The Santa Margarita Groundwater Basin (SMGB) is a primary source of water supply for Scotts Valley, San Lorenzo Valley and Santa Cruz. It covers over 30 square miles in the Santa Cruz Mountains foothill forming a triangular area that extends from Scotts Valley to the east, Boulder Creek to the northwest and Felton to the southwest.

The major water purveyors that directly rely on the supply from SMGB are Scotts Valley Water District (SVWD), San Lorenzo Valley Water District (SLVWD) and Mount Hermon Association (MHA). SMGB is also the sole supply source for 13 small water systems and over 1,100 private well users. In addition, the City of Santa Cruz derives a major portion of its supply from the San Lorenzo River watershed that overlaps the basin.

The decline of groundwater levels in many parts of the basin occurred during 1985-2004 representing a loss in groundwater storage in SMGB by an estimated 28,000 acre-feet resulting in diminished local water supply and reduced sustaining base flows to local streams that support fishery habitats. Thanks to conservation and other management efforts at local water agencies, the total pumping from SMGB has decreased by 45% since 1997. For the last 10 years, the demand and supply in the basin have been in balance.

In 2014, the State of California adopted historic legislation to help manage its groundwater, the Sustainable Groundwater Management Act (SGMA). The SGMA provides a framework for local authorities to manage groundwater supplies sustainably. Recognizing that groundwater is most effectively managed locally, the SGMA empowers local agencies to achieve sustainability within 20 years. SGMA establishes minimum standards for sustainable groundwater management, improves coordination between land use and groundwater planning, provides state technical assistance, protects water rights, and creates a mechanism for state intervention if a local agency is not managing its groundwater sustainability.

The Santa Margarita Groundwater Agency (SGMWA) was formed in response to SGMA and operates as the Groundwater Sustainability Agency for the Santa Margarita Groundwater Basin.

The SMGWA oversees the groundwater management activities of the Santa Margarita Basin Area in Santa Cruz County, California. The agency has three member agencies: Scotts Valley Water District, San Lorenzo Valley Water District, and County of Santa Cruz and is governed by an 11-member Board of Directors comprising of two representatives from each member agency, one representative from the City of Scotts Valley, one from the City of Santa Cruz, one from Mount Hermon Association, and two well owner representatives.

Under the Sustainable Groundwater Management Act of 2014, over-drafted groundwater basins need to be sustainably managed by a GSA through the development of a Groundwater Sustainability Plan (GSP). The GSP must be completed by 2022 and the Basin must reach sustainability by 2042.

Key Milestones

• The early 1980s: SVWD began actively managing groundwater in the area to increase water supply reliability and to protect local water supply sources.
• 1983: SVWD instituted a Water Resources Management Plan to monitor and manage water resources.
• 1994: The District formally adopted a Groundwater Management Plan in accordance with AB3030, also known as the Groundwater Management Act under Water Code section 10750.
• 1995: SVWD, SLVWD, MHA, LCWD, City of Scotts Valley and County of Santa Cruz signed a Memorandum of Understanding forming Santa Margarita Groundwater Basin Advisory Committee that was actively involved in the cooperative groundwater management of the basin until its dissolution and substitution with Santa Margarita Groundwater Agency (SMGWA) in 2017.
• 2017: SMGWA, a Groundwater Sustainability Agency (GSA), was formed as a joint powers authority in June.
• 2021: The Groundwater Sustainability Plan (GSP) was adopted by the SMGWA Board of Directors in November.
• 2022: The GSP was submitted to the state Department of Water Resources (DWR) in January. 
• 2023: The DWR approved the GSP in April.
• 2023: The SMGWA installed seven new groundwater monitoring wells to increase current understanding and assess future conditions of the Basin.