HomeMy WebLinkAbout06 PETERS CANYON WASH AGREEMENT�Y O
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AGENDA REPORT Ree eweld m
City Manager
Finance Director
MEETING DATE: NOVEMBER 19, 2013
TO: JEFFREY C. PARKER, CITY MANAGER
FROM: DOUGLAS S. STACK, DIRECTOR OF PUBLIC WORKS /CITY ENGINEER
SUBJECT: APPROVE AGREEMENT WITH THE CITY OF IRVINE, IRVINE RANCH
WATER DISTRICT, COUNTY OF ORANGE, ORANGE COUNTY FLOOD
CONTROL DISTRICT, AND THE CALIFORNIA DEPARTMENT OF
TRANSPORTATION TO FUND THE PETERS CANYON WASH CHANNEL
WATER CAPTURE AND REUSE PIPELINE
SUMMARY
The Agreement provides for joint funding for the construction of the Peters Canyon Wash Channel
Water Capture and Reuse Pipeline (PCW Pipeline Project). The construction of the pipeline will
enable the City of Tustin to continue to comply with the provisions of the Selenium Total Maximum
Daily Load (TMDL) and the Time Schedule Order No. R8- 2009 -0069, as adopted by the United
States Environmental Protection Agency and the Santa Ana Regional Water Quality Control Board.
The document is a cooperative arrangement between the County of Orange, the Orange County
Flood Control District, the Irvine Ranch Water District (IRWD), California Department of
Transportation (Caltrans), and the Cities of Irvine and Tustin.
SUBSTITUTE RECOMMENDATION
It is recommended that the City Council:
1. Appropriate the first installment payment of $181,518 from MCAS Backbone Fee (Fund
187) for the Peters Canyon Wash Channel Water Capture and Reuse Pipeline; and
2. Approve the Peters Canyon Wash Channel Water Capture and Reuse Pipeline Funding
Agreement, and authorize the Mayor and City Clerk to execute the document on behalf of
the City.
FISCAL IMPACT
The Project Partners jointly funded a feasibility study, and based on this report the project cost is
estimated not to exceed $8,700,000. However, the project has been awarded two grants which will
reduce the funding partners' share of the costs. OCTA has awarded the project $3,273,105 under
the M2 Environmental Cleanup Program Tier 2. The project has also been recommended to
receive $1 million under Proposition 84 through the Department of Water Resources and the Santa
Ana Watershed Project Authority. As a result, the City of Tustin's share of the costs will be
$396,033. A first installment payment of $181,518 is anticipated for this fiscal year. The City had
reserved $100,000 of MCAS Backbone Fee (Fund 187) funds in the FY 2013 -2014 Capital
Improvement Program. However, an additional $81,518 is necessary for this fiscal year and the
total of $181,518 will need to be appropriated for the anticipated first installment payment. Fund
187 has a fund balance of approximately $2M.
Peters Canyon Wash Channel Pipeline Funding Agreement
November 19, 2013
Page 2
CORRELATION TO STRATEGIC PLAN
The construction of the Peters Canyon Wash Water Capture and Reuse Pipeline contributes to the
fulfillment of the City's Strategic Plan Goal G: Strong Community and Regional Relationships.
Specifically, the project implements Strategy #2, which encourages working collaboratively with
agencies outside Tustin on issues of mutual interest and concern.
BACKGROUND
In 1998, the Santa Ana Regional Water Quality Control Board identified the Newport Bay and San
Diego Creek as impaired water bodies for selenium. As a result, the Environmental Protection
Agency adopted a Total Maximum Daily Load (TMDL) for selenium in the Newport Bay Watershed
that required the development of programs to attain reduction targets. In 2009, the Santa Ana
Regional Water Quality Control Board issued Time Schedule Order for Compliance (TSO) R8-
2009 -0069. The TSO provided an extension for compliance with the TMDL, but mandated the
development of a Best Management Practice Strategic Plan that would treat selenium in the
watershed.
