PISMO BEACH CITY COUNCIL and
PISMO BEACH PUBLIC FINANCING AGENCY
STAFF REPORT
Agenda Item #9.E
Meeting Date: June 18, 2024
TITLE:
Amendment 1 to the Central Coast Blue Regional Recycled Water Authority Joint Exercise of Powers Agreement
RECOMMENDATION:
1) Adopt a Resolution of the City Council authorizing the City Manager to Execute Amendment 1 to the Joint Exercise of Powers Agreement creating the Central Coast Blue Regional Recycled Water Authority and approving related budget adjustments;
2) Adopt a Resolution of the Public Financing Agency Board of Directors approving admittance as a member agency into of the Joint Exercise of Powers Agreement creating the Central Coast Blue Regional Recycled Water Authority.
DISCUSSION:
The cities of Arroyo Grande, Grover Beach, and Pismo Beach entered into a Joint Exercise of Powers Agreement (JEPA) in October 2022, which created the Central Coast Blue Regional Recycled Water Authority (Authority) and included provisions to govern the development and management of the Central Coast Blue regional recycled water project.
Since that time, the cities of Arroyo Grande and Grover Beach have officially indicated their intent to withdraw from the project and corresponding JEPA and cost-sharing agreement.
On May 21, 2024, the City Council and Pismo Beach Public Financing Agency (Agency) provided direction to staff to request that the Authority Board of Directors consider an amendment of the JEPA to include the Agency as a member, remove Arroyo Grande and Grover Beach as members, and take other actions as necessary to effectuate the amendment.
On June 3, 2024, the Central Coast Blue Authority Board of Directors voted unanimously to recommend to the three member agencies approval of the JEPA Amendment as proposed. At that meeting, the Authority Board acknowledged and accepted the notice of intent to withdraw by Arroyo Grande and Grover Beach and waive the 180-day notice period prescribed by the JEPA, contingent upon approval of the Amendment by the three agencies. Below is a summary of the proposed Amendment 1 (Attachment 1.A):
1. The Agreement will be amended to remove the cities of Arroyo Grande and Grover Beach as Member Agencies, and to add the Pismo Beach Public Financing Agency as a Member Agency;
2. The Agreement will be amended to change the Water Purveyor Contributions to reflect the withdrawal of Arroyo Grande and Grover Beach, and to set the allocation of costs at 100% for Pismo Beach;
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3. The Agreement will be amended to remove the restriction prohibiting the Authority’s attorney from being counsel to one of the Member Agencies;
4.The Agreement will be amended to remove the provision that Arroyo Grande and Grover Beach would participate in the division of remaining assets upon the dissolution of the Authority at some undetermined point in the future, and to authorize the reimbursement of Arroyo Grande and Grover Beach for their respective shares of the purchase price of real property acquired for the Project; and
5. Other conforming changes would be made to the Agreement to reflect the withdrawal of Arroyo Grande and Grover Beach and the addition of the Pismo Beach Public Financing Agency.
Conclusion and Recommendation
In order to continue to effect the City Council’s direction with respect to the Central Coast Blue project, and to allow the City to maintain the project’s Joint Powers Authority as operational until such time that the future path of the project is determined, staff recommends that the City Council adopt a resolution (Attachment 1) authorizing the City Manager to execute Amendment 1 (Attachment 1.A) to the JEPA, and making budget adjustments necessary to support the other member agencies’ exit from the agreement; and that the Public Financing Agency Board of Directors adopt a resolution (Attachment 2) accepting its admittance as a member of the JEPA.
As soon as feasible after June 30, 2024, at which time the City and Agency will be the only members of the JEPA, the Authority Board will hold a meeting to conduct the final legislative steps necessary to complete the corporate transition, including formally appointing City staff to serve as officers of the Authority, appointing Alternate Directors to the Authority Board, and authorizing the Agency’s Executive Director to formally sign on as a member of the JEPA.
