ITEM:		ACTION ITEM
10.	APPROVE STRATEGY TO ADDRESS WATER FOR NEAR-TERM HOUSING NEEDS
Meeting Date:			August 17, 2020	Budgeted:	N/A
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item No.: N/A
Prepared By:			Stephanie Locke	Cost Estimate:	N/A
General Counsel Review: N/A
Committee Recommendation: This item was discussed on July 2, 2020 by the Technical Advisory and Water Demand Committees and on August 4, 2020 by the Policy Advisory Committee.
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines section 15378

SUMMARY: In February 2020, the District requested that each of the jurisdictions submit responses to the District about potential near-term housing water needs in the Cal-Am system for the next 3-4 years (if water was made available). One of the primary cautions the District advised was that the jurisdictions should focus on metered properties, given the moratorium on setting new meters. Based on discussions with the jurisdictions, that may need to be revisited in this process. Five of seven jurisdictions submitted responses to the District. The individual responses are summarized below:

Carmel-by-the-Sea 10 Acre-Feet (AF)

Del Rey Oaks No response

Monterey 16-23 AF

Pacific Grove 31 AF

Sand City 10 AF

Seaside 21 AF

Unincorporated County No response

This effort produces a need of 88-95 AF, but it does not include several jurisdictions (as discussed below) that may also merit inclusion. As a result, the District will likely need to recommend an alternative allocation strategy. The process and methods of allocation were discussed at the Technical Advisory Committee and Water Demand Committee on July 2, 2020 and with the Policy Advisory Committee (PAC) on August 4^th. As a result of the PAC meeting, District staff revisited the information provided by the cities of Carmel, Pacific Grove, and Del Rey Oaks. On August 7^th, those cities were advised that (a) we are not trying to satisfy a total 10-year RHNA need; (b) we are not trying to satisfy a Cycle 4 remainder plus Cycle 5 total RHNA need;  (c) we cannot rely on an 8-year housing needs assessment from 2015;  and (d) we cannot overly allocate water to a jurisdiction that states they have no immediate needs.

RECOMENDATION: It is recommended by the Water Demand Committee that staff be directed to begin discussions with the state, build a coalition of support among housing advocates, and make a request for 75 AF of relief from the CDO, and if granted, allocations be made initially at one-half as shown in the table below.

Jurisdiction	RHNA Goal	Allocation (AF)
Carmel-by-the-Sea	31	4
Del Rey Oaks	27	4
Monterey	650	19
Pacific Grove	115	8
Sand City	55	4
Seaside	393	17
Unincorporated County	125	6
NPS		2
POM		5
School Districts		1
District Reserve		5
Total	1,396	75

BACKGROUND AND DISCUSSION:

Initial Feedback: In February 2020, District staff provided the following information to the Technical Advisory Committee (TAC). The purpose of the Technical Advisory Committee is to review, discuss and if necessary, vote on potential agenda items related to the technical aspects associated with the operation of the District. Recent calls for water for housing, and the impact of a lack of water has on the ability to meet local housing needs, prompted the action.

The desalination component of the Monterey Peninsula Water Supply Project is expected to require 30 months to construct and start-up following issuance of a permit from the California Coastal Commission (CCC). The hearing on the appeal for a Coastal Development Permit is scheduled for September 17, 2020. Additionally, it is unclear whether the State Water Board will lift the Cease and Desist Order (CDO) immediately upon operations or require the project to demonstrate a year of operations first. Hence, it could be 3 or 4 years before the CDO is lifted, and there is always the specter of additional delays.

In order for local jurisdictions to meet their desire for housing starts in the interim period, the District is considering measures to make water available to the jurisdictions. As a predicate to this, the District requested information from each jurisdiction as to their immediate short-term water needs for housing starts. The TAC members were asked to:

1. Determine the realistic number of units that can be permitted and built in the next 4-year period;

2. Determine the amount of water needed using the District’s factors for each type of unit;

3. Determine the total amount of water needed for housing during interim 4-year period.

4. Send a letter to the District stating that if the District can make an allocation of water supply available, the jurisdiction would like XX acre-feet for use on housing during the next 4-year period. The request should include an attachment with the breakdown of anticipated units and water required.

