HomeMy WebLinkAbout2002-01-22; Municipal Water District; 517; Seawater Desalination Report&A[ CARLSBAD MUNICIPAL WATER DISTRICT -AGENDA BILL
AB# 517
Authorization to Proceed With Staff Review MTG. 01/22/02
DEPT. IiDP&??
DEPT. CMWD and Appropriation for Seawater
Desalination Report CITY MGR. e
RECOMMENDED ACTION:
Adopt Resolution No. 1\38 authorizing staff to proceed with a review and analysis of the Poseidon
Resources Inc. report on seawater desalination, authorize the CMWD Executive Manager to sign a
cooperative agreement with the City of Oceanside and the San Diego County Water Authority to have the
Authority's consultant, PB Water, review and analyze the Poseidon Resources Report and to appropriate
$80,000, as CMWDs share, for this review and analysis. In addition, the Board is requested to support a
submittal, by the County Water Authority, of a Statement of Interest in response to the Metropolitan Water
District of Southern California Seawater Desalination Program Request For Proposals.
ITEM EXPLANATION:
Last July the CMWD Board passed a resolution authorizing Poseidon Resources Inc. to conduct a
study on the feasibility of a seawater desalination facility for Carlsbad. That resolution has
automatically repealed and is of no further force and effect.
This report has been completed and submitted to staff. The report states that a seawater desalination
facility, if constructed, could provide water directly to Carlsbad. The study addressed two potential
locations for a desalination facility. One site was immediately south of the Encina wastewater
treatment facility and the other site was at the Encina power plant facility. The site south of the Encina
wastewater facility was shown not to be feasible because of brine disposal capacity issues, which
limited the site to only a 10 mgd desalination facility. The site at the Encina power plant facility is
shown to be more viable because of the intake and brine disposal capacities. Additionally, if
constructed this plant could deliver water to County Water Authority facilities and possibly to the City
of Oceanside.
While staff has only reviewed the report and has not analyzed it in depth, staff has determined that a
seawater desalination facility warrants further exploration.
The quality of the water from the desalination facility, as stated, would meet or exceed all applicable water
quality standards and the proposed purchase price of the water is $794 per acre-foot. There would be an
additional charge of $84 per acre-foot for CMWD's proportionate share of the construction and operation
of the water transmission pipeline and pumping facilities required to deliver that water to Maerkle
Reservoir and other locations within CMWD.
CMWD presently pays $521 per acre-foot for imported water from the County Water Authority. The price
of $794 per acre-foot for desalinated seawater compares very favorably with past studies of seawater
desalination, which found the costs ranging from $1500 to $2000 per acre-foot. It also compares
favorably with the current cost of imported water if the avoided costs identified in the report are taken into
consideration. However, this price is based on the construction of a 50 million gallon per day (mgd)
facility. In order for CMWD to realize the economies of scale associated with a facility of this size,
additional purchasers of the water will need to be identified.
It should also be noted that the Metropolitan Water District Board of Directors has recently approved a
financial assistance program for development of seawater desalination, similar to their present
financial assistance program for recycled water projects. Successful applicants can receive up to
$250 per acre-foot of desalted seawater produced.
Page 2 of Agenda Bill No. 5 I 7
The County Water Authority is scheduled to approve, at their January Board meeting, submittal of a
Statement of Interest in response to the Metropolitan Water District of Southern California Seawater
not bind the Authority or any agency to a particular project proposal (i.e. the Poseidon Project) or
Desalination Program Request For Proposals. This statement of interest will be written such that it does
institutional arrangement at this time. The CMWD Board action on this item tonight is to support the
County Water Authority's submittal of Statement of Interest.
Therefore, in order to determine project feasibility, it is necessary to evaluate the benefits as stated in
the report and verify that those benefits would actually accrue to the entities mentioned. To
accomplish this, a much more detailed analysis and negotiations are required. Additionally, there are
certain questions that a seawater desalination facility would raise that would affect Carlsbad directly,
such as benefits of increased reliability versus costs, possible improved water quality and ratio of
water imported by the County Water Authority to the amount of desalted water. These questions need
to be reviewed by Carlsbad staff directly and be closely coordinated with the San Diego County Water
Authority. This analysis and coordinating will involve significant staff time.
Staff has developed a work plan and the information collected through this work plan will be used to
help determine the feasibility of Poseidon's proposal. The primary objectives of the work plan are as
follows:
1. Provide a thorough, independent review of Poseidon's proposal.
2. Develop a reasonable estimate of the quantity of desalinated water needed to achieve CMWDs
3. Identify how such purchases would affect CMWDs continuing relationship with the SDCWA.
4. Identify how such purchases would affect CMWDs operations and its customers.
5. Identify regional needs, objectives and issues and seek to resolve issues.
6. Determine the level of interest of other necessary Project participants and define their roles and
7. Identify the appropriate level of desalinated water purchases and develop adequate and
8. Aggressively pursue Metropolitan Water District (MWD) Desalination Program Funding in
water supply reliability goal.
responsibilities.
effective terms and conditions of a water purchase agreement(s).
conjunction with SDCWA, Poseidon and the other project participants.
