Estrella - El Pomar - Creston Water District

1/22/26 Exhibit B | Resolution No. 2026 - 03 Page 1 of 4 Municipal Service Review Determinations for the Estrella – El Pomar – Creston Water District 1. Growth and population projections for the affected area The EPCWD serves a sparsely populated agricultural area in northeastern unincorporated San Luis Obispo County, where precise population data is unavailable due to the District’s noncontiguous boundaries. Regional forecasts suggest gradual growth in the broader North County region—rising from 35,460 in 2025 to 36,961 by 2060 at an annual rate of 0.12%—with EPCWD expected to remain low-density and largely shaped by land use and resource planning. 2. The location and characteristics of any disadvantaged unincorporated communities within or contiguous to the sphere of influence There are four areas within or in close proximity to EPCWD’s SOI and service area boundary that meet the definition of a DUC as outlined in Government Code Section 56033.5. Although these DUCs were identified, EPCWD does not provide public facilities or services related to wastewater, municipal or industrial water, or structural fire protection. Therefore, no infrastructure deficiencies affecting a DUC would result from changes to the EPCWD’s SOI or service area boundary. 3. Present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies The District's main purpose at formation was to enable participating landowners to comply with the Sustainable Groundwater Management (SGMA) Act by creating a water district that could also serve as a Groundwater Sustainability Agency (GSA) under SGMA. In addition to its role as a GSA, the District is authorized to provide all services under Water Code Section 34000, with the exception of exportation of water and sewer services. At present, it appears that the District has the capacity to fulfill its responsibilities as a GSA under the SGMA. EPCWD represented constituents in the development of the Paso Robles Subbasin Groundwater Sustainability Plan (GSP), which was approved by the California Department of Water Resources in June 2023. The Exhibit B | Resolution No. 2026 - 03 Page 2 of 4 District has also played a key role in advancing several important projects and management initiatives, including an Economic Impact Study on irrigated agriculture in the Paso Robles region, a Stormwater Capture and Groundwater Recharge Feasibility Study, the development of a 3D Geologic Model, and the establishment of a comprehensive groundwater level monitoring network. The District’s capacity is further demonstrated through its participation in the GSP’s five-year evaluation, submitted in January 2025. Overall, EPCWD demonstrates adequate capacity to carry out its groundwater management responsibilities under SGMA. 4. Financial ability of agencies to provide services To assess the District’s financial health, key indicators, including Operating Ratio, Liquidity Ratio, and Net Position, were analyzed. Operating Ratio, which compares annual operating revenues to operating expenses, remained below 1.0 in only two of the five years, demonstrating an inconsistent ability to generate positive operating margins. Liquidity Ratio, which measures current assets relative to current obligations, remained strong across all five years, reflecting adequate short-term financial health. The District’s Net Position, representing the difference between total assets and total liabilities, increased by 72 percent over the five-year audited period, a strong indicator of long-term financial growth and stability. Overall, these financial indicators suggest that EPCWD is in a financially healthy state with adequate financial resources to deliver its services. 5. Status of and opportunities for shared facilities The EPCWD participates in the Paso Robles Area Groundwater Authority (Authority), which was formed by a Joint Exercise of Power Agreement (JPA) in March 2025. The Authority replaces the prior Memorandum of Agreement and establishes a formal structure for implementing the Groundwater Sustainability Plan. EPCWD’s participation in the Authority enhances efficiency, reduces duplication of efforts, and strengthens the District’s ability to meet SGMA requirements. 6. Accountability for community service needs, including governmental structure and operational efficiencies Exhibit B | Resolution No. 2026 - 03 Page 3 of 4 EPCWD is governed by a five-member Board of Directors, each elected to a four-year term. The Board holds regular meetings on the second Wednesday of each month at 2:00 PM. The District posts its agendas in compliance with the Brown Act and maintains an up- to-date website in compliance with Senate Bill 929. 7. Any other matter related to effective or efficient service delivery There are no other matters related to the efficiency of services. Sphere of Influence Determinations for the Estrella – El Pomar - Creston Water District 1. Present and planned land uses in the area, including agricultural and open-space lands. The present and planned land uses within the service area of EPCWD are guided by the County’s General Plan. The majority of the District falls within the Agricultural and Residential Rural land-use designation. Reaffirmation of the District’s coterminous SOI is recommended. 2. Present and probable need for public facilities and services in the area. Given the predominantly agricultural nature of the EPCWD and its primary function as a Groundwater Sustainability Agency representation, there is no present and probable need for public facilities and services in the area. The District’s role is focused on groundwater management rather than direct service provision. Reaffirmation of the District’s coterminous SOI is recommended. 