEWATER AGENCIES FLOW VS CAPACITY ........ 49 FIGURE 3-6: WASTEWATER PROVIDER REGULATORY COMPLIANCE, 2019-2023 ........................ 51 FIGURE 4-1: CITY OF HOLLISTER GOVERNING BODY ................................................................................ 56 FIGURE 4-2: TRANSPARENCY AND ACCOUNTABILITY INDICATORS ................................................. 58 FIGURE 4-3: CITY OF HOLLISTER PLANNING AREA MAP ........................................................................... 63 FIGURE 4-4: CITY OF HOLLISTER GENERAL PLAN LAND USE DESIGNATION ............................... 67 FIGURE 4-5: CITY OF HOLLISTER IMPORTANT FARMLAND AND WILLIAMSON ACT CONTRACTS 73 FIGURE 4-6: CITY OF HOLLISTER VACANT AND UNDERUTILIZED LAND INVENTORY ............. 77 FIGURE 4-7: CITY OF HOLLISTER POPULATION GROWTH, 2010-2023 ............................................... 78 FIGURE 4-8: LAFCO ANNEXATION 2011-2019 ....................................................................................................... 84 FIGURE 4-9: THE CITY OF HOLLISTER FINANCIAL SUMMARY FY 20-21 ............................................. 88 FIGURE 4-10: THE CITY OF HOLLISTER SEWER RATE STRUCTURE ........................................................ 94 FIGURE 4-11: ORGANIZATIONAL CHART, UTILITIES DEPARTMENT 2024 ........................................... 99 FIGURE 4-12: EXISTING PIPELINE INVENTORY BY DIAMETER .................................................................. 100 FIGURE 5-1: CITY OF SAN JUAN BAUTISTA SOI/ UGB, 2023 ..................................................................... 119 FIGURE 5-2: CITY OF SAN JUAN BAUTISTA GOVERNING BODY .......................................................... 122 FIGURE 5-3: TRANSPARENCY AND ACCOUNTABILITY INDICATORS ................................................ 124 FIGURE 5-4: THE CITY OF SAN JUAN BAUTISTA ORGANIZATIONAL CHART .............................. 126 FIGURE 5-5: CITY OF SAN JUAN BAUTISTA UNDERUTILIZED AND VACANT LANDS ................. 131 FIGURE 5-6: CITY OF SAN JUAN BAUTISTA WILLIAMSON ACT CONTRACTS .............................. 134 FIGURE 5-7: CITY OF SAN JUAN BAUTISTA POPULATION GROWTH, 2010-2023 ......................... 136 FIGURE 5-8: THE CITY OF SAN JUAN BAUTISTA FINANCIAL SUMMARY FY 22-23 ...................... 143 FIGURE 6-1: THE SAN BENITO COUNTY WATER DISTRICT GOVERNING BODY ....................... 166 FIGURE 6-2: TRANSPARENCY AND ACCOUNTABILITY INDICATORS ................................................ 168 FIGURE 6-3-: SAN BENITO COUNTY WATER DISTRICT ORGANIZATIONAL CHART ................. 169 FIGURE 6-4: SAN BENITO COUNTY LAND USE DIAGRAM ........................................................................ 172 FIGURE 6-5: THE SAN BENITO COUNTY WATER DISTRICT FINANCIAL SUMMARY FY 22-23 177 FIGURE 6-6: SBCWD RESTRICTED AND DESIGNATED NET ASSETS/CASH ..................................... 180 FIGURE 6-7: PROPOSED RECYCLED WATER & POWER RATES, $/AF (PER ACRE FEET) .......... 183 List of Figures 4 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final FIGURE 7-1: SUNNYSLOPE COUNTY WATER DISTRICT GOVERNING BODY ............................... 192 FIGURE 7-2: TRANSPARENCY AND ACCOUNTABILITY INDICATORS ................................................ 194 FIGURE 7-3: SSCWD PLANNED OR PROPOSED DEVELOPMENT PROJECTS ................................ 200 FIGURE 7-4: THE SUNNYSLOPE COUNTY WATER DISTRICT FINANCIAL SUMMARY 2022-23 203 FIGURE 7-5: THE SUNNYSLOPE COUNTY WATER DISTRICT FINANCIAL RESERVES ............... 205 FIGURE 8-1: TRES PINOS COUNTY WATER DISTRICT MAP ..................................................................... 221 FIGURE 8-2: TRES PINOS COUNTY WATER DISTRICT GOVERNING BODY .................................. 222 FIGURE 8-3: TRANSPARENCY AND ACCOUNTABILITY INDICATORS ............................................... 225 FIGURE 8-4: TRES PINOS COUNTY WATER DISTRICT BUDGET OVERVIEW FY 22-23 ............... 231 FIGURE 8-5: TRES PINOS COUNTY WATER DISTRICT BUDGET OVERVIEW FY 22-23 .............. 233 FIGURE 8-6: TPCWD MAXIMUM DAY DEMAND (MDD), 2012-2021 .......................................................... 235 FIGURE 9-1: CSA #22 FINANCIAL SUMMARY FISCAL YEAR 22-23 AND 23-24 ................................. 244 FIGURE 9-2: CSA #22 FEE SCHEDULE ................................................................................................................... 247 List of Figures 5 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final ADFW: Average Dry Weather Flow AMBAG: The Association of Monterey Bay Area Governments AWMP: Agriculture Water Management Plan CDP: Census Designated Place CEQA: California Environmental Quality Act CIP: Capital Improvement Plan or Program CKH: Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 CPRA: California Public Records Act CSA: County Services Area CWA: Clean Water Act DAC: Disadvantaged Community DOF: California Department of Finance DUCs: Disadvantaged Unincorporated Communities DWR: California Department of Water Resources DWTP: Domestic Wastewater Treatment Plant EIR: Environmental Impact Report FFPC: The State of California Fair Political Practices Commission FY: Fiscal year GIS: Geographic Information Systems GP: General Plan GPD: Gallons Per Day HOA: Homeowners Association HUA: Hollister Urban Area HUAWWMP: Hollister Urban Area Water and Wastewater Master Plan I/I: Infiltration and Inflow IWTP: Industrial Wastewater Treatment Plant JPA: Joint Powers Authority or Agency LAFCo: Local Agency Formation Commission MGPD: Million Gallons Per Day MMPs: Mandatory Minimum Penalties MSR: Municipal Service Review NPDES: National Pollutant Discharge Elimination System NOV: Notice of Violation NA: Not applicable RFP: Request for Proposals RGF: Regional Growth Forecast RWQCB: Regional Water Quality Control Board SBCWD: San Benito County Water District SCADA: Supervisory Control and Data Acquisition SJB: San Juan Bautista SOI: Sphere of Influence SSCWD: Sunnyslope County Water District SSMP: Sanitary Sewer Management Plan SWRCB: State Water Resources Control Board TDS: Total Dissolved Solids TMDLs: Total Maximum Daily Loads UWMPs: Urban Water Management Plans WWTP: Wastewater Treatment Plant Preface 6 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Prepared for the San Benito Local Agency Formation Commission (LAFCO), this report is a Municipal Services Review (MSR) covering the San Benito Regional Wastewater Services. An MSR is a state-required comprehensive study of services within a designated geographic area. This MSR focuses on six agencies in San Benito County that provide wastewater collection and treatment services. San Benito LAFCO is required to prepare this MSR by the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Government Code §56000, et seq.), which took effect on January 1, 2001. The MSR examines wastewater and recycled water services provided by San Benito County agencies, whose boundaries and governance are subject to LAFCO. The authors extend their appreciation to those individuals at the many agencies that provided responses to questionnaires, as well as planning and financial information and documents used in this report. Jennifer Stephenson, San Benito LAFCO Executive Officer, acted as project manager and Melat Assefa with Policy Consulting Associates was the primary author of this report. Preface 7 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final This report is a municipal service review (MSR) covering seven agencies in the San Benito Regional Wastewater Services, prepared for the San Benito Local Agency Formation Commission (LAFCO). An MSR is a State-required comprehensive study of services that special districts or cities provide. The MSR requirement is codified in the Cortese-Knox- Hertzberg Local Government Reorganization Act of 2000 (Government Code §56000 et seq.). The most recent MSR covering the San Benito Regional Wastewater Services was completed in 2007. Some service providers were also reviewed in 2014. This review focuses on wastewater and recycled water services provided in incorporated and unincorporated San Benito County. Four of the seven agencies reviewed provide wastewater collection and treatment services, while one agency offers recycled water services. Two agencies, County Service Area (CSA) #22 and County Service Area (CSA) #45, no longer provide the wastewater collection and treatment services they previously offered to their respective service areas. The services previously provided by CSA #45 to Rancho Larios have now been taken over by the Homeowners Association (HOA). Meanwhile, for Cielo Vista Estates, CSA #22 no longer manages wastewater collection or treatment. Wastewater treatment is now handled by the City of Hollister, while maintenance, ownership, and administrative oversight of the new sanitary sewer collection system have been transferred to the Sunnyslope County Water District. Figure 1-1: Wastewater and Recycled Water Providers in San Benito County service recycled agency wastewater water City of Hollister P City of San Juan Bautista P San Benito County Water Districts (SBCWD) P Sunnyslope County Water District (SSCWD) P Tres Pinos Water District (TPWD) P Ch. 1 Executive Summary 8 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Indicators of wastewater service adequacy evaluated in this report consist of collection system integrity and regulatory compliance. Several measures assess the integrity of wastewater collection systems. For this report's purposes, integrity is defined by the rate of sanitary sewer overflows and peaking factors resulting from infiltration and inflow. Based on these indicators, most agencies in San Benito provide at least minimally adequate services. The City of Hollister has had violations throughout the years, due to struggles with exceeding the annual average effluent flow set by the regulatory permit. The City of San Juan Bautista also faced challenges due to high salt levels being discharged into the creek by the City's wastewater treatment plant (WWTP), exceeding the National Pollution Discharge Elimination System (NPDES) permit levels, resulting in a violation of the National Pollution Elimination System permit. These repeated violations are because the City's WWTP is not designed to remove salt (e.g., sodium, chloride, and total dissolved solids) from its domestic wastewater, as such effluent has received repeated violations for chloride, sodium, and total dissolved solids (TDS). To address this issue, the City of Hollister and San Juan Bautista (SJB) have entered into a memorandum of understanding (MOU) for SJB to send domestic wastewater to Hollister. As a result, a San Juan Bautista to Hollister Sanitary Sewer Force Main project is underway. The project setting begins at the existing City of San Juan Bautista Wastewater Treatment Plant (WWTP) on Third Street in San Juan Bautista and terminates at the City of Hollister Domestic WWTP at the intersection of State Route 156 and San Juan Hollister Road, within Hollister. The majority of the project route is on existing road rights-of-way within farmland. SJB is responsible for managing the local collection system and delivering wastewater to Hollister's Domestic WWTP via the new force main. The final connection is estimated to be completed in January 2025. The San Benito County Service Area (CSA) #22 (Cielo Vista) is one of the agencies that has struggled to provide adequate wastewater services. In 2021, San Benito County contracted with the Wallace Group to conduct a Wastewater Treatment Plant Evaluation on the Cielo Vista's WWTP. The report included a condition assessment of the existing facility, analyzed the WDR requirements and effluent water quality violations, and provided recommendations for the facility based on these findings. The report highlighted exterior, interior, and other/health and safety deficiencies. It concluded that, based on the facility's existing condition, continued operation of the Cielo Vista WWTP is not recommended without significant repairs and Ch. 1 Executive Summary 9 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final updates to address safety concerns. Additionally, the report indicated that even with repairs and updates, the facility would likely continue to struggle to meet effluent salt limits and could face additional Notices of Violation. In 2023, the Sunnyslope County Water District (SSCWD) entered into a Wastewater Treatment Services Agreement with the City of Hollister for the conveyance of wastewater from four areas, including Cielo Vista, to Hollister's treatment and disposal facilities. All four areas are located in unincorporated San Benito County and fall within SSCWD's boundaries. Cielo Vista requested an emergency out-of-jurisdiction service connection due to the failure of its existing facilities. The agreement requires that SSCWD construct, operate, and maintain the wastewater collection system for the parcels designated to be connected to the City's existing wastewater system. The City of Hollister submitted an application to San Benito LAFCO for this out-of-agency services agreement with Sunnyslope County Water District for the provision of sanitary sewer services. Although Sunnyslope County Water District's contract with the City of Hollister is considered exempt from LAFCO approval per the exception outlined in Government Code section 56133(e)(1), agencies are required to apply to LAFCO for a determination that the action is exempt.1 San Benito LAFCO determined the application to be exempt from approval on December 14, 2023. The new sewer connection from Cielo Vista to the City of Hollister wastewater collection system has been completed. Currently, no services are being provided to Rancho Larios by CSA #45; the Homeowners Association (HOA) assumed responsibility for services provided, effective July 1, 2009. The Homeowners Association of Rancho Larios is responsible for payment to a consultant for the operation and maintenance of the wastewater treatment plant, including four lift stations, and oversight of the reclaimed water pond. The County provides oversight of wastewater treatment services. Similarly, Tres Pinos County Water District (TPCWD) has struggled to provide adequate services due to several challenges, including financial constraints, aged infrastructure, and the state-mandated moratorium on adding new service connections. 1 Gov. Code § 56133(e)(1): Two or more public agencies where the public service to be provided is an alternative to, or substitute for, public services already being provided by an existing public service provider and where the level of service to be provided is consistent with the level of service contemplated by the existing service provider. Ch. 1 Executive Summary 10 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The San Benito County Water District (SBCWD) serves as the Groundwater Sustainability Agency (GSA) for the Bolsa, Hollister, San Juan Bautista, and Tres Pinos groundwater basins and collaborates with the Santa Clara Valley Water District, which manages small portions of the Hollister and San Juan Bautista basins within Santa Clara County. SBCWD is also actively pursuing the consolidation of these basins to achieve more comprehensive and cost- effective management. In addition to management of the County's groundwater, water recycling is provided through a cooperative effort between the San Benito County Water District (SBCWD) and the City of Hollister. Recycled water is produced at the Hollister DWWTP and provided as a wholesaler to SBCWD for distribution to customers. It is also used at the City of Hollister's Brigantino Park for irrigation. Production of recycled water is constrained by the volume of wastewater flowing into the reclamation facilities, while demand is significantly contingent on weather conditions. SBCWD must meet strict water quality regulations to provide recycled water. SBCWD reports that the reclaimed water meets Title 22 standards and is deemed suitable for unrestricted agricultural irrigation. According to the SBCWD Recycled Water Annual Report for Cycle Year 2022, water conservation levels and drought have impacted the City of Hollister's reclamation plant output. Therefore, the District used virtually all the water produced. The plant's output is expected to increase as the City of Hollister grows, and the District's deliveries are projected to rise accordingly. Although recycled water is considered supplemental and interruptible, SBCWD reports that the supply is generally reliable. The District plans to continue refining its operations and expanding its customer base for the recycled water project. Additional minor facilities have been added to increase the circulation of stored water in the ponds, as well as additional filtration to improve water quality delivered to recycled water customers. Once storage facilities are completed, the District will be able to deliver 1,000 acre-feet of recycled water per year, with nearly 100 percent of the recycled water produced from April to September of each year available for use. The District emphasizes that the use of recycled water for agricultural purposes will be crucial in the coming years as the region continues to address the ongoing drought. Ch. 1 Executive Summary 11 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The larger agencies included in this San Benito Regional Wastewater MSR, such as the City of Hollister, the City of San Juan Bautista (SJB), the San Benito County Water District (SBCWD), and the Sunnyslope County Water District (SSCWD), overall demonstrate adequate financial standing to provide services. Additionally, all of these agencies prepare various plans and policies that represent "Best Practices," including capital improvement programs (CIPs), fully documented budgets, and financial reports. Some areas of improvement in financial planning have been identified for the City of San Juan Bautista through the 2023 high-level organizational review prepared by Citygate. Highlighted fiscal-related operational issues include a lack of review or adjustment related to current fees, a lack of formalized policies and procedures, the potential for noncompliance with the California Government Code due to the use of the same auditing service, and the absence of succession planning, cross-training, and long-range financial planning. In smaller agencies included in this MSR, such as CSA #22, operating deficits (expenses exceeding revenues) have been a recurring challenge. The primary reason for this is the increase in costs for services and supplies for wastewater operations, as well as salaries, while charges for services have remained unchanged over the years. Similarly, since FY 21-22, CSA #45 (Rancho Larios) has reported no revenue, while expenses for wastewater operations are estimated to be around $300,000. It is unclear how the HOA is collecting charges to cover operating and maintenance expenses. Tres Pinos County Water District (TPCWD) is also another agency that faces financial difficulties in providing services. Despite rate increases, revenue fails to meet maintenance and operational expenses. The District also lacks adequate reserves and capital funding. Furthermore, the 2020 mandate restricting new connections poses additional challenges to the problem by limiting opportunities to generate additional revenue. In many cases, weak financial conditions can be improved through reorganizations that leverage economies of scale achievable by a larger entity, as well as the expertise and shared resources of a larger organization. Although some aspects of "local control" might be diminished, this can be mitigated by establishing local advisory groups to ensure community input and representation. Ch. 1 Executive Summary 12 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Throughout this Municipal Services Review, several key issues have been identified for each agency. One of the issues specific to Hollister is the interchangeable use of the terms Hollister Urban Area (HUA) and Hollister Urban Service Area (USA) throughout the City's planning documents. According to Government Code (GC) 56080, urban service areas are defined as developed, undeveloped, or agricultural land, either incorporated or unincorporated, within the sphere of influence (SOI) of a city, which is served by urban facilities, utilities, and services or which are proposed to be served by urban facilities, utilities, and services during the first five years of an adopted capital improvement program of the City if the City adopts that type of program for those facilities, utilities, and services. The San Benito LAFCO policies also state that Cities and those special districts providing municipal services are encouraged to establish urban service areas within their spheres of influence. However, LAFCO policies do not provide a clear definition of a USA. Alternately, Tthe Hollister Urban Area (HUA) is defined as an approximately 20-square-mile area comprising all of the incorporated and some unincorporated county lands surrounding the City of Hollister. The HUA area seems to be utilized as a planning tool, and it has been usincluded in the Hollister Urban Water Management Plan (UWMP) and the Water and Wastewater Master Plan. In contrast, urban service areas, as defined in the Government Code (GC) 56080, as developed, undeveloped, or agricultural land, either incorporated or unincorporated, that falls within a city's sphere of influence (SOI). These areas are served or proposed to be served by urban facilities, utilities, and services within the first five years of an adopted capital improvement program, provided that the city has approved such a program for those facilities, utilities, and services. However, in 2003 San Benito LAFCO adopted Resolution No. 2003-02 to eliminate Hollister's USA determining that the existing Urban Service Area was too large and ineffective in ensuring orderly growth and adequate provision of services. Ch. 1 Executive Summary 13 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Additionally, the City's current Urban Service Area (USA) does not meet LAFCO's definition. As mentioned, LAFCO requires an urban service area to be within a City's SOI; however, Hollister's USA extends beyond the City's SOI. Hollister also has several out of area connections for wastewater services that create contention due to concerns about the potential decline in service quality for the City's residents as wastewater capacity approaches or exceeds its maximum limit. There are also concerns that out-of-area residents are benefiting from the wastewater system that Hollister residents have funded. In some instances, the extension of services outside of an agency's jurisdictional boundary in lieu of annexing the territory to the agency, - including island areas -, can create disorderly service areas. This can lead to jurisdictions with overlapping service areas causing duplicative duplicate services and conflict between agencies. In addition, an extension of services outside an agency's boundaries may exacerbate urban sprawl, which is under LAFCO's authority to manage.2 It also creates unpredictability in the development process and prevents appropriate long-term planning for both development and related capital needs. Private landowners make significant decisions about property based on established norms and laws, and when these laws are not implemented equally throughout the community, county, or state, the resulting uncertainty can be challenging. Development interests are also denied the predictability and certainty of the consistent implementation of local land use laws and the carefully planned and financed local infrastructure plans.3 Lastly, San Benito County and the City have been challenged to reach an agreement regarding wastewater services for potential development adjacent to or surrounding the City. As a result, the County has been unable to approve new developments as there won't be adequate wastewater facilities for the newly approved developments as outlined in the San Benito General Plan as follows:4 • PFS-5.4 Developer Requirements: The County shall require that the new development meet all County requirements for adequate wastewater collection, treatment, and disposal prior to project approval. 2 California Association of Local Agency Formation Commissions (CALAFCO), Planning for a Sustainable and Predictable Future. Clarifying LAFCo Authority to Determine Government Code Section 56133(e) Exemption Eligibility. 2022. p.10. 3 California Association of Local Agency Formation Commissions (CALAFCO), Planning for a Sustainable and Predictable Future. Clarifying LAFCo Authority to Determine Government Code Section 56133(e) Exemption Eligibility. 2022. p.10. 4 San Benito County 2035 General Plan, July 21, 2015. p.7-8. Ch. 1 Executive Summary 14 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final LAFCO informed the City of San Juan Bautista that the 2016 General Plan Sphere of Influence and Urban Growth Boundary for the City was never adopted by LAFCO. Therefore, the 1998 SOI remains the guide for growth, and it conflicts with nearly all of the 2016-2035 General Plan Land Use, Open Space, and Conservation policies, including the following key Land Use Element Programs. An urban growth boundary (UGB) is a regional boundary set to control urban sprawl by mandating that the area inside the boundary be used for urban development and the outside be preserved in its natural state or used for agriculture. The UGB is similar to what other jurisdictions refer to as an Urban Growth Area or Urban Service Area. In August 2020, the San Juan Bautista City Council created an "Urban Growth Boundary Committee" to address inconsistencies with the SOI and UGB. The process involved contentious meetings, frequent new appointments, and numerous absences. The committee ultimately evaluated two primary approaches: one advocating for a more expansive SOI to enhance legislative control and development management, and the other for a more restrictive SOI to preserve open space within a designated planning area. After thorough deliberation, including input from property owners and the community, and an assessment of resource and development constraints, the City Council adopted a revised SOI and UGB in November 2023. This update aligns the SOI with City limits and reduces the size of the UGB. The resolution also includes plans to amend the 2035 General Plan and collaborate with San Benito County to formalize a Planning Area through a Memorandum of Understanding. The City plans to apply to LAFCO after completing a Community Plan, being drafted by EMC Planning Group. This plan will focus on managing infill and mixed-use development within City limits while addressing constraints such as public safety, hazards, natural resource conservation, and infrastructure. Additionally, an MSR is a required component for a significant update in SOI. As such, LAFCO plans to complete a full MSR for the City of San Juan Bautista in the next fiscal year. The Tres Pinos County Water District (TPCWD) faces several challenges, including financial constraints, aged infrastructure, and the state-mandated moratorium on adding new service connections. Ch. 1 Executive Summary 15 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final In 2022, TPCWD received a moratorium on new hookups throughout the District due to compliance violations with California Code of Regulations, title 22, section 64554 (a), for not having adequate source capacity and storage capacity. The District reports that it is currently working at capacity and cannot accommodate new developments. The TPCWD wastewater system is also outdated and needs updating to continue providing an adequate level of service. The District reports that rate increases and income from existing connections are not enough to maintain and repair the facility. Since the District lacks sufficient resources to expand or maintain its current operations, TPCWD is seeking to consolidate with SSCWD. As discussed, Cielo Vista requested an out-of-agency service seeking an emergency service connection to the City of Hollister's plant due to the failure of existing facilities for the area. On June 18, 2024, San Benito County Board of Supervisors adopted Resolution No. 2024-52 to divest CSA #22 of the authority to provide sanitary sewer services and transfer the maintenance, ownership, and administrative oversight for the sanitary sewer collection system and its infrastructure when the new sanitary sewer system is operational, to the Sunnyslope County Water District (SSCWD), to serve as the successor public agency. While responsibility for wastewater treatment is transferred to the City of Hollister. SSCWD has now taken responsibility for the Cielo Vista collections system and is sending the wastewater to the City of Hollister under a contract between the agencies. The new sewer connection from Cielo Vista to the City of Hollister wastewater collection system has been completed, and wastewater from Cielo Vista is currently running to the City of Hollister wastewater treatment plant. Following an application from the County to finalize the divestiture process, San Benito LAFCO adopted Resolution No. 2024-05 approving the divestiture of wastewater services by CSA #22 serving Cielo Vista, with an effective date of September 1, 2024. In 2021, the Homeowners Association (HOA) took over the operation of the CSA #45 (Rancho Larios) wastewater services. However, it is unclear how the operational costs, estimated by the County at approximately $300,000, are recouped. The CSA is currently considered inactive. Ch. 1 Executive Summary 16 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Several governance options were identified for each agency under review throughout this MSR. These options are summarized in Figure 1-2. Refer to the affected agency's chapter for a discussion of agency-specific options. In addition, the potential for a regional or countywide sanitary district is also identified. These options have the potential to affect many or all the reviewed agencies and have far-reaching impacts on wastewater services in the County. The options identified are intended to focus on means to address two key issues: 1) services for those areas within the vicinity of the City of Hollister where connections have been approved or may be needed but that do not meet the criteria for service outside the city limits and 2) appropriate joint preplanning by the City of Hollister and the County of San Benito for existing and anticipated development to clearly indicate where wastewater services will be provided and where development will be accepted by both land use authorities. While LAFCO has an obligation to identify governance options as part of this MSR, as outlined in Government Code Section 56430, there is no obligation by LAFCO or the subject agencies to take action to institute these options. LAFCO can only initiate certain types of organizational changes, and generally it is preferred that the affected agencies be the initiators to support success of the change of organization. The options identified here are only intended to provide a starting point for conversations between the affected agencies. Any further action toward a change of organization would require a feasibility study, plan for services, environmental review, and comprehensive application to LAFCO for consideration and possible approval. Recognition of the option in this report by itself does not indicate LAFCO's existing or future support of the option. Some of the options identified could be considered growth inducing, meaning with the new service structure in place new development could be supported where it previously may not have been feasible due to a lack of available services. The potential environmental impact for each of the options identified would have to be thoroughly reviewed as required by law prior to LAFCO accepting an application for change of organization. The degree of new development that would occur in the affected area is entirely dependent on the general plans of the respective land use authorities. In addition, aAny application to LAFCO would have to meet San Benito LAFCO's adopted policies, in particularparticularly those regarding the preservation of agricultural lands. Ch. 1 Executive Summary 17 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 1-2: San Benito County Governance Structure Options governance structure options Affected Agency Governance Options Benefits Challenges • Evaluate the function of the HUA • Address any existing • Update to several City and determine whether this interchangeable use of the term planning documents may boundary can be retired or needs with other retired terms such as, be needed to be redefined. Urban Service Area • Update to several relevant • A comprehensive update of the • Consistency with Resolution No. City documents may be City's planning documents to 2003-02, adopted by San Benito needed eliminate the use of the Hollister LAFCO eliminating the use of Urban Service Area (USA) Hollister USA City of • Addresses out-of-area • The City of Hollister may Hollister connections not support this option due • May improve efficiencies across to the possible relinquishing agencies of local control and asset ownership • May improve consistency of • Establish a Regional Sanitation service levels across agencies • Requires substantial time District in collaboration with all within the region and coordination to get relevant neighboring agencies. consensus of all affected • Incorporates all extra-territorial agencies connections into the boundaries of a provider (eliminates • Could be growth inducing disenfranchisement) Ch. 1 Executive Summary 18 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • May involve a feasibility study, service plan, and environmental review prior to an application to LAFCO for approval • Allows the City to retain local • Not all out of area powers connections may be able to • Addresses the out-of-area participate, such as SJB, connections that are immediate due to the requirements of to the City the law that at least 70 percent of the subsidiary • Enables the proposed district's land must be • Establishment of a subsidiary developments within the district within city limits. However, district -governed by the City to have a potential connection to these areas can contract Council- that can extend outside of the existing facility with the subsidiary district the city limits to a certain degree to continue to receive services • Need to ensure that new customers pay their fair share Ch. 1 Executive Summary 19 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Collaboration to address shared challenges and opportunity for shared resources while retaining local power • A thorough process to • Is an immediate and transitional determining which agencies • Form a joint powers authority option for agencies as they may would be part of JPA may (JPA) for sewer service within or not be prepared to commit to be required even outside the HUA significant changes such as a regional or subsidiary wastewater district • Does not require LAFCO approval • Addresses Hollister's several out- • The County is unlikely to of-agency connections support this option due to • The County can approve new concerns about its developments without concern • County buys a portion of feasibility about available wastewater Hollister's wastewater capacity to • Dependent on the City's services provide services to new available wastewater developments near Hollister and • Additional revenue source for the capacity address the various out-of-area City of Hollister • Possibly growth-inducing if connections. • Ensures new customers outside constraints are not in place of the City are paying their fair • An environmental review share may be required Ch. 1 Executive Summary 20 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Requires substantial time • Collaborate with the City of and consensus of the Hollister and other agencies to agencies involved establish a Regional Sanitation • Improves efficiencies across • Relinquishing local control District.SJB adopts an updated may be a challenge agencies SOI that correspondence with the • Improves consistency of service existing General Plan and ensures levels across agencies within the it is LAFCO approved. City of San region • Collaborate with the City of Juan Bautista Hollister and other agencies to (SJB) establish a Regional Sanitation District. • Update to several relevant • Ensures compliance with • SJB adopts an updated SOI that City documents may be Cortese-Knox-Hertzberg Local correspondence with the existing needed Government Reorganization Act General Plan and ensures it is LAFCO approved. • Collaborate with the City of • Requires substantial time Sunnyslope Hollister and other agencies to • May improve efficiencies and and consensus of the County establish a Regional Sanitation consistency of service levels Water agencies involved District District.A consolidation with Tres across agencies within the region • Relinquishing local control (SSCWD) Pinos for wastewater services is • May prevent overlap of services may be a challenge similar to what is happening lap of services Ch. 1 Executive Summary 21 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final between these agencies regarding water services. • Collaborate with the City of Hollister and other agencies to establish a Regional Sanitation District. • Increases efficiency/reduced duplication of management and • A consolidation with Tres Pinos for • Relinquishing local control governance wastewater services is similar to may be a challenge • Streamlines water and recent consolidation between these wastewater services agencies regarding water services • May enhance level of services • Dissolution of TPCWD and Tres Pinos Annexation to • May address the various • Relinquishing local control County SSCWDConsolidation of TPCWD challenges the District is facing Water may be a challenge District and SSCWD. in service delivery including (TPCWD) • Annexation and dissolution of financial constraint and aged TPCWD. infrastructure • Plan for services may be • Compliance with SB 448 • Dissolution of the CSA, as the required depending on the CSA #45 (Wieckowski) which mandates CSA is inactive and the HOA has Rancho adequacy services currently LAFCO to initiate dissolution of Larios taken over operationsDissolution of provided by the HOA inactive CSAs the CSA. Ch. 1 Executive Summary 22 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • A successor agency may need to be identified Ch. 1 Executive Summary 23 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final As with any change of organization, there are challenges that must be overcome prior to and during the reorganization process, including but not limited to the following: First and foremost, there needs to be consensus among the affected agencies on the desired form of the reorganized agency. The reorganization will not be effective nor beneficial if only a few potentially affected agencies choose to participate. Which agencies are deemed affected will depend on the reorganization format. For example, if the intent is to address the various out-of-area connections to Hollister, then areas immediate to the City or agencies within the HUA would be affected. Consensus among multiple agencies regarding such a significant change would likely take substantial time and effort to achieve and will likely be the primary challenge to moving forward. Reorganization is also likely to take a long time as the process will require a detailed study with a plan for services, application, environmental study, and approval. A common concern during reorganization is whether member agencies can retain local control if a separate regional governing body is formed. Generally, local governing bodies have a more immediate connection with customers and are attuned to the needs of the agency and its operations; however, multiple, overlapping governing bodies may be duplicative, inefficient, and counterproductive to the goals of reorganization. The governance structure of the new agency will need to be determined by the affected agencies when defining the desired new agency format and striving to maintain a desirable level of local control. Similarly, the composition of the decision-making body of the new agency is often contentious as agencies strive for representation that may most benefit their City or district. However, readily available examples of fair and equitable solutions to this challenge exist. The affected agencies will need to cumulatively fund upfront costs associated with initiating the desired reorganization. Reorganization costs will vary depending on the proposed outcome and may include a detailed study with a plan for services, application costs, election costs, and/or time and costs associated with getting state legislation passed in the case of a wastewater agency. Potential new agencies are often challenged to identify and establish sustainable revenue sources. For utility services, funding is generally guaranteed by rates for services. Ch. 1 Executive Summary 24 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Finally, all agencies will need to acclimate to new or altered roles. Agencies may find it challenging to relinquish certain responsibilities. The structure and detail of the chosen alternative will determine the degree of adjustments for each agency. One governance option that would benefit most, if not all, San Benito County wastewater agencies is forming a regional sanitation district. This option has been identified previously in presentations to the Commission by former staff in 2021, and continues to be a potential option to address key issues. While this is technically identified as an option, there is no interest by either agency to pursue the formation of a regional district. Sanitary districts are established pursuant to the Sanitary District Act of 1923 (Health & Safety Code §6400, et seq) and are empowered to acquire, maintain, and operate sewer, drainage, and/or refuse collection facilities. A county sanitation district may acquire, construct, and operate sewage collection, treatment, and disposal works within or outside district boundaries. It may also provide water services. Such districts may include incorporated or unincorporated territory. The governing body of a county sanitation district within unincorporated territory only is the board of supervisors. The governing board of a county sanitation district, which includes both incorporated and unincorporated territory, is made up of both city council and county supervisor members, depending on the amount of overlap. A sanitation district can also be independent with an governing body. There are several examples of county sanitation districts in California. For example, Orange County Sanitation District (OC San) provides wastewater collection, treatment, and recycling for approximately 2.6 million people in central and northwest Orange County. The regional sanitary district would encompass all the agencies within the Hollister Urban Area, including Sunnyslope County Water District (SSCWD) and the adjacent areas that currently receive services from the City of Hollister. Additionally, this option also can include the City of San Juan Bautista since a Hollister Sanitary Sewer Force project is underway for SJB to convey the City's wastewater to the Hollister Domestic WWTP. This option would incorporate the various out of area connections into the regional district's boundary and eliminate disenfranchisement. It will also improve consistency of service levels across agencies Ch. 1 Executive Summary 25 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final within the region and increase efficiency in wastewater service delivery by consolidating services and eliminating any duplicative functions. Given the various agencies involved in implementing this option, governance considerations are necessary to address the issue of relinquishing local control. For example, this option could be implemented in combination with a Joint Powers Authority (JPA), enabling existing agencies to retain individual control. This would enable collective decision-making while facilitating collaboration on wastewater management through a JPA agreement. Another major consideration regarding this option is the need to assess the existing facilities in the region and their capacity to meet the regional demand for wastewater treatment. Currently, the wastewater flow for the City of San Juan Bautista is operating at approximately 55 percent capacity. However, due to infiltration and inflow from stormwater, San Juan Bautista has entered into an agreement to send domestic wastewater to Hollister for treatment. The flow for the City of Hollister, including the capacity allocated for San Juan Bautista as well as other current and planned out-of-jurisdiction connections, is estimated to be operating at 97 percent capacity. In comparison, the Sunnyslope County Water District's wastewater plant currently operates at 45 percent of its permitted capacity; however, it is expected to operate at 72 percent of its permitted capacity after the full build-out of all planned developments. Therefore, it is crucial to determine if upgrades or expansions are needed to existing infrastructures to accommodate future growth and meet regulatory standards. Melat – can you add a little more here about what this would look like? Use of the City's wastewater plant? Maybe in combination with the other options ie JPA. I know there is more detail in the Hollister chapter but this is the first time the readers will be reading this. The agencies may not be prepared to entirely commit to significant changes immediately. Other options enable the agencies to explore collaborative activities and assess the feasibility of options without committing to forming a new agency. Intermediate options may include a subsidiary district, a joint powers authority, and other agency-specific governance options highlighted in Figure 1-2 and each agency's chapters. Ch. 1 Executive Summary 26 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Another alternative governance option to a regional organization is the formation of a subsidiary district. The procedures for the establishment of a subsidiary district were established by the legislature in 1965 by the adoption of the District Reorganization Act of 1965, effective September 17, 1965 (Stats 1965 Ch. 2043 §§ 2), which added Government Code sections 56073, 56401, and 56405. For purposes of the current version of the Act, the term "subsidiary district" is a district in which a city council is designated as, and empowered to act as, the ex officio board of directors of the district. (§ 56078.) A subsidiary district is a district of limited powers for which a city council is designated as the ex officio board of directors of the district. At least 70 percent of the district's land area and the number of registered voters must be within the city limits for a district to become a subsidiary district. Establishing a subsidiary district would address Hollister's several out-of-agency connections that are immediate to the City. Although this option extends beyond the City's boundary, it would not encompass all existing out-of-area connections, such as the San Juan Bautista (SJB), due to the requirements of a subsidiary district to have 70 percent of the district's land area and number of registered voters within the city limits. However, SJB and any other agencies receiving out-of-area services from Hollister that cannot be part of the subsidiary district can contract with the district for continued services. Forming a subsidiary district will also require the willingness of the City of Hollister as the affected territory. However, a subsidiary district allows the City to retain local control, which may make it easier to reach consensus. However, it is essential to note that Hollister's City Council, as the decision-maker for many issues concerning the Subsidiary District, could create political contention between the City and the other involved agencies. If this option is selected, it is recommended that the District ensure that new customers pay their fair share. It is also recommended that any rate for service arrangements with out-of-area services is clearly communicated to Hollister's residents to avoid confusion and increase transparency. Joint powers are exercised when the public officials of two or more agencies agree to create another legal entity or establish a joint approach to work on a common problem, fund a project, or act as a representative body for a specific activity. Ch. 1 Executive Summary 27 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final A joint powers agreement (JPA) is a formal legal agreement between two or more public agencies that share a common power and want to implement programs, build facilities, or deliver services jointly. Officials from those public agencies formally approve a cooperative arrangement. A joint powers agreement is a collaboration among multiple agencies that share resources for mutual support or common actions. The government agencies that participate in joint powers agreements are called member agencies. With JPA, a member agency agrees to be responsible for delivering a service on behalf of the other member agencies. Each joint powers agreement is unique, as there is no set formula for how governments should use their joint powers. One agency will administer the terms of the agreement, which may be a short- term, long-term, or perpetual service agreement. A joint powers authority (JPA) is a separate government organization created by the member agencies but is legally independent from them. Like a joint powers agreement (in which an agency administers the terms of the agreement), a JPA shares powers common to the member agencies outlined in the JPA agreement. Agencies create JPAs to deliver more cost-effective services, eliminate duplicative efforts, and consolidate services into a single agency. A JPA offers the advantages of a more temporary and potentially more limited consolidation (e.g., planning or treatment), continued accountability and local control, and a potential structure to overcome inherent financial incompatibilities among the providers working towards future consolidation. Additionally, forming a JPA would be a significant step toward forming a regional wastewater district. A JPA could entail whatever roles the member agencies desire, such as resource management for the cities and district(s) involved or a regional approach for collection and treatment to improve efficiency. A JPA could avoid overhead costs for fiscal and personnel management associated with the formation of a new agency by using existing participating agencies support services, such as budgeting or engineering. If the JPA option is considered, LAFCO's role is a coordination role; no formal approval or action is required. However, it is important to note that a JPA alone will not address Cities' specific issues, such as the City of Hollister's several out-of-area connections. Therefore, an optimal option may be to make other governance options, such as the county buying part of the City's wastewater capacity as an add-on option as part of the JPA. Ch. 1 Executive Summary 28 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Considering the limited scope of this study, which exclusively covers the legally mandated requirements of an MSR for LAFCO's purposes, San Benito wastewater agencies will need a more detailed step-by-step approach to bridge the gap between concept and implementation. The agencies need to begin conversations to determine a preferred service structure and confirm consensus, then move ahead with further assessment to determine: • How the reorganization would affect rates. • Immediate and long-term cost of the reorganization. • Appropriate composition of the governing body. • Funding sources that can feasibly ensure sufficient revenues for the new entity. It is recommended that wastewater providers in San Benito engage in long-term discussions regarding their vision for wastewater services in the County. This will help address existing concerns and ensure a sustained effort to deliver reliable and sustainable wastewater services throughout the County. Ch. 1 Executive Summary 29 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final LAFCO regulates boundary changes proposed by public agencies or individuals through approval, denial, conditions, and modification. It also regulates the extension of public services by cities and special districts outside their boundaries. LAFCO is empowered to initiate updates to the SOIs and proposals involving the dissolution or consolidation of special districts, mergers, the establishment of subsidiary districts, and any reorganization, including such actions. Otherwise, LAFCO actions must originate as petitions or resolutions from affected voters, landowners, cities, or districts. The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 requires LAFCO to review and update SOIs every five years, or as necessary, and to review municipal services before updating SOIs. The requirement for service reviews arises from the identified need for a more coordinated and efficient public service structure to support California's anticipated growth. The service review provides LAFCO with a tool to study existing and future public service conditions comprehensively and to evaluate organizational options for accommodating growth, preventing urban sprawl, and ensuring that critical services are provided efficiently. Government Code §56430 requires LAFCO to conduct a review of municipal services provided in the county by region, sub-region, or other designated geographic area, or by type of service, as appropriate, for the service or services to be reviewed, and prepare a written statement of determination with respect to each of the following topics: • Growth and population projections for the affected area; • The location and characteristics of any disadvantaged unincorporated communities (DUCs) within or contiguous to the SOI; • Present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies (including needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any DUCs within or contiguous to the sphere of influence); • Financial ability of agencies to provide services; • Status of and opportunities for shared facilities; Ch. 2 Background 30 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Accountability for community service needs, including governmental structure and operational efficiencies; and • Any other matter related to effective or efficient service delivery, as required by commission policy. The MSR process does not require LAFCO to initiate changes in an organization based on service review findings, only that LAFCO identifies potential government structure options. However, LAFCO, other local agencies, and the public may subsequently use the determinations to analyze prospective changes in organization or reorganization or to establish or amend SOIs. Within its legal authorization, LAFCO may act with respect to a recommended change of organization or reorganization on its initiative (e.g., certain types of consolidations) or in response to a proposal (i.e., initiated by resolution or petition by landowners or registered voters). MSRs are exempt from the California Environmental Quality Act (CEQA) pursuant to §15306 (information collection) of the CEQA Guidelines. LAFCO's actions to adopt MSR determinations are not considered "projects" subject to CEQA. The Commission is charged with developing and updating the SOI for each city and special district within the county. SOIs must be updated every five years or as necessary. In determining the SOI, LAFCO is required to complete an MSR and adopt the seven determinations previously discussed. An SOI is a LAFCO-approved plan that designates an agency's probable future boundary and service area. Spheres are planning tools used to provide guidance for individual boundary change proposals and are intended to encourage the efficient provision of organized community services and prevent duplication of service delivery. Territory cannot be annexed by LAFCO to a city or a district unless it is within that agency's sphere. The purposes of the SOI include the following: to ensure the efficient provision of services, discourage urban sprawl and premature conversion of agricultural and open space lands, and prevent overlapping jurisdictions and duplication of services. LAFCO cannot regulate land use, dictate internal operations or administration of any local agency, or set rates. LAFCO is empowered to enact policies that indirectly affect land use decisions. On a regional level, LAFCO promotes the logical and orderly development of Ch. 2 Background 31 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final communities as it considers and decides individual proposals. LAFCO has a role in reconciling differences between agency plans so that the most efficient urban service arrangements are created for the benefit of current and future area residents and property owners. The Cortese-Knox-Hertzberg (CKH) Act requires to develop and determine the SOI of each local governmental agency within the county and review and update the SOI every five years. LAFCOs are empowered to adopt, update, and amend the SOI. They may do so with or without an application and any interested person may submit an application proposing an SOI amendment. LAFCO may recommend government reorganizations to particular agencies in the county, using the SOIs as the basis for those recommendations. In addition, in adopting or amending an SOI, LAFCO must make the following determinations: • Present and planned land uses in the area, including agricultural and open-space lands; • Present and probable need for public facilities and services in the area; • Present capacity of public facilities and adequacy of public service that the agency provides or is authorized to provide; • Existence of any social or economic communities of interest in the area if the Commission determines these are relevant to the agency; and • Present and probable need for water, wastewater, and structural fire protection facilities and services of any DUCs within the existing sphere of influence. By statute, LAFCO must notify affected agencies 21 days before holding the public hearing to consider the SOI and may not update the SOI until after that hearing. The LAFCO Executive Officer must issue a report including recommendations on the SOI amendments and updates under consideration at least five days before the public hearing. LAFCO is required to evaluate disadvantaged unincorporated communities (DUCs) as part of this service review, including the location and characteristics of any such communities. The purpose of Senate Bill (SB) 244 (Wolk, 2011) is to begin to address the complex legal, financial, and political barriers that contribute to regional inequity and infrastructure deficits within DUCs. Identifying and including these communities in the long-range planning of a city or a special district is required by SB 244. Ch. 2 Background 32 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The CKH requires LAFCO to make determinations regarding DUCs when considering a change of organization, reorganization, sphere of influence expansion, and when conducting municipal service reviews. For any updates to an SOI of a local agency (city or special district) that provides public facilities or services related to sewer, municipal and industrial water, or structural fire protection, LAFCO shall consider and prepare written determinations regarding the present and planned capacity of public facilities and adequacy of public services, and infrastructure needs or deficiencies for any DUC within or contiguous to the SOI of a city or special district. CKH prohibits LAFCO from approving an annexation to a city of any territory greater than 10 acres if a DUC is contiguous to the proposed annexation, unless an application to annex the DUC has been filed with LAFCO. An application to annex a contiguous DUC shall not be required if a prior application for annexation of the same DUC has been made in the preceding five years or if the Commission finds, based upon written evidence, that a majority of the registered voters within the affected territory are opposed to annexation. Government Code §56033.5 defines a DUC as 1) all or a portion of a "disadvantaged community" as defined by §79505.5 of the Water Code, and as 2) "inhabited territory" (12 or more registered voters), as defined by §56046, or as determined by commission policy. Ch. 2 Background 33 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final San Benito County is a rural and agricultural community in the Central Coast Region, south of Silicon Valley. The Counties of Santa Clara, Santa Cruz, Monterey, Fresno, and Merced surround the County. San Benito County has a land area of 1,389 square miles. The terrain varies from flat valley floor to hilly rangeland in the east to 5,450-foot peaks far south. 