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HomeMy WebLinkAboutRESO 10024 1 6055600 Resolution No. 10024 Resolution Of The City Council Of The City Of Palo Alto Approving An Amendment To The Amended And Restated Water Supply Agreement Between The City And County Of San Francisco And Wholesale Customers In Alameda County, San Mateo County, And Santa Clara County R E C I T A L S A. Water supply agencies in Alameda, San Mateo, and Santa Clara Counties have purchased water from the City and County of San Francisco (San Francisco) for many years. B. The San Francisco Public Utilities Commission (SFPUC or Commission) operates the Regional Water System, which delivers water to communities in Alameda, San Mateo, and Santa Clara Counties, as well as to customers within San Francisco (collectively, “the Parties”). C. The Parties entered into the “Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and Certain Suburban Purchasers in San Mateo County, Santa Clara County and Alameda County” in 1984 (1984 Settlement Agreement and Master Water Sales Contract). D. In April 2003, water supply agencies in Alameda, San Mateo and Santa Clara Counties (collectively referred to as the "Wholesale Customers" or "BAWSCA member agencies") established the Bay Area Water Supply and Conservation Agency (BAWSCA), as authorized by Water Code Section 81300 et seq. E. Upon expiration of the 1984 Settlement Agreement and Master Water Sales Contract, the Parties entered into the “Water Supply Agreement between San Francisco and Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County” (Water Supply Agreement or WSA) on July 1, 2009, authorized by SFPUC Resolution No. 09-0069, dated April 28, 2009. F. In 2017, the Wholesale Customers directed BAWSCA to act as its authorized representative in discussions and negotiations with San Francisco to amend the Water Supply Agreement to address a number of substantive issues and these negotiations resulted in the Parties' adoption of the Amended and Restated Water Supply Agreement (Amended and Restated Water Supply Agreement) in 2018, authorized by SFPUC Resolution No. 18-0212, dated December 11, 2018. G. On March 4, 2019 this Council, by Resolution No. 9821 approved the Amended and Restated Water Supply Agreement. DocuSign Envelope ID: 82A055DF-154F-4D6F-AA86-D9AFC17B1CA5 2 6055600 H. Under Article 3 of the Amended and Restated Water Supply Agreement, the SFPUC agrees to deliver water to the Wholesale Customers up to the amount of 184 million gallons per day (MGD), referred to as the “Supply Assurance,” and the Wholesale Customers have allocated shares of the Supply Assurance among themselves, referred to as Individual Supply Guarantees (“ISG”). I. Section 3.04 of the Amended and Restated Water Supply Agreement enables a Wholesale Customer that has an ISG to transfer a portion of its ISG to one or more other Wholesale Customers, subject to several conditions. J. Under Section 3.07 of the Amended and Restated Water Supply Agreement, four Wholesale Customers (Alameda County Water District and the Cities of Milpitas, Mountain View, and Sunnyvale, collectively, the “Minimum Purchase Customers”) may purchase water from sources other than the SFPUC, but they are each obligated to purchase a specific minimum annual quantity of water from the SFPUC, referred to as a “Minimum Purchase requirement”. K. If a Minimum Purchase Customer does not meet its Minimum Purchase requirement in a particular fiscal year, it must pay the SFPUC for the difference between its metered water purchases during the fiscal year and its minimum annual purchase quantity set forth in Attachment E of the Amended and Restated Water Supply Agreement . L. The Amended and Restated Water Supply Agreement does not currently allow a Minimum Purchase Customer to transfer a portion of its Minimum Purchase requirement and the associated financial obligation to another Wholesale Customer. M. In September 2017, BAWSCA and the Water Management Representatives (WMRs) of the BAWSCA member agencies began reviewing the issue of Minimum Purchase Quantities, as described in Section 3.07.C of the Water Supply Agreement, and discussing the creation of a process to transfer Minimum Purchase Quantities. N. Throughout 2017 and 2018, the WMRs held multiple meetings