3. Present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. At present, it appears that the District has the capacity to fulfill its responsibilities as a Groundwater Sustainability Agency (GSA) under the Sustainable Groundwater Management Act (SGMA). As a member of the Paso Basin Cooperative Committee (PBCC), EPCWD represented its constituents in the development of the Paso Robles Subbasin Groundwater Sustainability Plan (GSP), which was approved by the California Department of Water Resources in June 2023. EPCWD has played a key role in advancing several important projects and management initiatives, including an Economic Impact Study on Exhibit B | Resolution No. 2026 - 03 Page 4 of 4 irrigated agriculture in the Paso Robles region, a Stormwater Capture and Groundwater Recharge Feasibility Study, the development of a 3D Geologic Model, and the establishment of a comprehensive groundwater level monitoring network. The District’s capacity is further demonstrated through its participation in the GSP’s five-year evaluation, submitted in January 2025. The evaluation reported encouraging trends, including rising groundwater levels attributed to above-average rainfall, enhanced data collection efforts, and progress in policy implementation. To support long-term GSP execution and improve regional coordination, a new governance entity—the Paso Robles Area Groundwater Authority—was established in March 2025 through a Joint Powers Agreement. This Authority replaces the PBCC and will oversee GSP implementation, funded primarily through groundwater extraction fees. Overall, EPCWD demonstrates adequate capacity to carry out its groundwater management responsibilities. Reaffirmation of the District’s coterminous SOI is recommended. 4. 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 protection, the present and probable need for those public facilities and services of any disadvantaged unincorporated communities within the existing sphere. 6. Four DUCs were identified inside or within close proximity to the EPCWD SOI and service area boundary, as seen in Figure 1. Although these DUCs were identified, EPCWD does not provide public facilities or services related to wastewater, municipal or industrial water, or structural fire protection, and therefore, no infrastructure deficiencies to a DUC would result from changes to the EPCWD’s SOI or service area boundary. Reaffirmation of the District’s coterminous SOI is recommended. Estrella – El Pomar - Creston Water District Municipal Service Review and Sphere of Influence Study Prepared by The San Luis Obispo Local Agency Formation Commission Adopted January 15, 2026 Resolution No. 2026 - 03 Estrella – El Pomar – Creston Water 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 Population Profile _____________________________________________________________ 11 Present and Planned Land Use ___________________________________________________ 13 Accountability ________________________________________________________________ 15 Services & Capacity ____________________________________________________________ 15 Finance ______________________________________________________________________ 20 Sphere of Influence ____________________________________________________________ 25 Determinations ______________________________________________________ 27 Municipal Service Review Determinations ____________________________________________ 27 Sphere of Influence Determinations _________________________________________________ 30 Estrella – El Pomar – Creston Water District 3 MSR & SOI Study List of Figures Figure 1: Disadvantaged Unincorporated Communities ........................................................................ 13 Figure 2: EPCWD Land Use Designations ................................................................................................ 14 Figure 3: Audited Revenues and Expenditures ....................................................................................... 22 Figure 4: Operating Ratio (FY 2020 - FY 2024) ........................................................................................ 23 Figure 5: Liquidity Ratio (FY 2020 - FY 2024) ......................................................................................... 24 Figure 6: EPCWD Boundary Map, Adopted November 2019 ................................................................. 26 List of Tables Table 1: District Profile ........................................................................................................................... 10 Table 2: Disadvantaged Unincorporated Communities ......................................................................... 12 Table 3: EPCWD Board of Directors ........................................................................................................ 15 Table 4: Current Assets and Liabilities .................................................................................................... 23 Table 5: Audited Net Position ................................................................................................................. 