The cornerstone of the Strategic Plan is the Peters Canyon Wash Pipeline Project. The project will
divert flows from channels and stormdrains along Peters Canyon Wash with high selenium levels
to the Orange County Sanitation District for treatment and reuse. The project will begin at the
Caltrans pump station on Walnut Avenue in Irvine and end at the OCSD sewer line on Main Street
in Irvine. In Tustin, the pipeline will divert flows from the Edinger circular drain and from the
Valencia drain on Moffett Avenue. It is estimated that 50 pounds of selenium will be removed from
Edinger and 36 pounds of selenium will be removed from Valencia each year, which will enable the
City to comply with the Santa Ana Regional Board's TSO requirements.
The City of Irvine is the lead agency on this project for planning this cooperative agreement and
managing the grants. IRWD will be responsible for the design, construction, and ongoing
operations and maintenance of the pipeline. The City Attorney has reviewed and approved the
agreement "as to form ". It is therefore recommended that the City Council approve the Peters
Canyon Wash Channel Water Capture and Reuse Pipeline Funding Agreement and authorize the
Mayor and City Clerk to execute the document on behalf of the City.
Douglas S. Stack, P.E.
Director of Public Works /City Engineer
Attachment: Peters Canyon Wash Channel Water Capture and Reuse Pipeline Funding Agreement
Attachment 1
FINAL DRAFT
Peters Canyon Wash Channel Water Capture and
Reuse Pipeline Project Agreement
(Including Operations and Maintenance)
Draft dated November 5, 2013, 3:08 p.m.
City of Irvine
City of Tustin
Orange County Flood Control District
County of Orange
Irvine Ranch Water District
California Department of Transportation
This Peters Canyon Wash Channel Water Capture and Reuse Pipeline Project Agreement
( "Agreement') is made as of this day of 2013, ( "Effective Date ") by and
among Irvine Ranch Water District, a body corporate and politic ( "IRWD "), City of Irvine, a
charter city ( "Irvine "), City of Tustin, a California municipal corporation ( "Tustin'), Orange
County Flood Control District, a body corporate and politic ( "OCFCD "), County of Orange,
a political subdivision of the State of California ( "County"), and California Department of
Transportation, an agency of the State of California ( "Caltrans "), hereinafter sometimes
individually referred to as "Party" or collectively as the "Parties." OCFCD and County are each
individually Parties to this Agreement, but are collectively referred to in this Agreement as
OCFCD. Irvine, Tustin, OCFCD, and Caltrans are providing funds to pay capital costs and are
individually referred to as a "Funding Party", and are collectively referred to as the "Funding
Parties ". OCFCD, IRWD, Irvine, and Tustin are individually referred to as an "Excess Credit
Party", and are collectively referred to as the "Excess Credit Parties ".
RECITALS
A. The Parties are, or may become, subject to federal and state regulations or
requirements applicable to point source discharges of nitrogen and selenium, including but not
limited to a Total Maximum Daily Load, and applicable provisions of dewatering permits and
time schedule orders, the Municipal Separate Storm Sewer System Permit, and /or other
discharge permits, waste discharge requirements, or discharge - related orders (collectively,
"Regulations "). The Santa Ana Regional Water Quality Control Board ( "Regional Board "),
California State Water Resources Control Board ( "State Board ") and /or United States
Environmental Protection Agency ( "EPA ") each have a jurisdictional role in prescribing the
Regulations.
B. In order to comply with their respective Regulations, the Parties seek to develop a
regional project to reduce nitrogen and selenium flows to Peters Canyon Wash Channel
( "Channel').
C. The Funding Parties collectively have funded the Peters Canyon Channel Water
Capture and Reuse Pipeline Concept Feasibility Study dated January 25, 2013 to study the
technical and economic feasibility of reducing nitrogen and selenium inflows to the Channel
( "Feasibility Study ").
