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HomeMy WebLinkAboutRESO 6277• RESOLUTION NO. 6277 ------RBSOLUTIDN OF COUNCIL vf THE CITY OF P~!O ALTO APPROVING AND AUTHORIZING EXEC~TION OF THE SUPPLEMENT TO SETTLEMENT AGREEMENT AND MASTER WATER SALES CONTRACT The COUNCIL of the CITY OF PALO ALTO DOES RESOLVE AS FOLLOWS: SECTION 1. The "Supplement to Settleuent Agreement and haster Water Sales Cvntract• is hereby apprvved and th"" Mayor is hereby authorized to execute said Supplement on behalf of the City. SECTION 2. The Council hereby finds that none of the provisions of this Resolution will have a significant environmental effect. SECTION 3. The pr0visions of thi3 resolution shall take effect on the date of its passage. INTRODUCED AND PASSED: July 9, 1984 AYES: Bechtel, Cobb, Fletcher, Klein, Levy, Renzel, Sutorius, Witherspoon NOES: None ABSENT Woo 11 ey ABSTENTIONS: None Attorney SUPPLEMENT TO SETTLEMENT AGREEMENT Ai .... D MASTER WATER SALES CONTRACT The par-';:ies recogn z~ that a proposed initiative measur•• entitled 11'1'axa tion: Initiative Const i t 11t ion al Amendml!nt • ("the initiative•) has qualified for ti.e November 1984 California General Election. The initiative would revise Article XIII~ of the California Constitution and impcse new procedural and substantive requirements on taxes and fees levied by local governments in the State of California. At this juncture, the parties do not know whether the initiative will he approved by the electorate, how the initiative would be construed by the courts if approved, or whether the initiative would be held applicabl~ to the Agreement. In light of these uncertainties and in order to protect the parties' expectations that they will receive the benefits conferred and fulf il1 the obligations created by the Settlement Agreement and Master Water Sales Contract ("the Agreement") as presently written, the parties hereby agree as folloW5: 1. In the event that a court of competent jurisdiction issues a final judgment or order, based on tbe initiative, which prevents the City fro.a receiving frOll the suburban purchasers the full amount of the Adjusted Rstiaated Suburban Revenue Require- ment which it would otherwise have bee~ or be entitled to receive under the Agreement in any fiscal year, the City may, by sending a Notice of Renegotiation to each suburban purchas•r# require the suburban purchasers to engage prOilptly in good faith negotiations to determine how the Agreement should be lllOdif ied in order to provide the City with the full a11ount of the suburban revenue requirement. The parties herc~y declare that it is their autual intent that, in the circumstance described above, the Agreement will be modified so as to permit tne City to receive the full amount of the suburban revenue requirement it would otherwise be entitled to receive under the Agreement during any fiscal zear affected by the judgment or order described above and all years thereafter during the Term of the Agreement, provided that nothing contained herein shall p~eclude any suburban purchaser or the City frO!I exercising any of the rights or options set forth in Section 2, below. In determining how the Agreement should be refot'Pllulated, the parties shall take into consideration any portien of the s~burban revenue requirement which the City has already been prevented from receiving by virtue of the judgment or o~der described above. The procedure provided foe in this section .ay be invoked sore than once if successive judici~l judgaaents or orders prevent the City froa r~alizinq the full amount of the suburban revenue requirement it voul~ otherwise be entitled to receive under the Agreement. In the event that thP parties are unable, despite their good faith efforts, to agree as to ho"' the Agreement should bP. modi- fied to achieve the result intended by this section, or if a voluntary modification of the Agreement is subsequently declared invalid or rendered unenforceable by a final judgment or order of a court of competent jurisdiction, the City may terminate the Agreement and its Individual Contracts with each suburban purchaser, in accord~nce with and subject to the limitations contained in Section 3. 