Title
Consider recommending that the Monterey County Water Resources Agency Board of Directors hold a public hearing to consider recommending the Monterey County Water Resources Agency Board of Supervisors to:
a. Approve and adopt the Fiscal Year (FY) 2024-25 Zone 2B water delivery fee of $89.60 per acre-foot of water delivered (AF) for Zone 2B for the Castroville Seawater Intrusion Project (CSIP) and the Salinas Valley Reclamation Plant (SVRP) b. Notice and hold a public hearing on May 29, 2024, at 10:30 a.m. to consider approving and adopting the fee change; and c. Direct the Clerk of the Board of Supervisors to publish a hearing notice once a week for two consecutive weeks prior to the date set for the public hearing by Board of Supervisors.
Report
RECOMMENDATION: It is recommended that the Finance Committee recommend the Monterey County Water Resources Agency Board of Directors hold a public hearing to consider recommending the Monterey County Water Resources Agency Board of Supervisors to: a. Approve and adopt the Fiscal Year (FY) 2024-25 Zone 2B water delivery fee of $89.60 per acre-foot of water delivered (AF) for Zone 2B for the Castroville Seawater Intrusion Project (CSIP) and the Salinas Valley Reclamation Plant (SVRP) b. Notice and hold a public hearing on May 29, 2024, at 10:30 a.m. to consider approving and adopting the fee change; and c. Direct the Clerk of the Board of Supervisors to publish a hearing notice once a week for two consecutive weeks prior to the date set for the public hearing by Board of Supervisors.
SUMMARY/DISCUSSION: The Castroville Seawater Intrusion Project (CSIP) is part of a conjunctive use system that delivers a combination of recycled water, Salinas River water, and groundwater to farmers to reduce groundwater extraction within seawater intruded areas of the 180/400-Foot Aquifer Subbasin. Monterey One Water owns and operates the Regional Treatment Plant that provides treated effluent to the Salinas Valley Reclamation Plant (SVRP) which treats the water for use in the CSIP distribution area. The water delivery fee of Zone 2B was established to support operations and maintenance of the CSIP and SVRP, and for growers to pay for water delivered to parcels.
The Monterey County Water Resources Agency (“Agency”) Agency Act (California Water Code, Appendix § 52) and Ordinance No. 3789 require a public hearing by the MCWRA Board of Directors to consider a recommendation on a proposed water delivery fee of a new fiscal year. Following the public hearing the Board of Directors would make recommendations to the MCWRA Board of Supervisors concerning the adoption of resolutions to establish the water delivery fee of Zone 2B. MCWRA Ordinance No. 3798 and Resolution 00-172 establish there is no limit on the increase that can be applied to the water delivery charge, so long as revenues do not exceed the reasonable cost of providing recycled water, including payment of debt. The cost of operations and maintenance of CSIP and SVRP has increased steadily over time, especially chemical costs, electrical charges, and staff rates since Fiscal Year 2019. Revenues from current assessments and water delivery fee is no longer sufficient to afford increased operational costs and needed capital improvement projects. MCWRA has been using Fund Balance to pay for capital improvement projects approved by the Board of Directors which is not sustainable with current revenues.
The Agency recommends that the FY2024-25 water delivery fee of Zone 2B be $89.60/AF, an increase of $52.36 from $37.24 /AF in FY 2023-24. Utility and chemical costs of CSIP and SVRP operations experienced average annual increases of 17% and 33%, respectively since FY 2019. The amount requested for the FY25 budget accounts for an increase of 24% for utilities and an increase of 35% for chemicals needed for each operation. The recommended water delivery fee of $89.60 is to pay for increased chemicals and utility costs as well as to fully fund annual well maintenance, CSIP turnout flowmeter calibrations and new source water investigation, while still using Fund Balances to cover existing funding gap of CSIP and SVRP operations in FY 25.
A notice of the April 15, 2024, public hearing by Board of Directors will be published in the Monterey County Weekly on April 4, 2024.
It is requested that the Finance Committee and the Board of Directors recommend that the MCWRA Board of Supervisors approve and adopt the FY 2024-25 water delivery fee of $89.60 /AF. Notices will be published once a week for two consecutive weeks prior to the date set for the MCWRA Board of Supervisors hearing.
OTHER AGENCY INVOLVEMENT: None
FINANCING: Financial impacts of the requested increases to the FY2024-25 water delivery fee was reviewed during the MCWRA FY2024-25 Budget Workshop, held on March 18, 2024.
Total FY 2024-25 revenue estimated of the CSIP water delivery fee at $89.60/AF is $1,792,000 based on estimate 20,000AF, estimated amount of $1,067,200 funding SVRP operations and $724,800 funding CSIP operations.
Prepared by: Nan Kyung Kim, Finance Manager III (831) 755-4860
Approved by: Ara Azhderian, General Manager (831) 755-4860
Attachments: Monterey One Water Five Year Expense Trend Notice of Public Hearing at the MCWRA Board of Directors meeting on April 15, 2024 Notice of Public Hearing by the MCWRA BoS BoS Resolution