EXHIBIT 12-A
ORDINANCE NO. 109
AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE
MONTEREY PENINSULA WATER MANAGEMENT DISTRICT
REVISING RULE 23.5 AND ADOPTING ADDITIONAL PROVISIONS TO FACILITATE THE FINANCING AND EXPANSION OF THE CAWD/PBCSD
RECYCLED WATER PROJECT
FINDINGS
1. The
2. MPWMD has general and specific power to
cause and implement water conservation activities as set forth in Sections 325
and 328 of the Monterey Peninsula Water Management District Law.
3. In Ordinance No. 39, MPWMD found and
determined that it was in the best interest of MPWMD and the inhabitants
thereof to provide for the design and construction of a tertiary treatment
facility at the wastewater treatment plant owned by the Carmel Sanitary
District (“CSD,” now the Carmel Area Wastewater District (“CAWD”)) to produce
recycled water which could be used in lieu of potable water for the irrigation
of vegetated areas within the Del Monte Forest, a distribution system capable
of distributing the recycled water from the facility to a point of distribution
in the Del Monte Forest for further distribution to such vegetated areas, and
recycled water irrigation systems on each of such vegetated areas (the
“Original Project”).
4. Ordinance No. 39 made various
additional findings and set forth a method of financing the Original Project by
selection of a Fiscal Sponsor who would guarantee the costs of the Original
Project in exchange for a portion of the “Franchise Water” liberated by the use
of recycled water, specifically the “Water Entitlement” as defined in Ordinance
No. 39.
5. Pursuant to the provisions of Ordinance No. 39, MPWMD on October 3, 1989, adopted Resolution No. 89-21, A Resolution of the Board of Directors of the Monterey Peninsula Water Management District Approving the CSD/PBCSD Wastewater Reclamation Project, a Financing Plan Therefor and MPWMD’s Participation in such Project and Financing Plan; Selection of a Fiscal Sponsor pursuant to Ordinance No. 39; and Execution and Delivery of the Wastewater Reclamation Project Fiscal Sponsorship Agreement with Pebble Beach Company (the “Resolution”). The Resolution made various findings, approved the Original Project, approved a financing plan for the Original Project, selected Pebble Beach Company (“PBC”), J. Lohr Properties, Inc. (“Lohr”), and the Hester Hyde Griffin Trust (“Griffin”) as the Fiscal Sponsors for the Original Project, dedicated a Water Entitlement of 365 acre feet annually (“af”) to PBC, 10 af to Lohr, and 5 af to Griffin, approved the Wastewater Reclamation Project Fiscal Sponsorship Agreement (dated as of October 3, 1989) between MPWMD and PBC (the “Fiscal Sponsorship Agreement”) and approved the issuance of Water Use Permits to PBC, Lohr, and Griffin to “evidence” the Water Entitlement.
6. These Water Use Permits authorize the
expansion and extension of the Cal-Am water distribution system to provide
connections to, and potable water service in specific annual quantities (in
acre feet) for the use on and benefit of, specific properties identified in the
Resolution and the Fiscal Sponsorship Agreement (such annual quantities being
specified, and such properties being identified as the “Benefited Properties,”
in Exhibit “A” to the Fiscal Sponsorship Agreement as subsequently amended).
7. The Fiscal Sponsorship Agreement and
the actions taken pursuant thereto provide suitable guarantees of payment of
all costs of designing, constructing, equipping, and operating the Original
Project as required by Ordinance No. 39.
PBC, as stated in the Fiscal Sponsorship Agreement, has assumed the
obligations of Lohr and
8. All actions of MPWMD in the adoption of
the Resolution, the terms of the Resolution itself, and the binding and
enforceable effect of the Fiscal Sponsorship Agreement and all of its terms,
and the obligations of MPWMD thereunder, were all validated by a final Judgment
of Validation entered on July 12, 1990 in a validation action brought by MPWMD
(Monterey Superior Court Case No. M21594).
9. As contemplated by the Fiscal
Sponsorship Agreement, to pay for the Capital Costs of the Original Project,
MPWMD issued interest-bearing Certificates of Participation in 1992 in the
principal amount of $33.9 million, the full payment of which (both principal
and interest) is guaranteed by PBC.
10. The facilities comprising the Original
Project have been completed and are owned and operated either by CAWD or by the
Pebble Beach Community Services District (“PBCSD”) pursuant to an agreement
between such agencies.
11. It was originally estimated that the
production of recycled water by the Original Project would lessen consumption
of potable water by at least 800 acre feet per dry year, thus liberating such
potable water for other uses.
12. The performance of the Original Project
has not met the expectations of the parties to the Fiscal Sponsorship Agreement
or the expectations of the parties to the Related Agreements (as defined
therein), either with regard to quantity or quality, due to a number of factors
beyond the consideration of any of the parties participating in the Original
Project. Prominent among these factors
are the salt-sensitivity of the dominant grass species planted in the greens of
many of the golf courses, inadequacy of the drainage facilities to conduct
accumulated salts away from the greens, smaller than anticipated amounts of
secondary effluent due to decreased flows of influent to the CAWD wastewater
plant (resulting in part from consumers’ water conservation efforts), increased
amount of salinity in the recycled water due to reduced influent flows caused
by water conservation efforts, increased salinity added by water softening units
(the demand for which increased as the source water became more saline),
internal wastewater plant processes contributing additional salinity loading,
the lack of sufficient data concerning the composition of the secondary
effluent produced by the CAWD Wastewater Treatment Plant or concerning the
water quality and water quantity requirements for golf course irrigation, and
the absence of any seasonal storage of recycled water
13. Recycled water with high salinity has the
potential to cause short-term and long-term environmental damage to vegetation
and soil resources, which could in turn have economic consequences.
14. Cal-Am has been limited in its ability to
deliver potable water by California State Water Resources Control Board (SWRCB)
Order No. 95-10, dated July 6, 1995, based upon a finding by SWRCB that Cal-Am
does not possess the legal right to divert from the Carmel River system the
amount of water historically (and presently) being diverted by Cal-Am. As a consequence, the SWRCB in Order No.
95-10 limited production by Cal-Am to 11,285 AF (currently) from the
15. The SWRCB has concluded that the Water Entitlement is not subject to these limitations on production of water from the Carmel River system because the Original Project has provided a source of recycled water for irrigation of the golf courses and certain other vegetated areas within the Del Monte Forest, thereby enabling Cal-Am to reduce its diversions from the Carmel River system by the amount of recycled water thus used in lieu of potable water. The SWRCB requested that MPWMD obtain and submit to it information documenting that (a) the new use of potable water does not exceed the historic quantity of potable water provided by Cal-Am to the Del Monte Forest property, and (b) the quantity of Recycled Water put to beneficial use equals or exceeds the potable water use.
16. PBC is willing to assist, and MPWMD
desires that PBC assist, with the financing of an expansion of the Original
Project (the “Project Expansion”), in conjunction with PBC’s continuing role in
the financing and implementation of the Original Project. The Project Expansion, if and when
implemented, will eliminate the need for reliance on supplemental potable water
for the irrigation of vegetated areas within the Del Monte Forest as defined in
Exhibit B to this ordinance (except in cases of an Interruption as defined in
this ordinance), thereby conserving additional potable water. It has been estimated by the parties
primarily involved in the planning of the Project Expansion (CAWD, PBCSD, PBC,
and the Independent Reclaimed Water Users Group (“IRWUG”)) that the Original
Project together with the Project Expansion will produce sufficient quantities
of Recycled Water each year to meet all of the irrigation needs of the Recycled
Water users who presently have Recycled Water Sales contracts with MPWMD
without the addition of any potable water thereto (except during an
Interruption as defined herein).
17. The parties primarily involved in the
planning of the Project Expansion (CAWD, PBCSD, PBC, and IRWUG) contemplate
that the Forest Lake Reservoir, one component of the Project Expansion, when
filled to its capacity of 420 acre feet, will provide storage sufficient for 60
days supply during the period when irrigation usage is the greatest. Thus, if the Forest Lake Reservoir is filled,
this storage will enable the Project to continue to provide Recycled Water even
during a shutdown of the CAWD wastewater treatment plant or a break in (or
other event preventing the continuous delivery of Recycled Water through) the
distribution facilities “upstream” of the Forest Lake Reservoir.
