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HomeMy WebLinkAbout30 - Proposed MOU - Wetland Water Supply ProjectCITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY COUNCIL AGENDA N0._,30 BY THE CITY COUNCIL May 13, 1996 CITY OF NEWPORT BEACH MAY TO: Mayor and Members of City Council FROM: Robert H. Burnham, City Attorney RE: Proposed MOU Wetland Water Supply Project I have attached a copy of the most recent draft of the proposed MOU between the City, IRWD and OCWD. I have also attached a copy of a summary of the pertinent provisions of the proposed MOU. Our report will be given to the Council when this matter comes up for discussion on May 13, 199 zz ,. R RT H. BURNHAM Qty Attorney RHB:de de\ccmou.mem SUMMARY OF MOU BETWEEN IRWD, OCWD AND THE CITY REGARDING THE INTEGRATED REUSE PROJECT A. COMPONENTS OF THE INTEGRATED REUSE PROJECT (IRP) 1. Construction of Green Acres Phase II; 2. Construction of Intertie between IRWD Water Reclamation Plant and Green Acres Phase II; 3. OCWD's commitment to accept 7.8 mgd. of reclaimed water from IRWD from 10-1 through 3-31; 4. Construction of permanent diversion structure in San Diego Creek; 5. Issuance of permit for demonstration phase of Wetland Water Supply Project; 6. Execution of Agreement between City and reclaimed water users. B. PHASING DEADLINES/DEFERRALS 1. Initial discharge component of demonstration phase deferred to 10- 1-97, and dates in 2. through 5. below, if City obtains end User Agreements on or before 10-1-96; 2. No discharge of reclaimed water if IRP fully implemented on 10-1- 97; 3. Initial six month discharge of reclaimed water pursuant to demonstration phase at reduced rate (3.2 mgd vs. 5 mgd) if IRP not fully implemented by 10-1-97 but OCWD has capability of accepting 4.6 mgd; 4. No further discharge if IRP fully implemented on 10-1-98 -- second six month discharge phase at 3.2 mgd if not implemented; 5. If IRP not fully implemented prior to March 31, 1999, (or March 31, 1998 if City doesn't obtain end user agreements), then IRWD can proceed with efforts to obtain permit for permanent discharge; C. SPECIFIC PROVISIONS 1. IRP contemplates no discharge of reclaimed water into any creek or river if excess Reclaimed Water can be accepted by CSDOC outfall facility; 2. City designated as lead agency for construction of San Diego Creek diversion facility and primarily responsible for obtaining CSDOC agreement to accept excess flows in outfall facility; 3. OCWD pays for Green Acres Phase II; 4. IRWD pays for Intertie and will share an unfunded cost of diversion structures; 5. IRWD agrees to transmit water to OCWD for reduced cost. 6. Provisions of MOU are specifically enforceable by court order. D. ADVANTAGES TO PROPOSED MOU 1. Will prevent discharge of reclaimed water into Newport Bay if IRP fully implemented on 10-1-97; 2. No discharge of reclaimed water so long as IRP fully implemented; 3. Will facilitate implementation of Green Acres Phase II -- accelerate beneficial use of reclaimed water in Newport Beach; 4. Will improve bay water quality by diverting San Diego Creek flow into the duck ponds and marsh during the entire year -- not just the summer -- with potentially greater winter time diversions to further reduce nutrients; 5. Avoid litigation between public entities and the consequential expenditures of taxpayer funds; 6. Creates possible frame work for creation of group to work cooperativelx to improve bay water quality and the San Joaquin Marsh. de\mousum.mem MEMORANDUM OF UNDERSTANDING The Orange County Water District (OCWD), the Irvine Ranch Water District (IRWD), and the City of Newport Beach (City) have entered into this Memorandum of Understanding on the day of , 1996, based upon the following: A. The Parties support all projects which beneficially use Reclaimed Water (for purposes of this MOU, the term "Reclaimed Water" generally means water which fully satisfies Title 22 Standards as presently constituted, or subsequently amended)— altheidgh the -tei- .Reelai eCTWLter is used differently "".'pends"ff idpen the—eentemt in this MG without adversely impacting the environment and which are cost effective or have positive cost benefit ratios; B. The Parties recognize that IRWD is a leader in reclaiming wastewater and produces Reclaimed Water of the highest standards; C. IRWD is the proponent of the Wetland Water Supply Project WWSP which consists of a two year Demonstration Phase (Demonstration Phase) and a subsequent Permanent Phase (Permanent Phase) which would require further action and approval by the Santa Ana Regional Water Quality Control Board (SARWQCB) subsequent to the successful completion of the Demonstration Phase. The Demonstration Phase and the Permanent Phase each contemplate the discharge of a maximum of five (5) million gallons per day (mgd.) of Reclaimed Water into the penda duck ponds and waterfowl habitat .(Habitat) for a seven day detention period with subsequent discharge into San Diego Creek. The WWSP also involves a 1 summertime San Diego Creek "low flow" diversion component which contemplates the diversion of approximately 3.25 mgd. (or five (5) cubic feet per second (cfs.) ) flow from San Diego Creek into the pends Habitat and/or adjacent marsh; D. The Parties acknowledge the objectives of IRWD in proposing WWSP include the creation of ._•...terf..w Habitat using Reclaimed Water and an overall reduction in nutrients entering Newport Bay when measured on an annual basis (Project Objectives); E. City has been actively seeking measures which would alleviate public concerns about the WWSP, while achieving Project Objectives. City has also proposed modifications to the monitoring program for WWSP; F. The Parties have identified a series of actions, projects, and permits (Integrated Reuse Project) which would achieve, ndi seffie—eases e3Ee =d', Project Objectives such that implementation of WWSP would not be necessary. G. The Parties acknowledge that time is of the essence in processing, obtaining approval of, and, as appropriate, constructing, each component of the Integrated Reuse Project, that some of the components of the Integrated Reuse Project require approval from numerous public entities, and that SARWQCB issuance of a permit for the Demonstration Phase of the WWSP will ensure that IRWD is able to achieve Project Objectives to some degree in the event that the Parties are unable to timely implement some or all of the components of the Integrated Reuse Project. H. The Parties intend to adopt a more formal Agreement 2 consistent with this MOU, on or before July 15, 1996, and to implement the Integrated Reuse Project on or before October 1, 1997. THE PARTIES AGREE AS FOLLOW: 1. COMPONENTS OF THE INTEGRATED REUSE PROJECT: The Integrated Reuse Project contains the following components: A. The construction of Phase II of the Green Acres Project (GAP II) by OCWD with a capacity of at least 7.8 mgd.; B. The construction of a pipeline (Intertie) between the Michelson Water Reclamation Plant (MWRP) and GAP II with a minimum capacity of 7.8 mgd. per the ASL Study described in Subsection 4 (B). The connection of the Intertie to GAP II shall generally be in the vicinity of Jamboree and University; C. OCWD's commitment to accept from IRWD, during the period from October 1 through March 31, at least 4.6 mgd. of Reclaimed Water and OCWD's further commitment to accept an additional 3.2 mgd. of Reclaimed Water from IRWD during the period from October 1 through March 31, (the additional 3.2 mgd. of Reclaimed Water is sometimes referred to as "excess flows") with the understanding that: (i) OCWD's commitment to accept at least 4.6 mgd. of Reclaimed Water during the period from October 1 through March 31 is subject to the execution of a written agreement between the County Sanitation District of Orange County (CSDOC) and OCWD 3 pursuant to which CSDOC commits to accept from OCWD at least 4.2 mgd. of Reclaimed Water during the period from October 1 through March 31 for a period of fifteen (15) years, and to pay OCWD for the Reclaimed Water at a rate per acre foot equal to OCWD's cost to treat secondary water to a tertiary standard. OCWD shall use its best efforts to obtain written commitments by CSDOC consistent with this Subparagraph on or before October 1, 1996. (ii) OCWD's commitment to accept an additional 3.2 mgd. of Reclaimed Water from IRWD during the period from October 1 through March 31 is contingent on City's preparation of, and payment for, all necessary environmental documents, the processing and approval of all necessary permits, and the design and construction of any physical facility necessary to discharge, and all costs related to the discharge or transmission of, that portion of the 3.2 mgd. of Reclaimed Water that OCWD is unable to beneficially use. City shall use its best efforts to obtain approval from CSDOC for the discharge of any excess flow directly into the CSDOC outfall facility. In the event that direct discharge into the CSDOC outfall facility is infeasible, City shall pursue other lawful means of disposing of the additional 3.2 mgd. of the Reclaimed Water. (iii) OCWD's commitment is also contingent on IRWD's agreement to sell 4.6 mgd. of Reclaimed Water to OCWD for no more than 50 percent of the price CSDOC pays OCWD for the Reclaimed Water, and IRWD's commitment to receive no consideration for any Reclaimed Water in excess of 4.6 mgd., except to the extent that 4 OCWD receives consideration for the sale of some or all of the excess flows to any third party and, in such event, IRWD's consideration shall be determined by agreement between OCWD and IRWD; D. Approval of the Demonstration Phase of WWSP by SARWQCB (except as such conditions may be modified pursuant to Section 2 of this MOU), with implementation of the Demonstration Phase to be discontinued or modified contingent upon satisfaction of phasing requirements as specified in Section 2; E. Approval and installation of an interim low flow diversion structure or facility sufficient to remove 3.25 mgd. (5 cfs.) of flow from San Diego Creek during the period from April 1st through September 30th, the approval and construction of a permanent San Diego Creek diversion structure capable of diverting up to 10 cfs. on a year-round basis, and the construction of related facilities including a settling basin and connecting pipeline from the temporary and permanent diversion facilities to the WWSP didek pe Habitat. The Parties acknowledge that a permanentT-l-,e diversion structure shall be capable of diverting 10 cfs. on a year round basis capable of supplying water sufficient to maintain the Habitat in accordance with detention times contemplated in the WWSP design as well as supplying water to irrigate the Mitigation Areas described in the Grant Deed from The Irvine Company to IRWD, recorded on December 28, 1995 (Grant Deed); F. The execution of end user agreements by six Major Purchasers of Reclaimed Water within the corporate limits of City. 5 (Big Canyon Country Club, Newport Beach Country Club, the Bluffs Community Association, Newport Mesa Unified School District, the City and the Eastbluff Homeowners Association, are considered the "Major Purchasers"). 