LAFCO

Public Review Draft Port San Luis Harbor District MSR and SOI Study

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Public Review Draft Port San Luis Harbor District Municipal Service Review and Sphere of Influence Study Prepared by The San Luis Obispo Local Agency Formation Commission Adopted ___, 2026 Resolution No. ____ Port San Luis Harbor District 2 MSR & SOI Study TABLE OF CONTENTS About LAFCO ____________________________________________________ 4 Authority and Objectives _____________________________________________________ 4 Regulatory Responsibilities ___________________________________________________ 4 Planning Responsibilities _____________________________________________________ 5 LAFCO Decision-Making _____________________________________________________ 6 SLO LAFCO _______________________________________________________________ 7 Acknowledgments _________________________________________________________ 8 District MSR & Sphere of influence Study ________________________________ 9 Overview ______________________________________________________________ 9 At A Glance ____________________________________________________________ 10 Background ___________________________________________________________ 10 Boundary Map _________________________________________________________ 12 Population Profile _______________________________________________________ 12 Present and Planned Land Use ______________________________________________ 15 Accountability __________________________________________________________ 16 Services & Capacity ______________________________________________________ 16 Shared Facilities __________________________________________________________ 25 Finance ________________________________________________________________ 25 Sphere of Influence ______________________________________________________ 33 Determinations _________________________________________________ 35 Municipal Service Review Determinations _______________________________________ 35 Sphere of Influence Determinations ____________________________________________ 38 California Environmental Quality Act ___________________________________________ 40 Port San Luis Harbor District 3 MSR & SOI Study List of Figures Figure 1: Port San Luis Harbor District Boundary Map .................................................................. 12 Figure 2: Countywide Disadvantaged Unincorporated Communities Map ...................................... 14 Figure 3: Audited Revenues and Expenditures............................................................................. 28 Figure 4: Operating Ratio .......................................................................................................... 29 Figure 5: Liquidity Ratio (FY 19-20 - FY 23-24) ............................................................................. 32 Figure 6: Recommended PSLHD SOI and Service Area Boundary ................................................... 34 List of Tables Table 1: District Profile ............................................................................................................. 10 Table 2: Population Projections ................................................................................................. 13 Table 3: Disadvantaged Unincorporated Communities within PSLHD ............................................ 14 Table 4: PSLHD Harbor Commission ........................................................................................... 16 Table 5: PSLHD Services ............................................................................................................ 19 Table 6: Harbor Patrol Responses by Fiscal Year .......................................................................... 23 Table 7: Lifeguard Responses by Calendar Year ........................................................................... 23 Table 8: Audited Assets and Deferred Outflows .......................................................................... 30 Table 9: Audited Liabilities and Deferred Inflows ......................................................................... 31 Table 10: Net Position .............................................................................................................. 33 Port San Luis Harbor District 4 MSR & SOI Study ABOUT LAFCO Authority and Objectives Local Agency Formation Commissions (LAFCOs) were established in 1963 and are considered regional subdivisions of the State of California responsible for providing regional growth management services in all 58 counties. LAFCOs’ authority is codified under the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (CKH), with principal oversight provided by the Assembly Committee on Local Government. LAFCOs are comprised of locally elected and appointed officials with regulatory and planning powers delegated by the Legislature to coordinate and oversee the establishment, expansion, and organization of cities and special districts and their municipal service areas. Regulatory Responsibilities LAFCOs’ principal regulatory responsibility involves approving or disapproving all jurisdictional changes involving the establishment, expansion, and reorganization of cities, towns, and most special districts in California. CKH defines “special district” to mean any agency of the State formed pursuant to general law or special act for the local performance of governmental or proprietary functions within limited boundaries. All special districts in California are subject to LAFCO oversight, with the following exceptions: school districts, community college districts, assessment districts, improvement districts, community facilities districts, and air pollution control districts. LAFCOs are also tasked with overseeing the approval process for cities, towns, and special districts to provide new or extended services beyond their jurisdictional boundaries by contracts, agreements, or annexation. LAFCOs also oversee special district actions to either activate new service functions and service classes or divest existing services. LAFCOs generally exercise their regulatory authority in response to applications submitted by affected agencies, landowners, or registered voters. Recent amendments to CKH also authorize and encourage LAFCOs to initiate jurisdictional changes to form, consolidate, and dissolve special districts consistent with community needs. Port San Luis Harbor District 5 MSR & SOI Study Planning Responsibilities LAFCOs inform their regulatory actions, in part, through two central planning responsibilities: (a) making sphere of influence determinations and (b) preparing municipal service reviews. With this, and other relevant information in the record, LAFCO makes decisions on a variety of matters, including but not limited to annexations to cities and special districts, city incorporations, activation of powers for special districts, dissolutions of special districts, etc. Sphere of Influence A Sphere of Influence (SOI) is defined by Government Code Section 56425 as a plan for the probable physical boundary and service area of a local agency or municipality. An SOI is generally considered a 20-year, long-range planning tool. LAFCOs establish, amend, and update SOIs for all applicable jurisdictions in California every five years, or as necessary. When updating an SOI, LAFCOs are required to consider and prepare a written statement of their determinations concerning each of the following five factors: 1) The present and planned land uses in the area, including agricultural and open-space lands. 2) The present and probable need for public facilities and services in the area. 3) The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. 4) The existence of any social or economic communities of interest in the area if the commission determines that they are relevant to the agency. 5) For an update of a sphere of influence of a city or special district that provides public facilities or services related to sewers, municipal and industrial water, or structural fire protection, that occurs pursuant to subdivision (g) on or after July 1, 2012, the present and probable need for those public facilities and services of any disadvantaged unincorporated communities within the existing sphere of influence. The intent in preparing the written statements is to orient LAFCOs in addressing the core principles underlying the sensible development of local agencies consistent with the anticipated needs of the affected communities. Port San Luis Harbor District 6 MSR & SOI Study Municipal Service Reviews Municipal Service Reviews (MSRs), in contrast, are intended to inform, among other activities, SOI determinations. LAFCOs also prepare MSRs regardless of making any specific sphere determinations in order to obtain and furnish information to contribute to the overall orderly development of local communities. When updating an MSR, LAFCOs are required to consider and prepare written statements of their determinations with respect to each of the following seven factors: 1) Growth and population projections for the affected area. 2) The location and characteristics of any disadvantaged unincorporated communities within or contiguous to the sphere of influence. 3) Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs or deficiencies, including needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any disadvantaged, unincorporated communities within or contiguous to the sphere of influence. 4) Financial ability of agencies to provide services. 5) Status of, and opportunities for, shared facilities. 6) Accountability for community service needs, including governmental structure and operational efficiencies. 7) Any other matter related to effective or efficient service delivery, as required by commission policy. LAFCO Decision-Making LAFCO decisions are legislative in nature and, therefore, are not subject to an outside appeal process; only courts can overturn LAFCO decisions. LAFCOs also have broad powers with respect to conditioning regulatory and planning approvals, so long as they do not establish any terms that directly affect land use density or intensity, property development, or subdivision requirements. LAFCOs are generally governed by a board comprised of county supervisors, city council members, independent special district members, a representative of the general public, and an alternate member for each category. SLO LAFCO is governed by a seven-member board comprised of two county supervisors, two city council members, two independent special district members, one representative Port San Luis Harbor District 7 MSR & SOI Study of the general public, and an alternate member for each category. All members serve four-year terms and must exercise their independent judgment on behalf of the interests of residents, landowners, and the public as a whole. LAFCO members are subject to standard disclosure requirements and must file annual statements of economic interests. LAFCOs are independent of local government, with their own staff. All LAFCOs, nevertheless, must appoint their own Executive Officers to manage agency activities and provide written recommendations on all regulatory and planning actions before the Commission. In addition, all LAFCOs must also appoint their own legal counsel. SLO LAFCO Regular Commissioners Chair Heather Moreno County Member Vice Chair David Watson Public Member Dawn Ortiz-Legg County Member Ed Waage City Member Steve Gregory City Member Ed Eby Special District Member Navid Fardanesh Special District Member Alternate Commissioners Bruce Gibson County Member Carla Wixom City Member Vacant Special District Member Michael Draze Public Member Staff Rob Fitzroy Executive Officer Imelda Marquez-Vawter Senior Analyst Morgan Bing Analyst Melissa Morris Commission Clerk Holly Whatley Legal Counsel Port San Luis Harbor District 8 MSR & SOI Study Contact Information San Luis Obispo LAFCO’s office is located at 1042 Pacific St, Suite A, in the City of San Luis Obispo. The LAFCO office is open by appointment to discuss proposals or other matters and can be scheduled by calling 805-781-5795. Additional information is also available online by visiting slo.lafco.ca.gov. Acknowledgments San Luis Obispo LAFCO gratefully acknowledges the time and effort of staff with the Port San Luis Harbor District in assisting in the preparation of this report, including – but not limited to – the following individuals: William D. Friedman, Harbor Director Matt Ashton, Chief of Harbor Patrol Jennifer Szeliga, Business Manager Dustin Barth, Facilities Manager Port San Luis Harbor District 9 MSR & SOI Study DISTRICT MSR & SPHERE OF INFLUENCE STUDY Overview This report represents San Luis Obispo LAFCO’s scheduled municipal service review and sphere of influence study for the Port San Luis Harbor District (PSLHD or District), located in the southern portion of the County of San Luis Obispo (County). The report has been prepared by staff in accordance with the requirements of the Government Code. The purpose of this report is to produce an independent assessment of municipal services in this area over the next five years or as necessary, relative to the Commission’s regional growth management duties and responsibilities as established by the State Legislature. This includes evaluating the current and future relationship between the availability, demand, and adequacy of services within the service areas of the PSLHD, subject to the Commission’s oversight. Information generated as part of the report will be used by the Commission in (a) guiding subsequent sphere of influence updates, (b) informing future boundary changes, and – if merited – (c) initiating government reorganizations, such as special district formations, consolidations, and/or dissolutions. The period for collecting data to inform the Commission’s analysis and related projections on population growth and service demands has been set to cover any major updates and changes since the last time the MSR and SOI Study was updated in 2014. The financial analysis has been set to cover the last five years of the audited fiscal year period. The timeframe for the report has been generally oriented to cover the next five to seven-year period, with the former (ten years) serving as the analysis anchor as contemplated under State law. The document outline serves to inform all the state- mandated requirements outlined in Government Code Sections 56430 and 56425. Written determinations have been included as the concluding chapter of this document. Port San Luis Harbor District 10 MSR & SOI Study At A Glance Table 1: District Profile Agency Name Port San Luis Harbor District Formation 1954 Legal Authority California Harbors and Navigation Code, section 6000 et seq. Mailing Address 3950 Avila Beach Drive, PO Box 249, Avila Beach, CA 93424 Website https://www.portsanluis.com/ Harbor Director William D. Friedman Public Meetings The Board of Directors meets on the fourth Tuesday of the month at 6:00 PM at the Coastal Gateway Building at 3900 Avila Beach Drive, Avila Beach, CA. Board of Directors Five members elected to four-year terms District Service Area 383,508 acres, including 8,400 acres of State Tidelands1 Population 129,579 Background The Port San Luis Harbor District (PSLHD or District) was formed on January 27, 1954, under the California Harbors and Navigation Code, following a local vote in 1953 that recognized the harbor’s economic and cultural importance to the County of San Luis Obispo (County). The District manages the harbor area, which consists of approximately 40 acres of upland property, 100 acres of submerged lands, and an additional 8,400 acres of state tidelands within San Luis Bay. Historically, the harbor supported commercial fishing, agricultural exports, and a marine oil terminal, generating revenue through wharfage, rentals, and other enterprise activities. These operations were further supported by facilities and services such as commercial piers, marine repair services, and wholesale fish processing. The State Legislature reinforced the harbor’s development by granting tidelands to the District in 1955 (amended in 1957), with mandates for both commercial and public uses. These included harbor 1 Although PSLHD’s service area boundary is 383,508 acres, the District only provides services within the Harbor Area which consists of approximately 40 acres of upland property, 100 acres of submerged lands, and an additional 8,400 acres of state tidelands. Port San Luis Harbor District 11 MSR & SOI Study infrastructure such as wharves, docks, and breakwaters, as well as public amenities like parks, recreation areas, and coastal access. The grant also required the District to maintain facilities that promote commerce and navigation while ensuring free access. This framework established the dual mission of the District – supporting economic activity and safeguarding public use of coastal resources. Over time, the District’s responsibilities continued to expand beyond enterprise operations. The California Coastal Act of 1976 required ports to provide visitor-serving and recreational uses, recognizing them as vital state resources. In addition, in 1984, the District assumed management of Avila State Beach and Pier, adding public services such as restrooms, lifeguards, and facility maintenance. Similarly, Harford Pier, a historic structure, became subject to preservation and safety upgrades, including fire protection systems. These obligations reflect the District’s evolving role in balancing recreational access, public safety, and historic preservation. Today, PSLHD continues to enhance coastal access through projects like improved beach launch ramps, ADA-compliant facilities, and guided access to areas such as the Pecho Coast and Point San Luis Lighthouse. Many of these initiatives rely on tax revenues to fund non-enterprise programs that maintain public amenities and ensure compliance with state mandates. This ongoing commitment underscores the District’s mission to serve both economic and community interests while preserving the unique coastal environment of Port San Luis. Port San Luis Harbor District 12 MSR & SOI Study Boundary Map Figure 1: Port San Luis Harbor District Boundary Map Population Profile PSLHD’s service area includes a broad geographic area in the southern portion of the County, encompassing a mix of cities, unincorporated communities, and rural lands. Population projections for the communities within the District’s service area provide insight into potential future service demands; however, these projections do not fully represent actual District users, as PSLHD services and facilities