MPWMD WATER DEMAND COMMITTEE MEETING--EXHIBIT 2B--EXISTING RULES 25, 25.5, 28 AND 30

EXHIBIT 2-B

RULE 25.5 WATER USE CREDITS

A. Except where a permit has been canceled, returned or revoked under these Rules, a Person may receive a Water Use Credit for the permanent abandonment of some or all of the prior water use on that Site by one of the methods set forth in this Rule. A Water Use Credit shall enable the later use of that water on that same Site.

1. Person may apply to the District for a Water Use Credit in advance of the abandonment of capacity for water use, which that Person may cause on that Site. In such a circumstance, District staff (1) shall verify that the Reduction is one which is permanent, (2) shall quantify the capacity for water use which remains, (3) shall quantify the reduced water use (the abandoned capacity), (4) shall quantify the increment of reduction which exceeds the District's target of 15% conservation based upon the criteria used for the Water Allocation EIR, and (5) shall provide written confirmation of the Water Use Credit based upon the quantity set forth in element (4) above. Credit shall not be given for any reduction, which occurs by reason of a District, mandated or sponsored program (e.g. retrofit-on-resale). A Water Use Credit obtained pursuant to this method may be applied to, and shall allow future water use on that Site at any time within a period of 60 months. After the 60th month, renewal of this Water Use Credit shall be allowed only upon proof by the applicant that some or all water savings represented by that Credit are current. If all savings are not current, a pro-rata reduction shall occur. A single renewal period of 60 months shall be allowed; thereafter any remaining unused Water Use Credit shall expire. Water Use Credits shall not be transferable to any other Site.

2. A Person who has not applied in advance to the District for a Water Use Credit (in advance of the abandonment of the capacity for water use) may still request that a Credit be given based on prior reductions in water use capacity which occurred on that Site within the preceding eighteen (18) months. In such a circumstance the applicant shall have the burden to quantify and verify both the reduction of water use capacity, and the date such reduction occurred. District staff shall determine the increment of reduction which exceeds the District's target of 15% conservation as set forth in the Allocation EIR and shall determine the effective date for that reduction in capacity for water use. Credit shall not be given for any reduction, which occurs by reason of a District, mandated or sponsored program (e.g. retrofit-on-resale); credit shall not be given for any reduction which was completed more than eighteen (18) months prior to the date of the application for the Water Use Credit. The quantity of water determined by staff to be available for a Water Use Credit under this method, once the Water Use Credit has been granted, may be applied to, and shall allow future water use on that Site within thirty (30) months from the date the reduction first occurred, and upon proof by the applicant that those water savings are still current. After the 30th month, renewal of this Water Use Credit shall be allowed only upon proof by the applicant that some or all water savings represented by that Credit are current. If all savings are not current, a pro-rata reduction shall occur. A single renewal period of thirty (30) months shall be allowed; thereafter any remaining Water Use Credit shall expire. Water Use Credits shall not be transferable to any other Site. Residential Water Use Credits shall not be transferable to any other Site.

3. A Water Use Credit shall provide the basis for issuance of a permit for an Intensified Water Use on that Site provided (1) the credit is current (has not expired), and (2) provided the abandoned capacity (saved water) forming the basis for the Water Use Credit is determined not yet to have been used on that Site. There shall be no connection charge assessed for the capacity for water used pursuant to any Water Use Credit. Connection charges, however, shall apply to the capacity for water use, which exceeds the Water Use Credit, or for any expansion of use following the expiration of the Water Use Credit. No refund shall accrue by reason of water use reduction, or abandonment of capacity, whether or not reflected by a Water Use Credit. Issuance of a Water Use Credit shall not result in any change to a Jurisdiction's Allocation. Use of any Water Use Credit shall similarly not cause a change to a Jurisdiction's Allocation.

Added by Ordinance No. 60 (6/15/92); amended by Ordinance No. 64 (10/05/92); amended by Ordinance No. 71 (12/20/93)

RULE 28 TRANSFER

A. TRANSFER LIMITATION

Any permit issued pursuant to these regulations may be transferred from one person to another, upon written notification to the District, except as follows:

1. Permits may not be transferred from one location to another, except as provided by Part B of this Rule;

2. Permits may not be transferred when the General Manager determines within thirty (30) days of the written notification required by this rule that the transfer may allow or facilitate increased water consumption of a water distribution system.

3. Transferred permits shall be subject to all conditions attached to the original permit. Applicants who are not allowed to transfer a permit under this rule may apply for a new permit or an amendment to the existing permit pursuant to Rule 23. Determinations of the General Manager under this rule, either allowing or refusing permit transfer, may be appealed to the Board pursuant to Rule 70.

B. PROPERTY-TO-PROPERTY AND PROPERTY‑TO-JURISDICTION TRANSFERS OF WATER USE CREDITS FOR COMMERCIAL AND INDUSTRIAL USES

Water use credits for existing water use which has been allowed by the District on or after January 1, 1985, may be transferred from one property to another for commercial and industrial connections pursuant to this Rule and upon the approval of the Board of Directors. Commercial and industrial water credits may also be transferred directly into a jurisdiction’s allocation upon the approval of the Board of Directors. Open space and residential water use shall not be transferred. The following conditions shall apply:

1. Due to the District’s ongoing concern about the viability of the available water supply and the possibility that water transfers may result in additional water usage, water transfers shall be approved by the Board of Directors, subject to the other provisions of this Rule, if the transfer will not have an adverse impact on the water supply. In exercising its discretion, the Board of Directors shall consider the impacts of the application under consideration, as well as the cumulative impacts of other transfers, on the water supply.

