ITEM:

PUBLIC HEARING

 

13.

CONSIDER FIRST READING OF ORDINANCE NO. 154 TOLLING WATER USE CREDITS AFFECTED BY STATE WATER RESOURCES CONTROL BOARD ORDER WR 2009-0060

 

Meeting Date:
August 20, 2012

Budgeted: 

N/A

 

From:

David J. Stoldt

Program/

N/A

 

General Manager

Line Item No.:

 

 

 

Prepared By:

Stephanie Pintar

Cost Estimate:

N/A

 

General Counsel Review:  Yes

Committee Recommendation:  Referred to Board by Water Demand Committee

CEQA Compliance:  Initial Study circulated.  Comment period ends August 22, 2012

 

SUMMARY:  When State Water Resources Control Board (SWRCB) Order WR 2009-0060 (the Cease and Desist Order (CDO) against California American Water (CAW)) no longer has any force or effect, Ordinance No. 154 (Exhibit 13-A) reestablishes Water Use Credits affected by the CDO.  The 2009 CDO will be lifted when Cal-Am has obtained a permanent supply of water to replace its unpermitted diversions from the Carmel River that were identified in SWRCB Order WR 95-10. 

 

Draft Ordinance No. 154 applies to all Water Use Credits affected by the CDO moratorium.  The length of time the credit remains valid after the CDO is determined by the amount of time that remains in its term when it is affected. A valid Water Use Credit under the proposed ordinance may continue to be used during the CDO (as applicable) and will expire upon completion of its term.  However, at such time as the CDO no longer has any force or effect, Water Use Credits that were valid as of October 20, 2009 or that were documented through the end of the CDO, would be reinstated with the same value and with a term equal to the length of time the Water Use Credit was affected by the CDO.  In the case where Water Use Credits were established after the start of the CDO, those credits would be reinstated at its conclusion with a full term.

 

RECOMMENDATION:  The Board should consider the first reading of Ordinance No. 154.  If approved, the ordinance will be brought back for second reading and consideration of adoption at the September Board meeting.  At that meeting, the Board will also consider adoption of a Negative Declaration under CEQA.

 

DISCUSSION:  Draft Ordinance No. 154 was drafted in response to a stipulation between the SWRCB and Lombardo and Associates (attorneys for Quail Lodge, CVR HSGE, LLC and Baylaurel, LLC (collectively “Petitioners”) to stay a Petition for Reconsideration of Order WR 2009-0060 for 120 days from June 4, 2012 (Exhibit 13-B).  During this period, if the District adopts an ordinance tolling the expiration of the Petitioner’s Water Use Credits, the Petition for Writ of Mandamus and Complaint for Injunctive Relief will be dismissed without prejudice.  Failure to adopt an ordinance tolling these credits will reinstate the Petition.

CDO and Moratorium

Water Use Credits have been negatively impacted by both the CDO and California Public Utilities Commission (CPUC) Decision 11-03-048, issued on March 24, 2011.  The CPUC decision recognized the moratorium that was established by Order WR 2009-0060. 

 

The CDO prescribes a series of significant cutbacks to CAW’s pumping from the Carmel River from 2010 through December 2016. CAW customers may be subject to water rationing, a moratorium on Water Permits for new construction and remodels, and fines if pumping limits are exceeded.  The CDO is expected to remain in place until a permanent supply of water replaces the unlawful diversions of Carmel River water.

 

The CDO restricts the setting of new water meters (i.e. New Connections).  District rules require a water meter for every new user when a New Structure is built.  This requirement does not apply to incidental water use, such as a single bar sink in a Non-residential space, nor does it apply to tenant improvements provided there are no substantial structural modifications necessary to facilitate the changed use.  Ideally, each user is separately metered, providing the individual user with feedback regarding their consumption.  Separate meters also facilitate water rationing enforcement when needed.