2. In the event that the initiative prevents one or more of the suburban purchasers from increasing water rates to its or their customers sufficiently to cover the increased cost of water delivered by the City, and as a result of the initiative it there- fore fails to pay the full amount due the City und~r its I~dividual Contract based on the City's water rates then in effect, any party to the Agreement may, by sending a Notice of Renego~iation to each other party, require all parties to engage promptly in good faith negotiations to determine what modifications tc the Agreement could be ~ade to best preserve the expectations of all parties in that circumstance. In the evenl th3t the parties are unable, despite their good faith efforts, to agree on a autually acceptable course of action: ( (a) The suburban purchaser which has been prevlnted by the initiative from increasing its water rates and which has failed to pay its full water bill may terminate the Agreement as between it anJ the City, and its Individual Contract with the City, provided it has complied with Section 5, below. (b} In ~ddition to vha~ever remedies the City may have 4t law or in equity as against the suburban purchaser which bas failed, by reason of the initiative, to pay the full amount of its water bill, the City aay also ·:elect to terminate the Agreement and Individual Contract with respect to that suburban purchaser. However, the City may not, through the oper·ation of the balancing account or otherwise, collect from other suburban ?urchasers thP. revenue a suburban purchaser was obligated to pay under the Agreement and Individual Contract but failed to pay beca~se of the initiative. (c) If suburban purchasers representing twenty percent (20t) or more of watar purchased from the City (based on the volum~s set out i~ Eshibit K-2) te~:ninate the Agreement and their Individual Contracts under Section 2(a), or if the City termi- ~~tes the AgreP.ment and Individual Contracts under Section 2(b) with respect to twE"nty percent of the suburba~l purchasers (as defined above) for nonpayment, then any other auh~r.ban pu~chaser may elect, during the fiscal year following the effectiveness of the last of such terainations, to terminate th'!· Agreement as to it and its Individual Contract. -2- (d) If suburban purchasers representing twenty percent (as defined above) fail to pay a water bill or bills that come due during any fiscal year in full, by the end of such year, as a r~sulc of the initiative, or if one or more suburban purcha~~rs have failed, as a result of the initiative, to pay sums due ~nd owing the City ag9re9atin9 7.5, of the Adjusted Estimated Suburban Revenue Requirement for that fiscal year, the City may, in addition to terminating the ~greernent and In~ividual Contracts as to them, terminate the Agreement and Individual Contracts of all suburban purchasers, in accordance ~ith and subj~ct to the l~mitations cont4ined in Section 3. Prior to giving any Notice of Termination under this subsection, th~ City shall allow a period of nine months to enable the defaulting suburban purchaser(s) or any other suburban purchaser(s) the opportunity to cure a default under this subsection; during such nine-month period, the City will make reasonable, good faith efforts to collect the amount of such default from the defaulting suburban pur~hasers, provided that completion of any collection remedies shall not be required in ord~r f0r th~ City to give Notice of Termination in the event such default has not been cured by the end of the nine-month period. (e) If the Agreement and/or IndiYidual Contracts are terminated by the City or by any suburban purchaser(s) as to any er all suburban purchaser(s), such termination shall not preclude the City frOlll pursuing any availaPle remedy at law or in equity against any s~burban purchaser which bas not 9aid or does not pay its water bill or bills, arising out c~ the period during which the Agreement was in effect as to it, in full. (f) Nothing contained in this Supplement, including thiu Section, is intended to or shall be construed to authorize or excuse the failure by any suburban purchaser to pay its water bill in conformity with its Individual Contract. 3. If the City is entitled to terminate the Agreement and the Individual Contracts as to all suburban purchasers under Sections 1 or 2 above, it may do so by sending each suburban purchaser a Hotice of Tertttination. The Notices will become effectiv~ and the Term of th~ Agreement and (except as provided below) the Individual Contr~cts will end at the conclusion of the fiscal year during which the Notices are sent. If the Asreement and Individual Contra~ts are terminated pursuant to this Section, the ~greement and Individual co~tracts will have no further force and effect thereafter except as expressly provided herein. In .particular, and witho~t affecting the generality expressed in the foregoing sentence, in the event the Agreeaent and individual Contracts are terminated pursuant to this Section: (a) the Stipulati~ns for Dismissal with Prejudice provided for in Section 2.02 shall cease to operate as a bar~ in -3-1 ' the same m~nn~r that the penulti~ate paragraph of that Section provides in the case th~ ~greement were held to b~ invalid: (b) the mutual releases provided for in s~ctions--i.03 and 8.09 shall remain in effect n:..