5 San Benito County was formed in 1874 from Monterey County. The County has two incorporated cities – Hollister and San Juan Bautista – and various unincorporated communities (Aromas, Tres Pinos, Panoche, Ridgemark, and Paicines). Major transportation routes bisecting the County include State Routes 129, 156, 25, and U.S. 101. The City of Hollister, where the County seat is located, is at an elevation of 229 feet. The north and northwest segments of the County are comprised of urban areas, leaving the southern portion of the County primarily rural. Major industries in San Benito County include agriculture, manufacturing, services, retail, recreation, mineraling, and professional services. The population of San Benito County has grown rapidly since its establishment in 1874. In 1880, the population was 1,000; by 1980, it had grown to 23,005, and according to the California Department of Finance (DOF), as of 2023, the population is 65,666. This indicates a roughly 20 percent increase and a 1.43 percent Average Annual Growth Rate (AAGR) since 2010, when the population was 55,269. The County's population trend over the last 13 years is shown in Figure 3-1. 5 On the Move: 2040 – San Benito Regional Transportation Plan, Chapter 3: Regional Setting and Travel Patterns. p. 3-1. Ch. 3 Overview 34 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 3-1: San Benito County Population Growth, 2010-2023 The median age in San Benito County is 35.7 years. By comparison, the median age for the State of California is 37.0 years old, and the median age for the United States is 38.4 years old. According to the Census, during 2018-2022, there are approximately 19,852 households in San Benito County, with an average household size of roughly three people. As of 2021, the County has a median household income of $95,606 compared to the statewide Median Household Income (MHI) of $84,097. The median property value in San Benito County, CA, was $623,000 in 2021, 2.54 times larger than the national average of $244,900. Between 2020 and 2021, the median property value increased from $588,500 to $623,000, a 5.86 percent increase. The homeownership rate in San Benito County, CA, is 67.6 percent, approximately the same as the national average of 64.6 percent. In 2021, 67.6 percent of the housing units in San Benito County, CA, were occupied by their owner. This percentage grew from the previous year's rate of 65.3 percent. Approximately 7.75 percent of the population in San Benito County (about 4,880 out of 62,900 people) live below the poverty line, which is lower than the national average of 12.6 percent. Ch. 3 Overview 35 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Data from the U.S. Census Bureau indicates that nearly two-thirds of San Benito County residents work outside the county. Economic opportunities in larger neighboring counties contribute to this trend, with 37 percent traveling to Santa Clara County, 21.5 percent to Monterey County, and 10.2 percent to Santa Cruz County. This pattern has created a strong demand for housing within San Benito County, as affordable housing near employment centers in these larger counties is limited. Anticipated development is an indicator of growth potential and a trigger to address necessary municipal service capacity enhancements associated with the degree of impending growth. San Benito County includes two incorporated cities: the City of Hollister and the City of San Juan Bautista, both located in the northwest portion of the county. Development in unincorporated areas of San Benito County is generally concentrated around these cities or within the unincorporated communities of Aromas and Tres Pinos, which are also situated in the northern part of the County. In contrast, development in the southern region of the county is sparse, with most activity centered in the Paicines/Panoche area. In the early 2010s, 88.3 percent of the County's population lived in the Hollister Civil Division (49,559 people), while 10.5 percent resided in the San Juan Bautista Civil Division (5,894 people). The remaining 1.2 percent of the population lived in the San Benito-Bitterwater Civil Division (662 people).6 In September 2021, California's Department of Housing and Community Development (HCD) issued a Regional Housing Needs Allocation (RHNA) of 5,005 units to the Council of San Benito Governments for the planning period of June 30, 2023, to Dec. 15, 2031. Of the 5,005 units, 4,163 were allocated for Hollister, 88 for San Juan Bautista, and 754 for the county's unincorporated area. The units for the unincorporated county were to be allocated as follows: 7 • 123 extremely low-income units (a family of four that makes 15-30 percent of the county median income of $95,606) • 123 very low-income units (30-50 percent of county median income) • 198 low-income units (50-80 percent of county median income) 6 San Benito County, Housing Element 2014-2023. Adopted by the San Benito County Board of Supervisors on April 12, 2016. p. 5-i. 7 Benito Link, San Benito County News-https://benitolink.com/county-officials-briefed-on-housing-element/ Ch. 3 Overview 36 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • 103 moderate units (80-120 percent of county median income) • 207 above moderate units Future growth within the City of Hollister and the City of San Juan Bautista will be limited by adopted growth management policies for both governments. The County of San Benito adopted a Growth Management System (Ordinance No. 751) that restricts population increases associated with new residential development to one percent per year. Similarly, the City of Hollister has established a growth limit of 159 residential units per year for the period ranging from 2105-2023 on the City's Municipal Code Section 16.64.045. The growth limit of 159 units per year was set based on 1.5 percent of the City's current housing inventory for all housing types. Suppose a future Regional Housing Needs Assessment (RNHA) requirement exceeds the five-year growth limit of 795 units for above-moderate- income housing. In that case, the established Growth Limit shall be increased to ensure compliance with the City's RHNA requirements. There are several significant development projects in various stages of planning and construction within San Benito County. These projects are outlined in Figure 3-2.8 8 San Benito County, Current Major Planning Projects and Notices, https://www.cosb.us/departments/resource-management- agency/planning-and-land-use-division/current-major-planning-projects. Ch. 3 Overview 37 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 3-2: San Benito County Planned or Proposed Development Projects, 2023 san benito county development projects # of dwelling project units acres project type Strada Verde Innovation Park 2,767 Employment Center Betabel Commercial Development Conditional Use Permit 111.61 Commercial Residential Units, a public park and open space, utilities infrastructure, internal public streets, and improvements to Old Lee Subdivision Project 141 27.45 Ranch Road. San Benito Ag Center 15 Commercial Ridgemark Subdivision Project 190 253 Zoning amendment San Benito Travelers Station 2.6 Commercial Residential and San Juan Oaks 1,084 Commercial Residential, Commercial, Mixed- Santana Ranch use, Park, and School Residential, park, and recreational uses, including active parks, open space a pedestrian and bikeway network, as well as related on- and off-site project Fairview Corners 120 infrastructure Lompa (Bates/Stringer, Bluffs, Promontory) 50 Lico and Greco Properties Riverview Estates II James Bray Angel Co. LLC-John Wynn Landfill Expansion Strada Verde total 331+ 4431+ Ch. 3 Overview 38 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final As the designated Metropolitan Planning Organization (MPO), the Association of Monterey Bay Area Governments (AMBAG) is the federally designated agency tasked with preparing the Regional Growth Forecast (RGF) for the tri-county region, which includes San Benito County. The RGF projects population, housing units, and employment. San Benito is projected to be the fastest-growing County within the AMBAG region, with an increase of 32 percent between 2015 and 2040. According to AMBAG, from 2015 to 2040, the highest percent growth will occur in the unincorporated parts of the County (43 percent or approximately 7,887 people), followed by the City of Hollister (27 percent or approximately 9,931 people), and with less growth forecasted for the City of San Juan Bautista (22 or approximately 405 people). Overall, Hollister will have the greatest absolute growth, with an increase of over 9,000 people projected through 2040. Figure 3-3 shows the projected growth in San Benito Jurisdiction 2015 – 2040. 9 9 Council of San Benito County Governments, On the Move: 2040 – San Benito Regional Transportation Plan, Chapter 3: Regional Setting and Travel Patterns, p.3-3. Ch. 3 Overview 39 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 3-3: Projected Population by San Benito County Jurisdiction, 2015-2040 According to the Department of Finance (DOF), overall countywide growth projections for San Benito County are expected to see an approximately 0.47 percent average annual growth rate (AAGR) from 2020 (64,432) through 2060 (77,666). San Benito County utilizes various tools to plan for future growth, including the General Plan, 6th Cycle San Benito County Draft Regional Housing Needs Allocation (RHNA) Plan, and regional growth forecast. The County 2035 general plan includes a goal of maintaining San Benito County's rural character and natural beauty while providing areas for needed future growth. The County has a direct role in shaping the character of rural and urban development as it manages growth in the unincorporated County. At the same time, the County seeks to support and encourage the cities in their land use planning efforts to ensure a quality living environment for all existing and future county residents. This goal aims to identify general countywide growth and development patterns envisioned in the unincorporated parts of San Benito County that will sustainably Ch. 3 Overview 40 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final accommodate the County's projected growth. The following policies are included in the County's General Plan as part of the countywide growth and development goal: • LU-1.1: Countywide Development — The County shall focus future development in areas around cities where infrastructure and public services are available, within existing unincorporated communities, and within a limited number of new communities, provided they meet the requirements of goal section LU-7 and demonstrate a fiscally neutral or positive impact on the County and any special districts that provide services to the project. • LU-1.2: Sustainable Development Patterns — The County shall promote compact, clustered development patterns that use land efficiently; reduce pollution and the expenditure of energy and other resources; and facilitate walking, bicycling, and transit use; and encourage employment centers and shopping areas to be proximate to residential areas to reduce vehicle trips. Such patterns would apply to infill development, unincorporated communities, and the New Community Study Areas. The County recognizes that the New Community Study Areas comprise locations that can promote such sustainable development. • LU-1.3: Future Development Timing — The County shall ensure that future development does not outpace the ability of either the County or other public/private service providers to provide adequate services and infrastructure. The County shall review future development proposals for their potential to reduce the level of services provided to existing communities or place economic hardships on existing communities, and the County may deny proposals that are projected to have these effects. • LU-1.4: Identifiable Community Boundaries — The County shall encourage defined boundaries between communities (e.g., cities and unincorporated communities). • LU-1.5 Infill Development — The County shall encourage infill development on vacant and underutilized parcels to maximize the use of land within existing urban areas, minimize the conversion of productive agricultural land and open spaces, and minimize environmental impacts associated with new development as one way to accommodate growth. • LU-1.6: Hillside Development Restrictions — The County shall prohibit residential and urban development on hillsides with 30 percent or greater slopes. • LU-1.7 Community Plans — The County should consider the development and adoption of Community Plans for existing unincorporated communities to maintain/establish a Ch. 3 Overview 41 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final community identity, coordinate traffic and circulation improvements, promote infill development where public services are already in demand, identify recreational needs, and ensure coordinated development. • LU-1.8: Site Plan Environmental Content Requirements — The County shall require all submitted site plans, tentative maps, and parcel maps to depict all environmentally sensitive and hazardous areas, including 100-year floodplains, fault zones, 30 percent or greater slopes, severe erosion hazards, fire hazards, wetlands, and riparian habitats. • LU-1.9: Airport Land Use Coordination and Consistency — The County shall coordinate planning and zoning with the San Benito County Airport Land Use Commission and ensure that all land uses and regulations within the Hollister and Frazier Airports areas of influence are consistent with the adopted San Benito County Airport Land Use Compatibility Plan. • LU-1.10: Development Site Suitability —The County shall encourage specific development sites to avoid natural and manmade hazards, including, but not limited to, active seismic faults, landslides, slopes greater than 30 percent, and floodplains. Development sites shall also be on soil suitable for building and maintaining well and septic systems (i.e., avoid impervious soils, high percolation or high groundwater areas, and provide setbacks from creeks). The County shall require adequate mitigation for any development located on environmentally sensitive lands (e.g., wetlands, erodible soil, archaeological resources, and important plant and animal communities). Urban Water Management Plans (UWMPs) are prepared by urban water suppliers every five years. These plans support the suppliers' long-term resource planning to ensure adequate water supplies are available to meet existing and future water needs. Every urban water supplier that provides over 3,000 acre-feet of water annually or serves more than 3,000 urban connections must submit a UWMP. In San Benito County, a UWMP is prepared as a collaborative effort among the San Benito County Water District (District), Sunnyslope County Water District (Sunnyslope or SSCWD), and the City of Hollister (Hollister). The plan is prepared in accordance with the Urban Water Management Planning Act and guidelines prepared by the Department of Water Resources (DWR). Ch. 3 Overview 42 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The UWMP outlines the short-term and long-term strategies and goals for supplying reliable and high-quality drinking water to the Hollister area. It is updated every five years to reflect the current regional water situation. This ensures that all the water suppliers for the whole region are cooperating and pursuing the same united goals. The most recent UWMP update was completed in 2020. The original Hollister Urban Area Water and Wastewater Master Plan (2008 Master Plan) was prepared to provide a long-term vision of water, wastewater, and recycled water management activities and infrastructure improvements for the Hollister Urban Area (HUA). The effort was a regional collaboration undertaken by local agencies, including the City of Hollister, San Benito County, the San Benito County Water District, and the Sunnyslope County Water District under a Memorandum of Understanding (MOU). In 2017, the 2008 Master Plan was updated with a decade of changes in water use patterns, economic activity, water supply (drought), development in the HUA, and State of California– mandated water quality regulations. The 2017 Master Plan Update refreshed water demand and wastewater flow projections, balanced supply portfolios to meet water quality objectives, and identified new capital improvement projects. The planning period was through 2035; an update was recommended after five years. Since 2017, the City of San Juan Bautista (SJB) has joined the MOU, drought conditions have continued, California adopted the Sustainable Groundwater Management Act, and the landscape of future water supply options has evolved. Given these changes, the 2022 San Benito Urban Areas (SBUA) Water Supply and Treatment Master Plan was adopted. This Master Plan Update provides water demand projections through 2045 and provides an updated strategy for near- and long-term water supply and treatment. Unlike the past master plans, this Master Plan Update focuses on drinking water supply and treatment planning. 10 The San Benito County General Plan is the County's primary planning document. It is the official policy statement of the County Board of Supervisors to guide the private and public 10 San Benito Urban Areas Water Supply and Treatment Master Plan Update: City of Hollister, City of San Juan Bautista, San Benito County, San Benito County Water District, and Sunnyslope County Water District Approved: October 25, 2023, p. 14. Ch. 3 Overview 43 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final development of the County. In regard to water and wastewater services, the General Plan contains the following goals: 11 • Goal PFS-3: ensure reliable supplies of water for unincorporated areas to meet the needs of existing and future agriculture and development while promoting water conservation and the use of sustainable water supply sources. • Goal PFS-4: maintain an adequate level of service in the water systems serving unincorporated areas to meet the needs of existing and future agriculture and development while improving water system efficiency. • Goal PFS-5: To ensure wastewater treatment facilities and septic systems are available and adequate to collect, treat, store, and safely dispose of wastewater. Wastewater service providers are subject to numerous federal and state requirements. This section provides an overview of the more significant requirements. Figure 3-4: Wastewater Regulatory Agencies agency regulatory role A broad, statewide regulatory role, including setting statewide policies, managing water rights, California State Water Resources Control issuing permits, and overseeing funding Board programs. Focuses on regional issues within the Central Coast, implementing and enforcing state policies at the local level, issuing permits specific to the Central Coast Regional Water Quality region, and addressing local water quality Control Board concerns. Individual public and private sewer systems in San Benito County the unincorporated San Benito County. Federal, state, and local laws and agencies regulate wastewater. Some state and regional plans build upon federal legislation, while in other instances, federal acts have established broad goals implemented at the state and local levels. Finally, some regulations are unique to California. 11 San Benito County, 2035 General Plan, Public Facilities and Services Element July 21, 2015.BOS-Adopted. p. 7-6 to 7-9. Ch. 3 Overview 44 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The following discussion identifies the major federal, state, and local regulatory bodies and requirements for wastewater programs. The Federal Water Pollution Control Act of 1972, commonly known as the Clean Water Act (CWA), with its amendments, is the principal law governing the nation's streams, lakes, and estuaries. It contains regulatory provisions that impose progressively more stringent requirements on industries and cities to reduce and eliminate pollution of waterways. The CWA establishes as national goals the elimination of pollutant discharges to the navigable waters and the assurance that all navigable waters would be fishable and swimmable. It requires dischargers to obtain permits regulating the amount, quality, location, and timing of pollutant discharges. Applicable sections of the CWA include: • §303(d) – Impaired Waters List and Total Maximum Daily Loads • §319 – Non-point Source Management Program • §401 – State Water Quality Certification Program • §402 (p) – The National Pollutant Discharge Elimination System CWA §303 requires each state to identify waters that do not meet water quality standards after application of technologically based controls. Applicable water quality standards include designated beneficial uses and adopted water quality objectives. Waterways are identified as designated Water Quality Limited Segments (WQLSs) and are prioritized to develop Total Maximum Daily Loads (TMDLs) and establish Waste Load Allocations (WLAs) and Load Allocations (LAs). The TMDL is the sum of waste load allocations (WLAs) for point sources of pollution, load allocations (LAs) for non-point sources of pollution, and natural background sources. The TMDL is the amount of a pollutant that can be discharged into a water body and still maintain water quality standards. §319 regulates non- point source pollutants, which enter water from diffuse sources. Non-point source pollutants are often chemicals from lawns, automobile residues or urban runoff that enter the wastewater stream and water supply in large quantities and sudden surges, largely due to storms. Control of this type of pollution has proven to be difficult and usually requires costly upgrades in existing facilities and permit costs, particularly for wastewater facilities with high rates of infiltration. Ch. 3 Overview 45 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The State Water Resources Control Board (SWRCB) certifies the quality of surface waters pursuant to §401 of the Clean Water Act. §401 requires that activities/facilities discharging pollutants into waters must obtain a state water quality certification permit proving that the activity complies with all applicable water quality standards, limitations, and restrictions. §402 requires municipalities and publicly owned treatment works to obtain a National Pollutant Discharge Elimination System (NPDES) permit which regulates the discharge of "pollutants from point sources to waters of the United States" to ensure that the discharges do not adversely affect surface water quality or beneficial uses. NPDES permits are authorized by the CWA, §402, §13370 of the California Water Code, and the California Code of Regulations, Title 23, Chapters 3 and 4. The SWRCB is responsible for issuing NPDES permits. The CWA regulates the water quality of all discharges into waters of the United States including wetlands, perennial, and intermittent stream channels. §401, Title 33, §1341 of the CWA sets forth water quality certification requirements for "any applicant applying for a federal license or permit to conduct any activity including, but not limited to, the construction or operation of facilities, which may result in any discharge into the navigable waters." §404, Title 33, §1344 of the CWA in part authorizes the U.S. Army Corps of Engineers to: Set requirements and standards pertaining to such discharges: subparagraph (e). • Issue permits "for the discharge of dredged or fill material into the navigable waters at specified disposal sites": subparagraph (a). • Specify the disposal sites for such permits: subparagraph (b). • Deny or restrict the use of specified disposal sites if "the discharge of such materials into such area will have an unacceptable adverse effect on municipal water supplies and fishery areas": subparagraph (c); • Specify type of and conditions for non-prohibited discharges: subparagraph (f); • Provide for individual State or interstate compact administration of general permit programs: subparagraphs (g), (h), and (j); • Withdraw approval of such State or interstate permit programs: subparagraph (i); • Ensure public availability of permits and permit applications: subparagraph (o); • Exempt certain Federal or State projects from regulation under this Section: subparagraph (r); and, Ch. 3 Overview 46 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Determine conditions and penalties for violation of permit conditions or limitations: subparagraph (s). Section 401 certification is required prior to final issuance of Section 404 permits from the U.S. Army Corps of Engineers. The California Water Code (CWC) is the principal state regulation governing water resource use within California. This law controls water rights, the construction and management of dams and reservoirs, flood control, conservation, development and utilization of state water resources, water quality protection and management, and management of water-oriented agencies. The water quality provisions set forth in the CWC have been written to supplement provisions of the Health and Safety Code, Public Resources Code, Fish and Game Code, Food and Agriculture Code, Government Code, Harbors and Navigation Code, California Environmental Quality Act (CEQA) and California Endangered Species Act. Division 7 of the CWC, the Porter-Cologne Water Quality Control Act of 1970, regulates water quality and pollution issues within California by protecting water quality and beneficial uses of all state waters. The Porter- Cologne Act is administered regionally by the SWRCB and California RWQCB. The Porter- Cologne Act is similar to federal water quality regulations and programs. The SWRCB and regional offices have broad powers and implement the CWA through the adoption of plans and policies, the regulation of discharges, the regulation of waste disposal sites, and the cleanup of hazardous materials and other pollutants. It also requires reporting of unintended discharges of any hazardous substance, sewage, or oil/petroleum product. Title 15 of the San Benito County Code, titled "Public Works," governs the regulation of both private and public sewage systems within the unincorporated areas of the county. Title 13 of the County Code details the connection requirements, permits, fees, system location, design, and operational standards to ensure public safety and minimize environmental impacts. It mandates site evaluations that include soil conditions, percolation tests, and a three-foot separation from seasonal high groundwater levels. Additionally, it specifies required distances from wells, creeks, slopes, and reserve areas. The County Code also includes comprehensive guidelines for the operation and maintenance of sewage facilities. Ch. 3 Overview 47 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final California has one of the most developed regulatory environments for water reuse. California's Recycled Water Policy, which includes a "Mandate for the Use of Recycled Water," was adopted in 2009 and amended in 2013 and 2018. The purpose of the Recycled Water Policy is to increase the use of recycled water from municipal wastewater sources that meets the definition in Water Code §13050(n), in a manner that implements state and federal water quality laws. For the purpose of this policy, recycled water refers to the reuse of treated wastewater derived from municipal sources, i.e., water that is covered under California Code of Regulations Title 22, Water Recycling Criteria. Title 22 of California's Code of Regulations refers to state guidelines for how treated and recycled water is discharged and used. State discharge standards for recycled water and its reuse are regulated by the 1969 Porter-Cologne Water Quality Control Act and the State Water Resources Control Board's 2019 Water Recycling Policy. In 2014, California adopted indirect potable reuse rules that provide detailed criteria for treatment processes, contaminants to test for, and how long treated water must remain underground. In early 2018, the State finalized the Reservoir Augmentation statewide regulations that allow highly purified potable reuse water to be placed into drinking water reservoirs. The State does not currently have direct potable reuse (DPR) regulations but is currently working on a DPR regulatory framework and research. AB 574 was signed into law in October 2017 and set a December 31, 2023, deadline for the development of Raw Water Augmentation regulations. According to SWRCB's website, rulemaking is in progress with the following history of the rulemaking proceedings: • California Regulatory Notice Register: Register 2023, Volume Number 29-Z, Notice File Number: Z2023-0711-04 • Notice of Proposed Rulemaking Publication Date: July 21, 2023 • Start of Public Comment Period: July 21, 2023 • Date of Public Hearing: September 7, 2023, 12:30 pm • Close of 45-day Public Comment Period: 12:00 PM (noon) on September 8, 2023 • Notice of Public Availability of Changes to Proposed Regulations: October 19, 2023 • Close of 15-day Public Comment Period: November 6, 2023 • Board Adoption Hearing: December 19, 2023 Ch. 3 Overview 48 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Submission of Rulemaking File to OAL: TBD • Approval by Office of Administrative Law: TBD • Filed with the Secretary of State: TBD • Effective Date of the Regulations: TBD There are also no specific statewide regulations in California to encourage onsite or decentralized water reuse. However, some California cities have developed their onsite reuse ordinances. Wastewater demand is affected mainly by growth in residential population and commercial development and secondarily by factors such as water usage and conservation efforts. Each wastewater treatment plant has permitted capacity as determined by the RWQCB. Permitted capacity is typically defined as the average dry weather flow (ADWF) or the average day flow during dry months. It appears that all agencies reviewed on this MSR are within the treatment capacity of their plants. Once wastewater flows reach 75 percent of available treatment capacity, it is a best management practice to plan for future capacity needs. Figure 3-5 illustrates the agencies' capacity and estimated (planned) flow in millions of gallons per day (mgd). Figure 3-5: San Benito Regional Wastewater Agencies Flow vs Capacity agency capacity flow % use City of Hollister 4.03 3.93 97.5%** City of San Juan Bautista .27 .15 55% Sunnyslope County Water District .35 .16 45% Tres Pinos N/A** N/A N/A CSA#45 Rancho Larios N/A** N/A N/A Ch. 3 Overview 49 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final *The flow for City of hollister include current and planned capacity for out of juridtstiction connections including Cielo Vista connection and a 0.43 MGD capacity allocated for SJB that is estimated to take effectve on January 2025. Due to infiltration and inflow that SJB experiences from stormwater, the City's agreement with SJB is limited to a yearly average of 0.43 MGD and not to exceed 1.2 MGD on any given day. However, current flow of SJB is around 0.15 to 0.20 MGD. **For CSA#45 and Tres Pinos data specific to plant capacity and flow was not readily available. This section reviews indicators of wastewater service adequacy, including collection system integrity and regulatory compliance. Whenever available, industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. There are several measures of the integrity of the wastewater collection system, including sanitary sewer overflows, peaking factors as a result of infiltration and inflow (I/I), and efforts to address infiltration and inflow. All wastewater agencies are required to report sanitary sewer overflows (SSOs) to SWRCB. Sewer overflows are discharges from sewer pipes, pumps, and manholes. Overflows reflect the capacity and condition of collection system piping and the effectiveness of routine maintenance. The sewer overflow rate is calculated as the number of overflows per 100 miles of the main pipeline per year. The rate of SSOs of the reviewed agencies indicates a generally low incidence of overflows. Since 2018, both San Juan Bautista (SJB) and Cielo Vista have reported zero SSO, while Sunnyslope County Water District (SCCWD) and Tres Pinos each reported one SSO. The City of Hollister reported the highest SSOs, with 27 overflows, for the same period. Wastewater flow includes not only discharges from residences, businesses, institutions, and industrial establishments, but also infiltration and inflow. Infiltration refers to groundwater that seeps into sewer pipes through cracks, pipe joints and other system leaks. Inflow refers to rainwater that enters the sewer system from sources such as yard and patio drains, roof gutter downspouts, uncapped cleanouts, pond or pool overflow drains, footing drains, cross-connections with storm drains, and even holes in manhole covers. Infiltration and inflow tend to affect Ch. 3 Overview 50 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final older sewer systems to a greater degree. Infiltration and inflow rates are highest during or right after heavy rain. They are the primary factors driving peak flows through the wastewater system and a major consideration in capacity planning and costs. The peaking factor is the ratio of peak day wet weather flows to average dry weather flows. The peaking factor is an indicator of the degree to which the system suffers from I/I, where rainwater enters the sewer system through cracks, manholes or other means. A peaking factor of up to three is generally considered acceptable based on industry practices. Due to the limited information available on wastewater flows during dry and wet weather conditions, peaking factors could not be calculated for many of the agencies to determine the extent of infiltration and inflow in the systems. Regional Water Quality Control Board (RWQCB) enforces the Clean Water Act, permit conditions, and other requirements of wastewater providers. State Water Resources Control Board (SWRCB) records violations of State requirements for wastewater providers and treatment facilities. The Board may levy fines or order the provider to take specific actions to comply with water quality regulations. Each wastewater provider's regulatory compliance since 2019 is shown in the following figure. The primary cause for violation for all agencies reviewed is effluent limit violations. The City of San Juan Bautista has the most violations among the agencies, with 202 violations since 2019. To address this repeated violation by SJB, the San Juan Bautista to Hollister Sanitary Sewer Force Main compliance project is underway and is expected to be completed in January 2025. Once the project is completed, SJB will no longer treat water, just collecting and conveying it to the Hollister wastewater treatment plant. Figure 3-6: Wastewater Provider Regulatory Compliance, 2019-2023 enforcement violations actions agency 2019-2023 2019-2023 City of Hollister 7 0 City of San Juan Bautista 202 3 Sunnyslope County Water District 57 0 Tres Pinos 68 0 CSA#22 Cielo Vista 4 0 CSA#45 Rancho Larios 9 0 Ch. 3 Overview 51 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Ch. 3 Overview 52 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Established by ranchers and farmers in 1872, the City of Hollister is the seat of San Benito County and the gateway to Pinnacles National Park. The City was named for Colonel W.W. Hollister in 1868 by the Rancho San Justo Homestead Association of farmers. The City is located in San Benito County just northeast of Salinas between Gilroy and San Juan Bautista along Highway 156 near the San Luis Reservoir.8 Hollister is primarily an agricultural town known for various products, including Blenheim apricots, olive oil, vineyards, chocolate walnuts, and cattle. Some major industries located within the City's boundaries or in close proximity include hospitals, manufacturers, distribution centers, and commercial stores. School Districts, Hospitals, and County offices also offer a significant economic presence, employing more than 2,000 professionals. However, according to the Comprehensive Economic Development Strategy (CEDS), agriculture production, packing, and manufacturing generate 4,170 jobs and are the largest component of the county's job base. The City of Hollister is the largest community in San Benito County, with a population of 44,658 according to the 2023 Census data. Hollister is a General Law City and has a Council-Manager form of government. The City of Hollister offers a comprehensive range of services, including law enforcement, fire protection, street and infrastructure construction and maintenance, code enforcement, building inspections, water and wastewater services, and general government administration. Although the City is a multi-service provider, this review is specific to wastewater services.12 The City of Hollister was last included in a San Benito LAFCO Countywide Municipal Services Review in 2007. The City of Hollister covers an area of approximately 8.2 square miles. Figure 4-1 depicts the City's boundaries.13 12 City of Hollister, Fiscal Year 2023-2024 Adopted Budget, p.11. 13 Hollister General Plan, Public Review Draft, April 2023. p.1. Ch. 4 City of Hollister 53 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The SOI identifies land that the City may annex in the future and for which urban services, if available, could be provided. Under State law, the SOI is established by the San Benito County Local Agency Formation Commission (LAFCO) with input from the City. An SOI aims to identify areas where urban development can be best accommodated in an orderly and efficient manner over the next five to ten years. The SOI may need to be updated after adopting a General Plan to amend any discrepancies between the SOI and other planning boundaries. According to the General Plan update, the City of Hollister's current SOI is 6,554 acres. 14 As a part of the proposed 2040 General Plan, the City of Hollister proposed to amend its SOI. 15 The City of Hollister is a general law city operating under the Council-Manager form of government. The City Council consists of four members, each elected by district voters, serving staggered four-year terms. The Vice Mayor is elected from among themselves every year at the first meeting in January. The Mayor is elected at large for a two-year term. Elections are held in November of even-numbered years. The Council, as the legislative body, represents the citizens of Hollister and is empowered by the Municipal Code to formulate citywide policy, enact local legislation, adopt budgets, and appoint the City Manager and City Attorney. Current council member names, positions, and term expiration dates are shown in Figure 4-2. The City Council meets on the first and third Mondays of each month at 6:30 p.m. in the City Hall Council Chambers. Meeting agendas are posted on the District's website in compliance with the Brown Act16 (Government Code §§ 54954.2 and 54956), as amended by California AB 2257, which requires agencies to make agendas available on their websites and in a 14 General Plan Update City of Hollister, Land Use and Planning, November 2020, p.12-17. 15 General Plan Update City of Hollister, Land Use and Planning, November 2020, p. LU-3 to LU-4. 16 California Government Code, Section 54950, commonly known as the "Brown Act" or "Open Meeting Law," establishes requirements and restrictions for meetings of local legislative bodies. The law ensures public access to these meetings, facilitating public participation and promoting transparency in local government decision-making. Ch. 4 City of Hollister 54 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final publicly accessible physical location at least 72 hours prior to regular meetings and at least 24 hours prior to special meetings. Additionally, an archive of agenda packets, minutes, and meeting videos for Council meetings is available online on the City of Hollister Meeting Portal. Agendas are also posted on the bulletin board in the west alleyway outside City Hall and are available for review at the City Clerk's Office. In addition to public meetings, the City of Hollister engages residents through its informative website and active social media pages, including Facebook, Instagram, X, LinkedIn, YouTube, and Nextdoor. The City offers various methods for residents to file complaints and service requests. In accordance with the requirements of the California Public Records Act (CPRA), the City provides an online public records portal that enables residents to submit requests, correspond with City staff, and track the status of their requests. The portal also allows users to search for published public records requests and documents. The City of Hollister has an online contact form for the public to provide comments and file complaints on various topics. For water and wastewater-related complaints, residents should use the Hollister Stormwater Management Suggestion form available on the website. Additionally, residents can contact the appropriate department by phone. Ch. 4 City of Hollister 55 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-1: City of Hollister Governing Body governing body Mayor at large. City council elected by Manner of Selection district. Length of Term 4 years for Council; 2 years for Mayor On the first and third Mondays of each month at 6:30 p.m. City Hall Council Chambers 375 Fifth Street Meetings Hollister, CA 95023 Posted online, City Clerk's office and on the bulletin board outside west alleyway Agenda Distribution at City Hall Posted online and available for review at Minutes Distribution City Clerk's office council members Term Manner of Length of Member Name District Position Expiration Selection Term Roxanne Stephens At large Mayor 2026 Elected 2 Years Rudy Picha 1 Councilmember 2028 Elected 4 Years Rolan Resendiz 2 Councilmember 2026 Elected 4 Years Dolores Morales 3 Councilmember 2026 Elected 4 Years Priscilla De Anda 4 Councilmember 2028 Elected 4 Years contact Contact Gordon Machado, City Treasurer Mailing Address 375 Fifth Street, Hollister, CA 95023 Phone (831) 673-3365 Email/Website coh.treasurer@hollister.ca.gov Ch. 4 City of Hollister 56 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Ethics training is required once every two years, beginning with an odd-numbered year (AB 1234, Chapter 700, Statutes of 2005). Training is available online at the State of California Fair Political Practices Commission (FPPC) website. Additionally, a Statement of Economic Interest, or Form 700, must be submitted annually to indicate transparency in economic interests as required by the Political Reform Act of 1974 (California Government Code Sections 81000-81003). Every elected official and public employee who makes or influences governmental decisions is required to submit Form 700. It is recommended that all up-to-date Form 700s and the Certificate of Completion for all applicable council members be uploaded to the City's website. Through the District, there also exists a conflict-of-interest code and bylaws, outlined in the municipal code, as lawfully required and by which the City must abide. There is legislation to help ensure public agencies adhere to accountability standards. California AB 2257 (Government Code §54954.2) is an update to the Brown Act and indicates requirements for methods by which an agenda for all meetings should be made available on an agency's website. The City of Hollister complies with this regulation. The City of Hollister demonstrated accountability in its disclosure of information and cooperation with the LAFCO questionnaires and other requests for information. The following figure illustrates efforts to comply with state laws aimed at ensuring transparency and accountability. Generally, the City of Hollister meets the requirements outlined in State laws regarding the Brown Act, website materials, and best practices to ensure easy access to significant planning documents and financial reports. The City's website is easily navigated and provides a substantial amount of clear and concise information and documentation for residents. However, the most recent audited financial statements, Annual Compensation Reports, and the State Controller's Office Financial Transaction Reports are unavailable on the City's website as required. It is recommended that the City add these reports to the website in an easily accessible location. Ch. 4 City of Hollister 57 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-2: Transparency and Accountability Indicators transparency and accountability city of hollister Agency website (GC §53087.8) Yes Contact information available on website (GC §53087.8 (a)(3)) Yes Annual Compensation Report (GC §53891 and 53908) No Adopted budget available on website Yes State Controller's Office Financial Transaction Report available on website (GC §53891 and 53893) No Notice of public meetings provided Yes Agendas posted on website (GC §54954.2) Yes Public meetings are live streamed Yes Minutes and/or recordings of public meetings available on website Yes Master Plan available on website Yes Strategic Plan available on website No Sanitary Sewer Management Plan available on website Yes Enterprise System Catalogue available on website (GC §6270.5 (a)) Yes Efforts to engage and educate the public on the services to the community Yes Staff and governing board member ethics training and economic Yes on form 700, unclear interest reporting completed on ethics training Compliance with financial document compilation, adoption, and reporting requirements Yes Adherence to open meeting requirements Yes While public sector management standards vary depending on the size and scope of the organization, there are minimum standards. Well-managed organizations evaluate employees annually, track employee and agency productivity, periodically review agency performance, prepare a budget before the beginning of the fiscal year, conduct periodic financial audits to safeguard the public trust, maintain relatively current financial records, conduct advanced planning for future service needs, and plan and budget for capital needs. As of FY 23- 24, the City of Hollister has 225 full-time equivalent (FTE) employees.17 The City budgeted for 42 FTE positions for the Public Works division. The division includes the utilities 17 City of Hollister, Fiscal Year 2023-2024 Adopted Budget, p.11. Ch. 4 City of Hollister 58 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final department, which is responsible for planning, operating, and maintaining the water and sewer collection systems.18 Training programs for utility staff include formal classroom training and on-the-job training. Training is facilitated by both City Staff and outside training workshops. On-the-job cross- training is pursued to ensure staff have a proficient working knowledge of the sanitary sewer system and that critical tasks can be performed without interruption. Task proficiency is a requirement for all job positions and promotions. Operation and Maintenance (O&M) related training is conducted on an ongoing and as- needed basis. The respective contractor or manufacturer initially trains O&M staff to properly operate and maintain all new major mobile equipment and facilities. Written operation and maintenance manuals are also used as resource material for equipment start-up training and new staff training. Training records are maintained by the Environmental Programs Manager and are located at the Community Services Department Office. 19 The City tracks the workload through time sheets, maintenance logs, and inspection activities.20 The City of Hollister's financial planning efforts include an annually adopted budget and annually audited financial statements. However, the City reports that the most recent audited financial statement available was for FY20-21. The City of Hollister has a 12-month Fiscal Year that starts on July 1 and ends on June 30 every year. The City of Hollister also conducts a robust budget monitoring process. Departments continuously monitor their budgets and departmental priorities, goals, and objectives with quarterly check-ins involving the City Manager and Administrative Services departments. Currently, the City of Hollister does not have management planning practices. It is recommended that the City adopts a strategic plan that illustrates the City's core mission, goals and priorities, and work plan for staff and the public. A strategic plan can be vital in communicating Hollister's vision and each Department's priorities to the public and increasing 18 City of Hollister, Fiscal Year 2023-2024 Adopted Budget, p.125-128. 19 Sewer System Management Plan – Revision 02, Element 4 – Operation and Maintenance Program. City of Hollister September 2022. p. 4-10. 20 The City of Hollister, Request for Information, 2023. Ch. 4 City of Hollister 59 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final transparency. The strategic plan could also provide an opportunity to engage with the public to identify and address the right priorities. The State Water Resources Control Board's (SWRCB's) Statewide General Waste Discharge Requirements (WDR) for Sanitary Sewer Systems, Order No. 2006-0003-DWQ, and Amended Monitoring and Reporting Program (MRP), Order No. WQ 2013-0058-EXEC requires the City of Hollister to have, maintain, and implement a Sewer System Management Plan (SSMP), which provides "a plan and schedule to properly manage, operate, and maintain all parts of the sanitary sewer system" to "help reduce and prevent sanitary sewer overflows (SSOs), as well as mitigate any SSOs that do occur." The City of Hollister's SSMP were last updated in 2022. As required by law, the City also conducts periodic SSMP audits at least every two years. The audit is intended to evaluate the effectiveness of the SSMP's programs, identify potential weaknesses, and determine improvement opportunities for use in future SSMP modifications. The last SSMP audit was completed in 2021. SSMP-related outreach materials are maintained at the Community Services office. The 2017 Hollister Urban Area Water and Wastewater Master Plan provides a comprehensive plan and implementation program to meet the existing and future water resource needs of the Hollister Urban Area. The plan includes recommended priorities through the year 2035 for water supply, recycled water facilities, water system operations, and institutional agreements. Priority projects identified in the plan include the addition of local wells to supply the northern part of the city, the expansion of recycled water use for agricultural irrigation, and the development of the North County Groundwater project, which involves the development of wells, particularly subbasins. The plan also includes recommendations for institutional agreements between agencies that will be required to implement projects. 21 The City of Hollister, San Benito County, and the San Benito County Water District (SBCWD) executed a Statement of Intent and an MOU in 2004 to initiate the Master Plan effort. The MOU was subsequently amended in 2008 to include Sunnyslope County Water District (SSCWD). 21 City of Hollister 2040 Draft General Plan, Community Services, and Facilities Element. p. CSF-2. Ch. 4 City of Hollister 60 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final As part of the City of Hollister's goal to plan for adequate water and sewer facilities, the City's proposed 2040 General Plan indicates the need to update the Urban Water and Wastewater Master Plan to be consistent with the population, employment, and other growth projections of the General Plan, in compliance with state law requirements for future water supplies.22 The City of Hollister has no capacity plan; however, the City has an Environmental Impact Report (EIR) for its Wastewater services that was completed in 2006 for the City of Hollister Domestic Wastewater System Improvements (DWSI) Project and the San Benito County Water District (SBCWD) Recycled Water Facility (RWF) Project. The City of Hollister also has a proposed 2040 General Plan that demonstrates the fundamental values and shared vision for future development in the City of Hollister. Its purpose is to direct and coordinate future planning decisions. The community services and facilities element establish goals, policies, and actions for the following systems: water supply, wastewater collection, storm drainage and flood control, and solid waste collection and disposal. Goals related to water supply and wastewater include plans for adequate water and sewer facilities and ensuring sufficient and sustainable solid waste management that meets the existing and future needs of the city and reduces disposable waste over time.23 The General Plan is yet to be approved. According to the City, the Planning commission's recommendations added significant new expansion to SOI, requiring a rewrite of EIR and traffic study. The City expects for the 2040 General Plan to be adopted towards end of 2024.24 The City of Hollister has a five-year Capital Improvement Program (CIP) covering FY 18-19 to FY 21-23. This program serves as a planning tool for infrastructure development and improvements. It is reviewed and revised annually to assess the city's infrastructure needs and align them with financial forecasts. The CIP ensures that infrastructure projects are prioritized and managed effectively within the City's budget constraints. 22 City of Hollister 2040 Draft General Plan, Community Services, and Facilities Element. CSF 10-13. 23 City of Hollister 2040 Draft General Plan, Community Services, and Facilities Element. CSF-10 to CSF-16. 24 City of Hollister MSR Interview, May 2024. Ch. 4 City of Hollister 61 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final This section aims to evaluate growth and population projections in relationship to the City of Hollister's boundaries and SOI to anticipate the City's future service needs. Additionally, the anticipated growth patterns of the City are evaluated to determine the impact and compatibility of such growth on land use plans and local government structure. Growth in Hollister is guided by several planning boundaries, including the Planning Area, Urban Service Area (USA), Sphere of Influence (SOI), and City Limits. These planning boundaries encompass land both inside and outside the City Limits. The Hollister City Limits encompass incorporated territory that the City serves and regulates. The City of Hollister controls land use within the City Limits through its General Plan, zoning code, land subdivision process, and other related regulations.25 The City has established a Planning Area in its General Plan's land use and community design element. The Hollister planning area boundary encompasses incorporated and unincorporated territory related to the City's planning. A city's planning area generally includes the city limits and land for potential annexation with the sphere of influence. Reduced in size from the 1995 General Plan, the Hollister planning area is generally bounded by Shore Road (north), Santa Ana Creek and parcels east of Fairview Road (east), Bolsa Road and the San Benito River (west), and Enterprise Road (south). 26 The land within the Hollister Planning Area generally slopes upward from north to south, with elevations of approximately 210 feet near the Hollister Municipal Airport, 290 feet near City Hall, and 500 feet near the intersection of Fairview Road and Airline Highway (State Route 25). Although the topography is relatively flat in most areas, the terrain is hilly near the San Benito River, west of the Southern Pacific Railroad line northwest of Hollister, and in the eastern portion of the Planning Area. 27 While a useful planning tool, the Planning Area is not a LAFCO-defined or approved jurisdictional boundary. The Planning Area does not give the City any regulatory power. However, it signals to the County and other nearby local and regional authorities that the City recognizes that development within this area impacts Hollister's future. The City's three planning areas—the City limit, SOI, and Planning Area—as of 2023 are represented in Figure 4-3. 25 City of Hollister 2040 Draft General Plan, Community Services, and Facilities Element. LU-2 to LU-3. 26 City of Hollister, Land Use and Community Design Element, December 2005, p.2.1. 