EXHIBIT 4-B
Unintended Consequences:
How the SWRCB’s WR 2009-0060 Undermines Livelihoods, Fosters Stagnation,
and Creates Urban Blight
INTRODUCTION
The State Water Resources Control Board (“SWRCB”) 2009 Cease
and Desist Order (“CDO”) regarding water production on the Monterey Peninsula,
WR 2009-0060 (see Tab 1), set forth a simple tenet regarding diversions from
the Carmel River for new water service:
California American Water Company (“Cal-Am”) “shall not
divert for new service connections or for any increased use of water at
existing service addresses resulting from a change in zoning or use.”
No where in this simple statement does the SWRCB say that is
their policy to encourage the closing or shuttering of commercial businesses as
a strategy to reduce water use on the Monterey Peninsula, yet that is exactly
what the CDO and subsequent SWRCB guidance letters have accomplished.
The CDO created confusion through the use of certain
terminology, and subsequent communication from the SWRCB has exacerbated the
problem, rendering Cal-Am simply unable to act judiciously or sensibly in
setting meters. Somehow, the SWRCB and
Cal-Am have strayed far afield of another simple principle:
An owner of a property that was entitled to use water when
the CDO was implemented should still be entitled to utilize the same amount of
water at that site.
Instead, the SWRCB appears to have implemented a regime
where it is dictating the type of business or use in which a property owner can
engage, preventing owners from seeking the highest and best use of their
property, through the prevention of multiple uses on a site, subdividing a
site, or reinstallation of a meter that was lost due to vacancy, fire, or
renovation – even where water use on the site will not be increased or will be
permanently reduced.
The confusion created by the SWRCB interpretation of the CDO
has led Cal-Am to do nothing – a permanent state of gridlock – thwarting the
implementation of good projects that reflect desirable community values with no
anticipated increase in water use.
Because it is unlikely the CDO can be lifted prior to 2018 or 2019, for
the next 5 or 6 years property owners on the
We recognize the urgency of finding a water supply solution
and the community is deeply engaged in moving a permanent water supply solution
forward. However, in the mean time,
individual small business owners and local planning agencies are being unduly
hampered. The Monterey Peninsula Water
Management District (“District” or “MPWMD”), on behalf of the planning agencies
on the Peninsula, asks the SWRCB to work cooperatively with us to create a
framework where projects that do not intensify water use may go forward and
community interests can be served.
THE
PROBLEM
As mentioned above, the Condition 2 of the CDO set forth a
simple tenet regarding diversions from the
California American Water Company (“Cal-Am”) “shall not
divert for new service connections or for any increased use of water at
existing service addresses resulting from a change in zoning or use.”
This appears to do two things, (i) prohibit new service
connections, and (ii) prohibit increased water usage due to a change in zoning
or use. But the language introduces
words such as “service connections,” “service address,” and “change in zoning
or use.”
Further, the CDO recognizes the high-level policy goal of
metering multiple uses individually.
That is, footnote 47 to the CDO says that for multifamily, commercial,
or industrial uses “the installation of additional meters at an existing
service will not be viewed as a new service connection” provided it does not
increase water use. This is consistent
with District policy as incorporated in its rules (see Tab 17.) District policy, however, is meant to be
consistent with industry standards, which are represented by East Bay Municipal
Utility District’s Watersmart Guidebook (Tab 18) and
the California Urban Water Conservation Council best management practices (Tab
19.)
CDO Conditions 6(f) and 6(g) are reporting requirements for
new meters and appear to distinguish between new meters for service that does
not increase water use and those that do require an increase in supply. Hence, it was envisioned that new meters
could be set where there is no intensification of use.
It seems logical that new meters should be set at an
existing site for any purpose so long as there is no change in zoning or use
under local land use regulation and no increase in water use. So why aren’t such projects getting meters?
CONFUSION
…. AND CLARIFICATION?
Following the California Public Utilities Commission
Decision 11-03-048, in November 2011 Cal-Am sent a letter to the SWRCB Deputy
Director, Water Rights seeking clarification of certain issues (see Tab
2.) The letter indicated that the
District and Cal-Am disagreed on how a baseline for past use should be
established and also sought clarification regarding (a) the meaning of changes
in “use”, (b) the use of water credits, and (c) changes in water service due to
remodeling or renovation.
