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Settlement Agreement And Release
SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (“ Agreemen t”) is made and entered into by and between Petitioners and Plaintiffs Central Coast Water Authority (“CCWA”), Carpinteria Valley Water District, City of Buellton, City of Guadalupe, City of Santa Barbara, City of Santa Maria, Goleta Water District, Montecito Water District, and Santa Ynez River Water Conservation District, Improvement District No. 1 (collectively “ Petitioners”), and Respondents and Defendants Santa Barbara County Flood Control and Water Conservation District (the “District”) and the Board of Directors of Santa Barbara County Flood Control and Water Conservation District (collectively “Respondents”). Each party hereto is a “Party” and, together, they are the “Parties.” This Agreement is effective as of ___________________, 2025, which is the last date of signature by all Parties hereto (the “Effective Date”).
A. This Agreement concerns a legal challenge brought by Petitioners challenging Respondents’ rights and obligations under various contracts between the Parties relating to the State Water Project.
B. On or about February 26, 1963, the District entered into a Water Supply Contract with the California Department of Water Resources (“ DWR”) (the “ State Water Supply Contract”) with respect to the delivery of 60,000 acre feet per year of water from the State Water Project to Santa Barbara County. In 1965, the District and DWR executed Amendment No. 2 to the State Water Supply Contract whereby this delivery amount was revised to 57,700 acre feet per year of water. Said quantity of water is set forth in “Table A” to the State Water Supply Contract and is referred to as the “Maximum Annual Table A Amount.” As permitted by Article 45(e) of the State Water Supply Contract, the District elected to delay construction of the facilities that would be required to permit delivery of the Maximum Annual Table A Amount.
C. In 1981, the District and DWR executed Amendment No. 9 to the State Water Supply Contract whereby the District agreed to reduce its annual deliveries by 12,214 acre feet per year to 45,486 acre feet per year. The balance of the Maximum Annual Table A Amount, which is 12,214 acre feet per year, is referred to herein as the “ Suspended Table A” water. Pursuant to the “Stipulation for Settlement and Compromise and Order” dated March 12, 1987 (Judicial Council Coordination Proceeding No. 1879; Santa Barbara Sup. Ct., No. 142195), DWR granted to the District the option to reacquire any amount of the Suspended Table A water which the District relinquished under Amendment No. 9.
D. On various dates between 1985 and 1988, the District entered into a series of agreements, each called a “ Water Supply Retention Agreement ,” with various public water providers and end users of water (each a “Contractor” and collectively, the “Contractors”). Each Water Supply Retention Agreement provided that the District “assign[ed] all rights and obligations under the State Water Contract” with respect to a specified portion of the water supply and conveyance capacity made available by the State Water Supply Contract to the Contractor. %#
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Attachment B
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E. On August 1, 1991, eight of the Contractors, each a public agency and public water provider (each, a “ Member” and collectively, the “ Members”) formed CCWA when they each executed a Joint Exercise of Powers Agreement pursuant to Government Code section 6500, et seq. As of the Effective Date, each Member, or its successor-in-interest, remains a member of CCWA and is also a Petitioner.
F. Following its formation, CCWA entered into a series of agreements, each called a “Water Supply Agreement,” with 13 of the Contractors, including the Members. Each party to a Water Supply Agreement with CCWA is referred to as a “ Participant” and collectively, as the “Participants.” Each of the Water Supply Agreements includes a provision that the rights held by each Participant under its Water Supply Retention Agreement with the District were assigned to CCWA, in return for CCWA’s delivery of the water made available by those rights to the Participant. The remaining Contractors elected to terminate their participation in the State Water Project and assigned their respective rights under their respective Water Supply Retention Agreements with the District to CCWA. The terminating Contractors have no retained, remaining, or other rights whatsoever under such agreements.
G. On November 12, 1991, CCWA and the District entered into a “ Transfer of Financial Responsibility Agreement ” under which CCWA agreed, inter alia , to accept responsibility for all financial obligations of the District under the State Water Supply Contract.
H. On June 3, 1993, the District and CCWA entered into an “Assignment Agreement” pursuant to which the District assigned its retained right to 250 acre feet that was not previously transferred or set over pursuant to a Water Supply Retention Agreement to CCWA.
I. In August 1997, CCWA completed construction of the transportation and treatment system by which water under the State Water Supply Contract would be delivered to Santa Barbara County and the first delivery of water pursuant to the State Water Supply Contract was made to CCWA, which in turn delivered the water to the Participants pursuant to the Water Supply Agreements.
J. On April 20, 2021, the District adopted Resolution No. 21-73, which purported to impose certain conditions and limitations on CCWA’s alleged rights under the State Water Contract and on the Participants’ water supply and water management activities.
K. On June 18, 2021, Petitioners filed a Petition for Writ of Mandamus and Complaint, which, inter alia , challenges Resolution No. 21-73 and Respondents’ right and/or authority to impose conditions and limitations on Petitioners’ exercise of their rights pursuant to the State Water Supply Contract, in Santa Barbara Superior Court Case No. 21CV02432 (“ Lawsuit”), which is ongoing.