>t\llithstanding the ten1ination of the Agreementr (c) the respecti\e financial rights and obligations of the parties regording water sold during the period the Agreem~nt was in effect will continoe to ~ governed by the provisions of the Agt'eement~ (d) the provisions of Section S.07(e) will govern the disposition of the ending balance in the balancing account at the time the Notices of Termino~ion become effective and the ~gree­ ment 's term ends: . (e) the City shall i::>e released from the obligations imposed by Sections 7.01 and 7.02, exc~pt for (l) obligations to deliver specified quantities of water as presently set forth in Exhibit K-1, which sha).l continue, adjusted as provideJ therein in Pootnotes l and 4; and (2) obligations to supply water which have vested during the Agreement's Term pursuant to Section 7.02(b)(3)(4) and (5) before the Notices of Teraination become effective. (3) ln lieu of subsections l and 2 herein, a sub- urb~~ purchaser may elect to bave tbe City's continuing obliga- cion to supply water based on the quantity of water supplied by the City to that purchaser during the calendar year i.mmediat~ly prio~ to the year in vblch the Notice of Termination is given, but in no event shall the total amounts vested for all suburban purchasers under this subparagraph exceed the Supply Assurance. Nothing in this Supplement, including Sections 3 and 3.5, is intended or shall be construed to authorize the City to abrogate, terminat~, cancel or otherwise impair the City's existing con- tracts with the Esterc Municipal Improvement District (•Estero•) and the City of Hayward t•sayward•). Moreover, in the event that either Estero or Hayward or both wish to exercise the option to terminate provided by Section 2 ebove, it or they may elect to terminate or-ly the Agreement and to aaintain their existing contracts with the City. Nothing in this Supplement, including Sections 3 and 3.5, is intended o~ shall be construed to entitle either San Jose or Santa Clar~ to an individual supply guarantee or vested amount of ~esidu&l watar unless they or either of them have become permanent customers under Section 9.03. _,_ 3.5 If the City is entitled to terminate the Agreem~nt and Individual Contracts of fewer than all of the suburban purchasers under Section 2(b), it may do so by sending each suburban purchaser whc_e participation in the Agreement and Individual Contract thP City wishes to terminate a Notice of Termin~tion, with copie~ co the remaining s~burban purchasers. The Notice{s) will become effective and the 1erm of the Agree~ent and the lndividual Cor.tract(s~ will end vis-a-vis the terminated suburban purchaser at the conclusion of the fiscal year during which the Notices are sent. If the Agreer~nt and ~ndividual Contract are terminated pursuant to this section, th~ Agreement and Individual Concract will have no further force and effect thereafter as between the City and the terminated subu~bci~ purchaser(s) except as expressly provided herein. In particular, and without affect- ing the generality expressed in the foregoing sentence, in· the ev~nt the Agreement and Individual Contract are terminated as to a~y suburban purchaser pursuant to this Section: (a) the Stipulation for Dismissal with ?rejudice provided for in Section 2.02 shall cease to operate as a bar as against the terminated su~urban purchaser, in the sam~ manner that the penultimate paragraph of that Section provides in the cas~ the AgreemP-nt were held to be invalid; (b) the autual releases provided for in Section 2.03 end 8.09 shall remain in effect notwithstanding the termination of the Agreement: (c) the respective financial rights and obligations of the City and the ter.ainated suburban purchaser{&) regarding water sold during the peric;d the Agreement and Individual Contract were in effect with res}lect to it will continue to be governed ~y the provisions of the Agreement aM Irtdividual Contract; (d) there will be no pro rata disposition of balances in the balancing account as between the City and the