25 Estrella – El Pomar – Creston Water 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. Estrella – El Pomar – Creston Water 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. Estrella – El Pomar – Creston Water 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 Estrella – El Pomar – Creston Water 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 Steve Gregory City Member Vice Chair Heather Moreno County Member Dawn Ortiz-Legg County Member Ed Waage City Member Edy Eby Special District Member Navid Fardanesh Special District Member David Watson Public 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 Estrella – El Pomar – Creston Water 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 Estrella – El Pomar - Creston Water District in assisting in the preparation of this report, including – but not limited to – the following individuals: Laurie Gage, District Administrator Estrella – El Pomar – Creston Water District 9 MSR & SOI Study DISTRICT MSR & SPHERE OF INFLUENCE STUDY Overview This report represents San Luis Obispo LAFCO’s first scheduled municipal service review (MSR) for the Estrella – El Pomar – Creston (EPCWD or District) since the District was formed in 2017. 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 seen 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 municipal services within the service areas of the District, 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 reflects information since the District was formed in 2017. The financial analysis has been set to cover the last five-year budgeted and the last five-year audited fiscal year period. The timeframe for the report has been generally oriented to cover the next five to seven-year period. 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. Estrella – El Pomar – Creston Water District 10 MSR & SOI Study At A Glance Table 1: District Profile Agency Name Estrella – El Pomar – Creston Water District Formation 2017 Legal Authority California Water Code, Section 34000 et seq. Mailing Address P.O. Box 1499, Paso Robles, CA 93447-1499 Website https://www.epcwd.org/ District Administrator Laurie Gage Public Meetings The Board of Directors meets on the second Wednesday of the month at 2:00 PM at the Windfall Farms Conference Room, 4710 Flying Paster Lane, Paso Robles, 93446. Board of Directors Five members elected to four-year terms District Service Area 37,208 acres Background The Estrella – El Pomar- Creston Water District (EPCWD or District) was formed by a petition of landowners under the provisions of Government Code Section 56000 et. seq. The District is a landowner-voter district1, and its primary purpose at formation was to enable participating landowners to comply with the Sustainable Groundwater Management Act (SGMA) by creating a water district that could also serve as a Groundwater Sustainability Agency (GSA), as permitted under SGMA. Enacted on January 1, 2015, SGMA provides a framework for the sustainable, long-term management of groundwater resources by local agencies, with provisions for state oversight if local efforts are insufficient. The legislation required the formation of GSAs by June 2017 and the adoption of Groundwater Sustainability Plans (GSPs) by January 31, 2020. Unlike traditional water service providers, EPCWD does not deliver water or infrastructure services. Instead, it functions primarily as a representative entity for landowners who voluntarily choose to “opt 1 “Landowner-voter district” means a district whose principal act provides that owners of land within the district are entitled to vote upon the election of district officers, the incurring of bonded indebtedness, or any other district matter. Estrella – El Pomar – Creston Water District 11 MSR & SOI Study in,” ensuring their interests are reflected in groundwater management efforts under SGMA by the EPCWD. Population Profile The EPCWD serves a broad agricultural area in northeastern unincorporated San Luis Obispo County. Due to the District’s irregular and non-contiguous boundaries, precise population data is not readily available. However, regional forecasts from the San Luis Obispo Council of Governments (SLOCOG) indicate slow growth in the broader unincorporated North County Area, which encompasses EPCWD. According to SLOCOG projects, the North County population is expected to increase from approximately 35,460 in 2025 to 36,961 by 2060, reflecting a growth rate of 0.12% per year over the 35-year period.2 Given EPCWD’s primarily agricultural land use and limited residential infrastructure, population growth within the District is similarly expected to remain gradual and low-density. Overall, while EPCWD may experience incremental growth, it is expected to remain a sparsely populated area. Future growth will likely be closely tied to resource availability, land use planning, and agricultural priorities. Disadvantaged Unincorporated Communities LAFCO is required to evaluate Disadvantaged Unincorporated Communities (DUCs) as part of this MSR, including the location and characteristics of any such community. Per Government Code Section 56033.5, a DUC is defined as any area with 12 or more registered voters where the median household income (MHI) is less than 80 percent of the statewide MHI. Once the locations of the DUCs have been identified, LAFCOs are further required to evaluate any present and probable need for services related to sewer, municipal or industrial water, or structural fire protection of any DUC within the existing SOI. The legislative intent is to prohibit selective annexations by agencies 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. 