HomeMy WebLinkAbout2006-06-06; Municipal Water District; 614; Encina Basin Water Reclamation Program Phase IICARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL
1
AB#
MTG.
DEPT.
614
6/06/06
ENG
TITLE: APPROVE AND AUTHORIZE
LOAN AGREEMENT 05-721-550-0 WITH THE
STATE WATER RESOURCES CONTROL BOARD FOR THE
ENCINA BASIN WATER RECLAMATION PROGRAM, PHASE II,
PROJECT NO. 3675
DEPT. HD. 4) X^
HCITY ATTY. \f2l<^
CITYMGR. ///
RECOMMENDED ACTION:
Adopt Resolution No. 1271 to approve and authorize loan agreement 05-721-550-0,
Project No. 3903-120, with the California State Water Resources Control Board for the Encina Basin
Water Reclamation Program, Phase II, CMWD Project No. 3675.
ITEM EXPLANATION:
The Encina Basin Water Reclamation Program, Phase II project (Phase II) includes a new 4 MGD
tertiary treatment plant, 24 miles of pipelines, 4 pumping stations, and 2 reservoirs. The State Water
Resources Control Board (SWRCB) approved a $5 million grant and up to $32 million in a low
interest loan. By Resolution No. 1098, on October 3, 2000, the Board approved and authorized the
Executive Manager to submit an application for the low-interest loan to the SWRCB for the Phase II
project. In response to the application, the SWRCB issued the first of two loan agreements,
Agreement Number 04-812-550-0, which was approved by the Board on June 28, 2005 by
Resolution No. 1248. The loan was for an amount of $9,817,305. Loan repayment begins
June 1, 2007 and extends to June 1, 2025, a total of 19 annual payments, with an interest rate of
2.5%.
In a letter dated May 12, 2006, the SWRCB submitted the second of two loans which included
four (4) originals for execution by the CMWD. The loan is for an amount of $20,763,473. The loan
repayment begins April 1, 2008 and extends to April 1, 2027, a total of 20 annual payments, with an
interest rate of 2.3%.
The SWRCB has requested the venue for all legal actions regarding this agreement be in
Sacramento and that the prevailing party recover attorney fees. These conditions are usually
unacceptable to the City Attorney; however, due to the nature of this agreement and the unlikelihood
of any legal actions by the SWRCB, it is recommended that the conditions be accepted.
ENVIRONMENTAL REVIEW:
A Mitigated Negative Declaration (MND) was prepared for the Phase II project. The Carlsbad
City Council approved the MND on January 25, 2000 under Case No. EIA 99-09.
FISCAL IMPACT:
The total Phase II project cost budget is estimated at approximately $49.6 million. This SWRCB loan
is approximately $20.8 million with an interest rate of 2.3%. The funding for the remaining balance of
project costs includes:
• SWRCB - $9.8 million loan at 2.5% interest rate (funds received)
• SWRCB - $5 million grant (funds received)
• Environmental Protection Agency - $2.2 million grant (funds received)
• Bureau of Reclamation - up to $10.4 million grant, where $7,512,000 has been received; and
• Water Capital Replacement fund - up to $6.5 million for non-eligible project share costs
EXHIBITS:
1. Resolution No. 1271 to approve and authorize a loan agreement with the
State Water Resources Control Board for the Encina Basin Water Reclamation Program,
Phase II, Project No. 3675.
2. SWRCB Loan Agreement Number 05-721-550-0.
DEPARTMENT CONTACT: William Plummer, (760) 602-2768, bplum@ci.carlsbad.ca.us
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RESOLUTION NO. 1271
A RESOLUTION OF THE BOARD OF DIRECTORS OF CARLSBAD
MUNICIPAL WATER DISTRICT (CMWD) TO APPROVE AND
AUTHORIZE A LOAN AGREEMENT WITH THE STATE WATER
RESOURCES CONTROL BOARD FOR THE ENCINA BASIN WATER
RECLAMATION PROGRAM. PHASE II. PROJECT NO. 3675.
WHEREAS, the Board of Directors of the Carlsbad Municipal Water District (CMWD) by
Resolution No. 1098 on October 3, 2000, approved and authorized the Executive Manager to
submit an application for a project loan to the State Water Resources Control Board (SWRCB) for
the Encina Basin Water Reclamation Program, Phase II, project; and
WHEREAS, SWRCB, Loan Agreement No. 05-721-550-0 was submitted to CMWD in a
letter dated May 12, 2006, requesting that CMWD execute the agreement; and
WHEREAS, the agreement awards a maximum loan of $20,763,473 with an interest rate
of 2.3% over a 20-year time period.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of Carlsbad Municipal
Water District of the City of Carlsbad, California as follows:
1. That the above recitations are true and correct.
2. That CMWD's Executive Manager, or his designee, is authorized to execute loan
agreement No. 05-721-550-0 with the State Water Resources Control Board.
PASSED, APPROVED AND ADOPTED at a special meeting of the Carlsbad Municipal
Water District held on the 6th day of June , 2006 by the following vote, to wit:
AYES: Board Members Lewis, Hall, Kulchin, Packard, Sigafoose
NOES: None
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LORRAINE M^WOOD, Secretary
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STATE OF CALIFORNIA
SANDARD AGREEMENT
. 213 (Rev 12/03)
AGREEMENT NUMBER 05-721-550-0
PROJECT NUMBER: 3903-120
REGISTRATION NUMBER: SflMOO 7Ofr
1. This Agreement is entered into between the State Agency and the Contractor named below:
STATE AGENCY'S NAME
State Water Resources Control Board
(Hereafter referred to as "SWRCB"
CONTRACTOR'S NAME
Carlsbad Municipal Water District
(Hereafter referred to as "Agency" or "Contractor")
2. The term of this
Agreement is:April 1,2006 through April 1, 2028
3. The maximum amount
of this Agreement is:
$ 20,763,473.00
Twenty million seven hundred sixty three thousand four hundred seventy three
dollars and no cents
The parties agree to comply with the terms and conditions of the following exhibits which are by this reference made
a part of the Agreement:
Exhibit A - Scope Of Work
Exhibit B - Budget Detail And Payment Provisions
Exhibit C - General Terms And Conditions (GTC 304)
Exhibit D - Special Conditions
Exhibit E - N/A
Exhibit F - Facility Plan Approval Letter(s)
Exhibit G -Installment Sale Agreement Payment Schedule
Exhibit H - Schedule Of System Obligations
Exhibit I - Tax Covenants
Exhibit J - SWRCB Special Terms And Conditions
page(s)
page(s)
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10 page(s)
3 page(s)
1 page(s)
5 page(s)
5 page(s)
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto.
(1)
CONTRACTOR'S NAME (if other than an individual, state whether a corporation, partnership, etc.)
Carlsbad Municipal Water District,
BY (Authorize&fUgnaturp)?' — — ^ / /
.S/r^s^ t 7)£$ ^ ^/t~^~*-t^ ^f l^/ ^ i-^-i^*^,
PRINTED NAME AND TITLE OF PERSON SIGNING
Glenn T. Pruim, Public Works Director
DATE SIGNED (Do not type)
6/°//06
ADDRESS
1635 Faraday Avenue
Carlsbad, CA 92008
AGENCY NAME
State Water Resources Control Board
BY (Aufhgfizkd SWrnape) V i
/
DATE SIGNED (Do not type)
t-Xt-O-fi
PRINTS DNAMEAND TITLE OF PERSONW3NING
Esteban Almanza, Chief, Division of Administrative Services
ADDRESS
1001 I Street, Sacramento, CA 95814
California Department of General
, , Services Use Only
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APPROVED
JUll 02006
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Exempt per:
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 1 of 8
EXHIBIT A — SCOPE OF WORK
SECTION 1. PROJECT DESCRIPTION.
The Project, commonly known as the Phase II Encina Basin Water Reclamation Program Project
generally consists of construction of a four million (4,000,000) gallons per day advanced tertiary water
recycled facility to meet Title 22 requirements, as more particularly described in the financial assistance
application of the Agency and the Facilities Plan approval letter and the Final Plans and Specifications
approval for the Project.
SECTION 2. PROJECT REPRESENTATIVES.
The Project Representatives during the term of this Agreement will be:
State Water Resources Control Board
Name: Richard Wong, Project Manager
Address: 1001 I Street, 16* Floor
Sacramento, CA 95814
Phone:(916)341-5811
Fax: (916) 341-5707
e-mail: rwong@waterboards.ca.gov
Grantee: Carlsbad Municipal Water District
Name: Glenn T. Pruim, Project Director
Address: 1635 Faraday Avenue
Carlsbad, CA 92008
Phone: (760) 434-2821
Fax: (760) 720-9562
e-mail: gpruim@ci.carlsbad.ca.gov
The SWRCB Project Manager shall be the SWRCB's day-to-day representative for administration of this
agreement and shall have full authority to act on behalf of the SWRCB with respect to this agreement.
The SWRCB's Chief of the Division of Financial Assistance, or designee, may also perform any and all
acts that could be performed by the SWRCB Project Manager under this agreement. All communications
relative to this agreement shall be given to the SWRCB Project Manager.
The Agency Project Director shall be the Agency's representative for the administration of this agreement
and shall have full authority to act on behalf of the Agency, including authority to execute all disbursement
requests. The Agency's representative authorized to execute this agreement, or successor or designee, if
other than the Agency Project Director, may also perform any and all acts that could be performed by the
Project Director under this agreement. All communications given to the Project Director shall be as
binding as if given to the Agency.
Either party may change its Project Representative upon written notice to the other party.
SECTION 3. DEFINITIONS.
"Additional Payments" means the Additional Payments described in Exhibit B Section 2.3(C) of this
Agreement.
"Allowance" means an amount based on a percentage of the accepted bid for an eligible project to help
defray the design and construction engineering and construction management costs of the Project.
