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HomeMy WebLinkAboutGARDEN GROVE, CITY OF (21)KLG 1. ar A WATER SYSTEMS ACQUISITION AGREEMENT THIS AGREEMENT, made and entered into this 20th day of February 1979, by and between THE CITY OF GARDEN GROVE, a municipal corporation of the State of California, ("GARDEN GROVE"), the City of Garden Grove Water Corporation, a non-profit corporation organized under the laws of the State of California, ("CORPORATION"), and the CITY OF SANTA ANA, a municipal corporation of the State of California ("SANTA ANA"), W I T N E S S E T H RECITALS: 1. Garden Grove is a general law city located within Orange County, California. 2. Santa Ana is a charter city located within Orange County, California. 3. Garden Grove operates, maintains and has prop- erty rights in a domestic water system, which water system is referred to as the "Entire Garden Grove System." 4. A portion of the Entire Garden Grove System was once owned by the Dyke Water Company, which portion is hereinafter referred to as the "Dyke System." 5. A portion of the Dyke System is located within the City of Santa Ana, which portion is described more fully in the Deed attached hereto, identified as "Exhibit A" and incorporated herein by this reference, and which portion of the Dyke System is hereinafter referred to as the "Encum- bered Santa Ana Subsystem." 6. Another portion of the Entire Garden Grove System is located within the City of Santa Ana, which por- tion is not a part of the Dyke System, and which portion is hereinafter referred to as the "Unencumbered Santa Ana Subsystem," which portion is more fully described in the KLG:ar 7/8/78 Bill of Sale attached hereto, identified as "Exhibit B", and incorporated herein by this reference. 7. Garden Grove desires to sell, and Santa Ana desires to purchase, the Encumbered Santa Ana Subsystem and the Unencumbered Santa Ana Subsystem. 8. Corporation owns certain property rights in the Dyke System, including but not necessarily limited to an estate for forty (40).years beginning October 1, 1964, and is willing to quitclaim to Garden Grove all of its right, title and interest in and to so much .thereof as is -described in that certain Quitclaim Deed attached hereto, identified as "Exhibit C", and incorporated herein by this reference, in consideration of a certain payment by Santa Ana as here- inafter specified. 9. Garden Grove owns all right, title and interest in and to the real property; together with improvements thereon, which is referred to herein as the Unencumbered Santa Ana Subsystem, and is able to convey clear title to said Subsystem. 10. Garden Grove, by virtue of a deed recorded in Official Records of Orange County, in Book 7401, Page 507, owns, subject to the Bond Indenture, all right, title and interest in and to the real property, together with all improvements thereon, which is part of the Dyke System and is referred to herein as the Encumbered Santa Ana Subsystem, except for the 40 year estate reserved to the Corporation. 11. Garden Grove also owns a leasehold interest in the Dyke System and Encumbered. Santa Ana Subsystem by virtue of that Lease dated February 1, 1965, hereinafter referred to as the "Facilities Lease," by and between the City of Garden Grove and the Corporation and recorded as Document No. 2382 in Book 7401, Page 551 of Official Records of Orange County, which Facilities Lease will end on March 15, 1995. 12. Pursuant to its Articles of Incorporation, the specific and primary purpose for which the Corporation -2- KLG:ar 10/14/78 was formed was to provide financial assistance to Garden Grove, by acquiring and leasing to Garden Grove the Dyke System and to vest title thereto. in Garden Grove upon com- pletion of payment of the cost of said acquisition and of all indebtedness of the Corporation incurred therefor or in connection with the lease of said Dyke System. 13. The Corporation made and entered into a mort- gage of chattels and trust indenture (sometimes hereinafter referred to as the "Trust Indenture") dated as of October 1, 1964, to secure the payment of revenue bonds issued by the Corporation in the aggregate principal amount of THREE MILLION NINE HUNDRED THOUSAND DOLLARS ($3,900,000) for the purchase of the Dyke System. ` 14. By the terms of the Trust Indenture, all of said revenue bonds will have become mature and been paid by the Corporation not later than October 1, 1994, and, shortly thereafter the Corporation, by the terms of its Articles of Incorporation, will dissolve and distribute its assets, including its interest in the Dyke System, to Garden Grove. 