HomeMy WebLinkAboutC-2186 - Storage Capacity Agreement for San Joaquin ReservoirCITY OF NEWPORT BEACH
Office of
CITY ATTORNEY
June 9, 1990
To: The Honorable Mayor and
Members of City Council
From: Assistant City Attorney
Subject: Storage Capacity Agreement with The Irvine
Company re San Joaquin Reservoir
Background
In 1962 The Irvine Company (TIC), the Irvine Ranch Water
District (IRWD), and other public entities agreed to construct
the San Joaquin Reservoir. TIC agreed to donate the land upon
which the reservoir was to be built and in return TIC received
the right to store 100 acre feet of water in the reservoir.
The right of TIC to store water in the reservoir was to be free
of any charge or expense. By virtue of subsequent agreements,
TIC agreed that should it transfer any of its right to store
water that it would require the transferee to agree to pay its
proportionate share of the cost and expense of reservoir main-
tenance and operation. TIC further agreed that the transferee
would execute an agreement to that effect.
In 1965, and because of TIC development, TIC granted to the City
of Newport Beach the right to store four acre feet of water in
the reservoir. Due to the large number of entities that had an
interest in the reservoir and the large number of agreements
that those parties had entered into, this transfer of four acre
feet took a long time to finalize.
In 1967 the City determined that the cost of new water facili-
ties, required because of increasing development of land within
the City, should be financed by the developer. To implement
this policy the City Council in 1967 adopted an ordinance
establishing a water capital improvement charge (NBMC Section
14.33.010 et seq.) and adopted a series of drawings outlining
the required master plan water facilities. This master plan
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June 9, 1980
Page Two
Storage Capacity Agreement with The Irvine
Company re San Joaquin Reservoir
provided that TIC would deed to the City water storage
capacity in the San Joaquin Reservoir to serve lands devel-
oped by TIC that could not be served by gravity flow from
the Big Canyon Reservoir. Because of the time and trouble
involved in the initial transfer of water rights, the
parties agreed that TIC would make a single transfer of
water storage capacity rights that would satisfy the require-
ment for all TIC land, developed and undeveloped, presently
within the corporate limits of Newport Beach. Joe Devlin,
the Utilities Director, and The Irvine Company have completed
negotiations with respect to the amount of water storage capa-
city to be transferred and have determined that 32 acre feet
of water storage rights in the San Joaquin Reservoir will
satisfy all of TIC's obligations.
Some Councilmembers may be aware that there is presently
litigation pending between IRWD, Huntington Beach, Coastal
Water District, and other entities that have interest in the
reservoir, but the City of Newport Beach is not a party to
that litigation. All parties that have an interest in the
reservoir, including the City, have been participating.in
negotiations to develop a comprehensive agreement which would
govern all phases of reservoir operations. This grant of water
rights from TIC to the City is already reflected in the draft
of the Trust Agreement. It is anticipated that this Council
will be asked to approve this Trust Agreement in June and we
will prepare a comprehensive memorandum prior to Council's
consideration of that agreement.
Discussion
Three documents are presented to the Council for consideration.
The first document, the Grant Deed, actually transfers the
storage capacity rights from TIC to the City. This document
will be recorded with the County Recorder. The Storage Capacity
Agreement simply provides that the City agrees to accept the
32 acre feet of water storage capacity as complete satisfaction
of TIC's obligation. The City also agrees to indemnify TIC if,
for instance, the City failed to pay its pro -rata share of
reservoir expenses, a failure which would require TIC to do so.
The Addendum Agreement is a contract required by contracts
between the initial reservoir owners. These owners wanted a
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June 9, 1980
Page Three
Storage Capacity Agreement with The Irvine
Company re San Joaquin Reservoir
separate agreement whereby an entity to whom water storage
capacity rights were transferred would agree to pay its pro -
rata share of reservoir expenses and charges. This agreement
is required if TIC is to retain the remainder of its water
rights in the reservoir free of expenses and other charges for
reservoir maintenance and operation.
All parties agree that the transfer of water rights as provided
by these documents should precede any proposed approval by
Council of the Trust Agreement that we have referred to above.
This procedure is recommended because the Trust Agreement con-
tains specific procedures whereby water storage rights can be
transferred between reservoir owners and because the Trust
Agreement already reflects the ownership of the City of 36 acre
feet.
/ Robert H. Burnham
STORAGE CAPACITY AGREEMENT
• COP
TIiIS AGREEMENT, made this day of
1980, by and between the CITY OF NEWPORT BEACH, a California
municipal corporation and charter city, hereinafter "City," and,
THE IRVINE COMPANY, a Michigan corporation, hereinafter "TIC,"
is made with reference to the following facts. The parties hereto
stipulate and agree that these facts exist and are material to
this Agreement:
A. TIC owns storage capacity rights in the San Joaquin
Reservoir, the legal description of the Reservoir being contained
in a grant deed recorded November 14, 1962, in Book 6322, Page
709, of Official Records in the Office of the County Recorder,
County of Orange, State of California (hereinafter the .'Reser-
voir ").
B. The storage capacity rights owned by TIC derive from
a series of agreements, some of which are appended hereto as
Exhibit "A," and it is the desire of both parties that TIC's
rights under these agreements are protected and that TIC suffers
no loss or injury as a result of the grant of storage capacity.
