In Pebble Beach, Water Can Come With the Lot. What Happens If the Moratorium Lifts?

"I own a vacant lot in Monterey," one property owner wrote to the State Water Resources Control Board this year. "The [order is] impacting my ability to build a house. Please act as soon as possible."

That letter describes the standard Monterey Peninsula problem. Since 2009, a state cease-and-desist order has kept California American Water from setting new meters, and that has been a significant obstacle to building housing. In the Del Monte Forest, some parcels have worked under different rules for decades. Water can be attached to the land itself as a recorded property right that the moratorium cannot touch. Buyers comparing two Pebble Beach lots at similar prices may be comparing a parcel that can be built on with one that can't, and the listing photos won't show which is which.

Start with the parcel's water use permit

The Monterey Peninsula Water Management District's Rule 23.5 covers water entitlements held by Pebble Beach Company, J. Lohr Properties for Macomber Estates, and the Hester Hyde Griffin Trust. Each water use permit issued under the rule grants "a vested property interest" in a set amount of potable water per year, measured in acre-feet and delivered through Cal-Am's system to designated "Benefited Properties." That entitlement cannot be "terminated or diminished by reason of any water emergency, water moratorium or other curtailment on the setting of meters."

Each permit has to name three things: the type and location of the water use, the number of connections planned, and the amount of entitlement "dedicated to, conveyed with, or separately conveyed to" the property. An owner can amend the permit to raise use only up to the amount the permit already specifies. The District adds that its Rule 23 requires a water permit application for any property that proposes to expand or modify water use, including new construction and remodels.

So the useful question in a Pebble Beach purchase is narrower than "does this property have water." Before you commit to a lot or plan an addition, get these in hand:

• The MPWMD water use permit for that specific parcel, if one exists
• The entitlement amount the permit assigns to the parcel
• How much of that amount the current fixtures and connections already use
• Whether the remodel or build you have in mind fits inside what's left

A house that already uses most of its assigned entitlement has less room for a guest wing than a house with permitted capacity to spare. Two neighboring homes can look the same on a tour and differ sharply on this one point.

Why the Del Monte Forest has its own water

These entitlements trace back to golf. Under the CAWD/PBCSD Reclamation Project, the Carmel Area Wastewater District, the Pebble Beach Community Services District, the MPWMD and Pebble Beach Company built a system that delivers treated wastewater to irrigate golf courses and open space in Pebble Beach. That frees up potable water those areas used to consume.

Homeowners helped pay for it. The district reports that the roughly $13 million construction cost of the Forest Lake Reservoir work was financed through sales of Pebble Beach Company water entitlements. The later expansion was also funded by selling Pebble Beach Company entitlements to residential owners within Pebble Beach, and about $26 million had been raised through those sales and interest as of June 30, 2009. The same page lists a price of $250,000 per acre-foot, "subject to change." The page carries no date, and the figures around it are from 2009. Treat it as a historical reference and confirm current pricing directly with Pebble Beach Company.

The structure explains why the right holds up so well. Residents of the Del Monte Forest bought potable water that golf courses gave up when they switched to recycled water. The total pool is capped at 380 acre-feet, and no single Benefited Property can use more than the entitlement allocated to it.

How much of the pool remained in August 2026

The MPWMD publishes a monthly entitlement report. The most recent one, covering August 2026, appeared in the District's September 28, 2026 board packet.

As of August 2026, the project pool still had more than 241 acre-feet unused. Macomber Estates had used its full allocation, and the Griffin Trust had a fraction of an acre-foot left. The report lists a change of 0.130 acre-feet on the Del Monte Forest Benefited Properties line for August. A footnote in the report says increases in the Benefited Properties entitlement reduce Pebble Beach Company's. The Pebble Beach Co. row doesn't reconcile exactly. Subtracting its demand from its entitlement gives a smaller number than the remaining figure shown. Anyone pricing a deal around that balance should ask the District to explain the gap.

For scale, District staff issued 55 water permits that August. Seven used water entitlements from holders such as Pebble Beach Company, Malpaso Water and Sand City. Six drew on the Pure Water Monterey allocation, and four used Rule 24-3-A, which allows a second bathroom in an existing single-bathroom home.

The hearing that could shrink the gap

An entitlement is worth so much partly because the rest of the Peninsula has gone without new meters. That condition is now under formal review.

In October 2025, the MPWMD asked the State Water Board to modify the Cal-Am order. The application proposes lifting Condition 2, which bars Cal-Am from diverting Carmel River water for new service connections or for increased use at existing addresses resulting from a change in zoning or use. It would also let the Board reinstate Condition 2 if certain supply and demand triggers are met. Written rebuttals were due September 18, 2026. Public comment and policy statements are set for November 5, and closing briefs are due November 10.

The supply picture has changed since the order was issued. The MPWMD says the Pure Water Monterey expansion was completed in October 2025 and now provides 60% of the Peninsula's drinking water. In a September 3, 2026 opinion column, Monterey County Weekly editor Sara Rubin wrote that Cal-Am has stayed within its legal limit for four years. She also wrote that most of the comment letters sent to the State Water Board support allowing new meters. Melodie Chrislock of Public Water Now made the case for lifting the ban in an August 18, 2026 guest commentary in the Monterey Herald.

Cal-Am's position moved during the summer. In testimony filed August 20, Senior Manager David Pezzini wrote that the company "does not object to a temporary suspension of the moratorium." He asked that the suspension run only until July 1, 2030, on the condition that the desalination plant is online, and the company says the plant is on track to operate by the end of 2029. MPWMD General Manager Dave Stoldt has described the change as reversible:

"We're fine on continued quarterly and annual reporting, and reinstating the [cease-and-desist order] if we can't handle the prosperity. We've got to move this book off the fiction shelf to the reference shelf. Let's actually look at what's happening."

The Board hasn't ruled, and no one can say how it will. If Condition 2 is lifted, a parcel elsewhere on the Peninsula could get a new meter without a private entitlement. In that case, the Pebble Beach advantage would rest less on the moratorium and more on the permit's guaranteed volume and its vested legal status.

What stays the same under either outcome

Some features of a Pebble Beach entitlement won't change, whatever the Board decides. Under Rule 23.5, once a connection is made, its user has no "preferential access to water over any other Water User" of the Cal-Am system. The permit doesn't limit the MPWMD's power to curtail water use during a drought or shortage emergency. Customary capacity fees, user fees and surcharges still apply.

The District's own proposal also makes any lifting reversible, so a moratorium could come back if supply and demand triggers are met. A recorded entitlement is "not subject to Revocation or cancellation" except in narrow cases the rule spells out. If the order is reinstated in a future dry cycle, owners who hold entitlements would be back in the position they've been in since the reclamation project.

So the hearing could change how much an entitlement adds to a parcel's value, but the entitlement keeps the same legal standing. Neither the entitlement nor the hearing changes the need to read the parcel's own water use permit before you write an offer.

A few questions that come up

Does every Pebble Beach property have an entitlement? No. Rule 23.5 applies only to designated Benefited Properties, and each permit states its own amount. Check the specific parcel.

Can a home without an entitlement still add a bathroom? In some cases. Rule 24-3-A allows a second bathroom in an existing single-bathroom home, and four permits were issued under it in August 2026. Larger projects need their own review by the District.

When will the State Water Board decide? No decision date has been announced. Public comment is November 5, 2026, and closing briefs are due November 10.

If you're weighing a Del Monte Forest lot or a remodel-ready home, Ben Ottmar can help you get the parcel's water use permit in hand early and read what it allows before price talks begin. Get in touch, and we'll start with the permit.