Water supply continues to be a critical issue for development in Southern California, and at present there is no reason to believe things will get better anytime soon. To avoid or minimize these potential consequences, those in the development industry need to become actively involved with the policies and actions taken by local water districts and community services districts.

California is in its third year of drought, with annual precipitation running about 60% to 70% of normal over each of the last three years. As a result, reservoir levels are steadily declining. At the same time, a series of court and regulatory actions focused on protecting the Delta Smelt have curtailed water exports from the Sacramento-San Joaquin Delta. Continuing litigation by the federal government and environmental groups in NRDC v. Kempthorne, as well as the recent federal biological opinion for salmon, steelhead and other migratory species in the Bay Delta, will keep pressure on water exports from the Bay Delta. The Metropolitan Water District of Southern California expects the restrictions resulting from these actions to reduce deliveries from the Bay Delta by as much as 40%. The impact of these reductions will be felt hardest in districts that lack significant groundwater supplies and are heavily dependent on imported water. More concerning, however, is that MWD now predicts that restrictions on Bay Delta water exports will hinder its ability to replenish water supplies during wet years. The state legislature, occupied with budget problems, has devoted little time or attention to a meaningful long-term solution.

At this point MWD and some local water agencies have responded to these circumstances primarily through rate increases and mandatory water conservation measures, rather than moratoria on new connections. If the situation worsens, however, moratoria could become a reality next year. Under the California Water Code, a water district (including a community services district that supplies water) may declare a “water shortage emergency condition” if it even anticipates an imbalance in its supply and demand. Once it does so, it has broad discretion to impose restrictions and even moratoria denying new water connections. With some exceptions, property owners have limited legal recourse, as the courts have ruled that prospective water users do not possess any absolute right either to water service or to the same treatment as established water users. See e.g., Swanson v. Marin Municipal Water District (1976) 56 Cal.App.3d 512, 522.

Nonetheless, there are things you can do to help and have a proactive voice in this effort. The Legislative Affairs Committee of NAIOP SoCal is advocating for policy to plan and develop the infrastructure necessary to ensure adequate water supply. The committee is proposing to invest funding from Propositions 50, 84 and 1E to immediately relieve pressure on the Delta from environmental challenges and to respond to the recent court ruling that will reduce deliveries.

Additionally, water districts and community service districts must hold public hearings and accept testimony and evidence from the public prior to declaring a water shortage emergency condition, and implementing restrictions or moratoria on new connections. The districts’ findings and determinations can be challenged in court. Additionally, a district that denies service on grounds of limited water supply has a continuing obligation to “exert every reasonable effort to augment its available water supply in order to meet increasing demands.” Swanson, supra, 56 Cal.App.3d at 524.

The prospect that water supply concerns will be used to delay or halt development on a broad basis is a very real concern for the near future. You can get out in front of this issue by doing the following:

  • Regularly attend the meetings of the water districts and community service districts (CSDs) in your jurisdictions, and stay abreast of any signs of policy shifts, new regulations or restrictions, and potential moratoria.
  • Urge your local water districts and CSDs to more aggressively pursue projects to augment their current supplies.
  • Develop productive relationships with board members for the water districts and CSDs in your jurisdictions, and actively engage in board elections.
  • Urge your state senator and assembly person to make water security a top priority in Sacramento.

If you observe any policy shifts, new regulations, restrictions, potential moratoria, or other developments in this area at the local level, please share this news with myself and the Legislative Affairs Committee of NAIOP SoCal, so that we can better track these developments and coordinate with the real estate development community. Information regarding NAIOP SoCal legislative efforts can be found online at www.naiopsocal.org.

The views expressed in this article are those of the author and not GlobeSt.com.

Sean Sherlock is a partner in the law firm of Snell & Wilmer LLP, in Costa Mesa, and a member of the Legislative Affairs Committee of NAIOP SoCal. His practice focuses on environmental, land use, and business litigation. You can reach Sean at (714) 427-7036, or ssherlock@swlaw.com.