Nevada County Municipal Code Ch. 8 Annexation Policy

This Annexation Policy shall be interpreted in the context of broader development policies contained in the County General Plan, the County Codes, and in the County's Sewage Disposal Ordinance. Another General Policy is that each zone in the Sanitation District must be financially solvent, with adequate and prudent reserves, as an independent administrative entity, except where the Board of Directors has authorized sharing of assets between zones or uniform service charges. The Board is highly aware that the financial insolvency of any particular zone can adversely affect the legal and financial position of the District as a whole.

For reference, see below the related policies in the County of Nevada 1995 General Plan:

Policy 3.5

Within Community Regions with existing public sewer and water systems, all new residential land divisions shall be required to connect to public sanitary sewer and water systems. Temporary use of private on-site systems may be allowed where public systems are not yet available but where a specific improvement plan and funding mechanisms are in place. A legally binding mechanism shall be required to ensure that the development will connect to the public systems when available, and that the private systems will be discontinued.

Policy 3.15

The County shall encourage and may require, where appropriate and feasible, that mechanisms be provided as a condition of discretionary project approval to facilitate the funding of public improvements which are attributable to that project. Such mechanisms may include, but not be limited to, creation of an independent or dependent entity (independent district, dependent district, county service area, community service district).

Policy 3.16

Where community sewer or water systems are installed or required as a condition of development, there shall be a contract, development agreement, formation of an area service district, or other legally enforceable mechanism to insure long term maintenance of the community system.

Policy 3.17

The use of community sewer and/or water systems are encouraged where such systems are economically feasible for the intended service area.

(SD-65. (04/28/2009); SD-75. 11/07/2023)

It shall be the preferred service arrangement for a proposed new public wastewater system (PWS) to annex into any existing city, agency, or District zone that is proximately located such that connecting pipelines are feasible. As to District zones, the sphere of influence may already encompass the proposed PWS, or the sphere may need to be amended. If annexation and/or connection of a PWS into an existing city, agency, or District zone are not initially feasible, financial provision to the satisfaction of the District shall be made by the project applicant, to provide for future connection and annexation.

(SD-65. (04/28/2009); SD-75. 11/07/2023)

The following steps shall be a guide as to how a proposed PWS may annex into the District as a new zone after approval by LAFCo (Local Agency Formation Commission) and acceptance by the District. A PWS will not be accepted into the District unless findings of financial, operational, and technical viability can be made. All costs associated with planning, design, environmental review, plan review, annexation, mitigation payments, construction, and construction inspection shall be paid solely by the project applicant.

A. Capacity. The project applicant shall identify the number of equivalent dwelling units (EDUs) of sewer capacity needed. An EDU is the amount of sewer capacity needed by a single-family residence per day.

B. Evaluation. Evaluation and selection of the proposed PWS (collection, treatment, and disposal facilities) must be done early in the development process to ensure a proper environmental review under CEQA (California Environmental Quality Act). Documentation shall be shared with the District as soon as possible, and contacts shall be made with the County Environmental Health Department, the State Central Valley Regional Water Quality Control Board (RWQCB), and LAFCo. The District will meet with proponents for a project as early as possible to provide initial feedback regarding the viability of the system and process for approval.

C. Permit to Discharge. A permit to discharge will be needed from the RWQCB and/or from the County Environmental Health Department. A copy must be provided to the District as soon as possible to identify the ongoing monitoring and reporting requirements and costs.

D. Request for Annexation. A letter requesting annexation shall be submitted to the District along with supporting information and justification for the annexation. The supporting information shall include all of the following:

1. Completed LAFCo Application with Project Maps.

2. Legal Description.

3. Adopted CEQA Documentation.

4. Proposed Design and Plans for Sewage Collection, Treatment, and Disposal Facilities.

5. Proposed Plan for Operations and Maintenance.

6. Report of Waste Discharge (from the RWQCB).

7. Project Schedule.

8. Financial Plan.

E. Pre-Construction. For review prior to construction, the project applicant shall provide improvement plans and specifications for the onsite wastewater collection system and treatment and disposal facilities in accordance with the District's standards and ordinances. The system shall be designed to accommodate increasing peak flows, as the system ages, from infiltration and inflow ("I&I") from the gravity laterals and leaky faucets/toilets, etc. The system and all its facilities shall be subject to approval by the RWQCB and/or County Environmental Health Department. All plan review costs shall be paid for by the applicant.

