Cotati City Council
Agenda Staff Report
Item type: REGULAR AGENDA (ACTION)
To: City Council
Subject: CONSIDERATION AND DIRECTION TO THE CITY’S WATER
ADVISORY COMMITTEE REPRESENTATIVE REGARDING
THE PROPOSED WATER SUPPLY AGREEMENT BETWEEN
MARIN MUNICIPAL WATER DISTRICT AND SONOMA
WATER
Date: July 8, 2025
Written by: Craig Scott, Director of Public Works/City Engineer Recommendation
It is recommended the City of Cotati City Council consider the proposed water supply agreement by and between Marin Municipal Water District and Sonoma County Water Agency and, by motion, make a recommendation to its Water Advisory Committee (WAC) representative to conditionally support the agreement, as described.
Background
The City of Cotati entered into the Restructured Agreement for Water Supply with Sonoma Water in 2006 (2006 Restructured Agreement). The 2006 Restructured Agreement created the Water Advisory Committee (WAC), which is an advisory committee to the Sonoma Water Board of Directors and is comprised of elected officials of each of the eight prime contractors that purchase water from Sonoma Water, including Cotati. Marin Municipal Water District (Marin Water) is not a party to the 2006 Restructured Agreement and has a separate water supply agreement with Sonoma County Water Agency (Sonoma Water) with a term expiring June 30, 2025.
Sonoma Water and Marin Water have prepared a draft amended and restated water supply agreement (Draft Agreement) for approval by their respective governing bodies, which proposes changes to delivery caps and to the term of the agreement; addition of a roll over provision to the take-or-pay water provision and addition of a lump sum payment for regional water resiliency projects; and removing provisions regarding a new segment of aqueduct parallel to the Petaluma Aqueduct and including reference to a potential new pipeline from North Marin Aqueduct to Nicasio and/or Soulajule Reservoirs. All other provisions of the Draft Agreement remain similar to the current existing water supply agreement.
The 2006 Restructured Agreement provides for deliveries to Marin Water pursuant to their 1996 water supply agreements, or to amendments to those agreements that have been approved by the WAC or to subsequent agreements between Sonoma Water and Marin Water that have been approved by the WAC. Therefore, the WAC will be considering approval of the Draft Agreement at a future WAC meeting, currently scheduled for August 4, 2025.
Staff are recommending the City Council provide a recommendation to its WAC representative, Councilmember Laura Sparks, regarding support for the Draft Agreement.
Analysis/Discussion
Marin Water currently obtains wholesale water supplies from Sonoma Water pursuant to the 2015 Renewal of the Third Amended Off-peak Water Supply Agreement and the Amended Agreement for the Sale of Water between the Sonoma County Water Agency and Marin Municipal Water District (2015 Renewal Agreement). The 2015 Renewal Agreement took effect July 1, 2015, with a ten-year term that expires on June 30, 2025. Exhibit A to the 2015 Renewal Agreement is the Fourth Amended Off-peak Water Supply Agreement (Off-peak Agreement), while Exhibit B is entitled Amendments to Amended Agreement for the sale of Water between Sonoma County water Agency and Marin Municipal Water District (Water Sale Agreement).
In advance of the 2015 Renewal Agreement’s expiration, Marin Water and Sonoma Water met to discuss the extension of the 2015 Renewal Agreement. The initial intent was to extend the agreement for another consecutive 10-year term, but there were several provisions in the 2015 Renewal Agreement that were mutually identified as no longer being in the future best interests of the two parties. Marin Water recently concluded a Water Supply Roadmap Project that, among other things, evaluates opportunities to maximize their storage of winter water for improved water supply resiliency. There are provisions in the 2015 Renewal Agreement that were identified as being too restrictive to allow Marin Water to be able to successfully carry out future conceptual “winter water” supply projects.
The 2015 Renewal Agreement imposes maximum transmission system delivery rates on Marin Water, in alignment with the 2006 Restructured Agreement, which would be simplified and revised by the proposed Draft Agreement. From the months of November through April, the maximum cap on deliveries to Marin Water would be increased, subject to availability and transmission capacity. The Draft Agreement also proposes to eliminate the 2015 Renewal Agreement’s mechanisms for ratcheting each year’s water availability up or down based on the amount of water delivered to Marin Water the prior year. In practice, the availability of water and transmission system capacity has served as the actual limit on Marin Water’s ability to receive Sonoma Water deliveries to the extent it would be requested by Marin Water. These operational changes would have no impact on Cotati’s priority and contractual amounts and would support Marin Water’s ability to pursue a proposed “winter water” supply project identified in their Water Supply Roadmap Project. Further, Marin Water’s maximum delivery cap of 14,300 AFY, and their 5,300 AFY minimum take-or-pay requirement remains unchanged in the Draft Agreement.
In 2023, the North Marin Water District operated portion of the aqueduct experienced a land slide emergency, initiating reduced capacity in that pipeline during the repairs. During this emergency, Marin Water was unable to receive its minimum take-or-pay allotment for the year.
To address a future scenario where Sonoma Water is unable to deliver water to Marin Water due to circumstances completely beyond their control, the Draft Agreement includes a “roll-over” provision for Marin Water to receive that water in a future fiscal year, subject to availability.
