Rio Dell City Council
October 7, 2025

CITY OF RIO DELL CITY COUNCIL
REGULAR MEETING - 6:00 P.M.

RIO TUESDAY, OCTOBER 7, 2025

DELL CITY COUNCIL CHAMBERS
675 WILDWOOD AVENUE, RIO DELL

CALFORNIA
WELCOME - Copies of this agenda, staff reports, and other materials available to the City Council are available at the City Clerk's office in City Hall, 675 Wildwood Avenue, and on the City's website at cityofriodell.ca.gov. Your City Government welcomes your interest and hopes you will attend and participate in Rio Dell City Council meetings often.

City Council meetings are held in City Hall Council Chambers for in-person public attendance.

Public Comment by Email:

In balancing the need to conduct government openly and transparently, public comments on agenda items can be submitted via email to [email protected]. Please note the agenda item the comment is directed to (for example: Public Comments for items not on the agenda) and email no later than one hour before the start of the Council meeting.

Your comments will be read out loud for up to three minutes. Meetings can be viewed on Access Humboldt's website at https://www.accesshumboldt.net/. Suddenlink Channels 10, 11 & 12 or Access Humboldt's YouTube Channel at https://www.youtube.com/user/accesshumboldt Zoom Public Comment:

When the Mayor announces the agenda item you wish to comment on, call the conference line line and turn off your TV or live stream. Please call the toll-free number 1-888-475-4499, enter meeting ID 987 154 0944, and press star (*) 9 on your phone - this will raise your hand. You will continue to hear the meeting on the call. When it is time for public comment on the item you wish to speak on, the Clerk will unmute your phone. You will hear a prompt that will indicate your phone is unmuted. Please state your name and begin your comment. You will have 3 minutes.

A. CALL MEETING TO ORDER
B. ROLL CALL
C. PLEDGE OF ALLEGIANCE
D. CEREMONIAL MATTERS
E. PUBLIC PRESENTATIONS
This time is for persons who wish to address the Council on any matter not on this agenda and two-thirds of the Council make a finding that the item came up after the agenda was posted and is urgent, requiring immediate action. Please limit comments to a maximum of 3 minutes.

F. CONSENT CALENDAR
The Consent Calendar adopts the printed recommended Council action, which will be enacted with one vote. The mayor will first ask the staff, the public, and the council members if anyone wishes to address any matter on the Consent Calendar. The items removed from the Consent Calendar will be considered individually after action is taken on the remaining items on the Consent Calendar.
1) 2025/1007.01- Approve Minutes of the September 16, 2025 Regular Meeting (ACTION) Pg. 1
2) 2025/1007.02- Approve Employment Agreement with Finance Director Travis Sanborn (ACTION) Pg. 7
G. ITEMS REMOVED FROM THE CONSENT CALENDAR
H. REPORTS/STAFF COMMUNICATIONS
1) 2025/1007.03 - City Manager/Staff Update (RECEIVE & FILE) Pg. 18 I. SPECIAL PRESENTATIONS
J. SPECIAL CALL ITEMS/COMMUNITY AFFAIRS/PUBLIC HEARINGS 1) 2025/1007.04 - Davis Street Park Acquisition (DISCUSSION/ POSSIBLE ACTION) Pg. 23
2) 2025/1007.05 - Explanation of Water and Sewer Rate Structure (DISCUSSION/POSSIBLE ACTION) Pg. 27
3) 2025/1007.06 - Cannabis Cultivation Tax Rate Analysis (DISCUSSION/POSSIBLE ACTION) Pg. 87
4) 2025/1007.07 - Discussion on Drainage Issues at and Around 590 View Ave. (DISCUSSION POSSIBLE ACTION) Pg. 92
K. ORDINANCES/SPECIAL RESOLUTIONS/PUBLIC HEARINGS
L. COUNCIL REPORTS/COMMUNICATIONS
M. ADJOURNMENT
In compliance with the Americans with Disabilities Act (ADA), if you require special assistance to participate in this meeting, please get in touch with the Office of the City Clerk at (707) 764-3532. Notification 48 hours before the meeting will enable the City to make reasonable arrangements to ensure accessibility to the meeting. Assistive listening devices are now available for the hearing-impaired. Please see the City Clerk for a receiver.

The next regular City Council meeting is scheduled for
Tuesday, October 21, 2025, at 6:00 p.m.

RIO DELL CITY COUNCIL

REGULAR MEETING MINUTES
SEPTEMBER 16, 2025
Mayor Garnes called the regular meeting of the Rio Dell City Council to order at 6:00 p.m.

ROLL CALL: Present: Mayor Garnes, Mayor Pro Tem Carter, Councilmembers Orr, and Wilson

Absent: Councilmember Woodall (excused)
Others Present: City Manager Knopp, Chief of Police Phinney, Finance Director Sanborn, Water/Roadways Superintendent
Jensen, City Clerk Dunham, and Senior Fiscal Assistant
Maciel

Absent: Community Development Director Caldwell (excused)

CEREMONIAL MATTERS
Proclamation Designating September 17-23, 2025, as Constitution Week Mayor Garnes read the proclamation and presented it to Catherine Culver from the National Society of the Daughters of the American Revolution Eel River Valley Chapter.

Catherine addressed the Council and said that they were grateful to the City for issuing the proclamation. She said that we are at a time where people consider the constitution a political instrument, but it is not and stressed the importance of people reading and understanding the constitution. She thanked the Council for its willingness to issue the proclamation.

PUBLIC PRESENTATIONS
Mayor Garnes invited public comments on non-agenda matters.

Laura Berrey, 590 View Ave. addressed the Council regarding an ongoing drainage problem in her neighborhood. She said that her house was built in the 1950's and was the first house on the block. The city installed a curb and sidewalk in the 1980's which has created a situation where all the storm water from the street flows into their yard.

She said that because they live on a hill, the water not only floods their property, it impacts the neighbors as well. Despite their efforts to install a makeshift drain to divert thousands of gallons of water each year, they still see several inches of standing water in their yard during light and heavy storms. She commented that this affects the value of all the homes in the neighborhood and needs to be corrected.

She presented two solutions; 1) install a collection box and connect it to the existing storm drain at the corner of View & Kelly or 2), install a small asphalt curb or berm to direct the storm water toward the drain. She said that with the current water line project occurring in that area, it would be the perfect time to address this issue. - 1-
SEPTEMBER 16, 2025 MINUTES

She urged city staff and council members to visit their property to see the situation firsthand.

Patrick Knight, 590 Pacific Ave. addressed the Council regarding the same issue and said that View Ave. has been neglected and in need of major repairs for years. He indicated that there is a major drainage issue and most of the road slopes and drains onto 590 View Ave. He said that the situation has become worse with the construction company digging up the road for the watermain project creating more dirt and gravel that will drain onto that property when the rainy season starts. He asked the Council to take the time to look at the situation and asked that the issue be added to the next City Council agenda for further discussion.

He pointed out a few issues regarding the contractor working on the water line project He said about a month ago they broke a water line and did not notify residents so when they got home, they found brown water and gravel coming out of their faucets. He said that for almost a week, they left a hole in the street near one of the neighbors' mailboxes where there were small children. In addition, they used a neighbor's water to rinse off their tools without permission.

Tommy Norton addressed the Council regarding water rates and said that he is the owner of 18 properties in town as well as part owner of a property on Dinsmore Plateau and the owner of Shotz Coffee. He said that the current water and sewer bill for Shotz Coffee in Rio Dell is over $700.00/mo. with approximately 200 customers a day compared to $400.00mo. for the Fortuna Shotz with approximately 500 customers.

He said that he understands there are a lot of needed water system improvements that drive up the rates but thought the city should apply for more grants to help keep the rates down. He commented that high utility rates put stress on current businesses and discourage new businesses from coming into town. He noted that he owns a vacant lot on Wildwood Ave., where he plans on building a restaurant, but it doesn't make sense to invest in a new business with rates continuing to increase. He asked that the water rate issue be placed on the next agenda for further discussion and a possible solution.

Brittany Massaro, a local licensed cannabis cultivator, addressed the Council regarding cultivation taxes and asked the Council to consider lowering the current cultivation taxes. She noted that the cannabis market is collapsing and wholesale flower prices have dropped to historic lows. She said that the legal licensed cultivators are continuing to compete with the unregulated market. In addition to statewide with the ce enlate challenges, operators in Rio Dell face unique burdens. The cost of maintaining Dinsmore Ranch Road, including grading, repairing and keeping it safe is all on the Dinsmore Plateau operators. She commented that these are infrastructure costs that cut into their profits and at the same time, cannabis farmers have no access to equity grants or other support programs that help offset costs. She said that local cultivation taxes are now the breaking point and pointed out that if the farmers can't survive, the - 2-
SEPTEMBER 16, 2025 MINUTES

City will not only lose tax revenue but will lose jobs, economic activity and the assurance that cannabis is grown in compliance with community standards. She noted that other cities and counties in California have already lowered or suspended local cultivation taxes because they recognize sustainability must come before short-term revenue. She said that Rio Dell has the chance to take the same proactive step to keep operators in the regulated system and preserve the long-term benefits for the city.

She respectfully urged the council to place this issue on a future agenda and work with the cultivators to establish a fair tax structure that allows them to survive and continue contributing to Rio Dell in a regulated system.

CONSENT CALENDAR
Mayor Garnes asked if any council member, staff, or member of the public would like to remove any item from the consent calendar for separate discussion. No items were removed.

Carter/Orr made a motion to approve the consent calendar, including the following items:
1) Approve Minutes of the August 29, 2025, Special Meeting; Approve Minutes of the September 2, 2025, Regular Meeting; 3) Approve Resolution No. 1647-2025 Amending the Safety Element to Incorporate the 2025 Local Hazard Mitigation Plan;
4) Approve Resolution No. 1648-2025 Designating Voting Delegates for the Cal Cities Annual Conference and Expo pm October 5-10, 2025; 5) Authorize the City Manager to Execute a 2-Year Service Agreement with Petersen CAT for the Inspection and Maintenance of the City's Backup Generators;
6) Approve Resolution No. 1650-2025 to Implement the City of Rio Dell's Last, Best, and Final Offer with the Rio Dell Employees Association for Terms and Conditions of Employment;
7) Receive and File the check Register for August; and
8) Approve Resolution No. 1646-2025 Accepting the City's Updated Annex to the Humboldt Operational Area Hazard Mitigation Plan.

The motion carried 4-0.

REPORTS/STAFF COMMUNICATIONS
City Manager/Staff Update
City Manager Knopp highlighted the staff update and said that the PG&E project rerouting the gas line across the river was expected to close October 27' but has been extended to mid-November due to multiple issues.
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SEPTEMBER 16, 2025 MINUTES

He also reported that there would be a Nuisance Advisory Committee (NAC) meeting tomorrow at 3:00 p.m. followed by a Traffic Committee meeting here on Thursday at 4:00 p.m.

Mayor Pro Tem Carter referred to the animal control report and said that there were two kittens in foster care and one dog transferred to Miranda's Rescue.

Councilmember Wilson thanked Chief Phinney for following up with Fish and Game regarding the bear issue and said that the State is basically placing the responsibility on the city.

SPECIAL CALL ITEMS/COMMUNITY AFFAIRS/PUBLIC HEARINGS
Resolution No. 1649-2025 Approving a Budget Adjustment for the Purchase of Four (4) Shield 12 speed Display Signs from All Traffic Solutions, Inc. for $20,393.26 Chief Phinney provided a staff report recommending approval of the purchase and implementation of four (4) Shield 12 Speed Display signs in the amount of $20,393.26 •and the associated budget amendment.

He explained that the city received a grant and deployed a speed display sign on the 600 block of Wildwood Ave. He said that a Speed Effectiveness Report conducted between September 3-11, 2025, demonstrated that the sign successfully reduced vehicle speeds across all categories, with more than 50% of vehicles slowing down during nearly every hour of monitoring speed effectiveness. measurable reduction highlights the effectiveness of speed display technology in encouraging voluntary compliance with posted speed limits. He said that given the proven effectiveness of the speed sign, recommended expanding the program by purchasing four (4) additional signs to be strategically placed throughout the city in areas with high traffic volumes and frequent complaints of speeding. He added that this is a cheap and effective way to evaluate speed trends and support targeted enforcement.

He suggested that one (1) speed sign be placed at the south end of Wildwood Ave, one on Davis St. at Ireland Ave, and one on each end of Belleview Ave. He commented that the signs are operated on cellular signals and can be moved around when needed.

Chief Phinney then referred to the Speed Effectiveness Report showing an example of the data collected and said that this is just one of many reports that can be generated.

Councilmember Wilson asked if the speed sign could only display speed results or if messages could be placed on the sign.

Chief Phinney said that as far as messages, the options were limited. -4-
SEPTEMBER 16, 2025 MINUTES

Mayor Pro Tem Carter agreed that speeding traffic coming into Rio Dell from the south end of town is a problem.

Mayor Garnes commented that there is also a problem with vehicles speeding on Painter St. and agreed that problem areas need to be the focal point for the signs.

Mayor Garnes called for public comment on the subject. No public comment was received.

Solutions, Inc. for $20,393.26.

The motion carried 4-0.

ORDINANCES/SPECIAL RESOLUTIONS/PUBLIC HEARINGS
Second Reading (by title only) and Adoption of Ordinance No. 418-2025 Amending the City's Accessory Dwelling Unit (ADU) Regulations to Incorporate State Mandated Changes Pursuant to SB 1211
City Manager Knopp provided a staff report and said that this item involves another state mandate that compels the City to amend its Accessory Dwelling Unit (ADU) regulations.

He explained that the current regulations allow for two (2) accessory dwelling units and under the new changes, based on the number of existing units, that number of units could double on a parcel, up to a maximum of eight (8) units, with relaxed setbacks and parking requirements.

He further explained that the City's regulations also need to include the definition of "livable space," and the new state law reinforces a ministerial review process for ADU permits, which means the : City must approve a qualifying application without a Conditional Use Permit.

He commented that the Rio Dell Planning Commission met on August 26, 202,5 and approved the recommended amendment and adoption of the ordinance implementing SB 1211.

Mayor Garnes opened a public hearing to receive public input on the proposed ordinance. There being no public comment, the public hearing was closed.

Carter/Orr made a motion to approve the second reading (by title only) and adoption of Ordinance No. 418-2025 Amending the City's Accessory Dwelling Unit (ADU) Regulations to Incorporate State Mandated Changes Pursuant to SB 1211. Motion carried 4-0.
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SEPTEMBER 16, 2025 MINUTES

COUNCIL REPORTS/COMMUNICATION
Mayor Pro Tem Carter reported on recent and upcoming meetings and events and said that the Touch a Truck Event was successful, the utility box near the bridge was prepped and ready for the art work this week, announced there was a seat open on the Rio Dell School Board, and said that there will be a concert at Fireman's Park on September 27th from 1-9 p.m.

She then reported on the Davis St. Park and said that the school board has declared the area in question as surplus property. There is, however, a problem with the lot lines as they don't line up the way they should, so she is requesting an item on the October 7th City Council agenda to discuss the matter further. Consensus of the Council was to agendize the item for the next meeting as requested.

Mayor Garnes announced that she had a LAFco meeting tomorrow and a Great Redwood Trail meeting on Thursday.

Councilmember Orr thanked the police department for effectively handling the rash of crimes on Edwards Dr. despite being short staffed.

Councilmember Wilson announced that he had a Redwood Coast Energy Authority (RCEA) meeting next week and they will receive an Al report and how it will affect the power grid and rates.

He asked if there was a consensus from the Council to bring back the matter of water rates as requested as well as the View Ave. drainage matter. The consensus of the Council was to agendize both matters for the October 7 meeting.

Mayor Garnes agreed to also bring back the matter regarding the cannabis cultivation tax.

ADJOURNMENT
Wilson/Carter made a motion to adjourn the meeting at 6:35 p.m. to the October 7, 2025, regular meeting. Motion carried 4-0.

Debra Garnes, Mayor
Attest:

Karen Dunham, City Clerk
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CITY OF
Rio Dell City Hall CRIO
675 Wildwood Avenue DELL
Rio Dell, CA 95562
(707) 764-3532 CALIFORNA
cityofriodell.ca.gov
October 7, 2025
TO: Rio Dell City Council
FROM: Kyle Knopp, City Manager
SUBJECT: Approval of Employment Agreement with Travis Sanborn for Finance Director Services
IT IS RECOMMENDED THAT THE CITY COUNCIL:

Authorize the City Manager to sign the agreement.

