HomeMy WebLinkAbout06/29/2004, BUS 3 - NACIMIENTO WATER SUPPLY AGREEMENT Ma�gD�
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CITY OF SAN LUIS OBISPO
FROM: John Moss,Utilities Direc
SUBJECT: NACIM ENTO WATER UPPLY AGREEMENT
CAO RECOMMENDATION
1. Adopt a resolution approving an agreement with the San Luis Obispo County Flood
Control and Water Conservation District for the design, construction and operation of
facilities required for the delivery of 3,380 acre-feet of water per year to the City of San
Luis Obispo from the Nacimiento Water Supply Project.
2. Appoint a member of the Council to serve on the Nacimiento Project Commission as
defined under Article 33 of the agreement.
REPORT IN BRIEF
The City has been working closely with the San Luis Obispo County Flood Control and Water
Conservation District (District) and other potential participants in the development of
participation agreements for the Nacimiento Water Supply Project (project) for the past year.
Several revisions of the agreement have been prepared and have been commented on by the
participants, staff, legal counsel, City Councils and Boards. The agreements have progressed
along with other project activities and are now ready for approval by the agencies. Execution of
the agreement commits the agencies to participate in the project through at least the design phase.
A final "opt-out" opportunity will exist after design if the total project cost including design,
right-of-way, environmental and construction exceeds $150 million.
The City has already considered and approved rates and development impact fees required to
support the project. The City will receive 3,380 acre-feet per year of water from the project. The
City's share of the total construction cost is estimated at$58 million.
The project as proposed will be owned and operated by the District, and will be governed by the
Nacimiento Project Commission (the Commission). In addition to requesting Council's approval
of the recommendation, this report also requests that Council appoint a member of the Council to
serve on the Commission. Other actions to be considered as companion reports at this same
meeting relative to the project include approval of amendments to the Water Management
Element policies and consideration of the Nacimiento Water Supply Pipeline Environmental
Impact Report (EIR).
DISCUSSION
Background
The project has been under development since 1994 when the District first began preparation of a
project description and EIR for the project. The project is a regional water supply project consisting
Nacimiento Water Supply Agreement_ Page 2
of conveyance and possibly treatment facilities for approximately 15,750 acre-feet of water per year
from Lake Nacimiento, located in the Northern portion of the county. The project would entail
construction of an intake structure at the dam and approximately 60 miles of pipeline ranging in
size from 36 inches in diameter at the upstream reaches to 10 inches in diameter at the downstream
end of the proposed system. The project would be constructed to serve water to cities and agencies
along the Highway 101 corridor from San Miguel to San Luis Obispo.
On January 13, 2004, staff presented a report to the Council regarding the City's possible
participation in the project. As a part of the January 13, 2004 report, staff reviewed the primary
components of a proposed agreement with the District for the design, construction, operation and
delivery of water from the project to the City. On February 10, 2004, the Council considered the
estimated fiscal impacts of participation in the project at varying levels and directed staff to
pursue participation in the project at 3,380 acre-feet per year (afy). Staff returned to Council on
March 9, 2004 with recommended policy amendments to the City's General Plan that would
further support the City's participation in the project at 3,380 afy. Council conceptually
approved the recommended policy amendments and directed staff to proceed with the General
Plan policy amendment process. Approval of these General Plan amendments is also being
considered by the Council as a separate item at this meeting.
On June 1, 2004, the Council considered and approved the first in a series of proposed rate
increases required to fund that portion of the City's participation in the project that is attributable
to existing residents. On June 15, 2004, the Council considered and approved increases in water
development impact fees to ensure that new development pays its appropriate share of the new
water supply. With the funding approach for the project approved, the remaining actions
required of the City, and being considered under separate reports in this same meeting, include:
1. Finalizing the amendments to the Water Management Element Policies.
2. Consideration of the EIR previously certified by the District.
3. And the recommended action of this report: adopting a resolution approving the participation
agreement.
The Participation Agreement—Review and Development
Since presentation of the base agreement to Council in January 2004, several reviews and
modifications to the agreement have been made based on comments received from the
participating agencies. Specifically, the City has reviewed and submitted comments on the
project agreement on October 13, 2003, January 13, 2004 and April 22, 2004, summarized as
follows:
The October 2003 review comments were prepared by the City's Utilities Department and
reviewed by the City Attorney prior to submittal to the District. Many of the comments
contained in the October 2003 review centered on clarification of the District's prior
commitment water (water already being used by the residents at the lake), defining operations of
the project that would enhance its value to the City, and gaining a better understanding of the
basic agreement provisions.
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Nacimiento Water Supply Agreement Page 3
On January 13, 2004 and again on February 10, 2004, City and District staff presented the
general contract provisions and project financing models to the Council for consideration and
comment. At those meetings, the Council requested that certain amendments to the agreement be
considered by the District. Specifically, the Council requested that the District consider
including emergency pipeline repairs as overall project costs to be funded by entitlement rather
than the railroad ticket model; and most significantly, the Council requested that the District
consider a hybrid cost allocation model for the project as a whole. The hybrid model would
significantly reduce the project costs for the City while maintaining an appropriate economy of
scale for upstream participants. The County Board of Supervisors (District Board) considered
both of these requests and with the support and recommendation of District staff and the other
participants, the Board approved them.
Following Council's direction to pursue participation in the project at 3,380 acre-feet per year,
staff forwarded a copy of the draft agreement to Hatch and Parent, the City's water rights legal
consultants, for review and comment. Hatch and Parent provided their comments to the City,
and the comments were subsequently forwarded to the District for review and response. At the
same time, the other participating agencies were also providing their comments from their own
legal staff and consultants to the District for review and response.
On June 2, 2004, the City's Utilities Director and City Attorney met with Paavo Ogren (Deputy
Director of Public Works from the County) and John Jenkins (legal counsel for the District
charged with the development of the participation agreement) to review the City's comments and
the District's response to those comments. This meeting was very productive in terms of gaining
an understanding of the agreements from the District's (project lead agency) perspective, and
what they could or could not agree to modify. The meeting also put into perspective the status
and timing of the agreement relative to other actions, such as formation of the project
Commission and further defining the powers of the Commission, which is slated to follow
execution of the participation agreement.
The final participation agreements were provided to the City for final review on June 9, 2004.
The City Attorney has reviewed the edited agreements and with this review, combined with prior
reviews and the discussions on June 2, 2004, he is comfortable in recommending the City move
forward with their execution.
The Participation Agreement—Understanding Key Provisions
The participation agreement has been prepared by the District's Public Works and legal staff. The
agreement was developed using agreements of other regional water supply projects as a template.
The agreement has been customized to reflect the particular circumstances of this project. In the
developing the agreement, the District has been open to modification of many of the terms in order
to achieve consensus among the participants.
The District has prepared participation agreements to address the key elements of construction,
ownership, agency entitlements, operations, maintenance, project financing, cost allocation,
governance, and capital maintenance. The project as proposed will be owned and operated by the
District and the agencies will serve on the project commission as project participants. This
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Nacimiento Water Supply Agreement Page 4
leaves the ultimate control in the hands of the District for issues that would be appropriate for the
District as the project owner. However, the agreement also requires the Commission to review
and approve budget and other significant actions and submit those approvals to the District. In
order for the District to make substantive changes to the approved recommendations of the
Commission, the District would have to make findings that the recommendations of the
Commission were inconsistent with legal or other responsibilities of the District. This is a
significant concession on the part of the District in terms of expanding the powers of the
Commission. Other provisions in the contract, especially those dealing with the financial
obligations of the participating agencies, are the result of the District's bond counsel review and
are provisions necessary to receive favorable rates for bond financing of the project. Finally, the
areas where the agencies have had the greatest impact in review and comment on the agreement
are in those dealing with operations, entitlements, surplus and reserve water, and cost allocation
methodology.
Articles of the Agreement that staff would like to draw Council's attention to specifically include
the following:
Article I —Definitions (pp. 1-9). Review of the "Definitions" provides tremendous insight
into the agreement and its provisions. In particular, staff would point out the defined
"Effective Date" of the agreement as "the date upon which all participants have executed
and delivered this contract and like contracts to the District, and the District has executed..."
This definition provides that the agreement is not effective or binding upon the City unless
and until all other initial participants have executed the agreement.
Article 2 — Rescission (p. 9). Defines the ability and obligations of the participants
associated with opting out of the project.. In particular, Section C of this article identifies
that opting out after the effective date is allowed only if the total project costs exceed $150
million at the time of bid. This provision also identifies that should the project be phased
and bidding of the entire project not be feasible prior to the need to issue obligations for
construction, then a minimum of 30% of the project must be bid and this bid information
used to develop final construction cost estimates. This revised estimate will be used to
determine if the target amount of$150 million will be exceeded and the rescission or opt-out
provision will be triggered.
Article 4 — Ownership, Operation and Maintenance of Nacimiento Facilities (p. 12).
Identifies the project facilities as facilities of the District.
Article 12 — Surplus Water (p. 17). Defines the procedures and costs associated with the
sale of surplus water. This article is a key article for providing some of the operational
flexibility in the project that staff views as a significant operational enhancement for the
City, especially in terms of meeting the secondary water supply goals for the City.
Article 16 — Obligations for Nacimiento Project Costs (p. 21). Defines the City's
obligations to pay, and the allocation of costs for the various cost components of the project.
The City's costs for the various cost components have been developed using the following
cost allocation policies:
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Nacimiento Water Supply Agreement Page 5
1. Capital Reserve and Fixed Operations and Maintenance costs are allocated based on a
straight"Unit Percentage Share" of the units or facilities used.to deliver water to the City
(AKA Railroad Ticket).
2. Variable costs, such as energy, will be allocated based on the City's share of the total
acre-feet delivered during any calendar quarter.
3. Environmental mitigation and the City's share of the "Reserved Capacity Construction
Cost Component" or unallocated reserves, will be allocated based on the City's
"Delivery Entitlement Share" (AKA postage stamp).
4. "All Other Construction Cost Components" will be based on a hybrid unit percentage
share calculated as 50% of the construction costs being allocated using the postage
stamp method and 50% being allocated using the railroad ticket method. The resulting
percentage allocations per defined unit of construction are reflected under Article 16 (C)
(3) (c)on pages 23 and 24.
5. Turnouts and other facilities dedicated to the sole benefit and use by the participant are
allocated 100% to the participant.
Article 19—Obligation to Take or Pay (p. 28). Identifies that the agencies are obligated for
certain project costs each year, whether or not they actually take delivery of any project
water. This obligation is necessary to ensure that debt service repayment is made each year,
and that fixed operating costs are covered appropriately by the participating agencies.
Article 33 — Establishment of the Nacimiento Project Commission (p. 44). Provides for
the establishment of the Nacimiento Project Commission, timing of the Commission's
formation, voting rights of the members, and powers of the Commission. As stated
previously, recent amendments to this section of the agreement have significantly expanded
the level of input and control of the Commission. Initial contract language proposed that the
Commission start merely as an advisory body to the District Board. The recent amendments
now provide the Commission with approval authority over such matters as budget, and the
District Board would need to make findings stating its reasons in order to override the
approval of the Commission. The Commission will not have authority to contract directly,
employ persons or make expenditures. Recommendation No. 2 of this report is for the
Council to appoint a member of the Council to serve as the City's representative to the
Commission. The initial functions of the Commission will be important advisory functions
related to the timing of the project and contracting for design and management services for
the project.
The voting rights or weighting as defined in this article are based on both participant
numbers and delivery entitlement share. The District is provided vote weighting in
proportion to the number of participants or Commissioners. That would mean for the initial
project as currently defined the District vote would be weighted 20% (4 participants plus the
District). The City's vote is weighted based on our percentage of delivery entitlement share
of the project times the rernaining 80%, or 35.099% times 80%, or 28%. In general terms,
as participation in the project increases, the District's vote weight will decrease and vote
weights of the larger initial participants, such as the City and Paso Robles, may actually
increase.
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Nacimiento Water Supply Agreement Page 6
Required Participation
The project at this time is dependent upon the continued support and commitment by four key
players: the City of San Luis Obispo, the City of Paso Robles, Atascadero Mutual Water
Company, and Templeton Community Services District. The financial estimates of cost to each
agency have been based upon the initial participation commitments of each of these four
agencies. Additional agencies and water users along the pipeline corridor may come forward,
and their participation will lower the cost to the four main participants. However, to facilitate
project implementation, it was necessary to define the project as one based on the commitments
of the four major water purveyors.
If any of these four agencies should not execute this agreement, then the financial analyses will
have to be recalculated. Assuming that the District decides to continue forward with the project
as feasible, the remaining agencies will be presented with revised agreements and cost estimates
for consideration. As noted above in the discussion and definition of"effective date" the City
will not be bound to participation in the project at higher costs than shown in the currently
proposed agreement should another agency decide not to participate. However, given the level of
negotiation and consensus-building underlying the recommended agreement, continued
participation by these four agencies is expected, reflecting an almost unprecedented example of
regional cooperation.
FISCAL IMPACT
The fiscal impacts of the City's execution of this agreement and participation in the project were
discussed in detail with the Council on February 10, 2004. The impacts to water rates have been
specifically discussed in the 2004 Water Fund Analysis presented to Council on June 1, 2004 and
an 8% increase in rates was approved at that time as the first in a series of required rate increases
to support this and other required projects, programs and services of the Water Fund.
Adjustments to the water development impact fees were presented to and approved by Council
on June 15, 2004 to ensure that new development pays its proportionate share of the costs for this
new supply and the water master plan projects.
Execution of this agreement will obligate the City to fund its share of the project through at least
the design phase. The City's estimated share of the design cost is $6.053 million and is projected
to be spread over a six year timeframe. The timing and amount of these costs per year was
included in the 2004 Water Fund analysis and are currently projected to be paid on a "pay as you
go" basis as opposed to debt financing the design component of the project. Debt financing will
be required to fund the City's share of the construction cost for the project, which is estimated to
be $58 million. The City's estimated share of the annual operations and maintenance (O&M)
cost is $1.1 million, resulting in a combined annual cost to the Water Fund for both debt service
and operations and maintenance of about$5.4 million, beginning in 2010.
The City's Finance and Information Technology Director will be closely involved in the actual
development of the financing instruments for this project. As presented in the 2004 Water Fund
analysis, it is anticipated that the City will "pay-as-we-go" with reserves for the design
component of the project, thus reducing our long term debt service requirements associated with
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Nacimiento Water Supply Agreement Page 7
the project. Additionally, staff will review options and the pros and cons of the long term debt
financing, and whether the City should participate in the District's bond issuance or pursue our
own financing. Staff will return to Council with a specific recommendation regarding the long
term debt financing options prior to the District issuing any obligations on behalf of the City.
As stated previously, execution of this agreement will obligate the City to fund and participate in
the project through at least the design phase, assuming that the other three participants also
execute agreements at this time. An opportunity to opt out of the project will occur at the time
bids are received for the construction of the project. If at that time the total project cost exceeds
$150 million, all participating agencies will be given the opportunity to opt out of the contract.
An agency opting out of the project is viewed as unlikely unless the costs are substantially
greater than estimated, as all agencies will have already made a significant investment in the
project through financing the design of the project. Additionally, it is not anticipated that any
alternative water resources will develop to alleviate demand nor is it anticipated that demand will
lessen from any other external factors.
ATTACHMENTS
1. Resolution Approving the Nacimiento Project Water Delivery Entitlement Contract,
including: Exhibit A—Nacimiento Project Water Delivery Entitlement Contract
f MADNEW 1
Resolution No. (2004 Series)
Page 2
David F. Romero, Mayor
ATTEST:
Diane Reynolds.
