EXHIBIT 2-A

 

DRAFT CONCEPT ORDINANCE

 

AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

ADDING RULE 23.6 TO ESTABLISH A WATER ENTITLEMENT FOR

 SAND CITY AND AMENDING RULES 11, 21 AND 23.1 TO REFLECT

THE PROCESS FOR ISSUING WATER USE PERMITS

 

FINDINGS

 

            1.         The Monterey Peninsula Water Management District (“MPWMD”) is charged under the Monterey Peninsula Water Management District Law with the integrated management of the ground and surface water resources in the Monterey Peninsula area.

           

            2.         MPWMD has general and specific power to cause and implement water conservation activities and to cause sufficient water to be available for present and future beneficial use or uses of lands or inhabitants within the District as set forth in Sections 325 and 328 of the Monterey Peninsula Water Management District Law.

           

            3.         The City of Sand City, a municipal corporation, (“Sand City”) has the power to establish a public works for the purpose of furnishing water to its inhabitants as set forth in Article XI, Section 9 of the California Constitution. 

           

            4.         In 2006, Sand City was granted the right to produce brackish water located in the Aromas Sands Formation of the Coastal Subarea of the Seaside Basin for the purpose of operating its proposed desalination plant by the Superior Court in Monterey County in its final Judgment entered in California American Water Company v. City of Seaside (No. M66343).[1]

           

            5.         Sand City has proposed the Sand City Water Supply Project for the purpose of furnishing water for present and future beneficial use of lands and inhabitants within the District; including but not limited to new and expanded water uses within Sand City (the “Project”). 

           

            6.         The Project includes the construction of a municipally owned desalination facility in Sand City (the “Sand City Desalination Facility”).[2]  The Sand City Desalination Facility shall extract brackish water from the Aromas Sands aquifer and remove salts from that brackish water.  Potable water produced by the Sand City Desalination Facility shall be delivered through a single connection into the existing California American Water distribution system (“CAW System”). 

 

            7.         Operation of the Sand City Desalination Facility shall be regulated by the California Department of Health Services.

                       

 8.        This ordinance shall allow water produced by the Sand City Desalination Facility to be delivered through a single connection into the CAW System. 

           

            9.         This ordinance shall allow the expansion and extension of the CAW System to provide connections to, and potable water service in specific annual quantities (expressed in acre-feet) for the use on and benefit of all property located within the jurisdictional limits of Sand City (the “Sand City Sites”).   

           

            10.       In consideration for the delivery of water from the Sand City Desalination Facility to the CAW System, this ordinance shall establish a Water Entitlement in favor of Sand City allowing Sand City and its assignees to take delivery of 206 acre feet of water per year from the CAW System.[3]

 

            11.       The Water Entitlement established by this ordinance shall be separate and distinct from the Allocation to Sand City as provided in Rule 30, and shall not affect any existing use of water in Sand City or any existing or future Allocation to Sand City.[4] 

                       

            12.       This ordinance authorizes Sand City, on terms and conditions set forth in this ordinance, to separately sell and convey portions of the Water Entitlement established by this ordinance for use on the Sand City Sites, through which Sand City will attempt to recover its capital costs for the Sand City Desalination Facility.[5]

           

            13.       This ordinance shall allow issuance of the Sand City Water Use Permits authorized by this ordinance for new and expanded water uses on the Sand City Sites, in a cumulative amount of no more than 206 acre feet per year.   

           

            14.       This ordinance provides that water use authorized by Water Permits issued under this ordinance shall be subject to the conservation Rules of MPWMD under its Regulation XIV and the rationing Rules of MPWMD under MPWMD its Regulation XV

 

            15.       This ordinance shall add Rule 23.6 and amend Rules 11, 21 and 23.1 to the Rules and Regulations of the Monterey Peninsula Water Management District

           

            16.       Sand City certified an Environmental Impact Report for the Project on January 18, 2005 and an Addendum to the Final Environmental Impact Report on September 18, 2007.  

           

            17.       The California Coastal Commission approved a coastal development permit for the Project, authorizing construction of that portion of the Sand City Desalination Facility located within the California Coastal Zone and production of up to 300 acre-feet of potable water from the Sand City Desalination Facility per year.

           

            18.       It is in the public interest to reduce the amount of water diverted from the Carmel River and taken from the Seaside Groundwater Basin by California American Water.  The Project, if successful, will have the environmentally beneficial effect of reducing CAW’s current reliance on its existing sources of water supply.[6]  The Project will provide an immediate benefit to the environment by allowing a 300 acre-foot per Water Year reduction of demand on existing sources of water supply for the CAW System at the time the Project becomes operational, and a permanent reduction of 94 acre-feet of water which is equal to the amount of water supplied to the Sand City Sites by the CAW System during the most recent completed Water Year.[7]       

           

            19.       California American Water has been limited in its ability to deliver potable water by California State Water Resources Control Board (“SWRCB”) Order No. WR 95-10, dated July 6, 1995.  The SWRCB found that California American Water does not possess the legal right to divert from the Carmel River system in the amount of water historically (and presently) being diverted.  Order No. WR 95-10 limited production by California American Water to 11,285 AF (currently) from the Carmel River system, and ordered California American Water to implement actions to terminate its unlawful diversions from the Carmel River, and in the interim to maximize its production from the Seaside Groundwater Basin.

