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HomeMy WebLinkAboutWATER DISTRICT, ORANGE COUNTY (Green Acres Project Water) - 1988JrDK:bc: 10/10/s8 - r, -!, F, I V AGREEMENT BETWEEN ORANGE COUNTY WATER DISTRICT AND CITY OF SANTA ANA REGARDING DISTRIBUTION AND SALE OF GREEN ACRES PROJECT WATER THIS AGREEMENT, made and entered into as of Se ,.Pt. 21 1988, by and between the ORANGE COUNTY WATER DISTRICT (here-, inafter - ""OCWD"") and the CITY OF SANTA ANA, (hereinafter "RETAILER"). A. OC'WD, was created by the OCWD Act, Ch. 924, Stats. 1933, as amended, for the purpose of protecting and managing the Orange County groundwater basin. The OCWD Act empowers OCWD to manage the groundwater basin, to provide for the conservation of the quantity and quality of water in the groundwater basin, to conserve and reclaim water within or outside of the boundaries of OCWD, to sell or otherwise put to beneficial use any water or reclaimed wastewater in order to conserve groundwater resources, and to distribute water to persons in exchange for ceasing or reducing the extraction of groundwater from the groundwater basin. B. OCWD purchases imported water from the Metropolitan Water District of southern California (hereinafter 11MWD11) I through its member Public agencies, for spreading and replen- ishment purposes, and obtains wastewater from the County Sanitation Districts of orange County (hereinafter "CSDOC11) for renovation-reclamation and groundwater injection. JDK:bc: 10/10/88 C. Reclaimed wastewater currently produced by OCWD is suitable for a number of non-potable uses, including, but not limited to, landscape irrigation and industrial uses. D. RETAILER is a municipal corporation organized and existing pursuant to the laws of the State of California. RETAILER- is the exclusive retail water purveyor, including water for residential, industrial, commercial, public agency, agricultural and other uses, within RETAILER's boundaries. r RETAILER currently distributes potable water in part purchased from the MWD and in part produced from groundwater within its boundaries. The corporate and water service boundaries of RETAILER are within the jurisdictional boundaries of OCWD. E. Landscape irrigation and industrial water users within the jurisdictional and service boundaries of RETAILER currently either purchase potable water from RETAILER for their use, or produce water from the groundwater basin by means of their own facilities for their own use, which private groundwater production is under the jurisdiction and control of OCWD. F. OCWD desires to construct, operate and maintain a water treatment facility, transmission mains and distribution pipeline system (including mainlines and service lines) and, in some cases, on-site plumbing, to be known as the "Green Acres Project," for the purpose of reclaiming wastewater received from CSDOC (hereinafter, "'Project water") and distributing the Project Water for appropriate landscape Mc JDK:bc: 10/10/88 irrigation and industrial purposes in order to supplement and conserve the supply of potable groundwater available to the residents and water users within the boundaries of OCWD. A plat depicting the location of the facilities comprising the Green Acres Project which OCWD intends to construct, operate and maintain is set forth as Exhibit "All hereto. G. OCWD and RETAILER mutually acknowledge that the use of reclaimed water for landscape irrigation is of mutual benefit to OCWD and RETAILER in fulfilling their joint responsibilities for the conservation of water resources in accordance with Sections 13550 and 13551 of the California Water Code, H. OCWD desires to sell Project Water to RETAILER for resale by RETAILER to appropriate landscape irrigation and industrial water users within the service boundaries of RETAILER, and RETAILER desires to purchase Project Water from OCWD for such resale purposes. AGREEMENTS NOW, THEREFORE, in consideration of the facts recited above and the terms, covenants and conditions herein contained, the parties hereto agree as follows: OVt M'r^%T ^"V. 'MA n'r T -r Mr r.1 OF PROJECT WATER 1.1 OCWD shall enter into a contract or contracts on or before October 1, 1988 for the construction of the Green Acres Project, and all facilities to produce, transport and distribute Project Water for the herein specified purposes Mc wwj�1�-E (hereinafter, the "Project Facilities' "). A plat depicting that portion of the Project Facilities which OCWD shall construct, operate and maintain within the boundaries of RETAILER is attached hereto as Exhibit "A". OCWD shall cause the Project Facilities to be completed and operational on or before June 1, 1991, and RETAILER shall incur no cost or liability in connection with the design or construction of the Project Facilities. 1.2 The Project Facilities to be constructed shall include a distribution pipeline system from the site of the Green Acres Project Water Treatment Facility, to be located at 1,0500 Ellis Avenue, Fountain Valley, California, to the point of connection to each of the proposed Project Water customers within the boundaries of RETAILER (hereinafter, "Project Customers") , for the purpose of distributing Project Water to RETAILER at the points of connection of the Project Customers for purchase by RETAILER and resale to the Project Customers. The names, addresses and anticipated annual Project Water demands of each Project Customer are set forth in Exhibit "B" hereto and incorporated herein by this reference. 1.3 OCWD shall obtain all permits required to construct and operate the Project Facilities, including the distribution pipeline system and ancillary facilities to be located within the public rights of way as shown on Exhibit "All hereto, as well as those facilities which are necessary to produce, deliver and distribute Project Water for the -4- 4 usa�# M* herein described purposes; and OCWD shall further obtain those permits that Project Customers may be required to obtain. OCWD shall cause the Project Facilities within the boundaries of RETAILER to be constructed in accordance with the construction standards of RETAILER in effect as of the date of the award by OCWD of the contract or contracts for such construction. The Project Facilities shall be owned by OCWD; provided, however, that RETAILER shall perform on behalf of OCWD all maintenance, repair and replacement of the Project Facilities located within the boundaries of RETAILER, pursuant to paragraph 4.1 hereinbelow. In this regard: 1.3.1 OCWD agrees to restore roads, streets, alleys, avenues, highways, drainage facilities, or any other public way or property used for construction, operations, or maintenance of the Project Facilities within RETAILER's boundaries to at least the same condition existing prior to construction, operation or maintenance of the Project Facilities, to the reasonable satisfaction of RETAILER's Director of Public Works. 1.342 OCWD agrees to provide adequate safeguards to afford security, to life and property during construction, operation, and maintenance of the Project Facilities, with due regard being given to other existing uses of public roads, streets, alleys, avenues, highways, drainage facilities, public ways and property within the boundaries of RETAILER. Mc JDK:bc: 10/10/88 1.3.3 OCWD agrees to use its best efforts to minimize noise, dust, pollution and problems relating to police and fire protection within the boundaries of RETAILER throughout construction, operation and maintenance of the Project Facilities within RETAILER"s boundaries. 1.3.4 OCWD agrees to construct, operate and maintain the Project Facilities within the boundaries of RETAILER in conformance with the "Standard Provisions for Water System Construction in the City of Santa Ana," as the same now reads or as may hereafter be amended at the time of such Project Facilities construction, operation or maintenance, as the case may be, a copy of which is on file in the office of RETAILER's Director of Public Works, and to which copy reference is hereby made for full particulars. 1.3.5 The parties understand and agree that OCWD's rights to construct, maintain, operate, inspect, repair and replace the Project Facilities within the lands and rights-of-way of RETAILER do not constitute vested property rights and are expressly subject to and governed solely by this Agreement. 1.4 OCWD shall, at no cost to RETAILER, provide a metering device meeting RETAUTIR's specifications, to be owned, operated and maintained by RETAILER, for the purpose of measuring the quantity of Project Water purchased by RETAILER and resold by RETAILER to each Project Customer. JDK:bc: 10/10/88 RETAILER shall be responsible for ensuring the accuracy of the metering device. Any costs incurred in modifying the size of existing RETAILER meters shall be the responsibility of OCWD. The quantity of Project Water measured by the meters to be owned, operated and maintained by RETAILER shall be the sole basis for determining the quantity of Project Water delivered and sold by RETAILER to each Project Customer under Section Two of this Agreement. In the event that a meter measuring the quantity of Project Water delivered by RETAILER to a Project Customer indicates a lesser quantity than OCWD,1s meter measuring the quantity of Project Water delivered to RETAILER for resale to a Project Customer, OCWD shall be responsible for the cost of such difference, and RETAILER shall not be liable therefor. In the event RETAILER has a separate metering device serving exclusively non- potable uses on the premises of a Project Customer, OCWD may sell Project Water to RETAILER by connecting the Project Facilities distribution pipeline system directly to the separate non-potable meter so long as the standards and requirements of RETAILER and any other, governmental agency having jurisdiction over the quality of Project Water are satisfied. 1.5 In order to avoid the risk that Project Water may enter into RETAILER' s potable water distribution system, OCWD shall, at its own expense, install on RETAILER's potable water, system a backflow prevention device or devices approved by RETAILER at a location or locations designated in writing JDK:bc: 10/10/88 by RETAILER. Such backflow prevention devices shall be installed prior to the commencement of deliveries of Project Water to a particular connection point. OCWD shall provide for separate marking of the non-potable Project Water system in accordance with standards and regulations in existence as of the date of this Agreement. 1.6 The Project Water distribution pipeline system shall be constructed by OCWD with sufficient capacity to allow RETAILER to serve known landscape irrigation and industrial water users. OCWD shall sell to RETAILER, and RETAILER shall purchase from OCWD, sufficient quantities of Project, Water for RETAILER to sell to the projected Project Customers as shown on Exhibit 11B,11 and such other and future Project Customers as are provided for herein, but only to the extent that RETAILER has contracts with such other and future Project Customers for the sale of Project Water; provided, however, that a water user within the service boundaries of RETAILER shall become a Project Customer only with the approval of both OCWD and RETAILER; and provided further, that OCWD shall have the sole discretion to determine whether to expand the Project Facilities or the production and distribution capacity of the Project Facilities to meet any future demand for Project Water that may be generated within the boundaries of RETAILER. In this regard, the listing of Project Customers attached hereto, as Exhibit "B" represents a listing of both the known Project Customers as of the date of this Agreement, and potential future Project Customers. OCWD MM and RETAILER mutually understand and agree that additional landscape irrigation and/or industrial water users within the boundaries of RETAILER may at some future time be served with Project Water and become Project Customers without the necessity of amending this Agreement. All future water users within the service boundaries of RETAILER who become Project Customers shall execute an agreement for the purchase of Project Water in the form attached hereto as Exhibit "C", and further shall be subject to the Project Rules to be adopted by RETAILER pursuant to paragraph 5.3 hereinbelow. SECTION TWO: PURCHASE AND SALE OF PROJECT WATER 2.1 OCWD shall complete the construction and commence operation of the Project Facilities by June 1, 1991, barring delays due to unforeseeable causes beyond the control and without the fault or negligence of OCWD or its contractors. If OCWD is permitted by all regulatory agencies having jurisdiction over OCWD to distribute Project Water, then, during the term of this Agreement, RETAILER shall have the exclusive right to purchase Project Water from OCWD, at the point of connection to each Project Customer, and to resell Project Water to the Project Customers shown on Exhibit 11B,11 and such other landscape irrigation and industrial water users within the boundaries of RETAILER that may be added as Project Customers in accordance with paragraph 1.6 above. 2.2 Concurrently with and as a condition precedent to any obligations of OCWD or RETAILER pursuant to this Agreement, RETAILER shall commit to purchase Project Water Mc . I JDK:bc: 10/10/88 for RETAILER's own use, and/or enter into separate agreements with the proposed Project Customers in substantially the form to be attached to and herein incorporated as Exhibit "C" for the purchase by Project Customers of Project Water from RETAILER, contingent upon its availability from OCWD. In the event RETAILER and other purveyors of Project Water are unable by December 1, 1988 (or as otherwise agreed to in writing by OCWD) to commit to purchase for their own use, or enter into agreements for the sale of, at least fifty percent ,(50%) of the total demand, as set forth in Table I of Exhibit "B," for Project Water each year during the term hereof, this Agreement shall terminate. 2.3 RETAILER shall commence the purchase and resale of Project Water upon receiving at least sixty (60) days advance written notice from OCWD of the availability of such Project Water. 2.4 RETAILER shall purchase the Project Water from OCWD, at the point of its metered connection, for an amount to be determined by the OCWD Board of Directors in its discretion, not to exceed eighty percent (80%) of the "area groundwater cost" as defined in Section 2.5 hereinbelow. The point of connection and sale of the Project Water from OCWD to RETAILER shall be at the meter which measures the flow of Project Water to each Project Customer, as described in Section 1.4 here,inabove. 2.5 For the purpose of this Agreement, the "area groundwater cost" shall be the same as'the fixed and variable M JDK:bc: 10/10/'88 costs of groundwater production as listed in the most recent OCWD Engineer's Report prepared pursuant to Section 31.5(a) of the QCWD Act, plus the replenishment assessment imposed by OCWD pursuant to the authority contained in Section 27 of the OCWD Act, and any additional replenishment assessments which may be imposed by OCWD pursuant to the authority contained in Section 27.1 of the OCWD Act, which replenishment assessments and additional replenishment assessments are established in April of each year but do not become effective until the following July of each year. The parties mutually recognize and agree that the area groundwater cost may change each year during the term of this Agreement, as a function of changes in the cost of operation and maintenance, energy, the replenishment assessment levied by OCWD, and the levy of any additional replenishment assessment by GCWD. 2.6 The governing body of RETAILER shall establish the rate for the resale of Project Water to each Project Customer, in an amount not to exceed eighty percent (80%) of the "notable water" rate established by RETAILER. 