HomeMy WebLinkAbout06 - Lease Extension of Groundwater Pipeline with Orange County Water DistrictQ SEW Pp�T
CITY OF
z NEWPORT BEACH
c�<,FORN'P City Council Staff Report
January 12, 2021
Agenda Item No. 6
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Mark Vukojevic, Utilities Director - 949-644-3011,
mvukojevic@newportbeachca.gov
PREPARED BY: Mark Vukojevic, Utilities Director
PHONE: 949-644-3011
TITLE: Lease Extension of Groundwater Pipeline with Orange County Water
District
ABSTRACT:
In 1991, the City entered into an agreement with the Orange County Water District
(OCWD) to lease an unused 30 -inch waterline to convey groundwater from four wells in
the City of Fountain Valley to Newport Beach. That water pipeline is a crucial link in the
City's water system to convey our groundwater. The 25 -year lease agreement
commenced in 1996. Staff has negotiated with OCWD to extend the lease for an
additional 25 years and staff is asking City Council to approve the lease extension.
RECOMMENDATION:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because
this action will not result in a physical change to the environment, directly or indirectly;
b) Approve Amendment No. One to the Agreement with the Orange County Water
District regarding the lease of a water pipeline for water transmission purposes,
extending the lease term by 25 years to September 22, 2047; and
c) Authorize the Mayor and City Clerk to execute Amendment No. One to this
Agreement.
FUNDING REQUIREMENTS:
OCWD has agreed to a $1 per year lease term for the next 25 years. During the first
14 years of the first 25 -year term, the City had paid $100,000 per year for a total of
$1.4 million. For the remaining 11 years, the lease was set at $1 per year.
DISCUSSION:
In the late 1980's and early 1990's the City's Utilities and Public Works Departments
pursued a very large project to reestablish and reconnect to its groundwater rights.
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Lease Extension of Groundwater Pipeline with Orange County Water District
January 12, 2021
Page 2
The City had a long history of using groundwater in its early years and then switched over
to imported State water in the 1950's and 1960's. As imported water became more
expensive the City desired a reconnection to groundwater as it was less expensive and
of higher quality. After years of efforts, negotiations, agreements, easements and
extensive construction of wells, pumps, pipelines, reservoirs and disinfection systems,
the $25+million Groundwater Development Project, including $17 million in bond
financing, was completed in 1997.
One crucial piece of the City's groundwater system is a 7 -mile 36 -inch pipeline that
transports groundwater from our wells in Fountain Valley to the City's reservoir on 16th
Street (Some pipeline segments are 30 -inch pipe, see Attachment B). Most of the pipeline
was newly constructed in the 1990's and ran beneath streets, flood control channels and
public and private easements in the cities of Fountain Valley, Huntington Beach, Costa
Mesa and Newport Beach. A 2.5 -mile portion of the pipeline is owned and leased from
the OCWD. That unused pipeline was installed in the 1970's for a desalinization feasibility
project, hence the nickname "seawater intake pipeline". The City negotiated for the lease
and use of that existing pipeline.
In 1991, the City and OCWD entered into a lease agreement to use the pipeline, which
commenced on September 22, 1996. Around that time period, the City funded and
rehabilitated the water line in order for it to be usable for our groundwater purposes. Also,
the City paid OCWD $100,000 per year for 14 years and $1 per year for the remaining
years. The City was also responsible for the ongoing maintenance and repairs of the
pipeline.
The groundwater pipeline is of the utmost importance to the City's water system and in
September of this year, City staff approached OCWD regarding the renewal of the lease.
Staff requested a 25 -year extension and $1 per year lease rate. After negotiations,
District staff brought the lease renewal, including presentations by District staff and City
staff, to their Property Management Committee and to the Board of Directors. The 25 -
year lease extension, to September 22, 2047, was unanimously approved at a rate of $1
per year. The City of Newport Beach remains responsible for the maintenance of the
pipeline and the lease allows OCWD to reclaim the use of the pipeline provided a four-
year notice is given.
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Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
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Lease Extension of Groundwater Pipeline with Orange County Water District
January 12, 2021
Page 3
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Amendment No. One to the Agreement with the Orange County Water
District
Attachment B — Location Map of City Groundwater Pipeline
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ATTACHMENT A
AMENDMENT NO, ONE TO
AGREEMENT BETWEEN ORANGE COUNTY WATER DISTRICT
AND CITY OF NEWPORT BEACH REGARDING LEASE OF SEAWATER INTAKE
PIPELINE FOR WATER TRANSMISSION PURPOSES
THIS AMENDMENT NO. ONE TO AGREEMENT ("Amendment No. One") is made
and entered into as of this 13th day of October, 2020 ("Effective Date"), by and between
the CITY OF NEWPORT BEACH, a California municipal corporation and charter city
("City"), and ORANGE COUNTY WATER DISTRICT, a special governmental district
formed and operating under Chapter 924 of the California Statutes of 1933, as amended
("OCWD"), and is made with reference to the following:
A. On January 16, 1991, City and OCWD entered into an Agreement ("Agreement")
for the lease of a certain seawater intake pipeline for water transmission purposes
("Project").
