|
WATER
DEMAND COMMITTEE |
||||
|
|
||||
|
2. |
CONSIDER RECOMMENDATION TO THE BOARD REGARDING ORDINANCE NO. XXX, AN
ORDINANCE SUSPENDING THE EXPIRATION OF WATER USE CREDITS DURING A MORATORIUM |
|||
|
|
||||
|
Meeting
Date: |
July
23, 2012
|
Budgeted:
|
N/A
|
|
|
|
||||
|
From: |
David J.
Stoldt |
Program/ |
N/A |
|
|
|
General
Manager |
Line Item No.: |
||
|
|
||||
|
Prepared
By: |
Stephanie
Pintar |
Cost
Estimate: |
N/A |
|
|
|
||||
General Counsel Review:
Pending
|
||||
Committee Recommendation: N/A
|
||||
|
CEQA Compliance: This
ordinance will require an Initial Study.
|
||||
SUMMARY: Water Use Credits (explained in the “Discussion” section below) have been negatively impacted by two relatively recent decisions: State Water Resources Control Board (SWRCB) Order WR 2009-0060 issued October 20, 2009 (a Cease and Desist Order against California American Water), and California Public Utilities Commission (CPUC) Decision 11-03-048, issued on March 24, 2011. The CPUC decision recognized the moratorium that was established by Order WR 2009-0060. Additionally, Water Use Credits can be subject to moratoriums during Stage 6 and Stage 7 of the District’s Expanded Water Conservation and Standby Rationing Plan (Regulation XV).
Draft Ordinance No. XXX (Exhibit 2-A) extends the length of time a Water Use Credit remains valid when there is a moratorium that restricts its use. The ordinance also clarifies that a Water Use Credit expires when a Site is subject to an efficiency mandate for the device or use that established the credit. As written, the ordinance applies to all Water Use Credits affected by a moratorium and would allow a Water Use Credit to remain valid throughout the moratorium and for some period of time afterward. If adopted, the ordinance would reinstate the validity of Water Use Credits that expired between October 19, 1999 and today, and would maintain the validity of any Water Use Credit documented going forward until the end of the moratorium and then for a period of up to ten years.
As proposed, the expiration of a Water Use Credit impacted by a moratorium is extended for the duration of the moratorium and beyond. The length of time the credit remains valid after the moratorium is determined by the amount of time that remains in its term when it is affected. However, as proposed in the draft ordinance, this provision would not apply to Water Use Credits that expire as a result of a mandated District, State or Federal conservation program or action. Further information about Water Use Credits is provided below.
The ordinance is proposed as the result of a stipulation between the SWRCB and Lombardo and Associates (attorneys for Quail Lodge, CVR HSGE, LLC and Baylaurel, LLC (collectively “Petitioners”) to stay a Petition for Reconsideration of Order WR 2009-0060 for 120 days from June 4, 2012 (Exhibit 2-B). During the period, if MPWMD adopts an ordinance tolling the expiration of the Petitioner’s Water Use Credits, the Petition for Writ of Mandamus and Complaint for Injunctive Relief shall be dismissed without prejudice. Failure to adopt an ordinance tolling these credits will reinstate the Petition.
DISCUSSION:
Water Use Credit
A Water Use Credit allows reuse of the reduced increment of water use for up to ten years (or up to 20 years at a Redevelopment Project Site) unless that credit is transferred to a Jurisdiction’s Allocation, in which case the credit would not expire. The Water Use Credit rule was developed to accommodate reconstruction of demolished buildings within a specific timeframe. The transfer rule (Rule 28) was adopted to allow a Water Use Credit to be moved to another Site or to a Jurisdiction’s Allocation. The District’s Water Use Credit rules were also designed to provide incentives for undertaking extraordinary retrofitting and/or installation of proven new technology and to provide a mechanism for offsetting potential intensification in use.
Water Use Credits are documented under the following circumstances:
No Connection Charge is assessed when a Water Use Credit is used on a Water Permit. However, if a Rebate was issued for the device, the Rebate must be paid back before the Water Use Credit can be used. Therefore, nearly all the water savings associated with the Rebate Program have the potential to be Water Use Credits.
