HomeMy WebLinkAbout02-16-2016 Item 11 Well site relinquishment at 1460 Calle Joaquin
Meeting Date: 2/16/2016
FROM: Carrie Mattingly, Director of Utilities
Prepared By: Aaron Floyd, Deputy Director, Water
SUBJECT: WELL SITE RELINQUISHMENT AT 1460 CALLE JOAQUIN
RECOMMENDATION
Approve and authorize the Mayor to execute the Quit Claim Deed and Indemnification
Agreement Affecting Real Property and Bill of Sale for the well at 1460 Calle Joaquin.
DISCUSSION
At its January 19, 2016 meeting, the City Council continued to a date uncertain staff’s request for
the City Council to relinquish any rights it might have to a well located at 1460 Calle Joaquin,
San Luis Obispo (the “Property”) to the overlying property owner, ARH Quiky Investments,
LLC (“Quiky”). After this action, the City received a letter from Quiky’s attorney threatening
litigation.
Background:
The well was installed in 1989 when the City was actively pursuing groundwater development to
supplement its surface water supply. Groundwater contamination (PCE and nitrates) forced the
shutdown of the well in June 1993. The regulatory status of the well was changed to “inactive” in
July 1995. Although it has been out of service for many years, and is currently separated by a
closed valve, the water line running from the well remains connected to the City’s water
distribution system, a potential water quality liability.
The City’s right to the well and related infrastructure:
Recorded Rights
In July 2014, Quiky’s representatives approached Utilities staff to discuss the ownership of the
well. A June 12, 2014 title report of the Property provided by Quiky’s engineering firm
confirmed that there is no recorded easement or other right of access for the well. The City’s
independent review of title and property history also did not reveal any easement or other right,
recorded or unrecorded, for the well.
Potential Prescriptive Rights
Without an easement or similar enforceable right, the City has no recorded legal right to operate,
maintain or remove the well. The only other alternative for the City to seek rights regarding the
well would be for the City to claim a prescriptive easement to the well itself. In order to assert
such a right, the City would need to file a lawsuit for declarative relief. The extent of the City’s
prescriptive rights that potentially could be perfected via a lawsuit are strictly constrained based
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on historic use. Because the City has not used the well at all for many years, the City’s right to
use and pump the well under such a theory would be severely limited. Without either an express
easement or an adjudicated prescriptive easement in place, the City has no established legal right
to access or use the well without the permission of the property owner.
Impacts to water rights:
Even assuming the City has a continuing ownership interest in the well infrastructure located on
the Property, transferring the well to the Property owner has no effect on the City’s or Quiky’s
water rights. A property owner has the right to groundwater for the reasonable beneficial use of
the overlying property. This means that Quiky has the right to use water from the San Luis
Obispo Groundwater Basin for the reasonable beneficial use on the Property, subject to all
regulatory requirements. Staff has not been able to locate any agreement that would have given
the City any right to access or use the groundwater underlying the Property via the existing well
site. The transfer of the well to the Property owner does not confer or otherwise modify any of
the parties’ otherwise existing water rights. In addition, the City does not prohibit private
property owners from drilling wells or utilizing well water for non-potable uses, provided the
water extracted from the well is used only on the property on which the well is located.
The January 16, 2016 letter from Central Coast Grown notes concerns that the City transferring
the well to Quiky “…is jeopardizing the water table serving the Calle Joaquin Agricultural
Preserve, which includes City Farm.” Water use for the proposed car wash is estimated to be
approximately 16 units of water per month or 0.44 acre feet per year (afy). This amount is about
.04% of the estimated 1,000 afy of water used for irrigated agriculture on lands in and near the
City. For reference, the City was withdrawing about 1,770 afy in addition to all other uses,
including irrigated agriculture, when the subsidence occurred that affected the Bear Valley
Shopping Center. Based on this estimate, staff does not believe the proposed use presents a threat
to the basin or would otherwise unreasonably interfere with the City’s (or City affiliated party)
beneficial use of the groundwater in the basin.
