Resolution No. 2010-015RESOLUTION NO. 2010-15
A RESOLUTION OF THE CITY COUNCIL OF.THE CITY OF
VERNON APPROVING AND AUTHORIZING THE EXECUTION OF A
LETTER TO THE CENTRAL BASIN MUNICIPAL WATER
DISTRICT REGARDING THE FUNDING AND CONSTRUCTION OF
THE VERNON PIPELINE PROJECT AND THE SOUTHEAST WATER
RELIABILITY PROJECT
WHEREAS, on November 2, 2005, the City Council of the City
of Vernon adopted Resolution No. 8890 approving an Agreement Between
Central Basin Municipal Water District (the "District") and the City
of Vernon (the "City") Regarding the Buying and Selling of Recycled
Water (the "Agreement") under which the District would provide
recycled water to the City for a proposed power plant; and
WHEREAS, under the terms of the Agreement, the District
would construct (i) approximately one and a half miles of 42-inch
pipeline from the intersection of Industrial Way and Grande Vista in
the City to the City's proposed power plant (the "Vernon Pipeline
Project") and (ii) approximately 10-miles of 42-inch pipeline from the
intersection of Industrial Way and Grande Vista in the City to the Rio
Hondo Pump Station in Whittier, plus other appurtenances known as the
"Southeast Water Reliability Project;" and
WHEREAS, in accordance with the Agreement, the City would
pay the District a portion of the cost of the Southeast Water
Reliability Project, plus 100 percent of the Vernon Pipeline Project,
upon the District's completion of the Vernon Pipeline Project and the
Southeast Water Reliability Project; and
WHEREAS, in July of 2009, City officials met with the
Central Basin staff to discuss the status of the Southeast Water
Reliability Project and were advised that the District had redesigned
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the pipeline to a 30" diameter from the originally proposed 42"
diameter pipeline; and
WHEREAS, the City believes the change in the pipeline size
invalidates the Agreement; and
WHEREAS, by letter dated August 13, 2009, the Director of
Community Services & Water requested the District to stop work on the
Southeast Water Reliability Project and not seek financing until the
parties could agree to and approve amendments to the Agreement; and
WHEREAS, by letter dated September 1, 2009, the Director of
Community Services & Water requested a meeting to discuss amending the
Agreement and the City's obligations respecting the payment of costs
for the Southeast Water Reliability Project; and
WHEREAS, City officials met with the District on October 1,
2009, and by letter dated October 22, 2009, the Director of Community
Services & Water memorialized the technical terms to be incorporated
into a new agreement; and
WHEREAS, the power plant that was fundamental to the City's
participation in the Agreement and a prerequisite to the City becoming
responsible for partially funding the Southeast Water Reliability
Project has not been implemented and, if implemented, will likely not
be implemented in its original size; and
WHEREAS, since the October 2009 letter, the City has
discovered that the District has moved forward with the Southeast
Water Reliability Project; and
WHEREAS, by Staff Report dated January 19, 2010, the
Director of Community Services & Water recommended that the City
Administrator be authorized to sign a letter to the District stating
the City's position with respect to the Agreement, the Southeast Water
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Reliability Project and the City's funding obligations under the
Agreement.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The City Council of the City of Vernon hereby
authorizes the City Administrator, or his designee, to send a letter
to the District reiterating the City's position regarding the
Agreement, the Southeast Water Reliability Project and the funding
thereof by the City, a copy of which is attached hereto as Exhibit A
and incorporated by reference.
SECTION 3: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of
Resolutions of the Council of this City.
APPROVED AND ADOPTED this 25th day of January, 2010.
ATTEST:
nk'�W� AX�2
ANUELA GIRON, Ci ft Clerk
42Z
Name: MilariO Gonzales
Title: Mayor /-,-a-y-e
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STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES )
I, MANUELA GIRON, City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No. 2010-15,
was duly passed, approved and adopted by the City Council of the City
of Vernon at a regular meeting of the City,Council duly held on Monday,
January 25, 2010, and thereafter was duly signed by the Mayor or Mayor
Pro-Tem -of the City of Vernon.
Executed this %-A-day of January, 2010, at Vernon, California.
