EXHIBIT 1-E

 

AGREEMENT FOR SALE OF

RECYCLED WATER

 

This Agreement for Sale of Recycled Water (“Agreement”) is entered into on                                        , 2004, by and between the MONTEREY PENINSULA WATER MANAGEMENT DISTRICT, a California public agency (“MPWMD”), and the [1] (“Buyer”) amending and restating the Agreement for Sale of Reclaimed Water between the parties dated as of                                              , 1992, effective when the Project Expansion is Completed.

 

RECITALS

 

A.        As is described in greater detail in MPWMD Ordinance No. 109, pursuant to statutory authority, beginning in 1989 MPWMD entered into a series of interrelated agreements with various parties for the finance, design, construction, and operation of facilities comprising the Original Project as herein defined, for the production and use of recycled water in lieu of potable water for irrigation of vegetated areas within the Del Monte Forest area of the Monterey Peninsula.  One such agreement, which is presently in effect and shall remain in effect until this Agreement becomes effective by its terms, was the Agreement for Sale of Reclaimed Water dated as of                                             , 1992 with Buyer, who is the owner of vegetated areas commonly known as the [2] (“Buyer’s Property”), located in the Del Monte Forest area of the Monterey Peninsula. 

 

B.         The Original Project has been constructed and is in operation.  MPWMD has supplied and will continue to supply, under the Agreements for Sale of Reclaimed Water with Buyer and various other owners of vegetated areas, non-potable water for irrigation purposes and to enable potable water to be “saved” for other purposes.  However, the performance of the Original Project has not met the expectations of the parties, either with regard to quantity or quality, due to a number of factors described in Ordinance No. 109.

 

C.        The parties to the Agreements for Sale of Reclaimed Water have determined that the Project Expansion (as defined herein), if and when Completed (as defined herein), will improve the performance of the Original Project and thereby allow the use of more recycled water for irrigation and the consequent savings of more potable water.

 

D.        MPWMD desires that Buyer enter into this Agreement to purchase Recycled Water (as defined herein) for irrigation of Buyer’s Property when the Project Expansion is Completed [without the addition of any potable water thereto (except during an Interruption as defined herein)], and Buyer is willing to enter into this Agreement for that purpose.  This Agreement shall not be effective unless and until the Project Expansion is Completed, whereupon this Agreement shall amend and restate in its entirety the Agreement for Sale of Reclaimed Water between MPWMD and Buyer referred to above.

 

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing, and the covenants and representations and warranties set forth in this Agreement, the parties have agreed as follows:

1.         Definitions. As used in this Agreement, the following terms shall have the following meanings:

            1.1       “Annual Charge” means the aggregate amount of all monthly quantity, service, and equalization charges payable by Buyer for any water year (October 1st through the following September 30th) as those charges are described in section 2.2 below.

            1.2       “Basic Penalty” has the meaning set forth in section 2.5 below.

1.3              Not Used.

            1.4       “Buyer” means the purchaser of Recycled Water pursuant to this Agreement.[3]

            1.5       “Buyer’s Property” means [4], and various other Recycled Water Irrigation Areas owned by Buyer, located in Del Monte Forest, Monterey County, California.

            1.6       “Cal-Am” means California-American Water [Company], a California corporation.

            1.7       “Capital Cost” has the meaning set forth in the Wastewater Reclamation Project Construction and Operation Agreement Relating to Wastewater Reclamation Project, dated as of November 1, 1990, by and between MPWMD CAWD, PBCSD, and PBC.

            1.8       “CAWD” means the Carmel Area Wastewater District, a California public agency.

            1.9       “Certificates of Participation” means the Certificates of Participation issued by MPWMD in 1992 in the amount of $33.9 million to finance the Capital Costs of the Original Project, as more fully described in the Supplemental Financing Agreement.

            1.10     “Construction and Operation Agreement” means the Wastewater Reclamation Project Construction and Operation Agreement by and among MPWMD, CAWD, PBCSD and PBC, dated as of November 1, 1990.

            1.11     “CAWD/PBCSD” means the combination of CAWD and PBCSD, which entities, pursuant to the Management Agreement, will separately own the various components comprising the Project and, through the Management Committee, manage, and be responsible for, the design, construction, operation and maintenance of the Project.

            1.12     “Completed” with respect to the Project Expansion shall mean that (1) all required permits or other approvals have been obtained, (2) all construction activities for the advanced treatment components (being added to the tertiary treatment plant facilities of the Original Project), Forest Lake Reservoir, and all treatment, and distribution facilities associated therewith, have been completed and tested in accordance with their respective approved plans, permits and other approvals, (3) Forest Lake Reservoir has been filled to capacity with “Recycled Water” suitable for irrigation of all portions of the Recycled Water Irrigation Areas without the addition of any potable water thereto and otherwise meeting all regulatory and health standards for such usage, and (4) all portions of the distribution system are capable of delivering such Recycled Water to the Recycled Water Irrigation Areas.

            1.13         Del Monte Forest” means the area of unincorporated Monterey County described and/or depicted on Exhibit “E.”

            1.14     “Due Date” has the meaning set forth in section 2.5 below.

            1.15     “Emergency” means, with respect to all or any portion of the territory of MPWMD, either (1) an emergency caused by drought, or other threatened or existing water shortage in response to which MPWMD has adopted an ordinance pursuant to section 332 of the Monterey Peninsula Water Management Law; (2) an emergency or major disaster declared by the President of the United States; or (3) a “state of war emergency,” state of emergency,” or “local emergency,” as those terms are respectively defined in Government Code section 8558, duly proclaimed pursuant to the California Emergency Services Act.

            1.16     “Financial Commitment” and “Supplemental Financial Commitment” shall each have the respective meanings specified in MPWMD Ordinance No. 109.

            1.17     “Fiscal Sponsorship Agreement” means the Wastewater Reclamation Project Fiscal Sponsorship Agreement between MPWMD and PBC, dated as of October 3, 1989, as amended from time to time.

            1.18     “Golf Courses” means the eighteen hole golf courses, located in Del Monte Forest, Monterey County, California and described on attached Exhibit “C.”  As of the date of execution of this agreement, there are currently seven such Golf Courses.

            1.19     “Indemnified Party” has the meaning set forth in section 10.1 below.

            1.20     “Indemnifying Party” has the meaning set forth in section 10.1 below.

            1.21     “Independent Recycled Water Users Group” or “IRWUG” means the unincorporated association of that name comprised of the Cypress Point Golf Club, Poppy Hills Golf Course, and Monterey Peninsula Country Club.

1.22          “Interruption” means an interruption for longer than 12 hours in the supply of Recycled Water to a Recycled Water Irrigation Area.

 

            1.23     “Irrigation System” means the present water supply system for Buyer’s Property together with the Irrigation System Improvements.

            1.24     “Irrigation System Improvements” means those modifications added to the water supply system for Buyer’s Property to irrigate Buyer’s Property with Recycled Water. 

            1.25     “Management Agreement” means the agreement between CAWD/PBCSD, which establishes and allocates the rights and responsibilities of CAWD and PBCSD with respect to the construction, ownership and operation of the Project.

            1.26     [“Management Committee” means a committee composed of (a) two representatives of CAWD, (b) two representatives of PBCSD, (c) one representative of PBC, and (d) one, non-voting representative of IRWUG (to become a voting member after the Certificates of Participation are fully paid and retired).  The Management Committee will, pursuant to the Construction and Operation Agreement, or the Supplemental Construction and Operation Agreement, whichever is then in effect, direct budgeting for, and the construction and operation of, the Project.]

