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City Council
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: Utilities
Meeting Date: June 8, 2026
Report #:2512-5656
TITLE
PUBLIC HEARING: Adopt a Resolution Adopting the 2025 Urban Water Management Plan and a Resolution Adopting the 2025 Water Shortage Contingency Plan. CEQA Status: Exempt under Water Code Sec. 10652.
RECOMMENDATION
The Utilities Advisory Commission (UAC) and staff recommend the City Council adopt a resolution adopting the 2025 Urban Water Management Plan and a resolution adopting the 2025 Water Shortage Contingency Plan. The UAC recommends that the UAC submit Commissioner Gupta’s May 2, 2026 Companion Memo (Public Comment Letter submitted to the UAC, shown in Attachment C) to the City Council as additional information (passed 4-1-1-1 Croft no, Mauter abstain, Scharff absent).
EXECUTIVE SUMMARY
The Urban Water Management Planning Act (codified in the California Water Code (§10610- 10656 and §10608) requires urban water suppliers to submit an Urban Water Management Plan (UWMP), which includes a Water Shortage Contingency Plan (WSCP), every five years.
UWMPs must include information about water demand, water supply, demand management activities, alternative water supplies, anticipated shortages during dry periods, and contingency plans for addressing those shortages. The actions recommended in this report satisfy a regulatory compliance activity, it can be amended at a later date and adoption is not a sign of endorsement of the assumptions used to complete the required regulation. The 2025 UWMP must be adopted by City Council and submitted to the Department of Water Resources (DWR) to meet the state-required deadline of July 1, 2026.
The City’s demand for water is expected to decrease by about 5% over the next 25 years, inclusive of savings from passive and active conservation. Potable water supply from the City’s supplier, the San Francisco Public Utilities Commission (SFPUC), is projected to be adequate during normal years, but significant shortfalls are expected during droughts.
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Palo Alto, in collaboration with its partners, continues to seek to maximize water conservation to reduce the impact of dry years. When water supply shortages do occur, Palo Alto’s WSCP provides for increasingly stringent steps to reduce water use including public outreach and education, rebate programs, water use restrictions, and water allocations.
BACKGROUND
The Urban Water Management Planning Act (California Water Code, §10610- 10656 and §10608) requires an urban water supplier, providing water for municipal purposes to more than 3,000 customers or serving more than 3,000 acre-feet annually, to adopt an UWMP every five years demonstrating water supply reliability in normal, single dry, and multiple dry water years.
An UWMP must also describe the City’s current water reliability, foreseeable future needs, strategy for meeting those needs, and any challenges. The information collected from UWMPs is useful for local, regional, and statewide water planning. In order for the City, as an urban water supplier, to be eligible for any water grant or loan administered by DWR, the City must have a current UWMP on file that DWR determined addresses the requirements of the California Water Code. A current UWMP must also be maintained by the City throughout the term of any grant or loan administered by DWR. This requirement also applies to the City’s outstanding loans administered by the State Water Resources Control Board (SWRCB). As of fiscal year 2025, the City had $153.8 million in SWRCB loans outstanding, and the City is drawing up to an additional $81.2 million on a reimbursement basis to finance the Secondary Treatment Upgrades project at the Regional Water Quality Control Plant, which is still under construction. There are several other State Revolving Fund loans that the City’s Regional Water Quality Control Plan is currently paying back or will pay back including the Advanced Water Purification System, Solids Dewatering, Ultraviolet Treatment and Recycled Water Pipeline.
