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overlying right and is distributed to the appropriators) or transfer it. He
                              disagreed with Markman’s conclusion, saying the adjudication does not
                              create a gray area where an overlyer forgoes production and that is still
                              considered an unused overlying water right. Once a permanent transfer
                              is  completed,  the  accounting  is  simple  –  the  overlyer  forgoes  their
                              production and at that point, it becomes an appropriative right. It is still
                              tracked as part of the safe yield, he continued.

                              Chair  Vela  pointed  out  that  the  Rules  and  Regulations  Subsection  B
                              reads that when an overlying party receives water service, the overlying
                              party  shall  forbear  the  use  of  that  volume.  This  ties  into  Resolution
                              2017-02,  which  approves  the  transfer  of  overlying  water  rights.  He
                              believes this indicates the transfer occurring when the water service is
                              provided to those specific parcels. The letters from overlyers also state
                              that the transfer is for the specific parcels, he added.

                              Member  Zoba  noted  that  this  verbiage  dates  back  to  the  original
                              transfers of Sunny Cal parcels in 2005 or 2006. Now there is a point
                              where an overlyer indicating to the Watermaster that they will forgo this
                              water prior to the actual service taking place – an accelerated transfer.
                              This fits more cleanly into SB 610 and SB 21 to guarantee a 20-year
                              supply  so  as  development  occurs,  there  is  not  a  last  minute  wait  to
                              determine if there is water available when a meter goes in and a house
                              is built, Zoba said. There are policies in place to assure there is water
                              available for a development long before the building permit is actually
                              issued,  he  said,  and  when  entering  a  development  agreement,  it  is
                              necessary  to  know  whether  there  is  water  supply.  Zoba  stated  he
                              believes it is clear when the transfer takes place.

                              Chair Vela noted that the water is there and the conditions in SB 610
                              would be met, but the transfer itself is not perfected until those parcels
                              actually receive service. Mr. Jaggers pointed to Rules and Regulations
                              Section 7.2 and 7.3, and posited that the Watermaster should formalize
                              a  clear  transfer  policy.  Zoba  disagreed;  suggesting  the  accounting
                              seems straightforward.

                              Member Jaggers noted the policy to account for transfers of water topic
                              has been on the agenda as a future item for some time (item VIII e),
                              but has not yet been addressed and the language in the draft report is
                              setting a precedent. Jaggers said he does not feel that this discussion
                              has  been  finalized  and  he  recommended  modification  of  report  item
                              3.4.2 to identify what the transfers were, but to strike out some of the
                              language about when it is available for use. He indicated that item VIIIe
                              should be addressed before appearing in writing in an annual report.

                              Counsel  Markman  pointed  out  that  there  are  thousands  of  entitled
                              houses on hold since 2008 for which the agencies may have to meet
                              water  demands.  The  purpose  of  a  conversion  as  indicated  in  the

               BEAUMONT BASIN WATERMASTER COMMITTEE - MINUTES 2019-03-06                          PAGE 5 OF 8

                                        Beaumont Basin Watermaster - March 27, 2019 - Page 8 of 58
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