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SR-03-25-2014-3FCity Council Meeting: March 25, 2014 Agenda Item: 3 -F° To: Mayor and City Council From: Dean Kubani, Manager, Office of Sustainability and the Environment Martin Pastucha, Director Public Works Subject: Recommendation to Adopt a Resolution Clarifying Uses of the Water Demand Mitigation Fees Recommended Action Staff recommends City Council adopt the attached resolution clarifying the appropriate uses of the Water Demand Mitigation Fee for water - efficiency related public facility capital improvements Executive Summary On February 26, 1991, Council approved an ordinance to authorize the Water Demand Mitigation Fee (Fee). On March 19, 1991, Council adopted Resolution No. 8196 (CCS) setting the Fee. The Fee is collected for new development projects, substantial remodels, and plumbing alteration projects to offset the increase in water demand. The staff report for that resolution stated that the Water Demand Mitigation Fee would be used for retrofits of toilets, showers and faucets in public facilities, City supported housing projects and non - profits to reduce the impact and demand on the City's water supply. It provided that this list of retrofit targets could be expanded depending on the magnitude of revenue proceeds from the Fee. The Fee generates approximately $300,000 annually. Advances in plumbing fixture, landscaping, rainwater and stormwater capture technologies, have resulted in a wide array of new water efficient products and infrastructure improvements for collecting, treating and distributing water. In order for the City to meet its goal to become water self- sufficient and meet its State requirement to reduce water demand 20 percent by 2020, additional water - efficiency projects and expansion of existing programs will be needed. By clarifying the expanded uses of the Water Demand Mitigation Fee in the attached resolution, the revenue collected can be used for a wider array of water - efficiency related public facility capital improvements in compliance with the Mitigation Fee Act. The list of priority projects would include installations of water - efficient plumbing pipeline, landscaping, rainwater and stormwater capture equipment along with the processes and equipment that minimize the water needed for the distribution system. 1 Background On February 26, 1991, Council approved an ordinance authorizing the Water Demand Mitigation Fee (Ordinance Number 1571 (CCS), codified in SMMC Section 7.16.050). On March 19, 1991 Council adopted Resolution No. 8196 (CCS) setting the Fee and providing that it would be used to retrofit water inefficient plumbing fixtures in the City. The March 19 1991 staff report outlined priority retrofits of toilets, showers and faucets in public facilities as well as City supported housing projects and non - profits. The staff report also stated that depending on the magnitude of revenues from the fee, the list of priority retrofit projects could be expanded. The intent of the fee was to mitigate the increase in water use of new and substantial remodels in single - family, multi - family and commercial projects during a water shortage. The fees collected were to be used to augment the City's BaySaver Program, also referred to as the water conservation program. Council declared a Water Shortage Advisory on May 12 2009 and extended it on September 13 2011. It remains in effect and calls for a voluntary 10% reduction in city- wide water use. In response to these water shortages and the City's sustainability goals, approximately 92% of all toilets, urinals, showerheads, and faucets in Santa Monica have been retrofitted with low -flow plumbing fixtures as part the City's conservation rebate and /or direct installation programs. However, advances in plumbing fixture technology, irrigation and landscaping have resulted in even more water - efficient products and processes that are not specifically named in the original staff report and resolution. Discussion The priority retrofits for public buildings listed in the original staff report, including toilets, showers and faucets have been and would continue to be implemented as newer, more water - efficient, fixtures become available. However, retrofitting toilets, showers and faucet aerators alone will not be sufficient to meet the goal of water self- sufficiency 2 established by Council on March 8, 2011. Additional water conservation and efficiency projects and programs would need to be implemented to reach these targets. On May 14, 2013, Council approved Option 1 included in the proposed Sustainable Water Master Plan Study Session. Option 1 includes maximizing groundwater supplies, increasing water conservation programs, and implementing new rainwater and stormwater capture programs. The Water Demand Mitigation Fee generates approximately $300,000 annually. The amount varies depending on how many new construction and remodel projects are permitted each year. With the clarification of the appropriate uses, the Water Demand Mitigation Fee by 2020 could generate a total of approximately $2,100,000. These funds could help offset water - efficient related public facility capital improvement projects, that would likely account for greater level of water reduction than if solely used for toilets, showers, and faucets. As contemplated by the original resolution, by clarifying the additional public improvements for which the Water Demand Mitigation Fee may be used, the revenue collected can fund an expanded array of water - efficiency related public facility capital improvements that could result in greater water savings. The list of priority projects would include installations of water - efficient plumbing, pipeline, landscaping, rainwater and stormwater capture equipment and processes and equipment that minimize the water needed for the distribution system. 3 Financial Impacts & Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action. Prepared by: Kim O'Cain, Sustainability Analyst Approved: Dean Kubani Sustainability Manager Approved: Martin Pastucha Director Public Works Attachment: 1 — Resolution Forwarded to Council: Rod Gould City Manager Reference: Resolution No. 10804 (CCS)