terminated suburban purchaser(s); and (e) the City shall be released from the obligations imposed by Sections 7,01 and 7.02, except for (1) obligations to deliver specified quantities of water as presently SP.t forth in Exhibit i-1, which shall continue, adjusted as provided therein in Footnotes 1 and 4; (2) obligations to supply ~ater which have vested during the Agreeaent's Term in favor of the terminated suburban pu~ehaser(s) pursuant to Section 7.02(b)(3)(4) and (S) before the Notices of Termination become effective; (3) in lieu ~f Subsecticns 1 and 2 herein, a terminated suburban purchaser(s) may elect to have the City's -5- continuing obligation to supply water based on the quantity of water supplied by the City to the terminated s~~urban purchaser during the calendar year immediately prior to the year in which the Notice of Termination is given~ (4) no terminated suburban purchaser shall receive a supply guarantee under this paragraph which, wh~n added to the vested supply guarantees of the suburban purchasers ~r.der the Agreement or this Supplement causes the ag9r~9ate of the individual supply guarantees t~ exceed the Supply Assurance~ and (5) the Supply Assurance as r~gards thP. remaining, non-terminated suburban purchaser(s) shall be reduced, upon termination of the Aqreement and Individual Contract as to one or ~aore suburban purchasers under this Supplement, by the amount of the individual supply guarantee vested under this subsection of this Supplem~nt, of the terminated suburban purchaser(s). 4. If a suburban purchaser is entitled to terminate the Agreement under Section 2, it may do so by sending the City and each of the other suburban purchasers a Notice of Termination. The Notice will become effective and the Term of the Agreement as to it and its Individual Contract will end at the conclusion of the fiscal year auring which the Notice is eent. If ~he Agree- •ent &nd Individ•Jal Contract are terminated pursuant to this Section, the Agreement and Individual Contract will have no further force or effect thereafter with respect to the City and that suburban purchaset: except as expressly provided herein. In particular, and wit~out affecting the gen~rality expressed in the foregoing sentence, in the event the A.greeaent and Individual Contract are terainated purnuant to this Section: (a) the Stipulation for Dismissal with ?rejudice provided for in Section 2.02 shall cease to operate as a bar, in the same manner that the penultimate paragraph of that Section provides in the c&se ~he Agreement were held to be invalid, except with respect to any suburban purchaser which elects to terminate the Agreement a~.'cr itzs Individual Contract under ~ection 2(a), above~ (b) the mutual releases provided for in Sections 2.03 and 8.09 shall remain in effect notwi'":hstanding the tE: .,ination of the Agreementi (c) the respecti9e financial rights and obligation& of the parties regarding water sold during the period th~ Agreement was in effect will continue to be governed by the provisions o! the Agreement1 (d) there will be no pro rata dispositions of balances in the balancing account upon individual terminations, provided _,_ that if all sub~rban purchasers ~lect to terminate, then the ending balanc~ will be disposed ~f pursuant to Section S.07(e); (e) the City shall be released fr.-m the obligations imposed by Sectio~s 7.01 and 7.02 as to the terminating suburban purchasers except as provided in Section J(e) of this Supplement, which provisions will apply to the terminating suburban pur- chaser. Tbe Supply Assurance shall be reduced, upon t~rmination of the Agreement and Indi~idual Contract as to one or more suburban purchas~rs under this Su~pleroent, by the amount of the individual supply guarantee(s) vested under Section 3(e) of this Supplement of the terminating suburban purchi""~er(s). 5. If a court holds that the initiative requires the City to obtain the approval of ~wo-thirds of its ~oters in order to increase ~ater rates to the suburban purchasers under the Agre~ment, the City shall not be entitled to terminate the Agreement under this Supplement unless and until it has submitted a measure increasing suburban water rates to the voters of San Francisco and the voters have failed to approve it. However, the City shall not be disentitled from exercisift9 any remedy set forth herrin by reason of the failure of the voters to appro~e any measure, submitted as a result of a court order. lf the City voli.:~•·.arily and without the compulsion of a court order submits a