ITEM:

PUBLIC HEARINGS

 

15.

CONSIDER APPLICATION TO Amend California American Water Distribution System to ServE Monterey Bay Shores Ecoresort IN Sand City; California American Water and Security National Guaranty, co-applicants; MPWMD Application #20080915MBS; APN 011-501-014

 

Meeting Date:

February 26, 2009

Budgeted:

N/A

 

From:

Darby Fuerst,

Program/

N/A

 

General Manager

Line Item No.:     N/A

 

Prepared By:

Henrietta Stern

Cost Estimate:

N/A

 

General Counsel Approval:  Yes 

Committee Recommendation:  N/A

CEQA Compliance:  The MPWMD, as a Responsible Agency, will rely on the EIR for the Monterey Bay Shores Resort (SCH #97091005) previously certified by the City of Sand City in December 1998, and the Addendum to the EIR (December 2008) adopted by the City on January 20, 2009.

 

SUMMARY:  This action is a continuation of public hearings held on November 17, 2008 and January 29, 2009 for consideration of Application #20080915MBS (Exhibit 15-A) submitted on September 15, 2008 by co-applicants California American Water (CAW) and Security National Guaranty, Inc. (SNG).  In brief, the application requests District approval to enable CAW to produce up to 90 acre-feet per year (AFY) from its wells in the Seaside Groundwater Basin for service to Assessor’s Parcel Number (APN) 011-501-014, the site of the proposed Monterey Bay Shores Ecoresort (MBSE) in Sand City, shown in Exhibit 15-B.  CAW extractions from the Seaside Groundwater Basin could increase by up to 90 AFY based on water rights held by SNG as specified in the Seaside Basin adjudication, and approved by the Seaside Basin Watermaster in a letter dated September 19, 2008 (Exhibit 15-C).  As described in the “Discussion” section below, there is an important distinction between 90 AFY of production from CAW well(s) in the Basin and 90 AFY actually delivered as metered sales to the resort.

 

The MPWMD Board initially continued this item in November 2008 to allow the public more time to review environmental documents associated with the MBSE, and for the applicant to respond to several information requests posed by the Board.  On January 29, 2009, the Board opened the public hearing but continued this item pending receipt of a formal written determination by the State Water Resources Control Board (SWRCB) regarding applicability of the one-for-one replacement condition in SWRCB Order WR 95-10.  A letter dated February 5, 2009 was received from the SWRCB on February 9, 2009 (Exhibit 15-D), and is described below.  Technical information from CAW about delivery of water solely from wells in the Seaside Basin was also requested. The MPWMD Board’s action solely relates to water management issues, including CAW supply to the affected parcel, not the overall merits of the proposed resort.

Pertinent elements of the November 17, 2008 and January 29, 2009 agenda packages are repeated herein for clarity.  The November 17, 2008 materials are available on the District website at:  http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2008/20081117/11/item11.htm.  The January 29, 2009 staff report and presentation materials are available on the website at:

http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2009/20090129/18/item18.htm.  Substantive letters to the Board are also tabulated weekly and are available on the website at:

http://www.mpwmd.dst.ca.us/gmletters/gmletters.htm.   

 

The MPWMD serves as a Responsible Agency in compliance with the California Environmental Quality Act (CEQA), and relies on environmental documents adopted by the City of Sand City (Lead Agency), as discussed below.  All MPWMD files associated with this application are available for review at the District office.  This public hearing has been properly noticed.

 

The “Discussion” section in the January 29, 2009 agenda package reviewed information received as of January 21, 2009.  Several documents were provided immediately before and on the day of the January 29, 2009 public hearing.  This staff report will review pertinent information that updates the materials in the January 29, 2009 agenda package and was received as of February 19, 2009.  Please review the “Background” and “Discussion” sections below for more information.

 

Importantly, Board members who were not present at earlier hearings on this matter must review all materials received during those proceedings and view the meeting video in order to vote on this matter.  The meetings materials and DVD have been provided to affected Board members.

 

RECOMMENDATIONS:  District staff recommends that the Board take the following actions:

 

1.      Adopt the revised MPWMD Findings of Approval for Application #20080915MBS to Amend the CAW WDS (Exhibit 15-E) with specific reference to Findings associated with District compliance with CEQA as a Responsible Agency. The “Discussion” section below reviews written assertions about adequacy of MPWMD’s CEQA review that were made by participants at the January 29, 2009 public hearing.

 

2.      Approve Application #20080915MBS; authorize issuance of MPWMD Permit #M09-03-L4 with the 33 Conditions of Approval specified in Exhibit 15-F.  Board guidance is needed for Condition #32 as noted in Recommendation 3 below.  The Conditions of Approval include required conditions as specified in MPWMD Rule 22-D as well as several special conditions for this project, as described in the “Discussion” section below.

 

3.   Determine which version of Condition #32 shall be imposed.  Option 1 urges CAW to obtain an additional 59 AFY from SNG (and other available adjudicated water rights) to reduce pumping from the Carmel River, and is voluntary.  Option 2 requires CAW to enter into an agreement with SNG to obtain the 59 AFY available from SNG’s 149 AFY water rights, and to show proof of an agreement within 180 days of this WDS permit approval.  Option 2 also requires careful monitoring of production sources and reporting using protocol approved by the MPWMD General Manager.  Staff recommends Option 2 for the reasons provided in the “Discussion” section below.

