HomeMy WebLinkAbout2012-05-22; Municipal Water District; 751; Authorize Exec Director Send Notice of TerminationCARLSBAD MUNICIPAL WATER DISTRICT - AGENDA BILL 14
AB# 751 AUTHORIZE EXECUTIVE DIRECTOR DEPT. HEAD A' MTG. 5/22/12 TO SEND NOTICE OF TERMINATION CITY ATTY.
DEPT. UTIL OF RECYCLED WATER PURCHASE
AGREEMENT WITH THE LEUCADIA
WASTEWATER DISTRICT
CITY MGR.
RECOMMENDED ACTION:
Adopt Resolution No. 1441 authorizing the Executive Director to send a notice of
termination of Agreement for Sale of Recycled Water to the City of Carlsbad by the Leucadia County
Water District and granting signature authority to the Executive Manager to provide agreement
termination notice as provided in the subject agreement.
ITEM EXPLANATION:
On March 25, 1991, an agreement was entered into between the Leucadia County Water District,
subsequently renamed the Leucadia Wastewater District (LWD), and the Carlsbad Municipal Water
District (CMWD or District) for the sale of recycled water from LWD to CMWD. The term of the
agreement was for twenty years, expiring on March 25, 2011. The agreement provided that the terms of
the agreement shall remain in force from year to year after the initial twenty-year term until either party
gives a one year written notice to the other party of its intention to terminate or renegotiate the
agreement. On March 24, 2011, CMWD notified LWD that CMWD intended to continue purchasing
recycled water under the agreement terms on a year to year basis while it explored other recycled water
supply options.
Over the past two years, CMWD staff has undertaken an extensive look into its recycled water supplies,
demands and costs. CMWD has also been working cooperatively with the North San Diego County
Recycled Water Committee to investigate a regional approach to addressing recycled water in northern
San Diego County. Additionally, CMWD has recently completed the technical portion of its Recycled
Water Master Plan and is working on the Phase III Recycled Water Project. The results of the studies
performed and the inter-agency cooperative work to date indicate that the terms of the recycled water
sales agreement with LWD are no longer favorable to CMWD. The data shows that CMWD has
adequate supplies to meet the near-term projected demand without LWD's source of recycled water and
the price of the LWD recycled water far exceeds the cost of CMWD's alternate supplies. Staff
recommends that the CMWD Board of Directors authorize the Executive Director to provide LWD with
written notice that CMWD intends to terminate the recycled water purchase agreement, pursuant to
Section 17 of the subject agreement.
It shouid be noted that LWD has approached CMWD with an offer to renegotiate the existing agreement
on terms that would be more favorable to CMWD. At this time, however, based on the significant
DEPARTMENT CONTACT: Glenn Pruim 760-438-2722 Glenn.Pruim@carisbadca.aov
FOR CITY CLERKS USE ONLY. 1 -
BOARD ACTION: APPROVED K CONTINUED TO DATE SPECIFIC •
DENIED CONTINUED TO DATE UNKNOWN •
CONTINUED • RETURNED TO STAFF •
WITHDRAWN • OTHER - SEE MINUTES •
AMENDED •
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difference in price between LWD's proposal and CMWD's alternative supply cost, it is uncertain whether
mutually acceptable terms on a new agreement could be reached. The requested action simply
authorizes the Executive Director to provide the required written one year agreement termination notice.
District staff will continue to work with LWD staff to discuss terms for a potential new recycled water
sales agreement. If a new agreement is not brought fonA/ard within one year of LWD being provided with
termination notice, the existing agreement will terminate and no longer be in effect.
