HomeMy WebLinkAboutPOSEIDON RESOURCES CHANNELSIDE LP; 2012-03-14;EXHIBIT 2
A Reimbursement Agreement between
CITY OF CARLSBAD,
CARLSBAD MUNICIPAL WATER DISTRICT
and
POSEIDON RESOURCES (CHANNELSIDE) LP
In connection with its proposed 50 MGD seawater desalination facility and associated
conveyance pipeline (the "Proiect"). Poseidon Resources (Channelside) LP (f/k/a Poseidon Resources
Channelside, LLC) ("Poseidon'') has entered into: (i) a Water Purchase Agreement, dated as of
September 28, 2004, as amended (the "Carlsbad Water Purchase Agreement"), with the Carlsbad
Municipal Water District (the "District") and (ii) an Amended and Restated Development Agreement,
dated as of October 22, 2009 (the "Development Agreement"), with the City of Carlsbad (the "Citv" and
collectively with the District and Poseidon, the "Parties"). In connection with the Water Purchase
Agreement (the "CWA Water Purchase Agreement") to be negotiated between Poseidon and the San
Diego County Water Authority (the "Water Authoritv"). Poseidon agrees to reimburse the District for
certain expenses incurred by the District (the "Third Partv Consultant Costs") in connection with the
negotiation of the Carlsbad Water Purchase Agreement and the City would agree to use good faith
efforts to minimize the overall financial impact to Poseidon, provide reasonable assistance to Poseidon
in connection with securing timely approval of the CWA Water Purchase Agreement, and expeditiously
process Poseidon's requests for the review and approval ofthe Project improvement plans.
Reimbursement of Third Partv Costs
Poseidon shall reimburse the District for its reasonable Third Party Consultant Costs incurred in
connection with the Carlsbad Water Purchase Agreement in the amount of $560,000. Poseidon shall
reimburse the District for such Third Party Consultants costs within one year after the Project
commences commercial operation which shall be the date upon which Poseidon first sells any water to
the Water Authority or other person or entity. If Poseidon does not reimburse the District within one
year after the Project commences commercial operation as specified immediately above, then Poseidon
shall be responsible for interest at the rate of 10% per year on any unpaid balance after the one year
deadline and a 10% penalty on any unpaid balance after the one year deadline. Poseidon shall also be
responsible for all reasonable costs and attorney's fees if collection attempts or litigation is necessary.
Identification of Cost Savings
From and after the date of this Agreement, Poseidon and the City agree to work together in
good faith to explore areas which may result in savings of Project Costs by Poseidon in relation to the
construction and operation of the Project. The result of these good faith efforts shall not affect the
Third Party Consultant Costs repayment obligation addressed in the previous section.
Assistance bv the Citv and the District
The City and the District shall provide reasonable assistance to Poseidon in connection with
securing timely approval of the CWA Water Purchase Agreement, including attending and participating
in public hearings and meetings of the Water Authority, and providing Poseidon with documentation
and support which is reasonably requested by Poseidon and appropriate under the circumstances.
Plan Check and Inspection
The City and District acknowledge the need for timely completion of the Project and agrees to
expeditiously process Poseidon's requests for the review and approval of the Project improvement
plans. The City and District further acknowledge that the Engineering Procurement Construction ("EPC")
method of delivery of the Project requires City review and approval of the improvement plans for the
Project as they are completed to accommodate the concurrent design and construction of portions of
the Project. For purposes of obtaining written approval from the City, Poseidon shall submit the
completed improvement plans (and other information as may reasonably be requested by the City) to a
project coordinator appointed within the City to facilitate the expeditious processing of Poseidon's
requests for the review and approval the Project improvement plans.
The City shall work diligently to promptly approve or disapprove of any proposed
improvements, and shall not unreasonably withhold or condition its approval. The City shall make its
best efforts to provide written approval or disapproval ofthe proposed improvement plans within thirty
(30) days of submission of same by Poseidon. If the City disapproves a proposed improvement plan(s),
then the City's written notice of disapproval shall provide the Poseidon, in reasonable detail, the reasons
for such disapproval.
Termination of Water Purchase Agreement
By entering into this Agreement, Poseidon and the District hereby agree that the Carlsbad Water
Purchase Agreement shall terminate and no longer have any force and effect upon approval ofthe CWA
Water Purchase Agreement by the Water Authority Board of Directors.
This Agreement shall be governed by, and construed and interpreted in accordance with, the
laws of the State of California, without giving effect to any choice-of-law or conflicts-of-laws rule or
principle that would result in the application of any other laws. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which shall together constitute one
and the same instrument.
This Agreement shall bind and inure to Poseidon's assigns, successors or other persons or
entities that produce and sell water from the Project.
Dated: i4 _,2012 'CITY"
CITY OF CARLSBAD
Approved as to form By
Ronal^R. Ball '^^//S-.
City Attorney
Lisa Hildabrand, City Manager
ATTEST
By:_
CitVtlerk
(SEAL)
^^^^
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Approved as to form
"DISTRICT"
CARLSBAD MUNICIPAL WATER DISTRICT
02^
Ronald R. Ball 3/sy/2_,
General Counsel '
By
Lisa Hildabrand
Executive Director
Dated:
ATTEST:
^2012 "POSEIDON"
Poseidon Resources (Channelside) LP
By: \P^^
Name: ?^T<t*U AA.^aM2CA»>J
Title: 0»c.*i^ P/v«iAi^^T~