MPWMD POLICY ADVISORY COMMITTEE (PAC)/TECHNICAL ADVISORY COMMITTEE (TAC) MEETING--JAN 31, 2008--DRAFT ORDINANCE ADDING A PROCESS FOR SUB-POTABLE WATER USE CREDITS TO THE RULES AND REGULATIONS OF THE DISTRICT

EXHIBIT 1-A

DRAFT ORDINANCE

AN ORDINANCE OF

THE MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

ADDING A PROCESS FOR SUB-POTABLE WATER USE CREDITS

TO THE RULES AND REGULATIONS OF THE DISTRICT

FINDINGS

1. The Water Management District is charged under the Monterey Peninsula Water Management District Law with integrated management of the ground and surface water resources in the Monterey Peninsula area.

2. The Water Management District has general and specific power to cause and implement water conservation activities as set forth in Sections 325 and 328 of the Monterey Peninsula Water Management District Law.

3. California State Water Resource Control Board (SWRCB) Order No. WR 95-10, issued in July 1995, ruled that California American Water (CAW) did not have a legal right to take approximately 69 percent of the water supplied by CAW to its customers at that time. The SWRCB set specific goals for CAW to reduce water diversions from the Carmel River Basin.

4. Under SWRCB Order No. WR 95-10, CAW was ordered to reduce its historical diversion from the Carmel River Basin by 20 percent beginning with Water Year 1997 and in each subsequent year.

5. By order of the Superior Court in California American Water v. City of Seaside, et al (Monterey Case No. M66343) the initial Operating Safe Yield for the Seaside Basin was determined to be 5,600 Acre-Feet (Coastal Subarea is 4,611 Acre-Feet and 989 Acre-Feet for the Laguna Seca Subarea). The Court defined the “Operating Safe Yield” for the Seaside Basin as the maximum amount of Groundwater resulting from Natural Replenishment which can be produced from each Subarea for a finite period of years as these terms are defined in the decision. Water conservation is required to achieve the Operating Safe Yield.

6. Substitution of Sub-potable Water for Potable water that derives from the Monterey Peninsula Water Resource System or Seaside Groundwater Basin sources results in water savings and reduces over pumping of Groundwater. Substitution of Sub-potable Water for Potable water confers environmental benefit as 25 percent of the former irrigation use shall be set aside as permanent conservation savings.

7. Incentives reduce use of Potable water by encouraging substitution of Sub-potable irrigation water in Non-Residential settings. Substitution of Sub-potable Water for Potable water supports the Water Management District’s Mission, “To Manage, Augment and Protect Water Resources for the Benefit of the Community and the Environment.” Substitution also supports the District’s legislated mandate to conserve water.

8. Sub-potable Water offers a viable substitute for Non-Residential Potable water when used for Landscape and agricultural irrigation, urban waterscape, and industrial re-use.

9. Sub-potable Water Use Credit may also provide a basis for the General Manager to issue a Water Permit for new, modified, or intensified Non-Residential water use on that Site using the Source of Supply from which the credit originated.

10. This ordinance shall revise, amend and republish Rules 11 and Rule 25.5 of the Rules and Regulations of the Water Management District. This ordinance shall add a definition for Sub-potable Water Use Credit to Rule 11. This ordinance shall add references to Sub-potable Water Use Credits in Rules 25.5 and 134.

11. This ordinance shall add District Rule 28-D to enable transfer of Sub-Potable Water Use Credits. This ordinance shall add Rule 134, Sub-potable Water Use Credits, to the Rules and Regulations of the MPWMD to allow a Sub-potable Water Use Credit when Non-Residential Potable irrigation is replaced with Sub-potable Water.

12. [CEQA findings shall be developed and added in accord with and as supported by the EIR for this Ordinance.]

NOW THEREFORE be it ordained as follows:

Section One: Short Title

This ordinance shall be known as the Sub-potable Water Use Credit Ordinance of the Monterey Peninsula Water Management District.

Section Two: Statement of Purpose

The Monterey Peninsula Water Management District enacts this ordinance to encourage the replacement of existing Non-Residential Potable water irrigation with Sub-potable Water use.