2.7 RETAILER shall read the Project Water meter for each Project Customer on a sixty (60) day cycle. The Project Water meter reading date shall coincide with RETAILER'S reading of the meter which measures the quantity of potable water delivered by RETAILER to the Project Customer that month. Within sixty (60) days thereafter, RETAILER shall transmit to OCWD a statement setting forth the Project Water rate established by RETAILER pursuant to paragraph 2.,6 during -11- 993��� that billing period, a description of the maintenance, repair and replacement activities of RETAILER, and the amount of such actual costs incurred by RETAILER, pursuant to Section 4.1 hereinbelow during that billing period, and indicating, for each Project Customer, the current 'meter, reading, the previous meter reading, and the total quantity of Project Water purchased from OCWD and resold by RETAILER to such Project Customer during the billing period. Together with this statement, RETAILER shall transmit to OCWD payment in accordance with paragraphs 2.4 and 2.5 for the Project Water purchased from OCWD by RETAILER and resold by RETAILER to all of the Project Customers during the billing period, after deducting therefrom the actual costs incurred by RETAILER in maintaining, repairing and replacing the Project Water distribution system within RETAILER's boundaries as set forth in Section 4.1 hereinbelow. SECTION THREE: PROJECT WATER QUALITY REGULATIONS 3.1 OCWD shall deliver and sell to RETAILER pursuant to this Agreement Project Water that shall conform to all current and future requirements established by the California Regional Water Quality Control Board - Santa Ana Region, and all other federal, state and local agencies having jurisdiction to fix minimum standards for the anticipated landscape irrigation and industrial uses of the Project Water by the Project Customers listed in Exhibit "B" hereto. The anticipated quality of Project Water shall be as shown on Exhibit 11D11 attached hereto and incorporated herein, or as NU2033EVAUT" subsequently amended to conform to any future, regulatory requirements for such use; provided, however, that OCWD shall not have any obligation to modify the quality of Project Water to meet the needs of any particular Project Customer. 3.2 During the term of this Agreement, OCWD shall pay all costs imposed by any and all governmental agencies having jurisdiction over the quality or use of Project Water for the issuance of any permits, licenses or approvals required for the production, treatment, distribution or sale of Project Water. OCWD further shall be responsible for paying any charges, fees, surcharges, assessments or other sums imposed or levied upon Project Water by the Municipal Water District of orange County. 3.3 OCWD shall inform RETAILER promptly after becoming aware of any proposed or actual modifications by any agency having jurisdiction over the quality of Project Water to any requirements governing the minimum standards of quality for or use of Project Water, or of any changes in the legally permissible uses which might affect the use of the Project Water sold by OCWD to RETAILER for resale by RETAILER to Project, Customers, and OCWD shall bear all costs of conforming to any such future requirements. RETAILER shall have no obligation to pay the cost of meeting any future requirements governing the standards of quality for, or use of, Project Water. -13- J'DK:bc: 10/10/88 SECTION FOUR: OPERATING OBLIGATIONS OF THE PARTIES. 4.1 During the term of this Agreement, OCWD shall manage, operate and maintain the Project Facilities in an efficient manner and in accordance with the highest standards, of skill-and workmanship; provided, however, that OCWD hereby contracts with RETAILER for the performance by RETAILER of the actual maintenance, repair and replacement responsibil- ities with respect to those Project Facilities located within the service boundaries of RETAILER. RETAILER recognizes the special quality considerations relating to Project Water, and RETAILER shall perform its maintenance, repair and replacement responsibilities in an efficient manner and in accordance with the highest standards of skill and workmanship. OCWD retains the right, upon sixty (60) days written notice to RETAILER, to make repairs to Project Facilities within the service boundaries of RETAILER if they are not made by RETAILER in a timely or efficient manner. RETAILER shall receive as a credit against all monies due OCWD pursuant to paragraph 2.8 hereinabove for the sale of Project Water the cost of such maintenance, repair and replacement activities actually undertaken by or on behalf of RETAILER, which costs shall include the actual labor, material and equipment costs, plus overhead costs, incurred by RETAILER and necessary for such maintenance, repair and replacement activities. OF M, 4.2 Notwithstanding the provisions of paragraph 4.1, the operating responsibility of OCWD with respect to the Project Facilities shall include the maintenance of quality, quantity and pressure of the Project Water, and compliance with all regulatory requirements and conditions applicable to the distribution and sale of Project Water, to the point of connection to each Project Customer. 4.3 RETAILER shall, at no cost to OCWD,, assume ownership of, service, maintain and read the Project Water meter and valve set and meter box/vault for each Project Customer in the same manner that RETAILER would for a customer service meter attached to its potable water system. RETAILER further shall, at no cost to OCWD, be responsible for customer service functions relating to Project Customers, including but not limited to billing and collection of payments from Project Customers for the Project Water, record keeping, and notification to oCWD of the quantity of Project Water delivered through the Project Customer's meter during each meter reading period. 4.4 OCWD shall have the right to review the books, records and accounts maintained by RETAILER relating to the Project Water and Project Customers during normal business hours, upon forty-eight (48) hours prior written notice to RETAILER. 4.5 OCWD shall operate the Project Facilities in such a manner that Project Water shall be delivered to the point of connection to each Project Customer on a continuous basis at so= NM M3• � 1M- a pressure of not less than sixty (60) pounds per square inch between the hours of 8:00 p.m. and 6:00 a.m., and not less than twenty (20) pounds per square inch between the hours of 6:00 a.m. and 8:00 p.m. 4.6 Except as provided in paragraph 9.6, hereinbelow, in the -event that, at any time during the term of this Agreement, OCWD for any reason cannot or chooses not to produce Project Water from its Green Acres Project Water Treatment Facility described in paragraph 1.2 hereinabove, OCWD shall provide through the Project Facilities, or otherwise, at a cost equal to the cost of Project Water, sufficient water of a quality at least equal to the quality of Project Water to meet the landscape irrigation and industrial water needs of all of the Project Customers; provided, however, that OCWD shall have no such obligation in the event that Project Water cannot be delivered to Project Customers due to damage to, breaks or other disruptions in the distribution facilities transporting Project Water to Project Customers. ,SECTION FIVE: PROJECT WATER RULES AND REGULATIONS. 5.1 All Project Water produced by OCWD for delivery and sale to RETAILER shall be in accordance with the terms and conditions of the discharge, requirements and primary user permit for the Project Water issued to OCWD by the California Regional Water Quality Control Board - Santa Ana Region. OCWD has obtained and shall maintain a blanket primary user permit for the production, distribution and sale of Project =ffi= JDK:bc: 10/10/88 Water, and shall at all times maintain such permit and bear all costs in complying with all present and future provisions thereof and all renewals or subsequent such permits. 5.2 OCWD shall promulgate and enforce rules and regula- tions regarding the distribution, delivery and sale of Project Water to RETAILER, and governing the use of Project Water resold by RETAILER to Project Customers (hereinafter, the "Project Rules"') . OCWD shall pay all costs incurred in the drafting and preparation of the Project Rules. OCWD shall obtain all requisite certifications and approvals from all federal, state and local agencies having jurisdiction over the production, quality and use of Project 'Water, including, but not limited to, the California Regional Water Quality Control Board - Santa Ana Region, and the State of California Department of Health, that such Project Rules comply with the regulations, requirements and orders of such regulatory agencies. 5.3 OCWD shall transmit to RETAILER such approved Project Rules for adoption by RETAILER, and RETAILER shall, within ninety (90) days after receipt thereof, incorporate the Project Rules into RETAILER's promulgated rules and regulations governing the distribution, delivery and sale of water within the service boundaries of RETAILER. Promptly upon adoption, RETAILER shall transmit to OCWD RETAILER'S adopted Project Rules, and RETAILER shall notify OCWD of any amendments to or modifications of the Project Rules adopted by RETAILER. Should OCWD choose either to make reasonable -17- JDK:bc: 10/10/88 amendments or modifications to the Project Rules not contrary to this Agreement, or be required by any governmental agency exercising jurisdiction over the distribution, sale or use of the Project Water to modify or amend the Project Rules, OC�WD shall promptly furnish such modifications or amendments to RETAILER; and RETAILER shall, after being provided a ninety (90) day period in which to review, comment upon, and/or meet and confer with OCWD regarding such proposed modifications or amendments, incorporate such modifications or amendments into RETAILER's adopted rules and regulations. 5.4 RETAILER shall include in its promulgated rules and regulations provisions requiring, whenever feasible and if Project 'Water is available, that any new or future customer of RETAILER, as a condition to receiving potable water service from RETAILER, to become a Project Customer and to accept and use Project Water in lieu of RETAILER's potable water supply for appropriate landscape irrigation and industrial purposes. RETAILER shall further include in its promulgated rules and regulations a requirement that any new or future Project Customer permit representatives of OC'WD and RETAILER to enter the premises of the Project Customer at all reasonable times for the purpose of monitoring, inspecting, analyzing and observing the Project Customer's on-site Project Water facilities and the utilization by the Project Customer, of Project Water. 5.5 For purposes of paragraph 5.4 of this Agreement, "feasibility" shall be presumed if OCWD and RETAILER mutually _18- JDK:bc: 10/10/88 determine in their, discretion that Project Water is available and that the Project Facilities can accommodate the new or future landscape irrigation or industrial water customer of RETAILER. For purposes of Section 5.4 of this Agreement, the use of Project Water for landscape irrigation or industrial uses shall be presumed "appropriate" if the use of Project Water by a new or future Project Customer for landscape irrigation or industrial applications will neither violate any minimum water quality or health standards established by any federal, state or local agency having jurisdiction over the quality of Project water, nor significantly and adversely affect either the Project Customer's plantings or the industrial processes or products served by the Project Water. 5.6 In connection with RETAILER's adoption of the Project Rules as part of its rules and regulations, and at the request of RETAILER, OCWD shall cooperate with and assist RETAILER in obtaining from the State of California Water Resources Control Board any necessary certifications, findings or orders authorized under Sections 13550 and 13551 of the California Water Code to require the use of Project Water for landscape irrigation uses within the service boundaries of RETAILER. 5.7 The parties understand and agree that Project Water delivered and sold by OCWD to RETAILER pursuant to the terms of this Agreement has limited uses, and OCWD shall deliver and sell to RETAILER Project Water only for those uses and purposes which are legally permissible under the laws of the Cl= JDK:bc: 10/10/88 State of California and the rules, regulations and directions of the appropriate federal, state and local regulatory agencies exercising Jurisdiction over the quality and use of Project Water. In this regard, OCWD and RETAILER shall cooperatively enforce Project Rules limiting the use of Project Water to legally permissible landscape irrigation and industrial applications, and shall monitor the use of Project Water by Project Customers to safeguard against any misuse or improper application of Project Water by Project Customers. SECTION SIX: PROJECT WATER DELIVERY TO EXCLUSIVE GROUND- WATER USERS 6.1 This Section Six shall apply only with respect to water users located within the Green Acres service area boundaries and within the service boundaries of RETAILER who, as of the date of this Agreement, are not presently served potable water by RETAILER for their landscape irrigation uses, but who rely instead exclusively upon their own private groundwater production to satisfy their landscape irrigation demands (such water users are hereinafter referred to as "Groundwater Customers"). 6.2 With the assistance and cooperation of OCWD, RETAILER shall use its best efforts to enter into agreements with each Groundwater Customer, under which the Groundwater Customer shall agree not to produce groundwater to satisfy its landscape irrigation demands, and purchase from RETAILER and use Project Water in lieu of groundwater for landscape irrigation purposes. In consideration for purchasing and CHM 6 11111111111111111 0 a I : :, using Project Water in lieu of groundwater, RETAILER shall sell Project Water to each Groundwater Customer at a rate equal to the variable groundwater production cost, including any Replenishment Assessment and additional Replenishment Assessment imposed by OCWD pursuant to Sections 27 and 27.1 of the ,OCWD Act, as shown in the most recent OCWD Engineer's Report prepared pursuant to Section 31.5(a) of the OCWD Act. 6.3 RETAILER shall read the Project Water meter for each Groundwater Customer at the same time during each sixty (60) day cycle, and shall perform the same customer service functions for Groundwater Customers that RETAILER performs for Project Customers pursuant to paragraph 4.3 hereinabove. 6.4 Within sixty (60) days after reading the meters of Groundwater Customers as set forth in paragraph 6.3 hereinabove, RETAILER shall forward to OCWD a statement indicating, for each Groundwater Customer, the current meter reading, the previous meter reading, and the 'total quantity of Project Water delivered and sold to RETAILER for resale to such Groundwater Customer during the billing period, together with payment for the Project Water purchased by all Groundwater Customers during the preceding month. The payments to be made by RETAILER to OCWD herein shall comprise the amounts actually owed by each Groundwater Customer to RETAILER, less a sum representing ten dollars ($10-00) for each acre foot of Project, Water purchased by the Groundwater Customers from RETAILER. Commencing in the year in which Project Water deliveries commence under this Agreement, the JDK:bc: 10/10/88 credit to RETAILER of ten dollars ($10.00) shall be adjusted annually in accordance with the Consumer Price Index published by the United Stated Department of Labor for the Long Beach - Santa Ana - Anaheim metropolitan area. This annually adjusted credit to RETAILER shall serve as full and adequate -compensation to RETAILER for the costs incurred by RETAILER in assuming ownership of, servicing, maintaining and reading the Project Water meter for each Groundwater Customer in the same manner that RETAILER would for a customer service meter attached to its potable water system, and for providing to the Groundwater Customers those customer services functions provided by RETAILER to Project Customers pursuant to paragraph 4.3 hereinabove. 