Item5_CC-Staff-Report-CCB-Cost-Sharing-2_15 — Grover Beach City Council, February 15, 2022

Agenda Item No. 5

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: February 15, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: Greg Ray, Public Works Director/City Engineer SUBJECT: Central Coast Blue Cost Sharing Agreement and State Revolving Fund Loan Application

RECOMMENDATION
Approve the Central Coast Blue Cost Sharing Agreement and authorize the City Manager to sign on behalf of the City and adopt the Resolution authorizing the City Manager to file an application to the State Water Resources Control Board for a State Revolving Fund Loan for the project.

BACKGROUND:

The Central Coast Blue Recycled Water Project (Project) is a multi-agency effort involving the cities of Arroyo Grande, Grover Beach, and Pismo Beach with support from the Oceano Community Services District and the South San Luis Obispo County Sanitation District to construct a regional recycled water project that will enhance groundwater supply reliability by injecting purified water into the groundwater basin. The Project will reduce vulnerability to drought and seawater intrusion by creating a seawater intrusion barrier and supplementing the naturally occurring groundwater. Phase 1 of the Project proposes to treat wastewater from the City of Pismo Beach to create between 900-1,000 acre-feet of additional water per year. The advanced treatment facility for the Project would be located on Huber Street in Grover Beach and is being designed to allow for future expansion to create additional water supplies if needed.

This innovative multi-agency project was awarded a Helen Putnam Award by Cal Cities in 2021 for regional collaboration. In addition, the project has received five grant awards to date totaling $4.5M and is well-positioned to receive additional grant funding for up to 75% of the project costs.

The project has also received awards for exceptional education and outreach efforts in 2019 at the WateReuse California Annual Conference, and again in 2019 at the 2019 National WateReuse Symposium.

The cities of Grover Beach, Arroyo Grande and Pismo Beach have been working diligently to develop a Cost Sharing Agreement necessary to provide assurance of funding for the remaining design and construction phases of the Project. This work following an initial Council item on March 22, 2021 where the Council reaffirmed the City Manager’s authority to enter into an Operating Agreement for the Project based on an agreement outline developed by staff of the three cities.

However, this agreement outline was subsequently approved by Arroyo Grande with certain conditions including requiring a Community Workforce Agreement for contractors working on the project. This upfront condition was not supported by Grover Beach and Pismo Beach which then led to an extensive effort by the City Managers of the three cities in summer 2021 to bring the cities back together on this important regional effort to provide additional water supply.

Staff Report: Central Coast Blue Costs Sharing Agreement Page 2 February 15, 2022
The result of this effort was a “Project Delivery and Governance Framework” which was brought to the Council on September 27, 2021. Highlights of the framework included an intent to lower Arroyo Grande’s share of Project costs, review and approval of Project costs by each Council, and formation of a Joint Powers Authority to operate the facilities. The Council indicated support for this framework and authorized the City Manager to negotiate a cost-sharing agreement and Joint Powers Agreement governing the City’s participation in CCB consistent with the framework.

Both Arroyo Grande and Pismo Beach took similar action in September/October 2021 which provided necessary direction to staff in the three cities to proceed with development of the Cost Sharing Agreement and related actions. In addition, on November 15, 2021, Pismo Beach took action to obtain the remaining unsubscribed portion of the Project and increase its total share to 39%, with Arroyo Grande’s share at 25% and Grover Beach’s share at 36% pending adoption of the Cost-Sharing Agreement by each respective city.

Overview of Cost Sharing Agreement
Since fall 2021, staff for the three cities have worked to draft a Cost Sharing Agreement based on the revised framework and on January 25, 2022 Arroyo Grande took action to approve the Agreement. This Agreement (shown in Attachment 1) is being presented to the Council for review and approval and will be subsequently considered in Pismo Beach on March 1. Consistent with the revised framework, the proposed Cost Sharing Agreement includes the following key terms:
• The City of Pismo Beach remains lead agency and acts as project developer through final completion of Phase 1 of the Project.
• Costs will be shared by the three cities in proportion to their share of the benefits (water) allocated to the jurisdiction. Grover Beach and Arroyo Grande will reimburse Pismo Beach for their respective shares of the costs of the Project, including all pre-construction and construction costs. Ongoing pre-construction costs will continue to be split between Arroyo Grande and Grover Beach until each party reaches its total contribution amount for its share of pre-construction costs.
• The allocation of costs/shares are as follows:
o Pismo Beach: 39%
o Grover Beach: 36%
o Arroyo Grande: 25%
• The cities will form a Joint Powers Authority (JPA) that will own and operate the Project, as well as obtain financing for construction of the Project. The JPA Board of Directors will consist of one representative of each city with each member retaining an equal vote on the Board. The JPA will own all Project assets and will employ or contract for the Project’s operations and administrative staff.
• The Agreement calls for the JPA to be formed during the design phase in order to ensure that the JPA is able to obtain financing for the Project. The Agreement also acknowledges the intent for the JPA to apply for and obtain financing from the state Clean Water State Revolving Fund (CWSRF) and, if financing is not available to the JPA through the CWSRF, that the parties may independently seek financing from the CWSRF. • Joint meetings of the three City Councils will be held at least once annually until the Project is constructed to provide a venue for discussion and transparency for the public on the project progress, to receive Project updates, and discuss policy issues as needed (e.g., unexpected timeline extensions, approvals of expenditures beyond the Project budget, etc.).
• A Technical Advisory Committee made up of staff from the three cities may be formed and meet monthly to evaluate pre-construction and construction costs, provide input into formation and operations of the JPA, and present reports at the joint City Council meetings.

Staff Report: Central Coast Blue Costs Sharing Agreement Page 3 February 15, 2022
• Each City Council will review and approve the scope, budget, contingency and procurement for the remainder of pre-construction and construction phases of the Project.

Costs in excess of the agreed-upon budget, plus a 20% contingency, will require approval of all three City Councils. If all three City Councils do not approve any such change order, the parties will meet and confer to arrive at an agreement on the requested change. If this process is unsuccessful, costs will be reduced to below the 20% contingency. • The Agreement does not impose groundwater pumping limitations on participating parties and recognizes the participants’ contribution of new developed water for their exclusive use. The Agreement also acknowledges that Project water will not be transported out of the Northern Cities Management Area (NCMA) without the prior written approval of the parties.
• An opt-out clause is included to allow exit of a party prior to award of a construction contract as long as the identified share of costs incurred to date are paid by that party. In addition to clarifications regarding formation of the JPA and the intent for the JPA to obtain financing for construction, the Agreement states that a financing plan may be prepared by the parties to describe the intended mechanisms for funding the Project. • The Agreement also states the intent for the JPA to obtain title to the Project site from Pismo Beach now that it has been determined to have the same property tax benefits as ownership by the City of Grover Beach.

The parties anticipate receiving financial assistance from the CWSRF, administered by the State Water Board, for the Project construction costs. The CWSRF provides funding to public agencies for the construction of clean water projects, typically in the form of low interest loans. In December 2021, staff was informed that General Applications for financial assistance from the CWSRF were due by the end of the calendar year for funding anticipated to be received in 2023, when Project construction is planned to begin. After consultation with design consultant Water Systems Consulting (WSC), and State Water Board staff, the partner agencies determined that in order to preserve the best possible opportunities for the Project to receive financial assistance from the CWSRF for all construction costs, each city should submit a General Application to the State Water Board for its respective share of construction costs.

Given this funding requirement and the short timeframe, each city subsequently submitted a preliminary application by December 31, 2021 which now requires an authorizing Resolution in order to finalize filling of the application. In addition, Pismo Beach submitted an application on behalf of the prospective Joint Powers Authority that is anticipated to be formed to own and operate the Project. The attached Resolution (Attachment 2) authorizes the City Manager to finalize the General Application on behalf of the City.

FISCAL IMPACT
WSC prepared a Project cost estimate in 2021 that represents the best information available on anticipated costs. The estimate is provided below and includes the Grover Beach portion based on the City’s 36% participation in the project. Pismo Beach will consider award of a contract for Project design, permitting and program management to WSC on February 15 which provides updated costs for portions of the work as shown below.

Category Estimate WSC
Proposal
GB Cost
Final Design $6,157,670 $3,997,855 $1,439,228
Program Management $1,480,427 $1,373,542 $494,475
Permitting $296,085 $965,946 $347,741
Staff Report: Central Coast Blue Costs Sharing Agreement Page 4 February 15, 2022
Construction Management $4,768,442 Not Included $1,716,639 Engineering Services During
Construction $444,128 Not Included $159,886
Construction $37,084,687 Not Included $13,350,487
Total $50,231,438 $6,337,343 $17,508,456
Some important items to note include the following:
• The estimate does not include costs incurred to date (approximately $6.5 million) for property acquisition, planning and preliminary design which have been or will be paid as part of the pre-construction costs.
• The construction cost estimate has an accuracy range from -20% to +30%. This estimate does not reflect current market conditions including inflation and volatility in materials pricing.
• A priority for the next phase of work will be to update the construction cost estimate based on current market conditions.
• The cost estimate reflects the costs to carry out Phase 1 of the Project though this work would provide capacity at the treatment facility and water lines for a future Phase 2 that would involve treating wastewater flows from the South San Luis Obispo County Sanitation District for additional treated water.

For the Council’s reference, on March 22, 2021 staff presented cost estimates as supporting documentation for the Wastewater Enterprise rate study that assumed the City could support the project without grant funding. The estimated Project construction cost at that time was $38 million though this cost has risen to $50 million given the inclusion of additional needs including injection wells along with the overall increase in construction costs. Pismo Beach applied for and was awarded a Bureau of Reclamation Title XVI Water Reclamation and Reuse Grant application for $1.7 million in grant funding on August 5, 2021. To date, $4,496,094 in federal and State grants have been awarded to fund the Project and it is anticipated that the Project will receive additional federal and State grants that could fund up to 75% of project costs. Based on the revised estimate and grant funding received, staff believes that the City’s approved water rates remain sufficient to fund the City’s share of the Project costs.

ALTERNATIVES
The Council has the following alternatives to consider:

1. Approve the Central Coast Blue Cost Sharing Agreement and authorize the City Manager to sign on behalf of the City and adopt the resolution authorizing the City Manager to file an application to the State Water Resources Control Board for a State Revolving Fund Loan for the Project and approve the Statement of Overriding Consideration along with all findings contained within Resolution 21-05, or

2. Provide alternate direction to staff.

PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.

Staff Report: Central Coast Blue Costs Sharing Agreement Page 5 February 15, 2022

ATTACHMENTS

1. Cost Sharing Agreement

2. Resolution authorizing the City Manager to finalize CWSRF loan application {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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COST SHARING AGREEMENT

FOR PARTIES PARTICIPATION IN THE

CENTRAL COAST BLUE PROJECT
THIS COST SHARING AGREEMENT (hereinafter “Agreement”), is effective as of __________, 2022 (the “Effective Date”) by and between the City of Arroyo Grande, a California municipal corporation (“Arroyo Grande”), City of Grover Beach, a California municipal corporation (“Grover Beach”) and City of Pismo Beach, a California municipal corporation (“Pismo Beach”). The cities may be individually referred to herein as a “Party” or collectively as the “Parties.”
RECITALS:

WHEREAS, in 1983, the Parties hereto entered into a voluntary groundwater management plan to manage the safe yield of the Arroyo Grande Groundwater Basin, which agreement was updated by the Parties through approval of the 2002 Agreement Regarding Management of the Arroyo Grande Groundwater Basin (the “Management Agreement”); and WHEREAS, on April 30, 2002, the Parties hereto, among others, entered into a settlement agreement (the “Settlement Agreement”) related to a 1997 groundwater adjudication litigation filed by the Santa Maria Valley Water Conservation District, which reaffirmed the Management Agreement, established separate water management areas (the “Original Management Areas”) to be independently managed by the Parties and others, and requiring the Parties and others to develop an equitable cost sharing agreement for any newly constructed water resource and water production facilities within the Original Management Areas; and WHEREAS, on June 30, 2005, the Parties hereto entered into a stipulation imposing a physical solution for ensuring the Arroyo Grande Groundwater Basin’s long-term stability (the “Stipulation”). The Stipulation adopted a local management approach, establishing three management areas (the “Current Management Areas”) and requiring a monitoring program to be established in each of the Current Management Areas; and WHEREAS, on January 25, 2008, the Santa Clara Superior Court entered Judgment in the Santa Maria Groundwater Adjudication litigation approving the Stipulation, without qualification (the “Adjudication Decree”); and
WHEREAS, the Parties intend to participate in the Central Coast Blue Project to construct a regional recycled water project that will enhance supply reliability by injecting advanced purified water into the Northern Cities Management Area of the Santa Maria Groundwater Basin (“Project”). The Project will reduce vulnerability to drought and seawater intrusion by creating a seawater intrusion barrier and supplementing the naturally occurring groundwater; and WHEREAS, the Project must comply with the California Environmental Quality Act (“CEQA”), and the lead agency pursuant to CEQA is Pismo Beach. Both Arroyo Grande and Grover Beach are considered responsible agencies for the Project and are required to make findings Attachment 1
{CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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for each significant effect of the Project and adopt a mitigation monitoring and reporting program; and
WHEREAS, Phase 1 of the Project includes construction of an Advanced Treatment Facility (“ATF”), treatment of all secondary treated flows from Pismo Beach’s Wastewater Treatment Plant (“WWTP”), construction of five injection wells and associated transmission lines, and injection of flows from the WWTP (“Phase 1”). Phase 1 proposes to treat wastewater from Pismo Beach to an advanced purification level to create between nine hundred (900) and one thousand (1,000) acre-feet of additional water per year; and WHEREAS, Phase 2 will include upgrades to the ATF to increase capacity, construction of two additional injection wells and associated transmission lines, and injection of flows from the South San Luis Obispo County Sanitation District Wastewater Treatment Plant (“Phase 2”); and WHEREAS, the Parties desire to enter into this Agreement to set forth the mechanism for establishing the fair share allotment of the Phase 1 costs in proportion to each Party’s share of the benefits of the Project.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the Parties hereby agrees as follows:

ARTICLE I
General Provisions

1. Recitals. The Recitals set forth above are expressly incorporated as terms of this Agreement. In the event of a conflict between the Recitals above and Articles I through V of this Agreement, Articles I through V shall prevail.

2. Term. This Agreement shall be effective from the last date of execution by all Parties until the date of issuance of a Notice of Completion of Phase 1 to all other Parties by Pismo Beach (the “Term”).

3. Management Agreement. In the event of a conflict between this Agreement and the Management Agreement, the Management Agreement shall prevail.

4. Adjudication Decree. In the event of a conflict between this Agreement and the Adjudication Decree, the Adjudication Decree shall prevail.

5. Developed Water. The Parties hereto acknowledge and agree that the recycled water injected into the ground pursuant to this Agreement, as well as all new developed water subsequently extracted, is New Developed Water as defined in the Adjudication Decree.

6. Municipal Pumping Entitlement. Each Party’s annual allocation of groundwater, as provided in the Management Agreement including agricultural conversion credits, shall remain as follows:
{CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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Arroyo Grande: 1,323 acre-feet per year.

