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HomeMy WebLinkAboutHansford Economic Consulting UVBGSA Regulatory Fee Study - Final HANSFORD ECONOMIC CONSULTINGLLc Ukiah Valley Basin Groundwater Sustainability Agency 7 n Regulatory Fee Study FINAL 0 0 0 TABLE OF CONTENTS SECTION PAGE 1. Executive Summary 1 1.1 Introduction 1 1.2 Fee Setting Authority and Purpose of the Fee Study 3 1.3 Calculated FY 2025 Fee 4 2. The Ukiah Valley Basin Economy and Groundwater Use 7 2.1 UVBGSA Socioeconomics 7 2.2 Industry and Jobs 8 2.3 Ukiah Valley Basin Groundwater Users 15 2.4 Groundwater Extraction Estimates 21 3. Fee Development 28 3.1 Fee Authority 28 3.2 Methodology Development 29 3.3 Public Outreach 31 4. Fee Calculation 34 4.1 Cost Basis of Fee 34 4.2 Data Sources 38 4.3 Fee Calculations 39 4.4 Regulatory Fee Collection 42 4.5 Example Customer Bills 43 S. Fee Implementation 48 5.1 Fee Adoption 48 5.2 Appeals 49 APPENDICES A Public Outreach Materials B Board Discussion Materials LIST OF TABLES TABLE PAGE 1 FY 2025 UVBGSA Regulatory Fee 5 2 Estimated UVBGSA Population and Housing Units 7 3 Estimated Proportion of Spanish Speakers 8 4 Jobs by Census Place in Mendocino County 8 5 Largest Employers in Mendocino County 9 6 Jobs by Industry Sector in Mendocino County 10 7 Acres of Crops Grown in UVBGSA 11 8 Ranking of Agricultural Commodities by Production Value 13 9 Mendocino County 2021 Agricultural Commodity Values Detail 14 10 Public Water Systems in the UVBGSA Management Area 16 11 Agricultural Production Acres including Timber and Rangeland 17 12 Properties with Cannabis License(s) 19 13 Public Water Systems Reported Groundwater Extraction 22 14 Public Water Systems Total Water and Agricultural Water Consumption 23 15 IDC Model Agricultural Water Use Estimates 24 16 Estimated Agricultural Groundwater Extraction 24 17 Cannabis Cultivation Estimated Water Use 25 18 Estimated UVBGSA Cannabis Water Use 25 19 Groundwater Extraction Calculation Fee Group 3 26 20 Groundwater Use by Customer Group 27 21 Summary of Projected GSA 5-Year Budget 34 22 Historical Price Index Changes 35 23 Projected GSA 5-Year Expenses Excluding PMAs in Inflated Dollars 36 24 Projected 5-Year Cash Balances 37 25 Cost Basis of Fee Components 39 26 Summary of GSA Fee Parcels and Acreage 40 27 UVBGSA Fee Calculations FY 2025 Except Group 2 41 28 Calculated Public Water Systems FY 2025 Fees 43 29 Example Crop Land Bills 44 30 Fee Calculations for a Ranch 44 31 Single Family Horne Fee Ranges (Groups 1 &3) 46 32 Example Bills for Group 1 Businesses 47 33 Example Bills for Group 3 Businesses 47 Q LIST OF FIGURES FIGURE PAGE 1 Top Five Commodities in Mendocino County by Production Value 12 2 Mendocino County Agricultural Production Value by Commodity Group 12 3 Ten-Year Historical Change in Agricultural Product Values 13 4 Estimated Ukiah Valley Basin Groundwater Use 26 5 Components of Five-Year Budget Projection 35 6 Projected GSA Ending Cash Balances by Fiscal Year 38 7 Revenue Collection by Group 42 8 Comparison of UVBGSA with Sonoma County GSAs Fees for Grape Growers 45 9 Comparison of UVBGSA with Sonoma County GSAs Fees for an Orchard 45 LIST OF MAPS MAP PAGE 1 UVBGSA Management Area 2 2 River Estates Mutual: Example PWS exporting Groundwater from the Basin 17 3 Cannabis Property classified Crop Land by DWR 19 4 Cannabis Property in Group 2 20 5 Fee Structure Objectives 30 ACRONYMS CPUC—California Public Utilities Commission CWD—County Water District DWR—California Department of Water Resources ET—Evapotranspiration GIS—Geographic Information System GSA—Groundwater Sustainability Agency GSP—Groundwater Sustainability Plan JPA—Joint Power Authority PMA—Project and Management Actions RRFC—Russian River Flood Control and Water Conservation Improvement District SGMA—Sustainable Groundwater Management Act URRWA—Upper Russian River Water Agency UVBGSA—Ukiah Valley Basin Groundwater Sustainability Agency UVSD—Ukiah Valley Sanitation District UVWA—Ukiah Valley Water Authority FEE STUDY PREFACE The Ukiah Valley Basin Groundwater Sustainability Agency commissioned this study to establish a new regulatory fee sufficient to generate revenues that will support the typical annual operation costs of its regulatory program authorized by the Sustainable Groundwater Management Act (SGMA).The analyses, opinions, and findings contained within this report are based on primary data collected through interviews and research, as well as many sources of secondary data available as of the date of this report.While it is believed that the secondary sources of information are accurate,this is not guaranteed. Updates to information used in this report could change or invalidate the findings contained herein. Every reasonable effort has been made in order that the data contained in this study reflect the most accurate and timely information possible. No responsibility is assumed for inaccuracies in reporting by the client, its consultants and representatives, or any other data source used in the preparation of this study. No warranty or representation is made that any of the projected values or results contained in this study will be achieved.There will usually be differences between forecasted or projected results and actual results due to changes in events and circumstances. Changes in economic and social conditions due to events including, but not limited to, major recessions, availability of water resources due to droughts and operating conditions, major environmental problems, or disasters that could negatively affect operations,expenses and revenues may affect the result of the findings in this study. In addition, other factors not considered in the study may influence actual results. The fee study consultant team that prepared this report includes: Catherine Hansford, HEC LLC Schaelene Rollins, Rollins PR Consulting Mark Foree, Mark Foree Consulting LLC Elizabeth Schlegel, Kristy Chang, Mo Tangestani, and Diego Ramirez, KSN, Inc. We want to thank Ukiah Valley Basin Groundwater Sustainability Agency member agency staff, and all the stakeholders who helped inform development of the Ukiah Valley Basin Groundwater Sustainability Agency regulatory fee. Catherine Hansford J(4 Hansford Economic Consulting LLC O O 0 Section 1: EXECUTIVE SUMMARY 1.1 INTRODUCTION The Ukiah Valley Basin Groundwater Sustainability Agency(UVBGSA or Agency)was created in 2017 by a Joint Powers Agreement (JPA)to serve as the official groundwater management agency for the Ukiah Valley Basin required by the Sustainable Groundwater Management Act(SGMA) of 2014. Member agencies include the City of Ukiah (City), County of Mendocino (County), Russian River Flood Control and Water Conservation District(RRFC), and the Upper Russian River Water Agency (URRWA).The four member agencies agreed to fund, or partially fund, the UVBGSA through 2026, or until a revenue source is established and collected to fully fund GSA activities. SGMA provides for the local regulation of groundwater by requiring that all groundwater basins in the State of California be managed by groundwater sustainability agencies. Bulletin 118 Interim Update 2016,circulated by the California Department of Water Resources (DWR), identifies the groundwater basins and sub-basins to be managed, and designates their priority status. The Ukiah Valley Basin is a medium priority basin.As required by SGMA for a medium priority basin, a Groundwater Sustainability Plan (GSP)was prepared and submitted to DWR before January 31, 2022.The GSP was approved by DWR, with a letter of corrective actions to be addressed, in July 2023. SGMA defines sustainable groundwater management as the management and use of groundwater in a manner that can be maintained during the planning and implementation horizon without causing undesirable results'.The six undesirable results are: 1. Chronic lowering of groundwater levels, 2. Significant and unreasonable reduction of groundwater storage, 3. Significant and unreasonable seawater intrusion, 4. Significant and unreasonable degradation of water quality, 5. Significant and unreasonable land subsidence, and 6. Surface water depletions that have significant and unreasonable adverse impacts on beneficial uses of surface water. The GSP addresses each of these undesirable results as they pertain to the Ukiah Valley Basin and provides a plan for sustainability of groundwater in the Ukiah Basin by 2043.The Ukiah Valley Basin, and therefore the UVBGSA's Management Area, is illustrated in Map 1 on the following page. Key elements of the GSP include completion of a fee study to ensure the long-term financial viability of the UVBGSA,and completion of several Projects and Management Actsons(PMAs)2 to avoid undesirable results in perpetuity. t Water Code 10721. 2 Actions that implement the GSP. Ukiah Valley Bas.n Groundwater Sustainability Agency Fee Study Final May 20,2024 Page 1 Map 1 UVBGSA Management Area fir~ Ukiah Valley Basin GSA Boundaries 20 Lake �- f Mendocino „u Nit Part of CSA,Basin Talmage CS 7C' x a � n 0 n •� 0 C 101 . t' Not Part of GSA Basin _ 253 Ukiah Valley Basin Groundwater Sustainabi ity Agency Fee Study Final May 20,2024 Pope 2 1.2 FEE SETTING AUTHORITY AND PURPOSE OF THE FEE STUDY The UVBGSA has the authority to charge fees, conduct investigations, register wells, require reporting, and take other actions to sustainably manage groundwater resources of the Ukiah Valley Basin.To date, most UVBGSA expenses have been related to development of the GSP,the cost of which was paid for with a grant from DWR. Member agencies have contributed$68,750 per year each to pay for the operating expenses of the Agency and contributed an additional $30,000 each in FY 2025 to fund the fee study.The member agencies have also provided considerable in-kind service costs to the UVBGSA. A new regulatory fee,which is the subject of this report,will be imposed that will replace member contributions. Water Code and Proposition 26 Water Code Sections 10730, 10730.1 and 10730.2 set forth the authority for the UVBGSA to establish and charge fees.The UVBGSA regulatory fee described in this report is being adopted pursuant to Water Code Section 10730,which follows the fee adoption requirements for regulatory fees under Proposition 26.The fee being considered in this report is exempt from voter approval, as it is not a tax pursuant to California Constitution Article XIIIC(Proposition 26,Section 1(e)(3)3).The fee may be charged to pay for"reasonable costs"of a regulatory program.The fee must be proportional and related to benefits of the program.'As directed by the UVBGSA Board of Directors (Board)s, revenue from the fee will not be used to pay for other operational costs (such as providing water service)or for infrastructure or resource capital costs for the foreseeable future. This report documents the methodology, public outreach conducted, and Fiscal Year 2024/25 (FY 2025) new UVBGSA regulatory fee proposed to fund the regulatory activities of the UVBGSA.The fee will only fund SGMA-related regulatory activities (such as GSP development), day-to-day administrative operations costs, PMAs that are investigative in nature, and prudent reserves.All beneficiaries of groundwater sustainability will be charged the fee except for federal lands and tribal lands held in trust by the federal government.The UVBGSA will regulate de minimis extractors pursuant to Water Code Section 10730(a) (these are domestic well owners pumping less than two acre-feet per year per parcel; domestic use excludes any commercial activities)'. Goals of the fee study are: 1. Establish and secure a fee structure that the UVBGSA can adopt with confidence and with maximum buy-in from interested parties and stakeholders. 2. Provide a fee structure that generates sufficient revenue to support the financial obligations and budget needs of the UVBGSA pursuant to SGMA's mandate. s"As used in this Article,"tax"means any levy,charge,or exaction of any kind imposed by a local government, except the following: .. .