EXHIBIT 2-B

March 31, 2005

Hon. John Laird, Member Hon. Simon Salinas, Member

California State Assembly California State Assembly

State Capitol State Capitol

Sacramento, CA Sacramento, CA

Dear Assembly Members Laird and Salinas:

I am writing to you about AB 1421 on behalf of the Board of Directors of the Monterey Peninsula Water Management District. On March 31, 2005 our Board reviewed this bill, and asked me to relay our comments and suggestions on the bill as drafted.

Naturally, our Board Members share your concern about the unmet need for affordable housing in the Monterey Peninsula communities. However, as presently written, AB 1421 raises the following concerns related to the District’s ability to meet its legislative charge of managing and seeking to augment the Peninsula’s water resources:

1) The word “project” is undefined in the bill, so it is unclear what type of water project would be required to allocate water to affordable housing. For example, if AB 1421 were to become law as currently written, the State Water Resources Control Board might interpret it to require that 750 acre-feet per year of water recovered in the future from the District’s Aquifer Storage and Recovery (ASR) project be allocated to new affordable housing development, as a condition of approving the District’s future temporary and permanent ASR water rights applications; rather than to assist in compliance with the Order 95-10 Carmel River water production limit as its designed purpose. We would urge that a definition added to the bill, making it clear that “project” does not include the SWRCB-authorized recovery and use of Carmel River water diverted and injected into the Seaside Groundwater Basin through the District’s ASR facilities.

2) AB 1421 appears to create a local government mandate, i.e. a water project serving the MPWMD area is required to allocate supply to affordable housing. However, the bill declares it is a Non-State mandated Local Program without a supporting rationale, and no State appropriation is provided. We would suggest that you consider amending the bill to require, for instance that Prop. 50 funds be granted to capitalize the proportionate share of a new water project serving the Peninsula whose water resource would be allocated to meet the bill’s affordable housing mandate. Funding this mandate using Prop. 50 bond proceeds would not have an adverse effect on the State’s General Fund deficit.

We hope you will consider these concerns and suggestions in AB 1421 amendments. Our staff will continue to coordinate with your offices as the bill is considered in the Legislature.

Sincerely,

Larry Foy

Chairman

cc: Board of Directors, MPWMD

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