TO: Napa County Groundwater Sustainability Agency
FROM: Brian D. Bordona - Director of Planning, Building and Environmental Services
REPORT BY: Jamison Crosby - Natural Resources Conservation Manager
SUBJECT: Adoption of Fee Structure in Support of GSP Implementation
RECOMMENDATION
title
Adopt a Resolution to implement Groundwater Sustainability fees in the Napa Valley Subbasin, as authorized by Water Code § 10730 to support implementation of the Groundwater Sustainability Plan. (Fiscal Impact; $2,168,300 Revenue; Not Budgeted; GSA Fund; Discretionary)
body
BACKGROUND
SCI Consulting Group (the “SCI Team”) evaluated and provided a range of options for the establishment of a fee, special tax, or benefit assessment to fund NCGSA management and GSP implementation and related programs. Initial planning was conducted throughout 2023, including stakeholder outreach and preparation of a Funding Options Technical Memorandum. On September 24, 2024 the Memorandum was presented to the Napa County Groundwater Sustainability Agency (NCGSA) and direction was provided to pursue a fee program based on estimated groundwater extraction in accordance with California Water Code section § 10730.
On April 22, 2025, the NCGSA received a presentation with three rate scenarios apportioning costs to groundwater users in the Napa Valley Subbasin. The NCGSA directed staff to further develop the fee methodology under Rate Scenario 3, which utilizes three different charge types (one for each groundwater user class) and apportions costs based on “Common Costs” and “Applied Groundwater Use Costs,” and incorporates an annual contribution from the County’s general fund.
Staff are aware of the challenges faced by the grape growing and winemaking communities statewide and in Napa County. Since its inception in 2019, the NCGSA budget has been subsidized entirely by the general fund. The County intends for the NCGSA to be self-funded by those who benefit through assessment to groundwater users within the Subbasin and staff acknowledges that this is a difficult time for these communities.
Proposed Fee Program Structure
A hybrid approach to the Fee structure was identified in February 2025 and further refined following the April 22, 2025, NCGSA meeting. GSA staff and the SCI Team have developed a methodology that apportions costs based on the average percentage of pumping within each user class, informing Fee rates for three different user classes: 1) agricultural groundwater users, 2) self-supplied groundwater users (largely domestic groundwater users), and 3) public water system groundwater users (public or state small water systems extracting groundwater).
The proposed Fee Program incorporates a projected annual budget of approximately $2.5 million (see Table 4 of the Rate and Fee Study for detail). This budget is based on typical annual costs but also includes consideration of specific future-year costs. While this budget total reflects an estimated annual cost, it is reduced by a continued contribution from the County’s general fund. This general fund contribution is intended to achieve three goals: 1) to reduce the fee applied to groundwater users, 2) to provide financial relief to self-supplied users, and 3) to stabilize the budget and account for unforeseen costs.
The Fee Study proposes achieving these goals with the support of an annual general fund contribution of $500,000. Of this total, $300,000 is applied to the overall budget, which reduces the balance allocated to all groundwater users and lowers rates. $100,000 is applied to self-supplied users, which reduces the self-supplied rate and acknowledges the burden of Fees on domestic water use. The remaining $100,000 is set aside for two purposes: 1) to allow for self-supplied users to apply for Fee waivers based on financial hardship, and 2) to contribute to an annual reserve which may address unforeseen costs or support projects and actions to implement the GSP, minimizing unexpected burdens for the general fund. Staff recommends capping the reserve at 15% of the annual budget and reducing Fees equal to any excess reserves the following year.
Costs are allocated (in part) based on the average annual percentage of groundwater pumping attributed to each user class from 2019 to 2024. The use of groundwater pumping percentages to apportion costs achieves a proportionality across different user classes despite incorporating different types of charges.
While some costs to be funded by the proposed Fee provide a benefit broadly to all groundwater users, other costs provide a heightened benefit only to certain users. To allocate costs appropriately to groundwater users, GSA staff and consultants analyzed all line items in the proposed budget according to their purpose and the benefit they provide. This framework addresses the variable benefit provided by different GSA costs to different user classes. The GSA budget was split into two sections - Administrative Costs and Professional Services. Costs were designated as either “Common Costs” which refer to costs that provide benefit broadly to all groundwater users, or “Applied Groundwater Use Costs,” that provide a benefit to agricultural and water system groundwater users.
