Officials say the deal will bring more water to farmers southwest of Visalia, and increase Visalia's water supply.
As Visalia works on a $140 million update to its wastewater treatment facility, they were looking for someone to take some of the excess treated water that will result from the project.
It's too expensive to pump the water upstream to the city's east side. The water will be near drinking water standards.
The Tulare Irrigation District will take it to supply water to up to 5-thousand acres of farmland and in return they'll give water back to the city of Visalia during wet years.
Visalia Natural Resource Conservation Manager Kim Loeb said, "It does help improve the water supply in the city. The city and region as a whole are using water just faster than nature can replenish it. In the city the water table has dropped an average of 3-feet every year for the last 25 years."
The project should be up and running in three years.