            1.27     “Minimum Purchase” means the Buyer’s share of the yield of the Project, determined as set forth in section 2.4 below.

            1.28     “Monterey Peninsula Water Management District Law” means Chapter 527 of the California Statutes of 1977, as amended to the date of this Agreement.

            1.29     “MPWMD” means the Monterey Peninsula Water Management District, a California public agency.

            1.30     “Net Operating Deficiencies” has the meaning set forth in the [Supplemental Financing Agreement].

            1.30     “Operating Revenues” has the meaning set forth in the [Supplemental Financing Agreement]..

            1.31     “Operation and Maintenance Expenses” has the meaning set forth in the [Supplemental Financing Agreement]..

            1.32     “Other Recycled Water Irrigation Areas” means the Recycled Water Irrigation Areas described in attached Exhibit “C” other than the Golf Courses.

            1.33     “Other Property” has the meaning set forth in section 2.8 below.

            1.34     Not Used

            1.35     “Owners” means the owners of each of the Recycled Water Irrigation Areas, and includes Buyer with respect to its ownership of Buyer’s Property.

            1.36     “PBCSD” means the Pebble Beach Community Services District, a California public agency.

            1.37     “PBC” means the Pebble Beach Company, a California general partnership. 

            1.38     “Percentage Share” means the percentages that are set forth on attached Exhibit “C” for each of the Recycled Water Irrigation Areas.

            1.39”    “Permits” has the meaning set forth in section 4.2 below.

            1.40     “Project” means the Original Project [(excluding, however, the Irrigation Systems)], and the Project Expansion.

            1.41     The “Original Project” means and consists of (1) a tertiary treatment facility at the present CAWD wastewater treatment plant site, designed to produce at least 800 acre feet per year of disinfected recycled water for irrigation of the Recycled Water Irrigation Areas, as more specifically described on Exhibit “A” hereto, (2) a distribution system which is capable of distributing the recycled water from the facility to a point of distribution in the Del Monte Forest for further distribution to the Recycled Water Irrigation Areas, as more specifically described on Exhibit “A” hereto, and (3) Irrigation Systems on each of the Recycled Water Irrigation Areas.

            1.42     The “Project Expansion” consists of components intended to improve the Original Project, principally including but not limited to (a) the addition of advanced treatment components to the treatment facilities of the Original Project to produce “Recycled Water” as defined in section 1.45 herein, and (b) the addition of storage, treatment, and distribution facilities at or associated with the Forest Lake Reservoir located within the Del Monte Forest, as more specifically described on Exhibit “B” hereto.

            1.43     “Public Participant” means any one or more of the following: MPWMD, CAWD, PBCSD, or any successor public agency, including, without limitation, any joint powers agency formed by one or more of such agencies.

            1.44     “Rate Schedule” has the meaning set forth in section 2.2 below.

            1.45     “Recycled Water” means water produced by the Project and receiving further treatment so as to be suitable for irrigation of the Recycled Water Irrigation Areas without the addition of any potable water thereto (except during an Interruption as defined herein) and otherwise meeting all regulatory and health standards for such usage.  Water meeting the quality standards set forth on Exhibit “F” to this Agreement shall be conclusively deemed to be “suitable for irrigation of the Recycled Water Irrigation Areas without the addition of any potable water thereto.”  “Recycled Water” has the same meaning as “Reclaimed Water.”

            1.46         “Recycled Water Irrigation Areas” means all of the Golf Courses and the Other Recycled Water Irrigation Areas as each are respectively described in attached Exhibit “C,” all of which will utilize Recycled Water, in lieu of potable water, for irrigation purposes.

            1.47     “Related Agreements” means the agreements contemplated by Ordinance No. 109 and this Agreement, or otherwise reasonably necessary to implement the Project, and addressing all matters related to the Project as the parties may deem necessary or advisable, including, without limitation, the agreements between MPWMD and each owner of one or more of the Recycled Water Irrigation Areas, the Construction and Operation Agreement, the Supplemental Construction and Operation Agreement, the Water Purchase Agreement, the Fiscal Sponsorship Agreement, the Financing Implementation Agreement, and the Supplemental Financing Agreement.

            1.48     “Shortfall Period” has the meaning set forth in section 6.3 below.

            1.49     “Supplemental Financing Agreement” means the Supplemental Financing Agreement between MPWMD and PBC dated                                  , 2004, supplementing the Fiscal Sponsorship Agreement (as amended by the Financing Implementation Agreement, dated as of November 1, 1992).

            1.50     “Surplus Recycled Water” has the meaning set forth in section 2.8 below.

            1.51     “Unpaid Balance” has the meaning set forth in section 2.5 below.

            1.52      “Water Year” means the period of one year beginning on October 1st and continuing through the following September 30th.

2.         Purchase and Sale of Recycled Water.

            2.1 Quantities of Recycled Water. During the term of this Agreement, MPWMD shall sell and deliver to Buyer, and Buyer shall purchase and accept from MPWMD, such quantities of Recycled Water as Buyer shall require, from time to time, to irrigate Buyer’s Property; subject, however, to the provisions of sections 6.1, 6.2 and 6.3, which shall govern the rights of the parties [only] in the event that the Project is unable to produce and deliver a sufficient quantity of Recycled Water to meet all of the irrigation requirements of the Recycled Water Irrigation Areas. During the term of this Agreement, Buyer shall not purchase or use water other than Recycled Water, for the purpose of irrigating Buyer’s Property, except that [(a)] Buyer may collect and use water falling upon or passing through Buyer’s Property for such purpose[; (b) to the extent MPWMD is unable to supply an aggregate amount of Recycled Water and potable water sufficient to meet the aggregate irrigation requirements of Buyer’s Property, Buyer may purchase or receive water from any other source legally available to Buyer to make up any shortfall for so long as such shortfall exists; and (c) Buyer may purchase or use water other than Recycled Water to the extent otherwise specifically provided in this Agreement].  Any such use of water [falling upon or passing through Buyer’s Property] by Buyer pursuant to the preceding sentence shall be consistent with the requirements of all Permits, as defined in section 4.2 below, and otherwise in compliance with all applicable laws and regulations. Additionally, any such use shall be reported to MPWMD on a quarterly basis at the same time Buyer submits its quarterly estimates as required by section 2.8.(c) below. Buyer’s report shall include the source, quantity, time(s), and duration(s) of any such use, and any other information reasonably requested by MPWMD.

            2.2       Charges for Recycled Water Use. Subject to the provisions of sections 2.3 and 2.4, MPWMD shall charge Buyer for service by the Project and for the use of Recycled Water as follows:

                  (a) A monthly quantity charge based on the quantity of Recycled Water used calculated in the same manner as the quantity charge for similarly-situated potable water users in the gravity zone as set forth in the then current Tariff Schedule for General Metered Service for the Cal-Am Monterey Peninsula Tariff Area, or any successor schedule, as approved by the California Public Utilities Commission (the “Rate Schedule”).

(b)   A monthly service charge based on the size of Buyer’s Recycled Water meter(s) calculated in the same manner as the service charge for similarly-situated potable water users in the gravity zone as set forth in the Rate Schedule.

