TO: Honorable Mayor and Members of the City Council
ATTENTION: Jeffrey L. Stewart, City Manager
FROM: Len Gorecki, Assistant City Manager/Public W orks Director
SUBJECT: Consideration and possible action to authorize the City Manager to execute 1) Amendment No. 6 to Agreement File No. 320.8; and 2) Agreement File No. 320.8.10, in forms approved by the City Attorney, with Bellflower-Somerset Mutual Water Company, for the sale and lease of water pumping allocation rights in Fiscal Year 2022-2023.
DATE: June 27, 2022
EXECUTIVE SUMMARY
Agreement File No. (AFN) 320.8 allows Belflower-Somerset Mutual Water Company (BSMWC) to purchase water at established amounts and rates through the City’s High Capacity Well and also lease the City’s surplus water rights. Amendment No. 6 (to AFN 320.8) renews the Agreement through June 30, 2023.
Agreement File No. 320.8.10 separately details the water lease provisions for Fiscal Year 2022-2023, for transmittal to the Watermaster for acknowledgment.
RECOMMENDATION TO CITY COUNCIL
1) Authorize the City Manager to execute Amendment No. 6 to Agreement File No. 320.8 and Agreement File No. 320.8.10, in forms approved by the City Manager; or
2) Alternatively, discuss and take other action related to this item.
FISCAL IMPACT
In FY 2022-2023, Amendment No. 6 will generate a maximum of $497,198 through the sale of 1,300 acre feet of water from the High Capacity Well at the rate of $382.46 per acre foot. It also establishes a rate of $248.10 per acre foot for each acre foot of water used by BSMWC in excess of 1,300 acre feet. Furthermore, under AFN 320.8.10, the lease of 680 acre feet of water rights at the rate of $135.61 per acre foot will generate $92,214.80 in FY 2022-2023, of which $53,430.34 will accrue to the City (leasing 394 acre feet), and $38,784.46 will accrue to the Municipal Water System (leasing the remaining 286 acre feet).
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Staff Report - Amendment No. 6 to AFN 320.8 and AFN 320.8.10 Bellflower-Somerset Mutual Water Company
June 27, 2022
DISCUSSION
Under AFN 320.8, BSMWC annually purchases 1,300 acre-feet of water through the High Capacity Well and leases the City’s surplus water rights. AFN 320.8 expired on June 30, 2018 and has been renewed annually by amendment through FY 2021-2022.
The latest amendment (Amendment No. 6) extends the term for one additional year, allowing BSMWC to purchase the first 1,300 acre-feet of water at the rate of $382.46 per acre foot and to also purchase additional water in excess of 1,300 acre feet at the rate of $248.10 per acre foot through June 30, 2023 or until the sale of the MWS is complete. Amendment No. 6 maintains the same rates from the previous year (Amendment No. 5), which continues to reflect the current market rate. AFN 320.8.10 details the provisions of the lease of 680 AF with flex in FY 2022-23; following approval, the lease must be transmitted to the Watermaster for acknowledgment. Both Amendment No. 6 and AFN 320.8.10 would support BSMW C’s operations and continue generating revenue for the City.
ATTACHMENTS
Amendment No. 6 to Agreement File No. 320.8 ..................................................................... 3 Agreement File No. 320.8.10 ................................................................................................... 76 -2-
AMENDMENT NO. 6 TO
AGREEMENT FILE NO. 320.8
WATER SALES AGREEMENT
BETWEEN THE CITY OF BELLFLOWER
AND BELLFLOWER-SOMERSET MUTUAL WATER COMPANY
THIS AMENDMENT NO. 6 ("Amendment"), is made and entered into this 27th day of June 2022, by and between the CITY OF BELLFLOWER, a general law city and municipal corporation (“CITY”), and BELLFLOWER-SOMERSET MUTUAL WATER COMPANY, a California corporation operated as a mutual water company under California Law (“BSMWC”).
SECTION 1. Pursuant to Agreement File No. 320.8 (“Agreement”), Section 1 (Term; Effective Date) is amended to read as follows:
“This Agreement is effective on August 1, 2013, and continues in effect until midnight on June 30, 2023.”