FISCAL IMPACT:
There Is no direct fiscal impact associated with the requested action. However, by terminating the
existing agreement the District stands to save considerable amounts of money on its recycled water
supply costs. Based on the anticipated recycled water purchase amounts from LWD, District staff
estimates that terminafing the agreement will reduce recycled water supply costs by more than $300,000
per year. Due to the fact that the existing agreement establishes the LWD recycled water purchase
costs as a percentage of imported water rates, those savings are expected to increase as imported
potable water rates continue to rise. A capital investment would be required to construct a pipeline to
replace the LWD recycled water supplies and the savings referenced above reflect the capital
investment. The required pipeline is included in the proposed 2012/2013 Capital Improvement Program.
ENVIRONMENTAL IMPACT:
Pursuant to Public Resources Code Section 21065, this action does not constitute a "project" within the
meaning of CEQA, in that It has no potential to cause either a direct physical change in the environment
or a reasonably foreseeable indirect physical change in the environment. This project, therefore, does
not require environmental review. Any required environmental review for the referenced pipeline will be
conducted as part of the CIP environmental review and subsequent project-level environmental review, if
required.
EXHIBITS:
1. Resolution No. 1441 authorizing the CMWD Executive Director to provide a notice of
termination to the Leucadia Wastewater District for the agreement titled "Agreement for Sale of
Recycled Water to the City of Carlsbad by the Leucadia County Water District."
2. Copy of the "Agreement for Sale of Recycled Water to the City of Carlsbad by the Leucadia
County Water District."
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EXHIBIT 1
1 RESOLUTION NO. 1441
2 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE
CARLSBAD MUNICIPAL WATER DISTRICT AUTHORIZING THE
3 EXECUTIVE DIRECTOR TO PROVIDE TERMINATION NOTICE
TO THE LEUCADIA WASTEWATER DISTRICT FOR THE
4 RECYCLED WATER PURCHASE AGREEMENT ENTITLED
"AGREEMENT FOR SALE OF RECYCLED WATER TO THE
5 CITY OF CARLSBAD BY THE LEUCADIA COUNTY WATER
DISTRiCT"
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WHEREAS, the Carisbad Municipal Water District (CMWD or District) provides
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potable and recycled water to the customers within its defined service area; and
WHEREAS, the use of recycled water is recommended whenever appropriate,
11 consistent with existing health and safety codes, to minimize the demand on limited
12 potable water supplies; and
13 WHEREAS, CMWD had access to limited supplies of recycled water in the eariy
years of the development of the recycled water program; and
WHEREAS, on March 25, 1991, CMWD entered into an agreement (Agreement)
with the Leucadia County Water District to purchase recycled water. Leucadia County
Water District subsequently was renamed the Leucadia Wastewater District; and
WHEREAS, the term of the Agreement was for twenty years, expiring on March
25, 2011. Secfion 17 of the Agreement provided for the terms to confinue on a year to
21 year basis beyond the expiration date until either party gives one-year written nofice of
22 its intenfion to terminate or renegofiate the agreement; and
23 WHEREAS, the costs of the recycled water purchased under the Agreement has
risen sharply in recent years, primarily due to rapidly increasing imported water rates, to
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which the recycled water price is fied, and the reduced consumption of the purchased
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water's only customer; and
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1 WHEREAS, CMWD has invested significant sums of money to procure and
2 develop alternative recycled water supplies which are now far less costly than those
supplies obtained under the Agreement; and
WHEREAS, CMWD has sufficient supplies to meet the recycled water demands
without the supplies obtained under the Agreement; and
WHEREAS, the Agreement does not specifically authorize staff to provide proper
written nofice of termination for the Agreement.
NOW, THEREFORE, BE IT RESOLVED by the Carisbad Municipal Water
10 District Board of Directors of the City of Carisbad, California, as follows:
11 1. That the above recitations are true and correct.
2. That the Board of Directors finds that it is in the best interests of the
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13 provide proper written one-year notice of terminafion to Leucadia Wastewater District
19 consistent with the terms of the Agreement.
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District to terminate the existing Agreement, entitled "Agreement for Sale of Recycled
Water to the City of Carisbad by the Leucadia County Water District," with the Leucadia
Wastewater District.