The City’s need for this well:
The City relies on surface water from the Whale Rock, Nacimiento and Salinas Reservoirs for its
potable water supply and the City is currently in the process of obtaining additional allocation
from Nacimiento to supplement its reserve supplies. The City does not use or have any need for
this well in the future. If the City were to utilize groundwater to supplement its water supply,
significant treatment infrastructure would be needed, which would necessitate a more localized
well system. In other words, even if the City needed groundwater, it would need to build a new
treatment system which would use different infrastructure – including different wells to access
the groundwater in the basin. Those new wells would need to be located on City property or, if
needed, on private property where the City has obtained a legal right to establish such a use.
Even if the City could establish a legal right to the current well location, the location of this well,
between the freeway and a busy road, including the need to cross multiple properties, would not
make it an ideal location to access the groundwater basin.
In the context of the legal and practical issues referenced above, staff continues to believe
relinquishing the well to the overlying property owner is beneficial in that: the City would
eliminate the need to maintain or repair this infrastructure; disconnection from the City’s system
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eliminates potential water quality liability; and the costs of disconnection, approximately $1250 -
$3125, would be paid for entirely by the Property owner.
Recycled water use:
Recycled water distribution runs nearby the property and the washing of cars is on the list of
approved uses. The property owner has recently submitted plans for recycled water use on site,
though only for landscape irrigation at this point. The property owner would have the option of
expanding the use of recycled water in the future to include the car wash.
ENVIRONMENTAL REVIEW
Transfer of the well and infrastructure is not a “project” under the California Environmental
Quality Act, because the action does not involve any commitment to a specific project which
may result in a potentially significant physical impact on the environment, as contemplated by
Title 14, California Code of Regulations, Section 15378. Further, the action does not involve the
issuance of a lease, permit, license, certificate or other entitlement or any of the other actions
described in Section 15378(a)(1)-(3). The Quiky car wash project was separately reviewed and
approved by the Planning Commission on November 12, 2014. That project was determined to
be categorically exempt from environmental review pursuant to CEQA Guidelines section
15301.
FISCAL IMPACT
No resources had been identified for the abandonment of the existing well. The disconnection of
the well from the City’s water distribution system would be reducing a potential water quality
liability.
ALTERNATIVES
1. The City Council could choose to refuse to transfer the well and infrastructure to the
overlying property owner. This is not recommended because the City has no right to access
or operate the well.
Attachments:
a - Indemnification Agreement Affecting Real Property and Bill of Sale
b - Quit Claim Deed
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1
INDEMNIFICATION AGREEMENT AFFECTING REAL
PROPERTY AND BILL OF SALE
(Quiky Car Wash Well)
FOR VALUABLE CONSIDERATION RECEIVED,
BE IT KNOWN that, upon recordation of the executed Quitclaim Deed in the form
attached hereto as Exhibit “1”, the City of San Luis Obispo, a chartered municipal
corporation (“City”) hereby sells, transfers, conveys and assigns forever to ARH Quiky
Investments, LLC, a California limited liability company (“Quiky”) and Quiky’s
transferees, grantees, assigns and successors in interest, all of City’s right, title and
interest in and to the underground waterline, building, vault, concrete pad and well and
any other related equipment, improvements or personal property attached thereto situated
in the location depicted in Exhibit B to the Quitclaim Deed (“Transferred Property”).
Quiky acknowledges and agrees that City makes no representation or warranty
whatsoever, express or implied, as to the quality of water underlying the property, the
sufficiency of the well or the condition of the Transferred Property and Quiky accepts the
Transferred Property on an “AS-IS, WHERE IS, WITH ALL FAULTS” basis.
Quiky, and its transferees, grantees, assigns and successors in interest, agree to
indemnify, defend and hold City harmless from and against, any and all losses, damages,
costs and expenses (including, without limitation, reasonable legal fees and costs) arising
out of or incurred with respect to any claims, demands, causes of action of any nature,
any expense incident to defense, for injury to or death of persons or loss of or damage to
property, including any alleged damages or liability resulting from the pumping and
drawing of water from the above-described well, occurring subsequent to the execution
of this Bill of Sale resulting from the use, operation or maintenance by Quiky, or its
officers, agents, employees, transferees, grantees and successors in interest of the
Transferred Property. Quiky acknowledges and agrees that its obligation to indemnify,
defend and hold harmless City as set forth herein is a covenant that shall run with the
land described in said Quitclaim Deed and shall be binding on Quiky’s transferees,
grantees, assigns and successors in interest. Quiky and City agree that upon recordation
of the Quitclaim Deed a Memorandum of Agreement substantially in the form attached
hereto as Exhibit “2” shall be recorded in the Official Records of San Luis Obispo
County. Quiky shall pay for all recording fees, if any.
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2
Signed January _____, 2015
City of San Luis Obispo
By:
Jan Marx, Mayor
Attest:
____
Jon Ansolabehere, Interim City Clerk
Approved as to Form:
_________________________________
J. Christine Dietrick, City Attorney
ARH Quiky Investments, LLC
By:
Its:
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EXHIBIT “1”
Form Quitclaim Deed with Attachments
RECORDING REQUESTED BY: and
WHEN RECORDED MAIL TO:
ARH Quiky Investments, LLC
c/o Westpac Investments
835 Aerovista Place Suite 230
San Luis Obispo, CA 93405
DOCUMENTARY TRANSFER $_____________________ SPACE ABOVE THIS LINE FOR
RECORDER'S USE
( ) Computed on the consideration or value of property conveyed; OR
( ) Computed on the consideration or value less liens or encumbrances
*________________________________
_______________
( ) remaining at time of sale. Signature of Declarant or Agent
determining tax - Firm Name -
053-151-036
QUITCLAIM DEED
FOR A VALUABLE CONSIDERATION
City of San Luis Obispo, a chartered municipal corporation,
hereby QUITCLAIMS, GRANTS, and CONVEYS to
ARH Quiky Investments, LLC, a California limited liability company,
Any and all rights, title and interests of record or arising by prescription, in and to the
underground waterline, building, vault, concrete pad and well and any other related equipment,
improvements or personal property attached thereto, including the right to draw water from the
above-described well, situated in the location described in Exhibit “A” and depicted in Exhibit
“B” attached hereto.
Dated: __________________, 20____
City of San Luis Obispo, a municipal corporation,
By:
_________________________________
MAIL TAX STATEMENTS TO: Same address as shown above
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Exhibit A
LOT 8 OF TRACT 347, FREEWAY CENTER, IN THE CITY OF SAN LUIS OBISPO,
COUNTY OF SAN LUIS OBISPO, AS PER MAP RECORDED MARCH 3, 1967 IN
BOOK 7, PAGE 23 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY. TOGETHER WITH THAT PORTION OF LOT 66 OF THE
RANCHO CANADA DE LOS OSOS AND LA LAGUNA THAT WOULD PASS BY
OPERATION OF LAW AS VACATED BY RESOLUTION RECORDED JUNE 4,
1986 AS INSTRUMENT NO. 86-32837 IN BOOK 2840, PAGE 740 OF OFFICIAL
RECORDS.
Exhibit B
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Exhibit 2
Memorandum of Agreement
RECORDING REQUESTED BY: and
WHEN RECORDED MAIL TO:
ARH Quiky Investments, LLC
c/o Westpac Investments
835 Aerovista Place Suite 230
San Luis Obispo, CA 93405
053-151-036
MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT (this “Memorandum”) is made and entered
into this day of __________, 2016 by and between the City of San Luis Obispo, (“City”)
and ARH Quiky Investments, LLC (“Quiky”).
Notice is hereby given that the City and Quiky entered into an Indemnification
Agreement Affecting Real Property and Bill of Sale dated _________, 2015
(“Agreement”), which is a covenant that runs with the land described herein below and is
binding on Quiky’s transferees, grantees, assigns and successors in interest.
Real Property:
LOT 8 OF TRACT 347, FREEWAY CENTER, IN THE CITY OF SAN LUIS OBISPO,
COUNTY OF SAN LUIS OBISPO, AS PER MAP RECORDED MARCH 3, 1967 IN
BOOK 7, PAGE 23 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF
SAID COUNTY. TOGETHER WITH THAT PORTION OF LOT 66 OF THE
RANCHO CANADA DE LOS OSOS AND LA LAGUNA THAT WOULD PASS BY
OPERATION OF LAW AS VACATED BY RESOLUTION RECORDED JUNE 4,
1986 AS INSTRUMENT NO. 86-32837 IN BOOK 2840, PAGE 740 OF OFFICIAL
RECORDS.
The terms and conditions of the Agreement is incorporated herein by this reference.
Should any party require information concerning said Agreement, they should contact
City or Quiky at the following addresses:
City of San Luis Obispo
990 Palm Street
San Luis Obispo, CA 93401
ARH Quiky Investments, LLC
c/o Westpac Investments
835 Aerovista Place Suite 230
San Luis Obispo, CA 93405
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IN WITNESS WHEREOF, the parties hereto have executed this Memorandum on the
day and year first above written.
City of San Luis Obispo
By:
Jan Marx, Mayor
Attest:
____
Jon Ansolabehere, Interim City Clerk
Approved as to Form:
_________________________________
J. Christine Dietrick, City Attorney
ARH Quiky Investments, LLC
By:
Its:
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RECORDING REQUESTED BY: and
WHEN RECORDED MAIL TO:
ARH Quiky Investments, LLC
c/o Westpac Investments
835 Aerovista Place Suite 230
San Luis Obispo, CA 93405
DOCUMENTARY TRANSFER $_____________________ SPACE ABOVE THIS LINE FOR RECORDER'S USE
( ) Computed on the consideration or value of property conveyed; OR
( ) Computed on the consideration or value less liens or encumbrances *_______________________________________________
( ) remaining at time of sale. Signature of Declarant or Agent determining tax - Firm Name -
053-151-036
QUITCLAIM DEED
FOR A VALUABLE CONSIDERATION
City of San Luis Obispo, a chartered municipal corporation,
hereby QUITCLAIMS, GRANTS, and CONVEYS to
ARH Quiky Investments, LLC, a California limited liability company,
Any and all rights, title and interests of record or arising by prescription, in and to the
underground waterline, building, vault, concrete pad and well and any other related equipment,
improvements or personal property attached thereto, including the right to draw water from the
above-described well, situated in the location described in Exhibit “A” and depicted in Exhibit
“B” attached hereto.
Dated: __________________, 20____
City of San Luis Obispo, a municipal corporation,
By:
_________________________________ __________________________________
MAIL TAX STATEMENTS TO: Same address as shown above
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Exhibit A
LOT 8 OF TRACT 347, FREEWAY CENTER, IN THE CITY OF SAN LUIS OBISPO, COUNTY OF SAN
LUIS OBISPO, AS PER MAP RECORDED MARCH 3, 1967 IN BOOK 7, PAGE 23 OF MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. TOGETHER WITH THAT PORTION OF
LOT 66 OF THE RANCHO CANADA DE LOS OSOS AND LA LAGUNA THAT WOULD PASS BY
OPERATION OF LAW AS VACATED BY RESOLUTION RECORDED JUNE 4, 1986 AS INSTRUMENT
NO. 86-32837 IN BOOK 2840, PAGE 740 OF OFFICIAL RECORDS.
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