CSA 57 Woods Cove – Graham Hill

County Service Area 57 (Service & Sphere Review) Local Agency Formation Commission of Santa Cruz County Adopted Version June 5, 2024 Table of Contents EXECUTIVE SUMMARY ................................................................................................ 2 Introduction .................................................................................................................. 2 CSA 57 (Woods Cove) Overview ................................................................................ 2 Legal Authority ............................................................................................................. 4 Key Findings ................................................................................................................ 5 Recommended Actions ................................................................................................ 6 DISTRICT OVERVIEW ................................................................................................... 7 History ......................................................................................................................... 7 Charges for Services ................................................................................................... 7 Strategic Plan .............................................................................................................. 7 Population & Growth .................................................................................................... 9 Disadvantaged Unincorporated Communities ............................................................. 9 FINANCES .................................................................................................................... 10 Revenues .................................................................................................................. 11 Expenditures .............................................................................................................. 11 Fund Balance ............................................................................................................ 11 GOVERNANCE ............................................................................................................ 13 Challenges and Opportunities ................................................................................... 14 SPHERE OF INFLUENCE ............................................................................................ 16 Cortese-Knox-Hertzberg Act ...................................................................................... 16 Sphere Boundary ....................................................................................................... 16 DISTRICT SUMMARY .................................................................................................. 18 SERVICE AND SPHERE REVIEW DETERMINATIONS .............................................. 19 Service Provision Determinations .............................................................................. 19 Sphere of Influence Determinations........................................................................... 20 APPENDICES ............................................................................................................... 21 Appendix A: 2001 Formation Resolution ................................................................... 21 Appendix B: 2014 Reorganization Resolution ........................................................... 21 Appendix C: 2024 Long-Term Maintenance & Capital Replacement Plan ................. 21 CSA 57 (Woods Cove) Service & Sphere Review Page 1 of 21 EXECUTIVE SUMMARY Introduction This Service and Sphere of Influence Review provides information about the services and boundaries regarding County Service Area 57 (referred to as “CSA 57”). The report will be used by the Local Agency Formation Commission (LAFCO) to conduct a statutorily required review and update process. The Cortese-Knox-Hertzberg Act requires that LAFCO conduct periodic reviews and updates of Spheres of Influence for all cities and special districts in Santa Cruz County (Government Code Section 56425). It also requires LAFCO to conduct a review of municipal services before adopting sphere updates (Government Code Section 56430). The last service review conducted for CSA 57 was adopted on June 5, 2019. The service review process does not require LAFCO to initiate changes of organization based on service review conclusions or findings; it only requires that LAFCO make determinations regarding the delivery of public services in accordance with Government Code Section 56430. However, LAFCO, local agencies, and the public may subsequently use the determinations and related analysis to consider whether to pursue changes in service delivery, government organization, or spheres of influence. Service and sphere reviews are informational documents and are generally exempt from environmental review. LAFCO staff has conducted an environmental review of the District’s existing sphere of influence pursuant to the California Environmental Quality Act (CEQA) and determined that this report is exempt from CEQA. Such an exemption is due to the fact that it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment (Section 15061[b][3]). CSA 57 (Woods Cove) Overview County Service Area 57 was formed in 2001 to provide sanitary and stormwater drainage to the Woods Cove Subdivision. In 2014, sewer services along Graham Hill Road were transferred over to County Service Area 10. Today, the sole service that CSA 57 continues to provide is storm drain maintenance to the Woods Cove community which has a population of approximately 300 residents. The County’s Community Development & Infrastructure Department (previously known as the Planning and Public Works Departments) is responsible for the operation and management of CSA 57. All CSAs are formed and operate in accordance with the County Service Area Law (Government Code Section 25210 et seq.). Figure 1 on page 3 provides a vicinity map showing the location of the CSA in the central portion of Santa Cruz County north of the City of Santa Cruz and south of the City of Scotts Valley. CSA 