The legal challenges continue as the District, joining forces with Peninsula cities, is seeking relief from the recently approved change of venue order to Santa Clara County.

Dates have not yet been determined as to when the venue appeal will be considered or, depending on the success of the venue appeal, when the court would consider action on the stay of the SWRCB CDO currently in place. Stay tuned as this issue will certainly evolve over the next few days and weeks.

Well Permit Moratorium Averted!

The District voted NOT to adopt the rushed-through urgency ordinance that would enact a moratorium on processing of applications for water distribution systems (WDS) supplied by a well drilled in “fractured rock.” The proposed ordinance was thrown together by district staff over the past couple of weeks in an attempt to freeze well application processing for 120 days – allowing district staff the time needed to study potential adverse impacts associated with wells drilled in fractured rock.

MCAR provided testimony opposing the urgency ordinance and recommended that the District continue processing WDS applications while pursuing a fractured rock well study.

The proposed urgency ordinance lacked the super majority vote needed for passage and the issue was sent back to committee for further vetting and discussion.

Property owners within the MPWMD district boundary who have NOT begun the WDS application process and require a well drilled in fractured rock, may want to consider moving forward with the application process as this issue (and possible revised ordinance) will most likely return at some point in the future.

The State Water Resources Control Board (SWRCB) released their updated draft Cease and Desist Order (CDO) this week. Hopes for sympathy or some level of practical understanding of impacts associated with its implementation, have disappeared into the vast netherworld of bureaucratic machinations.

The amended document stays the course on previous demands and further defines compliance thresholds and requirements. The draft establishes a 5% reduction (549 ac-ft) starting in October 2009 and cumulatively increases by 121 acre feet each year until 2014, at which point the annual reduction doubles to 242 acre feet annually (afa). This formula assumes that a new water supply will be online sometime in the year 2016, the deadline for by which Cal-Am “shall terminate all unlawful diversions from the river”. The total cumulative reduction in water diverted from the Carmel River will be around 25% by the year 2016.

The modified draft puts the onus of responsibility on Cal-Am, it’s users (us) and local leadership to bring a new water supply online – ideally prior to 2014 when the annual reductions double. The California Public Utilities Commission is set to make a determination sometime early next year as to what project they deem to be most appropriate for the region. At this point, the Regional Project seems to make the most sense, both fiscally and environmentally with the least amount of potential legal challenges associated with it.

Interestingly enough, the revised draft CDO acknowledges and applauds Pebble Beach Company for its use of recycled water, and then goes on to say that no exceptions should be made for the Pebble Beach Company, nor should they (this being property owners in PB) be exempt from MPWMD conservation requirements. Essentially, the CDO is underscoring the state Board’s desire to see a moratorium on any new water connection (or change of use resulting in a water demand increase) prior to a new water supply coming online.

In Summary:

Should the SWRCB adopt the draft revised CDO in October, the amount of water Cal-Am can pull from the Carmel River will be reduced by 5% – starting sometime in October or November 2009 (cumulatively increasing to 25% by 2016). The Monterey Peninsula Water Management District (MPWMD) will then most likely set their water rationing level to stage 5, resulting in a moratorium on all new connections along with additional mandatory water conservation measures. Per the MPWMD, there will be a window of approximately 60-90 days before the new conservation requirements will be in place. The timing of all of this is not exact. Should litigation follow ratification of the CDO, a delay in any type of MPWMD water rationing/moratorium plan is almost certain, pending a court decision…this could be decided in weeks, months or years. We will need to modify the County Disclosure based on the outcome of October’s SWRCB meeting – should the CDO be adopted. Proper communication with clients is imperative, and we will continue to disseminate information as it becomes available.

Supervisor Dave Potter was the first to comment after Cal-Am’s legal team challenged the validity and authority of the Board to impose the order. The Supervisor requested more time be allowed before issuance of the CDO, given the unique circumstances of our area and the timeline of upcoming water projects suited to address the needs of our communities.

The health and safety concerns relating to any additional cutbacks were the common theme amongst most of those who opposed ratification of the order. The California Public Utilities Commission (CPUC) representative requested that more time be granted in light of the water projects currently being evaluated by their board and echoed the potential health and safety challenges associated with the water cutbacks.

Upon conclusion of comments, the Board deliberated briefly on appropriate legal procedures and offered little insight as to the direction they would be taking. Nothing was shared with the attending audience that would indicate a specific course, though Board Member Tam D. Doduc did reveal a desire to see the Order adopted as drafted, at a bare minimum (indicating a desire to see stronger language incorporated within the order). Ms. Doduc was the only Member who spoke to that effect.

