4. Consider Adoption of Urgency Ordinance No. 97 - An Ordinance of the Board of Directors of the Monterey Peninsula Water Management District Amending Water Use Credit Transfer Rules

ACTION: The Board will consider adoption of Urgency Ordinance No. 97. The proposed ordinance would prohibit the transfer of any water credit when money or other valuable consideration greater than the connection charge collected by the District was given in exchange for the water credit. If the urgency ordinance is adopted, it would take effect on January 26, 2001. Public comment will be received on this item.

SUMMARY: The Board will consider the first reading and adoption of urgency Ordinance No. 97 (Draft-2 shown as Exhibit 1), which revises Rule 28-B of the District Rules and Regulations regarding water use credit transfers. The Draft-2 version makes only one change to the existing Rule 28-B, paragraph 10, shown in underlined bold italics. Specifically, a water credit transfer is not allowed for which money or other valuable consideration has been given in exchange for the transfer, except to reimburse the donor the cost of the District connection fees (currently $_______ per acre-foot). The ordinance was originally prepared by District Counsel at the direction of the Chairperson, based on a November 8, 2000 written request by Director Lindstrom (Exhibit 2).

A Draft-1 version, which had made several substantive restrictive changes to Rule 28, was circulated for 30-day CEQA review on December 15, 2000 via an Initial Study/proposed Negative Declaration (Exhibit 3). Following discussion at the PAC/TAC meeting of December 19, 2000, at which concerns were raised by jurisdiction representatives, legal counsel was asked by Director Lindstrom to remove all of the substantive changes contained in Draft-1, except for the monetary issue. With these changes, Ordinance No. 97 no longer meets the definition of a CEQA project, and adoption of a Negative Declaration is not needed.

Five affirmative votes are needed for an urgency ordinance to be adopted; in this case, Ordinance 97 would become effective at 12:01 AM on January 26, 2001. If only four affirmative votes are cast, the ordinance will be heard for a second reading at the February 22, 2001 meeting. Assuming a majority approval at that time, Ordinance 97 would become effective 30 days after the second reading and adoption.

RECOMMENDATIONS: Staff recommends that the Board take the following action regarding Ordinance No. 97:

1. Determine that Draft-2 of Ordinance No. 97 is not a project under CEQA in that it only refines monetary/reimbursement amounts under existing rules and regulations that does not result in a physical change to the environment.

2. Determine whether or not to adopt Ordinance No. 97 as an urgency ordinance (five affirmative votes are needed) or approve as a standard ordinance to be adopted at second reading in February 2001 (four affirmative votes needed). Staff does not have a position on the ordinance as the primary issue is of a policy nature; that is, whether or not the District should control the amount of profit made on a water credit transfer.

PRIOR BOARD ACTION: Rule 28 was created with MPWMD Ordinance No. 1 in 1980 and has been refined over the years, most recently via Ordinance No. 79 adopted in September 1995. In the previous year, there have been extensive discussions about the water credit transfer program as part of deliberations associated with Ordinance No. 95.

DISCUSSION: The following changes from the Draft-1 text circulated in early December 2000 to the current Draft-2 version (January 8, 2001) include:

• Draft-1, Finding #4 is changed in Draft-2 to remove all text but the first sentence, to be identical to the existing language of Rule 28-B:

4. Existing Water Management District rules also allow transfer of water credits directly into a jurisdiction's water allocation. This ordinance extends limitations that apply to direct transfer of credit from one site to another so that those limitations apply equally to the use of increments of water that were first transferred into and later used from a jurisdiction's allocation.
• Draft-1, Section Three, Rule 28-B, paragraph #4, lines 3-5: The text shown as strike out in Draft-1 has been restored in Draft-2 to be identical to the existing language of Rule 28-B:

 
Other than transfers which add to a jurisdictions allocation, transfer credits shall not originate from, or be transferred to any residential use. Transfer credits shall not derive from any prior open space water use.
• Draft-1, Section Three, Rule 28-B, paragraph #5, lines 1 and 3: The bold italic underlined text shown in Draft-1 has been removed in Draft-2, and the words "property-to-property" that were in strike out are restored so that text is identical to the existing language of Rule 28-B:

5. Property-to-property and property-to-jurisdiction water use credit transfers shall only be used for intensification purposes. New water connections shall not be issued based upon a property-to-property anytransferred water use credit.

• Draft-1, Section Three, Rule 28-B, paragraph #7, is changed to remove all text but the first sentence, so Draft-2 is identical to the existing language of Rule 28-B:

 
7. The use of credits resulting from a property-to-jurisdiction transfer shall be at the discretion of the jurisdiction. However, use of credits from a property-to-jurisdiction commercial water use credit transfer shall only enable intensification of water use capacity for an existing commercial or industrial connection at the time that credit is released from the jurisdiction's allocation. Such credits shall not provide water use capacity for new commercial or industrial connections.

012501\viid
unreviewed first draft, 1/08/01, H Stern, 5 pages