3. That the Board hereby authorizes the District's Executive Director to
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1 PASSED, APPROVED AND ADOPTED at a Special Meefing of the Board of
2 Directors of the Carisbad Municipal Water District of the City of Carisbad on the 22"^
^ day of May, 2012, by the following vote to wit:
AYES: Board Members Hall, Kulchin, Blackburn, Douglas and Packard.
NOES: None.
ABSENT: None.
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13 ATTEST:
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MATT HALL, President
16 LaRRAlNE M. WOOD, Secretary
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AGREEMENT FOR SALE OF RECYCLED WATER
TO THE CITY OF CARLSBAD BY THE
LEUCADIA COUNTY WATER DISTRICT
This RECYCLED WATER SALES AGREEMENT (AGREEMENT) is made and
entered into this day of Al^^^. ; 1991, by and
between the Leucadia County Water District, a County Water District
existing under the California Water Code, hereinafter referred to
as "LEUCADIA," and the CARLSBAD MUNICIPAL WATER DISTRICT a
DISTRicT^•''^*'^'' district, hereinafter referred to as the "WATER
RECITALS:
WHEREAS, the WATER DISTRICT is responsible for the
distribution of potable water within its DISTRICT boundary; and,
WHEREAS, the WATER DISTRICT and LEUCADIA recognize the use of
recycledwater (treated domestic wastewater) as a positive and
achievable means of helping to meet the growing water demands of
Southern California in the future; and, i"<aiius or
WHEREAS, LEUCADIA operates the Forest R. Gafner Water
Reclamation Plant for the treatment of domestic wastewater and
TMGDf;''fnd, producing up to 0.75 million gallons per day
WHEREAS, the WATER DISTRICT is interested in purchasing
recycled water from LEUCADIA for purveyance to ultimate users fo?
^?STRICT^^^^ appropriate uses within the WATER
WHEREAS, the California Regional Water Quality Control Board
San Diego Region (hereinafter known as REGIONAL BOARD) adopted ok
January 23, 1984, ORDER No. 84-10, WATER RECT.AMATIQN RROTTTLMPKrmc
FOR THE CITY OF CART.qRAn FOR THF Pm^TTT^YANCE OF PFPT.ArSgrrir^^^
SAN DIgGO COIJNTX, which permits the CITY and tL wS SISTRI^^ to
distribute withm its boundaries recycled water; and, ^"^^^-""-^
REGIONAL BOARD adopted ORDER NO
WASTE DISCHARGE REQUTPFMENTS FHP T.T^JCADTA ^rofmTV ^A^^^
DISTRICT FOREST R. GAFNKR WATER PEnr.AMATTQN V.^^ ^v.Jo^^^
CARISBAD, SAN nTJGO.COmiTY^ as an update to its prev^ourgRDErNC!
