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HomeMy WebLinkAbout2001-04-03; City Council; 16144; County Water Authority Lawsuit Against MWDCITY OF CAkLSBAD/CARLSBAD MUNICIPAL WATER DISTRICT - AGEN AB# id,/+/ TITLE- CONSIDER ADOPTING A RESOLUTION SUPPORTING DEPT. %ihN DIEGO COUNTY WATER AUTHORITY IN THEIR MTG. 4/3/01 LAWSUIT AGAINST THE METROPOLITAN WATER DISTRICT CITY ATTY. SUPPORTING LEGAL CLARIFICATION OF PREFERRENTIAL DEPT. CMWD RIGHTS UNDER SECTION 135 OF THE METROPOLITAN CITY MGR. WATER DISTRICT ACT RECOMMENDED ACTION: City Council to consider adopting Resolution No. 200 / + /OS supporting the San Diego County Water Authority in their lawsuit against the Metropolitan Water District of Southern California supporting legal clarification of Preferential Rights Under Section 135 of the Metropolitan Water District Act. The Board of Directors of the Carlsbad Municipal Water District to consider adopting Resolution No. supporting the San Diego County Water Authority in their lawsuit against j Ial the Metropolitan Water District of Southern California supporting legal clarification of Preferential Rights Under Section 135 of the Metropolitan Water District Act. ITEM EXPLANATION: The Metropolitan Water District of Southern California was formed by the State Legislature in 1928 to provide water to the region at that time. The Metropolitan Water District used property tax revenue to generate the money it needed to build the Colorado River aqueduct. To fairly divide the rights to water, the Metropolitan Water District promised each of its member agencies an entitlement ----a preferential right ----- to a percentage of Metropolitan’s water equal to the amount each agency had contributed in property tax. Los Angeles, with the largest amount of development, contributed more in property taxes than any other agency, and got the highest preferential right to water. However, by the 1970’s, the Metropolitan Water District stopped using property taxes as its revenue base---the money it needs to maintain its 775-mile system of pipelines, pump stations, reservoirs, and treatment plants. Instead, it switched to raising the bulk of its revenues by water sales . But at the same time the Metropolitan Water District did not change each agency’s traditional preferential right to water, meaning each agency’s preferential right still reflected property tax contributions ----a much smaller portion of the Metropolitan’s current revenues --- instead of water purchases. The San Diego County Water Authority now claims that its purchases of water represent the largest percentage of the Metropolitan Water District’s water sales and, as a result, the Authority contributes more money to maintain the Metropolitan Water District’s system of pipelines than any other agency. However, their preferential right is still dwarfed by Los Angeles. After years of attempting to rectify this perceived inequity without success, the San Diego County Water Authority has filed a lawsuit against the Metropolitan Water District in an attempt to have the courts remedy this situation. Representatives from the San Diego County Water Authority presented an update at the last CMWD Board meeting and requested Carlsbad’s support in their lawsuit against MWD, Resolutions supporting that effort have been prepared for the City Council and CMWD Board consideration and possible action this evening. Page 2 of Agenda Bill No. 16, IV+ EXHIBITS: 1. City Council of the City of Carlsbad to Resolution No. g@ j - ‘0 c . 2. Board of Directors of the Carlsbad Municipal Water District: Resolution No. 1 \ d \ 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 RESOLUTION NO. 2001-105 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, SUPPORTING LEGAL CLARIFICATION OF PREFERENTIAL RIGHTS UNDER SECTION 135 OF THE METROPOLITAN WATER DISTRICT ACT WHEREAS, the San Diego County Water Authority (“Water Authority”) provides wholesale water service to 23 member public agencies in the San Diego region ; and WHEREAS, the Water Authority has responsibility to provide imported water supplies to meet the needs of the region’s $103 billion economy and to sustain the quality of life of the region’s nearly three million people; and WHEREAS, the City of Carlsbad depends and relies upon the Water Authority to provide all or a substantial portion of its water supply needs; and WHEREAS, the Water Authority is a member agency of the Metropolitan Water District of Southern California (“MWD”) and is currently dependent on it for all of the water supply it imports to serve the needs of the Water Authority’s own members and their customers, including the City of Carlsbad; and WHEREAS, over fifty years MWD has promised, assured and represented to the Water Authority and the public it serves that it would provide them with sufficient water to meet their stated needs; and WHEREAS, in good faith reliance on MWD’s past assurances, the Water Authority expanded its territory, built public works and made its own assurances that it would provide the San Diego region with a reliable supply of water; and WHEREAS, the City of Carlsbad has relied upon the assurances of a continuing and reliable water supply from the Water Authority and MWD for the adoption and implementation of a comprehensive, long-term general plan for the development of its community; and WHEREAS, MWD was created under the Metropolitan Water District Act (“the MWD Act”); and, WHEREAS, Section 