Resolution No. 2012-191RESOLUTION NO. 2012-191
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON AUTHORIZING THE ISSUANCE OF A NOTICE
INVITING SEALED PROPOSALS OR BIDS FOR THE SALE OF
500 ACRE-FEET OF WATER RIGHTS IN THE CENTRAL BASIN
WHEREAS, the City of Vernon is interested in obtaining bids
for the sale of up to 500 acre feet of Allowed Pumping Allocation
("APA" or "Water Rights"), including the Total Water Right associated
with such APA, owned by the City pursuant to the terms of the case
entitled Central and West Basin Water Replenishment District, et al.
vs. Adams, et al., LASC Case No 786,656; and
WHEREAS, by memorandum dated October 4, 2012, the City
Administrator has requested that the City Council of the City of
Vernon approve the issuance of a notice inviting sealed proposals or
bids for the sale of 500 acre-feet of water rights in the central
basin; and
WHEREAS, the City Council of the City of Vernon has
determined that it is in the best interest of the City of Vernon that
such notice be issued in accordance with the formal contract procedure
set forth in Section 2.29-4 of the Vernon City Code.
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
directs the City Administrator, or his designee, to issue in
accordance with Vernon City Code Section 2.29-4, the written notice
inviting sealed bids for the sale of 500 acre-feet of water rights in
the central basin, a copy of which is attached hereto as Exhibit A.
SECTION 3: The City Council of the City of Vernon hereby
authorizes the City Administrator, or his designee, to make
modifications to the notice as he deems necessary that are consistent
with the intent of this Resolution.
SECTION 4: The City Council of the City of Vernon hereby
directs City staff to comply with Section 2.29-4 of the Vernon City
Code in the solicitation, receipt, opening, and rejection of bids for
the sale of 500 acre-feet of water rights in the central basin.
SECTION 5: The City Council finds that the sale of water
rights is categorically exempt under the California Environmental
Quality Act (CEQA) guidelines, Section 15312, and in accordance with
Section 15061(b)(3), the general rule that CEQA only applies to
projects that may have an effect on the environment.
SECTION 6: The Acting City Clerk of the City of Vernon
shall certify to the passage, approval and adoption of this
resolution, and the Acting City Clerk of the City of Vernon shall.
cause this resolution and the Acting City Clerk's certification to be
entered in the File of Resolutions of the Council of this City.
APPROVED AND ADOPTED this 16th day of October, 2012.
tt
Name: willia l .J. Davis
Title:/ Mayor Pro-Tem
ATTEST:
Ana Bar i , puty ity Clerk
- 2 -
STATE OF CALIFORNIA )
ss
COUNTY OF LOS ANGELES }
I, Ana Barcia, Deputy City Clerk of the City of Vernon, do hereby
certify that the foregoing Resolution, being Resolution No. 2012-191,
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
Tuesday, October 16, 2012, and thereafter was duly signed by the Mayor
or Mayor Pro-Tem of the City of Vernon.
Executed this —_ day of October, 2012, at Vernon,.California
Ana ia, eputy City Clerk
(SEAL)
_3-
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
October 16, 2012
Notice Inviting Sealed Bids for the Sale of 500 Acre -Feet of Water Rights in the Central
Basin
To All Interested Parties:
Notice is hereby given that the City of Vernon ("City") invites and will receive sealed bids for
the sale of up to 500 acre feet of Allowed Pumping Allocation ("APA" or "Water Rights"),
including the Total Water Right associated with such APA, owned by the City pursuant to the
terms of the case entitled Central and West Basin Water Replenishment District, et al. vs. Adams,
et al., LASC Case No. 786,656 (the "Central Basin Judgment").
The City will accept bids for all or a portion of the Water Rights. The minimum bid price for the
Water Rights shall be seven thousand eight hundred dollars ($7,800) per acre foot.
Qualified bidders are restricted to those parties already holding an Allowed Pumping Allocation
within the Central Basin as of the date City receives the sealed bid, which rights are recognized
by the Watermaster of the Central Basin. Qualified bidders shall further certify that they have
funds available to deliver and pay in full within fourteen (14) days of notice that the Bid has been
awarded by the City Council, including a period of due diligence review by Buyer as specified in
the attached Purchase and Sale Agreement and Escrow Instructions. Notice shall be given by
email and shall be deemed given as of the time the email is sent.
Due Date:
All sealed bids must be received in the City Clerk's office up to the hour of 2:00 pm on Thursday,
November 8, 2012 (according to the clock in the City Clerk's office). At said time, the bids will be
opened in public and announced at the City Clerk's Office.
Bid Form:
'The bid must be made on the form provided for that purpose attached herewith as attachment "A", shall
be enclosed along with the affidavit mentioned below enclosed in a sealed envelope, and marked : "Bid
for Water Rights" and addressed to the City Clerk, City of Vernon, 4305 Santa Fe Avenue, Vernon CA
90058. If the Bid is made by an individual, it must be signed by that individual, and an address,
telephone (fax number and e-mail address if available) must be given. If made by a business or
municipal entity, it must be signed by the person(s) authorized to execute agreements and bind the entity
E Ccfusivefy Industnaf
to contracts. A full business address, telephone (fax number and e-mail address if available) must be
given. No telegraphic, fax, telephonic or e-mailed bid will be considered. Any bidder may withdraw its
bid either personally or by signed written request any time prior to the scheduled time for opening of the
bids (but not after). Bids are irrevocable on bid opening and shall remain firm for ninety (90) days.