Change orders may cause this amount to be lowered.
"Bonds" means any series of bonds issued by the State all or a portion of the proceeds of which may be
applied to fund the Project in whole or in part or that are secured in whole or in part by Installment
Payments paid hereunder.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor provisions and the
regulations of the U.S. Department of the Treasury promulgated hereunder.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 2 of 8
EXHIBIT A — SCOPE OF WORK
"Completion of Construction" means the date, as determined by the Division after consultation with the
Agency, that the work of building and erection of the Project is substantially complete.
"Division" means the Division of Financial Assistance of the SWRCB, or any other segment of the
SWRCB authorized to administer the water recycling program.
"Fiscal Year" means the period of twelve (12) months terminating on June 30 of any year, or any other
annual period hereafter selected and designated by the Agency as its Fiscal Year in accordance with
applicable law.
"Force Account" means the use of the Agency's own employees or equipment for design, construction, or
construction-related activity of the Project.
"Initiation of Construction" means the date that notice to proceed with work is issued for the Project, or, if
notice to proceed is not required, the date of commencement of building and erection of the Project.
"Installment Payments" means Installment Payments due and payable by the Agency to the SWRCB
under this Agreement to repay the Project Funds, the amounts of which are set forth as Exhibit G hereto.
"Net Revenues" means, for any Fiscal Year, so long as there may be outstanding System Obligations, as
such term is defined under the authorizing instruments for such System Obligations, and thereafter all
Revenues received by the Agency less the Operations and Maintenance Costs for such Fiscal Year.
"Obligation" means the obligation owed by the Agency to make Installment Payments and Additional
Payments as provided herein, as evidenced by the execution of this Agreement, to be used to fund the
Project as specified in the Project Description.
"Operations and Maintenance Costs" means, so long as outstanding System Obligations are outstanding,
the definition of such term as defined therein, and thereafter, the reasonable and necessary costs paid or
incurred by the Agency for maintaining and operating the System, determined in accordance with
generally accepted accounting principles, including all reasonable expenses of management and repair
and all other expenses necessary to maintain and preserve the System in good repair and working order,
and including all reasonable and necessary administrative costs of the Agency that are charged directly or
apportioned to the operation of the System, such as salaries and wages of employees, overhead, taxes (if
any), the cost of permits, licenses and charges to operate the System and insurance premiums; but
excluding, in all cases depreciation, replacement and obsolescence charges or reserves therefor and
amortization of intangibles.
"Pledged Revenues" means and include user fees and charges, or other sources of income, which are
consistent with federal requirements.
"Project" means the Project as described in Exhibit A, Section 1 and Exhibits E and F.
"Project Completion" means the date, as determined by the Division after consultation with the Agency,
that operation of the Project is initiated or is capable of being initiated, whichever comes first
"Project Costs" means the incurred costs of the Agency which are eligible for financial assistance, which
are defined by the SWRCB and which are reasonable, necessary and allocable by the Agency to the
Project under generally accepted accounting principles.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 3 of 8
EXHIBIT A — SCOPE OF WORK
"Project Funds" means funds disbursed by the SWRCB to the Agency for purposes of this Agreement.
"Revenue Program" means a system of charges, fees, or other means of income production adopted by
the Agency which provides for recovery of appropriate capital costs of the Project, generates adequate
income to reasonably assure repayment of the Obligation under this Agreement, generates adequate
income to provide for reasonable operation and maintenance of the Project, and provides adequate
income for reasonable future expansion and improvement of the Project.
"Revenues" means, for each Fiscal Year, all gross income and revenue received or receivable by the
Agency from the ownership or operation of the System, determined in accordance with generally accepted
accounting principles, including all rates, fees and charges (including connection fees and charges) as
received by the Agency for the services of the System, and all other income and revenue howsoever
derived by the Agency from the ownership or operation of the System or arising from the System, and also
including all income from the deposit or investment of any money in the Enterprise Fund or any rate
stabilization fund, and any refundable deposits made to establish credit, and advances or contributions in
aid of construction.
"State" means State of California.
"System" means all wastewater, water recycling, and/or potable water collection, transport, treatment,
storage and/or disposal facilities, including land and easements thereof, owned by the Agency, including
the Project, and all other properties, structures or works hereafter acquired and constructed by the Agency
and determined to be a part of the System, together with all additions, betterments, extensions or
improvements to such facilities, properties, structures or works or any part thereof hereafter acquired and
constructed.
"System Obligations" means all senior; parity and subordinate obligations of the Agency payable from
Revenues as identified as of the date of this Agreement in Exhibit G and such additional obligations as
may hereafter be issued in accordance with the provisions of such obligations.
SECTION 4. GENERAL AGENCY COMMITMENTS.
The Agency accepts and agrees to comply with all terms, provisions, conditions, and commitments of this
Agreement, including all incorporated documents, and to fulfill all assurances, declarations,
representations, and commitments made by the Agency in its application, accompanying documents, and
communications filed in support of its request for financial assistance.
SECTION 5. COMPLETION OF PROJECT.
The Agency agrees to expeditiously proceed with and complete construction of the Project in substantial
accordance with Project plans and specifications approved by the SWRCB.
SECTION 6. PROJECT CERTIFICATION.
Not Applicable
SECTION 7. FEDERAL OR STATE ASSISTANCE.
If federal or state funding for Project Costs is made available to the Agency from sources other than the
SWRCB's water recycling program, the Agency may retain such funding up to an amount which equals
the Agency's local share of Project Costs. To the extent allowed by requirements of other funding sources,
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 4 of 8
EXHIBIT A — SCOPE OF WORK
any funding received in excess of the Agency's local share, not to exceed the total amount of the
SWRCB's water recycling program funding, shall be remitted to the SWRCB to be applied to current
balance due hereunder.
SECTION 8. REVENUE PROGRAM.
The Agency agrees to prepare and provide an acceptable final Revenue Program to the Division at the
time of ninety percent (90%) disbursement of Project Costs. Further disbursements may be withheld until
an acceptable final Revenue Program is submitted. The Agency further agrees to periodically review and
modify the Revenue Program as necessary to assure reasonable adequacy of the Revenue Program. The
final Revenue Program and all modifications thereof shall be consistent with applicable guidelines and
shall be to the reasonable satisfaction of the Division. The Division may review the Agency's records to
assure compliance with the approved Revenue Program at any time during the useful life of the Project.
SECTION 9. OPERATION AND MAINTENANCE; INSURANCE.
The Agency agrees to properly staff, operate and maintain all portions of the Project during its useful life in
accordance with all applicable state and federal laws, rules and regulations.
The Agency shall procure and maintain or cause to be maintained insurance on the System with
responsible insurers, or as part of a reasonable system of self-insurance, in such amounts and against
such risks (including damage to or destruction of the System) as are usually covered in connection with
systems similar to the System. Such insurance may be maintained by the maintenance of a self-insurance
plan so long as any such plan provides for (i) the establishment by the Agency of a separate segregated
self-insurance fund funded in an amount determined (initially and on at least an annual basis) by an
independent insurance consultant experienced in the field of risk management employing accepted
actuarial techniques and (ii) the establishment and maintenance of a claims processing and risk
management program.
In the event of any damage to or destruction of the System caused by the perils covered by such
insurance, the net proceeds thereof shall be applied to the reconstruction, repair or replacement of the
damaged or destroyed portion of the System. The Agency shall begin such reconstruction, repair or
replacement as expeditiously as possible, and shall pay out of such net proceeds all costs and expenses
in connection with such reconstruction, repair or replacement so that the same shall be completed and the
System shall be free and clear of all claims and liens. If such net proceeds are insufficient to enable the
Agency to pay all remaining unpaid principal portions of the Installment Payments, the Agency shall
provide additional funds to restore or replace the damaged portions of the System.
SECTION 10. USEFUL LIFE OF PROJECT.
For purposes of this Agreement, the parties agree that the useful life of the Project is at least fifty (50)
years from and after Project Completion for pipelines, and thirty (30) years for all other portions of the
Project.
SECTION 11. CONSTRUCTION ACTIVITIES; NOTIFICATIONS; PROTECTION OF
ARCHEOLOGICAL AND HISTORICAL RESOURCES.
(A) The Agency agrees to promptly notify the Division in writing of:
(1) Any substantial change in scope of the Project. The Agency agrees that no substantial
change in the scope of the Project will be undertaken until written notice of the proposed
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 5 of 8
EXHIBIT A — SCOPE OF WORK
change has been provided to the Division and the Division has given written approval for
such change;
(2) Cessation of all major construction work on the Project where such cessation of work is
expected to or does extend for a period of thirty (30) days or more;
(3) Any circumstance, combination of circumstances, or condition, which is expected to or
does delay completion of construction for a period of ninety (90) days or more beyond the
estimated date of completion of construction previously provided to the Division;
(4) Discovery of any potential archeological or historical resource. Should a potential
archeological or historical resource be discovered during construction of the Project, the
Agency agrees that all work in the area of the find will cease until a qualified archeologist
has evaluated the situation and made recommendations regarding preservation of the
resource, and the Division has determined what actions should be taken to protect and
preserve the resource. The Agency agrees to implement appropriate actions as directed
by the Division; and
(5) Actual completion of construction, and any changes to estimated completion dates
specified in bid submittal package.
(6) Actual date the operation of the Project is initiated or is capable of being initiated,
whichever comes first.
SECTION 12. PROJECT ACCESS.
The Agency agrees to ensure that the SWRCB, or any authorized representative thereof, will have
suitable access to the Project site at all reasonable times during Project construction and thereafter for the
useful life of the project.
SECTION 13. PROJECT COMPLETION; INITIATION OF OPERATIONS.
Upon Completion of Construction of the Project, the Agency agrees to expeditiously initiate Project
operations.
