HomeMy WebLinkAbout13 - Well Site Easement Agreement and Option to Purchase between the City iof Fountain Valley and the City of Newport Beach Dolphin Avenue Well Site Groundwarter Development Project1]
February 12, 1996
CITY COUNCIL AGENDA
ITEM NO. 13
TO: MAYOR & MEMBERS OF THE CITY COUNCIL
FROM: PUBLIC WORKS DEPARTMENT
SUBJECT: WELL SITE EASEMENT AGREEMENT AND OPTION TO PURCHASE
BETWEEN THE CITY OF FOUNTAIN VALLEY AND TH 7FM NEWPORT BEACH DOLPHIN AVENUE WELL SITE G DEVELOPMENT PROJECT
RECOMMENDATIONS:
Approve the Well Site Easement Agreement and alithnri
Mayor and the City Clerk to execute the agreement on behalf of
the City.
L7;TQXRJaeiffieIl1
As part of the City of Newport Beach's (City) Groundwater
Development Project, it is necessary to acquire at least two well sites in the
Fountain Valley area. The City has studied numerous potential well sites in
the Fountain Valley area as a part of the previous project planning. The
Environmental Impact Report for the project, certified in January, 1993,
considered nine different well site locations for implementation of the project.
This staff report relates to the well site (No. 1) on Dolphin Avenue.
The property is located within the Slater Avenue Right -of -Way and is
owned by the City of Fountain Valley (Fountain Valley). The site is on the
southeast corner of the intersection of Slater Avenue and Dolphin Avenue. The
well site under consideration is a 63 foot wide by 180 foot long parcel located
on the northerly side of Dolphin Avenue and south of Slater Avenue.
The City has met and discussed acquisition and /or leasing of the
property with Fountain Valley representatives on numerous occasions over the
last 21 months. A public information and community meeting was held by
Fountain Valley on May 17, 1994, to present the proposed well site project to
area residents. At that meeting, staff recommended to City Council to
negotiate an agreement with the City of Newport Beach for a lease of the
Dolphin Avenue property. In addition, a development review of the landscaping
and architectural elements was reviewed and approved by the Fountain Valley
Planning Commission on July 27, 1994.
Fountain Valley and the City have previously agreed on a land
appraisal of the property as a basis to negotiate further on the specific price for
the property lease by the City.
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Well Site Easement Agreement
and Option to Purchase
February 12, 1996
In light of this, the City and Fountain Valley staffs have jointly
prepared a lease agreement for Council and Fountain Valley's consideration.
The Agreement is attached as Exhibit "A ".
DISCUSSION ON PROPOSED LEASE AGREEMENT
The Agreement provides the City with a long -term lease arrangement
with an option (first right -of- refusal) to purchase the property from Fountain
Valley.
j The annual lease payment was established by an appraisal which
researched a range of fee ownership property values in the vicinity and of
properties of similar size to obtain a "fair- market value" for the well site. The
proposed annual lease payment for the site is $25,000.
A summary of the significant terms of the Agreement are
1. Fountain Valley will grant to the City an easement to a 63 foot
by 180 foot parcel upon which the City may construct and
operate water wells and related surface and subsurface
facilities.
2. The initial term of the agreement and easement will be for
twenty-five (25) years, and the City shall have the option of
extending the terms of the agreement for an additional three (3)
consecutive twenty-five (25) year periods. The total term of the
agreement will be for 100 years.
3. The City will pay an annual lease payment of $25,000 per year
for the first ten years, thereafter the lease payment would be
adjusted to reflect changes in the All Urban Consumers Price
Index (CPI) for the LA- Anaheim - Riverside area for the remainder
of the first twenty-five (25) year lease. The lease payment will
then be adjusted at the end of each of the next three (3) twenty-
five year leases.
4. The City will have an exclusive option to purchase the easement
area if Fountain Valley terminates the agreement and Newport
Beach is not in material default under the agreement. The
value of the site for purchase will be determined by a mutually
agreeable appraiser.
5. The City will pay an annual mitigation consideration to
compensate Fountain Valley for anticipated increased energy
operational costs. The first year mitigation consideration will be
$24,000 and will be adjusted after impacts are determined by
the City's actual groundwater production. This first year
mitigation consideration was determined based on the recent
drawdown studies completed on Fountain Valley wells by the
Orange County Water District, with assistance from Newport's
hydrogeologist.
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Well Site Easement Agreement
and Option to Purchase
February 12, 1996
6. Fountain Valley is allowed to review the architecture of the
proposed surface facilities.
7. The City is required to maintain the landscaping and
appearance of the well building.
8, Fountain Valley agrees to issue a well drilling permit to the City
on a timely basis.
9. The City will allow the transfer to Fountain Valley of a portion of
the City's unused MWD water demand allocations (up to a
maximum of 1,800 acre - feet).
10. The City will allow Fountain Valley to construct a system
interconnect to the groundwater production facility in the event
of an emergency.
STAFF RECOMMENDED ACTION:
The proposed lease agreement will provide the City with a desirable
site for two water wells at a "fair market' lease cost. The long -term 25 -year
lease is renewable for an additional three (3) 25 -year periods, with the right-of-
first-refusal to purchase the site.
The Public Works /Utilities Committee has reviewed this Well Site
Easement Agreement and Option to Purchase Agreement. Staff noted that it is
estimated that implementation of the Groundwater Development Project will
save the City over $60 million dollars during the neat fifteen years, in addition
to providing the City with an alternative water supply.
The proposed lease agreement has been reviewed by Fountain
Valley's staff and was approved by the Fountain Valley City Council on
February 6, 1996.
Staff recommends approval of the Well Site Agreement and Option to
Purchase between the City of Fountain Valley and the City of Newport Beach
for the Dolphin Avenue well site.
(WC Respec submitted,
WORKS DEPARTMENT
Don Webb, Director
,
By:
chael.1 Sinacori, P.E.
( cting) Utilities Manager
Attachments; Exhibit "A ": 'Well Site Easement Agreement and Option to Purchase between the City of Fountain
Valley and the City of Newport Beach ".