BACKGROUND AND DISCUSSION
Travis Sanborn has been serving as the City's Finance Director since September 26, 2022 and has been with the City since December 6, 2021. The attached agreement was reviewed and approved by the City Attorney.
/lI
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CITY OF RIO DELL

FINANCE DIRECTOR

EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered by and between the CITY OF RIO DELL, a municipal corporation of the State of California, hereinafter referred as the "Employer" or "City" and TRAVIS SANBORN, hereinafter referred to as "Employee" or "Finance Director", both of whom understand as follows:

RECITALS
A. WHEREAS, Employer desires to employ the services of Travis Sanborn as Finance Director of the City of Rio Dell; and
B. WHEREAS, it is the desire of the Employer, to provide certain benefits, establish certain conditions of employment, and set working conditions of said Employee; and C. WHEREAS, Employee desires to accept employment as the Finance Director of the said City.

AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties agree as follows:

SECTION 1. DUTIES. Employer hereby agrees to employ Travis Sanborn as Finance Director of said Employer to perform the functions and duties specified in the Ordinances of said City, pursuant to Calitornia Government Code section 36506, and to perform other legally permissible and proper duties and functions as the Finance Director shall from time to time be assigned.

SECTION 2. TERM. This Agreement shall remain in effect through June 30, 2028, unless Employee's term of employment is terminated earlier as provided in this Section 2 or Section 3 of this Agreement, or by the voluntary resignation of Employee. Should Employee elect to resign, Employee shall provide Employer with at least six (6) weeks written notice prior to resignation.
a. Termination from Employment; 90 Day Limitation on Termination and Severance Pay. Except in the event of immediate termination for cause as a result of a conviction or a plea of no contest to a felony as stated in Section 2.b. of this Agreement, below, the Finance Director shall not be terminated from employment within the ninety (90) day period following the appointment of a new City Manager.

The purpose of this provision is to allow any newly appointed City Manager to directly observe the actions and ability of the Finance Director in the performance of the powers and duties of her office. In all other circumstances, the Finance Director can be terminated from employment with or without cause and for any reason (or no reason at all following two (2) weeks written notice from the City Manager, and 1 -8-
without notice under Section 2.b. of this Agreement. In the case of employment termination prior to expiration of this Agreement (i.e., prior to June 30, 2023) the Finance Director shall be entitled to receive severance in a lump sum and all unused vacation, and executive leave time, as Employee's sole and exclusive remedy and rights) to payment at employment termination. "Severance" shall be paid according to the following schedule:

Years of Continuous Service Severance Pay
0-1 year 2 months' salary
1-2 years 3 months' salary
2-3 years 4 months' salary
3-4 years 5 months' salary
b. Severance Payment Exception. Should the Finance Director be terminated for cause or as a result of a conviction or plea of no contest to a felony no severance pay will be provided upon employment termination. If the Finance Director voluntarily leaves employment with the City of Rio Dell or resigns, no severance pay will be provided upon separation.

SECTION 3. SUSPENSION OR REMOVAL. The Employee may be suspended, removed, or dismissed from the service of the City of Rio Dell at any time during the term of this Agreement pursuant to Section 2 above or to the provisions of any applicable City of Rio Dell Ordinances.

SECTION 4. DISABILITY. Employer may terminate Employee's employment if Employee suffers a disability that renders Employee unable, as determined in good faith by the City Manager, to perform the essential functions of the position, even with reasonable accommodation, for four months (twelve weeks) in any 12-month period. If Employee's employment is terminated under this Section 4, Employee shall be compensated for all accrued obligations through the termination date, which for purposes of this section shall be a date specified by the City Manager. Employer shall also pay to Employee a severance pay as set forth in Section 2 above. After the termination date, Employer shall not pay to Employee any other compensation or payment of any kind, or severance, or payment in lieu of notice. All benefits provided by Employer to Employee under this Agreement or otherwise shall cease on the Termination Date.

SECTION 5. SALARY. The salary for the Finance Director shall be as follows: The salary schedule for the Finance Director shall be set in accord with "Step E" of the longevity based salary steps set forth in the salary pay scale adopted by the Rio Dell City Council as Resolution No. 1645-2025, a copy of which is attached hereto as Exhibit "A" and incorporated by reference (the "Salary Schedule").

Employee shall receive a five percent (5%) increase upon completion of ten (10) years of continuous, uninterrupted employment with the City, and another five percent (5%) increase upon completion of twenty (20) years of continuous, uninterrupted employment. 2 -9-
Employee shall receive a ten percent (10%) increase to base compensation upon obtaining a Master of Business Administration or other finance related advanced degree from an accredited university.

SECTION 6. PERFORMANCE EVALUATION. The City Manager shall review and evaluate the performance of the Employee not later than twelve (12) and twenty four (24) months from the effective date of this Agreement. From time to time as may mutually be deemed appropriate, the City Manager and Employee shall define such goals and performance objectives in writing which are determined necessary for the proper operation of the Department and City. Such goals amperformance objectives shall be considered as part of the annual performance review or SECTION 7. HOURS OF WORK. The Finance Director is limited to 24 hours per week of work pursuant to this Agreement. This arrangement can be altered by mutual agreement of the City and the Employee. It is recognized that Employee may be expected to work in excess of eighty (80) hours per pay period at the direction of the City Manager where necessary. Employee shall receive no overtime pay or compensatory time off. Employee acknowledges that the position of Finance Director is an administrative level, supervisorial position exempt from rights to overtime pay under California Wage and Hour law and regulations.

Employee shall have access to a voluntary Alternative Workweek Schedule consisting of four 10-hour days per work week. Holiday pay hours shall remain at eight (8) hours per holiday when that holiday occurs during employee's Alternative Workweek Schedule.

SECTION 8. OTHER EMPLOYERS OR OUTSIDE ACTIVITIES. Employee agrees to remain in the exclusive employ of Employer and not to become employed by any other employer in other employment until termination of the employment relationship without prior approval of the City Manager. The term "other employment" shall not be construed to include occasional teaching, writing, consulting, or military reserve service performed on Employee's time off.

Employee shall not spend more than four (4) hours per week in teaching, counseling, or other non-employer connected business without the prior written approval of the City Manager.

SECTION 9. AUTOMOBILE. Employee's duties require that he shall have the use at all times during his employment with Employer an automobile to perform Employer's business.

Employee's use of his private vehicle for City business shall be reimbursed to Employee at the current standard mileage rate as published by the United States Internal Revenue Service.

Subject to the provisions of the City's separate Travel and Reimbursement Resolution, Employee shall be responsible for paying for all gas, maintenance, and repair of said automobile.

Employee shall be responsible for paying for all liability, property damage, and comprehensive insurance on said automobile. Employee shall maintain a valid driver's license and maintain insurable driving status as defined by City's insurance coverage. Employee shall provide employer with a Department of Motor Vehicle H-6 report annually to verify minimum driving standards.

SECTION 10. VACATION, SICK LEAVE, HOLIDAYS, AND EXECUTIVE TIME. For the health and welfare of its employees, it is the policy of the City of Rio Dell that employees be encouraged to use the vacation benefits granted by the City and shall take an annual vacation of at least 40 hours.
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Employee will receive eighty (80) hours of executive leave each fiscal year in (2) installments; forty (40) hours on July 1 and forty (40) hours on January 1. The taking of vacation and executive leave time shall be coordinated with and approved by the City Manager, who shall not unreasonably withhold their approval.

Employee may cash out or utilize the Executive Time installment beginning July 1. Employee shall be paid on the first pay period of June for each calendar year during the term of this agreement for accrued Executive Leave that remains unused or unpaid during the previous (12) months on a prorated basis.

Employee accrues a sick leave benefit of five (5) hours each calendar month actually worked by Employee, Rules pertaining to the use of sick leave are detailed in the Rio Dell Personnel Rules.

Upon the employee's separation from City service, he or she shall be paid for any accrued sick leave beginning after five years of full time employment based upon the following schedule:
5-7 years - 10%
8 - 12 years - 15%
13 - 20 years - 20%
21 + years - 25%
The amount paid out under this Article shall not exceed 240 hours.

Vacation time shall accrue in accord with the following schedule based on years of continuous employment service to the City (all of said rates are set at a sixty percent (60%) accrual rate compared to similarly situated full-time City employees):

Years of Continuous Service Hours per Year Accrual Max.

One to three (1-3) -8 hour: 120 hours
Four to ten (4-10) 12 hour 180 hours
Eleven to fifteen (11-15) 96 hours 240 hours
Sixteen to twenty (16-20) 120 hours 300 hours
Employee shall also be entitled to the same paid holidays as the Rio Dell Employees' Association.

SECTION 11. ACCRUED VACATION LEAVE. The amount of vacation time allowed to be accrued at the end of any pay period shall not exceed 1.5 times the annual amount of vacation time for the Employee's year of service stated in the schedule recited in Section 10 (not t exceed a maximum of 300 hours). Upon reaching the applicable vacation accrual maximum ir accord with the schedule recited in Section 10, Employee will not earn or accumulate additional vacation time and shall be automatically cashed out of 40 hours of accrued vacation, to be paid in the next pay period.
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Employee may elect to buy down his vacation accrual at any time, provided that he has scheduled a vacation leave with the City Manager as appropriate or has taken his annual vacation and the balance in his vacation account will be at least 40 hours after the buy down.

SECTION 12. WORK RELATED EXPENSES AND REIMBURSMENT. Employer agrees to reimburse the Employee such verifiable work related out-of-pocket expenses incurred by the Employee as approved by the City Manager. Employee shall submit an itemization schedule of his out-of-pocket expenses to the City Manager in writing in the form of a purchase order for payment. • Employer also agrees to pay Employee a monthly cell phone allowance to ensure Employee can be contacted at all times. Employee must maintain cell phone service. The City's cell phone policy established by separate Resolution of the City Council is applicable in all regards for Employee.

SECTION 13. MEDICAL, DENTAL AND VISION INSURANCE REIMBURSEMENT.

Medical, Dental and Vision Insurance shall be provided for the Community Development Director as the City provides for other management positions, but prorated for the Finance Director consistent with a work schedule set at sixty percent of full-time employment. The contribution amount by the City shall be sixty percent (60%) of the premium costs for these benefits for Employee and forty-two percent (42%) of the total premium costs for Employee's dependents, depending on their age and status as a student as provided in the plan document. The comprehensive equivalency, but Employee acknowledges that Employee has no expectation that comparable coverage will continue since the City, like all insurance coverage procurers, is subject to significant fluctuations in the scope, availability and cost of insurance. Employee may elect to substitute compensation for health, dental, and vision insurance coverage. The level of compensation shall be $75 per pay period for all health, vision and dental coverage, collectively.

Proof of alternative health insurance must be provided to Employer before the requesting Employee may substitute compensation for insurance. Although the City is not obligated to pay a higher amount, Employee may request to re-negotiate the $75 figure during the Term of this Agreement.

If elected by Employee and if the Employee has a spouse/qualified dependent who has reached the age of 65 and is eligible for Medicare coverage, Employee shall be entitled to a stipend of One Hundred and Fifty ($150.00) dollars (less applicable payroll taxes) per pay period in lieu of City provided health insurance coverage through the City's current medical plan for the spouse/qualified dependent and effective upon the spouse/qualified dependent's removal from the City's plan. The amount of the stipend is in addition to the Employee's regular salary and is subject to all payroll taxes as required by law, with Employee bearing and paying the regular portion of payroll tax allocated to Employee.

SECTION 14. DEFERRED COMPENSATION. The Employer does not yet participate in and is not a party to the Public Employees Retirement System of the State of California. The Employer participates in a deferred Compensation Plan (i.e., an IRC 457(b) Plan). The Employer shall contribute and pay an amount equal to twelve percent (12%) of the Employee's salary to 5 - 12-
the Deferred Compensation Plan to the extent accrued proportional to the amount of time worked during any given year.

SECTION 15. LIFE INSURANCE. A term life insurance policy in the amount of Seventy-Five Thousand Dollars ($75,000.00) shall be provided by the Employer for the Employee, with the Employee entitled to designate Employee's beneficiary.

SECTION 16. AGREEMENT EFFECTIVE. This Employment Agreement shall become etfective July 1, 2021 and shall remain in effect through June 30, 2028, subject to potential early termination under Sections 2, 3 and 4 of this Agreement and changes pursuant to amendments or adjustments made at mutually agreed upon times throughout Employee's term of employment with Employer.

SECTION 17. INDEMNIFICATION. Employer shall defend, hold harmless and indemnify Employee against any tort, professional liability claim or demand or other legal action arising out of an alleged act or omission occurring in the performance of Employee's duties as Finance Director. Employer's indemnity obligation shall not apply to any claims or liabilities, of any type or nature, arising out of any intentional acts, criminal acts or willful misconduct of Employee.

SECTION 18. BONDING. Employer shall bear the full cost of any fidelity or other bonds required of the Employee under any law or ordinance.

SECTION 19. DUES AND SUBSCRIPTIONS. Employer agrees to budget and to pay for the professional dues and subscriptions of Employee necessary to support growth, advancement and active communication for the good of the City. Employee shall distribute to and share with the City Manger written material and information distributed by the said associations.

SECTION 20. LICENSING AND TRAINING. Employer agrees to budget and pay for the professional licensing and continued education of Employee for training as necessary and approved by the City Manager.

SECTION 21. TRAVEL EXPENSES. Employer hereby agrees to budget for and to pay the travel and subsistence expenses of Employee for official and professional travel of Employee while on City business, provided that the City Manager has first approved and authorized said travel and training expenses.

SECTION 22. ATTORNEY'S FEES. Should any litigation be commenced between the parties o this Agreement or the rights and duties of either relationship thereto, the prevailing party i uch litigation shall be entitled in addition to such other relief as may be granted, to reasonabl sum as and for attorney's fees which shall be determined by the court.

SECTION 23. OTHER TERMS AND CONDITIONS OF EMPLOYMENT. The City Manager may fix any such other terms and conditions of employment, not in conflict with City Ordinances, Rules or Policies, as he/she may determine from time to time, relating to the performance of Employee.
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SECTION 24. NOTICES. Notices pursuant to this Agreement shall be given by deposit in the custody of the United States Postal Service, postage prepaid, addressed as follows:

EMPLOYER EMPLOYEE
City of Rio Dell Travis Sanborn
Rio Dell City Hall
675 Wildwood Ave
Rio Dell, California 95562
Alternatively, notices required pursuant to this Agreement may be personally served in the same manner as is applicable to civil judicial practice. Notice shall be deemed given as of the date of personal service or as of the date of deposit of such written in the course of transmission in the SECTION 25. GENERAL PROVISIONS.

A. The text herein shall constitute the Agreement between parties.

B. This Agreement shall be binding upon and inure to the benefit of the heirs at law and executors of Employee.

C. This Agreement shall become effective commencing immediately, subject to Section 16 above.

D. If any provision, or any portion thereof, contained in this Agreement is held unconstitutional, invalid or unenforceable, the remainder of this Agreement, or portion thereof, shall be deemed severable, shall not be affected and shall remain in full force and effect.

E. This Agreement (including all Exhibits attached hereto) contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Agreement may not be modified, changed, supplemented or amended except by written instrument signed by the party to be charged or by its agent duly authorized in writing or as otherwise expressly permitted herein.

IN WITNESS WHEREOF, the City of Rio Dell has caused this Agreement to be signed and executed in its behalf by its City Manager, and the Employee has signed and executed this Agreement, both in duplicate.