A staff report entitled "Staff Report On Poseidon Resources' Proposal To Determine Feasibility Of
Seawater Desalination For Cadsbad' was prepared at Board direction last year as part of the
authorization to proceed with the Project feasibility assessment. That report (Exhibit 2) identified a number
of questions that will need to be addressed in the project evaluation,
Certain portions of the Poseidon report such as its technical aspects, and some of the avoided costs
that would result, are common to Carlsbad, the County Water Authority and possibly the City of
Oceanside. Therefore, in order to avoid duplication of effort, staff is requesting a joint reviewing effort
to include the County Water Authority and the City of Oceanside. The County Water Authority has
previously contracted with PB Water to look into the potential for seawater desalination in the county.
The Authority Board has already amended that contract with PB Water to perform a joint evaluation of
the Poseidon Report in partnership with Carlsbad and Oceanside. Authority staff will be coordinating
this review with the staff from the both Carlsbad and Oceanside.
Assuming that the water cost presented in the report prove to be accurate, it will be necessary for
Water Authority. Staff will endeavor to secure that priority during the course of the detailed review.
Carlsbad to have this water be allocated to CMWD as a priority local source by the San Diego County
final feasibility determination.
Once a thorough review is completed and presented to the CMWD Board, the Board will make the
Page 3 of Agenda Bill No. SI7
FISCAL IMPACT:
The County Water Authority’s amendment to their existing contract with PB Water amounts to $400,000.
This amendment is for a detailed review of the Poseidon Resources Report that includes a review and
staff as part of the Report. The cost of this review is to be shared on a pro-rata basis with the Carlsbad
advice regarding the proposed Water Purchase Agreement that Poseidon has previously submitted to
Municipal Water District, the City of Oceanside and the San Diego County Water Authority. The allocation
of these costs is based on the percent of total water production reserved by each agency for potential
direct purchase. Carlsbad’s potential share is 20% and amounts to $80,000
This action is to appropriate $80,000 for reviews and evaluation of this Seawater Desalination Report
There are sufficient funds available in the Water Replacement Enterprise Fund for this appropriation.
EXHIBITS:
1. Excerpts From The ”Staff Report On Poseidon Resources’ Proposal To Determine Feasibility Of
2. “Draft Cooperative Agreement Among the Carlsbad Municipal Water District, the City of Oceanside
3. Board of Directors of the Carlsbad Municipal Water District: Resolution No. I 138
Seawater Desalination For Carlsbad”
and the San Diego County Water Authority”.
‘3
Exhibit #1
EXCERPTS FROM THE STAFF REPORT ON POSEIDON RESOURCES’ PROPOSAL TO
DETERMINE FEASIBILITY OF SEAWATER DESALINATION FOR CARLSBAD
A staff report entitled “Staff Report On Poseidon Resources ’ Proposal To Determine Feasibility Of Seawater
Desalination For Carlsbad” was prepared at Board direction that identified the following questions regarding
the proposed Project:
“Should the Carlsbad Municipal Water District Board allow Poseidon to proceed with its feasibility study
on seawater desalination and if the study shows feasibility, a number of critical issues would need to be
addressed. Some of these issues are as follows:
- 1. The San Diepo County Water Authority
a The first issue deals with the question of our continuing relationship with the Water Authority.
Do we rely on desalinated water for 100% of our water supply and abandon the Water Authority
as a water supplier? If we do eliminate the Water Authority as a water provider, how does the
Water Authority recover CarlsbadS share of the existing and future costs related to the Water
Authority’s Capital Program? Would this be a reason for the Water Authority to become partner
in the desalination project ifproven feasible? If Carlsbad continues to pay for its share of the
Water Authority ‘s CIP, could the seawater desalination project really be cost effective?
The second issue deals with how much water will Carlsbad be purchasingfrom the Poseidon’s
desalination facility. Should we purchase 100% if economically feasible, or continue to purchase
some water from the Water Authority as insurance and blend it with the supply from the
desalination facility? How would this affect our water distribution operations? If Carlsbad was
to purchase 100% of its potable water supply from Poseidon, could Carlsbad re-establish
connections to its conventional current source (CWA) ofpotable water supply in an emergency?
Another issue concerns the Water Authority’s possible revisions to its rate structure including
“take or pay” contracts for future water purchases. “Take or pay” contracts typically require
that the purchaser of water pay for the contracted amount, whether or not the water is actually
taken by the purchaser.
For example, if Carlsbad enters into a “take or pay” contract for 17,000 acre feet of water
per year and only takes 15,000 acre feet in any one year, Carlsbad would still have to pay for
17,000 acre feet, as per the contract. Also, if Carlsbad needed more than the contracted
17,000 acre feet of water in any one year, Carlsbad would have to pay a surcharge for the
amount over the contracted 17,000 acre feet.
