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AP 05-25-00 SpecialSOUTH TAHOE PUBLIC UTILITY DISTRICT "Basic Services for a Complex World" NOTICE OF SPECIAL BOARD MEETING Thursday, May 25, 2000 3:30 = 4:00 P.M. District Conference Room 1275 Meadow Crest Drive, South Lake Tahoe, California Robert G. Baer, General Manager Richard Solbrig, Assistant Manager Christopher H. Strohm, President James Jones, Director BOARD MEMBERS Mary Lou Mosbacher, Director AGENDA 1. CALL SPECIAL MEETING TO ORDER 2. ITEMS FOR BOARD ACTION a. LUKINS BROS. WATER COMPANY / DISTRICT WHOLESALE WATER AGREEMENT (Bob Baer) 3. ADJOURNMENT Pembroke Gochnauer, Vice President Duane Wallace, Director REQUESTED BOARD ACTION AUTHORIZE EXECUTION OF AGREEMENT South Tahoe Public Utility District • 1275 Meadow Crest Drive, South Lake Tahoe, CA 96150 • Phone: 530.544.6474 • Facsimile: 530.541.0614 SOUTH TAHOE PUBLIC UTILITY DISTRICT BOARD AGENDA ITEM TO: BOARD OF DIRECTORS FR: Bob Baer, General Manager RE: BOARD MEETING May 25, 2000 AGENDA ITEM: ACTION ITEM NO: CONSENT CALENDAR ITEM NO: ITEM-PROJECT NAME: LUKINS BROS. WATER COMPANY / DISTRICT WHOLESALE WATER AGREEMENT REQUESTED BOARD ACTION: Authorize execution of agreement. DISCUSSION: To assist the District in providing a reliable water supply for the upcoming summer, the District contracted Lukins Bros. Water Company to determine if they could supply excess water. Through a series of meetings and discussions, an agreement has been developed that is acceptable to District staff and Lukins Bros. The key points of the agreement are as follows: Term: June to September, right to extend until December. Quantity: Water in excess of the needs of Lukins' customers (believed to be 300,000 to 400,000 gallons per day). System Modifications: At District expense. Cost: Minimum of $5,000 per month credited toward water purchases. SCHEDULE: COSTS: ACCOUNT NO: BUDGETED AMOUNT REMAINING: ATTACHMENTS Draft Agreement CONCURRENCE WITH REQUESTED A TION: GENERAL MANAGER: YES NO CHIEF FINANCIAL OFFICER: YES NO CATEGORY: GENERAL WATER X SEWER WHOLESALE WATER SUPPLY AGREEMENT This Wholesale Water Supply Agreement (Agreement) is made by and between the South Tahoe Public Utility District, a California public agency formed in 1950 pursuant to the Public Utility District Act (District), and Lukins Brothers Water Company, Inc., a California private utility (Lukins) on this day of May, 2000, at South Lake Tahoe, California, with reference to the following facts and intentions: A. The District owns and operates a municipal water distribution system for the purpose of supplying water for beneficial use by the District and its customers. The District provides water service and other services to certain portions of the City of South Lake Tahoe and the County of El Dorado, California; B. Lukins owns and operates a private water distribution system for the purpose of supplying water for the beneficial use by Lukins' customers. Lukins provides water service to a certain portion of the City of South Lake Tahoe pursuant to its certificate of public convenience issued by the California Public Utilities Commission; C. The District's municipal water system has been severely compromised as a result of MTBE contamination of groundwater which has caused the District to discontinue production from approximately one -third (1/3) of its water wells and required, and may further require, water conservation measures by its customers; D. The Lake Tahoe Basin Management Unit, United States Department of Agriculture, Forest Service (Forest Service) issued a temporary special use permit to the District for installation and construction of related facilities on Forest Service land in order to provide the District with a well site for the purpose of extracting and providing uncontaminated water to the District's customers; E. The District and the Forest Service negotiated the terms and conditions of a special use permit for operation of the well and related facilities on May 19, 2000. However, the Forest Service's delay in agreeing to issue a special use permit will likely result in the District being unable to meet the needs of its customers this summer and necessitate the District's adoption of water conservation measures on water service to its customers; F. Lukins' water system has water delivery capacity in addition to the quantity of water needed to serve Lukins' customers. The District and Lukins have cooperated with each other in the past and interties are located between their respective systems for furnishing water to each other on an emergency or other agreed basis; and G. The District desires to purchase and Lukins agrees to sell wholesale water to the District in excess of the water delivered to Lukins' customers and based on its ability to provide excess water to the District. This Agreement is not an expansion of either Lukins' or District's service areas and Lukins is not offering water to the District as a PUC tariff customer. This Agreement is for a fixed term and fixed amount only. SB 235705 v 1:07627.0009 -1- NOW, THEREFORE, the District and Lukins agree as follows: 1. Water Delivery. 