ASSIGNMENT AND ASSUMPTION AGREEMENT (Agreement #6)
(Project Committee 5)
This Assignment and Assumption Agreement (Project Committee 5) (“Agreement”) is between Moulton Niguel Water District (“MNWD”), South Coast Water District (“SCWD”), City of San Clemente (“CSC”) and Santa Margarita Water District (“SMWD”), each of which are a “Party,” and together are the “Parties.” This Agreement is effective as of _________, 2024 (“Effective Date”).
RECITALS
Overview. The South Orange County Wastewater Authority (“SOCWA”) is a joint powers agency made up of several water purveyors and/or wastewater service providers within the San Juan Creek and/or Aliso Creek watershed. SOCWA owns and operates wastewater treatment facilities, transmission mains, and outfalls. SOCWA was created pursuant to the “Joint Exercise of Powers Agreement Creating South Orange County Wastewater Authority (“SOCWA”)…,” dated July 1, 2001 (the “Joint Powers Agreement”). The current members of SOCWA are the City of Laguna Beach, the City of San Clemente, El Toro Water District, Emerald Bay Service District, MNWD, SMWD, and SCWD (collectively, the “Member Agencies”).
Project Committees. If a SOCWA project or facility involves less than all of the SOCWA’s Member Agencies, the affected Member Agencies form a “Project Committee” (or “PC”) that is responsible for the construction, operation, and maintenance of that project or facility.
Project Committee 5 (San Juan Creek Ocean Outfall). MNWD, SMWD, SCWD, and CSC (together, the “PC 5 Member Agencies”) are the Participating Member Agencies of Project Committee 5 (“PC 5”), which governs the San Juan Creek Ocean Outfall (“SJCO Outfall”). The PC 5 Member Agencies are signatories to the Agreement By and Between the South East Regional Reclamation Authority Acting on Behalf of Project Committee No. 5 and All Member Agencies Relative to the Participation of the City of San Clemente in Project Committee No. 5, dated November 17, 1976, and subsequently amended six times between November 1976 and October 2006 (collectively, the “PC 5 Agreement”). The PC 5 Agreement governs the financing, construction, operation, and maintenance of the SJCO Outfall, as well as sets capacity and use restrictions for the PC 5 Member Agencies.
PC 5 Facility Capacity Allocations. SOCWA owns and operates the outfall for the benefit of the Participating Member Agencies, and will continue to do so after execution of this Agreement. Pursuant to the PC 5 Agreement, the current capacity allocations of the 24.0 million gallons per day (“mgd”) peak flow in the SJCO Outfall are as follows:
Agency
Outfall Ownership (mgd)
Outfall Ownership
Pump Station Ownership (mgd)
Pump Station Ownership
City of San Clemente
13.300
16.62%
0%
MNWD
12.410
15.51%
20.27%
SCWD
9.970
12.47%
29.05%
SMWD
44.346
55.4%
50.68%
Total
80.000
100%
100%
Payment and Assignment to SCWD and SMWD. The Parties intend by this Agreement for (1) MNWD to pay SCWD and SMWD for all liabilities arising out of MNWD’s use of PC 5 facilities, programs, and services; and (2) MNWD to permanently assign to SCWD and SMWD, and SCWD and SMWD to accept from MNWD, MNWD’s (i) 15.51% ownership capacity in the SJCO Outfall (“MNWD’s Assigned Outfall Capacity”) and (ii) 20.27% ownership in the Pump Station (“MNWD’s Assigned Pumping Capacity”); and (iii) rights and obligations pursuant to the PC 5 Agreement. MNWD’s Assigned Outfall Capacity and MNWD’s Assigned Pumping Capacity are together referred to herein as “MNWD’s Assigned Capacity.” NOW, THEREFORE, for and in consideration of the promises and mutual agreements, benefits, representations, warranties and covenants of the Parties contained herein and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows:
Incorporation.
