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11c Measure to Purchase State WaterMEMORANDUM TO: CITY COUNCIL FROM: SUBJECT: CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5, 2012 ELECTION TO AUTHORIZE PURCHASE OF STATE WATER DATE: JANUARY 24,201 2 RECOMMENDATION: It is recommended the Council 1) adopt a Resolution calling for the holding of a special municipal election to be held on Tuesday, June 5, 2012, for the submission to the voters a question relating to the purchase of water from the California State Water Project; 2) adopt a Resolution setting priorities for filing written arguments for City measures and directing the City Attorney to prepare an impartial' analysis; 3) adopt a Resolution providing for the filing of rebuttal arguments; 4) approve the ballot argument in support of the measure; and 5) appropriate $35,000 from the Water Availability Fund for the estimated cost of placing the measure on the ballot and preparing and distributing public education materials. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: 'The estimated cost of State water is approximately $1,250 to $1,350 per acre foot of water. A one-time capital cost to pay the City's share of'capital investments in the system that other contractors have been making through the life of the project is estimated to be approximately $25,000 to $30,000 per acre foot. The City has requested the State water purchase be structured so only holding costs be charged until the water is needed and used. Holding costs are estimated to be approximately $200 to $300 per acre foot. There is currently approximately $1.4 million available in the Water Availability Fund to cover costs for acquisition of new water supply. The City is currently in the third year of a five-year temporary water purchase agreement with the Oceano Community Services District (OCSD) for the purchase of 100 acre feet of water. The current annual cost is approximately $1 55,000. Staffs intent is to time the purchase of State water with the expiration of the OCSD temporary water purchase agreement. The actual amount of water recommended to be purchased will depend upon the terms agreed upon by the County and Central Coast Water Authority (CCWA). The objective is to maintain costs relatively close to Agenda Item 11.c.Page 1 CITY COUNCIL CONSIDERATION OF PLACING A MEASLIRE ON THE BALLOT AT THE JUNE 5, 2012 ELECTION TO AU'THORIZE PURCHASE OF STATE WATER JANUARY 24,201 2 PAGE 2 what is currently paid to OCSD in order minimize any impact on the City's water rates. The cost of placing the measure on the ballot is approximately $45,000 to $50,000. However, if it is accompanied with the Police Station ballot measure, the costs of the two measures can be shared. It is proposed to fund this cost from the Water Availability Fund. It is also recommended that $10,000 be appropriated for public education. Therefore, the total cost impact of the election to this fund will be approximately $35,000. There will be impacts on staff resources. However, the work will be accomplished as part of ongoing efforts to coordinate City water resources. Water supply measures are one of the priorities identified in the City's Critical Needs Action Plan. BACKGROUND: An Arroyo Grande ballot measure passed by the voters in 1990 requires a public vote before the City can purchase State water. The question on the ballot was as follows: Shall an affirmative vote of the voters of Arroyo Grande be required before the City of Arroyo Grande is authorized to participate in the California State Water Project? In June 2010, staff presented a water analysis and strategies to the City Council. It identified a projected need for approximately 400 ddditional acre feet of water to meet the community's needs when it reaches its buildout population under the existing General Plan. It was agreed to address these needs by expanding water conservation efforts, seeking purchase of State water, and to continue working on the potential for a water recycling project in the future. The City Council directed staff to prepare a ballot measure for the June 2012 election to enable purchase of State water. ANALYSIS OF ISSUES: State water would help diversify the City's water supply. Since the County has an excess supply of State water, it is also a reliable source. When the State reduces its delivery during drought conditions, the County has traditionally been able to provide delivery of the full allocation with its excess supply through the sale of drought insurance to State water contractors. Based on staffs analysis, State water appears to be the most cost effective option, but still has significant costs associated with it. The City is facing a number of challenges and pressures on its water and sewer rates. Reduced usage due to conservation efforts and rainfall levels, infrastructure needs, and reduced development impact revenues due to poor economic conditions have all impacted the City's ability