ITEM: VI A PUBLIC HEARING -- CONSIDER APPROVAL OF ORDINANCE NO. 87 -- AN URGENCY ORDINANCE ESTABLISHING A COMMUNITY BENEFIT ALLOCATION FOR THE PLANNED EXPANSION OF THE COMMUNITY HOSPITAL OF THE MONTEREY PENINSULA

MEETING DATE: FEBRUARY 27, 1997

SUMMARY: The District Board will consider a request from Community Hospital of the Monterey Peninsula (CHOMP) and the City of Monterey (City) for creation of a special community reserve allocation to meet the water demand of improvements to CHOMP's hospital facilities under the amended Planned Community Plan approved by the City on January 21, 1997 (CHOMP Master Plan). Staff, in consultation with the District's legal counsel, has concluded that a special community reserve allocation of 18.28 acre feet (AF) can be made for this purpose from the water conserved to date under the District's conservation plan.

Because of the importance of the timely implementation of the CHOMP Master Plan to public health and safety on the Monterey Peninsula, the District Board is considering adoption of Ordinance No. 87, which creates a special community reserve allocation for CHOMP, as an urgency ordinance. Creation of such an allocation for implementation of the CHOMP Master Plan is categorically exempt from the provisions of the California Environmental Quality Act (CEQA).

Action required to consider Ordinance No. 87 as an urgency ordinance includes:

1. Consider and adopt the Findings, including Findings for the Urgency Ordinance (Ordinance No. 87) and CEQA exemption, contained in Exhibit A.

2. Consider and adopt the Urgency Ordinance (Ordinance No. 87) creating a special community reserve allocation for CHOMP contained in Exhibit A.

Notice of this Public Hearing has been advertised in The Herald.

RECOMMENDATION: Following staff's presentation, the Board should open the public hearing to receive public comment on Ordinance No. 87. After closing the public hearing and considering public comments, staff recommends that the Board take the following action:

1. Adopt the Findings, including Findings for the Urgency Ordinance (Ordinance No. 87) and CEQA exemption, contained in Exhibit A.

2. Adopt the Urgency Ordinance (Ordinance No. 87) creating a special community reserve allocation of 18.28 AF for CHOMP contained in Exhibit A.

3. Direct staff to file a Notice of Exemption with the appropriate agencies pursuant to CEQA.

Based upon the analysis by staff and District counsel, staff recommends approval of the Urgency Ordinance and adoption of the proposed Findings, including findings that conditions exist which justify adoption of the proposed ordinance as an urgency measure and that creation of the special community reserve allocation for implementation of the CHOMP Master Plan is subject to a Class 2 categorical exemption from CEQA under Section 15302 of the CEQA Guidelines.

BACKGROUND: On January 21, 1997, the City of Monterey approved the CHOMP Master Plan. The City also certified a final environmental impact report for the CHOMP Master Plan (CHOMP Master Plan EIR). In approving the CHOMP Master Plan, the City determined that implementation of the CHOMP Master Plan as conditioned would not have any significant environmental effects.

The District has been provided with copies of the CHOMP Master Plan submitted to the City and the CHOMP Master Plan EIR. The purpose of the CHOMP Master Plan is to improve the quality of health care services available on the Monterey Peninsula and to allow CHOMP to meet the health care needs of the community in the next century. More specific goals include the modernization of existing facilities to meet the spatial demands of current health care technology and equipment, to meet current hospital construction codes and standards, including current seismic standards, and to improve the overall efficiency of hospital operations in the delivery of patient care. Some portions of the existing hospital are up to 30 years old and were constructed according to standards that are now outdated.

The CHOMP Master Plan calls for the upgrading and modernization of hospital facilities at CHOMP in two phases. In Phase 1, the hospital's cancer treatment facilities will be modernized and relocated into new and remodeled space on the north side of the existing hospital. This phase is expected to be completed in 1998. Phase 2 includes the upgrading and relocation of the hospital's intensive/coronary care unit, inpatient surgery rooms, emergency department, and certain hospital support facilities into a hospital addition to be built on the hospital grounds south of the existing hospital. Phase 2 also includes improvements in the hospital's backup utility systems, which will enhance the ability of CHOMP to be self-sufficient and to continue operation in a major emergency. Phase 2 is expected to be completed by the year 2000. The CHOMP Master Plan spells out in detail the changes to existing hospital facilities which will occur when the CHOMP Master Plan is implemented.

Because implementation of the CHOMP Master Plan involves replacement of certain existing hospital facilities and relocation of certain services, careful planning is required to avoid disruption in the delivery of patient services. Hospital facilities and services to be relocated will remain in existing facilities while the replacement structure under phase 2 is under construction. The modernized facilities will continue to provide services currently provided by the hospital. Implementation of the CHOMP Master Plan will not change the purpose of the hospital structures and facilities, nor will it substantially increase the capacity of the Hospital whether measured in terms of patients served, hospital beds, square footage, or increase in water use.