B. The Agreement commenced on September 22, 1997, and runs for 25 years.
C. The parties desire to enter into this Amendment No. One to extend the term of the
Agreement for an additional 25 years, to September 22, 2047, and to update the
compensation under the Agreement.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties
as follows:
1. TERM
1.1. Section 3.2 of the Agreement is amended in its entirety and replaced with the
following: "The term of the Pipeline Lease shall commence on the date of the
recordation of the notice of completion of the Pipeline Improvements pursuant to
Paragraph 2.5 above, and shall continue until September 22, 2047 (such term is
hereinafter referred to as the "Pipeline Lease Term",), subject to early termination
by "OCWD" without cause pursuant to Paragraph 3.2.1 below, termination by the
"CITY" pursuant to Paragraph 3.2.2 below, termination by "OCWD" with cause
pursuant to Paragraph 3.2.3 below, or extension of the term in accord with
Paragraph 3.2.4 below,"
2. Section 3.2.4 of the Agreement is amended in its entirety and replaced with the
following: "Unless the Pipeline Lease is terminated prior to its expiration pursuant
to Paragraph 3.2.1, 3.2.2 or 3.2.3 herein above, the "CITY" shall transmit written
notice to "OCWD" at the commencement of the final year of the Pipeline Lease
Term of the "CITY'S" intent to either renegotiate the Pipeline Lease, or to allow the
Pipeline Lease to expire.
M01
1.3. Section 3.2.4.1 of the Agreement is amended in its entirety and replaced with the
following: "In the event that the "CITY" transmits notice pursuant to Paragraph
3.2.4 of its intent to renegotiate the Pipeline Lease, the parties shall meet and
confer during the final year of the Pipeline Lease Term in a good faith effort to
achieve a new or renegotiated pipeline lease acceptable to both the "CITY" and
"OCWD"; provided, however, that nothing herein shall require the parties to
achieve such a mutually acceptable new or renegotiated Pipeline Lease.
Notwithstanding the foregoing, the parties shall not meet and confer regarding a
new or renegotiated Pipeline Lease in the event that, within sixty (60) days
following its receipt from the "CITY" of the written notice of intent pursuant to
paragraph 3.2.4 herein above, "OCWD" transmits written notice to the "CITY" of
"OWCD's" intent not to renew or renegotiate the Pipeline Lease."
1.4. Section 3.2.4.2 of the Agreement is amended in its entirety and replaced with the
following: "In the event that the "CITY" transmits notice pursuant to Paragraph
3,2.4 of its intent to allow the Pipeline Lease to expire, the Pipeline Lease shall
expire at the end of the Pipeline Lease Term, and the Pipeline, together with the
Pipeline Improvements and any other improvements or additions to the Pipeline,
shall be deemed abandoned by the "CITY" to "OCWD."
1.5. Section 3.2.4.3 of the Agreement is amended in its entirety and replaced with the
following: "The Pipeline Lease shall be deemed to expire at the conclusion of the
Pipeline Lease Term in the event that the "CITY" fails or refuses to transmit any
notice of its intent in accord with Paragraph 3.2.4 herein."
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Section 3.3.1.3 of the Agreement is amended in its entirety and replaced with the
following: "For and during Years Sixteen through the conclusion of the Pipeline Lease
Term, inclusive, the "CITY" shall annually pay to "OCWD" the sum of One Dollar ($1.00)."
3. MISCELLANEOUS
Section 4.1 of the Agreement is amended in its entirety and replaced with the
following: "Notices. 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 shall be personally served or deposited in a United States mail depository,
first class postage prepaid, and addressed as follows:
If to OCWD: Orange County Water District
18700 Ward Street
P.O. Box 8300
Fountain Valley, California 92728-8300
Attention: General Manager
Orange County Water District 9a g�e t
6-5
If to City: City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
Attention: Utilities Director"
Except as expressly modified herein, all other provisions, terms, and covenants
set forth in the Agreement shall remain unchanged and shall be in full force and effect.
[SIGNATURES ON NEXT PAGE]
Orange County Water District Page 3
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IN WITNESS WHEREOF, the parties have caused this Amendment No. One to be
executed on the dates written below.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: 09/_�)4/an
By: A07 W U /
ron C. Harp
ity Attorney
ATTEST:
Date:
Leilani I. Brown
City Clerk
(R')
g-ILq /to
CITY OF NEWPORT BEACH,
a California municipal corporation
Date.-
-2
ate:
:
Brad Avery
Mayor
ORANGE COUNTY WATER DISTRICT, a
special governmental district formed and
operating under Chapter 924 of the
California Statutes of 1933, as amended
DaAincente
2-
By:
-a
By
4arHlentoa7
President of the Board
Date:
[END OF SIGNATURES]
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Orange County Water District Page 4
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