18. Therefore, the parties primarily involved
in the planning of the Project Expansion (CAWD, PBCSD, PBC, and IRWUG) have
concluded that, after the Project Expansion is Completed, the use of supplemental
potable water for irrigation on the Recycled Water Irrigation Areas, as defined
in this Ordinance, will likely be necessary, if at all, if an Interruption is
caused by one of the following circumstances: (1) the Forest Lake Reservoir is
destroyed or otherwise rendered inoperable, or (2) the facilities conveying
Recycled Water to Forest Lake Reservoir are destroyed or otherwise rendered
inoperable at a time when storage in Forest Lake Reservoir has fallen below 50
acre feet, or (3) the facilities conveying Recycled Water from Forest Lake
Reservoir to Recycled Water Irrigation Areas are destroyed or otherwise
rendered inoperable, or (4) the CAWD wastewater treatment plant or the PBCSD
transmission facilities are rendered unable to deliver Recycled Water to the
Forest Lake Reservoir for a period of time that allows the Recycled Water then
remaining in storage Forest Lake Reservoir to be exhausted, or (5) the
quantities of wastewater entering the CAWD wastewater treatment plant are
reduced to the extent that the CAWD wastewater treatment plant cannot produce
sufficient quantities of Recycled Water to refill Forest Lake Reservoir and the
Recycled Water stored therein is exhausted.
Although unlikely, it is possible that other circumstances might cause
an Interruption requiring use of potable water to supplement the Recycled Water
being used to irrigate the Recycled Water Irrigation Areas.
19. The parties primarily involved in the
planning of the Project Expansion (CAWD, PBCSD, PBC, and IRWUG) have conferred
with and advised MPWMD that they have concluded that, given the limited
availability of public funds, the most effective means of financing and
implementing the Project Expansion will be to make a portion of PBC’s existing
Water Entitlement available for separate sale and conveyance, and applying the
proceeds therefrom to the costs of the Project Expansion and Original Project
as more specifically described in Section Three of this ordinance.
20. This ordinance shall authorize PBC, on
terms and conditions set forth in Section Three of this ordinance, to
separately sell and convey portions of its Water Entitlement for use on lands
within the Del Monte Forest (as defined in Exhibit “B”) not owned by PBC at the
time that this ordinance is adopted, through which PBC will attempt to raise
funds sufficient to finance all Capital Costs of the Project Expansion as set
forth in Section Three hereof. This
ordinance shall also revise and amend Rule 23.5 of the Rules and Regulations of
the Monterey Peninsula Water Management District as set forth in Section Four
hereof; and shall adopt other provisions to facilitate the financing of the
Project Expansion, as more particularly described below.
21. Ordinance No. 39, which is among the body
of actions and agreements supporting the issuance of MPWMD’s Certificates of
Participation as a tax-exempt financing and defining MPWMD’s obligations to the
holders thereof, remains in full force and effect, with all of its terms,
except to the extent its terms are amended by the terms of this ordinance
22. It is in the public interest to maximize
the use of Recycled Water. The Original
Project has resulted in environmental benefits by reducing Cal-Am diversions
from the
23. The Recycled Water Irrigation Areas,
particularly the Del Monte Forest golf courses of international reknown, are an
important contributor to the economy within MPWMD. The Project Expansion will facilitate the
increased use of Recycled Water by the Recycled Water Irrigation Areas without
the use of substantial public funds, which should facilitate these
contributions to the economy within MPWMD in the future.
NOW THEREFORE be it ordained as follows:
Section One: Short Title
This ordinance shall be known as the Recycled Water
Project Expansion Supplemental Financing Ordinance of the Monterey Peninsula
Water Management District.
Section Two: Purpose
It
is the primary purpose of this ordinance to facilitate the financing of the
Project Expansion in order to provide sufficient quantities of Recycled Water
of a quality suitable for irrigation of even the most water quality-sensitive
plants on the golf courses and other vegetated areas located within the Del
Monte Forest (“Recycled Water Irrigation Areas”), and thereby to completely
eliminate the use of potable water for such irrigation (except during an
Interruption as defined herein). The
Original Project has not to date produced sufficient quantities of Recycled
Water of a quality suitable for all irrigation needs within the Recycled Water
Irrigation Areas.
To
assist MPWMD in monitoring the success of eliminating the use of potable water
for irrigation of the Recycled Water Irrigation Areas, reports of the
quantities of potable water introduced into the Project on a daily basis shall
be submitted to MPWMD each week during an Interruption (as defined herein) and
monthly at all other times.
This
ordinance recognizes the existing annual dedication of 380 acre feet of potable
water as the Water Entitlement, which is evidenced by Water Use Permits
authorizing use within specific portions of the Del Monte Forest and a specific
area of four lots immediately adjacent thereto, which portions are collectively
defined as the “Benefitted Properties” in the Fiscal Sponsorship Agreement as
amended. The Water Entitlement and Water
Use Permits represent a portion of the potable water freed up by the
implementation of the Original Project.
The MPWMD Board authorized certain amendments to the definition of such
“Benefitted Properties” prior to the date that this ordinance is adopted.
This
ordinance authorizes PBC to separately convey, for valuable consideration, up
to 175 acre feet of PBC’s existing Water Entitlement solely for dedication to
property or the portion thereof being used for residential purposes within the
Del Monte Forest that is not owned by PBC as of the date that this ordinance is
adopted. Any portion of the Water
Entitlement thus conveyed may be used only on the specific property to which it
is first dedicated following the conveyance, and up to the quantity of water
purchased shall be put solely to Residential use. All of the proceeds from each
of these separate conveyances shall be applied exclusively to the costs of the
Project Expansion and the Original Project as more specifically described in
Section Three of this ordinance. This ordinance does not alter the continuing
guarantees of PBC’s fiscal responsibility for the Original Project. It establishes a specific method by which PBC
will attempt to raise funds to finance all Capital Costs of the Project
Expansion. Funds thus raised (and any
additional funds separately contributed) in excess of the amount needed for
Capital Costs of the Project Expansion shall be applied as more specifically
described in Section Three of this ordinance.
Ordinance No. 39, which is among the body of actions and agreements
supporting the issuance of MPWMD’s Certificates of Participation as tax-exempt
financing and defining MPWMD’s obligations to the holders thereof, remains in
full force and effect, with all of its terms, except to the extent its terms
are amended by the terms of this ordinance.
MPWMD
shall use its existing authority, including without limitation the provisions
of Rule 42, MANDATORY RELEASE OF CUSTOMER INFORMATION FROM WATER DISTRIBUTION
SYSTEMS, and shall adopt such additional Rules and Regulations, or execute such
agreements, as are necessary to gather information concerning (1) the quantity
of potable water obtained from Cal-Am on a monthly and total annual basis to
serve the Benefited Properties (wherever located), and (2) the quantity of
Recycled Water produced by the Project on a monthly and total annual basis to
serve Recycled Water Irrigation Areas.
The purpose of gathering this information is to respond to the SWRCB’s
request that MPWMD document that (a) the new use of potable water does not
exceed the historic quantity of potable water provided by Cal-Am to the Del
Monte Forest property, and (b) the quantity of Recycled Water put to beneficial
use equals or exceeds the potable water use.
Section Three: Financing for the Project Expansion
A. Method
of and Procedure for Financing Project Expansion
1. This ordinance shall
allow PBC, on terms and conditions set forth in the following Subsections of
this Section Three , to separately sell and convey up to 175 acre feet of its
existing Water Entitlement solely for dedication to the Benefited Properties
(as defined in this Ordinance) not owned by PBC as of the date that this
ordinance is adopted.
2. Pursuant to the Recycled Water Project Supplemental Financing Agreement (“Supplemental Financing Agreement”), an agreement to be entered into between MPWMD and PBC in connection with this ordinance, PBC will use its good faith efforts, within the limitation stated in the preceding subsection, to sell such portions of its Water Entitlement as PBC in its discretion may determine to raise the funds necessary to cover the Capital Costs of the Project Expansion. At the end of each month after the effective date of this Ordinance, PBC shall report to MPWMD, in a manner that shall not adversely impact its continuing ability to sell such portions of its Water Entitlement, on its progress in raising funds for the Supplemental Financial Commitment (as defined herein). 3. As of the date of adoption of this ordinance, the Capital Costs of the components comprising the Project Expansion (as those terms are respectively defined herein) are estimated by others at $22 million.
4. All proceeds received
by PBC from any separate sale or conveyance of a portion of PBC’s Water
Entitlement as described in this Subsection shall be deposited in an account
requiring the signature of PBC and at least one Public Participant to release
funds and shall be used to pay for, in the first instance, the Capital Costs of
the Project Expansion.
5. If the expected
proceeds of the commitments received by PBC for sale of portions of its Water
Entitlement within eighteen months after this Ordinance becomes effective are
insufficient to fund the entire Project Expansion, and no person or entity has
come forward with sufficient additional funds to enable both components to
proceed, the parties shall follow the procedures specified in Subsection
A.8.
6. Capital Costs of the
Project Expansion advanced by PBC or any other person (including any funds
independently committed by MPWMD, PBC, IRWUG, CAWD, PBCSD, or any other entity
as a part of the funding component of the Supplemental Financial Commitment)
shall be reimbursed only after sufficient
funds from the Supplemental Financial Commitment have been set aside or
guaranteed to assure that the Project Expansion will be Completed.
7. Any proceeds from such
sales in excess of the Capital Costs of the Project Expansion shall be used to
pay the Capital Costs of the Original Project.