           

            20.       The SWRCB has concluded that the Project, including the delivery of water represented by the Water Entitlement to the Sand City Sites, does not violate any provision of Order No. WR 95-10.[8]       

           

            21.       The Project will allow for the expansion of commercial and residential water uses within Sand City thereby contributing to the economy within MPWMD as well as providing new housing opportunities within the MPWMD.        

           

            22.       It is in the best interest of MPWMD and the inhabitants thereof to provide for the Water Entitlement and to enable the Sand City Water Use Permits.

 

            23.       The Project is consistent with the goals and strategic objectives of MPWMD.

             

           NOW THEREFORE be it ordained as follows:

 

            Section One:  Short Title

           

            This ordinance shall be known as the Sand City Water Supply Project Entitlement Ordinance of the Monterey Peninsula Water Management District.

 

            Section Two:  Purpose

 

            A.        The primary purpose of this ordinance is to facilitate the Project.  Contemporaneously with the adoption of this ordinance, the Board of Directors of  MPWMD may approve an application by Sand City for a Water Distribution System Permit allowing the 300 acre-feet of water to be produced annually by the Sand City Desalination Facility to be put into the existing CAW System.  The addition of the Sand City Desalination Facility as a Source of Supply to the CAW System shall temporarily decrease demand on existing water sources for the CAW System. [9]

 

            B.         This ordinance establishes a Water Entitlement for 206 acre-feet per Water Year of Potable water (the “Sand City Water Entitlement”) as evidenced by a Water Use Permit.  The Water Use Permit authorized by this ordinance shall allow for new and expanded water uses within Sand City.  Contemporaneously with the adoption of this ordinance, the Board of Directors of MPWMD may approve an application by California American Water to expand the CAW System to allow for the delivery of up to the entire amount of the Sand City Water Entitlement to new and expanded water uses on the Sand City Sites.   

 

            C.        This ordinance authorizes Sand City to convey, for valuable consideration, the entire amount of the Sand City Water Entitlement created by this ordinance solely for dedication to use on the Sand City Sites. [10]  

 

            Section Three:  Rule 23.6 Sand City Water Entitlement

 

            Rule 23.6 is hereby added to the Rules and Regulations of the Monterey Peninsula Water Management District to read as follows:

 

RULE 23.6 -           SAND CITY WATER ENTITLEMENT

 

            A.        There is hereby established the Sand City Water Entitlement which confers upon Sand City a vested property right to take up to 206 acre-feet per Water Year of Potable water from the CAW System.  California American Water shall be required to take delivery of 300 acre-feet per Water Year of Potable water from the Sand City Desalination Facility for so long as the Sand City Water Entitlement continues.  The Sand City Water Entitlement shall continue until December 31, 2082.[11] 

 

            B.         Sand City is hereby authorized to separately sell, transfer and convey to owners of Sand City Sites, for such consideration and upon such conditions as Sand City may in its discretion determine, such portions of the Sand City Water Entitlement as it may choose.[12]  Any portion of the Sand City Water Entitlement conveyed to the owner of a Sand City Site shall become vested in the owner of the Sand City Site, and appurtenant to title to the particular Sand City Site, at the time a Sand City Water Use Permit is issued as evidence of such conveyance. At the time the Sand City Desalination Facility begins delivery of Potable water to the CAW System, the General Manager shall issue a Water Use Permit to Sand City in the amount of the Sand City Water Entitlement. 

 

            C.        The Sand City Water Entitlement shall be separate and distinct from the Allocation to Sand City as provided in Rule 30.  The existence of the Sand City Water Entitlement shall not affect any existing use of water in Sand City or any existing or future Allocation to Sand City.[13] 

 

            D.        Nothing in this ordinance shall excuse the owner of a Sand City Site from the obligation to comply with the water conservation rules set forth in MPWMD Regulation XIV and the water rationing rules set forth in MPWMD Regulation XV.

 

E. Nothing in this ordinance shall relieve the owner of a Sand City Site to whom a Sand City Water Use Permit has been issued from any all or any part of such owner’s obligation to pay all fees, connection charges, user fees, surcharges, taxes, utility taxes or other obligation imposed by the California Public Utilities Commission, the MPWMD (including but not limited to fees and charges imposed by MPWMD under its Rule 24), California American Water or any governmental authority acting with jurisdiction on other users of the CAW System in Sand City.  Nothing herein shall prevent the termination of service from the CAW System for non-payment of required fees and charges in the manner authorized by law.

