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HomeMy WebLinkAbout0188.094March 1'1, 1994 THE HONORABLE CITY COUNCIL Pale Alto. California /' .~ . ~, 9 Resolutipn A] locating Residual Unallocated Water Under Se.:::tion 7. Q2 (b) Ilj of the Set:tlement Agreement and Master Water Sales Contract with the City of San Francisco Members of the Council: Repcrt in Brief This report requests Council approval of a resolution to allocate all reGidual water apportioned to the suburban agencies in the Settlement Agreement -with San Francisco. Of 184 million gallons of water per day (rngd) apl?ortioned to the suburban agencies. only 16 remain unallocated. The resolution removes incentive for suburban agencies to increase their water cO~Eumption in order to receive greater allocations and is. therefore, in concurrence with Palo ~tO'6 poli~~ of conserving resources. In addition, adoption of the resolution will increase Palo Alto's allocation by .64 mgd. Utilities Advisory Ccmmission rUAC, Rev]@w and ~_ction The resolution, and a det.ailed memorandum to the UtiJit ies Advisory COlmnissio~ (UAC) listing the benefits of this action. are attached. At their Febura.ty 2; 1994 meeting the OAC reviewed staff' S rec~endation and unanimously approved a motion ~that the Utilities AdYiscry Commission recommend that City Council approve the resolution suspending Section 7.02 (b) (3) of the Settlement Agreement and Maste_r Sal~s Contract between lhe City and Count.y of Sal1 Francisco and allocating residual unallocated water under Sect.ion ? 02 (b) (~) for fiscal years 1994=95 and thereafter." CMR: 1!l8:94 Reqommendatign Staff recommends Cour',cil approve t~e attached Resolution suspending section 7.02 (b) (3) of the Settlement Agreement as a Master Sales Contract between ~he City and County of San Francisco and allocating residual unallocated water under Section 7.02 (b) {l) for fiscal years 1994-95 and thereafter. Respectfully submitted, .-r rf, ,.j -, """ 1'j"-"' ... 5 .... '/~ w<A~. TOM HABASHI 77 ;;'~~7e Plaruling EOW;.J· ~~ vX~R Director of Utilities Cit Manager Attachments: UAC Memorandum: "~location of Residual Water Supply~ Resolution cc, Utilities Advisory Commission CMR: 188:94 ~x --'------------.~ ··~t,~j( -":i_C,' , ~' ". AJminsatiot i """"",,(JI!Xe .ru...:n9.1!77 4l53Zt~'m Admini!,tr.rti\1!~~ .u3..329.:J.~ ·U5.3:!l1}£il F ....... CllStt.Jme:r5enia:C~ lli~2161 ,ll3~1.(16::lrFaIoO CredilClndCo&ctiun li3.3!9.:.3"33 ii3D..D$l Fa.': E,~ ..f!S.3:!9..:'"!N ..jl,.319.2iiOOP4J;; """" i1~':"'l86 il.5.I!9261l!FiIA Water-Gas-W~4rler 415..:£Sl.::3S7 ..J153-"'9.2!a1Fa.'I; Resoun::J:~·~t ~ PLV"lrling ';15..t!9~ ..ffi.32ia1..=i'J7F;r.: Resource~·ation CJper.u;cro &=;.: lliA%.EOS.:l ·n5A9I;.1fi99 Fax Wa1ef"~Gw" Wastt'walet" 415.Bb..ti9S2 ..J15.&.n92..Jr.n.. Cityof~loAlto UtiJiti<'"50 D.1-1(/rnli~ If TO: mOM: Ut.ilil1es Ac!ViS.OfY comm~'iS:S:ion Palo Alto. Calitomia Edward 1. M CIZek 1'1 Drreclor of Utilities / SUBJECT: Alloc.a.tlon of Residual Wate.r Supply DATE: January 24, 1994 Members of the Commission: Report in Brief This report requests the Utilities. Advisory Commission recommend Ihat CQuncil approve a resolution to allocale Ihe ponion of the San Frarv:;sco Water District (supplier) "'later supply dmt is. earmarked to t...ie Bay Area Water Users Association M~mbers (Members) but not curren!]y apporJoned amongst them. The members ar~ er:litll!"d to a tCt(lJ of 184 million gallon of .... "3.ter per day (MGD). all but 16 MGD ha\'e already been ..... ested to lhe members. The existing agreemenls. bet ..... :een the Supplier 2nd the Members would distribute the 16 MGD based on future consumptio:1. This give.§ tl-,e members an incentive to increase consumption of water (0 rr.ax.