The Carpinteria Valley and Montecito water districts have received a $2.9 million settlement from engineering firm Penfield & Smith and the Cushman Contracting Corp. more than two years after a leak was discovered in the 21 million-gallon Ortega Ridge reservoir in which the two companies installed a four-acre aluminum cover in 2007.

The $18.5 million project had been completed to keep the reservoir — one of the Cachuma water system’s main balancing reservoirs, serving both the Montecito and Carpinteria water districts — in compliance with federal drinking water standards, but a 50 gallon-per-minute leak was discovered a short time later. Experts put the normal rate of leakage for a reservoir of that size and type at five to 10 gallons per minute.

Although the reservoir’s water level had to be reduced two-thirds to lessen the leak to about 10 gallons per day, water managers and their attorneys were tight-lipped about how they would pay for a remedy while litigation against the contractors ensued.

Many were concerned that the leak could damage the structural integrity of the earth-fill dam that forms the reservoir, but representatives from the Bureau of Reclamation — the agency administrating the dam — and the U.S. Geological Survey — which monitors the dam — were adamant that the ground below the dam had not become so saturated that it posed any danger to residents in the valley below.

“Now we have to come up with a strategy for how to correct the problem,” said Carpinteria Water District General Manager Charles Hamilton, adding that he’s working with Montecito Water District General Manager Tom Mosby to determine an appropriate solution.

One option he said is being seriously considered is installing a high-density polyethylene (HDPE, a type of heavy duty plastic) liner rather than the much more expensive alternative of breaking up and replacing sections of the reservoir’s concrete floor.

The original estimate for the repair, which was centered on concrete work, had been projected at $7.5 million. The two districts already had spent $30,000 to perform dye testing and to hire scuba divers to inspect the leak.

“We’re using the settlement money to make sure that the liner fix is durable for another 50 years,” said Hamilton, adding that in other locales, liners made from HDPE have been known to last for at least 20 years. He said Carpinteria and Montecito’s boards left money in reserve over the amount required to pay for repairs to the liner should it fail again.

Mosby said the reservoir will have to be taken out of service for three to five months this winter in order to complete the needed repairs, but because demand for water during the winter months is so much lower than during the hot summer months, he doesn’t anticipate any service interruptions.

“When we put the aluminum cover on in 2007, we took the reservoir out of service for nearly seven months without causing problems with service,” Mosby said, adding that his district usually delivers about 700 acre-feet during the month of August — normally the year’s hottest month — compared with about 200 acre-feet in February.

Santa Barbara County Superior Court Judge Rick Brown ordered the defendants to make full payment to the two districts in early June. The districts reported that the money has been deposited in their respective accounts.

— Noozhawk staff writer Ben Preston can be reached at bpreston@noozhawk.com.