EXHIBIT 13-C

 

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

RULES AND REGULATIONS

JANUARY 2002

 

RULE 23.5   PERMITS FOR WATER FROM THE CAL‑AM WATER DISTRIBUTION SYSTEM DEDICATED FOR USE IN CONNECTION WITH THE PLAN TO FINANCE THE WASTEWATER RECLAMATION PROJECT

 

                     A.    ISSUANCE OF WATER USE PERMITS

 

Upon Board selection of all Fiscal Sponsor/Sponsors pursuant to Part II of Ordinance No. 39 and upon irrevocable commitment by those sponsors to underwrite, be responsible for, assure and guarantee payment of the Financial Commit­ment (Capital Costs and Net Operating Deficiencies and Ancillary Project Costs of the Reclamation Pro­ject recorded by the agreements required by Part VII of this Ordinance), the General Manager shall issue Water Use Permits to the Fiscal Sponsor/Sponsors authorizing the expansion and extension of the Cal‑Am water dis­tribution system to provide water service and connections for the benefit of the properties identified in the appli­cation(s) of the Fiscal Sponsor/Sponsors (such properties hereinafter referred to as the "Benefited Properties"). Each Water Use Permit shall grant an irrevocable property interest upon one or more Benefited Parcels for the use and benefit of a specified quantity of potable water per year (in acre feet) produced by the Cal‑Am water dis­tribution system.  Water Use Permits shall be subject only to the following limita­tions: (1) The permit shall not limit the power of the District to curtail water use in the event of a water emergency, as defined in Section 332 of the Monterey Peninsula Water Management Act; (2) The permit shall not relieve or reduce any obligation of the recipient of water to pay customary fees, connection charges, use fees, surcharges, taxes, utility taxes, and/or any other customary monetary obligation which may be imposed by the Cali­fornia Public Utilities Commission, Cal‑Am, District, or other Public Participants upon water users of the same class within the California‑American Water Company service area includ­ing but not limited to fees and charges due and payable to the District by reason of Rule 24 of the District's Rules and Regu­lation; (3) The permit shall enable present use of the Water Entitlement only upon the commencement of operation of the Recla­mation Project and upon the continuing financial assurance or guarantee by the Fiscal Sponsor/Sponsors relating to the payment of Net Operating Deficiencies for the Reclamation Project; (4) Not­withstanding any other provision of this Ordinance, once a new water connection is established through use of all or a portion of a Water Entitle­ment, the water user shall be treated in a manner equal to any other Cal‑Am water user and shall not be entitled to preferential access to water over any other water user of the Cal‑Am water distribution system. The revocation and termination of any Water Use Permit shall not diminish or otherwise adversely affect present actual use of water by reason of a prior expansion or extension of the Cal‑Am water distribu­tion system through any connection previously made pursuant to such Water Use Permit. Permits issued pursuant to this Rule shall represent a vested property interest upon issuance and shall not be subject to revocation or cancellation except as expressly set forth in Subparagraph (D) below. The Water Entitle­ment granted by each Water Use Permit shall not be subject to reallocation pursuant to District Rule 30, nor shall it be terminated or diminished by reason of any water emergency, water moratorium or other curtail­ment on the setting of meters for the California‑American Water System, nor shall it otherwise be subject to reallocation pur­suant to District Rule 30, nor shall it be terminated or diminished by reason of any water emergency, water moratorium or other curtailment on the setting of meters for the California‑American Water System, nor shall it otherwise be subject to diminishment or revocation, except in the event that a Water Use Permit is revoked or canceled as provided by Subparagraph (D) below.

 

                     B.    WATER USE PERMIT PROVISIONS

 

Each Water Use Permit shall be issued by the General Manager with respect to a single Benefited Property and shall identify:

 

               (1)   The nature (industrial/commercial/residential) and location of the water use to be applied to each Benefited Property, and the consistency of such water use with existing land use and zoning plans;

 

               (2)   The number and nature of connections projected for each Benefited Property; and

 

               (3)   The projected water use required by each connec­tion proposed upon the Benefited Property.