are available to visitors from within its service area and beyond. The estimated population within the PSLHD service area was 129,579 in 2020. Based on a medium- growth scenario, by 2060, the population is projected to increase to approximately 137,808, Port San Luis Harbor District 13 MSR & SOI Study representing a total increase of 6.35% over the 40-year period. Countywide, the population is expected to increase 7.45% from 2020 to 2060. Table 2: Population Projections2 Local Agencies within PSLHD 2020 2030 2040 2050 2060 % Change (2020 to 2060) Arroyo Grande 18,347 18,119 18,420 18,709 18,921 3.13% Grover Beach 12,789 12,937 13,273 13,501 13,556 6.00% Pismo Beach 8,054 7,883 7,943 8,080 8,173 1.48% San Luis Obispo 46,986 51,138 53,359 54,150 54,736 16.49% Unincorporated County South 41,383 41,455 40,851 40,649 40,362 -2.47% Total 129,579 133,562 135,886 137,139 137,808 6.35% County Total 282,424 286,398 294,858 299,599 303,469 7.45% Disadvantaged Unincorporated Communities LAFCO is required to evaluate Disadvantaged Unincorporated Communities (DUCs) as part of this MSR and SOI Study, including the location and characteristics of any such community. Per California Senate Bill 244, a DUC is defined as any area with 12 or more registered voters where the median household income (MHI) is less than 80% of the statewide MHI. The legislative intent is to prohibit selective annexations by cities of tax-generating land uses while leaving out underserved, inhabited areas with infrastructure deficiencies and a lack of access to reliable potable water, wastewater, and fire protection services. To identify the MHI within the County and determine which areas meet the DUC MHI threshold, LAFCO relied on U.S. Census American Community Survey (ACS) five-year reports for Census Block Groups (CBG) and Census Designated Places (CDP) data. When a CBG or CDP met the DUC MHI threshold, LAFCO subsequently verified that the area was inhabited, consistent with the requirements of Government Code Section 56033.5, using registered voter data from the County Clerk-Recorder. Using this methodology, eight DUCs were identified within or contiguous to PSLHD’s service area. Although these DUCs were identified, PSLHD does not provide public facilities or services related to 2 2060 Regional Growth Forecast for the San Luis Obispo County Region, San Luis Obispo Council of Governments Port San Luis Harbor District 14 MSR & SOI Study wastewater, municipal or industrial water, or structural fire protection. As a result, infrastructure deficiencies would not result from changes to PSLHD’s SOI or service area boundaries. Additional information regarding each DUC within the County is provided in Table 3 below. Figure 2: Countywide Disadvantaged Unincorporated Communities Map Table 3: Disadvantaged Unincorporated Communities within PSLHD DUC MHI3 Registered Voters4 San Luis Obispo DUC Area No. 1 $9,233 64 San Luis Obispo DUC Area No. 2 $59,318 23 Oceano DUC Area No. 1 $48,264 935 Oceano DUC Area No. 2 $45,494 1,280 Oceano DUC Area No. 3 $62,000 69 3 American Community Survey Data from 2016-2020 in 2021 inflation/adjusted dollars 4 County of San Luis Obispo Clerk Recorder GIS Data from October 2023 Port San Luis Harbor District 15 MSR & SOI Study Nipomo DUC Area No. 1 $50,298 783 Nipomo DUC Area No. 2 $59,063 644 Nipomo DUC Area No. 3 $64,537 1,277 Social or Economic Communities of Interest in the Area There are no District relevant social or economic communities of interest in the area served. Present and Planned Land Use PSLHD shares land use and development authority with the California Coastal Commission and the County. All Port land-based properties fall primarily under the County's permitting jurisdiction, except areas that have been previously filled or otherwise under jurisdiction of the California Coastal Commission. The Coastal Commission retains authority over lands below the mean high tide line and areas subject to the public trust. In addition, the Coastal Commission is the State agency responsible for implementing the Coastal Act. It requires each local government within the coastal zone to prepare a Local Coastal Program (LCP) that aligns with the Coastal Act policies. An LCP includes land use plans, zoning ordinances, and other measures necessary to implement the Coastal Act, and local governments must submit their LCP to the Coastal Commission for certification. The Port Master Plan establishes the District's official policy for the use and development of land, piers, and tidelands under its administration. Key portions of this plan, particularly the Goal and Policies in Chapter 3, are incorporated into the County's LCP for the San Luis Bay Planning Area. To ensure consistency with regional planning objectives, the Port aligns its improvements and uses with the County’s land use designations and development standards in the LCP. The LCP designates all coastal lands with Use Categories, which encompass an extensive list of possible uses for that area. Two use categories apply to the District - Public Facilities and Recreation. Public Facilities applies to areas including Open Water, Harford Pier, Harford Landing, Beach and Bluffs, Harbor Terrace, and the Lighthouse. The Recreation category applies to Avila Beach, Avila Pier, and the Avila Parking Lot. Together, these plans ensure that development within the Port’s jurisdiction aligns with state coastal policies and local planning objectives, while preserving public access and coastal Port San Luis Harbor District 16 MSR & SOI Study resources. Accountability PSLHD is an independent special district governed by a five-member Board of Commissioners, each elected by district to a four-year term. Regular meetings of the Harbor Commission are held on the fourth Tuesday of each month at 6:00 PM at the Coastal Gateway Building at 3900 Avila Beach Drive, Avila Beach, CA. Agendas and staff reports for meetings are available to the public for review at the Harbor Office and on the District’s website. Every agenda for a regular meeting provides an opportunity for members of the public to directly address the Harbor Commission. Table 4: PSLHD Harbor Commission Commission Member Title Division Term Drew Brandy President Division 5 2023 - 2026 Mary Matakovich Vice President Division 3 2023 - 2026 Bob Vessely Secretary Division 4 2025 - 2029 Bill Barrow Commissioner Division 1 2025 - 2029 Richard Scangarello Commissioner Division 2 2025 - 2029 PSLHD maintains an up-to-date website in compliance with Senate Bill 929 that provides public access to District contact information, current agendas, financial transaction and compensation reports, and an SB 272 Enterprise System Catalog. Approved minutes from the Harbor Commission’s regular meetings are also posted on the website for public review. In addition, the District reports that all Form 700 Statements of Economic Interests are current and in full compliance with state disclosure requirements. Services & Capacity Authorized Services When PSLHD was formed in 1954, its governance authority was established under the California Harbors and Navigation Code, which permits harbor districts to adopt ordinances for public safety, acquire and manage property, employ necessary staff, issue citations, regulate harbor facilities, and construct, own, or operate harbor-related works and infrastructure. In 1955, the District was also granted the State-owned tidelands encompassing San Luis Obispo Bay. The original intent of the Harbor Port San Luis Harbor District 17 MSR & SOI Study District in obtaining the State Tidelands Grant was to develop a public harbor to meet the needs of the people of the state. The Tidelands Grant was based on this objective and mandated specific functions that the District must guarantee for public use within the granted lands, including recreational and visitor-serving uses. In addition to these services, as a result of the California Coastal Act of 1976, the District has been required to provide non-enterprise service functions and operations, including coastal-dependent, visitor-serving, and recreation uses that benefit the users of the Port and enhance the public’s enjoyment of the waterfront. Today, many responsibilities of PSLHD are to provide services to ensure the enjoyment, safety, and access of the State-granted lands. In accordance with Government Code Section 56425(i), when LAFCO adopts, updates, or amends a SOI for a special district, it must also determine the nature, location, and extent of the functions or services the district is authorized to provide. Furthermore, under Government Code Section 56050.5, any service authorized by the district’s principal act that is not currently being exercised is considered a latent power, requiring LAFCO approval prior to activation. However, PSLHD is authorized to exercise all powers listed under the California Harbors and Navigation Code, and as such, there are no powers considered latent by operation of law. The MSR and SOI Study provides a discussion on present and long-term service demands and resource capabilities of the local agency. LAFCO reviews and evaluates 1) the resources and services that are currently available, and 2) the ability of PSLHD to expand such resources and services in line with increasing demand. An adequate ability to provide service should be documented