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HomeMy WebLinkAboutAGMT - Orange County Water District (Limited Term Partial Basin Equity Assessment Exemption Agmt - Lampson Well Treatment System) (Pending return from County)LIMITED TERM PARTIAL BASIN EQUITY ASSESSMENT EXEMPTION AGREEMENT BETWEEN ORANGE COUNTY WATER DISTRICT AND CITY OF SEAL BEACH (Lampson Well) This LIMITED TERM PARTIAL BASIN EQUITY ASSESSMENT EXEMPTION AGREEMENT (the "Agreement") is entered as of September _21—, 2022 by and between the ORANGE COUNTY WATER DISTRICT, a special governmental district organized and existing pursuant to the Orange County Water District Act, Chapter 924, Statutes of 1933, as amended ("OCWD"), and the CITY OF SEAL BEACH, a California charter city ("City"). RECITALS A. Approximately two-thirds of all drinking water currently used within northern and central Orange County is provided from groundwater by OCWD. Inasmuch as Orange County is located in a semi -arid area, it is essential that all reasonable efforts be put forth to protect the quality of groundwater supplies and to provide for maximum utilization of that resource. B. The City operates a public water system for the purpose of delivering potable water to its customers, and obtains most of its water by pumping groundwater from wells for delivery to its customers. The City, as well as other groundwater producers within the boundaries of OCWD, has lost pumping capacity in its Lampson well due to the presence of hydrogen sulfide. The city of Seal Beach Lampson Well ("Well"), located on Lampson Avenue west of Heather Street in Seal Beach, has the capacity to produce up to 4,000 acre feet per year of groundwater; however, the City limited production of groundwater from the Well due to its high levels of hydrogen sulfide. There are no federal or state drinking water quality standards set for hydrogen sulfide in drinking water, however hydrogen sulfide can produce odors and can be corrosive to certain metals and can be unsuitable for domestic purposes. C. The City recently completed a pilot study using the Granular Activated Carbon (GAC) treatment process to reduce hydrogen sulfide in the water produced by the Well. The pilot study demonstrated complete removal of the hydrogen sulfide in the well water. The City proposes to design and construct a GAC treatment system to treat the flows from Well (such treated Well groundwater is hereinafter referred to as "Product Water"). D. The City's preliminary cost estimate for this GAC treatment system Project is $4,500,000 (the "Project Cost"). OCWD has determined that the City's construction of the Project will reduce the potential for groundwater containing hydrogen sulfide to impact nearby wells. E. The Legislature of the State of California has vested in OCWD the statutory responsibility to manage, regulate, replenish and to protect the quality of the groundwater supplies within the boundaries of OCWD. F. In April of each year, the Board of Directors of OCWD acts in accordance with Section 31.5 of the Orange County Water District Act ("OCWD Act") to find, determine and establish the basin production percentage (the "BPP"), and sets basin equity assessments (each, a City ofHuntington Beach Partial BEA Exemption Agreement "BEA") for each producer within OCWD for the period from July 0 through June 30`i' of the next succeeding year. G. The OCWD Act authorizes OCWD to enter into an agreement with the owner operating a groundwater production facility within OCWD's boundaries to increase the production of groundwater in lieu of water from an alternative non -tributary source for the purpose of removing contaminants or pollutants from the groundwater basin, and paying from OCWD funds that portion of the cost of groundwater production that will encourage the production for beneficial use of the polluted or contaminated groundwater that is impairing the quality of the water supplies within OCWD. H. OCWD and the City mutually desire to enter into this Agreement pursuant to the OCWD Act to set forth the specific terms and conditions under which the City will conduct the Project and remove hydrogen sulfide -impaired groundwater from the Orange County groundwater basin by treating groundwater from Well for ultimate distribution to City customers for potable beneficial uses, with the City recovering a portion of the Project Cost by means of a partial exemption of that water from the payment.of the BEA. OCWD and the City understand and agree that this Agreement does not and cannot become effective unless and until the City files a petition for a partial exemption from the BEA of the water produced from Well, and the Board of Directors of OCWD approves such a partial BEA exemption, in accordance with Section 38.1 of the OCWD Act. EXECUTORY AGREEMENTS NOW, THEREFORE, in consideration of the facts recited above and the covenants, conditions and promises contained herein, and subject to this Agreement taking effect in accordance with Section 5 below, OCWD and the City hereby agree as follows: SECTION 1. LIMITED TERM HYDROGEN SULFIDE REMOVAL PROJECT 1.1. The City shall design and construct the Project within the Project Cost. A portion of the Project Cost will be eligible to be credited against BEA payments otherwise owed by the City for production of groundwater from Well above the BPP, in accordance with Paragraph 2.5 below. 1.2. The City shall serve as the lead agency for, and be responsible for all CEQA processing for, the Project. 1.3. The City shall be responsible for all design, engineering, construction, and CEQA costs for the Project. 1.4. Once the Project has been constructed, and if the OCWD Board of Directors has approved a petition for partial, limited term BEA exemption pursuant to Section 38.1 of the OCWD Act (as outlined in Section 5), this Agreement will be implemented in fiscal year 2024-25 after the Project is complete, beginning July I" of that year, and last for up to five fiscal years through June 301 of the last year (the "Project Term"). During the Project Term, the City may produce groundwater in an amount equal to the BPP for that given year, plus additional groundwater production from Well, provided that all of the groundwater production above the BPP during the City of Seal Beach Partial BEA Exemption Agreement -2- Project Term shall be produced solely from Well in order to receive partial exemption set forth in Paragraph 2.5 below. 