The Draft CDO will now go back to the Board for review and potential modification. We were told yesterday that a revised CDO should be out within the next couple of weeks and that a two week comment period would then follow, setting up an October Board meeting in which final consideration would be given.

We will update the membership upon review of the revised CDO as soon as it’s released to the public – sometime within the next couple of weeks. Stay tuned…

As was reported in my last Water Update, the proposed CDO would require immediate reductions in the amount of water diverted from the Carmel River. The CDO would require a reduction of 670 Acre Feet Annually (AFA) (~5%) beginning on October 1, 2009 which would gradually escalate to around 21% by 2015. To borrow the CA Public Utility Commission’s (CPUC) analogy; “each acre foot of water in the Monterey region serves about four households for one year. A 21% annual reduction, with no replacement water, would be equivalent to no water for about 6500 families”. To reiterate our documented position and that of other local stakeholders: the proposed CDO simply is not realistic, feasible, equitable or reasonable on any level.

A piece of good news was reported last week in the Herald regarding the CA Public Utilities Commission request that the SWRCB apply some level of common sense in respect to the proposed CDO. The very fact that the PUC would submit a letter urging consideration for more time to be given demonstrates not only the magnitude of the situation but offers a sense of hope that a California regulatory entity would actually understand and defend taxpayers who are being held responsible for the states punitive charge against Cal-Am.

Current water use on the Monterey Peninsula averages 70 gallons per capita per day, (GPCD) the lowest in the entire state. The statewide average is in the ball park of 192 GPCD. If the proposed CDO were ratified as it is drafted today, the Monterey Region would be reduced to the lowest levels actually experienced in the industrialized world {CPUC Comment Letter}.

This issue represents much more than just another restrictive policy or burden to business. It exemplifies an evolving and ongoing struggle for fairness or merit on harmful exactions impacting economic or even physical viability from a regulatory body.

I will be providing testimony on behalf of MCAR and its membership at tomorrow’s workshop in Sacramento during public comment. The workshop will be streamed online and should begin around 1:00 pm. You can access the feed by clicking here. I have also included the link to MCAR’s comment letter which can be accessed by clicking here.

Upon conclusion of tomorrow’s workshop, we should have a much stronger understanding of how this issue could evolve in regards to mandatory reductions. I will provide an update on Thursday of this week to summarize the day’s events and let you know what is (or could be) in store for all of us.

]]> http://mcarforum.com/2009/09/water-update-part-2/feed/ 1 http://mcarforum.com/2009/08/water-update-part-1/ http://mcarforum.com/2009/08/water-update-part-1/#comments Sat, 29 Aug 2009 22:25:24 +0000 kevin http://mcarforum.com/?p=190 It was feared (and anticipated) by many that Monterey Peninsula residents and business owners would be facing 50 percent cutbacks in available water pumped from the Carmel River through the State Water Resources Control Board (SWRCB) Cease and Desist Order decision. Fortunately, (at least at this point) State Water Board staff has backed off of the original recommendation and has suggested the Board consider imposing smaller cutbacks, starting in the range of 5 percent and cumulatively increasing through a phased-in process over the coarse of many years.

The proposed order will be considered by the State Water Resources Control Board on September 2, 2009 and will most likely be adopted before October 1, 2009. There is still much confusion relating to the limits of water made available to many Monterey Peninsula communities, and the timeline associated with water commitments for new service connections.

One point is made very clear throughout the proposed order; Cal Am is violating state water law and must be put in a position to appropriately comply with the order. The true impacts of this order are yet to be fully understood by Monterey Peninsula residents, businesses and elected leadership, and the future of “committed water” to projects in the pipeline is very much in question.

Now, probably more than ever, the need for a new water supply in this region will be realized. Conservation, cutbacks and restrictions on available water may satisfy a legal order, but at what cost? The potential economic impacts are daunting to say the least.

While the news isn’t good, it certainly isn’t as bad as it could be. A publicly owned Regional Water Project coming online prior to mandatory reductions would have been ideal, but at this point, unrealistic. Fortunately, regional water solution efforts continue with a sense of urgency understood by the public, elected officials and the agency in charge of oversight, the California Public Utilities Commission.

We will continue to monitor this issue closely and will update the membership on specific impacts to water availability and entitlement post SWRCB decision on September 2nd. Stay tuned.

Propositions 1A through 1E were soundly defeated by voters, leaving only 1F victorious. 1F’s passage fits perfectly into this voting pattern, as it had to do with limiting the Legislators access to pay increases in deficit years. It isn’t hard to define the voters’ message, they want Sacramento to make sacrifices in order to balance the budget, just like they have had to do in their own homes.