 

                  (c) A monthly equalization charge based on the aggregate amount of all taxes, charges, surcharges, assessments, fees, or other monetary impositions of any kind, however denominated and for whatever purposes, that from time to time are due and payable by similarly-situated potable water users. 

            The aggregate amount of all monthly quantity, service, and equalization charges payable by Buyer for any water year is herein referred to as the “Annual Charge.” The express intent of MPWMD and Buyer, except as set forth in sections 2.3 and 2.4, is that Buyer’s Annual Charge for the use of Recycled Water shall equal, to the extent practicable, and shall not exceed the annual charges Buyer would have paid to Cal-Am and MPWMD for service by the Cal-Am water system and the use of potable water for irrigation of Buyer’s Property (excluding elevation zone differentials).

            2.3       Adjustment in Annual Charge. Upon the later to occur of (a) payment of the Certificates of Participation in full or (b) termination of the Financial Commitment with respect to Net Operating Deficiencies, MPWMD shall adjust Buyer’s charges under section 2.2 for the balance of the water year in which the later of such events occurs to a level that assures that, to the extent practicable, Operating Revenues shall suffice to pay the reasonable Operation and Maintenance Expenses for that water year. 

            For each water year thereafter, the Annual Charge for Buyer and all other Owners shall be calculated by MPWMD independently of Cal-Am’s annual charges for potable water users and shall be set at a level that assures that, to the extent practicable, Operating Revenues shall suffice to pay the reasonable Operation and Maintenance Expenses for that water year.  Buyer further acknowledges and agrees that Buyer’s Annual Charge for any such water year may exceed an amount comparable to the amount Buyer would have paid for such water year if calculated pursuant to section 2.2 above.

            Operation and Maintenance Expenses shall be independently audited annually.

            2.4       Minimum Purchase. Irrespective of the amount of Recycled Water actually used by Buyer, Buyer shall be deemed to have purchased under section 2.1, and shall be obligated to pay for under section 2.5, a minimum amount of Recycled Water in each water year (the “Minimum Purchase”). Buyer’s Minimum Purchase for each Water Year is set forth in attached Exhibit “C” and is calculated by multiplying Buyer’s Percentage Share times eight hundred (800) acre feet of Recycled Water. If Buyer’s Property consists of more than one of the Recycled Water Irrigation Areas, then Buyer’s total Percentage Share shall be the aggregate of the percentage shares for all Recycled Water Irrigation Areas owned by Buyer. In that case, Buyer’s total Minimum Purchase shall be the aggregate of the Minimum Purchases for all Recycled Water Irrigation Areas owned by Buyer. Buyer’s actual purchase of Recycled Water in any water year for use on any of the Recycled Water Irrigation Areas owned by Buyer shall be applied toward satisfaction of Buyer’s total Minimum Purchase requirement for such year. Buyer shall be required to take delivery of and use only that amount of Recycled Water necessary to satisfy the irrigation requirements for Buyer’s Property and in the event that Buyer requires less than the full amount of the Minimum Purchase during a given water year, no Recycled Water in excess of Buyer’s requirements shall be delivered. Buyer’s obligation to pay for the Minimum Purchase, to the extent the Minimum Purchase exceeds the amount of Recycled Water actually purchased and used by Buyer in any given water year, shall be calculated in the manner provided in section 2.5(b), and payment shall be made as provided in section 2.5(c). At such time as the price for Recycled Water may be adjusted pursuant to section 2.3, Buyer’s obligations under this section 2.4 shall terminate, and Buyer shall thereafter be required to pay for the amount of recycled Water actually delivered.

            2.5 Payment for Recycled Water.

                  (a) MPWMD (or its agent for purposes of billing and collection) shall invoice Buyer for all quantity charges, service charges, and equalization charges payable under section 2.2 on a monthly basis in accordance with the Cal-Am billing procedures then in effect with respect to potable water customers.

                  (b) At the conclusion of each water year, MPWMD shall prepare a final invoice for such water year to reflect, if necessary, the following adjustments:

                        (i) First, MPWMD shall calculate the total quantity of Recycled Water used and purchased by Buyer during such water year. If such total is less than the Minimum Purchase, then MPWMD shall invoice Buyer for the quantity charge payable under section 2.2 for a quantity of Recycled Water represented by the difference between the Minimum Purchase and the total quantity of Recycled Water used and purchased by Buyer during such water year.

                        (ii) Second, MPWMD shall determine whether the sum of (A) Buyer’s total payments under subsection 2.5(a) above for such water year and (B) the amount, if any, owed by Buyer under subsection 2.5(b)(i) above is equal to the Annual Charge properly payable by Buyer under section 2.2. If such sum is less than the Annual Charge properly payable by Buyer for such water year, then MPWMD shall invoice Buyer for the difference.

                  (c) Each such invoice shall be due and payable by Buyer within the time period for payment then provided by Cal-Am with respect to potable water customers. If Buyer fails to pay to MPWMD the full amount owing under any such invoice (the “Unpaid Balance”) on or before the last day of such time period (the “Due Date”), Buyer shall be obligated to pay to MPWMD a basic penalty of ten percent (10%) of the Unpaid Balance, as provided in section 326(g) of the Monterey Peninsula Water Management District Law (the “Basic Penalty”). Additionally, if Buyer fails to pay the full amount of the Unpaid Balance and the Basic Penalty on or before ten (10) days after the Due Date, Buyer shall be obligated to pay to MPWMD interest on the Unpaid Balance and the Basic Penalty at the rate of one-half of one percent (1/2%) per month from the Due Date until paid, as provided in section 326(g) of the Monterey Peninsula Water Management District Law. Additionally, MPWMD shall have all other remedies against Buyer available under the Monterey Peninsula Water Management District Law, including, without limitation, the lien rights provided by section 326(h).

            2.6       Measurement of Use of Recycled Water. The actual use of Recycled Water by Buyer for Buyer’s Property shall be measured by a water meter or meters installed for the purpose of measuring such use. The measurement of such use determined by MPWMD (or its agent for purposes of billing and collection) by reading such water meter shall be deemed to be conclusive and binding on the parties, absent manifest error.

            2.7       Supplemental Potable Water Pursuant to Section 6.1. Any potable water delivered to and used by Buyer pursuant to the provisions of section 6.1 shall be deemed to be “Recycled Water” purchased and used by Buyer for purposes of sections 2.2, 2.4, 2.5 and 2.6 of this Agreement, but for no other purposes, and no other potable water purchased and/or used by Buyer shall be deemed “Recycled Water” for purposes of this Agreement.  Buyer shall pay [MPWMD and MPWMD shall pay] Cal-Am for such water.

            2.8       Right of First Offer. MPWMD and Buyer acknowledge and agree that the rights of Buyer and any other Owner to purchase and receive Recycled Water for their respective Recycled Water Irrigation Areas shall be primary and superior to the rights of Buyer, any other Owner, or any other person to purchase and receive Recycled Water for any suitable use on any property other than the Recycled Water Irrigation Areas (“Other Property”). Subject to this express acknowledgement and agreement, MPWMD and Buyer further acknowledge that the Project may be capable of producing more Recycled Water during certain time periods than the aggregate amount of Recycled Water required by the Recycled Water Irrigation Areas during such time periods (“Surplus Recycled Water”). With respect to any Surplus Recycled Water, MPWMD and Buyer therefore further agree as follows:

                  (a)  Buyer and all other Owners shall have a [equal] right of first offer to purchase all or a portion of the Surplus Recycled Water on the terms and conditions set forth in attached Exhibit “D.”