27 City of Hollister, Open Space and Agriculture Element, December 2005, p. OS-1. Ch. 4 City of Hollister 62 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-3: City of Hollister Planning Area Map Ch. 4 City of Hollister 63 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Hollister's Urban Service Area Hollister's Urban Service Area (USA) historically defined the areas in which the City provides access to municipal water and sewer service. In 1985, the City of Hollister conducted a Sphere of Influence (SOI) study, which recommended establishing a five-year Urban Service Area (USA) for residential development to coordinate service provision with geographic areas and time. This was in response to ample available industrial land within the city but significant unincorporated residential land. The planning area for the study was the Public Works Master Plan (PWMP). In January of 1986, San Benito LAFCO approved Hollister's first Sphere of Influence (SOI) boundary that substantially conformed to the PWMP planning area and with a five-year residential urban service area. Since 1986, there have been several expansions to the USA approved by LAFCO. These expansions aimed to align with planning areas and accommodate residential growth management ordinances. Hollister requested and received approval for a 500-acre expansion in 1987 to include ongoing development projects or align with property lines. Three other expansions occurred for affordable housing projects in 1992 and 1993 and for a 100-acre area along Airline Highway/Crestview Drive. Between 1993 and November 2000, no property tax exchange agreements were made, and no annexations occurred. Since 1986, LAFCO's policies and criteria regarding urban service area amendments and annexations. In 1992, Resolution 92-04 mandated the submission of service plans with annexation requests and that an annexation would be denied if services were not adequate. It also required jurisdictional resolutions and that applications would be amended to eliminate present and future islands. In 1995, Resolution 95-03 added a policy requiring that an amendment to a sphere-of-influence, urban service area, or annexation should be denied if it facilitates the conversion of prime agricultural land if there is the opportunity for amendment/annexation of non-prime agricultural land. GC 56080 defines urban service areasareas , as developed, undeveloped, or agricultural land, either incorporated or unincorporated, that falls within a city's sphere of influence (SOI). These areas are served or proposed to be served by urban facilities, utilities, and services within the first five years of an adopted capital improvement program, provided that the city has approved such a program for those facilities, utilities, and services. as developed, undeveloped, or agricultural land, either incorporated or unincorporated, within the sphere of influence of a city, which is served by urban facilities, utilities, and services or which are proposed to be served by urban facilities, utilities, and services during the first five Ch. 4 City of Hollister 64 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final years of an adopted capital improvement program of the City if the City adopts that type of program for those facilities, utilities, and services. The San Benito LAFCO policies also state that Cities and those special districts providing municipal services are encouraged to establish urban service areas within their spheres of influence. However, LAFCO policies do not provide a clear definition of a USA.In 2003, the San Benito LAFCO adopted Resolution No. 2003.02 eliminating the City's USA after determining that the existing Urban Service Area was too large and ineffective in ensuring orderly growth and adequate provision of services. However, the City of Hollister appears to still utilize the USA in the City's General Plan. Additionally, there seems to be an interchangeable use of the USA with Hollister's Urban Area which is discussed below. It is recommended that the City retire the USA to ensure compliance with Resolution No. 2003-02 and avoid confusion with HUA.Currently, Hollister's USA extends beyond the City's SOI which does not meet LAFCO's definition of an urban service area. As part of growth management actions in Hollister, the 2040 Draft General Plan suggests evaluating the function of the Hollister Urban Service Area and determining whether this boundary can be retired or needs to be updated to meet the requirements of Government Code Section 56133.28 Currently, the City reports there are no plans to retire the USA. As such if the City chooses to retain the USA, it is recommended that the City works to align the USA to the City's SOI to ensure that it meets LAFCO's definition. Hollister Urban Area (HUA) The Hollister Urban Area (HUA) is about 90 miles south of San Francisco in the northern portion of San Benito County, California. The HUA is in a broad valley between the Gabilan Range on the west and the Diablo Range on the east. The San Benito River runs through the southwestern portion of the HUA, and Santa Ana Creek flows through the eastern portion of the HUA. The Arroyo de Las Viboras and Arroyo Dos Picachos flow to the northeast of the HUA. The City of Hollister was incorporated in 1872 and is the largest community in San Benito County. Other communities near the HUA include San Juan Bautista and Tres Pinos, also in San Benito County, and Gilroy in Santa Clara County. The HUA is an approximately 20 square mile area comprising all of the incorporated and some unincorporated county lands surrounding the City of Hollister. The HUA area appears to 28 Beginning January 1, 1994, the Local Agency Formation Commission was charged with the responsibility for reviewing and taking action on a city or district contract to extend service outside its jurisdiction under the provisions of Government Code Section 56133. Ch. 4 City of Hollister 65 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final be utilized as a planning tool and has been incorporated into the Hollister Urban Water Management Plan (UWMP) and the Water and Wastewater Master Plan. The Hollister Urban Area includes the City of Hollister and adjacent unincorporated areas of San Benito County designated for urban development. The HUA was established to protect the County's groundwater resources through water treatment improvements and directing sewer service to an upgraded Hollister wastewater plant. The City of Hollister comprises approximately 5,248 acres or 8.2 square miles, originally home to the Ohlone and Popeloutchom (Amah Mutsun) tribal nations. Roughly 75 percent of the City is developed, and the remaining 25 percent includes open space and agricultural lands. Land uses in the City's urban development are mainly residential, with other major land uses including industrial, general commercial, and airport. Figure 4-4 illustrates the land designated for each use within Hollister's boundaries and SOI according to the City's 2040 draft General Plan. Ch. 4 City of Hollister 66 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-4: City of Hollister General Plan Land Use Designation city planning maximum land use limits soi area permitted designation acres acres acres intensity RE Residential Estate 0 137 1,962 0.2 to 1 du/ac Low Density LDR Residential 1,365 392 1,390 6 to 10 du/ac Medium Density MDR Residential 409 58 60 11 to 29 du/ac High Density HDR Residential 233 133 27 30 to 65 du/ac Mixed-Use Commercial and MU Residential 107 0 56 30 to 65 du/ac Downtown Commercial and 30 to 125 du/ac DMU Mixed-Use 55 0 0 3.0 FAR 11 to 19 du/ac HO Home Office 13 0 0 1.0 FAR West Gateway Commerical and 30 to 65 du/ac WG Mixed-Use 76 0 0 3.0 FAR North Gateway NG Commercial 97 96 45 2.0 FAR General GC Commercial 117 56 94 2.0 FAR I Industrial 718 468 804 1.0 FAR AS Airport Support 66 0 0 1.0 FAR A Airport 368 0 6 N/A P Public 496 67 498 2.0 FAR OS Open Space 196 10 342 .01 FAR AG Agriculture 0 9 16,129 N/A Total 4,315 1,427 21,413 Ch. 4 City of Hollister 67 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Source: City of Hollister, 2040 Draft General Plan, 2023. *du/ac is dwelling unit per gross acre *FAR is Floor Area Ratio Ch. 4 City of Hollister 68 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The 2040 draft General Plan also identifies eight Special Planning Areas— North Gateway, West Gateway, Buena Vista Road, Downtown, "Old Town" Residential, Home Office, Meridian Street Extension, and Union Road. Each of these areas is at least partially developed already. By designating them as Special Planning Areas, the General Plan intends to provide additional policy direction to guide additional development, redevelopment, and property improvements in these areas. The Special Planning Areas are designated as such for the following reasons: 29 • They are located in highly visible locations that characterize Hollister, in and around Downtown or as people approach and leave the City. • They contain potential economic development opportunities if developed appropriately. • They would benefit from a unified design approach and take advantage of the unique elements of the City. Some Special Planning Areas have specific land use designations (described above), while others have a series of use-based designations that occur in other parts of the City. In either case, each Special Planning Area also has a series of development policies, which are contained in the Land Use and Community Element section of the City's 2040 General Plan. The Land Use and Community Element section also discusses infill development. Development pressure on the City's edges is expected to increase as Hollister grows. Without a strategy to counterbalance this pressure, development will creep further from the core of Hollister. If this happens, new buildings will begin to cover the scenic hillsides that surround Hollister, and the City will have a more difficult time extending municipal services to all its residents. Considering these issues, the City of Hollister actively encourages infill development. As a first step, the General Plan suggests the City attempts to annex any county "islands" within the City Limits, making these sites "ripe" for development. Once this has occurred, sites within the SOI should be encouraged to develop before development extends to the surrounding areas. New residential and job-generating uses should be focused on the downtown, residential, and mixed-use infill sites, and the special planning areas. The City does not support new urban development outside the SOI and will work with the County to focus future development in already urbanized areas. Other incentive techniques, as highlighted in the General Plan, include reducing or eliminating development fees associated with construction projects in infill areas. The City can provide 29 City of Hollister 2040 Draft General Plan, Land Use and Community Design Element. p. LU-14 to LU-17. Ch. 4 City of Hollister 69 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final credits, fee waivers, or fee deferments on exactions such as water and sewer fees, construction and building permit fees, etc., on projects in priority areas. Hollister may adopt a policy to defer or adjust sales and/or property taxes in specific districts. The 2040 Draft General Plan also recommends that Hollister adjust its land use policies and zoning and development standards to provide developers with greater potential financial returns in exchange for tackling high-priority development projects that otherwise might prove too risky. 30 When the State of California evaluates agricultural land, areas are designated as Prime Farmland when they are found to have the best combination of physical and chemical characteristics for crop production and have the soil quality, growing season, and moisture supply needed to produce sustained yields of crops when treated and managed. Lands identified as Prime Farmland must have been used to produce irrigated crops within the last three years. Areas designated as Farmland of Statewide Importance represent land other than Prime Farmland with a good combination of physical and chemical characteristics for crop production. As in the case of Prime Farmland, these areas must have been used to produce irrigated crops within the last three years. Lands identified as Unique Farmland consist of lesser-quality soils used for agricultural production. The San Benito Valley, which includes the City of Hollister, is generally considered a prime agricultural area due to its favorable soil types and climate. There is a significant amount of agricultural land inside and outside the General Plan Planning Area. The Planning Area includes Prime Farmland, Farmland of Statewide Importance, and Unique Farmland as classified by the State Department of Conservation and protected by the California Environmental Quality Act. Prime agricultural lands are defined in California Government Code Section 56064. The City has an agricultural land use designation encompassing lands with continuing commercial agriculture potential. This category intends to retain primary agricultural use to the greatest extent practical. These areas should be kept free of any urban-type development and annexations. Allowed uses for the area include orchards, row crops, nurseries, grazing lands, open space, farm services, and parks. The most prevalent type of agriculture in San Benito County is vegetable and irrigated row crops, largely spinach, lettuce, wine grapes, broccoli, celery, and tomatoes, which are arranged 30 City of Hollister 2040 Draft General Plan, Land Use and Community Design Element. p. LU-18. Ch. 4 City of Hollister 70 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final in rows. Common orchard crops in San Benito County include apples, walnuts, cherries, and apricot trees. Wine grapes are particularly abundant and economically significant. Standard field crops include grains, hay, nursery plants, and seeds that cover the entire field in which the crops are planted. Agricultural operations are an important source of fresh local farm food within San Benito County. They are transported throughout the United States and to several other countries on most continents, including South America, Europe, Asia, Africa, and Australia.31 There are three soil associations within the Hollister Planning Area under the classification system of the Natural Resources Conservation Service of the U.S. Department of Agriculture: • Soils of the Sorrento-Yolo Mocho association consist of nearly level to sloping soils formed in very deep alluvium derived from sedimentary rocks and underlie the central and western portions of the Planning Area. The dominant soils in this association are very deep and well-drained and include some of the most productive soils in the country. • Soils of the Rincon-Antioch-Cropley association consist of nearly level to strongly sloping soils on fans and terraces and underlie the southeastern quadrant of the Planning Area. These soils are well-drained, although erosion is a problem on the more sloping soils. • Soils of the Clear Lake-Pacheco-Willows association consist of nearly level and gently sloping soils formed in alluvium derived from sedimentary rocks and underlie the northern portion of the Planning Area. For these soils to support agricultural activity, drainage is needed in most areas, and reclamation may be necessary in those areas affected by salts and alkali. Under the Land Conservation Act ("Williamson Act"), farmers can enter into land conservation contracts with San Benito County, which enable them to enjoy reduced property taxes in exchange for maintaining their land in agricultural production. Once entered into by a farmer, a Williamson Act Contract is binding for ten years. Contracts are automatically renewed yearly unless the farmer files a Notice of Non-Renewal. After filing such notice, the land may not be converted to other uses for ten years, during which time the property taxes are gradually increased to reflect the full market value of the land. Ten years after filing a Notice of Non- Renewal, the land is free of contractual land use restrictions, and the farmer is denied further property tax benefits associated with the former Williamson Act contract. 31 City of Hollister 2040 Draft General Plan, Open Space and Agriculture Element. p. OS-2. Ch. 4 City of Hollister 71 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Two parcels by Buena Vista Rd that are Prime Farmlands are designated as Williamson Act land within the City's SOI. All the other farmlands designated as Williamson Act lands are within the Planning Area. Figures 4-5 show the location of all Williamson Act lands, their designation, and important farmland. Ch. 4 City of Hollister 72 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-5: City of Hollister Important Farmland and Williamson Act Contracts Ch. 4 City of Hollister 73 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final LAFCo is charged with discouraging urban sprawl, preserving open space and prime agricultural lands, encouraging the efficient provision of government services, and encouraging the orderly formation and development of local agencies based on local conditions and circumstances. Prime agricultural lands are defined in California Government Code Section 56064. Based on the types of agricultural lands as mapped in Figure 4-6, there are few parcels considered prime farmland within the City's SOI to the south of the city limits near the Hollister Municipal Airport as well as around the central area of the City near Flynn Rd and Wright Rd. Additionally, there are prime farmlands near Buena Vista Rd in the northwestern part of the City. The area proposed for the City's SOI expansion, which is on the southern part of the City's limit, also includes largely prime farmlands with small grazing land areas and farmland of local importance areas. The City has adopted multiple policies and goals in the 2040 Draft General Plan, outlined in the Open Space and Agriculture element related to agricultural land uses, including: Goal OS-6 Preserve viable agricultural activities and lands. • Policy OS-2.1 Offsets for Loss of Agricultural Land. Require that all new developments that convert agricultural land to urban uses provide for the preservation of twice as much agricultural land in perpetuity. (new) • Policy OS-2.2 Agricultural Buffers. Require that developers of all new developments adjoining agricultural land provide a 200-foot buffer to ensure that agricultural practices will not be adversely affected, and that developers also pay a fee adequate to allow the City to maintain this buffer land. (new) • Policy OS-2.3 San Benito County Future Development Areas. Encourage the County of San Benito to focus future development within the areas identified for development in this City of Hollister General Plan, so as to help protect agricultural lands and preserve open space areas within the other portions of the Hollister Planning Area. (Part of Policy OS2.2) • Policy OS-2.4 Coordination with San Benito County to Preserve Important Farmlands. Coordinate with the County of San Benito in efforts to maintain prime farmlands, unique farmlands, and farmlands of statewide significance in active agricultural use and Ch. 4 City of Hollister 74 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final in all efforts to maintain the continued economic viability of agriculture within the Hollister Planning Area. (Part of Policy OS2.2) • Policy OS-2.5 Residential Development Near Agricultural Areas. Require developers to inform potential buyers of homes near agricultural areas of the possible hazards associated with the application of pesticides/herbicides and nuisances from other cultivation practices. In those cases where the County of San Benito's Right-to-Farm Ordinance applies to the City review of projects, homeowners shall also be informed of this Ordinance by developers. (Policy OS2.4) Additionally, the agriculture preservation actions include — offsetting agricultural land conversion, agriculture buffer ordinance, urban growth boundary, and agricultural community disclosure ordinance.32 Vacant land is defined as land with no structure or building improvement not used for active agricultural production. Conversely, underutilized land is defined as land that can accommodate additional density. In the City of Hollister, development was slow under the 2005 General Plan due to the 2008 Great Recession and a building moratorium in place from 2008 to 2016; the existing General Plan's contemplated growth is now largely underway. According to the 2020 General Plan update, much of the vacant residential lands within the City Limits are under construction or have planning approval, and much of the Sphere of Influence identified for residential development has pending applications for pre-zoning and annexation. Figure 4-7 illustrates the vacant and underutilized land in the General Plan Planning Area. Vacant or underutilized sites do not include sites with pipeline projects. As of November 2020, there are approximately 475 acres of vacant land and 374 acres of underutilized land (i.e., parcels with less than 10 percent building coverage) in the City Limits. Beyond the City Limits, the SOI includes roughly 258 acres of vacant land. Within the City Limits and SOI, vacant and underutilized land designated for industrial uses, including Airport and Airport Support, represents 70 percent of the vacant and underutilized inventory. Commercial/mixed-use and residential designations represent 24 percent and 17 percent of the vacant and underutilized land within the City Limits and SOI. 32 City of Hollister 2040 Draft General Plan. Open Space and Agriculture Element. p. OS-7 to OS-9. Ch. 4 City of Hollister 75 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Outside the City Limits and SOI, the Planning Area includes 1,537 acres of vacant land and 2,199 acres of underutilized land with an urban County General Plan Land Use designation. In addition, the Planning Area includes 13,533 acres of land with an Agriculture or Rangeland County General Plan Land Use designation. The large amount of vacant and underutilized land within the unincorporated County could make it difficult for Hollister to create an orderly growth pattern if there is not proper coordination between the City and County. In 2020, a Market Demand Analysis was completed for the Hollister General Plan Update that illustrates economic conditions in the broader San Benito County area. The analysis is based on data depicting pre-COVID-19 conditions, which was the only data available when the research was completed. The analysis examines the amount of vacant and underutilized land, pipeline projects, and projected growth to assess whether there is enough land within the SOI to meet future demand. In regard to land use, the report assesses whether under baseline, moderate, and robust growth scenarios additional land would be needed to meet demand. The Market Demand Analysis concludes that the City of Hollister might need to consider:33 • Reviewing whether there is the correct mix of residential land use designations given much of the remaining vacant/underutilized residential land would be for multi-family projects under all growth scenarios. • Designating up to 635 acres of land for residential uses depending on what growth scenario and mix of residential units the community and decisionmakers would like to plan for over the next 20 years. • Adding between 12 and 20 additional acres of commercially zoned land to accommodate retail and office demand under the robust growth scenario. 33 City of Hollister General Plan Update, Land Use and Planning. November 2020. p.12- 17. https://hollister2040.org/wp- content/uploads/2020/11/12_Land-Use-and-Planning.pdf. Ch. 4 City of Hollister 76 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-6: City of Hollister Vacant and Underutilized Land Inventory Ch. 4 City of Hollister 77 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final According to the 2022 Census, the City of Hollister is estimated to have a total population of 44,218. The California Department of Finance (DOF) reports a slightly lower population of 42,631 for 2022 and 42,891 for 2023. This indicates a roughly 23 percent increase and 1.6 percent Average Annual Growth Rate (AAGR) since 2010, when the population was 34,928. The City's population trend over the last 13 years is shown in Figure 4-8. Figure 4-7: City of Hollister Population Growth, 2010-2023 Ch. 4 City of Hollister 78 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Population Characteristics As of 2021, the population of the City of Hollister has a median age of 33.3 years old. By comparison, the median age for San Benito County is 35.7 years old, the median age for the State of California is 37.0 years old, and the median age for the United States is 38.4 years old. 34 During 2017-2021, there were about 11,736 households in Hollister, with an average household size of about three people. The five largest ethnic groups in Hollister, CA are White (Hispanic) (35.7 percent), White (Non-Hispanic) (22.8 percent), two or more (Hispanic) (20.8 percent), Other (Hispanic) (13.6 percent), and Asian (Non-Hispanic) (2.34 percent). The City has a median household income of $87,761 compared to the statewide MHI of $84,097. Approximately 9.27 percent of the population for whom poverty status is determined in Hollister, CA (3.77k out of 40.7k people) live below the poverty line. This number is lower than the national average of 12.6 percent. Approximately 64.6 percent of the housing units in Hollister, CA, were occupied by their owner. This is a slightly lower proportion than that of San Benito County (67.6 percent) and significantly higher than the State of California (55.5 percent). Hollister's high proportion of homeowner households is likely influenced by the high median household income. According to the Department of Finance (DOF), countywide growth projections for San Benito County are expected to see an approximately 0.47 percent average annual growth rate (AAGR) from 2020 (64,432) through 2060 (77,666). Utilizing the County's AAGR and Hollister's 2023 population estimates, the population within the City is anticipated to increase to approximately 50,981 by 2060. The Hollister 2040 Draft General Plan includes a growth management section that promotes orderly and balanced growth within Hollister's planning area boundaries. One of the related policies specific to this goal is regarding development capacity. The General Plan and the General Plan Update Environmental Impact Report (EIR) assume the following maximum development projections by the year 2040: • 6,455 new dwelling units. 34 Data Usa, Reports 2021. Ch. 4 City of Hollister 79 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • 1.1 million square feet (SF) of new commercial and office space. • 2.8 million square feet (SF) of new industrial space. When development approved by the City of Hollister reaches the maximum development projections above, an environmental review for subsequent development projects is required to determine if there are any impacts related to the additional growth beyond the development capacity anticipated in the 2040 General Plan EIR. 35 As discussed, the City of Hollister utilizes the General Plan as a tool for planning future growth. Additionally, the City of Hollister has several other plans to guide development and annexation in specific areas of Hollister. The Urban Water Management Plan and Environmental Impact Report (EIR) are among these. The goals, policies, and actions outlined in the General Plan are intended to direct and characterize growth within the city and its future boundaries. The Land Use and Community Design Element is the primary instrument that presents regulatory and policy land use tools to guide trends in the City, including the following goals:36 • LU-1: Promote orderly and balanced growth within Hollister's planning area boundaries. • LU-2: Promote diverse housing opportunities for existing and future residents. • LU-3: Encourage mixed-use development projects that create vibrant, walkable districts and contain residential and community-serving commercial uses. • LU-4: Ensure the city has a wide variety of commercial space with appropriate commercial uses to meet the needs of residents. • LU-5: Preserve and protect industrial uses to sustain and develop the City's economy. • LU-6: Support balanced growth and well-designed development patterns within Hollister's Special Planning Areas. • LU-7: Create an attractive gateway along San Felipe Road and Highway 25 into the City and provide an opportunity for commuter-oriented and larger-scale commercial uses. 35 City of Hollister 2040 Draft General Plan, Land Use and Community Design Element. p. LU-19. 36 City of Hollister 2040 Draft General Plan, Land Use and Community Design Element. p. p. LU-19 to LU-46. Ch. 4 City of Hollister 80 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • LU-8: Develop the West Gateway as an entry feature to the City of Hollister and an opportunity for a mixed-use district with medium to high-density residential with integrated neighborhood-serving retail. • LU-9: Preserve existing agricultural uses to the north and west of Buena Vista Road and encourage residential uses along Buena Vista Road to complement existing uses. • LU-10: Preserve and enhance the Downtown as a major focus of the community. • LU-11: Preserve the diverse historic architecture of existing residential uses and ensure that new development in these areas blends with the existing character of historic neighborhoods. • LU-12: Preserve the look and feel of the existing residential neighborhood, while continuing to allow specific commercial office uses to transition from the Downtown to the surrounding residential uses. • LU-13: Foster a complete neighborhood in the Meridian Street Extension Special Planning Area that includes a mix of residential and commercial uses. • LU-14: Create a mix of medium- to high-density residential units and new job-generating uses in the Union Road Special Planning Area. • LU-15: Support small, urban agricultural uses in and around the City. • LU-16: Maintain and enhance Hollister's small-town charm and identity. Ensure orderly development with attractive and high-quality design. • LU-17: Ensure that residential developments are well-designed and are compatible with the small-town character of Hollister. • LU-18: Develop and maintain attractive landscaping on public and private properties, open spaces, and public gathering spaces. • LU-19: Provide adequate parking to support all land uses in the City. • LU-20: Preserve Hollister's historic identity and historic and culturally important structures, assets, and districts for future generations. The 2040 Draft General Plan includes a statement of vision that describes the future of Hollister as the community envisions and sets the tone for the entire document. The vision highlights that new growth in the City primarily focuses on existing urban areas or areas adjacent to existing development to enhance connectedness and preserve active agricultural uses and open space areas. The City coordinates with the County of San Benito and other local agencies to ensure well-planned, sustainable growth and provide needed services and resources. Ch. 4 City of Hollister 81 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Additionally, the General Plan outlines values that provide direction for decision-making as it is implemented over time. Values include equity, diversity, innovation, and sustainability. The statements of vision and values provide the underpinnings for all concepts in this General Plan for its ultimate implementation. All policies and actions are intended to support the implementation of vision and values. As part of the growth management goal outlined in the General Plan, several policies emphasize annexation. • LU-1.1: Infill Development— Ensure an orderly pattern of development in the city that prioritizes infill development over the annexation of properties. • LU-1.6: Coordinated Annexation Requests — Encourage coordinated annexation of contiguous properties. • LU-1.7: Specific Plans— Ensure the orderly development of large areas of land proposed for annexation through specific plans. Require a specific plan for annexation requests that are over 20 acres in size or include non-residential uses, regardless of size. • LU-1.8 Revenue Neutral — Require annexations to be revenue neutral and cover all costs related to public infrastructure, public facilities, and public services. • LU-1.9 Contiguous Annexations— Prohibit any annexations of land that are not contiguous to City Limits. Annexation of land that would result in the formation of a County "island" or irregular City boundary shall not be permitted. The General Plan also comprises actions related to the City's annexation process, which includes reviewing City procedures related to annexations and updating them as needed to ensure an efficient and orderly review process. Additionally, an annexation prioritization strategy for areas outside the existing city limits is outlined, identifying where and in what order the City should annex land outside the city limits. The strategy must also consider initiating the annexation of developed unincorporated areas adjacent to the City and in county "islands." Annexation of these areas should occur if the annexation would facilitate infill development, improve service delivery, or create a more logical City boundary.37 From 2011 through 2019, 59 annexations, or 518.89 acres, were approved by LAFCO. The majority of these annexations are within the City's Low-Density Residential zone (202.68 37 City of Hollister 2040 Draft General Plan, Land Use and Community Design Element. p. p. LU-21. Ch. 4 City of Hollister 82 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final acres), Medium-Density Residential zone (94 acres), and Public Facilities zone (94.67 acres). Other approved annexations are within Public Facilities (Public Quasi-Public Zoning (51.83 acres), General Commercial (44.28 acres), Neighbourhood Mixed Use (8.48 acres), Light Industrial (2.54 acres), North Gateway (17.39 acres), and Airport (2.84 acres). There are also 107.1 acres of annexations to the City of Hollister that are in progress as of 2019. Figure 4-9 illustrates all LAFCO-approved annexations to the City of Hollister from 2011-2019. It's unclear if the City has a formal annexation plan in place. However, annexations are presently paused until the updated General Plan is adopted.38 If there isn't an existing annexation plan, it is recommended that the City adopt one. 38 City of Hollister MSR Interview, May 2024. Ch. 4 City of Hollister 83 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-8: LAFCO Annexation 2011-2019 LAFCo is required to evaluate disadvantaged unincorporated communities as part of this service review, including the location and characteristics of any such communities. The intent and history of this requirement are outlined in the Background Section of this report. A disadvantaged unincorporated community is defined as any area with 12 or more registered voters, or as determined by commission policy, where the median household income is less than 80 percent of the statewide annual median. According to Census Bureau data, the statewide MHI for 2017-2021 is $84,097, and hence, the calculated threshold of $67,277 defines whether a community is disadvantaged. Therefore, with a median income of $87,761, the City of Hollister is not considered to be a disadvantaged community. Ch. 4 City of Hollister 84 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The functions of the City of Hollister are supported by taxes and intergovernmental revenues (governmental activities) and through user fees and charges (business-type activities). The governmental activities of the City include general government, public protection, public works, and recreation. The business-type activities of the City include the airport, water, wastewater, street sweeping, and Briggs building funds. The Generally Accepted Accounting Principles (GAAP) in government accounting require the segregation of funds by type. All of the funds of the City of Hollister can be divided into three categories: governmental funds, proprietary funds, and fiduciary. The City of Hollister maintains 35 individual governmental funds. In the financial statements for governmental funds, information is presented separately for four major funds: the General Fund, the Housing Successor Agency Fund, the Transportation Development Act Fund, and the CIP Traffic Impact Fees Fund. The City adopts an annual appropriated budget for its General Fund. The City's proprietary funds are comprised of enterprise funds. Enterprise funds report the same functions as business-type activities in the government-wide financial statements. The City also maintains two different types of fiduciary funds. The Private Purpose Trust fund is used to report resources held in trust for the activities of the Oversight Board and the Department of Finance to dissolve the former Redevelopment Agency. Custodial funds report resources held by the City of Hollister in a custodial capacity for individuals, private organizations, and other governments. As previously mentioned, the last financial audit for the City was completed in FY 20-21. The audit highlighted the following fiscal challenges:39 • Financial close— During the audit, it was observed that the processes for closing and financial reporting were ineffective. Approximately 33 journal entries were made after providing the trial balance for the audit. Several funds had recurring negative cash balances and/or fund deficits, leading to multiple audit adjustments. The City lacks adequate controls to ensure accurate closure of accounting records, resulting in financial statements with misstatements that require adjustments. 39 City of Hollister, Schedule of Prior Year Findings. June 30, 2021. Ch. 4 City of Hollister 85 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Grants— The City's grant revenues, expenditures, and receivables are not properly reconciled for financial reporting at year-end. Claims for reimbursement of eligible expenditures are not submitted in a timely manner, causing the general fund to cover these payments upfront. Some reimbursement grant receivables were not recorded. • Notes receivable— The City lacks adequate controls for recording and monitoring notes receivable, leading to several deficiencies. These include inconsistent recording practices and failures in monitoring the accuracy of receivable balances. As a result, significant adjustments totaling $670,288 were proposed to reconcile the notes receivable balance. These adjustments include $245,580 for amortization of a forgiven loan, $335,144 for previously unrecorded interest, and $89,564 to correct deferred inflows related to unavailable revenues. Addressing these issues is crucial to improve financial accuracy and compliance with reporting standards. • Cash and bank reconciliation— Due to personnel turnover, the overall process for cash and investment reconciliations was not being completed properly. Bank reconciliations were not being prepared or reviewed in a timely manner. Untimely preparation and review of bank reconciliations increases the risk that errors could go undetected. Cash and investment balances as presented were not reflective of their true balances. • Schedule of expenditures of federal awards (SEFA)— The initial SEFA provided to the auditors contained numerous errors. The City was not properly reconciling grant receivables, revenues, and expenditures. In addition, amounts initially reported on the SEFA were derived from general ledger details, which do not necessarily equate to allowable costs to be claimed and reported on the SEFA. There were numerous journal entries and adjustments made to ensure amounts reported on the SEFA were accurate. • Financial reporting timeliness— There were various accounting issues, such as personnel turnover and accounting schedules not properly reconciling with the general ledger, which caused delays in completing the 2021 annual audit. • Financial close— During the performance of the FY 20-21 audit, it was noted that processes utilized for closing and financial reporting of financial activity for the fiscal year were not effective. Approximately 25 journal entries were proposed and posted subsequent to providing the trial balance for the audit. • Grants— The City experienced delays in submitting claims for reimbursement of eligible expenditures to the relevant agency. These delays led to future revenues being unavailable during the period of expenditure, forcing the City's general fund to cover the upfront costs. Ch. 4 City of Hollister 86 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Note receivable— During the FY 20-21 audit, the City discovered failure to accrue interest on certain loans, a lack of review for the allowance of uncollectible loans, and the discovery of a loan from a promissory note that was not recorded in the City's general ledger. These deficiencies have been recurring annually, and no recommendations have not been implemented. Ch. 4 City of Hollister 87 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-9: The City of Hollister Financial Summary FY 20-21 the city of hollister budget fy 20-21 Governmental Funds Revenues Taxes $30,519,393 Licenses and permits $10,224,388 Intergovernmental Charges for services $8,867,027 Charges for services $9,365,673 Fines and forfeitures $153,342 Investment earnings (loss) $143,796 Other Revenues $1,265,259 Total revenue $60,538,878 Expenditure General government $8,827,818 Public safety $20,707,358 Public works $4,402,787 Parks and recreation $2,272,005 Capital outlay $7,435,148 Debt Service Principal $179,813 Interest $35,155 Total expenditure $43,860,084 Excess (deficiency) of revenues over expenditures $16,678,794 Other Financing Sources/ (Uses) Transfer in $859,359 Transfer out ($603,297) Total other financing sources (uses) $256,062 Beginning Fund Balance $36,808,504 Ending Fund Balance $53,743,360 Change in Fund Balance $16,934,856 Ch. 4 City of Hollister 88 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Proprietary Funds Operating Revenues Charges for services $33,362,280 Other revenues $17,830 Total operating revenue $33,380,110 Operating Expenses Personnel services $5,511,356 Contractual and professional services $6,660,697 Supplies and opeating costs $9,536,084 Utilities $2,100,870 Depreciation expense $5,149,279 Total operating expense $28,958,286 Operating income (loss) $4,421,824 Nonoperating Revenue (Expenses) Taxes $35,254 Gain on sale of assets $1,995 Investment income (loss) $86,319 Interest expense ($2,025,966) Total nonoperating revenue (expenses) ($1,902,398) Net income (loss) before transfers and capital contributions $2,519,426 Transfers and Capital Contributions Transfer out ($256,062) Capital contributions $2,472,547 Total $2,216,485 Beginning Net Position $81,781,319 Ending Net Position $86,517,230 Changes in Net Position $4,735,911 Typical Monthly Rate for Single Family Residence $80.38 Median Monthly Household Income, 2017-2021 (not in thousands) $87,761 Monthly Wastewater Rates as a % of Household Income 0.09 % Ch. 4 City of Hollister 89 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Recurring operating deficits are a warning sign of fiscal distress. In the short term, reserves can backfill deficits and maintain services. However, ongoing deficits eventually will deplete reserves. According to the FY 20-21 audit: • The City of Hollister's total revenues for governmental activities of $60,538,878 exceeded total expenditures (including capital outlay and debt services) for governmental activities of $43,860,084 by $16,678,794 or 38 percent. • For business-type activities the City's total operating revenue of $33,380,110 exceeded total expenses of $28,958,286 by $4,210,337, or 15 percent. • The City of Hollister's total transfers and capital contributions were $2,216,485 while total non-operating expense were $1,902,398. An agency's "Net Position" represents the amount by which assets (e.g., cash, capital assets, other assets) exceed liabilities (e.g., debts, unfunded pension and OPEB liabilities, other liabilities). A positive Net Position indicates financial soundness over the long term. According to the FY 20-21 audit, the City's total assets exceeded total liabilities, resulting in a positive net position of $172,815,126. This was an increase in net position by $18,821,335 compared to the previous year, when the net position was $153,993,791. All qualified permanent and probationary employees are eligible to participate in the Public Agency Cost-Sharing Multiple-Employer Defined Benefit Pension Plan (Plan) administered by the California Public Employees' Retirement System (CaPERS.) The Plan consists of individual rate plans (benefit tiers) within a safety risk pool (police and fire) and a miscellaneous risk pool (all other). Plan assets may be used to pay benefits for any employer rate plan of the safety and miscellaneous pools. Accordingly, rate plans within the safety or miscellaneous pools are not separate plans under GASB Statement No. 68. Individual employers may sponsor more than one rate plan in the miscellaneous or safety risk pools. The City sponsors nine plans (three miscellaneous and six safety). Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. As of June 30, 2021, the City reported Ch. 4 City of Hollister 90 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final a net pension liability for its proportionate share of the net pension liability of the Plan of $34,061,952. For the year ended June 30, 2021, the City recognized pension expense of $6,589,378.40 The City sponsors and administers a single-employer health care plan for its employees. Medical coverage is provided through CalPERS under the Public Employees' Medical and Hospital Care Act (PEMHCA), also referred to as PERS Health. The City sets its monthly contribution rates for health insurance on behalf of active employees according to the PEMHCA statutory minimum. These amounts are indexed in all future years according to the rate of medical inflation. The excess of the designated City contribution for healthcare over PEMHCA statutory minimum is contributed to a Cafeteria Plan and employees may elect to have some or all of this excess contributed on their behalf to CalPERS as an employee contribution towards healthcare benefits. The City has the authority to establish and amend the plan's benefit terms and financing requirements to the city council. The City makes contributions based on an actuarially determined rate. For the year ended June 30, 2021, the City paid $48,234 on behalf of retirees, and the estimated implicit subsidy was $108,744, for a total contribution of $156,978. For the fiscal year ended June 30, 2021, the City recognized OPEB expense of $407,877.41 Long-term obligations of the City consist of bonds and other liabilities, which are payable from the general, capital projects, and enterprise funds. As of FY 20-21, the City had the following long-term obligations: 42 • California Energy Commission Loan— In February 2012, the City entered into a loan agreement with the California Energy Commission for its energy conservation project. The loan bears interest at 1 percent. Principal payments are due semi-annually beginning on December 22, 2012. • John Deere Equipment Lease— The City entered into three 60-month lease agreements starting in late 2018: a four-wheel drive loader with $3,510 monthly payments at 3.75 percent interest totaling $192,371, a compact track loader with $1,375 monthly payments at 4.75 percent interest totaling $73,572, and a scrap grapple with $1,375 monthly payments at 3.75 percent interest totaling $107,778. As of June 30, 2021, the outstanding 40 City of Hollister, Annual Comprehensive Financial Report. For the year ended June 30, 2021. p.61-67. 41 City of Hollister, Annual Comprehensive Financial Report. For the year ended June 30, 2021. p. 42 City of Hollister, Annual Comprehensive Financial Report. For the year ended June 30, 2021. p. 54-59. Ch. 4 City of Hollister 91 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final lease balance for governmental activities was $98,374, with the leased assets valued at $152,304 and amortization of $20,536 included in the year's depreciation expense. • Fire Trucks Capital Lease— In April 2017, the City entered into a capital lease agreement for four fire trucks. The lease bears interest at 2.848 percent with monthly payments of principal and interest due beginning July 1, 2017. The assets acquired through the capital lease were put into service in 2019 and have been recorded with a net book value of $856,549 as of June 30, 2021, with depreciation expense of $244,728 for the year ended June 30. • 2016 Wastewater Revenue Refunding Bonds— In March 2016, the Hollister Joint Powers Financing Authority issued $67,975,000 in bonds to refinance existing debt and establish reserves, funded by a lien on the City's wastewater system revenues. The issuance aimed to achieve substantial savings, with projected net present value savings of approximately $0.7 million, equivalent to over 12 percent of the refunded bonds' value, after accounting for issuance costs. Annual debt service savings were expected to exceed $1 million. Interest payments on the bonds are due semi-annually, beginning December 1, 2016, with interest rates ranging from 2 to 5 percent. The City approved a 50-year cell tower lease agreement with Crown Castle USA Inc. on June 30, 2019. As part of the agreement, the City received an up-front payment of $1,400,000. After deducting professional services expenses, the City initially received $1,316,000 in net revenue. From 2022 to 2071, the City is scheduled to receive a total of $1,263,360 in revenue. This revenue is amortized as periodic payments over the remaining term of the lease agreement. In 2016, the City of Hollister engaged Raftelis Financial Consultants to prepare a financial plan and rate study for its wastewater enterprise. Prior to this, the City last updated its rates with a significant increase in 2011. In April 2016, the City refinanced its wastewater bonds, which resulted in annual debt savings. Due to this refinance, the City's annual wastewater expenses were reduced. The City conducted the Study to determine if this reduction could lead to a rate reduction for ratepayers. The financial plan involved a revenue adjustment that resulted in a 5 percent reduction in total revenue. However, the Study also involved a new Cost of Service (COS) analysis which Ch. 4 City of Hollister 92 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final involves reallocating costs proportionally to the customer classes. Consequently, the 5 percent revenue reduction does not correspond to a 5 percent rate reduction across the board. In 2017, the City Council approved the newly proposed rate structure to take effect in 2018. Figure 4-11 illustrates the City's wastewater rate structure. The City's residential classes are Single Family, Multi-Family, and Mobile Home, which pay a monthly fixed charge based on the class type. The City's non-residential classes are Low Strength, Moderate Strength, and School. Low Strength and Moderate Strength pay fixed and quantity charges for every hundred cubic feet (hcf) of water they use. The school customer class pays a fixed charge based on the number of students in the school (student population is utilized as a proxy for flow). The City also charges per gallon for septage dumping services at the treatment plant. Ch. 4 City of Hollister 93 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-10: The City of Hollister Sewer Rate Structure the city of hollister sewer rate structure Prior 2018 Effective January 2018 Qty Charge Customer Class Fixed Charge Current Rate Fixed Charge ($/hcf) Single Family $86.32 $80.38 Multi Family $75.25 $70.07 Mobile Home $52.80 $49.17 Low Strength $40.62 $46.23 $8.70 Moderate Strength $75.46 $94.81 $10.23 Schools $3.14 * $1.73* Septage Customers $0.23 ** $0.26** *Rate per student *Monthly rate per student **Rate per Gallon **Rate per Gallon Water recycling is offered through a cooperative effort between the City and the San Benito County Water District (SBCWD). Recycled water has been provided by the City of Hollister for landscape irrigation since 2010. The system was expanded in 2014, including infrastructure and treatment capability to improve water quality for agricultural irrigation. The system was further enhanced in 2015 when the District installed 1.65 miles of additional distribution system piping and 30 metered deliveries to provide water for agricultural customers for approximately $1,000,000. In 2016, a Recycled Water Storage Pond was installed in "Pond 2" at the Domestic Wastewater Treatment Plant (DWTP) to improve distribution system water quality and to store surplus supply during high agricultural demand periods when the DWTP is not producing enough recycled water. In 2019, the District installed a series of sand media filters upstream of the Recycled Water Distribution System to enhance water quality and enable agricultural customers to utilize drip irrigation, thereby minimizing backwash waste. According to the 2020 Agricultural Water Management Plan, recycled water is provided to approximately 865 acres for agricultural production and landscape irrigation.43 43 San Benito County Water District, 2020 Agriculture Water Management Plan. September 2021. p.20. Ch. 4 City of Hollister 94 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The Domestic WWTP treats domestic, commercial, and industrial wastewater in the City of Hollister and produces Title 22 reclaimed water for park irrigation, agricultural use, airport greenery, and groundwater recharge. The City of Hollister owns the Domestic Wastewater Treatment Plant (DWTP) and provides wastewater collection and treatment services for the entire City. The City services approximately 13,000 residential sewer accounts and 350 commercial accounts. The Hollister Wastewater Treatment Division also owns the Industrial Wastewater Treatment Plant (IWTP), which is leased to San Benito Foods - Neil Jones Foods Company and operated by the Sunnyslope County Water District. From July through September, San Benito Foods operates its tomato canning facility in Hollister and discharges the industrial wastewater from the canning process to the IWTP. Additionally, the IWTP handles a portion of the City's stormwater runoff. The City of Hollister provides additional wastewater treatment capacity in contract with the Sunnyslope County Water District as "an alternative to, or substitute for," the wastewater services already being provided by the District. On September 7, 2021, the City of Hollister and San Juan Bautista (SJB) entered into a memorandum of understanding (MOU) for SJB to send domestic wastewater to the City. This is due to high salt levels being discharged into the creek by the SJB's wastewater treatment plant, exceeding the National Pollution Discharge Elimination System (NPDES) permit levels, resulting in an NPDES permit violation. Additionally, the City also entered into a Wastewater Treatment Services Agreement with the Sunnyslope County Water District (SSWCD) for the conveyance of wastewater from Gavilan College, Cielo Vista, Fairview Corners, and Lands of Lee projects to Hollister's treatment and disposal facilities. All four areas are located in unincorporated San Benito Ch. 4 City of Hollister 95 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final County and fall within SSCWD's boundaries. The affected area is composed of 82 parcels consisting of approximately 220.08 acres. Properties in the Cielo Vista Subdivision are in the City's SOI. While properties in the Gavilan College, Fairview Corners, and Lands of Lee projects are not in the City's SOI. Cielo Vista requested an emergency out-of-jurisdiction service connection due to the failure of its existing facilities. While the other subject areas requested out-of-jurisdiction service connection to the City for proposed developments. The agreement requires that Sunnyslope County Water District construct, operate, and maintain the system for the collection from only those parcels identified, to the connection to the City's existing wastewater system. The City of Hollister submitted an application to San Benito LAFCO for this out-of-agency services agreement. Although the Sunnyslope County Water District's contract with the City of Hollister does not trigger approval from LAFCO per the exception outlined in Government Code section 56133(e)(1), agencies are required to apply to LAFCO for a determination that the action is exempt. LAFCO staff reviewed the documentation provided by the City of Hollister and concluded that the proposal supports a finding that it meets the criteria for an exemption from Commission approval as set forth in Government Code Section 56133(e)(1). The new sewer connection from Cielo Vista to the City of Hollister wastewater collection system has been completed, and wastewater from Cielo Vista is currently running to the City of Hollister wastewater treatment plant. The City of Hollister contracts with Sunnyslope County Water District, authorizing the District to collect service charges and related fees from customers on behalf of the City for wastewater collection and treatment services. Additionally, the City contracts with Veolia Water West Operating Services, Inc. for operations and maintenance services of the City's Domestic WWTP beginning August 2, 2010.44 The agreement was amended on December 10, 2018, to address the scope of work, fee for services, responsibility for repairs, and term. Scope items included: • Removing and reinstalling pond surface aerators. • Managing field activities of the pond sludge removal sub-contractor (Synagro). 44 Resolution 2010-108 on August 2, 2010. Ch. 4 City of Hollister 96 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Removing liquid sludge from ponds. • Disposing of dewatered sludge. The contract was last amended in August 2024 for an 18-month extension. Veolia prepares an annual Discharge Self-monitoring Report (DSMR), with the most recent report submitted to the California Regional Water Quality Control Board (RWQCB) on January 30, 2023. 45 There are no overlapping service providers within the City of Hollister service area. There are two areas outside the City limits from which the City has agreements to receive wastewater flow. These include the communities of San Juan Bautista and San Juan Oaks. Hollister has lawfully provided extended sewer service outside its jurisdictional boundaries since about 1996 to 3061 Southside Road. Government Code section 56133(e)(4) provides that no LAFCO approval is necessary for a city to provide out-of-jurisdiction service if such service is an extended service that a city or district was providing on or before January 1, 2001. In addition, there are areas outside the City limits from which the City receives wastewater flow. These areas include a small housing development, the County public works/planning facility, and the labor camp located south of the City near Hospital Road and Southside Road.46 Furthermore, the City has reported that out-of-jurisdiction services are provided to the following areas: • Sunnyside Estates • Bennet Ranch • Santana Ranch • Riverview II • A series of homes off of San Juan Hollister Road • A series of homes off of Los Altos Drive • 930 Hillcrest Road (recently approved for connection by the City, one home, application not submitted to LAFCO for approval yet) 45 Veolia Water Monitoring and Reporting Annual Report. 01/30/2023. 46 City of Hollister Sewer System Management Plan – Revision 02, September 2022, p. 0-2. Ch. 4 City of Hollister 97 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Sunnyslope Cristian Center (approved for connection, unclear whether it has been successfully connected to the City services). The City also approved to connect a new auditorium/congregation hall that is being constructed in the rear of the property. There are no unserved areas within the City of Hollister's boundaries. The MOUs between the City of Hollister, San Benito County Water District (SBCWD), and Sunnyslope County Water District (SSCWD) govern the collection, treatment, and disposal of wastewater and recycled water.47 As of 2022, the City has seven staff members for the operation and maintenance of the sewer system. A Senior Maintenance Worker directs and supervises maintenance staff for most sewer-related operations and maintenance activities. A Utilities Supervisor oversees rehabilitation and replacement projects conducted on City sewer assets. According to the 2022 SSMP, the City plans to assess current staffing levels and determine if current levels are adequate to accomplish the goals set by the City for the operation and maintenance of the system. 48 The City Council makes sewer-related policy decisions related to the City's sanitary sewer system with advice from the General Manager, Public Works Director, and City Engineer. The City Engineer directs the implementation of design and performance provisions and assists the Utilities Manager with implementing system evaluation and the Capacity Assurance Plan. The organization chart is shown in Figure 4-11.49 47 Hollister Urban Area UWMP 2020, p.7-1. 