On May 6, 2026 the Utilities Advisory Commission (UAC) met and discussed this item1 and made the following recommendations to the City Council: to recommend that the City Council adopt a resolution adopting the 2025 UWMP, a resolution adopting the 2025 WSCP, and an Ordinance Amending Municipal Code Chapter 12.32 (Water Use Regulations) and that the UAC submit Commissioner Gupta’s May 2, 2026 Companion Memo (Public Comment letter submitted to the UAC shown in Attachment C) to the City Council as additional information2 (passed 4-1-1-1 Croft no, Mauter abstain, Scharff absent).3 Staff recommends that the City adopt the UWMP and WSCP concurrently with staff’s proposed amendments to Municipal Code section 12.32.010, Water Use Restrictions (See Staff Report 2512-5653 on Council’s agenda for June 8, 2026). The 2025 UWMP includes a description of the City’s water use restrictions ordinance, and the WSCP identifies response actions to be 1 Agenda item #4: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=19031 2 On May 5, 2026, Commission Gupta submitted a memo to the UAC, proposing seven in-context edits for inclusion in the City’s 2025 UWMP.
3 Draft Action Minutes of May 6, 2026 Regular Meeting of the Utilities Advisory Commission. 8 8
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implemented during a water shortage. These actions include enforcement of the City’s permanent water use restrictions, along with increasingly stringent water-use prohibitions for each shortage level.
ANALYSIS
The key elements of the UWMP and WSCP are summarized below.
1. Water Demand
2. Water Supply Adequacy
3. Water Conservation
4. Alternative Water Supplies
5. Water Supply Reliability
6. Water Shortage Contingency Plans
1. Water Demand
The demand projections in the City’s 2025 UWMP are based on the 2025 Water Demand and Conservation Projections (2025 Demand Study) prepared in coordination with Bay Area Water Supply & Conservation Agency (BAWSCA). BAWSCA’s technical consultant, Hazen and Sawyer, developed individual models for each BAWSCA member agency, utilizing information provided by agencies on projected population, jobs, and housing growth to project water demand through 2050. City staff worked with Hazen and Sawyer to develop and refine the underlying assumptions for Palo Alto’s demand forecasts by using sources such as the City’s Housing Element and the City’s current and planned participation in water conservation programs. More information about the inputs and methodology for the 2025 Demand Study can be found in the 2025 Regional Demand Study Report7.
The City’s baseline demand forecast reflects a 5% total decline in water demand over the 25- year forecast period, inclusive of savings from passive and active conservation. Though the forecast assumes the City meets its Regional Housing Needs Allocation (RHNA) requirement of 6,086 units by 2031, this planned residential growth is assumed to be almost entirely high- density multifamily housing developments with relatively low per-account water use.
Moreover, this growth is offset in part by passive and active water conservation savings and price-elasticity of demand. Figure 1 below shows the City’s potable water use since 1988 and a projection of water supplies through 2050.
7 2025 Regional Water Demand and Conservation Study: https://bawsca.org/water/use/2025_Demand_Study 8 8
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Figure 1: Palo Alto’s Annual Purchases from SFPUC - Actual and Forecast Table 1 shows projected population in Palo Alto based on the population assumptions for the 2025 Demand Study. Consistent with the City’s 2023-2031 Housing Element, the projections use population data from the Association of Bay Area Governments (ABAG) Plan Bay Area 2040 projections, together with the assumption that the City will meet its RHNA targets by 2031.
Under this assumption, all population growth occurs through 2031 as those units are added, and population levels remain flat after 2031.
Table 1: Population - Current and Projected
Water demand and population are described in “Section 4 – Water Demand” and “Section 2 – Service Area” of the UWMP.
2025 2030 2035 2040 2045 2050
Service Area Population 67,231 88,509 91,532 91,532 91,532 91,532 8 8
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2. Water Supply Adequacy
The City receives 100% of its potable water from the SFPUC through the Regional Water System (RWS). The City also uses some recycled water produced at the Palo Alto-operated Regional Water Quality Control Plant (RWQCP) for irrigation of the municipal golf course, a park, and some other minor applications. A system of local groundwater wells and storage provide emergency water supply service.
