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HomeMy WebLinkAbout1987-11-10; City Council; 8961-2; Approval of Batiquitos Lagoon EnhancementCI7 OF CARLSBAD - AGEND BILL PEPT. MP TITLE" APPROVAL OF BATIQUITOS LAGOON 11/10/87 ' ENHANCEMENT PROJECT MEMORANDUM OF AGREEMENT RECOMMENDED ACTION: Adopt Resolution No. QeL°lo authorizing the Mayor to execute the six (6) party Memorandum of Agreement for the enhancement of Batiquitos Lagoon. ITEM EXPLANATION; Negotiations have been completed among the six (6) party Federal, State, and local agencies resulting in the attached Memorandum of Agreement for the enhancement of Batiquitos Lagoon. The Memorandum of Agreement sets forth the roles and responsibilities of the parties to the agreement with respect to compensating marine habitat losses resulting from future landfill projects within Los Angeles Harbor by enhancement of marine habitat within the City of Carlsbad's Batiquitos Lagoon. The Memorandum of Agreement describes the general goals and objectives of the enhancement project which include: - Acquisition of Lagoon property interests; Physical reconfiguration of the Lagoon through dredging and excavation as required to restore tidal inflows and aid in the maintenance of an open Lagoon mouth; Creation of new intertidal and subtidal habitats; Construction of sediment control facilities; - Management of a fresh water marsh to preserve habitat; Construction of California least tern nesting sites; - Disposal of dredged and excavated material by technically > feasible, environmentally acceptable, and cost effective OLU OocQ.O- O< oo methods; - Regular monitoring of the Lagoon to determine the effects of construction activities; and Provide necessary and economical long-term Lagoon maintenance. In accordance with Section 2 of the agreement, the City of Carlsbad is designated as the lead agency for securing all project permits and approvals and ensuring compliance with the California Environmental Quality Act (CEQA). The U. S. Army Page Two of Agenda Bill No. Corps of Engineers will be responsible for all environmental work under the National Environmental Policy Act (NEPA). Further, the City of Carlsbad is designated as the lead agency for project construction in consultation with the California Department of Fish and Game, the U. S. Fish and Wildlife Service, the National Marine Fisheries Service, and the U. S. Army Corps of Engineers. FISCAL IMPACT; Section 5 of the agreement provides for the City of Los Angeles, Board of Harbor Commissioners (Port of Los Angeles), and/or the Pacific and Texas Pipeline and Transportation Company (PACTEX) to provide all necessary project funding. In accordance with California Coastal Commission Permit No. 5-85-623-A, PACTEX shall initially deposit $15 million into an escrow account to be created by this agreement prior to the beginning of the PACTEX landfill project within Los Angeles Harbor. The Port of Los Angeles will administer the escrow account. Further, PACTEX is obligated to deposit up to an additional $5 million if required for the project. The Port of Los Angeles is obligated to provide additional project funds in excess of $20 million if required. In the event the PACTEX project to be constructed within Los Angeles Harbor is not undertaken, the Memorandum of Agreement provides the opportunity, but not the obligation, for the Port of Los Angeles to fund the Lagoon project in full. EXHIBIT; 1. Resolution No. ^3.^ O authorizing the Mayor to execute the six (6) party Memorandum of Agreement for the enhancement of Batiquitos Lagoon. 2. Memorandum of Agreement for the enhancement of Batiquitos Lagoon with agreement exhibits A through D. 1 RESOLUTION NO. 9290 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, AUTHORIZING THE MAYOR TO 3 EXECUTE THE SIX (6) PARTY MEMORANDUM OF AGREE- MENT FOR THE ENHANCEMENT OF BATIQUITOS LAGOON 4 5 WHEREAS, negotiations have been completed among the six (6) 6 party Federal, State and local agencies resulting in a 7 Memorandum of Agreement for the enhancement of Batiquitos 8 Lagoon; and 9 WHEREAS, the City Council of the City of Carlsbad 10 determines it to be in the public interest to approve said 11 agreement; 12 NOW, THEREFORE, BE IT RESOLVED by the City Council of the 13 City of Carlsbad, California, as follows: 14 i. That the above recitations are true and correct. 15 2. That the City Council of the City of Carlsbad hereby 16 authorizes and directs the Mayor to execute said agreement. 17 PASSED, APPROVED AND ADOPTED at a regular meeting of the 18 Carlsbad City Council held on the 10th day of November , 1® 1987, by the following vote, to wit: 20 AYES: Council Members Lewis, Kulchin, Pettine, Mamaux and Larson 21 NOES: None 22 ABSENT: None 23 24 £LAUDE A. LEWIS/ Mayor 25 ATTEST: 26 ALETHA L. RAUTENKRANZ, City) Clerk 28 (SEAL) 3 AGREEMENT AMONGTHE CITY OF LOS ANGELES, THE CITY OF CARLSBAD, THE CALIFORNIA DEPARTMENT OF FISH AND GAME, THE CALIFORNIA STATE LANDS COMMISSION, THE NATIONAL MARINE FISHERIES SERVICE, AND THE UNITED STATES FISH AND WILDLIFE SERVICE. TO ESTABLISH A PROJECT FOR COMPENSATION OF MARINE HABITAT LOSSES INCURRED BY-PORT DEVELOPMENT LANDFILLS WITHIN THE HARBOR DISTRICT OF THE CITY OF LOS ANGELES BY MARINE HABITAT ENHANCEMENT AT BATIQUITOS LAGOON THIS AGREEMENT is entered into by the UNITED STATES OF AMERICA, acting by and through the FISH AND WILDLIFE SERVICE, UNITED STATES DEPARTMENT OF THE INTERIOR ("FWS"), and the NATIONAL MARINE FISHERIES SERVICE, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, UNITED STATES DEPARTMENT OF COMMERCE ("NMFS"); the STATE OF CALIFORNIA, acting by and through the DEPARTMENT OF FISH AND GAME ("CDFG") and the STATE LANDS COMMISSION ("SLC"); the CITY OF CARLSBAD ("CARLSBAD"); and the CITY OF LOS ANGELES, acting by and through the BOARD OF HARBOR COMMISSIONERS ("BOARD"). I. WHEREAS, the BOARD is authorized to foster the orderly and necessary development of the Port of Los Angeles, consistent with the public trust for navigation, commerce, and fisheries including the creation of new land in the Harbor District of the City of Los Angeles ("Harbor District") by landfill; and II. WHEREAS, the FWS and the CDFG have as their primary mandates, in this matter, the conservation, protection, and enhancement of marine fish and migratory birds and their habitats, including the planning of biological loss avoidance, minimization, and compensation; and the NMFS has as its primary mandate, the conservation, protection, and enhancement of marine fisheries resources, including the planning of biological loss avoidance, minimization, and compensation; and III. WHEREAS, port development landfills are subject to State regulation pursuant to the California Coastal Act and Federal regulation pursuant to the Rivers and Harbors Act and the Clean Water Act; and IV. WHEREAS, the BOARD and its tenant, the Pacific & Texas Pipeline & Transportation Company ("Pacific Texas") contemplate an imminent harbor development within the Harbor District, consisting of a landfill totalling approximately 106 acres at an average elevation - 1 - of +20 feet MLLW (which is equivalent to 110 acres above mean high water) as permitted by Corps of Engineers Permit No. 85-97 and California Coastal Commission Permit No. 5-85-623-A (the "Pacific Texas Landfill" or "Landfill"); and V. WHEREAS, the Pacific Texas Landfill and other harbor landfills will permanently eliminate marine fish and wildlife habitat values that FWS, NMFS and CDFG recommend be compensated by creation of equivalent marine fish and wildlife habitat values maintained on a permanent basis; and VI. WHEREAS, the parties intend that habitat loss compensation for the impacts on the marine environment be provided in advance of or concurrently with the habitat losses predicted from harbor landfills; and VII. WHEREAS, the parties concur that creation of appropriate fish and wildlife habitat values in advance of or concurrently with the loss requires a procedure whereby habitat losses which will be incurred by specified landfill development in the Harbor District, including the Pacific Texas Landfill, could be charged against the habitat credits; and VIII. WHEREAS, the parties concur that creation of new habitat value within the Harbor District to offset large-scale habitat losses within the Harbor District is infeasible; and IX. WHEREAS, since shallow, estuarine coastal embayment habitat in Southern California, with its relatively high value to marine fishes and migratory birds, has been reduced in area at a greater rate than that of deep water habitat, NMFS, CDFG, and FWS judge that compensation for adverse impacts upon the marine ecosystem should emphasize the creation of shallow water, coastal embayment habitat; and X. WHEREAS, FWS, NMFS, CDFG, CARLSBAD, and BOARD have identified Batiquitos Lagoon, within the City of Carlsbad, County of San Diego, California (the "Lagoon"), as an appropriate location for creation of habitat values to offset the habitat losses within the Harbor District; and XI. WHEREAS, pursuant to California Public Resources Code Section 31000 et seq., the State Coastal Conservancy has described a proposed project for the physical alteration of the Lagoon to create fish and wildlife habitat by restoring tidal influence, recontouring the Lagoon bottom, controlling causes of sedimentation through structural facilities, maintaining the Lagoon as altered, and other actions (the "Lagoon Enhancement Project" or "Project") as generally and conceptually described in the draft Batiquitos Lagoon Enhancement Plan (the "Enhancement Plan" or "Plan") and which are more specifically described in the excerpted sections of the Plan which is attached hereto as Exhibit "A" and incorporated herein by this reference; and - 2 - XII. WHEREAS, CARLSBAD Is the local government with jurisdiction over the Lagoon and much of its watershed area, and desires to assist in expediting the enhancement of the Lagoon; and XIII. WHEREAS, the parties have determined that (1) CARLSBAD is the most appropriate agency to design and construct the Lagoon Enhancement Project, and to obtain the necessary property rights for construction and maintenance of the Project, (2) SLC is the most appropriate agency to hold the necessary property rights for construction and maintenance of the Project, and (3) CDF6 is the most appropriate agency to assume responsibility for management, operation, maintenance and monitoring of the Project upon completion of construction. NOW, THEREFORE, IT IS AGREED THAT: 1. Short Description of Project. The Project, understood to be the Preferred Alternative of the Enhancement Plan if undertaken after completion of environmental analysis pursuant to Sections 6(e) and 13 below, shall be designed, constructed, operated and maintained in accordance with Exhibit A. The Project, as defined herein, includes the environmental documentation, design, permit applications, property acquisition, construction, monitoring and maintenance activities necessary to implement the Plan, including: (1) the acquisition of property interests in the Lagoon (as described in Section 3, below); (2) the physical reconfiguration of the Lagoon and Lagoon bottom through dredging and excavation as required to restore tidal inflows and aid in maintaining an open Lagoon mouth; (3) creation of new intertidal and subtidal habitats (available for marine habitat loss compensation as set forth in Section 12 below; (4) construction of sediment control facilities including protection of the riparian habitat in Encinitas Creek drainage in order to control sediment in the Lagoon (5) provision of a managed freshwater marsh to preserve like habitat; (6) construction of California least tern nesting sites, including fences, to preserve like habitat; (7) disposal of dredged and excavated material by technically feasible, environmentally acceptable and cost-effective methods; (8) monitoring activities to determine the condition of the constructed Lagoon on a regular basis, and (9) necessary maintenance activities. The Project, as defined herein, does not include portions of the Enhancement Plan which recommend nonstructural measures for sediment control or which describe construction or maintenance of public access facilities (bike path, trails, parking, interpretive facilities, viewpoints, bridge crossing, etc.); provided however, that these public access facilities will be analyzed in the environmental documentation for the Project. It is estimated that the Project will create the following acreages of habitat type within the 596 acre wetlands area of the Lagoon: subtidal habitat (-2.5 feet to -8.0 feet MSL), 220 acres; unvegetated intertidal habitat (-2.5 feet to +2.5 feet MSL), 170 acres; salt/brackish marsh, 139 acres; freshwater marsh, 33 acres; and least tern nesting sites, 34 acres. Suitable sandy material dredged from the Lagoon to create said acreages shall be used to replenish beaches in the City of Carlsbad adjacent to the Lagoon property, if permitted and - 3 - economically feasible, and as will be described in Project's environmental documentation and design work. 2. Lead Agency for CEQA Compliance and Permits. CARLSBAD shall be the lead agency for compl i ance wi th the California Environmental Quality Act ("CEQA") and shall be responsible for obtaining all permits and approvals necessary for Project's construction. In accordance with this Agreement and the provisions of Exhibit "B," attached hereto, BOARD will provide necessary resources to allow CARLSBAD to meet said obligations. FWS, NMFS, CDFG, SLC, and BOARD shall cooperate with CARLSBAD in supporting applications for such permits and approvals. CEQA work shall be coordinated with the Army Corps of Engineers (hereinafter "Corps"), the lead agency for the environmental work for the Project under the National Environmental Policy Act ("NEPA"). 3. Property Acquisition. CARLSBAD shall be responsible for obtaining fee title or permanent easements sufficient to allow CARLSBAD to enter the property and conduct whatever surveys and other actions necessary to accomplish construction of the Project and to assure maintenance and monitoring of the Lagoon as fish and wildlife habitat in perpetuity as described in the Enhancement Plan. Such land use constraints shall run with the title of the land. Physical construction of the Lagoon Enhancement Project shall not commence until SLC, CDFG and BOARD have determined that the appropriate land interest ("Land Interest") has been obtained by CARLSBAD and transferred to the SLC; provided however, that if BOARD authorizes construction to begin after an order of immediate possession has been obtained, then BOARD and CARLSBAD agree not to abandon the condemnation action and the transfer of the Land Interest to SLC will be finalized on completion of the condemnation action. If CARLSBAD acquires the necessary Land Interest, the cost of such acquisition shall first be approved by BOARD. Any Land Interest acquired and capital improvements constructed thereon as well as all other capital improvements constructed as part of the Lagoon Enhancement Project shall be held in trust for the People of California as Public Trust assets without regard to the source of the monies used for their acquisition or construction, and legal title to such assets shall become vested in the SLC. The parties acknowledge it is their intent that the Project will provide, in perpetuity, an enhanced fish and wildlife habitat in Batiquitos Lagoon. The SLC shall issue to CDFG, for the maximum period allowed by law, a lease over the property covered by the Land Interest it holds to allow management and continued maintenance of Project. CDFG shall provide CARLSBAD with a license to enter the property covered by the Land Interest in order to carryout construction hereunder. However, if CARLSBAD is not able to acquire the Land Interest by a purchase or dedication in a timely way, the BOARD may authorize construction to begin if an order of immediate possession is obtained after filing of the appropriate condemnation - 4 - 7 action; provided however, if the BOARD determines that significant issues exist in the condemnation proceeding which could result in an award in excess of the amount BOARD is willing to approve for such Land Interest, then construction will not commence until the issues are resolved to the satisfaction of BOARD. In that event the parties hereto agree to consider extending the time limits for the commencement of construction in accordance with the provisions of Section 6(b) by the time required to achieve such resolution. If the BOARD does not elect to proceed because of anticipated costs, the project shall be deemed cancelled pursuant to Section 14(b) and the provisions of Section 15 shall apply. 4. Lead Agency for Project Construction. Design and construction of the Project, including the preparation of any additional sediment sampling, appropriate archaeological survey, environmental documentation, design and engineering services and construction, shall be done by CARLSBAD in consultation with CDFG, FWS, NMFS and Corps, shall be in substantial conformance with the Enhancement Plan, and shall be supported as further provided in this Agreement and in Exhibit "B", attached hereto, by the BOARD. 5. Project Funding. (a) BOARD and/or Pacific Texas shall provide necessary funds for design, construction and maintenance of the Project including: (1) sediment sampling, appropriate archaeologic survey, environmental documentation, preliminary design plans, necessary engineering studies and preliminary cost estimates, (collectively referred to as "Preliminary Design"); said Preliminary Design shall be in sufficient detail to: clearly demonstrate the feasibility of, and provide an estimate of the costs of constructing Project; provide information for preparation of the necessary environmental documents and provide specific direction for preparation of final plans and specifications necessary for Project's construction and maintenance; (2) required activities for obtaining all permits and approvals necessary for construction of the Project (collectively referred to as "Permits and Approvals"); (3) required activities for obtaining the Land Interests; (4) Project final design (plans and specifications), construction and construction management; and (5) monitoring and maintenance of the constructed Project as described in Section 10, below. It is understood that the funding obligations of Pacific Texas under this Agreement shall be fully satisfied by deposit of up to $20 million into the Escrow Account pursuant to Section 9(a) below. In accordance with California Coastal Commission Permit No. 5-85-623-A, Pacific Texas shall initially deposit $15 million into said Escrow Account. If Project Manager, as described in Exhibit B, determines that additional funds are necessary, Pacific Texas shall deposit up to an additional $5 million. BOARD shall be obligated to provide additional funds in excess of $20 million required under this Agreement, including providing additional funds into the Escrow - 5 - r Account, subject to its right to elect not to proceed pursuant to Section 6(c), 6(e) and 6(g), below. If BOARD elects not to proceed pursuant to one of these sections, its funding obligations hereunder shall be terminated. (b) If the Pacific Texas Landfill is not constructed in the Harbor District, BOARD shall have the right, but not the obligation, to proceed with the Project pursuant to this Agreement. BOARD will fund any remaining necessary work out of the Harbor Revenue Fund in accordance with Section 9(f). In such event, the Escrow Account described herein and in Section 9(a) shall not be required. 