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PEBBLE BEACH CO. PROPOSAL TO SELL "ENTITLED" WATER

 From the Monterey County Herald
Published Thursday, December 27, 2001

By THOM AKEMAN
takeman@montereyherald.com

A Pebble Beach Co. proposal to sell water to finance a recycling project for golf courses is now equipped with firm prices and volumes, a company official said Wednesday.

The company would sell 100 acre-feet of water privately for $170,000 an acre-foot - a record price that's nearly nine times the municipal rate for water on the Monterey Peninsula, when it's available.

In addition, the company would give 45 acre-feet to the Monterey Peninsula Water Management District for distribution to residential and government users at the standard connection fee of $19,000 per acre-foot.

The proposal includes a number of conditions that would have to be approved by the Peninsula water board, as would the basic concepts of releasing water from the residential lots it's currently tied to and allowing it to be moved to other places and other uses.

Various versions of the Pebble Beach Co. proposal have been discussed with the water district's staff for more than a year, but the plan hadn't been firm enough yet to be presented to the water board for decisions.

The latest proposal with prices and volumes was presented to the water district in a letter from Mark Stilwell, executive vice president of the company.

In addition to firmer numbers, it added new terms to the proposal that could spark controversy.

The company had proposed selling water only to residential lots within the Del Monte Forest, lots that have all been subjected to environmental-impact studies. New water uses there wouldn't raise any new, insurmountable environmental questions, company officials have said.

But the new proposal sent to the water district drops that limitation. It says the Pebble Beach Co. could sell water to residential-property owners outside the Pebble Beach area. If any environmental review was needed for projects spawned by that move, the water district would have to do it.

"We're going to call that question separately from the others," said Alan Williams, who is a Pebble Beach Co. consultant for land-use matters and the owner of the Carmel Development Co. "One isn't contingent on another."

Williams said Wednesday that the company would prefer to sell its 100 acre-feet of water within the forest because environmental questions associated with that have been resolved.

"We want to use it within the forest, but we don't want to preclude use outside the forest if that's deemed appropriate," he said. "We'd throw that concept to the wind if it's a problem."

The Pebble Beach Co. has water to spare because it has an entitlement to use an additional 365 acre-feet of California-American Co. water each year.

The company got that entitlement in 1989 when it agreed to guarantee the financing for a $34 million water-recycling project that converts sewage to golf-course irrigation water. The project was intended to replace 800 acre-feet of Cal-Am water a year that was being used to irrigate the golf courses at that time. For its financial commitment, the Pebble Beach Co. got the right to reuse a little less than 50 percent of the saved Cal-Am water.

But that water was committed in specific amounts to specific parcels in Del Monte Forest, property slated to be developed as housing sites.

But ownership of the property and zoning changed over the years, dropping the development potential of many of the parcels and, consequently, the need for tap water. At the same time, the new owners of the Pebble Beach Co. have proposed a new golf course and hotel expansions that will require water to be used in places not included in the 1989 contracts.

The water could be freed from the specific locations it's now tied to by a majority vote of the Peninsula water board.

It would take more votes - and the changing of at least one ordinance - to then allow that water to be used outside the legal boundaries of the Del Monte Forest.

If such approvals are granted, the Pebble Beach Co. would use all the money from its water sales to finance improvements of the recycling project so it could produce even more irrigation water than it was designed for, Williams explained.

"There's no profiteering here," Williams said. "If you take the total cost for improvements and divide that by the amount of water we've got, that's the price per unit."

Thom Akeman can be reached at 648-1171.