1.5. In order to obtain the partial exemption set forth in Paragraph 2.5 below, the City shall produce groundwater from Well that, after treatment, meets the adopted primary drinking water standards, and the City shall deliver the groundwater to its customers or to City facilities for potable beneficial uses. Further, the Product Water shall meet the State Water Resources Control Board ("SWRCB") and the Division of Drinking Water ("DDW") Secondary Drinking Water Standards with a Secondary Maximum Contaminant Level for odor set at 3 Threshold Odor Number (TON) in drinking water. The Product Water fiom Well shall also meet any other requirements from the SWRCB for treatment of this Product Water. 1.6. The City shall be responsible for all costs incurred in the operation and maintenance of Well for distribution of the Product Water to City customers or facilities for potable beneficial use, including but not limited to labor, materials and power. 1.7. The City shall take out and .maintain in effect at all times during the term of this Agreement comprehensive general liability insurance in an amount not less than $2 million per occurrence, for bodily injury, death and property damage, naming OCWD as an additional insured under such policy. An endorsement evidencing this insurance coverage shall be furnished to OCWD prior to the City filing with OCWD a petition pursuant to Section 38.1 of the OCWD Act (as outlined in Section 5). If the City is, or becomes, partially or fully self-insured for its public liabilities, a letter executed by the City's Mayor or City Manager stating the City's self-insured status and acknowledging its responsibility to respond to the indemnification of OCWD as provided in Paragraph 5.5 below, may be furnished in lieu of the insurance endorsement. The City shall provide written notice to OCWD of any change in the City's insured or self-insured status during the Project Term within 30 days of the effective date of such change. SECTION 2. PROJECT TERM BASIN EQUITY ASSESSMENT AND REPLENISHMENT ASSESSMENT PAYMENTS 2.1. The City shall file water production statements and a basin equity assessment statement in strict compliance with Sections 29(a) and 31.50) of the OCWD Act, respectively, for all groundwater produced by the City during the Project Term, including all groundwater produced from Well and distributed as Product Water. 2.2. On or before the 15th day of each month, during the Project Term, the City shall file with OCWD a monthly report reflecting the quantity of groundwater produced by Well through the end of the preceding calendar month during the Project Term (a "Monthly Project Production Report"). 2.3. Concurrently with the filing of the City's basin equity assessment report pursuant to Section 31.50) of the OCWD Act, the City shall file with OCWD a statement, verified by a written declaration under penalty of perjury, setting forth the total amount of groundwater produced from Welt during the Project Term and distributed as Product Water (the "Project Production Statement"). City ofSeal Beach Partial BEA Exemption Agreement -3- 2.4. The City shall pay the replenishment assessment and additional replenishment assessment levied and imposed pursuant to Sections 27 and 27.1 of the OCWD Act on all groundwater produced by the City during the Project Term, including all groundwater produced from Well, in accordance with Section 29(a) of the OCWD Act. 2.5. To the extent that the City's production of groundwater during the Project Term does not exceed an amount equal to the BPP plus additional groundwater produced from Well, and all of the groundwater produced during the Project Term in excess of the BPP was produced from Well, the City shall be exempt during the Project Term from paying a portion of the basin equity assessment or any surcharge on such groundwater production above the BPP from Well during the Project Term to allow the City to recoup a portion of the Project Cost, as described in the Attached Exhibit A attached hereto and by this reference incorporated herein. Notwithstanding the foregoing, the City shall pay the applicable basin equity assessment and any surcharge for the following: 2.5.1. The City shall pay the applicable basin equity assessment and surcharge on all groundwater produced by the City.during the Project Term that exceeds an amount equal to the BPP plus additional groundwater produced from Well; and 2.5.2. The City shall pay the applicable basin equity assessment and surcharge on all groundwater produced by the City during the Project Term in excess of the BPP, if such groundwater in excess of the BPP is produced from any water production facility other than Well. 2.6. The City acknowledges that the groundwater produced from Well, and the Product Water distributed and sold by the City, shall be classified as "groundwater," and shall not be classified as "supplemental sources" as such term is defined in Section 31.5 of the OCWD Act, for the purpose of calculating the amount of groundwater produced by the City relative to the BPP. SECTION 3. CITY GROUNDWATER PRODUCTION DURING THE PROJECT REMAINDER TERM 3.1. Following completion of the Project Term, and for ten consecutive years thereafter, (such ten-year period is hereinafter referred to as the "Project Remainder Term"), the City shall make its best efforts to continue to operate Well throughout the Project Remainder Term. 3.2. Beginning the first fiscal year of the Project Remainder Term, and each fiscal year thereafter during the Project Remainder Term, the City shall pay the then -applicable replenishment assessment, additional replenishment assessment and, if applicable, the basin equity assessment and surcharge, on all groundwater produced by the City during that fiscal year, including all groundwater produced form Well, in strict compliance with Sections 29 and 31.5 of the OCWD Act. 3.3. Notwithstanding Paragraphs 3.1 and 3.2 above, in the event that the City was unable to produce sufficient groundwater from Well during the Project Term to allow the City to achieve a total groundwater production equal to the BPP plus the additional groundwater produced from Well so as to recover a minimum of $1.0 million of the Project Cost, the City and OCWD shall City of Seal Beach Partial