To: Honorable Mayor and Members of City Council
From: Joy Eldredge, Utilities Director
Prepared By: Patrick Costello, Water Resources Analyst
TITLE:
Title
Sale of State Water Project Water
LABEL
RECOMMENDED ACTION:
Recommendation
Approve and authorize the Utilities Director to execute the sale of State Water Project Article 56 (c) water (carryover water) to Westside Water Authority for a total sale of up to 3,000 acre feet (AF) and determine that this action is exempt from CEQA.
Body
DISCUSSION:
The City of Napa is a sub-contractor to Napa County Flood Control and Water Conservation District (NCFCWCD) for the contract with the State of California for the water received from the State Water Project (SWP) via the North Bay Aqueduct. The terms of the agreement with NCFCWCD are specified in City Agreement No. 1482 (NCFCWCD Agreement No. 1573), entered into on April 5, 1966, and subsequent amendments Nos. 1 - 15. The NCFCWCD is a member of the State Water Contractors Association, which is comprised of 29 contractors for State Water Project water.
The City of Napa has invested in SWP Water Supplies since 1968 when it purchased its original entitlements to the State Water Project known as Table A water. The City of Napa has 21,900 Acre-Feet (AF) of Table A SWP Entitlements. Each year the California Department of Water Resources (DWR) assesses the reservoir levels, snowpack, and overall state of the water supply in the SWP system and establishes a percent allocation of Table A entitlements that will be delivered that year.
In select years, if the City does not consume all of its Table A entitlements, and the San Luis Reservoir located South of Delta does not spill, the unused water is reclassified as Article 56(c) water, or carryover water and can be used in future years. If the San Luis Reservoir spills, carryover water is reduced by the amount that spills until the balance of carryover water is zero. In this case the water would be lost without being put to beneficial use. There is also a cap on the amount of carryover water accrued based on the year’s Table A allocations. If the South of Delta allocation is 50%, or less as it is in 2026 (45%), the maximum carryover amount is 25% of an agency’s Table A allocations, which is 5,475 AF (21,900 AF*0.25) for City of Napa. Our 2026 North of Delta SWP allocation is 60% or 13,140 AF. When snowpack and rains result in excess conditions in the delta SWP contractors have access to Article 21 water that does not count against Table A annual entitlements. The City took beneficial use of 1,272 AF of Article 21 water when it was available in January through June 2026.
Staff strives to maximize the use of SWP water; however, due to the Emergency 36-inch Transmission Main Replacement Project, system operations required more use of Lake Hennessey in 2025 and early 2026 than in a typical year. Fortunately, as of August 5, 2026, Lake Hennessey is at nearly 94% capacity. As of July, the City has a total of 9,900 AF of carryover water available. San Luis Reservoir could spill before the end of the year which would result in the subsequent loss of stored carryover water for SWP contractors. However, ahead of potential reservoir spills DWR has committed to recognize sales of water to SWP contractors south of San Luis Reservoir amongst willing parties.
NCFCWCD on behalf of City staff has facilitated an Agreement to execute the sale of water to Westside Water Authority who is willing to purchase up to 5,000 AF of water at $375/AF from all interested subcontractors (Cities of Napa, American Canyon, and Calistoga). Napa’s commitment to participate in the sale is 3,000 AF. Staff has analyzed the sale of 3,000 AF and determined there is no impact on future supplies.
Local Water Supply sources are currently 30,300 AF composed of:
Lake Hennessey 29,000
Milliken Reservoir 1,300
Available SWP water supplies are currently 18,180 AF (including proposed sale) composed of:
SWP Table A 11,280 AF
Carryover 9,900 AF
Sale of water -3,000 AF
Total available supplies: 48,480 AF
Staff is comfortable that the sale of SWP water will not affect the City’s ability to reliably meet normal annual demands of 13,000 AF while making normal withdrawals from Lake Hennessey of 5,000 - 8,000 AF even if SWP allocations are at 5-10% range (severe drought conditions) starting in 2027. The City has access to additional SWP sources including Article 21 water which has been available during the winter months in recent drought years, and a minimum of 3,772 AF Advanced Table A water if all remaining carryover water is depleted.
Staff recommends taking advantage of this option to sell SWP carryover water since it would be lost if San Luis Reservoir spills. With this sale, the City recovers some of the financial investment of the annual SWP entitlements.
FINANCIAL IMPACTS:
Pursuant to the terms of the Agreement, the price of water is $375 per AF for up to 3,000 AF delivered to Westside Water Authority. At that price, the sale will bring in one-time revenues to the water enterprise fund of $1,125,000 for 3,000 AF for the sale of carryover water to Westside Water Authority.
CEQA:
The Utilities Director recommends that the City Council determine that the recommended action is Categorically Exempt from CEQA pursuant to Title 14 CCR Section 15301. The proposed project consists of the contractual right to transfer water through the continued operation of existing water supply diversion, storage and conveyance facilities and would not expand Napa or Westside Water Authority water supply use. For the sale of water, under CEQA requirements, the Napa County Flood Control and Water Conservation District (NCFCWCD) is the “Lead Agency,” and the City is a “Responsible Agency.” The NCFCWCD filed a Notice of Exemption on August 6, 2026 based upon the Class 1 (CEQA Guidelines Section 15301) and Class 6 (CEQA Guidelines Section 15306) categorical exemptions upon final approval of the agreement.
DOCUMENTS ATTACHED:
None
NOTIFICATION:
None