Grover Beach City Council
September 26, 2022

Agenda Item No. 14

CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: September 26, 2022 FROM: Matthew Bronson, City Manager
PREPARED BY: David Hale, City Attorney
Matthew Bronson, City Manager
SUBJECT: Approval of a Joint Exercise of Powers Agreement Creating the Central Coast Blue Regional Recycled Water Authority

RECOMMENDATION
Approve the Joint Exercise of Powers Agreement Creating the Central Cost Blue Regional Recycled Water Authority with the cities of Arroyo Grande and Pismo Beach for the Central Coast Blue Project and authorize the Mayor to execute the Agreement.

BACKGROUND
At its February 15, 2022 meeting, the City Council authorized entering into a Cost Sharing Agreement with the cities of Arroyo Grande, and Pismo Beach for the Central Coast Blue recycled water project (Project) as well as a Resolution that authorized the City Manager to apply for financial assistance from Clean Water State Revolving Fund administered by the State Water Resources Control Board for the City’s share of anticipated construction costs for the Project. The Cost Sharing Agreement (shown as Attachment 1 for reference) contained provisions related to the contemplated creation of a Joint Powers Authority, which will be a separate legal public entity, 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 of the Project. As set forth in the Cost Sharing Agreement, the Joint Powers Authority (JPA) Agreement is to contain provisions addressing 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 the Cost Sharing Agreement.

The CCB JPA Agreement has been negotiated by the cities of Arroyo Grande, Grover Beach, and Pismo Beach and is now being presented to the Council for its consideration and approval. The Project has been a multi-agency effort between the cities of Arroyo Grande, Grover Beach, and Pismo Beach to construct a regional recycled water project that will enhance supply reliability by injecting advanced purified water into the Santa Maria Groundwater Basin. The South San Luis Obispo County Sanitation District will be involved in this project in Phase II after completion of the facility’s construction. The City of Pismo Beach is the lead agency for construction of the Project.

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 an advanced purification level to create between 900 and 1,000 acre-feet of additional water per year. This new developed water will be injected into the basin at key locations to help to ensure that a sufficient barrier exists within the basin to keep seawater from flooding into the aquifer and contaminating the wells used by the Staff Report: Central Coast Blue Joint Powers Authority Agreement Page 2 September 26, 2022
NCMA parties. As a result, the Project will support the City’s ability to rely on groundwater to supply potable water to its residents and businesses into the future. Approval of the CCB JPA Agreement and completion of the Project will secure an estimated 324 to 360 acre-feet per year of reliable groundwater for the City based on a cost-sharing allocation of 36% of project costs.

Overview of CCB JPA Agreement
The CCB JPA Agreement contains provisions to provide for the ongoing operation of the Project.

The agreement provides that the new Central Cost Blue Regional Recycled Water Authority will have the responsibility for the operation and maintenance of the Project and will own the facility sites, facilities, ancillary facility sites and ancillary facilities, which are defined in the Agreement.

The agreement also references and incorporates the Cost Sharing Agreement and contains provisions to be consistent with it with review and revisions from Project bond counsel to address and facilitate anticipated future financing for the Project. Below are key provisions of the agreement:
• Authority powers and governance. The powers of the Authority (e.g., to make contracts, employ staff and consultants, acquire and dispose of property, issue bonds and incur debts and liabilities, apply for grants, etc.). There will be a Board of Directors, which will have a Chair and Vice Chair, meet at least quarterly, and consist of one representative of each city, as well as one alternate. Except for reimbursement for actual costs and expenses, the Board will serve without compensation from the Authority. • Budget process. In March of each year, the Board is to adopt a preliminary budget and an allocation of contributions from the Member Agencies for presentation to each Member Agency’s governing body. The governing body of each Member Agency is to then review and comment on the preliminary budget and allocation of contributions. The Board is to adopt a final budget prior to July 1 of each year and adopt an allocation of contributions from the Member Agencies to be consistent with the percentages agreed to for PreConstruction and Construction costs for Phase 1 of the Project (i.e., Arroyo Grande 25%, Grover Beach 36%, and Pismo Beach 39%). Each annual budget is to be adopted by an affirmative unanimous vote of the Board of Directors, except that the first annual budget may be adopted by a majority vote.
• Construction financing, operations and maintenance costs, capital improvement costs, and debt service. In connection with the issuance of debt, each party will enter into a Financing Agreement with the Authority securing the obligation of such party to make payments on its share of debt service on financing issued by the Authority. The Financing Agreements will stipulate that payment to the Authority is a special limited obligation payable solely from system net revenues of each party’s Enterprise Fund. • Termination and withdrawal. The agreement has provisions on withdrawal of Member Agencies and the effect of such withdrawal, including continuing liability and indemnification. The Agreement makes it clear that the debts, liabilities, and obligations of the Authority are not the debts, liabilities and obligations of any of the Member Agencies.

The Council has already approved the City’s participation in the Project through the Cost Sharing Agreement which contemplates that the parties will create a Joint Powers Authority to own and operate the Project. Approval of the CCB JPA Agreement will provide a framework for operating, managing and administering the Project. The Project is important for the ongoing resiliency of groundwater resources relied upon by the City, as well as all residents, businesses, agricultural operations, and visitors to the Five Cities area. The Arroyo Grande City Council will consider approval of the CCB JPA Agreement on September 27 and the Pismo Beach City Council will consider it on October 4.