EMPLOYEE
-
Travis Sanborn Date
Finance Director

EMPLOYER
Kyle Knopp Date
City Manager
7 - 14-

CITY OF RIO DELL COMPENSATION SCHEDULE
Resolution No. 1645-2025
Peace Officers Association
Salary Range

JOB TITLE A D E
Police Officer 54,766 57,296 59,953 62,742 65,671
Police Officer Recruit 50,165
Police Corporal 62,847 65,782 68,863 72,098 75,495
Sergeant 68,939 72,178 75,579 79,150 82,899
Rio Dell Employee's Association
Salary Range

JOB TITLE A B C D E
Accountant I 56,031 58,624 61,347 64,207 67,209
Accountant II 61,416 64,279 67,285 70,441 73,755
Admin. Assistant 40,870 42,706 44,633 46,657 48,782
Administrative Tech. 46,732 48,861 51,096 53,443 55,907 Community Service Officer 47,797 49,979 52,270 54,675 57,201 Fiscal Assistant I 39,102 40,849 42,683 44,609 46,632
Fiscal Assistant Il 42,729 44,658 46,683 48,809 51,041
Management Analyst I 61,416 64,279 67,285 70,441 73,755 Office Assistant 35,815 37,397 39,059 40,804 42,636
PW Leadman 46,732 48,861 51,096 53,443 55,907
Records Tech. 42,729 44,658 46,683 48,809 51,041
Rio Dell Employee's Association (continued)
Sr. Fiscal Assistant 46,732 48,861 51,096 53,443 55,907 Utility Worker I 37,417 39,080 40,826 42,660 44,585
Utility Worker I! 40,870 42,706 44,633 46,657 48,782
Utility Worker III 44,682 46,708 48,835 51,069 53,415
W/WW Plant Op. I 43,693 45,670 47,745 49,924 52,212
W/WW Plant Op. lI 47.797 49,979 52,270 54,675 57,201
W/WW Plant Op. IlI 52,327 54,735 57,264 59,919 62,707
Operator In Training (OIT) 43,693
Management/Confidential Employees
Salary Range

JOB TITLE A C D E
City Clerk 56,031 58,624 61,347 64,207 67,209
City Manager 111,522 117,099 122,953 129,101 135,556
Chief of Police 97,980 102,671 107,597 112,768 118,199
Finance Director 96,538 101,365 106,433 111,755 117,343 Community Dev. Dir. 87,084 91,230 95,583 100,154 104,954 Management Analyst lI 67,359 70,519 73,837 77,321 80,979 Senior Management Analyst 73,921 77,409 81,071 84,917 88,955 Wastewater Sup. 83,320 87,486 91,861 96,454 101,276
Water/Streets Sup 85,404 89,674 94,158 98,865 103,809
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CITY OF
(RIO
DELL)
RESOLUTION NO. 1645-2025

A RESOLUTION OF THE CITY COUNCIL

OF THE CITY OF RIO DELL

AMENDING AND ADOPTING THE CITY MASTER SALARY TABLE
WHEREAS, the City of Rio Dell recognizes the value of adopting a salary schedule that promotes the recruitment and retention of employees; and
WHEREAS, a pay structure with competitive salaries is essential in attracting and retaining a skilled, motivated workforce, thereby increasing the level of service to the City's residents; and WHEREAS, the City of Rio Dell engaged Gallagher to complete a Total Compensation Study Report that was presented to the City Council on February 18, 2025; and WHEREAS, it was recommended that the Wastewater Superintendent position be placed in salary range 27 and the Water/Streets Superintendent position be placed in salary range 28 with rationale from the study being market competitiveness and range placement; and WHEREAS, the City has experienced recruitment challenges for the Wastewater Superintendent position, necessitating competitive compensation to attract qualified candidates in specialized infrastructure roles; and
WHEREAS, to address current market conditions and recruitment challenges, the City has determined that a 25% adjustment above the Gallagher study recommendations is necessary to ensure competitive positioning for these specialized positions; and WHEREAS, a salary table helps provide transparency in compensation; and WHEREAS, Section 36506 of the Government Code of the State of California provides that the City Council shall, by Resolution or Ordinance, fix the compensation for all appointive officers and employees; and
WHEREAS, the Master Salary Tables are attached as Exhibit "A" to this Resolution and have been reviewed and considered by the City Council; and
NOW THEREFORE BE IT RESOLVED, by the City Council of the City of Rio Dell:
- 16-

1. The Master Salary Tables attached hereto as Exhibit "A" are hereby adopted.

2. All prior resolutions concerning compensation for City employees that conflict with this Resolution or the attached Master Salary Tables are hereby repealed, and this Resolution shall be effective August 19, 2025.

PASSED AND ADOPTED by the City of Rio Dell on this 19th day of August 2025 by the following roll call vote:

Ayes: Garnes, Carter, Orr, Wilson and Woodall
Noes: None
Abstain: None

Absent: None
hide Sumed
ebra Garnes, Mave
ATTEST:
haven Dunham
Karen Dunham, City Clerk
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(RIO
DELL
Staff Highlights - 2025-10-07
City Council
City Manager
The City has hired Mr. Marshall Moore for the position of Wastewater Superintendent.

Attended and presented on the 2022 Earthquake at the North State Emergency Management Conference in Blue Lake on September 25th.

It is anticipated that a presentation on a new Solid Waste Franchise Agreement and Universal Collection will occur at the Council's next meeting on October 21st.

A television crew was recently in Rio Dell taking drone footage of the community for an upcoming show related to "Fire Country" on CBS.

City Clerk
Processed Fifteen (15) Building Permit Applications:
429 Fourth Ave. - Re-Roof Residence
65 Belleview Ave. - Re-Roof Residence
615 Gunnerson Lane - Re-Roof Residence
288 Dixie St. - 100 Amp Service Panel Upgrade
490 Painter St. - 20' x 20' Detached Accessory Building (Shop) (Canceled) 117 Wildwood Ave. - Replace Rotten Siding
180 Birch St. - Sewer Lateral
440 Second Ave. - Sewer Cleanout
1271 Eeloa Ave. - Re-Roof
87 Berkeley St. - Foundation Repair
65 Davis St. - Re-Roof Garage
492 Walker Lane - Re-Roof Residence
734 Rigby Ave. - Remove Chimney and Replace with Siding 474 Walker Lane - New Gas Meter
615 Gunnerson Lane - Reinstall Rooftop Solar
Processed One (1) Business License Application:

Hutton & Keller - Coin Operated Laundromat at 132 Wildwood Ave.

Processed Two (2) Encroachment Permit Applications:
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DELL
440 Second Ave. - Install Sewer Cleanout in Street
217 S. Sequoia Ave. - CBS Studios - Staging Area for Drone Filming Misc:

Attended Accretive Employee Benefits (Medicare) Webinar on September 25, 2025 Submitted Quarterly Seismic Fee Report
Submitted Quarterly SB 1473 Building Permit Report to Building Standards Commission Submitted Quarterly SB 1186 Building Permit Report to Division of State Architect City Attorney
Human Resources, Risk & Training
Finance Department
TDA Audit Preparation Completed: Closed out TDA Fund and submitted exhaustive documentation list to Davis Farr LLP for comprehensive audit compliance and financial transparency.

Water CIP Project Funding Secured: Received payment for Invoice #9 and confirmation of Invoice #10 approval from State Water Resource Control Board, maintaining consistent project cash flow.

Water Infrastructure Project Management: Executed Change Orders 6 and 7 for Water CIP Project and coordinated with RCAC and State Water Board on extension request processing.

Water Rate Structure Documentation: Conducted comprehensive research and prepared detailed staff report on the historical origin and methodology of water and wastewater rate determinations per City Council request.

Cannabis Tax Policy Research: Conducted comprehensive research and prepared detailed staff report on the historical origin and methodology of cannabis tax rate determinations per City Council request.

Infrastructure Financing Analysis: Conducted comprehensive research and prepared detailed staff report analyzing implications of potential debt financing for additional Water CIP project scope items.

Revenue Optimization Partnership Development: Coordinated scheduling of strategic meeting with HdL Companies to explore enhanced revenue collection services and opportunities.

Digital Accessibility Compliance Initiative: Collaborated with city staff and vendor representatives to implement ADA website features ensuring AB 1637 compliance for public entity digital accessibility requirements.
-19-
RIO:

DELL
Website Infrastructure Migration: Worked with city staff to facilitate seamless integration and migration processes with web hosting providers for enhanced digital presence.

Regional Transportation Coordination: Met with Caltrans representatives to discuss current status and timeline of Rio Dell transportation project initiatives.

Environmental Grant Reporting: Submitted Progress Report 3 to CalRecycle for ongoing grant compliance and program accountability.

Public Works Water
Public Works Wastewater
Public Works Streets, Buildings and Grounds
Public Works City Engineer
Public Works Capital Projects
Police Department
Patrol Statistics:

During September 11"' - Oct. 3' 2025, the Rio Dell Police Department handled 417 incidents. This includes 260 calls for service, and 157 Officer Initiated Contacts. 8 arrests were made. A total of 2 citations wer issued for traffic offenses or other miscellaneous criminal violations. 21 total cases requiring investigation were taken.

Staffing:

The Police Department is currently down two (2) sworn officer positions.

One lateral Police Officer is currently in backgrounds with our department. • Backgrounds have started on a candidate for Entry-level Academy Sponsorship.

Community Events / Notable Cases:
• Chief Phinney began his POST mandated Management School (Week 1 of 3) • Officer Rocha completed Interview and Interrogation School • CSO Clark completed her Records Supervisor School
• Chief Phinney has been appointed by the California Police Chiefs Association (CPCA) to serve on the Board of Directors as the Region 1 Representative (Humboldt/Del Norte/Trinity Counties). Chief Phinney's goal is to represent the unique priorities and challenges of our region, advocate for resources and legislative positions that support our communities, and ensure that our collective voice of the agencies in these counties are heard at the state level.

Abatement Projects:

Residential Abatement:
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DELL
• Total Active Cases 24
5 New open cases, 0 closed cases
• 24 of the cases consist of excessive vegetation, junk vehicles, solid waste, animal noise, improper parking and ongoing violations.

Vehicular Abatement:
• Total Active Cases 11
• 13 New open cases, 5 closed cases
9 vehicles towed
Animal Control:
• 20 Calls for animal related issues
• O animals taken to Mirandas Rescue
• O animals taken to Critters Without Litters
Community Development Department
Review and respond to HCD's inquiry regarding Housing Element Program D-1 and multi-family units being principally permitted in various zones.

Follow-up foundation inspection 130 Wildwood Ave, "All-Thread" anchor bolts in footings/plates.

Insulation inspection 172 Ogle Ave, both units
Follow-up inspection 482 Third Ave, re supplemental ground rod Reach out to the LWCF folks regarding timeline for reviewing and awarding grants. Grant recipients will be notified in February 2026
Review WCB Notice of Unrecorded Grant Agreement, prepare legal description/exhibits, send back to Alyssa Benedetti for review
Follow up w/Moore Roofing on Certification for 103 Atlanta Dead-file old Building Permit files
Correspondence with Brandon Rivas re: outstanding cannabis taxes, prepare Notice of Lien and send to Mr. Rivas for review and consideration
Respond to inquiry re: former Eel River Sawmill site, wood processing - firewood and lumber, water pay-back agreement and brownfield site
Sheetrock/drywall inspection 172B Ogle Ave
Framing, insulation, gas line inspection 130 Wildwood Ave -21-
*RIO
DELL
Roof deck inspection 429 Fourth Ave
HVAC inspection 1261 Eeloa Ave
Roof Final 65 Belleview Ave
Roof Final 70 Wildwood Ave
Final inspection 132 Wildwood Ave, laundromat
Meeting w/Cyrus Farrell re: foundation repairs 87 Berkeley Ave Meeting w/Thomas Hierholzer re: solar permit 157 Grayland Heights Meeting w/George Patmore re: shop, setbacks
Prepare Staff Report re: Davis Street Park acquisition, title reports, record of survey prior to award of grant.

Prepare Lasko NEPA document and refer
Correspondence with owner of Scatena Motel, siding replacement, Design Review, review California Historic Building Code, reach out the State Office of Historic Preservation (SHPO) and BPR.

Meeting w/Brandon Rivas re: past due cannabis taxes and resolution Final inspection, windows 371 Wildwood Ave, email to owner re: Permit for siding work Sheetrock/Drywall and Final inspection 95 Belleview Ave Footings/Forms/Rebar inspection 1285 Eeloa Ave
Respond to information request from Osprey Environmental regarding vacant parcel at corner of Davis and Ireland.

Gas line inspection 474 Walker Lane
Review and respond to HCD's inquiry regarding City ADU regulations Intergovernmental
Humboldt-Rio Dell Business Park
-22-
CITY OF Community Development Department
AMMA
675 Wildwood Avenue
(KIO
DELL) Rio Dell, CA 95562
(707) 764-3532
For the Meeting of October 7, 2025
• Consent Item; M Public Hearing Item
To: City Council
From:

Kevin Caldwell Community Development Director E
Through: Kyle Knopp, City Manager
Date: September 29, 2025
Subject: Davis Street Park Acquisition
Recommendation:

That the City Council:

Postpone Non-Reimbursable Project Expenditures (Title Work & Record of Survey) for Davis Street Park LWCF Acquisition until After Grant Award Announcement (Expected February 2026); and
Open the public hearing, receive public input, close the public hearing and deliberate.

Discussion
It is strongly recommended that the City of Rio Dell postpone the expenditure of local funds for key acquisition due diligence items, specifically Title Work and a Record of Survey, until after the official announcement of the Land and Water Conservation Fund (LWCF) grant awards, which is anticipated in February 2026.

Davis Street Park LWCF Staff Report October 7, 2025 CC Meeting -23-
Fidelity National Title has estimated the cost of the Title Reports, title insurance and escrow to be around $3,000. Mike O'Hern who performed the previous survey indicated, assuming the previously set monuments are still there, that the survey and map preparation, checking and recording fees would be about $4,500.

Expending funds on these items now constitutes a significant financial risk, as the City is not guaranteed to receive the grant award. Furthermore, LWCF program rules dictate that acquisition cannot commence before Federal approval, and while some costs may be potentially considered "pre-award costs" for the local match, this is a complex and risky strategy. A failure to secure the grant would result in the full cost of the Title Work and Survey being borne by the City with no guarantee of future reimbursement or benefit.

It must be noted that the City expended almost $4,500 in 2015 for a survey of the area that was intended to be acquired back then. The potential acquisition never materialized. Since 2015 the school had a solar array installed in a portion of the area that was to be acquired. In addition, the District recently reduced the area to be acquired by about a half-acre. See Attachment 1. This reduction may have adversely affected our grant application. The greater number of acres put under LWCF protection, the higher the score.

Again, the LWCF grant requires a 50% match. In addition, any lands put under LWCF protection are basically limited to open space and recreational facilities. Buildings e.g community centers, gymnasiums, etc. other than restrooms are prohibited. Even if the City were awarded the grant, the Council may choose to not accept the grant. Accepting the grant and purchasing the property could be a significant capital expense. In addition, once acquired the City takes on any potential risks and liabilities, demolition costs of removing that portion of the baseball field fencing, dilapidated restroom and snack shack and maintenance responsibilities.

Council member Carter has indicated that if the City does not get the grant, at least we'd have the survey done. This is risky. As pointed out above, the District could change their mind again on the area to be disposed of.

There will be other grant opportunities, including some with no match requirements and would allow community centers or similar facilities.

Davis Street Park LWCF Staff Report October 7, 2025 CC Meeting -24-
Conclusion
The expenditure of funds for Title Work and a Record of Survey before the LWCF award announcement (expected February 2026) is financially unsound and operationally premature.

Recommendation
The City should defer the final authorization and expenditure for the Title Work and Record of Survey until a formal Notice of Grant Award is received and the National Park Service has issued the official Authorization to Proceed (ATP) for the acquisition phase.

This conservative approach mitigates the risk of expending City funds on a non-guaranteed project and ensures that all incurred costs are fully eligible for the maximum possible reimbursement or correctly documented toward the City's mandatory local match.

Attachment 1: Map
Davis Street Park LWCF Staff Report October 7, 2025 CC Meeting -25-
675 Wildwood Avenue

CITY OF
Rio Dell, CA 95562
(707) 764-3532 WWA
(707) 764-5480 (fax) RIO!
DELL
Carrera
DATE: October 7, 2025
TO: Honorable Mayor and Members of the City Council
FROM: Travis Sanborn, Finance Director
THROUGH: Kyle Knopp, City Manager
SUBJECT: Water and Sewer Rate Structure Explanation
IT IS RECOMMENDED THAT THE CITY COUNCIL:
1) Acknowledge the comprehensive rate study process conducted in full compliance with Proposition 218 requirements.
2) Reaffirm the cost-of-service methodology for both water and sewer rates established through Resolution 1535-2022 and Resolution 1536-2022.
3) Note that sewer rates are appropriately differentiated by strength classification to reflect actual treatment costs for different business types.

BACKGROUND AND DISCUSSION:

Rate Study Timeline: The City has been focusing on providing information to the public and developing a long-term plan for rates over the past few years, utilizing the municipal consulting firm of Lechowicz and Tseng to conduct a professional water and sewer rate study (Minutes,

(Presentation, Page 2). The City Council was presented with a rate study and rate options at their regular meetings on January 4, 2022, and February 15, 2022 (Minutes, Page 5).