How would Carlsbad be affected if we limit future water purchases, or even eliminate all
purchases, from the Water Authority? If “take or pay ‘‘ contracts are required from the
Water Authority prior to construction of any seawater desalination facility, how would that
affect Carlsbad’s ability to purchase water from that desalination facility? As a result of this
possible rate structure change by the Water Authority, would the resultant pricing structure
be economical to Carlsbad?
Would the Water Authority be willing to partner with Carlsbad, ifthis project is deemed viable?
Would Carlsbad be willing to partner with other neighboring water entities or willing to
wholesale them water from the desalination facility? Would Carlsbad be willing to partner with
Poseidon ifthe feasibility study is positive?
- 2. CMWD 's Water Svstem
Should the seawater desalination project prove feasible, several operational issues pertaining to our
water distribution system will need to be addressed. Questions as to the possible water supply mixture
arise if the sources are to be the Water Authority and the desalination project. Will the quality
dzfferences create any operational dgfficulties and how will the system operate with two sources of
supply entering at different locations? Will Carlsbad peak off of the desalination system or the CWA
system? (It is not desirable to peak off of either system. Solutions may involve revisions to present
reservoir operations.)
- 3. Potential Contractual Issues
Should the seawater desalination project prove feasible, what will be the contractual obligations, not
only for Carlsbad but also Poseidon Resources? What will be the issues besides water costs, water
quality and water reliability? What percentage of Carlsbad's water needs should be satisfied by the
seawater desalination facility?
- 4. Potential Customer Issues
Should the seawater desalination project prove feasible, how would the CMWD customer be affected?
Would the water rates increase and would a possible increase be justified by improved water quality,
water supply reliability and stability in future water costs? Will the CMWD customer accept the new
source of water supply or prefer to continue with the present source of imported water, accepting the
present reliability and quality issues?
Summary and Recommendations
... ... .._There are also numerous issues affecting the City of Carlsbad and some of those are; the possible
redevelopment (and possible relocation) of the Encina power plant, the continued relationship with the
County Water Authority and how a desalination facility would affect a possible contractual agreement with
the Authority, how a contractual arrangement would be negotiated with Poseidon if the project was shown
to be feasible and would Carlsbadpartner with the Water Authority and/or neighboring water entities.
Exhibit #2
DRAFT COOPERATIVE AGREEMENT
THE SAN DIEGO COUNTY WATER AUTHORITY
SEAWATER DESALINATION PROJECT FEASIBILITY STUDY IN CARLSBAD
AMONG THE CARLSBAD MUNICIPAL WATER DISTRICT, THE CITY OF OCEANSIDE AND
This agreement, among the San Diego County Water Authority (hereinafter referred to as AUTHORITY)
and The Carlsbad Municipal Water District (hereinafter referred to as CARLSBAD) and the City of Oceanside
(hereinafter referred to as OCEANSIDE) establishes the framework for cooperation among the AUTHORITY,
CARLSBAD and OCEANSIDE in regard to efforts by Poseidon Resources Corporation, Inc. (hereinafter
referred to as POSEIDON) to locate a seawater desalination facility in the City of Carlsbad (hereinafter referred
to as the Desalination Project). This agreement is made and entered into as
RECITALS:
A. In June 2000, CARLSBAD authorized POSEIDON to proceed with the preparation of a feasibility
study and a detailed proposal for the development of the Desalination Project.
6. AUTHORITY and OCEANSIDE recognize CARLSBADs primary role in authorizing Poseidon to
conduct the current the Desalination Project feasibility study.
C. OCEANSIDE, a member agency of Authority, located adjacent to CARLSBAD, has discussed with
CARLSBAD and POSEIDON the potential to receive product water deliveries from the Desalination Project.
OCEANSIDE, CARLSBAD and AUTHORITY desire to cooperate in further analysis of this potential.
D. AUTHORITY, CARLSBAD and OCEANSIDE (hereinafter collectively referred to as PARTIES)
recognize that the Desalination Project has the potential for significant regional as well as local water supply
reliability benefits.
E. AUTHORITY adopted a Seawater Desalination Action Plan in January 2001 that includes seeking
out partnership opportunities with CARLSBAD regarding the Desalination Project, as well as discussions with
POSEIDON on the potential for larger regional plant sizes (Le., greater than 50 million gallons per day).
F. In August 2001, the Metropolitan Water District of Southern California (Metropolitan) Board of
Directors approved a seawater desalination program that will provide up to $250 per acre-foot through a
competitive solicitation process. The program will be limited to an initial contracted amount (for the
Metropolitan service area) of 50,000 acre-feet. Statements of interest will be due in early 2002 and proposals
will be due by June 30,2002.
responsibilities for the following purposes:
G. The PARTIES desire to cooperate among themselves, coordinate activities, and define roles and
To mutually evaluate and consider the Desalination Project feasibility study prepared by POSEIDON as
well as potential long-term water supply and other agreements that would be needed to implement the
Desalination Project.
0 To respond to the Metropolitan Seawater Desalination Program Request for Proposals
THEREFORE, in consideration of the recitals and mutual interests of the PARTIES herein expressed, the
AUTHORITY, CARLSBAD and OCEANSIDE agree as follows:
1.
