EXHIBIT 10.18
96-03 W.B.
CITY AGREEMENT NO._96-272
WATER SUPPLY AGREEMENT
THIS AGREEMENT (Agreement) made and entered into this _25_day
of__September_, 1996, by and between the CITY OF BAKERSFIELD (CITY), a
charter city and municipal corporation and CALIFORNIA WATER SERVICE
COMPANY (COMPANY), a California public utility water corporation.
RECITALS
WHEREAS, COMPANY is engaged in the purveying of domestic water to,
among others, citizens within the CITY; and
WHEREAS, COMPANY has agreed, subject to approval by the
CALIFORNIA PUBLIC UTILITIES COMMISSION (COMMISSION), of an
appropriate extension of COMPANY's service area, to provide domestic water
service to an area in the northeast section within the CITY, more specifically
described as Section 17 (619.36 acres) and Section 20 (4.939 acres) of
T29S/R29E MDBM, collectively referred to hereinafter as DEVELOPMENT; and
WHEREAS, in order to provide water service to this DEVELOPMENT,
COMPANY desires to acquire an additional water supply, which is intended to
offset potential groundwater overdraft of the adjacent basin and aquifer; and
WHEREAS, to promote and provide for the continued orderly growth
within the CITY, CITY and COMPANY deem that it is desirable to arrange for a
water supply to serve the DEVELOPMENT; and
WHEREAS, CITY has previously acquired a permanent high quality
source of Kern River water dedicated to serve the long-term needs of its
residents; and
WHEREAS, CITY is willing to make available a portion of its Kern River
water supply to provide water service to future CITY residents that will be
served in the DEVELOPMENT.
NOW, THEREFORE, incorporating the foregoing recitals herein, it is
mutually agreed as follows:
1. WATER SUPPLY. CITY will make available to COMPANY a surface water
supply to serve the needs of residents that will reside in the DEVELOPMENT,
consisting of approximately 625 acres. This DEVELOPMENT is shown on
"Exhibit A" attached hereto and incorporated herein. The parties anticipate
that at full build out the CITY will make available to COMPANY up to 2,500
acre feet per year to meet the needs of residents in the DEVELOPMENT.
2. POINT OF DELIVERY. The point of delivery of this water supply will be
within the boundaries of the CITY. Surface deliveries may be made to the Kern
County Water Agency Purification Plant located near Highway 99 and Golden
State Highway. Deliveries for groundwater use by COMPANY may be made in
the Kern River channel, through CITY recharge sites or at another mutually
agreeable point of delivery to the groundwater aquifer within the CITY.
3. PLACE OF USE. COMPANY's plans and specifications for the design,
construction and installation of the facilities required to serve a domestic
water supply, that meets all federal, state and local water quality
requirements, to the DEVELOPMENT are shown on "Exhibit B" attached hereto and
incorporated herein. The plans may be changed from time to time by COMPANY
as it deems reasonably necessary, provided that a current version of the plans
shall be on file in CITY and COMPANY's business offices as specified herein.
COMPANY acknowledges its intent to use the water made available hereunder
only on the DEVELOPMENT lands.
4. WATER QUALITY. CITY does not represent or guarantee the quality of the
raw water which is subject of this Agreement. COMPANY understands the water
specified for delivery under this Agreement, as supplied from the Kern River,
is untreated and not fit for human consumption as delivered. COMPANY shall be
solely responsible for testing said water and for any and all treatment which
may be necessary to bring the water into conformity with all federal, state
and local domestic water quality requirements prior to its delivery for
domestic use. CITY shall not be responsible for the quality of water delivered
by COMPANY in any way or at any time and COMPANY's failure to test or properly
treat the water is not the responsibility of CITY. By execution of this
Agreement COMPANY expressly waives any and all legal remedies against CITY,
from the CITY's delivery of nonpotable water to COMPANY. COMPANY shall
indemnify, defend and hold CITY harmless from and against any and all claims
from COMPANY failure to deliver water to domestic users in the DEVELOPMENT in
conformance with federal, state and local domestic water quality requirements.