BEA Exemption Agreement —4— meet and confer to continue the program to give the City additional time to recover the $1.0 million worth of BEA exemptions (the "Make -Up Production"). In the event that the City undertakes Make -Up Production: 3.3.1. The City shall receive a partial basin equity assessment exemption on the Make -Up Production in accordance with Exhibit A. 3.3.2. The City shall file Monthly Project Production Reports (as described in Paragraph 2.2) for the Make -Up Production during each calendar month during the Make - Up Production time. 3.3.3. In addition to all groundwater production reports and statements required under the OCWD Act, the City shall file a Project Production Statement (as described in Paragraph 2.3) for the Make -Up Production concurrently with the filing of the City's basin equity assessment report pursuant to Section 31.50) of the OCWD Act. SECTION 4. MISCELLANEOUS 4.1. Effective Date, Term. This Agreement shall become effective upon the Board of Directors of OCWD approving a partial exemption of the BEA for the water produced from Well, and shall continue for a term of twenty years, until June 30, 2045. 4.2. Notices. Any notice, instrument, payment or document required to be given or delivered under this Agreement shall be given or delivered by personal delivery or by depositing the same in a United States Mail depository, first class postage prepaid, and addressed as follows: If to OCWD: Orange County Water District PO Box 8300 18700 Ward Street Fountain Valley, CA 92708 Attn: General Manager If to City: City of Seal Beach 211 Eight Street Seal Beach, CA 90740 Attn: City Manager or such other address as either party may direct in writing to the other. Service of any instrument or document given by mail shall be deemed complete upon receipt if delivered personally, or 48 hours after deposit of such instrument or document in a United States mail depository, first class postage prepaid, and addressed as set forth above. 4.3. Compliance with Laws. The City shall keep itself informed of all existing and future state and federal laws and all county, municipal ordinances and regulations, which in any manner effect its performance of this Agreement. The City shall at all times observe and comply with all such laws, ordinances and regulations. 4.4. Records and Review. City orScai Beach Partial BEA Exemption Agreement -5- 4.4. 1. The City shall keep and maintain all records, accounts and reports relating to this Agreement and its performance hereunder for a period of three years following the expiration of this Agreement. OCWD shall have access to such records at any time during normal business hours upon 48 hours' notice to the City. At its cost, OCWD shall have the right to audit the books, records and accounts of the City relating to its performance of this Agreement no more than once annually, and the City shall provide reasonable cooperation to OCWD in this regard. 4.4.2. OCWD shall keep and maintain all records, accounts and reports relating to this Agreement and its performance hereunder for a period of three years following the expiration of this Agreement. The City shall have access to such records at any time during normal business hours upon 48 hours' notice to OCWD. At its cost, the City shall have the right to audit the books, records and accounts of OCWD relating to its performance of this Agreement no more than once annually, and OCWD shall provide reasonable cooperation to the City in this regard. 4.5. Indemnification. The City shall defend, indemnify and hold OCWD, its officers, directors, employees and representatives, harmless from and against any and all actions, suits, claims, demands, judgments, attorney's fees, costs, damages to person or property, losses, penalties, obligations, expenses or liabilities (collectively, "Costs") that may be asserted or claimed by any person or entity arising out of the performance or implementation of this Agreement by City or its officers, directors, employees or representatives, or the distribution or use of any water produced from Well; provided, that the City shall not be liable for OCWD Costs arising primarily out of OCWD's own negligence or willful misconduct or the negligence or willful misconduct of OCWD's officers, employees, agents or representatives. The City shall also defend, indemnify and hold OCWD, its officers, directors, employees and representatives harmless from and against any and all Costs that may be asserted or claimed by any person in any administrative or judicial challenge to the legality or validity of this Agreement or any exemption under Section 38.1 from payment of the BEA on any portion of the water produced from Well, or to any act or determination (including any finding under Section 38.1 of the OCWD Act or any finding, action or inaction under or required by the California Environmental Quality Act) leading up to or in connection with such a BEA exemption or this Agreement; provided, that the City shall not be liable for OCWD Costs arising primarily out of OCWD's own negligence or willful misconduct or the negligence or willful misconduct of OCWD's officers, employees, agents or representatives. 4.6. Successors and Assigns. All of the terms, conditions and provisions of this Agreement shall inure to the benefit of, and be binding upon, OCWD, the City, and their respective successors and assigns. 4.7. No Implied Waivers. In the event that any term, condition or provision of this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the specific breach so waived, and shall not be deemed either to be a continual waiver or to waive any other breach under this Agreement. City of Seal Beach Partial HEA Exemption Agreement -6- 4.8. No Representation or Warranty. OCWD and the City each acknowledges that neither party, nor any of its respective officers, employees, agents or representatives, has made any written or oral representation, promise or warranty, express or implied, regarding any matter that is the subject of this Agreement, other than as expressly set forth herein. 4.9. No Obligation to Thud Parties. The approval, execution and performance of this Agreement shall not be deemed to confer any rights upon any person or entity other than OCWD and the City. There are no third party beneficiaries to this Agreement. 