Blank spaces in the bid form must be filled in, using ink, indelible pencil, or typewriter and the text of the
proposal form must not be changed. No additions to the form may be made. Any unauthorized conditions,
limitations, or provisos attached to a proposal will render it informal and may cause its rejection.
Alterations. by erasure or interlineations must be explained or noted in the proposal form over the
signature of the Proposer. Numbers shall be spelled out and written in Arabic figures. If the words and
the Arabic figures are different, the words shall be used. and the Arabic figures disregarded. If the unit
price and the total amount set forth by a bidder calculate in error, the unit price shall be considered as
representing the bidder's intention, and the totals shall be corrected to conform thereto.
Affidavit:
An affidavit form is enclosed as Attachment `B". It must be completed and enclosed with the bid form,
The affidavit signifies that the bid is genuine and not collusive or made in the interest or on behalf of
any person not named in the bid, that the Bidder has not directly or indirectly induced or solicited any
other Bidder to put in a sham proposal or any other person, firm, or corporation to refrain from
proposing, and that the Bidder has not in any manner sought by collusion to secure for itself an
advantage over any other Bidder. Any bid submitted without an affidavit or in violation of this
requirement will be rejected.
Contract and Terms:
The form of contract that the successful bidder will be required to execute is attached herewith as
Attachment "C". Funds for the sale of the water rights shall be deposited in an escrow account no later
than fourteen (14) days from written notice that the Bid has been awarded by City Council. Upon
completion of a transfer of rights to the bidder as established by the Watermaster of the Central Basin, the
funds shall be released to the City as specified in the Purchase and Sale Agreement.
Reservation:
The City reserves the right to revise or amend these specifications prior to the date set for opening bids.
Revisions and amendments, if any, will be announced by an addendum to this Invitation to Bid. If the
revisions require additional time to enable Bidders to respond, the City may postpone the opening date
accordingly. In such case, the addendum will include an announcement of the new opening date.
All addenda must be attached to the bid. Failure to attach any addendum may render the bid non-
responsive and cause it to be rejected.
The City Council reserves the right to reject any and all bids received, to take all bids under advisement
for a period not to exceed ninety (90) days after the date of the opening, to waive any informality in any
bid, and to be the sole judge of the relative merits of the respective bids received. The City reserves the
right to reject any bid not accompanied with all data or information required. The award shall be made to
the HIGHEST qualified bidder, except that the City reserves the right to sell the water rights in
incremental portions, with priority to given to the highest qualified bidder and the amount of units
requested in its bid, any remaining units will be sold to the next highest qualified bidder for the amount
requested in its bid, and so on until no rights remain.
E.xcfusivefy Industriaf
Conditions for responses to requests:
The following conditions apply to this request:
A. Nothing contained in this Invitation to Bid shall create any contractual relationship
between the respondent and the City.
B. The City shall not be liable for any expenses incurred by any organization in connection
with this Invitation to Bid.
C. No conversations or agreements with any officer, agent, or employee of the City shall
affect or modify any terms of this Invitation to Bid. Oral communications or any written/e-
mail materials provided by any person other than designated contact staff of City shall not
be considered binding.
D. Bidders shall not issue any news release, press release or public statement pertaining to
this Invitation to Bid, or Bid, without prior written approval of the City.
E. All submitted bids and information included therein or attached thereto shall become
public record upon bid opening.
Should you have any questions you may contact Alex Kung, Assistant to the City Administrator.
Sincerely,
Mark Whitworth
City Administrator
Dccfusivefy hu ustriaf
Attachment "A"
OF V.P
ti
T�yElY IM9J
CITY OF VERNON
SALE OF UP TO 500 ACRE-FEET OF CENTRAL BASIN ALLOWED
PUMPING ALLOCATION
BID FORM
Name of Person/City/Agency/Company:
Address:
City/State/Zip Code:
Person to Contact:
Phone Number:
E-mail Address (for official notices about this Bid and award of the Bid):
The undersigned as Bidder, agrees to purchase the following amount of Central Basin Allowed Pumping
Allocation (and the associated Total Water Right) at the unit price below:
(The minimum bid'is $7,800.00 per acre-foot)
Total Allowed Pumping Allocation to be purchased:
At a unit price of:
Acre Feet
(words)
Acre Feet
(figures)
(words)
(figures)
Exchaivefy Industriaf
per Acre Foot
per Acre Foot
Total Bid Price for all water units to be purchased:
(figures)
The undersigned certifies that the Bidder is currently the holder of an adjudicated Allowed Pumping
Allocation ("APA") as provided in Central and West Basin Water Replenishment District, et al. vs.
Adams, et al., LASC Case No. 786,656 (the "Central Basin Judgment").
(Bidder's Signature)
(Print Name)
Excfusively Industrid
(Title)
(Date)
Attachment "B"
AFFIDAVIT OF NON -COLLUSION
STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
and says that he/she is
being first duly sworn deposes
(Insert "Sole Owner", 'Partner", 'President; "Secretary", or other proper title)
of
(Insert name of bidder)
who submits herewith to the City of Vernon a bid;
That all statements of fact in such bid are true;
That such bid was not made in the interest of or on behalf of any undisclosed person, partnership,
company, association, organization or corporation;
That such bid is genuine and not collusive or sham;
That said bidder has not, directly or indirectly by agreement, communication or conference with anyone
attempted to induce action prejudicial to the interest of the City of Vernon, or of any other bidder or
anyone else interested in the proposed contract; and further
That prior to the public opening and reading of bids, said bidder:
a. Did not directly or indirectly, induce or solicit anyone else to submit a false or sham bid;
b. Did not directly or indirectly, collude, conspire, connive or agree with anyone else that said
bidder or anyone else would submit a false or sham bid, or that anyone should refrain from
bidding or withdraw his bid;
C. Did not, in any manner, directly or indirectly seek by agreement, communication or conference
with anyone to raise or fix the bid price of said bidder or of anyone else, or to raise or fix any
overhead, profit or cost element of his bid price, or of that of anyone else;
d. Did not, directly or indirectly, submit his bid price or any breakdown thereof, or the contents
thereof, or divulge information or data relative thereto, to any corporation, partnership,
company, association, organization, bid depository, or to any member or agent thereof, or to any
individual or group of individuals, except the City of Vernon, or to any person or persons who
have a partnership or other financial interest with said bidder in his business.