MANUELA GIRON, 6ity Clerk
{SEAL)
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EXHIBIT A
COMMUNITY SERVICES & WATER DEPARTMENT
Samuel Kevin Wilson, Director of Community Services & Water
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811 Fax (323) 826-1435
January 25, 2010
Art Aguilar
Central Basin Municipal Water District
6252 Telegraph Road
Commerce, California 90040-2512
Dear Mr. Aguilar:
C-2
Via U.S. Certified Mail
The City of Vernon ("City") has learned that Central Basin Municipal Water District ("the
District") has awarded a contract for the first phase of the construction of the Southeast Water Reliability
Project ("Project") and a construction management contract to oversee the Project. We also understand
the District representatives may be privately and publicly stating that the City remains responsible to fund
a portion of the Project.
The District has been advised by the City on several occasions that the November 22, 2005
agreement between the District and the City no longer is valid or viable. This is due to the fact that the
energy project which was fundamental to the City's participation and a prerequisite to the City becoming
responsible for partially funding the Project no longer is being implemented and most likely will not be
implemented in its original size. Further, the pipeline at the core of the Project has been downsized
unilaterally by District action. Accordingly, the City is constrained to again advise the District hereby that
the City is not financially obligated to pay for any portion of the Phase I construction of the Southeast
Water Reliability Project.
The City continues to believe that the Project will provide a valuable resource to the southeast
area of Los Angeles by providing an alternative supply of water to the region and encourages the District
to continue discussing how Vernon might participate in this revised project based on a mutually agreeable
new structure.
Sincerely,
Donal O'Callaghan
City Administrator
DOC/SKW/ca
c: Douglas Wance, Sedgwick
Central Basin Municipal Water District Board Members
E,iccfusivefy Industnaf
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: January 26, 2010
TO: Kevin Wilson, Director of Community Services & Water
FROM. Nelly Giron, City Clerk
RE: Resolution No. 201.0-15 — A Resolution of the City Council of the City of Vernon
Approving and Authorizing the Execution of a Letter to the Central Basin Municipal Water
District Regarding the Funding and Construction of the Vernon Pipeline Project and the
Southeast Water Reliability Project
Transmitted herewith for distribution is the original letter for mailing to Central Basin Municipal Water
District and a copy of Resolution No. 2010-15 referenced above, which was approved by City Council on
January 25, 2010.
Thank you.
NG:dj
c: Resolution No. 2010-15
COMMUNITY SERVICES & WATER DEPARTMENT
Samuel Kevin Wilson, Director of Community Services & Water
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811 Fax (323) 826-1435
January 25, 2010
Art Aguilar
Central Basin Municipal Water District
6252 Telegraph Road
Commerce, California 90040-2512
Dear Mr. Aguilar:
C-2
Via U.S. Certified Mail
The City of Vernon ("City") has learned that Central Basin Municipal Water District ("the
District") has awarded a contract for the first phase of the construction of the Southeast Water Reliability
Project ("Project") and a construction management contract to oversee the Project. We also understand
the District representatives may be privately and publicly stating that the City remains responsible to fund
a portion of the Project.
The District has been advised by the City on several occasions that the November 22, 2005
agreement between the District and the City no longer is valid or viable. This is due to the fact that the
energy project which was fundamental to the City's participation and a prerequisite to the City becoming
responsible for partially funding the Project no longer is being implemented and most likely will not be
implemented in its original size. Further, the pipeline at the core of the Project has been downsized
unilaterally by District action. Accordingly, the City is constrained to again advise the District hereby that
the City is not financially obligated to pay for any portion of the Phase I construction of the Southeast
Water Reliability Project.
The City continues to believe that the Project will provide a valuable resource to the southeast
area of Los Angeles by providing an alternative supply of water to the region and encourages the District
to continue discussing how Vernon might participate in this revised project based on a mutually agreeable
new structure.