A Water Use Credit is not issued for a non-permanent Change in Use, such as occurs when tenants change from a higher use (e.g. a restaurant) to a lower use (e.g. retail). The Water Permit process allows flexibility in Non-Residential uses to address the needs of the tenants. This process recognizes the 1985 date as the date that established the baseline use on a Site. This allows a use to be retired for perhaps many years and then to be reinstated when needed. This situation does not have a time limit, other than the 1985 establishment date.
Documentation of Water Use
Credit
Although the District has a process to formally recognize a Water Use Credit, there are at least two other ways that a Water Use Credit is documented, as discussed below. District Rules do not limit when one can apply for credit as long as it is within the ten years after the device is installed and as long as the District’s rules (at the time the application is received) do not disallow a Water Use Credit for the device. Water Use Credits can be documented as:
A Water Use Credit is calculated in one of three ways: (1) by using the District’s factors as displayed in either Rule 24, Table 1: Residential Water Use Factors, or (2) by using Table 2: Non-Residential Water Use Factors, or (3) by using water savings factors that are recognized by the California Urban Water Conservation Council or that are clearly more accurate based on clear and convincing evidence. The Non-Residential Water Use Factors are based on regional averages; therefore actual water use may be higher or lower than the factored use. Water Use Credits may also be determined using equipment-specific water savings for Ultra-Low Consumption Technology.
Impacts of CDO Moratorium
The SWRCB Cease & Desist Order (CDO) imposed limits on the setting of new water meters (i.e. New Connections). District rules require a water meter for every new user when a New Structure is built. This requirement does not apply to incidental water use, such as a single bar sink in a Non-residential space, nor does it apply to tenant improvements provided there are no substantial structural modifications necessary to facilitate the changed use. Ideally, each user is separately metered, which provides the individual user with feedback regarding their consumption and helps the District enforce water rationing, when needed.
A Water Use Credit can offset demand in New Construction of New Structures and Expansions and Intensifications in Use. It cannot be identified as applying only to one or the other (i.e., a Water Use Credit is not specifically designated as available only to one type of construction or another), so may be impacted by a moratorium differently. Currently, the District continues to process and issue Water Permits for all types of uses, but when an Applicant applies for a meter at California American Water, they are affected by the moratorium on new connections. California American Water will not set new meters for New Connections approved after October 20, 2009.
A letter dated April 9, 2012, from Barbara Evoy, Deputy Director of Water Rights for the SWRCB (Exhibit 2-C) further clarifies how the moratorium affects the use of Water Use Credits. It appears that in the strictest interpretation, many of the Water Permits issued by the District are for projects subject to the CDO.
CEQA Considerations
Prior to consideration of this ordinance, an Initial Study must be prepared in compliance with the California Environmental Quality Act (CEQA). Staff quantified Water Use Credits that were formally documented and valid for the period of January 2000 through June 2012. Approximately 100 acre-feet of Water Use Credits would be subject to the proposed ordinance, plus an unknown quantity of credit that has not been formally documented as a Water Use Credit to date, but that would qualify as a Water Use Credit under District Rule 25.5. Almost two-thirds of the identified credits were documented from Non-Residential reductions in use, with the remainder from Residential uses.
The District has mandated future retrofits of existing Non-Residential uses and the State has mandated future HET sales and installations. During the time between now and when these mandates occur, retrofits to the new standards are potential Water Use Credits. Significant, water savings are expected to occur when Non-Residential uses (with the exemption of Visitor Serving Commercial that installed ULFT by December 31, 2000) convert from older non-ULFT to HET and implement other retrofits required by the District by 2013. A conservative estimate of 165 acre-feet is expected as a result of these requirements. Unquantified Water Use Credits exist throughout the District. Voluntary installation of High Efficiency Toilets (HET) is one example of retrofitting to higher efficiency fixtures than required that currently qualifies for a Water Use Credit. During January 2011, District staff began noted the number of voluntary installations of HET seen during Site inspections. The District mandates Ultra-Low Flush Toilets (ULFT). In one month, staff noted 68 voluntary HET installations in place of ULFT. Assuming that each HET has a potential Water Use Credit of 0.004 Acre-Feet Annually (AFA), staff identified 0.272 AFA of undocumented Water Use Credits during one month of routine Water Permit and Change of Ownership inspections. A number of retrofits occur that the District is not aware of.
