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Home My WebLink AboutRESO7296• • RESOLUTION NO. 7296 RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO SUSPENDING OPERATION OF SECTION 7.02 (b) (3) OF THE SETTLEMENT AGREEMENT AND MASTER WATER SALES CONTRACT WITH THE CITY AND COUNTY OF SAN FRANCISCO FOR FISCAL YEAR 1993- 94 AND ALLOCATING RESIDUAL UNALLOCATED WATER UNDER SECTION 7.02(b)(1) FISCAL YEARS 1994-95 AND THEREAFTER WHEREAS, the City of Palo Alto ("City") obtains water from the San Francisco Water Department ("SFWD"), pursuant to the terms of a Settlement Agreement and Master Water Sales Contract ("Settlement Agreement") and a Water Purchase Contract ("Purchase Contract"), each of which was entered into with the City and County of San Francisco ("San Francisco") in 1984; and WHEREAS, the Settlement Agreement commits San Francisco to deliver to the City, and to other agencies in San Mateo, Santa Clara and Alameda Counties (collectively referred to as the "Suburban Purchasers") 184 million gallons per day on a collective, aggregate basis; and WHEREAS, the quantity so committed is referred to in the Settlement Agreement as the "Supply Assurance"; and WHEREAS, the 1984 Settlement Agreement did not fully allocate the Supply Assurance among the Suburban Purchasers. Instead, the Settlement Agreement provides that the amount of the Supply Assurance not already allocated on the basis of historical usage as of 1984 may, after taking into account water used by the City of Hayward ("Hayward") and the Estero Municipal Improvement District ("Estero"), be allocated by agreement among the Suburban Purchasers themselves. In the absence of such an overall agreement, Section 7.02(b)(3) of the Settlement Agreement provides for a periodic allocation based on current usage over successive three-year periods; and WHEREAS, the first such triennial allocation occurred in 1988, based on usage during Fiscal Year 1984-85 through Fiscal Year 1986-87. Thereafter, the Suburban Purchasers have suspended the operation of the triennial vesting process in order to support the San Francisco Public Utilities Commission's ("SFPUC") mandatory water rationing program which had been initiated in response to the drought; and WI'EREAS, even though the drought and mandatory rationing have ended, the need for conservation continues. The triennial vesting formula in the Settlement Agreement will continue to act as a disincentive to Suburban Purchasers to limit use of SFWD water since long-term entitlements to such water would be based on each agency's current, continuing use of it; and 940302 .pc 0051117 -1- i • WHEREAS, the San Francisco Bay Area Water Users Association ("Association"), of which the City is a member, has through a committee with representatives from differently situated agencies, studied how this disincentive can be overcome. The committee has recommended that the Suburban Purchasers agree now on the final allocation of the remaining portion of the Supply Assurance. Doing so will remove the disincentive to conservation of SFWD water and to the development of alternative water sources inherent in the triennial vesting process; and WHEREAS, the San Francisco Board of Supervisors has adopted a policy encouraging the SFPUC to pursue conservation efforts in cooperation with wholesale water customers (Resolution No. '740-89), and the SFPUC has adopted a policy committing itself to work with the Suburban Purchasers to eliminate aspects of the Settlement Agreement which serve as disincentives to water conservation or development of alternative sources of water (SFPUC Resolution No. 93-0085); and WHEREAS, the City endorses_these goals and believes the allocations set forth on Exhibit A reflect equitable principles. while also allowing for growth ih usage by Hayward and Estero and, to the extent feasible, recognizing specialized circumstances of particular Suburban Purchasers. NOW, THEREFORE, the Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Subject to the provisions of Section 3 of this Resolution, the provisions of Section 7.02(b)(3) of the Settlement Agreement dealing with the allocation of that portion of the Supply Assurance designated as "Residual Water" shall be suspended as to water used by Suburban Purchasers during FY 1993-94 (i.e., July 1, 1993 through June 30, 1994). Water usage during this period will not be used for any purpose in determining permanent entitlements of the Suburban Purchasers to Residual Water. SECTION 2. Commencing with FY 1994-95 (i.e., July 1, 1994 through June 30, 1995), pursuant to Section 7.03(b)(1) of the Settlement Agreement, the portion of the Supply Assurance designated as "Residual Water" shall be allocated as sh,Dwn on the table attached to this resolution marked Exhibit A. These allocations shall remain fixed for the remainder cf the Term, except (a) as pro rata reductions may be required pursuant to Section 7.02(b) (4) as a result of growth in usage by Hayward and Estero, or (b) if future action by the Suburban Purchasers and San Francisco allow for the partial transfer of such allocations among the Suburban Purchasers. SECTION 3. This resolution shall become effective if, but only if, both of the following conditions are met: (a) Similar resolutions are adopted, or action of equivalently formal and binding nature is taken, on or before June 30, 1994, by each of the other 25 agencies listed on Exhibit A; and 940302 apc 0051117 -2- • • (b) Amendments to the individual Water Purchase Contracts between San Francisco and both Alameda County Water District and the City of Mountain View are executed, on or before December 31, 1994, increasing the limitations on water purchases in those Water Purchase Contracts from 12.0 MGD on an annual average basis to 13.76 MGD in the case of Alameda County Water District and 13.46 MGD in the case of Mountain View, so as to be consistent with the allocations approved by this resolution. If both of the foregoing conditions are not met on or before the application dates set forth in Subsections (a) and (b), then this resolution shall not be effective for any purpose and the provisions of Section 7.02(b)(3) of the Settlement Agreement shall apply to water used during FY 1993-94, in accordance with its terms. SECTION 4. The procedure for prorate reduction in vested individual supply guarantees set forth in Section 2 of Exhibit K-3 to the Settlement Agreement shall be utilized in the event that combined water use by the City of Hayward and the Estero Municipal Improvement District exceeds 28.029 MGD for any period of three consecutive years. In so doing, the guarantees shown on Exhibit A shall be deemed to be each Suburban Purchaser's individual supply guarantee at the end of "vesting period N-1." The guarantees vested as of June 30, 1987 shall be deemed to be tI.e individual supply guarantees at the end of "vesting period N-2." The guarantees shown on (or provided for in) Exhibit K-1 to the Settlement Agreement shall be deemed to be the individual mupply guarantees at the end of "vesting period N-3." Nothing in this resolution shall constitute an acknowledgement by the City that San Francisco is obligated or entitled to reduce the City's supply guarantee in the circumstances described in this section and the provisions of Section 7.02(b)(4) of the Settlement Agreement to that-- effect are expressly reaffirmed. SECTION S. Nothing in this resolution is intended to be in derogation of the reservation of claims by the Suburban Purchasers to water in excess of the Supply Assurance, which reservations are contained in Section 7.04 of the Settlement Agreement. In addition, this resolution is not intended to alter, amend or modify Section 9.10 of the Settlement Agreement. SECTION 6. The Council finds that there is no possibility that the provisions of the Council Procedural Rules will cause a significant effect on the environment, and upon that basis finds the project exempt from the provisions of the California Environmental Quality Act. 940302 apc 0051117 -3- PASSED AND ADOPTED this 21st day of March , 1994 by the following vote: INTRODUCED AND PASSED: March 21, 1994 AYES: ANDERSEN, FAZZINO, HUBER, KNISS, MCCOWN, ROSENBAUM, WHEELER NOES: - ABSENT: SCHNEIDER, SIMITIAN ABSTENTIONS: A'Yi'EST : %i • APPROVED : 940302 apc 0051117