SECTION 14. CONTINUOUS USE OF PROJECT; LEASE OR DISPOSAL OF PROJECT.
The Agency agrees that, except as provided in the Agreement, it will not abandon, substantially
discontinue use of, lease, or dispose of the Project or any significant part or portion thereof during the
useful life of the Project without prior written approval of the Division. Such approval may be conditioned
as determined to be appropriate by the Division, including a condition requiring repayment of all or any
portion of all remaining funds covered by this Agreement together with accrued interest and any penalty
assessments that may be due.
SECTION 15. REPORTS.
The Agency agrees to expeditiously provide, during construction of the Project and thereafter during the
useful life of the Project, such reports, data, and information as may be reasonably required by the
Division.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 6 of 8
EXHIBIT A — SCOPE OF WORK
The Agency agrees to expeditiously provide, during construction of the Project, status reports on the
construction of the project no less frequently than quarterly, starting with the issuance of the Notice To
Proceed to the construction contractor. At a minimum the reports will contain the following information: a
summary of progress to date including a description of progress since the last report, percent construction
complete, percent contractor invoiced, and percent schedule elapsed; a listing of change orders including
amount, description of work, and change in contract amount and schedule; any problems encountered,
proposed resolution, schedule for resolution, and status of previous problem resolutions.
The Agency shall submit annual reports to the SWRCB for a period commencing with completion of
construction until at least one (1) full year after all proposed users are connected up to a maximum of nine
(9) years.
The first annual report is due on February 28th following the first complete calendar year of operation and
shall cover the period from the Completion of Construction through the end of the first full calendar year
thereafter. Subsequent annual reports are due by February 28th following the year covered. The annual
reports shall be prepared in accordance with the "Water Reclamation Loan Program Guidelines for Annual
Progress Report", dated September 2002, or any successor guidelines. The reports shall briefly review
the operation of the Project during the preceding year, identify current users and User Contracts, provide
monthly Project water deliveries to each user, the amount of fresh/potable water usage offset by the use
of recycled water, and monthly amounts of water from each source delivered through Project facilities, list
the funds received from other State and federal agencies for this Project during the period by agency, the
amount, whether grants or loans, and a description of the facilities, components, and items the funds were
used for; list the power and maintenance costs associated with the Project for the period, indicate current
plans and programs for use of any Project capacity not under contract, summarize Project financial
experience, describe compliance with any special conditions of this contract, and provide such other
information as may be reasonably required to evaluate Project benefits and use of Project facilities.
SECTION 16. RECORDS.
(A) Without limitation of the requirement to maintain Project accounts in accordance with generally
accepted accounting principles the Agency agrees to:
(1) Establish an official file for the Project which shall adequately document all significant
actions relative to the Project;
(2) Establish separate accounts which will adequately and accurately depict all amounts
received and expended on the Project, including all assistance funds received under this
Agreement;
(3) Establish separate accounts which will adequately depict all income received which is
attributable to the Project, specifically including any income attributable to assistance
funds disbursed under this Agreement;
(4) Establish an accounting system which will accurately depict final total costs of the Project,
including both direct and indirect costs;
(5) Establish such accounts and maintain such records as may be necessary for the State to
fulfill federal reporting requirements, including any and all reporting requirements under
federal tax statutes or regulations; and
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 7 of 8
EXHIBIT A — SCOPE OF WORK
(6) If Force Account is used by the Agency for any phase of the Project, accounts will be
established which reasonably document all employee hours charged to the Project and
the associated tasks performed by each employee. Indirect Force Account costs may be
paid with prior written approval by the Division of the Agency's indirect cost proposal.
Notwithstanding Exhibit C, the Agency shall be required to maintain books, records and other material
relative to the Project in accordance with generally accepted accounting principles. The Agency agrees to
retain its Project records for a minimum of thirty-six (36) years from the date of Project Completion. The
Agency shall also be required to retain such books, records, and other material for each subcontractor
who performed work on this project for a minimum of thirty-six (36) years after Project Completion. The
Agency shall require that such books, records, and other material be subject at all reasonable times to
inspection, copying, and audit by the SWRCB and by state auditors, or any representatives thereof.
SECTION 17. FINAL PROJECT REPORTS; AUDIT.
(A) Within ninety (90) days after Project Completion, the Agency agrees to submit to the Division a
final Project summary report which briefly describes the Project as completed, its features,
estimated capacity, current and planned recycled uses and users, and a cost summary.
(B) Within one hundred and twenty (120) days after Project Completion, the Agency agrees to provide
to the Division a final cost summary report on the Project. The summary shall include at a
minimum, a statement of:
(1) Total Project Costs;
(2) Total Project Costs which are eligible for financing assistance under this Agreement;
(3) The sources, amounts, and tinning of funds contributed to the Project;
(4) The amount of interest earned, if any, on assistance funds before disbursement on
account of incurred Project costs. If no interest has been earned, this fact shall be
expressly stated.
(5) The report shall be accompanied by such other financial information as may be
reasonably required by the Division to verify Agency entitlement to financial assistance, to
assure program integrity of the Water Recycling Funding Program, and to comply with
any federal requirements. The report shall be certified as correct by a duly Authorized
Representative of the Agency.
(C) The Division, at its option, may call for an audit of financial information relative to the Project,
where the Division determines that an audit is desirable to assure program integrity or where such
an audit becomes necessary because of federal requirements. Where such an audit is called for,
the audit shall be performed by a certified public accountant independent of the Agency and at the
cost of the Agency. The audit shall be in the form required by the Division.
(D) Audit disallowances shall be returned to the SWRCB.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 8 of 8
EXHIBIT A — SCOPE OF WORK
SECTION 18. NO OBLIGATION OF THE STATE.
Any obligation of the SWRCB herein contained shall not be an obligation, debt or liability of the State and
any such obligation shall be payable solely out of the moneys in the SWRCB's water recycling program
made available pursuant to this Agreement.
SECTION 19. PROJECT DELIVERIES.
The Agency agrees to obtain sufficient recycled water users connected to Project facilities to make
deliveries of recycled water in accordance with the schedule specified in Exhibit F.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 1 of 5
SECTION!
EXHIBIT B — BUDGET DETAIL AND PAYMENT PROVISIONS
ESTIMATED COST OF PROJECT.
The estimated reasonable cost of the total Project at the time of SWRCB Approval, including associated
design costs, is twenty million seven hundred sixty three thousand four hundred seventy three dollars
($20,763,473).
SECTION 2. ASSISTANCE AMOUNT AND FINANCING PROVISIONS.
Section 2.1. Project Funds; Repayment from Installment Payments.
Subject to the conditions and in accordance with the terms of this Agreement, the
SWRCB hereby agrees to provide the Project Funds and the Agency hereby agrees to
accept the Project Funds in the maximum principal component of twenty million seven
hundred sixty three thousand four hundred seventy three dollars ($20,763,473) and to
repay the Project Funds in Installment Payments at an interest rate of two and three
tenths percent (2.3%) per annum as set forth in Exhibits B and G attached hereto. This
rate is based on the sale of State General Obligation Bonds held on March 1, 2006. The
Agency agrees that it shall not be entitled to interest earned on undisbursed project funds.
The Agency hereby agrees to pay Installment Payments solely from Net Revenues
and/or other amounts legally available to the Agency. Interest on any funds disbursed to
the Agency shall begin to accrue as of the date of each disbursement.
Section 2.2. Purchase and Sale of Project.
The Agency hereby sells to the SWRCB and the SWRCB hereby purchases from the
Agency the Project. Simultaneously therewith, the Agency hereby purchases from the
SWRCB, and the SWRCB hereby sells to the Agency, the Project in accordance with the
provisions of this Agreement. All right, title and interest in the Project shall immediately
vest in the Agency on the date of execution and delivery of this Agreement without further
action on the part of the Agency or the SWRCB.
Section 2.3. Amounts Payable by the Agency.
(A) Installment Payments. Repayment of the Project Funds, together with all interest accruing
thereon, shall be repaid in annual installments commencing on the date that is two (2)
years after start date of this Agreement, and shall be fully amortized not later than twenty
(20) years after the start date of this Agreement.
The repayment amount is based on a standard amortization of all Project Funds with
equal annual repayments. The remaining balance is the previous balance, plus the
disbursements, plus the accrued interest on both, less the repayment. Exhibit G is a
Water Recycling Installment Sale Agreement Payment Schedule based on the provisions
of this article and an estimated disbursement schedule. The actual repayments will be
based on actual disbursements.
The Division will prepare appropriate Installment Sale Agreement Payment Schedules
and supply the same to the Agency. The Installment Sale Agreement Payment Schedule
may be amended as necessary to accurately reflect amounts due under this agreement.
Any amended Installment Sale Agreement Payment Schedule which is necessary will be
prepared by the Division and furnished to the Agency.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 2 of 5
EXHIBIT B — BUDGET DETAIL AND PAYMENT PROVISIONS
The Agency agrees to make each installment payment on or before the due date therefor.
A ten-day grace period will be allowed. A penalty in the amount of one-tenth of one
percent (0.1%) of the amount due will be due for each day of nonpayment. For purposes
of penalty assessment, repayment will be deemed to have been made if repayment is
deposited in the U.S. Mail within the grace period with postage prepaid and properly
addressed. Any penalties assessed will not be added to the assistance amount balance,
but will be treated as a separate account and obligation of the Agency. The interest
penalty will be assessed from the repayment due date.
