COUNCIL AGENDA REPORT
TO: Mayor and City Council
FROM: Thomas T. Watson, City Attorney
DATE: October 21, 2025
SUBJECT: Adoption of Resolution Approving Settlement Agreement, and any related supporting documents necessary to effectuate the settlement of the matter of Central Coast Water Authority et al. vs. Santa Barbara County Flood Control District et al. (Case No. 21CV0
Description:
The City Council will consider adopting a resolution approving a Settlement Agreement, and any related supporting documents necessary to effectuate the settlement of the matter of Central Coast Water Authority et al. vs. Santa Barbara County Flood Control District et al. (Case No. 21CV02432) and ratifying all prior signatures.
Environmental Notice: This action is not a project subject to the California Environmental Quality Act (CEQA) because it is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment (CEQA Guideline Section 15378(b)(5)).
RECOMMENDATION
1. Adopt a Resolution approving Settlement Agreement and any related supporting documents necessary to effectuate the settlement of the matter of Central Coast Water Authority et al. vs. Santa Barbara County Flood Control District et al. (Case No. 21CV02432) and ratifying all prior signatures; and
2. Authorizing Mayor, or designee, to execute the Settlement Agreement and any related supporting documents.
BACKGROUND:
The Central Coast Water Authority (CCWA), its eight member agencies including the City of Santa Maria ( Members), and the Santa Barbara County Flood Control and Water Conservation District (District) have reached a comprehensive settlement of the claims and issues raised in the pending lawsuit initiated by CCWA and the Members against the District in June, 2021 regarding the parties’ respective rights and obligations to the State Water Project (SWP) under the State Water Supply Contract (SWP Contract).
The parties have agreed to execute two contracts to settle the disp ute—a Settlement Agreement and an Assignment, Assumption, and Release Agreement ( Assignment Agreement). The Settlement Agreement requires the District to transfer the SWP Contract to CCWA. Contingent upon the California Department of Water Resources ( DWR) 2 approval of the transfer, the Settlement Agreement obligates CCWA and the Members to dismiss the lawsuit with prejudice and make 10 annual payments of $580,000 to the District (reimbursing the District for the investments made by County tax payors to retain the rights to SWP water during the period 1963 -1985.) The Settlement Agreement also grants the District an option to purchase up to 1,700 acre-feet of SWP water from CCWA, if CCWA elects to purchase additional water supplies from DWR in the future.
Pursuant to the Assignment Agreement, (1) the District assigns all of its rights, interests, and obligations pursuant to the SWP Contract to CCWA; (2) CCWA assumes all of the District’s rights, interests, and obligations; and (3) DWR consents to the transfer o f the SWP Contract to CCWA and releases the District from its obligations pursuant to the SWP Contract.
CCWA has been responsible for the conveyance, treatment, and delivery of SWP water pursuant to the SWP Contract since 1991. Assignment formalizes the existing circumstances, rights, and obligations of the parties. Assignment of the SWP Contract does not change the SWP Contract itself. The only change is that CCWA will be substituted for the District as the contracting party with DWR.
DISCUSSION:
The settlement of this lawsuit avoids continued litigation between public agencies and the associated costs for taxpayers and ratepayers. Settlement a voids future disputes between CCWA and the District regarding their respective rights, interests, and obligations with respect to the SWP Contract, and reimburses the District for the investments made by County tax payors to retain the rights to SWP water during the period 1963-1985. Settlement also provides a mechanism for assignment of the SWP Contract.
The assignment of the SWP Contract from the District to CCWA completes the transfer of responsibility for the SWP Contract from the District to CCWA, as initially contemplated in 1991 when CCWA became responsible for administration of the SWP Contract and all payments to the State (DWR). Assignment also:
Aligns CCWA’s decision-making authority with CCWA’s financial responsibility for SWP supplies.
Streamlines local decision -making with respect to the importation and management of SWP water supplies.
Relieves the District (and thus County tax payors) of any and all liability under the SWP Contract.
Relieves cities and other communities within Santa Barbara County who do not receive SWP water from any potential financial obligation under the SWP Contract.
3 Alternative(s)
The alternative to settlement is continued litigation which creates uncertainty on both sides and could lead to additional lawsuits as the current lawsuit does not fully address all issues between the parties as contemplated by the proposed settlement agreement and related assignment.
Fiscal Considerations
The payments associated with the settlement of this case will be made by CCWA with the City of Santa Maria paying its proportionate share along with the other member agencies which will begin upon the effectuation of the settlement and be paid annually as required.
Impact on the Community
This proposed settlement will avoid continued litigation between public agencies and the associated costs for taxpayers and ratepayers, while avoiding future disputes between CCWA and the District regarding their respective rights, interests, and obligations regarding the SWP Contract. Settlement also provides a mechanism for assignment of the SWP Contract.
ATTACHMENT(S)
1. Resolution
2. Settlement Agreement