Regen/ed Clerk of the Napa Superior Court The Honorable Scott Snowden Presiding Judge*

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as identified on of the 2002/2003 Grand Jury Report will not be implemented as advocated by the Grand Jury because the Napa County Flood Control and Water Conservation District (District) already functions as a water agency and performs many of the duties recommended by the Grand Jury. The Cities of American Canyon, Calistoga, Napa, St. Helena, Town of Yountville, the District, NSD, and the Napa County Department of Public Works jointly agree that the District performs many of the duties recommended in the Grand Jury report and could add the other suggested duties at the recommendation of the participating agencies. The formation of a Water Agency as envisioned by the Grand Jury would duplicate efforts already handled by the District and remove the essential autonomy that each agency requires to operate their water system and to meet their specific customer and community needs. Such functions as setting water rates, establishing budgets, planning capital improvements, and conducting engineering studies must remain in the control of each municipality and not in a County Water Agency. The agency would also un-necessarily create another political body including a board of directors, staff, and office requirements, which would increase the cost of local government. October 6, 2003 Subject: Response to Grand Jury Finding 1 and Recommendation 1-Formation of a Napa Water Agency The Napa County Flood Control and Water Conservation District was formed in 1951 and over the years has evolved to provide all but a few of the duties and tasks recommended by the 2002/2003 Grand Jury Report. The District Board is made up of representatives from all five Cities and the County Board of Supervisors. Of the thirteen duties recommended by the Grand Jury, the District already provides eight of the duties. A few of the duties listed such as review of groundwater permits and management of watershed programs are performed all or partially by departments of the County of Napa. The three items not performed by others and not performed by the District include development of a Countywide Urban/Agricultural water management plan, development of countywide water rate structures, and the research and collection of data on statewide water rates. The District does provide services that cover all other duties recommended by the Grand Jury report. The District has conducted studies in the past that include many of the components of a countywide urban/agricultural water management plan and are underway with a 2050 water study that has many elements of a water management plan. This study is a cooperative effort funded by all five cities, the Napa Sanitation District, the Flood Control and Water Conservation District, and the County of Napa. The 2050 water study was tailored to meet the needs of all the agencies participating and an action plan to manage and develop needed water supplies in the County will be prepared as part of this study. In addition, the cities have developed their own urban water management plans that go into the detail necessary to meet the needs of their specific agency. There are many reasons why a countywide water rate structure as recommended by the Grand Jury is inappropriate. Each water and wastewater agency has specific operational, capital, and maintenance costs that go into the development and setting of their water rates. A countywide water rate would not recognize the varying costs needed to serve a group of customers with such varied geographical service areas and varied water supplies. Each community has invested significant funds in their specific systems and to ignore these differences and varying levels of investment would remove the autonomy and local control of the customers served by each agency. The five cities, the Napa Sanitation District, the Napa County Flood Control and Water Conservation District, and the County of Napa do not feel a countywide water rate structure is appropriate or should be included in the tasks performed by the District. The remaining item recommended by the Grand Jury not currently performed is the maintenance of a database of water rates charged by other agencies statewide. This is a task that could be performed by the District and may be considered by the water agencies and the District. Currently each agency reviews water rates charged by surrounding water agencies as they feel appropriate when setting their specific water What other agencies charge for water service throughout the State, while rates. interesting, is not necessarily relevant when setting water rates for a specific water agency. There are specific methods of setting water rates or any utility service rates that have been tested by the courts and others throughout the State. These methods dictate that rates for utility service must be charged based on debt service obligations, operational costs, and capital improvement. These costs can vary widely depending on the age of a utility, source of supply, the investment in capital improvements both historically and more recent, and the geographic location of the utility. All these factors 3 October 6, 2003 Subject: Response to Grand Jury Finding 1 and Recommendation 1-Formation of a Napa Water Agency determine the cost of providing service to customers and are the reasons water agencies charge differently throughout the State. A single countywide water rate would result in some customers subsidizing the cost of water service of other customers. In recent years the District has become much more active in the coordination of water activities with the five cities in Napa County. The District conducts monthly technical meetings (WATERTAC) to keep the various cities and NSD informed of State Water Project and local water issues. WATERTAC provides a forum to discuss regional water issues and work cooperatively to solve common problems. As an example, the District has recently embarked on a cooperative 2050 Water Study that will look at the needs of many agencies on the valley floor through the year 2050. This 2050 Water Study includes the participation of all five cities, the Napa Sanitation District, and Napa County. Agencies outside the valley floor were not included in this study because of their geographic location and significantly different water concerns. All the agencies involved in the 2050 Water Study have water system interconnections