BILL ANALYSIS SENATE LOCAL GOVERNMENT COMMITTEE Senator Gloria Negrete McLeod, Chair BILL NO: SB 821 HEARING: 4/18/07 AUTHOR: Kuehl FISCAL: Yes VERSION: 4/11/07 CONSULTANT: Detwiler DEVELOPMENT DECISIONS AND WATER SUPPLY Background and Existing Law Urban water suppliers with more than 3,000 customers must adopt urban water management plans (AB 797, Klehs, 1983). An important component of these plans is an assessment of water reliability service during normal, dry, and multiple-dry years (AB 1845, Cortese, 1995). Urban water suppliers must review their plans in years that end in "0" and "5" (AB 2552, Bates, 2000). Urban water management plans are source documents for cities and counties' general plans. Before they adopt or amend their general plans, city and county planners must notify urban water suppliers and follow a standardized process for determining the adequacy of water supplies (AB 455, Cortese, 1992). Cities and counties must consider information provided by water suppliers when they act on proposals for large-scale residential, commercial, hotel, industrial, or mixed-use projects (SB 901, Costa, 1995). Concerned that local agencies weren't implementing the 1995 requirements, legislators broadened its application and increased the required information. Every large-scale development project must have a water supply assessment (SB 610, Costa, 2001). The Subdivision Map Act requires cities and counties to include as a condition in their approval of a tentative map for a subdivision with more than 500 dwelling units that a sufficient water supply must be available (SB 221, Kuehl, 2001). More specifically, the 2001 Kuehl bill: Required that proof of the availability of a sufficient water supply must be based on a written verification from the applicable public water system. Allowed either the applicant or the city or county to request the written verification and gave the public water system 90 days to respond. SB 821 -- 4/11/07 -- Page 2 Allowed the city or county or any other interested party to seek a writ of mandate if the public water system fails to deliver the water supply assessment. Allowed a city or county to find that sufficient water supplies will be available, even if the public water system does not provide written verification. Required that, when a public water system's written verification relies on projected water supplies, the verification must be based on written contracts, adopted capital outlay programs, and infrastructure construction permits. Required that, when a public water system's written verification relies on groundwater, the public water system must evaluate whether the landowner has additional groundwater rights. Applied these requirements to residential subdivisions with more than 500 dwelling units. The requirements also apply to subdivisions that increase service connections by 10% or more in public water systems with less than 5,000 connections. Applied this same requirement to development agreements that include larger residential subdivisions. Exempted certain residential projects from these requirements. Exempted the County of San Diego under certain conditions. In October 2003, the Senate Local Government Committee and the Senate Agriculture and Water Resources Committee held a joint hearing on "Water and Land Use Planning" in Tracy. After two hours of comments from 14 witnesses, the committees' staffs identified five findings: Local officials have not fully implemented SB 221 and SB 610. There is support for including water supply and water demand information in city and county general plans. Urban water management plans and agricultural water management plans were a good start, but more needs to be done. Legislators should amend the water and land use planning statutes to improve the law's clarity and effectiveness. Legislators should consider lowering the threshold SB 821 -- 4/11/07 -- Page 3 that triggers a water supply and demand analysis for proposed development projects. Six years after the enactment of the 2001 Costa and Kuehl bills, some legislators want to strengthen the statutory connections between land use decisions and the availability of water supplies. Proposed Law I. Subdivisions . Senate Bill 821 reduces, from 500 to 250 dwelling units, the threshold for requiring a city or county to impose a condition on its approval of a tentative subdivision map that a sufficient water supply must be available. II. Development Permits . Senate Bill 821 requires cities and counties to impose, as a condition on any entitlement for a project, a requirement that a sufficient water supply must be available. SB 821 defines "entitlement" to mean any discretionary or ministerial permit, use permit, conditional use permit, or building permit for the construction of a project or a development agreement. The bill defines "project" to include: A shopping center or business employing more than 1,000 people or having more than 500,000 square feet of floor space. A commercial office building employing more than 1,000 persons or having more than 250,000 square feet of floor space. A hotel or motel with more than 500 rooms. An industrial, manufacturing, processing plant, or industrial park planned to house more than 1,000 people, occupy more than 40 acres, or have more than 650,000 square feet of floor area. A mixed-use project that includes any of these projects. Any project that needs more water than 500 dwelling units. SB 821 -- 4/11/07 -- Page 4 SB 821 requires that proof of the availability of a sufficient water supply must be based on a written verification from the applicable public water system. The bill allows either the applicant or the city or county to request the written verification and gives the public water system 90 days to respond. If the public water system fails to deliver the water supply analysis, SB 821 allows the city or county or any other interested party to seek a writ of mandate. If the public water agency's written verification indicates that it can't provide a sufficient water supply, the bill allows the city or county to find, based on substantial evidence in the record, that additional water supplies are or will be available before the project is completed. If the public water agency doesn't provide any written verification, the bill allows the city or county to find, based on substantial evidence in the record, that additional water supplies are or will be available before the project is completed. The bill requires that the public water system's written verification regarding water supplies must be based on substantial evidence, including its urban water management plan, a water supply assessment, or substantially similar information. If the public water system's written verification relies on projected water supplies that are not yet currently available, SB 821 requires the verification to rely on written contracts, adopted capital outlay programs, infrastructure construction permits, and necessary regulatory approvals. If there is no public water