Grover Beach: 1,407 acre-feet per year.

Pismo Beach: 700 acre-feet per year.

This Agreement in no way limits any Party’s right to pump their respective annual allocation of groundwater under the Adjudication Decree and in no way limits any Party’s right to transfer, sell, or lease their allocation of water consistent with the Adjudication Decree. Further, this Agreement in no way limits any Party’s right to pump their respective share of the recycled water injected into the ground pursuant to this Agreement, as well as all other dependent agreements described herein, for subsequent extraction.

ARTICLE II
Definitions

1. Construction Cost. Means the cost incurred as of the effective date of the first construction contract for Phase 1 of the Project through the determination by the Parties that construction of Phase 1 is complete, including the cost of the purchase of the Facility site for the Project. Construction Cost does not include legal expenses attributable to each Party’s City Attorney, retained counsel or their associates.

2. Enterprise. Means, for purposes of application to the Cities of Arroyo Grande and Grover Beach, the Party’s water system, including all facilities, works, properties and structures of the Party for the treatment, transmission and distribution of potable and non-potable water, including all contractual rights to water supplies, transmission capacity supply, easements, rightsof-way and other works, property or structures necessary or convenient for such facilities, together with all additions, betterments, extensions and improvements to such facilities or any part thereof hereafter acquired or constructed. For purposes of City of Pismo Beach, the above definition shall include both the Party’s water and wastewater system.

3. Facility or Facilities. Means the advanced water treatment facility that will receive and further treat wastewater influent from Pismo Beach’s WWTP, in Phase 1, which as of the date of this Agreement is proposed to be constructed on Assessor’s Parcel Number 060-543-016 in the City of Grover Beach, including the Facility’s equalization basin, injection wells, storage tanks, pump station and associated piping and equipment from the Pismo Beach WWTP.

4. Gross Revenues. Means all gross income and revenue received or receivable by the Party from the ownership and operation of its Enterprise, calculated in accordance with Generally Accepted Accounting Principles, including all rates, fees and charges (including fees for connecting to the Enterprise and any water stand-by or water availability charges or assessments) received by the Party for water service made available or provided by the Enterprise and all other income and revenue howsoever derived by the Party from the Enterprise or arising from the Enterprise; provided, however, that (i) any specific charges levied for the express purpose of reimbursing others for all or a portion of the cost of the acquisition or construction of specific facilities, or (ii) customers’ deposits or any other deposits subject to refund until such deposits have become the property of the Party, are not Gross Revenues and are not subject to the lien of {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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the Agreement. For purposes of Pismo Beach, this definition will include all income and revenue received as defined by this provision for both the water and wastewater system.

5. Lead Agency. Means the public agency that has the principal responsibility for carrying out or approving a project. The lead agency for this Project is Pismo Beach.

6. Net Revenues. “Net Revenues” means, for any period, all of the Gross Revenues during such period less all of the Maintenance and Operation Costs during such period. For purposes of this provision, Maintenance and Operation Expense means all reasonable expenses incurred by the Party in causing the Enterprise to be operated and maintained in good repair, working order and condition, including payments made to any other municipal corporation or private entity for water service (or other utility service if the Party combines such service in the Enterprise and enters into a contract for such services), but not including any depreciation or taxes levied or imposed by the Party or payments to the Party in lieu of taxes, or capital additions to or capital replacements of any portion of the Enterprise. Net Revenues for the City of Pismo shall mean the above definition as it applies to both the water and wastewater systems.

7. Pre-Construction Cost. Includes the cost of planning, designing and procuring of contracts for professional services required to obtain and perfect any necessary permits, leases, licenses, or other requirements for Phase 1 of the Project, beginning with the 2017 Regional Groundwater Sustainability Program Contract through, but not including award of the first construction contract for Phase 1 of the Project. Pre-Construction Cost does not include legal expenses attributable to each Party’s City Attorney, retained counsel or their associates.

ARTICLE III
Project Delivery and Governance Framework

1. Lead Agency Duties. Pismo Beach will remain Lead Agency and act as project developer through final completion of Phase 1 of the Project. As the Lead Agency, Pismo Beach will act as the construction manager for Phase 1 and will provide administration of Phase 1 on all Parties' behalf. Pismo Beach is hereby authorized and empowered to represent the Parties in construction supervisory and coordination activities, including the authority to issue field work directives and/or change orders on behalf of the Parties, pursuant to the terms of this Agreement.

As Lead Agency, Pismo Beach will contract for professional services and is responsible for obtaining and perfecting any necessary permits, leases, licenses or other approvals for Phase 1 of the Project, consistent with its own contracting policies. The Parties shall pay their pro rata shares of Pre-Construction costs for any professional service expenses incurred by Pismo Beach in connection with obtaining such Phase 1 approvals, in accordance with Article IV below. a. Contract Awards. Pismo Beach shall adhere to all federal, State, and local laws in awarding contracts for Phase 1 and, to the extent any federal grant funds are used to finance contracts for Phase 1, specifically in compliance with Title 2 of the Federal Code of Regulations, part 200 et seq.
b. Local Hire. Subject to Section 1.a., above, every contractor submitting a bid to Pismo Beach for a public works contract for Phase 1 of the Project shall agree to make a good faith effort to hire individuals who are local residents. A “good faith effort” means a contractor {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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will take the following or similar actions to recruit and maintain residents of San Luis Obispo County and Santa Barbara County as part of the construction workforce:
i. Contact local recruitment sources to identify individuals who are local residents;
ii. Advertise for individuals who are local residents in trade papers and newspapers of general circulation within San Luis Obispo and Santa Barbara Counties; and
iii. With respect to any portion of a public works contract to be performed by a subcontractor, identify subcontractors whose workforce includes individuals who are local residents.
c. Grant Funding and Financing. As Lead Agency, Pismo Beach will apply for available grant funding for Pre-Construction and Construction Costs of Phase 1 of the Project, including but not limited to Proposition 1 Groundwater Grant Program Grant Funding from the State Water Resources Control Board and Title XVI WaterSMART Water Reclamation and Reuse Grant Funding from the United States Bureau of Reclamation. The Parties may jointly develop a financing plan describing the anticipated mechanisms for obtaining the necessary funding to construct Phase 1 of the Project.

2. Phase 1 Accounting. Pismo Beach will maintain Phase 1 accounting and will invoice the other Parties consistent with the Water Purveyor Contributions identified in Article IV of this Agreement. Pismo Beach shall, on a monthly basis, invoice each Party for its pro rata percentage of the Pre-Construction Costs and Construction Costs incurred by Pismo Beach during such preceding, if not reimbursed by other funding sources, as established in the annual operating budget, and further detailed in Article IV of this Agreement. All Parties agree to pay Pismo Beach’s invoices within thirty (30) days of the date of the invoice subject to and consistent with Article IV, Section 4 of this Agreement.

3. Joint Powers Authority. Contemporaneously with preparation of this Agreement, the Parties are negotiating a Joint Powers Agreement to establish a Joint Powers Authority (“JPA”), pursuant to Government Code section 6500 et seq., that will own and operate the Project and have the power to issue debt and enter into loans or financing agreements to finance the Construction Costs for Phase 1. The Joint Powers Agreement will contain provisions addressing, without limitation, acquisition of the Facility site from Pismo Beach, ownership of the Facility, and financing of Construction Costs, including repayment obligations of the Parties consistent with the Water Purveyor Contribution percentages identified in Article IV, Section 2.a of this Agreement. It is the intent of the Parties that the JPA shall apply for and obtain financing through the State Water Resources Control Board’s Clean Water State Revolving Fund for Construction Costs or other financing mechanisms not otherwise covered by grant funding awarded to the Project and for the JPA to comply with all requirements to obtain such financing. The potential loans could be separate installment sale agreements based on the respective share of each Party, and repayment would be paid either directly to the JPA by each Party consistent with the Water Purveyor Contribution percentages identified in Article IV, Section 2.a of this Agreement or directly to the State Water Resources Control Board or bond trustee, depending on the funding {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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mechanism. In the event that the JPA is not able to finance the Construction Costs, the Parties will seek financing consistent with the financing plan described in Article III, Section 1.c above, which may include applications by each Party to the State Water Resources Control Board’s Clean Water State Revolving Fund for its respective share of Construction Costs. Any financing mechanism for construction of Phase 1 of the Project, ownership, and operation of the Facility will be addressed in the Joint Powers Agreement. The Joint Powers Agreement will also contain provisions regarding governance of the JPA that will include, at a minimum, the following requirements: the JPA will be governed by a three-member Board of Directors consisting of one elected official from each Party; each JPA Director will retain equal voting rights on the JPA Board of Directors; and the JPA Board of Directors will meet bi-monthly or quarterly.

4. Parties Review of Construction Scope, Schedule and Budget. Prior to initiating construction, the City Council for each Party shall have a reasonable opportunity to review and approve the scope, schedule, and budget of Phase 1 of the Project. The approved budget for Phase 1 shall include a twenty percent (20%) contingency to allow for appropriate flexibility for contract management by the Lead Agency. Change orders and amendments that exceed twenty percent (20%) of the most recently-approved contract value shall require approval by the City Council for each Party. If a Party does not grant such approval, the Parties will immediately confer in an attempt to reconcile the disagreement. Should the Parties be unable to reach agreement, measures shall be taken to reduce the additional costs below 20% of the current contract value and in no such event shall the Parties be liable for Construction Costs in excess of this amount absent a written amendment to this Agreement.

5. Technical Advisory Committee. The City Managers of the Parties may create a temporary Technical Advisory Committee (“TAC”) to assist the Parties in reviewing the technical aspects of Phase 1 and the Phase 1 budget. The TAC will consist of nine (9) members with three members appointed by each Party’s City Manager. If created, the TAC will be established within one (1) month of the Effective Date and will meet monthly until completion of Phase I of the Project. The TAC will provide technical input on the following: (1) review and suggest any modifications to the pre-construction and construction plans and agreements for Phase 1; (2) assist the Parties in deliberating on technical matters that could be of issue in the development of Phase 1, and make recommendations to be presented to the City Councils of the Parties on all major technical aspects of Phase 1 of the Project; and (3) develop, for consideration by the Parties’ City Councils, joint operational protocols for the JPA to ensure the continued operation of the facilities and viability of the Project in the future. The TAC will be disbanded upon completion of Phase I of the Project.

6. Joint Agency Meetings. During design and construction of Phase 1, the City Councils for each Party will meet jointly at least once but no more than twice per year to provide a venue for discussion and transparency for the public on the progress of Phase 1, to receive Phase 1 updates, and discuss policy issues as needed. The TAC will present a summary of their work and analysis of Phase 1 at all the joint meetings.
{CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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ARTICLE IV
Pre-Construction and Construction Costs

1. Facility Purchase. Pismo Beach has previously purchased the site for the Facility at a total cost of $1,815,373 (the “Purchase Price”). The Purchase Price shall be included as a Construction Cost of Phase 1 of the Project. The Parties acknowledge that pursuant to Article XIII, Section 11, subdivision (a), of the California Constitution, the Facility site may be considered taxable real property. As such, the Parties shall cooperate to minimize the property tax implications of Pismo Beach’s current ownership of the Facility site by either allocating such property tax costs among the Parties according to the Water Purveyor Contribution percentages, as defined in Article IV below, by transferring title of the Facility site to the JPA, or by such other action upon which the Parties may agree.

2. Water Purveyor Contributions. The Parties shall pay their pro rata share of all PreConstruction and Construction Costs incurred by Pismo Beach in connection with Phase 1 of the Project.
a. The Parties agree to the following cost allocation of the total PreConstruction and Construction costs for Phase 1 for each Party:
i. Arroyo Grande shall contribute 25%.
ii. Grover Beach shall contribute 36%.
iii. Pismo Beach shall contribute 39%.
b. Pursuant to Section VII.3(c) of the Stipulation, as adopted by the Adjudication Decree, the Parties may engage in contractual transfers, leases, licenses, or sales of any of their water rights, including voluntary fallowing programs, for drought protection, conservation, or other management purposes; however, no groundwater produced within the Current Management Areas, including water produced by Phase 1 of the Project, may be transported outside of the Current Management Areas without the written agreement of each Party.

3. Pre-Construction Cost Review and Adjustment. Following approval of this Agreement, the City Council for each Party shall have a reasonable opportunity to review and approve the scope, schedule, and budget of the remaining Pre-Construction Costs for Phase 1 of the Project, which will include a twenty percent (20%) contingency to allow for appropriate flexibility for contract management by the Lead Agency. Change orders and amendments that exceed twenty percent (20%) of the current Pre-Construction Cost contract value shall require approval by the City Council for each Party. If a Party does not grant such approval, the Parties will immediately confer in an attempt to reconcile the disagreement. Should the Parties be unable to reach agreement, measures shall be taken to reduce the additional costs below 20% of the current contract value and in no such event shall the Parties be liable for Pre-Construction Costs in excess of these amounts absent a written amendment to this Agreement. Cost share percentages for Pre‐ Construction Costs may be temporarily adjusted to help reconcile remaining Pre‐Construction Cost contributions for each of the Parties, if funding is available, until the cumulative contributions by each Party approximately match the Water Purveyor Contribution percentages set forth in Section {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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2, above, taking into account the payments already made by Pismo Beach, and the contributions already made by Grover Beach and Arroyo Grande, for Phase 1. Once Pre‐Construction Cost contributions approximate the Water Purveyor Contribution percentages, the remaining PreConstruction Costs will be split according to the Water Purveyor Contribution percentages. In the event that the costs funded by Pismo Beach, Arroyo Grande, and Grover Beach do not match the cumulative contributions in the Water Purveyor Contribution percentages set forth in Section 2, above, prior to construction, the Parties shall structure the construction financing to achieve the contributions in the Water Purveyor Contribution percentages.

4. Invoicing. Pismo Beach shall, on a monthly basis, invoice each other Party for its pro rata percentage of the expenses incurred, as established in the budget approved by the Party’s City Councils for all Pre-Construction and Construction Costs. Payment shall be made within thirty (30) days of receipt of each invoice as to all non‐disputed charges. If a Party disputes any of the charges, it shall give written notice to Pismo Beach within thirty (30) days of receipt of an invoice of any disputed charges set forth on the invoice. In the event that payment is not made as to all non‐disputed charges consistent with this Section, interest may apply at the maximum rate allowed by law. Notwithstanding the foregoing, Construction Costs financed by the JPA shall be invoiced to and paid by the JPA consistent with any financing agreements entered into by the JPA, including the time frames and other requirements included in the financing agreements. In the event that the JPA does not obtain financing for the Construction Costs and each Party obtains financing for its respective share of Construction Costs, invoices will be paid consistent with the financing agreements entered into by the Parties, including the time frames and other requirements included in the financing agreements. Pismo Beach agrees to provide all documentation necessary for the JPA, or for a Party individually financing its share of the Construction Costs, to receive reimbursements for Construction Costs consistent with the financing agreement entered into by the JPA or the Party.

