For City Council Meeting November 25, 2025
TO: Honorable Mayor and City Council
FROM: Tanya Williams, City Manager
Title
Request City Council/Rialto Utility Authority to: (1) Approve an Agreement Between the City of Rialto and the County of San Bernardino for an Additional Three-Year Term (January 1, 2026 - September 30, 2028) to Allow Continued use of 1,600 acre-feet of Standby Water Lease Within the Rialto/Colton Groundwater Basin, and (2) Authorize the City Manager to Execute all Related Documents.
Body
RECOMMENDATION
Staff recommends that the City Council/Rialto Utility Authority:
1) Approve an agreement between the City of Rialto and the County of San Bernardino for an additional three-year Term (January 1, 2026 - September 30, 2028) to allow continued use of 1,600 acre-feet of Standby Water Lease within the Rialto/Colton Groundwater Basin; and
2) Authorize the City Manager to execute all related documents.
BACKGROUND
The City of Rialto (Rialto) and County of San Bernardino (County) first entered into Agreement No. 00-289 on May 20, 2000, authorizing the County to use up to 1,600 acre-feet per year of Rialto’s groundwater rights leased to the Fontana Union Water Company (FUWC) for compliance with Regional Water Quality Control Board Order No. 99-86 (Cleanup and Abatement Order No. 98-96).
In February 2019, the Standby Water Lease between Rialto and FUWC was extended for another 20 years. Both parties agreed to pursue a Consumer Price Index (CPI)-based rate adjustment of up to 5 percent annually, applied to the County’s payment obligations.
The original agreement with the County expired in May 2020, after which the County obtained a two-year extension (through December 31, 2022) approved by the City Council on September 14, 2021. A subsequent Amendment No. 1 extended the agreement through December 31, 2025, allowing continued County use of up to 1,600 acre-feet of standby water and corresponding reimbursements to Rialto.
The adjustments are based upon the accumulative CPI from the beginning of the agreements and carried forward to current. The CPI is based upon the US Department of Labor Bureau of Labor Statistics’ Consumer Price Index for all Urban Consumers (CPI-U) and shall not exceed the annual increase of 5%.
The County is continuing good-faith discussions with FUWC and the Regional Board regarding the long-term need for the 1,600 acre-feet allocation and now seeks to extend the agreement through September 30, 2028, with an option for two additional three-year renewals.
At its meeting on October 30, 2025, the Water Subcommittee reviewed the proposed extension of the standby water lease and provided feedback that the item be forwarded to the City Council for consideration.
ANALYSIS/DISCUSSION
The proposed Standby Water Lease (effective January 1, 2026) provides the following payment schedule to Rialto:
The County must notify Rialto in writing 30 days before each water year whether it will exercise its right to pump under the lease. Rialto will invoice the County after the close of each water year (September 30), and the County must remit payment within 60 days of invoice.
The agreement maintains the maximum 5 percent annual CPI adjustment permitted under the FUWC lease and remains consistent with Baseline Feeder replacement water costs of approximately $210 per acre-foot.
Both parties reaffirm Rialto’s ownership of sufficient water rights within the Rialto/Colton Groundwater Basin to honor the lease and commitment to the Regional Board Order’s compliance objectives.
ENVIRONMENTAL IMPACT
The proposed action is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. According to Section 15378(b), a Project does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY
Approval of the proposed action also complies with the following City of Rialto Guiding Principles, General Plan Goals and Policies: “Our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.”
Approval of the proposed action also complies with the following City of Rialto Goals and Policies:
Goal 2-29: Protect and enhance Rialto’s surface waters and groundwater basins.
Policy 2-29.1: Work with local water agencies and the State and Federal governments to clean up and mitigate perchlorate contamination within the basin.
Policy 2-29.5: Apply methodologies and assign responsibility to protect the quality of groundwater from pollution by landfills and industrial uses.
LEGAL REVIEW
The City Attorney's Office has reviewed the agreement and approved it as to form.
FINANCIAL IMPACTS
Operating Budget Impact
Funds associated with the Standby Water Lease are administered under the Concession Agreement. Rialto Water Services (RWS)-Veolia invoices the County of San Bernardino annually on behalf of the City for the applicable standby and production charges, consistent with the approved lease terms. Revenues from these invoices are recorded as non-rate revenue within the Trust Accounts.
Capital Improvement Budget Impact
There is no impact on the Capital Improvement Budget.
Licensing
This action does not require a business license.
ATTACHMENTS
Agreement between City of Rialto and County of San Bernardino for Standby Water Lease.