News
Zoning, Planning and Use
Mar. 1, 2002
Bill Ties New Development to Available Water Supply
Focus Column - By Robert McMurry - The classic movie "Chinatown" was based on the true story of how the availability of water made possible much of the enormous growth of California. Now Sacramento, not Hollywood, has set the stage for another interesting drama over whether water will be available to sustain that growth in the future.
Focus Column
By Robert McMurry
The classic movie "Chinatown" was based on the true story of how the availability of water made possible much of the enormous growth of California. Now Sacramento, not Hollywood, has set the stage for another interesting drama over whether water will be available to sustain that growth in the future.
SB221 by Sen. Sheila Kuehl generally requires that, before a city or county approves a tentative tract map, parcel map or development agreement for a project involving 500 or more dwelling units, it must verify that sufficient water supplies are available to serve the project.
Understanding how to satisfy that seemingly simple requirement will be a major focus for developers, water agencies and local governments in a state expected to add 6 million people, a 35 percent increase, in the next dozen years.
SB221 amends the Government Code to provide that within five days after the city or county deems an application for one of these types of projects complete, the city or county must ask the public water-system operator that will supply the project to verify that it has a "sufficient water supply" to serve the proposed project and all other existing and planned future uses, including agricultural and industrial uses, in its area over a 20-year period, even in multiple dry years.
The operator's verification must look at the history of water availability over at least the prior 20 years, its urban water shortage contingency analysis, reductions of its supply due to existing commitments and the amount of water that the supplier can "reasonably" expect from other water-supply projects.
The water-system operator's verification must be supported by substantial evidence. That may include the operator's most recently accepted urban water-management plan, water-supply assessment or similar information prepared pursuant to the Water Code.
In perhaps the most significant provisions of the bill, SB221 requires that when the verification relies on projected water supplies not currently available, it must be supported by written contracts showing proof of the applicant's rights to the water supply; evidence of capital outlay and financing programs by agencies that will provide delivery of the water; evidence that permits have been issued for construction of the infrastructure needed; and proof of regulatory approvals.
If the water supply for the subdivision includes groundwater, the verification must show that the landowner has the legal right to extract it - a potentially contentious issue given California's complex water-rights law.
In an added twist, Kuehl inserted in the legislative record, during consideration of the bill by the governor, a letter declaring the intent of two key provisions. In her letter, she indicated that it was not the intent of the bill's sponsors to require that agencies providing verifications exclude projected water supplies if the agencies could demonstrate that they could "reasonably" rely on those supplies.
The final paragraph of Kuehl's letter states: "SB 221 is not intended to require a public water system have a twenty-year supply of water in place and immediately available at the time a final subdivision map is approved by a city or county." The effect of Kuehl's letter remains to be seen.
SB221 is the most significant legislation to date linking development approvals to water supply. In one form or another, the policy behind the bill has been fought over for nearly a decade. The development community feared that SB221 was not intended to set reasonable standards to ensure adequate water available to support growth, but rather to set unreasonable standards to prevent growth.
Water agencies argued that the legislation would leave them overburdened with compliance obligations and vulnerable to lawsuits. Environmentalists contended that the bill was just common sense.
Everyone agrees that the legislation will have a substantial impact on water policy and development. Courts had already moved away from the "mañana mitigation" approach, where projects were approved based only on a condition that the developer obtain a "will serve" letter from a water purveyor before it obtains building permits. See Stanislaus Natural Heritage Project v. County of Stanislaus, 48 Cal.App.4th 182 (1996).
SB221 not only requires the public water-system operator to verify its ability to supply the project before the project is processed, but also may mandate that the operator support its demand estimates with historical data, identify specific sources of supply, demonstrate an ability to use those sources through substantial evidence and document programs for delivery infrastructure, regulatory approvals and groundwater extraction rights over a 20-year period - not only for the proposed project but also for all existing and anticipated projects in its service area.
A project applicant need not have a 20-year supply in place upon approval but may have to demonstrate a present certainty that long-term demand with the water system's service can somehow, some way, be met.
The harsh reality is that few water agencies have conducted this type of long-term, comprehensive analysis, even with current requirements for urban water-management plans and similar planning documents. Even fewer projects, including those with extensive environmental analyses, have undertaken the kind of analysis mandated by SB221.
The task of doing so is formidable. A large project phased over 10 to 20 years now must identify and perhaps lock in water sources at time of approval in a changing marketplace. Choices that seem feasible today may be unduly expensive or unavailable in 15 years, yet there is no assurance that authorities will accept changes in the previously approved water supply program.
To ensure a sufficient supply, applicants may have to offer regulatory bodies a variety of sources promising more water than actually needed for the project, since otherwise challenges to any part of the water-supply strategy could prevent approval of the project. But tying up those water rights for decades may impose high upfront capital costs on developers for that which may never be used. It also may lead to the hoarding of water supplies as insurance against future uncertainties.