Staff Report: Central Coast Blue Joint Powers Authority Agreement Page 3 September 26, 2022
Lastly, the Council is asked to appoint on an interim basis a representative of the Council to serve on the JPA Board of Directors along with an alternate. Such an appointment would continue for the remainder of this calendar year if a JPA Board meeting is needed prior to the end of this year.

The Council will be asked to identify a representative and alternate for 2023 as part of the Council’s committee assignments process in January 2023.

Environmental Review
The City of Pismo Beach is the Lead Agency under the California Environmental Quality Act (CEQA) for the Project and previously prepared, circulated, and approved an Environmental Impact Report (EIR), and adopted findings and a Statement of Overriding Considerations on March 16, 2021. The City of Grover Beach is a Responsible Agency for the Project under CEQA.

On February 15, 2022, the City Council adopted findings and a Statement of Overriding Considerations for the Project relying on the EIR in compliance with CEQA. No additional CEQA findings are required at this time.

FISCAL IMPACT
There is no direct fiscal impact to this action. The City’s FY 2021-23 budget includes a total of $1,385,400 in the Water Fund for the Project with $655,400.00 in FY 2021-22 and $730,000 for FY 2022-23 with a carryover from prior year of $1,200,000. The CCB JPA Agreement defines the financial obligation of the City to pay for 36% of the total costs of the Project while Pismo Beach will pay 39% of the costs and Arroyo Grande will pay 25% of the costs. Total costs for the Project are currently estimated to be $92,595,000. To date, $17,120,000 in federal and state grants have been awarded to fund the Project. The City’s portion of the remaining $46,296,000 in Project costs funded by local agencies is $16,666,920 though it is anticipated that the Project will receive additional grant funding which would reduce local costs. The water rates adopted by Council on May 10, 2021 following a utility rate study are intended to fund the City’s share of costs for the Project not funded through federal and state grants. The City’s utility rate structure, along with the rate structures in the other cities, is being reviewed by an outside consultant to verify local funding levels and adequate debt coverage ratios.

ALTERNATIVES
The Council has the following alternatives to consider:

1. Approve the Joint Exercise of Powers Agreement Creating the Water Central Cost Blue Regional Recycled Authority (CCB JPA Agreement) with the cities of Arroyo Grande and Pismo Beach for the Central Coast Blue Project and authorize the Mayor to execute the Agreement; or

2. Do not approve Joint Exercise of Powers Agreement Creating the Water Central Cost Blue Regional Recycled Authority; or

3. Provide other direction to staff.

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

Staff Report: Central Coast Blue Joint Powers Authority Agreement Page 4 September 26, 2022
Attachments

1. Joint Exercise of Powers Agreement Creating the Central Cost Blue Regional Recycled Water Authority

2. Central Coast Blue Cost Sharing Agreement

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
1 A JOINT EXERCISE OF POWERS AGREEMENT

CREATING THE CENTRAL COAST BLUE REGIONAL

RECYCLED WATER AUTHORITY
THIS JOINT EXERCISE OF POWERS AGREEMENT ("Agreement") is made and entered into by and between the City of Arroyo Grande, a California municipal corporation (“Arroyo Grande”), the City of Grover Beach, a California municipal corporation (“Grover Beach”), and the 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, each Party to this Agreement is a public agency authorized and empowered to contract for the joint exercise of powers under Articles 1 through 4, Chapter 5, Division 7, Title 1 (commencing with Section 6500) of the Government Code of the State of California; and 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 are participating 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, Phase 1 of the Project includes construction of an Advanced Treatment Facility (“ATF”), treatment of secondary treated flows from Pismo Beach’s Wastewater Treatment Plant (“WWTP”), construction of approximately 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
Attachment 1

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
2 WHEREAS, Phase 2 of the Project will include upgrades to the ATF to increase capacity, construction of approximately 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, Arroyo Grande, Grover Beach and Pismo Beach believe that the best way to achieve their joint goals in a way that is mutually beneficial is to form a joint powers agency under Articles 1 through 4, Chapter 5, Division 7, Title 1 (commencing with Section 6500) of the Government Code of the State of California ("Joint Exercise of Powers Act"); and
WHEREAS, by forming a joint powers agency ("JPA") under the Joint Exercise of Powers Act, the Parties believe they will be better able to, through a separate JPA, oversee and manage the planning and implementation, including but not limited to construction, operation and administration of, the Project.

NOW THEREFORE, in consideration of the above Recitals and of the mutual promises and agreements contained herein, the Parties agree as follows:

ARTICLE 1

GENERAL PROVISIONS

1.1 Definitions. Unless the context otherwise requires, the words and terms defined in this Section

1.1 shall, for the purposes of this Agreement, have the meanings herein specified.

1.1.1. Act means Articles 1 through 4, Chapter 5, Division 7, Title 1 of the Government Code of the State of California (commencing with Section 6500) relating to the joint exercise of powers common to public agencies.

1.1.2. Agreement means this Joint Exercise of Powers Agreement.

1.1.3. Ancillary Facilities means injection wells, storage tanks, pump stations, associated piping, and any other equipment located on an Ancillary Facilities Site.

1.1.4. Ancillary Facilities Sites means any real property or real property interest held by the Authority for purposes of the Project, excluding the Facility Site.