to support areas in the sphere envisioned for eventual annexation and service by a jurisdiction. If warranted, different governance options may be reviewed for the District, including potential jurisdictional changes such as consolidation, reorganization, and dissolution. Staffing & Personnel The District provides a broad range of services through three departments. The Administration and Business Department includes seven full-time employees, including the Harbor Director. The department administers core functions such as accounting, information technology, and human resources, and manages leases and licenses that generate revenue for the District. This department Port San Luis Harbor District 18 MSR & SOI Study has experienced a greater demand for administrative and customer service assistance, without the ability to add additional employees due to limited revenue. The Harbor Patrol Department is responsible for ensuring the safety of patrons and protecting property within the harbor, including emergency response and enforcement of regulations. The department includes one Chief Harbor Patrol Officer, one Harbor Patrol Sergeant, four full-time Harbor Patrol officers, twenty seasonal lifeguards, and up to four Harbor Patrol reserves. This department faces significant challenges, including operating under a constrained budget with reduced grant funding for asset replacement and capital improvements, as well as difficulties in recruiting and retaining qualified Harbor Patrol Officers and Lifeguards amid declining candidate interest. The Facilities Department includes thirteen full-time employees and two temporary employees. The Facilities Department is responsible for the development, construction, maintenance, and repair of port and harbor facilities, including the buildings, roads, parking lots, beaches, revetments, piers, docks, hoists, moorings, water distribution system, and wastewater collection system. The District experiences challenges in this Department due to limited staff, reduced federal, state, and local grant opportunities, and continued storm damage, repairs, and time commitment for Federal Emergency Management Agency (FEMA) reimbursement. Despite these challenges, the department has made significant progress towards the Hartford Pier rehabilitation and repairs to Avila Pier, though both piers are incomplete. Labor is considered a limited resource that impacts the District’s ability to complete necessary projects. To offset the increased workload on the Facilities Department during the Avila Pier and Harford Pier projects, the District has employed two contract workers for the duration of the Avila Pier project. While the addition of contract workers has been crucial in keeping up with projects, labor continues to be an issue due to turnover and the ongoing increase in the number of projects. Services & Facilities PSLHD provides a range of harbor-related services and facilities to residents, visitors, and businesses. As outlined below, some of these services are revenue-generating enterprises, while others serve a broader public function that is not typically subject to fees and charges. The high levels of use, combined with the impacts of the marine environment, place exceptional demands on the PSLHD for Port San Luis Harbor District 19 MSR & SOI Study facility and infrastructure maintenance. Table 5 highlights the many services and facilities provided by the District. Table 5: PSLHD Services Category Current Uses Public Access Public fishing, coastal access, public parking, public beaches, public restrooms Recreation Surfing, swimming, kayaking, camping, sailing, paddleboarding, water skiing, and nature education Commercial Services Charter boat service, restaurant, convenience stores, fuel and ice facility, boat yard repair, boat & engine services Facilities Two public/commercial piers, Cal Poly Pier, boat launching facilities, boat moorings, and land storage Public Safety Harbor Patrol, lifeguards Public Access One of the District’s primary objectives outlined in its Master Plan is to meet Coastal Act priorities for the harbor, particularly ensuring public access to the waterfront and supporting land and water uses that benefit both residents within the County and the people of California. Opportunities for public access exist vertically from the land or pier structure to the water and boating facilities, and laterally along the waterfront perimeter. A network of walkways, open spaces, overlooks, visitor amenities, and integrated circulation improvements improves public access and enhances the enjoyment and appreciation of the San Luis Obispo Bay waterfront. Since PSLHD assumed management of the tidelands, the creation of multiple access points has significantly improved public access to the waterfront. Current non-boating-related access to the shoreline provided by the District includes Avila Beach, Olde Port and Fisherman’s Beaches, Hartford Landing, and the Lighthouse station. To support these opportunities, the District maintains stairways, ADA-compliant ramps, restrooms, parking lots, lifeguard stations, benches, and trails—ensuring safe, convenient, and equitable public access to coastal resources. Port San Luis Harbor District 20 MSR & SOI Study Recreation The Tidelands Grant also requires the District to provide recreational opportunities within its jurisdiction. Recreation plays a very significant role in the use of the District’s facilities, resulting in increased demand on District resources, including maintenance, Harbor Patrol, and administrative staff. The largest group of users is beachgoers at Avila Beach, with smaller numbers at Olde Port and Fisherman’s beaches. These areas host hundreds of thousands of visitors annually for traditional beach activities as well as kayaking, paddle boarding, surfing, outrigger canoeing, and boogie boarding. Supporting facilities include stairways, ramps, boat launches, picnic areas, and benches. PSLHD is also a popular destination for recreational fishing, offering boat launch facilities and pier fishing areas with bait shops and fish-cleaning stations. PSLHD also provides overnight camping, which plays an important role in offering low-cost visitor amenities and supports a growing demand for outdoor recreation. The District currently operates 20 campsites at Harford Landing. Although RV camping generates meaningful revenue for the Port, income has declined in recent years due to restrictions on bluff-top camping imposed by the Coastal Commission, which cited concerns about obstructing scenic ocean views from the roadway. To accommodate increased visitor demand for camping, the District entered into a 50-year ground lease in 2018 for the development of Harbor Terrace, a 30-acre hillside property overlooking San Luis Obispo Bay that the District originally acquired in 1978 to support operational needs. Construction began in 2020, and the campground, operated as Flying Flags Avila Beach, opened in 2021. Today, Harbor Terrace provides District facilities, boat storage, and a range of overnight accommodations, including tent sites, RV spaces, and cabins. The project increases public access, supports coastal-dependent uses, and provides a sustainable revenue source to help fund District operations. Commercial Services The Harbor also serves as a regional hub for several commercial activities. It includes three commercial piers that support commercial fishing, marine repair services, and the retail and wholesale distribution of fresh fish. In 2024, commercial landings totaled over 700,000 pounds valued at $1.5 million. Species landed include rockfish, cabazon, hagfish, and halibut. Port San Luis Harbor District 21 MSR & SOI Study Although commercial fishing has long been important to the Port’s economy, the industry has experienced a steady decline in recent years. The Coastal Act protects existing commercial and recreational boating space, but revenues from commercial fishing are no longer sufficient to meet the escalating capital and maintenance costs associated with sustaining the infrastructure that the industry requires. Despite these challenges, the District recognizes the heritage, cultural importance, and economic contributions of commercial fishing and remains committed to supporting the industry as regional demand allows. Core facilities on Harford Pier, including the icehouse, fish-buying station, and retail fish-sales operations, remain essential to preserving PSLHD’s working maritime character. In addition, the District is focused on maintaining a boater-friendly environment for both commercial and recreational users. This includes exploring opportunities to enhance boating access through an improved Port layout, parking management, and long-term facilities planning. These efforts may require pursuing grants or other external funding sources to support necessary upgrades and ensure the continued vitality of the harbor’s commercial services. Facilities PSLHD maintains two public fishing piers, Avila Pier and Hartford Pier, that offer popular and accessible fishing opportunities. Both piers include open edge setbacks to keep fishing areas clear for locals and visitors, along with bait-and-tackle shops and fish-cleaning stations. Avila Pier has been partially or fully closed since 2015 due to structural concerns. While earlier