A draft allocation policy aims to structure where new water supply should go in parts of unincorporated Monterey County.

After decades of water scarcity in parts of unincorporated Monterey County, new water supply from Pure Water Monterey is poised to open the tap. The question is how that water will be tracked and allocated to new projects.

On April 19, County Planning Commissioners discussed a draft water allocation policy that outlines a framework for delivering water to California American Water service areas in unincorporated areas within the Monterey Peninsula Water Management District. These areas include parts of Carmel Valley, Pebble Beach, the Highway 68 corridor, Jacks Peak and more.

The draft policy, set to return to the Planning Commission on Wednesday, May 13 before heading to the Board of Supervisors for possible adoption in June, seeks to shift water allocations away from a historically first-come, first-served basis to a more structured process. The goal: to fairly distribute the new water supply while also supporting the County’s housing and economic development goals.

“We’re dealing with the fact that there’s possibly a limited amount of water to do something, and we don’t know what,” Planning Commissioner Martha Diehl says. “It hasn’t worked like that. It’s
a change of state.”

For decades, an over-reliance on the Carmel River resulted in a cease-and-desist order against Cal Am, effectively halting new water connections and stalling development since 2009.

However, water from Pure Water Monterey’s expanded advanced recycling project, completed in 2025, has reduced reliance on the Carmel River.

The tension, evident at the Planning Commission meeting as developers and land-use attorneys spoke at length, centers on how restrictive the County should be in allocating this supply, particularly for individual homeowners looking to build or add smaller features like a bathroom.

“The mistake people make is assuming this is the only allocation we’re going to have,” says Dave Stoldt, MPWMD general manager. “The idea was to give every jurisdiction enough water to get started, and then see which jurisdictions are actually committed to growth and housing and so forth.”

As proposed, the draft policy allocates 80 percent of the water to projects that include affordable housing, 15 percent to first-come, first-served projects, and 5 percent reserved for “special decisions” by the Board of Supervisors. Within the housing allocation, smaller units like ADUs as well as those that meet density and affordability criteria would be prioritized.

MPWMD officials along with developers argue that the proposed water limits don’t reflect real-world needs. “I think they’re overly restrictive with their draft policy,” Stoldt says.

Some land-use attorneys pushed for a more streamlined process so that developers can determine how much water would be available earlier in the permitting phase to protect investments. “What’s at stake really, is the ability of people to use their property and use water like you would everywhere else,” attorney Tony Lombardo says, “and whether there will be an artificial limitation on the use.”