Er,chtsivei5 Industriaf
I certify under penalty of perjury that the above information is correct
LIM
Date
Title:
Excrwivefy Industriaf
Attachment "C"
PURCHASE AND SALE AGREEMENT
AND ESCROW INSTRUCTIONS
This Purchase and Sale Agreement (this "Agreement") is made as of the date executed by
Seller (the "Effective Date"), by and between City of Vernon, a Municipal corporation
("Seller"), and ("Buyer"). Buyer and Seller are sometimes
hereinafter individually referred to as a "Party" and collectively as the "Parties".
RECITALS
A. Reference is hereby made to that certain Judgment entered October 11, 1965, as
amended by that certain Second Amended Judgment dated May 6, 1991, as such judgment may
have been further amended prior to the Effective Date (as so amended, the "Judgment") in the
case entitled Central and West Basin Water Replenishment District, et al., vs. Adams,'et al., Case
No. 786,656 in the Superior Court of the State of California for the County of Los Angeles (the
"Court"). All initially capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Judgment.
B. According to records maintained by the Department of Water Resources of the
State of California, in its capacity as watermaster under the Judgment (in such capacity, the
"Watermaster"), Seller is currently the owner of 10,050 acre feet of Total Water Right and 8,039
acre feet of Allowed Pumping Allocation (the "Seller's APA"). On the terms and conditions set
forth herein, Seller desires to sell to Buyer, and Buyer desires to buy from Seller, on a perpetual
and permanent basis, acre feet of Total Water Right and acre feet of Allowed
Pumping Allocation (the "Purchased APA").
C. The Purchased APA, together with Seller's other rights, privileges and
entitlements relating to the Purchased APA, or appurtenant thereto, if any, including without
limitation Seller's right, title and interest, if any, in and to the Allowed Pumping Allocation
arising from the Purchased APA for any period after the Closing Date (as defined below in
Section 5) and any carryover rights and any storage rights associated with the Purchased APA
are sometimes collectively referred to as the "Water Rights."
D. Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, the
Water Rights on the terms and conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants contained herein, and for
other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Seller and Buyer agree as follows:
1. Agreement to Transfer Title to Buyer. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, the Water Rights, on the terms and conditions set forth herein.
2. Escrow.
2.1. Establishment of Escrow. Within two (2) business days following the
Effective Date, the Parties shall open an escrow (the "Escrow") at Fidelity National Title
Insurance Company, or such other escrow holder to which the parties shall mutually agree (the
"Escrow Holder") for this transaction. This Agreement shall constitute escrow instructions to
Escrow Holder concerning this transaction.
2.2. Deposit. Within three (3) business days after the Effective Date, Buyer
shall deposit a sum equal to ten percent (10%) of the Purchase Price (the "Deposit") with Escrow
Holder, by wire transfer of immediately available funds denominated in U.S. dollars. If Buyer
does not deliver the Deposit in the time and manner provided herein, then Seller may elect, in its
sole and absolute discretion, to deliver a written notice to Buyer and Escrow Holder terminating
any further obligations of the Parties under this Agreement. The Deposit shall be non-
refundable, except as expressly provided in Sections 2.3, 10.1.2, 10.1.4, and 10.1.5 below.
2.3. Due Diligence Review. Buyer shall have seven (7) calendar days after the
Effective Date to review such documents and snake such inquiries as Buyer deems necessary or
prudent to confirm that the Water Rights are satisfactory for its purposes (the "Diligence
Period"). In the event Buyer determines that the Water Rights are not satisfactory for its
purposes, Buyer shall have the right to terminate this Agreement by delivering written notice
thereof to Seller (the "Termination Notice") prior to the expiration of the Diligence Period.
Buyer's failure to deliver the Termination Notice to Seller prior to the expiration of the Diligence
Period shall be deemed Buyer's waiver of any objection to matters affecting the Water Rights.
2.4. Diligence Satisfaction. Within two (2) business days after the expiration
of the Diligence Period, Buyer shall deposit an amount equal to the Purchase Price. (as defined
below in Section 4) less the Deposit with Escrow Holder (the "Purchase Price Funds"). Buyer
may elect to request that the Purchase Price Funds be invested by Escrow Holder in a money
market account, or similar investment, and the interest therein shall be for the sole benefit of
Buyer.
2.5. Title Matters.. Seller shall not cause any lien, encumbrance or other
exception to title to the Water Rights to be recorded or to attach to the Water Rights between the
Effective Date and the recording of the Water Deed or earlier termination of this Agreement
pursuant to the terms hereof without the prior written consent of Buyer. Unless and until this
Agreement is terminated pursuant to the terms hereof, Seller shall not assign, convey or
otherwise transfer any record or beneficial interest in the Water Rights to any person other than
to Buyer at Closing (as defined below in Section 5) pursuant to the terms of this Agreement.