system, the bill allows the city or county to make a written finding of sufficient water supplies. SB 821 requires all of the written verifications of sufficient water supplies to describe the reasonably foreseeable impacts of the proposed project on the availability of water for agricultural and industrial uses in the public water system's service area that use the same water sources. If a water supply includes groundwater, the bill requires the public water system to evaluate the landowner's right to use the groundwater to supply the proposed project. SB 821 -- 4/11/07 -- Page 5 SB 821 allows the city or county to work with the project applicant and the public water system to secure sufficient water supplies. The bill exempts from its requirements any residential subdivision or mixed-use project for a site that is either (1) within an urbanized area that was previously developed for urban uses, or (2) where the contiguous properties are or were developed for urban uses. SB 821 also exempts housing projects that are exclusively for very low and low-income households. The determinations required by the bill must be consistent with the public water system's existing statutory obligation to provide water to housing developments that meet the city or county's regional housing needs for lower income households. SB 821 declares that its provisions apply to charter cities because the availability of sufficient water supplies is a matter of statewide concern and not a municipal affair. Comments 1. Matching water and land use . For the last quarter-century, the Legislature has incrementally required local land use decisions to match the availability of water supplies. From the 1983 Klehs measure that required urban water management plans to the 2001 Costa and Kuehl bills, legislators have gradually extended the policy requirement that sufficient water supplies should be available before city councils and county supervisors approve more development. In a semi-arid state facing a growing population and an expanding economy, it only makes sense to know where the water is coming from before approving more residential, commercial, and industrial development projects. SB 821 takes the next step in that historical progression by requiring local officials to identify water supplies before they approve medium-sized residential subdivisions. The bill also requires similar analyses and conditions before local officials permit the development of larger commercial, hotel, industrial, and mixed-use projects. SB 821 -- 4/11/07 -- Page 6 2. Murky research . Even though it's been six years since the 2001 Kuehl bill required cities and counties to put water supply conditions on residential subdivisions with more than 500 units, there are no reliable data on the law's effectiveness. No one can say for certain how many subdivisions or how many residential units have come under the existing requirements. Have local officials faithfully followed the law, or did they find ways to dodge the statutory requirements? Without knowing the answers to those questions, it's premature to reduce the size threshold for residential subdivisions or to extend those requirements to nonresidential projects. Before legislators create solutions, they need to define the scale and scope of the specific problems they want to solve. Instead of creating another new state mandate, the Committee may wish to consider commissioning a detailed, thorough, and reliable study of how the existing laws really work. 3. Adaptive drafting . SB 821's definition of large-scale nonresidential projects is similar to the definitions in the 1995 and 2001 Costa bills that required local officials to prepare water supply assessments when they prepare environmental review documents. Local officials who adhere to the existing requirements for water supply assessments probably have all the information they need to comply with SB 821. Further, local officials who have already integrated water supply information into their general plans can probably meet the bill's requirements without much additional work. By relying on existing statutory definitions and the existing requirements for water supply assessments, SB 821 is a modest incremental change to the laws that connect land use decisions with water supply planning. 4. Does size matter ? Early versions of the 2001 Kuehl bill would have applied its requirements for water supply conditions to subdivisions with more than 200 dwelling units. The final version of the Kuehl bill settled on subdivisions with more than 500 dwelling units. That's the same threshold that the 2001 Costa bill used to require water supply assessments when preparing environmental documents. At the October 2003 joint oversight hearing, some witnesses (including one developer) recommended SB 821 -- 4/11/07 -- Page 7 lowering the 500-unit threshold to 200 dwelling units. However, a coalition of five business groups opposed the proposed reduction. SB 821 lowers the threshold for requiring conditions to subdivisions from more than 500 units to subdivisions with more than 250 dwelling units. The Committee may wish to consider whether legislators should similarly lower the threshold on the Costa statute that requires water supply assessments in environmental documents. 5. Gaps and leaks ? Another staff finding from the October 2003 joint hearing was that legislators should improve the law's clarity and effectiveness. While implementing the 2001 bills, state and local officials discovered drafting problems. The Committee may wish to consider whether legislators should ask the State Department of Water Resources to recommend specific statutory improvements in the laws that describe planning for reliable water supplies. Better written state laws can lead to better local implementation practices. 6. Even San Diego . When local officials in San Diego County argued that their regional growth strategy already aligned land use decisions with water supplies, the 2001 Costa and Kuehl bills allowed them to avoid those specific requirements if the Governor's Office of Planning and Research (OPR) made specified determinations. OPR has never made those determinations and local officials in San Diego County must comply with existing law. SB 821 does not exempt the County of San Diego and its 18 cities from the requirement to impose conditions on large-scale nonresidential development projects. 7. Better drafting . SB 821 includes a development agreement within its definition of an "entitlement" that requires a condition that a sufficient water supply must be available. But development agreements rely on a statute that's separate from zoning and project entitlements. To avoid creating any legal confusion, the Committee may wish to consider a technical amendment that places the provision for development agreements in the existing statute that governs development agreements. Support and Opposition (4/12/07) SB 821 -- 4/11/07 -- Page 8 Support : Unknown. Opposition : California Building Industry Association.