                  (b)  If Buyer and the other Owners fail to exercise their respective rights of first offer, or if Surplus Recycled Water is available even after Buyer or any other Owner has exercised its right of first offer, then MPWMD shall take the following actions:

                        (i)   MPWMD shall use its best efforts to sell any such Surplus Recycled Water to purchasers who will use the water for commercial purposes. The provisions of any such contract shall include the following: 

      (a) the price for the Surplus Recycled Water shall be the highest price then available in the market, but in no event less than Buyer would pay for such water pursuant to this Agreement;

      (b) the term of the contract shall be limited to six (6) months;

      (c) the contract shall be on an [interruptible,] “as available” basis, with an express acknowledgement that Surplus Recycled Water can only be supplied to the proposed buyer on a daily basis to the extent the requirements of the Recycled Water Irrigation Areas have been completely satisfied.

      (ii) If, after using its best efforts, MPWMD is unable to secure any commercial purchasers pursuant to clause (i) above, MPWMD may contract to sell the Surplus Recycled Water to purchasers who will use the water for any public benefit. The provisions of any such contract shall include the following:

      (a) The price for the Surplus Recycled Water shall be the highest price attainable by MPWMD, but in no event less than the cost to MPWMD of producing and delivering the Surplus Recycled Water;

      (b) the term of the contract shall be limited to thirty (30) days;

      (c) the contract shall be on an interruptible, “as available” basis, with an express acknowledgement that Surplus Recycled Water can only be supplied to the proposed buyer on a daily basis to the extent the requirements of the Recycled Water Irrigation Areas have been completely satisfied.

                  (c) To assist MPWMD in determining whether any Surplus Recycled Water may be available, Buyer shall submit to MPWMD on or before the first day of each new quarter (based on a water year), an estimate of its projected Recycled Water use for that quarter. MPWMD agrees that any such estimate is to be provided solely as a convenience to MPWMD, with no obligation on Buyer to adhere to the amount of such estimate for any purpose.

                  (d)  All revenues from the sale of Recycled Water shall be applied in accordance with the provisions of the Related Agreements pertaining thereto.

3.         Term.

            3.1 Term. This Agreement shall commence and be effective and binding on the parties on the date that the Project Expansion is Completed, and continue and remain in effect until the date on which the Certificates of Participation are fully paid, or the date which is thirty (30) years after the Project Expansion is Completed, whichever is later, and thereafter until terminated pursuant to section 3.2.  The parties agree to memorialize in writing the date on which the Project Expansion is Completed, and to incorporate such writing into this Agreement.

            3.2       Termination by MPWMD or Buyer. Thirty (30) years after the date that the Project Expansion is Completed, either MPWMD or Buyer may terminate this Agreement upon providing the other party at least six (6) months written notice of termination; provided, however, that as long as the Project remains capable of producing and distributing Recycled Water in accordance with this Agreement [neither party] may terminate this Agreement unless an alternative long-term supply of non-potable water of sufficient quality and quantity to meet all of the  irrigation needs on Buyer’s Property is then reasonably available to Buyer. 

4.         Irrigation System.

            4.1 Recycled Water Irrigation Area       Ownership and Operation. Buyer is the owner of the Irrigation System, including the Irrigation System Improvements. Buyer shall be responsible for the operation, including, without limitation, maintenance and repair, of the Irrigation System, including the Irrigation System Improvements, and for all related costs and expenses.

            4.2       Permits. MPWMD and Buyer acknowledge that certain governmental permits, approvals, and authorizations (collectively, “Permits”) are required in order to use the Recycled Water on the Recycled Water Irrigation Areas as a part of the Project. Buyer shall (a) timely execute and file, to the extent not previously executed and filed, all applications for all Permits necessary to use the Recycled Water on Buyer’s Property in the manner contemplated or required by this Agreement, and (b) timely satisfy and comply with all terms and conditions of all Permits, provided, however, that Buyer shall have the right to object to the imposition of any unreasonable terms or conditions proposed in any Permits. Buyer shall at all times maintain the Permits in full force and effect at its own expense. The Permits shall include, without limitation, those required by the California Coastal Commission, the County of Monterey, the California Regional Water Quality Control Board, and the Monterey Bay Unified Air Pollution Control District.

5.         Water Quality.

            5.1 Quality of Recycled Water. Pursuant to the Supplemental Construction and Operation Agreement, CAWD and PBCSD have covenanted and agreed that all Recycled Water sold to Buyer will meet the quality standards set forth in Exhibit “F” hereto, so as to be suitable for irrigation of the Recycled Water Irrigation Areas without the addition of any potable water thereto (except during an Interruption), and will otherwise meet all regulatory and health standards for such usage. Buyer is an intended beneficiary of the Supplemental Construction and Operation Agreement and has the right to enforce the requirements set forth in the preceding sentence.

            5.2 Water Quality Reports. Upon request, Buyer shall be entitled to receive from MPWMD copies of any reports prepared by or on behalf of MPWMD relating to the quality of the Recycled Water sold to Buyer.

6.         Water Quantity.

            6.1 Supply of Potable Water during an Interruption. In the event of an Interruption, then (a) MPWMD hereby finds, and the parties agree, that non-potable water is not “reasonably available” in such circumstances to meet all of the irrigation requirements of the Recycled Water Irrigation Areas and (b) except as otherwise provided in section 6.2, MPWMD shall arrange for Cal-Am to supply sufficient quantities of potable water to meet the irrigation requirements of the Recycled Water Irrigation Areas, subject to the procedures and limitations set forth in subsections (a) through (c) below:

(a)  If there is an Interruption in Recycled Water deliveries to any Recycled Water Irrigation Area, the temporary use of potable water for irrigating each such Recycled Water Irrigation Area is authorized in the manner described in this Subsection 6.1.  Following written notice to MPWMD from an owner of the affected area, CAWD, PBCSD and/or Cal-Am, are authorized to turn on the connection by which potable water enters the distribution system serving the Recycled Water Irrigation Areas.  Reports of the quantities of potable water introduced into the Project through this connection on a daily basis shall be submitted to MPWMD each week throughout the Interruption.

 

(b)  Under normal circumstances, potable water shall not be used for irrigation of a Recycled Water Irrigation Area for any longer than the period of time reasonably required to promptly and diligently complete repair or replacement or other activities necessary to restore Recycled Water service, provided that potable water shall be made available for irrigating tees and greens during an Interruption without any limitation on the duration. 

 

(c)  If potable water has been used for irrigation of a Recycled Water Irrigation Area for 14 days , MPWMD may thereafter give notice of, and hold, a hearing (1) if it appears that the repair or replacement or other activities necessary to restore Recycled Water Service are not being completed promptly or diligently, or (2) upon the request of any interested party, who asserts that due to unique or unusual circumstances there may be a need to use potable water for irrigation of a Recycled Water Irrigation Area for a period longer than the period of time reasonably required to promptly and diligently complete repair or replacement or other activities necessary to restore Recycled Water service. The purpose of the hearing is to determine the period of time during which, and what quantities of, potable water shall continue to be supplied for irrigation of the affected Recycled Water Irrigation Area(s). 