6. Project Schedule. (a) All parties hereto shall perform their obligations hereunder with all due speed so as to facilitate progress of the Project through Project's Construction Certification pursuant to subsection (k), below. (b) Implementation of the Project shall be undertaken in an expeditious manner so that Construction Certification pursuant to subsection (k), below, occurs not later than four (4) years from the effective date of this Agreement. It is further the intent of the parties that physical construction of the Project shall begin no later than thirty-six (36) months from the effective date of this Agreement as defined in Section 16, below. If construction cannot begin within said time, the Project shall be deemed cancelled and the provisions of Section 15, below, shall apply, unless CDFG, FWS, and NMFS agree in writing to an extension of this time limit. If construction cannot begin within said time, CDFG, FWS and NMFS agree to consider unforeseen events beyond the control of CARLSBAD including, but not limited to, permits, land interests, CDFG, FWS and NMFS review, etc. in granting such written extension. (c) The scope of work of the consultant undertaking the Preliminary Design will require the consultant to provide CARLSBAD, BOARD, CDFG, FWS, SLC and NMFS with an estimate of the cost of construction for the Project and with an estimate of the expected annual costs of maintaining the Lagoon as described in Section 10(e), below. Within forty-five (45) days of receipt of these estimates, BOARD shall determine and notify all other parties hereto in writing whether it elects to proceed with the remaining funding obligations pursuant to Sections 5, 9 and 10. It is understood that the grounds for not electing to proceed include: an unreasonably high estimate of Project's construction costs; a determination that annual maintenance costs will exceed the limit set in Section 10 (b) below; an engineering determination that the Lagoon cannot be physically constructed to permanently create tidal and intertidal habitat substantially as described in the Enhancement Plan; a determination that the necessary Property Interests cannot be obtained within a reasonable time or for a reasonable sum of money, if any; a determination that the Lagoon is not suited for creation and - 6 - maintenance of sufficient habitat value units to, at a minimum, mitigate the Pacific Texas Landfill; or a change in state law which prevents the City of Los Angeles from using excess habitat units created by the project to mitigate future Port projects. If BOARD does not elect to proceed, the Project shall be deemed cancelled and the provisions of Section 15, below, shall apply. (d) Upon completion of the Preliminary Design and prior to initiating preparation of the Environmental Impact Report/Statement, CARLSBAD shall submit the Preliminary Design for the review and/or approval of BOARD, CDFG, FWS, SLC, NMFS and Corps. The scope of this review shall be limited to the consistency of the Preliminary Design with the Enhancement Plan. CDFG, FWS and NMFS shall have forty-five (45) days after receipt of the Preliminary Design to review the preliminary design plans and to either approve them or to submit written comments to CARLSBAD. Failure by any of these agencies to respond within this period shall result in the forfeiture of such party's review rights under this subsection and shall constitute approval of the nonresponding agency. CDFG, FWS and NMFS shall each approve the preliminary design plans if they substantially conform, as described in Section 20, below, to the Enhancement Plan, and no agency's approval shall be unreasonably withheld. If unqualified approvals are not received from each of these agencies, CARLSBAD, in consultation with the BOARD shall modify the Preliminary Design to the satisfaction of all these agencies before proceeding further with the Project. (e) If BOARD has notified all other parties of its election to proceed with the Project pursuant to subsection (c) above, and upon approval of the Preliminary Design by CDFG, FWS and NMFS pursuant to subsection (d) above, CARLSBAD shall proceed with preparation of the Draft and Final Environmental Impact Report and Environmental Impact Statement. Within forty-five (45) days of certification of the Final Environmental Impact Report or approval of the Final Environmental Impact Statement, whichever occurs later, BOARD shall determine and notify all other parties hereto in writing whether it elects to proceed with the remaining funding obligations pursuant to Sections 5, 9 and 10. Grounds for not electing to proceed are among those set forth in Section 6(c). If BOARD does not elect to proceed, the Project shall be deemed cancelled and the provisions of Section 15, below, shall apply. (f) If BOARD has notified all other parties of its election to proceed with the Project pursuant to this subsection, CARLSBAD shall grant project approval and, provided that all requirements of CEQA have first been satisfied, shall proceed with preparation of construction plans and specifications, and a bid package for construction of the Project (the "Final Design"), based upon the preferred alternative described in the Final EIR/EIS. Upon completion of the Final Design and prior to advertisement for bids CARLSBAD shall furnish BOARD, FWS, NMFS, SLC and CDFG with a copy of the bid package for the construction of the Project, including all - 7 - engineering drawings for review and/or approval. The scope of this review shall be limited to the consistency of the Final Design with the certified Final Environmental Impact Report and/or approved Final Environmental Impact Statement. CDFG, FWS and NMFS shall have forty-five (45) days after receipt of the bid package to either approve it or to submit written comments to CARLSBAD. Failure by any of these agencies to respond within this period shall result in forfeiture of such party's review rights under this subsection and shall constitute approval of the nonresponding agency. COFG, FWS and NMFS shall each approve the Final Design if it substantially conforms, as described in Section 20, below, to the approved project described above, and no agency's approval shall be unreasonably withheld. If unqualified approvals are not received from each of these agencies, CARLSBAD, in consultation with BOARD shall modify the Final Design to the satisfaction of all these agencies before proceeding further with the Project. (g) Upon receipt of construction bids, CARLSBAD shall immediately forward copies thereof to BOARD, CDFG, SLC, FWS and NMFS. Within forty-five (45) days of receipt of the bids, BOARD shall determine and notify all other parties hereto in writing whether it elects to proceed with the remaining funding obligations pursuant to Sections 5, 9 and 10. The grounds for not electing to proceed are understood to be among those given in subsection 6 (c). If BOARD considers the lowest bid too high, CARLSBAD agrees to rebid the project if BOARD so desires. If BOARD does not elect to proceed, the Project shall be deemed cancelled and the provisions of Section 15, below, shall apply. (h) During Project's construction, CARLSBAD shall provide all parties with access to the Project site and information on progress of the various construction activities in accordance with Section 8. Project Manager shall further provide all parties preliminary notification in writing that construction has been completed (the "Preliminary Notification"). Upon receipt of such Preliminary Notification, BOARD, CDFG, FWS and NMFS and shall have forty-five (45) days to inspect the Project site and to notify the Project Manager in writing of each party's preliminary determination (the "Preliminary Determination") as to whether the Project's construction has been completed in accordance with all permits obtained for the Project and with the approved Final Design. Failure by any of the above-named parties to respond within this period shall result in a forfeiture of that party's review rights under this subsection and shall constitute an affirmative Preliminary Determination of the nonresponding agency. Each above-named agency shall make its Preliminary Determination in the affirmative if the Project's construction substantially conforms to the approved Final Design, and no agency's approval shall be unreasonably withheld. If the Preliminary Determination of any above-named party is not in the unqualified affirmative, the reasons therefor shall be stated with particularity. Upon expiration of this forty-five (45) day period, CARLSBAD shall decide whether to withdraw the Preliminary - 3 - Notification or to provide all parties with final notification in writing that construction of the Project is complete (the "Final Notification"). (i) Upon receipt of Final Notification, a qualified party satisfactory to CDFG, FWS and NMFS shall undertake a study and prepare a written report of the actual acres of the Lagoon which are inundated with water at various tidal levels (MHHW, MHW, MLW and MLLW) over one (1) full lunar cycle (the "Tidal Monitoring Study"). Said report shall be provided to all parties and Corps within sixty (60) days after Final-Notification. Funding for conduct of the Tidal Monitoring Study shall be from the Escrow Account described in Section 9(a), below. (j) Upon receipt of the Tidal Monitoring Study, any recalculation of habitat units pursuant to Section 12(e), below, shal 1 be performed. (k) Within forty-five (45) days of the receipt of the Tidal Monitoring Study and based on any such recalculation, CARLSBAD, BOARD, CDFG, FWS and NMFS shall each make a final determination (the "Final Determination") as to whether the Project's construction has been completed in accordance with all permits obtained for the Project and the approved Final Design, and if the Final Determination is affirmative, shall certify this determination to all other parties and Corps. Failure by any of the above-named parties to make a Final Determination within this period shall result in forfeiture of that party's review rights under this subsection and shall constitute an affirmative Final Determination of the nonresponding agency. Each above-named party shall make its Final Determination in the affirmative if the Project's construction substantially conforms to the approved Final Design, and no agency's approval shall be unreasonably withheld. Construction of the Project shall be deemed complete upon said certification by each of the above-named parties. (The certification of all these parties is hereinafter collectively referred to as the "Construction Certification.") 7. Linkage with Harbor District Landfills and Release of Claims. (a) In accordance with California Coastal Commission Permit No. 5-85-623-A no fill shall commence for the Pacific Texas Landfill until Pacific Texas has deposited $15 million into the Escrow Account pursuant to Section 9(a), below. It is understood that under the terms of said permit, upon deposit of up to $20 million into the Escrow Account, Pacific Texas shall have no further obligation to mitigate for the loss of fish and wildlife habitat values caused by the Pacific Texas Landfill except as provided in Corps Permit No. 85-97. It is further understood that under the terms of the escrow instructions to be prepared in accordance with said Coastal Commission Permit, in return for this limitation of mitigation responsibilities, Pacific Texas will be required to forever release - 9 - and discharge all parties to this Agreement, and their officers, agents and employees, from any claims, demands, damages or judgments arising out of implementation of or failure to implement any mitigation project for the Pacific Texas Landfill, including, without limiting the above, any claims for mismanagement, misappropriation or misuse of said Pacific Texas deposit. (b) Except for the Pacific Texas Landfill, and in accordance with Corps Permit No. 85-97. Construction Certification (pursuant to Section 6(k), above) or certification of completion of another project mitigating the effects of the Pacific Texas Landfill (pursuant to Section 15, below) is a prerequisite to any filling in the "outer harbor area" of the Harbor District by BOARD, or any of its tenants. Further, in accordance with said permit, if said certification has not been made within four (4) years of initiation of the Pacific Texas Landfill's construction, BOARD, or any of its tenants, shall not commence any inner harbor fills requiring off-site mitigation of biological impacts until mitigation for such inner harbor fills has been accomplished. 8. Construction Monitoring. CDFG, FWS and NMFS, at their cost, shall have the right to monitor construction of the Project, through their staffs and/or through contract with an engineering consultant, to ascertain whether construction is proceeding in accordance with the approved Final Design. Each party shall have the right to visit the Project site, as needed, and shall be furnished with all needed information by the Project Manager, to carry out effective monitoring. In the event that construction is not proceeding in substantial conformance with the Final Design, or cannot so proceed due to onsite conditions or other reasons, CARLSBAD shall immediately notify all parties to this Agreement. At CARLSBAD'S request, BOARD, CDFG, FWS and NMFS agree to participate in discussions regarding appropriate steps to remedy the situation. 9. Establishment of Accounts and Use of Funds. The funds described in Section 5 shall be deposited and administered in the fol lowing matter: (a) Escrow Account. Prior to start of construction of the Pacific Texas Landfill, Pacific Texas shall be required to deposit $15 million (the "Pacific Texas Deposit") into an escrow account (the "Escrow Account") which shall be established within sixty-(£04 days of the effective date of this Agreement by BOARD for the purpose of holding these funds and disbursing these funds consistent with this Agreement. The escrow instructions for the Escrow Account, prepared by the Executive Director of the California Coastal Commission in accordance with Coastal Permit No. 5-85-623-A, shall be reviewed and approved by CARLSBAD, BOARD and Pacific Texas in writing prior to establishment of the Escrow Account. BOARD shall be the trustee for the Escrow Account for the benefit of the parties hereto. Under the escrow instructions, BOARD shall be authorized to request - 10 - 13 disbursement of funds in the Escrow Account: (i) for costs incurred by CARLSBAD or BOARD in preparing Preliminary Designs, in preparing environmental documents, in obtaining Permits and Approvals, in obtaining title to the Land Interests and in carrying out the Final Design, construction and the Tidal Monitoring Study; (ii) for acquisition of the annuity, described in Section 10(b), below; and (iii) for transfer into the Investment Account, described in Section 10(c), below. The escrow instructions shall provide that the escrow agent shall be responsible for notifying all parties hereto of any deposit into or disbursement from the Escrow Account. Project Manager may require Pacific-Texas to deposit up to an additional $5 million into the Escrow Account in accordance with Section 5 herein. (b) Funds Advanced by BOARD. CARLSBAD, after receiving prior BOARD approval, is expending funds for the purpose of preparing the Preliminary Design prior to the time of the Pacific Texas Deposit. Under the provisions of a separate reimbursement agreement, BOARD is advancing funds to reimburse these expenditures. BOARD may withdraw funds from the Escrow Account after the Pacific Texas deposit is made to reimburse itself for such advanced funds. (c) Return of Funds to Pacific Texas. If the Pacific Texas Deposit is made and thereafter Pacific Texas and BOARD formally abandon plans to undertake the Pacific Texas Landfill , any unexpended portion of the Pacific Texas Deposit shall be returned to Pacific Texas, reserving therefrom any funds needed to satisfy existing and non- cancellable monetary obligations of the parties entered into in expectation of reimbursement with funds from the Pacific Texas Deposit. (d) Interest. The balance of funds in the Escrow Account shall be invested in a prudent manner so as to earn the maximum return subject to the paramount goal of preservation of principal. All income accrued through such investment shall be distributed in the same manner as the principal. (e) Records/Audits. All records, invoices, vouchers and ledgers, correspondence and all written documents of any kind developed during the course of the Project which relate to the expenditure by any party of BOARD or Pacific Texas funds on the Project shall be retained for a period of four (4) years following Construction Certification and shall be available, to the extent prov-ided under applicable law (such as the Public Records Act, California Government Section 6250 et seq.), for audit by CDF6, FWS, NMFS, SLC, CARLSBAD and BOARD. Nothing in this Section shall be deemed a waiver of the attorney-client or other applicable privileges of any party. (f) Harbor Revenue Fund. The parties to this Agreement acknowledge that all monies payable by BOARD shall be paid solely out of the Harbor Revenue Fund and not the general fund of the City of Los Angeles. - 11 - (g) No Obligation of Other Funds. Nothing herein shall be construed to obligate CARLSBAD, SLC, FWS, NMFS or CDF6, except as specifically provided herein, to expend its own funds, or any other public funds except for nonreimbursed staff administrative time and expenses. 10. Project Maintenance Responsibilities. Upon Construction Certification, CDFG agrees to assume responsibility for monitoring and maintenance of the Project consistent with the Final Determination for the primary purpose of preservation in perpetuity of fish, wildlife and wetland habitat values, to the extent funds are available pursuant to subsections (a) and (b), below. CDFG may contract out these responsibilities and, upon the approval of the parties hereto, may assign these responsibilities. CARLSBAD agrees that it shall use its best efforts, in enforcement of local environmental and planning ordinances with respect to property owners within its jurisdiction, and in working with other local jurisdictions, to minimize the amount of sediment which may be transported to the Lagoon from upstream runoff within the Lagoon's watershed area. (a) Maintenance Account. Within sixty (60) days after Construction Certification, BOARD and CDFG shall establish a separate escrow account (the "Maintenance Account") with an escrow agent chosen by CDFG. The Maintenance Account shall be funded as provided in subsections (b) and (c), below. CDFG shall have the exclusive authority to withdraw funds from the Maintenance Account. All funds in the Maintenance Account, including any accrued interest thereon, shall be used solely for the purposes set forth in subsection (e), below. (b) Annuity. Within sixty (60) days after Construction Certification, CDFG and BOARD shall determine the amount of funds necessary to establish an annuity or equivalent investment (the "Annuity") which will provide a guaranteed annuity paying the future equivalent of Two Hundred Thousand Dollars ($200,000) per year for thirty (30) years based on 1987 dollars at the effective date of this Agreement in accordance with the method described in Exhibit D attached hereto and made a part hereof. The first disbursement into the Maintenance Account is to be made immediately upon establishment of the Annuity. All proceeds from the Annuity shall be deposited into the Maintenance Account. The payments from this Annuity shall be used by CDFG to cover the maintenance costs of the Project as described in Section 10(e) for the first thirty (30) years following Construction Certification. BOARD shall transfer the amount determined to be needed for this Annuity, in accordance with the provisions of Exhibit D, from the Escrow Account established in accordance with Section 5(a), provided this amount shall not exceed the sum of Four Million, Eight Hundred and Fifty-Two Thousand, Five Hundred Dollars ($4,852,500) given that Construction Certification occurs either in or prior to calendar year 1991. If Construction Certification occurs after 1991, the provisions of 2(a) of Exhibit D - 12 - shall control. BOARD shall be obligated to contribute to the Annuity only after the amount deposited by Pacific Texas into the Escrow Account, excluding interest, has reached $20 million. (c) Investment Account. Within sixty (60) days after Construction Certification, BOARD shall establish an investment account (the "Investment Account") in an amount to be determined in accordance with the provisions of Exhibit D provided this amount shall not exceed the sum of Three Million, Three Hundred and Eighty-Six Thousand Dollars ($3,386,000) given that Construction Certification occurs either-in or prior to calendar year 1991. If Construction Certification occurs after 1991, the provisions of 2(a) of Exhibit D shall control. BOARD shall transfer the amount determined to be needed for the Investment Account from the Escrow Account established in accordance with Section 5(a). BOARD shall be obligated to contribute to the Investment Account only after the amount deposited by Pacific Texas into the Escrow Account, excluding interest, has reached $20 million. The Investment Account shall be maintained for thirty (30) years following Construction Certification by BOARD to maximize the return to this Investment Account so that a fund is created to maintain the Project after the first thirty (30) years. At the end of this thirty (30) year period, all funds in the Investment Account shall be transferred into the Maintenance Account. Within sixty (60) days thereafter, BOARD, FWS, NMFS, CDFG, SLC and CARLSBAD shall meet for the purpose of determining the adequacy of the Maintenance Account balance to generate sufficient income to fund the costs of maintaining the Project as certified pursuant to Section 6(k), above. If it is determined, based on the amount remaining in the Maintenance Account following the first thirty (30) years plus the amount transferred from the Investment Account, is in excess of that required for continuing maintenance of the Project at the future equivalent of Two Hundred Thousand Dollars per year, a lump sum amount shall be refunded to BOARD to be determined in accordance with the provisions of Exhibit D. (d) No Further Obligations and Return of Funds. BOARD shall not be obligated to deposit any funds beyond those described in subsections (b) and (c), above, to maintain the Lagoon. Any funds remaining in the Escrow Account upon funding of the Annuity and the Investment Account shall be transferred to BOARD. (e) Allowable Maintenance Costs. It is agreed that any funds in the Maintenance Account shall be used only to pay all costs associated with removal of accumulated sediment from the Project's sediment basins, redredging of the Lagoon and Lagoon mouth, maintenance of the freshwater marsh and appurtenances, preparation of the least tern nesting sites, maintenance of all other physical Project features as described in Section 1, and monitoring activities, and direct support costs, to assure that Project's habitat values remain as anticipated at the time of Construction Certification. Any activities carried out beyond these standards shall be the responsibility of the party carrying them out. - 13 - (f) Records. CDFG shall maintain records showing the use of funds from the Maintenance Account. If CDFG designated representatives or personnel work at several locations, the funds provided pursuant to this Agreement shall be used only for that proportion of the time such personnel or representatives work at the Lagoon and then only to the extent described in subsection (d), above. CDFG shall maintain time records showing hours spent at the Lagoon site and activities carried out sufficient to support use of the funds from the Maintenance Account. CDFG shall monthly maintain records of all expenses at the Lagoon. All parties to this Agreement, to the extent provided under the Public Records Act, California Government Code Section 6250 et seq., and subject to the attorney-client or other applicable privileges, shall have the right to audit these maintenance records and all invoices, vouchers, ledgers, supporting documentation and correspondence maintained or available to CDFG for the purpose of assuring that CDFG is properly expending the funds. 11. No Interference with Endangered Species. CARLSBAD agrees that construction of the Project wi11 be scheduled and conducted so as not to incur significant habitat loss or degradation elsewhere within the Lagoon and so as not to adversely impact any State or Federal endangered species which utilizes the Lagoon area, including the California Least Tern, the California Brown Pelican, Least Bell's Vireo or Belding's Savannah Sparrow. Recommendations offered in any subsequent Biological Opinion on consultation report prepared pursuant to Section 7 of the Enda'ngered Species Act (16 U.S.C. Sec. 1531 et seq.) or the California Endangered Species Act (California Fish and Game Code Section 2050 et seq.) shall be implemented as required by permit(s) for construction of Project. 