BILL ANALYSIS AB 1408 Page 1 ASSEMBLY THIRD READING AB 1408 (Krekorian) As Amended April 30, 2009 Majority vote LOCAL GOVERNMENT 5-2 WATER, PARKS AND WILDLIFE 8-4 ----------------------------------------------------------------- |Ayes:|Caballero, Arambula, |Ayes:|Huffman, Arambula, | | |Davis, Krekorian, Skinner | |Blumenfield, Caballero, | | | | |Krekorian, Bonnie | | | | |Lowenthal, John A. Perez, | | | | |Salas | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Knight, Duvall |Nays:|Fuller, Anderson, Tom | | | | |Berryhill, Fletcher | ----------------------------------------------------------------- APPROPRIATIONS 10-5 ----------------------------------------------------------------- |Ayes:|De Leon, Ammiano, Davis, | | | | |Fuentes, Hall, John A. Perez, | | | | |Price, Skinner, Torlakson, | | | | |Krekorian | | | | | | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |Nays:|Nielsen, Duvall, Harkey, | | | | |Miller, Audra Strickland | | | ----------------------------------------------------------------- SUMMARY : Establishes a Water Demand Mitigation Fund (Fund) that a public water system may authorize a subdivision project applicant to voluntarily contribute to in order to offset at least 100% of the projected water demand associated with the subdivision, and requires all monies in the Fund to be expended on water conservation measures that will offset at least 100% of the subdivision's projected water demand. Specifically, this bill : 1)Defines "projected water demand associated with the AB 1408 Page 2 subdivision" as the anticipated water demand associated with the subdivision that is determined by the public water system and is based on physical characteristics of the subdivision, including, but not limited to, lot size and use, current water conservation standards required by local ordinance or state regulation, and optional water conservation measures that exceed all applicable local and state standards that are agreed to by the public water system and the subdivision applicant. 2)Defines "water conservation measures" as measures from which substantial evidence in the record demonstrates that the measures will result in water efficiency and have a life expectancy of at least 20 years. 3)States that substantial evidence in relation to water conservation measures may include, but is not limited to, water efficiency projections calculated by the California Urban Water Conservation Council (CUWCC) or data that demonstrates that water efficiencies are quantifiable and verifiable. 4)Defines "Water Demand Mitigation Fund" as the fund used to finance conservation measures implemented by the public water system and funded by the subdivision applicant in sufficient amount to offset 100% of the projected water demand associated with the subdivision. 5)States that participation in the Fund shall be at the mutual agreement of the public water system and the subdivision applicant. 6)States that a legislative body of a city, county or advisory agency, to the extent that it is authorized by local ordinance to approve, conditionally approve, or disapprove a tentative map, would be required to include as a condition in any tentative map that includes a subdivision a requirement that a sufficient water supply be available or that sufficient water supplies will be available through a Fund held by the public water system. 7)States that if the public water system and the subdivision applicant mutually choose to demonstrate that a sufficient water supply will be available through the use of water conservation measures, then the subdivision applicant shall AB 1408 Page 3 enter into an agreement with the public water system to mitigate demand associated with the subdivision by depositing monies in to the Fund. 8)Specifies that the amount of funding required for participation by the subdivision applicant in the Fund shall be determined by the public water system and be based on offsetting at least 100% of the projected water demand associated with the subdivision. 9)Prohibits the funding required for participation in the Fund from exceeding the amount necessary to offset the actual water demand impact of the subdivision. 10)Requires the public water system to include in the written verification of its ability or inability to provide sufficient water supply an assessment pf the projected water demand associated with the subdivision. 11)Provides that if the public water system bases its assessment of the projected water demand associated with the subdivision on inclusion of optional water conservation measures that exceed all applicable local and state standards, the assessment shall be conditioned with appropriate measures to ensure that the optional water conservation measures will be retained by future homeowners and that actual long-term water demand associated with the subdivision will be consistent with the water demand projection. 12)Specifies that the conditions listed above shall be included in the covenants, conditions, and restrictions (CC&Rs), or in an equivalent legally enforceable mechanism that is associated with the property and that the conditions may be enforced by the imposition of financial penalties for any violations of them. 13)Authorizes water savings projections to be calculated using the water savings projections adopted by CUWCC, or data that demonstrates that water efficiencies are quantifiable and verifiable. 14)Authorizes a public water system to impose a more stringent requirement than provided for in this measure. AB 1408 Page 4 15)Requires that, when the written verification relies on voluntary participation in the Fund held by the public water system, the written verification include an assessment by the public water system of funds needed for the public water system to implement water conservation measures that offset at least 100% of the projected water demand associated with the subdivision and proof that the funds have been voluntarily deposited in a Fund held by the public water system. 16)Requires the public water system's assessment of funds to include identification and quantification of the water savings resulting from the water conservation measures that the public water system will implement to offset at least 100% of the demand. 17)Requires the public water system to expend all monies from the Fund on water conservation measures that will reduce 100% of the projected demand associated with the subdivision. 18)Requires that the water conservation measures chosen be the least expensive and most cost-effective means to yield the applicable amount of water. 19)Specifies that the expenditure of monies from the Fund may be made within the subdivision or elsewhere within the service area of the public water supplier, at its discretion. 20)Prohibits monies from the Fund from being used to supplant funding for water conservation programs already required under existing law or paid for by existing rates and surcharges. 