Proposition 218 Process: Following the requirements of Proposition 218, the City mailed notices to property owners and tenants and held a public hearing at least 45 days after the notices were mailed (Minutes, Page 5). The City issued 1,304 notices on March 1, 2022 (Presentation

(Presentation Page 37). The threshold to meet Proposition 218 state law and stop the rate -27-
increase from proceeding is 653 valid protest ballots; however, only 306 protest ballots were submitted (Minutes, Page 8).

Water Rate Structure: Water rates comprise a fixed charge per EDU and a consumption charge per CCF (Resolution 1535-2022, Page 2). The proposed monthly water rates for 2026/27 are:

Base Rate, $50.20; Consumption Rate per CCF, $3.50; and Dinsmore Zone Charge, $76.12 (Presentation, Page 17).

Sewer Rate Structure: Sewer rates include a fixed monthly charge per EDU and a volume rate per CCF based on customer categories/groups classified as low strength, domestic strength, medium strength, and high strength based on the content and strength of the discharge (Resolution 1536-2022 Page 3). The proposed monthly wastewater rates for 2026/27 are as follows: Fixed Monthly Charge per EDU, $72.40; Low Strength, $5.66/CCF; Domestic Strength, $7.04/CCF; Medium Strength, $10.52/CCF; and High Strength, $12.26/CCF (Presentation, Page Strength Classifications: Customer strength classes are defined as follows (Resolution 1536- 2022 Pages 4-5):

Low Strength: Car wash, office, retail store, school w/o cafeteria, laundromat Domestic Strength: Residential, hotel, school with cafeteria, motel, mobile home park, churches, auto shop, gas station, bars without dining
• Medium Strength: Beauty shop, medical office, dental office • High Strength: Restaurant, market with food prep, bakery Winter Water Consumption Methodology: Sewer volume charges are calculated based on winter water consumption rather than year-round usage (Resolution 1536-2022 Page 2). The City uses a three-month average of winter water use, from December to February, as measured and recorded at the water meter serving the same parcel (Presentation Pages 25, 31). This methodology provides a more accurate estimate of actual wastewater discharge by excluding summer irrigation and other non-sewer water uses that do not generate wastewater (Presentation

for sewer billing purposes (Presentation Page 31). This winter average calculation ensures customers are only charged sewer fees for water that actually enters the sewer system, rather than water used for landscaping or other outdoor purposes that typically occur during warmer months.

Leak Adjustment Provisions: The City has established mechanisms to protect customers from unfair sewer charges due to water leaks. The City Manager or his designee is authorized to make adjustments to customer winter water consumption due to vacancy, irregularity, or new account circumstances (Resolution 1536-2022 Page 2). Suppose water consumption readings for the three winter months indicate that the premise being served by sewer service was vacant during a portion of the three winter months. In that case, the City is authorized to average the water consumption for the period the premise appeared to be occupied. The City is also licensed to eliminate from the calculation water readings that are clearly not representative of average monthly water use when compared to water readings for two of the three months (Resolution - 28-
1536-2022 Page 2). Additionally, customers who experience leaks that have been repaired can request credits and recalculation of their winter water consumption baseline to ensure fair billing.

Financial Objectives: The primary objective of the rate study was to develop a five-year rate schedule for water and wastewater service that equitably distributes costs to customers and adequately funds operations, debt service, reserves, and capital projects (Minutes Page 4).

CONCLUSION
The City's current water and sewer rate structure was established through a legally compliant process following Proposition 218 requirements (Minutes Pages 4-5, Resolutions 1535-2022 and 1536-2022). The strength-based sewer classification system assigns costs based on the content and strength of the discharge, as established by industrial standards and California State Water Resources Control Board guidelines (Resolution 1536-2022, Page 3). Rates will be increased annually, ettective July 1st of each year, beginning in 2022-2026. The City will review each utility's financial standing annually prior to implementing any rate increases (Minutes, Page 7).

ATTACHMENTS:
- Attachment A - Resolution 1535-2022 (Water Rates)
- Attachment B - Resolution 1536-2022 (Sewer Rates)
- Attachment C - April 19,2022 Council Meeting Minutes
- Attachment D - Lechowicz & Tseng Rate Study Presentation -29-

RIO DELL CITY COUNCIL

REGULAR MEETING MINUTES
APRIL 19, 2022
The regular meeting of the Rio Dell City Council was called to order at 6:30 p.m. by Mayor Garnes.

ROLL CALL: Present: Mayor Garnes, Mayor Pro Tem Johnson, Councilmembers Carter, Wilson and Woodall
Others Present: City Manager Knopp, Management Analyst Sanborn, Water/Roadways Superintendent Jensen, Wastewater
Superintendent Taylor, Fiscal Assistant Il Hamaker, City Clerk Dunham, and City Attorney Gans
Attending remotely were Finance Director Dillingham and Chief of Police Conner

Absent: Community Development Director Caldwell

PUBLIC PRESENTATIONS
Mayor Garnes called for public comment on non-agenda items. There were no public comments received.

CONSENT CALENDAR
Mayor Garnes asked if any councilmember, staff or member of the public would like to remove any item from the consent calendar for separate discussion.

Councilmember Woodall removed the minutes of the April 5, 2022 regular meeting.

Motion was made by Johnson/Woodall to approve the following consent calendar items:
1) Resolution No. 1534-2022 authorizing the City Manager to execute agreements with the California Department of Transportation for the City of Rio Dell Clean California Local Grant Programs: 1) Rio Dell Gateway Beautification and 2) Eel River Trail Clean California
2) To Receive and File Check Register for March
Motion carried 5-0.

ITEMS REMOVED FROM CONSENT CALENDAR
Approve Minutes of the April 5, 2022 Regular Meeting
-30-
APRIL 19, 2022 MINUTES

Motion was made by Carter/Johnson to approve the minutes of the April 5, 2022 regular meeting as submitted. Motion carried 4-0 with Councilmember Woodall abstaining.

REPORTS/STAFF COMMUNICATIONS
City Manager/Staff Update
City Manager Knopp provided highlights of the staff update and said that staff met with Caltrans representatives on the Clean California Grants and had discussions with the City engineer on moving forward with the botany study for the Eel River area as part of the required environmental work. He said that they are anxious to get the project moving and staff anticipates potentially doing a kick-off press event with Caltrans over the next week or two at their request. He said that staff also had meetings with the contractor on the street paving projects on Riverside, Cherry and Orchard Streets with anticipated work to start very soon. A city newsletter was issued, and interviews were conducted for open positions in Public Works. He also announced that the next Annual Spring Cleanup Event would be held on May 7, 2022 from 9:00 a.m. to 1:00 p.m. at Eagle Prairie Elementary School.

City Manager Knopp then turned it over to Chief Conner to provide an update on an event that occurred today.

Chief Conner reported Demetrius Coleman who was convicted in November 2020 of first- degree murder for a drive-by shooting in Rio Dell had a hearing in court today requesting a retrial which was denied. He was sentenced to life in prison without the possibility of parole including a concurrent 25 years to life sentence for the special allegation of firing a gun out of a vehicle. He was pleased to report that this brings a conclusion to the 2019 homicide case.

Mayor Garnes thanked Chief Conner for the update and for all the work put forth by he and his department on this case.

Mayor Pro Tem Johnson commented that Chief Conner was instrumental in getting the guilty verdict and expressed thanks to the Chief and his department. Councilmembers echoed those sentiments.

Mayor Garnes called for public comment regarding the staff update. There were no public comments received at this time.

SPECIAL PRESENTATIONS/STUDY SESSIONS/PUBLIC HEARINGS
Presentation by JJA CPA, Inc - Fiscal Year 2020-2021 Audited Financial Statements Finance Director Dillingham said that what is being presented is the fiscal year 2020-2021 audited financial statements. Overall, the City's financial situation has improved which is a good thing, as the City has decades of deferred maintenance with regard to streets, the water distribution system and sewer collection system and that those monies are needed to keep the City moving forward. She commented that she was proud to report that there -31-
APRIL 19, 2022 MINUTES

were no findings or material weaknesses found with the audit and turned it over to the auditors to provide a presentation.

Brett Jones, Engagement Manager with JJA CPA, Inc. provided a power point presentation on the audited financial statements for fiscal year 2020-2021 and accompanying information.

He began by stating that the City received an unqualified opinion which is the highest opinion they can give.

He continued with review of the Management's Discussion and Analysis which provided a narrative overview and analysis of the financial activities of the City for the year ended June 30, 2021. He provided financial highlights and said that the City's net position was reported at $31,676,649, an increase of $1,653,921 from the prior year.

Overall, City-wide revenues from all governmental activities increased by $349,396, primarily due to increased sales and cannabis tax revenue.

He continued with review of the actual financial statements, followed by notes including a Summary of significant accounting policies. The last document was the Independent Auditor's Report to the Council which is where they would report any material weaknesses or internal control deficiencies. He commented that he was pleased to report that there was nothing to report. He noted that overall, the audit went very well and Finance Director Dillingham and staff were able to provide everything they needed to do their job without any issues. He concluded the presentation and called for questions from the Council.

Mayor Garnes and Councilmembers thanked him for preparing the audit and giving the City such a good report. The Council also expressed thanks to Finance Director Dillingham and staff for doing a great job in keeping the City's finances on track.

Mayor Garnes called for public comment on the audited financials.

City Clerk Dunham read the following public comment from Steve and Sharon Wolff:
"Since we're talking about city budget, please discuss how the proposed reductions in commercial cannabis taxes that will be discussed at the next city council meeting could impact city finances, including any impact to water/sewer fund or streets fund." City Manager Knopp explained that what is being discussed is the audit for the prior fiscal year, not the budget. He commented that the cannabis taxes and water and sewer rates are unrelated. Water and sewer are enterprise funds which are required to operate and fund themselves, whereas cannabis taxes go to the General Fund, which primarily supports law enforcement services. Ne pointed out that there is a slight impact in the sense that as businesses are expanded in the community whether they are cannabis or - 32-
APRIL 19, 2022 MINUTES

non-cannabis businesses, it creates a larger customer base for water and sewer which helps to defray the costs.

He said that regarding the question about cultivation versus sales taxes for dispensaries, the City Council's prior discussions were related to cultivation taxes only. He reiterated that cannabis tax is a tax that no other individual or business in the community pays unless involved in the cannabis industry or a consumer of the product.

Public Hearing and Presentation on Proposed Water sand Wastewater Rate Study with Proposed Rates through Fiscal Year 2026-2027 Pursuant to Proposition 218 with Possible Continuance of Tabulation of Protest Ballots to May 3, 2022 City Manager Knopp provided a staff report and began by advising attendees of the meeting to be sure to submit any remaining protest ballots prior to the close of the public hearing.

He explained that the Council would be opening the Proposition 218 public hearing, hearing and considering all public comments received on the proposed water and wastewater rate adjustments, having been noticed more than 45 days ago and sent to all property owners and rate payers in the City of Rio Dell.

He said that over the past few years, the City has been focusing on trying to provide information to the public and coming up with a long-term plan in terms of rates. The City utilized the municipal consulting firm of Lechowicz and Tseng to do a professional water and sewer rate study. The primary objective of the rate study was to develop a five-year rate schedule for water and wastewater services that equitably distributes costs to customers and adequately funds operations, debt service, reserves and capital projects.

There were some prior major capital improvements to both the water and wastewater systems including a new water plant and water intake system, a new wastewater plant and a new backup well system with filtration. He noted that the City tries to leverage as much grant money as possible to get the state and/or federal government to pay for these improvements.

Following the 2014 drought, the City aggressively pursued grant funding for the Metropolitan Well Site to provide for a backup water source during drought conditions and were able to secure 95% of that project funded through state and federal grants. Typically grants are either not funded or are around 80% funded so pulling down anything above that is a huge success. The prior improvements to the water and wastewater facilities received significant grant funding however, the City does have some debt related to those improvements.

What remains are two main critical infrastructure issues related to the distribution and collection systems. There are a lot of aged and failing piping systems and similarly with the collection on the sewer side. There are issues that are significant that are potentially -33-
APRIL 19, 2022 MINUTES

regulatory in nature and if they are not corrected and fixed, the City could be facing fines by the State for non-environmental compliance.

The City currently has an application out with the State Water Resources Control Board for $9 million of improvements on the water distribution system and have been spending the better part of 6 years to put together the application to make it competitive. In order to allow tor that project to move forward, the State would need to fund 80-90% of the $9 million or that cost would fall directly on the ratepayers.

City Manager Knopp reviewed the process for the Proposition 218 rate hearing and said that the public has an absolute right to submit protest ballots on the proposed rates, noting that any property owner or customer of record who is subject to the proposed utility charge may submit a written protest although only one protest ballot is allowed per parcel. The Mayor will open the public hearing, receive public testimony on the proposed rates, close the public hearing, and allow staff to begin the tabulation of the ballots. If the tabulation is unable to be completed within 30 minutes, staff's recommendation would be to continue the meeting to May 3, 2022 and to schedule an open ballot count at City Hall on Thursday, April 21st between the hours of 1-5 p.m. and if needed from 9 a.m. to 12 p.m. on Friday.

He introduced Catherine Tsang from Lechowicz and Tsang to provide a presentation on the proposed Water and Wastewater Rate Study.

Catherine proceeded with a power point presentation and began by providing an overview on the background of the City's water and wastewater rates. She noted that enterprise funds are supported from rates and charges, are separate from the General Fund and receive no revenue from taxes. The proposed rate study and rate options were presented to the City Council at their January 4, 2022 and February 15, 2022 regular meetings and covers a 5-year period through FY 2027 with rates to become effective July 1, 2022.

She continued with review of the procedural requirements of Proposition 218 which governs how property-related charges are adopted. Procedural requirements included conducting a rate study, mailing a notice to property owners and tenants, holding a public hearing at least 45 days after the notice is mailed, and not adopting new rates if more than 50% of ratepayers submit written protests.

Next was review of why rate increases are needed which is to fund the cost of providing the services including operating and maintenance costs, debt service obligations, debt service coverage covenants, capital improvements, maintaining reserve funds for emergencies and to retain a positive rating to obtain grants, loans and/or other debt financing.

Catherine continued with review of historic and current monthly water rates, water rate components including the fixed charge, consumption charge and the Dinsmore Zone charge, water net revenues, water operating expenses, water capital improvement projects, distribution system projects, water scenario comparison, water reserve fund -34-
APRIL 19, 2022 MINUTES

balance, proposed water rates, sample of water bill impacts, and proposed water low income discount.

The proposed monthly water bill for a typical residential customer using an average of 5 units of water per month represented the following charges for the 5-year period beginning July 1, 2022:
2021/22 (Current Bill) - $ 65.63
2022/23 $ 62.12
2023/24 - $ 63.47
2024/25 $ 64.85
2025/26 $ 66.26
2026/27 $ 67.69
Catherine continued the presentation with an overview of the sewer system components and proposed sewer rates. She explained that the sewer system includes a network of collection pipes, manholes, cleanouts, and pumps that convey wastewater to the wastewater treatment plant. The City utilizes an aerated activated sludge process to provide secondary treatment of wastewater with a total sewer flow of 79,000 ccf/year.

In 2013, the City completed a major plant upgrade which replaced the old conventional wastewater plant with a new activated sludge process to address nutrient removal and included construction of the irrigation field located in Metropolitan.

She provided a review of historic and current sewer rates, sewer rate components, net revenues, operating expenses, sewer capital improvement program, rate comparison, sewer reserve fund balance, proposed sewer rates, and sample sewer bill impacts.

The proposed monthly sewer bill for a typical residential/domestic strength customer using an average of 5 units of water per month represented the following:
2021/22 (Current Bill) $ 75.68
2022/23 $ 80.17
2023/24 - $ 86.29
2024/25 - $ 92.91
2025/26 $ 99.99
2026/27 - $107.60
Catherine referred to the proposed low- income discount for water and sewer customers and explained that to comply with Proposition 218, water and sewer rate revenues from one group of customers cannot be used to subsidize the rates of another group. What the City can do is utilize non-rate revenues, such as General Fund revenues, interest earnings or late fees to fund a low-income discount program. A $3.00/month discount was proposed for both water and sewer utilizing revenue from utility billing late fees to fund the program. The eligibility would be based on PG&E's CARE program requirements with approximately 700 Rio Dell customers currently qualifying, and would be reviewed -35-
APRIL 19, 2022 MINUTES

annually to determine whether the water fund has adequate non-rate revenues to fund the program.

She also pointed out that rates will be increased on July 1 of each year beginning 2022- 2026 however; the City will review each utility's financial standing annually prior to implementing any rate increases.

She recommended the City proceed with the public hearing and noted that if 653 valid protests are received, the City cannot move forward with the rate increase.

