BILL ANALYSIS
AB 1408
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Date of Hearing: April 28, 2009
ASSEMBLY COMMITTEE ON WATER, PARKS AND WILDLIFE
Jared William Huffman, Chair
AB 1408 (Krekorian) - As Proposed to Be Amended: April 28,
2009
SUBJECT : Subdivisions: water demand mitigation fund
SUMMARY : Allows local agencies to incorporate water demand
reductions into water supply verifications for new developments,
if the developer agrees to install conservation measures or pay
into a Water Conservation Mitigation Fund operated by the water
supplier that will achieve 100% elimination of new water demand
from proposed development. Specifically, this bill :
1)Defines or retains definitions of certain terms necessary for
voluntary program to encourage developers to implement or pay
for water conservation measures in new developments.
a) "Projected water demand associated with the subdivision"
is determined based on physical characteristics of the
subdivision.
b) "Public water system" means the water supplier that may
supply water to the proposed subdivision (herein "water
supplier").
c) "Water conservation measures" include those measures
shown, by evidence in the record (as defined), to result in
water efficiency and have a life expectancy of at least 20
years.
d) "Water Demand Mitigation Fund" (Fund) means the fund
used to finance water conservation measures implemented by
the water supplier.
2)Authorizes city/county to determine sufficient water supply
for a proposed subdivision exceeding 500 residential units
with either an estimate of available water or water supplies
made available through water conservation measures funded by
the Fund, if the developer volunteers to participate.
a) Allows developer and water supplier to agree to terms to
mitigate subdivision water demands and demonstrate
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sufficient water supply through conservation measures.
b) Requires developer to contribute enough money to pay for
water conservation measures that offset 100% of the
proposed subdivision's projected water demand, as
determined by water supplier.
c) Requires water conservation measures to exceed all
applicable local and state standards.
d) Limits required developer funding for the Fund to the
amount necessary to offset the actual water demand impact
of the subdivision.
e) Requires water supplier assessment to be conditioned
with appropriate measures to ensure optional water
conservation measures will be retained by future homeowners
and actual long-term water demand associated will be
consistent with projections.
f) Allows enforcement of water conservation by financial
penalties pursuant to existing authority of water supplier
to enforce its ordinances.
g) Requires water supplier to determine projected water
savings for water conservation measures incorporated into
the subdivision's design, based on substantial evidence
that may include projections by California Urban Water
Conservation Council (CUWCC).
h) Requires water supplier to calculate water savings
associated with optional water conservation measures
required by local ordinance or state regulation.
i) Requires water supplier verification of water supply to
include estimation of funds needed to offset 100% of the
proposed subdivision's projected water demand.
3)Establishes requirements for operating the Fund to pay for
water conservation measures.
a) Requires water supplier to expend all funds on water
conservation measures that will offset at least 100% of the
subdivision's projected demand.
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b) Requires selection of water conservation measures that
are least expensive and most cost-effective means to yield
the applicable amount of water.
c) Requires 40% of Fund proceeds to be directed to water
conservation programs in any disadvantaged community within
the water supplier's service area.
d) Prohibits use of Fund to supplant funding for water
conservation programs required by existing law or paid for
by existing customers through water rates and surcharges,
but allows expansion of existing water conservation efforts
beyond CUWCC requirements.
e) Requires conservation measures paid for by the Fund to
be quantifiable, verifiable, have a planned completion date
that is concurrent with when the buildings within the
subdivision will require service, and have a life
expectancy of at least 20 years.
f) Specifies categories of eligible water conservation
measures but allows other measures for which "substantial
evidence demonstrates" a quantifiable reduction in demand.
g) Requires water supplier to document and calculate fund
expenditures, measured annual water conservation of the
subdivisions involved in the Fund, and water savings
attributable to water conservation measures.
4)Requires water supplier, if calculated water savings to do not
equal or exceed the measured water demand in the subdivision,
to include actions designed to achieve the necessary savings
in its urban water management plan.
5)Provides for reimbursement of local costs mandated by the
bill.
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.
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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 1408 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 300 (Caballero), which will be
heard during this same hearing. Both bills purport to 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. They also have a relationship to previous
bills - AB 2153 (Krekorian/2008) and AB 2219 (Parra/2008). Both
failed to pass in 2008.
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. These requirements were enacted by SB 610 (Costa),
Chapter 643, Statutes of 2001 and SB 221 (Kuehl), Chapter 642,
Statutes of 2001. This bill focuses on the second stage of the
process - the verification of future water supply - that was
enacted by SB 221.
According to the author, AB 1408 would provide the framework for
an optional program that would allow developers to get credit in
the water supply assessment for implementing conservation
measures at the development that go beyond what is required.
This includes the use of a legally enforceable mechanism, such
as the CC&Rs, to notify the purchasers of the homes that they
are buying a special home with unique requirements to conserve
water. These legally enforceable mechanisms will help ensure
that the anticipated level of conservation is achieved and
remains durable over time. The author states that AB 1408 also
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provides the framework for an optional arrangement between
developers and water suppliers where developers can offset 100%
or more of the projected water demand of the development by
paying into a water conservation mitigation fund that is managed
by the water supplier. The author believes that for highly
water constrained areas, this optional program can provide water
suppliers with a way to provide a water supply assessment so
that developers can proceed with a development that might
otherwise be uncertain.
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
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using both stages is redundant, and suggested the program
apply to only one stage. AB 1408 applies the program only to
verification stage. The preceding water assessment may
provides sufficient information for the developer and the
supplier to determine how much water demand needs to be
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, for quantifiable and
verifiable conservation measures and 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.
REGISTERED SUPPORT / OPPOSITION :
Support:
East Bay Municipal Utilities District (Sponsor)
Planning & Conservation League (Sponsor)
Association of California Water Agencies (if amended)
California Special Districts Association
Opposition :None submitted
Analysis Prepared by : Alf W. Brandt / W., P. & W. / (916)
319-2096