2 2060 Regional Growth Forecast for the San Luis Obispo County Region, San Luis Obispo Council of Governments Estrella – El Pomar – Creston Water District 12 MSR & SOI Study To identify the MHI for locations within the unincorporated areas of the County, and to identify those that meet the DUC MHI threshold, LAFCO used U.S. Census American Community Survey (ACS) five- year reports for Census Block Groups (CBG) and Census Designated Places (CDP) data. Once a CBG or a CDP meets the DUC MHI threshold, LAFCO then verifies that those areas are inhabited as specified in Government Code Section 56033.5 using registered voter data from the County Clerk-Recorder. Using this methodology, four DUCs were identified in proximity to and partially within EPCWD’s service area, as shown in Figure 1. Although these DUCs were identified, EPCWD does not provide public facilities or services related to wastewater, municipal or industrial water, or structural public safety protection. As a result, any modifications to EPCWD’s SOI or service area boundaries would not lead to infrastructure deficiencies affecting these communities. Table 2 contains additional information about each DUC within the District’s boundary. Table 2: Disadvantaged Unincorporated Communities DUC MHI3 Registered Voters4 San Miguel DUC Area No. 1 $66,496 1,268 Paso Robles DUC Area No. 2 $61,513 59 Northeast Unincorporated $61,526 1,009 County DUC Area No. 1 Atascadero DUC Area No. 1 $59,559 354 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 Estrella – El Pomar – Creston Water District 13 MSR & SOI Study Figure 1: Disadvantaged Unincorporated Communities 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 The present and planned land uses within EPCWD’s service area are governed by the County General Plan. The General Plan provides a basis for local government land use decisions, providing clear guidance to citizens, developers, and decision-makers regarding how land within the County’s unincorporated areas can be developed. As illustrated in Figure 2, the majority of the District falls within the Agriculture and Residential Rural land-use designations. However, because EPCWD was formed to function exclusively as a Groundwater Sustainability Agency, its operations and services are not directly influenced by specific land use designations within its boundaries, though future land use changes could augment the way in which the GSP is implemented. Estrella – El Pomar – Creston Water District 14 MSR & SOI Study Figure 2: EPCWD Land Use Designations Estrella – El Pomar – Creston Water District 15 MSR & SOI Study Accountability EPCWD is an independent special district governed by a five-member Board of Directors, each elected to a four-year term. To be qualified, directors must be holders of title to land within the District or the legal representative of a holder of title to land within the District. The Board holds regular meetings on the second Wednesday of each month at 2:00 PM at the Windfall Farms Conference Room at 4710 Flying Paster Lane, Paso Robles, CA 93446. The public may participate in person, via phone, or by logging onto the web-based meeting link provided on each agenda. Agendas and board packets are officially posted on the EPCWD website and at the meeting location. Every agenda for a regular meeting provides an opportunity for members of the public to directly address the board. Table 3: EPCWD Board of Directors Board Member Title Term Eric Pooler Director 2025 – 2029 Hilary Graves Director 2025 – 2029 Lee Nesbitt Director 2025 – 2029 Ryan Scott Director 2023 – 2027 Zach Merkel Director 2025 – 2027 EPCWD maintains an up-to-date website in compliance with Senate Bill 929, which contains contact information for the District, the current agenda, financial transaction reports, compensation reports, and an SB 272 Enterprise System catalog. Approved minutes of the Board’s regular meetings are also made available for public access on the website. The District also reports that all Form 700 financial disclosure statements are current and in compliance with state requirements. Services & Capacity Authorized Services EPCWD’s governance authority is established under California Water District Law, Water Code Section 34000 et. seq. This principal act outlines the broad range of services and facilities that a water district may provide. Estrella – El Pomar – Creston Water District 16 MSR & SOI Study 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. As part of EPCWD’s formation approval in 2017, the Commission also took action to activate all powers available under Water Code Section 34000 with the exception of the following powers: 1. Exportation of Water: EPCWD’s authority to export, transfer, or move groundwater outside the boundaries of the Paso Robles Groundwater Basin was deemed latent. 2. Sewer Services: Powers granted under Part 5, Chapter 2, Article 5 (Sections 35500-35509) of the California Water Code, relating to sewer infrastructure and services, were also designated as latent. This services and capacity section analyzes present and long-term infrastructure 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 the District to expand such resources and services in line with increasing demands. An adequate supply of services should be documented to support areas in the sphere, envisioned for eventual annexation and service by a jurisdiction. Groundwater Sustainability Plan Implementation The Sustainable Groundwater Management Act (SGMA), enacted in 2014, required local agencies to manage groundwater. In September 2017, five local agencies — Shandon-San Juan Water District (SSJWD), Heritage Ranch Community Services District5, the City of Paso Robles, San Luis Obispo County, and San Miguel Community Services District — formed GSAs and formed the Paso Basin Cooperative Committee (PBCC) under a Memorandum of Agreement (MOA) to develop the Groundwater Sustainability Plan (GSP) to sustainably manage the portions of the Paso Robles Basin underlying their combined service areas (i.e. all portions of the Basin located within San Luis Obispo County). 