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HomeMy WebLinkAboutC-3330 - Agreement Relative to Annexation (Water and Sewer Service)AMENDMENT NO. 1 TO AGREEMENT BETWEEN IRVINE RANCH WATER DISTRICT AND CITY OF NEWPORT BEACH RELATIVE TO ANNEXATION This Amendment No. 1 ("AMENDMENT NO. 1") is made and entered into this 151'1 day of VdAC 4 2001, by and between the IRVINE RANCH WATER DISTRICT ("IRWD") and the CITY OF NEWPORT BEACH (the "City"). WITNESSETH: WHEREAS, IRWD and the City have entered into an agreement entitled "AGREEMENT BETWEEN IRVINE RANCH WATER DISTRICT AND CITY OF NEWPORT BEACH RELATIVE TO ANNEXATION," dated January 24, 2000 ("AGREEMENT'); and WHEREAS, the parties desire to amend the AGREEMENT with respect to the provisions establishing the effective date thereof. NOW, THEREFORE, in light of the Recitals and the mutual covenants and conditions contained in this AMENDMENT NO 1., the parties hereby agree as follows: 1. Amendment of Section 1. Section 1 of the AGREEMENT is hereby amended to read as Termination of 1973 Agreement. This AGREEMENT, when effective, shall follows: terminate and supersede the 1973 Agreement. 2. Effective Date of AGREEMENT. The AGREEMENT, as amended by this AMENDMENT NO. 1, shall be effective upon the execution and delivery of this AMENDMENT NO. 1. By -1- executing and delivering this AMENDMENT No. 1, the parties hereby ratify the AGREEMENT, as so amended. 3. Validation. The parties shall jointly prepare, file and prosecute an action pursuant to Code of Civil Procedure Section 860 et seq. to determine the validity of the AGREEMENT and the rights, duties and obligations therein (the "validation action"). The validation action shall be filed no later than forty-five (45) days after the execution and delivery of this AMENDMENT No. 1. The parties shall fully cooperate with each other in the preparation, filing and prosecution of the validation action. 4. Counterparts. This AMENDMENT No. 1 may be executed in one or more counterparts. Each will be deemed an original and all, taken together, will constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT No. 1 the day and year first written above. APP •VED AS TO FORM: City Attorney CITY OF NEWPORT BEACH By Offor„rl. ...1111' Mayor B,,,,V5-7.,,)2-) x4.4ez,,, City Clerk (SEAL) IRVINE RANCH WATER DISTRICT By President 2 APPROVED AS TO FORM: 77 Counsel for IRWD 72669/ IRVINE RANCH WATER DISTRICT (SEAL) -3- • • AGREEMENT BETWEEN IRVINE RANCH WATER DISTRICT AND CITY OF NEWPORT BEACH RELATIVE TO ANNEXATION This agreement (AGREEMENT) is made and entered into this 2000, by and between the IRVINE RANCH WATER DISTRICT ("IRWD") and the CITY OF NEWPORT BEACH (the "City"). WITNESSETH: WHEREAS, IRWD and the City entered into an agreement on September 11, 1972 relative to future adjustment of service area boundaries for an area described therein as the "Property," which was superseded and replaced by a similar agreement executed on September 10, 1973 (the agreements are collectively referred to as the "1973 Agreement"); and WHEREAS, the City is currently in the process of preparing to annex unincorporated areas and territory within its sphere of influence including Bay Knolls, Santa Ana Heights, Newport Coast (including the Property) and Newport Ridge, all as described in the October 25, 1999 public hearing conducted by the City. The areas proposed for annexation by the City are, except for Bay Knolls, collectively referred to as the "Annexation Area" and are depicted in Exhibit "A" which is incorporated by this reference. The Annexation Area is within IRWD's service area and receives water, sewer and/or reclaimed water service from IRWD; and WHEREAS, IRWD has constructed and acquired facilities to provide transmission, storage, and distribution of water, as well as collection, treatment, reclamation, and disposal of sewage and wastewater to the Annexation Area as well as other territory within IRWD's service area; WHEREAS, the facilities constructed and acquired by IRWD in Newport Coast and Newport Ridge have been financed by means of bonds payable from assessments and property taxes assessed on property; and WHEREAS, the City has expended funds and made improvements in contemplation of providing water and sewer service to all or a portion of the Annexation Area; and WHEREAS, the parties, through this AGREEMENT, intend to resolve all issues relating to the meaning and effectiveness of, and to supersede and terminate, the 1973 Agreement. The parties also intend to clearly establish IRWD's right to provide water, sewer and reclaimed water service to the Annexation Area, to establish their respective duties with respect to the proposed annexation of the Annexation Area by the City and to compensate the. City for the value of the 1973 Agreement and the improvements made in reliance on the 1973 Agreement. NOW, THEREFORE, in light of the Recitals and the mutual covenants and conditions contained in this AGREEMENT, the parties hereby agree as follows: 1. Termination of 1973 Agreement. This AGREEMENT, when effective, shall terminate and supersede the 1973 Agreement. This AGREEMENT shall be effective upon execution and the entry of a final judgment by a court of competent jurisdiction validating this AGREEMENT. 