ITEM:		ACTION ITEM
8.	Consider Approving and Authorizing the District to Enter into an Amended and Restated Water Purchasing Agreement for the Pure Water Monterey Project Expansion
Meeting Date:			August 16, 2021	Budgeted:
From:			David J. Stoldt, General Manager	Program/
				Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:
General Counsel Approval: N/A
Committee Recommendation: None
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

SUMMARY: On May 11, 2021 District staff, representatives of California American Water Company (Cal-Am), and Monterey One Water (M1W) staff met to discuss opening discussions on construction of the Pure Water Monterey (PWM) expansion project and what terms and conditions, or amendments to the existing water purchase agreement (WPA), might be necessary. In all the parties had nine meetings and exchanged terms and suggested language fourteen times. Attorneys for all the parties participated in the meetings.

It was decided that, using the existing WPA as a starting point, an Amended and Restated Water Purchase Agreement would be the best approach to contract for water deliveries from the combined base and expanded PWM project. There were several areas of discussion/negotiation: (a) recitals, (b) project construction timeline, (c) water delivery guarantees, (d) financial penalties in event of default, (e) the public agency’s actions in event of cost recovery for stranded desalination expenditures, if any, and (f) the public agency’s support of alternative water supply sources in the event of repeated failure to meet PWM delivery guarantees.

District staff believes the draft Amended and Restated WPA attached hereto as Exhibit 8-A meets the objectives of all three parties.

The California Public Utilities Commission (CPUC) will need to approve the WPA before the parties can sign it. It is not yet clear what process will be utilized to secure CPUC approval, but it is expected that the CPUC will do so. Agreement by all three parties that each intends to sign the WPA when approved will serve as a basis for expenditure of pre-construction monies for design, bid documents, additional environmental work, and permitting. It is likely the District will be asked to participate in such pre-construction funding based upon the WPA.

RECOMMENDATION: The Board should consider approval of the attached draft Amended and Restated Water Purchase Agreement and authorize the General Manager to sign it once CPUC approval is obtained.

EXHIBIT

8-A Proposed (Draft) Amended and Restated Water Purchase Agreement Dated August 11, 2021

U:\staff\Boardpacket\2021\20210816\Action Items\08\Item-8.docx