57 (Woods Cove) Service & Sphere Review Page 2 of 21 Figure 1: Vicinity Map CSA 57 (Woods Cove) Service & Sphere Review Page 3 of 21 Legal Authority CSA 57 is governed by the County Service Area Law (Government Code Section 25210 et seq.). The Legislature finds and declares the following: a) Population growth and development in unincorporated areas result in new and increased demands for public facilities and services that promote the public peace, health, safety, and general welfare. b) The residents and property owners in unincorporated areas should have reasonable methods available so that they can finance and provide these needed public facilities and services. c) The residents and property owners in some unincorporated areas may propose the incorporation of new cities or annexations to existing cities as a way to fulfill these demands for public facilities and services. d) In other unincorporated areas, independent special districts with directly elected or appointed governing boards can fulfill these demands for public facilities and services. e) County boards of supervisors need alternative organizations and methods to finance and provide needed public facilities and services to the residents and property owners of unincorporated areas. f) In enacting the County Service Area Law by this chapter, it is the intent of the Legislature to continue a broad statutory authority for county boards of supervisors to use county service areas as a method to finance and provide needed public facilities and services. g) Further, it is the intent of the Legislature that county boards of supervisors, residents, and property owners use the powers and procedures provided by the County Service Area Law to meet the diversity of local conditions, circumstances, and resources. CSA Zones of Benefit State law indicates that LAFCOs have purview over cities and special districts, including county services areas. However, in accordance with Government Code Section 56036(b)(10), LAFCOs do not have authority over a zone of any special district. This service review is intended to provide information about CSA 57 only. The creation, modification, or dissolution of future zones can only be implemented by the County through official action from the Board of Supervisors. It is LAFCO’s understanding that there are no zones of benefits within CSA 57, however, the County may consider this option to ensure accurate funding is available to offset rising operational costs. More information regarding the CSA’s financial health is shown later in the report. CSA 57 (Woods Cove) Service & Sphere Review Page 4 of 21 Key Findings The following are key findings of the 2024 Service and Sphere of Influence Review for County Service Area 57 (Woods Cove): 1. CSA 57 provides one service to an unincorporated community. The CSA’s service area encompasses approximately 170 acres of unincorporated territory and includes approximately 300 residents within the Woods Cove community. At present, CSA 57 is only providing stormwater drainage services. 2. CSA 57 is currently facing financial challenges. The CSA’s primary source of revenue is from service charges. CSA 57’s fund balance ended with approximately $375,000 in FY 2022-23, a decrease of 11% from the previous fiscal year. Financial statements indicate that the CSA ended with a surplus each year from FY 2017-18 to FY 2020-21. However, the CSA experienced consecutive deficits during the last two fiscal years (FY 2021-22 and FY 2022-23). The increase in expenditures over the past two fiscal years, compared to the prior years, was to fund Public Works Engineering and Drainage Operations staff developing the long-term maintenance plan as was required by the LAFCO commission during its last review in June 2019, including completing minor repairs as identified when assessing the condition of the drainage improvements within the CSA. The condition assessment revealed that more substantial repairs will be needed, and Public Works staff is currently obtaining cost estimates from contractors to complete these repairs. 3. CSA 57 fulfilled LAFCO’s 2019 service review recommendation. The Commission evaluated CSA 57 in 2019 and determined that the District was operating efficiently but would benefit from the development of a long-term maintenance and capital replacement plan. Based on LAFCO’s analysis, the County created a comprehensive report that includes a long-term maintenance plan and a capital replacement plan. This report is attached as an appendix and is discussed in more detail in this service review. 4. CSA 57 requires improvement in governmental transparency. State law now requires all independent special districts to maintain and operate a website by January 1, 2020. CSA 57 is a dependent special district, and therefore, not subject to this statutory requirement. However, CSA 57 provides a specific public service and should strive to be as transparent as possible. Based on LAFCO’s analysis, the CSA does not meet any of the transparency benchmarks evaluated in this service review. LAFCO encourages the County to offer more information about CSA 57 on their website to ensure residents have the opportunity to participate in the CSA’s decision-making process and future actions. 5. CSA 57’s sphere of influence is coterminous with jurisdictional boundary. The Commission adopted CSA 57’s original sphere of influence in March 2001 and is coterminous (or identical) with the CSA’s jurisdictional boundary. A coterminous sphere indicates that the CSA should not expand beyond its service area at this time. Staff is recommending that the Commission reaffirm the existing sphere boundary. CSA 57 (Woods Cove) Service & Sphere Review Page 5 of 21 Recommended Actions Based on the analysis and findings in the 2024 Service and Sphere of Influence Review for County Service Area 57, the Executive Officer recommends that the Commission: 1. Find that pursuant to Section 15061(b)(3) of the State CEQA Guidelines, LAFCO determined that the sphere of influence review is not subject to the environmental impact evaluation process because it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment and the activity is not subject to CEQA; 2. Determine, pursuant