 

              C.    AMENDMENT OF WATER USE PERMITS

 

Each Fiscal Sponsor, as owner of any Benefited Property, shall, upon request, be entitled to an amendment to any Water Use Permit to reduce, or increase, or change the number and type of connec­tions and water use with respect to any Benefited Property owned by such Fiscal Sponsor, provided that in no event shall the aggregate amount of estimated annual water usage for the Benefited Properties of that Fiscal Sponsor/Sponsors exceed the aggregate Water Entitlement allocated to the Benefited Properties of that Fiscal   Sponsor, and provided further that the realloca­tion of connec­tions shall be allowed only among those locations identified in the Fiscal Sponsor's application. Water Use Permits may be transferred and assigned only to successors‑in‑interest to the Benefited Properties.

 

              D.    REVOCATION AND TERMINATION OF WATER USE PERMITS

 

Each Water Use Permit shall provide that it shall be revoked and terminated in the event that the Fiscal Sponsor shall default in any material manner upon its obligation, assurance and guarantee of the Financial Commitment for the Reclamation Project, pro­vided that nothing herein shall preclude the Fiscal Sponsor from disputing in good faith any claim of default made by the District nor shall the District terminate or revoke any Water Use Permit unless the Fiscal Sponsor shall have been given notice and a reasonable opportunity to cure any such default so long as such opportunity to cure shall not result in any payment default to any  bondholders. In addition, notwithstanding any other provi­sion of this Ordinance, each Water Use Permit which on or after January 1, 2075, embodies an annual Water Entitlement in excess of requirements for planned land uses on the Benefited Properties shall be subject to revocation and termination in the sole dis­cretion of the District. Prior to any termination and revocation pursuant to this paragraph, the Fiscal Sponsor shall be entitled to notice and a hearing, and any termination shall be subject to appeal to the Board pursuant to Rule 70 of the District Rules and Regulations. The revocation and termination of any Water Use Permit shall not diminish or otherwise adversely affect present actual use of water by reason of a prior expansion or extension of the Cal‑Am water distribution system through any connection previously made pursuant to such Water Use Permit.

 

              E.    CAL‑AM SYSTEM EXPANSION/EXTENSION PURSUANT TO WATER USE PERMITS

 

So long as the Reclamation Project has commenced operation so long as all assurances or guarantees required for both payment of Capital Costs and payment of Net Operating Deficiencies for the Reclamation Project continue to be met, each Water Use Permit shall entitle the owner of a Benefited Property to service to be provided by the Cal‑Am water distribution system for such Benefited Properties, including the installation of water meters and mains as necessary, upon presentation to the District by the Fiscal Sponsor of the following:

 

       (1)   a.     A statement by the Fiscal Sponsor setting forth the annual capacity of water use that the Fiscal Sponsor will exercise through such expansion/extension of the Cal‑Am water distribution system and the nature of the uses to which such water is intended to be applied in the future; and

 

              b.     A valid municipal or county building permit which will allow construction upon the Benefited Property; or

 

              c.     A complete set of architectural contract drawings; or

 

       d.     Other documentation sufficient for the District to determine quantity and the      capacity for annual water determine quantity and the capacity for annual water use of the Benefited Property and the number and type of each requested   connection.

 

               (2)   The payment of any customary fees and connection charges required by both Cal‑Am and the District of water users within the Cal‑Am service area, calculated upon the basis of the annual water usage capacity for the Benefited Property set forth in the Fiscal Sponsor's statement, including but not limited to fees and charges due by reason of Rule 24 of the District's Rules and Regulations.

 

Upon the filing of the information and payment of the fees required above, the General Manager shall make a notation on the Water Use Permit indicating the location, capacity and nature of each connection requiring a present expansion/extension of the Cal‑Am water distribution system. Estimated usage shall be based upon the water use capacity for proposed or planned development upon Benefited Properties. The aggregate water use represented by such expansions/ extensions of the Cal‑Am water distribution system, shall not exceed the Water Entitlement evidenced by such Water Use Permit. In the event that a Fiscal Sponsor requests an expansion/extension of the Cal‑Am water distribution system with respect to less than all of the Water Entitlement evidenced by such Water Use Permit, the General Manager shall make a notation on such Water Use Permit indicating the remaining Water Entitle­ment. The Fiscal Sponsor shall be entitled to increase the annual water use for any Benefited Property to which the Fiscal Sponsor has previously applied a portion of the Water Entitlement through prior expansions/extensions of the Cal‑Am water distri­bution system upon presentation of the information and payment of the fees set forth in this Sub-paragraph (E), provided that any such increases in water use for the Benefited Properties shall not exceed in the aggregate the total Water Entitlement of the Fiscal Sponsor for all Benefited Properties.