5. WATER BALANCE. COMPANY agrees to maintain a positive water account
balance in providing service to the DEVELOPMENT, subject to Paragraphs 7
and 12. CITY and COMPANY, after consultation, shall annually on or before
December 1 of each year determine COMPANY's projected water requirements
to serve the DEVELOPMENT for the following three calendar years. To provide
a continuous and uninterrupted supply, CITY shall make available and
COMPANY shall purchase water from CITY such quantities so that at the start of
any calendar year the Company's water account balance in the underground is
not less than the determined three (3) year supply, subject to Paragraph 7;
provided, however, that during the first three years of this Agreement the
parties expect that COMPANY shall build up the requisite water account balance
and accordingly agree that COMPANY shall not be in breach during such 3-year
period from its failure to have the requisite water account balance during such
period. COMPANY may purchase more water from CITY than is necessary to
meet the determined three (3) year supply requirements of this Agreement, but
such additional purchase shall be subject to the availability of such water
from the CITY: CITY will provide COMPANY quarterly statements of water account
balance and generate invoices and statements of water delivered for use by
COMPANY. Water purchased from CITY by COMPANY shall be delivered to
COMPANY at such times as COMPANY reasonably requests, subject to
Paragraph 7. CITY's obligation to make deliveries, subject to Paragraph 7,
shall continue so long as COMPANY has a positive water account balance and
notwithstanding any termination of CITY's obligation to make future sales to
COMPANY under this AGREEMENT.
6. WATER SERVICE AREA. COMPANY and CITY agree that any water
delivered to COMPANY shall be used only within the incorporated boundary of
the CITY and shall be limited to the DEVELOPMENT as described herein,
provided, however, that both parties acknowledge that the water acquired by
COMPANY hereunder may be commingled with other waters at any given time.
Accordingly COMPANY agrees that except in cases in which the express written
approval of CITY has been obtained, the aggregate amount of water acquired
from CITY hereunder of which COMPANY takes delivery at the Kern County
Water Agency Purification Plant, and pumped by COMPANY from the
underground, for delivery to DEVELOPMENT will not exceed the aggregate
amount of water delivered by the COMPANY to the customers in the
DEVELOPMENT plus a reasonable amount attributable to lost water
associated with COMPANY's service to customers in the DEVELOPMENT.
7. INTERRUPTIBLE SUPPLY. The obligation of CITY to supply water
hereunder is subject to all prior existing commitments to service the needs of
the CITY, its contractors, licensees or court decisions and existing agreements
to supply water. The water to be delivered to COMPANY as contemplated by
Paragraph 2 hereof shall be considered interruptible and the failure of CITY to
supply water because of these limitations shall not constitute a breach of any
duty, and imposes no liability upon City. In the event CITY reasonably
determines to interrupt its deliveries hereunder to COMPANY, CITY shall
attempt to catch up with its delivery obligations as soon as reasonably
practicable thereafter.
8. INSTALLATION OF DELIVERY FACILITIES. CITY represents to COMPANY
that CITY has and will continue to have required facilities to deliver water
purchased hereunder by COMPANY to the Kern County Water Purification Plant
and to other areas, including recharge sites in CITY. COMPANY shall be solely
responsible for the construction and installation of any and all facilities
required to be built for COMPANY to take delivery of the water supply at any
other delivery locations agreed to by COMPANY and CITY. All costs for
rights-of-way, permits, engineering, surveying, labor, materials, supplies
and any other costs associates with the transportation and delivery of the
water at such other locations shall be arranged by COMPANY. Notwithstanding
the preceding two sentences, CITY shall use all means reasonably necessary to
deliver CITY water to COMPANY using CITY facilities or rights to facilities
at no cost or charge to COMPANY; provided, however Company shall be responsible
for any and all costs that may be generated due to use of facilities of others.