Mayor Garnes opened the public hearing at 7:28 p.m. to receive public testimony on the proposed water and wastewater rate adjustments, limiting comments to a maximum of three minutes per speaker.

Bridget Vaile addressed the Council and said that she put together a petition to hopefully get enough signatures to keep the rate increase from going through. She said that after listening to the presentation, it was even more concerning to hear that there are currently 700 customers that qualify for the PG&E CARE Program. With that many low-income customers, she didn't know how they were going to be able to pay for the water and sewer increase even with the $6.00 discount. She said that her husband came up to City Hall today and turned in a binder with over 300 protests and assumed that they had not been counted yet. She reiterated that it is concerning that there is a large number of low-income collects in late fees and pointed out that if those people can't pay their bills on time now it's going to be even worse if the rates are increased.

She then pointed out a discrepancy in the number of customers and said that in the notice sent out to customers, it said that there are approximately 1,400 customers but the presentation said that there are 1,400 sewer customers and 1,470 water customers. She said that she came to City Hall and asked for the exact number so she would know how many protests were needed to defeat the rate increase and no one was able to tell her.

She was confused as to how there could be more water customers than sewer customers.

Also, when she went to City Hall she was told that every parcel was supposed to get mailed a letter but she only received one letter even though she has two parcels. When she asked why she only received one, she was told that the post office probably lost it.

She noted that her cousin also owns two parcels in Rio Dell and only received one letter.

She asked the Council to take into consideration the number of low-income families that cannot afford an increase.

Angelina Lasko, 223 Belleview Ave. said in listening to the presentation, the first red flag for her was that the water rates were set to go down the first year then back up. She expressed concern that water and sewer bills would be going up to almost $200/mo. when - 36-
APRIL 19, 2022 MINUTES

there are hardly any jobs here requiring people to commute to school and work; she felt that it should be taken into consideration. With regard to the idea of creating a larger customer base, she said that she was forced to shut down her business here because the City does not allow vacation rentals in the Town Center (TC) zone. Considering everything that has been going on with COVID and the situation with people getting their water shut off because they haven't been able to pay their water bills, perhaps the City should allow more time before increasing rates so people can recover from the impacts of COVID. She mentioned that she read in the newspaper where Rio Dell has been receiving grants and doing good things so maybe it's time to do something good for the citizens. She suggested the Council increase the customer base by providing some kind of incentives that encourage businesses to come here.

James Oates, said that he owns two homes in Rio Dell with the one on Wildwood Ave. closed down because vacation rentals are not allowed in the Town Center (TC). He said that he also owns a house on Pacific Ave. and that he will pay the rate increased but felt that low-income residents will have a problem paying it. He said at the end of four years and the water bill is almost $200.00, it will be unaffordable for most people to even pay their mortgage. He noted that grants from the State may be free for the City but its not free for the taxpayers.

Mayor Garnes asked if there were any other public comments.

City Clerk Dunham read the following public comment from Steve and Sharon Wolff:
"Is the 5% annual increase in salary/benefits cited in the water rate study above and beyond the 10% across the board salary increases approved in January?" City Manager Knopp explained that the 10% increase for compensation that occurred in January was not part of the annual budget process for the current year. It was also not incorporated in the current rate study so the 5% is an average cost increase related to labor over two years. It also includes the cost of certain benefits that the Council has limited control over.

He said as far as the discrepancy between the number of water and sewer accounts, there are some accounts such as the Dinsmore Plateau accounts that only have water service.

Conversely, there are some customers that have private wells and only subscribe to sewer.

Bridget Vaile, asked for clarification if public comments count as a protest ballot. It was explained that protest ballots must be in written form at such time a ballot was provided to a citizen to complete and submit.

An unidentified person asked if renters were allowed to protest. -37-
APRIL 19, 2022 MINUTES

Mayor Garnes explained that either the property owner or the renter could submit a protest ballot although only one protest per parcel can be counted.

Jacqui Wilson addressed the Council and expressed the importance of having good quality water.

There being no further public comment, the public hearing closed at 7:43 p.m.

Mayor Garnes called for a 30-minute recess to allow staff to begin the tabulation of protest ballots. She explained that If the tabulation is unable to be completed within 30 minutes, the meeting would be continued to May 3, 2022 and staff would continue with an open ballot count at City Hall on Thursday, April 21st between the hours of 1-5 p.m. and if needed from 9 a.m. to 12 p.m. on Friday.

City Manager announced that the Mayor would reconvene the meeting at 8:15 p.m. to report on the tabulation.

The meeting reconvened at 8:15 p.m.

City Manager Knopp announced that staff was able to tabulate the total number of submitted protest ballots which was 306. The threshold to meet the Proposition 218 state law and stop the rate increase from proceeding is 653 valid protest ballots. Based on that, and assuming that all 306 protest ballots are valid, it does not meet the requirement to stop the rate increase from proceeding.

He explained that the Council has a couple of options: 1) the Council directs staff to continue the verification and count of the protest ballots and to continue the meeting to May 3, 2022 and schedule the open count for Thursday and possibly Friday to proceed with the tabulation; or 2) for the purposes of expediency, the Council can direct that all protest ballots be considered as valid therefore, the final vote count would be 306 of the 653 threshold and the protest would not be sustained for stopping the rate adjustment.

Staff would then return on May 3, 2022 with a Resolution enacting the proposed rates according to the Prop 218 hearing rate study, with rates to become effective July 1, 2022.

He said that the two fundamental questions are whether staff should continue with the tabulation and verification; or to deem all 306 ballots valid without the need for further tabulation and verification.

Motion was made by Woodall/Johnson deeming all 306 protest ballots as valid without the need for further tabulation and verification. Motion carried 5-0.

Motion was made by Johnson/Woodall to direct staff to return to Council at the meeting of May 3, 2022 with a resolution enacting the proposed water and wastewater rate adjustments. Motion carried 5-0.
-38-
APRIL 19, 2022 MINUTES

COUNCIL REPORTS/COMMUNICATIONS
Mayor Pro Tem Johnson reported that several months ago, the Council authorized the cleaning out of flag pole holes on Wildwood Ave. He said that the work would take place tomorrow, weather permitting, and he and Tim Marks along with the help of the Public Works crew would be doing the work.

Councilmember Wilson reported on the last HWMA meeting and said they discussed i tell car t cente bad was that HWA no
eenact the handling of CRV and that it all be handled by Hambro CRV Redemptior Center in Arcata. He said that their site needs to be reserved for the processing of organic waste in accordance with AB 1383. He noted that going to universal collection would play a big part in AB 1383 because ultimately it falls on the local jurisdictions.

Councilmember Woodall announced there would be a Nuisance Advisory Committee meeting at 3:00 tomorrow at City Hall.

Councilmember Carter commented that she has seen where other cities have held informational forums related to AB1383 which may be something the Council might want to consider.

Councilmember Wilson explained that under AB 1383, people will be required to get rid of food waste that is put into the garbage that is compostable so that it doesn't end up in the landfill. In addition, it has to be kept separate from regular garbage so that it is not contaminated
The consensus of the Council was to schedule a study session at some point related to AB 1383.

ADJOURNMENT
Motion was made by Johnson/Carter to adjourn the meeting at 8:25 p.m. to the May 3, 2022 regular meeting. Motion carried 5-0.

Debra Garnes, Mayor
Attest:

Karen Dunham, City Clerk
-*-39-

CITY OF RIO DELL
Water and Sewer Rate Study
Proposition 218 Hearing

CITY OF
(RIO
DELL)

CALICENA
City Council Meeting
April 19, 2022
LECHOWICZ TSENG Catherine Tseng
Project Manager
-40-
Background
Water Rates
Rates have increased each year since 2015
Rate structure was last updated in 2015
Wastewater Rates
Rates have increased annually by the change in the CPI since 2013 Rate structure was last updated in 2014
Enterprise funds
Self supported from rates and charges
Separate from General Fund
No tax revenue received
Rate study covers 5-year period (FY2023 through FY2027) Presented rate options at the January 4 and February 15 City Council meetings New rates effective July 1, 2022
-41-
Proposition 218
Adopted by California voters in 1996 and added Articles 13C and 13D to the California Constitution
Governs how property-related charges are adopted
Rates must be based on the reasonable cost of service
Rates must proportionally recover costs based on how customers take service Revenues from rates can only be used for intended purpose Covers rates over a maximum 5-year period
Procedural requirements:

Conduct a rate study
Mail a notice to property owners
Hold a public hearing a minimum of 45 days after notice is mailed Rates cannot be adopted if more than 50% of ratepayers submit written protests -42-
Why Rate Increases Are Needed
Fund the cost of providing service:

Operating & maintenance costs
Debt service obligations
Debt service coverage covenants

1.20 times the annual payment
Capital improvement projects
Maintaining reserve funds for emergencies
Eliminate sewer operating deficit
Retain positive credit rating to obtain grants, loans, and/or other debt financing
-43-
Water & Sewer Fund Objectives
Meet debt service coverage (1.2x)
Financial measure of an agency's ability to repay outstanding debt Net Operating Revenue/Total Annual Debt Service => 1.20 Meet fund reserve targets
Operating Reserve Target = 30% of annual operating costs Capital Reserve Target = $1.0 million
Debt Service Reserve Target = Total debt service for one year Maintain positive net operating revenues
To ensure that each utility is covering its cost of service To avoid an operating deficit and dipping into reserves -44-

WATER RATES
-45-
Water System Overview
• Raw water is pumped from infiltration galleries under the Eel River to the treatment plant. The City completed an approximately $8.5 million project to establish a new raw water intake which lifted a water emergency declaration that had been in place for over five years and dramatically improved the quality of water.
• In 2014, the City began the Metropolitan Wells project that provided a state-of- the-art filtration system upon the City's old well site and added an additional layer of water security for the City.
• Total Customer Accounts = 1,500
• Total Consumption = 100,000 ccf/year
-46-
Historic and Current Monthly Water Rates
Calendar Year (1) 2016 2017 2018 2019 2020
BASE RATE (2)
All Customers per EDU $40.06 $46.63 $47.57 $48.50 $49.48 % Change 16.4% 2.0% 2.0% 2.0%
CONSUMPTION RATE (3)
All Consumption per ccf $2.61 $3.04 $3.10 $3.17 $3.23
% Change 16.5% 2.0% 2.3% 1.9%

ADDITIONAL CHARGES
Dinsmore Zone (4) $39.13 $65.21 $65.36 $65.51 $65.66
% Change 66.6% 0.2% 0.2% 0.2%
1 - Rates effective January 1 of each year
2 - EDU = Equivalent Dwelling Unit. For R.V. & Mobile Home Parks with significant R.V. Space parking, the Base Rate per rented R.V Space is 50% of current Base Rate.
3 - One unit = 1 ccf = 748 gallons
4 - Additional flat charge for Dinsmore area
-47 -
Water Rate Components

1. FIXED CHARGE:

All customers are charged the same fixed charge per EDU Levied regardless of water consumption and recognizes that even when a customer does not use any water the City incurs fixed costs associated with maintaining the ability or readiness to serve each connection Currently generates 73.6% of total water sales revenues

2. CONSUMPTION RATE PER CCF:

All customer classes are billed at a single tier and pay the same charge per unit (1 CCF = 748 gallons) Recovers costs that vary based on the amount of water used, such as utilities and chemicals Currently generates 26.4% of total water sales revenues

3. DINSMORE ZONE CHARGE:

Additional flat charge to pay for additional operating and capital costs the City incurs to provide water service to the area
27 customers
-48-
Water Net Revenues
Actual Budget
2018/19 2019/20 2020/21 2021/22

WATER REVENUES
Operating $977,624 $857,184 $905,773 $797,500
Capital $190,643 $186,466 $183,906 $239,400
Debt $115,193 $181,163 $185,608 $136,000
Metro Wells $17,752 $18,287 $18,630 $17,100
Dinsmore $21,894 $22,659 $79.601 $21,800
Subtotal $1,323,106 $1,265,759 $1,373,518 $1,211,800

WATER EXPENSES
Operating $669,392 $629,766 $622,297 $738,614
Capital $125,361 $31,869 $58,078 $88,000
Debt $266,727 $367,106 $136,106 $136,000
Metro Wells $9,180 $4,349 $3,873 $22,050
Dinsmore $2,035 $3,237 $2,170 $155,100
Subtotal $1,072,695 $1,036,327 $822,524 $1,139,764

NET REVENUES
Operating $308,232 $227,418 $283,476 $58,886
Capital $65,282 $154,597 $125,828 $151,400
Debt ($151,534) ($185,943) $49,502 $0
Metro Wells $8,572 $13,938 $14,757 ($4,950)
Dinsmore $19,859 $19,422 $77,431 ($133,300)
TOTAL NET REVENUES $250,411 $229,432 $550,994 $72,036
-49-
Water Operating Expenses
Budget Projected
2021/22 2022/23 2023/24 2020/25 2025/26
2026/27
Cost Escalation Escalation Escalation Escalation
Cost Cost Cost Escalation
Factor Factor Cost Cost
Factor Factor Factor
Operating Expenses
Salaries & Benefits $417,679 5.0% $439,000 5.0% $461,000

5.0% $484,000 5.0% $508,000 5.0% $533,000
Chemicals $18,300 300.0% $73,000 3.0% $75,000 3.0% $77,000 Professional Services 3.0% $79,000 3.0% $81,000
$70,927 3.0% $73,000 3.0% $75,000 3.0% $77,000 3.0% $79,000 3.0% Maintenance - Repair $44,168 $81,000

3.0% $45,000 3.0% $46,000 3.0% $47,000 3.0% $48,000 3.0% $49,000 Insurance $39,236 3.0% $40,000 3.0% $41,000

3.0% $42,000 3.0% $43,000 3.0% $44,000
Utilities $34,157 3.0% $35,000 3.0% $36,000

3.0% $37,000 3.0% $38,000 3.0% $39,000
Regulatory Fees & Other Fees $13,951 3.0% $14,000 3.0% $14,000 3.0% $14,000 Computer Maintenance & Software 3.0% $14,000 3.0% $14,000 $17,566 3.0% $18,000 3.0% $19,000 3.0% $20,000 3.0%
$21,000 3.0% $22,000
Other Operating Expenses $82,630 3.0% $85,000 3.0% $88,000 3.0% $91,000 3.0% $94,000 3.0% Subtotal Operating Expenses $738,614 $97,000
$822,000 $855,000 $889,000 $924,000 $960,000
% Change 11.3%

4.0% 4.0% 3.9% 3.9%
Metro Wells Expenses (063)
Salaries & Benefits $10,684 5.0% $11,000 5.0% $12,000
5150 Electricity 5.0% $13,000 5.0% $14,000 5.0% $15,000 $6,000 3.0% $6,000 3.0% $6,000 3.0% $6,000 3.0% $6,000 3.0% Public Works $1,200 3.0% $6,000
$1,200 3.0% $1,000 3.0% $1,000 3.0% $1,000 3.0% $1,000
Other Metro Wells Expenses $4,166 3.0% $4,000 3.0% $4,000 3.0% $4,000

3.0% $4,000 3.0% $4,000
Subtotal Metro Wells Expenses $22,050 $22,200 $23,000 $24,000 % Change $25,000 $26,000

0.7% 3.6% 4.3% 4.2%

4.0%
Dinsmore Expenses (064)
5115 Contract/Professional Services $7,500 3% $7,700 3% 3% 5150 Electricity 3% $8,300 3% $8,500
$2,200 3% $2,300 3% 3% 3%
3% $2,600 3% $2,700
Other Dinsmore Expenses $400 $400 3% 3% 3% $400 3% $400 Subtotal Dinsmore Expenses $10,100 $10,400
% Change $11,300 $11,600