12. Use of Mitigation Credits Created by Project. (a) This Project is being carried out in part to mitigate for the Pacific Texas Landfill. (b) The parties to this Agreement acknowledge that the habitat values gained from the Lagoon Enhancement Project will be used to offset the habitat values lost from the Pacific Texas Landfill and will be used to offset other landfill projects which may be permitted in the future. (c) Construction and maintenance of the Lagoon Enhancement Project will completely mitigate the Pacific Texas Landfill and create excess habitat units sufficient to compensate for an additional 325 acres of landfill in waters deeper than -20 feet MLLW within the Harbor District ("Excess Habitat Units"), in accordance with provisions of Exhibit C. Upon Construction Certification, these Excess Habitat Units (the exact amount will be determined after Project construction in accordance with subsection (e) below) will be credited to the BOARD and may be used to offset fish and wildlife habitat losses which may result from other landfill projects in the - 14 - )7 Harbor District provided such projects receive all then applicable Federal and State permits. FWS, CDFG and NMFS would have no objection to use the Excess Habitat Units to offset anticipated outer harbor landfill projects in waters -20 feet MLLW or deeper which are associated with development or new terminal facilities for general cargo, bulk and neobulk cargo and necessary supporting infrastructure (streets, rail access, utilities, pipelines, etc.). FWS, CDFG, NMFS and BOARD agree that for these landfills the filling, in a manner similar to the Pacific Texas landfill, of each one acre of habitat in waters -20 feet MLLW or deeper will be offset completely by each one acre of Excess Habitat Unit-gained as shown in Exhibit C, Table 5, subject to permit conditions which may be imposed on such future landfill projects by regulatory agencies. For dredging or landfills created within the Harbor District in waters shallower than -20 feet MLLW, including areas which may be classified as rocky dike habitat, or for land uses other than those given above, the application of excess Habitat Units must be reevaluated and approved by FWS, CDFG, NMFS, and BOARD. For dredging or landfills in waters shallower than -20 feet MLLW, said parties agree to evaluate the habitat loss in a manner similar to the procedure followed in Exhibit C. BOARD agrees that before creating any landfills, it will obtain all permits required by applicable laws, including but not limited to the permits required by the California Coastal Act, the Rivers and Harbors Act and the Clean Water Act, and agrees to design such fills in accordance with the requirements of such laws. Any review or subsequent approvals the FWS, NMFS or CDFG have with regard to the use of Excess Habitat Units for such future fills shall be made in an official and public manner, during completion of the environmental review process as may be required under the California Environmental Quality Act and National Environmental Policy Act, or the regulatory process as may be required under the California Coastal Act, the Rivers and Harbors Act, the Clean Water Act, the United States Fish and Wildlife Coordination Acts, the United States and State Endangered Species Acts and any other applicable laws. (d) No Excess Habitat Units may be used for any purpose until the Construction Certification has been made. (e) In the event of variations between the Final Determination and actual acres of each habitat type created by the Project and existing at the Lagoon at the time of Construction Certification, FWS, NMFS, CDFG and BOARD will recalculate the habitat units—in_a. manner similar to the procedure followed in Exhibit C and the number of Excess Habitat Units reported in subsection (c), above, shall be modified accordingly. (f) If at any time during the term of this Agreement as set forth in Section 17, below, the balance of funds in the Maintenance Account is insufficient to meet all costs described in Section 10(e), above, FWS, NMFS, CDFG and BOARD will recalculate the total number of habitat units created from the Lagoon Project in its then current condition and the number of unused Excess Habitat Units available at - 15 - that time to the the BOARD pursuant to subsections (c) or (g) will be reduced accordingly. (g) The BOARD may be allowed to transfer Excess Habitat Units to other ports in the Southern California Bight that are applicants for a Corps of Engineers permit or a California Coastal Development permit for a port district project. However, such ports shall first consult with and obtain the approval of SLC, FWS, NMFS and CDFG, before being entitled to use such Excess Habitat Units. The Excess Habitat Units thus transferred may be used only to compensate for habitat losses incurred as a result of port district projects in waters deeper than -20 feet HLLW. Transfer and use of such excess Habitat Units shall not result in a net loss of fish and wildlife values. Excess Habitat Units shall not be used to offset the impacts of any project which fills or otherwise adversely affects wetlands, as that term is defined in FWS publication FWS/OBS-79/31, Classification of Wetlands and Deepwater Habitats of the United States, L. Cowardin, V. Carter, F. Golet, E. La Roe, December 1979. The BOARD shall officially notify FWS, NMFS and CDFG in writing of acceptance or rejection of any such proposal to transfer Excess Habitat Units. t 13. CEQA and NEPA Compliance is a Condition Precedent to Project. This Agreement describes a proposed Lagoon Enhancement Project and allocates responsibilities for its implementation. Entering into this Agreement does not constitute an adoption of the Project or a commitment to carry out the Project as those terms are used in the California Environmental Quality Act, Public Resources Code Section 21000 et seq. ("CEQA") and the National Environmental Policy Act, 42 U.S.C. Section 4321 et seq. ("NEPA"). Prior CEQA and NEPA compliance is a condition precedent to any party being committed to carry out any obligations set forth in this Agreement for which such compliance is required. If CEQA compliance discloses any significant adverse environmental impacts from the Project that can be better mitigated than as presently proposed, any party responsible for the actions that produce the impacts shall not approve or determine to carry out the Project unless and until such mitigation measures are either duly adopted or excused by a statement of overriding considerations. If, upon completion of all necessary CEQA and NEPA compliances, any party whose actions require prior CEQA or NEPA compliance does not determine to carry out or approve the Project, then the Lagoon Enhancement Project shall be deemed cancelled and the provisions of Section 15, below, shall apply. 14. Cancellation if Permits Not Available. The Lagoon Enhancement Project may be cancelled, in which event the provisions of Section 15, below, shall apply: (a) if Corps of Engineers and Coastal Commission permits for the Pacific Texas Landfill do not become effective or are revoked, or - 16 - (b) if CARLSBAD is unable to obtain Corps, Coastal Commission, other necessary permits and approvals or the necessary Land Interests to construct the Lagoon Enhancement Project. 15. Effect of Project Cancellation. If the Lagoon Enhancement Project is cancelled pursuant to Sections 5, 6(b), 6 (c), 6(e), 6(g), 13 or 14(b): (a) The Pacific Texas Deposit shall not be returned. (b) CDFG, FWS, NMFS, SLC, CARLSBAD and BOARD shall immediately begin necessary work to determine if alternative projects described in the Enhancement Plan or in the Final EIR/EIS documents prepared for Project can be completed within a time period acceptable to CDFG, FWS, NMFS and BOARD using the funds available in the Escrow Account and any other funds made available for this purpose. If it is determined that a project under this subsection can be completed, CDFG, FWS, NMFS, SLC, CARLSBAD and BOARD shall proceed with implementation of that project expeditiously and in a manner similar to that described in this Agreement for implementation of the Lagoon Enhancement Project. If the Lagoon Enhancement Project was cancelled pursuant to Section 6(b), 13 or 14(b), BOARD shall be entitled to receive any Excess Habitat Units created by a project completed under this subsection; provided that if another entity, whether public or private, financially participates in such project, being authorized by law to do so, any Excess Credits created shall be divided pro rata based on the contributions of such other entity and the contributions of BOARD including its share of the Pacific Texas Deposit as set forth in Permit No. 580 between BOARD and Pacific Texas. As an example, if total expenditures necessary to create and maintain an alternate project under the provisions of this Subsection are $25,000,000 and the monies paid by another entity are $5,000,000, then such entity shall receive 5 divided by 25 which equals 20% of the Excess Habitat Units and BOARD shall receive 80% of the Excess Habitat Units. If it is determined that a project under this subsection cannot be completed, CDFG, FWS, NMFS, SLC, CARLSBAD and BOARD shall comply with subsection (c), below. (c) If this subsection becomes applicable, CDFG, FWS, NMFS, SLC, CARLSBAD and BOARD shall immediately begin necessary work to determine if another project at Batiquitos Lagoon which would generate enough habitat value gains, pursuant to analysis conducted by CDFG, NMFS, FWS and BOARD in a manner similar to the procedure followed in Exhibit C, to offset the habitat value losses due to the Pacific Texas Landfill can be completed within a time period acceptable to CDFG, FWS, NMFS and BOARD using the funds available in the Escrow Account. Any such alternative Lagoon project shall create tidal and subtidal habitat for the reasons set forth in Recital IX of this Agreement, and shall be designed and implemented to meet the following criteria: .(i) not less than fifty percent (50%) of the project area shall have an average elevation of -3 feet MLLW; (ii) - 17 - not more than thirty-five percent (35%) of the project area shall have an elevation of between -3 feet and +2.5 feet MLLW; and (iii) not more than fifteen percent (15%) of the project area shall have an elevation of between +2.5 and +5.5 feet MLLW. If it is determined that a project under this subsection can be completed, CDFG, FWS, NMFS, SLC, CARLSBAD and BOARD shall proceed with implementation of that project expeditiously and in a manner similar to that described in this Agreement for implementation of the Lagoon Enhancement Project. If the Lagoon Enhancement Project was cancelled pursuant to Section 6(b), 13 or 14(b), BOARD shall be entitled to receive any Excess Habitat Units created by a project completed under this subsection; provided that if another entity, whether public or private, financially participates in such project, being authorized by law to do so, any Excess Credits created shall be divided pro rata based on the contributions of such other entity and the contributions of BOARD including its share of the Pacific Texas Deposit as set forth in Permit No. 580 between BOARD and Pacific Texas as per the example given in Section 15(b). If it is determined that a project under this subsection cannot be completed, CDFG, FWS, NMFS, SLC, CARLSBAD and BOARD shall comply with subsection (d), below. (d) If this subsection becomes applicable, CDFG, FWS, NMFS, SLC and BOARD shall immediately begin necessary work to determine if another project at an alternative location which would generate enough habitat value gains, pursuant to analysis conducted by CDFG, FWS, NMFS and BOARD in a manner similar to the procedure followed in Exhibit C, to offset the habitat value losses due to the Pacific Texas Landfill can be completed within a time period and at a location acceptable to CDFG, FWS, NMFS, SLC and BOARD using the funds available in the Escrow Account. Any such alternative location project shall create tidal and subtidal habitat for the reasons set forth in Recital IX of this Agreement and shall be located between Point Conception and the Mexican border. More specifically, such alternative location project shall maximize marine fisheries and coastal seabird habitat gains by establishing unrestricted tidal influence to coastal areas presently having little or no marine fisheries and coastal seabird habitat value, and shall be designed and implemented to meet the following criteria: (i) not less than fifty percent (50%) of the project area shall have an average elevation of -3 feet MLLW; (ii) not more than thirty-five percent (35%) of the project shall have an elevation of between -3 feet and +2.5 feet MLLW; and (iii) not more than fifteen percent (15%) of the project area shall have an elevation of between +2.5 and +5.5 feet MLLW. CDFG, FWS, NMFS, SLC, and BOARD shall proceed with implementation of such alternative location project expeditiously and in a manner similar to that described in this Agreement for implementation of the Lagoon Enhancement Project. If use of funds from the Escrow Account for an alternative location project requires legislation similar to Section of SB 2059 of the 1985-1986 Regular Legislative Session (Ch. 1415, Stats. 1986; Public Resources Code Section 6306.1) BOARD and SLC agree to support such legislation. - 18 - (e) If the Project is cancelled pursuant to Section 14(a), unless any loss of habitat in the Harbor District has resulted from the initiation of any work on the Pacific Texas Landfill, any unexpended portion of the Pacific Texas Deposit shall be returned to Pacific Texas, reserving therefrom any funds needed to satisfy existing'and noncancelable monetary obligations of the parties entered into in expectation of reimbursement with funds from the Pacific Texas Deposit. 16. Effective Date. The effective date of this Agreement shall be the date on which the last of all signatories designated on the signature page hereto has signed this Agreement. 17. Term. Except as otherwise provided by law, this Agreement shall remain valid for the life of the Pacific Texas Landfill unless it is rescinded by written consent of all parties or unless cancelled as provided herein. 18. Captions. The captions on the sections and subsections of this Agreement are solely for the convenience of the parties and no meaning shall be ascribed thereto in interpreting the provisions of this Agreement. 19. Days. Unless otherwise specifically provided, the term "days" as used herein shall mean calendar days. However, when the use of this term results in the last day for an action being set for a Saturday, Sunday or other non-working holiday, the action shall be deemed to be timely if performed on the first business day thereafter. 20. Substantial Conformance. The terms "in substantial conformance" or "substantially conform(s)" as used herein shall mean not differing in any material way from that to which it is compared including, without limitation of the foregoing definition, not differing in any way that results in a reduction in habitat values anticipated from the Project and not in conflict with the requirements of state and federal law. - 19 - 21. Communications, Points of Contact. Unless all parties are notified in writing of changes, the following individuals will be the points of contact for the respective parties: Port of Los Angeles Mr. Vernon E. Hall, Project Manager P. 0. Box 151 San Pedro, CA 90733-0151 (213) 519-3660 The Fish and Wildlife Service Mr. Jeff Opdycke, Project Leader 24000 Avila Road Laguna Niguel, CA 92656 (714) 643-4270 The Department of Fish and Game Mr. Donald Lollock, Chief, Environmental Services Branch 1416 9th Street Sacramento, CA 95814 (916) 445-1383 The National Marine Fisheries Service Mr. Robert Hoffman, Southern Area Environmental Coordinator 300 South Ferry Street Terminal Island, CA 90731 (213) 514-6199 The City of Carlsbad Mr. Raymond R. Patchett, City Manager 1200 Elm Avenue Carlsbad, CA 92008-1989 (619) 438-5561 The State Lands Commission Ms. Claire Dedrick, Executive Director 1807 13th Street Sacramento, CA 95814 (916) 322-4105 - 20 - APPROVED AS TO FORM P. BENDER Assistant City Attorney THE CITY OF LOS ANGELES, acting by and through its PaARD OF HARBOR COMMISSIONER. EZUNIAL BURTS Executive Director THE FISH AND WILDLIFE SERVICE, U.S. Department of the Interior JEFFREY D. OPDYCKE Field Supervisor, Laguna Niguel, Field Office, Region 1 THE DEPARTMENT OF FISH AND GAME PETER BONTADELLI Acting Director THE NATIONAL MARINE FISHERIES SERVICES, NOAA, U.S. Department of Commerce . 5 E. C. FULLERTON Regional Director THE CITY OF CARLSBAD CLAUDE A. LEWIS Mayor THE STATE LANDS COMMISSION 10/14/87 Pactex MOU-2 csc3-6766a CLAIRE DEDRICK Executive Officer - 21 - EXHIBIT A SHORT DESCRIPTION OF PROJECT For the proposed Batiquitos Lagoon Enhancement Project in the City of Carlsbad. The following SHORT DESCRIPTION of the Batiquitos Lagoon Enhancement Project was excerpted, unedited from the draft Batiquitos Lagoon Enhancement Plan prepared by the California Coastal Conservancy in October, 1986. The SHORT DESCRIPTION was taken from Section IV of the draft plan and represents the following: Pages 118-137 ("the Enhancement Plan") and Pages 155-159 ("Alternative Plans") plus Figures I (Preferred Alternative), N (Plan Alternative No. 2), and 0 (Plan Alternative No. 3). THE EMHAMCD€MT PUM Four different alternative enhancement plans are described 1n the following section. Alternative one 1s the preferred alternative and ts recommended for Implementation under thts plan. Alternatives two and three contain less dredging and consequently, smaller tidal prisms. There 1s a higher level of uncertainty about whether the mouth of the lagoon will remain open under alternatives two and three. All three of these alternatives have been viewed by the public and enhancement group; we have revised the original design of alternatives two and three to reflect certain changes since their first design. The final alternative 1s the No Project alternative and 1s really a prediction of the fate of Bat1qu1tos Lagoon should no enhancement be done. Table 17 compares the specific features of each alternative. In addition to the Improvements proposed for the lagoon, each alternative Includes the same sediment management system, public access trail and beach nourishment program. The various agencies and funding mechanisms for Implementation of the plan are Included 1n Section V. Preferred Alternative (Alternative 1) This alternative endeavors to fulfill the goals of the enhancement plan by creating adequate tidal prism while still conserving the wildlife habitat values and marsh areas of the lagoon. Tidal Prism and lagoon Channel Closure Conditions The single most Important hydrologlc design constraint for Bat1qu1tos Lagoon 1s to ensure that there 1s a sufficiently large tidal prism to keep the entrance channel open. The complexity of the hydrodynamlc processes Involved, and the difficulty 1n their measurement, make 1t difficult to predict the "critical" value of the tidal prism, above which we can be assured the entrance channel will always stay open. The plan takes an empirical approach to this problem. Based upon the studies by Johnson (1973) and updated by Philip Williams and Associates, the mean tidal prism and closure conditions for 20 coastal lagoons 1n California were determined, and plotted against deep water wave power. The plotted points are shown 1n Figure 7, along with the three alternatives for Bat1qu1tos Lagoon. The plotted points show a clear separation between lagoons that are "always open* and those that are "sometimes closed". This separation 1s Indicated by a dotted line 1n Figure 7. The position of the line, however, 1s only approximate; the minimum tidal prism needed to keep a coastal lagoon always open can only be estimated within a factor of two. The preferred alternative will have a potential mean tidal prism of 44 million cubic feet, a potential diurnal tidal prism of 67 million cubic feet, and a perigean spring tidal prism of 99 million cubic feet. If the position of the boundary between open and closed lagoons (Figure 7) 1s offset by a factor of two, the tidal prism for the preferred alternative would still be sufficient to keep the lagoon open. According to the Jenkins and Skelley (1985) study which used a different analysis, the closure frequency would be less than once 1n 30 years. 1A Table 17 SlffKRY OF ALTERNATIVES - BATIQUITOS LAfiOON EHHAMCEMEMT PLAM (Preferred 1 Alternative) 2 : Intent1dal Area (acres) (+2.5' to -2.5' NGVD*) 170 215 315 Subtldal area (acres) (below -2.51 NGVO) 220 171 71 Area of salt/brackish marsh (acres) (above +2.5' N6VD) 139 141 141 Area of Least Tern habitat (acres) 34 34 34 Area of freshwater marsh (acres) 33 33 33 Potential mean diurnal tidal prism (million cubic feet) 67 60 46 Potential peMgean spring tidal prism (million cubic feet) 99 89 68 Approximate volume of dredge material (million cubic yards) 3.0 2.1 1.3 Entrance channel area (below 0' NGVO) (square feet) 1700 1500 1200 Total Capital Costs (Includes dredging 9 $4.00/yd, drag bucket system, beach groins, levee, 1n million dollars) 12.4 8.8 5.6 *NGVD - National Geodetic Vertical Datum - approximately equal to Mean Sea Level 2A MINIMUM cuoas KCTiOMAk «n» or IMVCT (rr*) muo* •*. I*) (1) Preferred Alttrnativt (2) Alternative 2 (3) Alternative 3 MOTC MCaCSVOM CUdvC ViTH t»LIMITS TIDAL PRISM VS CROSS-SECTIONAL AREA ALL MLCTS ON PACIFIC COAST FIG. 6 Prom Jarrett 1976 3A To determine whether the actual tidal prism Mas not significantly less than the potential tidal prism, a tidal hydrodynanric model was used to simulate friction losses (for details see Appendix C). The model found that the difference between the actual and potential diurnal tidal prism was small, approximately - 5%. Ebb flows through the entrance channel are slowed by energy losses and the MLLW level 1n the main part of the lagoon 1s Increased by 0.4 ft. Most of this tidal dampening 1s due- to the constrictions of the entrance channel through the beach and the Highway 101 bridge. Once the channel 1s deepened, the 1-5 and railroad bridge no longer have much effect on the tidal range. During the peak ebb flow, the maximum difference 1n water level between the ocean and the lagoon 1s about one foot for the mean diurnal tide for the most constricted channel alignment which assumes no dredging of the western basin except for the channel (see Alternatives 24 3). Jenkins & Skelly (1986) have carried out a two-dimensional model simulation that Indicated for similar conditions the maximum water level difference to be approximately 1.5 ft. for the perlgean spring tide. However, 1t should be noted that this water level difference does not translate directly Into a loss of tidal prism. Instead, 1t causes a lag and steepening of the tidal wave form as 1t moves Into the lagoon. The actual dampening of the tidal range 1s considerably less. Therefore, dredging the western basin may not be particularly Important to minimize tidal dampening. However, deepening the western basin does add 1 million cubic feet or 1.6 percent to the tidal prism. The reconfiguration of the lagoon 1s presented In Figure I. The eastern basin would be excavated from the approximate +2.5 foot MSL contour down to the -6.0 foot contour. The western basins would be excavated down to the -8.0 foot contour (see lagoon cross-sections Figures J and K). The hydrodynamlc program analyzed tidal heights 1n the entire lagoon for an average tidal cycle. In order to decrease the amount of friction between the lagoon bottom and tidal flows, to create subtfdal habitat and to overdredge the lagoon slightly, the bottom dredging elevations of -6.0 foot for the eastern basin and -8.0 foot for the western basin were decided upon. The hydrodynamlc program showed that deeper dredging 1n either basin provided no additional benefits to tidal flows. Another feature of the dredging contours 1s a defined bottom channel to help transport fine sediment through the lagoon and out to the ocean. This channel extends from the mouth of San Marcos Creek through the subtldal area to the lagoon entrance channel. This channel will also serve to facilitate flows of freshwater through the marsh to the lagoon and Improve current flood problems along lower San Marcos Creek. For the most part, the dredging area 1s confined to the presently unvegetated portions of the lagoon. The dredging was designed 1n this way to avoid loss of existing marshland. The exception to this design criteria 1s the far western basin between the railroad and Highway 101. As previously mentioned modelling completed for this plan does not conclude the same dredging requirements as the Jenkins and Skelly (1986) report. It was the decision of members of the enhancement group to provide for dredging of the western basin and the design of the dredging Incorporates these results. In several areas of the east and west basins there are small areas of marsh which are below the +2.5 contours. These would not be able to survive the Inundation once the lagooji 1s open to tidal action and could not be preserved. 