Equally interesting will be the interrelation between SB221 and the California Environmental Quality Act, Public Resources Code Sections 21000 et seq. Most environmental impact reports prepared under CEQA include an analysis of the water supply for the project and the environmental impacts of the project and other reasonably foreseeable developments on water supplies.
The practical effect of SB221 on CEQA analyses will likely be a change in the methodology that governments use to consider cumulative impacts of a project on water resources. Courts have held that the requirement for a cumulative impact analysis must be interpreted to afford the fullest possible protection to the environment. See Citizens to Preserve the Ojai v. Board of Supervisors, 176 Cal.App.3d 421 (2nd Dist. 1985).
SB221 requires a 20-year analysis of water supplies with a specific set of standards for determining "sufficient water supply." Accordingly, the SB221 methodology for determining the existence of water supplies will likely become the required methodology for assessing the significance of cumulative impacts under CEQA in order to avoid discrepancies when assessing the physical impacts of a project on the environment.
Similarly, Section 15064 of the CEQA Guidelines requires a lead agency to consider the reasonably foreseeable indirect physical changes in the environment that may be caused by the project when evaluating the significance of the project's impact.
SB221 requires consideration of reasonably foreseeable impacts on the availability of water resources that serve other agricultural and industrial users within the service provider's area. As a result, SB221 likely will define and expand the scope of CEQA analysis of those indirect consequences, potentially broadening the issues, adding stakeholders and creating more complex legal controversies.
SB221 does not apply to general or specific plan amendments or to certain other nontract maps. If SB221 standards are incorporated in local guidelines for CEQA analysis, this process indirectly may force nonsubdivision projects to undergo an identical analysis.
Initial reaction to SB221 suggested, not entirely tongue-in-cheek, that California would lead the nation in producing 499-lot subdivisions. Even that strategy may not work. The cumulative-impact analysis required by CEQA could lead to a combined SB221/CEQA analysis for projects outside the scope of SB221.
Once an SB221 analysis is completed for a project, failure to include that same analysis in CEQA documentation for later projects - even those that don't fall within SB221 - leaves those projects vulnerable to claims that the cumulative-impact analysis required by CEQA did not include information necessary to support the findings for that project's impacts on water resources.
In short, even though SB221 is not an amendment to CEQA, it may raise the CEQA bar with regard to water resources for a wide variety of projects beyond SB221's scope.
Finally, there is little doubt SB221 will add to the proliferation and complexity of litigation over development projects. The written verification by the water system may be challenged for lack of sufficient evidence. If not rejected as premature by the court, such an action would delay or even halt consideration of the project.
Even if the verification is challenged after project approval, it adds a new dimension to the legal controversy if courts construe SB221's requirements differently from those of CEQA standards.
Robert McMurry specializes in land use processing and litigation at the Los Angeles office of Nossaman, Guthner Knox & Elliot.
By Robert McMurry
The classic movie "Chinatown" was based on the true story of how the availability of water made possible much of the enormous growth of California. Now Sacramento, not Hollywood, has set the stage for another interesting drama over whether water will be available to sustain that growth in the future.
SB221 by Sen. Sheila Kuehl generally requires that, before a city or county approves a tentative tract map, parcel map or development agreement for a project involving 500 or more dwelling units, it must verify that sufficient water supplies are available to serve the project.
Understanding how to satisfy that seemingly simple requirement will be a major focus for developers, water agencies and local governments in a state expected to add 6 million people, a 35 percent increase, in the next dozen years.
SB221 amends the Government Code to provide that within five days after the city or county deems an application for one of these types of projects complete, the city or county must ask the public water-system operator that will supply the project to verify that it has a "sufficient water supply" to serve the proposed project and all other existing and planned future uses, including agricultural and industrial uses, in its area over a 20-year period, even in multiple dry years.
The operator's verification must look at the history of water availability over at least the prior 20 years, its urban water shortage contingency analysis, reductions of its supply due to existing commitments and the amount of water that the supplier can "reasonably" expect from other water-supply projects.
The water-system operator's verification must be supported by substantial evidence. That may include the operator's most recently accepted urban water-management plan, water-supply assessment or similar information prepared pursuant to the Water Code.
In perhaps the most significant provisions of the bill, SB221 requires that when the verification relies on projected water supplies not currently available, it must be supported by written contracts showing proof of the applicant's rights to the water supply; evidence of capital outlay and financing programs by agencies that will provide delivery of the water; evidence that permits have been issued for construction of the infrastructure needed; and proof of regulatory approvals.
If the water supply for the subdivision includes groundwater, the verification must show that the landowner has the legal right to extract it - a potentially contentious issue given California's complex water-rights law.
In an added twist, Kuehl inserted in the legislative record, during consideration of the bill by the governor, a letter declaring the intent of two key provisions. In her letter, she indicated that it was not the intent of the bill's sponsors to require that agencies providing verifications exclude projected water supplies if the agencies could demonstrate that they could "reasonably" rely on those supplies.
The final paragraph of Kuehl's letter states: "SB 221 is not intended to require a public water system have a twenty-year supply of water in place and immediately available at the time a final subdivision map is approved by a city or county." The effect of Kuehl's letter remains to be seen.