~miz.e their fUiure ,",,~Jter alloc::u:lon. The attacbed resolution removes this incenLive and allocates the: 16 MGD in a melhod deemed tqui..wle by the member rep;ex::ntati·.'es, Palo Alto's share oftl'.e 16 MOD is 0.64 MGD. Bacl.:DIOund In 1984, thiny suburban water agencies. including Palo A!to, signed a SetLlement with San Francisco, thereby resolving olJts!anding disagreements. Section 7.02 of the Seaiemenl provided for the allocahon of the 184 million ganon per dllY Supply Assl!rance betwee:1 the Members. Failure by the Members [0 detenmne melf o~·n distribution method evoked provision 7.02(b)(3), whereby water is '.-e£tt:d to the agencies lIi.en.1~aIly. based on the previous three years~ consumption. AI this time a1J but 16 MGD have been vested in this fushior,. rD. G..l\ It)!'i(} r.W AJII',CA 9-t..1(1) 7.b o During the recent drought, ;1 bec2me cI~r (hat th~ cOnl;nuatton of tilt' C<J.frent approach fostered an atutude of irlcrea.~ing cons~mp!ior.. no ma,ler hQ'.!.' wastdul. in order to maximize future wate:r a!iocatiof"' .. In an (ffon Ie remO'e',! this. cor.ser\'a~ion disincentive, BA\VUA directed a commitiee te-develop af'! equ.~lab~e pi.~n fllr ~he ailocalion of the remaining 16 MGD. The committee. including a repre~ntali\le from Palo Alia, ..... orked diligently to develop an allocation :plan for the remaining 16 MGD, The general aprroach and philosophy of the plan was ~resenled to tile BAWJA membership during a workshop ir. February of 1993. The plan was modified based on input from that workshop. The tinaJ resolution "Nas .accepted unanimously by the members al their Dexember plenary session. Tn order to be binding, it must now be adopted by each member's governing board. Discussion Section 7.02 of thl! Se!tlem~m l1as always allowed the Mernbe:-s (0 determine the alJo--....ation of the Suppiy Assur.lI1ce among themselves. SectiOTI "7.02(b)I'." provided thoD: triennial vesting as the defauh method in the e\'ent thar the MCIr:Jber!> failed to de\'elop their own a!location method. Until recently. there has been no attempt by the Members to solve this problem cooperatively. Recently, ho·,,\;ever. challenges such as the threat of filtration of Hetch Hetchy, mandated stream flo ..... s, and other regulations have caused the Members to band together to proiect and better manage their water supplies. TIle ratification of the attached resoi1Jtion is viewed as a first step tolAard better managemen: of SF',,'D water by the Members. The fonov.;ng are benefilS fTOm the ratification of lhe jesolmian. These benefIts are very important .0 the City since it recej"es all its \I,;ater supply from the S':pplier. L Ratification ends the co~sumptiofl ba...:.ed triennia] ves;jng method. Trais removes the ince."n:ive to increase 'IA"alel" consumption as a mea.'1S to increase 3.11 agency's permanem water allocation. 2. Ratification allocates 9.8 mgd in a manner which is fair to all ci {he affected agencies. All agencies received jn~reases in their Supp:'y Assuranc.::s. Of the 9.8 mgd distnouted, Palo Alto will receive .64 mgd. 3. Ratification pr0vides a 6.1 mgd buffer ~t .aside te absorb the growth of Estero and HaY'W3rd. Estew and H .. yward l1ave pr~·Sel[lemt!n! ccnrracts with the Supplier. These contracts give the entities preference o'''er the mher memhers. The buffer prolects the other .2.gencles· Supply Assurances from erosion by Estero and Hayward for the next len to ri fteen ye;;.rs.. ". ------------ -", J,.- In addition Sectiol'! 4 of 1~e Resolu;ion pro', ides for a proi"Jta decrease in the S"upply Assurances of the agen:ies in the event that Hayward.lEs!ero gro ... ·;h surpasses the buffer. It is imiX'rura 10 rta:iz.t: that !Iv::: passage of ttlis resolution does !'lOt affect the statu:; of Hayward and Estero. Their sp""...::jal St;!tU5 exists independent of this resolution. 4. Ratification establisbes a basis for future agreements among tile agencies, including temporary i!i1d permanent transfers of surplus entitlement between agencies. s. F-4SS3ge of the Resolution by all :26 affected agencies will be seen as an important iest of the membe!s' ability to take umfied action on importaflt w;::'[er issues. Re;;qmme.ndati ons Staff TeGUesiS that the Utilities Advisory Committee support the staff recommendation that Council approve the attacherl resolution suspending Section 7.02(b)O) c,f the SettJement Agreement and Master Sales Contr.K.1 bet'A'eerl the Ci~y and Count.