5. Payment Limitations. The respective obligation of each Party to make payments herein with respect to the Pre-Construction and Construction Costs of Phase 1 or in furtherance of the objective and purpose of this Agreement, is a special, limited obligation payable solely from net revenues of each party’s respective Enterprise fund(s), and does not constitute a debt or pledge of the faith and credit of each Party or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction. The payments made under this Agreement are payable from net revenues of each party’s respective Enterprise fund(s) on such a basis as is dictated by each Party’s existing debt instruments. The respective obligation of each Party to make payments hereunder or in furtherance of the objective and purpose of this Agreement is further subject to the Parties establishing sufficient net revenues to fund the obligations of this Agreement, which includes, but is not limited to, approval by the Party’s City Councils for an increase in Enterprise user fees sufficient to meet the above obligations of this Agreement, the successful implementation of a Proposition 218 protest hearing wherein the Parties are authorized to proceed with approval of a fee increase, and the attainment of Proposition 1 Groundwater Grant Program Grant Funding by the State Water Resources Control Board.
{CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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6. Grant Funding. Any grant funding obtained for Pre-Construction or Construction Costs will be applied to reduce the total cost of Phase 1. The Parties’ obligations for such costs shall be reduced according to the contribution percentages set forth in Section 2, above.

ARTICLE V
Miscellaneous

1. Indemnification.
a. Each Party hereto agrees to protect, indemnify, defend, and hold harmless each of the other Parties and their elected officials, officers, employees, agents, successors, and assigns from and against any and all actual or potential claims, liabilities, damages, losses, fines, penalties, judgments, awards, costs, and expenses (including without limitation reasonable attorneys’ fees and costs and all foreseeable, unforeseeable and consequential damages) asserted against, resulting in, imposed upon, or incurred by said other Party by reason of the first Party’s breach of any provisions of this Agreement, the Adjudication Decree, the Management Agreement, or applicable federal or State law. This indemnification shall survive the termination of this Agreement.
b. Notwithstanding the above indemnity provision, costs and expenses arising from an action challenging the preparation, approval, or certification of the Facility Environmental Impact Report (Facility EIR) or any other document related to certification under the California Environmental Quality Act (CEQA) used by Pismo Beach for the approval of the Project, shall be considered a Pre-Construction Cost subject to pro-rata division. However, if the challenge is successful, Pismo Beach shall pay any award of attorney’s fees.

2. Records. Pismo Beach shall maintain identifiable records regarding any and all costs and expenses subject to this Agreement, including records of billing, payment, and other documents related to the execution of its obligations under this Agreement. The Parties and their designated agents shall have the right to inspect all records maintained by Pismo Beach associated with this Agreement at any time during normal business hours, with fifteen (15) business days’ advanced written notice to Pismo Beach.

3. Assignability. This Agreement shall not be assignable by any Party hereto to any other Party or non-party.

4. No Third Party Beneficiary. This Agreement shall not be construed or deemed to be an agreement for the benefit of any third party or parties and no third party or parties shall have any claim or right of action hereunder for any cause whatsoever.

5. Notice. Any notice or communication required hereunder between the Parties must be in writing and may be given either personally, by registered or certified mail (return receipt requested), or by Federal Express, UPS, or other similar couriers providing overnight delivery. If personally delivered, a notice or communication shall be deemed to have been given when delivered to the Party whom it is addressed. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the Party to whom notices are to be sent; or {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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(ii) five (5) calendar days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar overnight courier, a notice or communication shall be deemed to have been given and received on the date delivered as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (10) calendar days’ written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below:

To City of Arroyo Grande: Whitney McDonald
City Manager for City of Arroyo Grande
1375 Ash Street
Arroyo Grande, CA 93420
With copy to: White Brenner LLP
Attn: Barbara A. Brenner, Esq.
1414 K Street, 3rd Floor
Sacramento, CA 95814
To City of Grover Beach: Matthew Bronson
City Manager for City of Grover Beach
154 S. Eighth Street
Grover Beach, CA 93433
With copy to: David Hale, City Attorney
1233 W. Shaw Ave. Ste. 106
Fresno, CA 93711
To City of Pismo Beach James R. Lewis
City Manager for City of Pismo Beach
760 Mattie Road
Pismo Beach, CA 93449
With copy to: Richards, Watson & Gershon
Attn: Dave Fleishman, Esq.
847 Monterey Street, Suite 206
San Luis Obispo, CA 93401

6. Amendments. No alteration of the terms of this Agreement shall be valid unless made in writing and signed by the Parties and incorporated into this Agreement.

7. Severability Clause. In case any one or more of the provisions contained herein shall, for any reason, be held invalid, illegal, or unenforceable in any respect, it shall not affect the validity of the other provisions, which shall remain in full force and effect. {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

Page 11 of 13 ends

8. Captions. The captions of the various sections, paragraphs and subparagraphs of this Agreement are for convenience only and shall not be considered nor referred to for resolving questions of interpretation of this Agreement.

9. Opt-out Clause. Any Party may opt-out of this Agreement prior to the award of the first Phase 1 construction contract. Any Party exercising this opt-out clause shall be responsible for their pro rata share of the Pre-Construction Costs as set forth in Article IV up to the date of opting-out.

10. Dispute Resolution. In the event of any dispute arising from or relating to this Agreement, the disputing Party shall, within thirty (30) calendar days of discovery of the event(s) giving rise to the dispute, notify all Parties to this Agreement in writing of the basis for the dispute.

Within thirty (30) calendar days of receipt of said notice, the Parties shall meet and confer in good faith to informally resolve the dispute. Except as provided in Article III, Section 4, and Article IV, Section 3, all disputes that are not resolved informally shall be settled by non-binding mediation. Within ten (10) calendar days following the failed informal proceedings, each Party shall nominate and circulate to all other Parties the name of two (2) mediators. Within ten (10) calendar days following the nominations, the Parties shall rank their top three among all nominated mediators, awarding 3 points to the top choice, 2 points to the second choice, and 1 point to the third choice, and zero points to all others. Each Party shall forward its tally to Pismo Beach, who shall tabulate the points and notify the Parties of the name of the mediator with the highest cumulative score, who shall be the selected mediator. In the event of a tie vote, or in the event the selected mediator declines or ceases to act, Pismo Beach may develop a procedure for approval by the Parties for selecting a mediator. Upon completion of mediation, if the controversy has not been resolved, any Party may exercise all rights to bring a legal action relating to the controversy in state or federal court, as applicable.

11. Statutes and Law Governing Contract. This Agreement shall be governed and construed in accordance with the statutes and laws of the State of California.

12. Venue. Venue for all legal proceedings shall be in the Superior Court of California in and for the County of San Luis Obispo.

13. Waiver. The Parties’ waiver of any term, condition or covenant, or breach of any term, condition or covenant shall not be construed as a waiver of any other term, condition or covenant or breach of any other term, condition, or covenant.

14. Attorney’s Fees and Costs. If any action at law or in equity, including action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing Party shall be entitled to reasonable attorney’s fees and costs, which may be set by the court in the same action or in a separate action brought for that purpose, in addition to any other relief to which such Party may be entitled.

15. Entire Agreement. This Agreement contains the entire Agreement between Arroyo Grande, Grover Beach and Pismo Beach relating to Phase 1 of the Project. Any prior agreements, promises, negotiations, or representations not expressly set forth in this Agreement are of no force or effect.
{CW108993.18} COST SHARING AGREEMENT
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16. Good Faith. To the extent reasonably required, each Party to this Agreement shall, in good faith, cooperate and assist the other Party in meeting its obligations under this Agreement.

17. Authority. The Parties to this Agreement warrant and represent that they have the power and authority to enter into this Agreement and the names, titles, and capacities herein stated on behalf of any entities, persons, states, counties or cities represented, or purported to be represented, by such entities, persons, states, counties or cities and that all former requirements necessary or required by state or federal law in order to enter into the Agreement have been fully complied with. Further, by entering into this Agreement no Party hereto shall have breached the terms or conditions of any other contract or agreement to which such Party is obligated, which such breach would have a material effect hereon.

18. Counterparts. This Agreement may be executed in counterparts, and all such executed counterparts shall constitute the same agreement. It shall be necessary to account for only one such counterpart from and executed by each Party hereto in proving this Agreement.

19. Other Agreements. This Agreement shall not prevent any Party from entering into similar agreements with others. The Parties acknowledge and accept the terms and conditions of this Agreement as evidenced by the following signatures of their duly authorized representatives.

It is the intent of the Parties that this Agreement shall become operative on the Effective Date.

20. Drafting and Ambiguities. Each Party acknowledges that it has reviewed this Agreement with its own legal counsel, and based upon the advice of that counsel, freely entered into this Agreement. Each Party has participated fully in the review and revision of this Agreement.

Any rule of construction that ambiguities are to be resolved against the drafting Party, does not apply in interpreting this Agreement.
[Signatures on Following Page]
{CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first written above.

CITY OF ARROYO GRANDE
a municipal Corporation
By: ________________________________
_______________________, City Manager
APPROVED AS TO FORM:

By: ________________________________
_______________________, City Attorney
ATTEST:

By: ________________________________
__________________________, City Clerk

CITY OF GROVER BEACH
A municipal Corporation
By: ________________________________
________________________, City Manger
APPROVED AS TO FORM:

By: ________________________________
_______________________, City Attorney
ATTEST:

By: ________________________________
__________________________, City Clerk

CITY OF PISMO BEACH
a municipal Corporation
By: ________________________________
_______________________, City Manager
APPROVED AS TO FORM:

By: ________________________________
_______________________, City Attorney
ATTEST:

By: ________________________________
__________________________, City Clerk
RESOLUTION NO. 22-

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GROVER BEACH,

CALIFORNIA AUTHORIZING THE CITY MANAGER TO FILE A FINANCIAL

ASSISTANCE APPLICATION FOR THE CENTRAL COAST BLUE PROJECT WHEREAS, Central Coast Blue (“the Project”) is a regional advanced purified water project intended to enhance supply reliability by reducing the Santa Maria Groundwater Basin’s vulnerability to drought and seawater intrusion; and
WHEREAS, the Project is a multi-agency collaboration between the Northern Cities Management Area agencies (the Cities of Arroyo Grande, Grover Beach, and Pismo Beach, and the Oceano Community Services District) and the South San Luis Obispo County Sanitation District; and
WHEREAS, the City of Pismo Beach pursuant to Section 21067 of CEQA and Section 15367 of the CEQA Guidelines, is acting as Lead Agency for this Project; and WHEREAS, pursuant to Section 21069 of the Public Resources Code of the California Environmental Quality Act (Pub. Res. Code Sections 21000 et seq.) (“CEQA”) and Sections 15096 and 15367 of the State CEQA Guidelines (Cal. Code Res., tit. 14, §15000 et seq.), the City of Grover Beach (“City”) is a Responsible Agency for the Project and is making the requisite CEQA Findings; and
WHEREAS, the City Council of the City of Grover Beach held a hearing on March 22, 2021 to consider and approve the CEQA environmental documents and adopted CEQA findings, a Statement of Overriding Consideration and a Mitigation Monitoring and Reporting Program, and WHEREAS, as part of that adoption, Council approved Resolution 21-05, which included the purpose of these findings which is to satisfy the requirement of Public Resources Code Section 21000, et seq., and Sections 15091, 15093, 15096, and 15097 of the CEQA Guidelines, 14 Cal. Code Regulations, Section 15000, et seq., associated with approval of the Central Coast Blue Project, and
WHEREAS, Resolution 21-05 also included the Statement of Overriding Consideration to approve the project notwithstanding certain unavoidable significant impacts that were not subject to feasible mitigation along with an analysis and explanation as to why the project’s benefits override and outweigh its unavoidable impacts, and
WHEREAS, Resolution 21-05 contained the substantial evidence to support those findings as required in CEQA Guidelines Section 15091 and 15093, and Attachment 2
Resolution No. 22- Page 2 of 3
WHEREAS, the City Council of the City of Grover Beach desires to finance the costs of the Central Coast Blue Project, specifically the CWSRF Project No. C-06-8255-110 Central Coast Blue Project (the "Project"); and
WHEREAS, the City of Grover Beach intends to finance the construction of the Project or portions of the Project with moneys ("Project Funds") provided by the State of California, acting by and through the State Water Resources Control Board (State Water Board), and WHEREAS, the Cities of Grover Beach, Arroyo Grande and Pismo have negotiated a Cost Sharing Agreement that sets forth those provisions that are necessary to provide assurance of funding for the remaining design and construction phases of the Project, and WHEREAS, staff is requesting Council’s approval of the Cost Sharing Agreement and delegation to the City Manager to sign the Agreement on behalf of the City of Grover Beach.

NOW, THERFORE, THE CITY COUNCIL OF THE CITY OF GROVER BEACH, CALIFORNIA, DOES DELARE, DETERMINE, AND ORDER AS FOLLOWS:

1. The WHEREAS provisions are hereby incorporated by reference as if set out in full.

2. Resolution No. 21-05 containing the Council’s prior review and approval of the EIR and all pertinent CEQA documents as mentioned herein are attached as “Exhibit A” and is hereby incorporated by reference as if set out in full and that all findings contained therein are hereby made as part of the approval of this Project.

3. The City Manager (the “Authorized Representative”) or designee is hereby authorized and directed to sign and file, for and on behalf of the City of Grover Beach, a Financial Assistance Application for a financing agreement from the State Water Resources Control Board for the planning, design, and construction of the Central Coast Blue Project (the “Project”); and

4. This Authorized Representative, or his/her designee, is designated to provide the assurances, certifications, and commitments required for the financial assistance application, including executing a financial assistance agreement from the State Water Resources Control Board and any amendments or changes thereto; and

5. The Authorized Representative, or his/her designee, is designated to represent the City of Grover Beach in carrying out the City’s responsibilities under the financing agreement, including certifying disbursement requests on behalf of the City and compliance with applicable state and federal laws.

6. The attached Cost Sharing Agreement is hereby approved by the City Council and the City Manager is authorized to sign on behalf of the City of Grover Beach and is delegated to do whatever is necessary to finalize and execute the agreement.

Resolution No. 22- Page 3 of 3
On motion by Council Member _____, seconded by Council Member ____, and on the following roll-call vote, to wit:

AYES: Council Members –
NOES: Council Members –
ABSENT: Council Members –
ABSTAIN: Council Members –
RECUSED: Council Members –
the foregoing Resolution was PASSED, APPROVED, and ADOPTED at a regular meeting of the City Council of the City of Grover Beach, California this 15th day of February 2022.