3.0% 2.7% 2.7%
TOTAL WATER EXPENSES $770,764 $854,600 $960,300
% Change $997,600

10.9% 3.9% 3.9%
-50-
Water CIP
Current Projected Funding
Project Title 2021/22 2022/23 2023/24_ 2024/25 2025/26 Local Funding Grant Funding Fund Source itywide Project
CADA Upgrade $10,000
$o $o
Nater Meter Replacement $12,000 $60,000 $60,000
Veter Reading Equipment Replacement $26,000
Backwash Flow Meter $0 $0
$10,000 11111. $o $0
Turbidity Meter Replacement $30,000 so so
Subtotal $88,000 $60,000
$60,000
Other Major Projects
Distribution System Upgrade $4,750,000 $9,500,000
Eel River Crossing Pipeline Retrofit 54.750000
Douglas Tank Seismic Retrofit $0 3,50000 ° 53,5000
Subtotal HMGP-FEMA
$O $4,750,000
TOTAL WATER CIP $88,000 $4,762,000 $4,762,000 $12,000 $2,712,000 $2,712,000 $14,960,000 $1,410,000 $13,550,000 Water Utility needs $15 million in capital improvements over the next 5 years. -51-
Eel River Crossing Pipeline & Douglas Tank
Seismic Retrofit Financing Scenarios
Eel River Crossing Douglas Tank
Pipeline Retrofit Seismic Retrofit
Total Project Cost $3,500,000 $1,900,000
Amount Grant Funded (75%) $2,625,000 $1,425,000
Total Amount of Loan (25%) $875,000 $475,000
Loan Terms
Term (years) 30 30
Interest Rate 3.0% 3.0%
Annual Loan Payment (1) $45,000 $24,000
Reserve Fund Requirement (2)
Equal to Annual Debt Service $45,000 $24,000
1 - Estimates for financial planning purposes. Assumes first payment is due one year after project completion (2027/28).
2 - Assumes the City must set aside 1 year of debt service for reserve requirement 13 -52-
Distribution System Project
Financing Scenarios
Scenario 1: Scenario 2: Scenario 3:
100% Loan 90% Grant/10% Loan 100% Grant
Total Project Cost $9,500,000 $9,500,000 $9,500,000
Amount Grant Funded $0 $8,550,000 $9,500,000
Total Amount of Loan $9,500,000 $950,000 $0
Loan Terms
Term (years) 20 20
Interest Rate :

0.0% 0.0%
Annual Loan Payment (1) $475,000 $48,000
Reserve Fund Requirement (2)
Equal to Annual Debt Service $475,000 $48,000
1 - Estimates for financial planning purposes. Assumes first payment is due one year after project completion (2025/26). 2 - Agencies must set aside 1 year of debt service for reserve requirement at least 90 days prior to project completion date. -53-
Water Scenario Comparison
Current Proposed
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
No Rate Increases 0.0% 0.0% 0.0% 0.0% 0.0%
Scenario #1: 100% Loan 12.0% 12.0% 12.0% 4.0% 4.0%
Scenario #2: 90% Grant/10% Loan : 3.0% 3.0% 3.0% 3.0% 3.0% Scenario #3: 100% Grant 2.0% 2.0% 2.0% 2.0% 2.0%
GOAL 1: MEET DEBT SERVICE COVERAGE
Current Proposed
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
Debt Service Coverage Ratio Required 1.20 1.20 1.20 1.20 1.20 1.20 No Rate Increases 3.16 2.64 2.40 2.15 1.40 1.18
Scenario #1: 100% Loan 3.16 3.46 4.35 5.38 1.24 1.29
Scenario #2: 90% Grant/10% Loan 3.16 2.70 2.71 2.73 2.03 2.04 Scenario #3: 100% Grant 3.16 2.62 2.54 2.46 2.38 2.29
GOAL 2: MEET WATER RESERVE FUND TARGETS
Current Proposed
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
No Rate Increases yes yes yes yes yes yes
Scenario #1: 100% Loan yes yes yes yes yes yes
Scenario #2: 90% Grant/10% Loan yes yes yes yes yes yes Scenario #3: 100% Grant yes yes yes yes yes yes
GOAL 3: MAINTAIN POSITIVE NET OPERATING REVENUES
Current Proposed
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
No Rate Increases $429,336 $358,800 $326,000 $292,000 $257,000 $221,000 Scenario #1: 100% Loan $429,336 $470,800 $592,000 $731,000 $760,000 $790,000 Scenario #2: 90% Grant/10% Loan $429,336 $366,800 $369,000 $371,000 $373,000 $375,000 Scenario #3: 100% Grant $429,336 $355,800 $346,000 $335,000 $324,000 $312,000 15 -54-
Water Reserve Fund Balance
Water Rate Scenario Comparison
Ending Operating Fund Balance
$4,500,000
$4,000,000
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000 No Rate Increases
• Scenario #1: 100% Loan
$500,000 Scenario #2: 90% Grant/10% Loan
Scenario #3: 100% Grant
- - Total Water Reserve Fund Target
$0
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
16 -55-
Proposed Water Rates

PROPOSED MONTHLY WATER RATES
Current 2022/23 2023/24 2024/25 2025/26 2026/27
BASE RATE $49.48 $45.47 $46.62 $47.79 $48.98 $50.20
CONSUMPTION RATE per ccf (1) $3.23 $3.33 $3.37 $3.41 $3.46 $3.50 DINSMORE ZONE CHARGE $65.66 $67.63 $69.66 $71.75 $73.90 $76.12 1 - One hundred cubic feet (ccf) = 748 gallons
17 -56-
Sample Water Bill Impacts
Monthly Current Proposed
Use (ccf) Bill 2022/23 2023/24 2024/25 2025/26 2026/27
Monthly Use = 3 cci
Base Rate $49.48 $45.47 $46.62 $47.79 $48.98 $50.20
Consumption Charge 3 $9.69 $9.99 $10.11 $10.24 $10.37 $10.49 Total Monthly Water Bill $59.17 $55.46 $56.73 $58.03
$59.35 $60.69
($3.71) $1.27 $1.30 $1.32 $1.35
Due to the -6.3% 2.3% 2.3% 2.3% 2.3%
updated cost of
service allocation, Monthly Use = 5 ccf (Residential Avg Use) the bill impact for Base Rate $49.48 $45.47 $46.62 $47.79 $48.98 $50.20 Consumption Charge 5 $16.15 $16.65 $16.86 $17.07 $17.28 $17.49 the first year will Total Monthly Water Bill $65.63 $62.12 $63.47 $64.85 $66.26 $67.69
vary based on a $ Change ($3.51) $1.35 $1.38 $1.41
% Change $1.43
customer's actual - 5.3% 2.2% 2.2% 2.2% 2.2%
monthly usage.

Monthly Use = 20 ccf
Base Rate $49.48 $45.47 $46.62 $47.79 $48.98
$50.20
Consumption Charge 20 $64.60 $66.59 $67.43 $68.27 $69.11 $69.96 Total Monthly Water Bill $114.08 $112.06 $114.04 $116.05 $120.16 $118.10
$ Change (S2.02) $1.98 $2.01 $2.04
% Change $2.07
-1.8% 1.8% 1.8% 1.8% 1.8%
Monthly Use = 40 cci
Base Rate $49.48 $45.47 $46.62 $47.79 $48.98 $50.20
Consumption Charge 40 $129.20 $133.18 $134.85 $136.54 $138.23 $139.93 Total Monthly Water Bill $178.68 $178.65 $181.47 $184.32 $187.21 $190.13
S Change ($0.03) $2.82 $2.85 $2.89 $2.92
% Change 0.0% 1.6%

1.6% 1.6% 1.6% 38
-57-
Proposed Monthly Water Bill for
Typical Residential Customer (5 ccf)
$70.00
$68.00
$66.00
$64.00
$62.00
$60.00
$58.00 $64.85 $66.26 $67.69
$63.47
$56.00 $62.12
$54.00
$52.00
$50.00
Current 2022/23 2023/24 2024/25 2025/26 2026/27
2021/22 Proposed
-58-
Monthly Water Bill Survey - October 2021
Single Family Residential (5 ccf)
$100
$90 Other Charges $87.50
Consumption Charge $82.07
$80 $76.97
* Fixed Charge
$70
$65.27 $65.63
$62.12
$60 $56.86
$50 $45.90 $46.76
$43.23
$40.00
$40
$33.00
$29.25
$30 $26.84
$20
$10
Current
$0
Fortuna Mickinleyville CSD Shelter Cove RID Hydesville Eureka Arcata Humboldt CSD Fort Brags Rio Dell (current) Scotia Garberville SD Rio Dell (Scenario 2A: 70%/30%) Ferndale (Del Oro Water Company) Brooktrails Township CSD 20 -59-
Water Low Income Discount
• To comply with Prop 218, water rate revenues from one group of customers cannot be used to subsidize the rates of another group
• Instead, the City can utilize non-rate revenues, such as General Fund revenues, interest earnings, or late fees to fund a low income discount program
• To ease administrative burden, qualification can be based on the PG&E's CARE program requirements • Program should be reviewed annually to determine whether the water fund has adequate non-rate revenues to fund the program
Total Number of Customers Eligible per PG&E 700
Total 2020/21 Water Late Fee Revenue $25,000
Annual Discount per Customer (1) $35.70
Monthly Discount per Customer (1) $3.00
Proposed 7/1/22 Average Water Bill $62.12
Proposed 7/1/22 Average Water Bill with Discount $59.12 % of Discount 4.8%
1 - Rounded
21 -60-

SEWER RATES
-61 -
Sewer System Overview
• Sewer system includes network of collection pipes, manholes, clean outs, and pumps that convey wastewater to the treatment plant
• City utilizes an aerated activated sludge process to provide secondary treatment of wastewater
• In 2013, the City completed a major plant upgrade which replaced the old conventional wastewater plant with the new activated sludge process to address nutrient removal. This project also included construction of the flood irrigation field located in Metropolitan.
• Total Customer Accounts = 1,470
• Total Sewer Flow = 79,000 ccf/year
23 - 62-
Historic and Current Sewer Rates
Calendar Year (1) 2013 2014 2015 2016 2017 2018 2019 2020 Fixed Monthly Charge per EDU (2) $47.01 $47.76 $47.76 $48.43 $49.64 $50.68 $51.49 $52.78 % Change 1.6% 0.0% 1.4% 2.5% 2.1% 1.6% 2.5%
Volume Rate per cct (3)
Customer Class
Low $3.29 $3.34 $3.34 $3.39 $3.48 $3.55 $3.61 $3.66
% Change 1.5% 0.0% 1.5% 2.7% 2.0% 1.7% 1.4%
Domestic Strength $4.11 $4.18 $4.18 $4.24 $4.35 $4.44 $4.51 $4.58 % Change 1.7% 0.0% 1.4% 2.6% 2.1% 1.6% $4.58
Medium $6.17 $6.27 $6.27 $6.36 $6.52 $6.66 $6.77 $6.87
% Change 1.6% 0.0% 1.4% 2.5% 2.1% 1.7% 1.5%
High $7.19 $7.31 $7.31 $7.41 $7.60 $7.76 $7.88 $8.01
% Change 1.7% 0.0% 1.4% 2.6% 2.1% 1.5%

1.6%
1 - Rates effective January 1 of each year
2 - EDU = Equivalent Dwelling Unit.
3 - One ccf = hundred cubic feet = 748 gallons
Volume Rate is based on three-month average of winter (Dec, Jan, & Feb) water use. Single family & multi-family residential consumption is capped at 15 ccf per month.
4 Customer Classes based on Strength:

Low Strength: Car wash, office, retail store, school w/o cafteria, laundromat Domestic: Residential, hotel, school with cafteria, motel, mobile home park, churches, auto shop, gas station, bars without dining Medium: Beauty shop, medical office, dental office
High: Restaurant, market with food prep, bakery
- 63-
Sewer Rate Components

1. FIXED CHARGE:

All customer classes are charged the same fixed charge per EDU Minimum charge for all customers
Currently generates 70.5% of total Sewer Service Revenues

2. VOLUME RATE PER CCF
Rate varies based on customer strength
Based on average consumption during the winter months of December, January and February Residential customers are considered domestic strength and consumption is capped at 15 ccf per month Currently generates 29.5% of total Sewer Service Revenues - 64-
Sewer Net Revenues
Actual Budget
2018/19 2019/20 2020/21 2021/22

SEWER REVENUES
Operating $984,695 $898,340 $900,469 $892,066
Capital $145,527 $120,644 $109,782 $110,000
Debt $334,082 $332,884 $338,949 $302,934
Subtotal $1,464,304 $1,351,868 $1,349,200 $1,305,000

SEWER EXPENSES
Operating $823,989 $827,171 $839,048 $1,036,555
Capital $438,497 $631,652 $40,480 $160,000
Debt $304,162 $303,639 $304,730 $302,934
Subtotal $1,566,648 $1,762,462 $1,184,258 $1,499,489

NET REVENUES
Operating $160,706 $71,169 $61,421 ($144,489)
Capital ($292,970) ($511,008) $69,302 ($50,000)
Debt $29,920 $29,245 $34,219 $0
TOTAL NET REVENUES ($102,344) ($410,594) $164,942 ($194,489) Without rate increases, the Sewer Utility will continue to miss debt service coverage and will not meet its operating fund reserve target beginning in 2023/2024 - 65-
Sewer Operating Expenses
Budget Projected
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
Escalation Escalation Escalation Escalation Escalation
Cost Cost Cost Cost Cost Cost
Factor Factor Factor Factor Factor
Operating Expenses (050)
Salaries & Benefits $510,733 5% $536,000 5% $563,000 5% $591,000 5% $621,000 5% $652,000
5109 Chemicals $25,000 300% $100,000 3% $103,000 3% $106,000 3% 3% Professional Services $109,000 $112,000
$97,647 3% $101,000 3% $104,000 3% $107,000 3% $110,000 3% 5135 Maintenance - Repair $113,000
$34,343 3% $35,000 3% $36,000 3% $37,000 3% $38,000 3% $39,000 Insurance $36,729 3% $38,000 3% $39,000 3% $40,000 3% $41,000 Utilities 3% $42,000
$182,987 3% $188,000 3% $194,000 3% $200,000 3% $206,000 3% $212,000 Regulatory Fees & Other Fees $16,270 3% $17,000 3% $18,000 3% $19,000 3% $20,000 Computer Software & Maintenance 3% $21,000
$10,851 3% $11,000 3% $11,000 3% $11,000 3% $11,000 3% $11,000 Public Works $39,000 3% $40,000 3% $41,000 3% $42,000 3% $43,000 3% $44,000
Other Operating Expenses (1) $82,995 3% $85,000 3% $88,000 3% $91,000 3% $94,000 3% $147,000 Total Sewer Operating Expenses $1,036,555 $1,151,000 $1,197,000 $1,244,000 $1,293,000 $1,393,000 % Change 11%
4% 4% 4% 8%
1 - Includes additional $50,000 beginning in 2026/27 for operating expenses related to UV Disinfection - 66-
Sewer CIP
CURRENT PROJECTED - RATE STUDY PERIOD Five-Year
Project Title 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 Total Planned Projects
Generator & Transfer Switch Replacement $65,000
$15,000 $15,000 $0
SCADA Upgrades $10,000 $15,000 $15,000 $15,000 $75,000
Boiler, $15,000 $30,000 $30,000 $30,000 $30,000 $30,000 $150,000
1&l Reductions $45,000 $30,000 $30,000 $30,000 $30,000 $30,000 $150,000 Chloramine System $25,000 $0
Subtotal Planned Projects $160,000 $75,000 $75,000 $75,000 $75,000 $75,000 $375,000 Future Projects
UV Disinfection $30,000 $30,000 $30,000 $30,000 $30,000 $150,000
Subtotal Future Projects $30,000 $30,000 $30,000 530,000 $30,000 $150,000 TOTAL SEWER CIP $160,000 $105,000 $105,000 $105,000 $105,000 $105,000 $525,000 - 67-
Sewer Scenario Comparison

PROPOSED RATE INCREASES
Current Proposed
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
No Rate Increases 0.0% 0.0% 0.0% 0.0% 0.0%
Scenario #1: 4% Inflationary Rate Increases : 4.0% 4.0% 4.0% 4.0% 4.0% Scenario #2: 8% Increases to Meet Goals by 2026/27 8.0% 8.0% 8.0% 8.0% 8.0% GOAL 1 : MEET DEBT SERVICE COVERAGE
Current Proposed
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
Debt Service Coverage Ratio Required 1.20 1.20 1.20 1.20 1.20 1.20 No Rate Increases 0.89 0.43 0.28 0.12 -0.04 -0.37
Scenario #1: 4% Inflationary Rate Increases 0.89 0.60 0.62 0.65 0.67 0.54 Scenario #2: 8% Increases to Meet Goals by 2026/27 0.89 0.77 0.98 1.21 1.48 1.60 GOAL 2: MEET SEWER RESERVE FUND TARGETS
Current Proposed
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
No Rate Increases yes yes no no no
no
Scenario #1: 4% Inflationary Rate Increases yes yes yes no no no
Scenario #2: 8% Increases to Meet Goals by 2026/27 yes yes yes yes yes yes GOAL 3: MAINTAIN POSITIVE NET REVENUES
Current Proposed
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
No Rate Increases (194,489) (278,000) (324,000) (371,000) (420,000) (520,000)
Scenario #1: 4% Inflationary Rate Increases ($194,489) ($227,000) ($220,000) ($212,000) ($204,000) ($245,000) Scenario #2: 8% Increases to Meet Goals by 2026/27 ($194,489) ($176,000) ($112,000) ($40,000) $39,000 $77,000 -68-
Sewer Reserve Fund Balance
Sewer Scenario Comparison
Ending Sewer Reserve Fund Balance
$4,000,000
$3,500,000 No Rate Increases
- Scenario #1: 4% Inflationary Rate Increases
$3,000,000 Scenario #2: 8% Increases to Meet Goals by 2026/27 - - Total Sewer Reserve Fund Target
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$0
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27
30 -69-
Proposed Sewer Rates

PROPOSED MONTHLY WASTEWATER RATES
Current 2022/23 2023/24 2024/25 2025/26 2026/27
FIXED MONTHLY CHARGE per EDU (1) $52.78 $54.28 $58.34 $62.71 $67.39 $72.40 VOLUME RATE per ccf (2)
Low Strength $3.66 $4.15 $4.49 $4.85 $5.24 $5.66
Domestic Strength $4.58 $5.18 $5.59 $6.04 $6.52 $7.04
Medium Strength $6.87 $7.73 $8.35 $9.02 $9.74 $10.52
High Strength $8.01 $9.01 $9.73 $10.51 $11.35 $12.26
1 - EDU = Equivalent Dwelling Unit.
2 - One hundred cubic feet (ccf) = 748 gallons. Volume Rate is based on three-month average of winter (Dec, Jan, & Feb) water use.

