CC 2024-06-11_09f CCB JPA Amendments
MEMORANDUM
TO: City Council
FROM: Matthew Downing, City Manager
SUBJECT: Amendments to the Central Coast Blue Regional Recycled Water
Authority Joint Exercise of Powers Agreement
DATE: June 11, 2024
RECOMMENDATION:
1) Adopt a Resolution approving Amendment Number 1 to the Joint Exercise of Powers
Agreement Creating the Central Coast Blue Regional Recycled Water Authority; and
2) Determine that adopting the Resolution is not a project subject to the California
Environmental Quality Act (CEQA) because it has no potential to result in either a direct,
or reasonably foreseeable indirect, physical change in the environment. (State CEQA
Guidelines, §§ 15060, subd. (c)(2)-(3), 15378)
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
There is no direct fiscal impact associated with the recommended action. If the
amendment is approved by all necessary parties, the City would be reimbursed its
respective share of the purchase price of real property obtained for purposes of the
.
BACKGROUND:
The C
entered into a Joint Exerciswhich
included provisions to govern the development and management of the Project and the
.
On April 9, 2024, the City Council directed staff to submit formal notices of intent to
withdraw from the Agreement, as well as from the related Cost-Sharing Agreement.
Pursuant to Section 8.2 of the Agreement (Attachment 2), withdrawal is effective one
hundred eighty (180) days after written notice is provided to the Authority. Under the
Agreement, withdrawal from the Authority constitutes a withdrawal of that member
On June 3, 2024, the Authority Board of Directors voted unanimously to provide a
recommendation to the Member Agencies to amend the Agreement as outlined below. At
Item 9.f.
City Council
Amendments to the Central Coast Blue Regional Recycled Water Authority Joint
Exercise of Powers Agreement
June 11, 2024
Page 2
of intent to withdraw from the Agreement effective June 30, 2024, and waived the 180-
day notice requirement, contingent upon the approval of the proposed amendments by
all three Member Agencies. Amendments to the Agreement are specifically addressed in
Article 8 Termination / Withdrawal / Amendment of the Agreement as follows:
8.5 Amendment. This Agreement may be amended at any time by the written
approval of the governing body of each Member Agency upon recommendation of
a majority of the Board of Directors of the Authority.
ANALYSIS OF ISSUES:
The City of Pismo Beach has expressed its interest in continuing the existence of the
Authority to preserve the previous investment in the Authority and the opportunity to
develop the Project notwithstanding the withdrawal of the City and the City of Grover
Beach from the Authority. To that end, Pismo Beach has requested an amendment to the
Agreement that would accomplish a number of matters, generally outlined as follows:
1. The Agreement would be amended to remove the cities of Arroyo Grande and
Grover Beach as Member Agencies, and to add the Pismo Beach Financing
Agency as a Member Agency;
2. The Agreement would be amended to change the Water Purveyor
Contributions to reflect the withdrawal of Arroyo Grande and Grover Beach,
and setting the allocation of costs at 100% for Pismo Beach;
3. The Agreement would be amended to remove the restriction prohibiting the
ey from being counsel to one of the Member Agencies;
4. The Agreement would be amended to remove the provision that Arroyo Grande
and Grover Beach would participate in the division of remaining assets upon
the dissolution of the Authority at some undetermined point in the future, and
to authorize the reimbursement of Arroyo Grande and Grover Beach for their
respective shares of the purchase price of real property acquired for the
Project; and
5. Other conforming changes would be made to the Agreement to reflect the
withdrawal of Arroyo Grande and Grover Beach and the addition of the Pismo
Beach Public Financing Agency.
ALTERNATIVES:
1. Adopt a Resolution approving Amendment Number 1 to the Joint Exercise of
Powers Agreement Creating the Central Coast Blue Regional Recyceld Water
Authority;
2. Modify and adopt the Resolution; or
3. Provide other direction to staff.
Item 9.f.
