Dear Ms. Epstein: Attachment A. P.O. Box 3596, Ventura, California Phone: (805)

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1 Exhibit U446

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4 June 9, 2015 Project No D City of San Buenaventura Post Office Box 99 Ventura, California Attention: Ms. Shana Epstein General Manager, Ventura Water Subject: Dear Ms. Epstein: United Water Conservation District Memorandum Dated May 26, 2015, HF&H Consultants, LLC, Response Letter Dated May 28, 2015, HF&H Consultants, LLC, FY Cost-of-Service Analysis Letter Dated May 28, 2015, and Stratecon Inc. Stratecon Analysis of the Structure of United Water Conservation District s Water Conservation Extraction Charges for FY Letter Dated May 28, As requested by the City of San Buenaventura (City), Hopkins Groundwater Consultants, Inc. (Hopkins) has reviewed the subject United Water Conservation District (UWCD) Memorandum (UWCD, 2015) dated May 26, 2015, the HF&H Consultants, LLC, response letter and Cost-of-Services Analysis letter (both dated May 28, 2015), and the Stratecon Inc. Water Conservation Extraction Charges for FY letter, dated May 28, 2015, that were presented at the UWCD Board of Directors meeting on May 28, 2015, which I was unable to attend due to another commitment made before the May 28th meeting was set. Because the format and method of calculation of the benefits of these analyses are the same as before, we will not go through them in detail, but rather reference where these points are addressed in previous documents and provide only new illustrations to clarify our views of the rate analyses. Because there were no comments in the subject documents about our previous assessment of the water balance issues (see Attachment A), we gather that our previous response was sufficient to address the issues raised in UWCDs correspondence (UWCD, 2014f) and public hearing testimony (UWCD, 2014h) and HF&H Consultants, LLC, response letter (HF&H, 2014a) which discussed topics including; Individual Basins All Benefit in the UWCD but not Equally Manipulation of Scientific Data Lack of Consideration of Cost Common Water Quality Benefits Common Water Supply Reliability P.O. Box 3596, Ventura, California Phone: (805) chop4@earthlink.net Attachment A

5 City of San Buenaventura June 9, 2015 (Project No D) Proportional Benefit and Burden of Groundwater Resources Apportionment of Safe Yield and Overdraft Contribution To focus the discussion about cost of services, we will only draw attention to the key factors that require the services of water conservation/water replenishment provided by the UWCD. Hydrogeological Accounting All overlying beneficial uses of groundwater were assessed by the UWCD studies (UWCD, 2013f). While the means of assessing rates for pumping groundwater for these uses may be unconventional for a rate study, we do not question that in this review. For the purpose of our discussion, we will simply use the UWCD detailed water balance assessment and conclusions to illustrate our previous findings; that the burden of M&I demand on the groundwater system does not warrant a 3:1 cost burden. While previous discussions included reasons why district wide agricultural pumpers should not be accredited or benefit from the anomalous recharge of fish farming (see Attachment A), we will ignore that issue in this summary. Here we merely want to summarize the water balance findings of the comprehensive and detailed UWCD studies (as presented in UWCD, 2013f) that should be considered by UWCD s financial consultants in establishing its groundwater pumping rates. These data are summarized in Table 1 Water Budget Deficit 2010 to 2012 for ease of review. Using the water budget deficit, referred to by the UWCD as the adjusted consumptive use, we see that the 3-year average for agriculture is 49,526 acre-feet per year (AFY) and the 3- year average for municipal is 20,514 AFY. This amount of water requires annual replenishment by the UWCD. Table 1 Water Budget Deficit 2010 to 2012 GROUNDWATER USER CLASSIFICATION AVERAGE 1 GROUNDWATER PRODUCTION (ACRE-FEET) AVERAGE 1 GROUNDWATER RECHARGE (ACRE-FEET) AVERAGE 1 ADJUSTED CONSUMPTIVE USE (ACRE-FEET) AGRICULTURE 124,523 74,997 49,526 MUNICIPAL 40,937 20,423 20,514 1 FROM (UWCD, 2013f) - 2 -

6 City of San Buenaventuraa June 9, 2015 (Project No D) Figure 1 Adjusted Consumptive Use of Groundwater 2010 to 2012 provides a graphical summary of these UWCD study findings which evaluated the groundwater replenishment requirements based on land use/groundwater user class. Here we see the results of the comprehensive comparison of the average annual production compared to the average annual recharge accredited to each land use for the years 2010, 2011, and 2012 by all sources of recharge (rainfall and groundwater return flows) districtt wide (in both confined and unconfined groundwater basins). Figure 1 Adjustedd Consumptive Use of Groundwater 2010 to 2012 FROM (UWCD, 2013f) The resulting amount of groundwater required to recharge the basins district wide from each land use is equal to the amount of consumptive use per acre-foot of groundwater pumped. Table 2 Consumptive Use Comparison 2010 to 2012 Average shows that the resulting agricultural ratio is acre-foot consumed per acre-foot produced and the municipal ratio is acre-foot consumed per acre-foot produced. Dividing the M&I result by the agricultural result (0.501 / = 1.26) yields a ratio of required replenishment of 1.26:1 M& &I to agricultural. These data indicate that rates for groundwater recharge districtt wide would be supported at a 1.26:11 cost ratio (without questioning orr removing any bias in the UWCD 2013 study), not 3:1 as presently used. C:\HGC\JOB FILES 2014\ D\FY RATES\HOPKINS LETTER DOCX - 3 -