3. Watermaster
3.1. The Water Rights. Concurrently herewith, Seller and Buyer shall execute
a Watermaster transfer form naming Seller as grantor and Buyer as grantee in the form attached
hereto as Exhibit A (the "Watermaster .Transfer Form"). Seller and Buyer shall deliver the
original of the Watermaster Transfer Form to Escrow Holder concurrently herewith. Promptly
following receipt of the Purchase Price Funds, Escrow Holder shall file the Watermaster Transfer
Form with the staff of the Watermaster
3.2. Cooperation. The Parties shall provide such documents and information
to the Watermaster as Watermaster may reasonably request from the Parties in connection with
this transaction. If Watermaster fails to take all actions necessary for the transfer contemplated
by this Agreement to become effective, then the Parties shall negotiate in good faith to determine
whether any changes to the relevant documents which are reasonably satisfactory to the Parties
in their respective discretions, should be made by them to facilitate such actions by Watermaster.
4. Purchase Price. The total purchase price for the Water Rights (the "Purchase
Price") shall be Dollars
($ ), representing $ per AF of the Purchased APA.
5. Closing. The closing of the purchase and sale of the Water Rights (the "Closing")
shall occur within three (3) business days after the Watermaster approves the Watermaster
Transfer Form. The date of closing is referred to herein as the "Closing Date".
5.1. Seller Closing Deliveries. At or prior to Closing, Seller shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Buyer (except as otherwise provided below):
5.1.1. An original duly executed and acknowledged grant deed in the
form of Exhibit C attached hereto (the "Water Deed").
5.1.2. Such other documents and instruments as Escrow Holder or Buyer
may reasonably request.
5.2. Buyer Closing Deliveries. At or prior to Closing, Buyer shall deposit the
following with Escrow Holder, all in form and substance reasonably satisfactory to
Escrow Holder and Seller:
5.2.1. The Purchase Price, in good and sufficient funds.
5.2.1. Such other documents and instruments as Escrow Holder or Seller
may reasonably request.
5.3. Costs and Prorations. Escrow Holder shall prepare and deliver one or
more preliminary closing statements to the Parties prior to the Closing, and the Parties
shall not unreasonably withhold their approval thereof. At Closing, Seller and Buyer
shall each pay one-half of the escrow fees of Escrow Holder for this transaction, subject
to Section 5.5 below, and Buyer shall pay all legal fees and related costs incurred by the
Parties in the negotiation and preparation of this Agreement and any and all Exhibits
attached hereto. At the time Buyer records the Water Deed, Buyer shall pay the
recording fee for the Water Deed. Escrow Holder may pro rate any administrative
assessments ,payable to the Watermaster for the fiscal year of the Watermaster in which
the Closing Date occurs, such pro ration to be based upon and proportional to (a) the
number of days in such fiscal year before the Closing Date, and (b) the number of days in
such fiscal year after the Closing bate. Each of Buyer and Seller shall deposit additional
funds into Escrow in an amount equal to their respective closing costs; provided,
however, that Escrow Holder is hereby authorized to withhold Seller's closing costs from
funds that would otherwise be distributable by Escrow Holder to Seller at Closing. All
other costs incurred by the Parties in connection with this transaction shall be paid in the
manner which is customary in Los Angeles County, California for transactions of the
type contemplated by this Agreement. To the extent that information for any such
proration is not available on the Closing Date, Buyer and Seller shall effect such
prorations outside of Escrow, as soon as possible following the Closing, but in no event
later than one hundred twenty (120) days after the Closing Date.
5.4. Procedure for Closing. Escrow Holder shall close the Escrow by doing
the following, in the following order
5.4.1 Pay Seller's closing costs from funds deposited by Seller or
otherwise distributable to Seller.
5.4.2 Pay Buyer's closing costs from funds deposited by Buyer.
5.4.3 Deliver the Purchase Price, less Seller's closing costs, to Seller
pursuant to instructions to be separately provided by Seller to Escrow
Holder.
5.4.4 Deliver interest, if any, on the Deposit to Buyer, by a check made
payable to Buyer.
5.4.5 Date the Water Deed as of the Closing Date.
5.4.6 Deliver an original of the Water Deed to Buyer, which Buyer
shall record as soon as practicable in the Official Records of Los
Angeles County, California (the "Official Records"), and a copy of the
executed, dated Water Deed (and any other closing documents) to Seller.
5.4.7 Return any other items to the Party who delivered it into escrow.
5.5. Inability to Close. If this Agreement is terminated pursuant to Section
10.1, Seller and Buyer shall each pay one-half of any cancellation fees of Escrow Holder;
provided, however, that if the Escrow fails to close due to a default of a Party, then the
defaulting party shall, in addition to any other damages, pay all cancellation fees.
6. Seller's Conditions for Sale. Seller's obligations to sell the Water Rights pursuant
to this Agreement shall be subject to satisfaction or waiver by Seller, in its discretion, of the
following conditions as of the Closing Date:
6.1 Buyer's Performance. Buyer shall have timely performed all obligations
to be performed by Buyer pursuant to this Agreement, and Buyer's representations and
warranties set forth herein shall be true and correct in all material respects.
6.2 Watermaster. Seller shall have received evidence reasonably satisfactory
to Seller that the Watermaster has taken all actions necessary for the transfer
contemplated by this Agreement to become effective.