JEFF LEE, MAYOR
Attest:

WENDI B. SIMS, CITY CLERK
**DRAFT**
RESOLUTION NO. 21-05

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GROVER BEACH,

CALIFORNIA, AS A RESPONSIBLE AGENCY ADOPTING CEQA FINDINGS, A

STATEMENT OF OVERRIDING CONSIDERATIONS, AND MITIGATION

MONITORING AND REPORTING PROGRAM AND DIRECTING THE CITY

CLERK TO FILE THE NOTICE OF DETERMINATION FOR THE CENTRAL

COAST BLUE PROJECT
WHEREAS, Central Coast Blue ("the Project") is a regional advanced purified water project intended to enhance supply reliability by reducing the Santa Maria Groundwater Basin's vulnerability to drought and seawater intrusion; and
WHEREAS, the Project is a multi-agency collaboration between the Northern Cities Management Area agencies (the Cities of Arroyo Grande, Grover Beach, and Pismo Beach, and the Oceano Community Services District) and the South San Luis Obispo County Sanitation District; and
WHEREAS, pursuant to Section 21069 of the Public Resources Code of the California Environmental Quality Act (Pub. Res. Code Sections 21000 et seq.) ("CEQA") and Sections 15096 and 15367 of the State CEQA Guidelines (Cal. Code Res., tit. 14, §15000 et seq.), the City of Grover Beach ("City") is a Responsible Agency for the Project and is making the requisite Findings in CEQA Guidelines Sections 15091 and 15093; and WHEREAS, the City of Pismo Beach pursuant to Section 21067 of CEQA and Section 15367 of the CEQA Guidelines, is acting as Lead Agency for this Project; and WHEREAS, pursuant to CEQA and the State CEQA Guidelines, the City has considered the environmental effects of the project and therefore are making the necessary Findings herein consistent with CEQA Guidelines Sections 15091 and 15093; and WHEREAS, the City of Pismo Beach issued a Notice of Preparation ("NOP") of a Draft EIR for the Project on December 20, 2019, for a 45-day agency and public review period, ending on February 4, 2020; and
WHEREAS, pursuant to Public Resources Code Section 21083.9 and State CEQA Guidelines Section 15082(c) and 15083, the City of Pismo Beach held a duly noticed Scoping Meeting on January 22, 2020 which the City participated in, to solicit comments on the scope of the environmental review of the Project and received comments ; and WHEREAS, during the NOP circulation period, the proposed locations of specific project components were selected, including the advanced treatment facility complex, water distribution pipelines, and monitoring wells; and
WHEREAS, as a result of siting of project components, a revised NOP of the Draft EIR was issued for 45-day agency and public review period starting on April 13, 2020 and ending on May 28, 2020; and
Exhibit A
Resolution No. 21-05 Page 2 of35
WHEREAS, a second EIR Scoping Meeting was held on May 8, 2020; and WHEREAS, a Draft EIR was prepared, incorporating comments received in response to both NOP periods; and
WHEREAS, the Draft EIR determined that mitigation measures were required to mitigate impacts to a less than significant level for the following resource areas: air quality, biological resources, cultural resources, energy, environmental justice, greenhouse gas emissions, hazards and hazardous materials, hydrology and water quality, noise, transportation, and land use; and WHEREAS, the Draft EIR further concluded that despite the incorporation of all feasible mitigation measures, the Project would nonetheless result in significant unavoidable impacts relating to land use and noise; and
WHEREAS, as required by State CEQA Guidelines Section 15087(a), the City of Pismo Beach provided Notice of Availability of the Draft EIR to the public on July 20, 2020, for a 45-day public and agency review period concluding on September 3, 2020; and WHEREAS, during the Draft EIR review period, the City of Pismo Beach solicited public comment at the August 18, 2020 regular City of Pismo Beach City Council meeting; and WHEREAS, the City of Pismo Beach received eleven comments on the Draft EIR, and responses to comments were provided in the Final EIR; and WHEREAS, pursuant to Public Resources Code Section 21092.5, the written responses to comments contained within the Final EIR were provided to any public agency that commented on the EIR at least 10 days prior to the City Council's certification of the Final EIR; and WHEREAS, on February 5, 2021, the City of Pismo Beach released the Final EIR ("Final EIR"), which consists of the Draft EIR, all technical appendices prepared in support of the Draft EIR, all written comment letters received on the Draft EIR, written responses to all written comment letters received on the Draft EIR, and errata to the Draft EIR and technical appendices; and
WHEREAS, on February 16, 2021, the City of Pismo Beach City Council conducted a duly noticed public hearing and Certified the Final EIR; and WHEREAS, on March 22, 2021, the City conducted a public meeting to consider the City of Pismo Beach's EIR for this Project; and

NOW, THERFORE, THE CITY COUNCIL OF THE CITY OF GROVER BEACH, CALIFORNIA, DOES DELARE, DETERMINE, AND ORDER AS FOLLOWS: that the City Council of the City of Grover Beach as a Responsible Agency does hereby adopt CEQA Findings and Statement of Overriding Considerations as provided in Exhibit A, attached hereto and incorporated herein by this reference, and adopts a Mitigation Monitoring and Reporting Program as provided in Exhibit 8, attached hereto and incorporated herein by this reference.

Resolution No. 21-05 Page 3 of 35
On motion by Council Member Bright, seconded by Council Member Robert, and on the following roll-call vote, to wit:

AYES:

NOES:

ABSENT:

ABSTAIN:

RECUSED:

Council Members - Bright, Miller, Robert and Mayor Lee
Council Members - None
Council Members - None
Council Members - None
Council Members - None
the foregoing Resolution was PASSED, APPROVED, and ADOPTED at a regular meeting of the City Council of the City of Grover Beach, California this 22nd day of March 2021 .

Attest:

LO~~
WENDI B. SIMS, CITY CLERK
Resolution No. 21-05 Page 4 of 35

EXHIBIT A

CEQA FINDINGS AND STATEMENT OF OVERRIDING CONSIDERATIONS I. PURPOSE OF THE FINDINGS
The purpose of these findings is to satisfy the requirement of Public Resources Code Section 21000, et seq., and Sections 15091 , 15093, 15096, and 15097 of the CEQA Guidelines, 14 Cal. Code Regulations, Section 15000, et seq., associated with approval of the Central Coast Blue Project. These findings provide the written analysis and conclusions of the City Council regarding the Project. They are divided into general sections, each of which is further divided into subsections. Each addresses a particular impact topic and/or requirement of law. At times, these findings refer to materials in the administrative record.

II. PROJECT OBJECTIVES
Pursuant to CEQA Guidelines Section 15124, the environmental impact report must identify the objects sought by the proposed project. As noted in Section 2 of the Certified Final EIR for the Project, the Project objectives are:
·1. Pr".Jduce advanced purified water of a quality that can safely be used to augment groundwater supply while maintaining or improving existing g~oundwater quality.

2. Create a sustainable, drought-resistant, local water supply and improve water supply reliability for southern San Luis Obispo County.

3. Provide a new source of recharge to the Santa Maria Groundwater Basin to protect the basin from degradation via seawater intrusion.

4. Reduce wastewater discharges to the ocean and maximize uti:ization of local water supplies.

5. Facilitate continued water resources collaboration in the Northern Cities Management Area.

Ill. PROJECT DESCRIPTION
Central Coast Blue (the Project) is a multi-agency collaboration between the Northern Cities Management Area agencies (the Cities of Arroyo Grande, Grover Beach, and Pismo Beach, and the Oceano Community Services District) and the South San Luis Obispo County Sanitation District (SSLOCSD) to construct a regional recycled water project that will enhance supply reliability by injecting advanced pu_rified water into the Santa Maria Groundwater Basin (SMG8). 'This will reduce vulnerabliity to drought and seawater intrusion by creating a seawater intrusion barri9r and supplementing the naturally occurring groundwater. Water for the Project will be sourced from two of the Resolution No. 21-05 Page 5 af 35
region's wastewater treatment facilities: the Pismo Beach Wastewater Treatment Plant (WWTP) and the SSLOCSD WWTP. Prior to injection to the SMGB, water will be treated to an advanced level of purification at a proposed advanced treatment facility (ATF) constructed at a site in the City (Assessor's Parcel Number 060-543-016). The proposed ATF will treat a combination of flows from the Pismo Beach WWTP and flows from the SSLOCSD WWTP for injection into the SMGB and/or for agricultural irrigation. Project components in addition to the ATF include an advanced purified water storage tank, an equalization basin, a pump station, distributicn pipelines, injection wells, monitoring wells, one new production well, and potential agricultural irrigation pipelines. The Project will alter the pumping regime of existing, operational production wells in the project area and will include construction of one new production well to optimize groundwater production in the area.

IV. CEQA PROCESS OVERVIEW
The City of Pismo Beach is the lead agency for the Project. The City is a Responsible Agency for this Project. All issues recommended in Appendix G of the CEQA Guidelines were examined in the Certified Final EIR. The City of Pismo Beach distributed a Notice of Preparation (NOP) of the EIR (SCH# 2019120560) for a 45-day agency and public reyiew period starting on December 20, 2019 and ending on February 4, 2020. The purpose of the NOP was to inform other public agencies, interest groups and the public in general of the City of Pismo Beach's intent to prepare an EIR. The NOP also provided an opportunity for those interested in the proposed project to comment on the contents of the EIR. The NOP was also sent to the State Clearinghouse, wh:ch is responsible for forwarding it to State agencies that might be affected. In addition, as required by CEQA Guidelines Section 15082(c)(1 ), the City of Pismo Beach held an EIR Scoping Meeting on January 22, 2020. However, during the NOP circulation period, the proposed locations of the ATF complex, water distribution pipelines, and monitoring wells, which were previously undetermined, were selected. As a result, the City of Pismo Beach distributed a revised NOP of the EIR for a 45-day agency and public review period starting on April 13, 2020 and ending on May 28, 2020. In addition, the City of Pismo Beach held a seccnd EIR Scoping Meeting on May 8, 2020. From July 20, 2020 to September 3, 2020, the City of Pismo Beach circulated the Draft !::IR (titled "Central Coast Blue Project Draft Environmental Impact Report") for a 45-day public and agency review period pursuant to th~ requirements of CEQA Guidelines Section 15105(a). During this re'iiew period, the City of Pismo Beach held a public meeting on the Draft EIR on August 6, 2020 and a public comment period on the Draft EIR at the August 18, 2020 regular City of Pismo Beach Council meeting. Eleven comments were received on the Draft EIR, and responses to comments are provided in the Final EIR. The Final EIR was certified at the February 16, 2021 regular City of Pismo Beach Council meeting by Resolution No. R2021-011 .

V. !MPACTS, MITIGATION MEASURES, AND FINDINGS
T:11e City -:,f Grover Beach, as a Respcnsible Agency, hereby adopts and makes the following findings related to its respective portion of the Project which requires approval Resolution No. 21-05 Page 6 of 35
of the Project by the City (i.e., the full execution of the Operating Agreement by the City cf Grover Beach, acting as a Responsible Agency, full execution of the Operating Ag,eeme:it by the City of Pismo Beach, acting as the Lead Agency, along with the !:i\1estor, ~J1ember, or Partner Agencies; to undertake the Central Coast Blue Project).

Havi;ig received, reviewed , and considered the entire record, both written and ora!, rel.atFJd to the Central Coast Blue Project and Certified Final EIR, the Citv makes the fo.ll0wing findings associated with sigr:ificant, potentially significant, and cumt.:lative significant impacts that can be mitigated to a less-than-significant level tr.rough implementation of mitigation measures identified in the Certified Final EIR.

EIR Consideration Findings
The Final EIR was presented to the City Council at a hearing before the public and reviewed and considered the information contained in the Final EIR prior to making a decision on the Project.

The Final EIR reflects the City's independent judgement and analysis as a Responsible Agency.

Aii Quality
Impact AQ-2 Construction of the project would generate temporary increases in criteria air pollutant emissions. Construction emissions of reactive organic gases (ROG) and nitrogen oxides (NOx) wo:Jld exceed San Luis Obispo County Air Pollution Control District (SLOAPCD) construction thresholds during Phase I and Phase II. This impact would be potentially significant.

Finding: Mitigation Measure(s) Feasil;)le and Required, Impact Reduced to Lessthan-Significant Level. Changes or alterations have been requirec' in, or incarporated into, the project that avoid or substantia;ly lessen the significant envir'Jn.77ental effect as identified in the Final EIR.

Mitigation . Measures: Mitigation Measure AQ-2(a) "Standard Control Measures for Construction Equipment" has been adopted to reduce construction-related emissions of NOx and ROG during Phases I and II. Mitigation Measure AQ-2(b) "Best Available Control Technology for Construction Equipment" has been adopted to implement Best Available Control Technology for diesel-fueled construction equipment during construction-related activities.

Support for Finding: According to the SLOAPCD (2012) CEQA Air Quality Handbook, fer projects with estimated construction emissions that are expected to exceed the S~_.'.JAPC:D daily thr8sholds of significance and the SLOAPCD quarter!y Tier 1 thresholds of significance, implementation of standard and Best Available Coi1trol Technology Resolution No. 21-05 Page 7 of 35
measures would reduce potential air quality impacts to a less-than-significant level. These measures are required for both phases of construction activities. As shown in Table 4.1- 10 and Table 4.1-11 in Section 4.1, Air Quality, of the Final EIR, implementation of Mitigation Measures AQ-2(a) and AQ-2(b) would reduce construction-related emissions of ROG + NOx below the SLOAPCD daily and quarterly thresholds during both Phases I and II. As a result, implementation of Mitigation Measures AQ-2(a) and AQ-2(b) would red·Jce construction-related air quality impacts during Phases I and II of construction to a less-than-significant level.

Reference: Final EIR, Pages 4.1-20 through 4.1-24
Cumulative The project would not conflict with or obstruct implementation of the 2001 Clean Air Plan but would exceed SLOAPCD daily and quarterly thresholds for emissions of ROG + NOx during Phases I and II of construction activities. The project's contribution to the cumulative air quality impact would be cumulatively considerable.

Finding: Mitigation Measure(s) Feasible and Required, Impact Reduced to Lessthan-Significant Level. Changes or alterations have been required in, or incorporated into, the project that avoid or substantially lessen the significant environmental effect as identified in the Final EIR.

Mitigaticn Measures: Mitigation Measure AQ-2(a) "Standard Control Measures for Construction Equipment" has been adopted to reduce construction-related emissions of NOx _and ROG during Phases I and II. Mitigation Measure AQ-2(b) "Best Available Control Technology for Construction Equipment" has been adopted to implement Best Available Control Technology for diesel-fueled cor.struction equipment during construction-related activities.

Support for Finding: As discussed under Impact AQ-2, the project would exceed SLOAPCD daily and quarterly threshol9s for emissions of ROG + MOx during Phases I and II of construction activities. As shown in Table 4.1-10 and Table 4.1 -11 in Section

4.1, Air Quality, of the Final EIR, implementation of Mitigation Measures AQ-2(a) and AQ2(b) would reduce construction emissions below SLOAPCD thresholds. Air pollution by nature is a cumulative issue, and significance thresholds for criteria pollutant emissions are established at the levels at which impacts would be cumulatively considerable. As such, emissions below the thresholds would not be cumulatively considerable. Therefore, with mitigation incorporated, the project would not have a cumulatively considerable contribution to the cumulative air quality impact.

Reference: Final EIR, Pages 4.1-20 through 4.1-24 and 4.1-28 through 4.1-29 Resolution No. 21-05 Page 8 of 35
Biological Resources
Impact 81,0-1: The proposed project would result in direct and indirect impacts to special status species, if present. This impact would be potentially significant.

Finding: Mitigation Measure(s) Feasible and Required, Impact Reduced to Lessthan-Significant Level. Changes or alterations have been required •in, or incorporated into, the project that avoid or substantially lessen the significant environmental effect as identified in the Final EIR.