An argument can be made that the former water uses that make up the pool of Water Use Credit that would be subject to this ordinance predate the precursor Order (SWRCB Order WR 95-10) to the CDO. The use or capacity for use was also accounted for in MPWMD’s Water Allocation Program Environmental Impact Report (EIR), adopted in 1990. New uses since 1990 that have been permanently abandoned were subject to the current Allocation process and would have required a Water Permit. Non-Residential Water Use Credit for demolitions and Permanent Abandonment of Use is often determined by using the Rule 24, Table 2: Non-Residential Water Use Factors. These factors are based on regional averages, have not been updated in 25 years, and may not accurately reflect water use trends on the specific Site, particularly when buildings slated for demolition are often underutilized in the years predating the demolition.
In an early version of a Water Use Credit tolling ordinance, staff identified a potential issue with allowing reuse of pent up Water Use Credits before new water supplies are available, particularly if the use creates additional unlawful diversions from the Carmel River or extractions from the Seaside Groundwater Basin. To counteract a potential increase in demand associated with Water Use Credits that could in turn result in additional non-compliance with California American Water’s Water Rights for the Carmel River and the Seaside Basin Adjudication Decision, staff proposed disallowing the use Water Use Credits until sufficient new water supplies are available to offset the potential burden of increased demand resulting from reinstatement of Water Use Credits.
Other Elements of Ordinance No. XXX
Ordinance No. XXX amends Rule 25.5-B to
expire Water Use Credits when the fixture becomes mandated by MPWMD, State or
Federal conservation programs. This
amendment to Rule 25.5-B will eliminate many of the currently undocumented (and
documented) Water Use Credits and will reduce the number of future Water Use
Credits, allowing conservation program savings to remain unused as reduced
consumption. As proposed, Water Use
Credits will expire upon the date mandated, despite a moratorium.
An alternate approach would allow a Water Use
Credit resulting from a retrofit that is eventually required to remain valid for
its first term only (i.e. five years).
At the end of five years, if there is a mandated retrofit in place for
that item, the credit would terminate.
In such a scenario, staff would recommend that the expiration occur
whether or not a moratorium was in place.
The argument supporting this approach is the timing required for
approval of remodel projects that might utilize a Water Use Credit. For Non-Residential Users subject to
mandatory retrofits in 2012 or 2013, the savings could be utilized for expansions
in use, but with a number of retrofit mandates looming close to the adoption of
this ordinance, a five year window would provide some relief for those
properties than have been contemplating use of a credit from these retrofits.
Above all,
the expiration of Water Use Credits when a retrofit becomes mandatory goes to
the heart of the MPWMD Conservation Program and the District’s legislative
function to manage water supplies. Conservation is a cornerstone of the
District. In 1986, the Board adopted a
conservation goal to reduce 2020 demand by 15 percent. At that time, demand was anticipated to
exceed 20,000 acre-feet. Today, the
Peninsula uses about half that amount.
And given that regulatory restrictions and limited storage facilities
have constrained use, the community has avoided water rationing through
exceptional conservation and water efficiency.
Conservation, including management and regulation of use, reuse and
reclamation are key concepts contemplated in the District’s enabling
legislation.
In 2009, Governor Arnold Schwarzenegger implemented the 20x2020 Water Conservation Plan. The 20x2020 Plan sets forth a statewide road map to maximize the state’s urban water efficiency and conservation opportunities between 2009 and 2020, and beyond. It set in motion a range of activities designed to achieve the 20 percent per capita reduction in urban water demand by 2020. These activities include promoting legislative initiatives that incentivize water agencies to promote water conservation, and creating evaluation and enforcement mechanisms to assure regional and statewide goals are met. MPWMD’s efforts contribute to meeting these goals.
Conservation
and efficient use of water do more than reduce reliance on limited water
supplies, help the community comply with goals set by the State of California,
or feel the full effects of the CDO.