to maintain a balanced budget in the Water Fund and will likely cause the need for future rate increases. As a result, staff has developed a strategy to Agenda Item 11.c.Page 2 CITYCOUNCIL CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5, 2012 ELECTION TO AU'THORIZE PURCHASE OF STATE WATER JANUARY 24,201 2 PAGE 3 mitigate the impact of the State water purchase on water rates by: 1) timing the purchase with the expiration of the OCSD temporary water purchase agreement; and 2) deferring costs until the water is needed so the majority of costs can be assumed by new development and customers. County officials are negotiating with the CCWA for the State water purchase. While the County has excess water supply, the CCWA controls the distribution system. The amount of water recommended to be purchased will depend upon the amount of costs that can be deferred. The City can address its water needs through conservation efforts if it meets the goals set forth by State legislation. However, the ability to meet the State water conservation requirements is unknown. Therefore, staff believes obtaining some amount of State water is important, but it should not be relied on exclusively to meet future needs and conservation efforts should continue to be expanded. One of the most serious issues is the ability to respond to potential reductions in water supply if groundwater reliability is impacted in the future by seawater intrusion. Therefore, the recommended measure also requests authorization to purchase an increased amount of State water if necessary to address reduced water supply due to drought, seawater intrusion or other emergency conditions. The followivg ballot language is proposed: Shall the City of Arroyo Grande be authorized to purchase: 1) up to 250 acre feet of water from the State Water Project; and 2) up to an additional 750 acre feet of water from the State Water Project as needed to replace any existing water supply that becomes unavailable due to drought, seawater intrusion or other unforeseen emergencies? ALTERNATIVES: The following alternatives have been identified for City Council consideration: 1. Approve staffs recommendations; 2. Request changes to the ballot measure and/or ballot argument language and postpone adoption until the February 14, 2012 meeting; 3. Request staff to modify the ballot measure to authorize an unspecified amount; 4. Postpone the measure until the November 6, 2012 general election; 5. Postpone the measure until negotiations are completed with the County and CCWA; 6. Do not approve a ballot measure and reconsider relying entirely on conservation measures and/or recycled water to address the City's water needs; or 7. Provide other direction. Agenda Item 11.c.Page 3 CITYCOUNCIL CONSIDERATION OF PLACING A MEASURE ON THE BALLOT AT THE JUNE 5, 2012 ELECTION TO AUTHORIZE PURCHASE OF STATE WATER JANUARY 24,201 2 PAGE 4 ADVANTAGES: Depending upon the terms of the purchase, State water provides the most cost effective option currently available to increase water supply. Since it represents a new water source, it will help diversify the City's water supply. Placing the measure on the ballot at this time will help facilitate negotiation of the purchase because it will resolve whether the City will have the authority for the purchase. Including the measure on the June ballot will help avoid confusion for voters that would occur if included along with a long list of controversial State and Federal items anticipated for the November election ballot. Placing the measure on the ballot at the same time as the Police building bond measure will also reduce the cost impact on the General Fund by funding a portion of the costs from the Water Availability Fund. DISADVANTAGES: 'The cost for a ballot measure at the June 5th election will be more than the November 6'h general election. It is difficult to accurately project costs before the agreement for the purchase is negotiated, which may be a concern for voters. Lastly, there will be costs and significant staff time required for this effort. 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, January 19, 2012 and on the City's website on Friday, January 20, 2012. No comments were received. Attachment: 1. Proposed Argument in Favor Agenda Item 11.c.Page 4 RESOLUTION NO. A RESOLU'TION OF THE ClTY COUNCIL OF THE ClTY OF ARROYO GRANDE CALLING FOR THE HOLDING OF A SPECIAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, JUNE 5, 2012, FOR THE SUBMISSION TO THE VOTERS A QUESTION RELATING TO THE PURCHASE OF STATE WATER WHEREAS, under the provisions of the laws relating to general law cities in the State of California, a Special Municipal Election shall be held on June 5, 2012, to submit to the voters at the election a question relating to the purchase of water from the State Water Project. NOW THEREFORE, BE IT RESOLVED, that the City Council of the City of Arroyo Grande does resolve, declare, determine, and order as