BILL ANALYSIS AB 1408 Page 1 Date of Hearing: May 20, 2009 ASSEMBLY COMMITTEE ON APPROPRIATIONS Kevin De Leon, Chair AB 1408 (Krekorian) - As Amended: April 30, 2009 Policy Committee: Local GovVote:5-2 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill provides alternative measures by which a local agency may determine a large residential development has sufficient water supply. Specifically, this bill: 1)Establishes the "Water Demand Mitigation Fund" from which a local agency finances water conservation measures. 2)Allows a water supplier and a developer of a residential development of 500 or more units to agree to demonstrate sufficient water supply through implementation of water conservation measures financed from the Water Demand Mitigation Fund. 3)Requires a developer entering into such an agreement with a water supplier to make payments to the Water Demand Mitigation Fund in an amount necessary to offset at least 100% of the projected water demand associated with the development. 4)Requires a water supplier that bases its assessment of a large residential development's projected water demand on the development's use of optional water conservation measures-such as water efficient appliances and irrigation controllers-to include retention of such conservation measures in the covenants, conditions and restrictions (CC&R's) or equivalently enforceable documents to ensure retention by future homeowners. 5)Requires a water supplier, if calculated water savings to do not equal or exceed the measured water demand in the subdivision, to include actions to achieve the necessary savings in its urban water management plan. AB 1408 Page 2 FISCAL EFFECT Negligible costs, if any, to the Department of Water Resources. COMMENTS 1)Rationale. The author contends the bill provides an optional arrangement between developers and water suppliers-payment into a water conservation mitigation fund managed by the water supplier-that may enable a residential development in a water constrained area that might not occur otherwise. The author further contends this bill allows developers of large residential projects to get credit for implementing conservation measures beyond those measures required by law, thereby encouraging them to undertake such measures. The author further argues that this bill will ensure lasting gains from these measures through the use of legally enforceable mechanism, such as CC&Rs. 2)Background. Existing law prohibits approval of a subdivision of property of more than 500 dwelling units, except as specified, unless the local government or the designated advisory agency provides written verification from the applicable public water system that a sufficient water supply will be available prior to completion of the project. The law also requires a water supplier to assess future water supply whenever a city or county determines that a project, as defined, is subject to the California Environmental Quality Act (CEQA). Urban water suppliers must prepare Urban Water Management Plans. 3)Supporters , including the sponsors of this bill-East Bay Municipal Utilities District and the Planning and Conservation League-argue that the state needs to decouple population growth from increasing water use. Those organizations contend that this bill will enhance water supply reliability while facilitating the development of sustainable communities. There is no registered opposition to this bill. 4)Related Legislation. a) AB 300 (Caballero) also seeks to encourage water conservation by developers of housing projects by allowing AB 1408 Page 3 a homebuilder to receive credit for voluntary water demand management measures that it incorporates into large residential developments, and to pay a fee to reduce projected water demand of their project. The bill passed Natural Resources 7-0 and is pending action before this committee. b) SB 610 (Costa, Chapter 643, Statutes of 2001) requires a water supplier for a property that requires local government to perform a review under the California Environmental Quality Act (CEQA) to assess future water supply sufficiency, upon the city or county's request. c) SB 221 (Kuehl, Chapter 642, Statutes of 2001) prohibits a local government from approving a development agreement that includes a subdivision of more than 500 units unless the developer can verifiably demonstrate that the subdivision has 20-year water supplies. Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081