WATER DEMAND COMMITTEE
DISCUSSION ITEM
3.	DISCUSS CONSERVATION OFFSET PROGRAM
Meeting Date:		April 18, 2018	Budgeted:	N/A
From:		David J. Stoldt	Program/	N/A
		General Manager	Line Item No.:
Prepared By:		David J. Stoldt	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation:
CEQA Compliance: Action does not constitute a project as defined by the California Environmental Quality Act Guidelines section 15378.

SUMMARY:  At its November 20, 2017 meeting, the Water Demand Committee directed staff to begin to determine basic provisions of a water conservation offset program. An offset program would allow a developer of a proposed project in a jurisdiction where an allocation of water is unavailable to invest in conservation savings elsewhere and use the credit created to “offset” the required water for the proposed development. At the meeting, the Committee stated its preference for a program where actual savings will occur, rather than paying into a mitigation bank to help pay for programs by the District to occur sometime in the future.

Several communities have water conservation offset policies (see Exhibit 3-A, attached.) In fact, the District has envisioned such a program in its Rule 24. Section E of Rule 24 covers “Special Circumstances” and subsection 6.k. states what is expected of a developer if a project fails to stay under its calculated Water Use Capacity limit: “Water use will be reviewed annually after occupancy. If actual water use exceeds the preliminary Water Use Capacity estimate during any annual review, the District will debit the Jurisdiction’s Allocation for the difference. At the end of the monitoring period, if the average annual water use exceeds the preliminary Water Use Capacity estimate, the District will determine whether the Jurisdiction shall transfer some of its Allocation to the Project, or whether the Applicant shall pay the cost of District-approved water conservation projects within the District or on the Project Site to establish Water Use Credits to offset the increased increment of water needed by the Project.” (emphasis added) To date, the District has not formalized a process for how it would approve such projects.

The Committee should discuss the following:

· Project specifications: Should the project be District designed, developer designed, or either?

· Offset or credit ratio: Level of savings required for the credit generated should be considered. Most programs are 1:1, but Soquel Creek is 1.6:1 and some programs are 2:1. The District has traditionally looked to 15% retirement for the benefit of the river and recently sought an additional 10% from the Pacific Grove entitlement for the benefit of a District Reserve.

· Permanence: Over what lifespan should offset benefits accrue? How should proposed projects that do not achieve that lifespan be evaluated?

· Additionality: A project must create new water savings or supply that would not/is not expected to have happened anyway, either through District conservation programs, building code changes, expected customer behavior, etc. How would this be determined?

· Measurability: The water savings or supply from a project should be able to be quantified. The most effective way of quantifying water savings is by metering. However, water savings/supply estimates that rely on the District’s Table 1 “Residential Fixture Unit Count Values” and Table 2 “Non-Residential Water Use Factors” would be more consistent with current District practice.

EXHIBIT

3-A Examples of Water Conservation Offset Policies

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