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.




           
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                 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  





           
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               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.






           
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          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.





           
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          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.





           
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          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  





           
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          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)





           
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           Support  :  Unknown.

           Opposition  :  California Building Industry Association.