CC 2015-05-26_08d Amended Water Supply Contract_Consent to One Time Extension of Time NRROY
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INCORPORATED 92
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* JULY 10. 1911
AMENDED
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N�P MEMORANDUM
TO: CITY COUNCIL
FROM: GEOFF ENGLISH, DIRECTOR OF PUBLIC WORKS
SUBJECT: LOPEZ WATER SUPPLY CONTRACT- REQUEST FOR CONSENT TO
ONE-TIME EXTENSION OF TIME FOR THE ZONE 3 WATER
CONTRACTORS TO REQUEST AN AMENDMENT TO THEIR WATER
DELIVERY SCHEDULES FOR THE PRIOR WATER YEAR
DATE: MAY 26, 2015
RECOMMENDATION:
It is recommended the City Council approve and authorize the Mayor to sign the
Consent to One-Time Extension of Time under Article 9 Paragraph (C) of the Lopez
Water Supply Contract to allow the Zone 3 Water Contractors additional time to request
an amendment to their water delivery schedules for the prior water year.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
There is no fiscal impact to City of Arroyo Grande as a consequence of the
recommended action.
BACKGROUND:
On August 22, 2000, the City Council adopted a resolution approving the current
Contract between the San Luis Obispo County Flood Control and Water Conservation
District and the City of Arroyo Grande for water supply from the Lake Lopez Reservoir.
(Attachment #4) The Consent to One-Time Extension of Time contains similar
language for all of the Zone 3 Water Contractors; City of Arroyo Grande, City of Grover
Beach, City of Pismo Beach, County Service Area 12 (CSA-12) and the Oceano
Community Services District (OCSD).
In December of 2014, the OCSD Board of Directors adopted a resolution requesting
"that the 2014 delivery of 326 acre feet of surface water delivered to OCSD from the
County to be accounted to for as State Water, as opposed to Lopez Water." Attached is
a letter from Paavo Ogren, General Manager for OCSD, providing additional information
about the December 2014 request. (Attachment #1)
On May 6, 2015, the San Luis Obispo County Department of Public Works (County)
mailed correspondence to the Zone 3 Water Contractors, notifying the agencies of a
"water management opportunity regarding entitlements of State Water and Lopez
Item 8.d. - Page 1
CITY COUNCIL
LOPEZ WATER SUPPLY CONTRACT- REQUEST FOR CONSENT TO ONE-TIME
EXTENSION OF TIME FOR THE ZONE 3 WATER CONTRACTORS TO REQUEST
AN AMENDMENT TO THEIR WATER DELIVERY SCHEDULES FOR THE PRIOR
WATER YEAR
MAY 26, 2015
PAGE 2
Water." (Attachment #2) The County has requested that all of the Zone 3 Water
Contractors respond to the Consent to One-Time Extension of Time under Article 9
Paragraph (C) of the Lopez Water Supply Contract by May 19, 2015. (Attachment#3)
ANALYSIS OF ISSUES:
The City of Arroyo Grande is a Zone 3 Water Contractor and has an annual delivery
entitlement of Lopez water of 2290 Acre Feet (AF). A chart showing the entitlements
for all Zone 3 Water Contractors is shown in the table below.
Contractor Eint.
Arroyo Grande 2290
OC'SD 303
Grover Beach 800
Pismo Beach 892
CSA-112 245
San UgueNiito
rota l 4530
The reclassification opportunity presented by the County only applies to the following
Lopez Contractors who are also State Water Contractors, OCSD, City of Pismo Beach
and CSA-12. The reclassification matter requires the consent of all Zone 3 Water
Contractors because of the necessity to waive Article 9 Paragraph (C) of the Lopez
Water Supply Contract.
Article 9. Time for Delivery of Proiect Water.