Under no circumstances shall PBC keep any of the proceeds received from
the separate sale or conveyance pursuant to
this Subsection A, provided that nothing in this sentence shall be construed to
affect the reimbursement, after the Project Expansion is Completed, of Capital
Costs of the Project Expansion advanced by PBC or any other entity.
8. If PBC has not, within
eighteen months after this Ordinance becomes effective in accordance with
Section Nine hereof, given notice that all of the elements of the “Supplemental
Financial Commitment,” as defined herein, are present, MPWMD may hold a hearing
to determine whether, and for what period of time, if any, to allow PBC to
continue selling portions of its Water Entitlement. MPWMD shall give PBC, CAWD, PBCSD, and IRWUG
not less than 14 days written notice for such hearing. The purpose of the hearing is to consider
such evidence that may be presented (including written materials that may be
included in an Administrative Record), and based thereon, to determine (1)
whether there is a reasonable possibility that such efforts will generate funds
sufficient to pay for the Capital Costs of the Project Expansion and (2) whether PBC has used good faith
efforts to raise the Supplemental Financial Commitment.
9. Upon considering the
evidence presented (including written materials that may be included in an
Administrative Record), which will be the basis for its determination of
whether, and for what period of time, if any, PBC may continue selling portions
of its Water Entitlement, MPWMD may make a determination thereon. MPWMD shall give PBC written notice of its
determination, whereupon the determination shall take effect on the 15th
day following service of the notice by personal delivery or by facsimile,
whereupon, PBC shall immediately comply with the determination or timely
challenge the same in court.
B. Authority
to Sell Portions of PBC Water Entitlement
In recognition of PBC’s undertaking to raise funds for, and, upon
raising such funds, to irrevocably
commit such funds to, the Project Expansion through the sale of portions of its
Water Entitlement (in accordance with the terms and conditions specified in
this ordinance and in Rule 23.5), PBC is hereby authorized, beginning 30 days
following adoption of this Ordinance, to separately sell and convey to other
owners of land within Del Monte Forest, for such consideration and upon such
terms and conditions as PBC in its discretion may determine, such portions of
its Water Entitlement as it may choose, provided that each such conveyance
shall conform to the limitations of Subsection C, and that the use of each
portion of the PBC Water Entitlement thus conveyed shall comply with the
limitations set forth in Subsection D.
C. Procedures for Separate
1. No such conveyance shall be effective
unless and until the writings comprising the Supplemental Financial Commitment
(as defined herein) have been received by MPWMD; and
2. Each portion of the PBC Water
Entitlement thus conveyed:
a. shall be dedicated
solely to property within the Del Monte Forest that is not owned by PBC as of
the date that that this ordinance is adopted;
b.
shall be put solely to Residential use (as defined in Rule 11); and
c. shall be offered on the same terms and conditions to
persons on the
3. As of the date that the
writings comprising the Supplemental Financial Commitment as defined herein are
received by MPWMD, each recipient of a portion of PBC’s Water Entitlement sold
and conveyed pursuant to Subsection C shall be entitled to issuance by the
General Manager of a Water Use Permit.
The Water Use Permit shall authorize uses only through a “Residential
connection” (as defined in Rule 11), up to the amount of the Water Entitlement
separately conveyed as is documented and authenticated in the conveyance
documentation presented to the General Manager.
4. All Water Use Permits
issued pursuant to this Subsection to evidence the portions of the Water
Entitlement separately conveyed by PBC pursuant to Subsection C of this Section
Three shall provide that rights memorialized thereby shall be subject to
modification after year 2075 as provided in this ordinance and in Ordinance No.
39, and shall further provide that such rights shall not be Revoked (as defined
in Rule 11) or Terminated as defined herein with respect to the entire Water
Entitlement so conveyed except as provided in Subsection D of this Section
Three.
5. Each of the
restrictions of use set forth in Subsection D of Section Three shall be set
forth on the face of the Water Use Permit, and shall bind each owner of the
Benefited Property to which the conveyed Water Entitlement is assigned.
6. The General Manager
shall simultaneously make a record of the quantity of the Water Entitlement
thus conveyed and a commensurate reduction in the aggregate amounts of the
Water Entitlement thereafter held by PBC.
The Water Use Permit shall provide that MPWMD shall have such access as
may be required to enable it to account for the use of water on the Benefited
Property.
D. Restrictions on Use
of Portion of Water Entitlement Separately Sold and Conveyed
1. Any portion of the
Water Entitlement of PBC separately conveyed pursuant to Subsection C of this
Section Three may be used only on the specific property to which it is first
dedicated following the conveyance, and the water shall be put solely to
Residential use (as defined in Rule 11).
2. In addition, the use of
water acquired pursuant to Subsection C of this Section Three shall not exceed
the quantity set forth in the Water Use Permit issued pursuant to Subsection C
of this Section Three and shall be measured in accordance with the water use
factors specified at the time of connection in the MPWMD Rules, as amended from
time to time. In order to facilitate
enforcement of this limitation, MPWMD shall use its existing authority,
including without limitation the provisions of Rule 42, MANDATORY RELEASE OF
CUSTOMER INFORMATION FROM WATER DISTRIBUTION SYSTEMS, and shall adopt such
additional Rules and Regulations, or execute such agreements, as are necessary
to gather information concerning the quantity of potable water obtained from
Cal-Am on a monthly and total annual basis to serve the Benefited Properties.
3. The use of water on
each of the properties to which a portion of the Water Entitlement is dedicated
(after conveyance by PBC pursuant to Subsection A of this Section Three) shall
be measured in accordance with the water use factors specified at the time of
connection in the MPWMD Rules, as amended from time to time, and shall at all
times remain subject to the limitations and restrictions referenced in this
ordinance and Rule 23.5.
E. Use
of Water Entitlement by PBC PBC may
commence or continue to use the quantity of PBC’s Water Entitlement that is not
sold and conveyed by PBC pursuant to Subsection A of this Section on any or all
Benefited Properties owned by PBC as of the time that this ordinance is
adopted, as provided in the Fiscal Sponsorship Agreement, for any lawful use as
determined by the appropriate jurisdiction with land use authority
thereover. In addition, PBC may sell
and convey a parcel of land that it owns together with a specified portion of
PBC’s remaining Water Entitlement without being required to apply any
consideration received therefor to the Project.
Section Four: Amendment of Rule 23.5
Monterey Peninsula Water Management District Rule
23.5 shall be amended by adding the portion set forth in italicized typeface and by deleting all text shown in strikeout
typeface. In all other respects, the
text of Monterey Peninsula Water Management District Rule 23.5 shall remain
unchanged and shall be republished by this ordinance.
Rule 23.5 PERMITS
FOR WATER FROM THE CAL-AM WATER
DISTRIBUTION SYSTEM DEDICATED FOR USE IN CONNECTION WITH THE PLAN TO
FINANCE THE WASTEWATER RECLAMATION RECYCLED WATER PROJECT
A. ISSUANCE OF WATER USE PERMITS. Upon The Board having selectedion of all the Fiscal Sponsor/Sponsors pursuant to
Part II of Ordinance No. 39 and based upon
the irrevocable commitment by those sSponsors
to underwrite, be responsible for, assure and guarantee payment of the
Financial Commitment (Capital Costs and Net Operating Deficiencies and
Ancillary Project Costs of the Reclamation Original Project recorded by the agreements required by Part VII of
this Ordinance No. 39), MPWMD has granted the Water Entitlement and the General Manager shall has issued Water Use Permits to the Fiscal Sponsor/Sponsors Pebble
Beach Company (“PBC”), J. Lohr Properties,
Inc. (“Lohr”), and the Hester Hyde
Griffin Trust (“Griffin”) authorizing the expansion and
extension of the Cal-Am water distribution system to provide water service and
connections for the benefit of the properties identified in the application(s)
of the Fiscal Sponsor/Sponsors Fiscal
Sponsorship Agreement (such properties hereinafter being called the “Benefitted
Properties” described in the
respective Exhibits “A” theretounder as amended). By
virtue of the Water Entitlement, eEach
Water Use Permit shall has granted an irrevocable vested property interest upon one or
more Benefited Parcels Properties for
the use and benefit of a specified quantity of potable water per year (in acre
feet) produced by the Cal-Am water distribution system owned and operated by the
California-American Water Company (“Cal-Am”).