4.10. Nature of Relationship. This Agreement shall not create, and shall not be construed or deemed to create, any agency, partnership, joint venture, landlord -tenant or other relationship between OCWD and the City. 4.11. Integration, Construction and Amendment. This Agreement represents the entire understanding ofOCWD and the City as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters covered by this Agreement. This Agreement shall be construed as if drafted by both OCWD and the City. This Agreement may not be modified, altered or amended except in writing signed by authorized representatives of both OCWD and the City. SECTION 5. AGREEMENT NOT EFFECTIVE UNTEL PARTIAL BEA EXEMPTION GRANTED ON WELL WATER PRODUCTION 5.1. This Agreement shall not take effect unless and until all of the following actions occur in accordance with Section 38.1 of the OCWD Act: 5.1.1. City shall have filed with OCWD a petition pursuant to Section 38.1 of the OCWD Act, for a partial exemption of the basin equity assessment levied under Section 31.5 of the OCWD Act, for all groundwater above the BPP produced from Well during the period from July 1, 2024 through June 30, 2029 (the "Project BEA Exemption"); and 5.1.2. The OCWD Board of Directors shall have received an investigation report on the petitioned Project BEA Exemption from OCWD's district geologist; and 5.1.3. The OCWD Board shall have conducted a public hearing on the petition for the Project BEA Exemption, made findings and determinations in accordance with Section 38.1(d)(2) of the OCWD Act, and granted the City's petition for the Project BEA Exemption. 5.2. City understands and acknowledges that the OCWD Board of Directors retains full discretion within the parameters set forth in the OCWD Act to approve or not to approve the Project BEA Exemption. Nothing in this Agreement shall in any way conimit the OCWD Board of Directors to approve the Project BEA Exemption, to take any other action with respect to the City's petition for the Project BEA Exemption, or to in any way limit or restrict the discretion of the Board of Directors of OCWD with respect to an exemption from the payment of the BEA on water produced from Well. City of Seal Beach Partial BEA Exemption Agreement IN WITNESS WHEREOF the parties have executed this Agreement as of the date first written above. APPROVED AS TO FORM: ORANGE COUNTY WATER DISTRICT RUTAN & TUCKER, LLP By: , President By: Jeremy Jungreis mi ofael TWarkus, General Manager General Counsel, OCWD APPROVED AS TO Steele, City Attorney CITY OF SEAL BEACH City or Seal Beech Partial BEA Exemption Agreement _g_ Exhibit A City of Seal Beach Partial BEA Exemption Agreement -9- 0 _cc _U U C 0 Q a) x W m w � cn Q E w J L U co N m UJ — >. M L I- ca ca >- !!1 0in Mv Cl iiH o i n lu Op c1 O in c o n n O) ttm in n ifs NI N A p j> c m 46 a `:5 E v M d N 41N in � O 1 Co lS to a' E .Q Q m �f achto i:. U m Q O cn m to oo CAi as c t C M d N 0 = 0 - . N pp N tD Qt tD sSD. G .O O wto 0 V1 O ►e V Y c Qy N n N UO m U a u CD N `bJ; @ N Q 3 Q .0 w ct co m co cto Q c N H Q. An to [6 Ln in t¢a a Li 3T}. 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U m Q O w ° o +' O U V c as a j N t' = 0 - . $ N Y pp N w G .O O �' Q 0 O � O ►e V Y c Qy N m N UO tb U a u Q b0 = « O @ N Q 3 Q .0 w E W N YO c to > to 0 41 cto Q c N H Q. 3 W m to [6 Ln tn t¢a a N S c c > 0 c H a ai 0 Q N +' a N Q ° C E C +' to ca to p m ++ p 4� 75 1 0 0 0 t� Y t- C 7 U to °� to W 0 w Q W 11 m d' Q V Q W k O N fV N c�l O N N N to O E GJ u C 3 u N O O m O N rl N O N O E N 'u c 3 u N 0 0 N N a c to CL e, w u c a u N O N d tL C: N E N a N Q C L a a +' m U'o u � U W O. to U C qp O C N CL J c LU a C E CL is RESOLUTION 7328 A RESOLUTION OF THE SEAL BEACH CITY COUNCIL APPROVING A LIMITED TERM PARTIAL BASIN EQUITY ASSESSMENT EXEMPTION AGREEMENT WITH ORANGE COUNTY WATER DISTRICT FOR THE LAMPSON WELL TREATMENT SYSTEM (CIP WT1902) WHEREAS, Lampson Well is one of the City's four (4) water production well where an occasional nuisance odor has been detected; and, WHEREAS, the Lampson Well Treatment System (CIP WT1902) ("Project') was budgeted in the City's Capital Improvement Program to mitigate the nuisance odor; and, WHEREAS, the Legislature of the State of California has vested in the Orange County Water District (OCWD) the statutory responsibility to manage, regulate, replenish, and to protect the quality of groundwater supplies within the boundaries of OCWD; and, WHEREAS, the OCWD Act authorizes OCWD to enter into an agreement with groundwater producers to increase production of groundwater in lieu of water from an alternative non -tributary source for the purpose of removing contaminants or pollutants from the groundwater basin, and paying from OCWD funds that portion of the cost of groundwater production that will encourage the production for beneficial use of the polluted or contaminated groundwater that is impairing the quality of water supply within OCWD; and, WHEREAS, OCWD and the City mutually agree to enter into a Limited Term Basin Equity Assessment Exemption Agreement ("Agreement") where the City will construct the Project to mitigate the nuisance odor, with the City recovering a portion of the Project cost by mean of a partial exemption of that water from the payment of Basis Equity Assessment ("BEA"). NOW, THEREFORE, THE SEAL BEACH CITY COUNCIL DOES HEREBY RESOLVE: Section 1. The City Council hereby approves the Limited Term Partial Basin Equity Assessment Exemption Agreement with Orange County Water District for the Project. Section 2. The City Council hereby authorizes and directs the City Manager to execute the Agreement on behalf of the City. PASSED, APPROVED and ADOPTED by the Seal Beach City Council at a regular meeting held on the 12th day of September, 2022 by the following vote: AYES: Council Members: Kalmick, Massa-Lavitt, Moore, Sustarsic, Varipapa { NOES: Council Members: None ABSENT: Council Members: None ABSTAIN: Council Members: None r" 16A almick, Mayor i ATTEST: STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Gloria D. Harper, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution 7328 on file in the office of the City Clerk, passed, approved, and adopted by the City Council at a regular meeting held on the 121h day of September, 2022. loria D. Har r, City Clerk LIMITED TERM PARTIAL BASIN EQUITY ASSESSMENT EXEMPTION AGREEMENT BETWEEN ORANGE COUNTY WATER