CONSIDER FIRST READING OF ORDINANCE NO. 96 -- AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE MONTEREY PENINSULA WATER MANAGEMENT DISTRICT REVISING THE DEFINITION AND REGULATION OF WATER DISTRIBUTION SYSTEMS

MEETING DATE: OCTOBER 26, 2000

SUMMARY: The Board will consider the first reading of a revised (Draft-4) version of Ordinance No. 96, which makes changes to existing rules and regulations that define and govern creation and expansion of water distribution systems, including mobile water distribution systems. The Draft-4 version of Ordinance No. 96 (Exhibit 1) reflects the Board's direction at its August 21, 2000 meeting. The ordinance intent is to balance reasonable regulation in light of existing concerns about protecting the public trust resources of the Carmel River. Exhibits 2 and 3highlight the substantive features that are incorporated into Draft-4 of the ordinance.

The Board will consider a conceptual outline of Implementation Guidelines for Water Distribution Systems (Exhibit 3). Formal Implementation Guidelines will be developed and reviewed by the Board in separate action once the ordinance is adopted. The Implementation Guidelines will provide more detailed information on procedures and information requirements.

Draft-4 of Ordinance No. 96 presently is written to require proof of water rights at the application stage for all applicants, and limits regulation of single-connection systems to the Carmel Valley alluvial aquifer (valley floor only) and the Seaside coastal areas. It also includes changes to rules governing permit fees to reflect current costs.

The Board will consider two basic policy questions that could change the ordinance text:

• Should the Board exempt single-connection, residential applicants from the requirement to prove water rights at the application stage? (requested by Director Potter)

 
• Should the Board also regulate single-connection systems in the upland areas of Carmel Valley? (requested by Director Erickson)

RECOMMENDATIONS: Staff recommends that the Board:

1. Approve Draft-4 of Ordinance No. 96 shown as Exhibit 1, and indicate which variation of the ordinance should be used (see Recommendation #2) regarding water rights and regulation of single-connection systems. Draft-4 reflects all previous text revisions approved by the Board as well as the direction provided at the August 21, 2000 public hearing. Vertical bars in the ordinance margin indicate sections with substantive changes from the Draft-3 versions. An overview of the features of Draft-4 is provided in Exhibit 2. Recommendations #3 through #6 highlight some of these features.

 
2. Determine whether alternative variations on the ordinance, as shown below in Table 1, should be part of the approved first reading. Depending on the variation selected, the Implementation Guidelines would be amended to be consistent with the ordinance text. Variations A and B address proof of water rights; Variations C and D address the geographic scope of regulation of single-connection systems. Please see the "Discussion" section below for more detailed information.

3. Concur that the Conceptual Outline of Implementation Guidelines for Water Distribution Systems shown in Exhibit 3 provides an adequate springboard to develop formal Implementation Guidelines that would be approved by Board Resolution in the future, upon enactment of the ordinance. The Implementation Guidelines would be available as a separate document that would function in tandem with the ordinance to clarify the permit process and required information. The Board should provide guidance to staff if additional clarification is needed.Exhibit 3 presently assumes Variation A and Variation C, and would be changed if other options are directed by the Board.

 
4. Concur that the additional definitions shown in Section Three of the ordinance (Exhibit 1, pages 3-6) adequately clarify terms within the ordinance. The Board should provide guidance to staff if additional terms should be defined. In particular, the Board should confirm that the definition of "controversy" is acceptable in the context of requiring proof of water rights:


A controversy exists when: (1) at least four Board members (or the hearing officer) at the public hearing on the application determine that additional water rights information is needed, based on the Board's own motion or in response to public agency concerns or a request by any member of the public; or (2) a person or entity notifies the Board (or hearing officer) in writing, prior to or at the public hearing on the application, of concerns about the proposed system potentially harming use of his/her water rights and/or impairing his/her ability to supply water from an existing water system. The Board (or hearing officer) shall define what additional information is needed and will continue the public hearing until adequate information is received. An applicant, or any other hearing participant or any Board member, may appeal the decision of the hearing officer to the full Board pursuant to MPWMD Rule 70.