A.
B.
C.
D.
E.
F.
PARTIES RESPONSIBILITIES
The PARTIES shall form a Technical Steering Committee consisting of designated representatives from
each PARTY. The Technical Steering Committee shall be responsible for coordinating the activities of
the PARTIES with respect to the Desalination Project, including larger regional project proposals,
mutually evaluating feasibility studies prepared by POSEIDON, managing communication among the
water supply agreements prepared by POSEIDON, coordinating review and evaluation of draft
Parties pursuant to this agreement, proposal responses to Metropolitan, evaluating draft long-term
environmental, finance, construction, operation and other feasibility studies necessary or convenient to
a thorough due diligence review of the project; and other similar purposes and activities.
AUTHORITY recognizes that CARLSBAD and OCEANSIDE may desire to receive product water
deliveries directly from the Desalination Project, independent of any regional participation. Nothing in
this agreement precludes CARLSBAD or OCEANSIDE from such direct independent participation in the
Desalination Project.
with the California Environmental Quality Act (CEQA) and the National Environmental Policy Act
The PARTIES agree that CARLSBAD will serve as Lead Agency for the purposes of project compliance
(NEPA), for those aspects of the Desalination Project that are wholly or partially within CARLSBAD.
The PARTIES agree that an evaluation of the feasibility study submitted by POSEIDON as well as other
issues including, but not limited to environmental compliance, finance, construction and operational
issues necessary or convenient to a thorough due diligence review of the project and /or a long-term
water supply agreement will most effectively and efficiently be accomplished jointly by the PARTIES.
The PARTIES further recognize that special technical expertise will be required to conduct such
evaluation. As such, the PARTIES agree to the following: . AUTHORITY, in cooperation with CARLSBAD and OCEANSIDE, will manage a consultant team
to assist with the evaluation. The PARTIES agree to jointly develop the scope for the due
diligence review effort. . AUTHORITY recognizes that CARLSBAD and OCEANSIDE may also carry out their own
evaluation of the feasibility study andlor long- term water supply agreement proposal. PARTIES
agree to share information derived through their respective evaluation processes to the extent
that information is not considered confidential as described in Section 1 .E below.
AUTHORITY, CARLSBAD and OCEANSIDE agree to share costs for outside evaluation
expenses incurred by the AUTHORITY. Cost-share responsibility among the PARTIES applies
solely to those outside costs associated with the review and evaluation of technical studies, drafl
terms and conditions for a water supply agreement, or other information developed by
POSEIDON related to their proposal for the Desalination Project. The allocation of such costs
will be based on the percent of total water production reserved by each agency for potential
direct purchase.
The PARTIES agree to consult with, cooperate with and share information with each other during any
evaluation process concerning a long-term water supply agreement with POSEIDON, should two or
more of the parties desire to continue beyond the acceptance of the Feasibility Study. The PARTIES
agree that such information sharing will not extend to internal deliberations or contract negotiations. If
the other PARTIES, such negotiations will be considered confidential.
one or more of the PARTIES decides to negotiate a long-term water supply agreement, independent of
The PARTIES agree to cooperate with each other in good faith to respond in a timely manner to the
anticipated Metropolitan Seawater Desalination Program Request for Proposals.
%,
2. HOLD HARMLESS AND LIABILITY
CARLSBAD, OCEANSIDE and the AUTHORITY each agree to mutually indemnify, defend at its own
expense, including attorneys' fees, and hold each other harmless from and against all claims, costs, penalties,
causes of action, demands, losses and liability of any nature whatsoever, including but not limited to liability for
or arising out of or related to any negligent act, error or omission, or willful misconduct of that party, its officers
bodily injury, sickness, disease or death, property damage (including loss of use) or violation of law, caused by
or employees, or any other agent acting pursuant to its control and performing under this agreement.
3. - TERM
Agreement may be extended by written agreement of the AUTHORITY and CARLSBAD and OCEANSIDE.
4. NOTICE
The term of this agreement shall be from the date first written above to June 30, 2002. The term of this
received upon personal delivery or 24 hours after deposit in any United States mail depository, first class
postage prepaid and addressed to the party for whom intended as follows:
Any notice, payment, credit or instrument required or permitted to be given thereunder will be deemed
If to AUTHORITY:
If to CARLSBAD:
If to OCEANSIDE:
San Diego County Water Authority
4677 Overland Avenue
San Diego, CA 92123
ATTN: Ken Weinberg
Carlsbad Municipal Water District
5950 El Camino Real
Carlsbad, CA 92008
ATTN: Robert Greaney
City of Oceanside
300 North Coast Highway
Oceanside, CA 92054
ATTN: Barry Martin
Either party may change such address by notice given to the other party as provided herein.
5. AMENDMENTS
PARTIES.
The agreement may be amended as circumstances necessitate by written agreement executed by the
6. ASSIGNMENT
CARLSBAD, OCEANSIDE or AUTHORITY shall not assign, sublet, or transfer this agreement or any of
the rights or interests in this agreement without the written consent of the other parties.