Section Three: Amendment of Rule 11 (Definitions)

A. The following term shall be added to Rule 11, Definitions, of the Rules and Regulations of the District and unless the context specifically indicates otherwise, this term shall be defined as set forth below:

SUB-POTABLE WATER USE CREDIT – “Sub-potable Water Use Credit” shall mean a Water Use Credit whereby Non-Residential irrigation that uses Potable water originating from the Monterey Peninsula Water Resource System or Seaside Groundwater Basin has been permanently replaced with Sub-potable Water that originates, (1) from outside the Monterey Peninsula Water Resource System or the Seaside Groundwater Basin, or (2) from Recycled or Reclaimed Water from the Carmel Area Wastewater District or Monterey Regional Water Pollution Control Agency wastewater treatment facilities.

Section Four: Amendment of Rule 25.5 – Water Use Credits and On-Site Water Credits

A. Rule 25.5-E of the Rules and Regulations of the District shall be revised as shown in bold italics (bold italics) and strikeout (~~strikethrough~~):

E. The following types of Permanent Abandonment of Capacity shall qualify for a Water Use Credit under this Rule:

1. Demolition of a building or use that has been recognized by the District as being a lawful water use;

2. Permanent disconnection of a lawful water use from a Water Distribution System;

3. Residential removal of water fixtures;

4. Permanent installation of non-Mandated water fixtures or appliances.

5. Permanent abandonment of Potable water use originating from the Monterey Peninsula Water Resource System or Seaside Groundwater Basin for Non-Residential irrigation purposes, when replaced with Sub-potable Water (see Rule 134—Sub-potable Water Use Credit). Abandonment shall be deemed to occur only for those landscaped areas that no longer have any potential to receive irrigation water from a potable Water Distribution System.

Section Five: Addition of Rule28–D Transfers of Sub-Potable Water Use Credit

The following text as shown in bold italics (bold italics) shall be added as Rule 28 D:

RULE 28 TRANSFER

D. TRANSFERS OF SUB-POTABLE WATER USE CREDIT

Sub-potable Water Use Credits allowed by the District pursuant to Rule 134 may be transferred from one property to another for any use, or from one property to a Jurisdictional Allocation for any use pursuant to this Rule. The following conditions shall apply:

1. Sub-potable Water Use Credit transfers shall only occur within a single Jurisdiction. No inter-Jurisdictional transfer shall be allowed. Sub-potable Water Use Credits shall not enable transfers between different Water Distribution Systems. Property-to-Jurisdiction transfers shall increase a Jurisdiction’s available allocation.

2. Sub-potable Water Use Credit transfers shall only occur with the prior approval of the city, county or Airport District.

3. Use of Sub-potable Water Use Credits resulting from a property-to-Jurisdiction transfer shall be at the discretion of the Jurisdiction.

4. All Sub-potable Water Use Credits shall originate only from prior documented water use capacity and shall be subject to each and every limitation on the calculation of Sub-potable Water Use Credits set forth in Rule 134.

5. All transfers of Sub-potable Water Use Credits shall occur only by the written (and recorded) agreement of the owner of record for each Parcel from which the transfer originates. This agreement shall confirm that the transfer of a Water Use Credit is irrevocable, shall quantify remaining Water Use Capacity required by the originating Parcel(s), and acknowledge that any intensification of Water Use Capacity on the originating Site thereafter shall result in additional Connection Charge fees. If all prior Water Use Capacity is transferred from a Site the recorded agreement and notice shall consent to permanent removal of the meter Connection from the originating Site, and acknowledge that the placement of a new meter shall be limited due to unavailability of water.

6. Transfer of Sub-potable Water Use Credits shall not be authorized if the effect of the transfer shall be limited in any manner by the order of the Superior Court in California American Water v. City of Seaside, et al (Monterey Case No. M66343).

7. The effect of any approved Sub-potable Water Use Credit transfer shall be the irrevocable extinction of any right or entitlement to the actual water use, Water Use Capacity, or Sub-potable Water Use Credit which has been transferred from the originating (transferring) Site.

8. Conditions of the transfer shall be recorded on both the originating and receiving Sites prior to completion of the Sub-potable Water Use Credit transfer.

9. Before any Sub-potable Water Use Credit transfer shall occur, the transfer fee required by Rule 60 for each originating Site shall be paid by the Applicant.

10. Before any Sub-potable Water Use Credit transfer shall occur, the Applicant shall enter into an indemnification agreement with the District as a Condition of Approval, whereby the Applicant agrees to indemnify, defend and hold harmless the District from any and all legal and financial responsibility that may arise in connection with approval of the Application, including but not limited to attorney’s fees and costs that the District may incur.

11. The Jurisdiction in which the Sub-potable Water Use Credit transfer occurs shall be notified in writing upon completion of the transfer.

