HomeMy WebLinkAboutItem 08e - Lease Production Rights in Main San Gabriel Basin
STAFF REPORT
PUBLIC WORKS SERVICES DEPARTMENT
DATE: April 7, 2026
TO: Honorable Mayor and City Council
FROM: Paul Cranmer, Public Works Services Director
By: John Corona, Utilities Manager
SUBJECT: AUTHORIZE LEASE AGREEMENT OF 1,200 ACRE-FEET OF PRODUCTION
RIGHTS IN THE MAIN SAN GABRIEL BASIN FROM COVINA VALLEY WATER
COMPANY, IN THE AMOUNT OF $1,173,960
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 groundwater from the Raymond Basin. The City of Arcadia has the
opportunity to lease 1,200 acre-feet of Production Rights from the Main San Gabriel
Groundwater Basin via the Covina Valley Water Company (“CVWC”). These water
rights will be leased at a reduced cost of $978.30 per acre-foot. The leased production
rights will be applied to Arcadia’s replacement water obligation for Fiscal Year 2025-
26 and will reduce the City’s total obligation to purchase replacement water, resulting
in a savings of $130,440.
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 $1,173,960.
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
Authorize Lease of Production Rights in the Main San Gabriel Basin
April 7, 2026
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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.
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 2025-26 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 previous 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 Public Works Services Department (“PWSD”) continues to proactively secure
reliable water resources whenever possible to meet current and future demands.
Recently, 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 2025-26 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 at 90% of the 2026 Upper District Cyclic Water Rate
(“UD Rate”), which has been set at $1,087 per acre-foot. This means the City will be
able to purchase each acre-foot for $978.30, thereby saving $130,440. This lease
ensures the City’s continued access to supplemental water supplies at a competitive
rate, supporting long-term water reliability and fiscal responsibility.
Authorize Lease of Production Rights in the Main San Gabriel Basin
April 7, 2026
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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 $1,173,960. Sufficient funds have
been budgeted in the Fiscal Year 2025-26 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 $130,440.
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 $1,173,960.
Attachment: Covina Valley Water Company Lease Agreement