 

Cal‑Am shall be authorized to execute a contract with the Fiscal Sponsor to enable the provision of water service consis­tent with the Water Entitlement evidenced by the Water Use Permit issued under this provision.

 

Such agreement with Cal‑Am shall at the Fiscal Sponsor's option be a condition precedent to the providing of the Fiscal Commit­ment by the Fiscal Sponsor. The actions required to be taken by the General Manager pursuant to this paragraph shall be ministe­rial, non‑discretionary acts which shall not be affected by any water moratorium, water emergency, allocation decision or other curtailment on the setting of new water meters for the Cal‑Am water distribution system and shall be enforceable by mandamus.

 

                     F.     DEFINITIONS

 

For the purpose of this Ordinance and Rule 23.5, the following words shall have the meanings set forth below. Other words which are defined in Rule 11 to the Rules and Regulations, when used in this Ordinance shall have the meanings set forth therein, unless the context otherwise indicates.

 

"Ancillary Project Costs" means net revenues (gross revenues less allocable operation and maintenance costs and administrative and general costs as such terms are defined in accord with generally accepted utility practices), which Cal‑Am shall not receive by reason of operation of the Reclamation Project. Ancillary Costs shall not include any return on assets of Cal‑Am, which have been removed, from the water distribution system rate base by reason of the Reclamation Project. Ancillary Costs shall be reduced over time by net revenues received by Cal‑Am by reason of sales of Cal‑Am water (with respect to the benefited properties) following the first date of Reclamation Project operation.

 

"Benefited Properties" means those properties within the Cal‑Am service area which have been identified within the appli­cation of the selected Fiscal Sponsor/Sponsors and upon which Water Enti­tlements granted pursuant to a Water Use Permit may be utilized. For any public agency Fiscal Sponsor, the term "Benefited Properties" shall be defined as those properties owned entirely by the public agency and dedicated for public use.

 

"Cal‑Am" means the California American Water Company, its succes­sors and assigns.

 

"Capital Costs" as applied to the Reclamation Project or portion thereof means all or any part of:

 

(a)    The cost of acquisition of all lands, structures, real or personal property, rights, rights‑of‑way, franchises, easements, and interests acquired or used for the Reclama­tion   Project, inclusive of fees and commissions for acquisition;

 

                      (b)   The cost of construction related to the Reclamation Project, including but not limited to demolition, repair, modification, replacement or renovation of existing structures, facilities, fixtures or equipment; cost of improve­ments and materials; direct and indirect Public Participation construction and administration expenses properly allocable to the Reclamation Project in accordance with generally accepted accounting principles; costs of painting, decorating, furnishing and landscaping; contractor and subcontractor profit; and costs related by reason of the Reclamation Project to plumbing, mains, tanks, or pipes which are modified, repaired, replaced, or renovated, whether owned by Public Participants or others;

 

(c)   The cost of demolishing or removing any buildings, fixtures, equipment, or structures on land so acquired, including the cost of acquiring any lands to which such buildings or structures may be moved;

 

        (d)   The cost of all machinery, piping, equipment and fur­nishings, including but not limited to the cost of machinery, piping, equipment and furnishings made obso­lete or unusable to Cal‑Am, Public Participants, or others by reason of the Reclamation Project;

 

       (e)   Financing charges;

 

        (f)   Interest prior to, during, and for a period after completion of the acquisition and construction of the Reclamation Project as determined by the District;

 

                      (g) Provisions for working capital;

 

(h)    Reserves for routine or extraordinary repairs and replacements necessary

              to the Reclamation Project;

 

        (i)    The cost of architectural, engineering, planning, envi­ronmental analysis, financial, accounting, auditing and legal services, plans, specifications, estimates, adminis­trative expenses, permits, fees, adverse claims, personnel and overhead costs (both direct and indirect to the extent properly allocable to the Reclamation Project), and other expenses necessary or incident to determining the feasi­bility of construction of the Reclamation Project or incident to the planning, construction, acquisition, or financing of that Project, including, without limitation:

 

       1.     Payment during the construction period of the premiums for all title and other insurance, bonds, or under­takings required to be taken out and maintained with respect to any part of the Reclamation Project to the extent such amounts are not paid by any contractor who constructs or installs any portion of the Reclama­tion Project;

 

       2.     Payment of the taxes, assessments and other fees or charges, if any, that may become payable during the construction period with respect to the Reclamation Project, or reimbursements thereof; and

 

       3.     Payment of expenses incurred in seeking to enforce any remedy against any contractor or subcontractor in respect of any default under a contract relating to the acquisition, construction or installation of the Reclamation Project.

