HomeMy WebLinkAbout04/21/1992, 1C - APPROVAL OF AGREEMENTS FOR STATE WATER PROJECT I���N��MVNIIIIIII�IZIIIIINMEETING DATE:
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Aril 21 1992
91111010,mmmump COUNCIL AGENDA REPORT ITEM NUMBEF:/�/
FROM: William T. Hetland, Utilities Director �L 1 `(�
SUBJECT: APPROVAL OF AGREEMENTS FOR STATE WATER PROJECT
CAO RECOMMENDATION: Adopt Resolution authorizing the Mayor to execute
Water Supply Agreement for State Water Project and
the Water Treatment Plant and Local Facilities
Agreement for 3000 afy and provide direction to staff
to negotiate changes in the agreements.
DISCUSSION
This agenda report is the third step in the City's approval of the State Water Project
(SWP). The first step authorized the City's further consideration to participate in the
SWP. The second step certified the Coastal Branch and Local Facilities Environmental
Impact Reports and made certain findings and conditions. This report will be the formal
approval of the City's participation in the SWP by authorizing the execution of the
following two required agreements:
o Water Supply Agreement Between San Luis Obispo County
Flood Control and Water Conservation District and the City
of San Luis Obispo.
o Water Treatment and Local Facilities Agreement By and
Between San Luis Obispo County Flood Control and Water
Conservation District and the City of San Luis Obispo.
Attached as Exhibit A is the letter titled State Water Project Invitation for City to
Participate from Mr. Clint Milne, County Engineer.
WATER SUPPLY AGREEMENT
The Water Supply Agreement is the agreement with the San Luis Obispo County Flood
Control and Water Conservation District (District) for State water. An Executive
Summary and the Agreement are attached as Exhibit B.
The agreement is basically the same for each agency choosing to participate. By
entering into this agreement, the City will receive a proportional share of the District's
State water entitlement. In return, the City will pay its proportional share of the
District's State Water costs. The costs are determined in the same manner as in the
State's Standard Provisions for Water Supply Contracts. This will also include a cost for
local administration by the District. This agreement requires the City to pay the District
its share of costs whether or not the City receives any State Water. This is consistent
with the District's obligation to the State. If there is a reduction in the amount of water
delivered by the State Water Project, then the City would share proportionally in all
delivery amounts.
The agreement also has provisions for the use of project water. This use provision is
one of the mitigation measures in the Local Projects EIR. Article 6 (b) Use of Project
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COUNCIL AGENDA REPORT
Approval of Agreements for State Water Project
Page 2
Water requires each contractor to adopt a water management plan or program which
shall demonstrate that State water will be first used to offset it's proportionate share of
any groundwater basin overdraft. The City supports proper water resource management
and a balancing of all water resources. It has demonstrated that by the adoption of a
Water Management Plan, establishing a Water and Wastewater Management Element of
the City's General Plan and annually reviewing its water resources in the Annual Water
Operational Plan. Therefore, staff believes that this provision, which gives the District
authority over the City in how it can use its water resources, is totally unnecessary as
part of the agreement, since it is identified as a mitigation measure in the EIR.
Because of the timing requirement to execute the agreement by May 15, 1992, Staff
recommends that the Council authorize the staff to negotiate with the District for the
removal of Article 6 (b) and for the Mayor to execute the final agreement.
WATER TREATMENT AND LOCAL FACILITIES AGREEMENT
The Water Treatment and Local Facilities Agreement is an agreement with the District
which will provide for water treatment of the state water and the necessary local
facilities. An Executive Summary and the Agreement are attached as Exhibit C.
The District will enter into a contract with the Central Coast Water Authority to provide
water treatment and local facilities for the State Water Project. The Central Coast
Water Authority is a joint powers agency composed of water contractors in Santa
Barbara County. By contracting with the CCWA it will be possible to achieve an
economy of scale and, therefore, significant costs savings in financing, designing and
construction of the treatment plant and local facilities.
CCWA will finance and build the necessary water treatment plant and local facilities,
while the District will own and operate the facilities, unless a separate agreement is
enter into by the District and the City. The City will pay rates based on the City's pro
rata share of fixed treatment costs and the City's share of variable operational costs.
The City will also pay its pro rata share of the local facilities costs.
The City will have to start paying costs at different times. Fixed treatment plant costs
will have to be paid when debt service on the CCWA bonds commences. Fixed
operation and maintenance costs commence just prior to completion of treatment plant
and variable operations and maintenance costs commence just prior to delivery of water.
After the first year of operation the fixed payments will be required on May 15 of each
year, in advance, and variable costs will be paid quarterly, in advance.
The City promises to set water rates at such levels to pay its obligations under the
agreement. Additional restrictions on disposing of water systems, permitting competitive
water systems in the City, maintaining the City water system, insurance, recording
keeping and paying taxes are also include in the agreement.
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ONS"" COUNCIL AGENDA REPORT
Approval of Agreements for State Water Project
Page 3
The agreement also includes what is called a "step up" provision. This provision allows
the District to increase the City's payment by 25% to cover defaults of any other San
Luis Obispo County contractor. This 25% increase allows the District to avoid being in
default to CCWA and, therefore, gives the bond rating agencies and credit markets
greater security. This should result in better interest rates for the bonds and lower rates
to the City. Before the "step up" provision is applied, the other contractors will have the
opportunity to assume the defaulting contractor's water. If the City had to make an
additional payment, then the City would be entitled to its share of the defaulting
contractor's water.
FISCAL IMPACT
The fiscal impact of approving these two agreements was included in the costs section
of the State Water Project agenda report and is summarized here.
Figure 1 shows a total cost of $608 per acre foot for the City of San Luis Obispo and
assumes that the County will subscribe for 12,268 acre feet, 10,286 for agencies that sign
SWP contracts and 2,000 of which is unallocated or reserved for some future water
users. It also assumes that the City subscribes for 3,000 acre feet per year. The costs
are broken down into the various components, including SWP both for existing delivery
systems and the Coastal Branch, treatment and local facilities. These financial estimates
were provided by the financial advisor for the project, Smith-Barney, and the assumptions
were ones that they felt were conservative and representative.
SUPPLY
Coastal
SWP Aqueduct TREATMENT DISTRIBUTION TOTAL
Debt Service $ 27 $198 $105 $24 $354
Administration N/A N/A $ 3 N/A $ 3
Operation and
Maintenance $ 23 $169 $ 59 N/A $251
TOTAL COST
PER ACRE FOOT $ 50 $367 $167 $ 24 $606
City Share of
Capital Costs $1,21.5,000 $9,020,000 $2,880,000 $727,000 $13,842,000
Figure 1 CITY OF SAN LUIS OBISPO - State Water Per Acre Foot Cost
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COUNCIL AGENDA REPORT
Approval of Agreements for State Water Project
Page 4
If the City subscribes for 3,000 acre feet per year of state water at $608 per acre foot,
it will need to generate $1.8 million each year. This would result in a monthly cost
requirement for an average single family resident of about $7.00 per month. This
amount would decline over time as connection fees and more users are added to the
system.
The connection fee is to recover the cost of the SWP from new users as they connect
to the City system and to reimburse the current rate payers over time. The City's
current connection fee of $2,627.60 per single family equivalent is adequate to fully
recover SWP costs. No increase in the connection fee would be required.
SUMMARY
For the City to obtain water from the SWP, it is necessary to execute the Water Supply
Agreement and the Water Treatment and Local Facilities Agreement with the District.
Both of these agreements are essentially the same that other participating agencies will
enter into and are also consistent with the State's Standard Provisions of the State Water
Contract. Other than the areas identified in this staff report, it is very unlikely that the
District will make major changes in the agreement language. These agreements will
provide the City certain protections in receiving state water and will obligate the City to
certain covenants and payment requirements.
Attachments: Resolution A Resolution of the San Luis Obispo City Council for
Participation in the State Water Project
Exhibit A -Letter of Invitation to Participate in the State Water Project .
w/o enclosures
Exhibit B - Executive Summary and Water Supply Agreement
Exhibit C - Executive Summary and Water Treatment and Local Facilities
Agreement
P:\BILL\SWPAGEE.WP
RESOLUTION NO. (1992 Series)
A RESOLUTION OF THE SAN LUIS OBISPO CITY COUNCIL AUTHORIZING
THE EXECUTION AND DELIVERY OF A WATER SUPPLY AGREEMENT
AND A WATER TREATMENT AND LOCAL FACILITIES AGREEMENT
AND AUTHORIZING CERTAIN OTHER ACTIONS
WHEREAS, the City of San Luis Obispo is a Charter City duly organized and
existing under the Constitution and laws of the State of California;
WHEREAS, pursuant to the Ralph M. Brown Act constituting Chapter 9 of
Part 1 of Division 2 of Title 5 (commencing with Section 54950) of the California
Government Code this meeting was duly noticed;
WHEREAS, the City of San Luis Obispo intends to enter into a water supply
agreement (the "Water Supply Agreement") with the San Luis Obispo County Flood
Control and Water Conservation District (the "District") and a water treatment and
local facilities agreement (the "Water Treatment and Local Facilities Agreement") with
the District.
WHEREAS, a Final Environmental Impact Report, "State Water Project,
Coastal Branch, Phase II, and Mission Hills Extension' (Coastal Branch EIR") has
been certified by the State of California, Department of Water Resources, and all
requirements of the California Environmental Quality Act ("CEQA') have been
satisfied by the Coastal Branch EIR; and,
WHEREAS, the City Council has made certain environmental evaluations,
findings, determinations, and a statement of overriding considerations, for City
participation in the State Water Project; and
WHEREAS, Preliminary Design and a Final Environmental Impact Report,
"State Water Project Coastal Branch (Phase II) Local Distribution Lines and
Facilities" (SLO EIR") has been completed and certified by the District and all
requirements of CEQA have been satisfied relating to the construction of the local
distribution lines and facilities described in the SLO EIR; and,
WHEREAS, it is the desire of the City of San Luis Obispo as a responsible
agency to approve those portions of said local distribution lines and facilities which lie
within the City's jurisdiction.
NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS:
Section 1. Declaration of City Council. This City Council hereby specifically
finds and declares that the actions authorized hereby constitute and are with respect
to public affairs of the City, and that the statements, findings and determinations of
the City set forth in the preambles above and of the documents approved herein are
true and correct.
Resolution No. (1992 Series)
Section 2. Water SuRply Agreement.ement. The form of Water Supply Agreement,
presented to this meeting and on file with the City Clerk is hereby approved. The
Mayor and the City Clerk are each hereby authorized and directed to execute,
acknowledge and deliver said Water Supply Agreement in substantially said form, with
such changes therein as the City of San Luis Obispo may require or approve, such
approval to be conclusively evidenced by the execution and delivery thereof.
Section 3. Water Treatment and Local Facilities Agreement. The form of
Water Treatment and Local Facilities Agreement, dated as of March 1, 1992,
presented to this meeting and on file with the City Clerk is hereby approved. The
Mayor and the City Clerk are each hereby authorized and directed to execute,
acknowledge and deliver said Water Treatment Agreement in substantially said form,
with such changes therein as the City of San Luis Obispo may require or approve,
such approval to be conclusively evidenced by the execution and delivery thereof.
Section 4. CEOA Compliance. The City Council hereby adopts and approves
the certified Coastal Branch E1R and the certified SLA E1R and certifies that is has
considered the Coastal Branch EkR and SLO EkR and the environmental effects of
the facilities described therein, in reaching its conclusion to approve those portions of
said local distribution lines and facilities which He within the City's jurisdiction and in
malting its decision to enter into the Water Supply Agreement and Water Treatment
Agreement described in this Resolution. The City Council hereby adopts as being
true and correct the Findings, Conditions, and Statement of Overriding Considerations
previously adopted and incorporates the same by reference herein.
Section 5. Further Actions. The Mayor and City Administrator are hereby
authorized to do any and all things, and to execute and deliver any and all
documents, which they may deem necessary or advisable in order to give effect to and
comply with the terms and intent of this resolution, the Water Supply Agreement, the
Water Treatment Agreement and the SLA E1R and the Coastal Branch E1R.
Section 6. Effective Date. This resolution shall take effect immediately upon
its passage.
PASSED AND ADOPTED this day of April, 1992, by the following vote:
AYES:
NOES:
ABSENT:
Mayor
Attest:
City Clerk
Resolution No. (1992 Series)
APPROVED:
City trative Officer
1- Y.
tiW44. 1 W
Utilities Director
EXHIBIT A
- LUIS HIM COURT GSfl EPARTMEN
COUNTY GOVERNMENT CENTER • ROOM 207 SAN LUIS OBISPO, CALIFORNIA 93408
1
CLINTON MILNE PHONE (805) 549-5252 FAX (805) 546-1229 '
County Engineer
GLEN L.PRIDDY
DEPUTY COUNTY ENGINEER
ROADS
NOEL KING TRANSIT
SPECIAL DISTRICTS ADMINSTRATOR
FLOOD CONTROL
WATER CONSERVATION
April 9, 1992 COUNTY SURVEYOR
SPECIAL DISTRICTS
City of San Luis Obispo
P.O. Box 8100
San Luis Obispo, CA 93403
Attention: Bill Hetiand, Utilities Director
Subject: State Water Project
Invitation for City to Participate
Honorable City Council:
Based upon a request by the City Council in 1986 along with some 23 other agencies in San Luis
Obispo County and 19 in Santa Barbara County, the Boards of Supervisors of the two counties
requested the State Department of Water Resources to do the preliminary engineering studies and
environmental work on the proposed completion of the Coastal Branch of the State Water Project
The Environmental Impact Report (EIR) was completed and certified by the State in May, 1991.
The San Luis Obispo County Flood Control and Water Conservation District did the preliminary
engineering and the EIR for the local projects needed to take State Project water (a regional water
treatment plant and spur lines to the proposed service areas in our County). The Local Projects EIR
was certified by the Board of Supervisors on March 25, 1992.
It is now time for further action by your City. If San Luis Obispo is going to participate in the State
Water Project, your Council must execute two agreements with the San Luis Obispo County Flood
Control and Water Conservation District One agreement is for participation in the State-owned
facilities and the other for local facilities. This action must take place by May 15, 1992. Enclosed
are copies of the Master Water Supply Agreement between the District and the State of California,
the Master Water Treatment Agreement between the District and the Central Coast Water Authority,
the proposed Water Supply Agreement between San Luis Obispo and the District, and the proposed
agreement between San Luis Obispo and the District for local facilities. If San Luis Obispo chooses
to participate then you should authorize the execution of the last two agreements.