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Item 8.d. - Page 2
CITY COUNCIL
LOPEZ WATER SUPPLY CONTRACT- REQUEST FOR CONSENT TO ONE-TIME
EXTENSION OF TIME FOR THE ZONE 3 WATER CONTRACTORS TO REQUEST
AN AMENDMENT TO THEIR WATER DELIVERY SCHEDULES FOR THE PRIOR
WATER YEAR
MAY 26, 2015
PAGE 3
This One-time Waiver must be approved by all of the Zone 3 Water Contractors in order
for the County to approve the OCSD request for reclassification. Two additional Zone 3
Water Contractors, the City of Pismo Beach and CSA 12 have also informed the County
that they will participate in the retroactive water delivery reclassification opportunity.
Staff recommends that the City Council authorize the Mayor to sign the Consent to One-
Time Extension of Time under Article 9 Paragraph (C) of the Lopez Water Supply
Contract.
ADVANTAGES:
City staff is supportive of the retro-active reclassification by OCSD and the One-Time
Extension of Time under Article 9 Paragraph (C) of the Lopez Water Supply Contract for
the following reasons;
• Currently there is approximately 900 AF of State Water stored in Lopez. Since
the Low Reservoir Response Plan (LRRP) has already been triggered, as the
reservoir level is below 20,000 AF, and stored State water is subtracted from the
reservoir level for determining the LRRP triggers, less State water and more
Lopez water in Lopez Reservoir is a benefit to Arroyo Grande because
maintaining a higher Lopez Reservoir elevation prevents further reductions in
Lopez Entitlement.
• Allowing agencies to reclassify stored State water as Lopez water will provide
these agencies with more flexibility to evaluate transfer opportunities with other
Zone 3 agencies that cannot take delivery of State water, including Arroyo
Grande. More available State water ordered and consumed locally, extends our
local water resources; both surface and groundwater. Maximizing the use of
State water by local agencies that have access to this source is encouraged.
• Local control over the use and classification of Lopez reservoir water is a strong
interest to all of the Zone 3 agencies. Zone 3 agencies should be able to use
their water entitlement and surplus water; both Lopez and State, in our own best
interest as long as it is consistent with the Lopez Contract and does not harm
other member agencies.
DISADVANTAGES:
The primary concern with reclassification and storage capability in Lopez is that it may
encourage more groundwater pumping to build up the Zone 3 agency member "banks"
of stored Lopez water while the LRRP is enacted. When the LRRP is activated, Zone 3
agencies can store, or bank, their unused Lopez water entitlement and previously
determined surplus water. This concern has largely been diminished by the on-going
Item 8.d. - Page 3
CITY COUNCIL
LOPEZ WATER SUPPLY CONTRACT- REQUEST FOR CONSENT TO ONE-TIME
EXTENSION OF TIME FOR THE ZONE 3 WATER CONTRACTORS TO REQUEST
AN AMENDMENT TO THEIR WATER DELIVERY SCHEDULES FOR THE PRIOR
WATER YEAR
MAY 26, 2015
PAGE 4
groundwater protection practices by the Northern Cities Management Area (NCMA)
agencies, including OCSD. All of the NCMA agencies are maximizing their surface
water supplies and have pumped less groundwater in 2015 compared to 2014.
Additionally, a robust groundwater monitoring program is in place to help guard against
potential seawater intrusion into the groundwater basin.
ALTERNATIVES:
The following alternatives are provided for the Council's consideration:
• Approve staff recommendation;
• Do not approve recommendation; or
• Provide direction to staff.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, May 21, 2015. The Agenda
and staff report were posted on the City's website on Friday, May 22, 2015.
Attachments:
1. Correspondence from OCSD General Manager
2. County Correspondence dated May 6, 2015
3. Consent to One-Time Extension form
Item 8.d. - Page 4
ATTACHMENT 1
O CUyt
Oceano Community Services District
* +► >♦ * 1655 Front Street, P.O. Box 599, Oceano,CA 93475
(805)481-6730 FAX(805)481-6836
�!��'sl9st41S
Geoff English, Director of Public Works
City of Arroyo Grande
1375 Ash Street
Arroyo Grande, CA 93420
Subject: 2014 Delivery of State Water; Consent Request from the San Luis Obispo County
Flood Control and Water Conservation District(County)
Mr. English,
The purpose of this letter is to respond to your request for background information on the
pending contract consent forms provided by the County for local agency consideration.