to Government Code Section 56425, the Local Agency Formation Commission of Santa Cruz County is required to develop and determine a sphere of influence for County Service Area 57, and review and update, as necessary; 3. Determine, pursuant to Government Code Section 56430, the Local Agency Formation Commission of Santa Cruz County is required to conduct a service review before, or in conjunction with an action to establish or update a sphere of influence; and 4. Adopt a Resolution (LAFCO No. 2024-14) approving the 2024 Service and Sphere of Influence Review for County Service Area 57 with the following conditions: a. Reaffirm CSA 57’s sphere of influence to coincide with its current jurisdictional boundary; and b. Direct the Executive Officer to distribute a copy of the adopted service and sphere review to CSA 57 representatives and any other interested or affected parties, including but not limited to the County of Santa Cruz. CSA 57 (Woods Cove) Service & Sphere Review Page 6 of 21 DISTRICT OVERVIEW History County Service Area 57 was formed on March 7, 2001 and its service area encompasses 74 parcels (totaling 167 acres), as shown in the map on page 3. Appendix A provides a copy of the 2001 formation resolution. CSA 57’s original purpose was limited to the “operation and maintenance of storm drainage facilities of the Graham Hill Estates Subdivision, and operation and maintenance of sanitary sewer facilities within the Graham Hill Estates Subdivision between the subdivision and the City of Santa Cruz sewer system.” It is important to note that the subdivision was later changed to “Woods Cove.” In 2014, LAFCO approved a reorganization which transferred sewer responsibilities to CSA 10. The reorganization was based on LAFCO’s findings in its 2013 service review and through coordination with the County. Appendix B provides a copy of the 2014 reorganization resolution. Figure 2 on page 8 also shows the current land use designation within CSA 57, which is primarily zoned as Urban Very Low Residential and Existing Parks & Open Space. Charges for Services CSA 57 charges single-family homes an annual rate for storm water drainage. Table 1 provides an overview of the annual rates for the last six fiscal years. Table 2: Annual Charges FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 Single Family Residence $591.44 $614.50 $634.78 $645.56 $666.22 $703.53 Change ($) - $23.06 $20.28 $10.78 $20.66 $37.31 Change (%) - 4% 3% 2% 3% 6% Footnote: FY 24-25 rates were recently approved by the County. The rates will be $729.56, representing a 4% increase from the previous year. Strategic Plan The County has developed a comprehensive report that focuses on how to effectively operate and finance CSA 57. This long-range document is directly tied to LAFCO’s recommendation outlined in its 2019 service and sphere review for CSA 57. This strategic plan has two primary categories: Long-Term Maintenance and Capital Replacement. The Long-Term Maintenace Plan covers administrative, operational, and routine maintenance activities. These are activities that are needed for the proper functioning of the existing storm drain system. The Capital Replacement Plan is a long-term financing strategy that allows the CSA to complete capital improvement replacement and upgrade projects over time and as necessary. It is anticipated that when the drainage facilities reach the end of their lifespan in approximately 60 years, the CSA Capital Reserves will be far less than what will be needed, as described in details in the attached Long-Term Maintenance and Capital Replacements Plan (refer to Appendix C). To avoid increasing the assessments by many folds as drainage facilities reach their end of lifespans, Public Works staff recommends starting in FY 2025-26 to apply annual increases that align with construction cost increases such as the California Department of Transportation Construction Cost Index (CCI) which has been averaging about 5.33% over the past forty years. This will be slightly higher compared to the average CPI increase of 2.56% since the annual increases started in 2002, a year after the establishment of the CSA. CSA 57 (Woods Cove) Service & Sphere Review Page 7 of 21 Figure 2: Land Use Map CSA 57 (Woods Cove) Service & Sphere Review Page 8 of 21 Population & Growth Based on staff’s analysis, the population of CSA 57 in 2020 was estimated to be 300. The Association of Bay Area Governments (ABAG) and the Association of Monterey Bay Area Governments (AMBAG) provide population projections for cities and counties in the Coastal Region. Official growth projections are not available for special districts. In general, the Coastal Region is anticipated to have a slow growth over the next fifteen years. Table 3 shows the anticipated population for the CSA. The average rate of change within CSA 57 is 0.86%. Population Projection Based on the projections for Santa Cruz County, LAFCO staff was able to develop a population forecast for CSA 57 by increasing the CSA’s 2020 population amount by 0.86% for the next fifteen years. Under this assumption, LAFCO staff projects that the entire population of the CSA will be 310 by 2040. Table 3: Projected Population 2020 2025 2030 2035 2040 Unincorporated County Territory 136,891 137,896 139,105 140,356 141,645 CSA 57 (Woods Cove) 300 303 305 308 310 Disadvantaged Unincorporated Communities In accordance with Senate Bill 244, which became effective on January 1, 2012, state law requires the identification and description of all “disadvantaged unincorporated communities” (DUCs) located within or contiguous to the existing spheres of influence of cities and special districts which provide fire protection, sewer, and/or water services (Government Code Section 56046). DUCs are defined as inhabited unincorporated areas with an annual median household income that is 80% or less than the statewide annual median household income. In 2020, the California statewide annual median household income was $78,672, and 80% of that was $62,938. LAFCO staff utilized the ArcGIS mapping program to locate potential DUCs in Santa Cruz County. Based on the criteria set forth by SB 244, in conjunction with further evaluation of these areas, staff