5 Heritage Ranch Community Services District withdrew from the Paso Basin Cooperative Committee in 2020 Estrella – El Pomar – Creston Water District 17 MSR & SOI Study In June 2023, the County Board of Supervisors took action to relinquish GSA authority within the EPCWD boundaries to allow EPCWD to become a GSA. This action also added EPCWD to the MOA and, as a result, granted the District membership to the PBCC. The PBCC has now been superseded by the Paso Robles Area Groundwater Authority, which was established in March 2025 through a Joint Powers Agreement (more details further below). The GSP, which was approved by the California Department of Water Resources (DWR) on June 30, 2023, outlines the approach to achieve a sustainable groundwater resource free of undesirable results within 20 years, while maintaining the unique cultural, community, and business aspects of the Subbasin. In adopting this GSP, it was the goal of the GSAs to balance the needs of all groundwater users in the Subbasin, within the sustainable limits of the Subbasin’s resources. The GSP describes the Paso Robles Subbasin, develops quantifiable management objectives that consider the interests of the Subbasin’s beneficial groundwater uses and users, and identifies management actions and conceptual projects that will allow the Subbasin to achieve sustainability by 2040. The GSP covers the entire Paso Robles Subbasin. As previously stated, the GSP includes a set of management actions and projects designed to achieve groundwater sustainability by 2040. While the GSP is a joint plan, some projects are specific to individual GSAs, including EPCWD. Basin-wide management actions include: • Monitoring, reporting, and outreach • Promoting best water use practices • Promoting stormwater capture • Promoting voluntary fallowing of irrigated crop land To support these actions, the GSP identifies infrastructure projects that will enhance water supply and reduce reliance on groundwater. Several potential projects are described in the GSP that may be implemented by willing entities to offset pumping and lessen the degree to which management actions would be needed. The implementation of projects depends on willing participants and/or successful funding votes. There are six potential sources of water for projects under the GSP, including: Estrella – El Pomar – Creston Water District 18 MSR & SOI Study 1. Tertiary treated wastewater supplied and sold by the City of Paso Robles and the San Miguel CSD to private groundwater extractors to use in lieu of groundwater. This water is commonly referred to as recycled water (RW). 2. State Water Project Water 3. Nacimiento Water Project Water 4. Salinas Dam/Santa Margarita Reservoir Water 5. Local Recycled Water 6. Flood flows/stormwater from local rivers and streams As one of the GSAs, EPCWD plays a vital role in implementing the GSP within its jurisdiction. While the plan is basin-wide, EPCWD is responsible for advancing specific projects and management actions tailored to its service area. These may include local infrastructure improvements, water conservation initiatives, and participation in regional water supply projects. Below is a summary of key projects and management actions EPCWD has undertaken or contributed to since 2018: Economic Impact Study: In partnership with SSJWD, SLO County Farm Bureau, Paso Robles Wine Country Alliance, and AgWest Farm Credit, EPCWD commissioned an economic impact study examining irrigated agriculture in the Paso Robles area. The study evaluates the potential economic consequences of groundwater reductions associated with SGMA and GSP implementation. It highlights the significant risks to the local economy and encourages the exploration of creative, flexible GSP implementation strategies beyond groundwater pumping cutbacks alone. Stormwater Capture & Groundwater Recharge Feasibility Study and 3D Geologic Model Development: In collaboration with SSJWD, the District conducted a basin-wide groundwater recharge feasibility study. A key outcome of this effort was the development of a detailed 3D geologic model, which is now actively used by the Paso Robles Area Groundwater Authority and continues to be refined as new data becomes available. The study and model provide several important benefits, such as: • Maintaining a visual and graphical representation of the local geologic setting and distribution of principal aquifers, faults, and aquitards, thereby allowing improved understanding of groundwater conditions Estrella – El Pomar – Creston Water District 19 MSR & SOI Study • Supporting characterization of groundwater level and water quality conditions • Enabling the development of additional geologic cross sections • Providing input data for a numerical groundwater flow model update EPCWD Groundwater Level Monitoring Network: EPCWD launched a program to monitor groundwater levels by partnering with member well owners across the District. Approximately 33 wells have been measured quarterly at no cost to participating landowners. This effort will help fill critical data gaps and significantly reduce uncertainty in analyses of groundwater elevations and changes in groundwater storage. Groundwater Sustainability Plan Evaluation As part of monitoring, reporting, and outreach, SGMA requires periodic evaluation of approved GSPs at least every five years. The periodic evaluation represents the GSAs’ written assessment of GSP implementation and adaptive management. The GSAs submitted the 5-Year Plan Evaluation to the DWR on January 30, 2025. The evaluation details numerous significant actions undertaken by the PBCC to demonstrate progress towards sustainability