Meeting Date:

December 13, 2004





David A. Berger,




General Manager

Line Item No.:


Prepared By:


Henrietta Stern

Cost Estimate:


General Counsel Approval:  Yes

Committee Recommendation:  N/A

CEQA Compliance:  Categorical Exemption, Guidelines Section 15301


SUMMARY:  The Board will consider approval of an application by co-applicants California American Water (Cal-Am) and Lombardo & Gilles (attorney for Sullivan) to expand the Cal-Am water distribution system (WDS) boundary to annex the Sullivan parcel (APN 197-081-024) located at 32825 Carmel Valley Road, Carmel Valley.  MPWMD Rule 22-E requires that a written permit be obtained from the District Board to amend a Water Distribution System service area.   


The Sullivan parcel is not within the Cal-Am service area, but until recently, had been receiving Cal-Am water for the home via a meter located on an adjacent parcel (APN 197-081-025, owned by Jon Showe).  The Showe parcel is also outside the Cal-Am service area, but has had an active Cal-Am connection and meter to serve the residence for several decades (estimated since 1947).  In March 2004, the physical connection between the Showe parcel (water source) and the Sullivan parcel (water recipient) was severed by the previous owner of the Showe parcel (Stillwagon).   Thus, the applicants have requested that the Sullivan parcel be annexed into Cal-Am in order to regain Cal-Am water service for the Sullivan residence and obtain a separate water meter. 


This staff note refers to the names of current property owners for the two parcels associated with this application to avoid confusion.  Both owners recently purchased the respective properties (July  2003 and October 2004, for Sullivan and Showe, respectively).  Notably, previous property owners had taken various actions over time enabling unpermitted Cal-Am service to the Sullivan parcel.  These actions were not disclosed to the Sullivans.  Though the Showe property plays a role in the history of the Sullivan property, only the Sullivan property is the subject of this public hearing.   The relationships and history are somewhat complex, and are described in more detail in the “Discussion” section below, based on information available to the District as of December 6, 2004.


Application #20040923SUL to amend the Cal-Am WDS is provided as Exhibit 13-A.   The entire package of application materials and related correspondence is available for review at the District office (see “Discussion” section below for a listing of application materials).  This public hearing has been properly noticed via mailed notices, posting on the District website, onsite posting, and posting on the District office. 


Pursuant to MPWMD Rule 181, Board members must disclose any oral or written ex parte communication on this quasi-judicial decision.  



Staff recommends that the Board of Directors take the following actions:


t                  Adopt the MPWMD Findings of Approval for Application #20040923SUL provided as Exhibit 13-B.  The Findings include and refer to CEQA compliance in the form of a Notice of Exemption (Exhibit 13-C) as described in the “Discussion” section below).


t                  Approve Application #20040923SUL and issue Permit #M04-02 with the Conditions of Approval specified in Exhibit 13-D.  These conditions would not increase the Cal-Am production limit.  MPWMD does not set a numerical connection limit on the main Cal-Am system.  Several special conditions are added to ensure compliance with MPWMD Rules & Regulations.  These include conservation and retrofit requirements, the need to obtain an MPWMD water connection permit and pay fees for the water fixtures associated with the home on the Sullivan property, and the need to properly obtain a Cal-Am meter.  A condition is also added to indemnify MPWMD against third-party claims/lawsuits, including MPWMD defense costs (see “Discussion” below.)


Rationale for Staff Recommendation

This application elicits policy decisions related to the method of enforcement of District Rules & Regulations.  The basic facts are that from 1982-83 to March 2004, the Sullivan parcel was unlawfully connected to Cal-Am due to actions taken by previous property owners, of which the Sullivans were unaware.   The basic policy question is, “Should the Sullivan parcel be allowed to legally reconnect to Cal-Am?”  Factors considered by staff include:


·        overall District management goals,

·        environmental impact

·        culpability of current owners,

·        rewarding unlawful behavior,

·        perception of punitive action,

·        pros and cons of approval versus denial; includes precedent issues and preserving integrity of MPWMD Rules & Regulations.


The staff recommendation is approval with several conditions, which effectively balance the above factors, and take into account all known information to date (12/06/04).  Staff believes it is in the best interest of the District, community and environment to reduce the number of unauthorized Cal-Am water recipients, and ensure that all Cal-Am recipients are properly connected and separately identified.  This facilitates more accurate tracking of Cal-Am water use, which is especially important during a drought or other event that necessitates mandatory conservation by each Cal-Am account.   The intent of the staff recommendation is to bring this parcel into compliance with District regulations, even if compliance is achieved many years after the home was built.  Staff believes this is the most appropriate solution given the facts of this particular situation.  Staff does not believe it is a precedent due to several unique factors in this case.