2. PHASING/PLAN CONTINGENCIES: The Parties acknowledge that WWSP Project Objectives will not be fully satisfied by the Integrated Reuse Project unless all components are in place and t=hat deferral of the initial discharge period of the Demonstration Phase should proceed (as modified by provisions of this Section) if all components are not in place on or before October 1, 1997. In addition, OCWD is unable to commit to the completion of GAP II on a timely basis unless end user agreements are in place on or before October 1, 1996. To ensure IRWD is able to achieve Project Objectives through the Integrated Reuse Project, the Parties agree to the following phasing plan: A. City shall agree to support removal of the condition from the proposed NPDES permit to be issued by SARWQCB that summertime low flow diversion from San Diego Creek precede the initial six month discharge period of the Demonstration Phase , and to allow IRWD additional time to complete the Demonstration Phase as speeified in t=his Seetien with the BeffienstaFatien Phase liffil t e -t- e-diseharge-e f 33 .2 rftgd . e f re elaime d water int e theywild-€ems habitat -and -San PTegsC= ek . In the event SARWQCB approves the Demonstration Phase without a prerequisite for summertime low flow diversion from San Diego Creek to precede the initial six month wintertime component of the Demonstration Phase, IRWD shall conduct 0 baseline monitoring from June 1, 1996, to October 1, 1996, and defer commencement of the Demonstration Phase of WWSP to October 1, 1996, subject to additional deferral as specified in B., C., and D.; B. Commencement of the Demonstration Phase shall be deferred from October 1, 1996, to April 1, 1997, in the event City has obtained fully executed end user agreements from the Major Purchasers on or before October 1, 1996. The summertime low flow diversion shall commence on April 1, 1997, at a flow of approximately 3.25 mgd. In the event end user agreements from the six Major Purchasers are not fully executed on or before October 1, 1996, the initial six month discharge period of the Demonstration Phase shall commence on October 1, 1996, at a flow of 3.2 mgd. with monitoring in accordance with the provisions of the permit issued by SARWQCB; C. The following describes the various discharge scenarios that would be applicable as of October 1, 1997: (i) In the event that all components of the Integrated Reuse Project are implemented on or before October 1, 1997, (All components of the Integrated Reuse Project shall be considered implemented when IRWD has the right to transmit up to 7.8 mgd. of Reclaimed Water from October 1 through March 31, OCWD has the ability to use or lawfully dispose of all Reclaimed Water transmitted by IRWD, and the permanent San Diego Creek diversion structure is in place and operational), then the Demonstration Phase shall be discontinued, and IRWD shall take no action relative 7 to the permit for WWSP _(and otherwise comply with the provisions of Section 6) so long as all components of the Integrated Reuse Project are implemented i-emai ns ful' • r -atie _a (ii) In the event that all components of the Integrated Reuse Project are fully implemented on October 1, 1997, b,c�except OCWD does not have the ability or legal right to use or otherwise lawfully dispose of Reclaimed Water in excess of 4.6 mgd.. (a) The initial six month discharge component of the Demonstration Phase will commence on October 1, 1997, at a flow of 3.2 mgd. until March 31, 1998, or until OCWD has the authority to lawfully dispose of Reclaimed Water up to 7.8 mgd., whichever occurs first; (b) In the event IRWD proceeded with the initial six month discharge component of the Demonstration Phase (City did not obtain necessary end user agreements), the second six month discharge period of the Demonstration Phase will Reel ime- Wates—diseharge eefflpenent shall commence on October 1, 1997, and continue until March 31, 1998, or until OCWD has the legal authority to dispose of 7.8 mgd. of Reclaimed Water, whichever occurs first; (c) In the event the Integrated Reuse Project are not implemented such that OCWD has the capability to accept at least 4.6 mgd. of Reclaimed Water, the provisions of Semon G. '; i) (a` er (b` shall b pp ; ='�'_=NPDES Permit for the -rr--- Demonstration Phase shall be fully applicable until OCWD has the L legal authority to dispose of 7.8 mgd. of Reclaimed Water, in which event the Demonstration Phase shall be discontinued or until OCWD has the capability to accept at 4.6 mgd. of Reclaimed Water in which event the Demonstration Phase flow shall be reduced to 3.2 mgd.; (D) The following describes the various discharge scenarios that would applicable as of October 1, 1988.1nthe—event h�� integrated Reuse Prejeet was net fully iffilglefaented en er befe e April 1, !998, the fellewng—seenaries shall be--amplieable—as of Geteber 1, 1994: (i) In the event that all components of the Integrated Reuse Project are implemented on or before October 1, 1998, has tzr«-tetransfa t -up to 7.8-fRgd.-ef ReelaifRed W t Geteb eiaTthieltg h M a i eh31, G GW ) has the eapability o f us divei-sien ±B in plaee--end eperatrena-lam then the Demonstration Phase, if not complete, shall be discontinued, and IRWD shall take no action relative to the permit for WWSP and otherwise comply with Section 6) so long as the Integrated Reuse Project __ __.pis fully of =_= }'____alimplemented; (ii) In the event that all components of the Integrated Reuse Project are fully implemented on October 1, 1998, but OCWD does not have the capability of using, or otherwise lawfully disposing of, Reclaimed Water in excess of 4.6 mgd. (This assumes OCWD does not have the capability of using or discharging 7.8 mad P] on October 1, 1998, or thereafter, and IRWD completed the initial six month discharge component of the Demonstration Phase,--:-- the hase y t ire eftensticatien Phase, the initial tial si m ffie nt h diseharg ^ o f the Beffienstratze n Phase will e e n,,,,e n e e ear -G e t eb!, !998,—at--a flew —ef 3.2 ffig`a •-,+- i l Maree31, 4999, er iantil GGWD has - c i efleeelalffied Water up te7.8 Fflgd. , whieheveweeeurs—fli-st; i the second six month discharge component shall commence on October 1, 1998, and continue until March 31, 1999, or until OCWD has the capability to use, or the legal authority to dispose of, 7.8 mgd. of Reclaimed Water, whichever occurs first; (iii) In the event that the Integrated Reuse Project is not fully implemented on or before the completion of the Demonstration Phase of the WWSP IRWD shall have the right to proceed with its application to SAROWCB before permit authorizing the Permanent Phase of WWSP, provided, however, IRWD shall not discharge more than 3.2 mad. pursuant to any permit for the Permanent Phase so long as the Integrated Reuse Project is fully implemented except for OCWD's ability to beneficially use or lawfully dispose of, excess flows. 10 t eSARQWGB f e r a pest}'itc- autherizing the —perfnanentdis urg e e f . (E) In the event the deadline for completing any component of the Integrated Reuse Project is initially satisfied, but subsequently lost, revoked or otherwise terminated other than as result of the actions or omissions of IRWD, (e.g. loss of permission to operate permanent diversion structure or OCWD's inability to use or dispose of the requisite quantity of Reclaimed Water), the applicable discharge scenario may proceed or resume as though such requirement had not been met, and continue for the applicable time periods as specified in this Section. 3. FUNDING OPTIONS AND OBLIGATIONS: The following are the obligations of the Parties regarding the funding of, and the options that may be available to fund, components of the Integrated Reuse Project. Any funding option to be pursued by one or more of the Parties shall be in place a sufficient time in advance of financing requirements so that construction or implementation is completed on or before the phasing deadline(s) in Section 2. A. City shall commit $500,000 in cash, or the equivalent in the form of agreements with end users to waive or reduce the reimbursement obligations of OCWD relative to GAP II, on or before October 1, 1996 (the Parties anticipate these commitments will increase the cost benefit ratio of GAP II). In addition to City's funding commitments, IRWD will sell Reclaimed Water to OCWD 11 for 50 percent of the price received by OCWD from CSDOC.( The Parties anticipate this differential between price and cost, together with City's funding commitments, will increase the cost benefit ratio of the GAP II Project to at least 1.5.) OCWD shall have no obligation to pay IRWD for any Reclaimed Water in excess of 4.6 mgd. unless some or all of those excess flows are sold by OCWD to third parties, and, in such event, provision of Section 1(C)(iii) shall apply. In consideration of City's funding commitments, OCWD shall approve amendments to the Green Acres Agreement authorizing City sale of Reclaimed Water above the existing price ceiling. B. The City shall be the lead agency relative to the preparation of environmental documents that are prerequisites to obtaining permits for, or constructing, the permanent San Diego Creek diversion structure. City and IRWD shall share equally in any unfunded cost related to the design of, the preparation of environmental documents for, or the processing of applications and permits necessary to construct, the permanent San Diego Creek diversion structure. City and IRWD shall contribute to the unfunded cost, if any, of constructing the permanent San Diego Creek diversion structure. The Parties shall use then- best effer-ts—cooperate in efforts to secure funding for environmental documentation, permitting, design, and construction of the diversion structure through active pursuit of all possible funding options including the following options: (i) The existing IRWD Grant application submitted 12 to EPA; (ii) The possible sale of mitigation rights or credits for nitrogen removal relative to the dewatering facility to be constructed by the Eastern Transportation Corridor Agency at the junction of the East Transportation Corridor Agency and the 115" freeway; (iii) A Grant or loan application(s) as applicable submitted to the Bureau of Reclamation or other Federal or State agency and—Fleeod Centre -1; C. OCWD shall fund all costs associated with the design of, permitting for, and construction of GAP II. D. IRWD shall fund the entire cost of designing, permitting, and constructing the Intertie, subject to the provisions of Section 4.B, with the exception of the ASL feasibility study which shall be funded entirely by City. E. IRWD and City shall share the unfunded cost of constructing the permanent San Diego Creek Diversion Structure. IRWD and City shall reach agreement on equitable sharing of the unfunded operation and maintenance costs of wintertime and summertime San Diego Creek diversions, previded, hewego=ems— City d F. City may retain an engineering consultant (approved by City, OCWD, and IRWD) who shall act as a Project Manager to 13 implement and coordinate the timely completion of all components of the Integrated Reuse Project. City, OCWD, and IRWD shall pay one- third of the consideration paid to the engineering consultant, provided, however, the Agreement between the City and engineering consultant shall limit consideration to $150,000. 