The state says the Peninsula must build, but also holds back on water.

Right on time, the Monterey Peninsula, along with the rest of the region, learned on April 21 how many new housing units the state not only expects, but will require, it to plan to build between 2023 and 2031.

Historically, for the Peninsula, this has been as awkward as a relationship between local and state government can get. The local governments here agree they need to add housing, yet the region, served by water utility California American Water, remains under a cease and desist order from the state that has, for years, barred adding new water connections.

The requirement, known as the regional housing needs assessment, or RHNA, is the state’s effort to curb the widespread and ever-accelerating housing crisis by mandating local housing supply increases in eight-year cycles. The state determines in broad strokes how much housing is needed in a region such as Monterey/Santa Cruz counties; then a local agency (in our case, the Association of Monterey Bay Area Governments, or AMBAG) fine-tunes the requirements for each jurisdiction in the region.

The city of Monterey’s lack of success in meeting RHNA requirements reflects the obstacles facing the entire Peninsula. Between 2014-2023, the state determined Monterey should build 650 housing units. To date, they have built just 110 of those.

Despite its previous failures, the newest housing responsibility placed on Monterey by the state has vastly expanded, and reflects the state’s new priority placed on adding more housing in high-opportunity areas. Between 2023 and 2031, the state is requiring the city of Monterey to build 3,654 new housing units, a more than 400-percent increase. It’s similar for other Peninsula cities: Carmel’s housing requirement jumped from 31 to 349; Pacific Grove from 115 to 1,125; Del Rey Oaks from 27 to 184. Unincorporated Monterey County jumped from 1,551 to 3,326; and the county’s requirement as a whole jumped from 7,386 to 20,295.

Now, about that awkwardness.

Since 2009, Cal Am has been under a cease and desist order issued by another arm of the state, the State Water Resources Control Board. The order prohibits Cal Am from taking any additional water from the Carmel River and places a moratorium on new water hookups – essentially, no growth. The moratorium was approved by the California Public Utilities Commission.

While one arm of the state is pushing the Peninsula’s housing supply forward, another arm is pulling it back. Starting Jan. 1 of this year, the Peninsula has had even less water to work with as the state tightened its restriction on Carmel River use – a move that had been foreseen for years.

Now, the Peninsula’s hopes are tied to an approved expansion of the Pure Water Monterey recycled drinking water project. An expansion is expected to provide enough water for at least the next 15 years of demand and up to 30 years, says David Stoldt, general manager of the Monterey Peninsula Water Management District. However, the project still needs approval by the CPUC – expected in September – and to undergo construction, which is expected to take until June 2025, if all goes according to plan.

Yet, what needs to be done to lift the order remains unclear even to the agency responsible for making the call.

Ailene Voisin, spokesperson for the state water board, says the board “has yet to lay out the steps… for lifting [the order],” but that Cal Am will have to prove, among other things, that it has obtained a permanent replacement water supply. Voisin acknowledges that there “will likely be disagreements on what constitutes a ‘permanent supply.’”

According to the state, the ball will be in Cal Am’s court to prove that the Pure Water Monterey expansion is a sufficient water supply to lift the order and untie the Peninsula from its decades-long stagnation – an irony, given the lengths Cal Am has taken to discredit the recycled water project in favor of its own embattled desalination proposal.

The Peninsula has previously used water to skirt around its RHNA obligations. However, the state has stepped up enforcement and is already showing that it is cracking down and expects action. On the Peninsula, something will have to give.

CHRISTOPHER NEELY is a staff writer at the Weekly who covers water. Reach him at christopher@mcweekly.com.