1.1.5. Annual Budget means the budget adopted pursuant to Section 6.2.2 of this Agreement.

1.1.6. Authority means the Central Coast Blue Regional Recycled Water Authority, which is created by this Agreement.

1.1.7. Board or Board of Directors means the Board of Directors referred to in Article 2 of this Agreement, which is the governing body of the Authority.

1.1.8. Bonds means bonds, notes, commercial paper, and any other evidence of indebtedness of the Authority authorized and issued pursuant to the Act, any indebtedness issued or incurred by the Authority pursuant to any act supplementary to the Act, including, but not limited to, refunding bonds authorized and issued pursuant to Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California.

1.1.9. Cost Sharing Agreement means the Cost Sharing Agreement for the Parties’ Participation in the Central Coast Blue Project dated March 14, 2022, a copy of which is attached hereto as Exhibit A and incorporated herein.

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
3 1.1.10. Director means a member of the Board appointed to the Board pursuant to Section 2.2 of this Agreement.

1.1.11. Effective Date means the last date on which all Parties to this Agreement have executed the Agreement.

1.1.12. 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, but excluding the joint outfall shared by the South San Luis Obispo County Sanitation District and the City of Pismo Beach which both agencies use to discharge their municipal waste.

1.1.13. Facility Site means Assessor’s Parcel Number 060-543-016 in the City of Grover Beach, California.

1.1.14. Financing Agreement means any agreement between the Authority and a Member Agency securing the obligation of the Member Agency to make payments relating to Bonds or other obligations issued or incurred by the Authority in connection with the financing of the Facilities or the improvement, use or acquisition of real or personal property that is or will be owned or operated by the Authority, or to refinancing of such previously issued or incurred Bonds or other obligations.

1.1.15. Manager means the manager of the Authority.

1.1.16. Member Agency(ies) means Arroyo Grande, Grover Beach and Pismo Beach and any other entity added to this Agreement by a subsequent amendment.

1.1.17. Member of the Board or Board Member means and includes any duly appointed Director, Chair and/or Vice-Chair of the Board.

1.1.18. Party(ies) means those entities who have executed this Agreement or any Amendment to this Agreement and who have not withdrawn from the Authority.

1.2 Purpose. This Agreement is made pursuant to the Act by Arroyo Grande, Grover Beach and Pismo Beach, each of which is authorized to contract with the other pursuant hereto. The purposes of this Agreement are to create the Authority, provide for the administration of the Authority and to enable the Authority to: (1) take all actions necessary to operate, and maintain Phases 1 and 2 of the Project. Phase 1 includes construction of an ATF, treatment of all secondary treated flows from Pismo Beach’s WWTP, construction of approximately five injection wells and associated transmission lines, and injection of flows from the WWTP; and (2) pursue grant funding and financing options for the Project and future projects; and (3) collectively interact with regulatory agencies with oversight over the Parties and the Project.

1.3 Creation of Authority. Pursuant to the Act, there is hereby created a public entity known as the “Central Coast Blue Regional Recycled Water Authority." The Authority shall be a public entity separate and apart from the Member Agencies and shall administer this Agreement.

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
4 1.4 Term. The term of this Agreement shall commence on the Effective Date and shall continue until terminated by the Parties as provided in Article 7 of this Agreement.

1.5 Phase 1, Project Facility Site Ownership, Construction Financing, and Operation

1.5.1. Phase 1 of Project. As set forth in Article III, Section 1 – Lead Agency Duties of the Cost Sharing Agreement, Pismo Beach will be 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 construction and start-up of Phase 1 on behalf of the Member Agencies. 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 Section 6.3.2 below.

1.5.2. Ownership of Facility Sites and Facilities. Pismo Beach has previously purchased the Facility Site, which is located in Grover Beach and identified as Assessor’s Parcel Number 060-543-016 (“Facility Site”). Within sixty (60) days of the Effective Date of this Agreement, Pismo Beach shall transfer the Facility Site to the Authority. The Authority shall own all Facilities located at the Facility Sites, including, but not limited to, the real property, buildings, water and treatment facilities, and support infrastructure and assets, injection wells and related transmission lines.

1.5.3. Ownership of Ancillary Facilities Sites and Ancillary Facilities. The Authority shall own all Ancillary Facilities Sites and Ancillary Facilities located thereon.

1.5.4. Financing of Construction Costs. To finance Construction Costs, as defined in the Cost Sharing Agreement, the Authority shall apply for and obtain financing for such costs through the issuance of Bonds, entering into loans or Financing Agreements or any other financing mechanisms not otherwise covered by grant funding awarded to the Project.

Any loans entered into and secured for construction of the Project may consist of separate installment sale agreements based on the respective share of each Member Agency, and any prepayment may be paid either directly to the Authority by each Party consistent with the Water Purveyor Contribution percentages identified in Section 6.3.2 hereof or directly to the grant funding agency or bond trustee, depending on the funding mechanism. In the event that the Authority is not able to finance the Construction Costs as described in this Section 1.5.4, the Parties will seek financing consistent with the financing plan described in Article III, Section 1.c of the Cost Sharing Agreement for its respective share of Construction Costs.

1.5.5. Operation and Maintenance of the Facilities. The Authority will have total responsibility for the operation and maintenance of the Facilities.