4.      Direct staff to file a Notice of Determination with the Monterey County Clerk in compliance with CEQA Guidelines Section 15096(i).  

 

BACKGROUND:  The history of the MBSE application is provided on the District website at:

http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2008/20081117/11/item11.htm and

http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2009/20090129/18/item18.htm.

 

The 39.04-acre project site was used for sand mining for 60 years, and is currently in a degraded state.  The resort proposal now includes the following uses:  (1) a 161-room hotel; (2) 46 visitor-serving condominium units; (3) 42 additional visitor-serving condominium units; (4) 92 residential condominium units; (5) auxiliary uses to include a restaurant, conference and spa facilities; and (6) parking, open space area, public access, and trails.  Many “green” technologies are proposed, as described on the MBSE project website: http://www.montereybayshores.com/.  Additional project information is found in Addendum to the Final Environmental Impact Report, Monterey Bay Shores Resort, SCH #97091005 (dated October 2008, but actually printed in December 2008).  This version is provided on the District website at:

http://www.mpwmd.dst.ca.us/ceqa/ceqa.htm. 

 

There are existing on-site well(s) owned by the applicant, but these are not part of the application currently before the Board.  The District owns two monitor wells located on the subject parcel.

 

Water Rights

Integral to the MBSE water supply is the Seaside Groundwater Basin Adjudication Judgment of March 27, 2006 (Final Decision).  This Decision sets the groundwater quantity allowed to be used by SNG on its property (APN 011-501-014).  The Decision also stipulates that the Seaside Groundwater Basin shall be administered by a Watermaster.  SNG was granted an Alternative Production Allocation (APA) of 149 AFY under the Decision, which is not reduced over time.    This contrasts with the Standard Production Allocation (SPA), which is reduced over time to meet the targets set by the Court.  In a letter dated September 19, 2008 (Exhibit 15-C), the Watermaster confirmed SNG’s right to produce 149 AFY from the Seaside Groundwater Basin for beneficial use on the SNG property.  Importantly, the Watermaster does not constrain the production to occur on the subject parcel through SNG’s existing on-site wells. Water may be produced from another offsite well owned by another entity and delivered to the SNG parcel so long as the well is within the Seaside Basin.  Hence, CAW may produce the requested 90 AFY for service to the MBSE site through CAW wells located farther inland, and this amount will not be reduced over time.  From a hydrogeologic perspective, production from inland wells is preferable to production by coastal wells as the risk of seawater intrusion is reduced.  The adjudication decision and other information are available on the Watermaster’s website at:

www.seasidebasinwatermaster.org.  

 

It is noted that the District received a copy of a February 5, 2009 letter from the California Environmental Law Project (CELP)/Sierra Club to Ralph Rubio, Watermaster Chairperson (Exhibit 15-G).  The letter: (a) questions the legality of the Watermaster’s determinations and cites various litigation; (b) requests the Watermaster to reconsider its September 19, 2008 letter at its meeting of March 4, 2009, specifically the issue of whether the 90 AFY should be considered as an APA that is not reduced over time or an SPA; and (c) as an alternative, asks the Watermaster to obtain an interpretation of the Decision as it relates to this matter from the presiding Judge Randall.  The CELP wrote a second letter to the Watermaster dated February 11, 2009 (Exhibit 15-H), which reiterates its position that the SNG water rights used by CAW should be viewed as a Standard Production Allocation that is reduced over time, and that Judge Randall should confirm the Watermaster’s action.  The CELP letters are provided as background only, as they are not directed toward the District, nor make any request of the District.  The District’s understanding is that the Watermaster meeting set for March 4, 2009 will be continued to March 18, 2009.  It is not known whether the CELP request for reconsideration will be on that agenda, or if on the agenda, what the Watermaster action might be.  As noted in the “Discussion” section below, District mandatory conditions of approval already identify approvals needed from other pertinent agencies in order for the MWMD permit to be considered as valid.

 

Unless reconsidered by the Watermaster, the ability for SNG to transfer excess water (149 AFY – 90 AFY = 59 AFY) elsewhere in the Basin has also been affirmed by the Watermaster in its September 19, 2008 letter (Exhibit 15-C).  Specifically, subject to timelines set by the Superior Court, SNG or its successor(s) has the right to convert the remaining 59 AFY of the 149 AFY original allotment to a Standard Production Allocation (SPA) by filing a declaration and serving it to all parties in the Seaside Basin litigation.  This 59 AFY, if converted from an APA to SPA, would be subject to reduction calculations as provided in the Decision.  Water produced from the Basin under a SPA is not restricted to use on the SNG property.   Importantly, conversion of the 59 AFY is not the subject of Application #20080915MBS before the District Board, but the subject is raised by the SWRCB in its February 5, 2009 letter.    

