BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 300
                                                                  Page  1

          Date of Hearing:   April 28, 2009

                            Jared William Huffman, Chair
                   AB 300 (Caballero) - As Amended:  April 20, 2009
          SUBJECT  :   Subdivisions: water supply

           SUMMARY  :   Requires local agencies to reduce the projected water  
          demand from a development project, as defined, based on the  
          project applicant's voluntary water demand management measures,  
          if a project applicant elects to include voluntary demand  
          management measures, until January 1, 2020.  Specifically,  this  
          bill  :  

          1)Defines "voluntary [water] demand management measures" to  
            include water-use efficiency measures that are permanently  
            fixed to residential, commercial, industrial, or other real  
            property that will reduce a proposed subdivision's water  
            demand beyond existing statutory, regulatory, and  
            local-ordinance requirements, including specified measures.

          2)Allows developer to mitigate water demand associated with  
            proposed residential subdivision by paying into the water  
            supplier's Voluntary Water Demand Mitigation Fund (Fund -  
            defined term), which will pay for least expensive, most  
            cost-effective water conservation measures to yield water and  
            reduce the project's water demand.

             a)   Limits fees to an amount necessary to offset the actual  
               or percentage of actual water demand impacts agreed upon in  
               the agreement between the applicant and the public water  
               system and not exceeding the amount of all capacity charges  
               and other water service fees applicable to the subdivision.

             b)   Reduces all applicable capacity charges and other water  
               service fees to the extent that contributions are made to  
               the Fund. 

             c)   Prohibits waiver or modification by contractual  
               agreement, act, or omission of the parties. 

             d)   Prohibits disapproval of tentative map based on  
               applicant's refusal to use voluntary mitigation measures.


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             e)   Requires the public water system to expend all Fund  
               monies on water conservation measures to reduce the  
               projected demand associated with the subdivision.

             f)   Allows Fund monies to be used within the subdivision or  
               elsewhere within the service area of the public water  
               supplier, at its discretion. 

             g)   Prohibits expenditure of Fund monies to supplant funding  
               for water conservation programs already required under  
               existing law or paid for by existing rates and surcharges.

          3)Requires public water systems to include water savings  
            projections attributable to voluntary water demand management  
            measures in water supply assessments and verifications.

             a)   Requires public water system, or if there is no public  
               water system, the local agency, to verify water savings  
               projections attributable to voluntary demand management  

             b)   Allows the public water agency to collect fees necessary  
               to provide additional analysis of voluntary demand  
               management measurers. 

          4)Provides for calculation of projected water savings and  
            enforcement of water conservation for subdivision projects  
            relying on water conservation in water supply verification.

             a)   Allows water savings projections to be calculated using  
               California Urban Water Conservation Council (CUWCC)  

             b)   Requires estimates for measures that CUWCC has not  
               adopted findings to be based on evidence in the record and  
               included in the water supplier assessment.

             c)   Requires the city or county, if project applicant  
               proposes a new voluntary water reduction demand management  
               measure lacking a CUWCC water savings projection, to  
               condition approval on project applicant entering into an  
               agreement with water supplier to implement and monitor the  
               actual water savings over time. 

             d)   Allows agreement to include legally enforceable  


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               mechanisms to ensure implementation of water conservation  
               measures, including covenants/restrictions on property  

             e)   Requires water supplier to prepare report on actual  
               water savings five years after complete development of  
               project, with copies going to the project applicant, the  
               city or county approving the subdivision map, CUWCC, and  
               Department of Water Resources.

             f)   Requires developer to place a manual providing  
               directions to the owner or occupant on the proper use of  
               water conservation devices in the dwelling

          5)Specifies that voluntary mitigation measures may include, at  
            the applicant's sole discretion, water demand mitigation  
            measures that minimize a percentage, as determined by the  
            applicant, of a project's impact to the public water system. 

          6)Provides that these provisions automatically terminate on  
            January 1, 2020, and restores existing law as of that date.

           EXISTING LAW  

          1)Prohibits approval of a subdivision of property of more than  
            500 dwelling units, except as specified, unless the  
            legislative body of a city or county or the designated  
            advisory agency provides written verification from the  
            applicable public water system that a sufficient water supply  
            is or will be available prior to completion of the project.

          2)Requires an assessment of future water supply whenever a city  
            or county determines that a project, as defined, is subject to  
            the California Environmental Quality Act (CEQA).

          3)Requires urban water suppliers to prepare Urban Water  
            Management Plans.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   AB 300 is one of two bills proposing to incorporate  
          water conservation measures into the water supply  
          assessment/verification processes required of new development in  
          California.  The other bill is AB 1408 (Krekorian), which will  
          be heard during this same hearing.  Both bills purport to  


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          encourage greater investment in water conservation measures by  
          developers of housing and commercial projects, based on the  
          incentive of increased likelihood of project approval with lower  
          demand for new water supplies.