1.5.6. Procurement Methods. The Board may adopt such policies relating to procurement of services, equipment, supplies and other materials needed to accomplish the purposes of this Agreement.

1.6 Powers of Authority

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
5 1.6.1. General Powers. The Authority shall exercise, in the manner herein provided, the powers which are common to each of the Member Agencies, powers otherwise permitted under the Act, and powers necessary to accomplish the purposes of this Agreement.

1.6.2. Specific Powers. Subject to the limitations set out in Section 1.6.1, the Authority is hereby authorized, in its own name, to do all acts necessary, convenient and appropriate for the exercise of the foregoing powers for the purposes set forth in this Agreement and to do any or all of the following:
i. To make and enter contracts, including contracts with its Member Agencies; ii. To employ agents, attorneys, consultants and employees or to contract for personnel to fulfill its mission and purpose. The Authority shall not contact employees of the Member Agencies at their current places of employment about employment opportunities with the Authority;
iii. To lease, acquire, construct, manage, maintain or operate any building, works or improvements;
iv. To lease, acquire, hold or dispose of real or personal property; v. To acquire and hold property, including funds, Project agreements and other obligations of any kind, and pledge, encumber or assign the same, or the revenues therefrom or any portion of such revenues, or other rights, whether then owned or possessed, or thereafter acquired, for the benefit of the bondholders, and as security or additional security for any bonds or the performance of obligations under an indenture;
vi. To provide for the advance of bond proceeds and other funds pursuant to Project agreements as necessary to pay or reimburse for Project costs; vii. To borrow money and issue Bonds and incur debts, liabilities or obligations for the purpose of paying all or any part of the costs of the Project or for any other authorized purpose, which do not constitute a debt, liability or obligation of any Member Agency;
viii. To receive gifts, contributions and donations of property, funds, services and other forms of assistance from persons, firms, corporations, and governmental entities, provided that the Authority consents to such gifts, contributions and donations;
ix. To fix the compensation, if any, paid to the Board of Directors, Secretary, Treasurer, Controller and Attorney, in compliance with all applicable laws; x. To prescribe the duties, compensation and other terms and conditions of employment of other agents, officers and employees;
xi. To adopt reasonable rules and regulations for the conduct of the day-to-day operations of the Authority;

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
6 xii. To apply for, accept, receive and disburse grants, loans and other aid from any agency of the United States of America or of the State of California; xiii. To sue and be sued in its own name;
xiv. To enter into Financing Agreements, state funding agreements and federal funding agreements relating to the Project, and assume rights and obligations pursuant to these agreements;
xv. To invest money in the treasury, pursuant to Government Code Section 6505.5, that is not required for the immediate necessities of the Authority, as the Authority determines advisable, in the same manner and on the same conditions as local agencies, pursuant to Section 53601 of the Government Code; xvi. To contract and pay compensation for professional, financial, and other services; xvii. To carry out and enforce all provisions of this Agreement; xviii. To exercise any and all powers which are provided for in the Act and in Government Code section 6584 et seq., including, without limitation, Government Code section 6588, as they exist on the Effective Date of this Agreement or may hereafter be amended;
xix. To exercise any power necessary or incidental to the foregoing powers.

ARTICLE 2

BOARD OF DIRECTORS

2.1. Creation. The Authority shall be governed by a board of three (3) members, which is hereby established and which shall be composed of one (1) representative appointed from each Member Agency.

The governing board shall be known as the "Board of Directors of the Central Coast Blue Regional Recycled Water Authority." All voting power shall reside in the Board.

2.2. Members of the Board of Directors.

2.2.1. Directors Appointed. Upon the Effective Date of this Agreement, each Member Agency which has not already done so shall designate and appoint, by resolution or minute order of its governing body, one (1) member of its governing body to act as its representative on the Board of Directors, and one individual to act as an alternate to each Director so appointed. The alternate appointed by each Member Agency shall have the authority to attend, participate in and vote at any meeting of the Board when the regular member is absent.

2.2.2. Membership. Each Director and alternate of the Board of Directors shall serve until a successor is appointed; provided, however, each Director and alternate serves at the pleasure of the appointing Member Agency's governing body and may be removed at any time, with or without cause, at the sole discretion of the appointing Member Agency governing body. If a Director or alternate's membership on the appointing Member Agency's governing body ceases, his or her membership on the Board shall also cease.

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
7 2.2.3. Chair. The Board of Directors shall elect one of its members as Chair of the Board. The term of office for the Chair of the Board shall be one (1) year. The Chair of the Board shall preside at all meetings and shall perform such other duties as are specified by the Board of Directors.

2.2.4. Vice-Chair. The Board of Directors shall elect one of its members as Vice-Chair. The term of office for the Vice-Chair shall be one (1) year. The Vice-Chair shall perform all the duties of the Chair of the Board in the absence of the Chair of the Board or in the event the Chair of the Board is unable to perform such duties, and shall perform such other duties as are specified by the Board of Directors.

2.2.5. Board Compensation. Except for reimbursement for actual costs and expenses, the Board shall serve without compensation from the Authority. Compensation may be provided as approved by the Member Agencies appointing each Director and alternate, and any such compensation will be the responsibility of the Member Agency.