 

Citing the Seaside Basin adjudication, James Kassel, Assistant Deputy Director for Water Rights, and Chief Enforcement Officer for the SWRCB Water Rights Division, determined that the one-for-one replacement required in SWRCB Order 95-10 does not apply to the SNG situation if CAW water is supplied only from wells in the Seaside Basin and not from Carmel River sources (Exhibit 15-D).  The letter recommends that MPWMD require “strict water accounting methods to ensure that any use of Carmel River water does not serve this project” and that such data also be included in CAW’s ongoing quarterly reports to the SWRCB.  The letter also encourages CAW to obtain 59 AFY from SNG and other available adjudicated rights to reduce pumping from the Carmel River (these rights would be subject to the one-for-one replacement requirement in Order 95-10, i.e., Condition 2). 

 

For reference, the MBSE parcel is currently within the CAW service area, but is not eligible to receive water from the pending Sand City desalination project.  MPWMD Ordinance No. 132, adopted in January 2008, prohibits CAW service via a Water Entitlement to the MBSE parcel from the desalination project as a Benefitted Property partly because MBSE has its own independent source of Seaside Basin water.  Also, the desalination project is sized only to meet the redevelopment needs of the City of Sand City. 

 

MPWMD Board Information Requests on November 17, 2008 and January 29, 2009

At the November 17, 2008 public hearing, the District Board directed that the hearing be continued and made several information requests.  These requests were provided to the applicant in a letter from MPWMD staff dated November 20, 2008, and included:

 

  1. Obtain a letter from Monterey County Health Department that concurs with the gray water reuse technology proposed for MBSE. 
  2. Compare water use in similar mixed use resorts or full-service hotel/spas, if available, to the water use proposed for MBSE; explain how MBSE would use less water than a similar resort that does not employ the water-saving technologies proposed for MBSE.
  3. Demonstrate how the MBSE water use estimates were derived, and obtain concurrence from MPWMD staff.   
  4. Explain water rights associated with MBSE parcel and use of these rights by CAW.  Explain how CAW would deliver water to the parcel and how the projected monthly water demand would be served by CAW, especially during the high-flow period (November through April), when CAW is required to minimize its production from the Seaside Basin.  Explain the role of proposed Sand City desalination project, if any.
  5. Address means to ensure migrating, wind-blown sand will not adversely affect operation of water-saving equipment and technology.
  6. Provide water-related sections of the October 2008 Addendum for public review on the MPWMD website, including project description (Section 3), hydrology/water quality (Section 4.8) and public utilities (Section 4.16).
  7. Encourage City of Sand City and California Coastal Commission to provide the October 2008 Addendum for public review, with the full document available on a website. 
  8. Provide list of local public outreach or public review opportunities prior to the January 29, 2009 MPWMD Board meeting.

 

The “Discussion” section in the January 29, 2009 agenda package provides the applicant’s responses to the eight information requests, including supporting attachments.

 

The more recent information requests posed by the Board at the January 29, 2009 hearing include:

 

1.      Obtain a letter from SWRCB regarding applicability of one-for-one replacement element in Order WR 95-10.

2.      Obtain a technical report from CAW describing what operational changes will be made to deliver water to the MBSE parcel solely from Seaside Basin sources, in light of SWRCB Order 98-04, the interagency Quarterly Water Supply Strategy and Budget process, and infrastructure/hydraulic constraints in the CAW system.  A CAW letter dated January 29, 2009 (Exhibit 15-I) stated that CAW will serve MBSE solely from wells in the Seaside Basin at all times.  This issue is described in more detail below.

3.      District staff and Counsel review validity of assertions made by hearing participants regarding adequacy of CEQA review, particularly the need for a Subsequent EIR.

 

DISCUSSION:  The following paragraphs review pertinent new information received immediately preceding, during, and after the January 29, 2009 hearing that have not been reviewed in a written agenda staff report to date.  Revised Findings and Conditions of Approval are then discussed along with CEQA compliance.  The MBSE file is available at the District office for inspection, upon request.

 

 

Obtain SWRCB Determination on Applicability of Order 95-10.

As noted above, the SWRCB’s February 5, 2009 letter (Exhibit 15-D) determined that the one-for one replacement requirement in Order 95-10 does not apply to the MBSE application so long as CAW water is supplied solely from Seaside wells.  As noted below, District staff has recommended several new Conditions of Approval that stem from the SWRCB letter.

 

Explain CAW Water Delivery Solely from Seaside Wells

The applicant previously submitted materials describing the engineering aspects of water delivery and provided attachments on CAW infrastructure.  The current focus is on the ability of CAW to serve MBSE solely from Seaside well(s) during the winter “high flow season,” when Carmel River flow exceeds 40 cubic feet per second (cfs).  To date, this has been a period when CAW’s Seaside Basin wells are turned off pursuant to SWRCB Order 98-04, which directs CAW to minimize production in Seaside during the winter season, when Carmel River sources are plentiful, in order to maximize water storage in the Seaside Basin for use in dry periods, thereby reducing extractions from the Carmel River Basin, when the river habitat is most vulnerable.  It is noted that Order 98-04 does not prohibit use of Seaside wells by CAW. 

 

The key technical questions relate to the physical ability of CAW to supply water to just one customer (MBSE parcel) from a Seaside well given that large municipal wells are typically designed to run on full throttle (on or off) and serve many customers at one time.  Regardless of seasonal changes, CAW must always remain under the annual limits set by the SWRCB for the Carmel River and the limits set by the Superior Court for the Seaside Basin. 