L. Respondents dispute the allegations in the Lawsuit.
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Settlement Agreement And Release
M. The Parties now wish to enter into this Agreement with regard to the Lawsuit and with respect to other disputes regarding the State Water Supply Contract to avoid expense, time, effort, and uncertainty of further litigation and to fully and finally compromise and settle and discharge all claims, controversies, demands, actions or causes of action which they may have against each other as raised in the Lawsuit, which could have been raised in the Lawsuit, or which arise from the Lawsuit, and with respect to the State Water Supply Contract, as more specifically set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set forth below and the foregoing recitals, which are incorporated into the operative provisions of this Agreement by this reference, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Statement of Intent and Purpose. The purpose of this Agreement is to: (1) resolve, compromise, and settle the Parties’ disputes, including, but not limited to those contentions alleged or that could have been alleged in the Lawsuit and with respect to the State Water Supply Contract, upon the terms and conditions set forth in this Agreement; and (2) provide for the full and final assignment and transfer of the State Water Supply Contract from the District to CCWA, such that CCWA has all of the rights, title, interests, and obligations under the State Water Supply Contract, and is the party to the State Water Supply Contract in privity with DWR, and such that the District will no longer have any rights, title, interests, or obligations under the State Water Supply Contract, and the District will no longer be the party to the State Water Supply Contract in privity with DWR.
2. Stipulation to Vacate. Within 10 days of the Effective Date, the Parties shall jointly file a stipulation with the Court requesting that all pending deadlines and court dates be vacated and that the Court set a Case Management Conference for the first available date after December 31, 2025. In the event the Assignment Date, as defined in Section 3.3, has not occurred before the date of the next Case Management Conference, the Parties shall jointly request that the Court continue the Case Management Conference to a future date.
3. Assignment of the State Water Supply Contract to CCWA
3.1 Within fourteen days of the District’s execution of this Agreement, the District shall consider entering into the “Agreement Regarding Assignment, Assumption, and Release of the State Water Supply Contract for Santa Barbara County” (“ Assignment Agreement ”) attached hereto as Exhibit A. In the event the District approves and executes the Assignment Agreement, the District shall deliver its executed Assignment Agreement to CCWA.
3.2 Upon receipt of the District’s executed Assignment Agreement, CCWA shall timely consider entering into the Assignment Agreement. In the event CCWA approves and executes the Assignment Agreement, CCWA shall deliver its executed Assignment Agreement to the District.
3.3 Promptly following CCWA’s execution of the Assignment Agreement, the District and CCWA shall jointly deliver the Assignment Agreement to DWR and request that DWR enter into the Assignment Agreement. The District and CCWA shall exercise their best efforts and utmost good faith to secure DWR’s execution of the Assignment Agreement at the earliest date %#
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available. The date on which the Assignment Agreement has been executed by the District, CCWA, and DWR is herein referred to as the “Assignment Date.” (a) In the event DWR requires any modification(s) to the Assignment Agreement, Petitioners and Respondents shall promptly meet and confer to consider whether said modification(s) is acceptable to the Parties, and if so, the District and CCWA shall each promptly execute the modified Assignment Agreement and the modified Assignment Agreement shall replace Exhibit A.
(b) If DWR declines to approve and execute the Assignment Agreement in a form that is acceptable to the Parties, Petitioners and Respondents shall promptly meet and confer to consider whether this Agreement should be amended, or whether it should be terminated, in which case this Agreement, and all of its terms and provisions, shall become null and void and each of the Parties will take all action necessary to put the other Parties back into the position they would have been had this Agreement never been executed. The Parties acknowledge and agree that DWR’s agreement to the Assignment Agreement, as presented in Exhibit A and as may be modified pursuant to Section 3.3, is a material term of this Agreement and a condition subsequent to the effectiveness of this Agreement.
4. Petitioners’ Dismissal of Lawsuit. Within fourteen days of the Assignment Date, Petitioners shall file a Request for Dismissal of the Lawsuit with prejudice and provide counsel for Respondents with a copy of the Request for Dismissal and conformed copy of the Entry of Dismissal after it is received from the Court.
5. CCWA’s Payment to the District
5.1 Subject to the occurrence of the Assignment Date, CCWA agrees to pay the District $5,800,000.00 in equal installments of $580,000.00 per year over ten years. The year in which the Assignment Date occurs is “year one,” the following year is “year two,” and so on.
5.2 Within 45 days of the Assignment Date, CCWA will deliver the first annual installment of $580,000.00 to the District. Thereafter, in years two through and including year 10, CCWA shall deliver the annual installment payment to the District no later than July 31. CCWA’s installment payments shall be made by wire transfer to the account provided to it by the District.
6. District Option to Purchase Suspended Table A Allocation
6.1 If at any time following the Assignment Date, CCWA (individually or on behalf of any Participant(s)), as the party in privity with DWR to the State Water Supply Contract pursuant to the Assignment Agreement, elects, in its sole and absolute discretion, to purchase any of the Suspended Table A water, the District shall have a one-time option to purchase an allocation of up to 1,700 acre-feet of the Suspended Table A water (the “ District Option”). Because the District is not a Participant and not a public water provider, if the District exercises the District Option, as provided in Section 6.2, the District shall identify a Participant that is a public water provider (the “Contracting Participant”) that will contract with CCWA to purchase the Suspended Table A water made available by the District Option. In the event the District exercises the District Option, but elects to purchase an allocation less than 1,700 acre-feet of Suspended Table A water, the %#
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District shall not have an additional option to purchase the balance of the allocation and shall permanently surrender such right. The District Option may not be transferred or assigned and CCWA will not recognize any transfer or assignment made in violation of this provision.