The Parties agree the above Recitals are true and correct and hereby incorporated herein by reference as if set forth herein at length and in full Incorporation of Asset and Capacity Transfer Agreement. The Parties agree that the “Asset Capacity and Transfer Agreement (Agreement 1)” (“Transfer Agreement”) is incorporated herein by this reference. The definitions set forth in the Transfer Agreement shall be interpreted herein and control unless otherwise specifically defined.
Assignment and Acceptance of MNWD’s Assigned Capacity. MNWD hereby permanently assigns to (a) SMWD and SMWD hereby accepts 59% of MNWD’s Assigned Outfall Capacity, and (b) SCWD and SCWD hereby accepts 41% of MNWD’s Assigned Outfall Capacity and 100% of MNWD’s Assigned Pumping Capacity, and (c) SCWD and SMWD, equally, all remaining rights and obligations pursuant to the PC 5 Agreements. As a result of MNWD’s assignments under (a) and (b) above, the capacity allocations within the SJCO Outfall and Pump Station, as of the Effective Date, are as follows:
Agency
Outfall Ownership (mgd)
Outfall Ownership
Hydraulic Capacity (mgd)
Pump Station Ownership
City of San Clemente
16.62%
13.296
0%
SCWD
18.83%
15.063
49.32%
SMWD
64.55%
51.641
50.68%
Total
100%
80.00 100%
Continued Discharge Capacity. In acceptance of MNWD’s Assigned Capacity, SCWD and SMWD agree that MNWD’s Assigned Capacity shall be reserved and maintained for the sole benefit of MNWD and its customers as provided herein. Subject to the terms of this Agreement, MNWD shall have the right to continue to discharge into the SJCO Outfall in an amount not to exceed MNWD’s Assigned Outfall Capacity in compliance with the NPDES discharge permit. The Parties agree that MNWD’s Assigned Outfall Capacity shall not be reallocated or used for any other uses or beneficiaries unless agreed to in writing by MNWD.
Implementation of Projects and Permit Updates. SOCWA manages the SJCO Outfall NPDES permit from the San Diego Regional Water Quality Control Board (“SDRWQCB”) on behalf of the PC 5 Member Agencies. MNWD’s 3A Wastewater Treatment Plant is currently a permitted facility on the SDRWQCB NPDES permit. MNWD is developing additional reuse projects and programs, including salinity management, that will require appropriate updates to the SDRWQCB NPDES permit (“Permit Updates”) for the SJCO Outfall to support the implementation and operation of such projects and programs. SMWD and SCWD agree to support and request SOCWA to work with MNWD on the Permit Updates when requested by MNWD. MNWD agrees to fund all expenses, by SCWD, SMWD and SOCWA, to implement any Permit Updates.
Costs Regarding MNWD’s Assigned Capacity and Payment Thereof.
Costs Regarding MNWD’s Assigned Capacity. After the Effective Date, any costs regarding MNWD’s Assigned Capacity will be borne by SCWD and/or SMWD pursuant to Section 5.2 and invoiced to MNWD pursuant to Section 5.3. Invoices to MNWD for the SJCO Outfall shall be allocated 59% from SMWD and 41% from SCWD based upon the assignments under (a) and (b) of Section 2 above. MNWD will be entirely responsible for any (i) capital project costs, including costs for replacement and refurbishment; (ii) operation and maintenance costs, and (iii) related overhead expenses for capital improvements constructed at the SJCO Outfall and/or Pump Station to support additional capacity requested by MNWD in writing in excess of MNWD’s Assigned Capacity, which expenses are in addition to the annual administrative fee in Section 5.4, for all of (i) through (iii). The construction of improvements at the SJCO Outfall and/or Pump Station to provide MNWD capacity beyond the MNWD Assigned Capacity shall be at the sole discretion of the PC 5 Member Agencies after the Effective Date.