7 City of San Buenaventura June 9, 2015 (Project No D) Table 2 Consumptive Use Comparison 2010 to 2012 Average GROUNDWATER USER CLASSIFICATION AVERAGE CONSUMPTIVE USE DIVIDED BY GROUNDWATER PRODUCTION (ACRE-FEET) RESULTING CONSUMPTIVE USE TO GROUNDWATER PRODUCTION RATIO (ACRE-FOOT/ACRE-FOOT) AGRICULTURE (49,526 / 124,523) MUNICIPAL (20,514 / 40,937) The direct use of the UWCD study findings provides a method of distributing the cost of overdraft mitigation that removes the discriminatory method of allocating safe yield to any single class of groundwater pumper. Correcting this single error in groundwater resource allocation will allow UWCD s financial consultants to better derive a cost of service that is proportional to the benefits received and water consumed from the UWCD s services. We trust the analyses of this letter-report provide a sufficient and concise explanation to further clarify the water balance issues that should be used as the basis for the UWCD s financial consultants to appropriately justify the UWCD s cost ratio between M&I and agricultural rates for groundwater extraction fees. If you have any questions or need any additional information, please give us a call. Sincerely, HOPKINS GROUNDWATER CONSULTANTS, INC. Curtis J. Hopkins Principal Hydrogeologist Registered Geologist RG 5695 Certified Engineering Geologist CEG 1800 Certified Hydrogeologist CHG 114 Attachment: Attachment A Hopkins Response Letter Dated July 14,

8 City of San Buenaventura June 9, 2015 (Project No D) References HF&H Consultants, LLC, (2013), Cost-of-Services Analysis, Letter to Michael Solomon, General Manager United Water Conservation District, Dated June 11. HF&H Consultants, LLC, (2013a), Cost-of-Services Analysis: Response to City of Ventura, Letter to Michael Solomon, General Manager United Water Conservation District, Dated September 23. HF&H Consultants, LLC, (2013b), Revised Cost-of-Services Analysis, Letter to Michael Solomon, General Manager United Water Conservation District, Dated October 1. HF&H Consultants, LLC, (2014), FY Cost-of-Service Analysis, Letter to Michael Solomon, General Manager United Water Conservation District, Dated May 29. HF&H Consultants, LLC, (2014a), Response to City of Ventura June 9, 2014 Review of Rate Analysis, Letter to Michael Solomon, General Manager United Water Conservation District, Dated June 19. HF&H Consultants, LLC, (2015), Response to Raftelis Financial Consultants, Inc. Review, Letter to Michael Solomon, General Manager United Water Conservation District, Dated May 28. Hopkins Groundwater Consultants, Inc. (2012), Review of Hydrogeological Conditions Pertinent to the United Water Conservation District Update Memorandum to 2011 Water Rate Study, Prepared for City of San Buenaventura, Dated June 11. Hopkins Groundwater Consultants, Inc. (2013), Review of the United Water Conservation District Stratecon Inc., Groundwater Extraction Charges Report Dated June 11, 2013, and HF&H Consultants, LLC Cost-of-Services Analysis Dated June 11, 2013, Prepared for City of San Buenaventura, Dated June 21. Hopkins Groundwater Consultants, Inc. (2013a), Letter-Report Analyzing the United Water Conservation District Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, Dated June 2013, Prepared for City of San Buenaventura, Dated July 9. Hopkins Groundwater Consultants, Inc. (2013b), Analysis of United Water Conservation District Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, Dated June 2013, Stratecon Inc. Groundwater Extraction Charges Report Dated June 11, 2013, and HF&H Consultants, LLC Cost-of-Services Analysis Dated June 11, 2013 (collectively, UWCD reports ), Prepared for City of San Buenaventura, Dated September 30. Hopkins Groundwater Consultants, Inc. (2013c), Analysis of United Water Conservation District Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, Dated September

9 City of San Buenaventura June 9, 2015 (Project No D) (Available on October 2, 2013), Prepared for City of San Buenaventura, Dated October 14. Hopkins Groundwater Consultants, Inc. (2014), United Water Conservation District Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, Dated September 2013, Prepared for City of San Buenaventura, Dated June 2. Hopkins Groundwater Consultants, Inc. (2014a), United Water Conservation District Supplemental Technical Memorandum to Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, (September 2013) Dated May 2014, Prepared for City of San Buenaventura, Dated June 10. Hopkins Groundwater Consultants, Inc. (2014b), United Water Conservation District Memorandum Dated June 19, 2014, and HF&H Consultants, LLC, Response Letter Dated June 19, 2014, Prepared for City of San Buenaventura, Dated June 10. Stratecon, Inc. (2013), Stratecon Analysis of the Structure of United Water Conservation Districts Water Conservation Extraction Charges, Letter to Mike Solomon, General Manager United Water Conservation District, Dated June 11. Stratecon, Inc. (2013a), Response to Comments on Stratecon s Analysis of the Structure of United Water Conservation Districts Water Conservation and Extraction Charges, Letter to Mike Solomon, General Manager United Water Conservation District, Dated September 16. Stratecon, Inc. (2013b), Supplemental Stratecon Analysis of the Structure of United Water Conservation Districts Water Conservation Extraction Charges, Letter to Mike Solomon, General Manager United Water Conservation District, Dated October 1. Stratecon, Inc. (2014), Stratecon Analysis of the Structure of United Water Conservation District s Water Conservation Extraction Charges for FY , Letter to Mike Solomon, General Manager United Water Conservation District, Dated May 29. Stratecon, Inc. (2014a), City of Ventura s Criticisms of Stratecon s Study of Groundwater Extraction Charges, Letter to Mike Solomon, General Manager United Water Conservation District, Dated June 19. Stratecon, Inc. (2015), Stratecon Analysis of the Structure of United Water Conservation District s Water Conservation Extraction Charges for FY , Letter to Mike Solomon, General Manager United Water Conservation District, Dated May 28. United Water Conservation District (UWCD, 2011), Final Draft 2011 Water Rate Study, Prepared by United Water Conservation District Resource Planning and Finance Department, Dated February