6.2 Upon CCWA’s election to purchase any Suspended Table A water, CCWA shall promptly give notice of such election to the District. The District shall have 180 days from the date of receipt of CCWA’s notice to exercise the District Option, which may be exercised only by delivery of notice to CCWA that includes all of the following: (a) the name of the Contracting Participant, and (b) the quantity of Suspended Table A water, up to 1,700 acre-feet, that the Contracting Participant elects to purchase (the “Option Water”). (a) If the District fails to deliver written notice of its exercise of the District Option to CCWA in accordance with the terms set forth in Section 6.2, the District shall be deemed to have permanently waived the District Option for all time. (b) If the District exercises the District Option in accordance with the terms set forth in Section 6.2, CCWA shall notify DWR of its intention to purchase Suspended Table A water from DWR, including the Option Water, and shall exercise reasonable diligence to effectuate such purchase.
6.3 CCWA and the District acknowledge and agree that the purchase of any Suspended Table A water by CCWA, including the Option Water, will require compliance with the California Environmental Quality Act (“ CEQA”) and amendment of the State Water Supply Contract to account for the increase in requested deliveries.
6.4 CCWA and the District further acknowledge and agree that the purchase and delivery of the Option Water will require the negotiation and execution of one or more future agreements between CCWA and the Contracting Participant (“ Option Agreement(s) ”) which agreement(s) shall provide, at a minimum, that the Contracting Participant will be responsible for all costs related to the purchase and delivery of the Option Water, including but not limited to: (i) the initial costs associated with the purchase of an allocation of Suspended Table A, as further described in Section 6.4(a); (ii) the annual fixed and variable costs associated with the use of the State Water Project facilities required to deliver the Option Water to the point of delivery; (iii) the annual fixed and variable costs associated with the use of the CCWA facilities required to deliver the Option Water to the point of delivery; (iv) the cost of any modification or upgrade of any affected facilities; and (v) depending on the nature of the delivery capacity requested, may also include reimbursement for the Contracting Participant’s pro rata share of the Participants’ capital investments in the facilities required to deliver the Option Water to the point of delivery. (a) The Parties reasonably anticipate that the initial costs to purchase an allocation of the Suspended Table A will include, but are not limited to: (i) the purchase price, per acre-foot, of the Suspended Table A allocation, which includes acquisition costs due to both DWR and to CCWA (“Purchase Price”); (ii) CCWA’s out-of-pocket costs (including all administrative, consultant, legal, and other transactional costs) associated with the purchase of an allocation of Suspended Table A water; and (iii) any permitting and environmental compliance costs associated with the purchase of an allocation of Suspended Table A water. The District acknowledges and agrees that the Purchase Price cannot be known until such time in the future as the purchase of an %#
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allocation of Suspended Table A water is effectuated and further that the Purchase Price will increase over time.
(b) The District further acknowledges and agrees that nothing in this Agreement, the Assignment Agreement, or any other agreement in existence as of the Effective Date, grants or provides the District with the right to use DWR or CCWA facilities to convey, treat, or deliver the Option Water or any other water. However, should the District exercise the District Option, the Option Agreement(s) will address use of the DWR and CCWA facilities as needed to convey, treat, or deliver the Option Water.
7. Releases
7.1 In consideration for each of the Parties’ obligations hereunder, Petitioners, on the one hand, and Respondents, on the other hand (each a “ Releasing Party ” and together, the “Releasing Parties”), on behalf of themselves and, to the extent they are legally capable of doing so, on behalf of their successors, assigns, agents, employees, officers, directors, managers, and any and all persons or entities which might make any claim on their behalf or in their stead, release the other and each of their successors, assigns, agents, employees, officers, directors, managers, attorneys, and insurers (“Released Parties”) from all liabilities, obligations, claims, suits, causes of action, demands, or any other rights or claims, regardless of the nature or cause, known or unknown that were raised in the Lawsuit, could have been raised in the Lawsuit, or arise from the Lawsuit, the Water Supply Retention Agreements, or the Transfer of Financial Responsibility Agreement (collectively, “Claims”) to the extent such Claims exist as of the Effective Date (the “Released Matters”). Notwithstanding the foregoing, CCWA shall continue to be liable for all financial obligations under the State Water Supply Contract arising pursuant to the Transfer of Financial Responsibility Agreement and as the successor-in-interest to the Water Supply Retention Agreements.
7.2 Each Party hereto acknowledges that Section 1542 of the California Civil Code provides:
A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.
The Parties specifically waive all rights granted to them by Section 1542 of the California Civil Code and the laws of any jurisdiction of similar import. The Parties further acknowledge that the release herein given shall be and remain in effect as a full and complete general release as to the matters released herein, notwithstanding the subsequent discovery or existence of any such additional or different facts. Each Party acknowledges that the waiver of the protections set forth in Civil Code Section 1542 was independently negotiated and agreed to.
8. Non-Disparagement. With regard to the subject matter of this Agreement, each Releasing Party shall limit any communications in any public statements, or statement likely to become %#
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public, such that such communication(s) does not malign, denigrate or disparage the Released Parties.
