AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: GABINO C. LUNA
PUBLIC WORKS DIRECTOR
SUBJECT:
title
WATER REPLENISHMENT DISTRICT PURCHASE OF WATER STORAGE
summary
Summary:
The City holds an annual groundwater pumping allocation of 2,022 acre-feet within the Central Basin Water Replenishment District as a water rights holder. In Fiscal Year 2025-26, while Gundry Reservoir was under construction, the City used less than its average pumping rights, resulting in savings of about $200,000 in the Water Fund. Staff recommends leveraging these savings to purchase and convert a portion of the unused allocation into stored water through a process known as Carryover Conversion. This approach enables the City to preserve its unused water rights and secure the Fiscal Year 2025-26 purchase rate. The stored supply will remain available indefinitely in a storage account and can be accessed in future years at no additional cost should the City exceed its annual pumping allocation. Staff is requesting the City Council authorize a budget amendment of $199,996.08 for Fiscal Year 2026-27, utilizing prior-year savings, to acquire additional water supply at a discounted rate. This strategy prepares the City for potential future supply shortages without immediately escalating potable water use restrictions.
Strategic Plan Goal(s):
Goal No. 1: Financial Stability: Ensure the City’s long-term financial stability and resilience.
Goal No. 4: Infrastructure: Maintain and improve the City’s physical infrastructure, water system, and recreational spaces.
recommendation
Recommendation:
1. Staff recommends the City Council authorize the City Manager, or his designee, to submit a Central Basin Watermaster Request for Carryover Conversion in the amount of 440.52 acre-feet for a total cost of $199,996.08.
2. Adopt a Resolution, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, AMENDING THE ADOPTED BUDGET AND AUTHORIZING APPROPRIATIONS FOR FISCAL YEAR 2026-27.
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Fiscal Impact:
The City Council would need to adopt a budget appropriation totaling $199,996.08 for Fiscal Year 2026-27 to convert 440.52 acre-feet of unused pumping allocation into long term groundwater storage. This funding would secure additional water supplies for future years at the current reduced conversion rate and enhance the City’s resiliency during periods of high demand or supply constraints. The projected savings, resulting from the $200,000 in reduced water usage in Fiscal Year 2025-26 while the Gundry Roof Replacement project forced the pumps offline, will offset this expense and remain consistent with the water model adopted by the City Council. The recommended budget adjustment does not impact the General Fund.
Background:
The Water Replenishment District (WRD) supports approximately four million residents across a 420-square-mile area in southern Los Angeles County, including Signal Hill. Groundwater users in this region extract roughly 220,000 acre-feet of water each year, representing nearly half of the area’s total water supply. WRD protects the reliability and quality of this resource by replenishing groundwater with recycled water and stormwater and by conducting extensive groundwater monitoring and testing.
In 2013 and 2014, the Superior Court of the State of California for the County of Los Angeles appointed WRD as the Watermaster Administrative Body for the Central and West Coast Basins. Through this role, WRD administers the legal judgments that govern groundwater pumping, water-rights transactions, storage operations, and carryover conversions. These judgments include provisions that provide pumpers flexibility, such as the ability to store water through the carryover conversion process.
As a Water Rights holder, the City has an annual pumping allocation of 2,022-acre feet. The City can carry over up to 60 percent of unused water rights, or a maximum of 1,213.2-acre feet, into a one-year carryover storage account. The City may use this stored water in future years and extract up to 140 percent of the City’s annual pumping allocation in a single year if groundwater demand exceeds the annual allocation. As of June 10, 2026, the City reached the storage cap; any remaining unused water rights for the current fiscal year will not accrue. Based on available records and the water-rights calculator, 1,827.08-acre feet would remain unused and would not accrue, limiting the City’s ability to meet unforeseen water demands.
During any fiscal year, Water Rights holders may move unused water rights through a process known as Carryover Conversion. A Carryover Conversion varies from One-Year-Carryover in that the water must be purchased before it is converted to Individual Storage. To complete a conversion, the City must submit a Storage Conversion Request to WRD. If WRD approves the request, the City may purchase the desired amount of water and transfer it into Water in Storage through an Individual Storage Account. This purchase creates a bank of groundwater the City can pump in future years without incurring additional replenishment assessment costs.
Analysis:
On June 23, 2026, the City Council adopted the 2025 Urban Water Master Plan (UWMP) and the 2025 Water Shortage Contingency Plan (WSCP), which outline strategies for long-term water resource planning, regulatory compliance, and ensuring supply reliability under a broad range of future conditions. The UWMP and WSCP forecast sufficient water supplies to meet anticipated demands through 2050, but it also underscores the need for continued investment in system resiliency. Section 8-3 of the WSCP identifies conversion of carryover balance to storage as a mitigating action for future financial risks associated with water shortages and shortage response actions.
To proactively address potential supply shortfalls, the City may utilize tools such as carryovers, storage, and other flexible water-rights mechanisms available through the WRD. These tools allow the City to respond to deficits without immediately escalating potable water restrictions. In alignment with these strategies, staff recommends converting a portion of the City’s carryover account to storage. Converting available water rights into permanent storage strengthens the City’s ability to meet future needs by securing supplies beyond the annual pumping allocation and preserving flexibility during periods of higher demand.
Staff’s recommendation is consistent with discussions held during Opportunity Study Areas Environmental Impact meetings regarding the City’s broader efforts to reinforce water-system resiliency to support future development. There are currently six active planning projects in development phases which highlights the importance of securing additional water through storage conversion to meet future demand. Additionally, the Opportunities Study Area could potentially produce several hundred residential units along with new commercial, high technology, aerospace, and other uses. The City’s proactive land use planning efforts underscore the importance of planning ahead to meet the needs of the community.
To ensure the Storage Conversion is processed the City must submit a request to WRD (Attachment A). The proposed storage conversion also effectively locks in a lower replenishment assessment rate for converted water using the FY 2025-26 replenishment assessment rate schedule. If approved and processed, WRD would provide an invoice for 440.52 acre-feet of water at the rate of $454 per acre-foot. Staff also prepared a corresponding budget resolution to effectuate the recommended actions (Attachment B).
Reviewed for Fiscal Impact:
_________________________
Siamlu Cox
Attachments:
A. Request for Carryover Conversion
B. Budget Resolution
C. Budget Adjustment Status Report