Exhibit "H ": February 6, 1996 Staff Report to Fountain Valley City Council discussing the agreement.
MJS:cja
RECORDING ROUESTED AND •
WHEN RECORDED RETURN TO:
City Clerk
City of Newport Beach
Post Office Box 1768
3300 Newport Boulevard
Newport Beach. California 92558 -8915
Space above mis line for Recorders use only
WELL SITE EASEMENT AGREEMENT AND OPTION TO PURCHASE
BETWEEN
THE CITY OF FOUNTAIN VALLEY
mike
THE CITY OF NEWPORT BEACH
Last Revised January 29, 1996
Exhibit "A"
TABLE OF CONTENTS
PARAGRAPH
PACE
NUMBER
SUBJECT
NUMBER
Recitals..................................................................... ...............................
3
Executory Agreements— .... -- ......... ...... - ........
-- 4
1.1
Grant of Easement ............................................ ...............................
4
1.2
Purpose of Easement ....................................... ...............................
4
1.3
Restrictions ......................................................... ..............................4
1.4
Term of Easement ............................................. ...............................
5
1.5
Termination of Easement.: .............................................................
5
1.6
Option to Purchase ........................................... ...............................
6
1.7
Consideration .................................................... ...............................
6
1.S
General Plan Conformance ............................. ...............................
8
1.9
Landscaping and Architectural Review ....... ...............................
8
2.0
Municipal Code Restrictions .......................... ...............................
8
2.1
Water Well Permit ............................................ ...............................
9
2.2
Development Agreement Mitigation Fee ..... ...............................
9
2.3
Other Permits .................................................... ...............................
9
2.4
Maintenance and Use of Unoccupied Easement Area ...............
10
2.5
Utility Costs ....................................................... ...............................
10
2.6
MWD Allocation Programs /System Interconnect .....................
10
2.7
Notices ............................................................... ...............................
11
2.8
Indemnification ................................................ ...............................
12
2.9
Partial Invalidity ............................................... ...............................
12
3.0
Integration, Construction and Amendment . ...............................
13
3.1
Attorney Fees .................................................... ...............................
13
3.2
Successors .......................................................... ...............................
13
3.3
Authorization to Enter Agreement ................ ...............................
13
3.4
Assignment ....................................................... ...............................
13
35)
Right of Access ................................................. ...............................
13
3.6
Possessory Interest ........................................... ...............................
13
Signatures.......................................................... ...............................
14
Exhibit A
Legal Description ............................................. ...............................
15
ExhibitB
Site Plan ............................................................. ...............................
16
Exhibit C
Mitigation Consideration Formul a ................ ...............................
17
2
QIELL SITE EASEMENT AGREEMENT AND OPTION TORCHASE
BETWEEN
THE CITY OF FOUNTAIN VALLEY
AND
THE CITY OF NEWPORT BEACH
This Easement Agreement and Option to Purchase (Agreement),
the City of Fountain Valley (Fountain Valley) and the City of
(Newport Beach) is made this day of
1996, in light of the following:
RECITALS
by and between
Nfewport Beach
Newport Beach is in the process of implementing a Groundwater
Development Project which involves drilling four (4) water wells on two (2)
sites in Fountain Vallev, the construction of facilities related to the wells and
the installation of a system to transport the groundwater;
2. Fountain Valley is the owner of property located at the southeast comer of
the intersection of Slater Avenue and Dolphin Avenue (Dolphin Avenue site)
which the parties believe to be suitable as a water well site;
Fountain Valley is willing to grant to Newport Beach, for consideration, an
Easement over the Dolphin Avenue site which will allow drilling of two
water wells and the construction of related improvements. Fountain Valley is
also willing to issue all permits and approvals necessary to authorize the
drilling of two water wells and the construction of related improvements on a
second well site (Tamura School site);
4. Fountain Valley has amended its Municipal Code to authorize the drilling of
wells and the construction of related facilities for the purpose of transporting
water outside of Fountain Valley City limits provided those activities are
conducted pursuant to an agreement approved by the Fountain Valley City
Council;
5. Fountain Valley desires to obtain` an additional 1,800 acre feet of water
demand allocations from the Metropolitan Water District of Southern
California via a transfer from Newport Beach's allocations;
6. Fountain Valley desires to mitigate the potential financial impacts that may
occur due to changes in the groundwater level at Fountain Valley well sites
which are attributable to Newport Beach groundwater production;
7. Newport Beach is willing to provide a system interconnect to allow Fountain
Valley, in emergency situations, to access groundwater produced by Newport
Beach;
8. This agreement represents a compromise between the parties regarding the
scope, source and nature of Fountain Valley's authority, if any, to control or
condition the groundwater production or transmission activities of Newport
Beach.
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EXECUTORY AGREEMENTS
The parties do agree as follows:
1.1 Grant of Easement
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Fountain Valley grants and conveys to Newport Beach an exclusive Easement
over the Dolphin Avenue site shown and described in Exhibit A and depicted
in Exhibit B and generally described as a parcel of land approximately o3 feet
wide and 180 feet long located on the northerly side of Dolphin Avenue and
south of Slater Avenue (Easement Area).
1.2 Purpose of Easement
Newport Beach is entitled to use the Easement Area for the following
purposes:
(a) to drill, install, construct, deepen, enlarge, operate, maintain, repair,
replace, and redrill two (2) water wells together with related equipment,
(including but not limited to water purification facilities, equipment,
materials, supplies, and electrical equipment), piping and all other
ancillary and incidental facilities necessary to produce, purify and
transport groundwater from beneath this Easement Area to Newport
Beach's transmission lines (the Facilities);
(b) to construct a building, roads, curb cuts and other improvements
necessary to inspect, service, maintain, repair, replace, and redrill the
Facilities;
(c) to engage in any activity necessary or incidental to the construction,
installation, operation, maintenance and repair, drilling or redriliing of the
Facilities, or the storage of material necessary to pump, purify, fluoridate
or transport the water produced from beneath the Easement Area.