9. Integration. The Assignment Agreement does not alter the terms and conditions of this Agreement. This Agreement, together with the Assignment Agreement, contains the entire agreement and understanding between the Parties concerning the matters described herein. Each of the Parties hereto acknowledges that no other Party, nor the agents, nor the attorneys for any Party, has made any promise, representation or warranty whatsoever, express or implied, not contained herein, to induce the execution of this Agreement and acknowledges that this Agreement has not been executed in reliance upon any promise, representation or warranty not contained herein.
10. Cooperation; Defense of Agreement and Assignment Agreement; Invalidity Event
10.1 The District and CCWA agree to support and provide for the full and final assignment and transfer of the State Water Supply Contract from the District to CCWA, as contemplated by this Agreement and as provided in the Assignment Agreement, and to not file on behalf of any third party, fund or otherwise support any third party by providing research, fact- finding, or advising any third party in filing any administrative process or court action opposing or challenging the validity of this Agreement or the Assignment Agreement or any provision thereof.
10.2 If any third party challenges any Party’s approval and execution of this Agreement or approval and execution of the Assignment Agreement by the District, CCWA, or DWR, CCWA has the right but not the obligation, in its sole and absolute discretion, to defend any such challenge and appeal any adverse administrative or court decision resulting from such challenge. The District agrees to cooperate in CCWA’s defense and appeal of any adverse decision. During the pendency of any such challenge and appeal, this Agreement and the Assignment Agreement, once effective, shall remain in full force and effect.
10.3 Upon a final, non-appealable determination or order issued by a court of competent jurisdiction that this Agreement and/or the Assignment Agreement or any material term or provision of this Agreement and/or the Assignment Agreement is void or unenforceable (an “Invalidity Event”), the Parties shall meet and confer to determine whether this Agreement and/or the Assignment Agreement may be modified or amended to address the Invalidity Event, consistent with the intentions, purpose, and directives of this Agreement. If the Parties mutually determine that this Agreement and/or the Assignment Agreement cannot be modified or amended consistent with the intentions, purpose, and directives of this Agreement, this Agreement and the Assignment Agreement shall become null and void. Upon such occurrence, the Parties agree that:
(i) the Parties shall take all actions necessary to put the other Parties back into the position they would have been had this Agreement never been executed, including the return, within 120 days, of any and all money that has been paid by Petitioners to Respondents pursuant to this Agreement; (ii) the releases provided in this Agreement shall become null and void, as if they had never been entered; (iii) the Transfer of Financial Responsibility Agreement and the Water Supply Retention Agreements shall automatically be revived and reinstated as if they had never been terminated; and (iv) nothing in this Agreement or the Assignment Agreement shall waive, bar, or limit any Party’s claims or defenses with respect to the interpretation or enforcement of the Water Supply %#
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Retention Agreements, the Transfer of Financial Responsibility Agreement, or the agreement described in Recital H. Further, the Parties will cooperate in good faith with each other and with DWR to address the issues giving rise to the Invalidity Event and to adopt new agreements serving the same purpose as this Agreement and the Assignment Agreement.
11. Fees and Costs. Each Party shall bear its own costs, expert and consultant fees and costs, or attorneys’ fees and costs (collectively, “ Fees and Costs ”) related to or arising out of (a) the Lawsuit, (b) the preparation, negotiation, approval, and execution of this Agreement and the Assignment Agreement, as applicable, (c) implementation of this Agreement, and (d) any defense of this Agreement.
12. Notices. All notices required by this Agreement shall be given by CCWA to the District, or by the District to CCWA, as applicable, and shall be in writing and shall be served either by email, overnight delivery service providing evidence of receipt (such as Federal Express), or by registered or certified mail, return receipt requested, and shall be deemed delivered upon actual receipt, and shall be addressed as follows, or at such other address as either Party may from time to time specify to the other Party in writing, provided that no notice of a change of address shall be effective until actual receipt of the notice by the receiving Party:
CCWA:
Ray Stokes, Executive Director
Central Coast Water Authority
255 Industrial Way
Buellton, CA 93427
(805) 688-2292
[email protected]
with a copy to:
Stephanie Osler Hastings
Brownstein Hyatt Farber Schreck, LLP
1020 State Street
Santa Barbara, California 93101
(805) 882-1415
[email protected]
DISTRICT:
Chris Sneddon, Public Works Director
County of Santa Barbara
123 East Anapamu
Santa Barbara, CA 93101
(805) 568-3000
[email protected]
with copy to:
Amber Holderness
Santa Barbara County Office of County
Counsel
105 E Anapamu Street
Santa Barbara, CA 93101
(805) 681-4200
[email protected]
13. General Provisions:
13.1 Amendment. This Agreement may only be modified or amended by a writing signed by all of the Parties. Each Party waives its right to assert that this Agreement was affected by oral agreement, course of conduct, waiver or estoppel.
13.2 Assignability. This Agreement shall not be assigned. Any attempted assignment shall be void.
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13.3 Authorization. Each signatory represents and warrants that he or she has the appropriate authorization to enter into this Agreement on behalf of the Party for whom he or she signs.
13.4 Counterparts; Electronic Signatures; Delivery by Email. The Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which when taken together shall constitute one and the same document. Counterparts may be delivered via electronic mail (including PDF or any electronic signature complying with the federal Electronic Signatures in Global and National Commerce (ESIGN) Act of 2000 (P.L. 106-229), e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
13.5 Enforcement; Governing Law; Venue. This Agreement and all matters relating to this Agreement shall be governed by the laws of the State of California. Venue for any disputes under this Agreement shall be in Santa Barbara County, California.