(3)A charge imposed for the reasonable regulatory costs to a local government for issuing licenses and permits, performing investigations,inspections,and audits,enforcing agricultural marketing orders, and the administrative enforcement and adjudication thereof. ..." °The fee might also be cons-dered not a tax because it Is a charge imposed for the specific service or benefit of providing for a sustainable groundwater basin(California Constitution Article XIIIC,sections 1(c)(1)and 1(c)(2)). s Board of Directors meeting, February 13,2024. Water Code section 10721(e). Uk ah Valley Basin Groundwater Sustainabil-ty Agency Fee Study Flnal May 20,2024 Page 3 3. Set a fee structure that is economically and easily administered, charged, and collected. A key tenant in developing the regulatory fee structure has been to maintain transparency throughout the project, informing the UVBGSA customer base about the fee study and how customers can be involved and provide input to the process. Public outreach efforts are described in detail in Section 3.3 of the report. UVBGSA Board Approval For the regulatory fee to be implemented,there must be an affirmative vote by a majority of the UVBGSA's Board of Directors (four of the six Directors must be in favor), per Article 9 of the JPA.The six-member board includes representatives of the JPA member agencies plus an agricultural representative and a tribal representative. Each member has one vote. 1.3 CALCULATED FY 2025 FEE The fee study presents the fee structure that was developed and presented to the public with outreach materials and workshop presentations.The fee structure was developed using two key pillars of information that were constructed through the fee study process: 1. Stakeholder and public comment on who should be charged,and the most equitable fee structure. 2. Available data upon which to confidently calculate the fee each year. Fee Components The proposed fee structure comprises two components (or parts), rather like a water bill. Part 1 is a per acre per year(annual)fee paid for by all property owners(hereinafter referred to as "users"), except for federal properties, and properties held in trust for tribes,within the Ukiah Valley Basin. The Part 1 fee collects for core administrative costs of the Agency(about 23%of annual costs, depending on the budget adopted).The Part 2 fee collects for all other Agency costs.The Part 1 fee will be collected from every user with property taxes, unless the property owner does not receive a property tax bill, in which case the UVBGSA will bill the fee directly. The Part 2 fee is paid by groundwater customer type. Different types of groundwater users have been identified and placed into four groups(definitions provided on pages 5-5). Group 1 users will not pay the Part 2 fee to the UVBGSA;their water service provider will receive an annual bill for their share of the Part 2 fee costs.Water service providers are responsible for recovering UVBGSA fees from their customers. Groups 1, 2,and 3 use Ukiah Valley Basin groundwater, either directly or indirectly, as explained in greater detail in Section 2.3 of the report. Group 1 users are supplied groundwater by a municipal water service provider for non-agricultural purposes. Group 2 users collectively use groundwater to grow crops,and Group 3 use groundwater for domestic or commercial economic activities, not growing a crop. Group 4 does not use groundwater(vacant land and rangeland,for example).The fourth group will only be subject to payment of the Part 1 fee (interchangeably'base fee')for core administrative functions of the GSA.Groups 2 and 3 will pay their Part 2 fees with property taxes, unless the property owner does not receive a property tax bill, in which case the UVBGSA will bill the fee directly. Ukiah Valley Basin Groundwater Sustainabdity Agency Fee Study F nal May 20,2024 Page 4 Table 1 presents the calculated UVBGSA Part 1 and Part 2 regulatory fees for FY 2025.After accounting for administrative costs, DWR-reporting activities, bad debt, and maintenance of at least 25%of costs held in reserve, approximately$1.0 million is projected to be available for PMAs over the next five years if the FY 2025 budget of$600,000 increases 4%each year. Table 1 FY 2025 UVBGSA Regulatory Fee FY 2025 Fee Component Fee PART 1 FEE:BASE FEE $4.07 Per Acre in GSA Boundary Every parcel is charged the base fee plus the group fee for the group the parcel is classified as(1] PART 2 FEES GROUP 1 PUBLIC WATER SYSTEMS $0.1352 Per 1,000 gallons extracted GROUP 2 CROP LAND $32.75 Per Cropped Acre [2) GROUP 3 IMPROVED PROPERTIES(41 $34.67 Per Acre of Entire Parcel [3) GROUP 4 ALL OTHER $0.00 Source HEC May 2024. tot table (11 Federal properties and tribal properties held in trust by the Federal government are exempt. (21 Properties classified group 2 because of a medium,large,or nursery cannabis license capped at 1.0 acre. (3) Residential group 3 properties capped at 0.5 acres. 141 Improved properties not in groups 1 or 2. Fee Group Definitions. Group 1: Public Water Systems The definition of Group 1 users is every parcel served by a Public Water System (PWS) using potable water for non-agricultural purposes.A PWS is defined by the California Safe Drinking Water Act as follows: "Public water system means a system for the provision of water for human consumption through pipes or other construction conveyances that has 1S or more service connections or regularly serves at least 25 individuals daily at least 60 days out of the year." Group 2: Crop Land The definition of Crop Land is land meeting one of the following characterizations: a) Property identified as growing crops using DWR's most recently released publicly available crop mapping dataset. Ukiah Valley Basin Groundwater Susta inability Agency Fee Study Final May 20,2024 Page 5 b) Property with at least one medium, large,or nursery stock cannabis license Issued by (D Mendocino County as of June 1 of each year. Property in Group 2 pursuant to b) is capped at 1.0 acre for the Part 2 fee calculation. Group 3: Improved Property not in Groups 1 or 2 The definition of fee Group 3 users is Improved Property where Improved means the property has an improvements value as shown on a property tax bill for structure(s) located on the property, and the property is: a) NOT served by a PWS but may be served by a State Small Water System. b) NOT identified as Crop Land. Rural Residential property acreage is limited to 0.5 acres for the Part 2 fee calculation. Group 4:All Other Fee group 4 properties are all remaining properties in the UVBGSA's Management Area that are not fee exempt and are not in Groups 1, 2,or 3.The land is: a) Located outside public water system service provider boundaries. b) Unimproved;the only economic activity taking place is raising livestock, or for an environmental, recreational,or cultural purpose. Fee Adoption The new fee must be adopted by resolution or by ordinance; it is proposed that the UVBGSA will adopt the fee by resolution in June 2024.The 2024 resolution will establish the fee for FY 2025. A fee resolution must be adopted every year to place the fees on the tax roll, regardless of whether the fee amounts change or not.The fee should be adjusted each year to reflect the UVBGSA's budget for the upcoming fiscal year, incorporating the most recent 5-year rolling average groundwater extractions for fee groups 1 and 2,and the most recent DWR crop mapping data. In the event the required annual data updates are not performed and/or the budget is adopted later than May, the fee study recommends including an automatic annual increase in the fee resolution.The recommended automatic fee increase is 4° every year or the 12-month change (March to March) in the West Region Consumer Price Index published by the Bureau of Labor Statistics. 0 Ukiah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 Page b SECTION 2: THE UKIAH VALLEY BASIN ECONOMY AND GROUNDWATER USE 2.1 UVBGSA SOCIOECONOMICS About one-quarter of Mendocino County's population resides in the Ukiah Valley Basin. Of the more than 20,000 people permanently residing in the Ukiah Valley Basin, more than 16,000 live in the City of Ukiah.Table 2 shows the number of housing units and population in each of the Ukiah Valley Basin's US Census places'.Almost all the communities in the Ukiah Valley Basin are classified as Disadvantaged by the State. Redwood Valley and Talmage are considered Severely Disadvantaged8. On average,there are 2.71 permanent persons per housing unit in the Ukiah Valley Basin,which is higher than the countywide average of 2.22. US Census data ranks Mendocino County relatively low for persons per household (ranks 39"in the State, of 58 counties).This indicates that although there are many low-income households in the Ukiah Valley Basin, crowded living conditions that often accompany agricultural communities,such as Merced County(with 3.35 persons per unit), are not present. Home ownership is low; Mendocino County ranks 361h in the State for percentage of owner-occupied units'.A high proportion (about 50%)of residents in Ukiah and Talmage do not own the properties where they reside. Table 2 Estimated UVBGSA Population and Housing Units Median %Units %of Disadvantaged Household Housing Owner County Persons Census Place Community[1] Income Units Occupied Population Popin. per Unit Redwood Valley yes $48,750 648 61% 1,798 2% 2.77 Calpella no $89,250 239 79% 617 1% 2.58 Ukiah yes $56,975 6,187 48% 16,728 18% 2.70 Talmage yes $43,258 360 50% 989 1% 2.75 Subtotal UVBGSA 7,434 50% 20,132 22% 2.71 Remainder County 33,842 63% 71,402 78% 2.11 Total County 41,276 60% 91,534 2.22 Source:20215-year ACS Data Table 51901,825003,and 01`05,Census Bureau. econ I1)If the median household income is less than 80%of the Statewide median household income ($84,097),the State considers it Disadvantaged.Calpella has a very large margin of error. 'Https:ww2.census.gov."The Bureau of the Census defines a place as a concentration of population that is legally incorporated,or a statistical equivalent treated as census designated place." 8 The State defines Disadvantaged as the community having a median household income(MHI) less than 80%of the Statewide MHI.A Severely Disadvantaged community has an MHI less than 60%of the Statewide MHI. 9 2021 US Census data table 51101. Ukiah valley Basin Groundwater sustainabi ity Agency Fee Study Final May 20,2024 Page 7 Residents of the Ukiah Valley Basin predominantly speak English; however, about 35%of the population are Spanish speakers,as shown in Table 3. Table 3 Estimated Proportion of Spanish Speakers %of % Total UVBGSA Spanish Census Place Population Popin. Hispanics Speakers Redwood Valley 1,798 9% 694 39% Calpella 617 3% 250 41% Ukiah 16,728 83% 5,949 36% Talmage 989 5% 188 19% Subtotal UVBGSA 20,132 100% 7,081 35% Source:20215-year ACS Data Table DP05,Census Bureau. lang 2.2 INDUSTRY AND JOBS Almost 40%of all the jobs in Mendocino County are located within the Ukiah Valley Basin.The major employment hub is the City of Ukiah.Table 4 shows the estimated number of jobs by Census Place. Table 4 Jobs by Census Place in Mendocino County In Number %of Census Place UVBGSA of lobs County Redwood Valley yes 236 1% Calpella yes 121 0% Ukiah yes 8,710 31% Talmage yes 809 3% Subtotal UVBGSA 9,876 36% All Other Census Places no 8,839 32% Remainder of County possibly 9,058 33% Total County 27,773 100% Source:onthemap.ces.census.gov,using 2021 ACS data. jobs The largest employers in Mendocino County and the City of Ukiah are listed in Table S. Most of the employers have operations located within the Ukiah Valley Basin. Health services, education/ government employers, and agricultural and forestry-related processing and packaging feature heavily in this list. O Ukiah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 POPS Table 5 Largest Employers in Mendocino County Employer Location Industry Adventist Health Howard Memorial Willits Hospitals Adventist Health Mendocino Coast Fort Bragg Hospitals Adventist Health Ukiah Valley Ukiah Hospitals Adventist Health Ukiah Valley Ukiah Outpatient Services California Department-Forestry Willits State Government-Fire Protection Coyote Valley Casino Redwood Valley Casinos Dharma Realm Buddhist Association Ukiah Montessori Schools Fetzer Vineyards Hopland Wineries(mfrs) Mendocino Community Health Ukiah Clinics Mendocino County Ukiah Government Offices-County Mendocino County Food Stamps Ukiah Government Offices-County Mendocino County Office of Education Ukiah Boards of Education Mendocino County Sheriff Point Arena Government Offices-County Mendocino County Social Services Ukiah Government Offices-County Mendocino Headlands State Park Mendocino State Parks Mendocino Redwood Co LLC Calpella Restaurants Metalfx Inc Willits Sheet Metal Fabricators(mfrs) Pacific Coast Farm Credit Ukiah Loans-Agricultural Pacific Medical Resources Fort Bragg Nursing Services Safeway Fort Bragg Grocers-Retail Sawmill Ukiah Sawmills& Planing Mills-General Ukiah City Civic Center Ukiah Halls&Auditoriums Ukiah High School Ukiah Schools Ukiah Unified School District Ukiah School Districts Walmart Ukiah Department Stores Source:Employment Development Department,State of California(dataset from America's Labor Market Information System Employer Database,2024 1st Edition), Table 6 shows the number of jobs by industry sector.The top five industry sectors in Mendocino County(health care and social assistance, retail trade, educational services, accommodation and food services,and public administration) are the same as the top five industry sectors in Ukiah. Together the top five industry sectors comprise 60%of total County jobs, and about 75%of City of Ukiah jobs. Mendocino County and the Ukiah Valley Basin's economy is heavily dependent on the quantity of good quality water available to sustain industry, including production and processing of agricultural commodities. Ukiah valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 pale 9 Table 6 Jobs by Industry Sector in Mendocino County O N �p Q W"O t0 V 0 00 M m m m M M M N N N N ti N .