6.5 In the event either that a Groundwater Customer abandons its groundwater production facility or that OCWD determines that a Groundwater Customer is no longer capable of producing groundwater for its landscape irrigation needs, OCWD shall have the exclusive authority and discretion, without the necessity of amending this Agreement, to remove such water user from the designation of "Groundwater Customers."' In such event, the former Groundwater Customer shall be treated as a Project Customer for all purposes hereunder, including but not limited to the retail sale of, and billing and payments for, Project Water. SECTION SEVEN: INDEMNITY AND INSURANCE 7.1 OCWD shall save RETAILER harmless from and against and shall indemnify RETAILER from any liability, loss, costs, JDK:bc: 10/10/88 expenses or damages however caused by reason of any injury (whether to body, property, or personal or business character or reputation) sustained by or to any person or property by reason of any act, neglect, default, or omission of OCWD or any of its agents, employees, or representatives, or caused by reason of the design, construction, operation or maintenance of the Project Facilities, or the distribution and sale to RETAILER for resale purposes herein of Project Water that does not meet the quality standards set forth in Title 22 of the California Administrative Code; provided, however, that OCWD shall not be responsible for the negligent operation, maintenance or repair of the Project Facilities within RETAILER'S service boundaries by RETAILER, the negligent operation, maintenance or repair by RETAILER or any Project Customer or Groundwater Customer of Project Water distribution and storage facilities located on the lands of any Project Customer or Groundwater Customer, and/or the misuse or misapplication of the Project Water on the Project Customer's or Groundwater Customer's side of the Project water meter by any person, including RETAILER or any Project Customer or Groundwater Customer. If RETAILER is sued in any court for damages by reason of any of the acts for which OCWD is required to indemnify RETAILER in this paragraph 7.1, including but not by way of limitation, damages arising out of a products, liability claim, OCWD shall defend said action (or cause same to be defended) at its own expense and shall pay and discharge any and all amounts of judgment that may be C9M wwj• N 1� rendered in any such action. If OCWD fails or neglects to so defend in said action, RETAILER may defend the same and any expenses, including reasonable attorneys' fees, which it may pay or incur in defending said action and the amount of any judgment which it may be required to pay shall be promptly reimbursed upon demand. Nothing herein is intended to nor shall it relieve RETAILER or any Project Customer or Groundwater Customer from liability for its own acts, omissions, or active or passive negligence. 7.2 OCWD shall cause RETAILER to be named as an additional insured on OCWD's general liability policy of insurance with respect to the sale and distribution to RETAILER of Project Water within the service boundaries of RETAILER, and OCWD shall provide RETAILER with certificates of insurance and endorsements evidencing such insurance coverage; provided, however, that nothing shall preclude OCWD from maintaining self insurance with respect to the sale, distribution and use of Project Water, in lieu of purchasing insurance as provided for herein. 7.3 OCWD shall not commence nor permit any contractor or subcontractor to commence work on construction of any of the Project Facilities that are located within the service boundaries of RETAILER until OCWD has obtained, or has caused its contractors to obtain, comprehensive general liability insurance providing coverage for bodily injury, personal injury and property damage, and which shall include as additional insureds RETAILER, its officers, agents and -24- NWJEBEK4M employees, but only while acting in their capacity as such and only as respects operations of the original named insured, its subcontractors, agents, officers and employees in the performance of the construction contract. OCWD shall furnish RETAILER with certificates of insurance and endorsements showing insurance coverage as described above. RETAILER shall incur no expense in connection with obtaining and maintaining any insurance required under, paragraphs 7.2 and 7.3. SECTION EIGHT: DISPUTES 8.1 In the event of any dispute arising under this Agreement, the parties hereto agree to utilize the arbitra- tion procedure set forth in this Section Eight as the sole and exclusive means of resolving any such dispute. 8.2 Arbitration shall be initiated by any party hereto serving upon any other party a written demand for arbitra- tion, which demand shall describe with specificity the nature of the dispute. Except as specified herein, the arbitration shall be conducted pursuant to the provisions of California Code of Civil Procedure, Section 1280, et . se ��_g The parties hereto agree that there shall be a single neutral arbitrator who shall be a civil engineer knowledgeable in water facili- ties operation and reclaimed wastewater, who shall be select- ed in the following manner: (A) The demand for arbitration shall include a list of the names of five. (5) persons accept- able to the demanding party for appointment as arbitrator. The responding party shall determine if any of the names Mv. 111111111 0 0 11 submitted are acceptable, and, if so, shall inform the other party within ten (10) days of actual receipt of the arbitra- tion demand, and such person will be designated as arbitra- tor; (B) In the event that none of the names submitted by the demanding party is acceptable to the responding party, or if for any reason the arbitrator selected is unable to serve, the responding party shall submit to the demanding party a list of the names of five (5) persons acceptable to the responding party for appointment as arbitrator. The demand- ing party shall in turn have ten (10) days from actual receipt of the list in which to determine if one such person is acceptable; (C) If the parties are unable mutually to agree upon a neutral arbitrator as described above, the mat- ter of the selection of an arbitrator, qualified as above, shall be submitted to the Orange County Superior Court pursu- ant to Code of Civil Procedure Section 1281.6. Upon selec- tion of an arbitrator, the arbitration shall be conducted consistent with the provisions of Code of Civil Procedure Section 1280, et �!eg., as are deemed practicable by the arbi- trator, considering the nature of the dispute. 8.,3 The costs of arbitration, including but not limited to reasonable attorneys' fees, shall be recoverable by the party prevailing in the arbitration. If an arbitration con- ducted hereunder is appealed to a court pursuant to the procedures set forth in Code of Civil Procedure Section 1280, et seq., the costs of arbitration shall also include court :MM JDK:bc: 10/10/88 costs associated with such appeals, including but not limited to reasonable attorneys' fees. SECTION NINE: MISCELLANEOUS PROVISIONS 9.1 Notices: All notices, payments, transmittals of documentation and other writings required or permitted to be delivered or transmitted to any of the parties under this Agreement, shall be personally served or deposited in a United States mail depository, first class postage prepaid, and addressed as follows: If to OCWD: Orange County Water District 10500 Ellis Avenue P.O. Box 8300 Fountain Valley, California 92708 Attn: William R. Mills Jr. General Manager If to RETAILER: City of Santa Ana Public! Works Agency 101 West Fourth Street Santa Ana, California 92703, Attn: David H. Grosse, Executive Director or such other address as OCWD or RETAILER shall direct in writing. Service of any instrument or writing by mail shall be deemed complete forty-eight (48) hours after deposit in a United States mail depository. 9.2 Term and Amendment: The term of this Agreement shall be for 'twenty-five (25) years from the date hereof. This Agreement shall automatically be extended for up to five (5) extensions of five (5) years each, for a possible total extension of twenty-five (25) additional years to the initial term hereof, if neither party hereto exercises its right to terminate the extensions to the initial term of this :F&M wmj���� Agreement. Either party shall have the right to terminate any extension to the initial term of this Agreement by written notice to the other at least four (4) years prior to the expiration of the initial term or any extension of this Agreement. Except as provided in paragraph 1.6 and Section Six hereinaLbove, this Agreement may only be amended or modified by mutual agreement in writing of OCWD and RETAILER. 9.3 Limitation on Sales by OCWD: OCWD acknowledges and agrees that, except as provided herein or with the prior written consent of RETAILER, OCWD is not now and will not in the future become a wholesale or retail seller of Project Water within the service boundaries of RETAILER, and OCWD further agrees that it will not use or contract with any entity other than RETAILER for the purpose of selling and distributing Project Water within the service boundaries of RETAILER. 9.4 Basin Limitations: OCWD and RETAILER mutually understand and agree that any and all Project Water delivered and sold by OCWD hereunder shall not constitute either "supplemental sources" or "groundwater supplies" for the purpose of the annual establishment of basin groundwater production requirements and limitations by OCWD pursuant to Section 3,1.5 of the OCWD Act. Project Water is hereby established as a separate class of water for the purposes of Section 31.5 of the OCWD Act. 9.5 Conditions Precedent: The performance of this Agreement is conditioned upon OCWD's being able to acquire 0411M ufij��� acceptable rights of way and access rights from its existing facilities to the points of connection to Project Customers, as set forth in the plat attached hereto as Exhibit, "All, and is further conditioned upon the approval by all federal, state and local regulatory agencies having jurisdiction over the Green Acres Project and Project Water. 9.6 Conditions Subsequent: The performance of this Agreement is conditioned upon OCWDI,s continued ability feasibly to produce and distribute Project Water for sale to RETAILER and resale by RETAILER to Project Customers in a cost-effective manner. Subsequent to the date of this Agreement, should OCWD determine in its sole discretion that unanticipated increases in the cost of producing or distributing Project Water or new or modified regulatory requirements governing the production, distribution, quality or use of Project Water render, the Green Acres Project economically unfeasible, OCWD may cease production and distribution of Project Water upon ninety (90) days written notice to RETAILER. In the event that OCWD ceases the production and distribution of Project Water pursuant to this paragraph 9.6, this Agreement shall terminate and OCWD shall incur no liability to RETAILER or any Project Customer or Groundwater. Customer by reason of the termination of this Agreement or the termination of production and delivery of Project Water; provided, however, that if OCWD ceases the production and distribution of Project Water pursuant to this paragraph 9.6 within ten (10) years immediately following the MOM JDK:bc: 10/10/88 date of this Agreement, OCWD shall pay the cost of connecting or reconnecting the landscape irrigation or industrial water facilities of each Project Customer or Groundwater Customer then connected to the Project Facilities to the domestic water distribution facilities of RETAILER. . 9.7- No Duplication of Services Intended or Created: OCWD and RETAILER mutually understand and Agree that the con- struction and operation of the Project Facilities and the distribution and sale of Project Water by OCWD to RETAILER for sale by RETAILER to Project Customers pursuant to this Agreement do not constitute either a duplication of RETAILER's retail water service or a taking of any property of RETAILER within the meaning of Section 1501, et of the California Public Utilities Code. RETAILER shall have no right to institute any Action against OCWD pursuant to Sections 1503, 1504 or 1505.5 of the Public Utilities Code by reason of the construction and operation of the Project Facilities and the distribution and sale of Project Water by OCWD to RETAILER in conformance with this Agreement. 9.8 Warranty: OCWD represents and warrants that under the OCWD Act OCWD, without the consent of any other public agency water purveyor, may enter into this Agreement to deliver and sell Project Water to RETAILER for resale by RETAILER to Project Customers or lands within the service boundaries of RETAILER. 9.9 Construction: This Agreement shall be construed according to its plain meaning and as if prepared by all -30- JDK:bc: 10/10/88 parties hereto. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 9.10 Integration: The parties herein have set forth the whole of their agreement, and the performance of this Agreement constitutes the entire consideration intended herein. 9.11 Successors: This Agreement and all of the provisions herein, shall be binding upon and inure to the benefit of OCWD and RETAILER, and their respective successors and assigns. WHEREFORE, the parties herein have executed this Agree- ment as of the date set forth above., V.110 QMMM Q103 !M nez�ay cunsel' f. C ran ge County Water istrict . f o rp�`"�VE20W-, D ;K City At ny re� <.' I City of Sa�Ana 8/131/006104-0124/005d ORANGE COUNTY WATER DISTRICT Bj B� C1 B� At _31- c Exhibit A OQ TALP[...o..ncxo. INP/F LRJ �'' APINH [ BC H[ 1 PARR O1 CWY CCALTRARM- TAAU.RT A PAID QO T N L NooL/;L�{IO RNIA ACNVOL IW CAITVC O A [ A e AAtN Al V[ COY tLIN {NtARY /CNOOL O � 1 AOR 0. IT CA LTPAHe -YR IY iLVP. Q 11 ® MAVOA { ^H[NTA {Y s—A. IV I V 1 C.C. IVTVT^ ALLCN�yM 11 � ! TOL CAVIIT C[xTI N1ICUAITY AACIIIC —1 II MVMTI�TO' ®� M [P tA�t NO CIY}iR IItPGI ; IgAIAMlc01 MzCNP /CMCCL O([1� XcTAOO X�INT YR�PCXOIL O 11 ......... PAP MT1 -1- ItACR 1! QO —1A HAIR I A /CNOOL mvle ICHOIL •J IAPR .C. O IA)ROFp{ IWO.) A1URCtCHO1L[NINTAR1 tCNOOL ANA —TA VALLEY N.-1 A1V L O IAOUNPR T[NIHRW [Ana IIICN Anl [z zCN ACNOOL T yRATLLZITA )1 E[CAMCIA NICX eCNOOL �;��C;��Q l•.•/ i;CAIUH C`IIOOL Iica1J IIOOWHONT[ V ooLJJ[Rw¢6 Bcx © AA IIICALII. IARIN.) GLI I. MLL{O{ �I IAwt PARR O/OVTN{AN N[LL VLFOA O.S. �; IAUDP.R [ A �ACR 11[Elp I[NO01./CRANL PARR ANT 4 N[x0 AAL IARA FWCnT o.c. r 1 NTVP N M IIIOT4 A{ACY Y /lAe 1 NttJ tIBLVARt RAO. YRFI 1A 1 YIIJt MIRLR[ RAO. /A]U. 1tlI I CKMT90MIRL IA ;; NIt' Z. I xilRieoRi ia[ALTle.c. ! AI__ �PIu 1 A•1 MURBCRYNI Ip) 1 XAFAAE A10T11EXt le) rA3RV1 /Y M. 1 �" IRA — COVRTY[RATE. V11TR)LT (Z 0 � r:v. L. L.iNARO OV[NCROen Rc IA-11N eIAIA Hi —AAL Nw 1�1 MARAYI YMMNYNAIY� 1] `•T_Y�^� A— AIRAH[vAlUe /CNOOL PARAtt IPMN[PA It eOITH COAAT vt LLI.C� iYay --V COAIT "n /UUT11 {OAIT TCNN CUT. [IARCO LAlJ CINTaA li UV[R!A[L. �11 OM TNt lAA{LL ®� M [P tA�t NO CIY}iR IItPGI ; FWCnT o.c. r 1 NTVP N M IIIOT4 A{ACY Y /lAe 1 NttJ tIBLVARt RAO. YRFI 1A 1 YIIJt MIRLR[ RAO. /A]U. 1tlI I CKMT90MIRL IA ;; NIt' Z. I xilRieoRi ia[ALTle.c. ! AI__ �PIu 1 A•1 MURBCRYNI Ip) 1 XAFAAE A10T11EXt le) rA3RV1 /Y M. 1 SANTA ANA Average Average (Assumes Peaking Location Demand Demand Factor of 6) Number (AFB") (GMP) Multitex Corp. 33 150 93 Centennial Park 71 120 74 Thornton Park '69 69 43 McFadden Int. School 70 48 30 U � , * =110 11A 387 240 193,5 120 w Exhibit B Table 2 Future Users Average Average Santa Ana Demand Demand (Assumes Peaking Factor of 6) (AFY) (GPM) Riverview Golf Course 298 185 Willowick Golf Course 269 167 BJ Fibers 81 50 Bomokora,l Park 67 42 Saddleback High School 60 37 Santa Ana Valley High School 66 41 Fritz School 62 38 Spurgeon Elementary 62 38 Woodside Village 52 32 Santa Ana Memorial Park 53 33 Harbor Gateway 47 29 Woodla,ke Condo 45 28 Greenville. School 45 28 Heritage Park 41 25 Versailles on the Puke 40 25 Jackson School 33 20 Compasino Park 31 19 Meter Del High School 30 19 Center park 31 19 Aspen Pearlree Apts 30 19 South Coast Shores 28 17 Carr High 28 17 ,Santa Barbara School 25 15 Adams Park 24 15 Rosita Park 22 14 Jerome Park 23 14 Lincoln School 22 14 Newhope School 21 13 Rosita School 21 13 Average Average Santa Ana Demand Demand (Assumes Peaking Factor of 6) (AEY) (GPM) South Gast Springs 20 12 Village Creek 20 12 Monte Vista School 20 12 Santa -Anita Park 20 12 South Coast Village 19 12 Hazard School 19 1.2 Alona Park 19 12 Cherry Textron 19 12 Monroe Elementary 18 11 Santa Ana College 17 11 City Yard & Delhi Park 17 11 Mobil Chemical 16 10 Diamond Elementary 16 10 Russell School 15 Washington Elementary 15 9 MacArthur Int 15 9 Taft Elementary 14 9 Caltrans 14 9 AMF Voit 14 9 Windsor Park 13 8 Boise Cascade 10 6 ABBE Systems 10 6 Adams School 5 3 Polaroid 8 5 Security Pacific 5 3 Causet Center 9 6 Total Demand 2,431 1,507 5'0% of Total Demand 1215.5 754 EXHIBIT "C" Form of Project Customer Sales Agreement (TO BE PROVIDED BY CITY OF SANTA ANA) f EXHIBIT "D" TYPICAL WATER QUALITY TO BE SUPPLIED TO GREEN ACRES CUSTOMERS mg/L Total Dissolved Solids 950 - 1,050 Hardness 300 - 350 Calcium 80 - 100 Magnesium 20 - 25 Potassium 12 - 14 Sodium 190 - 2,40 Bicarbonate 260 - 280 Chloride 230 - 300 Sulfate 220 - 240 Boron 0.6 - 0.8 Fluoride 1.1 - 1.5 Silica 21 - 24 Nitrogen - Total N 2,0 - 30 Prosphorus - Total P 5.0 - 5.6 Chemical Oxygen Demand 30 - 40 AGREEMENT TERMINATION Please complete this form when the attached agreement is no longer in effect. Return form to the Deputy Clerk of the Council (M-30). Call 647-6520 if you have any questions. - - The - - - - - - - - I - - - - - - - - agreement with (' - - - - - - - - - - K Dirik tC2--- - - - - - - - - - - - A-- was completed on and final payment has been made. Revised 4-16-87 Department: Signature: Date: City of Santa Ana Clerk of the Council AGREEMENT NO. 22156 GREEN ACRES RECLAMATION PROJECT LOCAL RESOURCES PROGRAM CONVERSION AGREEMENT BETWEEN THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA,- MUNICIPAL WATER DISTRICT OF ORANGE COUNTY, COASTAL MUNICIPAL WATER DISTRICT, CITY OF SANTA ANA AND ORANGE COUNTY WATER DISTRICT RECORD NO-t�IZ� OCWD DOC -xiZz. - AGREEMENT NO. 22156 GREEN ACRES RECLAMATION PROJECT LOCAL RESOURCES PROGRAM CONVERSION AGREEMENT BETWEEN THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, MUNICIPAL WATER DISTRICT OF ORANGE COUNTY, COASTAL MUNICIPAL WATER DISTRICT, CITY OF SANTA ANA AND ORANGE COUNTY WATER DISTRICT TABLE OF CONTENTS Section ym-e RECITALS................. .......... --- ........ — ...... — ............... - ... — ...... 11 ........ --l. ...... .......... - ............ I SectionI- Definitions ............ ........ ....................... .................... - ...................................................... 3 Section2: Warranties ........... ........ - ........ ...... .............. .......... ............ ...... ......... 4 Section 3: Ownership and Responsibilities... ...................... - .......... - .......... ........... 5 Section4: Billing Process.. .............. ---- .......... ................ .... - ................... ........ ............ — ...... — 5 Section 5: Reconciliation Process ... - ................ ............ ............ ...... .......... ............. — ...... .......... » 6 Section 6: Coordinating Committee ........... .................... ...................... — ........ -- ........ ............. ---7 Section 7: Record Keeping and Audit... ...... -- .......................................... — ......... ................ 7 Section 8- Term and Amendments ................. ......... -- ..... ........ - ...... .......... .......... --8 Section 9: Hold Harmless and Liability ......... .............. ........... ................ -- ....... .............. ........... 9 Section10: Notice.. .......... -- .................. -- .... ......... --- ........ — ...... ......... - ............ ......... .......... 9 Section 11: Successors and Assigns ......... ........ -- .................. -- ..... - ......... ......... .......... -- 10 Section12, Severability ....... ....................... ........ ..................... - ......... ................... 10 Section13: Integration .................. ....... ... --- ........... --.- ... - ....... ...... ---- .......... — .... ........... 10 Section 14: Governing Law. ............ ......... ................. -- ........ .................... — ......... .......... 10 Exhibits Exhibit A (Project Description) Exhibit B (Annualized Capital Component) Exhibit C (Operation and Maintenance Component). Exhibit D (Annualized Replacement Component) Exhibit F (Deferred Cost) Exhibit F (Performance Provisions) Exhibit G (Green Acres Phase 1 Capital Projects Debt Service Allocation) AGREEMENT NO. 22156 GREEN ACRES RECLAMATION PROJECT LOCAL RESOURCES PROGRAM CONVERSION AGREEMENT BETWEEN THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, MUNICIPAL WATER DISTRICT OF ORANGE COUNTY, COASTAL MUNICIPAL WATER DISTRICT, CITY OF SANTA ANA, AND ORANGE COUNTY WATER DISTRICT THIS AGREEMENT is made and entered into as of July 1, 1999 by and among The Metropolitan Water District of Southern California (Metropolitan), Municipal Water District of Orange County (MWDOQ, Coastal Municipal Water District (CMWD), City of Santa Ana (SA), and Orange County Water District (OCWD). Metropolitan, MWDOC, CTN4WD, SA, and OCWD 0 may be collectively referred to as "Parties" and individually as "Party". RECITALS A. There is now in effect a Joint Participation Agreement (JPA) dated June 1, 1988 which was amended on April 3, 1992 (First Amendment), September 1, 1995 (Second Amendment) and September 8, 1997 (Third Amendment) by and among Parties for the development and utilization of recycled water, which provides for the Green Acres Reclamation Project (Project) to participate in Metropolitan's Temporary Local Resources Program (TLRP) until Metropolitan adopted terms and conditions for a new Local Resources Program (LRP); B. Metropolitan's Board of Directors, at its June 9, 1998 meeting, established terms and conditions for the LRP and authorized all existing agreements under the TLRP to be C, incorporated into the LRP, which provides financial incentives from $0 to $250 per acre-foot of recycled water produced and used within Metropolitan's service area for the purposes of improving regional water supply reliability; C. The Parties mutually agree to terminate the JPA as amended and enter into this agreement ZD (Agreement) with terms and conditions outlined herein; D. Metropolitan was incorporated under the Metropolitan Water District Act (Act) for 'the purpose of developing, storing, and distributing water for domestic and municipal purposes; E. The Act empowers Metropolitan to acquire water and water, rights within or without the C� state; develop, store and transport water; provide, sell and deliver water at wholesale for municipal and domestic uses and purposes; set the rates for water; and acquire, construct, operate and maintain any and all works, facilities, improvements and property necessary or convenient to the exercise of the powers granted by the Act; Agreement 22.156 F. MWDOC, CMWD and SA, as member public agencies of Metropolitan under the Act, are wholesale purchasers within their respective service areas of water developed, stored, and distributed by Metropolitan; G. OCWD is a member public agency of MWDOC with boundaries that Include portions of the service boundaries of MWDOC, CMWD and SA; K OCWD was created under a Special Act of the California Legislature in 1933 (OCWD Act) for the purpose of protecting and managing the Orange County groundwater basin. The OCWD Act specifically empowers OCWD to manage the groundwater basin; to provide for conservation of the basin including both quantity and quality of water; and to provide protection both of the water rights of Orange County and of the natural flow of the Santa Ana River; I. Metropolitan has determined to take all reasonable and necessary steps to provide its service area with adequate and reliable water to meet present and future needs in an environmentally and economically responsible way including providing financial incentives to water recycling projects under its LRP; A significant amount of treated wastewater generated within OCWD's service area is significant into the ocean, which water when provided with tertiary treatment could be used for irrigation, agricultural, corni-nercial and industrial purposes, thereby avoiding disposal thereof as a waste product, and avoiding the use of an equivalent volume of imported water from Metropolitan's water supply system for such purposes; K Pursuant to the JPA, the Project commenced operation in October 1991; L. Under the Project, OCWD owns and operates a tertiary treatment facility known as Green Acres Reclamation Plant which is a source of recycled water for the Project. 'Under a separate agreement, recycled water may be purchased from the Irvine Ranch Water District (IRWD) during the winter through an intertie with the Newport Beach pipeline and used to satisfy Project demands, Further, OCWD has entered into discussions regarding conveyance of well water through the Project's distribution system to 1RWD via the intertie and connecting pipelines; M. Metropolitan, MWDOC, CMWD, SA and OCWD have determined that it is mutually beneficial for local water projects originating in the service areas of MWDOC, CMWD, and SA to be developed as a supplement to Metropolitan's imported water supplies in order to meet future water needs; N� Metropolitan desires to assist in increasing production and distribution of recycled water by providing a financial incentive to OCWD, through MWDOC, CMWD, and SA, for implementation of the Project; O. MWDOC, CMWD, and SA desire to participate in and affirmatively support the Project by transferring to OCWD the financial incentive that they receive from Metropolitan; Agreement 22156 -2- P. OCWD believes that Metropolitan's continued financial contribution toward the cost of the Project will make the Project operation economically viable, and thus is coirinritted to implementation of this Project; Q. OCWD has an agreement with Orange County Sanitation District (OCSD) to provide 4=1 Project recycled water which is not Allowable Yield under this Agreement. R. The Parties believe development of recycled water by the Project will benefit the local community within OCWD and the region served by Metropolitan, NOW, THEREFORE, in consideration of the promises and covenants hereinafter set forth, the Parties do agree as follows: Section 1: Definitions The following words and terms, unless otherwise expressly defined in their context, shall be defined to mean: 1.1 "'Allowable Yield" shall mean the arnount of Recycled Water including TRWD recycled water delivered to the End Users by OCWD from the Project in a Fiscal Year that is eligible to receive Metropolitan's financial assistance, Allowable Yield shall not exceed Ultimate Yield and shall exclude any Recycled Water Metropolitan reasonably determines will not reduce MWDOC's, CMWD's and SA's demand for Metropolitan's imported water. Unless otherwise approved in writing by Metropolitan, Allowable Yield shall exclude: (1) groundwater, surface water or potable water deliveries to supplement the Recycled Water system; (2) Allowable Yield from other projects with active or terminated LRP or Local Projects Program agreements-, and (3) additional Recycled Water or any type of water conveyed through Project facilities to OCSD. 1.2 "Deferred Cost "shall mean that cost, in dollars per acre-foot, carried forward from the preceding Fiscal Year as calculated in Exhibit E, incorporated herein by this reference. 1.3 "End User" shall mean each user that purchases Allowable Yield furnished by this Project. IA "Estimated LRP Contribution" shall mean the advanced financial contribution in dollars per acre-foot Metropolitan pays for Allowable Yield to OCWD for monthly billing purposes until the Final LRP Contribution is calculated pursuant to procedures in Sections 4.2 and 5.2, respectively. 1.5 "Final LRP Contribution" shall mean the financial contribution, not to exceed $250 per acre-foot, by Metropolitan to the Project in dollars per acre-foot of Allowable Yield. The Final LRP Contribution for the Project is equal to the sum of the Project Unit Cost and Deferred Cost minus the sum of Metropolitan's prevailing full service treated water rate and the amortized cost of any avoided Metropolitan New Demand Charge. The New Demand Charge will be applied in the formula used to determine the Final LRP Agreement 22156 -3- 1.6 "Fiscal Year" shall mean a Metropolitan Fiscal Year that begins on July 1 and ends on June 3 0. 1.7 "New Demand Charge" shall mean those amounts charged to each member agency to recover the capital costs associated with meeting that agency's new demands on Metropolitan's system, pursuant to the discretionary rate-setting authority of Metropolitan's Board of Directors, 1.8 "Project" shall mean the "Green Acres Reclamation Project", as defined in Exhibit A attached hereto and incorporated herein by this reference, being developed by OCV D to produce the Ultimate Yield. 1.9 "Project Unit Cost" shall mean the actual cost to produce an acre-foot of Recovered Water by the Project and is comprised of three components: Annualized Capital Component, Operation and Maintenance Component, and Annualized Replacement Component as specified in Exhibits B, C, and D, incorporated herein by this reference. 1,10 "Recovered Water" shall mean all types of water including Recycled Water delivered for beneficial use by the Project in a Fiscal Year, measured in acre-feet. 1.11 "Recycled Water" shall mean treated wastewater which, subject to regulatory requirements, is suitable for beneficial uses. 1.12 "Ultimate Yield" is originally established as 7,000 acre-feet per Fiscal Year and is subject to the reduction provisions as outlined in Exhibit F, incorporated herein by this reference. .Section 2: Warranties 2.1 OCWD, by virtue of its ownership of the Green Acres Reclamation Plant and its agreements with OCSD and IRWD, warrants that it has a firm and adequate source of Recycled Water to operate the Project; 12 OCVTD warrants that it is able and has a right to sell Allowable Yield from the Project. I 23 OCWD warrants that it does not discriminate against employees or against any applicant for employment because of ethnic group identification, religion, age, sex, color, national origin, or physical or mental disability and further warrants that it requires all contractors and consultants performing work on the Project to comply with all laws and regulations prohibiting discrimination against employees or against any applicant for employment because of ethnic group identification, religion, age, sex, color, national origin, or physical or mental disability. 2.4 OCWD warrants that it has or will comply with the provisions of the California Environmental Quality Act for each and all components of the Project facilities, Agreement 22,156 -4- Section 3: . Owncrshia- and -Res pPnaihiIidQ5 3.1 OCWD shall be the sole owner of the Project facilities, Metropolitan, MWDOC, CMWD, and SA have no ownership right, title, security interest or other interest in the Project facilities. 3.2 OCWD shall be solely responsible for all design, environmental compliance, right-of- Ic way acquisitions, permits, construction, and cost of the Project and all modifications thereof. 3.3 OCWD shall be solely responsible for operating and maintaining the Project in ,accordance with all applicable local, state, and federal laws. Metropolitan, MWDOC, CMWD, and SA shall have no rights, duties or responsibilities for operation and maintenance of the Project. 3.4 OCWD shall install, operate and maintain metering devices for The purpose of measuring the quantity of Recovered Water, Deliveries to OCSD and Allowable Yield delivered to each End User, OCWD shall also provide electrical metering devices to accurately measure the energy used for the Project to determine incurred operation and maintenance costs, Metropolitan shall not pay for electrical energy cost if OCWD fails to install electrical metering devices. 3.5 OCWD shall, at all times during the term of this Agreement, use its best efforts to operate the Project facilities to maximize Allowable Yield on a sustained basis. 3.6 OCWD shall assist Metropolitan in its effort to forecast future Project production and cost. 3.7 OCWD shall notify and provide Metropolitan with copies of relevant agreements if OCWD decides to convey water using Project facilities to any party that is not an End User. Section 4: Billing Process 43 Metropolitan shall pay OCWD:, through MWDOC, CMWD, and SA, the Final LRP Contribution for the Allowable Yield. 