1.3 Restrictions
Newport Beach shall comply with the following restrictions on the rights
granted by the Agreement:
(a) the building to be constructed to house the water wells will not exceed 18
feet in height, 40 feet in width or 110 feet in length;
(b) the building shall be constructed with an exterior appearance compatible
with other buildings near the Dolphin Avenue site;
(c) Newport Beach shall insulate the structure housing the water wells, or
otherwise mitigate noise, such that the improvements authorized by this
Agreement do not significantly increase ambient noise levels on
surrounding private property;
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(d) NewpooBeach shall at all times be resposible for maintaining the
exterior appearance of all above ground Facilities in a neat and orderly
condition;
(e) Newport Beach shall allow no nuisance to occur on the property and shall
conduct all operations and shall have all Newport Beach representatives
on the Easement Area conduct themselves in accordance with the
Fountain Valley :Municipal Code including, but not limited to, its Noise
Ordinance.
1.4 Term of Easement
The initial term of this Agreement and Easement shall be twenty -five (25)
vears, commencing from the date of execution by Fountain Valley
(Commencement Date). Newport Beach shall have the option to extend
the term of this Agreement and Easement for three (3) additional
consecutive twenty -five (25) year periods. Newport Beach shall be
considered to have exercised this option to renew unless Newport Beach
or any successor notifies Fountain Valley in writing of its intention not to
exercise the term - extension option.
1.5 Termination of Easement
The Agreement and Easement may be terminated under the following
conditions:
A. By Newport Beach. Newport Beach may terminate this Agreement
upon determination that continued groundwater pumping from the
subject area is no longer feasible. Newport Beach shall give Fountain
Valley at least one (1) year's written notice of its intent to terminate this
Agreement and the notice shall specify the date of termination.
Newport Beach's obligation to make payments shall continue until
Newport Beach has restored the Easement Area to its original
condition by removing the Facilities (including the abandonment of
the wells) in accord with all federal, state and other regulatory
requirements and by providing Fountain Valley with a quitclaim deed
or other document evidencing its termination and abandonment of the
Easement Area. Newport Beach has made its own independent
investigation of the Easement Area site and underground conditions,
and Newport Beach shall not be entitled to damages from Fountain
Valley if it so terminates, and its remedy will be limited to a return of
any unused portion of the prepaid rent.
B. In consideration of the cost of the Facilities, Fountain Valley agrees not
to terminate this Agreement without granting Newport Beach an
option to purchase as provided in Section 1.6. Fountain Valley shall
give Newport Beach one (1) year's written notice of its intent to
terminate this Agreement accompanied by an option to acquire fee title
3
to PEasement Area. If Fountain Valleferminates this Agreement
and Newport Beach does not exercise the purchase option described in
Section 1.6, Newport Beach shall restore the Easement Area to its
original condition by removing all improvements and abandoning the
wells in accord with all federal, state and other regulatory
requirements.
1.6 Option to Purchase
Newport Beach shall have the exclusive option to acquire fee title to the
Easement Area if Fountain Valley exercises its right to terminate the
Agreement pursuant to Section 1S (B) and Newport Beach is not in
material default under this Agreement. Newport Beach shall exercise this
option to purchase by giving Fountain Valley written notice of its intent to
purchase the Easement Area within ninety (90) days after Fountain Valley
serves written notice of its intent to terminate the Agreement. The
purchase price shall be determined by an appraisal prepared by an MAI
appraiser selected by the parties. Should Newport Beach exercise such
option, it agrees that any subsequent use of the property will be limited to
the uses specified in Section 1.2 of this Agreement, and no other use, and
Fountain Valley agrees that any use consistent with Section 1.2 of this
Agreement will comply with the General Plan, Zoning Ordinance, and
Building Ordinance, notwithstanding anv other provision of taw-,
including Section 53090, et seq., of the California Government Code.
1.7 Consideration
A. The Annual Consideration for this Agreement shall be $25,000.00 per
fiscal year (July 1" to June 30`''). The Annual Consideration shall be
due and paid in advance of the fiscal year for which the payment is
due and in no event later than June 30 ". Newport Beach shall pay
Fountain Valley a prorated share of this Annual Consideration for the
first year of the Agreement for that portion of the year between the
Commencement Date and the following June 30.
There will be no adjustment or change in the Annual Consideration for
the first ten (10) years of this Agreement. Beginning with the eleventh
year of the Agreement, July 1, 2007, the Annual Consideration shall be
increased or decreased to reflect the change in the All Urban
Consumers Price Index (CPI) for the Los Angeles- Anaheim - Riverside
area published by the Department of Labor. The annual adjustment in
consideration from the eleventh year until the twenty-fifth year of the
initial twenty -five (25) year term shall be computed using the
difference in value of this CPI between July 1, 2007, and its value on
June 30' each successive year thereafter.
The Annual Consideration shall be adjusted at the end of each of the
three (3) twenty-five (25) year renewal terms provided in Section 1.4 of
this Agreement. The modified Annual Consideration shall be an
ri
am *t equal to the total of the CPI iox adjustments during the
twenty-five (25) year term multiplied by the "Annual Consideration" at
the beginning of that term. Annual adjustments shall continue
thereafter.
B. In addition to the Annual Consideration, Newport Beach will pay an
annual _litigation Consideration to compensate Fountain Valley for
increased operational costs directly related to lower groundwater
levels directly attributed to Newport Beach groundwater production
from the Dolphin Avenue site and the Tamura School site. Within
thirtv (30) days after Newport Beach commences groundwater
production from both the Dolphin Avenue and the Tamura School
sites, a first year Mitigation Consideration of 524,000.00 shall be paid to
Fountain Vallev. This figure is based on the aquifer testing performed
on Fountain Valley wells and estimates of Newport Beach's pumping
impacts as summarized in the report dated November 1995, prepared
by the Orange County Water District.
The parties have generally agreed to a formula for determining the
Mitigation Consideration to be paid each year subsequent to the first
year of Newport Beach's groundwater production. The formula is
specified in Exhibit C to this Agreement. During the first year of
groundwater production by Newport Beach, from both the Dolphin
Avenue and the Tamura School sites, Newport Beach and Fountain
Valley will engage in additional testing to determine the actual
drawdown attributable to Newport Beach groundwater production.
