ATTACHMENT II
1 HAYWARD CITY COUNCIL
RESOLUTION NO. 25-____
Introduced by Council Member _________
RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE AN
AMENDMENT TO THE AMENDED AND RESTATED WATER SUPPLY
AGREEMENT BETWEEN THE CITY AND COUNTY OF SAN FRANCISCO AND
WHOLESALE CUSTOMERS IN ALAMEDA COUNTY, SAN MATEO COUNTY, AND
SANTA CLARA COUNTY
WHEREAS, water supply agencies in Alameda, San Mateo, and Santa Clara Counties have purchased water from th e City and County of San Francisco (San Francisco) for many years; and
WHEREAS, the San Francisco Public Utilities Commission (SFPUC) operates the Regional Water System (RWS), which delivers water to communities in Alameda, San Mateo, and Santa Clara Coun ties, as well as to customers within San Francisco (collectively, “the Parties”); and
WHEREAS, the Parties entered into the “Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and Certain Suburban Purchasers in San Mateo County, Santa Clara County and Alameda County” in 1984 (1984 Settlement Agreement and Master Water Sales Contract); and WHEREAS, in April 2003, water supply agencies in Alameda, San Mateo and Santa Clara Counties (collectively referred to as th e Wholesale Customers) established the Bay Area Water Supply and Conservation Agency (BAWSCA), as authorized by Water Code Sections 81300 et seq.; and
WHEREAS, upon expiration of the 1984 Settlement Agreement and Master Water Sales Contract, the Parties entered into the “Water Supply Agreement between San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County” (Water Supply Agreement or WSA) on July 1, 2009, authorized by SFPUC Resolution No. 09- 0069, dated April 28, 2009; and
ATTACHMENT II
2 WHEREAS, in 2017, the Wholesale Customers directed BAWSCA to act as its authorized representative in discussions and negotiations with San Francisco to amend the Water Supply Agreement to address a number of substantive issues and these negotiations resulted in the Parties' adoption of the Amended and Restated Water Supply Agreement in 2018 authorized by SFPUC Resolution No. 18-0212, dated December 11, 2018; and WHEREAS, on February 5, 2019, this Council , by Resolution No. 19 -025 approved the Amended and Restated Water Supply Agreement (2018 WSA); and WHEREAS, pursuant to WSA Section 3.07, four Wholesale Customers (Alameda County Water District and the Cities of Milpitas, Mountain View, and Sunnyvale, collectively, the “Original Minimum Purchase Customers”) may purchase water from sources other than the SFPUC, but they are each obligated to purchase a specific minimum annual quantity of water from the SFPUC, referred to as a “Minimum Purchase Requirement;” and WHEREAS, historically, if a Minimum Purchase Customer does not meet its Minimum Purchase Requirement in a particular fiscal year, it must pay the SFPUC for the difference between its metered water purchases during the fiscal year and its minimum annual purchase quantity set forth in WSA Attachment E; and
WHEREAS, some Original Minimum Purchase Customers pay the SFPUC for water that is not delivered due to either insufficient potable demand within their service area or conservation efforts during drought rationing; and
WHEREAS, as part of the 2018 negotiations, the Wholesale Customers and the SFPUC resolved to work to identify a resolution to this as part of a future contract amendment; and WHEREAS, in 2019, the Wholesale Customers directed BAWSCA to draf t a proposed amendment to the 2018 WSA to provide a procedure for expedited and permanent transfers of minimum annual purchase quantities that safeguards the financial and water supply interests of Wholesale Customers not participating in such transfers a nd these negotiations resulted in the Parties' adoption of the Amended and Restated Water Supply Agreement in 2021, authorized by SFPUC Resolution No. 21-009, dated January 26, 2021; and WHEREAS, on March 22, 2022, this , Council, by Resolution No. 22-061 approved the Amended and Restated Water Supply Agreement (2021 WSA); and WHEREAS, the 2021 WSA provided a significant, but incomplete solution to address the Original Minimum Purchase Customer’s concerns with the minimum purchase quantities through a transfer process; and
ATTACHMENT II
3 WHEREAS, 2021 WSA Section 3.11.C. provides that the SFPUC may reduce the amount of water available to the Wholesale Customers in response to a drought; and WHEREAS, 2021 WSA Section 3.11.C. provides that the Tier 1 Shortage Plan (Attachment H to the WSA) will be used, during system -wide shortages of 20% or less, to allocate water from the Regional Water System between Retail and Wholesale Customers ; and
WHEREAS, 2021 WSA Section 3.11.C. further provides that the SFPUC will honor allocations of water among the Wholesale Customers (Tier 2 Allocations) unanimously agreed to by all Wholesale Customers or provided by BAWSCA; and WHEREAS, in 2021, the SFPUC and BAWSCA implemented the Tier 1 and Tier 2 Plans for the first time; and
WHEREAS, th roughout 2022 and 2024, the Wholesale Customers ’ appointed negotiators convened at least once per month , to negotiate an update to the method for sharing water made available from the SFPUC during shortages caused by drought (Tier 2 Plan); and
WHEREAS, during the Tier 2 Plan negotiations, the Original Minimum Purchase Customers renewed discussions among the Wholesale Customers to identify a comprehensive and final solution to concerns about the minimum purchase quantities; and WHEREAS, during the Tier 2 Plan negotiations, the Wholesale Customers identified, and the SFPUC agreed to, changes to the Tier 1 Plan that would facilitate agreement on the updated Tier 2 Plan; and
WHEREAS, in June 2023, following several years of discussions regarding the Minimum Purchase Requirements, the SFPUC proposed amending the 2021 WSA to reset the existing minimum annual purchase quantities to align with current water consumption trends, while protecting investment in the RWS; and