1.1 Delivery Points. The water delivered by Lukins to the District shall be delivered through the 15th Street intertie and the Dunlap intertie (collectively Interties). The delivery pressure at the Interties shall not be less than eighty -five (85) pounds per square inch. The District, at its cost and expense, shall perform all necessary work to prepare the Interties for the District to receive water deliveries from Lukins including, but not limited to, installation of valves, adjustments to existing meters, installation of new meters, or other related work at the District's sole expense and maintenance cost, constructed on the District's property(Upo i termination, any such installations shall remain the property of the District. The parties agree that Lukins has the right to access and review any such installation or any other work to confirm it is performed to Lukins' standards before providing any water. Lukins shall also have the right to review meter readings and audit meter readings at any reasonable time. Upon termination, the parties agree totthe return the intertie to a mutually acceptable condition, at District's sole expense. 1.2 Notice to Deliver. The District shall provide Lukins with reasonable prior notice of its intention to open the Interties and receive water from Lukins in order to meet the District's customers demands but still provide for proper operation of Lukins' water system. Lukins agrees to sell wholesale water to the District that it has in excess of the water it delivers to Lukins customers and based on its ability to provide excess water to the District. Both parties will cooperate with each other to accomplish the purposes of this Agreement. 1.3 Quantity. Lukins shall operate its water system to provide to the District maximum flow through the Interties as requested by the District and capable of being delivered by Lukins without interfering with Lukins delivery of water to Lukins' customers. The parties estimate that the maximum flow rate through the 15th Street intertie is four hundred (400) gallons per minute and through the Dunlap intertie is two hundred (200) gallons per minute, with a total maximum daily estimated delivery of three hundred to four hundred thousand (300,000 to 400,000) gallons per day. The quantity may vary depending on the Lukins' customers' needs and the capacity of the Lukins' water system and Lukins reserves the right to decide in its sole discretion when and how much water is delivered to the District. The District understands that Lukins may be unable to provide water due to equipment failure, power outages, Lukins' customer demand or for other reasons not within the control of Lukins and that this Agreement is for the sale of excess water only. 1.4 Priority. The District shall have the right to receive all excess capacity of Lukins to the extent not needed by Lukins to serve the then existing demands of Lukins' customers. Lukins shall maintain the excess capacity described in this Agreement for the benefit of the District during the term in order to assist the District in meeting the water supply needs of the District's customers. 1.5 Quality. The water supplied by Lukins to the District shall conform with all California Department of Health Services and California Public Utilities Commission SB 235705 v 1:07627.0009 -2- requirements and shall be continuously chlorinated in accordance with the District's requirements. 2. Term. The term of this Agreement shall be for four (4) months, commencing on June 1, 2000 and terminating on October 1, 2000 at 12:00 p.m. The District shall have successive options to extend the term for an additional thirty (30) day period to 12:00 p.m. on the 15th of the month following expiration of the then existing term by providing Lukins with at least thirty (30) days prior written notice of its exercise to extend the then existing term. The maximum option to extend shall be for three (3) thirty (30) day terms and the last option term shall expire on or before December 15, 2000. The parties may extend or modify this Agreement, however, any such extension or modification is unenforceable, unless based upon the parties' prior mutual written consent. 3. Cost. The District shall pay Lukins the sum of Five Thousand Dollars ($5,000) on or before the first day of each month regardless whether the District receives any water deliveries from Lukins. If the District receives water deliveries from Lukins, the District shall pay Lukins a volumetric rate, in arrears on the first day of each following the month in which water is delivered, in an amount equal to One and 65/100 Dollars ($1.65) per one hundred (100) cubic feet of water. The fixed Five Thousand Dollars ($5,000) payment per month shall be credited to the volumetric rate for water actually delivered by Lukins to the District. 4. Indemnity. 4.1. District. The District shall indemnify, defend and hold harmless Lukins, its directors, officers, employees, agents and consultants, from and against, all damages, liabilities, claims, actions, demands, costs and expenses, including, but not limited to, cost of investigations, lawsuits and other proceedings in law or in equity, settlement costs, attorneys' fees and costs, and penalties or violations of any kind, which arise out of, or result from or relate to any injury to person or property in connection with the District's delivery of Lukins' water to the District's customers after the water is delivered to the District. 