2.2.6. Reimbursement of Costs. Each Board Member is entitled to reimbursement for their travel, meals, lodging and other actual and necessary expenses incurred in the performance of the duties required or authorized by the Board pursuant to Government Code Section 53232.2.

2.3. Powers of the Board. All the power and authority of the Authority shall be exercised by the Board of Directors.

2.4. Provision for Bylaws. The Board may cause to be developed and may adopt, from time to time, such bylaws for the Authority to govern its day-to-day operations. Each Member Agency shall receive a copy of any bylaws developed and adopted under this Section.

ARTICLE 3

MEETINGS OF THE BOARD

3.1 Meetings. The Board shall provide for its regular meetings by resolution; provided, however, that at least one regular meeting shall be held each fiscal quarter. The date, hour and place of the regular meetings shall be fixed by resolution of the Board and filed with the governing body of each of the Member Agencies. The Board may meet in joint session with other public agencies and advisory bodies in accordance with State law.

3.2 Ralph M. Brown Act. All meetings of the Board, including, without limitation, regular, adjourned regular, special, adjourned special, and emergency meetings, shall be called, noticed, held, and conducted in accordance with the provisions of the Ralph M. Brown Act, commencing with section 54950 of the Government Code.

3.3 Voting. Each Board Member shall have one vote. Except as otherwise provided by law or by this Agreement, all actions of the Board shall be approved on the affirmative vote of a majority of the Members of the Board.

3.4 Quorum. A majority of the Members of the Board shall constitute a quorum for the transaction of business, except that less than a quorum may adjourn from time to time.

3.5 Minutes. The Secretary of the Authority shall cause minutes of regular, adjourned regular, special, adjourned special, and emergency meetings to be kept and shall, as soon as possible after each

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
8 meeting, cause a copy of the minutes to be forwarded to each Member of the Board and to each Member Agency.

3.6 Rules. The Board may adopt from time to time such rules and regulations for the conduct of its affairs as may be required.

ARTICLE 4

OFFICERS AND EMPLOYEES OF THE AUTHORITY

4.1 Secretary. The Board of Directors shall appoint a Secretary who shall serve at the pleasure of the Board. The Secretary may, but need not, be a member of the Board of Directors. The Secretary shall be responsible for the minutes and other records of the proceedings of the Board of Directors and shall perform such other duties as the Board of Directors specifies.

4.2 Treasurer and Auditor Controller. Pursuant to Government Code Sections 6505.5 and 6505.6, the Authority's Treasurer and Auditor/Controller shall be the Manager's senior financial officer (such as its chief financial officer, director of finance, or finance manager as designated by the Manager. The Treasurer shall be the depository and have custody of all money of the Authority, from whatever source, and shall have all of the duties and obligations set forth in Sections 6505 and 6505.5 of the Government Code. The offices of Treasurer and Auditor/Controller may be held by separate individuals, or combined and held by one individual as the Board may elect. The Treasurer and Auditor/Controller shall serve at the pleasure of the Manager and may be removed at any time, with or without cause, in the sole discretion of the Manager.

4.3 Authority Attorney. The Attorney for the Authority, who may not be counsel to one of the Member Agencies, shall be engaged by the Board of Directors. The Attorney for the Authority or a designated deputy shall attend or participate in meetings of the Board of Directors; provided, however, that the absence of the Authority Attorney shall not affect the validity of any meeting. The Attorney shall perform such other duties the Board of Directors specifies.

4.4 Official Bond. Pursuant to Government Code section 6505.1, the public officer, officers or persons who have charge of, handle or have access to any property of the Authority shall file an official bond in an amount to be fixed by the Parties to this Agreement.

4.5 Additional Officers and Employees. The Board shall have the power to appoint such additional officers and to employ such employees, assistants, contractors, consultants and others as may be appropriate. Such power shall include, but not be limited to, the power to appoint a Manager for the purposes of managing and administering the Authority, and an Operator for the purposes of providing operations, maintenance, and similar services to the Authority. A Member Agency may be appointed as the Authority's Manager and/or Operator pursuant to a written agreement with the Authority.

ARTICLE 5

COMMITTEES

5.1 Committees. The Board of Directors, by a majority vote, may form committees for any purpose.

Such vote shall designate the method for appointing committee members, the scope of the duties and responsibility of the committee, whether the committee is a standing or ad hoc committee, and such other matters as the Board may deem appropriate.

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
9 ARTICLE 6

FINANCES
Fiscal year. The Fiscal Year of the Authority shall be the period commencing on July 1 of each year and ending on and including the following June 30.

6.2 Annual Budget.

6.2.1 Interim Budget. The Board shall, within one hundred and twenty days (120) days of the Effective Date of this Agreement, approve an interim budget, which shall constitute the operating budget until the Annual Budget is adopted.

6.2.2 Annual Budget. Except for costs related to construction of Phase I, which shall be subject to the Cost Sharing Agreement, annually, in March of each year, the Board shall adopt a preliminary budget and an allocation of contributions from Member Agencies for presentation to each Member Agencies' governing body. The governing body of each Member Agency shall, no later than May 31 of each year, review and comment on the preliminary budget and allocation of contributions. Thereafter, annually, prior to July 1 of each year, the Board shall adopt a final budget for all expenses to be made by the Authority during the ensuing Fiscal Year and adopt an allocation of contributions from Member Agencies consistent with Section 6.3.2. Each annual budget shall be adopted and shall be effective on the affirmative unanimous vote of the Directors, except that the first Annual Budget may be adopted by an affirmative vote of a majority of the Directors.