Payment of Costs Assessed by SOCWA for MNWD’s Use of SJCO Outfall and Pump Station. The annual costs associated with the operation and maintenance of the SJCO Outfall are allocated between the existing Participating Member Agencies of the respective Project Committees on an annual basis through SOCWA’s budgeting process and cost allocation processes. MNWD acknowledges that SOCWA and the Participating Member Agencies of the respective Project Committees may periodically evaluate costs of service at various facilities and that methods for cost recovery by SOCWA are subject to change during the term of this Agreement. After the Effective Date, SCWD and SMWD shall pay to SOCWA all costs assessed by SOCWA relating to MNWD’s use of the SJCO Outfall and Pump Station. MNWD shall pay SCWD and SMWD (a) all costs assessed by SOCWA relating to MNWD’s use of the SJCO Outfall and Pump Station and (b) for MNWD’s share of all costs and expenses related to MNWD’s discharge, including annual operation and maintenance costs, costs of depreciation, replacement and refurbishment expenses, any upgrade, expansion, or other capital, administrative, overhead or shared costs, in proportion to MNWD’s Assigned Capacity.
MNWD Payment of Costs Attributable to MNWD’s PC 5 Expenses. SCWD and SMWD will invoice MNWD for the costs attributable to MNWD’s PC 5 expenses on a quarterly basis, unless otherwise agreed to in writing by the Parties . Within 60 days of SCWD and/or SMWD sending MNWD an invoice, MNWD shall pay to SCWD and SMWD the full amount of the costs specified therein. MNWD shall pay SCWD and SMWD a delinquency payment of 2% of the outstanding balance for any late payment and an additional 2% for each 30 days the payment is delinquent thereafter.
Within 30 days following receipt of an invoice from SCWD or SMWD related to any SOCWA audit or expense reconciliation, the Parties will reconcile any over- or under-payments identified in that audit or reconciliation, and will pay or reimburse such payments as applicable.
Administrative Fee. In addition to costs assessed by SOCWA for MNWD’s PC5-related expenses, MNWD shall pay to both SCWD and SMWD an annual administrative fee of $10,000. MNWD will pay the full administrative fee along with MNWD’s payment of the first invoice sent by SCWD or SMWD each fiscal year. The Administrative Fee amount will increase by 3% at the beginning of each fiscal year. Within 30 days after the full execution of this Agreement, MNWD shall also pay to both SCWD and SMWD a one-time payment of $15,000 each to reimburse SCWD and SMWD for their legal costs and staff time to prepare this Agreement.
Term. The term of this Agreement shall be 20 years from the Effective Date (Initial Term). This Agreement will automatically extend on a yearly basis after the Initial Term but may be terminated by MNWD at any time after the Initial Term with twelve (12) months written notice to SCWD and SMWD. Should MNWD terminate this Agreement, MNWD shall reimburse SCWD and SMWD for MNWD’s proportional share of any outstanding amortized capital costs for projects awarded to provide additional capacity for MNWD, and for any replacement and refurbishment projects awarded to sustain MNWD’s capacity and the overall operations of the SJCO Outfall and/or the Pump Station in anticipation of MNWD’s continued use. If either/both of SCWD or SMWD cease to own capacity in the San Juan Creek Ocean Outfall and/or the Pump Station (aside from MNWD’s assigned capacity), SCWD and/or SMWD shall be relieved of their obligations to reserve and maintain MNWD’s assigned capacity under Section 3 of this Agreement. Prior to either/both of SCWD and SMWD’s cessation of capacity ownership, SCWD and/or SMWD agree to the following reversionary right and order of assignment: (1) SCWD and/or SMWD shall assign MNWD’s capacity, subject to the terms of this Agreement, to a PC 5 Member who agrees to accept the capacity, (2) SCWD and/or SMWD shall assign to a SOCWA Member, subject to the terms of this Agreement, who agrees to accept the capacity, or (3) if there are no SOCWA Members who agree to accept the capacity, the capacity rights shall automatically revert to MNWD.
Liability.
