Wdcwa JPA Service Review - Adopted 07.27.23

Joint Powers Agency Service Review for the LAFCo No. 23-02 Adopted July 27, 2023 YOLO LAFCO JOINT POWERS AGENCY SERVICE REVIEW Joint Powers Agency Service Review for the Woodland-Davis Clean Water Agency (LAFCo No. 23-02) SUBJECT AGENCY: Woodland-Davis Clean Water Agency Regional Water Treatment Facility Office 855 County Road 102 Woodland, CA 95776 www.wdcwa.com Board Members: Josh Chapman, Chair (Davis City Council) Tom Stallard, Vice-Chair (Woodland City Council) Bapu Vaitla, Director (Davis City Council) Rich Lansburgh, Director (Woodland City Council) Camille Kirk*, Director (UC Davis) Angel Barajas*, Director (Yolo County) *Participating Agency, Non-Voting Member Staff Contact(s): Tim Busch, WDCWA General Manager (City of Woodland Principal Utilities Engineer) (530) 661-5963 tim.busch@cityofwoodland.org Stan Gryczko, WDCWA Operations Manager (City of Davis Public Works Utilities & Operations Director) (530) 747-8292 sgryczko@cityofdavis.org CONDUCTED BY: Yolo Local Agency Formation Commission 625 Court Street, Suite 107 Woodland, CA 95695 (530) 666-8048 www.yololafco.org Commissioners: Olin Woods, Chair, Public Member Commission Alternates: Gary Sandy, Vice Chair, County Member Richard DeLiberty, Public Member Norma Alcala, City Member Angel Barajas, County Member Bill Biasi, City Member Gloria Partida, City Member Lucas Frerichs, County Member Staff: Christine Crawford, Executive Officer Terri Tuck, Admin Specialist/Commission Clerk Eric May, Counsel Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 ii YOLO LAFCO JOINT POWERS AGENCY SERVICE REVIEW Contents BACKGROUND ............................................................................................................................................ 1 Role and Responsibility of LAFCo ............................................................................................................. 1 Purpose of a JPA Service Review ............................................................................................................. 1 AGENCY PROFILE ....................................................................................................................................... 2 MUNICIPAL SERVICE REVIEW .................................................................................................................. 3 Potentially Significant MSR Determinations .............................................................................................. 3 LAFCo Municipal Service Review: ............................................................................................................ 3 1. Growth and Population ...................................................................................................................... 3 2. Capacity and Adequacy of Public Facilities and Services ................................................................. 4 4. Financial Ability .................................................................................................................................. 7 5. Shared Services and Facilities ........................................................................................................ 10 6. Accountability, Structure, and Efficiencies ....................................................................................... 11 7. Status of Previous MSR Recommendations ................................................................................... 12 Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 ii YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY BACKGROUND ROLE AND RESPONSIBILITY OF LAFCO The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, as amended (“CKH Act”) (California Government Code §§56000 et seq.), is LAFCo’s governing law and outlines the requirements for preparing Municipal Service Reviews (MSRs) for periodic Sphere of Influence (SOI) updates. MSRs and SOIs are tools created to empower LAFCo to satisfy its legislative charge of “discouraging urban sprawl, preserving open-space and prime agricultural lands, efficiently providing government services, and encouraging the orderly formation and development of local agencies based upon local conditions and circumstances (§56301). CKH Act Section 56301 further establishes that “one of the objects of the commission is to make studies and to obtain and furnish information which will contribute to the logical and reasonable development of local agencies in each county and to shape the development of local agencies so as to advantageously provide for the present and future needs of each county and its communities.” Based on that legislative charge, LAFCo serves as an arm of the State; preparing and reviewing studies and analyzing independent data to make informed, quasi-legislative decisions that guide the physical and economic development of the state (including agricultural uses) and the efficient, cost-effective, and reliable delivery of services to residents, landowners, and businesses. While SOIs are required to be updated every five years, they are not time-bound as planning tools by the statute, but are meant to address the “probable physical boundaries and service area of a local agency” (§56076). SOIs therefore guide both the near- term and long-term physical and economic development of local agencies, and MSRs provide the near- term and long-term time-relevant data to inform LAFCo’s SOI determinations. PURPOSE OF A JPA SERVICE REVIEW LAFCo has broad discretion in conducting informational studies, including geographic focus, scope of study, and the identification of alternatives for improving the efficiency, cost-effectiveness, accountability, and reliability of public services. In 2017, the cities