The Agency as a whole is obligated to make all payments required by this agreement to
the SWRCB, notwithstanding any individual default by its constituents or others in the
payment to the Agency of fees, charges, taxes, assessments, tolls or other charges
("Charges") levied or imposed by the Agency. The Agency shall provide for the punctual
payment to the SWRCB of all amounts which become due under this agreement and
which are received from constituents or others in the payment to the Agency. In the event
of failure, neglect or refusal of any officer of the Agency to levy or cause to be levied any
Charge to provide payment by the Agency under this agreement, to enforce or to collect
such Charge, or to pay over to the SWRCB any money collected on account of such
Charge necessary to satisfy any amount due under this agreement, the SWRCB may
take such action in a court of competent jurisdiction as it deems necessary to compel the
performance of all duties relating to the imposition or levying and collection of any of such
Charges and the payment of the money collected therefrom to the SWRCB. Action taken
pursuant hereto shall not deprive the SWRCB of, or limit the application of, any other
remedy provided by law or by this agreement.
Each Installment Payment shall be paid by check and in lawful money of the United
States of America.
(B) Project Costs. The Agency agrees to pay any and all costs connected with the Project
including, without limitation, any and all Project Costs. If the Project Funds are not
sufficient to pay the Project Costs in full, the Agency shall nonetheless complete the
Project and pay that portion of the Project Costs in excess of available Project Funds, and
shall not be entitled to any reimbursement therefor from the SWRCB.
(C) Additional Payments. In addition to the Installment Payments required to be made by the
Agency, the Agency shall also pay to the SWRCB the reasonable extraordinary fees and
expenses of the SWRCB, and of any assignee of the SWRCB's right, title and interest in
and to this Agreement, in connection with this Agreement, including all expenses and fees
of accountants, trustees, attorneys, litigation costs, insurance premiums and all other
extraordinary costs reasonably incurred by the SWRCB or assignee of the SWRCB.
Additional Payments shall be billed to the Agency by the SWRCB from time to time,
together with a statement executed by a duly authorized representative of the SWRCB,
stating that the amounts billed pursuant to this section have been incurred by the SWRCB
or its assignee for one (1) or more of the above items and a copy of the invoice or
statement for the amount so incurred or paid. Amounts so billed shall be paid by the
Agency within thirty (30) days after receipt of the bill by the Agency.
(D) The Agency may without penalty prepay all or any portion of the outstanding principal
amount of the Obligation provided that the Agency shall also pay at the time of such
prepayment all accrued interest on the principal amount prepaid through the date of
prepayment.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 3 of 5
EXHIBIT B — BUDGET DETAIL AND PAYMENT PROVISIONS
Section 2.4. Obligation Absolute. The obligation of the Agency to make the Installment Payments and
other payments required to be made by.it under this Agreement, solely from Net
Revenues, is absolute and unconditional, and until such time as the Installment Payments
and Additional Payments have been paid in full, the Agency shall not discontinue or
suspend any Installment Payments or other payments required to be made by it
hereunder when due, whether or not the System or any part thereof is operating or
operable or has been completed, or its use is suspended, interfered with, reduced or
curtailed or terminated in whole or in part, and such Installment Payments and other
payments shall not be subject to reduction whether by offset or otherwise and shall not be
conditional upon the performance or nonperformance by any party of any agreement for
any cause whatsoever.
Section 2.5. Disbursement of Project Funds; Availability of Funds.
(A) Except as may be otherwise provided In this Agreement, disbursement of Project Funds
will be made as follows:
(1) Upon execution and delivery of this Agreement, the Agency may request
immediate disbursement of any incurred design allowance as specified in Exhibit
A from the Project Funds through submission to the SWRCB of the Disbursement
Request Form 260, or any amendment thereto, duly completed and executed.
(2) Additional Project Funds will be promptly disbursed to the Agency upon receipt of
Disbursement Request Form 260, or any amendment thereto, duly completed
and executed by the Agency for incurred costs consistent with this Exhibit.
Disbursement shall not be made more frequently than once a month. The Agency
agrees that it will not request disbursement for any Project Cost until such cost
has been incurred and is currently due and payable by the Agency, although the
actual payment of such cost by the Agency is not required as a condition of
disbursement request. Notwithstanding any other provision of this Agreement, no
disbursement shall be required at any time or in any manner which is in violation
of or in conflict with federal or state laws, rules, or regulations.
(B) The SWRCB's obligation to disburse Project Funds is contingent upon the availability of
sufficient funds to permit the disbursements provided for herein. If sufficient funds are not
available for any reason, including but not limited to failure of the federal or State government
to appropriate funds necessary for disbursement of Project Funds, the SWRCB shall not be
obligated to make any disbursements to the Agency under this Agreement. This provision
shall be construed as a condition precedent to the obligation of the SWRCB to make any
disbursements under this Agreement. Nothing in this Agreement shall be construed to provide
the Agency with a right of priority for disbursement over any other agency. If any
disbursements due the Agency under this contract are deferred because sufficient funds are
unavailable, such disbursement will be made to the Agency when sufficient funds do become
available.
(C) Prior to request for disbursement, the Agency shall certify that its accounting system is:
(1) In accordance with generally accepted accounting principles and practices,
consistently applied;
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 4 of 5
EXHIBIT B — BUDGET DETAIL AND PAYMENT PROVISIONS
(2) Capable of identifying all eligible and ineligible Project costs; and
(3) Capable of identifying all interest earned, if any, by the Agency upon state
disbursements.
SECTION 3. WITHHOLDING OF DISBURSEMENTS.
(A) The SWRCB may withhold all or any portion of the funds provided for by this Agreement
in the event that:
(1) The Agency has materially violated, or threatens to materially violate, any term,
provision, condition, or commitment of this Agreement;
(2) The Agency fails to maintain reasonable progress toward completion of the
Project; or
(3) A final Revenue Program is not submitted at the time of ninety percent (90%)
disbursement of funds provided for by this Agreement.
SECTION 4. PLEDGE AND LIEN OF NET REVENUES; RATES, FEES AND CHARGES;
ADDITIONAL PAYMENTS.
Section 4.1. Establishment of Enterprise Fund. In order to carry out its obligation to pay the
Installment Payments, Additional Payments and, where applicable, System Obligations,
the Agency agrees and covenants that it shall establish and maintain the Enterprise Fund.
All Revenues received shall be deposited when and as received in trust in the Enterprise
Fund.
Section 4.2. Pledge of Net Revenues. The Net Revenues are hereby pledged and a security interest
granted therein in order to secure the payment of Installment Payments and Additional
Payments. The Net Revenues in the Enterprise Fund shall be subject to the lien of such
pledge without any physical delivery thereof or further act, and the lien of such pledge
shall be valid and binding as against all parties having claims of any kind in tort, contract
or otherwise against the Agency.
Section 4.3. Application and Purpose of the Enterprise Fund. Subject to the provisions of any
outstanding System Obligations, money on deposit in the Enterprise Fund shall be applied
and used first, to pay Operations and Maintenance Costs, and thereafter, all amounts due
on Installment Payments, Additional Payments and System Obligations due. After
making all payments hereinabove required to be made in each Fiscal Year, the Agency
may expend in such Fiscal Year any remaining money in the Enterprise Fund for any
lawful purpose of the Agency, including payment of subordinate debt.
Section 4.4. Rates, Fees and Charges. The Agency agrees, to the extent permitted by law, to fix,
prescribe and collect rates, fees and charges for the System during each Fiscal Year
which are reasonable, fair and nondiscriminatory and which will be at least sufficient to
yield during each Fiscal Year, Net Revenues equal to the Installment Payments,
Additional Payments and debt service on System Obligations for such Fiscal Year. The
Agency may make adjustments from time to time in such fees and charges and may
make such classification thereof as it deems necessary, but shall not reduce the rates,
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 5 of 5
EXHIBIT B — BUDGET DETAIL AND PAYMENT PROVISIONS
fees and charges then in effect unless the Net Revenues from such reduced rates, fees
and charges will at all times be sufficient to meet the requirements of this section.
Section 4.5. Future Local Debt. All future debt secured by the pledged revenue source shall be on
parity with, or subordinate to, the Obligation.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 1 of 1
EXHIBIT C —GENERAL TERMS AND CONDITIONS (GTC 304)
(Click on the below Department of General Services, Office of Legal Services Website to determine the
GTC and CCC number. The numbers are based on the beginning "Term of Contract" date.)
Note: The CCC number will be in the "Certification Clause" paragraph from the downloaded GTC
paragraphs.
http://www.ols. das.ca.gov/Standard+Lanquage/default. htm
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 1 of 1
EXHIBIT D— SPECIAL CONDITIONS
[X] None at this time.
[ ] Special condition as follows:
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 1 of 1
EXHIBIT E - AGREEMENT OF AWARD
N/A
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 1 of 10
EXHIBIT F — FACILITY PLAN APPROVAL LETTER (S)
See the Facility Plan Approval letter(s) dated December 6, 2001
Winston H. Hickox
Secretary for
Environmental
Protection
State Y iter Resources Contn Board
Division of Clean Water Programs
1001 I Street, 16th Floor • Sacramento, California 95814 • (916) 341-5700
Mailing Address: P.O. Box 944212 • Sacramento, California • 94244-2120
FAX (916) 341-5708 • Internet Address: http://www.swrcb.ca.gov
The energy challenge facing California is real. Every Califomian needs to take immediate action to reduce energy consumption.
For a list of simple ways you can reduce demand and cut your energy costs, see our website at www.swrcb.ca.gov.
Gray Davis
Governor
r-n*
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Section ,
By
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Dot*
DEC 6 2001
Mr. William E. Plummer
Deputy City Engineer
City of Carlsbad
1635 Faraday Avenue
Carlsbad, CA 92008-7314
Dear Mr. Plummer:
FACILITIES PLANNING APPROVAL, CARLSBAD MUNICIPAL WATER DISTRICT (DISTRICT),
SAN DIEGO COUNTY, PHASE H ENCINA BASIN WATER RECLAMATION PROGRAM
PROJECT (PROJECT), WATER RECYCLING CONSTRUCTION PROGRAM (WRCP), PROJECT
NO. C-06-3903-110
The Division of Clean Water Programs (Division) has reviewed your application and facilities planning
documents dated December 20, 2000. The District has requested grant and loan funding to construct the
Encina Basin Water Reclamation Facilities (EBWRF) Phase n through the Office of the Water
Recycling's grant and loan program.