SB221 is the most significant legislation to date linking development approvals to water supply. In one form or another, the policy behind the bill has been fought over for nearly a decade. The development community feared that SB221 was not intended to set reasonable standards to ensure adequate water available to support growth, but rather to set unreasonable standards to prevent growth.
Water agencies argued that the legislation would leave them overburdened with compliance obligations and vulnerable to lawsuits. Environmentalists contended that the bill was just common sense.
Everyone agrees that the legislation will have a substantial impact on water policy and development. Courts had already moved away from the "mañana mitigation" approach, where projects were approved based only on a condition that the developer obtain a "will serve" letter from a water purveyor before it obtains building permits. See Stanislaus Natural Heritage Project v. County of Stanislaus, 48 Cal.App.4th 182 (1996).
SB221 not only requires the public water-system operator to verify its ability to supply the project before the project is processed, but also may mandate that the operator support its demand estimates with historical data, identify specific sources of supply, demonstrate an ability to use those sources through substantial evidence and document programs for delivery infrastructure, regulatory approvals and groundwater extraction rights over a 20-year period - not only for the proposed project but also for all existing and anticipated projects in its service area.
A project applicant need not have a 20-year supply in place upon approval but may have to demonstrate a present certainty that long-term demand with the water system's service can somehow, some way, be met.
The harsh reality is that few water agencies have conducted this type of long-term, comprehensive analysis, even with current requirements for urban water-management plans and similar planning documents. Even fewer projects, including those with extensive environmental analyses, have undertaken the kind of analysis mandated by SB221.
The task of doing so is formidable. A large project phased over 10 to 20 years now must identify and perhaps lock in water sources at time of approval in a changing marketplace. Choices that seem feasible today may be unduly expensive or unavailable in 15 years, yet there is no assurance that authorities will accept changes in the previously approved water supply program.
To ensure a sufficient supply, applicants may have to offer regulatory bodies a variety of sources promising more water than actually needed for the project, since otherwise challenges to any part of the water-supply strategy could prevent approval of the project. But tying up those water rights for decades may impose high upfront capital costs on developers for that which may never be used. It also may lead to the hoarding of water supplies as insurance against future uncertainties.
Equally interesting will be the interrelation between SB221 and the California Environmental Quality Act, Public Resources Code Sections 21000 et seq. Most environmental impact reports prepared under CEQA include an analysis of the water supply for the project and the environmental impacts of the project and other reasonably foreseeable developments on water supplies.
The practical effect of SB221 on CEQA analyses will likely be a change in the methodology that governments use to consider cumulative impacts of a project on water resources. Courts have held that the requirement for a cumulative impact analysis must be interpreted to afford the fullest possible protection to the environment. See Citizens to Preserve the Ojai v. Board of Supervisors, 176 Cal.App.3d 421 (2nd Dist. 1985).
SB221 requires a 20-year analysis of water supplies with a specific set of standards for determining "sufficient water supply." Accordingly, the SB221 methodology for determining the existence of water supplies will likely become the required methodology for assessing the significance of cumulative impacts under CEQA in order to avoid discrepancies when assessing the physical impacts of a project on the environment.
Similarly, Section 15064 of the CEQA Guidelines requires a lead agency to consider the reasonably foreseeable indirect physical changes in the environment that may be caused by the project when evaluating the significance of the project's impact.
SB221 requires consideration of reasonably foreseeable impacts on the availability of water resources that serve other agricultural and industrial users within the service provider's area. As a result, SB221 likely will define and expand the scope of CEQA analysis of those indirect consequences, potentially broadening the issues, adding stakeholders and creating more complex legal controversies.
SB221 does not apply to general or specific plan amendments or to certain other nontract maps. If SB221 standards are incorporated in local guidelines for CEQA analysis, this process indirectly may force nonsubdivision projects to undergo an identical analysis.
Initial reaction to SB221 suggested, not entirely tongue-in-cheek, that California would lead the nation in producing 499-lot subdivisions. Even that strategy may not work. The cumulative-impact analysis required by CEQA could lead to a combined SB221/CEQA analysis for projects outside the scope of SB221.
Once an SB221 analysis is completed for a project, failure to include that same analysis in CEQA documentation for later projects - even those that don't fall within SB221 - leaves those projects vulnerable to claims that the cumulative-impact analysis required by CEQA did not include information necessary to support the findings for that project's impacts on water resources.
In short, even though SB221 is not an amendment to CEQA, it may raise the CEQA bar with regard to water resources for a wide variety of projects beyond SB221's scope.
Finally, there is little doubt SB221 will add to the proliferation and complexity of litigation over development projects. The written verification by the water system may be challenged for lack of sufficient evidence. If not rejected as premature by the court, such an action would delay or even halt consideration of the project.
Even if the verification is challenged after project approval, it adds a new dimension to the legal controversy if courts construe SB221's requirements differently from those of CEQA standards.
Robert McMurry specializes in land use processing and litigation at the Los Angeles office of Nossaman, Guthner Knox & Elliot.
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