To assist you in your further action we have provided the following discussions of the issues we think
are most important
COST
There are two categories of costs associated with the SWP, the State facilities and the local facilities
needed to take State Project water. The following table shows cost estimates for a best case and a
worst case scenario. The best case would result if full entitlements are taken by all those
communities which have been included in the planning as reflected in the EIRs (State and Local
Projects). The worst case assumes little participation by communities in this County but with Santa
Barbara County communities participating.
The State facilities include the State's dams, reservoirs, power plants, pump stations, aqueducts and
the uncompleted portion of the Coastal Branch (which will consist of a buried pipeline, three pump
stations and a hydroelectric power plant). The State facilities cost will be influenced relatively little
by communities' participation or non-participation in this County (because Santa Barbara County
represents such a large portion of the Coastal Branch).
Commencement of costs would likely begin in fiscal year 1992-93. The following table shows
estimates of projected costs through 1996-97. The estimates are subject to revision because we are
not certain who the final participants will be. When such is known then the estimate can be re-
evaluated and adjusted. After 1996-97 there would likely be minor increases of costs due to cost
of living increases for the operation and maintenance part of the cost. The capital costs will remain
fixed once all capital expenditures are made which are expected to have occurred by late 1996.
The capital cost portion represents more than half of the cost in the early years. If inflation occurs
at about 5% then you may expect your annual costs to increase at about 2 1/2%. The capital costs
will all be repaid by the year 2035.
For your information, were desalted ocean water to be used, you could expect costs to be in the
order of four to five times higher than for State Project water. Although we do not yet have cost
estimates for Nacimiento water, I suspect that for the City they may prove to be relatively close to
the costs.of State water assuming that Nacimiento would also be designed for no "peaking" capacity
(see the following Section on the matter of no °peaking°) and assuming that most other communities
would be participating in the Nacimiento Project If "peaking" capacity is provided then the costs
may be in the order of 1/5 greater.
The following table has been developed on the basis that the City would take 3000/AF/yr. If the
City desires to increase its subscription, such may be possible provided that appropriate
environmental work.has been accomplished and with the approval of the Board of Supervisors.
Should the City wish to increase its subscription, then please advise by May 15, 1992 so that we
may present the matter for the Board's consideration (the Board would have to reserve an
entitlement for the extra water until the environmental work is accomplished).
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OPERATIONAL ISSUE (No 'Peakino
In 1963, when negotiating the Master Water contract, this District executed the agreement with the
provision that there will be no "peaking' capacity in the Coastal Branch [See Section 45(a) of Master
Contract]. The reason for not providing'peaking" capacity is one of economics - it enables building
a smaller pipeline thereby saving money. DWR plans some down time for maintenance so that even
when all subcontractors are taking their full entitlements there will be enough capacity to provide
full delivery in about an eleven-month period.
Note also, that should the City participate in the State Water Project it must plan for 'down time"
when the Coastal Branch or the spur lines serving the City are off for maintenance purposes. This
should prove to be a rare occurrence. The City's other sources of water should accommodate this
concern.
RELIABILITY
Temporay Reduction in Delivery
Please see Section 18(a) in the Master Agreement
During two critical drought periods in 1977 and then again in 1991 DWR temporarily reduced
deliveries of SP water to urban water users. In 1977 there was a 10% reduction and in 1991 after
five years of State-wide drought there was a 70% reduction. However, in both years supplemental
water was acquired and delivered to State water contractors as needed. In 1991 Governor Wilson
created a Drought Emergency Pool and almost 800,000 acre-feet of water was acquired for helping
needy communities (not just SWP contractors but others who could be served through the State's
water system). Such water could be purchased for $175 per acre-foot The plan was so successful
that 550,000 acre-feet of water were purchased by needy communities and the SWP purchased the
balance and placed it in storage for future use.
The complete SWP system has not yet been finished. Except for the Coastal Branch, essentially all
of the transportation facilities have been built and are operative. This is not the case for the facilities
which provide the water. At the present time the SWP can provide about 2.4 million acre-feet per
year as'a firm yield during a seven-year dry period. The State Water Project is able to deliver more
water during normal and wet years. The 30 State water contractors ultimately have an entitlement
of 4.2 million acre-feet per year (one contractor does not reach its full entitlement until the year
2019). The DWR is in various stages of planning and development of additional facilities to provide
additional project yield; e.g., Delta pumping facilities, Delta improvements to enable the diversion
of additional water during times of surplus to storage facilities south of the Delta, Kern Water Bank,
and Los Banos Grandes Dam and Reservoir.
Studies from the State's E.I.R. indicate that full municipal and industrial (M & 1) water entitlements
can be delivered in 53 percent of the years and half or greater of the entitlements can be delivered
in 95 percent of the years assuming existin State Water Project facilities and year 2000 water
4
demands of 3.7 million acre-feet of water per year. The reliability would increase with the planned
additions to the State Water Project at the ultimate demand of 4.2 million acre-feet per year. Under
these conditions, there would be full M & I entitlement delivery 70 percent of the years and 65
percent or greater delivery 95 percent of the years. Upon completion of the State Water Project,
complete reliability is expected. The.City should keep this in mind if it contracts for State water.
The reliability estimates can be translated into expected annual cost per acre-foot of State Project
water delivered. If it is assumed that State water will cost San Luis Obispo $500/AF and 85 percent
of this cost is fixed, then with the existing State Water Project facilities; in 53% of the years the cost
will be $500/AF, in 42% of the years the cost will be between $500 and $887, and in 5% of the
years the cost will be greater than $887. The long-term average unit cost with existing facilities will
be between $510/AF and $630/AF.
Planned but not yet constructed facilities will increase both the reliability and the cost of the State
Water Project When the planned facilities are completed, it is expected that; in 70% of years the
cost will be about $550/AF, in 25% of years the cost will be between $550/AF and $775/AF and in
5% of years the cost will be greater than $775/AF. The long-term average unit cost with planned
facilities will be between $555/AF and $615/AF. The City should keep this in mind if it contracts
for State water.
Linking to the State water system provides flexibility that no local project presently provides. Take
1991, for example, had the City been able to take State Project water last year when the State cut
deliveries to 30% but also made water available at$175/AF from the Governor's Drought Emergency
Pool, the effective cost would have been:
Fixed cost for 1 AF = (0.85)($500/AF) _ $ 425.00
Variable costs for 1 AF = (0.15)($500/AF) = 75.00
Drought Emergency Pool Water = (0.7 AF)($175/AF) = 122.50
Effective cost per AF $ 622.50
There will continue to be developed State Drought Emergency Pools as droughts occur. If it is
assumed that, the current normal cost for State water is $500/AF, the project reliability is as stated
above, and in critical drought situations, water can be made available at an additional $175/AF.
Then with existing facilities the long-term average cost of 100% reliable water delivery will be
$525/AF and with planned facilities the long-term average cost of 100% reliable water will be
$565/AF.
Please note that droughts in northern California - the source of the SWP water - and southern
California normally show little correlation. The current five-year Statewide drought is pretty much
unprecedented. Overall, dependability will be increased for all San Luis Obispo County contractors
by taking State Project water, thereby linking up with a Statewide system permitting exchanges'of
water during times of emergency.
5
Permanent Reductions in Delivery
See Section 18(b) of the Master Contract Note that if the State is unable to develop facilities to
provide full entitlements for all 30 State Water contractors, then the entitlements will be reduced
commensurate with the minimum yield of the project In other words, if for some reason the State
can develop facilities that will deliver only 90% of the entitlements, then the entitlements will be
uniformly cut by 10% but the yearly entitlements will thereafter be dependable. We do not expect
that permanent reductions will be necessary.
General
The Coastal Branch can improve overall reliability of water supplies in San Luis Obispo County by:
(1) adding a new source of water, and (2) providing a link to a state-wide system would allow the
County to participate in water banking or other exchanges of water during droughts.
QUALITY
State Project water is superior to all existing local supplies of water from the standpoint of total
dissolved solids.
Because it is a "surface" water supply it has suspended solids which must be removed by a water
treatment plant just as is the case for Whale Rock Reservoir and Salinas Reservoir waters which are
now sources of the City's water supply.
Treatment is proposed as a joint venture with the Santa Barbara County interests with a regional
water treatment plant to be located in the northeast portion of our County.
State Department of Health Services regulations must be met before a water purveyor is permitted
to serve drinking water. State Project water is now serving all or part of the water supply for 19
million Californians.
TIMING/SUPPLY ALTERNATIVES
The State Department of Water Resources by letter dated December 3, 1991 has triggered Section
45(c) of the Master Water Contract This means that final design will commence on June 3, 1992.
The State has indicated that the Coastal Branch should be operational about four years from start
of final design.
It would be our goal that all local facilities be operational by the time the States facilities are
operational.
Undoubtedly the State Water Project could be brought on line some years sooner than the
Nacimiento Project
6 ,
Desalting of sea water might be operational in about the same time frame as the State Water Project
but it would prove very costly(four to five times as expensive as State Project water) and very energy
intensive.
ENVIRONMENTAL ISSUES
There are two environmental impact reports which have been made available to the City; one by
the State for the Coastal Branch of the State Water Project and the other by the San Luis Obispo
County Flood Control and Water Conservation District for the Local Projects. These reports describe
the environmental impacts and the proposed mitigation measures which must be implemented if the
projects are to be built
If the City is to participate in the State Water Project then it is recommended that the City:
1. Review and consider both final Environmental Impact Reports as a responsible agency.
2. Adopt Findings, Conditions and Statement of Overriding Considerations.
3. Approve agreements and authorize their execution.
At a later date we will provide model resolutions for Items 1 and 2 to you for your consideration.
SUMMARY
We have covered the issues we think are most important to the City; namely, cost, the operational
issue of summer "peaking" needs, reliability (both temporary and permanent), water quality and
environmental impacts.
Should you have any questions please contact any one of the following:
Clinton Milne, County Engineer
Glen Priddy, Deputy County Engineer - Engineering Services
Noel King, Deputy County Engineer - Administration
George Gibson, Hydraulic Planning Engineer
Should you wish our attendance at a Council meeting, please advise.
7
If the City is to participate in the State Water Project we will need executed contracts by May 15,
1992.
Respectfully,
&G
CLINTON MILNE
County Engineer
stw\slo.wlt.cmc
Enclosures
Agreements
1. Copy of the Master Contract between State and San Luis Obispo County Flood
Control and Water Conservation District (SLOCFC & WCD)
2. Copy of Draft of Master Water Treatment Agreement between SLOCFC & WCD and
Central Coast Water Authority (CCWA)
3. Copy of Execution Draft of Water Supply Agreement between SLOCFC & WCD and
City
4. Copy of Draft of Water Treatment and Local Facilities Agreement between SLOCFC
& WCD and City
8
-C-4.
EXHIBIT B
WATER SUPPLY AGREEMENT
Executive Summary
The Water Supply Agreement is the contract that the San Luis
Obispo County Flood Control and Water Conservation District
(District) will execute with each local entity (Contractor) within
San Luis Obispo County that. desires to purchase a portion of the
District's Project Water entitlement in the State Water Project.
All local entities desiring to receive a part of the
District's Project Water will execute a Water Supply Agreement and
all of the Water Supply Agreements will be in essentially the same
format and text.
The basic concept of the Water Supply Agreement is simple. A
local entity contracts to receive from the District an annual
quantity of Project Water known as the entity's "Water Service
Amount" . In return for the Water Service Amount, the local entity
promises to pay to the District an annual sum known as the
"Contractor's Annual Obligation".
The "Contractor's Annual Obligation" is based on the same
formula that the State uses to calculate the annual amount that the
District has to pay the State for the District's entitlement to
Project Water.
Essentially, the Water Supply Agreement requires the local
entity to pay its proportional share of the District's annual '
obligation to the State, plus the local entity's proportional share
of the District's costs for administering the delivery of Project
Water under the Water Supply Agreements.
An important feature of the Water Supply Agreement is its
requirement that Project Water be first used by a contracting local
entity to cure any depletions and shortages in the local entity's
groundwater and other supplies. The local entity is required to
adopt a water management plan that shows . how the local entity
intends to cure any such existing deficiencies and, also, how the
local entity intends to prevent future water supply shortages and
depletions.
The Water Supply Contract is a "take or pay" contract. This
means that the contracting local entity must pay its "Contractor's
Annual Obligation" to the District whether or not the local entity
actually takes delivery of Project Water. This is consistent with
the District's obligation to pay the State whether or not the
District takes delivery of Project Water.
In the event there is a shortage in the amount of Project
Water made available by the State to the District, the "Water
Service Amounts" of each of the contracting local entities will be
reduced proportionately during the time of the shortage.
JMJ:ch
0809.ch
Charge Code?
WATER SUPPLY AGREEMENT BETWEEN SAN LUIS OBISPO COUNTY
FLOOD CONTROL AND WATER CONSERVATION DISTRICT AND
CITY OF SAN LUIS OBISPO
This agreement, made this day of by and
between the San Luis Obispo CountyoFl odTontrol an later onservation istrict,
hereinafter referred to as "District°, and the City of San Luis Obispo,
hereinafter referred to as the 'Contractor".
WITNESSETH:
WHEREAS, the District and the State of California, on February 26, 1963s
entered into an agreement entitled "Water Supply Contract Between the State of
California Department of Water Resources and San Luis Obispo County Flood Control
and Water Conservation District," which agreement has been amended from time to
time, whereby the State of California will furnish a water supply to the
District; and
WHEREAS, the lands and/or inhabitants of the Contractor are in need of
additional water for municipal use and other beneficial uses; and
WHEREAS, because certain communities within the County of San Luis Obispo
who desire to contract with the District for a water supply are now subject to
water resource constraints and could, on receipt of said water supply, experience
an increased rate of population growth, and, because certain of said communities
are presently overdrafting their groundwater basins, this agreement requires that
the governing body of each water purveyor accepting SWP water shall adopt a water
management plan or program, the goal of which shall be to demonstrate that its
project water shall be used first to offset its proportionate share of
groundwater basin overdraft, if any, and to improve water quality for its
consumers, if appropriate, and to provide an appropriate reserve available for
a period of reduced water supply before being made available for other purposes.
Such commitment may be manifested. by the adoption of an ordinance or by the
adoption of a resolution or by the adoption of a water management plan or program
which brings its proportionate share of groundwater supply and demand into
balance; and
WHEREAS, the Contractor desires to contract with the District for a water
supply to be for the use and benefit of the inhabitants and lands of the
Contractor and for which the Contractor will make payment to the District upon
the terms and conditions hereinafter set forth;
WHEREAS, the District desires to make water available to Contractor, and
others, under terms and conditions which are fair and equitable to .all such
entities and persons and consistent with the said "Water Supply Contract Between
the State of California Department of Water Resources and San Luis Obispo County,:
Flood Control and Water Conservation District."
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED by District and Contractor as
follows:
Article 1. Definitions.