We have reviewed the District's supplemental information provided in response to our comments to the
facilities planning review. The Division hereby approves the concept of constructing the project as
generally described in the Facilities Planning Report and as further described in this letter. Our approval
is based on the following determinations:
1. The facilities planning documents meet the 1997 water recycling funding guidelines.
2. The environmental documentation meets the CEQA requirements; the Division's Environmental
Services Unit approved the documents on November 15, 2001.
3. The receipt of an adequate draft revenue program. The draft revenue program was approved on
November 8, 2001.
4. The receipt of the adopted water conservation plan. The water conservation plan was adopted by
the District in August of 1991.
The estimated eligible cost for the EBWRF Phase U construction is $36,000,000. Enclosure No. 1
provides a cost breakdown of the EBWRF Phase n project.
The State Water Resources Control Board's (SWRCB) loan and grant funding distribution will be as
follows:
Eligible Construction
Loan Portion Grant Portion
$31.65 million $4.35 million
Construction Allowance
Loan Portion Grant Portion
$4.75 million $0.65 million
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DEC 6200!Mr. William E. Plummer - 2 -
ELIGIBLE PROJECT DESCRIPTION
The EBWRF Phase I, constructed in 1994 through the WRCP, is currently producing a total of 3 mgd of
recycled water from the Meadowlark Water Reclamation Plant (MWRP) and the Garner Water
Reclamation Plant. The total EBWRF Phase If recycled water supply will be increased from the current
3 mgd to 8 mgd. 1 mgd from MWRP and 4 mgd from CWRF. The MWRP expansion is not being
funded.
The following project components proposed under the Phase n EBWRF will be eligible for WRCP grant
and loan funding:
Carlsbad Water Recycling Facility (CWRF)
Construction of a 4 mgd advanced tertiary water recycling facility to meet Title 22 requirements.
The advanced tertiary facility utilizes two independently operated systems consisting of granular
media and membrane/reverse osmosis filtration processes on a site adjacent to the existing
Encina Wastewater Treatment Plant (EWWTP). The treated water from both filtration processes
will be blended to maintain a total dissolved solids limit not to exceed 1,000 mg/1. The
advanced tertiary plant will include an influent pump station, an influent equalization reservoir, a
recycled water storage reservoir, recycled water effluent pump station, sodium hypochlorite
disinfection system, and a plant control building. The influent to the tertiary facility will be
treated effluent from the EWWTP. The following describes the proposed CWRF components
and their corresponding capacities:
Plant components Capacity Units #of pumps/units
Filters:
Granular Media Filtration 3,000 gpm
Membrane/Reverse Osmosis 810 gpm
Influent:
Influent Pump Station 3,000 gpm 4
Equalization Storage Reservoir 3.75 mg
Effluent:
Recycled Water Pump Station - 10,000 gpm (peak) 4
Recycled Water Storage Reservoir 3.75 mg
Chlorination/Dechlorination:
Chlorine Contact Basin 345,000 gallons
Sodium Hypochlorite system 400 #/day
Solids Handling:
Sludge Thickener 700 gpm
California Environmental Protection Agency
Recycled Paper
Mr. William E. Plummer -3-DEC 6 2001
Plant Control/Storage Facilities:
Operations Building 4,500
Chemical storage and feed facilities
Canopy over treatment processes and electrical building
sf
Site Improvements:
Avenida Encinas Road improvement,
Site grading, paving, landscaping, yard piping and electrical distribution
Storm water drainage
Recycled Water Distribution System
The recycled water distribution system within the District's service area will have four pressure
zones. Each pressure zone is designed around existing water pressure zones and storage
facilities. Each zone is designated by its corresponding elevation in relation to the mean sea
level as follows:
• Zone 260, the lowest pressure zone, consists of approximately 780 feet of eight-inch
diameter pipelines servicing the coastal region. Recycled water to this zone is supplied from
the existing Zone 384 through a new pressure reducing station;
• Zone 384 ties directly to the recycled water effluent pumping station at the CWRF. It also
incorporates the existing "twin D tanks" (potable make-up water and recycled water supplied
by Gamer WRP). Zone 384 consists of approximately 35,440 feet of four-inch diameter to
24-inch diameter pipelines;
• Zone 550, the largest of the four pressure zones, serves higher elevations to the east of Zone
384. The Zone 550 incorporates a new proposed "D" tank pump station to boost water from
the 384 zone to the 550 zone, and improvements to the Mahr Storage Reservoir (MSR). It
also includes the Calavera pump station which is a closed loop pumped zone (no storage)
pumping from the 384 zone to the 550 zone. Zone 550 consists of approximately 86,266 feet
of four-inch diameter to 24-inch diameter pipelines; and
• Zone 660 is a closed loop pumped zone with no storage provisions. Water supply to Zone
660 will be from Zone 550 through the proposed Bressi 660-booster pump station. Zone 660
consists of approximately 7,320 feet of four-inch diameter and eight-diameter pipelines.
Distribution System Components
Pump Stations
"D" tank-550 Zone
Calavera-550 Zone w/hydropneumatic tank
Bressi-660 Zone w/Hydropneumatic tank
Capacity (gpm)
4,500
1,600
3,200
No. of Pumps
4
3
4
California Environmental Protection Agency
£% Recycled Paper
DEC 6 2001
Mr. William E. Plummer - 4 -
3- Pressure Reducing Stations 1- "D"tank site (Zone 550 to Zone 384)
1- Faraday Avenue (ZoneSSO to Zone 384)
1- Avenida Encinas (Zone 384 to Zone 260)
Mahr Storage Reservoir (MSR)
The MSR is a 54 million-gallon unlined and uncovered earthen basin. The MSR will be used to provide
seasonal and emergency storage to the recycled water distribution system. The proposed improvements
to the MSR include:
• Dredging, cleaning and fine grading the reservoir bottom
• Modifying the inflow and outflow structures, and site piping
• Adding an aeration/destratification system
• Adding a chlorination system
• Site work improvements including paving the existing access road
• Installing a floating cover
ELIGIBLE DESIGN CAPACITY
The eligible CWRF design capacity is 4,480 acre-feet per year (AFY) or 4 MOD. The CWRF design
capacity is based on peak summer recycled water demands and considerations for the recycled water
storage requirement. The original water demand assessment included an estimated potable make up
water requirement of 942 AFY during the peak summer months. However, because the Olivenhain
Municipal Water District is no longer included as a potential recycled water user, potable make up water
will be less than 200 AFY.
The District has adopted a mandatory use ordinance requiring the use of recycled water where it is made
available. The District, through a letter dated November 30, 2001, stated that the mandatory use
ordinance will be fully enforced upon the completion of the EBWRP Phase n project. Because a
substantial number of potential users are currently using the District's potable water supply, it is
anticipated that the capacity of CWRF will be fully utilized within a year of facility start-up.
Enclosure No. 2 is a listing of approved users and their corresponding water consumption based on
averaged annual recycled water demand.
INELIGIBLE PROJECT ITEMS
• Any items that replace/repair facilities that were previously constructed under the Phase I project;
• Facilities under construction prior to the issuance of Final Plans and Specifications (P&S)
Approval by the Division;
• Costs for project planning;
• Costs for loan application;
• Costs for land, easements, and rights of way; and
• Costs for water recycling retrofits on new or existing facilities.
California Environmental Protection Agency
Recycled Paper
Mr. William E. Plummer -5-DEC 6 2QQf
CONDITIONS OF APPROVAL
The facilities planning approval (FPA) is contingent upon the District's compliance with the conditions
in the grant and loan contracts and substantially meeting the following milestones. Because of the project
magnitude, multiple construction contracts are planned to accommodate construction logistic and
budgetary outlay.
PROJECT MILESTONES
Submit value engineering report
Submit final plans and specifications
Advertise for bids
DATES
12-21-2001
11-26-2002
11-26-2002
11-26-2002
12-27-2002
6-27-2003
1-15-2002
12-29-2002
12-29-2002
12-29-2002
1-30-2003
8-1-2003
4-1-2002
2-30-2003
2-30^2003
2-30-2003
4-28-2003
11-27-2003
Complete construction of all facilities
Initiate facilities operation
Submit notice(s) of completion and final payment request
Submit Final Project Summary Report, Final Cost Summary
and Final Revenue Program
Project Performance Certification
Award construction contract
CONTRACTS
CWRF
"D" Tank 348-zone pump sta.
Calavera 550-zone pump sta.
Bressi 660-zone pump sta.
Distribution System
Mahr Storage Reservoir
CWRF
"D" Tank 550-zone
Calavera 550-zone
Bressi 660-zone
Distribution System
Mahr Storage Reservoir
CWRF
"D" Tank 550-zone pump sta.
Calavera 550-zone pump sta.
Bressi 660-zone pump sta.
Distribution System
Mahr Storage Reservoir
September 24, 2004
October 1, 2004
October 24, 2004
November 24, 2004
October 1, 2005
The FPA includes only that project described above and does not include any associated project that may
have been referred to in the grant and loan application or supplemental submittals. CMWD is authorized
to proceed with preparation of P&S for the eligible project. The FPA does not constitute a grant/loan
California Environmental Protection Agency
ffi Recycled Paper
DEC 6 2001
Mr. William E. Plurnmer - 6 -
offer. Grant and loan offers will be issued after project approval by the SWRCB. CMWD shall not
begin construction prior to Approval-to-Award to preserve project eligibility.
