Santa Barbara Seals 50-Year Deal to Sell Water to Montecito

Partners Will Share Cost of City's $72 Million Desal Plant

Under a new agreement between Montecito and the City of Santa Barbara, Montecito will pay off nearly half the cost of the city’s $72 million desalination plant on the waterfront in return for a guaranteed yearly supply of potable city water from any source for the next 50 years. | Credit: City of Santa Barbara photo

Signing off on a historic deal with its wealthiest — and thirstiest — neighbor, the Santa Barbara City Council this week voted 6-0 to ship a supply of the city’s drinking water to Montecito every year for the next 50 years, rain or shine.

In return, under a Water Supply Agreement that will be signed by both parties in August, the Montecito Water District has agreed to effectively fund 46 percent, or $33 million, of the city’s $72 million desalination plant through 2072, plus interest and a share of operation and maintenance costs.

“This truly is exemplary of a mutually beneficial agreement,” Mayor Pro Tempore Kristen Sneddon said on Tuesday. “It’s a win-win. It really speaks to our strengthening our resilience, our water quality, and our water supply.”

The district’s initial payments to the city will be $4.6 million annually, saving city ratepayers from steep rate hikes, officials said. For Montecito, it buys 1,430 acre-feet of water; that’s 46 percent of current plant capacity and enough to meet nearly 40 percent of Montecito’s customer demand.

Desalination provides the surplus that is available for sale, but under the agreement, the city can supply Montecito with water from any source. The district will raise rates through 2025 to help pay for the project; the water will start flowing on January 1, 2022.

The council, with Councilmember Meagan Harmon absent, hailed the agreement as the coming to fruition of a regional partnership that began to form and then dissolved in the early 1990s, when the city built — and mothballed — its first desalination plant in the wake of a six-year drought.

“We are going to be in drought cycles from here on out,” Councilmember Eric Friedman said. “This really does us allow us flexibility.”

And, Friedman said, it’s a local water supply. In 1991, countywide voters approved the construction of a state aqueduct branch to Lake Cachuma, a $575 million project to import water from Northern California. During the recent statewide drought of 2012 to 2018, the aqueduct supply dropped to 5 percent of what member agencies were entitled to. Faced with shortages, the Montecito Water District was forced to impose strict rationing and heavy penalties for over-watering.

But Kira Redmond, executive director of Santa Barbara Channelkeeper, a nonprofit environmentalist group, objected to the agreement with Montecito on Tuesday. She told the council that it would keep the plant running, year in and year out, in contradiction of the city’s longstanding policy that desalination is for drought emergencies only. Redmond urged the council to conduct additional environmental review before proceeding with a 50-year commitment.

Photo: CourtesyKira Redmond, executive director of Santa Barbara Channelkeeper, says the agreement with Montecito will keep the desalination plant running at full capacity for 50 years, in contradiction of longstanding city policy that says desalination is to be used as a drought buffer only.

“You’re effectively making the decision to continue to operate your ‘desal’ facility at full capacity indefinitely — or worse, to expand its capacity to produce even more water … regardless of whether this water is even needed or makes economic sense,” Redmond said.

The city’s 2011 Long-Term Water Supply Plan states that the city’s desalination plant is “a back-up for potential prolonged drought.”

In an interview, Redmond said the city should put the plant in standby mode. At least, under the agreement, Santa Barbara will recoup some of the cost of construction, she said, but desalination is energy-intensive, harmful to the marine environment and “a significant move in the wrong direction.”

Channelkeeper promotes the use of potable recycled water, or wastewater that is treated to drinking water standards, in both Santa Barbara and Ventura counties.

In an interview, Josh Haggmark, the city’s water resources manager, said the agreement with Montecito does allow the city to operate its desalination plant in standby mode — at a savings to the city of about $2 million yearly — so long as the city can supply Montecito with water from other sources.

Photo: CourtesyJoshua Haggmark, Santa Barbara water resources manager, was the lead negotiator for the city for the Water Supply Agreement with Montecito.

“This agreement leaves the city with the ultimate flexibility on how we want to operate,” he said. “We still have to make decisions on an annual basis as to how we’re going to ensure we have adequate water to meet our needs.”

Those needs, Haggmark told the council, could include an eventual “pivot” from desalination to potable recycled water, although, he said, “The cost is astronomically higher.

“I don’t believe any of the investments we’re making here today are taking away any opportunities we may have in the future,” Haggmark said.