4A Table 18 Suavary of Data for Natural Lagoons -Call Potential TidalName Prism Diurnal Mean Smith River Estuary Lake Earl Freshwater Lagoon Stone Lagoon Big Lagoon Eel River Delta Estero Americano Estero San Antonio Tomales Bay Abbotts Lagoon Drakes Estero Bollnas Lagoon Pescadero Marsh Mugu Lagoon 1976 Mugu Lagoon 1857 Carp1nter1a Marsh Aqua Hedlonda Lagoon 1976 Bat1qu1tos Lagoon 1985 San D1egu1to Lagoon 1976 San D1egu1to Lagoon 1889 Los Penasqultos Lagoon 1976 Tijuana River Estuary Bolsa CMca 35 430 35 86 240 200 22 11 1580 17 490 200 68 27 170 4.8* 80 0.33 0.2 37 2 24 113* 24 320 25 64 180 140 15 65 1070 11 340 130* 46 19 120 1.5 55 0.23 0.14 24 0.75 17 80* Annual Deep Water Wave Power ft Ibs/ft/yr x 10" 303 329 348 348 348 371 (200) (200) 209 307 26 117 (200) (100) (100) (50) 28 (30) (30) (30) (30) (100) 29 No. 2 3 4 5 6 7 8 9 10 14 15 16 17 18 19 20 21 22 23 *T1dal prism precisely characterized 'ipted from Johnson, 1973. Closure Conditions Infrequent Frequent Always Frequent Frequent Infrequent Frequent Frequent Never Frequent Never Never Frequent Frequent Never Infrequent Never Frequent Frequent Never Frequent Infrequent Remarks Good Date Good O- Entr Lire Entrance Lined 5A ^^^_ o o ». « ° C <Ao c11 § Jo -1 <D -- , §3 go z £ UJ x l</ l)/«qild) d3MOd 3AVM H31VM d33O 6A The hydrodynamlc program predicted tidal heights for the lagoon over an average tidal cycle. Table 19 contains the results of this analysis. Under this tidal regime the proposed dredging contours were designed to create an 1ntert1dal zone below existing vegetated wetlands. This 1ntert1dal band will encircle each basin and vary from a maximum 10 percent slope to a nearly flat gradient of less than 1 percent slope. At the -2.5 foot contour, the lagoon bottom will drop off at a six percent slope to the subtldal bottom elevation of -6.0 or - 8.0 ft MSL. With a 67 million cubic foot tidal prism, the cross sectional area of the entrance channel would be about 1700 square feet below MSL. This calculation uses the Jarrett relationship (see Figure 6). The width of the channel under the bridge (from headwell to headwell) would be about 160 feet with rip-rap side slopes at 3:1. The channel would be about 15 feet deep MSL and 10 feet wide across the bottom. Since the Highway 101 bridge has at least three sets of piers on the southbound lane and seven sets on the northbound lane, engineering specifications for the channel will require provisions for fortification and protection of these piers from undercutting. The lagoon channel would be lined with riprap through the beach to the mean lower low water (MLLW) line. A fence would be erected along the riprap to restrict access to the channel. Habitat Acreages The creation of habitats and enhancement of coastal wetlands 1s still an uncertain process. Despite ten years of enhancement efforts 1n California wetlands, there are still many unknowns and always the possibility that what Is planned 1n an enhancement project will not be realized 1n the final result. The acreages and types of habitat which are expected to occur after the construction of the Bat1qu1tos project are based upon the elevations to which the lagoon will be dredged, predicted tide levels and the occurance of similar habitat types 1n nearby wetlands. With consideration of these conditions, the preferred alternative (Alternative 1) 1s proposed to conserve and create the following acreage of each habitat type: Subtldal habitat (-2.5 ft to -8.0 ft MSL) 220 acres Intertldal habitat (-2.5 ft to +2.5 ft MSL) 170 acres Salt/Brackish marsh 139 acres Freshwater marsh 33 acres Least tern nesting sites 34 acres Total 596 acres The distribution of these acreages 1s Illustrated 1n Figure I. Subtldal Habitat This area would be covered by tidewater during most stages of the tidal cycle. Several times during the month when low tide levels are at their extremes, portions of the lagoon bottom 1n the subtldal area will be exposed. However 7A Table 19 Modeled ind Pteasured Tide Heights. Batlqultos Lagoon, Scripps Wharf +2.52 -2.88 Pref. Alt. 1 +2.5 -2.8 West . Basin Alt. 2 Alt.3 +2.5 +2.5 -2.8 -2.9 Pref. Alt. 1 2.5 -2.5 MGVD (ft.) Middle Basin Alt. 2 +2.5 -2.8 Alt.3 +2.5 -2.9 EastBasin Pref. Alt. 1 Alt.2 +2.5 +2.5 -2.5 -2.5 AH.3 +2.5 MLLW -2.88 -2.8 -2.8 -2.9 -2.5 -2.8 -2.9 -2.5 -2.5 -2.5 8A 33 9A €D for the most part this 1s a shallow marine aquatic habitat and will be covered by 5 to 6 feet of water. Certain fish and Invertebrate species would be expected to colonize the lagoon once 1t 1s dredged and opened to the ocean. We propose no stocking of the area or Introduction of shellfish Into the lagoon. Therefore, the abundance of these animals would be dependent upon natural colonization rates and be expected to Increase following the Initial opening of the lagoon. The types of Invertebrates and their abundance will also depend upon substrate types in the lagoon bottom, water quality and nutrient levels and soil chemistry. These factors will change 1n the first few years following the project. For example, after the lagoon 1s dredged the bottom sediments will be made up primarily of sand with little silt or clay. As fine sediments continue to come Into the lagoon from the watershed, some probably will settle on the sand and form a mud layer. The thickness of this layer and the mixing of the sand and mud by bottom currents will change the type of substrate 1n the lagoon and thus the habitat for benthlc organisms. A similar enhancement project 1n San D1egu1to Lagoon has been monitored for several years following completion of dredging of a tidal basin (Christopher, 1984). The substrate 1s largely sand and varies from subtldal to 1ntert1dal zones. These studies found a number of benthlc organisms, the most common being: bubble shell (Haminoea veslcyla), wavy chlone (Chlone undatella), dish clam (Mactra nasuta), California jacknlfe clam (Tagelus callfornlcus) violet ray jacknlfe clam, (Tagelus sybtores) and marine polychaete worms (Capltella capitata, Polydora paucibranchlata, Scolelepls accuta and Medlomastps californlensls) and various species of ollgochaete worms. In addition, other species which could colonize this area Include: snails (Ceratpstoma nuttaTH). moon snail (PpHnlces 1ew1s1), rough plddock (Zlrfaea pllsbryj), ghostshrlmp (CalUnassa glgas), blue-mud shrimp (Upogebia pugettensls), spenculld worm (Slpunculys nudus), segmented worm (Chaetopterus variopedatus), rough skinned lugworm (Arenlcola brasiliensls) and ribbon worms (Nereis sp"p.). In general, Invertebrate species select their habitats according to the grain sizes of the substrate (sand vs. mud), the amount of wave action or current and the salinity and water quality. As explained, 1n the first few years after the lagoon 1s dredged, sediment layers will move and resort according to tidal and storm currents. Soil chemistry and water quality will change as well. The system will not reach an equilibrium condition for several years at least and the Invertebrate fauna would be expected to respond to these changes. The subtldal area will also provide habitat for marine and estuarfne fish species such as California halibut, white,spot-fin and yellow-fin croaker, topsmelt, deep-body anchovy, barred and spotted sand bass, long jaw mudsucker, arrow goby and several species of surfperch. Many of these species enter shallow bays and estuaries to spawn. Juvenile fish bom both in the open ocean and in the lagoon may spend several months feeding and maturing in the shallow water prior to their migration Into the ocean. The abundance of zooplankton and benthic animals will support both juvenile and adult fish. The San Diegulto Lagoon, since its enhancement, supports many of these species. 10A Juvenile fish and Invertebrates provide food for diving ducks, diving ocean birds and gulls and terns Including the Least Tern. Presently the lagoon does not provide any subtldal habitat and only very limited fish habitat due to the seasonally poor water quality conditions. Intertldal Habitat The Intertldal zone 1s the area which average tidal flows cover and expose twice dally. The majority of the Intertldal area lies along the south shore and eastern end of the eastern basin. A 50 foot wide strip borders the north shore and rings the western basin. A total of 170 acres of Intertldal habitat are Included 1n the plan. As with the subtldal habitat, the Intertldal zone will be 1n a state of flux for the first few years following the dredging. In most lagoons and estuaries, the Intertldal zone 1s habitat to numerous benthlc animals which burrow Into the mudflats or live on Its surface. The Infusion of ocean water twice dally provides a source of food for the benthlc animals who sieve bits of detritus and food from the water. Worms, clams, arvhlpods and other creatures Inhabit this area. Monitoring studies from San 01egu1to Lagoon found such animals as; polychaete worms such as Capltella capltata, Polydora sp.. Scolelepls acuta and various ol^gochaete worms as well 3MUSC spedes, vlolcas clam or mollusc species, violet ray jacknife clam (Tagelus subtores) eggshell cockle (Laeylcardlum substraltum) dish clam (Mactra nasuta); Hacoma yold1form1s; razor clam (Solen rosaceusfT and striped mussel Uschad 1 urn demlssumfTn the Intertldal area"! Other animals which were found 1n this zone are ecMnoderms such as Leptpsynapta alblans, gastropods (Acteodna harpa) and various amphlpod species Including Caprella equHlbra (Christopher, 1984). Some of the other species which could typically Inhabit Intertldal sand and mud flats and could collnze the Intertldal zone of the lagoon Include: sand dollars (Dendraster excentrtcus). sea pansles (Renllla kolUkerl). sea stars (Aspropecten armatus). horn sTJell snail (Cerlthldea callfornica), moon snails (Ponnlces recluzlanus). ghost shrimp (Calllanassa cal1forn1ens1s), burrowing anemone (Cerianthus aestuarl, Harenactis attenuata), brittle stars (AmpModria barfaarae) and segmented worms (Mesochaetopterus "taylorl) and joint worm (Axlothella rubrodncta). Crab species (Portunls xanfusl, Heterocrypta occidental 1s) may forage 1n this area as well. These Invertebrate animals provide the productive food base assodtaed with bird use of Intertldal areas. The three Resource Agencies (OFG, NMFS, FWS) have determined through the Habitat Evaluation Process (HEP) that the 170 acres of Intertldal habitat and 172 acres of marsh outlined 1n the plan are sufficient to conserve the existing habitat values for migratory birds present at Bat1qu1tos Lagoon. The depth of water and productivity of the habitat will largely determine the species and number of shoreblrds using different areas of the lagoon. Approximately the same shoreblrds species would be expected to use the enhanced lagoon as do presently (see Appendix G). Wading birds, diving ducks, terns, gulls and others would be expected to use the Intertldal zone at various tidal stages as well. However, the value of the Intertldal area to the dabbling ducks which currently use the lagoon 1s less certain. Shallow freshwater or 11A brackish water habitats are most valuable to these species. The shallow areas of 1ntert1da1. habitat should provide feeding habitat as will the freshwater marsh. The proposed acreages of these are considered adequate by the Resource agencies to support dabbling duck populations currently using the lagoon. Salt/Brackish Marsh The salt/brackish marsh acreage 1s composed of existing marsh which occurs above the dredge zone (+2.5 ft MSL). This marsh would experience regular tidal Inundation as a result of the lagoon enhancement but would not be mechanicallymanipulated or changed. The Introduction of regular tidal Inflows to the lagoon could cause the composition of plant species 1n the marsh to change. The present distribution of plant species 1s a response to a hydrologlc regime 1n which the lagoon seasonally floods with freshwater and then dries out and has hypersallne conditions. Tidal flows are rare. The present marsh vegetation extends from approximately +2.0 ft. to over +7.0 ft. In several areas. This marsh 1s a mixture of brackish and salt marsh species. Studies In other salt marshes 1n San 01ego County have found a number of physical factors to affect marsh plant distribution. These factors Include: tidal Inundation, elevation, slope, soil salinity, wave force and nutrients. The plan would Introduce regular tidal Inflows and create tidal zones In the marsh. The enhanced lagoon would have a mean higher high tide level at +2.5 ft. (MSL) and a spring high tide level at about +4.5 ft. (MSL). Extreme storm tide levels could reach +6.0 ft. (MSL). Figure 25 depicts the elevatlonal occurrence of certain species of marsh plants 1n relation to tidal Influence. The range for each species 1s a maximum zone and the area extent of each 1n the enhanced lagoon may differ significantly. In the far eastern end of the lagoon the Inflow of freshwater could affect the distribution of plant species and the brackish, less salt-tolerant plant species (e.g. Sclrpus robustus, Sclrpus olneyl, typha domlngensls) may occur there. Likewise areas of freshwater seeps may retain their brackish water species. However for the most part the relntroductlon of tidal flows should create conditions which favor the growth of salt marsh plants (e.g. Sallcornla v1rg1n1ca, Frankenla grandlfolla. Jaumea carnosa) and Increase the vigor of those salt marsh plants already in the lagoon. Many salt marsh species are active colonizers of areas with suitable conditions. Cordgrass (Spartlna follosa) occupies the lowest zone of vegetation 1n a tidal marsh and does not presently occur 1n Bat1qu1tos Lagoon. It could be planted 1n expermential areas once the project has been functioning for several years and sediments and water levels have stabilized. Other marsh plant species. Including the endangered salt-marsh birds beak (Cordylanthus mar1t1mus) could be Introduced to the lagoon wetlands. Overall 1t 1s difficult to predict how the species composition and extent of the marsh will change once the lagoon 1s enhanced. For the most part the existing areas of marsh are conserved and changes 1n the acreage of marsh will be monitored. Shoreblrds are expected to regularly use the marsh both to forage for Invertebrates 1n tidal sloughs and to roost during high tides. .Wading birds 12A FT MLLW ELEVATION 5 I I 6 I DM MSL I 4 i 5 1 10 I 11 CORDGRASS PtCKLEWEED ANNUAL PICKLEWEED | SALTWORT | JAUMEA CARNOSA | SEA BLUE [_ PRANKENIA GHANDIFQLIA [ MQNANTHOCHLOE LfTTORALIS^ GLASSWORT|_ 7 I 12 HATCHING DENOTES ELEVATIONS WITH FREQUENCY OF OCCURRENCE GREATER THAN 70%. Distribution of th« wait common hilophytM by elevation, at Tijuana Eatuary (Zadlar 1977). Data fro* Aaahaia Bay (Maaaay and Zcmbal 1979) ware uaed to axtand the ran«*a of •pcciaa beyond the >to 12-d« MSL range observed at Tijuana Eatuary. from Zedler.1982 FIG. 25 13A and some ducks may also roost and feed 1n the marsh. Bird species use will depend largely upon the type of plants that predominate. For example, a greater extent of plckleweed marsh could support more breeding pairs of Bel ding's Savannah Sparrows. More brackish marsh could support long-billed marsh wrens and other small birds. Freshwater Marsh The proposed freshwater marsh would be a managed freshwater wetland enclosed by an earthen levee. The primary reason for creation of a freshwater marsh 1s to assure the continuance of the existing habitat values at Bat1qu1tos Lagoon. While the 1ntert1da1 mudflats and subtldal areas proposed 1n the plan would create prime habitat for migratory shoreblrds, wading birds and some waterfowl, one component of the present fauna - the dabbling ducks require a freshwater component. The creation of a freshwater area would condense the present winter area of the lagoon for these species Into a 33 acre freshwater area and the 170 acre 1ntert1dal zone. The levee 1s designed with an approximate 80 foot toe and an 8 to 1 slope on the outer side and a 3 to 1 slope on the Inner side (see Figure L). The gentle slope on the outer side would allow for tidal water to Inundate the lower portion of the levee and create marsh and mudflat. The 8:1 slope 1s flat enough to avoid wave erosion and the need for rip rap. The bottom toe of the levee would be constructed at the approximate elevation +2.5 ft. (MSL) and the top of the levee would reach +8.0 ft. (MSL). The top elevation would preclude yearly high tides from overtopping the levee. The Interior of the marsh would be recontoured to an elevation of +2.5 to +3.0 ft. (MSL) and given design provisions for deep areas and exposed plant areas to Increase diversity. Water depths would be controlled at six Inches to one foot. The dredging would allow for the portion of the marsh closest to the upland to be higher than the area near the levee so that the marsh can be drained completely. The water source for the marsh will be San Marcos Creek. A weir would be placed In the creek at the El Camlno Real bridge at the +5.0 ft MSL level. This weir would detain water and the water would flow by gravity through pipes Into the marsh. Given a maximum evaporation rate of 25 acre feet per month In the summer, 1t 1s estimated that the marsh will require 1/2 cubic feet per second (cfs) of Inflow during the summer. Summer waterflows In the channel could fill this need. In the winter the need for water 1n the marsh may be minor since a small tributary enters the marsh area. The weir 1n San Marcos Creek would be destgned-siieh that no-flood problems would occur. Additionally,, dual slide/flap gates would be placed at several locations 1n the levee to allow for release of freshwater when levels are 1n excess of the six Inch to one foot marsh depth and to allow the flooding of the marsh with salt water. All culverts, frames and gates would be coated with replacable zinc anodes and be made of eight gauge bituminous-coated asbestos-bonded galvanized steel for long wear and low maintenance. Salt water flooding 1n the summer could create a year round habitat should a drought occur and could be used to control tules and other unwanted vegetation. However use of salt water should remain a management option for the marsh, not necessarily a mandate since it could adversely affect certain brackish to freshwater marsh plaats needed for 14A waterfowl. When viewed from the adjoining hills the marsh will look like a shallow water pond with small collections of bulrush or other marsh plants. The freshwater marsh would replace salt marsh and salt pan on the site. The water management scheme and finished bottom elevations of the freshwater marsh will largely determine what plant species Inhabit the area. At present, there are not plans to plant marsh species, but Instead, the plants would colonize by seed. Cattail, bulrush, three-square rush, pondweed and other aquatic plants would be expected to Invade the shallow areas. Because soils may remain brackish for the first years following construction, some species may be limited. However, 1f the marsh 1s left strictly as a freshwater area, the soils will leach and salts should be reduced. The management of the marsh water levels and annual drying w1l largely determine the plants which colonize and thrive there. Least Tern Nest Sites The U.S. F1sh and Wildlife Service In conjunction with the Department of F1sh and Game determined a minimum of four least tern nesting sites be created In the lagoon totalling approximately 32 acres. The plan provides for four sites -one 16 acre site near the Park and R1de lot, one 12 acre site on the north shore, one 4 acre site within the levee of the freshwater marsh and one 2 acre site near the lagoon mouth. All these sites occupy locations of previously used nest sites. When tidal Influence 1s returned to the lagoon, the previous nest sites on the salt pan will be flooded. Therefore to provide sufficient area for the terns to nest, new nesting sites have to be created. These sites would be created out of sand dredge spoils from the lagoon and raised up to +8.0 ft. MSL. A layer of clean white Imported sand with broken shells would cap the dredge spoils. Limited maintenance of the nesting sites will be required; removal of all vegetation must be performed yearly. In order to gain access to the nesting sites they are located close to the edges of the lagoon. In order to protect the sites against predators six foot cyclone fencing will border the lagoon edge 1n the vicinity of the least tern sites and be located a minimum of 100 feet from the site. Both ends of the freshwater marsh levee would be fenced. The fencing will restrict domestic animals and other terrestrial predators from entering the nest sites. The fence 1s located at a distance from the site so that avlan predators are not able to use the fence posts as hunting roosts. An additional nesting area could be gained If the levee surrounding the freshwater marsh were kept free of vegetation and covered with white sand. Least Tems 1n the San Francisco Bay area nest on the levees of salt ponds. All four sites are designed to provide relatively Isolated, dry sandy locations with clear views for the tems. A number of different sites are provided to allow for various locations over the entire lagoon for the tems to choose from. A total of 34 acres of nesting sites are provided. Construction Methods and Schedules The preferred alternative would require dredging and disposal of approximately ISA 3.0 million cubic yards of sand and silt material from the lagoon. Before exact construction methods can be outlined and a reliable schedule drawn up a number of tests must be completed. The only studies on the lagoon sediments are a limited number of corlngs of the lagoon bottom 1n the eastern basin and a larger number 1n the western basin (Woodward-Clyde Consultants, 1985; Shepardson Engineering Associates Inc., 1985). These corlngs reveal Information regarding the grain size of the material and thus the thickness of clay and silt layers and sand layers over the lagoon bottom. These coring Studies did not Include any chemical analysis of the materials however, and these tests must be done before final plans for construction can be completed. The coring studies give gross estimates of the quantities of two classes of sediment on the lagoon bottom. The upper layers of the lagoon bottom are primarily fine silts, clays and fine sands with grain sizes smaller than .125 mm. The silt and clay layer 1n the east basin 1s much thicker than the west basin and could compose 60 to 70% of the dredge volume from the east basin. The total volume of fine sediment to be removed from the lagoon 1s between 1.2 and 1.0 million cubic yards. The sand fraction 1n the lagoon lies below the clay and silt layers and represents a larger proportion of the dredge volume 1n the western lagoon than the eastern basin. The median grain diameter of the sandy sediments 1n the western lagoon 1s .18 mm while the median grain diameter for the same layers In the east basin 1s .15 mm. There are about 1.8 to 2.0 million cubic yards of sand to be removed. These sandy sediments are coarse enough to be used for beach nourishment should bloassay and toxin testing prove negative (Jenkins and Skelley, 1986). These two sediment layers must both be tested for the concentration of toxic chemicals, nutrient levels and other substances. The results of these tests will determine where the dredge spoils can be disposed of and could have a great effect on the cost of the project. Detailed soils engineering studies will determine exact quantities and conditions of spoils. Therefore we will outline a number of possible options for dredge disposal and construction methods. The most Inexpensive method of dredging the lagoon 1s to use dry land techniques. Construction would begin In the east basin and progress to the west. In the early spring (February-March) the lagoon mouth would be opened and the lagoon drained. Inflowing streams would be diverted by pipe to the ocean, stormdralns or other appropriate outlet.