City receives 14 acre-feet allocation; council holds discussion on prioritizing water for affordable housing

CARMEL-BY-THE-SEA, Calif. — The Monterey Peninsula Water Management District has allocated 14 acre-feet of potable water to the City of Carmel-by-the-Sea, staff told the council May 5, and the allocation was provisionally placed in the city’s unallocated water reserves pending council direction.

Marnie, a planning staff member, briefed the council on how the city’s water-management program is administered. The city’s water-management ordinance creates land-use categories (single-family, multifamily, commercial, municipal and affordable housing). The city’s ordinance requires that at least 10% of available water resources be set aside for affordable housing. Staff said the new allocation increases the city’s reserve to approximately 16.6 acre-feet when combined with existing Mallory/Pescadero credits cited in staff materials; the district estimates the 14 acre-feet will be available for use at the end of 2025 or early 2026.

Staff reminded the council that the city’s Regional Housing Needs Allocation (RHNA) requires planning for 349 units over the planning period and that the water district has estimated roughly 40 acre-feet would be needed to meet that RHNA target. By comparison, the current 14 acre-feet equals roughly 21 typical housing units based on the district’s water factors.

Councilmembers discussed how to allocate the incoming 14 acre-feet. Staff noted the ordinance automatically places new district allocations into an unallocated reserve until the city council adopts a resolution assigning the water to one or more land-use categories. Councilmembers debated whether to set aside the minimum 10% (roughly 1.4 acre-feet) for affordable housing now or to put a larger portion into the affordable or multifamily categories to better incentivize mixed-income or downtown redevelopment projects.

No final reallocation resolution was adopted at the May 5 meeting. Instead, council direction favored leaving the 14 acre-feet in unallocated reserves while staff and the planning commission refine options tied to programs in the pending housing element update. Several councilmembers asked staff to return with a proposed resolution and allocation scenarios — including options that would prioritize deed‑restricted affordable units, allow mixed-income projects to access water credits if they meet minimum affordability thresholds, and define how exceptions for projects with partial affordable components would be handled.

Staff also explained the district’s restriction that allocated water cannot be sold and that receiving properties must have an existing meter. The city’s planning department will continue to administer the program and maintain a waiting list for any affordable housing projects that require water but are approved before water is available.