48 The City of Hollister, Sanitary Sewer Management Plan (SSMP). November 13, 2023. p. 2-3 to 2-7. 49 The City of Hollister, Sanitary Sewer Management Plan (SSMP). November 13, 2023. p.4-11. Ch. 4 City of Hollister 98 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 4-11: Organizational Chart, Utilities Department 2024 Ch. 4 City of Hollister 99 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City owns and maintains approximately 108 miles of wastewater collection, interceptor, and force main lines, including six lift stations with corresponding force mains. The system includes lines with diameters ranging from 4 inches to 36 inches. Additionally, the City operates and maintains a combined storm and sewer line. Figure 4-12 shows an inventory of wastewater conveyance pipelines. Figure 4-12: Existing Pipeline Inventory by diameter length diameter (inches) feet miles 4 596 0.11 6 135,416 25.65 8 314,345 59.54 10 33,616 6.37 12 21,200 4.02 14 2,790 0.53 15 26,199 4.96 18 11,443 2.17 21 5,919 1.12 24 3,301 0.63 27 2,596 0.49 30 5,468 1.04 36 8,973 1.70 Total 571,864 108.31 The City's Preventive Maintenance Program includes CCTV inspection, cleaning, visual manhole inspection, lift station maintenance, and FOG (Fats, Oils, and Grease) control. The City will review these operation and maintenance practices annually and compare them with annual sanitary sewer overflows (SSO) records. According to the SSMP, a summary of corrective actions for operations and maintenance is developed to reduce the causes of SSOs occurring in the associated calendar year. Operation and Maintenance activities are tracked in the City's work history logs. The results of routine maintenance will be tracked and assessed annually. Ch. 4 City of Hollister 100 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City cleans this combined line every October to prepare for the transition from conveying wastewater to conveying stormwater. This process removes any residual wastewater from parts of the stormwater system that may flow into outfalls entering the San Benito River. The line is also cleaned before canning season to ensure that it is free of any residual debris that may impact sewer line performance. Manhole inspections are also conducted during annual cleaning. Line cleaning and manhole observations are logged on the line cleaning-manhole inspection log.50 The City of Hollister owns an immersed membrane bioreactor (MBR) DWTP situated west of downtown, along the Highway 156 bypass, near the San Benito River. The Domestic WWTP has a permitted capacity of 4.03 mgd. The IWTP is designed to treat high-strength organic loading from canneries; the facility treats cannery wastewater and stormwater. The permitted capacity of the IWTP varies by season: 0.18 mgd of DWTP diversion during canning season, 1.52 mgd of DWTP diversion during non- canning season, and 3.5 mgd of cannery wastewater flow during canning season. The effluent is treated and discharged to evaporation/percolation ponds covering approximately 39 acres. Operation and Maintenance manual and project program policies, including contingency plans review and updates for the DWTP, were completed in December 2022. A total of 1350 preventive maintenance work orders and 129 corrective work orders were completed in 2022. The City reports that there are no significant system failures at the DWTP. However, a capacity study is planned to identify any necessary upgrades. Minor updates, including the replacement of aging pumps and the upgrade of treatment train air compressors, are planned. While current priority projects involve replacing deteriorating manholes upstream from the treatment plant and upgrading two sewer lift stations in the collection system. Although not an immediate need, an increase in demand resulting from growth and various out-of-area connections may necessitate an expansion of the wastewater treatment plant's 50 City of Hollister, Sewer System Management Plan – Revision 02 Element 4 – Operation and Maintenance Program. September 2022. Ch. 4 City of Hollister 101 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final capacity. The City plans to increase the capacity of its treatment plant by installing upgrades to the MBR system, scheduled to commence on July 8th. These upgrades are expected to alleviate the current bottleneck in the treatment process and increase the plant's technical capacity from 4 to approximately 6.8 mgd. However, before fully utilizing this increased capacity, the City must seek approval from the water board and conduct a capacity study to identify any potential bottlenecks beyond the MBR upgrades. Crossing the five mgd threshold triggers additional requirements from the water board, including the development of an industrial pre-treatment program. Initially, an administrative approval from the water board may be sufficient for capacity increases of up to 5 mgd; however, further expansions require a formal application process.51 As mentioned previously, the City of Hollister relies on Sunnyslope County Water District to collect service charges and fees from customers for wastewater services. Additionally, the City collaborates with the San Benito County Water District to facilitate water recycling efforts. The City has not identified any resource-sharing opportunities. The City faces challenges in disposing of treated water and sludge. Currently, recycled water is supplied to the San Benito County Water District, with a small portion used for park irrigation. Disposing of sludge involves running it through a belt filter press and sending it to a landfill; however, landfilling organic materials is a concern. The immediate challenge is designing a process to further treat sludge into Class A biosolids for land application, reducing environmental impact, and promoting reuse as fertilizer. 51 City of Hollister MSR Interview, May 2024. Ch. 4 City of Hollister 102 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final As of 2024, the City estimates an average daily flow of 2.6 to 2.8 mgd from Hollister residents. In 2022, an annual total of 251.35 million gallon (mg) of the treated effluent was beneficially reused at the City's recycled water application sites, San Benito County Water District, and Brigantino Park. The remaining tertiary treated water, 693.11 mg, was disposed into the percolation ponds.52 As mentioned previously, the City of San Juan Bautista will begin sending domestic wastewater to Hollister. According to the agreement for waste disposal with the City of San Juan Bautista, the maximum domestic wastewater volume conveyed by SJB to Hollister will be limited to approximately 800 gallons per minute (gpm) and 1.2 mgd, but not more than 0.43 mgd as a yearly average.53 However, currently SJB's flow is approximately .15 to .20 mgd. The allocated capacity is inflated due to infiltration and inflow from stormwater that SJB experiences. Furthermore, the combined flow from Gavilan College, Cielo Vista, and Fairview Corners is estimated to be approximately 200,000 gallons per day (gpd), while the projected flow from the Lands of Lee projects remains unknown as construction has not commenced. Additionally, there is 500,000 gpd dedicated to San Juan Oaks as per the out-of-area agreement. This section reviews indicators of wastewater service adequacy, including collection system integrity and regulatory compliance. Whenever available, industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. 52 Veolia Water, 2022 Annual Discharge Self-Monitoring Report, p.1. 53 Agreement for Domestic Wastewater Treatment and Disposal. The City of Hollister and City of San Juan Bautista, June 20, 2023. Ch. 4 City of Hollister 103 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final There are several measures of the integrity of the wastewater collection system, including sanitary sewer overflows, peaking factors resulting from infiltration and inflow (I/I), and efforts to address infiltration and inflow. All wastewater agencies are required to report sanitary sewer overflows (SSOs) to the SWRCB. Sewer overflows are discharges from sewer pipes, pumps, and manholes. Overflows reflect the capacity and condition of the collection system piping and the effectiveness of routine maintenance. The sewer overflow rate is calculated as the number of overflows per 100 miles of the main pipeline per year. Over the last five complete years (2018-2023), there have been 27 SSO events in all categories. The total volume of spills is 35,614 gallons, of which 35,100 gallons, or 98 percent, were recovered. The most recent SSO events reported occurred in June and July 2023 due to a system failure at the gravity mainline and manhole, which was subsequently fully recovered.54 Wastewater flow includes not only discharges from residences, businesses, institutions, and industrial establishments but also infiltration and inflow. Infiltration refers to groundwater that seeps into sewer pipes through cracks, pipe joints, and other system leaks. Inflow refers to rainwater that enters the sewer system from sources such as yard and patio drains, roof gutter downspouts, uncapped cleanouts, pond or pool overflow drains, footing drains, cross-connections with storm drains, and even holes in manhole covers. Infiltration and inflow tend to affect older sewer systems to a greater degree. Infiltration and inflow rates are highest during or right after heavy rain. They are the primary factors driving peak flows through the wastewater system and a major consideration in capacity planning and costs. The peaking factor is the ratio of peak day wet weather flows to average dry weather flows. The peaking factor is an indicator of the degree to which the system suffers from I/I, where rainwater enters the sewer system through cracks, manholes, or other means. A peaking factor of up to three is generally considered acceptable based on industry practices. 54 California Integrated Water Quality System Project (CIWQS), Spill Public Report – Summary Page. Ch. 4 City of Hollister 104 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The RWQCB enforces the Clean Water Act, permit conditions, and other requirements of wastewater providers. Violations of State requirements for wastewater providers and treatment facilities are recorded by the SWRCB. The Board may levy fines or order the provider to take specific actions to comply with water quality regulations. The City of Hollister's wastewater system was previously regulated under Order R3-2008- 0069 until September 25, 2020, when the Central Coast Water Board adopted General Waste Discharge Requirements Order R3-2020-0020. This change followed a Central Coast Water Board meeting in June 2021, during which several individual permits, including the City's, were terminated due to their transition to the new general order. Additionally, a new monitoring and reporting program (R3-2023-0067) was issued on October 24, 2023, modifying requirements for the Hollister Domestic Wastewater Recycling Facility. 55 According to the SWRCB's website, there have been no enforcement actions against Hollister's Domestic WWTP or Industrial WWTP since 2009 and 2006, respectively. From 2019 to 2023, Hollister's Domestic WWTP had seven violations, primarily due to exceeding the 150 mg/L annual average Chloride limit. In 2021, sodium levels also exceeded the 200 mg/L limit. The most recent violation in 2023 involved Chloride levels of 223 mg/L, above the 150 mg/L annual average limit. Additionally, a 2020 violation for failing to sample for coliform was addressed with a new coliform tracking procedure. Alternately, Hollister's Industrial WWTP had 35 violations from 2018-2022, with the last violation reported in 2020. Key issues included exceeding Sodium and Total Dissolved Solids (TDS) limits, with reported values often surpassing the set thresholds. For instance, in 2020, Sodium and TDS levels were 333 mg/L and 1488 mg/L, respectively, exceeding their respective limits of 250 mg/L and 1415 mg/L. Misreporting of Nitrate values and several instances of high pH levels were also noted. Significant groundwater contamination violations occurred, with downgradient concentrations of Chloride, Sodium, and Total Dissolved Solids showing substantial increases compared to upgradient levels. 55 MRP R3-2023-0067 Hollister Domestic Wastewater Recycling Facility, October 24, 2023. Ch. 4 City of Hollister 105 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final One of the issues specific identified to Hollister is that throughout the City's planning documents, the Hollister Urban Area (HUA) and Hollister Urban Service Area (USA) are seemingly used interchangeably. According to GC 56080, urban service areas are defined as developed, undeveloped, or agricultural land, either incorporated or unincorporated, within the sphere of influence of a city, which is served by urban facilities, utilities, and services or which are proposed to be served by urban facilities, utilities, and services during the first five years of an adopted capital improvement program of the City if the City adopts that type of program for those facilities, utilities, and services. The San Benito LAFCO policies also state that Cities and those special districts providing municipal services are encouraged to establish urban service areas within their spheres of influence. However, LAFCO policies do not provide a clear definition of a USA. Alternately, the Hollister Urban Area is an approximately 20 square mile area comprising all of the incorporated and some unincorporated county lands surrounding the City of Hollister. The HUA area seems to be utilized as a planning tool and has been used in the Hollister Urban Water Management Plan (UWMP) and the Water and Wastewater Master Plan. In addition to the City documents using the USA and HUA interchangeably, another issue identified is that Hollister's current USA does not meet the LAFCO definition of USA. As mentioned, LAFCO requires an urban service area to be within a City's SOI; however, Hollister's USA extends beyond the City's SOI. Overall, there is a need to differentiate between HUA and USA within the City's various planning documents. It is recommended that the City evaluates the function of the Hollister Urban Area (HUA). The HUA serves as a planning tool for wastewater and water services within the City of Hollister and its surrounding areas. However, it appears to be used interchangeably with the Urban Service Area (USA), which as discussed previously was eliminated by the San Benito LAFCO in 2003. Ch. 4 City of Hollister 106 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Therefore, if stakeholders choose to retain the HUA as a planning tool, it should be redefined to avoid confusion. Alternatively, the City could eliminate the HUA and focus on the Sphere of Influence (SOI) as the primary planning area. These options will necessitate a comprehensive update of the City's documents to ensure consistent definitions and uses of the Hollister Urban Area. It is also recommended that the City review and update all relevant documents to ensure that the use of USA is retired, in accordance with San Benito LAFCO's Resolution No 2003-02. These steps will address the interchangeable use of the HUA with Hollister's USA and provide clarity to the public and City staff.Option 2a: City-initiated update to Hollister's USA As mentioned, the existing Hollister Urban Service Area (USA) does not meet the LAFCO definition as it relates to the City's SOI, as the USA extends beyond the City's SOI. The first option is for the City to prepare an updated and well-designed urban service area that meets the CKH policies can be prepared by the City and can be presented to LAFCO for approval. It is important to note that as part of growth management actions in Hollister, the City's 2040 Draft General Plan suggests evaluating the function of the Hollister Urban Service Area and determining whether this boundary can be retired or needs to be updated. Therefore, this option can be considered as part of Hollister's evaluation of the USA. Another option is for the commission to initiate updates to the City of Hollister's SOI to include the entire Hollister Urban Service Area boundary excluding the Sunnyslope County Water District service area. This option would also address the inconsistency of the Hollister USA with the CKH policies by extending the City's SOI to match the USA boundary. If this option is considered, the Commission would need to coordinate closely with the City for those areas outside the City's General Plan boundary and ensure the City will require pre-annexation agreements from all landowners who seek city sewer connection. LAFCO's role if this option is considered is to approve or modify the City of Hollister sphere of influence amendment as directed by the Commission. It is important to note that this option may lead to urban sprawl. Ch. 4 City of Hollister 107 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final A comprehensive update of LAFCo policies is recommended to clearly define the Urban Service Area. This can create a more defined process for out-of-area service applications. It will also protect against urban sprawl. This update to LAFCO's definition of USA will prompt updates to the City's several planning documents. Hollister also has several out-of-area connections for wastewater services, which could raise concerns about a potential decline in the quality of services provided to the City's residents as the City's wastewater capacity approaches or exceeds its maximum limit. This situation may also create the perception that out-of-area residents are benefiting from the resources or systems that Hollister residents have invested in.Hollister also has several out-of-area connections for wastewater services that create contention due to concerns about a possible downturn in the quality of services provided to the City's residents due to the City's wastewater capacity reaching or exceeding the maximum capacity. It also creates a possible perception that Hollister residents are paying for capital improvements while out-of-area residents receive services. In some instances, the extension of services outside of an agency's jurisdictional boundary in lieu of annexing the territory to the agency, including island areas, can create disorderly service areas. This can lead to jurisdictions with overlapping service areas, causing duplicative services and conflict between agencies. In addition, an extension of services outside an agency's boundaries may exacerbate urban sprawl, which is under LAFCo's authority to manage. It also creates unpredictability in the development process and prevents appropriate long-term planning for both development and related capital needs. Private landowners make significant decisions about a property based on established norms and laws, and when these laws are not implemented equally throughout the community, county, or state, the resulting uncertainty can be challenging. Development interests are also denied the predictability and certainty of the consistent implementation of local land use laws and the carefully planned and financed local infrastructure plans. Ch. 4 City of Hollister 108 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The Commission can give direction to work with the City and other agencies to establish a regional Sanitary District that incorporates all the agencies included in HUA and all extra- territorial areas currently receiving services within the regional sanitary district boundary, and establish a sphere of influence for areas considered for future service. This option also can include the City of San Juan Bautista since a Hollister Sanitary Sewer Force project is underway for SJB to convey the City's wastewater to the Hollister Domestic WWTP. This option has several benefits including: • Improve efficiencies across agencies by consolidating services through eliminating duplicate functions and achieving economies of scale. • Improve consistency of service levels across agencies within the region. • Incorporates all extra-territorial connections into the boundaries, eliminating disenfranchisement. Due to the various agencies that would be involved in establishing a regional district, this option would require substantial time and coordination to get the consensus of all affected agencies. The reorganization will not be effective nor beneficial if only a few potentially affected agencies choose to participate. Which agencies are deemed affected will depend on the reorganization format. For example, if the intent is to address the various out-of-area connections to Hollister, then areas immediately adjacent to the City or agencies within the HUA would be affected. Consensus among multiple agencies regarding such a significant change would likely take substantial time and effort to achieve and will likely be the primary challenge to moving forward. Reorganization is also likely to take a long time, as the process will require a detailed study with a plan for services, applications, environmental studies, and approvals. Another challenge would be identifying whether member agencies can retain local control if a separate regional governing body is formed. Generally, local governing bodies have a more immediate connection with customers and are attuned to the needs of the agency and its operations; however, multiple, overlapping governing bodies may be duplicative, inefficient, and counterproductive to the goals of reorganization. The governance structure of the new agency will need to be determined by the affected agencies when defining the desired format of the new agency and striving to maintain a desirable level of local control. Similarly, the transfer of ownership of assets will be challenging. Ch. 4 City of Hollister 109 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final This option could also be growth-inducing, as a larger SOI for wastewater services in the region will allow for construction and new developments. Increases in population may strain existing community service facilities, necessitating the construction of new facilities that could have significant environmental impacts. Accordingly, per CEQA requirements, an EIR may be needed to evaluate the growth-inducing impacts of a proposed project. Another alternative option to a regional organization is the formation of a subsidiary district. The procedures for the establishment of a subsidiary district were established by the legislature in 1965 by the adoption of the District Reorganization Act of 1965, effective September 17, 1965 (Stats 1965 ch 2043 §§ 2), which added Government Code sections 56073, 56401, and 56405. For purposes of the current version of the Act, the term "subsidiary district" is a district in which a city council is designated as, and empowered to act as, the ex officio board of directors of the district. (§ 56078.) A subsidiary district is a district of limited powers for which a city council is designated as the ex officio board of directors of the district. At least 70 percent of the district's land area and number of registered voters must be within the city limits for a district to become a subsidiary district. Establishing a subsidiary district would address Hollister's several out-of-agency connections that are immediate to the City. Although this option extends beyond the City's boundary, it would not encompass all existing out-of-area connections, such as the San Juan Bautista (SJB), due to the requirements of a subsidiary district to have 70 percent of the district's land area and number of registered voters within the city limits. However, SJB and any other agencies receiving out-of-area services from Hollister that cannot be part of the subsidiary district can contract with the district for continued services. Forming a subsidiary district will also require the willingness of the City of Hollister as the affected territory. However, a subsidiary district allows the City to retain local control, which may make it easier to reach consensus. This option also enables proposed developments within the district to connect to the existing facility. However, it is essential to note that Hollister's City Council, being a decision-maker for many issues as a governing body for the Subsidiary District, could result in a political contention between the City and the County. If this option is selected, it is recommended that the District ensure that new customers pay their fair share. It is also recommended that any rate for service arrangements with out-of-area services is communicated to Hollister's residents to avoid confusion and increase transparency. Ch. 4 City of Hollister 110 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City of Hollister and San Benito County have been challenged to reach an agreement regarding wastewater services for potential development adjacent to or surrounding the City. As a result, the County has been unable to approve new developments as there won't be adequate wastewater facilities for the newly approved developments as outlined in the San Benito General Plan as follows: • PFS-5.4 Developer Requirements: The County shall require that the new development meet all County requirements for adequate wastewater collection, treatment, and disposal prior to project approval. The County or San Benito County Water District buys part of Hollister's wastewater capacity to provide services to new developments near Hollister. This option would allow the County to approve new developments without concern about available wastewater services. The option could also address the various out-of-area connections that the City of Hollister currently has by putting it under the County's jurisdiction. Another benefit is this option can bring in additional revenue sources for Hollister while ensuring new customers outside of the City are "paying their fair share." An increase in new developments can potentially be growth-inducing if no constraints are placed. Accordingly, per CEQA requirements, an EIR may be needed to evaluate the growth- inducing impacts of a proposed project. Another challenge is this optionThis option is also dependent on Hollister's available wastewater capacity. It is important to note that the City of Hollister's Domestic WWTP currently accommodates several out of -of-area connections, and as such, available capacity must may be consideredlimited. Therefore, if this option is considered, a wastewater capacity maximum canwill need to set be set for the County's operation as part of the agreement. This will ensure that the County's buy-in will not impact the City's residents and/or existing customers. It will also guide the County in approving new developments, considering the available capacity. A significant challenge in implementing this option is the County is unlikely to support this option due to feasibility concerns. Ch. 4 City of Hollister 111 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The San Benito County Water District (SBCWD) activates wastewater services latent power and contracts with the City for services in unincorporated areas. Must apply to LAFCO to begin providing sewer services per California Water Code Division 12 Part 5 Chapter 1 Article 6 Section 31100: a district may acquire, construct, and operate facilities for the collection, treatment, and disposal of sewage, waste, and stormwater of the district and its inhabitants and may contract with any public agency including but not limited to sanitation districts for sewer outfall facilities. This option would require SBCWD's willingness to activate its latent power to provide wastewater services. Another challenge with this option is that if significant protests are received, it may require the SBCWD to obtain approval from its voters or property owners. If the new service requires new revenues from special taxes or benefit assessments, the district must also get those approvals from voters or property owners. If SBCWD is unable or unwilling to activate its latent powers to provide wastewater services, the County must find other means to provide services, such as forming a regional wastewater County Service Area (CSA), because the County itself is not a service provider. Ch. 4 City of Hollister 112 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 4-1: According to the 2022 Census, the City of Hollister is estimated to have a total population of 44,218. The California Department of Finance (DOF) reports a slightly lower population of 42,631 for 2022 and 42,891 for 2023. This indicates a roughly 23 percent increase and a 1.6 percent Average Annual Growth Rate (AAGR) since 2010, when the population was 34,928. 4-2: According to the Department of Finance (DOF), countywide growth projections for San Benito County are expected to see an approximately 0.47 percent average annual growth rate (AAGR) from 2020 (64,432) through 2060 (77,666). Utilizing the County's AAGR and Hollister's 2023 population estimates, the population within the City is anticipated to increase to approximately 50,981 by 2060. 4-3: The statewide MHI for 2017-2021, according to Census Bureau data, is estimated at $84,097; hence, the calculated threshold of $67,277 defines whether a community is identified as disadvantaged. Therefore, with a median income of $87,761, the City of Hollister is not considered a disadvantaged community. 4-4: The City of Hollister owns a Domestic Wastewater Treatment Plant (DWWTP) that provides wastewater collection and treatment services for the entire City. The collection system includes approximately 108 miles of wastewater collection, interceptor, and force main lines, as well as six lift stations with corresponding force mains. The City also owns the Industrial Wastewater Treatment Plant (IWTP), which primarily treats wastewater from the local tomato cannery and collects a portion of the City's stormwater runoff. 4-5: Currently, the DWTP is functioning without significant system failures, but a capacity study is planned to assess potential upgrades. Minor updates, such as replacing aging pumps and upgrading treatment train air compressors, are scheduled in the upcoming fiscal year. Priority projects include replacing deteriorating manholes upstream and upgrading two sewer lift stations in the collection system. 4-6: Additionally, the City plans to enhance the DWTP capacity by upgrading the MBR system, beginning in July 2024. These upgrades aim to resolve current process bottlenecks and increase the plant's technical capacity from 4.03 MGD to approximately 6.8 MGD. However, before fully utilizing this increased capacity, the City must secure approval from the water board and conduct a capacity study to identify any potential bottlenecks beyond the MBR upgrades. Ch. 4 City of Hollister 113 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 4-7: Currently, the City receives an average daily flow of 2.6 to 2.8 MGD from Hollister residents. The City also has several current and planned out-of-area connections with flows ranging from .2mgd to 1.2 MGD. 4-8: According to the RWQCB's website, there were zero enforcement actions for both Hollister's DWTP and IWTP since 2009 and 2006, respectively. 4-9: From 2019 to 2023, Hollister's DWTP had seven violations for exceeding Chloride and sodium limits, including a 2023 violation for high Chloride levels and a 2020 issue with coliform sampling. While Hollister's IWTP has 35 violations from 2018 to 2022, primarily due to exceeding Sodium and Total Dissolved Solids (TDS) limits, misreporting Nitrate values, high pH levels, and significant groundwater contamination issues. 4-10: Over the last five complete years (2018-2023), there have been 27 SSO events in all categories. The total volume of spills is 35,614 gallons, of which 35,100 gallons, or 98 percent, were recovered. The most recent SSO events reported occurred in June and July 2023, resulting from a system failure at the gravity mainline and manhole, which was subsequently fully recovered. 4-11: Overall, the City has the financial ability to continue providing services. However, the last completed audit in FY 20-21 highlighted several financial management issues, including ineffective financial closing and reporting processes, improper reconciliation of grant revenues and expenditures, and inadequate controls over notes receivable and cash reconciliations. These issues resulted in numerous journal entries, significant adjustments, and misstatements in financial statements. Additionally, delays in submitting reimbursement claims forced the general fund to cover costs upfront, and errors in the Schedule of Expenditures of Federal Awards (SEFA) further underscored the need for improved financial accuracy and compliance. 4-12: The City of Hollister collaborates with the San Benito County Water District (SBCWD) to provide recycled water to the region. Surface water imported from the Central Valley Project (CVP) is treated to drinking water standards. Once the water is used by residents and businesses, the resulting wastewater is sent to the City of Hollister's Reclamation facility, where it is treated and used for agriculture and/or landscape irrigation. 4-13: The City of Hollister contracts with Sunnyslope County Water District (SSCWD) for the District to collect service charges and related fees from customers on behalf of the City for wastewater collection and treatment services. 4-14: The MOUs between the City of Hollister, San Benito County Water District (SBCWD), and Sunnyslope County Water District (SSCWD) govern the collection, treatment, and disposal of wastewater as well as the provision of recycled water services. Ch. 4 City of Hollister 114 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 4-15: The City's website is easily navigated and provides a substantial amount of clear and concise information and documentation for residents. However, the most recent audited financial statements, Annual Compensation Reports, and the State Controller's Office Financial Transaction Reports are unavailable on the City's website as required. It is recommended that the City add these reports to its website in an easily accessible location. 4-16: It is recommended that the City make complete and up-to-date ethics training and Form 700s for each required staff member readily available on the City's website. 4-17: The City of Hollister demonstrated transparency when sharing information to create this report. 4-18: Various governance structure options were identified for the City including — clearly defining or retiring the Hollister Urban Area (HUA), eliminating the Hollister Urban Service Area (USA) in accordance with San Benito LAFCO's elimination of the City's USA in 2003, establishing a regional or subsidiary district, and the County buying part of the City's wastewater capacity. 4-19: It is recommended that the City ensure proper long-term wastewater planning occurs following the adoption of the 2040 general plan update to manage future capacity needs, ensure efficient resource allocation, and support sustainable development. Additionally, as part of any reorganization process related to the governance options outlined, it is recommended that fees be established to account for future capacity needs. Ch. 4 City of Hollister 115 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City of San Juan Bautista (SJB) is located in the northwest portion of San Benito County, near the Monterey County and Santa Clara County borders. The City is approximately 8 miles west of Hollister, 11 miles south of Gilroy, and 13 miles southeast of Watsonville. It was originally inhabited by the Mutsun people of the Ohlone Nation and became a significant Spanish colonial site with the founding of Mission San Juan Bautista in 1797. This mission, the 15th in California's mission chain, catalyzed settlement in the area. The City, which originated around the Mission, was established in 1869. San Juan Bautista is home to seven national historic landmarks, boasting the highest number of registered landmarks in the County..56 San Juan Bautista is one of two incorporated cities in San Benito County and plays a significant role in much of the County's agriculture industry. The City's major operations include public safety, highways and streets, sewer and water, parks and recreation, building inspection, public improvements, planning and zoning, and general administrative services. The City's major operations include public safety, highways and streets, sewer and water, parks and recreation, building inspection, public improvements, planning and zoning, and general administrative services. Although the City is multi-service provider, this review is specific to wastewater services. The City of San Juan Bautista was last included in a San Benito LAFCO Countywide Municipal Services Review in 2007. The City of San Juan Bautista covers an area of approximately 0.79 square miles or 505.6 acres. 56 The City of San Juan Bautista 2035 General Plan. November 1, 2015. p.19. Ch. 5 City of San Juan Bautista 116 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final In 2020, the San Benito LAFCO informed the San Juan Bautista City Council that the 2016 General Plan's SOI and urban growth boundary (UGB) had not been submitted and were never adopted by LAFCO; instead, the 1998 SOI remains as the guide for growth. 57 An urban growth boundary (UGB) is a regional boundary established to control urban sprawl by mandating that the area within the boundary be used for urban development and the outside be preserved in its natural state or used for agricultural purposes. Some jurisdictions refer to the area within a UGB as an Urban Growth Area or Urban Service Area. According to the 2023 San Juan Bautista 6th Cycle Housing Element and Fair Housing Analysis, the City's Sphere of Influence adopted by LAFCO before the 2016 General Plan is extensive, and it conflicts with nearly all of the 2016-2035 General Plan Land Use, Open Space, and Conservation policies including essential Land Use Element programs. The preferred Growth Scenario of the 2016-2035 General Plan shows an alternative Sphere of Influence that brings areas planned for residential and commercial development closer to the existing City boundary. Amending and/or re-implementing an SOI requires coordination between the City, San Benito County LAFCO, and San Benito County, as well as cooperation with affected landowners.58 The Council appointed an "Urban Growth Boundary Committee" in August 2020 to weigh the options and address inconsistencies with the SOI and UGB. The process involved contentious meetings, frequent new appointments, and numerous absences. Between 2021 and 2023, the UGB Ad Hoc Committee held various meetings and considered several factors, including input from property owners and the community, as well as resource and development constraints. In November 2023, the City Council adopted Resolution No. 2023-71 accepting the Ad Hoc Committee's proposed SOI conterminous with the City limits and the UGB, which is a smaller boundary than the City limits, as illustrated in Figure 3-1. The resolution also included plans for the UGB Ad Hoc committee to work with San Benito County to establish a Planning Area and a related Memorandum of Agreement /Understanding (MOU). The MOU outlines policies to guide development in a specific portion of the unincorporated area of San Benito County that is adjacent to and surrounding the City, which is the planning area. The MOU aims to establish shared expectations between the City 57 The City of San Juan Bautista, City Council Report. Urban Growth Boundary- Sphere of Influence Ad Hoc Committee Status. September 20, 2022. 58 Harris & Associates (Harris), August 24, 2020. Ch. 5 City of San Juan Bautista 117 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final and County regarding future development policies within the planning area, with the intention of evolving into a formal agreement or ordinance.59 On May 20, the County Board of Supervisors adopted the MOU proposed by the City. Under the MOU, any proposed development within the planning area around the City will be presented to the City Council for consideration. The City will then be able to support or oppose the project in a resolution that will be considered by the County in any final decision made regarding the project. The City plans to amend the 2035 General Plan, specifically targeting policies, objectives, and programs that are affected by an amended SOI, the adoption of a UGB, and a Planning Area. Additionally, a required component for a significant update in the sphere of influence is a Municipal Service Review (MSR). As such, LAFCO plans to complete a full MSR for the City of San Juan Bautista in the next fiscal year. 59 City of San Juan Bautista. Urban Growth Boundary, Sphere of Influence. Regular Meeting Tuesday, May 28, 2024, 4:00 P.M. Ch. 5 City of San Juan Bautista 118 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 5-1: City of San Juan Bautista SOI/ UGB, 2023 Ch. 5 City of San Juan Bautista 119 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City of San Juan Bautista is a general law city that operates under the Council-Manager form of government. The City Council consists of five members elected at large and serves four-year terms. Pursuant to the San Juan Bautista Municipal Code, at the regular meeting in December of each year, the City Council chooses one of its members to serve as Mayor and one of its members to serve as Mayor Pro Tempore, each to serve until successors are chosen at the regular meeting in the following December. Current council member names, positions, and term expiration dates are shown in Figure 4-1. The City Council meets on the third Tuesday of each month in Council Chambers at City Hall, 311 Second Street, San Juan Bautista, at 6:00 p.m. Residents can also stream meetings live on CMAP TV Channel 17, on Zoom, and on the City's Facebook page. Archived broadcasts of City Council meetings, minutes, and agenda packets are available on the City's website. Meeting agendas are posted on the District's website in compliance with the Brown Act60 (Government Code §§ 54954.2 and 54956), as amended by California AB 2257, which requires agencies to make agendas available on their websites and in a publicly accessible physical location at least 72 hours prior to regular meetings and at least 24 hours prior to special meetings. The City of San Juan Bautista utilizes Facebook, Instagram, X, and YouTube to communicate with residents, provide public notices and city council meeting updates, and distribute agenda packets. The City engages in community outreach through utility billings, social media, and the City website for wastewater-related services. 61 Residents can call or email City Hall for sewer- specific complaints. According to the City, three odor-related complaints were filed in 2022. 60 California Government Code, Section 54950, commonly known as the "Brown Act" or "Open Meeting Law," establishes requirements and restrictions for meetings of local legislative bodies. The law ensures public access to these meetings, facilitating public participation and promoting transparency in local government decision-making. 61 The City of San Juan Bautista, Request for Information. October 2023. Ch. 5 City of San Juan Bautista 120 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City of San Juan Bautista also provides an interactive online complaint form that can be downloaded, completed, and emailed to City Hall, or printed and submitted in person, by mail, or via email to building@san-juan-bautista.ca.us. Ch. 5 City of San Juan Bautista 121 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 5-2: City of San Juan Bautista Governing Body governing body Councilmembers are elected at large, each year in December the Mayor and Mayor Pro Tempore are Manner of Selection chosen among the Councilmember. Length of Term 4-year The third Tuesday of each month at 6:00 p.m. in Council Chambers at City Hall, 311 Second Street, Meetings San Juan Bautista Agenda Distribution Online Minutes Distribution Online board members Term Manner of Member Name Position Expiration Selection Length of Term Leslie Q. Jordan Mayor 2026 At-Large 4-years EJ Sabathia Mayor Pro Tem 2026 At-Large 4-years Scott Freels Councilmember 2028 At-Large 4-years Jose Aranda Councilmember 2028 At-Large 4-years Jackie Morris-Lopez Councilmember 2026 At-Large 4-years contact Contact Ashley Collick, City Manager 311 Second Street PO Box 1420 Mailing Address San Juan Bautista, CA 95045 Office: (831) 623-4661, Phone Cell: (831) 594-6322 Email/Website citymanager@san-juan-bautista.ca.us Ch. 5 City of San Juan Bautista 122 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Ethics training is required once every two years, beginning with an odd-numbered year (AB 1234, Chapter 700, Statutes of 2005). Training is available online at the State of California Fair Political Practices Commission (FPPC) website. It is recommended that the City of San Juan Bautista's Board Members, General Manager, District Counsel, and Board Secretary complete Ethics Training for 2023. Additionally, a Statement of Economic Interest, or Form 700, must be submitted annually to indicate transparency in economic interests as required by the Political Reform Act of 1974 (California Government Code Sections 81000-81003). Every elected official and public employee who makes or influences governmental decisions is required to submit Form 700. It is recommended that all up-to-date Form 700s and the Certificate of Completion for all applicable council members be uploaded to the City's website. Through the City, there also exists a conflict-of-interest code and bylaws, outlined in the municipal code, as lawfully required and by which the City of San Juan Bautista must abide. There is legislation to help ensure public agencies adhere to accountability standards. California AB 2257 (Government Code §54954.2) is an update to the Brown Act and indicates requirements for methods by which an agenda for all meetings should be made available on an agency's website. The City of San Juan Bautista complies with this regulation. The City of San Juan Bautista demonstrated accountability in its disclosure of information and cooperation with the LAFCO questionnaires and other requests for information. The following figure identifies efforts to meet State laws to ensure transparency and accountability. Generally, the City of San Juan Bautista meets the requirements outlined in State laws regarding the Brown Act, website materials, and best practices to ensure easy access to significant planning documents and financial reports. The City's website is easily navigated and makes available a substantial amount of information and documentation that is clear and concise for the customer. However, the most recent audited financial statements, Annual Compensation Reports, and the State Controller's Office Financial Transaction Reports are unavailable on the City's website as required. It is recommended that the City add these two reports to the website in an easily accessible location. It is also recommended that the most recent Sanitary Sewer Management Plan (SSMP) be made available on the City's website. Ch. 5 City of San Juan Bautista 123 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 5-3: Transparency and Accountability Indicators city of san juan transparency and accountability bautista Agency website (GC §53087.8) Yes Contact information available on website (GC §53087.8 (a)(3)) Yes Annual Compensation Report (GC §53891 and 53908) Yes Adopted budget available on website Yes State Controller's Office Financial Transaction Report available on website (GC §53891 and 53893) Yes Notice of public meetings provided Yes Agendas posted on website (GC §54954.2) Yes Public meetings are live streamed Yes Minutes and/or recordings of public meetings available on website Yes Master Plan available on website Yes Strategic Plan available on website Yes, as part of the Fiscal Budget Sanitary Sewer Management Plan available on website No Enterprise System Catalogue available on website (GC §6270.5 (a)) No Efforts to engage and educate the public on the services to the community No Staff and governing board member ethics training and economic interest reporting completed Yes Compliance with financial document compilation, adoption, and reporting requirements Yes Adherence to open meeting requirements Yes While public sector management standards vary depending on the size and scope of the organization, there are minimum standards. Well-managed organizations evaluate employees annually, track employee and agency productivity, periodically review agency performance, prepare a budget before the beginning of the fiscal year, conduct periodic financial audits to safeguard the public trust, maintain relatively current financial records, conduct advanced planning for future service needs, and plan and budget for capital needs. Ch. 5 City of San Juan Bautista 124 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final As of FY 23-24, the City of San Juan Bautista has 14 full-time equivalent (FTE) employees. The City has five staff members assigned to its Public Works division. The division includes the utilities department, which is responsible for planning, operating, and maintaining the water and sewer collection systems. Figure 5-4 illustrates the City's organizational chart. The City conducts annual employee evaluations, which are completed by the City manager and immediate supervisors. The City also conducts routine agency-wide performance evaluations, specifically focusing on the operations and productivity of wastewater services, using monthly effluent chemical levels as performance measures. The City of San Juan Bautista provides training programs for its wastewater operations staff. Additionally, the City offers tuition reimbursement and salary stipends to utilities staff who obtain certifications for water distribution and sewer collection. The City of San Juan Bautista reports that it currently does not track staff workload. Ch. 5 City of San Juan Bautista 125 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 5-4: The City of San Juan Bautista Organizational Chart The City of San Juan Bautista's financial planning efforts include an annually adopted budget, audited financial statements, and a Capital Improvement Project (CIP). On February 21, 2023, the City adopted Resolution 2023-16, which included a mid-year budget review. The budget allocated $60,000 for a fiscal assessment of SJB's finances, an organizational review, an evaluation of public safety functions, and the development of a new five-year strategic plan. This plan, aimed at guiding the FY 23-24 budget, involved a City-wide survey with 158 responses and two community workshops to discuss findings and set priorities.62 62 City of San Juan Bautista, Budget Book 2024 p. 4-5. Ch. 5 City of San Juan Bautista 126 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City has a yearly adopted strategic plan that informs the annual budget. In 2023, the City contracted with Citygate Associates to conduct a high-level organizational, financial, and law enforcement review. The review includes strategic recommendations that accompany a Five-Year Priority Implementation Plan and a realistic framework of recommended actions, current financial analysis, and operational realities that City leaders, staff, and residents can use to begin making critical strategic decisions for the City's future. The review identifies the following 11 overall themes that informed Citygate's recommendation:63 • Theme 1: Improvement and protection of water quality. • Theme 2: Investment in infrastructure improvements including sewer, roads, streets, sidewalks, and curbs. • Theme 3: Establishment of appropriate staffing levels. • Theme 4: Implementation of thoughtful, smart economic development specifically in the Downtown area through General Plan amendments, discussions, and policies related to growth, zoning, and conditions of approval. • Theme 5: Enhancement of business partnerships, incentives, communications, and process improvements. • Theme 6: Enhancement of recreation activities for all with a focus on the youth and seniors. • Theme 7: Revitalization of the Downtown area including addressing cleanliness, vacant lots, parking, esthetics, lighting, landscaping, and signage. • Theme 8: General enhancement of communication with City staff and volunteers, including messaging, updates, website, and other marketing opportunities. • Theme 9: Public safety review including Sheriff's Department partnership, code enforcement, and current security services. • Theme 10: Disaster preparedness related to flooding, fires, state mandates, etc. • Theme 11: Fragmentation of the San Juan Bautista Community Business Association into two competing groups. 63 City of San Juan Bautista, CA. High-Level Organizational, Financial, and Law Enforcement Review, August 10, 2023. p.4-5. Ch. 5 City of San Juan Bautista 127 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City's prior strategic plan launched three initiatives: the Urban Growth Boundary/Sphere of Influence, the Third Street master plan, and the Public Safety Initiative. As discussed earlier, the City Council adopted Resolution No. 2023-71 accepting the proposed Sphere of Influence, Urban Growth Boundary, and Planning Area from the UGB Ad Hoc Committee in November 2023. The Third Street Master Plan is moving forward with a $365,000 grant application pending with the State. This would pay for the development of a transportation hub on the Alameda, between Franklin and Fourth Street. Meanwhile, the focus on public safety has been on reorganization. The City authorized Akel Engineering Group to prepare a 2020 Wastewater Master Plan (WWMP) and a concurrent Water Master Plan in November 2019. The 2020 WWMP evaluates the City's wastewater collection system and recommends capacity improvements necessary to meet the needs of existing users and to accommodate the City's future growth. The plan aims to serve as a tool for planning and phasing the construction of future wastewater collection system infrastructure for the projected buildout of the City's service area. The area and horizon for the master plan are based on the City's General Plan. If planning conditions change, and depending on their magnitude, adjustments to the master plan recommendations might be necessary. 64 The City has completed several special studies to evaluate localized growth.65 • City of San Juan Bautista 2035 General Plan (November 2015)— The 2035 General Plan represents the officially adopted goals and policies of the City of San Juan Bautista and addresses planning matters within the community, such as historic preservation, economic development, and development of public facilities. This includes establishing a municipal plan for land use, housing, and economic development. • City of San Juan Bautista Wastewater Treatment Improvements Project (September 2020)— The report investigates alternatives to the existing WWTP and recommends a program to bring the WWTP into compliance with regulatory standards. 64 City of San Juan Bautista Wastewater Master Plan, November 2020. 65 City of San Juan Bautista Wastewater Master Plan, November 2020, p.1-3. Ch. 5 City of San Juan Bautista 128 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • City of San Juan Bautista, Rancho Vista Sewer Lift Station Compliance Review (September 2020)— Assesses the lift stations' compliance with industry standards and includes a summary of observations, findings, and recommendations to bring the lift station up to industry standards. The City of San Juan Bautista has an Environmental Impact Report (EIR) for its 2035 General Plan, which provides an analysis of the potential environmental effects that may result from proposed projects. As it relates to wastewater services, the EIR indicates that the proposed plan may result in land uses, including wastewater treatment plants, that could generate substantial odor complaints. The purpose of this chapter is to evaluate growth and population projections in relation to the City of San Juan Bautista's boundaries and sphere of influence (SOI), to anticipate the future service needs of the City. Additionally, the anticipated growth patterns of the City are evaluated to determine the impact and compatibility of such growth on land use plans and local government structure. The Land Use Element guides planners, the public, developers, and decision-makers in future development and growth. This Element designates the location, distribution, and intensity of housing, industry, recreation, education, open space, public facilities and buildings, and waste management facilities. It impacts all other Elements and is the most representative of the General Plan. The goals and policies in this Element "play a pivotal role in zoning, subdivision, and public works decisions".66 The City of San Juan Bautista covers an area of approximately 0.79 square miles or 505.6 acres. The 2013 Land Use Inventory surveyed existing uses and found that 10.9 percent of the acreage within the City (38.9 acres) was vacant, allowing for various development opportunities. The developed acreage is made up of 33 percent residential, 27 percent open space, 13 percent public facility, 8 percent commercial, retail, and service, 0.7 percent mixed- use, and less than 1 percent industrial uses. 66 San Juan Bautista 2035 General Plan November 1, 2015, p. 3. Ch. 5 City of San Juan Bautista 129 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The 2016-2035 General Plan designates an Urban Growth Boundary encompassing about 168 acres designated for residential land use within the City limits and another 256 acres referenced in the General Plan within the Sphere of Influence, not including approximately 53 acres for mixed residential/commercial land use. As discussed, the City is currently addressing inconsistencies between the San Benito County LAFCO's adopted SOI and the SOI outlined in its 2016 General Plan. This update will result in changes to land use designations and planned infrastructure necessary to accommodate housing development within the 6th Cycle Housing Element planning period. Between 2015 and 2017, SJB annexed six different portions of land within the UGB. The City annexed the 13-acre Copperleaf residential subdivision project in 2016. The remaining annexations were of non-residential land: a 32-acre piece of land on the southeastern end of the City annexed in 2015 for industrial development; an approximately one-acre piece of land on the western side of the City annexed in 2015; a roughly two-acre and three-acre piece of land annexed in 2017 and 2015, respectively; and a two-acre piece of land to the north of the City was annexed in 2015.67 The City of San Juan Bautista's General Plan also has an Open Space Element, which contains information on three different categories of open space: active open space for recreation, passive open space for recreation and the management of natural and historic resources, and open space for agriculture. In San Juan Bautista, active open space for recreation and parks includes two City parks, Abbe Park and Verutti Park, totaling 2.3 acres. This is equivalent to 1.4 acres per 1,000 people, which is below the common 3 to 5 acres per 1,000 people County standard. An additional 9.4 acres of sporting fields and recreational space provided by San Juan Elementary School supplements the City parkland. The San Juan Bautista Historic Park has a plaza with over 1 acre of lawn, which can be used as active open space for recreation. Passive open space for recreation includes the management of natural and historic resources such as scenic views and historical sites. The City Library provides approximately 0.4 acres of passive open space for recreation. Sections of both City parks are dedicated to picnicking. The Original El Camino Real Road and the path next to Old Mission San Juan Bautista provide a short trail network within the City. Scenic places in the City are identified as City parks, scenic 67 City of San Juan Bautista 6th Cycle Housing Element Draft. August 2023. p. 4-12. Ch. 5 City of San Juan Bautista 130 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final vistas from the cemetery, and scenic view sheds from downtown providing "glimpses" of the surrounding hillsides. Historical sites with passive open space identified are the Mission San Juan Bautista and San Juan Bautista Historic State Park, which provide amenities such as historic programs and picnic areas. There is also over 160 acres of agricultural land in and around San Juan Bautista. San Juan Bautista's vast agricultural landscape provides residents and visitors with open space and pleasant views. The 2013 land use inventory identified 42 vacant parcels within City limits, totaling approximately 43.5 acres. These parcels do not have any occupied structures on them and are not being put to productive economic use. Vacant parcels are considered prime candidates for development due to their presence within the existing city limits and the availability of infrastructure such as roads, municipal water, and sewer lines. Vacant parcels are spread throughout the City, but most of the larger vacant parcels are located on the west and south sides. 