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 Westside Districts for a total sale of up to 4,550 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 based on the current year’s Table A allocations. If the South of Delta allocation is 50%, or less as it is in 2025, the maximum carryover amount is 25% of an agency’s Table A allocations, which is 5,475 acre-feet for City of Napa. However, due to the snowpack and wet spring, excess conditions have existed in the delta through mid-June. Under these conditions, SWP contractors have access to Article 21 water that does not count against Table A annual entitlements. The City took beneficial use of over 1,100 AF of Article 21 water from January through June 2025.
Staff strives to maximize the use of SWP water, however due to the Emergency 36-inch transmission main replacement project, system operations require more use of Lake Hennessey than in a typical year. Fortunately, due to high allocations in water year 2023 (100%) and 2024 (65%), it is projected that with the sale of 4,550 AF over 12,100 acre-feet of carryover will be available at the end of 2025. DWR has changed operations to pump water to the San Luis Reservoir this fall, ahead of the winter rains, in part to maintain operational flexibility to move water to southern California SWP contractors without pumping at Banks Pumping Plant which has been subject to restrictions in recent years based on biological monitoring in the San Joaquin-Sacramento River delta during winter months. This operational change increases the likelihood of San Luis Reservoir spilling and subsequent loss of the City’s stored carryover water. As part of operational changes, DWR is also allowing for the sale of water amongst SWP contractors.
NCFCWCD on behalf of City staff has developed a draft term sheet (Attachment 1) and framework to execute the sale of water to Westside District (Westside) who has capacity for groundwater banking this wet year. The term sheet for the sale includes the sale of up to 6,000 AF of water at $375/AF to Westside from all three subcontractors (Cities of Napa, American Canyon, and Calistoga) for a total of 6,000 AF. Napa’s share in the sale is up to 4,550 AF to Westside.
Staff is comfortable that this sale of SWP water will not affect the City’s ability to reliably meet normal demands of 13,000 AF (demands were 12,400 AF in 2024) while making normal withdrawals from Lake Hennessey of 5,000 - 8,000 AF, even if SWP allocations are in the 5-10% range for the next three years. 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. Lake Hennessey is currently at 95% capacity as we enter the summer season with 29,500 AF of water available.
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 term sheet, the price of the water is $375 per AF for up to 4,550 AF delivered to Westside Water Authority. At those prices, the sale will bring in one-time revenues of approximately $1,706,250 to the water enterprise fund. Revenue in the amount of $1.4 million was anticipated as part of the FY26 budget process.
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 KCWA, Westside Districts 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:
ATCH 1 - Draft Term Sheet for water purchase between Napa County Flood Control and Water Conservation District and the Westside Districts
NOTIFICATION:
None.