Across America the average family has made multiple sacrifices the last 18 months in order to make ends meet. Some decided to turn off their expensive HD cable, others agreed not to eat out and most cut back drastically on consumer spending.  Very few have been unaffected by the recent financial situation. Even in what can be considered the lavish state of California, people are reeling with lost equity in homes, reduced access to credit and mounting bills because of layoffs. Financial analysts are saying the market will start to round the corner this year, but not soon enough for voters to approve California’s complicated and highly political budget plan on yesterday’s ballot.

The ballot measures were a result of budget negotiations done earlier this year between the Republican Governor and the Democratic majority party leaders. The Big 5, as they are often called, are made up of the Governor, the Assembly and Senate majority leaders and the minority party leaders from both houses. This is the group that put forward the series of propositions voters decided on last night.  1A-1E would have raised significant money for the General Fund, set aside dedicated education monies for the 2011-2012 fiscal year and generally changed how the budget process is done in California.  Now, the Big 5 are headed back to the table to attempt a new budget under the June 30^th deadline.

With the state now facing an estimated $21 billion dollar deficit, a lot of decisions have to be made. None of them will be politically easy. Whether or not the Governor makes good on his promise to lay off thousands of state employees is yet to be seen.  State officials have indicated deep cuts will be necessary to education, public safety and social programs. Politicians do however, have one thing on their side as they head into negotiations, they know without a doubt what the voters have asked them to do.

Recently, homeowners throughout the state began receiving notices from companies that stated they were paying too much in property tax and that for a flat fee (~$175.00) a reassessment of the properties current value would be undertaken resulting in a lower property tax bill.  While at first blush this might seem like a bargain, this very service is available to the public free of charge from the County Tax Assessors Office.  The video is approximately 15 minutes in length and is a great resource for those who have questions on how this process works.

Gov presented on numerous legal topics affecting agents in the field and briefed the membership on new laws impacting transactions, homeownership and general real estate practices. For those unable to attend, a video of the presentation is now available for viewing (approx 2hr). 

Gov Hutchinson is Assistant General Counsel and Staff Vice President of the CALIFORNIA ASSOCIATION OF REALTORS®. He has been with C.A.R. since 1985 and manages C.A.R.’s Member Legal Services Program in Los Angeles. Gov advises REALTORS® through the “Hotline” on all aspects of real estate law and trains and supervises other “Hotline” attorneys. Received his Bachelor’s degree in History from Princeton University and his Juris Doctorate from the University of Pennsylvania. Gov has written for CALIFORNIA REAL ESTATE magazine, co-authored C.A.R’s continuing education courses and is a master instructor for the Education Division of C.A.R. with certification from the Department of Real Estate. He also regularly speaks to Associations/Board of REALTORS®, affiliated trade associations, city and county bar associations and major real estate firms. He is also a member of the Real Property Law Sections of the American, California and Los Angeles County Bar Associations.

The plan has two primary goals:

1.To help homeowners in existing Fannie Mae or Freddie Mac loans that are current on their mortgage payments to refinance and take advantage of today’s lower interest rates. Many of these homeowners are unable to refinance because of lost appreciation in their homes due to the continuing decline in home prices. These homeowners still have equity in their home, just not the necessary 20% to get a refinance. Under the Administration’s plan, Fannie and Freddie will be allowed to refinance qualified homeowners up to a 105 percent loan-to-value of the current value of the home.

2. To help homeowners who are at risk of foreclosure. The Administration is offering loan servicers and investors government assistance to help offset the cost of modifying qualified homeowners into affordable mortgages that will allow them to keep their homes. This may be done by reducing the mortgage interest rate, extending the term of the loan, principal forbearance, and/or principal cramdown. This program is voluntary and the servicers must agree to contracts with the Treasury to participate.

The following links are a GREAT resource for those interested in finding out if they would qualify or benefit from either one of the above-mentioned programs.

Click HERE to find out if you qualify for the Making Home Affordable Refinance

Click HERE to find out if you qualify for the Home Affordable Modification

NOTE, this is not a new ordinance. This law was passed a number of years ago but was not enforced. The City is now requiring adherence to the code prior to issuance of a city report. I have heard from a number of agents who have attempted to pull a city report and were told that their brokers needed to pay for their license before being granted the requested documents. A breakdown of the business license tax structure is listed below. I am also including a link to the business license application.

Real Estate Broker:

Fee:   $58.00  – $0 up to $25,000 or fraction thereof

PLUS  $10.00  – for each additional $5,000 or fraction thereof in excess of $25,000.

Example:

Receipts: $0 – $25,000 = $58.00 Amount Due

Receipts: $25,001 – $30,000 = $58.00 (+$10) = $68.00

Click here to visit the Seaside Bus. Lic. page.