Water Use Permits shall be
subject only to the following limitations:
(1) Tthe permit shall not limit the power of the Monterey
Peninsula Water Management District (“MPWMD”) to curtail water use in the event of any water emergency caused
by drought, or other threatened or existing water shortage, as defined in
Section 332 of the Monterey Peninsula Water Management Act, including without limitation the power of MPWMD to terminate water
service as a consequence of a violation of water use restrictions;
(2) Tthe permit shall not relieve or reduce
any obligation of the recipient of water to pay customary fees, connection
charges, user fees, surcharges, taxes, utility taxes, and/or any other customary
monetary obligation which may be imposed by the California Public Utilities
Commission, Cal-Am, MPWMD District,
or other Public Participants upon water users of the same class within the California-American
Water Company service area, including but not limited to fees and charges
due and payable to MPWMD by reason of Rule 24 of MPWMD’s Rules and Regulation, nor shall such permit limit the authority
of Cal-Am or MPWMD to terminate water use for non-payment of such fees and
charges;
(3) Tthe permit shall enable present use of
the Water Entitlement by PBC only
upon its the commencement of
operation of the Reclamation Project and upon the continuing financial
assurance or guarantee by the Fiscal Sponsor/Sponsor(s) relating to the
payment of Net Operating Deficiencies for the Reclamation Project; and
(4) Nnotwithstanding any other provision of
this Rule Ordinance:
(a) the Water Entitlement allocated to the Benefited
Properties as a whole shall not exceed 380 AF,
(b) the
water usage under the Water Entitlement on any Benefited Property shall not
exceed the amount of the Water Entitlement allocated to such Benefited
Property, measured in accordance with the water use factors specified at the
time of connection in the MPWMD Rules, as amended from time to time, and
(c) for
purposes of collecting connection charges and fees, the projected water usage
of the Benefited Properties shall be calculated by MPWMD in the manner set
forth in Rule 24.
(5) Further, notwithstanding any other provision of this Rule, once a new water connection is established pursuant to through
a Water Use Permit and use of all or a portion of a Water Entitlement,
(a) no user of water through such connection shall
be entitled to preferential access to water over any other water user of the Cal
Am water distribution system; and
(b) the fixtures on the Benefited Property served by
that connection shall be subject to verification of water use
capacity in the manner specified in the MPWMD Rules, as amended from time to
time; and
(c) the use of water on the Benefited Property served by such connection shall be accounted for by MPWMD in the manner specified at the time of connection in the MPWMD Rules, as amended from time to time; and
(d) the restrictions of use set
forth above shall be enforced as determined by MPWMD to be necessary.
(6) The revocation and termination of any Water Use Permit shall not
diminish or otherwise adversely affect present actual use of water by reason of
a prior expansion or extension of the Cal-Am water distribution system through
any connection previously made pursuant to such Water Use Permit, except that actual use of water may be
reduced pursuant to the provisions of subparagraphs A(1) through A(5).
(7) Permits issued pursuant to this Rule shall represent a vested property
interest upon issuance and shall not be subject to revocation or cancellation
except as expressly set forth in subparagraph (D) below.
(8) The Water Entitlement granted by each Water Use Permit shall not be
subject to reallocation pursuant to District MPWMD Rule 30, nor shall it be terminated or diminished by reason
of any water emergency, water moratorium or other curtailment on the setting of
meters for the California-American Wwater Ssystem, nor
shall it otherwise be subject to diminishment or revocation, except in the
event that a Water Use Permit is rRevoked
or cancelled or as otherwise provided by subparagraph (D)
below.
B. WATER USE PERMIT PROVISIONS. Each Water Use Permit shall
be issued by the General Manager with respect to a single Benefitted
Property and shall identify, with
respect to the Benefited Property:
(1) the nature
(industrial/commercial/residential) and location of the water use to be applied
to each Benefitted Property, and the consistency of such water use with
existing land use and zoning plans;
(2) the number and nature of connections projected for each Benefitted
Property; and
(3) the amount of the Water
Entitlement dedicated to, conveyed with, or separately conveyed to, projected water use required by each connection proposed
upon the
Benefitted Property.
C. AMENDMENT OF
WATER USE PERMITS.
(1) The Each Fiscal Sponsor Oowner of any Benefitted
Property, shall, upon request, be entitled to an amendment to any Water Use
Permit to reduce, or increase (up to the
amount of the Water Entitlement specified in the Water Use Permit pursuant to
subparagraph B(3) of this Rule), or change the number and type of
connections and water use with respect to that
Benefited Property. In addition, the
Owner of any Benefitted Property not
described in subparagraph C(2) or C(3) below shall, upon request, be entitled
to an amendment to any Water Use Permit to reduce, or increase, or change the
number and type of connections and water use with respect to any Benefited
Property owned by such Fiscal Spponsor Oowner, provided that in no event shall the aggregate amount
of estimated annual water usage for the Benefitted Properties owned by that Owner of that Fiscal
Sponsor/Sponsors exceed the aggregate Water Entitlement allocated to the
Benefitted Properties of that Fiscal Sponsor Oowner, and provided further that the
reallocation of connections shall be allowed only among those locations
identified in Exhibit A to the Fiscal Sponsor’ship Agreement (as such Exhibit has been
amended after execution to expand the Benefited Properties) application.
(2) As an integral part of the
conveyance of title to one or more Benefited Properties, Water Use Permits shall may be conveyed transferred and assigned to the
successors-in-interest to the Benefitted Properties to which the
pertinent portion of the Water Entitlement is dedicated.
(3) Owners who have received a Water Use Permit
from MPWMD for the portion of the Water Entitlement acquired by separate sale and conveyance from PBC pursuant to Section Three of Ordinance
No. 109 shall be entitled to use up to the quantity of the Water Entitlement evidenced therein only after the writings comprising the
Supplemental Financial Commitment (as defined herein) have been received by
MPWMD and then only on the Benefited
Property to which it applies. Such
Owners shall not have the right to further sell or convey the Water Use Permit
or the corresponding portion of the Water Entitlement for any use other than
Residential use or on any other Benefited Property.
D. REVOCATION, AND TERMINATION, OR MODIFICATION OF WATER USE PERMITS.
Each Water Use Permit held by the Fiscal Sponsor shall provide
that it shall be revoked and terminated in the event that the Fiscal Sponsor shall default in any
material manner upon its obligation, assurance, and guarantee of the Financial
Commitment for the Reclamation Project, provided that nothing herein
shall preclude PBC or any other
subsequent Fiscal Sponsor from disputing in good faith any claim of default
made by the Water Management District MPWMD nor shall the Water Management District MPWMD terminate or revoke any Water Use
Permit unless the PBC or any subsequent Fiscal Sponsor shall
have been given notice and a reasonable opportunity to cure any such default so
long as such opportunity to cure shall not result in any payment default to the any bondholders of the Certificates of Participation.
All Water
Use Permits issued to evidence the Water Entitlement conveyed by PBC pursuant
to Subsections C and D of Section Three of Ordinance No. 109 shall not be
Revoked (as defined in Rule 11) or Terminated as defined herein with respect to
the entire Water Entitlement so conveyed except as set forth in the following
sentences.
In addition, nNotwithstanding the preceding
sentences of this Subsection D any other provision of this Ordinance,
the actual use on each of the properties
to which a portion of the Water Entitlement is dedicated (after conveyance by
PBC pursuant to Subsections C and D of Section Three of Ordinance No. 109)
shall at all times remain subject to the limitations and restrictions
referenced in Subsections A through C of this Rule 23.5, which shall be
enforced in the manner determined by MPWMD to be necessary. In order
to facilitate enforcement of this limitation, MPWMD shall account for the use
of water on the Benefited Property in the manner specified at the time
of connection in the MPWMD Rules, as amended from time to time .
Moreover, each Water Use Permit which on or after January 1, 2075,
embodies an annual Water Entitlement in excess of requirements for planned land
uses on a Benefitted Property or
which purports to authorize usage in excess of the constitutional limitation to reasonable and beneficial use shall
be subject to modification,
revocation, or and termination
in the sole discretion of the District MPWMD, such that the water usage authorized thereby shall not exceed
such requirements and limitations.
Prior to any termination and
revocation or modification,
termination, or revocation pursuant to this subparagraph D, the holder of the Water Use Permit, Fiscal
Sponsor, shall be entitled to
notice and a hearing, and any termination, revocation, or modification shall be
subject to appeal to the Board pursuant to Rule 70 of the District MPWMD Rules and Regulations.
The revocation, and termination, or modification of any Water Use Permit
shall not diminish or otherwise adversely affect present actual use of water by
reason of prior expansion or extension of the Cal-Am water distribution system
through any connection previously made pursuant to such Water Use Permit, provided that each Water Use Permit holder
shall be subject to such laws, ordinances, and regulations as are generally
applicable to all similarly situated users (Residential users within the Cal-Am
System with lots classified by MPWMD as the same size) actually using water
from the Cal-Am water distribution system, and nothing herein is intended to or
shall affect the ability to curtail or eliminate the actual use of water
through any connection previously made pursuant to a Water Use Permit to the
extent such curtailment or elimination is authorized by such generally
applicable laws, ordinances, or regulations applied in a non-discriminatory
fashion to all similarly situated users in the Cal-Am System (Residential users
with lots classified by MPWMD as the same size).
For example, persons using water from the Cal-Am water
distribution system are required to reduce their water usage in the various
stages in MPWMD’s Expanded Water Conservation and Standby Rationing Plan, and
may be penalized or their water service may be terminated for failing to reduce
water usage as required. Similarly, such
persons must pay the rates and charges imposed for such water service, or their
water service may be terminated.