The SFPUC has a perpetual commitment (Supply Assurance) to deliver 184 MGD to the 24 permanent Wholesale Customers collectively. Palo Alto’s allocation, or Individual Supply Guarantee, is 16.575 MGD, or approximately 18,579 acre feet per year. In normal years, Palo Alto’s potable water demand is not expected to exceed supply as shown in Table 2.
Table 2: Palo Alto Potable Water Supply and Demand Balance - normal years
3. Water Conservation
The 2025 UWMP highlights the water conservation programs and the important role they play in the City’s water supply planning. The City partners with the Santa Clara Valley Water District (Valley Water) to offer a wide range of water conservation programs to residential and commercial customers. The City pursues innovative technologies and cost-effective programs to implement and best utilize the annual water conservation operating budget. These programs include free outdoor water audits, rebates for upgrading landscapes to drought-tolerant plants, irrigation equipment, and commercial equipment. Water conservation resources available to Palo Alto customers can be found on the City’s website9 and Valley Water’s website10. Water conservation is described in “Section 5 – Demand Management Measures” of the UWMP.
4. Recycled Water and Alternative Water Supplies
The 2025 UWMP is required to describe planned recycled water use and alternative water supply projects. The 2025 UWMP does not identify any recycled water or alternative water supply projects planned by the City. It does include descriptions of regional projects and supply planning projects by the SFPUC and BAWSCA.
9 City Website, Ways to Save https://www.paloalto.gov/Departments/Utilities/Ways-to-Save 10 Valley Water’s Website, Water Savings https://www.valleywater.org/watersavingsorg 2025 2030 2035 2040 2045 2050
Palo Alto Demand for SFPUC Water 10,431 9,783 9,677 9,634 9,635 9,680 Individual Supply Guarantee 18,579 18,579 18,579 18,579 18,579 18,579 Difference 8,148 8,796 8,902 8,945 8,944 8,899
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The City’s 2025 UWMP provides background on its recent efforts to evaluate alternative water supply options. The Northwest County Recycled Water Strategic Plan, completed in collaboration with Valley Water, identified and evaluated a number of potable and non-potable water reuse concept options using effluent from the RWQCP in Palo Alto. The City’s One Water Plan, completed in 2024, is a framework for evaluating water supply and water conservation alternative portfolios that may mitigate the impact of future water supply uncertainties such as severe multi-year drought, changes in climate, water demand, and regulations. The One Water Plan included concept options identified in the Northwest County Recycled Water Strategic Plan. Further project-specific studies and analyses will be required to assess the need for additional supplies or conservation, as well as to evaluate project feasibility, including detailed cost estimates and potential funding sources. This is described in “Section 3 – System Supplies” of the UWMP.
5. Water Supply Reliability
When preparing the 2025 UWMP, staff followed California Water Code and populated the required water supply reliability using information provided by the SFPUC. Since the City relies on the SFPUC RWS for its potable water supplies, the City’s water supply reliability mirrors that of the Wholesale RWS. During a water supply shortage, contractually agreed upon allocation methods apply in limited circumstances13. The amount of water available to San Francisco’s Retail Customers (the residential and commercial customers in the City of San Francisco) and Wholesale Customers (the 26 agencies, including Palo Alto, that purchase water from the SFPUC) will be impacted by the outcome of the Water Quality Control Plan for the San Francisco Bay/Sacramento-San Joaquin Delta Estuary (Bay-Delta Plan Amendment or Bay Delta Plan). This 2025 UWMP assumes implementation of the Bay Delta Plan and associated unimpaired flow requirements for the Tuolumne River. In August 2018, City Council voted to support the Bay Delta Plan14.
Table 3 shows Palo Alto’s 5-year Drought Assessment, the amount of water projected to be available to the City if the next five years are dry. It does not assume implementation of the Bay-Delta Plan Amendment because the start of implementation remains uncertain, and therefore reflects 100% supply for both RWS Wholesale Customers and the City. 13 The Tier 2 Drought Response Implementation Plan, which allocates the collective wholesale customers’ share of available RWS supplies among each of the 26 wholesale customers during dry years, only applies during system- wide shortages of 20% or less. Because the projected wholesale cutbacks range from 31% to 48%, the Tier 2 Plan cannot be applied. Therefore, the 2025 UWMP cutback projections are assumed to apply to each wholesale customer equally.