Subsequent to the first year of groundwater production by Newport
Beach, the Public Works Directors of Newport Beach and Fountain
Valley will meet and confer to agree on increases and decreases in the
amount of drawdown due to :Newport Beach groundwater production
(H), the cost of power (P), and plant efficiency (E). The Mitigation
Consideration for the second year of this Agreement shall be as
determined by the Public Works Directors of Newport Beach and
Fountain Valley. The Mitigation Consideration shall be adjusted every
fifth year during the term of this Agreement, pursuant to mutual
agreement of the Public Works Directors on increases or decreases in
drawdown, power costs, or plant efficiency.
If a dispute should arise between the Public Works Directors regarding
the value of any component to the formula, the dispute will be
submitted to a qualified individual (Hearing Officer) who shall
conduct a hearing and prepare a tentative decision accompanied by
findings of fact and conclusions of Law, relative to the value of the
component in dispute. Any member of the Judicial Arbitration and
Mediation Service (JAMS) or similar association shall be considered a
qualified individual to serve as the Hearing Officer. The Parties shall
agree on hearing procedures and rules designed to reduce the cost and
time of the proceedings, such as limits on the amount of live testimony,
limits on length of legal documents, and stipulations as to undisputed
facts. The tentative decision of the Hearing Officer, together with the
proposed findings of fact, conclusions of Law and a record of the
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hea9g, shall be submitted to the FountalWalley City Council For its
consideration and determination. The Fountain Va11ev City Council
shall adopt the tentative decision of the Hearing Officer unless it
determines that, in light of the entire record before the Hearing Officer,
the tentative decision is not supported by substantial evidence. The
decision of the Fountain Valley City Council to adopt the tentative
decision of the Hearing Officer shall be binding on the Parties until the
next adjustment period. In the event Newport Beach disputes any
determination of the Fountain Valley City Council that there was not
substantial evidence in the record to support the tentative decision of
the Hearing Officer, Newport Beach shall have the right to challenge
the determination of the Fountain Valley City Council by an action for
Declaratory Relief, Writ of 'Mandate, or other appropriate cause of
action brought in the Superior or Municipal Court of Orange County.
Newport Beach and Fountain Valley mutually agree that the Fountain
Valley City Council's determination regarding the tentative decision of
the Hearing Officer constitutes an act which is "spedficaily enjoined'
(as that term is used in California Civil Procedure Section 1085), in
accordance with Chapters 8.12 and 14.16 of the Fountain Valley
Municipal Code.
1.8 General Plan Conformance
On July 13, 1994, the Fountain Valley Planning Commission unanimously
confirmed that the Newport Beach Groundwater Project is in contormance
with the City of Fountain Valley General Plan. Newport Beach has, in
good faith, relied upon this decision for expending substantial sums on
the design and construction of the Facilities to transport groundwater
from the Dolphin Avenue site and intends to expend significant
additional funds to construct similar Facilities at the Tamura School site.
Unless this Agreement is amended to the contrary, the Easement Area and
Tamura School site shall not be subject to any subsequently enacted
amendment of Fountain Valley's General Plan, Subdivision or Zoning
Ordinances which would impair the ability of Newport Beach to produce
groundwater from the Easement Area or the Tamura School site.
1.9 Landscaping and Architectural Review
On July 27, 1994, the Fountain Valley Planning Commission approved the
proposed building elevations and landscaping for the Dolphin Avenue
site. Buildings and landscaping shall be constructed in accordance with
the approved plans. Any later modification will be subject to similar
review.
2.0 Municipal Code Restrictions
The Fountain Valley City Council amended its Municipal Code, Chapters
8.12 and 14.16, to enable the Public Works Director and /or City Council to
El
enter iR this Agreement authorizing the *vport Beach Groundwater
Development Project, the construction of the Facilities, and the
transmission of groundwater to Newport Beach. Unless this Agreement is
amended to the contrary, the Easement Area and the Tamura School site
shall not be subject to any subsequently enacted amendment of Fountain
Valley's Municipal Code, which would restrict Newport Beach from
maintaining and operating the Groundwater Project provided for in this
Agreement.
2.1 Water Well Permit
This Agreement contemplates issuance of a Water Well Permit for the
Groundwater Project pursuant to relevant provisions of Fountain Valley's
Municipal Code. Fountain Valley agrees to process this permit
expeditiously and on a timely basis. Fountain Valley's approval shall not
be unreasonably withheld. Fountain Valley =,vill process take permit within
four (4) weeks of submission of signed improvement plans from Newport
Beach. The payment of Annual Consideration for the Easement site, the
payment of Mitigation Consideration, the potential for transfer of unused
new water demand allocations, and the construction of a system
interconnect provides substantial benefits to Fountain Valley and any one
of these benefits constitute more than adequate evidentiary basis for a
finding by the Fountain Valley Public Works Director that "the public's
interest as otherwise provided for" by this Agreement as required by
Section 8.12.
2.2 Development Agreement Mitigation Fee
Fountain Valley and Newport Beach agree that this document satisfies the
criteria for a Development Agreement as established by the State Zoning
and Planning Act and the Municipal Code of the City of Fountain Vallev.
The Fountain Valley City Council adopted a policy which requires a
Development Agreement Mitigation Fee for residential, commercial or
industrial developments which have the potential to increase the cost of,
or the need for, City services. The parties agree that the Mitigation
Consideration eliminates the potential for any increase cost to Fountain
Valley resulting from the Groundwater Development Project and that
components of the Project, such as the emergency interconnect and the
potential for transfer of MWD water demand allocations, have the
potential to actually decrease the cost of services to Fountain Valley
residents. Fountain Valley agrees that this Agreement and the
Groundwater Development Project are exempt from the Development
Agreement Mitigation Fee.
2.3 Other Permits
Newport Beach shall obtain all permits required to construct the Facilities
in the Easement Area. Fountain Valley, as the land owner, will sign all
6
permit applications as required by the local a• Gies issuing the permits.