 

                           "Financial Commitment" means the commitment of a Fiscal Sponsor or Sponsors to assume and guarantee payment of (1) the Capital Costs of the Reclamation Project (including the payment of the principal of and interest on any bonds or other obliga­tions issued by any Public Participant to finance such costs), and (2) the Net Operating Deficiencies of the Reclamation Project for the entire period ending twenty years following the estimated comple­tion date of the project (or for any shorter periods as permitted by the District), and (3) payment of all Ancillary Project Costs.

 

                           "Fiscal Sponsor or Fiscal Sponsors" means the person or persons (including partnerships, corporations, municipal corpora­tions, or other public entities) selected to act as the Fiscal Sponsor/Sponsors pursuant to Part II of Ordinance 39, which person or persons will be obligated, and liable for, and capable of paying the Capital Costs and Net Operating Deficiencies of the Reclama­tion Project.

 

                           Franchise Water" means potable water, which has been freed for new use by reason of subpotable water deliveries from the Reclamation Project.

 

                           "Net Operating Deficiency" as applied to the Reclamation Project means, for any fiscal year or portion thereof, the difference between the Operating Revenues and the Operation and Maintenance Expenses for such period.

 

"Operation and Maintenance Expenses" as applied to the Reclama­tion Project means all expenses and costs of management, operation, maintenance and repair of the Reclamation Project, including payments to be made by the Public Participants under agreements with Cal‑Am for the purchase of subpotable water, debt service payments on all bonds or other obligations issued to finance the cost of the Reclamation Project, and all inciden­tal costs, fees and expenses properly chargeable to the Reclamation Project, including reasonable depreciation and obsolescence charges or reserves therefore assuming straight line depreciation upon a useful life assumed to be thirty (30) years, amortization of intangibles and other bookkeeping entries of a similar nature.

 

"Operating Revenues" as applied to the Reclamation Project means all income, rents, rates, fees, charges and other monies derived by the Public Participants from the ownership or opera­tion of the Reclamation Project, including, without limiting the generality of the foregoing: (i) All income, rents, rates, fees, charges or other monies derived from the sale, furnishing and supplying of the reclaimed, subpotable water or from potable water supplied in lieu thereof; (ii) Interest earnings on all revenues men­tioned in (i) above, and on the reserve fund or on any other fund or account relating to the Reclamation Project, and (iii) Insurance and condemnation proceeds resulting from damage to or destruction of the Reclamation Project facilities, or from the condemnation of the Reclamation Project; provided, that the term "Operating Revenues" shall not include customers' deposits or any other deposits subject to refund until such deposits have become the property of the Public Participants.

 

"Project" or "Reclamation Project" means the CSD/PBCSD wastewater treatment plant (including lands, facilities, equip­ment, furni­ture and fixtures).

 

"Public Participant" means any one or more of the following: the Monterey Peninsula Water Management District, the Carmel Sanitary District, the Pebble Beach Community Services District, or any successor public agency including but not limited to any joint powers agency formed by one or more of the above agencies.

 

"Water Entitlement" means 400 acre feet per year (or less) of potable water, and in no event more than fifty (50%) percent of the total amount of Franchise Water, which shall be the maximum portion of the Franchise Water which may be dedicated to land within the jurisdiction of the District for the purpose of providing for the payment of the Capital Cost, Ancillary Project Cost, and Net Operating Deficiencies of the Reclamation Project.

 

"Water Use Permit" means writing from the District, which evidences the irrevocable dedication of the Water Entitlement as a property right ensuring to the use and benefit of the Benefited Parcels.  A Water Use Permit shall by non‑discretionary ministerial action cause the present Expansion/Extension of the Cal‑Am water distribution for Benefited Properties upon designation of the location of use, upon payment of applicable connection fees and charges. A Water Use Permit shall take the place of and be used instead of any Expansion/Extension Permit upon any Benefited Parcel.

 

                     Added by Ordinance No. 39 (2/13/89); amended by Ordinance No. 71 (12/20/93)

 

 

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