FISCAL IMPACT:
The fiscal impact of approving the attached budget Resolution is contingent upon the decisions of the City Councils of Pismo Beach, Arroyo Grande, and Grover Beach. Upon amendment to the JEPA, the two departing member agencies would need to be made whole for the land acquisition cost, consistent with the existing water purveyor percentages for the acquisitions of the land. Assuming these member agencies approve the amendment to the JEPA, the City will be required to pay a total of $1,219,647.05 for the real property as described in the report. Staff recommends that Council appropriate budget amendments and authorization to compensate Arroyo Grande and Grover Beach in the amounts of $499,855.34 and $719,791.71, respectively, by the adoption of the resolution provided as Attachment 1. Out of the total $1,219,647.05, 33%, or $402,483.53, would be funded from the City’s Water Enterprise Fund, while the remaining 67%, or $817,163.52, would be funded from the City’s Wastewater Enterprise Fund.
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ATTACHMENTS:
1.City Council Resolution
1.A. Exhibit A to Resolution: Amendment 1
2.Public Financing Agency Board of Directors Resolution Submitted by: Jorge Garcia, City Manager/Executive Director City Manager/Executive Director Approval:
Council Agenda 6-18-2024 9.E-3
RESOLUTION NO. R-2024-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH, CALIFORNIA AUTHORIZING THE CITY MANAGER TO EXECUTE AMENDMENT 1
TO THE JOINT EXERCISE OF POWERS AGREEMENT CREATING THE CENTRAL
COAST BLUE REGIONAL RECYCLED WATER AUTHORITY AND APPROVING
RELATED BUDGET ADJUSTMENTS
WHEREAS, the City of Pismo Beach, along with Grover Beach and Arroyo Grande, is a “Member Agency” of the Central Coast Blue Regional Recycled Water Authority (“Authority”), created pursuant to the joint exercise of powers agreement (“Agreement”) between the Member Agencies to govern participation in the Central Coast Blue project; and
WHEREAS, the City wishes to amend the Agreement to reflect the requested withdrawal of Arroyo Grande and Grover Beach from the Authority, effective June 30, 2024; and WHEREAS, the City wishes to amend the Agreement to reflect the additional of the Pismo Beach Public Financing Agency as a member agency under the Agreement, effective June 30, 2024; and
WHEREAS, the City wishes to amend the Agreement to make all necessary changes related to the withdrawal of Arroyo Grande and Grover Beach, as agreed upon by the Member Agencies, including, but not limited to, the provisions related to financing the Authority, and reimbursing withdrawing Member Agencies for contributions to the Authority property; and
WHEREAS, the City will be required to pay a total of $1,219,647.05 for the real property to compensate Arroyo Grande and Grover Beach in the amounts of $499,855.34 and $719,791.71, respectively. Out of the total $1,219,647.05, 33%, or $402,483.53, would be funded from the City’s Water Enterprise Fund, while the remaining 67%, or $817,163.52, would be funded from the City’s Wastewater Enterprise Fund; and WHEREAS, Section 8.5 of the Agreement requires that any amendment to the agreement be approved by the governing body of each Member Agency upon recommendation of the Board of Directors of the Authority, which recommendation was given on June 3, 2024;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Pismo Beach hereby authorizes the City Manager to execute Amendment #1 (Exhibit A) to the Joint Exercise of Powers Agreement Creating the Central Coast Blue Regional Recycled Water Authority.
BE IT FURTHER RESOLVED that the City Council of the City of Pismo Beach hereby appropriates $402,483.53 from the City’s Water Enterprise Fund Central Coast Blue project account and $817,163.52 from the City’s Wastewater Enterprise Fund Central Council Agenda 6-18-2024 9.E-4
Attachment 1
Coast Blue project account, supported by net position (available fund balance) in their respective funds.
UPON MOTION OF Council Member , seconded by Council Member , the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 18th day of June 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Mayor Erica Inderlied, City Clerk
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Pismo Beach, California, on _______________________. ________________________
Erica Inderlied, City Clerk
Council Agenda 6-18-2024 9.E-5
Attachment 1
AMENDMENT NUMBER 1
TO JOINT EXERCISE OF POWERS AGREEMENT
CREATING THE CENTRAL COAST BLUE
REGIONAL RECYCLED WATER AUTHORITY
This Amendment Number 1 to Joint Exercise of Powers Agreement Creating the Central Coast Blue Regional Recycled Water Authority (“First Amendment”) is effective as of June 30, 2024 (the “Effective Date”).