4. ISSUES TO BE RESOLVED: The Parties acknowledge that implementation of the Integrated Reuse Project involves the resolution of certain issues in a timely manner including the following: A. Flow commitments. OCWD has indicated a willingness to accept all of IRWD's excess Reclaimed Water (approximately 7.8 mgd during certain periods from October 1st through March 31st) subject to the ability to beneficially use excess flows, discharge excess flows into the CSDOC outfall facility, or otherwise lawfully discharge or dispose of excess flows. IRWD is willing to transmit at least 4.6 mgd during all or a portion of this period with the understanding that it is actively engaged in efforts to increase the demand for Reclaimed Water in its service area during winter and spring. Moreover, IRWD is committed to irrigate Mitigation Areas (other than the water few! —hHabitat created by the WWSP) in the marsh adjacent to MWRP pursuant to the Grant Deed, and may occasionally need to irrigate with Reclaimed Water. IRWD and OCWD shall use their best efforts to reach agreement regarding flow commitments that satisfy the needs of both Parties. IRWD may amend its consolidated use NPDES permit to seek authorization to use 14 Reclaimed Water to satisfy its obligation to irrigate mitigation areas pursuant to the Grant Deed provided however, IRWD shall not use Reclaimed Water to irrigate the Mitigation Areas or wotei- fewl- -hHabitat when supplies of groundwater, pumped from below MWRP, and/or stream flows diverted from San Diego Creek are adequate to satisfy IRWD's irrigation obligations pursuant to the Grant Deed, and, provided further, that any water discharged into San Diego Creek from the Mitigation Areas (other than the WWSP duek pends'.Habitat discharge which is subject to the applicable provisions of this MOU) shall be equal to, or less than, the total of irrigation flows from non-Reclaimed Water sources (MWRP groundwater, diverted creek flows, run-off, etc.). B. Construction of Intertie. IRWD has committed to construction of the Intertie and expressed its indieated r intent to fund entire cost of construction of the Intertie. However, IRWD is unable to make a firm commitment on funding all of the construction costs until the actual cost and timing of construction are known n,.tr,•etie., eannet--rbce-fRade until ests and tiffling of eenstruetiozr-are knewn cora FWD is eenfident that PaFej eet j eetives--6a will be satisfied by t4e- integrated City has retained Alderman, Swift, and Lewis (ASL) to conduct a feasibility study. ASL will prepare an analysis of estimated construction costs, the timing of construction, and other factors relative to construction. City shall pay the cost of the ASL study. The Parties agree that OCWD will be designated as the lead agency for the construction of GAP 15 II and the Intertie. The Parties agree to cooperate to resolve any issue related, directly and specifically, to the construction of the Intertie or GAP II. C. Construction of Flow Diversion Structure in San Diego Creek. IRWD shall initially install a pump facility to divert approximately 3.25 mgd from San Diego Creek during the period from April 1, 1997, through September 30, 1997. The City and IRWD shall work cooperatively to maximize the removal of organic and inorganic nitrogen from flows diverted into the duck ponds and Mitigation Area ultimately discharged into San Diego Creek. City and IRWD shall work cooperatively to devise a diversion structure and related facilities that maximize the potential for diversions to improve water quality in Newport Bay. 5. CONDITIONS FOR EXECUTION OF MOU: A. The Parties acknowledge that opposition to, or interference with, implementation of this MOU, the WWSP, or any permit or approval required to implement either, could prevent IRWD from achieving Project Objectives. The Parties acknowledge that the City is in the best position to assure the maximum level of cooperation on the part of its residents and groups comprised, in whole or in part, of Newport Beach residents. B. City shall withdraw its opposition to IRWD's application for an NPDES permit for the Demonstration Phase, the 11404" permit required from the Army Corps. of Engineers, the Streambed 16 Alteration Agreement required with the Department of Fish and Game and any other permit required to implement the Demonstration Phase: C. City shall support approval of the Marsh Enhancement Plan Project and certification of the Marsh Enhancement Plan EIR. City shall support modifications to the consolidated use NPDES permit fethe ;4;FSP-that would authorize the use of Reclaimed Water consistent with the provisions of Section 4(A). D. City shall not initiate any litigation or administrative appeal challenging any action or decision of IRWD necessary to implement the Demonstration Phase of the WWSP. E. City shall not oppose, file any appeal of, or litigate or support, or pay for any legal challenge to, settlement of ACL Complaint 96-27, as currently proposed or approved by SARWQCB. F. City shall withdraw AB 3344 from consideration during the current legislative session, and shall not in the future introduce legislation which would prohibit discharge of Reclaimed Water in Newport Bay, and shall oppose any such legislation if introduced. City may modify AB 3344 or seek passage of legislation which would facilitate the discharge of excess flows into the Santa Ana River or any other lawful means of discharge. G. For purposes of this Subsection, the term "Citizen Opponents" shall mean any resident of the City of Newport Beach, any group that includes one or more residents of Newport Beach, and any agent, attorney, representative, or individual acting on behalf of a Citizen Opponent. The term "third party" shall mean any by individual, group, association, or any entity other than a Citizen 17 Opponent. In the event that any Citizen Opponent takes any action contrary to the commitments of the City in this Section, or otherwise opposes or interferes with the implementation of any Integrated Reuse Project component other than as provided in (iii) below, IRWD shall have the right to unilaterally terminate this MOU unless the City, within 10 days of the initiation of the action, notifies IRWD in writing of its intent to defend or respond to the action at the City's expense; In the event any Third Party takes any action contrary to the commitments of the City as specified in this Section, or otherwise opposes or interferes with the implementation of any Integrated Reuse Project component other than as provided in (iii) below, IRWD shall have the right to unilaterally terminate this MOU unless the City, within 10 days of the initiation of the action, notifies IRWD in writing of its intent to pay 50 percent of the cost of any defense or response to the action. (iii) . In the event of any citizen opposition or third party opposition to the discharge of excess flows into the CSDOC outfall facility of the Santa Ana River or other lawful means of discharge, City may elect to defend against, or respond to, that opposition, or pursue another option at its election. (iv). The deadlines for completion of the various components of the Integrated Reuse Project shall not be extended by virtue of any litigation, administrative action, or other reason, regardless of whether such litigation, administrative action, or H other reason is beyond the control of any of the Parties to this MOU. 6. COMMITMENTS OF IRWD: IRWD agrees not to exercise its rights to discharge Reclaimed Water into San Diego Creek pursuant to the NPDES permit issued by SARWQCB pursuant to the application currently on file, or any other permit issued before or after the effective date of this MOU, so long as IRWD has the legal right to transmit 7.8 mgd. of Reclaimed Water to OCWD during the period from October 1 through March 31, and OCWD has the legal right to use, or otherwise lawfully dispose of, at least 7.8 mgd. of Reclaimed Water during the period from October 1 through March 31 and a permanent diversion structure has been installed and is operational in San Diego Creek with the capacity to divert 10 cfs. to property owned by IRWD. 7. FORMAL AGREEMENT: The Parties shall prepare a formal agreement consistent with this MOU for submittal to, and approval by, the legislative bodies of each of the Parties on or before July 15, 1996. The Parties acknowledge that time is of the essence in preparing and obtaining approval of the Formal Agreement. 8. DUTY TO COOPERATE: The Parties have a duty to cooperate with one another relative to the preparation, approval, and execution of a Formal Agreement 19 consistent with this MOU, to cooperate with one another in the implementation of the various components of the Integrated Reuse Project, that the City and IRWD shall cooperate with the City of Irvine, and The Irvine Company with respect to the implementation of the Marsh Enhancement Plan, and the Grant Deed. The Parties will consider the formation of a committee or group comprised of some or all of the Parties, and other interested public entities, private entities and persons, and environmental organizations which will be devoted to the improvement of water quality in Upper Newport Bay, the enhancement of the San Joaquin Marsh, the preservation or enhancement of habitat in the Upper Newport Bay Ecological Reserve. 