\! of San Francisco and aliocating residual unallocated waler under Se.::tion 7.0~(bHl) for fls.:-al yeJ.rS 1994·95 and thereaf'..er . , _. RBSOLti"T!CN NO. RESOLUTION OF WE COUNCIL OF TF.E CITY OF PALO ALTO SUSPENDING OPERATION 07 SECTION 7.02(b)(3)OF THE SBTI'L~NT AGREEMENT AND MASTER WATER SALES CONTRACT WITH THE CITY AND CCtlNTy OF SAN FRANCISCC FOR FISCAL YEAR 1993- 94 AND ALLOCATING RESIDUAL UNALLOCATED WATER UNDER SECTION 7.02(b) (1) FISCAL YEARS 1994·95 Jl1'ID THRRRAFTER WHEREAS, the City of Palo ~to (~City·) obtains water from the San 1rancisco Water Depar~ent (·SYWD~), pursuant to the terms of a Settlament Agreea~nt and Master Water Sales Contract (·Settlement Agreement·) and a Water Purchase Contract (:I f".Jrchase Contract·). each of which was enter-ed into 'With the City and County of San Francisco (·San Francisco-) in 19B4; and WHEREAS, the Settlement A9re~£nt commits San Francisco to deliver to the City, and to other agencies in San Mateo, Santa Cl-3.ra and Alameda Counties (collectively referred to ae· the -Suburban Purchasers·) 184 mdllion gallons per day on a co~lective, aggregate basis; and WBBREAS, the quantity so committed is referred t.o in the Settlement: Agreement as the ·Supply Assuranc:e w ; and WHEREAS, the ~9S4 Settlement Agreement did not fully allocate the SUpply Assurance among the Suburban P..J.rchasers. Instead. the Settlement Agreement provides that the amount of the Supply Assurance not already allocated on the basis of historical usage aE of 1984 may, after taking ir.to account water used by the City of Ka.ywa.rd {"Hayward') and the £stero Municipal Improvement District C'BBtero')~ be allocated by agreement among the Suburban PurchaserG themselvea. In the absence of such an overall agreement.. Section 7.02 (b) (3) of the Sel;.tlement Agreement provides for a periodic allocation based on current usage over successive three-year periods; and WHEREAS. the first such triennial allocation occurred in 1ge8~ based on usage Gu.r:"ing Fiscal Year 1984-85 through Fiscal Y.ear 1986-87. Thereafter, the Suburban Purchasers have suspended the operation of the triennial vesting process in order to support the San Francisco Plmlic Utilities Commission's (~SFPUC"') ma.ndatory water rationing program which had been initiated in respo!lse to the drought; and WHEREAS~ even though the drought and mandatory rationing have ended, the need for conservation continuee. The triennial vesting formula in the Settlement Agreement will continue to act as a disincentive to Suburban Purchasers to lLmit use of s~n water since long-cerm entitlements to such water would be bas9d on each agency'S cur::-ent. continuing use of it; and -1- -.--~- () 'WHEREAS, the San Fran~isco Bay Area Water Users Association (·Association!l)~ of -which the Cit.y is a member, has through a committee with representati .... es from differently situated agencies. studied how this disincentive can be overcome. The committee has recommended that the Subur.ban Purchasers agree now on the final allocation of the rema.ining portion of the Supply Assurance. Do~n9 BO will remove the disincentive to c:onsexvation of SFWn water and to the development of alternative water sources inherent in the trier.nial vesting process; and WHEREt..s, the Scm Prancisco Beard of Supervisors has adopted a policy encouragiDg the SFPUC to pursue conservation efforts in cooperation with wholesale water customers (Resolution No. 740-89) ~ aDd 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 WHER.XAS, the City endorses these goals and believes the allocations set forth on Exhibit A reflect equitable principles, while also allowing for growth in usage by Hayward and Estero and, to the extent