 

F. Each Water Use Permit issued to the owner of a Sand City Site shall provide that MPWMD shall have such access as may be required to enable it to account for the use of water on the Sand City Site.  Water use authorized by the Water Use Permit shall be measured in accordance with the water use factors specified at the time of issuance of the Water Use Permit.

 

 

                        Section Four:  AMENDMENT TO RULE 21-E: APPLICATION FOR WATER USE PERMIT FOR “BENEFITED PROPERTIES” AS THAT TERM IS DEFINED IN RULE 23.5

 

Rule 21-E[14] shall be revised as shown in bold italics (bold italics) and strikeout (strikeout): 

 

E.         APPLICATION FOR WATER USE PERMIT FOR “BENEFITED PROPERTIES” AS THAT TERM IS DEFINED IN RULE 11, 23.5 AND RULE 23.6

 

Each application for a Water Use Permit shall follow the process set forth in Rule 23.1.  A proper Applicant for a Water Use Permit may be the property owner or any agent thereof.  The application for a Water Use Permit shall be deemed complete when the Applicant submits all of the following:

 

 

1.         A completed Water Use Permit application,

2.         A copy of the recorded Assignment Document, “An Assignment of a Portion of Monterey Peninsula Water Management District Ordinance No. 39 Water Entitlement and Water Use Permit” or “An Assignment of a Portion of City of Sand City Water Entitlement”  specific to the application Site.

                        3.         Processing fees.

 

Section Five:  Amendment of Rule 23.1, Action on Application for a Water Use Permit on a Benefited Property

 

Rule 23.1[15] shall be revised as shown in bold italics (bold italics) and strikeout (strikeout): 

A.     PROCESS

 

1.            Action on Application for a Water Use Permit

 

a.     The General Manager shall review the application and determine whether the Applicant has met the criteria for a Water Use Permit.  If additional information is required to complete the application, the Applicant shall be notified in writing within thirty (30) days of the initial application.

 

b.    The General Manager shall ensure that the Assessor’s Parcel Number of the Benefited Property shown on the Assignment Document matches the APN(s) shown on the spreadsheet of water purchasers provided to the District by either the Pebble Beach Company or the City of Sand City. 

 

(1)   When the APN(s) shown on the Assignment Document does not match the spreadsheet of water purchasers, the General Manager shall notify the Pebble Beach Company of the discrepancy contact the appropriate Entitlement holder to verify the validity of the Assignment Document. 

 

(2)   When the APN shown on the Assignment Document is determined found to be incorrect an error, the Applicant shall submit a corrected and recorded Assignment Document from the Entitlement holder prior to issuance of a Water Use Permit.  The Entitlement holder shall notify the District in writing of any correction.

 

(3)   When the APN shown on the Assignment Document is determined to be correct and the spreadsheet is in error, the spreadsheet of water purchasers shall be revised by the Pebble Beach Company to reflect the correct APN.

 

c.     The General Manager shall prepare and execute a Water Use Permit for the APN(s) shown on the Assignment Document.

 

d.    The original Water Use Permit shall be mailed to the Applicant.

 

e.     The District shall retain one copy of the Water Use Permit and the copy of the Assignment Document. 

 

B.     AMENDMENT OF WATER USE PERMIT

 

1.            A Water Use Permit may be amended to reflect a Change of Ownership of a Parcel.

 

2.            A Water Use Permit may be amended to reflect assignment of water previously held collectively by two or more Parcels under a Water Use Permit.  A written request for assignment shall be submitted to the District, along with processing fees and ownership information sufficient to prepare a new Water Use Permit.

 

3.            A Water Use Permit may be amended to reflect newly-assigned Assessor’s Parcel Numbers when a Benefited Property is subdivided into two or more Parcels.  A written request for amendment shall be submitted to the District, along with processing fees, evidence of the subdivision approval by the land use Jurisdiction Monterey County and ownership information sufficient to prepare a new Water Use Permit.

 

Section Six: Amendment of Rule 11, Definitions

 

[Definitions will be added to this section.]

 

Rule 11 definitions for Assignment Document, Benefited Property, and Water Use Permit shall be amended in accordance with Sections Four and Five above.  A new definition shall be added for Sand City Desalination Facility.

           

 

 

 

 

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[1] See Memo from District Counsel (Memo), Section I-A.

[2] See Memo, Section I-B

[3] See Memo, Section I-C.

[4] See Memo, Section I-D.

[5] See Memo, Section I-E.

[6] See Memo, Section I-F.

[7] See Memo, Section I-G.

[8] SWRCB Letter dated January 31, 2006 from Celeste Cantu, Executive Director, to Steve Leonard of CAW.

[9] See Memo, Section II-A.

[10] See Memo, Section II-C.

[11] See Memo, Section III.

[12] See Memo, Section II-C and III.

[13] See Memo, Section I-D.

[14] For the current text of Rule 21-E, see Ordinance No. 128.

[15]  For current text of Rule 23.1, see Ordinance No. 128.