As described in the “Discussion” section below, key factors in the staff recommendation include:


·        Management Goals:  A properly recorded Cal-Am connection for the Sullivan parcel is consistent with the MPWMD management goals described above.

·        Environmental Impact:  Reconnection to Cal-Am would result in minimal effect to the environment or compliance with State Water Resources Control Board (SWRCB) Order WR 95-10 due to a history of Cal-Am use on the parcel since 1982-83 until March 2004.

·        Culpability:  The Sullivans were not aware of the unauthorized water connection; their attorney contends it was never disclosed to them as required by real estate law.

·        Rewarding Unlawful Behavior:  Unlawful behavior by a property owner is not being “rewarded” because the Sullivans did not knowingly engage in unauthorized activity.  The staff recommendation may have been different if the Sullivans knowingly purchased the property to enjoy an unauthorized Cal-Am connection.  Notably, an MPWMD permit was issued for the Sullivan parcel residence in 1982, but was not activated for unknown reasons (MPWMD permit expired after one year).

·        Punitive Action:  There does not appear to be an alternative source of water supply with adequate quantity or quality to serve the home, based on current well records.  This has ramifications relating to the potential need for the Sullivans to abandon the property as a residence and pursue legal action.

·        Pro and Cons:  All factors considered, the merits of approval outweigh the detriments in this particular case. Approval is not considered to be a precedent due the unique combination of facts of this case, which are unlikely to be repeated.  The integrity of MPWMD Rules and Regulations is not compromised because the conditions of approval require full compliance.


DISCUSSION:  The following paragraphs address various aspects of the application based on information known as of December 6, 2004.  The full set of application materials in the file includes:


t                  MPWMD Form IG96-5, Application for Water Distribution System Permit, with cover letter.

t                  Parcel map showing property location.

t                  Letter from D. Messenger dated October 11, 2004 to MPWMD with answers to questions posed at an October 1, 2004 meeting between applicant and MPWMD representatives.  The letter attaches 1982 assessor information confirming construction of the subject residence that year.  (Note:  The October 11 letter anticipated and responded to an MPWMD letter dated October 14, 2004 requesting such information.)  The October 11, 2004 letter clarifies and corrects inaccurate information in the application materials (responses to questions # 35, 36 and 38) regarding the length of time the home has received Cal-Am water.

t                  Letter from MPWMD dated October 22, 2004 advising that the application is complete and requesting clarification of certain facts, refined figures, etc.

t                  Letter from D. Messenger dated October 27, 2004 providing refined figures, Assessor’s records and public noticing materials.


Additional information supplied by the applicant or MPWMD staff during preparation of the staff note, Findings and Conditions for the December 13, 2004 hearing includes:


t                  Letter from D. Messenger dated December 6, 2004 with clarifying information requested by MPWMD staff.

t                  E-mails and facsimiles from Lombardo & Gilles with additional information and figures as requested by MPWMD staff.

t                  Materials from MPWMD records on the parcel, including non-potable well production.

t                  Real estate transaction histories for Sullivan and Showe parcels (RealQuest).

t                  Letter from G. Gillespie dated December 5, 2004 regarding use of Cal-Am water on Sullivan parcel.

t                  MPWMD Carmel River streamflow records for aquifer subunit 1.


Existing Setting  

The Sullivan parcel (APN 197-081-024) is 7.7 acres in size, and is located at 32825 Carmel Valley Road, across Carmel Valley Road from the entrance to Sleepy Hollow.   The parcel includes a residence approved by Monterey County in 1982.  The residence on the Sullivan parcel never received its own Cal-Am meter, and evidently used water from the Showe parcel from the 1982-83 timeframe until March 2004.  MPWMD permit staff is aware that a Cal-Am water connection permit for the Sullivan parcel residence was issued in the 1982-83 timeframe (no exhibit; a copy of the permit has not been located at the printing deadline for this item).  The permit expired after one year and a Cal-Am water meter was never set for the Sullivan parcel.  Despite this fact, Cal-Am service personnel assisted the previous owner when he had water problems on at least two occasions (Exhibit E).


Ironically, current District permit staff believes it was a mistake to have issued the MPWMD permit in 1982 because the parcel is outside the Cal-Am system.  There may have been confusion at that time about the parcel’s relationship to Cal-Am because it is immediately adjacent to the Cal-Am boundary (see Figure 1 attached to Exhibit 13-D).  It is unknown why the property owners at that time chose to establish their own interconnection.  Until the connection to the Showe parcel was severed by Stillwagon in March 2004, the Sullivan parcel was considered to be an unauthorized, unpermitted connection to Cal-Am.  When the Sullivans purchased the parcel on July 31, 2003, no mention of the unauthorized Cal-Am connection was made in the required real estate disclosure form (Exhibit 13-E). 