Single family & multi-family residential consumption is capped at 15 ccf per month. - Low Strength: Car wash, office, retail store, school w/o cafteria, laundromat - Domestic Strength : Residential, hotel, school with cafteria, motel, mobile home park, churches, auto shop, gas station, bars without dining - Medium Strength: Beauty shop, medical office, dental office - High Strength: Restaurant, market with food prep, bakery

33. - 70-
Sample Sewer Bill Impacts
Monthly Current Proposed
Use (cci) Bill 2022/23 2023/24 2024/25 2025/26 2026/27
Residential/Domestic Strength - Low User (3 ccf)
Fixed Charge $52.78 $54.28 $58.34 $62.71 $67.39 $72.40
Variable Charge $13.74 $15.53 $16.77 $18.12 $19.56
$21.12
Total Monthly Sewer Bill $66.52 $69.81 $75.11
$80.83 $86.95 $93.52
$ Change $5.30
$3.29 $5.72 $6.12 $6.57
% Change

4.9% 7.6% 7.6% 7.6% 7.6%
Residential/Domestic Strength - Average User (5 ccf)
Fixed Charge $52.78 $54.28 $58.34 $62.71 $67.39 $72.40
Variable Charge 5 $22.90 $25.89 $27.95 $30.20 $32.60
Total Monthly Sewer Bill $35.20
$75.68 $80.17 $86.29 $92.91 $99.99 $107.60
S Change $4.49 $6.12
$6.62 $7.08 $7.61
% Change 5.9% 7.6% 7.7%

7.6% 7.6%
Residential/Domestic Strength - High User (15 ccf)
Fixed Charge $52.78 $54.28 $58.34 $62.71 $67.39 $72.40
Variable Charge 15 $68.70 $77.66 $83.85 $90.60 $97.80
Total Monthly Sewer Bill $105.60
$121.48 $131.94 $142.19 $153.31 $165.19 $178.00
S Change
$10.46 $10.25 $11.12 $11.88 $12.81
% Change 8.6% 7.8%

7.8% 7.7% 7.8%
Due to the updated cost of service allocation, the bill impact for the first year will vary based on your winter water use and customer strength class. -71-
Proposed Monthly Sewer Bill for
Typical Residential Customer (Winter Water Use = 5 ccf) $120.00
$100.00
$80.00
$60.00
$92.91 $99.99 $107.60
$40.00 $75.68 $80.17 $86.29
$20.00
$0.00
Current 2022/23 2023/24 2024/25 2025/26 2026/27
2021/22
13 - 72-
Monthly Sewer Bill Survey - October 2021
Single Family Residential (5 ccf)
$120
• Fixed Charge $103.27
$100 Consumption Charge
Other Charge
$80.17
$80 $75.00 $75.68
$72.96
$67.33 $68.00 $69.33
$60 $56.15
$49.04
$46.21
$38.75
$40
$20
$0
Fortuna Shelter Cove RID Mckinleyville CSD Humbolt so Fort Bragg Garberville SD Arcata Eureka Rio Dell (Current) Scotia Brooktrails Township CSD Rio Dell (Scenario 2A: 70%/30%) Sewer Low Income Discount
• To comply with Prop 218, sewer rate revenues from one group of customers cannot be used to subsidize the rates of another group
• Instead, the City can utilize non-rate revenues, such as General Fund revenues, interest earnings, or late fees to fund a low income discount program
• To ease administrative burden, qualification can be based on the PG&E's CARE program requirements • Program should be reviewed annually to determine whether the water fund has adequate non-rate revenues to fund the program
Total Number of Customers Eligible per PG&E 700
Total 2020/21 Sewer Late Fee Revenue $25,000
Annual Discount per Customer (1) $35.70
Monthly Discount per Customer (1) $3.00
Proposed 7/1/22 Average Sewer Bill $80.17
Proposed 7/1/22 Average Sewer Bill with Discount $77.17 % of Discount 3.7%
1 - Rounded
35 - 74-
Proposed Combined Monthly Bill
Total Proposed Monthly Utility Bill for I Water • Sewer Typical Residential Customer (5 ccf)
$200.00
$180.00 $175.29
$166.25
$160.00 $157.76
$149.76
$141.31 $142.29
$140.00
$120.00 $107.60
$75,68 $86.29 $92.91 $99.99
$100.00
$80.00
$60.00
$40.00
$66.26
$20.00
$0.00
Current 2022/23 2023/24 2024/25 2025/26
2021/22 2026/27
- 75-
| Proposition 218 Protest
1,304 notices mailed out to property owners and customers on March 1, 2022
4 protests received as of April 19, 2022
Per Prop 218, only one vote per parcel will be counted
City cannot revise rates if the City receives protests from more than 50% of affected parcels (653 protests)
-76-
Next Steps
If rates are approved:

Rates will be increased on July 1 of each year, beginning 2022 through 2026
The City will review each utility's financial standing annually prior to implementing any rate increases.

WELCOME TOl
- 77-
Questions?
- 78-
6/22/22, 12:06 PM PrintDocument
CiTY OF
KO:

DELL
Crain
RESOLUTION NO. 1536-2022

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RIO DELL ESTABLISHING WASTEWATER

FEES AND CHARGES FOR WASTEWATER CUSTOMERS
PURSUANT TO CHAPTER 13.10 OF THE RIO DELL MUNICIPAL CODE WHEREAS, the City of Rio Dell is authorized by the California Constitution and the California Government Code to charge fees to cover expenses for the services it provides; and WHEREAS, the City Council of the City of Rio Dell did adopt Ordinance No. 207, codified in Chapter 13.10 of the Rio Dell Municipal Code, that allows for sewer rates and charges to be modified by resolution of the City Council to provide for future changes; and
WHEREAS, Ordinance No. 207 deemed reasonable and authorizes the Council for the City of Rio Dell to fix charges to pay for expenses to be incurred by the wastewater department. The expenses to be paid include: (a) salaries, office expenses and other necessary disbursements: (b) the operation expenses of the utility: (c) provisions for the appropriate funds for repairs, replacements or betterments"; and WHEREAS, all wastewater system connections, once purchased, place a demand on the capacity of the treatment and collection system for processing and treat possible effluent whether in service or not; and
WHEREAS, the City Council of the City of Rio Dell has held public meetings pursuant to Proposition 218 to discuss the need for an increase in wastewater rates and charges; WHEREAS, the City has entered into a funding agreement for construction of a $12.6 million Sewer Plant and Effluent Disposal Project with the State Water Resources Control Board; and the City must earmark funds for the repayment of the loan;
WHEREAS, Proposition 218 requires the City Council to conduct a public hearing not less than forty-five (45) days after mailing a notice of proposed property-related rate increases to record property owners of each identified parcel upon which the fees will be imposed and the City of Rio Dell issued said notice; WHEREAS, a duly noticed public hearing regarding the proposed increases to rates for wastewater service was conducted on April 19, 2022, at 6:30 P.M. in the Rio Dell City Council Chamber; WHEREAS, Proposition 218 requires that the City Council shall not impose the proposed rates if written protests against the proposed fee are presented by a majority of record owners/ratepayers of the identified parcels;
WHEREAS, three hundred and six (306) written protests to the proposed rate increase were presented by the conclusion of said public hearing by affected property owners and/or ratepayers, less than the six hundred and fifty three (653) written protests required to establish a majority protest by record owners/ratepayers of the identified parcels;
Resolution 1536-2022
Restating Wastewater Fees and Charges
dc1-server/eclipseweb#Retrieve/view/bd2dca4b-5ef2-ec11-9440-00155d059902/index/1/page/4 - 79- 6/22/22, 12:06 PM PrintDocument
WHEREAS, the Rio Dell City Council, by means of written resolution, is authorized to fix and determine rates and charges for wastewater service provided by the City to all of its users as noted above.

NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Rio Dell that this Resolution rescinds Resolution 1306-2016 and 1253-2015 and any prior resolution establishing and fixing wastewater service rates and establishes and fixes wastewater service rates and charges for residential, commercial and institutional customers and replaces the wastewater rates as previously set by Ordinance or Resolution. Wastewater rates shall include a fixed minimum charge in addition to volume rates based on winter water consumption. Wastewater rates shall meet the following conditions:

Sewer Bills. Sewer bills are based on consumption but in no case are sewer bills less than the fixed/minimum service charge that is applied to the sewer bill for an equivalent dwelling unit (EDU).
2) Definition of Consumption. "Consumption" shall mean a three month average of winter water use as measured and recorded at the water meter serving the same parcel or premise receiving sewer service for the months of December, January, and February. The City Manager or his designee is authorized to make adjustments to customer winter water consumption due to any of the following conditions:

Vacancy: If the water consumption readings for the three winter months indicate that the premise being served sewer service was vacant during a portion of the three winter months, the City is authorized to average the water consumption for the period the premise appeared to be occupied.

Irregularity: The City is authorized to eliminate from the calculation water readings which are clearly not representative of average monthly water use when compared to water readings for two of the three months.

New Residential Account: New residential accounts will be billed based on the city-wide residential average of 5ccf until a usage history is established.

New Commercial Account: New commercial accounts at existing locations will be billed based on prior occupant's water consumption unless the new commercial operation is significantly different from the previous commercial operation. 3) Definition of Customer Categories/Groups. Residential refers to single-family, multi-family residential properties and mobile home parks; Commercial refers to descriptions other than residential and mobile home parks as shown on Exhibit A.

FOR ALL R.V. PARKS AND MOBILE HOME PARKS WITH SIGNIFICANT SPACE COMMITTED TO

RECREATIONAL VEHICLE PARKING
A. Minimum monthly base rate effective July 1, 2022 shall be based on commercial customer annual EDU count;
B. Usage rate by unit (100 cubic feet equals 1 Unit, or 748 gallons) is based on assigned strength allocations of high, medium, low, and domestic Commercial classification eligibility for R.V. Parks and parks with 20% of spaces designated as RV Space will be based on the following conditions and definitions:

Resolution 1536-2022
Restating Wastewater Fees and Charges
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A. Significant R.V. space is defined as being at least 20% of total spaces in the facility B. EDUS for commercial customers are calculated annually with the following calculation EDU = (Avg. units per winter month's usage/5) x (60% + (40% x strength allocation)) C. Total park water consumption must have average less than 90% of the average residential water consumption to maintain eligibility for this rate D. Certification: Mobile home park owners or operators must file a monthly sworn statement certifying that the total number of spaces in the park and the number of spaces dedicated to recreational vehicles for the entire month met the above criteria in order to qualify as a commercial customer for reported RV spaces on the next billing cycle. 4) Water Consumption Measurements. Water consumption is measured in units of one hundred cubic feet (ccf). One ccf equals 748 gallons.
5) Winter Water Consumption Rate. Each unit of winter water consumption is billed at the volume rate for the customer category/group. Sewer fixed minimum charges and volume rates are presented in the table below representing the rate phase-in over a five-year time period:

MONTHLY WASTEWATER RATES
Current 2022/23 2023/24 2024/25 2025/26 2026/27
FIXED MONTHLY CHARGE per EDU (1) $52.78 $54.28 $58.34 $62.71 $67.39 $72.40 VOLUME RATE per cct (2)
Low Strength $3.66 $4.15 $4.49 $4.85 $5.24 $5.66
Domestic Strength $4.58 $5.18 $5.59 $6.04 $6.52 $7.04
Medium Strength $6.87 $7.73 $8.35
High Strength $9.02 $9.74 $10.52
$8.01 $9.01 $9.73 $10.51 $11.35 $12.26
1 - EDU = Equivalent Dwelling Unit.
2 - One hundred cubic feet (ccf) = 748 gallons. Volume Rate is based on three-month average of winter (Dec, Jan, & Feb) water use.

Medium Strength: Beauty shop, medical office, dental office High Strength: Restaurant, market with food prep, baker 6) Residential Water Consumption Maximum. Single family residential and multifamily residential customers shall not be billed for monthly winter water consumption in excess of 15 units. 7) Customer Categories/Groups. Sewer customers are classified as low strength, domestic strength, medium strength, and high strength based on the content and strength of the discharge as established by industrial standards and California State Water Resources Control Board guidelines and as determined by the City Engineer. 8) There shall be a new service connection fee of $5,220 required for each individual dwelling, residence, building, or separate service to any multiple use consumer on any parcel or parcels under the same ownership. The fee shall be levied in addition to any actual costs by the City to provide the new service and shall be received into the sewer capital fund for the purpose of capital expenditures.

BE IT RESOLVED that the rates stated in this Resolution will be effective July 1, 2022; and Resolution 1536-2022
Restating Wastewater Fees and Charges
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PrintDocument
BE IT RESOLVED that the rates will be increased annually effective July 1" of each year as provided in this Resolution; and
BE IT RESOLVED that commercial category EDUs will be adjusted each year based on winter water usage; and
BE IT FURTHER RESOLVED that these fees and charges apply to all connections to the City of Rio Dell's wastewater collection and treatment system, once they are purchased from the City, without regard to the actual status of the connection or if the premises are occupied or unoccupied; and PASSED AND ADOPTED at a regularly scheduled council meeting of the City of Rio Dell held on May 3, 2022, by the following vote:

Johnson, Carter, Wilson and Woodall
Abstain:

Absent:
leto, Sus
ebra Garnes, Máyo
ATTEST:

Haven A unhanc
karen Dunham, City Clerk
Exhibit A
Strength Classifications into Low, Domestic, Medium, and High Strength Dischargers Low Strength Banks & Financial Institutions
Barber Shops
Hair Salon (hair cutting only)
Dry Cleaners
Laundromats
Offices - Business and Professiona
Offices - Medical/Dental (without surgery
Post Offices
Retail Stores
Schools without cafeteria
Car Wash
Domestic Strength Residential - All
Appliance Repair
Auto Dealers - without Service Facilities
Nail Salons
et Groomer
Bars & Taverns - without dinin
Camp Ground or RV Park
Churches, Halls & Lodges
Fire Stations
Hotels, Motels, B&Bs, and Vacation Rentals (W/O restaurant) Libraries
Rest Homes
Shoe Repair Shops
Resolution 1536-2022
Restating Wastewater Fees and Charges
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Theaters
Warehouses
Car Washes - Self Service
High Tech Medical Manufacturing
Light Manufacturing/Industrial
Mobile Home Park
Gym or Health Club
Schools with cafeteria
Auto Dealers - with Service Facilities
Machine Shops
Service Stations, Garages, Auto Repair Shops
Medium Strength Restaurants - W/O Dish Washer & Garbage Disposal Coffee Shops - W/O Dish Washer & Garbage Disposal
Mini Marts - W/O Dish Washer & Garbage Disposal
lini Mart with Gas Pumps - W/O Dish Washer & Garbage Disposa Catering - W/O Dish Washer & Garbage Disposa
totel/Motel with Restauran
Beauty Shops (hair cutting w/additional treatments
Hospitals - General, Convalescent & Veterinarian
Medical Offices - with Surgery
Dental Offices
High Strength Restaurants - with Dish Washer or Garbage Disposal coffee Shops - with Dish Washer or Garbage Disposal
Catering - with Dish Washer or Garbage Disposal
Bakeries
Butcher Shops
Fish Market/Shop
Markets - with Dish Washer or Garbage Disposal
Markets - with Bakeries or Butcher Shops
Mini Marts - with Dish Washer or Garbage Disposal
Wineries
Cheese Makers
Dairy Products (milk producers, yogurt, ice cream maker) Specialty Foods Manufacturing (e.g., olive oil maker)
Ice Cream Shop
Tasting Rooms
Spa with Various Beauty Treatments
Funeral Homes/ Mortuary
Resolution 1536-2022
Restating Wastewater Fees and Charges
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CITY OF
*RIO
DELL
RESOLUTION 1535-2022