9. SPECIFIC PERFORMANCE. The provisions of this MOU are intended to be binding on each of the Parties. Each of the Parties acknowledges that, in the event of any breach of this MOU, any of the non -breaching parties shall have the right to obtain an order of specific performance, court of competent jurisdiction, directing the breaching party to fully comply with that Party's obligations pursuant to the provisions of this MOU. The Parties acknowledge that certain rights will be given up or waived between the date of approval of this MOU and the execution of a Formal Agreement, and the non -breaching party would not have an adequate remedy at law absent this provision for specific performance. 20 Dated: Dated: Approved as to Form: M I'M M Clark F. Ide, General Counsel Orange County Water District 21 Orange County Water District President, Board of Directors General Manager wb\agr\ocwd.mou (May 13th) WILLIAM HOUSE, M.D. TEL:714-631-2030 May 13'96 16:12 No.009 P.01 William F. House, M.D. Hearing Associates City Council of Newport Beach Mayor John Hedges , John Cox Jan Debay RECEIVED Thomas EdwardssMaY 13' 1996 Norma Glover CITY CLERK Dennis O'Neil \A NEWPORT BEACH jean Watt May 13, 1996 "RECEIVED AFTER AGENDA PRINTED ' -_ 30 Dear Honored Members of the Newport City Council; Dr. House and I understand that tonight you will discuss the K of allowing reclaimed sewerage water to be dumped into Newport Bay. We implore you to put a stop to this for everyone's sake. If you have seen the L.A.Times the past few days and read about the vast amount of pollution already surrounding us who wants more? When we look out on what was once clear water of the bay and see not much but green muck and white soap -like fuzz we want to cry. Ask most of the old time fisherman about their feelings on the safety of eating fish caught in the bay and you will soon agree we must start a cleanup campaign NOT an add more garbage in the bay. It is totally frustrating to write to the people in the water district and get back letters that as much say "That's too bad how you feel about this matter, we are going to do it anyway and you can't stop us"!!! Who has more right than the people who live here and see the changes and pay the taxes to try to repair needless contamination? "merly, Dr. and Mrs. iam House 1212 past Balboa Blvd. - Newport Beach, Ca 92661 Newport Lido Medical Ccntor, Suite 327, 361 Hospital Road, Newport Bcach, CA 92663 (714) 631 -43271631 -NEAR] • TDD: 631-2530 . IFAX:'631-2039 CITY OF NEWPORT BEACH OFFICE OF THE CITY ATTORNEY May 14, 1996 TO: LaVonne Harkless, City Clerk FROM: Robert H. Burnham, City Attorney RE: IRWD - Memorandum of Understanding Motion Attached is the MOU Motion for your minutes. Please be advised Norma Glover's motion encompassed all provisions with the exception of 4(d) which was added by Tom Edwards pursuant to a friendly amendment. , RO " Fr MRNHAM City Attorney RHB:de de%LHmounem MEMORANDUM OF UNDERSTANDING MOTION I would like to make the following motion relative to the proposed MOU between the City, IRWD, and OCWD 1. The City Council supports the concept of an MOU and subsequent formal agreement between the parties; 2. The City Council believes that concerns expressed about the issuance of a permit prior to final action on the formal agreement are valid in light of the limited opportunity for public review of the proposed MOU, the complexity of the MOU, and the large number of public and private entities interested in the issues. Accordingly, the City Council could not support unconditional issuance of a permit by the Santa Ana Regional Water Quality Control Board prior to execution of a formal binding agreement among the parties; 3. The City Council is comfortable with many aspects of the current draft of the MOU including the following: a. The desire of the parties to work to achieve the objectives of the Wetland Water Supply Project; b. The financial and other commitments of the City necessary to facilitate completion of Phase II of Green Acres C. The financial and other commitments of the City necessary to ensure that OCWD has the capability to use or lawfully dispose of all of IRWD's excess reclaimed water; d. Establishing reasonable deadlines for completion of the Intertie and Green Acres Phase II; e. Supporting the concept of a permanent San Diego Creek diversion structure as a means of irrigating the waterfowl habitat and mitigation areas, with the understanding that every reasonable effort should be made by IRWD and the City to protect the interests of nearby property owners; f. Supporting the concept of allowing reclaimed water to used to irrigate the marsh to the extent other sources are inadequate so long as discharges into San Diego Creek and the Bay are limited to sources other than reclaimed water Ad g. Supporting the Marsh Enhancement Plan and the City of Irvine's efforts in that regard consistent with this motion; h. Working cooperatively with IRWD, OCWD and all other interested parties to improve the marsh, enhance water quality in Newport Bay and to protect the Upper Newport Bay Ecological Reserve; i. Paying all costs and expenses associated with any legal challenge to those components for which the City is solely responsible; 4. The City Council is not currently supportive of certain provisions in the MOU including the following: a. The requirement that a permanent diversion structure be in place and operational as a condition to deferral of reclaimed water discharges; b. The requirement that the City be the lead agency for the structure and the current uncertainty regarding our funding commitments in that regard. C. The requirement that the City pay for all or a portion of attorney fees and costs occasioned by lawsuits or administrative challenges by Newport Beach residents, groups or third parties over which the City has no control; d. The requirement that the City withdraw support for AB 3344. S. Finally, a direction to staff -o meet with iRWD and OCWD representatives in an effort to resolve these issues prior to May 20th. O E!4 -�- 614 �, M kn00 O O O p N a � � a 00 if) 66 666!3 N N -Moll E�460) Vel � C�4 � 614 614 rA tL a o ArA Negotiating Strengths of Newport vs. IRWD 1. Economics of Green Acres - Green Acres with the Ocean Outfall earns them more money than dumping into the Bay. Additionally, since it poses less risks, its intangible value is also greater. As the project will be built with tax dollars, it is subject to governmental scrutiny. 2. Brewer Bill - IRWD has been told by the assembly committee to negotiate. They risk losing their $3.3 M investment in the Ponds if they start construction and the bill passes. However if they wait to see if it passes or not, they lose $2.8 M per year by not avoiding CSDOC charges. 3. Impact of Lawsuits and/or CRWQCB appeals by City or Defend Our Bay - Appeals will stretch out the timeframe. IRWD may lose. Even if not, every delay will cost them $2.8 M per year. 4. - An injunction against dumping could be reasonably be obtained as a prelude to hearing an appeal on the full set of environmental issues. Delays will cost IRWD $2.8 M per year. 5. - IRWD could lose all or part of their $3.3 M investment in the Ponds if they lose a legal suit. If an injunction fails, they still are at risk in the event they lose the suit. If they delay construction to await the outcome of the suit, they lose $2.8 M per year by not avoiding CSDOC charges. 6. - Legal costs. If sued, they will have to spend $100,000 to $500,000 to defend themselves. Of course we would like to avoid legal costs also. It is a tradeoff vs. what we have committed to give them now. 7. Loss of potential business in Newport Beach - They would like to sell their reclaimed water in Harbor View and Corona del Mar. Newport Coast - They will become a major water utility within the City if and when Newport Coast is annexed. They will be battling a hostile voting public and city Government. They will alienate the Irvine Company whose business interests would be enhanced by a smooth annexation. 9. Risk that Pond Nitrogen removal performance will fail during tests or initial operation - They will be out all or a part of their $3.3 M investment in the Ponds. This is particularly relevant if environmental consultants suggestions as to measurement of all forms of nitrogen is included in their use permit conditions and one considers that their program is based upon the limited testing of one scientist. 10. The Pringle Bill - This would provide some local justification of the need for utility consolidation. 11. Community Ill Will - Bad community relations are not good business. 12. Risk of City of Irvine Takeover - There have been some statements that this type of action was being contemplated. Creating this type of adversarial community relationship can provide cause to appeal to the City of Irvine to look into IRWD operations and provide some additional justification to take over their operations. ALL IN ALL, THIS IS AN OVERWHELMING SET OF NEGOTIATING POINTS. THE IRWD PROJECT IS UNECONOMIC IF THESE BUSINESS RISKS ARE CONSIDERED. THEIR ANNUAL SAVINGS OF $2.8 M IN AVOIDED CSDOC CHARGES DWARFS MINOR CONCERNS ABOUT THE COSTS OF GREEN ACRES. Note that IRWD seems to agree as they have negotiated most of these away. Strengtl.doc 1 5/13/96 Comments on Proposed MOU dated March(sic) 20,1996 (dated May 10) These comments apply to the subject document. While detailed, they still require a discussion to be adequately understood and a basis for decisions to be made. Prepared by Philip Arst 5/12/96 Force Majeure Section 5 G. (iv) permits IRWD to discharge if we cannot meet all of our obligations due to conditions beyond our control such as earthquakes, floods, etc. This is unreasonable and a show stopper. Under commercial practice, the parties cannot be held to the detailed schedule and multiple conditions of the MOU and be responsible for conditions beyond their control. A Force Majeure clause is needed. It protects both parties. An example of a typical commercial industry clause is contained below. "The Parties shall not be responsible for delays in the installation of the IRP or its operation caused by conditions beyond their reasonable control, including without limitation such conditions as acts of God, civil insurrections, wars, sabotage, fires, floods, and weather related outages, labor disputes, requirements of government authorities (except as specifically called out in the body of the MOU), and other conditions beyond their reasonable control. In the event of delay due to any such condition, the performance schedule shall be adjusted equitably. " Missing References As the Grant Deed for the Irvine Company is referenced as a key condition, the MOU review cannot be completed until copies are furnished to reviewing parties. A copy of ACL complaint 96-27.which is referenced on page 16 is needed in order to properly review this MOU. IRWD Commitments Insert somewhere a statement to the effect that if IRWD fails to meet any of its obligations in the implementation of the ISP that it will immediately cease any activities on its WWSP demonstration and final project until such conditions are corrected. Moucomnt.doc 1 5/13/96 Introduction Section of MOU D. Is nutrients the right word? Replace with "forms of nitrogen" Check with Caustin & Skinners!) Add at end "and the Parties understand that the project will be terminated if the objectives cannot be met." E. Cite at end of paragraph where modifications to the monitoring program are defined F. "provided that it can be shown that the Demonstration Phase will not be harm the ecologically sensitive environment of the Newport Back Bay." Section 1. THE PARTIES AGREE AS FOLLOW (change to plural) 1. C. I insert after March 31 is subject to ": (1)" Add at end of this paragraph "Should CSDOC not agree to accept the subject water then OCWD's obligations under this paragraph will be satisfied if the CSDOC Ocean Outfall or other lawful means of disposal are available to accept the 4.6 mgd as an alternative." I.D. We cannot guarantee that SARWQCB will accept their project nor can the City bind its residents not to oppose it. Normally I would recommend striking this paragraph. However, two interpretations are possible. If IRWD is turned down by the SARWQCB, and this MOU is then null and void, then the Cities position is materially stronger in a renegotiation of terms because IRWD would have no other alternative. This needs to be discussed internally. 1. F It would be better to set a goal for the total equivalent reclaimed water usage of the six major purchasers and not name them. One of then may hold out for some inexplicable reason! Moucomnt.doc 2 5/13/96 2. PHASING/PLAN CONTINGENCIES: First paragraph "deferral" is an incorrect word. Probably should be "commencement" however since this error operates to the possible detriment of IRWD, suggest you not volunteer this change. 2.A The City should not support removal of the condition ... that summertime low flow diversion into San Diego Creek precede the initial six months discharge. This violates the initial intent of the SARWQCB to insure that the diversion project was in place. The time period gained should be used to increase the insufficient period of time allocated for baseline monitoring. Add after ending date of baseline monitoring of October 1, 1996 "or such later date established for the commencement of Demonstration Phase as specified in B., C., and D.:' C. i Insert after "IRWD has the" in the first parenthetical sentence "obligation to meet its flow commitments per par. 4. A." This will ensure a supply of water to CSDOC to operate its cooling towers. An interruption in this supply could cause damage to CSDOC! Why would the IRP not be fully operational other than Force Majeure events which are covered elsewhere? Place period after WWSP in next to last line and remove all after. D. (i) Why would the IRP not be fully operational other than acts of God which will be covered elsewhere? Place period after WWSP in next to last line and remove all after. F. Add after "subsequently lost, revoked or otherwise terminated" , "except for operations of the permanent diversion structure" and delete "loss of permission to operate permanent diversion structure" from parenthetical phrase immediately following. IRWD should not be allowed to dump reclaimed water in the Bay if its diversion project, which is under its general operational control, fails for any reason. FUNDING OPTIONS AND OBLIGATIONS 3.B Change funding to be "the sole responsibility of IRWD" IRWD will build this capability entirely on their own if they we doing the WWSP on their own. They save money in operational and capital costs by going to Green Acres. They should pay as they already have these amounts budgeted. Moucomntdoc 3 5/13/96 Newport Beach can retain lead agency status if it chooses recognizing the extra cost burden of personnel to run this project. Again, If IRWD were doing the WWSP project on their own, they would pay for this function themselves. In any event, if the City chooses to fund this item, there is a big problem in that IRWD will charge the City for its internal construction and operations It is also undefined how much IRWD overhead or other charges will apply to the costs included in this section.. This can get out of control. A limitation of say $500,000 should be placed on Newport Beach contributions. 3.E Change funding to be "the sole responsibility of IRWD" IRWD will build this capability entirely on their own if they we doing the WWSP on their own. They save money in operational and capital costs by going to Green Acres. They should pay as they already have these amounts budgeted. In any event, if the City chooses to fund this item, there is a big problem in that IRWD calculates the costs of its operation of the ponds, diversion, etc. This can get out of control. A limitation of say $50,000 per year plus inflation as measured by the PPI should be placed on Newport Beach contributions. X 5. CONDITIONS FOR EXECUTION OF MOU C. Delete this paragraph. The City is on record as opposing the WWSP and would be telling the world that it lied on its previous statements to the SARWQCB, the press and its citizens. The City and its citizen organizations should continue to oppose the WWSP. D. Change "action or decision" to "lawful action or decision conforming to the terms and conditions of the Demonstration as established by cognizant governmental reviewing agencies." E. This needs to be defined before any comments can be made. F. This sighs away Newport rights leaving too many unknowns open to properly protect the City.. What if IRWD ships its reclaimed water to another district which then dumps it into the River? What if the State decides to prohibit reclaimed water dumping in all Moucomnt.doc 4 5/13/96 ecologically sensitive Bays? Is Newport Beach supposed to stand up and say we want it? Newport cannot be expected to oppose such legislation if others introduce it! A reasonable compromise would be to remove the Brewer Bill from consideration unless this MOU is abrogated for some cause. G. i What about cases where IRWD is violating State law, EPA regulations, SARWQCB conditions or otherwise engaging in unlawful activities? It is unconscionable that the City would oppose the rights of its citizens to register legitimate dissent. Remove this paragraph in its entirety. 6 COMMITMENTS OF IRWD In first sentence delete "Reclaimed". What if IRWD wants to discharge other byproducts of its operations such as discolored ground (i.e. fresh) water, water containing odors or chemicals which they might try to persuade the Board were in too low a concentration to be a threat, etc. Installation and operation of the permanent diversion structure is not a valid condition. What if IRWD drags its feet or defaults on its payment commitments or performance in any manner? It is important that this condition be removed. G. 00 This opens the City up to the situation that IRWD supports some activity which derails the IRP. It also means that if we fail because of an earthquake, labor strife or disgruntled customer bombing IRWD facilities, they get to discharge into the Bay. This is counter to the Force Majeuere clause which is essential to any business agreement and should be removed in its entirety. XX Term Add new section of Term containing the statement "This MOU is to remain in force in perpituity or for the maximum period permitted by applicable State Laws. Moucomnt.doc 5 5/13/96 MEMORANDUM OF UNDERSTANDING The Irvine Ranch Water District (IRWD), and the City of Newport Beach (City) have entered into this Memorandum of Understanding on the day of 1996, based upon the following: A. The Parties support all projects which beneficially use Reclaimed Water (for purposes of this MOU, the term "Reclaimed Water" generally means water which fully satisfies Title 22 Standards as presently constituted, or subsequently amended), without adversely impacting the environment and which are cost effective or have positive cost benefit ratios; B. The Parties recognize that IRWD is a leader in reclaiming wastewater and produces Reclaimed Water of the highest standards; C. IRWD is the proponent of the Wetland Water Supply Project (WWSP) which consists of a two year Demonstration Phase (Demonstration Phase) and a subsequent Permanent Phase (Permanent Phase) which would require further action and approval by the Santa Ana Regional Water Quality Control Board (SARWQCB) subsequent to the successful completion of the Demonstration Phase. The Demonstration Phase and the Permanent Phase each contemplate the wet -season (October 1 through March 31) discharge of a maximum of five (5) million gallons per day (mgd.) of Reclaimed Water into WWSP Habitat (Habitat) for a seven day detention period with subsequent discharge into San Diego Creek. The WWSP also involves a summertime San Diego Creek "low flow" diversion component which contemplates the diversion of approximately 3.25 mgd. (or five (5) 1 cubic feet per second (cfs.)) flow from San Diego Creek into the Habitat and/or adjacent marsh; D. The Parties acknowledge the objectives of IRWD in proposing WWSP include the enhancement of the WWSP Habitat, the supply of water to that Habitat using Reclaimed Water, and an overall reduction in nutrients entering Newport Bay when measured on an annual basis (Project Objectives); E. City has been actively seeking measures which would alleviate public concerns about the WWSP, while achieving all or substantially all of the Project Objectives. City has also proposed modifications to the monitoring program for WWSP; F. The Parties have identified a series of actions, projects, and permits (Integrated Reuse Project) which would achieve Project Objectives such that implementation of WWSP would not be necessary. G. The Parties acknowledge that time is of the essence in processing, obtaining approval of, and, as appropriate, constructing, each component of the Integrated