2. Water use credit transfers shall only occur within a single jurisdiction. No inter-jurisdictional transfer shall be allowed. Property-to-property transferred water credits shall not have any impact on a jurisdiction’s allocation. Property-to-jurisdiction transfers shall increase a jurisdiction’s available allocation.

3. Water use credit transfers shall only occur within a single water distribution system. No inter-system transfers shall be allowed.

4. Water use credit transfers shall only occur with the prior approval of the city, county or airport district.

5. Water use credit transfers shall only be allowed from an existing commercial or industrial use, and must be applied to the intensification of another existing commercial or industrial use or added to a jurisdiction’s allocation. Other than transfers which add to a jurisdiction’s allocation, transfer credits shall not originate from, or be transferred to, any residential use. Transfer credits shall not derive from any prior open space water use.

6. Property-to-property water use credit transfers shall only be used for intensification purposes. New water connections shall not be issued based upon a property-to-property transferred water use credit.

7. Property-to-property commercial water use credit transfers shall only enable intensification of an existing commercial or industrial water use capacity, as proposed by a current application for a water permit. Transfers shall not provide water use capacity for new commercial or industrial water meter connections. Transferred water credits shall not be “banked” for future use at any new or different site.

8. The use of credits resulting from a property-to-jurisdiction transfer shall be at the discretion of the jurisdiction.

9. All water use credit transfers shall originate only from prior documented commercial water use capacity and shall be subject to each and every limitation on the calculation of water use credits set forth in Rule 25.5.

10. All transfers of water use credits shall occur only by the written (and recorded) agreement of the owner of record for each parcel from which the transfer originates. This agreement shall confirm that the transfer of water credit is irrevocable, shall quantify remaining water use capacity required by the originating parcel(s), and acknowledge that any intensification of water use capacity on the originating site thereafter shall result in additional connection charge fees. If all prior water use capacity is transferred from a site (due to demolition of all structures on that site), the recorded agreement and notice shall consent to permanent removal of the meter connection from the originating site, and acknowledge that the placement of a new meter shall be limited due to unavailability of water.

11. Transfer of water use credits shall only occur upon approval by the Board of Directors. The Board of Directors shall have sole and exclusive authority to determine the water use capacity, which cannot be transferred by reason of capacity requirements for the originating site. The Board of Directors shall have sole and exclusive authority to determine the water use capacity requirements for the receiving site. The Board of Directors shall not approve any water credit transfer where money or other valuable consideration has been given in exchange for the water credit transfer. The Board of Directors shall not approve any capacity for expanded water use deriving from a transferred water credit in any circumstance where money or other valuable consideration has been given in exchange for use of the water credit. These limitations shall nonetheless allow the recipient of a water credit transfer to reimburse the donor of that credit for connection fees previously paid to the District for that increment of water.

12. Violation of the prohibition on the transfer of water credit for money or other valuable consideration shall result in immediate revocation of the transfer credit.

13. Violation of the prohibition on the transfer of water credit for money or other valuable consideration is a misdemeanor as provided in Section 256 of the Monterey Peninsula Water Management District Law.

14. Transfer of water use credits shall not be approved by the Board of Directors if the effect of the transfer shall cause the originating site to have insufficient water credit to meet the water use capacity requirements of all existing structures on the transferring property site. If all prior water use is transferred from a site (due to demolition of all structures), the transfer shall be approved only upon the removal of the meter connection from the originating site, and the recordation of the notice specified above.

15. The effect of any approved water credit transfer shall be the irrevocable extinction of any right or entitlement to the actual water use, water use capacity, or water credit which has been transferred from the originating (transferring) site.

16. Before any water use credit transfer shall occur, the transfer fee required by Rule 60 for each originating site shall be paid by the applicant.

Added by Ordinance No. 1 (2/11/80); formerly Rule 223; renumbered by Ordinance No. 6 (5/11/81); formerly Rule 27, amended by Ordinance No. 8 (1/14/81); amended by Ordinance No. 71 (12/20/93); amended by Ordinance No. 79, (9/18/95); amended by Ordinance No. 97 (3/19/2001), amended by Ordinance No. 102 (2/28/02); amended by Ordinance No. 107 (5/19/03); amended by Ordinance No. 108 (5/19/03)

REGULATION III. JURISDICTIONAL ALLOCATIONS

RULE 30 DETERMINATION OF WATER ALLOCATIONS

From any new supply of water, the District shall establish a specific Allocation for each Jurisdiction, and may also establish a District Reserve Allocation.

Permits for new or Intensified Water Use within each Jurisdiction shall be issued only upon receipt by the District of a Water Release Request from that Jurisdiction.

Each permit issued by the District for new or Intensified Water Use shall cause an equivalent quantity of water to be debited from the appropriate Allocation account.

When a Jurisdiction can establish that permanent water savings have been achieved in excess of that necessary to sustain the 15% conservation target set forth by the District in the Water Allocation EIR, the excess increment of permanent water savings may be credited by the District to that Jurisdiction's Allocation. Credit shall not be given for any reduction which occurs by reason of a District sponsored or mandated program (e.g. retrofit-on-resale). Such credits shall be determined by a Resolution approved by the board of directors of the District. The Board shall adopt guidelines to guide the implementation of the credit process provided by this Rule.

Added by Ordinance No. 1 (2/11/80); formerly Rule 300, renumbered by Ordinance No. 6 (5/11/81); added by Ordinance No. 39 (2/13/89); deleted by Ordinance No. 60 (6/15/92); deleted by Ordinance No. 60 (6/15/92); added by Ordinance No. 60 (6/15/92)

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