On Monday night, February 2nd, the City of Santa Cruz Water Commission heard a limited presentation about the potential for a Water Demand Offset (WDO) program within the department’s service area. The motivation for the “informational” discussion was partly a result of the current work being done by the Council appointed Water Supply Advisory Committee (WSAC), which is exploring a variety of options to meet the water needs of the community. Neighboring district Soquel Creek already has such a program in place, which requires all new development and redevelopment projects to offset 160 percent of their water use through efficiency upgrades. The cost of these upgrades is in addition to the cost of a “system development charge” (SDC), otherwise known as a connection fee.
The consultant’s presentation focused on the hypothetical nature of what a local program could look like by drawing from three case studies of other California cities: Cambria, Moro Bay, and Napa. Each of these three programs varied in the proportion of water required to be offset, administrative models (either by building permit or meter), and the type of applicable development (commercial, residential, industrial, etc.). In terms of residential development, the additional cost to the development of a single family home varied from $1800 (Napa) to $6,800 (Cambria). If a similar program were implemented in Santa Cruz, the added cost to a single family home could be as high as $8,052, depending on the type of offsets required. This fee would be in addition to the current SDC ($12,000), bringing the total cost of a new single family home, from just adding a water connection, to roughly $20,000. For larger developments, such as an 80-room hotel, these offsets could add on anywhere from $200,000-300,000 per project.
In light of these added costs, both the Planning Director, Juliana Rebagliati, and Economic Development Director, Bonnie Lipscomb, cautioned against pursuing an aggressive program before understanding the full impact a WDO program might have on new development. According to each of their comments, a WDO program could adversely affect the City’s affordable housing program through added cost, as well as future commercial projects, especially hotels, in light of the City’s transient occupancy tax incentive program being challenged under the Department of Industrial Relations. Multiple speakers reinforced this perspective and cautioned against duplicating a process that was underway with the Water Supply Advisory Committee, including Bill Tysseling of the Chamber of Commerce and myself.
Ultimately the Commission gave direction to staff to further study the issue, and come back at a later date to be determined with more specifics about how a program might be implemented. Furthermore, multiple commissioners requested to hear from Ron Duncan, the Conservation and Customer Service Field Manager for Soquel Creek.