SECTION 2. Pursuant to the Agreement, Section 2 (Water Purchased), is amended to read as follows:
“(b) If BSMWC, with City’s approval pursuant to City’s sole discretion, as set forth in subparagraph (a), above, takes delivery of more than 1,300 acre-feet during Fiscal Year 2022-2023, then BSMWC shall pay the City an amount equal to $248.10 per acre foot.”
“(e) BSMWC’s purchase of up to 1,300 Acre-feet, or in excess of 1,300 Acre-feet of water between July 1, 2022, and June 30, 2023, is also subject to the following provision: (1) the City may terminate the purchase of water pursuant to Section 17 of this Agreement or upon the sale of the MWS to a third party.”
SECTION 3. Pursuant to the Agreement, the table in Section 3 (Payment for Purchase of Water) is amended to include the following:
“For the Period Price per Acre-Foot
7-1-2022 through 6-30-2023 $382.46”
SECTION 4. Pursuant to the Agreement, the table in Section 5 (Payment for Lease of Water Rights) is amended to include the following:
“For the Period Price per Acre-Foot
7-1-2022 through 6-30-2023 $135.61”
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City of Bellflower
Amendment No. 6 to Agreement File No. 320.8
Bellflower-Somerset Mutual Water Company
SECTION 5. Pursuant to the Agreement, Section 17 (Termination of the Agreement) is replaced with the following:
“Unless stipulated otherwise in this Agreement or in any ensuing Amendments, this Agreement may be terminated under any or all of the following circumstances: (a) by mutual agreement of both parties; (b) if the HCW is abandoned by the City, at its sole discretion; (c) by the City, in its sole discretion as to which provisions of this Agreement are terminated, if the City determines, in its sole discretion to inactivate the HCW due to the financial or practical in feasibility for the HCW to produce water that meets the current quality standards required for potable water, or (d) by the City, in its sole discretion as to which provisions of this Agreement are terminated, if the HCW cannot produce the quantity of water described in Section 3, as determined by the City, in its sole discretion.
In addition, this Agreement terminates at midnight on June 30, 2023, unless extended by mutual written agreement of the Parties.”
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 6 to Agreement File No. 320.8 as of the date first written above.
CITY OF BELLFLOWER BELLFLOWER-SOMERSET MUTUAL
WATER COMPANY
_____________________________ _____________________________ Jeffrey L. Stewart, City Manager Steve Lenton, General Manager
ATTEST:
_____________________________
Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:
_____________________________ _____________________________ Karl H. Berger, City Attorney James D. Ciampa, Legal Counsel
Attachments:
Agreement File No. 320.8 with BSMWC
Amendment No. 1 to Agreement File No. 320.8
Amendment No. 2 to Agreement File No. 320.8
Amendment No. 3 to Agreement File No. 320.8
Amendment No. 4 to Agreement File No. 320.8
Amendment No. 5 to Agreement File No. 320.8
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Certificate Of Completion
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16600 Civic Center Drive
16600 Civic Center Drive
Bellflower, CA 90706
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Status: Original
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Steve Lenton
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City of Bellflower
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ELECTRONIC RECORD AND SIGNATURE DISCLOSURE
From time to time, City of Bellflower (we, us or Company) may be required by law to provide to you certain written notices or disclosures. Described below are the terms and conditions for providing to you such notices and disclosures electronically through the DocuSign system.
Please read the information below carefully and thoroughly, and if you can access this information electronically to your satisfaction and agree to this Electronic Record and Signature Disclosure (ERSD), please confirm your agreement by selecting the check-box next to ‘I agree to use electronic records and signatures’ before clicking ‘CONTINUE’ within the DocuSign system.
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At any time, you may request from us a paper copy of any record provided or made available electronically to you by us. You will have the ability to download and print documents we send to you through the DocuSign system during and immediately after the signing session and, if you elect to create a DocuSign account, you may access the documents for a limited period of time (usually 30 days) after such documents are first sent to you. After such time, if you wish for us to send you paper copies of any such documents from our office to you, you will be charged a $0.00 per-page fee. You may request delivery of such paper copies from us by following the procedure described below.
Withdrawing your consent
If you decide to receive notices and disclosures from us electronically, you may at any time change your mind and tell us that thereafter you want to receive required notices and disclosures only in paper format. How you must inform us of your decision to receive future notices and disclosure in paper format and withdraw your consent to receive notices and disclosures electronically is described below.