 

Water Use Credits can offset demand in New Construction of New Structures, as well as Expansions of Use.  However, a Water Use Credit is not restricted to how it can be used, so a credit may be impacted differently by the CDO.  Currently, the District continues to process and issue Water Permits for all types of uses, but when an Applicant applies for a water meter at CAW, they are affected by the moratorium on new connections.  CAW will not set new meters for New Connections approved after October 20, 2009.  Projects that do not involve new or enlarged water meters are not reviewed by CAW and have continued to receive building permits.

 

In a letter dated April 9, 2012, Barbara Evoy, Deputy Director of Water Rights for the SWRCB, further clarifies how the moratorium affects the use of Water Use Credits.  It appears that with the strictest interpretation, many of the Water Permits issued by the District (and subsequently the building permits issued by the Jurisdictions) could be affected by the CDO.  This letter is attached as Exhibit 13-C.

 

California Environmental Policy Act (CEQA)

An Initial Study was prepared and circulated as required by CEQA.  Staff believes that adoption of Ordinance No. 154 would have less than significant environmental impact, because it would not reinstate Water Use Credits affected by the CDO until a new water supply is developed that resolves the current water deficit.  Water Use Credits reinstated as a result of Ordinance No. 154 represent existing uses or water that was previously analyzed in the Mitigated Negative Declaration (December 18, 1990) reviewing the California-American Water Company’s System Capacity Limit and Operation Strategies Due to Operation of a New Production Well on Paralta Avenue in Seaside.  The Board will consider a Negative Declaration prior to consideration of adoption of this ordinance.

 

To prepare the Initial Study, staff reviewed the District’s records of documented Water Use Credits that were established between January 1, 2001, and July 1, 2012.  This process identified approximately 103 AF (AF) of documented Water Use Credits that would be extended or reinstated upon conclusion of the CDO.  Almost two-thirds of these Water Use Credits were documented for Non-Residential reductions in use.  The balance was from former Residential uses.  Of the 103 AF, approximately 7 AF would be reinstated from Water Use Credits that expired between the date the CDO was enacted (i.e., October 20, 2009) and July 1, 2012.  In addition, staff identified possible future Water Use Credits of over 500 AF.  Added together, there is potential for approximately 600 AF of saved water to be reinstated as useable Water Use Credits at the conclusion of the CDO. 

 

MPWMD has mandated future retrofits of existing Non-Residential uses, and the State of California has mandated future High Efficiency Toilet (HET) sales and installations.  During the time between now and when these mandates occur, retrofits to the new standards should be considered as potential Water Use Credits.  Significant water savings are expected to occur when Non-Residential uses (with the exemption of Visitor Serving Commercial that installed Ultra-Low Flush Toilets (ULFT) by December 31, 2000) convert from older non-ULFT to HET and implement other retrofits required by MPWMD by 2013[1].  A conservative estimate of 165 acre-feet of water savings is expected as a result of these requirements. 

 

Potential Water Use Credits exist throughout the District.  Voluntary installation of HET is one example of retrofitting to higher efficiency fixtures than required that currently qualifies for a Water Use Credit.  In January 2011, staff began documenting the number of voluntary installations of HET in place of required ULFTs during Site inspections.  Between January 2011 and July 2012, 651 voluntary HET installations were documented.  Assuming that each HET has a potential credit of 0.004 AF, this equates to 2.6 AF of Water Use Credits noted during routine Change of Ownership inspections over 18 months. 

 

Retrofits that may eventually be documented as Water Use Credits regularly occur.  MPWMD Rule 25.5 does not specify timing for an application for Water Use Credit.  As water becomes scarcer, it is likely there will be new applications for Water Use Credits for qualifying reductions that have taken place in the past ten years.  Until an application for a Water Use Credit is submitted to the District, these savings may not be identified or quantified. 