—Sroundwater would be pumped out of the basin and the lagoon bottom dried out. Rubber tired scrapers or comparable equipment would remove the silt and clay layers and they would be disposed of 1n one or several ways. The silt-clay spoils must be dried prior to disposal and 1f possible the adjacent north shore uplands owned by Samtils and HPI should be used. Once dried and depending upon the test results of the spoils they could be: 1) trucked to a sanitary landfill for disposal; 2) mixed with fine sands and sold or given away as structural fill; 3) used as landscaping fill on adjacent properties; or 16A 4) disposed of In the ocean at a site approved by the Environmental Protection Agency. The preferable option would be to place the spoils on adjacent properties for landscaping fill should they pass all needed tests for this use. Sammls Properties has offered to accept approximately one half million cubic yards to fill a canyon on their property. A site 1s still needed for the remaining 500,000 to 800,000 cubic yards and the golf course proposed by HPI has been suggested by several plan participants. Placement of the spoils on adjacent properties would avoid the use of public roads. If the spoils are transported • to other sites for disposal, additional equipment will be needed as the rubber tire scrapers can not travel public roads. A fleet of dump trucks would be used and would be loaded at the end of Lagoon Lane or other appropriate access points. Both the landfill and ocean disposal options are prohibitively expensive and nearby landfills may not have the capacity for such a large disposal project. Remixing the spoils for use as structural fill will require some additional space but could possibly be feasible. The levee for the freshwater marsh would be constructed from on site dredge spoils and 1s the only feature of the lagoon project which could utilize the clay-silt spoils. The Interior of the marsh also needs to be dredged to create a bottom elevation (+2.5 ft. HSL) such that water Impounded 1n San Marcos Creek could flow by gravity Into the marsh. A suggestion for using the marsh as a recipient site for silt-clay spoils to raise the base level would require pumping water Into the marsh, and thus Increase yearly operating costs and 1s not recommended. The method for disposal fo the silt-clay layers will be determined after elutriate, bloassay and soil engineering tests are completed through the environmental review, preliminary engineering and permit processes. The sand layers will also require certain toxldty tests but they are of suitable size for disposal on local beaches. Elutriate tests and bulk sediment analysis test will be required. The lagoon dredging will produce approximately 1.8 to 2.0 million cubic yards of sandy material. Again dry land methods would be employed 1f possible as they are less costly than dredging. The majority of sandy spoils He 1n the western basin. These would be scraped up and transported to the lagoon mouth for placement on the beach. Depending on the type of construction used (dry land vs. dredging) the method for placement of the spoils on the beach may differ. If dry land methods are used and scraping equipment can fit through the three bridges, the scrapers could deposit sand directly on the beach. A dirt haul road may be needed along the beach. If the scrapers can't transport sand directly they would load 1t Into dump trucks at the end of Lagoon Lane for the east basin and Hwy 101 for the west basin or other appropriate access points. Dump trucks would use public roads to transport the sand to the beach for disposal. Some sandy spoils would be used to construct the least tem sites 1n the lagoon. Disposal of sandy dredge spoils on Carlsbad beaches 1s not only convenient to the lagoon project but allows for nourishment of a badly eroded-coastline. 17A Sand movement 1n this area has been Interrupted by the construction of Oceanslde harbor which traps southward moving sand. In addition, the sand supply has been depleted by the damming of most rivers and streams and year round closure of many lagoons such that sandy sediments deposit 1n the closed lagoon or behind the dam rather than being carried out to sea. The littoral cell supplying sand to the Carlsbad area begins about San Clemente and ends about La Jolla. Generally sand volumes are deposited onto the beach by ocean waves 1n spring and summer and eroded off the beach during winter. Depending upon the amount of sand 1n the cell and the storm sizes, the width of sandy beaches 1n this region varies. The profile of the Carlsbad beaches has been measured 1n 1983 and 1984 (FUck et al, Seymour et al). The winter of 1982-83 saw extreme wave heights associated with El N1no. During the winter the large storm waves removed 200 cubic meters of sand per meter of beach. This erosion quantity 1s associated with extreme storm waves. The following year winter storms removed 20-35 cubic meters of sand per meter of beach. These erosion losses represent more average winter storms. As can be witnessed during a trip to the South Carlsbad Beach, sand 1s 1n short supply and the beach 1s often made up only of cobbles. The dredging of Bat1qu1tos Lagoon has as a by product the placement of as much as two million cubic yards of sandy spo.lls Into this littoral cell. While deposition of this amount just below Oceanslde harbor progesslng southward would be favorable , the cost to truck this much material exceeds the costs of dredging 1t from the lagoon (V. Hall, pers. comm.) Therefore, the placement of the material on the beaches likely will begin at the mouth of Bat1qu1tos Lagoon and progress northward. One likely beach nourishment method would be the creation of large sand piles or dunes at the landward edge of the beach. These dunes could be progressively pushed onto the beach to nourish the 1ntert1dal area. Numerous other methods are possible as are various management options to Increase the longevity of the sand on the Carlsbad beaches. The precise method for placement of the sand spoils on the beach and the miles of beaches covered will be determined through the environmental review, preliminary engineering and permit processes. Since State Department of Parks and Recreation owns and operates most of these beaches, their concerns and suggestions will help to determine what methods are used. However, all cost estimates for the lagoon project assume that the sand spoils will be placed on the beach 1n the most cost-effective manner. Several constraints must be placed on the construction activities to protect existing resources of the lagoon. In order to minimize disturbance to the lagoon wetlands, heavy equipment will enter and leave the construction area at one or two points where little or no vegetation 1s present. Several locations on the north shore of the eastern basin are appropriate. Access to the western basins will be more difficult and may need to be done under the Highway 101 bridge or from the fill site 1n the northwestern corner of the western basin. The beginning of project construction largely will depend upon the timing of permit approvals and CEQA compliance. However the beginning of construction must be scheduled either prior to the beginning of the nesting season of the ISA Least Tern OP following fledging of all chicks. The nesting time period stretches from April or May to August or September. If construction begins anytime during this period 1t would disturb the terns and cause a loss of a nesting season. Therefor* construction may begin 1n March or October. Since 1t 1s more difficult and expensive to construct during the wet season, a March date would be preferable. By timing the construction of the project to protect the tern, the construction should not affect any other endangered species. Maintenance of the Lagoon Channel Waves such as occurred during the extreme storms of 1982-83 will no doubt occur again. These waves have enough energy to fill the lagoon channel Inlet with sand and cobbles and overcome the scouring energy of the tidal prism flowing out of the lagoon. There are no reliable predictions for how often such extreme storms would occur; there are also no foolproof predictions of how well the lagoon channel will maintain Itself under normal winter storm waves. In addition, the large concentration of cobbles presently blocking the lagoon mouth 1s a major concern 1n the self maintenance of the lagoon mouth. It 1s not entirely clear that the proposed tidal prism will be able to consistently push these cobbles from the lagoon channel. Some type of back-up system 1s required to open the lagoon channel should It become clogged. A number of different methods are possible. The Highway 101 bridge and Its supporting piers create a narrow constricted channel which does not allow for certain types of equipment to operate easily. Bulldozers and some dredging equipment will not be able to operate well to clear the channel. The recommended method would be the use of a drag bucket which could scoop sand and cobbles out of the channel and redeposlt them offshore. There are two alternative ways to set up a drag bucket system. The recommended alternative 1s discussed 1n Jenkins & Skelley (1986). The following excerpt describes the system, "Drag buckets have been used successfully 1n both Inlet maintenance and beach nourishment from offshore deposits. The best design has been the Sauerman drag-scraper. It 1s a bottomless bucket with three vertical sides, a I1d, with a front side open to the scraping direction and a backside that 1s closed. The bucket 1s dragged seaward through the Inlet by a shore mounted winch operating an endless loop drag-cable system to a block and tackle moored offshore to the bottom. As the bucket 1s dragged seaward, 1t fills with sediment until reaching capacity. On the return haul to shore, the contents of the bucket are deposited out the open end at the point of reversal. "Considering the Inlet dimensions at Bat1qu1tos, as well as the volume of sand that had to be excavated to reopen the lagoon In September 1985, It 1s estimated that an Inlet bar would typically comprise about 300 cubic yards. Practical experience has shown that 300 round trips of the bucket are feasible per day. Therefore a 3 cubic yard capacity bucket would allow clearing of the Inlet 1n about 1/2 day. This would require a 260 horsepower winch to drag a bucket of this size. The block and tackle should be anchored seaward of the mean shoreline by about 850 feet 1n order to avoid 19A seasonal burial by bar formations. A 350 pound Danforth anchor would provide a 7 k1p mooring with a 2:1 safety factor for the block and tackle. The block and tackle 1s secured to the anchor using a length of p1g-ta11 sufficiently long to reach the surface at the mooring point. A marker float 1s attached to the block and tackle at the pig- tall. The endless loop drag, cable must be recovered upon completion of the scraping operation. This Involves a small boat recovering the marker float, raising the block and tackle to the surface, and disconnecting 1t from the p1g-ta1l. The drag cable and block and tackle are then retrieved by using the shore mounted winch. The pig-tall and anchor are left on the bottom with the marker float attached for future relocation. To Initiate scraping operations, a polypropylene rope must be brought out from the shore to the marker float. There a small service boat 1s anchored. Using the propylene line a winch on the service boat will haul the drag cable and block and tackle assembly out to the mooring site. The marker float line 1s used to retrieve the pig-tall and reattach the block and tackle. This procedure requires relatively calm seas to Initiate. Furthermore recreational swimming must be prohibited 100 feet to either side of the drag cable during scraping operations." This system would only be set up when needed and Is relatively Inexpensive to operate. The shore mounted winch would be located on the fill site at the northwestern corner of the western lagoon basin. The drag bucket system would be able to remove both sand cobbles from the channel. The drawback to this system 1s the hazard 1t poses to swimmers when the cable 1s 1n use and Its limitations for use 1n heavy seas. The second alternative Involves construction of a pier for use as a base for a drag bucket system. This alternative Involves: "This approach would build a short pier, 400 feet 1n length and parallel to the axis of the Inlet channel. The pier should extend 300 feet seaward and 100 feet Into the lagoon channel. The deck of this pier would be at the elevation of the Highway 101 bridge, +19 feet MSI, and should provide access to the highway for a mobile crane. The mobile crane 1s operated on the deck of the pier and 1s used to drag the Sauerman bucket seaward to perform the scraping operations 1n the Inlet channel. The scraping operation could be performed from the pier 1n higher sea states than could the drag cable method, and would not Involve the potential hazard to the swimmers associated with the drag cable. The pier could be used as a recreational fishing pier when scraping operations are not being performed. The estimated cost 1n building such a pier 1s $2,000 per foot, or a total of $800,000." The disadvantages of this system are Its high construction costs, high maintenance costs and the need for a public agency to operate the pier and accept ownership and liability. For these reasons this plan recommends the use of the first alternative, a drag bucket system using an offshore bottom moored block and tackle. 20A Alternative Plans The primary differences between Alternatives Two, Three and the preferred Alternative 1s the size of the proposed tidal prism and thus the dredging requirements and the acreage of 1ntert1dal and subtldal habitats. Host of the features of the plan — construction methods, maintenance of the lagoon channel, sediment control program, public access trail, lagoon ownership and management, operation and maintenance and monitoring program remain the same for all three alternatives. The habitat acreages for the freshwater marsh, Least Tern nest sites remain the same as the preferred alternative. The acreage of salt/brackish marsh differs slightly due to differences 1n the dredging proposed for the far western basin. Therefore, the following discussion will focus on the major differences between Alternatives Two and Three and the Preferred Alternative. Alternative Two This alternative would have a potential mean diurnal tidal prism of 60 million cubic feet and a potential perlgean spring tidal prism of 89 million cubic feet. This size tidal prism may not necessarily be large enough tomalntain an open lagoon entrance channel against large storm waves. As outlined for the preferred alternative, the estimation of closure conditions for lagoon and estuary entrances 1s not an exact process. As Illustrated 1n Figure 7, Alternative Two appears to fall 1n the "never closed" portion of the graph. However, this line of separation 1s only approximate. The minimum tidal prism needed to keep a coastal lagoon "always open" can only be estimated within a factor of two. Should th.1s line be offset by a factor of two. Alternative Two would border on the "Infrequently closed" category. There 1s not as much assurance that this size tidal prism will sustain an open lagoon channel as there 1s for the preferred alternative. The hydrodynamlc model was used to estimate the differences between the actual and the potential diurnal tidal prism. The model found the difference was small, approximately 51. Consistent with the model findings, Alternative Two proposed very limited dredging 1n the far western basin. A subtldal channel would be dredged but the area to the south of the channel would be left as would a portion of the area to the north of the channel. The model showed not significant dampening of tidal flows with this configuration. The dredging of the lagoon under Alternative Two would remove approximately 2.1 million cubic yards of material. The cross-sections of the lagoon would resemble those for the preferred alternative (Figures J and K) excepting the 1ntert1dal zone would Increase 1n size slightly and the subtldal zone would diminish 1n width slightly. The dredging 1s designed to conserve most of the existing marsh acreage. Tidal heights 1n the lagoon under Alternative Two would approximate those created under the preferred alternative. The cross-sectional area of the entrance channel would be about 1500 square feet below MSL. The side slopes would be riprap lined at a 3:1 slope through the beach to the N.LU line. The piers on the Highway 101 bridges would require fortification and protection from undercutting. 21A Alternative Two would create the following habitat acreages: Subtldal Habitat 171 Intertldal Habitat 215 Salt/Brackish Marsh 143 Freshwater Marsh 33 Least Tern nesting sites 34 Total 596 acres The distribution of these acreages 1s Illustrated 1n Figure N. Alternative Two would create a larger Intertldal habitat and smaller subtldal habitat than the preferred alternative. This difference would create a larger area of habitat for Intertldal Invertebrates and thus a larger feeding habitat for migratory shoreblrds, resident lagoon bird species and some waterfowl. The subtidal habitat would allow a smaller area for ocean and estuarlne fish species, subtidal zone Invertebrates and diving ducks, gulls and terns. The acreage of other habitat types does not differ appreciably from the preferred alternative. The primary drawback to Alternative Two 1s the uncertainty regarding the size of the tidal prism and Its adequacy for maintaining an open lagoon channel. With the slightly larger tidal prism of the preferred alternative, the assurance of retaining an "always open* Inlet 1s greater. Should the lagoon mough close 1n larger storm waves, 1t could be several days to several weeks to reopen the mouth using the drag bucket system proposed. The drag bucket system cannot be used 1n heavy seas and could not be operated until calm weather prevailed. If several storms occur 1n a row, the delay could reach several weeks. The delay could reach an even larger time period should equipment failures or personnel problems occur. During the time the lagoon 1s closed, the water 1n 1t will be trapped as will fish and other aquatic organisms. If Impounded for any length of time, dissolved oxygen levels 1n the lagoon could drop, algae blooms could Increase, as would nutrients, salinity and temperatures. The fish and other aquatic creatures would eventually die. This problem should generally be avoided by assuring a larger tidal prism to help maintain the lagoon opening. Alternative Three Alternative Three has a tidal prism which 1s considerably smaller than either Alternative Two or One. The potential mean diurnal tidal prism would be 46 million cubic feet. The smaller size of the tidal prism 1s not large enough to maintain a lagoon opening against large winter storm waves. As figure 7 Indicates, this alternative 1s within the area of the graph for lagoons that are "always open". However, since this estimate 1s approximate and could be offset by a factor of two, this alternative would then become "Infrequently closed". There 1s very little assurance that the lagoon Inlet will remain open most of the time for Alternative Three. 