BILL ANALYSIS                                                                                                                                                                                                    

                        Senator Patricia Wiggins, Chair

          BILL NO:  AB 300                     HEARING:  6/17/09
          AUTHOR:  Caballero                   FISCAL:  Yes
          VERSION:  6/10/09                    CONSULTANT:   

                         SUBDIVISIONS AND WATER SUPPLY
                          Background and Existing Law  

          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).  Every large-scale  
          development project must have a water supply assessment (SB  
          610, Costa, 2001).  Before cities and counties can approve  
          large-scale subdivisions, they must include a condition  
          that a sufficient water supply must be available (SB 221,  
          Kuehl, 2001).  

          Although some cities, counties, and water agencies require  
          new subdivisions to install water conserving devices,  
          builders say that local officials don't always recognize  
          their additional voluntary conservation efforts when  
          evaluating a proposed development's water demand.

                                   Proposed Law  

          Assembly Bill 300 requires cities and counties to reduce a  
          project's anticipated water demand below water conservation  
          requirements based on its voluntary water demand management  
          measures.  The public water agency must quantify the  
          reduction of anticipated water demand.  

          AB 300 defines "voluntary water demand management measures"  
          as water efficiency measures beyond statutory and  
          regulatory requirements that are permanently fixed to real  
          property that will reduce water demand, including:
                 Smart irrigation controllers,
                 Waterless urinals,
                 Ultralow flow and dual flow toilets,
                 Recycled water facilities, and
                 Rainwater capture and reuse facilities.


           AB 300 -- 6/10/09 -- Page 2

          At the applicant's sole discretion, voluntary mitigation  
          measures may also include water conservation offsets which  
          minimize a percentage of a project's impact to the public  
          water system, as determined by the applicant and agreed  
          upon by the public water system.

          The bill requires a public water system's verification of  
          the availability of water to a proposed subdivision to  
          include projections of water savings attributable to  
          voluntary demand management measures.  The city or county  
          must approve or disapprove the projections after review by  
          the retail water supplier.

          Local officials may calculate the water savings projections  
          by using water efficiency program data compiled or  
          maintained by the public water system or the California  
          Urban Water Conservation Council's water savings  
          projections.  If that Council doesn't have projections for  
          a measure, then the water supplier must base its estimate  
          on substantial evidence.  If an applicant proposes to use a  
          voluntary water reduction demand measure that is not based  
          on the Council's projections, the city or county must  
          impose a requirement that the applicant enter an agreement  
          with the water supplier to implement and monitor the actual  
          water savings over time.  The agreement may include  
          provisions requiring the adoption of legally enforceable  
          mechanisms, including inclusion in covenants, conditions,  
          and restrictions.

          The public water system must prepare a written report of  
          the projected demand and actual water use five years after  
          the project has been fully developed.  Copies of the report  
          must be provided to the project applicant, the city or  
          county that approved the subdivision map, the California  
          Urban Water Conservation Council, and the State Department  
          of Water Resources.

           AB 300 allows an applicant to enter into a mutual  
          agreement with a public water system to mitigate water  
          demand associated with a proposed subdivision by depositing  
          funds into a Voluntary Water Demand Mitigation Fund.  Fees  
          paid into the fund can't exceed:
                 The amount necessary to offset the actual or  
               percentage of actual water demand impacts specified in  
               the agreement between the applicant and the public  


           AB 300 -- 6/10/09 -- Page 3

               water system, or
                 The amount of all capacity charges and other water  
               service fees applicable to the subdivision.  

          At the discretion of the public water system, the amount  
          required for the Water Demand Mitigation Fund may be  
          reduced by a portion of the normally required system  
          capacity charges that finance future water.  

          The bill provides that a tentative map that includes a  
          subdivision may not be disapproved due to the applicant's  
          refusal to use voluntary mitigation measures.

          AB 300 requires a public water system to expend all funds  
          from the Voluntary Water Demand Mitigation Fund on water  
          conservation measures that will reduce the projected demand  
          associated with new subdivisions. The water conservation  
          measures must be the least expensive, most cost-effective  
          means to yield water.  The expenditure may be made within a  
          subdivision or elsewhere within the service area of the  
          public water supplier, at its discretion.  Water Demand  
          Mitigation funds may be directed to water conservation  
          programs in any disadvantaged community, as defined in  

          AB 300 prohibits a public water system from using funds  
          from the Water Conservation Mitigation Fund to supplant  
          funding for water conservation programs required by  
          existing law or paid for by existing customers through  
          water rates and surcharges.