10 City of San Buenaventura June 9, 2015 (Project No D) United Water Conservation District (UWCD, 2011a), Final Report, 2011 Water Rate Study, Prepared by Resource Planning and Finance Departments, Dated May 18. United Water Conservation District (UWCD, 2013a), Annual Investigation and Report of Groundwater Conditions Within United Water Conservation District, Prepared by Groundwater Department, Dated March. United Water Conservation District (UWCD, 2013b), Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, United Water Conservation District, Dated June. United Water Conservation District (UWCD, 2013c), Staff Report to Board of Directors, Agenda Item 1.3 Pumping Trough Pipeline Temporary Water Supply and Demand Management Measures, From Mary Kanatzar, Administrative Services Manager, through E. Michael Solomon, General Manager, Dated July 26. United Water Conservation District (UWCD, 2013d), Staff Report to Board of Directors, Agenda Item 5.1 Monthly Administrative Services Department Report, From Mary Kanatzar, Administrative Services Manager, through E. Michael Solomon, General Manager, Dated August 28. United Water Conservation District (UWCD, 2013e), Staff Report to Board of Directors, Agenda Item 8.3 Update on Pumping Trough Pipeline Users Working Group, From Michael Ellis, O&M Manager, through E. Michael Solomon, General Manager, Dated September 3. United Water Conservation District (UWCD, 2013f), Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, United Water Conservation District, Dated September. United Water Conservation District (UWCD, 2013g), Resolution No , Dated October 2. United Water Conservation District (United, 2014), Groundwater And Surface Water Conditions Report 2013, United Water Conservation District Open-File Report , Prepared by Groundwater Resources Department, Dated May. United Water Conservation District (United, 2014a), Pumping Trough Pipeline Users Group Meeting, PowerPoint Slide Presentation, Prepared by United Water Conservation District, Groundwater Resources Department. United Water Conservation District (United, 2014b), United Water Conservation District Oxnard-Hueneme Water Delivery System, 2013 Consumer Confidence Report, Dated April. United Water Conservation District (United, 2014c), Annual Investigation and Report of Groundwater Conditions Within United Water Conservation District, A summary of finding for the previous water year ( ), current water year ( ), and - 7 -

11 City of San Buenaventura June 9, 2015 (Project No D) ensuing water year ( ), Prepared by Groundwater Department United Water Conservation District, Dated March. United Water Conservation District (United, 2014d), Supplemental Technical Memorandum to Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD (September 2013), United Water Conservation District, Dated May. United Water Conservation District (UWCD, 2014e), Draft Resolution No United Water Conservation District (UWCD, 2014f), Memorandum, Comments on City of Ventura Opposition to Proposed FY Groundwater Rates, To United Water Conservation District Board of Directors and General Manager, From Groundwater Resources Department, Dated June 19. United Water Conservation District (UWCD, 2014g), Memorandum, M. Solomon s responses to June 10, 2014 letter from Ventura Water (Shana Epstein) and June 10, 2014 Letter from M. Colantuono, To Board of Directors, From E. Michael Solomon, General Manager, Dated June 19. United Water Conservation District (UWCD, 2014h), United Water Conservation District Public Hearing For Groundwater Conditions, Water Year, Proposition 218 Hearing, Reporter s Transcript of Proceedings, Dated June 20. United Water Conservation District (UWCD, 2015), Memorandum, M. Solomon s Recommended Revisions to the Proposed FY Budget Including No Groundwater Extraction Fee Rate Increase for Water Conservation Fund (Water Conservation Activities Sub-fund Zone A) and Corresponding Reductions to Capital Improvement Projects Funding, To Board of Directors, From E. Michael Solomon, General Manager, Dated May

12 ATTACHMENT A HOPKINS RESPONSE LETTER DATED JULY 14, 2014

13 July 14, 2014 Project No D City of San Buenaventura Post Office Box 99 Ventura, California Attention: Ms. Shana Epstein General Manager, Ventura Water Subject: Dear Ms. Epstein: United Water Conservation District Memorandum Dated June 19, 2014, and HF&H Consultants, LLC, Response Letter Dated June 19, As requested by the City of San Buenaventura (City), Hopkins Groundwater Consultants, Inc. (Hopkins) has reviewed the subject United Water Conservation District (UWCD) Memorandum (UWCD, 2014a), and the HF&H Consultants, LLC, response letter (both dated June 19, 2014) that were presented at the UWCD Board of Directors meeting on June 20, 2014, which I was unable to attend due to another commitment made before the June 11th meeting at which this special meeting was set without prior notice. For simplification, we will address these documents one at a time starting with the UWCD Memorandum (Memo). United Water Conservation District Memorandum Dated June 19, 2014 Individual Basin Benefits In The UWCD. Once again, the UWCD asserts that the City asserts that the Mound and Santa Paula basins do not benefit from UWCD s operations. In fact, the City contends these basins do not benefit as much as other basins in the district boundaries. This is evident in their comparatively restricted annual yield and the absence of facilities operated by UWCD in these basins to augment supplies. Manipulation of Scientific Data. The UWCD staff assertion about unreasonable manipulation of scientific data misunderstands the primary focus of our efforts. Our discussion of the Fillmore Fish Hatchery and its contribution to pumping and subsequent (virtually 100 percent) return flow recharge was intended to identify the magnitude (an average of 8,868 acrefeet per year [AFY] for 2010 to 2012) (UWCD, 2013f) of the anomalous groundwater recharge from this land use. The high amount of recharge from this single operation contributes to a significant bias in favor of agricultural pumpers when factored into the overall per-acre benefit from groundwater return flows, which was a primary focus of the UWCD analysis (UWCD, 2013b and 2013f). This single operation contributes 42 percent of all other typical agricultural groundwater return flows in the entire UWCD, which averaged 20,880 AFY (UWCD, 2013b). As shown in a previous analysis (Hopkins, 2013c, see Table 6), the addition of the fish operations (groundwater pumped equals groundwater recharged) does not alter the annual net P.O. Box 3596, Ventura, California Phone: (805) chop4@earthlink.net