22A The hydrodynamlc model was used to estimate the differences between the actual and the potential diurnal tidal prism. The model found the difference was small, about 5X. The dredging of the lagoon under Alternative Three would remove about 1.3 million cubic yards of material. A large portion of the dredged area would be 1ntert1dal with a wide subtldal channel running the length of the lagoon. The dredging 1s designed to conserve most of the existing marsh acreage. A limited area of dredging 1s proposed for the far western basin. Tidal elevations in the lagoon under Alternative Three would approximate those created under the Preferred Alternative (see Table 19). The cross-sectional area of the entrance channel below MSL would be about 1200 square feet. Side slopes would be 3:1 and lined with riprap through the beach to the HLLW line. As with Alternatives One and Two, the piers for the Highway 101 bridges will require fortification from undercutting. Alternative Three would create the following habitat acreages:* Subtldal Habitat 71 Intertldal Habitat 315 Salt/BracMsh Marsh 143 Freshwater Harsh 33 Lest Tem Nesting Sites 34 Total 596 acres The distribution of these acrages 1s Illustrated 1n Figure 0. Alternative Three would create a very large area of Intertldal habitat and a small area of subtldal habitat. This plan would s1gn1f1cantly1ncrease the habitat area for Intertldal Invertebrates and feeding area for migratory shorebirds, resident lagoon species and some waterfowl over the preferred alternative. Subtldal acreages would allow for a decrease in this habitat over the preferred alternative with attendant decreases 1n proposed ocean and estuarfne fish habitat and feeding area for diving ducks, gulls, and terns. The acreage of other habitat types 1s about the same as the preferred alternative. Alternative Three would not create an adequate tidal prism to assure that the lagoon channel would remain open 1n most large storms. Considerable effort would be needed to keep the lagoon functioning as a tidal system. The drag bucket system would have to be used frequently and long delays in reopening the lagoon mouth would occur. It might prove useful to use a different channel maintenance system for this alternative, such as the pier and drag bucket system. This other system does not require calm weather for Us operation and could more effectively maintain the channel under this alternative. Since lagoon closure would be more frequent under Alternative Three, the problems associated with this condition would be more prevalent. Unless a more efficient channel maintenance system were Installed, closure periods could be quite lengthy. The aquatic organisms trapped Inside the lagoon would undergo 23A stress as temperatures and salinity Increase, dissolved oxygen decreases and algae blooms and nutrients Increase. Many fish and other creatures could die as the lagoon conditions change from a tldally flushed system to an Impounded system. Under this alternative, the only way to avoid these problems 1s to Install a very efficient lagoon maintenance system and have the funds and personnel available to run 1t. No Project Alternative-. The No Project Alternative would leave the lagoon 1n Its present state with no enhancement. The lagoon would continue to function as a seasonal wetland and be dependent upon freshwater Inflows for Its primary water source. The water quality problems which currently exist would continue. Probably the greatest change which would occur, barring any other enhancement proposals, would be the slow filling of the lagoon with sediment. During November and December of 1985, portions of the east basin were covered with .4 to .7 feet of new sediment. As the watershed continues to develop and upstream grading and agricultural practices remain relatively unchanged, the lagoon will continue to fill with sediment. Eventually, much of the eastern basin may be rarlsed to sufficient elevation that marsh will replace sand/mud flats. If sediment deposits are great enough, they could Increase elevations such that riparian trees will replace salt and brackish marsh as 1s now occurring at the mouth of Endnltas Creek. Although the lagoon would not loose habitat area, the types of habitats may change. 24A I!Ul O•.HZ •!<»-<« ? •> i> i < £u £ MI SJ > eo z. Z:S i - « S 0 « < C a ui 52 i H I 9 J- a S s • • ac 111 2 1 n 8 ooo" o- • ooo ^£^j •J W, o ^__ ^^•^M 3 O — P H Z DCLU h-_J ^QLU DC DCLJJ LL LLI DC Q.BA8INSEDIMENTO Z< 0 I Z 0Ul0o oc z 0 IMENT0 ELOPMEN> 8o Ul o Vm OPOSED 1•A8IN PRK Ul = 00X Ul Ul aa < a. i- zMI < f <"" f " d £ 5: 2 £-I C _l J a H o < z111 cvj «i15 *« i0 M ^ e» '. 3 • i > i S xw z o>Z O UIs:s£ <9<Izg t * z * Ss5S| « ±_ Q.a c Z n o§-w o8- o- •* ooo ml 0) 0 Hm^i 3 O H < oz LU > H ztrUJh- ^^L -i Q. z 209 a HZUI 5 UIa a HC9 X Z vj SX z aUI O o Ka. z5 a zUIao UI ? UI a. O_J UI ino cUI o 0) aUIa) Oa. OKa. za a IMENTOUI• S3O Ul Ot- z55 288 UJ Q OL H Z £ •- 5* J -J * i Q Zr met 2 " *•«» fJ, ui zU Z Mz O uio N i £N J (0 it <9<|z 0 H •* * 5 C IE h. O (CMi21 (0 5 W • GC 111 CO Z O O*o yj <5g Ul 0.o Ul z ui< o crA m O H a. 2x Eu £ a 3 O Pa! Ul2aUlID O X Ul o a Ul UlID <OO Oa. a.O OC Xa. a. z zM 35 z zUl Ul2 2a 5Ul Ul« o O EXHIBIT B DEFINING SUPPORT TO BE PROVIDED TO CARLSBAD BY BOARD TO ACCOMPLISH BATIQUITOS LAGOON ENHANCEMENT PROJECT 1. Statement of Purpose This Exhibit constitutes a separate agreement between the City of Carlsbad (CARLSBAD) and the City of Los Angeles acting by and through the Board of Harbor Commissioners (BOARD) to specify the payment and support obligations of BOARD to CARLSBAD pursuant to the Agreement for the marine habitat enhancement of Batiquitos Lagoon (Principal Agreement) to which this Exhibit is attached. It is the intent of this Exhibit to require the BOARD to pay all direct and indirect costs incurred by CARLSBAD as required by the Principal Agreement and to provide all support required by CARLSBAD in order for CARLSBAD to perform its obligations under the Principal Agreement provided CARLSBAD agrees that BOARD'S responsibility to reimburse costs CARLSBAD has incurred shall commence only after the monies deposited by PACIFIC TEXAS into the Escrow Account under the terms of California Coastal Commission Permit No. 5-85-623-A have first been expended subject to the provisions of Section 5(b) of the Principal Agreement. 2. Processing of Environmental Documents and Permits a. Subject to exhaustion of the above referenced Pacific Texas deposit, pursuant to Section 2 of the Principal Agreement BOARD shall pay all costs directly or indirectly incurred by CARLSBAD'S processing of any permits, approvals, entitlements, or reports for consideration by CARLSBAD or any other legislative or administrative agency provided, however, Project Manager must approve in advance expenditures of more than Ten Thousand Dollars ($10,000). Such costs shall include, but not be limited to, the salaries of any CARLSBAD employees, fees for consultants or special counsel, and cost of providing public notices and any overhead. b. In accordance with Section 5(a) of the Principal Agreement and subject to the exhaustion of the above-referenced Pacific Texas deposit, BOARD shall pay CARLSBAD its costs as defined in this Agreement after first providing Project Manager a monthly itemized billing detailing services provided and costs incurred. CARLSBAD shall account to BOARD for all costs incurred upon completion of the tasks assigned to CARLSBAD under Section 2 of the Principal Agreement. -1- c. Processing a, Consideration of environmental .uments shall be done pursuant to CARLSBAD and applicable state and federal law. 3. Project Construction a. The obligations regarding Project's design and construction are generally set forth in Sections 3, 4 and 5 of the Principal Agreement. BOARD shall indemnify CARLSBAD for any direct or indirect costs incurred by CARLSBAD in the performance of CARLSBAD'S obligations under Sections 3, 4 and 5 of the Principal Agreement. Such costs shall include, but not be limited to, the salaries of any CARLSBAD employees, fees for consultants or special counsel, and cost of providing public notices and any overhead. Construction shall be accomplished according to the provisions of the CARLSBAD Municipal Code and applicable state law. Contracts shall be awarded pursuant to the law and policies applicable to other public works projects of CARLSBAD. Contracts shall be between the CARLSBAD and selected Contractor(s). The contract for construction will be awarded to the lowest responsible bidder. CARLSBAD understands that pursuant to the Principal Agreement, BOARD reserves the right not to proceed with Project's construction. CARLSBAD agrees that Project bidders shall be informed in the Construction specifications that CARLSBAD reserves the right not to award a contract for any reason. CARLSBAD also agrees that no contract will be awarded and all bids will be rejected if BOARD is not willing to proceed with the Project. If a contract is awarded, CARLSBAD will be reimbursed its costs associated with construction and the construction contractor will be paid from the funds described in Section 5(b) of the Principal Agreement. b. The following resources will be provided to CARLSBAD by BOARD under the provisions of this Exhibit and Sections 4, 5 and 9(a)(i) of the Principal Agreement. I. A full-time Project Manager dedicated to the Project frcn the initial environmental review stage through to the completion of the construction phase of the Project's implementation program. The Project Manager shall be selected by mutual written agreement of CARLSBAD and BOARD from a list of qualified applicants prepared by BOARD. With the written approval of CARLSBAD, BOARD may, from time to time, replace the Project Manager with an individual whose qualifications and/or experience are best suited for the particular phase of the Project. The Project Manager shall report to and take direction from the CARLSBAD City Council as implemented through the CARLSBAD City Manager or his designee, provided, however, CARLSBAD agrees that it -2- will at times consult with BOARD if L , expresses any concerns regarding the project and will implement all requests of BOARD unless it expressly finds such requests are unreasonable. The Project Manager shall comply.with all laws, rules and policies of the City of CARLSBAD and may be removed by BOARD or the CARLSBAD City Council, after consultation with BOARD, if his/her performance is in any respect unsatisfactory. The Project Manager shall be provided appropriate office space and facilities, if available, (phone, copier, files, etc.) by CARLSBAD. If leased space or equipment is necessary, the cost shall be paid by BOARD. The Project Manager may augment his/her staff in the manner set forth in his/her agreement with BOARD from time to time as appropriate (e.g., clerical support). The Project Manager's duties and responsibilities shall include, but are not necessarily limited to: (A) Managing consultants required to accomplish any of the preliminary design, environmental review, design, permit processing, or construction management activities. (B) Preparing staff reports for and scheduling actions by CARLSBAD or BOARD including consultant selection, advertisement, bid opening and contract award. (C) Processing invoices, vouchers, etc. for timely payment by BOARD. (D) Processing progress payments to contractor(s). (E) Preparing progress reports to CARLSBAD and BOARD as appropriate. Establishing and maintaining a public information program on status of Project. (F) Preparing and submitting permit applications. (G) Supervising clerical employees, inspectors, construction managers, surveyors as may be required. (H) Processing contractor payments, claims, change orders, stop notices, etc. during the construction phase for action by CARLSBAD. (I) Coordinating Project events with CDFG, FWS, NMFS CARLSBAD, and BOARD staffs. The Project Manager shall, subject to the direction of control of CARLSBAD and BOARD as described above, have -3- complete Authority to carry out the Batic,^ os Project provided, however, that the Project Manager shall have no authority to commit CARLSBAD or BOARD to the payment of any money or the performance of any act without the appropriate prior approvals. All contracts entered into by the Project Manager shall be let and administered according to CARLSBAD law and policy or state law as applicable to CARLSBAD. II. Reimbursement for CARLSBAD employee salaries and expenses directly related to Project's implementation upon receipt of monthly certified statements. III. Funding for consultants hired to accomplish preliminary engineering studies, environmental review, obtaining permits, final design, entitlements, or approvals. IV. Hiring and funding of necessary inspectors, surveyors, resident engineer(s), contract administrator(s) for the construction phase of the project. V. Necessary support from BOARD staff resources including: (A) BOARD'S Pacific Texas Project Managers (B) Environmental specialists (C) Engineering review of preliminary and final project designs, estimates, schedules and calculations (D) Legal assistance VI. Furnishing all plans and specifications for construction of the Project. c. Contracts necessary to implement the Batiquitos Project shall be entered into by the City of CARLSBAD in conformance with its applicable laws and regulations. Contract expenses shall first be paid from the Fifteen Million Dollar ($15,000,000) Pacific Texas deposit (Twenty Million Dollar ($20,000,000) deposit if the project costs exceed Fifteen Million Dollars). If the Batiquitos Project costs exceed Twenty Million Dollars ($20,000,000), then BOARD agrees to pay the excess amount provided, however, if BOARD disputes the appropriateness of any such costs, whether more or less than Twenty Million Dollars ($20,000,000) then CARLSBAD agrees not to pay such costs so long as BOARD defends and indemnifies CARLSBAD against any related litigation and provided further such costs shall be payable only from the Harbor revenue fund. -4- '(£> d. CARLSBAD and „...<D assume that any property r,^. ^ which are necessary to undertake the project will be acquired by voluntary dedication or purchase. If it is necessary to condemn any interests in land to undertake the construction or maintenance of the Project, CARLSBAD agrees it will file and pursue to judgment the necessary condemnation action and BOARD agrees that the costs of such suit and the judgment shall be paid in the same manner as any other project related costs under this Agreement. e. CARLSBAD shall first be reimbursed for project related costs from the fund deposited with the Coastal Commission in the manner as the Commission staff, CARLSBAD and BOARD shall agree. If and when this fund is exhausted, BOARD shall reimburse CARLSBAD for all costs which this Agreement covers within thirty (30) days of receiving a monthly certified statement from CARLSBAD. As mentioned above, if BOARD disputes any costs claimed by consultants or contractors, CARLSBAD shall not pay such costs so long as BOARD defends and indemnifies CARLSBAD from any resulting lawsuits. f. To the extent that services are not provided by a Project Manager CARLSBAD may hire and pay for consultants, surveyors, resident engineer(s), contract administrator(s), legal counsel and experts, deemed necessary by CARLSBAD to accomplish its obligations under the Principal Agreement. However, before independently retaining such consultant CARLSBAD agrees to first make written request to Project Manager and BOARD to provide the needed services. To the extent that the payment for these persons is not addressed by the funding and payment provisions of the Principal Agreement, BOARD shall upon receipt of a written statement, reimburse CARLSBAD for any payments made by it. 4. Hold Harmless a. BOARD shall defend, indemnify and hold harmless CARLSBAD and the State of California (STATE) from any and all claims, liabilities, damages, losses or causes of action, of whatever nature (contractual, tortious, or otherwise) resulting or arising from the performance of the Principal Agreement or this Exhibit unless the claim, liability, damage, loss or cause of action arises solely from the intentional actions of CARLSBAD or STATE. BOARD will be responsible for all litigation which may arise out of any of the construction contracts and for resolving or attempting to resolve all claims arising out of the construction contracts. CARLSBAD shall not be responsible for payment of any cost overruns; to the extent that the cost of construction exceeds the funds deposited, BOARD shall indemnify CARLSBAD. The provision is intended to obligate BOARD to protect and defend CARLSBAD and STATE and to pay any settlement or judgment against CARLSBAD -5- 1 or STATE resuming from the performance of the K .ncipal Agreement or this Exhibit unless CARLSBAD or STATE intentionally fails to perform their express obligations and the failure is the sole cause of the damage, injury or loss. It is agreed that any claims arising from this Agreement and the Lagoon Enhancement Project will be treated as falling under the California Tort Claims Act Government Code Sections 810 et seq. and that the City of CARLSBAD, City of Los Angeles, and STATE their Boards, officers and employees v/i 11 raise all applicable immunities and defenses if a claim is filed against any entity. The bidding contracts and specifications entered into between CARLSBAD and the necessary contractors and consultants will all have the following provisions provided, however, that if it is not possible for a prospective consultant or contractor to reasonably meet one or more of the insurance requirements, then CARLSBAD, after consultation with BOARD may waive the requirement. Before any such waiver shall be granted, BOARD shall first be provided an opportunity to itself purchase additional insurance if it desires. I. Indemnification and Insurance. The contractor or consultant retained pursuant to this Agreement shall at all times relieve, indemnify, protect and save harmless (1) the Cities of Los Angeles (including its Harbor Department) and CARLSBAD (CITIES) and (2) the State of California (STATE) and any and all of their boards, officers, agents, consultants and employees from any and all claims and demands, actions, proceedings, losses, liens, costs and judgments of any kind and nature whatsoever, including expenses incurred in defending against legal actions, for death of or injury to persons or damage to property including property owned by or under the care and custody of Cities or STATE and for civil fines and penalties, that may arise from or be caused directly or indirectly by: (A) Any dangerous, hazardous, unsafe or defective condition of, in or on the premises which are the subject of this Agreement of any nature whatsoever, which may exist by reason of any act, omission, neglect, or any use or occupation of the premises by Contractor or Consultant, its officers, agents, employees, subcontractors or subconsultants or consultant. (B) Any operation conducted upon or any use or occupation of the premises by Contractor or -6- its officers, agents, employees, subcontractors or subconsultants under or pursuant to the provisions of this contract or otherwise; (C) Any act, omission or negligence of Contractor or Consultant, its officers, agents, employees, subcontractors or subconsultants regardless of whether the negligence of the City of CARLSBAD or the City of Los Angeles or STATE contributed to such act or failure to act; (D) Any failure of Contractor or Consultant, its officers, agents or employees to comply with any of the terms or conditions of this contract or any applicable federal, state, regional, or municipal law, ordinance, rule or regulation; (E) The conditions, operations, uses, occupations, acts, omissions or negligence referred to in Subdivisions (1), (2), (3), and (4), existing or conducted upon or arising from the use or occupation by Contractor or Consultant on any other premises within the City of CARLSBAD related to this Agreement. The Contractor or Consultant also agrees to indemnify CITIES and STATE and pay for all damage or loss suffered by CITIES and STATE including but not limited to damage to or loss of CITIES' or STATE'S property caused by or arising out of the conditions, operations, uses, occupations, acts, omissions or negligence referred to in Subdivisions (A), (B), (C), (D), and (E). The Contractor or Consultant agrees that it will maintain the insurance specified in the contract. All such insurance shall be written at such limits and with such companies as are acceptable to CITIES and STATE and the Contractor or Consultant shall provide CITIES and STATE with proof of said insurance as specified below. II. Workers' Compensation. (A) The Contractor or Consultant will be required to secure the payment of compensation to its employees injured while performing work or labor necessary for and incidental to performance under this Agreement in accordance with the provisions of Section 3700 of the Labor Code of the State of California. -7- (B) The Contractor or Consultant shall file with CITIES one of the following: 1) a certificate of consent to self-insure issued by the Director of Industrial Relations, State of California, 2) a certificate of Workers' Compensation insurance issued by an admitted insurer, or 3) an exact copy or duplicate thereof of the policy certified by the director or the insurer. Such documents shall be filed prior to commencing the work of this Agreement. (C) Where the Contractor or Consultant has employees who are covered by United States Longshoremen and Harbor Workers' Compensation Act coverage, the Contractor or Consultant must furnish proof of such coverage to the satisfaction of CITIES. It is suggested that the bidder consult its insurance agent to determine whether its proposed construction methods will render its employees subject to coverage under the Act. III. Liability and Protection and Indemnity Insurance. (A) The Contractor or Consultant shall furnish a policy of comprehensive general liability insurance, including endorsements for contractual liability assumed, and automobile liability insurance, in which CITIES and STATE, their boards, officers, agents, and employees are named insureds or are included as additional insureds with the Contractor or Consultant. Contractor shall also include an endorsement for products and completed operations insurance. Consultants shall provide errors and omissions insurance. The comprehensive general liability policy shall fully protect and save harmless the additional insureds frcm any and all claims for damages for bodily injury, including wrongful death, as well as from claims for property damages, which may arise from operations under and in connection with this contract, whether such operations be by the Contractor or Consultant or by any subcontractor or subconsultant or anyone directly or indirectly employed by either of them and whether