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF RIO DELL AMENDING RESOLUTIONS 1281-2015 AND 1293-2016 ESTABLISHING AND RESTATING

WATER FEES AND CHARGES FOR WATER CUSTOMERS
PURSUANT TO CHAPTER 13.05 OF THE RIO DELL MUNICIPAL CODE WHEREAS, The City of Rio Dell is authorized by the California Constitution and California Government Code to impose fees to cover expenses for the services it provides; and WHEREAS, the City Council of Rio Dell did on November 7, 2000 adopt Water Ordinance No. 241 (Rio Dell Municipal Code Chapter 13.05) that allows for all rates, charges, fees, and penalties contained in the ordinance to be modified by resolution of the City Council of the City of Rio Dell to provide for future charges; and
WHEREAS, the City Council of Rio Dell did on May 21, 2002 adopt Ordinance No. 243-2002, amending Water Ordinance No. 241, allowing for monthly bills to be calculated as set forth by resolution duly adopted by the City Council of the City of Rio Dell; and WHEREAS, the City Council of Rio Dell did on August 7, 2012 adopt Resolution 1168-2012 establishing water rates, charges and fees pursuant to provisions of the Rio Dell Municipal Code Chapter 13.05; and WHEREAS, the City Council of Rio Dell did on February 18, 2014 adopt Resolution 1217-2014 restating water rates, charges, and fees pursuant to provisions of the Rio Dell Municipal Code Chapter 13.05; and WHEREAS, the City Council of Rio Dell did on December 1, 2015 adopt Resolution 1281-2015 establishing water rates, charges, and fees pursuant to provisions of the Rio Dell Municipal Code Chapter 13.05;
WHEREAS, the City Council of Rio Dell did on April 19, 2016 adopt Resolution 1293-2016 with a limited amendment of Resolution 1281-2015 providing a base rate reduction for all recreational vehicle (R.V.) parks and mobilehome parks with significant space committed to R.V. parking; WHEREAS, the City Council of Rio Dell did on May 16, 2017 adopt Ordinance No. 356-2017 renumbering section 13.05.230 to section 13.05.240 in Rio Dell Municipal Code Chapter 13.05 that allows for fees, rates and charges to be established by resolution of the City Council; Resolution 1535-2022
Establishing Water Charges and Fees
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WHEREAS, Proposition 218 requires the City Council to conduct a public hearing not less than forty-five (45) days after mailing a notice of proposed property-related rate increases to record property owners of each identified parcel upon which the fees will be imposed and the City of Rio Dell issued said notice; WHEREAS, a duly noticed public hearing regarding the proposed increases to rates for water service was conducted on April 19, 2022, at 6:30 P.M. in the Rio Dell City Council Chamber; WHEREAS, Proposition 218 requires that the City Council shall not impose the proposed rates if written protests against the proposed fee are presented by a majority of record owners/ratepayers of the identified parcels;
WHEREAS, three hundred and six (306) written protests to the proposed rate increase were presented hundred and fifty three (653) written protests required to establish a majority protest by record by the conclusion of said public hearing by affected property owners and/or ratepayers, less than the six owners/ratepayers of the identified parcels; and
WHEREAS, the Rio Dell City Council, by means of written resolution, is authorized to fix and determine rates and charges for water service provided by the City to all of its users as noted above.

NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Rio Dell that this Resolution establishes, restates, amends and continues the water service rates and charges for residential, commercial, and institutional customers established pursuant to Resolution 1281-2015, as amended by Resolution 1293-2016, and affirms that all rates, charges, and fees thereunder shall remain levied and assessed except for the amendment to Section 6 as stated in Section 1 of this Resolution XXXX-2022, which shall take effect on and after July 1, 2022, and the amendment to Section 13 as stated in Section 2 of this Resolution 1535-2022.

SECTION 1. Amendment to Resolution 1281-2015 and Resolution 1293-2016 Resolution 1281-2015 and Resolution 1293-2016 are hereby amended as follows: Section 6 of Resolution 1281-2015 shall be amended to read as stated below, and Resolution 1281-2015 shall hereinafter be read and interpreted as if Section 6 exists and is stated therein:

SECTION 6. Charges for Service

FOR ALL RESIDENTIAL, COMMERCIAL, AND INSTITUTIONAL CUSTOMERS

1. Minimum monthly base rate effective July 1, 2022 shall be $ 45.47

2. Usage rate by unit (100 cubic feet equals 1 Unit, or 748 gallons) $3.33

3. DINSMORE ZONE customers will have an additional charge of $67.63 -Dinsmore Zone is a separate pressure zone fed from the Dinsmore tank

4. The following charge represents the rate phase-in over a five-year time period:

Resolution 1535-2022
Establishing Water Charges and Fees
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MONTHLY WATER RATES
Current 2022/23 2023/24 2024/25 2025/26 2026/27
BASE RATE $49.48 $45.47 $46.62 $47.79 $48.98 $50.20
CONSUMPTION RATE per ccf (1) $3.23 $3.33 $3.37 $3.41 $3.46 $3.50 DINSMORE ZONE CHARGE $65.66 $67.63 $69.66 $71.75 $73.90 $76.12 1 - One hundred cubic feet (ccf) = 748 gallons
SECTION 2. Amendment to Resolution 1281-2015 and Resolution 1293-2016 Resolution 1281-2015 and Resolution 1293-2016 are hereby amended as follows: The final paragraph of Resolution 1281-2015 shall be amended to read as stated below, and Resolution 1281-2015 shall hereinafter be read and interpreted as if the final paragraph exists and is stated therein:

BE IT FURTHER RESOLVED, that rates will be increased annually effective July 1" of each year as provided in Section 6.

SECTION 3. Continuation of Resolution 1281-2015 and Resolution 1293-2016 Except for the amendments created by this Resolution 1535-2022, Resolution 1281-2015 and Resolution 1293-2016 shall continue in full force and effect.

PASSED, APPROVED, AND ADOPTED by the City Council of the City of Rio Dell in the County of Humboldt, State of California, on the 3 day May, 2022 by the following vote:

AYES: Johnson, Carter, Wilson and Woodall
NOES: None
ABSENT: Garnes
ABSTAIN: None Ded Saved
Debra Garnes, Mayor
ATTEST:
1, Karen Dunham, City Clerk for the City of Rio Dell, State of California, hereby certify that the above and foregoing to be a full, true and correct copy of Resolution 1535-2022 adopted by the City of Rio Dell on the 3rd day of May, 2022.
haven Dunham
Karen Dunham, City Clerk, City of Rio Dell
Resolution 1535-2022
Establishing Water Charges and Fees
dc1-server/eclipseweb#Retrieve/view/9bf00f16-5ef2-ec11-9440-00155d059902/index/1/page/3 -86- 675 Wildwood Avenue
Rio Dell, CA 95562 CITY OF
(707) 764-3532
RIO!
(707) 764-5480 (fax)
DELL

CALSONA
DATE: October 7, 2025
TO: Honorable Mayor and Members of the City Council
FROM: Travis Sanborn, Finance Director
THROUGH: Kyle Knopp, City Manager
SUBJECT: Cannabis Cultivation Tax Rate Analysis
IT IS RECOMMENDED THAT THE CITY COUNCIL:

Maintain the current cannabis cultivation tax rate of $2.00 per square foot.

OR
Reduce cannabis cultivation tax rate (not recommended due to significant fiscal impact).

BACKGROUND AND DISCUSSION:

Voter Authorization and Election History
Rio Dell voters have twice affirmed support for commercial cannabis activity and taxation:

Measure T (November 8, 2016) - Commercial Cannabis Activity Advisory Question Voters approved permitting and taxing commercial cannabis activity in the Sawmill Annexation Area by a margin of 53.41% to 46.59% (572 yes votes to 499 no votes). While advisory in nature, this measure demonstrated community support for regulated cannabis operations subject to local taxation.

Measure X (November 7, 2017) - Cannabis Tax Authorization Voters overwhelmingly approved Measure X with 80.96% support (353 yes votes to 83 no votes), authorizing cannabis taxation up to $5.00 per square foot for cultivation and up to 10% of gross receipts for other cannabis activities. This strong voter mandate established the legal framework for the City's current cannabis tax structure. -87-
Following voter approval, the City Council adopted the current rate of $2.00 per square foot in March 2019, operating at 40% of the voter-approved maximum. This rate has remained unchanged for over six years.

Financial Impact.

Cannabis cultivation taxes generate approximately $258,000 annually, representing 14.5% of general fund revenue ($1,773,850). This revenue supports road maintenance, public safety initiatives, and general operational expenses.

Potential rate reductions would create significant budget impacts. A reduction to $1.50 per square toot would result in an annual cost of $64,500, representing 3.6% of the total general fund revenue. A more substantial reduction to $1.00 per square foot would eliminate $129,000 annually, or 7.3% of general fund revenue. Over five years, a $1.00 reduction would result in $645,000 in lost revenue for the general fund.

Current Regulatory Framework
The City's existing regulations provide flexibility through documented crop loss adjustments, payment plans for financial hardships, and late fee waivers. Ordinance 397-2023 allows Dinsmore Plateau farmers to defer previous years' taxes to accommodate seasonal cultivation patterns.

Regional Market Analysis
Neighboring jurisdictions are experiencing significant collection crises. Humboldt County suspended 100% of cannabis taxes for 2025 with 765 permits owing $17 million in back taxes.

Sonoma County implemented emergency rate reductions in July 2025, dropping indoor rates to $7.58 per square foot and outdoor rates to $0.69 per square foot. Desert Hot Springs reduced rates by 44% in February 2024 due to market pressures.

State-level market conditions reflect industry-wide challenges. California cultivation licenses declined 31% from 7,672 to 5,296 permits between 2023 and 2024. Fifteen percent of state cannabis businesses are in tax default, totaling $243.5 million in unpaid taxes. Wholesale prices have compressed significantly, with outdoor cannabis dropping from $277 to $143 per pound.

Risk Assessment
Maintaining the Current Rate:

Preserves critical revenue representing 14.5% of general fund operations • Maintains competitive positioning as neighboring jurisdictions face collection crises • Honors the strong voter mandate (80.96% approval) for taxation up to $5.00 per square foot
• Utilizes existing hardship relief mechanisms without compromising revenue stability -88-
Reducing the Current Rate:
• Creates immediate budget pressures requiring service cuts or alternative revenue sources Establishes precedent for future decreases during market downturns Potentially contradicts the voter mandate for taxation up to $5.00 per square foot Eliminates stable revenue during uncertain economic conditions Statt Analysis
Rio Dell's $2.00 per square foot rate represents fiscal prudence in a volatile industry while remaining well below the $5.00 maximum authorized by 81% of voters. While neighboring jurisdictions implement emergency reductions or suspend collection due to widespread defaults, Rio Dell maintains stable taxation that generates reliable revenue while remaining competitive enough to sustain local cannabis operations.

The City's existing hardship relief mechanisms provide appropriate flexibility for operators facing temporary difficulties without compromising overall revenue stability. Market downturns affecting the cannabis industry do not justify permanent tax reductions that would require cuts to essential city services and would operate contrary to the clear voter mandate expressed in Measure X.

Conclusion
Staff analysis demonstrates Rio Dell's cannabis taxation policy represents a model of fiscal management in a volatile industry. The current $2.00 per square foot rate (operating at 40% of the voter-approved maximum) achieves an optimal balance: competitive enough to attract investment, stable enough to generate reliable revenue, and reasonable enough to ensure consistent collection rates while honoring the strong community support expressed through the ballot box.

ATTACHMENTS:
- Attachment A - Verified Jurisdictional Comparison Data Attachment B - 5 Year Cannabis Revenue Dashboard (FY20/21 - FY24/25) -89-
ATTACHMENT A: VERIFIED JURISDICTIONAL COMPARISON DATA
The following information represents only verified data from official sources as of 2024-2025:
- Humboldt County: 100% tax suspension for 2025 cultivation season. Previously taxed at $1.00-$3.00 per square foot when active. Public records show 765 permits with $17 million in outstanding tax debts. Source: Times-Standard March 2025, MJBizDaily March 2025, Humboldt County public records.
- Sonoma County: Current rates effective July 2025 are $7.58 per square foot for indoor - Desert Hot Springs: Current rate is $5.75 per square foot, reduced from $10.20 per square foot in February 2024 (44% reduction). Source: Desert Hot Springs official website, KESQ February 2024.
- California License Decline: Active cultivation licenses decreased 31% from 7,672 permits at the beginning of 2023 to 5,296 permits as of April 2024. Source: California Department of Cannabis Control.
- Tax Default Crisis: 15% of California cannabis businesses are in tax default, totaling $243.5 million in unpaid taxes as of December 2023. Source: California Department of Tax and Fee Administration, Cannabis Business Times
- Price Compression: Sonoma County data shows outdoor cannabis wholesale prices declined from $277 to $143 per pound (2023-2024), while indoor prices fell from $606 to $240 per pound. Source: Sonoma County commissioned HdL analysis. - State Tax Changes: California cannabis excise tax was scheduled to increase from 15% to 19% in July 2025 but was reversed by AB 564 signed in September 2025. Source:

California Governor's Office.

Sources: California Department of Cannabis Control, California Department of Tax and Fee Administration, Humboldt County public records, Sonoma County Board of Supervisors, Desert Hot Springs municipal website, Times-Standard, MJBizDaily, Cannabis Business Times. Data compiled and verified September 2025. - 90-
Attachment B: 5 Year Cannabis Revenue Dashboard
Fiscal Year 2020-21 2021-2022 2022-2023 2023-2024 2024-2025 Revenue $403,000 152,000 $212,000 $269,000 $258,000
-91-

CITY OF
Rio Dell City Hall
675 Wildwood Avenue *RIO F
Rio Dell, CA 95562 DELL)
(707) 764-3532
cityofriodell.ca.gov CALFORNA
DATE: October 7, 2025
TO: Mayor and Members of the City Council
THROUGH: Kyle Knopp, City Manager
SUBJECT: Discussion on Drainage Issues at and Around 590 View Avenue in Rio Dell IT IS RECOMMENDED THAT THE CITY COUNCIL:

Refer this issue to the City Attorney for briefing; or, Take no action.

BACKGROUND
On September 16, 2025 the Rio Dell City Council requested that a drainage issue near and around 590 View Street be agendized for discussion.

Sometime between 1940 and 1956 the house at 590 View Avenue was built. This construction was prior to the incorporation of the City of Rio Dell in February of 1965. At the time the house was the only building located on the east side of View Avenue. Over the years and decades, there were three additional homes built on the east side of View, the most recent being the two homes nearest to 590 View. These two homes were constructed via a lot line adjustment (turning one parcel into two in 1983. This lot line adjustment was approved by the City subject to terms & conditions. The City currently does not have any records regarding the details of these terms and conditions but has requested some boxes be retrieved from deep storage that may or may not contain additional information.

However, a common condition of lot line adjustments or subdivisions is the required creation of sidewalks and the sidewalks of the neighboring properties appear to have been constructed in 1983 at the same time as the new homes were constructed. According to the City Clerk, the City has no records or memory of complaints about drainage at 590 View until within approximately the last five years.
-92-
It is also important to note that the sidewalks would not have been constructed by the City, instead they would have been built by the property owner or contractor conducting the housing construction at the adjacent properties.

Resolution of these kinds of issues can be complex, involving issues of liability for permit/plan approval, defect disclosure laws, assignment of maintenance responsibilities and possible deferred improvement agreements. While City staff is sympathetic to the situation, the City Attorney's preliminary opinion on the issue is that the City has no obligation to fix this issue.

If the Council wishes to pursue this issue further, it is recommended the item be referred to the City Attorney for further information. This action is consistent with prior action on contentious or complex drainage issues in the past.

Attachments:

Photos of 590 View (2)
//I
- 93-
590 View Legend
Google Earth
-94-
590 View Lege
Google Earth
© 2025 Google