Interim City Clerk
APPROVED AS TO FORM:
Jo h .Lowell
City Attorney
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NACIMIENTO PROJECT WATER
DELIVERY ENTITLEMENT CONTRACT
CITY OF SAN LUIS OBISPO
TABLE OF CONTENTS
PAGE
ARTICLE 1: DEFINITIONS................................................................................................. 1
ARTICLE 2: TERM OF CONTRACT; RESCISSION........................................................1.9
ARTICLE 3: CONSTRUCTION OF THE NACIMIENTO FACILITIES......................... 11
ARTICLE 4: OWNERSHIP, OPERATION AND MAINTENANCE OF
• NACIMIENTO FACILITIES........................................................................ 12
ARTICLE 5: EXISTING OBLIGATIONS: MASTER WATER CONTRACT AND
PRIOR COMMITMENT WATER................................................................ 13
ARTICLE 6: DELIVERY ENTITLEMENT....................................................................... 14
ARTICLE 7: WATER YEAR DELIVERY AMOUNTS AND SCHEDULE.................... 15
ARTICLE 8: PLACE OF DELIVERY................................................................................ 15
ARTICLE 9: MEASUREMENT OF DELIVERY ENTITLEMENT AND
SURPLUSWATER......................:......:..............:..............:........................... 16
ARTICLE 10: NO RESPONSIBILITY................................................................................. 16
ARTICLE 11: WATER QUALITY.........................:..................................a........................... 16
ARTICLE 12: SURPLUS WATER....................................................................................... 17
ARTICLE 13: CURTAILMENT OF DELIVERY................................................................ 19
ARTICLE 14: NACIMIENTO PROJECT WATER SHORTAGES .................................... 19
ARTICLE 15: LIMITATIONS ON OBLIGATION TO FURNISH WATER......................21
ARTICLE 16: OBLIGATIONS FOR NACIMIENTO PROJECT COSTS..........................21
ARTICLE 17: CONTRACT PAYMENTS ...........................................................................25
ARTICLE 18: USE OF TOTAL PARTICIPANT CONTRACT PAYMENTS....................27
ARTICLE 19: OBLIGATION TO "TAKE—OR—PAY".........................................................28
ARTICLE 20: PARTICIPANT'S PLEDGE AND COVENANTS.......................................28
ARTICLE 21: WATER ENTERPRISE OPERATION AND MAINTENANCE.................29
ARTICLE 22: COVENANTS OF THE DISTRICT AND THE PARTICIPANT;
SPECIAL TAX COVENANTS.....................................................................30
ARTICLE 23: NO OUTSIDE SERVICE..............................................................................35
ARTICLE 24: FAILURE TO LEVY, SET OR COLLECT TAXES, RATES AND
CHARGES; ESTABLISHMENT OF COVERAGE ACCOUNT..................35
ARTICLE 25: PARTICIPANT'S OBLIGATIONS SEVERAL AND NOT JOINT;
STEP—UP PROVISIONS AND REIMBURSEMENT..................................36
TABLE OF CONTENTS
PAGE
ARTICLE 26: EVENTS OF DEFAULT; DISTRICT'S REMEDIES..................................37
ARTICLE 27: CHANGES IN ORGANIZATION................................................................39
ARTICLE 28: ADDITIONAL CAPITAL PROJECTS.........................................................39
ARTICLE 29: USE OF RESERVE WATER........................................................................40
ARTICLE 30: USE OF RESERVED CAPACITY...............................................................42
ARTICLE 31: UNIFORM CONTRACTS ............................................................................43
ARTICLE 32: AMENDMENTS TO CONTRACT ..............................................................43
ARTICLE 33: ESTABLISHMENT OF NACIMIENTO PROJECT COMMISSION..........44
ARTICLE 34: OPINIONS AND DETERMINATIONS; GOOD FAITH ............................45
ARTICLE 35: WAIVER OF CONTRACT RIGHTS ...........................................................45
ARTICLE 36: C NOTICES...................................................................................................45
ARTICLE 37: ASSIGNMENT..............................................................................................46
ARTICLE 38: INSPECTION OF BOOKS AND RECORDS ..............................................46
ARTICLE 39: SEVERABILITY...........................................................................................46
ARTICLE 40: WATER RIGHTS,.........................................................................................47
ARTICLE 41: GOVERNING LAW......................................................................................47
ARTICLE 42: VALIDATION..............................:................................................................47
ARTICLE 43: COUNTERPARTS........................................................................................48
EXECUTION: ...........................................................................................48
EXHIBIT A: UNIT DESCRIPTIONS
EXHIBIT B: ENVIRONMENTAL IMPACT REPORT ENTITIES
NACIMIENTO PROJECT WATER
DELIVERY ENTITLEMENT CONTRACT
This Water Delivery Entitlement Contract (the "Contract"), made this _ day of
, 2004, by and between the San Luis Obispo County Flood Control and Water
Conservation District, a Flood Control and Water Conservation District duly established and
existing under the San Luis Obispo County Flood Control and Water Conservation District Act,
Act 7205 of the Uncodified Acts of the California Water Code (the "District"), and the City of
San Luis Obispo, a chartered city and municipal corporation of the State of California (the
"Participant"), as follows:
WITNESSETH:
WHEREAS, t he lands and i nhabitants w ithin t he j urisdiction o f t he Participant are i n
need of water; and
WHEREAS, the District has certain rights to water stored in the Nacimiento Reservoir
located in the northwest corner of the County of San Luis Obispo (the"County") and the District
is willing to provide a portion of said water to the Participant and to other public water
distribution agencies within the District;and
WHEREAS, the Participant desires to contract with the District for the supply of
additional water for the use and benefit of the lands and inhabitants served by the Participant;
and
WHEREAS, the Participant and the District desire to join with other public water
distribution entities within the District to have the District finance, construct and operate a water
system which will convey the District's waters from the Nacimiento Reservoir to the Participant
and to the other public water distribution entities all on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED by and between the
Participant and the District as follows:
ARTICLE 1:
DEFINITIONS
(A) Unless the context otherwise requires, the terms defined in this Article shall, for
all purposes of this Water Delivery Entitlement Contract, have the meanings set forth in the
Recitals hereof or hereunder specified, to be equally applicable to both the singular and plural
forms of any of the terms herein defined. Defined terms used herein without capitalization shall
have the same meanings as the.corresponding capitalized defined terms but do not refer to the
specific Participant hereunder,
"Additional Capital Project" shall mean one or more capital projects related to the
Nacimiento Facilities, or other improvements or repairs to the Nacimiento Facilities, undertaken
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from time to time by the District in addition to the Nacimiento Project, which is an Approved
Additional Project, an Emergency Project or a Required Additional Project.
"Additional Capital Project Costs" shall mean costs expended or incurred by the District
for Additional Capital Projects and not attributable to, financed by or included in Capital Projects
Installment Debt Service.
"Additional Debt" shall mean, as to the Participant and its Water Enterprise, and as to the
Water Enterprises, individually, of the respective Other Participants, such debt or similar
obligations to be payable from the revenues of such Water Enterprise, as may be permitted under
the terms of the Legal Documents.
"Approved Additional Project" shall mean a capital improvement to the Nacimiento
Facilities that has been agreed to by the Participant and/or certain Other Participants, and that
will be paid by that group within All Participants which has requested or agreed to such capital
improvement.
"All Participants" shall mean those public or private entities then participating in the
Nacimiento Pipeline by the purchase of Project Water under this Contract or a Like-Contract.
"Board of Supervisors" shall mean the Board of Supervisors of San Luis Obispo County
acting as the governing board of the County Flood Control and Water Conservation District.
"Calendar Quarter" shall mean each three (3)-month period commencing on January 1,
April 1, July 1, and October l of each year.
"Calendar Year" shall mean each twelve (12)-month period commencing January I and
ending December 31,both dates inclusive.
"Capital Projects" shall mean and include the following terms, each of which is
separately defined herein: Additional Capital Projects; Approved Additional Projects; Required
Additional Projects; Emergency Projects and the Nacimiento Project.
"Capital Projects Installment Debt Service" shall mean payments on debt or similar
obligations incurred by the District for the Nacimiento Facilities consisting of, in the aggregate,
(a) principal and interest (or mandatory sinking fund payments, installments or lease or similar
payments due) with respect to all Municipal Obligations at the time outstanding in accordance
with their terms, provided that capitalized interest funded from the proceeds of Municipal
Obligations need not be taken into account, (b) annual costs of administering the Municipal
Obligations, including the annual fees of any trustee or paying agent therefor, and (c)the costs, if
any, of annual credit enhancement for the Municipal Obligations, whether or not based on a
derivative structure as provided in Section 5922(a) of the Government Code. In the event, and to
the extent that, any Additional Capital Project is financed by means of the issuance of a series of
additional Municipal Obligations, then the payments and costs associated with the additional
Municipal Obligations shall become a part of the Capital Projects Installment Debt Service.
"Capital Reserve Costs" shall mean the District's annual costs of maintaining Capital
Reserves, determined by the District and budgeted annually by the District as provided for in
Article 4(C) hereof, to be apportioned among All Participants as provided for in Article 16(C)(1)
hereof.
"Capital Reserves" shall mean those reserves established and maintained by the District
for (i) Scheduled Maintenance or (ii) for anticipated costs of a Required Additional Project
imposed, or likely to be imposed, by a Governmental Authority (an "External Requirement") in
order for the District to continue to operate the Nacimiento Facilities,provided however, that the
District shall not expend any portion of the Capital Reserves for any External Requirement until
and unless such External Requirement becomes a final order of such Governmental Authority,
not subject to further appeal. Such Capital Reserves may be established either, (i) on a year-to-
year basis by the District in its annual budgets, copies of which shall be supplied to the
Participant promptly following adoption, or (ii) on a multi-year basis by the District through the
development and promulgation to the Participant of a long-term capital improvement plan of the
District; provided, however, that no Approved Additional Projects shall be funded from the
Capital Reserves.
"Commission" or "Nacimiento Project Commission" shall mean the commission formed
of a representative of the Participant, each Other Participant and the Board of Supervisors, to
operate as provided under Article 33 hereof.
"Construction Bids" shall mean the bids for construction of the Nacimiento Project, as
further described in Article 2(B).
"Construction Phase" shall mean the period of time following the opening of the final
Construction Bid, during which the District shall apply the proceeds of the Municipal
Obligations to pay the Nacimiento Project Costs.
"Consultants" shall mean contractors, environmental specialists, engineers, financial
advisors, underwriters; attorneys, accountants and similar consultants under contract with the
District to perform services related to the Nacimiento Project or the Nacimiento Facilities.
"Contract Pa 11�" shall mean those payments due from the Participant to the District,
representing the Participant's pro rata share of Nacimiento Project Costs.
"Costs" shall include the following terms, each of which is separately defined herein:
Additional Capital Project Costs; Contract Costs; Nacimiento Project Construction Costs; Master
Water Contract Costs; Nacimiento Project Costs; Reserve Water Costs; and Variable Energy
Costs.
"County Treasury Pool" shall mean the Treasury Pool of the County of San Luis Obispo,
California.
"Coverage Account" shall mean an account established for the Participant either with the
District or with a Depository, as provided in Article 24 hereof.
"Coverage Factor" shall mean one hundred twenty-five percent (125%) of Participant's
pro rata share of Capital Projects Installment Debt Service, determined in accordance with
Article 20(C) hereof, calculated for each Fiscal Year.
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"CPA" shall mean a certified public accountant or firm of certified public accountants.
"Debt-Service Shortfall" shall mean the aggregate amount of Delinquent Debt Service
Payments due from Defaulting Participants on the Due Date in question.
"Delinquent Debt Service Payment" shall mean those payments of Capital Projects
Installment Debt Service due under this Contract or any Like-Contract that are not, in fact, paid
on its Due Date.
"Delinquent Participant" shall mean any of the Participant or any Other Participant which
fails to meet its obligation for payment for Nacimiento Project Water hereunder or under any
Like-Contract, as further described in Article 25(A) hereof.
"Delivery Entitlement" shall mean the quantity of Nacimiento Project Water which the
Participant is entitled to have delivered by the District to the Participant under this Contract in
any given Water Year, as set forth in Article 6(A) herein.
"Delivery Entitlement Share" shall mean the proportion of the Delivery Entitlement as
compared to the Total Delivery Entitlement Obligation in any given Water Year.
"De osito shall mean a financial institution designated for the deposit and
administration of the Participant's Coverage Account, as and when appointed in accordance with
Article 24 hereof.
"Design Phase" shall mean the period of time during which the proceeds of the Notes are
being expended to finance the costs of design, engineering and planning for the construction of
the Nacimiento Project. The Design Phase shall conclude with the opening of the final
construction bid for the Nacimiento Project.
"Due Date" shall mean the date upon which each payment of Capital Projects Installment
Debt Service is required to be made by the Participant or any Other Participant hereunder or
under a Like-Contract.
"Effective Date" shall mean the date upon which all Initial Participants have executed
and delivered this Contract and the Like-Contracts to the District, and the District has executed
each of this Contract and such Like-Contracts.
"Emergency Projects" shall mean those Additional Capital Projects undertaken by the
District without notice to or consultation with the Participant, any Other Participant, or the
Commission, whenever the District determines that there is a substantial risk of harm to the
Nacimiento Facilities or to the operation of the Nacimiento Facilities which requires immediate
remedy.
"Fiscal Year" shall mean the twelve (12)-month period from July 1 of a Calendar Year to
June 30 of the immediately following Calendar Year, both dates inclusive or such other dates
constituting the designated fiscal year of the Participant as shall be determined by the governing
board of the Participant..
. 4 3- 1�
'GoverningBoard"oard" shall mean the legislative body which at the time in question governs
the Participant and is responsible for the administration and operation of its Water Enterprise.
"Governmental Authority" shall mean any State of California, federal or local
government authority having jurisdiction or authority over the District or the Nacimiento
Facilities, or any portion thereof, empowered to regulate or control any aspect of its or their
operations.
"Initial Participant" shall mean the Participant and the following Other Participants, each
of which has executed a Like-Contract as of the Effective Date: the City of Paso Robles, the
Templeton Community Services District and Atascadero Mutual Water Company.
"Legal Documents" shall mean any legal documents entered into by or on behalf of the
District with respect to the Municipal Obligations.
"Long-Term Project Debt" shall mean those Municipal Obligations, whether Tax_Exempt
or Taxable as to their interest component, whose proceeds are to be expended for the costs of the
Construction Phase of the Nacimiento Project.
"Master Water Contract" shall mean that certain Agreement, entered into by and between
the District and the Monterey Water Agency (the "Monterey Water Agency"), successor to the
Monterey County Flood Control and Water Conservation District, on October 19, 1959..
"Master Water Contract Costs" shall mean those amounts that the District is obligated to
pay under the Master Water Contract and which are attributable to the 15,750 acre-feet per year
of Nacimiento Project Water.
"Municipal Obligations" shall mean all the Taxable Obligations and the Tax-Exempt
Obligations, in the form of bonds, notes, certificates or similar securities, sold by or on behalf of
the District to finance all or a portion of the Nacimiento Facilities or an Additional Capital
Project, and specifically includes the Notes and Long-Term Project Debt.
"Nacimiento Facilities" shall mean all those facilities comprising the water delivery and
treatment facilities bringing water from the Nacimiento Reservoir to the Participants, to be
purchased hereunder, including without limitation, the Nacimiento Project, any Additional
Capital Project, the land underlying the same and any easements or similar rights associated
therewith or appurtenant thereto, as they may exist from time to time.
"Nacimiento Project" shall mean the project described in the Nacimiento Water Project
Environmental Impact Report SCH#2001061022 certified January 2004.
"Nacimiento Project.Construction Costs" shall meanthe costs of constructing any portion
of the Nacimiento Project, including design, engineering, planning, environmental mitigation,
equipping new facilities and/or construction efforts, accounting services, project administration
and management, installation; grading, razing and building the Nacimiento Project, and includes
the elements defined in Article 16(C)(3).
5 3- f �
i
"Nacimiento Project Costs" shall mean the sum of (i) the Nacimiento Project
Construction Costs; and (ii) all other costs of operating and maintaining the Nacimiento
Facilities and of all Additional.Capital Projects.
"Nacimiento Project Water" shall mean, in each Water Year, the Total Delivery
Entitlement Obligation plus the Reserve Water, but not more than Fifteen Thousand Seven-
Hundred (15,750) Acre-Feet of Nacimiento Reservoir Water. Nacimiento Project Water is the
source of the Delivery Entitlement, Surplus Water and Reserve Water.
"Nacimiento Reservoir Water" shall mean the Seventeen Thousand Five Hundred
(17,500) Acre-Feet of water which the District has the right to take from the Nacimiento
Reservoir pursuant to the Master Water Contract in each Water Year.
"Nacimiento Water Fund" shall mean the separate fund established and maintained by the
District within the County Treasury Pool, into which the District shall deposit all Net Revenues
and all payments received by the District under this Contract and each Like-Contract.
"Net Revenues" shall mean the sum of(a) the proceeds of sale by the District of Surplus
Water, (b) revenues received by the District from Wheeling Customers, and (c) revenues
received by the District from the sale of Reserve Water, less the costs of making such sales and
collecting said revenues.
"New Participant" shall mean and include each Other Participant which executes a Like-
Contract after the Effective Date, in accordance with Article 29(C) hereof.
"Non-Delinquent Participant" shall mean any of the Participant or any Other Participant
which at the time is then complying with its obligations to pay for Nacimiento Project Water
hereunder or under its Like-Contract, as set forth in Article 25(A)hereof.
"Notes" shall mean those short-term notes to be issued by the District after the Effective
Date, whether Tax-Exempt or Taxable as to their interest component, whose proceeds are to be
expended for the costs of design, engineering and planning for the construction of the
Nacimiento Project.
"Operation and Maintenance Costs" shall mean the reasonable and necessary current
expenses of maintaining, repairing and operating the Nacimiento Facilities, including District
administrative expenses directly attributable to the Nacimiento Facilities, but excluding the
Capital Reserve Costs and the Capital Projects Installment Debt Service, all computed in
accordance with generally accepted accounting principles applicable to enterprise funds of
government agencies.
"Opt-out Date" shall mean the date following the Effective Date upon which the
Participant may elect to opt out of the Construction Phase of the Nacimiento Project and cease to
accrue obligations under this Contract, as further described in Article 2(B).
"Other Delivery Entitlement" shall mean the quantity of Nacimiento Project Water which
any Other Participant is entitled to have delivered by the District under its Water Delivery
Entitlement Contract in any given Water Year.
6
"Other Delivery Entitlement Share" shall mean the proportion of the Other Delivery
Entitlement of each Other Participant as compared to the Total Delivery Entitlement Obligation
in any given Water Year.
"Other Participant" shall mean any other water-distributing public agency of the State of
California, city, mutual water company or other entity established under the laws of the State of
California, which, having the legal power to do so, executes a Water Delivery Entitlement
Contract substantially identical to this Contract for the delivery of water from the Nacimiento
Facilities (a "Like-Contract"), except for Participant information, dates, Unit Participations,
Participant's Unit Percentage Share and Delivery Entitlement Share, other than for the purpose
of purchasing Surplus Water.
"Parity Debt' shall mean, as to the Participant and its Water Enterprise, and as to the
Water Enterprises, individually, of the respective Other Participants, all Additional Debt that, by
its terms, is payable on a panty with the obligations of the Participant under this Contract.
"Participant Revenue Fund" shall mean that special segregated fund established with or
by the District for the deposit of amounts collected from the Participant hereunder as its portion
of Capital Projects Installment Debt Service.
"Participations" include the following types of participation in the purchase of Project
Water, each of which is separately defined herein: All Participants; Delinquent Participant;
Initial Participants; New Participants; Non-Delinquent Participants; Other Participants and
Participant.
"Participant's Capital Share" shall mean the portion of the Total Nacimiento Project
Construction Costs to be borne by the Participant, and as set forth in Article 16(C)(3).
"Prior Commitment Water" shall mean 1,750 acre-feet of Project Water available to the
District each Water Year from the Nacimiento Reservoir under the terms of the Master Water
Contract that has been committed to persons and entities other than the Participant and the Other
Participants.
"Required Additional Project" shall mean any capital improvement to the Nacimiento
Facilities that the District has determined to be necessary in order to keep the Nacimiento
Facilities in good repair and operating condition and to maintain the water supply at the quality
required hereunder, or which has been ordered or directed by a Governmental Authority.
"Reserved Capacity" shall mean that part of the capacity of the Nacimiento Facilities
which is not needed by the District for the delivery of the Total Delivery Entitlement Obligation.
"Reserve Pool Water" shall mean the portion of Reserve Water remaining, if any, after
the District applies and delivers the Reserve Water in accordance with the priorities set forth in
Article 29(A) hereof.
"Reserve Water" shall mean that part of the Nacimiento Reservoir Water remaining after
the subtraction of the Prior Commitment Water and the Total Delivery Entitlement Obligation.
7 3- lg
t
"Reserve Water Customer" shall mean any person or entity that is a party to a contract
with the District pursuant to which that person or entity is obligated to purchase Reserve Water
from the District.
"Scheduled Maintenance" shall mean the maintenance tasks for the Nacimiento Facilities
which are required to be accomplished less frequently than annually, a portion of the costs of
which shall be set aside in each annual budget of the District in anticipation of such requirement.
"Surplus Water" shall mean, beginning with the first Water Year during which
Nacimiento Project Water is delivered to the Participant, and in each Water Year thereafter, the
sum of(i) the Reserve Water for such Water Year, if any, plus (ii) the Turn-Back Pool Water for
such Water Year, if any.
"Taxable Obligations" shall mean those certain obligations of the District under an
indenture of trust or evidenced by an installment purchase agreement or similar instrument
whose p roceeds are u sed i n whole o r i n p art t o p ay t he c osts o f the N acimiento P roj ect, any
Approved Additional Project or any Required Additional Project, the interest on which is
included in gross income pursuant to federal income tax law.
