To: Honorable Mayor and Members of City Council
From: Joy Eldredge, Utilities Director
Prepared By: Joy Eldredge, Utilities Director
TITLE:
Title
Sale of State Water Project Carryover Water
LABEL
RECOMMENDED ACTION:
Recommendation
Authorize the Utilities Director to execute the sale of State Water Project Article 56 (c) water (carryover water) to San Gorgonio Pass Water Agency 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 was in 2025, 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. 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 360 AF of Article 21 water in January 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 than in a typical year. Fortunately, as of February 17, 2026 Lake Hennessey is at 100% capacity and continues to spill. As of early March the City has a total of 12,160 AF of carryover water available. San Luis Reservoir is expected to spill before the end of March which would result in the subsequent loss of an estimated 2,000 AF of stored carryover water for Napa County SWP sub-contractors of which City of Napa owns 1,510 AF. However, ahead of the impending reservoir spill 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 San Gorgonio Pass Water Agency (SGPWA) who is willing to purchase up to 3,000 AF of water at $225/AF from all three subcontractors (Cities of Napa, American Canyon, and Calistoga). Napa’s share if all three Cities participate in the sale is 75.45% or 2,264 AF to SGPWA. Staff has analyzed the sale of the entire 3,000 AF in the event other sub-contractors do not participate.
Local Water Supply sources are 32,400 AF composed of:
Lake Hennessey 31,000
Milliken Reservoir 1,400
Available SWP water supplies are 21,280 AF composed of:
SWP Table A 8,760 AF
Carryover 9,160 AF (assuming sale of 3,000 AF)
Article 21 360 AF
Total available supplies: 50,680 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 starting in 2027. The 2026 north of delta SWP allocation is 40% or 8,760 AF. 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 $225 per AF for up to 3,000 AF delivered to SGPWA. At that price, the sale will bring in one-time revenues to the water enterprise fund of $510,000 for 2,264 AF our proportionate share if all three subcontractors participate, and up to $675,000 for 3,000 AF if no other subcontractors participate in the sale of carryover water to SGPWA.
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 SGPWA 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 plans to file a Notice of Exemption 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:
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NOTIFICATION:
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