MNWD Continued Liability Related to MNWD Assigned Capacity. MNWD shall remain liable for all liabilities arising out of MNWD’s use of MNWD Assigned Capacity and MNWD’s use of PC5 facilities, programs, and services. MNWD shall remain liable for their continued use of PC 5 facilities utilizing SCWD and SMWD’s capacity rights in the same manner, and to the same extent, that MNWD would have been liable for use of PC 5 facilities had MNWD not withdrawn from SOCWA. Any costs or liability arising out of, or otherwise incurred, to the extent arising from MNWD’s discharges to the SJCOO or Pump Station, or MNWD use, operation, maintenance or repair of any facilities within the purview of PC 5, shall continue to the responsibility of MNWD and not the other Parties to this Agreement, and MNWD shall hold the other Parties to this Agreement harmless in proportion to additional costs and liabilities attributable to MNWD’s ongoing operations that utilize PC 5 facilities.
MNWD shall defend at its own expense, indemnify, and hold harmless SCWD and SMWD, their directors, officers, employees, and authorized volunteers from and against any and all damages, costs, losses, claims, legal actions, or other liabilities (including legal fees and costs) arising out of (a) this Agreement, including any legal actions brought by third parties challenging the validity of this Agreement; and (b) SCWD’s and SMWD’s assumption of (i) MNWD’s rights and obligations pursuant to the PC 5 Agreement, and (ii) MNWD’s Assigned Capacity, or any exceedance thereto in PC 5 and/or in the SJCO Outfall and/or the Pump Station. It is the intent of the Parties that SCWD and SMWD not assume or incur any liability arising from SCWD and SMWD assuming MNWD’s rights and obligations under this Agreement.
Incremental Additional Costs and/or Liability Resulting From Assignment. As stated in Section 7, it is the intent of the parties that SCWD and SMWD not assume or incur any additional costs and/or liability as a result of assuming MNWD’s capacity rights and obligations under this Agreement. As such, MNWD shall reimburse SCWD and SMWD an amount equal to any costs and/or liability assessed on or incurred by SCWD and/or SMWD as a consequence of SCWD and SMWD accepting MNWD’s assignment of capacity herein that arises from any claims relating to the debts, liabilities, obligations, or facilities owned or operated by SOCWA or any of its Project Committees, that arise on or after the Effective Date of this Agreement. For example, if the amount of any such costs and/or liability is calculated on the basis of capacity interest owned by SCWD or SMWD, inclusive of that capacity assigned herein, the amount of reimbursement due SCWD or SMWD from MNWD shall be the amount by which the assigned capacity herein increases the amount of said unforeseen costs and/or liability incurred by SCWD or SMWD under this Agreement. However, SCWD or SMWD shall notify MNWD at the earliest reasonable time of the amount of said costs and/or liability, the basis for and/or calculation of said costs and/or liability, and allow MNWD sixty (60) days from receipt of said costs to review or audit said costs and/or liability to ensure compliance with this Section 8, and to request that SCWD or SMWD consider or request that SOCWA consider a monetary adjustment if called for by that review or audit.
Effect on Prior Rights. The terms of this Agreement govern the Parties and supersede all contrary terms in prior agreements between the Parties, including but not limited to the Joint Exercise of Powers Agreement Creating South Orange County Wastewater Authority dated July 1, 2001, amended concurrently with this Agreement. The terms of this Agreement are incorporated into the Withdrawal Agreement and do not supersede that agreement.
SOCWA Dissolution. If SOCWA dissolves or at any time ceases to own the Facilities, then SCWD and SMWD will continue to reserve MNWD’s Assigned Outfall Capacity for MNWD’s on-going use subject to the substantive terms and conditions of this Agreement.
Amendment. This Agreement may be amended from time to time with the prior written approval of the Parties. If the governance of SOCWA or the ownership of the SJCO Outfall is changed in any way that would make continued implementation of this Agreement impracticable or impossible, then the Parties will meet and confer and work in good faith to arrange for a form of continued partnership on the SJCO Outfall to provide for the mutual benefit of the Parties.
Duty of Good Faith and Fair Dealing. The Parties anticipate that in connection with the SJCO Outfall their interests are identical and non-competitive. SCWD and SMWD shall ensure that if any issues arise at SOCWA in which SCWD and SMWD’s interests and MNWD’s interests diverge, then SCWD and SMWD shall keep MNWD apprised of those issues and meet and confer with MNWD about any future actions. SCWD and SMWD shall advise MNWD of any material changes to SOCWA or its Project Committees that could affect MNWD’s interests under this Agreement.
