Meeting Date:

September 18, 2006





David A. Berger,




General Manager

Line Item No.:




Prepared By:

Stephanie Pintar

Cost Estimate:



General Counsel Review:  Yes

Committee Recommendation:  At its 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:  Negative Declaration Approved June 22, 2006


SUMMARY:  This is the second reading and consideration of adoption of Draft Ordinance No. 125 (Exhibit 11-A).  The ordinance updates permit and water credit-related rules to conform to adopted policies and administrative practices by adding new language and definitions, by deleting obsolete and redundant text, by simplifying text to make it understandable to the public, and by focusing the subject matter of the rules.  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 first reading of Ordinance No. 125 was approved by the Board at its June 22, 2006 meeting along with approval of a Negative Declaration, in compliance with the California Environmental Quality Act (CEQA). 


As reported in previous staff reports, Ordinance No. 125 does not contain changes to Rules 23.5, Permits for Water from the Cal-Am Water Distribution System Dedicated for Use in Connection with the Plan to Finance the Recycled Water Project, or to Rule 24.5, Connections for Affordable Housing.  Staff plans to review the edits to Rule 23.5 with the parties involved in the adoption of Ordinance No. 109, which most-recently amended Rule 23.5, and the affordable housing definitions were referred to the Technical Advisory Committee (TAC) for further consideration of a uniform definition that would apply to all jurisdictions.  It is anticipated that edits to these two rules will be returned for consideration by the Board at a future meeting as part of a follow-up ordinance.


The revision to Ordinance No. 125 (Exhibit 11-A) is the removal of all modifications to Rule 28-B.  The text containing changes to Rule 28-B, Property-To-Property and Property-To-Jurisdiction Transfers of Water Use Credits for Commercial and Industrial Uses, has been deleted from the proposed ordinance being considered on September 18, 2006.  This  change is the result of  the August 21, 2006 meeting, at which  the Board directed staff to remove from Ordinance No. 125 the revised version of Rule 28-B, in response to written comments and concerns the District received regarding proposed changes to the existing water credit transfer rules.  Ordinance 125 shall therefore cause no change to existing Rule 28-B or to the water credit transfer process referenced in that rule.


The staff report from the first reading of this ordinance (June 22, 2006), including the summary of policy changes made by this ordinance, can be found on the District’s website at: .  The staff report and attachments from the August 21, 2006 Board meeting at which second reading was originally scheduled, can be found at .


DISCUSSION:  During review of the proposed ordinance with respect to the appellate decision in SOCR v. MPWMD (H029242), legal counsel identified several areas of the proposed ordinance that could be vulnerable to challenge.  The three areas included Rule 11 (definitions), Rule 25.5 (water credits) and Rule 28 (water credit transfers).  In response to legal counsel’s advice, several definitions proposed for deletion were reinstated in Rule 11 and water conservation savings identified under the District’s long-term conservation plan were clearly excluded from qualifying as Water Use Credits that could be available for reuse.  The Board accepted these edits at the August 21, 2006 meeting.


On August 10, 2006 the Water Demand Committee recommended adding language to Rule 28-B to clarify that Water Use Credits from public authority uses are not eligible for transfer, and to restore former language identifying “commercial” and “industrial” Water Use Credits as being eligible for transfer.  Separate written objections were received from the City of Monterey, dated August 14, 2006, and attorney Michael Stamp, dated August 21, 2006, regarding proposed changes to the District’s water credit transfer rules contained Ordinance 125.  (A copy of District Counsel’s response to Mr. Stamp’s letter is attached as Exhibit 11-B.)  In order to resolve the expressed concerns, the Board directed staff to delete modifications to Rule 28-B from the final version of Ordinance 125 that will be considered for adoption at the September 18, 2006 meeting.   


Rule 28-B remains unchanged in the Rules and Regulations.  According to General Counsel’s interpretation of Rule 28-B (i.e. David Laredo memo of February 11, 2005), transfers of Water Use Credits can occur from any commercial or industrial water use, including credit that originates on public properties or from public buildings, subject to the remaining conditions of the rule.  Conditions of the rule include CEQA compliance.


RECOMMENDATION:  Staff recommends that the Board take the following actions:


  1. Approve the second reading and adopt Ordinance No. 125 as shown in Exhibit 11-A.  If adopted, the ordinance will become effective on January 1, 2006.  This timeline provides support services with sufficient lead time to incorporate the changes into the Rules and Regulations before the effective date of the ordinance.


  1. Direct staff to prepare a Notice of Determination and Certificate of Fee Exemption and to transmit the documents to the Monterey County Clerk in compliance with CEQA.    


BACKGROUND:  Ordinance No. 125 facilitates 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 approved by the Board have been added.  There are two staff members who have institutional knowledge of these policy interpretations, procedures, and practices.  This institutional knowledge is 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.


Draft Ordinance No. 125 was developed after careful review of existing rules and staff-suggested changes by the Water Demand Committee.  During committee meetings held on June 14, August 2, September 1, October 11, December 8, 2005 and January 24, 2006, Water Demand Committee members provided comments and feedback to staff.  The Water Demand Committee and staff’s goal while drafting the ordinance was to reorganize and rewrite the rules in ways that 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 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 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.  Rule 26 addresses the reapplication process, and Rule 28 has been edited to reduce redundancy.  Rule 30 has been modified to delete obsolete language regarding water credits.  Finally, definitions have been added to Rule 11 associated with the water permit and water credit process, and other definitions have been modified to conform to District rules, policies and practices.


The draft ordinance was reviewed by the TAC on February 7 and March 7, 2006.  The TAC unanimously endorsed the ordinance.



11-A    Draft Ordinance No. 125 - Clarifying Rules Related to Water Permits and Water Credits

11-B    September 11, 2006 response to Mr. Stamp’s correspondence