llll^^^^n^J^^"^^'^ order NO. 87-82, in its findings, stated
that to 0.75 MGD of secondary recycled water from LEUCADIA'S
Forest R. Gafner Water Reclamation Plant will be used for the
irrigation of the 250-acre La Costa Golf Course within the WATEP
DISTRICT. The Order further states that recyclerwaSr from ?he
plant would be chlorinated and pumped to a small lake in the La
costa Golf course and the lake would hold the ?eScled water untn
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being repumped for irrigation. Order No. 87-82 further states that
the golf course reservoir shall be at all times protected against
erosion, flooding, overland runoff resulting from a 2-year
frequency 24-hour storm; and that discharge of recycled water to
the golf course reservoir is prohibited from November 1 through
March 30. A copy of Order No. 87-82 is attached hereto and
incorporated herein by this reference as Exhibit "A"; and,
WHEREAS, in a letter dated August 18, 1978, the California
Department of Health Services required LEUCADIA to upgrade its
treatment plant to meet the most stringent provisions of Article
5, Title^ 22, Division 4, of the California Administrative Code
(hereinafter referred to as Title 22 Requirements) prior to use of
Its recycled water for the irrigation of the La Costa Golf Course
A copy of said letter is attached hereto and incorporated herein
by this reference as Exhibit "B"; and,
WHEREAS, LEUCADIA is at present in the process of upgradina
Its Forest R. Gafner Water Reclamation Plant to meet the most
stringent Title 22 Requirements, and is scheduled to complete this
facilities upgrade by October 1993 . "f-^^^e tnis
of-.^o^f^^' or<ier/or the DISTRICT to qualify for and receive
state funding to upgrade the Gafner plant as referenced above it
is a requirement of the state that a commitment be made for the
purchase of a minimum amount of recycled water; and,
^^^^J^^^^' mutual desire of the parties hereto to
establish herein an agreement for the delivery of a minimum
commitment of 394 acre feet and of up to 840 acre-feet on a^
average annual basis of recycled water from the Forest R. Gafner
water Reclamation Plant to the WATER DISTRICT for the purposes and
on the terms and conditions herein set forth, and in sSch a manner
as to qualify LEUCADIA for the necessary state loan; and,
NOW, THEREFORE, in consideration of these recitals and the
mutual covenants contained herein, WATER DISTRICT and LEUCADIA
agree as follows:
SECTION 1. DELIVERY AND ACCEPTAWPTg
agrees to deliver to WATER DISTRICT and WATER
DISTRICT agrees to accept from LEUCADIA recycled water produced a?
the Forest R. Gafner Water Reclamation Plant in the quantities and
on the terms and conditions specified in this AGREEMENT.
SECTION 2. TREATMENT STANDARDS
LEUCADIA Shall treat the wastewater to be delivered to the
WATER DISTRICT in conformance with the standards ofThe REGIONAL
BOARD as specified in Exhibit "A" and as specified by the Health
Department m Exhibit "B." If applicable regulatory requirements
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are made more stringent by the San Diego Regional Water Quality
^ Board, the California Water Resources Board, or the State Health
t Department such that upgraded treatment is required, LEUCADIA shall
have the option to terminate its obligations under this AGREEMENT
on sixty (60) days written notice to WATER DISTRICT; or to upgrade
the plant to meet the new requirements subject to negotiation of
the cost thereof with WATER DISTRICT. In the event that LEUCADIA
chooses to upgrade the plant to meet the new requirements WATER
DISTRICT shall continue to purchase recycled water as herein
provided following the upgrade.
SECTION 3. OUANTITY TO BE DELIVERED
LEUCADIA shall operate the Forest R. Gafner Water Reclamation
Plant so as to produce up to 0.75 million gallons per day (MGD),
of recycled water for delivery to WATER DISTRICT under this
AGREEMENT, consistent with sound management practices, applicable
government regulations and requirements, and commitments to other
customers, if any. The parties hereto understand that the volume
of recycled water that will be delivered to WATER DISTRICT will be
about 394 acre-feet per year, but that the actual volume per year
will vary according to seasonal needs for irrigation water. The
parties further understand and accept the fact with no liability
to LEUCADIA that there may be day to day interruptions in service
due to plant emergencies requiring occasional plant shut-down and
repair associated with acts of God, orders by regulatory bodies
and judicial courts, and/or equipment breakdowns.
The General Managers or their Designee of the WATER DISTRICT
and LEUCADIA shall meet monthly to establish a schedule for
delivery of recycled water. LEUCADIA and WATER DISTRICT shall make
every reasonable effort to comply with such delivery schedules once
mutually accepted.
WATER DISTRICT agrees to accept a minimum of 394 acre feet of
recycled water per year. If WATER DISTRICT accepts and pays for
more than 394 acre feet of recycled water in any given year, WATER
DISTRICT shall be entitled to a carry forward credit for every acre
foot (or portion thereof) so purchased over the 394 acre foot
minimtim. Such carry forward may be applied in future years to meet
the 394 acre foot minimum purchase requirement. It is recognized
that LEUCADIA must have a commitment to a minimum purchase in order
to meet the requirements of its state loan to upgrade the Gafner
plant.
