On January 27, 2025, the Monterey Peninsula Water Management District (MPWMD) adopted Ordinance No. 197 allocating an additional 14-acre feet of water to the City of Carmel-by-the-Sea. According to the City’s water management program (Carmel-by-the-Sea Municipal Code Chapter 17.50), this allocation has been placed administratively in unallocated reserves until the City Council adopts a resolution allocating the water to a specific use category (e.g., residential, commercial, municipal, etc.).
The City’s water management program was adopted in 1987 by Ordinance 87-14 (Attachment 1) and amended in 1993 by Ordinance 93-11 (Attachment 2). The program is codified in Carmel-by-the-Sea Municipal Code (CMC) Chapter 17.50 (Attachment 3) and identifies the process for dedicating the city’s limited water resources to new development. The program also establishes a process for determining the land use categories to be served through allocations of water made available to the city.
The process begins with the City Council adopting a resolution that documents the quantity of water available, the land use categories that will receive water, the amount of water allocated to each category, and the amount that will remain in an unallocated reserve. Before adopting the Resolution, the City Council must consider the Planning Commission’s recommendations on the distribution of water to implement the General Plan and the Local Coastal Program.
The current water management program requires that the allocation resolution reserve at least 10 percent of available water resources for projects that will create new affordable housing units for “moderately low-, low- or very low-income households.” The allocation resolution must also ensure that water is reserved for anticipated projects serving coastal recreation, access, and essential public services.
2025 Allocation of Water from the Monterey Peninsula Water Management District
On January 27, 2025, the Monterey Peninsula Water Management District (MPWMD) adopted Ordinance No. 197 (Attachment 4), identifying a total water allocation for the City of Carmel of 16.479 acre-feet. This includes an existing allocation of 2.479 acre-feet of water as of 11/30/2024, plus a new allocation of 14 acre-feet associated with the Pure Water Monterey Expansion project. The Ordinance took effect on March 1, 2025.
The MPWMD publishes a Monthly Allocation Report for each jurisdiction within its service area. For March 2025 (Attachment 5), the City of Carmel was reported to have 2.661 acre-feet of water, plus the recently allocated 14 acre-feet, for a total allocation of 16.661 acre-feet of water. The 2.661-acre feet of water more closely aligns with the city’s records than the 2.479-acre feet reflected in Resolution 197.
CMC Chapter 17.50, Water Management Program, Subsection 17.50.030.C, Unallocated Reserves, states that if new water resources become available to the city through action by the MPWMD, they shall be placed in unallocated reserves administratively until distributed to other categories through the adoption of a new allocation resolution. The most recent allocation resolution that city staff could locate was City Council Resolution 2013-43 on August 6, 2013 (Attachment 6). At that time, the following categories, along with their respective water allocations, were as follows:
2013 Water Allocation Balances per Resolution 2013-43
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Low & Very Low-Income Housing
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Single Family Residential
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Mallery/Pescadero Water Transfer Reserve
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Forest Cottages Pre-Commitment
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Following the adoption of City Council Resolution 2013-43, the balance of the Category #4 Commercial water allocation was transferred to the Carmel Event Center, now the 7th & Dolores Steakhouse. The Category #9 Forest Cottages Pre-Commitment water allocation was transferred back to Category #1 Low & Very Low-Income Housing because the project did not commence construction by February 13, 2014. As a result of these changes, plus the recent allocation of 14 acre-feet, the current balances for each category are as follows:
Water Allocation Balances post-Resolution 2013-43
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Low & Very Low-Income Housing
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Single Family Residential
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Mallery/Pescadero Water Transfer Reserve
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Forest Cottages Pre-Commitment
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Local Coastal Program/General Plan
The adopted Local Coastal Program and General Plan set forth the policies for managing water resources and the CMC is the instrument through which those policies are implemented. Below is a brief discussion of the applicable water resource policies.
Land Use & Community Character Element (Excerpt from Water Resources Narrative)
“The City's share of District water resources is internally allocated to land use categories based on policies in the Local Coastal Program and secondarily in the Conservation, Land Use, and Housing Elements of the General Plan. These policies affirm the City's commitment to lots of record, and residential use (new homes, apartments, and remodeling) as the largest allocation for new development. In particular, existing subdivided lots of record zoned for housing should always be considered ‘first in line’ for limited water resources. New subdivisions of land should be limited until existing subdivided lots have a secure water supply to serve full build-out and additional water allocation units have been obtained from the District. As documented above, visitor serving uses throughout the City have been well accommodated with prior water allocations to achieve consistency with the Coastal Act. Augmenting scarce water supplies to serve planned growth continues to be a City policy. (LUP)”
Goal G1-6: Protect, conserve, and increase Carmel’s available water resources and water quality. (LUP)
Objective O1-19: Maintain and enhance a viable domestic water supply for the City through conservation techniques and direct involvement in regional water policies, including cooperation with Monterey Peninsula Water Management District (MPWMD) and the California-American Water Company. (LUP)
Policy P1-116: Where existing public services, including water, can accommodate only a limited amount of new development, priority uses, including essential public services, public recreation, commercial recreation, and visitor-serving land uses, shall not be precluded by services to other development. (LUP)
Objective O1-20: Maintain an effective program to monitor water use in the City and to ensure the availability of water to fulfill the goals of the General Plan. (LUP)
P1-123 Applications for new development shall demonstrate an adequate public (i.e. publicly-managed) water supply (e.g. the CalAm/MPWMD system or their successor agencies) to support the proposed development. Private water supplies are prohibited to serve existing and new development.
