Mendocino LAFCO finds no substantial change to Hopland Public Utility District sphere; schedules next review in five years

The Mendocino County Local Agency Formation Commission on Sept. 8 adopted a resolution finding that no substantial changes have occurred since the district's last sphere of influence review in 2016 and directed staff to schedule the next review in five years.

The decision affirms staff's recommendation that a streamlined review was appropriate for the Hopland Public Utility District (PUD). Executive Officer Hinman told the commission staff had interviewed district officials, reviewed a certified questionnaire and current financial statements and concluded the review met the intent of Government Code 56425 to review spheres of influence at least every five years.

Commissioners pressed the district's contract general manager, Jared Walker, for details on a pending rate study and several large expenditures that informed staff's recommendation. Walker said a comprehensive rate study by Hildebrand Consulting proposes raising the flat sewer charge from $60 to $75 and would increase the average residential household's combined water and sewer bill by about $12 per month; he characterized the water-side increase as roughly 40 percent and sewer about 25 percent. Walker said the district has not raised rates in roughly 10 years.

Walker told commissioners the district faces a list of near-term capital needs and debt obligations, including an outstanding USDA loan of about $800,000 and a Caltrans-mandated relocation of water and sewer mains tied to Highway 101 improvements that he estimated at about $5 million. He said the district carries substantial cash on hand but also noted an unfunded pension liability of roughly $88,000 that appears in audit materials.

Commissioners asked why seven parcels outside the district's boundaries receive water and/or sewer service and whether the parcels should be moved into the district's sphere now. EO Hinman said mapping of those parcels is included in the staff packet and that pulling them into the sphere would require a comprehensive study; staff recommended waiting and tracking the parcels so they could be addressed during the next full review unless the district requests annexation sooner.

After discussion, Commissioner Gonzales moved to adopt the resolution and Commissioner Roden seconded. A roll call vote recorded yes votes from Commissioners Ward, Gonzales, Horsley, Mahoney, Roden and Chair Mulhern; commissioners Klein, Hasik and Crane were recorded absent. The motion carried.

The commission's packet includes the draft resolution and the certified questionnaire supplied by the district; staff said an incorrect audit report had been included in the packet and that the correct Hopland PUD audit will be substituted in the record.

The commission's action affirms current governance and service boundaries and leaves the option open for the district or staff to request a comprehensive MSR and sphere update sooner if annexation or expanded service is pursued.

The commission also recorded substantive operational details during the discussion, including the timeline for a five-year rate plan and the district's projects list, which staff and district representatives said will guide future LAFCO review and any required applications for outside-agency service or annexation.