and the County requested LAFCo apply its MSR process to some of the local joint power authorities/agencies (JPAs) in order to provide additional oversight1. The intent of the JPA Services Review is to provide a comprehensive inventory and analysis of the services provided by local JPAs, service areas, and evaluation of the finances, structure and operation of the local agency and discuss possible areas for improvement and coordination. From the state required MSR determinations, the following determinations remain relevant to the comprehensive inventory and analysis of local JPAs: 1. Growth and population projections for the service area; 2. Present and planned capacity of any public facilities, adequacy of services, and infrastructure needs or deficiencies; 3. Financial ability of agencies to provide services; 4. Status of, and opportunities for, shared services and facilities; and 5. Accountability for community service needs, including governmental structure and operational efficiencies. The JPA Service Review is organized according to these determinations listed above. Information regarding each of the above issue areas is provided in this document. This report has been organized in a checklist format to focus the information and discussion on key issues that may be particularly relevant to the subject agency. 1 Yolo Local Government Transparency and Accountability Program adopted by the cities and County Oct/Nov 2017 Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 1 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY AGENCY PROFILE The Woodland-Davis Clean Water Agency (WDCWA or “Agency”) is a joint powers authority formed in 2009 responsible for managing a sustainable, high-quality water supply for the cities of Woodland and Davis, and UC Davis. The Agency constructed and is now managing a regional surface water supply project to serve more than two-thirds of the urban population of Yolo County. The Agency is overseen by a six- member Board comprised of two City Council Members from each city, and two non-voting members, one each from UC Davis and Yolo County. The primary goals of the surface water project include: • Provide a new water supply to help meet existing and future needs • Improve drinking water quality • Improve the quality of treated wastewater Project Detail The project includes a jointly owned and operated intake on the Sacramento River (WDCWA in partnership with Reclamation District 2035), a raw water pipeline connecting the intake to a regional water treatment facility, and separate pipelines delivering treated water to Woodland, Davis, and UC Davis. Woodland and Davis each made improvements to their own water supply infrastructure, including distribution pipelines, water storage tanks and booster pump stations. Construction of the project facilities, including the regional water treatment facility began April 2014. The project diverts up to 45,000 acre-feet of water per year from the Sacramento River under WDCWA’s SWRCB water right. Water rights were granted in March 2011 and are subject to conditions imposed by the State. Water diversions are limited during summer and other dry periods. A more senior water right for 10,000 acre-feet was purchased from the Conaway Preservation Group (a majority landowner of Reclamation District 2035) to provide summer water supply. Groundwater will continue to be used in Davis during periods when demand for water cannot be met with surface water supplies alone. The City of Woodland will rely on its Aquifer Storage Recovery (ASR) wells to meet peak demand and continue to maintain groundwater wells as a backup supply. The water treatment facility can supply up to 30 million gallons of water per day, with an option for future expansion to 34 million gallons per day. Of the 30 million gallons per day, Woodland's share of treated surface water is 18 million gallons per day, Davis' share is 10.2 million gallons per day, and UC Davis’ share is 1.8 million gallons per day. Approximately 4.5 miles of pipeline transports "raw" water from the surface water intake on the Sacramento River to the water treatment plant located south of Woodland. From there, the treated water travels 7.8 miles via pipeline to Davis, and approximately 1.4 miles to Woodland. The cost for project development and implementation was $279.2 million. The bulk of the project is funded through customer water rates. Actions to reduce Project cost impacts to customers, included: • Secured state and federal funding to reduce projected rate increases. • Partnering with Reclamation District 2035 to jointly finance, construct, own, and operate the water intake facility. • Awarding a Design-Build-Operate (DBO) service contract for the construction of project facilities. The Agency selected CH2M Hill, a highly qualified contractor, to design, build, operate and maintain the water treatment facility. This resulted in lower construction costs and reduced fixed costs for operations for up to 15 years. • Appropriately sizing the water treatment facility based on detailed studies of current and future anticipated demand for water. With the completion and acceptance of all project capital facilities in 2016, the Agency’s focus has transitioned to overseeing operations and maintenance of facilities, management of water supply and deliveries pursuant to applicable water rights and delivery contracts and servicing long-term debt obligations. Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 2 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY Agency Staff The Cities of Davis and Woodland charge the WDCWA for administrative services provided throughout the year for use of administrative staff, accounting systems, and other administrative services provided to the Agency. The WDCWA General Manager is the City of Woodland Principal Utilities Engineer and the WDCWA Operations Manager is the City of Davis Public Works Utilities & Operations Director. The Agency also contracts for a part-time Board Secretary. The Agency has a significant contractual agreement with CH2M Hill for operation of the Water Supply Project. MUNICIPAL SERVICE REVIEW POTENTIALLY SIGNIFICANT MSR D ETERMINATIONS The MSR determinations checked below are potentially significant, as indicated by answers to the key policy questions in the checklist and corresponding discussion on the following pages. If most or all of the determinations are not significant, as indicated by “no” answers, the Commission may find that a MSR update is not warranted. Growth and Population Shared Services Capacity, Adequacy & Infrastructure to Accountability, Structure, and Efficiencies Provide Services Financial Ability Status of Previous MSR Recommendations LAFCO MUNICIPAL SERVICE REVIEW: On the basis of this initial evaluation, the required determinations are not significant, and staff recommends that an MSR is NOT NECESSARY. The subject agency will be reviewed again in five years per Government Code Section 56425(g). The subject agency has potentially significant determinations and staff recommends that a comprehensive MSR IS NECESSARY and has been conducted via this checklist. 1. Growth and Population Significant Potentially Growth and population projections for the affected area. Issue Significant No Issue a) Will development and/or population projections over the next 5-10 years impact the subject agency’s service needs and demands? b) Do changes in demand suggest a change in services? Discussion: According to the State Department of Finance population projections2, the City of Davis population decreased from 66,687 as of January 1, 2021 to 64,869 in 2022, a decrease of -2.7%. The City of Woodland population is estimated to have also declined from 60,999 as of January 1, 2021 to 60,137 in 2022, a 2 State of California Department of Finance Population Estimates for Cities, Counties, and the State – January 1, 2021 and 2022 Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 3 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY decrease of -1.4%. However, projections suggest the population countywide will go up 8% by 2030 and 19% in 20403. Growth and Population MSR Determination: Growth and population projections are not anticipated to impact the subject agency’s service needs and demands or suggest a change in services. The WDCWA manages the operation of the water diversion project and treatment facility that can supply up to 30 million gallons of water per day, with an option for future expansion to 34 million gallons per day. It is the responsibility of the cities of Woodland and Davis to manage demand and capacity to supply water. Groundwater will continue to be used in Davis during periods when demand for water cannot be met with surface water supplies alone. The City of Woodland can utilize Aquifer Storage Recovery (ASR) wells to meet additional demand and planned in its 2035 General Plan. Recommendation(s): None. 2. Capacity and Adequacy of Public Facilities and Services 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. Significant Potentially Issue Significant No Issue a) Are there any deficiencies in the infrastructure, equipment, and capacity of agency facilities to meet existing service needs for which the agency does not have a plan in place to resolve (including deficiencies created by new state regulations)? b) Are there any issues regarding the agency’s capacity and ability to meet the service demand of reasonably foreseeable future needs? c) Are there any service needs or deficiencies for disadvantaged unincorporated communities related to sewers, municipal and industrial water, and structural fire protection within or contiguous to the agency’s sphere of influence? d) Is the agency needing to consider climate adaptation in its assessment of infrastructure/service needs? Discussion: WDCWA’s infrastructure is relatively new considering its lifespan with construction being completed in 2016. Approximately 5.1 miles of pipeline transport "raw" water from the surface water intake on the Sacramento River to the water treatment plant located south of Woodland. From there, the treated water is conveyed via pipeline 7.8 miles to Davis, and up to 1.4 miles to Woodland. Additional information regarding project construction can be found on WDCWA’s website here: https://www.wdcwa.com/project-history Upon completion of the project, the Agency conveyed the infrastructure roughly within the cities to each city, whereby they would be responsible for the ownership, operation, maintenance, repair, replacement, modification, and improvement going forward. The WDCWA owns the infrastructure generally in the unincorporated areas, and there is a defined point where infrastructure and water ownership transfers to 3 Report P-2A: Total Estimated and Projected Population for California and Counties: July 1, 2010 to 2060. Projections Prepared by Demographic Research Unit, California Department of Finance, July 2021. Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 4 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY the cities. The Agency has no obligation to operate, maintain, repair, replace, modify, or improve any member individually owned project facilities. Woodland Area WDCWA Infrastructure The water treatment facility can supply up to 30 million gallons of water per day, with an option for future expansion to 34 million gallons per day. The WDCWA water service provides an additional source of water supply to the cities to create more system resiliency. Groundwater will continue to be used in Davis during periods when demand for water cannot be met with surface water supplies alone. The City of Woodland can utilize Aquifer Storage Recovery (ASR) wells to meet additional demand. State law regarding service needs or deficiencies for disadvantaged unincorporated communities related to water are not applicable to JPAs. Regardless, disadvantaged unincorporated communities contiguous to the cities of Woodland and Davis have been connected to city water service. WDCWA was formed and the project implemented to create additional water supplies for resiliency to adapt to climate changes. Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 5 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY Davis Area WDCWA Infrastructure Capacity and Adequacy MSR Determination: WDCWA’s infrastructure is relatively new considering its lifespan, with construction being completed in 2016. The water treatment facility can supply up to 30 million gallons of water per day, with an option for future expansion to 34 million gallons per day. The WDCWA water service provides an additional source of water supply to the cities to improve their water quality and resiliency to adapt to climate changes. Groundwater will continue to be used in Davis during periods when demand for water cannot be met with surface water supplies alone. The City of Woodland can utilize Aquifer Storage Recovery (ASR) wells to meet additional demand. Recommendation(s): None. Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 6 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY 4. Financial Ability Financial ability of agencies to provide services. Significant Potentially Issue Significant No Issue a) Is the subject agency in a stable financial position, i.e. does the 5- year trend analysis indicate any issues? b) Is there an issue with the organization’s revenue sources being reliable? For example, is a large percentage of revenue coming from grants or one-time/short-term sources? c) Is the organization’s revenue sufficient to fund an adequate level of service, necessary infrastructure maintenance, replacement and/or any needed expansion? Is the fee inconsistent with the schedules of similar local agencies d) Does the subject agency have a capital improvement plan (CIP)? Has the agency identified and quantified what the possible significant risks and costs of infrastructure or equipment failure? Does the agency have a reserve policy to fund it? e) Does the agency have any debt, and if so, is the organization’s debt at an unmanageable level? Does the agency need a clear debt management policy, if applicable? f) Can the subject agency improve its use of generally accepted accounting principles including: summaries of all fund balances, summaries of revenues and expenditures, general status of reserves, and any un-funded obligations (i.e. pension/retiree benefits)? Does the agency have accounting and/or financial policies that guide the agency in how financial transactions are recorded and presented? g) Does the agency staff need to review financial data on a regular basis and are discrepancies identified, investigated and corrective action taken in a timely manner? The review may include reconciliations of various accounts, comparing budgets-to-actual, analyzing budget variances, comparing revenue and expense balances to the prior year, etc. If the agency uses Yolo County’s financial system and the County Treasury, does the agency review monthly the transactions in the County system to transactions the agency submitted to the County for processing? h) Does the agency board need to receive regular financial reports (quarterly or mid-year at a minimum) that provide a clear and complete picture of the agency’s assets and liabilities, fully disclosing both positive and negative financial information to the public and financial institutions? Discussion: The 5-year financial trend for the total of all these funds is shown below4. The audits prepared for the WDCWA through 2020 do not include a Statement of Revenues, Expenditures, and Changes in Fund Balance (only net position) which is not typical, and therefore, the fund balance information is sourced instead from each year’s 4th Quarter Financial Report. However, these are unaudited numbers and there’s 4 WDCWA 4th Quarter Financial Reports for the years ended 2018-2022 Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 7 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY a discrepancy between the reported yearend balance for FYs 2019/20 and opening balance for FY 2020/21 as highlighted below that needs to be resolved. Financial Position and Ability to Provide/Maintain Services The 5-year trend indicates that WDCWA is in a relatively stable financial position. Its fund balance has decreased 12% over the last five years, however, this could be due to the FY 2020/21 discrepancy in the opening balance being reported $2.2 million lower than the previous closing balance that has yet to be resolved. In addition, the Agency did lower the reserve amount, which was maintained at a higher-level during construction, since ongoing operations costs and revenues are consistent. Revenues have Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 8 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY increased over the last five years and are keeping pace with expenditures for the last three FYs (since project construction was completed). Agency revenues are entirely derived from contributions from member agencies. To support Agency operations, maintenance and debt obligations, the cities of Woodland and Davis have adopted respective multi-year water rate ordinances consistent with the public approval process