engineering evaluations found that the pier retained capacity despite pile damage, recent storm- related impacts have created additional uncertainties about the final scope of repairs. The District has secured over $2.7 million for the project, which is sufficient to complete Stage 1 (initial repairs to reopen the pier) and part of Stage 2 (landing and restroom repairs). However, Stage 3, which includes improvements to the terminus, remains unfunded, and the District is pursuing FEMA reimbursement for the remaining work. Harford Pier is considered the “backbone” of PSLHD. The pier is home to recreational and commercial fishing, boating, essential waterfront operations, as well as a restaurant and a seafood market. The District has made progress on long-planned pier improvements, including the redevelopment of the canopy area. Following the 2021 Draft Canopy Assessment and Repair Plan, staff completed roof Port San Luis Harbor District 22 MSR & SOI Study replacement and structural repairs in 2022 and nearly finished repairs behind the former Olde Port Inn site. Once the remaining repairs are completed and a Coastal Development Permit is issued, reconstruction of the pier buildings can proceed. Initial inquiries into grant funding have begun, but the District has not yet finalized a plan for future uses or cost-sharing responsibilities under the canopy. The District also manages moorings and trailer boat storage. The number of people on the waiting list for moorings fluctuates with market demand. The harbor contains approximately 280 mooring spaces for recreational vessels, commercial fishing boats, guest moorings, and a small number of moorings west of Avila Pier. Currently, commercial fishing vessels use 45% of moorings, while recreational vessels use 52%, with room for expansion in both categories. Thirty-four seasonal guest moorings also support transient boaters, with capacity for additional spaces based on demand. Trailer boat storage is provided at Harbor Terrace, and future site improvements aim to enhance storage efficiency and layout. Public Safety The Harbor Patrol Department is responsible for managing all public safety functions of the District. The Department provides comprehensive safety and security services to all District users through both water and shoreside patrols. Its mission is to maintain safe conditions across the harbor, beaches, and surrounding facilities. Key responsibilities include: • Maintaining a visible safety presence through continuous water and land patrols • Monitoring beach activity to ensure safe conditions for all visitors • Advising the public of hazardous conditions, rules, and regulations • Providing search, rescue, lifesaving, and emergency medical response • Coordinating closely with CalFire and other partner agencies • Training, supervising, and supporting all District lifeguards The following tables summarize Harbor Patrol responses over the last five fiscal and calendar years. Port San Luis Harbor District 23 MSR & SOI Study Table 6: Harbor Patrol Responses by Fiscal Year Fiscal Year FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25 Marine Rescues 88 70 73 57 49 Medical Aids 47 51 44 48 46 Agency to Agency 216 187 247 183 208 Assistance Wildlife Rescues 92 65 98 65 51 Parking Citations 241 314 516 65 51 Contacts for beach fire 142 47 22 21 17 compliance Contacts for dog law 361 149 154 91 84 compliance Contacts for alcohol 78 43 21 27 20 compliance Table 7: Lifeguard Responses by Calendar Year5 Calendar Year 2021 2022 2023 2024 2025 Rescues 4 32 7 20 26 Medical Aids 70 97 76 84 165 Contacts for beach fire 3 33 40 73 31 compliance Contacts for dog law 1,530 1,592 1,252 990 874 compliance Contacts for alcohol 3,454 586 278 347 247 compliance Areas such as marine rescues, parking violations, and compliance-related contacts continue to show a downward trend, suggesting stronger public awareness and more effective communication of District 5 Year-to-year fluctuations in these numbers may reflect changing operational priorities for lifeguards and harbor patrol officers, as well as external factors such as weather conditions or public health events. These variances do not necessarily indicate changes in beach attendance or overall demand for lifeguard services. Port San Luis Harbor District 24 MSR & SOI Study ordinances. These reductions may also reflect the Harbor Patrol’s ongoing emphasis on marine safety education and proactive, preventative engagement with the public. At the same time, Agency-to- Agency assistance calls, while fluctuating year to year, remain consistently high. This reflects the Harbor Patrol’s role as a regional partner, regularly supporting CalFire, the County Sheriff, and other cooperating agencies in joint public safety efforts. Infrastructure Needs and Deficiencies PSLHD identifies major maintenance projects as well as required capital projects and asset purchases as part of their annual budgeting process. These long-range plans and projects are assessed for how well they support the District’s mission and long-term objectives, ensuring that resources are directed toward efforts that deliver the greatest strategic impact. During the budgeting process, the District also evaluates the need for the use of reserves for major maintenance and capital projects. For Fiscal Year 2025-26, major maintenance projects include abandoned vessel removal, repairs and maintenance to the District’s mooring tender vessel, and repairs and upgrades to the existing water tank system. Capital projects and asset acquisitions for the same fiscal year include the Avila Pier Rehabilitation, Hartford Pier Redevelopment, Harbor Patrol emergency vessel and equipment replacement, revetment maintenance, and replacement of the underground storage tank, among several other project needs. The District’s long-term capital planning is guided by the goals and action items identified in the District’s Master Plan. These priorities include improvements to open water and public access, enhancements to the Hartford Pier and Hartford Landing areas, Beach and Bluff planning, the Harbor Terrace project, the Point San Luis Lighthouse, and the Avila Beach Pier and parking lots. In addition to advancing current Master Plan priorities, the District evaluated its vulnerability to sea- level rise in response to long-range projections issued by state and federal agencies regarding the extent and effects of sea-level rise over the next century. In 2020, the District completed a Sea Level Rise Vulnerability Assessment using projections from the California Ocean Protection Council based on a medium- to high-risk aversion, high-emissions scenario. These projections estimate approximately 0.7 feet of sea-level rise by 2030, 1.8 feet by 2050, and 6.7 feet by 2100. Sea-level rise is expected to Port San Luis Harbor District 25 MSR & SOI Study primarily affect District beaches by 2100, with limited upland impacts. Key findings from the assessment include: • Olde Port Beach is projected to be impacted by 2050. • Avila Beach and Fisherman’s Beach are projected to be impacted by 2100. • An estimated $5.5 million in sea-level rise and storm-wave damage is projected by 2100. • Non-market losses are estimated at $39 million to $43 million by 2100. • Most upland facilities are considered low risk. • Adaptation measures will be needed for new facilities and shoreline assets. These sea-level rise projections and vulnerability findings should be incorporated into future Master Plan updates and considered in the planning and design of nearshore and shoreline improvements, including evaluation of appropriate elevations for parking and public access areas. Shared Facilities The Avila Beach Community Services District (ABCSD) owns, operates, and maintains existing wastewater treatment and disposal facilities that presently serve PSLHD. A 2016 agreement between PSLHD and ABCSD re-established the District’s 35% capacity rights to the wastewater treatment plant in Avila Beach. This entitlement comes with an obligation to fund 35% of related capital improvements. These projects could influence future operating costs, though the amounts are difficult to estimate. In addition, the restored 19th-century Point San Luis Lighthouse is owned by PSLHD and restored, managed, and maintained by the Point San Luis Lighthouse Keepers, the District’s non-profit partner. Visitors can access the Lighthouse by scheduled trolley trip and docent-led hikes. Visitors can also access the Lighthouse by arriving on the popular Coast Guard Beach, walking up the stairs, and self- touring the Lighthouse grounds. Finance LAFCO is required to make a determination regarding the financial ability of PSLHD to provide public services. This section provides a general overview of the District’s financial health and establishes the context for LAFCO’s financial determinations. To evaluate the District’s overall financial condition, LAFCO utilizes three key financial indicators: Port San Luis Harbor District 26 MSR & SOI Study • Operating Ratio: Assessment of revenues relative to expenditures; • Liquidity Ratio: Analysis of assets and liabilities to gauge short-term financial stability; • Net Position: Measurement of the District’s overall financial position The primary data sources for this evaluation are the District’s audited financial statements