Water Supply Contract Extension
The State of California entered into long-term water supply contracts (Contracts) with water agencies in the 1960s. Under the contract terms, the Department of Water Resources provides water service to these public agencies, known as State Water Project Contractors, from the State Water Project (SWP) in exchange for payments that will recoup all costs associated with providing this water service over the life of the SWP. The majority of the capital costs associated with the development and maintenance of the SWP is financed using revenue bonds. These bonds have historically been sold with 30-year terms, but such bonds have not been sold with maturity dates that extend beyond the year 2035, the year the contracts begin to expire.
With each passing year it becomes more challenging to affordably finance SWP capital expenditures because bonds used to finance these expenditures are limited to terms that only extend to the year 2035, far less than 30 years from today. In order to ensure continued debt service affordability to SWP Contractors, it is necessary to extend the contract termination date. Contract extensions will allow DWR to again sell bonds with 30-year terms or longer, commensurate with the economic life of the project being financed, thus ensuring the debt service on these bonds remains affordable to SWP Contractors and their water customers.
The Director of the Department of Water Resources on December 11, 2018 approved the Water Supply Contract Extension Project. In accordance with CEQA, DWR also filed its Notice of Determination for the project with the Governor’s Office of Planning and Research. In addition, DWR filed an action in Sacramento County Superior Court to validate the Contract Extension Amendments. Documents (in PDF format) related to these actions may be found below:
Approval Recommendation Memorandum
Model Execution Version of Amendment
Director's Project Approval
Notice of Determination
Lawsuit Complaint to Validate the Extension Amendments
Summons in Validation Lawsuit
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Executed Contract Extension Amendments
Alameda County Flood Control and Water Conservation District Zone 7
Alameda County Water District
Coachella Valley Water District
Crestline-Lake Arrowhead Water Agency
Desert Water Agency
Metropolitan Water District of Southern California
Palmdale Water District
Santa Clara Valley Water District
Santa Clarita Valley Water Agency
DWR released the draft Environmental Impact Report (DEIR) on August 17, 2016, and the public comment period closed October 17, 2016. DWR held a public hearing for the DEIR on September 12, 2016, at the Tsakopoulos Library Galleria in Sacramento, California. Links to the DEIR and related documents are available below. The final Environmental Impact Report (FEIR) was released on November 16, 2018. The FEIR, DEIR and related documents are available at the publications links below.
Legislative Informational Hearings
By letter dated May 10, 2018, to Senator Holly Mitchell, DWR Director Karla Nemeth, requested that an Informational Hearing be scheduled before the Joint Legislative Budget Committee regarding the SWP Water Supply Contract Extension. Such a hearing is required by Water Code Section 147.5. The request was accompanied by the Proposed Contract Extension Amendment, dated February 13, 2018. The Amendment is based on the Agreement in Principle resulting from public negotiations between DWR and the 29 water contractors that concluded in June 2014.
The Senate Natural Resources and Water Committee held an informational hearing at the Capitol regarding the State Water Project Water Supply Contract Extension program July 3, 2018. A second informational hearing before the Joint Legislative Budget Committee was held on September 11, 2018.
WSC Extension Negotiation Meeting Series
- Final Environmental Impact Report
- Final Environmental Impact Report Exhibit A
- Final Environmental Impact Report Exhibit B
- Notice of Availability
- Draft Environmental Impact Report
- Appendix A—Agreement in Principle
- Appendix B—Notice of Preparation and Comment Letters Received
- Appendix C—Example Water Supply Contract
- Appendix D—Financial Model
- WSC Contract Extension Project—Notice of Preparation for the Environmental Impact Report