"Tax-Exempt Obligations" shall mean those certain obligations of the District under an
indenture of trust or evidenced by an installment purchase agreement or similar instrument
whose p roceeds a re u sed i n w hole o r i n p art t o p ay t he c osts o f t he N acimiento P roject, a ny
Approved Additional Project, or any Required Additional Contract, the interest on which is
excluded from gross income for federal income tax purposes.
"Total Delivery Entitlement Obligation" shall mean, subject to the Master Water
Contract, the total amount of Nacimiento Project Water which the District shall make available
in each Water Year as Delivery Entitlements to the Participant and Other Delivery Entitlements
to the Other Participants under this Contract and under all the other Like-Contracts, and which
total shall not exceed the Nacimiento Reservoir Water, less the Prior Commitment Water and
less the Reserve Water.
"Total Nacimiento Project Construction Costs" shall mean the costs and expenses
incurred by the District in the acquisition and construction of the Nacimiento Facilities.
"Total Participant Contract Payments" shall mean all of the payments due from the
Participant and the Other Participants pursuant to Articles 16 and 17 hereof and the
corresponding Articles of the Like-Contracts with the Other Participants.
"Turn-Back Pool _Water" shall mean that part of the Delivery Entitlement which the
Participant does not request be delivered for the Water Year in question in accordance with
Article 7 hereof, together•with those portions of the Other Delivery Entitlements which are not
requested to be so delivered under the correlative provisions of the affected Like-Contracts.
"Unit" shall mean those facilities, which collectively make up the operating segments of
the Nacimiento Facilities, delineated as provided in Exhibit A.
8 3 , 19
"Unit Percentage Share" shall mean the Participant's pro rata share of the Capital
Reserve Costs, the Operation and Maintenance Costs and All Other Construction Costs
Component for each Unit and as set.forth in Article 16(C)(1) and (3)(c) herein; or, in the context
of a Like-Contract with any Other Participant, the tern "Unit Percentage Share" shall mean and
refer to the correlative pro rata share of such Other Participant or Participants.
"Variable Energy Costs" shall mean the actual Nacimiento Facilities .pumping energy
costs incurred by the District in conveying and delivering: (i) the Delivery Entitlement and
Surplus Water to.the Participant and (ii) the respective Other Delivery Entitlements and surplus
water to the Other Participants as defined under their respective Like-Contracts and as set forth
in Article 16(C)(2) hereof.
"Water Delivery Entitlement Contracts" shall mean this Contract and the other
Nacimiento Project Water Delivery Entitlement Contracts entered into by and between the
District and the Other Participants.
"Water Enterprise" shall mean the water system operated and to be operated by the
Participant.for sales of water to its customers or to the general public within the Participant's
jurisdiction.
"Water Enterprise Charges" shall mean the rates and charges imposed and collected by
the Participant for the provision of water through its Water Enterprise.
"Water Rights" shall mean (a) water rights, (b) claims to water rights or (c) agreements
concerning water rights, including, but not limited to, overlying, prescriptive, appropriative,
riparian or pueblo rights.
"Water Year" shall mean the twelve (12)-month period from October 1 of a each year to
and including September.30 of next following year..
"Wheeling Customer" shall mean any person or entity to which the District conveys
water, other than Nacimiento Project Water, through any Unit.
ARTICLE 2:
TERM OF CONTRACT; RESCISSION
(A) Term. This Contract shall become effective on the Effective Date and shall
remain in effect throughout the term provided by Section 3 of the Master Water Contract;
provided, that if and when, through no fault of the District, one or more provisions of the Master
Water Contract shall be terminated or suspended in the manner and for a cause specified in the
Master Water Contract, the District's obligations to the Participant and to the Other Participants
under this Contract and under Like-Contracts shall likewise be terminated or suspended;
provided, however, that this Contract may not be terminated,suspended or rescinded so long as
there remain outstanding any Municipal Obligations issued by the District for the Nacimiento
Facilities.
9 3 ,Ju
(B) Implementation of the Design Phase and Construction Bidding. The parties
hereto acknowledge that the total Nacimiento Project Construction Costs are estimated to be .
$150,000,000 as of the Effective Date; the parties hereto further acknowledge that the actual total
costs of construction of the Nacimiento Project will be determined through a competitive bid
process applicable to the District at the conclusion of the Design Phase (collectively, the
"Construction Bids"). The District covenants and agrees to provide All Participants with a
summary report of the Construction Bids, not less than two (2) Business Days following the date
upon which the last of such bids is received. In the event that the District finds it necessary or
advisable to divide the Construction Phase into two or more subphases, it shall provide a
summary report to All Participants of those Construction Bids it deems sufficient to begin the
Nacimiento Project (which shall include Construction Bids on no less than thirty percent (30%)
of the total estimated Nacimiento Project Construction Costs) and a sound estimate (which shall
then be current and shall be based, as appropriate, on construction bids received) of total
Nacimiento Project Costs, and shall so state and so estimate in its report to All Participants. The
thirtieth (30`) calendar day following the date upon which such report is received by the
Participant is referred to as the "Opt-out Date." It is understood and agreed by the parties hereto
that the District will incur certain costs and expenses for the Design Phase, which it intends to
pay for, in large part, from the proceeds of sale of the Notes. The Construction Bids can only be
developed as a result of planning to be. accomplished during the Design Phase, by the end of
which,the District anticipates that all of the proceeds of the Notes will have been expended. The
Participant expressly understands and agrees that the use of the Notes to finance the costs of the
Design Phase is an expenditure for the shared benefit of its Water Enterprise and the Water
Enterprise of each Other Participant. The District shall not award any construction contracts for
the Nacimiento Project until such time as the District shall have consulted with All Participants
as to whether to proceed with the Nacimiento Project, and in no event shall any award of a
Construction Bid be made, nor shall any Long-Term Project Debt be issued, prior to the Opt-out
Date.
(C) Termination of Participation in Nacimiento Facilities by Participant after
Effective Date. Subject to the provisions of subparagraph (A) above, the Participant may
withdraw from this Contract (and any Other Participant may withdraw from any Like-Contract)
following the Effective Date and on or prior to the Opt-out Date, but only if the total Nacimiento
Project Construction Costs shall exceed the figure given in paragraph (B) above. In order to
withdraw from participation hereunder, the Participant shall provide written notice to the District
and to each Other Participant that it elects to opt out of the Construction Phase.
(D) Obligations of District, of All Participants and of Participant in the Event of
Opting Out. The Participant agrees with the District and all Other Participants that the Initial
Participants shall share the costs of the Design Phase by the expedient of remaining obligated for
the repayment in full of the principal of and interest on the Notes, whether or not the Participant
should subsequently take advantage of the forgoing provisions to opt out of the remaining term
of t his C ontract. S hould t he P articipant elect t o w ithdraw f rom t his C ontract o n t he O pt-out
Date, it shall nonetheless repay to the District its pro rata share (in proportion to its Delivery
Entitlement Share) of the principal of and interest on the Notes by a date no later than one (1)
year following the Opt-out Date. The Participant understands and agrees that the District shall
not be obligated to pay any portion of the expenses for the Design Phase or the Municipal
Obligations, which shall instead be the pro rata obligations of the Participant and the Other
10
3, 2rl
Participants which will benefit from the Nacimiento Project, and that, in the absence of the
Participant's having withdrawn on an Opt-out Date, the Participant and the Other Participants
then remaining shall pay to the District pro rata (in proportion to their respective Delivery
Entitlement Share or Other Delivery Entitlement Shares) the amount necessary to pay or redeem
any outstanding Municipal Obligations. The provisions of, this Article shall survive the
rescission of this Contract.
(E) Rescission Following Construction of the Nacimiento Project. Subject to the
provisions of subparagraph (A) above, this Contract may be rescinded by the unanimous written
consent of the District, the Participant and all Other Participants.
ARTICLE 3:
CONSTRUCTION OF THE NACIMIENTO FACILITIES
(A) District's Authority to Enter Contracts, to Engage Consultants and to Finance the
Nacimiento Facilities. The Participant understands and agrees that the District will finance the
acquisition and construction of the Nacimiento Facilities by means of the issuance and sale of
Municipal Obligations and the Participant agrees that the District shall, and is hereby authorized
to cause the execution and delivery of the Municipal Obligations. on terms and conditions
favorable to the District, to the Participant and to the Other Participants, and which terms and
conditions will be established by the market conditions at the time of the sale of the Municipal
Obligations. In particular, the Participant acknowledges and agrees that:
(1) The District shall contract for the public works comprising the Nacimiento
Facilities on such terms as the District, in its sound business judgment may deem in the
best interests of the District,the Participant and the Other Participants, but only following
consultation with the Nacimiento Project Commission; and
(2) The District may engage Consultants as may be necessary and/or
convenient in order to plan, finance, acquire and construct the Nacimiento Facilities and
to issue and sell the Municipal Obligations, on such terms and conditions as the District
shall determine,provided, however, that the District and the Participant hereby agree that
all such contracts already in place as of the effective date of this Contract shall be deemed
valid and the costs thereof to the District shall be deemed appropriate costs and expenses
of the District in the acquisition and construction of the Nacimiento Facilities ; and
(3) The D istrict m ay a uthorize a nd s ell a t e ither p ublic o r p rivate sa le, a nd
cause to be executed and delivered, the.Municipal Obligations at any time, or times,
following the effective date hereof, to provide for the financing or reimbursement to the
District of the costs of the acquisition and construction of the Nacimiento Facilities, to
pay capitalized interest on the Municipal Obligations, to establish a reserve fund for the
Municipal Obligations and to pay the costs of delivery thereof; and
(4) The Participant shall execute and provide such instruments, certificates,
agreements and opinions of counsel as may be necessary in order for the District to
deliver the Municipal Obligations, including, without limitation, information for
inclusion in the disclosure document for the Municipal Obligations and a continuing
ll
disclosure agreement to permit compliance with Rule 15c2-12 of the Securities and
Exchange Commission, respecting the Participant's financial condition and operations,
and c ertificates a nd a greements e videncing c ompliance w ith t he c ovenants s et forth i n
Article 22 hereof;and
(5) The Participant will cooperate with the District and its Consultants in
connection with the planning, acquisition and construction of the Nacimiento Facilities
and the authorization and delivery of the Municipal Obligations.
(B) Commencement of Construction. The District will use its best efforts to cause or
accomplish the construction and financing of the Nacimiento Facilities, the obtaining of all
necessary authority and rights, and the performance of all things necessary and convenient
therefor. The District will commence the acquisition and construction of the Nacimiento
Facilities on any date after the Effective Date and when the following conditions have been met:
(1) The District determines such acquisition and commencement of
construction is permitted under the Master Water Contract and state, federal and local
law; and
(2) The District has received from the District's Consulting .Engineer a
certification that, based on contracts awarded by the District for the acquisition and
construction of the Nacimiento Facilities, and based upon the Consulting Engineer's
estimates of the costs of the portions of the Nacimiento Facilities for which contracts
have not been awarded, the District has sufficient moneys from (i) the proceeds of the
Municipal Obligations, together with (ii) estimated proceeds to be derived from any other
authorized but unissued Municipal Obligations, and (iii) moneys on deposit with the
District and legally available to complete the Nacimiento Facilities.
. ARTICLE 4:
OWNERSHIP, OPERATION AND MAINTENANCE OF NACIMIENTO FACILITIES
(A) District Ownership of the Nacimiento Facilities. The Nacimiento Facilities and
all of its pumps, machinery, conduits, apparatus, fixtures, fittings and equipment of any kind, real
property (including rights-of—way) and capacity are and shall be, owned by the District and shall
be held and operated and maintained by the District as provided for herein.
(B) District's Objectives and Covenants. The parties hereto acknowledge and agree
that the primary goal of the District under this Contract shall be to deliver Nacimiento Project
Water to the Participant and to the Other Participants, subject to cost considerations, as to which
the District shall be expected to exercise sound business judgment. In this regard, the District
covenants and agrees that it will operate and maintain the Nacimiento Facilities in accordance
with the Master Water Contract, all governmental laws, ordinances, approvals, rules, regulations
and requirements, including, without limitation, such zoning, sanitary,pollution, environmental
and safety ordinances and laws and such rules and regulations thereunder as maybe binding
upon the District. The District further covenants and agrees that it will maintain and operate the
Nacimiento Facilities in good repair, working order and condition, and that it will from time to
time inspect and test all Nacimiento Facilities against then-current water supply industry
12 3 -a3
standards, and that the District will pursue all necessary and proper replacement, repairs,
renewals and improvements thereto. In its operation of the Nacimiento Project, the District shall
have as an objective the maximum beneficial use of the Nacimiento Project Water and its
conservation. The District, the Participant and the Other Participants agree that they shall
individually and collectively cooperate and work towards this objective. The District, the
Participant and the Other Participants, individually and collectively, agree further that, to the
extent feasible, all revenues received from the Nacimiento Facilities shall be used for the sole
benefit of the Nacimiento Facilities and that all parties shall pay their respective shares of
Nacimiento Project Costs for Nacimiento Project Water received.
The District further covenants and agrees that it will take any and all action necessary to
enforce the rights vested in the District by this Contract and the Master Water Contract as the
District deems most appropriate. However, in the event the District fails to enforce any such
rights, the Participant may assert such rights on behalf of the District by such means as the
Participant deems most appropriate. Nothing in this Contract shall impair or otherwise affect, in
any manner, the Participant's right to assert, defend, enforce or otherwise protect any and all
rights vested in the Participant by this Contract.
(C) District's Capital Reserves; Annual Budgets to Be Prepared by the District. In
order to satisfy its covenants set forth in this Article, the District-shall determine the amount of
Capital Reserves necessary for the Nacimiento Facilities for the upcoming Water Year and shall
prepare its draft annual budget by no later than March 1 to reflect such Capital Reserves. The
District s hall p rovide c opies o f each s uch b udget t o t he N acimiento P roj ect C ommission, t he
Participant and the Other Participants for review and comment prior to the distribution of the
draft annual budget to the Board of Supervisors, and shall, if deemed necessary or advisable,
develop and promulgate to the Nacimiento Project Commission, the Participant and the Other
Participants a multi-year improvement plan for the Nacimiento Facilities reflecting the annual
requirements for the Capital Reserves.
ARTICLE 5:
EXISTING OBLIGATIONS: MASTER WATER CONTRACT AND PRIOR
COMMITMENT WATER
(A) Primacy of Master Water Contract. The obligations of the District under this
Contract and the obligations of the District under each and every Like-Contract with the Other
Participants, shall be subject to .the provisions of the Master Water Contract and should the
provisions of the Master Water Contract restrict, impair or prohibit the District from the
performance of any or all of the District's obligations under this Contract and/or the Like-
Contracts with the Other Participants, then the District shall, to the extent that the District is so
restricted, impaired or prohibited, be relieved of its said performance obligations to the
Participant under this Contract. This Contract does not create in the Participant any right, rights
or interest in or to the Master Water Contract. The Participant has been provided with a copy of
the Master Water Contract for review. On advice of counsel, the Participant has reviewed the
Master Water Contract and determined that the terms of the Master Water Contract do not
conflict with the terms of this Contract or the Participant's obligations hereunder.
13 a4
I
(B) Prior-Commitment Water. No part of the Prior-Commitment Water shall be used
by the District to satisfy any of the District's obligations under this Contract with the Participant,
Like-Contracts with Other Participants or the District's agreements with Reserve Water
Customers or third parties.
ARTICLE 6:
DELIVERY ENTITLEMENT
(A) Amount of Delivery Entitlement. Subject to the provisions of Article 14(D), and
so long as water is made available to the District under the Master Water Contract, the District
shall make available to the Participant, in each Water Year, the Delivery Entitlement of Three
Thousand Three Hundred Eighty (3,380) acre-feet of Nacimiento Project Water.
Notwithstanding the foregoing:
(1) The Total Delivery Entitlement Obligation available under this Contract
and under the Like-Contracts with the Other Participants may be reduced, following
written notice given to the Participant from the District, for any of the conditions or
reasons set forth in Articles 13, 14 and 15 hereof, and
(2) Under this Contract and all Like-Contracts, the District shall not be
obligated to deliver to the Participant or to any Other Participants, nor shall said
Participants have any rights in or to, any of the District's Prior.-Commitment Water.
(B) Limit on Rate of Deliveries of Water to Participant. In no event shall the District
be obligated to deliver the Delivery Entitlement and/or Surplus Water through any delivery
structure of the Nacimiento Facilities at a total combined instantaneous rate of flow exceeding
5-.1 cubic feet per second. The maximum amount of said water to be delivered by the District to
the Participant from the Nacimiento Facilities in any one month of any year shall not exceed 310
acre-feet. While the District is not required to deliver more than 310 acre-feet of water to the
Participant in any one month of any year, and while the District is not obligated to deliver the
Delivery Entitlement and/or Surplus Water through any delivery structure of the Nacimiento
Facilities at a total combined instantaneous rate of flow exceeding 5.1 cubic feet per second, in
the event deliveries required to be made by the District to the Other Participants do permit a
higher monthly rate of delivery to the Participant, then the District shall have the discretion
temporarily to exceed the maximum monthly deliveries provided for herein.
In the event that the Participant shall desire to have the Nacimiento Project constructed in
such a manner as to allow the District to deliver the Delivery Entitlement through any delivery
structure of the Nacimiento Project at a total combined instantaneous rate of flow exceeding 5.1
cubic feet per second, the Participant shall notify the District in writing prior to the time that the
District shall have completed the final design of the Nacimiento Project. At the time the District
receives said request, the District shall determine the additional costs of the Nacimiento Project
which are attributable to the Participant's desired increased rate of flow. The Commission shall
review the District's determination of the aforesaid additional costs and report the additional
costs to the Participant. The Participant agrees that the Participant shall be solely responsible for
and shall pay to the District the additional costs of construction of the Nacimiento Project which
are attributable to the increased rate of flow.
14 3
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(C) No District Obligation to Deliver at Particular Head or Pressure. The District is
under no obligation to the Participant to deliver the Delivery Entitlement at any particular head
or pressure; however, the Nacimiento Project shall be designed to deliver water to the
Participant's turnout at a hydraulic grade line of 460 feet..
(D) Participant's Right to Acquire Additional Delivery Entitlement. To the extent that
the District has available Reserved Water, Participant shall have the right to apply to, and acquire
from, the District, additional delivery entitlement as provided for in.Article 29 herein.
ARTICLE 7:
WATER YEAR DELIVERY AMOUNTS AND SCHEDULE
The amounts, times and rates of delivery of the Delivery Entitlement to the Participant
during any Water Year shall be in accordance with a water delivery schedule determined by the
District in the following manner:
(A) Preliminary Water Delivery Schedule. On or before October 1 of each Calendar
Year, the Participant shall submit in writing to the District a preliminary water delivery schedule
which sets forth the amounts, rates and times of the conveyance and delivery of the Delivery
Entitlement as is desired by the Participant for each month of the next succeeding three(3) Water
Years.