In the event that WATER DISTRICT decides to purchase
additional recycled water from LEUCADIA, WATER DISTRICT shall
inform LEUCADIA of its desire to increase the quantity of recycled
water purchased. WATER DISTRICT shall have those rights of first
refusal to purchase additional water set forth in Section 11.
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SECTION 4. MWD OR OTHER REBATE
Any rebate or other incentive payment from the Metropolitan
Water District (MWD) or from any other governmental agency now
available or available at any time in the future for this recycled
water project shall be secured by and be the responsibility of
LEUCADIA.
SECTION 5. METERS
LEUCADIA shall be responsible for installing and maintaining
a flow meter at t:he Forest R. Gafner Plant that will measure the
quantity of recycled water supplied to the WATER DISTRICT pursuant
to this AGREEMENT. LEUCADIA shall be responsible for operating,
maintaining, calibrating, and reading this flow meter on a regular
basis. LEUCADIA shall read and report to WATER DISTRICT meter
results no less than once per month. Results of calibrations shall
be copied to the WATER DISTRICT on a regular basis.
SECTION 6. OWNERSHIP. OPERATION. AND MAINTENANCE.
LEUCADIA Shall have no responsibility for owning, operating,
or maintaining the recycled water storage and distribution system,
except for downstream of the point of delivery as shown on Exhibit
"C." All facilities and equipment beyond the point of delivery
shall be the responsibility of WATER DISTRICT and the ultimate
user, as they shall agree amongst themselves. Both parties to this
AGREEMENT shall grant each other necessary easements and rights of
way to operate and maintain the reclamation facilities described
herein on lands they control, and each shall assist the other to
obtain easements or rights of way on lands controlled by other
entities not subject to this AGREEMENT. WATER DISTRICT will
arirange for necessary easements in favor of LEUCADIA for the
construction, installation, and maintenance of facilities required
to deliver recycled water to the point of delivery as shown on
Exhibit "C," to the extent that such easements do not already
exist.
SECTION 7. RECYCLED WATER OUALITY
LEUCADIA shall use its best good faith efforts to ensure that
the recycled water delivered to WATER DISTRICT shall have a quality
meeting the standards and approvals herein specified. LEUCADIA
represents and warrants that it will meet the following
requirements:
a. LEUCADIA will do all testing as required by the
terms of its permits, on the schedule specified in the permits;
b. All recycled water delivered pursuant to this
AGREEMENT will meet the standards stated in Exhibit "A";
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c. LEUCADIA will not substantially change any of its
treatment practices in a manner which will cause a decrease in
water quality of the recycled water without notifying WATER
DISTRICT in advance.
Both parties to this AGREEMENT understand that the presence
of dissolved minerals in the recycled water and other substances
in higher concentrations can be deleterious to the plants irrigated
with such water. LEUCADIA agrees to do everything reasonably
within its power to ensure that the quality of the recycled water
it delivers pursuant to this AGREEMENT will not be harmful to the
golf course areas to be irrigated. These efforts shall include a
ban by LEUCADIA of self-regenerization water softening equipment
within LEUCADIA'S boundaries as outlined in Ordinance 10, attached
hereto as Exhibit "D." LEUCADIA shall further mail annual notices
to residents and vendors of water softening equipment notifying
them of the prohibition against self-regenerization water softening
equipment.
Both parties further agree that failure to supply recycled
water with a TDS concentration less than 1,000 milligrams per liter
(mg/l) as determined in conformance with the methodology specified
in the project's waste discharge permit may be sufficient grounds
for CITY to suspend its obligation to accept and pay for recycled
water until the recycled water quality is restored to less than
1,000 (mg/l) TDS.