9. OWNERSHIP AND ACCESS. CITY is owner of certain water rights and
storage facilities on the Kern River. The water supply being made available to
COMPANY from CITY shall not become the property of COMPANY, but will be
available for COMPANY to use by groundwater withdrawal or direct delivery from
existing purification plants for direct retail delivery to customers in areas
of the CITY authorized under the terms and conditions of this agreement. The
return flows from water supplied to COMPANY by CITY shall be the sole property
of the CITY, as between CITY and COMPANY.
10. ENVIRONMENTAL STUDIES OR REVIEW. To the extent not funded by the
developers of the DEVELOPMENT, which funding is expected by the parties,
COMPANY shall be responsible to obtain any and all California Environmental
Quality Act reviews that may be ordered or required to receive and use water as
described in this Agreement.
11. WATER COSTS. To compensate CITY for water delivered hereunder and
all other CITY costs hereunder (except as provided in Paragraph 8), COMPANY
shall pay CITY $32.00 (thirty-two dollars) per acre foot of water made
available to COMPANY by CITY for the first three (3) years of this Agreement.
After the first three years the cost per acre foot shall be adjusted annually
by the increase or decrease in the national Producer Price Index for All
Commodities published by the U.S. Bureau of Labor Statistics over the same
month in the prior year. Payment in full shall be made to CITY within thirty
(30) days after mailing of an itemized invoice to COMPANY. Even though water
may have been purchased by the COMPANY as contemplated by Paragraph 5, the
CITY shall bill the COMPANY for quantities delivered only after the water is
actually delivered by the CITY; provided that the applicable rate shall be
the rate in effect on the date of purchase, not the date of delivery.
COMPANY shall not assess or levy any charge of any kind or type to CITY for
the delivery or use of said water. Failure to pay CITY in full shall
constitute a breach of this Agreement. Reasonable late fee amounts may be
assessed by CITY and shall be paid by COMPANY upon demand. In addition, at
City's sole discretion, CITY may terminate this Agreement immediately after
30 day cure period and collect all past due sums and late fees.
12. NOTICE OF TERMINATION. The initial terms of this Agreement shall be for
nine years commencing January 1,1997, or when the COMMISSION approves
the extension of the COMPANY's service area to include the DEVELOPMENT,
provided, however, that such term shall be renewed for successive three year
periods, unless either party hereto shall provide written notification of
termination to the other party at least one hundred eighty (180) days prior
to the expiration of the then remaining term of this Agreement. In the event
of termination, COMPANY shall be entitled to continue to receive from the
CITY all of the water remaining in its water account in accordance with the
terms of this Agreement and COMPANY acknowledges that thereafter it will have
to acquire alternative water supplies to replace water furnished by CITY under
this Agreement to serve DEVELOPMENT.
13. PUBLIC UTILITIES CODE. This Agreement is entered into in accordance
with and subject to any requirements of the COMMISSION and any and all rules
and regulations as may apply to COMPANY. CITY is immune from regulation by
the COMMISSION and entering into this Agreement shall not construe CITY as
recognizing authority or control by said COMMISSION over the CITY.
14. NONEXCLUSIVE AGREEMENT. CITY and COMPANY agree the rights
under this contract to a water supply are nonexclusive and in no way dedicates
the water supply to sole delivery to or use by COMPANY. CITY reserves the
right to enter into other agreements or arrangements concerning water supply
and delivery of water supplies, provided such agreements or arrangements do
not interfere with CITY's obligations hereunder or necessitate termination by
CITY of this Agreement. Nothing herein shall be deemed to constitute a
dedication of the water supply to COMPANY or to COMPANY's customers.
15. DISRUPTION OF SERVICE. Whenever maintenance is required on CITY
facilities or the system of delivery that requires suspension of deliveries of
water at any point or points, such delivery shall be suspended without
liability on the part of the CITY. Suspension of delivery may occur without
reasonable notice only in cases of emergency by and without liability to the
CITY whenever CITY is unable to obtain sufficient amounts of water to supply
previously existing contract amounts and demands. CITY may also suspend
deliveries upon reasonable prior notice for defaults under this agreement,
and failure to pay any sums required to be paid shall result in immediate
suspension of deliveries, subject to reapsonable notice. CITY will maintain
accurate records and reporting of water balances and waters sold to COMPANY.