Section Six: Addition of Rule 134 – Sub-potable Water Use Credits

The following text as shown in bold italics (bold italics) shall be added as Rule 134:

RULE 134 – SUB-POTABLE WATER USE CREDITS

A. A Person may receive a Sub-potable Water Use Credit for permanent abandonment of Potable water use (i) provided the Potable water originated from the Monterey Peninsula Water Resource System or Seaside Groundwater Basin, and (ii) provided the Potable water use was exclusively for Non-Residential irrigation purposes, when the abandoned Potable water use is replaced with Sub-potable Water that originates, (1) from outside the Monterey Peninsula Water Resource System or the Seaside Groundwater Basin, or (2) from Recycled or Reclaimed Water from the Carmel Area Wastewater District or Monterey Regional Water Pollution Control Agency wastewater treatment facilities. Each replacement source of Sub-potable Water must be from a reliable, perennial supply of demonstrated capacity sufficient for the proposed use.

B. The District shall provide written documentation for each Sub-potable Water Use Credit. This notification shall define the quantity and expiration of each Sub-potable Water Use Credit.

C. Except as allowed by Rule 28-D, Sub-potable Water Use Credits shall not be transferable to any other Site.

D. A Sub-potable Water Use Credit may be applied to and shall allow future Potable water use on that Site at any time within a period of sixty (60) months from the first date of written documentation required above. The General Manager shall allow renewal of this Sub-potable Water Use Credit to extend beyond the sixtieth (60^th) month only upon verification that some or all water savings represented by the Sub-potable Water Use Credit are current (i.e. no Water Permit or other use of the Water Use Credit has occurred). If all savings are not current, a pro-rata reduction shall occur. A single renewal period of sixty (60) months shall be allowed; thereafter any remaining unused Sub-potable Water Use Credit shall expire.

E. A Sub-potable Water Use Credit on a Redevelopment Project site may, in addition to the time limits and in the manner set forth above, have its expiration date extended for two (2) additional periods of sixty (60) months each, to afford a Redevelopment Project a maximum period of two hundred forty (240) months to use that credit.

F Sub-potable Water Use Credit shall be calculated as follows:

1. The Applicant shall provide the District with a Landscape plan and calculation of the Landscape Water Budget completed by a Landscape Irrigation Auditor for the existing irrigated Landscaping.

2. The General Manager shall:

a. Conduct an inspection of the Site to document existing Landscaping and Irrigation System components;

b. Verify the Landscape plan matches the existing Landscaping and review the Landscape Water Budget for accuracy.

c. Verify that all Landscaping was properly permitted or pre-dated any District Water Permit requirement. Verification shall include a review of the District’s file(s) for the Site and by comparing the Landscape plan against available orthoimagery. Landscaping that cannot be verified as having been installed pursuant to Permit shall not provide a basis to qualify for issuance of a Sub-potable Water Use Credit. Unpermitted Landscaped areas shall be removed from any Landscape Water Budget.

3. The General Manager shall reduce the quantity of water estimated in the Landscape Water Budget by twenty-five percent (25%) and issue a Sub-potable Water Use Credit of seventy-five percent (75%) of the Budget. The twenty-five percent increment shall be permanently set aside to reduce overall community water demand.

G. A Notice and Deed Restriction Regarding Limitation on Use of Water on a Property and Notice and Deed Restriction to Provide Public Access to Water Use Data shall be recorded prior to documentation of a Sub-potable Water Use Credit.

H. A valid Sub-potable Water Use Credit shall provide the basis for the General Manager to issue a Water Permit for new, modified, or intensified Non-Residential water use on that Site.

1. No Connection Charge shall be assessed for any Sub-potable Water Use Credit. Connection Charges, however, shall apply to the Capacity for water use which exceeds the Sub-potable Water Use Credit, or for any Expansion of Use following the expiration of the Sub-potable Water Use Credit.

2. Use of a documented Sub-potable Water Use Credit for On-Site use to offset an Expansion of Use shall cause recordation of an amended Notice and Deed Restriction Regarding Limitation on Use of Water on a Property.

3. No Connection Charge refund shall accrue by reason of a water use reduction or abandonment of Capacity, whether or not reflected by a Sub-potable Water Use Credit.

4. Issuance of a Sub-potable Water Use Credit for On-Site use shall not result in any change to a Jurisdiction’s Allocation or to any Water Entitlement. Use of any On-Site Sub-potable Water Use Credit shall similarly not result in a change to a Jurisdiction’s Allocation or any Water Entitlement.