21)Authorizes the public water system to use monies from the Fund to expand existing water conservation programs beyond the requirements of the CUWCC Memorandum of Understanding. 22)Requires that not less than 40% of the proceeds from the Fund be directed to water conservation programs in disadvantaged communities, as defined, within the public water system's service area. 23)Requires that actions for which the public water supplier may use water demand mitigation funding are conservation measures that have a planned completion date that is concurrent with when the buildings within the subdivision will require AB 1408 Page 5 service. 24)Specifies the types of actions that can be taken by the public water supplier to reduce water demand, which include, but are not limited to, all of the following: a) Water efficient appliances; b) Water efficient landscapes and irrigation controllers; c) Water recycling; d) Stormwater capture, grey water systems, and groundwater treatment; and, e) Other water conservation measures for which substantial evidence demonstrates the measure will achieve a quantifiable reduction in demand. 25)Requires that the public water system document all expenditures from the Fund in its Urban Water Management Plan and confirm that the water conservation mitigation funding was not used to supplant funding for water conservation programs required by existing law, paid for by existing customers through water rates and surcharges, or that are required for participation in the California Urban Water Conservation Council. 26)Requires that the public water system document the measured annual water use of each subdivision. 27)Requires that the public water system calculate the water savings attributable to both of the following: a) The water conservation measures financed by the water conservation mitigation funding from each subdivision; and, b) The water conservation measures implemented in the subdivision that exceed all applicable local and state standards in the absence of a Fund. 28)Provides that in the event that the calculated water savings do not equal or exceed the measured water demand over a AB 1408 Page 6 five-year period, the public water system shall include in its Urban Water Management Plan a schedule of actions designed to achieve the savings necessary to offset 100% of the actual demand of the subdivision. EXISTING LAW prohibits approval of a tentative map, or a parcel map for which a tentative map was not required, or a development agreement for a subdivision of property of more than 500 dwelling units, except as specified, including the design of the subdivision or the type of improvement, 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 available or, in addition, a specified finding is made by the local agency that sufficient water supplies are, or will be, available prior to completion of the project. FISCAL EFFECT : According to the Assembly Appropriations Committee, there are negligible costs, if any, to the Department of Water Resources. COMMENTS : The Subdivision Map Act prohibits approval of a tentative map for a subdivision of property of more than 500 dwelling units, unless the legislative body of a city or county provides written verification from the applicable public water system that a sufficient water supply is available or, in addition, a specified finding is made by the local agency that sufficient water supplies are, or will be, available prior to completion of the project. This requirement was placed into law by SB 221 (Kuehl), Chapter 642, Statutes of 2001. This bill established the Fund that a public water system may authorize a subdivision project applicant to voluntarily contribute to in order to offset at least 100% of the projected water demand associated with the subdivision, and requires all monies in the Fund to be expended on water conservation measures that will offset at least 100% of the subdivision's projected water demand. According to the author, this bill 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 AB 1408 Page 7 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 this bill also 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. This bill authorizes a subdivision applicant to offset at least 100% of the projected water demand for their project by paying into the Fund. Furthermore, the bill authorizes a public water system to purchase conservation measures with these funds to offset the projected water demand by 100%. However, what is not considered in the bill is how a public agency will deal with actually achieving the 100% offset if the conservation devices do not work at full capacity. These devices are estimated to perform at specified standards; however, certain conditions must exist in order to ensure that a product performs at the estimated standard. How will the public water system be able to ensure that every device is going to be able to perform at the estimated standard? These devices will be installed in homes and businesses and the conditions will be different at each location. The Legislature may wish to consider whether the bill should ensure that the public water system includes a degree of error when determining how many devices will be necessary. This is especially key to ensuring that a 100% conservation level is met since the public water system is not required to consider a back up water source if 100% conservation is not achieved. Although this bill requires the written verification regarding water supply include an assessment by the public water system of funds needed for the public water system to implement water conservation measures that offset at least 100% of the projected water demand, there is no specific methodology sited in the bill to determine how those amounts will be calculated. The Legislature may wish to consider requiring specific methodology in the bill on how the financial costs of a particular conservation measure will be determined so that there is AB 1408 Page 8 consistency across the state on how these costs are calculated. This bill requires that the public water system calculate the water savings attributable to the water conservation measures financed by the water conservation mitigation funding from each subdivision. However, the Legislature may wish to consider how the public water system is going to calculate the water savings from water conservation measures put on existing facilities that are not required to have a water meter? Moreover, the Legislature may also wish to place a limit on the number of projects that a public water system can approve using the 100% mitigation fund offset, because there may come a point when a community can only conserve so much and an actual water supply may be necessary. Analysis Prepared by : Katie Kolitsos / L. GOV. / (916) 319-3958 FN: 0001309