(d)  MPWMD shall give CAWD, PBCSD, Cal-Am, and the owners of each affected Recycled Water Irrigation Area(s) not less than 30 days advance written notice for any such hearing, which notice shall set forth the basis of the hearing (as described in the preceding sentence). 

(e)  Upon considering the evidence presented (including written materials that may be included in an Administrative Record), MPWMD may determine the period of time during which, and what quantities of, potable water shall continue to be supplied for irrigation of the affected Recycled Water Irrigation Area(s).  MPWMD shall give CAWD, PBCSD, Cal-Am, and the owners of the affected Recycled Water Irrigation Area(s) written notice of such determination, and the determination shall be effective on the [15th] [30th] day following service of the notice by personal delivery, [e-mail,] or by facsimile,, whereupon, each party shall immediately comply with the determination or timely challenge the same in court.

[(f) If MPWMD has adopted an ordinance in response to any emergency caused by drought, or other threatened or existing water shortage pursuant to section 332 of the Monterey Peninsula Water Management Law, said ordinance shall prevail over contrary provisions of this Subsection 6.1.]

            6.2 Water Supply Emergency During an Emergency. In the event of an Emergency as to which MPWMD has declared a lawful “water supply emergency” (as defined in section 332 of the Monterey Peninsula Water Management District Law) and has imposed water rationing on all users of potable water within the Cal-Am service area, then MPWMD shall have no obligation to supply any potable water under the provisions of section 6.1. In such event, however, inasmuch as MPWMD finds and the parties agree that non-potable water will not then be “reasonably available” to meet all of the irrigation needs of the Recycled Water Irrigation Areas (as provided in section 6.1), MPWMD agrees that Buyer and the other Owners shall have a right to receive potable water from Cal-Am or any other source under MPWMD’s control to supplement the Recycled Water on a basis that assures that Buyer and the other Owners will have the irrigation requirements of the Recycled Water Irrigation Areas satisfied to the same degree that the irrigation requirements of any similar non-Project golf courses or [large irrigated turf areas] within the service area of Cal-Am or such other source are being satisfied from the system of Cal-Am or such other source.  In the event of any other Emergency, the provisions of Section 6.1 shall yield as necessary to respond to the conditions giving rise to the declaration or proclamation of the Emergency.

            6.3 Allocation in Time of Shortage. In the event that the Recycled Water produced and delivered by the Project, as supplemented by potable water under the provisions of section 6.1 or section 6.2 above, is insufficient to meet the aggregate requirements of the Recycled Water Irrigation Areas at any given time (a “Shortfall Period”), then the aggregate amount of Recycled Water and potable water available through the Distribution System shall be allocated among all of the Recycled Water Irrigation Areas in the manner agreed by all of the Owners. In the absence of such agreement, the aggregate amount of Recycled Water and potable water available during any given Shortfall Period shall be allocated among each of the Owners in proportion to their respective Percentage Shares as set forth in attached Exhibit “C.”

                  If Buyer’s Property consists of more than one of the Recycled Water Irrigation Areas, then Buyer shall be entitled to aggregate the Percentage Shares for all the Recycled Water Irrigation Areas owned by Buyer, and Buyer may use its aggregate Percentage Share of Recycled Water (and any potable water available during any Interruption or Shortfall Period) on all or any of the Recycled Water Irrigation Areas owned by Buyer in any manner Buyer determines in its sole discretion.

                  At no time during any Shortfall Period or otherwise during the term shall any Recycled Water Irrigation Area receive or use a quantity of Recycled Water and potable water in excess of its irrigation requirements.

            6.4 Buyer’s Right to Receive Reports.  Upon request, Buyer shall be entitled to receive from MPWMD copies of any reports prepared by or on behalf of MPWMD relating to the use of Recycled Water and potable water by the Recycled Water Irrigation Areas for irrigation, including, without limitation, any reports relating to any Shortfall Periods.

7.         Operation of the Project.

            7.1 Standards of Operation. Buyer shall ensure that the Irrigation System is operated, maintained and repaired in compliance with (a) applicable provisions of federal, state and local laws, regulations, permits and approvals, including, without limitation, the Permits, (b) insurance policies in place with respect to such Irrigation System, (c) good engineering practices, and (d) prudent business practices. The Project shall be operated, maintained and repaired as provided in the Supplemental Construction and Operation Agreement.  Buyer is an intended beneficiary of the Supplemental Construction and Operation Agreement and has the right to enforce the requirement set forth in the preceding sentence.

            7.2 Insurance on Irrigation System.

                  (a) Buyer shall continue to obtain and maintain in effect during the term of this Agreement insurance for the Irrigation System, with sufficient coverages therefor (including with respect to risks, amounts and deductibles), and with such insurance companies, as are authorized by the Commissioner of Insurance to supply insurance in the State of California. Each such insurance policy shall (1) name MPWMD and PBC as an additional insured thereunder, and (2) provide that it may not be terminated or amended or otherwise modified, in any material respect, without MPWMD and PBC being given at least thirty (30) days prior written notice of such termination, amendment or modification. Upon receipt of any such notice, MPWMD and PBC shall have the same approval rights with respect to any replacement policy or any material amendment or other modification as they had with respect to the original policy. Upon the initial placement and the renewal of each such insurance policy, Buyer shall provide MPWMD and PBC with written evidence, in the form of policies or certificates of insurance, of such insurance. 

                  (b) In the event that a casualty should occur to any portion of the Irrigation System on Buyer’s Property, Buyer shall promptly thereafter repair or reconstruct such portion using any proceeds of the insurance described in section 7.2(a) above and such other funds of Buyer as are necessary to complete such work.

            7.3 Insurance on Project. The Construction and Operation Agreement and the Supplemental Construction and Operation Agreement each require CAWD and PBCSD to obtain and maintain insurance with respect to the portions of the Project and the operations thereof for which each is responsible.  To the extent such [extended coverage] is available at a reasonable cost to the Project, Buyer shall be named as an additional insured under any such insurance policies.  Buyer is an intended beneficiary of the Supplemental Construction and Operation Agreement and has the right to enforce the requirement set forth in the preceding sentence.

8.         Representations and Warranties and Covenants.

            8.1 Mutual Representations and Warranties. MPWMD and Buyer each hereby represents and warrants to the other that:

      (a) the execution and delivery of this Agreement, and the performance of its obligations under this Agreement, have been duly authorized by all necessary action on its part, and it has full power, right and authority to enter into this Agreement and to perform its obligations hereunder;

      (b) neither the execution and delivery of this Agreement by it, nor the performance by it of any of its obligations under this Agreement, violates any applicable federal, state or local law, whether statutory or common, or regulation, or its charter documents, if any, or constitutes a violation of, or a breach or default under, any agreement or instrument, or judgment or order of any court or governmental authority, to which it is a party or to which it or any of its property is subject;

      (c) this Agreement is a valid and binding obligation of it, enforceable against it in accordance with its terms, except as such enforceability may be limited by equitable principles or by bankruptcy or other laws affecting creditors, rights generally; and

      (d) except as may be required to construct and operate the Irrigation System, no consent, approval, order or authorization of any person, entity, court or governmental authority is required on its part in connection with the execution and delivery of this Agreement or the performance by it of any of its obligations hereunder.