Efficient water use allows a smaller water project to meet the existing
needs of the community. This in turn
will reduce the cost to the community and to the customer.
Last, there
should be discussion about the continued documentation of Water Use Credits if
this ordinance is passed. Between the
date this ordinance could be enacted (i.e. October 2012) and the date that
mandated retrofits are required of all Non-Residential Users, significant water
savings (previously estimated conservatively at 165 acre-feet) could accrue as
Water Use Credits. This number could be
higher. In addition, the date for which
a historical Water Use Credit is based (i.e. 1985) continues to recede in
history, creating a longer and longer time during which a water use may not be
active, but could qualify as a Water Use Credit if it were permanently
abandoned. Finally, the CDO and the
clarification letter from the SWRCB in April 2012 disallow the use of Water Use
Credits. However, only projects that
must contact California American Water are subject to restriction because the
District continues to process and issue Water Permits and the Jurisdictions continue
to issue Building Permits..
RECOMMENDATION: The Water Demand Committee should consider a recommendation to the Board, and should provide direction to staff on preparation of a final draft ordinance for California Environmental Quality Act (CEQA) analysis. In considering a recommendation, the committee should deliberate the extent to which this ordinance applies to existing and future Water Use Credits. Staff has drafted the ordinance in a broad sense to encompass all credits that have been impacted by the moratorium, although the scope could be limited to only the specific Water Use Credits addressed in the stipulation agreement.
IMPACT ON STAFF/RESOURCES: To be determined and presented in staff report to the Board.
BACKGROUND: A similar draft ordinance (Ordinance No. 146) tolling (or suspending) the expiration date of Water Use Credits affected by a California Public Utilities Commission (CPUC) moratorium, as well as a draft Initial Study on the revised ordinance, were presented to the Board on February 24, 2011. The former ordinance differed from the currently proposed ordinance in that it tolled (or suspended) Water Use Credits during a CPUC-ordered moratorium. The Water Use Credit under the proposed ordinance would be tolled until the termination of the moratorium and there were new water supplies available to offset the potential demand of all documented Water Use Credits. At such time, tolled Water Use Credits would be reinstated with the same value and remaining time to expiration as existed on the day a CPUC-ordered moratorium began.
An earlier version of Ordinance No. 146 (October 2010) contemplated tolling Water Use Credits until a CPUC-ordered moratorium was lifted. However, staff identified a potentially significant impact associated with concluding tolling before new water supplies are available, particularly if the use of pent up Water Use Credits creates additional unlawful diversions from the Carmel River or extractions from the Seaside Groundwater Basin. To counteract a potential increase in demand associated with Water Use Credits that could in turn result in additional non-compliance with California American Water’s Water Rights for the Carmel River and the Seaside Basin Adjudication Decision, staff added language to maintain the tolling until full compliance with the Monterey County Superior Court's Seaside Basin Adjudication Decision (as amended) was achieved and after additional water supply had been developed and released in a quantity sufficient to offset all documented Water Use Credits. The sufficiency of supply was to be determined in a written report by the General Manager and approved by the District Board in a noticed public hearing. This rule continued the tolling of Water Use Credits until sufficient new water supplies were available to offset the potential burden of increased demand resulting from tolling.
On February 24, 2011, the Board deferred action on Ordinance No. 146 to seek input from the Technical Advisory Committee (TAC) and the Water Demand Committee. The TAC discussed the Initial Study and Ordinance No. 146 on March 1, 2011, and unanimously recommended that the Board proceed with filing the Initial Study and a Notice of Intent to Adopt a Mitigated Negative Declaration. The Water Demand Committee also reconsidered the previous ordinance on March 9, 2011. There was consensus among committee members that the ordinance should not be presented to the Board until after the California Public Utilities Commission issued a final decision on California American Water’s Application No. 10-05-020 requesting authority to implement a moratorium in the Monterey District.
EXHIBITS
2-A Draft
Ordinance
2-B Stipulation
2-C SWRCB
Letter
U:\staff\Board_Committees\WaterDemand\2012\20120720\02\item2.docx