7. SEVERABILITY
The partial or total invalidity of one or more parts of this agreement will not affect the intent or validity of
remaining parts of this agreement.
8. GOVERNING LAW
This agreement will be deemed a contract under the laws of the State of California and for all purposes
jurisdiction of the courts of the State of California and that the venue of any action brought hereunder shall be in
shall be interpreted in accordance with such laws. The PARTIES hereby agree and consent to the exclusive
a superior court in San Diego County, California. (i
9. TERMINATION OF AGREEMENT
Any party hereto for any reason may terminate this agreement 30 days after notice in writing to the other
parties. Financial obligations incurred up to the point of termination will be allocated using paragraph 1. D.
10. SIGNATURES
The individuals executing this agreement represent and warrant that they have the legal capacity and
authority to do so on behalf of their respective legal entities.
IN WITNESS WHEREOF, the parties have executed this agreement as of the date above
San Diego County
Water Authority
Ken Weinberg
Director of Water Resources
Approved as to Form:
By:
Daniel S. Hentschke
General Counsel
City of Oceanside
Barry Martin
Water Utilities Director
Approved as to Form:
Carlsbad Municipal Water District
By:
Ray Patchett
Executive Director
Approved as to Form:
By:
General Counsel
By:
City Attorney
For the Information ofthe:
Seawater Desalination agenda bill 7FdS - crm"omF -fv
Actions before the Council
rn Authorize staff to proceed with the analysis of the report from Poseidon and the
rn Enter into an agreement with County Water Authority, Oceanside and City of San
desalination project (the prior Council authority to work on this project has expired)
Diego to hire a consulting firm to do a detailed analysis of the Poseidon proposal
(CWA intends to hire PB Water - an engineering firm with expertise in desalination -
to do the study)
Appropriate $80,000 for our share of the work (our share is 20% of the total cost
because Carlsbad should be receiving 20% of the water from the plant)
rn Allow the CMWD Executive Director to submit a "statement of interest" to MWD
indicating our interest in participating in the MWD desalination program. (This
statement of interest is not binding, but lets MWD know that we are considering
applying for the $250 per acre-foot rebate that may be available for the creation of
desalted water.)
Discussion for 1/22/02 meeting
rn General background of the project:
rn Plant size -About 50 Million Gallons per Day (MGD) as currently proposed
rn Water cost - initial study suggests $794 per acre-foot plus about $84 to pump the
rn Current cost of Water - as of January 2002 - $53 1 per acre foot
rn Location - Encina Power Plant / Cabrillo Power site (Encina Wastewater facility
was studied but rejected due to inadequate outfall capacity)
water to the reservoir.
rn MWD Rebate program:
rn MWD is proposing a rebate program offering a rebate of UP TO $250 per acre-
rn A statement of interest in participating in this program must be filed with MWD
rn The Statement of interest is not binding, but hold our place in the process
foot for the creation of UP TO 50,000 acre-feet of water per year
by February 14,2002
rn CWA, Oceanside, City of San Diego
rn Other entities are interested in participating in this project.
Oceanside wants about 15 mgd
City of San Diego would like to participate (I don't know how much they
County Water Authority is interested in purchasing as much of the water as
want)
possible.
.
CWA, Oceanside and Carlsbad are interested in moving forward with the detailed
study (San Diego may also join in the study, but the decision is still pending)
PB Water Study:
CWA, Oceanside, Carlsbad all agree that further study is required
CWA has issued a Request for Proposal for a consultant and will be hiring PB
This will provide an independent review of the Poseidon feasibility study
Water
Both Technical and Financial information will be reviewed
Other issues:
The key issue is Water Reliability - If the project cannot be shown to increase
Carlsbad’s water reliability, the City’s interest in the project should end
Establishing reliability requires the cooperation of the CWA and MWD in
assuring that the efforts to create a local source of water will result in favorable
treatment in cases where water consumption is being scaled back due to drought
or other water restrictions
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Exhibit #3
RESOLUTION NO. 1138
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE CARLSBAD MUNICIPAL
ANALYSIS OF THE POSEIDON RESOURCES INC. REPORT ON SEAWATER
WATER DISTRICT AUTHORIZING STAFF TO PROCEED WITH A REVIEW AND
DESALINATION, AUTHORIZE THE CMWD EXECUTIVE MANAGER TO SIGN A
COOPERATIVE AGREEMENT WITH THE CITY OF OCEANSIDE AND THE SAN DIEGO
COUNTY WATER AUTHORITY TO HAVE THE AUTHORITY'S CONSULTANT, PB
WATER, REVIEW AND ANALYZE THE POSEIDON RESOURCES REPORT AND TO
APPROPRIATE $80,000, AS CMWD'S SHARE, FOR THIS REVIEW AND ANALYSIS AND
TO SUPPORT A SUBMITTAL, BY THE COUNTY WATER AUTHORITY, OF A STATEMENT
OF INTEREST IN RESPONSE TO THE METROPOLITAN WATER DISTRICT OF
SOUTHERN CALIFORNIA SEAWATER DESALINATION PROGRAM REQUEST F0.R
PROPOSALS.