(a) "Master Contract" shall mean that agreement entitled "Water Supply
Contract Between the State of California Department of Water Resources and the
San Luis Obispo County Flood Control and Water Conservation District," dated
February 26, 1963, and all amendments thereto.
(b) 'Project Water" shall mean all water, including District's
Entitlement Water and District's Surplus Water, made available to the District
by the State of California pursuant to the Master Contract.
(c) 'District's Entitlement Water" shall mean that part of the Project
Water set forth in Table 'A' of the Master Contract for San Luis Obispo County
Flood Control and Water Conservation District.
(d) 'District's Surplus Water" shall mean that Project Water made
available to District pursuant to the provisions of Articles 21 and 46 of the
Master Contract.
(e) 'Contractor's Water Service Amount' shall mean that amount of
District's Entitlement Water which District shall provide to Contractor during
the term of this agreement and, specifically, in the amounts and at the times set
forth in Article 6 and Article 8 of this agreement.
(f) 'Year" shall have the same meaning as the word "year" in the Master
Contract.
(g) Year of initial water delivery" shall mean the year when District's
Project Water is first available for delivery to the Contractor pursuant to the
terms of this agreement.
(h) "Municipal use" shall mean all those uses of water usual to the
municipal water supply of a city, town, or other similar population group,
including uses for domestic purposes, uses for the purposes of commerce, trade
. or industry, and any other use incidental thereto for any beneficial purpose.
(i) 'Repayment Reach' or 'reach" shall mean reaches of the California
Aqueduct designated by the Department of Water Resources for purposes of
repayment of Project Transportation Facilities by District and other water
contractors under the Master Contract.
(j) 'Other agency' or 'other subcontractor' shall mean any other public .
water distribution agency having the power to do so, which executes a contract
with the District for the purchase of a water supply from District's Project
Water.
(k) 'District Administrative Costs' are the labor, equipment, materials
and overhead costs of the District which are associated with the service of
providing Project Water to Contractor under this agreement and to other agencies
under similar agreements. '
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(1) "Central Coast Water Authority" shall mean and is a joint exercise
of powers agency duly organized and validly existing under the Constitution and
laws of the State of California.
Article 2. Term.
This agreement shall become effective on the date first above written and
shall remain in effect throughout the term provided by Article 2 of the Master
Contract; provided, that whenever the Master Contract is terminated or suspended
in the manner and for a cause specified in the Master Contract, this contract
shall also be terminated or suspended.
Article 3. Option for Continued Service.
By written notice delivered to District at least nine (9) months prior to
the expiration of the term of this agreement, Contractor may elect to receive
continued service after expiration of said term and under the conditions set
forth in Article 4 of the Master Contract.
Article 4. Relationship to Master Contract.
Contractor acknowledges and agrees that this agreement is subject to the
obligations and limitations imposed on District by the Master Contract and all
existing and future amendments to the Master Contract and is intended to be in
conformance and harmony with it. The Contractor hereby expressly agrees to the
provisions of the Master Contract and all existing and future amendments thereto
and further expressly agrees that nothing in this agreement shall be deemed to
require the District to perform an obligation in conflict with the Master
Contract. Contractor further agrees that District's rights to enter into
amendments to the Master Contract is not, and shall not be restricted or
impaired, in any way, by this agreement.
Article S. Service Agreement.
Parties agree that this is an agreement for service, and only contractual
rights are created by this agreement, and that it does not create an entitlement
to, nor does it convey to the Contractor any property right or interest in
District's Project Water.
Article 6. Contractor's Water Service Amount and Use of Project Water.
(a) Contractor's Water Service Amount
Commencing with the year that District first makes Project Water available
for delivery to Contractor under this agreement, and subject to the shortage
provisions of Article 10 of this agreement, District each year shall make
available for delivery to the Contractor acre feet of Project Water which
amount is referred to in this agreement as tTie 7ontractor's Water Service Amount.
3
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(b) Use of Project Water
Contractor shall adopt a water management plan or program, which shall
demonstrate that its project water shall be used first to offset its
proportionate share of groundwater basin overdraft, if any, and to improve water
quality for its consumers, if appropriate, and to provide an appropriate reserve
available for a period of reduced water supply before being made available for
other purposes. Such commitment shall be manifested by the adoption of an
ordinance or by the adoption of a resolution or by the adoption of a water
management plan or program which brings its proportionate share of groundwater
supply and demand into balance.
Article 7. Measuring Devices: Treatment Facilities_._
(a) Measuring Devices.
The District shall be responsible for the measuring of the amounts of all
Project Water delivered to the Contractor and shall keep or cause to be kept
accurate records thereof. For this purpose, the District shall install, operate,
and maintain at all turnouts for delivery of Project Water to the Contractor such
measuring devices and equipment as are satisfactory and acceptable to both
District and Contractor, except that where measuring devices and equipment to be
installed, operated and maintained by the State of California pursuant to the
Master Contract will be sufficient for the measurement of Project Water delivered
to the Contractor, the District need not duplicate such facilities and the
parties hereto agree to accept the measurements and records of the State of
California in such cases. Any measuring devices and equipment installed,
operated and maintained by the District shall be examined, tested and serviced
regularly to insure their accuracy. At any time or times, the Contractor or any
other subcontractor may inspect such measuring devices installed, operated and
maintained by the District and the measurements and records taken therefrom.
Contractor shall pay to District all of the costs incurred by District for those
said measuring devices reasonably necessary for measuring the delivery of Project
Water to Contractor
(b) Water Treatment.
- The treatment of project water supplied to Contractor hereunder shall be
accomplished by the Central Coast Water Authority and pursuant to and- in
accordance with the provisions of that certain agreement between the District and
Contractor which agreement is entitled "Water Treatment and Local Facilities
Agreement." Upon notice to the District by the Central Coast Water Authority
that Contractor has failed to make any payment, which failure the Central Coast
Water Authority certifies constitutes a default under the said "Water Treatment
and Local Facilities Agreement", the District shall discontinue water service and
the delivery of project water to *Contractor hereunder and District shall not
recommence water service or the delivery of project water to the Contractor until
the Central Coast Water Authority gives written notice to District that such
default has been cured.
4
Article 8. Location and Rate of Delivery of Contractor's Water Service
Amount.
Contractor's Water Service Amount shall be made available for delivery to
the Contractor at the locations and rates hereinafter specified:
(a) The location and maximum instantaneous flow capacity to be provided in
each delivery structure shall be:
Location: Reach No.
Maximum instantaneous flow capacity: cubic feet per second
(b) The maximum amount of water to be delivered by District to Contractor
in any one month through the State's transportation facilities shall not exceed -
acre-feet.
(c) Procedure for Determining Water Delivery Schedule.
The amounts, times, and rates of delivery of Contractor's Water Service
Amount to the Contractor during any year shall be in accordance with a District
water delivery schedule for that year, with such schedule to be determined in the
following manner:
(1) On or before September 1 of each year, the Contractor
shall submit in writing to the District a preliminary water delivery
schedule, subject to the provisions of. this Article, Article 6, and
Article 9, indicating the amounts of Project Water desired by the
Contractor during each month of the succeeding five years (5) years.
(2) Upon receipt of said preliminary schedule, the District
shall review it and, after consultation with the Contractor, shall
make such modifications in it as it deems necessary to insure that
the amounts, times, and rates of delivery to the Contractor will be
consistent with the District's receipt of Project Water from the
State of California pursuant to the Master Contract, considering the
then current delivery schedules of all subcontractors; provided that
the District shall not make any such modification which would
provide for the delivery of water to the Contractor in any month in
excess of the Contractor's total water demand for that month, or
8.333 percent of the Contractor's Water Service Amount for that
year, whichever is the lesser. On or before December 15 of each
year, after the District has been furnished a water delivery
schedule from the State of California, pursuant to the terms of
Article 12 of the Master Contract, the District shall determine and
furnish to the Contractor a water delivery schedule for the. next
succeeding year which shall show the amounts of Project Water to be
delivered to the Contractor during each month of that year.
(3) The water delivery schedule may be amended by the
District upon the District's initiative or upon the Contractor's
written request. Proposed amendments shall be submitted by the
s
Contractor within a reasonable time before the desired change is to
become effective, and shall be subject to review and modification by
the District in like manner as the schedule itself. The District
shall approve all requests for changes in delivery from one delivery
structure to another when there is sufficient capacity available in
the transportation facilities, considering the then current delivery
schedules of all subcontractors; provided, that the Contractor
agrees to pay all increased costs incurred by the District as a
result of such change.
(4) In the event that the dates provided for in Article 12
of the Master Contract are changed by amendment to the Master
Contract, the dates provided for in this agreement shall also be
automatically changed so that they have the same relative time span
as they now have with those in the Master Contract.
(d) Temporarily Exceeding Limit on Peak Deliveries of Water.
While District is not required to deliver to the Contractor in any one
month of any year a total amount of Project Water greater than eight and one-
third percent (8.333%) of the Contractor's Water Service Amount for that year;
however, in the event deliveries required to be made by the District to other
agencies permit a higher monthly rate of delivery to the Contractor without the
District exceeding the limitations imposed on the District by the State of
California in the Master Contract, then the District shall have the discretion
to temporarily exceed the maximum monthly deliveries provided for herein.
(e) Limitation of Rate of Delivery to Contractor.
In no event shall the District be obligated to deliver water to the
Contractor through all delivery structures at a total combined instantaneous rate
of flow exceeding cubic feet per second.
Article 9. Limitations on Obligation of District to Furnish Water.
(a) Notwithstanding any provisions of this agreement to the contrary, the
obligation of the District to furnish water hereunder shall be limited to the
times and to the extent that water and facilities necessary for furnishing the
same are available to the District pursuant to the Master Contract. Further,
District shall have no obligation to Contractor to deliver Project Water at any
particular head or pressure.
(b) The District shall not be liable for the failure to perform any
portion of this agreement to the extent that such failure is caused by the
failure of the State of California to perform any obligation imposed on the State
of California. by the Master Contract; provided, that to the extent that the
District's obligations to the State are reduced by such failure on the part of
the State, the District shall make appropriate reductions in the obligations of
the Contractor under this agreement; provided further, that the District shall
diligently and promptly pursue all rights and remedies available to it to enforce
the rights of the District against the State of California under the Master
Contract relative to such failure to perform and, provided further, that the
6 c
costs and expenses incurred by District in the enforcement or attempted
enforcement of said rights under the Master Contract shall be considered to be
Administrative costs under this agreement.
Article 10. Water Shortages
(a) No Liability for shortages.
There may occur from time to time a shortage or shortages in the quantity
of Project Water available to the District pursuant to the Master Contract and
for furnishing to the Contractor pursuant to this agreement. In any such event
no liability shall accrue against the District or any of its respective officers,
agents or employees for any damage, direct or indirect, arising from such
shortage or shortages.
(b) Temporary Shortages; Delivery Priorities.
In any year in which there may occur a shortage, due to any cause, in the
supply of Project Water available to the District with the result that there is
insufficient Project Water available to District for District to provide to
Contractor the Contractor's Water Service Amount, then District shall reduce
deliveries to each subcontractor in an amount which bears the same proportion to
the total amount of such reduction that the subcontractor's Water Service Amount
bears to the total of all of the Contractor Water Service Amounts of all
subcontractors for that year, all as determined by the District; provided, that
the District may apportion on some other basis if such is required to meet
minimum demands of any Contractor(s) for domestic supply, fire protection, or
sanitation during the year.
(c) Permanent Shortage.
In the event that because of a permanent shortage in the supply of Project
Water available for delivery to the District there is an amendment of Table A of
the Master Contract with the result that the annual supply of District's
Entitlement Water is less than the total of Contractor's Water Service Amount
plus the water service amounts of all other Contractors, then Contractor's Water
Service Amount and the Water Service Amount of all other subcontractors shall be
reduced proportionately by the District to the extent necessary so that the sum
of the reduced Contractor's Water Service Amount plus the reduced Water Service
Amount of all other subcontractors will then equal such reduced annual supply of
District's Entitlement water to be made available to the District by the State
of California.
(d) Reinstatement of Reductions in Water Service Amounts.
If after any reduction of annual supply of District's Entitlement Water,
pursuant to subdivision (c) of this Article, there is an amendment.to Table A of
the Master Contract which increases the annual supply of District's Entitlement
Water, then the District shall, with the consent of the Contractor and to the
extent possible, increase the previously reduced Contractor's Water Service
Amount, in proportion to the water service amounts of all other subcontractors,
7
up to an amount equal to, but not exceeding the amount provided for in Article
6 of this agreement.
(e) Advance Notice of Delivery Reduction.
The District shall give the Contractor written notice, as far in advance
as District reasonably may, of any reduction in deliveries to Contractor under
subdivision (b) or subdivision (c) of this Article.
Article 11. Curtailment of Delivery for Maintenance Purposes.
The State of California or the District may temporarily discontinue or
reduce the amount of Project Water to be furnished to the Contractor during such
time as the State or District are maintaining, repairing, replacing,
investigating or inspecting, any of the facilities necessary for the furnishing
of water to the Contractor. Insofar as it is feasible, the District shall give
the Contractor notice in advance of any such temporary discontinuance or
reduction, except in the case of emergency, in which case no notice need be
given. In the event of such discontinuance or reduction, the District will upon
resumption of service, deliver, as nearly as may be feasible, and to the extent
water is furnished to it by the State of California, the quantity of Project
Water which would have been furnished to the Contractor in the absence of such
discontinuance or reduction.
Article 12. Responsibilities for Delivery and Distribution of Water.
Neither the District nor its officers, agents or employees shall be liable
for the control, carriage, handling, use, disposal, or distribution of Project
Water supplied to the Contractor after such water has passed into the
Contractor's delivery structures, nor for claim of damages of any nature
whatsoever, including but not limited to property damage, personal injury or
death, arising out of or connected with the control, carriage, handling, use,
disposal or distribution of such water beyond said delivery structure; and the
Contractor shall defend, indemnify and hold harmless the District and its
officers, agents and employees from and against any such damages or claims of
damages.
Article 13. Quality of Project Water Delivered.
Contractor acknowledges and agrees that inasmuch as District will neither
operate nor control the sources, delivery facilities, or the water treatment
facilities for the Project Water, the District shall not be responsible for the
quality of the Project Water furnished to Contractor pursuant to this agreement.
Article 14. Payment for Water Service. .
(a) Contractor's Annual Obligation.
In addition to the other payments to District by Contractor provided for
herein, the Contractor shall pay to District each year during the term of this
agreement a sum which shall consist of the total of the following, and which is
referred to herein as Contractor's Annual Obligation:
8
t
(1) Delta Water Charge Reimbursement.