68 According to the 2035 General Plan, the City faces challenges with the availability of vacant developable land for housing or commercial expansion within City limits. Much of the open land surrounding San Juan Bautista is farmland. Residents have expressed a strong desire to maintain the agricultural character of the landscape. The land use inventory also identified parcels that were considered underutilized. Underutilized parcels may have some structures on them and may be in productive use. However, these sites are considered underutilized when compared to the property's potential for development or the condition of the buildings. Underutilized parcels could include parcels with structures rated as in "poor" condition, single-family lots with enough room for an accessory dwelling unit, or large lots with small structures. 69 The General Plan indicates that development opportunities include vacant and underutilized land within the City limits. Areas in disrepair outside of the historic district can also be redeveloped and renewed. Figure 5-5 shows a composite of both underutilized and vacant lands. Figure 5-5: City of San Juan Bautista underutilized and vacant lands 68 San Juan Bautista 2035 General Plan November 1, 2015, p.51. 69 San Juan Bautista 2035 General Plan November 1, 2015, p.46. Ch. 5 City of San Juan Bautista 131 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Ch. 5 City of San Juan Bautista 132 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Under the Land Conservation Act ("Williamson Act"), farmers can enter into land conservation contracts with San Benito County, which enable them to enjoy reduced property taxes in exchange for maintaining their land in agricultural production. A Williamson Act Contract is binding for ten years. Contracts are automatically renewed yearly unless the farmer files a Notice of Non-Renewal. After filing such notice, the land may not be converted to other uses for ten years, during which time the property taxes are gradually increased to reflect the full market value of the land. Ten years after filing a Notice of Non-Renewal, the land is free of contractual land use restrictions, and the farmer is denied further property tax benefits associated with the former Williamson Act contract. All agricultural land protected under the Williamson Act should be preserved from urbanization. There is no Williamson Act land within City limits. However, there is a large amount of Williamson Act land to the west of the City. Protected agricultural land also occurs to the northeast and south. Figure 5-6 shows the agricultural lands near the City protected by the Williamson Act. Ch. 5 City of San Juan Bautista 133 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 5-6: City of San Juan Bautista Williamson Act Contracts Ch. 5 City of San Juan Bautista 134 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final All properties with sites listed on the National Historic Register should be preserved in their existing state. Federal regulations prohibit the development of these sites. Historic sites in the City include the San Juan Bautista State Historic Park on 2nd Street and several buildings on 3rd Street in the Historic Downtown District and other locations. 70 Unlike other General Plan elements that typically cover a much longer planning horizon (10 to 20 years), the Housing Element covers a core timeframe of eight years. Within this timeframe, the Housing Element identifies strategies and programs that focus on: (1) preserving and improving housing and neighborhoods; (2) providing adequate housing sites; (3) assisting in the provision of affordable housing; (4) removing governmental and other constraints to housing investment; and (5) promoting fair and equal housing opportunities. The City updated its housing element in 2023. State law previously required housing elements to be updated at least every five years. The standard cycle is now every eight years and is tied to the region's transportation planning. The 2009-2014 (4th Cycle) San Juan Bautista Housing Element covered the five years spanning 2009 through 2014, but the City missed the 5th cycle, due on December 15, 2015, to cover the planning period from 2015-2023. Because the City missed this deadline, it adopted two consecutive four-year housing elements to return to the current standard eight-year cycle. California law requires that each city and county, when preparing its State-mandated Housing Element, develop local housing programs to meet its "fair share" of existing and future housing needs for all income groups, also known as the Regional Housing Needs Allocation (RHNA). This fair share concept seeks to ensure that each jurisdiction, to the extent feasible and appropriate, provides housing for its resident population and those households who might reasonably be expected to reside within the jurisdiction, with a variety of housing suitable to their needs, thereby affirmatively furthering the fair housing goals of the State of California. The City has experienced a cycle of "booms" and "busts," with the population dwindling in some decades and surging in others. In 1870, San Juan Bautista had more than 2,600 residents, almost 400 more people than today. By 1910, the City's population had declined to 70 San Juan Bautista 2035 General Plan November 1, 2015, p. 51. Ch. 5 City of San Juan Bautista 135 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 326. It doubled between 1910 and 1930, dropped during the 1930s, grew rapidly during the 1940s, and remained flat during the 1950s. In more recent times, the population has continued to grow at an uneven rate, with faster growth during the 1970s, 1980s, and 2000s and a slight decline during the 1990s. In 2017, the City's population was 2,081, an increase of 219 people from the 2010 population of 1,862. As of 2020, the population in San Juan Bautista has slightly increased to 2,089. The California Department of Finance (DOF) reports that as of 2023, the City's population has decreased to 2,022. Figure 5-7: City of San Juan Bautista Population Growth, 2010-2023 Population Characteristics The median age in San Juan Bautista as of 2021 is 40.2. By comparison, the median age for San Benito County is 35.7, 37 for the State, and 38.4 nationally.71 According to the City's 6th Cycle Housing Element, San Juan Bautista has a higher proportion of seniors than San Benito County as a whole. As of 2021, 17 percent of all San Juan Bautista residents are over 65, compared to 12.7 percent countywide. The City's housing element emphasizes that the housing needs of seniors are significant due to seniors' limited incomes and higher healthcare costs. Seniors' housing may also require certain physical features, such as handicap ramps, grab bars, and easy access to local services. At the other end of the age spectrum, 26.5 percent of all San Juan Bautista residents are 19 or under, 71 City of San Juan Bautista 6th Cycle Housing Element, DRAFT August 2023, p. 2-4. Ch. 5 City of San Juan Bautista 136 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final compared to 28.7 percent in the County. The City has a high concentration of children under five, suggesting a surge in elementary school enrollment during the coming years.72 Alternatively, the City has a low concentration of adults aged 20-24, suggesting limited housing and job opportunities for persons in this age group. The 2023-2031 housing element suggests that a larger supply of affordable rental units might allow young people to remain in San Juan Bautista after graduating from high school or college. About a third of all San Juan Bautista residents are in the "first-time home buyer" age cohort (25-44), which is comparable to the percentage in the County. As of 2021, the homeownership rate in San Juan Bautista, CA, is 56.4 percent, approximately the same as the national average of 64.6 percent.73 In 2021, the median household income in San Juan Bautista was $92,404, compared to $95,606 countywide (and $87,761 in Hollister). Of all San Juan Bautista households, 4.9 percent earned less than $25,000 yearly, compared to 7.9 percent countywide. On the other hand, 38.9 percent of all San Juan Bautista households earned more than $100,000 a year, compared to 47.9 percent countywide. According to the Department of Finance (DOF), countywide growth projections for San Benito County are expected to see an approximately 0.47 percent average annual growth rate (AAGR) from 2020 (64,432) through 2060 (77,666). Utilizing the County's AAGR and SJB's 2023 population estimates of 2,022, the population within the City is anticipated to increase slightly to 2,403 by 2060. The City of San Juan Bautista has several planned and proposed development projects. • The Casa Rosa project, located at 107 Third Street, was approved in 2017. The project, situated in the Mixed-Use zone of the Historic District, involves exterior, interior, and site alterations to create a restaurant on the first floor, an apartment on the second floor, and additional facilities in an expanded rear addition. This development is approximately 3,917.279 SF and is currently under construction. • The Service Station, Convenience Store, and Quick Serve Restaurant project was initially proposed in 2016. The project, initially proposed in 2016 for a 48,602-square-foot parcel 72 City of San Juan Bautista 6th Cycle Housing Element, DRAFT August 2023 p.2-2. 73 Data Usa, Reports 2021. Ch. 5 City of San Juan Bautista 137 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final at the southeast corner of Highway 156 and Alameda, is a six-pump fueling station, quick- serve restaurant, and convenience store. It was recently reapproved and is now seeking building permits. • The City is also reviewing the D'Ambrosio Vista project near the sewage treatment plant, comprising 34 units, including eight single-family homes and a mix of single-story and two- story units facing Third Street. • Development of the Vacant properties at 70 Muckelemi Street, by the San Benito County Health Foundation, is planning to build health care facilities and workforce housing. Additionally, the Developer has proposed plans to build eight approved single-family homes and townhomes behind these units. According to the City's 2023-2031 6th Cycle Housing Element & Fair Housing Analysis, San Juan Bautista must address key housing challenges over the 2023- 2031 planning period. These challenges include: (1) providing sites for additional housing; (2) providing a range of housing types and prices; (3) looking at ways to address the need to improve and rehabilitate housing and neighborhoods; (4) providing for those with special housing needs; and 5) maintaining and improving the local environment and quality of life in San Juan Bautista. The City's 2035 General Plan includes three alternatives for accommodating future population, housing, and employment needs in San Juan Bautista through 2035. Each alternative presents options with varying development densities, intensities, types, and growth locations throughout the City. 74 • The Business-as-Usual Alternative assumes that future growth will continue based on historical trends in land use patterns, housing types and densities, and employment opportunities and locations. In this alternative, residential development remains primarily low-density, with scattered commercial development, and the transportation system remains auto oriented. This is characterized by low population growth, sporadic increases in housing, and sprawling development towards the fringes. • The Clustered Growth Alternative selects multiple areas to concentrate growth within a short walk or bicycle ride to services and amenities. Proposed growth areas include a residential and commercial development cluster along Muckelemi Street, 3rd Street, and south of State Route 156. By providing multiple commercial centers, the Clustered 74 San Juan Bautista 2035 General Plan November 1, 2015. p.63. Ch. 5 City of San Juan Bautista 138 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Growth Alternative aims to reduce the distance between residential and commercial uses, bringing residents closer to essential public facilities and other amenities. • The Dynamic Growth Alternative accommodates future growth needs by focusing growth within City boundaries through infill development along key corridors connecting the main entry gateways to the historic downtown area. This alternative incorporates community input on retaining development within City limits to minimize impacts on surrounding agricultural uses and encourage more activity downtown. It also includes relocating the City's wastewater treatment facility outside City limits. The former location of the wastewater treatment facility provides additional land for growth and open space needs within the City. Key development corridors along Muckelemi Street, north of 3rd Street, and The Alameda will link the Historic Downtown to the City's gateways while providing a mix of commercial, residential, and office space at medium to high densities. The General Plan also includes a Preferred Growth Scenario, which incorporates the preferred elements from all development alternatives, emphasizing concepts from the Dynamic Growth and Clustered Growth alternatives. Conceptual land uses for the Preferred Growth Scenario are based on a combination of existing land uses, proposed land uses, and the community's preferred aspects of each growth alternative. This scenario proposes growth in four key areas of the City, focusing on redeveloping vacant and underutilized parcels. The Preferred Scenario is based on public input from three community meetings and outreach events. The goals of the Preferred Growth Scenario are to attain a vibrant, walkable, and attractive downtown, maintain the City's Historic nature, provide an adequate housing supply, and increase the number of jobs within the City. The Preferred Growth Scenario focuses on:75 • Medium-density housing in the 3rd Street extension area • Mixed-use commercial and retail development in the Muckelemi Street Corridor • Infill commercial and residential development in the Historic Downtown • Light-industrial and commercial development south of SR 156 The General Plan also includes a Public Facilities and Services Element to ensure adequate facilities and service standards in San Juan Bautista and the planning and meeting of future community needs. The topics addressed within this element include infrastructure for water 75 San Juan Bautista 2035 General Plan November 1, 2015.p.12. Ch. 5 City of San Juan Bautista 139 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final supply, stormwater, and wastewater; recycling and solid waste disposal; police services; fire services; school facilities; and library facilities. Providing high-quality water and sewer services in the most efficient, cost-effective, and environmentally sound manner is one of the goals highlighted in the Public Facilities and Services Element. Objective PF 1.3 specifies the City's aim to improve the quality of sewer treatment facilities and services for residents and businesses. Some of the policies included in the objective are: 76 • Policy PF 1.3.1: Allow individual septic systems within the sphere of influence only where the City cannot feasibly provide sewer service and where the County Health Department has determined that sufficient area and soil conditions exist for a septic tank leach field or other accepted method of effluent disposal. In such cases, the use of septic systems should be discontinued when City sewer service becomes available within 600 feet of the property. • Policy PF 1.3.2: Provide extensions of City sewer service only to properties within the designated sphere of influence. Do not extend service to development on agricultural or open space lands outside the City's sphere of influence. LAFCo is required to evaluate disadvantaged unincorporated communities as part of this service review, including the location and characteristics of any such communities. The intent and history of this requirement is outlined in the Background Section of this report. A disadvantaged unincorporated community is defined as any area with 12 or more registered voters, or as determined by commission policy, where the median household income is less than 80 percent of the statewide annual median. According to Census Bureau data, the statewide Median Household Income (MHI) for 2017- 2021 is $84,097. Therefore, the calculated threshold of $67,277 defines whether a community is disadvantaged. Therefore, with a median income of $92,404 as of 2021, the City of San Juan Bautista is not considered a disadvantaged community.77 76 San Juan Bautista 2035 General Plan November 1, 2015. p.227. 77 San Juan Bautista, Wastewater Treatment Improvements Project, p.24. Ch. 5 City of San Juan Bautista 140 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The financial ability of agencies to provide services is affected by available financing sources and constraints. This section discusses the primary financing sources and identifies the current revenue sources for the City of San Juan Bautista. Finally, it assesses the City's financial ability to provide services. The City reports the following major governmental funds:78 • General Fund—The General Fund is the City's general operating fund. It is used for all financial resources except those required legally or by sound financial management to be accounted for in another fund.79 Generally, the General Fund accounts for the City's traditional governmental services, such as police and fire protection, planning, and general administrative services. The three principal sources of General Fund Revenues are the City share of Property Tax, Sales Tax, and Transit Occupancy Tax. The City reports the following major enterprise funds: • Water Fund —The Water Fund accounts for the operation and maintenance of the City's water treatment, transmission, and distribution systems. • Sewer Fund — The Sewer Fund accounts for the operation and maintenance of the City's sewer system. According to the City of San Juan Bautista's proposed FY 23-24 budget, as of May 2023, all three major funds were projected to include a healthy balance. Additionally, the two Enterprise funds are beginning to build reserves that will pay for the debt service for the capital improvements to implement the necessary upgrades to the City's water and sewer systems. Additionally, the proposed FY 23-24 budget also included the following new budget priorities:80 • Economic Development: The FY 23-24 budget includes $31,165 from its General Fund Reserve for economic development activities and training. The Economic Development Citizen's Advisory Committee will begin drafting an economic development strategy. Partnering with state and county agencies, the City will create regional partnerships to 78 City of San Juan Bautista, Independent Auditor's Report and Financial Statements. p.14. June 30, 2022. 79 City of San Juan Bautista | Budget Book 2024, p.22. 80 City of San Juan Bautista, Budget Book 2024, p.14. Ch. 5 City of San Juan Bautista 141 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final utilize its history and assets. Business retention and tourism efforts are expected to increase as merchants and property owners reorganize downtown. • Recreation: The development of a new and robust recreation program is funded with the Part-time Recreation Technician position and operational funds of $29,072. Facility improvements are underway to accommodate new programs. The City is also funding a summer recreation program to begin in July. • Housing Element: The state-mandated Housing Element is set to be updated by the end of 2023. The City set aside $170,000 for this at the mid-year point. • Climate Action Plan: The budget includes $50,000 to fund consulting costs for completing its climate action plan, as state laws become increasingly restrictive on jurisdictions that still require a fully integrated approach to reducing the greenhouse gases they produce. • Implementing the Public Safety Changes: The City Council supports organizing its Public Safety functions. Removing private security and directly staffing these efforts are significant parts of this change. Establishing a single point of contact is also critical. The creation of a Fire District is underway. The County Office of Emergency Services uses grant funding to hire a feasibility consultant. The Sheriff has begun negotiating a new contract with the City and stepped up its services for two dedicated deputies. • Homeless Programs: The City of Hollister and the County Public Health Department continue to evaluate homeless initiatives. The Intergovernmental Committee is currently discussing an MOU. SJB is expected to participate in and help fund programs for the homeless. Additionally, according to the 2023 high-level organizational review, Citygate identified several fiscal positives implemented by the City that have helped to improve its overall fiscal health. These include a fiscally healthy General Fund, the 2021 and 2022 sewer and water rate increases, hiring an Assistant City Manager to focus on economic development, and implementing a new financial system. The review also identified potential fiscal-related operational issues, including a lack of review or adjustment related to current fees and charges, a lack of formalized policies and procedures, potential noncompliance with the California Government Code due to the use of the same auditor service, and a lack of succession planning, cross-training, and long-range financial planning. Figure 5-8 illustrates the City's FY 22-23 financial summary. Ch. 5 City of San Juan Bautista 142 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 5-8: The City of San Juan Bautista Financial Summary FY 22-23 the city of san juan bautista budget fy 22-23 Governmental Funds Revenue Taxes $2,578,729 Intergovernmental $67,810 Charges for services $91,318 Licenses, permits and impact fees $161,910 Fines and forfeitures $3,070 Interest and rent $123,144 Other $8,399 Total revenue $3,638,380 Expenditure Current General government $881,499 Public works $1,012,938 Parks and recreation $98,245 Public safety $661,293 Community development $919,724 Capital outlay $1,894,483 Total expenditure 5,468,182 Revenue over/ (under) expenditures (1,829,802) Other Financing Sources/ (Uses) Lease revenue $22,099 Operating transfers in/ (out) $40,553 Total other Financing Sources $62,652 Beginning Fund Balance $6,433,400 Ending Fund Balance $4,666,250 Change in Fund Balance (1,767,150) Enterprise Funds Ch. 5 City of San Juan Bautista 143 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Operating Revenue Charges for services $2,746,465 Other fees $74,985 Total operating revenue $2,821,450 Operating Expense Contractual services and utilities $679,023 Personnel $483,683 Supplies, materials, and repairs $352,040 Depreciation expense $732,409 Total operating expense $2,247,155 Operating income/ (loss) $574,295 Nonoperating Revenue/ (Expense) Capital contributions $783,043 Interest expense ($443,673) Total nonoperating revenue/ (expense) 339,370 Net income/ (loss) before transfers $913,665 Operating Transfers In/ (Out) (40,553) Beginning of Year Net Position 4,128,421 End of Year Net Position 5,001,533 Changes in Net Position $873,112 Typical Monthly Rate for Single Family Residence $124.27 Median Monthly Household Income, 2017-2021 (not in thousands) $4,423 Monthly Wastewater Rates as a % of Household Income 2.8% Recurring operating deficits are a warning sign of fiscal distress. In the short term, reserves can backfill deficits and maintain services. However, ongoing deficits eventually will deplete reserves. For the City's governmental funds, total expenses (including capital outlay) exceeded revenue (excluding other financing sources) by $1,829,802, or about 50 percent. Alternatively, the total operating revenue of the enterprise fund exceeded the operating expense by $574,295, or about 25 percent. Ch. 5 City of San Juan Bautista 144 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Fund balances and reserves should include funds for cash flow and liquidity in addition to funds to address longer-term needs. Cash reserves should be adequate to respond to system emergencies, temporary deficits, economic downturns, fiscal emergencies, and needed capital improvements. The City of San Juan Bautista has a reserve policy adopted in 2015, which aims to provide guidelines for the City Council and staff to ensure responsible and prudent decision-making regarding financial matters and maintaining minimum and targeted reserves. Reserves are established to ensure that sufficient resources are maintained in specified funds in amounts sufficient to manage reasonable risks, meet unanticipated needs, capitalize on opportunities, and provide for reasonable contingencies. The City of San Juan Bautista maintains the following reserves: • General Fund Reserve— The City aims to maintain a minimum unrestricted fund balance of 20 percent of Operating Expenditures in the General Fund, equating to approximately 2.5 months of cash flow. This practice aligns with the risk assessment methodology developed by the Government Finance Officers Association, ensuring preparedness for various financial challenges. • Water Enterprise Fund Reserve— The Water Enterprise Fund accounts for specific services funded directly by fees and charges to City water customers. It operates independently, covering all costs, including personnel expenses and depreciation, through its rates and grants, without relying on subsidies from the General Fund. The reserves within the Water Enterprise Fund include the emergency operating reserve, emergency capital reserve, and rate stabilization fund (RSF) reserve. • Wastewater Enterprise Fund Reserve—The Wastewater Enterprise Fund accounts for specific services funded directly by fees and charges to City water customers. The fund is intended to be self-supporting, with all direct and indirect personnel costs and depreciation costs covered by its own rates and/or grants without subsidies from the General Fund. The reserves within the water enterprise fund include the emergency operating reserve, emergency capital reserve, and RSF reserve. Ch. 5 City of San Juan Bautista 145 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final An agency's "Net Position" represents the amount by which assets (e.g., cash, capital assets, other assets) exceed liabilities (e.g., debts, unfunded pension and OPEB liabilities, other liabilities). A positive Net Position indicates financial soundness over the long term. The City's government-wide and business-type activities fund financial statements utilize a net position presentation. Net position is categorized as invested capital assets (net of related debt), restricted, and unrestricted. 81 As of FY 22-23, assets for governmental activities decreased by $182,000 from the prior year, primarily due to an increase in fixed assets for infrastructure improvements offset by a decrease in cash used to fund these improvements. Alternatively, liabilities remained consistent. The unrestricted fund balance also decreased by $1,719,000 compared to the prior year, mainly due to investment in capital expenditure. Assets for business activities increased by $668,000 in FY 22-23, primarily due to a grant receivable for the wastewater project, while liabilities decreased by $270,000, mainly from debt paydown and lower accrued expenses. The unrestricted fund balance rose to $1,628,000, up $867,000 from the prior year. 82 On October 1, 1999, the City established a deferred compensation plan for its employees, allowing them to save for retirement. The plan meets the requirements of Internal Revenue Code Section 457. Under the plan, employees make tax-deferred contributions up to the limits established by the Internal Revenue Service. The contributions made to the plan may be withdrawn only upon retirement, separation from service, death, or unforeseen emergency. Employees are 100 percent vested in their contributions from the first date of participation. The plan provides for varying matching contributions. The City administers the plan. The participants are offered investment options and make their own investment decisions. The City has a fiduciary obligation to exercise due care when administering the plan. However, it is not responsible for the investments or performance results of the investment products offered under the plan. Therefore, the City is not required to report these funds on its financial statements. 81 City of San Juan Bautista, Notes to the Basic Financial Statements. Year Ended June 30, 2023. P.18. 82 City of San Juan Bautista, Notes to the Basic Financial Statements. Year Ended June 30, 2023. p.1. Ch. 5 City of San Juan Bautista 146 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City agreed to lease a cell tower from February 26, 2002, through February 25, 2036, for a starting monthly payment of $1,413.87, with a 3 percent annual increase. Payment is due monthly at 0.9 percent interest. As of FY 22-23, the lease receivable balance was $163,926. The City also recognized $19,669 in lease revenue and related interest income. 83 In January 2015, the City issued Series 2015 Enterprise Revenue Bonds in the amount of $11,640,000. These bonds were used to refund outstanding debts, improve the water system, and cover issuance costs. The reacquisition price exceeded the net carrying amount of old debt by $1,819,135. The refunding reduced total debt service over 28 years by $4,125,856, resulting in an economic gain (difference between the present values of debt service payments on the old and new debt) of $1,947,479. The bonds bear interest ranging from 3 to 5 percent and are payable semi-annually until October 2043. Debt service is secured by the City's Water and Sewer Systems' net revenues, which must meet specific covenants, ensuring adequate revenue for operations and debt repayment. As of FY 22-23, the City complies with these covenants, with cash basis debt service paid totaling $665,738 and net revenue available for debt service exceeding requirements.84 The City's wastewater utility is a financially self-supporting enterprise. Revenues are derived primarily from sewer service charges. As such, the City's sewer rates must be set at adequate levels to fund the costs of providing service as well as the following: 85 • Fund ongoing operating and maintenance expenses; • Address State mandates & RWQCB wastewater regulatory requirements; • Fund the regionalization project, related debt service, and associated increased operating costs; • Provide funding for sewer collection system maintenance and upgrades. 83 City of San Juan Bautista, Notes to the Basic Financial Statements. Year Ended June 30, 2023. p.24. 84 City of San Juan Bautista, Notes to the Basic Financial Statements. Year Ended June 30, 2023. p.27. 85 Bartle Wells Associates, City of San Juan Bautista - Sewer Rate Study Final Report, October 13, 2021. p.1-2. Ch. 5 City of San Juan Bautista 147 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final In 2020, the City retained Bartle Wells Associates (BWA) via a competitive RFP process to develop a financial plan and rate study for the sewer enterprise. BWA conducted an independent evaluation of sewer enterprise finances. Key conclusions of the study include:86 • Previous rate increases have put the sewer enterprise in a sound financial position, but the City faces substantial financial challenges. • Sewer fund reserves are currently at healthy levels but are projected to be partially drawn down in upcoming years to help fund wastewater treatment facility improvements. Financial projections are designed to maintain a prudent minimum level of fund reserves in future years. • The City must implement significant sewer rate increases over the next five years to support funding for the regionalization project to comply with the EPA and RWQCB regulatory and permit requirements. The City's sewer rate structure varies by customer class. Residential customers pay a fixed monthly charge per dwelling unit. All residential dwelling units paid the same fixed monthly charge of $83.61 prior to the sewer rate adjustment, equating to a charge of $2.75 per day. Commercial and non-residential customers pay volumetric sewer charges based on their customer class and water usage. Customer classes with higher-strength wastewater pay higher rates, reflecting the increased costs associated with wastewater treatment. Prior to the rate increase, commercial rates ranged from $9.10 to $18.18 per thousand gallons, while industrial customers were charged $9.10 per thousand gallons. 87 The completed rate study was presented to the City Council on October 19, 2021. At that meeting, the Council authorized City staff to mail Proposition 218 notices with the rates recommended in the rate study. The rate study was approved and went into effect on February 1, 2022. Figures 5-9 illustrate the new schedule of the City's sewer rates. The new rates include the estimated capital improvement costs to build a 6-mile sewer force main to Hollister. This is the first time in over 20 years that the City has increased its rates to cover capital improvements. These improvements will transform how the City manages its wastewater and enhance the quality of life for its residents by reducing the odor associated with the City's current sewer treatment system. The improvements will also ensure the City becomes compliant with EPA standards, eliminating its effluent discharge into the creek. 86 Bartle Wells Associates, City of San Juan Bautista - Sewer Rate Study Final Report, October 13, 2021. p.5. 87 Bartle Wells Associates, City of San Juan Bautista - Sewer Rate Study Final Report, October 13, 2021. p.4. Ch. 5 City of San Juan Bautista 148 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The revenues received will first be used to reimburse the City's General Fund Reserve for costs incurred since February 2021 to design the project. Revised cost estimates for the project included in the rate study are estimated to be $18 million. The approved rates are based on the $18 million split, with $6 million in State and Federal grants and $12 million in low-interest infrastructure loans. The new rate revenue will be allocated to cover the anticipated annual debt service of $477,000 on $12 million over 30 years. Figure 5-9: The City of San Juan Bautista's New Sewer Rate Schedule the city of san juan bautista new sewer rate schedule Effective Effective Effective Effective Effective 2/1/2022 7/1/2022 7/1/2023 7/1/2024 7/1/2025 Residential Sewer Rates Monthly Fixed Rate $95.62 $109.01 $124.27 $141.67 $148.75 Commercial Sewer Rates Minimum Monthly Base Charge $95.62 $109.01 $124.27 $141.67 $148.75 Volumetric Rates Standard Strength $/1,000 gal Moderate Strength $/1000 gal High Strength $/1,000 gal $14.51 $16.54 $18.86 $21.50 $22.57 The City's service area is generally bound to the north by Prescott Road, to the east by Mission Vineyard Road, to the southwest by State Route 156, and to the south by Old San Juan Hollister Road. The topography is generally flat, with slopes increasing north to south toward the Gabilan Mountain Range. The City operates and maintains a wastewater collection system that covers most of the developable area within the Planning Boundary. The wastewater flows are currently conveyed Ch. 5 City of San Juan Bautista 149 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final to the City of San Juan Bautista Wastewater Treatment Plant (WWTP).88 Figure 5-10 illustrates the City's wastewater system. Figure 5-10: The City of San Juan Bautista Wastewater System Map The City of San Juan Bautista provides wastewater collection services to approximately 700 residential, commercial, industrial, and institutional accounts.89 Areas within the City's potential wastewater collection service area include: • 741 acres of flow-generating lands, including residential and non-residential areas. • 106 acres of undeveloped land inside the service area. 88 City of San Juan Bautista Wastewater Master Plan. November 2020.p. 2-1. 89 City of San Juan Bautista Wastewater Master Plan, August 2020, p. 1-1. Ch. 5 City of San Juan Bautista 150 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City of San Juan Bautista does not provide services to other agencies. In 2018, the City of San Juan Bautista contracted with Cypress Water Services, Inc. to operate the City's Wastewater Treatment Plant (WWTP) for three years. This agreement was extended for one year in 2020, renewed in 2021, and is expected to remain in effect until 2024.90 Additionally, on September 7, 2021, the City of Hollister and SJB entered a memorandum of understanding (MOU) for SJB to send domestic wastewater to Hollister. This is due to the City's WTTP discharging high salt levels into the creek, exceeding the NPDES permit levels and resulting in a violation. In July 2023, the agreement was amended to include language regarding the volume of wastewater to be sent to Hollister, capping the yearly average at no more than 0.43 mgd. This is substantially higher than the .16 mgd of wastewater generated today, and it is the maximum amount to be generated at the buildout of the City over the next forty years and in the foreseeable future.91 Since 2001, the City has provided municipal sewer services outside of the City boundary to Coke Farms, an agricultural production operation. According to Resolution No. 2001-14, Coke Farms requested sewer services to accommodate 3,000 gallons per day of effluent flow. The City also provides sewer services to Natural Selections Foods, another agricultural operation outside of the City boundary, since 2002. According to Resolution No. 2002-01, Natural Selections Foods requested the City's sewer services to accommodate 10,000 gallons per day of domestic wastewater flows. Two industrial users, Taylor/Earthbound Farms and True Leaf Farms, operate private water and wastewater facilities; therefore, the City's water system does not service these users, but they convey wastewater flows to the WWTP. 90 City of San Juan Bautista Iterim Agreement for Wastewater Operator Services. April 27, 2022. 91 Resolution No. 2023-49 A Resolution of the City of San Juan Bautista Approving the Amended Agreement with the City of Hollister for Domestic Wastewater Treatment and Disposal. Ch. 5 City of San Juan Bautista 151 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The City's sewer system operations are supported by contracts, a public works supervisor, four full-time maintenance workers, and two part-time staff for additional public works tasks. The City has also engaged the engineering firm MNS, for a Deputy City Engineer that is assigned to provide daily support for the Department. This role was crucial to the City's response to the 2023 floods.92 The City owns and operates a wastewater collection system comprising approximately 9.3 miles of gravity trunks, force mains, and five lift stations, which convey the flow to the City's Wastewater Treatment Plant (WWTP). The City's wastewater collection system has a single primary trunk that begins at the Alameda near Old San Juan Hollister Road and collects flows as it travels along Fourth Street, Tahualami Street, and Third Street until the flows reach the WWTP location. According to Stantec's report, the existing WWTP is a tertiary treatment facility that includes a mechanical screen and influent pump station, sequencing batch reactor pond (SBR), flow equalization tanks, a denitrification pond, pressure sand filters, and ultraviolet (UV) disinfection. The last major improvement project, completed in 2010, upgraded Pond 1 to an aerated pond functioning as a SBR and divided Pond 2 into three cells, including a polishing pond and two sludge storage lagoons. The 2010 upgrade project also added a mechanical basket screen, a new dual media pressure filtration system, and a UV disinfection system. In 2018, the City removed 30 years of accumulated sludge from Pond 2 to accommodate the continued operation of the treatment plant. The City's WWTP is located at 1300 Third Street in San Juan Bautista and has a permitted capacity of 270,000 gpd. The WWTP provides sanitary wastewater collection, treatment, and disposal for the community. 92 City of San Juan Bautista, Budget Book 2024. P.78. Ch. 5 City of San Juan Bautista 152 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final According to the 2020 Wastewater Master Plan, the SBR provides some buffering capacity (1.6 mg); however, it is insufficient to equalize the excess daily flow during peak flow conditions.93 This City's WWTP is not designed to remove salt (e.g., sodium, chloride, and total dissolved solids) from its domestic wastewater. As such, the City has received repeated effluent violations for chloride, sodium, and total dissolved solids (TDS). In recent years, the Regional Water Quality Control Board (RWQCB) has issued notices for high levels of biochemical oxygen demand (BOD), ammonia, and total suspended solids. The wastewater master plan evaluated various solutions to address the concerns regarding effluent quality. The main solutions identified are upgrading the existing WWTP or building a force main and lift station to convey the City's wastewater to the Hollister Domestic WWTP. As mentioned previously, the City has entered into a memorandum of understanding (MOU) with the City of Hollister for SJB to send domestic wastewater to the City. As a result, a San Juan Bautista to Hollister Sanitary Sewer Force Main project is underway. The project setting begins at the City's existing WWTP on Third Street in San Juan Bautista and terminates at the City of Hollister Domestic WWTP at the intersection of State Route 156 and San Juan Hollister Road, in Hollister. The majority of the project route is on existing road rights-of-way within farmland. The project is expected to be funded through a combination of grants, low-interest-rate financing from the USDA or Clean Water State Revolving Fund (SRF) financing program, and cash funding generated from prior and proposed sewer rate increases. The City anticipates that $5.4 million of the project cost will be funded through grants; however, it is actively pursuing additional grant funding. The project is estimated to cost the City $18,571,000. However, the City has indicated that it can only finance up to $14,268,000 of the development costs through revenues, charges, taxes, assessments, or funds otherwise available, resulting in a reasonable user charge. As such, the City received a Water and Waste System Grant from the United States Department of Agriculture for $4.303,000 or 23.17 percent of the project development costs.94 93 City of San Juan Bautista, Wastewater Master Plan. August 2020. p.4-4. 94 Water and Waste System Grant Agreement, United States Department of Agriculture Rural Utilities Service. Ch. 5 City of San Juan Bautista 153 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The State's FY 22-23 budget included a $3-million appropriation for the City's sanitary sewer force main project. According to Resolution No. 2023-53, this funding is critical to the $23.6 million needed to fund the project.95 In May 2023, the City also applied for the EPA's State and Tribal Grant Community Assistance Grants Program to obtain partial funding for its Wastewater System Compliance Project - Force Main to Hollister WWTP. This grant specifically covers the City's pre-award costs incurred on or after October 1, 2021. These are the same costs that would have been allowable if incurred after the date of the Federal award. The grant will allow the City to cover the project design, engineering, and environmental assessment and compliance costs for achieving compliance with the National Permit Discharge Elimination System standards and the EPA's Administrative Order on Consent Requirements.96 Construction was scheduled to begin between Spring 2022 and Fall 2023 and was expected to last about one year. This timeline includes project award, notice to proceed, substantial completion, start-up, punch-list resolution, and project closeout. Substantial completion is estimated to be nine months after the notice to proceed. In August 2023, the City entered construction agreements with Specialty Construction, Incorporated (SCI) after successfully bidding for a $16,518,749 contract price. The project's groundbreaking ceremony was held in September 2023 at the San Juan Bautista Wastewater Treatment Plant, located at 1127 Third Street, at the Corner of Third and Trailside Drive. The August 2023 Quarter Report and Schedule Update outlined the following construction and completion dates:97 • 30 percent project completion: November 15, 2023 • 60 percent project completion: February 28, 2024 • Substantial construction complete (start-up force main): April 27, 2024 • Punch list resolution: May 30, 2024 • Initial Project completion: June 26, 2024 However, in a May 2024 project timeline update by SCI, a key challenge hindering project completion was identified as material procurement, particularly the main switchboard. This 95 Resolution No. 2023-53, A Resolution of the City of San Juan Bautista Authorizing the City Manager to Sign and File a Financial Assistance Application for a Financing Agreement from the State Water Resources Control Board for the City's Sanitary Sewer Force Main Project ("Project"). 96 Pre-Award Costs for San Juan Bautista's Community Grant Project Period: March 2020 - June 2026. 97 RE: San Juan Bautista Compliance Project 2022- 2s Quarter Report (Report #4). August 1, 2023. Ch. 5 City of San Juan Bautista 154 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final component is critical as the new lift station cannot undergo start-up testing without it. Until the new lift station is operational, the existing one must remain in service. Demolition is scheduled to begin on September 4, 2025, with sludge removal expected to be completed by early February 2026. As the project progresses and key equipment delivery dates are confirmed, a more detailed schedule is set to be established.98 When the project is completed, the City will no longer treat water; it will just collect and convey it to the Hollister wastewater treatment plant. As mentioned previously, the San Juan Bautista to Hollister Sanitary Sewer Force project is underway to bring the City's water and wastewater systems into compliance with local NPDES permit limits. The collaboration's aims to provide adequate wastewater collection system facilities to meet existing and projected peak dry weather flows and peak wet weather flows for San Juan Bautista and Hollister.99 As stated previously, the City's WWTP effluent has received repeated violations for chloride, sodium, and total dissolved solids (TDS). In more recent years, the RWQCB has also issued notices for high levels of biochemical oxygen demand (BOD), ammonia, and total suspended solids. The 2020 Wastewater Master Plan utilized water billing consumption records to determine the city's average annual wastewater flow at the WWTP, which is 0.15 mgd. The average daily wastewater flows from existing and future developments by 2036 are estimated at 0.43 mgd. These flows were used to size future infrastructure facilities, including 98 Specialty Construction, Incorporated. 23415- Sanitary Sewer Force Main to Hollister Project, San Juan Bautista, CPM Schedule Update – Progress through 4-30-24. May 10, 2024. p.4. 99 Public Review CEQA-Plus Initial Study/ Proposed Mitigated Negative Declaration San Juan Bautista to Hollister Sanitary Sewer Force Main. November 202, p.5. Ch. 5 City of San Juan Bautista 155 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final collection mains and lift stations. Flows were also used to allocate and reserve capacities in the existing or any proposed facilities. Based on an estimated average of 3.8 persons per home, the City estimates that the WTTP can accommodate up to 1,500 new homes. According to the 2035 General Plan projection of 3 percent population growth, the City anticipates 497 new homes by 2035. Alternatively, the Wastewater Master Plan projects a 1.9 percent population growth by 2035, resulting in approximately 2,900 residents, and a total of 287 new homes. Alternately, based on San Benito County's Average Annual Growth Rate (AAGR) of 0.47, the City's population is projected to increase to 2,403 by 2060.100 With the WTTP's capacity to accommodate 1,500 new homes and an average of 3.8 persons per home, all of these growth scenarios can be serviced adequately. This section reviews indicators of wastewater service adequacy, including collection system integrity and regulatory compliance. Whenever available, industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. There are several measures of the integrity of the wastewater collection system, including sanitary sewer overflows, peaking factors resulting from infiltration and inflow (I/I), and efforts to address infiltration and inflow. All wastewater agencies are required to report sanitary sewer overflows (SSOs) to the SWRCB. Sewer overflows are discharges from sewer pipes, pumps, and manholes. Overflows reflect the capacity and condition of the collection system piping and the effectiveness of routine maintenance. The sewer overflow rate is calculated as the number of overflows per 100 miles of the main pipeline per year. The SWRCB shows 0 SSOs for the City of San Juan Bautista. 100 The City of San Juan Bautista, Request for Information, June 2023. Ch. 5 City of San Juan Bautista 156 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Wastewater flow includes not only discharges from residences, businesses, institutions, and industrial establishments but also infiltration and inflow. Infiltration refers to groundwater that seeps into sewer pipes through cracks, pipe joints, and other system leaks. Inflow refers to rainwater that enters the sewer system from sources such as yard and patio drains, roof gutter downspouts, uncapped cleanouts, pond or pool overflow drains, footing drains, cross-connections with storm drains, and even holes in manhole covers. Infiltration and inflow tend to affect older sewer systems to a greater degree. Infiltration and inflow rates are highest during or right after heavy rain. They are the primary factors driving peak flows through the wastewater system and a major consideration in capacity planning and costs. The peaking factor is the ratio of peak-day wet weather flows to average dry weather flows. The peaking factor indicates the degree to which the system suffers from I/I, where rainwater enters the sewer system through cracks, manholes, or other means. A peaking factor of up to three is generally considered acceptable based on industry practices. According to the City's waste disposal agreement with Hollister, an inflated capacity was allocated to account for potential stormwater infiltration and inflow. Although SJB's current flow is about 0.15 to 0.20 mgd, the agreement permits up to 1.2 mgd, with a yearly average limit of 0.43 mgd. The San Juan Bautista WWTP operates under Order No. R3-2009-0019 NPDES permit No. CA0047902. The City has been out of compliance since at least 2007, primarily due to high levels of chlorides, sodium, and total dissolved solids. In August 2020, the City entered an Administrative Order on Consent with the EPA to address these compliance issues, agreeing to 1) decommission the current plant and send wastewater to Hollister for treatment, 2) eliminate brine-producing water softeners, and 3) blend drinking water with groundwater to reduce salt levels. In February 2021, a Memorandum of Understanding was executed with the San Benito County Water District (SBCWD) to provide treated surface water for blending. According to the RWQCB's website, the City had 202 violations from 2019 to 2023, with 13 reported in 2023. Additionally, the RWQCB's website shows three enforcement actions since 2015, all related to mandatory minimum penalties (MMPs) due to effluent limit violations. From 2007 to 2022, the City incurred approximately $981,000 in penalties. Ch. 5 City of San Juan Bautista 157 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final In June 2019, EPA and RWQCB inspections identified ongoing pollution from the wastewater facility. Following continued non-compliance, an Administrative Order on Consent (AOC) No. CWA-309(a)-20-007 was issued on August 20, 2020, requiring the City to address violations noted in a 2019 inspection report, including violations of sections 301(a) and 402 the Clean Water Act. The City faces a total expedited payment of $33,000 for violations occurring from April 30, 2022, through September 30, 2022, due by March 15, 2023. An additional enforcement order, issued in October 2023, addresses further MMPs for violations that occurred from October 31, 2022, through June 30, 2023.101 101 Central Coast Regional Water Quality Control Board. October 31, 2023. Enforcement Program: Expedited Payment Letter (EPL) No. R3-2023-0076, Acceptance of Conditional Offer and Waiver of Hearing Executed as Administrative Civil Liability Order for City of San Juan Bautista Wastewater Treatment Facility Effluent Violations of WDR Order No. R3-2009-0019, San Benito County, NPDES No. CA0047902, WDID No. 3 350102001. Ch. 5 City of San Juan Bautista 158 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final One issue that needs to be addressed is that the 2016 General Plan SOI and UGB for SJB was never adopted by LAFCO. Therefore, the 1998 SOI remains the guiding framework for growth, and it conflicts with nearly all of the 2016-2035 General Plan's land use, open space, and conservation policies. In 2020, the SJB Council appointed an "Urban Growth Boundary Committee" to evaluate the options for addressing this discrepancy. The process involved contentious meetings, frequent new appointments, and numerous absences. The committee ultimately evaluated two primary approaches: one advocating for a more expansive SOI to enhance legislative control and development management, and the other for a more restrictive SOI to preserve open space within a designated planning area. After thorough deliberation, including input from property owners and the community, as well as an assessment of resource and development constraints, the City Council adopted a revised SOI and UGB in November 2023. This update aligns the SOI with City limits and reduces the size of the UGB. The resolution also includes plans to amend the 2035 General Plan and collaborate with San Benito County to formalize a Planning Area through a MOU. The City plans to apply to LAFCO after completing a Community Plan, being drafted by EMC Planning Group. This plan will focus on managing infill and mixed-use development within City limits while addressing constraints such as public safety, hazards, natural resource conservation, and infrastructure. Additionally, a required component for a significant update in SOI is an MSR. As such, LAFCO plans to complete a full MSR for the City of San Juan Bautista in the next fiscal year. The City of San Juan Bautista may consider the option of establishing a regional sanitary district in collaboration with neighboring agencies. This option may enhance efficiency across agencies and ensure consistent service delivery within the region. However, there are several challenges to implementing this recommendation, including reaching a consensus among the involved agencies and relinquishing local control. For a more detailed discussion of this option, please refer to the Governance Structure Option section in the City of Hollister chapter. Ch. 5 City of San Juan Bautista 159 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 5-1: The City has experienced a cycle of "booms" and "busts," with the population dwindling in some decades and surging in others. According to the 2020 Census, the population in San Juan Bautista has slightly increased to 2,089. The California Department of Finance (DOF) reports that as of 2023, the City's population has decreased to 2,022. 5-2: According to the Department of Finance (DOF), countywide growth projections for San Benito County are expected to see an approximately 0.47 percent average annual growth rate (AAGR) from 2020 (64,432) through 2060 (77,666). Utilizing the County's AAGR and Hollister's 2023 population estimates of 2,022, the population within the City is anticipated to increase slightly to 2,403 by 2060. 5-3: The statewide MHI for 2017-2021 according to Census Bureau data is estimated at $84,097, and hence the calculated threshold of $67,277 defines whether a community was identified as disadvantaged. Therefore, with a median income of $92,404, the City of San Juan Bautista is not considered a disadvantaged community. 5-4: The City of San Juan Bautista (SJB) operates and maintains a wastewater collection system. Currently, the wastewater flows are conveyed to the City's Wastewater Treatment Plant (WWTP). The City provides wastewater collection services to approximately 700 residential, commercial, industrial, and institutional accounts. 5-5: The City also provides sewer services to two agricultural production operations, Coke Farms and Natural Selections Foods, outside of the City boundary. 5-6: According to the City's 2020 Wastewater Master Plan, Peak Dry Weather Flow (PDWF) and Peak Wet Weather Flow (PWWF) used for evaluating the existing collection system were estimated at 0.51 MGD and 1.74 MGD, respectively. The PDWF and PWWF used for designing the General Plan buildout system, including growth, were estimated at 1.39 MGD and 2.25 MGD, respectively. This indicates the City only uses about 36 percent of the permitted capacity during Peak Dry Weather Flow and about 77 percent during Peak Wet Weather Flow. 5-7: The SWRCB shows 0 SSOs for the City of San Juan Bautista. 5-8: According to the RWQCB's website, there were 202 violations for the City of San Juan Bautista from 2019-2023, of which 13 violations were reported in 2023. Ch. 5 City of San Juan Bautista 160 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Additionally, the RWQCB's website shows three enforcement actions since 2015. All three are admin civil liability enforcement actions regarding mandatory minimum penalties (MMPs) due to effluent limit violations. 