HomeMy WebLinkAbout10 - Acquisition of 2017 Rule 20A Credits from the City of Mission ViejoTO:
FROM
CITY OF
NEWPORT BEACH
City Council Staff Report
June 13, 2017
Agenda Item No. 10
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
David A. Webb, Public Works Director - 949-644-3311,
dawebb@newportbeachca.gov
PREPARED BY: Raymund Reyes, Management Specialist,
rreyes@newportbeachca.gov
PHONE: 949-644-3325
TITLE: Acquisition of 2017 Rule 20A Credits from the City of Mission Viejo
(17M03)
ABSTRACT:
California Public Utilities Commission (CPUC) Rule 20A establishes program funding for
the undergrounding of overhead utilities by municipalities. The City of Mission Viejo
(Mission Viejo) has unallocated Rule 20A credits and is offering to sell them to the City of
Newport Beach for $72,469.10. This action will result in a $131,762.00 credit to the City's
Southern California Edison (SCE) Rule 20A account.
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
b) Approve Budget Amendment No. 17BA-035 transferring $72,469.10 from Account
No. 01201928-980000-17T11 (Arroyo Canyon Bike Trail) to Account No. 01201928-
980000-17M03 for SCE Rule 20A Credit Purchase;
c) Authorize the City Manager to execute the Memorandum of Understanding (MOU)
between the City of Newport Beach and City of Mission Viejo documenting details of
transaction for the Rule 20A credit acquisition and to provide the City of Newport
Beach first right of refusal to purchase additional Rule 20A credits from the City of
Mission Viejo, as it becomes available, at a purchase rate of $0.55 on the dollar; and
d) Authorize staff to process the Rule 20A credit transfer between the City of Newport
Beach and City of Mission Viejo with SCE.
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Acquisition of 2017 Rule 20A Credits from the City of Mission Viejo (17M03)
June 13, 2017
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FUNDING REQUIREMENTS:
Upon approval of the Budget Amendment, there is sufficient funding for this purchase.
The following fund will be expensed:
Account Description Account Number Amount
General Fund 01201928-980000-17M03 $72,469.10
Total $72,469.10
DISCUSSION:
The CPUC sets Rule 20 policies and procedures for the conversion of overhead utility
facilities to underground. Under Rule 20, underground utility projects may be financed by
utility rate money, combined rate funds and local tax proceeds, depending on whether the
project is classified under the Rule 20A, Rule 20B, or Rule 20C provision.
Rule 20A projects are paid for by the Utility's ratepayers. To qualify for funding through
these proceeds, projects must produce a benefit to the general public and not just
customers in the affected area. This can be satisfied by one or more of the following
criteria:
The location has an unusually heavy concentration of overhead facilities;
The location is heavily traveled;
The location is an arterial or major collector road in a city's general plan; and/or
The overhead equipment must be located within or pass through a civic,
recreational, or scenic area.
The City has previously purchased the City of Mission Viejo's unused Rule 20A
allocations following negotiations and Council approval of MOUs in 2011, 2013, 2014,
and 2015. As part of the 2015 MOU, Mission Viejo granted the City first right of refusal to
purchase any Rule 20A allocations between July 1, 2015 and July 1, 2017.
Mission Viejo currently has $131,762.00 in unallocated Rule 20A funds for calendar year
2017. The City has taken the opportunity to purchase these credits at the previously
agreed upon rate of $0.55 on the dollar for a total purchase price of $72,469.10. This
purchase is comparable to other Rule 20A transactions within the Orange County region.
SCE will transfer Mission Viejo's available credit to Newport Beach's account upon receipt
of an authorization letter from Mission Viejo. Additionally, the proposed MOU extends the
first right of refusal to purchase Rule 20A allocations through July 1, 2019.
These additional credits would be allocated towards the next 20a Balboa Boulevard
project between West Coast Highway and Newport Pier, planned for this Fall. Cost for
that project is estimated at $4 million and the currently 20a balance available for the
project is approximately $3.5 million. By not purchasing these credits the Balboa
Boulevard project, along with the adjacent Assessment Districts 111, 116 and 116b
projects, could be delayed for a year or more. Final cost for the Balboa 20a project will be
known this summer after SCE completes the bidding for that and AD -111, 116 and 116b.
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Acquisition of 2017 Rule 20A Credits from the City of Mission Viejo (17M03)
June 13, 2017
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ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Memorandum of Understanding between the City of Mission Viejo and
the City of Newport Beach
Attachment B — Budget Amendment
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ATTACHMENT A
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding (MOU) is entered into as of June 13, 2017
(Effective Date), by and between the City of Newport Beach, a California municipal
corporation with its principal place of business at 100 Civic Center Drive, Newport Beach,
California 92660 (Newport Beach), and the City of MissiorrViejo, a California municipal
corporation with its principal place of business at 200 Civic Center, Mission Viejo,
California 92691 (Mission Viejo). Newport Beach and Mission Viejo are sometimes
individually referred to herein as "Party" and collectively as "Parties".