Common Costs
Common Costs are those that provide benefit broadly to all groundwater users, in that they involve general Subbasin management, compliance with Sustainable Groundwater Management Act (SGMA), and efforts to track and measure sustainability in accordance with the GSP. For this reason, Common Costs are allocated to all groundwater users. Common Costs are further described in Tables 4, 5, and 6 of the Fee and Rate Study. Annual Common Costs are calculated to be $1,007,175.
Applied Groundwater Use Costs
Applied Groundwater Use Costs refers to costs that both focus on large-scale applied groundwater use and are necessitated by agricultural irrigation and water suppliers. These costs provide a heightened benefit to agricultural users and water system users, and because of this they are allocated only to these two user classes. Applied Groundwater Costs are further described in Tables 4, 5, and 6 of the Fee and Rate Study. Annual Applied Groundwater Costs are calculated to be $1,161,125.
Agricultural Groundwater Users
Agricultural users are assigned a base charge per “planted acre” (acres that contain agricultural crops) and an additional charge per “groundwater-irrigated” acre (acres that consistently irrigate with groundwater). These charges are based on the benefit of having access to groundwater to support agricultural irrigation and related uses. Crop acreage per parcel was identified using data provided by the Napa County Assessor’s office.
Despite these charges being based on crop acreage (and not pumping) consideration of water use has been incorporated into this approach. In some instances, growers either dry-farm or utilize alternative water sources, such as surface water and recycled water. In these cases, dry-farmed acres or planted acres that utilize alternative water sources benefit from using groundwater in certain situations and have access to it when needed. The base charge per planted acre acknowledges that a degree of benefit is provided to all agricultural operators within the Subbasin - but this benefit is less than that provided to those that consistently irrigate with groundwater. All Common Costs allocated to agricultural groundwater users are assigned to the base charge per planted acre.
For rate calculation purposes, this approach assumes that 10% of planted acreage is either dry-farmed or irrigated with alternative water sources. This assumption is conservative in that planted acreage not consistently irrigated with groundwater is likely less than 10%. This number will need to be refined on a parcel scale prior to imposing charges on agricultural groundwater users growers through direct outreach anticipated in Spring 2026.
All acreage irrigated consistently with groundwater (groundwater-irrigated acreage) is assigned an additional rate. This charge accounts for the heightened benefit provided to those that rely consistently on groundwater. All Applied Groundwater Use Costs allocated to agricultural groundwater users are assigned to the additional rate per groundwater irrigated acre.
Self-Supplied Groundwater Users
Self-supplied users are assigned a charge per groundwater-using parcel. A parcel-based charge is based on access to groundwater (not the amount used) and accounts for this benefit despite a lack of parcel-scale extraction data for these parcels. GSA staff and consultants explored several ways to identify variability of water use on self-supplied user parcels. However, attempts to identify this variability on a parcel scale were met with data limitations, precluding the use of variable rates for these users (such as an extraction charge). For this reason, the parcel charge is intended to account for the benefit of having basic access to groundwater.
Self-supplied use parcels were identified by first flagging all parcels with County use codes that indicate water use (e.g., residential use codes). The SCI Team then analyzed these parcels to determine whether they lie within a water system boundary, which implies they are served by a water system. All parcels that are assigned to a use code that indicates water use but lie outside of PWS boundaries were identified as self-supplied users. Most of these users are domestic, although a small number of commercial users are included as well.
Self-supplied groundwater users are apportioned only a percentage of Common Costs based on their share of average annual pumping. This is based on the concept that these users are provided a benefit by some costs, but not by the supplemental costs included in the Applied Groundwater Use Cost category.
As noted above, a portion of the County contribution is used to reduce the financial burden on self-supplied users. First, $100,000 is applied to their cost allocation, reducing the revenue need and rate associated with this user class. Second, self-supplied users would be eligible to apply for their Fee to be waived due to financial hardship. The Fee Study proposes using enrollment in PG&E’s California Alternate Rates for Energy “CARE” program, which offers discounted energy rates for households that qualify based on status as low-income. By using enrollment in CARE, the GSA can determine eligibility based on actual need without requiring self-supplied users to submit annual income information.