E. CAL-AM SYSTEM EXPANSION/EXTENSION
PURSUANT TO WATER USE PERMITS.
So long as the
Reclamation Project has commenced operation so long as all assurances or
guarantees required for both payment of Capital Costs and payment of Net
Operating Deficiencies for the Reclamation Project continue to be met, eEach Water Use Permit shall entitle the owner of a
Benefitted Property to potable
water service to be provided by the Cal-Am water distribution system for
such Benefitted Properties, including the installation of water meters
and mains as necessary notwithstanding
the existence of a moratorium or a temporary delay on new connections, upon
payment of the fees required by
subparagraph E.2. and presentation to MPWMD
the District by the Fiscal Sponsor Owner of the applicable Benefited Property of the following:
(1.)
(a) A statement by the Fiscal Sponsor Owner setting forth the annual capacity
of water use that the Fiscal Sponsor Owner intends to use through such expansion/extension of the Cal-Am
water distribution system, and the nature of the uses to which such water is
intended to be applied; and
(b) a valid municipal or county building permit
which will allow construction upon the Benefitted Property; andor
(c) a complete set of architectural contract
drawings; or
(d) other documentation sufficient for MPWMD the District to determine
quantity and the capacity for annual water use of the Benefitted
Property in the manner set forth at the
time of connection in the MPWMD Rules, as amended from time to time, and
the number and type of each requested connection.
(2.) The payment of any customary fees and
connection charges required by both Cal-Am and the District MPWMD of water users within the Cal-Am
service area, calculated upon the basis of the annual water usage capacity for
the Benefitted Property determined
as set forth in the preceding subsection E.1(d)set forth in the Fiscal Sponsor’s statement, including but not limited to
fees and charges due by reason of Rule 24 of the District’s MPWMD’s Rules and Regulations.
Upon the filing of the
information and payment of the fees required above, the General Manager shall issue make a notation on the
Water Use Permit pursuant to those
provisions of Rule 23 authorizing the expansion/extension of the Cal-Am water
distribution system consistent with
this Rule 23.5, which Permit shall indicateing the location, maximum
usage measured as capacity, and nature of each connection requiring a
present expansion/extension of the Cal-Am water distribution system. Customary fees and connection charges Estimated
usage shall be calculated based
upon the water use capacity for proposed or planned development upon Benefitted
Properties and calculated in the manner
described in Rule 24. The water use represented by such
expansions/extensions of the Cal-Am water distribution system, shall not exceed
the Water Entitlement evidenced by such Water Use Permit. In the event that an Owner of any Benefited Property Fiscal
Sponsor requests an expansion/extension of the Cal-Am water distribution
system with respect to less than all of the Water Entitlement evidenced by such
Water Use Permit, the General Manager shall make a record of the respective amounts deducted from and remaining under the
pertinent notation on such Water Use Permit indicating the remaining Water
Entitlement (as evidenced in the Water
Use Permit).
The Owner of any Benefited Property to which the Owner has previously
applied a portion of the Water
Entitlement through prior expansions/extensions of the Cal-Am water
distribution system Fiscal Sponsor shall be entitled to increase the
annual water use for any on such
Benefited Property to which the
Fiscal Sponsor has previously applied a portion of the Water Entitlement
through prior expansions/extensions of the Cal-Am water distribution system upon
presentation of the information and payment of the fees set forth in this
subparagraph (E), provided that such increase does not cause
the any such increases in water use for on the Benefitted Property
(or, in the case of PBC, PBC’s Benefited Properties) to shall not
exceed in the aggregate the total Water Entitlement of all
Benefitted Properties owned
by such Owner, or the total Water Entitlement of the Benefited
Properties as a whole.
Cal-Am shall be
authorized to execute a contract with the Fiscal Sponsor to enable the
provision of water service pursuant to
subsections C and D of Section Three of Ordinance No. 109 consistent with
the Water Entitlement evidenced by the Water Use Permit issued under this
provision. Such agreement with Cal-Am
shall at the Fiscal Sponsor’s option be a condition precedent to the providing
of financing pursuant to Section
Three of Ordinance No. 109 Fiscal Commitment by the Fiscal Sponsor that is to pay for the Capital Costs of the
Project Expansion. The actions
required to be taken by the General Manager pursuant to the foregoing provisions of this paragraph E shall be ministerial, non-discretionary acts which shall not be
affected by any water moratorium, water emergency, allocation decision or other
curtailment on the setting of new water meters for the Cal-Am water
distribution system and shall be enforceable by mandamus.
Nothing in the foregoing is intended to or shall
affect the ability of MPWMD to curtail or eliminate the actual use of water
through any connection previously made pursuant to a Water Use Permit to the
extent that such curtailment or elimination is authorized by other laws,
ordinances, or regulations as are generally applicable to all similarly
situated users (Residential users within the Cal-Am System with lots classified
by MPWMD as the same size) actually using water from the Cal-Am water
distribution system, nor is it intended to provide or imply that any Water Use
Permit holder shall not be subject to such generally applicable laws,
ordinances, and regulations. For
example, persons using water from the Cal-Am water distribution system are
required to reduce their water usage in the various stages in MPWMD’s Expanded
Water Conservation and Standby Rationing Plan, and may be penalized or their
water service may terminated for failing to reduce water usage as
required. Similarly, such persons must
pay the rates and charges imposed for such water service, or their water
service may be terminated.
F. PROCEDURE IN CASE OF INTERRUPTION OF RECYCLED WATER
DELIVERIES
1. The provisions of this subparagraph F shall
be applicable only after the Project Expansion is Completed. After the Project Expansion is Completed, 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 F. Following written notice
to MPWMD from an owner of the affected area, CAWD, PBCSD and/or Cal-Am, 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.
2. 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.
3. If potable
water has been used for irrigation of a Recycled Water Irrigation Area for 15
days , MPWMD may thereafter give notice of, and hold, a hearing (a) 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 (b)
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).
4. 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).
5. 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
day following service of the notice by personal delivery or by facsimile,
whereupon, each party shall immediately comply with the determination or timely
challenge the same in court.
6. 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 F.
7. If (1) an
emergency or major disaster is declared by the President of the United States,
or (2) a “state of war emergency,” “state of emergency,” or “local emergency,”
as those terms are respectively defined in Government Code section 8558, has
been duly proclaimed pursuant to the California Emergency Services Act, with
respect to all or any portion of the territory of MPWMD, the provisions of this
Subsection F shall yield as necessary to respond to the conditions giving rise
to the declaraton or proclamation.
G. DEFINITIONS.
For the purpose of this Ordinance
No. 109 and Rule 23.5, the following
words shall have the meanings set forth below. Other words which are defined in Rule 11 to the Rules and
Regulations, when used in Rule 23.5 or thise ordinance shall have the meanings set forth therein, unless the
context otherwise indicates.
“Actual use of water” means the quantity of water that has
passed through the water meter or meters installed to measure it.
“Ancillary Project Costs” means
net revenues (gross revenues less allocable operation and maintenance costs and
administrative and general costs as such terms are defined in accord with
generally accepted utility practices),
with respect to the potable water, subject, from time to time, to the Water
Entitlement, which Cal-Am shall not receive by reason of operation of the Reclamation
Project. Ancillary Costs shall not include any return on assets of Cal-Am
which have been removed from the water distribution system rate base by reason
of the Reclamation Project. Ancillary Costs shall be reduced over time
by net revenues received by Cal-Am by reason of sales of Cal-Am potable
water (with respect to the bBenefited pProperties) following the
first date of Reclamation Project operation.
“Benefitted Properties”
means those properties described on
Exhibit “A” hereto within the Cal-Am service area which have been identified within the application of
the selected Fiscal Sponsor/Sponsors and upon which a portion of the Water Entitlement may be
utilized. For any public agency Fiscal Sponsor, the term
“Benefitted Properties” shall be defined as those properties owned entirely by
the public agency and dedicated for public use.
All Benefited Properties are located in the
unincorporated portion of the Del Monte Forest (the area shown on Exhibit “B”)
except as otherwise noted in Exhibit “A.”
“Cal-Am” means the California American Water Company, a
“Capital Costs” as applied to
the Reclamation Project or any portion
thereof means all or any part of:
(a) the cost of acquisition of
all lands, structures, real or personal property rights, rights-of-way,
franchises, easements, and interests acquired or used for, the Reclamation Project,
inclusive of fees and commissions for acquisition;
(b) the cost of construction related
to of the Reclamation Project,
including but not without limitedation, to demolition,
repair, modification, replacement or renovation of existing structures,
facilities, fixtures or equipment essential
to the construction and operation of the Project; cost of improvements and
materials; direct and indirect Public Participation construction and
administration expenses of each of the Public Participants properly allocable to the Reclamation
Project in accordance with generally accepted accounting principles; costs
of painting, decorating, furnishing and landscaping; contractor and subcontractor
profit; and costs related, by reason
of the Reclamation Project, to
plumbing, mains, tanks, or pipes which are modified, repaired, replaced,
or renovated, whether owned by Public Participants or others.
