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: Draft Fee Structure in Support of GSP Implementation
RECOMMENDATION
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Receive a presentation on a potential rate and fee structure to fund the management and implementation of the Napa County Groundwater Sustainability Agency and Groundwater Sustainability Plan and provide direction to staff regarding the implementation of a fee program. (No Fiscal Impact)
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BACKGROUND
Under Agreement No. 230312B, SCI Consulting Group (the “SCI Team”) was retained by the County to evaluate and provide a range of options for the establishment of fee, special tax or benefit assessment to fund Napa County Groundwater Sustainability Agency (NCGSA) management and Groundwater Sustainability Plan (GSP) implementation and related programs. Initial planning was conducted throughout 2023, including stakeholder outreach and the preparation of a Funding Options Technical Memorandum. At the September 24, 2024, Board of Supervisors meeting, the Funding Options Technical Memorandum was presented, and direction was provided to pursue a fee program based on estimated groundwater extraction in accordance with California Water Code section 10730.
Staff and the SCI Team proceeded to develop a methodology for calculating estimated groundwater extraction on agricultural properties, given it represents most of the groundwater use within the Subbasin. The development of applied water use estimates for various property types in the Subbasin centered around the fact that for most stakeholders, groundwater use would have to be estimated due to a lack of parcel-scale groundwater extraction and use data. The exception to this is public water systems, as they are required to report their groundwater extraction to the Division of Drinking Water in the California State Water Resources Control Board, making this data readily available.
In determining parcel-scale applied water estimates, the SCI Team incorporated analysis from GSA staff and an irrigation specialist at the University of California Cooperative Extension. Data was utilized from various sources including the Napa Valley Integrated Hydrologic Model (NVIHM). The analysis showed variability in parcel-scale estimates due in large part to a range in professional judgement and geographic specific irrigation practices within given areas. As such, the SCI team ultimately recommended applied water estimates based on data from the Cal Poly Irrigation Training and Research Center.
However, upon staff review of applied water estimates, several concerns were identified. First, issues related to consistency were noted. The use of different water use estimation methodologies for various purposes (modeling, fee study, etc.) holds implications related to policy, outreach, and data availability and consistency. Additionally, development of the Napa County Water Availability Analysis (WAA) would need to be considered and is not finalized. A methodology that produces slightly different groundwater use data may introduce challenges related to these implications. Second, technical staff expressed that the Napa Valley Subbasin has a high variability of water use and related characteristics. The hydrogeologic setting of the Subbasin presents a higher degree of uncertainty related to groundwater extraction volume compared to other basins. Depending upon various factors, the opportunity for vines to benefit from direct uptake and soil moisture varies greatly on a parcel-by-parcel basis. It was determined that more data may be needed to develop an accurate applied water estimation. Because of these concerns, staff began to explore alternative approaches to Fee Program development.
Revised Approach to Fee Program Development
Given the lack of parcel-scale extraction data for agricultural properties, a revised approach to the fee structure was identified in February 2025. GSA staff and the SCI Team have identified a hybrid methodology that apportions costs based on the percentage of pumping within each user class, assigning a charge per parcel for domestic and commercial users, a charge per acre foot for water systems, and a charge per planted acre or irrigated acre for agricultural users. These charges would be assigned based on the benefit provided to various user classes from GSP implementation, which ensures compliance with SGMA and protects current and long-term groundwater availability.
In using a hybrid methodology, costs must be apportioned appropriately to various user classes. The recommended approach to this issue is to use the percentage of groundwater pumping attributed to each user class as a metric to apportion a percentage of Agency costs to those user classes. Within each class, these cost amounts can then inform a charge per parcel for domestic and commercial uses, and charge per acre foot for water systems, and a charge per planted acre or irrigated acre for agricultural users. The use of groundwater extraction percentages to apportion costs achieves a proportionality across different user classes despite incorporating different types of charges.
Domestic and commercial users would be assigned a parcel charge that acknowledges the benefits these users receive by having access to groundwater. A parcel-based charge accounts for this benefit despite a lack of parcel-scale extraction data for these parcels.
Water systems would be assigned an acre foot charge 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.
