The Santa Cruz Water Department (SCWD) provides water to the City of Santa Cruz, as well as a portion of the unincorporated area of Santa Cruz County and a small portion of the City of Capitola. The City has been actively considering possible new water supplies for the past 16 years. The various projects that were studied ranged from groundwater to surface water impoundment, but all had one thing in common - almost all were sized to serve nearly all demand in a drought condition as severe as the 1976-1977 event. After repeated failures to identify a water supply augmentation project on which key stakeholders could agree, the City Council directed that the approach change to one that considers combinations of water conservation, use curtailment in droughts, and development of a more modest additional supply. This integrated water planning (IWP) process began in 1997 with the objective of responding to the current drought-related crisis and planning for future growth. Specifically, it must help the City: reduce near-term drought year shortages; and, provide a reliable supply that meets long-term needs while ensuring protection of public health and safety. This paper presents an outline of the IWP that includes: the four current water supply sources for the City of Santa Cruz; water conservation in the IWP; base case supply deficiencies; options for balancing supply and demand; evaluation criteria; formulation of resource strategies; and, strategy evaluation. Includes tables, figures.