Pebble Beach Has Run on Its Own Water Rules. A State Decision Could Narrow the Gap

When a home or lot in Del Monte Forest changes hands, a water permit can change hands with it. Under the Monterey Peninsula Water Management District's Rule 23.5, each Pebble Beach Company entitlement permit is a vested interest, and it conveys with title to the benefited property. That permit is a real asset. It does not appear in the listing photos, and it sets the limit on how far the next owner can remodel or add on.

For most of the Monterey Peninsula, the bigger question since 2009 has been whether a property could get a new water connection at all. This month, a State Water Resources Control Board hearing on that restriction reaches its final written stage. Closing briefs were due Nov. 17, 2026, after the deadline moved from Nov. 10. If the board lifts the restriction, the rest of the Peninsula moves a step closer to where Pebble Beach entitlement holders have been for years. Even then, the permit attached to a parcel still decides what that parcel can become.

The Ban Pebble Beach Was Partly Written Around

The restriction is Condition 2 of State Water Board Order WR 2009-0060. It bars California American Water from using Carmel River diversions "for new service connections or for any increased use of water at existing service addresses resulting from a change in zoning or use." Monterey County NOW reported that the restriction halted nearly all new home and business construction on the Peninsula.

Pebble Beach entitlements were handled differently from the start. The 2009 order addressed them directly:

"Increased diversions from the river by Cal-Am to satisfy PBC entitlements from MPWMD shall be added to the adjusted base, and are not subject to section 2 of this order."

The same order limited that water to properties holding a Pebble Beach Company entitlement inside Cal-Am's service area. It also ended the use of Carmel River diversions for the entitlement after Dec. 31, 2016. The board's 2016 follow-up, Order WR 2016-0016, kept the special accounting for the remaining entitlement and barred illegal river diversions for it after Dec. 31, 2021.

The district's own rules go further. Rule 23.5 says entitlement permits are not diminished by a water emergency, a moratorium, or any other limit on setting meters. It also allows Cal-Am service and meter installation for these properties despite a district moratorium. The usual fees still apply, and so do the conservation rules. The entitlement came out of the CAWD/PBCSD wastewater reclamation project. According to the 2009 order, the Pebble Beach Company sold 175 acre-feet per year of its entitlement to Del Monte Forest landowners to help pay for an upgrade to that project.

How Much of the Pool Is Left

The entitlement pool is finite. Rule 23.5 caps it at 380 acre-feet. The district's report for the month of June 2026, included in its July 20, 2026 board packet, splits the pool four ways:

The two large lines have been used at very different rates. As of June 2026, about half of the Del Monte Forest Benefited Properties share had been assigned. The Pebble Beach Company had used only about a sixth of its share. The difference matters to a buyer, because water bought separately under Rule 23.5 belongs to its designated property and cannot be resold or conveyed to another one. Water on one lot cannot be moved to the lot next door.

What Lifting Condition 2 Would and Would Not Touch

The push to lift the restriction started with new supply. The district's board voted unanimously on Oct. 20, 2025 to ask the state to allow new service connections. That came shortly after the Pure Water Monterey Expansion was announced earlier that October. The district describes the expansion as now providing 60% of the Peninsula's drinking water. District General Manager Dave Stoldt called it "a window of opportunity for the community to ease water restrictions in favor of housing and jobs," according to the district's summary of the request.

The application asks the board to rescind Condition 2 and keep Cal-Am's reporting in place. It also proposes supply and demand triggers that would let the state bring the restriction back. It does not propose any change specific to Pebble Beach entitlements.

Support has grown over the past year. The Carmel Pine Cone reported in January that Carmel had unanimously called for ending the moratorium. The Monterey Herald reported in July that Seaside's City Council backed lifting it. In an August guest commentary in the Monterey Herald, Public Water Now said it strongly supports lifting the ban.

Cal-Am's position has changed over that time. The board's hearing notice records a Dec. 19, 2025 request from Cal-Am to deny the application or hold it in abeyance. By late August, the Carmel Pine Cone reported that Cal-Am's written testimony supported a temporary suspension of the ban, with the end date tied to its desalination plant. Cal-Am's 2025 Urban Water Management Plan expects that plant to be operating by the end of 2029. The Coastal Commission approved it conditionally in November 2022.

The schedule on the State Water Board's hearing page ran from the Nov. 5 public comment day to closing briefs on Nov. 17. The decision now rests with the board.

Lifting Condition 2 would remove a state-level ban on connections. It would not remove the district's permit process. Under Rule 23, any project that adds, modifies, or increases water use needs a Water Permit and a final district inspection. The added water has to be covered by a jurisdictional allocation, an entitlement, or a verified credit. If it cannot be covered, the application is denied and the applicant has to find more water. A Pebble Beach permit with water left on it can be one of those sources.

The Math Behind a Remodel

The district counts water in fixture units, and each residential fixture unit equals 0.01 acre-feet. Staff count the fixtures in the existing house, confirm them by inspection, and compare that count with the proposed plans. Verified credits are subtracted, and the owner pays a capacity fee on the net increase. The current values in the Rule 24 fixture table and the district fee table, effective July 1, 2026, look like this:

As an example, a new bathroom with a toilet, a shower, and a washbasin adds 4.3 fixture units, or 0.043 acre-feet. At the 2026–27 rate, the capacity fee on that increase comes to about $1,644, before the application charge. The fee is the smaller hurdle. The harder one is finding 0.043 acre-feet in an allocation, an entitlement, or a credit.

There is a narrow exception. A home built before May 16, 2001 with fewer than two full bathrooms can add a specified toilet, tub or shower, and washbasin without drawing on the jurisdictional allocation. The capacity fee still applies. This route cannot be used to create or serve an ADU or JADU. It also records a water-use limitation on the property, which ordinarily caps the home at two bathrooms unless more water is permitted later.

ADUs have metering rules of their own. New structures generally need an operator-maintained meter for each residential user. An ADU built inside the existing house or an existing accessory structure is exempt from the submetering requirement. Other ADUs can use a permanent submeter if the jurisdiction confirms the unit cannot become a separate site. If an ADU is ever transferred by title, it needs its own operator meter.

Three Questions That Belong in the Due Diligence

Rule 23.5 frames the questions to ask about any Del Monte Forest parcel:

1. Is the parcel a designated benefited property under the Pebble Beach Company entitlement?
2. What Water Use Permit is recorded for it, and how much entitlement remains on that permit?
3. Is the planned connection or added use allowed under the State Water Board's order as it stands on the day you apply?

The district holds the records for the first two questions. The board's decision on the hearing will shape the answer to the third.

A Few Distinct Questions

Does an entitlement override the state's order? The 2009 order exempted increased Cal-Am diversions for Pebble Beach entitlements from Condition 2. Rule 23.5 protects the entitlement itself from moratoria. How either applies to a specific project is a question for the district and qualified counsel.

Can unused entitlement be sold to a neighbor? Under Rule 23.5, a separately purchased portion stays with its designated property and cannot be resold or conveyed.

Does Pure Water Monterey mean water is available for every parcel? Cal-Am's 2025 plan treats the second phase of the expansion as design supply with some uncertainty about source water and timing. That is different from water committed to a particular property.

This post is general information, not legal, tax, or financial advice. Please confirm your own parcel and project with the district and the right professionals.

If you are weighing a Pebble Beach home or lot and want to understand the water permit before you think about square footage, Scherling Properties can help you put the right questions to the district early, before you commit to a plan. Let's Connect.