9.         Remedies.

            Neither MPWMD nor Buyer shall have the right to terminate this Agreement as a result of a breach of this Agreement by the other. Subject to the foregoing limitation, each party may avail itself of such rights at law or in equity as such party may have as a result of a breach of this Agreement by the other. Each of the parties hereby acknowledge that the other party may have no adequate remedy at law if such party breaches any of its obligations hereunder, and, accordingly, each of the parties shall have the right, in addition to any other rights it may have hereunder or at law, to obtain, in any court of competent jurisdiction, injunctive relief to restrain a breach or threatened breach of this Agreement by the other party or otherwise to specifically enforce any of the provisions of this Agreement involved in any such breach or threatened breach.

10.       Indemnification.

            10.1 General Indemnification. Subject to the limitations in this section 10, each party (the “Indemnifying Party”) shall defend and indemnify, and hold harmless, the other party (the “Indemnified Party”) from and against any and all damages, liabilities, losses, and costs or expenses suffered or incurred by the Indemnified Party, arising out of, or resulting from, any breach of its representations, warranties or agreements set forth in this Agreement.

            10.2 Procedure for Indemnification. In the event that any legal proceedings are instituted, or any claim or demand is asserted, by any third party which may give rise to any damage, liability, loss, or cost or expense in respect of which any party has indemnified, or is obligated to indemnify, the other party under section 10.1 above, the Indemnified Party shall give the Indemnifying Party written notice of the institution of such proceedings, or the assertion of such claim or demand, promptly after the Indemnified Party first be comes aware thereof; provided, however, any failure by the Indemnified Party to give such notice on such prompt basis shall not affect any of its rights to indemnification hereunder unless such failure materially and adversely affects the ability of the Indemnifying Party to defend such proceeding. The Indemnifying Party shall have the right, at its option and at its own expense, to utilize counsel of its choice in connection with such proceeding, claim or demand, subject to the approval of the Indemnified Party, which approval shall not be unreasonably withheld or delayed, and to defend against, negotiate with respect to, settle or otherwise deal with such proceeding, claim or demand; provided, however, that no settlement of such proceeding, claim or demand shall be made without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed, unless, pursuant to the terms and conditions of such settlement, the Indemnified Party shall be released from any liability or other exposure with respect to such proceeding, claim or demand; and provided, further, that the Indemnified Party may participate in any such proceeding with counsel of its choice at its own expense. In the event, or to the extent, the Indemnifying Party elects not to, or fails to, defend such proceeding, claim or demand and the Indemnified Party defends against, settles or otherwise deals with any such proceeding, claim or demand, any settlement thereof may be made without the consent of the Indemnifying Party if it is given written notice of the material terms and conditions of such settlement at least ten (10) days prior to a binding agreement with respect to such settlement being reached. Each of the parties agrees to cooperate fully with each other in connection with the defense, negotiation or settlement of any such proceeding, claim or demand.

            10.3     Payment of Indemnified Claim. Upon a final judgment or award with respect to any proceeding of the nature described in section 10.2 having been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the expiration of the time in which an appeal therefrom may be made, or a settlement of such proceeding, claim or demand having been consummated, or the parties having arrived at a mutually binding agreement with respect to each separate matter indemnified hereunder pursuant to section 10.1, the Indemnifying Party shall forthwith pay all of the sums so owing to the Indemnified Party. In the event any such proceeding is brought, in which allegations of fault are made against both of the parties, the extent of any indemnification shall be determined in accordance with the findings of the court as to the relative contribution by each of the parties to the damage suffered by the party seeking indemnity with respect to such proceeding.

11.       Miscellaneous.

            11.1 Standard of Reasonableness for Approvals. Whenever in this Agreement any party has the right to approve or consent to any matter, such approval or consent shall not be unreasonably withheld or delayed. 

            11.2 Further Assurances. Each of the parties agrees to execute, and deliver to the other parties, such documents and instruments, and take such actions, as may reasonably be required to effectuate the terms and conditions of this Agreement; provided, however, such covenant shall not have the effect of increasing the obligations of any party pursuant to this Agreement or require any representations and warranties by any party in addition to those of such party set forth herein.

            11.3 Relationship of the Parties. Nothing in this Agreement shall create a joint venture, partnership or principal-agent relationship between or among any of the parties.

            11.4 Notices. Whenever any matter herein provides for notice or other communication to be given to any of the parties, such notice shall be in writing and given to the persons, and at the addresses, designated below for such party, or to such other person or other address as such party shall provide, in writing, to the other party. All notices may be given by being personally delivered or placed in the United States mail, postage prepaid, certified or registered mail, sent by facsimile transmission, or sent by overnight, prepaid air freight, addressed to the party to whom notice is to be given. Each such notice shall be deemed to be effective upon receipt, if personally delivered, sent by facsimile transmission or sent by air freight, or five (5)days after being so mailed.

If to MPWMD:                                                            If to Buyer:

Monterey Peninsula Water                                            [5]

       Management District

P.O. Box 85                                                                

Monterey, CA 93942-0085                                        

Attn.: General Manager                                    

            11.5 Exhibits. All exhibits referenced in and attached to this Agreement are hereby incorporated herein and made a part of this Agreement, for all purposes, by this reference.

            11.6 Assignment. This Agreement shall be binding upon, and inure to the benefit of, the successors and permitted assigns of the parties. Buyer shall have the right to assign any or all of its rights or obligations under this Agreement to (a) an entity which manages Buyer’s Property pursuant to a contract with Buyer; (b) a lessee of Buyer’s Property and (c) a successor in interest in the ownership of Buyer’s Property, and upon such assignment, Buyer shall be relieved of all such obligations so assigned. MPWMD shall have the right to assign its rights under this Agreement to a trustee (or person or entity in a similar capacity) to the extent necessary in connection with the issuance of the Certificates of Participation.  [Notwithstanding the preceding sentence, neither party may assign or transfer its rights or obligations if to do so would: (1) impair the ability or right of any other party to receive the benefits of this Agreement, or (2) frustrate the purpose for which this Agreement was executed.]  Nothing herein shall be construed to give any rights or benefits to anyone other than the parties to this Agreement, or to their respective successors and permitted assigns.

            11.7 Severability. If any provision of this Agreement is declared invalid or unenforceable in any jurisdiction by a court of competent jurisdiction, then such portion or provision shall be deemed to be severable, to the extent invalid or unenforceable, from this Agreement as to such jurisdiction (but, to the extent permitted by law, not elsewhere) and shall not affect the remainder hereof. Notwithstanding the foregoing, (a) such provision of this Agreement shall be interpreted by the parties and by any such court, to the extent possible, in such a manner that such provision shall be deemed to be valid and enforceable, and (b) such court shall have the right to make such modifications to any provision of this Agreement as do not materially affect the rights or obligations under this Agreement of the parties hereto and thereto and as may be necessary in order for such provision to be valid and enforceable.

            11.8 Waiver. No waiver of any right or obligation of any of the parties shall be effective unless in a writing, specifying such waiver, executed by the party against whom such waiver is sought to be enforced. A waiver by any of the parties of any of its rights under this Agreement on any occasion shall not be a bar to the exercise of the same right on any subsequent occasion or of any other right at any time.

            11.9 Headings and Titles. The designation of a title, or a caption or a heading, for each section of this Agreement is for the purpose of convenience only and shall not be used to limit or construe the contents of this Agreement.

            11.10 Presumptions. Because all of the parties have participated in preparing this Agreement, there shall be no presumption against any party on the ground that such party was responsible for preparing this Agreement or any part hereof.