Mitigation Measures: Mitigation Measures 810-1 (a) through 810-1 (k) would be implemented to avoid and minimize impacts to special-status species. Mitigation measures include: 810-1 (a) "California Red-legged Frog Habitat Avoidance"; 810-1 (b) "California Red-legged Frog Avoidance and Minimization Measures"; 810-1 (c) "Southwestern Pond Turtle Avoidance and Minimization Measures"; 810-1 (d) "Monarch Butterfly Avoidance"; 810-1 (e) "Nesting Bird Avoidance and Minimization Measures"; Bi0-1 (f) "Biological Resources Assessment"; 810-1 (g) "Special Status Plant Species SuNeys"; 810-1 (h) "Special Status Plant Species Avoidance, Minimization, and Mitigation"; 810-1 (i) "Restoration Plan for Special Status Plant Species"; 810-1 U) "Endangered/Threatened Species Avoidance and Minimization"; and BI0-1 (k) "Non-listed Special Status Animal Species Avoidance and Minimization." su·pport for Finding: Mitigation Measures 810-1 (a) through 810-1 (e) require avoidance and minimization measures to reduce direct and indirect impacts to special status species from development of project components with known locations. Mitigation Measures 810- 1 (D through 810-1 (k) require completion of a Biological Resources Assessment and identification and implementation of appropriate avoidance and minimization measures to reduce direct and indirect impacts to special status species from development of the p;oject components with unknown loca~ions. As a result, implementation of Mitigation Measures 810-1 (a) through 810-1 (k) would reduce project impacts on any species identified as a candidate, sensitive, or special status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Wildlife or the Ur.ited States Fish and Wildlife SeNice to a less-than-significant level.

Reference: Final EIR, Pages 4.2-37 through 4.2-44
Impact 810-2 The project would result in direct and indirect impacts to riparian areas.

This impact would be potentially significant.

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Mitigation Measures: Mitigation Measure 810-2 "Sensitive Plant Community and Environmentally Sensitive Habitat Area Avoidance and Minimization Measures" has been adopted to address potential disturbance of arroyo willow habitat during project construction and maintenance activities.

Support for Finding: Mitigation Measure 810-2 requires measures to avoid, minimize, and compensate for direct and indirect impacts to riparian habitat and other sensitive natural communities from construction and maintenance of the proposed project. As a result, implementation of Mitigation Measure 810-2 would reduce project impacts to riparian habitat and other sensitive natural communities to a less-than-significant level.

Reference: Final EIR, Pages 4.2-45 through 4.2-46
Impact 810-3 The project would potentially impact state and federally protected wetlands through direct removal, filling, or hydrological interruption. This impact would be potentially significant.

Mitigation Measures: Mitigation Measures BI0-3(a) through BI0-3(c) have been adopted to avoid and minimize impacts to state and federally protected wetlands.

Mitigation measures include: BI0-3(a) "Jurisdictional Delineation"; BI0-3(b) "Drainages and Wetlands Impact Mitigation"; and BI0-3(c) "Drainages and Wetlands Best Management Practices During Construction."
Support for Finding: Mitigation Measures BI0-3(a) through BI0-3(c) require preparation of a jurisdictional delineation to identify jurisdictional areas and implementation of a\,oi.dance, minimization and mitigation measures to avoid, minimize, and compensate ~or direct and indirect impacts to state or federally protected wetlands from development of the project. As a result, implementation of Mitigation Measures BI0-3(a) through 81-0- 3( c) would reduce project impacts on state or federally protected wetlands (including but not limited to marsh, vernal pool, coastal, etc.) through direct removal, fill ing, hydrological interruption, or other means to a less-than-significant level.

Reference: Final EIR, Pages 4.2-47 through 4.2-49
Impact 810-5 The project would result in impacts to biological resources protected by local policies. This impact would be potentially significant.

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Mitigation Measures: Mitigation Measure BI0-5 "Native Tree Inventory, Protection, and Replacement" has been adopted to minimize impacts on native trees in the project area t!1at could potentially be affected by project construction activities.

Support for Finding: Mitigation Measure BI0-5 requires implementation of avoidance, minimization, and · compensation measures for protected trees. As a result, !:i~p~ementation of Mitigation Measure BI0-5 would avoid conflict with any local policies or 0rdinances protecting biological resources, such as a tree preservation policy or o:-,jinance, reducing impacts to a less-than-significant level.

Reference: Final EIR, Page 4.2-51
Cultural Resources
Impact CR-2 The proposed project has the potential to cause a substantial adverse change in the significance of unique archaeological resources and archaeological resources that may be considered historical resources.

This impact would be potentially significant.

Finding: Mitigation Measure(s) Feasible and Required, Impact Reduced to Lessthan-Significant Level. Changes or alterations have been required in, or incorporated intot the project that avoid or substantially lessen the significant env.;ronrr,ental effect as identified in the Final EIR.

Mitigation Measures: Mitigation Measures CR-2(a) through CR-2(d) have been adopted to avoid, minimize, and mitigate potentia, impacts on archaeological resources. Mitigation measures include: CR-2(a) "Worker's Environmental Awareness Program"; CR-2(b) "P..F::;haeological and Native American M;:,nitoring"; CR-2(c) "Unanticipated Discovery of Cu!tural Resources"; and CR-2(d) "Archaeological Resource Studies." Support for Finding: Mitigation Measures CR-2(a) though CR-2(c) require implementation of a Worker's Environmental Awareness Program, monitoring of ground disturbance by a qualified archaeologist a.nd Native American monitN, a!ld evaluation of any unanticipated cultural resources for all project components. !n adc:tion, Mitigatio:1 Measure CR-2(d) requires completion of archaeological resource studies for the agricultural irrigation pipelines and new production well once the locatio!ls of these project components are identified. These measures would require identification, evaluation, treatment, and mitigation of impacts to archaeological resources in accordance with CEQA. Therefore, impacts to archaeological resources would be reduced to a less-thansignificant level.

Reference: Final EIR, Pages 4.3-19 through 4.3-21
Resolution No. 21 -05 Page 11 of 35
Energy
Impact E-2 The project would be potentially inconsistent with the energy efficiency and renewable energy policies of the City of Pismo Beach's Climate Action Plan and the City of Grover Beach's General Plan. This impact would be potentially significant.

Mitigation Measures: Mitigation Measures E-2 "Energy Efficiency and Renewable Energy Measures" and GHG-2 "GHG Emission Reduction Measures" have been adopted to achieve consistency with energy-related measures and policies of the City of Pismo Beach's Climate Action Plan and the City of Grover Beach's General Plan.

Support for Finding: Implementation of Mitigation Measures E-2 and GHG-2, which require implementation of applicable energy-related measures and policies of the City of Pismo Beach's Climate Action Plan and the City of Grover Beach's General Plan, would achieve project consistency with these plans. Impacts would be less than significant with mitigation incorporated.

Reference: Final EIR, Pages 4.4-14 and 4.6-18
Cumulative The project would be potentially inconsistent with the City of Pismo Beach's Climate Action Plan and the City of Grover Beach's General Plan, which were adopted to reduce the cumulative impact of energy consumption in Pismo Beach and Grover Beach, respectively. The project's contribution to the cumulative energy impact would be cumulatively considerable.

Support for Finding: Implementation of Mitigation Measures E-2 and GHG-2, which require inclusion of applicable energy-related measures and policies of the City of Pismo Beach's Climate Action Plan and the City of Grover Beach's General Plan, would achieve project consistency with these plans. Therefore, with incorporation of mitigation, the Resolution No. 21-05 Page 12 of 35
project would not have a cumulatively considerable contribution to a significant cumulative impact related to the plans adopted for renewable energy and energy efficiency.

Reference: Final EIR, Pages 4.4-14 through 4.4-15 and 4.6-18 Environmental Justice
Impact EJ-1 Project components would be constructed in Oceana and Grover Beach, which are identified as environmental justice communities. The proposed project would potentially result in disproportionately high and adverse impacts to these communities during project construction and operation . This impact would be potentially significant.

Mitigation Measures: Mitigation measures have been adopted to avoid and minimize adverse, localized project impacts to environmental justice communities related to air quality, hazards and hazardous materials, noise, and traffic. Mitigation measures include:

Mitigation Measures AQ-2(a) "Standard Control Measures for Construction Equipment"; AQ-2(b) "Best Available Control Technology for Construction Equipment"; HAZ-1 (a) "Hazardous Materials Management and Spill Prevention and Control"; HAZ-1 (b) "Preparation of Hazardous Materials Business Plan"; N-1 "Construction Noise Reduction Measures"; N-2 "Acoustical Analysis of ATF Complex Operations"; and T-1 "Transportation Management Plan."
Support for Finding: As discussed under the findings for Impacts AQ-2, HAZ-1, N-2, and T-1, implementation of the mitigation measures would reduce most of the project's potentially adverse localized impacts to a less-than-significant level with the exception of the project's significant and unavoidable construction noise impact associated with 24- hour drilling of the injection, monitoring, and production wells. However, the entire project area is located within the environmental justice communities of Oceana and Grover Beach, and the project's significant and unavoidable construction noise impact would be evenly distributed throughout the project area at 18 well locations, not focused on a single area. Therefore, this impact would not affect one area or population more than another.

Furthermore, construction noise impacts would be short-term, temporary, and typical of construction projects occurring throughout the region, which often generate temporary increases in noise. Therefore, although this impact would occur in the environmental justice communities of Oceana and Grover Beach, this impact would not be disproportionately high and adverse. As such, with mitigation incorporated, construction of the proposed project would not result in any disproportionately high impacts on minority, low income, or disadvantaged communities. Therefore, environmental justice impacts would be reduced to a less-than-significant level.

Resolution No. 21-05 Page 13 of 35
Reference: Final EIR, Pages 4.1-20 through 4.1-24, 4.5-6 through 4.5-8, 4.7-9 through

4.7-10, 4.10-24 through 4.10-27, 4.10-32 through 4.10-34, and 4.11-11 through 4.11-13 Greenhouse Gas Emissions
Impact GHG-2 The proposed project would be potentially inconsistent with the City of Pismo Beach's Climate Action Plan. This impact would be potentially significant.

Finding: Mitigation Measure(s) Feasible and Required, Impact Reduced to Lessthan-Significant Level. Changes or alterations have been required in, or incorporated into, the project that avoid or substantially Jessen the significant environmental effect as identified in the Final EIR.

Mitigation Measures: Mitigation Measure GHG-2 "GHG Emission Reduction Measures" has been adopted to achieve consistency with the City of Pismo Beach's Climate Action Plan.

Support for Finding: Implementation of Mitigation Measure GHG-2, which requires implementation of applicable measures from the City of Pismo Beach's Climate Action Plan, would achieve project consistency with this plan. Therefore, impacts would be less than significant with mitigation incorporated.

Reference: Final EIR, Pages 4.4-14 and 4.6-18
Cumulative The project would be potentially inconsistent with the City of Pismo Beach's Climate Action Plan, which was adopted to reduce the cumulative impact of greenhouse gas (GHG) emissions in Pismo Beach.

The project's contribution to the cumulative GHG emissions impact would be cumulatively considerable.

Finding: Mitigation Measure(s) Feasible and Required, Impact Reduced to Lessthan-Significant Level. Changes or alterations have been required in, or incorporated into, the project that avoid or substantially Jessen the significant environmental effect as identified in the Final EIR.

Mitigation Measures: Mitigation Measure GHG-2 "GHG Emission Reduction Measures" has been adopted to achieve consistency with the City of Pismo Beach's Climate Action Plan.

Support for Finding: The issue of climate change involves an analysis of whether a project's contribution towards an impact is cumulatively considerable. As discussed under Impact GHG-2, the project would be potentially inconsistent with the City of Pismo Beach's Climate Action Plan. Implementation of Mitigation Measure GHG-2, which requires implementation of applicable measures from the City of Pismo Beach's Climate Action Plan, would achieve project ·consistency with this plan. Therefore, with Resolution No. 21-05 Page 14 of 35
implementation of Mitigation Measure GHG-2, project impacts would therefore not be cumulatively considerable.

Reference: Final EIR, Pages 4.4-14 and 4.6-18
Hazards and Hazardous Materials
Impact HAZ-1 Construction and operation of the project would increase the routine transport and use of hazardous materials in the project area but would not create a significant hazard to the public or the environment. The project has the potential to result in the release of hazardous materials through reasonably foreseeable upset or accident conditions during both construction and operation of the project. This impact would be potentially significant.

Mitigation Measures: Mitigation Measures HAZ-1 (a) "Hazardous Materials Management and Spill Prevention and Control"; HAZ-1 (b) "Preparation of Hazardous Materials Business Plan"; BI0-3(c) "Drainages and Wetlands Best Management Practices During Construction"; and HWQ-1 "Initial Quarterly Radioactivity Testing" have been adopted to reduce the project's potential environmental effects with hazardous materials.

Support for Finding: Mitigation Measure HAZ-1 (a) includes preparation of a Hazardous Materials Management and Spill Prevention and Control Plan prior to commencement of construction activities to reduce potential construction-related impacts resulting from the routine transport and storage of hazardous materials. Implementation of Mitigation Measure HAZ-1 (b) entails the creation and implementation of a Hazardous Materials Business Plan for the ATF complex to reduce the potential for adverse impacts to occur in the event of spills and/or accidental releases of hazardous materials. Implementation of Mitigation Measure BI0-3(c) requires implementation of construction best management practices, including measures for handling hazardous materials near jurisdictional areas such as Arroyo Grande Creek, which would further reduce the potential release of hazardous materials through foreseeable upset or accident conditions. Implementation of Mitigation Measure HWQ-1 requires implementation of initial quarterly radioactive monitoring to identify violations of radioactivity levels and resolution of exceedances via additional treatment processes to reduce water quality impacts related to radioactive toxicity. Altogether, these mitigation measures would address the potential release of hazardous materials into the environment and would reduce the potential for adverse impacts to occur in the event of spills and/or accidental releases of hazardous materials. Therefore, impacts would be less than significant with mitigation incorporated.

Resolution No. 21-05 Page 15 of 35
Reference: Final EIR, Pages 4.2-47 through 4.2-49, 4.7-9 through 4.7-10, and 4.8-27 through 4.8-28
Impact HAZ-2 Although construction activities for the project would be conducted in compliance with all applicable regulations for the transport, storage, use, and disposal of hazardous materials and precautions would be taken to reduce potential risks, there is potential for an accidental release of hazardous materials within 0.25 mile of a school. This impact would be potentially significant.

Mitigation Measures: Mitigation Measure HAZ-1 (a) "Hazardous Materials Management and Spill Prevention and Control" has been adopted to minimize impacts related to the handling of hazardous materials in the vicinity of a school.

Support for Finding: Mitigation Measure HAZ-1 (a) entails development and implementation of a Hazardous Materials Management and Spill Prevention and Control Plan for project construction that will include measures for minimizing risks associated with accidental release of hazardous materials, including in proximity to existing or proposed schools. Implementation of Mitigation Measure HAZ-1 (a) would address potential release of hazardous materials into the environment and would reduce the potential for adverse impacts to occur in the event of spills and/or accidental releases of hazardous materials in the vicinity of a school. Therefore, impacts would be less than significant with mitigation incorporated.