follows: SECTION 1. That the City Council, pursuant to its right and authority, does order submitted to the voters at the June 5, 2012 Special Municipal Election the following question: SECTION 2. That the ballots to be used at the election shall be in form and content as required by law. ClTY OF ARROYO GRANDE MEASURE - Shall the City of Arroyo Grande be authorized to purchase: 1) up to 250 acre feet of water from the State Water Project; and 2) up to an additional 750 acre feet of water from the State Water Project as needed to replace any existing water supply that becomes unavailable due to drought, seawater intrusion or other unforeseen emergencies? SECTION 3. That the City Clerk is authorized, instructed and directed to coordinate with the County of San Luis Obispo Registrar-RecorderICounty Clerk to procure and furnish any and all official ballots, notices, printed matter and all supplies, equipment and paraphernalia that may be necessary in order to properly and lawfully conduct the election. Yes No SECTION 4. That the polls for the election shall be open at seven o'clock a.m. of the day of the election and shall remain open continuously from that time until eight o'clock p.m. of the same day when the polls shall be closed, pursuant to Election Code 510242, except as provided in 514401 of the Election Code of the State of California. Agenda Item 11.c.Page 5 RESOLUTION NO. PAGE 2 SECTION 5. That in all particulars not recited in this Resolution, the election shall be held and conducted as provided by law for holding municipal elections. SECTION 6. That notice of the time and place of holding the election is given and the City Clerk is authorized, instructed and directed to give further or additional notice of the election, in the time, form and manner as required by law. SECTION 7. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. SECDTION 8. The City Council authorizes the City Clerk to administer said election and all reasonable and actual election expenses shall be paid by the City upon presentation of a properly submitted bill. On motion of Council Member , seconded by Council Member I and on the following roll call vote: AYES: NOES: ABSENT: The foregoing Resolution was passed and adopted this - day of ,2012. Agenda Item 11.c.Page 6 RESOLUTION NO. PAGE 3 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, ClTY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, ClTY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, ClTY ATTORNEY Agenda Item 11.c.Page 7 RESOLUTION NO. A RESOLUTION OF THE ClTY COUNCIL OF THE ClTY OF ARROYO GRANDE SElTlNG PRIORITIES FOR FILING A WRITTEN ARGUMENT REGARDING A ClTY MEASURE AND DIRECTING THE ClTY ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS WHEREAS, a Special Municipal Election is to be held in the City of Arroyo Grande, California, on June 5, 2012, at which there will be submitted to the voters the following measure: NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Arroyo Grande as follows: ClTY OF ARROYO GRANDE MEASURE Shall the City of Arroyo Grande be authorized to purchase: 1) up to 250 acre feet of water from the State Water Project; and 2) up to an additional 750 acre feet of water from the State Water Project as needed to replace any existing water supply that becomes unavailable due to drought, seawater intrusion or other unforeseen emergencies? SECTION 1. That the City Council, being the legislative body of the City of Arroyo Grande, hereby authorizes ALL members of the City Council, to file a written argument in favor of the City measure not exceeding 300 words, accompanied by the printed names and signatures of the authors submitting it, in accordance with Article 4, Chapter 3, Division 9 of the Elections Code of the State of California. The argument may be changed or withdrawn until and including the date fixed by the City Clerk after which no arguments for or against the City measure may be submitted to the City Clerk. The arguments shall be filed with the City Clerk, signed, with the printed names and signatures of the authors submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers who is the author of the argument. The arguments shall be accompanied by the Form of Statement To Be Filed By Author(s) of Argument. Yes No SECTION 2. That the City Council directs the City Clerk to transmit a copy of the measures to the City Attorney, unless the organization or salaries of the Office of the City Attorney are affected. The City Attorney shall prepare an impartial analysis of the Agenda Item 11.c.Page 8 RESOLUTION NO. PAGE 2 measure not exceeding 500 words showing the effect of the measure on the existing law and the operation of the measure. If the measure affects the organization or salaries of the office of the City Attorney, the City Clerk shall prepare the impartial analysis. 'The impartial analysis shall be filed by the date set by the City Clerk for the filing of primary arguments. SECTION 3. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. On motion by Council Member , seconded by Council Member , and on the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this - day of January, 201 2. Agenda Item 11.c.Page 9 RESOLUTION NO. PAGE 3 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, ClTY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, ClTY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, ClTY ATTORNEY Agenda Item 11.c.Page 10 RESOLUTION NO. A RESOLUTION OF 'THE ClTY COUNCIL OF THE ClTY OF ARROYO GRANDE, CALIFORNIA, PROVIDING FOR THE FILING OF REBUTTAL ARGUMENTS FOR ClTY MEASURES SUBMITTED AT MUNICIPAL ELECTIONS WHEREAS, Section 9285 of the Elections Code of the State of California authorizes the City Council by majority vote, to adopt provisions to provide for the filing of rebuttal arguments for City measures submitted at municipal elections. NOW, THEREFORE BE IT RESOLVED by the City Council of the City of Arroyo Grande as follows: SECTION 1. That pursuant to Section 9285 of the Elections Code of the State of California, when the City Elections Official has selected the arguments for and against the measure which will be printed and distributed to the voters, the City Elections Official shall send a copy of an argument in favor of the measure to the authors of any argument against the measure, and a copy of an argument against the measure to the authors of any argument in favor of the measure, immediately upon receiving the arguments. The author or a majority of the authors of an argument relating to a City measure may prepare and submit a rebuttal argument not exceeding 250 words or may authorize in writing any other person or persons to prepare, submit, or sign the rebuttal argument. A rebuttal argument may not be signed by more than five authors. The rebuttal arguments'shall be filed with the City Clerk, signed, with the printed name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers, not more than 10 days after the final date for filing direct arguments. The rebuttal arguments shall be accompanied by the Form of Statement To Be Filed By Author(s) of Argument. Rebuttal arguments shall be printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut. SECTION 2. That all previous resolutions providing for the filing of rebuttal arguments for City measures are repealed. SECTION 3. That the provisions of Section 1 shall apply only to the election to be held on June 5, 2012, and shall then be repealed. SECTION 4. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. Agenda Item 11.c.Page 11 RESOLUTION NO. PAGE 2 On motion of Council Member , seconded by Council Member , and on the following roll call vote, to wit: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this - day of January, 201 2. Agenda Item 11.c.Page 12 RESOLUTION NO. PAGE 3 TONY FERRARA, MAYOR ATTEST: KELLY WETMORE, CITY CLERK APPROVED AS TO CONTENT: STEVEN ADAMS, CITY MANAGER APPROVED AS TO FORM: TIMOTHY J. CARMEL, CITY ATTORNEY Agenda Item 11.c.Page 13 ATTACHMENT 1 ARGUMENT IN FAVOR OF MEASURE Your "YES" vote on Measure - will authorize the City of Arroyo Grande to purchase a limited amount of State water to continue to meet the needs of its customers in the most cost effective manner. Projections indicate the City will require approximately 400 acre feet of additional water to meet the needs of its buildout population under the existing General Plan. The City uses all the Lopez water it is legally entitled to and a court order prevents the City from pumping additional groundwater. This measure is not intended to acquire water to accommodate any growth not currently allowed or planned for. State water represents the most cost effective approach available to obtain additional water. The City's objective is to structure a purchase that will have minimal impact on customers' water rates. State water is a reliable source even in droughts because the County has excess supply that is available to compensate for periodic reductions in deliveries from the State. Since the City currently has only two sources of water, this will help diversify our water supply. Conservation and other efforts will still be needed, but given the uncertainties involving water resources, it is dangerous to rely solely on conservation to meet the City's needs. 'This will also provide the critical authorization needed to purchase emergency water if ever needed to replace the potential loss of existing supply due to drought or other emergency conditions. The City has worked hard to make available the water needed to serve its customers, but supply is restricted and options are limited. Your City Council unanimously urges you to take the steps necessary to help ensure it can continue to meet these needs in the future in a cost effective manner by voting "YES" on Measure Tony Ferrara, Mayor Tim Brown, Mayor Pro Tem Joe Costello, Council Member Jim Guthrie, Council Member - Caren Ray, Council Member Agenda Item 11.c.Page 14