If the PWS is an existing system, the project applicant shall provide "as built" drawings along with operating documentation that demonstrates that ongoing preventative maintenance has been performed on the facilities. The District will require television inspection of the pipelines and testing of the existing facilities to determine existing condition of facilities. The system shall have all facilities and areas required for disposal on land owned fee simple located within the development served, and title to be turned over to the District prior to acceptance of the PWS. All inspection costs shall be paid for by the applicant.

F. Finances. The District will prepare (at applicant's cost) a financial analysis identifying estimated administration, operation, and maintenance costs. The analysis shall identify an amortization and funding of the capital improvements over the life of the discharge permit, but not less than ten (10) years, in order to provide adequate funds to address significant repairs, replacements, or upgrades. The analysis shall include the projected annual sewer or standby charge per EDU based on projected build-out of the project. It shall also identify estimated costs of administration, operation, and maintenance, as well as amortization of the capital improvements.

If the PWS is a new system, the District will require the project applicant to provide fifty percent (50%) of the amortization of the capital improvements as a payment prior to completing annexation. If the PWS is an existing system, the District will require the project applicant to provide from fifty percent (50%) to one hundred percent (100%) of the amortization of the capital improvements as a payment prior to completing the annexation depending on the age of the facilities. The projected annual sewer and standby charges are to be set by the District at a level that ensures the new PWS does not have any negative financial impacts on the District. These charges will include a Consumer Price Index mechanism to automatically increase charges over time. There will also be a need for additional charges to cover repair/replacement costs not covered by amortization. The financial analysis shall accommodate future rate increases and the restrictions of the Proposition 218 process. The projected annual treatment and standby charges are to be approved to accommodate the above and to ensure no negative financial impacts on the District.

As a condition of LAFCo approval, or anytime prior to District acceptance of the PWS, the schedule of service charges (connected EDUs) and standby charges (unconnected EDUs) must be adopted for the new zone. The charges are added to the property tax bill for each parcel of land, and are collected annually with County property taxes.

G. Mitigation Fee. The project applicant shall pay a development mitigation fee for the PWS that includes five (5) months of expenses for administration, operation and maintenance in order to ensure cash flow for the zone. In addition, an equity "buy-in" is required for the new zone's share of the District's property that is shared with all other zones (vehicles, equipment, buildings); this shall be calculated proportionately by the ratio of new EDUs to the total number of District EDUs existing prior to the new zone.

H. Construction. The improvements referred to in Paragraph E, above, shall be constructed subject to periodic inspection by the District, which retains sole discretion over final approval and acceptance. "As built" improvement plans shall be provided. A test period for operation and baseline performance shall be required, along with assignment of equipment warranties to the District. These conditions apply to both new PWS construction and existing PWS facilities. All inspections costs shall be paid for by the applicant.

I. Operation and Maintenance (O&M). A manual for O&M of the collection system shall be provided to the District. A Sanitary Sewer Overflow Prevention and Response Plan shall be prepared, and shall be approved by the District and the RWQCB with copies distributed to both. Copies of an O&M manual for the treatment and disposal facilities shall be provided to the District. These conditions apply to both new PWS construction and existing PWS facilities.

J. Acceptance by District. After the steps in the above paragraphs are complete and assuming satisfaction of all conditions of LAFCo approval, the PWS is ready to be offered to the District for acceptance. All appropriate deeds and easements for real property, and fixtures thereon, which are necessary for proper functioning of the PWS, shall be conveyed to the District. The annexation shall not be completed until all conditions of the District's adopted Resolution of Application to LAFCo have been satisfied. All fees and costs described in this Chapter shall have been paid by the applicant.

(SD-65. (04/28/2009); SD-75. 11/07/2023)

The District reserves its rights to decline, for any reason and in the sole discretion of the District Board of Directors, the annexation of a new zone. Such rights shall be exercised responsibly at the appropriate stage in the development process in order to not cause delay or disruption to projects involving either new or existing developments.

(SD-65. (04/28/2009); SD-75. 11/07/2023)