15. Until the dissolution of the Corporation and the distribution of its assets to Garden Grove, it is anticipated that Garden Grove will continue to have the right to use and operate the Dyke System by virtue of the, Facilities Lease which runs through March 15, 1995, and - by virtue of the Articles of Incorporation of the Corpor- ation. 16. The parties to this Agreement wish to arrange for a present conveyance to Santa Ana of all right, title and interest in the Unencumbered Santa Ana Subsystem and in the Encumbered Santa Ana Subsystem. -3- KLG:ar 10/14/78 17. It is anticipated that all steps will be taken, including obtaining of the consents of the Trustee and the holders of the Bonds, and- :making appropriate amendments to the Trust Indenture and the Facilities Lease, to permit Corpor- ation to convey its interestsinthat portion of,the Dyke System above mentioned. 18. Garden Grove shall apply the sale proceeds of the Encumbered Santa Ana Subsystem to the bonded indebted- ness to which said Subsystem is subject. A G R E E M E N T 1. Sale and Purchase of Unencumbered Santa Ana Subsystem, Garden Grove (sometimes hereinafter referred to as "Seller") hereby agrees to convey, and Santa Ana (sometimes hereinafter referred to as "Buyer") hereby agrees to purchase, all right, title and interest in -the Unencumbered. Santa Ana Subsystem. In connection therewith, Garden Grove shall execute and deliver to Santa Ana, on •the date of closing, a Bill of Sale conveying said Unencumbered Santa Ana Subsystem, a copy of which Bill of Sale is attached hereto as said "Exhibit B". 2. Sale and Purchase'of'Encumbered.Santa Ana Subsystem. Garden Grove hereby agrees to sell and transfer, and Santa Ana hereby agrees to purchase, all of Garden Groves interests in the Encumbered Santa Ana Subsystem. In connection therewith, Garden Grove shall execute and deliver to Santa Ana, on the date of closing, a Grant Deed conveying said properties, a 4- KLG:ar 7/8/78 copy of which Grant Deed is attached hereto and incorporated herein as "Exhibit A". In consideration of Santa Ana's payment of the sum of Five Hundred Eighty Thousand Dollars ($580,000.00), hereinafter specified,.Corporation agrees to convey to Garden Grove, and Garden Grove agrees to accept all of the Corporation's interests in the Encumbered Santa Ana Subsystem. In connection therewith, Corporation agrees to execute and deliver to Garden Grove, on the date of closing, a good and sufficient quitclaim deed conveying said interests in the Encumbered Santa Ana Subsystem, a.copy of which quitclaim deed is attached hereto as said "Exhibit C". 3. Property. (a) Property to be Sold. The property to be sold consists of those certain parcels of real property, easements, water facilities, water rights, water pumping rights and other properties owned by Garden Grove or the Corporation and located within the City of Santa Ana and more fully described and set forth in said Exhibits "A", "B", and "C". (b) "Water Service" Defined. As used in this Agreement, the term "water service" shall refer to the active and inactive customer connections within the areas described in said Exhibits "A", "B" and "C". (c) Exhibits. The exhibits to this Agreement that require execution by one or more of the parties hereto have been approved and executed by the respective parties hereto, and copies thereof have been filed in the offices of the City Clerks of Garden Grove and Santa Ana. 4. Purchase Price. (a) The total purchasepriceto be paid by Santa Ana for all of said property is the sum of SIX HUNDRED FORTY-SIX THOUSAND DOLLARS ($646,000.00). FIVE HUNDRED EIGHTY THOUSAND DOLLARS ($580,000.00) of said purchase price shall -5- KLG:ar 7/8/78 be paid by Santa Ana to the Corporation, and the balance of said purchase price, being the sum of SIXTY-SIX THOUSAND DOLLARS ($66,000.00),.shall be paid by Santa Ana to Garden Grove. (b) Pa)5ent. The purchase price to be paid by Santa Ana as hereinabove specified shall be paid on the date of closing. Payment shall be by cashier's checks or municipal warrants. 5. Representation and Warranties of Seller. Garden Grove hereby represents and warrants.to Santa Ana as follows: (a) organization and Standing. (i) Garden Grove is a municipal cor- poration, duly organized, existing and in good standing under the laws of the State of California. (b) Council Authority. (i) The execution of this agreement by Garden Grove and its delivery have been duly authorized by the City Council of the City of Garden Grove and no, further action is required on the part of Garden Grove for the execution and delivery of this agreement, and the con- summation of the transactions contemplated hereby, other than those specified in this Agreement. (c) Other Laws and Agreements. (i) it is the intent of Garden Grove and the opinion of Garden Grove that the execution of this Agreement and Garden Grove's consummation of the transactions contemplated