5-A. PROVIDE DIRECTION ON DEVELOPMENT OF WATER CREDIT REASSIGNMENT RULES

Meeting Date: February 2, 2004 Budgeted: N/A

Program/Line Item No.: N/A

Staff Contact: Stephanie Pintar Cost Estimate: N/A

General Counsel Approval: N/A

Committee Recommendation: The Water Demand Committee recommended the Board provide direction on an ordinance to authorize reassignments

CEQA Compliance: N/A

SUMMARY: On January 20, 2004, the Water Demand Committee reviewed the issue of water credit reassignments. District staff has had an informal practice for handling requests to reassign water credits for a number of years, particularly as these requests related to demolition of a house that straddled a lot line. With less water available from the jurisdictions, staff noticed an increase in the number and complexity of the requests to reassign water credits. As there is no formal District policy to address reassignments, staff brought the policy issue to the Water Demand Committee for direction. In September 2003, the Board Chairman directed staff to suspend processing requests for credit reassignments pending policy action by the Board. This issue was revisited in January before it is brought to the Board in February 2004.

At the Water Demand Committee meeting of January 20, 2004, the committee reviewed the scenarios shown in the “background” information. Some of the concerns expressed at the committee meeting were:

1. A property owner should have the flexibility to remodel throughout the property.

2. Implementation of the ordinance should occur at a future date, rather than applying to those who are currently “in progress.”

3. What is an adequate definition of “in progress”?

a. Water Permit application

b. Payment of fees to the jurisdiction

c. Building permit application

d. Other

4. The process needs to be clarified (by ordinance) to ensure consistent application.

5. Should the term “type of use” shown in Rule 11, Definitions, be interpreted to mean the general zoning (e.g. residential, commercial, industrial or public) or should the term have a more literal interpretation (e.g. single-family residential site versus vacant lot)?

6. Evidence of irrigation/water use on a vacant parcel (e.g. credit for exterior water use) can be demonstrated with copies of water records for the vacant parcel showing regular water use dating back to 1985.

a. Burden of proof is with the property owner.

The Water Demand Committee unanimously recommended the following actions:

1. Clear policy direction to prepare an ordinance on reassignments of water credits should come from the Board at the February workshop.

2. Action by the Board on “projects in process” should occur on February 19, 2004.

RECOMMENDATION: The Board should review the various water credit reassignment scenarios staff has identified below and provide policy direction to staff, including direction that staff prepare a draft ordinance for Board consideration and direction that staff identify an appropriate fee structure for processing reassignment applications. Staff will present a synopsis of the Board’s direction at the February 19, 2004 Board meeting, and staff will also provide a recommendation regarding processing existing (“in process”) requests for reassignments. To assist with preparation of a policy to address reassignments, staff is seeking direction on the following points:

1. Should water credit reassignments occur?

2. When is it allowed?

3. Does the definition of “site” need to be amended? Input is needed from District Counsel to determine the legality of modifying the definition, particularly as it essential to many other District rules. The current definition is:

“SITE - shall mean any unit of land which qualifies as a parcel or lot under the Subdivision Map Act, and shall include all units of land: (1) which are contiguous to any other parcel (or are separated only by a road or easement), and (2) for which there is unity of ownership, and (3) which have an identical present use. The term "Site" shall be given the same meaning as the term "Parcel’.” 

4. The definition of “site” includes the term “identical present use.” Should staff’s interpretation of the term “use” be changed?

5. Should credit reassignments to a vacant lot (no historic use) be allowed?

6. Staff has required deed restrictions on reassignments similar to those required for Water Use Credit transfers. This includes the deed restriction that shows the limitation on use (e.g. the number of fixtures permitted on the property) and the form that allows the District access to water records for an unspecified period of time. Should this requirement continue?

7. When does a vacant property qualify for outdoor water credits?

a. Separate water meter with regular historic use (pre-1985).

b. Evidence that the vacant lot has historically (pre-1985) been part of the main house parcel (not a separate lot).

8. When is a request for credit reassignments “in process”?

Staff recommends the Board agree on an acceptable definition of “in process”. Several ideas were provided earlier in this staff report, including (1) date of receipt of the water permit application, (2) date fees were paid to the jurisdiction with a planning application, or (3) date of building permit application. As (2) is not always the starting point for an application with a jurisdiction, staff recommends that the Board use both (2) and (3), with the earliest date applying, as the criteria to determine when a project is “in process.” Staff also recommends that the Board limit the ability to qualify as being “in process” to a period of 24 months, providing adequate time for projects to obtain the requested approval from the District.

There are currently three requests for reassignments that have been identified: The District received two “requests” prior to the September processing suspension, and one additional “request” was identified as being “in process” with the County during the Water Demand Committee meetings. Please note that the term “requests” is used exclusively when discussing reassignments, as there is currently no formal application process in place. With approval of a District policy, a formal application process will be established with appropriate processing fees. The Board should be prepared to provide direction on processing reassignments that meet an acceptable “in process” definition at the February 19 meeting to address the current outstanding matters while an ordinance is prepared.