WHEREAS, the Cities of Arroyo Grande, Grover Beach and Pismo Beach (each a “Member Agency” and collectively the “Member Agencies”) entered into a joint exercise of powers agreement (“Agreement”) for the Member Agencies’ participation in the Central Coast Blue Project, which established the Central Coast Blue Regional Recycled Water Authority (“Authority”); and
WHEREAS, the Parties wish to amend the Agreement to reflect the withdrawal of Arroyo Grande and Grover Beach effective June 30, 2024; and
WHEREAS, the Parties wish to amend the Agreement with this First Amendment to reflect the addition of the Pismo Beach Public Financing Agency as a member agency under the Agreement effective June 30, 2024; and
WHEREAS, Section 8.5 of the Agreement requires that any amendment to the Agreement be approved by the governing body of each Member Agency upon recommendation of the Board of Directors of the Authority, which recommendation was given on June 3, 2024.
NOW, THEREFORE, Arroyo Grande, Grover Beach and Pismo Beach hereto agree as follows:
1.Section 1.1.9 is revised to read as follows:
“Construction Costs shall mean 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.Section 1.1.13 is revised to read as follows:
Facility Site is defined in Section 1.5.2 herein.
3.Section 1.1.16 is revised to read as follows:
“Member Agency(ies) means Pismo Beach, the Pismo Beach Public Financing Agency, and any other entity added to this Agreement by subsequent amendment.”
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Attachment 1.A
4.The first sentence of Section 1.2 is revised to read as follows:
“This Agreement is made pursuant to the Act by Pismo Beach and the Pismo Beach Public Financing Agency, each of which is authorized to contract with the other pursuant hereto.”
5.Section 1.5.1 is revised to read as follows:
Phase 1 of Project. 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.
6.Section 1.5.2 is revised to read as follows:
“Pismo Beach has previously transferred to the Authority Facility Parcel #1, which is located in Grover Beach and identified as Assessor's Parcel Number 060-543-016. Prior to June 30, 2024, Grover Beach shall complete the transfer to the Authority of Facility Parcel #2, which is located in Grover Beach and identified as Assessor’s Parcel Number 060-543-007 (collectively Facility Parcels #1 and #2 are referred to as the "Facility Site").” The Authority shall own all Facilities located at the Facility Site, including, but not limited to, the real property, buildings, water and treatment facilities, and support infrastructure and assets, injection wells and related transmission lines.”
7.Section 1.5.4 is revised to read as follows:
“To finance Construction Costs, 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.”
8.Section 1.6.2(ii) is revised to read as follows:
“To employ agents, attorneys, consultants and employees or to contract for personnel to fulfill its mission and purpose.”
9.Section 2.1 is revised to read as follows:
“Creation. Until such time as additional member agencies are added to this Agreement through amendment under Section 8.5, the Authority shall be Council Agenda 6-18-2024 9.E-7
Attachment 1.A
governed by a board of two (2) 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.”
10.Section 2.2.1 is revised to add the following sentence at the end of the existing section:
“Any Member Agency which joins the Authority pursuant to an amendment to this Agreement shall designate and appoint a regular and alternate representative in the manner described in this section upon the effective date of such amendment.”
11.Section 4.3 is revised to read as follows:
“Authority Attorney. The Attorney for the Authority shall be engaged by the Board of Directors and may be the attorney for one of the Member Agencies. 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.”
12.The first sentence of Section 6.2.2 is revised to read as follows:
“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.”
13.Section 6.3.2 of is revised to read as follows:
“The Parties shall pay their pro rata share of all Pre-Construction 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. Pismo Beach shall contribute 100%.
As provided in Section 6.2.2, annual contributions by Member Agencies for ongoing operations shall be consistent with the above percentages.
14. The existing second paragraph of Section 7.3 shall be stricken entirely and revised to read as follows:
“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 Council Agenda 6-18-2024 9.E-8
Attachment 1.A
constitutional or statutory debt limitation or restriction. The payments made under this Agreement, if any, 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’ governing bodies 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.”
15. Section 8.3 is revised to read as follows:
“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, only those Member Agencies who are parties to this Agreement at the time of termination shall be permitted to participate in disbursement of Authority assets. Notwithstanding the foregoing sentence, Arroyo Grande and Grover Beach shall be entitled to reimbursement for their respective shares of the purchase price of Facility Parcel #1 and Facility Parcel #2 as follows: not later than 30 days following full execution of this First Amendment by the Parties, Pismo Beach shall remit to Arroyo Grande the sum of $499,855.34, and to Grover Beach the sum of $719,791.71.
