A decision in Montecito could lead to the water supply for a brand-new community proposing 4,000 homes and much more on now-vacant land at Solomon Hills south of Orcutt. 

The Montecito Water District Board of Directors this week will consider entering into a non-binding letter of intent concerning the future sale of a portion of the district’s State Water Project allotment. The meeting will begin at 9:30 a.m. Tuesday at the district office, 583 San Ysidro Road, Montecito.

Solstra Communities California LLC has proposed building up to 4,000 homes as part of a new community for the Solomon Hills Project sitting on 4,195 acres west of Highway 101 and two miles east of Highway 135. Development is planned for nearly one-half the land, or 1,903 acres.

Historically, the annual State Water Project deliveries fluctuate based on yearly rainfall and snowfall levels that affect California’s supply. While reliability has decreased, State Water costs have increased, the project’s customers have noted.

A partial sale of its State Water allocation would position the Montecito district by providing an upfront payment for the allotment and slash future operational and capital infrastructure costs related to State Water, district staff said.

The deal also will not impact the reliability of the water supplies for the Montecito district amid a shift relying on ocean desalination to help meet the needs

“We have been building this plan for years,” said Floyd Wicks, who is serving his 10th 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. 

“Our board and staff planned very strategically, and the District has led the way to a more drought-proof water supply for our Montecito and Summerland customers,” Wicks added. 

Montecito would sell about 1,400 acre feet of its allocation, which amounts to approximately 40% of its interest in State Water. 

An acre foot is a measurement for the amount of water it would take to cover a football field at a depth of 1 foot. The 325,851 gallons in an acre foot are enough water to supply two to three households for an entire year.

The deal could add up to $40 million by 2028 to the Montecito district’s coffers. Solstra also will pay transaction costs of $600,000 among other costs.

Tuesday’s discussion will only be one step toward the transfer of Montecito’s allocation. If the letter of intent gets approval, the district and Solstra representatives would draft the purchase agreement with final approval expected in spring 2027.

Montecito has participated in State Water since 1997 and would retain 1,900 acre feet of its annual allocation.

Even with an agreement in place, Montecito officials said, the sale would not be finalized until the development receives all final approvals, which could take several years. 

The county kicked off the environmental review process for Solomon Hills earlier this year with a scoping meeting. 

Spelled out in a specific plan, Solomon Hills envisions 4,000 single- and multi-family residential units along with more components to make up a new community.

The development would add up to 525,000 square feet of office space; 125,000 square feet for businesses such as a grocery store, pharmacy and restaurants; up to 104,800 square feet of public institutional uses; 20,000 square feet of park and recreation space; and approximately 950 acres of open space. The project site would also include a 506-acre conservation easement.

Public facilities would include a new school for transitional kindergarten through eighth grade along with a fire station and law enforcement offices.

At the time of the March scoping meeting to identify potential environmental concerns, officials said a water source for the project along with the highway interchange plans remained in the works.

Several potential water sources mentioned included imported supplies from the Cadiz Water Project in San Bernardino County and the State Water Project, noting the possibility of a pact with Montecito. 

Water availability will prompt an added analysis as part of the applicant’s extensive environmental review process.

“Because these sources may not be reliably available at the time of project development, the adequacy of the water supply will require further evaluation in a Water Supply Assessment, which is being prepared by the applicant,” the scoping document said.

In March 2023, the county Planning Commission accepted the General Plan amendment and rezoning applications with various steps leading toward launching the formal environmental process in March 2026.

Once the draft environmental impact report is completed, it will be available for public review and comments for 45 days, with the comments and needed adjustments included in the final EIR.