Agenda Item No: N.8
AGENDA REPORT
DATE: April 7, 2026
TO: Mayor and Council
FROM: David Gassaway, City Manager
SUBJECT: Resolution 2026-50 PW Pre-Authorization for a One-Time Water Transfer for the 2026 State Water Project with Solano County Water Agency
Authorizing the City Manager to Sign a Letter of Understanding with the Solano County Water Agency for a One -Time Transfer of up to 2,000 Acre-Feet of Fairfield 202 6 State Water Project Water Supplies with Another State Water Contractor
Funding Source: N/A
Contact: Michael J. Hether, (707) 428-7493
RECOMMENDED ACTION
Adopt resolution.
STATEMENT OF ISSUE
The City Council approval would authorize the city manager to sign a standard form Letter of Understanding (LOU) on a future date. This authorization would be comparable to Resolution No. 2025-54, which was signed on April 15, 2025, between the City of Fairfield and the Solano County Water Agency (SCWA). A future LOU would contemplate a one-time transfer of up to 2,000 acre- feet (AF) of State Water Project water supplies between SCWA and a potential buyer. A one-time transfer would only occur if the transaction were conducted before the San Luis Reservoir spills and if the remainder of the City’s water supplies were adequate.
DISCUSSION
The City of Fairfield relies on two surface water sources : Lake Berryessa and the Delta. Water from Lake Berryessa, also referred to as the Solano Project (SP), is derived from the Upper Putah Creek watershed and captured by Monticello Dam to form Lake Berryessa. Water from the Delta, also referred to as State Water Project (SWP), is derived from the Northern Sacramento River Valley watershed and captured by Oroville Dam to form Lake Oroville. The one -time transfer under consideration preserves all SP water supply entitlements totaling 27,000 AF and is confined to SWP water supply entitlements.
Contracts for water supply are administered by SCWA, which acts as the wholesaler of raw water for both SP and SWP. SWP water supplies are delivered to the city t hrough the North Bay Aqueduct (NBA), which is a component of the SWP. The agreement to receive SWP water supplied through the NBA into Solano County is held by the State and SCWA. The City has a member unit contract with SCWA to receive SWP water supplies, which are generally categorized as SWP allocations and carryover water supplies.
SWP allocations fluctuate from year to year and are based on hydrologic conditions in the Delta and storage levels within Lake Oroville. Carryover water supplies are derived from unused Table A quantities but cannot exceed half of the full Table A entitlement, which is 14,678 AF. As of December 2025, the City’s carryover exceeded 4,000 AF. Carryover water is stored in San Luis Reservoir and the carryover amounts reset to zero when the San Luis Reservoir spills, which last occurred in March 2023.
In 2021, SCWA developed a water exchange and transfer policy (see Attachment 4) in conjunction with Solano County cities. The purpose of this policy was to formalize how SCWA had conducted water transfers and exchanges while protecting Solano County’s primary water sources. The central theme of the policy gives Solano County cities the first right of refusal for any transfers or exchanges before seeking buyers located outside the county. Similarly, to participate in a water transfer or exchange, all Solano County cities who receive SWP water supplies must unanimously agree to participate in the transaction.
In July 2025, the City of Fairfield participated in a one-time water transfer which resulted in the sale of 2,000 AF at rate of $250 per AF amounting to $ 500,000. While there currently is no transaction being proposed, advance approval would expedite a potential transaction given that the San Luis Reservoir may spill in the coming months, which would result in the City’s carryover going from 4,079 AF to zero. Prompt action is necessary to ensure successful completion of water transfers and sales transactions between buyers and sellers.
If the opportunity presents itself, pre-authorization of an LOU would allow the City to participate in another transaction through SCWA. SCWA will then be empowered to seek out potential buyers of excess water and when a buyer is confirmed, SCWA as the contract administrat or will execute an agreement and seek approval from the Department of Water Resources (DWR). Upon approval by DWR, SCWA will conduct the water transfer to the buyer in accordance with their agreement. A minimum rate of $250 per AF would be used as the ba seline for a potential one- time transfer, however, the market could result in a sale of upwards of $450 per AF.
If the San Luis Reservoir does not spill, the City of Fairfield has adequate water supplies available for the remainder of 2026 and is well positioned to conduct a one-time transfer in an amount not to exceed 2,000 AF. If San Luis Reservoir spills before a one-time transfer can be completed, then an LOU would no longer be required, and the City will not follow through on a one -time water transfer for the 2026 water year.
FINANCIAL IMPACT
The City’s Water Enterprise Fund could receive upwards of $450/AF in revenue if pre-approval to sign an L OU were approved, and SCWA were able to execute the proposed one -time water transfer.
PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
N/A
ALTERNATIVE ACTION
The council may choose not to authorize the city manager to sign the LOU. However, doing so will forgo receiving revenue that would otherwise be lost if the San Luis Reservoir spills in the upcoming months.
COORDINATED WITH
N/A
STAFF CONTACT
Bryan Heinzelman
(707) 434-6157
[email protected]
ATTACHMENTS
Attachment 2: Proposed Resolution
Attachment 3: Standard Form of Letter of Understanding (Dated September 11, 2024) Attachment 4: Solano County Water Agency Transfer and Exchange Policy