DISTRICT AND CITY OF SEAL BEACH (Lampson Well) This LIMITED TERM PARTIAL BASIN EQUITY ASSESSMENT EXEMPTION AGREEMENT (the "Agreement") is entered as of October , 2022 by and between the ORANGE COUNTY WATER DISTRICT, a special governmental district organized and existing pursuant to the Orange County Water District Act, Chapter 924, Statutes of 1933, as amended ("OCWD"), and the CITY OF SEAL BEACH, a California charter city ("City"). RECITALS A. Approximately two-thirds of all drinking water currently used within northern and central Orange County is provided from groundwater by OCWD. Inasmuch as Orange County is located in a semi -arid area, it is essential that all reasonable efforts be put forth to protect the quality of groundwater supplies and to provide for maximum utilization of that resource. B. The City operates a public water system for the purpose of delivering potable water to its customers, and obtains most of its water by pumping groundwater from wells for delivery to its customers. The City, as well as other groundwater producers within the boundaries of OCWD, has lost pumping capacity in its Lampson well due to the presence of hydrogen sulfide. The city of Seal Beach Lampson Well ("Well"), located on Lampson Avenue west of Heather Street in Seal Beach, has the capacity to produce up to 4,000 acre feet per year of groundwater; however, the City limited production of groundwater from the Well due to its high levels of hydrogen sulfide. There are no federal or state drinking water quality standards set for hydrogen sulfide in drinking water, however hydrogen sulfide can produce odors and can be corrosive to certain metals and can be unsuitable for domestic purposes. C. The City recently completed a pilot study using the Granular Activated Carbon (GAC) treatment process to reduce hydrogen sulfide in the water produced by the Well. The pilot study demonstrated complete removal of the hydrogen sulfide in the well water. The City proposes to design and construct a GAC treatment system to treat the flows from Well (such treated Well groundwater is hereinafter referred to as "Product Water"). D. The City's preliminary cost estimate for this GAC treatment system Project is $4,500,000 (the "Project Cost"). OCWD has determined that the City's construction of the Project will reduce the potential for groundwater containing hydrogen sulfide to impact nearby wells. E. The Legislature of the State of California has vested in OCWD the statutory responsibility to manage, regulate, replenish and to protect the quality of the groundwater supplies within the boundaries of OCWD. F. In April of each year, the Board of Directors of OCWD acts in accordance with Section 31.5 of the Orange County Water District Act ("OCWD Act") to find, determine and establish the basin production percentage (the "BPP"), and sets basin equity assessments (each, a City of Huntington Beach Partial BEA Exemption Agreement "BEA") for each producer within OCWD for the period from July 1" through June 30th of the next succeeding year. G. The OCWD Act authorizes OCWD to enter into an agreement with the owner operating a groundwater production facility within OCWD's boundaries to increase the production of groundwater in lieu of water from an alternative non -tributary source for the purpose of removing contaminants or pollutants from the groundwater basin, and paying from OCWD funds that portion of the cost of groundwater production that will encourage the production for beneficial use of the polluted or contaminated groundwater that is impairing the quality of the water supplies within OCWD. H. OCWD and the City mutually desire to enter into this Agreement pursuant to the OCWD Act to set forth the specific terms and conditions under which the City will conduct the Project and remove hydrogen sulfide -impaired groundwater from the Orange County groundwater basin by treating groundwater from Well for ultimate distribution to City customers for potable beneficial uses, with the City recovering a portion of the Project Cost by means of a partial exemption of that water from the payment of the BEA. OCWD and the City understand and agree that this Agreement does not and cannot become effective unless and until the City files a petition for a partial exemption from the BEA of the water produced from Well, and the Board of Directors of OCWD approves such a partial BEA exemption, in accordance with Section 38.1 of the OCWD Act. EXECUTORY AGREEMENTS NOW, THEREFORE, in consideration of the facts recited above and the covenants, conditions and promises contained herein, and subject to this Agreement taking effect in accordance with Section 5 below, OCWD and the City hereby agree as follows: SECTION 1. LIMITED TERM HYDROGEN SULFIDE REMOVAL PROJECT 1.1. The City shall design and construct the Project within the Project Cost. A portion of the Project Cost will be eligible to be credited against BEA payments otherwise owed by the City for production of groundwater from Well above the BPP, in accordance with Paragraph 2.5 below. 1.2. The City shall serve as the lead agency for, and be responsible for all CEQA processing for, the Project. 1.3. The City shall be responsible for all design, engineering, construction, and CEQA costs for the Project. 1.4. Once the Project has been constructed, and if the OCWD Board of Directors has approved a petition for partial, limited term BEA exemption pursuant to Section 3 8.1 of the OCWD Act (as outlined in Section 5), this Agreement will be implemented in fiscal year 2024-25 after the Project is complete, beginning July 1St of that year, and last for up to five fiscal years through June 30th of the last year (the "Project Term"). During the Project Term, the City may produce groundwater in an amount equal to the BPP for that given year, plus additional groundwater production from Well, provided that all of the groundwater production above the BPP during the City of Seal Beach Partial BEA Exemption Agreement -2- Project Term shall be produced solely from Well in order to receive partial exemption set forth in Paragraph 2.5 below. 