Continued Public Hearing to consider approval of Resolution 2024-10 adopting the Municipal Service Review (MSR) for Flood Protection Services and approving a Sphere of Influence (SOI) Update for Reclamation District (RD) 999, and determine the MSR/SOI is exempt from the California Environmental Quality Act (CEQA) (LAFCo No. 23-03)

1. Reopen the Public Hearing to receive staff presentation and public comment on the MSR/SOI Update.
2. Close the Public Hearing and consider the information presented in the staff report and during the Public Hearing. 
3. Approve Resolution 2024-10, adopting the MSR for Flood Protection Services and approving the SOI Update for RD 999.

This item was initially heard at the July 25, 2024, meeting and was continued until September 26, 2024, in order to allow additional time for the RD 999 board to meet and discuss the MSR recommendation regarding reorganizing the Clarksburg Basin RDs into RD 999 as the single Local Maintaining Agency successor for the Basin. In the meantime, the RD 999 board has met twice with staff's offers to attend politely declined.

Staff spoke with Tom Slater on the phone on September 5th. He indicated RD 999's opinion is that the US Army Corps of Engineers (USACE) System Wide Improvement Framework (SWIF) plan (i.e. the USACE levee rehabilitation plans for each basin) is working and all three RDs are now coordinating better using the same engineering firm, MBK Engineers. Mr. Slater stated his board is in agreement with the MSR recommendation to eventually reorganize, but it's not the right time to initiate it, and RD 999 does not currently support annexing either RD. He indicated the situation and thinking may shift in the future, but it is premature at this time. Regarding the other two RDs in the Clarksburg Basin, staff confirmed with RD 765 via email that their position has not changed since its July 23rd letter indicating a willingness to be absorbed by RD 999 so long as it didn't involve private water rights. Staff emailed RD 307 multiple times (Aug 8 and Sep 4) urging them to respond and attend the LAFCo meeting, to no avail. 

Considering RD 999's position and that, per Government Code Section 56857, the Commission "shall" terminate a proposed annexation if the receiving district requests it, staff removed the previous recommendation from the July meeting to conduct additional outreach with the Clarksburg RDs with the goal of initiating reorganization because it would not be a good use of LAFCo resources. Instead, stronger accountability recommendations have been provided in an attempt to resolve longstanding RD 307 and RD 765 accountability issues. Below is the amended/new recommendation language for RD 307 and RD 765 (new language in bold and italic):

• RD 307/765 shall immediately secure independent audits of financial reports that meet California State Controller requirements every two years (repeat from 2018 MSR). Per Government Code Section 26909, for every special district which does not submit an audit to the county auditor within 12 months of fiscal year-end, the county auditor shall either make or contract an annual audit with any costs borne by the special district.
• Per Water Code 50940 and 50941, RD 307/765 shall keep an office for the business of the district. All district books, maps, papers, records, contracts, and other documents shall be kept in the office and be open to inspection during all business hours by any person interested.

To summarize and be clear, the MSR recommendation that RDs 307, 765, and 999 should be reorganized (either via dissolution/annexation or consolidation) into RD 999 as the single LMA successor entity for the basin remains in the MSR with a corresponding update to RD 999's SOI. However, the July staff report recommendation that the Commission direct staff to conduct additional outreach regarding potential reorganization has been removed due to RD 999's objections to initiating any reorganizations at this time. 

Since the July meeting, the Draft MSR/SOI has been edited to address the following issues:

1. Updated District Performance Indicators on page 2 to include the version organized by Basin.
2. Inserted Updated District Map (reflecting all the districts and not just RDs) on page 20.
3. Corrected the reference to the Sacramento River West Side Drainage Levee District (affected MSR Overview, Section 1.0, and Section 1.1)
4. Updated the Accountability recommendations for RD 307 and RD 765 as noted previously (affected MSR Overview, Section 6.1, and Section 6.2)

The sections that have been updated are dated September 17, 2024, in the footer. Those sections that remain the same as presented for the July meeting are dated July 8, 2024, in the footer.