7. Buyer's Conditions for Purchase. Buyer's obligations to purchase the Water
Rights pursuant to this Agreement shall be subject to satisfaction or waiver by Buyer, in its
discretion, of the following conditions as of the Closing Date:
7.1. Seller's Performance. Seller shall have timely performed all obligations to
be performed by Seller pursuant to this Agreement, and Seller's representations and warranties
set forth herein shall be true and correct in all material respects.
7.2. Watermaster. Buyer shall have received evidence reasonably satisfactory
to Buyer that the Watermaster has taken all actions necessary for the transfer contemplated by
this Agreement to become effective.
8. Representations and Warranties of Seller. Seller represents and warrants to Buyer
that, as of the Effective Date and the Closing Date:
8.1. Due Organization. Seller is a Municipal corporation, validly existing and
in good standing under the laws of the State of California.
8.2. Power and Authority. Seller has the right, power and authority to enter
into this Agreement, which has been "duly authorized by valid action of Seller's governing body,
and to perform its obligations hereunder, and the person(s) executing this Agreement on behalf
of Seller have the right, power and authority to do so.
8.3. Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance , with its terms. Neither this
Agreement nor the consummation of the transactions contemplated hereby violates any provision
of any agreement to which Seller is a party or by which Seller is bound.
8.4. No Conflicts. To Seller's knowledge, Seller is not now in, nor will the
Closing of the transaction contemplated by this Agreement in any material respect constitute a,
violation of any law, ordinance, rule, regulation or administrative or judicial order affecting the
Water Rights, including without limitation the Judgment.
8.5. No Other Consents Needed. To Seller's knowledge, other than the
approval of the Watermaster, no consent from any third party (including any governmental
agency or authority) is required in order to effectuate the transfer of the Water Rights in
accordance with this Agreement.
8.6. The Water Rights. Seller owns all of the beneficial right, title and interest
in and to the Water Rights and has not entered into any agreement to alienate, encumber,
transfer, option, lease, assign, or otherwise convey all or any portion of its interest in any of the
Water Rights, that would prevent Seller's sale of the Water Rights pursuant to this Agreement.
9. Representations and Warranties of Buyer. Buyer represents and warrants to Seller
that, as of the Effective Date and the Closing Date:
9.1. Due Organization. Buyer is a duly organized, validly
existing and in good standing under the laws of the State of California. Buyer is qualified to.do
and doing business in the State of California.
9.2. Power and Authority; Party to the Central Basin Judgment. Buyer has the
right, power and authority to enter into this Agreement and to perform its obligations hereunder,
and the person(s) executing this Agreement on behalf of Buyer have the right, power and
authority to do so. Buyer is a party to the Judgment and either currently holds water rights
thereunder or is not precluded from acquiring such rights.
9.3. Enforceability. This Agreement constitutes the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms. Neither this
Agreement nor the consummation of the transactions contemplated hereby violates any provision
of any agreement to which Buyer is a party or by which Buyer is bound.
9.4. No Conflicts. To Buyer's knowledge, Buyer is not now in, nor will the
Closing of the transaction contemplated by this Agreement in any material respect constitute a,
violation of any law, ordinance, rule, regulation or administrative or judicial order affecting the
Water Rights.
10. Termination; Waiver; Release.
10.1. Termination. This Agreement may be terminated at any time prior to the
Closing:
10.1.1. By written agreement of the Parties.
10.1.2. By Buyer, if there is a default or breach of any covenant or
an inaccuracy in any representation or warranty made by Seller in this
Agreement which default, breach or inaccuracy has not been cured to
Buyer's reasonable satisfaction within ten (10) calendar days following
receipt by Seller of written notice of such default, breach or inaccuracy.
10.1.3. By Seller, if there is a default or breach of any covenant or
an inaccuracy in any representation or warranty made by Buyer in this
Agreement which default, breach or inaccuracy has not been cured to
Seller's reasonable satisfaction within ten (10) calendar days following
receipt by Buyer of written notice of such default, breach or inaccuracy.
10.1.4. By Seller or Buyer, if the Watermaster refuses or declines
to approve the Watermaster Transfer Form, within five (5) calendar days
after the Watermaster provides written notice to the Parties of such a
final decision by the Watermaster.
10.1.5. By Buyer or Seller prior to the Closing, if the Closing shall
not have occurred for any reason, other than because of the default of the
Party seeking to terminate, on or before ninety (90) calendar days from
the Effective Date hereof, or such later date as may be agreed to in
writing by the Parties.
10.2. Effect of Termination. If this Agreement is terminated pursuant to Section
10.1 hereof, the Parties shall have no further obligations hereunder, provided that nothing
contained in this Section 10 shall relieve any party from liability for a breach or default under
this Agreement occurring prior to such termination.
10.3. Limitation on Seller's Liability. In the event the Closing fails to occur due
to a default by Seller hereunder (and provided that all conditions to Seller's obligations have
been satisfied), Buyer shall be entitled, as its sole and exclusive remedy; to terminate this
Agreement in accordance with Section 10.1.2 above and obtain a return of the Deposit and
Purchase Price Funds, plus any interest accrued thereon. Buyer hereby expressly waives any
right to any actual, incidental, consequential or punitive damages or any equitable remedies
which it may otherwise have for Seller's default. This provision shall survive the termination of
this Agreement or the Closing.