In April 2012, the SWRCB issued its reply letter, also
referred to herein as its “interpretive letter” (see Tab3.) After a year observing how Cal-Am had
responded to the interpretive letter, the District concluded it was not working
and that it seemed to overcomplicate how Cal-Am would evaluate whether new
meters should be set at an existing site for any purpose so long as there is no
change in zoning or use under local land use regulation and no increase in
water use. Cal-Am simply began to say
“No” to everything.
In February and March 2013, the District met with Division
of Water Rights staff and the SWRCB General Counsel to express its
concerns. In March 2013 the District
sent a letter (see Tab 4) to the Deputy Director, Division of Water Rights,
asking for both greater clarification and relief, in order to create a
framework where projects that do not intensify water use may go forward and
community interests can be served. The
District believes that the same three issues from the November 2011 letter –
(a) the meaning of changes in “use”, (b) the use of water credits, and (c)
changes in water service due to remodeling or renovation – remain inadequately
addressed.
At the end of May 2013, the SWRCB responded (see Tab 5) and reinforced
three conclusions of the April 2012 letter:
(a) Condition 2 of the CDO is intended to limit an increase in water
consumption, (b) new water meters at existing structures where there is no
change in zoning is addressed by footnote 47, and (c) establishing a baseline
for past use and monitoring of future use has not yet been well defined. The District believes your responses
regarding items (a) and (b) are positive, but require additional explanation,
as requested in the next section. We
also recognize your interest in resolving the setting of baselines under item
(c) and offer some discussion of this topic in the subsequent section.
ALLOWABLE
CHANGES IN USE
The May 2013 SWRCB letter states “that condition 2 and
footnote 47 “are intended to limit an increase in water consumption from the
Carmel River that may be caused by regional or local zoning and land use
changes when compared to the conditions that existed at the time of the Order
adoption.” It also says, “The Order
addressed new water meters at existing structures with no changes in zoning…”
Question:
Can this be interpreted to mean new meters should be set at an existing
site for any purpose so long as there is no change in zoning or use under local
land use regulation and no increase in water use?
The community will benefit if the uses identified behind Tab
6 of this packet can proceed so long as there is no change in zoning or use
under local land use regulation and no increase in water use. Tabs 7 – 10 provide examples of actual projects
that are in danger of not moving forward if a clearer framework cannot be
provided to Cal-Am. The examples are
included in this packet for discussion in person. These projects are representative of desirable
community goals such as:
However, the April 9, 2011 letter does not appear to allow
any of these, despite no increase in planned water use. For example, the April 2011 letter says
“Condition 2 prohibits any increased water use at an existing service address
that results from a change in zoning or use approved by either MPWMD or a local
land use authority after October 20, 2009.”
Question:
MPWMD’s defined term “Change of Use” was never intended to determine
land use policy and is not considered zoning.
Rather, it was intended to signal a construction or renovation and to
trigger the applicant to seek a water permit from the District, affording the
District the opportunity to “count the water usage.” Would the SWRCB remove the MPWMD reference
with respect to change of use and rely solely on local zoning?
Question:
If the use is allowable under existing zoning, then can we all agree it
is not a change of use?
Question:
If a use is not a change in zoning or of use under existing zoning, and
does not result in an increase in water usage, then shouldn’t it be allowed?
The April 2011 letter also says “The State Water Board
agrees… that water credits may not be used to serve a new connection or an
increased use of water at an existing service address due to a change in zoning
or use as described above.” The District
has passed many Ordinances that require retrofits of commercial and residential
fixtures without providing the owner a credit that can be used to add
additional fixtures or activities on the site.
However, the District also has programs that allow an owner to invest in
fixtures or features that save water, creating a credit that can be used to add
an activity, but resulting in no overall increase in water consumption. For example, if a mom-and-pop hair salon
wants to expand their business to add a chair and a sink, water use must first
be reduced through other permanent measures, ensuring no overall increase in
water use. That is the purpose of the
credit system. In fact, a “credit” is
the fundamental building block for businesses to retool and renovate. Most of the examples under Tabs 7 – 10 use
“credits” as the currency to calculate how much water was used in the past and
how much is available in the future.