1.5. In order to obtain the partial exemption set forth in Paragraph 2.5 below, the City shall produce groundwater from Well that, after treatment, meets the adopted primary drinking water standards, and the City shall deliver the groundwater to its customers or to City facilities for potable beneficial uses. Further, the Product Water shall meet the State Water Resources Control Board ("SWRCB") and the Division of Drinking Water ("DDW') Secondary Drinking Water Standards with a Secondary Maximum Contaminant Level for odor set at 3 Threshold Odor Number (TON) in drinking water. The Product Water from Well shall also meet any other requirements from the SWRCB for treatment of this Product Water. 1.6. The City shall be responsible for all costs incurred in the operation and maintenance of Well for distribution of the Product Water to City customers or facilities for potable beneficial use, including but not limited to labor, materials and power. 1.7. The City shall take out and maintain in effect at all times during the term of this Agreement comprehensive general liability insurance in an amount not less than $2 million per occurrence, for bodily injury, death and property damage, naming OCWD as an additional insured under such policy. An endorsement evidencing this insurance coverage shall be furnished to OCWD prior to the City filing with OCWD a petition pursuant to Section 38.1 of the OCWD Act (as outlined in Section 5). If the City is, or becomes, partially or fully self-insured for its public liabilities, a letter executed by the City's Mayor or City Manager stating the City's self-insured status and acknowledging its responsibility to respond to the indemnification of OCWD as provided in Paragraph 5.5 below, may be furnished in lieu of the insurance endorsement. The City shall provide written notice to OCWD of any change in the City's insured or self-insured status during the Project Term within 30 days of the effective date of such change. SECTION 2. PROJECT TERM BASIN EQUITY ASSESSMENT AND REPLENISHMENT ASSESSMENT PAYMENTS 2.1. The City shall file water production statements and a basin equity assessment statement in strict compliance with Sections 29(a) and 31.50) of the OCWD Act, respectively, for all groundwater produced by the City during the Project Term, including all groundwater produced from Well and distributed as Product Water. 2.2. On or before the 15th day of each month, during the Project Term, the City shall file with OCWD a monthly report reflecting the quantity of groundwater produced by Well through the end of the preceding calendar month during the Project Term (a "Monthly Project Production Report"). 2.3. Concurrently with the filing of the City's basin equity assessment report pursuant to Section 31.50) of the OCWD Act, the City shall file with OCWD a statement, verified by a written declaration under penalty of perjury, setting forth the total amount of groundwater produced from Well during the Project Term and distributed as Product Water (the "Project Production Statement"). City of Seal Beach partial BEA Exemption Agreement -3- 2.4. The City shall pay the replenishment assessment and additional replenishment assessment levied and imposed pursuant to Sections 27 and 27.1 of the OCWD Act on all groundwater produced by the City during the Project Term, including all groundwater produced from Well, in accordance with Section 29(a) of the OCWD Act. 2.5. To the extent that the City's production of groundwater during the Project Term does not exceed an amount equal to the BPP plus additional groundwater produced from Well, and all of the groundwater produced during the Project Term in excess of the BPP was produced from Well, the City shall be exempt during the Project Term from paying a portion of the basin equity assessment or any surcharge on such groundwater production above the BPP from Well during the Project Term to allow the City to recoup a portion of the Project Cost, as described in the Attached Exhibit A attached hereto and by this reference incorporated herein. Notwithstanding the foregoing, the City shall pay the applicable basin equity assessment and any surcharge for the following: 2.5.1. The City shall pay the applicable basin equity assessment and surcharge on all groundwater produced by the City during the Project Term that exceeds an amount equal to the BPP plus additional groundwater produced from Well; and 2.5.2. The City shall pay the applicable basin equity assessment and surcharge on all groundwater produced by the City during the Project Term in excess of the BPP, if such groundwater in excess of the BPP is produced from any water production facility other than Well. 2.6. The City acknowledges that the groundwater produced from Well, and the Product Water distributed and sold by the City, shall be classified as "groundwater," and shall not be classified as "supplemental sources" as such term is defined in Section 31.5 of the OCWD Act, for the purpose of calculating the amount of groundwater produced by the City relative to the BPP. SECTION 3. CITY GROUNDWATER PRODUCTION DURING THE PROJECT REMAINDER TERM 3.1. Following completion of the Project Term, and for ten consecutive years thereafter, (such ten-year period is hereinafter referred to as the "Project Remainder Term"), the City shall make its best efforts to continue to operate Well throughout the Project Remainder Term. 3.2. Beginning the first fiscal year of the Project Remainder Term, and each fiscal year thereafter during the Project Remainder Term, the City shall pay the then -applicable replenishment assessment, additional replenishment assessment and, if applicable, the basin equity assessment and surcharge, on all groundwater produced by the City during that fiscal year, including all groundwater produced form Well, in strict compliance with Sections 29 and 31.5 of the OCWD Act. 3.3. Notwithstanding Paragraphs 3.1 and 3.2 above, in the event that the City was unable to produce sufficient groundwater from Well during the Project Term to allow the City to achieve a total groundwater production equal to the BPP plus the additional groundwater produced from Well so as to recover a minimum of $1.0 million of the Project Cost, the City and OCWD shall City of Seal Beach Partial BEA Exemption Agreement -4- meet and confer to continue the program to give the City additional time to recover the $1.0 million worth of BEA exemptions (the "Make -Up Production"). In the event that the City undertakes Make -Up Production: 3.3.1. The City shall receive a partial basin equity assessment exemption on the Make -Up Production in accordance with Exhibit A. 3.3.2. The City shall file Monthly Project Production Reports (as described in Paragraph 2.2) for the Make -Up Production during each calendar month during the Make - Up Production time. 3.3.3. In addition to all groundwater production reports and statements required under the OCWD Act, the City shall file a Project Production Statement (as described in Paragraph 2.3) for the Make -Up Production concurrently with the filing of the City's basin equity assessment report pursuant to Section 31.50) of the OCWD Act. SECTION 4. MISCELLANEOUS 4.1. Effective Date; Term. This Agreement shall become effective upon the Board of Directors of OCWD approving a partial exemption of the BEA for the water produced from Well, and shall continue for a term of twenty years, until June 30, 2045. 