RECITALS
A. Electric Utilities collect and annually allocate funds to communities to
convert overhead electric facilities to underground electric facilities (Rule 20A Funds).
B. Newport Beach is actively planning one or more projects to underground
overhead electric facilities that qualify for the application of California Public Utilities
Commission (CPUC) Rule 20A Funds (Projects). Newport Beach desires to obtain
additional Rule 20A Funds allocation to finance such Projects.
C. Southern California Edison (SCE) currently has designated and dedicated
a balance of $131,762.00 in Rule 20A Funds for the benefit of Mission Viejo (Mission
Viejo Allocation), and Mission Viejo currently has no active projects which can make use
of the Mission Viejo Allocation.
D. Mission Viejo has granted Newport Beach first right of refusal to purchase
Rule 20A allocations between July 1, 2015 and July 1, 2017.
E. Newport Beach desires to acquire, for consideration, the Mission Viejo
Allocation to use in connection with the Projects, and Mission Viejo desires to transfer the
Mission Viejo Allocation to Newport Beach to enable the Rule 20A Funds, which have
been allocated to Mission Viejo, to be used for their intended purpose of undergrounding
electric facilities and to derive economic benefit from the Mission Viejo Allocation.
AGREEMENT
NOW, THEREFORE, the Parties hereto agree as follows:
1. Mission Viejo agrees to assign, for use by Newport Beach, its rights and
interests in the Mission Viejo Allocation to Newport Beach, and Newport Beach agrees to
acquire, for consideration, the Mission Viejo Allocation in accordance with the terms of
this MOU. This MOU shall be subject to the approval of each the City Council of Newport
Beach and the City Council of Mission Viejo and shall become effective on the date when
both such approvals have been obtained (Effective Date). Notwithstanding the foregoing,
if this MOU has not become effective as of September 30, 2017, then either Party may
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terminate this MOU on five (5) business days' written notice to the other Party without
incurring any liability, costs or further obligations to the other party or any third party.
2. Within fifteen (15) business days of the Effective Date, Newport Beach shall
make a payment to Mission Viejo in the amount of Seventy Two Thousand Four
Hundred Sixty Nine Dollars and 101100 ($72,469.10) (Acquisition Price). The
Acquisition Price shall be made in immediately available funds via check or wire transfer
to an account designated by Mission Viejo. The Acquisition Price shall constitute full
consideration for the transfer and assignment of the Mission Viejo Allocation.
3. Mission Viejo agrees to sell the Mission Viejo Allocation to Newport Beach
at a purchase rate of Fifty -Five Cents ($0.55) for every One Dollar ($1.00) of Rule 20A
Funds. Within ten (10) business days of Mission Viejo's receipt of the Acquisition Price
funds, Mission Viejo shall deliver a written request to SCE, with a copy to Newport Beach,
making a formal request to transfer and assign the entire balance of the Rule 20A Funds
contained in the Mission Viejo Allocation to and for the benefit of Newport Beach. Mission
Viejo shall cooperate in good faith with Newport Beach to provide any additional
documentation or information that is reasonably requested by SCE to complete the
transfer. In the event that SCE is unable to complete the transfer, or only complete a
partial transfer, Mission Viejo shall return the unused Acquisition Price funds to Newport
Beach within ten (10) business days of Newport Beach's notification to Mission Viejo.
4. Newport Beach acknowledges and agrees that it has conducted its own
investigation as to the applicability and transferability of the Mission Viejo Allocation for
use in the Projects and that Mission Viejo has not made any representation or warranty
to Newport Beach with respect to same. The actual use of the Mission Viejo Allocation
by Newport Beach shall be subject to the rules and procedures adopted by SCE, CPUC,
and such other conditions or requirements as are set forth in the Public Utilities Code.
5. Newport Beach shall indemnify, defend, and hold harmless Mission Viejo,
its elected officials, officers, employees, and agents, from any claim, damage or liability
arising in connection with the use of Rule 20A Funds from the Mission Viejo Allocation in
connection with the construction of the Projects, including legal challenges of all types or
natures, including but not limited to administrative, judicial, or legislative actions.
6. In the event that either Party is in breach of its obligations as set forth in this
MOU, then the non -defaulting Party shall have the right to terminate this Agreement on
ten (10) business days' written notice to the defaulting Party unless the default is cured,
or cure has commenced, within the notice period. Upon termination for breach, the non -
defaulting Party may exercise any right or remedy which it may have under applicable
law. Within ten (10) business days of termination pursuant to this Section 7, Mission Viejo
shall return to Newport Beach that portion of the Acquisition Price funds applicable to that
portion of the Mission Viejo Allocation not yet transferred by SCE to Newport Beach.