City Council
Amendments to the Central Coast Blue Regional Recycled Water Authority Joint
Exercise of Powers Agreement
June 11, 2024
Page 3
ADVANTAGES:
The proposed amendments remove the City from the Agreement and Authority prior to
the 180-day notice requirement and minimizes Authority administration costs as the City
departs. The amendments also preserve the Authority as a tool for current and future
financing, as well as providing a structure for future regional water supply solutions as
desired by the City Council.
DISADVANTAGES:
Due to the requirement for amendments to the Agreement to be approved by the
ilure to approve the
Authority prior to
the 180-day noticing period. This would require the City to remain in the Authority until
November 13, 2024, and the City would be responsible for Project costs during this time
period. Additionally, not allowing the Pismo Beach Financing Agency to join the Authority
would effectively eliminate the joint powers agreement structure, triggering dissolution of
the Agreement and associated actions, including property disposition under State law.
ENVIRONMENTAL REVIEW:
The action is not a project subject to the California Environmental Quality Act (CEQA)
because it has no potential to result in either a direct, or reasonably foreseeable indirect,
physical change in the environment (State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3),
15378).
PUBLIC NOTIFICATION AND COMMENTS:
Government Code Section 54954.2.
ATTACHMENTS:
1. Proposed Resolution
2. Joint Exercise of Powers Agreement Creating the Central Coast Blue Regional
Recycled Water Authority
Item 9.f.
ATTACHMENT 1
AMENDMENT NUMBER 1
TO JOINT EXERCISE OF POWERS AGREEMENT
CREATING THE CENTRAL COAST BLUE
REGIONAL RECYCLED WATER AUTHORITY
This Amendment Number 1 to Joint Exercise of Powers Agreement Creating the Central Coast
Blue Regional Recycled Water Authority (ÐFirst AmendmentÑ) is effective as of June 30, 2024
(the ÐEffective DateÑ).
WHEREAS, the Cities of Arroyo Grande, Grover Beach and Pismo Beach (each a ÐMember
AgencyÑ and collectively the ÐMember AgenciesÑ) entered into a joint exercise of powers
agreement (ÐAgreementÑ) for the Member AgenciesÓ participation in the Central Coast Blue
Project, which established the Central Coast Blue Regional Recycled Water Authority
(ÐAuthorityÑ); and
WHEREAS, the Parties wish to amend the Agreement to reflect the withdrawal of Arroyo
Grande and Grover Beach effective June 30, 2024; and
WHEREAS, the Parties wish to amend the Agreement with this First Amendment to reflect the
addition of the Pismo Beach Public Financing Agency as a member agency under the
Agreement effective June 30, 2024; and
WHEREAS, Section 8.5 of the Agreement requires that any amendment to the Agreement be
approved by the governing body of each Member Agency upon recommendation of the Board of
Directors of the Authority, which recommendation was given on June 3, 2024.
NOW, THEREFORE, Arroyo Grande, Grover Beach and Pismo Beach hereto agree as follows:
1.Section 1.1.9 is revised to read as follows:
ÐConstruction Costs shall mean the cost incurred as of the effective date of the
first construction contract for Phase 1 of the Project through the determination by
the Parties that construction of Phase 1 is complete, including the cost of the
purchase of the Facility site for the Project. Construction Cost does not include
legal expenses attributable to each PartyÓs City Attorney, retained counsel or
their associates.Ñ
2.Section 1.1.13 is revised to read as follows:
Facility Site is defined in Section 1.5.2 herein.
3.Section 1.1.16 is revised to read as follows:
ÐMember Agency(ies) means Pismo Beach, the Pismo Beach Public Financing
Agency, and any other entity added to this Agreement by subsequent
amendment.Ñ
4.The first sentence of Section 1.2 is revised to read as follows:
ÐThis Agreement is made pursuant to the Act by Pismo Beach and the Pismo
Beach Public Financing Agency, each of which is authorized to contract with the
other pursuant hereto.Ñ
5.Section 1.5.1 is revised to read as follows:
Phase 1 of Project. Pismo Beach will be Lead Agency and act as project
developer through final completion of Phase 1 of the Project. As the Lead
Agency, Pismo Beach will act as the construction manager for Phase 1 and will
provide administration of construction and start-up of Phase 1 on behalf of the
Member Agencies. The Parties shall pay their pro rata shares of Pre-
Construction costs for any professional service expenses incurred by Pismo
Beach in connection with obtaining such Phase 1 approvals, in accordance with
Section 6.3.2 below.
