3. CONSIDER ADOPTION OF SECOND READING OF ORDINANCE NO. 109
Program/Line Item No.: N/A
Staff Contact: David Laredo Cost Estimate: N/A
General Counsel Approval: Yes
Committee Recommendation: None
SUMMARY OF PRIOR ACTION:
Ordinance No. 109 is an ordinance to enable upgrades to the Carmel Area Wastewater District (CAWD)/Pebble Beach Community Services District (PBCSD) Recycled Water Project. This ordinance would enable water entitlements presently held by the Pebble Beach Company to be made available to properties throughout Del Monte Forest, rather than only to properties owned by the Pebble Beach Company (PBC) in order to finance the Project Expansion.
The original financing plan to facilitate construction of the Wastewater Reclamation Project was approved by the MPWMD Board in 1989 by Ordinance No. 39. This financing plan was followed by agreements among MPWMD, CAWD, PBCSD, PBC, and other recycled water users to finance, construct and operate, and sell recycled water. Problems have arisen relating to the quality of recycled water available for its intended use and inadequate quantities of recycled water. As a consequence, a significant amount of potable water has been needed each year to supplement or replace recycled water. Plans to physically improve the existing project have been developed. The purpose of proposed Ordinance 109 is to facilitate the financing of the contemplated improvements to the existing project.
To fund project improvements, the Pebble Beach Company has proposed a financing plan whereby water entitlements held by the PBC, in accordance with MPWMD Ordinance No. 39, would be made available to residential properties throughout Del Monte Forest, rather than only to properties owned by the PBC. Ordinance No. 109, as approved on first reading, would modify MPWMD Rule 23.5 to re-define benefited properties and provide a framework for the ancillary agreements for financing, construction and operation, and sale of recycled water.
The Board has considered several different versions of draft Ordinance No. 109. The evolution of this measure, and Board action on it, is partially summarized below:
October 20, 2003 - The Board passed Ordinance No. 109 on October 20, 2003 on First Reading by the unanimous vote of 7 – 0 (Motion by Henson, Second by Edwards).
November 24, 2003 - The Board adopted Ordinance No. 109 on second reading by the unanimous vote of 7– 0 (Motion by Henson, Second by Lindstrom). This motion followed adoption of a motion that Ordinance No. 109 “does not involve any new or different environmental circumstances that would trigger a need for further environmental review under Public Resources Code section 21166.”
The Motion by Henson, Second by Erickson, was adopted on a vote of 5 - 2.
December 15, 2003 – In accord with District Rule No. 23, Director Edwards requested reconsideration of the November 24, 2003 action of the Board to adopt Ordinance No. 109 on second reading. The Motion by Edwards, Second by Potter, was adopted on a vote of 7 - 0.
April 22, 2004 – On April 22, 2004, the Board reviewed and approved CEQA Findings in support of its determination that the criteria of CEQA Guideline Section 15162 enable the Board to rely on the prior EIR certified for the original recycled wastewater project. CEQA findings in support of the first reading of Ordinance No. 109 passed on a vote of 4 – 2 (Directors Lehman and Markey opposed, Director Potter was absent).
Ordinance No. 109 was also approved on first reading at the meeting of April 22, 2004, by a vote of 4 – 2 (Directors Lehman and Markey opposed, Director Potter was absent). Ordinance No. 109, as approved by Board, differed from the earlier November 24, 2003 version in the following aspects: (i) revised provisions describe the Project Expansion financing, (ii) a provision referenced the SWRCB position on measurement of Entitlement Water use, (iii) detail was added concerning the procedure for parties to challenge MPWMD determinations, (iv) implementation dates were clarified, and (v) duplicative findings were removed.