determined that there are no disadvantaged unincorporated communities within CSA 57 at this time. CSA 57 (Woods Cove) Service & Sphere Review Page 9 of 21 FINANCES This section will highlight the CSA’s audited financial performance during the most recent fiscal years. Fiscal Year 2022-23 is the latest audited financial statement publicly available. A comprehensive analysis of the CSA’s financial performance during the past six years is shown in Table 6 on page 12. At the end of FY 2022-23, the total revenue collected by the CSA was approximately $49,000, representing a 15% increase from the previous year ($42,000 in FY 2021-22). Total expenses for FY 2022-23 were approximately $97,000, which increased from the previous year by 39% ($70,000 in FY 2021-22). As shown in Figure 3, the CSA has ended with a surplus each year from FY 2017-18 to FY 2020-21. However, the CSA experienced consecutive deficits during the last two fiscal years (FY 2021-22 and FY 2022-23). It is unknown whether the CSA will continue this downward trend even though service rates have increased each year. Figure 3: Statement of Revenues & Expenditures $500,000 $457,520 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $96,626 $100,000 $69,702 $44,840 $46,471 $42,552 $48,661 $50,000 $42,249 $26,386 $11,098 $12,923 $11,042 $- FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) TOTAL REVENUE TOTAL EXPENDITURE Footnote: CSA 57 received appx. $338,000 from “Operating Transfer In” during FY 2017-18. CSA 57 (Woods Cove) Service & Sphere Review Page 10 of 21 Revenues CSA 57’s primary source of revenue is charges for services. Annual charges represented 85% of total revenue in FY 2022-23. The remaining 15% of total revenue came from interest earned. Figure 4 highlights the limited revenue stream during the last fiscal year. Figure 4: Total Revenues (FY 2022-23) Interest $7,109 (15%) Charges for Services $41,552 (85%) Expenditures CSA 57’s total expenditures are from Services & Supplies. Table 4 distinguishes the cost and percentage since 2017. As the table shows, total expenditures fluctuate each year. Such inconsistencies may prevent the CSA from having sufficient funds to offset the costs. Table 4: Total Expenditure FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Services & Supplies $11,098 $12,923 $11,042 $26,386 $69,702 $96,626 Change (%) 16% -15% 139% 164% 39% Total Expenditure $11,098 $12,923 $11,042 $26,386 $69,702 $96,626 Change (%) 16% -15% 139% 164% 39% Fund Balance As of June 30, 2023, the total fund balance was approximately $375,000. Table 5 on page 12 highlights the net position balance from 2017 to 2023. CSA 57’s fund balance has fluctuated over the years, recently experiencing significant decreases during the most recent years. The decreases in the Fund Balance resulted from funding the extra work to complete the Long-Term Maintenance and Capital Replacement Plan as requested by the LAFCO commission in June 2019. The results of this work lead to the fortuitous recognition that the current CPI annual increases are not aligned with the increases in the cost of drainage inventory repairs and, eventually, replacement of the drainage facilities as they reach the end of life. If adjustments in these annual assessments are not done, the CSA will not have the funds to implement the expected inventory replacements when the drainage improvements reach the end of their lifespan without increasing the assessments by many folds; such increases would not be reasonable and, most likely, would not be appreciated or approved by future property owners of the CSA. CSA 57 (Woods Cove) Service & Sphere Review Page 11 of 21 Table 5: Fund Balance/Net Position FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Net Position $ 446,423 $ 399,176 $ 434,605 $ 450,771 $ 423,317 $ 375,352 (Ending Balance) Change in ($) from -$47,247 $35,429 $16,166 -$27,454 -$47,965 previous year Change in (%) -11% 9% 4% -6% -11% from previous year Table 6: Total Revenues & Expenditures COUNTY SERIVCE AREA 57 (WOODS COVE) FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) REVENUE Charges for Services $ 35,849 $ 36,888 $ 38,326 $ 39,583 $ 40,264 $ 41,552 Interest $ 4,237 $ 7,952 $ 8,145 $ 2,969 $ 1,985 $ 7,109 State-Natural Disaster Assistance $ 79,163 $ - $ - $ - $ - $ - Operating Transfers In $ 338,271 $ - $ - $ - $ - $ - TOTAL REVENUE $ 4 57,520 $ 44,840 $ 46,471 $ 42,552 $ 42,249 $ 48,661 EXPENDITURE Services & Supplies $ 11,098 $ 12,923 $ 11,042 $ 26,386 $ 69,702 $ 96,626 TOTAL EXPENDITURE $ 11,098 $ 12,923 $ 11,042 $ 26,386 $ 69,702 $ 96,626 Surplus / (Deficit) $ 4 46,422 $ 31,917 $ 35,429 $ 16,166 $ (27,453) $ (47,965) FUND BALANCE Ending Balance $ 4 46,423 $ 399,176 $ 4 34,605 $ 4 50,771 $ 4 23,317 $ 3 75,352 Change ($) $ (47,247) $ 35,429 $ 16,166 $ (27,454) $ ( 47,965) Change (%) -11% 9% 4% -6% -11% CSA 57 (Woods Cove) Service & Sphere Review Page 12 of 21 GOVERNANCE CSA 57 is a dependent special district governed by the County Board of Supervisors. All CSAs are formed and operate pursuant to the County Service Area Law (Government Code Section 25210 et seq.). County Supervisors receive no additional compensation for their CSA responsibilities. The County’s Community Development & Infrastructure Department (previously known as the Planning and Public Works Departments) manages the services related to CSA 57. The Board of Supervisors holds public hearings when considering any annual charges and/or work programs overseen by the Board. Local Accountability & Structure The current Board is as follows: Table 8: Board of Directors Board Member Supervisorial District Term of Office First District (Live Oak, Soquel, Summit, First Elected: 2020 Manu Koenig Santa Cruz Gardens, Next Election: Primary 2028 Carbonera, and parts of Scotts Valley & Capitola) Second District (Aptos, Freedom, Corralitos, First Elected: 2012 Zach Friend La Selva Beach, and parts of Next Election: Primary 2024 Capitola & Watsonville) Third District First Elected: 2022 Justin Cummings (Santa Cruz, Bonny Doon, Next Election: Primary 2026 North Coast) Fourth District First Elected: 2022 Felipe Hernandez (Pajaro Valley, Watsonville) Next Election: Primary 2026 Fifth District (San Lorenzo Valley, most of