13.6 Good Faith. The Parties shall, at all times, exercise their best efforts and utmost good faith to timely satisfy their respective obligations under the terms of this Agreement, including taking all further actions reasonably necessa ry to effectuate the letter and the spirit of this Agreement.
13.7 Legal Advice. Each Party has received independent legal advice from its attorneys with respect to the advisability of executing this Agreement and the meaning of the provisions of this Agreement. Each Party acknowledges that this Agreement in its final form is the result of the combined efforts of counsel for the Parties and, should any provision of this Agreement be found to be ambiguous in any way, such ambiguity shall not be resolved by construing this Agreement in favor or against another Party but rather by construing the terms of this Agreement fairly and reasonably in accordance with the purpose of this Agreement.
13.8 No Admission of Liability. This Agreement is a compromise of disputed claims, and nothing contained in this Agreement shall be construed to be an admission of fault or liability on the part of any Party hereto.
13.9 No Agency. This Agreement shall not create, nor shall it be construed to create any agency, partnership or similar relationship among the Parties.
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35272780
Settlement Agreement And Release
IN WITNESS WHEREOF, this Agreement has been entered into by and between the Parties on the dates set forth below.
SANTA BARBARA COUNTY FLOOD
CONTROL AND WATER
CONSERVATION DISTRICT
B y :
Chris Sneddon
County Public Works Director
D a t e :
APPROVED AS TO FORM:
By: _______________________________
Amber Holderness
Santa Barbara County Office of County
Counsel
CENTRAL COAST WATER AUTHORITY
B y :
Ray Stokes, Executive Director
D a t e :
APPROVED AS TO FORM:
B y :
Stephanie Osler Hastings
Brownstein Hyatt Farber Schreck, LLP
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35272780
Settlement Agreement And Release
CARPINTERIA VALLEY WATER
DISTRICT
B y :
Case Van Wingerden, President
D a t e :
ATTEST:
By: _________________________________
Lisa Silva, Board Secretary
D a t e :
APPROVED AS TO FORM:
B y :
James E. Perero
Myers, Widders, Gibson, Jones, Feingold,
LLP
CITY OF BUELLTON
B y :
David Silva, Mayor
D a t e :
ATTEST:
B y :
Linda Reid, City Clerk
D a t e :
APPROVED AS TO FORM:
B y :
Gregory M. Murphy, City Attorney
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CITY OF GUADALUPE
B y :
Ariston D. Julian, Mayor
D a t e :
APPROVED AS TO FORM:
B y :
Philip Sinco, City Attorney
CITY OF SANTA BARBARA
B y :
Kelly R. McAdoo
City Administrator
D a t e :
APPROVED AS TO FORM:
Sarah J. Knecht, City Attorney
B y :
Daniel S. Hentschke
Assistant City Attorney
CITY OF SANTA MARIA
B y :
Alice Patino, Mayor
D a t e :
ATTEST:
B y :
Donna Schwartz, Chief Deputy City
Clerk
D a t e :
APPROVED AS TO FORM:
B y :
Thomas T. Watson, City Attorney
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GOLETA WATER DISTRICT
B y :
Lauren Hanson, President
Board of Directors
D a t e :
ATTEST:
B y :
David Matson, Board Secretary
D a t e :
APPROVED AS TO FORM:
B y :
Andrew Jared
Colantuono, Highsmith & Watley, P.C.
MONTECITO WATER DISTRICT
B y :
Kenneth Coates, President
Board of Directors
D a t e :
ATTEST:
By: ______________________________
Nicholas Turner, Secretary
D a t e :
APPROVED AS TO FORM:
B y :
Walter E. Wendelstein, District Counsel
Wendelstein Law Group PC
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SANTA YNEZ RIVER WATER
CONSERVATION DISTRICT,
IMPROVEMENT DISTRICT NO. 1
B y :
Paeter E. Garcia, General Manager
D a t e :
APPROVED AS TO FORM:
B y :
Elisabeth L. Esposito
Brownstein Hyatt Farber Schreck, LLP
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EXHIBIT A
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35275588
Agreement Regarding Assignment, Assumption, and Release of the State Water Supply Contract For Santa Barbara County
AGREEMENT REGARDING
ASSIGNMENT, ASSUMPTION, AND RELEASE
OF THE STATE WATER SUPPLY CONTRACT FOR SANTA BARBARA COUNTY
This AGREEMENT REGARDING ASSIGNMENT, ASSUMPTION, AND RELEASE OF THE STATE WATER SUPPLY CONTRACT FOR SANTA BARBARA COUNTY (the “Agreement”) is made by and between the Santa Barbara County Flood Control and Water Conservation District (the “ District”), the Central Coast Water Authority (“ CCWA”), and the California Department of Water Resources (“ DWR”) (each, a “ Party” and collectively, the “Parties”), with reference to the following facts and intentions. This Agreement is effective as of ______________, 2025, which is the last date of signature by all Parties hereto (the “Effective Date”).