liability is attributable to the Contractor or Consultant or any of the named insureds. Such policy shall protect the City of Los Angeles and its Harbor Department and the City of CARLSBAD and the STATE their officers, agents, and employees while acting within the scope of their duties, against all claims arising out of or in connection with the work. -8- ,£> (B) The minimum limits of Liability Insurance shall be the limits normally carried by the Contractor or Consultant but not less than $15,000,000 combined single limit for property damage and bodily injury including death (or such other amounts as CITIES may specify). If the submitted policies contain aggregate limits the Contractor or Consultant shall provide evidence of insurance protection for such limits so that the required coverage is not diminished in the event that the aggregate limits become exhausted. Said limit shall be without deduction, provided that CITIES and their designee may permit a deductible amount when, in their judgment, it is justified by the financial capacity of the Contractor or Consultant. (C) Nothing herein shall be construed as limiting in any way the extent to which the Contractor or Consultant may be held legally responsible for damages to persons or property. (D) When the work of this specification requires the use of watercraft, the Contractor or Consultant must additionally provide protection and indemnity insurance in the amount of $15,000,000 combined single limit for marine liability subject to the same terms as in A, B, and C above. IV. Comprehensive and Special Hazard Insurance. (A) During the progress of the work under this contract and.until its final acceptance, the Contractor or Consultant responsible for the work shall have the charge and care thereof and shall take every necessary precaution against injury or damage to any part thereof by the action of the elements, or from any other cause whatsoever whether arising from the execution or from the nonexecution of the work. (B) The Contractor or Consultant responsible for the work shall, at its expense, rebuild, repair, restore and make good all injuries or damages to any portion of the work from any and all causes before its completion and final acceptance, and shall deliver the work completed in accordance with the terms of the Contract. (C) The Contractor or Consultant responsible for the work is encouraged (but is not required) to obtain comprehensive insurance covering the full insurable value of the work and providing protection during -9- construction against perils of the elements, vandalism, malicious mischief, and to guarantee the Contractor's or Consultant's ability to perform any restoration required. The Contractor or Consultant may also need to insure against any special construction hazards peculiar to the work. V. The special insurance endorsement attached hereto as Attachment B-l shall be made available to Contractors and Consultants to satisfy the insurance requirements described above. VI. The bidding specifications shall require as a condition precedent to beginning any work that the contractor selected to perform the work provide a performance bond in the amount of 100% of the value of the work and a payment bond in the amount of 50% of the value of the work. d. Insurance Documents and Submittals. I. All required insurance shall be transmitted to the Project Manager within thirty (30) days of award of contract for approval by CITIES. II. The approval of insurance by CITIES shall be a condition precedent to the right of the Contractor or Consultant to demand or receive payment for the work under the contract requiring such insurance. No request for payment will be processed until the required insurance has been approved by CITIES and no Notice to Proceed will be issued until such approval has been given. III. Contractor or Consultant shall submit two "certified duplicate" copies of all policies of required insurance with personally executed signatures of authorized agent or representative. Facsimile signatures will not be approved. IN LIEU OF CERTIFIED DUPLICATE COPIES, CERTIFICATES OF INSURANCE INDICATING THE REQUIRED COVERAGES WILL BE ACCEPTED IF THE SPECIAL ENDORSEMENT APPEARING IN THE INSURANCE REQUIREMENTS SECTION OF THIS SPECIFICATION IS EXECUTED AND ATTACHED TO EACH OF THE DUPLICATE CERTIFICATES. (Attachment B-l) IV. Liability and protection and indemnity policies shall name as additional insureds the Cities of Los Angeles and CARLSBAD and STATE, their boards, officers, agents, and employees, and must contain a noncancellation clause exactly as fol lows: -10- '.» .s agreed that the insurance pro,,ded herein will not be cancelled or reduced in amount until the Board of Harbor Commissioners and the City Attorney of the City of Los Angeles and the City of CARLSBAD and its City Attorney have been given 30 days notice by certified mail." Such policies shall contain an endorsement substantially in the form of Attachment B-l. e. Indemnity After Land Interests Transferred. The STATE agrees that once it becomes the holder of the necessary land interest in the Lagoon and CDFG or any other STATE agency begins to maintain the Lagoon, the City of Los Angeles shall no longer have an obligation to indemnify the STATE for any incidents occurring at the Lagoon thereafter. 5. Records and Accounts. CARLSBAD through the Project Manager agrees to maintain all books, accounts and other records ("records") related to this Agreement. These records shall be subject to examination, audit and transcription by BOARD and any bond trustee associated with bond funds expended on the project. These records shall be retained for at least four years following the term of this Agreement. Upon request in writing by the Executive Director of the Port of Los Angeles or Bond trustee or their designated representative, CARLSBAD shall furnish a statement of the exact location of all records and the name and telephone number of the custodian of these records. The statement shall be submitted within fifteen (15) days of the request and shall contain such detail and cover such period of time as may be specified in any such request. 6. City Approval. Whenever approval of CARLSBAD is required under the Principal Agreement or this Exhibit the approving authority is the City Manager unless the Carlsbad Municipal Code or other law requires the decision to be made by the City Council or other City agency or official. -11- ATTACHMENT B-l ENDORSEMENT FOR COMPREHENSIVE GENERAL LIABILITY AND FOR PROTECTION AND INDEMNITY POLICIES SPECIAL INSURANCE ENDORSEMENT NO. 1 Notwithstanding any inconsistent statement in the policy to which the endorsement is attached or any endorsement now or hereafter attached thereto, it is agreed (1) the City of Los Angeles, the Board of Harbor Commissioners, the Harbor Department, and its officers, agents, and employees; (2) the City of CARLSBAD, and its Board, its officers, agents and employees; and (3) the State of California, its officers, agents and employees while acting within the scope of their authority, are included as additional insureds with respect to all operations, uses, occupations, acts, and activities of the insured pursuant to Agreement No. between the City of CARLSBAD and , regardless of whether liability is attributable to the named insured, or a combination of the insured and additional insureds. Such insurance is to be primary and not contributing with any other maintained by said additional insureds. The policies listed below shall apply severally as to each insured except that the inclusion of more than one insured shall not operate to increase the limit of the Company's liability; and the inclusion thereunder of any person or organization as an insured shall not affect any right which such person or organization would have as a claimant if not so included. Name Insured and Address: COVERAGES TO WHICH THIS EFFECTIVE ENDORSEMENT DATE OF POLICY POLICY LIMITS OF INSURANCE ATTACHES ENDORSEMENT NUMBER PERIOD LIABILITY COMPANY -12- The policy(ies) sha'i . r^c be cancelled or reduced in courage until after the Board of Harbor Conmissloners and the City Attorney of the City of Los Angeles and the City of Carlsbad and its City Attorney have each been given thirty (30) days prior written notice by certified mail, return receipt requested, addressed as follows: Board of Harbor Commissioners Office of the City Attorney P. 0. Box 151 City of Carlsbad San Pedro, California 90733 1200 Elm Avenue Carlsbad, CA 92008-1989 Office of the City Attorney State Lands Commission P. 0. Box 151 ' 1807 13th Street San Pedro, California 90733-0151 Sacramento, CA 95814 -10- There are no dec .Dies or self-insured retentions ^nless otherwise noted. ($ deductible (or self-insured retention) for coverage.) APPROVED AS TO FORM JAMES K. HAHN, City Attorney City of Los Angeles By APPROVED AS TO FORM City of Carlsbad , City Attorney By VEHrlm csc3-7250 10/14/87 INSURANCECOMPARY ADDRESS: By AUTHORIZED OFFICER (No facsimile signature accepted) TITLE: ADDRESS: TELEPHONE: DATE: -14- EXHIBIT C HABITAT EVALUATION SUMMARY of the proposed PACIFIC TEXAS PIPELINE COMPANY PROJECT in the PORT OF LOS ANGELES and the proposed BATIQUITOS LAGOON ENHANCEMENT PROJECT in the CITY OF CARLSBAD FEBRUARY 1987 Participants: U.S. Fish and Wildlife Service National Marine Fisheries Service California Department of Fish and Game Port of Los Angeles Section 1. INTRODUCTION The Pacific Texas Pipeline Company (Pactex), a private corporation, proposes to construct a crude oil pipeline system that would extend from the Port of Los Angeles, California to Midland, Texas. A 75-foot deep channel would be dredged in Los Angeles outer harbor and the dredged material used to create a 110-acre (at MHW) landfill island. This landfill would be used as a berthing area to receive tankers of up to 225,000 DWT which would carry primarily Alaska North Slope oil and for locating a 4.8-million barrel capacity tank farm. The landfill in outer harbor would be constructed in waters about 32-40 feet in depth. The Pactex landfill area has been reduced in size due to changes in engineering design (now fully revetted with rock) and as a result of California Coastal Commission permit conditions. The bottom footprint of the landfill was presented in the Draft EIR/EIS as 208 acres and was revised to 192 acres in the Final EIR/EIS and currently is calculated at 140.8 acres. A joint environmental impact report/environmental impact statement (EIR/EIS) was prepared for the Pactex project by the Los Angeles Harbor Department and the U.S. Bureau of Land Management as co-lead agencies under the California Environmental Quality Act (CEOA) and the National Environmental Policy Act (NEPA), respectively. The Los Angeles Board of Harbor Commissioners certified the Final EIR for the Pactex project in November 1985. In early 1985, LAHD requested the participation of FWS, NMFS, and CDFG in the assessment of biological impacts of the proposed Pactex project and in the formulation and assessment of a biological mitigation project. The fish and wildlife impact assessment and mitigation is pertinent to CEQA, to the consideration of the required COE Section 10/404 permits and the California Coastal Act Port Master Plan amendment and coastal development permits. The loss of marine, coastal embayment habitats of outer Los Angeles Harbor from dredge and landfill construction required for the proposed Pactex project was discussed in the EIR/EIS. These habitats are principally of value to nearshore marine fishes, numerous water-associated bird species and some waterfowl. No significant terrestrial habitats would be impacted by the proposed Pactex project in the POLA area. In consultation with the staffs of the FWS, NMFS, and CDFG, potential mitigation project sites between Point Conception and the U.S. Mexican border were examined by POLA. The potential sites to mitigate the Pactex project were narrowed to the following areas: 1) Los Cerritos wetlands - City of Long Beach, Los Angeles County, 2) Batiquitos Lagoon - City of Carlsbad, San Diego County, and 3) Tijuana River estuary - San Diego County. The FWS, NMFS, and CDFG considered Batiquitos Lagoon to be a prime candidate for a restoration project that was compatible with project mitigation objectives. California Coastal Conservancy, City of Carlsbad, local property owners, and interested parties supported a restoration/mitigation project at Batiquitos Lagoon. Section 2. DESCRIPTION OF THE MITIGATION PROJECT Batiquitos Lagoon, 596-acre basin is located in Northern San Oiego County, within the corporate limits of the City of Carlsbad. The lagoon occupies an elongated coastal basin that extends approximately 2.5 miles inland from the ocean and one-half mile in width. Two freshwater creeks, the San Marcos and the Encinitas, drain unto the upper reach of the lagoon. This lagoon, like many others along the southern coast of California, was (and is) subject to man's development. Substantial reductions in tidal volumes have occurred, most significantly within the last quarter of a century due to sedimentation. In addition to the development in the uplands, primarily the San Marcos River Valley, the western portion of the lagoon is constricted by three major transportation arteries: Pacific Coast Highway (Carlsbad Boulevard), an AT & SF railroad bridge, and Interstate Highway 5. All of these recent developments contributed significantly to the rapid increase in sedimentation and the closure of the lagoon mouth to tidal influence except under extreme high tide and wave conditions, or high outflows. Seasonal freshwater inflow and the virtual elimination of tidal influence have resulted in a pattern of fresh or brackish water inundation after winter rains, followed by evaporation resulting in very high salinities (60 parts per thousand) and large salt-flats in the dry season. This is particularly true in the 360-acre eastern lagoon basin, east of Interstate 5. In dry years, broad areas of the lagoon dry up completely, creating bare salt-flats and attendant odor problems. These extreme aquatic environmental conditions limit the lagoon biota to largely plankton and insects. Fishes are usually found only in the deeper waters of the western lagoon (marine) and San Marcos Creek (freshwater). Inundated areas support substantial numbers of shorebirds and dabbling ducks. The California least tern, a state and Federal endangered species, has nested in several areas within the lagoon. The upper lagoon has acted as a sedimentation basin for San Marcos and Encinitas Creeks; deposition rates have averaged 1.1 to 1.4 cm/year since the early 1900's. Continuing sedimentation is further restricting aquatic habitats and left unchecked will convert the lagoon basin to upland conditions. A complete description of Batiquitos Lagoon is found in Batiquitps Lagoon Habitat Enhancement Study, by Keith MacDonald and C. Robert Feldmeth(April 1985), Alternatives for Maintaining Tidal Circulation in the Batiquitos Lagoon,"California by Scott A. Jenkins and David W. Skelly (February 1985), anatheDraft Batiquitos Lagoon Enhancement Plan (1986) by the California Coastal Conservancy. A process of evaluating various enhancement alternatives at Batiquitos Lagoon has been ongoing for a number of years by property owners, resource agencies, local citizen interest groups (e.g., Batiquitos Lagoon Foundation) and the City of Carlsbad. The proposed Lagoon Enhancement Plan provided the opportunity, in view of Pactex's mitigation requirements for the impacts at POLA, to develop an enhancement project at Batiquitos Lagoon which meets the goals of the interest groups, offsets the Pactex project impacts, and creates excess habitat values for future fill projects in San Pedro Bay. These Lagoon Enhancement Plan goals include: - restore tidal influence to the lagoon - retain existing marshland and create additional marshland, if desirable - preserve or enhance existing fish and wildlife resources - retain and enhance habitat for endangered species - maintain good water quality - provide public access -to the lagoon shoreline, where appropriate - reduce sedimentation in a cost-effective manner - maintain an open ocean entrance - assure that the goals listed above are achieved and maintained in perpetuity The proposed Batiquitos Lagoon enhancement project is described in detail in the Coastal Conservancy's Draft Batiquitos Lagoon Enhancement Plan (1986). In addition to the preferredenhancementproject,arangeof alternative configurations were evaluated. The main features of this project include the construction of a lagoon mouth channel approximately 200 feet wide across the existing beach, westerly of Carlsbad Boulevard. The channel will be lined with riprap to the low water edge of the beach. Through a combination of excavation and dredging, a large area of the lagoon will be reconfigured to establish subtidal and intertidal habitats. The volume of material to be removed will be sufficient to establish a tidal prism which will assure continuous tidal influence and daily scouring of the lagoon mouth. Suitable material will be used for beach replenishment, if feasible. The levee (or berm) will separate an area of the marsh from tidal influence thereby preserving the existing freshwater and brackish marsh habitat. Water will be divered from San Marcos Creek to maintain the diked freshwater marsh. Additionally, sediment catch basins will be placed upstream in the creek channels that input to the lagoon. Since shorebirds, dabbling ducks and the endangered California least tern (CLT) presently use the lagoon, the project is designed to result in no net loss of habitat values for these species. Only the FWS and CDFG conducted this analysis of the net effect of each project alternative upon the existing habitat value for shorebirds and dabbling ducks. The restoration plan includes provisions for CLT nesting areas. No fewer than four nesting locations averaging about 8 acres each will be constructed within the lagoon system as determined by FWS and CDFG. In addition to the preferred enhancement project (presently proposed), a range of preliminary alternative configurations were evaluated. Section 3. METHODOLOGY The involved agencies(FWS, NMFS, CDFG, and POLA) utilized an agreed-upon habitat evaluation procedure to assess the impact area and the mitigation project. Figure 1 presents a schematic diagram of the evaluation procedure. The evaluation team of biologists from FWS, NMFS, CDFG, and POLA were responsible for familiarity with the existing biological information and studies pertinent to outer Los Angeles Harbor, Batiquitos Lagoon, and other appropriate coastal embayment habitats. POLA provided appropriate maps and preliminary engineering drawings of the proposed landfill construction. Maps, drawings, and recent studies of the Batiquitos Lagoon restoration alternatives were provided by the Coastal Conservancy and by the affected property owners, HPI and SAMMIS, through their consultants. The team also reviewed an ongoing study, Assessment of the Functional Values of Batiquitos Lagoon, being prepared by Woodward^Tlyde Consultants for the Coastal Conservancy. All important activities, assumptions, and conclusions, directly related to the habitat evaluation, were discussed or conducted mutually and cooperatively by the evaluation team. The process utilized in this habitat evaluation included the following general steps: a) determination of proposed project scope; b) fish and wildlife resources likely to be significantly impacted; c) establishment of mitigation goal; d) definition of harbor cover type(s); e) mitigation site identification; f) conceptual design of mitigation area construction; g) harbor and mitigation site evaluation species list development; h) formulation of habitat suitability indices for the project and mitigation alternatives; i) determination of habitat units for the project area and the mitigation alternative area; j) determination of the necessary size of the mitigation area to offset proposed project; and k) determination of the potential excess habitat values (mitigation credits) available to offset future fill projects in San Pedro Bay for each alternative. Relative value indices were not used. The fish and wildlife resources of concern in the landfill project vicinity were water-associated migratory birds, such as gulls, terns, cormorants, brown pelicans, grebes, mergansers, and surf scoters, and coastal marine fishes such as croakers, surfperches, California halibut, northern anchovy, flatfishes, sand basses, bay sharks and rays. The accepted mitigation goal of the evaluation team was: no net loss of in-kind habitat value. The evaluation species included exclusively fishes and birds. The evaluation species chosen for the harbor site and the compensation site are either common to both systems or considered ecologically equivalent. A fundamental premise to the habitat evaluation procedure was that fishery resources would not be traded for avian resources, or vice versa. Since the existing habitat at Batiquitos Lagoon supports shorebirds, dabbling ducks and the endangered California least tern, it was agreed that the restoration project for Batiquitos must conserve the existing habitat values for these species. Therefore, a separate evaluation was conducted by FWS and CDFG to assess the existing shorebird, dabbling duck and least tern habitat values at Batiquitos Lagoon. This was a major factor in determining the preferred enhancement/mitigation project to be implemented at Batiquitos. Only a few habitat compensation measures are presently considered feasible for offsetting habitat losses of harbor landfills. The principal measure at Batiquitos Lagoon is to restore unrestricted tidal influence to a significant portion of the lagoon and create and enhance coastal embayment habitats by excavating varying volumes of sediment. In its present condition, the areas of Batiquitos Lagoon which would be enhanced have little biological value to any marine evaluation species. Several alternative enhancement plans that achieve the restoration goals by creating different proportions of intertidal and subtidal areas were proposed. The considered alternatives with varying ratios of subtidal and intertidal areas are described in Exhibit A. The selected cover types used for the basis of the habitat evaluation were: Los Angeles Harbor water surface area measured at the mean high water line, ±4.8 feet mean lower low water (MLLW); and Batiquitos Lagoon water surface area measured from ±5.0 feet MLLW to -5.5 feet MLLW. Only intertidal and subtidal areas within this evaluation range were evaluated. Areas that contain California least tern nesting activity, salt marsh or freshwater marsh/sedimentation