This provision is fair in the spirit of “take-or-pay” requirements and does not change the Marin Water’s 5,300 AFY minimum take-or-pay requirement.
The Draft Agreement proposes no impacts to the allocation and curtailment process that is outlined in the 2006 Restructured Agreement. Water allocation during a shortage is critically important to all Sonoma Water’s contractors, including Cotati. The Draft Agreement would uphold the current allocation and curtailment structure, consistent with the 2006 Restructured Agreement.
The Draft Agreement includes a proposed provision for Marin Water to make an additional lump sum payment in the amount totaling $12,500,000 to support regional water resiliency projects in the Russian River, with $3,500,000 of that total being dedicated to projects that would enhance Sonoma Water’s ability to deliver winter water. The 2015 Renewal Agreement’s Off-peak and Water Sale Agreements included reference to the potential need for Sonoma Water to construct a parallel pipeline roughly adjacent to the Cotati Intertie and Petaluma Aqueduct, from the Ely Pumping Plant and terminating at Kastania Reservoir. The Draft Agreement would omit any reference to the earlier approach of expanding delivery capacity in parallel with the Petaluma Aqueduct from the Ely Pumping Plant to Kastania Reservoir (also referred to as the South Transmission System Project [STSP]). Instead, the Draft Agreement acknowledges that Marin Water is investigating the potential to build a pipeline from the existing transmission system to their Nicasio or Soulajule reservoirs. This pipeline would convey “winter water” to be available to meet Marin Water’s customer needs during dry years.
In accordance with the 2006 Restructured Agreement, the cities of Rohnert Park, Cotati and Petaluma are tied to the Petaluma Aqueduct for budget and capital project purposes. In the 2006 Restructured Agreement, Petaluma Aqueduct customers, as well as North Marin customers (Contractors), are responsible for the majority of the STSP costs. Marin Water, a Surplus Water Customer, is subject to the attached agreement, as amended, except that the 2006 Restructured Agreement includes various provisions that would presumably still control. Of most importance to Petaluma Aquaduct Customers, the 2006 Restructured Agreement states that water deliveries can‘t be curtailed to Marin Water due to flow restrictions in the Petaluma Aquaduct between Ely Booster Station and the Kastania Tanks, if Marin Water funds a parallel pipeline along this segment. Historically, this segment of pipeline was approaching its capacity, which is why it is specifically identified in the 2006 Restructured Agreement as a potential bottleneck in the system.
In the Sonoma Water FY 24-25 through FY 28-29 Capital Improvement Plan, the STSP is not included as demands for water have dropped due to greater water conservation. However, the STSP, as well as a parallel aqueduct along the Russian River-Cotati Intertie, are still listed in the 2006 Restructured Agreement when the region was projecting much higher water demands. If the STSP were to be required again, Marin Water would likely need to be re-added as a potential funder via their surplus supply agreement with Sonoma Water, if it is removed from the agreement now. The need for the STSP is unlikely in the near term but may be required in the future if overall water demands in Petaluma and Marin County grow. Separately, the 2006 Restructured Agreement term will expire in 15 years, on June 30, 2040. For these reasons, it’s recommended that the language regarding the pipeline parallel to the Petaluma Aqueduct remain in Marin Water’s agreement at this time. If, or when, this project is removed from the 2006 Restructured Agreement, a similar edit should be made to Marin Water’s agreement.
The proposed term of the agreement would be 15 years, in alignment with the expiration of the term of the 2006 Restructured Agreement, of which Cotati is a signatory. The Draft Agreement includes a provision for Sonoma Water’s statement of support for Marin Water’s participation in discussions regarding the extension or renewal of the 2006 Restructured Agreement, at the time it expires. Marin Water is not a “prime contractor” under the 2006 Restructured Agreement. This provision provides for Sonoma Water to be supportive of Marin Water participating in future discussions regarding the extension or renewal of the 2006 Restructured Agreement, however participation will still be subject to approval by all parties to the 2006 Restructured Agreement.
The 2006 Restructured Agreement provides for deliveries to Marin Water pursuant to the Third Amended Off-peak Water Supply Agreement dated January 25, 1996 and the Amended Agreement For The Sale of Water Between The Sonoma County Water Agency and the Marin Municipal Water District dated January 25, 1996, or to amendments to those agreement that have been approved by the WAC, or to subsequent agreements between Sonoma Water and Marin Water that have been approved by the WAC. Therefore, the WAC will be considering approval of the Draft Agreement at a future WAC meeting, currently scheduled for August 4, 2025.
Financial Considerations
The proposal would have no negative fiscal impacts to Cotati or Cotati customers. The proposed inclusion of the lump sum payment of $12,500,000 and opportunities for Marin Water to purchase off-peak available water could reduce the overall Sonoma Water Transmission System operational cost in the future.
Environmental Issues
Pursuant to CEQA Guidelines Section 15378, the proposed action is not a “project” subject to the California Environmental Quality Act (CEQA) because it does not have a potential for resulting in either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. In the alternative, the proposed action is exempt from CEQA pursuant to CEQA Guidelines Section 15061(b)(3) because it can be seen with certainty that there is no possibility that the project may have a significant effect on the environment.