4.2 Lukins. The Lukins shall indemnify, defend and hold harmless the District, its elected officials, directors, officers, employees, agents and consultants, from and against, all damages, liabilities, claims, actions, demands, costs and expenses, including, but not limited to, cost of investigations, lawsuits and other proceedings in law or in equity, settlement costs, attorneys' fees and costs, and penalties or violations of any kind, which arise out of, or result from or relate to any injury to person or property in connection with the quality of water delivered by Lukins to the Distric - • - • vi , ► r5 1,-� i �, a� 5. Insurance. 5.1 District. At all times during the term of this Agreement, District shall maintain its existing commercial liability insurance policy(ies) and add Lukins as an additional insured. District shall provide Lukins with a certificate of insurance showing the coverages and deductibles and naming Lukins as an additional insured. The District's insurance coverage described above shall not be terminated, canceled or materially changed without Lukins' prior SB 235705 v 1 :07627.0009 -3 - written consent. 5.2 Lukins. At all times during the term of this Agreement, Lukins shall maintain its existing commercial liability insurance policy(ies) and add the District as an additional insured. Lukins shall provide the District with a certificate of insurance showing the coverages and deductibles and naming the District as an additional insured. Lukins' insurance coverage described above shall not be terminated, canceled or materially changed without the District's prior written consent. 6. GENERAL PROVISIONS. 6.1 Recitals. The recitals stated at the beginning of this Agreement of any matters or facts shall be conclusive proof of the truthfulness thereof and the terms and conditions of the recitals, if any, shall be deemed a part of this Agreement. 6.2 Notices. All notices, approvals, acceptances, requests, demands and other communications required or permitted, to be effective, shall be in writing and shall be delivered, either in person or by mailing the same by United States mail (postage prepaid, registered or certi- fied, return receipt requested) or by Federal Express or other similar overnight delivery service, to the party to whom the notice is directed at the address of such party as follows: TO: SOUTH TAHOE PUBLIC UTILITY DISTRICT With a copy to: TO: LUKINS BROTHERS WATER COMPANY, INC. With a copy to: South Tahoe Public Utility District 1275 Meadow Crest Drive South Lake Tahoe, California 96150 Attn: General Manager Gary M. Kvistad, Esq. Hatch and Parent 21 East Carrillo Street Santa Barbara, California 93101 Lukins Brothers Water Company, Inc. 2031 West Way South Lake Tahoe, CA 96150 Attn: Danny Lukins Deborah A. Palmer, Attorney Deborah A. Palmer, A Law Corporation Post Office Box 7963 South Lake Tahoe, CA 96158 Any communication given by mail shall be deemed delivered five (5) business days after such mailing date, and any written communication given by overnight delivery service shall be deemed delivered one (1) business day after the dispatch date. Either party may change its address by giving the other party written notice of its new address. SB 235705 v 1 :07627.0009 -4- 6.3 Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the parties and their respective heirs, successors and assigns. Nothing in this Agreement, express or implied, is intended to confer on any person other than the parties or their respective heirs, successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 6.4 Assignability. This Agreement shall not be assignable by either party without the prior written consent of the other party, who shall have the sole discretion to consent or not to consent to any proposed assignment. Any attempted assignment without the approval of the other party shall be void. Each party warrants and represents that each party has not assigned to any person or entity not a party to this Agreement any of its rights and obligations which the parties deem personal rights. 6.5 Waiver. No waiver by any party of any of the provisions shall be effective unless explicitly stated in writing and executed by the party so waiving. Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants, or agreements contained in this Agreement, and in any documents delivered or to be delivered pursuant to this Agreement. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, rior shall any waiver constitute a continuing waiver. 6.6 Headings. The section headings contained in this Agreement are for convenience and reference only and shall not affect the meaning or interpretation of this Agreement. 6.7 Severability. If any term, provision, covenant or condition of this Agreement shall be or become illegal, null, void or against public policy, or shall be held by any court of competent jurisdiction or administrative agency to be illegal, null, void or against policy, the remaining provisions of this Agreement shall remain in full force and effect, and shall not be affected, impaired or invalidated. The term, provision, covenant or condition that is so invalidated, voided or held to be unenforceable, shall be modified or changed by the parties to the extent possible to carry out the intentions and directives set forth in this Agreement. 