4.2. Notices. Any notice, instrument, payment or document required to be given or delivered under this Agreement shall be given or delivered by personal delivery or by depositing the same in a United States Mail depository, first class postage prepaid, and addressed as follows: If to OCWD: Orange County Water District PO Box 8300 18700 Ward Street Fountain Valley, CA 92708 Attn: General Manager If to City: City of Seal Beach 211 Eight Street Seal Beach, CA 90740 Attn: City Manager or such other address as either party may direct in writing to the other. Service of any instrument or document given by mail shall be deemed complete upon receipt if delivered personally, or 48 hours after deposit of such instrument or document in a United States mail depository, first class postage prepaid, and addressed as set forth above. 4.3. Compliance with Laws. The City shall keep itself informed of all existing and future state and federal laws and all county, municipal ordinances and regulations, which in any manner effect its performance of this Agreement. The City shall at all times observe and comply with all such laws, ordinances and regulations. 4.4. Records and Review. City of Seal Beach Partial BEA Exemption Agreement -5- 4.4. 1. The City shall keep and maintain all records, accounts and reports relating to this Agreement and its performance hereunder for a period of three years following the expiration of this Agreement. OCWD shall have access to such records at any time during normal business hours upon 48 hours' notice to the City. At its cost, OCWD shall have the right to audit the books, records and accounts of the City relating to its performance of this Agreement no more than once annually, and the City shall provide reasonable cooperation to OCWD in this regard. 4.4.2. OCWD shall keep and maintain all records, accounts and reports relating to this Agreement and its performance hereunder for a period of three years following the expiration of this Agreement. The City shall have access to such records at any time during normal business hours upon 48 hours' notice to OCWD. At its cost, the City shall have the right to audit the books, records and accounts of OCWD relating to its performance of this Agreement no more than once annually, and OCWD shall provide reasonable cooperation to the City in this regard. 4.5. Indemnification. The City shall defend, indemnify and hold OCWD, its officers, directors, employees and representatives, harmless from and against any and all actions, suits, claims, demands, judgments, attorney's fees, costs, damages to person or property, losses, penalties, obligations, expenses or liabilities (collectively, "Costs") that may be asserted or claimed by any person or entity arising out of the performance or implementation of this Agreement by City or its officers, directors, employees or representatives, or the distribution or use of any water produced from Well; provided, that the City shall not be liable for OCWD Costs arising primarily out of OCWD's own negligence or willful misconduct or the negligence or willful misconduct of OCWD's officers, employees, agents or representatives. The City shall also defend, indemnify and hold OCWD, its officers, directors, employees and representatives harmless from and against any and all Costs that may be asserted or claimed by any person in any administrative or judicial challenge to the legality or validity of this Agreement or any exemption under Section 38.1 from payment of the BEA on any portion of the water produced from Well, or to any act or determination (including any fording under Section 38.1 of the OCWD Act or any finding, action or inaction under or required by the California Environmental Quality Act) leading up to or in connection with such a BEA exemption or this Agreement; provided, that the City shall not be liable for OCWD Costs arising primarily out of OCWD's own negligence or willful misconduct or the negligence or willful misconduct of OCWD's officers, employees, agents or representatives. 4.6. Successors and Assigns. All of the terms, conditions and provisions of this Agreement shall inure to the benefit of, and be binding upon, OCWD, the City, and their respective successors and assigns. 4.7. No Implied Waivers. In the event that any term, condition or provision of this Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the specific breach so waived, and shall not be deemed either to be a continual waiver or to waive any other breach under this Agreement. City of Seal Beach Partial BEA Exemption Agreement -6- 4.8. No Representation or Warranty. OCWD and the City each acknowledges that neither party, nor any of its respective officers, employees, agents or representatives, has made any written or oral representation, promise or warranty, express or implied, regarding any matter that is the subject of this Agreement, other than as expressly set forth herein. 4.9. No Obligation to Third Parties. The approval, execution and performance of this Agreement shall not be deemed to confer any rights upon any person or entity other than OCWD and the City. There are no third party beneficiaries to this Agreement. 