Integration and Governing Law. This Agreement represents the entire understanding of the Parties with respect to the matters covered by this Agreement. To the extent that it contradicts or varies from this Agreement, no prior oral or written understanding shall be of any force or effect with respect to the matters covered by this Agreement. This Agreement is governed by the laws of the State of California and shall be construed as if drafted by all Parties.
Third Parties. This Agreement does not create any third-party beneficiary or any rights in any person or party other than the Parties.
Signing Authority. Each Party represents and warrants that each person or persons executing this Agreement on its behalf is duly authorized to do so by the respective Party and that this Agreement shall bind the Parties.
Notices. Any written notice required by this Agreement shall be made by U.S. mail or by reliable overnight courier and delivered to the following address, together with a courtesy copy by email:
To MNWD: Moulton Niguel Water District
26161 Gordon Road
Laguna Hills, CA 92653
Attn: General Manager/Joone Kim-Lopez
By email to: [email protected]
To SMWD: Santa Margarita Water District
26111 Antonio Parkway
Las Flores, CA 92688
Attn: General Manager/Robb Grantham
By email to: [email protected]
To SCWD: South Coast Water District
31592 West Street
Laguna Beach, CA 92651
Attn: General Manager/Rick Shintaku
cc by email to: [email protected]
To CSC: City of San Clemente
910 Calle Negocio
San Clemente, CA 92673
Attn: _______________
By email to: ___________
Any Party may, by written notice to the other, designate a different address or addressee, which will be substituted immediately for that specified above.
Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.
Dispute Resolution. The Parties agree that the maintenance of a cooperative and mutually beneficial relationship between them is an important aspect of this Agreement, and the Parties therefore intend to provide means for resolving any disputes, claims, or controversies that may arise during the course of this Agreement in an efficient manner to avoid resorting to legal actions against one another, if feasible. Therefore, except for any claim or action filed by a nonparty to this Agreement, any dispute, claim, or controversy arising from the interpretation of this Agreement or the performance of any Party (“Dispute”) shall be first submitted to a three-step dispute resolution process that includes, in sequence: (1) an informal meet and confer process between representatives designated by all the Parties to the Dispute, (2) mediation, and (3) binding arbitration as to findings of fact. Notwithstanding the foregoing, the Parties reserve the right to seek equitable relief in exigent circumstances where timely relief is required to protect human health or the environment.
Informal Meet and Confer. The Party asserting such a Dispute may, within 30 days from the date the Dispute has arisen, serve written notice upon the others that a Dispute exists, and each Party to the Dispute shall then within 14 days designate one or more representatives and shall establish a time and place at which to meet and confer in mutual good faith to resolve the Dispute.
Mediation. If, after a reasonable amount of time and effort have elapsed, a resolution of the Dispute has not been established to the mutual satisfaction of all Parties to the Dispute, any Party may then initiate a mediation process by serving a written notice of the election to mediate upon the other(s). In the event the election to mediate a Dispute is invoked by any Party to the Dispute, a request for mediation shall be submitted within 30 days to a mediation service such as the Office of the American Arbitration Association in or nearest to Orange County, California and the mediation shall be initiated and conducted in accordance with rules and procedures for mediation then in effect with the mediation service, or by any other rules and procedures mutually agreeable to the Parties. Any statements made during mediation shall remain confidential and may not be disclosed without consent of all mediation participants.
Arbitration. If mediation does not resolve the Dispute, any Party to the Dispute may then elect arbitration by providing a written notice of such election to the other Parties. Such request must be mailed to the other Parties within 30 days following the conclusion of mediation. Upon serving written notice upon the other Parties, the request for arbitration shall be submitted to an arbitration service such as the Judicial Arbitration and Mediation Services, Inc. and the arbitration rules and procedures then in effect with the service shall control the arbitration, unless all Parties to the Dispute mutually agree to alternative rules and procedures to control arbitration. The Parties agree the arbitration shall occur in Orange County, California.