Contributions for each Member Agency shall be due and payable to the Authority on a monthly basis with the first payment being made within thirty (30) days of approval of the budget.

6.2.3 Failure to Obtain Budget Approval. In the event the Board does not adopt a budget prior to the beginning of a fiscal year, the budgeted amounts of all expenses and allocation of contributions from Member Agencies shall remain the same as the amounts last approved by the Board in its most recently adopted budget; provided, however, that the amounts shall be increased by the Consumer Price Index ("CPI") with a minimum increase of no less than two percent (2%). The CPI shall mean the Consumer Price Index, Bureau of Labor Statistics, U.S. Department of Labor Consumer Price Index-All Urban Consumers, All Items, Los Angeles-Long Beach-Anaheim CA for the twelve (12) month period ending the February prior to the beginning of the fiscal year, or if this index no longer exists, an index approved by a majority of the Board. This factor shall be applied to the budget until such time as a new budget is adopted by the Board. Any shortfall in revenues shall be made up from available reserves dedicated by the Board for such purpose and, if insufficient to cover the shortfall, any available reserve funds which have not been designated by the Board for a particular purpose or otherwise legally restricted for other purposes. Reserves shall mean any available cash or investments.

6.3 Funds, Accounts and Reports. There shall be strict accountability of all funds and reporting of all receipts and disbursements.

6.3.1 Sources of Funds. The sources of funds available to the Authority may include, but are not limited to, the following:

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
10 i. Grants, donations, and loans received by the Authority from local, State, or Federal agencies or from individuals or businesses.
ii. Funds collected as user charges or user fees by Member Agencies. iii. Funds collected from Members pursuant to this Agreement. iv. Funds received from State and Federal disaster relief agencies. v. Funds obtained by issuing Bonds.
vi. Funds collected pursuant to a Financing Agreement.
vii. "In kind" contributions from Member Agencies.
viii. Funds from any other source derived.

The Authority shall arrange for the receipt of such funds from the above sources as are available to the Authority and as are necessary for the conduct of the Authority's activities. Member Agencies may, in the appropriate circumstances: (a) make contributions from their treasuries for the purposes set forth in this Agreement; (b) make payments of public funds to defray the cost of such purposes; and (c) make advances of public funds for such purposes. The provisions of Government Code section 6513 are incorporated into this Agreement.

6.3.2 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.

The Parties agree to the following cost allocation of the total Pre-Construction 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%.
. As provided in Section 6.2.2, annual contributions by Member Agencies for ongoing operations shall be consistent with the above percentages.

6.3.3 Accounts. Revenues or funds received or made available to the Authority from any source whatsoever, shall be deposited into accounts that may be established by the Authority and may be expended by the Authority in any legal manner, subject to such reservations as may be imposed by the Authority from time to time.

6.3.4 Reports. The Treasurer shall, within one hundred and eighty days (180) days after the close of each Fiscal Year, give a complete written report of all financial activities for such fiscal year to the Board of Directors and to each Member Agency. The Authority's books and records shall be open to inspection at all reasonable times by representatives of each Member Agency.

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

CENTRAL COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
11 6.4 Payments and Advances. No expenditures in excess of those budgeted shall be made without approval of a revised or amended budget, which may from time to time be submitted to and approved by the Board of Directors.

6.5 Audit. The Treasurer and Auditor/Controller shall cause an annual audit of the accounts and records of the Authority to be made and reported in accordance with Sections 6505 through 6505.6 of the Government Code. The audit shall be conducted by an independent certified public accountant. The audit shall conform to generally accepted auditing standards. Such report shall be filed within twelve (12) months of the end of the Fiscal Year under examination.

ARTICLE 7

COST ALLOCATION

7.1 Operations and Maintenance Costs. Each Party shall pay its allocated share of all expenses incurred by the Authority for administration, operation, and maintenance of its Facilities and Ancillary Facilities based on the Water Purveyor Contribution percentages.

7.2. Capital Improvement Costs. Capital improvement costs to acquire, construct, or improve Facilities and Ancillary Facilities shall be subject to allocation between the Parties based on the Water Purveyor Contribution percentages.

7.3 Debt Service. In connection with the issuance of Bonds or the incurrence of other obligations by the Authority to finance or refinance Construction Costs or capital improvement costs to acquire, construct or improve Facilities and Ancillary Facilities, each Party shall negotiate a Financing Agreement with the Authority that includes provisions by which each Party shall make payments with respect to such Party’s share of debt service on the Bonds or other obligations incurred by the Authority, consistent with any pre-existing contractual obligations of each Party.

Each Financing Agreement will stipulate that the debt service payments made by a Party to the Authority will be subject to the payment limitations set forth in Article IV, Section 5 of the Cost Sharing Agreement. For purposes of this Section 7.3, the provisions of Article IV, Section 5 of the Cost Sharing Agreement shall continue in full force and effect in the event that the Cost Sharing Agreement shall terminate.

At the time of a Bond issuance or the entering into of any other obligation by the Authority, if a Party elects to pay its share of the capital improvement costs in full with cash, it will not be allocated any share of the debt service on such Bonds or other obligations incurred by the Authority, and will not be required to enter into a Financing Agreement with the Authority, for that Bond issuance or obligation.