4,2 Metropolitan shall consult with OCWD to determine the Estimated LRP Contribution based on historic cost data and expected Project activities, Reconciliation of the Estimated LRP Contribution and Final LRP Contribution shall be performed by Metropolitan pursuant to Section S. 43 OCWD shall invoice Metropolitan monthly for the Estimated LRP Contribution based upon the Allowable Yield billed to the End Users during the previous month. Metropolitan shall pay OCWD for invoiced Estimated LRP Contribution pursuant to Sections 4.1 and 4.2 by means of a credit included on the next water service invoice issued to MWDOC, CMWD, and SA. Agreement 221 56 -5- 4.4 Upon receiving the Metropolitan invoice, MWDOC, CMWD and SA shall include the full arnount of the Estimated LRP Contribution for the Allowable Yield received from Metropolitan as a credit on its next invoice to OCWD. 4.5 All invoicing, billing, and crediting processes shall be in accordance with the rules and regulations established from time to tirne by Metropolitan as reflected in Metropolitan's Administrative Code. Section 5: Reconciliation Process 5.1 By January I" of each Fiscal Year, OCWD shall provide Metropolitan with the following reconciliation data for the previous Fiscal Year: (a) records of Recovered Water, Allowable Yield, and deliveries to OCSD; (b) supporting documentation of the actual cost of the Project required to perform the calculations prescribed in Exhibits B, C, and D; (c) the terms and schedule of payments of the Project's financing instrument; (d) a description of any changes to the Project's financing instruments,* and (e) all contributions other than those derived from End Users. Metropolitan will suspend its Estimated-LRP Contribution if OCWD fails to provide any of the above required data by April I" of each Fiscal Year. During the suspension period, OCWD shall continue. to invoice Metropolitan for the Estimated LRP Contribution based upon the Allowable Yield for water accounting purposes, Metropolitan will resume the monthly Estimated LRP Contribution once complete data is received and the corresponding reconciliation is complete pursuant to Section 5.2, In the event OCWD fails to provide reconciliation data by January I" of the following Fiscal Year which is IS months after the end of the Fiscal Year for which a reconciliation is required, this Agreement shall automatically terminate without notice or action by any Party and OCWD shall repay to Metropolitan within 90 days of termination all estimated LRP Contributions for which no reconciliation data was provided to Metropolitan. 5.2 Within 180 days after Metropolitan receives complete data from OCWD, pursuant to Section 5. 1, Metropolitan shall calculate the Final LRP Contribution for the Fiscal Year. The Final LRP Contribution shall then apply retroactively to all Allowable Yield for the applicable Fiscal Year. An adjustment shall be computed by Metropolitan for over- or under-payment for the Allowable Yield and included on the next invoice issued to MWDOC, CMWD, and SA; and payments shall be made in accordance with Metropolitan's Administrative Code. 53 The Parties agree that all contributions other than those derived from End Users or within MWDOC, CMWD, and SA service area boundaries and Final LRP Contribution under this Agreement, including but not limited to grants provided by the U.S. Bureau of Reclamation and IRWD payments to OCWD for wheeling water through the Project, received prior to and during the term of this Agreement that offset eligible Project costs shall be deducted from respective cost components. During the reconciliation following receipt of such contributions, the Parties shall determine the equitable apportionment of such contributions for capital and/or operational purposes. If the Parties are unable to arrive at an agreement, Section 6 shall apply. Agreement 22156 -6- Section 6: Coordinating Committee 6.1 The Coordinating Committee is composed of one participant each from'Metropolitan, MWDOC, CMWD, SA and OCWD. The Coordinating Committee shall meet as needed to resolve issues regarding the LRP Contribution, Annualized Capital Component, Operation and Maintenance Component, Annualized Replacement Component, and Project ect Unit Cost, The Coordinating Committee's responsibilities are limited to interpretation of the terms of this agreement. The Coordinating Committee shall not have authority to negotiate, amend, or otherwise change the terms of the Agreement. 62 The Coordinating Committee shall, to the extent possible, seek to establish consensus in carrying out its responsibilities. Metropolitan shall have a single vote on the committee and MWDOC, CMWD, SA and OCWD shall collectively have a single vote on the committee. If by voting the Coordinating Committee cannot resolve a particular matter or matters, a third party shall be appointed by the Parties to provide a third vote on the Committee. The Coordinating Committee shall then act by majority vote as to the matter, or matters. If the Parties cannot agree on the third party, or for any other reason the Parties cannot resolve the disputed matter or matters Ming the Coordinating Committee, the Parties agree to settle the dispute using mediation conducted by a neutral organization agreed upon by the Parties. The Parties shall pay their own expenses of mediation with the exception of the mediator's fee which shall be borne one-half by Metropolitan and one-half collectively by MWDOC, CMWD, SA and OCWD. Costs of mediation shall not be included in the Project Unit Cost. Section 7: Record Kee ing and Audit. 7.1 OCWD shall establish and maintain accounting records of all costs incurred for the construction, operation and maintenance, and replacement parts of the Project as described in Exhibits B, C, and D. Accounting for the Project shall utilize generally accepted accounting practices, and be consistent with the terms of this Agreement. OCWD's Project accounting records must clearly distinguish all costs for the Project from OCWD's other water production, treatment, and distribution costs. OCWD's records shall also be adequate to determine Allowable Yield, Deliveries to OCSD and Recovered Water to accomplish all cost calculations contemplated in this Agreement. 7.2 OCWD shall establish and maintain accounting records of all contributions including grants that offset eligible Project capital costs, operation and maintenance costs, and/or replacement costs, as outlined in Section 5.3. 7.3 OCWD shall collect Recovered Water, Deliveries to OCSD and Allowable Yield data for each Fiscal Year of Project operation and retain records of that data based on the metering requirements in Section 3.4. In addition, OCWD shall collect and retain records of total annual amount of water conveyed outside of OCWD's service area using Project facilities. Agreement 22156 -7- 7.4 Metropolitan shall have the right to audit all Project costs and other data relevant to the terms of this Agreement for a period of three years following the termination of this Agreement. M Agreement may elect to have such audits conducted by its staff or by others, including independent accountants, as designated by Metropolitan. OCWD shall make available for inspection to Metropolitan or its designee, upon 30 days advance notice, all records, books and other documents, including all billings and costs incurred by contractors, relating to the construction, operation and maintenance of the Project; any grants and contributions, as described in Exhibits B, C, and D; and capital cost financing. Upon 30 days advance notice and at Metropolitan's request, OCWD shall also allow Metropolitan's personnel or its designee to accompany OCWD staff in inspecting OCWD's contractors' records and books for the purpose of conducting such audits of Project costs. 7.5 In lieu of conducting its own audit(s), Metropolitan shall have the right to direct the OCWD to have an independent audit conducted of all Project costs incurred in any Fiscal Year(s) pursuant to this Agreement. OCWD shall then have an audit performed for said Fiscal Year(s) by an independent certified public accounting firm and provide - Metropolitan copies of the audit report within six months after the date the audit was requested. The cost of any independent audit performed under this Agreement shall be paid by OCWD and is an allowable Project operation and maintenance cost pursuant to Exhibit C. Based on the results of any independent audit, an adjustment for over- or under-payment of Allowable Yield for each applicable Fiscal Year shall be paid by Metropolitan or OCWD within one year of determination after such adjustment. 7.6 OCWD shall keep all Project records for at least three years following the termination of this Agreement. Section 8: Term and Amendments 8,1 The Agreement shall commence at 12:01 AM. on July 1, 1999 and terminate on October 31, 2016, subject to provisions outlined in Exhibit F. The JPA as amended shall terminate at 12:00 midnight on June 30, 1999. The provisions regarding reconciliation and audit shall remain in effect until three years after the termination of the Agreement. 8.2 This Agreement may be amended at any time by the written mutual agreement executed by each of the Parties, 8.3 In addition to the automatic termination provided for in Section 5. 1, Metropolitan may terminate this Agreement due to any other material breach of this Agreement by any Party other than Metropolitan, upon thirty (30) days notice to other Parties. Metropolitan shall notify OCWD of any other material breach and OCWD shall have 30 days to address and rectify the breach. Only in the event of failure to rectify the breach shall Metropolitan terminate the Agreement. Agreement 22156 -8- Section 9: Hold Harness and LjAbility OCWD agrees at its sole cost and expense to indemnify, defend, and hold harmless Metropolitan, MWDOC, CMWD, and SA and their Boards of Directors, officers, agents, and employees from any claim and any and all liability, including but not limited to, any claims for injury or death to any person, or damage to property for any act or ornission or any liability due to water quality, which may arise out of OCWD's approval of, and subsequent construction, operation, or ownership of the Project including the sale of Project water. Such indemnity shall include any and all losses related to any claim made, whether or not a court action is filed, and shall include attorney fees, administrative and overhead costs, engineering and consulting fees and all other costs related to or arising out of such claim of liability. Section 10: Notice Any notice, payment or instrument required or permitted to be given hereunder shall be deemed received upon personal delivery or 24 hours after deposit in any United States post office, first class postage prepaid and addressed to the Party for whom intended, as follows: If to Metropolitan: The Metropolitan Water District of Southern California Post Office Box 54153 Los Angeles, California 90054-0153 Attention: General Manager If to MWDOC: Municipal Water District of Orange County 10500 Ellis Avenue Fountain Valley, California 92708 Attention: General Manager If to CMWD: Coastal Municipal Water District 3 Monarch Bay Plaza, Suite 205 Dana Point, California 92629 Attention: General Manager Agreement 22156 -9- If to SA: City of Santa Ana Public Works Agency 220 S. Daisy Avenue, Santa Ana, California 92703 Attention. Water Resources Manager If to OCWD: Orange County Water District 1 10500 Ellis Avenue Fountain Valley, California 92708 Attention: General Manager Any Party may change such address by notice given to each of the other Parties as provided in this section. Section 11: Successors and Assigns This Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Parties hereto, This Agreement and any portion thereof shall not be assigned or transferred to any entity not an original Party to this Agreement, nor shall any of the duties be delegated, without the express written consent of all Parties. Any attempt to assign or delegate this Agreement or any of the obligations or benefits of this Agreement without the express written consent of all Parties shall be void and of no force or effect. Section 12: Severability The partial or total invalidity of one or more sections of this Agreement shall not affect the validity of this Agreement,. L-1 Section 13: Integration This Agreement comprises the entire integrated understanding between the Parties concerning the Green Acres Reclamation Project, and supersedes all prior negotiations, representations, or agreements. Section 14: Governing Law The law governing this Agreement shall be the laws of the state of California and the venue of any action brought hereunder shall be in Los Angeles County, California. Agreement 22156 -10- IN WITNESS WHEREOF, the par-ties hereto have executed this Agreement effective as of the date first hereinabove written. APPROVED AS TO FORM: N. Gregory Taylor General Counsel By- Deputy General C&nsel McCoirnick, Kidman & Behrens THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA Ronald R. Gastelum General Manager By: Chief of Planning and Resources MUNICIPAL WATER DISTRICT OF ORANGE COUNTY By: By: eneral �Cou 'l General Manater-� APPROVED AS TO FORM: By-, General Counsel APPROVED AS TO FORM: B X"C 1 4,1­ Attorney 1 City ATTEST, By:�4� City Clark City Cl.rk APPROVED AS TO FORN11- By: General Counsel oAc I ustr I O\Ynmsh-,ircdkcontract\agrce\22156-doc Agreement 22156 COASTAL MUNICIPAL�I`ER DI,5,TRICT By: CITY OF SANTA ANA By: City Manager, By: fi e"] A. Pulido, Mayor RXF�� PROJECT DESCRIPTION Overview The Green Acres Reclamation Project (Project) is owned and operated by the Orange County C, Water District (OCWD). The Project will ultimately produce and deliver about 7,000 acre-feet per year (AFY) of Recycled Water from the Green Acres Reclamation Plant (CARP) to End Users witbin,portions of Costa Mesa, Santa Ana, Huntington Beach, Fountain Valley, Newport Beach, and Huntington Beach as shown on the attached map. Recycled Water from the Project is also delivered to the Orange County Sanitation District's (OCSD) for various in-plant uses. Bowever, these deliveries, about 5,000 AFY, do not replace an existing demand or prevent a new demand on Metropolitan and therefore, are not considered Allowable Yield. Existing Project There are no existing Recycled Water users in the Project's service area other than those developed pursuant to this Agreement. Prpject -Facilities Project facilities will be developed incrementally and include a tertiary treatment plant at the Water. Factory 21 (WF-21) site in Fountain Valley, a clearwell and pump station, storage facilities, distribution system, and ancillary facilities. The tertiary treatment facilities will not be used for wastewater disposal purposes. Teaiary Plant The CARP receives undisinfected secondary treated wastewater from the OCSD's Plant No. 1. The Green Acres tertiary plant is a direct filtration plant which treats water by providing coagulation, flocculation, filtration, and disinfection. Treated water is stored in a clearwell prior to being pumped to users throughout the distribution system. IR WD 1n tertie Typically during the winter, Recycled Water may be purchased from Irvine Ranch Water District (IRWD) through an intertie with the Newport Beach pipeline and used to satisfy Project demands. During this time, the GARP would be taken out of service for maintenance and repairs. Recycled Water deliveries made through the OCWD/IRWD intertie to serve Project End Users shall be considered Allowable Yield delivered by the Project and are eligible for LRP Contributions., Agreement 22156 -12- In order to deliver Recycled Water from IRWD to OCSD during the winter via the intertie, a portion of the Project's distribution system is used. Hence, in this Agreement, the cost of facilities to make deliveries to Project End Users and OCSD via the OCWD/IRWD intertie are prorated as outlined in Exhibit B, Section 5. Groundwater OCWD currently blends groundwater with Recycled Water produced by the tertiary plant to control total dissolved solids (TDS) levels. Groundwater is ineligible for payment under this Agreement. In addition, IRWD's groundwater may be pumped from satellite wells located in Santa Ana into the Project's Recycled Water distribution system and conveyed to IRWD via the intertie. IRWD may compensate OCWD for use of Project facilities to wheel groundwater through the system. OCWD will receive water quality benefits in the form of reduced total dissolved solids levels in Recycled Water delivered to their Newport Beach customers. Payments by IRWD for use of Project facilities to convey groundwater shall be treated as negative capital and operation and maintenance cost values in Exhibits B and C. Distribution System The Project also includes varying diameter Recycled Water pipelines in Fountain Valley, Santa Ana, Huntington Beach, Costa Mesa, Newport Beach, and Huntington Beach, Other facilities include a treated water clearwell and pump station at GARP, storage facilities and booster pump stations in the distribution system to maintain system operation and pressure, End Users Recycled Water from the Project will be used for non-potable landscape, agricultural, commercial and industrial purposes. This amount excludes Recycled Water deliveries (about 5,000 AFY) to OCSD, which is not part of this Agreement. Points of Connection Project facilities shall terminate at the points of connection to the potable distribution systems, sewer systems, storm drains, groundwater extraction systems, OCSD Plant Nos. I and 2, connection to the OCWD/IRWD Tntertie, secondary effluent connection to GARP, and meter connections to the End Users. Agreement 22156 -13- 0 T C. 0 Ir CO Al �d i' z 0 r [s DwZ z zw L34uaz ,.Woo "% a� Wiz # a -f CC -1 °- � , �bf CC CC � fl SOJ ? ' CL �: W F � �. z z Q 0 LU ZZ zua� 6 cn CC 0 LI oducm �� z 0 LLU tll-a^a 6 -J CL a. as aronA U I f C3 d 0 m, m z to 0 40 CC <) .Z 0 > G?