HomeMy WebLinkAbout2007-01-23; Municipal Water District; 627; Amendment to Water Purchase AgreementCARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL
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MTG,
DEPT.
627
1-23-07
Admin.
Services
APPROVAL OF AMENDMENT TO THE
WATER PURCHASE AGREEMENT
DEPT. HEAD ^£^
CITY ATTY. d^
CITY MGR. -ng)
RECOMMENDED ACTION:
Adopt Resolution No. 1288 approving an amendment to the Water Purchase Agreement
dated September 28, 2004, between Poseidon Resources and the Carlsbad Municipal Water
District.
ITEM EXPLANATION:
On September 28, 2004 the CMWD Board entered into an agreement with Poseidon Resources
regarding the purchase of water for a proposed desalination facility to be located near the
Encina Power Station (the Water Purchase Agreement). Section 2.3 of the Water Purchase
Agreement, Termination Prior to the Commercial Operation Date, states that if certain events
have not occurred by 24 months from the original agreement date, either party may terminate
the agreement. Section 2.3.1 provides a list of seven events that must be completed by the
September 28, 2006 deadline. These include:
• Certification of the EIR for the project.
• Poseidon entering into supplemental agreements for the sale of water from the plant.
• Developing tests to determine the effect of desalinated water on the CMWD
transmission and distribution system, and consumer plumbing systems.
• Establishing a concentration limit for Boron in the water produced by the desalination
plant.
• Determining the point at which the desalinated water transmission system will connect
to the CMWD water system.
• Development of a delivery regime for desalinated water to CMWD.
• Obtaining consent from Cabrillo Power, where necessary, for any terms, conditions, or
agreements related to the desalination facility.
On September 26, 2006 the Board approved a short extension of time to complete
negotiations with Poseidon Resources dealing with a number of issues, including those listed
above. That extension moved the deadline for completion of these tasks to November 30,
2006. Although agreement has been reached on several of these issues, additional time will
be necessary to complete negotiations on a few remaining topics.
On November 21, 2006 the Board approved another extension of time to complete
negotiations with Poseidon Resources dealing with a number of issues, including those listed
above. That extension moved the deadline for completion of these tasks to January 31,
2007. Although agreement has been reached on several of these issues, additional time will
be necessary to complete negotiations on a few remaining topics.
Therefore, staff is asking the Board to allow an additional three-month extension of the
deadlines described in 2.3.1, thereby allowing staff to complete negotiations and present a
completed amendment to the Board at a future meeting.
If approved by the Board, the attached agreement between CMWD and Poseidon Resources
would extend the deadline for completion of the work described in 2.3.1 to April 30,
2007.
FISCAL IMPACT:
None.
ENVIRONMENTAL IMPACT:
None.
EXHIBITS:
1. Resolution No. 1288 approving an amendment to the Water Purchase
Agreement between Poseidon Resources and CMWD, dated September 28, 2004.
2. Fourth Amendment to the Water Purchase Agreement.
DEPARTMENT CONTACT: Jim Elliott, 760-602-2409, ielli@ci.carlsbad.ca.us
FOR CITY CLERKS USE ONLY.
BOARD ACTION: APPROVED tf CONTINUED TO DATE SPECIFIC D
DENIED D CONTINUED TO DATE UNKNOWN D
CONTINUED D RETURNED TO STAFF D
WITHDRAWN D OTHER-SEE MINUTES D
AMENDED D
EXHIBIT 1
1 RESOLUTION NO. 1288
2
A RESOLUTION OF THE BOARD OF DIRECTORS OF CARLSBAD MUNICIPAL
3
WATER DISTRICT (CMWD), APPROVING A FOURTH AMENDMENT TO THE
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WATER PURCHASE AGREEMENT DATED SEPTEMBER 28, 2004
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6 WHEREAS, the Board of Directors of the Carlsbad Municipal Water District
7 approved a Water Purchase Agreement (Agreement) with Poseidon Resources
8 (Channelside) LLC to purchase from Poseidon up to 25 million gallons of water per day
9 (MGD) of product water, subject to the terms, conditions and arrangements included in
10 the Agreement; and
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12 WHEREAS, the completion of certain events was required by September 28,
13 2006 by the terms and conditions of section 2.3.1 of the Agreement; and
14 WHEREAS, if the events described in section 2.3.1 were not completed by
15 September 28, 2006, either party could exercise its right to terminate the Agreement;
16 and
17 WHEREAS, both parties agreed to an extension deadline of November 30, 2006;
18
and
19 WHEREAS, both parties agreed to another extension deadline of January 31,
20 2007; and
21
WHEREAS, both parties desire an additional extension of the deadline
22 established in section 2.3.1 of the Agreement to allow the completion of negotiations
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regarding certain events described in section 2.3.1.