RECITALS
A. On or about February 23, 1963, the District entered into a Water Supply Contract with DWR (the “State Water Supply Contract”) with respect to the delivery of 60,000 acre feet per year of water from the State Water Project to Santa Barbara County. In 1965, the District and DWR executed Amendment No. 2 to the State Water Supply Contract whereby this delivery amount was revised to 57,700 acre feet per year of water. Said quantity of water is set forth in “Table A” to the State Water Supply Contract and is referred to as the “Maximum Annual Table A Amount.” As permitted by Article 45(e) of the State Water Supply Contract, the District elected to delay construction of the facilities that would be required to permit delivery of the Maximum Annual Table A Amount.
B. In 1981, the District and DWR executed Amendment No. 9 to the State Water Supply Contract whereby the District agreed to reduce its annual deliveries by 12,214 acre feet per year to 45,486 acre feet per year. The balance of the Maximum Annual Table A Amount, which is 12,214 acre feet per year, is referred to herein as the “Suspended Table A” water. Pursuant to the “Stipulation for Settlement and Compromise and Order” dated March 12, 1987 (Judicial Council Coordination Proceeding No. 1879; Santa Barbara Sup. Ct., No. 142195), DWR granted to the District the option to reacquire any amount of the Suspended Table A water which the District relinquished under Amendment No. 9.
C. On various dates between 1985 and 1988, the District entered into a series of agreements, each called a “ Water Supply Retention Agreement ,” with various public water providers and end users of water (each a “Contractor” and collectively, the “Contractors”). Each Water Supply Retention Agreement provided that the District “assign[ed] all rights and obligations under the State Water Contract” with respect to a specified portion of the water supply and conveyance capacity made available by the State Water Supply Contract to the Contractor.
D. By letter dated April 2, 1991, certain Contractors, in coordination with the District, formally requested that DWR approve the assignment of rights embodied in the Water Supply Retention Agreements. By letter dated August 13, 1991, DWR expressly approved the Water Supply Retention Agreements insofar as those agreements pertained to the District transferring or %#
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Agreement Regarding Assignment, Assumption, and Release of the State Water Supply Contract For Santa Barbara County
setting over its rights pursuant to the State Water Supply Contract to the Contractors, but DWR declined to release the District from its obligations to DWR pursuant to the State Water Supply Contract.
E. On August 1, 1991, eight of the Contractors, each a public agency and public water provider (each, a “ Member” and collectively, the “ Members”) formed CCWA when they each executed a Joint Exercise of Powers Agreement pursuant to Government Code section 6500, et seq. As of the Effective Date, each Member, or its successor-in-interest, remains a member of CCWA.
F. Following its formation, CCWA entered into a series of agreements, each called a “Water Supply Agreement,” with 13 of the Contractors, including the Members. Each party to a Water Supply Agreement with CCWA is referred to as a “ Participant” and collectively, as the “Participants.” Each of the Water Supply Agreements includes a provision that the rights held by each Participant under its Water Supply Retention Agreement with the District were assigned to CCWA, in return for CCWA’s delivery of the water made available by those rights to the Participant. The remaining Contractors elected to terminate their participation in the State Water Project and assigned their respective rights under their Water Supply Retention Agreement with the District to CCWA. The terminating Contractors have no retained, remaining, or other rights whatsoever under such agreements.
G. On November 12, 1991, CCWA and the District entered into a “ Transfer of Financial Responsibility Agreement ” under which CCWA agreed, inter alia , to accept responsibility for all financial obligations of the District under the State Water Supply Contract.
H. On June 3, 1993, the District and CCWA entered into an “ Assignment Agreement” pursuant to which the District assigned all of its retained right to 250-acre feet that was not previously transferred or set over pursuant to a Water Supply Retention Agreement to CCWA.
I. In August 1997, CCWA completed construction of the transportation and treatment system by which water under the State Water Supply Contract would be delivered to Santa Barbara County and the first delivery of water pursuant to the State Water Supply Contract was made to CCWA, which in turn delivered the water to the Participants pursuant to the Water Supply Agreements.
J. On December 12, 2017, the Members amended the 1991 Joint Exercise of Powers Agreement creating CCWA to include the power to “contract with DWR for delivery of water from the State Water Project, along with all necessary and incidental powers as may be required by [CCWA] to carry out [CCWA’s] rights and obligations under the State Water Supply Contract, including, but not limited to, the right to levy a tax or assessment on all properties within the jurisdiction of [CCWA] not exempt from taxation, as mandated by the California Water Code and the State Water Supply Contract.”
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35275588
Agreement Regarding Assignment, Assumption, and Release of the State Water Supply Contract For Santa Barbara County
K. In reliance on DWR’s consent and release, as set forth below, the Parties enter into this Agreement to assign the District’s rights, title, and interest in the State Water Supply Contract, and to effectuate an assumption and release of the District’s obligations under the State Water Supply Contract. It is the intention of the Parties that the result of this Agreement shall be that the District shall no longer have any rights or obligations under the State Water Contract and that CCWA shall replace the District as a party to the State Water Contract as if CCWA were the original counterparty with DWR.
NOW, THEREFORE, in consideration of the mutual promises set forth below and the foregoing recitals, which are incorporated into the operative provisions of this Agreement by this reference, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Assignment. The District hereby assigns, transfers, and sets over to CCWA, without recourse and without representation or warranty of any kind, all of the District’s rights, title, and interest in, to, and under the State Water Supply Contract (including, but not limited to, the right to delivery of the Table A water, inclusive of the right to reacquire the Suspended Table A water, and the reimbursement provided for in Amendment No. 9 (Article 45(j)) of the State Water Supply Contract), along with all liabilities and obligations of the District arising from or under the State Water Supply Contract. This assignment is absolute and presently effective.
