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San Diego County Water Authority - Emergency StorageMEMORANDUM OF UNDERSTANDING BETWEEN THE SAN DIEGO COUNTY WATER AUTHORITY AND THE CITY OF POWAY REGARDING THE EMERGENCY STORAGE PROJECT The San Diego County Water Authority ( "SDCWA ") and the City of Poway ( "Poway ") have executed this memorandum of understanding ( "MOU ") with respect to the SDCWA's Emergency Storage Project ( "ESP "). INTRODUCTION The ESP consists of development of new and enhancement of existing pumps, pipelines, dams, reservoirs and other facilities and improvements that, upon completion, will result in approximately 90,100 acre - feetof additional water storage capacity under the ownership and control of the 'SDCWA for use when the SDCWA's imported water supplies are interrupted or reduced due to a of supplies from its regular sources or a failure of an imported water facility (Emergency). In addition to providing emergency water storage capacity, the ESP will enhance the SDCWA's operational flexibility and water deliverycapabilities for the benefit of its member agencies. In furtherance of the ESP, SDCWA has entered into a contract with the Olivenhain Municipal Water District,, including that certain "Agreement between the San Diego County Water Authority and the Olivenhain Municipal Water District for the Emergency Storage Project (Joint Use of Olivenhain Reservoir Site)" [ Olivenhain Agreement]. In furtherance of the ESP, SDCWA has entered into contracts with the City of San Diego, including that certain "Agreement between the�San Diego County Water Authority and the City of San Diego for the Emergency Storage Project (Expansion: of San Vicente Reservoir)" and that certain "Agreement between the San Diego County Water Authority and the City of San Diego for the Emergency Storage Project (Joint Use of Lake- Hodges Dam and Reservoir)." [San Diego Agreements] which allow, the SDCWA, in exchange for the benefits and consideration specified in the San Diego Agreements, to utilize the facilities and infrastructure of the City of San Diego in furtherance of the regional goal of maintaining adequate emergency storage for the entire San Diego region. 4. During.the planning and approval process for ESP, SDCWA made certain assumptions regarding.the amount of water in local water supplies and storage owned and controlled by the various SDCWA member agencies. However, these assumptions were made for planning purposes only and SDCWA.has not relied and is not relying on any specific amount of water that is or may be available to Powav on account of its local supplies or storage. In furtherance of the ESP, SDCWA has entered into, or anticipates entering into, numerous other contracts necessary for the implementation of the ESP as described in the Final`Environn7ental Impact Statement / Environmental Impact Report as certified by the SDCWA Board of Directors. 6. The timely and successful�completion of the ESP is critical to the ability of the SDCWA to meet the emergency water storage needs within its jurisdiction and to prevent economic disruption and personal suffering caused by limited water supplies. The businesses and people of San Diego County have endured extensive shortages of water in recent years. It is imperative that the ESP be completed a timely fashion, making effective use of the limited financial resources of the public in general and the SDCWA in particular, in order to reduce hardship and meet water needs in a water shortage emergency. SDCWA and Poway desire to provide mutual commitments and assurances to the financing, construction, maintenance and operation of the ESP for the, public health, safety and welfare. Poway has requested the establishment of its commitments and assurances through a long -term contract. STATEMENTS OF UNDERSTANDING SDCWA will construct the ESP in phases as a multi- yearproject with each phase of construction to be, awarded and completed according to the terns of the Olivenhain and San Diego Agreements. A long -term agreement, based upon this Memorandum of Understanding, will be developed between SDCWA and Poway. Until that long -term agreement is made, SDCWA and Poway, as a matter of legislative commitment but not contract, agree to abide by the terms of this - Memorandum of Understanding. 3. Only after a member agency complies with SDCWA Resolution No. 2000 -7 will the SDCWA permit the'member agency not to participate in ESP or its funding. SDCWA water stored pursuant to the ESP will be available for delivery to SDCWA member agencies whenever the SDCWA's imported water supplies are interrupted or reduced such that the SDCWA is unable to obtain imported water to supplement local supplies so thaCits member agencies can meet 75 percent of their demands. The ESP facilities will also be available for use in non - emergency situations to enhance the operational flexibility .and _ water delivery capabilities of the SDCWA for the benefit.of its member agencies and to maintain the water quality of SDCWA's stored water. Except as necessary for water quality and operational exchanges as set forth in the Reservoir Regulating Plans to be developed pursuant to the Ulivenhain and San Diego Agreements, SDCWA water stored for emergencies in ESP facilities will not be used by SDCWA for delivery to its member agencies whenever the SDCWA is able to. obtain imported water from the Metropolitan Water District of Southern California (MWD), or other sources, in amounts sufficient to supply its member agencies with water. �. The SDCWA will establish revenues for the ESP as follows: a. The basic formula for ESP revenues is: Total Annual Revenue Requirement for ESP (debt service and operation and maimenance,costs) minus ESP Pro Rata Share of Taxes and Charges (property tax or tax in lieu payments plus standby charge plus capacity charge plus infrastructure access charge naulliplied by ESP percentage of total capital cost) equals Amount of Revenue to be Generated by ESP Charge Payable as a User or Service Charge for Water. b. Beginning on January 1 of each calendar year, the ESP Charge will