Title
Consider recommending the Board of Supervisors consider a Groundwater Monitoring Program Regulatory Fee Stabilization Policy.
Report
RECOMMENDATION:
It is recommended that the Board of Directors:
Recommend the Board of Supervisors consider a Groundwater Monitoring Program Regulatory Fee Stabilization Policy.
SUMMARY/DISCUSSION:
The Finance & Administration Committee was presented the proposed Groundwater Monitoring Program (GMP) Regulatory Fee Stabilization Policy at the September 11, 2026, meeting. The FAC Report, example Attachments, and draft Policy are included in this package for your convenience. The FAC raised three policy questions for further consideration:
First, the FAC discussed whether interest earnings from the reserve funds should accumulate, rather than be sown back into the GMP as an alternative revenue source, until such time that the program costs could be sustained by interest earnings instead of well owner fees.
Staff supports the principle of reinvesting reserves but recommends additional research before deciding. Financial reserves are the foundation of resilience for public water agencies. They help moderate rate volatility, weather economic downturns, and prepare for emergencies and capital needs. Issues requiring further consideration include, how to develop and implement best investment management practices, including liquidity management, asset-liability matching, and duration strategies, within the range of allowable investment options under County policies and California’s legal framework. Ultimately, the question is, “how can the Agency optimize reserve portfolios based on unique cash flow needs while maintaining the balance of safety, liquidity, and yield?” Examining this question will take time. In the meantime, staff recommends interest earnings be retained at least until the proposed reserve funds are accumulated, or while the broader question is considered.
Second, the FAC discussed whether the Agency should maintain a database of well owners paying the GMP regulatory fee so that if a refund of reserves is warranted one day, monies could be returned to those well owners that originally paid the fee.
Each year, staff struggle to connect with well owners contacted just the previous year. Keeping up with changing ownership or tenancy, addresses, and contact information requires substantial effort. Staff agree maintaining a database of previous well owners is rather straightforward; the challenge and cost stem from keeping information current and useful. In the event a refund should be warranted one day, staff recommend it be made to those well owners of record at the time rather than incurring the cost to try and reconnect with well owners that have been out of the systems for years, or potentially decades.
Third, the FAC discussed whether the GMP should be funded by Ad Valorem revenues accounted for in Fund 1501 (formerly 111).
As discussed in the attached the FAC Report, the GMP was established to meet the requirements of California Code of Regulations (CCR), Title 23 (23 CCR), Division 2, Chapter 1.5, Subchapter 2, Article 5, Sections 354.32 et seq. To meet these requirements, the Agency had to establish a reliable funding mechanism to recover the reasonable costs necessary to ensure regulatory compliance. In July 2024, the Agency initiated a Groundwater Monitoring Program Fee Study, completed in May 2025, which established a schedule of cost-based fees under section 1(e)(3) of Article XIII C of the California Constitution (Proposition 26). The established regulatory fees are consistent with Gov. Code § 53758(c), which states in part: “…that the amount [of the fee] is no more than necessary to cover the reasonable costs to the local government in providing the specific benefit or specific government service…” As it applies to the GMP, the specific benefit accrues solely to well owners. Ad Valorum tax revenues, on the other hand, are received from a wide range of landowners, most of whom do not own a well. For this reason, the Ad Valorum revenue is generally dedicated broadly, to support the Agency’s organizational structure and functions and provide Countywide services related to water resources management. Additionally, the adopted FY27 budget estimates a draw from Fund Balance of over $2M to support the currently approved activities. For these reasons, staff recommend GMP activities continue to be funded through the Board established regulatory fees.
The FAC Regulatory Fee Stabilization Policy discussion occurred at the beginning of the meeting and can be viewed at the following link:
Finance and Administration Committee - 2026 - Zoom <https://montereycty.zoom.us/rec/play/Ysl6UILkR5quSjK_RkRkCnvyzsiLZktAsyVjO-OSvF2_-HqtNvHcubpaw9xqWtcclyCZ4t2DjUNFP7yc.MyildGzWHtkEcTkn?
STRATEGIC PLAN ALIGNMENT:
The Regulatory Fee Stabilization Policy recommendation aligns with the Board of Directors adopted 2020 Strategic Plan Goal A, Strategies 3 & 4; Goal B, Strategies 2 & 7; and Goal D, Strategy 1.
OTHER AGENCY INVOLVEMENT:
Finance & Administration Committee
FINANCING:
Implementing the recommendation may require a FY27 budget amendment to augment revenues and appropriations by $120,000.
Prepared and Approved by: Ara Azhderian, General Manager, (831) 755-4860