MEETING DATE: MARCH 9, 2004
ACTION ITEM 3-B: Discuss Water Credit Transfers Next Steps
1.
TAC Recommended
Program
2.
EIR Option
3.
Discuss Updating
Commercial Water Use Factors
SUMMARY: At the January 28, 2004 joint PAC/TAC
meeting, the group asked the Board to delay moving forward immediately on an
EIR for a water credit transfer program as defined by Ordinance No. 101. Such action was to be considered on January
29, 2004 at the regular Board meeting.
Committee members suggested there might be other water credit transfer
concepts the TAC should review and possibly recommend for consideration by the
Board. The District’s Board agreed to
give the TAC 30 days to consider and recommend an alternative transfer
program. The Board is scheduled to
consider the TAC recommendation on March 15, 2004.
1.
TAC Recommended
Program.
The TAC met on February
25, 2004 to discuss an alternative transfer concept submitted by the City of
Monterey. Although the TAC did not
recommend using Monterey’s proposal, the committee made a recommendation to
change the existing Rule 28 from having discretionary approval to ministerial
approval. The TAC unanimously supported
this recommendation.
2.
EIR Option.
It is staff’s
understanding that the current Board wishes to move forward on an EIR for a
water credit transfer program as defined by Ordinance No. 101. Action on this issue was delayed at the
request of the TAC. To move forward,
policy direction by the full Board on water credit transfer issues is required
to: (1) define proposed project and alternatives, and (2) determine the means
to select a consultant (sole-source or new RFP). Based on consultant feedback in August 2003, a rough time
estimate is 9-12 months for a Final EIR at a cost of up to $250,000.
3.
Discuss Updating
Commercial Water Use Factors.
The Board received a recommendation on January 29, 2004 to update the commercial water use factors as soon as possible to facilitate accurate estimates of historic and future water demand. The factors are outdated (more than 11 years old). Updating the commercial water use factors was part of the Strategic Initiative approved by the Board in 2002 to “Revise the Water Permit Processes.” In 2003, the Water Demand Committee recommended that staff pursue other components of the initiative before the factors were updated. Staff was directed to improve the data management systems and prepare a policies and procedures manual. Updating the commercial water use records was listed third, based on a number of potential difficulties in achieving the goal.
The District utilizes commercial
water use factors derived from regional water use averages by type of use. The factors were last updated in
1991-1992. Obviously, much has changed
since 1992. Laws mandating toilet retrofits
have been in place for more than 15 years.
The community has been through water rationing and is now restricted to
80 percent of its historic Carmel River use by SWRCB Order No. 95-10. The local water company (Cal-Am) is required
to promote Best Management Practices and new equipment and appliances that are
much more water efficient. Many factors
are now in place that have changed the way water is used in the community.
The Water Use Credit Transfer Program utilizes the commercial water use factors to calculate credit available for transfer and to estimate the future demand of a receiving site. If the factors are outdated, it is possible that the District is underestimating or overestimating the water demand associated with both the originating site and the receiving site. It is prudent to have the most accurate factors available. Therefore staff is recommending that the factors be updated at this time. In addition, the current commercial water factors are a critical component in estimating new or expanding water demand.
Updating the District’s water factors will require extensive review and analysis. The previous commercial water use surveys reviewed only limited information obtained through telephone surveys and reviewed the water consumption records available. In most cases there were between two and five years of consumption history available. In addition to reviewing water records and taking into consideration fluctuations in climate and business, a new survey should include on-site inspections to verify existing fixtures, equipment, training, landscaping and outdoor water uses and personnel.
Staff’s 2002 estimate for completion of the commercial water use factor update was $125,000 and approximately 9-12 months. Recent discussions with a consultant familiar with this type of work product revised that estimated to more in the range of $300,000 and taking a minimum of 9-12 months. This assumes that Cal-Am consumption records are readily available and that the account holders and property owners are willing to participate in the study. In 2002, staff noted that the Conservation Fund does not provide adequate resources to pursue the proposed objectives. Funding remains an issue. If the commercial water factor update is to be pursued, funding will have to be located, perhaps through a cost sharing with the local jurisdictions that will benefit from the updated factors.