required by Proposition 218. Therefore, WDCWA’s revenue sources are reliable. Capital costs of the Agency, as defined by the JPA Agreement, include costs of construction, financing, acquiring, planning, designing, environmental documentation and permitting, and the funding of a reasonable construction reserve. As defined in the JPA Agreement, all project facilities, other than any "individually-owned project facilities" as specified in the JPA Agreement, shall be owned by and held in the name of the Agency for the benefit of project participants. Upon completion of construction of any individually owned project facility, the Agency will convey all of its right, title and interest in the completed individually owned project facility to the Member Cities, whereby the Member Cities would be responsible for the ownership, operation, maintenance, repair, replacement, modification and improvement. The Agency has no obligation to operate, maintain, repair, replace, modify or improve any individually owned project facilities. With the completion and acceptance of all project capital facilities in 2016, the Agency’s focus has transitioned to overseeing operations and maintenance of facilities, management of water supply and deliveries pursuant to applicable water rights and delivery contracts and servicing long-term debt obligations. The most significant expenses in order of magnitude include debt service (60% of total expenses in FY 2022), operations and maintenance (36% of total expenses in FY 2022), and administration/contract services (4% of total expenses in FY 2022). In September 2015, the Agency established a Contingency Reserve Fund which can be used to pay for (among other things) project capital improvements, repairs and replacements to the extent not covered under the Service Contract or Repair and Replacement Account. The balance in the Contingency Reserve Fund, as of June 30, 2020, was $1,532,370. WDCWA does not have a formal CIP at this time, however, WDCWA does occasionally have projects that are considered CIPs. Most such “projects” are rather minor repairs or design/construction component changes to improve operations. Since the Agency’s infrastructure is new, it will likely need a formal CIP in future when larger repairs/replacements become necessary. Agency Debt The development and construction of the Project was completed within the budget of $204.5 million, exclusive of $67.0 million for local facilities constructed and funded directly by the cities of Woodland and Davis. UC Davis funded an additional $7.7 million for campus-serving facilities. The bulk of the project was financed through a combined $206.8 million in low-interest State Revolving Fund loans secured by the cities of Davis and Woodland, to be re-paid through water rate revenues collected from water customers. The City of Davis holds WDCWA funds. Per WDCWA’s latest audit in 2020, it carries a significant amount of debt ($218 million) with total assets valued at $239 million. Debt payments are roughly 60% of total expenditures. Its current debt service payments extend until 2047. Its revenue sources are stable from water rates paid to the cities, which are contributed to the WDCWA. Accounting Practices WDCWA uses generally accepted accounting principles including summaries of revenues and expenditures and general status of reserves. Its Board received quarterly financial reports; however, quarterly reports could be improved by detailing the balances of all fund balances, including the Contingency Reserve Fund established in 2015. WDCWA funds were originally held at the City of Davis but have transferred and are now held by the City of Woodland. Staff may need to review financial data on a regular basis for discrepancies to be identified, Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 9 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY investigated and corrective action taken. LAFCo staff notified WDCWA on March 21, 2023, regarding a significant discrepancy in the closing June 30, 2020 and opening July 1, 2020 balance and it has not been resolved yet. Financial Ability MSR Determination: The 5-year trend indicates that WDCWA is in a relatively stable financial position. Since project construction was completed and all reimbursements resolved in 2019, the WDCWA has operated with a positive cash flow in the last three fiscal years. WDCWA holds a significant amount of debt at $218 million as of its latest audit in 2020 and roughly 60% of its expenditures goes towards debt service payments that will extend until 2047. The WDCWA may benefit from more involved financial oversight. The Agency was regularly audited each year up until 2020 but has not had an audit since. The fiscal year 2019/20 audit was completed late, and then the accounting transitioned from the City of Davis to the City of Woodland at the beginning of FY2020/21. Auditors are now in place to catch up and perform all audits after fiscal year 2019/20 was completed. Past audits have not included fund balance information, which is unusual in LAFCo staff experience. The quarterly financial reports present unaudited fund balance information, but it does not detail the different reserves used such as the Contingency Reserve Fund, which would be valuable information to operations staff. There is a discrepancy in the WDCWA’s financial reports between the closing yearend balance June 30, 2020, and the July 1, 2020, opening balance by more than $2 million that will need to be resolved in the upcoming audits. The 5-year trend shows the WDCWA’s fund balance has decreased 12% over the last five years, however, this could be due to this discrepancy. Recommendation(s): • The WDCWA Treasurer should review financial data on a regular basis and ensure any discrepancies are identified, investigated and corrective action taken in a timely manner. • WDCWA audits should include a Statement of Revenues, Expenditures, and Changes in Fund Balance including detail of any individual reserve accounts. 