� {y 0 �P CIN z 4 w 0 T C. 0 Ir CO Al �d i' ANNUALIZED CAPITAL COMPONENT The Annualized Capital Component shall be computed using only the fOIIOWiDg incurred costs by OCWD for the Project: a. Design and construction management services. b. Construction of Project facilities, more particularly described in Exhibit A. C. Agency administration of the Project design, construction, and start-up, not to exceed three (3) percent of construction Costs unless otherwise approved in writing by Metropolitan. d. Permits, including required data Collection. e,. Land, right-of-way and easements for the Project described in Exhibit A. f. Environmental documentation and mitigation measures directly related to the implementation or operation of the project and required to comply with applicable environmental permits and laws, including but not limited to the California Environmental Quality Act, National Environmental Policy Act, and the California and Federal Endangered Species Acts, Environmental documentation costs shall commence with the Notice of Preparation and conclude with the filing of the Notice of Determination, 9. All contributions as outlined in Section 53 of this Agreement, including but not limited to payments from IRWD to OCWD for excess capacity purchases oi- groundwater conveyance through the Project, shall be treated as negative capital cost values for the purpose Of COMPLIting the Annualized Capital Component. 2. Cost of the following items shall not be used to calculate the Annualized Capital Component: Storm drains, sewer collection systems, and - treatment and distribution facilities beyond the Project's points of connection. b. Existing facilities, land, right-of-way, and easements. Feasibility studies. d' Facilities necessary to meet the National Pollution Discharge Elimination System and California Waste Discharge requirements. e. Deposit of any reserve funds required as a condition of financing,. Agreement 22156 -15- E Payments made to another department or element of OCWD, MWDOC, CMWD, SA, OCSD, or TRWD, unless otherwise approved in writing, by Metropolitan. Intertie pipeline between the Irvine Ranch Water District Reclamation Project and this Project. L Public outreach, education, and water marketing activities including but not limited to preparing brochures and handout materials, training, meetings, and workshops. All other items not specified in Section I of this Exhibit. 3, Annualized Capital Cost (ACCost) in dollars per year shall be computed as follows in conjunction with Section #5 of this Exhibit a. For Green Acres Reclamation Project Phase 1, the ACCost shall be deten-nined using the Green Acres Debt Service Allocation for each respective Fiscal Year as summarized in Exhibit G. If OCWD refunds any or all issues shown in Exhibit G for savings with no economic detriment to Metropolitan, Exhibit G shall be revised by letter agreement to incorporate such refunds for savings without amending this agreement. b. For all other phases of the Green Acres Reclamation Project, the ACCost shall be computed using the following procedure: ACCost = CRF1 x P, + CRF7 x R, +... + CRFj x Pj Where: Pj is each portion of incurred capital cost for the Project with a distinct financing arrangement. CRF, is the capital recovery factor for each distinct financing arrangement, as follows: CRFj = [i x (I+i)n] / [(I+i),1-1] where., i is the interest rate (%). n is the term of financing (in years) commencing in the first Fiscal Year of Project operation. For all capital financing, cash expenditures, and grants and contributions received after the Project begins operation, annual payments shall be calculated beginning in the Fiscal Year the costs occur using the above process. j is the number of each separate financing element. Agreement 22156 -16- In the first Fiscal Year and Fiscal Year n +1 of production of Allowable Yield, each amortization for the calculation of ACCost shall be prorated by the number of days needed to achieve exactly n years of amortization following the first day of production of Allowable Yield, C. For variable-interest rate financing, annual payments shall be computed based on the actual payments made in the applicable Fiscal Year according to OCWD's financing documents. Any principal payments toward the Project capital cost before the Project operation will be treated as cash. OCWD shall provide Metropolitan with the accumulated paid principal pursuant to Section 5.1. d. For fixed-interest rate financing with a non-uniform annual payment schedule, an econon-tically-equivalent uniform annual payment schedule shall be calculated based on an "Internal Rate of Return" analysis to establish the annualized capital cost. e. Project capital costs not covered by a financing arrangement described above and all grants and contributions as defined in Section 5.3 shall be amortized over 25 years at an interest rate equal to the lesser of: Metropolitan's most recent weighted cost of long-term debt on June 30 in the year the capital expenditure occurred; or the Fiscal Year average of the 25-bond Revenue Bond Index (RBI) as published in the Bond Buyer, or such other index that may replace the R131, over the most recent Fiscal Year prior to the date the replacement cost was incurred. All grants or contributions shall be amortized as negative capital cost values beginning in the year that money was received. f. After the first Fiscal Year of operation, only refinancing changes which lower the Annualized Capital Component shall be included in the Annualized Capital Component calculation of each subsequent Fiscal Year. 9. If the Project capital cost is part of a broad financing arrangement, annual payments shall be calculated by prorating the annual payments of the broad financing using the ratio of the Project capital cost to the initial principal of the broad financing arrangement. 4. The Annualized Capital Component (ACCom) in dollars per acre-foot for purposes of determining the Project Unit Cost each Fiscal Year shall be calculated using the following formula: ACCorn = ACCost / Allowable Yield 5, When Recycled Water is delivered to OCSD plants, the Annualized Capital Component shall be adjusted as follows: Agreement 221,56 -17- Green Acres PrQject Facility Component GAP Treatment Plant First 7.5 ;MGT facility Future expansions Phase I Pipeline OCWD/IRWD Intertie used OCWD/IRWD Intertie not used Phase 11 Newport Beach Pipeline OCWD/IRWD Intertie used OCWD/IRWD Intertie not used All other facilities ✓figible Capital Cost (% of Total Green Acres Debt Service Allocation) 29 100 88 95* 83 100* 100 To qualify for these higher percentages, OCWD must demonstrate that no Recycled Water was delivered during the contractual Fiscal Year to OCSD plants through the OCWD/IRWD Intertie. 4� Agreement 22156 -Is- 1. The Operation and Maintenance Component shall be computed using only the following incurred costs by 0CWD during the applicable Fiscal Year. a. Professional consulting services for Project operation, maintenance and audit excluding daily Project operation. b. OCWD labor costs and/or contract labor costs equal to.- $175,000 x (A / $22.89) where A is maximum hourly rate for O&M Technician (i.e., entry level plant operator) for the applicable Fiscal Year and $22.89 is the maximum hourly rate for O&M Technician for Fiscal 'Year 1998-99, Between July I and December 3 0 in the year 2002, and every third year thereafter, any Party may request the Coordinating Committee to revise the allowable labor cost. Labor cost in the first year of production of Allowable Yield shall be prorated based on the number of days of production of Allowable Yield, C. Chemicals and supplies for Project operation and maintenance, d. Net electrical energy (recovered energy shall be deducted from energy purchased) for Project operations. Metropolitan shall not pay for electrical energy cost if OCWD fails to install electrical metering devices. e. Contractor services and Supplies for Project facilities, operation, maintenance and repair to maintain reliable system operation and achieve regulatory compliance. f Monitoring required by permits, including water quality sampling and analysis of Recycled Water produced by the Project, 9- Replacement of Project parts costing less than or equal to the following amount per unit: $100,000 x (ENRCCI / 6,694) where ENRCCI is the Engineering News Record Construction Cost Index for Los Angeles area for July of each applicable Fiscal Year. ENRCCI for July 1998 is 6,694. h. Payments to Irvine Ranch Water District (IRWD) for Recycled Water service via the Irvine Reclamation Project/Green Acres Project intertie during winter months, Agreement 22156 -19- IRWD will furnish recycled water to the Green Acres Reclamation Project during the winter months at a price not to exceed one-half of the rate OCWD charges the Orange County Sanitation District for recycled water service. All contributions as outlined in Section 5.3 of this Agreement including but not C� limited to payments from IRWD to OCWD for wheeling water through the Project, shall be treated as negative operation and maintenance cost values for the purpose of computing the Operation and Maintenance Component. 1 Costs of the following items shall not be used to calculate the Operation and Maintenance Component: a. Operation and maintenance of any facilities beyond the Project's points of connection. b. Operation and maintenance of any facilities necessary to meet National Pollution Discharge Elimination System and California Waste Discharge Requirements, C. Payments made to another department or element of OCWD, MWDOC, CMWD, SA, OCSD, or IRWD, unless otherwise approved in writing by Metropolitan. d. Brine disposal beyond the point of connection to the existing sewer. e, Public outreach, education, and water marketing activities including but not limited to preparing brochures and handout materials, training, meetings, and workshops. Intertie pipeline between the Irvine Ranch Water District Reclamation Project/Green Acres Project. 91 Fines, penalties, settlements, or 'Lidgments due to Project operation. J Z' h. All others not specified in Section I of this Exhibit. 3. The Annualized Operation and Maintenance Component (O&MC) in dollars per acre-foot for purposes of determining the actual Project Unit Cost each Fiscal Year shall be calculated using the following formula: O&MC = (Actual Annual Cost of O&M) / [(Deliveries to OCSD) + (Allowable Yield)] Agreement 22156 -20- 10LIVII-1398 ANNUALIZED REPLACEMENT COMPONENT The Annualized Replacement Component shall be computed using Incurred costs for the following., a. Replacement cost of major Project parts costing more than the following amount per unit. $ 100,000 x (ENRCCI / 6,694) where ENRCCI is the Engineering News Record Construction Cost Index for Los Angeles area for July of each applicable Fiscal Year. ENRCCI for July 1998 is 6,694, b. Salvage value of replaced parts shall be a negative replacement cost. c. All contributions as outlined in Section 53 of this Agreement including but not t� limited to payments from IRWD to OCWD for wheeling water through the Project, shall be treated as negative replacement cost values for the purpose of computing the Annualized Replacement Component, 2. Costs of the following iterns shall not be used to calculate the Annualized Replacement Component: a. Replacement of any facilities beyond the Project's points of connection. b. Any capital or operation and maintenance cost as previously defined in Exhibits B and C, Annualized Capital Component and Operation and Maintenance Component, respectively. C. Reserve funds. d. Intertie, pipeline between the Irvine Ranch Water District Reclamation Project /Green Acres Project, I The Annualized Replacement Cost (ARCost) shall be calculated using the same procedure as for capital amortization ( ARCost) in Exhibit B except that: • For membrane replacement, n is the number of years the replaced membranes were in service; for all other replacement costs, n is 25 years. • i is the interest rate in the Fiscal Year of replacement established in Section 3e of Exhibit B. • P is the actual costs of replacement in the Fiscal Year, subject to the adjustments cited in Section 5 of Exhibit B. 4. The Annualized Replacement Component (ARCom) for each replacement occurrence in dollars per acre-foot shall be calculated using the following procedure: ARCom = ARCost / [(Deliveries to OCSD) + (Allowable Yield)] Agreement 22156 -21- EXHIBIT E DEFERRED COST Deferred Cost (DC) applicable to the determination of the Final LRP Contribution is computed as follows: DC = AYP x (PULP - RateP - ANDC - 250) / RW where, AYP = Allowable Yield in the previous Fiscal Year (AF) PULP = Project Unit Cost, as defined in Section 1.8, in the previous Fiscal Year ($/AF) RateP = Metropolitan's applicable full service treated water rate in the previous Fiscal Year ($/AF) ANDC = Amortized cost of any avoided Metropolitan's New Demand Charge in the previous Fiscal Year ( /AF) 250 = Maximum Final LRP Contribution ($/AF) RW = Recovered Water in the Fiscal Year that the reconciliation is performed There shall be no DC value carryover upon Agreement termination. If DC calculated as a negative number using the above equation, DC will be Zero. DC for 1998-99 (under TLRP) shall be included in reconciliation for 1999-2000. Example: The following hypothetical example demonstrates how DC is calculated and used in calculation of the LRP Contribution: Fiscal Year Sum of MWD's Water Rate and ANDC ($/AF) Recovered Water (AF) Allowable Yield (Al:) . . .......... Project Unit Cost ($/AF) DC ($/AF) LRP Contribution ($/AF) 1 431 2,600 2,100 781 0 250 2 431 3,000 2,500 670 70 250 3 431 3,500 3,000 721 0 250 4 431 4,000 3,500 600 30 199 5 431 4,200 4,200 585 1 0 1 154 Fiscal Year I DC = 0 because project was not operating in the previous year LRP Contribution = 791 - 431 > 250 4 LRP Contribution = 250 $/AF Fiscal Year 2: DC = 2 „100 x (781 - 431 - 250) / 3,000 = 70 $/AF LRP Contribution = 670 + 70 - 431 > 250 4 LRP Contribution = 250 $/AF Fiscal Year 3: DC = 2,500 x (670 - 431 - 250) / 3,500 < 0 4 DC = 0 LRP Contribution = 721 - 431 > 250 4 LRP Contribution = 250 $/AF Fiscal Year 4: DC = 3,000 x (721 - 421 - 250) / 4,000 = 30 $/AF LRP Contribution = 600 + 30 - 431 = 199 $/AF Fiscal Year 5: DC = 3,500 x (600 - 431 - 250) / 4,200 <0 4 DC = 0 LRP Contribution = 585 - 431 = 154 $/AF Agreement 22156 -22- EXHIBITF PERFORMANCE PROVISIONS Until a project reaches its Ultimate Yield in any one Fiscal Year, the following performance provisions apply: Metropolitan will terminate this Agreement if construction has not commenced by June 30, 2001, As opposed to Provision lb below, there is no established appeal process for this outcome. b. Metropolitan will terminate this Agreement if Allowable Yield is not delivered by June 30, 2005. The Project sponsor(s) may appeal this decision to Metropolitan's