Reference: Final EIR, Pages 4.7-9 through 4.7-11
Impact HAZ-5 Project construction would have the potential to interfere with an adopted emergency response plan or evacuation plan. This impact would be potentially significant.

Mitigation Measure: Mitigation Measure T-1 "Transportation Management Plan" has been adopted to minimize potential impacts to emergency response routes and evacuation routes during project construction.

Support for Finding: Mitigation Measure T-1 would reduce the potential for project construction to interfere with an adopted emergency response plan or evacuation plan by Resolution No. 21-05 Page 16 of 35
outlining temporary detour routes and alternative emergency access routes. As a result, implementation of Mitigation Measure T-1 would reduce impacts to emergency response plans and evacuation plans to a less-than-significant level.

Reference: Final EIR, Pages 4.7-13 and 4.11-11 through 4.11-13 Hydrology and Water Quality
Impact HWQ-1 The project would potentially violate water quality standards. This impact would be potentially significant.

Mitigation Measure: Mitigation Measures HWQ-1 "Initial Quarterly Radioactivity Testing" and BIO-3(c) "Drainages and Wetlands Best Management Practices During Construction" have been adopted to reduce potential impacts on surface water and marine water quality.

Support for Finding: Mitigation Measure HWQ-1 requires implementation of initial quarterly radioactive monitoring to identify violations of radioactivity levels and resolution of exceedances via additional treatment processes to achieve compliance with the City of Pismo Beach's and SSLOCSD's National Pollutant Discharge Elimination System permit requirements for effluent discharge from the existing ocean outfall. Mitigation Measure BIO-3(c) requires implementation of best management practices for grading and construction within jurisdictional areas where impacts are authorized and where construction occurs within 100 feet from jurisdictional areas or wetlands. As a result, implementation of Mitigation Measures HWQ-1 and BIO-3(c) would reduce project impacts on surface water and marine water quality to a less-than-significant level.

Reference: Final EIR, Pages 4.2-47 through 4.2-49 and 4.8-27 through 4.8-28 Noise
Impact N-2 Operation of the proposed project would potentially generate substantial permanent increases in ambient noise levels in the \/icinity of the project in excess of local standards. This impact would be potentially significant.

Mitigation Measure: Mitigation Measure N-2 "Acoustical Analysis of ATF Complex Operations" has been adopted to minimize operational noise impacts.

Resolution No. 21-05 Page 17 of 35
Support for Finding: Mitigation Measure N-2 requires preparation of an acoustical analysis upon completion of the 30 percent design· for the ATF complex and selection of equipment. The acoustical analysis will determine specific operational noise impacts and identify siting and/or design features that will be implemented to reduce operational noise levels to below the operational exterior and interior noise level limits for stationary noise sources during daytime and nighttime hours. As a result, operational noise impacts would be less-than-significant with mitig_ation incorporated.

Reference: Final EIR, Pages 4.10-32 through 4.10-34
Cumulative Given the proximity of cumulative projects to project components with known locations, cumulative daytime construction noise impacts would be potentially significant. The project's contribution to the cumulative daytime construction noise impact would be cumulatively considerable.

Mitigation Measure: Mitigation Measure N-1 "Construction Noise Reduction Measures" has been adopted to minimize daytime construction noise impacts.

Support for Finding: Mitigation Measure N-1 requires implementation of construction noise reduction measures that would reduce construction noise levels below the exterior construction noise threshold of 80 dBA Leq .
1 Furthermore, Mitigation Measure N-1
requires the City of Pismo Beach and/or its contractor(s) to schedule construction of IW5A, IW-5B, and MW-5A/5B/5C so that construction activities do not overlap with construction of the SSLOCSD Wastewater Redundancy Project, which would minimize the project's contribution to cumulative construction noise impacts at residences located west and north of the SSLOCSD WWTP property. Therefore, with mitigation incorporated, the project would not have a cumulatively considerable contribution to the significant cumulative impact related to daytime construction noise.

Reference: Final EIR, Pages 4.10-24 through 4.10-27 and 4.10-38 Transportation
Impact T-1 Project construction would conflict with a program, plan, ordinance or policy addressing the circulation system, including transit, roadway, bicycle and pedestrian facilities . This impact would be potentially significant.
1 dBA = A-weighted decibels; Leq = equivalent noise level Resolution No. 21-05 Page 18 of 35
Finding: Mitigation Measure(s) Feasible and Required, Impact Reduced to Lessthan-Significant Level. Changes or alterations have been required in, or incorporated into, the project that avoid or substantially lessen the significant environmental effect as id9ntified in the Final EIR.

Mitigation Measure: Mitigation Measure T-1 "Transportation Management Plan" has been adopted to minimize conflicts with local programs, plans, and ordinances addressing the circulation system.

Support for Finding: Mitigation Measure T-1 requires implementation of designated construction traffic routes, damage repair procedures, and traffic control measures to minimize and mitigate potential impacts to the movement of vehicles, public transit, bicycles, and/or pedestrians within the project area due to construction traffic and lane and/or road closures during project construction. In addition, Mitigation Measure T-1 requires coordination with South County Transit and designation of alternative bicycle and pedestrian routes during project construction to compensate for impacts to transit stops and bicycle and pedestrian facilities. As a result, impacts would be less than significant with mitigation incorporated.

Reference: Final EIR, Pages 4.11-11 through 4.11-13
Impact T-4 The project would potentially result in inadequate emergency access during construction activities. This impact would be potentially significant.

Mitigation Measure: Mitigation Measure T-1 "Transportation Management Plan" has been adopted to minimize impacts to emergency access in the project area.

Support for Finding: Mitigation Measure T-1 requires implementation of traffic control measures and coordination with emergency response providers to minimize impacts to emergency access in the project area due to lane and/or road closures during project construction. As a result, implementation of Mitigation Measure T-1 would reduce construction impacts related to emergency access to a less-than-significant level.

Reference: Final EIR, Pages 4.11 -11 through 4.11-13 and 4.11-15 Cumulative Given the proximity of cumulative projects to project components with known locations, cumulative construction traffic impacts would be potentially significant. The project's contribution to the cumulative construction traffic impact would be cumulatively considerable.

Resolution No. 21-05 Page 19 of 35
Finding: Mitigation Measure(s) Feasible and Required, Impact Reduced to Lessthan-Significant Level. Changes or alterations have been required in, or incorporated into, the project that avoid or substantially lessen the significant environmental effect as identified in the Final EIR.

Mitigation Measures: Mitigation Measure T-1 "Transportation Management Plan" has been adopted to minimize construction traffic conflicts in the project area.

Support for Finding: Mitigation Measure T-1 requires coordination with other active construction projects within 0.25 mile of project construction sites to minimize simultaneous lane and/or road closures, major deliveries, and haul truck trips. Mitigation Measure T-1 also requires designating alternate detour routes and construction traffic routes that avoid these projects to the maximum extent practicable. Therefore, with mitigation incorporated, the project would not have a cumulatively considerable contribution to the significant cumulative impact related to construction traffic.

Reference: Final EIR, Pages4.11-11 through4.11-13and4.11-15through4.11-16 Findings Associated with Significant Impacts that Cannot Feasibly Be Mitigated to a Less-than-Significant Level
Land Use
Impact LU-2 The project would potentially result in significant environmental impacts due to potential conflicts with land use plans, policies, and regulations adopted for the purpose of avoiding or mitigating an environmental effect. This impact would be potentially significant.

Finding: Mitigation Measures Required but Impact Not Reduced to Less than Significant Level. Changes or alterations have been required in, or incorporated into, the project that substantially lessen the significant environmental effect as identified in the Final EIR, but a significant unavoidable impact remains even after mitigation. Avoidance of the impact altogether is infeasible taking into account economic, legal, social, technological and/or other considerations, including considerations for the provision of employment for highly trained workers.

Mitigation Measure: Mitigation measures have been adopted to avoid and minimize the project's potential conflicts with land use plans, policies, and regulations adopted for the purpose of avoiding or mitigating an environmental effect. Mitigation measures include:

CR-2(a) "Worker's Environmental Awareness Program"; CR-2(b) "Archaeological and Native American Monitoring"; CR-2(c) "Unanticipated Discovery of Cultural Resources"; CR-2(d) "Archaeological Resource Studies"; BIO-3(a) "Jurisdictional Delineation"; BIO3(b) "Drainages and Wetlands Impact Mitigation"; BIO-3(c) "Drainages and Wetlands Best Management Practices During Construction"; HAZ-1 (a) "Hazardous Materials Management and Spill Prevention and Control"; HAZ-1 (b) "Preparation of Hazardous Resolution No. 21-05 Page 20 of 35
Materials Business Plan"; N-1 "Construction Noise Reduction Measures"; and N-2 "Acoustical Analysis of ATF Complex Operations".

Support for Finding: Mitigation Measures CR-2(a) through CR-2(d) would address potential impacts to known and unknown archaeological resources through implementation of a Worker's Environmental Awareness Program, monitoring of ground disturbance by a qualified archaeologist and Native American monitor, evaluation of any unanticipated cultural resources, and preparation of archaeological resource studies with implementation of additional mitigation, as needed, for project components with unknown locations. Mitigation Measures BIO-3(a) through BIO-3(c) would avoid, minimize, and compensate for direct and indirect impacts to state or federally protected wetlands from development of the project. Mitigation Measures HAZ-1(a) and HAZ-1(b) would address the potential release of hazardous materials into the environment and would reduce the potential for adverse impacts to adjacent land uses in the event of spills and/or accidental releases of hazardous materials.

Mitigation Measures N-1 and N-2 would minimize noise conflicts with adjacent land uses.

Groundwater well construction requires 24-hour drilling activities, and implementation of Mitigation Measure N-1 would reduce nighttime construction noise impacts to the extent feasible. However, it is possible that the final well locations may shift within a 50-foot radius of their current locations during final engineering and/or during installation to account for subsurface conditions. As a result, the final well locations may be closer to sensitive receivers than analyzed herein such that the specified mitigation measures would not sufficiently reduce noise levels. Furthermore, residents in the City within 100 feet of well locations and residents in uni:icorporated San Luis Obispo County within 175 feet of well locations may voluntarily choose not to be temporarily relocated during 24- hour well drilling activities and would be exposed to a significant temporary increase in ambient noise levels in excess of the specified thresholds, which are based on compliance with the San Luis Obispo County Code and Grover Beach Municipal Code.

As a result, land use impacts related to the 24-hour well drilling activities would be significant and unavoidable.

Reference: Final EIR, Pages 4.2-47 through 4.2-49, 4.3-19 through 4.3-21 , 4.7-9 through

4.7-10, 4.9-5 through 4.9-12, 4.10-24 through 4.10-27, and 4.10-32 through 4.10-34 Noise
Impact N-1 Project construction would generate substantial temporary increases in ambient noise levels in the vicinity of project components in excess of local standards during project construction.

Finding: Mitigation Measure Required but Impact Not Reduced to Less than Significant Level. Changes or alterations have been required in, or incorporated into, the project that substantially lessen the significant environmental effect as identified in the Final EIR, but a significant unavoidable impact remains even after mitigation. Avoidance of the impact altogether is infeasible taking into account economic, legal, social, Resolution No. 21-05 Page 21 of 35
technological and/or other considerations, including considerations for the provision of employment for highly trained workers.

Mitigation Measure: Mitigation Measures N-1, BIO-1 (a), BIO-1 (b), BIO-1 (e), and BIO1 U) have been adopted to minimize construction noise to the extent feasible. Mitigation measures include: N-1 "Construction Noise Reduction Measures"; BIO-1 (a) "California Red-legged Frog Habitat Avoidance"; BIO-1 (b) "California Red-legged Frog Avoidance and Minimization Measures"; BIO-1 (e) "Nesting Bird Avoidance and Minimization Measures"; and BIO-1 U) "Endangered!Threatened Species Avoidance and Minimization".

Support for Finding: Mitigation Measures BIO-1(a), BIO-1(b), BIO-1(e), and BIO-1U) would require avoidance and minimization measures to reduce indirect construction noise impacts to special status species. Implementation of Mitigation Measure N-1 would entail the use of several noise reduction measures, including mufflers and temporary sound barriers. Use of critical grade mufflers would reduce engine noise levels from mobile construction equipment by at least 10 dBA in comparison to industrial grade mufflers, and installation of portable sound enclosures for generators and air compressors would reduce noise levels by at least 10 dBA. Temporary sound barriers would reduce noise levels from well drilling activities by approximately 9 to 20 dBA, depending on the barrier height specified for each well location. Implementation of Mitigation Measure N-1 would reduce daytime construction noise levels during the site preparation, well drilling, and site restoration phases of construction for MW-1 C/1 D and MW-2D/2E/2F at the sensitive receivers nearest to the injection and monitoring wells below the daytime exterior noise thresholds. Therefore, daytime construction noise impacts related to site preparation, well drilling, and site restoration for the injection and monitoring wells would be reduced to a less-than-significant level.

In addition to mufflers, enclosures, and barriers, Mitigation Measure N-1 would require the closure of campsites within 200 feet of IW-1, IW-2A, IW-2B, IW-3, MW-1A/1 B, MW2A/2B/2C, and MW-3A/3B as well as the temporary relocation of residents in the City within 100 feet of construction activity in the City and residents in unincorporated San Luis Obispo County within 175 feet of construction activity during 24-hour well drilling activities to reduce daytime and nighttime noise impacts. Therefore, by closing the nearest campsites and temporarily relocating nearby residents, the nearest noisesensitive receivers would be located at greater distances, which would reduce noise impacts. As shown in Table 4.10-18 and Table 4.10-19 in Section 4.10, Noise, of the Final EIR, for the injection wells and monitoring wells, respectively, implementation of Mitigation Measure N-1 would reduce 24-hour well drilling noise levels at the nearest noise-sensitive receivers below the daytime and nighttime exterior noise thresholds. In addition, nighttime exterior noise levels for project components in unincorporated San Luis Obispo County would be reduced below 55 dBA Leq and 75 dBA Lmax, which would result in interior noise levels below the thresholds of 35 dBA Leq and 55 dBA Lmax. 2 Nighttime exterior noise levels for project components in Grover Beach would be reduced below 60 dBA Leq, which would result in interior noise levels below the threshold of 40 dBA Leq . 2 Lmax = maximum instantaneous noise level
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:t is possible that the final well locations may shift within a 50-foot radius of their current locations during final engineering and/or during installation to account for subsurface conditions. As a result, the final well locations may be closer to sensitive receivers than analyzed in the Final EIR such that the specified mitigation measures would not sufficiently reduce noise levels. Furthermore, residents in the City within 100 feet of well locations and residents in unincorporated San Luis Obispo County within 175 feet of well locations may voluntarily choose not to be temporarily relocated during 24-hour well drilling activities and would be exposed to a significant temporary increase in ambient noise levels in excess of the specified thresholds. Therefore, construction noise impacts would be minimized but not completely mitigated through implementation of Mitigation Measure N-1. As a result, construction noise impacts related to the 24-hour well drilling activities for the injection and monitoring wells would be significant and unavoidable.