Fountain Valley will also expedite the plan check and permitting
processes for the construction drawings and will issue the necessary
encroachment permits for partial closure of Dolphin Avenue during
construction of the Project. Fountain Valley's approval of these permits
shall not be unreasonably withheld.
2.4 Maintenance and Use of Unoccupied Easement Area
Fountain Valley shall be entitled to continue using the unoccupied
portions of the Easement Area except when these areas are being used by
Newport Beach for construction or maintenance of the Facilities. In
consideration of Fountain Valley's use of the unoccupied portion of the
Easement Area, Fountain Valley agrees to maintain this unoccupied area.
After use of the unoccupied area by Newport Beach for construction or
maintenance, Newport Beach shall restore any disturbed portions of the
area.
2.5 Utility Costs
All utility costs and other expenses related to the Easement Area shall be
borne by Newport Beach.
2.6 MWD Allocation Programs /System Interconnect
As additional consideration and mitigation for the issuance of all permits
necessary to construct wells resulting from the Groundwater
Development Project, Newport Beach agrees to the following:
A. MWD Allocation Program
Newport Beach shall, to the extent allowed by the Metropolitan Water
District of Southern California (MWD) and its member agencies
(Coastal Municipal Water District and the Municipal Water District of
Orange County), provide or transfer some of Newport Beach's unused
MWD Water Demand Allocations (up to a maximum of 1,800 acre feet)
to Fountain Valley, so that Fountain Valley may benefit from those
unused allocations by avoiding certain MWD or member agency costs
or charges.
Newport Beach shall initially transfer 700 acre feet of MWD Water
Demand Allocations to Fountain Valley. The transfer is to take place
when water well production begins delivering water to Newport
Beach.
If the OCWD sets the Basin Production Percentage for Fountain Valley
at a value of less than seventy percent (70 %), then Newport Beach shall
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tran9er an additional 550 acre feet lv[WD Water Demand
Allocations to Fountain Valley.
If the CCWD sets the Basin Production Percentage for Fountain Valley
at a value of less than sixty -five percent (65°0), then Newport Beach
shall transfer an additional 550 acre feet of MWD Water Demand
Allocations to Fountain Valley.
In the event Newport Beach terminates this Agreement at any time
under the terms of paragraph 1.5, Fountain Valley shall agree to
transfer to Newport Beach, all previous MWD Water Demand
Allocations transferred to Fountain Valley.
If Fountain Valley has not used all or a portion of the MWD Water
Allocations transferred or offered for transfer within twenty -five (25)
years of the Commencement Date, then the offer to transfer that
portion which has not been used by Fountain Valley will be
renegotiated as a part of the Annual Consideration adjustment
described in Section 1.7, Consideration, of this Agreement. In this
renegotiation the maximum �IWD Water Allocation transfer shall
remain at 1,300 acre feet. The parties agree and understand that it is a
material consideration to Fountain Valley that it obtain usable v[WD
Water Allocations.
B. System Interconnect
Newport Beach shall allow Fountain Valley to construct a System
Interconnect to the groundwater production facility to be constructed
by Newport Beach at either the Dolphin Avenue site or the Tamura
School site. The System Interconnect shall be designed to permit
Fountain Valley to access water produced by Newport Beach wells in
the event of an emergency which disrupts Fountain Valley's water
service. The Interconnect shall be designed and constructed at
Fountain Valley's sole expense. Newport Beach shall cooperate with
Fountain Valley relative to the design and construction of the System
Interconnect and any related equipment necessary to Fountain Valley's
use of the system in the event of an emergency. Water from the
Newport Beach system will not be disinfected and it will be Fountain
Valley's responsibility to provide the appropriate level of disinfection
for any water taken from the Newport Beach Groundwater
Development Project. The Public Works Directors from Newport
Beach and Fountain Valley shall adopt a standard operating procedure
that will control the use of the System Interconnect in case of an
emergency.
2.7 Notices
Except as otherwise provided in this Agreement, all notices, payments,
transmittals of documentation and other writings required or permitted to
be delivered or transmitted to any of the parties under this Agreement
11
shall be p rsonally served or deposited in a Jr ed States mail depository,
first class postage prepaid, and addressed as follows:
If to Fountain Vallev
City of Fountain Valley
10200 Slater Avenue
Fountain Valley, California 92708
Attention: Public Works Director
If to Newport Beach
City of Newport Beach
3300 Newport Boulevard
Post Office Box 1768
Newport Beach, California 92658 -8915
Attention: Public Works Director
or such other address or person as any party may direct to the other in
writing. Except where service is by personal delivery or by registered or
certified mail, return receipt requested, service of any instrument or
writing shall be deemed completed forty-eight (48) hours after deposited
in a United States mail depository. Notices served by personal delivery
shall be deemed served when delivered; notices served by registered or
certified mail, return receipt requested, shall be deemed served when
deposited in the mail.
2.8 Indemnification
A. Newport Beach shall indemnify and hold Fountain Valley and its officers,
Council Members, employees, and representatives harmless from and
against any injury to any person, or any damage to property caused by the
negligent performance of this Agreement by Newport Beach, its officers,
Council Members, employees, agents, representatives and contractors in
connection with the performance of this Agreement, or caused by the use
of the property described in the Easement Area.
B. Fountain Valley shall indemnify and hold Newport Beach and its officers,
Council Members, employees, and representatives harmless from and
against any damage to Newport Beach's improvements caused by the
negligent or willful act of any officer, Council Member, employee, agent,
representative or contractor of Fountain Valley.
2.9 Partial Invalidity
If any provision of this Agreement is held by a Court of competent
jurisdiction to be invalid, void, or unenforceable, or if any provision of this
Agreement is rendered invalid, void or unenforceable as a result of any state
or federal legislation enacted subsequent to the effective date of this
Agreement, the remaining provisions will nevertheless continue in full force
and effect without being impaired or invalidated in any way.
12
3.0 IntegratiopConstruction and Amendment •
This Agreement represents the entire understanding of Fountain Valley and
Newport Beach as to those matters contained herein, and no prior oral or
written understanding shall be of any force or effect with respect to those
matters covered by this Agreement. This Agreement shall be governed by the
laws of the State of California and construed as if drafted by both Fountain
Valley and tV'ewport Beach. This Agreement may not be modified, altered or
amended except in writing signed by Fountain Valley and Newport Beach.