          AB 300 provides that a public water system should commit to  
          carrying out the water conservation measures funded by the  
          Water Demand Mitigation Fund within 24 months of the sale  
          of the last unit of a proposed subdivision.  However, the  
          public water system's failure to implement the water  
          conservation measures shall not result in the revocation,  
          denial, or delay of any legislative, adjudicatory,  
          ministerial or discretionary act, permit, or approval  
          necessary for the planning, use, development, construction,  
          occupancy, or operation of the proposed subdivision. The  
          bill states that the sole remedy for the failure of a  
          public water system to implement the water conservation  
          measures shall be for any interested party to seek a writ  
          of mandamus to compel the public water system to comply.


           AB 300 -- 6/10/09 -- Page 4

          AB 300 requires a builder, before the close of escrow, to  
          give a purchaser a manual or document which must be  
          included in the maintenance manual that informs the  
          purchaser of the existence of the home's unique water  
          savings devices, including information regarding their  
          benefits, maintenance requirements, and proper use.

          These provisions automatically terminate on January 1,  


          1.   Conservation is the best supply  .  Water managers  
          acknowledge that conservation is the quickest way to  
          stretch existing supplies to meet the demands of persistent  
          population growth.  If builders get credit for voluntarily  
          installing water conservation devices, they're likely to  
          add them to their projects.  For the next 10 years, AB 300  
          allows local officials to recognize fixed water  
          conservation devices when they calculate the water demands  
          created by large-scale development projects.  With written  
          reviews coming after five years, public officials can tell  
          if the proposed conservation measures really worked.

          2.   Plumb and switch  ?  Some water conservation measures,  
          like low-flush toilets, are hard to alter.  However, home  
          buyers can thwart other measures by replacing  
          drought-tolerant landscaping and low-flow showerheads.   
          Even when a well-intentioned subdivider voluntarily  
          installs water efficiency measures, the savings may not  
          occur.  While current law requires developers to identify a  
          verifiable and quantifiable 20-year water supply before the  
          approval of new construction, AB 300 provides little  
          assurance that water efficiency measures will reliably  
          produce water for 20 years.  Who will insist that  
          homeowners conserve water if actual water use exceeds the  
          earlier projection?

          3.   The long count  .  Sunset clauses are a good way for  
          legislators to experiment with new ideas without creating  
          programs that no one oversees.  The test period must last  
          long enough for a program to take hold, but not so long  
          that term-limited legislators forget the program's original  


           AB 300 -- 6/10/09 -- Page 5

          purpose.  A seven-year sunset clause, for example, allows a  
          three to five years for implementation, a report in the  
          sixth year, and a seventh year for legislators to respond.   
          AB 300 requires water suppliers to report on water use  
          after five years and the bill's changes sunset in 2020.   
          The Committee may wish to consider a seven-year sunset,  
          ending the bill's experiment in 2017, unless future  
          legislators consider it worthy.

          4.   Related bills  .  AB 300 is similar to AB 2219 (Parra,  
          2008), which passed the Senate Local Government Committee,  
          but died in the Senate Appropriations Committee.  Some of  
          the provisions in AB 300 relating to the Water Demand  
          Conservation Fund are similar to provisions in AB 1408  
          (Krekorian, 2009), which the Assembly defeated.

          5.   Double-referred  .  The Senate Rules Committee ordered a  
          double-referral for AB 300; first to the Senate Local  
          Government Committee and then to the Senate Natural  
          Resources and Water Committee.

                                 Assembly Actions  

          Assembly Local Government Committee:  7-0
          Assembly Water, Parks, and Wildlife Committee:11-0
          Assembly Appropriations Committee: 15-0
          Assembly Floor:                         73-0

                         Support and Opposition  (6/11/09)

           Support  :  California Building Industry Association,  
          American Council of Engineering Companies California,  
          Associated General Contractors, Association of California  
          Water Agencies, California Alliance for Jobs, California  
          Apartment Association, California Association of Realtors,  
          California Business Properties Association, California  
          Chamber of Commerce, California Manufacturing and  
          Technology Association, League of California Cities,  
          Metropolitan Water District of Southern California, Western  
          Electrical Contractors Association, Inc.

           Opposition  :  East Bay Municipal Utility District, Planning  
          and Conservation League.


           AB 300 -- 6/10/09 -- Page 6