The letter constitutes a Final Staff Division. The Division will request that the State Water Resources
Control Board (SWRCB) make preliminary grant and loan commitments for this project AFTER an
agreement in writing on the eligibility decisions, schedule, and other conditions in this letter has been
received from you. To expedite this process, please notify us immediately in writing if you agree with
this letter, so we can start the process of requesting SWRCB approval for a WRCP grant and loan for
your project.
If you are NOT in agreement, then you must request a Final Division Decision within ten working days
from the date of this letter. Your request should be specific on the items of disagreement and suggest the
exact changes with which you would agree. Please send the request to:
Ms. Barbara L. Evoy, Chief
Division of Clean Water Program
P.O. BOX 944212
Sacramento, CA 94244-2120
Please contact Mr. Richard Wong at (916) 341-5811 or Wongr@cwp.swrcb.ca.gov if you have any
questions or comments regarding this letter.
Sincerely,
ORIGINAL SIGNED BY f. ^^ ?*<•<**€*
J^Oames D. Kuykendall, Chief
Loans & Grants Branch
Enclosures
cc: San Diego Regional Water
Quality Control Board
9174 Skypark Court, #100
San Diego, CA 92123
bcc: Wayne Pierson, DCWP Diana Robles, DCWP
Christopher Stevens, DCWP Bob Been, DCWP
Cookie Him, DCWP flene Smith, DCWP
RWONG/CARLSF2.DOC/30 NOV 01/3 DEC Vi DEC 01/ANNE
California Environmental Protection Agency
O Recycled Paper
ENCLOSURE 1
EBWRF PHASE H RECYCLED WATER FACILITIES
AND CAPITAL COSTS
FACILITY PROJECT COST
Carlsbad Recycled Water Supply $15,918,300
384-Zone Pipelines $4,646,700
550-Zone Pipelines $10,106,600
660-Zone Pipelines $578,000
Twin "D" Reservoir Pump Station $1,363,700
Bressie Booster Pump Station -$724,500
Calavera Booster Pump Station $511,400
Pressure Reduction Stations $255,700
Mahr Reservoir Improvements $1,329.600
Total Project cost $35,578,600
ENCLOSURE 2
CARLSBAD MUNICIPAL WATER DISTRICT PHASE n ENCINA BASIN WATER
RECLAMATION PROGRAM WATER USERS
Annual Recycled Water Use (AFY)
Users First year (2005V and each year thereafter
Poinsettia Village Shopping Ctr 12.8
Carlsbad Municipal Golf 384.0
AltoMira 50.0
Poinsettia Shores PA 7 & 8 37.5
Marcario Canyon Park ' 250.0
Seacrest 7.0
Vista Pacific 24.0
Lohf Residential (zone 3 84) 85.0
Kelly Ranch 54.0
Carlsbad Research Center 202.2
Industrial Center (Fed Ex) 103.1
Olympic Resort and Hotel 14.3
Safety Center 6.0
Zone 19 Park 30.0
CalaveraCape . 22.5
Calavera Villages Q,T,X,Y,& Z 178.0
Carlsbad Airport Center 34.9
Lohf Residential (zone 550) 180.0
Manzanita Partners 10.0
Villages of La Costa (Greens) 372.5
Calaveras Park 47.3
Zone 5 Park 25.0
Robertson Ranch 190.0
Villages of La Costa (Ridge) 170.0
Hope Elementary 10.1
Calavera Lake School 37.5
La Costa Meadows Elementary 19.1
Carlsbad Oaks Business Ctr 228.0
Raceway Industrial Park 26.3
Industrial (Professor's capital) 25.0
Church St. Elizabeth 10.8
Canillo Ranch Park 37.0
Carrillo Ranch 162.5
Meadowcrest 8.3
Meadowlands 14.0
Bressi Ranch (zone 384) 125.0
Bressi Ranch (zone 660) 275.0
Total 3,469
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000
Page 1 of 3
EXHIBIT G
INSTALLMENT SALE AGREEMENT PAYMENT SCHEDULE
See the attached preliminary Installment Sale Agreement Payment Schedule dated March 9, 2006. The
final Installment Sale Agreement Payment Schedule will be forwarded to the Agency after all
disbursements have been paid and construction of the Project has been completed.
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Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 1 of 1
EXHIBIT H — SCHEDULE OF SYSTEM OBLIGATIONS
Except for the following, the Agency has no outstanding System Obligations:
The following outstanding debt is senior to this Obligation:
Title
Not Applicable
Interest Rate Total Amount Amount Remaining End Date
The following outstanding debt is parity to this Obligation:
Title
3903-110
Interest Rate
2.5
Total Amount
$9,817,305
Amount Remaining
$8,514,779
End Date
June 1,2025
The following outstanding debt is subordinate to this Obligation:
Title
Not Applicable
Interest Rate Total Amount Amount Remaining End Date
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 1 of 5
EXHIBIT I - TAX COVENANTS
SECTION 1. GOVERNMENTAL UNIT.
The Agency is a state or local governmental unit as defined in Section 1.103-1 of the Treasury
Regulations or an instrumentality thereof (a "Governmental Unit") and is not the federal government or any
agency or instrumentality thereof. The Agency exclusively owns and, except as provided in Section 7
hereof, operates the Project.
SECTION 2. TEMPORARY PERIOD.
The Agency reasonably expects that at least eighty-five percent (85%) of the Project Funds will be
allocated to expenditures for the Project within three (3) years of the earlier of the effective date of this
Agreement or the date the Bonds are issued ("Applicable Date"). The Agency has incurred, or reasonably
expects that it will incur within six (6) months of the Applicable Date, a substantial binding obligation
(i.e., not subject to contingencies within the control of the Agency or a related party) to a third party to
expend at least five percent (5%) of the Project Funds on the costs of the Project. The completion of
acquisition, construction, improvement and equipping of the Project and the allocation of Project Funds to
expenditures for the Project will proceed with due diligence.
SECTION 3. WORKING CAPITAL.
No operational expenditures of the Agency or any related entity are being, have been or will be financed or
refinanced with Project Funds.
SECTION 4. EXPENDITURE OF PROCEEDS.
Project Funds shall be used exclusively for the following purposes: (i) architectural, engineering,
surveying, soil testing, and similar costs paid with respect to the Project incurred prior to the
commencement of construction and in an aggregate amount not exceeding twenty percent (20%) of the
Project Funds, (ii) capital expenditures relating to the Project originally paid by the Agency on or after the
date hereof, (iii) interest on the Obligation through the later of three (3) years after the Applicable Date or
one (1) year after the Project is placed in service, and (iv) initial operating expenses directly associated
with the Project in the aggregate amount not more than five percent (5%) of the Project Funds. Where
other provisions of this Agreement are more limiting in scope, those provisions shall control.
SECTION 5. PRIVATE USE AND PRIVATE PAYMENTS.
None of the Project Funds or the Project are, have been or will be used in the aggregate for any activities
that constitute a Private Use (as defined below). None of the principal of or interest with respect to the
Installment Payments will be secured by any interest in property (whether or not the Project) used for a
Private Use or in payments in respect of property used for a Private Use, or will be derived from payments
in respect of property used for a Private Use. "Private Use" means any activity that constitutes a trade or
business that is carried on by persons or entities, other than a Governmental Unit. The leasing of the
Project or the access by or the use of a person or entity other than a Governmental Unit on a basis other
than as a member of the general public shall constitute a Private Use.
SECTION 6. NO DISPROPORTIONATE OR UNRELATED USE.
None of the Project Funds or the Project are, have been or will be used for a Private Use that is unrelated
or disproportionate to the governmental use of the Project Funds.
SECTION 7. MANAGEMENT AND SERVICE CONTRACTS.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 2 of 5
EXHIBIT I - TAX COVENANTS
With respect to management and service contracts, the determination of whether a particular use
constitutes Private Use shall be determined on the basis of applying Section 1.141-3(b)(4) of the Treasury
Regulations and Revenue Procedure 97-13 and other applicable rules and regulations. As of the date
hereof, none of the Project Funds or the Project are being used to provide property subject to contracts or
other arrangements with persons or entities engaged in a trade or business (other than Governmental
Units) that involve the management of property or the provision of services that do not comply with the
standards of the Treasury Regulations and Revenue Procedure 97-13.