-4 O O O Q N W W W G J1 LA N M %D N M M ri N M O W u'i N l6 -* O1 O jp N W r., CDV1 In N O O N N W tO IT 01 00 CO N M N 00 W M M M N N ry ry ry rti ' ' N C O :6 Of E W OC g C rG _ C C r E H o a �e y T n a � c n - o `w ii a m c a �` M c m .0 2 U U U y V a c � m N. N to F } Qr 7 V G ca wc-E c a to r wd Cd -0at O— m c CL o v c c 3 E u o a c N cn,n '� mL y �^ a c .G oil v 0 m C a, E c .R C V1 G C u E C rp CO N E • 7 N E -O C C N 3 lu N OJ N N O t' 7 .Q ry .a i C O ry 0 i+ u y ri E 7 is t- C ld Q F a E v 'n 3 m y .+ O N m C w ED 00 7 w C Lv W CU l U d ty'j cCC D F C . O yO CC W cGO *I O .0 O M O O ON 00 rO Ln M M M N N N N 14 1 O O O O N W W r4 C V1 O N �r O 00 O 00 r` V rr ry Oi 01 N W 00 V W 0 M y� M r• v O W V1 %n r` O M r-r W n W V m O n N M N O Q V r71 N n rr ff n V m r, r` 10 er V C M N r4 r4 N Ln M N N N N ti N N cc Y IE E CI a c A o c aci m c a,l ` Vi O .`a. ta 0! V b u° c m vOi 'c a v c E c w is w _ a c U C w U !� yr C fe U c C Z r6 i! C -0 _ m7 F 3 u n C o 7 a v t z m `—° 'o Q 0 N t eo m y a -c O 0 O d m _ 1A IN CL •'J N •G O L 7 Y ' C • E m �"' U_ N a U �C LAX OJ fC a a IA L6V m vO1 O - c LL O m c O C C } ro m 01 a o f ti ° m m a ; m e °1 0 a t 0 E Q ra t! y N N v1 " O G7 C N A N O O E `-' u c ar u' w c W m E c m o c .` C E z z � Warl Q3aocc < Ukiah Valley Basin Groundwater Sustainability Agency fee Study Final May 20,2024 Page 10 Agriculture While agriculture is not a major employment sector in the Ukiah Valley, it does contribute to the prosperity of the valley.Table 7 summarizes acreage of crops grown in the GSA's management area.The dominant crop is wine grapes.The valley is also well known for producing pears. Table 7 Acres of Crops Grown in UVBGSA DWR Map Acres in Code Crop UVBGSA V Vineyard 15,339 X Unclassified [11 1,252 G6 Miscellaneous grain and hay 810 D6 Pears 557 D13 Walnuts 245 P3 Mixed pasture 212 P1 Alfalfa&Alfalfa mixtures 65 C6 Olives 32 P6 Miscellaneous grasses 27 T18 Miscellaneous truck&berry 7 T16 Flowers, nursey,and Christmas tree farms 4 CTotal Cropped Land 18,550 Source:DWR Statewide Crop Mapping. (11 Property partially used for growing crops during the year. Agricultural statistics beyond acreage grown in the Ukiah Valley are not available, but the County prepares agricultural statistics,as required,for the State each year.The top five Mendocino County agricultural commodities by production value are shown in Figure 1. Wine grapes have the highest commodity value in the County,followed by forest products.Timber accounts for about 20%of the County's total agricultural value,and the County is ranked second of the counties reporting timber value in the State; however, in terms of total agricultural production value, Mendocino ranks 351h of the State's 58 countieslo io California County Agricultural Commissioners'Report Crop Year 2021-2022,March 26 2024,California Department of Food and Agriculture. Ukiah Valley Basin Groundwater Susta nability Agency Fee Study Final May 20,2024 P ag*11 Figure 1 0 Top Five Commodities in Mendocino County by Production Value pears = $10,745,343 Field Crops _ $13,898,210 Livestock - $18,453,440 Forest Products _ [2] $67,128,681 Wine Grapes $84,484,842 In 2021, Mendocino County's total agricultural production value was$200 million,excluding fish catch. Figure 2 shows the percentage of total production value by commodity group. Figure 2 Mendocino County Agricultural Production Value by Commodity Group All Other Pears 3% Field Crops 5% 7% Livestock (Meat) 9% Wine Grapes Forestry Products Table 8 shows the ranking of agricultural production value by commodity. Wine grapes and forest products have been the top two producers since 2010. Ukiah Valley Basin Groundwater Susta nability Agency Fee Study Final May 20,2024 Pap 12 Table 8 Ranking of Agricultural Commodities by Production Value Commodity[1] 2021 Commodity[1] 2010 nominal$s 1 Wine Grapes $84,484,842 1 Wine Grapes $73,904,000 2 Forest Products[2] $67,128,681 2 Forest Products[2] $57,673,418 3 Livestock $18,453,440 3 Field Crops $11,107,500 4 Field Crops $13,898,210 4 Pears $10,325,300 5 Pears $10,745,343 5 Livestock $7,718,300 6 Nursery Production $1,821,000 6 Livestock&Poultry Products $6,043,700 7 Livestock&Poultry Products $1,389,000 7 Nursery Production $3,167,000 8 Vegetable Crops $1,387,000 8 Miscellaneous [3] $1,600,000 9 Miscellaneous[3] $1,085,000 9 Apples $1,305,600 10 Apples $163,800 10 Vegetable Crops $1,200,000 Total $200,556,316 Total $174,044,818 Source:2021 Mendocino County Agricultural Commissioner's Annual Report toplo [1]Excludes fish catch value. [21 Log Value at Mill [3]Miscellaneous includes berries,cherries,chestnuts,olives,guava,peaches,persimmons, table grapes,pistachios and walnuts. Figure 8 further demonstrates the dominance of fruit/nuts/wine grapes of agricultural production value in the County. Forestry products and fish catch are excluded in the graph. Figure 3 Ten-Year Historical Change in Agricultural Product Values Fruit/Nut#/Wine Grapes f Livestock(Meat) Livestock(Products) ■Nursery ■Vegetables ■Field Crops $200,000,000 $180,000,000 . $160,000,000 $140,000,000 • $120,000,000 , 1 $100,000,000 $80,000,000 $60,000,000 S40,000,000 $20.000 000 $0 $012 2013 701� 2015 d016 2p17 7C19 20t9 2��0 i021 Note:Figures in nominal dollars(not adjusted for inflation). Ukiah Valley Basin Groundwater Sustainab lity Agency Fee Study Final May 20,2024 Page 13 Table 9 provides the 2021 commodities values with a description of the commodities included in each commodity group. Table 9 Mendocino County 2022 Agricultural Commodity Values Detail 2021 Commodity Commodity Group Value Fruit and Nut Crops Fresh Apples $81,900 Other Apples(dried,juice,etc.) $81,900 Wine Grapes $84,484,842 Bartlett Pears $9,563,000 Bosc Pears $424,096 Red Pears $751,512 Other Pears(canning,fresh,dried,paste,etc.) $8,889,763 Miscellaneous $1,085,000 Subtotal Fruit and Nut Crops $105,362,013 Livestock Cattle and Calves $17,498,400 Sheep and Lambs $404,700 Hogs and Pigs $81,340 0 Miscellaneous $469,000 Total Livestock $18,453,440 Livestock and Poultry Products Milk n.a Wool $21,000 Miscellaneous(eggs,apiary,cheese, manure,etc.) $1,368,000 Total Livestock and Poultry Products $1,389,000 Nursery Turf and Cut Flowers $1,805,000 Christmas Trees $16,000 Total Nursery $1,821,000 Vegetables $1,387,000 Field Crops Irrigated Pasture $979,200 Pasture $6,849,810 Range $3,919,200 Miscellaneous(alfalfa, barley, beans,corn,hay&oats) $2,150,000 Total Field Crops $13,898,210 Total Commodities Value in 2021(excl.forestry&fish catch) $283,234,326 Source:2021 Mendoc no County Agricultural Commis{ioner's Annual Report. value Ukiah Valley Basin Groundwater Sustainabdity Agency Fee Study Final May 20,2024 Page 14 2.3 UKIAH VALLEY BASIN GROUNDWATER USERS The customer base of the UVBGSA is all beneficiaries of sustainable groundwater management within the Ukiah Valley Basin that reside or own property within the UVBGSA management area. Beneficiaries include individuals, businesses, and government agencies, including the State of California. Beneficiaries may also include wildlife, riparian habitat and other environmental users of groundwater and groundwater that interacts with surface water; however,for purposes of the regulatory fee, beneficiaries are defined as all property owners within the UVBGSA management area because all properties reap the benefit of UVBGSA's groundwater management activities. The Ukiah Valley Basin's water resources are interconnected.The GSA is monitoring and evaluating all water sources to continually improve its hydrologic model as environmental conditions change. Use of surface water and other waters cannot be parsed out with precision, as documented in the GSP; therefore, all properties within the GSA management area do,to some degree, benefit from the GSA's activities. Even if the benefit is not obvious today, all water sources need to be protected, monitored, and managed to ensure a stable supply of groundwater in perpetuity. Properties may be using groundwater supplied by a public water system, by a domestic well, commercial production well, or an irrigation well, or they may be passive users of groundwater". The fee study grouped groundwater users into four types. Group 1 users are supplied groundwater by a municipal water service provider for non-agricultural purposes. Group 2 users collectively use groundwater to grow crops, and Group 3 use groundwater for domestic or commercial economic activities, not growing a crop.The fourth group does not use groundwater; examples include vacant land (such as an undeveloped industrial lot, range land, right-of-way, and utilities). Group 1: Public Water Systems Group 1 Definition.The definition of Group 1 users is every parcel served by a PWS using potable water for non-agricultural purposes. A PWS is defined by the California Safe Drinking Water Act as follows: "Public water system means a system for the provision of water for human consumption through pipes or other construction conveyances that has 15 or more service connections or regularly serves at least 2S individuals daily at least 60 days out of the year." There are 11 water systems meeting the definition of a PWS in the Ukiah Valley. Of these, Rogina Water Company is regulated by the California Public Utilities Commission (CPUC).The other water systems are regulated by the State Water Boards. Four county water districts have a JPA for joint management, and potential future consolidation,of assets and operations.The URRWA is collectively responsible for the Calpella County Water District (CWD),Willow CWD, Millview CWD, and Redwood Valley CWD. Because management activities for these four water districts are consolidated the fee study calculations are only shown for the URRWA. In February 2024, a new JPA 11 Surface water users affect groundwater supplies in the Ukiah Valley Basin.Dry farming is another passive use of groundwater as precipitation is consumed by plants rather than reaching the aquifer. Ukiah Valley Basin Groundwater Sustainabiiity Agency Fee Study Final May 20,2024 Pap IS was formed,the Ukiah Valley Water Authority(UVWA).The UVWA integrates the governance and water infrastructure of the City of Ukiah, Millview CWD and Redwood Valley CWD.The PWSs and total number of connections they serve (includes agriculture) in the Ukiah Valley Basin are listed in Table 10. Table 10 Public Water Systems in the UVBGSA Management Area Water System Name Population Served Total Connections Upper Russian River Water Agency Calpella County Water District 548 185 Willow County Water District 3,797 1,079 Millview County Water District 5,500 1,715 Redwood Valley County Water District 5,200 1,317 Subtotal URRWA 15,045 4,296 River Estates Mutual Water Company 250 83 Rogina Water Company 2,554 1,001 City of Ukiah 16,607 4,938 Lake View Mutual Water Company 90 29 Yokayo Tribe of Indians 75 23 Flight Ridge 206 3 0 City of 10,000 Buddhas 400 50 Total 35,227 10,423 Source Drinking Water Watch:https:l/sdwis.waterboards.ra.gov./PDWW: May 2024 Many of the water providers serve(export)groundwater to customers(and parcels) outside the UVBGSA management area. Map 2 illustrates water exportation from inside the basin to outside the basin by River Estates Mutual Water Company. Blue dots(with a blue circle around them)show the location of the water provider's wells.The blue shaded area shows properties served by the water provider; most properties served are outside the GSA's management (fee) area. Group 2: Crop Land To develop the definition of crop land,the fee study first examined the Assessor's records of agricultural land use in the GSA's management area.Table 11 shows the Assessor classifies almost 14,000 acres of property Irrigated Agriculture, and just over 16,000 acres of property Dry Agriculture for a total of 30,310 acres of parcels engaged in agricultural production.The largest acreage used for agriculture is for raising livestock (rangeland). Almost all the irrigated acres are planted vineyards.The Assessor's data, however, is only updated when necessitated -by change of ownership,for example. It is not always reflective of current uses of land. A data source that is considered more reflective of agricultural land use is provided by DWR,the "DWR crop map"which is updated each year using aerial photography. Ukiah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 Page 16 Map 2 River Estates Mutual: Example PWS exporting Groundwater from the Basin Ukiah Valley Basin Groundwater Sustainability Agencys...:s.,,p..Yr pr• auvMSAF—A,—.SwRCBGAMA. +. 