Staff will be meeting with a consultant to further discuss updating the commercial water use factors on March 16, 2004. At that time, staff may be able to obtain a better estimate of the costs to update the factors based on a variety of approaches. Further updates on this item will be provided at a future Water Demand Committee meeting.
RECOMMENDATION: As requested by the Board at its January 29,
2004 meeting, District Counsel reviewed the TAC proposal to determine CEQA
compliance and enforcement. A copy of
Counsel’s Confidential Memorandum is provided under separate cover. To facilitate Counsel’s review, staff prepared
a draft ordinance (No. 117) for the TAC recommendation (Exhibit B-1).
The Water Demand Committee
should consider a recommendation to the Board on the water credit transfer
program. Staff has presented three
options for consideration:
1.
Recommend support of the
TAC’s preferred program and recommend the Board consider the first reading of
draft Ordinance No. 117 at a future Board meeting.
2.
Recommend the Board
proceed with an Environmental Impact Report (EIR) on a program identical to
Ordinance No. 101 (Exhibit B-2).
3.
Recommend status
quo. Maintain the current program as
is. (Rule 28 B, attached as Exhibit B-3.)
BACKGROUND:
At the January 27, 2000 meeting, the Monterey Peninsula Water
Management District Board of Directors (Board)
considered modifying the water credit transfer program to include residential
uses. At the time, the key issue was
whether current District rules, which allow the transfer of commercial water
credits to another commercial site but prohibit the transfer of residential
water credits to another residential site, should be amended. The Board did not take action at the January
meeting other than to direct staff to set a public hearing for review of the
water credit transfer ordinance at the February 24, 2000 board meeting.
At the February 24, 2000, Board meeting,
District staff was directed to prepare a report on whether or not water demand
has been reduced as a result of the existing water credit programs. A preliminary report presented to the Board on
March 20, 2000, indicated that the anticipated water savings from the program
were not occurring. District staff was
directed at the March 20, 2000 meeting to continue researching the water
savings associated with Water Use Credits and transfers and report back to the
Board in 90 days.
District staff began an extensive data
collection process following the March 20, 2000 Board meeting. Cal-Am customer-specific data related to
individual water consumption is proprietary and confidential information owned
by Cal-Am. For the District to access
this information, a non-disclosure agreement was necessary. Both parties signed the non-disclosure
agreement on June 7, 2000. This
agreement allows the District access to Cal-Am’s confidential customer
consumption records for limited purposes on the condition that the District
maintains confidentiality and agrees that information obtained from Cal-Am is
the property of Cal-Am and will not be distributed to third parties.
Transfers of commercial water credits from an
existing commercial use to an expanding commercial use in the same jurisdiction
were allowed starting December 1993. In
September 1995, Ordinance No. 79 modified the transfer rule to allow commercial
credits to transfer into a jurisdiction’s allocation. Once the water use credit is assigned to the jurisdiction’s
allocation, the water becomes available for use at the jurisdiction’s
discretion and can be used for residential and nonresidential uses, new
connections, and remodels. All
transfers require the authorization of the jurisdiction and the District, and
the property owner must agree to transfer the water use credit and must agree
to a deed restriction on the property.
District Ordinance No. 95 was adopted on June
19, 2000 to allow only commercial-to-commercial water credit transfers of like
kind to occur during a 90-day moratorium on water credit transfers. During the 90-day period, the effectiveness
of the water credit program was to be reviewed. The proposed ordinance was effective for 90 days and was extended
for a second 90-day period on September 18, 2000 to give staff time to have a
third party review the findings from its credit analysis. The ordinance expired on December 18, 2000,
after consideration of a third extension of the ordinance was continued by lack
of a quorum at the December 11, 2000 Board meeting.
Ordinance No. 100, a 90-day ordinance
suspending the authority of the Water Management District to receive any water
credit transfer applications under District Rule 28 B that are not for “like to
like” (identical) commercial-to-commercial or industrial-to-industrial
expansions of an existing use, was adopted on March 19, 2001. The ordinance expired on June 18, 2001. The third party analysis of the water
savings on commercial sites and sites receiving water from credit transfers was
completed on June 1, 2001 and provided to the Board.
On June 18, 2001, the District’s Board of
Directors suspended receipt of water credit transfer applications for 60 days
(through August 17, 2001). District
staff was directed to consider modifications to the water credit transfer
process that would incorporate additional safeguards to prevent an increase of
water use beyond the original projection at the receiving site, and safeguards
that would ensure that accurate estimates of historical water use at the donor
site are developed.