2. City Annexation of Annexation Area. The City and IRWD agree that the City may proceed at the City's discretion to pursue the annexation of the Annexation Area, in one or more phases. The City's annexation proposal(s), including but not limited to any applicable plan for services, shall specify that water, sewer, and reclaimed water services (existing and to be extended in the future) will be provided in the Annexation Area by IRWD (except to the extent regional sewer service is provided by the Orange County Sanitation District), and that the water, sewer, and reclaimed water facilities and utilities -2- (existing and to be constructed or extended) serving the Annexation Area shall be owned by IRWD (except for regional sewer facilities owned by the Orange County Sanitation District). No detachment from IRWD or reallocation of IRWD's general property tax allocation shall occur in conjunction with or result from the City's annexation of the Annexation Area. 3. IRWD Support of Annexation. IRWD will support the City's proposal(s) to annex the Annexation Area when considered by the Local Agency Formation Commission ("LAFCO") and any other public entity. IRWD agrees to oppose any change of organization or reorganization proposal that competes or conflicts with or precludes the City's annexation of the Annexation Area. The City agrees to oppose any change of organization or reorganization proposal with respect to the Annexation Area that includes detachment of any territory from IRWD's service area, the transfer of water, sewer or reclaimed water services from IRWD to any other public entity, or reallocation of IRWD's general property tax allocation. 4. IRWD Settlement Payment. Upon completion of the annexation (consistent with Section 2 of this AGREEMENT) of the Annexation Area, or any portion of the Annexation Area, to the City, IRWD shall pay the City the amount of $25,000,000.00 (Consideration). The Consideration is due and payable in installments, without interest, in accordance with the following schedule: Payment No. 1 Thirty (30) days following LAFCO's filing of $15,000,000.00 Certificate(s) of Completion for the annexation Payment No. 2 Second (2nd) anniversary of the date Payment 5,000,000.00 No.1 is due Payment No. 3 Fourth (4`") anniversary of the date Payment No. 3,000,000.00 1 is due Payment No. 4 Sixth (6"') anniversary of the date Payment No. 1 2,000,000.00 is due TOTAL $25,000,000.00 -3- The parties acknowledge that the Consideration and related payment schedule equitably accounts for the improvements made by the City in contemplation of providing service to the Annexation Area. The parties also acknowledge that the Consideration and related payment schedule account for the risk to each party that IRWD's current allocation of the general property tax levy with respect to the Annexation Area may be changed or discontinued by state legislation. No amount shall be due unless and until the annexation of the Annexation Area or any portion of the Annexation Area is completed, as evidenced by the recording and filing of a certificate(s) of completion by LAFCO. 5. Third Party Annexation or Incorporation. (a) The provisions of Section 4 notwithstanding, it is the intent of the parties that the Consideration is allocated to specific water and sewer tax rate areas ("TRAs") for purposes of adjusting Consideration if any portion of the Annexation Area is incorporated, annexed or otherwise included in a jurisdiction other than the City ("Third Party Jurisdiction"), the Third Party Jurisdiction takes over water, sewer or reclaimed water services from IRWD, .and the Third Party Jurisdiction is allocated all or a portion of IRWD's share of the general property tax levy for such area. (b) The parties agree that, for the purpose of adjusting the Consideration in the event of the circumstances described in Subsection a, the Consideration will be allocated by water and sewer TRA as shown in Exhibit "B" attached hereto and incorporated herein by this reference. In the event the property tax allocation to IRWD for any TRA is reduced for the reasons described in Subsection a, the Consideration shall be adjusted and reduced according to a revised TRA table that reflects the change in property tax allocation for the affected TRA(s) (adjustment). To the extent any installment(s) have been paid by IRWD prior to the adjustment, the City shall refund the amount of the adjustment(s), without interest, to IRWD, within ninety (90) days of the effective date of the Third Party Jurisdiction incorporation or annexation. Any remaining installment(s) will be adjusted in conformance with the revised TRA table. If the incorporation or annexation by the Third Party Jurisdiction results in the division of TRAs or partial -4- • • . reallocation within a TRA or other variation not directly addressed by this Subsection, the parties agree to adjust the methodology herein to preserve the intent of this Section. An example adjustment calculation is shown in Exhibit "C" attached hereto and incorporated herein by this reference. 