0[2023 -- i • �1 Supplemental Dao Well, SWRCOGAMA on2623 a q y k Wue,DiFtrict Bmn,dary, M.W--C—ty OvilaD UVBGSA Fadvalty Ovr.d►-1, parzelgont D-U21 Table 11 Agricultural Production Acres including Timber and Rangeland Land Use Crop/Use Code Acres Irrigated Orchard 41 2,096 Irrigated Orchard 51 75 Vineyard 42 11,728 Irrigated Vineyard 52 1,624 Classified lands 53 1,753 Permanent pasture(dairy) 43 46 Irrigated Row crops 44 18 Irrigated Range 54 11,919 Recreational residential 55 943 Timber: assessable young growth 62 107 Total 30,310 Total Irrigated 13,888 46% Total Dry(includes Timber) 16,422 54% Source:UVSGSA fee database May 2024. ag acres Uk-ah Valley Bas n Groundwater Susta inability Agency Fee Study Final May 20,2024 Page 17 Group 2 Definition. Crop Land is land meeting one of the following characterizations: a) a) Property identified as growing crops using DWR's most recently released publicly available crop mapping dataset. b) Property with at least one medium, large, or nursery stock cannabis license issued by Mendocino County as of June 1 of each year'. Property in Group 2 pursuant to b) is capped at 1.0 acre for the Part 2 fee calculation. In 2010,the County worked with DWR to develop a GIS file showing dry and irrigated portions of agricultural properties.This work effort has not occurred since,so although the DWR updates its maps each year to show portions of properties being cropped or having been disturbed for agricultural purposes for some portion of the past year, it cannot be stated with any accuracy if dry or irrigated farming is taking place".The GSP, and subsequent annual reports prepared for the GSA, input the 2010 data to DWR's Integrated Water Flow Model Demand Calculator(IDC)to estimate agricultural water demand". While not considered an agricultural commodity by the State of California,a crop that is grown in abundance (legally and illegally) in Mendocino County, is cannabis.The GSP notes that water use of cannabis was not accounted for in the water budget but that it is an agricultural use of water and that it should be investigated due to its potential to impact water demand in the Basin in the future14. Stakeholders and the public were asked about the importance of cannabis cultivation in the fee structure.Their responses were in favor of a fee on cannabis license holders (see Section 3.3). The Mendocino County cannabis licensing department provided a shapefile identifying Assessor Parcel Numbers (APNs)with cannabis licenses.This data was joined with the other fee study data sources using GIS to ascertain the total number of current valid cannabis licenses in the GSA's management area.Table 12 shows there are 50 properties with at least one current valid cannabis license (some have 2 or 3 licenses). Of the 50 properties, 27 would be considered Crop Land using the DWR definition of Crop Land, and 23 would not. Properties with small cultivation licenses were not included in the fee study because water use in the maximum allowable canopy is similar to that of having a vegetable garden,or a second home on the property. Map 3 highlights a parcel that is classified Crop Land using the 2020 DWR crop map. DWR identifies the parcel as growing grapes and truck nursery and berry crops.The parcel has two cannabis licenses. Map 4 shows four cannabis license parcels within the UVBGSA management area that are in Group 2 because of cannabis cultivation;they would not otherwise be in Group 2. (The red and white line is the UVBGSA boundary—the map also shows two cannabis licenses parcels outside the GSA management area). 11 LandlCL the firm that prepares the cropping maps for DWR,confirmed this verbally May 2024. 11 Pages 215 and 216 of the GSP. 14 Pages 62 and 234 of the GSP. Ukiah Valley Basin Groundwater Susta nability Agency Fee Study Final May 20,2024 Page 18 Table 1,2 Properties with Cannabis License(s) Number of Properties Have Already in Cannabis Crop License Type License(s) Group 2 [1) Land (2) #of properties Medium cultivation 11 3 8 Large cultivation 20 9 11 Nursery Stock/Seed 19 15 4 Total so 27 23 Source:HEC May 2024 canna char [1] Meets definition of Crop Land per DWR crop mapping data. [2] Not classified Crop Land by DWR data definitions. Map 3 Cannabis Property classified Crop Land by DWR Ukiah Valley Basin Groundwater Sustainability Agency Fee Assessment Map A. Gl " y r- + '` Ukiah Valley Basin Groundwater Susta inability Agency Fee Study Final May 20,2024 Page 19 Map 4 Cannabis Property in Group 2 jUkiah Valley Basin Groundwater Sustainability Agency fee A%wssme^*+dan • ` \ t= OF f * r h • f r • i . ram t. Unlike the vast agricultural growing regions California is so well known for, agriculture in Ukiah is both large-scale and small-scale (some may be described as hobby growing),and rarely is an entire parcel cropped. Cannabis cultivation is limited to canopy size by license type per Mendocino County Ordinance 4522. Even with two or three licenses on a parcel,the cannabis cultivation area is unlikely to exceed one acre. For this reason, parcels in Group 2 that are in this group because they cultivate cannabis are capped at 1.0 acre when considering them as a groundwater user. All properties that DWR's crop maps identify as having grown a crop for some portion of the year, even if they are currently fallow but have been engaged in agricultural economic activity, are considered Group 2 groundwater users. Group 3: Improved Property not in Groups 1 or 2 Although there are various incomplete sources of well information for the Ukiah Valley housed by DWR, the SWRCB, and the County, except wells owned by the PWSs(which are well documented), the locations of wells in the Ukiah Valley Basin are not documented with precision by any regulatory body. By examining maps and Assessor data, and the incomplete well information housed by the State,there is much non-agricultural economic activity taking place outside of the water service provider boundaries within the GSA management area. Group 3 includes improved properties not in groups 1 or 2, and it largely consists of residential parcels that can be characterized as rural with Ukiah Valley Bas n Groundwater Sustainability Agency Fee Study Final May 20,2024 Pate 20 much larger parcel size than in the urban areas. Residential parcels may be quite large (40 acres for example), but water use will remain limited to the structures on the parcel, and small areas of outdoor watering for landscaping or vegetable gardens,for example. For this reason, residential parcels in group 3 are capped at 0.5 acres when considering them as a groundwater user. Group 3 Definition.The definition of fee Group 3 users is Improved Property where Improved means the property has an improvements value as shown on a property tax bill for structure($) located on the property, and the property is: a) NOT served by a Public Water System but may be served by a State Small Water System. b) NOT identified as Crop Land. Rural Residential property acreage is capped at 0.5 acres for the Part 2 fee calculation. Group 4:All Other Group 4 Definition. Fee Group 4 properties are all remaining properties in the GSA's management area that are not fee exempt and are not in Groups 1, 2,or 3.The land is: a) Located outside public water system service provider boundaries. b) Unimproved;the only economic activity taking place is raising livestock, or for an environmental, recreational, or cultural purpose. 2.4 GROUNDWATER EXTRACTION ESTIMATES Groundwater extraction estimates were developed for the three groundwater user groups. Group 1: Public Water Systems All Public Water Systems are required to file electronic annual reports with the State Water Boards"'. In their reporting,each water system must state quantity produced by facility extraction type. Water production reported from wells is considered groundwater for purposes of the fee. Table 13 provides historical records of groundwater extraction by Public Water System (URRWA water systems are grouped together). Due to fluctuation in use of surface water and groundwater that occurs annually depending on the abundance of surface water,the analysis uses the 5-year rolling average pumping for the fee study. Average annual total pumping by the 11 water systems for the past five years is 1.25 billion gallons. is DWR compiles the EAR data into public water systems statistics surveys,detail of which can be obtained from Public Water Systems Statistics Surveys fcajzov). Ukiah Valley Basin Groundwater Susta inability Agency Fee Study F-nal May 20,2024 :cage a Table 13 Public Water Systems Reported Groundwater Extraction River Yokayo Flight City of 10K Calendar Year Ukiah Rogina URRWA Estates Lake View Tribe Ridge[21 Buddhas TOTAL Groundwater Production(Extraction)in Thousands of Gallons 2015 382,992 129,128 384,438 9,384 2,919 3,344 8,965 11,100 932,270 2016 298,015 131,763 413,507 9,544 2,352 2,482 6,039 16,900 880,602 2017 412,355 140,732 438,763 11,956 2,212 n.r. n.r. 16,400 1,022,418 2018 337,463 143,628 464,153 11,244 2,041 2,264 5,798 17,200 983,791 2019 569,538 151,413 447,978 11,169 2,339 2,648 4,082 16,200 1,205,367 2020 491,178 324,468 503,821 11,677 2,957 n.r. 4,736 6,120 1,344,957 2021 734,185 n.r. 421,740 9,362 2,311 n.r. 3,974 6,590 1,178,161 2022 477,059 143,485 696,441 8,594 1,980 3,050 1,785 6,440 1,338,834 Average Water Extraction per Year 5-Years 521,885 190,749 506,827 10,409 2,326 2,654 4,075 10,510 1,249,434 Non-Agricultural 521,885 174,778 334,367 10,409 2,326 2,654 937 10,510 1,057,866 Agricultural[1) 0 15,970 172,460 0 0 0 3,138 0 191,568 Source:Electronic Annual Reports filcd wit^the State Water Boards. extract [1)See Table 14 for agricultural consumption as a percentage of total water consumption. Note:n.r.=not reported. (2)Flight Ridge provided water consumption data for 2023,which demonstrated 77%of water is used for agricultural purposes. Data not included in the study pe-California Code 7927.410 customer confidentiality requirements. The URRWA, Rogina Water Company, and Flight Ridge serve agricultural customers.The percentage of total water consumption by agriculture was applied to groundwater pumping to net an estimate of groundwater pumped for agricultural purposes by the Public Water Systems.Agricultural water use is deducted from total PWS pumping because agricultural groundwater use is accounted for in the Group 2 groundwater extraction estimate.Average annual total pumping by the 11 water systems for non agricultural purposes for the past five years is estimated at 1.06 billion gallons. 'fable 14 shows agriculture as a share of total water consumption by the Public Water Systems. Flight Ridge was contacted directly for data, as that water system did not report agricultural water use to the State. It may be possible to refine the estimate of groundwater pumped for agricultural use by PWSs'customers further in future updates to the fee,as the reduction for agricultural water use may be overstated (a greater than proportionate share of agriculture's water use may be surface water). Currently,the Public Water Systems are unable to provide datasets matching water service with APNs; therefore, any property in a PWS service boundary not classified in Group 2 is included in Group 1. As a result, some properties classified as Group 1 should possibly be classified as Group 3. The fee study recommends the UVBGSA work with the Public Water Systems to refine this portion of the fee so that all properties are placed in the correct fee group. Ukiah Valley Basin Groundwater Susta nability Agency Fee Study Final May 20,2024 page 22 Table 14 Public Water Systems Total Water and Agricultural Water Consumption Calendar Year Rogina URRWA Total Consumption(Thousands Galls) 2015 129,128 522,288 2016 122,859 624,425 2017 131,815 571,362 2018 135,963 691,912 2019 n.r. 472,197 2020 n.r. 677,658 2021 122,850 641,870 2022 109,721 597,207 Total Avg.Annual Consumption 5-Years 122,844 616,169 Ag.Consumption(Thousands Galls) 2015 8,361 269,909 2016 8,904 240,140 2017 8,926 n.r. 2018 7,665 297,536 C 2019 n.r. 158,885 2020 n.r. 515,895 2021 13,678 60,826 2022 9,512 15,189 Agriculture Avg.Annual Consumption 5-Years 10,285 209,666 Ag.As%of Total 8% 34% Source EARS filed with the State Water Boards. Note:n.r.