during which the agencies currently subject to Minimum Purchase Quantity requirements and the other Wholesale Customers shared their interests and concerns regarding changes to the Minimum Purchase Quantity requirements and allowing transfers of Minimum Purchase Quantities. O. At the time the Amended and Restated Water Supply Agreement was approved, the Parties expressed a collective interest in working together to develop a process for the expedited and permanent transfer of Minimum Purchase Quantities. DocuSign Envelope ID: 82A055DF-154F-4D6F-AA86-D9AFC17B1CA5 3 6055600 P. In 2019, the Wholesale Customers directed BAWSCA to draft a proposed amendment to the Amended and Restated Water Supply Agreement to provide a procedure for expedited and permanent transfers of Minimum Purchase Quantities that safeguards the financial and water supply interests of Wholesale Customers not participating in such transfers. Q. The Parties recognize that, both before and after the most recent statewide drought, after meeting drought-related conservation mandates, several BAWSCA member agencies were unable to meet their respective Minimum Purchase requirements described in Article 3.07 of the Amended and Restated Water Supply Agreement, which requires payment for water up to the required Minimum Purchase level even if such water is not delivered and used. R. Several of the Wholesale Customers with Minimum Purchase requirements might be interested in transferring a portion of their Minimum Purchase Quantity within their respective ISGs to reduce the financial obligation to pay for imputed sales for Minimum Purchase water that is not used. S. With its Alternative Water Supply Program, the SFPUC is in the early stages of planning for fourteen projects to support the Wholesale and Retail Customers' ability to respond to climate change and address future water supply challenges and vulnerabilities , such as regulatory changes, earthquakes, disasters, emergencies, and increases in population and employment. T. The City of San Jose (San Jose) and the City of Santa Clara (Santa Clara ) are temporary, interruptible Wholesale Customers of the SFPUC Regional Water System and both cities wish to become permanent Wholesale Customers. U. Pursuant to Section 4.06 of the Amended and Restated Water Supply Agreement, by December 31, 2028, San Francisco must complete any necessary California Environmental Quality Act (CEQA) review and must decide whether or not to make San Jose and Santa Clara permanent Wholesale Customers of the Regional Water System with a combined Individual Supply Guarantee (ISG) of 9 million gallons per day (MGD) allocated equally between the two cities, as well as how much water in excess of 9 MGD it will supply to San Jose and Santa Clara. V. Section 4.06 of the Amended and Restated Water Supply Agreement provides: "San Francisco will make San Jose and Santa Clara permanent customers only if, and to the extent that, San Francisco determines that Regional Water System long term water supplies are available." DocuSign Envelope ID: 82A055DF-154F-4D6F-AA86-D9AFC17B1CA5 4 6055600 W. According to SFPUC's December 2021 Alternative Water Supply Planning Quarterly Update (Quarterly Update), "[f]or San Jose and Santa Clara to become permanent customers of the SFPUC, an additional 9 MGD of new, year-round supplies would be needed to meet historic demand levels and up to 15.5 MGD would be needed to meet planned demand through 2045." X. According to its December Quarterly Update, SFPUC is planning with the “intention to be able to make San Jose and Santa Clara permanent customers,” but is prioritizing instream flow obligations to meet existing permanent customer demands, including drought supplies. Y. SFPUC has budgeted $298.3 million over the next ten years to fund water supply projects. Z. SFPUC, San Jose, Santa Clara, and BAWSCA are actively working together to consider water supply projects that may offer potential sources of supply to support San Jose and Santa Clara as permanent Wholesale Customers. AA. BAWSCA and SFPUC have identified intra-system water transfers as one potential solution to long term water reliability needs among the Wholesale Customers. BB. A Minimum Purchase Customer might be more inclined to tran sfer a portion of its