ITEM:		PUBLIC HEARING
11.	CONSIDER APPLICATION FOR VARIANCE TO ALLOW NON-RESIDENTIAL GROUP II WATER USE CAPACITY AT 458-460 ALVARADO STREET, MONTEREY (APN: 001-572-029)
Meeting Date:			February 22, 2018	Budgeted:	N/A
From:			Dave Stoldt,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Stephanie Locke	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines section 15378.

SUMMARY: Anthony G. Davi, Sr. is requesting Board approval of a variance from Rule 24-B to allow commercial Group II water use in a Group I space at 458-460 Alvarado Street (Site) in Monterey without requiring water from the City of Monterey’s Allocation (Exhibit 11-A). The Site currently consists of two retail spaces. Non-Residential Group I uses include retail, office, warehouse, gym, bank, etc. Mr. Davi states that he has been unable to rent either of his spaces in the last 14 months to a business that qualifies for the District’s Group I Water Use Factor and now faces potential loss of insurance. All inquiries have been food-related Group II businesses. Mr. Davi is requesting that the Board allow him to rent both spaces as Group II, because Group II is more desirable for the downtown Alvarado Street location. District research shows that Group II businesses use more water than Group I and includes uses such as coffee shops, bakeries, ice cream shops, delis and pizzerias. Presently, no additional water is available on Site or approved from the City of Monterey to allow this Intensification in Use.

District Rule 90 allows for consideration of a variance from the Rules and Regulations when there are Special Circumstances^[1] or Undue Hardship^[2]. The Board may, after holding a public hearing, in specific cases, grant a variance from any provision of the standards incorporated into the Rules and Regulations whenever it finds: (a) that Special Circumstances exist in a particular case, and (b) that practical difficulties or Undue Hardship would result from the strict interpretation and enforcement of any such standard, and (c) that the granting of such a variance would not tend to defeat the purposes of these Rules and Regulations. The Board may place conditions upon such variances.

RECOMMENDATION: Staff recommends the Board deny the variance and adopt the Findings of Denial (Exhibit 11-B). District Rule 20, Permits Required (Exhibit 11-C), requires a Water Permit for any Change of Use or any expansion of a Non-Residential use to a more intensive use as determined by Rule 24, Table 2, Non-Residential Water Use Factors (Exhibit 11-D). Rule 23-A-1-g (Exhibit 11-E) states that when an application involves an Intensification of Use, the increase in Capacity shall deducted from a Jurisdiction’s Allocation or a Water Entitlement as indicated on the Water Release Form. The City of Monterey has not authorized additional water to the Site. When the Jurisdiction is opposed to assigning water to a property, the business cannot obtain a Water Permit. Further, the ongoing lack of available water is a hardship experienced by many property owners and prospective businesses within the District. Finally, staff believes granting a variance would create an unfair precedent and would be in violation of District Rules 20, 23, and 24.

DISCUSSION: Mr. Davi approached the District in December 2016 regarding a proposed tenant “Tea Zone & Fruit Bar” for his Group I space. The business was described as a juice bar with smoothies and tea. After reviewing information about other Tea Zone locations, including a visit to a Tea Zone & Fruit Bar location in the San Jose area, staff determined use was Group II and would require water from the City of Monterey’s Allocation before a Water Permit could be issued.

The difficulty in finding tenants for Group I commercial space is not unique to 458-460 Alvarado Street. It’s a problem pervasive due to the area’s lack of water, the Cease and Desist Order against California-American Water Company, and store-based retailers versus e-commerce, etc. This situation is commonplace among property owners and potential tenants, especially in the Cities of Monterey and Pacific Grove where there is no water available from Water Entitlements or Allocations. The problem is so significant that the Monterey County Weekly published an article on January 11, 2018, highlighting the lack of available Group II spaces, with as many as 17 businesses applying for one vacant Group II location (Exhibit 11-F).

The ongoing water supply shortage on the Peninsula has severely limited the ability of both property owners and potential tenants to find a location with enough available onsite water to conduct business. In adopting Option V of the Water Allocation Program EIR in 1991, the Board made a finding to allocate only water that presently exists. Most Jurisdictions have previously allocated their water, leaving little for potential development. A small quantity of water remains in the City of Monterey’s Allocation and is distributed periodically at its discretion.

EXHIBITS

11-A Application for Variance

11-B Draft Findings of Denial

11-C District Rule 20, Permits Required

11-D District Rule 23, Action on an Application for a Water Permit

11-E District Rule 24, Table 2, Non-Residential Water Use Factors

11-F Monterey County Weekly January 11, 2018 article “Cachagua General Store, Pig Wizard and Katie’s Cold Press Fight to Find a Place to Serve People”

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[1] “Special Circumstances” are defined as unusual, uncommon, peculiar, unique or rare situations that require Board consideration.

[2] “Undue Hardship” is a condition that exists when compliance with a rule, regulation or condition poses significant difficulty when considered in light of unique circumstances related to the application.