 

The District also has an extensive Rebate Program that provides substantial refunds for installation of ultra high efficiency devices and appliances.  Although the purpose of the Rebate Program is to reduce potable demand, nearly all the water savings associated with the Rebate Program has the potential to be converted to Water Use Credits.  Water saved through the Rebate Program can be used as a Water Use Credit on a Water Permit if the Rebate fees are paid back to the District.  To date, the Rebate Program has reduced potable use by more than 350 AF each year. 

 

The prior water uses that make up the pool of Water Use Credits that benefit from Ordinance No. 154 (i.e., Water Use Credits established between October 20, 1999 and the conclusion of the 2009 CDO) were either existing uses prior to CDO or were built using water from a Jurisdiction’s Allocation.  The historic use or capacity for use was analyzed in the MPWMD Water Allocation Program Environmental Impact Report (EIR) adopted in 1990 and in the Mitigated Negative Declaration (December 18, 1990) reviewing the California-American Water Company’s System Capacity Limit and Operation Strategies Due to Operation of a New Production Well on Paralta Avenue in Seaside.  The latter document (State Clearinghouse Number SCH 90030919) tiered off of the Water Allocation Program EIR and formed the basis for adoption of MPWMD Ordinance No. 70, repealing and ending the moratorium on Water Permits in 1993. 

 

Conservation Savings

In 1986, the District’s Board established a goal of conserving 15 percent of the water demand projected for the year 2020.  This translates to a long-term conservation goal of approximately 3,900 AF based on the 2020 water demand of 26,000 AF projected at the time the goal was established, though actual 2020 demand is now anticipated to be less than 26,000 AF.  Build-out of the CAW system is presently (2012 estimate) projected to be around 19,800 AF.  Significant demand reductions have resulted from extensive efficiency programs overseen by the District.  Adoption of the Project would have a less than significant impact on conservation savings as most of the Water Use Credits identified by this analysis were considered in the development of water supply sufficient to remove the CDO.

 

In 2009, Governor Arnold Schwarzenegger implemented the 20x2020 Water Conservation Plan.  The 20x2020 Plan calls for a 20 percent per capita reduction in urban water demand by 2020.  As of 2011, CAW had not yet achieved the required per capita reduction in its Monterey County District[2].  The Project may cause some loss of conservation savings resulting from reuse and from reinstatement of Water Use Credits that would be disallowed by current District policy.  Reduced conservation savings could affect achievement of the 20x2020 goal for the CAW Monterey County District.

 

IMPACTS ON STAFF/RESOURCES:  Adoption of Ordinance No. 154 will not have any significant identifiable impacts on either staff or resources.  Minor programming changes to the District’s database may be required in the future to accommodate tracking of reinstated Water Use Credit and reduced savings from conservation. 

 

BACKGROUND:

Water Use Credits

The Water Use Credit process is codified in MPWMD Rule 25.5.  A Water Use Credit allows the reuse of the reduced increment of water for up to ten years (up to 20 years at Redevelopment Project Sites).  MPWMD Rule 25.5 was adopted to accommodate reconstruction of demolished buildings, allow for future replacement of removed fixtures, and to allow Expansions of Use without requiring water from a Jurisdiction’s Allocation.  The Water Use Credit process provides an incentive for extraordinary retrofitting and/or installation of proven new technology. 

 

Water Use Credits are documented when there is a Permanent Abandonment of Capacity (MPWMD Rule 25.5-E).  The entire increment of reduced water can be reused on the Site, and no Connection Charge is assessed on a Water Permit when the proposed use is offset by a Water Use Credit.  Non-Residential Water Use Credits can be transferred to another expanding Non-Residential Site or transferred into a Jurisdiction’s Allocation pursuant to Rule 28 (transfers are not components of this project).