          Determinations as to sufficiency of water supply occur at two  
          points in the development process.  First, when CEQA requires a  
          city/county to comply on a project, the water supplier for the  
          property must assess future water supply sufficiency upon the  
          city/county's request.  Second, for residential developments of  
          more than 500 units, the city/county must verify the sufficiency  
          of the 20-year water supply, based on the water supplier's  
          assessment.  While the developer's participation in the program  
          proposed by this bill is voluntary, the bill requires local  
          agencies to incorporate the developer's water savings  
          projections attributable to voluntary demand management measures  
          into both the assessment and verification, and reduce the  
          development's projected future water demand.

          The bill's sponsor, the California Building Industry Association  
          (CBIA), casts this bill as addressing a history of local  
          agencies failing to consider the builders' use of water-saving  
          devices in the local agency estimates of future water demand  
          from those developments.  CBIA asserts that homebuilders have  
          built this low-water-use technology into their new homes "for  
          years," but local agencies "do not always" consider the reduced  
          water demands.  It argues: "As California's water situation  
          worsens, it has become increasingly difficult to ensure reliable  
          water supplies for new housing."  The sponsor intends to address  
          the California water supply by giving developers incentives to  
          invest in water-use efficiency.  The author believes that AB 300  
          will encourage innovative approaches to reduce water consumption  
          in new homes by accounting for voluntary water conservation  
          measures when a local agency quantifies a project's water  

          The bill would establish a voluntary program to allow  
          homebuilders to incorporate water-saving strategies and  
          technology into their development design, or pay into a  
          Voluntary Water Demand Mitigation Fund, in order to reduce the  
          projected water demand of their project, and improve the  
          likelihood of the project's approval.  AB 300, and AB 1408, will  
          assist water agencies and the state in documenting the potential  
          water savings from new water use efficiency projects and  
          programs in a manner that will promote successful water  


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          conservation strategies and discourage ineffective ones.  Most  
          importantly, by creating an incentive based conservation  
          program, AB 300 will achieve reductions in water consumption  
          without any additional cost to state or local governments.  

          AB 300 and AB 1408 have many similarities, but also some  
          differences, which the Committee may wish to consider:

           1)Conservation Enforcement  :  AB 300 relies largely on the water  
            supplier to enforce, through the agreement with the developer  
            at the time of the assessment, the water conservation  
            measures.  It allows for, but does not require, inclusion of  
            water conservation conditions in the "covenants, conditions  
            and restrictions" (CCRs) in the property title.  It also  
            requires the water supplier to complete a report on the  
            project 5 years after development completion, and the  
            developer to provide a manual for water conservation devices  
            to each homeowner.  AB 1408 also relies on the water supplier,  
            but requires enforcement tools (e.g. CCRs), subsequent  
            monitoring, and further water supplier actions if the  
            projected water savings do not materialize.

           2)Amount of Conservation  :AB 300 allows for a range of water  
            conservation targets for new developments, which allow the  
            proposed conservation measures to reduce, but not necessarily  
            eliminate, water demand from a proposed project.  AB 1408  
            requires that the conservation achieve a 100% elimination of  
            new water demands from a proposed development, if the  
            developer chooses to participate.  Because this program is a  
            new concept, it is not clear whether the 100% target is  
            attainable.  East Bay MUD, a sponsor of AB 1408, has tried  
            this program with a new development in its own area, but has  
            not reported on whether its program has achieved a 100%  
            elimination of new water demand.  Finally, AB 1408 puts the  
            burden on the water supplier to estimate the costs of  
            sufficient water measures to offset 100% of the water supply.

           3)Assessment & Verification  :AB 300 provides for this program to  
            apply to both the assessment and verification stages.   
            Association of California Water Agencies has suggested that  
            using both stages is redundant, and suggested the program  
            apply to only one stage.  AB 1408 applies the program only to  
            the verification stage.  At that stage, the water assessment  
            provides sufficient information for both the developer and the  
            supplier to determine how much water demand needs to be  


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            offset, either to achieve the 100% elimination target or a  
            reduction that would allow the development's water demand to  
            fall within projected water supply.

           4)Restrictions on Fund  :AB 300 requires use of Fund monies on  
            water conservation measures and bars supplanting other water  
            conservation funding with Fund money.  AB 1408 then adds  
            requirements on Fund expenditures, to quantifiable and  
            verifiable conservation measures and for water conservation in  
            disadvantaged communities (40%).  It also requires more  
            substantial water supplier follow-up, with  
            documentation/calculation of expenditures, actual resulting  
            conservation and water savings.  

          These differences deserve more analysis and consideration.  AB  
          300 does not include the level of detail in AB 1408.  On the  
          other hand, the AB 1408 amendments proposed for Committee  
          adoption today are substantial.  The Committee may consider  
          whether to encourage the authors to collaborate with each other  
          and with the sponsors, to work out a consensus bill that  
          addresses this concept in a comprehensive way.



          CA Building Industry Association (sponsor)
          American Council of Engineering Companies CA
          Associated General Contractors
          Assoc. of CA Water Agencies (if amended) 
          CA Alliance for Jobs
          CA Apartment Association
          CA Association of Realtors
          CA Business Properties Association
          CA Chamber of Commerce
          CA Manufacturing and Technology Assn. 
           Opposition:  None submitted
          Analysis Prepared by  :    Alf W. Brandt / W., P. & W. / (916)