First Elected: 2012 Bruce McPherson Scotts Valley, parts of Santa Next Election: Primary 2024 Cruz, and Paradise Park) CSA 57 (Woods Cove) Service & Sphere Review Page 13 of 21 Challenges and Opportunities Both independent and dependent special districts are tasked with operating in an efficient and transparent manner on a regular basis. LAFCO staff has taken the position that public agencies should always prepare and consider future opportunities and potential challenges in order to properly provide and sustain adequate services to their constituents. The following section explores possible actions that should be considered by the CSA. Website Requirements Senate Bill 929 was signed into law in September 2018 and requires all independent special districts to have and maintain a website by January 1, 2020. SB 929 identifies several components that must be found within an agency’s website. Additionally, the Special District Leadership Foundation (SDLF), an independent, non-profit organization formed to promote good governance and best practices among California’s special districts, has also outlined recommended website elements as part of its District Transparency Certificate of Excellence. This program was created as an effort to promote transparency in the operations and governance of special districts to the public. Based on SB 929’s criteria and the recommendations set by the SDLF; LAFCO conducted a thorough review of the CSA’s website even though said law only applies to independent special districts. Table 7 summarizes staff’s findings on whether the website is meeting the statutory requirements. At present, the CSA does not meet the statutory requirements under SB 929 and SDLF’s website transparency criteria. In fact, LAFCO could not find any reference to CSA 57 on the County’s website. The financial information used to conduct LAFCO’s analysis for this service review was available within the County’s budget and audit webpages, but were retrieved after a thorough examination of the fiscal documentations. There is currently no financial information available exclusively for CSA 57 at this time. It is LAFCO’s recommendation that the County develop a website or dedicate a webpage for CSA 57 information. This recommendation is consistent with previous requests for other CSAs within Santa Cruz County. Table 57: Website Transparency Website Components Checkmark (Yes) Required Items (SB 949 Criteria and SDLF Benchmarks) 1. Names and Contact Information of Board Members* 2. Board Member Term Limits 3. Names of Key Staff, including General Manager 4. Contact Information for Staff 5. Election/Appointment Procedure & Deadlines 6. Board Meeting Schedule* 7. Mission Statement 8. Description of District's Services/Functions and Service Area 9. Authorizing Statute/Enabling Act CSA 57 (Woods Cove) Service & Sphere Review Page 14 of 21 10. Adopted District Budgets* 11. Financial Audits* 12. Archive of Board Meeting Agendas & Minutes* 13. Link to State Controller's Webpages for District's reported Board Member and Staff Compensation 14. Link to State Controller's Webpages for District's reported Financial Transaction Report 15. Reimbursement & Compensation Policy / Annual Policies 16. Home Page Link to Agendas/Board Packets 17. SB 272 - Compliance-Enterprise Catalogs 18. Machine Readable/Searchable Agendas 19. Recipients of Grant Funding or Assistance 20. Link or Copies of LAFCO’s Service & Sphere Reviews Total Score (out of a possible 20) 0 (0%) Additional Items (SDLF’s Recommended Elements) 1. Board Member Ethics Training Certificates 2. Picture, Bio, and Email Addresses of Board Members 3. Last Three Years of Audits 4. Financial Reserves Policy 5. Online/Downloadable Public Records Act Request Form 6. Audio or Video Recordings of Board Meetings 7. Map of District Boundaries/Service Area 8. Link to CSDA Mapping Program 9. General Description of Special Districts or Link to www.districtmakethedifference.org 10. Link to Most Recently Filed to FPPC Forms Total Score (out of a possible 10) 0 (0%) *Footnote: Senate Bill 929 Statutory Requirements LAFCO Staff Recommendation: LAFCO encourages more transparency from CSA 57 by sharing online information on how residents can participate in the CSA’s decision- making process and future actions. The CSA is not subject to SB 929, but as a dependent district that provides various services, it should create a webpage dedicated to CSA 57 to fulfill the requirements under SB 929 to ensure transparency at its highest level. CSA 57 (Woods Cove) Service & Sphere Review Page 15 of 21 SPHERE OF INFLUENCE Cortese-Knox-Hertzberg Act City and special district spheres of influence define the probable physical boundaries and service area of a local agency, as determined by the Commission (Government Code Section 56076). The law requires that spheres be updated at least once every five years either concurrently or subsequently in preparation of Municipal Service Reviews. Spheres are determined and amended solely at the discretion of the Commission. In determining the sphere of influence for each local agency, the Commission is required by Government Code Section 56425(e) to consider certain factors, including: ➢ The present and planned uses in the area, including agricultural and open space lands; ➢ The present and probable need for public facilities and services in the area; ➢ The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide; ➢ The existence of any social or economic communities of interest in the area if the commission determines that they are relevant to the agency; and ➢ 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. Sphere Boundary CSA 57’s original sphere was adopted on March 7, 2001 and is coterminous with its service area, as shown in Figure 1 on page 3 and Figure 5 on page 17. Staff believes that the current sphere boundary reflects CSA 57’s future, and therefore, is recommending that the Commission reaffirm the existing sphere of influence. CSA 57 (Woods Cove) Service & Sphere Review Page 16 of 21 Figure 5: Current Sphere Map CSA 57 (Woods Cove) Service & Sphere Review Page 17 of 21 DISTRICT SUMMARY CSA 57 (Woods Cove) California Government Code, Section 25210 et seq. Formation (County