Except to the extent the Agency has received an opinion of counsel expert in the issuance of state and
local government bonds the interest on which is excluded from gross income under Section 103 of the
Code ("Nationally-Recognized Bond Counsel") and satisfactory to the SWRCB and the State to the
contrary, the Agency will not enter into any management or service contracts with any person or entity that
is not a Governmental Unit for services to be provided with respect to the Project except with respect to
contracts where the following requirements are complied with: (i) the compensation is reasonable for the
services rendered; (ii) the compensation is not based, in whole or in part, on a share of net profits from the
operation of the Project; (iii) not more than twenty percent (20%) of the voting power of the Agency in the
aggregate may be vested in the service provider and its directors, officers, shareholders and employees
and vice versa; (iv) any overlapping board members between the Agency and the service provider must
not include the chief executive officer or executive director of either, or their respective governing bodies;
and (v):
(A) At least ninety-five percent (95%) of.the compensation for services for each annual period
during the term of the contract is based on a periodic fixed fee which is a stated dollar
amount for services rendered for a specified period of time. The stated dollar amount
may automatically increase according to a specified objective external standard that is not
linked to the output or efficiency of a facility, e.g., the Consumer Price Index and similar
external indices that track increases in prices in an area or increases in revenues or costs
in an industry are objective external standards. A fee shall not fail to qualify as a periodic
fixed fee as a result of a one-time incentive award during the term of the contract under
which compensation automatically increases when a gross revenue or expense target
(but not both) is reached if that award is a single stated dollar amount. The term of the
contract, including all renewal options, must not exceed the lesser of eighty percent (80%)
of the reasonably expected useful life of the financed property and fifteen (15) years
(twenty (20) years for "public utility property" within the meaning of Section 168(i)(10) of
the Code);
(B) At least eighty percent (80%) of the compensation for services for each annual period
during the term of the contract is based on a periodic fixed fee. The term of the contract,
including all renewal options, must not exceed the lesser of eighty percent (80%) of the
reasonably expected useful life of the financed property and ten (10) years. A one-time
incentive award during the term of the contract similar to the award described in
subsection (A) above is permitted under this option as well;
(C) At least fifty percent (50%) of the compensation for services for each annual period during
the term of the contract is based on a periodic fixed fee or all of the compensation for
services is based on a capitation fee or combination of a periodic fixed fee and a
capitation fee. A capitation fee is a fixed periodic amount for each person for whom the
service provider or the Agency assumes the responsibility to provide all needed services
for a specified period so long as the quantity and type of services actually provided to
covered persons vary substantially; e.g., a fixed dollar amount payable per month to a
service provider for each member of a plan for whom the provider agrees to provide all
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 3 of 5
EXHIBIT I - TAX COVENANTS
needed services for a specified period. A capitation fee may include a variable
component of up to twenty percent (20%) of the total capitation fee designed to protect
the service provider against risks such as catastrophic loss. The term of the contract,
including all renewal options, must not exceed five (5) years. The contract must be
terminable by the Agency on reasonable notice without penalty or cause, at the end of the
third year of the contract;
(D) All of the compensation for services is based on a per-unit fee or a combination of a per-
unit fee and a periodic fee. A per-unit fee is defined to mean a fee based on a unit of
service provided as specified in the contract or otherwise specifically determined by an
independent third party, such as the administrator of the program or the Agency; e.g., a
stated dollar amount for each specified procedure performed, car parked or passenger
mile is a per-unit fee. The term of the contract, including all renewal options, must not
exceed three (3) years. The contract must be terminable by the Agency on reasonable
notice, without penalty or cause, at the end of the second year of the contract term; or
(E) All of the compensation for services is based on a percentage of fees charged or a
combination of a per-unit fee and a percentage of revenue or expense fee. During the
start up period, however, compensation may be based on a percentage of either gross
revenues, adjusted gross revenues or expenses of a facility. The term of the contract,
including renewal options, must not exceed two (2) years. The contract must be
terminable by the Agency on reasonable notice without penalty or cause, at the end of the
first year. This type of contract is permissible only with respect to contracts under which
the service provider primarily provides services to third parties, and management
contracts involving a facility during an initial start-up period for which there have been
insufficient operations to establish a reasonable estimate of the amount of the annual
gross revenues and expenses (e.g., a contract for general management services for the
first year of the operations).
If the compensation terms of a management or service contract are materially revised,
the requirements for compensation terms must be retested as of the date of the material
revision and the management or service contract is treated as one (1) that was newly
entered into as of the date of the material revision.
A renewal option, for purposes of the foregoing, is defined to mean a provision under
which the service provider has a legally enforceable right to renew the contract. Thus, for
example, a provision under which a contract is automatically renewed for one (1) year
periods absent cancellation by either party is not a renewal option, even if it is expected to
be renewed.
A cancellation penalty is defined to include a limitation on the Agency's ability to compete
with the service provider, a requirement that the Agency purchase equipment, goods or
services from the service provider, and a requirement that the Agency pay liquidated
damages for cancellation of the contract; in comparison, a requirement effective on
cancellation that the Agency reimburse the service provider for ordinary and necessary
expenses or a restriction against the Agency hiring key personnel of the service provider
is generally not a contract termination penalty. Another contract between the service
provider and the Agency, such as an Installment Sale Agreement or guarantee by the
service provider, is treated as creating a contract termination penalty if that contract
contains terms that are not customary or arm's length, that could operate to prevent the
Agency from terminating the contract (e.g., provisions under which the contract
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 4 of 5
EXHIBIT I - TAX COVENANTS
terminates if the management contract is terminated or that places substantial restrictions
on the selection of a substitute service provider).
The service provider must not have any role or relationship with the Agency, that, in
effect, substantially limits the Agency's ability to exercise its rights, including cancellation
rights, under the contract, based on all the facts and circumstances.
SECTION 8. NO DISPOSITION OF FINANCED PROPERTY.
The Agency does not expect to sell or otherwise dispose of any portion of the Project, in whole or in part,
prior to the final maturity date of the Obligation.
SECTION 9. USEFUL LIFE OF PROJECT.
The economic useful life of the Project is at least twenty (20) years from the Project Completion, and is
specified elsewhere in this Agreement.
SECTION 10. INSTALLMENT PAYMENTS.
Installment Payments generally are expected to be derived from current revenues of the Agency in each
year, and current revenues are expected to equal or exceed debt service on the Obligation during each
payment period.
SECTION 11. NO OTHER REPLACEMENT PROCEEDS.
The Agency will not use any of the Project Funds to replace funds of the Agency which are or will be used
to acquire investment property reasonably expected to produce a yield that is materially higher than the
yield on the Bonds.
SECTION 12. REIMBURSEMENT RESOLUTION.
Not applicable.
SECTION 13. CHANGE IN USE.
The Agency reasonably expects to use all Project Funds and the Project for the entire stated term to
maturity of the Obligation. Absent an opinion of Nationally-Recognized Bond Counsel to the effect that
such use of Project Funds will not adversely affect the exclusion from federal gross income of interest on
the Bonds pursuant to Section 103 of the Code, the Agency will use the property financed or refinanced
with Project Funds solely as set forth in the Agreement.
SECTION 14. NO FEDERAL GUARANTEE.
The Agency will not directly or indirectly use any of the Project Funds that would cause the Bonds to be
"federally guaranteed" within the meaning of Section 149(b) of the Code.
SECTION 15. NO NOTICES OR INQUIRIES FROM IRS.
The Agency has not received any notice or inquiry by the Internal Revenue Service within the last ten (10)
years regarding any obligations issued by the Agency, the interest on which obligations is excludable from
federal income taxation.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 5 of 5
EXHIBIT I - TAX COVENANTS
SECTION 16. AMENDMENTS.
The provisions in this Exhibit I may be amended or supplemented at any time to reflect changes in the
Code upon obtaining an opinion of Nationally-Recognized Bond Counsel that such amendment will not
adversely affect the exclusion from federal gross income of interest on the Bonds pursuant to Section 103
of the Code.
SECTION 17. REASONABLE EXPECTATIONS.
To the best of the knowledge, information and belief of the Agency's signatory, and based on the facts and
estimates as set forth in the tax covenants in this Exhibit I, the expectations of the Agency as set forth in
this Exhibit I are reasonable. The Agency is not aware of any facts or circumstances that would cause it
to question the accuracy or reasonableness of any representation made in the provisions in this Exhibit I.
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 1 of 5
EXHIBIT J - SWRCB SPECIAL TERMS AND CONDITIONS
SECTION! COPYRIGHTS.
The Agency agrees that the U.S. Environmental Protection Agency shall have a royalty-free, nonexclusive
and irrevocable license to reproduce, publish, otherwise use, and to authorize others to use, for federal
government purposes: (a) The copyright in any work developed under this Agreement, and (b) any rights
of copyright which the Agency may purchase where costs of such purchase are reimbursed with Project
Funds.
SECTION 2. COVENANTS.
Section 2.1. Tax Covenant. Notwithstanding any other provision hereof, the Agency covenants and
agrees that it will comply with the Tax Covenants set forth in Exhibit I attached hereto.
Section 2.2. Disclosure of'Financial Information, Operating Data and Other Information. The Agency
covenants to furnish certain financial and operating data pertaining to the Agency that
may be required to either: (i) enable the SWRCB to secure an Indenture by this
Agreement and issue any Bonds; or (ii) enable any underwriter to comply with Rule 15c2-
12(b)(5) of the Securities and Exchange Commission. The Agency further covenants to
provide the SWRCB with copies of all continuing disclosure reports concerning the
Agency required by the terms of any financing other than this Agreement, including
reports required to be filed in order to comply with Rule 10b-5, and to send such reports to
the SWRCB at the same time such reports are sent to any dissemination agent, trustee,
nationally recognized municipal securities information repository or other person.
SECTION 3. ASSIGNABILITY.
The Agency agrees and consents to any pledge, sale or assignment to the State or a trustee for the
benefit of the owners of the Bonds at any time of any portion of the SWRCB's estate, right, title and
interest and claim in, to and under this Agreement and the right to make all related waivers and
agreements in the name and on behalf of the SWRCB, as agent and attorney-in-fact, and to perform all
other related acts which are necessary and appropriate under this Agreement, if any, and the SWRCB's
estate, right, title and interest and claim in, to and under this Agreement to Installment Payments (but
excluding the SWRCB's rights to Additional Payments and to notices, opinions and indemnification under
each Obligation).
SECTION 4. STATE REVIEWS AND INDEMNIFICATION.