16. INDEMNITY. COMPANY shall indemnify, defend, and hold harmless CITY,
its officers, agents and employees against any and all liability, claims,
actions, causes of action or demands whatsoever against them, or any of them,
before administrative or judicial tribunals of any kind whatsoever, arising
out of, connected with, or caused by COMPANY, COMPANY's employees, agents or
independent contractors in the performance of, or in any way arising from, the
terms and provisions of this Agreement whether or not caused in part by a party
indemnified hereunder, except as limited by California Civil Code section 2782.
17. DEFAULT. Should CITY and COMPANY default in the performance of any
convenant, except payment for water, or condition of the Agreement contained
herein, and the default is not cured within thirty (30) days after written
notice of said default is served upon the offending party, then this Agreement
may be terminated by the nondefaulting party; provided, however, if the nature
of the breach reasonably required more than thirty (30) days to cure, this
Agreement may not be terminated if CITY or COMPANY commences to cure the breach
within thirty (30) days thereafter and diligently pursues the cure to
completion. This clause shall not apply to any monetary payments due
hereunder; other cure provisions apply to payment obligations.
18. WAIVER OF DEFAULT. The failure of any party to enforce against another,
a provision of this Agreement shall not constitute a waiver of that party's
right to enforce such a provision at a later time, and shall not serve to
vary the terms of this Agreement.
19. FORUM. Any lawsuit pertaining to any matter arising under, or growing out
of, this Agreement shall be instituted in Kern County, California.
20. TIME. Time is of the essence in this Agreement.
21. HEADINGS. All paragraph or section captions are for reference only and
shall not be considered in construing this Agreement.
22. NOTICES. All notices relative to this Agreement shall be given in writing
and shall be personally served, served by confirmed facsimile transmission or
sent by certified or registered mail and be effective upon actual personal
service or upon confirmed facsimile transmission or five (5) business days
after depositing in the United States mail. The parties shall be addressed
as follows or at any other address designated by notice:
CITY: CITY OF BAKERSFIELD
City Hall
1501 Truxtun Avenue
Bakersfield, CA 93301
Attention: CITY CLERK
FAX: 805.323.3780
COMPANY: CALIFORNIA WATER SERVICE COMPANY
P. O. Box 1150
San Jose, CA 95108
Attention: PRESIDENT
FAX: 408.437.9185
23. ASSIGNMENT. This Agreement shall not be assigned by any party, or any
party substituted, without prior written consent of CITY and COMPANY, which
shall not be unreasonably withheld; provided, however, the COMPANY may
assign this Agreement, upon reasonable notice, without CITY's prior written
consent, in connection with any merger or consolidation or in connection with
any sale of all or substantially all of its assets.
24. BINDING EFFECT. The rights and obligations of this Agreement shall
inure to the benefit of, and be binding upon, the parties to the Agreement and
their heirs, administrators, executors, personal representatives, successors
and permitted assigns.
25. MERGER AND MODIFICATION. All prior agreements between the parties
with respect to the subject matter of this Agreement are incorporated in this
Agreement which constitutes the entire agreement of the parties. Its terms are
intended by the parties as a final expression of their agreement with respect
to such terms as are included herein and may not be contradicted by evidence of
any prior agreement or contemporaneous oral agreement. The parties further
intend that this Agreement constitutes the complete and exclusive statement of
its terms and no extrinsic evidence whatsoever may be introduced in any
judicial or arbitration proceeding involving this Agreement. This Agreement
may be modified only in a writing approved by the City Council and signed by
all parties.
26. CORPORATE AUTHORITY. Each individual executing this Agreement
represents and warrants that they are duly authorized to execute and deliver
this Agreement on behalf of the corporation or organization named herein and
that this Agreement is binding upon said corporation or organization in
accordance with its terms, subject to applicable bankruptcy and insolvency laws.