Consequences of changing your mind
If you elect to receive required notices and disclosures only in paper format, it will slow the speed at which we can complete certain steps in transactions with you and delivering services to you because we will need first to send the required notices or disclosures to you in paper format, and then wait until we receive back from you your acknowledgment of your receipt of such paper notices or disclosures. Further, you will no longer be able to use the DocuSign system to receive required notices and consents electronically from us or to sign electronically documents from us.
All notices and disclosures will be sent to you electronically Electronic Record and Signature Disclosure created on: 6/8/2020 10:47:26 AM Parties agreed to: Steve Lenton, Mayra Ochiqui
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Unless you tell us otherwise in accordance with the procedures described herein, we will provide electronically to you through the DocuSign system all required notices, disclosures, authorizations, acknowledgements, and other documents that are required to be provided or made available to you during the course of our relationship with you. To reduce the chance of you inadvertently not receiving any notice or disclosure, we prefer to provide all of the required notices and disclosures to you by the same method and to the same address that you have given us. Thus, you can receive all the disclosures and notices electronically or in paper format through the paper mail delivery system. If you do not agree with this process, please let us know as described below. Please also see the paragraph immediately above that describes the consequences of your electing not to receive delivery of the notices and disclosures electronically from us.
How to contact City of Bellflower:
You may contact us to let us know of your changes as to how we may contact you electronically, to request paper copies of certain information from us, and to withdraw your prior consent to receive notices and disclosures electronically as follows:
To contact us by email send messages to: [email protected]
To advise City of Bellflower of your new email address
To let us know of a change in your email address where we should send notices and disclosures electronically to you, you must send an email message to us at [email protected] and in the body of such request you must state: your previous email address, your new email address. We do not require any other information from you to change your email address.
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To request delivery from us of paper copies of the notices and disclosures previously provided by us to you electronically, you must send us an email to [email protected] and in the body of such request you must state your email address, full name, mailing address, and telephone number. We will bill you for any fees at that time, if any.
To withdraw your consent with City of Bellflower
To inform us that you no longer wish to receive future notices and disclosures in electronic format you may:
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i. decline to sign a document from within your signing session, and on the subsequent page, select the check-box indicating you wish to withdraw your consent, or you may; ii. send us an email to [email protected] and in the body of such request you must state your email, full name, mailing address, and telephone number. We do not need any other information from you to withdraw consent.. The consequences of your withdrawing consent for online documents will be that transactions may take a longer time to process..
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Until or unless you notify City of Bellflower as described above, you consent to receive exclusively through electronic means all notices, disclosures, authorizations, acknowledgements, and other documents that are required to be provided or made available to you by City of Bellflower during the course of your relationship with City of Bellflower.
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LEASE AGREEMENT 320.8.10
BETWEEN THE CITY OF BELLFLOWER AND
BELLFLOWER-SOMERSET MUTUAL WATER COMPANY
THIS LEASE is made and executed this 27th day of June, 2022 (“Effective Date”), between CITY OF BELLFLOWER, a municipal corporation and general law city (“CITY”), and BELLFLOWER-SOMERSET MUTUAL WATER COMPANY, a California corporation operated as a mutual water company under California law (“LESSEE”).
1. RECITALS. This Lease is made with reference to the following facts and objectives:
A. CITY and LESSEE are parties to the Water Sales Agreement and Agreement for Lease of Water Pumping Allocation Rights (Amendment No. 6 to Agreement File No. 320.8) pursuant to which LESSEE agrees to lease from CITY the right to extract any portion of CITY’S 1,380 acre-feet of water pumping allocation rights not required to meet the actual service and operational demands for the Municipal Water System; B. Both CITY and LESSEE are parties in that certain water adjudication judgment entered in Los Angeles County Superior Court Case No. 786656, entitled Central and West Basins Replenishment District v. Charles E.