in the Subbasin within the 20-year SGMA implementation time frame. Key takeaways from the evaluation include the following: • Over the past five years, groundwater monitoring data revealed rising water levels due to above-average precipitation, with no significant changes in subsidence or water quality conditions linked to groundwater management. • Significant strides have been made in data collection, policy changes, and governance, with water level declines in most representative monitoring sites reversed, indicating notable progress towards sustainability. • The GSAs believe it is premature to revise or amend the GSP at this time. Several key activities, such as the installation of more monitoring wells and the initiation of GSP projects and programs, are still in progress. The implementation of the GSP to date, in tandem with higher-than-average rainfall over the past two years, has been effective in preventing further declines in groundwater levels and, by extension, the reduction of groundwater in storage. These activities, in addition to planned Projects and Management Estrella – El Pomar – Creston Water District 20 MSR & SOI Study Actions, indicate progress toward achieving sustainability in the first 5-year period of SGMA implementation. Paso Robles Area Groundwater Authority With the GSP now approved by the State, a long-term governance structure was recently adopted to implement it more effectively. The Joint Exercise of Powers Agreement (JPA), adopted in March 2025, supplants the MOA and creates a legal entity, the Paso Robles Area Groundwater Authority (Authority), to oversee and fund GSP implementation. The 4-Party JPA defines governance, voting rights, funding mechanisms, and responsibilities. The Authority will be funded primarily through groundwater extraction fees, though initial costs will be covered by contributions from the GSAs. The Authority has powers to regulate and manage groundwater use, but does not replace the individual GSAs. The JPA includes: • City of Paso Robles • County of San Luis Obispo • Estrella-El Pomar-Creston Water District • Shandon-San Juan Water District In 2025, the Authority proposed a groundwater management charge to fund implementation of its GSP and meet the requirements of SGMA. The proposed fee would have applied to agricultural, commercial, and public water system pumpers—excluding small domestic well owners who use less than 2 acre-feet per year. The services to be funded include State-mandated monitoring and reporting, GSP program administration, regulatory programs, and groundwater demand reduction projects and management actions. However, during a public hearing on August 1, 2025, a majority of affected property owners formally protested the fee, surpassing the threshold required to block its enactment. The Authority is now working to identify alternative funding mechanisms to ensure it can continue to make essential contributions. Finance LAFCO is required to make a determination regarding the financial ability of EPCWD to provide public services. This section provides a general overview of the District’s financial health and establishes the Estrella – El Pomar – Creston Water District 21 MSR & SOI Study context for LAFCO’s financial determinations. To evaluate the District’s overall financial condition, LAFCO utilizes three key financial indicators: • 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 worth. The primary data sources for this evaluation are the District’s audited financial statements from Fiscal Year (FY) 2020 through FY 2024.6 Budget The District adopts an annual budget on or before June 30th of each fiscal year. The Board of Directors may amend the budget by motion during each fiscal year. All appropriations lapse at the end of the fiscal year to the extent that they have not been expended. Professional contracts entered into by the District are subject to annual review by the Board of Directors. Audited Financial Statements EPCWD hires an outside accounting firm to perform an annual audit in accordance with established governmental accounting standards. This includes auditing EPCWD’s financial statements with respect to verifying overall assets, liabilities, and net position. These audited statements provide quantitative measurements in assessing EPCWD’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 assessments and miscellaneous income. As shown in Figure 3 below, the District’s revenues have fluctuated over the last five fiscal years. Similarly, the District’s total expenditures—primarily related to project expenses, administration and operations, legal counsel, and insurance—have varied during this period, with no consistent upward or downward trend. According to District staff, EPCWD has chosen to adopt assessment levels to align closely with annual budget projections, ensuring that revenues are sufficient to cover operating costs, planned 6 EPCWD’s operates on a fiscal year that corresponds with the calendar year, beginning January 1 and ending December 31. Estrella – El Pomar – Creston Water District 22 MSR & SOI Study projects, and maintain prudent reserves—without generating excess funds. Each fiscal year’s budget also incorporates carryover balances from prior years. Figure 3: Audited Revenues and Expenditures $300,000.00 $276,489.00 $250,000.00 $200,000.00 $159,554.00 $150,000.00 $102,050.00 $106,636.00 $101,062.00 $102,392.00 $93,709.00 $100,000.00 $86,094.00 $77,239.00 $64,745.00 $50,000.00 $- FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Revenues Expenditures To assess the District’s ability to meet its financial obligations, Figure 4 displays the Operating Ratio for the past five audited fiscal years. 