6.8 Counterparts. This Agreement may be executed in any number of coun- terparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument. 6.9 Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of California, with venue proper only in the South Lake Tahoe Session of County of El Dorado, State of California. 6.10 Parties in Interest. Nothing in this Agreement, whether express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any SB 235705 v 1:07627.0009 -5- persons other than the parties to it and their respective successors and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement, nor shall any provision give any third persons any right of subrogation or action against any party to this Agreement. This Agreement does not confer any rights or entitlements on any third party beneficiaries and any such claim is void. 6.11 Litigation Fees and Costs. If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, or because an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the attorneys' fees and costs (including, without limitation, reasonable fees and expenses of counsel and experts or consultant fees and costs, and other costs) incurred in that action (including the costs to enforce or preserve the rights awarded in the arbitration) shall be borne by the party whom the decision of is against. If the decision is not clearly against one party on one or more issues, each party shall bear its own costs. 6.12 Cooperation. The parties shall, whenever and as often as reasonably requested to do so by the party, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all documents and instruments as may be necessary, expedient or proper in the reasonable opinion of the requesting party to carry out the intent and purposes of this Agreement, provided that the requesting party shall bear the costs and expense of such further instruments or documents (except that each party shall bear its own attorney's fees). 6.13 Good Faith. The parties agree to exercise their best efforts and utmost good faith to effectuate all the terms and conditions of this Agreement and to execute such further instruments and documents as are necessary or appropriate to effectuate all of the terms and con- ditions of this Agreement. 6.14 Construction. The provisions of this Agreement should be liberally con- strued to effectuate its purposes. The language of all parts of this Agreement shall be construed simply according to its plain meaning and shall not be construed for or against either party, as each party has participated in the drafting of this document and had the opportunity to have their counsel review it. Whenever the context and construction so requires, all words used in the singular shall be deemed to be used in the plural, all masculine shall include the feminine and neuter, and vice versa. 6.15 Several Obligations. Except where specifically stated in this Agreement to be otherwise, the duties, obligations, and liabilities of the parties are intended to be several and not joint or collective. Nothing contained in this Agreement shall be construed to create an association, trust, partnership, or joint venture or impose a trust or partnership duty, obligation, or liability on or with regard to either party. Each party shall be individually and severally liable for its own obligations under this Agreement. 6.16 Authority. The individuals executing this Agreement represent and warrant that they have the authority to enter into this Agreement and to perform all acts required by this Agreement, and that the consent, approval or execution of or by any third party is not required to legally bind either party to the terms and conditions of this Agreement. The parties SB 235705 v 1:07627.0009 -6- stipulate that this Agreement is contingent upon its filing with the PUC, PUC approval of its terms and conditions, and any revisions or modifications to its terms mandated by the PUC. This Agreement is subject to Lukins' PUC Approved Rules and Regulations. 6.17 Entire Agreement. This Agreement contains the entire understanding and agreement of the parties, and supersedes all prior agreements and understandings, oral and written, between the parties. There have been no binding promises, representations, agreements, warranties or undertakings by any of the parties, either oral or written, of any character or nature, except as stated in this Agreement. This Agreement may be altered, amended or modified only by an instrument in writing, executed by the parties to this Agreement and by no other means. Each party waives its future right to claim, contest or assert that this Agreement was modified, canceled, superseded or changed by any oral agreement, course of conduct, waiver or estoppel. IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year and at the place first written above. SOUTH TAHOE PUBLIC UTILITY DISTRICT By: Christopher H. Strohm, President LUKINS BROTHER WATER COMPANY, INC. By: Danny Lukins, President By: , Secretary SB 235705 v 1:07627.0009 -7-