=not reported. Group 2: Crop Land The estimate of groundwater applied to crop land is provided in the GSP and GSA annual reports prepared for and submitted to DWR. As previously described, agricultural water use is estimated using the IDC model.The total estimated water use for purposes of the fee study uses a 5-year rolling average for the same reasons previously given. Using the IDC model estimates, 39%of water used for agricultural purposes is groundwater,and 61%is surface water, as shown in Table 15111 16 Recycled water is a blend of groundwater and surface water used by City of Ukiah and Ukiah Valley Sanitation District(UVSD)sewer customers,collected,and treated at the City's wastewater treatment plant.It is not included in the calculation of the share of agricultural water that is groundwater versus surface water. Ukiah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20.2024 Rage?3 Table 15 IDC Model Agricultural Water Use Estimates Surface Recycled Water Year Groundwater Water Water Total 2015 all figures in acre-feet 13,582 2016 13,222 2017 12,453 2018 No breakdown available for these years 13,152 2019 13,204 2020 14,884 2021 10,702 12,487 1,104 24,293 2022 3,326 9,536 910 13,772 Last 5 Years 14,028 22,023 2,014 38,065 5-Yr Share 39% 61% 100% Source:LWA est-mates prepared for the GSP, ag use the 2021 Annual Report,and the 2022 Annual Report. Due to the imprecision of the analysis,agriculture's share of total water used is rounded to 40%to determine the annual estimated groundwater extraction by agriculture calculated in Table 16. Table 16 Estimated Agricultural Groundwater Extraction Total Agricultural GW Share Est.GW Water Year Applied Water[AF] [1] Extraction 2015 13,582 40% 5,433 2016 13,222 40% 5,289 2017 12,453 40% 4,981 2018 13,152 40% 5,261 2019 13,204 40% 5,282 2020 14,884 40% 5,954 2021 24,293 40% 9,717 2022 13,772 40% 5,509 5-Year Avg.Ac-Ft Agricultural GW Extraction Est. 6,344 Source: Larry Wa ker Associates,December 2023. We [1] U�e5 the 2021 and 2022 annual reports rounded,applied each year. 0 Uk ah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 Pam 24 Cannabis water use is not included in the prior two tables. Cannabis water use is estimated using limited information on water requirements of cannabis plants.Table 17 estimates the annual water use of a cannabis farm (license) by license type.The analysis should be considered high-level and should be refined over time as greater research is conducted and better information becomes available regarding water use of cannabis plants. For example, outdoor growing has a limited growing season (summertime), but indoor growing can occur year-round. No UVBGSA management area specific data was obtainable. Table 17 Cannabis Cultivation Estimated Water Use License Type Maximum Canopy Estimated Growing Full Canopy Canopy Area Plants Days Galls/Yr Ac-Ft/Yr Sq. Ft. Acres [11 Jun-Oct(2] (3] [4) Small cultivation 2,500 0,06 100 150 90,000 0.28 Medium cultivation 5,000 0,11 200 150 180,000 0.55 Large cultivation 10,000 0.23 400 150 360,000 1.10 Nursery Stock/Seed 22,000 0.51 880 150 792,000 2.43 Source:Mendocino County Ordinance No 4522,Dr.Ted Graham,UC Berkeley,email correspondence canna use February 11,2024,and Zheng,Z.,Fiddes,K.&Yang,L.A narrative review on environmental impacts of cannabis cultivation,J Cannabis Res 3,35(2021). [1]200 plants per 5,000 scl ft. (2)One growing season per year. (3]Water use of 6 gallons per plant per day during the growing season. [4] Per Dr.Graham,cannabis farms use between 1 and 2.5 acre-feet of water per year. Table 18 calculates the estimated annual cannabis water use of Group 2 users is 87.5 acre-feet. Table 18 Estimated UVBGSA Cannabis Water Use Number of Estimated Cannabis Full Canopy Total Ac-Ft License Type Licenses Ac-Ft/Yr per Year [1] [2] (3] Medium cultivation 12 0.55 6.63 Large cultivation 38 1.10 41.98 Nursery Stock/Seed 16 2.43 38.89 Total 66 87.50 Source;UVBGSA fee parcel database,HEC May 2024. c 1..1..! [1]Number of medium,large&nursery licenses in the GSA boundaries. [2)Estimate using maximum canopy allowable Mendocino County Ordinance No.4522. (3]All water use assumed to be groundwater. Ukiah Valley Basin Groundwater Sustainab lily Agency Fee Study Final May 20.2024 Pale 7s Group 3:Improved Properties not in Group 1 or 2 Groundwater extraction for Group 3 was determined using 2023 water meter consumption records for Millview County Water District customers.Average annual water use by residential, commercial, industrial, and institutional land uses was multiplied by the acreage of each land use type.Table 19 shows Group 3 users are estimated to use 211 acre-feet per year. Table 19 Groundwater Extraction Calculation Fee Group 3 Thousands Acre-Ft per Acre Improved Parcels Est.Ac-Ft Assessor Land Use Galls. per Year per Year Acreage per Year per acre [2] [2] [1] Rural Residential 240,000 0.74 156 115 Commercial 134,600 0.41 34 14 Industrial 327,000 1.00 72 72 Institutional 283,800 0.87 11 10 Total 0.77 273 211 Source:UVBGSA fee database,Millview CWD metered use records,and HEC May 2024. group 3 11)Acres of parcels with improvements. Residential parcels capped at 0.5 acre. [2]Data from Millview CWD consumption records. Total Groundwater Use The estimate of total groundwater use developed for the FY 2025 fee calculations is provided in Table 20. Estimated water use by the three fee groups is shown in Figure 4. Figure 4 Estimated Ukiah Valley Basin Groundwater Use Group 3: Other Improved Properties,2% Group 1 Public Water 31 Group 2: Crop band, 67 Ukiah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 Page 26 Based on the estimates of historical proportion of groundwater extraction by the three fee groups in the Ukiah Valley Basin,Group 1 users are responsible for 31%; Group 2 users are responsible for 67%, and Group 3 users are responsible for 2%of the Part 2 estimated FY 2025 costs. Table 20 Groundwater Use by Customer Group Group Est.GW Fee Group Share Extraction Methodology Data Source Group 1:Public Water Systems Acre-Feet Municipa.Mix(GSP definition[(1) 3,882 Rolling 5-yr gw extrwt nn average EAR Reports to DWR less portion that is for crops 595 Rolling S-yr%of consumption by Agriculture EAR Reports to DWR Total Group 1 GW Use)acre-feet) 31% 3,297 Group 2:Crop Land Agricultural(GSP definition)[21 6,344 Rolling 5 year gw extraction average IDC Model used in the GSP and Annual Reports plus Cannabis Use 88 Max.crop coverage per license 1100%gw) Mendocino County cannabis licenses database plus crop portion of Municipal Mix 595 Rolling 5-yr%of consumption by Agriculture EAR Reports to DWR Total Group 2 GW Use(acre-feet) 67% 7,027 Group 3:Other Improved Properties Tota Improved Acres 273 Parcels with Improvement Value not n Groups 1 or 2 Fee Parcel Database,Resid.capped 0.5 a:rrs Annual Average Acre-Feet per Acre 0.77 Est.Extraction per Acre(100%gw)by and use type Millview CWD 2023 metered customer data Total Group 3 GW Use(acre-feet) 2% 211 Total Estimated Groundwater Use 100% 10,525 for dm Source State EAR Reports filed by each Public Water System,Mendocino County,UVBGSA GSP and 2021 to current GSA annual reports. [11 Total differs from the GSP because of the inclusion of Rogina,Yokayo Tribe,Flight Ridge,Lake View,and City of 10 Thousand Buddhas water systems and calendar year rather than water year reporting. [II About 40%of total agricultural water use is from groundwater,per GSP consultant calculations. Ukiah Valley Basin Groundwater Sustainability,Agency Fee Study F,nal May 20,2024 :kape 7 SECTION 3: FEE DEVELOPMENT One of the first tasks of the Board was to determine what type of fee would best characterize the purpose of the fee under the California Constitution.At the October 2023 and January 2024 Board meetings,the different funding mechanisms available and types of fees were presented.At the February 2024 Board meeting,direction was provided to proceed with a regulatory fee adopted under the Proposition 26 process requirements which is authorized under SGMA. 3.1 FEE AUTHORITY Disclaimer:HEC is not an attorney. The following is an interpretation of California law as if applies to UVBGSA's fee-setting abilities. HEC is not, and does not claim to be, an attorney qualified to provide legal opinions. UVBGSA's fee authority is derived from the SGMA-specific legislation codified in Water Code 10730 through 10731 "Financial Authority".This section of the Water Code allows UVBGSA to impose fees for regulated activities, including but not limited to, permits to operate wells,the costs of a groundwater sustainability program such as development and amendment of a groundwater sustainability plan (GSP), investigations, inspections,compliance assistance, enforcement, and program administration including a prudent reserve. In addition, after the adoption of a GSP, UVBGSA could impose fees to pay for GSP activities that require land acquisition and/or construction of infrastructure that implement PMAs in the GSP. UVBGSA's revenue collection authority, not the subject of this Study, also includes: • One-time regulatory fees for permits and inspections (Proposition 26 exception 1(e)(2)), and • Meter installation cost recovery for meters installed within the Ukiah Valley Basin (Water Code 10725.8(b)); however, UVBGSA cannot require meters to be installed on de minimis users(domestic wells that pump less than two acre-feet per year). Under Proposition 26,a regulatory fee, an assessment,and a property-related charge are all exemptions from the definition of a tax. Regulatory fees are adopted pursuant to the requirements of Proposition 26, and as specified in Water Code 10730(b).Assessments and property-related charges are adopted pursuant to the requirements of Proposition 218 (Article XIII D of the California Constitution). Property-related charges were ruled out at this time by the Board because the agency is not a water provider; it only conducts regulatory activities17. UVBGSA could form an assessment district(limited to no bond issuance authority) under various enabling laws such as the Landscape and Lighting Act of 1972 and the Benefit Assessment Act of 1982; however, assessments must only cover the portion of agency costs that are incurred to provide special benefit to parcels. UVBGSA cannot prove special benefit of groundwater sustainability management actions to parcels within its Ukiah Valley Basin because of the lack of current understanding of groundwater and surface interaction. In addition,groundwater management activities within UVBGSA could be of benefit to persons outside of the Ukiah Valley Basin. 'y The UVBGSA Board could adopt a Proposition 218 fee in the future for certain projects. Ukiah Valley Basin Groundwater Sustainab lity Agency Fee Study Final May 20,2024 Page 28 The new UVBGSA regulatory fee must be no more than necessary to cover the reasonable costs of the governmental activity, and the manner in which the costs are allocated to a payor must bear a fair or reasonable relationship to the payor's burden on, or benefits received from, the governmental activity. 3.2 METHODOLOGY DEVELOPMENT The fee structure was developed using two key pillars of information that were constructed through the fee study process: 1. Stakeholder and public comment on who should be charged, and the most equitable fee structure. 