City Council Agenda Report
Meeting Date: May 20, 2025
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Senior Management Analyst
Subject
Water Rights Lease Agreements with Liberty Utilities Corporation, the City of Compton and South Montebello Irrigation District
Recommendation
A. Approve and authorize the City Administrator to execute a Water Rights License and Agreement with Liberty Utilities Corporation, in substantially the same form as submitted, for a lease of 2,000 acre-feet of the City’s Allowed Pumping Allocation for Fiscal Year 2024-25 and 1,000 acre-feet per year of the City’s Allowed Pumping Allocation for Fiscal Years 2025-26 and 2026-27, for a total revenue amount of $460,000;
B. Approve and authorize the City Administrator to execute a Water Rights License and Agreement with the City of Compton, in substantially the same form as submitted, for a lease of 1,500 acre-feet per year of the City’s Allowed Pumping Allocation for Fiscal Year 2025-26, Fiscal Year 2026-27, and Fiscal Year 2027-28, for a total revenue amount of $720,000; and C. Approve and authorize the City Administrator to execute a Water Rights License and Agreement with South Montebello Irrigation District, in substantially the same form as submitted, for a lease of 500 acre-feet per year of the City’s Allowed Pumping Allocation for Fiscal Year 2026-27 and Fiscal Year 2027-28, for a total revenue amount of $130,000.
Background
The City of Vernon is situated above the Central Basin and is a participant in the Judgment issued on October 11, 1965, in Los Angeles County Superior Court Case No. 786656, titled “Central and West Basin Water Replenishment District v. Charles E. Adams, et al.” As a participant in this Judgment, the City has been granted an annual Allowed Pumping Allocation (APA) of 7,539 acrefeet, with these water rights being held in perpetuity.
The Judgment has undergone three amendments to date. The third amendment, enacted in 2013, introduced provisions for water storage and carryover. The revised Judgment appointed the Water Replenishment District of Southern California (WRD) as the Watermaster, responsible for managing and enforcing the Judgment’s terms. The carryover provisions allow the parties involved to transfer a portion of their unused water rights into the subsequent Fiscal Year (FY).
Furthermore, it is common practice for parties to lease, buy, sell, and trade any unused water rights.
On July 31, 2019, Assembly Bill 756 (AB756) received approval from the Governor. This legislation empowered the State Water Resources Control Board (State Water Board) to mandate public water systems to monitor for perfloroalkyl and polyfluoroalkyl substances (PFAS), identified as emerging contaminants. In response, the State Water Board issued a series of monitoring directives to public water systems. Consequently, many water systems in the region had to take wells offline until appropriate treatment solutions could be implemented. This situation resulted in an increase in imported water purchases and a decrease in the amount of water extracted from the basin. Additionally, the PFAS concerns complicated the leasing of water rights.
Due to the effects of PFAS and the loss of Farmer John, which accounted for twenty percent of the total water demand, the Vernon Public Utilities (VPU) carryover account has reached its maximum capacity of 4,523 acre-feet. Currently, VPU’s water demand stands at approximately 4,700 acre-feet, which is 2,839 acre-feet below VPU’s annual APA. As a result, staff expects a continuous balance to accumulate in the carryover account. To address the potential revenue loss from unused rights, staff recommends approval of the following water rights leases:
Fiscal Year 2024-25:
- 2,000 acre-feet to Liberty Utilities Corporation at $100 per acre-foot, for a total revenue amount of $200,000.
Fiscal Year 2025-26:
- 1,500 acre-feet to the City of Compton at $160 per acre-foot, for a total revenue amount of $240,000.
- 1,000 acre-feet to Liberty Utilities Corporation at $130 per acre-foot, for a total revenue amount of $130,000.
Fiscal Year 2026-27:
- 1,500 acre-feet to the City of Compton at $160 per acre-foot, for a total revenue amount of $240,000.
- 500 acre-feet to South Montebello Irrigation District at $130 per acre-foot, for a total revenue amount of $65,000.
- 1,000 acre-feet to Liberty Utilities Corporation at $130 per acre-foot, for a total revenue amount of $130,000.
Fiscal Year 2027-28:
- 1,500 acre-feet to the City of Compton at $160 per acre-foot, for a total revenue of $240,000. - 500 acre-feet to South Montebello Irrigation District at $130 per acre-foot, for a total revenue amount of $65,000.
The proposed agreements have been reviewed and approved as to form by the City Attorney’s Office.
Fiscal Impact
The fiscal impact from the total water revenue rights will not exceed $1,310,000 and will be credited to the Water Fund, Water Rights Lease Revenue, Account No. 058-430-700-450300 for the current fiscal year and subsequent fiscal years.
Attachments
1. Water Rights License and Agreement with Liberty Utilities Corporation for FY 2024-25
2. Water Rights License and Agreement with Liberty Utilities Corporation for FY 2025-26
3. Water Rights License and Agreement with Liberty Utilities Corporation for FY 2026-27
4. Water Rights License and Agreement with the City of Compton for FYs 2025-26 through FY 2027-28
5. Water Rights License and Agreement with South Montebello Irrigation District for FY 2026-27
6. Water Rights License and Agreement with South Montebello Irrigation District for FY 2027-28