 

As of this writing, and perhaps due to the limited time between the January 29 and February 26, 2009 meetings, a formal response by CAW to these questions has not been received.  Additional information may be presented at the February 26, 2009 hearing.  Note that new Special Condition #30 requires a formal written response from CAW on this subject within 90 days of permit approval, or the WDS permit will not be valid. 

 

Adequacy of CEQA Review by MPWMD

For the January 29, 2009 hearing, the District received letters from CELP/Sierra Club, Land Watch Monterey County and League of Women Voters questioning the adequacy of the City of Sand City’s Addendum to the Final EIR on the MBSE project for use by the District as a Responsible Agency.  The letters questioned whether a Subsequent EIR is needed and asserted that the District’s CEQA compliance may not be adequate.  Please refer to the CEQA section below for an overview of the assertions and the MPWMD staff response.    

 

Other Agency Review

The District focus is solely on the WDS application by CAW/SNG to enable CAW service to the MBSE project using SNG’s water rights.  Another entity associated with water supply from the Seaside Basin is the Watermaster.  As noted above, CELP/Sierra Club has requested that the Watermaster consider the 90 AFY to be produced by CAW for service as a Standard (rather than Alternative) Production Allocation, which would be reduced over time.  It is unknown when or if the Watermaster will respond, though the CELP letter requested consideration of this issue on March 4, 2009 (Note:  The March 4, 2009 Watermaster meeting has been continued to March 18, 2009).  The California Public Utilities Commission (CPUC) has already confirmed a CAW advice letter regarding CAW’s annexation of the MBSE parcel, which was based on District approval in October 2007.  More information on the annexation history is available in the January 29, 2009 hearing materials.

 

Other agencies address the whole of the project, including the City of Sand City, the CEQA lead agency, and the California Coastal Commission (CCC).  CCC’s strong preference is for MPWMD to first approve the water service before the CCC hearing on the MBSE project, slated for March 11-13, 2009 in Monterey.  A Court Order stemming from litigation between SNG and CCC requires that the CCC hold a hearing on the project before March 31, 2009.  It is not confirmed whether a formal determination by CCC to approve or deny the MBSE project is also required before March 31, 2009.  Exhibit 15-J is a January 16, 2009 letter from CCC to the applicant with a checklist of information requests, including water supply approvals.  

 

MPWMD Condition of Approval #5 addresses approvals by other agencies, which is required by District Rules 22-D-1-c and 22-D-3.  This condition has been revised to specifically name pertinent agencies that regulate the MBSE project, and states that the validity of the MPWMD WDS permit is contingent on project approvals by these other entities.

 

February 2009 Findings of Approval

The February 2009 Findings of Approval for Application #20080915MBS (Exhibit 15-E) are based on evidence provided in the application materials, including supporting documents received through February 19, 2009, on file at the District office.  Staff believes the application meets the criteria and minimum standards for Approval set by District Rules 22-B and C.  Pertinent information includes environmental documents prepared for the City of Sand City in compliance with CEQA; technical studies, reports, memoranda and maps; correspondence between MPWMD staff, the applicant, and/or SWRCB; previous approvals by other governmental entities; action by the Monterey County Superior Court and Seaside Basin Watermaster; and review of CEQA in light of comments made by hearing participants to date.  

 

MPWMD approval of the application, as conditioned, is not anticipated to result in a further effect to the Seaside Basins beyond what has already been approved and/or is allowed.  All things being equal, there could temporarily be more water actually drawn from the Seaside Basin in the near-term with the project than without it. However, the Superior Court’s action in the Seaside Basin adjudication preserves the rights of Alternative Producers such as SNG to extract water from the Seaside Basin, and compels Standard Producers such as CAW to reduce their cumulative use over time until the natural safe yield of the Seaside Basin is reached.  This long-term action is expected to result in reduced cumulative extractions from the Basin in compliance with the Court’s 2006 Final Decision.  Thus, approval of the application is consistent with MPWMD Rule 22-C-4 regarding overdrafts.

 

The SWRCB letter of February 5, 2009 and the proposed MPWMD Conditions of Approval dated February 2009 (Exhibit 15-F), which are consistent with the SWRCB letter, will result in no additional impact to the Carmel River, and could potentially benefit the river.  Only Seaside Basin water shall be allowed to be produced by CAW to serve the MBSE project, and a strict accounting of water sources used to serve the MBSE project shall be required.  The SWRCB has determined that the one-for-one replacement for new CAW supplies in Order 95-10 does not apply to the 90 AFY of SNG’s water rights set aside for the MBSE project.  However, the SWRCB urges CAW to obtain rights to the remaining 59 AFY of SNG’s Seaside Basin water rights, and offset that amount by an equal reduction in Carmel River diversions. MPWMD Condition #32 addresses this issue, and provides two options for the Board to consider:  either encourage or require CAW to obtain the 59 AFY available from Seaside to offset Carmel River pumping.   

 

The Findings of Approval also include several Findings that specifically relate to CEQA compliance by the District.  These are addressed in the “MPWMD CEQA Compliance” subsection below. 

 

February 2009 Conditions of Approval

The February 2009 Conditions of Approval (Exhibit 15-F) proposed for Permit #M09-03-L4 are consistent with MPWMD Rule 22-D governing approval of Water Distribution Systems.  Conditions #1 through #4 define the Permitted System, including up to 90 AFY of CAW production to serve the MBSE located on APN 011-501-014, based on SNG’s legal right to 149 AFY of Alternative Production Allocation water. 