27. COMPLIANCE WITH ALL LAWS. COMPANY shall, at COMPANY's sole
cost, comply with all of the requirements of municipal, state and federal
authorities now in force, or which may hereafter be in force, pertaining to its
obligations under this Agreement, and shall faithfully observe in all
activities relating to or growing out of this Agreement all municipal
ordinances and state and federal statues, rules or regulations now in force
or which may hereafter be in force.
28. INDEPENDENT CONTRACTOR. COMPANY shall not become or be
deemed a partner or joint ventured with CITY or associate in any relationship
with COMPANY by reason of the provisions of this Agreement other than
specified herein. COMPANY shall not, for any purpose, be considered an agent,
officer or employee of CITY in regard to this Agreement.
29. EXECUTION. This Agreement is effective upon execution. It is the product
of negotiation and all parties are equally responsible for authorship of this
Agreement. Section1654 of the California Civil Code shall not apply to the
interpretation of this Agreement.
30. INTEREST. COMPANY shall pay CITY interest at an annual rate of ten
percent (10%) compounded quarterly (or the maximum rate permitted by law, if
less) on all expenses or costs reasonably incurred by CITY in the enforcement
of the indemnity provisions of this Agreement, and of any sums COMPANY may
pay as a result of claims, demands, cost or judgments with respect to the
subject matter of this Agreement, from the date such sums are actually paid.
31. PREJUDGMENT INTEREST. In the event of a default by any party to this
Agreement, to the extent that Paragraph 31 does not apply, the nondefaulting
party shall be allowed to recover interest on all damages at the legal rate
from the date of the breach.
32. SURVIVAL OF REPRESENTATIONS. All representations, warranties and
covenants of CITY and COMPANY as set forth herein shall survive the
termination of this Agreement.
33. POSSESSORY INTEREST TAXES. Without agreeing that COMPANY's
interest hereunder is subject to property taxation, COMPANY acknowledges
that, as a party in whom a possessory interest may be vested, COMPANY may
be subject to the payment of property taxes levied on such interest, and, if
such is determined to be the case, COMPANY shall pay all such possessory
interest taxes lawfully levied on COMPANY.
34. RECORDS. COMPANY's records concerning maintenance, replacement
and repair of its facilities used in the distribution of this water as
described herein shall be available for CITY's review during normal business
hours and shall be made available to CITY's representatives upon 24 hours
written notice. CITY's records concerning maintenance, replacement and
repair of its facilities used in the distribution of this water as described
herein shall be available for COMPANY's review during normal business hours
and shall be made available to COMPANY's representatives upon 24 hours written
notice.
35. EXHIBITS. In the event of a conflict between the terms, conditions or
specifications set forth in this Agreement and those in exhibits attached
hereto, the terms, conditions, or specifications set forth in this Agreement
shall prevail. All exhibits to which reference is made in this Agreement are
deemed incorporated in this Agreement, whether or not actually attached.
36. TAX NUMBERS.
COMPANY's Federal Tax Identification No. 94-0362795
COMPANY is a corporation Yes X No
(Please check one.)
IN WITNESS WHEREOF, the parties hereto have caused this agreement
to be executed, the day and year first-above written.
"CITY"
CITY OF BAKERSFIELD
BY: Bob Price, Mayor
APPROVED AS TO CONTENT:
WATER RESOURCES DEPARTMENT
BY: GENE BOGART, WATER RESOURCES MANAGER
APPROVED AS TO FORM:
JUDY K. SKOUSEN, CITY ATTORNEY
BY: ALAN D. DANIEL, ASSISTANT CITY ATTORNEY
COUNTERSIGNED:
BY: GREGORY J. KLIMKO, FINANCE DIRECTOR
"COMPANY"
CALIFORNIA WATER SERVICE CO.
BY: PETER C. NELSON
PRESIDENT AND CEO