14 City of San Buenaventuraa July 14, 2014 (Project No D) water balance for agricultural uses which resulted in ann average annual water deficit of 49,525 AFY. Figure 1 Total Groundwater Deficit Resulting From Consumptive Use of Groundwater By Land Use illustrates this point. Including this groundwater use merely biases the per-acre calculation of the recharge benefit for agriculture without changing the adjusted consumptive use (i.e., virtually no consumption of groundwater for thee fish hatchery operation). Figure 1 Total Groundwater Deficit Resulting From Consumptive Use of Groundwater By Land Use MODIFIED FROM (HOPKINS, 2014a) Including the fish hatchery production and recharge (Figure 2 - Total Groundwater Deficit Resulting From Consumptive Use of Groundwater By Land Use for Each UWCD Budget Evaluation Period) illustrates the proportional amounts of groundwater produced, groundwater recharged, and groundwater consumed per user classs as presented in each of the UWCD financial analyses. C:\HGC\JOB FILES 2014\ D\FY RATES\HOPKINS LETTER DOCX - 2 -

15 City of San Buenaventuraa July 14, 2014 (Project No D) Figure 2 Total Groundwater Deficit Resulting From Consumptive Use of Groundwater By Land Use for Each UWCD Budget Evaluation Period DATA FROM (UWCD, 2013f), (HF&H, 2013b), AND (HF&H, 2014) As shown in Figure 2, the water required to replace the groundwater consumed by agricultural land uses is significantly greater than that required to replace the groundwater consumed by municipal land uses in all UWCD s budgett analyses. Lack of Consideration of Cost. The UWCD Memo indicates that our previous analyses lack a considerationn of cost (UWCD, 2014f). Whilee we agree with UWCD staff that the computation of relative financial benefits and the allocation of costs associated with those benefits should be done by economic and financial experts, we contend that the analysis of benefits and impacts to the groundwater resource that is provided by the hydrogeological technical experts should be utilized by the economic andd financial experts when calculating those costs. Both the City and UWCD have relied on consulting teams reflecting these two areas of expertisee throughout this multi-year analysis of UWCD ss rate-making practices. C:\HGC\JOB FILES 2014\ D\FY RATES\HOPKINS LETTER DOCX - 3 -

16 City of San Buenaventura July 14, 2014 (Project No D) Paragraph No. 7 of the UWCD resolution (UWCD, 2013g and 2014e) states that, An acre foot of groundwater use by agricultural users contributes acre feet towards groundwater overdraft in the basins within UWCD s service area. This is inconsistent with the UWCD financial consultant s reports, which allocate virtually all the overdraft to M&I uses when calculating the costs of service (see Figure 6 in both HF&H, 2013b and HF&H, 2014). This single manipulation is the primary means used by the UWCD financial consultants to disproportionately allocate costs to M&I groundwater users to justify the existing 3:1 ratio used by the UWCD for groundwater pumping fees. Pumping Effects. The UWCD does not dispute that the depressed groundwater levels in the Oxnard Plain and Pleasant Valley basins are in a confined area of the UWCD dominated by agricultural uses (see Figure 1, UWCD, 2014a). It appears the UWCD is requesting acknowledgment of groundwater use by others in upgradient areas that affect groundwater use in downgradient areas. While we agree with this concept, the impacts of those groundwater uses that contribute to overdraft are proportional to the deficit in the water budget (adjusted consumptive use) related to each land use (see Figure 1 above) and still do not justify a 3:1 ratio of augmentation charges on M&I groundwater users to those imposed on agricultural groundwater users. Water Balance. The approach that Hopkins applied to the water balance of the UWCD is consistent with the approach applied by the UWCD in its technical memoranda (UWCD, 2013f, and 2014a) and is constrained to the effects of land use. While the UWCD states that the graphics that portray the results of the analyses are deceptive, the graphics merely illustrate the water balance of the land uses as reported by the UWCD (UWCD, 2013f). The contested Figure 3 is a display of the data provided by the UWCD and summarized in Table 4 of that report (Hopkins, 2014). The UWCD staff response is itself disingenuous when it leads the argument away from the findings of the study by focusing on a portion of the title, Total Groundwater Deficit and leaves behind the qualifier by Land Use. Again, our study used the data provided by the UWCD (UWCD, 2013f) and simplified its presentation for ease of understanding. The UWCD apparently objects to an illuminating presentation of its own data. The UWCD staff s discussion indicates that our assessment does not include important elements of groundwater recharge, then mistakenly states that HGC recognizes as important in other sections of the report. While other elements of recharge are important to other analyses, we did not discuss any of those factors in our report (Hopkins, 2014). This critique of our work fails because we used UWCD data as it was reported, and calculated the water balance solely based on land use. We do not perceive that the analysis in the Technical Memorandum (UWCD, 2013f) is a comprehensive safe yield type study, as the UWCD staff suggests. That is why the water balance analysis is constrained only to the factors of groundwater recharge and discharge analyzed by the UWCD, which was focused on developed land uses of agriculture and M&I, and subsequently used for their rate-setting analyses. Our work was a critical analysis of UWCD s work; it was not intended as a comprehensive water - 4 -

