FOR THE COUNCIL MEETING OF AUGUST 15, 2023
COUNCIL AGENDA REPORT
TO: City Council
FROM: City Manager
Prepared by: Director of Utilities
SUBJECT: Surplus Water Transfer Program for 2023 with the Central Coast Water Authority
Description:
The City Council will consider authorizing participation in the Surplus Water Transfer Program for 2023 with the Central Coast Water Authority (“CCWA”).
Environmental Notice: The project will use existing facilities; therefore, qualifies for Categorical Exemption pursuant to Section 15301 – Class 1 and no environmental review is required.
RECOMMENDATION:
Adopt a Resolution authorizing participation in the Surplus Water Transfer Program fo r 2023 with the Central Coast Water Authority (“CCWA”).
BACKGROUND:
CCWA was created by the member agencies in 1991 for the development, financing, construction, operation, and maintenance of local facilities required for the delivery of State Water. The member agencies to CCWA (also referred to as participants) are the City of Buellton, Carpinteria Valley Water District, City of Guadalupe, Goleta Water District, Montecito Water District, City of Santa Barbara, City of Santa Maria, and the Santa Ynez River Water Conservation District-Improvement District #1.
The City of Santa Maria (“City”) has been receiving water from the State Water Project (“State Water”) through CCWA since 1997 and has imported over 215,000 acre -feet (“AF”) of water since that time. State Water is blended with local groundwat er to provide a higher quality blend of water to the residents and businesses in Santa Maria to assist in meeting discharge requirements at the Wastewater Treatment Plant, and to augment total water supplies available to the City.
Persistent drought condi tions intermixed with excessive precipitation , as well as operational constraints placed on the State Water Project, have reduced State Water reliability. In the previous three years, the State Water allocation was 5 percent, 5 percent, and 15 percent, res pectively, while this year (2023), the State Water allocation is 100 percent. This inconsistency requires the City to explore options to augment water supplies during dry years and consider options to prepare for dry years during wet years. 2 To address preparing for dry years during wet years , at a regular meeting on July 27, 2023, CCWA adopted a Resolution creating the Surplus Water Transfer Program (“Program”) and the template for the Central Coast Water Authority Surplus Water Transfer Program Participation Agreement (Attachment “A”). The Program allows CCWA members to participate if they have surplus water in a given year that they would like to exchange or transfer (sale).
DISCUSSION:
This year (2023), the City of Santa Maria has over 20,000 AF of State Water available for delivery from CCWA (Attachment “B”). As part of the Stipulation to resolve portions of the Santa Maria Groundwater Litigation, the City is required to import 10,000 AF of State Water in years when it is available. This will leave the City with a balance of approximately 10,000 AF of surplus State Water at the end of the calendar year. That surplus water will be in San Luis Reservoir and subject to “spill” if that volume is needed by the State Water Project for use in next year’s State Water allocation. As a CCWA member, the City may participate in the Program as a means to either exchange or transfer the surplus water.
CCWA has engaged a consultant that is actively pursuing parties throughout the State of California that may be interested in surplus State Water. The terms of an exchange are bound by the State Water Contract inasmuch as the exchange ratio is set at two-to-one.
This means that for every two AF the City may provide to a willing recipient, that recipient is required to return to the City one AF over a set term (often ten years). The exchange would allow the City to provide surplus water it does not currently need to another agency that would, in turn, return half that amount in the future when the City may need it, su ch as years with low State Water allocation. The terms of a transfer (sale) are not bound by the State Water Contract. The value of an AF of water is market driven. In years of limited supply, the value is higher , and in years of surplus supply, the value is lower. With the State Water allocation this year at 100 percent, there is a significant surplus of State Water statewide; as such, the prices being offered are low ($100 per AF).
The agreements between parties for either an exchange or transfer are frequently time- sensitive and require commitment in a short time period. To address this , City Council may designate an authorized representative in accordance with the terms of the Program and provide minimum parameters regarding a future exchange or transfer agreement. To that end, it is recommended the City Council authorize the Director of Utilities as the City’s authorized representative with the following parameters: to exchange or transfer up to 10,000 AF of surplus State Water at an exchange rate of two-to-one and/or a transfer price of not less than $125 per AF.
Alternative(s)
1. The City Council may elect not to authorize the City’s participation in the Program.
This will eliminate the City’s opportunity to potentially receive the benefit of either the return of water to the City in a future dry year or the increase in revenue to offset rates from a transfer.
3 2. The City Council may elect not to participate in the Program and direct City Staff to independently pursue exchange or transfer opportunities for surplus State Water statewide. The exchange or transfer will require approval by multiple entities, including the State Department of Water Resources, CCWA, and the Santa Barabara County Flood Co ntrol and Water Conservation District. The Program authorized by CCWA will address all those entities, as well as coordination between all member agencies within CCWA.
Staff recommends the City authorize the Program with CCWA and designate the Director of Utilities as the City’s authorized representative to work within the parameters described above.
Fiscal Considerations
Costs associated with an exchange will be minor and will be paid to CCWA from the Water Enterprise Fund. Revenues received from a trans fer will be credited to the Water Enterprise Fund.
Impact to the Community
Participation in the Program may provide opportunities for the community to benefit from surplus State Water available this year by either providing water during years of non - surplus or providing additional revenue to the Water Enterprise Fund.
Other Agency Review
Approval of an exchange or transfer through the Program will require approval of the State Department of Water Resources, the recipient agency, CCWA, and the Santa Barbar a County Flood Control and Water Conservation District.
ATTACHMENTS
Attachment “A” – CCWA Surplus Water Transfer Program_2023-08-15 Attachment “B” – State Water Availability_2023-08-15