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7. All notices to be given pursuant to this MOU shall be delivered in person or
by commercial overnight delivery to the address of the Party set forth above, and
addressed to the City Manager of such Party and shall be effective upon receipt.
8. This MOU shall be governed and construed in accordance with the laws of
the State of California, and any action brought relating to this Agreement shall be
adjudicated in a court of competent jurisdiction in the County of Orange.
9. Each Party shall at its own cost and expense comply with all statutes,
ordinances, regulations and requirements of all governmental entities, including federal,
state, county or municipal, whether now in force or hereinafter enacted.
10. A waiver by either Party of any breach, of any term, covenant or condition
contained herein shall not be deemed to be a waiver of any subsequent breach of the
same or any other term, covenant or condition contained herein, whether of the same or
a different character.
11. Mission Viejo agrees to provide Newport Beach first right of refusal to
purchase future Rule 20A allocations between July 1, 2017 and July 1, 2019. If Mission
Viejo intends to transfer its Rule 20A allocation within said dates it shall notify Newport
Beach of fund availability and the proposed purchase price by another city if another city
is proposing a purchase price higher than the purchase rate of Fifty -Five Cents ($0.55)
for every One Dollar ($1.00) of Rule 20A Funds. If Newport Beach desires to acquire said
allocations by matching the price proposed by another city, it shall respond within fifteen
(15) business days of Mission Viejo's notification stating intent to purchase said
allocations at the proposed purchase price. Newport Beach agrees to enter into an MOU
with Mission Viejo to complete the transfer within 90 days of said notification to Mission
Viejo.
12. The terms of this Agreement shall be construed in accordance with the
meaning of the language used and shall not be construed for or against either Party by
reason of the authorship of the Agreement or any other rule of construction which might
otherwise apply.
13. If any term or portion of this Agreement is held to be invalid, illegal, or
otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of
this Agreement shall continue in full force and effect.
14. In the event of any dispute or legal action arising under this Agreement, the
prevailing Party shall not be entitled to attorney's fees.
15. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one and the
same instrument.
16. Each Party signing this Agreement explicitly affirms and provides they have
the power and authority to bind their respective Party.
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IN WITNESS WHEREOF, the Parties hereto have executed this MOU as of the
dates indicated below.
CITY OF MISSION VIEJO,
A California municipal corporation
Date:
Dennis Wilberg
City Manager
ATTEST:
Date:
Karen Hamman
City Clerk
APPROVED AS TO FORM:
Date:
William P. Curley III
City Attorney
CITY OF NEWPORT BEACH,
A California municipal corporation
Date:
Dave Kiff
City Manager
ATTEST:
Date:
Leilani I. grown
City Clerk
APPROVED AS TO FORM:
Date: q/ ! 7
Aaron C. Harp o
City Attorney
[END OF SIGNATURES]
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ATTACHMENT B
City of Newport Beach
BUDGET AMENDMENT
2016-17
EFFECT ON BUDGETARY FUND BALANCE:
increase Revenue Estimates
increase Expenditure Appropriations AND
% Transfer Budget Appropriations
SOURCE:
% from existing budget appropriations
from additional estimated revenues
from unappropriated fund balance
EXPLANATION:
NO. BA- 17BA-435
AMOUNT:J $72,469.10
Increase in Budgetary Fund Balance
Decrease in Budgetary Fund Balance
% No effect on Budgetary Fund Balance
This budget amendment is requested to provide for the following:
To transfer expenditure appropriations from the Arrovo Canvon Bike Trail proiect for the FYI SCE Rule 20A Credits Purchase.
ACCOUNTING ENTRY:
BUDGETARY FUND BALANCE Amount
Fund Account Description Debit Credit
EXPENDITURE APPROPRIATIONS (3603)
Qrg Number
Account Number
Project Number
Project String
Org Number
Account Number
Project Number
Project String
Signed:
Signed:
Signed;
Description
01201928 General Fund Cid' - Misc. & Studies
980000 CIP Expenditures for GL
17T11 Arroyo Canyon Bike Trail
E-1 7T1 1 -DESIGN -012 -UNASSIGNED
01201928 General Fund CIP - Misc. & Studies
980000 CIP Expenditures for GL
17M03 SCE Rule 20A Credit Purchase
E-17 MO 3-U MASS I G N E D -012 -UNASSIGNED
-Finart6M Approval: Finance Director
Adminis "ve Approval: City Mana
City Council Approval: City Clerk
$72,489.10
$72,469.10
6 -- ( -- / 7
Date
(10 J L.) 0
Date
Da le
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