IM!asure increasing water rates for suburban purchasers to the voters of the City and such measure is not approved by the requisite vote, then the City shall bave all the rights, remedies and options provided in Section 1 of this Supplem~nt. A suburban purchaser shall not .be entitled to terminate tbe Agreement and/o~ its Individual Contract under Section 2(a) of this Supplement 'esA and until it tas submitted to its voters a aeasure increasi~ ·•'tter rates and those voters have failed to approve it by the ~ite vote. 6. The parties inte. tr1w.: the termination of the Agreement as to fewer than a~. ?f the suburban purchasers shall not af fe~t the ~conomic relationships of tnose which remain parti~s (i.e., to either increase or decrease the average unit coct of water to the remaining suburban purchasers). Therefore, if, as a result of either the City or any suburban purchaser exercising the options provided for in Section 2(a) and/or 2(b) above, the Agreement and Individual Contracts are terminated as between the City and fewer than all of the suburban purchasers, the final suburban revenue requirements for each year thereafter shall be adjusted in a aanner so as to achieve this intent in the light of the termination. Th~ City will, no later than three aonths after the be9inning of t~e first fiscal yea~ in which fewer than all the suburbar1. purchasers remain as parties to the Agreement, nctiiy the remaining suburban purchasers of th~ aanner in which it intends to adjust the final suburban revenue requir&- •ent to achieve this intent. If one or more of the remaining -1- suburban p~rchasers believe that the m~thod proposed by th~ City does not fairly achieve this int~nt, it or they may requir~ the City to engage pro~ptly in good faith negotiations to determine how the revenue requirement should be adjusted and, if necessary, the Agreement {including any Exhibit th~reto) amend~d. If the parties are unable to agree, any party may, not later than six months after the b~ginning of such fiscal year, submit the matter to mandatory, binding arbitration pursuant to Section 8.02 of the Ag:eement. If no Demand for Arbitration is served within this six month period, the City's proposed adjustment to prospective final suburban revenue requirements shall be deemed to have been accepted by the remainin<J suburban purchasers. If, subsequent to such fiscal year, the Agreement and, if applicable, Individual Contracts with respect to additional suburban purchasers are terminated purs~ant to Section 2(a) and/ or 2(b) above, the procedures specified in this Section shall again become applicable. Nothing contained in this Section shall affect, modify or limit the rights and options of the parties under Section 2(c) or (d), above. 7. Nothing in this Supplement is intended or dhall be con- strued as an admission or concession by the parties to it tbat the initiative would apply to or affect the Agreement or the setting or collect~on of water rates by local governments. 8. In the event of the occ~rrence of circumstances tlbich would make the specific provisions of this Supplement operative, and if, in such event, there is a conflict between the specific provisions of this Supplement and the Agreement, the specitic provisions of this Supplement shall control. 9. If, as a result of renegotiations provided for above, the Agreement is to be amended, the effectiveness of the amend- ment shall be determined in accordance with Section 3.03 of the Agreement. 10. Execution of this Supplement may be a~complished by execution of separate counterparts by each signatory. The separate executed counterparts, taken together, shall constitute a single agreement. When the Agreement, as supplemented, becomes effective the City shall provide all suburban purchasers with a -8- '• counterpart original of this Supplement signed on beh~~f of the City. IN WITNESS WHEREOF, the parties hereto have executed this Supplement, to become effective u~on the effectiveness of the Settlement ~greement, by their duly authorized representatives. DATED: Authorized by Public Utilit~es Commission Resolution No. 8~­ Adopted May ~-' 1984. RCiUaine A. Boldrid9~, Secretary Approved by Board of Supervisors Ordinance No. Adopted , 1984. John L. Taylor, Clerk DATED: , 1984. --------- CITY 1.ND COUNTY OF SAN FRANCISCO By Rudolf Nothenberg General Manager of Public Utilities CITY By_,,..~.---~~~_,,_.,q.~..=._;;;_~~ Its~~-___.~l=::~i:;.=~-~~-~ Approved by___,,,~~~~~~~~ of the City Council Adopted: July 9 , 1984. a.,~ CityUferk/Secretary -9- I