 

Condition #3 includes several additional components:

 

·        The source of CAW supply to serve the MBSE parcel shall be derived solely from the Seaside Basin, and the use of Carmel River water to serve the parcel shall be prohibited.

·        Due to system losses in the CAW system, the 90 AFY production limit is equivalent to a maximum of 83.7 AFY metered sales at the MBSE project site, based on assumed system losses of seven percent (7%).  The MPWMD General Manager may consider a change to the 7% loss factor if CAW provides adequate documentation (as determined by MPWMD) showing such as change is warranted.  This issue is discussed further below.

·        For the purpose of MPWMD’s Expanded Conservation and Standby Rationing Program, 90 AFY is added to CAW’s allowed production from the Seaside Basin.  This means the current amount of 3,504 AFY would be increased to a new amount of 3,594 AFY in the near-term.  If the Court or Watermaster reduces water available to CAW below 3,504 AFY, 90 AFY shall be added to CAW’s recognized allotment.  The CAW production limit of 11,285 AFY from the Carmel River, as currently set by the SWRCB, would not be changed by this action.  

 

The consideration of system losses, resulting in a lower number than 90 AFY for actual metered sales to the MBSE parcel, was requested by the General Manager on January 29, 2009, when he realized that this technical consideration was not included in the January 2009 draft Findings and Conditions.  For all projects depending on CAW water, the District distinguishes between production from the well(s) and metered sales at the point of use by the customer. Based on CAW records, the system losses (sometimes referred to as “unaccounted for water”) have been 10% or more for the past four years.  Using a 10% factor, 90 AFY of production would equate to 81 AFY of metered sales.  This amount was suggested to the Board during the staff presentation on January 29, 2009.  The applicant disagrees with this change and discussed his concerns with the MPWMD General Manager in early February 2009.  District staff is willing to change the factor to 7% (the standard target for CAW system losses in the MPWMD Rules and Regulations).  Using a 7% loss factor, 90 AFY of CAW production is equivalent to 83.7 AFY of metered sales at the MBSE parcel.  As noted above, CAW may provide documentation in the form of a technical report to the MPWMD General Manager to support a requested change to the 7% loss factor, based on protocol approved by the MPWMD General Manager prior to the submittal of the technical report.  Importantly, the SNG situation is not the same as the Sand City Desalination Plant WDS, where a brand new pipeline will transmit desalinated water directly from the plant into the CAW system at a specific location only a few hundred feet away.  The District did not impose a system loss factor for the desalination project WDS due to that unique situation.

 

Conditions #5 through #23 reflect standard MPWMD mandatory conditions, including water quality, metering and annual reporting, conservation, required Indemnification Agreement, fee payments, timely notice of pending or actual changes to the system, and other required elements.  As noted above, Condition #5 has been expanded to specify other agency approvals that are needed.  Other Conditions of Approval (Conditions #24 and #25) address basic water rights and the Endangered Species Act; these conditions are not required by District rules, but are included in all MPWMD WDS permits. 

 

Special Condition #26 addresses the requirement that District staff have physical access to the two dedicated monitor wells owned by MPWMD on APN 011-501-014, in addition to the existing production well owned by SNG.  The District’s wells must be maintained in good condition throughout construction. 

 

Special Condition #27 requires SNG and its successors to provide copies to the District of any report submitted to the Watermaster on water levels in its production well(s) on a monthly basis; the amount of water it has produced on a quarterly basis; and certain water quality test results on an annual basis each Fall. It also requires CAW to provide metered sales information to parcel APN 011-501-014 on an annual (water year) basis, and more frequently, if directed by the MPWMD General Manager.  This information is used to ensure that metered sales to MBSE do not exceed the 83.7 AFY limit imposed in Condition #3.

 

Special Condition #28 requires SNG and its successors to give notice to the District and copies of any correspondence with the Watermaster regarding transferring the right to produce water from the Basin under an Alternative Production Allocation right to a Standard Production Allocation right. 

 

Conditions #29 through #33 are new, and stem from the SWRCB letter dated February 5, 2009 as well as the technical questions about how CAW will serve the project with only Seaside wells.    

 

Condition #29 states that CAW must implement “strict water accounting methods approved by the MPWMD General Manager to track CAW production sources to ensure that only Seaside Basin wells (and not Sand City desalination water) serve the MBSE parcel identified as APN 011-501-014, and no Carmel River Basin water is produced to serve the subject parcel.”  The condition also requires quarterly reporting of MBSE-related water production data, and that the reports shall be provided to MPWMD “in the manner and form as prescribed by the District.”  It adds that the data tracking and reporting protocol must be approved by the District prior to completion of construction of the MBSE project.  This means that the District will work with CAW to develop a reasonable production tracking and reporting protocol that will enable compliance with the SWRCB letter of February 5, 2009.  This condition focuses on the sources of supply for the 90 AFY maximum production in contrast to the metered sales at the MBSE parcel addressed in Condition #27. 