At the August 20, 2001 meeting, District
staff presented a number of policy questions to the Board and asked for their
feedback. Members of the Board provided
individual thoughts on the various issues, and the proposed draft ordinance
reflected the consensus of the feedback.
The District’s Technical
Advisory Committee (TAC) and Policy Advisory Committee (PAC) reviewed Draft
Ordinance No. 101 on July 20, 2001 and again on August 29, 2001. The TAC and PAC members agreed with the
concept, but objected to the set-aside of a total of 50 percent of the
available water credit. The Board’s consensus was that 35 percent of
the savings should be set aside as permanent savings. The TAC and PAC members maintained that true equity would only be
achieved by allotting 25 percent of the established water credit to the
District.
The TAC/PAC reasoned that the 35 percent
conservation savings figure is based on the assumption that the commercial
water use factors are not accurate and may underestimate historic water use at
the transferring site, so that more than 25 percent must be saved in order to
compensate for the underestimation of the water credit. Proposed amendments to Rule 28 that have
been incorporated in the proposed ordinance would base the water credit
calculation on both commercial water use factors and actual historic
water use at the transferring site.
Combining both calculation methods is the District’s way of correcting
for the inaccuracy of the commercial water use factors. Therefore, there is no need to increase the
District’s conservation savings to 35 percent, and a 25 percent conservation
savings figure is adequate and also fair to the property owner.
The TAC/PAC was united in its request that no
restrictions be placed on use of the 15 percent that would be transferred to
the jurisdiction. According to the
committee, the jurisdiction should decide whether to allot that water for
commercial, residential or affordable housing projects. There were no objections to providing the
District with information about the recipients of water originating from a
transfer.
Ordinance No. 101 was adopted November 19,
2001. At the following Board meeting,
Director Henson submitted a request for reconsideration. Ordinance No. 101 was rejected on December
17, 2001.
The Board of Directors deleted District Rule 28-B in its entirety on March 26, 2002 by adoption of Ordinance 102, after determining that the water transfer program had not resulted in the anticipated savings of water that originally motivated the program and, in some cases, may have resulted in an increase in water usage. On March 27, 2003, as part of a settlement agreement between the District and the Cities of Seaside, Carmel, Del Rey Oaks, Monterey, Pacific Grove and Sand City, the Board of Directors completed first reading of Ordinance No.107, repealing Ordinance No. 102, thereby effectively reinstating District Rule 28-B. Rule 28-B was immediately modified by the adoption of Ordinance No. 108 on the same evening. Ordinance No. 108 clarified that the Board of Directors will make the decisions concerning water credit transfers after taking into account whether an application would have an adverse impact on the area’s water supply.
CEQA Review of Proposed
Transfer Program(s)
Despite extensive successful conservation efforts, water supply for new construction and remodeling projects on the Monterey Peninsula is extremely limited for a variety of environmental, regulatory and technical reasons. The Water Credit Transfer Program (WCTP) began in 1993 as a means to facilitate commercial expansion within the community while also supporting the District’s conservation goal. Environmental review on the WCTP ordinance was not carried out at that time.
MPWMD Ordinance No. 102, adopted in February 2002, rescinded Rule 28-B and the WCTP as a whole after the Board determined that the program had not resulted in the anticipated water savings that originally motivated the program. Six cities filed suit against the District in May 2002 challenging the rescission of the program on CEQA grounds.
On March 17, 2003, the MPWMD Board approved the first reading of Ordinance No. 107, which rescinds Ordinance No. 102, thereby restoring the WCTP as defined in Rule 28-B prior to Ordinance No. 101. On April 2, 2003, the Board approved the first reading of Ordinance No. 108, which clarifies that approval of a water credit transfer application is a discretionary act by the Board, and such action requires CEQA review. On May 19, 2003, the MPWMD Board adopted on second reading both Ordinances No. 107 and 108; both become effective on June 18, 2003. Finding No. 5 of Ordinance No. 107 states that it is the Board’s intention to prepare an EIR to address concerns that have been raised about the program. The Board had earlier directed at its February 27, 2003 meeting that applications for water credit transfer approval will not be considered by the Board until after the EIR is certified.