5. Approve the recommended changes to the water distribution system permit fee structure (Rule 60) and fees for appeals and variances (Rule 63) to reflect current costs and staff time needed to process water distribution system permits. The new fees for an application to create a water distribution system (Rule 60) would be $1,400 for up to 20 hours of staff time, plus $70 per hour for additional staff time over 20 hours. The fee to amend a water distribution system would be $750 for single-connection systems (adding connections on a single lot/parcel) and $1,400 for multiple-connection systems (service area crosses property lines). There would also be a charge of $70 per hour for additional staff time over 20 hours.

The relatively low filing fees for an appeal ($125 to $750) would be the same as presently listed in Rule 63. However, Section 5 of Rule 63, "Additional Fees for Complex Appeals or Variances," would be changed from $30 per hour for staff time exceeding 20 hours to $70 per hour for staff time exceeding 10 hours. This suggested structure would keep fees low (below cost) for simple appeals but would adequately fund staff efforts for complex appeals.
 
6. Confirm the clarifications to existing Rule 54 and 57 stating that all new wells as of December 1, 2000 must be metered, regardless of the parcel size, location or annual production amount. Currently, there is confusion regarding this issue, and this language would help resolve the problem.

Ordinance No. 96 (Draft-3) was further refined for consideration at the August 21, 2000 meeting. At that meeting, the Board adopted a Negative Declaration that stated the ordinance would not result in significant adverse impacts to the environment. The Board also received information on the fiscal and resource impacts of ordinance implementation to applicants and MPWMD staff. On a 4-3 vote, the Board directed staff to incorporate staff's recommended changes to the ordinance, most notably that single-connection systems should be regulated only in the Carmel Valley alluvial aquifer and Seaside coastal areas, as well as amend the ordinance text to provide clarity on specific permit procedures. The Board also directed that the revised ordinance include proposed amendments to MPWMD Rule 60 (permit fees). The Board also expressed an interest in the number of lots that could potentially be affected and the quantities of water that could potentially be involved. For a more detailed background, please refer to the materials on this item in the April 27, May 15 and August 21, 2000 Board information packages as well as the minutes of those meetings.

DISCUSSION: In general, Ordinance No. 96 expands the scope of the District's regulation to include all water distribution systems and mobile water distribution systems (rather than excluding small systems); expands the definition of a water distribution system to include single-source projects and distribution systems which derive a source of supply from alternative sources such as imported water or desalination plants; expands the information that must be provided by permit applicants, including water rights information; sets a two-track process for potable systems and subpotable systems; sets additional minimum standards for approval, and requires additional findings that must be made by the Board.

Ordinance No. 96 would not have much of an effect for applications with two or more connections on two or more separately owned parcels because the District already requires extensive technical and legal information. Based on Draft-4 of Ordinance No. 96 (Exhibit 1), the greatest effect of the ordinance would be on single-family residential users in the Carmel Valley alluvial aquifer and Seaside coastal areas who plan to provide their own drinking water. These applicants presently need only to obtain a well construction permit from the Monterey County Health Department; and must register, meter and annually report their well production with the District. The ordinance would require these applicants to provide water quality and well capacity information and water rights proof (see Implementation Guideline worksheets #1-A and #1-B in Exhibit 3). These applicants must also pay an application fee (presently $750, and recommended to be $1,400 plus $70 per hour for more than 20 hours of staff time).

Alternative Text Variations - Proof of Water Rights

Variation A in Table 1 above reflects Draft-4 of the ordinance as currently written (see Exhibit 1, Rule 21-A(4) on page 8), and requires proof of water rights before the application is accepted from any applicant. Variation B lessens the requirement for single-connection residential applicants; they must provide documentation to support a water rights claim, but need not provide proof in the application phase. The definition of proof is provided in the ordinance text, and is consistent with the requirements that Monterey County recently imposed to demonstrate adequate water supply for subdivision applications (two or more parcels).