 

Condition #30 is related to Condition #29 as it addresses how CAW will actually serve the MBSE parcel with only Seaside wells, given CAW’s current practice to minimize or terminate Seaside well production during the winter “high flow season.”  Condition #30 requires CAW to submit a written Operations Plan to the District within 90 days of the CAW/MBSE WDS approval explaining: (a) which Seaside wells will be used to serve MBSE; (b) physical constraints associated with potential source wells and related infrastructure; (c) impacts to compliance with SWRCB Order 98-04, if any; (d) ramifications to the Quarterly Water Supply Strategy and Budget process; and (e) estimated production from Seaside Basin well(s) in the winter “high flow season) to serve the MBSE parcel (and potential other customers, if required due to well operation constraints).  An extension of time to submit the report may be requested by CAW subject to approval by the MPWMD General Manager.  

 

Condition #31 requires that CAW provide the District a copy of any quarterly report to the SWRCB that includes information about service to the subject MBSE parcel. 

 

Condition #32 addresses CAW’s opportunity to obtain an additional 59 AFY from SNG (and potentially other available adjudicated water rights in the Seaside Basin) specifically for the purpose of reducing pumping from the Carmel River.  Importantly, staff has provided two options for Board consideration:

 

·        Option 1 “urges” CAW to obtain an additional 59 AFY (as amended by restrictions imposed by the Watermaster) from SNG (and potentially other available adjudicated water rights in the Seaside Basin) specifically for the purpose of reducing pumping from the Carmel River.”  Option 1 is voluntary, but would require careful monitoring and reporting using protocol approved by the MPWMD General Manager if rights are obtained, similar to Condition #29.

·        Option 2 requires CAW to enter into an agreement with SNG to obtain the remaining 59 AFY (as amended by restrictions imposed by the Watermaster) available from SNG’s 149 AFY water rights, and to show proof of an agreement within 180 days of the CCC Coastal Development Permit approval.  Similar to Condition #29, Option 2 also requires careful monitoring and reporting of production sources using protocol approved by the MPWMD General Manager.  Option 2 is mandatory as it relates to CAW and SNG; of course, CAW is encouraged to voluntarily pursue water rights from parties other than SNG.   

 

District staff recommends Option 2 be adopted by the Board because CAW and SNG are co-applicants on this application, and Mr. Ghandour indicated his intent to make his remaining water rights “available to the public trust” at the January 29, 2009 hearing.  The financial and legal arrangement between CAW and SNG is not the domain of the District; MPWMD is solely interested in the beneficial use of the remaining SNG water rights.  District staff briefly spoke with Mr. Ghandour, who prefers Option 1 due to unspecified tax, legal and other ramifications associated with the Watermaster and CCC.  He will be available to discuss this issue in more depth at the February 26, 2009 hearing.

 

For both Option 1 and Option 2, the obtained water rights would be subject to the one-for-one replacement in Order 95-10.  It is also understood that the 59 AFY would be in the Standard Production Allocation category, and thus would be reduced over time pursuant to the Seaside Basin adjudication until the natural safe yield of the Seaside Basin is achieved. 

 

Condition #33 requires SNG to ensure that any use of its on-site wells on the MBSE parcel does not result in more than 90 AFY extractions from the Seaside Basin, when CAW production is also considered.  It also requires careful tracking and reporting in the manner and form as prescribed by the District.  For example, if CAW produces 70 AF from Seaside to serve the MBSE parcel in a year, production from SNG’s on-site wells may not exceed 20 AF in that year.  It is understood that SNG does not plan to use its on-site wells unless needed as an emergency back-up supply.  This condition is simply proposed as a cross-check and safeguard.

 

The net result of Conditions #3, #27, #29, #32 and #33 is that: (a) no more than 90 AFY production will be extracted from the Seaside Basin to serve the MBSE parcel; (b) no more than 83.7 AFY of CAW metered sales will be consumed at the SNG parcel; (c) CAW’s near-term rights to water in the Coastal Subareas of the Seaside Basin could be as high as 3,653 AFY (3,504 + 90 + 59); and (d) extractions from the Carmel River could potentially be reduced by 59 AFY. 

 

The applicants have indicated that they understand these conditions, and generally agree with them, with the exception of the system losses described above for Condition #3 and Option 2 for Condition #32.  Notably, District Rule 22-D-1-m as specified in Condition #19 requires written, notarized acceptance of the conditions via a Permit Condition Acceptance Form in order for the WDS permit to be valid.   Rule 22-D-1-n as specified in Condition #22 requires recordation of a deed restriction signed and notarized by the property owner that includes the WDS permit, conditions, and Indemnification Agreement between the applicants and MPWMD. 

 

MPWMD CEQA Compliance

The District Board action must comply with CEQA as well as MPWMD regulations.  In the review of this application, MPWMD has followed those guidelines adopted by the State of California and published in the California Administrative Code, Title 14, Section 15000, et seq.  Specifically, the MPWMD, as a Responsible Agency under CEQA for this action, has complied with Guidelines Section 15096.  The District Board has relied on previous action by the City of Sand City, the Lead Agency under CEQA.  On December 1, 1998, the City adopted Resolution SC 98-83 certifying the Final Environmental Impact Report (SCH#97091005) for approving the MBSE as originally proposed. The City also approved the project via a series of resolutions that were provided in the November 17, 2008 public hearing materials.  The City’s Notice of Determination for the FEIR was filed with the County Clerk on December 2, 1998. 