Service Area Law) County Board of Supervisors; five members; elected at-large to Board of Trustees a four-year term Matt Machado, Deputy Chief Administrative Officer and Director Contact Person of Community Development & Infrastructure Employees 0 full-time employees Various sized and length storm drain pipes, inlets, manholes, Facilities headwalls, energy dissipators, check dams, outfalls, storm drain markings, open channels, trash rack, etc. District Area 167 acres (74 parcels) Sphere of The sphere boundary goes beyond the jurisdictional boundary. Influence Total Revenue = $48,661 FY 2022-23 Audit Total Expenditure = $96,626 Projected Net Position (Ending Balance) = $375,352 Mailing Address: 701 Ocean Street, Room 410 Santa Cruz CA 95060 Phone Number: 831-454-2160 Contact Information Email Address: dpwcsa@santacruzcountyca.gov Website: https://www.dpw.co.santa-cruz.ca.us/Home/CSAs.aspx (no website/webpage currently dedicated to CSA 57) Annual public meeting is held by the Board of Supervisors to Public Meetings adopt annual charges. Mission N/A Statement CSA 57 (Woods Cove) Service & Sphere Review Page 18 of 21 SERVICE AND SPHERE REVIEW DETERMINATIONS The following service and sphere review determinations fulfill the requirements outlined in the Cortese-Knox-Hertzberg Act. Service Provision Determinations Government Code Section 56430 requires LAFCO to conduct a municipal service review before, or in conjunction with, an action to establish or update a sphere boundary. Written statements of determination must be prepared with respect to each of the following: 1. Growth and population projections for the affected area. CSA 57 encompasses the community of Woods Cove in unincorporated county territory. It is estimated that approximately 300 residents currently live within the CSA’s jurisdiction. LAFCO staff projects that the CSA’s population will still be around 300 by 2040. 2. The location and characteristics of any disadvantaged unincorporated communities within or contiguous to the sphere of influence. In 2020, the California statewide median household income was $78,672, and 80% of that was $62,938. Based on LAFCO’s analysis, there are no disadvantaged unincorporated communities within or contiguous to the District’s sphere boundary. 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. CSA 57 does not provide water, sewer, or fire protection to the community. 4. Financial ability of agencies to provide services. CSA 57’s primary source of revenue is from service charges. CSA 57’s fund balance ended with approximately $375,000 in FY 2022-23. The CSA is currently solvent; however, recent fiscal years have incurred consecutive deficits because of the additional cost incurred for the development of the Long-Term Maintenance and Capital Replacement Plan. The cost of the additional repairs is still being determined, and will be incurred in FY 2024-25. 5. Status of, and opportunities for, shared facilities. The County should consider utilizing its existing website to promote and share more information about CSA 57’s finances, activities, and governance. 6. Accountability for community service needs, including governmental structure and operational efficiencies. LAFCO encourages more transparency from CSA 57 by sharing online information on how residents can participate in the CSA’s decision-making process and future actions. 7. Any other matter related to effective or efficient service delivery, as required by commission policy. No additional local LAFCO policies are specifically relevant to this service review. CSA 57 (Woods Cove) Service & Sphere Review Page 19 of 21 Sphere of Influence Determinations Government Code Section 56425 requires LAFCO to periodically review and update spheres of influence in concert with conducting municipal service reviews. Spheres are used as regional planning tools to discourage urban sprawl and encourage orderly growth. Written statements of determination must be prepared with respect to each of the following: 1. The present and planned land uses in the area, including agricultural and open- space lands. The present and planned land uses are based on the general plan from the County, which range from urban to rural uses. The general plan anticipates growth centered on existing urban areas and the maintenance of agricultural production, rural residential uses, and environmental protection in rural areas. 2. The present and probable need for public facilities and services in the area. CSA 57 may benefit from creating zones or reevaluating how to operate the storm water drainage system to ensure revenues offset rising costs. 3. The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide. CSA 57 is only responsible for storm water drainage services. It is LAFCO’s understanding that the drainage facilities are operating efficiently. 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. It is unknown if the CSA has a resident-based governance body. It may be beneficial to consider forming a governance body to help the County make decisions for the community, if none exist at this time. 5. For an update of a sphere of influence of a city or special district that provides public facilities or services related to sewers, municipal and industrial water, or structural fire protection, 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. In 2020, the California statewide median household income was $78,672, and 80% of that was $62,938. Based on LAFCO’s analysis, there are no disadvantaged unincorporated communities within or contiguous to the District’s sphere boundary. CSA 57 (Woods Cove) Service & Sphere Review Page 20 of 21 APPENDICES Appendix A: 2001 Formation Resolution Appendix B: 2014 Reorganization Resolution Appendix C: 2024 Long-Term Maintenance & Capital Replacement Plan CSA 57 (Woods Cove) Service & Sphere Review Page 21 of 21 APPENDIX A: 2001 Formation Resolution APPENDIX B: 2014 Reorganization Resolution APPENDIX C: 2024 Long-Term Maintenance & Capital Replacement Plan WOODS COVE COUNTY SERVICE AREA #57 PART OF: GRAHAM HILL ESTATES SUBDIVISION IMPROVEMENTS, TRACT 1339 LONGTERM MAINTENANCE & CAPITAL REPLACEMENT PLAN MAY 2024 Table of Contents Development History Page 3 LAFCO Review Page 3 