Reuse Project. The Parties acknowledge that some of the components of the Integrated Reuse Project require approval from numerous public entities, and that SARWQCB issuance of a permit for the Demonstration Phase of the WWSP will ensure that IRWD is able to achieve Project Objectives to some degree in the event that the Parties are unable to timely implement some or all of the components of the Integrated Reuse Project. H. The Parties intend to adopt a more formal Agreement, 2 consistent with this MOU, on or before July 15, 1996, and to implement the Integrated Reuse Project on or before October 1, 1997. THE PARTIES AGREE AS FOLLOW: 1. COMPONENTS OF THE INTEGRATED REUSE PROJECT: The Integrated Reuse Project contains the following components: A. The construction of Phase II of the Green Acres Project (GAP II) by OCWD with a capacity of at least 7.8 mgd.; B. The construction of a pipeline (Intertie) between the Michelson Water Reclamation Plant (MWRP) and GAP II with a minimum capacity of 7.8 mgd. per the ASL Study described in Subsection 4 (B). The connection of the Intertie to GAP II shall generally be in the vicinity of Jamboree and University; C. OCWD's commitment to accept from IRWD, during the period from October 1 through March 31, at least 4.6 mgd. of Reclaimed Water and OCWD's further commitment to accept an additional 3.2 mgd. of Reclaimed Water from IRWD during the period from October 1 through March 31, (the additional 3.2 mgd. of Reclaimed Water is sometimes referred to as "excess flows") with the understanding that: (i) OCWD's commitment to accept at least 4.6 mgd. of Reclaimed Water during the period from October 1 through March 31 is subject to the execution of a written agreement between the County Sanitation District of Orange County (CSDOC) and OCWD 3 pursuant to which CSDOC commits to accept from OCWD at least 4.2 mgd. of Reclaimed Water during the period from October 1 through March 31 for a period of fifteen (15) years, and to pay OCWD for the Reclaimed Water at a rate per acre foot equal to OCWD's cost to treat secondary water to a tertiary standard. OCWD shall use its best efforts to obtain written commitments by CSDOC consistent with this Subparagraph on or before October 1, 1996. OCWD's commitment is also contingent upon IRWD's commitment to supply required Reclaimed Water for a period of at least 15 years. (ii) OCWD's commitment to accept an additional 3.2 mgd. of Reclaimed Water from IRWD during the period from October 1 through March 31 is contingent on City's preparation of, and payment for, all necessary environmental documents, the processing and approval of all necessary permits, and the design and construction of any physical facility necessary to discharge, and payment by City of all costs related to the discharge or transmission of, that portion of the 3.2 mgd. of Reclaimed Water that OCWD is unable to beneficially use. City shall use its best efforts to obtain approval from CSDOC for the discharge of any excess flow directly into the CSDOC outfall facility. In the event that direct discharge into the CSDOC outfall facility is infeasible, City shall pursue other lawful means of disposing of the additional 3.2 mgd. of the Reclaimed Water. (iii) OCWD's commitment to accept Reclaimed Water from IRWD during the period from October 1 through March 31 is also contingent on the execution on the formal written contemplated in 4 Section 4.A which contains IRWD's commitment to: (a) Sell OCWD at least 4.6 mgd. of Reclaimed Water for a fixed period of time; (b) To sell at least 4.6 mgd. of Reclaimed Water for no more than 50 percent of the price CSDOC pays OCWD for the Reclaimed Water; (c) IRWD's commitment to receive no consideration for any Reclaimed Water in excess of 4.6 mgd. except to the extent that OCWD receives consideration for the sale of some or all of the excess flows to any Third Party and, as appropriate, the framework for determining that consideration; and, (d) To resolve, in good faith, issues related to water subsidies for Reclaimed Water, and Reclaimed Water transmission rates during peak periods of demand. D. Approval of the Demonstration Phase of WWSP by SARWQCB as submitted by IRWD, except for the modifications authorized pursuant to Section 2 of this MOU and any conditions that may imposed by SARWQCB, with implementation of the Demonstration Phase to be discontinued or modified contingent upon satisfaction of phasing requirements as specified in Section 2; E. Approval and installation of an interim low flow diversion structure or facility sufficient to remove 3.25 mgd. (5 cfs. ) of flow from San Diego Creek during the period from April 1st through September 30th. The Parties acknowledge that the interim low flow diversion structure consists of a concrete pad or other stabilizing device, a pump, and related pipe or hose sufficient to 9 remove the flow from the Creek and transport the water to WWSP Habitat; F. Approval and installation of facilities or systems capable of supplying water sufficient to maintain the WWSP Habitat in accordance with detention times contemplated in the WWSP design and, to the extent feasible, supplying water to irrigate the Mitigation Areas described in the Grant Deed from The Irvine Company to IRWD, recorded on December 28, 1995 (Grant Deed). This component may be satisfied on an interim basis by one or both of the following alternatives to the extent the Alternatives are legally and physically feasible: (i) The use and possible upgrade of the interim low flow diversion structure to enable it to supply water during the period from October 1 through March 31, flows equal to, or slightly less than, required to satisfy the detention times assumed in the WWSP design. Upgrades could include modifications to support structures, capacity modifications, and sediment control measures; (ii) The installation of facilities necessary to transmit Reclaimed Water from MWRP through the WWSP Habitat and provide any necessary retreatment prior to recirculation through the IRWD Reclaimed Water distribution system. City and IRWD contemplate the ultimate installation of a permanent San Diego Creek diversion structure (Permanent Diversion Structure) capable of diverting 10 cfs. on a year round basis. The Parties acknowledge that a Permanent Diversion Structure with a capacity to divert 10 cfs. on a year round basis is capable of L supplying water sufficient to maintain the Habitat in accordance with detention times contemplated in the WWSP design as well as supplying water to irrigate the Mitigation Areas described in the Grant Deed from The Irvine Company to IRWD, recorded on December 28, 1995 (Grant Deed). While installation of a Permanent Diversion Structure is a component of the Integrated Reuse Project, and the Parties contemplate installation within a reasonable time frame, the Parties acknowledge that this component of the Integrated Reuse Project is not essential so long as WWSP Habitat is capable of receiving adequate flows pursuant to (i) or (ii). G. The execution of end user agreements by six Major Purchasers of Reclaimed Water within the corporate limits of City. (Big Canyon Country Club, Newport Beach Country Club, the Bluffs Community Association, Newport Mesa Unified School District, the City and the Eastbluff Homeowners Association, are considered the "Major Purchasers"). 2. PHASING/PLAN CONTINGENCIES: A. The Parties acknowledge that WWSP Project Objectives will not be fully satisfied by the Integrated Reuse Project unless all components are in place and the initial discharge period of the Demonstration Phase should proceed (as modified by provisions of this Section) if the components identified in this Section are not in place on or before the date specified in this Section. In addition, OCWD is unable to commit to the completion of GAP II on a timely basis unless end user agreements are in place on or before 7 October 1, 1996. To ensure IRWD is able to achieve all or substantially all, of the Project Objectives through the Integrated Reuse Project, the Parties agree to the phasing plan specified in this Section: B. For purposes of this Section, the term "all components of the Integrated Reuse Project are implemented" or similar phrase means: (i) The Intertie is constructed and operational; (ii) GAP II is constructed and operational; (iii) The contingencies to OCWD's obligation to accept 7.8 mgd. from IRWD have been fully satisfied; and, (iv) The Permanent Diversion Structure is in place and operational or the component (s) identified in F. (i) and/or F.(ii) are implemented and operational, and are capable of supplying sufficient flow to the WWSP Habitat to satisfy the detention times assumed in WWSP design. The irrigation alternative described in Subparagraph F. (ii) shall be considered implemented and operational so long as City pays, on an annual basis, $50,000.00, or 50 percent of the operation and maintenance costs, whichever is less. (v) End user agreements with major purchasers are fully effective. C. City shall agree to support removal of the condition from the proposed NPDES permit to be issued by SARWQCB that summertime low flow diversion from San Diego Creek precede the initial six month discharge period of the Demonstration Phase , and 8 to allow IRWD additional time to complete the Demonstration Phase. In the event SARWQCB approves the Demonstration Phase without a prerequisite for summertime low flow diversion from San Diego Creek to precede the initial six month wintertime component of the Demonstration Phase, IRWD shall conduct baseline monitoring from June 1, 1996, to October 1, 1996, and defer commencement of the Demonstration Phase of WWSP to October 1, 1996, subject to additional deferral as specified in D., E., and F. City shall use its best efforts to assist IRWD in complying with the summertime low flow diversion condition to the Demonstration Phase, if that condition is not modified by SARQWQCB; D. Commencement of the Demonstration Phase shall be deferred from October 1, 1996, to April 1, 1997, in the event City has obtained fully executed end user agreements from the Major Purchasers on or before October 1, 1996. The summertime low flow diversion shall commence on April 1, 1997, at a flow of approximately 3.25 mgd. In the event end user agreements from the six Major Purchasers are not fully executed on or before October 1, 1996, the initial six month discharge period of the Demonstration Phase shall commence on October 1, 1996, at a flow of 3.2 mgd. with monitoring in accordance with the provisions of the permit issued by