14 See Council meeting minutes: https://www.cityofpaloalto.org/civicax/filebank/documents/66831 8 8
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Table 3: Projected RWS Supply Available to Palo Alto for 5-year Drought Assessment (AFY) The potable water supply shortfall for Palo Alto for multiple dry years is shown below in Table
4. The Multiple Dry Year projections assume implementation of the Bay Delta Plan in 2030.
Under these conditions, Palo Altans will be asked to reduce water usage by up to 48%.
Table 4: Potable Water Cutbacks in Future Multiple Dry Years See “Section 8 – Supply and Demand Comparison Provisions” in the UWMP for more details.
Climate change was considered as part of SFPUC’s water supply reliability assessment, and as required by Water Code. The City’s 2025 UWMP includes a description of actions the SFPUC has taken to assess the effects of climate change, including its partnership with the Water Research Foundation to develop the Long-Term Vulnerability Assessment (LTVA) of the RWS17. See UWMP “Section 6 – Water Supply Reliability – SFPUC Climate Change Studies”.
The 2025 UWMP also includes descriptions of regional efforts facilitated by BAWSCA to address water supply reliability, including the development of its Long-Term Reliable Water Supply Strategy 2050 (Strategy 2050), a regional assessment of Member Agencies’ water supply needs.
See “Section 6 – Water Supply Reliability – Regional Plans to Ensure a Reliable Water Supply”.
6. Water Shortage Contingency Planning
During the most recent drought, the City was able to reduce water use by 15% in response to voluntary reduction measures and during the 2015 drought the City reduced water use by 31%.
The City’s proposed Water Shortage Contingency Plan (WSCP) includes actions to achieve water use reductions above 40% and above 50%, but the City does not have actual experience in implementing such drastic measures. With each progressive stage, enforcement, rate 17 Long Term Vulnerability Assessment: https://www.sfpuc.gov/about-us/reports/long-term-vulnerability- assessment
2030 2035 2040 2045 2050
First Year 31.1% 33.0% 35.2% 36.8% 38.4%
Second Year 42.2% 42.9% 45.1% 46.8% 48.4%
Third Year 42.2% 42.9% 45.1% 46.8% 48.4%
Fourth Year 42.2% 42.9% 45.1% 46.8% 48.4%
Fifth Year 42.2% 42.9% 45.1% 46.8% 48.4%
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strategies, and water use restrictions will be increased while putting in place mitigation measures to maintain the health of the City’s tree canopy.
Short-term emergency water needs will be met with the City’s groundwater wells and storage system. The system was designed to provide adequate fire protection following a disaster such as a major earthquake. Groundwater may also be available during drought periods although pumping restrictions may be in place, and the City’s wells are currently restricted to 1,500 AFY, 5 consecutive days of pumping, and 15 days of pumping per year.
Table 5: Summary of Proposed Water Shortage Contingency Plan Stage I Stage II Stage III Stage IV Stage V Stage VI
Target Water
Savings Up to 10% 10% -20% 20% -30% 30% - 40% 40%- 50% Above 50% Information
Outreach
and Audit
Program
Low level
outreach
Increase advertising, social media
campaigns and direct communication with
customers targeting highest users and
increasing water use auditing
Escalate
outreach
efforts and
media
campaign
with focus
on water use
prioritization
Highest
outreach
effort level
with focus
on health
and safety
Demand-Side
Management
Programs
Continuation
of existing
programs,
evaluation of
new programs
Augment programs and incentive levels as necessary to achieve reduction targets
Rate
Structures
Standard
rates already
encourage
conservation
Drought rate
structures may be
implemented to
secure needed
revenue
Water allocations or allotments may be
implemented
Water Use
Restrictions
Water use restrictions become more severe with each stage and enforcement is enacted more strongly with each stage. With each stage, efforts made to ensure tree canopy is protected as much as possible.