In March 2004, the physical connection between the Showe parcel (water source) and the Sullivan parcel (water recipient) was severed by Stillwagon, the previous owner of the Showe parcel.   The applicant (Lombardo & Gilles) believes that the connection was severed due to a planned sale of the parcel by Stillwagon, and the desire to avoid concerns by prospective buyers about the legal, billing and logistical issues associated with one meter serving two residences.  Others have opined that Stillwagon was not aware of the connection until unusually high water bills aroused his curiosity, and the physical connection was discovered.  There is no evidence of a written agreement for water service between the Showe and Sullivan parcels.  Reconnecting the Sullivan parcel to the Showe parcel is not an option because: (1) it is illegal, and (2) the current owner (Showe) was advised that Stillwagon had severed the connection, and Mr. Showe does not wish to reconnect it (Exhibit 13-E).  It is unknown why the Showe parcel has been served by Cal-Am for many decades (estimated year of service is 1947), and was never formally part of the Cal-Am service area.  It is anticipated that an application to annex the Showe parcel into Cal-Am will be submitted to the District next year.   There are several examples of “remote connections” within the Cal-Am system, each with their own unique history.  


Non-Potable Well Information

It is notable that an active non-potable well exists on the Sullivan property.  District records indicate the well was first drilled in 1973 and registered by MPWMD in 1981.  No water use was reported until 1992.  The owner at that time indicated the well casing was old and had very limited capacity, enough for vegetation “directly around the residence and a few fruits trees.”  The water quality was also described as poor due to high sulfur and iron content, deemed to be “unusable for anything other than the small garden, the fruit trees and a small lawn (gopher patch) area.”  A Land Use inspection was conducted by the District in 1992, and estimated 0.16 acre-feet per year (AFY) of water use from the well.  Annual water use reporting in 1992-1993 estimated water use at about 0.30 AFY; only 0.01 to 0.04 AFY has been estimated in recent years.   Based on this information, it is unlikely that the well could serve as a water source for the Sullivan home in its current condition.  (The standard factor for a Carmel Valley home used by the District for a new well is 0.50 AFY.)  The well would need to be refurbished or replaced, and pumping and water quality testing conducted in order to make a determination of adequate supply and quality for the home.


Notably, Sullivan owns the adjacent 48-acre parcel (APN 197-081-023), which has three registered, metered wells.  The wells have been inactive in recent years.  Preliminary data for water year 2004 indicates use of less than 3,000 gallons for the year (roughly 0.009 AFY). 


The application materials (October 11, 2004 letter from D. Messenger) mention a well serving vineyard and equestrian use on the 7-acre Sullivan parcel.  Recent aerial photographs indicate the absence of any vineyard on either of the parcels owned by the Sullivans, though such use could be planned in the future.   The aerial photographs show an object that could be a horse trough on the adjoining 48-acre parcel. 


Proposed System

The Sullivan property currently does not have Cal-Am water service for  potable use in the residence. Thus, the applicants have requested that the Sullivan parcel be annexed into Cal-Am in order to regain Cal-Am water service for the Sullivan residence and obtain a separate water meter.     The application proposes amending the Cal-Am service area to annex APN 197-081-024 (Sullivan).


Alternative Board Actions on Application  

Unlike most WDS applications, technical issues relating to the ability of Cal-Am to serve the Sullivan parcel are not the controlling factors in this permit decision.  In contrast, the issues are more policy-driven.  Staff carefully considered the six factors described in the “Recommendations” section above.   Conceptually, the Board could address this application in one of three ways, as described below:



Ø      Option 1, Deny Application.  The Board could take a strict interpretation of District Rules & Regulations and deny the application. Grounds for denial may include the fact that Cal-Am service to the Sullivan parcel was unlawful and unpermitted from 1982-83 until March 2004, and should be permanently terminated.  Reinstatement of such unlawful Cal-Am use, however small, should not be allowed in light of State Water Resources Control Board (SWRCB) Order WR 95-10.  Cal-Am service is not essential for the Sullivan’s health and well-being because (a) the parcel is not the primary Sullivan residence, and (b) the Sullivans own an undeveloped adjacent parcel with three non-potable wells that potentially could serve their residential needs (assuming successful testing and proper WDS permit).  Lack of disclosure by the seller of an unauthorized source of water for the Sullivan residence is a real estate issue that can be resolved through the appropriate legal channels, and need not involve MPWMD.  Also, approval of this application could be viewed as rewarding illegal use and compromising the integrity of District Rules & Regulations. 


Ø      Option 2, Approve Application as Requested.  The Board could approve the application without special conditions.  Grounds for approval may include the physical reality that Cal-Am service to the Sullivan parcel has occurred since 1982, and was only recently terminated by Stillwagon in March 2004.  Reinstatement of Cal-Am service to the home a few months after termination would not result in a measurable effect on the environment because there is high-quality habitat and year-round flow in the Carmel River in the Sleepy Hollow area.  (The parcel is served by nearby Cal-Am wells.)  Approval would not substantively jeopardize Cal-Am’s compliance with Order WR 95-10 in 2005 and beyond because water use on the parcel is part of Cal-Am historical use through March 2004. Cal-Am is the co-applicant, so it is obviously not worried about this issue.  The fact that a non-potable well exists on the property to irrigate landscaping means that Cal-Am service is focused on indoor residential use only, thus reducing Cal-Am use.  Annexing the parcel would help facilitate lawful Cal-Am use and help “right” a historical “wrong.” The Sullivans were not aware of the unauthorized  water connection because it was never disclosed to them.  Thus, this is not an “amnesty” situation where unlawful behavior by a property owner is rewarded.  The Sullivans did not knowingly engage in unlawful activity.  It would be unfair for them to bear the brunt of the previous owner’s actions.  A viable alternative water supply has not been demonstrated, and it is unknown whether a new well could be drilled to supply adequate water quality and quantity for a single-family residence and associated needs.  Policy-wise, these types of annexations should be encouraged to reduce unauthorized Cal-Am connections and properly regulate every Cal-Am connection.  It is believed that only a handful of these situations exist within the District.


Ø      Option 3, Approve Application with Conditions to Ensure Compliance with MPWMD Regulations.  The Board could approve the application with conditions to ensure prudent use of water resources and compliance with MPWMD permit regulations.  The following section highlights these conditions.


Recommended Conditions for Option 3

Staff believes the following conditions protect the community and environment as well as the integrity of MPWMD Rules & Regulations.  They are not considered to be punitive, but also do not reward the parcel owners for ignoring MPWMD rules for many years.  Suggested conditions found in Exhibit 13-D include:


Ø      The Cal-Am production limit will not be increased by reason of this annexation.


Ø      Low water using fixtures, if not already installed in the home, will be required.  Drip irrigation, where reasonable (best management practices), and other means to conserve water will also be required.


Ø      An MPWMD water connection permit must be obtained.  The applicant must comply with current water connection rules and current fees charged for the fixtures in the home as if it was a new home being built today.


Ø      Any remodeling or expansion of the home will be subject to MPWMD rules.


Ø      The applicant shall indemnify MPWMD against all third party claims and lawsuits, including MPWMD defense costs. 


Findings of Approval

The Findings of Approval (Exhibit 13-B are based on evidence provided in the application materials (Exhibit 13-A and supporting attachments on file at the District office).  Staff believes the application meets the criteria and minimum standards required by District Rule 22.  Pertinent information includes application materials, zoning and existing land use, as well as conditions to be imposed on the approved application.  It is noted that lack of data and documentation make some Findings problematic, but the Board should also consider the general Rule of Reason confirmed by past CEQA litigation.


Annexation of the Sullivan parcel does not change the Cal-Am production limit set by the MPWMD Water Allocation Program or supersede Carmel River diversion limits imposed by SWRCB Order 95-10.  Annexing the Sullivan parcel would acknowledge one new recorded Cal-Am service connection, though the actual number of Cal-Am connections would not change (this was an unrecorded connection for more than 20 years).  Conditions of Approval would require low water using fixtures, if not already installed in the home, as well as drip irrigation, where reasonable (best management practices) in additional to compliance with MPWMD regulations. 


CEQA Compliance

The District Board must comply with the California Environmental Quality Act (CEQA) as well as MPWMD regulations.  Staff recommends that the Board adopt a Categorical Exemption pursuant to CEQA Guidelines Section 15301.  The Class 1 exemption, “Existing Facilities,” applies because the WDS would be appurtenant to allowed uses on an existing, approved, developed residential parcel which was created as the result of CEQA review by Monterey County.  A Draft Notice of Exemption is attached as Exhibit 13-C to be filed with the County Clerk upon Board approval.



13-A    Application #20040923SUL dated September 23, 2004.

13-B    Draft Findings of Approval for Application #20040923SUL

13-C    Draft Notice of Exemption from CEQA for Application #20040923SUL

13-D    Draft Conditions of Approval for Application #20040923SUL, Permit #M04-02

13-E    December 6, 2004 letter from D. Messenger and attachments