SARWQCB; E. The following describes the various discharge scenarios that would be applicable as of October 1, 1997: (i) In the event that all components of the Integrated Reuse Project are implemented on or before October 1, 1997, then the Demonstration Phase shall be discontinued, and IRWD shall take no action relative to the permit for WWSP (and otherwise comply with the provisions of Section 6); (ii) In the event that all components of the Integrated Reuse Project are fully implemented on October 1, 1997, except OCWD does not have the ability or legal right to use or otherwise lawfully dispose of Reclaimed Water in excess of 4.6 mgd.. (a) The initial six month discharge component of the Demonstration Phase will commence on October 1, 1997, at a flow of 3.2 mgd. until March 31, 1998, or until OCWD has the authority to lawfully dispose of Reclaimed Water up to 7.8 mgd., whichever occurs first; (b) In the event IRWD proceeded with the initial six month discharge component of the Demonstration Phase (City did not obtain necessary end user agreements), the second six month discharge period of the Demonstration Phase will commence on October 1, 1997, and continue until March 31, 1998, or until OCWD has the legal authority to dispose of 7.8 mgd. of Reclaimed Water, whichever occurs first; (c) In the event the Integrated Reuse Project is not implemented such that OCWD has the capability to accept at least 4.6 mgd. of Reclaimed Water, the provisions of the NPDES Permit for the Demonstration Phase shall be fully applicable until OCWD has the legal authority to dispose of 7.8 mgd. of Reclaimed Water, in which event the Demonstration Phase shall be discontinued 10 or until OCWD has the capability to accept at 4.6 mgd. of Reclaimed Water in which event the Demonstration Phase flow shall be reduced to 3.2 mgd.; F. The following describes the various discharge scenarios that would be applicable as of October 1, 1998: (i) In the event that all components of the Integrated Reuse Project are implemented on or before October 1, 1998, then the Demonstration Phase, if not complete, shall be discontinued, and IRWD shall take no action relative to the permit for WWSP and otherwise comply with Section 6; (ii) In the event that all components of the Integrated Reuse Project are fully implemented on October 1, 1998, but OCWD does not have the capability of using, or otherwise lawfully disposing of, Reclaimed Water in excess of 4.6 mgd. (This assumes OCWD does not have the capability of using or discharging 7.8 mgd. on October 1, 1998, or thereafter, and IRWD completed the initial six month discharge component of the Demonstration Phase) the second six month discharge component shall commence on October 1, 1998, and continue until March 31, 1999, or until OCWD has the capability to use, or the legal authority to dispose of, 7.8 mgd. of Reclaimed Water, whichever occurs first; (iii) In the event that the Integrated Reuse Project is not fully implemented on or before the completion of the Demonstration Phase of the WWSP, IRWD shall have the right to proceed with its application to SARQWCB for a permit authorizing the Permanent Phase of WWSP, provided, however, IRWD shall not 11 discharge more than 3.2 mgd. pursuant to any permit for the Permanent Phase so long as the Integrated Reuse Project is fully implemented except for OCWD's ability to beneficially use, or lawfully dispose of, excess flows. G. In the event the deadline for completing any component of the Integrated Reuse Project is initially satisfied, but subsequently lost, revoked or otherwise terminated other than as a result of the actions or omissions of IRWD, (e.g. OCWD's inability to use or dispose of the requisite quantity of Reclaimed Water), the applicable discharge scenario may proceed or resume as though such requirement had not been met, and continue for the applicable time periods as specified in this Section subject to compliance with all applicable State and Federal laws including a valid NPDES permit. H. The Party acting as lead agency shall, with the full cooperation of the other Parties, use its best efforts to ensure that all components of the Integrated Reuse Project are constructed and installed on or before the deadline specified in this Section. The Parties shall, at a minimum, do the following: (i) Phase the construction of GAP II such that the initial portion of the facility to be constructed is the pipeline from the current terminus of Phase I to the point of connection with the Intertie (generally at the intersection of University and Jamboree); (ii) Consolidate the construction of the Intertie and GAP II under the same contract, with the same construction 12 management; (iii) Promptly review and approve or return for correction all plans submitted by one of the Parties to another; (iv) Use their best efforts to expedite permit issuance, permit review, or plan check; (v) Assign personnel capable and willing to expedite, review or approve necessary plans or permits. I. The deadlines for completion of the various components of the Integrated Reuse Project shall be extended by virtue of any litigation, administrative action, or other reason, regardless of whether such litigation, administrative action, or other reason is beyond the control of the Parties to this MOU, provided, however, the deadline for completion of any component shall be extended by any delay in construction that occurs subsequent to the award, the relevant contract, and is beyond the control of the general contractor or any relevant subcontractor. In the event of any delay, the Parties shall support and take all action appropriate to ensure approval of any extension of the NPDES permit for WWSP. 3. FUNDING OPTIONS AND OBLIGATIONS: The following are the obligations of the Parties regarding the funding of, and the options that may be available to fund, components of the Integrated Reuse Project. Any funding option to be pursued by one or more of the Parties shall be in place a sufficient time in advance of financing requirements so that construction or implementation is completed on or before the 13 phasing deadline(s) in Section 2. A. City shall commit $500,000 in cash, or the equivalent in the form of agreements with end users to waive or reduce the reimbursement obligations of OCWD relative to GAP II, on or before October 1, 1996 (the Parties anticipate these commitments will increase the cost benefit ratio of GAP II). In addition to City's funding commitments, IRWD will sell Reclaimed Water to OCWD for 50 percent of the price received by OCWD from CSDOC. (The Parties anticipate this differential between price and cost, together with City's funding commitments, will increase the cost benefit ratio of the GAP II Project to at least 1.5.) OCWD shall have no obligation to pay IRWD for any Reclaimed Water in excess of 4.6 mgd. unless some or all of those excess flows are sold by OCWD to third parties, and, in such event, provision of Section 1(C)(iii) shall apply. In consideration of City's funding commitments, OCWD shall approve amendments to the Green Acres Agreement authorizing City sale of Reclaimed Water above the existing price ceiling. B. IRWD shall be the lead agency relative to the preparation of environmental documents that are prerequisites to obtaining permits for, or constructing, the permanent San Diego Creek diversion structure. City and IRWD shall share equally in any unfunded cost related to the design of, the preparation of environmental documents for, or the processing of applications and permits necessary to construct, the permanent diversion structure, provided, however, the City's share of those costs shall not exceed 14 $75,000.00. IRWD and City shall, in good faith, reach agreement on equitable sharing of the unfunded cost, if any, of constructing the Permanent San Diego Diversion Structure contribute to the unfunded cost, if any, of constructing the permanent San Diego Creek diversion structure. The Parties shall cooperate in efforts to secure funding for environmental documentation, permitting, design, and construction of the diversion structure through active pursuit of all possible funding options including the following: (i) The existing IRWD Grant application submitted to EPA; (ii) The possible sale of mitigation rights or credits for nitrogen removal relative to the dewatering facility to be constructed by the Eastern Transportation Corridor Agency at the junction of the East Transportation Corridor Agency and the 115" freeway; (iii) A Grant or loan application(s) as applicable submitted to the Bureau of Reclamation or other Federal or State agency; IRWD and City shall, in good faith, reach agreement on equitable sharing of the unfunded operation and maintenance costs of wintertime and summertime San Diego Creek diversions. C. OCWD shall fund all costs associated with the design of, permitting for, and construction of GAP II. D. IRWD shall fund the entire cost of designing, permitting, and constructing the Intertie, subject to the 15 provisions of Section 4.B, with the exception of the ASL feasibility study which shall be funded entirely by City. E. City may retain an engineering consultant (approved by City, OCWD, and IRWD) who shall act as a Project Manager to implement and coordinate the timely completion of all components of the Integrated Reuse Project. City, OCWD, and IRWD shall pay one- third of the consideration paid to the engineering consultant, provided, however, the Agreement between the City and engineering consultant shall limit consideration to $150,000. 4. ISSUES TO BE RESOLVED: The Parties acknowledge that implementation of the Integrated Reuse Project involves the resolution of certain issues in a timely manner including the following: A. Flow commitments. OCWD has indicated a willingness to accept all of IRWD's excess Reclaimed Water (approximately 7.8 mgd during certain periods from October 1st through March 31st) subject to the ability to beneficially use excess flows, discharge excess flows into the CSDOC outfall facility, or otherwise lawfully discharge or dispose of excess flows. IRWD is willing to transmit at least 4.6 mgd during all or a portion of this period with the understanding that it is actively engaged in efforts to increase the demand for Reclaimed Water in its service area during winter and spring. Moreover, IRWD is committed to irrigate Mitigation Areas (other than the Habitat created by the WWSP) in the marsh adjacent to MWRP 16 pursuant to the Grant Deed, and may need to irrigate Mitigation Areas with Reclaimed Water (for purposes of this MOU, the use of Reclaimed Water to irrigate the WWSP Habitat and/or Mitigation Areas pursuant to Subparagraph 1.D. or the alternative specified in Subparagraph 1.F. (ii) does not constitute the use of Reclaimed Water). IRWD and OCWD shall, consistent with their commitments in this MOU, and as specifically identified in Section 1.C.