For both variations, more detailed documentation and proof of a water rights claim may be required by the Board (or hearing officer) if a controversy about the water rights exists. The term controversy is defined in Recommendation #4 above. If there is a declared controversy by the Board or hearing officer, the hearing would be continued until the necessary information, as defined by the Board or hearing officer, is received from the applicant. Decisions by the hearing officer may be appealed to the Board pursuant to existing appeal procedures (Rule 70).

Variation A requires every application to describe the type of water rights that is being claimed (e.g., riparian, pre-1914, appropriative, overlying) and provide "... written verification of legal water rights applicable to the type of right claimed." Using language very similar to Monterey County's recent ordinance, Ordinance No. 96 provides examples of verification, which could include a copy of a signed appropriation permit or domestic registration from the SWRCB, a Condition of Title Report, a full title opinion prepared by an attorney with expertise in water law, a judicial declaration of right, or other compelling documentation that supports the claim. The proof requirement is most relevant for applications in the Carmel Valley alluvial aquifer, where various types of water rights exist, and where some rights were extinguished or restricted in past decades. It is notable that being listed on Table 13 of SWRCB Decision No. 1632 is not considered proof of an appropriative right.

Importantly, the ordinance recognizes overlying water rights for applications outside the jurisdiction of the SWRCB that extract water from percolating ground water. California law recognizes that water rights run with the land in these situations. Thus, the applicant need only provide a deed showing ownership of the property to establish proof of water rights in areas such as the Carmel Valley upland hillsides, Seaside coastal area and the Highway 68 corridor.

Variation B exempts single-connection residential systems from the proof requirement at the application stage. The word "single-connection" refers to one or more buildings or structures if they occur on the same parcel with one Assessor's Parcel Number (APN), such as a "granny unit", caretaker's cottage, horse barn, etc. The use must be residential. Splitting a single parcel would cancel the exemption. Staff's understanding is that the Variation B exemption would not be extended to single-connection commercial systems nor systems serving two or more APNs with the same ownership.

Pros and Cons. Variation A would require less judgement by staff about the adequacy of the water rights documentation because specific requirements would be known. There would also be a lower probability of a controversy about water rights at the public hearing if proof of rights is included in the application package. Applicants in the Carmel Valley alluvial aquifer claiming riparian rights would potentially benefit from the proof requirement because they could provide tangible evidence to support a finding of "a valid superior right", which would override the ordinance requirement to deny an application if it contributes to an existing overdraft (see Exhibit 1, Rule 22-C(4) on page 14). Otherwise it may be difficult for the Board to defend approval of a permit application that contributes to overdraft in the Carmel River Basin.

From the applicant's perspective, especially for small single-connection residential applications claiming riparian rights to the Carmel Valley alluvial aquifer, the proof requirement in Variation A may be considered unreasonable or burdensome due to the time delays and cost associated with the verification effort. For appropriators, obtaining a permit or domestic registration from the SWRCB may take months to years.
 

A related policy question is whether or not the Board wishes to fund an update to research conducted by the District in the early 1980s on which properties in Carmel Valley relinquished or constrained their rights in some way. If conducted, the title searches and other research could be available to permit applicants. District Counsel has contacted local experts, but none has been able to provide a reliable estimated cost for such an effort. A District-funded effort of any amount is not budgeted in Fiscal Year 2000-2001.

Alternative Text Variation - Regulation of Single Connections in Carmel Valley

Variations C and D in Table 1 above represent two options about the regulation of single-connection systems (both residential and commercial) in Carmel Valley. The term "single-connection" also refers to multiple connections (buildings) on the same parcel, but not different parcels with the same or different owner. The current text of Draft-4 of the ordinance reflects Variation C, consistent with Board direction on August 21, 2000. It states that single-connection systems would be regulated only in the Carmel Valley alluvial aquifer and Seaside coastal areas. Variation D would expand the single-connection regulation to the upland areas (hillsides) of the Carmel River watershed (including areas of Cachagua within the District) that are outside the jurisdiction of the SWRCB.