from Fiscal Years (FY) 2020-2021 through FY 2024-2025. Budget The District has adopted several financial policies that assist in the financial planning process. These policies help prioritize staffing resources, revenue-generating opportunities, long-term capital projects, establish contingency amounts, and describe the overall long-term planning processes. It is through these policies that the District develops its annual budget and long-term planning. PSLHD’s budget serves as the main financial planning tool for the District. The budget is prepared annually by the Accounting Division in consultation with the Harbor Director and Department Managers, on a government wide as well as a fund basis. The proposed budget is brought to the Harbor Commission for review and eventual adoption. The Harbor Commission holds public hearings on the proposed budget and legally adopts the final budget. The General Fund and the Capital Projects Fund are both annually appropriated. The Harbor Commission's level of budgetary control is maintained at the fund and budget category level, with more stringent control over major maintenance and capital assets, which are maintained at the line-item level. As a result, District staff requests approval from the Harbor Commission for budgetary transfers between budget category levels and any line-item additions to major maintenance and capital assets throughout the year. The District ensures transparency by making budgets easily accessible on the District website. In addition, the Government Finance Officers Association (GFOA) awarded the Distinguished Budget Presentation Award to the District for its annual budgets from Fiscal Year (FY) 2014-15 through FY 2025- 26. This award is the highest form of recognition in government budgeting. Port San Luis Harbor District 27 MSR & SOI Study Audited Financial Statements PSLHD hires an outside accounting firm to perform an annual audit in accordance with established governmental accounting standards. This includes auditing PSLHD’s financial statements with respect to verifying overall assets, liabilities, and net position. These audited statements provide quantitative measurements in assessing PSLHD’s short and long-term fiscal health with a specific focus on delivering its active service functions. Revenues and Expenditures The District is primarily funded through property taxes, charges for services, capital grants and contributions, and investment income. Over the past five fiscal years, property tax revenue has increased by 21.45%. Historically, the District also received unitary tax revenues associated with Pacific Gas & Electric's Diablo Canyon Power Plant; however, as the facility's assessed value has declined and prior mitigation programs have phased out, unitary tax revenues have decreased significantly. As shown in Figure 3 below, the District’s revenues decreased 3.16% from FY 2023-24 to FY 2024-25. This decline is largely attributable to decreases in charges for services and in capital grants and contributions. The decrease in charges for services is partially due to a decrease in RV overnight stays due to the loss of permits for two camping areas.6 In FY 2024-25, the District’s total expenditures increased by about $154,017, or 2% more than the prior year. Such costs include wages and benefits, operations and maintenance, supplies, utilities, and general and administrative. Increases are due to increases in the administrative line item. Operating costs for materials and supplies are expected to increase in future FYs due to inflation. These increases, together with supply shortages, could impact the cost of operations and the cost and timing of capital projects. Labor costs are also projected to increase due to the increased Consumer Price Index. 6 Bluff-top camping restrictions imposed by the California Coastal Commission, due to concerns about obstructed scenic ocean views, led to the expiration of approval for two additional District camping areas in November 2024. Port San Luis Harbor District 28 MSR & SOI Study Figure 3: Audited Revenues and Expenditures $10,000,000 $9,282,759 $8,957,954 $9,000,000 $7,758,629 $8,674,786 $6,580,827 $8,002,885 $7,848,868 $8,000,000 $6,816,244 $7,049,055 $6,220,944 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $- FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 Revenues Expenditures To assess the District’s ability to meet its financial obligations, Figure 4 displays the Operating Ratio for the past five audited FYs. This ratio—calculated as annual operating expenses divided by annual operating revenues—serves as a basic indicator of financial performance: • A ratio below 1.0 indicates the agency is operating at a surplus • A ratio above 1.0 indicates the agency is operating at a deficit Over the five-year period, the District’s Operating Ratio remained below 1.0 in four of the five years, indicating that operating revenues exceeded operating expenses in most years. In FY 2020-21, the District operated at a deficit due to impacts from COVID-19 restrictions that affected budgeted revenue from parking fees and camping fees. Overall, the District’s Operating Ratios suggest stable financial performance and a consistent ability to generate positive operating margins. However, operating expenditures are projected to outpace revenues in FY 2025-26 and onward. The District recognizes this is not a sustainable position and is working on a long-term mitigation plan to maximize revenue and manage expenses within available resources. Port San Luis Harbor District 29 MSR & SOI Study Figure 4: Operating Ratio FY 24-25 0.903610523 FY 23-24 0.8318 FY 22-23 0.7429 FY 21-22 0.9856 FY 20-21 1.0435 0 0.2 0.4 0.6 0.8 1 1.2 Assets and Liabilities An agency’s assets represent resources that provide current, future, or potential economic benefits. These assets may include items the agency owns or amounts owed to the agency. In this section, agency assets will be reviewed in two separate categories as defined below: • Current Assets: Cash and other assets that are expected to be converted to cash within a year • Noncurrent Assets: Long-term investments that are not expected to become cash within an accounting year Over the past five audited years, PSLHD’s total assets have grown, reaching over $24 million at the end of FY 2024-25, which is a 5.5% increase from the previous fiscal year. Approximately 46% of these assets are classified as current, with the largest current asset being cash and investments. The remaining assets are classified as noncurrent assets, mainly consisting of lease receivables and capital assets. In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net assets that applies to a future period(s) and will not be recognized as an outflow of resources Port San Luis Harbor District 30 MSR & SOI Study (expense/expenditure) until then. In FY 2024-25, PSLHD reported deferred outflows related to pensions and other post-employment benefits (OPEB) totaling $2,096,770. Table 8: Audited Assets and Deferred Outflows Category FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 Current Assets $7,645,429 $9,025,674 $9,870,507 $10,105,908 $11,086,225 Noncurrent - $2,562,067 $2,316,265 $2,103,050 $1,956,353 Assets Capital Assets $8,271,262 $8,962,319 $11,298,982 $11,544,038 $11,045,866 Total Assets $15,916,691 $20,550,060 $23,485,754 $23,752,996 $24,088,444 Total Deferred $1,246,406 $1,230,850 $2,544,319 $2,550,929 $2,096,770 Outflows of Resources An agency’s liability is something the agency owes, usually a sum of money. Liabilities are settled over time through the transfer of economic benefits, including money, goods, or services. In this section, agency liabilities will be reviewed in two separate categories as defined below: • Current Liabilities: an agency's short-term financial obligations due to be paid within a year • Noncurrent Liabilities: an agency’s long-term financial obligations that are due more than a year away At the close of FY 2024-25, PSLHD’s audited liabilities totaled approximately $10.3 million, a decrease of 2.8% from the prior year. Of this amount, current liabilities accounted for about 18% of total liabilities, a majority of which is related to unearned revenue, compensated absences, accounts payable, and the current portion of long-term debt. The remaining balance, $8,461,260 in noncurrent liabilities, was largely attributable to net pension obligations. In addition to liabilities, the statement of net position reports a separate section for deferred inflows of resources. This separate financial statement element represents an acquisition of net assets that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. For FY 2024-25, PSLHD reported $3,025,193 in deferred inflows, consisting of deferred pensions and deferred OPEB. Port San Luis Harbor District 31 MSR & SOI Study Table 9: Audited Liabilities and Deferred Inflows C ategory FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 Current $977,291 $1,209,538 $2,696,122 $2,053,406 $1,887,288 Liabilities Noncurrent $7,206,806 $6,563,784 $8,532,683 $8,595,897 $8,461,260 Liabilities Total $8,184,097 $7,773,322 $11,228,805 $10,649,303 $10,348,548 Liabilities Total $326,952 $6,065,114 $3,796,979 $3,541,247 $3,025,193 Deferred Inflows of Resources Figure 5 illustrates the District’s Liquidity Ratios from FY 2020-21 through FY 