(c) the cost of demolishing or
removing any buildings, fixtures, equipment, or structures on land so acquired,
including, without limitation, the
cost of acquiring any lands to which such buildings or structures may be moved;
(d) the cost of all new machinery, piping, equipment and
furnishings, including but not limited to and the cost lesser of (i) the fair market value, or (ii) depreciated value for
purposes of the applicable rate base, of machinery, piping, equipment and
furnishings made obsolete or unusable to Cal-Am, or any of the Public Participants, or others by reason of
the Reclamation Project to the
extent not replaced by the Project;
(e) costs of selling and issuing the Certificates of Participation,
including, without limitation, the underwriter’s discount Financing
charges;
(f) Iinterest on any funds advanced to permit payment of any of the Capital Costs
prior to, during, and for a reasonable period
after completion of the acquisition and construction of the Reclamation Project
as determined by PBC and MPWMD the
District, including, without
limitation, capitalized interest on the Certificates of Participation;
(g) Provisions
for working capital;(h) the
Operating Reserve, as defined
in the Fiscal Sponsorship Agreement for routine or extraordinary repairs
and replacements necessary to the Reclamation Project;
(ih) the cost of architectural, engineering, planning,
environmental analysis, financial, accounting, auditing and legal services,
plans, specifications, estimates, administrative expenses, permits, fees,
adverse claims, personnel and overhead costs (both direct and indirect, to the
extent properly allocable to the Reclamation Project in accordance with generally accepted
accounting principles), and other expenses necessary or incident to
determining the feasibility of construction of any portion of the Reclamation Project or incident to the
planning, construction, acquisition, or financing of any portion of theat Project, subject to independent
audit and review pursuant to the Supplemental Construction and Operation
Agreement, including, without limitation:
1. Ppayment during the construction period of the premiums for all
title and other insurance, bonds, or undertakings required to be taken out obtained
and maintained with respect to any part of the Reclamation Project, to the extent such amounts are not
paid by any contractor who constructs or installs any portion of the Reclamation Project;
2. Ppayment of the taxes, assessments and other fees or charges, if
any, that may become payable during the construction period with respect to any portion of the Reclamation Project,
or reimbursements thereof; and
3. Ppayment of expenses incurred in seeking to enforce any remedy
against any contractor or subcontractor in respect of any default under a
contract relating to the acquisition, construction or installation of any portion of the Reclamation Project.
“Capital Costs of
the Project Expansion” means costs falling within the preceding definition of
Capital Costs that apply to the Project Expansion, and without limitation
specifically includes payment of expenses incurred concerning the Project
Expansion, the need therefor, and related matters beginning on January 1, 1995,
and continuing through the drafting, negotiation, and execution of any and all
agreements necessary or desirable to implement the design, construction,
operation, and maintenance of the Project Expansion and any modifications
thereof or thereto.
“CAWD” means the Carmel Area Wastewater
District (formerly known as the Carmel Sanitary District), a public agency.
“CAWD/PBCSD” means both
the
“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.
“Completed” with respect to the Project Expansion shall mean that (1) all required permits or other approvals have been obtained, and (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, and (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. The Project Expansion shall be deemed Completed only if and when each of the events described in the preceding sentence have occurred.
“Construction and Operation Agreement” means the Wastewater Reclamation Project Construction and Operation Agreement among the Monterey Peninsula Water Management District, Carmel Area Wastewater District, the Pebble Beach Community Services District, and the Pebble Beach Company, dated as of November 1, 1990, as it may be amended from time to time.
“Del Monte Forest” means the area of
unincorporated
“Financial Commitment” means
the commitment of PBC, as the
Fiscal Sponsor, or any subsequent
Fiscal Sponsors, to assume and guarantee payment of (1) the Capital
Costs of the Reclamation Original Project
(including the payment of the principal of and interest on the Certificates of Participation or any
bonds or other obligations issued by any Public Participant to finance such
costs), and (2) the Net Operating Deficiencies of the Reclamation Project
for the entire period ending twenty
years following the estimated completion date of the project until the Certificates of Participation (and any bonds or other obligations issued by any Public Participant to
finance such costs) have been paid in full (or for any shorter periods as permitted by the District MPWMD), and (3) payment of all Ancillary
Project Costs.
“Financing Implementation Agreement” means the Financing
Implementation Agreement Relating to Wastewater Reclamation Project, dated as
of November 1, 1992, by and between MPWMD and PBC, as it may
be amended from time to time.
“Fiscal Sponsor or Fiscal
Sponsors” means the PBC and
any person or persons (including partnerships,
corporations, municipal corporations, or
other public entities) selected to
act that may succeed PBC
and assume, as the Fiscal Sponsor/Sponsors, all of PBC’s obligations pursuant to Part II of Ordinance No. 39, Ordinance No. 109, the Fiscal
Sponsorship Agreement, and any amendments thereof, which person or persons shall will be obligated, and liable for, and capable of paying
the Capital Costs and Net Operating Deficiencies of the Reclamation Project.
“Fiscal Sponsorship Agreement” means the Wastewater
Reclamation Project Fiscal Sponsorship Agreement between the Monterey Peninsula
Water Management District and Pebble Beach Company, dated as of October 3,
1989, as it may be amended from time to time.
“Franchise Freed-Up Water” means potable water
which has been freed for new use by reason of subpotable Recycled Wwater deliveries from
the Reclamation Project. “Freed-Up Water” has the same meaning as
“Franchise Water” in Ordinance No. 39.
“General Manager” means the General Manager of MPWMD.
“Interruption,” means an interruption for longer than 12
hours in the supply of Recycled Water to a Recycled Water Irrigation Area.
“MPWMD” means the Monterey Peninsula Water Management
District, a public agency.
“Net Operating Deficiency” as
applied to the Reclamation Project means, for any fiscal year or portion
thereof, the difference between the Operating Revenues and the Operation and
Maintenance Expenses for such period.
“Operation and Maintenance
Expenses” as applied to the Reclamation Project means all expenses and
costs of management, operation, maintenance and repair of the Reclamation Project,
including, without limitation, payments
to be made by the Public Participants under agreements with Cal-Am for the
purchase of subpotable water, debt service payments on bonds or other
obligations issued to finance the cost of the Reclamation Project, and all
incidental costs, fees and expenses incurred
for such purpose properly chargeable to the Reclamation Project in accordance with generally accepted
accounting principles, including
an allowance for reasonable depreciation,
amortization, and obsolescence which
is determined pursuant to generally accepted utility practices (subject to
limitations set forth in the agreements applicable to the Project including but
not limited to the Construction and Operation Agreement and the Fiscal Sponsorship Agreement), charges or
reserves therefore assuming straight line depreciation upon a useful life
assumed to be thirty (30) years, amortization of intangibles and other
bookkeeping entries of a similar nature further
provided, however, that Operation and Maintenance Expenses shall include all
administrative expenses of MPWMD and PBC incurred in connection with, and
properly allocable as an expense relating to the Project and the Certificates,
and further provided however that Operation and Maintenance Expenses shall
include an amount equal to any reduction in real property taxes allocated to
MPWMD caused by a change in State law which results in a reduction of such tax
allocation based on the collection of the Operating Revenues from the sale of
the Recycled Water.
“Operating and Maintenance Reserve Fund,” also called “O&M Reserve Fund,” means a reserve maintained and held, pursuant to the Water Purchase Agreement and the Financing Implementation Agreement, separate and apart from other funds for the purpose of paying for Operations and Maintenance Expenses as they become due and payable to the extent Operating Revenues are insufficient to provide for such payments, providing working capital, and paying for routine and extraordinary repairs and replacements.
“O&M Reserve Requirement” means the amount calculated on or before July 1 of each year by the Management Committee to be equal to one quarter (1/4) of the projected amount of Operation and Maintenance Expenses for the immediately succeeding fiscal year as such amount may be revised upward or downward during the course of such fiscal year.
“Operating Revenues” as applied
to the Reclamation Project means all income, rents, rates, fees, charges
and other moneys derived by the Public Participants from the ownership or
operation of the Reclamation Project, including, without limiting the
generality of the foregoing: (i) all income, rents, rates, fees, charges or
other moneys derived from the sale, furnishing and supplying of the reclaimed, subpotablewater (or from potable water supplied in lieu thereof; (ii) Interest
earnings on all revenues mentioned in (i) above, and on the reserve fund
or account relating to the Reclamation Project, and (iii) insurance
and condemnation proceeds resulting from damage to or destruction of the Reclamation
Project facilities, or from the condemnation of any of such facilities; and (iii) interest earned on all revenues
mentioned in (i) and (ii) above or on any fund or account relating to the
Project under the Trust Agreement (excluding any amounts required to be rebated
to the United States pursuant to Section 148 of the Internal Revenue Code)
the Reclamation Project; provided, that the such term “Operating Revenues” shall
not include customers’ deposits or any other deposits subject to refund until
such deposits have become the property of one
of the Public Participants or the
water supply surcharge retained by MPWMD in connection with the sale of
Recycled Water in accordance with the Financing Implementation Agreement.
