ITEM:            XI               PUBLIC HEARINGS

C.          CONSIDER SECOND READING AND ADOPTION OF ORDINANCE NO. 100 - AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE MONTEREY PENINSULA WATER MANAGEMENT DISTRICT TEMPORARILY SUSPENDING RECEIPT OF APPLICATIONS FOR WATER CREDIT TRANSFERS

SUMMARY:   Ordinance No. 100 (Exhibit C-1)  temporarily suspends 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” (i.e., identical) commercial-to-commercial or industrial-to-industrial expansions of an existing use.  The proposed ordinance also states that any payment of money or other value in compensation for the transferred water credit cannot exceed the connection fee that would apply to the increment of water use capacity pursuant to Rule 24.  The proposed ordinance was approved on first reading by the Board at its January 25, 2001 meeting.

The Board Chair and Vice Chair have suggested language that would modify the sunset date for the Ordinance No. 100.  Specifically, the language in Section Five, Effective Date and Sunset, would be changed as shown below, with additions shown in bold italic type (bold italic) and deletions in strikeout (strikeout):

This ordinance shall become null and void, and cease to have any continuing effect on the day following the sunset date as defined herein.  The sunset date shall be the ninety-first (91^st) day following adoption on second reading, provided however, that the board of directors may, extend this sunset date in the event additional time is required to review and research water credit transfer issues.  Each extension of the sunset date shall be limited to a period of ninety (90) days, and shall be authorized by motion, cause the earlier termination of this ordinance.  Such earlier termination shall be authorized by motion (4 votes in favor) at a regular meeting of the board of directors.  No more than two extensions shall be permitted under this ordinance.  Accordingly, the maximum length of time this ordinance may have effect shall be 271 days.   

The suggested changes would limit the period during which the District would not accept applications for water credit transfers to 90 days following adoption of the ordinance and would allow the Board to shorten this period by motion at a regular meeting.  If approved with the suggested changes, Ordinance No. 100 would go into effect on February 23 and sunset on May 23, 2001. 

RECOMMENDATION:   Following public comment, the Board should (1) decide whether or not to include the changes suggested by the Board Chair and Vice Chair to Section Five of the proposed ordinance regarding the sunset date and (2) decide whether or not to approve the second reading and adopt the proposed ordinance.

The District’s Technical Advisory and Policy Advisory Committees (TAC/PAC) reviewed draft Ordinance No. 100 and the status of the related water credit transfer study at its February 8, 2001 meeting.  By unanimous vote, the TAC/PAC voted not to support adoption of Ordinance No. 100.

BACKGROUND: At the January 27, 2000 meeting, the Board considered modifying the water credit transfer program to include residential uses.  The Board did not take action at the January 2000 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, 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.  The preliminary report that was presented on March 20, 2000, indicated that the anticipated water savings from the program were not occurring.  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.  The non-disclosure agreement was signed by both parties 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.

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.  The third party analysis of the water credit program is underway but has not been completed to date.

DISCUSSION/ANALYSIS: Adoption of the ordinance will prevent staff from accepting new transfer applications (except like-to-like transfer applications) while the Board considers taking action to modify or discontinue the water credit transfer  program.  A third party analysis by DCI Inc. of the findings presented to the Board in September 2000 on water consumption data supplied by Cal-Am and the water savings associated with credit transfers that was made by staff at the September 2000 meeting has been initiated and a report on the water savings at the transferring site is expected to be available to the Board in March 2001.  Information about water use at the site receiving the credit is available, but has not been analyzed.

There are presently nine transfer applications pending completion on file at the District.  Three have been received since Ordinance No. 95 expired in December 2000.  Once an application is deemed complete, it will be presented to the Board for consideration of approval.

PRIOR BOARD ACTION: Please see background information for prior board actions.

IMPACT ON STAFF/RESOURCES: Adoption of this ordinance will have minimal impact on staff work load.