17 City of San Buenaventura July 14, 2014 (Project No D) balance analysis; nor has UWCD attempted such a comprehensive analysis in the reports analyzed here. Water Quality. In this discussion, the UWCD distracts from the main focus of our comments on water quality. We merely present existing conditions and identify that the UWCD has no means to selectively provide water quality benefits to M&I groundwater users that could contribute to a greater cost of service. The groundwater produced by M&I users in Piru, Fillmore, Santa Paula, Ventura, Oxnard, and Port Hueneme receive the same benefits as agricultural users in these same areas of the UWCD because they draw the very same water from the very same basins using the very same technology. Its discussion about the OH-Pipeline is irrelevant to the quality of groundwater and the cost of pumping throughout the district. Our point is clearly made by UWCD s staff s statement that, UWCD s groundwater replenishment source is runoff and base flows from the watershed of the Santa Clara River. UWCD does not control the water quality in the river. Our point exactly. Any benefit therefore, is shared by all users of groundwater, not specifically M&I, and all users therefore, should share the cost of service equally. The statement just quoted as to UWCD s contribution to water quality could as easily be stated this way: UWCD is not responsible for the natural groundwater quality of the Mound (or any other) basin, and to infer otherwise is unfounded. Moreover, we would add, that to claim selective benefit at an additional cost to M&I is equally unfounded. Water Supply Reliability. Here again, the UWCD misses the mark. It misstates the City s position as, UWCD does nothing to enhance the reliability of water supplies to M&I users. Rather, we contend that the UWCD has historically done nothing more for the reliability of groundwater for M&I users than it does for agricultural users. Its benefits to the groundwater basins between Piru and the Oxnard Plain provide equal reliability to all groundwater users of those basins; within the constraints of each basin. Stated in general terms: because agricultural and M&I groundwater users draw the same water from the same basins, they benefit equally from UWCD s services and ought to pay equally for them. We agree that the UWCD encouraged the Fox Canyon Groundwater Management Agency (FCGMA) to do something with respect to groundwater use in the coastal plain groundwater basins and that UWCD is clearly not responsible for the groundwater pumping reductions, stipulated in the FCGMA ordinance. It is also a fact that the UWCD has never restricted any groundwater pumping by any users within its district (particularly agricultural) to create greater reliability for M&I groundwater users and thus has no basis to charge M&I users for a reliability benefit UWCD does not indeed, cannot provide. HF&H Consultants, LLC, Response Letter Dated June 19, 2014 Hopkins Ratio is Superficially Proportionate. HF&H s discussion on this point provides helpful insight as to the errors of HF&H s analysis. It appears that HF&H was confused by our analysis (Hopkins, 2014). The confusion is apparent as HF&H attempts to use a - 5 -

18 City of San Buenaventura July 14, 2014 (Project No D) simple example to illustrate the error in Hopkins ratio. The example states that the ratio derived is inaccurate because of the method of derivation. However, a more fundamental error occurs when HF&H applies the Bob to Bill consumption ratio (Bob s 10 candies/bill s 20 candies = 50%) to the total cost of the 30 candies instead of recognizing the ratio as a comparison with the other party (Bob:Bill = 0.5:1). This approach yields a plainly inaccurate result, which HF&H then states is the method applied by Hopkins to allocate costs. At issue here is a financial analysis invented by HF&H and subsequently disproved by HF&H. Hopkins is not a financial consultant and did not attempt to calculate each user s proportion of the total costs for replenishment. Hopkins merely provided the allocation of each user s total consumption of the groundwater resource, and recommended the resource ratio be used by HF&H to calculate the appropriate costs of replenishment. Table 1 Explanation of HF&H Cost Ratio Confusion provides a clear comparison of the central point of HF&H s confusion. Table 1 Explanation of HF&H Cost Ratio Confusion PRODUCT TYPE CONSUMER TOTAL CONSUMPTIVE USE QUANTITY CONSUMPTION QUANTITY RATIO (BOB:BILL) (M&I:AG) PAYMENT PERCENTAGE OF TOTAL PAYMENT RATIO (CONSUMER: TOTAL COST) CANDIES GROUNDWATER BILL % : 1 (0.50) : (1) BOB % : 1 AG 49, % : 1 (0.41) : (1) M&I 20, % : / 30 = 66.7% and 10 / 30 = 33.3% 2-49,525 / 70,039 = 71.7% and 20,514 / 70,039 = 29.3% The analysis of groundwater consumption cost that would be performed by HF&H from the resource allocation ratio of 0.41:1 (HF&H, 2014a), indicates that M&I pumpers should be paying 29.3 percent of the total replenishment cost and agricultural pumpers should pay 71.7 percent of the cost. Interesting enough, the ratio of payment percentage (i.e., M&I 29.3% / AG 71.7% = 0.41) is equal to the ratio of quantities (i.e., M&I 20,514 af / AG 49,525 af = 0.41) and substantiates the claim HF&H fails to rebut (HF&H, 2014a). The consumptive use quantities are the relative amounts the two groundwater user classes contribute to groundwater overdraft. From this example, we trust the UWCD financial consultants can appropriately convert the correct hydrogeological quantity ratio (0.41:1) M&I to - 6 -