WHEREAS, Poseidon Resources Inc. conducted a study on the feasibility of a
Seawater Desalination facility for Carlsbad; and
WHEREAS, this report has been completed and submitted to staff; and
WHEREAS,.the report states that a seawater desalination facility, if constructed, could
provide water directly to Carlsbad and additionally, if constructed water could be
delivered to County Water Authority facilities and possibly be delivered to the City of
Oceanside; and
financial assistance program for development of seawater desalination; and
WHEREAS, the Metropolitan Water District Board of Directors has recently approved a
WHEREAS, in order to determine project feasibility, it is necessary to evaluate the
benefits as stated in the report; and
WHEREAS, staff has developed a work plan and the information collected through this
work plan will be used to help determine the feasibility of Poseidon's proposal; and
WHEREAS, certain portions of the report such as the technical aspects of the report,
and some of the avoided costs that would result, are common to Carlsbad, the County
Water Authority and possibly the City of Oceanside and in order to avoid duplication of effort, a joint reviewing effort will include the County Water Authority and the City of
Oceanside, if interested; and
WHEREAS, the San Diego County Water Authority has amended their consultant contract
to include a detailed review and analysis of the Poseidon Resources Report and the draft
Water Purchase Agreement at a cost of $400,000; and
WHEREAS, Carlsbad is willing to participate in a cooperative review of the Poseidon
Oceanside and the San Diego County Water Authority, with the Carlsbad Municipal Water Resources Report and the draft of the Water Purchase Agreement with the City of
District's share of the review and analysis to be $80,000; and
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WHEREAS, the Board is requested to support a submittal, by the County Water Authority, of a Statement of Interest in response to the Metropolitan Water District of Southern
California Seawater Desalination Program Request For Proposals;
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 staff be directed to proceed with a joint review of the Poseidon Resources Report
and draft Water Purchase Agreement.
3. That $80,000 be appropriated to conduct joint review and to share in the anticipated
consultant's costs associated with a joint review by the County Water Authority and the
City of Oceanside
4. And to support a submittal, by the County Water Authority, of a statement of interest in
response to the Metropolitan Water District of Southern California Seawater
Desalination Program request for proposals.
5. That at the conclusion of these reviews and analysis it is expected that staff will return
with a report to this Board on a recommendation on whether or not Carlsbad's should
participate in the project.
PASSED, APPROVED AND ADOPTED at a special meeting of the Board of Directors of
the Carlsbad Municipal Water District held on the =day of FEBRUARY , 2002 by the
following vote, to wit:
AYES: Board Members Lewis, Kulchin, Finnila, Hall
NOES: None
,ABSENT: Board Member Nygaard
4TTEST
JANICE BREITENFELD: DeputySecretary
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7
B
COOPERATIVE AGREEMENT
AMONG THE CARLSBAD MUNICIPAL WATER DISTRICT,
THE CITY OF OCEANSIDE, THE CITY OF SAN DIEGO AND THE
SAN DIEGO COUNTY WATER AUTHORITY
SEAWATER DESALINATION PROJECT FEASIBILITY STUDY IN CARLSBAD
This agreement, among the San Diego County Water Authority (AUTHORITY)
and the Carlsbad MunicipalLWater District (CARLSBAD), the City of Oceanside
(OCEANSIDE) and the City of San Diego (SAN DIEGO) establishes the framework for
cooperation among the AUTHORITY, CARLSBAD. OCEANSIDE and SAN DIEGO with
regard to efforts by Poseidon Resources Corporation, Inc. (POSEIDON) to locate a
seawater desalination facility in the City of Carlsbad (Desalination Project).
RECITALS:
A. In June 2000. CARLSBAD authorized POSEIDON to proceed with the
preparation of a.feasibility study and a detailed proposal for the development of the
Desalination Project.
B. AUTHbRITY, OCEANSIDE and SAN DIEGO recdgnize CARLSBAD's
primary role in authorizing Poseidon to conduct the current Desalination Project
feasibility study.
C. OCEANSIDE, a member agency of Authority, located adjacent to
CARLSBAD. has aiscussed with CARLSBAD and POSEIDON the potential to receive
product water deliveries from the Desalination Project. OCEANSIDE, CARLSBAD and
AUTHORITY desire to cooperate in further analysis of this potential.
D. SAN DIEGO, a member agency of Authority, located within the service area of
AUTHORITY, has discussed with CARLSBAD and POSEIDON the potential to receive
product water deliveries from the Desalination Project. SAN DIEGO, OCEANSIDE,
CARLSBAD and AUTHORITY desire to cooperate in further analysis of this potential.
E. AUTHORITY, CARLSBAD. OCEANSIDE and SAN DIEGO (PARTIES)
recognize that the Desalination Project has the potential for significant regional as well
as local water supply reliability benefits.