The District believes the April 2011 interpretive letter
unduly restricts the use of water credits.
Question:
Does the SWRCB agree that if an owner should be allowed to invest to
save water consumed in order to change or expand his activities on a site, so
long as the overall use of water is not increased and there is no change in
zoning or use under existing zoning?
Question:
If an owner wants to change or expand activities on a site, the water
used on the site does not increase, and there is no change in zoning or use
under existing zoning, but the owner splits his building into two uses,
creating a new second service address – also a “new connection” – why does the
SWRCB want to prevent this?
Finally, the April 2011 interpretive letter addresses
remodeling and renovations. It appears
that Cal-Am has not been willing to set meters when it has concerns that doing
so would create a “new service address” or be deemed a “new connection,” even
when the site is the same, there is no change in zoning or use under existing
zoning, and there is no increase in water consumption. It seems there are unintended outcomes due to
the terms used.
Question:
So long as there is no change in zoning or use under existing zoning,
and no increased water consumption at the site, was it the SWRCB’s desire under
footnote 47 that new meters be allowed to be set for multiple and different
uses at an existing site, even if a new account number is established and
Cal-Am will consider this a “new connection.”
Question:
So long as there is no change in zoning or use under existing zoning,
and no increased water consumption at the site, was it the SWRCB’s desire under
footnote 47 that new meters be allowed to be set for multiple and different
uses at an existing site, even if a building owner splits his building into two
uses, creating a new second “service address” – also a “new connection.”
Question:
So long as there is no change in zoning or use under existing zoning,
and no increased water consumption at the site, if an owner performs a
renovation that will no increase overall average use, but may increase peak
usage, thereby requiring a larger meter, shouldn’t that be an allowable
use? What if the larger meter is solely
required to meet the requirements of fire suppression, perhaps through a
junction as shown behind Tab 20?
It appears that the attempt by the SWRCB to clarify have
actually created more confusion. It
seems that a clear policy statement is needed that allows new meters to be set at an existing site for any purpose so long
as there is no change in zoning or use under local land use regulation and no
increase in water use. Use should be site specific and not be encumbered with “service address”
or “new connection” definitional concerns.
Making such a clarification in a very simple and objective framework
would then put the focus of discussion solely on how a baseline of water usage
is determined and proposed use going forward is calculated and monitored. This is the subject of the next section.
ESTABLISHING
A BASELINE FOR SITE-SPECIFIC WATER USE:
HISTORICAL DATA
The April 2011 interpretive letter indicated that “Until a
determination to the contrary is made, the State Water Board will determine the
baseline for past water use based on the lessor (sic) of the actual average
metered annual water use for a water year from the last five years’ of records,
or the amount calculated from the fixture unit count.” The District believes that it is time to work
together in earnest to make a determination to the contrary.
The District believes the use of actual metered data is
flawed and insufficient for the following reasons:
Hence, there are just too many weaknesses to the use of
actual data in general, and too many variables nestled in the historical
data. Historical data is simply not
appropriate because it does not reflect potential changes in tenants, business
activities performed, or potential future use for a given site and
activity. Economic and market conditions
are always changing and a business that had a site in October 2009 always had
the potential increase its consumption, reduce it, or stay the same – no one
really knows. The SWRCB should be less
concerned with each individual business’s actual
past and future use, and focus instead on the potential or probable
average use.
ESTABLISHING
A BASELINE FOR SITE-SPECIFIC WATER USE:
WATER USE FACTORS
It is nearly impossible to predict the consumer mind-set or
socioeconomic ethics on water use. There is usually insufficient data to
account for all the factors that may influence the water demands of a
particular water system. Defined design criteria are laid out in the ASHRAE guide
and the Uniform Plumbing Code (UPC). Both criteria focus on the use of
probability theory with a safety factor to compensate for unknown variables.
Required flow rates are defined based on a “Fixture Count” method that is
determined after appropriate research and analysis of controlling variables.