Board of Directors. If the Allowable Yield during the 2003-04 through 2006-07 Fiscal Years after agreement execution does not reach the target yield of 37% of the Ultimate Yield, then Metropolitan will reduce the Ultimate Yield by one-half the 37% target shortfall using the highest Allowable Yield produced in that period. For example, the Ultimate Yield of a project with the following performance will be revised from 2,000 to 1,950 AFY for Scenario I while there would be no adjustment under Scenario I Project Ultimate Yield = 2,000 AFY 37% of the Ultimate Yield = 0.37 x 2,000 = 740AFY Scenario 1: Shortfall = 740 - 640 = 100 AFY Revised Ultimate Yield = 2,000 - (0.5 x 100) = 1,950 AFY Scenario 2: Since, the Allowable Yield in the 2006-07 is greater than 740, no adjustment is required. d. f f the Allowable Yield during Fiscal Years 2007-08 through 2010 -11 does not reach the target yield of 63% of the Ultimate Yield, then Metropolitan will reduce the Ultimate Yield (or the Revised Ultimate Yield) by one-half the target shortfall using the highest Allowable Yield produced in that period. For Example, the Ultimate Yield of the project in above example with the following performance Agreement 22156 -23- Scenario I Scenario 2 Fiscal Year after agreement execution Allowable Yield (AFY) Allowable Yield (AFY) 2003-04 400 400 2004-05 640 650 2005-06 450 750 2006-07 500 500 37% of the Ultimate Yield = 0.37 x 2,000 = 740AFY Scenario 1: Shortfall = 740 - 640 = 100 AFY Revised Ultimate Yield = 2,000 - (0.5 x 100) = 1,950 AFY Scenario 2: Since, the Allowable Yield in the 2006-07 is greater than 740, no adjustment is required. d. f f the Allowable Yield during Fiscal Years 2007-08 through 2010 -11 does not reach the target yield of 63% of the Ultimate Yield, then Metropolitan will reduce the Ultimate Yield (or the Revised Ultimate Yield) by one-half the target shortfall using the highest Allowable Yield produced in that period. For Example, the Ultimate Yield of the project in above example with the following performance Agreement 22156 -23- will be reduced from 1,950 to 1,850 AFY for Scenario 1 and .from 2,000 to 1,900 AFY under Scenario 2: Scenario 1: Ultimate Yield := 1,950 AFY 63% of Ultimate Yield = 0.63 x 1,950 = 1,229 AFY Shortfall = 1,229 - 1,029 = 200 AFY Revised Ultimate Yield =1,950 - (0.5 x 200) =: 1,850 AFY Scenario 2: Ultimate Yield = 2,000 AFY 63% of Ultimate Yield = 0.63 x 2,000 = 1,260 AFY Shortfall = 1,260 - 1,060 = 200 AFY Revised Ultimate Yield = 2,000 - (0.5 x 200) = 1,900 AFY e. If the Allowable Yield during Fiscal Years 2011-12 through 2014-15 (and every four-year period thereafter) does not reach the target yield of 75% of the Ultimate Yield, then Metropolitan will reduce the Ultimate Yield (or the revised Ultimate Yield) by one-half the target shortfall using the highest Allowable Yield produced in that period. The adjustinent will be made, using the same methodology shown in the above examples. 2. If the project reaches its Ultimate Yield in any one Fiscal Year, there will be no adjustment to the Ultimate Yield thereafter. Agreement 22156 -24- Scenario I Scenario 2 Fiscal Year after agreement execution Allowable Yield (AFY) Allowable Yield (AFY) 2007-08 700 900 2008-09 800 1,000 2009-10 1,029 1,000 2010-11 900 1,060 Scenario 1: Ultimate Yield := 1,950 AFY 63% of Ultimate Yield = 0.63 x 1,950 = 1,229 AFY Shortfall = 1,229 - 1,029 = 200 AFY Revised Ultimate Yield =1,950 - (0.5 x 200) =: 1,850 AFY Scenario 2: Ultimate Yield = 2,000 AFY 63% of Ultimate Yield = 0.63 x 2,000 = 1,260 AFY Shortfall = 1,260 - 1,060 = 200 AFY Revised Ultimate Yield = 2,000 - (0.5 x 200) = 1,900 AFY e. If the Allowable Yield during Fiscal Years 2011-12 through 2014-15 (and every four-year period thereafter) does not reach the target yield of 75% of the Ultimate Yield, then Metropolitan will reduce the Ultimate Yield (or the revised Ultimate Yield) by one-half the target shortfall using the highest Allowable Yield produced in that period. The adjustinent will be made, using the same methodology shown in the above examples. 2. If the project reaches its Ultimate Yield in any one Fiscal Year, there will be no adjustment to the Ultimate Yield thereafter. Agreement 22156 -24- X ui uj uj 0 L) LLJ 0 z 0 4h m M 0 - ® - - - - I - - - N cA - I - - - - - - - - S2 :2 :2 C! r2 2 2 2 n -- -- - - -w--- - - - - - - - - - mm - -mm w -- -mm - - - - - t2 g I I d 1.5 v 13 2 F t2 I I I . . . . q n -K d . . . n m - r-,"= n - m - - - -i -Ir . . . . I . . wo ­;;- i ir" Z q PI I I I I q - �: r: : _: _7 vz r 7 -7 4 t! t2 � I . I . . I '6 r; P4 Q; f�N ci I P P RR RQ RR'IMIR 25 . . . . . . 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Fq m F� m a � a ;3S4 za q mamN Z a � c-, Z8 (V ;a N Z5 N FQ LY E S. GREEN ACRES RECLAMATION PROJECT AND UTILIZATION OF RECLAIMED WATER THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, COASTAL MUNICIPAL WATER DISTRICT. MUNICIPAL WATER DISTRICT OF ORANGE COUNTY, THE CITY OF SANTA ANA, um ORANGE COUNTY WATER DISTRICT TABLE OF CONTENTS Page 'E.xhibits Exhibit A (Project Description) Exhibit B (Map) Exhibit C (Methodology for calculating Purchase Price) Re_citals Sec tj-Ons . . . 1. Def initions. . . • . . . 6 Z. Project Description. 6 3. Warranties . . . . . . . . Construction Responsibilities. . . . . . 7 . . . 8 4. 5. ownership of Facilities . . . . . . . . . . . . . . 8 . 6. operating Responsibilities . . . . . . . . . . . 10 7. purchase of Actual Yield . . . . • 12 8. Payment for Water . . . . . . . • . . . . . 13 9. Project Water Rates. . • . . . . * . . . . 14 10. Term and Amendments. . . . . . . . . • . Liability. . . • . . . L . • . . . 14 11. Hold Harmless and 14 12. Notice . - - - * , . . 15 13. successors and Assigns . . . 16 14. Seve,rabilitY 'E.xhibits Exhibit A (Project Description) Exhibit B (Map) Exhibit C (Methodology for calculating Purchase Price) JOINT PARTICIPATION AGREEMENT FOR DEVELOPMENT AND UTILIZATION OF RECLAIMED WATER BETWEEN THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA, COASTAL MUNICIPAL WATER DISTRICT, MUNICIPAL WATER. DISTRICT OF ORANGE COUNTY, THE CITY OF SANTA ANA. AND ORANGE COUNTY WATER DISTRICT THIS AGREEMENT is made and entered into as of June 1, 1988, by and Between THE METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA (hereinafter ,,MWD "), COASTAL MUNICIPAL WATER DISTRICT (hereinafter °'CMWD ") , MUNICIPAL WATER. "DISTRICT OF ORANGE COUNTY (hereinafter ""MWDOC "), THE CITY OF SANTA ANA (,hereinafter "SA "), and ORANGE COUNTY WATER 'DISTRICT (hereinafter °'OCWD ") . REC F "-AL S A. MWD was incorporated under the Metropolitan Water District Act ( "MWD Act ") for the purpose of developing, storing and distributing water for domestic and municipal purposes B. The MWD Act empowers MWD to acquire water and water rights within or without the 'State, to develop, store, and transport water; to provide, sell, and deliver water at wholesale for municipal and domestic uses and purposes; to set the rates for water; and to acquire, construct, operate, and rmAi.ntain any and all works, facilities, improvements, and property necessary or convenient to the exercise of the powers granted by the MWD Act; C. CMWD, MWDOC, and SA, as member public agencies of MWD, are the sole purveyors within their service areas of water developed, stored, and distributed by MWD; D. Water supply and demand projections for MWD's service area, including 'that encompassed by CMWD, MWDOC, and SA, show that additional sources of supplemental water must be developed to meet future needs; E. OCWD was created under a Special Act of the California Legislature in 1933 ("OCWD Act") for the purpose of protecting and managing the orange County groundwater basin. The OCWD Act specifically empowers OCWD to manage the groundwater basin; to provide for conservation of the basin, including both quantity and quality of water; and to provide protection both of the water rights of Orange County and of the natural flow.of the Santa Ana River; F. The boundaries of OCWD include portions of the service boundaries of CMWD. MWDOC, and SA; G. OCWD purchases imported water from MWD through mwDoc for spreading and replenishment purposes; and, further, receives wastewater from the county Sanitation Districts of Orange County (hereinafter IICSDOCII) for further renovation, reclamation, and groundwater injection; H. OCWD is authorized under Section 2.6 of the OCWD Act to sell or otherwise put to beneficial use any water or reclaimed wastewater recovered from the operation of OCWD's wastewater reclamation facility; I. MWD has determined to take all reasonable and necessary steps to maintain MWD's water supplies at levels which will meet the needs of the people in the MWD service areas, which steps include detailed analyses of the conjunctive use of groundwater basins, water reclamation, and a variety of water conservation techniques: J. MWD, CMWD, MWDOC, SA, and OCWD have determined that it is mutually beneficial for cost-effective local water projects originating in the service areas of CMWD, MWDOC. and SA to be developed as a supplement to MWD's imported 'water supplies in order to meet future water needs; K. Local project yield can be cost-effectively developed within the CMWD, MWDOC, and SA service areas; L. A significant amount of treated wastewater generated within the OCWD service area is currently lost to the ocean, which water when provided tertiary treatment can be used for special subpotable purposes: M. OCWD is currently planning and desires to construct a distribution system and modify its existing water treatment facilities to be collectively known as the "Green Acres Reclamation Project" (hereinafter the "Project") for 'the distribution to local retail water purveyors or consumers within its boundaries of reclaimed wastewater for landscaping irrigation and industrial uses, which Project has been determined by OCWD to be cost-effective for development within its boundaries, and which will produce additional yield of available subpotable water to MWD for special purposes and uses, thereby reducing the need for additional water that otherwise must be delivered from MWD's aqueduct water supply system: 111919 N. MWD desires to participate jointly wit's OCWD through its member agencies in the development of new water supply projects, including the Project as designed and submitted by OCWD through CMWD, MWDOC, and SA as the administrating agents; C. MWD desires to assist in increasing production and distribution of Reclaimed Water that would not otherwise occur through the Project, by agreeing with OCWD to buy, at a purchase price established herein which may be adjusted from time to time, the Actual Yield of the Project, hereinafter described, and by selling said Actual Yield back to OCWD through MKDOC. CMWD, and SA at rates to be set by MWD, MWDOC, CMWD, and SA, respectively, on a periodic basis; P. OCWD believes the contribution of MWD toward the costs of the Project, in the form of the purchase of the Actual Yield by MWD, will make the operation of the Project cost-effective for OCWD, and thus desires to commit to repurchase said Actual Yield from MWD through MWDOC, CMWD, and SA at rates to be set by MWD, MWDOC, CMWD, and SA, respectively, from time to time: Q. The Project will produce Actual Yield to MWD which will correspondingly reduce demand of OCWD for water supply from MWD through CMWD, MWDOC, and SA: R. MWDOC, CMWD, and SA desire to participate in and affirmatively support the Project by purchasing the Actual Yield of the Project sold 'within their respective, service areas during the term of the Agreement from MWD and reselling said Actual Yield to OCWD for resale by OCWD to local retail water purveyors or End Users; and S. The Project, when fully, developed, is estimated as being capable of generating up to 7000 acre-feet per year of Reclaimed Water. NOW THEREFORE, in consideration of the promises and covenants hereinafter set forth, the parties do agree as follows: Section 1: Definitions. The following words and terms, unless otherwise expressly defined in their context, shall be defined to mean: 1.1: "Project" shall mean the "Green Acres Reclamation Project" being designed and developed by OCWD, using a portion of the 50 MGD treated effluent from CSDOC'S Treatment Plant No. 1, to be filtered, treated, and pumped through a separate Reclaimed Water distribution system to the End Users. The Project consists of approximately 25 miles of pipeline, a pumping station, tertiary filters, and chlorination facilities, altogether capable of meeting the estimated demand for 7000 acre-feet of Reclaimed Water per year, and more particularly defined in Exhibits "All and JIB." 1.2: "Reclaimed Water" shall mean subpotable water reclaimed from sewage which is not usable for human consumption, but is usable for limited special purposes such as landscape irrigation and industrial processes. am 1.3: "Reclaimed Water Rate" shall mean those amounts which are charged by MWD, CMWD, MWDOC, and SA, respectively, pursuant to discretionary rate-setting authority of their Boards of Directors and City Council from time to time for the class of water produced by this Project or similar projects. 1.4: "Actual Yield" shall mean the actual amount of Reclaimed Water which is delivered to the End User through the Project in any given year, and available for sale by OCWD to MWD and resale by MWD to CMWD, MWDOC, and SA as member agencies. "Actual Yield" shall exclude any Reclaimed Water MWD reasonably determines will not reduce CMWD, MWDOC, and SA's demand for supply of potable water from MWD. 1.5: "End User" shall mean each of the ultimate users of Reclaimed Water furnished by this Project. Section Project Description. All of the principal elements of the Project are more particularly described in the engineering summary and map, attached hereto as Exhibits "Ali' and 11B,11 and incorporated herein by this reference. Section 3: 'Warranties. 3.1: OCWD warrants that there will be, no later than the commencement of deliveries of Reclaimed Water from the Project, a firm source of water adequate to operate the Project by virtue of an agreement between OCWD and CSDOC. CSDOC will provide treated secondary effluent to OCWD for further treatment and distribution through the Project. OCWD further I M. warrants that the quantities of secondary treated effluent generated and available from CSDOC will exceed the maximum demands of the Project. 3.2: OCWD warrants that, no later than the commencement of deliveries of Reclaimed Water from the Project, sufficient Reclaimed Water service applications will be completed between OCWD and local retail water purveyors or End Users of the Reclaimed Water generated by the Project to ensure the delivery of the Actual Yield-. 3.3: OCWD warrants that, no later than the commencement of deliveries of Reclaimed Water from the Project, it will have obtained a permit from the California Regional Water Quality Control Board to deliver water from the Project at quality levels which meet the applicable standards set forth in Title 1 22 of the California Administrative Code, that the Actual Yield will meet those standards, and that OCWD has, a right to sell such Actual Yield as is produced from the Project. 3.4: OCWD warrants that neither it nor any contractor or consultant performing work on this Project shall discriminate against employees or against any applicant for employment because of ethnic group identification, religion, age, sex, color, national origin, or physical or mental disability. Section 4: Construction Responsibilities. OCWD shall be solely responsible for all design, environmental proceedings, right—of-way acquisitions, permits, and construction of the Project and all modifications thereof. ocWD shall be responsible for all capital costs. Section 5: Ownership of Facilities. OCWD shall be the sole and exclusive owner of all Project facilities, except for metering devices which shall be owned by the local retail water purveyors, and Project facilities that may be installed within the boundaries of End Users' properties. MWD, Cam, MWDOC, and SA shall have no ownership right, title, security interest or other interest in any Project facilities, nor any rights, duties or responsibilities for construction, operation, and maintenance thereof. The sole right and obligation of MWD shall be in the form of an entitlement to purchase the Actual Yield generated by the Project, and to sell the Actual Yield as set forth in Sections 7 and 8 hereof. Section 6: Operating Responsibilities. 