Recycled
Water Use
Business as
usual use
Water use restrictions require use of recycled water for specific purposes, advertise availability of recycled water for trucked delivery, use recycled water for City facilities and street trees as much as possible.
See “Section 7 – Water Shortage Contingency Plan” of the UWMP plan. 8 8
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Changes to the Draft 2025 UWMP since the May 6, 2026 UAC Meeting Since the May 6, 2026 UAC Meeting, Staff has made several formatting edits and minor revisions to the DRAFT 2025 UWMP, which include:
Revision to Table 2: Coordination with Appropriate Agencies to reflect that the Draft 2025 UWMP was sent to other agencies.
Update to the plan’s description of the City’s Green Building Ordinance. Revision to Table 21: WSCP Summary to reflect that implementation of progressive water restrictions begins in Stage 1 of a water shortage, rather than Stage 2 as reflected in Table 21 of the May 2026 UAC version.
FISCAL/RESOURCE IMPACT
Adoption of the 2025 UWMP and WSCP do not have an associated resource impact. Actions to execute this plan will require allocation of resources, especially should implementation of contingency planning be necessary.
STAKEHOLDER ENGAGEMENT
On March 31, 2026, staff presented key updates on the 2025 UWMP at the UAC meeting.
During public comment, a speaker recommended that the City of Palo Alto use alternative water supply reliability projections rather than those provided by its supplier. In response, Commissioners asked whether that would be possible and about the significance of those projections in the UWMP. The City is required to use information provided by the SFPUC, though alternative projections could potentially be explored in the future if first vetted by staff and brought to SFPUC for consideration. Staff noted that such work would need to be presented in a separate document, could not be completed within the UWMP timeline, and would require additional funding and likely consultant support. Commissioners discussed whether the City should hire a consultant or rely on staff and existing resources to evaluate alternatives to SFPUC’s design drought. Two Commissioners asked staff to consider the SFPUC Long-Term Vulnerability Assessment and Adaptation Plan and explain its relevance to the UWMP, and one Commissioner supported approaching SFPUC with alternative projections.
Commissioners also discussed several other issues related to the UWMP. Two Commissioners stated that the City’s demand forecast appears reasonable, while others asked why some agencies project increased demand and how factors such as temperature, snowmelt, and other assumptions are incorporated into forecasts. One Commissioner suggested revising the UWMP language to reflect the City’s view of SFPUC’s water supply reliability projections and design drought, while another noted that the staff report did not mention the City Council’s support 8 8
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for the Bay Delta Plan19. A Commissioner also noted that UWMPs should be viewed not only as a regulatory requirement but also as an opportunity to improve processes and methodologies each cycle and to support regional coordination.
On May 6, 2026, staff recommended that the Utilities Advisory Commission (UAC) recommend that the City Council adopt resolutions approving the 2025 Urban Water Management Plan (UWMP) and the 2025 Water Shortage Contingency Plan, and adopt an ordinance amending Chapter 12.32 of the Municipal Code (Water Use Regulations). Public comments raised concerns regarding the SFPUC’s water supply reliability analysis, inflated demand projections for the Regional Water System, and ratepayer affordability. Commissioners asked several clarifying questions. One commissioner asked whether the projected dry-year cutbacks were based on the City’s Individual Supply Guarantee (ISG). Staff explained that ISGs do not apply during water shortage conditions and that projected dry-year cutbacks are measured relative to projected demand. One commissioner expressed an interest in moving some of the water shortage response actions - such as requiring operators of hotels and motels to provide guests with the option of choosing not to have towels and linens laundered daily - to earlier water shortage stages in the WSCP.