Purpose Page 3 Long-Term Maintenance Plan Page 3 Capital Replacement Plan Page 5 2 Development History The development area served by County Service Area (CSA) 57 was originally a subdivision named Graham Hill Estates, Tract map 1339, later changed in name to Woods Cove. This CSA was formed in 2001, with independent storm drainage and sanitary sewage systems. The two types of facilities were administratively separated in 2014 with the sanitation components being redesignated CSA 10. CSA 57 contains 62 acres of land area, with 63 residential zoned lots and 6 larger open-space and recreation zoned parcels. The original tract consisted of 60 parcels. Three additional parcels were added to the County Service Area in 2003. LAFCO Review LAFCO last performed a typical sphere of influence review in June of 2019 as a mandated means of State oversite of county service areas. LAFCO concluded that CSA 57 was being operated responsibly, and that no amendments were to be recommended to the sphere of influence. They did identify need “to develop a long-term maintenance and capital replacement plan”. This report presents those two plans. Purpose The Long-Term Maintenace Plan covers administrative, operational, and routine maintenance activities. These are activities that are needed for the proper functioning of the existing storm drain system. The Capital Replacement Plan is a long-term financing strategy that allows the CSA to complete capital improvement replacement and upgrade projects over time and as necessary. Long-Term Maintenance Plan For the four year period 2015 through 2019 actual DPW drainage expenditures on record for CSA maintenance averaged $21,471. In present year 2023 this figure would now be increased to $29,320 (CalTrans CCI of 5.33% for a stable multi-decade period 1972 to 2003). This is a similar value to the rule-of-thumb guideline of estimating maintenance using 1.25% of the 2023 estimated capital replacement value of $2,320,000 for the entire CSA maintained drainage infrastructure, which would yield $29,000. This ~1.1% variation in figures indicates that actual prior history of drainage expenditures is roughly in-line with reasonable estimated maintenance cost guidelines. For the four year period 2015 through 2019 DPW drainage revenues on record for CSA parcel collections and accrued interest averaged $38,887. In present year 2023 this figure should now be represented as $53,103 (CalTrans CCI of 5.33% for a stable multi-decade period 1972 to 2003). Divided by the 63 assessed parcels this would equate to a 2023 annual assessment of about $843. In actuality the 2023 assessment is presently somewhat lower at approximately $660 per parcel. This is because the actual long-term CPI increase typically used to raise assessments is closer to 2.25%, rather than being related to real maintenance costs, or published 3 construction-related cost indexes. This points to a future funding problem for the capital replacement plan to be discussed in a following section of this report. Types and Schedule of Maintenance Performed: 4 C S A -5 7 S t o r m d r a in S y s t e m M a in te n a n ce S ch e d u le R e cu rrin g La b o r Ite m s: T re e -fa ll In sp e ctio n & R e m o va l G ra ss & B ru sh R e m o va l W Q M H D e vice Se rvicin g /V a ccu u m Su m p s Flu sh & V a ccu u m P ro b le m P ip e lin e s & C a tch B a sin s Stre e t Sw e e p in g W Q Ste n cilin g /B a d g in g In sp e ctio n E ro sio n In sp e ctio n & R e p a irs V a n d a lism R e p a irs O p e n C h a n n e l Se d im e n t/D e b ris R e m o va l C h e ck D a m Se d im e n t/D e b ris R e m o va l, In sp . & R e p a ir T o rq u e Fla n g e B o lts & C k G ro u n d M o u n ts - Fo re st P ip e P h o to /V id e o D o cu m e n ta tio n - Se rvice d E xte rn a ls C lo se d C ircu it T V - V id e o P ip e s In te rn a lly C a p ita l R e p la ce m e n t/U p g ra d e S ch e d u le Fu tu re S ch e d u le d Ite m s: R e p la ce W Q Ste n cilin g /B a d g in g - W o rn O ff R e p la ce H a rd w a re - C o rro sio n R e p la ce C h a in lin k Fe n cin g - C o rro sio n R e p la ce G a b io n C h e ck D a m s - C o rro sio n # Pertains to LARG E dam aging events of w ind, rain, fire, vandalism , etc… C o m p re h e n siv e Fie ld A sse ssm e n t Id e n tifie d A ctio n Ite m s: * Past Due In sta ll C o u n ty ke ye d p a d lo ck @ g a te , O ce a n St. E xt. Se rvice 1 2 " R C P Lin e -F, Stre e t-A (Flu sh & V a c G ra ve ls) U p g ra d e W Q M H B a ffle s to P ro p e r Fu n ctio n a lity R e p a ir H D P E P ip e lin e H a ckin g - V a n d a lism R e p a ir C h a in lin k Fe n ce & Fa b ric M o u n tin g - V a n d a lism R e p a ir O u tfa ll Fo u n d a tio n U n d e rm in in g - E ro sio n R e p la ce W Q Ste n cilin g /B a d g in g - W o rn O ff R e p la ce G ra te H a rd w a re - C o rro sio n ecivreS X * X * edargpU X riapeR XXX ecalpeR XX #desaB tnevEX XXXX X yllaunnA-iB XX yllaunnA XXXXX sraeY-5 yrevE XXXX sraeY-01 yrevE X X X * sraeY-51 yrevE X X * sraeY-03 yrevE X sraeY-04 yrevE X JANX FEBX M S ARCH X e a so n APRIL XX X XX a l S c M AY -----> -----> -----> -----> -----> XX h e d u le fo r A JUNE JULY < ----- < ----- < ----- < ----- -----> -----> < ----- < ----- < ----- < ----- < ----- < ----- < ----- < ----- < ----- X < ----- < ----- < ----- < ----- < ----- < ----- < ----- < ----- < ----- < ----- < ----- < ----- c tiv ity AUG SEPT X -----> X -----> X -----> X -----> X -----> X -----> X -----> X -----> X -----> X -----> X -----> X -----> <<<< < OCT ----- ----- ----- ----- ----- NOV XXXXX X DEC X o Brush Removal: Bi-annually along forest HDPE pipeline and open channels of upper meadows o Tree-fall Removal: Scout HDPE forest line after major saturation rain/wind events; at least bi-annually o w/removals upon noted occurrence. o Open Channel Sediment/Debris Removal: Within gabion check dam basins every 5 years o Check Dam Repairs: Inspect gabion wires every 5 years for galvanizing coating/corrosion. Anticipate replacement at 40 years. o Water Quality Device Servicing: Vacuum sump and check baffle position and mounts bi-annually. o WQ stenciling/badging: Inspect annually, re-stencil/badge street catch basins, approx. every 10 years. o Vandalism Repairs: Promptly as noticed