C. In 1967 City adopted Ordinance No. 1209, the ordinance
presently contained within Chapter 14.33 of the Municipal Code
of City, in an effort to establish a procedure for financing
the expansion and development of the City water system in then-
undeveloped areas of City.
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D. At the time City adopted Ordinance No. 1209 it also
considered.enacting an ordinance to require TIC, in recognition
of its plan of massive development within the confines of City,
to formally dedicate storage capacity in Reservoir on a periodic
or development -by- development basis.
E. In lieu of adopting such an ordinance, City and TIC
informally agreed that TIC would, in the future and not neces-
sarily on a development -by- development basis, dedicate to City
a portion of TIC's storage capacity rights in Reservoir to sat-,
isfy the needs of areas then developed and other areas that TIC
proposed to develop.
F. City and TIC have agreed on the extent of storage
capacity in Reservoir now to be conveyed by•TIC to City in
accord with this informal agreement, and the storage capacity
described in this Agreement is sufficient to satisfy the needs
of City vis -a -vis past, present and future developments of TIC
within the corporate limits of City as presently constituted,
and will serve to extinguish all obligations owed by TIC to
City with respect to such developments.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises contained herein, the parties agree as follows:
1. DEDICATION. TIC hereby agrees to convey and dedicate
to City the right to store 32 acre -feet of watef in Reservoir,
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these storage capacity rights derived from capacity in Reservoir
now owned by TIC. This conveyance shall be accomplished by the
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execution of the grant of storage capacity, attached as Exhibit
"II; "'and made a part of this Agreement, and all agreements
between City and TIC that relate to.the conveyance of storage
capacity shall be executed at the same time.
2. DUTIES OF CITY.
City agrees to accept the TIC grant
of 32 acre -feet of storage capacity in Reservoir as full and
complete satisfaction of any obligation owed by TIC to City to
convey storage capacity by TIC by reason of its development of
lands within the corporate limits of City as presently.consti -
tuted. City also agrees to do the following acts:
a. City agrees to execute the document entitled
"Addendum Agreement," a copy of which is attached hereto as
Exhibit "C," and to deliver the executed Addendum Agreement
to each of the parties to that agreement, and to utilize -its
best efforts to obtain the signatures of each of the parties
to that agreement, and then to deliver the fully executed Adden-
dum Agreement to TIC.
b. City agrees to perform each of its obligations
pursuant to the terms of the Addendum Agreement, and City fur-
ther agrees to and hereby does indemnify TIC with respect to any
liability, claim, damage or cause, including attorneys' fees,
incurred by TIC by reason of a failure of City to perform any
duty or obligation required of it pursuant to the Addendum Agree-
ment. This agreement to indemnify also includes the obligation
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on the part of City to defend, or provide a defense for, TIC
in the event of litigation that results from City's failure to
perform duties or obligations pursuant to the Addendum Agree-
ment. This agreement of City to indemnify TIC shall survive
the delivery of the grant of storage capacity.
3. BREACH. Failure of City to perform any of the acts
required of it pursuant to this Agreement shall not invalidate
the grant of storage capacity but shall subject City to any
other legal remedy or remedies TIC may wish to pursue.
4. ENTIRE AGREEMENT. This Agreement.constitutes the
entire agreement between the parties with respect to storage
capacity within Reservoir and supersedes all prior written or
oral agreements, formal or informal, between the parties with
respect to Reservoir, and this Agreement shall inure to, and
be binding upon, the successors and assigns of the parties to
this Agreement. -
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IN WITNESS WHEREOF, the parties hereto subscribe their
names as of the day and year first above written.
Dated: (i1�, �� C J D CITY OF NEWPORT BEACH
A Municipal Corporation
BY
Mayor Pro Tem
ATTEST:`
'Q"'
City Clerk
APPROVED AS TO FORM:
City Attorney
THE IRVINE COMPANY
A Michigan Corporation
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RESOLUTION NO. 9796
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH AUTHORIZING THE MAYOR AND
CITY CLERK TO EXECUTE A STORAGE CAPACITY AGREE-
MENT AND ADDENDUM AGREEMENT BETWEEN THE CITY OF
NEWPORT BEACH AND THE IRVINE COMPANY IN CONNEC-
TION WITH THE SAN JOAQUIN RESERVOIR
WHEREAS, there has been presented to the City Council
of the City of Newport Beach a certain Storage Capacity Agree-
ment and Addendum Agreement between the City of Newport Beach
and The Irvine Company in connection with the San Joaquin
Reservoir; and
WHEREAS, the City Council has reviewed the terms and
conditions of said Storage Capacity Agreement and Addendum Agree-
ment and finds them to be satisfactory and that it would be in
the best interest of the City to execute said Storage Capacity
Agreement and Addendum Agreement,
NOW, THEREFORE, BE IT RESOLVED by the City Council of
the City of Newport Beach that the Storage Capacity Agreement
and Addendum Agreement above described are approved, and the Mayor
and City Clerk are hereby authorized and directed to execute the
same on behalf of the City of Newport Beach.
ADOPTED this 9th day of June
ATTEST:
City Clerk
Mayor Pro Tan
1980.
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6/4/80