basin were not considered in the habitat evaluation process. The twenty (20) selected evaluation species or groups for both the proposed landfill and enhancement alternative sites are listed in Table 1. The habitat suitability indices for each species or groups at the proposed sites were determined by the judgement of the team member(s) of each participating agency based upon best available information and then averaged. The habitat suitability indices ranged from 0.0 for no habitat suitability to 1.0 for complete habitat suitability. Habitat suitability indices were derived for the existing condition and the future condition at both the project impact site and for the alternative enhancement proposal sites. The landfill and the enhancement construction were assumed to be concurrent. The habitat loss from outer POLA fill was assumed to be total and to have occurred between year zero and year one. Similarly, the Batiquitos Lagoon habitats in the areas to be restored were assumed to have little value for the evaluation species and that full predicated habitat value would be achieved after the first year following enhancement. From the array of enhancement alternative previously evaluated, a preferred enhancement proposal was developed for implementation (see Table 2). Under this proposal, 390 acres are available for restoration. Based upon preliminary engineering design, the net impact of the proposed Pactex construction in POLA outer harbor was determined to be 118.8 acres (see Table 3). Further refinement of the landfill and mitigation site engineering design may result in a revision to the acreages of the impacted and mitigation areas. The habitat units per acre were calculated for the impact and enhancement sites by summation of the mean habitat suitability indices. The predicted habitat value losses at the Pactex landfill were tabulated by comparing the habitat value of the existing condition to the habitat value after the landfill is completed. Also the predicted habitat value gains at the Batiquitos Lagoon enhancement site were tabulated by comparing the existing habitat value with the future (enhancement) condition. Habitat unit gains and losses for the twenty (20) selected evaluation species were the units of measure and were exchanged on a unit-by-unit basis. The net result of comparing habitat unit changes at the Pactex landfill (habitat unit losses) with the net habitat unit changes as Batiquitos Lagoon (habitat unit gains) can be represented in a ratio that indicates the offset requirements. Those trade-off ratios are 1.138 for Alternative 1, 1.062 for Alternative 2, and 0.52 for Alternative 3 (Table 4). As shown in Table 5, the Batiquitos Lagoon habitat gains would not only compensate for the Pactex landfill (118.8 acres) in POLA, but would restore varying amounts of excess habitat value (83 to 325 acres of central San Pedro Bay outer harbor habitat) that may be used to offset future landfill project in San Pedro Bay or other appropriate port districts. In summary, the three alternative plans in Exhibit A, the Batiquitos Lagoon Enhancement Plan, satisfactorily meet the following objectives: 1. avoids harm to California least tern nesting activity, 2. avoids any loss of habitat value for shorebirds and dabbling ducks, 3. offsets marine resources and habitat loss from the Pactex landfill, and 4. Would provide additional habitat values which would be counted as mitigation credits that can be used to offset future San Pedro Bay landfill. Figure 1: Habitat Evaluation Process Flow Diagram define project and likely impacts determine mitigation goal determine habitat suitability indices for project area i -k. select evaluation species define mitigation area and impacts calculate the habitat units in the mitigation area determine net loss within project determine habitat suitability indices calculate the habitat units in the project area determine net gain within mitigation area calculate mitigation area required to offset project area loss T determine excess (mitigation habitat value) available for banki ng Table 1: Evaluation Species and Groups for the Batiquitos Lagoon Enhancement Projects Pactex Landfill And 1. California halibut 2. White croaker 3. Gobiedae 4. Diamond turbot 5. Bay ray 6. Bay sharks 7. California corbina 8. Anchovy species 9. Oueenfish 10. Topsmelt 11. Barred sand bass 12. Shiner surfperch 13. Bonita/barracuda 14. White surfperch 15. California killifish 16. Spotted sand bass 17. California tonguefish 18. Striped mullet 19. Diving ducks 20. Gulls/terns/cormorants Paralichthys californicus Genyonemus lineatus (bay, arrow and cheekspot gobies, long-jaw mudsucker) Hypsopsetta guttulata Myli obatfs~Ca1i forni ca (leopard shark and smoothhounds) Menticirrhus undulatus (northern slough, and deepbody) Seriphus politus Atherinops affinis Pa r a 1 a bralT nebu 1 Tfer Cymatogaster aggregata Sarda chiliensis/Sphyraena argentea Phanerodon furcatus Fundulus parvipinnis Paralabrax maulatofasciata Symphurus atricauda Mugil cep'halus (scoters, mergansers, ruddy, bufflehead) Table 2: Summary of Batiqultos Lagoon Enhancement Plan Alternatives Alternative 1 Alternative 2 Alternative 3 Area of intertidal 175217 317 (Acres) Area of subtidal 220 171 71 (Acres) Area of salt/brackish marsh" 139 141 141 (Acres) Area of freshwater marsh 33 33 33 (Acres) Area of least tern habitat 34 34 34 (Acres) <r Table 3: Pactex Landfill Project Impact* Habitat Soft bottom - footprint deep water protected Piling (within 35 ft. of wharf face) Shallow piling Deep piling Benthic side slope Deep water protected Deep water unprotected Rocky dike habitat (exposed) Shallow water protected Deep water protected Total Actual Gain (or loss) in Acres (140.8) 1.0 1.4 1.4 0.9 4.3 12.1 (119.7) Weighted Value 1.0 1.0 0.5 1.0 0.5 1.5 1.0 Weighted Gain (or loss) in Acres (140.8) 1.0 0.7 1.4 0.4 6.4 12.1 (118.8) Based on a preliminary engineering design using current NOAA harbor bottom topographic data and due to a CCC permit condition, the landfill footprint area of such impact has been revised to 140.8 acres. With application of the biological mitigation procedure (using wildlife agencies' weighted values) described in Appendix F of the Draft 2020 Plan (COE, 1984), the net impact of the proposed Pactex construction in POLA outer harbor was determined to be 118.8 acres. This includes mitigating for the water area above the rocky slope to the toe of the landfill footprint such that further mitigation for this area, if filled in the future, will not be required. Table 4: Summary of Habitat Evaluation For Pactex Landfill And Batiquitos Lagoon Enhancement Plan Alternatives _ PARAMETER EVALUATION SITES PROJECT BATIQUITOS LAGOON LANDFILL SITE ENHANCEMENT Alternative 1 Alternative 2 Alternative 3 1. Cover Type Area 118,8 390 388 388 Evaluated (acres) 2. Intertidal/subtidal 44/56 56/44 82/18 distribution within evaluation area (%) 3. Existing condition * 9.84 0.90 0.90 0.90 (existing habitat units/acre) 4. Future condition 0 12.10 11.35 6.02 (future habitat units/acre) 5. Net habitat units/acre (9.84) 11.20 10.45 5.12 (4.-3.) 6. Offset ratio 1.138 1.062 0.520 (Net HU project) (Net HU restoration) 7. Area of Batiquitos (104.4) (111.9) (228.5) enhancement required to offset Pactex landfill (Cover Type Area; acres of Batiquitos) Offset Ratio * Excluding shorebirds and dabbling ducks which were evaluated separately. Table 5: Summary of Habitat Evaluation For Batiquitos Lagoon Enhancement Plan Alternatives and Outer Harbor San Pedro Bay PARAMETER Batiquitos Lagoon Enhancement Plan Alternative 1 Alternative 2 Alternative 3 1. Predicted habitat units 443.8* 412.1** 201.8*** gained from Batiquitos enhancement (= acres of central outer harbor San Pedro Bay****) 2. Habitat units lost from (118.8) (118.8) (118.8) Pactex landfill (= acres of central outer harbor San Pedro Bay****) 3. Excess habitat units 325.0 293.3 83.0 available after Pactex project for future mitigation (acres of central outer harbor San Pedro Bay****) * 390 acres of Batiquitos enhancement x 1.138 (trade-off ratio) = 443.8 habitat units = 443.8 acres of central outer harbor San Pedro Bay. ** 388 x 1.062 = 412.1 acres *** 388 x 0.520 = 201 .8 acres **** One (1) habitat unit = one (1) acre of mitigation for one (1) acre of outer harbor San Pedro Bay landfill in waters 20 feet or deeper. For example, if City has received all necessary State and federal permits for an outer harbor landfill of 100 acres (impacting such area calculated as set forth in Table 3) in waters of a depth equal to or greater than 20 feet, then City may accomplish the biological mitigation for this fill by using 100 of the 325 excess habitat units described above. There would, thereafter, be 225 excess habitat units available to the City if future fills are permitted. 7003 esc August 10, 1987 EXHIBIT D DEFINING METHODOLOGY TO DETERMINE FUNDS NECESSARY TO ESTABLISH ANNUITY AND INVESTMENT ACCOUNTS TO FUND THE MAINTENANCE ACCOUNT FOR THE BATIQUITOS LAGOON ENHANCEMENT PROJECT. 1. Purpose The methodology described herein shall be used by BOARD and CDFG to comply with the funding requirements of Section 10 (Project Maintenance Responsibilities) of the Agreement for the marine habitat enhancement of Batiquitos Lagoon ("Agreement") to which this Exhibit is attached. 2. Determination of Annuity Amount to Fund Maintenance for First 30 Years a. Determination of the Annuity Amount In accordance with Section 10(b) of the Agreement, the amount of funds necessary to establish the Annuity will be determined based on the future equivalent of $200,000 in 1987 dollars at the effective date of the Agreement. This future equivalent shall be determined in accordance with the inflation factors given in Table D-l. Said inflation factors are based upon Data Resources Institute's (DRI) "U.S. Long-Term Review", Spring 1987 forecasts for calendar years 1987 through 1991. Based on these factors, the annuity amount for each of the years 1988 through 1991 is given in Table D-l. TABLE D-l Year Inflation Factor Annuity Amount 1987 - $200,000 1988 1.0405 $208,100 1989 1.0445. $217,360 1990 1.0430 $226,707 1991 1.0415 $236,115 As such, if Construction Certification (as defined in Section 6(k) of the Agreement, occurs in calendar year 1990, the dollar basis for establishing the Annuity in accordance with Subsection c. below would be $226.707. - 1 - If Construction Certification occurs after the year 1991, determination of the annuity amount to be used in accordance with the methods described hereunder to determine the Annuity and Investment Account amounts shall be based on the actual inflation rate occurring between the effective date of the Agreement and the date of Construction Certification as reported by DRI at the time of Construction Certification. For example, if Construction Certification occurs in 1992 and actual inflation between 1987 and 1992 is nineteen percent (19%), the annuity amount would be $200,000 x 1.19 = $238,000. b. Annual Inflation Rate for Adjusting Annual Maintenance Cost, Years 0-29 It is expressly agreed that the annual inflation rate to be applied to the annual maintenance cost for the period of time of thirty (30) years following Construction Certification, is to be five and two/tenths percent (5.2%). Said inflation rate is based upon the Data Resources Institutes "U.S. Long-Term Review", Spring 1987 forecasts. c. Determination of Initial Deposit to Establish Annuity to Fund Project Maintenance Costs for 0-29 Years In accordance with Section 10(b) of the Agreement, within sixty (60) days after Construction Certification, CDFG and BOARD shall meet to determine the amount of funds necessary to transfer from the Escrow Account as described in Section 9(a) of the Agreement, or from the Harbor Revenue Fund, as may be required in accordance with Sections 5(b) and 9(f) of the Agreement, to establish the Annuity. The initial deposit shall be determined from the annuity amount from subsection a., above, the agreed upon annual inflation rate of 5.2%, and an investment rate of 8.2% for a 30 year annuity. Using a computer model, a series of annually compounded interest calculations will be made which result in an ending balance of approximately zero dollars following 30 years of transferring funds from the Annuity to the Maintenance Account. Table D-2 is a sample computer model calculation, based on the factors given above, assuming Construction Certification occurs in calendar year 1991. In this example, the initial deposit required would be $4,852,000 including the initial transfer of $236,115 from the Escrow Account required by Section 10(b) of the Agreement. Table D-2 shows the annual interest earned and the annual amount to be deposited into the Maintenance Account. As a sample calculation for year 17 (rounded to the nearest thousand dollars): 0 Interest earned: $5,763,000 x .082 = $473,0000 Amount transferred to Maintenance Account: $ 505,000 x 1.052 = $531,0000 Annuity ending balance: $5,763,000 + $473,000 - $531,000 = $5,705,000 - 2 - TABLE D-2 BATIQUITOS1 LAGOON ENHANCEMENT PROJECT MAINTENANCE FUNDING INITIAL DEPOSIT $4,852,485 INVESTMENT RATE 8.2% INFLATION ANNUITY RATE AMOUNT 5.2% $236,115 ===================================================== YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 INTEREST EARNED 378,542 389,215 399,703 409,937 419,838 429,318 438,278 446,608 454,185 460,873 466,521 470,961 474,006 475,452 475,069 472,609 467,792 460,315 449,842 436,002 418,390 396,559 370,018 338,229 300,604 256,494 205,192 145,922 77,834 • TO MAINTENANCE ACCOUNT 236,115 248,393 261,309 274,898 289,192 304,230 320,050 336,693 354,201 372,619 391,995 412,379 433,823 456,382 480,114 505,079 531,344 558,973 588,040 618,618 650,786 684,627 720,228 757,680 797,079 838,527 882,130 928,001 976,257 1,027,023 ==========: ENDING BALANCE 4,616,370 4,746,519 4,874,425 4,999,230 5,119,975 5,235,582 5,344,850 5,446,435 5,538,842 5,620,408 5,689,286 5,743,428 5,780,566 5,798,191 5,793,529 5,763,519 5,704,784 5,613,603 5,485,878 5,317,102 5,102,318 4,836,081 4,512,412 4,124,750 3,665,900 3,127,977 2,502,341 1,779,532 949,196 7 - 3 - f?- 3. Determination of Initial Deposit to Establish Investment Account. In accordance with Section 10(c) of the Agreement, within sixty (60) days after Construction Certification, BOARD shall establish the Investment Account by transfer from the Escrow Account, or from the Harbor Revenue Fund, in accordance with Section 5(b) of the Agreement. The amount of the deposit into the Investment Account shall be determined based upon: the annuity amount from Subsection a., above, the agreed upon annual inflation rate of 5.2% and the agreed upon investment rate of 8.2% by application of the following formula: D - [ (x) (l+i)301/(l*I)30 for l-i X = annuity amount I = interest rate = 0.082 i = inflation rate « 0.052 D = initial deposit As an example, assuming Construction Certification in 1991, the initial deposit would be: D = [$236.115 (1.052)30]/(1.082)30 = $3,385,764 .082 - .052 call $3.386,000 4. Determination of Funding Requirements for Long-Term Maintenance and Dispersal of any Excess Funds In accordance with Section 10(c) of the Agreement, at the end of the thirty (30) year period following Construction Certification, BOARD, SLC and other parties shall meet (within 60 days) to determine the adequacy of the Maintenance Account balance to provide for maintenance beyond the first 30 years. This section describes the methodology to be used in making this determination. Each of the 30 actual annual maintenance expenditures, based on records maintained by CDFG, in accordance with Section 10(f) of the Agreement, shall be adjusted to account for actual annual inflation between the year in which the expenditure was made and the end of the 30 year period following Construction Certification. For example, an expenditure of $750,000 in the 25th year would be adjusted as follows if actual inflation ,in years 26, 27, 28, 29, and 30 were observed to be 5.4%, 5.3%, 5.6%, 6%,and 4.7%, respectively: $750,000 x 1.054 x 1.053 x 1.056 x 1.06 x 1.047 = $975,543.65. Following this procedure for each of the 30 annual maintenance expenditures will result in a list adjusted to reflect the value of dollars at the beginning of the 31st year following Construction Certification. - 4 - This list of 30 inflation-adjusted annual maintenance expenditures shall then be utilized to determine a mean annual maintenance expenditure in year 31 dollars by dividing the sum of the 30 annual adjusted maintenance figures by 30. Additionally, the list of annual maintenance expenditures shall be used to identify the greatest maintenance expenditure which was required in any of the 30 preceding years. A 95% confidence interval about the inflation-adjusted mean annual maintenance cost shall be calculated using the following formula: x+ 1.96s for X = Adjusted mean annual maintenance expenditure. " N = 30 (the number of years being sampled), s = Standard deviation of the 30 inflation-corrected annual maintenance expenditures. For example, if X = $500,000; and s = $51,000 then the 95% confidence interval about the mean annual maintenance cost would be $500,000 + 1.96 ($51.000) {3rT or $500,000 + $18,250.12; or $481,749.88 < X < $518,250.12. Next, the 95% confidence intervals shall be arrayed about the mean annual inflation, and the mean observed annual difference between interest and inflation through analysis of each of these parameters as they relate to each of the 30 years following Construction Certification. For Example: 1) The 95% confidence interval about the mean inflation calculated over the 30-year period will be computed as follows: 1 + s(1.96) for i = The mean of the observed interest rates for each of JN the 30 years following certification. N = 30 s = Standard deviation. If i = 5.2% standard deviation = 1.0% and N = 30, then the 95% confidence interval would be 5.2% +_ 0.35%; or 4.85% < i < 5.55% 2) The 95% confidence interval about the mean difference between interest and inflation (Y) will be computed as follows: - 5 - Y + s(1.96) for Y = The mean of the observed difference between interest JN and inflation for each of the 30 years N = 30 s = The standard deviation of each of the 30 observed annual differences between interest and inflation. If Y = 3.0; s = 0.5; and N = 30, then the interval would be 3.0 +_ 0.18; or 2.82 £Y<3.18 In order to attempt • to assure the permanent adequacy of the long term (post 30 year) Maintenance Account, the higher figure in the 95% confidence interval about mean inflation shall be identified (5.55% in the above example); the lower figure in the 95% confidence interval about the mean difference between interest and inflation shall be identified (2.82% in the above example); and the higher figure in the 95% confidence interval about mean inflation-corrected annual maintenance expenditure shall be identified ($518,250.12 in the above example). These identified numbers shall then be entered into the following equation: B - C (1+it) (X+) ] for 8 = requisite post 30 year balance Y+i t - Upper figure of a 95% confidence interval about mean observed annual inflation in each of the 30 years following certification. Xt = The upper figure in the 95% confidence interval for the mean adjusted annual maintenance cost as discussed above. Y i = Lower figure of a 95% confidence interval about the observed difference between interest and inflation for each of the 30 years following Construction Certification. Using the previously derived figures for the sake of illustration only, we have: B = C 1.0555) ($518,250.12)] = $19,397,624 .0282 Lastly, as has been previously indicated, use of the inflation-corrected list of annual maintenance costs will enable the identification of the largest annual maintenance expenditure (LAME) (corrected, of course, to the relative value of dollars in the 31st year following certification of the lagoon enhancement project). For the sake of illustration, let us assume this figure to be $1.5 million. This maximum expenditure figure is to be combined with the value of B as determined above. Combining the computed value of B above with the presumed maximum observed annual maintenance expenditure results in a total of $20,897,624. - 6 - If the total of funds available in the Maintenance Account plus the funds remaining in the Annuity Account plus the funds available in the long-term Investment Account exceed the sum of B plus LAME, then the portion of these combined funding sources which exceed the computed value of the sum of B and LAME shall be refunded to the BOARD. CDFG shall receive the portion of the combined accounts which is equal to the sum of B plus LAME and shall establish two separate accounts therewith. These accounts shall be known as the LAME account (equivalent in size to LAME as identified above) and the permanent maintenance account (or B account) equivalent in size to B as B is to be computed. Use of these two accounts shall be limited to providing for maintenance of the Batiquitos Lagoon Restoration Project area. CDFG shall rely upon use of the B account for lagoon maintenance except in cases of emergency in which event CDFG may draw against the LAME account. Using the agreed to interest and inflation assumptions, (i.e., interest at 8.2% and inflation at 5.2%) and assuming, for example, an initial deposit of $3,385,764 into the investment account and an annual estimated maintenance cost of $236,115 (i.e., the deposit takes place 4 years from the effective date of the Agreement). This account will grow to $36,014,261, and BOARD would, given this example, receive a refund of $36,014,261 - $20,897,624 = $15,116,636 plus any remaining funds available in the Annuity Account. If the differential between interest and inflation turns out to be measurably higher than the agreed to 3.0%; and/or if the annual mean corrected maintenance figure is less than $500,000; and/or if expenditures and interest rates exhibit a degree of consistency which results in tightening the 95% confidence intervals about the parameters discussed above, then the refund could be greater than the $15,116,636 indicated above. If, alternatively, the total funds available in the Maintenance Account plus the funds available in the Annuity and Investment Accounts are less than or equal to the sum of B and LAME, then CDFG shall become the sole owner of funds then available and BOARD shall receive no refund. Given this instance, CDFG shall use the combined total of the Maintenance Account, Annuity Account and Investment Account exclusively for the maintenance of the Project area and shall attempt to secure additional funds which may be required for such maintenance from a variety of State, Federal, local, or private funding sources. VEH:cam CSC3-5315 - 7 -