TO: Honorable Mayor and Members of the City Council
ATTENTION: Ryan Smoot, City Manager
FROM: Len Gorecki, Assistant City Manager/Public Works Director
SUBJECT: Consideration and possible action to authorize the City Manager to execute Agreement File No. 320.8.11, in a form approved by the City Attorney, with Bellflower-Somerset Mutual Water Company, for the lease of water pumping allocation rights for Fiscal Year 2023-2024.
DATE: May 27, 2024
EXECUTIVE SUMMARY
Agreement File No. (AFN) 320.8.11 allows Bellflower-Somerset Mutual Water Company (BSMWC) to lease the City’s 680 acre-feet (AF) of water rights for Fiscal Year 2023-24.
AFN 320.8.11 details the water lease provisions, and following approval, must be transmitted to the Watermaster for acknowledgement.
RECOMMENDATION TO CITY COUNCIL
1) Authorize the City Manager to execute Agreement File No. 320.8.11, in a form approved by the City Attorney; or
2) Alternatively, discuss and take other action related to this item.
FISCAL IMPACT
Under AFN 320.8.11, the lease of 680 AF of water rights for the 2023-24 Fiscal Year at the rate of $125.00 per acre foot will generate $85,000 total revenue.
DISCUSSION
Following the sale of the City’s Municipal Water System in November 2022 (that included 700 acre feet of water rights), the City still owns 680 AF of water rights.
The City may sell or lease these water rights as California law treats water rights as if it were real property. Previously, the City leased a portion of the available allocation to Bellflower-Somerset Mutual Water Company on an annual basis. This year the Public Works Department sent out a request for proposals for the lease of these water rights for Fiscal Year 2023-24 to the surrounding water agencies. Only one proposal was submitted by the deadline on May 22, 2024, and was submitted by Bellflower-Somerset Mutual Water Company.
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Staff Report - AFN 320.8.11
Bellflower-Somerset Mutual Water Company
May 28, 2024
DISCUSSION – Continued
The proposed lease includes 680 AF at the rate of $125.00 per AF for Fiscal Year 2023-24. The proposed lease would generate $85,000 for the City. AFN 320.8.11 details arrangement, and following approval, must be transmitted to the Watermaster for acknowledgement. Ultimately, the agreement to lease the water rights to BSMWC will continue to support its operations in the City while generating revenue for the City.
ATTACHMENT
Agreement File No. 320.8.11 .......................................................................................... 3 2 AGREEMENT FILE NO. 320.8.11
LEASE AGREEMENT
BETWEEN
THE CITY OF BELLFLOWER AND
BELLFLOWER-SOMERSET MUTUAL WATER COMPANY
FOR LEASE OF WATER RIGHTS
THIS LEASE is entered into this 28th day of May 2024, by and between the CITY OF BELLFLOWER, a municipal corporation and general law city (“CITY”) and BELLFLOWER-SOMERSET MUTUAL WATER COMPANY, a California corporation (“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
(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 was 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 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”).
2. LEASE; DESCRIPTION OF PROPERTY. CITY leases to LESSEE to use, on the terms and conditions of this Lease, 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 2023-24 identified in attached Exhibit “A” (“Property”), which is incorporated by reference.
3. RENT. LESSEE agrees to pay to CITY the sum of $85,000 for 680 acre-feet with flex at a rate of $125 per acre-foot for Fiscal Year 2023-24. CITY will invoice LESSEE within five days after the Effective Date of this Agreement. Payment for Fiscal Year 2023-2024 must be made within 14 days after CITY transmits the invoice to LESSEE.
3 City of Bellflower
Agreement File No. 320.8.11
Bellflower-Somerset Mutual Water Company
4. TERM. The term of this Lease commences on May 28, 2024, and remains in effect until June 30, 2024.
5. 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.
6. CITY’S LIMITED WARRANTY. CITY warrants that it is under no disability, restriction or prohibition, whether contractual or otherwise, with respect to its right to execute this agreement and perform its terms and conditions and has the legal right, power and authority to grant all of the rights granted herein. 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 during the term of this Lease.
7. TERMINATION. This Lease may be terminated as follows:
A. At the expiration of the term;
B. Upon mutual written agreement between the parties;
C. Upon the Property being condemned; or
D. 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.
8. 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.
9. 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.
10. 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.
11. 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.
4 City of Bellflower
Agreement File No. 320.8.11
Bellflower-Somerset Mutual Water Company
12. 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.
13. 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.
14. 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.
15. 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 actio n, will constitute a breach of this Lease by LESSEE, and in such event this Lease will automatically cease and terminate.
5 City of Bellflower
Agreement File No. 320.8.11
Bellflower-Somerset Mutual Water Company
16. NOTICES. All communications to either party by the other party will be deemed made when received by such party at its respective name and address as follows:
If to LESSEE:
If to CITY:
Attention: Steve Lenton Attention: Len Gorecki
Bellflower-Somerset Mutual Water
Company
City of Bellflower
10016 Flower Street 16600 Civic Center Drive
Bellflower, CA 90706 Bellflower, CA 90706
562-866-9980 (562) 804-1424
slenton@bsmwc [email protected]
Any such written communications by mail will be conclusively deemed to have been received by the addressee upon deposit thereof in the United States Mail, postage prepaid and properly addressed as noted above. In all other instances, notices will be deemed given at the time of actual delivery. Changes may be made in the names or addresses of persons to whom notices are to be given by giving notice in the manner prescribed in this paragraph.
17. ELECTRONIC SIGNATURES. This Agreement may be executed by the Parties on any number of separate counterparts, and all such counterparts so executed constitute one agreement binding on all the Parties notwithstanding that all the Parties are not signatories to the same counterpar t. In accordance with Government Code §16.5, the Parties agree that this Agreement, agreements ancillary to this Agreement, and related documents to be entered into in connection with this Agreement will be considered signed when the signature of a party i s delivered by electronic transmission. Such electronic signature will be treated in all respects as having the same effect as an original signature.
18. 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.
19. 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.
20. 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. There is one (1) attachment to this Lease. 6 City of Bellflower
Agreement File No. 320.8.11
Bellflower-Somerset Mutual Water Company
21. 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.
22. 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 amendment. CITY’s city manager, or designee, may execute any such amendment on behalf of CITY.
23. 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.
IN WITNESS WHEREOF the parties hereto have executed this contract the day and year first hereinabove written.
CITY OF BELLFLOWER BELLFLOWER-SOMERSET
MUTUAL WATER COMPANY
_________________________ ________________________
Ryan Smoot, City Manager Steve Lenton,
General Manager
ATTEST:
_________________________
Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:
_________________________
Karl H. Berger, City Attorney
ATTACHMENT:
Exhibit A – BSMWC Water Rights Lease Proposal
7 8
Water Lease Proposal
To: City of Bellflower
For: Lease of Water Pumping Rights
From: Bellflower Somerset Mutual Water Co.
(Agency Name as given on the Central Basin Watermaster Records) Quantity of Acre Feet Price Per Acre-Foot Total Amount
680 $125.00 $85,000
Signed: J; Date: 5 22 2024
Name (print): Steve Lenton
Agency Name: Bellflower Somerset Mutual Water Co.
Address: 10016 Flower St, Bellflower Ca. 90706
Phone Number: 5 624365—9980
Full Name and Title of the designee to appear in the lease document:
Name; Steve Lenton
TItIe' General Manager
Proposals are due no later than Wednesday, May 22, 2024, by 12:00 pm, and may be submitted via email to Sarah Ho, Public Works Manager, [email protected]. Any questions can be directed to her via email or by phone at (562) 804-1424 ext. 2233.