hereby will not violate or contravene any of the provisions of any charter, bylaw, resolu- tion, indenture, agreement, judgment, order, IM. KLG:ar 7/8/78 license, permit, franchise, or other instru- ment or writing to which Garden Grove is a party, or by which Garden Grove is bound. (d) Title to Properties to be 'Conveyed. Garden Grove, on the date of closing, will transfer good and marketable title to the properties except such.of the properties as may be consumed by use and replaced by substantially equivalent properties or disposed of in the ordinary course of business, free and clear of all liens, charges, mortgages, encumbrances, claims or equities of any kind whatsoever, ex- cept (i) as set forth in "Exhibit D" attached hereto, and incorporated.herein by this refer- ence, (ii) liens for taxes, assessments or governmental charges or levies, the payment of which are not delinquent as of the date of closing, (iii) easements, rights -of -way, cov- enants, conditions, restrictions and other de- fects, charges or encumbrances which do not materially interfere with the present use of the property, and (iv) as expressly agreed to in writing by the Buyer prior to the date of closing. (e) Litigation. (i) Except for the actions herein- after named in this subparagraph (e), there is no suit, action or legal, administrative, arbitration or other proceeding, or any in- vestigation, pending or to the knowledge of Garden Grove threatened against. Garden Grove, which affects its title to the properties or its rights to sell the same. In the event -7- KLG:ar 7/8/78 any of the foregoing shall be commenced, or to Garden Grove's knowledge threatened with respect to Garden Grove or any part of said properties, Garden Grove shall, promptly upon receipt of notice thereof, mail notice to Santa Ana at the address hereinafter set forth. The actions now pending or threatened which do or may affect said title or right of Garden Grove are: NONE 6. Representations and warranties of Buyer. Santa Ana represents and warrants to Garden Grove as follows: (a) Authority and.standing. (i) Santa Ana is a municipal corpor- ation, organized, duly existing and in good standing under the laws of the State of California. (ii) The execution of this Agreement by Santa Ana and its delivery have been duly authorized by its City Council and no further action is required on its part for the execution and delivery of this Agreement, and the consumma- tion of the transactions contemplated hereby, other than as specified in this Agreement. The City Council of the City of Santa Ana has author- ized the acceptance of the conveyances provided for herein and a certificate of such acceptance will be attached to such conveyances prior to recordation. (b) Litigation. Except for the actions hereinafter named in this subparagraph (b), there is no suit or action, or legal, administrative, arbitral or other proceeding, or any investiga- tion, pending or to the knowledge of Santa Ana -8- KLG:ar 7/8/78 threatened against said Buyer which affects its right to acquire the properties.of Garden Grove. In.the event any of the foregoing shall be com- menced] or to the knowledge of Santa Ana, threatened, it shall, promptly upon receipt of notice hereof, mail notice to Garden Grove at the address hereinafter set forth. The. actions now pending or threatened are as follows: NONE 7. Particular Agreements of Seller. Garden Grove hereby covenants and agrees to and with Santa Ana with respect to its conduct and the property to be sold hereunder that: (a) Conduct of Business. Prior to the close hereof, Garden Grove will not, without the prior written con- sent of Santa Ana, enter into any material transaction affect- ing the properties to be conveyed hereby other than in the ordinary course of business. Such changes, additions, improve- ments, major repairs, extensions or retirement in, to or of the water system facilities as -in the opinion of Garden Grove may be necessary to maintain adequate water service to exist- ing customers of Garden Grove shall be deemed to be transac- tions in the ordinary course of business, provided, however, that all work involved shall be done in accordance with the customary water system practice. (b) Sale or Transfer of Operating Property. No part -of the properties to be sold by Garden Grove and no easements, water rights, or.pumping rights to be sold will be voluntarily sold, leased, transferred or encumbered by Garden Grove prior to the close hereof without the prior written consent of Santa Ana. (c) Maintenance and Repairs. From and after the date hereof and until the date of closing, Garden. Grove will maintain and preserve its properties to be sold hereunder -9- KLG:ar 7/8/78 in as good repair and working order as at the