Notwithstanding anything to the contrary set forth in any other agreements among the Parties approving the amendment revising this Section 8.3, and notwithstanding the withdrawal from this Agreement of any Party, 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 January 25, 2008 Judgment entered by the Santa Clara Superior Court in the Santa Maria Groundwater Adjudication litigation.”
16. Section 9.3 shall be revised to delete the last sentence in its entirety, which currently reads:
“This section shall not be deemed to supersede, extinguish, or modify the indemnification provisions in the Cost Sharing Agreement.”
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Attachment 1.A
17. Section 10.2 is revised to read as follows:
“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 Pismo Beach
Attention: City Manager
760 Mattie Road Pismo Beach, CA 93449
Pismo Beach Public Financing Agency
Attention: Executive Director
760 Mattie Road Pismo Beach, CA 93449”
18. Section 10.3 is revised to read as follows:
“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.”
Except as set forth herein, all other terms and conditions of the Agreement, shall remain in full force and effect.
Dated:________________________ City of Arroyo Grande
_________________________________
Caren Ray Russom, Mayor
Dated:________________________
Attest:
Jessica Matson, City Clerk
City of Grover Beach
_________________________________
Karen Bright, Mayor
Attest:
_________________________________
Wendi Sims, City Clerk
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Attachment 1.A
Dated:________________________ City of Pismo Beach
_________________________________
Ed Waage, Mayor
Attest:
_________________________________
Erica Inderlied, City Clerk
Council Agenda 6-18-2024 9.E-11
Attachment 1.A
RESOLUTION NO. R-2024-XXX
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE PISMO BEACH PUBLIC
FINANCING AGENCY APPROVING ADMITTANCE AS A MEMBER AGENCY OF
THE JOINT EXERCISE OF POWERS AGREEMENT CREATING THE CENTRAL
COAST BLUE REGIONAL RECYCLED WATER AUTHORITY
WHEREAS, the cities of Pismo Beach, Grover Beach and Arroyo Grande, are each a “Member Agency” of the Central Coast Blue Regional Recycled Water Authority (“Authority”), created pursuant to the joint exercise of powers agreement (“Agreement”) between the Member Agencies to govern participation in the Central Coast Blue project; and
WHEREAS, the Member Agencies from Grover Beach and Arroyo Grande have requested withdrawal from the Authority, effective June 30, 2024; and WHEREAS, the Pismo Beach Public Financing Agency (“Agency”) met on May 21, 2024 and requested admittance into the Authority as a new Member Agency under the Agreement, effective June 30, 2024; and
WHEREAS, Section 8.5 of the Agreement requires that any amendment to the agreement be approved by the governing body of each Member Agency upon recommendation of the Board of Directors of the Authority, which recommendation was given on June 3, 2024; and
WHEREAS, consistent with the Board’s direction given on May 21, 2024, upon successful amendment of the Agreement, the Agency Vice-Chair will serve in the capacity as a Board Member for the Authority.
NOW, THEREFORE, BE IT RESOLVED that the Board of Directors of the Pismo Beach Public Financing Agency hereby approves the admittance of the Agency as a member agency of the Central Coast Blue Regional Recycled Water Authority.
BE IT FURTHER RESOLVED that the Board of Directors of the Pismo Beach Public Financing Agency hereby authorizes the Executive Director to execute documents necessary to join the Joint Exercise of Powers Agreement Creating the Central Coast Blue Regional Recycled Water Authority and take such other action as may be necessary to effectuate the addition of the Agency as a Member Agency of the Authority.
UPON MOTION OF Board Member , seconded by Board Member , the foregoing resolution was adopted by the Pismo Beach Public Financing Agency this 18th day of June 2024, by the following vote:
AYES:
NOES:
ABSENT:
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Attachment 2
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Chair Erica Inderlied, Secretary
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the Pismo Beach Public Financing Agency, on _______________________. ________________________
Erica Inderlied, Secretary
Council Agenda 6-18-2024 9.E-13
Attachment 2