The Contractor shall reimburse District for a
portion of the District's annual Delta Water Charge, as
defined in the Master Contract. Contractor's
reimbursement amount shall be the product of the Delta
Water rate for the respective year times the amount of
the Contractor's Water Service Amount specified in
Article 6.
(2) Transportation Charge.
(i) Capital Cost Component Reimbursement.
The Contractor shall reimburse District for a
portion of the District's annual Transportation Capital
Charge, as defined in the Master Contract, for each
repayment reach in which the Contractor has been
provided capacity by the District, as determined by the
District. The Contractor's percentage reimbursement
shares of the District's Transportation Capital Charge,
by repayment reach, are as follows:
Repayment Reach Contractor' Reimbursement Share N)
1 through 33A
34
35
(ii) Transportation Minimum Operation
Maintenance, Power and Replacement Component (Minimum
OMP&R) Reimbursement.
The Contractor shall reimburse District for a
portion of the District's annual Transportation Minimum
OMP&R Charge (Minimum OMP&R), as defined in the Master
Contract, for each repayment reach in which the
Contractor has been provided capacity, as determined by
the District. The Contractor's percentage reimbursement
shares of the District's Minimum OMP&R Charge, by
repayment reach, are as follows:
9
Repayment Reach Contractor's Reimbursement Share (%)
1 through 33A
34
35
(iii) Variable Operation, Maintenance, Power and
Replacement Charge (Variable OMP&R) Reimbursement.
The Contractor shall reimburse District for a
portion of the District's Variable OMP&R charge, as
defined in the Master Contract, which shall be the
product of the acre-feet of Project Water scheduled to
be delivered during the respective year to the
Contractor from or through said reach multiplied by the
District's estimate of the charge per acre-foot to be
made by the State to the District for said year for the
Variable OMP&R component of the Transportation Charge
applicable to transporting water through said reach.
(iv) Off-Aqueduct Power Facilities Reimbursement.
The Contractor shall reimburse District for its portion
of the annual Off-Aqueduct Power Facilities charge to be
paid by the District to the State, as defined in the
Master Contract. Contractor's reimbursement share shall
bear the same proportion to the District's annual Off-
Aqueduct Power Facilities charge as the estimated
electrical energy (kilowatt-hours) required to pump
through project transportation facilities the
Contractor's Water Allocation for that year, [as
submitted pursuant to Article 8(c) (1) and as may be
modified by the District pursuant to Article 8(c) (2)]
bears to the total estimated electrical energy
(kilowatt-hours) required to pump all such amounts for
all Contractors through project transportation
facilities for that year, all as determined by the
District.
(3) Revenue Bond Surcharge Reimbursement.
The Contractor shall pay to the .District its
proportionate share as calculated by the District, of
the annual Revenue Bond Surcharge to be paid by the
District to the State.
(4) Administrative Cost Reimbursement.
The Contractor shall reimburse District for a
portion of the District's administrative costs
10
/-e-a
associated with delivery of State Project Water under
this agreement. The Contractor's* share of the
administrative costs shall be based upon the percentage
of the Transportation Capital Cost component that the
Contractor pays. This percentage multiplied by the
total administrative cost shall be the Contractor's
share of the administrative costs.
(b) Time of Payment.
Commencing with the year the Contractor shall pay to the
District, either within 10 days a ter receipt by it of an annual statement from
the District setting forth the Contractor's annual obligation or on January 1 of
each year, whichever is later, sixty percent (60%) of its annual obligation. The
Contractor shall pay the remainder of such annual obligation on or before July
1 of that year.
(c) Adjustments in Contractor's Annual Obligation.
At the end of each year the Contractor's annual obligation shall be
recalculated by substituting as soon as possible the actual charges made by the
State Department of Water Resources to the District for the variable operation,
maintenance, power, and replacement components of said Delta Water Charge and
Transportation Charge and the Off-Aqueduct Power Facilities charge for the
District's estimates of these charges and the actual quantities of water
delivered for any scheduled quantities used in calculating the annual obligation
pursuant to the provisions of subdivision (a) of this Article. Any adjustment
in the Contractor's payments required to reflect this recalculation shall be made
in the Contractor's first payment to District due after said recalculation.
Interest rates used in the computation of these adjustments shall be the same as
those used by the State Department of Water Resources in the adjustments made for
the District's obligation for that year.
(d) Additional Deliveries.
In the event that the Contractor requests the delivery during any year of
Project Water in addition to the quantities set forth in Article 6 hereof and to
the extent that other Contractors have requested less than their total annual
water allocations, District may provide such requested additional Project Water
to the Contractor. For such additional Project Water, the Contractor shall pay
in advance of the delivery of such additional Project Water an amount to be
determined as follows:
(1) For any such additional Project Water delivered to the
Contractor, the Contractor shall pay for each acre-foot the
applicable unit charges for the Variable Operation, Maintenance,
Power and Replacement component of the Transportation Charge, the
Off-Aqueduct Facilities charge attributable to such water, and one-
half of the Delta Water rate times the amount of additional Project
Water.
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(e) Reduced Deliveries.
Upon reasonable notice to the District that the Contractor will not take
all of Contractor's Water Service Amount for any year, the District shall adjust
the payment required by the Contractor for such water as provided in Article
14(c), above. To the extent that deliveries so reduced are delivered to other
subcontractors pursuant to Article 14(d) above, the District may reduce the Delta
Water Charge to the Contractor in the amount of one-half of the Delta water rate
times the amount of water so reduced, as determined by the District; however,
Contractor shall otherwise pay to District the Contractor's annual obligation.
Article 15. Default; Suspension of Service.
In the event of any default by the Contractor in the payment of any money
required to be paid to the District hereunder, the District in its discretion may
suspend delivery of Project Water during the period when the Contractor is
delinquent in its payment for or obligations due to the District under the terms
of this agreement; provided, that during any such period of delinquency or
suspension the Contractor shall remain obligated to make all payments required
undef this agreement. Action taken pursuant to this Article shall not deprive
the District of or limit any remedy provided by this agreement or by for the
recovery of money due or which may become due under this agreement.
Article 16. Interest on Overdue Payments.
Upon each charge to be paid by the Contractor to the District pursuant to
this agreement which remains unpaid after the same shall have become due and
payable, interest shall accrue at an annual rate equal to that earned by the
District on its funds invested through the County of San Luis Obispo by the
County Treasurer calculated monthly on the amount of such delinquent payment from
and after the due date when the same becomes due until paid, and the Contractor
hereby agrees to pay such interest; provided, that no interest shall be charged
to or be paid by the Agency unless such delinquency continues for more than (30)
days. In addition, Contractor shall reimburse District for all of District's
costs, expenses, and personnel costs and other overhead incurred in the
collection of any past due payments owed by Contractor to District.
Article 17. Obligation of Contractor to Make Payment
(a) Character of Obligation.
The obligation of the Contractor arising out of or pursuant or incidental
to this agreement including, without limiting the generality of the foregoing,
the obligations of the Contractor to pay to the District the sums becoming due
the District for water furnished hereunder, shall constitute a general obligation .
of the Contractor and the Contractor shall use all the powers and resources
available to it under the law to collect the funds necessary for and to pay its
obligations to the District under this contract including levying and collecting
all necessary taxes, assessments and charges. The Contractor as a whole is
obligated to pay to the District the payments becoming due under this agreement,
notwithstanding any individual default by its water users. constituents or others
12 ,
in the payment to the Contractor of assessments, tolls, or other charges levied
by the Contractor.
(b) Refusal of Water Does Not Affect Obligation.
The Contractor's failure or refusal to accept delivery of Project Water
under this agreement shall in no way relieve the Contractor of its obligation to
make payments to the District except to the extent provided under Article 14 (e)
hereof.
Article 18. Area Served by Contractor
Project Water delivered to the Contractor pursuant to this agreement shall
not be sold or otherwise disposed . of by the Contractor for use outside the
District.
Article 19. Remedies not Exclusive.
The use by either party of any remedy specified herein for the enforcement
of this agreement is not exclusive and shall not deprive the party using such
remedy of, or limit the application of, any other remedy provided by law.
Article 20. Amendments.
This agreement may be amended at any time by mutual agreement of the
parties, except insofar as any proposed amendments are in any way contrary to
applicable law or inconsistent with the provisions of the Master Contract. The
District shall make available to the Contractor at all times during the normal
hours of business at the District offices for the Contractor's inspection copies
of all agreements now or hereafter executed by the District with all other
subcontractors or the State of California and of any amendments thereof.
Article 21. Opinions and Determinations.
Where the terms of this agreement provide for action to be based upon
opinion, judgment, approval , review, or determination of either party hereto,
such terms are not intended to be and shall never be construed as permitting such
opinion. judgment, approval , review or determination to be arbitrary, capricious,
or unreasonable.
Article 22. Waiver of Rights.
Any waiver at any time by either party hereto of its rights with respect
to a default or any other matter arising in connection with this agreement, shall
not be deemed to be a waiver with respect to any other default or matter.
Article 23. Notices.
All notices that are required either expressly or by implication to be
given by either party to the other under this agreement shall be signed for the
District and for the Contractor by such officers as they may, from time to time,
authorize in writing to so act. All such notices shall be deemed to have been
13
given and delivered if delivered personally or if enclosed in a properly
addressed envelope and deposited in a United States Post Office for delivery by
registered or certified mail . Unless and until formally notified otherwise, all
notices shall be addressed to the parties at their addresses as shown on the
signature page of this agreement.
Article 24. Assignment.
The provisions of this agreement shall apply to and bind the successors and
assigns of the respective parties, but no assignment or transfer of this
agreement, or any part hereof or interest herein, shall be valid until and unless
approved by the District.
Article 25. Contractor to Keep Books. Records and Other Data.
The Contractor shall establish and maintain accounts and other books and
records sufficient to enable the District to furnish to the State of California
reports and statements, to such extent and in such manner and form as may be
prescribed by the District and the State of California pursuant to the terms of
this agreement and the Master Contract. Reports required to be furnished by the
Contractor to the District pursuant to the terms of this agreement and the Master
Contract shall be furnished to the District within the period of time specified
therefor.
Article 26. District to Keep Books. Records and Other Data.
The District shall establish and maintain accounts and other books and
records sufficient to enable Contractor to .determine the use and disposition of
all monies paid by Contractor to District pursuant to this agreement.
Article 27. Inspection of Books and Records.
The officers or agents of the Contractor shall have full and free access
at all reasonable times to the account books and official records of the District
insofar as the same pertain to the matters and things provided for in this
agreement, with the right at any time during office hours to make copies thereof,
and the representatives of the District and the State of California shall have
the same rights in respect to the account books and records of the Contractor.
Article 28 Good Faith.
Contractor and District shall each act in good faith in performing their
respective obligations as set forth in this agreement.
Article 29 Water Rights.
No provision of this agreement shall be considered to be in derogation of
any existing water right(s) or claim(s) to water right(s) by or any agreements
concerning water rights of any party hereto, including but not limited to
overlying, prescriptive, appropriative, riparian, or pueblo rights, nor shall it
be construed to result in any relinquishment or adjustment of any such water
rights or claims thereto; and, in particular, no provision of this agreement
shall be considered to diminish, reduce or affect, in any way, any party's rights.
pursuant to California Government Code Section 1005.1 and/or Section 1005.2.
14 /'G.•v/
Article 30 Joint Powers Agreement and/or Authority.
No provision of this agreement is intended to prohibit the District and
Contractor, in conjunction with other contractors, from entering into a joint
powers agreement, or from forming a joint powers authority, concerning any
subject matter contained in this agreement provided, however, that it is
understood that this paragraph shall not be construed as requiring District or
Contractor, or any other contractor, to enter into any such point powers
agreement or form such joint powers authority.
ARTICLE 31. Advisory Group.
District and Contractor shall use their best efforts to form, with other
Contractors for Project Water, an advisory group, the membership of which shall
be representatives of District and Contractor and of other Contractors. The
purpose of the advisory group shall be to monitor all aspects of this agreement
and related agreements and to advise the governing bodies of District and
Contractor on the functioning of this agreement and related agreements, and to
recommend to- the governing bodies of District and Contractor any modifications
to said agreements that may, from time to time, be appropriate.
Article 32. Agreements to be Uniform.
Agreements executed by the District with other agencies shall be
substantially similar to this agreement with respect to basic terms and
conditions. and shall differ primarily with respect to quantities and payment
amounts; except that any such agreement(s) with San Luis Obispo County Waterworks
District No. 8, Morro Rock Mutual Water Company and/or Paso Robles Beach Water
Association may include provisions for exchange of water in lieu of participation
in the construction of Local Facilities, and, also, conditions precedent
concerning the construction of Local Facilities.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on the
date first above written.
ATTEST: SAN LUIS OBISPO COUNTY FLOOD CONTROL
AND WATER CONSERVATION DISTRICT
By By
ATTEST: CITY OF SAN LUIS OBISPO
By By
stw\ctyslo.agr.cmc
15 Sol
EXHIBIT C
BROWN & WOOD
Draft 2/4/92
EXECUTIVE SUMMARY OF
WATER TREATMENT AND LOCAL FACILITIES AGREEMENT
BETWEEN SAN LUIS OBISPO COUNTY FLOOD CONTROL
AND WATER CONSERVATION DISTRICT AND
PARTICIPATING WATER PURVEYORS
The following summarizes the essential provisions of the
proposed Water Treatment and Local Facilities Agreements to be
entered into by the San Luis Obispo County Flood Control and
Water Conservation District and participating purveyors to
provide for treatment of State Project Water. The summary is
offered to assist staff and decision makers in reviewing the
documents and may be used to prepare staff reports or for other
purposes.
Treatment of Water. District agrees to cause CCWA to
construct treatment plant with sufficient capacity to serve each
Contractor. Contains provisions specifying the amount of water
to be treated, the water treatment schedule, and shortage
provision which is parallel to the State Water Contract.
Local Facilities. Agreement provides that the District will
ownand operate the Local Facilities unless Contractor and the
District enter into a subsequent agreement with respect to
ownership and operation of local facilities. The Contractor
agrees to pay its share of capital costs incurred by the District
to CCWA to finance the Local Facilities.
Rates and Charges. The District will set rates payable by
the Contractor for water treatment based on the Contractor's pro
rata share of fixed treatment plant costs and the Contractor's
share of variable treatment costs based on actual water treated.
The Contractor will also pay its pro rata share of the capital
costs of the Local Facifities. Contractor must make water
treatment and local facilities payments from its water revenues
after O&M expenses but prior to all other expenses.