date hereof, reasonable wear and tear excluded. (d) Taxes. All ad valorem property taxes with respect to the Unencumbered.Santa Ana Subsystem and the Encumbered Santa Ana Subsystem, whether prepaid or constituting a lien payable at the date of closing, shall be prorated be- tween Garden Grove and Santa Ana as of 8:00 o'clock a.m., on the date of closing. Santa Ana shall be solely responsible for payment of taxes (if any) on the both of said Subsystems after the date of closing. (e) Information: and Access. As and when, from time to time, requested by Santa Ana, Garden Grove will give to Santa Ana and its counsel, accountants and other rep- resentatives, in such manner as does not interfere with the operations of Garden Grove, full access during normal business hours (to the extent such access is reasonable), to the prop- erties, books, contracts, documents and records of Garden Grove,.including customer accounts pertaining to the proper- ties to be conveyed hereunder needed by and necessary for Santa Ana in the management and operation of such properties. (f) The fifty percent (50%)surcharge provision applicable to users of the Encumbered Santa Ana Subsystem and the Unencumbered Santa Ana Subsystem shall continue and apply to any water bill issued by or for Garden Grove up until the date of closing. (g) Indemnification. Garden Grove respectively for itself alone shall indemnify and hold harmless Santa Ana from and against.and in respect to the following, and any expenses or fees associated therewith: (i) Any and all claims, liabilities, deficiencies, loss, damage and expense result- ing from any default by Garden.Grove in the per- formance or fulfillment of any of the covenants -10- KLG:ar 7/8/78 or conditions of this agreement on.Garden Grove's part to be performed or fulfilled, or from any breach by Garden Grove of itsrepresentations or warranties hereunder. (ii) Any and all claims and demands by Garden Grove's creditors in the event that Santa Ana shall elect to waive compliance with the provisions of the Uniform Commercial Code - Bulk Transfer, State of California. (h) Garden Grove shall transmit to Santa Ana any and all customer deposits for the water service hereunder agreed to be conveyed to Santa Ana. 8. Particular -Agreements of •Buyer. (a) Continuation of Service. Santa Ana agrees that from and after the date of closing it,will provide water service without unfair or unreasonable discrimination to all customers in the area wherein Garden Grove is now rendering water service by means of the facilities conveyed and will continue to serve all of such customers, subject to its lawful rules and regulations. (b) Santa Ana agrees to permit Garden Grove to install a water transmission main in that part of Marty Lane within Santa Ana City limits, from Fairview to and through the Santa Ana boundary, east of Laird Street, and to grant any easements to Garden Grove,necessary for the operation and maintenance of said -water transmission main. The installa- tion, operation and maintenance thereof shall be at Garden Grove's expense and Garden Grove shall restore the pavements after the construction of said main or any necessary repair or replacement thereof. (c) With respect to water services which Santa Ana presently operates within the boundaries of Garden Grove, Santa Ana shall continue to operate said services at the same -11- KLG:ar 7/8/78 rate as it charges its Santa Ana customers. Garden Grove may, however, connect any of said service connections to its own water distribution system at a future date upon reasonable notice to Santa Ana and without further compensation by either party, provided that Santa Ana may then remove its meters. 9. Closing. The time of transfer and closing shall be 8:00 o'clock a.m., on a date prior to ninety (90) days from and after execution and delivery by said trustee under the Trust Indenture of its "Certificate and Consent of Inden- ture Trustee" within the time and in the manner hereinafter specified in paragraph.20. The closing date shall be selected by Santa Ana upon thirty (30) days written notice to Garden Grove. The closing shall be held at the offices of Rutan & Tucker, 401 Civic Center Drive West, Santa Ana, California. Subject to the terms -and conditions of this Agreement, at the closing, Garden. Grove shall convey to Santa Ana the properties to be conveyed by it hereunder. The risk of operation of the water system facilities to be conveyed hereunder shall transfer to Santa Ana as of the date and time of closing, and thereafter all profits and losses from such operation shall accrue to Santa Ana, except as otherwise provided in this Agreement. 