2024-25. This ratio measures the District’s ability to meet its short-term financial obligations by comparing unrestricted current assets to current liabilities. • A ratio above 1.0 indicates that the District has sufficient short-term resources to cover its liabilities, reflecting strong financial health. • A ratio below 1.0 signals potential liquidity concerns, suggesting short-term resources may be insufficient to meet immediate obligations. Generally, the higher the ratio, the greater the District’s short-term financial stability. Over the five- year period, the District’s liquidity ratio has consistently remained above 1.0, demonstrating a stable ability to meet short-term obligations. Port San Luis Harbor District 32 MSR & SOI Study Figure 5: Liquidity Ratio FY 24-25 5.874 FY 23-24 4.921 FY 22-23 3.661 FY 21-22 7.462 FY 20-21 7.823 0 1 2 3 4 5 6 7 8 9 Net Position The government-wide financial statements utilize a net position presentation to assess the District’s financial position at a specific point in time. Net position is defined as the difference between total assets and total liabilities, and it serves as a key indicator of an agency’s overall financial health. • A positive net position indicates that the District possesses more assets than liabilities, reflecting fiscal health • A negative net position may suggest fiscal distress or an inability to meet long-term obligations As of June 30, 2025, PSLHD’s net position increased to $12,811,473, reflecting 48% growth over the past five audited years. This increase indicates that the District’s total assets exceed its total liabilities, indicating the District is in a financially healthy state. Port San Luis Harbor District 33 MSR & SOI Study Table 10: Net Position Category FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 Net $7,932,637 $7,591,707 $9,805,160 $10,159,661 $9,773,688 Investment in Capital Assets Unrestricted $719,411 $350,767 $1,199,129 $1,953,714 $3,037,785 Total Net $8,652,048 $7,942,474 $11,004,289 $12,113,375 $12,811,473 Position Sphere of Influence The District’s existing Sphere of Influence (SOI) is coterminous with its service area boundary, as shown in Figure 1. PSLHD is unique in that its service area boundary does not correspond to the geographic area in which services are actually provided, nor does it reflect the population served by the District. Instead, the boundary represents the area within which a portion of property tax revenue is collected and allocated to the District. The District directly provides services only within the harbor area, which consists of approximately 40 acres of upland property, 100 acres of submerged lands, and an additional 84,00 acres of State-granted tidelands. Consistent with the Commission’s FY 2025-26 Work Plan, LAFCO staff prepared the MSR and SOI Study for the PSLHD and presented the report at the Commission’s regular meeting on March 19, 2026. As part of that study, staff evaluated the potential expansion of PSLHD’s SOI to include the entire County. The analysis provided in that report found that a countywide SOI could better align with the District’s service population, service functions, and broader financial and regulatory conditions when compared to the existing service area boundary. This conclusion was based primarily on the District’s practice of serving any County resident, as well as visitors from outside the County, and the possibility that a countywide SOI could more accurately reflect the District’s potential service area over the long term. However, the supporting analysis was limited by the lack of available data. Although LAFCO staff requested information to substantiate the proposed SOI expansion, no additional data was readily available. As a result, during the March 19, 2026, meeting, Commissioners expressed concern regarding the insufficiency of data supporting a countywide SOI expansion. Specifically, Commissioners noted the Port San Luis Harbor District 34 MSR & SOI Study need for a more robust analytical framework, improved survey data, additional capital improvement program (CIP) analysis, and more detailed financial information. Based on the limited information presented, the Commission determined that an SOI amendment was not supportable at that time. The Commission further directed staff to clarify in the MSR and SOI Study that, should the District seek to pursue an SOI expansion in the future, it may do so through LAFCO’s Sphere of Influence Amendment application process. Any such request should be supported by a comprehensive study prepared by the District in coordination with LAFCO staff, and should fully address the methodological, financial, and service-related concerns identified by the Commission. Figure 6: Recommended PSLHD SOI and Service Area Boundary Port San Luis Harbor District 35 MSR & SOI Study DETERMINATIONS Municipal Service Review Determinations As set forth in Government Code Section 56430(a), in order to update the SOI in accordance with Government Code Section 56425, the commission shall conduct a service review of the municipal services provided in the County or other appropriate area designated by the Commission. The Commission shall include in the area designated for a service review the County, the region, the sub- region, or any other geographic area as is appropriate for an analysis of the service or services to be reviewed, and shall prepare a written statement of its determinations with respect to each of the following: 1. Growth and population projections for the affected area. The estimated population within the District’s existing service area was approximately 129,579 in 2020 and is projected to increase to about 137,808 by 2060, representing growth of approximately 6.35% over the 40-year period. Over the same period, the County’s total population is projected to increase by approximately 7.45%. While population projections for communities within PSLHD's existing service area provide useful context for assessing future service needs and resource demands, these projections do not fully capture the population that utilizes District facilities and services. Port San Luis functions as a regional coastal destination, with services and facilities available to residents from within the District’s service area and beyond. As a result, future demand for District services and facilities is expected to increase over time as coastal resources experience greater use pressures from both residents and visitors. 2. The location and characteristics of any disadvantaged unincorporated communities within or contiguous to the sphere of influence. Eight DUCs were identified within or contiguous to PSLHD’s SOI and service area boundary. The location and characteristics of the DUCs are described in Table 3 and Figure 2 of the DUC section of this report. Although these DUCs were identified, PSLHD does not provide public facilities or services related to wastewater, municipal or industrial water, or structural fire Port San Luis Harbor District 36 MSR & SOI Study protection, and therefore, related infrastructure deficiencies would not arise from changes to PSLHD’s SOI or service area boundaries. 3. Present and planned capacity of public facilities, adequacy of public services, and infrastructure needs or deficiencies, including needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any disadvantaged, unincorporated communities within or contiguous to the sphere of influence. PSLHD provides a wide range of services and facilities that include harbor and port operations, public access infrastructure, beaches, piers, trails, parking facilities, restrooms, emergency response, and preservation of coastal resources. Altogether, these facilities and services support coastal access and public use for residents within the District’s service area boundary, as well as visitors from beyond its boundaries. The District is currently facing infrastructure deficiencies and capacity constraints that may affect its ability to provide these services due to aging assets, rising maintenance and labor costs, and regulatory compliance. Planned capital improvements include improvements to open water and public access, enhancements to the Hartford Pier and Hartford Landing areas, Beach and Bluff planning efforts, the Harbor Terrace project, the Point San Luis Lighthouse, and the Avila Beach Pier and parking facilities. 