F. AUTHORITY adopted a Seawater Desalination Action Plan in January 2001
that includes seeking out partnership opportunities with CARLSBAD regarding the
Desalination Project.
G. In November 2001, the Metropolitan Water District of Southern California
(Metropolitan) released a Request for Proposals for its Seawater Desalination Program
(SDP). The SDP will provide up to $250 per acre-foot through a competitive solicitation
process. The program is currently limited to an initial contracted amount (for the
Metropolitan service area) of 50,000 acre-feet. A Statement of Interest regarding the
Desalination Project was submitted to Metropolitan by AUTHORITY. Proposals are
due by June 28,2002.
H. The PARTIES desire to cooperate among themselves, coordinate activities,
and define roles and responsibilities for the following purposes:
m' To mutually evaluate and consider the Desalination Project feasibility study
prepared by POSEIDON as well as potential long-term water supply and other
agree,ments that would be needed to implement the Desalination Project.
To respond jointly to the Metropolitan Seawater Desalination Program Request for
Proposals in a timely manner.
THEREFORE, in consideration of the recitals and mutual interests of the
PARTIES herein expressed, the AUTHORITY, CARLSBAD, SAN DIEGO and
OCEANSIDE agree as follows:
1, PARTIES' RESPONSIBILITIES ~
,A. The.PARTlES shall form a Technical Steering Committee consisting of'
designated representatives from each PARTY. The Technical Steering
Committee shall be responsible for coordinating the activities of the PARTlES
with respect to the Desalination Project: mutually evaluating feasibility studies
prepared by POSEIDON, managing communication. among the PARTIES
pursuant to this agreement, proposal responses to Metropolitan, evaluating draft
long-term water supply agreements prepared by POSEIDON, coordinating
review and evaluation of draft environmental, finance, construction, operation
and other feasibility studies necessary or convenient to a thorough due diligence
review of the project; and other similar purposes and activities.
B. AUTHORITY recognizes that CARLSBAD. OCEANSIDE and SAN DIEGO may
desire to receive product water deliveries directly from the Desalination Project,
independent of any regional participation. Nothing in this agreement precludes
CARLSBAD or OCEANSIDE or SAN DIEGO from such direct independent
participation in the Desalination Project.
C. Lead Agency for the purposes of Desalination Project compliance with the
California Environmental Quality Act (CEQA) and the National Environmental
Policy Act (NEPA) will be determined at a later date.
Page 2
D. The PARTIES agree that an evaluation of the feasibility study submitted by
POSEIDON as well as other issues including, but not limited to environmental
compliance, finance, construction and operational issues necessary or
convenient to a thorough due diligence review of the project and /or a long-term
water supply agreement will most effectively and efficiently be accomplished
jointly by the PARTIES. The PARTIES further recognize that special technical
expertise will be required to conduct such evaluation. As such, the PARTIES
agree to the following:
a AUTHORITY shall have responsibility for the day-today management and
direction of the consultant team conducting the due diligence evaluation
8 AUTHORITY, in cooperation with CARLSBAD. OCEANSIDE, and SAN
DIEGO will provide general oversight and direction, through the Technical
Steering Committee, of the consultant team to assist with the evaluation.
8 AUTHORITY recognizes that CARLSBAD, OCEANSIDE and SAN DIEGO
may also carry out their own evaluation of the feasibility study and/or long-
term water supply agreement proposal. PARTIES agree to share
information deiived through their respective evaluation processes to the
extent that information is not considered confidential asdescribed in
Section 1 .E below.
8 AUTHORITY, CARLSBAD, OCEANSIDE and SAN DIEGO agree to share
costs for outside evaluation expenses incurred by the AUTHORITY. Cost-
share responsibiiity among the PARTIES applies solely to those outside
costs associated with the review and evaluation of technical studies, draft
terms and conditions for a water supply agreement, or other information
developed by POSEIDON related to their proposal for the Desalination
Project. The allocation of costs will be based.on the percent,of total'water
production reserved by each agency for potential direct purchase.
8 Upon completion or termination of the due diligence evaluation described
herein, AUTHORITY will invoice CARLSBAD, OCEANSIDE and SAN
DIEGO for payment of their respective share of applicable outside
evaluation expenses incurred by AUTHORITY. Total shared outside
evaluation expenses shall not exceed $410,000 without prior authorization
of the PARTIES.
8 In order for PARTIES to participate in the Technical Steering Committee
and receive information. materials, and analyses developed by the
Consultant Team for purposes of conducting the due diligence evaluation
of the Desalination Project, the PARTIES must execute this agreement
no later than April 30, 2002.
Page 3
E.
F.
G.
H.
I.
0 In the event one or more of the PARTIES does not execute this
agreement by April 30, 2002 the provision of information, materials and
analyses developed by the consultant team and participation on the
Technical Steering Committee shall be by mutual written agreement of the
remaining parties including conformance with the cost share provisions of
this section herein
The PARTIES agree to consult with, cooperate with and share information with
each other during any evaluation process concerning a long-term water supply
agreement with POSEIDON, should two or more of the parties desire to continue
beyond the acceptance of the Feasibility Study. The PARTIES agree that such
information sharing will not extend to internal deliberations or contract
negotiations. If one or more of the PARTIES decides to negotiate a long-term
water supply agreement, independent of the other PARTIES, such negotiations
will be considered confidential.