The parties recognize during periods of drought LEUCADIA may
experience lower flows as a result of conservation efforts.
However, the amount of solids received would not decrease and could
cause the TDS levels to rise. During such drought periods as
designated by the WATER DISTRICT the parties agree recycled water
with a TDS concentration of no more than 1,200 mg/l will be an
acceptable quality under the terms of this agreement.
SECTION 8. USE OF RECYCLED WATER
The WATER DISTRICT agrees that the use of recycled water
delivered pursuant to this AGREEMENT shall be confined to the
boundaries of Carlsbad.
SECTION 9. RECYCLED WATER DELIVERY PRESSURE
Recycled water delivered by LEUCADIA to WATER DISTRICT shall
be at no guaranteed minimum pressure, provided LEUCADIA will pump
to the La Costa Lake.
SECTION 10. COMPLIANCE WITH REGULATORY REOUIREMENTS
WATER DISTRICT agrees to comply with all applicable recycled
water distribution regulations issued and/or mandated by the
California Department of Health Services, the County of San Diego
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Department of Health, and the REGIONAL BOARD. WATER DISTRICT shall
be responsible for insuring that all users of recycled water within
WATER DISTRICT'S jurisdiction shall first apply for and receive
California Water Reclamation Requirements issued by the REGIONAL
BOARD, and that all users shall be made to comply with WATER
DISTRICT'S most up-to-date recycled water RULES AND REGULATIONS
LEUCADIA shall bear no responsibility or liability for compliance
with such rules and regulations by WATER DISTRICT, the ultimate
F^H^A-H?^..o^?^°"® beyond the point of delivery as shown on
SECTION 11. PRICE OF RECYCLED WATFP
WATER^ DISTRICT shall pay LEUCADIA for all recycled water
delivered by LEUCADIA pursuant to this AGREEMENT with the minimum
purchase in any given year being 394 acre feet, adjusted to take
into account the WATER DISTRICT'S right to carry forward credits
as provided for in paragraph three above. The basic price pavable
by WATER DISTRICT to LEUCADIA shall be ninety-nine percent (99%)
potable water price charged to residential users within the WATER DISTRICT boundary. xuentxai users
WATER DISTRICT shall have a right of first refusal to purchase
additional recycled water from LEUCADIA on the following terms:
a. The price and payment terms shall be as set forth in this
Agreement;
b. WATER DISTRICT'S right of first refusal shall be subject
™T^to^. official policy or policies established by
LEUCADIA, by ordinance or resolution, in effect at the
time governing priority of access to recycled water;
c. WATER DISTRICT shall give LEUCADIA at least 30 days
advance notice of its intent to exercise, in whole or in
part. Its rights of first refusal; and
d. WATER DISTRICT'S rights are subject to LEUCADIA'S
recycled water availability.
SECTION 12. TERMS OF PAYMENT
WATER DISTRICT shall be invoiced by LEUCADIA for recycled
water delivered to WATER DISTRICT at least quarterly, but no more
frequently than monthly, and WATER DISTRICT agrees to pay LEUCADIA
T^irtnr^ deliveries within 30 days of receipt of an invoice from
LEUCADIA for such purchases.. In the event payment is more than
30 days m arrears, LEUCADIA reserves the right to stop deliverv
of recycled water until payment is made, or to charge a penaltv of
one percent (l%) per month on delinquent amounts, or to
trsectioi^L^hSeof ^ DISTRICT'S payment obligations pursuant
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SECTION 13. ACCESS TO RECORDS
LEUCADIA and WATER DISTRICT shall keep proper books and
records, in which complete and correct entries shall be made of
all recycled water delivered throughout the duration of this
AGREEMENT. Said books and records shall, upon written request, be
subject to inspection by any duly authorized representative of
LEUCADIA, WATER DISTRICT, and the REGIONAL BOARD or any agency
providing a rebate to LEUCADIA.