135 of the MWD Act establishes a “preferential right” to MWD’s water supplies for each of MWD’s 26 member agencies based on each agency’s payment of MWD’s capital costs and operating expenses; and 2 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 WHEREAS, as currently interpreted and applied by MWD, a member agency’s preferential right to water under Section 135 bears no relationship to its payment of MWD’s capital costs and operating expenses or to its stated water needs; and WHEREAS, MWD’s interpretation and application of Section 135 is inconsistent with its own promises, assurances and representations to provide water to meet the Water Authority’s stated needs; and WHEREAS, through June 30, 2000, the Water Authority has paid MWD nearly $3 billion to pay the capital costs and operating expenses of MWD water works, representing twenty-two percent (22%) of all member agencies’ total historical payments to MWD; and WHEREAS, of this amount, only $514 million is counted by MWD in its calculation of the Water Authority’s preferential right under Section 135, resulting in an entitlement to less than fifteen percent (15%) of MWD’s water supply; and WHEREAS, this calculation leaves the Water Authority with a preferential right to less than one-half of the water supply it purchases, year in and year out, from MWD-a shortfall of about 300,000 acre feet of water; and WHEREAS, by way of contrast, through June 30, 2000, the City of Los Angeles’ has paid MWD approximately $1.6 billion to pay the capital costs and operating expenses of MWD water works, representing twelve percent (12%) of all member agencies’ total historical payments to MWD; and WHEREAS, of this amount, $792 million is counted by MWD in its calculation of Los Angeles’ preferential right under Section 135, resulting in an entitlement to more than twenty-two (22%) of Metropolitan’s water supply; and WHEREAS, this calculation leaves the City of Los Angeles with preferential right to about two times as much water as its regular water purchases from MWD; and WHEREAS, the City of Los Angeles claims that its right to purchase water from MWD is governed by Section 135 as currently interpreted and applied by MWD, and may be exercised at any time, in the sole discretion of Los Angeles, notwithstanding the availability to it of alternative water supplies and irrespective of any resulting reductions in supplies delivered to the Water Authority’; and f/l /II Ill A Y 1 2 3 4 5 6 7 8 9 IO 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 WHEREAS, MWD’s current revenue policies and programs allocate MWD’s capital costs and operating expenses as though Section 135 rights do not exist, thus leaving the Water Authority with the obligation to pay the capital costs and operating expense of water supplies that are subject to claims by Los Angeles; and WHEREAS, past payments by the Water Authority to MWD pale in comparison to the future revenues and indebtedness that are projected to meet the water supply demands of MWD member agencies, in excess of $4 billion over the next 20 years; and WHEREAS, the Water Authority has made numerous efforts to resolve the dispute over preferential rights through MWD board processes and committees, mediations and facilitations over the years, all without success; and WHEREAS, the Water Authority has filed an action in the San Diego Superior Court (Case No. GIC 761526), in an effort to finally resolve the controversy and achieve certainty as to its MWD supply reliability and costs: NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, as follows: 1. That the above recitations are true and correct. 2. That the City of Carlsbad hereby expresses its support of the actions taken by the San Diego County Water Authority to seek legal clarification of preferential rights under Section 135 of the Metropolitan Water District Act; 3. That the City of Carlsbad hereby urges MWD, in the interest of fairness, to remain neutral in this dispute between and among its member agencies; Ill Ill Ill Ill Ill ill III Ill Ill 5 1 7 8 9 10 11 12 13 14 15 16 18 20 21 22 23 24 25 26 27 28 4. The City Clerk shall send this resolution to the Water Authority and to MWD for due consideration. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad held on the 3rd day of April , 2001 by the following vote, to wit: AYES: Council Members Lewis, Kulchin, Finnila, Nygaard and Hall. NOES: None. ABSENT: None. (SEAL) 6 ,’ 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 RESOLUTION NO. ‘I21 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD MUNICIPAL WATER DISTRICT SUPPORTING LEGAL CLARIFICTION OF PREFERENTIAL RIGHTS UNDER SECTION 135 OF THE METROPOLITAN WATER DISTRICT ACT WHEREAS, the San Diego County Water Authority (“Water Authority”) provides wholesale water service to 23 member public agencies in the San Diego region ; and WHEREAS, the Water Authority has responsibility to provide imported water supplies to meet the needs of the region’s $103 billion economy and to sustain the quality of life of the region’s nearly three million people; and WHEREAS, the Carlsbad Municipal Water District depends and relies upon the Water Authority to provide all or a substantial portion of its water supply needs; and WHEREAS, the Water Authority is a member agency of the Metropolitan Water District of Southern California (“MWD”) and is currently dependent on it for all of the water supply it imports to serve the needs of the