10. Billing and Rebates After Closing. (a) Within a reasonable period of time after the closing hereof (but not to exceed sixty (60) days) Santa Ana shall read and Garden Grove shall assist in reading the meters on each of the respective water services purchased by Santa Ana and record same. Garden Grove shall accept said readings subject to an administrative adjustment of misread- ings. The "billing period" as used in this Paragraph 10, shall be the period between Garden Grove's last meter reading date prior to closing and the first meter reading of Santa Ana subsequent to closing. 12. KLG:ar 7/s/7s (b). Thereafter, Santa Ana shall bill its re- spective customers for the full "billing period" and shall retain that portion of the amount of.money received as is repre- sented by the ratio that the number of clays between the clos- ing and Santa Ana's meter reading date bears to the total number of days in the "billing period." Santa Ana shall remit the balance to Garden Grove within ninety (90) days following the reading of meters for the billing. . (c) Garden Grove shall make a good faith effort to collect all delinquent accounts in the respective water services purchased by Santa Ana prior to the date of closing. Garden Grove shall furnish Santa Ana a list of all accounts delinquent between Garden Grove's billing date prior to the last billing date before closing and the amount owing on each account. Santa.Ana shall pay Garden Grove the full amount owing on said accounts. Santa Ana shall be entitled to all funds that may be collected on such delinquent accounts after closing. Garden Grove shall furnish Santa Ana information regarding any customers due refunds and shall reimburse Santa Ana accordingly. Garden Grove shall be responsible for col- lection on its own account of delinquencies prior to the above - mentioned billing dates. 11. Conditions to the Obligations of Buyer. The obligations of Santa Ana hereunder to purchase the respective properties from Garden Grove and to pay therefor in the manner hereinabove provided are subject to fulfillment prior to, or on the date of closing, of each of the following conditions: (a) Seller's Representations and Warranties True at Closing. All representations and warranties by Garden Grove which are contained in this Agreement shall be true on and as of the date of closing as though said representa- tions and warranties were made at and as of such time and Garden Grove shall deliver to Santa Ana at the date of closing -13- KLG:ar 7/8/78 a certificate of Garden Grove's authorized representatives dated the date of closing to the effect that all representa- tions and warranties set forth in this 'Agreement are true and correct as of the date of closing, and that Garden Grove has fulfilled the conditions set forth herein. (b) Seller"s.PerforMaice. Garden Grove shall have performed and complied with all agreements or conditions required by this Agreement to be performed by it prior to or on the date of closing. (c) Evidence as to Titles. Garden Grove shall have delivered to Santa Ana originals or photostatic copies of such evidence as to Garden Grove's title to the properties as Santa Ana shall have reasonably requested and as Garden Grove shall have. In this connection, Santa Ana has ordered such title reports as it deems necessary and inspected same. Garden Grove shall not be required to order a current policy of Title Insurance, unless Santa Ana shall agree to bear the full costs of same, but shall warrant good and marketable title as set forth in Paragraph.5(d) supra subject to such conditions as are set forth in this Agreement. Failure of Santa Ana to disapprove of title within. fifteen (15) days prior to the date of closing hereof, by writing, delivered to Garden Grove, shall be deemed approval by Santa Ana of Garden Grove's title to the properties being conveyed to Santa Ana. 12. Condi•tions to the Obligations of Seller. The obligations of Garden Grove hereunder to transfer and sell its respective properties to Santa Ana are subject to fulfill- ment prior to, or on the date of closing, of each of the follow- ing conditions: (a) Buyer's Representations 'and Warranties True at Closing. All representations and warranties by Santa Ana which are contained in this Agreement shall be true on and as of the date of closing as though said representations -14- KLG:ar 7/8/78 and warranties were made at and as of such time and Santa Ana shall deliver to Garden Grove at the date of closing a certificate of its authorized representative dated the date of closing to the effect that all representations and warran- ties set forth in this Agreement are true and correct as of the date of closing. (b) Buyer's Performance., Santa Ana shall have performed and complied with all agreements or conditions required by this Agreement to be performed by it prior to or on the date of closing. 