SECTION 14. NOTICE
Notices required or permitted under this AGREEMENT shall be
sufficiently given if in writing and if either served personally
upon the party to whom it is directed or by deposit in the United
States mail, postage prepaid, certified, return receipt requested,
addressed to the parties at the following addresses:
a. WATER DISTRICT General Manager
Carlsbad Municipal Water
District
5950 El Camino Real
Carlsbad, CA 92008
b. LEUCADIA General Manager
Leucadia County Water District
1960 La Costa Avenue
\^ Carlsbad, CA 92009
It shall be the sole responsibility of each party to this AGREEMENT
to promptly notify the other of any change of title and/or address
as long as this AGREEMENT remains in effect.
SECTION 15. ASSIGNMENT
The rights and obligations of the parties under this AGREEMENT
shall not be assigned, or transferred without the prior written
consent of the other party, which consent shall not be
unreasonably withheld.
SECTION 16. EFFECTIVE DATE
This AGREEMENT shall become effective upon the date at which
it is executed by both parties hereto.
SECTION 17. TERMINATION OF AGREEMENT
The term of this AGREEMENT shall be twenty (20) years, subject
to the rights of the parties to an earlier termination as provided
in SECTION 18 hereof. This AGREEMENT shall continue in force from
year to year after the initial twenty-year term of the AGREEMENT
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until either party gives one year written notice to the other of
its intention to terminate or renegotiate the AGREEMENT. The
AGREEMENT shall terminate one year from the date upon which such
written notice is received unless the parties agree otherwise, in
writing.
SECTION 18. EARLY TERMINATION
a. LEUCADIA Termination. If at any time during the term of
this AGREEMENT recycled water in compliance with the quality
standards of Section Seven of this AGREEMENT cannot lawfully be
used by WATER DISTRICT for the purposes intended by this AGREEMENT,
because of government regulations now in effect or hereinafter
imposed, LEUCADIA may terminate this AGREEMENT with no further
obligation by giving sixty (60) days written notice thereof to
WATER DISTRICT,or at LEUCADIA'S option, specifically enforce WATER
DISTRICT'S obligations pursuant to Section 19 hereof.
b. WATER DISTRICT Termination. WATER DISTRICT shall be
entitled to terminate this AGREEMENT early for an act of God or if
LEUCADIA fails to deliver recycled water to WATER DISTRICT meeting
the quality standards of Section Seven hereof. Provided, however,
that WATER DISTRICT must first give LEUCADIA written notice of any
alleged deficiency in the recycled water quality and a minimum
sixty (60) day period to cure the problem, or longer if a longer
cure period is reasonably required. If WATER DISTRICT gives such
notice and LEUCADIA fails to cure the problem within the 60 day
cure period, or if a longer period is reasonably necessary and
LEUCADIA is not diligently pursuing a cure, WATER DISTRICT may upon
thirty (30) days further written notice terminate this AGREEMENT
with no further obligation on its part. So long as the recycled
water meets the quality standards provided for herein, or in the
event of a change in standards or a decline in quality, so long as
LEUCADIA is diligently endeavoring to meet the new standards or
cure the quality problem, and provided that LEUCADIA does in fact
cure the problem as provided above, WATER DISTRICT shall not have
a right to terminate this AGREEMENT. However, the WATER DISTRICT
reserves the right to refuse delivery of recycled water and payment
thereof, until the quality again meets all previously stated
standards.
SECTION 19. SPECIFIC PERFORMANCE.
In recognition of the fact that LEUCADIA has made a long term
capital commitment to this project and has undertaken a long term
loan committment with the State related thereto, and in recognition
of the fact that WATER DISTRICT is making a long term commitment
to the project, the parties agree that specific performance shall
be available to enforce the obligations of the parties hereunder,
including LEUCADIA'S obligation to deliver recycled water as
required hereunder and WATER DISTRICT'S obligation to accept and
pay for the same. The parties agree that specific performance
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shall be available as a remedy in addition to any other available
remedy. The parties expressly agree that money damages for a
breach is an inadequate remedy.