The parties agree that review or approval of Project plans and specifications by the SWRCB is for
administrative purposes only and does not relieve the Agency of its responsibility to properly plan, design,
construct, operate, and maintain the Project. To the extent permitted by law, the Agency agrees to
indemnify, defend and hold harmless the SWRCB, the State and any trustee and their officers, employees
and agents for the Bonds (collectively, "Indemnified Persons") against any loss or liability arising out of any
claim or action brought against any Indemnified Persons from and against any and all losses, claims,
damages, liabilities or expenses, of every conceivable kind, character and nature whatsoever arising out
of, resulting from, or in any way connected with (1) the System or the Project or the conditions, occupancy,
use, possession, conduct or management of, work done in or about, or the planning, design, acquisition,
installation or construction, of the System or the Project or any part thereof; (2) the carrying out of any of
the transactions contemplated by this Agreement or any related document; (3) any violation of any
applicable law, rule or regulation, any environmental law (including, without limitation, the Federal
Comprehensive Environmental Response, Compensation and Liability Act, the Resource Conservation
and Recovery Act, the California Hazardous Substance Account Act, the Federal Water Pollution Control
Carlsbad Municipal Water District
Agreement No.: 05-721-550-0
WRCP No.: 3903-120
Water Recycling 1996 and 2000 Bond
Page 2 of 5
EXHIBIT J - SWRCB SPECIAL TERMS AND CONDITIONS
Act, the Clean Air Act, the California Hazardous Waste Control Law and California Water Code Section
13304, and any successors to said laws), rule or regulation or the release of any toxic substance on or
near the System; or (4) any untrue statement or alleged untrue statement of any material fact or omission
or alleged omission to state a material fact necessary to make the statements required to be stated
therein, in light of the circumstances under which they were made, not misleading with respect to any
information provided by the Agency for use in any disclosure document utilized in connection with any of
the transactions contemplated by this Agreement. To the fullest extent permitted by law, the Agency
agrees to pay and discharge any judgment or award entered or made against Indemnified Persons with
respect to any such claim or action, and any settlement, compromise or other voluntary resolution. The
provisions of this section shall survive the discharge of the Agency's Obligation hereunder.
SECTION 5. LIABILITY OF AGENCY.
Notwithstanding anything contained herein, the Agency shall not be required to advance any moneys
derived from any source of income other than Net Revenues and the other funds legally available for the
payment of the Installment Payments, and other payments required to be made by it hereunder, or for the
performance of any agreements or covenants required to be performed by it contained herein. The
Agency may, however, but in no event shall be obligated to, advance moneys for any such purpose so
long as such moneys are derived from a source legally available for such purpose and may be legally
used by the Agency for such purpose.
SECTION 6. [Reserved.]
SECTION 7. TERMINATION; IMMEDIATE REPAYMENT; INTEREST.
(A) This Agreement may be terminated by written notice during construction of the Project, or
thereafter at any time prior to complete repayment by the Agency, at the option of the SWRCB,
upon violation by the Agency of any material provision of this Agreement after such violation has
been called to the attention of the Agency and after failure of the Agency to bring itself into
compliance with the provisions of this Agreement within a reasonable time as established by the
Division.
(B) In the event of such termination, the Agency agrees, upon demand, to immediately repay to the
SWRCB an amount equal to current balance due hereunder, including accrued interest, and all
penalty assessments due. In the event of termination, interest shall accrue on all amounts due at
the highest legal rate of interest from the date that notice of termination is mailed to the Agency to
the date of full repayment by the Agency.
SECTION 8. DAMAGES FOR BREACH AFFECTING TAX EXEMPT STATUS.
In the event that any breach of any of the provisions of this Agreement by the Agency shall result in the
loss of tax exempt status for any state bonds, or if such breach shall result in an obligation on the part of
the State to reimburse the federal government by reason of any arbitrage profits, the Agency shall
immediately reimburse the state in an amount equal to any damages paid by or loss incurred by the state
due to such breach.
SECTION 9. DISPUTES.
(A) Any dispute arising under this Agreement which is not otherwise disposed of by agreement shall
be decided by the Division Chief, or his or her authorized representative. The decision shall be
reduced to writing and a copy thereof furnished to the Agency and to the SWRCB's Executive
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Director. The decision of the Division shall be final and conclusive unless, within thirty (30)
calendar days after mailing of the Division decision to the Agency, the Agency mails or otherwise
furnishes a written appeal of the decision to the SWRCB's Executive Director. The decision of the
SWRCB's Executive Director shall be final and conclusive unless determined by a court of
competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous
as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any
appeal under this clause, the Agency shall be afforded an opportunity to be heard and to offer
evidence in support of its appeal. Pending final decision of a dispute hereunder, the Agency shall
continue to fulfill and comply with all the terms, provisions, commitments, and requirements of this
Agreement.
(B) This clause does not preclude consideration of legal questions, provided that nothing herein shall
be construed to make final the decision of the SWRCB, or any official or representative thereof,
on any question of law.
SECTION 10. VENUE.
The SWRCB and the Agency hereby agree that any action arising out of this Agreement shall be filed and
maintained in the Superior Court in and for the County of Sacramento, California, or in the United States
District Court in and for the Eastern District of California.
SECTION 11. RIGHTS IN DATA.
The Agency agrees that all data, plans, drawings, specifications, reports, computer programs, operating
manuals, notes, and other written or graphic work produced in the performance of this Agreement are
subject to the rights of the State as set forth in this section. The State shall have the right to reproduce,
publish, and use all such work, or any part thereof, in any manner and for any purposes whatsoever and to
authorize others to do so. If any such work is copyrightable, the Agency may copyright the same, except
that, as to any work which is copyrighted by the Agency, the State reserves a royalty-free, nonexclusive,
and irrevocable license to reproduce, publish, and use such work, or any part thereof, and to authorize
others to do so. (40 CFR 31.34, 31.36)
SECTION 12. INCOME RESTRICTIONS.
The Agency agrees that any refunds, rebates, credits, or other amounts (including any interest thereon)
accruing to or received by the Agency under this Agreement shall be paid by the Agency to the State, to
the extent that they are properly allocable to costs for which the Agency has been reimbursed by the State
under this Agreement.
SECTION 13. PERMITS, SUBCONTRACTING, WAIVER, REMEDIES AND DEBARMENT.
The Agency shall procure all permits and licenses necessary to accomplish the work contemplated in this
Agreement, pay all charges and fees, and give all notices necessary and incidental to the due and lawful
prosecution of the work.
Any subcontractors, outside associates, or consultants required by the Agency in connection with the
services covered by this Agreement shall be limited to such individuals or firms as were specifically
identified and agreed to during negotiations for this Agreement, or as are specifically authorized by the
SWRCBs Project Representative during the performance of this Agreement. Any substitutions in, or
additions to, such subcontractors, associates, or consultants, shall be subject to the prior written approval
of the SWRCBs Project Representative.
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Any waiver of rights with respect to a default or other matter arising under the Agreement at any time by
either party shall not be considered a waiver of rights with respect to any other default or matter.
Any rights and remedies of the State provided for in this Agreement are in addition to any other rights and
remedies provided by law.
The Agency shall not subcontract with any party who is debarred or suspended or otherwise excluded
from or ineligible for participation in federal assistance programs under Executive Order 12549,
"Debarment and Suspension". The Agency shall not subcontract with any individual or organization on
USEPA's List of Violating Facilities. (40 CFR, .Part 31.35, Gov. Code 4477)
The Agency certifies to the best of its knowledge and belief, that it and its principals:
(A) Are not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily
excluded by any federal department or agency;
(B) Have not within a three-year period preceding this Agreement been convicted of or had a civil
judgment rendered against them for commission of fraud or a criminal offense in connection with
obtaining, attempting to obtain, or performing a public (federal, state or local) transaction or
contract under a public transaction; violation of federal or state antitrust statutes or commission of
embezzlement, theft, forgery, bribery, falsification or destruction of records, making false
statements, or receiving stolen property;
(C) Are not presently indicted for or otherwise criminally or civilly charged by a governmental entity
(federal, state or local) with commission of any of the offenses enumerated in paragraph (1)(b) of
this certification; and
(D) Have not within a three-year period preceding this application/proposal had one (1) or more public
transactions (federal, state or local) terminated for cause or default.
SECTION 14. CONTRACT MODIFICATIONS.
The SWRCB may, at any time, without notice to any sureties, by written order designated or indicated to
be a "contract modification", make any change in Exhibit A, for the work to be performed under this
Agreement so long as the modified work is within the general scope of work called for by this Agreement,
including but not limited to "changes in the specifications or in the method, manner, or time of performance
of work. If the Agency intends to dispute the change, the Agency must, within ten (10) days after receipt
of a written "contract modification", submit to the SWRCB a written statement setting forth the
disagreement with the change.
Notwithstanding the above, no modification may be made which in any way alters the provisions of Exhibit
B without formal amendment of this Agreement.
SECTION 15. COMPUTER SOFTWARE.
The Agency certifies that it has appropriate systems and controls in place to ensure that state funds will
not be used in the performance of this contract for the acquisition, operation or maintenance of computer
software in violation of copyright laws.
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SECTION 16. COMPLIANCE WITH LAW, REGULATIONS, ETC.
(A) The Agency agrees that it will, at all times, comply with and require its contractors and
subcontractors to comply with all applicable federal and state laws, rules, guidelines, regulations,
and requirements. Without limitation of the foregoing, the Agency agrees that, to the extent
applicable, the Agency will:
(1) Comply with the provisions of the adopted environmental mitigation plan for the term of
this Agreement;
(2) Comply with the SWRCB's "Water Recycling Funding Program Guidelines", adopted April
17, 1997.
(3) Comply with and require its contractors and subcontractors on the Project to comply with
federal minority and women-owned business enterprise (MBE/WBE) requirements.
SECTION 17. SWRCB ACTION; COSTS AND ATTORNEY FEES.
The Agency agrees that any remedy provided in this Agreement is in addition to and not in derogation of
any other legal or equitable remedy available to the SWRCB as a result of breach of this Agreement by
the Agency, whether such breach occurs before or after completion of the Project, and exercise of any
remedy provided by this Agreement by the SWRCB shall not preclude the SWRCB from pursuing any
legal remedy or right which would otherwise be available. In the event of litigation between the parties
hereto arising from this Agreement, it is agreed that the prevailing party shall be entitled to such
reasonable costs and/or attorney fees as may be ordered by the court entertaining such litigation.
SECTION 18. PREVAILING WAGES.
To the extent applicable, the Agency agrees to be bound by all the provisions of State Labor Code Section
1771 regarding prevailing wages. To the extent applicable, the Agency shall monitor all agreements
subject to reimbursement from this Installment Sale Agreement to assure that the prevailing wage
provisions of State Labor Code Section 1771 are being met.