ITEM: VIII ACTION ITEM

B. DISCUSSION AND INFORMATION REGARDING APPROPRIATE ACTION TO BE TAKEN IN RESPONSE TO REQUEST BY CHRIS AND MARY CURRIER FOR SERVICE WITHIN FORMER WATER WEST SERVICE AREA – AP# 187-241-017, COUNTRY CLUB DRIVE, CARMEL VALLEY

Meeting Date: December 17, 2001 Budgeted: No

Program/Line Item No.: N/A

Staff Contact: Darby Fuerst Cost Estimate: N/A

General Counsel Approval: Yes

Committee Recommendation: Considered by the Water Demand Committee; no recommendation was made.

CEQA Compliance: N/A

SUMMARY: N. Isakson Consultant Management Services (Isakson) submitted, on behalf of Chris and Mary Currier, a request that the District Board consider allowing water service from the California-American Water Company (Cal-Am) to the Currier property located in Carmel Valley (Exhibit B-1). This property is located on Country Club Drive in Carmel Valley within the former Water West Corporation (Water West) service area in an unincorporated portion of Monterey County, and is listed as Assessor’s Parcel Number 187-241-017 (Exhibit B-2). The location of the former Water West service area in relation to Cal-Am’s service area is shown on Exhibit B-3. The Currier property was formed as part of a minor subdivision approved by Monterey County in 1974. As reported by Isakson, a main extension was constructed and water meters were installed on the subdivided properties at that time. Since that time, the Curriers have not used water on the property, but have continued to maintain service from Water West and subsequently from Cal-Am.

The Water West water distribution system was acquired by Cal-Am as a separate system in 1989 and integrated into the main Cal-Am system in 1993. As part of the acquisition, Cal-Am made many improvements that reduced system losses and resulted in permanent water savings. These savings were estimated by District staff in 1993 to be approximately 53 acre-feet per year of production (i.e., 264 acre-feet of recorded production in Reporting Year 1987 before improvements minus 211 acre-feet of estimated production after improvements). Of the total savings, 14 acre-feet per year of production were set aside by the District in a special reserve assigned to Monterey County for service of new subdivisions within the Water West service area. The remainder of estimated annual savings (39 acre-feet of production) was permanently set aside to meet the District’s long-term water conservation goal and has not been reused. This action was approved by the District in June 1993 when the Board adopted Ordinance No. 70. This ordinance, which is reflected in District Rule 33(C), Water West Adjustment Reserve, states:

A special reserve shall be established to replenish the Monterey County allocation for new water use which occurs within the boundaries of the former Water West Water Distribution System. Replenishment of Monterey County's allocation from this special reserve shall occur only upon the approval of water use for real

property within the Water West boundary which is subdivided after the effective date of this ordinance. The total quantity of water use to replenish Monterey County's allocation pursuant to this paragraph shall not exceed 12.76 acre feet (sales).

The effective date of Ordinance No. 70 was July 21, 1993. When the ordinance was adopted, the intent was to reserve sufficient water to serve subdivisions consisting of up to 29 connections based on the assumption that each connection would use 0.44 acre-feet per year. This usage (12.76 acre feet of metered sales) is equivalent to 14.18 acre-feet of production assuming a ten percent system distribution loss. The special reserve was sized to meet the projected water use requirements of a planned subdivision that was pending approval from Monterey County at the time. This subdivision, the Veeder Ranch Project, has not been developed to date. As written, Rule 33(C) does not allow the Currier property to receive Cal-Am water service from the Water West special reserve because the Currier property was not subdivided after July 21, 1993.

In the November 16, 2001 submittal, Isakson requests that the District acknowledge the Curriers’ “vested rights” based on the main extension contract, the Curriers’ and Monterey County’s reliance on the main extension contract to provide water service to the property, and the substantial expenditures made by the Curriers, and issue them an allocation of water. Alternatively, Isakson suggests: (1) granting a variance to Rule 33(C), or (2) changing Rule 33(C) to allow Cal-Am water service to the Currier property. With respect to the second suggestion, Isakson offers specific language that could be added to Rule 33(C) to address the Curriers’ concerns. This language would allow water to be released from the special reserve that was established for Monterey County for properties within the Water West service area that were subdivided before July 21, 1993.