19 City of San Buenaventura July 14, 2014 (Project No D) agriculture water deficit (adjusted consumptive use) into the correct cost ratio as they clearly illustrated in the simple example. Plainly, it will not justify the current 3:1 ratio. Apportionment of Safe Yield and Overdraft Contribution. HF&H s assignment of basin safe yield pumping is discriminatory and without a method of calculation. The arbitrary assignment of all agricultural pumping to be within safe yield and all M&I pumping to contribute to overdraft is the only means by which HF&H can justify the current 3:1 cost ratio. Because UWCD does not (and cannot) assign disparate water rights or pumping priority to its customers, it should treat all groundwater pumping and the associated burden of replenishment equally when determining their benefit from its services and their concomitant duty to pay for that benefit. UWCD s fiscal year budget was calculated using groundwater quantities based on the FY2001 to FY2013 averages (HF&H, 2014). From the land use method of calculation, the UWCD derived an average water balance indicating that 51,750 AFY was removed by agricultural uses (adjusted consumptive use) and 12,063 AFY was removed by urban water uses (see Figure 4, HF&H, 2014). When we evaluate the water lost per land use compared to the total amount pumped, we calculate the per acre-foot contribution to overdraft. Table 2 Overdraft Contribution Per Acre-Foot of Groundwater Pumped shows the per acre removal of groundwater by each of the land uses from the basins within the UWCD. Table 2 Overdraft Contribution Per Acre-Foot of Groundwater Pumped LAND USE AVERAGE 1 ADJUSTED CONSUMPTIVE USE (ACRE-FEET) AVERAGE 1 GROUNDWATER PRODUCTION (ACRE-FEET) REPLACEMENT WATER REQUIRED PER ACRE-FOOT OF GROUNDWATER PUMPED AGRICULTURE 51, , MUNICIPAL 12,063 30, FROM (HF&H, 2014) 2 AGRICULTURE OVERDRAFT CONTRIBUTION 51,750 / 129,669 = AF/AF 3 M&I OVERDRAFT CONTRIBUTION 12,063 / 30,167 = AF/AF The average adjusted consumptive use (water balance deficit) of groundwater for agricultural land uses is over 4 times greater than the average for municipal uses because, although there is more recharge from agricultural than M&I uses, agriculture consumes much, much more groundwater than does M&I. This point is shown in Table 2 by the average groundwater production. The required replacement water volumes (through natural and artificial means) are proportional to the long-term average contribution to overdraft in the UWCD. From these volumes, we can calculate the amount of groundwater removed from the basins in the - 7 -

20 City of San Buenaventura July 14, 2014 (Project No D) UWCD with each acre-foot of groundwater pumped. As shown in Table 2, the per-acre-foot of replacement water required is virtually the same for both land uses, 0.39 acre-feet per-acre-foot of groundwater pumped. This indicates that the long-term burden on the groundwater system is the same for each user class. Because the cost to provide replacement water for overdraft mitigation is calculated and assessed on an acre-foot basis, and because the per-acre-foot consumption by land use is virtually the same, this analysis indicates the overdraft mitigation cost should be born equally by all pumpers. This method of distributing the cost of overdraft mitigation removes the discriminatory method of allocating safe yield to any single class of groundwater pumper, which results in the arbitrary and unfounded allocation of 98 percent of the overdraft mitigation to M&I pumpers (HF&H, 2013b and 2014). Correcting this single error in groundwater resource allocation will allow UWCD s financial consultants to better derive a cost of service that is proportional to the benefits received from the UWCD s services. We trust the analyses of this report provide a sufficient explanation to clarify the hydrogeological issues and to identify the inappropriate methodologies applied by the UWCD s financial consultants to justify the UWCD s existing 3:1 ratio of M&I to agricultural rates for groundwater extraction fees. If you have any questions or need any additional information, please give us a call. Sincerely, HOPKINS GROUNDWATER CONSULTANTS, INC. Curtis J. Hopkins Principal Hydrogeologist Registered Geologist RG 5695 Certified Engineering Geologist CEG 1800 Certified Hydrogeologist CHG 114 Attachment: - 8 -

21 City of San Buenaventura July 14, 2014 (Project No D) References AECOM, (2011), City of San Buenaventura, Groundwater Treatment Study, Dated March 7. Freeman, V.M. (1968), People-Land-Water: Santa Clara River Valley and Oxnard Plain, Ventura County, California. Fox Canyon Groundwater Management Agency (2007), 2007 Update to the Fox Canyon Groundwater Management Agency Groundwater Management Plan, Dated May. HF&H Consultants, LLC, (2013), Cost-of-Services Analysis, Letter to Michael Solomon, General Manager United Water Conservation District, Dated June 11. HF&H Consultants, LLC, (2013a), Cost-of-Services Analysis: Response to City of Ventura, Letter to Michael Solomon, General Manager United Water Conservation District, Dated September 23. HF&H Consultants, LLC, (2013b), Revised Cost-of-Services Analysis, Letter to Michael Solomon, General Manager United Water Conservation District, Dated October 1. HF&H Consultants, LLC, (2014), FY Cost-of-Service Analysis, Letter to Michael Solomon, General Manager United Water Conservation District, Dated May 29. HF&H Consultants, LLC, (2014a), Response to City of Ventura June 9, 2014 Review of Rate Analysis, Letter to Michael Solomon, General Manager United Water Conservation District, Dated June 19. Hopkins Groundwater Consultants, Inc. (2012), Review of Hydrogeological Conditions Pertinent to the United Water Conservation District Update Memorandum to 2011 Water Rate Study, Prepared for City of San Buenaventura, Dated June 11. Hopkins Groundwater Consultants, Inc. (2013), Review of the United Water Conservation District Stratecon Inc., Groundwater Extraction Charges Report Dated June 11, 2013, and HF&H Consultants, LLC Cost-of-Services Analysis Dated June 11, 2013, Prepared for City of San Buenaventura, Dated June 21. Hopkins Groundwater Consultants, Inc. (2013a), Letter-Report Analyzing the United Water Conservation District Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, Dated June 2013, Prepared for City of San Buenaventura, Dated July 9. Hopkins Groundwater Consultants, Inc. (2013b), Analysis of United Water Conservation District Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, Dated June 2013, Stratecon Inc. Groundwater Extraction Charges Report Dated June 11, 2013, and HF&H Consultants, LLC Cost-of-Services Analysis Dated June 11, 2013 (collectively, UWCD reports ), Prepared for City of San Buenaventura, Dated September

