HomeMy WebLinkAboutStaff Report 3578
City of Palo Alto (ID # 3578)
City Council Staff Report
Report Type: Consent Calendar Meeting Date: 4/1/2013
City of Palo Alto Page 1
Summary Title: Amendment to the Water Supply Agreement with San
Francisco
Title: Approval of Amendment Number One to the Water Supply Agreement
with the City and County of San Francisco
From: City Manager
Lead Department: Utilities
Recommendation
Staff recommends that Council approve Amendment Number One to the Water Supply
Agreement with the City and County of San Francisco.
Executive Summary
In November 2012, the voters of San Francisco defeated an initiative to evaluate the restoration
of the Hetch Hetchy Valley from its current condition to its original valley configuration. In
order to ensure there is a process for the wholesale water customers of San Francisco’s regional
water system to have a more formal role in future restoration related discussions, the San
Francisco Public Utilities Commission (SFPUC) and the Wholesale Customers have developed an
amendment to the Water Supply Agreement. The SFPUC has approved the amendment, and
the Wholesale Customers, including Palo Alto, must approve the amendment to put it into
effect.
Background
In June 2009, The City of Palo Alto, entered into a Water Supply Agreement with the City and
County of San Francisco and Wholesale Customers in Alameda County, San Mateo County and
Santa Clara County (CMR: 269:09). The Water Supply Agreement sets forth the terms by which
the 26 wholesale customers will purchase water from the SFPUC’s regional water system, which
includes the Hetch Hetchy Reservoir.
During the November 2012 election, a group named Restore Hetch Hetchy placed an initiative
before San Francisco voters that would have required the City and County of San Francisco to
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develop plans to drain the Hetch Hetchy Reservoir and restore the Hetch Hetchy Valley. The
initiative was defeated, but the organization announced that it will continue to pursue these
goals.
The Wholesale Customers use two-thirds of the water provided by the regional water system
and pay two-thirds of the costs of building, operating and maintaining the regional water
system. However, none of these water customers may vote on San Francisco ballot measures.
As a result, there is uncertainty as to how the parties would address changes to the regional
water system in the event of a future abandonment or decommissioning of O’Shaughnessy
Dam, which forms the Hetch Hetchy Reservoir, or a draining of the reservoir.
Discussion
In order to provide long-term protection for the Wholesale Customers, the Bay Area Water
Supply and Conservation Agency (BAWSCA) and San Francisco have developed an
administrative solution, an amendment to the Water Supply Agreement, which addresses
water-supply reliability, water quality and cost-allocation. This amendment will assure that the
existing condition of the Reservoir is maintained unless the parties agree to a further
amendment to the Water Supply Agreement. Notably, the amendment provides that if the
parties do not agree on any such amendment, San Francisco may not drain the Reservoir or
abandon or decommission O’Shaughnessy Dam.
San Francisco, acting by and through the SFPUC, approved Amendment Number One on
January 22, 2013, and authorized its General Manager to execute the amendment, pending
approval by the requisite number of the Wholesale Customers.
Pursuant to the Section 2.03 of the Water Supply Agreement, the Water Supply Agreement may
be amended by a minimum of two-thirds of the Wholesale Customers representing 75% of the
quantity of water delivered by San Francisco to all the Wholesale Customers during the fiscal
year immediately preceding the amendment.
The proposed amendment will provide a voice for the City of Palo Alto and the other Wholesale
Customers during any future discussions regarding the draining of Hetch Hetchy. The ability to
develop and execute this amendment reflects the evolution of the relationship between the
SFPUC and the Wholesale customers and is an acknowledgment on the part of the SFPUC that
the Wholesale Customers are an integral part of the SFPUC system and deserve formal
representation on important issues that impact the regional water system.
Resource Impact
The execution and adminstration of Amendment Number One to the Water Supply Agreement
will not result in any new or increased resource requirements.
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Environmental Review
The Amendment is not subject to the California Environmental Quality Act (Public Resources
Code Section 21000 et seq.) (CEQA) pursuant to Section 15378(b)(5)(the activity is not a project
as it involves an adminstrative activity that will not result in direct or indirect physical changes
in the environment) of the State CEQA Guidelines, California Code of Regulations, Title 14,
Chapter 3.
Attachments:
Attachment A - Resolution (PDF)
Attachment B - Amendment No 1 language with signature pages (PDF)
Cities Association letter of support (PDF)
*NOT YET APPROVED*
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Resolution No. _________
Resolution of the Council of the City of Palo Alto
Approving an Amendment to the Water Supply Agreement
With the City and County of San Francisco
R E C I T A L S
A. The City and County of San Francisco, acting by and through its Public Utilities
Commission, entered into a Water Supply Agreement with Wholesale Customers in Alameda
County, San Mateo County and Santa Clara County in June 2009 (WSA); and
B. Proposition F, the "Water Sustainability and Environmental Restoration Act"
appeared on the November, 2012 ballot and, if enacted, would have required the City of San
Francisco to evaluate how to drain Hetch Hetchy Reservoir; and
C. The San Francisco Charter acknowledges that the Hetch Hetchy Water System,
including O'Shaughnessy Dam, is an irreplaceable asset such that San Francisco could not drain
Hetch Hetchy Reservoir or abandon or decommission O'Shaughnessy Dam absent a Charter
amendment as well as additional regulatory and administrative approvals; and
D. The parties, at the time of entering into the WSA, contemplated that Hetch
Hetchy Reservoir and O'Shaughnessy Dam were both integral parts of the Regional Water
System and were considered Existing Assets as that term is used in the WSA, and were included
in the calculation of the Wholesale Revenue Requirement; and
E. The parties, at the time of entering into the WSA, also contemplated that the
reliability and quality of the water to be delivered was premised on the shared assumption of
the continued use of Hetch Hetchy Reservoir and O'Shaughnessy Dam as integral components
of the Regional Water System; and
F. The parties, at the time of entering into the WSA, did not contemplate that an
alternate water delivery system created as a result of draining Hetch Hetchy Reservoir, or
abandoning or decommissioning O'Shaughnessy Dam, would be considered part of New
Regional Assets described by the WSA; and
G. The parties now desire to amend the WSA to reaffirm the water reliability and
quality requirements set forth therein, and to acknowledge that Hetch Hetchy Reservoir and
O'Shaughnessy Dam will continue to be used as integral components of the Regional Water
System, unless both San Francisco and the Wholesale Customers approve any alternate water
storage and delivery system to be used for delivery of water under the WSA; and
H. Said amendment to the WSA was approved by the San Francisco Public Utilities
Commission on January 22, 2013 and its General Manager was authorized to execute it,
provided the amendment is approved by the Wholesale Customers; and
I. The City Manager recommends the approval of the attached amendment.
*NOT YET APPROVED*
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NOW, THEREFORE, BE IT RESOLVED:
SECTION 1. The attached amendment to the Water Supply Agreement Between the
City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo
County, and Santa Clara County (Amendment) is approved.
SECTION 2. The City Manager is authorized and directed to execute the Amendment, in
the form attached hereto, on behalf of the City.
SECTION 3. The Council find that the adoption of this resolution does not meet the
definition of a project under Public Resource Code Section 21065, thus, no environmental
assessment under the California Environmental Quality Act is required.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ ___________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ ___________________________
Senior Deputy City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative
Services