EXHIBIT 17-A
POLICY ADVISORY COMMITTEE / TECHNICAL ADVISORY COMMITTEE
ITEM:		ACTION ITEMS
1.	DISCUSS PROPOSED DRAFT ORDINANCE – ADDING A PROCESS FOR SUB-POTABLE WATER USE CREDITS TO THE DISTRICT’S RULES AND REGULATIONS
Meeting Date:			January 31, 2008
From:			David A. Berger,
			General Manager
Prepared by:			Stephanie Pintar

SUMMARY: On January 8, 2008, the District’s Technical Advisory Committee (TAC) reviewed and discussed a draft Sub-potable Water Use Credit ordinance and the related CEQA requirement. District Counsel has advised that an Enviromental Impact Report (EIR) on Sub-potable Water Use Credit transfers is required to move the ordinance forward. The TAC preliminarily discussed the concept of cost-sharing to complete the EIR (estimated to cost $135,000). Given the policy nature of committing to funding an EIR, the TAC recommended that a joint meeting with the Policy Advisory Committee be convened to further the discussion.

DISCUSSION: At its October 16 and November 21, 2007 meetings, the District Board’s Water Demand Committee discussed (1) preparation of an amended ordinance that includes a Sub-potable Water Use Credit transfer provision, and (2) the level of California Environmental Quality Act (CEQA) review that will be required before the ordinance can be considered by the Board.

The committee reviewed a revised draft Sub-potable Water Use Credit ordinance that includes a transfer provision at its November 21 meeting (Exhibit 1-A). The ordinance also establishes on-site credit for replacement of irrigation water from the California American Water distribution system with sub-potable water on a property that is outside of the Monterey Peninsula Water Resources System and the Seaside Goundwater Basin. The draft ordinance would allow both potable and subpotable irrigation on a site, as long as there is no potential to receive potable water on the converted area. Without the assurance that there is no practical way to shift potable water to the converted area, staff is uneasy with the concept of allowing two irrigation systems to supply one open space area. Irrigation systems are not subject to District permit requirements and potable irrigation could theoretically be expanded without District knowledge. If all irrigation on a site is sub-potable, there is no question as to the source of the water.

District Counsel, David Laredo, addressed CEQA as it pertains to transferring open space Water Use Credit as requested by the Board. District Counsel believes that adding a transfer provision for Sub-potable Water Use Credits triggers an Environmental Impact Report requirement. The jurisdiction appropriating the use of the transferred water would be responsible for the end-use evaluation; therefore the end use of transferred water would not be included in the EIR. Staff received an informal estimate of approximately $135,000 for an EIR, the required CEQA noticing (initial study, NOP, NOA, NOC, NOD), CEQA findings, and document distribution from one well-qualified and experienced local environmental planning firm. The estimated cost also includes a moderate amount of hours for meetings and public hearings.

The Water Demand Committee has suggested that the jurisdictions consider paying the majority of the cost of an EIR for this ordinance, as they are the principal beneficiaries of the water credit/transfer opportunities it would create. One concept was that the cost of the EIR could be proportionally shared by the jurisdictions that will utilize the program. For example, the MPAD will not utilize the program and should not pay for the EIR. Whereas the unincorporated County and the City’s of Seaside, Monterey and Pacific Grove have significantly more opportunities to use and transfer Sub-potable Water Use Credits, they should pay a larger share of the costs. The Water Demand Committee has asked the TAC to relay this request for funding to their PAC and to their governing bodies. TAC members should receive and report responses to this request at the February 2008 TAC meeting.

RECOMMENDATION: The PAC should discuss the proposed ordinance and funding requirement with the TAC and provide feedback to District staff.

BACKGROUND: Following a presentation on the proposed Regional Urban Water Augmentation (RUWA) Project at the September 17, 2007 meeting, the Board discussed the concept of allowing Sub-potable Water Use Credits. Staff was asked to develop an ordinance that would allow for the establishment and transfer of Sub-potable Water Use Credits. A copy of a draft ordinance with no transfer provision was provided in the material related to the September 17 presentation. The draft ordinance was used as the basis for the ordinance included in this staff report that establishes Sub-potable Water Use Credits and allows transfers.

The Draft Ordinance is intended to provide an incentive for replacing existing Non-Residential Potable water irrigation with Sub-potable Water. The ordinance adds the new definition “Sub-potable Water Use Credit” to the District’s Rules and Regulations. The prerequisite for a Sub-potable Water Use Credit is the permanent replacement of Non-Residential Potable water irrigation (originating from the Monterey Peninsula Water Resource System or Seaside Groundwater Basin) with: (1) Sub-potable Water originating from outside the Monterey Peninsula Water Resource System and the Seaside Groundwater Basin, or (2) Recycled or Reclaimed Water from the Carmel Area Wastewater District or Monterey Regional Water Pollution Control District wastewater treatment facilities.