The PARTIES agree to cooperate with each other in good faith to respond in a
timely manner to the anticipated Metropolitan Seawater Desalination Program
Request for Proposals.
The ,PARTIES agree that in the event one or more of the PARTIES determine
that a Proposal for the Desalination Project be submitted in response to the
Metropolitan Seawater Desalination Program Request for Proposals, dated
November 2001, and any addendurns or amendments thereof, that a single joint
proposal be prepared for the Desalination Proj,ect by the those PARTIES desiring
to submit such. Proposal and that such Proposal be submitted on behalf of those
PARTIES by AUTHORITY
The PARTIES agree that in the event that the governing body of one or more of..
the PARTIES, with the exception of AUTHORITY as the sponsoring Metropolitan
Member Agency, has not taken action in regard to submission of a Proposal for
funding under the Metropolitan SDP by June 28:2002. and that one or more of
the PARTIES desires to submit a Proposal to Metropolitan, a proposal shall be
submitted by AUTHORITY on behalf of the remaining PARTIES no later than
June 28.2002.
Nothing in the Proposal submitted under the Metropolitan Seawater Desalination
Program by Authority shall limit the subsequent ability of the PARTIES to
determine institutional roles and responsibilities or contractual relationships, if
any, with Poseidon or each other in regard to the Desalination Project.
Page 4
2. HOLD HARMLESS AND LIABILITY
CARLSBAD, OCEANSIDE, SAN DIEGO and the AUTHORITY each agree to
mutually indemnify, defend at its own expense, including attorneys' fees, and hold each
other harmless from and against all claims, costs, penalties, causes of action,
demands, losses and liability of any nature whatsoever, including but not limited to
liability for bodily injury, sickness, disease or death, property damage (including loss of
use) or violation of law, caused by or arising out of or related to any negligent act, error
or omission, or willful misconduct of that party, its ofticers or employees, or any other
agent acting pursuant to its control and performing under this agreement.
3. - TERM
The term of this agreement shall be from the date first written above to
December 31,2002. The term of this Agreement may be extended by written
agreement of the AUTHORITY and CARLSBAD and OCEANSIDE and SAN DIEGO.
4. NOTICE
Any notice, payment, credit or instrument required or permitted to be given
thereunder will be deemed received upon personal delivery or 24 hours after deposit in
any United States mail depository, first class postage prepaid and addressed to the
party for whom intended as follows:
If to AUTHORITY:
If to CARLSBAD:
If to OCEANSIDE:
If to SAN DIEGO:
San Diego Csunty Water Authority
4677 Overland Avenue
San Diego, CA 92123
ATTN: Ken Weinberg
Carlsbad Municipal Water District
5950 El Camino Real
Carlsbad, CA 92008
ATTN: RoberCGreaney
City of Oceanside
300 North Coast Highway
Oceanside, CA 92054
ATTN: Barry Martin
City of San Diego
Water Department
600 "6" Street
San Diego, CA 92101
ATTN: Larry Gardner
Page 5
Any party may change such address by notice given to the other parties as
provided herein.
5. AMENDMENTS
The agreement may be amended as circumstances necessitate by written
agreement executed by the PARTIES.
6. ASSIGNMENT
CARLSBAD. OCEANSIDE, SAN DlEGO or AUTHORITY shall not assign, sublet,
or transfer this agreement or any of the rights or interests in this agreement without the
written consent of the other parties.
7. SEVERABILITY
The partial or total invalidity of one or more parts of this agreement will not affect
the intent or validity of remaining parts of this agreement.
8. GOVERNING LAW
This agreement will be deemed a contract under the laws of the State of
California and for all purposes shall be interpreted in accordance with such laws. The
PARTIES hereby agree and consent to the exclusive jurisdiction of the courts of the
State of California and that the venue of any action brought hereunder shall be in a
superior court in San Diego County, California.
9. TERMINATION OF AGREEMENT
This agreement may be terminated by any party hereto for any reason 30 days
after notice in writing to the other parties. Financial obligations incurred up to the point
of termination will be allocated using paragraph 1. D.
Page 6
IO. SIGNATURES
The individuals executing this agreement represent and warrant that they have
the legal capacity and authority to do so on &half of their respective legal entities.
IN WITNESS WHEREOF, the PARTIES have executed this agreement as of the
date below.
San Diego County Water Authority
By:
Ken Weinberg
Director of Water Resources
Approved as to Form:
By:
Daniel S. Hentschke
General Counsel
City of Oceanside
0 y:
Barry Martin
Water Utilities Director
Approved as to Form:
City Attorney
Page 7
Carlsbad Municipal Water District
Executjve Manager
Approved as to Form:
By: &.R.L
General Counsel 3.20. kc,
City of San Diego
By:
Approved as to form:
By:
City Attorney