6. Future Jurisdictional and Service Changes. The City agrees that it will not initiate or support any proceeding or action, through LAFCO or otherwise, for the detachment from IRWD, or other reorganization, of any portion of IRWD's jurisdiction, including but not limited to unannexed portions of the Annexation Area, or the transfer of any water, sewer or reclaimed water facilities, services or utilities from IRWD, without the express consent of IRWD. IRWD agrees that it will not initiate or support any proceeding or action, through LAFCO or otherwise, for the acquisition of the City's water or sewer facilities, services or utilities or the adjustment or modification of the City's service area, without the express consent of the City. 7. Service and Tax Rates Within the City Annexed Area. (a) IRWD agrees, effective upon annexation of the entire Annexation Area into the City, that it will not increase water, sewer or reclaimed water commodity rates or ad valorem debt -service assessments applicable within the Annexation Area, except increases that are generally applicable and established in the same manner as such increases are established on a District -wide basis (excluding areas that are subject to special service contracts or conditions, such as areas other than the Annexation Area which are annexed into the IRWD service area in the future). All other IRWD fees, charges and assessments within the Annexation Area, including but not limited to pumping or elevation surcharges, shall be IRWD's standard fees, charges and assessments, established in the same manner as in other portions of IRWD. (b) The provisions of this Section shall not prohibit IRWD from implementing such rates, charges, assessments, or increases therein as IRWD may deem necessary to prevent or cure any -5- • • default in connection with debt service on bonded indebtedness or to reimburse a credit facility provider as required by agreement with such provider in the event of its acquisition of unremarketed or defaulted bonds . (c) This Section shall not apply within Santa Ana Heights for so long as the IRWD rates, charges and assessments in such area are governed by the separate agreements entered into in conjunction with the acquisition of the Sante Ana Heights Water Company by IRWD. 8. Disclosure. The parties agree to prepare a joint statement to disclose the terms of this AGREEMENT to the public. In addition to such disclosure, the parties acknowledge that this AGREEMENT shall be released as required by law. 9. Interpretation. Both of the parties have negotiated the provisions of this AGREEMENT with the assistance of their counsel Accordingly, the parties waive the effect of Califomia Civil Code Section 1654 or any other statute or common law principle of similar effect which interprets uncertainties in a contract against the party who drafted the contract. 10. No Waiver. No failure of either party to exercise any power given that party under this AGREEMENT or to insist on strict compliance by the other party to•its obligations; and no custom or practice of the parties in variation with the terms of this AGREEMENT will constitute a waiver of any parry's right to demand exact compliance with the terms of this AGREEMENT. 11. Successors and Assigns. The provisions of this AGREEMENT will be binding on and will inure to the benefit of the parties and their respective heirs, successors, and assigns, except for any public entity other than the parties which acquires jurisdiction over the Annexation Area or any portion thereof through any change of organization or reorganization. -6- 12. Counterparts. This AGREEMENT may be executed in one or more counterparts. Each will be deemed an original and all, taken together, will constitute one and the same instrument. 13. Notices. Any notice, request, demand, consent, approval or other communication required or permitted pursuant to this AGREEMENT or by law shall be validly given or made only if in writing and delivered in person or seventy-two (72) hours after deposit in the United States mail, duly certified or registered (return receipt requested), postage prepaid, and delivered (in the case of personal delivery) or addressed (in the case of mail delivery) to the Party for whom intended, as follows: If to IRWD: If to the City: IRVINE RANCH WATER DISTRICT 15600 Sand Canyon Avenue P.O. Box 57000 Irvine, CA 92619-7000 Attention: General Manager CITY OF NEWPORT BEACH 3300 Newport Boulevard P.O. Box 1768 Newport Beach, CA 92659-1768 Attention: City Manager Either party may substitute a different addressfor its above -stated address by giving written notice to the other in the manner herein provided. 14. Authority. Each of the undersigned represents and warrants to the other party hereto that they have the authority to bind the party on behalf of whom they sign. Each of the undersigned represents that it has all requisite authority to perform each of its obligations hereunder. 