Water Use Credits are established as the result of the following actions: 

 

 

 

 

 

 

A Water Use Credit is not issued for a non-permanent Change in Use, such as occurs when tenants change from a higher use (e.g. a restaurant) to a lower use (e.g. retail).  The reduction in use under this circumstance is called a “Water Credit.”  The Water Permit process and the establishment of a Water Credit provide flexibility for Non-Residential tenant needs.  A Water Credit allows a use to be reinstated when needed.  Reuse of a Water Credit is not time limited, but it must have been a lawful use either documented to have existed when the current Water Permit process was implemented (i.e. March 1985) or that received a Water Permit after March 1, 1985.

 

Projects that use a Water Use Credit to offset water needs are first reviewed by the land use Jurisdiction.  These projects are subject to CEQA review by the Jurisdiction that includes consideration of the availability of sufficient water resources to supply the project.  The District does not issue Water Permits without the authorization of the Jurisdiction.

 

Documentation of Water Use Credit

Although the District has a process to formally recognize a Water Use Credit, there are at least two other ways that a Water Use Credit is documented, as discussed below.  District Rules do not limit when one can apply for credit as long as it is within the ten years after the device is installed and as long as the District’s rules (at the time the application is received) do not disallow a Water Use Credit for the device.  Water Use Credits can be documented as:

 

  1. A Water Permit that shows a lower number of fixtures pre-project documents a Water Use Credit.

 

  1. A Residential Water Permit that includes High Efficiency Appliance Credits (Rule 25.5, Table 4) that were not fully utilized, or a Non-Residential Water Permit based on installation of non-mandated water efficient devices or retrofits pursuant to Rule 25.5.  Although these Water Use Credits are included in the Water Permit, a separate formal documentation of unused Water Use Credits is not normally issued.

 

  1. A formal Water Use Credit application with evidence of the removal of the use.  In this situation, a letter documenting the credit is mailed to the applicant.

 

A Water Use Credit is calculated in one of three ways:  (1) by using the District’s factors as displayed in either Rule 24, Table 1: Residential Water Use Factors, or (2) by using Table 2: Non-Residential Water Use Factors, or (3) by using water savings factors that are recognized by the California Urban Water Conservation Council or that are clearly more accurate based on clear and convincing evidence.  The Non-Residential Water Use Factors are based on regional averages; therefore actual water use may be higher or lower than the factored use.  Water Use Credits may also be determined using equipment-specific water savings for Ultra-Low Consumption Technology.

 

Previous Tolling Ordinance

A similar draft ordinance (Ordinance No. 146) tolling (or suspending) the expiration date of Water Use Credits affected by a California Public Utilities Commission (CPUC) moratorium, as well as a draft Initial Study on the revised ordinance, were presented to the Board on February 24, 2011.  The former ordinance differed from the currently proposed ordinance in that it tolled (or suspended) Water Use Credits during a CPUC-ordered moratorium. 

 

On February 24, 2011, the Board deferred action on Ordinance No. 146 to seek input from the Technical Advisory Committee (TAC) and the Water Demand Committee.  The TAC discussed the Initial Study and Ordinance No. 146 on March 1, 2011, and unanimously recommended that the Board proceed with filing the Initial Study and a Notice of Intent to Adopt a Mitigated Negative Declaration.  The Water Demand Committee also reconsidered the previous ordinance on March 9, 2011.  There was consensus among committee members that the ordinance should not be presented to the Board until after the California Public Utilities Commission  (CPUC) issued a final decision on CAW’s Application No. 10-05-020 requesting authority to implement a moratorium in the Monterey District.  The concept did not return to the Board after the final CPUC decision.

 

EXHIBITS

13-A    Draft Ordinance No. 154

13-B    Stipulation

13-C    SWRCB Letter                                                           U:\staff\Boardpacket\2012\20120820\PubHrng\13\item13.docx


[1]  Ordinance No. 151 under consideration by the Board will extend the deadline to retrofit by six months, to July 1, 2013.

[2]  Source:  2010 California American Water Urban Water Management Plan for the Central Division, Monterey County District, Final Draft, May 21, 2012