 

The District Board also relies on a technical Addendum, prepared in October 2008 and updated in December 2008, which describes the reduced size and scope of the project, particularly the reduced water demand due to new water-saving technologies that are now part of the project description.  The Addendum addresses each of the questions posed in an Initial Study, and evaluates the potential impacts associated with each environmental topic.  In relation to water supply issues, the Addendum summarizes information that is already in the public record and/or has already been evaluated by MPWMD independently as part of the WDS approval process.  The pertinent information in the Addendum includes:

 

·        Updated water rights status for SNG and determination of 149 AFY available to the project site as a result of the Seaside Basin adjudication;

·        Confirmation by the Watermaster that CAW may serve the MBSE parcel based on SNG’s water rights;

·        Revised water use estimates, as confirmed by District staff, for MBSE as proposed in 2009; this amount is less than the original project evaluated in the 1998 EIR; and

·        Description of the MPWMD approval process for the subject WDS permit. 

 

The October 2008 (brown cover) Revised Draft Addendum to the Environmental Impact Report for the Monterey Bay Shores Resort (SCH # 97091005) was provided to District staff, Board members, and was available for public review as part of the November 17, 2008 public hearing.  In early December 2008, a final version entitled Addendum to the Environmental Impact Report for the Monterey Bay Shores Resort (light blue cover, still dated October 2008) was provided to the District with minor changes to the water-related sections.  The project description and water-related sections of this December 2008 document were placed on the District website and a hard copy was provided in the District foyer. The Board was provided the four pages where there were minor refinements from the October 2008 to the December 2008 versions.  This information is included in the January 29, 2009 staff report. 

 

At a January 20, 2009 public hearing, the City of Sand City formally adopted the Addendum, including an errata sheet with minor corrections unrelated to water supply or hydrology.  The City passed Resolution #SC 96-06 that determined: (1) no major revisions to the EIR are needed for the revised project, and (2) a Subsequent EIR is not required for the revised project.

 

CEQA Guidelines Section 15164 states that the lead agency or a responsible agency shall prepare an Addendum to a previously certified EIR if some changes or additions are necessary, but none of the conditions described in CEQA Section 15162(a) regarding a Subsequent EIR have occurred. District staff and Counsel do not believe a Subsequent EIR is needed because the project does not: 

 

·        Involve new significant environmental effects or a substantial increase in the severity of previously identified significant effects due to a change in the project [Guidelines 15162(a)(1)];

·        Involve new significant environmental effects or a substantial increase in the severity of previously identified significant effects due to a change in the circumstances (setting) under which the project is undertaken [Guidelines 15162(a)(2)]; or

·        Involve new information of substantial importance that shows any of the following: (A) the project will have one or more significant environmental effects not previously discussed; (B) significant effects previously examined will be substantially more severe than previously described; (C) mitigation measures or alternatives previously found to be infeasible would in fact be feasible and would substantially reduce one or more significant effects of the project, but the project proponents decline to adopt the measure or alternative; and (D) mitigation measures or alternatives considerably different than those analyzed in the previous EIR would substantially reduce one or more significant effects of the project, but the project proponents decline to adopt the measure or alternative. [Guidelines 15162(a)(3)].

 

With respect to hydrology and water supply, the anticipated water demand has been reduced due to “green” technologies incorporated into the project description; the Superior Court has adjudicated the Seaside Groundwater Basin resulting in 149 AFY water rights assigned to SNG; and water production to serve the MBSE parcel would be pumped from CAW wells farther inland rather than by coastal wells at the project site, thereby reducing the risk of seawater intrusion.  The current MBSE project, with the proposed MPWMD Conditions of Approval (Exhibit 15-F) is consistent with the Seaside Basin adjudication, SWRCB Order 95-10, recent direction by the Watermaster and SWRCB Division of Water Rights, and could potentially result in reduced diversions from the Carmel River.  There are no mitigation measures or alternatives that meet the specific criteria of CEQA Guidelines 15162(a)(3)(C) and (D) cited above. 

 

The Addendum will suffice for purposes of the District as a Responsible Agency, thus fulfilling the requirements of CEQA.  Furthermore, CEQA Section 15164(c) states that an Addendum need not be circulated for public review.  As noted above, the City of Sand City adopted the Addendum at a public hearing on January 20, 2009. 

 

CEQA directs that projects should first avoid, then minimize and mitigate impacts, in that order.  As described above, the February 2009 proposed Conditions of Approval focus on avoidance of hydrologic impacts via: (a) serve the project only from Seaside wells in accordance with the Seaside Basin adjudication and SWRCB letter for February 5, 2009, (b) obtain additional available water rights in Seaside to reduce Carmel River pumping, (c) implement stringent tracking and reporting of water production and consumption, (d) regulate on-site pumping to stay within limits set by the Seaside Basin adjudication, and to minimize pumping near the coast, and  (e) develop clear operational plans to consistently comply with the conditions.