Implementation of the CHOMP Master Plan will result in an increase in water use of approximately 3.41 AF for Phase 1 and approximately 14.87 AF for Phase 2, for a combined total water demand of approximately 18.28 AF. CHOMP and the City have requested that the District create a special community reserve allocation for implementation of the CHOMP Master Plan. Staff is recommending that such an allocation in the amount of 18.28 AF be made for the benefit of CHOMP and the implementation of the CHOMP Master Plan and that Cal-Am's production and sales limits be modified accordingly. Creation of the special community reserve allocation of 18.28 AF for the benefit of CHOMP will cause the annual production limit for the Cal-Am water system to be 17,640.81 AF per year (equivalent to metered sales of 16,405.95 AF per year). The non-Cal-Am production limit from the Monterey Peninsula Water Resource System will remain unchanged at 3,045.71 AF per year. The proposed ordinance attached as Exhibit A contains the necessary provisions to accomplish this.

CHOMP Water Conservation Measures: As part of its voluntary water conservation program, CHOMP has implemented, or is studying the feasibility of implementing, measures to lower water use at CHOMP. These measures include an upgrade of the pumping and filtration system on the hospital's Koi pond, an upgrade in the hospital's walk-in cooler refrigeration system, and a cooling tower retrofit. Any reduction in water use at CHOMP which would result from these measures may offset to some degree any use of water made available through the special community reserve allocation which would be created by the proposed ordinance. However, the amount of any water savings to be achieved by these measures and the feasibility of the refrigeration system upgrade and cooling tower retrofit are uncertain. The proposed ordinance requires CHOMP to continue studying the feasibility and cost effectiveness of the refrigeration system upgrade and cooling tower retrofit, and to implement these measures if feasible and cost effective.

As required by the District, CHOMP is presently implementing a program to retrofit its restroom and bathroom fixtures, including toilets, showerheads, and faucets, which should result in significant water savings. For example, new toilets will reduce water consumption by approximately 54 percent per use compared to existing toilets (from 3.5 gallons to 1.6 gallons per use). CHOMP is not eligible to receive water credits for the water conserved by this required fixture retrofit program, which is anticipated to be completed in 1998.

District Reserve: On June 21, 1993, the District Board adopted Ordinance No. 70 which created a District Reserve allocation to ensure the availability of water for particular projects which provided a special regional benefit. This District Reserve was incorporated as Rule 33(B) of the District's Rules and Regulations. At the request of local jurisdictions, the District Board in February 1995 adopted Ordinance No. 73, which repealed Rule 33(B), thereby eliminating the District Reserve.

With the elimination of the District Reserve, no allocation is currently available to meet special projects which provided important community benefits such as the hospital modernization under the CHOMP Master Plan. At its meeting on January 23, 1997, the District Board directed staff to consider and prepare an ordinance which would create a special community reserve allocation from conservation savings achieved to date under the District's conservation plan to ensure the availability of a water supply to meet the water demand of the CHOMP Master Plan.

Allocation From District Conservation Goal: The District Board has adopted both short-term and long-term water conservation goals. The short-term goal calls for conservation of nine percent (9%) of demand by the year 1990. This goal, which corresponds to a decrease in demand of approximately 1,600 AF, has been met. The District's long-term goal calls for a 15 percent reduction of projected demand by the year 2020. At the time the goal was established, the 2020 demand was projected to be 26,000 AF, based on allowable densities under general plans applicable at the time. The 15 percent conservation goal therefore translated to a reduction of approximately 3,900 AF. However, because the trend of local jurisdictions has been toward a reduction in allowable densities, the 2020 demand is now anticipated to be lower than projected when the long term goal was established. Consequently, while the long term conservation goal is still set at 15 percent, it is now anticipated that the actual savings needed to achieve that goal will be less than 3,900 AF.

To achieve these conservation goals, the District has implemented a water conservation program. The conservation program has been successful in achieving the short term goal. To date, the conservation savings under the water conservation program are estimated to be approximately 1,810 AF. An allocation of 18.28 AF from the District's conservation savings represents approximately one percent (1%) of those savings and less than one percent (1%) of the District's long-term conservation goal. Such an allocation will not substantially affect the ability of the District to meet its long-term water conservation goals.

Urgency Ordinance: Because of the importance of the timely implementation of the CHOMP Master Plan, staff was directed by the District Board at its meeting on January 23, 1997, to explore with District counsel whether the allocation could be made pursuant to an urgency ordinance. As discussed below, it is appropriate to approve this allocation pursuant to an urgency ordinance.

An urgency ordinance is appropriate and will take effect immediately where the ordinance is necessary for the immediate preservation of the public peace, health, or safety. There are several factors which support the approval of this allocation by means of an urgency ordinance.