3.1 Attorney Fees
If either party is required to initiate litigation to enforce the terms and
conditions of this Agreement or to seek damages by reason of the breach of
the terms and conditions of this Agreement, the prevailing party shall be
entitled to recover reasonable attorney fees and costs incurred.
3.2 Successors
This Agreement, and all of the terms, conditions and provisions herein, shall
inure to the benefit of, and be binding upon, Fountain Valley and Newport
Beach, and their respective successors and assigns.
3.3 Authorization to Enter Agreement
Fountain Valley represents that it is authorized by law to enter into this
Agreement and that this Agreement has been authorized by its City Council.
3.4 Assignment
Newport Beach shall not assign, sublet or otherwise transfer this Agreement
or any right or interest in said premises without the express written consent
of Fountain Valley.
3.5 Right of Access
Fountain Vallev shall at all times have a right of access during business hours
to inspect said premises following reasonable written notice to Newport
Beach.
3.6 Possessory Interest
Newport Beach acknowledges that if the possessory interest granted Newport
Beach herein causes a tax upon that possessory interest, that Newport Beach
shall pay said tax promptly when due and will keep Fountain Valley
indemnified therefrom.
13
IN WITNIRS WHEREOF, the parties have exe #ted this Agreement on the
date first written above:
APPROVED AS TO FORM
By:
City Attorney
ATTEST
a
J.E. Palazzo
City Clerk
APPROVED AS TO FORM
By:
Robert Burnham
City Attorney
ATTEST
a
LaVonne Harkless
City Clerk
CITY OF FOUNTAIN VALLEY
a Municipal Corporation
us
George B. Scott
Mayor
CITY OF NEWPORT BEACH
a Municipal Corporation
0
14
John Hedges
Mayor
• E CHIBIT "A" •
AN EASEMENT FOR PUBLIC UTILITY PURPOSES FOR THE INS T.ALL-ATIO;N AND
VAIN TENANCE OF A WELL AND .-\PPURTENA:\'T FACILITIES IN THE CITY OF
FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE OF CALIF OR_�"IA, OVER,
UNDER, AND ACROSS THE FOLLOWING DESCRIBED PARCEL OF LAND:
A PORTION OF PARCEL 2 OF THAT CERTAIN RELIT fOGISHvIE;`IT OF HINWA Y'
RIGHT -OF -WAY TO THE CITY OF FOUNTAIN VALLEY P.ECORDED JULY 3, 1968 IN
BOOK 86 9, PAGE 873 OF OFFICIAL RECORDS IN THE OFFICE OF THE COUNTY
RECORDER OF SAID ORANGE COUNTY, Y, SAID PARCEL ALSO BEIN \PORTION
OF THE NORNW EST QUARTER OF THE SOUTHEAST QUARTER OF SECTION 30.
TOWNSHIP S SOUTH, RANGE 10 WESI', IN THE R.A CHO LAS BOLSAS, AS SHOW.N
ON A MAP FILED IN BOOK 51. PAGE i'_ OF, ISCELLA`TOUS MAPS, I� r_
OFFICE OF TnE COL N T YR E CORDER OF SAID ORANGE COUNTY, DESCRIBED .,S
FOLLOWS:
BEGINNING (P.0 -B.) AT THE NORTHWEST CORNER OF THE `+ORT:H_;vEST
QUARTER OF THE SOUTHEAST QUARTER OF SAID SECTION 30, SAID POINT
BEING NE INTERSECTION OF BUSHARD STREET AND SLATER AVEi`7_`;
THENCE, EASTERLY ALONG THE NORTHERLY LINE OF SAID NORTHWEST
QUARTER OF THE SOUTHEAST QUARTER AND ALONG THE CENTERLIN—= OF
SAID SLATER AVENUE, NORTH 39 006'46" EAST, •A DISTANCE OF 396.20 FEET TO
THE bVESTERLY LINE OF SAID PARCEL 2; THENCE, CONTINUING EASTERLY
ALONG SAID NORTHERLY LINE, NORTH 89 006'46" EAST, A DISTANCE OF 11 1.75
FEET; THENCE, SOUTH 0 °53' l4" EAST, A DISTANCE OF 36. 42 FEET TO THE TRUE
POINT OF BEC;IN'NIL(Q (T P O.B.); THENCE, NORTH 89 °06' 46" EAST, A DISTANCE
OF 180.00 FEET; THENCE, SOUTH 0 153' l!" EAST, A DISTANCE OF 63.00 FEET;
THENCE, SOUTH 89 006'46" WEST, A DISTANCE OF 180.00 FEET; THENCE,
NORTH 0053'[4" WEST, A DISTANCE OF 63.00 FEET TO THE TRUE POINT OF
B F FINNNG.
SUBJECT TO COVENANTS, CONDITIONS, AND EASEMENT'S OF RECORD, IF ANY-
MORE PARTICULARLY SHOWN ON EXHIBIT "B" ATTACHED HERETO AND MADE
A PART HEREOF.
PREPARED BY:
LAND
No. 5496
Exp. 6/3C/90
F�V SHEET t OF 2 SHEETS
425-1
DEREK J. MCGOR L.S. NO. 6496
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EXHIBIT " s'
NW COR
NW 1/4 SE 1/4
SEC 30
�- SLATER AVENUE
S 89', 46 307.95'
9620'�� 411.75
j S O'53,11"E
36.42
.v 0,53'11 "W�
P.O.B. I 63.00'
i-
T.P.O.B.