In her November 16, 2001 letter, Isakson also indicated that her clients were agreeable to the conditions of approval suggested by Fran Farina at the November 5, 2001 Water Demand Committee meeting. At the meeting, Ms. Farina suggested that (1) allocation of water from the reserve be limited to properties within the former Water West service area, (2) each allocation from the reserve be limited to a maximum of 0.44 acre-feet per year, and (3) that 20% of the existing reserve of 12.76 acre-feet per year be dedicated to conservation.

On December 5, 2001, Isakson submitted additional information in response to the staff note that was prepared for the November 19, 2001 Board meeting (Exhibit B-4). In the December 5, 2001 submittal, Isakson indicates that the Curriers’ request for water service should be approved and can be accomplished administratively, by variance, or by a change to Rule 33(C).

RECOMMENDATIONS: District staff recommends that:

(1) Isakson’s request that the District administratively issue an allocation of water to the Currier property be denied,

(2) Isakson’s request that the District Board grant a variance from Rule 33(C) be denied, and

(3) Isakson’s request that the District Board amend Rule 33(C) be considered.

With respect to considering amendments to Rule 33(C), District staff suggests that the Board consider the following five options:

(A) Make no changes to Rule 33(C). This is consistent with the State Water Resources Control Board’s (SWRCB’s) opinion on this matter. This action would not allow water service to the Currier property from the special reserve.

(B) Delete the subdivision reference. This would allow Cal-Am water service to be provided to existing lots of record, including the Currier property, and future subdivided lots within the former Water West service area from the special reserve.

(A) Change the subdivision reference from “after” the effective date of the ordinance to “before.” This would allow Cal-Am water service to be provided only to lots that were subdivided before July 21, 1993, and were within the former Water West service area from the special reserve. This change would allow water service to the Currier property from the special reserve.

Similarly, the “cutoff” date could be changed to the effective date of the new ordinance that would modify Rule 33(C). For example, if this option was selected and the first and second readings of the new ordinance were approved in January and February 2002, the new effective or cutoff date would be March 31, 2002. This would allow Cal-Am water service to be provided to lots that were subdivided before March 31, 2002, and were within the former Water West service area from the special reserve. This change would allow water service to the Currier property from the special reserve.

(B) Delete the “within the Water West boundary” restriction and the subdivision reference. This would allow Cal-Am water service to be provided to existing lots of record and future lots within the unincorporated portions of Monterey County from the special reserve. Alternatively, water service from the special reserve could be restricted to existing residential lots of record within the unincorporated portions of Monterey County.

(C) Delete Rule 33(C) and dedicate the remainder of the estimated water savings from the system improvements made by Cal-Am (14 acre-feet per year of production) to the District’s long-term water conservation goal.

Any amendments to District Rule 33 must be made by ordinance.

PREVIOUS BOARD/COMMITTEE ACTION:

November 30, 2000 The Water Demand Committee considered the Curriers’ request for a variance from Rule 33(C) on November 30, 2000. At that time, the committee did not take any action but directed District staff to draft a letter to the SWRCB requesting its evaluation (Exhibit B-5). As directed, this letter requested an opinion regarding how the issuance of water connection permits by the District, based on the Water West special reserve, would be considered by the SWRCB with respect to SWRCB Order WR 95-10. In the letter to the SWRCB, it was noted that Rule 33(C) was adopted by the District Board in June 1993 prior to the adoption of Order WR 95-10 by the SWRCB in July 1995. The SWRCB Division of Water Rights Chief, Harry Schueller, responded by letter on December 18, 2000 (Exhibit B-6). In his letter, Mr. Schueller discouraged the District Board from taking any actions that may undermine future compliance with Order WR 95-10, and lead to assessment of administrative civil liability fines.