5. Shared Services and Facilities Status of, and opportunities for, shared facilities. Significant Potentially Issue Significant No Issue a) Are there any opportunities for the organization to share services or facilities with neighboring, overlapping, or other organizations that are not currently being utilized? Discussion: None. Shared Services MSR Determination: WDCWA was formed as a shared agency operation including the cities of Woodland and Davis, and UC Davis (and Yolo County as a non-voting member that does not receive a water supply). It also partnered with Reclamation District 2035 on the Sacramento River intake facility. WDCWA also coordinates with multiple regional and state entities to efficiently provide an additional water supply to member agencies. Recommendation(s): None. Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 10 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY 6. Accountability, Structure, and Efficiencies Accountability for community service needs, including governmental structure and operational efficiencies. Significant Potentially Issue Significant No Issue a) Are there any recommended changes to the organization’s governmental structure or operations that will increase accountability and efficiency (i.e. overlapping boundaries that confuse the public, service inefficiencies, and/or higher costs/rates)? b) Does the agency need to secure independent audits of financial reports that meet California State Controller requirements? Are the same auditors used for more than six years? Are audit results not reviewed in an open meeting? c) Is the agency insured or in a risk management pool to manage potential liabilities? d) Are there any issues with filling board vacancies and maintaining board members? Is there a lack of board member training regarding the organization’s program requirements and financial management? e) Are there any issues with staff capacity and/or turnover? Is there a lack of staff member training regarding the organization’s program requirements and financial management? f) Does the agency have adequate policies (as applicable) relating to personnel/payroll, general and administrative, board member and meetings, and segregating financial and accounting duties among staff and/or board to minimize risk of error or misconduct (see suggested policies list)? g) Does the organization need to improve its public transparency via a website (see https://www.yololafco.org/yolo-local-government- website-transparency-scorecards)? Discussion: The Agency is overseen by a six-member Board comprised of two City Council Members from each city, and two non-voting members, one each from UC Davis and Yolo County. The WDCWA General Manager is the City of Woodland Principal utilities Engineer and the WDCWA Operations Manager is the City of Davis Public Works Utilities & Operations Director. The Agency contracts for part-time Board Secretary services. The Agency has a significant contractual agreement with CH2M Hill for operation of the Water Supply Project. WDCWA is audited on an annual basis and posts audits and budget information on its website. It has not had an audit performed since 2020, but auditors are now in place to perform all audits after fiscal year 2019/20 was completed and get caught up. The Agency is a member of the Yolo County Public Agency Risk Management Insurance Authority which provides annual coverage for general liability and automobile liability. The excess coverage for both general liability and automobile liability insurance is $40,000,000 with a deductible of $5,000. The Agency has not had any settlements in excess of the coverage in the last three years. The JPA agreement provides for bylaws regarding board meetings and members. Other policies are covered by the cities of Woodland and Davis in particular as managing/holding the agency finances. Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 11 YOLO LAFCO MUNICIPAL SERVICE REVIEW/SPHERE OF INFLUENCE STUDY WDCWA received a 65% score in the most recent 2022 Yolo Local Government Website Transparency Scorecard5. Accountability, Structure, and Efficiencies MSR Determination: There are no recommended changes to the organization’s governmental structure or operations. In the past WDCWA has had audits performed on an annual basis, but there has been a gap since FY 2020 although auditors have recently been secured by the Agency to get caught up. WDCWA also needs to update its website content to improve its transparency. Recommendation(s): • Update WDCWA content to improve website transparency. See the most recent Yolo Local Government Website Transparency Scorecard posted on the LAFCo website to see where improvements are needed: https://www.yololafco.org/yolo-local-government-website- transparency-scorecards. 7. Status of Previous MSR Recommendations Any other matter related to effective or efficient service delivery, as required by commission policy. Significant Potentially Issue Significant No Issue a) Are there any recommendations from the agency’s previous MSR that have not been implemented? Discussion: None. Status of Previous MSR Recommendations Determination: This is the first JPA Service Review conducted on WCDWA. Therefore, there are no previous recommendations to provide status on. Recommendation(s): None. 5 https://www.yololafco.org/yolo-local-government-website-transparency-scorecards Woodland-Davis Clean Water Agency JPA Service Review LAFCo No. 23-02 Adopted July 27, 2023 12