Background & Key Dates

The Kern Water Bank was developed in response to wide fluctuations in California surface water supplies. It is a highly effective water storage project designed to enhance groundwater resources, to supplement inconsistent surface water supplies, and provide a more stable, reliable and sustainable source of water particularly in dry years.  The Kern Water Bank generally accomplishes this by storing surface water that becomes available in wet years, including flood water flows that might otherwise not be conserved, in a groundwater aquifer.  Those banked water supplies are later recovered for beneficial uses, typically in dry and critically dry years, when surface supplies are significantly diminished.

For decades prior to the Kern Water Bank’s development by the Kern Water Bank Authority (KWBA), most of the 20,000 acres on which the Kern Water Bank was built was used for farming. In 1988, the property was acquired by the California Department of Water Resources (DWR) on behalf of the State Water Project (SWP) Contractors, which planned to develop a functioning water bank on the property known as the Kern Fan Element of the Kern Water Bank (KFE).  The SWP Contractors paid all the costs of DWR’s efforts to develop a water bank on the KFE property.  Despite spending tens of millions of dollars and years of studies, testing and other efforts, DWR encountered many legal, institutional and environmental impediments to the implementation of a water bank on the property. DWR ultimately concluded that development of a water bank on the KFE property by DWR as part of the SWP was not feasible and halted all work on the KFE banking project.

Prompted by several dry water years and disputes by and among SWP Contractors relating to the allocation and management of SWP water supply shortages, mediated negotiations between the SWP Contractors and DWR in 1994 led to the Monterey Agreement. The Monterey Agreement was a Statement of Principles proposed to avoid litigation and settle a number of longstanding differences between certain of the SWP Contractors and DWR relating SWP management, water allocations and the operation of the SWP.  One of those principles was providing for the transfer of the KFE property to local water agencies who believed in the water bank concept and were willing to take the financial and environmental permitting risks to develop the property into a functioning water banking facility, which would become known as the Kern Water Bank project.  As provided in the Monterey Agreement, SWP Contractors were to obtain determinations from their respective Boards of Directors as to whether the Statement of Principles was acceptable, and, if ratified, their SWP long-term water supply contracts were to be amended as appropriate to conform to the Statement of Principles.   The SWP amendment, vetted and approved through public processes by SWP Contractors’ Boards of Directors to implement the Statement of Principles, is known as the “Monterey Amendment.”    

All of the SWP Agricultural Contractors, as well as the fifteen member units of the Kern County Water Agency, were offered the opportunity to participate in the development of a water banking project on the KFE property, which became known as the “Kern Water Bank,” but only five of these decided to do so. Those agencies that decided to participate, in addition to a mutual water company, all became member entities of a separate public entity created pursuant to the California Joint Exercise of Powers Act called the “Kern Water Bank Authority” – and are located in Kern and Kings Counties within the San Joaquin Valley.

The participants of the KWBA relinquished, or caused to be relinquished, and DWR retired 45,000 acre-feet of SWP entitlement (now known as annual “Table A amount”) to DWR in exchange for the KFE property.  This retired Table A amount is presently would be worth at least $5,500/acre-foot or more than $250 million.  In addition, as part of the KFE property transfer, the SWP Contractors funded minor remediation work on the site to address contamination associated with past oil and agricultural activities, and DWR transferred all future liabilities to the KWBA in exchange for $3 million.   Since the transfer, the Kern Water Bank Authority has conducted necessary environmental review, including as required by CEQA, obtained the required permits, performed remediation, and invested about $70 million in infrastructure and improvements, including wells, canals, pump stations, and pipelines.  In addition, KWBA members have recharged nearly 3 million acre-feet of water in wet years and recovered 1.7 million acre-feet of water in dry years when available surface supplies were insufficient.  The KFE property transferred to KWBA became known as the “KWB Lands.”

The water in storage and the costs to recharge and extract it are borne exclusively by the members of the KWBA.  Major infrastructure projects were funded through participant assessments, bonds and other commercial financing ($46 million), a Prop 204 loan ($5 million), and a Proposition 13 grant ($3.4 million) and two Proposition 1 grants ($4 million).  KWBA’s members are solely responsible for the repayment of the loans used to fund the improvements.