Montecito Water District Steers Towards Selling a Portion of its State Water Contract Interests
Montecito Water District’s Board of Directors has approved a non-binding Letter of Intent to sell approximately 40% of the District’s State Water contract interests. The District will keep nearly 60% of its State Water Contract interests, or approximately 1,900 acre feet of annual water allocation, and the capacity to convey, store, and transfer water, if the sale succeeds.
At the District’s September Board meeting, General Manager Nick Turner presented information on the State Water Project and the partial sale opportunity. Data shared showed that the District has received its full annual State Water Project allocation only five times since participation started in 1997.
“The District currently pays about $5 million annually in fixed costs regardless of whether the allocation is 100% or 0%,” Turner explained. “If there is water available and we deliver it, that cost increases.”
The record shows that during drought years allocations have gone as low as 5%, or 165 acre feet, reinforcing Turner’s message that this costly water is not available during times when the District needs it most. Additional points in support of the sale include:
- 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. The District has not used State Water to meet customer demands since 2019.
- District water security has improved as a result of numerous successful actions and extensive long-term planning efforts completed over the past decade.
- In 2022, the District added approximately 1,400 acre feet of water annually through the 50-Year Water Supply Agreement with the City of Santa Barbara.
- Receipt of this local water is unrelated to rainfall and the amount is consistent, in contrast to variable annual allocations like State Water.
- Through groundwater banking, the District has stored more than 5,802 acre feet of surplus State Water since 2017. Current storage guarantees four years’ worth of 1,400 acre feet deliveries in the event of future drought conditions. Storage could continue to grow, even after the sale, by depositing additional water supplied from the District’s remaining State Water interest.
- Long-term water supply planning, including a comprehensive Future Demand and Water Supply Option analysis, prepared by hydrogeologic consultant Dr. Steven Bachman in 2025, indicates that even under severe drought conditions the District will meet customer demand without State Water.
- District-wide annual use has remained consistently reduced by approximately 45% since 2015.
Public comments made following the presentation conveyed both concern and support. Whether endorsing or expressing reservations about the sale, most speakers acknowledged improvements to the District’s water supply portfolio made over the past decade. Concerns revolved primarily around potential future water shortage, based on past experience with allocations during the drought from 2012-2015. One member of the public emphasized “The operative words of the agreement are permanent and in perpetuity.” Some proponents indicated the sale was a long time coming, and one stated “…there was huge controversy when we purchased these rights. I think it was wasted money when we bought it, now we own it and we have a responsibility to be intelligent when we consider the sale.”
Board discussion followed the presentation and public comment, with a focus on the value of reducing the amount of money currently spent on State Water and instead investing in more local, reliable supplies to further diversify the District’s water portfolio.
That concept was summarized in these closing remarks from Board President Brian Goebel:
“Everyone here wants a diverse water supply. What's the net result of this Letter of Intent going to be? Our water supply will be more diverse.
We'll be way better off if we diversify by ridding ourselves of a part of the State Water Project that we do not need. This community will be stronger, not weaker, going forward by a substantial amount. So that is why I've come to the point where I'm going to support this deal.
I think the concerns expressed by this community and the people here today are legitimate. I appreciate people being here today. I appreciate the civility of the discussion today. I appreciate the opportunity to have a chance to explain to the community in greater detail why I think this deal will be a net benefit.”
Next steps in the process include finalizing a purchase agreement with Solstra Communities California LLC (Solstra), which will be publicly noticed prior to adoption. Solstra seeks water for Solomon Hills, a planned development project for up to 4,000 homes in northern Santa Barbara County. Even with a completed purchase agreement, the sale would not be final until the development receives all approvals, which could take several years.
Customers interested in additional information are encouraged to review the meeting materials and presentation available online at: www.montecitowater.com and to contact the District directly at 805-969-2271 with any questions.
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 twitter @MontecitoWater.