Among a host of other factors, these variables are fixture types, people use
factors for structure types, and people socioeconomic factors. (“Design of Potable Water Plumbing Systems” Course
No: M04-023; A. Bhatia; Continuing Education and Development, Inc. 9 Greyridge Farm Court Stony Point, NY 10980)
There are two methods that are typically used in the design
of water systems. Currently, the plumbing industry uses Hunter’s method for approximating peak demand loadings on a
building’s water distribution system. This method was developed in the 1940’s
and presented in the National Bureau of Standards published report BMS 65,
“Methods of Estimating Loads in Plumbing Systems”. It is still the most widely
used procedure and forms the basis for model plumbing codes (e.g. The
International Plumbing Code, The Uniform Plumbing Code and ASHRAE guide).
Another method has been developed by the American Water
Works Association (AWWA). The “fixture value method” was introduced in 1975 and
presented in AWWA’s M22 Manual. This method is an empirical approach based on
data obtained from water meter data loggers, field experiments, utility
surveys, and other information. This method is primarily used for sizing of
water service lines, but has been applied to the development of average usage
factors for water supply planning.
Other industry standards for estimating average water
consumption by type of residential or business use and by fixture type include Water
Supply and Sewerage, Terence J. McGhee. McGraw-Hill. 1991; On-Site
Wastewater Treatment: Educational Materials Handbook, National Small Flows
Clearinghouse. West Virginia University.
1987; and Water Resources Engineering, Larry W. Mays. John Wiley & Sons. 2001; and others.
The fixture unit concept is a method of calculating maximum
probable water demand within large buildings based on theory of probability.
The method is based on assigning a fixture unit (f/u) value to each type of
fixture based on its rate of water consumption, on
the
length of time it is normally in use and on the average period
between successive uses. All the above factors, together, determine the
rate of flow within a plumbing pipe.
Average water consumption is typically based on the probable
water demand for a type of use based on fixture unit values factored by the
hours of use probabilistically expected for a type of use. Average flow is flow likely to occur in the
piping under normal conditions. Average flow is of little concern to the building
designer, who designs for conditions under peak flow, butaverage flow is typically used for determining the capacity
of supply required over time for a type of use.
The use of fixture unit values and user category factors has
been industry standard for decades. The
District has used non-residential water use factors since 1985 using national
methods adapted for the
Use of water use factors is a traditional approach to
wastewater capacity sizing, since wastewater is not metered. Water use factors for dischargers are
established based on water use factors, adjustments for irrigation, and adjusted
for strength of discharge. Wastewater
rates and charges are then established converting the water use factors to a
revenue requirement for each type of use.
Tab 12 shows the various monthly rates for Monterey Regional Water
Pollution Control Agency by type of use.
The variability reflects the differences in water use factor for the
type of business use.
A similar methodology is often applied for water rate
setting. Tab 13 shows a recent water
supply charge study prepared by an outside consultant to the District. This methodology reinforces the District’s
assertion that on average the water usage for a type of business can be
represented by a water use factor.
Tab 14 summarizes a study by the City of
Tab 15 shows how fixture unit values are used for peak
demand sizing under
Tab 16 is included to show how the concept of fixture
counting is typical across the country, in this example of meter sizing in
CONCLUSION
Actual historical and future use for any particular user may
be higher or lower than predicted by a water use factor, but the goal in both
rate-setting and water supply planning is to capture the averages. By counting fixtures for a site and
determining average probable use, or utilizing already statistically calculated
water use factors for a type of use, the capacity for use on that site is
captured. Whether or not the actual use
is reflected for a single business owner is irrelevant. The District believes that in setting meters
for any purpose – subdividing a building, meter splits, new mixed uses and other
changes in business activity – so long as there is no change in zoning or use
under existing zoning, and there is no increase in water consumption, then the
average potential use under previous conditions should be compared to average
potential use under new conditions, in both cases using water use factors. No future actual
monitoring, nor enforcement action based on measured use should be
required for a single individual user that has been permitted and has had a
meter set in this way. Rather, the
effects of that user’s consumption are averaged out across all users. So long as the community as a whole is
meeting the ramp-downs required under the CDO and the Seaside Basin
Adjudication, or all users share equally in any necessary conservation,
rationing, or other actions in order that the
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