10.4. LIQUIDATED DAMAGES. IF THE CLOSING FAILS TO OCCUR BY
REASON OF A BUYER DEFAULT OF THIS AGREEMENT, SELLER WILL BE
DAMAGED AND WILL BE ENTITTLED TO COMPENSATION FOR THESE DAMAGES,
BUT SUCH DAMAGES WILL BE EXTREMELY DIFFICULT AND IMPRACTICABLE TO
ASCERTAIN FOR NUMEROUS REASONS, INCLUDING, WITHOUT LIMITATION, THE
FOLLOWING: (A) THE DAMAGES TO WHICH SELLER WOULD BE ENTITLED WILL
BE BASED ON THE DIFFERENCE BETWEEN THE ACTUAL VALUE OF THE WATER
RIGHTS AT THE TIME SET FOR THE CLOSING AND THE PURCHASE PRICE FOR THE
WATER RIGHTS AS SET FORTH IN THIS AGREEMENT, (B) PROOF OF THE AMOUNT
OF THESE DAMAGES WILL BE BASED ON OPINIONS OF THE VALUE OF THE
WATER RIGHTS, WHICH CAN VARY IN SIGNIFICANT AMOUNTS, AND (C) IT IS
IMPOSSIBLE TO PREDICT AS OF THE DATE ON WHICH THIS AGREEMENT IS
ENTERED INTO WHETHER THE VALUE OF THE WATER RIGHTS WILL INCREASE
OR DECREASE AS OF THE DATE SET FOR THE CLOSING DATE, AND BUYER
DESIRES TO LIMIT THE AMOUNT OF DAMAGES FOR WHICH BUYER MIGHT BE
LIABLE SHOULD BUYER BREACH THIS AGREEMENT. BOTH BUYER AND SELLER
WISH TO AVOID THE COSTS AND LENGTHY DELAYS WHICH WOULD RESULT IF
SELLER FILED A LAWSUIT OR COMMENCED AN ARBITRATION PROCEEDING TO
SEEK TO ASCERTAIN ITS DAMAGES FOR A BREACH OF THIS AGREEMENT.
THEREFORE, BUYER AND SELLER HEREBY AGREE THAT IN THE EVENT THE
CLOSING SHALL FAIL TO OCCUR BY REASON OF A DEFAULT OR BREACH OF THIS
AGREEMENT BY BUYER, SELLER SHALL BE ENTITLED TO RETAIN, AS ITS SOLE
AND EXCLUSIVE REMEDY, THE DEPOSIT AS A REASONABLE ESTIMATE OF
SELLER'S DAMAGES. IT IS AGREED THAT IN ORDER TO IMPLEMENT THE
PROVISIONS OF THIS SECTION, .SELLER MAY UNILATERALLY INSTRUCT ESCROW
HOLDER TO CANCEL THE ESCROW AND DELIVER THE DEPOSIT TO SELLER.
NOTHING CONTAINED IN THIS SECTION SHALL BE DEEMED OR CONSTRUED TO
LIMIT BUYER'S OBLIGATIONS UNDER SECTION 11.16 BELOW, WHICH SHALL BE IN
ADDITION TO THE LIQUIDATED DAMAGES PROVIDED HEREIN. THIS PROVISION
SHALL SURVIVE THE TERMINATION OF. THIS AGREEMENT AND THE CLOSING.
BUYER'S INITIALS
11. Miscellaneous.
SELLER'S INITIALS
11.1. Further Assurances. At any time and from time to time after the Effective
Date, each Party agrees to take such actions, to execute and deliver such instruments and to
provide such documents and information as the other Party may reasonably request to effectuate
the purposes of this Agreement.
11.2. Successors. This Agreement shall be binding upon and inure to the
benefit assigns and successors -in -interest of the Parties.
11.3. Amendment. Except as otherwise provided in this Agreement, neither this
Agreement nor any provision hereof may be waived, modified, amended, discharged, or
terminated except by an instrument in writing signed by the Party against which the enforcement
of such waiver, modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such writing.
11.4. Entire Agreement. This Agreement and the agreements referenced herein
constitute the entire understanding between the Parties with respect to the matters set forth
herein, and supersede all prior or contemporaneous understandings or agreements between the
Parties with respect to such matters, whether oral or written.
11.5. Notices. Any notice, approval, consent, waiver or other communication,
required or permitted to be delivered upon a Party under this Agreement shall be in writing and
shall be personally delivered or sent by reputable overnight delivery service, such as FedEx, and
shall be deemed given: (a) if personally delivered, when actually delivered; or (b) if sent by
reputable overnight delivery service, such as FedEx, when actually delivered, provided
confirmation of delivery shall be retained by the sender. Such notices shall be addressed to the
Party to whom such notice is to be given at the Party's address set forth below or as such Party
shall otherwise direct in a writing to the other Parry delivered or sent in accordance with this
Section. Any notices so given shall be deemed given as of the date established by the overnight
delivery service.
If to Seller, to: City of Vernon
City Clerk
4305 Santa Fe Avenue
Vernon CA 90058
Copy to: William F. Kruse, Esq.
Lagerlof, Senecal, Gosney & Kruse, LLP
3010 North Lake Avenue
Tenth Floor
Pasadena, CA 91101
If to Buyer, to:
If to Escrow Holder, to:
11.6. Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of California, without giving effect to principles of
conflicts of laws. The venue for the resolution of any disputes arising out of, or related to, this
Agreement shall be Los Angeles County, California.
11.7. Waiver. No failure by either Party to exercise, and no delay in exercising
any rights, shall be construed or deemed to be a waiver thereof, nor shall any single or partial
exercise by any Party preclude any other or future exercise thereof or the exercise of any other
right. Any waiver by a Party of any breach of any provision of this Agreement shall not operate
as or be construed to be a waiver of any other breach of that provision or of any breach of any
other provision of this Agreement.