ARTICLE 8

TERMINATION/WITHDRAWAL/AMENDMENT

8.1 Duration and Termination. This Agreement shall become effective as of the Effective Date and shall continue in full force and effect until terminated by the mutual written agreement of all Member Agencies, which agreement shall meet the requirements imposed by the terms and conditions of all outstanding bonds, notes, warrants, indentures and other evidences of indebtedness; provided, however, that this Agreement and the Authority shall continue to exist for the purpose of disposing of all claims, distribution of assets, and all other functions necessary to conclude the affairs of the Authority.

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

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12 8.2 Withdrawal. Notwithstanding any other provision of this Agreement, any Member Agency may withdraw from the Authority by providing the Authority with one hundred eighty (180) days written notice of its intent to withdraw. A withdrawal from the Authority constitutes a withdrawal of that Member Agency's representatives from the Board of Directors.

8.3 Effect of Withdrawal. The withdrawal of a Member Agency shall not terminate its responsibility to contribute its share of any obligation incurred by the Authority, including amounts determined by the Board for (1) liabilities and claims accrued during the time the agency was a Member Agency or (2) budgeted expenses for the Fiscal Year in which notice of intent to withdraw is given. Except as the withdrawing Member Agency may agree, in writing, with the Board, the withdrawing Member Agency shall automatically relinquish all rights as a Member Agency under this Agreement, on the effective date of the withdrawal. Upon termination of this Agreement, a Member Agency that has withdrawn will be treated like all other Member Agencies for purposes of disbursement of Authority assets, unless otherwise agreed in writing.

8.4 Disbursement. Upon termination of this Agreement and after payment of all liabilities, costs, expenses and charges validly incurred under this Agreement, all remaining assets of the Authority shall be disbursed among Member Agencies, including any Member Agencies which previously withdrew from the Authority. All assets shall be divided among the Member Agencies in accordance with and proportionate to the Water Purveyor Contribution amounts stated in Section 6.3.2, if it is feasible to do so.

8.5 Amendment. This Agreement may be amended at any time by the written approval of the governing body of each Member Agency upon recommendation of a majority of the Board of Directors of the Authority.

ARTICLE 9

SPECIAL PROVISIONS

9.1 Insurance. The Authority shall maintain types and levels of insurance coverage for the Authority as the Board of Directors determines to be reasonably adequate, provided, however, that each Member Agency shall be named as an additional insured on such policy of and/or agreement for insurance coverage.

9.2 Liability of Authority, Board, Officers, Employees. Pursuant to Government Code section 6508.1, the debts, liabilities, and obligations of the Authority shall not be the debts, liabilities and obligations of any of the Member Agencies or any of their respective members, officers, directors, employees or agents. The Authority, its Directors, officers, employees, staff and agents shall use ordinary care and reasonable diligence in the exercise of their powers and in the performance of their duties pursuant to this Agreement. No Member Agency, its officer, director or employee shall be responsible for any action taken or omitted by any other Member Agency, or its officers, or employees or the Authority, its officers, or employees.

9.3 Indemnity. The Authority shall indemnify, defend and hold harmless the Board of Directors, the individual Member Agencies, and their elected officials, members, officers, directors, employees and agents from and against any and all liability, loss, damages, expenses, costs (including, without limitations, costs and fees of litigation or arbitration) of every nature, arising out of any act or omission related to this Agreement, including, but not limited to those related to the use of any property and/or facility of any Member Agency, The Authority shall indemnify, defend and hold harmless the individual Member Agencies, and their elected officials, members, officers, directors, employees and agents from and against any and all liability, loss, damages, expenses, costs (including, without limitations, costs and

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

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13 fees of litigation or arbitration) of every nature, arising out of any willful misconduct of the Authority Board of Directors or its Board Members, officers or employees. Further, the duty of the Authority to indemnify, defend and hold harmless shall not extend to the activities of the individual Member Agencies, and their members, officers, directors, employees and agents that are outside the scope of this Agreement.

The Authority's duty to indemnify each Member Agency pursuant to this Agreement shall survive that Member Agency's withdrawal from the Agency. This section shall not be deemed to supersede, extinguish, or modify the indemnification provisions in the Cost Sharing Agreement.

9.4 Conflict of Interest Code. The Authority shall, by resolution, adopt a conflict of interest code as required by law.

ARTICLE 10

MISCELLANEOUS PROVISIONS

10.1 Severability. If any section, clause or phrase of this Agreement or the application thereof to any Party or any other person or circumstance is for any reason held to be invalid by a court of competent jurisdiction, it shall be deemed severable, and the remainder of the Agreement or the application of such provisions to the other Party or to other persons or circumstances shall not be affected thereby. Each Party hereby declares that it would have entered into this Agreement, and each subsection, sentence, clause and phrase thereof, irrespective that one or more sections, subsections sentences, clauses or phrases or the application thereof might be held invalid.