or have service areas that overlap. This 2050 Water Study will identify the water needs of each agency and will provide an action plan to meet their needs through the year 2050. This study and the implementation of its recommendations partially address one or more of the duties recommended by the 2002/2003 Grand Jury Report. Other examples of joint collaboration on issues include; purchase of Kern County State Water Project Entitlements, emergency water supply agreements among agencies, sanitary surveys, drought water supply purchases, North Bay Aqueduct studies, and water conservation programs. We do agree that the District could expand its existing efforts to assist the Cities and NSD in keeping up with the issues from the State Water Contractors, participate in regional water supply issues, and maintain historical data and records for water studies within the County. However, we recognize that in order to increase efforts to perform these tasks and others, a clear plan must be prepared to establish expectations and funding from each City or agency. When the 2050 Study is completed early next year, the District's duties will likely expand to include implementation efforts on behalf of the cities and possibly NSD. Over the years, the District has expressed a willingness to increase its efforts at the request of the cities and remains ready to expand or contract to meet the needs and desires of all the participating agencies. It is suggested in the Grand Jury Report that a new Water Agency be created similar to the Solano County Water Agency or the Sonoma County Water Agency. These agencies have duties that vary greatly and have evolved due to their specific county needs and desires. Unlike Napa County, Sonoma County Water Agency owns a significant amount of actual infrastructure including pipelines, water treatment facilities, and wastewater treatment facilities. Sonoma holds significant water rights to the Russian River, owns and operates these diversion facilities, and delivers water through agency facilities to many cities and districts in Sonoma and Marin Counties with a total population served nearing 600,000 people. The magnitude of their services and population demand a different level of management and oversight within their county. However, Sonoma County Water Agency does not perform all the duties recommended by the 2002/2003 Grand Jury Report and does not include the oversight of the many small and geographically remote water districts throughout their county for the same 4 October 6, 2003 Subject: Response to Grand Jury Finding 1 and Recommendation 1-Formation of a Napa Water Agency reasons the District in Napa County is not advocating inclusion of these small water districts. The Solano County Water Agency operates and has duties very similar to the Napa County Flood Control and Water Conservation District. In Solano County much like Napa County, a large portion of their water is imported and the Water Agency holds the master agreements for this imported water from the State and Federal projects. Solano County agencies have expressed a desire to increase its population size and therefore have advocated for additional staff members to pursue water supplies from various The cities and irrigation districts in Solano County still maintain their sources. autonomy by setting rates and planning their water infrastructure needs independently. This practice is common in all other counties in the State of California where each agency and region has evolved dependent on their specific needs and desires. The District has evolved based on the needs of Napa County agencies and is the appropriate agency to perform the duties recommended by the Grand Jury. Creation of a separate agency and the governing body and staff that go along with a new agency are not necessary at this time and would be a duplication of effort in Napa County. In these tight budget times, it is appropriate that government agencies operate efficiently and without a duplication of efforts wherever possible. CONCLUSION The City of American Canyon, City of Calistoga, City of Napa, City of St. Helena, Town of Yountville, the Napa County Flood Control and Water Conservation District (District), the Napa Sanitation district (NSD), and Napa County Department of Public Works disagree with a portion on Finding 1 regarding unified service for water delivery in Napa County and have explained above why the agencies jointly feel that the appropriate level of unified service already exists. This group of agencies believes that expansion or contraction of this unity of water service can take place under the current powers of the Napa County Flood Control and Water Conservation District. The City of American Canyon, City of Calistoga, City of Napa, City of St. Helena, Town of Yountville, the Napa County Flood Control and Water Conservation District (District), the Napa Sanitation District (NSD), and Napa County Department of Public Works will not be implementing Recommendation 1 creating a new water agency as recommended by the Grand Jury because the recommendation is not warranted and would be a duplication of service already provided by the Napa County Flood Control and Water Conservation District. We have reviewed the duties conducted by neighboring county water agencies and have found that the District has the ability to perform all the duties of these neighboring county water agencies and can expand or contract the level of effort provided by the District at the will of the Board of Directors and participating agencies as explained in the response above. October 6, 2003 Subject: Response to Grand Jury Finding 1 and Recommendation 1-Formation of a Napa Water Agency The agencies listed above will be responding to other portions of the 2002/2003 Grand jury Report separately as appropriate or as requested by the Grand Jury. We hope this response has adequately addressed Finding 1 and Recommendation 1 within the report and would respectfully direct the Grand Jury to each agency if additional questions or a follow-up to this response is necessary. Very truly yours, CITY OF CALISTOGA inc/ Vanice von Pohle Jamès C. McCann Vice Mayor City Manager THE CITY OF AMERICAN CANYON THE CITY OF NAPA THE CITY OF ST. HELENA THE TOWN OF YOUNTVILLE THE NAPA SANITATION DISTRICT THE COUNTY OF NAPA THE NAPA COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT Attachment 6 October 6, 2003 Subject: Response to Grand Jury Finding 1 and Recommendation 1–Formation of a Napa Water Agency )