HomeMy WebLinkAboutItem 11o - Lease of Production Rights in the Main San Gabriel BasinAuthorize Lease of Production Rights in the Main San Gabriel Basin
June 17, 2025
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DATE: June 17, 2025
TO: Honorable Mayor and City Council
FROM: Paul Cranmer, Public Works Services Director
By: John Corona, Utilities Manager
SUBJECT: AUTHORIZE LEASE AGREEMENT FOR 1,200 ACRE-FEET OF
PRODUCTION RIGHTS IN THE MAIN SAN GABRIEL BASIN FROM
COVINA VALLEY WATER COMPANY IN THE AMOUNT OF $1,096,200
CEQA: Not a Project
Recommendation: Approve
SUMMARY
The City of Arcadia gets a major portion of its drinking water supply from the Main San
Gabriel Groundwater Basin (“Main Basin”). The remaining demand is met by City wells
that pump a fixed amount of groundwater from the Raymond Basin. The City was recently
informed that there is an opportunity to lease 1,200 acre-feet of production rights from the
Main San Gabriel Groundwater Basin from Covina Valley Water Company. These water
rights will be leased at a reduced cost of $913.50 per acre-foot. The leased production
rights will be applied to the replacement water obligation for Fiscal Year 2024-25 and will
reduce the City’s total obligation to purchase replacement water, resulting in savings of
$121,800.
It is recommended that the City Council authorize the Lease Agreement for 1,200 acre-
feet of production rights in the Main San Gabriel Basin from Covina Valley Water
Company, in the amount of $1,096,200.
BACKGROUND
In 1973, an overproduction of water from the Main Basin resulted in a stipulated judgment
that created the Main San Gabriel Basin Watermaster. The Main San Gabriel Basin
Watermaster is a nine-person board appointed by the Los Angeles County Superior Court
that administers and enforces the provisions of the Main San Gabriel Basin Judgment.
This Judgement established water rights and responsibilities for efficient management of
the Main Basin.
Authorize Lease of Production Rights in the Main San Gabriel Basin
June 17, 2025
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The Main San Gabriel Basin Watermaster determines the total amount of water that can
be pumped from the Main Basin each year, free from a Replacement Water assessment;
this amount is referred to as the Operating Safe Yield. The Operating Safe Yield for Fiscal
Year 2024-25 was set at 160,000 acre-feet. The City’s annual share of the Operating Safe
Yield is 4.23%, or 6,768 acre-feet. Pumping more water than the amount established for
a given year is allowed; however, the City must then purchase Replacement Water to
recharge the groundwater basin. Although Governor Newsom eased drought restrictions
through Executive Order N-5-23 on March 24, 2023, Southern California groundwater
basins continue to recover from the multi-year drought. Consequently, pumping rights in
the Raymond Basin remain at reduced levels. This has placed a greater demand on water
pumped from the Main Basin.
DISCUSSION
The City of Arcadia Public Works Services Department (“PWSD”) continues to proactively
secure reliable water resources whenever possible, to meet current and future demands.
Recently, the Covina Valley Water Company (“CVWC”) announced that 1,200 acre-feet
of its Main San Gabriel Basin production rights would be available for lease. Essentially,
the CVWC will not be using its entire allocation and is offering other agencies the
opportunity to purchase those water rights at a reduced rate. Staff has negotiated
favorable terms for this water lease to supplement the City’s water portfolio. The leased
water rights will be applied to the replacement water obligation for Fiscal Year 2024-25
and will reduce the City’s total obligation to purchase replacement water.
Under the terms of the proposed agreement, the City will lease 1,200 acre-feet of
production rights from CVWC. The lease rate is based on 90% of the 2025 Upper District
Cyclic Water Rate (UD Rate), which is $1,015 per acre-foot. This means the City will be
able to purchase each acre-foot for $913.50, thereby saving $121,800. This lease
ensures the City’s continued access to supplemental water supplies at a competitive rate,
thereby supporting long-term water reliability and fiscal responsibility.
ENVIRONMENTAL ANALYSIS
The proposed action does not constitute a project under the California Environmental
Quality Act (“CEQA”) under Section 15061 (b)(3) of the CEQA Guidelines, as it can be
seen with certainty that it will have no impact on the environment.
FISCAL IMPACT
The total cost of the Lease Agreement with CVWC is $1,096,200. Sufficient funds have
been budgeted in the Fiscal Year 2024-25 Water Operations Budget for this purchase.
The purchase of water under this Lease Agreement will reduce the City’s total obligation
to buy replacement water and will save the City $121,800.
Authorize Lease of Production Rights in the Main San Gabriel Basin
June 17, 2025
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RECOMMENDATION
It is recommended the City Council determine that this action does not constitute a project
under the California Environmental Quality Act (“CEQA”); and authorize the Lease
Agreement for 1,200 acre-feet of production rights in the Main San Gabriel Basin from
Covina Valley Water Company in the amount of $1,096,200.
Attachment: Covina Valley Water Company Lease Agreement