11.8. Liberal Construction. This Agreement constitutes a fully -negotiated
agreement among commercially sophisticated Parties, each assisted by legal counsel, and the
terms of this Agreement shall not be construed or interpreted for or against any Party hereto
because that Party or its legal representative drafted or prepared such terms.
11.9. Severability. If any provision of this Agreement is invalid, illegal or
unenforceable, such provision shall be deemed to be severed or deleted from this Agreement and
the balance of this Agreement.shall remain in full force and effect.
11.10. Good Faith and Fair Dealing. The performances required by the
provisions of this Agreement shall be undertaken in good faith, and with each of the Parties
dealing fairly with the other.
11.11. No Third -Party Beneficiaries. This Agreement does not create, and shall
not be construed to create, any rights enforceable by any person, partnership, corporation, joint
venture, limited liability company or other form of organization or association of any kind that is
not a Party to this Agreement.
11.12. No Brokers. Each Party represents and warrants to the other that it has not
dealt with any broker, agent or finder in connection with this transaction. Buyer agrees to
indemnify and hold Seller harmless from and against any and all Claims arising out of any claim
to a commission or fee by any other party claiming by or through Buyer. Seller agrees to
indemnify and hold'Buyer harmless from and against any and all Claims arising out of any claim
to a commission or fee by any other party claiming by or through Seller. This provision shall
survive the termination of this Agreement and the Closing.
11.13. Counterparts. This Agreement may be executed in counterparts (by
original, facsimile or electronic PDF signatures) which, when taken together, shall constitute a
single agreement. The signature page of any counterpart may be detached therefrom without
impairing the legal effect of the signature(s) thereon.
11.14. Back -Up Offers. After the execution of this Agreement and until the
expiration of the Diligence Period, Seller shall have the right, without liability to Buyer, to solicit
or initiate, directly or indirectly, and to encourage the submission of inquiries, proposals, or
offers from any potential buyer for the Water Rights. Buyer further agrees that during the
foregoing period of time, Seller may, without liability to Buyer, enter into and agree to back-up
offers from potential buyers for the Water Rights, provided that any such back-up offer, if
accepted by Seller, shall be subject to Buyer's rights under this Agreement.
11.15. Time of the Essence. Time is of the essence of each and every provision
of this Agreement. Whenever action must be taken under this Agreement during a certain period
of time that ends on a non -business day, then such period shall be extended until the immediately
following business day. As used herein, "business day" means any dayotherthan a Saturday,
Sunday or federal or California State holiday.
11.16. Attorneys' Fees. In any action or proceeding for the purpose of enforcing
any provision of this Agreement, or to recover damages hereunder, or to obtain injunctive or
other relief, or for a declaration of rights or obligations hereunder, or for any other judicial or
equitable remedy, the prevailing Party shall be entitled, in addition to such other relief as may be
granted, to an award, in the same or a subsequent proceeding, of its reasonable attorneys' fees
and costs.
11.17. Not an Offer. In no event shall any draft of this Agreement create any
obligations or liabilities, it being intended that only a fully executed and delivered copy of this
Agreement will bind the Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first
above written.
SELLER: CITY OF VERNON, a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
BUYER:
By:
Name:
Its:
EXHIBITS
A Watermaster Transfer Form
B Water Deed
ACKNOWLEDGEMENT OF ESCROW HOLDER
Escrow Holder acknowledges its receipt of an executed version of this Agreement and agrees to
act as escrow holder with respect to its obligations expressly set forth herein.
By:
Name:
Its:
EXHIBIT A
WATERMASTER TRANSFER FORM
For a valuable consideration, City of Vernon, a Municipal corporation, hereby sells and
transfers to
The Rights to extract acre feet of grantor's Allowed Pumping Allocation
acre feet of Total Water Right) allocated to grantor (or predecessors in interest) under
and pursuant to Judgment dated October 11, 1965, and entered in Los Angeles Superior Court
Case No. 786,655 entitled "Central and West Basin Water Replenishment District vs. Charles E.
Adams, et al."
DATED: , 2012
Buyer
By
Name
Title
By
Name
Title
CITY OF VERNON,
a Municipal corporation
Grantor/Seller
By _
Name
Title
By _
Name
Title
EXHIBIT B
WATER DEED
WATER RIGHTS GRANT DEED
Space above this line for Recorder
The undersigned grantor(s) declare(s)
DOCUMENTARY TRANSFER TAX $ 0.00 (Zero)
( ) computed on full value of property conveyed, or
( ) computed on full value less liens and encumbrances remaining at time of sale.
( ) Unincorporated Area
As of , 2012, City of Vernon, a Municipal corporation limited partnership, as Grantor
herein, for valuable consideration, the receipt of which is hereby acknowledged, does hereby grants
to , as Grantee herein, all that certain real property in the County of
Los Angeles, State of California, described as:
acre feet, of Total Water Right and acre feet of Allowed Pumping
Allocation (the "Purchased APA") together with all of Grantor's other rights, privileges
and entitlements relating to the Purchased APA, or appurtenant thereto, if any, including
without limitation Grantor's right, title and interest, if any, in and to the Allowed
Pumping Allocation for any period after the closing date, any carryover rights and any
storage rights associated with the Purchased APA (collectively, the "Water Rights")
allocated to Grantor in, under and pursuant to that certain Second Amended Judgment
dated May 6, 1991 (the "Judgment") in the case entitled Central and West Basin Water
Replenishment District, et al., vs. Adams, et al., Case No. 786 656 in the Superior Court
of the State of California for the County of Los Angeles.