The issues to consider when making a choice between Variations C and D include hydrologic and other environmental impacts on the public trust resources of the Carmel River, impact to MPWMD staff and resources, impact to applicants, and equity issues. The following paragraphs provide some historical data and briefly discuss each of these issues.

Well and Water Use Trends. Exhibit 4, Table 1 shows that 219 of the 406 well construction permits (54%) approved by the Monterey County Health Department from 1993 through October 2000 were in the Carmel Valley upland (CVU) area. Permits issued in the upland area have ranged from 10 to 67 per year, with an average rate of 27 well permits per year. An additional 90 permits (22%) were in the Carmel Valley alluvial aquifer (denoted as AS1 through AS4), ranging from six to 20 permits per year, and averaging 11 well approvals per year. The remaining 97 permits were from all other areas (ranging from two to 19 permits annually, an average of 12 permits per year). It should be noted that not all Health Department well permits are for new wells. Some applicants must reapply for a well permit if they did not construct the well the first year, or need to replace a well.

Exhibit 4, Table 2 shows that there was a net increase of 182 active non Cal-Am wells within the District from Reporting Year (RY) 1993 through RY 2000. Roughly half were drilled in the Carmel Valley Upland area; about one-third were drilled in the Carmel Valley alluvial aquifer (AS1-AS4).
 

Exhibit 5 shows that in RY 2000 (July 1, 1999 through June 30, 2000), a total of 239 non-Cal-Am wells in the Carmel Valley alluvial aquifer produced 2,118 AF. These wells range from larger irrigation wells on farms and golf courses to small single-family backyard situations. In the same period, a total of 172 wells in the Carmel River upland watershed ("CVU" and "CAC" areas) produced 424 AF. Similarly, these wells may range from larger agricultural wells for ranches or vineyards to small single-family settings. For comparison, Cal-Am produced 11,268 AF from the Carmel River system in RY 2000, over five times the total non-Cal-Am production from alluvial and upland watershed sources.

Based on water use data and zoning information, District staff believe most new single-connection water distribution system applications in the Carmel Valley upland area would be for residential use and would produce less than one acre-foot per year (AFY) on average. District records for non-Cal-Am residential users indicate that water production for a single-family home is about 0.5 AFY in the Carmel Valley/Hidden Hills area.

Hydrologic Impact to the Carmel River. Computer modeling and field experience indicate that wells in the Carmel Valley alluvial aquifer have had a measurable effect on waters within the jurisdiction of the SWRCB. The State has determined that the river is over-appropriated in certain seasons and that adverse effects to the public trust resources currently exist. Agencies such as the National Marine Fisheries Service (NMFS) and U.S. Fish and Wildlife Service (USFWS) have also expressed great concern about existing diversion effects to the threatened steelhead and California red-legged frog.

A measurable hydrologic impact of water extractions from the Carmel Valley upland area is difficult to demonstrate in the reasonably foreseeable future. Upland wells would intercept water that would eventually run downhill to the river, but it may take decades for the water to reach the river alluvium through the consolidated bedrock.

Nearly any lot in Carmel Valley that meets Monterey County Health Department well construction set-back standards could potentially drill a well for subpotable or potable use, depending on the water quality. Because it is difficult to accurately predict the total number of lot owners that may choose to drill wells in the future, this assessment is based on a 10-year period assuming a reasonable rate of new wells coming on line each year. A 10-year time frame is used because a long-term water supply project (a new dam or Plan B) that significantly reduces current Cal-Am production impacts on the Carmel River should be operational by year 2010.

Assuming a relatively high rate of 40 to 50 mostly residential, new, upland wells per year (based on data in Exhibit 4) averaging 0.5 AFY, roughly 20 to 25 AFY of new production, or 200 to 250 AFY cumulative new production, could occur by the year 2010. Using the 250 AFY value, this equates to a loss of 0.68 AF/day or 0.3 cubic feet per second spread over an area extending vertically to the hilltops on both sides of Carmel Valley and more than 20 miles into the valley interior. Based on these data, a measurable effect on the Carmel River or its habitat value could not be detected.