WHEREAS, in 2024, the SFPUC, the O riginal Minimum Purchase Customers, and BAWSCA held multiple meetings to identify amendments that would address challenges related to the Minimum Purchase Requirements; and
WHEREAS, once the SFPUC and the Original Minimum Purchase Customers discussed amendments to the Minimum Purchase Requirements, the Original Minimum Purchase Customers presented proposals to the broader Wholesale Customer group; and
ATTACHMENT II
4 WHEREAS, in 2024, the Wholesale Customers came to a final agreement on a package that includes an updated Tier 2 Plan, amendments to the minimum purchase quantity requirements, and amendments to the Tier 1 Plan; and
WHEREAS, with its Alternative Water Supply Program, the SFPUC is in the early stages of planning for projects to support the Wholesale and Retail Customers' ability to respond to climate change and address future water supply challenges and vulnerabilities, such as regulatory changes, earthquakes, disasters, emergencies, and increases in population and employment; and
WHEREAS, under 2021 WSA Section 3.06.D, the Parties agree that they will diligently apply their best efforts to use both surface water and groundwater sources located within their respective service areas and available recycled water to the maximum feasible extent, taking into account the environmental impacts, the public health effects, and the effects on supply reliability of such use, as well as the cost of developing such sources; and WHEREAS, each Wholesale Customer recognizes the importance of local water supplies in improving regi onal water supply reliability and commits to develop and use available local water supplies within their service areas, consistent with Section 3.06.D of the WSA; and
WHEREAS, as of January 2025, the SFPUC has budgeted $298.3 million over the next ten years to fund water supply projects; and
WHEREAS, the Parties now desire to approve an amendment to the 2021 WSA to reduce the minimum annual purchase quantities to 80% of average purchases from the most recent four (4) non -drought years and establish a co ntinuing, periodic review of the minimum annual purchase quantities on a 10-year schedule; and WHEREAS, the amendment will also establish a Rebound Year minimum annual purchase quantity calculation for the first year following a waiver of the Minimum Purchase Requirements; and
WHEREAS, the amendment further provides that Imputed Sales will not apply to an Original Minimum Purchase Customer that does not meet its individual Minimum Purchase Requirements if the collective SFPUC purchases from all Original Mi nimum Purchase Customers are equal to or greater than the total collective minimum annual purchase quantity; and
ATTACHMENT II
5 WHEREAS, the Parties also desire to adopt an amendment to the Tier 1 Plan to provide that excess use charges will not apply to Wholesale Cust omers that exceed their individual annual shortage allocation if the Wholesale Customers’ collective SFPUC purchases are less than the total Tier 1 allocation; and WHEREAS, the amendment further provides that if the collective Wholesale Customers’ SFPUC pu rchases exceed total Tier 1 allocation, excess use charges will be applied to each Wholesale Customer that exceeded its individual annual allocation, proportional to the collective Wholesale Customer's overuse of the total Tier 1 allocation; and
WHEREAS, the Parties also desire to adopt an amendment to the 2021 WSA to include the following substantive modifications:
a) update references in Section 2.03.C regarding BAWSCA’s authority to amend attachments;
b) extend the timing of the completion of the WSIP to refle ct the currently adopted program completion date (Section 3.09);
c) correct a reference to a SFPUC resolution number in Section 9.07; d) update “Imputed Sales” definition in Attachment A to reference Attachment E; e) update “Level of Service Goals and Objectives” d efinition in Attachment A to reflect updated and expanded Level of Service Goals and Objectives adopted by the SFPUC in November 2023; and
WHEREAS, the SFPUC approved these amendments and authorized the execution of a 2025 Amended and Restated Water Supply Agreement incorporating these amendments on May 13, 2025 pursuant to SFPUC Resolution No. 25-0074; and WHEREAS, the amendment considered now is not a "project" for the purposes of CEQA as it involves an administrative activity that does not result in a direct change to the environment (see 14 CCR Section 15378(b)(5)), and would not result in a direct or reasonably foreseeable indirect physical change in the environment (see 14 CCR Section 15060(c)(2)).
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Hayward hereby approves the "2025 Amended and Restated Water Supply Agreement Between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County" dated as of 2025 (2025 Amended and Restated Water Supply Agreement). BE IT FURTHER RESOLVED that the City Manager is authorized and directed to execute the 2025 Amended and Restated Water Supply Agreement, in a form approved by the City Attorney, when final execution copies are prepared and distributed by BAWSCA.
ATTACHMENT II
6 IN COUNCIL, HAYWARD, CALIFORNIA, _______________________, 2025
ADOPTED BY THE FOLLOWING VOTE:
AYES: COUNCIL MEMBERS:
MAYOR:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ATTEST: ______________________________________
City Clerk of the City of Hayward
APPROVED AS TO FORM:
_________________________________________
City Attorney of the City of Hayward
Attachment:
Exhibit A: Redline and clean excerpts showing changes to Sections 2.03, 3.07,
3.09, 9.07, Attachment A, Attachment E and Attachment H of the Amended and Restated Water Supply Agreement.