“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, (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, and (3) recycled water irrigation systems on each of the
Recycled Water Irrigation Areas, all of which were completed and became
operational in 1994.
“Owner” means the holder (of record) of fee title to any
Benefited Property.
“PBCSD” means the Pebble Beach Community Services District,
a public agency.
“Project” or “Reclamation Project” means the CSD/PBCSD wastewater treatment plant (including lands, facilities, equipment,
furniture and fixtures) Original Project and the Project Expansion.
“Project Expansion” means and 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, and (b) the addition of storage,
treatment, and distribution facilities at or associated with the Forest Lake
Reservoir located within the Del Monte Forest.
“Public Participant” means any one or more of the following: the
Monterey Peninsula Water Management District, the Carmel Area Wastewater District, formerly the Carmel Sanitary District,
the Pebble Beach Community Services District, or any successor public agency
including but not limited to any joint powers agency formed by one or more of
the above agencies.
The meaning of the term “Recycled Water” depends upon
whether or not the Project Expansion is Completed:
(a) Before the Project Expansion is Completed, “Recycled Water” shall mean water originating from the tertiary
treatment facilities of the CAWD wastewater treatment plant.
(b) After the Project Expansion is Completed, “Recycled Water” shall refer to water originating from said tertiary
treatment facilities and thereafter 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. Recycled Water meeting water quality standards agreed upon by the owners of
the Recycled Water Irrigation Areas and CAWD/PBCSD shall be deemed “suitable for
irrigation of the Recycled Water Irrigation Areas.” “Recycled Water” has the
same meaning as “Reclaimed Water.”
“Recycled Water Irrigation Areas” means the golf courses and other vegetated areas located within the Del Monte Forest that are currently being irrigated with Recycled Water supplied by the Project or such golf courses and other vegetated areas wherever located that in the future may be irrigated with Recycled Water supplied by the Project.
“State
Water Resources Control Board” and “SWRCB” each mean the state agency created
pursuant to Water Code sections 174 and 175 which exercises the adjudicatory
and regulatory functions of the State of
“Supplemental Financial Commitment” means all of the
following:
(1) the irrevocable written commitment by PBC to pay all
Capital Costs of the Project Expansion, using funds raised through the sale of
such portions of its Water Entitlement pursuant to Subsection C of Section
Three of Ordinance 109 (combined with any funds which may be independently
committed by PBC, IRWUG, CAWD, PBCSD, or any other entity willing to commit
funds to the Capital Costs of the Project Expansion), and to continue to pay
the Net Operating Deficiencies of the Project until the Certificates of
Participation (and any bonds or other obligations issued by any Public
Participant to finance such costs) have been paid in full (or for any shorter
periods as permitted by MPWMD), and to continue to pay all Ancillary Project
Costs; and
(2) the written representation by each of PBC,
CAWD, and PBCSD that each is prepared and intends forthwith to commence
construction of the Project Expansion and to proceed diligently therewith until
the Project Expansion is Completed.
“Terminate” means the withdrawal, without formal MPWMD action, of authority to act as previously provided by a valid permit or water service connection, whichever is applicable.
“Trust Agreement” means the Trust Agreement by and between First Trust of California, National Association, as Trustee and MPWMD dated as of November 1, 1992 relating to $33,900,000 Varial Rate Demand Certificates of Participation (Wastewater Reclamation Project) Series 1992, as it may be amended from time to time.
“Water
Entitlement” means an aggregate of 400
380 acre feet per year (or less) of potable water, and in no
event more than fifty (50%) percent of the total amount of Franchise Water,
which shall be the maximum portion of the Franchise Water has
been dedicated (as evidenced by Water Use Permits issued pursuant to Ordinance
No. 39, the Resolution, and the Fiscal Sponsorship Agreement) which may be dedicated to land within the jurisdiction of the District MPWMD
for the purpose of providing for the payment of
the Capital Costs, Ancillary Project Costs, and Net Operating Deficiencies of
the Original Reclamation Project. Ordinance
No. 109 provides a process by which a portion of the Water Entitlement held by
PBC may be separately sold and conveyed and thereby be dedicated to other land
within the Del Monte Forest with the proceeds therefrom to be applied to the
costs of the Project Expansion and the Original Project as more specifically
described therein.
“Water Purchase Agreement” means the Water Purchase Agreement by and among MPWMD, CAWD, and PBCSD dated as of November 1, 1992, as it may be amended from time to time.
“Water Use Permit” means a writing from the
District MPWMD which evidences the irrevocable
dedication of the Water Entitlement as a present vested property right enuring to the use and benefit of one or more
of the Benefitted Parcels Properties. A Water Use Permit shall by non-discretionary
ministerial action, cause the present Expansion/Extension of the Cal-Am water
distribution for Benefitted Properties upon designation of
the location of use, and upon payment of applicable connection fees and
charges. A Water Use Permit shall take
the place of and be used instead of an Expansion/Extension Permit upon any
Benefitted Parcel Property
as relates to the use of any portion of the Water Entitlement.
Added by Ordinance No. 39 (2/13/89); amended by
Ordinance No. 71 (12/20/93)
Section Five: Agreements to Provide for Water Entitlement and to Guarantee the Payment of Project Capital Costs and Net Operating Deficiencies
The
General Manager is authorized to negotiate and, subject to the prior approval
by the Board, to execute a Supplemental Financing Agreement with PBC, and such
further agreements with Cal-Am and PBC as are necessary or desirable,
(a) to
provide the terms and conditions upon which portions of the Water Entitlement
will be conveyed by PBC to, and used on, Benefited Properties not owned by PBC
as of the date that this ordinance is adopted in the manner provided in this
ordinance;
(b) to provide the terms and conditions upon
which PBC shall attempt to raise the Supplemental Financial Commitment from
which all Capital Costs of the Project Expansion shall be paid (primarily from
the proceeds received by PBC from any separate conveyance of a portion of PBC’s
Water Entitlement as described in Subsections C or D of Section Three of this
ordinance); and
(c)
to provide the terms and conditions specifying the procedure to be followed
once PBC has, through the sale of such portions of its Water Entitlement
pursuant to Subsection C of Section Three of Ordinance 109, raised funds which
are sufficient (combined with any funds which may be independently committed by
PBC, IRWUG, CAWD, PBCSD, or any other entity willing to commit funds to the
Capital Costs of the Project Expansion) to pay for the Capital Costs of the
Project Expansion, and the procedure by which PBC shall forthwith make the
Supplemental Financial Commitment (as defined herein) and shall give notice
thereof to MPWMD.
(d)
to provide the terms and conditions upon which PBC shall assure and guarantee,
with minimal fiscal risk to MPWMD or any other Public Participant, payment of
the Net Operating Deficiencies of the Project as a whole.
(e)
to provide terms and conditions specifying the procedures to be followed if
MPWMD Board determines pursuant to
subsections A.8 and A.9 of Section Three that PBC shall stop selling portions
of its Water Entitlement, or if such determination is otherwise unacceptable to
PBC, PBC shall, within a specified period of time acceptable to MPWMD after the
effective date of such determination, either (1) disburse the monies received
from separate sales of portions of its Water Entitlement in the manner provided
in the agreement, or (2) file suit challenging such determination in Mandamus
or other available remedy based solely on evidence presented to MPWMD Board,
and, notwithstanding the provisions of section 394 of the Code of Civil
Procedure, timely prosecute such case to judgment in the Monterey County
Superior Court.
MPWMD
will cooperate with PBC and Cal-Am in securing any approval required from the
California Public Utilities Commission that may be necessary or desirable in
connection with the Supplemental Financing Agreement or any such further
agreements.
The
Supplemental Financing Agreement shall provide for the payment , of any
expenses incurred by MPWMD to account for and record changes in the Water
Entitlements following issuance of new Water Use Permits, to verify water use
capacity pursuant to Rule 23, to otherwise monitor compliance with or to
enforce water usage pursuant to applicable laws, ordinances, and regulations,
and to make such determinations concerning adjustments, and to implement and
enforce the adjustments, to Water Use Permits that may be required in 2075.
The Supplemental Financing Agreement
shall provide reasonable controls over expenditures and accounting of
expenditures and shall not require the Fiscal Sponsor to incur any cost or
liability for changes which expand the scope of the Project beyond the Project
Expansion.
The
Supplemental Financing Agreement shall not affect the Water Entitlement evidenced
by the issuance of Water Use Permits issued by MPWMD as of the date that this
ordinance is adopted, or the Financial Commitment made by PBC (concerning the
Original Project) in the Fiscal Sponsorship Agreement, or the acknowledgement
thereof by MPWMD. MPWMD shall agree not
to amend the provisions of this ordinance in any manner which would impair the
interest of such Fiscal Sponsor or any successor or assign.
