WATER DEMAND COMMITTEE
2.	DISCUSS RESPONSES FROM JURISDICTIONS ON NEAR-TERM NEEDS FOR HOUSING AND REVIEW NEXT STEPS
Meeting Date:		July 2, 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: N/A
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 existing 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 attached as Exhibit 2-A and 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 Technical Advisory Committee (TAC) meeting of July 2, 2020 will be an opportunity to receive this information and to discuss the District’s proposal for moving forward.

RECOMENDATION: It is the staff recommendation that a request is made for 75 AF of relief from the CDO, and if granted, allocations be made as shown in Table 6, with 5 AF held back to replenish the District Reserve used for the two Garden Road developments, to be reallocated as needed and determined at the discretion of the Board.

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 August 12-14, 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 3 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 6 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 is willing to set aside 4 AF for the school districts as a placeholder.

Responses received by the District from the cities of Carmel, Monterey, Pacific Grove, Sand City, and Seaside are provided in the exhibits. Responses were not received from Del Rey Oaks and Monterey County.

The initial responses can be summarized as follows:

Table 1.

Jurisdiction	Request (AF)	Percent
Carmel-by-the-Sea	10	11%
Del Rey Oaks	No Response	0%
Monterey	20 (avg)	22%
Pacific Grove	31	33%
Sand City	10	11%
Seaside	21	23%
Unincorporated County	No Response	0%
NPS	N/A	0%
POM	N/A	0%
School Districts	N/A	0%
Total	92	100%

Evaluation of Initial Responses: The District believes certain entities have over-reached and others are under-represented. As stated above, if we include the needs of the non-responders and the three under-represented entities, the totals could look much more like the following:

Table 2.

Jurisdiction	Request (AF)	Percent
Carmel-by-the-Sea	10	9%
Del Rey Oaks	3	3%
Monterey	20 (avg)	18%
Pacific Grove	31	27%
Sand City	10	9%
Seaside	21	19%
Unincorporated County	5	4%
NPS	3	3%
POM	6	5%
School Districts	4	3%
Total	113	100%

The District believes that 113 AF is too great a number to request the State Water Resources Control Board (SWRCB) provide relief for. It is more likely that an amount on the order of 75 AF is more reasonable – it is approximately 2% of the savings in annual production for customer service since the CDO, base on the most recent 5-year average as it compares to the value in 2009.

If the District is willing to request relief for 75 AF, then a method for allocating that to individual jurisdictions must be developed. A few alternative examples are developed below.

Weighting by Initial Response (adjusted): Based on the requests, above, and if we include the needs of the non-responders and the three under-represented entities, the totals could look much more like the following:

Table 3.

Jurisdiction	Allocation (AF)	Percent
Carmel-by-the-Sea	7	9%
Del Rey Oaks	2	3%
Monterey	14	18%
Pacific Grove	20	27%
Sand City	7	9%
Seaside	14	19%
Unincorporated County	3	4%
NPS	2	3%
POM	4	5%
School Districts	2	3%
Total	75	100%

Weighting by Population: An alternative approach might be to weight allocation of water by relative population in 2020.[1] The values below represent Monterey Peninsula population with Cal-Am connections. Doing so would result in the following:

Table 4.

Jurisdiction	Population	Percent	Allocation (AF)
Carmel-by-the-Sea	3,833	4%	3
Del Rey Oaks	1,949	2%	1
Monterey	28,726	31%	21
Pacific Grove	15,349	17%	11
Sand City	544	1%	1
Seaside	34,301	37%	25
Unincorporated County[2]	7,182	8%	5
NPS			2
POM			4
School Districts			2
Total	91,884	100%	75

Weighting by RHNA Value: One alternate approach to allocating by jurisdiction would be to compare the Regional Housing Needs Allocation (RHNA) values[3] for each entity and the relative proportion of each. Unincorporated County has been estimated:

Table 5.

Jurisdiction	RHNA Goal	Percent	Allocation (AF)
Carmel-by-the-Sea	31	2%	1.5
Del Rey Oaks	27	2%	1.5
Monterey	650	47%	31
Pacific Grove	115	8%	5
Sand City	55	4%	3
Seaside	393	28%	19
Unincorporated County	125	9%	6
NPS			2
POM			4
School Districts			2
Total	1,396	100%	75

It is noted that under this weighting mechanism, the City of Monterey would have more allotment than requested. Therefore, some of the Monterey allocation can be reassigned to the smaller entities as shown in Table 6.

Table 6.

Jurisdiction	RHNA Goal	Allocation (AF)
Carmel-by-the-Sea	31	3
Del Rey Oaks	27	3
Monterey	650	20
Pacific Grove	115	5
Sand City	55	4
Seaside	393	19
Unincorporated County	125	6
NPS		2
POM		5
School Districts		3
Total	1,396	75

EXHIBITS

2-A Response from City of Carmel

2-B Response from City of Monterey

2-C Response from City of Pacific Grove

2-D Response from City of Sand City

2-E Response from City of Seaside

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[1] Association of Monterey Bay Area Governments. 2018. “2018 Regional Growth Forecast.” Table 8, page 32

[2] Uses Cal-Am service area population reported in SWRCB June 2014 – September 2019 Urban Water Supplier Monthly Reports (Raw Dataset), minus urban areas, escalated at 5%.

[3] Association of Monterey Bay Area Governments. ND. “Regional Housing Needs Allocation Plan: 2014-2023.”