Other Environmental Impacts. Development in the upland area could lead to increased erosion, sedimentation and runoff from relatively impervious surfaces such as roads associated with new construction. The EIR prepared by Monterey County for the General Plan/Carmel Valley Master Plan as well as specific EIRs for subdivisions and major structures must address a host of environmental effects required by CEQA. Standard conditions of approval for building permits include appropriate grading and construction practices to minimize erosion or chemical spills, proper design and construction of septic systems, and other measures to avoid adverse effects to the river system. It is recognized that erosion/sedimentation can occur from construction even with mitigation measures in place. When making determinations about water distribution system permits, the District can consider only environmental issues within its authority.

MPWMD Workload. As described in the August 21, 2000 Board packet, staff believes it can manage the additional workload associated with Variation C, but would have difficulty if upland areas were added. Exhibit 4 data indicate that six to 20 applications per year would be expected from the Carmel Valley alluvial aquifer and Seaside coastal areas combined, averaging about 11 applications per year. Currently, the District processes one to four water distribution system permits of varying complexity each year. Variation D could add another 10 to 50 applications per year, averaging 25 well permits per year. Additional staff would be needed to process this number of applications, and funds have not been budgeted to date for this purpose.

Legal and Other Issues. Based on the direct measurable hydrologic link between well extractions in the Carmel Valley alluvial aquifer, well-documented concerns by agencies and groups about the public trust resources of the Carmel River, and concerns about seawater intrusion and lowering ground water levels in the Seaside Basin coastal areas, regulation of single-connection wells in the alluvial aquifer and Seaside coastal areas (Variation C) would be more defensible than regulation of upland wells (Variation D). In areas that extract water from percolating ground water, water rights associated with the property are protected by State law as long as they are used for a reasonable and beneficial use.

Reasons to pursue Variation D include the indirect effect of upland water extraction on the public trust resources in Carmel Valley, consistency (i.e., all wells in the Carmel River watershed would be equally regulated), and the fact that proof of water rights for upland applicants would be as straightforward as providing a copy of the deed to the property.

Recommended Permit Fee Changes

Whether or not Ordinance No. 96 is approved, staff recommends that Rule 60, Permit Fees, be changed to reflect actual, current permit application processing costs for water distribution systems. Current fees reflect staff rates of $30 per hour, which is less than half of the rate charged by other entities, such as the Monterey County Health Department ($85/hr and more), for similar field inspections, CEQA processing and other technical data evaluations. Staff recommends that the Board incorporate a new simplified fee schedule of $1,400 plus $20 per hour for more than 20 hours of staff time for permit applications to create a water distribution system. The $1,400 figure is based on the average actual total costs of involved staff members ($70 per hour) times the minimum staff time needed to process a simple permit (20 hours). More complex permits would be charged a flat hourly rate of $70 per hour for staff time greater than 20 hours. Staff members presently keep logs of time expended for each water distribution system permit, and the applicant is provided copies of these logs as documentation along with the bill for the permit processing fee.

Staff recommends that fees for amending a water distribution system be two-tiered: $750 for single-connection systems and $1,400 for multiple-connection systems. Similarly, $70 per hour would be charged for complex projects that take more than 20 hours of staff time to process.

Please refer to Recommendation #5 regarding changes to fees for appeals. The Board may wish to address the question of whether the appeals fee should be refunded to the successful appellant.

Exhibit 6 includes letters from the public received by October 19, 2000. Additional letters will be provided to the Board under separate cover, and will be available at the District office for review.

IMPACT TO RESOURCES: The FY 2000-2001 budget does not include funds to implement Ordinance No. 96. Staff believes the Draft-4 version of Ordinance No. 96 with Variation C is achievable within the existing workload and budget, based on recent trends in well construction permits issued by the County of Monterey.

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reviewed by DF 10/20/00