ITEM:		GENERAL MANAGER’S REPORT
9.	REPORT ON ODELLO/MALPASO WATER LLC
Meeting Date:			October 20, 2014	Budgeted:	N/A
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:	N/A
General Counsel Review: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: In 1997, Clint Eastwood and Maggie Eastwood canceled permits for development of 82 homesites on the historic Odello East property, located on the south bank of the Carmel River and primarily immediately east of Highway 1, and donated approximately 49 acres of the 131 acre Odello East and an agricultural water supply to the Big Sur Land Trust.

Clint Eastwood and Maggie Eastwood still own the remaining approximately 82 acres of Odello

East and are planning to donate this property to the Big Sur Land Trust to facilitate the Carmel River Floodplain Restoration and Environmental Enhancement Project ("Floodplain Project"). This property currently is being used for irrigated pasture. After the donation is completed, the Big Sur Land Trust will restore native vegetation on this property.

The Odello East water rights will not be needed to irrigate this property after native habitat is established. As envisioned by the project proponents, eighty-five acre-feet per year of the Odello East water supply will be made available for community benefits on existing lots of record within California American Water Company's service area that is within the Carmel River watershed or the City of Carmel. This water, for example, would allow for an existing home to be remodeled or added on to, and for a new home to be built on an existing lot of record. Also, this water could be used by Cal-Am on an interim basis to reduce Cal-Am's unauthorized diversions from the Carmel River, consistent with the State Water Resource Control Board (SWRCB) Cease and Desist Order. Forty-five acre-feet per year (AFY) of the Odello East water supply will be dedicated permanently to Carmel River instream use. This is structured to provide beneficial use without adversely affecting water flows in the Carmel River or water levels in the alluvial aquifer; and enhance flows to the Carmel River Lagoon. Clint Eastwood and Maggie Eastwood's donation of Odello East to the Big Sur Land Trust will occur after final regulatory action to approve the water rights assignment and the necessary agreements have been signed.

Bottlenecks in the lower Carmel River from the construction of levees and Highway 1 have contributed to significant floods. The 1995 flood destroyed the Highway 1 Bridge and the 1998 flood caused millions of dollars in damage to residents and businesses north of the Carmel River. The Floodplain Project will let the river use its floodplain by removing portions of the river levees, restoring the natural floodplain on lower Odello East and building a causeway to allow flood flows to pass under Highway 1 to the floodplain on the west side of the highway. The original Floodplain Project included removal of approximately 101,500 cubic yards of fill material on Odello East (the "Blister" area), which blocked the Carmel River from floodplain habitat. Clint Eastwood and Maggie Eastwood removed the Blister in 2009 and compacted it to create an east/west haul road on the property. Removal of the Blister facilitates the Floodplain Project, and the haul road can be used as a recreational trail through the donation to the Big Sur Land Trust. Reconnecting the floodplain to the Carmel River and the Lagoon will create and maintain a mosaic of wildlife habitats and aid in the restoration of Steelhead. The recreational component of the project will include development of an integrated trail and parkland system along the Carmel River.

The County of Monterey is coordinating with public agencies for environmental review for all phases of the Floodplain Project.

A Memorandum of Understanding (MOU) Regarding Proposed Actions and Proposed Process for Collaboration and Coordination on Community and Environmental Benefits from Use of the Eastwood/Odello Water Right was entered into on June 7, 2013 by and between California American Water Company (Cal-Am) and the Margaret Eastwood Trust u/D/T dated

August 21, 1990 and Clint Eastwood. The MOU calls for the following:

· Eastwood will form a limited liability company (LLC), for the purposes of holding and administering water right License 13868A and entering into subscription agreements, as described in the following paragraphs. The LLC is Malpaso Water LLC.

· Eastwood will file a petition with the SWRCB: (I) to split Eastwood's water-right License 13868 into two parts; (2) to add seven of Cal-Am's wells to the authorized points of diversion (the points of diversion may change at the request of the SWRCB) and to add the part of Cal-Am's service area that is in the Carmel Valley watershed or the City of Carmel to the authorized place of use in one of the licenses (which will be designated License 13868A); and (3) to assign this new license to the LLC.

· Eastwood will work with the SWRCB to prepare an environmental impact report on Eastwood's petition. The SWRCB will certify the final EIR.

· The other license (which will be designated License 13868B) will be for the remainder of License 13868. This license will be for approximately 45 AFY of instream use.

· Eastwood will request the Monterey Peninsula Water Management District (MPWMD) to adopt a new rule, similar to Rule 23.5 (which was used for the Pebble Beach subscription agreements), under which the District will issue water use permits to the parcel owners who have entered into subscription agreements with the LLC.

· The LLC will enter into subscription agreements with owners of legal lots of record in the areas of use. The subscription agreements and water-use permits issued by MPWMD will run with the land and will not be transferable.

· Eastwood and Cal-Am will enter into a water supply conveyance and temporary water transfer agreement.

· Eastwood's will ask the SWRCB to confirm that SWRCB Order WR 2009-0060 (as modified by Order WR 2010-0001) does not prohibit Cal-Am from diverting and conveying water under the Eastwood LLC's water-right License 13868A to Eastwood's subscribers.

· Cal-Am will seek a modification of CPUC Decision 11-03-048 to clarify that the moratorium ordered by the Decision does not apply to connections to Cal-Am's system by Eastwood's subscribers.

· After the SWRCB, the CPUC and the MPWMD have taken the necessary regulatory actions, Cal-Am will convey and deliver water to Eastwood subscribers that have received water-use permits from the MPWMD, and Cal-Am will provide any necessary new meters and connections for such subscribers. After these regulatory actions have occurred, Cal-Am will use any available surplus under License 13868A to divert water from the Carmel Valley aquifer through the wells designated as points of diversion in License 13868A and to supply the diverted water to its existing customers in the Carmel River watershed or the City of Carmel. MPWMD has requested that to the extent such water is surplus to the legally available supplies from other Cal-Am sources, the Odello East water be made available to the Aquifer Storage and Recovery system.

EXHIBITS

None

U:\staff\Boardpacket\2014\20141020\GMreport\09\item9.docx