Montecito Water District advances sale of 40% of State Water interests

Montecito Water District’s Board of Directors on Tuesday, Sept. 29, 2026, authorized a nonbinding letter of intent concerning the future sale of a portion of the district’s State Water Project contract interests, according to the Santa Barbara News-Press, which reported a 5-0 vote. The district had said in a Sept. 23 press release that directors would consider the letter at that meeting.

Under the terms the district published, the potential purchase by Solstra Communities California LLC would support the planned Solomon Hills development of up to 4,000 homes in northern Santa Barbara County. If the letter of intent was approved, the district said next steps would include preparing a purchase agreement expected to take about six months, with any final sale contingent on the development receiving all final approvals, which could take several years.

The district said a successful transaction would divest it of approximately 40% of its interest in the State Water Project. The proposed sale would permanently transfer 1,400 acre-feet of State Water contract interests, including proportional conveyance and treatment, while the district would retain 1,900 acre-feet of its annual allocation and capacity to convey, store and transfer water.

Montecito has participated in State Water since 1997 and pays annually for an allocation and conveyance infrastructure regardless of availability, the district said. It said State Water costs have risen over the past decade while reliability has fallen, and that a partial sale would provide an upfront payment and cut future operational and capital costs tied to State Water.

“We have been building this plan for years,” said Floyd Wicks, who the district said is serving his tenth year on the board. “Because of our team’s collaboration with Santa Barbara, we now have a far more reliable water supply from the Pacific Ocean. As a result, we are able to divest a portion of our State Water Project assets to other communities that don’t have access to the ocean.”

Since 2022, the district said, it has received about 1,400 acre-feet a year through ocean desalination with the City of Santa Barbara and has not used State Water to meet customer demand since 2019. It also said it has stored more than 5,802 acre-feet of surplus State Water in a groundwater banking program since 2017.

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