In December 2014,the Oceano Community Services District(OCSD) Board of Directors adopted
a motion requesting that the 2014 delivery of 326 acre feet of surface water delivered to OCSD
from the County be accounted for as State Water, as opposed to Lopez Water. In response to
the OCSD request,the County established a decision-making process, and developed consent
forms for local agencies to consider. Meanwhile, other agencies with water contracts similar to
OCSD(i.e.those with both State Water and Lopez Water allocations) have indicated a desire to
seek similar determinations as OCSD.
Background
Throughout the course of 2014, the water delivered to OCSD was accounted for as Lopez
Water. With the approval of the Low Reservoir Response Plan (LRRP), the OCSD Board of
Directors requested that 2014 deliveries be accounted as State Water. Doing so would permit
OCSD to carry over the 326 acre feet as Lopez Water. OCSD initiated its request to more fully
develop our multi-year drought strategies, with a greater level of certainty than otherwise
exists this time, and because State Water was in fact delivered.
If the OCSD request is not approved by the County,then based on discussions with the County,
they will continue to account for the water as"Stored State Water" in Lopez reservoir.
Together with water deliveries prior to 2014, approximately 1,000 acre feet of State Water was
stored in Lopez reservoir as of December 31, 2014.
Item 8.d. - Page 5
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Oceano Community Services District
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In that event,the County has indicated that the "Stored State Water" will be available for the
benefit of State Water contractors, and as such, a portion will be allocable to OCSD at some
time in the future. How and when the County will allocate that water, under its own
determinations and a separate process, is uncertain. Consequently, the OCSD request is
essentially seeking to have determinations made now, with input and consideration by local
agencies provided sooner as opposed to later.
The significance of the current drought, and the need for local agencies to have certainty in
developing drought strategies should be of utmost importance to all agencies. Likewise,the
proposed action will also provide the opportunity for other agencies, including Arroyo Grande,
to have possible access to additional water during the drought since "Stored State Water" will
no longer exist and, instead, water in Lopez reservoir will solely be "Lopez Water."
As you may note,the actual quantities allocated to each of the local agencies have not been
established in the County correspondence. Those quantity determinations are subject to
additional analysis; in part dependent on the desires of other local agencies. OCSD respectively
recognizes that multiple approaches to analyzing State Water deliveries, and how it should be
allocated, are ultimately the determination of the County Board of Supervisors in accordance
with State Water contracts but also with input from local agencies.
We hope that Arroyo Grande will approve the consent form provided by the County so that this
effort, initiated by OCSD and now incorporated into a fully collaborative process, can help to
resolve an issue that will otherwise continue to remain uncertain. As always, we appreciate
your effort and that of the other City staff in meeting and discussing this and other water
resource issues that are of common interest.
Respectfully,
Paavo Ogren, General Manager
Cc: Mark Hutchinson, Deputy Director of Public Works,County of San Luis Obispo
Item 8.d. - Page 6
ATTACHMENT 2
SAN LUIS OBISPO COUNTY
DEPARTMENT OF PUBLIC WORKS
Wade Horton, Director
County Government Center, Room.206 - San Luis Obispo CA 93408 - (805) 781-5252
5
Fax (805) 781-1229 email address: pwdo -)co.slo.ca.us
May 6, 2015
City of Pismo Beach
Oceano Community.Services District
City of Grover Beach
City of Arroyo Grande
County Service Area 12
Subject: Request for Agreement not to Object to One-Time Extension of Time
Dear Zone 3 Water Contractor:
Last month Zone 3 contractors were notified of a water management opportunity
regarding entitlements of State Water and Lopez Water, both delivered through the Zone
3 distribution system. With the implementation of the Low Reservoir Response Plan for
the Lopez system agencies now have the opportunity to "carryover" unused Lopez water
in an agency specific water account. Consequently, agencies that are subscribed to both
Zone 3 and State Water have inquired about the ability to implement a retroactive water
accounting change to effectively exchange'Lopez water used in 2014 for a like amount of
unused State Water. This exchange is possible because during the spring of 2014 State
Water was moved.into Lopez Reservoir for the benefit of State Water subcontractors
connected to the Lopez turnout. Therefore,this exchange could be accommodated using
the stored.State Water in Lopez Reservoir.
