WATER DEMAND COMMITTEE
ITEM:		ACTION ITEM
2.	Consider Modifications to District Rule 25.5 (Water Use Credits)
Meeting Date:			January 11, 2005
From:			David A. Berger, General Manager
Prepared by:			Stephanie Pintar

SUMMARY: At its December 14, 2004 meeting, the Board considered a request for a water credit transfer from a redevelopment site in Seaside. The Board’s action included a referral to the Water Demand Committee to discuss modifying District Rule 25.5 (Water Use Credits) to allow a Water Use Credit for redevelopment projects to remain valid longer than the current maximum of 120 months (10 years) as allowed by District Rule 25.5. Redevelopment projects often take many years to come to fruition, and an extended Water Use Credit for these projects would assist the Redevelopment Agency in obtaining developers and completing the project.

District Rule 25.5 currently allows reuse of a documented Water Use Credit for up to a maximum of ten years when the credit is established prior to abandonment of use. In the recent public hearing regarding the water transfer in Seaside, the redevelopment site has been vacant for ten years and the Water Use Credit was scheduled to expire before the permits for the redevelopment project were issued. The City of Seaside has been actively pursuing a developer for the site for the past decade and needed additional time to secure a developer before the permits are issued. Transferring the credit from the site was one of the only options to maintain the water credit for the project.

BACKGROUND: Over 400 cities and counties in the state have used the authority in California Community Redevelopment Law (CRL) to establish a redevelopment agency to pursue the elimination of blight in designated Redevelopment Project Areas. A project area is the specific geographic location within which blight removal, revitalization of private properties, and public infrastructure improvements are intended to take place. Under CRL a proposed Redevelopment Project Area Plan must first go to public hearing, giving citizens a chance to learn more about redevelopment and to express their views. Thereafter, the Redevelopment Agency and the City Council may act to adopt the project area plan, take necessary actions to implement it, and monitor and report on its results. Directly relevant to the subject of this report, and recognizing the long-term nature of redevelopment activities, CRL authorizes project area plans created prior to 1993 to be effective for up to 41 years from initial adoption (and 31 years for plans adopted after 1993).

A redevelopment project area plan describes where and how specific redevelopment activities and public infrastructure improvements are expected to be undertaken, but it does not approve any specific project.  The plan authorizes the Redevelopment Agency to undertake certain actions to achieve its goals, such as: to assemble and re-sell land in order to attract private investment required to revitalize or replace vacant commercial buildings in a project area; create affordable housing opportunities; and to use tax increment financing to repay debt issued to fund street repairs, replace utilities, add public parking facilities and other public infrastructure improvements required to induce private sector redevelopment investment in the project area. 

RECOMMENDATION: The Water Demand Committee should discuss the merits of adding a provision to Rule 25.5 that would allow a Site (as defined in District regulations) that is part of a Redevelopment Agency approved redevelopment project additional time to use a documented Water Use Credit. Staff suggests that the Committee consider adding at least one additional five-year extension period to the single, five-year extension currently authorized in Rule 25.5. The Committee’s recommendation would be brought to the Board for potential action in the form of an ordinance prepared by the General Counsel.

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