N 89.06'46' E ,-
180.00'
S 0'53'14 "E
<' 63.00'
—S 89'06'36" W/
cO ANOSUp
G�C\��'S. MCG9�
W CO y
i
a No.6496 v ,
Exp. 6130/99
OF Cam/
PREPARED BY: "I IGO
SCAL$; I- - 1000
Derek J. kicOregor L . No. 6496
DMc Engineering DOLPHIN AVENUE WELL SITE OF 2 SHEZETS
Civil • Surveying - Planning
le Te hnolop Drtre, Suite 100 LEASE AGREEMENT DATE: 6-14 -95
brine, CA 02710
VAM(714) 767 -7973 Paz (7I4) 757 -9522 CITY OF NEWPORT BEACH
DRAINING rn.E LOCAO c
ON: \ACAO\XGS\;75\r03ESUn.o»c GROUNDWATER DEVELOPMENT PROJECT JN 92 -425 -I
• EXHIBIT C •
MITIGATION CONSIDERATION FORMULA
Based on the predicted theoretical drawdowns obtained from the analytical
modeling, estimated additional energy costs were calculated for each Fountain
Valley well due to pumping of the proposed Newport Beach wells. These costs were
calculated using the following formula:
where:
5 /acre feet = Ll 032)(H)(Pl
H = theoretical drawdown (feet) due to proposed Newport Beach wells
P = power cost (50.11 per kw -hour, reported by Fountain Valley staff)
E = plant efficiency (65% reported by Fountain Valley staff)
assuming:
Maximum drawdown based on 300 days of continuous pumping at 9,600
gpm by Newport Beach wells
2. Transmissivity = 450,000 gpd /ft
3. Storativity = 0.0003
The $ /acre feet values were calculated for each Fountain Valley well and then
multiplied by its three year average annual production (1992 -95) to obtain a
maximum average annual pumping cost due to drawdown from the Newport Beach
wells, as summarized in Table 5. The resultant total additional annual pumping cost
for all Fountain Valley wells of $23,304 is believed to be a maximum amount based
on the conservative estimates of drawdown, power costs, plant efficiency, and the
assumptions listed above.
17
41
Request for
CITY COUNCIL ACTION
Tos The Honorable Mayor and
Members of the City Council
• c:a -; n
y���tlUrrr C���
Agenda Date s Feb. 6, 1996
SUBJECT: APPROVAL OF WELL SITE EASEMENT AGREEMENT & OPTION TO
PURCHASE BETWEEN THE CITY OF FOUNTAIN VALLEY AND THE
CITY OF NEWPORT BEACH
Mwe"VA
The City of Newport Beach is proposing to construct four wells within the city limits of the City
of Fountain Valley. City ordinance requires approval of an agreement with the City of Newport
Beach before a permit can be issued for the construction of the four wells. Two of the wells
will be constructed on City -owned property located on the southwest comer of Slater Avenue
and the San Diego Freeway. The other two wells will be located on the Tamura School
grounds. The agreement grants an easement to the City of Newport Beach for the City -owned
site for a term of 25 years with an option to extend the term an additional 75 years. The City
of Fountain Valley will receive four benefits from the agreement - -these are: (1) $25,000 per
year for the lease of the land; (2) $24,000 per year as a mitigation fee to the City of Fountain
Valley due to the adverse effect that the Newport Beach wells will have on the City of Fountain
Valley wells; (3) The City will receive 1,800 AF of water demand allocation from the
Metropolitan Water District of Southern California (MWDSC) which has a potential value of
$1,800,000; and (4) A system interconnect to Newport Beach's water lines, which will give the
City of Fountain Valley an emergency water supply.
Staff is recommending that the City Council approve the well site easement agreement and
option to purchase between the City of Fountain Valley and the City of Newport Beach.
DISCUSSION:
The City of Newport Beach is proposing to construct four wells located within the city limits
of the City of Fountain Valley. The City of Newport Beach also proposes to locate two of the
wells on property owned by the City of Fountain, Valley. The City ordinance states that:
"It is unlawful to drill a new well or develop an existing well and facilities for the
purpose of transporting or conveying water outside of the City for any use not
herein authorized unless in the public interest and pursuant to an agreement
approved by the City Council."
The agreement submitted to the City Council for its consideration will authorize the City of
Newport Beach to construct the four wells for the purpose of pumping water from the
underground basin to the City of Newport Beach. Two wells will be constructed on City -owned
property located south of Slater Avenue and west of the San Diego Freeway. The other two
Exhibit "B"
of City Council
Page 2
February 6 Agenda Itere •
NEWPORT BEACH WELL SITE EASEMENT AGREEMENT
wells will be constructed on the Tamura School grounds located north of Slater Avenue, west
of Magnolia Street. The agreement provides an annual payment to the City of Fountain Valley
for the lease of the property at Slater Avenue and the San Diego Freeway and an annual payment
to the City for the increased energy costs to the City of Fountain Valley to pump water from the
basin due to the lowering of the elevation of the underground water table. In addition, the City
will receive credit for 1,800 acre feet (AF) for future allocations of water from the MWDSC.
The cost to purchase future allocations from MWDSC will be $1,000 per AF.
Highlights of the agreement include:
(1) Fountain Valley will grant an easement to Newport Beach for the City -owned site south
of Slater Avenue west of the San Diego Freeway. The term of the easement will be for
25 years, with an option to extend the term an additional three 25 -year periods for a total
term of 100 years. The City of Newport Beach will pay the City of Fountain Valley
$25,000 per year for the lease for the first ten years and, after the ten years, the lease
price will be increased by the Consumer Price Index (cpi).
(2) The City of Newport Beach will be entitled to construct two wells at the Slater Avenue
site and be allowed to place a 40' x 110' building on the site. Newport Beach agrees
that the building will not exceed 18 feet in height and that the building will be
constructed so that the exterior appearance will be compatible with other buildings near
the Slater Avenue site.
(3) Newport Beach shall have the exclusive option to acquire fee title to the easement area
if the City of Fountain Valley decides at some future date to sell the property. In the
event Newport Beach purchases the property, it agrees that the use of the property will
be limited to the construction of two wells and the building.
(4) The City of Newport Beach will pay an annual mitigation consideration to compensate
Fountain Valley for increased operational costs directly related to lower groundwater
levels. With the development of four wells within the City of Fountain Valley and the
anticipated pumping of 14,000 AF of water per year, the water table will be lowered
approximately 20 feet, which will increase the energy cost to Fountain Valley to pump
water from City wells. At a lower water table of 20 feet, it has been determined that the
additional energy costs to the City of Fountain Valley will be $24,000 per year. The
agreement requires the City of Newport Beach to reimburse the City of Fountain Valley
$24,000 for the first year's operation. The increased energy costs for the second year's
operation will be reevaluated at the end of the first full year's operation.