September 27, 2001 The Water Demand Committee considered the Curriers’ request for service from the Water West special reserve on September 27, 2001. At that time, the committee members (Directors Chesshire, Edwards and Henson) expressed a preference for amending Rule 33(C) as stated in option C. Under this option, the subdivision reference would be changed from “after” to “before” the effective date of the ordinance. This change would set aside 12.76 acre-feet of water for use on lots of record that were established prior to July 21, 1993. There was also interest in amending the ordinance to state that the 12.76 acre-feet of water would be available for use on lots in the former Water West service area that were established before the effective date of any proposed new ordinance revising Rule 33(C). The committee members acknowledged that full support for that recommendation could not be provided until information was available on the number of lots that could potentially receive water under a new ordinance. The general consensus was that the 12.76 acre-feet of water would be allocated to Monterey County for use only in the former Water West service area. Monterey County could then decide if any limits should be placed on how the water is used, i.e., for residential projects only or for new construction only.

The committee asked to review this issue again before it is considered by the full Board. In addition, the committee requested that staff and the applicant determine the number of lots in the former Water West service area that would be eligible to utilize the 12.76 acre-feet of water should it become available. The committee also asked for a count of the number of lots in the former Water West service area that have a connection to the Cal-Am system. As part of its review, the committee discussed the District’s December 8, 2000 letter to the SWRCB regarding use of the Water West system reserve (Exhibit B-5) and the SWRCB’s December 18, 2000 response (Exhibit B-6). No action was taken or direction given from the committee regarding this correspondence.

November 5, 2001 The Water Demand Committee received and considered the lot-related information that was requested on September 27, 2001. As reported by Cal-Am, there are presently 528 parcels within the former Water West service area. Of these 528 parcels, 432 parcels have Cal-Am connections. Of these 432 parcels, 14 parcels have Cal-Am connections but the owners do not use water. The Currier property is one of these 14 parcels, in which the owner maintains the connection by paying the Cal-Am service charge, but does not use water. The remaining 96 parcels in the former Water West service area presently do not have Cal-Am connections.

Following the presentation and discussion of the lot-related information, Director Henson indicated that, while he sympathized with the Curriers’ request and recognized that their parcel had a meter, he did not support allowing them to receive Cal-Am service from the Water West special reserve. Based on the SWRCB letter, Director Henson expressed his preference for Option E – Delete Rule 33(C) and dedicate the remainder of the estimated water savings from the system improvements made by Cal-Am (14 acre-feet per year of production) to the District’s long-term water conservation goal – and recommended that the full Board consider the matter at its November 19, 2001 meeting. Director Edwards did not concur with Director Henson’s preference for Option E, but did agree to refer the matter to the full Board.

November 19, 2001 Because of time constraints, the Board deferred its discussion of the appropriate action to be taken in response to the Currier request for service within the former Water West service area until the December 17, 2001 Board meeting.

DISCUSSION: When the Board considered the integration of the Water West system into the Cal-Am system in 1993, a special Board committee was established. In developing its recommendations regarding integrating the Water West system into the Cal-Am system, the committee expressed the position that the adjustments provide equity to the properties within the Water West service area so that these property owners would not be placed at a disadvantage in developing their properties due to the acquisition of the system by Cal-Am. In this regard, while the water needs of existing lots of record were not explicitly accounted for, the estimated use for the Water West system following Cal-Am improvements was based on the assumption that all of the “active” connections would receive 0.44 acre-feet of water each year (432 connections * 0.44 acre-feet/connection/year = 190.1 acre-feet/year of metered sales or 211.2 acre-feet/year of production assuming 10% distribution loss). Accordingly, in the water savings analysis, there was an implicit assumption that the existing 432 Water West connections were being served and would

continue to be served in the future. However, this calculation was completed prior to the issuance of SWRCB Order 95-10.

It should be noted that action by the Board to amend or delete Rule 33(C) may affect water service to two parcels that are within the former Water West service area and were subdivided after July 21, 1993. These parcels and their specific circumstances are described in Exhibit B-7, a letter from District staff to the Monterey County Health Department. In the letter, it was concluded that “portions of two future lots that were determined to be within the former Water West service area ... are eligible to receive water connection permits from the District, without further Board action” and that the “projected water use for these connection permits would be debited from the Water West special reserve”. The letter also indicated that the portions of the two future lots outside the former Water West service area would not be eligible to receive water connection permits without further Board action.

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