In order to affect any requested water accounting changes, a key process needs to occur,
because it requires the Flood Control District to extend the period of time within which an
agency can request an amendment to its water delivery schedule for the water year
ending on March 31, 2015:
Both the Water Supply Contracts for Lopez Water and the Water Supply
Agreements for State Water do not,permit after-the-fact changes in water
deliveries at the request of the agency. Article 8 paragraph (c) (3) of the
State Water agreement states "The water delivery schedule may be
amended by the District upon the District's initiative or upon the Contractor's
written request. Proposed amendments shall be submitted by the
Contractor within a reasonable time before the desired change is to become
effective and shall be subject to review and modification by the District in
like manner as the schedule itself" (underline added]. Article 9 paragraph
(C) of the Lopez contract-states "Proposed amendments to such schedules
shall be submitted by the Agency within a reasonable time prior to the date
the desired change is to become effective and they shall be subject to
review and modification by the District in the. same manner as the
preliminary water schedule described in paragraph (B) above" (underline
Item 8.d. - Page 7
added]. However, the Flood Control District can extend the time period
within which each agency can request an amendment to the water delivery
schedules pursuant to Article 8 paragraph (c) (3) of the State Water
agreement and Article 9 paragraph (C) of the Lopez contract provided that
none of the agencies object to said extension. In addition, Article 23 (C)
of the Lopez contracts state that any amendment to said contracts must be
approved-by the unanimous-written-consent-of all-agencies.
Therefore, this letter seeks your written agreement not to object to the one time extension
of the time period within which each agency can request an amendment to its water
delivery schedule for the water year ending on March 31, 2015 (see attached). Your
response by May 19 would be greatly appreciated, however, if you need more time to
process an official response please let us know.
If you have any questions about this opportunity or would like-to discuss this process
further, please contact me at (805) 781-5458 or mhutchinson @co.slo.ca.us.
Sincerely,
-ell
MARK HUTCHINSON
Director of Public Works
C Wade Horton, Director of Public Works
File: CF 970.01.01
L:IMANAGMNTIMAY15\2015.05.06 Zone 3 Cover Letter Final.dou MH:Jb
Item 8.d. - Page 8
ATTACHMENT 3
CONSENT TO ONE-TIME EXTENSION OF TIME
UNDER ARTICLE 9 PARAGRAPH (C)
OF THE LOPEZ WATER SUPPLY CONTRACTS
The San Luis Obispo County Flood Control and Water Conservation District ("Flood
Control District") offered each agency that is a party to both a Lopez Water Supply
Contract and a State Water Supply Agreement (the City of Pismo Beach, Oceano
Community Services District, Avila Beach Community Services District, Avila Valley
Mutual Water Company, and San Luis Coastal Unified School District) the opportunity to
request a modification to their water delivery schedules for the prior year on or before
May 31, 2015. These agencies may receive an additional benefit under the carryover
provisions of the recently enacted Lopez Low Reservoir Response Plan by decreasing
their Lopez water deliveries and increasing their State water deliveries during the prior
year.
The ("Agency') hereby affirms that is has no
objection to and will not challenge the Flood Control District's one-time extension of the
period of time within which the City of Pismo Beach, Oceano Community Services
District, Avila Beach Community Services District, Avila Valley Mutual Water Company,
and San Luis Coastal Unified School District can request an amendment to their water
delivery schedules for the prior Water Year (Water Year ending on March 31, 2015)
pursuant to Article 9 Paragraph (C) of the Lopez Water Supply Contracts.
Signature Date
Name— Print Title
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