(iii), shall enter into a formal written agreement regarding the timing of Reclaimed Water transmission requirements in consideration that satisfy the needs of both Parties. IRWD may amend its consolidated use NPDES permit to seek authorization to use Reclaimed Water to satisfy its obligation to irrigate mitigation areas pursuant to the Grant Deed provided however, IRWD shall not use Reclaimed Water to irrigate the Mitigation Areas or Habitat when supplies of groundwater, pumped from below MWRP, and/or stream flows diverted from San Diego Creek are adequate to satisfy IRWD's irrigation obligations pursuant to the Grant Deed, and, provided further, that any water discharged into San Diego Creek from the Mitigation Areas (other than the WWSP Habitat discharge which is subject to the applicable provisions of this MOU) shall be equal to, or less than, the total of irrigation flows from non -Reclaimed Water sources (MWRP groundwater, diverted creek flows, run-off, etc.). B. Construction of Intertie. IRWD shall construct the Intertie and is committed to pay the entire cost of construction consistent with the $2.4 million estimate and the feasibility study conducted by Alderman, 17 Swift, and Lewis (ASL). City and IRWD shall reach agreement on the equitable sharing of construction costs in excess of $2.4 million. ASL will continue to analyze estimated construction costs, the timing of construction, and other factors relative to construction. City shall pay the cost of the ASL study. The Parties agree that OCWD will be designated as the lead agency for the construction of GAP II and the Intertie. The Parties agree to cooperate to resolve any issue related, directly and specifically, to the construction of the Intertie or GAP II. C. Construction of Flow Diversion Structure in San Diego Creek. (i) IRWD shall initially install a pump facility to divert approximately 3.25 mgd from San Diego Creek during the period from April 1, 1997, through September 30, 1997, and thereafter as appropriate subject to approval by all relevant agencies. City and IRWD shall work cooperatively to devise a diversion structure and related facilities that maximize the potential for diversions to improve water quality in Newport Bay. (ii) Permanent Flow Diversion Structure. City and IRWD each support the concept of a Permanent San Diego Creek Diversion Structure and, assuming appropriate maintenance and operation, agree that diversion of San Diego Creek flows into WWSP Habitat and adjacent Marsh will improve water quality in Newport Bay. However, the City and IRWD also acknowledge that construction of the Permanent Diversion Structure requires permits from various agencies, that certain property owners in the vicinity of the 18 Marsh, as wells as other individuals, have expressed opposition to the Permanent Diversion Structure, that construction may require riparian/wetland mitigation, and that construction of the Permanent Diversion Structure may be linked to other projects. City and IRWD agree that it is desirable for the Permanent Diversion Structure to be in place and operational on or before October 1, 1997, and will use their best efforts to do so. City shall support all permit applications submitted by IRWD for the Permanent Diversion Structure, and support any project linked to the Permanent Diversion Structure so long as there is no substantial evidence that the Permanent Diversion Structure would adversely impact water quality. Subsequent to the effective date of this MOU, City and IRWD shall continue to discuss components of the Permanent Diversion Structure so that the respective duties of City and IRWD, relative to that structure, are more fully described in the formal agreement. (D) City and IRWD shall work cooperatively to maximize the removal of organic and inorganic nitrogen from any Reclaimed Water and creek flows discharged into San Diego Creek. IRWD agrees that City may request additional monitoring or operational modifications to WWSP provided, however, City shall be solely responsible for any cost associated with requested monitoring or modifications.. 5. CONDITIONS FOR EXECUTION OF MOU: A. City shall withdraw its opposition to IRWD's application for an NPDES permit for the Demonstration Phase, the 11404" permit 19 required from the Army Corps. of Engineers, the Streambed Alteration Agreement required with the Department of Fish and Game and any other permit required to implement the Demonstration Phase. B. City shall support approval of the Marsh Enhancement Plan Project and certification of the Marsh Enhancement Plan EIR. City shall support modifications to the consolidated use NPDES permit that would authorize the use of Reclaimed Water consistent with the provisions of Section 4(A). C. City shall not initiate any litigation or administrative appeal challenging any action or decision of IRWD necessary to implement the Demonstration Phase of the WWSP. D. City shall not oppose, file any appeal of, or litigate or support, or pay for any legal challenge to, settlement of ACL Complaint 96-27, as currently proposed or approved by SARWQCB. E. City shall request the author of AB 3344 to withdraw that bill from consideration during the current legislative session, and shall not introduce or support legislation which would in any way interfere with, or impede, implementation of the Demonstration Phase to the extent permitted by this MOU and any subsequent formal agreement or prohibit discharge of Reclaimed Water into Newport Bay other than from any subsequent phase of the WWSP. F. For purposes of this Subsection, the term "Citizen Opponents" shall mean any resident of the City of Newport Beach, any group that includes one or more residents of Newport Beach, and any agent, attorney, representative, or individual acting on behalf of a Citizen Opponent. The term "Third Party" shall mean any 20 individual, group, association, or any entity other than a Citizen Opponent. In the event that any Citizen Opponent or Third Party files any legal action or administrative challenge to the implementation of any component of the Integrated Reuse Project (other than issuance of the NPDES permit or the supply of water to the Habitat), IRWD shall have the right to unilaterally terminate this MOU unless the City, within 10 days of the initiation of the action, notifies IRWD in writing of its intent to defend or respond to the action at the City's expense; (ii). In the event any Citizen Opponent files any lawsuit challenging the issuance of the NPDES permit for WWSP, or irrigation of the Habitat. IRWD shall have the right to unilaterally terminate this MOU unless the City, within 10 days of the initiation of the action, notifies IRWD in writing of its intent to pay the entire cost of any defense; (iii) . In the event of any citizen opposition or Third Party opposition to the discharge of excess flows into the CSDOC outfall facility of the Santa Ana River or other lawful means of discharge, City may elect to defend against, or respond to, that opposition, or pursue another option at its election. (iv). IRWD shall be solely responsible for defending City and OCWD against any lawsuit, legal action, or administrative appeal, other than those identified in Subsection (i) through (iii) . 21 6. COMMITMENTS OF IRWD: IRWD agrees not to exercise its rights to discharge Reclaimed Water into San Diego Creek pursuant to the NPDES permit issued by SARWQCB pursuant to the application currently on file, or any other permit issued before or after the effective date of this MOU, so long as IRWD has the legal right to transmit 7.8 mgd. of Reclaimed Water to OCWD during the period from October 1 through March 31, and OCWD has the legal right to use, or otherwise lawfully dispose of, at least 7.8 mgd. of Reclaimed Water during the period from October 1 through March 31 and a Permanent Diversion Structure has been installed and is operational in San Diego Creek with the capacity to divert 10 cfs. to property owned by IRWD. 7. FORMAL AGREEMENT: The Parties shall prepare a formal agreement consistent with this MOU for submittal to, and approval by, the legislative bodies of each of the Parties on or before July 15, 1996. The Parties acknowledge that time is of the essence in preparing and obtaining approval of the Formal Agreement. 8. DUTY TO COOPERATE: The Parties have a duty to cooperate with one another relative to the preparation, approval, and execution of a Formal Agreement consistent with this MOU, to cooperate with one another in the implementation of the various components of the Integrated Reuse Project, that the City and IRWD shall cooperate with the City of 22 Irvine, and The Irvine Company with respect to the implementation of the Marsh Enhancement Plan, and the Grant Deed. The Parties will consider the formation of a committee or group comprised of some or all of the Parties, and other interested public entities, private entities and persons, and environmental organizations which will be devoted to the improvement of water quality in Upper Newport Bay, the enhancement of the San Joaquin Marsh, the preservation or enhancement of habitat in the Upper Newport Bay Ecological Reserve. 9. SPECIFIC PERFORMANCE. The provisions of this MOU are intended to be binding on each of the Parties. Each of the Parties acknowledges that, in the event of any breach of this MOU, any of the non -breaching parties shall have the right to obtain an order of specific performance, court of competent jurisdiction, directing the breaching party to fully comply with that Party's obligations pursuant to the provisions of this MOU. The Parties acknowledge that certain rights will be given up or waived between the date of approval of this MOU and the execution of a Formal Agreement, and the non -breaching party would not have an adequate remedy at law absent this provision for specific performance. Dated: , 1996 Approved as to Form: By General Counsel Irvine Ranch Water District 23 Irvine Ranch Water District By President, Board of Directors Approved as to Form: By Robert H. Burnham City Attorney Approved as to Form: 0 General Counsel Orange County Water District wb\agr\ocwd.mou 24 City of Newport Beach By John Hedges, Mayor Orange County Water District By (May 16th:#2)