 

As required by CEQA Sections 15091, 15092 and 15093, the District Board, through Findings (and cited evidence) #21, #22 and #23 (Exhibit 15-E) has determined, in relation to hydrology and water supply, that: (a) the project will not have a significant effect on the environment, (b) mitigation measures are not required as part of the District’s action on this WDS permit, and (c) a Statement of Overriding Considerations was not required to be adopted by the District Board for this action.  If the application is approved by the Board, the District will file its own Notice of Determination in compliance with CEQA Section 15096(i).  

 

Exhibit 15-K is a table prepared by District staff and Counsel that consolidates the assertions related to CEQA compliance contained in letters submitted for the January 29 and February 26, 2009 public hearings, as of February 19, 2009.  The specific letters received are listed and provided as exhibits in the “Noticing and Public Comment” subsection below.  Stated very briefly, recent information renders moot most of the assertions or recommendations in these letters regarding interpretation of SWRCB Order 95-10, and impacts of the MBSE project on the Carmel River.  This information includes: 

 

·        January 29, 2009 letter from CAW (Exhibit 15-I) stating it will serve the MBSE parcel only with water pumped from Seaside Basin wells;

·        February 5, 2009 letter from SWRCB Water Rights Division (Exhibit 15-D) determining that the one-for-one replacement requirement in SWRCB Order 95-10 does not apply to the MBSE application so long as CAW serves the project from Seaside wells and not the Carmel River;

·        Revised proposed MPWMD Conditions of Approval (Exhibit 15-F) crafted to ensure that only Seaside Basin water will be used to serve the MBSE project, less water will be needed from the Carmel River, and compliance with existing Orders governing water use in the Seaside and Carmel River Basins will occur.   

 

Noticing and Public Comment

Public notice has been provided for this public hearing in several ways, including: (1) mailed notices to property owners within 300 feet of the subject parcel; (2) posted notices at the project site; (3) posted notice at the MPWMD office; (4) notice of the public hearing to recipients of District agendas for the January 29 and February 26, 2009 meetings; (5) standard agenda/hearing notices to local media; and (6) posting of the CEQA documents and related materials on the District website at:  http://www.mpwmd.dst.ca.us/ceqa/ceqa.htm and for agenda items/meetings at:  http://www.mpwmd.dst.ca.us/asd/board/meetings/meeting.htm (see Feb. 26, 2009, Item 15).

 

To date (February 19, 2009 at 10:00 AM), 83 comment letters have been received; a cumulative listing is provided as Exhibit 15-L.  The actual letters have been provided to the Board under separate cover.  Any letters received after the printing deadline for this staff report will be provided to the Board at the February 26, 2009 hearing. 

 

A total of 77 letters expressed support for the MBSE project, lauded the benefits of the innovative, water-saving “green” technologies, and noted the positive benefit to the local economy and jobs.  The “Discussion” section in the January 29, 2009 reviewed letters from environmental organizations received by January 21, 2009 that opposed the MBSE application and/or questioned the District’s compliance with CEQA.  Additional letters from attorneys representing the applicant and environmental organizations were received through the day of the January 29, 2009 hearing, and were summarized by the attorneys during the public hearing. 

 

To date, the letters containing substantive questions or assertions about the District’s CEQA compliance, regulatory authority or permit conditions include:

 

·        CELP for Sierra Club dated January 15, 2009 (Exhibit 15-M)

·        CELP for Sierra Club dated January 26, 2009 (Exhibit 15-N)

·        Land Watch Monterey County dated January 27, 2009 (Exhibit 15-O)

·        League of Women Voters dated January 6, 2009 (Exhibit 15-P)

·        Lombardo & Gilles for applicant dated January 21, 2009 (Exhibit 15-Q)

·        Lombardo & Gilles for applicant dated  January 29, 2009  (Exhibit 15-R)

·        Sand City letter dated February 9, 2009 (Exhibit 15-S)

 

Any letters received after February 19, 2009 at 10:00 AM will be provided to the Board at the February 26, 2009 hearing.

 

EXHIBITS

15–A   Application #20080915MBS to amend the CAW WDS (without attachments)

15–B   Map of Project Location

15–C   Seaside Basin Watermaster letter confirming water rights

15–D   SWRCB letter to CELP/Sierra Club dated February 5, 2009

15–E    MPWMD Draft Findings of Approval, as of February 19, 2009

15–F    MPWMD Draft Conditions of Approval, as of February 19, 2009

15–G   February 5, 2009 letter from CELP/Sierra Club to Seaside Basin Watermaster

15–H   February 11, 2009 letter from CELP/Sierra Club to Seaside Basin Watermaster

15-I     CAW letter dated January 29, 2009 regarding service to SNG from Seaside wells

15–J    January 16, 2009 letter from CCC to applicant with list of information requests

15-K    Staff/Counsel review of CEQA-related assertions through February 19, 2009

15-L    Updated list of comment letters received as of February 19, 2009

15-M   CELP for Sierra Club letter dated January 15, 2009

15-N    CELP for Sierra Club letter dated January 26, 2009

15-O    Land Watch Monterey County letter dated January 27, 2009

15-P     League of Women Voters letter dated January 6, 2009

15-Q    Lombardo & Gilles for applicant letter dated January 21, 2009

15-R    Lombardo & Gilles for applicant letter dated January 29, 2009 

15-S     Sand City letter dated February 9, 2009

 

 

 

 

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Prepared by H. Stern, 2/18/09