15. Entire Agreement. This AGREEMENT constitutes the entire agreement between the parties concerning the subject matter hereof. All prior agreements, representations, negotiations and understandings of the parties are superseded and merged in this AGREEMENT. This AGREEMENT shall be amended only in writing executed by both parties. -7- 16. No Third Party Beneficiaries. Nothing in this AGREEMENT is intended or shall be construed to give any person, other than the parties and their respective successors and assigns, any legal or equitable right, remedy or claim under or in respect of this AGREEMENT or any provision. This AGREEMENT and each condition and provision is intended to be for the sole and exclusive benefit of the parties and their respective successors and assigns, and for the benefit of no other person. 17. Mutual Release. It is understood and agreed that this AGREEMENT is a compromise settlement of a disputed claim and that the furnishing of the consideration for this settlement and general release shall not be deemed or construed as an admission of liability or responsibility at any time for any purpose. It is further agreed and understood that this AGREEMENT is intended to constitute a complete and total release of any and all claims, rights, demands, actions, obligations, liabilities, and causes of action either party may have with respect to the 1973 Agreement. Accordingly: IT IS UNDERSTOOD AND AGREED THAT ALL RIGHTS UNDER SECTION 1542 OF THE CIVIL CODE WHICH PROVIDES AS FOLLOWS, "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." ARE HEREBY EXPRESSLY WAIVED. 18. Specific Performance. The parties agree that the party entitled to receive performance of each obligation herein other than an obligation to pay money has no adequate remedy at law for the breach of such obligation and is entitled to specific performance thereof except as prohibited by law. /// 111 // /// -8- IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT the day and year first written above. APPROV D AS TO FORM: City Attorney r APPROVED AS TO FORM: ounsel for IRWD 62 .5 CITY OF NEWPORT BEACH By By&tht//U 11/ City Clerk (SEAL) IRVINE RANCH WATER DISTRICT By By ecretary (SEAL) 7,1b -9- Exhibit A Agreement between Irvine Ranch Water District and City of Newport Beach relative to Annexation Santa Ana Heights Bay Knolls `" 7'% �� S rE / 4,4 ����� • N r,� �A OhillWV PACIFIC N 1 OCEAN S 0 1 2 Miles C C CC Legend Annexation Areas) West Newport Area Crystal Cove State Park City Boundary • 55036 Exhibit B 55039. 55030,:-= 55091- 55048- _ • t• r err , B2 TRAs in Newport Coast; = 55092 55024 55086 55093 55064 -a• te •-- - _ • 55085 • • • 6014 Ogg • • Coast streets Coast TRA's 55008 55017 55024 55030 • 55031 :! •; 55034 55036 55039 h= 55048 55056 55064 »T 55082 ';‘,;•:';', 55083 55085 //r, 55086 r r 55087 55088 • 55089 c41 55090 55091 • 55092 55093 55094 f 66014 = 66036 ▪ n 66037 66043 :iii 66044 'J 66050 • % 66051 • EXHIBIT "C" Example New jurisdiction formed inclusive of TRA 55036 water and sewer, 55039 water only and only a portion of the tax levy and acreage of 55085 water only. Original TRA Allocation New Jurisdiction IRWD TRA (2) Water Sewer Water Sewer Water Sewer 5009 0.0055% 0.0169% 0.0055% 0.0169% 5012 0.0119% 0.0367% 0.0119% 0.0367% 7066 0.0073% 0.0073% 55008 0.0029% 0.0090% 0.0029% 0.0090% 55017 2.7172% 8.4139% 2.7172% 8.4139% 55025 0.0036% 0.0113% 0.0036% 0.0113% 55030 0.2641% 0.8163% 0.2641% 0.8163% 55031 2.1743% 2.1743% 55036 1.4740% 4.5641% 1.4740% 4.5641% 55039 0.7650% 2.3688% 0.7650% 2.3688% 55056 0.2662% 0.2662% 55066 0.0155% 0.0155% 55082 0.6161 % 1.9077% 0.6161 % 1.9077% 55083 0.0271% 0.0084% 0.0271 % 0.0084% 55085 A 3.6b77% 11.1714% 2.8862% (1) 55085 B 5.4116% 16.7571% 55085 9.0194% 27.9285% 2.8862% 0.7215% 5.4116% 6.1332% 11.1714% 16.7571% 27.9285% 55089 0.0047% 0.0147% 0.0047% 0.0147% 55090 1.4814% 1.4814% 66010 0.0015% 0.0045% 0.0015% 0.0045% 66014 0.0020% 0.0061 % 0.0020% 0.0061% 66030 0.2152% 0.6663% 0.2152% 0.6663% 66036 2.1690% 6.7163°% 2.1690% 6.7163% 66037 0.0020% 0.0063% 0.0020% 0.0063% 66043 0.0801 % 0.2479% 0.0801 % 0.2479% 66044 1.4405% 4.4607°4 1.4405% 4.4607% 66051 4.6452% 14.3840°% 4.6452% 14.3840% Subtotal 27.4115% 72.5885% 5.1251% 4.5641% 22.2864% 68.0244% Add Water 27.4115°% 5.1251% 22.2864% Total 100.0000% 9.6892% 90.3108% From New Jurisdiction 9.6892% Total 100.0000°% (1) - The new jurisdiction includes only 40% of the acreage in TRA 55085 and only 80% of the water tax levy to IRWD. Therefore the allocation is as follows: (9.0194% * 40% * 80% = 2.8862%) . (2) - Not all TRAs located within the agreement area were incuded in this exhibit. If the TRA did not receive a portion of the general property tax levy then the TRA was excluded from the exhibit. In this example, the City would return 9.6892% of the $25 million consideration (an amount equal to $25 million * 9.6892%, or $2,422,300) to IRWD in accordance with Section 5 of the Agreement.