One commissioner requested additional information from the SFPUC regarding its design drought and water supply reliability analysis. Specifically, the commissioner requested information on estimated water storage levels for each year of the design drought and whether the analysis prepared by the Yosemite Rivers Alliance, referenced in public comment letters, was accurate. Staff responded that it would work through BAWSCA and the City’s BAWSCA representative, Vice Mayor Stone, to request information from the SFPUC. A commissioner also asked whether the City’s 2025 UWMP would still meet state requirements if it included the language proposed in Commissioner Gupta’s memo (Attachment C). Staff explained that the UWMP would still contain all required components but that the proposed language should first be reviewed and vetted by staff. Commissioners also noted shared concerns regarding the SFPUC and BAWSCA and asked whether there is another mechanism, separate from the UWMP, to communicate those concerns effectively. Staff recommended working with the City’s BAWSCA Representative Vice Mayor Stone to build on collaborative relationships through BAWSCA. One commissioner suggested forming an ad hoc committee to address the UAC’s concerns regarding the SFPUC and its design drought analysis and to explore options for coordination, including working with Vice Mayor Stone. The Chair recommended adding this topic to the UAC’s annual work plan.
Chair Mauter moved the staff recommendation and Commissioner Gupta moved a substitute motion recommending that the UAC direct staff to incorporate, prior to transmittal of the 2025 UWMP to the City Council, the seven context-specific edits set forth in Commissioner Gupta’s 19 See Section 1, page 12 of the 2025 Urban Water Management Plan https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2026/june/draft-city-of-palo-alto-urban-water-management-plan.pdf 8 8
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companion memo (see Attachment C). The substitute motion failed on a 2-4-1 vote (Phillips, Croft, Mauter, Metz no, Scharff absent. One commissioner stated that they did not agree with each of the edits in the memo and that the UAC would need to discuss each proposed edit.
Another commissioner noted that UWMP is a regulatory requirement and so it is not the appropriate place to address the UAC’s concerns. Another commissioner asked what document could be more important than the UWMP with respect to water supply and stated that they could not support the UWMP as recommended by staff. Commissioner Gupta then moved a substitute motion recommending that the City Council adopt the proposed resolutions and ordinance, and that the UAC submit Commissioner Gupta’s May 2, 2026 Companion Memo (Public Comment Letter submitted to the UAC) to the City Council as additional information.
Commissioner Gupta said that he believes the memo reflects the UAC’s discussion and commentary on the topic and that it provides City Council with options for consideration. That motion passed on a 4-1-1-1 vote (Croft no, Mauter abstain, Scharff absent). The Chair clarified that under the motion the memo is not from the UAC to City Council but rather a memo from Commissioner Gupta to City Council for their consideration. The UAC appointed Commission Gupta to represent the views of the UAC at the June 8, 2026 City Council meeting.
ENVIRONMENTAL REVIEW
Council’s adoption of the 2025 Urban Water Management Plan and the 2025 Water Shortage Contingency Plan is not subject to the California Environmental Quality Act (CEQA) under Water Code Section 10652, and no environmental assessment is necessary.
ATTACHMENTS/LINKS
LINK: Draft 2025 Urban Water Management Plan and 2025 Water Shortage Contingency Plan21 Attachment A: Resolution Adopting the 2025 Urban Water Management Plan Attachment B: Resolution Adopting the 2025 Water Shortage Contingency Plan Attachment C: Commissioner Gupta’s Proposed Edits to the Palo Alto UWMP APPROVED BY:
Alan Kurotori, Director of Utilities
Staff: Adriana Artola, Senior Resources Planner
21 Draft 2025 Urban Water Management Plan and 2025 Water Shortage Contingency Plan https://www.paloalto.gov/files/assets/public/v/1/agendas-minutes-reports/agendas-minutes/city-council- agendas-minutes/2026/june/draft-city-of-palo-alto-urban-water-management-plan.pdf