Staff Report 6.2 - Timber Cove Water District Municipal Service Review; Consideration of Adoption of Determinations

Analysis

At the urging of residents of Timber Cove, staff recommended to the Commission that a Municipal Service Review be conducted for the Timber Cove Water District.

Staff has received the final report conducted by our consultant for the project, Planwest Partners, Inc., and has made the report available at the Commission’s web site beginning in late August.

While the report does not directly address the bulk of the concerns of a cadre of local residents, it does provide an assessment of existing operations of the District and is consistent with the required elements of a Municipal Service Review per the Cortese-Knox-Hertzberg Local Government Reorganization Act.

Staff is requesting that the Commission review the report, and consider passing a resolution indicating adoption of the report’s primary determinations.

Background

In 2019 a group of concerned residents of Timber Cove approached Commission staff with concerns regarding the operations of the Timber Cove Water District.  These concerns included:  

• •A lack of transparency of Board activity, including gaps in publishing meeting agendas and minutes on the District web site.
• •A decision by the Board to cease vegetation management services within District territory. (Water Districts that rely on surface water are allowed, but not required, to provide vegetation management services in the service of protecting water supply.)
• •An apparent loss of District records that occurred when there was a retirement of a District administration employee.
• •A report that the District had misplaced on the order of $250,000 of reserve funds.
• •Improper behavior by former and existing District directors.

While staff enjoined the residents to consider all options for addressing these concerns, including exercising their voting franchise and filing complaints, if warranted, with the Fair Political Practices Commission, staff also recognized that a Municipal Service Review of the District would provide the Commission insight into the operational condition of the District.

Because the District relies on surface water supplies, the District must employ licensed operators to ensure water quality standards imposed by the State are appropriately met.  A surface water system is generally far more costly to own and operate than a system using groundwater supplies or wholesale water from Sonoma Water (formally named the Sonoma County Water Agency).

Additionally, the District is known to face supply issues, with water supplies in it’s reservoir falling perilously low at the close of the dry season in many years.

Lastly, the District has a very small user base, with 189 lots developed out of the 277 in the District territory.  With high fixed costs (for capital assets and operations) being recovered through low water sales, resulting in very high water service rates.

Determinations 

The key determinations of the report are summarized at the beginning of each of the sections addressing the requirements for a Municipal Service Review (”MSR”) outlined in Cortese Knox.  

From the Commission’s perspective, understanding whether the District remains financially viable is perhaps most important, followed by a consideration of the District’s Sphere of Influence.   

The report indicates that the District is solvent and has accumulated a capital reserve intended for required treatment plant upgrades. It also points out that the District is remiss in conducting financial audits for the previous five fiscal years; the District is evidently addressing this by hiring an auditor.  

The District really has no potential for expanding its service area or operating in conjunction with other agencies to reduce costs.  

In a worse-case scenario, if the District fails to manage operations, the system could be reorganized as a service zone of County Service Area 41. It should be noted that such a reorganization would simply change the governance and management of the District but would not change the underlying challenges of operating the water utility.  

With regard to the concerns of District residents, it should be noted that a Municipal Service Review is intended to take a “snap shot” of the current activities of the agency. Although prior issues can inform current conditions, an MSR is not intended to adjudicate prior decisions and actions of the Board or staff of the agency.

  Staff recognizes that in this regard, the residents who approached LAFCO seeking a review of District operations may be disappointed by the scope of the review. However, the report does provide a review of the current operations of the District, which informs Commission considerations of Sphere of Influence amendments or other recommendations for District management.

Recommendation

Staff asks that the Commission review the Municipal Service Review for the Timber Cove Water District and direct staff to make amendments or conduct further study.

Staff also recommends that the Commission consider a resolution (draft attached) that adopts the determinations of the Municipal Service Review.

Alternative to Recommendation 

Should the Commission direct significant additional study of the District, staff would recommend rejection of the draft resolution adopting determinations until such time as the report can be amended.

Attachments 

1. Municipal Service Review: Timber Cove County Water District
2. Draft Resolution