2. Assumption. CCWA accepts such assignment without recourse and without representation or warranty of any kind, and assumes all of the District’s liabilities and obligations arising from or under the State Water Supply Contract, including any and all obligations to make payments, indemnifications or reimbursements thereunder, and agrees to be bound by and to keep, perform and observe the terms, covenants and conditions placed on the District under the State Water Supply Contract. CCWA agrees to be bound by the State Water Supply Contract to the same extent as if it had been an original party to said instrument and accepts and agrees to perform all of the District’s obligations therein.
3. CCWA Indemnification and Release.
a. CCWA Indemnifies District. CCWA releases, forever acquits, discharges and indemnifies the District from and against any and all liabilities (at law or in equity), obligations, liens, claims, orders, rulings, losses, damages, assessments, fines, penalties, injuries, demands, actions, judgments, suits, costs, expenses, or disbursements of any kind (including reasonable attorneys’ fees and costs) which may at any time on or after the Effective Date be imposed on, incurred by, or asserted against the District by any third party, based on, resulting from, in any way relating to, in connection with, or arising out of the State Water Supply Contract, except to the extent caused by the District’s gross negligence or willful misconduct. In the event the District’s right to indemnification under this Section is triggered by an administrative proceeding or legal action by a third party seeking to invalidate or otherwise limit the effectiveness of this Agreement, CCWA shall be entitled to appoint the counsel of its choice to represent the District at CCWA’s expense and, to the extent CCWA appears in such action, the District consents to such counsel jointly representing the District and CCWA and will agree in writing to waive any %#
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35275588
Agreement Regarding Assignment, Assumption, and Release of the State Water Supply Contract For Santa Barbara County
potential legal conflict that might arise as a result of such joint representation, unless impermissible pursuant to the California Rules of Professional Responsibility or as a matter of law, in which case the District shall be entitled to appoint the counsel of its choice to represent the District at the District’s expense.
b. CCWA Indemnifies DWR. CCWA agrees to defend and hold DWR, its officers, employees, and agents harmless from any direct or indirect loss, liability, lawsuits, cause of action, judgment or claim, and shall indemnify DWR, its officers, employees, and agents from all lawsuits, costs, damages, judgments, attorney’s fees, and liabilities that DWR, its officers, employees and agents incur as a result of this Agreement, except to the extent resulting from the sole negligence or willful misconduct of DWR, its officers, employees and agents.
4. DWR Consent and Release. DWR consents to and approves the assignment, transfer, and assumption of the State Water Supply Contract to and by CCWA, as described in this Agreement, and releases the District from all liabilities and obligations arising from or under the State Water Supply Contract. DWR shall hold CCWA, as the contracting party pursuant to this Agreement, responsible for all liabilities and obligations arising from or under the State Water Supply Contract to the same extent as if CCWA had been an original party to said instrument.
Upon the Effective Date, all references in the State Water Supply Contract to the “Santa Barbara County Flood Control and Water Conservation District,” or “District,” or “Agency” shall be deemed to refer to CCWA.
5. Termination of Other Agreements
a. Transfer of Financial Responsibility Agreement. Upon the Effective Date, the Transfer of Financial Responsibility Agreement shall automatically terminate and this Agreement shall supersede all provisions of the Transfer of Financial Responsibility Agreement. b. Water Supply Retention Agreements. Upon the Effective Date, the Water Supply Retention Agreements shall automa tically terminate and this Agreement shall supersede all provisions of the Water Supply Retention Agreements. c. Contingent Revival of Prior Agreements. (i) If a court of competent jurisdiction determines in a final non-appealable order that this Agreement or the assignment contemplated herein is void, unenforceable, or otherwise fails to take legal effect, or (ii) if DWR determines in its sole discretion that a final non-appealable order from a court of competent jurisdiction issued in connection with litigation arising from this Agreement or the assignment is likely to result in a downgrade of the ratings issued by Moody’s Investor Services or S&P Global Ratings for bonds issued under DWR’s 1986 General Bond Resolution, as amended or (iii) if within [time period] of the Effective Date of this Agreement Moody’s Investor Services or S&P Global Ratings provides a rating (including, if applicable an indicative rating) for bonds issued under DWR’s 1986 General Bond Resolution, as amended, that is lower than the last rating issued for such bonds prior to the assignment contemplated herein, which includes a statement or finding that the reduction in rating is, in whole or in substantive part (as determined by DWR), a result of such assignment, then, prior to the revival and reinstatement described in this Section 5.c. below %#
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35275588
Agreement Regarding Assignment, Assumption, and Release of the State Water Supply Contract For Santa Barbara County
(“Revival”), the Parties shall have sixty (60) days from the date of such court order, DWR determination following such court order, or such indi cative rating to assess, attempt to cure, or otherwise address the matter consistent with the intentions, purpose, and directives of this Agreement. During such sixty (60) day period, the Parties shall confer in good faith and use reasonable best efforts to identify and implement measures to avoid Revival, provided that each Party shall retain sole discretion as to whether any such measures are acceptable. If, following the expiration of such sixty (60) day period or any additional period as may be agreed to by the Parties in writing pursuant to Section 9.a of this Agreement, the matter has not been resolved to the satisfaction of the Parties in their sole discretion, then the Transfer of Financial Responsibility Agreement and the Water Supply Retention Agreements shall automatically be revived and reinstated as if they had never been terminat ed, effective as of the date of the determination described in clause (i) or (ii) or the indicative rating described in clause (iii) hereof. The sixty (60) day cure period established in this Section may be extended upon the written Agreement of the Parties in accordance with Section 9.a of this Agreement.