5-9: Due to SJB's repeated effluent limit violations, in 2021, the City of Hollister and SJB entered into a memorandum of understanding (MOU) for SJB to send domestic wastewater to Hollister. 5-10: The project is expected to be completed in January 2025. Once the project is complete, the City will no longer treat water; it will only collect and convey it to the Hollister wastewater treatment plant. 5-11: According to the 2023 high-level organizational review, Citygate identified several fiscal positives implemented by the City that have helped to improve its overall fiscal health. These include a fiscally healthy General Fund, the sewer and water rate increase of 2021 and 2022 respectively, the hiring of an Assistant City Manager to focus on economic development, and the implementation of a new financial system. 5-12: Citygate also identified potential fiscal-related operational issues during its review. This included a lack of review or adjustment related to current fees and charges, a lack of formalized policies and procedures, the potential noncompliance with the California Government Code due to the use of the same auditor service, and the lack of succession planning, cross-training, and long-range financial planning. 5-13: As mentioned previously, due to SJB's repeated effluent limit violations, SJB began sending domestic wastewater to Hollister sinch 2021. Additionally, a Hollister Sanitary Sewer Force project is underway for SJB to convey the City's wastewater to the Hollister Domestic WWTP. 5-14: The City's website is easily navigated and makes available a substantial amount of information and documentation that is clear and concise for the customer. However, the most recent audited financial statements, Annual Compensation Reports, and the State Controller's Office Financial Transaction Reports are unavailable on the City's website as required. It is recommended that the City add these reports to the website in an easily accessible location. 5-14: It is also recommended the City makes the Sanitary Sewer Management Plan (SSMP) available on its website. 5-15: It is recommended that completed and up-to-date ethics training and Form 700s for each required staff be readily available on the City's website. 5-16: The City of San Juan Bautista demonstrated transparency when sharing information to create this report. Ch. 5 City of San Juan Bautista 161 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 5-17: As a governance structure option, it is recommended that the City work with LAFCO to ensure that an updated SOI that corresponds with the existing General Plan is adopted. Establishing a regional sanitary district with neighboring agencies has also been identified as an option. Ch. 5 City of San Juan Bautista 162 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The San Benito County Water District (SBCWD) is a special district formed in 1953 by the San Benito County Water Conservation and Flood Control Act. At that time, the District merged with the Hollister Irrigation District, becoming the successor to the water rights, water facilities, and land interests of the Hollister Irrigation District. The name was changed from San Benito County Water Conservation and Flood Control District to San Benito County Water District in 1988. SBCWD has broad powers for the conservation and management of water (flood, surface, drainage, and groundwater) throughout San Benito County. The District's primary focus is managing water quantity and quality throughout the County, including, where appropriate, the development of local water supplies and the development and importation of water supplies from outside the County. SBCWD also serves as the Groundwater Sustainability Agency (GSA) for the Bolsa, Hollister, San Juan Bautista, and Tres Pinos groundwater basins. Residential communities served by the District include the City of San Juan Bautista, the City of Hollister, and unincorporated urban areas surrounding Hollister and Tres Pinos. The District provides water service and water-related services through zones of benefit. Current zones of benefit include: • District Administration (Zone 1) • San Benito River System (Zone 3) • San Felipe Project (Zone 6) • Groundwater Sustainability Plan (Zone 7) SBCWD relies on a diverse portfolio of water supply sources, including groundwater, imported water, recycled water, and local surface water. This review is specific to the District's recycled water services. Ch. 6 SBCWD 163 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The District covers all of San Benito County, which spans approximately 1,389 square miles and serves a population of over 63,526 residents. Residential communities served include the City of San Juan Bautista, the City of Hollister, and unincorporated urban areas surrounding Hollister and Tres Pinos. A five-member board of directors governs the District. Board members are elected for four-year terms from divisions that are coterminous with the supervisory districts of San Benito County. Directors must be residents of and registered voters in the division they represent. Members begin service in December of even-numbered years. The Board of Directors meets on the last Wednesday of each month at 5:00 p.m. at the San Benito County Water District office, 30 Mansfield Road, Hollister, CA 95023. Beginning April 27, 2022, residents can attend all San Benito County Water District Board meetings in person. The District also offers meetings via Zoom. Meeting agendas are posted on the District's website in compliance with the Brown Act102 (Government Code §§ 54954.2 and 54956), as amended by California AB 2257, which requires agencies to make agendas available on their websites and in a publicly accessible physical location at least 72 hours prior to regular meetings and at least 24 hours prior to special meetings. Agenda minutes for Board meetings are also available on the City's website. Typically, one of the District's twelve standing committees reviews most issues before the Board. Each committee subsequently reports to the full Board, which then makes the final decisions. There are twelve standing committees: • Finance • Investments • Administration • Expansion 102 California Government Code, Section 54950, commonly known as the "Brown Act" or "Open Meeting Law," establishes requirements and restrictions for meetings of local legislative bodies. The law ensures public access to these meetings, facilitating public participation and promoting transparency in local government decision-making. Ch. 6 SBCWD 164 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • Rural Water Systems • Zone 3 Operations and Water Supply • Zone 6 Water Supply • Zone 6 Operations • Personnel • Pacheco Reservoir Exploratory • San Felipe Division Activities • Groundwater Sustainability Agency In addition, District Board members serve as the District representatives to the following Board of Directors and multi-agency committees: • San Luis & Delta Mendota Water Authority (2 positions) • Association of California Water Agencies-Joint Powers Insurance Authority • Pajaro River Watershed Flood Prevention Authority • Water Resources Association of San Benito County • Urban Area Water and Wastewater Master Plan Governance Committee (2 positions) Ch. 6 SBCWD 165 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 6-1: The San Benito County Water District Governing Body governing body Directors are elected by division that are coterminous with the supervisory districts of San Manner of Selection Benito County Length of Term 4-year Last Wednesday of each month at 5 p.m. at the San Benito County Water District at 30 Meetings Mansfield Road, Hollister, CA 95023 Agenda Distribution Online Minutes Distribution Online board members Term Manner of Length of Member Name Division Position Expiration Selection Term Mark Wright 1 Director 2026 By Division 4-years Joe Tonascia 2 Director 2024 By Division 4-years Andrew Shelton 3 Director 2024 By Division 4-years Doug Williams 4 Director 2026 By Division 4-years Director, Sonny Flores 5 President 2024 By Division 4-years contact Contact Jeff Cattaneo, Interim General Manager Mailing Address 30 Mansfield Road, Hollister, CA 95023 Phone (831) 637-8218 Email/Website jcattaneo@sbcwd.com The Sustainable Groundwater Management Act (SGMA) requires a communications plan to reach and involve the community and stakeholders around the Groundwater Sustainability Plan. SBCWD recognizes that this is a critical aspect of ensuring the process is transparent, engaging, effective, and fully accessible to community members. As such, the District produces and distributes informational fact sheets, provides specific website resources on the Sustainable Groundwater Management Act (GMA) and Groundwater Sustainability Plan (GSP), utilizes social and traditional media, and conducts several community workshops on key issues and milestones in the GSP preparation. Interested community members can also sign up to receive email updates, including notices of upcoming community workshops. Ch. 6 SBCWD 166 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Ethics training is required once every two years, beginning with an odd-numbered year (AB 1234, Chapter 700, Statutes of 2005). Training is available online at the State of California Fair Political Practices Commission (FPPC) website. All SBCWD Board Members have completed up-to-date Ethics Training. Additionally, a Statement of Economic Interest, or Form 700, must be submitted annually to demonstrate transparency in economic interests, as required by the Political Reform Act of 1974 (California Government Code Sections 81000-81003). Every elected official and public employee who makes or influences governmental decisions is required to submit Form 700. All SBCWD's members have current filings for Form 700 with the California Fair Political Practices Commission, indicating transparency in their economic interests. It is recommended that the District make all certificates of completion for ethics training and Forms 700s available on the website to ensure enhanced transparency. Through the District, there also exists a conflict-of-interest code and bylaws, outlined in the municipal code, as required and by which the City of San Juan Bautista must abide. The San Benito County Water District demonstrated accountability in its disclosure of information and cooperation with the LAFCO questionnaires and other requests for information. The following figure identifies efforts to meet State laws designed to ensure transparency and accountability. The San Benito County Water District meets the requirements outlined in State laws regarding the Brown Act, website materials, and best practices to ensure easy access to significant planning documents and financial reports. The City's website is easily navigated and makes available a substantial amount of information and documentation that is clear and concise for the customer. Annual Compensation Reports, the State Controller's Office Financial Transaction Reports, and the Enterprise System Catalogue are available on the City's website as required. It is recommended that the District makes up-to-date financial statements available. Ch. 6 SBCWD 167 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 6-2: Transparency and Accountability Indicators transparency and accountability sbcwd Agency website (GC §53087.8) Yes Contact information available on website (GC §53087.8 (a)(3)) Yes Annual Compensation Report (GC §53891 and 53908) Yes Adopted budget available on website Yes State Controller's Office Financial Transaction Report available on website (GC §53891 and 53893) Yes Notice of public meetings provided Yes Agendas posted on website (GC §54954.2) Yes Public meetings are live streamed Yes Minutes and/or recordings of public meetings available on website Yes Master Plan available on website Yes Strategic Plan available on website N/A Sanitary Sewer Management Plan available on website N/A Enterprise System Catalogue available on website (GC §6270.5 (a)) Yes Efforts to engage and educate the public on the services to the community Yes Staff and governing board member ethics training and economic interest reporting completed Yes Compliance with financial document compilation, adoption, and reporting requirements Yes Adherence to open meeting requirements Yes The Government Finance Officers Association of the United States and Canada (GFOA) awarded the District a Certificate of Achievement for Excellence in Financial Reporting for its annual comprehensive financial report (ACFR) for the fiscal year ended June 30, 2020. This was the ninth year the District has been awarded a Certificate of Achievement. To be awarded a Certificate of Achievement, a District must publish a comprehensive, easily readable, and efficiently organized annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. Ch. 6 SBCWD 168 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final While public sector management standards vary depending on the size and scope of the organization, there are minimum standards. Well-managed organizations evaluate employees annually, track employee and agency productivity, periodically review agency performance, prepare a budget before the beginning of the fiscal year, conduct periodic financial audits to safeguard the public trust, maintain relatively current financial records, conduct advanced planning for future service needs, and plan and budget for capital needs. The San Benito County Water District has 23 full-time equivalent (FTE) employees. Figure 6-3 illustrates SBCWD's organizational chart. The District conducts annual performance evaluations for employees and the entire agency. Figure 6-3-: San Benito County Water District Organizational Chart Ch. 6 SBCWD 169 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final SBCWD's Board of Directors annually adopts a capital and operating budget for the upcoming fiscal year, starting July 1, as a financial plan for the year. The District also prepares audited financial statements each year. In 2021, SBCWD adopted an updated Agricultural Water Management Plan (AWMP) and submitted it to the California Department of Water Resources (DWR), as mandated by the California Water Code.103 The Plan must describe and evaluate water deliveries and uses, sources of supply, water quality, water delivery measurements, water rates and charges, water shortage policies, drought management, and practical, efficient water management practices.104 SBCWD also participated in the 2020 Hollister Urban Area (HUA) Urban Water Management Plan (UWMP), which was prepared as a collaborative effort of SBCWD, Sunnyslope County Water District (SSCWD), and the City of Hollister. The Plan aims to guide the area's future water management efforts. This Plan builds on and updates the 2015 UWMP, accounting for changes in the California Water Code and local planning and water management efforts. In 2008, an original Master Plan was prepared to establish project opportunities for regional cooperation and coordination of water, wastewater, and recycled water facilities to serve the HUA. The planning effort was initiated through the 2004 Memorandum of Understanding (2004 MOU) developed among the City of Hollister, San Benito County, and SBCWD. The 2004 MOU was amended in 2008 to include the SSCWD. The Master plan was previously updated in 2017. The 2017 Master Plan recommended several supply augmentation and facility expansion projects, including a few specific to recycled water. For example, to improve recycled water production, the City of Hollister's Water Reclamation Facility (WRF) would add flow equalization, and the recycled water distribution system would be expanded to new customers, as needed.105 103 California Water Code mandates that agricultural water suppliers providing water to 10,000 or more irrigated acres prepare and adopt an AWMP. 104 San Benito County Water District, 2020 Agricultural Water Management Plan. September 2021 p.1. 105 San Benito Urban Areas Water Supply and Treatment Master Plan Update, October 25, 2023.p.7. Ch. 6 SBCWD 170 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Since the 2017 update, several changes have occurred, including the City of San Juan Bautista (SJB) joining the MOU, ongoing drought conditions, the State's adoption of the Sustainable Groundwater Management Act, and the evolving landscape of future water supply options. Given these changes, the 2022 San Benito Urban Areas (SBUA) Water Supply and Treatment Master Plan (Master Plan Update) was adopted, with a focus on drinking water supply and treatment planning. The report provides water demand projections through 2045 and an updated strategy for near and long-term water supply and treatment. The planning period for this Master Plan Update extends from 2021 to 2045. The SBUA is located in San Benito County, California, is approximately 50 miles southwest of the City of San Jose and 40 miles east of Monterey Bay. The 2008 Master Plan and 2017 Master Plan Update focused on the Hollister Urban Area (HUA), which includes the City of Hollister and its adjacent unincorporated areas of San Benito County designated for urban development. The SBUA Master Plan Update incorporates the City of San Juan Bautista into the Plan. SBCWD adopted a Climate Change Plan in 2022 to review and summarize the analysis performed to date, assessing the anticipated impacts of climate change on the District's water supply. The Plan also documents the District's efforts in identifying system vulnerabilities and risk mitigation strategies. This Plan is appended to the 2022 San Benito Urban Areas Water Supply and Treatment Master Plan Update.106 The District was also part of the 2022 San Benito County Multi-Jurisdictional Hazard Mitigation Plan (HMP), along with the County of San Benito, the City of Hollister, the City of San Juan Bautista, and the Sunnyslope County Water District. The HMP aims to reduce the community's vulnerability to natural and manmade disasters and enhance resilience. The County has maintained an HMP since 2011, meeting the requirements of the Stafford Act and Title 44 CFR §201.6, with the last update in 2016. The 2021 HMP integrates lessons learned from recent California wildfires, droughts, periodic floods, and the COVID-19 pandemic. Supported by FEMA's Hazard Mitigation Grant Program, the plan qualifies for FEMA's Hazard Mitigation Assistance grants and details the County's approach to boosting community resilience to hazards, without creating policies or legal obligations. 106 San Benito County Water District, Climate Change Strategic Plan. December 13, 2022, p.2. Ch. 6 SBCWD 171 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final This section reviews historical and recent population and economic growth, projected growth, and growth areas. San Benito County has land use regulatory authority over all unincorporated land in the County, which includes everything except land within the city limits of Hollister and San Juan Bautista or land owned/managed by either the State or Federal governments (e.g., State Parks, National Parks, Bureau of Land Management areas, and tribal lands). The County's jurisdiction covers roughly 83 percent of all land, the vast majority of which is designated either Rangeland (RG) or Agriculture (A). However, there are more intensive residential and urban uses within the San Juan and Hollister valleys, particularly surrounding the two cities. The purpose of the Rangeland (RG) designation is to maintain open space and grazing land on hills, mountains, and remote areas of the County. This designation applies to areas with minimal transportation access, high to very high fire hazards, and no public infrastructure (e.g., sewer, water, drainage). Most of these areas are located within remote parts of the County. This designation allows uses directly supporting agricultural operations and one principal residential dwelling unit per lot. Secondary dwellings are permitted for relatives, caretakers/employees, and farm worker housing. Figure 6-4 shows land use designations for the entire County. As mentioned, SBCWD's service area encompasses the entirety of San Benito County. Accordingly, for a detailed discussion of the growth and population projections for the City of Hollister and the City of San Juan Bautista, please refer to Chapters 4 and 5, respectively. The San Benito County 2014-2023 Housing Element indicates that approximately 99 percent of the County is unincorporated land, with roughly 79 percent of this area being in some form of public or private open space. The majority of the open space lands are in private ownership under the Williamson Act Contract (64.5 percent), with the remainder in government ownership (13.2 percent). About 91 percent of government land in the County is federally owned, most of which is located in South County and held by the Bureau of Land Management land (105,403 acres) or Pinnacles National Monument (approximately 26,000 acres).107 Figure 6-4: San Benito County Land Use Diagram 107 San Benito County Housing Element, 2014- 2023. Adopted by the San Benito County Board of Supervisors on April 12, 2016, p.5-i. Ch. 6 SBCWD 172 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Ch. 6 SBCWD 173 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The San Benito County's 2035 general plan includes a land use element that focuses on identifying ways the County can encourage growth in existing unincorporated communities, new communities, or clustered residential developments to preserve prime farmland and rangeland, protect natural habitats, and reduce the financial, social, and environmental impacts of urban sprawl. 108 The General Plan also has a public facilities and services element that provides the framework for decisions in San Benito County concerning public and private infrastructure, utilities, and services. One of the objectives within this element is water supply and conservation. This goal aims to ensure reliable water supplies for unincorporated areas, meeting the needs of existing and future agriculture and development, while promoting water conservation and the use of sustainable water sources (Goal PFS-3). Additionally, the following specific goals are highlighted: 109 • PFS-3.1 Water District Support: The County shall support efforts of the San Benito County Water District to ensure that adequate high-quality water supplies are available to support current residents and businesses and future development projects. • PFS-3.2 Interagency Coordination: The County shall cooperate with public and private water agencies to help address existing and future water needs for the County. • PFS-3.3 Water Rights Protection: The County shall support public and private water agencies in their efforts to protect their water rights and water supply contracts, including working with Federal and State water projects to protect local water rights. • PFS-3.4 Drought Response: The County shall encourage all public and private water agencies to develop and maintain drought contingency and emergency services plans, emergency inter-ties, mutual aid agreements, and related measures to ensure adequate water services during drought or other emergency water shortage. • PFS-3.5 Water Supply Development: The County shall support plans to develop new, reliable future sources of supply, including, but not limited to, the expansion of surface water storage and conjunctive use of surface water and groundwater while promoting water conservation and water recycling/reuse. • PFS-3.6 Conjunctive Use: The County shall support conjunctive use of groundwater and surface water to improve water supply reliability. 108 San Benito County 2035 General Plan, July 21, 2015. p.3-1. 109 San Benito County 2035 General Plan, July 21, 2015. p.7-5 to 7-6. Ch. 6 SBCWD 174 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final • PFS-3.7 Groundwater Management: The County shall support cooperative, regional groundwater management planning by water resource agencies, water users, and other affected parties to ensure a sustainable, adequate, safe, and economically viable groundwater supply for existing and future uses within the County. • PFS-3.8 Integrated Management: The County shall support and participate in the integrated management of surface water and groundwater resources, wastewater, stormwater treatment and use, and the use of reclaimed water. • PFS-3.9 Sufficient Water Supply for New Development: The County shall require new developments to prepare a source water sufficiency study and water supply analysis for use in preparing, where required, a Water Supply Assessment per SB 610 and a Source Water Assessment per Title 22. This shall include studying the effect of new developments on the water supply of existing users. The County encourages the development of integrated regional water management plans or similar plans. A detailed discussion of trends in population growth, growth strategies, and planned and proposed development within San Benito County is included in the Executive Summary (Chapter 1). LAFCo is required to evaluate disadvantaged unincorporated communities as part of this service review, including the location and characteristics of any such communities. The intent and history of this requirement is outlined in the Background Section of this report. A disadvantaged unincorporated community is defined as any area with 12 or more registered voters, or as determined by commission policy, where the median household income is less than 80 percent of the statewide annual median. According to Census Bureau data, the statewide Median Household Income (MHI) for 2017- 2021 is $84,097, and hence, the calculated threshold of $67,277 defines whether a community is disadvantaged. Therefore, with a median income of $95,606 as of 2021, San Benito County as a whole is not considered to be a disadvantaged community. Additionally, the California Department of Water Resources (DWR) has created a mapping tool using US Census data (American Community Survey Five-Year Data, 2016-2020) to identify disadvantaged communities based on median household income. The tool overlays Ch. 6 SBCWD 175 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Census Place, Census Tract, and Census Block Group data, highlighting areas where median household incomes are below 80 percent of the statewide median household income, as defined by the Disadvantaged Community (DAC) Definition. Unlike LAFCO, DWR does not use voter registration thresholds to define communities. According to the DWR mapping tool, several areas within the county are classified as disadvantaged Census Block groups. These include parcels in the northeast and southeast regions of San Juan Bautista along San Juan Highway and a parcel east of Dunneville near Pacheco Pass Highway. Additionally, disadvantaged areas are noted south of Hollister and northwest of Ridgemark. The District is not required by statute to adopt a budget; however, it does so annually to outline the major elements of the forthcoming year's operating and capital plans and allocate funding required for those purposes. Budget appropriations for major capital projects continue yearly until the project is completed. The Board Finance Committee reviews a quarterly financial report and submits it to the Board of Directors. The District's single enterprise fund is managed using a cost of service or "economic resources" measurement focus. This method includes all assets and activities in the statement of net position related to the provision and delivery of water services. The primary sources of operating revenue are customer charges for these services, while operating expenses cover the costs of sales and services, general and administrative expenses, and capital asset depreciation. Revenues and expenses that do not fall into these categories are classified as nonoperating. Nonoperating revenues include general and special-purpose taxes and assessments. Additionally, a fiduciary fund accounts for resources held for the benefit of parties outside the District.110 110 San Benito County Water District. Notes to Basic Financial Statements. June 30, 2022. p.20. Ch. 6 SBCWD 176 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 6-5: The San Benito County Water District Financial Summary FY 22-23 sbcwd financial summary fy 22-23 Operating revenue $8,561,579 Operating expenses Cost of water $1,875,591 Wages and employee related expenses $2,770,615 Pension cost (gain) expense $2,596,779 Contact services $3,761,037 Material and equipment $398,527 General and administrative $425,823 Utility expense $439,460 Depreciation and amortization $3,628,807 Total operating expense $15,896,639 Operating Loss ($7,335,060) Non-operating revenue (expenses) Taxes and assessments $12,058,062 Grant revenue $21,965 Other nonoperating revenues $220,136 Interest revenues $1,349,524 Investment loss ($601,321) Interest expense ($184,837) Other nonoperating expense ($5,270) Net nonoperating revenue (expenses) $12,858,259 Net position, beginning of year $143,935,158 Net position, end of year $149,458,357 Change in net position $5,523,199 Ch. 6 SBCWD 177 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Recurring operating deficits are a warning sign of fiscal distress. In the short term, reserves can backfill deficits and maintain services. However, ongoing deficits eventually will deplete reserves. In FY 22-23, SBCWD's operating expenses of $15,896,639 exceeded operating revenue of $8,561,579 by $7,335,060 or 85 percent. Additionally, non-operating revenue totaled $12,858,259, primarily consisting of tax assessments and grant revenue. An agency's "Net Position" represents the amount by which assets (e.g., cash, capital assets, other assets) exceed liabilities (e.g., debts, unfunded pension and OPEB liabilities, other liabilities). A positive Net Position indicates financial soundness over the long term. In FY 22-23, SBCWD's total assets, including deferred outflows of resources of $185,716,923, exceeded total liabilities of $36,258,566 with a total net position of 149,458,3757. This reflects an increase of $5,523,199 from FY 21-22. Fund balances and reserves should include funds for cash flow and liquidity in addition to funds to address longer-term needs. Cash reserves should be adequate to respond to system emergencies, temporary deficits, economic downturns, fiscal emergencies, and needed capital improvements. The District has a restriction and designation of net assets/cash policy that was initially adopted in 2004 and was last amended in 2023. The policy aims to document the District's business practices, accurately reflect the nature, purpose, and management of restricted and designated net assets, and provide a clear picture of the District's financial condition to constituents, creditors, financial institutions, regulatory agencies, state and federal agencies, and the general public. The policy includes restricted and designated net assets/cash. Restricted net assets/cash, defined by GASB Statement 34 and FASB Statement 71, are funds whose use is externally limited by creditors, grantors, contributors, or government laws and regulations. They may also be restricted by constitutional provisions or enabling legislation, ensuring funds are used for specified purposes or legal obligations. Ch. 6 SBCWD 178 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final According to GASB Statement 34, the designated net assets/cash represent how management intends to use resources, aligning with plans approved by senior government officials. These designations impose self-imposed restrictions on the use of available financial resources.111 111 Resolution no. 2023-14. A Resolution of the Board of Directors of the San Benito County Water District Amending Resolution 2022-20 Regarding the District Policy on Restriction and Designation of Net Assets/Cash. Ch. 6 SBCWD 179 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 6-6: SBCWD Restricted and Designated Net Assets/Cash name of restricted or designated net assets/cash purpose Restricted Net Assets/Cash To provide funds which may be used for emergencies and to pay costs necessary for the District Revolving Fund establishment of a zone within the District. To meet unforeseen extraordinary costs and San Felipe Hollister Conduit Reserve emergencies. To meet operations and maintenance costs incurred during period of special stress and extraordinary repair or replacement costs San Felipe- Reach 1 Reserve associated with Reach 1. Funds to pay for San Felipe Division costs, including existing foreseeable and unforeseeable USBR Contract Repayment and Rate costs that may result from catastrophic failure of Management Reserve San Felipe Division facilities. Reach 1 Major Repair and Replacement To provide funds for major repair and Reserve replacement associated with Reach 1. To provide funds for capital replacement of assets of the Water Supply and Treatment Reserved for Water Treatment Plants – Program, and funds so expended will be replaced Asset Replacement Reserve through subsequent contributions Reserve for Other Post-Employment To provide restricted funds for retiree future Benefits (OPEB) Trust medical payments. Designated Net Assets/Cash The reserves designated for operating contingencies are established to provide for unforeseen needs, revenue shortfalls, and Reserved for Operations emergency appropriations during the year. Established by board action(s to fund future capital improvement projects. The purpose of this designation is to accumulate funds for specific projects or utility purpose to provide all or a Reserved for Capital Improvements portion of the cost. Ch. 6 SBCWD 180 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Established by board policy to fund the contingent liability for the District's self-insured Reserved for Self-Insurance portion of vehicle coverage. This designation is to accrue funding for asset purchase and replacement in the period of use. Through this funding reservation, monies are set aside for planned future asset expenditures within specified categories. In addition, this reserve provides a funding source for unanticipated asset needs, mitigates the impact of large budget expenditures, and assists with asset management Reserved for Capital Asset Replacement and long range planning. To provide additional source of funds for Zone 6 water supply augmentation through local or Water Supply Revolving Reserve imported water purchases. To provide funds for the pre-construction Expanded Pacheco Reservoir (planning and design) phase of the project. The District provides post-employer retirement benefits to its employees to assist with future medical premium costs. In 2000, the District joined the Public Employees' Medical and Hospital Care Act (PEMHCA) for its employees, which is offered through the California Public Employees' Retirement System (CalPERS). It is an agent multiple-employer plan administered by CalPERS. The healthcare plan provides medical insurance benefits to active and eligible retirees and their families in accordance with memoranda of understanding with employee groups and adoption by the Board of Directors. The District provides PEMHCA post-retirement healthcare benefits to all full-time employees who retire directly from the District after reaching the age of 55 and have five years of CalPERS service. Government Code Section 22892 of the PEMHCA prescribes the minimum employer contribution amount. It was initially established as a specific dollar value with specified increases from calendar years 2004 through 2008. Beginning in 2009, the calculated adjustments were based on the medical care component of the Consumer Price Index-Urban (CPI-U) consistent with CalPERS. At that time, the District opted for the unequal method of distribution. Beginning in 2020, the District was required to pay 100 percent of the minimum required contribution, which is $139. Ch. 6 SBCWD 181 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Additionally, the District offers supplemental contributions to all employees who retire directly from the District with a regular service retirement through CalPERS. Employees must be at least 55 and have a minimum of ten years of District service at the time of retirement.112 In 2016, the District obtained financing for capital improvements related to the Hollister Urban Area Water Supply and Treatment Agreement (HUWSTA) and the Recycled Water projects in the amount of $5,500,000 from City National Bank. At the end of FY21-22, the District's remaining obligation for this loan was $3,434,600. In February 2021, a new debt of $2,905,000 was issued to pay off the USBR In-Basin Capital obligation in accordance with the Water Infrastructure Improvements for the Nation (WIIN) Act. In April 2021, another debt of $3,016,000 was issued to reduce the interest on the CalPERS Unfunded Accrued Liability in the long term. The payment to CalPERS was reflected in Deferred Outflows of Resources and reduced the District's pension liability in FY22- 23. The San Benito County Water District uses rates and charges to recover current operating, maintenance, and interest costs related to water service from its current users, as required of a public enterprise agency and as authorized by the San Benito County Water District Zone 6 voters on November 8, 1977. The Board of Directors adopts water rates for groundwater, surface water, and rural water system services. The District follows Proposition 218 landowner notification, protest process, and public hearings to adopt new or increased rates and charges. On January 25, 2023, the Board approved rates for the FY 23-24, 24-25, and 25-26. The recycled water charges are set to cover operations and maintenance costs associated with delivering recycled water including water supply, water quality, and infrastructure. Figure 6-7 shows the current and proposed recycled water rates and power charges related to pumping recycled water. The rates are based on the cost of service. The recycled waterpower charge is subject to additional pass-through increases if actual costs are higher than projected.113 112 Annual Comprehensive Financial Report of the San Benito County Water District for the Fiscal Year Ended June 30, 2022, p. 46. 113 San Benito County Water District, Zone 6 Water Rate and Capacity Fee Study. Final Report. January 5, 2023. p.6. Ch. 6 SBCWD 182 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 6-7: Proposed Recycled Water & Power Rates, $/AF (Per Acre Feet) existing rates fy 23-24 fy 24-25 fy 25-26 Recycled Water $211.00 $294.70 $300.59 $306.61 Power Charge $63.09 $101.10 $104.65 $108.32 SBCWD operates two surface water treatment plants in the Hollister Urban Area, which deliver drinking water to the Sunnyslope County Water District (SSCWD) and the City of Hollister. The District also manages local and imported surface water through the San Benito River System and the San Felipe Distribution System. The San Felipe System delivers imported Central Valley Project (CVP)114 water to irrigation, municipal, and industrial customers. The drinking water delivered to SSCWD and the City of Hollister ultimately becomes recycled water from the City of Hollister's Reclamation Plant. This reclaimed water is then used for irrigation by local farmers. The reclaimed water serves as a new water source to mitigate reduced allocations from the CVP due to drought and other environmental issues, and allows for more flexibility, reliability, and local control. Recycled water is treated to strict standards set by the California Department of Health (DPH) and rigorously monitored by local, state, and federal agencies to ensure it continuously meets those standards. The reclaimed water has been deemed acceptable for unrestricted use for agricultural irrigation. Currently, its average total dissolved solids (TDS) level is approximately 1050 parts per million (ppm)115, which falls within the Title 22 standard limit of 1,500 ppm for recycled water used in unrestricted urban settings. Title 22 regulation ensures that recycled water meets specific quality standards before it can be used for various non-potable purposes such as landscape irrigation, industrial uses, and certain types of agricultural irrigation, where permitted. 114 A 400-mile complex, multi-purpose network of dams, reservoirs, canals, hydroelectric power plants, and other facilities through central California. 115 PPM is the US standard unit of measurement in water chemistry. It indicates the density of a given substance dissolved in water. Ch. 6 SBCWD 183 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final In February 2021, a Memorandum of Understanding was executed with SBCWD agreeing to provide the City of Hollister with treated surface water from the West Hills Treatment Plant to blend with its groundwater. The District will also begin delivering treated surface water to the City of San Juan Bautista in 2025. The San Benito County Water District owns the West Hills Water Treatment Plant but contracts with Sunnyslope Water to conduct daily operations and maintenance at West Hills. There are no overlapping service providers within the SBCWD service area. The MOUs between the County, SBCWD, Hollister, and Sunnyslope County Water District govern the collection, treatment, and disposal of wastewater and recycled water.116 Recycled water is considered supplemental and subject to interruption. According to SBCWD, overall the recycled water supply is highly reliable, as it is sourced from the City of Hollister Reclamation Plant. Over the last five years, SBCWD has produced 2,500 acre-feet of recycled water for distribution as well as irrigation or other industrial uses. Any water user within the service area boundaries who has a valid recycled water use may request recycled water service. SBCWD may, at its discretion, allocate recycled water to optimize its use in a way that best preserves and restores the groundwater basin. The District may set priorities for water distribution to manage salt loadings, fulfill customer needs, or according to other criteria. The district requires that approved recycled water customers accept and use recycled water in a manner consistent with the allowed uses and these rules and regulations. 117 116 Hollister Urban Area UWMP 2020, p.7-1. 117 Municipal Code 4.52.050. Ch. 6 SBCWD 184 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Water recycling is a cooperative effort of SBCWD and the City of Hollister. Recycled water has been provided by the City of Hollister for landscape irrigation since 2010. The system was expanded in 2014, including infrastructure and treatment capability to improve water quality for agricultural irrigation. The system was further enhanced in 2015 when SBCWD installed 1.65 miles of additional distribution system piping and 30 metered deliveries to provide water for agricultural customers. In 2016, a recycled water storage pond was installed at Hollister's Domestic Waste Reclamation Facility (DWRF) to enhance water quality in the distribution system and to store excess supply during periods of high agricultural demand when the DWRF is not producing enough recycled water. In 2019, the District installed a series of sand media filters upstream of the Recycled Water Distribution System to enhance water quality, enable agricultural customers to utilize drip irrigation, and minimize backwash waste. According to the 2020 Agricultural Water Management Plan, recycled water is supplied to approximately 865 acres for agricultural production and landscaping.118 The District continues to refine its operations and attract new customers to the recycled water project. Additional minor facilities have been added to enhance the circulation of stored water in the ponds and to increase filtration, thereby improving the water quality delivered to recycled water customers. The completion of the storage facilities will allow for 1,000 acre-feet of recycled water per year to be delivered, and nearly 100 percent of the recycled water produced between April - September of each year will be available for use. According to the District, the use of recycled water for agricultural purposes will be particularly important in the next few years as the region continues to work through the current drought.119 Wastewater from residents and businesses is sent to the City of Hollister's Water Reclamation Facility to produce Title 22 reclaimed water for park irrigation, airport greenery, and groundwater recharge. The district has reported that there are currently no opportunities for facility sharing. 118 San Benito County Water District, 2020 Agricultural Water Management Plan. September 2021. p.19-20. 119 Annual Comprehensive Financial Report of the San Benito County Water District for the Fiscal Year Ended June 30, 2022, p. ii. Ch. 6 SBCWD 185 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final According to the SBCWD Recycled Water Annual Report for Cycle Year 2022, water conservation levels and drought have impacted the City of Hollister's reclamation plant output. Therefore, the District used virtually all the water produced. The plant's output is expected to increase as the City of Hollister grows, and the District's deliveries are projected to rise accordingly. The District reports that it continues to invest heavily in recycled water infrastructure to improve reliability and supply to meet increasing demand. No options specific to SBCWD have been identified. Ch. 6 SBCWD 186 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 6-1: The San Benito County Water District (SBCWD) boundaries encompass all of San Benito County. 6-2: The population of San Benito County has grown rapidly since its establishment on February 12, 1874. In 1880, the population was 1,000; by 1980, it had grown to 23,005. According to the California Department of Finance (DOF), as of 2023, the population is 65,666. This indicates a roughly 18.8 percent increase and a 0.64 percent Average Annual Growth Rate (AAGR) since 2010, when the population was 1,862. 6-3: According to the Department of Finance (DOF), San Benito County's countywide growth projections are expected to see an approximately 0.47 percent average annual growth rate (AAGR) from 2020 (64,432) through 2060 (77,666). 6-4: According to Census Bureau data, the statewide Median Household Income (MHI) for 2017-2021 is $84,097, and hence, the calculated threshold of $67,277 defines whether a community is disadvantaged. Therefore, with a median income of $95,606 as of 2021, San Benito County as a whole is not considered to be a disadvantaged community. 6-5: According to the DWR mapping tool, some areas within the county are classified as disadvantaged Census Block groups, including parcels in the northeast and southeast regions of San Juan Bautista along San Juan Highway, a parcel east of Dunneville near Pacheco Pass Highway, areas south of Hollister, and northwest of Ridgemark. 6-6: Water recycling is a cooperative effort of SBCWD and the City of Hollister. 6-7: SBCWD manages the water resources within San Benito County and is the Groundwater Sustainability Agency for the county. SBCWD provides retail and wholesale potable water services as well as groundwater replenishment and recycled water. The drinking water delivered to SSCWD and the City of Hollister ultimately becomes recycled water from the City of Hollister's Reclamation Plant. The reclaimed water is used for irrigation or landscaping and also serves as a new water source. Ch. 6 SBCWD 187 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 6-8: Over the last five years, SBCWD has produced 2,500 acre-feet of recycled water for distribution, irrigation, or other industrial uses. 6-9: The District has not identified any infrastructure needs. 6-10: According to the SBCWD Recycled Water Annual Report for Cycle Year 2022, water conservation levels and drought have impacted the City of Hollister's reclamation plant output. Therefore, the District used nearly all the water produced. As the City of Hollister grows, the plant's output will increase, which is expected to also lead to an increase in the District's reclaimed water deliveries. Additionally, the District reports that it continues to invest substantially in recycled water infrastructure to enhance reliability and supply to meet growing demand. 6-12: In FY 22-23, SBCWD's operating expenses $15,896,639 exceeded its operating revenue $8,561,579 by $7,335,060. However, non-operating revenue amounted to $12,858,259, primarily from tax assessments and grants. As a result, the District's net position increased by $5,523,199 from FY 21-22. 6-13: On January 25, 2023, the Board approved rate increases for the FY 23-24, 24-25, and 25-26. These increases reflect the costs of operations and maintenance for delivering recycled water, including expenses related to water supply, water quality, and infrastructure. 6-14: The collection, treatment, and disposal of wastewater and recycled water uses are governed by the MOUs between the County, the District, Hollister, and Sunnyslope County Water District (SSCWD), in addition to regulatory requirements. 6-15: SBCWD meets the requirements outlined in State laws regarding the Brown Act, website materials, and best practices to ensure easy access to significant planning documents and financial reports. The City's website is easily navigated and makes available a substantial amount of information and documentation that is clear and concise for the customer. Annual Compensation Reports, the State Controller's Office Financial Transaction Reports, and the Enterprise System Catalogue are available on the City's website as required. It is recommended that the District also makes up-to-date financial statements available. 6-16: All SBCWD's Board Members have completed up-to-date Ethics Trainings and Form 700s. 6-17: It is recommended that the District make all completed and up-to-date ethics training Certificates of Completions and Form 700s readily available on the City's website. Ch. 6 SBCWD 188 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 6-18: The San Benito County Water District demonstrated transparency when sharing information to create this report. Ch. 6 SBCWD 189 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Sunnyslope County Water District (SSCWD) was founded on December 17, 1954, to provide potable water supplies to San Benito County residents in the area east of the City of Hollister boundary at that time. As Hollister continued to grow, many of these areas were annexed into the city but retained water service from Sunnyslope. In the early 1970s, with the development of Ridgemark Country Club to the southeast of Hollister, Sunnyslope agreed to provide potable water and sanitary sewer service. This sewer service eventually expanded to include the Quail Hallow and Oak Creek developments in the mid-1990s. SSCWD was formed as a California Special District pursuant to the California County Water District Act, §30000 et seq., to furnish water and wastewater services to residents of the District in San Benito County, California. This review is specific to wastewater services. The Sunnyslope County Water District was last included in a San Benito LAFCO Countywide Municipal Services Review in 2007. The Sunnyslope County Water District covers about 3.9 square miles or 2,496 acres. The District's water system serves an area of approximately 3.9 square miles in the City of Hollister and surrounding areas. The District's wastewater system (collection, treatment, and disposal) serves a smaller area within the County, consisting of Ridgemark Estates and the Oak Creek and Quail Hollow subdivisions.120 120 Sunnyslope County Water District San Benito County, California, Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2020, p.i. Ch. 7 SSCWD 190 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final SSCWD is a special district governed by a five-member, independently elected Board of Directors (Board) serving staggered four-year terms elected at-large from within the District's service area. On August 11, 2011, SSCWD adopted the Basis of Authority & Operating Principles of the Board Policy 7000, which further defines the District's Operating Principles of the Board (Norms). The Board of Directors appoints the General Manager, who is responsible for the District's administration. Current Board members' names, positions, and term expiration dates are shown in Figure 7-1. The Board holds regular meetings on the fourth Tuesday of each month at 5:15 p.m. in the SSCWD Board Room, located at 3570 Airline Highway, Hollister, CA. The public can access meetings in person and through virtual viewing via Zoom. Meeting agendas are posted on the District's website in compliance with the Brown Act121 (Government Code §§ 54954.2 and 54956), as amended by California AB 2257, which requires agencies to make agendas available on their websites and in a publicly accessible physical location at least 72 hours prior to regular meetings and at least 24 hours prior to special meetings. Agendas are also available at the District's office and on the SSCWD website. Additionally, the District's online searchable database allows residents to find past or current agenda packets and minutes. SSCWD also regularly issues newsletters to customers and the community to highlight their services and showcase various aspects of the District's work, from daily tasks to long-term planning. 121 California Government Code, Section 54950, commonly known as the "Brown Act" or "Open Meeting Law," establishes requirements and restrictions for meetings of local legislative bodies. The law ensures public access to these meetings, facilitating public participation and promoting transparency in local government decision-making. Ch. 7 SSCWD 191 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 7-1: Sunnyslope County Water District Governing Body governing body Manner of Selection At Large Length of Term Staggered 4-years Fourth Tuesday of each month at 5:15 p.m. at the Board Room of Sunnyslope County Water District at 3570 Meetings Airline Highway, Hollister, CA 95023 Agenda Distribution Online, at the District's office Minutes Distribution Online board members Term Member Name Position Expiration Manner of Selection Length of Term Dorthy "Dee" Brown President 2026 At Large 4-years Edward Mauro Vice President 2026 At Large 4-years Mike Alcorn Director 2026 At Large 4-years Jerry Buzzetta Director 2024 At Large 4-years James Parker Director 2024 At Large 4-years contact Contact Drew Lander, General Manager Mailing Address 3570 Airline Highway, Hollister, CA 95023 Phone (831) 637-4670 Email/Website drew@sunnyslopewater.org Ethics training is required once every two years, beginning with an odd-numbered year (AB 1234, Chapter 700, Statutes of 2005). Training is available online at the State of California Fair Political Practices Commission (FPPC) website. All SSCWD's Board Members, except Director James Parker, have completed Ethics Training for 2024. The District reports that Director Parker is scheduled to complete the Ethics training in May 2024. Additionally, the District's General Manager, Finance/HR Manager, Water/Wastewater Superintendent, Crew Chief, and Executive Secretary have completed Ethics Training for 2024. It is recommended that the Districts make all Certificates of Completions available on the District's website. Ch. 7 SSCWD 192 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Additionally, a Statement of Economic Interest, or Form 700, must be submitted annually to indicate transparency in economic interests as required by the Political Reform Act of 1974 (California Government Code Sections 81000-81003). Every elected official and public employee who makes or influences governmental decisions is required to submit Form 700. All SSCWD's board members have current filings for Form 700 with the California Fair Political Practices Commission, indicating transparency in their economic interests. Furthermore, SSCWD's finance and human resource manager and the District's general manager have current filings for Form 700. It is recommended that the District make all completed and up-to- date Form 700 filings available on the website. Through the District, there also exists a conflict-of-interest code and bylaws, outlined in the municipal code, as lawfully required and by which the Sunnyslope County Water District must abide. There is legislation to help ensure public agencies adhere to accountability standards. California AB 2257 (Government Code §54954.2) is an update to the Brown Act and indicates requirements for methods by which an agenda for all meetings should be made available on an agency's website. SSCWD complies with this regulation. SSCWD demonstrated accountability in its disclosure of information and cooperation with the LAFCO questionnaires and other requests for information. The following figure identifies efforts to meet State laws designed to ensure transparency and accountability. SSCWD meets the requirements outlined in State laws regarding the Brown Act, website materials, and best practices to ensure easy access to significant planning documents and financial reports. SSCWD's website is easily navigated and makes available a substantial amount of information and documentation that is clear and concise for the customer. Annual Compensation Reports, the State Controller's Office Financial Transaction Reports, and the Enterprise System Catalogue are also available on the District's website as required. Ch. 7 SSCWD 193 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 7-2: Transparency and Accountability Indicators transparency & accountability sscwd Agency website (GC §53087.8) Yes Contact information available on website (GC §53087.8 (a)(3)) Yes Annual Compensation Report (GC §53891 and 53908) Yes Adopted budget available on website Yes State Controller's Office Financial Transaction Report available on website (GC §53891 and 53893) Yes Notice of public meetings provided Yes Agendas posted on website (GC §54954.2) Yes Public meetings are live streamed Yes Yes – No archived Minutes and/or recordings of public meetings available on website recordings available Master Plan available on website Yes Strategic Plan available on website N/A Sanitary Sewer Management Plan available on website Yes Enterprise System Catalogue available on website (GC §6270.5 (a)) Yes Efforts to engage and educate the public on the services to the community Yes Yes – Director Park is in the process of Staff and governing board member ethics training and economic completing ethics interest reporting completed training Compliance with financial document compilation, adoption, and reporting requirements Yes Adherence to open meeting requirements Yes While public sector management standards vary depending on the size and scope of the organization, there are minimum standards. Well-managed organizations evaluate employees annually, track employee and agency productivity, periodically review agency performance, prepare a budget before the beginning of the fiscal year, conduct periodic financial audits to safeguard the public trust, maintain relatively current financial records, conduct advanced planning for future service needs, and plan and budget for capital needs. Ch. 7 SSCWD 194 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final As of FY 23- 24, the Sunnyslope County Water District (SSCWD) has 21 full-time equivalent positions approved by the Board. 