2. Available data upon which to confidently calculate the fee each year. Before the UVBGSA Board meeting held October 12, 2023, HEC researched other GSA fee structures for insights of what fee structures are being adopted across the state. Key highlights and take aways of the case study research included: • Fee Pathway. Of the 22 GSAs researched, 20 use a SGMA-authorized funding tool.Of those, half at least started with a Proposition 26 fee,and half started with a Proposition 218 fee. • Fee Structure.Ten of the case studies have an acreage-only fee, 7 have an extraction-only fee, 3 have an acreage fee and water systems pay a lump sum amount, and 2 have a hybrid fee. Hybrid fee structures were used for GSAs with significant urban population. One GSA has a hybrid fee with a base fee.Another GSA is considering a new fee with a base fee component. • Fee Collection.The majority of GSAs(all those with acreage or hybrid fees and the Sonoma County GSAs-there are 3 but they were counted as 1 for the case study research-which have extraction fees), collect fees with property taxes. Most water providers want the GSA fee to be on the property tax bill to distinguish the fee from their own water fees. • UVBGSA Fee.The UVBGSA should choose a fee structure that works best for all the beneficiaries of groundwater management in the Ukiah Valley Basin; it could be unique to UVBGSA. Map 5 illustrates the fee structure objectives that were constantly considered as the fee methodology was developed. Ukiah Valley Basin Groundwater Susta inability Agency Fee Study Final May 20,2024 Pam 29 Map 5 Fee Structure Objectives �0 Defensibility o Understandability Methodology demonstrates reasonableness of the fee Understandable by structure and amount(s)per CA the customer base j Constitution Financial Simplicity Stability r Functional ease, Confidence that the fee keeps administrative structure will produce costs down I anticipated revenues 5 Equity Enforceability All parties given equal AbilityIo collect the oppodundyto participate in fee based on reliable the process data UVBGSA's Proposition 26 fee options past-GSP adoption include a wellhead fee, parcel fee, acreage fee, water connection fee, and extraction fee. Fee structure options originally presented but eliminated include these: • Wellhead fee—insufficient data exists to develop a wellhead fee. • Parcel fee—this fee structure was eliminated in favor of an acreage fee because an acreage fee has a stronger linkage to the benefits of the GSA's activities, including surface area of rainfall collection and the interconnection of surface water and groundwater in various parts of the basin. • Connection fee—only applicable to groundwater users served by a public water system,this fee structure is less robust than an extraction fee for the groundwater users served by a public water system. While the fee charged to the Public Water Systems is based on extraction,the providers can distribute their fee among customers as they choose,which could include cost allocation by connection. At the October 12, 2023 and January 11, 2024 Board meetings,findings from the case studies,the stakeholder interviews, and available data sources were discussed in the context of the fee structure goals. Ukiah Valley Basin Groundwater Sustamabdity Agency Fee Study Fina'May 20,2024 ftge N At its February 13, 2024 Board meeting,the Board directed proceeding with a Proposition 26 fee, agreeing that all beneficiaries of groundwater management should pay for the regulatory costs of UVBGSA, including domestic well owners. Domestic well owners are referred to in the Water Code as "de minimis users".As the location of de minimis users is unknown in the GSA's management area, and because Water Code 10730 requires groundwater users to be regulated if they are to be charged a Proposition 26 fee,the GSA must adopt a resolution regulating de minimis users18. The fee was developed and refined between February and May, 2024.The developed fee methodology recognizes the difference in water use between customer groups and it provides some flexibility in that it can be updated within its original framework with better information, technological advances, and new data sets. 3.3 PUBLIC OUTREACH A key tenant in developing the regulatory fee structure has been to maintain transparency throughout the project, informing the UVBGSA stakeholders and the community about the fee study and how they can be involved and provide input to the process. Outreach Overview Public outreach served as one of the fundamental components of establishing a reasonable, equitable and legally defensible fee structure. Key principles included transparency, inclusion, and recognition of the diversity of groundwater users in the Ukiah Valley Basin, as well as cultural, environmental, and economic considerations. Clarity about the setting of and use of the fee was a key objective given the GSA has been funded thus far by JPA members. Outreach goals, objectives and considerations were identified at the onset in a Communication and Engagement Plan,which was reviewed by GSA staff, including GSA legal counsel.The fee consultant team was also educated about Tribal engagement protocol and communication tactics. Stakeholder Outreach and Engagement The team reviewed a list of stakeholders compiled during the GSP development and identified priority stakeholders to be contacted for the fee study.An introductory email was sent to representatives to explain the fee study purpose and provide options for meetings. The fee study consultant team met with organizations or its representatives, either in-person or via phone or video conference. In total, 21 meetings were held with representatives from Ukiah City and County agencies, environmental interests,agricultural interests, disadvantaged communities, small water systems, and private/public water agencies. Information obtained during the interviews was taken into consideration when developing the fee structure. Several attempts were made to engage local Tribal representatives, both formally and via email and calls to designated representatives; however,only the Yokayo Tribe was engaged in the stakeholder process. 18 Regulation may refer to Water Code 10725.4,specifically conducting investigations,and in connection with such investigations,"inspecting the property or facilities of a person or entity to ascertain whether the purposes of this part are being met and compliance with this part." Ukiah Valley Basin Groundwater Susta nability Agency Fee Study Final May 20,2024 PJgc 31 Highlights from the stakeholder engagement included: 0 • Reduce the 5-year GSA budget from the potential total costs presented at the October 12, 2023 Board meeting to address minimum administration needed to comply with SGMA (annual reporting, GSA/GSP management, etc.). • Establish a fee that places the least amount of economic impact on the Ukiah community (affordability for low income households, particularly renters, and current depressed wine grape prices). • All water users should pay a fee regardless of the water source they use (surface and groundwater are interconnected). • All parcels with wells should pay(regulate di minimis users). • Parcel/acreage fee was the most supported methodology;stakeholders were clear the fee structure needs to account for different land use types. • Consider whether cannabis growers should be charged a fee. • Collecting the fee with property taxes is ideal.Water systems do not want to add to billing and create new fees on existing water bills. • Be mindful of other fees that agriculture and water systems pay to Russian River Flood Control Agency and the difficulty to absorb another fee. Public Outreach Tactics Several tactics were used to provide a broader outreach effort: • Website-specific fee study tab on the GSA's website • Fee-Specific Frequently Asked Questions(FAQ)* • Fee study presentations and display boards • Mailer*to all property owners in the Ukiah Valley Basin to advertise fee study workshops held in January and March and board meetings when the fee study was on the agenda • Advertisements* for the January and March workshops in the Ukiah Daily Journal • Social media posts and workshop notifications provided to GSA member agencies to promote engagement via their agency channels • Media relations and reporter communications *Dual English/Spanish languages Public Workshops Two workshops were held. The January 11, 2024 presentation included background about SGMA, UVBGSA's role in developing a groundwater sustainability plan, and an in-depth explanation of the fee study.The March 13, 2024 public workshop addressed the fee structure under consideration, fee study methodology, provided examples for residential, commercial and agriculture beneficiaries, and reviewed outreach efforts. In total, more than 90 participants attended the two workshops. Developed supporting materials included PowerPoint presentations,display boards,fact sheets and meeting facilitation materials. Most materials were available in English and Spanish languages, and Spanish translation services were provided at both workshops. The fee study process considered community feedback received during the two public workshops. In general,the public had many questions related specifically to the GSA and SGMA at both Uk A Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 Pagr 3z. workshops, although the second workshop received more questions related to the fee methodology. Fee-related comments and question topics included: • Understanding the GSA budget, GSA management costs and related costs to implement the GSP.The GSA budget, or cost basis, is used to set the fee needed to sustain the operations of the GSA. • Understanding both the individual and greater benefits received from paying a fee to the GSA. • Whether all well owners, including di minimis users,should be charged a fee;similarly understanding why a private single well-owner would have to pay to use its"own"water. • Whether meters will be required on domestic wells. • Whether the GSA has the authority to regulate well permits and if permits will be limited (especially applicable to Redwood Valley area). • Understanding how properties will be charged if not all acres are irrigated,and if a parcel extends beyond the GSA boundaries. • Considerations for how the fee will be established (i.e. parcel and land use types, irrigated acres and whether to charge certain crop types,such as cannabis). • Whether to charge all water users a base fee.This would include all property owners either with a well or on a public water system. • Voicing general support for charging the fee to cannabis cultivators. • Understanding how the fee will be collected (water provider bills, property tax bills). • Understanding how the fee will be adopted (Proposition 26 or Proposition 218). Detailed workshop summaries are included in the Appendix A.The public also had the opportunity to participate and provide input at UVBGSA Board meetings when the fee study was on the agenda. The fee study was discussed at the August 30 and October 12, 2023 Board meetings,the January 11, February 13, and March 13, 2024 UVBGSA Board meetings. Appendix A of this report provides copy of the following public outreach materials: • A.1 state and Fee Study Outreach Plan • A.2 Stakeholder Summary Report • A.3 Mailer to all Property Owners • A.4 Display Ads • A.5 Fact Sheet • A.6 Internet Postings • A.7 Fee Study Workshop Summaries • A.8 Media Articles All Board discussion materials and public outreach presentations are provided in Appendix B. Ukiah Val ey Bas n Groundwater Sustainability Agency Fee Study Fina`May 20,2024 Page 3; Section 4: FEE CALCULATION 0 4.1 COST BASIS OF FEE To date, most UVBGSA expenses have been related to administrative functions of the GSA and development of the GSP,the cost of which was paid for with a grant from DWR. Member agencies have contributed$68,750 per year each to pay for the operating expenses of the Agency, and an additional $30,000 each in FY 2024 to fund the Fee Study. Member agencies have also provided considerable in-kind service costs to the UVBGSA.A new regulatory fee,which is the subject of this report, will be imposed that will replace member contributions. The $600,000 FY 202S budget comprises UVBGSA's core administrative costs, DWR-reporting activities, administrative support for GSP action items, PMAs, and a prudent reserve.Table 21 shows the five-year budget forecast in real (inflated) dollars with a FY 2025 starting budget of $600,000.The projection assumes that UVBGSA's budget increases 4%each year,the average annual price increase in California for the past 5 years. Historical annual increases in various price indexes is shown in Table 22 for reference. Table 21 Summary of Projected GSA 5-Year Budget Cast Fiscal Year Ending 5-Yr Category 2025 2026 2027 2028 2029 Total Share Fee Revenues $600,000 $624,000 $649,000 $675,000 $702,000 $3,250,000 100% Costs Core Operating $138,000 $144,000 $150,000 $156,000 $163,000 $751,000 23% DWR Reporting $130,000 $136,000 $142,000 $148,000 $154,000 $710,000 22% GSP Administrative Support 11) $113,000 $118,000 $123,000 $128,000 $134,000 $616,000 19% Remaining for PMAs&Other[2) $219,000 $226,000 $234,000 $243,000 $251,000 $1,173,000 36% Source:UVBGSA financial projections,May 2024. sum cost [1]Preliminary estimate,actual costs will depend on the PMAs pursued. [21 May be spent on PMAs,added to reserves,or used for any other purpose of the GSA. Components of the budget projection are shown in Figure S. Ukiah Valley Bas n Groundwater Sustainability Agency Fee Study Final May 20,2024 Page 34 Table 22 Historical Price