D. Based upon the findings of the Feasibility Study and assurances from the Regional
Board regarding compliance with Regulations, the Parties have agreed to jointly design and
solicit bids for the construction of a pipeline project that will capture flows from two storm
drains, a side channel and the Caltrans Groundwater Treatment Facility ( "GWTF") before they
otherwise discharge into the Channel. These flows would be diverted to the Orange County
Sanitation District ( "Sanitation District'). The diversion will significantly reduce nitrogen and
selenium loads within the San Diego Creek watershed. The Parties joint undertaking to study,
design, plan, environmentally review, permit and potentially construct the pipeline project is
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more formally known as the Peters Canyon Wash Channel Water Capture and Reuse Pipeline
Project ( "Project "). Final Project improvements as owned, operated, and maintained by IRWD
shall be referred to herein as the "Pipeline ". As more particularly presented in Exhibit A, and as
described in the Feasibility Study, the Pipeline, if constructed, is expected to include three
diversion structures and pump stations located near the intersection of the Channel and Como
Channel, Edinger Circular Storm Drain and Valencia Storm Drain that will eliminate flows at
those locations containing nitrogen and selenium. The Pipeline would not include the Caltrans
existing wells or their GWTF facilities. The Project will eliminate certain point sources of
nitrogen and selenium and, although not currently required by applicable Regulations, the
Pipeline will also significantly reduce non -point sources of nitrogen and selenium.
E. The Parties estimate that the total cost of "Capital Costs" for the Project will not
exceed $8,678,611 ( "Estimated Project Cost "). The term "Capital Costs" means all design and
construction costs, including without limitation construction, costs for defense of CEQA/NEPA
lawsuits or construction claims, project administration, including, but not limited to, accounting,
inspection, surveying, compaction testing, geotechnical services and engineering, a reasonable
and appropriate share of IRWD staff time, consultant costs, costs of permitting, bonds, rights -of-
way acquisition, design, environmental compliance, mitigation and documentation, costs related
to HM Management Activities related to HM -2 (as defined in Section 1.9), management
activities, construction management, startup and testing activities, project management and legal
support for design, permitting and construction of the Project. Irvine, on behalf of the Parties,
has applied for and has been awarded grant funding for the Project, including a grant in the
amount of $1,000,000 from the "One Water One Watershed" Proposition 84 Grant Program
administered by California Department of Water Resources ( "OWOW Grant "), and a grant in
the amount of $3,273,105 from the Orange County Transportation Authority Measure M2 2012
Tier 2 Environmental Cleanup Program ( "OCTA Grant ") (collectively, "Grants "). The terms
and conditions of the OCTA Grant prevent Caltrans from benefitting from the OCTA Grant in
calculating Caltrans' liability for payment of Project costs. The terms of the OCTA Grant
require matching funds in the amount of forty percent (40 %) of the OCTA Grant amount,
exclusive of Caltrans funding contribution. The terms of the OWOW grant require matching
funds in the amount of twenty -five percent (25 %) of the OWOW Grant amount. The Estimated
Project Cost (which is the total Capital Costs anticipated for the Project), and the Project Capital
Cost Contribution to be provided by each of the Funding Parties are set forth in Exhibit B,
attached hereto. The Estimated Project Cost and each Funding Party's Project Capital Cost
Contribution may be increased only by an amendment to this Agreement.
F. Subject to compliance with applicable state and federal laws, including the California
Environmental Quality Act (California Public Resources Code § 21000 et seq.) ( "CEQA ") and,
if federal funding is provided for the Project, subject to compliance with the National
Environmental Policy Act (42 U.S.0 § 4231 et seq.) ( "NEPA "), the Parties will, as described in
this Agreement, jointly provide: funding of Capital Costs not funded by Grants up to the Party's
respective Project Capital Costs Contribution as defined herein; and funding of the costs to
operate, maintain, and repair the Pipeline when it is placed into service, including without
limitation environmental mitigation maintenance and monitoring costs, and costs related to
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lawsuits or regulatory actions associated with the Pipeline, its operation, and any discharges into
the Pipeline (including discharges of hazardous materials) that are unrelated to any Party's
improper or negligent act ( "O &M Costs ").