If the Board direction on February 2 is to create a policy and process to address water credit reassignments, staff will prepare an ordinance for first reading at the April 2004 Board meeting. Prior to the first reading, staff will review the draft ordinance and the CEQA (California Environmental Quality Act) approach with the Water Demand Committee at its March 9, 2004 meeting and then file the appropriate CEQA documentation prior to first reading. Completion of the CEQA work early in the process will ensure that the ordinance can be adopted in a timely manner. If CEQA is not completed prior to first reading, consideration of second reading and adoption would likely be delayed until the June Board meeting, with implementation occurring thirty days later.

BACKGROUND: Due to the complexity of requests to reassign water credits from one lot/parcel to an adjacent developed parcel/lot or to adjacent vacant parcel/lot, staff requested guidance from the Water Demand Committee. The reassignment of water credits is an administrative practice that is not set forth in the District’s Rules and Regulations. At the September 23, 2003, Water Demand Committee meeting, the Board Chair suspended processing requests for credit reassignments to vacant lots or lots with uninhabitable structures pending policy action from the Board. Staff was directed to determine what type of rule change this policy direction required. If development of a resolution or ordinance were necessary, staff was directed to proceed with presenting the issue to the committee or the Board. Straightforward reassignments of credit, such as occurs when a demolished house straddled a lot line, were allowed by continue.

The former Water Demand Committee reviewed the following information at its September 23, 2003 meeting and affirmed that water credit reassignments should not be allowed if they facilitate construction of a new connection (new residence).

Requests to reassign credit occur for a variety of reasons. Originally, staff received requests for reassignment when a house was being demolished that straddled two lots. In recent times, requests have become increasingly complex. Examples of reassignment requests are summarized in the following numbered paragraphs. It should be noted that the issue of reassigning water credit comes about due to the District’s definition of a “site” in Rule 11:

SITE - shall mean any unit of land which qualifies as a parcel or lot under the

Subdivision Map Act, and shall include all units of land: (1) which are contiguous to any

other parcel (or are separated only by a road or easement), and (2) for which there is unity

of ownership, and (3) which have an identical present use. The term "Site" shall be given

the same meaning as the term "Parcel".

All requests to designate water credits to a particular portion of a site are deed restricted. In addition to verifying that the ownership of the properties is identical, that the properties are contiguous and have an identical present use (residential or commercial designation), staff requires the property owner to record deed restrictions on the originating site and the receiving site. In addition to deed restrictions identifying the allowed uses on both sites and the length the water credit is available, the District has required all requests for reassignment to agree to allow public access to water records indefinitely. This condition is in keeping with the Board’s policy requiring disclosure on all water credit transfers.

Water credits that are the subject of a request for reassignment must be documented prior to processing a request for reassignment. For instance, a house must be demolished or a bathroom permanently removed prior to any action to reassign the credits. Throughout the process, staff is continuously verifying the unity of ownership, and inspects the property prior to and following any action to permanently reduce water use.

Recent Examples Of Reassignment Requests

1. A single-family dwelling straddles two lots/parcels. The single-family dwelling is demolished and portions of the credit are distributed to each lot.

2. Two lots/parcels each have single-family dwellings that are under identical ownership. Owner removes water fixtures from the first house and installs ultra low-flow appliances in both houses to add water fixtures to the second house.

3. Two lots/parcels each with a single-family dwelling under identical ownership. One of the parcels is subdivided into two new parcels (LOTS 1 & 2). The other parcel remains the same (LOT 3). The existing single-family dwelling is located on one of the newly created parcels (LOT 1) and a garage with water fixtures is located on the other newly created parcel (LOT 2). Owner would like to remove water fixtures from both existing single-family dwellings (on LOTS 1 & 3), install ultra low-flow appliances in both houses, and reassign the water credits to LOT 2 to construct a new home.

4. Determination of exterior credit for historic outdoor water use. Determination of historic exterior water use allows construction when credit is reassigned from an adjacent lot/parcel on the site without requiring additional water credits or water from a jurisdiction’s allocation for exterior uses (including irrigation, car washing, etc.)

a. Three contiguous lots/parcels under the same ownership. Single-family dwellings occupy two lots/parcels (LOTS 1 & 2). The third parcel is a landscaped garden (LOT 3) with evidence of historic regular water use. Owner would like to remove water fixtures and install ultra low-flow appliances in both existing houses (LOTS 1 & 2) to build a new single-family dwelling on the garden parcel (LOT 3).

b. Owners assert existing exterior use on a vacant lot/parcel to avoid being charged for landscaping use. Staff is finding it increasingly difficult to document pre-1985 water use on a site (e.g. the District’s current permitting requirements were adopted in 1985 requiring any increase in the number of water fixtures on a residential property to receive a permit). It is easy to install incidental water fixtures without a permit (i.e. a hosebibb and/or minimal landscaping with outdoor irrigation).

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