Sincerely,
Donal O'Callaghan
City Administrator
DOC/SKW/ca
c: Douglas Wance, Sedgwick
Central Basin Municipal Water District Board Members
iCclusively Industrial
APPROVE® JAN ? 510 CITY COUNCIL
J0 2 0 2010
CITY CLERK'S OFFICE qW
STAFF REPORT
COMMUNITY SERVICES & WATER DEPARTMENT
DATE: January 19, 2010 Revised January 20, 2010
TO: Honorable Mayor and City Council
FROM: Samuel Kevin Wilson, Director of Community Services & Water � �' �+' �%� -X.
RE; CENTRAL BASIN MUNICIPAL WATER DISTRICT — RECYCLED WATER
PIPELINE AGREEMENT
The City of Vernon entered into an agreement with Central Basin Municipal Water District (CBMWD)
on November 22, 2005 to provide recycled water to the proposed Vernon Power Generating facility (see
Attachment "A").
As part of the Southeast Water Reliability Project (Project) the City agreed to fund a portion of the cost
to design and construct the Project. The Project consisted of a 42" pipeline from Vernon to a pump station in
Whittier, and included metering, SCADA controls, pumping and flushing facilities, and other appurtenances.
CBMWD retained HDR Engineering, Inc. to prepare the plans and specifications for the Project. The
design work has been completed.
The City has been advised that the pipeline size originally agreed to in our Agreement has been
unilaterally changed by CBMWD from a 42" pipeline to a 30" pipeline. The City of Vernon advised CBMWD
on August 13, 2009 (see Attachment "B") that the change in the pipeline size voided the November 22; 2005
Agreement and advised CBMWD that the terms of the Agreement must be renegotiated.
CBMWD sent the City an invoice seeking the City's first payment for its portion of the design work.
In response, a letter was mailed to CBMWD dated September 1, 2009 (see Attachment "C"). The City advised
that in accordance with Section 3C of the Agreement, no capital recovery fee was due from the City until
CBMWD completed the Project. This letter reiterated that the change in the pipeline size voided the terms of
the Agreement and that CBMWD should stop work including financing the Project until the terms of the
Agreement are amended.
Finally, City and CBMWD staff met on October 1, 2009 and agreed that the November 22, 2005
Agreement needed to be amended. On October 22, 2009 a follow up letter was sent to CBMWD (see
Attachment "D") setting forth technical items that needed to be amended in the Agreement. This letter also
advised CBMWD that the new agreement would set forth new timelines and risk sharing provisions which
would be negotiated following concurrence on the technical points.
Since that time CBMWD has not submitted any proposed revisions to the Agreement to the City of
Vernon. City staff has learned that CBMWD has contracted for the construction of the first phase of the Project.
COMMUNITY SERVICES & WATER DEPARTMENT
Samuel Kevin Wilson, Director of Community Services & Water
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811 Fax (323) 826-1435
January 25, 2010
Art Aguilar
Central Basin Municipal Water District
6252 Telegraph Road
Commerce, California 90040-2512
Dear Mr. Aguilar:
ATTACHMENT "E"
C-2
Via U.S. Certified Mail
The City of Vernon ("City") has learned that Central Basin Municipal Water District ("the
District") has awarded a contract for the first phase of the construction of the Southeast Water Reliability
Project ("Project") and a construction management contract to oversee the Project. We also understand
the District representatives may be privately and publicly stating that the City remains responsible to fund
a portion of the Project.
The District has been advised by the City on several occasions that the November 22, 2005
agreement between the District and the City no longer is valid or viable. This is due to the fact that the
energy project which was fundamental to the City's participation and a prerequisite to the City becoming
responsible for partially funding the Project no longer is being implemented and most likely will not be
implemented in its original size. Further, the pipeline at the core of the Project has been downsized
unilaterally by District action. Accordingly, the City is constrained to again advise the District hereby that
the City is not financially obligated to pay for any portion of the Phase I construction of the Southeast
Water Reliability Project.
The City continues to believe that the Project will provide a valuable resource to the southeast
area of Los Angeles by providing an alternative supply of water to the region and encourages the District
to continue discussing how Vernon might participate in this revised project based on a mutually agreeable
new structure.
Sincerely,
Donal O'Callaghan
City Administrator
DOC/SKW/ca
Douglas Wance, Sedgwick
Central Basin Municipal Water District Board Members
#htsive(y Industfial