13. Separation of,.Fac:111ties. The parties hereto shall fully and reasonably cooperate in -the disconnection of the facilities to be sold by Garden Grove in order to sep- arate those facilities so sold from other systems of Garden Grove. In order to properly sever the Santa Ana System from the larger system, Santa Ana will cut mains at each location where the larger system crosses the Santa Ana boundaries and cap both sides and pour thrust blocks. Santa Ana shall re- store the pavements damaged by said severances. If Garden Grove desires additional cuts to be made, such other cuts and caps within the Garden Grove boundaries may be made as it desires at its own expense. Santa Ana shall also be respon- sible for cutting, capping and pouring thrust blocks as de- tailed above for the miscellaneous services listed.as parcels a. through o. under Roman Numeral III in Exhibit "A" attached hereto, which services are presently connected to Garden Grove mains. 1.6. Notices. Any notice hereunder shall be deemed sufficient if given by one party to the other in writing and delivered, either in person or by depositing in the United States mail in a sealed envelope certified with postage and postal charges prepaid, addressed as follows: -15- KLG:ar 7/8/78 To Garden Grove-- City of Garden Grove Dept. of Public Works and Development 11391 Acacia Parkway Garden. Grove, CA. 92640 To Santa Ana- City of Santa Ana Director of Public Works 20 Civic Center Plaza Santa Ana, CA. 92701 17. Survival: of Wa-rrantees and Covenants. All of the warrantees, representations, covenants and agreements of the parties hereto contained in this Agreement shall sur- vive the closing and delivery and recordation of the deeds and other instruments called for hereunder. 18. Attorney's Fees.. Should any litigation be commenced among or between the parties hereto, or any of them, concerning said properties, this Agreement or the rights and duties of either in relation thereto, the party or parties prevailing in such litigation shall be entitled, in addition to such other relief as may be granted, .to a reasonable sum as and for its attorney's fees in such litigation which shall be determined by the court in such litigation, or in a separate action brought for that purpose. 19. Entire Agreement. This instrument and the attachments hereto contain the entire agreement between the parties respecting said properties, and any agreement or representation respecting said properties, or the duties of any party in relation thereto, not expressly set forth in this instrument is null and void. 20. Agreement Contingent Upon Delivery of Certificate and Consent of Indenture Trustee. Anything to the contrary contained in this Agreement notwithstanding, Garden Grove and Santa Ana mutually covenant and agree that this Agreement shall be of no force or effect unless and until that certain document, entitled "Certificate and Consent of Indenture Trustee", a copy of which is attached hereto, identified as "Exhibit E", and by this reference incorporated in andmade a part hereof, (or a document substantially similar thereto, it being recognized by the parties that the final form thereof will be determined -16- KLG: ar 10/15/78 by the Corporation and its bond counsel) is executed and de- livered to the addressees thereof by the trustee therein named. Upon such execution by said trustee and delivery thereof to Garden Grove, Garden Grove agrees to provide to Santa Ana's Clerk of the Council a certified copy of said executed "Cer- tificate and Consent of Indenture Trustee". If such execution and delivery of said "Certificate and Consent of Indenture Trustee" is not done and made on or before a date one (1) year from and after the date hereof, then, in that event, this Agreement shall be null and void, and later execution and delivery thereof shall not operate to create any rights in or obligations upon either of the parties hereto with respect to this Agreement or otherwise. 21. Counterparts. This Agreement may be executed in more than one counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 22. No Liability of Corporation. The parties hereto acknowledge that Corporation is a party to this agreement for the sole purpose of making the conveyance and receiving payment there- for as provided in Sections 2 and 4 hereof, and Corporation shall have no other obligation or liability of any kind hereunder. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their respective officers therefor duly authorized. A ZPR AS TO I y A ney for Garden Grove APPROVED AS TO,—FOR111: City Attorney for Santa Ana CITY OF GARDEN GROVE Cler CITY 0 SANT o, Mayor by City Clerk CITY OF GARDEN GROVE by yor CITY OF GARDEN GROVE WATER CORPORATION by reside tz by Secretary - :Z -17--