Santa Barbara enters 50-year supply agreement with Montecito district
The Santa Barbara City Council voted Tuesday to enter into a 50-year water supply agreement with the Montecito Water District.
Under the terms, the city will deliver 1,430 acre-feet of water annually to the MWD.
Both parties have been negotiating an agreement in connection with the 2017 restart of the city’s Charles E. Meyer desalination facility since plans to restart the facility began in 2015. The MWD approved the agreement during a special meeting last week.
In 2019, city staff brought a term sheet to the city council and the Montecito board laying out the major elements of the agreement. It was approved by both groups, and the official agreement was approved unanimously, with council member Meagan Harmon absent. Tuesday’s pact was consistent with that term sheet, said Joshua Haggmark, water resource manager.
“It took us longer than I thought to pull all the details together in there, but we were able to remain consistent with what city council and the Montecito board had approved,” Mr. Haggmark told the council.
Core principles of the terms include an agreement that Santa Barbara will operate the facility and deliver the water and will share the cost with MWD without granting any ownership to the district.
The agreement is also a “take or pay agreement,” meaning the district pays whether they need the water or not. The pricing reflects the full cost of financing and operating the plant, and does not include any subsidies.
The agreement also protects Santa Barbara’s water supply.
“We’re not giving away something that we currently need or can’t fill with additional expansion of the plant in the future,” said Mr. Haggmark.
Emergency provisions were included to protect the city’s customers in case of a critical water emergency, such as infrastructure damage or a severe drought.
“The city would be relieved of some deliveries, and what we would be doing is a ‘share the pain’ approach in which we would be basically sharing that water so that both of our communities are getting the same per capita water usage,” said Mr. Haggmark.
The council authorized an $18.9 million increase in appropriations and estimated revenue in the city’s water capital fund, which is funded by a settlement of claims against Southern California Edison for losses sustained by the water utility from the Thomas Fire and Montecito debris flow.
The council also approved a conveyance pipeline project and authorized the public works director to procure and award contracts for construction of the pipeline and ancillary improvements and facilities needed to implement the agreement.
The proposed pipeline would be capable of conveying 10,000 acre-feet of water annually.
Following negotiations, the MWD agreed to pay nearly 65% of the capital costs associated with the pipeline.
“By putting in this pipeline, it provides not only insurance that we can make deliveries to the district under a diverse list of water supply conditions, but it also has benefits for the city in allowing us to take this incredibly high quality water and mix it with our surface water and groundwater,” said Mr. Haggmark.
The pipeline would also allow Santa Barbara to deliver water to anywhere in its service area. Currently, the city is not able to deliver desalinated water to the foothills, according to Mr. Haggmark.
The desal plant currently produces 3,125 acre-feet of water annually. To provide supplies to MWD over the span of the agreement, the production capacity at the facility is expected to increase. To do so, the city plans to administer incremental increases in treatment production capacity consistent with its water supply plan.
The total cost of pipeline construction and plant expansion is estimated at $19 million. Funding to build the conveyance pipeline project will be fronted by the city and repaid by the Montecito district in the future. Staff have also secured a $1 million grant from the Department of Water Resources to be used for the pipeline.
Water deliveries will begin Jan. 1, 2022, and the city will receive approximately $4.5 million in revenue annually for deliveries to Montecito.
“That’s the equivalent to a rate revenue increase of about 7.5%, and it really takes a lot of pressure off of future rate increases as we continue to look to maintain the aging infrastructure that we have,” said Mr. Haggmark. “It reduces the city’s exposure to long term capital maintenance and renewal costs, and the city maintains discretion to operate the plant to maximize the benefit to its customers.”
The agreement fulfills the original intent of the Charles E. Meyer desalination plant as a regional water supply, said Mr. Haggmark.
The agreement will likely be officially signed in August, and a contract for construction will be executed some time in September, according to Mr. Haggmark.