The failure to enter into the
Supplemental Financing Agreement or a further agreement with PBC and/or Cal-Am
with respect to undertaking the Project Expansion shall in no way diminish or
affect PBC’s or any Owner’s rights or obligations under Ordinance No. 39, any
Water Use Permit issued thereunder, or any agreement entered into pursuant
thereto.
Section Six: Agreements with Public Participants
The
General Manager is authorized to negotiate and, subject to the prior approval
by the Board, to execute a Supplemental Construction and Operation Agreement,
and such agreements as are necessary or desirable, to provide for the
respective construction, equipping and operation of the Project Expansion by
CAWD and PBCSD in conjunction with the continuing operation and maintenance of
the Original Project by CAWD and PBCSD, respectively. Such agreement(s) shall become operative once
the Supplemental Financial Commitment is provided or such earlier date upon
which the parties thereto agree, and shall specify (1) water quality standards
deemed by the Recycled Water users, CAWD, and PBCSD to be suitable for
irrigation of all portions of the Recycled Water Irrigation Areas, and (2)
authorize the Recycled Water users to enforce the obligations of CAWD and/or
PBCSD, as the Project operators of the Project Expansion, for the delivery of
Recycled Water from the Project to such Recycled Water users to meet all of
their irrigation requirements except during an Interruption as defined herein,
and (3) a timeline for performance of the Project Expansion (measured from the
time the Supplemental Financial Commitment is provided), and (4) the obligation
of the appropriate parties to Complete the Project Expansion in accordance with
the objective of the Project Expansion to provide sufficient quantities of
Recycled Water of a quality suitable for irrigation of even the most water
quality-sensitive plants on the Recycled Water Irrigation Areas, and thereby to
completely eliminate the use of potable water for such irrigation (except
during an Interruption as defined in this ordinance), and (5) shall address the
ownership of surplus Recycled Water in the manner set forth in the Construction
and Operation Agreement or some other manner acceptable to MPWMD.
Such agreement(s) shall also specify that all entities participating in
the Project Expansion shall use their best efforts, both individually and
collectively, so that the Project Expansion shall be Completed within two
calendar years after Pebble Beach Company gives notice of the Supplemental
Financial Commitment. This two year
period shall be included in, and provide the framework for, the timeline to be
set forth in the agreement(s).
Such agreements shall provide that (1) any party dissatisfied with the determination made following the procedures specified in subsection F of Section Four of this ordinance shall, within a specified period of time acceptable to MPWMD after the effective date of the determination, file suit challenging such determination in Administrative Mandamus (or other available remedy based on the Administrative Record) and, notwithstanding the provisions of section 394 of the Code of Civil Procedure, timely prosecute such case to judgment in the Monterey County Superior Court, and (2) each party shall continue to comply with the determination unless and until expressly relieved from doing so by written order from the court.
Such agreements shall provide that the only funds of MPWMD to be used to pay for the construction, equipping and operation of the Project Expansion by CAWD and PBCSD, respectively, or the operation and maintenance of the Original Project by CAWD and PBCSD, respectively, shall be the Operating Revenues received by MPWMD.
All
financial commitments (including the possible issuance of refunding bonds or
other obligations) under the Fiscal Sponsorship Agreement for the continuing operation and maintenance
of the Original Project by CAWD and PBCSD, respectively, shall be unaffected by
this ordinance.
Section Seven: Purchase of Recycled Water from the Project
The
General Manager is authorized to negotiate and, subject to the prior approval
by the Board, to execute an Agreement for Sale of Recycled Water with each
owner of one or more Recycled Water Irrigation Area(s) providing for the
purchase and sale of Recycled Water from the Project. Each such Agreement for Sale of Recycled Water
shall:
(1)
require the Recycled Water users to purchase such Recycled Water for a term not
less than thirty (30) years, provided that it shall not become operative until
the Project Expansion is Completed; and
(2)
authorize the the Recycled Water users to enforce the obligations of CAWD
and/or PBCSD, as the operators of the Project, for the delivery of Recycled
Water from the Project to such Recycled Water users to meet the water quality
standards deemed by the Recycled Water users, CAWD, and PBCSD to be suitable
for meeting all of their irrigation requirements except during an Interruption
as defined herein; and
(3)
prohibit such Recycled Water users, after Completion of the Project Expansion,
from using any potable water to irrigate any portion of the Recycled Water
Irrigation Areas except as specified in subsection F of Section Four during an
Interruption as defined herein, provided, however, that the use of potable
water during any such Interruption shall be subject to such further
restrictions as may be imposed by the Board upon other golf courses and other
similarly situated users within MPWMD in response to water shortage emergency
declared by the Board pursuant to Section 332 of the Monterey Peninsula Water
Management District Law throughout the duration of such water shortage
emergency; and
(4)
provide for the timely payment and collection of revenues for Recycled Water;
and (5) after the expiration of the
Financial Commitment of the Fiscal Sponsor, require MPWMD to impose rates and
charges for Recycled Water sufficient to maximize payment for Operation and
Maintenance Expenses and Capital Costs of the Reclamation Project, subject to
the limitation set forth in Water Code section 13550 that the price for
Recycled Water shall be comparable to the cost of supplying potable domestic
water except as the owners of the Recycled Water Irrigation Areas may agree in
writing otherwise;
(6) provide that (a) any party dissatisfied with the determination made following the procedures specified in subsection F of Section Four of this ordinance shall, within a specified period of time acceptable to MPWMD after the effective date of the determination, have the right to file suit challenging such determination in Administrative Mandamus or other available remedy based on the Administrative Record and, notwithstanding the provisions of section 394 of the Code of Civil Procedure, timely prosecute such case to judgment in the Monterey County Superior Court, and (b) each party shall comply with the determination unless and until expressly relieved from doing so by written order from the court.
Section Eight: Authority to Void Agreements
The Supplemental Financing Agreement, the Supplemental Construction and Operation Agreement, and the Agreements for Sale of Recycled Water (as described in Sections Five through Seven) shall each authorize, but not require, each party thereto to declare that agreement void on the terms further described in that agreement if either (1) the Supplemental Financial Commitment has not been made by PBC, CAWD, and PBCSD within eighteen (18) months after the effective date of this ordinance, or (2) construction has not begun on the Project Expansion within twelve (12) months after the Supplemental Financial Commitment has been made by all parties.
Section Nine: Severability and Effective Date
If
any subdivision, paragraph, sentence, clause or phrase of this ordinance is,
for any reason, held to be invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability, shall not affect the
validity or enforcement of the remaining portions of this ordinance, or of any
other provisions of the Monterey Peninsula Water Management District Rules and
Regulations except as set forth in the following sentence.
It is MPWMD’s express intent that
Ordinance No. 109, the Supplemental Financing Agreement, the Supplemental
Construction and Operation Agreement, and the Agreements for Sale of Recycled
Water, together comprise a single transaction, and therefore, this Ordinance
shall not become effective unless and until each of the agreements referenced
in the preceding sentence is fully executed by each signatory thereof.
Section
Ten: Sunset
Date
This Ordinance shall have no sunset
date, provided however, if any one or more of the Supplemental Financing
Agreement, the Supplemental Construction and Operation Agreement, and/or the
Agreements for Sale of Recycled Water (as described in Sections Five through
Seven of this Ordinance) is or are declared void by any party thereto pursuant
to the terms thereof, and the parties to each agreement thus declared void do
not execute a successor or replacement agreement therefor within 90 days, this
Ordinance and the other agreements described hereinabove shall thereupon cease
to have any force or effect.
On motion by Director Foy, and second by
Director Knight, the foregoing ordinance is adopted upon this 27th day of May,
2004, by the following vote:
AYES: Directors Edwards, Foy, Knight, and
Pendergrass
NAYS: Directors
Lehman and Markey
ABSENT: Director
Potter
I,
Fran Farina, Secretary to the Board of Directors of the Monterey Peninsula
Water Management District, hereby certify the foregoing is a full, true and
correct copy of an ordinance duly adopted on the 27th day of May, 2004.
Witness
my hand and seal of the Board of Directors this 29th day of June, 2004.
_____________________________________
Fran Farina, Secretary to the Board
U:\staff\word\boardpacket\2004\2004boardpacket\20041115\ActionItems\12\item12_exh12a.doc
EXHIBIT A
BENEFITED PROPERTIES
All real property within the
boundaries of the unincorporated portions of the Del Monte Forest as defined in
Exhibit ”B” and such additional real property as has been designated and included
as Benefited Properties under the Fiscal Sponsorship Agreement pursuant to
amendments thereto as approved by the MPWMD Board before the date that this ordinance is
adopted and Rule 23.5 is amended thereby.
DEL MONTE FOREST