ISG to another Wholesale Customer under Section 3.04 of the Amended and Restated Water Supply Agreement if it was able to include a simultaneous transfer of a portion of its Minimum Purchase requirement and the associated financial obligation. CC. Allowing simplified permanent intra-system transfers of portions of Minimum Purchase Quantity and ISG will facilitate the development of new water supplies by SFPUC that are necessary to support San Jose and Santa Clara as permanent Wholesale Customers . DD. The Parties have developed a process to allow for the transfer of a Wholesale Customer's Minimum Purchase Quantity in conjunction with an ISG transfer pursuant to Section 3.04, which ensures that such transfers will not result in new or different risks to the water supply and financial interests of Wholesale Customers not participating in a transfer. EE. The Parties agree that the total aggregate amount of Minimum Purchase Quantity that may be transferred by all of the Wholesale Customers subject to Minimum Purchase requirements as first specified in Attachment E of the Amended and Restated Water Supply Agreement, over the course of one or multiple transfers, is limited to 6 MGD. FF. If demand for Minimum Purchase Quantity transfers exceeds 6 MGD in the future, the Parties agree to consider further amending Section 3.04 of the Amended and Restated Water Supply Agreement to increase the total aggregate cap on the amount of Minimum Purchase Quantity that may be transferred . DocuSign Envelope ID: 82A055DF-154F-4D6F-AA86-D9AFC17B1CA5 5 6055600 GG. A proposed transfer that does not meet the requirements of Section 3.04 of the Amended and Restated Water Supply Agreement, as amended by this Resolution, may be presented as an amendment to the Amended and Restated Water Supply Agreement pursuant to Section 2.03 of the Amended and Restated Water Supply Agreement . HH. The Parties agree to consider a proposal by the City of Mountain View (Mountain View) and the City of East Palo Alto (East Palo Alto) to amend the Amended and Restated Water Supply Agreement to allow for the conversion of Mountain View's 2017 sale of 1 MGD of ISG to East Palo Alto into a transfer of 1 MGD of Mountain View's ISG that includes Minimum Purchase Quantity to East Palo Alto, over a period of time, and in a manner that protects the other Wholesale Customers' financial and water supply interests. II. If such a conversion is approved by the Parties, the 1 MGD of Mountain View's Minimum Purchase Quantity would be counted towards the total aggregate 6 MGD cap on Minimum Purchase Quantity transfers. JJ. The Parties now desire to adopt an amendment to the Amended and Restated Water Supply Agreement to permit Wholesale Customers with an ISG to transfer, or accept a transfer, of both a portion of a Wholesale Customer's ISG and its Minimum Purchase Quantity. KK. An updated Amended and Restated Water Supply Agreement, reflecting this amendment, in the form negotiated by BAWSCA (2021 Amended and Restated Water Supply Agreement), was presented to and approved by SFPUC on January 26, 2021 pursuant to SFPUC Resolution No. 21-0009. The Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. The Council approves the modifications included in the attached "2021 Amended and Restated Water Supply Agreement Between the City and County of San Francisco Wholesale Customers in Alameda County, San Mateo County, and Santa Clara County" dated January 2021 (2021 Amended and Restated Water Supply Agreement). SECTION 2. The City Manager is authorized and directed to sign the 2021 Amended and Restated Water Supply Agreement, in the form previously approved by the San Francisco Public Utilities Commission and attached hereto. // // // DocuSign Envelope ID: 82A055DF-154F-4D6F-AA86-D9AFC17B1CA5 6 6055600 // SECTION 3. The Council finds that the amendment considered now is not a "project" for the purposes of CEQA as it involves an administrative activity that does not result in a direct change to the environment (see 14 CCR Section 15378(b)(5)), and would not result in a direct or reasonably foreseeable indirect physical change in the environment (see 14 CCR Section 15060(c)(2)). INTRODUCED AND PASSED: April 4, 2022 AYES: BURT, CORMACK, DUBOIS, FILSETH, STONE NOES: KOU, TANAKA ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Assistant City Attorney City Manager Director of Utilities Director of Administrative Services DocuSign Envelope ID: 82A055DF-154F-4D6F-AA86-D9AFC17B1CA5 Certificate Of Completion Envelope Id: 82A055DF154F4D6FAA86D9AFC17B1CA5 Status: Completed Subject: Please DocuSign: RESO 10024 - Approving An Amendment To Amended And Restated Water Supply Agre... Source Envelope: Document Pages: 6 Signatures: 6 Envelope Originator: Certificate Pages: 5 Initials: 0 Mahealani Ah Yun AutoNav: Enabled EnvelopeId Stamping: Enabled Time Zone: (UTC-08:00) Pacific Time (US & Canada) 250 Hamilton Ave Palo Alto , CA 94301 Mahealani.AhYun@CityofPaloAlto.org IP Address: 199.33.32.254 Record Tracking Status: Original 4/6/2022 2:13:01 PM Holder: Mahealani Ah Yun Mahealani.AhYun@CityofPaloAlto.org Location: DocuSign Security Appliance Status: Connected Pool: StateLocal Storage Appliance Status: Connected Pool: City of Palo Alto Location: DocuSign Signer Events Signature Timestamp Amy Bartell amy.bartell@cityofpaloalto.org Assistant City Attorney City of Palo Alto Security Level: Email, Account Authentication (None) Signature Adoption: Pre-selected Style Signed by link sent to amy.bartell@cityofpaloalto.org Using IP Address: 199.33.32.254 Sent: 4/6/2022 2:16:04 PM Viewed: 4/6/2022 6:07:58 PM Signed: 4/6/2022 6:08:15 PM Electronic Record and Signature Disclosure: Accepted: 7/16/2015 5:52:40 AM ID: d8ecb53d-ef81-4016-8886-1560c48de42a Kiely Nose kiely.nose@cityofpaloalto.org Director, Administrative Services/CFO City of Palo Alto Security Level: Email, Account Authentication (None) Signature Adoption: Uploaded Signature Image Signed by link sent to kiely.nose@cityofpaloalto.org Using IP Address: 199.33.32.254 Sent: 4/6/2022 6:08:17 PM Viewed: 4/12/2022 12:23:33 PM Signed: 4/12/2022 12:23:48 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign Dean Batchelor dean.batchelor@cityofpaloalto.org Director of Utilities City of Palo Alto Security Level: Email, Account Authentication (None) Signature Adoption: Pre-selected Style Signed by link sent to dean.batchelor@cityofpaloalto.org Using IP Address: 199.33.32.254 Sent: 4/12/2022 12:23:50 PM Viewed: 4/13/2022 10:13:31 AM Signed: 4/13/2022 10:13:46 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign Signer Events Signature Timestamp Ed Shikada ed.shikada@cityofpaloalto.org Ed Shikada, City Manager City of Palo Alto Security Level: Email, Account Authentication (None) Signature Adoption: Pre-selected Style Signed by link sent to ed.shikada@cityofpaloalto.org Using IP Address: 199.33.32.254 Sent: 4/13/2022 10:13:47 AM Viewed: 4/13/2022 11:59:54 AM Signed: 4/13/2022 12:00:04 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign Patrick Burt pat@patburt.org Mr Security Level: Email, Account Authentication (None)Signature Adoption: Pre-selected Style Signed by link sent to pat@patburt.org Using IP Address: 98.35.231.69 Sent: 4/13/2022 12:00:06 PM Viewed: 4/13/2022 12:00:32 PM Signed: 4/13/2022 12:04:54 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign Lesley Milton Lesley.Milton@CityofPaloAlto.org City Clerk Security Level: Email, Account Authentication (None)Signature Adoption: Pre-selected Style Signed by link sent to Lesley.Milton@CityofPaloAlto.org Using IP Address: 199.33.32.254 Sent: 4/13/2022 12:04:56 PM Viewed: 4/13/2022 2:06:33 PM Signed: 4/13/2022 2:06:43 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign In Person Signer Events Signature Timestamp Editor Delivery Events Status Timestamp Agent Delivery Events Status Timestamp Intermediary Delivery Events Status Timestamp Certified Delivery Events Status Timestamp Carbon Copy Events Status Timestamp Witness Events Signature Timestamp Notary Events Signature Timestamp Envelope Summary Events Status Timestamps Envelope Sent Hashed/Encrypted 4/6/2022 2:16:04 PM Certified Delivered Security Checked 4/13/2022 2:06:33 PM Signing Complete Security Checked 4/13/2022 2:06:43 PM Completed Security Checked 4/13/2022 2:06:43 PM Payment Events Status Timestamps Electronic Record and Signature Disclosure CONSUMER DISCLOSURE From time to time, City of Palo Alto (we, us or Company) may be required by law to provide to you certain written notices or disclosures. 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