Agricultural users would be assigned a charge per planted or irrigated acre that acknowledges the benefit of having access to groundwater to support agricultural irrigation and related uses. Consideration of water use will need to be incorporated into this approach. Use of alternative water supplies, such as surface water and recycled water, may produce a need to reduce or eliminate charges on specific irrigated acreage. Occurrences of dry farming and “mothballing” (temporarily taking vineyards out of production) present a similar scenario. The SCI Team is working to identify planted acreage where groundwater use is either reduced, not occurring, or temporarily suspended. A rate scenario has been identified that may appropriately deal with this issue, as detailed below.
Benefits of an irrigated acreage methodology include: predictability and consistency across the Subbasin, as well as simplicity - saving time and money in administration of the fee program and producing annual changes will be more clearly understood (changes in irrigated acreage resulting in similar changes in fees). It is less granular than an extraction-based method but at the present time, there is simply not adequate understanding of parcel-scale pumping to establish an extraction-based fee. However, if more data is obtained over time, it is possible to modify the fee methodology at a future date. A challenge of the irrigated acreage approach is the acknowledgment and incorporation of dry farming and use of alternative water sources.
Several challenges remain in determining the optimal balance of this revised approach; however, the use of irrigated acreage as a means to apportion costs to agricultural groundwater users circumvents the challenges realized during the development of applied water estimates. Initial outreach to agricultural groundwater users indicates that these stakeholders understand the challenges related to developing Subbasin-wide applied water estimates and are seemingly open to this revised approach.
Rate Scenario 1
Rate Scenario 1 utilizes 2024 pumping percentages to apportion a percentage of Agency costs to each user class. In this Scenario, agricultural users are assigned a charge per irrigated acre. This approach assumes that 10% of planted acreage is either dry-farmed or irrigated with alternative water sources and excludes these planted acres from the fee program. Domestic and commercial parcels are assigned a flat charge per parcel, and water systems are assigned a charge per acre foot.
Rate Scenario 2
Rate Scenario 2 incorporates a more nuanced approach. Costs are separated into two categories - “Common Costs” and “Applied Groundwater Use Costs.” All user classes are apportioned a percentage of Common Costs based on their 2024 pumping percentages. Applied Groundwater Use Costs are only apportioned to certain users. This approach is based on the concept that certain costs provide a benefit to all users, while other costs provide a heightened benefit only to certain users.
Domestic and commercial users are apportioned only a percentage of Common Costs. This is based on the concept that these users are provided a benefit by some costs, but not necessarily by the supplemental costs included in the Applied Groundwater Use Cost category. Additionally, in an effort to acknowledge that some larger domestic and commercial parcels may utilize a larger volume of groundwater, a base charge per parcel is established as well as an additional charge for acreage greater than one acre.
Water systems are apportioned both Common Costs and Applied Groundwater Use Costs. This is based on the concept that these users receive both a common benefit and a common benefit and a heightened benefit by both cost categories.
For agricultural users, two sub-classes are also established: “Non-Groundwater” planted acres and “Groundwater-Irrigated” planted acres. Common Costs are apportioned to all planted acres, based on the concept that even dry-farmed acres or planted acres that utilize alternative water sources likely use groundwater in certain situations, and have access to it when needed. Applied Groundwater Use Costs are apportioned only to Groundwater-Irrigated Acres based on the concept that these users are provided a heightened benefit by these costs.
Rate Scenario 3
Rate Scenario 3 uses the same approach as Scenario 2 but illustrates how a continued contribution from the County’s general fund would reduce the revenue need and rates for each user class. It should be noted that the Fee Study will justify the maximum rates allowed under a Fee Program, and including an assumption of continued County contribution would reduce the maximum rates. As an alternative to Scenario 3, the Agency could pursue Scenario 2 with the understanding that the County could decide to make a contribution in any given year and reduce the rates at that time. Conversely, if the Fee Study assumes a County contribution, the maximum rates would be reduced over the life span of the Fee Study.
Staff Recommendation and Next Steps
Direct Staff to pursue a hybrid fee methodology that incorporates a charge per parcel for domestic and commercial users, a charge per acre foot for water system users, and a charge per irrigated and/or planted acre for agricultural properties. Provide direction on options for the approach to dry farmed acreage, surface water users, recycled water users, and temporarily suspended agricultural operations.
Next Steps:
1. Refine foundational data, including irrigated acreage, alternative or variable water use, and groundwater use estimates for residential and commercial properties.
2. Develop a Fee Report for the Board’s consideration on May 20, 2025. The opportunity to initiate a fee program would be provided based on this Report.
3. Conduct additional community outreach to all groundwater users.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
No |
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Is it Mandatory or Discretionary? |
Discretionary |
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.