May 27, 2004 – Ordinance No. 109 (Exhibit 3-A) is presented for consideration on second reading. This version has been modified in accord with the Board’s direction at the meeting of April 22, 2004 meeting. The Board directed various revisions, at times providing specific language and at times characterizing desired revisions in more general terms. One of the more significant revisions in the latter category was to add in the concept of calculating water use by the District’s fixture unit methodology as authorized by SWRCB staff. Another significant revision was to add an “escape clause” (New Section Eight) voiding the agreements and Ordinance No. 109 if either (1) there was no Supplemental Financial Commitment within eighteen (18) months after the effective date of the ordinance, or (2) construction of the Project Expansion has not begun within twelve (12) months thereafter. Additional clean-up modifications have been made to the version of Ordinance No. 109 at second reading; these include: (1) limiting the amount of PBC’s Water Entitlement that can be sold to 175 acre feet, (2) eliminating references to completing one component of the Project Expansion only, (3) adding language to Section Nine to confirm that voiding the agreement “undoes” the Ordinance, and (4) various conforming revisions to avoid potential conflicts with other revisions described above.
Also presented for consideration for the second reading of Ordinance No. 109 is a set of revised and conformed CEQA Findings (Exhibit 3-B). This set of CEQA Findings reflect limits on reassignment of PBC’s existing Entitlement, and that the conveyed Entitlement cannot be used unless and until completion of the Project Expansion is guaranteed. Several minor number errors were corrected to accurately characterize the current state of Del Monte Forest development. A full description of these modifications is set forth below in this staff note under the heading, “CEQA REVIEW”
RECOMMENDATION: Staff recommends that the Board take the following actions:
1. The Board previously approved the revised CEQA Findings (Exhibit 3-B) to support the second reading and enactment of Ordinance No. 109. The Board should accept and approve the CEQA Findings in support of action to adopt Ordinance No. 109 on Second Reading.
2. Following the public hearing, the Board should consider whether or not to approve Ordinance No. 109, as presented (Exhibit 3-A), on second reading.
3. Direct staff and counsel to continue efforts to finalize the Supplemental Financing Agreement, Supplemental Construction and Operation Agreement, and Agreements for Sale of Recycled Water in order to implement Ordinance No. 109. Staff should be directed to return these revised documents to the Board for review and approval.
BACKGROUND: The CAWD/PBCSD Wastewater Reclamation Project began operation in August 1994. Since operation began, the recycled water users have experienced apparent stress-related symptoms in some of their turf areas, primarily the greens, due to the combination of high levels of sodium in the recycled water with low-salt-tolerant grass species used in those portions of the golf courses. As a result, significant quantities of potable water have been needed to meet the recycled water users’ water quality needs. In addition, potable water has been required to provide sufficient quantity of irrigation water during periods when demand for irrigation water exceeded the available supply of recycled water.
To address the problems of recycled water quantity and quality, all parties involved in the project have been working since 1995 to develop solutions. The parties now all agree that the best, most cost-effective solution is to (1) retrofit Forest Lake Reservoir in Del Monte Forest, formerly owned by California-American Water Co. but taken out of service several years ago, to provide the additional recycled water storage capacity needed to meet the water quantity requirements, and (2) add additional treatment facilities at the CAWD treatment plant to produce final treated water quality that meets the recycled water users’ needs.
In order to fund these improvements, the Pebble Beach Company has proposed a financing plan whereby water entitlements held by the Pebble Beach Company in accordance with MPWMD Ordinance No. 39 and current project agreements would be made available to residential properties throughout Del Monte Forest, rather than only to properties owned by the Pebble Beach Company. Ordinance No. 109 would change MPWMD Rule 23.5 to re-define benefited properties and provide a framework for the ancillary agreements for financing, construction and operation, and sale of recycled water.
As noted above, the Board reviewed earlier versions of Ordinance No. 109. The Board passed Ordinance No. 109 on October 20, 2003 on First Reading by the unanimous vote of 7– 0 (Motion by Henson, Second by Edwards). On November, 24, 2003, the Board adopted Ordinance No. 109 on second reading by the unanimous vote of 7– 0 (Motion by Henson, Second by Lindstrom). On December 15, 2003, acting pursuant to District Rule No. 23, Director Edwards requested reconsideration of the November 24, 2003 action of the Board to adopt Ordinance No. 109 on second reading. The Motion by Edwards, Second by Potter, was adopted on a vote of 7 - 0. Ordinance No. 109 was again approved on first reading (upon reconsideration) at the meeting of April 22, 2004, by a vote of 4 – 2 (Directors Lehman and Markey opposed, Director Potter was absent). CEQA Findings in support of this action were also approved.
Ordinance No. 109 proposes to change MPWMD Rule 23.5 to re-define benefited properties and provide a framework for the ancillary agreements for financing, construction and operation, and sale of recycled water.
As characterized below, a series of additional documents is needed to complete the proposed Financing Plan, including: (a) the Supplemental Financing Agreement, (b) the Supplemental Construction and Operation Agreement, and (c) the Agreement for Sale of Recycled Water. Preliminary draft versions of these documents were provided to the Board in the October 20, 2003 meeting packet. (Reference Exhibits 1-C, 1-D, and 1E to the April 22, 2004 meeting packet.) These draft agreements remain subject to negotiation, review and modification, and shall be modified to conform to Ordinance No. 109 as enacted.
The most recent State Water Resources Control Board (SWRCB) letter of May 10, 2004 (Exhibit 3-C) clarifies earlier comments submitted on the 2004 Draft EIR for the Pebble Beach Company’s Del Monte Forest Preservation and Development Plan, and also confirms that the Division of Water Rights “has no objection to continued use of the fixture method” as the means to account for entitlement water use.
The following documents have been prepared pursuant to the California Environmental Quality Act (CEQA) relating to the CAWD/PBCSD Project:
· MPWMD Resolution No. 89-21 adopted on October 3, 1989, certifying MPWMD’s reliance, as responsible agency, on the Final EIR for CSD/PBCSD Waste Water Reclamation Project certified September 21, 1989 by CAWD.
· Final Expanded Initial Study, Phase II – CAWD/PBCSD Wastewater Reclamation Project, dated February 23, 1996 and Negative Declaration adopted in PBCSD Resolution No. 96-04 adopted February 23, 1996.
Guideline 15162 provides a logic tree under which the Board is authorized to determine whether or not the present action (a) would cause a substantial change in the project which will involve new significant environmental effects or a substantial increase in the severity of identified significant effects, or (b) would involve changed circumstances or new information relating to significant new effects of the project or as to the severity of impacts of the project.
On April 22, 2004, the Board reviewed and approved CEQA Findings in support of the first reading of Ordinance No. 109. A revised and conformed set of CEQA Findings (Exhibit 3-B) supports the determination that CEQA Guideline Section 15162 enables the Board to rely on the prior EIR certified for the original recycled wastewater project.
The CEQA Findings presented in this packet update the prior version as follows: A sentence was added to Finding #4 to state, “The remainder of the potable water freed up by the Original Project has not been allocated by MPWMD for reuse of any kind.” Finding #8 was modified to parallel the text of the CEQA Guidelines. Finding #11 was modified to reflect the 175 AF limit on reassignment of PBC’s existing Entitlement, and also to state that the conveyed Entitlement cannot be used unless and until completion of the Project Expansion is guaranteed. Finding #21 was corrected to accurately conform to the map attached as Exhibit B to Ordinance No. 109. Findings #21 and #36 were added to state the Supplemental Financing Plan will not increase diversions from the Carmel River system because an average of 275 AF of potable water is now used for golf course irrigation, the Project Expansion will eliminate this use, and the total amount of Entitlement water available for reassignment is 175 AF.
IMPACT ON STAFF/RESOURCES: MPWMD’s legal and other expenses associated with development of this ordinance and subsequent agreements for implementation of the project improvements are eligible for reimbursement from the current CAWD/PBCSD Wastewater Reclamation Project.
3-A Ordinance No. 109 As Proposed for Second Reading
3-B CEQA Findings Related to Enactment of Ordinance No. 109
3-C May 10, 2004 Letter from Victoria A. Whitney, SWRCB
Reclamation Staff Note 5-27-04 (revised)