be apportioned to Poway according to the ratio obtained by dividing the amount of imported water received (hnported Water Supply) by Poway over the five previous fiscal years (July I through June 30) by the amount of imported water received by all member agencies over the five previous fiscal years. The Imported Water supply shall be the sum of the imported water Poway receives from facilities owned by the SDCWA or MWD. The amount of Imported Water Supply will be calculated based upon a 5 -year rolling average beginning with the five most recent fiscal years of the SDCWA, updated annually (e.g., the calendar year 2001 ESP Charge would be based on the historic average of Imported Water Supply for the1996 through 2000 fiscal years). Agricultural customers have agreed during emergencies to a reduction in deliveries at twice the rate of system -wide reductions (Agricultural Water). The additional water made available through these reductions (Additional Agricultural Cutback Water) will be made available to commercial and industrial customers. Neither local water transported through local facilities nor Agricultural Water, would 0 be included in thedetermination of the historic average of Imported Water Supply received by Poway. c. The ESP Charge will be applied to all SDCWA member agencies except member agencies', if any, that are not participating in ESP pursuant to SDCWA Resolution No. 2000 -7. SDCWA and Poway will fix Poway's payment obligation in a long -term contract according to the formula set, forth in paragraph 5. The SDCWA will administer ESP water as follows: a. When the water supply available to the region, including -imported water and local supplies (Regional Water Supply), drops.below 100 percent of demand due to an Emergency,.the SDCWA will estimate theAuration of the Emergency and the amount of imported water supplies that remain available. Then the SDCWA, will determine the level of service that each member agency could expect without the delivery of water from,the ESP during the estimated duration of the Emergency. Such determination will be based upon: i. The estimated demands of each member agency for the duration of the emergency, and ii. The estimated amount of water available from Local Supplies for the duration of the emergency, up to an amount of water no greater than four average months of demand. Should there be insufficient Regional Water Supplies to meet a minimum of 75 percent.of system -wide demand, water from the ESP will be used to supplement Regional Water Supplies to maintain a 75 percent, or if sustainable, a higher, system -wide level of service. c. When water is allocated during emergencies, the Additional Agricultural Cutback Water will be allocated to commercial and industrial customers to raise their level of service above the system wide level to the extent possible. d. Should there be insufficient supplies available to the region, including ESP supplies (Total Regional Water Supplies), to meet a minimum of 75 percent of system -wide demand, the SDCWA will allocate Total Regional Water Supplies to the extent possible such that supplies 'to customers receiving Agricultural Water will be reduced at twice the rate of system-wide reductions, and that all remaining demands will be supplied in amounts sufficient to provide an equal level of service. e. In determining the amount available to each member agency from its Local Supplies, the SDCWA will consider all sources of water owned available, or under the operational control of the member agency that the SDCWA estimates would meet a demand for water in the member agency's tservice area during the estimated duration of the Emergency, up to a limit of four average months of demand. These sources include water stored in surface water reservoirs or groundwater basins, water recycling projects, brackish groundwater desalination, seawater desalination, or any other locally controlled and available supply that can help meet that agency's demand for water during the estimated duration of the emergency. In determining Local Supplies available to amember agency, the SDCWA will also takeJnto consideration the physical capacity of an agency's water distribution system and its actual ability to deliver water for end uses. The SDCWA does not expect any member agency to maintain any specific amount of water in storage for emergencies. Recycled water supplies will be deducted from an agency's total water demands prior to determining its 75 percent level of service. This is because during an emergency it is expected that recycled water customers will continue to receive 100 percent level of service unless physically interrupted due to the emergency and, recycled supplies are distributed through an independent system pursuant to health and safety regulations that restrict reclaimed water use. 10. The description in this.MOU of the typical process to be used by SDCWA for the allocation of ESP water is not intended to give SDCWA any control over Poway's local supplies. Such control, if any, must be based upon a separate agreement between SDCWA and Poway or other delegation in the event of a duly declared emergency, Unless otherwise authorized by law in an emergency or by contract with Poway, SDCWA will request the cooperation of Poway to utilize Poway's local supply to meet the needs of one or more of the SDCWA's other member agencies. Such cooperation by Poway shall be at Poway's sole discretion. 11. With respect to�the implementation of the Olivenhain and San Diego Agreements, SDCWA will coordinate with Olivenhain and San Diego; respectively, to jointly 0 0 eliminate impacts on their respective facilities, consistent with the terms of the Olivenhain -arid San Diego Agreements. 12. The SDCWA will develop a Water Shortage Management Plan for Authority water, including ESP water, which is consistent with the terms of this MOU, the Olivenhain Agreement, and the San Diego Agreements. SAN DIEGO COUNTY WATER AUTHORITY Maureen A. S aple on General Manager CITY OF POWAY 1 es Howelt ector of Public Services S Gerounsel City of Poway Approved as to form and legality: