HomeMy WebLinkAboutCarlsbad Mutual Water Company; 1957-08-30;1 AMENDMENT TO AGREEMENT FOR PURCHASE
2
3 WHEREAS, on the 30th day of August, 1957, the CARLSBAD MUTUAL
4 WATER COMPANY and THE CITY OF CARLSBAD executed an agreement
5 wherein the Carlsbad Mutual Water Company agreed to sell its assets to the
6 City of Carlsbad upon the terms and conditions set forth in said agreement,
7 which original agreement is attached hereto; and
8 WHEREAS, on the 17th day of December, 1957, the voters of the City
9 of Carlsbad by a Special Municipal Election approved said agreement; and
10 WHEREAS, Paragraph 11 (c) of said original agreement, as approved
11 by the voters of the City of Carlsbad, provides as follows:
12 "Paragraph 11 (c). The power of the City and of the Mutual,
13 respectively, to enter into, and carry out the terms of, this
14 agreement has been established by decree of a court of
15 competent jurisdiction. ";
16 and
17 WHEREAS, on the 8th day of April, 1958, at a General Municipal
18 Election of the City of Carlsbad, the following proposition was approved in
19 the affirmative by the voters of the City of Carlsbad, said proposition being
20 as follows:
21 PROPOSITION A - CONTRACT AMENDMENT:
22 "Shall the City Council be authorized to amend the
23 Agreement of Purchase between the City of Carlsbad
24 and the Carlsbad Mutual Water Company (Dated
25 August 30, 1957 and approved by the voters of the
26 City December 17, 1957 and on file in the office of
27 the City Clerk) by striking therefrom the provision
28 requiring litigation, to wit:
29 "The power of the City and of the Mutual,
respectively, to enter into, and carry out the
30 terms of, this agreement has been established
by decree of a court of competent jurisdiction"? ".
31
32
1 WITNESSETH:
2 This amendment to the original agreement between the City of Carlsbad
3 and the Carlsbad Mutual Water Company, which agreement is heretofore
4 referred to, and which agreement is attached to this amendment.
5 It is mutually agreed by and between the parties hereto that Paragraph
6 11 (c) of said original agreement shall be deleted from the terms and provi-
7 sions of said agreement.
8 All remaining terms, conditions, covenants, agreements, stipulations
9 and provisions of said original agreement shall remain in full force and effect.
10 If any of the terms and conditions of the original agreement are in
11 conflict or inconsistent with the terms and conditions of this amendment, then
12 in such event the terms and conditions of this amendment shall be controlling
13 and decisive to resolve any such conflict or inconsistency.
14 IN WITNESS WHEREOF, the Mutual has, by resolution of its Board of
y^15 Directors adopted on the / g - day of r>7•<? & art » 1958, ordered its
16 President to affix his signature for and in behalf of the Mutual,and further5 Resolution #58-19
17 ordered its Secretary to attest to his signature. See letter attached
18 Carlsbad Mutual Water Company
19 (SEAL) /r, ^ r\ -A/
H1>A3I ,
20 ~" President ]
ATTEST:
21 /L( j /L./ , j ^ Jl^^,^r Lf /T'vf-
22 Se cretaryT
23
24 I IN WITNESS WHEREOF, the City Council has by Resolution No. 364
25 adopted by the City Council on the 21st day of April, 1958, caused its Mayor
26 for and in behalf of the City of Carlsbad to sign this amendment and ordered
27 the City Clerk to attest to the same,
28 City of Carlsbad
29
(SEAL)
30 ^ Mayor
ATTEST:
31 "
32 ^~-A City Clerk
-2-
1 AGREEMENT FOR PURCHASE
2
3 This Agreement made in duplicate this 30th day of
4 August, 1957, between the City of Carlsbad, a municipal corpora-
5 tion of the State of California, sometimes hereinafter referred
6 to as the "City" and the Carlsbad Mutual Water Company, a
7 California corporation, sometimes hereinafter referred to as
8 the "Mutual"
9 WlJNESSjETH:
10 THAT, WHEREAS, the area served by Mutual has changed
11 in its character from a semirural to an urban community,
12 resulting in a change in the character of use of the water
13 provided by Mutual; and
14 WHEREAS, the change in the character of the use of
15 the water has disqualified Mutual from obtaining financing from
16 agricultural lending institutions; and
17 WHEREAS, the change in the character of the use of
18 the lands served by Mutual has resulted in the stock of Mutual
19 being divided into many fractional shares; and
20 WHEREAS, the administrative burdens that have been
21 imposed, as a result of the many fractional shares of stock, has
22 rendered the administration of Mutual unwieldy and expensive; and
23 WHEREAS, the City desires to acquire the rights and
24 properties of said Mutual and has offered to purchase such rights
25 and properties upon terms and conditions hereinafter set forth,
26 which terms and conditions are satisfactory to shareholders of
27 the Mutual who are entitled to exercise a majority of the voting
28 power of the Mutual; and
29 WHEREAS, it is anticipated that the vote and written
30 consent of shareholders entitled to exercise a majority of the
31 voting power of the Mutual will be filed with the Secretary
32 of the Mutual authorizing the Mutual to sell its assets to
-1-
1 the City upon terms contained in this contract; and
2 WHEREAS, acquisition of such rights and privileges of
3 the Mutual will give the City ownership and control of the
4 valuable water distribution system serving a large percentage
5 of the City1s population and thereby will be a benefit to the
6 City and its residents;
7 NOW, THEREFORE, in consideration of the mutual covenants
8 and agreements of the parties hereto to be by said parties
9 respectively kept and performed and of the mutual advantages to
10 the parties hereto and to the shareholders of Mutual and the
11 residents and property owners of City, the parties hereby agree
12 as follows:
13 1. Subject to all the terms and conditions herein contained,
14 the City agrees to buy, and the Mutual agrees to sell
15 to the City all of the assets of the Mutual shown in
16 the "Inventory of Assets" marked "Exhibit A" (Exhibit A
17 to consist of an itemized list of assets, including, but
18 not limited to (a) all water rights whether acquired by
19 contract, deed, deed restriction, purchase, prescriptive
20 use, permit from the Division of Water Resources of the
21 State of California (b) real properties (c) all water
22 production facilities (d) all water storage and reservoir
23 facilities (e) all water transmission and water distri-
24 bution facilities as shown on map attached to Exhibit A
25 (f) all choses in action, accounts receivable, refunds of
26 any kind, expectancies, and cash on deposit in any bank
27 or trust company (g) all water meters (h) all equipment,
28 tools, supplies and inventory. Said Exhibit A to be
29 compiled by the Mutual as of the effective date of this
30 contract and to bear the endorsement of the managers of
31 the Mutual and of the City), attached hereto, and by
32 reference thereto made a part hereof as if fully set forth
-2-
1 herein, for the sum of Five Hundred Thousand Dollars ($500.00),
i
2 cash, plus the assumption by the City of all indebtedness and
3 obligations of the Mutual as herein provided and upon such
4 other terms and conditions as are hereinafter set forth.
5 2. City assumes and agrees to pay all indebtedness of the Mutual
6 as it exists on the effective date of this agreement and
7 faithfully to comply with and carry out all obligations of
8 Mutual under any and all contracts to which Mutual is or
9 may be a party on the effective date of this agreement; a
10 statement of such indebtedness and a list of such contracts
11 is hereunto attached, marked "Exhibit D" and by reference
12 thereto made a part hereof. It is recognized that certain
13 of the contractual obligations of the Mutual may be, by
14 the terms of such contract, cancellable; and in such event
15 the City reserves the right to cancel and discontinue such
16 of the contracts as the City deems advisable for the best
17 interests of the City; the City specifically sets forth
18 its intention to cancel insurance contracts of all types,
19 contracts for retirement benefits for employees of the
20 Mutual, and such other contracts as the City may determine.
21 It is specifically understood and agreed, however, that
22 the legal and contractual rights heretofore held by share-
23 holders of Mutual to specific proportions of the water
24 supply available to, or produced by, the Mutual, dependent
25 upon their ownership of stock, shall not apply to or be
26 binding upon the City.
27 3. The City specifically agrees to assume the burdens, and to
28 be bound by the terms of that particular contract entered
29 into between the South Coast Land Company and the City of
30 Oceanside, under date of August 13, 1913, and recorded in
SI the office of the County Recorder of the County of San Diego,
32 State of California, on September 19, 1913, in Book 627 of
-3-
1 Deeds, Page 245 et seq., records of the County of San Diego,
2 insofar as such contract relates to the waters naturally
3 tributory to the San Luis Key River, or the Mission Basin,
4 in the valley of said river.
5 4. The City covenants and agrees to maintain and protect all
6 water rights to which the Mutual heretofore may have been
7 entitled, and to distribute all water produced under such
8 water rights, heretofore and now owned by the Mutual, within
9 that area outlined on "Exhibit B", (Exhibit B to contain
10 outline of Mutual service area as outlined in Exhibit A
11 attached to "Oceanside" contract referenced in Paragraph 3
12 of this contract), attached hereto, and by reference thereto
13 made a part hereof as if fully set forth herein.
14 5. The City covenants and agrees that for a period of ten
15 years, from and after the effective date of this contract,
16 the City will charge owners of any of the lands that are
17 marked with cross-hatching on "Exhibit C", (Exhibit C
18 to show Mutual service area the same as outlined by
19 Exhibit B, with all lands to which water stock in the
20 Mutual is appurtenant at the effective date hereof to be
21 not cross-hatched; all other lands to be cross-hatched),
22 attached hereto, and by reference thereto made a part
23 hereof as if fully set forth herein, who make application
24 for the delivery of water to such lands and which
25 delivery of water involves the use of any portion of the
26 Mutual distribution system, as outlined in the map
27 attached to "Exhibit A", a fee of $100 an acre, such fee
28 to be denominated an "inclusion fee" and in addition
29 thereto, to pay for all costs of labor, pipes, pipe lines,
30 service materials, and other incidental charges that are
31 required to make such connection; that the inclusion fees
32 so received by the City of Carlsbad shall, at the option
1 of the City, either be applied to the Bond Redemption Fund
2 which hereafter may be created by the City for the redemp-
3 tion of any bonds issued by the City for the purpose of
4 purchasing rights and properties of Mutual, or be paid
5 by the City to the persons who may be shareholders of
6 Mutual at the effective date hereof, in proportion to
7 their respective stock ownership.
8 6. In the event of a water shortage, the City covenants and
9 agrees, insofar as permitted by law or good water distri-
10 bution practices, to grant priority of allocation of all
11 natural water extracted from the Mission Basin of the
12 San Luis Rey River to those areas which are not cross-
13 hatched, in said "Exhibit C".
14 7. The City agrees to maintain at least two varying rate
15 structures, which rate structures shall include an
16 agricultural rate and a domestic rate and such other
17 rate structures as may be hereafter created by the
18 City; and the City shall continue to maintain an appro-
19 priate differential between the agricultural and domestic
20 rates.
21 8. The City covenants and agrees to continue to furnish water
22 to all areas outside the incorporated limits of the City
23 that are presently being served by the facilities of the
24 Mutual, as the same are delineated and described by the non-
25 cross-hatched areas on "Exhibit C", at substantially the
26 same rates as are charged in areas within the incorporated
27 limits of the City, provided that in no event shall the
28 City charge a differential of more than five per cent for
29 water served outside said City limits.
30 9. The City covenants and agrees to submit to the voters of
31 the City of Carlsbad the following three propositions:
32 (a) Shall the City of Carlsbad incur a bonded
-5-
1 indebtedness, repayable solely from the proceeds
2 obtained by the City from the revenue from the sale
3 of water, in an amount of $550,000.00 for the purpose
4 of purchasing the assets of the Carlsbad Mutual
5 Water Company and to discharge all fixed liabilities
6 of the Carlsbad Mutual Water Company?
7 (b) Shall the City of Carlsbad incur a bonded
8 indebtedness, repayable solely from the proceeds
9 obtained by the City from the revenue from the sale
10 of water, in the amount of $150,000.00 for the
11 purpose of rehabilitating the water transmission,
12 storage and production facilities of the City of
13 Carlsbad, and for extending, acquiring and con-
14 structing new water production and transmission
15 facilities for the City of Carlsbad?
16 (c) Shall the City of Carlsbad enter into a con-
17 tract with the Carlsbad Mutual Water Company for the
18 purchase by the City of Carlsbad of the assets of
19 the Carlsbad Mutual Water Company, in accordance with
20 the terms and conditions of a proposed contract as
21 the same were published in the legally published
22 notice of this election?
23 That the exact wording of the foregoing propositions shall be
24 subject to approval and revision of bond counsel selected
25 by the City. In the event that both propositions set forth
26 in sub-paragraphs (a) and (c) are approved by the voters
27 of the City, the City shall be obliged to consummate this
28 contract; in the event that either one or both of the propo-
29 sitions set forth in sub-paragraphs (a) and (c) above are
30 not approved by the voters of the City, then this contract
31 may, at the option of either party, upon written notice to
32 the other party, be declared null and void and of no further
-6-
1 force and effect.
2 10. Each party hereto agrees to execute promptly all documents,
3 instruments and papers required for the purpose of effect-
4 uating this agreement.
5 11. The obligation of the Mutual to sell and of the City to
6 buy the rights and properties herein agreed to be conveyed
7 shall become effective only when all the following conditions
8 have been complied with:
9 (a) The voters of the City have approved the
10 issuance of bonds, and the contract, as herein
11 provided;
12 (b) The sale of the rights and properties of the
13 Mutual, as herein provided, has received the approval
14 by vote or written consent of shareholders entitled
15 to exercise a majority of the voting power of Mutual;
16 and
17 (c) The power of the City and of the Mutual, respect-
18 ively, to enter into, and carry out the terms of, this
19 agreement has been established by decree of a court
20 of competent jurisdiction.
21 Whenever in this agreement the term "effective date" is
22 used, it shall be construed to mean the date when all
23 the conditions referred to in this Paragraph 11 have
24 been accomplished. Such effective date shall be endorsed
25 upon this agreement, and all documents executed pursuant
26 to this agreement shall bear, or refer to, and unless
27 otherwise stated therein, shall be effective as of such
28 effective date.
29 12. The Mutual herewith covenants and agrees that between the
30 date of the signing of this contract and the effective date
31 of this contract it will continue to operate the Mutual in
32 a prudent and economical manner, and that it will not dispose
.7-
1 of any substantial portion of its assets or make any refund
2 to its shareholders and will not incur any further indebted-
ness, excepting in the ordinary course of business, without
first securing the consent of the City.
5 13. Except as to the covenants and conditions contained in
6 Paragraphs 3, 5 and 8 of this Agreement, the remaining
7 covenants and conditions of this contract shall remain in
8 full force and effect for so long as there exists an unpaid
9 bonded indebtedness incurred as a result of the voters'
10 approval of propositions contained in sub-paragraphs (a)
11 and (b) of Paragraph 9 of this Agreement. After expiration
12 of such time all covenants and conditions shall expire and
13 be no longer binding upon the City; excepting, however, the
14 covenants and conditions of Paragraphs 3 and 8 shall con-
15 tinue for so long as allowed by law, and the provisions,
16 covenants and conditions of Paragraph 5 shall continue for
17 the time therein provided.
18 14. It is agreed between the parties that the Mutual shall retain
19 all funds received from distribution of assets on account
20 of Treasury stock owned by the Mutual, and that the funds
21 so received by the Mutual, or its trustee or successor,
22 shall be used to pay or defray the expenses of the distri-
23 bution of the assets of the Mutual; that any excess funds
24 remaining after the foregoing deduction shall be paid over
25 to the City.
26 15. The City covenants and agrees to continue the employment of
27 those personnel who are employed by the Mutual as of the
28 date of signing of this contract for a period of not less
29 than one year from and after the effective date of this
30 contract; excepting, however, the City reserves the right
31 to discharge employees for misfeasance, malfeasance or non-
32 feasance.
-8-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
24
25
26
2
28
29
30
3]
16. It is recognized by the parties hereto, that upon the consum-
mation of the sale contemplated by this contract, the Mutual
may dissolve and distribute its assets in kind to the share-
holders standing of record as of the date of dissolution;
in the event of such dissolution the rights and benefits
inuring to the benefit of the Mutual shall be enforceable
by the individual shareholders standing of record on the date
of dissolution of the Mutual or their respective successors
or assigns.
IN WITNESS WHEREOF, the Mutual has, by resolution of
Board of Directors adopted on the 30th day of August, 1957,
ordered its President to affix his signature for and in behalf of
the Mutual and further ordered its Secretary to attest to his
signature.
Carlsbad Mutual Water Company
(SEAL)By
Attest:
President j
Secretary
IN WITNESS WHEREOF, the City Council has by Resolution
No. 280 adopted by the City Council on the 30th day of August,
1957, caused its Mayor for and in behalf of the City of Carlsbad
to sign this contract and ordered his City Clerk to attest to
the same.
City of Carlsbad
BV/9?
Attest:
Mayor
City Clerk
-9-