Furthermore, implementation of Mitigation Measure N-1 would require preparation of an acoustical analysis for the new production well once its location is known to determine the specifications for noise reduction measures that would reduce construction noise levels for this project component to below the daytime and nighttime thresholds. However, if new production well is sited within 100 feet of residences such that temporary relocation of residents would be required to fully mitigate construction noise impacts, residents may voluntarily choose not to be temporarily relocated during 24-hour well drilling activities and would be exposed to a significant temporary increase in ambient noise levels in excess of the specified thresholds. Therefore, construction noise impacts would be minimized but not eliminated through implementation of Mitigation Measure N-1. As a result, construction noise impacts related to the production well would be significant and unavoidable.

Reference: Final EIR, Pages 4.10-17 through 4.10-31
VI. PROJECT ALTERNATIVES
In addition to proposing mitigation measures to reduce the impacts associated with the proposed Central Coast Blue Project, the Certified Final EIR presented several alternatives to project development. The alternatives presented included the statutorilymandated "No Project" alternative, a "No Agricultural Irrigation Pipelines" alternative, an "ATF Complex at SSLOCSD WWTP" alternative, a "Modified Locations of Injection and Monitoring Wells" alternative, an "Increased State Water Project Allocation" alternative, and an "Increased Storage of Lopez Reservoir" alternative. The second alternative was specifically formulated to provide an alternative that furthered at least some of the project objectives while lessening (though not necessarily eliminating) one or more of the Project's significant but mitigable impacts. No Project alternatives that would both meet Project objectives and avoid the Project's significant and unavoidable construction noise and land use impacts were identified because hydrogeologic limitations and regulatory requirements constrain the feasible locations of the infrastructure necessary to meet Project objectives (i.e., injection, monitoring, and production wells). As such, it is not feasible to site all injection and monitoring wells at a sufficient distance from residential Resolution No. 21-05 Page 23 of 35
and hotel/motel land uses to avoid these impacts while also accounting for optimal hydrogeologic conditions and compliance with regulatory requirements for groundwater injection and indirect potable reuse. The Certified Final EIR presents a reasonable range of alternatives that also allows the City Council to consider (by extrapolation) the possibility of variations of the alternatives presented.

Each of the alternatives presented in the Certified Final EIR are rejected as infeasible.

The City Council makes this determination after taking into account economic, legal, social, technological and/or other considerations, including the provision of employment opportunities for highly trained workers. The justifications for rejecting the Certified Final EIR alternatives as infeasible are explained below for each separate alternative.

Alternative 1: No Project Alternative
The "No Project" alternative is mandated by CEQA. It allows for an assessment of what the environmental consequences are of not moving forward with a proposed Project. The No Project Alternative assumes that the proposed ATF complex, water distribution pipelines, injection wells, monitoring wells, new production well, and agricultural irrigation pipelines are not constructed. The full volume of secondary treated effluent from the Pismo Beach and SSLOCSD VW\/TPs continues to be discharged to the ocean via the outfall pipeline. No seawater intrusion barrier is developed, and no additional recharge of the SMGB occurs. In addition, no recycled water is provided for agricultural irrigation.

No change in environmental conditions would occur under this alternative because no development would occur and site conditions would not change. This alternative would avoid the proposed project's significant and unavoidable construction noise and land use impacts related to 24-hour well drilling activities and significant but mitigable impacts in the areas of air quality, biological resources, cultural resources, environmental justice, GHG emissions, hazards, hydrology and water quality, operational noise, and transportation. No significant impacts would occur under this alternative, and none of the mitigation measures recommended for the proposed Project would apply.

Alternative 1 is considered the environmentally superior alternative because it would eliminate all of the anticipated adverse environmental effects of the Project, including the Project's significant and unavoidable construction noise and land use impacts related to 24-hour well drilling activities. However, this alternative is rejected as infeasible because it would not achieve the stated Project objectives and would not result in the Project's important beneficial impacts of improving water supply reliability; creating a sustainable, drought-resistant local water supply for southern San Luis Obispo County; providing a new source of recharge to the SMGB to protect the basin from degradation via seawater intrusion; and potentially providing a new source of water for agricultural irrigation. The City Council wishes instead to approve a project that would further longstanding State, regional, and local objectives for water supply, reliability, and resiliency rather than maintaining the current water supply portfolio as is.

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Alternative 2: No Agricultural Irrigation Pipelines
Similar to the proposed Project, this alternative consists of an ATF complex (including an advanced purified water storage tank, an equalization tank, and a pump station), water distribution pipelines, injection wells, monitoring wells, and one new production well.

However, under this alternative, agricultural irrigation pipelines would not be constructed as part of Phase II of the project, and water produced by the ATF complex would not be used to irrigate agricultural lands south of Oceana. Instead, either all advanced purified water produced from the ATF complex under Phases I and II (approximately 3.9 million gallons per day) would be used for groundwater injection, or the ATF complex would be constructed with less capacity than under the proposed Project, thereby processing less secondary treated effluent from the Pismo Beach and SSLOCSD \/IM/TPs. 3 The purpose
of this alternative is to avoid Project impacts associated with the construction of agricultural irrigation pipelines across Arroyo Grande Creek. Potential impacts associated with the remaining Project components (i.e., injection wells, monitoring wells , water distribution pipelines, ATF complex, and new production well) would occur as described for the proposed Project.

Of the alternatives that would meet Project objectives, Alternative 2 would be the environmentally superior alternative because it would not include construction of agricultural irrigation pipelines and would therefore avoid all impacts associated with that project component, including those related to air quality, biological resources, cultural resources, energy, GHG emissions, noise, and transportation/traffic. However, Alternative 2 would not avoid the project's significant and unavoidable construction noise and land use impacts associated with 24-hour well drilling activities for the injection, monitoring, and production wells because construction of the injection, monitoring, and production wells in close proximity to residential land uses would still be required . As a result, construction noise and land use impacts under Alternative 2 would remain significant and unavoidable.

Although Alternative 2 would attain the basic Project objectives, it is rejected as infeasible because the reduction in environmental impacts under this alternative would involve an undesirable trade-off in that it would preclude the potential for the beneficial use of excess recycled water for agricultural irrigation purposes. Furthermore, all of the Project's environmental impacts that would be lessened by Alternative 2 would already be minimized and reduced to a less-than-significant level for the proposed Project through implementation of the mitigation measures identified in the Certified Final E!R.

Alternative 3: ATF Complex at SSLOCSD \/IM/TP
Similar to the proposed Project, Alternative 3 consists of an ATF complex (including an advanced purified water storage tank, an equalization tank, and a pump station), water distribution pipelines, injection wells, monitoring wells, and one new production well. 3 The determination of whether to construct an ATF complex with less capacity rather than use all advanced purified water for groundwater injection would be dependent on if additional groundwater recharge is necessary for protection and augmentation of groundwater suppl ies.

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Alternative 3 would include injection of advanced purified water into the SMGB to develop a seawater intrusion barrier. In addition, a portion of the water from the ATF may be used for agricultural irrigation. However, under Alternative 3, the ATF complex would be constructed at the existing SSLOCSD \/WI/TP facility at 1600 Aloha Place in Oceana. The purpose of this alternative is to provide an alternative siting option for the ATF complex.

Alternative 3 would result in generally similar environmental impacts as the proposed Project because the nature of project components would remain the same and most project components would be constructed in the same or similar locations. However, Alternative 3 would result in potentially greater environmental impacts than the proposed Project related to energy and hydrology and water quality, which would require additional mitigation measures to reduce impacts to a less-than-significant level. Furthermore, Alternative 3 would not avoid the Project's significant and unavoidable construction noise and land use impacts associated with 24-hour well drilling activities for the injection, monitoring , and production wells because construction of the injection, monitoring , and production wells in close proximity to residential land uses would still be required . As a result, construction noise and land use impacts under Alternative 3 would remain significant and unavoidable.

Although Alternative 3 would attain the basic Project objectives, it is rejected as infeasible because this alternative would result in similar or greater environmental impacts than the proposed project and would require additional flood protection design considerations to account for the location of the ATF complex in a FEMA-designated 100-year Special Flood Hazard Area.

Alternative 4: Modified Locations of Injection and Monitoring Wells Similar to the proposed Project, Alternative 4 consists of an ATF complex (including an advanced purified water storage tank, an equalization tank, and a pump station), water distribution pipelines, injection wells, monitoring wells, one new production well, and agricultural irrigation pipelines. Alternative 4 would include injection of advanced purified water into the SMGB to develop a seawater intrusion barrier. In addition, a portion of the water from the ATF complex may be used for agricultural irrigation. However, under Alternative 4, the locations of some injection and monitoring wells and water distribution pipeline alignments would be modified to avoid recreational impacts to the Coastal Dunes RV Park and Campground . Under this alternative, IW-1 , IW-2A, IW-2B, IW-3, and MW2A/2B/2C would be sited outside the Coastal Dunes RV Park and Campground , and the locations of all remaining monitoring wells would shift to be located in accordance with regulatory requirements for travel times. To accommodate the modified locations of IW1, IW-2A, IW-2B, and IW-3, minor modifications to the alignments of water distribution pipel ines would be needed to connect these injection wells to the ATF complex. However, similar to the proposed Project, water distribution pipeline alignments would generally be located in the Coastal Dunes RV Park and Campground , SR 1, public roadway rights-ofway, Oceana County Airport, the SSLOCSD \/WI/TP property, and the properties that contain the injection wells.

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Alternative 4 would result in generally similar environmental impacts as the proposed Project because the nature of the project components would remain the same and project components would be constructed in the same or similar locations. However, Alternative 4 would result in potentially greater impacts than the proposed Project related to biological resources and cultural resources due to proximity to potential special status species habitat associated with Meadow Creek and several known archaeological resources in the vicinity of Pismo State Beach Corp Yard, which may require additional mitigation measures to reduce impacts to a less-than-significant level. Furthermore, Alternative 4 would not avoid the Project's significant and unavoidable construction noise and land use impacts associated with 24-hour well drilling activities for the injection, monitoring, and production wells because construction of the injection, monitoring, and production wells in close proximity to residential land uses would still be required. As a result, construction noise and land use impacts under Alternative 4 would remain significant and unavoidable.

Although Alternative 4 would attain the basic project objectives, it is rejected as infeasible because this alternative would result in similar or greater environmental impacts than the proposed Project.

Alternative 5: Increased State Water Project Allocation Under this alternative, the Northern Cities Management Area (NCMA) agencies would seek increased State Water Project (SWP) allocations rather than implementing the proposed Project. The purpose of this alternative is to address, in part, comments received during the scoping period requesting analysis of alternative water supply options. To achieve an equivalent amount of water supply as the proposed Project, an additional 3,566 acre-feet per year of SWP allocations would need to be secured . The full volume of secondary treated effluent from the Pismo Beach and SSLOCSD WWTPs would continue to be discharged to the ocean via the outfall pipeline. No seawater intrusion barrier would be developed, and no additional recharge of the SMGB would occur. In addition, no recycled water would be provided for agricultural irrigation. To secure new or additional entitlements, NCMA agencies would need to negotiate with San Luis Obispo Flood Control and Water Conservation District, the County of Santa Barbara, and the Central Coast Water Authority. Furthermore, additional capacity would need to be available at the Polonia Pass Water Treatment Plant and in the Central Coast Water Authority Coastal Branch and Lopez pipelines for treatment and delivery of the additional SWP water.

Of the alternatives that are not the No Project alternative, Alternative 5 is the environmentally superior alternative, primarily because this alternative does not require the physical construction of any new infrastructure. This alternative would avoid the Project's significant and unavoidable construction noise and land use impacts and lessen the significant but mitigable impacts of the proposed Project on air quality, biological resources, cultural resources, environmental justice, hazards and hazardous materials, hydrology and water quality, operational noise, and transportation/traffic. However, this alternative may increase impacts related to energy and GHG emissions as compared to the proposed Project because the energy intensity of SWP water is potentially greater Resolution No. 21-05 Page 27 of 35
than that of recycled water and use of additional SWP water is not consistent with the goals of the State's 2017 Climate Change Scoping Plan.

In addition, Alternative 5 is rejected as infeasible because it would not achieve the stated Project objectives and would not result in the Project's important beneficial impacts of augmenting groundwater supply; creating a sustainable, drought-resistant local water supply for southern San Luis Obispo County; providing a new source of recharge to the SMGB to protect the basin from degradation via seawater intrusion; and reducing wastewater discharges to the ocean. Furthermore, this alternative would be dependent on the completion of successful negotiations with San Luis Obispo County Flood Control and Water Conservation District, Central Coast Water Authority, and the County of Santa Barbara, which are not guaranteed to result in increased SWP allocations for NCMA agencies. As discussed later in the Statement of Overriding Considerations, the City finds the Project's significant and unavoidable impacts to be acceptable and preferable to Alternative 5 because Alternative 5 would not achieve the City's stated Project objectives or local, regional, and State water supply, reliability, and resiliency objectives to the same extent as the proposed Project.

Alternative 6: Increased Storage of Lopez Reservoir
Under this alternative, the spillway elevation of the Lopez Dam would be raised to increase the yield of the Lopez Reservoir rather than implementing the proposed Project.

The purpose of this alternative is to address, in part, comments received during the scoping period requesting analysis of alternative water supply options. Raising the spillway of Lopez Dam by twelve feet would increase additional long-term yield, which would correlate to a greater entitlement of the water supply that can be distributed to NCMA agencies. However, the estimated water supply yield from this alternative would not be sufficient to provide an equivalent amount of water supply (i.e. , 3,566 AFY) as the proposed Project; therefore, this alternative would need to be implemented in conjunction with additional water supply alternatives, such as Alternative 5 or water conservation measures, in order to provide an equivalent amount of water supply as the proposed Project. The feasibility of this alternative would be limited by precipitation and drought conditions, which constrain the amount of water captured by the Lopez Reservoir each year. The existing spillway has not been used since 1998 due to low precipitation and extended drought conditions; therefore, although this alternative could provide up to 1,005 acre-feet of water, the actual amount would vary based on year-to-year conditions. Under this alternative, the full volume of secondary treated effluent from the Pismo Beach and SSLOCSD WWTPs would continue to be discharged to the ocean via the outfall pipeline.

No seawater intrusion barrier would be developed, and no additional recharge of the SMGB would occur. In addition, no recycled water would be provided for agricultural irrigation.

Alternative 6 would eliminate the Project's significant and unavoidable construction noise and land use impacts and also lessen the Project's significant but mitigable impacts related to environmental justice, hydrology and water quality, and noise. However, this alternative would potentially result in greater environmental impacts to air quality, cultural Resolution No. 21-05 Page 28 of 35
resources, and GHG emissions than the proposed Project due to a greater intensity of construction activities, the potential submersion and/or destruction of historical and archaeological resources, and inconsistency with the State's 2017 Climate Change Scoping Plan.