            11.11 Amendment or Modification. This Agreement may be amended, altered, or modified only by a writing, specifying such amendment, alteration or modification, executed by all of the parties hereto.

            11.12 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which shall constitute one (1) and the same instrument.

            11.13 Entire Agreement. This Agreement and the Related Agreements constitute the entire agreement between the parties regarding the subject matter hereof and thereof, and supersede all prior or contemporaneous negotiations, understandings or agreements of the parties, whether written or oral, with respect to such subject matter.

            IN WITNESS OF THE FOREGOING, this Agreement has been executed by the officers of each of the parties effective the date first shown above.

            Monterey Peninsula Water                                      [6]

Management District, a                                          

California public agency

 

By:  _____________________                                   By  _________________________

 

Its:  ______________________                                  Its  _________________________


EXHIBIT A

DESCRIPTION OF ORIGINAL PROJECT

The Original Project consists of the following components:

(1)        The tertiary treatment plant located at the CAWD wastewater treatment plant immediately south of the Carmel River and west of California State Highway One, capable of producing 1.8 million gallons per day (MGD) of tertiary treated recycled water. The existing tertiary treatment facility diverts and treats secondary level effluent from the CAWD wastewater treatment plant for reuse as irrigation water using a treatment process consisting of: secondary effluent flow equalization; influent pumping; polymer and alum addition with rapid mixing for coagulation; low energy mixing for flocculation; filtration; chlorination; dechlorination; and pumping.

            (2)        The improvements within the existing CAWD wastewater treatment plant facilities to assure a consistent supply of secondary effluent from the existing CAWD plant diverted to the tertiary treatment plant. These improvements include a secondary clarifier flow split control and replacement of mechanical aeration diffusers.

(3)        The recycled water distribution system consisting of approximately 38,000 feet of distribution pipeline and a steel water storage tank (described in item (4) below) in Del Monte Forest.  The main transmission line begins at the tertiary treatment plant and terminates at the southern portion of the Spanish Bay Golf Course and Resort in Del Monte Forest. The pipeline is located primarily within existing roads and road rights-of-way extending through the City of Carmel-by-the-Sea and unincorporated areas of Monterey County, including areas of Del Monte Forest. The distribution system also includes a connection adjacent to the storage tank (described in item (4) below) for furnishing an emergency potable water supply in the event of failure of the tertiary treatment plant or distribution pump station.

(4)        The 2.5 million gallon recycled water storage tank located adjacent to the Poppy Hills Golf Course maintenance yard north of Viscaino Road in Del Monte Forest. 

 


[EXHIBIT B]

DESCRIPTION OF PROJECT EXPANSION

The Project Expansion consists of the following components:

            [to be furnished by PBC, CAWD, or PBCSD]


EXHIBIT C

 

RECYCLED WATER IRRIGATION AREAS

 

                                                                                    Percentage      

                                                                                    Share                           Minimum Purchase

                                                                                                                                                           

Golf Courses

Monterey Peninsula Country                                         13.63%                                    109acre

Club Dunes Course                                                                                          feet

Monterey Peninsula Country                                         13.63%                                    109acre

Club Shore Course                                                                                                       feet

Cypress Point Golf Course                                           13.63%                                    109acre

                                                                                                                                    feet

Spyglass Hill Golf Course                                             13.63%                                    109acre

                                                                                                                                    feet

Pebble Beach Golf Course                                            13.63%                                    109acre

                                                                                                                                    feet

Spanish Bay Golf Course                                              13.63%                                    109acre

                                                                                                                                    feet

Poppy Hills Golf Course                                               13.63%                                    109acre

                                                                                                                                    feet

Other Recycled Water Irrigation Areas

Peter Hay Par 3 Golf                                                    1.54%                                      12.32 acre

Course                                                                                                                         feet

Pebble Beach Practice                                      .77%                                        6.16 acre

Fairway                                                                                                                        feet

Collins Field/Polo                                                         .77%                                        6.16 acre

Field/Equestrian Center                                                                                                 feet

Robert Louis Stevenson                                                1.54%                                      12.32 acre

School athletic fields                                                                                                     feet______ 

TOTALS                                                                     100%                                       800 acre

                                                                                                                                    feet


EXHIBIT D

RIGHT OF FIRST OFFER

 

 

                                This Right of First Offer is attached to and Incorporated in that certain Agreement for Sale of Recycled Water (the “Agreement”) as an Exhibit. All capitalized terms used in this Right of First Offer shall have the same meaning as in the Agreement.

 

1.         Buyer’s Notice Regarding Surplus Recycled Water. At the time Buyer submits its quarterly estimates as required by section 2.8(c) of the Agreement, Buyer shall notify MPWMD whether Buyer desires to purchase Surplus Recycled Water, if available, to irrigate any Other Property owned by Buyer commencing anytime within the next six (6) months. Buyer’s notice shall include the quantity of Surplus Recycled Water Buyer desires to purchase per year, the date on which Buyer desires to commence use of such Surplus Recycled  Water, the Other Property on which Buyer proposes to use such Surplus Recycled  Water, the proposed duration of such use (the duration shall be for a minimum period of six (6) months and a maximum period co-extensive with the term of the Agreement), and any other information reasonably requested by MPWMD.

 

2.         Surplus Recycled Water Agreement. If Buyer notifies MPWMD of its desire to purchase Surplus Recycled Water as provided in paragraph 1 above, then MPWMD shall be obligated to sell, and Buyer shall be obligated to purchase, Surplus Recycled Water with respect to that notice pursuant to a written agreement (the “SRW Agreement”) on the following terms and conditions:

a. The quantity of Surplus Recycled Water to be sold shall be the quantity specified in Buyer’s notice, subject to the primary and superior rights of all Owners to receive Recycled Water for their respective Recycled Water Irrigation Areas as provided in section 2.8 of the Agreement, and further subject to the rights of any other Owner who has exercised its right of first offer with respect to an earlier or the same six (6) month period and has entered into a SRW Agreement with MPWMD, as provided below. If Buyer and any other Owners give MPWMD notice as provided in paragraph 1 above with respect to the same six (6) month period, then Buyer’s and each such other Owner’s SRW Agreement shall provide that, to the extent the Surplus Recycled Water available at any given time is insufficient to meet the aggregate requirements of Buyer and such other Owner(s) under their respective SRW Agreements, the aggregate amount of Surplus Recycled Water available shall be allocated as follows: each such Owner, including Buyer, shall be entitled to the percentage of the Surplus Recycled Water available that is derived by dividing the quantity of Surplus Recycled Water specified in each such Owner’s SRW Agreement by the aggregate quantity of Surplus Recycled Water specified in all such Owner’s SRW Agreements. No Owner who gives notice of its desire to purchase Surplus Recycled Water with respect to a later six (6) month period shall be entitled to receive Surplus Recycled Water under its SRW Agreement relating to that period until the requirements of all SRW Agreements relating to earlier six (6) month periods are fully satisfied. Except for the SRW Agreement or SRW Agreements relating to the first six (6) month period for which a notice or notices have been given, all subsequent SRW Agreements shall contain a provision acknowledging the prior rights to Surplus Recycled Water granted by all prior SRW Agreements.