According to records maintained by the Department of Water Resources of the State of California, in its
capacity as Watermaster under the Judgment (in such capacity, the "Watermaster"), Grantor is currently
the owner of acre feet of Total Water Right and acre feet of Allowed Pumping Allocation.
Pursuant to this instrument, Grantor is selling to Grantee, on a perpetual and permanent basis,
acre feet of Total Water Right and acre feet of Allowed Pumping Allocation, and Grantor is
retaining acre feet of Total Water Right and acre feet of Allowed Pumping
Allocation.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned has executed this instrument as of the date first
written above.
GRANTOR: City of Vernon,
a Municipal corporation
By:
Name:
Its:
By:
Name:
Its:
[INSERT APPLICABLE ACKNOWLEDGEMENT]
DATE: October 11, 2012
TO: Honorable City Council
FROM: Mark C. Whitworth, City Administrator
RE: Sale of Surplus Water Rights
Background
The City of Vernon (City) staff conducted an in-depth evaluation to investigate the feasibility of
selling up to 500 acre-feet of surplus adjudicated water rights to address the budget deficit. In this pursuit,
City staff (staff) performed an extensive review of recent water right sales in order to garner a general
consensus of what the market will bear in terms of price per acre-foot for water rights. Staff made contact
with representatives of companies and industry professionals whom played an integral role in recent water
rights sales transactions. Based on the information gathered as part of the City's evaluation, it is estimated
that water rights in the Central Water Basin have a market value in the $7,500 per acre-foot to $8,100 per
acre-foot range.
The City's current water demand is approximately 8,000 acre-feet per year. The City owns 8,039
adjudicated water rights that are distributed to our customers by way of eight water wells located at
strategic locations throughout the City. Adjudicated water rights were established in the Central Water
Basin in accordance with a court judgment in 1965. In addition, the City has an existing contract with the
Central Basin Municipal Water District that allows for the purchase of up to 1,000 acre-feet annually of
Tier 1 surface water. The surface water provides a degree of flexibility and reliability in order to meet
demand conditions in the event of an .emergency where large volumes of water are needed; or as a
supplemental water supply. The City's existing adjudicated rights of 8,039 acre-feet coupled with the
1,000 acre-feet of surface water provide for a current excess capacity of approximately 1,000 acre-feet
year. Although not anticipated, conditions could change depending on future business usage. If necessary,
the City could utilize additional surface water supplies, lease water, or increase recycled water use in
order to meet water demand requirements. Still, even with the sale the City will have an excess capacity
of 500 acre-feet of water per year.
Staff has developed the attached bid package, including the purchase and sales agreement, in
order to seek bids for the. sale of 500 acre-feet of the City's adjudicated water rights.. The law firm of
Lagerlof, Senecal, and Kruse have been retained to review the bid package and purchase and sales
agreement on the City's behalf to assist in the transaction.
CEQA Analysis
Groundwater rights, whatever their source, have long been held to be real property rights.
Stanislaus Water Co. v. Bachman (1908) 152 Cal. 716, 725. Sale of "surplus government property" is
categorically exempt under CEQA Guidelines (§ 15312). This Class 12 Categorical exemption reads:
"Class 12 consists of sales of surplus government property except for parcels of land located in an
area of statewide, regional or areawide concern identified in Section 15206(b)(4). However, even if the
surplus property to be sold is located in any of those areas, its sale is exempt if:
(a) The property does not have significant value for wildlife habitat or other environmental
purposes, and
(b) Any of the following conditions exist:
1. The property is of such size, shape, or inaccessibility that it is incapable of
independent development or use;
2. The property to be sold would qualify for an exemption under any other class of
categorical exemption in these Guidelines; or
3. The use of the property and any adjacent property has not changed since the time
of purchase by the public entity."
By definition, the water rights have no significant value for wildlife habitat, because they create
no surface water until exercised. The "use of the water rights have not changed since they were acquired
by the City, since they have always been either produced for domestic potable water purposes or have
been unpumped.
Finally, the sale is exempt under the "common sense exemption" (§15061(b)(3)). The transfer of
surplus water rights "has no potential for causing a significant effect on the environment." Further, the
transfer of the rights for value does not constitute a "project" within the meaning of CEQA because there
is no determination possible regarding the location of any production facilities, the use of any water
produced or, in fact, whether the rights are to be exercised by anyone at all. Finally, the exercise of all
adjudicated rights are subject to regulation by the Court, through the Department of Water Resources as
its Watermaster, and that the Court has specifically retained continuing jurisdiction over all production of
adjudicated rights within the Central Basin.
Recommendation
It is recommended that the City Council authorize staff to issue bids for the sale of 500 acre-feet
of water rights at the October 16, 2012 City Council meeting.
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: October 31, 2012
TO: Mark C. Whitworth, City Administrator
FROM: Ana Barcia, Deputy City Clerk
RE: Resolution No. 2012-191 — A Resolution of the City Council of the City of Vernon
Authorizing the Issuance of a Notice Inviting Sealed Proposals or Bids for the Sale of 500
Acre -Feet of Water Rights in the Central Basin
Transmitted herewith is a copy of Resolution No. 2012-191 referenced above, which was approved by
City Council on October 16, 2012.
Thank you.
AB: yb
Attachment
c: Resolution No. 2012-191
Luz Martinez
Andy Guth