upon the various other inspections, or as reported. o Hardware Replacements: 15 year interval for galvanized bolts, studs, nuts, washers within/near water flows. Chainlink fall-protection fencing (mesh, posts, hardware) at 30 year interval. o HDPE Pipeline S.S. Bolting @ Fittings and MHs: Check tightness to load spec every 10 years or after any access use. o Pipeline Filming External: HDPE forested line every 5 years in entirety; every occurrence of tree-fall across line. Document bolted joints of fittings, MHs, pipe anchors. o Pipeline Filming Internal: CCTV entire system every 10 years. o Still photos: Document bolted joints of fittings, MHs, pipe anchors, Outfalls, Inlets/Catch Basins every 5 years. Administrative Management: o Review Video & Photos: 1, 5 & 10 year intervals based on activity, reported conditions. o Filing Documentation: Produce organized reports, maintain central storage directory locations. o Annual Budget and Audit: Co-ordinate involved Field Crew, SWM office and Fiscal staff. Capital Replacement Plan It is the difference between revenues and expenditures that can be set aside to accrue and earn interest for future replacement of failing infrastructure. In 2023 terms, the difference between $53,000 collected and a $29,000 expenditure leaves a $24,000 annual accrual. This accrual can be projected into the future with just 3.0% inflation/interest adjustments: 5 Y( T e2 o a0 t r2 a l 3 ) L 123 456789 1 0 1 1 1 2 1 3 1 4 1 5 1 6 1 7 1 8 1 9 2 0 2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 2 9 3 0 o n1 gs T e t 3 $ r m 0 Y 1 , Ar s $ 2 $ 2 $ 2 $ 2 $ 2 $ 2 $ 2 $ 2 $ 3 $ 3 $ 3 $ 3 $ 3 $ 3 $ 3 $ 3 $ 3 $ 3 $ 4 $ 4 $ 4 $ 4 $ 4 $ 4 $ 4 $ 5 $ 5 $ 5 $ 5 $ 5 1 4 n.445 67789012 3 456789 0 234578 013461 n ,,, ,,,,,,,, , ,,,,,, , ,,,,,, ,,,,,, u 074 20865432 2 223356 8 036937 273958 a 026 21251015 2 140916 5 844868 551151 l 002 52377254 2 852138 8 477667 181080 C a2 pn i td a 3 $ l R e 0 Y$$$ $$$$$$$$ $ $$$$$$ $ $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 $ 1 2 , 7 pr566 66667777 8 888999 9 000111 222337 l a s .801 35791368 0 358036 9 258148 159371 c , 2 , 0 , 8 , 6 , 5 , 5 , 5 , 6 , 7 , 0 , 2 , 6 , 0 , 5 , 1 , 7 , 4 , 2 , 1 , 1 , 2 , 3 , 6 , 9 , 4 , 9 , 6 , 4 , 2 , 2 , 4 e 500 56354908 3 541588 7 417271 730887 m 422 66395599 8 785815 4 940109 210203 e n3 tr Rd e 3 $ s0 6 e $$$ $$$$$$$$ $ $$$$$$ $ $$$$$$ $$$$$ r Y111 11111111 1 222222 2 222222 23333 , 7 v e r s445 55667789 9 001223 4 456778 901232 A .150 49383940 5 173063 0 753097 644337 ,,, ,,,,,,,, , ,,,,,, , ,,,,,, ,,,,,, c 360 51989140 7 668297 7 930904 090520 c 941 14230192 2 047901 2 484363 538019 r u 800 05072938 9 088430 1 313424 797951 a l : The sums collected after 30, 60, and 90 years prove to be useful amounts, but grossly deficient if they were needed at some far future date to replace the entirety of the drainage systems, whether incrementally or at some terminal end. An additional 60 to 90 years of life is a reasonable expected service lifespan for much of the drainage infrastructure materials that exist within CSA57. Some items will need replacement significantly sooner, such as the gabion mesh check dams. (Table in 2022 dollars – adjust for 2023 = $2,320,000) To better illustrate, one can determine the future worth of the present day $2,320,000 capital value of the drainage systems. Notice that with time passage available funds increasingly lose ground. For 30 years: $11,017,000 future worth in 2053 vs. $1,142,000 accrued, or 10.4% For 60 Years: $52,313,000 future worth in 2083 vs. $2,771,000 accrued, or 5.3% For 90 Years: $248,414,000 future worth in 2113 vs. $6,727,000 accrued, or 2.7% The capital replacement funding problem lies in the stark difference between the stable long-term CalTrans CCI rate of 5.3% greatly out-pacing over time the allowed CPI adjustment on collections of 2.5% plus any interest earned on deposited/invested funds. Over the initial history of the CSA earned interest on accrued funds appears to have averaged little better than 0.7%. So combined annual adjustments on accruals is about 3.2%, falling far behind 5.3%. 6 Making matters worse, recent construction index trends have accelerated over the past decade to values much higher than the older long-term values used in this presentation. It is unknown whether this pace of increase will abate. California State Department of General Services has shown recent dramatic increases in construction costs (maintenance proxy) of 13.4% in 2021 and 9.3% in 2022. From January 2011 to May 2021 monthly cost increases were more stable over the period at 0.20% on average, or 2.39% annually. From May 2021 to March 2023 the cost increase have greatly inflated, averaging 1.09% monthly or 13.13% annually. Likewise, Cal Trans cost index shows an even longer term persistent increase in construction (capital replacement proxy) costs. These recent unstable trends break down any pre-planning and attempt at longer term fund management. It is clear that the interest earned on accrued funds needs to be significantly greater if it is to compensate. There are safe investments such as US treasuries that would yield well above 0.7%, and could even close the 2.1% performance gap that exists. Alternatively, perhaps the viewpoint, and planning, should be that collected and accrued funds are only expected to cover partial and modest replacements of the system, and any time a significant replacement is needed that a different mechanism, such as bond issuance in then-current day funds be pursued; the future debt burden typically atrophying with inflationary time passage. It should be pointed out that a catastrophic forest fire would literally liquidate and then consume the above- ground HDPE pipeline that routes through the adjacent forest. This untimeable replacement could be incurred in any year, and would be a very substantial expenditure. Presently, and over the medium term, there are insufficient funds accrued to cover such an expenditure. Bond issuance could provide a replacement solution for such event. Possibly an insurance policy could be obtained. Re-evaluation of the need for this unusual pipe application could alternately be reviewed, and perhaps cheaper routing methods substituted. 7