For now, the desalination plant is operating at full capacity, meeting 30 percent of the city’s water demand. By relying equally on desalinated water and supplies from Lake Cachuma and Gibraltar Reservoir on the Santa Ynez River, the city is “resting” two groundwater basins that were depleted by heavy pumping during the drought, Haggmark said. The downtown basin has dropped so low that seawater intrusion is occurring, he said.

Once the basins have been replenished by rains, and Cachuma spills again — it hasn’t spilled since 2011 — the city can idle its desalination plant, Haggmark said. The agreement with Montecito, he said, is “insured by ‘desal,’ like the gold in Fort Knox as the ultimate backup,” but it doesn’t represent a change in city policy.

Santa Barbara’s original desalination plant cost $34 million. It was operated for only three months in 1992, then dismantled when the weather turned wet. As the city began to reactivate the plant in the depths of the recent drought, it relied on a 1996 state Coastal Commission permit stating that the plant could be used “to produce water for exchange with other water purveyors during non-drought periods,” but that “use of the desalination facility is expected to be infrequent.”

Channelkeeper was the only environmentalist group to sound a note of caution: The electricity needed for desalination, Redmond said, feeds the cycle of climate change and drought.

“Other communities that didn’t have a desalination plant started developing recycled water and stormwater capture, and we didn’t do that,” Redmond said this week. “The city spent all this money the first time around and they never used the plant, and they turned it off. The second time, they were in a desperate situation, and no environmental group would have been willing to say we shouldn’t be doing it.”

Redmond cites city data showing that, running at current capacity, the electricity required to filter and treat ocean water to drinking water standards at Santa Barbara’s plant has increased the total energy use in city-owned facilities by 50 percent.

Haggmark prefers to compare electrical use at the plant to electrical use throughout the city, including homes and businesses: The plant represents only 4 percent of the total. In October 2021, the city plans to switch to 100 percent renewable power through a city-run Community Choice Energy program; when that happens, Haggmark said, greenhouse gas emissions from desalination will drop nearly to zero.

An update of the city’s long-term water supply plan is currently under review; a schedule of public hearings is available here.

‘Poison Pill’?

The question of desalination as a short- or long-term supply will come up again on July 28, when the City Council considers whether to accept a $10 million state grant for the plant. The problem, as critics see it, is that the city would have to commit to operating the plant at full capacity during 36 of the next 40 years in order to qualify for the grant.

“The community has been sold that the desal plant was to be our drought buffer,” City Water Commissioner Dave Davis wrote in a letter to the mayor and City Council last month. “If the money is accepted and, as intended, expended on other capital items, the next drought will require expansion of the plant at a cost of an additional tens of millions of dollars and again higher long-term water rates passed on to ratepayers. I don’t believe the public has had adequate input or say in making this decision.”

The Water Commission voted 3-1 on May 21 to recommend that the city accept the grant; Davis called the state’s operating condition a “poison pill” and voted no.

And at a commission meeting this month on the Water Supply Agreement with Montecito, Davis said that had he been asked, he would have pushed for a 20-year renewable term because “50 years is way too long.” The commission was given no role in drawing up the agreement.

The $10 million state grant for the desalination plant would come from Prop. 1 funds earmarked for improved water reliability, including desalinated supplies. Haggmark wants to use the money in part to construct a $10 million pipeline to convey desalinated water from the plant to the Mission, where it will connect to a line to the Cater Water Treatment Plant above Foothill Road. From there, the South Coast Conduit, a high-pressure pipeline, will carry the water to Montecito. The new pipeline will also allow for the distribution of desalinated water to more city customers.

The pipeline project was approved 6-0 by the City Council on Tuesday; construction is expected to begin in September. The Montecito Water District has agreed to pay 65 percent of the cost if and when the city decides to expand its desalination plant — an arrangement that Davis believes would tie the payment too closely to plant expansion and the “control over what desal is supposed to be.”

Haggmark said that accepting the state grant now is a business decision, not a decision on the long-term operation of the plant or the role of desalinated water in the city. The funding would come at a critical time, he said, because the city’s water revenues from businesses have declined sharply during COVD-19 stay-at-home orders. Haggmark said the city could repay the grant money to the state in the future, if the plant is operating solely as a drought buffer.

CORRECTION: An earlier version of this story mischaracterized the terms of the proposed $10 million state grant for the city’s desalination plant. Repayment would be required if the plant were to be operated solely as a drought buffer.


Melinda Burns volunteers as a freelance journalist in Santa Barbara as a community service. She offers her news reports to multiple local publications, at the same time, for free.

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