A review of all the well sites will be made and a determination will be made on the
actual amount of draw -down in the water table. The Directors of Public Works for the
City of Newport Beach and Fountain Valley will make a determination of what the /
mat
r1ulluldulc ivieyor ana Members
of City Council
Page 3 •
February 6 Agenda Ite4#
NEWPORT BEACH WELL SITE EASEMENT AGREEMENT
second year's cost will be. The agreement states that if there is disagreement between
the Public Works Directors, the dispute will be submitted to a qualified hearing officer
who shall conduct a hearing and prepare a tentative decision. The decision would then
be submitted to the City Council for its approval or disapproval.
(5) The agreement does include a clause that the '...easement area and the development of
two wells on the Tamura School site shall not be subject to any future enacted
amendment of the Fountain Valley Municipal Code which would restrict Newport Beach
from maintaining and operating the groundwater project provided for in this agreement."
(6) The agreement authorizes the issuance of a water well permit for the groundwater project
which includes two wells at the Slater Avenue site and two wells on the Tamura School
site, which is located north of Slater Avenue, west of Magnolia Street. In accordance
with the agreement, Fountain Valley agrees to process the permit within four weeks of
submission of the improvement plans from Newport Beach.
(7) The agreement provides two major benefits to the City of Fountain Valley, which means
that the public interest, as required by City ordinances, will be provided. The two
benefits are:
(a) The MWDSC allocation program whereby 1,800 AF of unused water demand
allocations will be transferred to Fountain Valley.
The MWDSC allocation program requires any agency that desires to increase its water
purchases from MWDSC would pay $1,000 per AF for any increase in its water demand.
In the agreement, Newport Beach agrees to transfer 1,800 AF of its unused MWDSC
water demand allocation to the City of Fountain Valley. This is a major benefit to the
City since we will be able to afford all future water demand allocation costs.
(b) A system interconnect.
The agreement requires Newport Beach to allow Fountain Valley to construct a
system interconnect to Newport Beach water lines. This system interconnect will allow
Fountain Valley to access the water produced by the Newport Beach wells in the event
of an emergency that might disrupt Fountain Valley's water service. This could be a
major benefit to the City of Fountain Valley in the event of a major earthquake. All of
the City's wells art; located northeast of the San Diego Freeway; therefore, this
connection could provide a water supply to the area located southwest of the freeway.
In summary, the agreement is a major benefit to the City of Newport Beach because they will f
be able to obtain low-priced water from the underground water basin. The City of Fountain
Valley receives four benefits:
of City Council
Page 4
February 6 Agenda Item•
NEWPORT BEACH WELL SITE EASEMENT AGREEMENT•
(1) $25,000 per year for the lease of the land;
(2) $24,000 per year as reimbursement for the additional cost to pump water from City
wells. This payment would not be made if Newport Beach constructed the wells north
of the City of Fountain Valley;
(3) The City will receive 1,800 AF of water demand allocation from MWDSC. If this was
fully utilized, the value of the 1,800 AF allocation would be $1,800,000; and
(4) A system interconnect to Newport Beach's water lines, which will give the City of
Fountain Valley an emergency water supply.
LTERti ATIV ES
(1) Approve the well site easement agreement and option to purchases between the City of
Fountain Valley and City of Newport Beach. This altemadve is recommended because
the City of Fountain Valley will receive some benefits from the agreement.
(2) Not approve the well site easement agreement and option to purchase. This would
prevent the City of Newport Beach from constructing wells within the City. This
alternative is not recommended because the City of Newport Beach would probably
construct the wells north of the city limits in the City of Westminster. Four wells
constructed north of Fountain Valley city limits would have a major adverse effect on
Fountain Valley's wells. If wells were located north of the city limits, water would be
pumped from the underground basin before it flowed to Fountain Valley wells.
FINANCIAL ANALYSIS:
Increased energy costs to the City of Fountain Valley $24,000
Payments from annual Newport Beach
well mitigation fee (will change 2nd year) $24,000
Lease of easement area $25.000
Total payment by Newport Beach 549.E
The potential value of MWDSC's demand allocation that will be transferred to the City of
Fountain Valley is: 1,800 AF x 51,000 per AF = $1,800,000.
4� -
Honorable Mayor and Members
of City Council
Page 5
February 6 Agenda Item
NEWPORT BEACH WELL SITE EASEMENT AGREEMENT
N-3414gL•
Notice pertaining to public hearing regarding approval of the well site easement agreement and
option to purchase was published in the Orange County Register and posted in accordance with
State law and City policy, a minimum of ten days prior to the hearing. All homeowners who
live within 500 feet of the two well sites were given a copy of the public hearing notice.
RECOMMENDATION:
Staff recommends that the City Council hold a public hearing and, at its conclusion, select
Altemative No. 1, which is to approve the well site easement agreement and option to purchase
between the City of Fountain Valley and the City of Newport Beach.
ks� lYl' CL
WAYtit OSBORA
Director of Public Works
OND H. KROMER
City anager
WSO/ h
45
'14I
0
STATE OF CALIFORNIA )ss.
COUNTY OF ORANGE )
WL' / J 1996 , pefore me,
0
appeared
" o r'd�. personally known tome (or proved
to me on the basis of satisfactory evidence) to e the persoJ s) whose name is*-.
subscribed to the wi instrument and ackno�rledged to me at he /sht�execufed
the same in his /he their authorized capacit�s� and that by his /her /their signatures . on
the instrument the person 4 r the entity upon behalf of which the person )` acted,
executed the instrument.
r . Shauna Lyn Oyler;
WITNESS my hand and official seal. U Comm •10026e1
NOTARY PUBLIC CALIPORNIfy�"
c ORANGE COUNTY l(7J
Comm Expr" Aug. 22, 1991
Notary Public in and for said State