6. Representations and Warranties. CCWA represents and warrants that it has the power, authority, ability and intent to fulfill each and every one of its obligations under the State Water Supply Contract upon and after the assignment contemplated by this Agreement including, but not limited to, obligations imposed by Article 15 of the State Water Supply Contract.
7. Further Agreements. As soon as reasonably practical following execution of this Agreement by the Parties, District and CCWA agree to execute an amendment to the State Water Supply Contract in form and substance acceptable to the DWR memorializing the assignment of the State Water Supply Contract to CCWA accomplished by this Agreement. In connection therewith, CCWA agrees to provide the map contemplated by Article 15(c) of the State Water Supply Contract delineating CCWA’s boundaries as of the date of this Agreement. Said map shall be included as an exhibit to the amendment.
8. Compliance with the Environmental Quality Act. Each Party shall be responsible for complying with the California Environmental Quality Act (“ CEQA”), if applicable, in connection with such Party’s approval of this Agreement.
9. General Provisions
a. Amendment. This Agreement may only be modified or amended by a writing signed by all of the Parties. Each Party waives its right to assert that this Agreement was affected by oral agreement, course of conduct, waiver or estoppel. b. Authorization. Each signatory represents and warrants that he or she has the appropriate authorization to enter into this Agreement on behalf of the Party for whom he or she signs.
c. Construction and Interpretation. The Parties agree and acknowledge that the terms of this Agreement have been negotiated by the Parties and the language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent. %#
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Agreement Regarding Assignment, Assumption, and Release of the State Water Supply Contract For Santa Barbara County
This Agreement shall be construed without regard to any presumption or rule requiring construction against the party causing such instrument to be drafted, or in favor of the party receiving a particular benefit under this Agreement.
d. Counterparts; Electronic Signatures; Delivery by Email. T h i s Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which when taken together shall constitute one and the same document. Counterparts may be delivered via electronic mail (including PDF or any electronic signature complying with the federal Electronic Signatures in Global and National Commerce (ESIGN) Act of 2000 (P.L. 106-229), e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. e. Entire Agreement. Other than the Settlement Agreement and Release entered between CCWA and the District on ____________________, 2025, this Agreement is the entire understanding of the Parties in respect of the subject matter hereof. There are no other promises, representations, agreements or warranties by any of the Parties. f. Governing Law and Jurisdiction. This Agreement and all matters relating to this Agreement shall be governed by the laws of the State of California. Venue for any disputes under this Agreement shall be in Santa Barbara County, California. g. Notices. All communications or notices in connection with this Agreement shall be in writing and either hand-delivered or sent by U.S. first class mail, postage prepaid, or electronic mail followed by written notice sent by U.S. mail and addressed to the Parties as follows, or at such other address as any Party may from time to time specify to the other Party in writing, provided that no notice of a change of address shall be effective until actual receipt of the notice by the receiving Party:
Santa Barbara County Flood Control and Water Conservation District Matthew Young, Water Agency Manager
130 East Victoria Street, Suite 200
Santa Barbara, CA 93101-2019
Tel: (805) 568-3440
[email protected]
Central Coast Water Authority
Ray Stokes, Executive Director
255 Industrial Way
Buellton, CA 93427-9565
Tel: (805) 697-5214
[email protected]
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35275588
Agreement Regarding Assignment, Assumption, and Release of the State Water Supply Contract For Santa Barbara County
California Department of Water Resources
John Yarbrough, State Water Project Deputy Director
715 P Street
Sacramento, CA 95814
Tel: (916) 653-5791
[email protected]
h. Waiver. Any waiver or failure to declare a breach as a result of the violation of any term or condition of this Agreement shall not constitute a waiver of that term or condition and shall not provide the basis for a claim of estoppel or waiver by any Party to that term or condition.
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the Effective Date.
—signatures following on next page—
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35275588
Agreement Regarding Assignment, Assumption, and Release of the State Water Supply Contract For Santa Barbara County
SANTA BARBARA COUNTY FLOOD
CONTROL AND WATER
CONSERVATION DISTRICT
B y :
Chris Sneddon
County Public Works Director
D a t e :
APPROVED AS TO FORM:
By: _______________________________
Amber Holderness
Santa Barbara County Office of County
Counsel
CENTRAL COAST WATER AUTHORITY
B y :
Ray Stokes, Executive Director
D a t e :
APPROVED AS TO FORM:
By: _______________________________
Stephanie Osler Hastings
Brownstein Hyatt Farber Schreck, LLP
CALIFORNIA DEPARTMENT OF WATER
RESOURCES
B y :
Karla Nemeth, Director
D a t e :
APPROVED AS TO FORM:
By: _______________________________
Ann K. B. Carroll, General Counsel
Department of Water Resources
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