G. The Parties further desire that, as a consideration for the Funding Parties' financial
contribution to the construction, operation and maintenance of the Project, the Pipeline will be
available for each of the Funding Parties to divert and discharge flows from the GWTF, Como
Channel, Edinger Circular Storm Drain and Valencia Storm Drain (the "Diversion Locations ")
up to the respective capacity amounts ascribed to each of the Diversion Locations as described in
Exhibit C attached hereto.
H. In seeking to comply with applicable Regulations and to provide a financing
mechanism for the long -term operation of the Pipeline, the Parties desire to establish qualified
offset and credit trading programs that will generate both offsets equivalent to their current
collective direct contributions of nitrogen and selenium to the Diversion Locations regulated as
point sources, and additional credits or allowances generated by the reduction of current non -
point source nitrogen and selenium loads, which may be allocated to the Parties, and /or traded or
sold to third parties at market -based rates.
1. The Parties desire to enter into this Agreement to: (i) set forth their respective rights
and obligations with respect to financing of the Project and completion of the Project design, at
which point, subject to all necessary approvals having been obtained and compliance with
applicable state and federal laws, including CEQA and, if federal funding is provided for the
Project, subject to compliance with the NEPA, the Parties will determine whether or not to
proceed with construction and operation of the Project as provided for in this Agreement; and
(ii) to memorialize the basis for the overall Project development and financing, including but not
limited to obtaining permits from resource agencies and other government entities, design and
construction of the Project, and operation and maintenance of the Pipeline, if the Parties
determine to proceed with the Project.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, which are incorporated
herein by reference, and the mutual covenants and promises among the Parties hereinafter set
forth, the Parties agree as follows:
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SECTION 1. IRWD RESPONSIBILITIES
1.1 IRWD's General Responsibilities. IRWD shall design, environmentally review,
obtain all required permits (to the extent required by Section 4.4) for, and, subject to a
determination by the Parties to proceed with the Project in compliance with all applicable state
and federal laws, including CEQA and NEPA, shall construct, own, operate, and maintain the
Pipeline developed by the Project under the terms of this Agreement. IRWD shall operate and
maintain the Pipeline during the Term stated in Section 14, as it may be extended by mutual
agreement of the Parties pursuant to Section 14 of this Agreement.
1.2 Environmental Review; Permitting. IRWD shall be the lead agency for purposes
of CEQA. IRWD shall secure the necessary permits and rights -of -way for the Project, including
operation of the Pipeline to the extent required by Sections 4.4. and 4.5. In the event that federal
funding becomes incorporated into the Project, Caltrans shall be the lead agency for purposes of
NEPA. IRWD shall prepare the NEPA- compliant environmental document (including, but not
limited to, studies, reports, public notices, and public meeting materials, administrative drafts,
and final environmental documents), and Caltrans shall provide oversight of the preparation of
the NEPA compliant document. Caltrans shall determine NEPA compliance and shall provide
approval for the NEPA compliant document. The NEPA document shall follow the Caltrans
standard environmental reference guidance.
1.3 Design. IRWD shall cause the preparation of the necessary plans and technical
specifications for the Project work ( "Plans ") consistent with both IRWD and OCFCD standards.
If any portion of the Project is to be constructed on property owned by any Party other than
IRWD or OCFCD, the plans and technical specifications also shall be consistent with such
Party's standards. In case of conflict between such standards, the most stringent standard shall
prevail. The Funding Parties shall have opportunities to review the Plans at the 60% and 90%
submittal levels and to provide timely comments prior to submittal of the Plans to the relevant
resource agencies that must issue permits for construction of the Project or operation of the
Pipeline. IRWD shall address the Funding Parties' comments in the drafts. The Funding Parties
shall promptly review the revised Plans and indicate their approval or disapproval of the same to
IRWD. IRWD shall promptly provide each Funding Party with a reproducible copy of the Plans
as well as a copy of all Project - related documents. IRWD shall be responsible for retaining all
consultants necessary to prepare the Plans ( "Design Consultants ") in accordance with applicable
law and IRWD's own procedures. In accordance with Section 8 of this Agreement, IRWD shall
require and ensure that all Design Consultants retained by IRWD name each Party as an
additional insured, and that such Design Consultants' indemnity, defense, hold harmless, and
insurance obligations under the IRWD's agreements with the Design Consultants expressly
benefit each other Party in the same manner and to the same extent as IRWD.
