Montecito Water District Considers Sale of Partial State Water Contract Interests
At their monthly meeting on Tuesday, September 29, 2026, Montecito Water District’s Board of Directors will consider entering into a non-binding Letter of Intent concerning the future sale of a portion of the District’s State Water contract interests. The potential purchase by Solstra Communities California LLC (Solstra) would be for the planned Solomon Hills development of up to 4,000 homes in northern Santa Barbara County. If the Board approves the Letter of Intent on Tuesday, next steps would include preparing a purchase agreement, which is anticipated to take approximately six months. Even with an agreement in place, the sale would not be finalized until the development receives all final approvals, which could take several years.
If successful, the transaction will divest the District of approximately 40% of its interest in California's State Water Project. As a participant in State Water since 1997, the District pays annually for an allocation of water and use of the conveyance infrastructure, irrespective of availability. Over the past decade, the costs of State Water have increased while reliability has decreased. This partial sale would provide the District with an upfront payment for the portion permanently transferred and substantially reduce its future operational and capital infrastructure costs related to State Water. The District will retain more than half of its original State Water Project entitlement, and there are no projected impacts to the reliability of its water supplies.
"We have been building this plan for years," said Floyd Wicks, who is serving his tenth year on the board. "Because of our team's collaboration with Santa Barbara, we now have a far more reliable water supply from the Pacific Ocean. As a result, we are able to divest a portion of our State Water Project assets to other communities that don't have access to the ocean. Our board and staff planned very strategically and the District has led the way to a more drought-proof water supply for our Montecito and Summerland customers."
The proposed sale terms involve a permanent transfer of 1,400 acre feet of State Water Contract interests inclusive of proportional conveyance and treatment. The District would retain interests including 1,900 acre feet of its annual allocation, and the capacity to convey, store, and transfer water, while gaining financial resources for high-priority initiatives such as strengthening local water supply reliability and addressing aging infrastructure. Although 1,400 acre feet is the contracted amount for the sale, the actual volume of water the District foregoes could be far less given State projections for future allocations.
Montecito Water District Projected Water Use by Source
Fiscal Year July 1, 2026 to June 30, 2027.
Since 2022, Montecito Water District receives 1,400 acre feet of water per year through its participation in ocean desalination with the City of Santa Barbara. The Board is considering a permanent sale of 1,400 acre feet per year of its State Water Project allocation to a non-coastal community.
The District has not used State Water to meet customer demands since 2019. Numerous actions taken during the past decade to increase local, reliable supplies have strengthened and diversified the District’s water portfolio and reduced dependence on the increasingly variable State Water deliveries. Through its partnership in ocean desalination with the City of Santa Barbara, the District receives approximately 1,400 acre feet of water annually to meet customer demand. Unlike State Water, delivery of this local water is unrelated to rainfall, not subject to annual allocations, and is 100% consistent. The possibility of eventually transferring District State Water Project assets was discussed regularly when adopting the 50-Year desalination agreement.
In addition to participating in desalination since 2022, the District has stored more than 5,802 acre feet of surplus State Water through its participation in a groundwater banking program since 2017. During rainy years surplus State Water Project deliveries are conveyed to a groundwater bank and saved until needed. Current storage would guarantee four years’ worth of 1,400 acre feet deliveries in the event of future drought conditions.
In early 2025, the District completed a periodic update of its Future Demand and Water Supply Option analysis, prepared by hydrogeologic consultant Dr. Steven Bachman. The study highlights the reduced need for importing State Water, even under severe drought conditions. Bachman examined various water supply strategies to further shore up long-term water supply reliability including the transfer or sale of approximately 40% of the District’s State Water Contract interests, comprising 1,400 acre feet of its 3,300 acre feet contract allocation. The study indicates that any potential future water shortages would be minimal and could be met with additional use of local sources and/or a minor reduction in customer water use.
In addition to sound supply management, an essential component of a secure long-term water supply outlook is proactive study and management of customer demand. District-wide annual use has remained consistently reduced by about 45% since 2015. Supporting this important achievement is the District’s 2022 Water Efficiency Plan that details customer-facing initiatives to promote and support efficient water use behaviors. Projects implemented to date include Water Budgets, Rebates, and WaterSmart - a customer portal that provides access to the numerous benefits of smart meters such as real-time usage data and customizable leak notifications.
Interested members of the public are encouraged to attend the upcoming meeting in-person or virtually. Schedules, agendas, and more information can be found on the web site: www.montecitowater.com.
Montecito Water District’s mission is to provide an adequate and reliable supply of high quality water to the residents of Montecito and Summerland, at the most reasonable cost. In carrying out this mission, the District places particular emphasis on providing outstanding customer service, conducting its operations in an environmentally sensitive manner, and working cooperatively with other agencies. For additional information visit www.montecitowater.com, like Montecito Water District on Facebook, and follow on X @MontecitoWater.
