Revisions to an agreement between the Goleta Water District and a developer on the Gaviota Coast could smooth out a long-standing question of whether the district acted in good faith more than 10 years ago for a project that has not yet materialized.

In 1998, the district accepted a payment of $4.5 million from CPH Dos Pueblos Associates in anticipation of infrastructure that would be necessary in the event it received permission to develop its project, once proposed as a golf course called Dos Pueblos Links on a 208-acre swath of Gaviota Coast land. The district issued a can-and-will serve letter signaling its intention to provide water to the property.

Plans for the golf course were scrapped in 2003 after they were rejected by the California Coastal Commission when endangered red-legged frogs were found on the site. The developer returned with plans for two luxury homes on 130 acres, known locally as the “Makar property,” the necessary annexation of which was challenged by the Gaviota Coast Conservancy.

In 2009, Judge Thomas Anderle sided with the environmental group, but CPH Dos Pueblos won on appeal. Still, the project has not materialized since.

Meanwhile, questions have been raised as to whether the district, now in financial dire straits with no cash reserves, might be liable for the $4.5 million. According to a letter written by the developer, the district did indeed act in good faith.

“CPH Dos Pueblos Associates LLC reaffirms its agreement that the district’s interest in the approximately $4.5 million paid … is now fully vested in the district and CPH Dos Pueblos Associates will not now or hereafter seek a refund of all or any part of those monies.” the letter reads. However, the developer maintains its ability to make claims against the district if future actions constitute lack of good faith efforts to provide water to a future development.

Also on Tuesday evening, the district board took in the final draft of its Water Supply Management Plan, a document that studies existing water supply, its sources, current demand and projected future demand over the next 20 years.

Consultant Dr. Stephen Bachman said that water supplies in normal conditions (16,500 acre-feet per year) exceed existing demand (14,600 acre-feet per year), and during conditions similar to the 1986-91 drought, supply and demand are about even, though some conservation may be needed. In times of extended drought, even more conservation would be needed.

However, he said it will be necessary to implement more stringent measures as demand increases over the next 20 years.

Dr. Bachman proposed a “hybrid priority” solution, which would include the use of both Cachuma water and groundwater, a measure that would take advantage of Cachuma spill events, “free water” that could go to replenishing the groundwater supply. Other suggestions include continued monitoring, and over the next four years, an evaluation of pumping capacity.

The board approved the report 4-1, with Director Bert Bertrando disagreeing with assumptions made by Bachman about the relative costs of water from the district’s varied sources.

The board unanimously approved Tuesday a contract with Kennedy/Jenks Consultants for a state-required new Urban Water Management Plan. The document would discuss various topics related to current and future water supply, including anticipated build-out and a drought contingency plan.

In addition, the board adopted an ordinance establishing a reserve policy that would establish $6 million in cash reserves for capital, operating and other expenses, a policy that may be amended at least once a year by the board.

It will be awhile, however, before the cash-strapped district will be in compliance with its own policy, GWD President Rosen acknowledged. Facing millions of dollars in essential infrastructure improvements and a depleted cash reserve, the district has been exploring ways to get back in the black, including a new rate system and increased one-time connection fees for new customers or existing customers seeking new connections.

— Noozhawk contributing writer Sonia Fernandez can be reached at sfernandez@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk or @NoozhawkNews.