Fee Process

What is the Salinas Valley Basin Groundwater Sustainability Fee?

The Salinas Valley Basin Groundwater Sustainability Agency (SVBGSA) Groundwater Sustainability Fee (Fee) was first adopted in March 2019 based on a fee study report developed by Hansford Economic Consulting (HEC) after seeking input from numerous public meetings and workshops.  In 2023, the SVBGSA Board of Directors commissioned a new fee study, exploring a tiered Fee structure. The process comprised a broad stakeholder engagement and concluded with a final report that was accepted by the Board on June 29, 2023. At the same meeting, a public hearing was held to adopt the Fees for Fiscal Year (FY) 2024.

SVBGSA is the local Groundwater Sustainability Agency (GSA) in the Salinas Valley Basin responsible for sustainably managing groundwater resources. SVBGSA has the authority to charge fees, conduct investigations, register wells, require reporting, and take other actions to sustainably manage six of the hydrographic subbasins of the Salinas Valley Basin: (1) Monterey, (2) 180-400-Foot, (3) Eastside, (4) Forebay, (5) Langley, and (6) Upper Valley.

These types of activities all constitute the Sustainable Groundwater Management Program of the SVBGSA.  By actively planning for and implementing sustainable groundwater management plans in the subbasins, SVBGSA helps maintain local management of groundwater in the Salinas Valley.

The Groundwater Sustainability Fee is paid by all beneficiaries of sustainable groundwater management in the subbasins managed by SVBGSA. A “beneficiary” is defined as the owner of irrigated agricultural land or the recipient of water service by a publicly or privately-owned water system. De minimis extractors, tribal lands, and federally owned properties are exempt from the Fee.

Why Does the Fee Amount Change Year to Year

Each year the Board reviews the Fee to determine if the revenue collected from the Fee is sufficient to cover expenses, consistent with the California Constitution and state law. The Board may increase or decrease the Fee as necessary or appropriate. The cost basis of the Fee is determined during the budget setting process. Several factors are taken into consideration when determining the cost basis for the Fee:

• Current cash reserves,
• Timing and amounts of grant funding reimbursements for costs already expended,
• Anticipated cash flow needs for the next one to three-year period determined by the work plan, and
• The change in the San Francisco Consumer Price Index since the last Fee update.

If it is recommended the Fee be changed, the California Public Utilities Commission (CPUC) must be notified, before the Board takes action. Every year a resolution must be passed by the Board certifying compliance with State law with respect to the levying of the Fee with the amount of the Fee for the next fiscal year. The resolution is required by the Monterey County Auditor-Controller, which is the county department responsible for placing fees on the property tax roll. A public hearing is held each year in June for any proposed changes to the Fee.
In July, after the Fee for the upcoming fiscal year has been adopted, fresh data is pulled for preparing the list of fees by Assessor Parcel Number (APN) for the County Auditor-Controller, and for preparing invoices to those beneficiaries receiving an invoice directly from the SVBGSA. The majority of the fees are collected with property taxes; in Fiscal Year 2024, 97% of the total fee amount was placed on the tax roll. The County collects the fees that were placed on the tax roll together with property taxes and disburses the fee revenue to SVBGSA.

How is the Fee Calculated Each Year?

The methodology for establishing the Groundwater Sustainability Fee is conducted in three steps. These steps occur between February – June each year and are overseen by the Board. The Board must approve SVBGSA budget by April each year. The budget defines the expenditures of the agency for administration and operations and includes that year’s Sustainable Groundwater Management Program costs for all the subbasins and for individual subbasins.

Step 1: Determine the amount of revenue needed to be raised in the next fiscal year through the regulatory fee – the “cost basis”. Allocate the cost basis between Agricultural and All Other beneficiaries of sustainable groundwater management. Agricultural beneficiaries are allocated 90% of the cost basis. All Other beneficiaries are allocated 10% of the cost basis.

Step 2: Determine the number of Irrigated Acres and Service Connections in the SVBGSA subbasins to be charged the fee in the next fiscal year.

Step 3: Divide the Agricultural beneficiaries’ cost basis by the number of Irrigated Acres to calculate the annual fee per acre. Divide the “All Other” beneficiaries’ cost basis by the number of Service Connections to calculate the annual fee per connection.

Definitions

Irrigated Acres – “All real property classified as Monterey County Assessor land use codes 4C, 4D, 4F, 4G, 4K, and 4N, whether the acre belonging to the Assessor Parcel Number upon which the regulatory fee is imposed is or is not currently irrigated.” County GIS data is used to determine the number of Irrigated Acres per APN, not County Assessor records. 

Connection – “A connection between the customer’s piping or constructed conveyance and the water system’s meter, service pipe, or constructed conveyance.”

A property can have more than one service connection. Connections are counted for Public Water Systems (15 or more connections or regularly serves 25 or more people daily for at least 60 days out of the year) and Small Water Systems (2-14 connections).

Once the budget is completed the costs for the upcoming year’s activities are further broken down into “Tier 1” and “Tier 2” costs. 

Tier 1 costs include the day-to-day operations of the SVBGSA, and other activities that are “reasonable costs” for the regulatory activities of the agency. 

Examples of regulatory activities that may be funded, include:

• Groundwater Sustainability Plans (GSP) development and updates
• Investigations and inspections
• Data networks and monitoring
• Compliance assistance and enforcement
• Program administration (includes agency staffing, legal counsel, consultants, and associated costs)
• Prudent operating reserves

These activities are important for local management of the groundwater basins and for compliance with the Sustainable Groundwater Management Act. 

Tier 2 costs are those associated with specific studies, management actions, and projects that need to be initiated or completed in a fiscal year. These activities are attributed to only one or more, but not all, subbasins managed by SVBGSA.  The costs are taken and apportioned to each of the subbasins that will receive benefit for the work completed that fiscal year. An example may be a recharge basin that can provide recharge to two subbasin areas.

• Tiered Fee Approach Analysis Presentation – Hansford Economic Consulting
• Tiered Fee Approach Analysis for FY 2024 Technical Memorandum – Hansford Economic Consulting
• Justification of FY 2024 Tiered Fees Technical Memorandum – Montgomery & Associates
• FY 2024 Budget
• FY 2024 Work Plan
• Tiered Regulatory Fee Policy