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 only remained below 1.0 in two of the five years, indicating that operating expenses exceeded operating revenues in most years. Specifically, in FY 2020, FY 2021, and FY 2023, the District operated at a deficit, primarily due to high project expenses. Overall, the District’s Operating Ratios do not demonstrate a consistent ability to generate positive operating margins. Estrella – El Pomar – Creston Water District 23 MSR & SOI Study Figure 4: Operating Ratio (FY 2020 - FY 2024) FY 2024 0.577 FY 2023 1.189 FY 2022 0.838 FY 2021 1.1379 FY 2020 1.009 0 0.2 0.4 0.6 0.8 1 1.2 1.4 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. Over the past five audited years, EPCWD’s total assets have grown, reaching $263,131 at the end of FY 2024. 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. At the close of FY 2024, EPCWD had no audited liabilities. Table 4: Current Assets and Liabilities Category FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Current $ 153,482 $140,000 $154,155 $146,196 $263,131 Assets Current $555.00 - $1,661.00 - - Liabilities Estrella – El Pomar – Creston Water District 24 MSR & SOI Study Figure 5 illustrates the District’s Liquidity Ratios from FY 2020 through FY 2024. 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 shown in Figure 5, the District’s liquidity ratio was above 1.0 in FY 2020 and FY 2022, demonstrating a stable ability to meet short-term obligations. In FY 2021, FY 2023, and FY 2024, a liquidity ratio could not be calculated due to the District having no current liabilities. While the ratio is technically undefined in these years, the absence of short-term obligations reflects an extremely strong liquidity position, with no immediate financial risk. Figure 5: Liquidity Ratio (FY 2020 - FY 2024) FY 2024 FY 2023 FY 2022 92.81 FY 2021 FY 2020 276.54 0 50 100 150 200 250 300 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. Estrella – El Pomar – Creston Water District 25 MSR & SOI Study • 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 2024, EPCWD’s net position increased to $263,131, reflecting 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. Table 5: Audited Net Position 5-yr % FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 Change Total Net $152,927 $140,000 $152,494 $146,196 $263,131 72% Position Sphere of Influence EPCWD’s current SOI is coterminous with its service area boundary, as illustrated in Figure 6. The District encompasses approximately 37,208 acres in northern San Luis Obispo County. Because the District’s primary role is to serve as a Groundwater Sustainability Agency, there is no logical way to envision future growth for the District. Accordingly, LAFCO will evaluate any SOI amendments or annexation requests concurrently and on a case-by-case basis. Future amendments and or updates of the SOI shall only include properties that have submitted written landowner consent. Therefore, the District’s SOI and service area boundary should remain coterminous. Estrella – El Pomar – Creston Water District 26 MSR & SOI Study Figure 6: EPCWD Boundary Map, Adopted November 2019 Estrella – El Pomar – Creston Water District 27 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 EPCWD serves a sparsely populated agricultural area in northeastern unincorporated San Luis Obispo County, where precise population data is unavailable due to the District’s noncontiguous boundaries. Regional forecasts suggest gradual growth in the broader North County region—rising from 35,460 in 2025 to 36,961 by 2060 at an annual rate of 0.12%—with EPCWD expected to remain low-density and largely shaped by land use and resource planning. 2. The location and characteristics of any disadvantaged unincorporated communities within or contiguous to the sphere of influence There are four areas within or in close proximity to EPCWD’s SOI and service area boundary that meet the definition of a DUC as outlined in Government Code Section 56033.5. Although these DUCs were identified, EPCWD does not provide public facilities or services related to wastewater, municipal or industrial water, or structural fire protection. Therefore, no infrastructure deficiencies affecting a DUC would result from changes to the EPCWD’s SOI or service area boundary. 3. Present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies The District's main purpose at formation was to enable participating landowners to comply with the Sustainable Groundwater Management (SGMA) Act by creating a water district that could also serve as a Groundwater Sustainability Agency (GSA) under SGMA. In addition to its Estrella – El Pomar – Creston Water District 28 MSR & SOI Study role as a GSA, the District is authorized to provide all services under Water Code Section 34000, with the exception of exportation of water and sewer services. At present, it appears that the District has the capacity to fulfill its responsibilities as a GSA under the SGMA. EPCWD represented constituents in the development of the Paso Robles Subbasin Groundwater Sustainability Plan (GSP), which was approved by the California Department of Water Resources in June 2023. The District has also played a key role in advancing several important projects and management initiatives, including an Economic Impact Study on irrigated agriculture in the Paso Robles region, a Stormwater Capture and Groundwater Recharge Feasibility Study, the development of a 3D Geologic Model, and the establishment of a comprehensive groundwater level monitoring network. The District’s capacity is further demonstrated through its