Arbitrator and Binding Findings of Fact. The arbitrator shall decide the Dispute in accordance with the law, and the arbitrator’s award shall be subject to review as to the arbitrator’s application of the law by any court having jurisdiction thereof, whether or not any mistake of law shall appear upon the face of the award. The arbitrator shall award the prevailing party (as defined in Code of Civil Procedure §1032(a)(4)) their reasonable attorney’s fees and costs, to include the cost of the arbitration. As to all questions of facts, only, the determination of the arbitrator shall be final and binding upon all Parties to the Dispute. Any Party to the Dispute shall be entitled to written findings of fact and conclusions of law as to all issues determined by the award. Subject to the above limitations, any Party to the Dispute may file the arbitrator’s award in any court having jurisdiction thereof.
Other Remedies and Continued Performance Under the Agreement. Nothing in this procedure shall prohibit the Parties from seeking other remedies available to them at law or in equity, including, but not limited to, specific performance. During the course of any proceeding to resolve a Dispute, the Parties shall continue to perform any duties or obligations existing under the Agreement.
Force Majeure. No Party shall be responsible for any delay or failure in complying with the terms of this Agreement where such delay or failure is due to acts or events beyond the reasonable control of the Party, including but not limited to fire, flood, hurricane/tornado, cyclone, explosion, labor strikes, labor disputes, picketing, lockout, transportation embargo or acts of God, civil riot or insurrection, terrorist acts, pandemic or epidemic, acts of the federal, state, or municipal government or any agency thereof or judicial action (“Force Majeure”), excluding such acts to the extent that the effect of such acts can be mitigated by the use of alternate sources, business continuity plans and other reasonable actions timely taken. In the event of Force Majeure, the Party affected by such Force Majeure event shall promptly give a written notice thereof to the other Parties describing (a) the Force Majeure event, (b) the obligations which it is unable to perform due to such Force Majeure event, and (c) its projection of the expected period of delay or inability to perform due to such Force Majeure event. Notwithstanding the foregoing, the Party unable to perform because of a Force Majeure event shall use reasonable good faith efforts to restore services or performance required by that its agreement as soon as practicable, and if the Party suffering from the Force Majeure event is not able to perform within ninety (90) calendar days after the event giving rise to the excuse of Force Majeure, the Parties shall meet and confer in good faith to try to resolve the performance issues.
Severability. If any provision of this Agreement, for any reason, is held to be invalid, illegal, or unenforceable in any respect that invalidity, illegality, or unenforceability will not affect any other provision of this Agreement, but this Agreement will be construed as if the invalid, illegal, or unenforceable provision had never been set forth herein, and the remainder will be enforceable to the fullest extent permitted by law.
Successors & Assigns. The terms of this Agreement are binding upon and will inure to the benefit of and be enforceable by the respective successors and assigns of the Parties.
Authority to Execute; Counterparts; and Electronic Signatures. Each Party represents and warrants that it has the full power and authority to execute this Agreement. This Agreement may be executed in counterparts and/or electronically (e.g., via DocuSign), each of which shall be deemed an original and all of which shall constitute one instrument. A faxed, .pdf, scanned or other electronic copy of the fully executed original version of this Agreement shall have the same legal effect as an executed original for all purposes.
The Parties are signing this Agreement as of the dates indicated below. [SIGNATURES CONTINUED ON NEXT PAGE]
“SCWD”
South Coast Water District,
a county water district
By:
Name:
Title:
By:
Name:
Title:
“MNWD”
Moulton Niguel Water District,
a California water district
By:
Name:
Title:
By:
Name:
Title:
“CSC”
City of San Clemente,
a California municipality
By:
Name:
Title:
By:
Name:
Title:
“SMWD”
Santa Margarita Water District,
a California water district
By:
Name:
Title:
By:
Name:
Title:
AS15072.0866833 4868-3101-2598v1AS15072.0866833 4868-3101-2598v1 AS15072.0866833 4868-3101-2598v1
AS15072.0866833 4868-3101-2598v1
1 Attachment 5