Time and Method of Payments. Fixed Treatment Plant Costs
and Local Facilities costs commence when debt service on the
Authority Bonds commences. Fixed O&M Cost payments commence just
prior to completion of the treatment plant. Variable 0&M Cost
payments begin just prior to commencement of water delivery. For
Fixed Treatment Plant Costs, Fixed O&M Costs and Local Facilities
Costs, payments after the initial payment are due on June 1 of
each year in advance; Variable O&M Cost payments are made
quarterly in advance.
• /z-33
Defaults. Contractor obligations to make payments to the
District are "several, " i.e. , one Contractor is not responsible
for any financial defaults by another Contractor, except under
the "step up" provision contained of Section il(d) . Under the
"step up" provision, a Contractor's payment obligation may be
increased, but only up to 25%, in the event that other
Contractors in San Luis Obispo County default. This 25% increase
permits the District to avoid default in its payments to CCWA and
gives the bond rating agencies and credit markets greater
assurance that CCWA bonds will be paid. This step up provision
should result in a lower interest rate on the CCWA bonds and
should not cost the Contractor any money unless a San Luis Obispo
contractor defaults. Before the "step up" provision applies, the
water_ which the defaulting Contractor was entitled to receive
will first be offered to other Contractors. If a Contractor
makes a step up payment, the Contractor is entitled to a share of
the defaulting Contractors water.
Contractor Covenants. The Contractor promises to levy water
rates in an amount sufficient to pay its obligations under this
Agreement. There are other covenants related to disposing of
parts of the Contractor's water system, permitting competitive
water systems in the service area, maintaining the water system,
paying claims, compliance with contracts, maintaining insurance,
keeping records, and paying taxes.
Assivnment of Richts. The Contractor acknowledges that the
District will assign its rights under the Agreement to CCWA to
secure CCWA's bonds.
2
W\6886003\E8-WTLFA
WATER TREATMENT AND LOCAL FACILITIES AGREEMENT
Dated as of March 1, 1992
By and Between
SAN LUIS OBISPO COUNTY FLOOD CONTROL
AND WATER CONSERVATION DISTRICT
and
CITY OF SAN LUIS OBISPO
TABLE OF CONTENTS
PAGE
Section 1. Definitions . . . . . . . . . . . . . . 1
Section 2. Purpose . . . . . . . . . . . . . . . 6
Section 3 . Rates and Charges . . . . . . . . . . . . • • • 6
Section 4. No District Responsibility for Delivery
and Distribution of Water by
Contractor . . . . . . . . . 8
Section S . Construction of the Treatment Plant . . . . . . 8
Section 6. Shortage in Water Supply . . . . . . . . . . . . 9
Section 7. Annual Budget and Billing Statement . . . . . . 9
Section 8 . Allocation of Costs and Expenses . . . . . . . . 9
Section 9 . Adjustments of Costs and Expenses . . . . . . . 10
Section 10 . Time and Method of Payment . . . . . . . . . . . 10
Section 11. Obligation in the Event of Default . . . . . . . 12
Section 12. Covenants of the Contractor . . . . . . . . . . 15
Section 13 . Covenants of the District . . . . . . . . . . . 18
Section 14. Term . . . . . . . 19
Section 15. Assignment; �Third Party Beneficiary 19
Section 16. Termination and Amendments . . . . . . . . . . . 19
Section 17. Additional Water Purchasers . . . . . . . . . . . 20
Section 18 . Miscellaneous . . . . . . . . . . . . . . . . . 21
EXHIBITS
Exhibit A. Schedule of State Water Allotments . . . . . . . . A-1
Exhibit B. Form of Opinion of Contractor Counsel . . . . . . B-1
Exhibit C. Form of Opinion of District Counsel. .. . . . . . C-1
Exhibit D. List of notes, bonds or other obligations
of the Contractor as of the date of
execution to which Revenues of the
Contractor are pledged. . . . . . . . . . . . . . . . . . . . . D-1
Exhibit E. Local Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
1 '
W\6886003B\WA SLO.1X
WATER TREATMENT AND LOCAL FACILITIES AGREEMENT
This Agreement, dated as of March 1, 1992, by and between
the San Luis Obispo County Flood Control and Water Conservation
District (the "District" ) , a flood control district created
pursuant to Water Code Appendix Chapter 49 and City of San Luis
Obispo (the "Contractor" ) , a city created pursuant to the
Constitution and laws of the State of California.
WITNESSETH•
WHEREAS, the Contractor and certain other water purveyors in
San Luis Obispo have contractual rights to receive water from the
State Water Project with the District pursuant to the terms of
the State Water Supply Contract and the Water Supply Agreements
(capitalized terms used herein and not otherwise defined shall
have the meanings set forth below) ;
WHEREAS, in order for the Contractor to utilize fully such
water rights, treatment facilities and certain local facilities,
must be constructed;
WHEREAS, the Contractor, such other water purveyors and the
District have determined that it would be in their best interest
for the District to contract with CCWA to construct and operate
the treatment facilities, and to finance such local facilities;
WHEREAS, the District and the Contractor now wish to enter
into this Agreement pursuant to which the District will contract
with CCWA to provide for the construction and operation of the
Treatment Plant and the financing of the Local Facilities and
certain other matters;
NOW THEREFORE, the parties hereto do agree as follows:
Section 1. Definitions.
The following terms shall, for all purposes of this
Agreement have the following meanings:
"Accountant' s Report" means a report signed by any firm of
certified public accountants appointed by the Contractor, or the
District, as the case may be, and each of whom is independent
pursuant to the Statement on Auditing Standards No. 1 of the
American Institute of Certified Public Accountants.
"Bonds" mean all bonds, notes or similar obligations (but
not including Contracts) of the Contractor authorized and issued
by the Contractor under and pursuant to applicable laws of the
State after the date of execution of this Agreement, the
principal of and interest on which are secured by a pledge on a
/-c•�3'7
lien on Contractor Net Water System Revenues and which are on a
parity with the obligations of the Contractor under this
Agreement.
"Bond Resolution" means the resolution or resolutions
providing for the issuance of CCWA Bonds and the terms thereof.
"CCWA" means the Central Coast Water Authority, a joint
exercise of powers agency duly organized and validly existing
under the Constitution and laws of the State.
"CCWA Bonds" means bonds, notes or other evidences of
indebtedness of CCWA issued to finance or refinance the
District' s allocable portion of the Treatment Plant and the Local
Facilities and includes additional CCWA Bonds to complete the
Treatment Plant and the Local Facilities.
"CEQA" means the California Environmental Quality Act,
Public Resources Code Section 21000 et seq. and the guidelines
promulgated thereunder.
"Contract Payments" means the Fixed Treatment Plant Costs,
the Fixed 0&M Costs, the Variable 0&M Costs and the Local
Facility Costs payable by the Contractor hereunder and provided
that the term Contract Payments shall also include for any Fiscal
Year, the sum of:
(1) the interest accruing during such Fiscal Year on all
outstanding Bonds, assuming that all outstanding serial Bonds are
retired as scheduled and that all outstanding term Bonds are
redeemed or paid from sinking fund payments as scheduled (except
to the extent that such interest is to be paid from the proceeds
of the sale of any Bonds) ,
. (2) that portion of the principal amount of all outstanding
serial Bonds maturing on the next succeeding principal payment
date that would have accrued during such Fiscal Year if such
principal amount were deemed to accrue daily in equal amounts
from the next preceding principal payment date or during the
_ preceding twelve (12) calendar month period preceding the first
principal payment date, as the case may be,
(3) that portion of the principal amount of all outstanding
term Bonds required to be redeemed or paid on the next succeeding
redemption date (together with the redemption premiums, if any,
thereon) that would have accrued during such Fiscal Year if such
principal amount (and redemption premiums) were deemed to accrue
daily in equal amounts from the next preceding redemption date or
during the Year preceding the first redemption date, as the case
may be, and
2
W\6886003B\MA SLO.l.%
(4) that portion of Contract Payments under Contracts
(other than under this Agreement) required to be made at the
times provided in the Contracts that would have accrued during
such Fiscal Year if such Contract Payments were deemed to accrue
daily in equal amounts from, in each case, the next preceding
Contract Payment date of interest or principal or the date of the
pertinent Contract, as the case may be.
"Contractor" shall have the meaning assigned thereto in the
preamble hereto.
"Contractor Net Water System Revenues" means, for any Fiscal
Year, the Contractor Water System Revenues for such Fiscal Year
less the Contractor Operation and Maintenance Expenses for such
Fiscal Year.
"Contractor Operation and Maintenance Expenses" means the
costs spent or incurred by the Contractor for maintaining and
operating the Contractor Water System, calculated in accordance
with generally accepted accounting principles, including (among
other things) the expenses of management and repair and other
expenses necessary to maintain and preserve the Contractor Water
System, in good repair and working order, and including
administrative costs of the Contractor, salaries and wages of
employees, payments to the Public Employees Retirement System,
overhead, insurance, taxes (if any) , fees of auditors,
accountants, attorneys or engineers and insurance premiums, and
all other reasonable and necessary costs of the Contractor, but
excluding in all cases (i) depreciation, replacement and
obsolescence charges or reserves therefor, (ii) amortization of
intangibles or other bookkeeping entries of a similar nature,
(iii) costs of capital additions, replacements, betterments,
extensions or improvements to the Contractor Water System, which
under generally accepted accounting principles are chargeable to
a capital account or to a reserve for depreciation, and (iv)
charges for the payment or principal and interest on Contractor
Prior Debt, Bonds or Contracts.
"Contractor Prior Debt" means notes, bonds or other
obligations of the Contractor existing prior to the date of
execution hereof, which are identified in Exhibit D hereto and
which are payable from Contractor Water System Revenues.
"Contractor Share" means a percentage equal to the
Contractor State Water Allotment divided by the sum of the
Contractor State Water Allotments of all Water Purchasers, as
such percentage may be adjusted from time to time in accordance
with Section 12 of each Water Treatment Agreement. The initial
Contractor Share is set forth in Exhibit A attached hereto.
3
W\6886003B\WA SIA.1X
"Contractor State Water Allotment" means 3, 000 acre-feet of
water per year unless such Contractor State Water Allotment is
reduced in accordance with the Water Supply Agreement.
"Contractor Water System" means all properties and assets,
real and personal, tangible and intangible, of the Contractor now
or hereafter existing, used or pertaining to the acquisition,
treatment, reclamation, transmission, distribution and sale of
water, including all additions, extensions, expansions,
improvements and betterments thereto and equipment relating
thereto; provided, however, that to the extent the Contractor is
not the sole owner of an asset or property or to the extent that
an asset or property is used in part for the above described
water purposes, only the Contractor's ownership interest in such
asset or property or only the part of the asset or property so
used for water purposes shall be considered to be part of the
Contractor Water System.
"Contractor Water System Revenues" means all income, rents,
rates, fees, charges, and other moneys derived by the Contractor
from the ownership or operation of Contractor Water System after
the date of execution of this Agreement, including, without
limiting the generality of the foregoing, (i) all income, rents,
rates, fees, charges or other moneys derived from the sale,
furnishing, and supplying of water and other services,
facilities, and commodities sold, furnished, or supplied through
the facilities of Contractor Water System, including standby and
availability charges and development fees allocable to the
Contractor Water System, and (ii) the earnings on and income
derived from amounts set forth in clauses (i) and (ii) above, and
shall not include (y) customers' deposits or any other deposits
subject to refund until such deposits have become the property of
the Contractor, and (z) the Contractor's share of San Luis Obispo
County' s It ad valorem property tax and reserves, taxes or
assessments specifically pledged to the payment of debt service
with respect to notes, bonds or other obligations of the
Contractor and which reserves, taxes or assessments are not
available for any other purposes of the Contractor.
"Contracts" means this Agreement and all contracts of the
Contractor authorized and executed by the Contractor under and
pursuant to the applicable laws of the State after the date of
execution of this Agreement, the payments under which are secured
by a pledge of and lien on the Contractor Net Water System
Revenues and which are on a parity with the obligations of the
Contractor under this Agreement.
"District State Water Allotment" shall have the meaning
assigned thereto in the Master Water Treatment Agreement..
4 ,
W\6886003B\WA SI.O.1%
"Fiscal Year" means the twelve month period commencing on
July 1 of each Year and ending on the following June 30 orsuch
other twelve month period which may be designated by the District
or the Contractor as its Fiscal Year, as the case may be.
"Fixed OSTM Costs" shall have the meaning assigned thereto in
the Master Water Treatment Agreement.
"Fixed Treatment Plant Costs" shall have the meaning
assigned thereto in the Master Water Treatment Agreement.
"Initial Operation Date" means the first date when the
Treatment Plant is available to provide water treatment services
to the District, as shall be determined by the Board of Directors
of CCWA in accordance with prudent utility practices.
"Local Facilities" means the facilities described in
Exhibit E hereto.
"Local Facility Costs" shall have the meaning assigned
thereto in the Master Water Treatment Agreement.
"Local Facility Share" means a percentage equal to the Local
Facility Costs allocable to the Contractor divided by all Local
Facility Costs, as such percentage may be adjusted from time to
time in accordance with Section 12 hereof. The initial Local
Facility Share of each Water Purchaser is set forth in Exhibit A
attached hereto.
"Master Water Treatment Agreement" means the Master Water
Treatment Agreement, dated as of March 1, 1992 by and between
CCWA and the District, as the same may be amended or supplemented
from time to time.
"State" means the State of California, including applicable
departments and .agencies thereof.
"State Water Project" means those portions of the State
Water Resources Development System (as defined in Section 12931
of the California Water Code) which provide water to the District
pursuant to the State Water Supply Contract.
"State Water Supply Contract" means the Water Supply
Contract between the State of California Department of Water
Resources and the San Luis Obispo County Flood Control and
Conservation District, dated February 26, 1963 , as amended to the
date hereof and as such may be amended and supplemental from time
to time.
"Treatment Plant" shall have the meaning assigned thereto in
the Master Water Treatment Agreement.
5
W\68860038\WA SL0-1X �,[
"Variable 0 & M Costs" shall have the meaning assigned
thereto in the Master Water Treatment Agreement.
"Water Supply Agreement" means the Water Supply Agreement
between the San Luis Obispo County Flood Control and Water
Conservation District and City of San Luis Obispo, as the same
may be amended or supplemented from time to time.
"Water Purchaser" means the Contractor and each entity
listed in Exhibit A hereto executing Water Treatment. Agreements
with the District, and each Additional Water Purchaser.
"Water Treatment Agreement" means this Agreement and each
Water Treatment and Local Facilities Agreement, dated as of March
1, 1992, by and between the District and a Water Purchaser, as
the =same may be amended or supplemented from time to time.
_ Section 2 . Purpose.
- ` The purpose of this Agreement is to provide the terms and
conditions of the treatment of the Contractor State Water
Allotment and to provide for the financing of the Local
Facilities. The Contractor acknowledges that the Contractor has
received a copy of the Master Water Treatment Agreement and
agrees that the Contractor's rights and obligations under this
Agreement are subject to and, in the event of a conflict with the
terms of the Master Water Treatment Agreement, shall be
controlled by the terms of the Master Water Treatment Agreement.
Section 3 . Rates and Charges.
(a) Establishment of Rates and Charges. The District shall
fix charges to the Contractor under this Agreement to produce
revenues to the District equal to (i) the Contractor Share of
Fixed Treatment Plant Costs, (ii) the Contractor Share of Fixed
O&M Costs, (iii) Variable O&M Costs allocable to the Contractor
in accordance with Section 8 hereof, and (iv) the Local Facility
Share of Local Facility Costs. The District shall fix charges to
the Contractor to produce revenues to the District to meet the
costs described in (i) , (ii) , (iii) and (iv) above as set forth
= in Section 8 hereof.
(b) Take-or-Pay Obligation. The obligations incurred by
the Contractor under this Section is for the benefit of the
District, CCWA and future owners of CCWA Bonds shall commence and
continue to exist and be honored by Contractor whether or not the
Contractor State Water Allotment is treated by the Treatment
Plant at all times or at all (which provision may be
characterized as an obligation to pay all costs on a take-or-pay
basis whether or not the Contractor State Water Allotment is
6
W\68860038\WA SLO.18
treated by the Treatment Plant and whether or not the Treatment
Plant or the Local Facilities are completed or are operable. )
e (c) Source of Payments. The Contractor shall make payments
under this Agreement solely from Contractor Water System
Revenues, and shall make such payments prior to any other
payments except Contractor Operation and Maintenance Expenses and
Contractor Prior Debt. Nothing herein shall be construed as
prohibiting (i) the Contractor from using any other funds and
revenues for purposes of satisfying any provisions of this
Agreement or (ii) from incurring obligations payable on a parity
with the obligations under this Agreement so long as the
Contractor complies with subsection (a) of Section 13 hereof.
(d) Obligation Is Not Subject To Reduction. The Contractor
shall make payments under this Agreement whether or not the
Treatment Plant or the Local Facilities are completed, operable,
operated or retired and notwithstanding the suspension,
interruption, interference, reduction or curtailment of operation
of the Treatment Plant or the Local Facilities or of water
contracted for under the Water Supply Agreements in whole or in
part for any reason whatsoever. Such payments are not subject to
any reduction, whether offset or otherwise, and are not
conditioned upon performance by the District, the State, CCWA or
any other Water Purchaser under this Agreement or any other
agreement.
(e) Several Obligation. The obligation of the Contractor
to make payments under this Agreement is a several obligation and
not a joint obligation with those of the other Water Purchasers.
Except as expressly set forth in Section 11 (d) hereof, the
Contractor shall not be liable under this Agreement for the
obligations of any other Water Purchaser. The Contractor shall
be solely responsible and liable for performance of its
obligations under this Agreement, including the obligation
pursuant to Section 11 (d) .
Section 4. No Responsibility for Deliverer and Distribution
of Water by Contractor.
To the extent permitted by law, neither the District, CCWA,
members, associate members or water contractors of CCWA, nor any
of their officers, agents, or employees shall be liable for the
control, carriage, handling, use, disposal, or distribution of
water supplied to the Contractor after such water has entered the
Contractor Water System; nor for claim of damage of any nature
whatsoever, including but not limited to property damage,
personal injury or death, arising out of or connected with the
control, carriage, handling, use, disposal or distribution of
such water beyond said delivery structures; nor in any way
relating to the Local Facilities; including in every case
7
W\68860038\WA SLO.1%
1-C-'a3
attorneys fees and other costs of defense in connection
therewith; and in every case the Contractor shall indemnify and
hold harmless the District, CCWA, CCWA' s members, associate
members and water contractors and their officers, agents, and
employees from any such damages or claims of damages.
Section 5. Construction of the Treatment Plant and Local
Facilities.
(a) Determination of Capacity of Treatment Plant. Unless
otherwise agreed by the District and the Contractor, the
Treatment Plant shall have sufficient capacity to treat the
Contractor State Water Allotment and the District shall not agree
to any amendment to the Master Water Treatment Agreement which
would result in the Treatment Plant not having treatment capacity
sufficient to treat the Contractor State Water Allotment.
.. (b) Criteria for Determining Capacity of Treatment Plant.
Subj-ect to the State Water Supply Contract and the Water Supply
Agreements, the District shall require CCWA to design and
= construct the Treatment Plant to enable CCWA to treat water in an
amount equal to the State Water Allotments of all Water
Purchasers as set forth in Exhibit A attached hereto.
(c) Inspection of Treatment Plant Plans and Specifications:
Preparation of Bid Materials; Award of Contracts. The Contractor
shall have a reasonable opportunity to inspect and study the
plans and specifications for all Treatment Plant facilities at
the District offices and may make comments and recommendations
thereon to the District.
(d) Failure to Complete the Treatment Plant. In the event
that the District notifies the Contractor that the Treatment
Plant cannot be completed from the proceeds of CCWA Bonds and
other amounts on deposit with CCWA and legally available
therefor, the Contractor shall be obligated to advance to the
District, upon reasonable notice, its Contractor Share of the
costs payable by the District under Section 8 (a) of the Master
Water Treatment Agreement to complete the Treatment Plant as a
- - Fixed Treatment Plant Cost notwithstanding the fact that the
Contractor State Water Allotment is or may be treated by the
portion of the Treatment Plant already completed.
(e) Local Facilities. Unless District and Contractor
enter into an additional agreement with respect to construction,
ownership, operation and maintenance of the Local Facilities
serving the Contractor prior to commencement of construction of
the Local Facilities, the District shall construct, own, operate
and maintain the Local Facilities.
8
W\6886003B\WA SLO.1%
Section 6. Shortage in Water Supply.
Neither the District, CCWA, CCWA members, associate members
or water contractors nor any of their officers, agents, or
employees shall be liable for any damage, direct or indirect,
arising from the shortages in the amount of water to be made
available to the Contractor under the Water Supply Agreement
caused by non-availability of water to the District under the
State Water Supply Contract or caused by drought, operation of
area of origin statutes, operation of the Master Water Treatment
Agreement, including but not limited to Section 7 thereof
relating to curtailment of Treatment Plant operations for
maintenance, or any other cause beyond its control.
Section 7. Annual Budget and Billing Statement.
The Board of Directors of the District will adopt an annual
budget for the applicable Year for credits, costs and expenses
relating to the Treatment Plant and Local Facilities, including
Fixed Treatment Plant Costs, Variable O&M Costs, Fixed O&M Costs
and Local Facilities Costs and shall promptly give notice to the
Contractor of its projected portion thereof.
Section 8. Allocation of Costs and Expenses.
(a) Allocation of Fixed Treatment Plant Costs Among
Contractors. The District shall allocate to the Water Purchasers
Fixed Treatment Plant Costs in an amount equal to Fixed Treatment
Plant Costs payable by the District for each Year pursuant to
Sections 13 (a) and (e) and 8 (a) of the Master Water Treatment
Agreement. The total amount of Fixed Treatment Plant Costs
allocated to the Contractor shall be an amount equal to the
Contractor Share of Fixed Treatment Plant Costs for each Year.
(b) Allocation of Fixed O&M Costs. The District shall
allocate to the Water Purchasers Fixed O&M Costs in an amount
equal to Fixed O&M Costs payable by the District for each Year
pursuant to Section 13 (b) and (f) of the Master Water Treatment
Agreement. The total amount of Fixed O&M Costs allocated to the
Contractor shall be an amount equal to the Contractor Share of
Fixed O&M Costs for each Year.
(c) Allocation of Variable O&M Costs. The District shall
allocate to the Water Purchasers Variable O&M Costs in an amount
equal to Variable O&M Costs payable by the District pursuant to
Section 13 (c) and (g) of the Master Water Treatment Agreement in
each Year. The total amount of Variable O&M Costs allocated to
the Contractor for each Year shall be computed by the District
and shall be based on the ratio of the amount of water treated by
CCWA pursuant to the terms of the Master Water Treatment
Agreement on behalf of the Contractor for each Year to the amount
9
W\6886003B\WA SIA.1% yw
Vr ��
of water treated by CCWA pursuant to the terms of the Master
Water Treatment Agreement on behalf of all Water Purchasers for
each Year.
(d) Allocation of Local Facility Costs. The District shall
allocate to the Water Purchasers Local Facility Costs for each
Year equal to Local Facility Costs payable by the District
pursuant to Section 13 (a) and (e) of the Master Water Treatment
Agreement for each Year. The total amount of Local Facility
Costs allocated to the Contractor for each year shall be the
Local Facility Share of Local Facility Costs for each Year.
Section 9 . Adjustments of Costs and Expenses.
The District shall each year determine adjustments to be
paid by the Contractor which shall account for the differences,
if any, between projections of costs used by the District in
determining the amounts of said costs and expenses for all
preceding Years and actual costs paid by the District under the
Master Water Treatment Agreement during such Years.
Section 10 . Time and Method of Payment.
(a) Initial Payment - Fixed Treatment Plant Costs and Local
Facility Costs. Payments by the Contractor of the Contractor
Share of Fixed Treatment Plant Costs and the Local Facility Share
of Local Facility Costs shall commence upon the effectiveness of
this Agreement in accordance with Section 15 hereof and shall
occur on May 15 of each Year thereafter, except as otherwise
provided in connection with the issuance of CCWA Bonds.
(b) Initial Payment - Fixed 0&M Costs. Payments by the
Contractor of the Contractor Share of Fixed O&M Costs shall
commence on the May 15 preceding the estimated Year of the
Initial Operation Date.
(c) Initial Payment - Variable O&M Costs. Payments by the
Contractor of Variable 0&M Costs allocable to the Contractor
shall commence on the March 15, June 15, September 15 or
December 15 which is closest to, but is at least three months
immediately preceding the date which the District estimates will
be the Initial Operation Date.
(d) Statement of Charges. The District shall within 30
days of the receipt from CCWA of a written statement of the
charges to be paid by the District and credits to be received by
the District under the Master Water Treatment Agreement (but in
no event later than May 15 of each Year) , furnish the Contractor
with a written statement of the estimated Fixed Treatment Plant
Costs, Fixed 0&M Costs and Local Facility Costs allocable to the
Contractor for the next succeeding Fiscal Year, taking into
10 ,
W\68860038\WA SL0.1X
account applicable credits and estimated investment earnings on
moneys related to the Treatment Plant. The District shall, on or
before March 15, June 15, September 15 and December 15 of each
Year, commencing with the Fiscal Year in which the District
estimates the Initial Operation Date will occur furnish the
Contractor with a statement Variable 0&M Costs allocable to the
Contractor for the three-month period commencing on the
January 1, April 1, July 1 or October 1, commencing three and
one-half months subsequent to such date.
(e) Times of Payment - Fixed Treatment Plant Costs and
Local Facility Costs. The Contractor shall pay to the District,
on or before May 15 of each Year, commencing as set forth in
subsection (a) of this Section, look of Fixed Treatment Plant
Costs and Local Facility Costs allocable to the Contractor for
the next succeeding Fiscal Year.
(f) Times of Payment - Fixed 0&M Costs. The Contractor
shall pay to the District, on or before May 15 of each Year
commencing with the Year preceding the Year of anticipated
initial water treatment for the Contractor, the sum of Fixed 0&M
Costs allocable to the Contractor for the Year.
(g) Times of Payment - Variable O&M Costs. The Contractor
shall pay to the District Variable 0&M Costs allocable to the
Contractor for the three-month veriod commencing on the next
succeeding March 15, June 15 '15 or December 15 so that the
District receives quarterly payments of Variable O&M Costs three
months in advance of the time when -such Variable 0&M Costs will
begin to be incurred by the District.
(h) Contest of Accuracy of Charges. If the Contractor
questions or disputes the correctness of any billing statement by
the District, it shall pay the District the amount claimed when
due and shall within thirty (30) days of receipt of such billing
statement request an explanation from the District-. If the bill
is determined to be incorrect, the District will adjust the bill
to such Contractor in the next Fiscal Year. If the District and
the Contractor fail to agree on the correctness of a bill within
thirty (30) days after the Contractor has requested an
explanation, the parties shall promptly submit the dispute to
arbitration under Section 1280 ip-t- sea. of the Code of Civil
Procedure.
Section 11. Obligation in the Event of Default.
(a) Written Demand Upon Failure to Make Payment. Upon
failure of the Contractor to make any payment in full when due
under this Agreement or to perform any other obligation _
hereunder, the District shall make written demand upon the
Contractor, and if said failure is not remedied within -thirty
11
W\68860033\SQA SLO.1%
(30) days from the date of such demand or, if CCWA Bonds are
outstanding, for such additional time as is reasonably required,
in the sole discretion of CCWA, to correct the same, such failure
shall constitute a default at the expiration of such period.
Notice of such demand shall be provided to each other Water
Purchaser by the District. Upon failure of the District to
perform any obligation of the District hereunder, the Contractor
shall make written demand upon the District, and if said failure
is not remedied within thirty (30) days from the date of such
demand or, if CCWA Bonds are outstanding, for such additional
time as is reasonably required, in the sole discretion of CCWA,
to correct the same, such failure shall constitute a default at
the expiration of such period. Notice of such demand shall be
provided to each Water Purchaser by the Contractor making such
written demand.
In addition to any default resulting from breach by the
District or the Contractor of any agreement, condition, covenant
or term hereof, if the District or the Contractor shall file any
petition or institute any proceedings under any act or acts,
state or federal, dealing with or relating to the subject of
bankruptcy or insolvency or under any amendment of such act or
acts, either as a bankrupt or as an insolvent or as a debtor or
in any similar capacity, wherein or whereby the District or the
Contractor asks or seeks or prays to be adjudicated a bankrupt,
or is to be discharged from a.ny. or all of its debts or
obligations, or offers to its creditors to effect a composition
or extension of time to pay its debts, or asks, seeks or prays
for a reorganization or to effect a plan of reorganization or for
a readjustment of its debts or for any other similar relief, or
if the District or the Contractor shall make a general or any
assignment for the benefit of its creditors, then in each and
every such case the District or the Contractor, as the case may
be, shall be deemed to be in default hereunder.
(b) Transfer for Defaulting Contractor' s Account. Upon the
failure of the Contractor to make any payment which failure
constitutes a default under this Agreement, the District shall
use its best efforts to transfer for the Contractor' s account all
or a portion of the Contractor' s Contractor State Water Allotment
for all or a portion of the remainder of the term of this
Agreement. Notwithstanding that all or any portion of the
Contractor's Contractor State Water Allotment is so transferred,
the Contractor shall remain liable to the District to pay the
full amount of its share of costs hereunder as if such sale or
transfer has not been made, except that such liability shall be
discharged to the extent that the District shall receive payment
from the transferee thereof.