10.2 Notices. Notices required or permitted hereunder shall be sufficiently given if made in writing and delivered either personally or by registered or certified mail, postage prepaid to the respective Parties, as follows:

City of Arroyo Grande
Attention: City Manager
300 E Branch Street
Arroyo Grande, CA 93420
City of Pismo Beach
Attention: City Manager
760 Mattie Road
Pismo Beach, CA 93449
City of Grover Beach
Attention: City Manager
154 S. Eighth Street
Grover Beach, CA 93433

10.3 Other Obligations. The responsibilities and obligations of each Party to this Agreement shall be solely as provided in this Agreement, or as may be provided for in other agreements to be executed by the Parties, including but not limited to the Cost Sharing Agreement. In the event there is any conflict between this Agreement and the Cost Sharing Agreement, the provisions of this Agreement shall be controlling.

10.4 Consent. Whenever in this Agreement or in any amendment thereto consent or approval is required, the same shall not be unreasonably withheld.

10.5 Other Agreements Not Prohibited. Other agreements by and between the Parties of this Agreement or any other entity are neither prohibited nor modified in any manner by execution of this Agreement.

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14 10.6 Assignment. The rights, titles and interests of any Party to this Agreement shall not be assignable or transferable without the consent of the governing body of each Party hereto and the Board of Directors.

Any assignment of a membership in the Authority made under this Section 10.6 by the governing body of any Party hereto will not result in the novation of the assignor Member Agency’s obligations with respect to this Agreement, a Financing Agreement or any other agreement which may obligate the assignor Member Agency, unless such novation is agreed to in writing by such consenting Member Agency, the assignee and the assignor Member Agency.

10.7 Section Headings. The section headings herein are for convenience of the Parties only, and shall not be deemed to govern, limit, modify or in any manner affect the scope, meaning or intent of the provisions or language of this Agreement.

10.8 Laws of California. This Agreement is made in the State of California, under the Constitution and laws of such State, and shall be construed and enforced in accordance with the laws of such State.

10.9 Construction of Language. It is the intention of the Parties hereto that if any provision of this Agreement is capable of two constructions, one of which would render the provision void and the other of which would render the provision valid, then the provision shall have the meaning which renders it valid.

10.10 Cooperation. The Parties recognize the necessity and hereby agree to cooperate with each other in carrying out the purposes of this Agreement.

10.11 Successors. This Agreement shall be binding upon and shall inure to the benefit of the successors of the Parties hereto.

10.12 Enforcement. The Authority is hereby authorized to take any and all legal or equitable actions, including, but not limited to, an injunction and specific performance, necessary or permitted by law to enforce this Agreement.

10.13 Integration. This Agreement constitutes the full and complete Agreement of the Parties.

10.14 Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement. [Signatures on following page.]

A JOINT EXERCISE OF POWERS AGREEMENT CREATING THE

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15 IN WITNESS WHEREOF, the Parties have caused this Joint Exercise of Powers Agreement to be executed and attested by their proper officers thereunto duly authorized on the day and year set forth below, making the same effective on the date signed by the last of all Parties hereto.

CITY OF ARROYO GRANDE: CITY OF PISMO BEACH:

By:

Caren Ray Russom, Mayor
Date:

By:

Ed Waage, Mayor
Date:

ATTEST:

By:

Jessica Matson, City Clerk
Date:

ATTEST:

By:

Erica Inderlied, City Clerk
Date:

APPROVED AS TO FORM:

By:

Timothy J. Carmel, City Attorney
Date:

APPROVED AS TO FORM:

By:

David M. Fleishman, City Attorney
Date:

CITY OF GROVER BEACH:

By:

Jeff Lee, Mayor
Date:

ATTEST:

By:

Wendi Sims, City Clerk
Date:

APPROVED AS TO FORM:

By:

David P. Hale, City Attorney
Date:
{CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

COST SHARING AGREEMENT
FOR PARTIES’ PARTICIPATION IN THE

CENTRAL COAST BLUE PROJECT
THIS COST SHARING AGREEMENT (hereinafter “Agreement”), is effective as of _______________________ (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 for each significant effect of the Project and adopt a mitigation monitoring and reporting program; and
DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE March 14, 2022
Attachment 2
{CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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 agree 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:

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

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

Pismo Beach: 700 acre-feet per year.

DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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 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.

DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover 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 Beach 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 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;
DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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 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 DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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.

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 DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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 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.

DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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 Parties’ 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.

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 DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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 (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:

DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

To City of Arroyo Grande: Whitney McDonald
City Manager for City of Arroyo Grande
300 E. Branch 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.

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.

DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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.

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 DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE {CW108993.18} COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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]

DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE

COST SHARING AGREEMENT
City of Arroyo Grande, City of Pismo Beach, and City of Grover Beach

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:

Whitney McDonald, City Manager
Date:

APPROVED AS TO FORM:

By:

Timothy J. Carmel, City Attorney
ATTEST:

By:

Jessica Matson, City Clerk

CITY OF GROVER BEACH
A municipal Corporation
By:

Matthew Bronson, City Manager
Date:

APPROVED AS TO FORM:

By:

David P. Hale, City Attorney
ATTEST:

By:

Wendi Sims, City Clerk
{CW108993.18}

CITY OF PISMO BEACH
a municipal Corporation
By:

James R. Lewis, City Manager
Date:

APPROVED AS TO FORM:

By:

David M. Fleishman, City Attorney
ATTEST:

By:

Erica Inderlied, City Clerk
DocuSign Envelope ID: 1820EDE6-C475-4CB7-BCAB-F765A830B6EE 3/11/2022
3/11/2022
3/14/2022