Index Changes Average Change per Year Index 20 Yrs 10 Yrs 5 Yrs June to June 2003-2023 2013 2023 2018 2023 ENR Construction Cost Index All Cities 3.5% 3.4° 3.8% San Francisco 3.5% 4.0% 5.0% Consumer Price Index West Region 2.8% 3.2% 4.2% California 2.8% 3.2% 4.0% Source:Bureau of Labor Statistics and the index Engineering News Record. Figure 5 Components of Five-Year Budget Projection N Core Operating DWR Reporting $800,000 •GSP Administrative Support a Remaining for PMAs&Other $700,000 $675,000 $702,000 $600,000 $624,000 $649,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 FY2025 FY2026 FY2027 FY2028 FY2029 Operating expenses include agency staffing, currently provided by a consulting engineering firm,to provide reports and proof of SGMA compliance required by DWR, develop implementation policies and guidelines, provide grant writing, and legal counsel. Regulatory compliance and administration Ukiah Valley Basin Groundwater Sustainability Agency Fee Study Finaz May 20,2024 Pie 35 costs include general operational costs such as small tools, materials and supplies,travel and training costs, insurance,dues, and permit costs,as well as costs associated with data gathering (data networks,monitoring activities, mapping and so forth) and County fees to place UVBGSA's regulatory fee on the property tax roll.The projection of expenses excluding potential PMA expenses is provided in detail in Table 23. GSP administrative support costs will vary with the number and scale of PMAs undertaken in the five-year period. Table 23 Projected GSA 5-Year Expenses Excluding PMAs in Inflated Dollars Expense Fiscal Year Ending Item 2024 2025 2026 2027 2028 2029 costs inflation factor---> 4.0% 4.0% 4.0% 4.0% 4.0% Core Administrative Costs All figures in inflated$s County Administration $5,000 $5,200 $5,500 $5,700 $5,900 $6,100 Annual Workshops $0 $4,200 $4,400 $4,500 $4,700 $4,900 Board/TAC Meetings $45,000 $46,800 $48,700 $50,700 $52,700 $54,800 Insurance $2,500 $2,600 $2,800 $2,900 $3,000 $3,100 Legal[3] $40,000 $52,000 $54,100 $S6,300 $58,500 $60,900 Fee Program Administration $0 $15,600 $16,300 $16,900 $17,600 $18,300 County Fees Costs $12,000 $12,400 $12,800 $13,200 $13,600 Subtotal Core Administration Costs $92,500 $138,400 $144,200 $149,800 $155,600 $161,700 GSP Administrative Suppport GSP Implementation Overs ght $15,000 $20,900 $21,700 $22,500 $23,400 $24,400 Rate and Fee Support $25,000 $10,400 $10,900 $28,200 $11,700 $12,200 Contracts/Fiscal Management $12,000 $20,800 $21,700 $22,500 $23,400 $24,400 Outreach and Engagement $10,000 515,600 $16,300 $16,900 $17,600 $18,300 Miscellaneous"as requested"Items $0 $5,800 $6,000 $6,200 $6,500 $6,700 Website/Email $2,S00 $3,200 $3,300 $3,400 $3,600 $3,700 Grant Writing $25,000 $36,400 $37,900 $39,400 $41,000 $42,600 Subtotal GSP Administrative Costs $90,000 $113,000 $118,000 $139,000 $127,000 $132,000 DWR-Reporting Activities Report;ng $20,000 $20,800 $21,700 $22,500 $23,400 $24,400 Technical Support $45,000 $78,000 $81,200 $84,400 $87,800 $91,300 Monitoring/Data Collection $79,000 $31,200 $32,500 $33,800 $35,100 $36,500 Total DWR-Reporting Activities(rounded) $144,000 $130,000 $135,000 $141,000 $146,000 $152,000 Estimated Recurring Annual Expenses $326,000 $381,400 $397,400 $429,600 $429,100 $446,200 5i ume:2024 edopted budget,UVBGSA staff.ano NEC.May 2024 Table 24 provides a cash flow analysis for the UVBGSA for the next five fiscal years. Note that the estimates of costs and revenues are best estimates and that only year-end values are reported; actual costs and revenues will likely vary from these estimates over time, and there could be periods of time during the fiscal year that the UVBGSA is unable to maintain its target minimum cash threshold because it needs to draw from reserves. After accounting for administrative costs, DWR-reporting activities, bad debt, and maintenance of at least 25%of casts held in reserve, UVBGSA would be able to spend approximately$1.0 million on PMAs over the next five years. Ukiah Valley Bas n Groundwater Sustainability Agency Fee Study Final May 20,2024 Paige 36 Table 24 Projected 5-Year Cash Balances Revenues and Fiscal Year Ending Expenses 2024 2025 2026 2027 2028 2029 Revenue New Fee Mechanism[1) $0 $600,000 $624,000 $649,000 $675,000 $702,000 Grants $0 $0 $0 $0 $0 $0 Total Revenue $0 $600,000 $624,000 $649,000 $675,000 $702,000 Expenses Core Administrative $92,500 $138,000 $144,000 $150,000 $156,000 $163,000 DWR Reporting $144,000 $130,000 $136,000 $142,000 $148,000 $154,000 PMA-Driven Administrative $90,000 $113,000 $118,000 $123,000 $128,000 $134,000 Total Expense $326,500 $381,000 $398,000 $415,000 $432,000 $451,000 Estimated Net Revenue ($326,500) $219,000 $226,000 $234,000 $243,000 $251,000 Beginning Balance $191,000 $104,500 $145,500 $172,780 $187,310 $190,060 Net Revenues ($326,500) $219,000 $226,000 $234,000 $243,000 $251,000 GSA Member Contributions $395,000 $0 $0 $0 $0 $0 Bad debt[2) $0 ($18,000) ($18,720) ($19,470) ($20,250) ($21,060) PMA Costs ($155,000) ($160,000) ($180,000) ($200,000) ($22%000) ($240,000) Estimated Ending Balance $104,500 $145,500 $172,780 $187,310 $190,060 $180,000 Reserves Target Reserves $120,375 $135,250 $144,500 $153,750 $163,000 $172,750 Cash Ba ance as%of Casts 21.7% 26.9% 29.91"3 30.5% 29.2% 26.0% Financial Health Criteria Target Cash Balance 25%of Costs no yes yes yes yes yes Gross Revenues Ratio 1.2(3) yes yes yes yes yes yes Source Fee study,HEC May 2024. flow [11 Assumes adopted fee increases 4%each year. [2)Allowance of 3%for potential lagged payments and/or uncollectable bills [3]Gross revenues ratio target of 1.2 times total expensCs- The cash flow includes an allowance for delinquencies (unrealized fee revenue). Although fees placed on property tax bills are guaranteed to the GSA on the Teeter Plan, unreceived billings of delinquent accounts will not be disbursed to UVBGSA until July or August (the next fiscal year). In addition, it is likely some direct bills will not be paid.The target minimum cash threshold is 25%of operating costs, the same as the City of Ukiah.An additional financial criteria applied in the financial model is that gross revenues must exceed 1.2 times total expenses. Figure 6 demonstrates that the fee meets the two financial criteria in each year; note however,that the projection is for fiscal year-end only and it is possible that at some point during the fiscal year the GSA may have to use some of its reserves to pay invoices. For example,the GSA will not receive any fee revenue between July and December. Ukiah Valley Basin Groundwater Sustamabi`ityAgency Fee Study Final May 20,2024 Pgtc 37 Figure 6 Projected GSA Ending Cash Balances by Fiscal Year $240,000 �Ending Cash Reserves @ 25% of Costs $200,000 $191,000 $187,310 $190,060 $172,780 $180,000 $160,000 $145 500 $120,000 $104 500 $80,000 $40,000 $0 FY2023 FY2024 FY2O25 FY2026 FY2027 FY2O28 FY2029 4.2 DATA SOURCES California law generally provides that a fee calculation need only rely upon the best available data at the time the fee is calculated.The fee calculations herein rely on the best available data sources as of the time of this fee study(May 2024). Data sources used to develop the FY 2025 fee include: • Mendocino County Assessor Parcel Database, • Mendocino County Environmental Health Department Small Water Systems Database, • The Ukiah Valley Basin GSP, 2021 Annual Report, and 2022 Annual Report, • Mendocino County cannabis license database November 2023, • Mendocino County's GIS shapefiles of water system boundaries, • Department of Water Resources Water Management Planning Tool (https:/Jgis.water.ca.pov/`a,Qplboundariesr`), • Millview County Water District water use by customer type, • DWR 2020 crop mapping, and • CA.gov Electronic Annual Reporting System reports provided by DWR staff. Ukiah Valley Basin Groundwater 5ustainab lity Agency Fee Study Final May 20,2024 Pa�e3Q 4.3 FEE CALCULATIONS The fee calculations are performed for the entire Ukiah Valley Basin shown in Map 1 on page 2. All beneficiaries of groundwater management will pay at least Part 1 of the new regulatory fee.The fee calculations are explained in steps. Step 1:Allocate the cost basis to the fee parts and fee groups. The Part 1 fee pays for the core administrative costs of the GSA included in the budget.All other budgeted costs are included in the Part 2 fee. Cost allocation for FY 2025 is based on the 5-year rolling average annual groundwater pumping for fee groups 1(Public Water Systems)and 2 (Crop Land), and an estimate of the average annual water use of Group 3 (Improved Properties not in Group 1 or 2).The fee study acknowledges that the estimates do not provide a perfect accounting of groundwater use in the Ukiah Valley Basin. UVBGSA is still in its infancy and developing data sets.The fee study does not have to provide a perfect accounting;the importance of Step 1 of the fee methodology is to allocate costs in a reasonable manner between the types of users of Ukiah Valley Basin groundwater. Table 25 shows the cost allocation for step 1. Table 25 Cost Basis of Fee Components Share of FY2025 Fee- Total Cost Recovered Fee Component Basis Costs PART 1 FEE: Base Fee 23% $138,000 PART 2 FEES:Customer Group Fees 77% $462,000 FY2025 Cost Basis 100% $600,000 Fee Group 1. Properties Served by a PWS not Crop Land 31% $143,000 2. Crop Land 67% $310,000 3. Improved Properties not in Groups 1 or 2 2% $9,000 Total Fees by Customer Group 100% $462,000 Source:HEC May 2024, Ukiah Valley Basin Groundwater Sustainability Agency Fee Study F nal May 20,2024 Pagr.19 Step 2: Determine the units upon which to allocate the fee-recovered costs. Part 1 Fee The Part 1 fee cost basis is divided by the number of acres of fee-paying parcels in the GSA's boundary. Part 2 Fee The Part 2 fee cost basis is calculated for each of the fee groups differently. Group 1 Fee.The Group 1 allocated cost is divided by the 5-year rolling average groundwater extraction net of estimated agricultural water by the Public Water Systems. Group 2 Fee.The Group 2 allocated cost is divided by the number of cropped acres of Group 2 properties,where cropped acres are identified by the most recent DWR crop mapping GIS file, and cannabis license properties not otherwise engaged in growing crops are capped at 1.0 acre. Parcels that straddle the GSA boundary pay for crops grown on that parcel that extend beyond the boundary because,similar to the exportation of groundwater by the public water systems, agricultural properties may apply water obtained from inside the UVBGSA management area to their property lying adjacent to the GSA's boundary. Group 3 Fee.The Group 3 allocated cost is divided by the number of fee-paying acres of Group 3 properties. Fee-paying acres include the entire acreage of parcels with some portion of the parcel in the Ukiah Valley Basin except for residential properties which are capped at 0.5 acres per parcel. Residential properties are identified by Assessor land use code; however,the Assessor land use code is not always representative of economic activity taking place on the parcel. For example, Recreational Residential should only be a code used for parcels 5 to 40 acres in size but many of the parcels classified as Recreational Residential by the Assessor are smaller than 5 acres.Although it would be ideal,determining actual economic activity each year for each Group 3 parcel would be too administratively burdensome.Table 26 provides a summary of number of GSA fee parcels and acreage of parcels by fee group. Table 26 Summary of GSA Fee Parcels and Acreage Fee GSA Area of Fee-Exempt Parcels Group Parcels In GSA Fee Acres base fee acres group fee acres Group 1 9,396 11,306 n.a. Group 2 952 16,447 9,967 Group 3 367 2,737 273 Group 4 274 5,271 n.a. Total 10,989 35,761 Source:UVBGSA fee database,May 2024. lu 0 Uk A Valley Bas n Groundwater Sustamabdity Agency Fee Study Final May 20,2024 Pap 41D Step 3: Perform the Fee Calculations Table 27 shows the fee calculations for the Part i and Part 2 fees. A 5% margin for error is included in the acreage to account for potential refinements to the database prior to the list of parcels being placed on the property tax roll. Table 27 UVBGSA Fee Calculations FY 2025 Item FY 2025 TOTAL COST BASIS $600,000 PART 1 BASE FEE Cost Basis $138,000 [1] Acreage of Fee-Paying Parcels (acres in the GSA Boundary) 33,973 Base Charge per Acre inside the GSA Boundary $4.07 PART 2 GROUP FEES Group 1 Fee to Public Water Systems Cost Basis $143,000 Thousands of Gallons(Non-Ag Use) 1,057,866 Fee per Thousand Gallons of Extraction $0.1352 Group 2 Fee to Crop Land Cost Basis $310,000 [1] Cropped Acres