(c) Termination of Entitlement to Treatment of Water:
Continuing Obligations. Upon the failure of the Contractor to
12
W\68860038\WA SLO.IX
make any payment which failure constitutes a default under this
Agreement and causes the District to be in default under the
Master Water Treatment Agreement, the District may (in addition
to the remedy provided by subsection (b) of this Section)
terminate the provisions of the Water Supply Agreement insofar as
the same entitle the Contractor to receive treatment of the
Contractor State Water Allotment. Irrespective of such
termination, the obligations of the Contractor under this
Agreement shall continue in full force and effect and the
Contractor shall remain liable to the District to pay the full
amount of costs hereunder shall continue in full force and
effect.
(d) Increase in Nondefaulting Contractor Costs. Upon the
failure of any Water Purchaser to make any payment which failure
constitutes a default under its respective Water Treatment
Agreement, and except as transfers are made pursuant to
subsection (b) of this Section of the applicable Water Treatment
Agreement, (i) the allocable portion of Fixed Treatment Plant
Costs, Fixed 0&M Costs, Variable 0&M Costs and Local Facility
Costs of each nondefaulting Water Purchaser shall be
automatically increased for each Year of the remaining term of
the applicable Water Treatment Agreement pro rata with those of
the other nondefaulting Water Purchasers and (ii) such defaulting
Water Purchaser's Contractor State Water Allotment shall be
reduced correspondingly; provided, however, that the sum of such
increases for any such nondefaulting Water Purchaser in any Year
shall not exceed, without written consent of such nondefaulting
Water Purchaser, an accumulated maximum of 25% of the
nondefaulting Water Purchaser' s allocable portion of Fixed
Treatment Plant Costs, Fixed 0&M Costs, Variable 0&M Costs and
Local Facility Costs in such Year determined as nearly as
practicable under the circumstances as if the defaulting Water
Purchaser were not in default. Upon payment of such increase, a
nondefaulting Water Purchaser shall be entitled to take delivery
of its pro rata share of such defaulting Water Purchaser' s State
Water Allotment (as set forth in Exhibit A attached hereto) .
(e) Right of Recovem From Defaulting Water Purchaser. If
a water Purchaser shall fail or refuse to pay any amounts due to
the District, the fact that Water Purchaser has increased its
obligation to make such payments shall not relieve the defaulting
Water Purchaser of its liability for such payments, and Water
Purchaser shall have a right of recovery from the defaulting
Water Purchaser to the extent of such respective increase in
obligation caused by the defaulting Water Purchaser.
(f) Enforcement of Remedies. In addition to the remedies
set forth in this Section, upon the occurrence of an Event of
Default as defined herein, the District or the Contractor, as the
case may be, shall be entitled to proceed to protect and enforce
13
W\6886003B\WA SLO.1S Q
the rights vested in such party by this Agreement by such
appropriate judicial proceeding as such party shall deem most
effectual, either by suit in equity or by action at law, whether
for the specific performance of any covenant or agreement
contained herein or to enforce any other legal or equitable right
vested in such party by this Agreement or by law. The provisions
of this Agreement and the duties of each party hereof, their
respective boards, officers or employees shall be enforceable by
the other party hereto by mandamus or other appropriate suit,
action or proceeding in any court of competent jurisdiction, with
the losing party paying all costs and attorney fees. Without
limiting the generality of the foregoing, the District or the
Contractor, as the case may be, shall have the right to bring the
following actions:
(1) Accounting. By action or suit in equity to
require the board of the District or the Contractor, its
officers and employees and its assigns to account as the
trustee of an express trust.
(2) Injunction. By action or suit in equity to enjoin
any acts or things which may be unlawful or in violation of
the rights of the District or the Contractor, as the case
may be.
(3) Mandamus. By mandamus or other suit, action or
proceeding at law or in equity to enforce its rights against
the other party hereto (and its board, officers and
employees) and to compel the other party hereto to perform
and carry out its duties and obligations under the law and
its covenants and agreements as provided herein.
In addition, in the event of a dispute between the District
or the Contractor with respect to the terms of the Agreement, the
District and the Contractor agree to submit such mtter to
arbitration under Section 1280 et sec . of the Code aof Civil
Procedure with the losing party paying all costs and attorney
fees.
(g) Waiver. The waiver by the District of any breach by
the Contractor of any agreement, condition, covenant or term
hereof shall not operate as a waiver of any subsequent breach of
the same or any other agreement, condition, covenant or term
hereof.
(h) CCWA is Third Party Beneficiary. CCWA and any other
assignee of the District' s right to receive payments under this
Agreement shall have the right, as a third party beneficiaries,
to initiate and maintain suit to enforce this Agreement -to the
extent provided in such assignment.
14
W\6886003B\WA SLO.1%
Section 12 . Covenants of the Contractor.
(a) Amount of Rates and Charges. The Contractor will fix,
prescribe and collect rates and charges for the Contractor Water
System which will be at least sufficient to yield during each
Fiscal Year Contractor Net Water System Revenues equal to one
hundred twenty-five percent (125%) of the Contract Payments for
such Fiscal Year. The Contractor may make adjustments from time
to time in such rates and charges and may make such
classification thereof as it deems necessary, but shall not
reduce the rates and charges then in effect unless the Contractor
Net Water System Revenues from such reduced rates and charges
will at all times be sufficient to meet the requirements of this
section.
(b) Against Sale or Other Disposition of Property. The
Contractor will not sell, lease or otherwise dispose of the
Contractor Water System or any part thereof unless the Contractor
determines that such sale, lease or other disposition will not
materially adversely affect the Contractor' s ability to comply
with subsection (a) of this Section. The Contractor will not
enter into any agreement or lease which impairs the operation of
the Contractor Water System or any part thereof necessary to
secure adequate .Contractor Net Water System Revenues for the
payment of the obligations imposed under this Agreement or which
would otherwise impair the rights of the District with respect to
the Contractor Water System Revenues or the operation of the
Contractor Water System.
(c) Against Competitive Facilities. To the extent
permitted by existing law and within the scope of its powers, the
Contractor will not acquire, construct, maintain or operate and
will not permit any other public or private agency, corporation,
district or political subdivision or any person whomsoever to
acquire, construct, maintain or operate within the boundaries of
the Contractor any water system competitive with the Contractor
water System. Nothing contained herein shall prevent the
Contractor from acquiring additional sources of water as part of
the Contractor Water System.
(d) Maintenance and Operation of the Contractor Water
System- Budgets. The Contractor will maintain and preserve the
Contractor Water System in good repair and working order at all
times and will operate the Contractor Water System in an
efficient and economical manner and will pay all Contractor
Operation and Maintenance Expenses as they become due and
payable. Each fiscal year, the Contractor will adopt and file
with the District, within 15 days of its adoption, a budget
approved by the legislative body of the Contractor, including
therein in the estimated Contractor Operation and Maintenance
Expenses for such Fiscal Year the estimated Fixed Treatment Plant
15
w\6886003B\MA SLO.1X
Costs, Fixed 0&M Costs, Variable 0&M Costs and Local Facility
Costs allocated to the Contractor by the District. Any budget
may be amended at any time during any Fiscal Year and such
amended budget shall be filed by the Contractor with the
District.
(e) Payment of Claims. The Contractor will pay and
discharge any and all lawful claims for labor, materials or
supplies which, if unpaid, might become a lien on the Contractor
Water System Revenues or any part thereof or on any funds in the
hands of the Contractor or the Trustee prior or superior to the
lien of the payments to be made under this Agreement or which
might impair the security of the payments to be made under this
Agreement, but the Contractor shall not be required to pay such
claims if the validity thereof shall be contested in good faith.
(f) Compliance with Contracts. The Contractor will comply
with, keep, observe and perform all agreements, conditions,
covenants and terms, express or implied, required to be performed
by it contained in all contracts for the use of the Contractor
Water System and all other contracts affecting or involving the
Contractor Water System to the extent that the Contractor is a
party thereto.
(g) Insurance.
(i) The Contractor shall procure and maintain or cause
to be procured and maintained insurance on the Contractor
Water System with responsible -insurers so long as such
insurance is available from reputable insurance companies,
or, alternatively, shall establish a program of
self-insurance, or participate in a joint powers agency
providing insurance or other pooled insurance program, in
such amounts and against such risks (including accident to
or destruction of the Contractor Water System) as are
usually covered in connection with water systems similar to
the Contractor Water System. In the event of any damage to
or destruction of the Contractor Water System caused by the
perils covered by such insurance, the proceeds thereof
remaining after payment of all expenses (including
attorneys' fees) incurred in the collection of such proceeds
shall be applied to the reconstruction, repair or
replacement of the damaged or destroyed portion of the
Contractor Water System. The Contractor shall begin such
reconstruction, repair or replacement promptly after such
damage or destruction shall occur, and shall continue and
properly complete such reconstruction, repair or replacement
as expeditiously as possible, and shall pay out of proceeds
remaining after payment of all expenses (including
attorneys' fees) incurred in the collection of such proceeds
all costs and expenses in connection with such
16 .
W\6886003B\WA SIA.1% w
reconstruction, repair or replacement so that the same shall
be completed and the Contractor Water System shall be free
and clear of all claims and liens.
If the proceeds remaining after payment of all
expenses (including attorneys' fees) incurred in the
collection of such proceeds are insufficient to pay in full
the cost of reconstruction, repair or replacement of the
damaged or destroyed portion of the Contractor Water System,
then the Contractor shall complete the work and pay any
costs in excess of the amount of such proceeds from
Contractor Net Water System Revenues.
(ii) The Contractor will procure and maintain such
other insurance which it .shall deem advisable or necessary
to protect its interests and the interests of the District,
which insurance shall afford protection in such amounts and
against such risks as are usually covered in connection with
water systems similar to the Contractor. Water System;
provided that any such insurance may be maintained under a
self-insurance program so long as such self-insurance is
maintained in the amounts and manner usually maintained in
connection with water systems similar to the Contractor
Water System and is, in the opinion of an accredited
actuary, actuarially sound.
All policies of insurance required to be maintained
herein shall, to extent reasonably obtainable, provide that
the District and CCWA shall be given thirty (30) days'
written notice of any intended cancellation thereof or
reduction of coverage provided thereby.
(h) Accounting Records and Financial Statements.
(i) The Contractor will keep appropriate accounting
records in which complete and correct entries shall be made
of all transactions relating to the Contractor Water System,
which records shall be available for inspection by the
District and the Trustee at reasonable hours and under
reasonable conditions.
(ii) The Contractor will prepare and file with the
District annually within one hundred eighty (180) days after
the close of each Fiscal Year (commencing with the Fiscal
Year ending June 30, 1992) financial statements of the
Contractor for the preceding Fiscal Year prepared in
accordance with generally accepted accounting principles,
together with an Accountant's Report thereon. The
Contractor will promptly furnish a copy of such Accountants
Report to the District and to CCWA.
17
W\6886003B\WA SLO.1X
f-�-s3
(i) Protection of Security and Rights of the District. The
Contractor will preserve and protect the rights of the District
and its assignees to the obligations of the Contractor hereunder
and will warrant and defend such rights against all claims and
demands of all persons.
(j ) Payment of Taxes and Compliance with Governmental
Regulations. The Contractor will pay and discharge all taxes,
assessments and other governmental charges which may hereafter be
lawfully imposed upon the Contractor Water System or any part
thereof or upon the Contractor Water System Revenues when the
same shall become due. The Contractor will duly observe and
conform with all valid regulations and requirements of any
governmental authority relative to the operation of the
Contractor Water System or any part thereof, but the Contractor
shall not be required to comply with any regulations or
requirements so long as the validity or application thereof shall
be contested in good faith.
(k) Further Assurances. The Contractor will adopt,
deliver, execute and make any and all further assurances,
instruments and resolutions as may be reasonably necessary or
proper to carry out the intention or to facilitate the
performance hereof and for the better assuring and confirming
unto the District and the Trustee of the rights and benefits
provided to them herein.
Section 13 . Covenants of the District.
(a) Accounting Records and Financial Statements.
(i) The District will keep appropriate accounting
records in which complete and correct entries shall be made
of all transactions relating to the Treatment Plant, which
records shall be available for inspection by the Contractor
at reasonable hours and under reasonable conditions.
(ii) The District will prepare annually within one
hundred eighty (180) days after the close of each Fiscal
Year (commencing with the Fiscal Year ending June 30, 1992)
financial statements of the District for the preceding
Fiscal Year prepared in accordance with generally accepted
accounting principles, together with an Accountant' s Report
thereof . The District will promptly furnish a copy of such
Accountant's Report to the Contractor and to CCWA.
(b) The District shall comply with all state and federal
laws applicable to the District, the Treatment Plant . and the
Local Facilities, including but not limited to CEQA.
18 '
W\6886003B\WA SLO.1X
Section 14. Term.
(a) No provision of this Agreement shall take effect until
this Agreement, the Water Treatment Agreements and the Water
Supply Agreements with each Water Purchaser have been duly
executed and delivered to the District together with an opinion
for each Water Purchaser of an attorney or firm of attorneys in
substantially the form attached hereto as Exhibit B and an
opinion for the District of District Counsel, in substantially
the form attached hereto as Exhibit C.
(b) The term of this Agreement shall continue until the
later of (i) the termination of the Master Water Treatment
Agreement or (ii) the date on which no CCWA Bonds remain
outstanding.
Section 15. Assignment: Third Party Beneficiary.
The District may pledge and assign all or any portion of the
payments received under this Agreement from the Contractor and
the District' s other rights and interests under this Agreement.
Such pledge and assignment by the District shall be made
effective for such time as the District shall determine and
provide that the assignee shall have the power to enforce this
Agreement in the event of a default by a Contractor. The
Contractor may not assign its rights under this Agreement or the
Water Supply Agreement without the written consent of the
District and CCWA; provided however that in the event that all
Contractors and the District consent to the assignment by the
District of its rights and obligations under this Agreement to a
joint exercise of powers agency comprised of all public agency
Contractors, CCWA shall not unreasonably withhold its consent to
such assignments.
The Contractor acknowledges that CCWA is an intended third
party beneficiary of the Agreement and may initiate and maintain
suit to enforce the District' s rights under this Agreement.
Section 16 . Termination and Amendments.
This Agreement shall not be subject to termination by any
party under any circumstances, whether based upon the default of
any other party under this Agreement, or any other instrument, or
otherwise, except as specifically provided herein.
Except as otherwise provided in this Agreement, on and after
the date CCWA Bonds are issued and so long as any CCWA Bonds are
outstanding in accordance with the applicable Bond Resolution,
Section 3 (a) , (c) and (d) , 8 (a) , 10 (a) and (e) , 11, 13 and 15 of
this Agreement shall not be amended, modified or otherwise
changed or rescinded by agreement of the parties without the
19 1
w\6886003B\WA SIA.1]C
consent of CCWA. This Agreement may only be otherwise amended,
modified, changed or rescinded in writing by each of the parties
hereto.
Notwithstanding the foregoing, the sections of this
Agreement set forth in the prior paragraph of this Section may be
amended without the consent of CCWA for any of the following
purposes:
(a) to add to the agreements, conditions, covenants and
terms contained herein required to 'be observed or performed by
the District or the Contractor other agreements, conditions,
covenants and terms hereafter to be observed or performed by the
District or the Contractor, or to surrender any right reserved
herein to or conferred herein on the District or the Contractor,
and which in either case shall not adversely affect the interests
of the owners of any CCWA Bonds;
(b) to make such provisions for the purpose of curing any
ambiguity or of correcting, curing or supplementing any defective
provision contained herein or in regard to questions arising
hereunder which the District or the Contractor may deem desirable
or necessary and not inconsistent herewith, and which shall not
materially adversely affect the interests of the owners of any
CCWA Bonds;
(c) to make any modifications or changes necessary or
appropriate in the opinion of a firm of nationally recognized
standing in the field of law relating to municipal bonds to
preserve or protect the exclusion from gross income of interest
on the CCWA Bonds for federal income tax purposes;
(d) to make any modifications or changes to this Agreement
in order to enable the execution and delivery of CCWA Bonds on a
parity with any CCWA Bonds previously issued and to make any
modifications or changes necessary or appropriate in connection
with the execution and delivery of CCWA Bonds;
(e) to make any other modification or change to the
provisions of this Agreement which does not materially adversely
affect the interests of the owners of any CCWA Bonds;
(f) to make changes to the definition of "Treatment Plant" .
Section 17. Additional Water Purchasers.
(a) Additional Water Purchasers. The Contractor
acknowledges that the District may enter into water treatment
agreements with Additional Water Purchasers subsequent to the
execution of this Agreement. Upon execution of a water treatment
agreement with an Additional Water Purchaser, the District shall
20
W\68860038\WA SLO.18
promptly notify the Contractor. No water treatment agreement
with an Additional Water Purchaser shall affect the Contractor
State Water Allotment. The water treatment agreement with such
Additional Water Purchaser shall establish a price to be paid by
the Additional Water Purchaser' to the District, and the District
will pay to the Contractor, an amount whicli reasonably
compensates the Contractor for Fixed Treatment Plant Costs, Fixed
0&M Costs and Local Facility Costs previously paid by the
Contractor which are fairly allocable to the Additional Water
Purchaser.
(b) Maintenance of Tax-Exempt Status of CCWA Bonds.
Notwithstanding any other provision of this Agreement, the
District shall not execute a water treatment agreement with an
Additional Water Purchaser if execution of such water treatment
agreement would result in any of the CCWA Bonds being treated as
an obligation not described in Section 103 (a) of the Internal
Revenue Code of 1986, as amended, by reason of classification of
such Authority Bond as a "private activity bond" within the
meaning of Section 141 of said Code.
Section 18 . Miscellaneous.
The headings of the sections hereof are inserted for
convenience only and shall not be deemed a part of this
Agreement.
If any one or more of the covenants or agreements provided
in this Agreement to be performed should be determined to be
invalid or contrary to law, such covenant or agreement shall be
deemed and construed to be severable from the remaining covenants
and agreements herein contained and shall in no way affect the
validity of the remaining provisions of this Agreement.
This Agreement may be executed in several counterparts, all
or any of which shall be regarded for all purposes. as one
original and shall constitute and be but one and the same
instrument.
This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
The District and Contractor shall each act in good faith in
performing their respective obligations set forth in this
Agreement.
21
W\6886003B\WA SLO.18
IN WITNESS WHEREOF the Contractor has executed this
Agreement with the approval of its governing body, and caused its
official seal to be affixed and the District has executed this
Agreement in accordance with the authorization of its Board of
Directors.
SAN LUIS OBISPO COUNTY FLOOD
CONTROL AND WATER CONSERVATION
DISTRICT
Attest:
By
Chairman
CITY OF SAN LUIS OBISPO
[SEAL]
Attest: By
Mayor
By:
Clerk
22
W\68860038\WA SLO.1X
EXHIBIT A
PART I: SCHEDULE OF STATE WATER ALLOTMENTS
State Water Local
Allotment Contractor Facility
Contractor (acre feet) Share Share
1.
2.
3 .
4.
S.
6 .
7.
8 .
9 .
10.
11.
12 .
13 .
14.
15 .
A-1
W\68860038\MA SIA.1%
EXHIBIT B
[This opinion shall be delivered upon execution of the Water
Treatment Agreement]
April _, 1992
San Luis Obispo County Flood Control
and Water Conservation District
County Government Center
San Luis Obispo, California 93408
City of San Luis Obispo
[Address]
Central Coast Water Authority
3301 Laurel Canyon Road
Santa Barbara, California 93105-2017
Ladies and Gentlemen:
We are acting as general counsel to City of San Luis Obispo
(the "Contractor") under the Water Treatment and Local Facilities
Agreement, dated as of March 1, 1992 (the "Water Treatment
Agreement") and the Water Supply Agreement, dated ,
1992 (the "Water Supply Agreement") (the Water Treatment
Agreement and the Water Supply Agreement collectively referred to
as the "Agreement") , between the San Luis Obispo County Flood
Control and Water Conservation District (the "District") and the
Contractor, and have acted as general counsel to the Contractor
in connection with the matters referred to herein. As such
counsel we have examined and are familiar with (i) documents
relating to the existence, organization and operation of the
Contractor provided to us by the Contractor, (ii) certifications
by officers of the Contractor, (iii) all necessary documentation
of the Contractor relating to the authorization, execution and
delivery of the Agreement, and (iv) an executed counterpart of
the Agreement. Terms used herein and not otherwise defined have
the respective meanings set forth in the Agreement.
Based upon the foregoing and such examination of law and
such other information, papers and documents as we deem necessary
or advisable to enable us to render this opinion, including the
Constitution and laws of the State of California, together with
the resolutions, ordinances and public proceedings of the
Contractor, we are of the opinion that:
1. The Contractor is a city, duly created, organized and
existing under the laws of the State of California and duly
qualified to furnish water service within its boundaries.
W\68860035\WA SLo.IX
San Luis Obispo County Flood Control
and Water Conservation District
City of San Luis Obispo
Central Coast Water Authority
April _, 1992
Page 2
2. The Contractor has legal right, power and authority to
enter into the Agreement and to carry out and consummate all
transactions reasonably contemplated thereby, and the Contractor
has complied with the provisions of applicable law relating to
such transactions.
3 . The Agreement has been duly authorized, executed and
delivered by the Contractor, is in full force and effect as to
the Contractor in accordance with its terms and, subject to the
qualifications set forth in the second to the last paragraph
hereof, and assuming that the District has all requisite power
and authority, and has taken all necessary action, to authorize,
execute and deliver such Agreement, the Agreement constitutes the
valid and binding obligation of the Contractor.
4. The obligations of the Contractor to make payments under
the Agreement from the Revenues of its Contractor Water System or
other lawfully available funds as provided in Section 5 of the
Agreement is a valid, legal and binding obligation of the
Contractor enforceable in accordance with its terms.
5 . No approval, consent or authorization of any
governmental or public agency, authority or person is required
for the execution and delivery by the Contractor of the
Agreement.
6 . The authorization, execution and delivery of the
Agreement and compliance with the provisions thereof will not
conflict with or constitutea breach of, or default under, any
instrument relating to the organization, existence or operation
of the Contractor, any commitment, agreement or other instrument
to which the Contractor is a party or by which it or its property
is bound or affected, or any ruling, regulation, ordinance,
judgment, order or decree to which the Contractor (or any of its
officers in their respective capacities as such) is subject or
any provision of the laws of the State of California relating to
the Contractor and its affairs.
7. There is no action, suit, proceeding, inquiry or
investigation at law or in equity, or before any court, public
board or body, pending or, to our knowledge, threatened against
or affecting the Contractor or any entity affiliated with the
Contractor or any of its officers in their respective capacities
as such, which questions the powers of the Contractor referred to
in paragraph 2 above or the validity of the proceedings taken by
the Contractor in connection with the authorization, execution or
W\68860038\WA SLO.IX /a
��+ /
San Luis Obispo County Flood Control
and Water Conservation District
City of San Luis Obispo
Central Coast Water Authority
April _, 1992
Page 3
delivery of the Agreement, or wherein any unfavorable decision,
ruling or finding would materially adversely affect the
transactions contemplated by the Agreement, or which would
adversely affect the validity or enforceability of the Agreement.
The opinion expressed in paragraph 3 above is qualified to
the extent that the enforceability of the Agreement may be
limited by any applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium, or other laws affecting creditors,
rights, to the application of equitable principles and to the
exercise of judicial discretion in appropriate cases and to the
limitations on legal remedies against public agencies in the
State of California and provided that no opinion is expressed
with respect to any indemnification or contribution provisions
contained therein.
This opinion is rendered only with respect to the laws of
the State of California and the United States of America and is
addressed only to the District, the Contractor and the Central
Coast Water Authority. No other person is entitled to rely on
this opinion, nor may you rely on it in connection with any
transactions other than those described herein.
Very truly yours,
W\68860038\WA SLO.l%
EXHIBIT C
[This opinion shall be delivered upon execution of the Water
Treatment Agreement]
April _, 1992
San Luis Obispo County Flood Control
and Water Conservation District
County Government Center
San Luis Obispo, California 93408
Water Purchasers Listed on
Exhibit A attached hereto
Central Coast Water Authority
3301 Laurel Canyon Road
Santa Barbara, California 93105-2017
Ladies and Gentlemen:
We are acting as special counsel to the San Luis Obispo
County Flood Control and Water Conservation District (the
"District") under certain Water Treatment and Local Facilities
Agreements, dated as of March 1, 1992 and certain Water Supply
Agreements, dated as of , 1992, between the District
and each of the water contractors (each a "Contractor")
identified on Exhibit A attached hereto (collectively, the
"Agreement") in connection with the matters referred to herein.
As such counsel we have examined and are familiar with (i)
documents relating to the existence, organization and operation
of the District provided to us by the District, (ii)
certifications by officers of the District, (iii) all necessary
documentation of the District relating to the authorization,
execution and delivery of the Agreement, and (iv) an executed
counterpart of the Agreement. Terms used herein and not
otherwise defined have the respective meanings set forth in the
Agreement.
Based upon the foregoing and such examination of law and
such other information, papers and documents as we deem necessary
or advisable to enable us to render this opinion, including the
Constitution and laws of the State of California, together with
the resolutions, ordinances and public proceedings of the
District, we are of the opinion that:
1. The District is a flood control district, duly created,
organized and existing under the laws of the State of California.
2 . The District has legal right, power and authority to
enter into the Agreement and to carry out and consummate all
transactions reasonably contemplated thereby, and the District
W\6886003B\WA SLO.1S
San Luis Obispo County Flood Control and
Water Conservation District
Water Purchasers Listed on Exhibit A Attached hereto
Central Coast Water Authority
April _, 1992
Page 2
has complied with the provisions of applicable law relating to
such transactions.
3 . The Agreement has been duly authorized, executed and
delivered by the District, is in full force and effect as to the
District in accordance with its terms and, subject to the
qualifications set forth in the second to the last paragraph
hereof, and assuming that each Contractor has all requisite power
and authority, and has taken all necessary action, to authorize,
execute and deliver such Agreement, the Agreement constitutes the
valid and binding obligation of the District.
4. No approval, consent or authorization of any
governmental or public agency, authority or person is required
for the execution and delivery by the District of the Agreement.
5 . The authorization, execution and delivery of the
Agreement and compliance with the provisions thereof will not
conflict with or constitute a breach of, or default under, any
instrument relating to the organization, existence or operation
of the District, any commitment, agreement or other instrument to
which the District is a party or by which it or its property is
bound or affected, or, to the best of our knowledge, any ruling,
regulation, ordinance, judgment, order or decree to which the
District (or any of its officers in their respective capacities
as such) is subject or any provision of the laws of the State of
California relating to the District and its affairs.
6 . There is no action, suit, proceeding, inquiry or
investigation at law or in equity, or before any court, public
board or body, pending or, to our knowledge, threatened against
or affecting the District or any of its officers in their
respective capacities as such, which questions the powers of the
District referred to in paragraph 2 above or the validity of the
proceedings taken by the District in connection with the
authorization, execution or delivery of the Agreement, or wherein
any unfavorable decision, ruling or finding would materially
adversely affect the transactions contemplated by the Agreement,
or which, in any way, would adversely affect the validity or
enforceability of the Agreement.
The opinion expressed in paragraph 3 above is qualified to
the extent that the enforceability of the Agreement may be
limited by any applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium, or other laws affecting
creditors' rights, to the application of equitable principles and
W\68860038\WA SLO.IX
San Luis Obispo County Flood Control and
Water Conservation District
Water Purchasers Listed on Exhibit A Attached hereto
Central Coast Water Authority
April _, 1992
Page 3
to the exercise of judicial discretion in appropriate cases and
to the limitations on legal remedies against public agencies in
the State of California and provided that no opinion is expressed
with respect to any indemnification or contribution provisions
contained therein.
This opinion is rendered. only with respect to the laws of
the State of California and the United States of America and is
addressed only to the District, the Contractors and the Central
Coast Water Authority. No other person is entitled to rely on
this opinion, nor may you rely on it in connection with any
transactions other than those described herein.
Very truly yours,
W\6886003B\WA SIA.1%
WATER PURGHASER. ADDRESSEES OF DISTRICT .COUNSEL OPINION
SCHEDULE A.
W\6886063B\WA-SL0-IX
.Y—TBIT D'
LIST OF NOTES, BONDS OR OT--.ER OBLIGATIONS OF T?iB CONTRACTOR AS OF
DATE OF EXECViIO?N TO WF"ICH CONTRACTOR ABATER SYSTEM REVEN-03S ARE
PLEDGED
PRINCIPAL M-A.XIMMN2 AN-rJAL
D-SCR:_-T:ON BALANCE AS OF DEBT SERVICE
04/13/92
Whale Rock General Obligation
Bonds - Series A $ 940,000.00 $157,050.00
Whale Rock General Obligation
$ 320,000.00 $ 51,000.00
Bonds - Series B
1988 Fater Certificates of Participation $4,610,000.00 $480,837.50
D-1
ii\6666003B\WA SL0.1X
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