participation in the GSP’s five-year evaluation, submitted in January 2025. Overall, EPCWD demonstrates adequate capacity to carry out its groundwater management responsibilities under SGMA. 4. Financial ability of agencies to provide services To assess the District’s financial health, key indicators, including Operating Ratio, Liquidity Ratio, and Net Position, were analyzed. Operating Ratio, which compares annual operating revenues to operating expenses, remained below 1.0 in only two of the five years, demonstrating an inconsistent ability to generate positive operating margins. Liquidity Ratio, which measures current assets relative to current obligations, remained strong across all five years, reflecting adequate short-term financial health. The District’s Net Position, representing the difference between total assets and total liabilities, increased by 72 percent over the five- year audited period, a strong indicator of long-term financial growth and stability. Overall, these financial indicators suggest that EPCWD is in a financially healthy state with adequate financial resources to deliver its services. 5. Status of and opportunities for shared facilities The EPCWD participates in the Paso Robles Area Groundwater Authority (Authority), which was formed by a Joint Exercise of Power Agreement (JPA) in March 2025. The Authority replaces the prior Memorandum of Agreement and establishes a formal structure for implementing the Groundwater Sustainability Plan. EPCWD’s participation in the Authority Estrella – El Pomar – Creston Water District 29 MSR & SOI Study enhances efficiency, reduces duplication of efforts, and strengthens the District’s ability to meet SGMA requirements. 6. Accountability for community service needs, including governmental structure and operational efficiencies EPCWD is governed by a five-member Board of Directors, each elected to a four-year term. The Board holds regular meetings on the second Wednesday of each month at 2:00 PM. The District posts its agendas in compliance with the Brown Act and maintains an up-to-date website in compliance with Senate Bill 929. 7. Any other matter related to effective or efficient service delivery There are no other matters related to the efficiency of services. Estrella – El Pomar – Creston Water District 30 MSR & SOI Study 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. Present and planned land uses in the area, including agricultural and open-space lands. The present and planned land uses within the service area of EPCWD are guided by the County’s General Plan. The majority of the District falls within the Agricultural and Residential Rural land- use designation. Reaffirmation of the District’s coterminous SOI is recommended. 2. Present and probable need for public facilities and services in the area. Given the predominantly agricultural nature of the EPCWD and its primary function as a Groundwater Sustainability Agency representation, there is no present and probable need for public facilities and services in the area. The District’s role is focused on groundwater management rather than direct service provision. Reaffirmation of the District’s coterminous SOI is recommended. 3. Present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. At present, it appears that the District has the capacity to fulfill its responsibilities as a Groundwater Sustainability Agency (GSA) under the Sustainable Groundwater Management Act (SGMA). As a member of the Paso Basin Cooperative Committee (PBCC), EPCWD represented its constituents in the development of the Paso Robles Subbasin Groundwater Sustainability Plan (GSP), which was approved by the California Department of Water Resources in June 2023. EPCWD has played a key role in advancing several important projects and management initiatives, including an Economic Impact Study on irrigated agriculture in the Paso Robles region, a Stormwater Capture and Groundwater Recharge Feasibility Study, the development of a 3D Geologic Model, and the establishment of a comprehensive groundwater level Estrella – El Pomar – Creston Water District 31 MSR & SOI Study monitoring network. The District’s capacity is further demonstrated through its participation in the GSP’s five-year evaluation, submitted in January 2025. The evaluation reported encouraging trends, including rising groundwater levels attributed to above-average rainfall, enhanced data collection efforts, and progress in policy implementation. To support long-term GSP execution and improve regional coordination, a new governance entity—the Paso Robles Area Groundwater Authority—was established in March 2025 through a Joint Powers Agreement. This Authority replaces the PBCC and will oversee GSP implementation, funded primarily through groundwater extraction fees. Overall, EPCWD demonstrates adequate capacity to carry out its groundwater management responsibilities. Reaffirmation of the District’s coterminous SOI is recommended. 4. 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 protection, the present and probable need for those public facilities and services of any disadvantaged unincorporated communities within the existing sphere. Four DUCs were identified inside or within close proximity to the EPCWD SOI and service area boundary, as seen in Figure 1. Although these DUCs were identified, EPCWD does not provide public facilities or services related to wastewater, municipal or industrial water, or structural fire protection, and therefore, no infrastructure deficiencies to a DUC would result from changes to the EPCWD’s SOI or service area boundary. Reaffirmation of the District’s coterminous SOI is recommended.