American Canyon officials are weighing whether to shrink the city's stake in Sites Reservoir, a massive California water-storage project, as new demand forecasts suggest the city may not need as much capacity as it originally planned. The city council discussed the matter at its October 20 meeting, with a final decision on how big a commitment to make expected by mid-December.
American Canyon currently holds a 1.8% share of the $6.8 billion project, according to the Water Education Foundation, translating to roughly 4,000 acre-feet of yield and about 25,000 acre-feet of storage capacity. City Manager Jason Holley suggested the city could fine-tune that participation and potentially cut its share down to 1%, a move that would reduce both the financial exposure and the water available to the city down the line. As reported by The Napa Valley Register, the city's current share carries an estimated construction-cost commitment of $177 million, though American Canyon would not owe that sum upfront — it would instead borrow and make payments over time, largely during the project's anticipated seven- to eight-year construction period.
At the full 1.8% stake, the city estimates an annual cost of about $13 million if the entire $177 million is financed, Holley said, according to the same report. The city may lean on grants and a federal long-term loan and credit assistance program to help cover its share. So far, American Canyon has invested $3.6 million upfront toward the project.
Why the City Is Rethinking Its Share
Holley told the council that American Canyon has struggled historically with insufficient water storage and limited control over its own water future — a vulnerability underscored by the fact that American Canyon is the only Napa County city without a local reservoir supplying its water, the Register reported in earlier coverage. The city looked at building its own dam as an alternative to joining Sites, but determined that maintaining, retrofitting, inspecting and repairing a dam on its own would be too costly. Holley said participating in the larger regional project remained the most cost-effective option available to the city.
Water-use patterns have shifted since American Canyon first signed on. The city used about 3,600 acre-feet through a major state-managed water system in 2014, but that figure dropped to roughly 2,200 acre-feet last year, according to Holley — a reduction of about 1,400 acre-feet, or 39%. That decline came even as the city added about 4,000 residents and more than 10 million square feet of commercial and industrial space, Holley said, crediting improved water-management practices and infrastructure repairs for the drop in demand.
City staff used a simulation model from the California Department of Water Resources and the U.S. Bureau of Reclamation, drawing on historical rainfall, snowpack and hydrological records from 1921 to 2021, to estimate how Sites deliveries might play out over the next 100 years. Under that model, American Canyon would use about 4,000 acre-feet in 68% of years and could need as much as 10,000 acre-feet in 24% of years. Water availability in any given dry year would also depend partly on how much is already stored, especially after consecutive dry years.
Council Members Press on Costs and Flexibility
Council members Brando Cruz, Melissa LaMattina and David Oro all praised the city's investment in the project while voicing concerns about cost and water-delivery uncertainties. Cruz, who supports the Sites project, asked whether American Canyon could buy or sell some of its storage capacity depending on its needs. Holley confirmed the city could seek to sell some of its capacity to another project participant, or buy additional capacity from another agency, but said the specific capacity-trading rules were still being worked out.
LaMattina asked what the estimated $177 million share and $13 million annual cost could mean for a typical customer's monthly water bill. Holley said the impact on customer bills remains uncertain, since it depends on factors including future water sales, new customers, financing terms and infrastructure costs. Oro said the council must weigh what expense it can stomach, noting that failing to secure water rights also carries a cost during droughts.
Because the Sites project's area of use includes Napa and Solano counties, the same conveyance infrastructure that would deliver water to American Canyon could also be used to sell or transfer water to other regional agencies, the Register reported. When the city does draw on its share, water stored at Sites would reach American Canyon via the North Bay Aqueduct system.
What Sites Reservoir Would Look Like
Sites Reservoir is planned near Maxwell in western Colusa County, about 80 miles northwest of Sacramento, and would rely mostly on existing canals and infrastructure rather than new construction. With a capacity of 1.5 million acre-feet, it would become California's eighth-largest reservoir, designed to capture excess Sacramento River flows during eligible periods. Nearly 30 public agencies — including counties, water districts and regional water authorities — have agreed to participate in the project, according to the Water Education Foundation.
Cost estimates for the project vary by source. The Register has reported the total project cost could reach $9.4 billion over an eight-year build period due to construction-cost escalation and inflation, while another estimate puts the cost at at least $6.2 billion, compared with an original estimate of $4.5 billion. That redesign also shrank the planned reservoir from 1.8 million acre-feet to 1.5 million acre-feet and cut projected average annual delivery capacity from 505,000 to 243,000 acre-feet.
Construction timelines also differ depending on the source. The Register has reported that construction is expected to break ground in the first quarter of 2027 and begin operations in the mid-2030s, while the Water Education Foundation states that, contingent on securing the project's water-right permit and full funding commitments from participating agencies, construction could begin in 2027 and run until 2033. Separately, Bond Buyer has reported that current regulatory conditions could slash the project's usable water by as much as half. Under optimal conditions, Bond Buyer notes the reservoir is expected to supply between 300,000 and 400,000 acre-feet of water annually.
Financing and Funding Sources
The project's financing plan includes a Water Infrastructure Finance and Innovation Act loan from the EPA covering 49% of costs, with the remainder funded through notes and revenue bonds repaid by participating users, according to Bond Buyer. The federal government, through the Bureau of Reclamation, has approved $789 million for the project, according to Bond Buyer, while the state has awarded nearly $1.1 billion, per the Water Education Foundation. In June, the California Water Commission approved an additional $268.9 million for Sites, bringing the state's total eligible investment through its Water Storage Investment Program to $1.363 billion, as reported by Smart Water Magazine. That same month, Governor Newsom's office framed the funding as part of a broader push to expand the state's water-storage capacity.
Several regulatory and funding milestones are approaching before American Canyon has to make its final call. The State Water Resources Control Board is set to hold a Sites project water-rights hearing on November 4, and the Sites Reservoir Coalition is scheduled to review the project on November 6. American Canyon staff plan to return to the city council with updated cost and financing information on November 17, followed by expenditure and revenue scenarios in November ahead of the council's scheduled December 15 decision on whether to commit to the project's final-engineering phase. The California Water Commission could also consider additional grant funding later in December if participating agencies lock in their commitments.