6.Section 1.5.2 is revised to read as follows:
ÐPismo Beach has previously transferred to the Authority Facility Parcel #1,
which is located in Grover Beach and identified as Assessor's Parcel Number
060-543-016. Prior to June 30, 2024, Grover Beach shall complete the transfer
to the Authority of Facility Parcel #2, which is located in Grover Beach and
identified as AssessorÓs Parcel Number 060-543-007 (collectively Facility Parcels
#1 and #2 are referred to as the "Facility Site").Ñ The Authority shall own all
Facilities located at the Facility Site, including, but not limited to, the real
property, buildings, water and treatment facilities, and support infrastructure and
assets, injection wells and related transmission lines.Ñ
7.Section 1.5.4 is revised to read as follows:
ÐTo finance Construction Costs, the Authority shall apply for and obtain financing
for such costs through the issuance of Bonds, entering into loans or Financing
Agreements or any other financing mechanisms not otherwise covered by grant
funding awarded to the Project. Any loans entered into and secured for
construction of the Project may consist of separate installment sale agreements
based on the respective share of each Member Agency, and any prepayment
may be paid either directly to the Authority by each Party consistent with the
Water Purveyor Contribution percentages identified in Section 6.3.2 hereof or
directly to the grant funding agency or bond trustee, depending on the funding
mechanism.Ñ
8.Section 1.6.2(ii) is revised to read as follows:
ÐTo employ agents, attorneys, consultants and employees or to contract for
personnel to fulfill its mission and purpose.Ñ
9.Section 2.1 is revised to read as follows:
ÐCreation. Until such time as additional member agencies are added to this
Agreement through amendment under Section 8.5, the Authority shall be
governed by a board of two (2) members, which is hereby established and which
shall be composed of one (1) representative appointed from each Member
Agency. The governing board shall be known as the "Board of Directors of the
Central Coast Blue Regional Recycled Water Authority." All voting power shall
reside in the Board.Ñ
10. Section 2.2.1 is revised to add the following sentence at the end of the existing section:
ÐAny Member Agency which joins the Authority pursuant to an amendment to this
Agreement shall designate and appoint a regular and alternate representative in
the manner described in this section upon the effective date of such
amendment.Ñ
11. Section 4.3 is revised to read as follows:
ÐAuthority Attorney. The Attorney for the Authority shall be engaged by the Board
of Directors and may be the attorney for one of the Member Agencies. The
Attorney for the Authority or a designated deputy shall attend or participate in
meetings of the Board of Directors; provided, however, that the absence of the
Authority Attorney shall not affect the validity of any meeting. The Attorney shall
perform such other duties the Board of Directors specifies.Ñ
12. The first sentence of Section 6.2.2 is revised to read as follows:
ÐAnnually, in March of each year, the Board shall adopt a preliminary budget and
an allocation of contributions from Member Agencies for presentation to each
Member Agencies' governing body.Ñ
13. Section 6.3.2 of is revised to read as follows:
ÐThe Parties shall pay their pro rata share of all Pre-Construction and
Construction Costs incurred by Pismo Beach in connection with Phase 1 of the
Project.
The Parties agree to the following cost allocation of the total Pre-Construction
and Construction costs for Phase 1 for each Party:
i. Pismo Beach shall contribute 100%.
As provided in Section 6.2.2, annual contributions by Member Agencies for
ongoing operations shall be consistent with the above percentages.