of entire Parcels(2] 9,468 Fee per Cropped Acre $32.75 Group 3 Fee to Improved Properties not in Group 1 or 2 Cost Basis $9,000 [1) Improved Properties Acres of entire Parcels [3) 260 Fee per Acre $34.67 Source:HEC fee model,May 2024. fee calc [11 Reduced 5%to allow for errors/adjustments in fee-setting period(Jul-Aug). [21 Cropped acres per DWR Cropping Map plus acreage of parcels growing cannabis capped at 1.0 acre. (21 Residential capped 0.5 acres per parcel. Uk ah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 Page a I 4.4 REGULATORY FEE COLLECTION If adopted,the regulatory fee will be placed on the property tax roll by the Mendocino County Auditor-Controller, and it will be collected by the Mendocino County Treasurer-Tax Collector19. Mendocino County adopted the Teeter Plan which guarantees payment of the full amount of the fees that are charged,with the County pursuing any unpaid fees. Fee revenues will be disbursed to UVBGSA in December(about 55%),April (about 38%) and July or August(about 7%)20. Properties not assessed on the property tax roll include railroad and utility-owned parcels, State of California owned parcels, and local government owned parcels if those parcels are located within their own jurisdiction.These property owners would be billed directly by UVBGSA. Illustration of revenue collection by customer group is shown in Figure 7. Figure 7 Revenue Collection by Group Group 4(Part 1 Fee Only) 4% Group 1 (Part 1 Fee paid by Group 3 (Other Property Owners) Improved Properties) 7% 3% 19 All fees would be placed on the property tax roll,with the exception of properties that do not receive a property tax bill. 20 Mendocino County Guide for Placement of Fixed Charges on Secured Tax Roll. Ukiah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 POW 42 ` 4.5 EXAMPLE CUSTOMER BILLS Public Water Systems. Public Water Systems FY 2025 bills for Group 1 users are estimated in Table 28 using data as of early May, 2023. Data upon which the fees are calculated will be updated as part of the fee-setting process in July.The base fees for parcels served by Public Water Systems are not included in the table because the fee will be different for every parcel, depending on its size. Table 28 Calculated Public Water Systems FY 2025 Fees Fee Based on GW Extraction 5-Yr Rolling Avg. FY 2025 ANNUAL Public Water System GW Extraction Fee Fee per Unit thousand gallons $0.1352 URRWA 334,367 $45,206 River Estates Mutual Water Company 10,409 $1,407 Rogina Water Company 174,778 $23,630 City of Ukiah 521,885 $70,559 Lake View Mutual Water Company 2,326 $314 Yokayo Tribe of Indians 2,654 $359 Flight Ridge 937 $127 City of 10,000 Buddhas 10,510 $1,421 Total 1,057,866 $143,023 Source:DWR Annual Electronic Records,and HEC fee model,May 2024. Crop Land. Examples of Group 2 bills are shown in Table 29 for three ten-acre farms cropping 1.5 acres, 6,0 acres, and 9.5 acres respectively.The Part 1 base fee is the same for each farm, but the Part 2 fee differs based on the acreage of the farm that is cropped, according to the 2020 DWR crop mapping data. Table 30 provides an example of total fees that would be paid by a certain ranch. Ukiah Valley Basin Groundwater Sustainab lity Agency Fee Study Final May 20,2024 Page 4; Table 29 Example Crop land Bills Item Farm 1 Farm 2 Farm 3 Total Parcel Acreage 10 10 10 Cropped Acreage 1.5 6.0 9.5 Base Fee Base Fee per acre $4.07 $4.07 $4.07 Total Base Fee a $40.70 $40.70 $40.70 Group 2 Fee Fee per cropped acre $32.75 $32.75 $32,75 Group 2 Fee b $49.13 $296.50 $311.13 Total Annual Fees a+b $89.83 $237.20 $351.83 Source:HEC May 2024, crop bill Table 30 Fee Calculations for a Ranch Fee Acres in Cropped Base Group Fee per Group Land Use GSA Acres Fee Fee Parcel fee per unit----> $4.07 $32.75 2 Crop Land 6.00 1.79 $24 $59 $83 2 Crop Land 5.00 1.26 $20 $41 $62 2 Crop Land 15.70 6.48 $64 $212 $276 4 Recreational 7.00 $28 $28 Total Annual Fees 33.70 9.53 $137 $312 $449 Monthly Fees $37 Source:HEC fee calculations,May 2024. Group 2 Fee Comparison with Sonoma County GSA Fees The Sonoma County GSAs have an extraction fee structure.The fees are based on estimated extraction according to the estimated water demands of different crop types.The UVBGSA fee does not differentiate between crop types. Figure 8 compares the UVBGSA calculated fees for the three farms in Table 29 with the subsidized and unsubsidized fees of the Sonoma County GSAs21 for 10 acres of grapes.The figure shows the UVBGSA fee is greater than the Santa Rosa Plain GSA fee but lower than the unsubsidized fees of the Petaluma and Sonoma GSAs.The UVBGSA fee is higher in 21 Sonoma County subsidizes the fee in the Sonoma and Petaluma GSAs so that all three GSAs pay$40 per acre- foot per year,the same fee as the Santa Rosa Plain GSA. Ukiah VaLey Basin Groundwater Sustainability Agency Fee Study F nal May 20,2024 PW 44 comparison to the Sonoma GSAs when a small portion of the parcel is cropped because of the Part 1 fee component.The Sonoma County GSAs do not have a base fee. Figure 8 Comparison of UVBGSA with Sonoma County GSA Fees for Grape Growers 10 Acre Parcel Growing Grapes 9.5 acres v L U Q 0 Petaluma 6.0 acres a ❑Sonoma a. 0 U pSanta Rosa Plain 1.5 acres !Ukiah Valley $0 5200 $400 $600 $800 $1,000 $1,200 $1,400 ANNUAL Fee Figure 9 displays the fees for the three farms growing apples or pears. For parcels cropping more than about 2.5 acres of orchard,the Sonoma County GSA fees are significantly higher than UVBGSA's fees.This is because the UVBGSA fee does not vary depending on crop type whereas the Sonoma County GSA fees do. Figure 9 Comparison of UVBGSA with Sonoma County GSA Fees for an Orchard 10 Acre Orchard 9.5 acres a� L U Q ■Petaluma v 6.0 acres Q- 0 Sonoma a 0 u` ID Santa Rosa Plain 1.5 acres i Ukiah Valley $0 $800 $1,600 $2,400 $3,200 $4,000 ANNUAL Fee Ukiah Val ey Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 Page OS Single Family Homes Single family home bills will vary,depending on whether the home is served by a Public Water System (in Group 1)or has another source of water(in Group 3). The bill of a home in Group 1 is dependent on how the water provider passes through the fee it has been charged to its customers.Without knowing how each water provider will do this,the example bills for Group 1 in Table 31 calculate the bill assuming the water provider charges the customer based on water consumption.A range of costs is shown according to annual water use. City of Ukiah single family homes typically use approximately 7,500 gallons per month,according to its latest water rate study,and Millview County Water District customers typically use approximately 9,500 gallons per month based on 2023 metered water use data. Part 1 fees increase bills for residential properties according to the acreage of the parcel within the GSA's boundaries, but Part 2 fees only vary up to parcels of half an acre for residential properties in Group 3.The total annual UVBGSA-related fees paid by single family homes in groups 1 and 3 are likely to be similar, ranging between $10 and $25 in FY 2025. Table 31 Single Family Home Fee Ranges(Groups 1&3) Item Calculation Water Use Range(Gallons per Month) 5,000 9,000 11,500 13,600 Water Use Assumptions Gallons per Year a 60,000 108,000 138,000 163,200 Acre feet per Year b=a/325,851 0.18 0.33 0.42 0.50 Group 1 Base Fee c $4.07 $4.07 $4.07 $4.07 Parcel Acreage(quarter acre lot) d 0.25 0.25 0.25 0.25 Base Fee a=c*d $2.02 $1.02 $1.02 $1.02 Group Fee per Thousand Galls f $0.1352 $0.1352 $0.1352 $0.1352 Group 1 Fee g=f*(c/1000) $8 $15 $19 $22 Total Group 1 ANNUAL Fee h=a+g $9 $16 $20 $23 Group 3 Base Fee c $4.07 $4.07 $4.07 $4.07 Parcel Acreage(estimate) d 0.25 0.75 1.50 2,00 Base Fee a=c*d $1.02 $3.05 $6.11 $8.14 Group Fee per Acre f $34.67 $34.67 $34.67 $34.67 Group 3 Fee[1] g=d*f $9 $17 $17 $17 Total Group 3 ANNUAL Fee h=e+g $10 $20 $23 $25 [1]Group 3 Residential fee capped at 0.5 acres. Ukiah Valley Bas n Groundwater Sustainability Agency Fee Study Final May 20,2024 Pa;e+l6 Non-Residential Properties Tables 32 and 33 show examples of UVBGSA fees for non-residential property owners in Group 1 and Group 3, respectively. Table 32 Example Bills for Group 1 Businesses Apartment Item Building Hotel Assumptions: Acres(in Millview CWD) 2.13 4.39 Annual Water Use(thousands of gallons) 84 57 Base Fee Base Fee per Acre $4,07 $4.07 Total Base Fee(served by Water District) $9.67 $17.97 Group 1 Fee Water use fee per 1,000 galls(estimated) $0.1352 $0.1352 Apartments Group 1 Fee $11.32 $7.75 Total ANNUAL Fee $19.99 $25.61 Source:HEC May 2024, apt bill Table 33 Example Bills for Group 3 Businesses Item Restaurant Bar Base Fee Base Fee per Acre $4.07 $4.07 Total Base Fee $6.27 $14.65 Group 3 Fee Group 3 Fee per Acre $34.67 $34.67 Number Acres 1.S4 3.60 Group 3 Fee $53.39 $124.81 Total ANNUAL Fee $59.66 $139.46 Source:HEC May 2024. bar Ukiah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 Paige A Section 5: FEE IMPLEMENTATION The calculated fee is a regulatory fee adopted pursuant to SGMA(Water Code section 10730).That section provides: Permit fees and fees on groundwater extraction or other regulatory activity [may be imposed] to fund the costs of a groundwater sustainability program, including, but not limited to, preparation, adoption, and amendment of a groundwater sustainability plan, and investigations, inspections, compliance assistance, enforcement, and program administration, including a prudent reserve. 5.1 FEE ADOPTION To adopt the new fee,the UVBGSA Board must hold at least one public meeting. Prior to the public meeting, notice must be provided as follows: (1) Publicize once a week for 2 weeks at least 14 days ahead of the meeting, (2) post notice on the agency's website, (3) send by mail to any interested party who files written request for notice of agency meetings on new or increased fees. (2) The notice must include time and place of meeting,general explanation of the item,and a statement that the data upon which the proposed fee is based is available(this must be made available to the public at least 20 days prior to the meeting). A fee resolution must be adopted every year to place the fees on the tax roll, regardless of whether the fee amounts change or not.The fee should be adjusted each year to reflect the UVBGSA's budget for the upcoming fiscal year, incorporating the most recent 5-year rolling average groundwater extractions for fee groups 1 and 2, and the most recent DWR crop mapping data. In the event the required annual data updates are not performed and/or the budget is adopted later than May, the fee study recommends including an automatic annual increase in the fee resolution. The recommended automatic fee increase is 4% every year or the 12-month change (March to March) in the West Region Consumer Price Index published by the Bureau of Labor Statistics. For the calculated fees to be implemented,there must be a majority vote of the Board of Directors22.After adopting the fee, UVBGSA must continue with the following actions to implement the fee for FY 2025, and each fiscal year thereafter: 1. The UVBGSA shall notify the California Public Utilities Commission (CPUC)of the fee by way of letter to the Director of the Water Division immediately following adoption of the fee, before the fee is imposed. 2. The UVBGSA shall provide the Mendocino County Auditor-Controller's office all required documentation authorizing placement of the fee on the property tax roll by August 1, 2024 and 21 Four out of six votes. O Ukiah Valley Basin Groundwater Sustainability Agency Fee Study final May 20,2024 Page 48 Pshall provide the list of Assessor Parcel Numbers and fee amounts to be placed on the FY 2025 roll no later than the date specified by the Mendocino County Auditor-Controller (usually around August 10th). Pursuant to SB 323 effective January 1, 2022, set forth in Government Code Section 53759,the fee payors have a 120-day challenge period following adoption of the new fee. 5.2 APPEALS Appeals guidelines will be developed and provided in either the fee resolution itself, or a separate resolution, and appeal forms shall be posted on the UVBGSA website. The property owner shall first be required to pay the fee as charged. Following payment of the fee, an appeal may be filed with UVBGSA. Upon review,the appeal shall be either granted or denied. Any person may pay the fee under protest and bring action against the governing body in the superior court to recover any money that the UVBGSA refuses to refund. Ukiah Valley Basin Groundwater Sustainability Agency Fee Study Final May 20,2024 plige 49 0 0 0 Appendices available online or by request. 0 0 0