STAFF REPORT
City of Lancaster
CC 10
8/26/2025
TN
Date: August 26, 2025
To: Mayor Parris and City Council Members
From: Patti Garibay, Director - Community Development
Subject: Approval of the Water Rights Transfer Agreement and Water Rights Transfer Option Agreement with Tivoli Investments, LLC.
Recommendations:
1. Approve the Water Rights Transfer Agreement between the City of Lancaster and Tivoli Investments, LLC. (Tivoli Investments) for the purchase of 500-Acre Feet of Permanent Water Rights.
2. Approve the Water Rights Transfer Option Agreement between the City of Lancaster and Tivoli Investments, LLC. for the Option to Purchase an Additional 500-Acre Feet of Permanent Water Rights.
3. Authorize the City Manager, or his designees, to execute all documents and make any non- substantive changes necessary to complete the transaction.
G.C. Section 84308: No
Fiscal Impact:
$5,000,000 is available in City account 10119000.8300 for the one-time payment for 500-acre feet of permanent water rights. $262,500 is available in City account 10119000.5809 to cover the first- year payment for the option to purchase an additional 500-acre feet of permanent water.
Subsequent payments for the option to purchase agreement will be covered through City 10119000.8300.
Background:
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Development in Lancaster continues to grow steadily, with several large industrial developments on the west side of town, and significant hydrogen-producing projects on the east side, including the landmark Element project under development. Staff is also working on a Westside Annexation, which will add seven square miles to the City’s boundaries. The Annexation project will add additional opportunities for industrial and commercial development in the City.
The City has an opportunity to purchase 500 acre-feet of permanent water rights from Tivoli Investments, along with an option to acquire an additional 500-acre-feet, to help support current and future development projects within the City.
A fair market analysis conducted by Merriman Hurst & Associates, Inc. (Merriman), a reputable water appraiser with expertise in the Antelope Valley’s water basins, determined that $10,000 per acre-foot represents a reasonable value for the permanent water rights offered by Tivoli Investments. Merriman also concluded that a fair market lease rate for a temporary transfer of all or part of the additional 500 acre-feet is $509 per acre-foot annually, based on recent comparable market data.
With Council approval, staff will work with Tivoli Investments to submit the water transfer application for 500-acre feet of permanent water rights and get approval for the transaction through the Antelope Valley Water Master.
The proposed acquisition of permanent and optional water rights from Tivoli Investments represents a strategic investment in Lancaster’s short-term water security and development capacity. Securing these rights will ensure the City is well-positioned to support ongoing and future growth, particularly as demand increases across residential, industrial, and renewable energy sectors.
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Attachments:
Water Rights Transfer Agreement
Option Agreement
Merriman Water Appraisal
AV Watermaster Transfer Request Form