122 SSCWD's financial planning efforts include annually adopted budget and audits. The annual budget serves as a guide for how the District plans to meet the various expenses inherent in all aspects of its operation and offset those costs with the income it receives. The District also undergoes a full financial audit by a third-party professional accounting firm. This audit aims to assure the public that the District is operating responsibly and transparently. SSCWD has a strategic plan adopted in 2012; however, it is recommended that the District update its strategic plan to reflect current and future priorities and goals. An updated strategic plan is key for communicating the District's vision and departmental priorities to the public and enhance transparency. The District does not have any additional management planning practices. In accordance with the California State Water Resources Control Board Order No. 2006-003, Sunnyslope County Water District has developed and is currently maintaining and implementing its Sewer System Management Plan. This plan outlines the District's operational activities and goals for its wastewater collection system, ensuring the health and safety of the public and the environment. At least once every five years, a complete update of the SSMP must be conducted to incorporate all changes and modifications. This update is taken before the Board of Directors for approval. The SSCWD's SSMPs were last updated in 2020. The SSMP is reviewed annually by the General Manager, Water/Wastewater Superintendent, Associate Engineer, Crew Chief, and all Maintenance staff during an operations and emergency response training. This training generally takes place in January and is required for all relevant management and field staff.123 122 Sunnyslope Water Service District, General Manager Response for Information, April 12, 2024. 123 Sunnyslope County Water District, Sewer System Management Plan (SSMP) 2020, p.21. Ch. 7 SSCWD 195 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The Hollister Urban Area Water & Wastewater Master Plan (HUAMP) is adopted in collaboration with the City of Hollister, San Benito County Water District, and Sunnyslope County Water District to address long-term regional water and wastewater supply and quality.. This plan serves as the basis for all long-term water and wastewater decisions in the Hollister area. The HUAMP was last updated in 2017. SSCWD had a five-year water and wastewater Capital Improvement Plan (CIP) for FY 17-18 through FY 21-22. The CIP included projects aimed at improving the overall functionality of the water or wastewater system and incorporating long-term strategic goals. The plan also included costs associated with each project, which are general estimations used for budgetary purposes and to help determine the timing of various projects. The District also incorporates CIP into annual budgets for wastewater-specific projects. For instance, the FY 23-24 budget has projects such as, equipment repairs, street repairs, sludge removal, and tank maintenance. Another planning document the District maintains related to wastewater services is an Overflow Emergency Response Plan, which outlines the steps and procedures that District staff follow in instances of a sanitary sewer overflow (SSO). This plan is designed to safeguard public health and the environment during and after such an emergency. This section reviews historical and recent population and economic growth, projected growth, and growth areas. San Benito County has land use authority over all unincorporated land within the county, including everything except land within Hollister and San Juan Bautista city limits or land owned or managed by the State or Federal governments (such as State Parks, National Parks, Bureau of Land Management areas, and tribal lands). Sunnyslope's SOI includes some areas within the eastern and southeastern parts of the City of Hollister. According to the City of Hollister 2040 General Plan, land use designations within the Sunnyslope SOI include open space and mixed-density residential designated areas. The Ch. 7 SSCWD 196 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final San Benito County 2035 General Plan also shows that the majority of the land in the east and southeast parts of the City of Hollister is designated for mixed-use residential. Sunnyslope's SOI also includes Ridgemark, an area south of the City of Hollister. According to the San Benito County 2035 General Plan, the majority of the land designation for the Ridgemark area is mixed-use residential. The remaining parcels are designated for park and Public Quasi-Public (PQP) use. The purpose of the Public Quasi-Public designation is to provide space for various uses, including public utility facilities and services such as schools, landfills, recycling facilities, resource recovery centers, sewage treatment plants, fire stations, and other similar uses.124 Additionally, Sunnyslope's SOI includes areas surrounding the City of Hollister to the north, eastern, and southeastern parts. The northern parts of the area are designated for rural residential use. The purpose of the rural residential designation is to allow for large-lot rural residential homes within areas of the county that are generally unsuitable for productive agriculture because of existing small property sizes, multiple property owners, and proximity to other more intensive residential developments. These properties typically lack public infrastructure (e.g., water, sewer, drainage). The eastern areas outside the City of Hollister are mostly designated for mixed-use residential use, and a few parcels are designated for Rural Transitional and Santana Ranch Specific Plan (SRSP) uses. According to San Benito County's General Plan, the purpose of the Rural Transitional designation is to allow traditional rural development as a transition between rural and urban areas. Development within this designation should be associated with rural standards and typically lacks public infrastructure (e.g., water, sewer, drainage). These transitional areas are designed to buffer higher-density residential development from exclusively agricultural areas, thereby minimizing the conversion of agricultural lands to urban uses. The Santana Ranch Specific Plan designation area is about 292 acres east of the intersection of Fairview Road with Hillcrest Road and Sunnyslope Road. The Santana Ranch Specific Plan includes 1,092 dwelling units of various housing types and densities, including 774 single-family residential units at densities of 1.0 to 5.0 per acre and 318 multiple residential units at 5.1 to 12 units per acre. It also includes 9.7 acres of commercial retail and 2.0 acres of office development. Specific land uses in this area must be consistent with the Santana Ranch 124 San Benito County 2035 General Plan, July 21, 2015, BOS-Adopted, p. 3-6 to 3-11. Ch. 7 SSCWD 197 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Specific Plan, which sets forth a comprehensive planning vision and regulatory framework for the project.125 The eastern areas outside the City of Hollister are largely designated as mixed-use residential and rural residential uses. Additionally, a few parcels in the area are designated for Public Quasi Public and Fairview Corners Specific Plan (FCSP) uses. The Fairview Corners Specific Plan designation encompasses approximately 60 acres adjacent to the proposed Gavilan College San Benito Campus, directly north of the Airline Highway (State Route 25) and east of Fairview Road. The Fairview Corners Specific Plan encompasses 57 acres of single-family residential units located east of the City of Hollister, featuring 220 housing units and extensive open space. Specific land uses in this area must be consistent with the Fairview Corners Specific Plan, which sets forth a comprehensive planning vision and regulatory framework for the project. Currently, the District's service area population is estimated to be 24,000, with an annual growth of approximately 750 persons. Over the past five years, Sunnyslope has grown at an average rate of 250 units per year. The District reports that there are enough approved subdivisions to keep that trend for three more years; however, due to increased interest rates, projections for this year estimate only 100 new units.126 As discussed previously, SSCWD and the City of Hollister entered a Wastewater Treatment Services Agreement for the conveyance of wastewater from Gavilan College, Cielo Vista, Fairview Corners, and Lands of Lee projects—which are all within the District's boundaries—to the City of Hollister's existing facilities for treatment and disposal.127 With the exception of Cielo Vista, which requested an out-of-jurisdiction service request seeking emergency service connection for 78 existing homes due to the failure of existing facilities for the area, the other three areas requested an out-of-area service for proposed developments. The Gavilan College project area proposes new development to expand the community college campus. The out-of-jurisdiction service request will allow the project to avoid installing a new 125 San Benito County 2035 General Plan, July 21, 2015, BOS-Adopted, p. 3-4 to 3-11. 126 Sunnyslope Water Service District, General Manager Response for Information, April 12, 2024. 127 Sunnyslope Water Service District Conveyance of Wastewater to the City of Hollister for Treatment and Disposal, November 6, 2023. Ch. 7 SSCWD 198 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final septic tank and connect to the City of Hollister's wastewater collection and treatment system, saving Gavilan College approximately $500,000 in public funds. The Fairview Corners project area proposes the development of 189 new single-family detached homes and 20 accessory dwelling units. The development proponent for this project proposes to fund and install most of the proposed infrastructure improvements for the extension of sewer services for all three project areas: Cielo Vista Subdivision, Gavilan College, and Fairview Corners. The out-of-jurisdiction service request will allow the development project to connect to the City of Hollister's wastewater collection and treatment system. It is unknown if there is an alternative project where septic tank(s) could/would be installed if the City's sanitary sewer services are not provided or if the project would need to be redesigned. The Lands of Lee project area proposes a new development of 121 single-family detached homes, 20 attached duet units, and up to 25 accessory dwelling units (ADUs). The project has not received approved entitlements from San Benito County. There is an existing single-family detached residence on the property. This project intends to connect to the Fairview Corners project. The affected territory is entirely within the boundaries of the unincorporated San Benito County and Sunnyslope County Water District. Properties within the Cielo Vista Subdivision project are located within the City of Hollister's SOI, while properties within the Gavilan College, Fairview Corners, and Lands of Lee Projects are not located within the City's SOI. The territory to be served is composed of 82 parcels consisting of approximately 220.08 acres.128 Note that all sewer treatment from these areas goes to the City of Hollister and does not count for Ridgemark plant capacity. Alternately, Figure 7-3 illustrates other planned and proposed developments within SSCWD's SOI that affect sewer services. These planned and proposed developments will require a total allocated reserve of 460 equivalent dwelling unit (EDUs) or 91,800 gpd. 128 Staff Report, San Benito LAFCO File 546: Application for Approval of an Out-of-Agency Service Agreement between the City of Hollister and Sunnyslope County Water District. December 14, 2023. Ch. 7 SSCWD 199 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 7-3: SSCWD Planned or Proposed Development Projects # of dwelling project project units type status project Promontory 90 Residential Construction Phase Vista Del Calabria Phase 1, 2, and 3 149 Residential Construction Phase John Wynn Ridgemark Commercial Commercial Pending Approval John Wynn Ridgemark Residential infill development 190 Residential Pending Approval Total 429+ units The out-of-agency service agreement between the City of Hollister and SSCWD for the District to provide wastewater services is to accommodate the growth and development at Gavilan College, Fairview Corners, and Lands of Lee projects. LAFCo is required to evaluate disadvantaged unincorporated communities as part of this service review, including the location and characteristics of any such communities. The intent and history of this requirement is outlined in the Background Section of this report. A disadvantaged unincorporated community is defined as any area with 12 or more registered voters, or as determined by commission policy, where the median household income is less than 80 percent of the statewide annual median. The California Department of Water Resources (DWR) has developed a mapping tool to assist in determining which communities meet the disadvantaged community's median household income definition. DWR is not bound by the same law as LAFCO to define communities with a minimum threshold of 12 or more registered voters. Because income information is not available for this level of analysis, disadvantaged unincorporated communities with smaller populations that meet LAFCO's definition cannot be identified. The DWR Mapping Tool is an interactive map application that allows users to overlay the following three US Census geographies as separate data layers—Census Place, Census Tract, and Census Block Group. The specific dataset used in the tool is the US Census American Ch. 7 SSCWD 200 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Community Survey Five-Year Data: 2016 - 2020. Only those census geographies that meet the DAC definition are shown on the map (i.e., only those with an annual median household income (MHI) that is less than 80 percent of the Statewide annual MHI). Only those census geographies that meet the DAC definition are shown on the map (i.e., only those with an annual median household income (MHI) less than 80 percent of the Statewide annual MHI). According to Census Bureau data, the statewide MHI for 2016-2020 is estimated at $78,672; hence, the calculated threshold of $67,937 defines whether a community was identified as disadvantaged. According to the DWR Mapping Tool, the Sunnyslope County Water District's sewer service area is not considered a disadvantaged community. SSCWD's principal source of revenue is from water sales (53.8 percent of operating revenue) and wastewater sales (16.8 percent of operating revenue), constituting 70.6 percent of operating revenue. The District's primary sources of non-operating revenues are water and wastewater capacity fees, as well as investment income. The District reports that new housing development was moderate in the current year, with connection fees totaling $1,438,150. The District received 104 water capacity fees this fiscal year, compared to 331 the previous year, and zero wastewater capacity fees this fiscal year, compared to 61 the previous year. Operating expenses include salaries and benefits for 23 full-time employees. The wastewater department's expenses include electricity for sewer pumping stations, repair and maintenance of sewer manholes and mainline pipes, treatment costs, operation and maintenance of the Sequencing Batch Reactor (SBR), sludge disposal, and a 20 percent share of customer service, general, and administrative costs. As of 2022, operating expenses are down 3.4 percent compared to the previous fiscal year, excluding pension adjustments. The decline in expenses is attributed to the reduction in surface water purchase and treatment, and the idling of the Lessalt water treatment plant. The District's non-operating expenses include interest expense on our debt and the loss on disposal of assets. Ch. 7 SSCWD 201 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Due to California State Executive Orders N-25-20129 and N-29-20130, the District halted service shutoffs for unpaid bills, resulting in an average of $250,000 in unpaid monthly charges. The District plans to resume shutoffs starting in February 2024; however, uninterrupted service delivery and regulatory compliance has been maintained throughout the pandemic. 129 On March 12, 2020, Executive Order N-25-20 was issued by the Governor in response to the COVID-19 pandemic, which includes a wide variety of actions to protect the health and safety of California residents. 130 Executive Order N-29-20 (amending Executive Order N-25-20 in part) was issued as part of a series of emergency measures in response to the COVID-19 pandemic. Ch. 7 SSCWD 202 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 7-4: The Sunnyslope County Water District Financial Summary FY 22-23 sscwd financial summary Operating Revenues Water services $6,480,883 Wastewater service $2,019,649 Contracted services $3,221,968 Late fees $84,884 Customer fees $52,157 Other $184,560 Total Operating Revenues $12,044,101 Operating Expenses Salaries and benefits $3,401,910 Pension $2,792,861 Operations and maintenance $6,762,696 Amortization and depreciation $2,456,304 Total Operating Expenses $15,413,771 Operating Income (Loss) ($3,369,670) Non-Operating Revenues (Expenses) Interest income $449,391 Unrealized (loss) on investments ($275,856) Gain on disposal of assets $10,493 Other expense ($8,593) Interest expense ($6,398) Total Non-Opertaing Revenue (Expenses) $169,037 Income/Loss Before Capital Contribution ($3,200,633) Capital Contribution Capacity and connection fees $1,438,150 Developer capital asset contributions $3,356,058 Total Capital Contributions $4,794,208 Change in Net Position $1,593,575 Net Position - Beginning of Year $46,464,792 Ch. 7 SSCWD 203 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Net Position - End of Year $48,058,367 Recurring operating deficits are a warning sign of fiscal distress. In the short term, reserves can backfill deficits and maintain services. However, ongoing deficits eventually will deplete reserves. In FY 22-23, SSCWD's operating expenses of $15,413,771 exceeded operating revenue of $12,044,101 by $3,369,670 or about 28 percent. Additionally, non-operating revenue totaled $169,037, primarily consisting of interest income. The District has also received capital contributions from developers, who construct water and wastewater system infrastructure and then transfer it to the District for operation and maintenance. In FY 22-23, SSCWD reports accepting the water infrastructure and appurtenances of four completed subdivisions into its system, totaling $3,356,058.131 Total capital contributions which include capacity and connection fees, totaled $1,438,150 for FY 22- 23.132 Fund balances and reserves should include funds for cash flow and liquidity in addition to funds to address longer-term needs. Cash reserves should be adequate to respond to system emergencies, temporary deficits, economic downturns, fiscal emergencies, and needed capital improvements. SSCWD has a reserve policy, adopted in 2014 and amended in 2020, to ensure adequate funding is available to meet operational, capital, and debt service obligations. There are three major types of reserve funds: Legally Restricted Reserves, Board Designated Reserves, and Unrestricted Reserves. Legally Restricted Reserves have restrictions imposed by an outside source, such as bond covenants, contractual obligations, or other restrictions. Board Designated Reserves are set aside for a specific purpose as determined by action of the Board of Directors. The Board of Directors has the authority to redirect the use of these reserves as the needs of the District change. Unrestricted Reserves are required for adequate cash flow to meet operating needs and are planned as a source of funding for the Capital Improvement Program and to assist in providing orderly rate increases. 133 131 The subdivisions include West of Fairview Phase 1A and 1B ($1,650,330), Robert Ranch Phase 1 and 2 ($1,191,857), Santana Ranch Phase 7 ($246,881), and Twin Oaks Phase 4 and 5 ($266,990). 132 Sunnyslope County Water District, Notes to Basic Financial Statements June 30, 2023, p.10-16. 133 Sunnyslope County Water District Reserve Policy, Policy Amended March 17, 2020.p.1. Ch. 7 SSCWD 204 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 7-5 shows the District's reserves and the balance as of FY 22-23. As of FY 22-23, SSCWD has $15,078,036 in total restricted reserve, $8,341,620 in board-designated reserve, and $2,188,864 in undesignated unrestricted reserve.134 Figure 7-5: The Sunnyslope County Water District Financial Reserves reserve fy 22-23 amount Restricted Reserve Water capacity fees $12,041,086 Wastewater capacity fees $1,357,256 Debt services reserve $780,051 Pension benefits $899,643 Total Restricted Reserve $15,078,036 Unrestricted Reserve (Board Designated Reserves) Capital improvement reserve $5,772,624 Vehicle replacement $398,132 Emergency equipment replacement $1,000,000 Office and miscellaneous equipment replacement $420,864 Rate stabilization fund $250,000 Drought contingency reserve $500,000 Total Board Designated Reserve $8,341,620 Unrestricted Reserve (Undesignated Reserve) $2,188,864 An agency's "Net Position" represents the amount by which assets (e.g., cash, capital assets, other assets) exceed liabilities (e.g., debts, unfunded pension and OPEB liabilities, other liabilities). A positive Net Position indicates financial soundness over the long term. As of FY 22-23, the District's assets exceed liabilities by $48,058,367, which reflects the District's net position. The most significant portion of the District's net position (46.7 percent) reflects its investment in capital assets of $22,449,847 (e.g., land, transmission and distribution systems, wells, tanks, pumps, buildings and structures, equipment, and vehicles), net of accumulated depreciation and related outstanding debt used to acquire those assets. The 134 Sunnyslope County Water District, Notes to Basic Financial Statements June 30, 2023, p.49. Ch. 7 SSCWD 205 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final District utilizes its capital assets to provide water and wastewater services to its designated service area, and as such, these assets are not available for future expenditures. The District's net position increased $1,593,575 from the prior fiscal year. The increase is primarily a result of the income from operations, capacity fees collected, developer capital contributions, and interest earned, offset by interest expense.135 The District offers two retirement plans to its employees. Employees hired before January 1, 2013, are members of the CalPERS Classic Plan, and employees hired after January 1, 2013, are members of the California Public Employees' Pension Reform Act Plan (PEPRA Plan). Section 20814(c) of the California PERL requires that the employer contribution rates for all public employers be determined annually by the actuary and must be effective on July 1st, following notice of a change in the rate. The total plan contributions are determined through the CalPERS annual actuarial valuation process. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The District is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. District contribution rates may change if plan contracts are amended. As of FY 22-23, the District's contribution to the CalPERS Classic Plan was $168,549. While the District's contribution to the PEPRA Plan was $107,124. 136 In January 2011, the District rejoined the Public Employees' Medical & Hospital Care Act (PEMHCA), offering healthcare plans through the California Public Employees' Retirement System (CalPERS). Under the CalPERS health plan, the District is required to pay the minimum employer health premium contribution for the District's eligible retirees and eligible surviving spouses. The employee is responsible for paying the remainder of the monthly healthcare premium. The minimum employer contribution for retirees' health premiums for calendar year 2023 is $151 per month. The amount will increase in subsequent years to reflect inflation in the cost of healthcare. These benefits are being paid through the CalPERS California Employers' Retirement Benefit Trust (CERBT). To be eligible for retirement medical, an active employee 135 Sunnyslope County Water District, Notes to Basic Financial Statements June 30, 2023, p.6-7. 136 Sunnyslope County Water District, Notes to Basic Financial Statements June 30, 2023, p.39. Ch. 7 SSCWD 206 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final must be at least 50, have a minimum of five years of service, and retire directly from the District. The District intends to contribute to the Trust the actuarially determined contribution (ADC) net of the pay-as-you-go benefits paid annually directly from employer resources. For FY 22-23, the District's cash contributions were $13,953 in premium payments made on behalf of retirees, implied subsidy payments of $57,268, and administrative expenses of 458, resulting in total payments of $71,679. No trust contributions were made in the FY 22-23 fiscal year.137 The District also offers its employees a choice between two deferred compensation plans created in accordance with Internal Revenue Code Section 457. The plans, available to all employees, permit them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Retirement law allows "rollovers" of 457 plan assets into other qualified retirement plans. Participants are fully vested at all times, and the District or creditors of the District have no claim against the plan. All funds are held by outside trustees and excluded from the statement of net position in conformity with Government Accounting Standards. Effective July 1, 2010, the District agreed to match the lesser of 30 percent of the employee deferral contribution, or $468, to the extent that District contributions and employee deferrals do not exceed the maximum permitted by law. For the year ended June 30, 2023, employee contributions consisting of employee deferrals, compensated absences, and cash in lieu of insurance benefits converted to deferred compensation totaled $262,097. The required employer matching contribution for the same period was $7,159.138 As of June 30, 2023, the District had long-term debt and long-term liabilities totaling $22,199,474. This includes a project financing agreement with the State Water Resources Control Board (SWRCB) that SSCWD entered into for a $11.4 million State Revolving Fund (SRF) loan. This loan provided funds for constructing the Ridgemark Wastewater Treatment and Recycled Water Improvements Project (the System), which generally consisted of upgrading and 137 Sunnyslope County Water District, Notes to Basic Financial Statements June 30, 2023, p.44. 138 Sunnyslope County Water District, Notes to Basic Financial Statements June 30, 2023, p.43. Ch. 7 SSCWD 207 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final consolidating the District's Ridgemark I and Ridgemark II wastewater treatment facilities. The agreement's term is from December 14, 2010, to September 30, 2033. Interest totaling $345,037 accrued during the construction period and was incorporated into the loan's principal balance. At an annual interest rate of 2.6 percent, the amortized principal and interest payments total $759,975 annually. Another source of the District's long-term debt comes from the District's share of costs to upgrade the Lessalt Water Treatment Plant and construct the West Hills Water Treatment Plant. Although the San Benito County Water District (SBCWD) committed $30 million to this project, costs exceeded this by $11.6 million, funded through grants, reserves, and a $4 million loan. The District's share of costs is divided among the tranches, with payments spread over different periods and varying interest rates. The District's financial commitments for the three tranches are: 139 • The first tranche is $6.5 million spread over 30 years at a 4.5 percent interest rate. • The second tranche is $8.5 million spread over 20 years at a 4.0 percent interest rate. • The third tranche is $2 million spread over 15 years at a 3.45 percent interest rate. Lastly, as of June 30, 2023, the District reported $51,967 in intangible software arrangements related to accounting and water monitoring. Following GASB Statement No. 96, these are classified as Subscription-Based IT Arrangements (SBITA) and recorded as assets and liabilities. The assets will be amortized over four to five years, with no residual value guarantees. The accounting software will conclude in 2025, while the water monitoring software ends in 2026.140 SSCWD conducted a wastewater rate study in 2013. The Board approved wastewater rate increases in August 2013 via Ordinance No. 74, implementing a phased 19 percent increase increase over two years, starting in December 2013. These increases were crucial for funding the Hollister Urban Area Water Project (HUAWP) and constructing a new Sequencing Batch Reactor (SBR) at the Ridgemark Wastewater Treatment Plant. Several projects recommended in the HUAWP have been constructed to enhance drinking water quality and ensure compliance with water and wastewater regulations at the state and federal levels.141 139 Sunnyslope County Water District, Notes to Basic Financial Statements June 30, 2023, p.35-37. 140 Sunnyslope County Water District, Notes to Basic Financial Statements June 30, 2023, p.37. 141 Sunnyslope County Water District, Management's Discussion and Analysis For the Year Ended June 30, 2023. p.7-8. Ch. 7 SSCWD 208 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The District also conducted a study on water and wastewater capacity charges in 2013. Following a public hearing in August 2013, new charges took effect on October 6, 2013. These fees are imposed to provide new or increased water and wastewater services through new connections.142 SSCWD owns and operates the wastewater collection system for the Ridgemark, Quail Hollow, and Oak Creek areas. The District manages around 1,237 sewer accounts, with 99 percent serving residential customers. Wastewater flows by gravity from homes and businesses into street sewer pipes and manholes. It then moves downhill toward one of Sunnyslope's sewer lift stations. These pump station the wastewater uphill through pressurized force mains to different parts of the sewer network. From there, gravity directs the flow to the Ridgemark Wastewater Treatment Plant or another lift station. Lift stations are located on Oak Creek Ct., Paullus Dr., Sonnys Way, and Marks Dr. SSCWD collects service charges and related fees from customers on behalf of the City of Hollister for wastewater collection and treatment services. The Sunnyslope County Water District (SSCWD) has a contract with the City of Hollister and San Benito Foods - Neil Jones Foods Company to operate the Hollister Industrial Wastewater Treatment Plant on the western side of Hollister. The City of Hollister provides additional wastewater treatment capacity in contract with the Sunnyslope County Water District as "an alternative to, or substitute for" the wastewater services already being provided by Sunnyslope County Water District. 142 Sunnyslope County Water District, Management's Discussion and Analysis For the Year Ended June 30, 2023. p.13. Ch. 7 SSCWD 209 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final As mentioned previously, the City of Hollister provides additional wastewater treatment capacity to the area. SSCWD entered a Wastewater Treatment Services Agreement with the City of Hollister for the District to provide wastewater services to Gavilan College, Cielo Vista, Fairview Corners, and the Lands of Lee projects. These areas are all located in unincorporated San Benito County and within the boundaries of the Sunnyslope County Water District. All four areas are also within the Hollister Urban Area. The affected area comprises 82 parcels, totaling approximately 220.08 acres. The new sewer connection from Cielo Vista to the City of Hollister wastewater collections system has been completed. There are no unserved areas within SSCWD. Sunnyslope maintains a strong relationship with neighboring agencies, including the San Benito County Water District and the City of Hollister. Significant coordination with these agencies has resulted in various regional plans for water supply and quality, wastewater treatment and disposal, and long-term partnerships to achieve diverse goals. As of FY 23-24, the Sunnyslope County Water District (SSCWD) has 15 FTE staff dedicated to water and wastewater services operations. The District reports that all staff hold state certifications for sewer collections and treatment. The operations department includes a Water/Wastewater Superintendent, an Operations and Maintenance Crew Chief, five Water Treatment Plant Operators, and eight Water/Wastewater Utility Maintenance staff. The department also has one Plant Maintenance Electrician/Instrumentation Technician position. The Water/Wastewater Utility Maintenance staff are responsible for the daily maintenance and operational activities as assigned. They are generally the first responders to any issues with the sewer system and conduct on-site work to resolve them. They also provide on-call service Ch. 7 SSCWD 210 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final for 24/7 emergency response and monitor the sewer system via the District's Supervisory Control and Data Acquisition (SCADA). SSCWD's sewer system comprises approximately 13 miles of sewer mains, 315 manholes, four sewer lift stations, and the Ridgemark Wastewater Treatment Plant (WWTP), which utilizes a sequential batch reactor. Approximately ten percent of the gravity sewer mains are made of 6" or 8" vitrified clay pipe (VCP) installed in the early to mid-1970s. The remaining 90 percent is predominantly 8" polyvinyl chloride (PVC) plastic pipe from the 1980s through the 1990s. All four SSCWD sewer lift stations are equipped with the District's SCADA system, which enables operators to remotely monitor and control the status of these stations. Alarms programmed into the SCADA system are active 24/7 and will notify operators of issues at critical set points. Each station also has primary and backup submersible pumps in the wet wells to ensure continued operation even if one pump is damaged. Two lift stations have permanent onsite backup power generators. The other two lift stations have adequate wet well storage to give staff sufficient time to respond and connect the District's portable generators to the lift stations. 143 SSCWD manages the Ridgemark Wastewater Treatment Plant, completed in 2013, to treat sewage from the District's service area. The District replaced its previous aerated pond system with a new treatment plant to meet tighter wastewater quality standards. This upgrade ensures that the District complies with all relevant wastewater quality regulations. The permitted capacity of the Ridgemark WWTP is 350,000 GPD. SSCWD reports that the plant operates at 80 percent of its permitted capacity to avoid triggering a permit requirement to plan for additional operational capacity. Currently, the flow is significantly below the 80 percent threshold, so there is no need to expand capacity at this time. 143 Sunnyslope County Water District, Sewer System Management Plan (SSMP) 2020, p.8. Ch. 7 SSCWD 211 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final SSCWD's staff performs routine preventative maintenance on the collection system facilities and equipment to ensure their reliability and consistent performance. This includes daily monitoring of lift stations, regularly clearing debris from lift stations, and scheduled sewer pipe cleaning and flushing. Specific cleaning is conducted in targeted areas of historic concern and issues. The Crew Chief assigns the various maintenance activities from an excel-based Computerized Maintenance Management System (CMMS), which schedules and creates work orders. Once these work orders are completed, the Crew Chief updates the program and assesses if further maintenance work is required. According to the 2020 SSMP, SSCWD intends to transition from the Excel-based CMMS to the Nexen Asset Management program—a more robust system that will easily analyze maintenance activities— in the coming years. Such analysis will enable SSCWD to become even more proactive in preventative maintenance by studying various system asset trends, costs, and lifecycles.144 SSCWD did not report any infrastructure needs. SSCWD did not identify any opportunities for shared facilities. SSCWD did not report any challenges in providing services. Sunnyslope County Water District has 1,314 sewer connections into the Ridgemark plant, with a daily flow of 160,000 gpd or about 45 percent of the permitted capacity of 350,000 gpd. 144 Sunnyslope County Water District, Sewer System Management Plan (SSMP) 2020, p.13. Ch. 7 SSCWD 212 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The District indicates that although the recent sewer treatment agreement with the City of Hollister will add sewer collection from the Cielo Vista Neighborhood, Gavilan College, and the Fairview Corners development, all sewer treatment will be sent to the City of Hollister and will not contribute to Ridgemark plant capacity.145 The District has approved 300 units to be added to the Ridgemark sewer, with an estimated capacity of 45,000 gpd set aside for these developments. After the full build-out of all planned developments, the District will be operating at approximately 252,000 gallons per day, or 72 percent of its permitted capacity. I/I is estimated to be low because these areas do not have groundwater issues. Sewers are also constructed and inspected by district inspectors for water tightness.146 This section reviews indicators of wastewater service adequacy, including collection system integrity and regulatory compliance. Whenever available, industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. There are several measures of the integrity of the wastewater collection system, including sanitary sewer overflows, peaking factors resulting from infiltration and inflow (I/I), and efforts to address infiltration and inflow. All wastewater agencies are required to report sanitary sewer overflows (SSOs) to the SWRCB. Sewer overflows are discharges from sewer pipes, pumps, and manholes. Overflows reflect the capacity and condition of the collection system piping and the effectiveness of routine maintenance. The sewer overflow rate is calculated as the number of overflows per 100 miles of the main pipeline per year. The SWRCB shows 1 SSO for the Sunnyslope County Water District since 2018. The Spill occurred in 2022 due to a construction diversion failure. 145 Sunnyslope Water Service District, General Manager Response for Information, April 12, 2024. 146 Sunnyslope Water Service District, General Manager Response for Information, April 12, 2024. Ch. 7 SSCWD 213 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Due to the relatively young age of the sewer system and SSCWD's proactive maintenance and cleaning practices, there have been very few SSO events, sewer main breaks, or other issues. 147 The SWRCB shows 1 SSO for the Sunnyslope County Water District since 2018. The spill occurred in 2022 due to a construction diversion failure. Wastewater flow includes not only discharges from residences, businesses, institutions, and industrial establishments but also infiltration and inflow. Infiltration refers to groundwater that seeps into sewer pipes through cracks, pipe joints, and other system leaks. Inflow refers to rainwater that enters the sewer system from sources such as yard and patio drains, roof gutter downspouts, uncapped cleanouts, pond or pool overflow drains, footing drains, cross-connections with storm drains, and even holes in manhole covers. Infiltration and inflow tend to affect older sewer systems to a greater degree. Infiltration and inflow rates are highest during or right after heavy rain. They are the primary factors driving peak flows through the wastewater system and a major consideration in capacity planning and costs. The peaking factor is the ratio of peak-day wet weather flows to average dry weather flows. The peaking factor indicates the degree to which the system suffers from I/I, where rainwater enters the sewer system through cracks, manholes, or other means. A peaking factor of up to three is generally considered acceptable based on industry practices. According to the District's 2020 SSMP, infiltration and inflow (I/I) during storm events do not cause a noticeable increase in flow. The District also reports that inflow and infiltration vary, and only during significant rain events does the District's SCADA system show prolonged increases in flow. During these events, daily flow increased to 180,000 gpd or roughly 20 percent, which uses about half of the permitted plant capacity.148 The District reports that historically, I/I has been very low, with a 10 percent increase in fluctuation during storms. SSCWD plans to remain below 80 percent of permitted capacity; therefore, I/I is expected not to exceed 85 percent of plant capacity. 149 147 Sunnyslope County Water District, Sewer System Management Plan (SSMP) 2020. 148 Sunnyslope Water Service District, General Manager Response for Information, April 12, 2024. 149 Sunnyslope County Water District, Request for Information, April 2024. Ch. 7 SSCWD 214 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The RWQCB enforces the Clean Water Act, permit conditions, and other requirements of wastewater providers. Violations of State requirements for wastewater providers and treatment facilities are recorded by SWRCB. The Board may levy fines or order the provider to take specific actions to comply with water quality regulations. In 2022, the Central Coast Regional Water Quality Control Board issued a notice of applicability, indicating that the Ridgemark Estates wastewater treatment facility's enrollment under the General Waste Discharge Requirements Order No. R3-2020-0020 and termination of Sunnyslope County Water District's coverage in the existing individual permit, Order No. R3-2004-0065. The letter also includes a monitoring and reporting program, which involves submitting quarterly monitoring reports and annual reports to the Central Coast Water Board, as well as complying with the annual volumetric reporting requirements set by the SWRCB. According to the RWQCB's website, there have been zero enforcement actions for SSCWD since 2011. In contrast, the District had 57 violations from 2019-2023, of which eight occurred in 2023.150 Over the years, violations have been associated with high salinity levels, including total dissolved solids (TDS), chloride, and sodium. To address this issue, the District has increased the delivery of low-salinity surface water to customers. Although this is a long-term process, the District reports that significant progress has been made over the past 10 years, with salinity levels reduced by more than half. Per the RWQCB's website the last inspection for the District was completed in 2021. No issues that would require a change in the governance structure have been identified for SSCWD. However, the District can participate in the following alternative governance options identified for other agencies. Another option identified is for Tres Pinos County Water District (TPCWD) to consolidate wastewater services with SSCWD, as the District is currently taking over water services for Tres Pinos. This option allows for increased efficiency and reduced duplication of management 150 State Water Resources Control Board, California Integrated Water Quality System Project (CIWQS) Facility At-A-Glance Report. Ch. 7 SSCWD 215 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final and governance. Consolidating may also streamline water and wastewater services by placing both services under the same agency and enhancing the level of services provided to Tres Pinos' residents. This option would require the willingness of both SSCWD and TPCWD. Additionally, relinquishing local control may be a struggle. SSCWD maintains a strong relationship with neighboring agencies, including the City of Hollister, which provides additional wastewater treatment capacity as "an alternative to, or substitute for" the wastewater services already provided by the District. Therefore, SSCWD participating in the option to establish a regional sanitary district in collaboration with all the neighboring agencies may prevent service overlap and increase efficiency across agencies. However, there are several challenges to implementing this recommendation, including reaching a consensus among the involved agencies and relinquishing local control. For a more detailed discussion of this option, please refer to the Governance Structure Option section in the City of Hollister chapter. Ch. 7 SSCWD 216 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 7-1: The Sunnyslope County Water District (SSCWD) wastewater system (collection, treatment, and disposal) serves a smaller area within the County, consisting of Ridgemark Estates and the Oak Creek and Quail Hollow subdivisions. 7-2: The District's service area population is estimated to be 24,000. Over the past five years, the area has grown by approximately 750 people annually and by an average of 250 units. 7-3: The District reports that there are enough approved subdivisions to keep the growth trend for three more years; however, due to increased interest rates, projections estimate only 100 new units for this year. 7-4: According to the DWR Mapping Tool, the Sunnyslope County Water District's sewer service area is not considered a disadvantaged community. 7-5: SSCWD owns and operates the wastewater collection system for the Ridgemark, Quail Hollow, and Oak Creek areas. SSCWD's sewer system comprises approximately 13 miles of sewer mains, 315 manholes, four sewer lift stations, and the sequential batch reactor Ridgemark Wastewater Treatment Plant (WWTP). 7-6: The average wastewater flow to the Ridgemark WWTP is about 150,000 gallons per day (GPD), with maximum daily flows of up to 195,000 GPD. However, this is well within the Ridgemark WWTP's treatment capacity of 350,000 GPD. 7-7: The SWRCB website shows 1 SSO for the Sunnyslope County Water District since 2018. The spill occurred in 2022 due to a construction diversion failure. 7-8: According to the SWRCB's website, Sunnyslope County Water District has had zero enforcement actions since 2011. Alternately, SSCWD had 57 violations from 2019 to 2023, of which eight occurred in 2023. Over the years, the primary cause of these violations has been high salinity levels in the wastewater. To address this issue, the District has increased the delivery of low- salinity surface water to customers, which helps reduce wastewater salinity. Over the Ch. 7 SSCWD 217 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final past decade, the District has made significant progress with this effort, reducing salinity levels by more than half. 7-9: SSCWD did not report any infrastructure needs. 7-10: In fiscal year 2022-2023, SSCWD's expenses were $15,413,771, exceeding revenues of $12,044,101 by $3,369,670 (28 percent). Non-operating revenue was $169,037. 7-11: The District utilizes financial planning and reserve policies to ensure continued provision of services. However, the halt in service shutoffs due to California State Executive Orders N-25-20 and N-29-20 led to an average of $250,000 in monthly unpaid charges. Although planning to resume shutoffs in February 2024, the District maintained uninterrupted service delivery and regulatory compliance throughout the pandemic. 7-21: SSCWD maintains strong relationships with neighboring agencies, including the San Benito County Water District and the City of Hollister. 7-13: SSCWD collects service charges and related fees from customers on behalf of the City of Hollister for wastewater collection and treatment services. 7-14: The City of Hollister provides additional wastewater treatment capacity in contract with the Sunnyslope County Water District as "an alternative to, or substitute for," the wastewater services already being provided by Sunnyslope County Water District. 7-15: SSCWD entered a Wastewater Treatment Services Agreement with the City of Hollister for the District to provide wastewater services to Gavilan College, Cielo Vista, Fairview Corners, and Lands of Lee projects. These areas are all located in unincorporated San Benito County and within the boundaries of the Sunnyslope County Water District. 7-16: SSCWD did not identify any opportunities for shared facilities. 7-17: SSCWD meets the requirements outlined in State laws regarding the Brown Act, website materials, and best practices to ensure easy access to significant planning documents and financial reports. SSCWD's website is easily navigated and makes available a substantial amount of information and documentation that is clear and concise. Annual Compensation Reports, the State Controller's Office Financial Transaction Reports, and the Enterprise System Catalogue are also available on the District's website as required. 7-18: It is recommended that completed and up-to-date ethics training and Form 700s for each required staff is readily available on SSCWD's website. Ch. 7 SSCWD 218 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 7-19: SSCWD demonstrated accountability in its disclosure of information and cooperation with the LAFCO questionnaires and other requests for information. 7-20: The identified governance structure options for SSCWD include participating in the formation of a regional sanitary district with other neighboring agencies and consolidating with the Tres Pinos Water District to provide wastewater services. Ch. 7 SSCWD 219 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The Tres Pinos County Water District (TPCWD) was formed in 1962 to serve the unincorporated Tres Pinos community in the eastern portion of San Benito County. TPCWD is an independent special service district that provides potable water and wastewater service to its local community. The town of Tres Pinos and the corresponding District service area are located approximately 7 miles southeast of the City of Hollister in San Benito County. 151 The Tres Pinos County Water District was last included in a San Benito LAFCO Countywide Municipal Services Review in 2007. This MSR is specific to wastewater services. The Tres Pinos County Water District is situated approximately four miles south of the City of Hollister and five miles north of the City of Paicines in the northern portion of San Benito County. According to the San Benito County Open Data Portal, the District comprises approximately 4 square miles. TPCWD is primarily situated between Airline Highway to the north, Bolado Road to the south, Quien Sabe Road to the east, and where Airline Highway meets Portogese Way on the west. A map of the District's service area is illustrated in Figure 8-1. While the District has service area boundaries, since Tres Pinos is an unincorporated community, it does not have a traditional SOI. 151 Tres Pinos County Water District, Developing a Comprehensive Long-Term Wastewater Management Plan. November 30, 2012. p.I-1. Ch. 8 Tres Pinos Water District 220 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 8-1: Tres Pinos County Water District Map O Tres Pinos Water District DIABLO HILLS RD SADDLE CT SUNDOWN LN HORIZON DR MEADO W CT AIRLINE HWY D ST QUIEN SABE RD W FIFTH ST F ST TS DRIHT FIRST ST FAILINGRD BOLADO RD SOUTHSIDE RD 0 0.1 0.2 0.3 Miles Map Created June 2020 The Tres Pinos County Water District is governed by a locally elected five-member Board of Directors, which serves four-year terms. Meetings take place at 6:30 pm at the District office on the third Tuesday of each month. Meeting agendas are posted on the District's website in compliance with the Brown Act152 (Government Code §§ 54954.2 and 54956), as amended by California AB 2257, which requires agencies to make agendas available on their websites and in a publicly accessible physical location at least 72 hours prior to regular meetings and at least 24 hours prior to 152 California Government Code, Section 54950, commonly known as the "Brown Act" or "Open Meeting Law," establishes requirements and restrictions for meetings of local legislative bodies. The law ensures public access to these meetings, facilitating public participation and promoting transparency in local government decision-making. Ch. 8 Tres Pinos Water District 221 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final special meetings. However, meeting minutes for all Board meetings are not readily available online. To enhance transparency, it is recommended that the District make all meeting minutes available on the website. It appears that there are two websites listed for the District online. One offers the most current and general information, while the other provides various service-specific details, including rates and policies, bill payments, and water quality reports. It is recommended that the District consolidate the websites to prevent confusion and duplicate information, ensuring residents receive cohesive and clear details. The District conducts various outreach efforts to keep its residents informed and engaged, including mailing materials with monthly statements, posting announcements on a local market bulletin board, and displaying flyers at the post office and on the District's website. Additionally, the District began providing newsletters in 2018 to better serve the community, update residents on the latest news, and promote public involvement. Customer concerns or complaints related to services are directly reported to the District office for resolution. If unresolved, residents may raise the issue at a board meeting. In 2023, the District reported no wastewater-related complaints. Ch. 8 Tres Pinos Water District 222 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 8-2: Tres Pinos County Water District Governing Body governing body Manner of Selection Local elections Length of Term 4 years 6:30 pm on the third Tuesday of each month at the District office 6850 Airline Hwy Meetings Tres Pinos, CA 95075 Agenda Distribution District website or District office Minutes Distribution District website or District office board members Term Manner of Length of Member Name Position Expiration Selection Term Edward Schmidt President 2026 Elected 4 years Robert (Bub) Kelly Vice-President 2024 Elected 4 years Adam Rule Secretary/Treasurer 2024 Elected 4 years Cassandra Spencer Director 2024 Elected 4 years Jeanette Maroney Director 2026 Elected 4 years contact Contact Maria Fehl – Office Manager Mailing Address 6850 Airline Hwy., Tres Pinos, CA 95075 Phone 831-628-3319 Trespinoswaterdistrict@gmail.com/ Email/Website https://trespinoswaterdistrict.specialdistrict.org Ethics training is required once every two years, beginning with an odd-numbered year (AB 1234, Chapter 700, Statutes of 2005). Training is available online at the State of California Fair Political Practices Commission (FPPC) website. Additionally, a Statement of Economic Interest, or Form 700, must be submitted annually to indicate transparency in economic interests as required by the Political Reform Act of 1974 (California Government Code Sections 81000-81003). Every elected official and public employee who makes or influences governmental decisions is required to submit Form 700. Ch. 8 Tres Pinos Water District 223 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final All TPCWD's board members have current Ethics Training and Form 700s. It is recommended that the District make all up-to-date Certifications of Completion for ethics trainings and Form 700s easily accessible on the website to promote transparency. The District also has a conflict-of-interest code and bylaws, outlined in the municipal code, as required by law, which the Tres Pinos Water District must follow. The following figure illustrates specific efforts to comply with state laws that are designed to ensure transparency and accountability. TPCWD meets some of the listed criteria; however, online access to various financial documents is not available on the District's website as mandated by the state of California. Additionally, no planning documents are available on the District's website. Overall, TPCWD demonstrated accountability in its disclosure of information and cooperation with the LAFCO questionnaires and other requests for information. Ch. 8 Tres Pinos Water District 224 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 8-3: Transparency and Accountability Indicators transparency and accountability tpcwd Agency website (GC §53087.8) Yes Contact information available on website (GC §53087.8 (a)(3)) Yes Yes via link available on the District's Annual Compensation Report (GC §53891 and 53908) website Adopted budget available on website No Yes via link available State Controller's Office Financial Transaction Report available on on the District's website (GC §53891 and 53893) website Notice of public meetings provided Yes Agendas posted on website (GC §54954.2) Yes Public meetings are live streamed No Minutes and/or recordings of public meetings available on website Yes Master Plan available on website No Strategic Plan available on website No Sanitary Sewer Management Plan available on website No Enterprise System Catalogue available on website (GC §6270.5 (a)) No Efforts to engage and educate the public on the services to the community Yes Staff and governing board member ethics training and economic interest reporting completed Yes Yes – however, financial audit is Compliance with financial document compilation, adoption, and delayed since FY 18- reporting requirements 19 Adherence to open meeting requirements Yes While public sector management standards vary depending on the size and scope of the organization, there are minimum standards. Well-managed organizations evaluate employees annually, track employee and agency productivity, periodically review agency performance, prepare a budget before the beginning of the fiscal year, conduct periodic financial audits to safeguard the public trust, maintain relatively current financial records, conduct advanced planning for future service needs, and plan and budget for capital needs. Ch. 8 Tres Pinos Water District 225 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final TPCWD has stated that it hires staff part-time through Infinity Staffing, a temporary staffing agency, with a set number of hours each week. Currently, the District employs two workers, an office manager and a meter reader. The District also has contracts for maintaining and operating its water and wastewater ponds. Employee evaluations are performed as necessary by an ad hoc committee created by the board. 153 The District also submits an annual report to the state, illustrating the operations and productivity of the wastewater services offered by the District. TPCWD follows an annual budgeting process. However, staffing challenges with the hired CPA have resulted in delays in conducting the yearly audits. The most recent financial audit was finalized for FY 18-19. The Sanitary Sewer Systems General Order (Order WQ 2022-0103-DWQ) requires public agencies that own or operate sanitary sewer systems to develop and implement sewer system management plans (SSMP). This plan outlines the District's operational activities and goals for its wastewater collection system, ensuring the health and safety of the public and the environment. The most recent SSMP was updated on November 30, 2012. In 2023, Bracewell Engineering, the District's operator, accompanied the State Water Resources Control Board (SWRCB) to carry out a Sanitary Survey of the District. This survey involves an inspection, a report outlining findings, and a list of identified deficiencies.154 It is recommended that the District update the existing SSMP to incorporate all changes and modifications at least once every five years, as required. This section details population trends, projected growth and growth areas, as well as planned and proposed developments within San Benito County. 