(B) Coordination with Other Participant Preliminary Schedules. Upon receipt of the
Participant's preliminary water delivery schedule, the District will consider the Participant's
requested schedule, and the preliminary water delivery schedules submitted to the District by the
Other Participants, and, after consultation with the Participant, the District shall make such
modifications in the Participant's preliminary water delivery schedule as will allow the District
to schedule the amounts, times and rates of the conveyance and delivery of the Delivery
Entitlement, and those of the Other Participants, so that the requests of the respective Participants
will match as closely as possible their respective requests but in a manner which is consistent
with the efficient and economical operation of the Nacimiento Facilities.
(C) Amendment of Schedules. The Participant's water delivery schedule may be
amended, from time to time, upon the written request of the Participant to the District, subject to
the pre-existing obligations of the District under the water delivery schedules of Other
Participants for the same period of time.
ARTICLE 8:
PLACE OF DELIVERY
(A) Place of_ Delivery. All of the Delivery Entitlement and all Surplus Water
furnished to the Participant shall be delivered to the Participant at Unit T11 (the "Place of
Delivery").
(B) Request for Change in Place of Delivery during First Half of Design Phase. If the
Participant shall desire to change its Place of Delivery at any time prior to the time that the
Design phase i s half completed, the Participant in ay do s o,p rovided, the Participant shall be
15 3 - X
I
solely responsible for any and all costs of design, construction or operation attributable to the
change in Place of Delivery. No request during the Design Phase for a change in the place of
delivery will be granted if such change would cause a material delay in either the Design Phase
or the Construction Phase or would require the District to prepare an environmental impact
report.
(C) Request f or C hanae i n Place o f D elivery at any Time. If t he P articipant s hall
desire at any time during the term of this Contract to change the Place of Delivery, or to request
an a dditional p lace(s) o f d elivery, t he P articipant m ay d o s o,p rovided, t he n ew o r additional
place of delivery will not interfere with, or restrict, or impair, the conveyance or delivery of the
delivery entitlement of any Other Participant and;provided that the Participant shall furnish to
the District all of the costs and expenses which the District shall incur in the acquisition and
construction of the new or additional place of delivery for the Participant.
ARTICLE 9:
MEASUREMENT OF DELIVERY ENTITLEMENT AND SURPLUS WATER
All of the Delivery Entitlement and all Surplus Water furnished to the Participant
pursuant to this Contract shall be measured by the District by means of the District's measuring
device(s) located at the place(s) of delivery established for the Participant under Article 8 of this
Contract. Upon the request of the Participant, the District shall investigate the accuracy of the
District's measurements, and the District, in writing, shall deliver the findings'of the District to
the Participant. Any error discovered in the course of such an investigation shall be cause for an
adjustment in the amounts charged the Participant. The Participant may, at the Participant's
expense, and after reasonable notice to the District, inspect the District's measuring equipment
for the purpose of determining the accuracy of the equipment.
ARTICLE 10:
NO RESPONSIBILITY
After the Delivery Entitlement or any portion thereof, and/or after the Surplus Water or
any portion thereof, shall have passed the place(s) of delivery established for the Participant
under Article 8 of this Contract, neither the District nor its officers, agents or employees shall be
liable for the control, carriage, conveyance, handling, use, disposal, distribution or changes
occurring in the quality or quantity of such water, or for any claim or damages of any nature
whatsoever, including, but not limited to, property damage or personal injury or death arising out
of or connected with the control, carnage, conveyance, handling, use, disposal, distribution or
changes occurring in the quality or quantity of such water beyond such place(s) of delivery. The
Participant shall defend, indemnify and hold harmless the District and its officers, agents and
employees from and against any such damages or claims of damage.
ARTICLE 11:
WATER QUALITY
When the District shall deliver the Delivery Entitlement and/or any Surplus Water to the
Participant from the Nacimiento Project Water, said water shall be at a quality that is
16 � ��
substantially the same as the quality of said water at the time it was taken from the Nacimiento
Reservoir by the District. The District shall assume no further or additional responsibility for the
quality o f t he w ater d elivered t o t he P articipant u nder t his C ontract a nd t he D istrict d oes n of
warrant the quality of any such water for any particular use. The Participant shall be responsible
for the treatment of all such water tQ the minimum water quality standards for water for domestic
use a s m ay b e e stablished f rom t ime t o t ime b y t he S tate o f C alifomia and/or b y t he f ederal
government and the Participant shall defend, indemnify and hold harmless the District from and
against any and all claims, damages, costs, expenses,judgments, attorney fees or other liability
to any person or entity asserting that said water does not meet or has not met said domestic use
water quality standards.
ARTICLE 12:
SURPLUS WATER
(A) District D etermination o f Amount o f S urplus W ater; R eserve P ool; T urn-Back.
The District shall notify All Participants of the total amount of Surplus Water, if any, available
for a Water Year on or about the first day of the then-current Water Year, and once so declared
by the District, said amount shall not be changed without first obtaining the consent of All
Participants. Surplus Water purchased by the Participant will be delivered to the Participant in
the same manner provided for the delivery of the Participant's Delivery Entitlement and to the
extent that all of said Surplus Water purchased is not in fact taken by the Participant by the end
of the Water Year in question, then such undelivered amount of Surplus Water shall revert to the
District and shall not thereafter be available to the Participant.
(B) Sale of Surplus Water by District; Rates. From the Surplus Water held by the
District, the District shall first sell any and all of the Reserve Pool Water portion of the Surplus
Water. N o T urn-Back Pool W ater s hall b e sold b y t he D istrict s o l ong a s a ny R eserve P ool
Water remains unsold.
(1) Sale of Reserve Pool Water. The District shall offer the Reserve Pool
Water to the Participant and to Other Participants pro rata in proportion to their respective
Delivery Entitlement'Share and Other Delivery Entitlement Shares. Any amounts of
Reserve Pool Water not purchased by an Other Participant shall be re-offered to the
Participant, if it purchased its pro rata share of.Reserve Pool Water, and the Other
Participants purchasing Reserve Pool Water pro rata according to their respective
Delivery Entitlement Share and Other Delivery Entitlement Shares until all of the
Reserve Pool Water has been sold.
(a) Price for Reserve Pool Water. For Reserve Pool Water, the
Participant shall pay to the District the sum of the following-
(1) The portion of the Operation and Maintenance Costs
attributable to the Reserve Pool Water and incurred by the District in the
immediately preceding Water Year per acre-foot,plus
17
3 ��
(2) The Variable Energy Costs incurred by the District for the
delivery of the Reserve Pool Water as calculated in Article 16(C)(2)
hereof.
(b) Revenues from Sale of Reserve Pool Water. All revenues derived
by the District from the sale of Reserve Pool Water shall be applied as a credit
against the obligations of the Participant and the Other Participants in proportion
to the Delivery Entitlement Share and the Other Delivery Entitlement Shares of
the Participant and the Other Participants, respectively.
(2) Sale of Turn-Back Pool Water. The District shall offer the Turn-Back
Pool Water to the Participant and to the Other Participants pro rata in proportion to their
Delivery Entitlement Share and Other Delivery Entitlement Shares, respectively.
(a) Price for Turn-Back Pool Water. For the Turn-Back Pool Water,
the Participant shall pay to the District the sum of the following:
(1) The average of the Operation and Maintenance Costs
incurred by the District in the immediately preceding Water Year per acre-
foot for the delivery of the Delivery Entitlement and the Other Delivery
Entitlements to the Participant and to the Other Participants, respectively;
plus
(2) The Variable Energy Costs incurred by the District for the
delivery of the Turn-Back Pool Water as calculated in Article 16(C)(2)
hereof.
(b) Revenues from Sale of Turn-Back Pool Water. All revenues
derived by the District from the sale of Turn-Back Pool Water shall be applied as
a credit against the obligations of those Participants contributing to the Tum-Back
Pool Water and in the proportion to the amount each Participant contributes to the
Tum-Back Pool Water in the Water Year, if at all.
(C) If the Participant shall commit in writing to purchase such Surplus Water from the
District, the Participant shall be obligated to pay for such Surplus Water, whether or not the
Participant accepts delivery of the Surplus Water, so long as such Surplus Water was available
for the period in question. Neither the Participant nor any Other Participant shall resell Surplus
Water on a wholesale basis at any time to persons or entities not a party to this Contract or to
Like-Contracts, without the prior written consent of the District and all Other Participants;
provided, however, that this provision is not intended to limit the sales of Surplus Water to the
end customers of the Participant.
(D) The District may offer to sell and deliver any Surplus Water not purchased by the
Participant or the Other Participants to any other prospective purchaser.without right of renewal,
in a manner and at prices which will return to the District the largest Net Revenue practicable for
the benefit of the Nacimiento Facilities, but in no event at prices less than those at which such
Surplus Water is offered to the Participant, unless the Participant is first tendered such Surplus
Water by the District at the lower price in writing, and in each case, attempting to recapture the
18 � , C\A%j
Operation and Maintenance Costs, the Variable Energy Costs and the Capital Projects
Installment Debt Service attributable to the volume of Surplus Water actually purchased by such
third parties, at the highest price the market will then bear.
ARTICLE 13:
CURTAILMENT OF DELIVERY
The D istrict in ay t emporarily d iscontinue o r r educe the amount o f N acimiento P roject
Water to be furnished to the Participant during such time as the District is maintaining, repairing,
replacing, investigating, or inspecting any of the portions of the Nacimiento Facilities necessary
for the furnishing of water to the Participant. Insofar as it is feasible, the District shall give the
Participant 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,
the quantity of Nacimiento Project Water which would have been furnished to the Participant in
the absence of such discontinuance or reduction. Notwithstanding the foregoing, under no
circumstances shall the Participant be relieved of any obligation to make Contract Payments as a
result of such temporary discontinuance or reduction of Nacimiento Project Water.
ARTICLE 14:
NACIMIENTO PROJECT WATER SHORTAGES
(A) Temporary Shortages. In any Water Year in which there may occur a shortage or
interruption due to drought or other temporary cause in the supply of the Nacimiento Reservoir
Water available for delivery by the District to the Participant, to the Other Participants and/or to
the Reserve Water Customers, with the result that the amount of such supply is less than the total
of. (i) the Delivery Entitlement and (ii) the Other Delivery Entitlements, plus (iii) the amount of
the District's obligations to the Reserve Water Customers for that Water Year, the District shall
calculate the amount of said reduced supply of water available to the District for use as
Nacimiento Project Water and shall apportion the reduced supply of water as follows:
(1) Subject to the provisions of paragraph (D) below, from the reduced
amount of Nacimiento Reservoir Water available to the District under the Master Water
Contract in the Water Year in question, the District will subtract One Thousand Seven
Hundred Fifty (1,750) Acre-Feet of the Prior-Commitment Water and the result shall be
the reduced s upply o f N acimiento Reservoir W ater available to the D istrict f or u se as
Nacimiento Project Water under this Contract and under the Like-Contracts with Other
Participants, and for the District's obligations to Reserve Water Customers; and
(2) For the Water Year in question, the District shall first apply the said
reduced supply of Nacimiento Project Water to satisfy the Delivery Entitlement and the
Other Delivery Entitlements, and then, to the satisfaction of the District's obligations to
Reserve Water Customers. In the event that the said reduced supply of Nacimiento
Project Water is insufficient to meet, in full, the Delivery Entitlement and the Other
Delivery Entitlements, then the District (i) shall make no deliveries to Reserved Water
Customers for that Water Year, and (ii) shall reduce the delivery of water to All
19 � ! !y U_
Participants pro rata according to the Delivery Entitlement Share or Other Delivery
Entitlement Shares of the Participant and each Other Participant, respectively. In the
event that said reduced supply of Nacimiento Project Water is sufficient to meet the
Delivery Entitlement and the Other Delivery Entitlements, but not the full amount then
due to Reserve Water Customers, the District shall reduce the delivery of Reserve Water
among the Reserve Water Customers pro rata, according to the amounts they have
contracted for during the Water Year in question.
(B) Permanent Shortages. In the event that there is a reduction in the supply of
Nacimiento Reservoir Water provided to the District under the Master Water Contract, which
notwithstanding the preventative or remedial measures taken by the Monterey Water Agency,
threatens or causes a permanent shortage in the amount of Nacimiento Reservoir Water available
to the District under the Master Water Contract, with the result that the District concludes such
supply will, for an indefinite period extending beyond the current Water Year, be less than
Seventeen Thousand Five Hundred (17,500) Acre-Feet, the District shall calculate and apportion
the permanently reduced supply of water as follows:
(1) Subject to the provisions of paragraph (D) below, from the reduced supply
of Nacimiento Reservoir Water available to the District under the Master Water Contract,
the District will subtract One Thousand Seven Hundred Fifty (1,750) Acre-Feet of Prior-
Commitment Water and the result shall be the amount of Nacimiento Reservoir Water
available to the District for use as the reduced Nacimiento Project Water under this
Contract, the Like-Contracts with Other Participants and for the District's obligations to
Reserve Water Customers; and
(2) For future Water Years, the District shall first apply the reduced supply of
Nacimiento Project Water to satisfy the District's obligations to the Participant under this
Contract and to the Other Participants under Like-Contracts, and then to the satisfaction
of the District's obligations to Reserve Water Customers. In the event that the reduced
Nacimiento Project Water is insufficient to meet, in full, the District's obligations to the
Participant under this Contract and to the Other Participants under the Like-Contracts, the
District s hall p ermanently reduce t he d elivery o f w ater t o All P articipants p to r ata, i n
proportion to the Participant's Delivery Entitlement Share and the Other Participants'
Other Delivery Entitlement Shares. In the event that the reduced Nacimiento Project
Water is sufficient to meet the District's obligations to All Participants under this
Contract and the Like-Contracts, but not the full amount then due to Reserve Water
Customers then the District shall reduce the delivery of Reserve Water to Reserve
Customers pro rata, according to the amounts contracted for during the most recent Water
Year completed.
(3) In the event and to the extent that the permanent shortage is ameliorated
and some or all of the reduced Nacimiento Reservoir Water is later restored to the
District, the restored amount of water shall be allocated to the Participant and the Other
Participants in proportion to the Delivery Entitlement Share and the Other Delivery
Entitlement Shares, respectively.
20 3 -3- A
(C) No Liability for Shortages. Neither the District nor any of its officers, agents, or
employees shall be liable for any damage, direct or indirect, arising from shortages in the amount
of Nacimiento Project Water to be made available to the Participant under this Contract caused
by the non-availability of water to the District under the Master Water Contract or caused by
drought, operation of the Nacimiento Reservoir, operation of area of origin laws, or any other
cause beyond the control of the District.
(D) Equitable Sharing of Shortages with Prior-Commitment Water. To the extent that
the District is able to do so under the District's contractual obligations to the persons and entities
entitled,to Prior-Commitment Water, the District will, during times of shortage, endeavor to
reduce the amounts of Prior-Commitment Water extracted from the District's 17,500 acre-feet of
water from the Nacimiento Reservoir in proportion to the ratio of 1,750 to 17,500.
ARTICLE 15:
LIMITATIONS ON OBLIGATION TO FURNISH WATER
(A) Limited District Obligations. Notwithstanding any provisions of this Contract to
the contrary, the obligation of the District to furnish Nacimiento Project Water hereunder shall
be limited to the times and to the extent that water from the. Nacimiento Reservoir and the
facilities necessary for furnishing the same are available to the District pursuant to the Master
Water Contract.
(B) District Not Liable for Monterey Water Agency Failure to Perform Master Water
Contract. The District shall not be liable for its failure to perform any part of this Contract to the
extent that such failure is caused by the wrongful failure of the Monterey Water Agency to
perform any obligation imposed on the Monterey Water Agency by the Master Water Contract;
provided, that the District shall diligently and promptly pursue all rights and remedies available
to the District to enforce the rights of the District against the Monterey Water Agency under the
Master Water Contract relative to such failure to perform and provided further, that the costs and
expenses incurred by the District in the enforcement or attempted enforcement of said rights
under the Master Water Contract shall be considered to be a part of the Operation and
Maintenance Costs under this Contract.
ARTICLE 16:
OBLIGATIONS FOR NACIMIENTO PROJECT COSTS
(A) Participant's Obligations to Pay. The Participant shall pay its Contract Payments
to the District, in the manner provided below
(B) District's Determination of Nacimiento Project Costs for each Fiscal•Year. On or
before April 1 of each Calendar Year, the District shall estimate the new or additional
Nacimiento Project Costs for the Fiscal Year commencing on the immediately following July 1
and the result shall comprise the Total Participant.Contract Payments due, collectively, from the
Participant hereunder and from the Other Participants under their respective Like-Contracts for
the said Fiscal Year. Nacimiento Project Costs shall include:
(1) Nacimiento Project Construction Costs;
21
3- 3 '1-
C :
(2) Additional Capital Project Costs;
(3) Capital Projects Installment Debt Service;
(4) Master Water Contract Costs incurred following the first date upon which
an allocation of ad valorem property taxes under Article 17(B)(5);
(5) Capital Reserve Costs;
(6) Operation and Maintenance Costs;
(7) Variable Energy Costs;
(8) Reserved Capacity Costs;
(9) Environmental mitigation costs; and
(10) Other annual or incidental costs associated with the Nacimiento Facilities.
(C) District's Allocation of District's Nacimiento Project Costs. Nacimiento Project
Costs shall be allocated by the District among the Participant and all Other Participants as
follows:
(1) The District shall allocate Capital Reserve Costs and Operation and
Maintenance Costs to the Participant on the basis of the Unit Percentage Share of Capital
Reserve Costs and Operation and Maintenance Costs attributable to the Units used by the
District to deliver the Delivery Entitlement to the Participant. As of the date of execution
of this Contract, there is apportioned to the Participant the following proportional share of
the said costs (expressed as a percentage) for each of the Units used to deliver water to
the Participant:
Project Segment Participant'.s Unit Percentage Share
Systemwide Operating Cost 35.099%
Unit No. A 35:099
Unit No..Al 35.099
Unit No. B 35.099
Unit No. C 35.099
Unit No. Cl 35.099
Unit No. D 60.036
Unit No. E 62.82-5
Unit No. F 100.000
Unit No. F1 35.099
Unit No. F2 100.000
Unit No. G 100.000
Unit No. G1 100.000
Unit No. G2 100.000
Unit No. H 100.000
Unit No. H 1 100.000
l �
The Participant shall pay such amounts allocated to the Participant under this paragraph
in the manner provided.for in Article 17(A)(1) and (2) below.
(2) For each Calendar Quarter, Variable Energy Costs shall be determined by
the District and shall be allocated to the Participant and to the Other Participants as
follows:
(a) Variable Energy Costs for the Calendar Quarter in question shall
be d ivided b y t he t otal acre-feet o f N acimiento Project W ater d elivered by t he
District during such Calendar Quarter to the Participant and to all Other
Participants pursuant to this Contract and Like-Contracts; and,
(b) The result in subsection (a) shall be multiplied by the number of
acre-feet of Nacimiento Project Water delivered by the District to the Participant
during such Calendar Quarter, which result shall be allocated to the Participant.
The District shall notify the Participant in writing of the amount of Variable
Energy Costs allocated to the Participant by a date no later than the forty-fifth
(45`") day following the end of each Calendar Quarter for the variable costs
attributable to the Calendar Quarter most recently concluded. The Participant
shall p ay s uch amounts a Ilocated t o t he P articipant under t his p aragraph i n t he
manner provided for in Article 17(A)(3)below.
(3) The District shall allocate Nacimiento Project Construction Costs as
follows:
The Nacimiento Project Construction Costs shall have three components:
(a) The costs attributable to environmental mitigation requirements
(the "Environmental Mitigation Construction Cost Component"). The
Environmental Mitigation Construction Cost Component shall be allocated pro
rata to the Participant and to the Other Participants on the basis of the Delivery
Entitlement Share and the Other Delivery Entitlement Shares, respectively. As of
the date of execution of this Contract, there is apportioned to the Participant
Thirty-Five and 99/1000 percent (35.099%) of the Environmental Mitigation
Construction Cost Component.
(b) The costs attributable to the District's Reserved Capacity (the
"Reserved Capacity Construction Cost Component"). The Reserved Capacity
Construction Cost Component shall be allocated pro rata to the Participant and to
the Other Participants on the basis of the Delivery Entitlement Share and the
Other Delivery Entitlement Shares, respectively. As of the Effective Date, there
is apportioned to the Participant Thirty-Five and 99/1000 percent (35.099%) of
the Reserved Capacity Construction Cost Component.
(c) The costs attributable to all other construction costs (the "All Other
Construction Costs Component"). The All Other Construction Costs Component
shall be allocated on a Unit Percentage Share basis. As of the date of execution of
23 3- 34
- n, (,
I I
this Contract, there is apportioned to the Participant the following proportional
share of All Other Construction Costs Components (expressed as a percentage)
for each of the Units used to deliver water to the Participant:
Project Segment Participant's Unit Percentage Share
Unit No. A 35.099%
Unit No. Al 35.099
Unit No. B 35.099
Unit No. C 35.099
Unit No. C1 35.099
Unit No. D 47.568
Unit No. E 48.962
Unit No. F 67.550
Unit No. F1 35.099
Unit No. F2 67.550
Unit No. G 67.550
Unit No. G1 67.550
Unit No. G2 67.550
Unit No. H 67.550
Unit No. H1 67.550
Unit No. T11 100.000
The Participant shall pay such amounts allocated to the Participant under this paragraph
in the manner provided for in Article 17(A)(1) and(2)below.
(4) The District shall allocate Capital Projects Installment Debt Service
among All Participants, pro rata, according to the proportion of Nacimiento Project
Construction C osts p aid by t he P articipant a nd the O ther P articipants, a s t hey m ay b e
adjusted for cash contributions under Article 17(B);provided, however, that the Capital
Projects Installment Debt Service shall further be allocated into a component representing
debt service on Tax-Exempt Obligations (the "Tax-Exempt Debt Service") and a
component representing the debt service on Taxable Obligations (the "Taxable Debt
Service"). If the Participant is eligible to borrow on a tax-exempt basis under the Tax
Code, then the Participant and the Other Participants who are also so eligible shall be
allocated their pro rata shares of Tax-Exempt Debt Service; if the Participant is not
eligible to borrow on a tax-exempt basis under the Tax Code, then the Participant and any
Other Participants who are also ineligible to so borrow shall be allocated their pro rata
shares of Taxable Debt Service.
(5) The District shall allocate all other Nacimiento Project Costs not otherwise
provided for above, including Master Water Contract Costs, to the Participant and to all
of the Other Participants pro rata on the basis of the Delivery Entitlement Share for the
Participant and the Other Delivery Entitlement Shares for the Other Participants. As of
the date of execution of this Contract, there is apportioned to the Participant Thirty-Five
and 99/1000 percent (35.099°/x) of the District's said remaining costs, including the
Required Additional Project Costs and Master Water Contract Costs. The Participant
24
i
shall pay such amounts allocated to the Participant under this paragraph in the manner
provided for in Article I7(A)(4) below.
(6) The foregoing a llocations shall be calculated by t he District each F iscal
Year for the Participant and for each Other Participant and the calculations of said
allocations shall be made available to the Participant.
(7) No more frequently than annually, the District shall retain a CPA with the
approval of the Commission. The CPA shall be responsible for reviewing and
confirming the District's allocation of the Participant's 'portion of Nacimiento Project
Costs and reporting the same to the Participant, the District and each Other Participant.
(8) The obligations of the Participant, if any, for any Approved Additional
Project will be established at the time of and by the agreement for each such Approved
Additional Project.
ARTICLE 17:
CONTRACT PAYMENTS
(A) Time and Amount of Contract Payments. Except as established under Paragraph
(C) below as to Capital Projects Installment Debt Service, the Contract Payments to the District
shall commence no later than the first Fiscal Year during which the Delivery Entitlement is made
available to the Participant hereunder, and in any event, promptly following receipt by the
Participant of an invoice from the District. The Contract Payments shall be determined by the
District as provided i n Article 16 o f this C ontract and shall b e p aid b y the P articipant to the
District in accordance with the further provisions of this Article, except and to the extent the
Participant shall, in accordance with paragraph (B) below, be entitled to an offsetting credit.
(1) On or before July 1 of each Fiscal Year, the Participant shall pay a sum
equal to sixty percent(60%) of the Participant's Allocation of Capital Reserve Costs, and
Operation and Maintenance Costs as calculated and allocated under Article 16(C)(1)
above; and
(2) On the immediately following January 1 within each Fiscal Year, the
Participant shall pay a sum equal to forty percent (40%) of the Participant's Allocation of
Capital Reserve Costs and Operation and Maintenance Costs as calculated and allocated
under Article 16(C)(1) above; and
(3) On or before the thirtieth (30`h) day following its receipt of an invoice
from the District under Article 16(C)(2), the Participant shall pay Variable Energy Costs
as calculated and allocated under Article 16(C)(2) above, for the Calendar Quarter most
recently concluded; and
(4) On or before July 1 of each Fiscal Year, the Participant shall pay a sum
equal to the Participant's Allocation of Capital Projects Installment Debt Service as
calculated and allocated under Article 16(C)(3) above.
25
' 1
(5) On or before July 1 of each Fiscal Year; the Participant shall pay a sum
equal to the Participant's allocation of remaining Nacimiento Project Costs, including
Additional Capital Project Costs and Master Water Contract Costs as calculated and
allocated under Article 16(C)(4) above.
(B) Participant Credits against Contract Payments. The following shall constitute
credits against the Contract Payments to the District:
(l) If, prior to the date upon. which the District causes the Municipal
Obligations to be sold, the Participant shall contribute to the District, in cash, a sum as
and for the Participant's Capital Share of the District's estimate of the Total Nacimiento
Project Construction Costs, or any portion of the Participant's Capital Share of said
construction costs, then the amount of Capital Projects Installment Debt Service allocated
to the Participant under Article 16(C)(3) above shall be reduced accordingly, but in no
event to less than zero; and
(2) If the Participant shall, following the date of delivery of the Municipal
Obligations, successfully implement a financing plan within its jurisdiction to fund all or
a portion of the Participant's Contract Payments, during the term of the Municipal
Obligations, by means of a levy of ad valorem property taxes, special assessments or
special t axes, t hen a 11 o r a p ortion o f t he a mount o f C apital P roj ects Installment D ebt
Service to be*allocated to the Participant under Article 16(C)(3) above, shall be credited
to the Participant from amounts paid under such levy as though such amounts were paid
directly by the Participant hereunder, subject to the prior approval of each rating agency
then rating the Municipal Obligations and any bond insurer then providing insurance
therefor; provided however, tha, to the extent legally permissible, the District shall be
made a third-party beneficiary of any pledge of such alternate source of revenues, with
the power to enforce collection thereof, in the event that the Participant should fail to do
so; and
(3) The Participant shall be entitled to a credit against the Participant's
obligations to the District hereunder in the form of a share of the Net Revenues the
District shall have received during the Fiscal Year in question. In determining the
amount of such credits against the obligations of the Participant hereunder, the District
shall apportion the District's net revenues from the foregoing sources; (i) first, against the
obligations allocated to the Participant and to the Other Participants for the Reserved
Capacity Construction Cost Component and in the same amount as the percentage .
allocation set forth for the Participant in Article 16(C)(3)(a) herein, and then (ii) against
the obligations allocated to the Participant and to the Other Participants for the All Other
Construction Costs Component and in the same amount as the percentage allocation set
forth for the Participant in Article 16(C)(3)(c) herein.
(4) On o r b efore December l o f e ach year, t he D istrict s hall d eliver t o t he
Participant a statement as to the actual Operation and Maintenance Costs and Capital
Reserve charges incurred or imposed during the Fiscal Year most recently concluded, and
shall set forth in such statement the District's determination as to whether the Contract
Payments .theretofore paid by the Participant were in excess of or less than the
26
A 3'
Participant's allocated share of the actual costs incurred by the District for said items. If
the Participant shall have paid less than the Participant's actual Unit Percentage Share for
said items for such Fiscal Year, the Participant shall remit'the difference to the District
within o ne h undred eighty ( 180) d ays o f t he d ate u pon w hich t he P articipant receives
such a statement from the District. . If the Participant shall have paid more than the
Participant's actual Unit Percentage Share for such items for such Fiscal Year, the
District shall credit the difference against the Participant's future Contract Payments to
the District.
(5) If, in any Fiscal Year, the Nacimiento Water Fund of the District receives
its allocated portion of the ad valorem taxes levied on the real property within the County
of San Luis Obispo under the authority of Article XIIIA, Section 1(a) of the California
Constitution, then the District shall apply said apportioned amount received by the
District to the reduction of Reserved Capacity Construction Cost Component .and the
District shall continue to do so in each Fiscal Year in which the District receives such
apportioned amounts up to and until the said Reserved Capacity Construction Cost
Component is paid. The District shall credit to the Participant the Unit Percentage Share
of said apportioned tax proceeds received by the Nacimiento Water Fund of the District,
less any amounts (i) which the District is obligated to pay under the terms of the Master
Water Contract and/or (ii) any amounts which are not received or retained by the District
because of the operation of the Community Redevelopment Law (California Health and
Safety Code Sections 33000 et seq.) or any other applicable law.
(C) Participant's Election Regarding Capitalized Interest. The District and the
Participant understand and agree that the Participant's share of Capital Projects Installment Debt
Service will be lower in the event that the Municipal Obligations attributable to the Participant
are marketed and sold without capitalized interest. Accordingly, each Participant shall be
entitled, by delivering written notice to the District no later than three (3) business days prior to
the pricing of any Municipal Obligations issued, to elect to commence making its portion of
Capital Projects Installment Debt Service during the first Bond Year as defined in that certain
Indenture of Trust by and between SLO County Financing Authority and BNY Western Trust
Company to be entered into in connection with the issuance of the Municipal Obligations,.
without regard to the date upon which delivery of Nacimiento Project Water is first made to the
Participant. If no such election is received from the Participant, the District shall be entitled to
include a capitalized interest component in the Municipal Obligations attributable to the
Participant, to apportion said capitalized interest to the Participant and to include the costs of
same in the Participant's portion of Capital Projects Installment Debt Service.
ARTICLE 18:
USE OF TOTAL PARTICIPANT CONTRACT PAYMENTS
During the term of this Contract and the Like-Contracts with Other Participants, the
District shall proceed with due diligence to collect Total Participant Contract Payments as and
when due, and shall deposit amounts collected into the Participant Revenue Fund promptly upon
receipt, and shall apply all other amounts comprising Total Participant Contract Payments in the
following order of priority:
(A) To the payment of Master Water Contract Costs;
(B) To the payment of Operation and Maintenance Costs;
(C) To the payment of Variable Energy Costs;
(D) To the payment of Additional Capital Project Costs; and
(E) To the replenishment of Capital.Reserves for the Nacimiento Project.
ARTICLE 19:
OBLIGATION TO "TAKE-OR-PAY"
Neither the Participant's failure or refusal to accept delivery of water from the
Nacimiento Facilities to which the Participant is entitled under this, Contract nor the District's
failure to deliver said water shall in any way relieve the Participant of its obligations to make
payments to the District as provided for herein. Commencing on the first date that debt service
payments are due under the Municipal Obligations provided for herein, the Participant shall pay
all amounts due hereunder, including, without limitation, those due under Article 17 hereof,
without reduction o r offset o f any kind, whether o r n of the N acimiento F acilities o r any p art
thereof is then operating or operable or its service is suspended, interfered with, reduced or
curtailed or terminated in whole or in part, due to any of the reasons set forth in Articles 6(A),
13, 14 and 15, or otherwise, and such Participant's Contract Payments shall not be conditional
upon the performance or nonperformance by any party to this Contract, or to the Like-Contracts,
for any cause whatsoever; provided, however, that any savings from non-operation of the
Nacimiento Facilities shall be apportioned among the Participant and the Other Participants in
accordance with their respective percentages of the Participant's and each Other Participant's
Unit Percentage Share.
The Participant's obligations to make Contract Payments and other payments required to
be made hereunder are incurred by the Participant for the benefit of future holders of Municipal
Obligations, and shall be absolute and unconditional. Such payments shall be absolutely net,
free of any deductions, and are not subject to any reduction, whether by offset, recoupment,
counterclaim or others. The Participant shall make all such payments notwithstanding the
occurrence of any act or circumstances that may constitute failure of consideration, destruction
of or damage to the Nacimiento Facilities, commercial frustration of purpose, any change in the
tax or other laws of the United States of America or of the State of California, or any political
subdivision or either of these.
ARTICLE 20:
PARTICIPANT'S PLEDGE AND COVENANTS
The Participant, unless it shall have paid cash as the Participant's portion of the Total
Nacimiento Project Construction Costs as provided in Article 16 hereof, hereby pledges the gross
water sales revenues of the Participant's Water Enterprise to the Participant's obligations under
this Contract, and covenants and agrees to establish, fix and collect rates and charges from the
28
3-�
customers of Participant's Water Enterprise at levels sufficient to produce revenues from the
Participant's Water Enterprise which are at least equal to:
(A) The costs of operating and maintaining the Participant's Water Enterprise; plus
(B) The Contract Payments, calculated in accordance with Article 16 hereof,
including the amounts allocated to the Participant as the Participant's share of Capital Projects
Installment Debt Service under Article 16(C)(3)hereof; plus
(C) The Coverage Factor for the amounts allocated to the Participant as the
Participant's share of Capital Projects Installment Debt Service under Article 16(C)(3) hereof,
and
(D) Under certain circumstances, that the Participant understands and agrees that the
provisions of Article 25(B) hereof may impose upon the Participant a surcharge following the
occurrence of any payment default by the Participant.
ARTICLE 21:
WATER ENTERPRISE OPERATION AND MAINTENANCE
(A) No Sale Lease-or Disposing of Participant's Water Enterprise. The Participant
covenants and agrees not to sell, lease or otherwise dispose of its Water Enterprise or any part
thereof essential to the proper operation thereof or to the earning or collection of the gross
revenues of the Participant's Water Enterprise, nor to enter into any agreement or lease which
would impair the operation of the Participant's Water Enterprise, or any part thereof necessary in
order to secure adequate revenues for the payment of amounts due under this Contract;provided,
however, that any real or personal property which has become nonfunctional or obsolete or
which is not needed for the efficient operation of the Participant's Water Enterprise may be sold
or disposed of if such disposition will not have the effect of reducing revenues of the
Participant's Water Enterprise below the levels required under this Contract.
(B) Participant to Maintain Participant's Water Enterprise. The Participant covenants
and agrees to maintain and preserve the Participant's Water Enterprise in good repair and
working order at all times, to operate the same in an efficient and economical manner and to,pay
all operation and maintenance costs of the Participant's Water Enterprise as they become due, all
in accordance with the best business judgment of the Participant.
(C) Participant's Budgets. The Participant covenants and agrees to adopt and deliver
a budget to the District approved by the.Participant's governing body setting forth the amounts
budgeted to be paid under this Contract no later than the first day of each Fiscal Year.
(D) Participant's Covenants. The Participant covenants and agrees to comply with,
keep, observe and perform all agreements, conditions, covenants and terms, express or implied,
required to be performed by the Participant contained in all contracts for the use of the
Participant's W ater E nterprise a nd all contracts affecting o r i nvolving t he P articipant's W ester
Enterprise to the extent that the Participant is a party thereto.
29 5 "'C V
(E) No Superior Liens or Payments. The Participant covenants and agrees not to
create or allow any lien on or payment from the revenues of the Participant's Water Enterprise or
any part thereof prior to, or superior to, the Participant's obligations to amounts payable under
this Contract.
. (F) Participant to Insure Water Enterprise. The Participant covenants and agrees to
procure and maintain insurance relating to the Participant's Water Enterprise which the
Participant shall deem advisable or necessary to protect its interests. Such insurance shall afford
protection in such amounts and against such risks as are usually covered in connection with
similar w ater a nterprises i n t he State o f California; p rovided, t hat t he Participant s hall n of b e
required to procure or maintain any such insurance unless such insurance is commercially
available at reasonable cost; and provided further, that any such insurance may be maintained
under a self-insurance program, so long as such self-insurance program is maintained in
accordance with standards and in such amounts as are then usually maintained for similar water
enterprises in the State of California.
(G) Participant to Pay Obligations; Observe Laws. The Participant covenants and
agrees to pay and discharge all taxes, assessments and other governmental charges which may
hereafter be lawfully imposed upon the Participant's Water Enterprise or any part thereof when
the same shall become due and to duly observe and conform to all valid regulations and
requirements of any governmental authority relative to the operation of the Participant's Water
Enterprise that are not being contested by the Participant in good faith.
(H) Eminent Domain. The Participant covenants and agrees that if all or any material
part of the Participant's Water Enterprise shall be taken by eminent domain proceedings, or if the
Participant receives any insurance proceeds resulting from a casualty loss to any material portion
of the Participant's Water Enterprise, the proceeds thereof shall be used by the Participant to
construct or install replacements for the condemned or destroyed components of the Participant's
Water Enterprise or to prepay the Participant's share of Capital Projects Installment Debt Service
under Article 16(C)(3) of this Contract.
ARTICLE 22:
COVENANTS OF THE DISTRICT AND THE PARTICIPANT; SPECIAL TAX
COVENANTS
(A) Punctual P ayment; C ompliance w ith D ocuments. T he D istrict s hall p unctually
pay or cause to be paid the interest and principal to become due with respect to all of the
Municipal Obligations, but solely from amounts paid to the District under this Contract and the
Like-Contracts, and the Participant shall punctually pay or cause to be paid the Capital Projects
Installment Debt Service, in strict conformity with the terns of the Municipal Obligations, this
Contract and the Legal Documents and will faithfully observe and perform all of the conditions,
covenants and requirements of this Contract and the Legal Documents including any and all
supplements thereto.
(B) Extension of Payment of Municipal Obligations. Neither the District nor the
Participant shall directly or indirectly extend or assent to the extension of the maturity of any of
the Municipal Obligations or the time of payment of any claims for interest by the purchaser or
30
owner of such Municipal Obligations or by any other arrangement, and in case the maturity of
any of the Municipal Obligations or the time of payment of any such claims for interest shall be
extended, such Municipal Obligations or claims for interest shall not be entitled, in case of any
default under the Legal Documents, to the benefits of this Contract, except subject to the prior
payment in full of the principal of all of the Municipal Obligations then outstanding and of all
claims for interest thereon which shall not have been so extended. Nothing in this Article shall
be deemed to limit the right of the District to issue obligations or cause obligations to be issued
for the purpose of refunding any outstanding Municipal Obligations, and such issuance shall not
be deemed to constitute an extension of maturity of the affected Municipal Obligations.
(C) Against Encumbrances. Neither the District nor the Participant shall create, or
permit t he c reation o f, any p ledge, l ien, c harge or o ther a ncumbrance u pon t he r evenues a nd
other assets pledged under this Contract while any of the Municipal Obligations are outstanding,
except the pledge created by the Legal Documents and this Contract, any Additional Debt and
any pledge, lien, charge or other encumbrance which is subordinate to the obligations under this
Contract. Subject to this limitation, the District expressly reserves the right to enter into one or
more indentures or trust agreements for any of its corporate purposes, and reserves the right to
issue other obligations or cause them to be issued for such purposes.
(D) Covenants to Maintain Tax-Exempt Status of Tax-Exempt Obligations. In the
event that any T ax-Exempt Obligations attributable in whole or in part, to the Participant are
issued and outstanding, the Participant covenants and agrees as follows:
(1) Definitions. When used in this Section, the following terms have the
following meanings:
"Bond Counsel"means Fulbright &Jaworski L.L.P.
"Bond Year" means the period of one year established in the Legal
Documents; during which the Tax-Exempt Obligations are outstanding, for
purposes of the Code; provided, that either the first Bond Year or the final Bond
Year may be a period shorter then twelve calendar months.
"Code" means the Internal Revenue Code of 1986 as in effect on the date
of issuance of the Tax-Exempt Obligations or (except as otherwise referenced
herein) as it may be amended to apply to obligations issued on the date of
issuance of the Tax-Exempt Obligations, together with applicable proposed,
temporary and final regulations promulgated, and applicable official public
guidance published, under the Code.
"Computation Date" has the meaning set forth in section 1.148-1(b) of the
Tax Regulations.
"Gross Proceeds" means any proceeds as defined in section 1.148-1(b) of
the Tax Regulations, and any replacement proceeds as defined in
section 1.148-1(c) of the Tax Regulations, of the Tax-Exempt Obligations.
31 3 -49,
"Investment" has the meaning set forth in section 1.148-1(b) of the Tax
Regulations.
"Nonpurpose Investment" means any investment property, as defined in
section 148(b) of the Code, in which Gross Proceeds of Tax-Exempt Obligations
are invested and that is not acquired to carry out the governmental purposes of
such Tax-Exempt Obligations.
"Rebate Amount" has the meaning set forth in section 1.148-1(b) of the
Tax Regulations.
"Yield"of
(1) any Investment has the meaning set forth in section 1.148-5.
of the Tax Regulations; and
(2) the Tax-Exempt Obligations has the meaning set forth in
section 1.148-4 of the Tax Regulations.
"Tax Regulations" means temporary and permanent regulations
promulgated under or with respect to section 103 of the Code.
(2) Not to Cause Interest to Become Taxable. Neither the District nor the
Participant shall use, permit the use of, or omit to use Gross Proceeds or any other
amounts(or any property, the acquisition, construction or improvement of which is to be
financed directly or indirectly with Gross Proceeds) in a manner that if made or omitted,
respectively, would cause the interest on any of the Tax-Exempt Obligations to become
includable in the gross income, as defined in section 61 of the Code, of the owner thereof
for federal income tax purposes. Without limiting the generality of the foregoing, unless
and until the District and the Participant receive a written opinion of Bond Counsel to the
effect that failure to comply with such covenant will not adversely affect the exclusion
from gross income for federal income tax purposes of the interest on any Tax-Exempt
Obligation, the District and the Participant shall comply with each of the specific
covenants in this Section.
(3) No Private Use or Private Payments. Except as would not cause any
Tax-Exempt Obligation to become a "private activity bond" within the meaning of
section 141 of the Code and the Tax Regulations and rulings thereunder, the District and
the Participant shall at all times prior to the last maturity date of the Tax-Exempt
Obligations;
(a) require that one or more state or local governmental agencies
exclusively own, operate and possess all property the acquisition, construction or
improvement of which is to be financed or refinanced directly or indirectly with
Gross Proceeds of the Tax-Exempt Obligations, and not use or permit the use of
such Gross Proceeds (including all contractual arrangements with terms different
than those applicable to the general public) or any property acquired., constructed
or improved with such Gross Proceeds in any activity carried on by any person or
3-43
entity (including the United States or any agency, department and instrumentality
thereof) other than a state or local government, unless such use is solely as a
member of the general public; and
(b) not permit the direct or indirect imposition of any charge or other
payment on or by any person or entity who is treated as using Gross Proceeds of
the Tax-Exempt Obligations or any property, the acquisition, construction or
improvement of which is to be financed or refinanced directly or indirectly with
such Gross Proceeds, other than taxes of general application within the boundaries
of the Participant or interest earned on investments acquired with such Gross
Proceeds pending application for their intended purposes.
(4) No Private Loan. Except as would not cause any Tax-Exempt Obligation
to become a "private activity bond" within the meaning of section 141 of the Code and
the Tax Regulations and rulings thereunder, neither the District nor the Participant shall
use or permit the use of the Gross Proceeds of the Tait-Exempt Obligations to make or
finance loans to any person or entity other than a state or local government. For purposes
of the foregoing covenant, such Gross Proceeds are considered to be"loaned" to a person
or entity if: (1) property acquired, constructed or improved with such Gross Proceeds is
sold or leased to such person or entity in a transaction that creates a debt for federal
income tax purposes; (2) capacity in or service from such property is committed to such
person o r e ntity under a t ake-or-pay, o utput o r s imilar c ontract o r a rrangement; o r(3)
indirect benefits, or burdens and benefits of ownership, of such Gross Proceeds or any
property .acquired, constructed or improved with such Gross Proceeds are otherwise
transferred in a transaction that is the economic equivalent of a loan.
(5) Not to Invest at Higher Yield. Except as would not cause the Tax-Exempt
Obligations to become "arbitrage bonds' within the meaning of section 148 of the Code
and the Tax Regulations and rulings thereunder, neither the District nor the Participant
shall at any time prior to the final maturity of the Tax-Exempt Obligations directly or
indirectly invest or permit the investment of Gross Proceeds in any Investment, if as a
result of such investment the Yield on Investments acquired with Gross Proceeds,
whether then held or previously disposed of, materially exceeds the Yield of the Tax-
Exempt Obligations .within the meaning of said section 148. For purposes of this
paragraph, Yield on Investments shall be determined in accordance with the provisions of
section 1.148-5 of the Tax Regulations (which, under certain circumstances, requires
Yield to be determined on less than all such Investments).
(6) Not Federally Guaranteed. Except to the extent permitted by
section 149(b) of the Code and the Tax Regulations and rulings thereunder, neither the
District nor the Participant shall take or omit to take, or permit, any action that would
cause any Tax-Exempt Obligations to be treated as "federally guaranteed" within the
meaning of section 149(b) of the Code and the Tax Regulations and rulings thereunder.
(7) Information Report. The District shall timely file or cause to be filed any
information required by section 149(e) of the Code with respect to the Tax-Exempt
C �
Obligations with the Secretary of the Treasury on Form 8038-G or such other form and in
such place as the Secretary may prescribe.
(8) Rebate. Except to the extent otherwise provided in section 148(f) of the
Code and the Tax Regulations and rulings thereunder:
(a) The District shall account for all Gross Proceeds (including all
receipts, expenditures and investments thereof) on its books of account separately
and apart from all other funds (and receipts, expenditures and investments
thereof) and shall retain all records of accounting for at least six years after the
day on which the last outstanding Tax-Exempt Obligation is retired. However, to
the extent permitted by law, the District may commingle Gross Proceeds of Tax-
Exempt Obligations with other money of the District, provided that the District
separately accounts for each receipt and expenditure of Gross Proceeds and the
obligations acquired therewith.
(b) Not less frequently than each Computation Date, the District shall
calculate or caused to be calculated the Rebate Amount in accordance with rules
set forth in section 148(f) of the Code and the Tax Regulations and rulings
thereunder, which calculation the District shall maintain with its official transcript
of proceedings relating to the issuance of the Tax-Exempt Obligations until six
years after the final Computation Date.
(c) In order to assure the excludability of the interest on Tax-Exempt
Obligations from the gross income of the owners thereof for federal income tax
purposes, the District shall make rebate payments at the times and in the amounts
as are or may be required by section 148(f) of the Code and the Tax Regulations
and rulings thereunder, which payments shall be accompanied by Form 8038-T or
such other forms and information as is or may be required by section 148(f) of the
Code and the Tax Regulations and rulings thereunder;provided, however, that the
District and the Participant agree that liability of the District to make any such
payments shall be limited to amounts received by it for such purpose pursuant to
this Contract and the Like-Contracts.
(d) The District shall cause the exercise of reasonable diligence to
assure that no errors are made in the calculations and payments required by
paragraphs (2) and (3), and if an error is made, to discover and promptly correct
such error within a reasonable amount of time thereafter (and in all events within
.one hundred eighty (180) days after discovery of the error),including payment to
the United States of any additional Rebate Amount owed to it, interest thereon,
and any penalty imposed under'section 1.148-3(h) of the Tax Regulations.
(9) Not to Divert Arbitrage Profits. Except to the extent permitted by
section 148 of the Code and the Tax Regulations and rulings thereunder, the District shall
not enter into any transaction that reduces the amount required to be paid to the United
States pursuant to section 148(f) of the Code because such transaction results in a smaller
34 '� -4<
profit or a larger loss than would have resulted if the transaction had been at arm's length
and the Yield of the Tax-Exempt Obligations had been irrelevant to each party.
(10) Tax-Exempt Obligations Not Hedge Bonds. The District represents that
the Tax-Exempt Obligations will not be structured so as to comprise "hedge bonds"
within the meaning of section 149(g) of the Code.
(11) Elections. The Participant hereby directs and authorizes any authorized
representative of the District to make elections permitted or required pursuant to the
provisions of the Code or the Tax Regulations, as such authorized representative of the
District (after consultation with Bond Counsel) deems necessary or appropriate in
connection with the Tax-Exempt Obligations.
ARTICLE 23:
NO OUTSIDE SERVICE
Neither the Delivery Entitlement nor the Participant's Surplus Water, nor any portion of
either, shall be sold or delivered or otherwise disposed of by the Participant outside the
boundaries of the District.
ARTICLE 24:
FAILURE TO LEVY, SET OR COLLECT TAXES, RATES AND CHARGES;
ESTABLISHMENT OF COVERAGE ACCOUNT
(A) Participant's Failure to Establish Taxes, .Rates and Charges; Establishing
Coverage Account. If the Participant for any reason shall fail or refuse to establish or levy taxes
or rates and charges sufficient to satisfy the requirements of Article 20 hereof, or if the
Participant shall be precluded from establishing rates and charges at the levels required by said
Article 20, then the Participant shall promptly notify the District of such fact in writing, and shall
establish a C overage A ccount e ither w ith the D istrict o r w ith a D epository d esignated b y t he
Participant to the District in writing. The Participant shall deposit to the Coverage Account,
from the first lawfully available funds therefor, an amount equal to one year's Coverage Factor
for the amounts allocated to the Participant as the Participant's Capital Projects Installment Debt
Service share under Article 16(C)(3) hereof. The. Coverage Account shall be invested in
accordance with applicable provisions of the Government Code, subject to any limitations
established pursuant to Section 148 of the Internal Revenue Code of 1986, as amended,
applicable to surplus moneys of the Participant and shall be made and remain available to the
Participant and to the District as a source of funds to remedy any failure of the Participant to
make its Contract Payments hereunder. The Coverage Account shall be pledged to the District
for the purposes described herein, and the Participant covenants and agrees to execute such
instruments as may be necessary in order to effect a pledge of amounts on deposit in the
Coverage Account, acknowledging and agreeing as well to follow the advice of special tax
counsel to the District in connection with the pledge and investment of the Coverage Account, as
may be necessary or advisable in order to maintain the tax status of the Tax-Exempt Obligations.
(B) Release of Coverage Account. If at any time following the establishment of the
Coverage Account hereunder, the Participant shall again be able to and does collect rates and
35
charges as required under Article 20 hereof, the Coverage Account may be released to the credit
and name of the Participant for any lawful purpose thereof, upon delivery to the District of
satisfactory evidence t hat( 1) the Participant has successfully levied rates and charges for t he
Participant's Water Enterprise at the appropriate levels for at least one full Fiscal or Water Year
since the Coverage Account was first created, and (2) the Participant is then current on all
payments due under this Contract; whereupon, the District shall either release the Coverage
Account to the Participant or shall direct the Depository to do so, free from the lien described
herein; subject, however to any contrary requirements of rating agencies or credit providers
providing security for any of the outstanding Municipal Obligations.
ARTICLE 25:
PARTICIPANT'S OBLIGATIONS SEVERAL AND NOT JOINT; STEP-UP
PROVISIONS AND REIMBURSEMENT
(A) Participant Not Responsible for Failures of Other Participants,Exception. Except
as provided in paragraph (B) of this Article, the Participant shall be solely responsible and liable
for performance under this Contract and shall not be responsible for any failures of any Other
Participant to perform such Other Participant's obligations under any other Like-Contract. The
obligations to the District to make payments under this Contract and under the other Like-
Contracts are expressly recognized by the District as several, and not joint, and no default on the
part of one, or more, of the Other Participants shall, in and of itself, create an event of default
under this Contract. The Coverage Account of the Participant, if any is established hereunder,
shall not be available for any failure of any Other Participant to make payments under any of the
other Like-Contracts between the District and the Other Participants, unless otherwise directed or
approved in writing by the Participant.
(B) Participant's "Step-Up" Obligations. If for any reason the Participant or any
Other Participant shall fail to pay its share of Capital Projects Installment Debt Service hereunder
or under its Like-Contract, the amount of the resulting Debt Service Shortfall shall be paid,
collectively, by all Non-Delinquent Participants. If there is more than one Delinquent
Participant, the amount of the Debt Service Shortfall shall be the sum of the unpaid amounts for
each Delinquent Participant. When such a Debt Service Shortfall occurs, the Participant shall be
required to increase its Contract Payments for the particular Water Year by an amount equal to
its pro rata share of the Debt Service Shortfall; provided, however, that each Other Participant
who is not a Delinquent Participant shall be required by the Other Participant's Like-Contract to
also contribute to the Debt Service Shortfall so that the Participant, and all of the Other
Participants who are not Delinquent Participants, shall each contribute to the Debt Service
Shortfall in a proportion determined by dividing each said Non-Delinquent Participant's Capital
Projects Installment Debt Service share (under Article 16(C)(3) of this Contract and the Like-
Contracts) by the aggregate of all the Participant's Instalment Debt Service shares of all Non-
Delinquent Participants, including the Participant; and provided further, that the Participant in no
event shall be required under this paragraph to contribute to the Debt Service Shortfall by an
amount in any Water Year exceeding the amount which is twenty-five percent (25%) of the share
of Capital Projects Installment Debt Service allocated to the Participant under Article 16(C)(3)
hereof.
36 3- 41
(C) Repayment to Participant by Delinquent Participant(s). If payments are made by
the Participant as a Non-Delinquent Participant during any Water Year under the foregoing
paragraph (B), the District shall, beginning on the first Due Date when a Debt Service Shortfall
is created by a Delinquent Participant, declare a default as to such Delinquent Participant under
the Delinquent Participant's Like-Contract and the.District shall be entitled to suspend deliveries
of the Delivery Entitlement established for such Delinquent Participant under its Like-Contract;
notwithstanding the foregoing, by the terms of its Like-Contract, such Delinquent Participant
shall nonetheless continue to be obligated for amounts paid on its behalf by the Non-Delinquent
Participants, until the Defaulting Participant has reimbursed each Non-Defaulting Participant in
full for the amounts they have previously paid in as their pro rata shares of the Debt Service
Shortfall. Reimbursement of amounts advanced by the Participant and the Other Participants as
Non-Delinquent Participants (or, in the case of multiple Delinquent Participants, the . ,
proportionate share thereof) is immediately due and payable to the District by the responsible
Delinquent Participant or Participants, and, if not so paid, and notwithstanding the provisions of
Article 26(C) of the Delinquent Participant's Like-Contract, shall incur interest on the unpaid
portion until paid in full at a rate per annum equal to the average rate for the County Treasury
Pool, plus two percent (2%) per annum, for the month for which the County Treasury Pool rate
was most recently calculated, based on a 360-day year of twelve 30-day months; provided,
however, that payments to be made as reimbursements by a Delinquent Participant are deemed
and understood to be subordinate to the obligations of the Delinquent Participant to pay the
amounts allocated to the Delinquent Participant as the Delinquent Participant's share of the
District's Capital Projects Installment Debt Service under Article 16(C)(3) of the Delinquent
Participant's Like-Contract.
(D) "Step-Up" to Be Exhausted before Recourse to Debt Service Reserve Fund/Surety
Bond. Shortfalls in Total Participant Contract Payments shall be remedied under this Article
prior to the District's making any withdrawal from any debt service reserve fund established, or
under the reserve surety bond posted, for the Municipal Obligations, if any are then outstanding.
Drawings on or under the debt service reserve fund or reserve surety bond shall be delayed until
and unless insufficient moneys are available from Non-Defaulting Participants hereunder.
(E) District's Covenant to Owners of Municipal Obligations. The District covenants
and agrees to enforce the provisions of this Contract with due diligence, including, without
limitation, the provisions of this Article for the benefit of the owners, from time to time, of the
Municipal Obligations.
ARTICLE 26:
EVENTS OF DEFAULT; DISTRICT'S REMEDIES
(A) Events of Default by Participant. The following shall constitute events of default
hereunder:
(1) The Participant shall fail to make timely payments in full of all amounts
due from the Participant under the terms of this Contract;or
(2) The Participant shall fail to establish or collect, or cause to be collected,
all rates and charges, and other sums, necessary to enable Participant to make the
37 3 � �
payments required hereunder, as provided in Article 20 hereof, and, following thirty (30)
days written notice from the District to the Participant, the Participant shall fail to remedy
such failure to the satisfaction of the District; or
(3) The Participant shall fail to perform any other obligation or covenant
hereunder and shall fail to remedy such failure to the satisfaction of the District within
thirty (30) days following the Participant's receipt of written notice from the District, or
for such additional time as is reasonably required, in the sole discretion of the District, to
correct the same; or
(4) The Participant 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 amendments to 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 Participant
seeks or prays to be adjudicated a bankrupt or is to be discharged from any or all of its
debts or obligations, or offers a reorganization of its obligations for the benefit of
creditors, or asks for similar relief.
(B) District's Remedies. Upon the occurrence of an event of default hereunder; the
District shall be entitled to protect and enforce the rights vested in the District by this Contract
by appropriate judicial proceedings as the District may deem most effective or convenient, either
in equity or law. The use by the District of any remedy specified herein for the enforcement of
this Contract is not exclusive and shall not deprive the District of, or limit the application of, any
other remedy provided hereunder or by law or by equity. Without limiting the generality of the
foregoing, the District shall be entitled to pursue any of the following remedies:
(1) The District may suspend the delivery to the Participant of water
hereunder during the period when the Participant is delinquent in its payments or other
obligations to the District hereunder, but only following notice to the Participant and the
imposition of such remedy following a formal hearing conducted by the Board of
Supervisors, unless such failure to pay is as described in subparagraph(5)below;
(2) The District may compel the Participant, or its governing board, by action
in any court of competent jurisdiction to account to the District as the trustee of an
express trust;
(3) The District may pursue an action in any court of competent jurisdiction to
enjoin any acts or things which may be unlawful or in violation of the rights of the
District hereunder; and
(4) The District may proceed in mandamus or other suit, action or proceeding
at law or in equity to enforce its rights against the Participant (and its governing board,
officers, agents and employees) and to compel the Participant to perform and carry out its
duties and obligations.under the law and its covenants and obligations as set forth herein..
(5) If the Participant shall fail to make timely payments in full of all amounts
due from the Participant.under the terms of this Contract, and if, as a result, payments are
made by any Non-Delinquent Participant during any Water Year under Article 25(B)
38
hereof, then the District shall, beginning on the first Due Date, declare a default as to the
Participant and the District shall be entitled to suspend deliveries of the Delivery
Entitlement without referring the matter to the Board of Supervisors for a hearing;
notwithstanding the foregoing, by the terms of this Contract, the Participant shall
nonetheless continue to be obligated for amounts paid on its behalf by the Non-
Delinquent Participants, until such time as the Participant has reimbursed each Non-
Defaulting Participant in full. Said amounts advanced by the Non-Delinquent
Participants are immediately due and payable by the Participant, and, if not so paid, and
notwithstanding the provisions of paragraph (C) of this Article, shall incur interest on the
unpaid amounts until paid in full at a rate per annum equal to the average rate for the
County Treasury Pool, plus two .percent (2%) per annum, for the month for which the
County Treasury Pool rate was most recently calculated, based on a 360-day year of
twelve 30-day months;provided, however, that payments to be made as reimbursements
under this paragraph are deemed and understood to be subordinate to the obligations of
the Participant to pay the amounts allocated to the Participant as the Participant's share of
the District's Capital Projects Installment Debt Service under Article 16(C)(3) of this
Contract.
(C) Rate of Interest. Upon each charge to be paid by the Participant to the District
pursuant to this Contract which remains unpaid after the time the same shall have become due
and payable, interest shall accrue at an annual rate equal to that earned by the County Treasury
Pool as provided in California Government Code at Section 16480 et seq., calculated monthly on
the amount of such delinquent payment from time to time after the due date when the same
becomes due until paid, and the Participant hereby agrees to pay such interest;provided, that no
interest shall be charged to or paid by the Participant unless such delinquency continues for more
than thirty (30) days. The Participant hereby agrees to pay such interest to the District, whether
or not the District shall pursue any of the remedies specified;in this Article.. In no event shall
said default interest be compounded.
ARTICLE 27:
CHANGES IN ORGANIZATION
The Participant shall furnish the District with maps showing the boundaries of the
Participant and showing the service area or areas of the Participant's water distribution system.
Throughout the term of this Contract, the Participant. shall promptly notify the District of any
changes in said boundaries and in said service area or areas occasioned either by addition or by
removal of territory. So long as there are outstanding any Municipal Obligations, the Participant
shall take no action to remove any lands from the Participant or its service areas without the prior
written consent of the District.
ARTICLE 28:
ADDITIONAL CAPITAL PROJECTS
(A) Required Additional Projects. At any time, and from time to time, without the
consent of the Participant or any Other Participant, the District shall have the authority to
undertake the construction or equipping of any Required Additional Project, provided that,
39
o
before a Required Additional Project may be commenced by the District pursuant to direction or
order of a competent Governmental Authority, the Participant and the Other Participants shall be
afforded notice by the District of said direction or order and each shall have the opportunity to
oppose the imposition of such requirement before a court of competent jurisdiction. Only if a
final judgment is thereafter rendered in favor of such direction or order of the said Governmental
Authority, or if no such opposition is filed, shall the directed or ordered project be undertaken by
the District. It is the intention of the parties hereto that the District shall, as and when necessary,
be deemed to assign its rights to pursue opposition to the creation of any obligations hereunder
by a Governmental Authority to the Participant and/or the Other Participants as third party
beneficiaries hereof and real parties in interest. The District shall allocate the costs of each
Additional Capital Project among All Participants pro rata according to the Delivery Entitlement
Share and the Other Delivery Entitlement Shares, respectively, unless the Commission shall
determine that some other manner of cost allocation is more equitable in which case the
Commission's determination shall be final.
(B) Approved Additional Projects. An Approved Additional Project may be
undertaken at any time, and from time to time, by the District in accordance with the terms of the
specific agreements between the District and the Participant and the Other Participants,provided
that, funding for an Approved Additional Project will not be from Capital Reserves but from a
new and separate capital fund established by the District as a part of the agreement establishing
each Approved Additional Project.
(C) Emergency Projects. Emergency Projects, including emergency repairs to the
Nacimiento Project, may, notwithstanding the above, be made by the District without notice to,
or consultation with, the Participant or the Nacimiento Project Commission or with any Other
Participant. The District shall then allocate the costs of each Emergency Project among All
Participants pro rata according to the Delivery Entitlement Share and the Other Delivery
Entitlement Shares, respectively, unless the Commission shall determine that some other manner
of cost allocation is more equitable, in which case the Commission's determination shall be final.
ARTICLE 29:
USE OF RESERVE WATER
The District may use the District's Reserve Water as follows:.
(A) Priorities. T he District shall use the District's Reserve Water in the following
order of priority:
(1) For the alleviation of any permanent water shortage described in
Article 14(B) hereof,
(2) For the alleviation of any temporary water shortage described in
Article 14(A) hereof,
(3) For the satisfaction of the District's obligations to each of the Reserve
Water Customers; m
40 �"��
(4) For adding to and supplementing the Delivery Entitlements for the
Participant and/or the Other Delivery Entitlements for the Other Participants who are
Initial Participants as provided for by Article 6(D) herein;
(5) For additional and New Participants (defined in paragraph (C) below) who
were not Initial Participants;
(6) For such other purposes as the District deems useful and beneficial to the
Nacimiento Project.
(B) District's S ale o f Reserve W ater/Reserved C apacity by A mending P articipant's
Contract and/or the Like-Contracts of Other Participants who were Initial'Participants. In the
event that the Participant, or any Other Participant who was an Initial Participant, desires to
purchase additional capacity in the Nacimiento Facilities and additional rights to have a portion
of Reserve Water conveyed and delivered to the Participant and to the extent that the amount of
Reserve Water and Reserved Capacity is sufficient to do so, the District and the Participant may
amend this Contract (or, in the case of an Other Participant, the Like-Contract),provided that the
District shall not enter into any such amendment which provides terms more favorable than those
presently existing in this Contract, and in each Like-Contract, and provided that the Participant
shall, in addition to the payments required under the Like Contract, pay to the District a fee (the
"Purchase of Reserve Water Delivery Entitlement and Reserved Capacity Fee") amounting to a
sum which will reasonably compensate the District for the Participant's Unit Percentage Share of
the Total Nacimiento Project Construction Costs plus the costs of any Additional Capital
Projects which are necessary or convenient for the conveyance and/or delivery of the Delivery
Entitlement. The District shall apply the Purchase of Reserve Water Delivery Entitlement and
Reserved Capacity Fee as a credit to the obligations of the Participant and the Other Participants
based on their respective Unit Percentage Share. However, the District shall not so amend this
Contract without having first provided sixty (60) days written notice to each Other Participant of
the fact that the Participant has applied to the District for such an amendment to this Contract
and providing each such Other Participant an opportunity to likewise apply for an additional
Delivery Entitlement of Reserve Water/Reserved Capacity. In the event that Other Participants
shall a Iso apply t o t he District a t t he t ime o f Participant's a pplication f or a dditional D elivery
Entitlements of Reserve Water, then to the extent that there is not sufficient Reserve Water or
Reserved Capacity to satisfy all of the applications for additional Delivery Entitlements, the
Participant and all Other Participants applying for additional Delivery Entitlements shall be
granted additional Delivery Entitlements in proportion to their respective Delivery Entitlements
existing at the time of the applications.
(C) District's Contract(s) for All or a Portion of Reserve Water and Reserved
Capacity by Execution of Like-.Contracts with New Participants who were Not Initial
Participants. In the event that an entity desires to become a New Participant, acquiring rights to
capacity in the Nacimiento Facilities and rights to have conveyed and delivered to the New
Participant a portion of Reserve Water, and to the extent that the amount of Reserve Water and
the District's Reserved Capacity is sufficient to do so, then the District, after consulting with the
Nacimiento Project Commission, and after receiving the written approval from that portion of
All Participants holding, in the aggregate, at least fifty-five percent (55%) of the total of all
delivery entitlements to Nacimiento Project Water existing at that time, may enter into a Like-
41
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1
Contract with such New Participant,provided that said New Participant shall, in addition to the
payments required under. the Like-Contract, pay to the District a Purchase of Reserve Water
Delivery Entitlement and Reserved Capacity Fee as described above herein. However,
notwithstanding the foregoing sentence, each entity listed on Exhibit B hereto shall have the
right to become a New Participant, and the District may enter into a Like-Contract with such
New Participant, on any day after the last day of the Design Phase without consultation with the
Commission or written approval from any portion of All Participants, provided, that said New
Participant shall, in addition to the payments required under its Like-Contract, pay to the District
a Purchase of Reserve Water Delivery Entitlement and Reserved Capacity Fee as described
above herein. The District shall apply the Purchase of Reserve Water Delivery Entitlement and
Reserved Capacity Fee received from any New Participant as a proportionate credit to the
obligations of the Participant and the Other Participants (excluding the New Participant) based
on the Participant's and the Other Participants' Unit Percentage Shares. N otwithstanding the
foregoing, or any other provision of this Contract, the District shall not execute a Like-Contract
with a N ew P articipant i f s uch a xecution w ould r esult i n a ny o f t he T ax-Exempt O bligations
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 Tax-Exempt Obligation as a "private
activity bond"within the meaning of Section 141 of said Code.
(D) District's Sale of Reserve Water to Reserve Water Customers.
(1) The District may enter into an agreement to deliver all or a part of Reserve
Water to Reserve Water Customers under the following conditions:
(a) There is Reserve Water and Reserved Capacity available in any
year after application of the priorities set forth above herein;
(b) The agreement cannot be for a period of time in excess of five
years; and
(c) The price charged by the District to any Reserve Water Customer
for the delivery of said Reserve Water may not be less than the greater of: (i)
rates t hat t he D istrict w ould c harge f or S urplus W ater u nder A rticle 12 o f t his
Contract delivered to that Participant geographically nearest the place where the
Reserve Water Customer takes delivery of Reserve Water; or, (ii) the charges
resulting from the application of the provisions of Article 30(A) hereof.
(2) The District's revenues from an agreement for the temporary delivery of
Reserve Water to Reserve Water Customers shall be applied by the District to effect a
credit under Article 17(B)(3) hereof("Credit for Participant's Portion of Any of District's
Surplus/Wheeling/District Customer Revenues").
ARTICLE 30:
USE OF RESERVED CAPACITY
The District shall use its best efforts to temporarily lease the Reserved Capacity of the
Nacimiento Facilities.
42
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(A) District's Use of Capacity in the Nacimiento Facilities for the Delivery of Reserve
Water through the Nacimiento Facilities to a Reserve Water Customer. If at any time during the
term of this Contract, the District conveys Reserve Water through any Unit to a Reserve Water
Customer, the Reserve Water Customer shall be required to pay the District for such conveyance
and delivery service in a manner and at prices which will return to the District the largest net
revenue practicable,,but in no event shall such conveyance be effected at charges less than those
applicable to the conveyance of Delivery Entitlement through the same Unit or Units. In
determining the appropriate charges for water conveyed and delivered for a Reserve Water
Customer, the District shall take into account the particular Unit or Units through which
conveyance of such water occurs, shall compare the Operation and Maintenance Costs and
Capital Projects Installment Debt Service apportionable to such Unit or Units with Nacimiento
Project Costs, and shall further compare the amount of water conveyed for Reserve Water
Customers through such Unit or Units with the amount of Nacimiento Project Water conveyed
for the Participant and for the Other Participants through such Unit or Units for the same period
of time.
(B) Wheeling of Water. If at any time during the term of this Contract, the District
conveys water to any Wheeling Customer, said Wheeling Customer shall be required to pay the
District for such conveyance and delivery service in a manner and at prices which will return to
the District the largest net revenue practicable, but in no event shall such conveyance be effected
at charges less than those applicable to the conveyance of Delivery Entitlement through the same
Unit or Units. In determining the appropriate charges for water conveyed and delivered for a
Wheeling Customer, the District shall take into account the particular Unit or Units through
which conveyance of such water occurs, shall compare the Operation and Maintenance Costs and
Capital Projects Installment Debt Service apportionable to such Unit or Units with Nacimiento
Project Costs, and shall further compare the amount of water conveyed for Wheeling Customers
through such Unit or Units with the amount of Nacimiento Project Water conveyed for the
Participant and for the Other Participants through such Unit or Units for the same period of time.
The District hereby covenants and agrees not to enter into any contract with a Wheeling
Customer for the conveyance of water with a term to exceed one (1) year.
ARTICLE 31:.
UNIFORM CONTRACTS
Nacimiento Project Water Delivery Entitlement Contracts executed by the District with
the Other Participants (or with any New Participant) shall be substantially uniform with respect
to basic terms and conditions when compared with this Contract, but shall provide for different
dates and quantities of water to be conveyed and delivered, the places of water delivery, each
delivery entitlement share and each unit percentage share and the payment amounts for each
participant.
ARTICLE 32:
AMENDMENTS TO CONTRACT
This Contract shall be subject to amendment at any time by mutual agreement of the
parties hereto, except insofar as any proposed amendments are in any way contrary to applicable
43
law, or would have a material adverse effect upon the owners of any of the Municipal
Obligations. As a condition to any amendment to this Contract or to the Like-Contracts with the
Other Participants; the District shall first have received written confirmation from the rating
agency or agencies then providing a rating for the Municipal Obligations, to the effect that the
proposed amendments will not adversely affect the rating of the Municipal Obligations and, in
the event that the Municipal Obligations, or any portion thereof, shall be covered by municipal
bond insurance, the District shall have received prior written consent to such proposed
amendments from the provider of such bond insurance. Amendments to this Contract and to the
Like Contracts of the Other Participants shall occur only after the written and unanimous consent
of the District, the Participant and all Other Participants, except, that the following Additional
Projects may be effected without said unanimous consent and upon the following conditions:
(A) Approved Additional Projects. Subject to the provisions of Article 28 hereof, and
upon the request of the Participant or of any Other Participant, the District may enter into an
amendment of this Contract, and/or of Like-Contracts, in order to undertake the acquisition and
construction of an Approved Additional Project;provided, however, the Participant and/or Other
Participants desiring such Project shall first demonstrate that said Approved Additional Project
will be economically feasible with the financial support of only the Participant and/or the Other
Participants participating in said Approved Additional Project.
(B) Required Additional Project/Emergency Project. The undertaking of a Required
Additional Project or of any Emergency Project by the District shall not require the consent of
the Participant or of any Other Participant nor the amendment of this Contract or of any Like-
Contract(s).
(C) Approval of Amendments by Participant. The Participant covenants and agrees to
act in good faith to approve or reject any proposed amendments hereto within a reasonable
period o f t ime. The failure to either approve o r r ej ect any such proposed amendment within
sixty (60) days from the date of adoption by the Board of a resolution approving such proposed
amendment shall constitute a lack of good faith.
ARTICLE 33:
ESTABLISHMENT OF NACIMIENTO PROJECT COMMISSION
In connection with its approval of this Contract, the Participant has appointed a
representative of the Participant to sit on the Nacimiento Project Commission. The District
covenants and agrees to call a first organizational meeting of the Commission within thirty (30)
days of the Effective Date, in accordance with law and, particularly, the provisions of the Ralph
M. Brown Act. The Commission shall meet at such intervals and at such places as it shall
determine. The total number of votes that may be cast on any issue or proposition considered by
the Commission shall be the sum of the number of Commissioners. The Commission member
representing the District shall be entitled to vote in proportion to the number of Commissioners.
The Commissioners representing the Participant and the Other Participants shall share the
remaining votes in proportion to the Delivery Entitlement of the Participant and of each of the
Other Participants.
44 3 "��
The purpose of the Commission shall be to review and approve all substantive matters
pertaining to the construction and operations of the Nacimiento Facilities, including the annual
budget; provided, however, that the Commission shall have no authority to contract, employ
persons, or make expenditures. The Board of Supervisors may approve, alter, or return any said
approval of the Commission. Furthermore, in every case that the Board alters or returns to the
Commission any item or proposition approved by the Commission, the Board shall set forth in
writing its findings that caused the Board to alter or return said item or proposition and shall do
so only after holding a public hearing at which time the Commissioners shall have the right to
appear and address the Board of Supervisors.
ARTICLE 34:
OPINIONS AND DETERMINATIONS; GOOD FAITH
Where the terms of this Contract 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 35:
WAIVER OF CONTRACT RIGHTS
Any waiver at any time by either party to this Contract of the party's rights with respect
to a default or any other matter arising in connection with this Contract shall not be deemed to be
a waiver with respect to any other default or matter.
ARTICLE 36:C
NOTICES
All notices that are required either expressly or by implication to be given by any party to
the other under this Contract shall be signed for the District and for the Participant by such
officers as they may, from time to time, authorize to so act. All such notices shall be deemed to
have been given and delivered if delivered personally or if enclosed in a properly addressed
envelope and deposited with the United States Postal Service for delivery by registered or
certified mail. Unless and until formally notified otherwise, all notices shall be addressed to the
parties as follows:
To the Participant: City of San Luis Obispo,
Utilities Department
879 Morro Street
San Luis Obispo, CA 93401
Attention: Utilities Director
45
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To the District: Department of Public Works
County of San Luis Obispo
County Government Center
San Luis Obispo, CA 93408
Attention: Director of Public Works
ARTICLE 37:
ASSIGNMENT
The provisions of this Contract shall apply to and bind the successors and assigns of the
respective parties, but no assignment or transfer of this Contract, or any part hereof or interest
herein, shall be valid until and unless approved by the District. The District shall not approve
any s uch assignment o r t ransfer t o any p erson o r e ntity t hat i s n of o ne or in ore o f the Initial
Participants, or a then-existing New Participant, unless and until the proposed assignment or
transfer of this Contract has been offered to and refused in writing by all said Participants. The
offer of any such assignment or transfer of this Contract shall be on the same basis to all
Participants and if more than one of the said Participants desires to accept the offer, this Contract
or portion thereof to be assigned or transferred shall be prorated among them in proportion to
their respective unit percentage share in the facilities involved in the assignment or transfer. The
foregoing notwithstanding, no assignment or transfer of this Contract or any part hereof or
interest herein shall be valid until such time as the District has received assurances from each
rating agency then rating the Municipal Obligations, to the effect that such assignment or transfer
will not adversely affect the rating on the Municipal Obligations, and, so long as any Municipal
Obligations are then being insured by a municipal bond insurance company, until such time as
the District has received the written consent from such bond insurer as to such assignment or
transfer. The Participant understands and acknowledges that the District may pledge amounts
received and to be received hereunder and under the other Like-Contracts to a financial
institution and/or Joint Exercise of Powers Authority as further support for the District's
obligations under the Municipal Obligations.
ARTICLE 38:
INSPECTION OF BOOKS AND RECORDS
The authorized officers of the Participant 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 services provided for in this Contract, with the right at any time during regular
business hours of the District to make copies thereof at the Participant's expense, and the
authorized officers of the District shall have similar rights in respect to the account books and
records of the Participant for its Water Enterprise.
ARTICLE 39:
SEVERABILITY
Any provision of this Contract that is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition,
46 � ,
unenforceability or nonauthorization without invalidating the remaining provisions hereof
affecting the validity, enforceability or legality of such provision in any other jurisdiction.
ARTICLE 40:
WATER RIGHTS
The parties hereto acknowledge and agree that this Contract is an agreement for service,
and only contractual rights are created by this Contract. This Contract does not create an
entitlement to nor does it convey to the Participant any property right or interest in the Master
Water Contract. Except as to rights associated with imported water discussed in this Article, no
provision of this Contract shall be considered, interpreted or applied in any fashion to derogate or
otherwise diminish, reduce or detrimentally affect, in any fashion, any parties' existing or
subsequently developed or acquired Water Rights. This Contract shall not be considered,
interpreted nor applied in any fashion to result in any relinquishment or adjustment of any such
Water Rights. In particular, no provision of this Contract shall be considered, interpreted or
applied in any fashion to diminish, reduce or detrimentally affect, in any fashion, any party's
rights pursuant to Water Code Section 1005.1 or Section 1005.2. Notwithstanding anything to
the contrary set forth herein, the parties to this Contract acknowledge that the water delivered to
the Participant pursuant to this Contract constitutes "imported water." The District agrees to
support any effort of the Participant to establish that the water delivered to the Participant
pursuant to this Contract constitutes "imported water." The parties further acknowledge that any
rights to water which may arise from the importation and/or use by the Participant of the water
delivered pursuant to this Contract (including, but not limited to the use, storage, capture,
recapture and/or reuse of such water) are held exclusively by the Participant and no other party.
ARTICLE 41:
GOVERNING LAW
This contract shall be interpreted, governed and enforced in accordance with the laws of
the State of California applicable to contracts made and performed in such State.
ARTICLE 42:
VALIDATION
Either the District, the Participant or any Other Participant may file and diligently
prosecute to a final decree in a court of competent jurisdiction a proceeding in mandamus or
other appropriate proceeding or action for the judicial examination, approval, and confirmation
of the proceedings had for the organization of the District and for the participation of the
Participant in the Nacimiento Facilities hereunder, or for the validation of the agreement(s)
which is the basis for the Municipal Obligations, or any of them, or the proceedings of the
governing body of the Participant leading up to and including the making of this Contract and the
validity of the provisions thereof and hereof.
i
47 -�y
ARTICLE 43:
COUNTERPARTS
This Contract may be executed in several counterparts, each of which shall be regarded
as an original and all of which shall constitute one and the same document.
48
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h
IN WITNESS WHEREOF, the parties hereto have executed this Contract on the date
first above written.
SAN LUIS OBISPO COUNTY FLOOD
CONTROL AND WATER CONSERVATION
DISTRICT
By
Chairperson, Board of Supervisors
APPROVED AS TO FORM:
COUNTY COUNSEL:
C
;1)u2:
ty Coun`aty Coun
G�! Yl0
ATTEST:
JULIE L. RODEWALD, COUNTY CLERK
By
Deputy County Clerk
CITY OF SAN LUIS OBISPO
By
Authorized Representative
APPROVED AS TO FORM: ATTEST:
CITY ATTORNEY CITY CLERK
By By
Deputy City Clerk
By
Deputy City Clerk
49 3 "lP�
J
EXHIBIT A
UNIT DESCRIPTIONS
Unit A - Lake N acimiento Intake and P ump S tation t o C amp Roberts W est Property
Line: Shall consist of the raw water intake structure including multiport tower, pumps, piping,
surge control facilities, access road, screens, gates, valves, controls, electrical service,
instrumentation, grounds, fencing, and appurtenances; and pipeline from the intake to the Camp
Roberts west property line, including road crossings, controls, instrumentation, air release
structures, blowoffs, valves, vaults, corrosion control, and appurtenances
Unit Al - Camp Roberts West Property Line to Camp Roberts Tank and Puma Station
Inlet: Shall consist of the pipeline from the Camp Roberts west property line to the inlet
connection of the Camp Roberts Pump Station including road crossings, the Nacimiento River
crossing, controls, instrumentation, air release structures, blowoffs; valves, vaults, corrosion
control, and appurtenances; and Camp Roberts Tank including piping and valves, connections to
the main pipeline, controls, instrumentation, corrosion control and coatings, access roads,
grounds, fencing, and appurtenances..
Unit B — Camp Roberts Pump Station: Shall consist of the Camp Roberts Pump Station
from the inlet connection to the discharge connection, including pumps, piping; connections to
the main pipeline, surge control facilities, access road, valves, controls, instrumentation, grounds,
fencing, and appurtenances.
Unit C — Camp Roberts Pump Station Discharge to Monterey Rd / Wellsonac Shall
consist of the pipeline from the Camp Roberts Pump Station discharge connection to the
intersection of Old Highway 101 and Monterey Road, including the highway crossing, road
crossings, controls, instrumentation, air release structures, blowoffs, valves, vaults, corrosion
control, and appurtenances.
Unit C1 — Monterey Rd / Wellsona to Paso Robles Turnout: Shall consist of the pipeline
from the intersection of Old Highway 101 and Monterey Road to the mainline connection for the
Paso Robles Turnout, including the Salinas River crossing, railroad crossing, road crossings,
controls, instrumentation, air release structures, blowoffs, valves, vaults, corrosion control, and
appurtenances.
Unit D — Paso Robles Turnout to Templeton CSD Turnout: Shall consist of the pipeline
from the mainline connection for the Paso Robles Turnout to the mainline connection for the
Templeton CSD turnout, including surge control, microtunneling through Santa Ysabel Ranch,
road crossings, controls, instrumentation, air release structures, blowoffs, valves, vaults,
corrosion control, and appurtenances.
Unit E — Templeton CSD Turnout to Atascadero MWC Turnout: Shall consist of the
pipeline from the mainline connection for the Templeton CSD turnout to the mainline connection
for the Atascadero MWC turnout, including road crossings, controls, instrumentation, air release
structures, blowoffs, valves, vaults, corrosion control, and appurtenances.
A-1 3 -[P
Unit F — Atascadero MWC Tumout to Rocky Canyon Tank Inlet: Shall consist of the
pipeline from the mainline connection for the Atascadero MWC turnout to the inlet flange of the
Rocky Canyon Tank, including road crossings, controls, instrumentation, air release structures,
blowoffs, valves, vaults, corrosion control, and appurtenances..
Unit F1 — Rocky Canyon Tank: Shall consist of the Rocky Canyon Tank from the inlet
flange of the tank through to the inlet connection to the Rocky Canyon Pump Station, including
piping and valves, connections to the main pipeline, controls, instrumentation, corrosion control
and coatings, access roads, grounds, fencing, and appurtenances.
Unit F2 — Rocky Canyon Pump Station: Shall consist of the Rocky Canyon Pump
Station from the pump station inlet connection through to the discharge connection, including
pumps, piping, connections to the main pipeline, surge control facilities, access road, valves,
controls, instrumentation, grounds, fencing, and appurtenances.
Unit G — Rocky Canyon Pump Station Discharge to Route 58/Maria Avenue: Shall
consist of the pipeline from the discharge connection of the Rocky Canyon Pump Station to the
intersection of Maria Avenue and Route 58 in Santa Margarita, including a Salinas River
Crossing, road crossings, controls, instrumentation, air release structures, blowoffs, valves,
vaults, corrosion control, and appurtenances.
Unit G1 — Route 58/Maria Avenue to Cuesta Tank Inlet: Shall consist of the pipeline
from the intersection of Maria Avenue and Route 58 in Santa Margarita to the inlet flange of the
Cuesta Tunnel Tank, including railroad and road crossings, controls, instrumentation, air release
structures, blowoffs, valves, vaults; corrosion control, and appurtenances.
Unit G2 — Cuesta Tunnel Tank Shall consist of the Cuesta Tunnel Tank from the inlet
flange of the tank through the north portal inlet flange of the existing Cuesta Tunnel pipeline,
including piping and valves, connections to the main pipeline, controls, instrumentation,
corrosion control and coatings, access roads, grounds, fencing, and appurtenances.
Unit H —C uesta Tunnel: S hall consist of the existing Nacimiento Pipeline in C uesta
Tunnel from the existing north portal inlet flange through the south portal outlet flange,
including controls, instrumentation, air release structures, blowoffs, valves, vaults, corrosion
control, and appurtenances.
Unit H 1 —Cuesta Tunnel to San Luis Obispo WTP: Shall consist of the pipeline from the
south portal outlet flange of the Nacimiento Pipeline in.Cuesta Tunnel to the San Luis Obispo
City Water Treatment Plant on Stenner Creek Road, including railroad crossings, road crossings,
controls, instrumentation, air release structures, blowoffs, valves, vaults, corrosion control, and
appurtenances.
Unit T11 —City of San Luis Obispo Turnout: Shall consist of the piping, instrumentation
and appurtenant facilities connecting the Nacimiento Facilities to the City of San Luis Obispo
water system facilities on Stenner Creek Road.
A-2 3 L0
EXHIBIT B
ENVIRONMENTAL IMPACT REPORT
ENTITIES
California Army National Guard
County of San Luis Obispo Service Area No. 10A, 22 and 23
Edna Valley Mutual Water Company
Fiero Lane Water Company
Lewis C. Pollard Family Trust
Morrow Rock Mutual Water Company
San Miguel Community Services District
Santa Margarita Ranch Mutual Water Company
B-1
` ffiiiN COUNCIL MEMORANDUM
June 29, 2004 RECEIVED
To: Mayor Dave Romero JUN 2 9 2004
Ken Schwartz SLO CITY CLERK
Christine Mulholland
Allen Settle
John Ewan
From: John Moss, Utilities Director
Via: Ken Hampian, City Administrative Officer
Subject: Red File—June 29, 2004 Agenda item B-3
Page 3-7A of the agenda report for agenda item B-3 contained a typographical error that is
hereby corrected with this transmittal. The correction is made to the fourth word of the fourth
Whereas, where the word wished is changed to wishes. I apologize for any confusion this error
may have caused.
Attached: Revised page 3-7A.
RED FILE
/cou c 'CDD DiR MEETING AGENDA
cCA 2 FIN DIR DATEITEM #. P�tA_3
CACAO 2"=IRE CHIEF
0 ATTORNEY Or FW DIR
IgCLERKIORIG CI-POLICE CHF
❑ DEPT HEADS 0-PIEC DIR
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ZUTIL R
f�----•-- �hR DIR
RESOLUTION NO. (2004 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
APPROVING A WATER DELIVERY ENTITLEMENT CONTRACT WITH THE SAN LUIS
OBISPO COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT
WHEREAS, the City of San Luis Obispo has identified through its General Plan the need for
developing additional water supplies to serve the City's water needs at build-out and to provide
secondary water supplies for unforeseen emergencies and meeting peak operating demands; and
WHEREAS, the City and other agencies in San Luis Obispo County have been working
together with the San Luis Obispo County Flood Control and Water Conservation District (District)
on the development of a project to deliver 15,750 acre-feet of water per year (afy) from Lake
Nacimiento to agencies along the Highway 101 corridor south to San Luis Obispo, and
WHEREAS, the Council for the City of San Luis Obispo (City) has been presented with a
form of Water Delivery Entitlement Contract (Contract) by the District respecting the water to be
provided through the District's Nacimiento Water Delivery Project facilities(Facilities); and
WHEREAS, the City wishes to ensure the availability of water from the Facilities for its use
and enjoyment and to that end wishes to approve the terms of the Contract and to authorize its
execution.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The foregoing recitals are true and correct.
SECTION 2. The terms and provisions of the Contract, included as Exhibit A to this
resolution and as presented to and reviewed by this meeting of the Council for the City of San Luis
Obispo, are hereby approved, and the Mayor of the City is hereby authorized and directed to execute
the Contract in the name and on behalf of the City, in substantially the form presented to and
approved at this meeting of the Council for the City of San Luis Obispo.
SECTION 3. This resolution shall take effect immediately upon its adoption.
Upon motion of seconded by
and on the following roll call vote:.
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of 2004.
R
Resolution No. (2004 Series)
Page 2
David F. Romero, Mayor
ATTEST:
Diane Reynolds.
Interim City Clerk
APPROVED AS TO FORM:
Jothan P well
Cit orney
.. RECEIVED
JUN 2 4 2004
city clerk memorandum SLO CITY CLERK
June 24, 2004 RED FILE
MEETING AGENDA
To: Council DAT Eu`rITEM #—b—L —
Via: Ken Hampian, CAO
From: Diane Reynolds, Acting City Clerk
at-
Subject. June 29, 2004 Agenda; Business Item#3 —Missing page
The attached page was inadvertently omitted from Business item#3 on the June 29, 2004
Agenda. Please insert into your packet accordingly.
Thank you.
l(�A L
I.EnouN&L'T f DD DIR
CAO FIN DIR
ACAO ,E'FIRE CHIEF
TTORN- ?FW DIR
'CLERK%ORIG Z POLICE CHF
�! ❑ �H=.�.DS ,2 REC DIR
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RED FILE
ME ING AGEND RECEIVED
DATE lP ITEM #� 2 .
��� JUN � 200
� 4
council memoRanou oCITY CLERK
June 23, 2004
TO: Council Members OU CIL DD DIR�'OAO SIN DIR
CAO FIRE CHIEF
FROM: Dave Romero, MayorTTORNEY el Pw DIR
I?CLERK/ORIG -e, POUCECHF
SUBJECT: Nacimiento Commission I DEET HEADS �"REC DIR
PUTIL DIR
SHR DIR
The staff report relating to the Nacimiento Agreement includes a recommendation that Council
appoint a representative to the Nacimiento Project Commission. Although, the staff report and
agreement provide information concerning the role of the Commission, I asked staff to provide
me with some added information concerning the Commission and its duties, which is outlined
below.
The Commission will:
1. Confer and consider information and presentations from staff regarding project funding,
including the development of annual operating budgets.
2. Advise the District Board on the creation of the Project Team including professional
services contracts for design and project management. Advise the Board on other project
issues including construction contract scheduling, sales of reserve water, new customers,
etc.
3. Develop proposed bylaws for the Commission, powers, and forms of communications.
In addition to my engineering background and high level of interest in this project, since
becoming Mayor I have communicated with elected leaders representing other participating
agencies, especially with the City of Paso Robles. Because my schedule is flexible, I will be able
to commit to the fairly busy meeting schedule, particularly in the early months of commission
activity, and will keep the full Council up-to-date with liaison reports. For all of these reasons, I
seek the Council's support for my appointment to represent the City on the Nacimiento Project
Commission.
` Attachmcnt 1
�J
RESOLUTION NO. (2004 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
APPROVING A WATER DELIVERY ENTITLEMENT CONTRACT WITH THE SAN LUIS
OBISPO COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT
WHEREAS,the City of San Luis Obispo has identified through its General Plan the need for
developing additional water supplies to serve the City's water needs at build-out and to provide
secondary water supplies for unforeseen emergencies and meeting peak operating demands; and
WHEREAS, the City and other agencies in San Luis Obispo County have been working
together with the San Luis Obispo County Flood Control and Water Conservation District (District)
on the developmeiiit of a project to deliver 15,750 acre-feet of water per year (afy) from Lake
Nacimiento to agencies along the Highway 101 corridor south to San Luis Obispo, and
WHEREAS, the Council for the City of San Luis Obispo (City) has been presented with a
form of Water Delivery Entitlement Contract (Contract) by the District respecting the water to be
provided through the District's Nacimiento Water Delivery Project facilities (Facilities); and
WHEREAS,the City wished to ensure the availability of water from the Facilities for its use
and enjoyment and to that end wishes to approve the terms of the Contract and to authorize its
execution.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The foregoing recitals are true and correct.
SECTION 2. The terms and provisions of the Contract, included as Exhibit A to this
resolution and as presented to and reviewed by this meeting of the.Council for the City of San Luis
Obispo, are hereby approved, and the Mayor of the City is hereby authorized and directed to execute
the Contract in the name and on behalf of the City, in substantially the form presented to and
approved at this meeting of the Council for the City of San Luis Obispo.
SECTION 3. This resolution shall take effect immediately upon its adoption.
Upon motion of seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this day of 2004.
R