 

            By way of illustration of the priority to Surplus Recycled Water intended by this Right of First Offer:

 

            Assume:

 

1.                 On December 30, 2004, Owner A notifies MPWMD of its desire to begin purchasing ten (10) acre feet of Surplus Recycled Water per year during the next six (6) month period (from January 1 to June 30, 2005), with such purchase to commence on March 1, 2005, and a term coextensive with the term of the Agreement.

2.                 On January 1, 2005, Buyer notifies MPWMD of its desire to begin purchasing thirty (30) acre feet of Surplus Recycled Water per year during the next six (6) month period (from January 1 to June 30, 2005), with such purchase to commence on April 1, 2005, and a term coextensive with the term of the Agreement.

 

3.                 Owner A and Buyer enter SRW Agreements with MPWMD on February 1, 2005, and March 1, 2005, respectively, for the quantity of Surplus Recycled Water specified in their respective notices.

 

4.                 On October 1, 2005, Owner B notifies MPWMD of its desire to begin purchasing ten (10) acre feet of Surplus Recycled Water per year during the next six (6) month period (from October 1, 2005, to March 31, 2006), with such purchase to commence on January 1, 2006, and a term co-extensive with the term of the Agreement. Owner B and MPWMD enter into a SRW Agreement on December I, 2005. 5. During the period from June to August 2006, Owner A, Buyer, and Owner B require 10,000, 30,000 and 10,000 gallons of Surplus Recycled Water per day each, respectively, but the aggregate amount of Surplus Recycled Water available during this three (3) month period is only 20,000 gallons per day.  Based on these assumptions, the Surplus Recycled Water available during this three (3) month period would be allocated under the parties’ respective SRW Agreements as follows:

 

(1)   5,000 gallons per day to Owner A.

           

            (2) 15,000 gallons per day to Buyer.

           

            (3) 0 gallons per day to Owner B.

 

This allocation is based upon dividing the quantity of Surplus Recycled Water specified in each of Owner A’s and Buyer’s respective notices by the aggregate quantity of Surplus Recycled Water specified in the two notices.

 

 

For Owner A:

10,000 + 40,000 = 25%

25% x 20,000 gallons per day (“gpd”) = 5,000 gpd

 

For Buyer:

30,000 + 40,000 = 75% ,,”

75% x 20,000 gpd = 15,000 gpd

 

Owner B is entitled to no Surplus Recycled Water during this period because Owner B gave its notice with respect to a later six (6) month period than either Owner A or Buyer, and therefore has no entitlement to receive Surplus Recycled Water until the requirements of Owner A and Buyer are satisfied.

 

            b. Buyer and any other Owner may execute more than one SRW Agreement with MPWMD, and the priority of the rights to Surplus Recycled Water granted by each such SRW Agreement shall be determined as provided in paragraph 2.a. above.

            c. The term of any SRW Agreement shall be as specified in Buyer’s notice and shall be for a minimum duration of six (6) months and a maximum duration co-extensive with the term of the Agreement, provided, however, that Buyer shall have the right to terminate any SRW Agreement on six (6) months notice to MPWMD.

            d. The Other Property to be irrigated with the Surplus Recycled Water shall be described in any SRW Agreement in a manner comparable to the description of the Recycled Water Irrigation Areas in the Agreement. Buyer shall have the right at any time and from time to time to change the Other Property subject to the terms any of its SRW Agreements by giving notice to MPWMD of such change, including the new description of the Other Property subject to the particular SRW Agreements affected, provided, however, that Buyer cannot increase the quantity of Surplus Recycled Water specified by any particular SRW Agreement.

 

[           e. If in any complete water year Buyer purchases an aggregate quantity of Surplus Recycled Water that is less than the aggregate quantity specified in all of its SRW Agreements, for any reason other than the unavailability of sufficient Surplus Recycled Water during that year, then the quantity of Surplus Recycled Water specified in Buyer’s last SRW Agreement and, if necessary, its second to last SRW Agreement, and so on proceeding in order from last to first, shall be reduced permanently so that the aggregate quantity of Surplus Recycled Water specified in all of its SRW Agreements executed up to that water year is equal to the aggregate quantity of surplus Recycled Water purchased in that water year. Additionally, Buyer shall have the right to reduce the quantity of Surplus Recycled Water specified in any of its SRW Agreements at any time and from time to time by giving thirty (30) days notice to MPWMD. If the quantity of Surplus Recycled Water specified in any of Buyer’s SRW Agreements is reduced in either of the above ways, the percentages calculated for, each Owner, including Buyer, with respect to each of its SRW Agreements pursuant to paragraph 2.a. above shall be adjusted to reflect this reduction.]  {to be negotiated among the Recycled Water Users}

 

            f. Charges to Buyer for Surplus Recycled Water shall be calculated in the same manner as charges to Buyer for Recycled Water under the Agreement.

 

            g. All other terms and conditions of the SRW Agreement shall be the same, to the extent practicable, as the terms and conditions of the Agreement.


[EXHIBIT E]

DEL MONTE FOREST

 

A Map of the unincorporated portion of the Del Monte Forest is attached
hereto as a part of this Exhibit E.

 

 


[PLACEHOLDER EXHIBIT F]

WATER QUALITY STANDARDS

[to be negotiated between and furnished by CAWD/PBCSD & Recycled Water users]

 

 

U:\staff\word\boardpacket\2004\2004boardpacket\20040422\01\item1_exh1e.doc



  [1].  “Buyer” would be either the Pebble Beach Company, a general partnership; the Monterey Peninsula Country Club, a California corporation; Cypress Point Club, a California corporation; Poppy Holding, Inc., a California corporation; and Robert Louis Stevenson School, a California nonprofit corporation.

  [2].  These properties are, respectively, the Pebble Beach Golf Course, Spyglass Hill Golf Course, Spanish Bay Golf Course, Peter Hay Par 3 Golf Course, the Pebble Beach Practice Fairway, and the Collins Field/Polo Field/Equestrian Center complex; the Monterey Peninsula Country Club Dunes Course, and the Monterey Peninsula Country Club Shore Course; the Cypress Point Golf Course; the Poppy Hills Golf Course; and the Robert Louis Stevenson School athletic fields.

  [3].  “Buyer” would be either the Pebble Beach Company, a general partnership; the Monterey Peninsula Country Club, a California corporation; Cypress Point Club, a California corporation; Poppy Holding, Inc., a California corporation; and Robert Louis Stevenson School, a California nonprofit corporation.

[4] These properties are, respectively, the Pebble Beach Golf Course, Spyglass Hill Golf Course, Spanish Bay Golf Course, Peter Hay Par 3 Golf Course, the Pebble Beach Practice Fairway, and the Collins Field/Polo Field/Equestrian Center complex; the Monterey Peninsula Country Club Dunes Course, and the Monterey Peninsula Country Club Shore Course; the Cypress Point Golf Course; the Poppy Hills Golf Course; and the Robert Louis Stevenson School athletic fields.

  [5].  “Buyer” would be either the Pebble Beach Company, a general partnership; the Monterey Peninsula Country Club, a California corporation; Cypress Point Club, a California corporation; Poppy Holding, Inc., a California corporation; and Robert Louis Stevenson School, a California nonprofit corporation.

  [6].  “Buyer” would be either the Pebble Beach Company, a general partnership; the Monterey Peninsula Country Club, a California corporation; Cypress Point Club, a California corporation; Poppy Holding, Inc., a California corporation; and Robert Louis Stevenson School, a California nonprofit corporation.