SECTION 20. ENTIRE AGREEMENT.
This AGREEMENT constitutes the entire understanding between
the parties hereto with respect to the subject matter hereof
superseding all negotiations, prior discussions and preliminary
agreements and understandings, written or oral. This AGREEMENT
shall not be amended, except by written consent of the parties
hereto, and no waiver of any rights under this AGREEMENT shall be
binding unless it is in writing signed by the party waiving such
rights. In the event any provision of this AGREEMENT shall be held
to be invalid and unenforceable, the other provisions of this
AGREEMENT shall be held to be valid and binding on the parties
hereto.
SECTION 21. RINDING EFFECT.
This AGREEMENT shall be binding upon the parties hereto and
their respective successors in interest, permitted assigns,
executors, administrators, and personal representatives.
SECTION 22. LIABILITY AND INDEMNIFICATION.
LEUCADIA assumes all liability for damage to persons or
property caused by the recycled water prior to the time that it
reaches the point of delivery as designated on Exhibit "C" hereto.
LEUCADIA agrees to indemnify, defend, and hold harmless WATER
DISTRICT, its officers, agents, and employees from any and all
claims, demands, actions, liability or loss which may arise from
LEUCADIA'S storage, use, treatment or delivery of the treated
effluent prior to the time it passes the point of delivery. In
addition, LEUCADIA agrees to asstime all liability for damage to
persons or property caused in any manner by the delivery of water
which does not meet the quality standards of Section Seven hereof.
WATER DISTRICT assumes all liability except as defined in the
preceding paragraph for damage to persons or property caused in
any manner by the recycled water once it passes the point of
delivery as shown on Exhibit "C" hereto. WATER DISTRICT agrees
to indemnify, defend, and hold harmless LEUCADIA, its officers,
agents, and employees from any and all claims, demands,
actions, liability or loss which may arise from WATER DISTRICT'S
storage, use, or delivery of recycled water after it passes the
point of delivery.
WATER DISTRICT understands that the product being sold by
LEUCADIA is treated waste water effluent and that its purity and
chemical composition cannot be guaranteed by LEUCADIA beyond
LEUCADIA'S obligation to meet the quality standards of Section
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Seven hereof. WATER DISTRICT acknowledges that no warranty or
ottier representation as to the physical, chemical, or biological
quality of the recycled water is made by LEUCADIA, except for
LEUCADIA'S obligation to meet the quality standards of Section
Seven hereof.
SECTION 23. ATTORNEY'S FEES
If any Court action is brought to enforce or interpret the
provisions of this AGREEMENT, the prevailing party shall be
entitled to reasonable attorney's fees and expert witness fees,
which may be set by the Court or arbitrator in the same action
brought for that purpose, in addition to any other relief to which
may be granted.
SECTION 24. VENUE
In the event of any disagreement as to the interpretation,
effect, enforceability, or the rights of the parties under this
AGREEMENT, such dispute shall first be addressed by negotiation
between the parties. In the event that the parties cannot resolve
their disagreement by negotiation, either party, upon written
notice, may request mediation or arbitration before the American
Arbitration Association. Such mediation or arbitration shall be
non-binding and shall be held in North County.
SECTION 25. PARTIES TO BEAR OWN COSTS OF MAINTAINING PERMITS.
LEUCADIA and the WATER DISTRICT shall each, respectively, pay
all costs of maintaining their own permits to carry out the
project.
IN WITNESS WHEREOF, the parties hereto have caused this
AGREEMENT to be executed and be effective on the date first above
mentioned.
LEUCADIA:^ WATER DISTRICT:
ATTEST: ATTEST:
reneral Manager
Date
er City Clerk)
: ^/j^/fJ Date; '3h.</Qf
(Doc:LCWDO10.cln/E.4-3)
(Rev. 3/07/91) -10-