CHOMP is a non-profit corporation which is the sole provider of acute care services on the Monterey Peninsula. Implementation of the CHOMP Master Plan will result in substantial modernization and upgrading of CHOMP facilities and service, and a corresponding improvement in the level of medical care that will be available to the District's residents in the coming years. Long range planning and various levels of review and approval by local and state agencies, including the Office of Statewide Health Planning and Development (OSHPD) and the California Coastal Commission, are required for these hospital improvements. Therefore, expeditious processing of approvals is essential. Neither OSHPD nor the Coastal Commission are likely to approve the improvements under the CHOMP Master Plan in the absence of assurances of adequate utilities, including an allocation of water. CHOMP has scheduled implementation of Phase 1 to begin in the summer of 1997. In order to meet that timetable, the bid solicitation process must begin shortly. Any delay is likely to result in additional costs and further delays in implementing the Master Plan. Unless site preparation and foundation work can occur prior to the beginning of the rainy season in the fall of 1997, the project could be delayed further by weather. CHOMP requires certainty of the availability of a water allocation before further processing of the necessary permits and approvals can occur, and before CHOMP takes further steps toward implementation of the CHOMP Master Plan.

An additional factor adding to the urgency of this matter is the vote on Measure A scheduled for March 4, 1997. Measure A contains a provision that would prohibit certain future water allocations by the District until certain conditions are met. If Measure A is approved and the limitation on allocations is deemed to prevent an allocation to CHOMP for implementation of the CHOMP Master Plan, the necessary upgrading of hospital facilities and improvements to the level of health care services available to District residents may never occur or may be delayed indefinitely. This would result in substantial harm to the public health, safety, and welfare. District legal counsel has determined that if Measure A is approved, its limitation on the District Board's power to make allocations would not apply retroactively to affect an allocation made by the proposed ordinance if the proposed ordinance is adopted prior to the effective date of Measure A. The effective date of the proposed ordinance would be February 28, 1997.

Under Rule 22 of the District's meeting rules, adoption of an urgency ordinance requires the affirmative votes of at least five Board members. If the proposed ordinance is adopted, Rule 22 requires the Board to review the urgency ordinance no later than one year from its effective date and to determine whether it should remain in effect without change, be amended, or be repealed.

CEQA Exemption: California Public Resources Code section 21084 contains a legislative mandate that certain classes of activities shall be exempt from CEQA because they have been determined not to have a significant effect on the environment. Section 21084 requires the Secretary of the Resources Agency to include in the CEQA Guidelines a list of classes of projects which have been determined not to have a significant effect on the environment and which shall therefore be exempt from CEQA. As legislatively mandated by Section 21084 of the Public Resources Code, the CEQA Guidelines set forth various classes of projects which have been found by the Secretary of the Resources Agency to meet the necessary criteria and which are therefore categorically exempt from CEQA.

In considering the proposed ordinance creating the special community reserve allocation, the District acts in a very limited capacity. Unlike the City of Monterey, which has granted the necessary land use approvals for the project, the District lacks land use approval jurisdiction with respect to the CHOMP Master Plan. However, in determining whether the criteria for a categorical exemption have been met, the District should consider the entire activity, i.e., implementation of the CHOMP Master Plan, which would be allowed by District approval of a water allocation.

Section 15302 of the CEQA Guidelines sets forth a Class 2 categorical exemption for the replacement or reconstruction of certain facilities. Section 15302 states in relevant part:

Class 2 consists of replacement or reconstruction of existing structures and facilities where the new structure will be located on the same site as the structure replaced and will have substantially the same purpose and capacity as the structure replaced, including but not limited to:

(a) Replacement for reconstruction of existing schools and hospitals to provide earthquake-resistant structures which do not increase capacity more than 50%.

(b) Replacement of a commercial structure with a new structure of substantially the same size, purpose, and capacity.

The examples included in Section 15302 are illustrative only and not intended to be all-inclusive. Staff, in consultation with District legal counsel, has determined that the implementation of the CHOMP Master Plan meets the criteria for a Class 2 categorical exemption.

The special community reserve allocation which would be created by the proposed ordinance would provide water to serve upgraded hospital facilities on the CHOMP site. As set forth in the CHOMP Master Plan and the CHOMP Master Plan EIR, the purposes of the CHOMP Master Plan are to meet the spatial demands of modern medical technologies and new equipment, to meet other construction codes and standards for modern hospital facilities, (including standards related to the ability of hospital structures to withstand earthquakes), and to reconfigure and relocate hospital services and facilities to provide for greater efficiency of hospital operations and delivery of patient care.

The CHOMP Master Plan involves the modernization of existing hospital facilities and services through the reconstruction, renovation, and replacement of portions of existing hospital structures at CHOMP. Implementation of the CHOMP Master Plan will neither change the purpose of the existing hospital nor substantially increase the patient capacity, number of beds, staffing levels, or floor area of the hospital. As such, creation of the special community reserve allocation for implementation of the CHOMP Master Plan meets the criteria for a Class 2 categorical exemption under CEQA and is therefore exempt from the requirements of CEQA.

Counsel for CHOMP has had an opportunity to review staff's recommendation and the proposed ordinance and concurs with staff's recommendations that the proposed ordinance be adopted, that it be enacted as an urgency measure, and that the action on the proposed ordinance be processed as a Class 2 categorical exemption.

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