153 Tres Pinos Water District, Request for Information. October 2023. 154 2023 Sanitary Survey of Tres Pinos County Water District, State Water Resources Control Board Division of Drinking Water. July 10, 2023. Ch. 8 Tres Pinos Water District 226 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final San Benito County, with its land use regulatory authority, governs all unincorporated land in the county, excluding areas within the city limits of Hollister and San Juan Bautista, as well as land owned or managed by the State or Federal governments. This includes State Parks, National Parks, Bureau of Land Management areas, and tribal lands. The County also does not oversee land owned or operated by state or federal agencies, such as state and national parks or tribal lands. The County's 2035 General Plan guides land use decisions. 155 The majority of the land use designation in the south and south-central areas of Tres Pinos, as per the San Benito County 2035 General Plan, is Residential Rural. This designation allows large-lot rural residential homes in areas of the County that are generally unsuitable for productive agriculture due to small property sizes, multiple property owners, and proximity to other more intensive residential developments. These properties often lack public infrastructure such as water, sewer, and drainage. Additionally, a small parcel in the southern area of Tres Pinos is designated a Public Quasi- Public (PQP). The purpose of the PQP designation is to provide space for uses such as public utility facilities and services, including schools, landfills, recycling facilities, resource recovery centers, sewage treatment plants, fire stations, and other similar uses. The remaining areas in the southern region and the western part of Tres Pinos have an Agricultural land use designation. This designation is to maintain the productivity of agricultural land, especially prime farmland, in the County. This designation is applied to various types of agriculturally productive lands, including cropland, vineyards, and grazing lands. Secondary dwellings are permitted for relatives, caretakers, employees, and farm workers. These areas typically have transportation access but little to no public infrastructure. Park designation is minimal in Tres Pinos, which is in the southern area. The majority of the central and central east areas have a Rangeland land use designation. The Rangeland designation maintains open space and grazing land on hills, mountains, and remote areas of the County. This designation is applied to areas that have minimal transportation access, high to very high fire hazard, and no public infrastructure (e.g., sewer, water, drainage). Most of these areas are located within remote parts of the County. Mixed Residential, Commercial Neighborhood, and Commercial Thoroughfare land use designations are concentrated in the central west parts of Tres Pinos. According to San Benito County's General Plan, the purpose of the Mixed Residential designation is to allow areas of 155 San Benito County, San Benito County 2035 General Plan, p. 3-4 to 3-13. Ch. 8 Tres Pinos Water District 227 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final unincorporated urban uses where circulation and utility services exist. This designation allows individuals to live in an unincorporated village or neighborhood atmosphere composed primarily of residential land uses with some commercial uses serving the residences. This designation applies to largely developed areas with public infrastructure and services necessary to support the increased density. The Commercial Neighborhood designation provides convenience goods within or near communities or other population concentrations. This designation also allows mixed-use developments, including residential, retail, and office uses. While the Commercial Thoroughfare land use designation provides commercial services for motorists near highway interchanges, along thoroughfares, and near Federal, State, and regional parks, and other tourist attractions to capture pass-through traffic and allow for commercial uses that serve the agricultural and rural unincorporated community. These include small shopping centers, truck and automobile stations, and tourist-serving commercial uses. The District reports 121 active connections, or approximately 350 people, within its service area. This is not representative of the population of the unincorporated Tres Pinos community, which is estimated to be 1,006 as of 2022. 156 The County of San Benito has completed the framework for growth and development within its General Plan. Notably, it highlights that residential growth has outpaced that of commercial and mixed-use development.157 This is especially a contributing factor to the County's low economic growth, as most residents commute outside the County for employment. In terms of the impact of growth and development on water and wastewater systems, the County is making a concerted effort, as outlined in the GP, to focus on sustainability and conservation practices. In particular, the County acknowledges that multi-user wastewater collection and treatment facilities are limited due to their high maintenance costs. In 2022, TPCWD received a moratorium on new hookups throughout the District due to compliance violations with California Code of Regulations, title 22, section 64554 (a), for not 156 Tres Pinos Water District, Request for Information. October 2023. 157 San Benito County, 2035 General Plan, p. 3-23 Ch. 8 Tres Pinos Water District 228 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final having adequate source capacity and storage capacity. The District reports that it is currently working at capacity and cannot accommodate new developments. The District has not met the deadlines of the compliance order and remains on a service connection moratorium. Based on its 2023 Feasibility Study, it is recommended that TPCWD consolidate with either Stonegate Water System or the Sunnyslope County Water District. TPCWD has since stated that the District was included in a grant to consolidate with the Sunnyslope Water District, specifically for water services. It is recommended that similar reorganization options are explored for wastewater services to ensure service adequacy and support growth. LAFCo is required to evaluate disadvantaged unincorporated communities as part of this service review, including the location and characteristics of any such communities. The intent and history of this requirement is outlined in the Background Section of this report. A disadvantaged unincorporated community is defined as any area with 12 or more registered voters, or as determined by commission policy, where the median household income is less than 80 percent of the statewide annual median. The California Department of Water Resources (DWR) has developed a mapping tool to assist in determining which communities meet the disadvantaged community's median household income definition. DWR is not bound by the same law as LAFCO to define communities with a minimum threshold of 12 or more registered voters. Because income information is not available for this level of analysis, disadvantaged unincorporated communities with smaller populations that meet LAFCO's definition cannot be identified. The DWR Mapping Tool is an interactive map application that allows users to overlay the following three US Census geographies as separate data layers—Census Place, Census Tract, and Census Block Group. The specific dataset used in the tool is the US Census American Community Survey Five-Year Data: 2016 - 2020. Only those census geographies that meet the DAC definition are shown on the map (i.e., only those with an annual median household income (MHI) less than 80 percent of the Statewide annual MHI). According to Census Bureau data, the statewide MHI for 2016-2020 is estimated at $78,672; hence, the calculated threshold of $67,937 defines whether a community was identified as disadvantaged. According Ch. 8 Tres Pinos Water District 229 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final to the DWR Mapping Tool, the Tres Pinos community and areas immediately adjacent to its boundaries are not considered disadvantaged. The District faces financial challenges due to restrictions on adding new connections resulting from the 2020 mandate, rate increases not generating enough revenue to cover maintenance and essential costs, and a lack of sufficient reserves and capital funding. Figure 8-4 illustrates the District's budget overview for FY 22-23. Ch. 8 Tres Pinos Water District 230 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 8-4: Tres Pinos County Water District Budget Overview FY 22-23 tpcwd budget overview fy 22-23 Operating Revenues Water sales $12,500 Water service - other $33,000 Water service – flat rate $45,950 Sewer $101,800 Late charges $14,400 Less Uncollectible Fees $0.00 Total Operating Revenues $207,650 Non-Operating Revenues Grant revenues $0.00 Interest $14.00 Other revenues $0.00 Total Operating Expenses $14.00 Total Income $207,664 Expense (Water) Contract labor $19,700 Maintenance and repair $29,700 Utilities $15,400 Permit/fees $11,900 Total water expense $76,700 Expense Pumping (Sewer) Contract labor $25,800 Maintenance and repair $8,700 Utilities $7,900 Permit/fees $2,300 Total water expense $44,700 Expense Administration Total Administration expense $112,903 Ch. 8 Tres Pinos Water District 231 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Total Expense (water+sewer+administration) $234,303 Net income (total expense less total revenue) ($26,639) Recurring operating deficits are a warning sign of fiscal distress. In the short term, reserves can backfill deficits and maintain services. However, ongoing deficits eventually will deplete reserves. As previously stated, the District has struggled to generate enough revenue to cover its expenses. As shown in Figure 8-4, during FY 22-23, total expenses of $234,303 exceeded total revenue of $207,650 by $26,639 or 12 percent. This trend of deficits, where expenses surpass revenues, has also been consistent in previous fiscal years. For instance, in FY 21-22, total expenses of $207,264.82 surpassed total revenue of $202,128.49 by $5,136.33 or 2 percent. Similarly, in FY 20-21, total expenses of $212,191.74 exceeded total revenue of $181,718.72 by $30,473.02 or 16 percent. The District currently charges residential sewer customers a monthly service charge. Non- residential sewer customers are assessed a volume charge based on metered water usage. The sewer rates were approved by the Board of Directors on August 6, 2013, by Ordinance No. 74, and the current rates took effect on December 21, 2014. The sewer rates were amended to cap average winter water use in drought years by Ordinance No. 71, which took effect on May 3, 2012. A consumption charge of $5.64 per Hundred Cubic Feet (HCF) for single- and multi-family dwellings is charged based on the average winter water usage for February and March and is updated each April. In drought years, as determined by the Board of Directors, customers whose average winter water usage increased by four or more HCF for February and March over the prior year will have their increase capped at the prior year's average plus 4 HCF. Ch. 8 Tres Pinos Water District 232 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 8-5: Tres Pinos County Water District Budget Overview FY 22-23 customer classification monthly sewer rates Single –Family Residential Dwelling (SFR) $95.93 plus $5.64 per HCF** Multiple –Family Residential Dwelling (MFR) $72.98 per unit, plus $5.64 per HCF** Cottages, Motels, Trailer Parks, Laundries, etc. $9.20 per HCF of metered water use Commercial and Industrial $12.14 per HCF of metered water use *HCF – Hundreds of Cubic Feet (based on metered water usage) The TPCWD provides wastewater collection and treatment services to its community. The District reports 121 active connections, or approximately 350 people, within its service area. Tres Pinos County Water District does not provide services to other agencies. TPCWD contracts with Bracewell Engineering for the operation and maintenance of wastewater ponds and water. There are no overlapping wastewater service providers within the District boundaries. The TPCWD does not provide extra-territorial services. The District currently has no unserved areas, and the existing services are at capacity. The District is not collaborating with other agencies to provide wastewater services. Ch. 8 Tres Pinos Water District 233 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The District's wastewater treatment plant is located adjacent to the Tres Pinos Creek, which includes a treatment facility that discharges to a 1.8-acre pond area. The District is operating at capacity and is seeking alternative solutions. Bracewell Engineering, the District's contracted operator, performs routine maintenance, including exercising valves, annual flushing, and line inventory. According to the 2023 Sanitary Sewer Survey, the operator conducts site visits once or twice a week. All monitoring records are stored digitally for a minimum of five years. The TPCWD wastewater system, constructed in 1963, is outdated and requires updates to continue providing an adequate level of service. The District reports that rate increases and income from existing connections are not enough to maintain and repair the facility. Currently, TPCWD does not share facilities. However, due to various challenges in providing services, including the District's inability to expand capacity and update the wastewater system, TPCWD is exploring potential options for long-term solutions, including consolidation with neighboring agencies. Specifically, consolidation with Sunnyslope County Water District (SSCWD) is highlighted as TPCWD recently consolidated its water services with SSCWD. As mentioned previously, the District faces several challenges, including financial constraints, aged infrastructure, and the state-mandated moratorium on adding new service connections. Ch. 8 Tres Pinos Water District 234 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final TPCWD reports it is currently operating at full capacity. The 2023 Sanitary Survey indicates that the District cannot meet Maximum Day Demand (MDD) requirements through available storage. The District is overdue for compliance with the March 30, 2020, compliance order, which mandated the rehabilitation or replacement of the storage tank. The District's storage capacity is 0.05 Million Gallons (MG), while the MDD ranged from 0.044 to 0.13 MG from 2012 to 2021.158 Figure 8-6 illustrates the District's MDD over this period. Figure 8-6: TPCWD Maximum Day Demand (MDD), 2012-2021 tpcwd mdd in millions gallon (mg) Year Max Day Max Month Year Total 2021 0.064* 1.32 11.34 2020 0.065* 1.34 12.05 2019 0.065* 1.35 11.17 2018 0.049 1.36 10.93 2017 0.044 1.25 10.21 2016 0.062* 1.24 10.68 2015 0.045 1.13 8.28 2014 0.13 2.65 15.65 2013 - - - 2012 0.071 1.46 12.90 *Max Day is calculated by dividing max month by number of days in month and multiplying by a peaking factor of 1.5 As mentioned previously, the state-mandated moratorium and TPCWD's inability to expand capacity and update the wastewater system prevent the District from providing services to new connections. 158 2023 Sanitary Survey of Tres Pinos County Water District, State Water Resources Control Board Division of Drinking Water. July 10, 2023.p.5. Ch. 8 Tres Pinos Water District 235 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final This section reviews indicators of wastewater service adequacy, including collection system integrity and regulatory compliance. Whenever available, industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. There are several measures of the integrity of the wastewater collection system, including sanitary sewer overflows, peaking factors resulting from infiltration and inflow (I/I), and efforts to address infiltration and inflow. All wastewater agencies are required to report sanitary sewer overflows (SSOs) to the SWRCB. Sewer overflows are discharges from sewer pipes, pumps, and manholes. Overflows reflect the capacity and condition of the collection system piping and the effectiveness of routine maintenance. The sewer overflow rate is calculated as the number of overflows per 100 miles of the main pipeline per year. The SWRCB shows 1 SSO for the Tres Pinos County Water District since 2018. The spill occurred in 2022 due to a gravity sewer main plugged with rags, two chunks of asphalt, and a small amount of grease. Wastewater flow includes not only discharges from residences, businesses, institutions, and industrial establishments but also infiltration and inflow. Infiltration refers to groundwater that seeps into sewer pipes through cracks, pipe joints, and other system leaks. Inflow refers to rainwater that enters the sewer system from sources such as yard and patio drains, roof gutter downspouts, uncapped cleanouts, pond or pool overflow drains, footing drains, cross-connections with storm drains, and even holes in manhole covers. Infiltration and inflow tend to affect older sewer systems to a greater degree. Infiltration and inflow rates are highest during or right after heavy rain. They are the primary factors driving peak flows through the wastewater system and a major consideration in capacity planning and costs. The peaking factor is the ratio of peak-day wet weather flows to average dry weather flows. The peaking factor indicates the degree to which the system suffers from I/I, where rainwater enters the sewer system through cracks, manholes, or other means. A peaking factor of up to three is generally considered acceptable based on industry practices. Ch. 8 Tres Pinos Water District 236 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The 2023 Sanitary Sewer Survey indicates that the District's peaking factor is 1.5, which meets industry standards and reflects a low incidence of I/I in the District's system. The RWQCB enforces the Clean Water Act, permit conditions, and other requirements of wastewater providers. Violations of State requirements for wastewater providers and treatment facilities are recorded by the SWRCB. The Board may levy fines or order the provider to take specific actions to comply with water quality regulations. In 2022, the Central Coast Regional Water Quality Control Board determined the updated permit requirements and monitoring and reporting program No. R3-2022-0078, contained in the General Permit, is more appropriate for your facility than Order No. R3-2012-0015. According to the RWQCB's website, the District had 61 violations from 2019-2024, with the last violation recorded in 2022. The primary cause of the violations over the years has been exceeding the annual average effluent limits and other effluent pollutant violations. The RWQCB's website shows the last inspection for TPCWD was completed in 2022. However, as mentioned previously, inspections were conducted as part of the 2023 Sanitary Sewer Survey, and a valve leak was found on-site. According to the Survey, operators were working to locate a nearby shutoff valve to stop water flow and enable repairs. To better address similar emergencies, the report has recommended that the District map all valve locations.159 In contrast, there have been zero enforcement actions for TPCWD since 2008. For several years, TPCWD has been conducting studies to determine the best solution moving forward as the District continues to face challenges due to inadequate resources to expand or maintain its current operations. The District was recently included in a grant to consolidate with Sunnyslope County Water District (SSCWD) for water services. A similar consolidation of wastewater services with SSCWD is also recommended to facilitate increased efficiency while reducing overlapping management and governance. The consolidation may also enable streamlining of water and wastewater services by placing both under a single 159 2023 Sanitary Survey of Tres Pinos County Water District, State Water Resources Control Board Division of Drinking Water. July 10, 2023.p.2. Ch. 8 Tres Pinos Water District 237 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final agency, thereby enhancing the quality of services for Tres Pinos' residents. This is also essential to ensure a consistent level of services for both utility services. Ch. 8 Tres Pinos Water District 238 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 8-1: The Tres Pinos County Water District (TPCWD) provides wastewater collection and treatment services to 121 active connections, or approximately 350 people, within its service area. 8-2: In 2022, TPCWD received a moratorium on new hookups throughout the District due to compliance violations with the California Code of Regulations, title 22, section 64554 (a), for not having adequate source capacity and storage capacity. The District reports that it is currently working at capacity and cannot accommodate new developments. 8-3: According to the DWR Mapping Tool, the Tres Pinos community and areas immediately adjacent to its boundaries are not considered disadvantaged. 8-4: The TPCWD wastewater system, built in 1963, is outdated and needs updating to continue providing an adequate level of service. 8-5: The District's storage capacity of 0.05 Million Gallons (MG) is insufficient to meet the Maximum Day Demand (MDD), which varied between 0.044 to 0.13 MG from 2012 to 2021. 8-6: The District is overdue for compliance with the March 30, 2020, compliance order, which mandated the rehabilitation or replacement of the storage tank. 8-7: The SWRCB shows 1 SSO for the Tres Pinos County Water District since 2018. 8-8: There have been no enforcement actions for TPCWD since 2008. In contrast, the District had 61 violations from 2019-2024, with the last violation occurring in 2022. The primary cause of the violations over the years has been exceeding the annual average effluent limits and other effluent pollutant violations. 8-9: In 2023, a Sanitary Sewer Survey was conducted by SWRCB, during the inspection valve leak was detected on-site. Operators were in the process of locating a nearby shutoff valve to stop water flow and facilitate repairs. The report also recommended that the District map all valve locations. Ch. 8 Tres Pinos Water District 239 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 8-10: Due to various challenges in providing services, including the District's inability to expand capacity and update the wastewater system, TPCWD is exploring potential options for long-term solutions, including consolidation with neighboring agencies. 8-11: TPCWD faces challenges due to its aging wastewater system and restrictions on new connections, leading to a need for consolidation with Sunnyslope County Water District (SSCWD). Despite rate increases, revenue falls short of covering maintenance costs, alongside inadequate reserves and capital funding. Financial struggles are evident in consecutive fiscal years, where expenses consistently surpass revenues, highlighting ongoing financial strain. 8-12: Due to various challenges, consolidation with SSCWD is highlighted, as TPCWD recently consolidated its water services with the District. 8-13: TPCWD complies with California AB 2257 (Brown Act) by publishing meeting agendas and minutes on its website. However, the District has two websites listed, which could lead to potential confusion for residents. It is recommended that the District consolidate the websites to ensure clarity and consistency. Additionally, it is also recommended that the District make essential financial and planning documents, such as financial audits and Sanitary Sewer Management Plans, readily accessible online to enhance transparency. 8-14: It is recommended that all up-to-date ethics training Certificates of Completion and Form 700s for each board member be readily available on TPCWD's website. 8-15: TPCWD demonstrated accountability in its disclosure of information and cooperation. 8-16: The identified governance structure option for TPCWD is to consolidate with SSCWD, building on their existing water services collaboration to address the District's lack of sufficient resources for expanding or maintaining current operations. Ch. 8 Tres Pinos Water District 240 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final County Service Areas (CSAs) are established to provide enhanced municipal services within unincorporated areas. CSAs are dependent special districts governed by the County Board of Supervisors and administered by County staff. For certain CSAs, parcels within the boundaries are evaluated yearly based on a budget amount, which in some cases has not been enough to fund asset replacement. Since many CSAs have aging facilities and deteriorating roads, future rate increases are anticipated. San Benito County has 30 active and seven inactive CSAs. Cielo Vista was formed in January of 1987 and is located in the unincorporated area of the County of San Benito, north of the Airline Highway and west of Fairview Road. The individual homeowners in each CSA are assessed a fee, which is collected with their property taxes. Each CSA's fees vary depending on the services provided by the County. No taxpayer funds are used for any of the services provided to CSAs. The San Benito County Resource Management Agency (RMA) manages the provision of these services.160 Services provided by CSA No. 22 to Cielo Vista include payment of utilities, storm drainage, and wastewater treatment services.161 This review is specific to wastewater treatment services. Cielo Vista is located in the unincorporated area of San Benito County, north of the Airline Highway and west of Fairview Road. The CSA covers 53.6 acres or 0.08 square miles. 160 San Benito County Civil Grand Jury Consolidated Final Report 2022-2023 p.42. 161 Services provided by CSA No. 22 to Cielo Vista include payment of utilities to PG&E and wastewater treatment services. p.9. Ch. 9 CSA #22- Cielo Vista 241 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final No records specific to the CSA's governing body are available. Additionally, there are no websites associated with Cielo Vista. While public sector management standards vary depending on the size and scope of the organization, there are minimum standards. Well-managed organizations evaluate employees annually, track employee and agency productivity, periodically review agency performance, prepare a budget before the beginning of the fiscal year, conduct periodic financial audits to safeguard the public trust, maintain relatively current financial records, conduct advanced planning for future service needs, and plan and budget for capital needs. The San Benito County Supervisors adopt budgets for all CSAs annually. CSA #22 currently does not have a Sanitary Sewer Management Plan (SSMP). State Water Resources Control Board General Order 2006-0003-DWQ requires agencies to submit a Sanitary Sewer Management Plan (SSMP) if they meet the following criteria: "Collection systems owned by state agencies, municipalities, counties, districts, and other public entities that own or operate sanitary sewer system greater than one mile in length and/or convey untreated or partially treated wastewater to a publicly owned treatment facility in the State of California are required to comply with the terms of this order." According to the Wastewater Treatment Plant Evaluation conducted by Wallace Group, based on aerial images of the Cielo Vista Estates development, it is estimated that the sanitary sewer collection system spans approximately 1.5 miles and discharges to a publicly owned treatment facility, both of which require an SSMP to be developed.162 162 Wallace Group, Wastewater Treatment Plant Evaluation, Cielo Vista WWTP. March 2021. p. 6. Ch. 9 CSA #22- Cielo Vista 242 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The Clio Vista area is just outside Hollister's city limits. According to San Benito County's 2035 General Plan, the entirety of the Clio Vista area is designated for mixed residential use. This designation allows areas of unincorporated urban uses where circulation and utility services exist. This will enable individuals to live in an unincorporated village or neighborhood atmosphere composed primarily of residential land uses with some commercial uses serving the residents. The census estimates the number of persons per household for 2018-2022 in San Benito County to be approximately 3.22. Using that census household estimation for the County and the 76 developed residential units within the CSA, the area has a population of about 244. According to the 2035 San Benito County General Plan, the intensity of development within areas designated as mixed residential will be directly proportional to the level and availability of public infrastructure and services. A maximum of 20 dwelling units per acre can be built in mixed residential areas. Thirty percent of new residential units with access to public sewer and water must include mixed residential types, with an average density of 8 units per acre. The exception is the Residential Multiple zoning category, which permits densities of 8 to 20 units per acre. This designation also allows for mixed-use developments that include residential, retail, and office space uses.163 LAFCo is required to evaluate disadvantaged unincorporated communities as part of this service review, including the location and characteristics of any such communities. The intent and history of this requirement is outlined in the Background Section of this report. A disadvantaged unincorporated community is defined as any area with 12 or more registered voters, or as determined by commission policy, where the median household income is less than 80 percent of the statewide annual median. 163 San Juan Bautista 2035 General Plan November 1, 2015. p.3-5. Ch. 9 CSA #22- Cielo Vista 243 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The California Department of Water Resources (DWR) has developed a mapping tool to assist in determining which communities meet the disadvantaged community's median household income definition. DWR is not bound by the same law as LAFCO to define communities with a minimum threshold of 12 or more registered voters. Because income information is not available for this level of analysis, disadvantaged unincorporated communities with smaller populations that meet LAFCO's definition cannot be identified now. The DWR Mapping Tool is an interactive map application that allows users to overlay the following three US Census geographies as separate data layers—Census Place, Census Tract, and Census Block Group. The specific dataset used in the tool is the US Census American Community Survey Five-Year Data: 2016 - 2020. Only those census geographies that meet the DAC definition are shown on the map (i.e., only those with an annual median household income (MHI) that is less than 80 percent of the Statewide annual MHI). The statewide MHI for 2017-2021, according to Census Bureau data, is estimated at $84,097, and hence, the calculated threshold of $67,277 defines whether a community was identified as disadvantaged. According to the DWR Mapping Tool, CSA #22's sewer service area is not considered a disadvantaged community. The financial ability of agencies to provide services is affected by available financing sources and constraints. San Benito County's Public Works staff annually estimates each CSA's budget. The estimated annual budget is based on the prior year's work effort, planned and CSA-requested future services, and inflationary factors. It also includes maintenance, repair, and capital improvements. The revenue and reserve balances are analyzed to determine the fees and charges.164 The CSA budget is recalculated annually and serves as the basis for determining the annual fee for the Property-Related Fee Schedule and Special Taxes for the CSAs, including CSA #22, based on each Equivalent Dwelling Unit. This fee will not exceed the maximum per-parcel fee. 164 FY 2023/24 Property-Related Fee Schedule & Special Taxes CSA Nos. 16, 21, 22, 23, 24, 28, 31, 34, 35, 42, 46, 47, 48, 50, 51, 53, 54 & 55. p.5. Ch. 9 CSA #22- Cielo Vista 244 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 9-1: CSA #22 Financial Summary Fiscal Year 22-23 and 23-24 csa #22 financial summary FY 22-23 Revenues Recommended FY 23-24 Recommended Charges for Services $70,000 $70,000 Transfer In 0 0 Use of Money and Property $24 $200 Total $70,024 $70,200 Expenses Services and Supplies Wastewater Operations $54,200 $121,200 Utilities $24,396 $40,00 Other Consultants $0 $1,600 Permits and Licenses $1,700 $2,000 Water Treatment $0 $0 Public and Legal Notices $0 $0 Communications $40 $120 Strom Drainage $0 $0 Total Services and Supplies $80,336 $164,920 Salary and Benefits Force Labor $18,080 $17,760 Other Charges Cost Plan $8,552 $0 Force Account Equipment $0 $1,380 Property Tax Admin Fee $22 $30 Total Charges $8,574 $1,410 Total Expenses $106,990 $184,090 Total Expenses Less Revenues ($36,966) ($113,890) Ch. 9 CSA #22- Cielo Vista 245 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Recurring operating deficits are a warning sign of fiscal distress. In the short term, reserves can backfill deficits and maintain services. However, ongoing deficits eventually will deplete reserves. As illustrated in Figure 9-1, CSA #22's FY 23-24 expenses exceed revenues by $113,890. In comparison, during FY 22-23, expenses exceeded revenues by $36,996. This change is due to the increase in expenses for services and supplies related to wastewater operations, utilities, other consultants, and permits and licenses. According to the FY 23-24 fee report, all parcels within the boundaries of CSA #22 are proposed to be subject to the fee and fee schedule illustrated in Figure 9-2. The fee applicable to each type of parcel is based on the proportional cost of the improvements and services attributable to that parcel. Revenues generated through the fee schedule will only be used for the purpose for which the fee was imposed and will not exceed the funds necessary to provide the improvements and services. The fee is being imposed for extended County services not available to the public at large in substantially the same manner as it is to the property owners in CSA# 22. Special consideration has been given to the proportionality of costs and the immediate availability of improvements and services applicable to each parcel in calculating the fee schedule. Seventy- eight (78) parcels currently comprise the area designated as CSA# 22. All developed residential parcels receive an equal share per unit of the proportional cost of the improvements and services. The developed residential County use code has been assigned a value of one equivalent dwelling unit ("EDU") per unit, which serves as the benchmark for other land use types. Parcels consisting of the treatment plant and detention pond are typically assigned zero EDU, as their costs are passed to property owners via homeowners' association or CSA expenses, as applicable. Ch. 9 CSA #22- Cielo Vista 246 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Figure 9-2: CSA #22 Fee Schedule developed undeveloped developed land land land treatment detention cpi residential plant (0.0 pond (0.0 fiscal year increase (1.0 edu) edu) edu) 2012/13 2.9% 918.94 0.00 0.00 2013/14 2.2% 939.16 0.00 0.00 2014/15 2.6% 963.57 0.00 0.00 2015/16 N/A 963.57 0.00 0.00 2016/17 N/A 963.57 0.00 0.00 2017/18 N/A 963.57 0.00 0.00 2018/19 N/A 963.57 0.00 0.00 2019/20 N/A 963.57 0.00 0.00 2020/21 N/A 963.57 0.00 0.00 2021/22 N/A 963.57 0.00 0.00 Wastewater treatment services include a contracted payment to consultants for the operation and maintenance of the wastewater treatment plant.165 Cielo Vista comprises 78 parcels, consisting of 76 developed residential parcels, one treatment plant facility, and one detention pond. County Service Area #22 does not provide services to other agencies. 165 FY 2023/24 Property-Related Fee Schedule & Special Taxes CSA Nos. 16, 21, 22, 23, 24, 28, 31, 34, 35, 42, 46, 47, 48, 50, 51, 53, 54 & 55. p.9. Ch. 9 CSA #22- Cielo Vista 247 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final In 2023, the County of San Benito and Bracewell Engineering, Inc. entered into a contract for Bracewell Engineering to perform several services regarding the operation and maintenance of waste and water treatment plants within various CSAs, including the operation and maintenance of a wastewater treatment plant (WWTP) at CSA #22. The service provided is specifically to Cielo Vista Estates as required for permit compliance. As of 2024, the new sewer connection from Cielo Vista to the City of Hollister's wastewater collection system for treatment and disposal has been completed, according to the 2023 Wastewater Treatment Services Agreement with the City of Hollister and Sunnyslope County Water District (SSCWD). This agreement covers the conveyance of wastewater from four areas within the boundaries of the Sunnyslope County Water District (SSCWD), including Cielo Vista, to Hollister's treatment and disposal facilities. County Service Area #22 does not provide extra-territorial services. There are no unserved areas within the County Service Area #22. The Cielo Vista WWTP was constructed in the late 1980s. San Benito County owns the facility and the associated disposal area. The facility consists of two SBRs, a sludge storage basin, mechanical and electrical equipment, and a leach field for disposal. The WWTP serves the Cielo Vista Subdivision (CSA# 22) and is designed to treat and dispose of a maximum of 30,000 gpd, with an average flow of 19,000 gpd. In 2021, the County contracted the Wallace Group to evaluate the Cielo Vista treatment plant. Several exterior, interior, and other health and safety deficiencies were identified, and due Ch. 9 CSA #22- Cielo Vista 248 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final to its condition, continued operations of the facility were not recommended without significant repairs and updates to address safety concerns. 166 This section reviews indicators of wastewater service adequacy, including collection system integrity and regulatory compliance. Whenever available, industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. There are several measures of the integrity of the wastewater collection system, including sanitary sewer overflows, peaking factors resulting from infiltration and inflow (I/I), and efforts to address infiltration and inflow. All wastewater agencies are required to report sanitary sewer overflows (SSOs) to SWRCB. Sewer overflows are discharges from sewer pipes, pumps, and manholes. Overflows reflect the capacity and condition of the collection system piping and the effectiveness of routine maintenance. The sewer overflow rate is calculated as the number of overflows per 100 miles of the main pipeline per year. According to the SWCRB website, 0 SSOs were reported for the Cielo Vista. Wastewater flow includes not only discharges from residences, businesses, institutions, and industrial establishments but also infiltration and inflow. Infiltration refers to groundwater that seeps into sewer pipes through cracks, pipe joints, and other system leaks. Inflow refers to rainwater that enters the sewer system from sources such as yard and patio drains, roof gutter downspouts, uncapped cleanouts, pond or pool overflow drains, footing drains, cross-connections with storm drains, and even holes in manhole covers. Infiltration and inflow tend to affect older sewer systems to a greater degree. Infiltration and inflow rates are highest during or right after heavy rain. They are the primary factors driving peak flows through the wastewater system and a major consideration in capacity planning and costs. 166 Wallace Group, Wastewater Treatment Plant Evaluation, Cielo Vista WWTP. March 2021, p. 11. Ch. 9 CSA #22- Cielo Vista 249 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The peaking factor is the ratio of peak-day wet weather flows to average dry weather flows. The peaking factor indicates the degree to which the system suffers from I/I, where rainwater enters the sewer system through cracks, manholes, or other means. A peaking factor of up to three is generally considered acceptable based on industry practices. Cielo Vista estimates a peaking factor of 4.0, which slightly exceeds the industry practices and indicates a high incidence of I/I in the CSA's system. The Cielo Vista WWTP is regulated by Waste Discharge Requirements (WDR) Order No. 87- 115. The WDR contains two different sets of effluent limits for the facility, depending on leach field application rates. According to the California Integrated Water Quality System (CIWQS), the Cielo Vista facility has received four Notice of Violations (NOVs) since May 2003 and 19 Category 1 effluent violations since January 2019. The effluent violations have been primarily due to salts (TDS, Sodium, and Chloride), with a few minor Total Suspended Solids (TSS) violations corrected through equipment adjustments. The last inspection for the Cielo Vista facility, as reported on the CIWQS website, was completed in 2007. However, as mentioned earlier, the County contracted the Wallace Group to conduct an evaluation of Cielo Vista's treatment plant in 2021, which identified various exterior, interior, and other health and safety deficiencies. Consequently, two alternatives were recommended as a solution: i) demolishing the existing facility and connecting to the City of Hollister Sanitary Sewer System at Robert's Ranch using a gravity sewer connection, or ii) replacing the existing facility with a Membrane Bio-Reactor Plant (MBR) and disposal leach field to address the various WWTP deficiencies. After comparing both capital and operating and maintenance (O&M) costs for the two alternatives, the report concluded that connecting to the City of Hollister Sanitary Sewer System is the most cost-effective option.167 As mentioned previously, Cielo Vista requested an emergency out-of-jurisdiction service connection due to the failure of existing facilities. As of 2024, the new sewer connection from Cielo Vista to the City of Hollister's wastewater collection system has been completed, allowing for the conveyance of wastewater to the City's treatment and disposal facilities. 167 Wallace Group, Wastewater Treatment Plant Evaluation, Cielo Vista WWTP. March 2021, p. 11. Ch. 9 CSA #22- Cielo Vista 250 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final Following the completion of the new sewer connection from Cielo Vista to the City of Hollister's wastewater collection system, on March 26, 2024, the San Benito County Board of Supervisors, as the governing body of CSA #22, adopted a Resolution of Intent to divest CSA #22 of its authority to provide sanitary sewer services in accordance with Government Code Section 25213.6(a). A public hearing was held on April 30, 2024, during which the Board reviewed the divestiture, determined it to be exempt from California Environmental Quality Act (CEQA), and discussed a proposed closeout assessment for residents following the transfer of services to the Sunnyslope County Water District (SSCWD). Subsequently, the Board approved Resolution 2024-52, authorizing the submission of an application to LAFCO for processing the proposed divestiture. The divestiture will transfer responsibility for maintenance, ownership, and administrative oversight of the sanitary sewer services and infrastructure (excluding the existing wastewater treatment plant) to SSCWD, which will act as the successor public agency. Additionally, wastewater treatment responsibility will be transferred to the City of Hollister. SSCWD has now assumed responsibility for the Cielo Vista sewer collection system and is sending the wastewater to the City of Hollister's treatment plant per the 2023 Wastewater Treatment Services agreement. Wastewater from Cielo Vista is currently being treated at the City of Hollister wastewater treatment plant. In June 2024, San Benito LAFCO adopted a Resolution No. 2024-05 approving the divestiture of wastewater services by CSA #22 serving Cielo Vista, with an effective date of September 1, 2024. Ch. 9 CSA #22- Cielo Vista 251 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 9-1: County Service Areas (CSAs) are established to provide enhanced municipal services within unincorporated areas. Cielo Vista is located in the unincorporated area of the County of San Benito, north of the Airline Highway and west of Fairview Road. 9-2: The census estimates the number of persons per household for 2018-2022 in San Benito County to be approximately 3.22. Using that census household estimation for the County and the 76 developed residential units within the CSA, the area has a population of about 244. 9-3: The statewide MHI for 2017-2021, according to Census Bureau data, is estimated at $84,097, and hence, the calculated threshold of $67,277 defines whether a community was identified as disadvantaged. According to the DWR Mapping Tool, CSA #22's sewer service area is not considered a disadvantaged community. 9-4: Wastewater treatment services include a contracted payment to consultants for operations and maintenance of the wastewater treatment plant. Additional costs include payments for operations and maintenance services provided by the County. 9-5: In 2021, San Benito County contracted the Wallace Group to conduct a Wastewater Treatment Plant Evaluation on Cielo Vista's WWTP. The report highlighted exterior, interior, and other health and safety deficiencies, concluding that, based on the facility's existing condition, continued operation of the Cielo Vista WWTP is not recommended without significant repairs and updates to address safety concerns. 9-6: Two alternatives were recommended as a solution: i) demolishing the existing facility and connecting to the City of Hollister Sanitary Sewer System at Robert's Ranch using a gravity sewer connection, or ii) replacing the existing facility with a Membrane Bio-Reactor Plant (MBR) and disposal leach field to address the various WWTP deficiencies. 9-7: After comparing both capital and operating and maintenance (O&M) costs for the two alternatives, the Wallace Group report concluded that connecting to the City of Hollister Sanitary Sewer System is the most cost-effective option. 9-8: Cielo Vista requested an emergency out-of-jurisdiction service connection due to the failure of existing facilities. As of 2024, the new sewer connection from Cielo Vista to Ch. 9 CSA #22- Cielo Vista 252 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final the City of Hollister's wastewater collection system has been completed, allowing for the conveyance of wastewater to the City's treatment and disposal facilities. 9-9: CSA #22's FY 23-24 expenses exceed revenues by $113,890. In comparison, expenses exceeded revenues during FY 22-23 by $36,996. This change is due to the increase in expenses for services and supplies related to wastewater operations, utilities, other consultants, and permits and licenses. 9-10: The new sewer connection to the City of Hollister's wastewater collection system for treatment and disposal is a collaborative effort with the Sunnyslope County Water District and the City. 9-11: Following an application from the County to finalize the divestiture process, San Benito LAFCO adopted Resolution No. 2024-05 approving the divestiture of wastewater services by CSA #22 serving Cielo Vista, with an effective date of September 1, 2024. Ch. 9 CSA #22- Cielo Vista 253 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final County Service Areas (CSAs) are established to provide enhanced municipal services within unincorporated areas. CSAs are dependent special districts governed by the County Board of Supervisors and administered by County staff. For certain CSAs, parcels within the boundaries are evaluated yearly based on a budget amount, which in some cases has not been enough to fund asset replacement. Since many CSAs have aging facilities and deteriorating roads, future rate increases are anticipated. San Benito County has 30 active and seven inactive CSAs. Rancho Larios is a small residential community in San Benito, west of San Juan Bautista. The Local Agency Formation Commission (LAFCO) formed CSA #45 in August of 1995, which authorized the County to provide maintenance of drainage facilities, maintenance of streets, maintenance of recreation facilities, landscape, open space, street lighting, water service, sewer service, street sweeping, and extend Police and Fire services to the Rancho Larios Development. Rancho Larios comprises 147 parcels, including 140 developed residential parcels, five open spaces, and two communal lots with sports court facilities. CSA #45 is no longer providing services to Rancho Larios; the Homeowners' Association (HOA) assumed responsibility for services starting July 1, 2009. This review is specific to wastewater treatment services. Rancho Larios is located in the unincorporated area of the County of San Benito, north of Salinas Road, south of Rocks Road, and east of State Highway 156. The CSA comprises 183.71 acres, equivalent to 0.29 square miles. No records specific to the CSA's governing body are available. Additionally, there are no websites associated with Rancho Larios. Ch. 10 CSA #45 – Rancho Larios 254 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final As of 2019, there are 147 developed residential parcels within CSA #45. No further population data is available for the area beyond this parcel count. LAFCo is required to evaluate disadvantaged unincorporated communities as part of this service review, including the location and characteristics of any such communities. The intent and history of this requirement is outlined in the Background Section of this report. A disadvantaged unincorporated community is defined as any area with 12 or more registered voters, or as determined by commission policy, where the median household income is less than 80 percent of the statewide annual median. The California Department of Water Resources (DWR) has developed a mapping tool to assist in determining which communities meet the disadvantaged community's median household income definition. DWR is not bound by the same law as LAFCO to define communities with a minimum threshold of 12 or more registered voters. Because income information is not available for this level of analysis, disadvantaged unincorporated communities with smaller populations that meet LAFCO's definition cannot be identified now. The DWR Mapping Tool is an interactive map application that allows users to overlay the following three US Census geographies as separate data layers—Census Place, Census Tract, and Census Block Group. The specific dataset used in the tool is the US Census American Community Survey Five-Year Data: 2016 - 2020. Only those census geographies that meet the DAC definition are shown on the map (i.e., only those with an annual median household income (MHI) that is less than 80 percent of the Statewide annual MHI). The statewide MHI for 2017-2021, according to Census Bureau data, is estimated at $84,097, and hence the calculated threshold of $67,277 defines whether a community was identified as disadvantaged. According to the DWR Mapping Tool, CSA #45's sewer service area is not considered a disadvantaged community. The financial ability of agencies to provide services is affected by available financing sources and financing constraints. Ch. 10 CSA #45 – Rancho Larios 255 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final San Benito County's Public Works staff annually estimates each CSA's budget. The estimated annual budget is based on the prior year's work effort, planned and CSA-requested future services, and inflationary factors. It also includes maintenance, repair, and capital improvements. The revenue and reserve balances are analyzed to determine the fees and charges. Since FY 21-22, Rancho Larios has had no revenue allocation, while expenses for wastewater operations were estimated to be around $300,000. It is unclear how the HOA covers operation and maintenance expenses. The County transferred the responsibilities of operating the domestic wastewater treatment system at Rancho Larios Domestic Wastewater Treatment Plant to the Rancho Larios HOA. The HOA is responsible for paying a consultant for the operation and maintenance of the wastewater treatment plant, which includes four lift stations and oversight of the reclaimed water pond. Domestic wastewater services are provided to 140 homes within the Rancho Larios HOA. The Rancho Larios treatment system comprises influent screening, an influent equalization basin, sequencing batch reactors, filters, a chlorine contact chamber, and long-term effluent storage. The Rancho Larios Domestic Wastewater Treatment Plant is designed to treat a maximum daily flow of 50,000 gpd during dry weather conditions. The average annual flow is reportedly 37,000 gpd.168 This section reviews indicators of wastewater service adequacy, including collection system integrity and regulatory compliance. Whenever available, industry standards are used to determine the level of services provided. In lieu of adopted standards, the report also makes use of generally accepted industry best practices or benchmarking with comparable providers. 168 Central Coast Regional Water Quality Control Board, Rancho Larios HOA May 27, 2022, Domestic Wastewater Treatment Plant. Ch. 10 CSA #45 – Rancho Larios 256 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final The Rancho Larios WWTP is regulated by the WQ 2014-0153-DWQ General Waste Discharge Requirements for Small Domestic Wastewater Treatment Systems (General Permit). According to the California Integrated Water Quality System (CIWQS), the Rancho Larios WWTP facility has received nine violations since 2019, with five violations in 2021. All violations Rancho Larios received in 2021 were due to violations of the following order conditions: • Violation of Board Order R3-2004-0153 Section B. Reclamation Specifications, No. 7, "Valves in the recycled water irrigation system shall be designed and constructed so unauthorized persons cannot open them." • Violation of Board Order R3-2004-0153 Section B. Reclamation Specifications, No. 8, "Proper backflow and cross connection protection for domestic water services and irrigation wells shall be provided." • Violation of Board Order R3-2004-0153 Section E. General Specifications for Reclamation and Use, No. 10, "Recycled water pipes shall be colored purple or wrapped in purple color tape." • Violation of Board Order R3-2004-0153 Section E. General Specifications for Reclamation and Use, No. 7, "All recycled water reservoirs and other areas with public access shall be posted (in English and Spanish) with signs that are visible to the public, in size no less than four inches high by eight inches wide, that include the following wording: "Recycled Water – Do Not Drink." • Violation of Board Order R3-2004-0153 Section E. General Specifications for Reclamation and Use, No. 9, "Permitter warning signs for the spray irrigation area shall be posted every 1250 ft. At a minimum, signs shall be posted at each corner and at access roads. Signs shall provide information consistent with the Department of Health guidelines 60310(f)." The last inspection for the Rancho Larios facility, as reported on the CIWQS website, was completed in 2021. As mentioned previously, the Homeowners Association (HOA) has assumed responsibility for the operation of the CSA #45 (Rancho Larios) wastewater services. However, it is unclear how Ch. 10 CSA #45 – Rancho Larios 257 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final the operational costs for wastewater services, estimated by the County to be approximately $300,000, are recouped. The CSA is currently considered inactive. Before FY 21-22, the County allocated a budget for the CSA every year; however, this allocation was halted after the HOA took over operations. It is also unclear to what extent the County is currently providing oversight. A dissolution of CSA #45 is recommended in compliance with SB 448 (Wieckowski)169, which mandates LAFCO to initiate the dissolution of inactive CSAs. Additionally, a plan for services may be required, and a successor agency may need to be identified depending on the adequacy of services currently provided by the HOA to ensure continued and adequate services for the residents in the area. A dissolution of CSA #45 is an option depending on the service levels and effectiveness of the current operation. 169 Assembly Committee on Local Government, SB 448 (Wieckowski), as amended July 3, 2017. Requires the State Controller to publish a list of inactive special districts and establishes a process for local agency formation commissions (LAFCO) to dissolve inactive special districts. Ch. 10 CSA #45 – Rancho Larios 258 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 10-1: County Service Areas (CSAs) are established to provide enhanced municipal services within unincorporated areas. LAFCO formed CSA #45 to provide services, including maintenance of drainage facilities, streets, and recreation facilities, landscape and open space maintenance, street lighting, water and sewer services, street sweeping, and the extension of police and fire services. 10-2: As of 2019, there are 147 developed residential parcels within CSA #45. No further population data is available for the area beyond this parcel count. 10-3: The statewide MHI for 2017-2021, according to Census Bureau data, is estimated at $84,097, and hence the calculated threshold of $67,277 defines whether a community was identified as disadvantaged. According to the DWR Mapping Tool, CSA #22's sewer service area is not considered a disadvantaged community. 10-4: The Rancho Larios treatment system consists of influent screening, influent equalization basin, sequencing batch reactors, filters, chlorine contact chamber, and long-term effluent storage. 10-5: There are currently no services being provided to Rancho Larios by CSA No. 45; the Homeowners Association (HOA) assumed responsibility for services provided, effective July 1, 2009. The HOA of Rancho Larios is responsible for paying consultants to operate and maintain the wastewater treatment plant. This includes managing four lift stations and overseeing the reclaimed water pond. The Rancho Larios HOA is responsible for paying a consultant for the operation and maintenance of the wastewater treatment plant, including four lift stations and the reclaimed water pond. 10-6: Since FY 21-22, Rancho Larios has received no revenue allocation, yet expenses for wastewater operations were estimated at around $300,000 annually, and it remains unclear how the HOA is covering these operational costs. Ch. 10 CSA #45 – Rancho Larios 259 Policy Consulting Associates, LLC San Benito Wastewater MSR Draft Final 10-7: No current or potential opportunities for shared facilities were identified. 10-8: A dissolution of CSA #45 is recommended after a review of the service levels and effectiveness of the current operation. Ch. 10 CSA #45 – Rancho Larios 260 Policy Consulting Associates, LLC