6.1: OCWD shall be solely responsible for the operation and maintenance of all facilities of the Project, including obtaining wastewater effluent from the CSDOC Plant No. 1 as a supply for this Project, providing tertiary wastewater treatment, and for distribution and delivery of Reclaimed Water to the site of each End User. OCWD shall provide metering devices, to be owned, operated, and maintained by local retail water. purveyors, for the purpose of measuring the quantity of Actual Yield delivered to each End User; provided, however, that OCWD shall be responsible for and shall certify the accuracy of measurements from the metering devices. 6.2: OCWD agrees to properly and regularly operate, maintain, replace as necessary, and inspect the facilities comprising the Project in accordance with all applicable State and Federal laws, rules, regulations and guidelines for the term of this Agreement; provided, however, that OCWD may contract with local retail water purveyors for the maintenance, repair, replacement and inspection of those portions of the Project facilities that are within the service areas of such local retail water purveyors. 6.3:, OCWD shall, at all times during the term of this Agreement, use its best efforts to operate the Project facilities, upon completion of construction, in accordance with the highest professional standards and generally accepted maintenance and operation principles, and in such manner as to provide service to existing and (to the extent that Project facility capacity and Actual Yield is available) to future End Users on a fair and equitable basis. 6.4: OCWD shall provide sufficient qualified personnel to properly operate and maintain the Project facilities. such personnel shall, no later than the commencement of deliveries of Reclaimed Water from the Project, meet applicable certification requirements of the State Water Resources Control Board, and other pertinent regulatory agencies as required. 6.5: OCWD shall issue and enforce appropriate rules and regulations providing that all Reclaimed Water produced and delivered by the Project is to be used in compliance with all applicable Federal, State and local statutes, ordinances, regulations, and other requirements, and OCWD shall further insure that connections to the Reclaimed Water system are properly designed and constructed, 6.6: OCWD shall make available for inspection to MWD, c,mWD, MWDOC, and SA, upon reasonable advance notice, all records, books and other documents relating to the operation of the Project. Section 7: Purchase of Actual Yield,. 7.1: MWD shall purchase all the Actual Yield from OCWD, provided that unless otherwise agreed in writing, MWD shall not be obligated to purchase in excess of 7000 acre-feet in any one MWD fiscal year. The estimated Reclaimed Water produced by the Project during the first twenty-five (25) year period from the effective date of this Agreement is 175,000 acre-feet. No minimum amount of Actual Yield is guaranteed. 7.2: MWDIS purchase price shall be the sum of MWD's Reclaimed Water Rate plus an annual adjusted energy cost of delivering "State project water," calculated more specifically and adjusted in the manner set forth in 'Exhibit ,c,,, which is attached hereto and incorporated herein by this reference. 7.3: MWD shall sell all of the Actual Yield to CMWD, MWDOC, and SA in accordance with its Reclaimed Water Rate and IFM the other terms and conditions set fort cMWD, MWDOC, and SA shall resell all of OCWD in accordance with their Reclaimed other terms and conditions set forth in 7.4: Solely for purposes of is between the parties, OCWD shall dete,rmi each month the quantity of Reclaimed Water delivered to each End user during the preceding month by causing the meters to be read. OCWD shall invoice MWD monthly for any Actual Yield produced during the previous month. The invoice shall identify the number of acre-feet of Actual Yield delivered within the boundaries of each of CMWD, MWDOC, and SA, and the billings and credits to be issued by each party shall be based upon such identification. MWD shall pay OCWD for such Actual Yield within forty-five (45) days of receipt of such invoice through MWDOC, CMWD, and SA by means of a credit included on the next billings issued to MWDOC, CMWD, and SA. If payment is not made by MWD to MWDOC, CMWD, and SA within said forty-five (45) days, it shall thereafter draw interest at a rate equivalent to the average interest MWD earns on its own invested funds during the time period in which payment is delayed beyond forty-five (45) days. Upon issuance of the credit, the Actual Yield shall, solely for purposes of billing and accounting, be deemed sold to MWD. On the same MWD billing on which the credit is issued, MWD shall bill MWDOC, CMWD, and SA for the Actual Yield. Upon such billing the Actual Yield shall, solely for purposes of -11- billing and accounting, be deemed sold to MWDOC, CMWD, and SA. mwDoc, CMWD, and SA shall include the full amount of the credit on their next billings to OCWD. on the same billing on which the credit is issued, MWDOC, CMWD, and SA shall bill OCWD for the Actual Yield., MWDOC, CMWD, and SA shall transmit to OCWD their respective invoices of billings and credits for the Actual Yield within forty-five (45) days of their receipt of the invoice from MWD. Upon such billing to OCWD, the Actual Yield shall be deemed sold to OCWD. Sale of water to MWD, CMWD, MWDOC. and SA shall not affect OCWD's obligations under Section 11 of this Agreement. Section 8: Payment for. Water.. 8.1: Subject to Section 8.2 hereof, CMWD, MWDOC, and SA shall purchase from MWD all of the Reclaimed Water sold to MWD which is delivered to End Users within their respective service areas pursuant to Section 7 and shall pay to MWD the MWD Reclaimed Water Rate for said purchase. MWDOC, CMWD, and SA shall be billed by MWD in accordance with the rules and regulations established from time to time by MWD as reflected in MWD's Administrative Code. The purchase price to be paid by MWDOC, CMWD, and SA for such water shall be the Reclaimed Water Rate established by the MWD Board of Directors from time to time, which shall be the customary or usual, rate for the assigned class of service. 8.2: OCWD shall purchase from 'MWDOC, CMWD, and SA all of the Reclaimed Water sold to MWD which is delivered to End -12- Users within their respective service areas under Section 7 and purchased by MWDOC, CMWD, and SA under Section 8.1 hereinabove. The rate paid for such water by OCWD shall be the Reclaimed Water Rates established, respectively, by the MWDOC and CMWD Boards of Directors and SA City Council from time to time, which shall be a nondiscriminatory rate for the Reclaimed Water class of service. OCWD shall be billed by MWDOC. CMWD,, and SA in accordance, with their general rules and regulations for billing as established by MWDOC, CMWD, and SA, respectively, from time to time. 8.3: Nothing contained herein shall be deemed to modify MWD obligations, if any, established by law or contract to supply water to MWDOC, CMWD, and SA for domestic and municipal use within MWD, nor MWDOC's, CMWD's, and RA's obligations, if any, to supply water to OCWD. Section 9: Project Water Rates. 9.1: The Board of Directors of MWD shall, in its sole discretion, set the Reclaimed Water Rate to be charged for the sale of the Reclaimed Water generated by this Project and similar projects. This rate may be changed from time to time by said Board. 9.2: The Boards of Directors of MWDOC and CMWD, and the City Council of SA shall set Reclaimed Water Rates to be charged for the sale of the Reclaimed Water purchased from MWD pursuant to this Agreement. These rates may be changed from time to time by said Boards and City Council. 9.3: The rates set by OCWD for Reclaimed Water service to local retail water purveyors and End Users shall be set in its sole discretion. Section 10: Term and Amendments. 10.1: The term of this Agreement shall be for twenty-five (25) years. 10.2: This Agreement may only be amended by the mutual written agreement of the parties. Section 11: Hold Harmless and Liability. OCWD agrees to hold MWD, CMWD, MWDOC, and SA harmless from any and all liability including, but not limited to, liability due to water quality, which may arise out of the construction, operation or ownership of the Project, and will save and defend MWD, CMWD, MWDOC, and SA and their officers, agents, and employees free from any claims for injury, including death or damage to property, or injury (including death or damage) due to water quality, arising out of the construction, operation or ownership of the Project. Such indemnity shall include all loss related to any claim made, whether or not a court action is filed, and shall include attorney fees, administrative and overhead costs, engineering and consulting fees, and all other costs related to or arising out of such claim of liability. Section 12,: Notice. Any notice, payment or instrument required or permitted to be given hereunder shall be deemed received upon -14- 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 MWD: The Metropolitan Water District of Southern California 1111 Sunset Boulevard, P.O. Box 54153 Los Angeles, California 90054 Attn: General Manager If to MWDOC: Municipal Water District of Orange County 1950 East 17th Street, Suite 150 Santa Ana, California 92705 If to CMWD: Coastal Municipal Water District No. 3 Monarch Bay, Plaza, Suite 209 Laguna Niguel, California 92677 If to SA: The City of Santa Ana P. 0. Box 1988 20 Civic Center Plaza Santa Ana, California 92701 If to OCWD: Orange County Water District 10500 Ellis Avenue P.O. Box 8500 Fountain Valley, CA 92728-8300 Attn: General Manager Any party may change such address by notice given to each of the other parties as provided in this Section. Section 13: Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon MWD, MWDOC, CMWD, SA, and OCWD, and their respective successors and assigns. -15- Section 14: Severability. The 'partial or total invalidity of one or more sections of this Agreement shall not affect the validity of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date first hereinabove written. APPROVED AS TO FORM: By General Counsel Rutan & Tucker G44�1 J D e D.' Kuperberg neral Counsel, OCWD Behrens, Recht, Finley, Hanley, and Holford X`egal Co u *l - C! ORANGE COUNTY WATER DISTRICT By P r e s i d4Trt, By C i-e t ief MUNICIPAL WATER DISTRICT OF' ORANGE COUNTY -16- ME THE COASTAL MUNICIPAL WATER DISTRICi��' m seB�y l RME ATTEST: 2�gty Clem� RDAGREE:114 3/01/88 Gener,41 Manager -17- City Manager EXHIBIT 'A' ENGINEERING SUMMARY GREEN ACRES RECLAMATION PROJECT PROJECT DESCRIPTION • overview The Green Acres Project is a new municipal wastewater reclamation facility that will provide reclaimed water for irrigation of parks, golf courses, greenbelts and school grounds. The Project consists of a new influent pump station; a treatment complex including chemical coagulation facilities, filters, and chlorination; a new pumping station to deliver the treated filtered water; and a new distribution system that will connect to the various users of the reclaimed water throilghout the service area. The Project is generally defined in a report entitled Orange County Water District Green Acres Proiect Wastewater Reclamation and Distribution Facilities - 10 Percent Design Report, April 1984. M Treatment Facilities The Green Acres Project consists of construction of an influent pump station to deliver secondary treated wastewater produced by the Orange County Sanitation Districts' Treatment Plant No. 1 to the Orange County Water District (OCWD), located at its Water Factory 21 (WF21) facility in Fountain Valley. There the secondary effluent will receive further chemical treatment by the addition of chemicals for flocculation prior to gravity, filtration. The filtered secondary effluent will then receive chlorination before being pumped from the WF21 site to the various user locations. A 3.4 million gallon reservoir and treated water pumping station will also be constructed at WF21 to provide the most efficient and reliable delivery' of seasonally variable flow. The initial design plant capacity is 7.5 mgd or 8,400 acre- feet/year. • Distribution System The capacity of the distribution system, identified by the heavy black line in Exhibit "B", is 15 mgd in order to meet the nightly peak pumping schedule. It consists of approximately 24.6 miles of 14 to 42 inch diameter pipelines. & user Facilities The expected project demand is approximately 7,000 acre- feet/year., At present, over seventy individual users have been identified. Seven of these major users have their own on-site storage and require minimum pressure. The remaining users are connected directly to the purveyor's transmission line, and have no on-site storage. As part of the project, the service connections for the users will be constructed. IWIM I $Y= a:il ¢ d:'. i I" a isMIW'MCy}wl �"aAif�i�± I�IFI['1 +! 1 fC�� r1,a..__Cr" a q�r''_el rd r _+• 1 - '11 t¢ 1j I ," _ 1 r � � ♦ y� !, rr Tt glut" r d^ai�r'. `�f4,..•f Y L3 ' wq. 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'+ "xn t 3° e tI m 4 [ F * w' �1l `�' I a... 61 F r~ ,, . & .. • _<= 1's.'' 7EMl',A,'L USERS AND PROPOSED F lFiAhISMCSSICiN, PEiJhNE,S -'+ wNnn Nx. amewav [wr wutaw Xbvw wx,�wrwsr 2. ru'r. � iw.tx L*i>tr.eiw rn.a., NcNAa' [... w[Le nkn.w.s ' @ -c. m '^ 2w�r.Mr TR � " wA°NnW L'Llri , � xr+S 4.[ I rOw t r@ Sl A@wicww4 (}� m W APR'a"wn IRfRYVk'war IMP awA.rawYl pg ��aNYI [3Y Mr kNna1r64 � CYCCwMr U.vN +�• owA.wcw L'u"nfS r.,lrw 4rfffiYrwcx , rSRVSx C G Cpw AMww' 'uw wnwao-L. �� �y,;l�rn.NfkY95L nLi @. ! x L.. !w rcl @MRCM I {UL air Ni@. YWW. I..I rwvr 'rwxew rnowr. � .Nn xAw w '�' � wNr++KS rLVwre rw�ieAxaSn�y@r r correw. t+.L rw�' + n {.k} u : rrv'cuvcn rxciwtk wv. A'prnw, 1w+wFAw�rc�CYMRnM MAkC xiv ED wlYrttlU Srl ] LvrTA FYn N. k.k. ,- RIYTr F V canwln! �!'�"j cr'Sr ¢W � yS�rrMC1T i wurcw rK•n C,f. ¢l.M wren cr rL+nwl. (��� '"'� SS w," Swxnn.. rew.®I. rY Wt 1MYww°� Ill L i ] NJt• @L —ft ­r. @. 11 [ lwt w'. nsYtC[ `�:J vF li.uct�r A!@wwTw fYd•Ix f uC r 8 /I`LWAiNV -1. ,rl 11 My r F' w@YLikn' NCww@4 Conti /��(�ij i RMw 'dNtYx Fr}TJ " w YAJCr IrIT'w A1A III �^ J TtY w 'wC4w05 IGM &w.l TNiK LWa1 'v' t L 'a (ED ��r1.tR tARRn ! AI11'.ww lRy Acc. W _ w rCm'wi'✓ ft. ww® tcrc'n,, 1 s�� Ct*Tv 1� C..� rtf me!w�vft � rteeea. � 'C�va'.VVrfrtaII .wiN LCwoo.Ll]tH.ani. !W �'`::Y �r[6YSe. ns Twc LW r.l EXHIBIT "C" Methodology for Calculating Purchase Price The purpose of this exhibit is to describe the methodology which shall be used to calculate Metropolitan's purchase price. For each fiscal year commencing July 1, Metropolitan's purchase price for the Actual Yield shall be the sum of Metropolitan's prevailing Reclaimed Water Rate and the prior calendar year's avoided energy cost of pumping water from the Delta to the State Water Project, (SWP) terminal reservoirs in Southern California. The purchase price shall be calculated for each fiscal year according to the following formula: A= B x C+ D Where, A = The yield purchase rate for the fiscal year; B = Net energy requirement in kilowatt-hours (kWh) per acre-foot to convey water from the Delta to the SWP terminal reservoirs in Southern California (3,000 kWh per acre-foot): C = Preceding calendar year's average sale price for surplus energy from the SWP*, in dollars per kWh; and D = Metropolitan's Prevailing Reclaimed Water "FrCm- In no case shall Metropolitan's avoided cost component of the purchase price (B x C) be less than $75 per acre-foot. Based on average sale of surplus SWP energy at 19.3 mills per kWh during calendar year 1986, the avoided cost of the state project pumping component in the above formula is $58 per acre-foot. Therefore, effective through the period ending June 30, 1988, the avoided cost'of the State project pumping component in the above formula shall be the "floor" amount of $75 per acre-foot. The calendar year 1987 sales value for surplus energy* shall be used as the avoided cost for fiscal year 1988-89, and so forth thereafter. If no SWP surplus energy is sold, the average melded State project power cost for pumping entitlement water shall be FUT-r-1