22 City of San Buenaventura July 14, 2014 (Project No D) Hopkins Groundwater Consultants, Inc. (2013c), Analysis of United Water Conservation District Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, Dated September 2013 (Available on October 2, 2013), Prepared for City of San Buenaventura, Dated October 14. Hopkins Groundwater Consultants, Inc. (2014), United Water Conservation District Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, Dated September 2013, Prepared for City of San Buenaventura, Dated June 2. Hopkins Groundwater Consultants, Inc. (2014a), United Water Conservation District Supplemental Technical Memorandum to Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, (September 2013) Dated May 2014, Prepared for City of San Buenaventura, Dated June 10. HydroMetrics Water Resources, Inc. (2014), Technical Memorandum, Lower Santa Clara River Salt & Nutrient Management Plan, Draft Assimilative Capacity for TAG Review, Dated April 10. HydroMetrics Water Resources, Inc. (2014a), Technical Memorandum, Fate and Transport Analysis: Mass Balance Model of Existing Conditions, Lower Santa Clara River Salt & Nutrient Management Plan, Dated April 14. Mann, John F. Jr. & Associates (1959), A Plan For Ground Water Management, for United Water Conservation District, Dated September. Mukae, Mike M. and Turner, John M. (1975), Ventura County Water Resources Management Study Geologic Formation, Structures and History in the Santa Clara-Calleguas Area, Ventura County Department of Public Works Flood Control District, Dated January. Stratecon, Inc. (2013), Stratecon Analysis of the Structure of United Water Conservation Districts Water Conservation Extraction Charges, Letter to Mike Solomon, General Manager United Water Conservation District, Dated June 11. Stratecon, Inc. (2013a), Response to Comments on Stratecon s Analysis of the Structure of United Water Conservation Districts Water Conservation and Extraction Charges, Letter to Mike Solomon, General Manager United Water Conservation District, Dated September 16. Stratecon, Inc. (2013b), Supplemental Stratecon Analysis of the Structure of United Water Conservation Districts Water Conservation Extraction Charges, Letter to Mike Solomon, General Manager United Water Conservation District, Dated October 1. Stratecon, Inc. (2014), Stratecon Analysis of the Structure of United Water Conservation Districts Water Conservation Extraction Charges for FY , Letter to Mike Solomon, General Manager United Water Conservation District, Dated May

23 City of San Buenaventura July 14, 2014 (Project No D) Stratecon, Inc. (2014a), City of Ventura s Criticisms of Stratecon s Study of Groundwater Extraction Charges, Letter to Mike Solomon, General Manager United Water Conservation District, Dated June 19. United Water Conservation District (UWCD, 2011), Final Draft 2011 Water Rate Study, Prepared by United Water Conservation District Resource Planning and Finance Department, Dated February 2. United Water Conservation District (UWCD, 2011a), Final Report, 2011 Water Rate Study, Prepared by Resource Planning and Finance Departments, Dated May 18. United Water Conservation District (UWCD, 2013a), Annual Investigation and Report of Groundwater Conditions Within United Water Conservation District, Prepared by Groundwater Department, Dated March. United Water Conservation District (UWCD, 2013b), Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, United Water Conservation District, Dated June. United Water Conservation District (UWCD, 2013c), Staff Report to Board of Directors, Agenda Item 1.3 Pumping Trough Pipeline Temporary Water Supply and Demand Management Measures, From Mary Kanatzar, Administrative Services Manager, through E. Michael Solomon, General Manager, Dated July 26. United Water Conservation District (UWCD, 2013d), Staff Report to Board of Directors, Agenda Item 5.1 Monthly Administrative Services Department Report, From Mary Kanatzar, Administrative Services Manager, through E. Michael Solomon, General Manager, Dated August 28. United Water Conservation District (UWCD, 2013e), Staff Report to Board of Directors, Agenda Item 8.3 Update on Pumping Trough Pipeline Users Working Group, From Michael Ellis, O&M Manager, through E. Michael Solomon, General Manager, Dated September 3. United Water Conservation District (UWCD, 2013f), Technical Memorandum, Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD, United Water Conservation District, Dated September. United Water Conservation District (UWCD, 2013g), Resolution No , Dated October 2. United Water Conservation District (United, 2014), Groundwater And Surface Water Conditions Report 2013, United Water Conservation District Open-File Report , Prepared by Groundwater Resources Department, Dated May. United Water Conservation District (United, 2014a), Pumping Trough Pipeline Users Group Meeting, PowerPoint Slide Presentation, Prepared by United Water Conservation District, Groundwater Resources Department

24 City of San Buenaventura July 14, 2014 (Project No D) United Water Conservation District (United, 2014b), United Water Conservation District Oxnard-Hueneme Water Delivery System, 2013 Consumer Confidence Report, Dated April. United Water Conservation District (United, 2014c), Annual Investigation and Report of Groundwater Conditions Within United Water Conservation District, A summary of finding for the previous water year ( ), current water year ( ), and ensuing water year ( ), Prepared by Groundwater Department United Water Conservation District, Dated March. United Water Conservation District (United, 2014d), Supplemental Technical Memorandum to Infiltration Potential of Precipitation Falling on Developed Lands and the Fate of Applied Groundwater Within UWCD (September 2013), United Water Conservation District, Dated May. United Water Conservation District (UWCD, 2014e), Draft Resolution No United Water Conservation District (UWCD, 2014f), Memorandum, Comments on City of Ventura Opposition to Proposed FY Groundwater Rates, To United Water Conservation District Board of Directors and General Manager, From Groundwater Resources Department, Dated June 19. United Water Conservation District (UWCD, 2014g), Memorandum, M. Solomon s responses to June 10, 2014 letter from Ventura Water (Shana Epstein) and June 10, 2014 Letter from M. Colantuono, To Board of Directors, From E. Michael Solomon, General Manager, Dated June