14. The existing second paragraph of Section 7.3 shall be stricken entirely and revised to
read as follows:
ÐThe respective obligation of each Party to make payments herein with respect to
the Pre- Construction and Construction Costs of Phase 1 or in furtherance of the
objective and purpose of this Agreement, is a special, limited obligation payable
solely from net revenues of each partyÓ s respective Enterprise fund(s), and does
not constitute a debt or pledge of the faith and credit of each Party or of the State
of California or of any political subdivision thereof within the meaning of any
constitutional or statutory debt limitation or restriction. The payments made under
this Agreement, if any, are payable from net revenues of each partyÓs respective
Enterprise fund(s) on such a basis as is dictated by each PartyÓs existing debt
instruments. The respective obligation of each Party to make payments
hereunder or in furtherance of the objective and purpose of this Agreement is
further subject to the Parties establishing sufficient net revenues to fund the
obligations of this Agreement, which includes, but is not limited to, approval by
the PartiesÓ governing bodies for an increase in enterprise user fees sufficient to
meet the above obligations of this Agreement, the successful implementation of a
Proposition 218 protest hearing wherein the Parties are authorized to proceed
with approval of a fee increase, and the attainment of Proposition 1 Groundwater
Grant Program Grant Funding by the State Water Resources Control Board.Ñ
15.Section 8.3 is revised to read as follows:
ÐThe withdrawal of a Member Agency shall not terminate its responsibility to
contribute its share of any obligation incurred by the Authority, including amounts
determined by the Board for (1) liabilities and claims accrued during the time the
agency was a Member Agency or (2) budgeted expenses for the Fiscal Year in
which notice of intent to withdraw is given.
ÐExcept as the withdrawing Member Agency may agree, in writing, with the
Board, the withdrawing Member Agency shall automatically relinquish all rights
as a Member Agency under this Agreement, on the effective date of the
withdrawal. Upon termination of this Agreement, only those Member Agencies
who are parties to this Agreement at the time of termination shall be permitted to
participate in disbursement of Authority assets. Notwithstanding the foregoing
sentence, Arroyo Grande and Grover Beach shall be entitled to reimbursement
for their respective shares of the purchase price of Facility #1 and Facility
#2 as follows: not later than 30 days following full execution of this First
Amendment by the Parties, Pismo Beach shall remit to Arroyo Grande the sum of
$499,855.34, and to Grover Beach the sum of $719,791.71.
Notwithstanding anything to the contrary set forth in any other agreements
among the Parties approving the amendment revising this Section 8.3, and
notwithstanding the withdrawal from this Agreement of any Party, the Parties
hereto acknowledge and agree that the recycled water injected into the ground
pursuant to this Agreement, as well as all new developed water subsequently
extracted, is New Developed Water as defined in the January 25, 2008 Judgment
entered by the Santa Clara Superior Court in the Santa Maria Groundwater
Adjudication litigation.Ñ
16.Section 9.3 shall be revised to delete the last sentence in its entirety, which currently
reads:
ÐThis section shall not be deemed to supersede, extinguish, or modify the
indemnification provisions in the Cost Sharing Agreement.Ñ
17.Section 10.2 is revised to read as follows:
ÐNotices. Notices required or permitted hereunder shall be sufficiently given if
made in writing and delivered either personally or by registered or certified mail,
postage prepaid to the respective Parties, as follows:
City of Pismo Beach
Attention: City Manager
760 Mattie Road Pismo Beach, CA 93449
Pismo Beach Public Financing Agency
Attention: Executive Director
760 Mattie Road Pismo Beach, CA 93449Ñ
18. Section 10.3 is revised to read as follows:
ÐThe responsibilities and obligations of each Party to this Agreement shall be,
solely as provided in this Agreement, or as may be provided for in other
agreements to be executed by the Parties.Ñ
Except as set forth herein, all other terms and conditions of the Agreement, shall remain in full
force and effect.
Dated:________________________ City of Arroyo Grande
_________________________________
Caren Ray Russom, Mayor
Attest:
Jessica Matson, City Clerk
Dated:________________________
City of Grover Beach
_________________________________
Karen Bright, Mayor
Attest:
_________________________________
Wendi Sims, City Clerk
Dated:________________________ City of Pismo Beach
_________________________________
Ed Waage, Mayor
Attest:
_________________________________
Erica Inderlied, City Clerk