4.10. Nature of Relationship. This Agreement shall not create, and shall not be construed or deemed to create, any agency, partnership, joint venture, landlord -tenant or other relationship between OCWD and the City. 4.11. Integration, Construction and Amendment. This Agreement represents the entire understanding of OCWD and the City as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respect to those matters covered by this Agreement. This Agreement shall be construed as if drafted by both OCWD and the City. This Agreement may not be modified, altered or amended except in writing signed by authorized representatives of both OCWD and the City. SECTION 5. AGREEMENT NOT EFFECTIVE UNTIL PARTIAL BEA EXEMPTION GRANTED ON WELL WATER PRODUCTION 5.1. This Agreement shall not take effect unless and until all of the following actions occur in accordance with Section 38.1 of the OCWD Act: 5.1.1. City shall have filed with OCWD a petition pursuant to Section 38.1 of the OCWD Act, for a partial exemption of the basin equity assessment levied under Section 31.5 of the OCWD Act, for all groundwater above the BPP produced from Well during the period from July 1, 2024 through June 30, 2029 (the "Project BEA Exemption"); and 5.1.2. The OCWD Board of Directors shall have received an investigation report on the petitioned Project BEA Exemption from OCWD's district geologist; and 5.1.3. The OCWD Board shall have conducted a public hearing on the petition for the Project BEA Exemption, made findings and determinations in accordance with Section 38.1(d)(2) of the OCWD Act, and granted the City's petition for the Project BEA Exemption. 5.2. City understands and acknowledges that the OCWD Board of Directors retains full discretion within the parameters set forth in the OCWD Act to approve or not to approve the Project BEA Exemption. Nothing in this Agreement shall in any way commit the OCWD Board of Directors to approve the Project BEA Exemption, to take any other action with respect to the City's petition for the Project BEA Exemption, or to in any way limit or restrict the discretion of the Board of Directors of OCWD with respect to an exemption from the payment of the BEA on water produced from Well. City of Seal Beach Partial BEA Exemption Agreement —7— IN WITNESS WHEREOF the parties have executed this Agreement as of the date first written above. RUTAN & TUCKER, LLP IIn Jeremy Jungreis General Counsel, OCWD APPROVED AS TO M- X' Steele, City Attorney ORANGE COUNTY WATER DISTRICT President Michael R. Markus, General Manager CITY OF SEAL BEACH Att IC City of Seal Beach partial BEA Exemption Agreement —g— Exhibit A City of Seal Beach Partial BEA Exemption Agreement -9- O cu U U O -f--a Q a) X U �M W Q _ x x W c: 0 cn cQ. C cu J U CD m VJ CD Q E ''cu^ vJ W i- LL m Ln Ln M 00 -zt L i/31 00)1 N C 0O (n +0+ in• 0 in. 0 ill- 'Ln- t/� 01 Ln No Ln d V AV 'i M d d M N N m Na — v- 41 �.,� � V•. LO M N 4- �p f0 An. t 41 tnh OZn Cy �. Ol M Ln 00 ' ma L, I d M N V +' 0 m i+ C -= O o Q) m a) O o O 41 "O Lu ++ a Q' Ln O n U 00) t.0 N cn d co M 00 y0 = 0 CL Y Ln tin U 41� o 0dD t/)- c M V). 'c L*o Q tn- O ih N O Q 41 (U ,� W 3 40 CO� Ln Q LCL C13 L]. ++ .Q W m NO Y 0 ++ -0 E m N O N fo- E U ^ C T LSD 3 N M -0 � H o - 7 D- N3 +, Lv M a-1 Ln 41 m m U 'CIO mU u U Q m TE m E E O e-1 c: •) f5 O W L cE N 0a y U y p �' N c 7 W 0 W Q W w Q U M O O m 1 m � Ln O I- 0) tD N .0) d N Ln n tn• t/- -tn i/)- th Ol d' N00 00 O N I-V). V). 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U Q `o O Y N V +' 0 m i+ C -= O o Q) m a) O o O 41 "O Lu ++ a Q' Ln O U N m 41 vYi t ++ y0 = 0 CL Y Ln tin U o 0dD Q c M `L_' O 'c L*o Q E Lu O 4 c Q 41 (U ,� W 3 40 CO� Ln Q LCL C13 L]. ++ .Q W m NO Y 0 ++ -0 E m Ln U fo- E U ^ C T LSD 3 N M -0 � H o - 7 D- N3 +, Lv C E Q O E c Ln 41 m m U 'CIO mU u U Q m TE m E E O .� c: •) f5 O W L cE N 0a y U y p �' N c 7 W 0 W Q W w Q U N N O N N W Q W m U O N N N e-4 Ol O N N O N O E N U c O O U N d' O O M O N N O N O E LU �U c O O U N d' O N o: C LO Ln if O CL N L.7 c 3 O U N 0 O L1 N E N O O Q N C co O m 4' LLL U V �Q a W U m c 0n O N CL cum c c O W }, '*E N d LL ' RESOLUTION 7328 A RESOLUTION OF THE SEAL BEACH CIN COUNCIL APPROVING A LIMITED TERM PARTIAL BASIN EQUITY ASSESSMENT EXEMPTION AGREEMENT WITH ORANGE COUNTY WATER DISTRICT FOR THE LAMPSON WELL TREATMENT SYSTEM (CIP WTI 902) WHEREAS, Lampson Well is one of the City's four (4) water production well where an occasional nuisance odor has been detected; and, WHEREAS, the Lampson Well Treatment System (CIP WT1902) ("Project") was budgeted in the City's Capital Improvement Program to mitigate the nuisance odor; and, WHEREAS, the Legislature of the State of California has vested in the Orange County Water District (OCWD) the statutory responsibility to manage, regulate, replenish, and to protect the quality of groundwater supplies within the boundaries of OCWD; and, WHEREAS, the OCWD Act authorizes OCWD to enter into an agreement with groundwater producers to increase production of groundwater in lieu of water from an alternative non tributary source for the purpose of removing colitaminants or pollutants from the groundwater basin, and paying from OCWD funds that portion of the cost of groundwater production that will encourage the production for beneficial use of the polluted or contaminated groundwater that is impairing the quality of water supply within OCWD; and, WHEREAS, OCWD and the City mutually agree to enter into a Limited Term Basin Equity Assessment Exemption Agreement ("Agreement") where the City will construct the Project to mitigate the nuisance odor, with the City recovering a portion of the Project cost by mean of a partial exemption of that water from the payment of Basis Equity Assessment ("BEA"). NOW, THEREFORE, THE SEAL BEACH CITY COUNCIL DOES HEREBY RESOLVE: Section 1. The City Council hereby approves the Limited Term Partial Basin Equity Assessment Exemption Agreement with Orange County Water District for the Project. Section 2. The City Council hereby authorizes and directs the City Manager to execute the Agreement on behalf of the City. n PASSED, APPROVED and ADOPTED by the Seal Beach City Council at a regular meeting held on the 12th day of September, 2022 by the following vote: AYES: Council Members: Kalmick, Massa-Lavitt, Moore, Sustarsic, Varipapa NOES: Council Members: None ABSENT: Council Members: None ABSTAIN: Council Members: None STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } *J�a fn�" J' almick, Mayor I, Gloria D. Harper, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution 7328 on file in the office of the City Clerk, passed, approved, and adopted by the City Council at a regular meeting held on the 12th day of September, 2022. G [7