feasible. recognizing specialized circumstances of particular Suburban Purchasers. N~W, THERE~ORE, the Council cf the City of Palo Alto does hereby RESOLVE as fallows: SECTTqN 1. Subject to the provisions of Section 3 of this Resolution, the prarisions of Section 7.02{bl {3) of the Settlement Agreement dealing with the allocation of that portion of the Supply Assurance ~signat~d 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). Mater usage during this period will Dot be used for any purpose in determining permanent entitlements of the Suburban Purchasers to Residual Water. @..Q.rION 2. Commencing with FY 1554·95 'Le., July 1~ 1994 through June 30, 1.995). pursuant to Section 7.03 (b) {l) of the Settlement Agreement. the portion of the Supply Assurance designated as -Residual Water~ shall be allocated as shown on the tahle attached to this resolution marked Ex.l1ibit A. These allocations shall remain fixed for the remainder of the Tenn, except (a) as pro rata reductions may be required pursuant to Sectio~ 7.02(bJ (4) as a result of growth in usage by Hayward and Estero, or (b) if future action by the Sl.!b'..lrban Purchasers and San Frar;.cisco allow for the partial transfer of such allocations among the Suburban Purchasers. SBCTION 3. This resolution shall become ~ffective if. b~t only if~ both of the following conditions are met: (al Similar resolutions are adopted. or equivalently formal and binding nature is take~. on June 30, 1994. by each of the other 25 agencies lixhibit A; and -2 - action of or before listed on ;:~ . o (bl Amendments to the individual Water Purchase Contracts between San Francisco and both Alameda County Water District and th~ City of Mountain View are executed, cn or before December .31, .1994, increasing th'2 lirt'litations 00l water purchases in those Water Purchase Contracts from 12.0 M:;D on an annual average basis to 13.76 :«;D in the case of Alameda County Water District and 13.46 MOD in the case of MOuntain View, so as to be consistent with the allocat.ions approved by this resolution. If both of the foregoing conditione are not met on or before the application dates set forth in SubBe~tions (a) and (b). then this resolution shall not be effective for any purpose and the provisicns of Section 7.02(b) (3) of the Settlement Ag~eement shall apply to water used during FY 1993-94~ in accordance with its terms. SRctION 4. Th~ procedure for prorate reduction in vested individual supply guarantees set forth in Section 2 of Exhibit x-) 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 shewn 00 Exhibit A shall be deemed to be each Suburban Purchaser's individual supply guarantee at the end of ·vesting period N -1. II The guar.antees vested as of June 30, 19S7 shall be deemed ~o be the individual supply guarantees at the end of ·vesting period N-2 _ • The guarantees shown on (or provided for in> Exhibit K-l to the Settlem.ot Agreeme~t shall be de~~~d to be the individual supply guarantees at the end of ·vesting period N-3_1 Nothing in this resolution shall cOustitute ~~ ackLowledgement by the City that San Francisco is obligated or entitled to reduce the City's supply guar~~tee in the circumstances described in this section and the provisions of Sectiou 7.02(b} (4) of ~he Settlement Agreement to that effect are expressly reaffirmed. SECTION 50 Nothing in thiE! re8olutio~ is intended to be in derogation of the reservation of claims by the Suburban Purchasers to water in excess of the Supply Assurance, which rese~Jations 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 i and upon that basis finds the project exempt from the provisions of the california Bnvironmental Quality Act_ ·3- + \".;,. PASSED AND ADOPTED this __ day of _________ , 1994 by the following vote: INTRODUCED AND PASSED; AYES; NOES, ABSENT, ABSTENTIONS, ATTEST; city Clerk APPROVED AS TO FORM, City Attorney Director of Utilities 94G3C'lIrc 005 ill ? -4- APPROVED, Mayor =;;-v::=~-.----­City Manager ."