Public Water System Users
Public water system (“PWS”) groundwater users include all public and small State water systems that pump groundwater. These users are assigned a rate per acre-foot (“AF”) of groundwater pumped based on the benefit they receive from access to groundwater to serve their customers. Because extraction data is generally available for these users, a charge per acre foot is likely the most optimal means of accounting for this benefit.
For the purposes of the Fee Study, total PWS extraction is derived from Napa GSA annual reports, based on a five-year average from 2019- 2024. Prior to charging these users, the GSA will have to account for system-by-system average extraction totals. Additionally, due to the nature of these entities, they will likely have to be billed directly - as charges assigned to parcels on the County tax roll would not apply.
Water systems are apportioned both Common Costs and Applied Groundwater Use Costs, based on their share or average annual pumping. This is based on the concept that these users receive both a common benefit and a heightened benefit by both cost categories.
Final rates by user class can be found below and in the attached Rate and Fee Study.
Fee Study Rate Summary
User Class / Charge Type Cost Allocation Rate Basis
Agricultural User Base Rate $747,032 $38.58 per planted acre
Agricultural User Additional Rate $1,048,288 $60.16 per GW-irrigated acre
Agricultural User Combined Rate NA $98.74 per planted acre (total)
Self-Supplied User Rate $79,733 $62.58 per parcel
Public Water System User Rate $193,246 $129.87 per AF
Alternative Fee Option
An alternative option to the rate structure described above and documented in the Rate and Fee Study would apply a larger portion of the County contribution to reduce the overall budget. This would entail reallocating the $100,000 County contribution specifically provided to self-supplied users and instead apply this amount to offset the overall budget, which would reduce the rates for all users. The methodology of the Fee study would remain unchanged. Under the alternative option, the rates by user class would change and can be found in the attachment and shown below. If the Board chooses to adopt the alternative option, GSA staff are required to revise the Rate and Fee Study, publish a new 20-day public notice, and hold a second public hearing to consider adoption of this or any other alternative.
Alternative Fee Option Study Rate Summary
User Class / Charge Type Cost Allocation Rate Basis
Agricultural User Base Rate $712,580 $36.80 per planted acre
Agricultural User Additional Rate $999,942 $57.39 per GW-irrigated acre
Agricultural User Combined Rate $1,712,522 $94.19 per planted acre (total)
Self-Supplied User Rate $179,733 $141.08 per parcel
Public Water System User Rate $184,334 $123.88 per AF
Staff Recommendation and Next Steps
Staff recommend the NCGSA adopt the fee structure outlined in the Rate and Fee Study and a Resolution of the NCGSA Adopting a Groundwater Sustainability Fee in the Napa Valley Subbasin, as authorized by Water Code § 10730 to assess fees for groundwater users to implement the Groundwater Sustainability Plan.
If adopted, staff recommend the fee to take effect in Fiscal Year 2026-27, to provide time for groundwater users to adjust and for staff to continue outreach to the community. The fees would then be presented for assessments and collection with the annual property tax invoices with due dates in December 2026 and April 2027. The County’s general fund will continue to fund operations until revenues are sustainable.
Next Steps:
1. Staff will conduct additional public outreach to all groundwater users, and
2. Staff will work with the Auditor-Controller, Assessor and Tax Collector to finalize charges in spring 2026 and return to the Board with a resolution adopting the levy roll to be placed on the tax rolls for Fiscal Year 2026-27.
PROCEDURAL REQUIREMENTS:
1. Staff reports.
2. Public comment.
3. Motion, second, discussion and vote on the item.
FISCAL & STRATEGIC PLAN IMPACT
Is there a Fiscal Impact? Yes
Is it currently budgeted? No, Revenues will not be generated until the next fiscal year.
Is it Mandatory or Discretionary? Discretionary
Discretionary Justification: Provides a source of non-General Fund funding
Is the general fund affected? Yes
Future fiscal impact: Analysis of future impact is pending
Consequences if not approved: GSP implementation would need to continue to be funded solely from the County’s General Fund
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.