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1.4 Construction.
1.4.1 As further provided in, and subject to, Section 4.6, IRWD shall be
responsible for bidding, awarding, and administering a contract for the construction of the
Project in conformance with the Plans, in compliance with the terms of the Grants, and in
accordance with all applicable laws governing construction of public works by IRWD.
Construction of the Project shall be contingent upon approval by the Parties following: (l)
satisfaction of applicable state and federal laws, including CEQA requirements, and, if federal
funds are to be expended on the Project, NEPA requirements; (2) the Parties' receipt of all
approvals required from any federal, state and local regulatory agency with jurisdiction over any
aspect of the Project; and (3) the receipt of a binding determination from the Regional Board that
the Project is a qualified offset program entitled to use Nitrogen and Selenium Offsets and /or
Nitrogen and Selenium Credits (as defined in Section 7) generated by the Project to comply with
the Regulations and to satisfy the regulatory responsibility of each of the Funding Parties for
nitrogen and selenium discharges.
1.4.2 The Parties agree to cooperate in good faith and exercise their respective best efforts to
assist the Project in complying with the "Project Schedule" set forth in Exhibit D, attached
hereto, as the same may be amended and revised to meet the requirements of Project permits and
approvals. In that regard, the Parties acknowledge the Project Schedule is based on a conceptual
design, and thus may require modification. Additionally, certain activities, necessary to
complete the Project, may result in delays to the Project Schedule, such as securing
environmental certifications /approvals, permitting or Grant funding, securing rights -of -way,
Force Majeure events, and obtaining necessary approvals of the Funding Parties relative to
design and construction of the Project. The Funding Parties agree that to the extent such delays
result in consequences, such as the loss of Grant funding, such risks are inherent in the nature of
this Agreement, and the resulting costs shall be considered Capital Costs that may require
additional approvals pursuant to Section 5 of this Agreement. The Funding Parties acknowledge
and agree that their timely approval of any Design Change Variances or Contract Change Orders
as set forth and defined in Section 4.7.1 shall be necessary to permit IRWD to efficiently manage
the Project in accordance with the Project Schedule, and IRWD shall not be responsible for any
delays that may occur as a result of delays or failures of the Funding Parties to act in a timely
manner, or delays caused by third - parties or unforeseeable events..
1.4.3 For purposes of this Section, "Force Majeure Event" shall mean any of
the following events that materially and adversely interferes with or increases the costs of
performing IRWD's obligations hereunder, provided that such event (or the effects of such
event) could not have been avoided by IRWD's use of reasonable efforts: naturally occurring
events (such as landslides, underground movement, earthquakes, fires, tornadoes, hurricanes,
floods, lightning, epidemics and other acts of God), HM Management Activities (see Section
1.9), explosion, sabotage or other act of war or public enemy, or change in law or regulation
applicable to the Project after the date of this Agreement.
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1.4.4 In accordance with Section 8.3 of this Agreement, IRWD shall require and
ensure that the construction contractor selected pursuant to Section 4.6 ( "Contractor ") and each
of the Contractor's subcontractors name each Party as an additional insured, and that such
Contractor's and subcontractors' indemnity, defense, hold harmless, and insurance obligations
under the IRWD's agreement with the Contractor expressly benefit each other Party in the same
manner and to the same extent as IRWD.
1.5 Operation and Maintenance. If the Project is constructed, IRWD shall operate
and maintain the Pipeline from and after acceptance of the completed Pipeline solely for the
exclusive, mutual use and benefit of the Parties. During the term of the Agreement, IRWD shall
annually contribute O &M Costs in the amount of $60,000 increased each year by the same
percentage increase as reflected in the Consumer Price Index (All Items) for the Anaheim -Long
Beach Area, published by the United States Department of Labor, