ITEM:		ACTION ITEMS
13.	DISCUSS CONCEPTUAL ORDINANCE CLARIFYING RULES RELATED TO WATER PERMITS AND CREDITS
Meeting Date:			April 17, 2006	Budgeted:	N/A
From:			David A. Berger,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Stephanie Pintar	Cost Estimate:	N/A
General Counsel Review: Yes
Committee Recommendation: At it’s January 23, 2006 meeting, the Water Demand Committee expressed support for revised rules that would provide clear guidelines for the public and staff, and voted unanimously that the Board should review the conceptual draft ordinance prior to first reading. At its March 7, 2006 meeting, the Technical Advisory Committee (TAC) unanimously supported the proposed changes and recommended the Board consider the draft ordinance.
CEQA Compliance: Will be initiated prior to formal consideration of ordinance.

SUMMARY: Presented for discussion is a draft conceptual ordinance to amend, revise, and update District Rules and Regulations related to water permits and water credits (Exhibit 13-A). These changes are supported by the District Board’s Water Demand Committee and Technical Advisory Committee (TAC) and were developed by the Water Demand Division staff to facilitate completion of a Policies and Procedures Manual. Before the manual can be completed, a significant number of policy interpretations, procedures, and practices must be incorporated into the rules and regulations to allow consistency in application. In addition, stand-alone policies adopted by the Board have been added. Currently, there are two staff members who have institutional knowledge of these policy interpretations, procedures, and practices. Staff’s institutional knowledge will be captured in the revised rules. Clarification and inclusion of these Board policies, policy interpretations, procedures, and practices in the rules will also facilitate the accuracy of the Water Demand Division database project.

The goal of the draft ordinance is to bring all permit and credit related rules current with adopted policies and administrative practices. This is accomplished by adding new language and deleting existing text. This draft ordinance also serves to fill in the gaps where practices are not supported by language in the existing rules, but where administrative memorandums, Board-approved policies not incorporated in the rules, past practice and other Board directives have supported staff’s actions and policy interpretations. The following rules have been modified by this draft ordinance:

· Rule 11, Definitions

· Rule 20, Permits Required

· Rule 21, Applications

· Rule 23, Action on Application for Permit to Expand or Extend a Water Distribution System

· Rule 24, Water Permit Process

· Rule 24.5, Connections for Affordable Housing

· Rule 25, Cancellation of Permits

· Rule 25.5, Water Use Credits

· Rule 26, Rehearing

· Rule 28, Transfer

· Rule 30, Determination of Water Allocations

In reviewing proposed language contained in the draft ordinance, the Water Demand Committee focused on reorganizing and rewriting the rules to make them easier for permit applicants to understand. With this in mind, Rule 20 was revamped to address under what circumstances a water permit is required. Rule 21 now deals exclusively with the application, and Rule 23 outlines the process for reviewing an application and issuing a water permit. Rule 24 explains how water use capacity is calculated and how to determine the appropriate connection charges. Rule 24.5 has been considerably simplified to address connection charge reductions for affordable housing. Rule 25 has been clarified to state a definitive water permit expiration date. Rule 25.5 has been revised to simplify the Water Use Credit process by eliminating two application timelines and now includes the existing administrative process for documenting the credit. This rule also speaks to other administrative practices and policies related to water credits. Finally, Rule 30 has been modified to delete obsolete language regarding water credits.

DISCUSSION: The following table summarizes all substantive modifications to the District’s rules related to the permit and water credit processes. The lines on the table have been numbered to correspond to each rule. Policy changes proposed by the Water Demand committee are shown in bold. The attached draft ordinance includes a box in the right margin that has a number in it that contains a dash. The first two numbers reference the rule number, and the numbers after the dash reference the comment number. These numbers relate to the table (shown below) that lists notable edits to the rules.

In addition to the points listed in the table, all references to the District Reserve Allocation have been deleted, as it was repealed upon adoption of Ordinance No. 73 in February 1995. Rule 24-I, Connection Charge Hearing, has been deleted as the rule is addressed in the proposed edits to the section on Special Circumstances.

Summary of Changes Included in Proposed Permit and Credit Rule Revision Ordinance
Proposed Rule and Reference Number[1]	Ord. Page #
11-1	3	Added and edited a number of definitions (see ordinance).
20-1	14	Changes “expands/extends” and “expansion/extension” to “connects to or modifies a connection to…” This change is carried out throughout the ordinance.
20-2	14	Provides a list of actions that require a water permit and includes the use of water credits and the modification of water fixtures as triggers for a water permit.
21-1	18	Title change to reflect terminology change noted in 20-1.
21-2	18	Explains who an appropriate “Applicant” is.
21-3	18	Changes the rule to provide a list of items needed to deem a water permit application “complete.” This is in keeping with the Water Demand Committee’s recommendation to have Rule 21 deal exclusively with the application process.
21-4	18	States that the Jurisdiction is responsible for environmental review prior to approval of the Water Release Form and Water Permit Application.
21-5	18	Adds the current requirement for landscape plans and a water budget for new construction on large lots. This is now shown only on Table I: Residential Fixture Unit Count.
21-6	18	Adds a requirement for landscape plans and a water budget for new construction on non-residential lots and for new construction of multi-family housing and mixed uses.
21-7	19	Clarifies language.
21-8	20	Deletes appeal and variance information contained elsewhere in the Rules and Regulations.
23-0	30	Rule 23 now deals entirely with the water permit process (the “how”).
23-1	30	Specifies that the General Manager (GM) shall ensure that there are no limitations imposed by the Expanded Water Conservation and Standby Rationing Plan (Regulation XV) that impact the water permit application being reviewed, and if there are limitations the water permit application will not be processed and will be returned to the applicant. This is implied by Regulation XV, but is not in the current permit process.
23-2	30	Allows an exception for fire protection connections and for “meter splits” (i.e. installation of individual water meters for users previously served by one water meter). Meter splits are encouraged by the District as a way to promote water conservation.
23-3	30	Requires final inspection and verification of compliance for all previously issued water permits and verification of compliance with other requirements (i.e. change of title, well registration and metering, etc.) before a new water permit is processed.
23-4	31	States that a water permit will not be processed if water is not available in a Jurisdiction’s allocation, and adds GM review to ensure that neither the Production Limit or Connection Limit has been exceeded for the water distribution system on which the permit is to be issued.
23-5	31	Adds a new term, “Adjusted Water Use Capacity” to refer to the final water demand calculation of a project.
23-6	31	Specifies that without water from an Allocation or Entitlement or a water credit to offset the proposed new uses, the application is to be denied.
23-7	31	Adds possibility of debiting a water entitlement or using a non-Cal-Am water distribution system for a water permit.
23-8	31	Current rules state that a water permit is required for “new” and “expanded” uses. The proposed ordinance adds “modifications” to the list of actions that require permits.
23-9	31	Adds current Board directive to record District deed restrictions prior to issuance of a water permit.
23-10	32	Adds collection of fees and receipt issuance to process.
23-11	32	States that no fees are due for fire connections or meter splits. This is shown in the list of fees in Rule 60, but has never been addressed in the permit rules.
23-12	32	Indicates that the construction drawings will be stamped with the District’s approval.
23-13	32	Requires GM to review the water permit with the applicant/agent prior to releasing the permit.
23-14	32	Indicates that the District will conduct a final inspection after project completion.
23-15	32	Indicates that an amended water permit is required if the completed project differs from the permitted project.
23-16	32	Adds that the District will notify the inspection contact as well as the owner of record by mailing the noncompliance notice.
23-17	32	States that violation notices that could result in a debit to Jurisdiction’s allocation will be copied to the Jurisdiction.
23-18	32	Notices will include a deadline for corrections.
23-19	32	States that if a correction is not made by the deadline, the District may take action to permit the unpermitted fixture(s) and that such action may result in a debit to an allocation or other action.
23-20	32	Provides for a refund of connection charges and/or a refund of water credit or entitlement water in the event that the completed project is less intensive than permitted.
23-21	32	The temporary water permit section has been completely revamped to conform with the current permit process (i.e. post-Paralta regulations). The application specifics for temporary water permits are added. These have been routinely requested in the past, but were not included in the rule.
23-22	33	A 24-month term for temporary water permits is specified. Current rules state one year or as specified. This policy change was supported by the Water Demand Committee.
23-23	33	Specifies that the permit process of the new Rule 23 should be used to process a temporary water permit.
23-24	33	Explains that water previously debited from a Jurisdiction’s water allocation for a temporary permit will be returned after verification that the temporary water permit/connection has been abandoned.
23-25	34	Adds a condition to the Conditional Water Permit process to require final, approved construction drawings prior to issuance of the final permit.
23-26	35	Clarifies the timeline for applying to extend a Conditional Water Permit. Current rule is vague (i.e. no later than 45 days…). Proposed amendment provides specific time window (i.e. no earlier than 90 days and no later than 45 days prior to expiration).
23-27	35	Rules 23-B adds mandatory Conditions Of Approval for water permits. The conditions are standards currently in use but not codified in the rules and regulations.
23-28	35	One condition is an amendment of existing rules that require compliance with the water conservation regulation. The amendment adds mandatory compliance with the Expanded Water Conservation and Standby Rationing Plan (Regulation XV).
23-29	35	Another condition adds a time period for actions necessary to achieve compliance following a non-passing final inspection.
23-30	35	Adds Board policy approved in 1985 when the Sleepy Hollow subdivision wells were condemned and Cal-Am was required to install a water connection from its main system to the Sleepy Hollow subdivision in Carmel Valley.
24-1	36	Rule 24 is revised to conform with current practices, including the change from a focus on calculating connection charges to a focus on projecting a project’s future water demand. This rule was only minimally revised when the permit process changed in 1990 (i.e. Paralta well). The current rule has a jumble of procedural steps, many of which have been addressed in other rules. The proposed changes eliminate redundancy and obsolete language.
24-2	53	The title of the rule has been changed to reflect the new focal point (demand projections and connection charges).
24-3	53	Residential and Non-Residential uses are addressed in separate sections. The proposed heading for the residential section explains “how” capacity is determined by the fixture unit methodology.
24-4	53	The proposed rule outlines the entire process for determining if there is an increase in water use capacity. The proposed rule codifies many existing and long-standing administrative practices.
24-5	3	Indicates that the District will conduct a pre-inspection prior to issuing a water permit. In a majority of cases, the District has an inspection on file.
24-6	53	Explains how water credits are used to reduce the estimated demand.
24-7	54	Introduces a new term “Adjusted Water Use Capacity” to refer to the final estimated water demand.
24-8	54	Clarifies the action to be taken under different “Adjusted Water Use Capacity” scenarios.
24-9	55	Adds dual flush ultra-low flush toilets to the Residential Fixture Unit Count. These toilets have been proven to save at least as much water as one-gallon ULF models and offer a “light” flush of less than one-gallon and a “big” flush of 1.6 gpf.
24-10 & 24-11	55	A reduced landscape factor is added for properties that are subject to Jurisdiction-enforced and mandated native landscape requirements. This policy addition was recommended by the Water Demand Committee.
24-12	55	Clarifies that a dishwasher may be installed in a kitchen without a water permit when a dishwasher was not previously installed.
24-13	56	Special Fixture Unit Accounting (Second Bathroom) has been clarified to state that it applies to single-family residential properties that have less than two bathrooms. The current rule states in the introduction that it applies to homes with only one bathroom. This contradicts later language in the rule that speaks to adding the missing fixtures to allow two complete bathrooms.
24-14	57	Adds the Board’s requirement to record a deed restriction listing all water fixtures permitted for the property and indicating which fixtures are part of the “special fixture unit accounting” (i.e. fixtures that do not qualify for water credits upon removal) on properties that utilize the second bathroom provision. This policy is currently in the ordinance (No. 98), but not in the Rule.
24-15	57	Adds the Board’s requirements allowing District access to water records on properties that utilize the second bathroom provision. This policy is currently in the ordinance (No. 98), but not in the Rule.
24-16	57	Eliminates a conflict in the rule whereby one could not apply for both a Master Bathroom and a second bathroom in the same application. This change clarifies that the Master Bathroom fixture unit value cannot be applied to a second bathroom added pursuant to the second bathroom provision. This change does not preclude someone from adding the Master Bathroom fixtures.
24-17	57	Spells out the exterior residential demand calculation methodology. Currently, this information is one line shown on Table I: Residential Fixture Unit Count.
24-18	58	The Maximum Applied Water Allowance (MAWA) calculation is added to the Rule.
24-19	58	Discussed under 24-10 and 24-11.
24-20	58	Adds the fixture unit to acre-foot conversion.
24-21	58	Specifies the number of decimal positions utilized in the water demand calculation.
24-22	58	Revises the section on Non-Residential water demand projections.
24-23	58	Explains the use of water factors for non-residential uses.
24-24	58	Allows changes in Table 2-Non-Residential Water Use Factors to be made by Board Resolution, rather than by ordinance (latter is current requirement).
24-25	58	Provides a step-by-step process for calculating non-residential water demand.
24-26	59	Explains the area used to determine changes to demand caused by tenant improvements.
24-27	59	Clarifies that the higher use category will be used when a use falls into more than one category. Current rule indicates that the higher category will be use when “doubt exists.” (This change was recommended by the Technical Advisory Committee.)
24-28	59	Adds a requirement for a landscape plan and water budget for new construction on vacant lots.
24-29	59	Clarifies the process for determining and approving new water factors.
24-30	59	Indicates that a pre-inspection may be required for non-residential water permits. Not all non-residential permit applications need an inspection prior to processing the water permit, as the number of water fixtures in the use is generally not a component of the factor.
24-31	59	Explains how water credits are used to reduce the estimated demand.
24-32	60	Clarifies the action to be taken under different “Adjusted Water Use Capacity” scenarios.
24-33	61	Amends Group I to add nail salons, fast photo processing, dental, medical and veterinary clinics in keeping with current practice. Group II has been amended to include coffee shops that are currently defined as “bakery-type” of uses. Water records for these uses have been reviewed over the years to determine the appropriate classification.
24-34	61	Assisted living beds have been added to Group III. The Board reviewed the proposed factor during consideration of the Sunrise Assisted Living variance. The footnote regarding dormitory water use has been added as directed by the Board at its February meeting. Adds the revised self-storage factor approved by the Board during the Mirabito appeal and amends the processing of hotel water permits in keeping with direction from a former Water Demand Committee.
24-35	61	Designates the area that can be considered “adjacent” to an existing commercial use and that is not subject to MAWA calculations if modified. Adds public toilets and urinals.
24-36	61	A new commercial category (Modified Commercial Uses) has been added to Table 2: Nonresidential Water Factors, for properties that have been granted a “credit” for installing ultra-low consumption technology. It is conceivable that credits established by retrofitting would be used to increase the square-footage, seating, or other factors that normally would result in intensification in use. It is also conceivable that the water credit would be transferred to another non-residential use. Either of these scenarios would result in a change in the capacity of the building to accommodate a change in use within the existing grouped uses. (Rule 24)
24-37	62	Adds MAWA requirement for non-Residential uses. This change is also contained in Table 2 – Non-Residential Water Use Factors.
24-38	62	Specifies rounding to third decimal place for non-Residential water use factors.
24-39	62	Adds new Table 3: Connection Charge History to document the change from one year to the next. This is useful to staff for calculating water permit refunds.
24-40	63	The proposed language claries how the connection charge is calculated. The section on “calculation of unfactored connection charges” has been deleted. Similarly, the language referring to a connection charge surcharge has been deleted. A surcharge was eliminated a number of years ago, and the unfactored connection charge may never have been implemented.
24-41	63	Adds language to incorporate existing practice related to allowing nonpotable water sources for exterior use.
24-42	63	Clarifies that non-Residential projects owned by public agencies are subject to review of actual consumption over time and adjustment of debit/connection charges based on historic use.
24-43	64	Provides language explaining the “how” of adjusting the debit/connection charge for projects with Special Circumstances. This language mirrors language later in the rule that addresses the adjustment for Special Circumstances with Substantial Uncertainty.
24-44	64	Clarifies that the GM makes the determination that Special Circumstances with Substantial Uncertainty exist.
24-45	64	Adds Conditions of Approval that have been developed by the Board.
24-46	65	Includes requirement for separate water meter for outdoor water uses.
24-47	66	Adds indemnity agreement language.
24-48	66	Deletes redundant and obsolete language in the Connection Charge Refunds section.
24-49	67	Specifies that refunds of connection charges are made to the title-holder of the property. This is a long-standing practice and is consistent with the “site-specific” water permit.
24-50	67	There are no changes to the section on Connection Charge Accounting.
24-51	67	There are no substantial changes to the section on Permit Fee Payment plans, other than elimination of a reference to an ordinance.
24.5-1	68	Changes definition of Affordable Housing from local area definition to local definition. This allows each Jurisdiction to determine the projects that comply with the Housing Element of their General Plans. This change also facilitates the implementation of this section, as staff has been confused by the existing language and has relied on the Juridictions to provide notification when a project is “affordable.” When the Jurisdiction approves affordable housing, the Jurisdiction records notice on the property title and enforces the restriction. The District also records notice.
24.5-2	71	Sets out the requirement for deed restriction for Affordable Housing exemptions as a separate point.
24.5-3	72	Eliminates redundant and confusing language.
24.5-4	72	Adds standard permit conditions shown in Rule 23.
25-1	72	Expands the title for clarity
25-2	72	Sets a specific time for expiration of water permits. Allows for reapplication after two years if a building permit has not been issued. If a building permit has been issued, the permit runs concurrently.
25-3	72	Changes authority to suspend an application from Board to GM.
25-4	73	The Board determines if a water permit is revoked.
25-5	73	Updates language related to cancelled water permits to include Water Entitlements.
25-6	73	Specifies that valid water credits return to the site when a permit is cancelled.
25.5-1	74	Eliminates complex language and substitutes understandable directions for consistency. This section has been particularly problematic since it was added in 1990.
25.5-2	76	Adds language for on-site water credits.
25.5-3	76	Specifies that no transfers of credit will occur, except as allowed by Rule 28.
25.5-4	77	Eliminates language for pre- and post- retrofit application, including two standards for credit. This has been particularly confusing to the public and staff and has not consistently applied since it was added to the Rules. The historic practice has been to grant credits for past abandonment when an applicant can produce documentation from the jurisdiction (i.e. a demolition permit or other city inspection). This was determined to be an incorrect application of the rule, and staff has stopped this practice. However, there is a compelling argument that there has been no notification of the need to establish a water credit before the permanent removal of water fixtures or uses, and indeed, most applications are submitted during the removal process and are processed after completion. The burden of proof to establish both the date of abandonment and the former capacity remain, and specific examples of evidence are added. The former requirement to apply for a credit within 18 months of abandonment is deleted, and the credit tracks from the date the abandonment occurred.
25.5-5	77	Clarifies how to determine if a credit is “current.”
25.5-6	77	Provides an inclusive list of items that qualify for credit. This list encompasses all applications the District has received. Should an application be received that does not fall within this list, the Board would be notified for direction.
25.5-7	77	Clarifies the process for documenting a Water Use Credit and adds existing practice.
25.5-8	77	Eliminates the ability to obtain a Water Use Credit for landscaping removal. This has been problematic in the few cases where it has been requested. It is difficult for staff to determine historic landscaping water use and to enforce permanent removal, particularly if there are other areas where landscaping may be added or changed. The amendment allows an exception only where a water permit was issued for a specific quantity and area of landscaping.
25.5-9	78	Adds clear direction for calculating a Water Use Credit using Tables 1 and 2.
25.5-10	78	Clarifies when use of the Non-Residential water use factors are not appropriate.
25.5-11	78	Specifies when consumption records will be used to review historic use.
25.5-12	78	Sets forth a clear process to calculating Water Use Credit.
25.5-13	78	Adds establishment of Water Use Credits for installation of ultra-low consumption appliances shown on the new Table 4. This is existing practice approved by Board action.
25.5-14	78	Makes amendment of Table 4 by Resolution of the Board.
25.5-15	79	Adds Table 4: Ultra-Low Consumption Appliances, including credit for installation of dual-flush ultra-low flush toilets (consistent with proposed amendment to Table 1).
25.5-16	80	Adds a process for determining Water Use Credits for non-Residential retrofits. The proposed procedure uses both former Board action and direction from a former Water Demand Committee and GM as a guide.
25.5-17	80	Adds the process used by the Board when it approved Water Use Credits at the Defense Language Institute, Presidio of Monterey after the facility retrofitted to waterless urinals and added SOMAT disposal systems.
25.5-18	80	Adds a requirement for independent third party review if adequate water records are not available. This was recommended by a former Water Demand Committee and supported by the current Water Demand Committee. This is also current administrative practice and was done with the Presidio of Monterey.
25.5-19	80	Specifies that an independent third party review will be conducted before the District considers a Water Use Credit when credit is requested prior to documented water savings.
25.5-20	81	Provides a mechanism to bring a Water Use Credit request to the Board.
25.5-21	81	Adds the deed restriction requirement when a Water Use Credit is used to offset new water use on a water permit. The deed restriction was approved by the Board, however the application of the deed restriction was not explicitly considered.
25.5-22	82	States that Water Use Credits may be used to construct new uses. This is implied in the current rule.
25.5-23	82	Adds a list of examples of acceptable evidence to document historic exterior water use. This is specific to establishing exterior water use on a site in order to avoid an assessment for new construction.
25.5-24	82	Clarifies the actions to be taken when disconnecting from a water distribution system.
25.5-25	82	Clarifies the current permit process date and states that uses in place at that time, or permitted after that date, may be continued if the use has not been permanently abandoned. This is existing administrative practice and has been upheld during actions taken by the Board.
26-1	82	Changes title to clarify the rule.
26-2	83	Changes authority from Board to GM to approve resubmission of a denied application.
28-1	83	Changes title to clarify the rule.
28-2	83	States that a water permit is site specific (i.e. attached to a specific Assessor’s Parcel Number).
28-3	83	Adds process: A water permit that is transferred to another (e.g. usually by transfer of ownership of the property) will be reprinted with the new name.
28-4	83	Title change to reflect change in terminology (i.e. commercial to non-residential)
28-5	84	Eliminates redundant language that is contained in the opening paragraph.
28-6	85	Eliminates redundant language that is contained elsewhere in the rule.
28-7	85	Adds requirement for 15 percent of the savings to be retained by the District.
28-8	86	Deletes language stating that the Board determines the water use requirement for a receiving site (staff makes this determination).
28-9	86	Changes authority to approve a water permit from the Board to the GM. The Board is not the authority which processes the water permit.
28-10	86	Clarifies what the appropriate amount of reimbursement may be for transferred Water Use Credits. The existing rule is unclear.
28-11	86	Adds a requirement for completion of a specific form to determine if valuable consideration has been given for a Water Use Credit.
28-12	86	Eliminates redundant language that is contained elsewhere in the rule.
28-13	86	Requires recordation of the conditions of the transfer to be recorded on both the originating and the receiving sites.
28-14	87	Adds indemnification agreement as a condition of approval.
28-15	87	Adds notification to the Jurisdiction upon completion of a Water Use Credit Transfer.
28-16	87	Relocates current Rule 24-B-2 to Rule 28-C.
28-17	87	Clarifies that open space water credit transfers must originate from open space irrigation.
28-18	87	Adds language to accommodate water use in excess of the amount transferred.
28-19	87	Adds language requiring a water permit for new, expanded or modified uses.
28-20	87	Requires recording of conditions on the title.
30-1	88	Updates language related to water allocations to include Water Entitlements.
30-2	88	Eliminates inactive language related to conservation savings. The language that allows water credit in excess of 15 percent savings to revert to the jurisdiction has been deleted as this process was not implemented and other processes to transfer water credits were added to the Rules.

RECOMMENDATION: The Board should review the proposed conceptual ordinance and raise questions for clarification or analysis by District staff. Staff should also be directed to return this item for further discussion at the next Board meeting or to complete any recommended edits and return the ordinance for first reading. Prior to first reading, staff will initiate the CEQA process. The draft ordinance has had one thorough review by District counsel and will be further evaluated prior to first reading.

EXHIBITS

13-A Draft Ordinance No. XXX - Clarifying Rules Related to Water Permits and Credits

U:\staff\word\boardpacket\2006\2006boardpackets\20060417\ActionItems\13\item13.doc

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[1] First two digits represent the proposed rule. Digits following the dash are note numbers. Both can be found in the draft ordinance (Exhibit 13-A) in the left margin next to the highlighted (in gray) text. The highlighted text supports the comment shown in this table.