Alternative 6 is rejected as infeasible because it would not achieve the Project objectives and would not result in the Project's important beneficial impacts of augmenting groundwater supply; creating a sustainable, drought-resistant local water supply for southern San Luis Obispo County; providing a new source of recharge to the SMGB to protect the basin from degradation via seawater intrusion; and reducing wastewater discharges to the ocean. Furthermore, this alternative would present significantly greater regulatory and permitting challenges associated with modifications to the Lopez Dam as compared to the proposed Project. As discussed later in the Statement of Overriding Considerations, the City finds the Project's significant and unavoidable impacts to be acceptable and preferable to Alternative 6 because Alternative 6 would not achieve the City's Project objectives or local, regional, and State water supply, reliability, and resiliency objectives to the same extent as the proposed Project.

VII. STATEMENT OF OVERRIDING CONSIDERATIONS FOR SIGNIFICANT AND

UNAVOIDABLE IMPACTS
In approving the Central Coast Blue Project, which is evaluated in the Certified Final EIR, the City Council makes the following Statement of Overriding Considerations in support of its findings on the Certified Final EIR. After review of the entire administrative record , the City Council finds that specific economic, legal, social, technological, and other anticipated benefits of the Project outweigh its significant and unavoidable adverse environmental impacts and therefore justify the approval of the Project (i.e., the full execution of the Operating Agreement by the City of Pismo Beach, acting as the Lead Agency, the City, acting as a Responsible Agency, along with the Investor, Member, or Partner Agencies, to undertake the Central Coast Blue Project). The City Council finds that the Project has eliminated or substantially lessened all significant effects on the environment where feasible, and finds that, on balance, the remaining significant and unavoidable impacts of the project are acceptable because the benefits of the project outweigh them. The City Council finds that each of the overriding considerations set forth below constitutes a separate and independent ground for such a finding .

Significant and Unavoidable Environmental Effects
The Project will result in significant and unavoidable impacts to noise and land use, as set forth under Findings Associated with Significant Impacts that Cannot Feasibly Be Mitigated to a Less-than-Significant Level. The City Council has balanced these significant unavoidable impacts of the Project against the Project's benefits and, based on the entire record before it, hereby determines that the identified impacts are acceptable.

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Significant Irreversible Environmental Effects
CEQA Guidelines Section 15126.2(d) requires a discussion of any significant irreversible environmental changes that would be caused by the Project should it be implemented.

Such significant irreversible environmental changes may include the following:
• Use of non-renewable resources during the initial and continued phases of the project that would be irreversible because a large commitment of such resources makes removal or non-use unlikely.
• Primary impacts and, particularly secondary impacts (such as highway improvements that provide access to a previously inaccessible area) that generally commit future generations to similar uses.
• Irreversible damage which may result from environmental accidents associated with the project.

As discussed in Section 6, Other CEQA Required Discussions, of the Certified Final EIR, construction of the Project would require the use of building materials and energy, some of which are non-renewable resources. Consumption of these resources would occur with any development projects in the region and are not unique to the Project. Operation of the Project would irreversibly increase local demand for non-renewable energy resources such as petroleum and natural gas for vehicle fuels, space heating, and generation of electricity. Increasingly efficient building fixtures and automobile engines as well as implementation of the State Renewable Portfolio Standard are expected to offset the demand to some degree. It is not anticipated that the Project would significantly affect local or regional energy supplies. Section 4.4, Energy, of the Certified Final EIR includes a full analysis of potential impacts related to energy resources by construction and operation of the proposed project.

The Project would incrementally contribute local traffic, increase ambient noise levels, and generate regional air pollutant and GHG emissions throughout the duration of Project operation. These topics are discussed in Section 4.1, Air Quality, Section 4.6, Greenhouse Gas Emissions, Section 4.10, Noise, and Section 4.11 , Transportation/Traffic, of the Certified Final EIR. However, these impacts would be less than significant with implementation of Mitigation Measures GHG-2 and N-2.

As discussed in Section 4.6, Hazards and Hazardous Materials, of the Certified Final EIR, the Project may result in reasonably foreseeable accidental spills and/or releases of hazardous materials at the ATF complex location, and implementation of Mitigation Measure HAZ-1 (b) would be required to reduce impacts to a less-than-significant level.

However, given the limited quantities and nature of hazardous materials to be used during Project operation, these accidental spills and/or releases would not result in irreversible environmental damage.

The impacts described above are further articulated under Findings Associated with Significant, Potentially Significant, and Cumulative Significant Impacts that Can Be Resolution No. 21-05 Page 30 of 35
Mitigated to a Less-than-Significant Level and Findings Associated with Significant Impacts that Cannot Feasibly Be Mitigated to a Less-than-Significant Level. The City Council has balanced these significant but mitigable irreversible impacts of the Project against the Project's benefits and, based on the entire record before it, hereby determines that the identified impacts are acceptable.

Specific Findings
Project Benefits Outweigh Unavoidable Impacts
The City Council hereby finds that the remaining significant and unavoidable impacts of the Project are acceptable in light of the following substantial benefits of the Project, which constitute the specific economic, legal, social, technological and other considerations that justify the approval of the Project.

1. Improves Local Water Supply Reliability and Resiliency for NCMA Agencies The Project is a water infrastructure project that would significantly improve water supply reliability; create a sustainable, drought-resistant local water supply for southern San Luis Obispo County; and provide a new source of recharge to the SMGB to protect the basin from degradation via seawater intrusion.

Implementation of the Project would allow the NCMA agencies to increase groundwater pumping levels (within their respective pumping limitations established in the SMGB Adjudication Judgment) as compared to recent years during which they have voluntarily decreased groundwater pumping below their respective allocations in response to the 2009 groundwater monitoring event that indicated incipient seawater intrusion.
4 Because the Project would develop a
seawater intrusion barrier, the Project would improve local water supply reliability and resiliency by protecting the existing groundwater supply for continued use by NCMA agencies as a reliable source of potable water. In doing so, the Project would have a beneficial impact on groundwater levels and supplies and would further the City's goal to develop a reliable source of clean water that is available and protected at all times (Principle P-5 of the Conservation/Open Space Element of the General Plan). The Project would also further the goals of the State's 2017 Climate Change Scoping Plan to 1) develop more reliable water supplies through a more resilient, diversified, sustainably managed water sources system and 2) reuse water more efficiently through water recycling and reuse to help meet future water demands and adapt to climate change. 5

2. Supports Planned Population Growth
The Urban Water Management Plans for the Cities of Pismo Beach, Grover Beach, and Arroyo Grande all anticipate full use of each city's groundwater allocation in calculating the supply sources available to meet projected water demand in normal year, single dry year, and multiple dry year scenarios. However, in recent years, 4 GSI Water Solutions. 2020. Northern Cities Management Area 2019 Annual Monitoring Report. April 23, 2020. Available at: https://oceanocsd .org/wp-contenUu ploads/bsk-pdf-manager/2020/05/NCMA-2019- Ann ual-Report Final.pdf
5 California Air Resources Board. 2017. California's 2017 Climate Change Scoping Plan. November 2017.

Available at: https://ww2.arb.ca.gov/sites/defauIUfiles/classic//cc/scopingplan/scoping plan 2017.pdf Resolution No. 21-05 Page 31 of 35
the NCMA agencies have voluntarily decreased groundwater pumping below their respective allocations in response to the 2009 groundwater monitoring event that indicated incipient seawater intrusion.
6 As discussed above, implementation of the
Project would allow the NCMA agencies to increase groundwater pumping levels (within their respective pumping limitations established in the SMGB Adjudication Judgment). As a result, the Project would support NCMA agencies in meeting demand generated by the existing population, activities, and land uses in the Project area and would be consistent with water planning policies and projections for the NCMA, particularly in light of California's ongoing challenges with cyclical drought conditions. The Project would also be consistent with the City's policies to investigate and pursue additional alternative water sources to increase existing supply and support development envisioned by the General Plan (Policies F-36 and F-41 of the Facilities Element of the General Plan).

3. Reduces Wastewater Discharges to the Pacific Ocean
Under existing conditions, the City of Pismo Beach and SSLOCSD \/WvTPs discharge all secondary treated effluent to the Pacific Ocean via the existing ocean outfall pipeline. Under the Project, this secondary treated effluent would be conveyed to the ATF complex, where it would be further treated for beneficial reuse via indirect potable reuse through groundwater injection as well as potentially agricultural irrigation. Although approximately 10 to 30 percent of water treated by the ATF complex would be discharged via the existing ocean outfall as reverse osmosis concentrate, the Project would beneficially reuse approximately 70 to 90 percent of the secondary treated effluent from the VWvTPs, which would greatly reduce the amount of secondary treated effluent discharged to the ocean. As such, the Project would beneficially utilize locally-produced secondary treated effluent, which would otherwise be lost to the ocean, to augment local potable water supplies.

The Project would therefore further City goals and policies expressed in the General Plan and Local Coastal Program (LCP), including ensuring a sustainable and safe water supply through a combination of conservation and maximizing supply (Policy COS-5.1 of the Conservation and Open Space Element), the City shall continue to pursue adequate water supplies to serve the projected population build-out in 2030 (LCP Section 6.7.1.1 ), the City shall continue to investigate opportunities to procure additional allocations from existing supplies and shall continue to investigate opportunities to secure new water supply sources in order to provide greater supply reliability (LCP Section 6.7.1.3), and recycling of treated wastewater as an alternative to ocean disposal of all effluent treated in the treatment plant shall be strongly supported and encouraged by the City when reclamation is economically feasible (LCP Section 6.7.2.1 ) .. In addition, the Project would advance the goals of the State Water Resources Control Board's Water Quality Control Policy for Recycled Water to 1) increase the use of recycled water to 2.5 million acre-feet per year by 2030; 2) reuse all dry weather direct discharges 6 GSI Water Solutions. 2020. Northern Cities Management Area 2019 Annual Monitoring Report. April 23, 2020.

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of treated wastewater to enclosed bays, estuaries and coastal lagoons, and ocean waters that can be viably put to a beneficial use;7 and 3) maximize the use of recycled water in areas where groundwater supplies are in a state of overdraft. 8

4. Project is Funded by Grants and Low Interest Financing The current cost estimate for Phase 1 of the Project is $43.5 million. The Project has applied for and/or received both state and federal grant funds and could receive approximately $35.4 million in grant funding. As of spring 2020, the Project has received $2 million from the State's Proposition 1 Groundwater Grant Program and $796,094 from the United States Bureau of Reclamation's WaterSMART program. The Project also plans to apply for the next round of funding through both programs. In total, the Project could receive grants for up to 50 percent of the implementation costs through the Prop 1 Groundwater Grant Program (approximately $21 ,730,950 based on current cost estimates) and 25 percent of total program costs through the WaterSMART program (approximately $10,865,475 based on current cost estimates). The remaining $8,069,381 would be eligible for low interest financing through the State Water Resources Control Board Clean Water State Revolving Fund.

Based on economic analysis done for the Project's Title XVI WaterSMART application, the Project benefits include $142 million of benefits to the local agricultural and tourism industries plus the numerous qualitative benefits to the local communities discussed earlier, including improved water supply reliability, reduced reliance on imported water, improved groundwater quality, reduced wastewater discharges to the Pacific Ocean, and efficient utilization of local water resources.

Balance of Competing Goals
The City Council hereby finds it is imperative to balance competing goals in approving the Project and the environmental documentation of the Project. Not every environmental concern has been fully satisfied because of the need to satisfy competing concerns to a certain extent. The City Council has chosen to accept certain environmental impacts because of the many benefits inherent in the attainment of City, regional, and State goals as described above, as well as the implementation of required mitigation measures, would balance the potential for environmental impacts to occur.

The City Council hereby finds and determines that the Project and the supporting environmental documentation provide for a positive balance of the competing goals and that the economic, social and other benefits to be obtained by the Project outweigh any remaining environmental and related potential detriment of the Project. 7 For the purpose of this goal, treated wastewater does not include discharges necessary to maintain beneficial uses and brine discharges from recycled water facilities or desalination facilities (State Water Resources Control Board 2018). 8 State Water Resources Control Board. 2018. Water Quality Control Policy for Recycled Water.

December 11 , 2018. Available at:
https://www.waterboards.ca.gov/water issues/programs/water recycling policy/policy.html Resolution No. 21-05 Page 33 of 35
Overriding Considerations
Based upon the objectives identified for the Project, the City Council has determined that the Project should be approved and that any remaining unmitigated en\Jironmental impacts attributable to the Project are outweighed by the specific economic, social and other overriding considerations as described above.

The City Council has determined that any environmental detriment caused by the Project has been minimized to the extent feasible through mitigation measures identified herein, and, where not feasible, has been outweighed and counterbalanced by the significant social benefits to be generated to the City, its residents, and the region .

VIII. MITIGATION MONITORING AND REPORTING PROGRAM
The City Council recognizes that any approval of the Project would require concurrent approval of a Mitigation Monitoring and Reporting Program (MMRP), which ensures performance of identified mitigation measures. Such an MMRP would identify the entity responsible for monitoring and implementation, and the timing of such activities. The City will use the MMRP to track compliance with proposed Project mitigation measures. The MMRP will remain available for public review during the compliance period. The MMRP is included as part of the Certified Final EIR, and is hereby incorporated by reference, and included as Exhibit B to this Resolution.

IX. ADMINISTRATIVE RECORD
The environmental analysis provided in the Draft EIR, Certified Final EIR, and the findings provided herein are based on and are supported by the following documents, materials, and other evidence, which constitute the Administrative Record for the Central Coast Blue Project:

1. The December 2019 NOP, April 2020 NOP, comments received on the NOPs, and all other public notices issued by the City of Pismo Beach in relation to the Certified Final EIR (i.e., Notice of Availability);

2. All associated references, appendices, and technical materials cited in the Draft EIR;

3. The December 2020 Final EIR, including comment letters, oral testimony, and technical materials cited in the document;

4. Minutes, transcripts, and recordings of the discussions regarding the project and hearings held by the City of Pismo Beach for the project; and

5. Staff reports associated with City Council meetings on the project and written and oral testimony submitted at these meetings.

X. LOCATION AND CUSTODIAN OF RECORDS
The City Clerk is the custodian of the Administrative Record. Due to the closure of City Hall as a result of the ongoing COVID-19 pandemic, the documents and materials that constitute the administrative record are available for review online at https ://centra lcoastbl ue. com/recent-updates/.

Resolution No. 21-05 Page 34 of 35
XI. FILING NOTICE OF DETERMINATION
The City Council hereby directs the City Clerk to file a Notice of Determination regarding the approval of the Project within five business days of adoption of this Resolution.

Resolution No. 21-05 Page 35 of 35

EXHIBIT B

MITIGATION MONITORING AND REPORTING PROGRAM
CEQA requires that a reporting or monitoring program be adopted for the conditions of project approval that are necessary to mitigate or avoid significant e1ects on the environment (Public Resources Code 21081 .6). This Mitigation Monitoring and Reporting Program is intended to track and ensure compliance with adopted mitigation measures during the Project implementation phase. For each mitigation measure recommended in the Final Environmental Impact Report (Final EIR), specifications are made herein that identify the action required , the monitoring that must occur, and the agency or department responsible for oversight.

The Mitigation Monitoring and Reporting Program is incorporated by reference and attached hereto as Exhibit AA.

Grover Beach City CouncilFebruary 15, 2022

Grover Beach City Council
February 15, 2022