Adams, et al.;
C. CITY has been certified by the Central Basin Watermaster to have a pumping allocation equal to or in excess of the amount herein leased to LESSEE;
D. LESSEE has determined its pumping allocation rights are not sufficient to meet its needs;
E. CITY wishes to lease to LESSEE 680 acre-feet with flex of CITY’S allowed pumping allocation rights;
F. LESSEE desires to lease from CITY pumping allocation rights of 680 acre-feet with flex (“Property”).
NOW, THEREFORE, pursuant to Amendment No. 6 to Agreement File No. 320.8, and in consideration of the Property and the mutual covenants contained herein, CITY leases said water rights to LESSEE on the following terms and conditions:
2. LEASE; DESCRIPTION OF PROPERTY. Pursuant to the terms, conditions and limitations in this Lease, CITY leases to LESSEE the right to extract water from the Central Basin to the extent of an agreed pumping allocation of 680 acre-feet with flex for Fiscal Year 2022-2023 and agrees to put the same to beneficial use.
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City of Bellflower
Agreement File No. 320.8.10
Bellflower-Somerset Mutual Water Company
3. RENT. LESSEE agrees to pay to CITY the sum of Ninety-two Thousand Two Hundred Fourteen Dollars and Eighty Cents ($92,214.80) each fiscal year for 680 acre-feet with flex at a rate of $135.61 per acre-foot for Fiscal Year 2022-2023. CITY will invoice LESSEE within five (5) days after the Effective Date of this Agreement. Payment for Fiscal Year 2022-2023 must be made within fourteen (14) days after CITY transmits the invoice to LESSEE.
4. PAYMENT OF ASSESSMENTS. LESSEE must pay all pumping assessments levied on CITY’s water rights to the extent same are leased by LESSEE pursuant to this Lease.
5. TERM. The initial term of this Lease will commence on July 1, 2022 and will remain and continue in effect until June 30, 2023.
6. USE OF PROPERTY. Subject to the limitations listed below, LESSEE must exercise all Property leased hereunder, must pump the same on behalf of the CITY, and must put the same to beneficial use. The Property may not be used for any other purpose.
7. CITY’S LIMITED WARRANTY. CITY warrants that it has 680 acre feet of adjudicated right and it has not pumped and will not pump or permit or lease any other person to pump any part of said 680 acre feet annually during the term of this Lease.
8. TERMINATION. This Lease may be terminated as follows:
A. At the expiration of the term;
B. Upon mutual written agreement between the parties; or C. Should LESSEE materially breach this Lease and fail to cure such breach within thirty (30) days of being notified by CITY regarding such breach to CITY’s reasonable satisfaction.
9. CONDITION OF PROPERTY UPON TERMINATION. Upon termination of this Lease for any reason, LESSEE will vacate the Property.
10. SALE OR TRANSFER BY CITY. Should CITY, at any time during the term of this Lease, sell, lease, transfer, or otherwise convey all or any part of the Property to any transferee other than LESSEE, then such transfer will be under and subject to this Lease and all of LESSEE’s rights hereunder.
11. CONDEMNATION. If all or part of the Property is acquired by eminent domain or purchase in lieu thereof, LESSEE acknowledges that it will have no claim to any compensation awarded for the taking of the Property or any portion thereof or for loss of or damage to LESSEE’s improvements.
12. FORCE MAJEURE. Should performance of this Lease be prevented due to fire, flood, explosion, war, embargo, government action, civil or military authority, the natural elements, or other similar causes beyond the Parties’ control, then it will immediately terminate without obligation of either party to the other. -77-
City of Bellflower
Agreement File No. 320.8.10
Bellflower-Somerset Mutual Water Company
13. ASSIGNMENT AND SUBLETTING. This Lease may not be assigned, transferred, or sublet by LESSEE, court order, or through any other means. Any such purported transfer will be null and void.
14. INDEMNIFICATION.
A. LESSEE indemnifies and holds CITY harmless from and against any claim, action, damages, costs (including, without limitation, attorney’s fees), injuries, or liability, arising out of this Lease, or its performance, except for such loss or damage arising from CITY’s sole negligence or willful misconduct. Should CITY be named in any suit, or should any claim be against it, by suit or otherwise, whether the same be groundless or not, arising out of this Lease, or its performance, pursuant to this Lease, LESSEE will defend CITY (at CITY’s request and with counsel satisfactory to CITY) and will indemnify it for any judgment rendered against it or any sums paid out in settlement or otherwise.
B. For purposes of this section “CITY” includes CITY’s officers, officials, employees, agents, representatives, and volunteers.
C. LESSEE expressly agrees that this hold harmless and indemnification provision is intended to be as broad and inclusive as is permitted by the law of the State of California and that if any portion is held invalid, it is agreed that the balance will, notwithstanding, continue in full legal force and effect.