25 201 S. Lake Avenue Suite 301 Pasadena, CA Phone Fax June 9, 2015 Ms. Shana Epstein General Manager Ventura Water 501 Poli Street P.O. Box 99 Ventura, CA Subject: Review of United Water Conservation District FY 2016 Rate Differential Analysis Dear Ms. Epstein: The City of San Buenaventura (City) engaged Raftelis Financial Consultants, Inc. (RFC) to review United Water Conservation District s (UWCD) justification of the 3:1 ratio between municipal and industrial (M&I) and agricultural (AG) water rates for fiscal year (FY) RFC reviewed the updated reports prepared by HF&H (2 reports) and Stratecon Inc., all dated May 28, (Exhibits U418, U419 & U421 from May 28, 2015, Budget Workshop) These reports modified certain assumptions that HF&H and Stratecon used to justify the rates in reports dated May 2014, June 2013, and October 2013 on which we commented in previous years. We questioned the methodology used in both reports in arriving at the 3:1 ratio between M&I and AG rates. Comments on HF&H May 28, 2015 Reports The following shows our comments to the updated reports and revised calculations. HF&H has made substantial changes to the allocation of costs among replenishment, reliability, and overdraft mitigation costs. Table 1 below compares HF&H s FY 2016, FY 2015, and FY 2014 allocations. It is illogical that the replenishment costs, which, in HF&H s terms, are the costs associated with the District s core function, which is to manage and administer groundwater replenishment activities in the District (HF&H May 28, 2015 report, page 5, paragraph 1), currently make up the smallest portion, approximately 13 percent, of the total UWCD s costs in FY 2016, compared to 36 percent in FY HF&H s reclassification of costs (which we do not accept) suggests that UWCD s core function is not to replenish the basin, but to provide a reliable water supply to M&I users by interrupting AG users Attachment B

26 Ventura Water June 9, 2015 Review of UWCD FY 2016 Rate Differential Analysis Table 1 Cost Allocation Comparison FY 2014 FY 2015 FY 2016 FY 2014 FY 2015 FY 2016 Overdraft Component $3,777,059 $5,083,851 $5,309,981 28% 34% 34% Reliability Component $4,764,624 $6,340,501 $8,352,680 36% 43% 53% Replenishment Component $4,822,317 $3,473,193 $2,083,805 36% 23% 13% TOTAL $13,364,000 $14,897,545 $15,746,466 HF&H allocates the entire operating and capital costs associated with UWCD s storage and diversion facilities (i.e., Santa Felicia Dam and Freeman Diversion Dam) (HF&H May 28, 2015 report, page 5, paragraph 2) to the reliability cost component. However, UWCD s Proposed Annual Budget FY 2015/2016 stated that, unlike the Santa Felicia Dam, the Freeman Diversion Dam is used to divert and efficiently manage run-off water from the Santa Clara River. The diversion of river (surface) water increases water availability that directly enhances the District s ability to recharge groundwater (UWCD Proposed Annual Budget FY 2015/2016 budget document, page 65 of 204). Thus, according to UWCD s own logic, the costs related to the Freeman Diversion Dam should be allocated to the replenishment cost component not the reliability component since the Freeman Diversion Dam helps UWCD recharge or replenish the groundwater basins. Allocating the operating and capital costs of the Freeman Diversion Dam to the reliability component is also inconsistent with the existence of Zone B itself, which captures costs of the Freeman Diversion and allocates them to only those pumpers in Zone B. Were the cost of the Freeman Diversion reclassified to replenishment, this would shift the approximately $4.1 million cost of the Freeman Fund in FY 2016 from the reliability component to the replenishment component. In response to our prior critique, HF&H contends that reliability is concerned with shortage years when supplies are less than the safe yield. Overdraft mitigation is concerned with pumpage that is greater than the safe yield. (HF&H May 28, 2015 response, page 3, paragraph 2) Under that logic, during a shortage year, AG would be interrupted so that the total pumpage does not exceed the safe yield. As California enters its fourth year of drought, FY 2016 can certainly be considered a shortage year. However, the projected FY 2016 pumpage is 141,860 AF for AG and 36,536 AF for M&I, which is 38,396 AF over the safe yield. Table 2 shows that in FY 2014, another shortage year, actual pumpage exceeded the safe yield by almost 71,000 AF. Thus, historical and projected pumpage data contradict HF&H s assertion that UWCD provides M&I greater reliability by interrupting AG pumpage during shortage years. Moreover, HF&H acknowledges that in shortage years, AG pumping actually increases: in part because of the drought conditions, AG s actual pumpage has been greater than the District s projections (HF&H May 28, 2015 report, page 6, paragraph 3). This statement contradicts HF&H s assertion that UWCD provides M&I greater reliability by interrupting AG pumpage. In the absence of any cutbacks in AG usage, the proper allocation method would require that costs be allocated based on total usage or total net usage (if justifiable). The report describes overdraft mitigation costs as being a consequence of growth in the basin that has exceeded the safe yield, which for the most part is attributable to urbanization. The Page 2