The cost of re-plumbing existing Irrigation Systems to accommodate Sub-potable Water can be daunting. For this reason, at the May 9, 2007, Water Demand Committee meeting, staff requested direction on preparation of an ordinance that would allow a Water Use Credit for conversion of Potable irrigation water to Sub-potable Water. By consensus, the Water Demand Committee agreed that an ordinance should be developed that would offer an On-Site Water Use Credit incentive for irrigation conversion. A percentage of the previous Potable water use should be permanently set aside as conservation savings.

The Draft Ordinance enacts a process similar to the one set forth in Rule 25.5 for Water Use Credits: Sub-potable Water Use Credits would be available for the permanent replacement of all Potable water irrigation with Sub-potable Water. A Sub-potable Water Use Credit would be transferable and would allow reuse of up to 75 percent of the Potable water reduction on the Site. A Sub-potable Water Use Credit can be applied to future water use on that Site at any time within a period of 60 months. After the 60th month, the Sub-potable Water Use Credit is renewed only after verification that some or all water savings represented by that credit are current (i.e. no Water Permit or other use of the Water Use Credit has occurred). If all savings are not current, a pro-rata reduction occurs. A single renewal period of 60 months is allowed; thereafter any remaining unused Sub-potable Water Use Credit expires. A Sub-potable Water Use Credit on a Redevelopment Project Site is allowed to have its expiration date extended for two (2) additional periods of sixty (60) months each, providing a maximum period of two hundred forty (240) months to use a credit on a Redevelopment Project Site.

Landscape Water Budgets are the basis for the Sub-potable Water Use Credit calculation. Rather than using actual water consumption records for the Site, which can be higher or lower depending on a number of factors, the Landscape Water Budget, required of most of the potential conversion Sites, is the method proposed for calculation of the Sub-potable Water Use Credit. Landscape Water Budgets are based on reasonable and efficient irrigation practices and considers the type of landscaping and other factors. Landscape Water Budgets are prepared by Landscape Irrigation Auditors who have been trained to assess the water needs of various plants based on soil types, Irrigation System efficiency criteria, location, etc. The use of the Landscape Water Budget for establishing the Sub-potable Water Use Credit will ensure that artificial inflation of Potable water use can not occur, and that the credit reflects a reasonable amount of water required for the specific Landscaping. The procedure for documenting a Sub-potable Water Use Credit is proposed in Section 6-F of the Draft Ordinance.

A number of checks are put into place in this ordinance to ensure that any use of a Sub-potable Water Use Credit could not exceed the prior Potable use and would result in water savings. The ordinance limits the source of Sub-potable Water to (1) either an On-Site well or other Water Distribution System with a Source of Supply outside the Monterey Peninsula Water Resource System and the Seaside Groundwater Basin, or (2) Reclaimed or Recycled Water from the Carmel Area Wastewater District (CAWD) or Monterey Regional Water Pollution Control Agency (MRWPCA). The ordinance further limits the amount of credit to 75 percent of the original Potable use as determined using the Landscape Water Budget (i.e., Estimated Applied Water) developed for the existing Landscaping and verified with both On-Site inspection and by review of orthophotography of the Site to verify that all Landscaping has been permitted by the District (if required). The remaining 25 percent of the saved water is permanently reserved as conservation savings to reduce overall local water consumption.

Potential for Sub-potable Water Use Credit

The potential for Sub-potable Water Use Credits is somewhat limited. There are two tertiary treatment facilities that have existing Recycled Water distribution systems that serve or will serve a portion of the general Monterey Peninsula. CAWD supplies Reclaimed Water to the golf courses and open space in Del Monte Forest via a Water Distribution System and Forest Lake Reservoir owned by the Pebble Beach Community Services District, with limited potential for future use of surplus Recycled Water elsewhere on the Peninsula[1]. The Carmel Area Wastewater District/Pebble Beach Community Services District (CAWD/PBCSD) Wastewater Reclamation Project has no current plan to expand the project beyond the existing users. Currently, Golf Courses and irrigated open space in the Del Monte Forest area of Pebble Beach utilize this Recycled Water for irrigation. To date, due to water quality issues, the project has not been able to replace 100 percent of the pre-project irrigation water needs of the users. This shortfall is in the process of being eliminated by improvements to the CAWD treatment facility and by storage of treated Recycled Water in the recently rehabilitated Forest Lake Reservoir, which facilities are expected to be complete by mid-2008. Under specified conditions, up to 20 AFY or possibly more of “surplus” Recycled Water is expected to be available for other beneficial uses on the Monterey Peninsula[2].

MRWPCA has proposed the Regional Urban Recycled Water Distribution Project which would provide Recycled Water to replace current Potable and Sub-potable Water uses within the Marina Coast Water District, former Fort Ord, and the California American Water Monterey Division service area. According to RBF Consulting in the July 2003 document Regional Urban Recycled Water Distribution Project^[3], the project would provide 300 acre-feet of Recycled Water to customers on the Monterey Peninsula.