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NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the
Carlsbad Municipal Water District, as follows:
1. That the above recitations are true and correct.
2. That the Board of the Carlsbad Municipal Water District hereby authorize
the Chairman of the Board to execute the Fourth Amendment.
PASSED, APPROVED AND ADOPTED at a Special Meeting of the Carlsbad
Municipal Water District of the City of Carlsbad on the 23rd day of January
2007, by the following vote:
AYES: Board Members Lewis, Hall, Packard, Sigafoose
NOES: None
ABSENT: Board Member Kulcbin
PRESIDENT
ATTEST:
LORRAINE M. WOOD, SECRETARY
(SEAL)
EXHIBIT 2
FOURTH AMENDMENT TO WATER PURCHASE AGREEMENT
THIS FOURTH AMENDMENT TO WATER PURCHASE AGREEMENT (this
"Amendment'), dated as of January , 2007, is made by and between the
CARLSBAD MUNICIPAL WATER DISTRICT, a municipal water district (the
"District"), and POSEIDON RESOURCES (CHANNELSIDE) LLC, a Delaware
limited liability company ("Poseidon").
RECITALS
WHEREAS, the District and Poseidon previously entered into that certain
Water Purchase Agreement (the "Purchase Agreement"), dated as of
September 28, 2004; and
WHEREAS, the District and Poseidon previously entered into that certain
Amendment to Water Purchase Agreement (the "First Amendment"), dated as
of May 19, 2005; and
WHEREAS, the District and Poseidon previously entered into that certain
Amendment to Water Purchase Agreement (the "Second Amendment") dated as
of September 26, 2006; and
WHEREAS, the District and Poseidon previously entered into that certain
Amendment to Water Purchase Agreement (the "Third Amendment") dated as of
November 21, 2006; and
WHEREAS, the Purchase Agreement and the First, Second and Third
Amendments hereinafter are referred to collectively as the "Agreement"; and
WHEREAS, capitalized terms that are used in this Amendment without
definition and that are defined in the Agreement are used herein as so
defined; and
WHEREAS, pursuant to the terms of the Agreement, Poseidon has agreed to
sell to the District, and the District has agreed to purchase from
Poseidon, up to twenty-five (25) MOD of Product Water, subject to the
terms, conditions and arrangements set forth in the Agreement; and
WHEREAS, pursuant to Section 2.3 of the Agreement, either Party has the
right to terminate the Agreement if certain events have not occurred on
or before the Determination Date; and
WHEREAS, Section 2.3 of the Agreement provides that the Determination
Date may be extended by the mutual agreement of the Parties, and the
District and Poseidon desire to extend the Determination Date as
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged by the Parties hereto, the Parties covenant and agree as
follows:
1. Amendment. The Determination Date is hereby
extended to April 30, 2007, and after the execution of this Amendment
by each of the Parties hereto, all references in the Agreement to the
Determination Date shall mean and refer to April 30, 2007.
2. Controlling Law. This Amendment shall be governed
by the laws of the State of California in accordance with Section 21.5
of the Agreement.
3. Counterparts and Facsimile Signatures. This
Amendment may be executed in any number of duplicate originals or
counterparts, each of such duplicate originals or counterparts shall be
deemed to be an original and alltaken together shall constitute one and
the same instrument. The signature page of any counterpart may be
detached therefrom without impairing the legal effect of the
signature(s) thereon, provided such signature page is attached to any
other counterpart identical thereto except for having an additional
signature page executed by any Party. Each Party agrees that each other
Party may rely upon the facsimile signature of each other Party on this
Amendment as constituting a duly authorized, irrevocable, actual,
current delivery of this Amendment as fully as if this Amendment
contained the original ink signature of the Party supplying a facsimile
signature.
4. Amendment and Modification Only. The Parties hereby ratify
and confirm all of their obligations under the provisions of the
Agreement as amended by this Amendment, and except as amended by this
Amendment, all of the terms and conditions of the Agreement shall remain
unmodified and in full force and effect.
IN WITNESS WHEREOF, the District and Poseidon, intending to bfc legally
bound by the provisions herein contained, have executed this Amendment
effective as of the date first above written.
CARLSBAD MUNICIPAL WATER DISTRICT
Title:
pr-' •
POSEIDON RESOURCES (CHANNELSIDE) LLC
Approved as to Form
Bv:
R.
City Attorney
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