The District was specific that this request should only include water needed for housing projects that could be under construction within 3-4 years (between now and the lifting of the CDO) if water becomes available. Initially, it was thought that any water allocated for housing needs would be subject to the water meter moratorium, which excludes vacant parcels, however, as stated earlier, at this time this aspect might also be included in a request to the State, if it remains a significant barrier to meeting local housing needs. The District must also weigh the needs of jurisdictions with access to an Entitlement, or that may have access to an existing allocation. The deadline for submittal was May 1, 2020.

The initial responses of the TAC member entities are discussed below.

City of Carmel-by-the-Sea: The City’s initial response was that no housing projects had been identified that had a near-term need for water that had not taken advantage of the Malpaso Entitlement. However, subsequent email between District and City staff resulted in an amended request for between 5-10 AF for the next 3-4 years, primarily for Accessory Dwelling Units (ADUs) and mixed-use development. The City has 2.5 AF remaining in its Allocation.

City of Del Rey Oaks: The City of Del Rey Oaks did not respond to this request. The City presently has one vacant residential lot and potential for development of at least one open space area that was previously a golf driving range. Other developable areas are not within Cal-Am’s service area, rather are on the former Fort Ord, which is Marina Coast Water District’s service area. Del Rey Oaks has no water in its Allocation.

City of Monterey: The City of Monterey has requested 16 to 23 AF for its near-term needs for housing. It has only 2.5 AF in its Allocation at this time. Two apartment projects were approved to receive water from the District Reserve Allocation at the May District Board meeting. The City is actively seeking developers for several City-owned sites and has a small amount of water credit available for future development.

City of Pacific Grove: The City of Pacific Grove requested approximately 31 AF of water. The City currently has 37.5 AF remaining in its Entitlement and 0.079 AF in its Allocation.

City of Sand City: The City of Sand City requested 10 AF. There are 198 AF in the Sand City Entitlement from the desalination project and 23 AF of water in its Allocation.

City of Seaside: Seaside requested 21AF, mentioning the Campus Town and Ascent projects as near-term needs. The Campus Town project will not be served by Cal-Am, which would reduce the amount requested by the City. Staff is aware that the Ascent project will need approximately 12 AF. The City has 34.7 AF remaining in its Allocation. Also available in the City of Seaside is the privately-held DBO Entitlement of 12 AF, however that Entitlement can only be used at the discretion of its owner and is not a publicly available source.

Unincorporated Monterey County in the MPWMD: Monterey County did not respond to the request for near-term water needs for housing. The County presently has 12.8 AF in its Allocation, and recently benefited from the Malpaso Water Entitlement. In addition, there are several small pockets of water still available in the former Water West system (3.3 AF), the Pebble Beach recycled water project Entitlements (277 AF), Quail Meadows (0.68 AF), and Malpaso Water Company (63 AF).

Naval Postgraduate School: The District did not ask for, and the Naval Postgraduate School (NPS) did not submit, a request for water for housing, but it should be considered during this process. The District is willing to set aside 2 AF for NPS as a placeholder.

Presidio of Monterey: The District did not ask for, and the Presidio of Monterey (POM) did not submit, a request for water for housing. However, the Board will be considering an appeal by the POM to reinstate expired water credits that were earmarked to offset construction of 264 dorm rooms (5.3 AF). Other uses planned by the POM include at least one dining hall and a large general instruction facility. The District is willing to set aside 5 AF for POM as a placeholder.

Carmel/Monterey Peninsula/Pacific Grove Unified School Districts: Staff met with MPUSD Superintendent P.K. Diffenbaugh last July to review possible locations for teacher housing. Two of the locations were not in areas served by Cal-Am. One location, which is served by Cal-Am, is the current location of an elementary school. Specific water needs were not identified, but teacher housing should be considered in this project. The District was initially willing to set aside 4 AF for the school districts as a placeholder, but then the school board decided not to place a housing bond measure on this November’s ballot.

EXHIBIT

None

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