MRWPCA has identified a number of potential Sites in the City of Seaside, City of Monterey and Unincorporated County that could convert to Recycled Water from the Regional Urban Recycled Water Distribution Project. The approximate total existing water use of these irrigated areas subject to District regulation is 440 AFY. Assuming the maximum 300 AFY is converted from Potable to Sub-potable Water use as a result of this Ordinance, 225 AFY could be documented as “Sub-potable Water Use Credit” and reused on the same Sites. Most of the Sites identified in the Regional Urban Recycled Water Distribution Project report are unlikely to have major development as their current uses include parks, Golf Course (Del Monte Golf Course), etc. On these Sites, there is some potential for reuse of saved water for negligible uses such as restrooms, drinking fountains, etc. Other Sites, such as Monterey Peninsula College (approximately 29 AFY of current irrigation) and several Public schools in Seaside (identified in the RBF Consulting document), could reuse 75 percent of the saved water capacity for expansion of the campus facilities.

Small Water Distribution Systems (water Wells) are located throughout the District that pump water from water sources not connected to either the Monterey Peninsula Water Resource System or the Seaside Groundwater Basin, both of which are under legal pumping constraints. Conversion of Non-Residential Potable water irrigation to Small Water Distribution System Sources of Supply outside the regulated systems would qualify for credit under the proposed ordinance. As the ordinance limits credit to Non-Residential uses, the number of Sites that could potentially qualify is limited.

Restricting the Sub-potable Water Use Credit to 75 percent of the converted demand, and limiting qualification for a Sub-potable Water Use Credit to Non-Residential use, reduces the potential for consumption above the Landscape Water Budget. Furthermore, as discussed above, the potential for On-Site reuse is limited.

District Regulation XIII

District staff has identified two scenarios where reduced water savings within the District may occur as the result of this project.

Currently, District Regulation XIII controls the use of Sub-potable Water. Under Rule 131, the MPWMD Board can declare the availability of Sub-potable Water as an alternative to irrigating Greenbelt areas with Potable water. Rule 11 defines Greenbelt to include cemeteries, Golf Courses, parks, and highway Landscaping. Rule 132 describes the process by which the Board declares that Potable irrigation is Water Waste.

Rule 131 is patterned after California Water Code Section 13550, which declares the use of Potable domestic water for nonpotable uses as Water Waste or an unreasonable use of water within the meaning of Section 2 of Article X of the California Constitution, if Recycled Water is available that meets certain conditions.

Creation of Sub-potable Water Use Credits saves about 25 percent of the Potable irrigation, whereas implementation of Rules 131 and 132, as well as Water Code Section 13550, would save 100 percent.

Similarly, State Water Resources Control Board Order No. WR 95-10 ordered California American Water to “obtain water from other sources of supply and make one-for-one reductions in unlawful diversions from the Carmel River.” Creation of Sub-potable Water Use Credits by the District helps address this as a replacement supply, but in a lesser amount than total replacement with Sub-potable Water.

An argument for adoption of this ordinance as it relates to the potential substitution of 300 AFY of Potable water with Recycled Water from MRWPCA without District Board action to implement Rules 131 and 132 is the cost of moving Recycled Water from MRWPCA into the District. That cost could be as high as $3,000 per acre-foot[4]. In conversations with staff from the City of Monterey, District staff was informed that the high cost of installing infrastructure to facilitate a Recycled Water Distribution System on the Monterey Peninsula was an obstacle to its participation in the project. An alternative would be to secure federal or state funding to underwrite these costs. Prior to consideration of Rules 131 and 132, the ability to obtain a Sub-potable Water Use Credit could provide motivation for Jurisdictions to participate in the Recycled Water project.

The second scenario identifies the impact to community water use due to the potential for Non-Residential water use that could otherwise be stopped during water rationing or emergencies by prohibitions on water use for irrigation. Stages 6 and 7 Water Rationing of the District’s Expanded Water Conservation and Standby Rationing Plan contain a provision whereby Non-Residential outdoor water use and operation and maintenance of ornamental water uses could be prohibited[5]. Allowing reuse of 75 percent of the water saved for new or expanded Non-Residential uses on the Site reduces the water savings associated with these rules and could potentially impact the amount of water available to other Non-Residential water users. Using the MRWPCA capacity (300 AFY) as an example, the maximum potential loss in water savings is 225 AFY during Stages 6 and 7. The loss of this savings could impact Non-Residential water users who would be rationed together as a group.

EXHIBITS

1-A Draft Ordinance Adding a Process for Sub-Potable Water Use Credits to the Rules and Regulations of the District

U:\staff\word\committees\pactac\2008\20080131\01\item1.doc

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[1] Per Amended and Restated Reclamation Project Construction and Operation Agreement (2004), between CAWD, PBCSD, MPWMD and Pebble Beach Company.

[2] Agreement for Sale of Recycled Water between MPWMD and each of the five entities receiving the recycled water (December 15, 2004)

[3] Regional Urban Recycled Water Distribution Project, prepared by RBF Consulting for Marina Coast Water District and the Monterey Regional Water Pollution Control Agency, July 2003

[4] Presentation by MRWPCA, April 16, 2007, titled “Interest in Providing Recycled Water to the Monterey Peninsula.”

[5] District Rule 166-M, Rule 166-O, and Rule 167-L, found in the Rules and Regulations of the MPWMD.