D. It is expressly understood and agreed that the foregoing provisions will survive termination of this Lease.
15. COMPLIANCE WITH LAW. LESSEE will, at its sole cost and expense, comply with all of the requirements of all federal, state, and local authorities now in force, or which may hereafter be in force, pertaining to the Property and will faithfully observe in the use of the Property all applicable laws. The judgment of any court of competent jurisdiction that LESSEE has violated any such ordinance or statute in the use of the Property will be conclusive of that fact as between CITY and LESSEE.
16. WAIVER OF BREACH. Any express or implied waiver of a breach of any term of this Lease will not constitute a waiver of any further breach of the same or other term of this Lease.
17. INSOLVENCY; RECEIVER. Either the appointment of a receiver to take possession of all or substantially all of the assets of LESSEE, or a general assignment by LESSEE for the benefit of creditors, or any action taken or offered by LESSEE under any insolvency or bankruptcy action, will constitute a breach of this Lease by LESSEE, and in such event this Lease will automatically cease and terminate.
18. NOTICES. Except as otherwise expressly provided by law, all notices or other communications required or permitted by this Lease or by law to be served on or given to either party to this Lease by the other party will be in writing and will be deemed served when personally delivered to the party to whom they are directed, or in lieu of the personal -78-
City of Bellflower
Agreement File No. 320.8.10
Bellflower-Somerset Mutual Water Company
service, upon deposit in the United States Mail, certified or registered mail, return receipt requested, postage prepaid, addressed to:
LESSEE at: Bellflower-Somerset Mutual Water Company
Attention: Steve Lenton, General Manager
10016 East Flower Street
Bellflower, CA 90706
(562) 866-9980
[email protected]
CITY at: City of Bellflower
Attention: Len Gorecki, Assistant City Manager
16600 Civic Center Drive
Bellflower, CA 90706
(562) 804-1424
[email protected]
Either party may change its address for the purpose of this Section by giving written notice of the change to the other party.
19. ACCEPTANCE OF FACSIMILE SIGNATURES. The Parties agree that agreements ancillary to this Lease and related documents to be entered into in connection with this Lease will be considered signed when the signature of a party is delivered by facsimile transmission. Such facsimile signature will be treated in all respects as having the same effect as an original signature.
20. GOVERNING LAW. This Lease has been made in and will be construed in accordance with the laws of the State of California and exclusive venue for any action involving this Lease will be in Los Angeles County.
21. PARTIAL INVALIDITY. Should any provision of this Lease be held by a court of competent jurisdiction to be either invalid or unenforceable, the remaining provisions of this Lease will remain in effect, unimpaired by the holding.
22. INTEGRATION. This instrument and its attachments constitute the sole agreement between CITY and LESSEE respecting the Property, the use of the Property by LESSEE, and the specified term, and correctly sets forth the obligations of CITY and LESSEE. Any Lease or representations respecting the Property or its licensing by CITY to LESSEE not expressly set forth in this instrument are void.
23. CONSTRUCTION. The language of each part of this Lease will be construed simply and according to its fair meaning, and this Lease will never be construed either for or against either party.
24. AUTHORITY/MODIFICATION. The Parties represent and warrant that all necessary action has been taken by the Parties to authorize the undersigned to execute this Lease and to engage in the actions described herein. This Lease may be modified by written -79-
City of Bellflower
Agreement File No. 320.8.10
Bellflower-Somerset Mutual Water Company
amendment. CITY’s City Manager, or designee, may execute any such amendment on behalf of CITY.
25. COUNTERPARTS. This Lease may be executed in any number or counterparts, each of which will be an original, but all of which together will constitute one instrument executed on the same date.
26. TRANSMITTAL TO WATERMASTER. City will transmit a copy of this Lease to the Central Basin Watermaster of the Water Replenishment District of Southern California upon its execution.
IN WITNESS WHEREOF the parties hereto have executed this Lease the day and year first hereinabove written.
CITY OF BELLFLOWER BELLFLOWER-SOMERSET
MUTUAL WATER COMPANY
____________________________ ____________________________ Jeffrey L. Stewart, City Manager Steve Lenton, General Manager
ATTEST:
____________________________
Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:
____________________________
Karl H. Berger, City Attorney
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