At its February 27, 2003 meeting, the Board directed staff to work with a sole source consultant to develop a scope of work for a focused EIR on the environmental impacts of having or not having a water credit transfer program. The stated goal at that time was completion of the Final EIR no later than September 30, 2003. The Board also directed that all applications for water credit transfer approval shall not be considered by the Board until after the EIR is certified.
At its March 17, 2003 meeting, the Board determined that Turnstone Consultants of San Francisco should be retained to prepare an EIR that evaluates the environmental effects associated with a water credit transfer program. The Board further directed that Directors Henson and Lindstrom should negotiate with Turnstone to refine the scope of work, and address Board concerns about the high cost and extensive reliance on staff work products.
A revised Turnstone scope of work was prepared for the April 21, 2003 Board meeting, but this item was continued until the May 19, 2003 meeting. A significant addition was to include an economic analysis in the scope to address certain concerns raised by litigants. Considerable information also remained to be provided by staff. The cost estimate for Turnstone to produce only a Draft EIR was $155,400; this amount included an estimated $42,200 for a specialist to perform an economic analysis. Negotiations between MPWMD and Turnstone representatives continued in mid-April, but it became evident that a mutually satisfactory result was not forthcoming.
District staff was directed in late April 2003 to prepare an RFP to be transmitted to a variety of environmental consulting firms for an EIR that would focus on termination of the existing WCTP. The overall goals of the EIR were to assess environmental effects associated with terminating the WCTP, and respond to assertions by litigants who challenged Ordinance No. 102 rescinding the WCTP. The emphasis on terminating the WCTP was at the direction of District Special Counsel, Clement Shute. Mr. Shute directed that the EIR should respond to litigant assertions that terminating the WCTP would result in direct and indirect adverse physical effects.
District adoption of Ordinance Nos. 107 and 108 in May 2003 also affected the proposed EIR. Ordinance No. 107 reinstated the water credit transfer program (Rule 28-B). Ordinance No. 108 clarified some of the processes and vague terminology contained in Rule 28-B. Specifically, decisions about water credit transfers will be made by the MPWMD Board of Directors and will be considered to be discretionary decisions subject to CEQA.
On May 19, 2003, the Board approved the RFP drafted by staff with review by the Water Demand Committee, and directed that it be transmitted to a list of 18 non-local consulting firms. The RFP was transmitted electronically on May 21 with a deadline of July 1, 2003. The intent was for staff to review proposals and make a recommendation for consideration by the Administrative Committee on July 15 and the full Board on July 21, 2003. No proposals were submitted by July 1, and the deadline was extended to August 6, 2003.
The Board considered retaining the firm of Resource Design Technology, Inc. (RDT) of Folsom, California, to prepare an Environmental Impact Report (EIR) on the termination of the Water Credit Transfer Program (WCTP). RDT was the only firm to submit a proposal to prepare an EIR in response to the District’s RFP. The full RDT Proposal was reviewed by the District’s Administrative and Water Demand Committees at their respective August 12 and August 21, 2003 meetings, and was also reviewed by Special Counsel. Significant portions of the RDT Proposal were provided to all Board members as part of the Administrative Committee packet. The bound complete proposal is available at the District office for public review.
The RDT proposal originally estimated a total cost of $261,820, which was reduced to an estimate of $255,500 upon further discussion. The proposed EIR costs were more than double the estimated MPWMD budget of $125,000. RDT emphasized that they “do not feel [they] can produce a robust, legally defensible document in the [District] price range due to the unusual nature of the proposed action as well as the legal issues involved.” It is notable that several firms who declined to propose indicated that the District’s budget estimate was too low.
The RDT proposal estimated a total of 36 weeks (roughly nine months) from the Notice of Preparation to completion of the Final EIR, preparation of CEQA Findings and hearings. This time frame was within the estimated schedule in the RFP.
The proposed EIR included project level evaluation of the proposed
project to terminate the WCTP, and evaluation of two alternatives at a lesser
level of detail. The alternatives
include: (1) Rule 28-B is reinstated (No Project alternative pursuant to
Ordinances No. 107 and 108); and (2) enact amended water credit transfer
program as described in Ordinance 101.
The Board voted on August 28, 2003 not to proceed with the EIR.
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