Water Authority’s own members including the Carlsbad Municipal Water District; and WHEREAS, over fifty years MWD has promised, assured and represented to the Water Authority and the public it serves that it would provide them with sufficient water to meet their stated needs; and WHEREAS, in good faith reliance on MWD’s past assurances, the Water Authority expanded its territory, built public works and made its own assurances that it would provide the San Diego region with a reliable supply of water; and WHEREAS, the Carlsbad Municipal Water District has relied upon the assurances of a continuing and reliable water supply from the Water Authority and MWD for the adoption and implementation of a comprehensive, long-term general plan for the development of its community; and WHEREAS, MWD was created under the Metropolitan Water District Act (‘the MWD Act”); and, 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 WHEREAS, Section 135 of the MWD Act establishes a “preferential right” to MWD’s water supplies for each of MWD’s 26 member agencies based on each agency’s payment of MWD’s capital costs and operating expenses; and WHEREAS, as currently interpreted and applied by MWD, a member agency’s preferential right to water under Section 135 bears no relationship to its payment of MWD’s capital costs and operating expenses or to its stated water needs; and WHEREAS, MWD’s interpretation and application of Section 135 is inconsistent with its own promises, assurances and representations to provide water to meet the Water Authority’s stated needs; and WHEREAS, through June 30, 2000, the Water Authority has paid MWD nearly $3 billion to pay the capital costs and operating expenses of MWD water works, representing twenty-two percent (22%) of all member agencies’ total historical payments to MWD; and WHEREAS, of this amount, only $514 million is counted by MWD in its calculation of the Water Authority’s preferential right under Section 135, resulting in an entitlement to less than fifteen percent (15%) of MWD’s water supply; and WHEREAS, this calculation leaves the Water Authority with a preferential right to less than one-half of the water supply it purchases, year in and year out, from MWD-a shortfall of about 300,000 acre feet of water; and WHEREAS, by way of contrast, through June 30, 2000, the City of Los Angeles’ has paid MWD approximately $1.6 billion to pay the capital costs and operating expenses of MWD water works, representing twelve percent (12%) of all member agencies’ total historical payments to MWD; and WHEREAS, of this amount, $792 million is counted by MWD in its calculation of Los Angeles’ preferential right under Section 135, resulting in an entitlement to more than twenty-two (22%) of Metropolitan’s water supply; and WHEREAS, this calculation leaves the City of Los Angeles with preferential right to about two times as much water as its regular water purchases from MWD; and WHEREAS, the City of Los Angeles claims that its right to purchase water from MWD is governed by Section 135 as currently interpreted and applied by MWD, and may be exercised at any time, in the sole discretion of Los Angeles, notwithstanding the availability to it of alternative water supplies and irrespective of any resulting reductions in supplies delivered to the Water Authority’; and ,8 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 WHEREAS, MWD’s current revenue policies and programs allocate MWD’s capital costs and operating expenses as though Section 135 rights do not exist, thus leaving the Water Authority with the obligation to pay the capital costs and operating expense of water supplies that are subject to claims by Los Angeles; and WHEREAS, past payments by the Water Authority to MWD pale in comparison to the future revenues and indebtedness that are projected to meet the water supply demands of MWD member agencies, in excess of $4 billion over the next 20 years; and WHEREAS, the Water Authority has made numerous efforts to resolve the dispute over preferential rights through MWD board processes and committees, mediations and facilitations over the years, all without success; and WHEREAS, the Water Authority has filed an action in the San Diego Superior Court (Case No. GIC 761526) in an effort to finally resolve the controversy and achieve certainty as to its MWD supply reliability and costs: NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Carlsbad Municipal Water District, as follows: 1. That the above recitations are true and correct. 2. That the Carlsbad Municipal Water District hereby expresses its support of the actions taken by the San Diego County Water Authority to seek legal clarification of preferential rights under Section 135 of the Metropolitan Water District Act; 3. That the Carlsbad Municipal Water District hereby urges MWD, in the interest of fairness, to remain neutral in this dispute between and among its member agencies; ill ill l/l Ill Ill //I Ill l/l Ill //I 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 17 18 19 20 21 22 23 24 25 26 27 28 4. The Secretary shall send this resolution to the Water Authority and to MWD for due consideration. PASSED, APPROVED AND ADOPTED at a special meeting of the Board of Directors of the Carlsbad Municipal Water District held on the 3rd day of April ,200l by the following vote, to wit: AYES: Board Members Lewis, Kulchin, Finnila, Nygaard and Hall. - %7%-=f- LOkf6AI)k M. WOOD, Secretary (SEJ=)