Applications for new development shall not be filed without a City determination that (1) no new water is required to serve the new development; or (2) there is water available in the City’s allocation from the regional supply to support the new development. This determination shall include an evaluation of the proposed development’s water demand, based on MPWMD’s water unit value system (or equivalent regional system in effect at the time of the determination). All water transfers and corresponding retirements, if any, shall be described and agreed to prior to any City determination.
Prior to the commencement of construction of new development, evidence of water service, in the form of a water use permit from the Monterey Peninsula Water Management District (or successor agency), shall be provided to the City Planning Department. (LUP)
P1-124 Establish priorities for ongoing water use in the event that further reduction of water consumption is required (e.g. during droughts or State-ordered cutbacks). (LUP)
General Plan, Housing Element
The City Council adopted the 6th cycle Housing Element in April 2024. The Housing Element is just one component of the General Plan and includes policies and programs that identify how the city will accommodate its regional share of housing needs (349 new housing units) by 2031.
Goal H1: Facilitate Housing Construction
Policy 1.1: Ensure adequate sites are available to meet the City’s projected housing growth needs
Program 1.2.A: Water Distribution Prioritization for Affordable Housing
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Work cooperatively with MPWMD to establish a procedure to prioritize water allocation for housing developments that include affordable units for lower-income households (December 2026). From its own modest water allocation of approximately 1.6-acre feet, the City will grant water allocation priority to those projects that assist the City in meeting its share of the regional housing need for lower- and moderate-income households. A city policy to clearly reflect water allocation priority and incentives for Extremely Low, Very Low, Low, and Moderate-Income households will be adopted (December 2026). Timeframe: Adopt policy by June 2025.
In a memo dated June 1, 2023, the MPWMD estimated that the City of Carmel-by-the-Sea would need 40-acre-feet of water to accommodate 349 new housing units based on various income categories and assumed unit sizes (Attachment 7). Based on these estimates, 14-acre feet of water would accommodate approximately 121 housing units.
The MPWMD is responsible for allocating water to municipalities. However, it is up to individual municipalities to determine how that water is used. Pursuant to the ordinance that was passed by the MPWMD Board of Directors, the sale of water by a jurisdiction is not allowed.
MPWMD Rule 33, Subsection D. Cost of Allocation specifically states,
There shall be no sale of water from an Allocation by a Jurisdiction.
Staff also notes that the moratorium on setting new Calam water meters imposed by the State Water Resources Control Board remains in effect.
City staff is seeking direction from the City Council on how to proceed with allocating the recent 14-acre feet of water that has been placed administratively in the Unallocated Reserve category.
Options for the City Council’s consideration include:
Option 1: Choose to keep the 14-acre feet in Unallocated Reserves for the time being.
A. To remain in compliance with the water management program, the City Council could consider allocating at least 10 percent of the new allocation of 14-acre feet (1.4-acre feet) to affordable housing. If the City Council chooses to do so, staff will return at a future meeting with a resolution transferring 1.4-acre feet from the unallocated reserve to Category #1 Low and Very Low-Income Housing.
B. Alternatively, the City Council could take a more conservative approach and consider that Category #1 Low and Very Low-Income Housing has an existing balance of 0.616-acre feet of water and transfer 1.0476-acre feet to maintain the minimum required 10 percent of the total balance (16.636-acre feet).
16.636 AF total x 10% = 1.6636 AF reserved for affordable housing
1.6636 AF - 0.616 AF existing balance of affordable housing = 1.0476 AF
1.0476 AF amount needed to reach 10%
Ref: CMC Section 17.50.030.B: Each allocation resolution shall reserve at least 10 percent of available water resources for projects that will create new affordable housing units for moderately low-, low- or very low-income households.
Option 2: Direct Staff to agendize a discussion with the Planning Commission on how the 14-acre feet should be allocated based on the Local Coastal Plan and General Plan and return with their recommendation.
Post Allocation Process (CMC Section 17.50.040)
One of the duties and powers of the Community Planning and Building Director is to administer the water management program (CMC Section 17.52.030.H). When a development application is submitted, it is evaluated to determine whether it will result in a net increase in water usage. If so, and no water is available, the application cannot be processed and is returned to the applicant. If there would be no net increase in water usage, the application is processed in accordance with the CMC. The only exception is projects including affordable housing which would be processed and placed on a waiting list until such time that water resources become available. There are no such projects currently on a waiting list.
If the City Council were to allocate new water resources to categories other than affordable housing, the Community Planning and Building Department would accept an application requiring additional water resources and once deemed complete, temporarily assign a pre-commitment of water while the application completes the review process. If the project is denied or abandoned, the pre-commitment would be returned to the original allocation category. If the application is approved, the water would be permanently allocated upon issuance of a water permit by MPWMD and a building permit by the City.
It is the responsibility of the Community Planning and Building Department to maintain a record of the remaining balance of water in each allocation category and for the Planning Commission to review the water management plan annually.
The MPWMD provides forms for the calculation of water usage for residential and non-residential projects (Attachment 8). These forms are completed by applicants and reviewed by the Community Planning and Building Department before being submitted to MPWMD for processing and ultimate issuance of a water permit.