4. Financial ability of agencies to provide services. The Harbor Commission adopts an annual budget prepared in accordance with generally accepted accounting principles. For eleven consecutive years, PSLHD has been recognized by the Government Finance Officers Association for excellence in transparent financial reporting, receiving the Distinguished Budget Presentation Award for its annual budgets from FY 2014-15 through FY 2025-26. The District is primarily funded through property tax revenue, charges for services, capital grants and contributions, and investment income. To evaluate overall financial health, key fiscal indicators, including Operating Ratio, Liquidity Ratio, and Net Position, were analyzed. Operating Ratio, which compares annual operating revenues to operating expenses, indicated positive financial performance in four of the five years reviewed. However, operating expenditures are projected to exceed revenues beginning in FY 2025-26 and continuing thereafter. The District recognizes this is not a sustainable position and is working on a long- Port San Luis Harbor District 37 MSR & SOI Study term mitigation plan to maximize revenue and manage expenses within available resources. Liquidity Ratio, which measures current assets relative to current liabilities, remained strong across all five years analyzed, indicating adequate short-term financial capacity to meet ongoing obligations. In addition, the District’s Net Position, defined as the difference between total assets and total liabilities, increased by approximately 48% over the five-year audited period, reflecting solid long-term financial growth and stability. Overall, these financial indicators suggest that PSLHD is in a financially healthy state with adequate financial resources to deliver its services. However, the District faces significant long- term challenges, including infrastructure deficiencies, rising capital and labor costs, expanded statutory responsibilities, anticipated reductions in Unitary Tax revenues, and increasing impacts associated with sea-level rise. To maintain financial stability and adequate service delivery, the District will need to identify and pursue additional funding sources. 5. Status of, and opportunities for, shared facilities. Wastewater services for PSLHD facilities are provided by the Avila Beach Community Services District (ABCSD) under a 2016 agreement that establishes PSLHD’s 35% capacity entitlement in the ABCSD wastewater treatment plant, along with responsibility for a proportional share of capital improvements, which may influence future operating costs. In addition, PSLHD owns the historic Point San Luis Lighthouse, which is restored, managed, and maintained through a cooperative partnership with the Point San Luis Lighthouse Keepers, a nonprofit organization that facilitates public access and preservation through coordinated operations. 6. Accountability for community service needs, including governmental structure and operational efficiencies. PSLHD is governed by a five-member Harbor Commission, with Commissioners elected by district to four-year terms. The Harbor Commission conducts regularly scheduled meetings that are open to the public and publicly noticed at least 72 hours in advance in compliance with the Ralph M. Brown Act. The District further promotes transparency and accountability by maintaining an up-to-date website that provides public access to District contact information, meeting agendas, and financial reports. Port San Luis Harbor District 38 MSR & SOI Study 7. Any other matter related to effective or efficient service delivery, as required by Commission policy. There are no other matters related to the efficiency of services. Sphere of Influence Determinations In order to carry out its purposes and responsibilities for planning and shaping the logical and orderly development of local governmental agencies to advantageously provide for the present and future needs of the county and its communities, the Commission shall develop and determine the Sphere of Influence of each local agency, as defined by Government Code Section 56036, and enact policies designed to promote the logical and orderly development of areas within the sphere. In determining the Sphere of Influence of each local agency, the Commission shall consider and prepare a written statement of its determinations with respect to the following: 1. The present and planned land uses in the area, including agricultural and open-space lands. PSLHD’s land use and development authority is shared with the California Coastal Commission and the County. Under the County’s Local Coastal Program, lands within the District are designated as Public Facilities and Recreation land use categories. Because PSLHD provides services exclusively within the Harbor Area, consisting of approximately 40 acres of upland property, 100 acres of submerged lands, and an 8,400-acre state tidelands grant, any amendment to the District’s SOI would not affect existing or planned land uses, including agricultural or open-space lands. However, for the reasons discussed by the Commission at its March 19, 2026, meeting, insufficient data currently exists to support a countywide SOI amendment at this time. Therefore, PSLHD should maintain a coterminous SOI and service area boundary until additional information is available for further study. Should the District elect to pursue an SOI expansion in the future, it may do so through LAFCO’s Sphere of Influence Amendment application process, and should be supported by a comprehensive study prepared by the District in coordination with LAFCO staff that fully addresses the concerns raised by the Commission. 2. The present and probable need for public facilities and services in the area. PSLHD provides facilities and services that support coastal access, recreation, commercial fishing, and public safety within the Harbor Area. Present service demand is driven primarily by Port San Luis Harbor District 39 MSR & SOI Study high levels of visitor use rather than population growth within the District’s service area boundary. Probable future service needs are expected to increase due to continued public demand for coastal access. However, for the reasons discussed by the Commission at its March 19, 2026, meeting, insufficient data currently exists to support a countywide SOI amendment at this time. Therefore, PSLHD should maintain a coterminous SOI and service area boundary until additional information is available for further study. Should the District elect to pursue an SOI expansion in the future, it may do so through LAFCO’s Sphere of Influence Amendment application process, and should be supported by a comprehensive study prepared by the District in coordination with LAFCO staff that fully addresses the concerns raised by the Commission. 3. The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. PSLHD currently has adequate capacity to meet existing service and facility demands within the harbor area. However, with increased service demand, expanded statutory responsibilities, and major maintenance and capital project needs, current revenues are considered insufficient to maintain adequate services and facilities into the future. However, for the reasons discussed by the Commission at its March 19, 2026, meeting, insufficient data currently exists to support a countywide SOI amendment at this time. Therefore, PSLHD should maintain a coterminous SOI and service area boundary until additional information is available for further study. Should the District elect to pursue an SOI expansion in the future, it may do so through LAFCO’s Sphere of Influence Amendment application process, and should be supported by a comprehensive study prepared by the District in coordination with LAFCO staff that fully addresses the concerns raised by the Commission. 4. The existence of any social or economic communities of interest in the area, if the commission determines that they are relevant to the agency. There are no social or economic communities of interest within the District service area boundary. 5. For an update of the sphere of influence of a city or special district that provides public facilities or services related to sewers, municipal and industrial water, or structural fire Port San Luis Harbor District 40 MSR & SOI Study protection, the present and probable need for those public facilities and services of any disadvantaged unincorporated communities within the existing sphere. There are seven DUCs within PSLHD existing SOI, as seen in Figure 2. Although these DUCs were identified, PSLHD does not provide public facilities or services related to sewers, municipal and industrial water, or structural fire protection, and therefore, no infrastructure deficiencies to a DUC would result from changes to PSLHD’s SOI or service area boundary. However, for the reasons discussed by the Commission at its March 19, 2026, meeting, insufficient data currently exists to support a countywide SOI amendment at this time. Therefore, PSLHD should maintain a coterminous SOI and service area boundary until additional information is available for further study. Should the District elect to pursue an SOI expansion in the future, it may do so through LAFCO’s Sphere of Influence Amendment application process, and should be supported by a comprehensive study prepared by the District in coordination with LAFCO staff that fully addresses the concerns raised by the Commission. California Environmental Quality Act The California Environmental Quality Act (CEQA) is contained in the Public Resources Code Section 21000, et seq. Under this law, public agencies are required to evaluate the potential environmental effects of their actions. The Port San Luis Harbor District MSR and SOI Study is exempt from CEQA review pursuant to Section 15306 of the CEQA Guidelines, Class 6 – Information Collection, and Section 15061 (b)(3), the General Rule Exemption. This report is based on the use of the MSR as a tool for data collection and service evaluation. The MSR and SOI Study will not result in any significant environmental impact, as it does not authorize new municipal service powers. Additionally, the study does not involve changes to land use or introduce activities that would affect the environment.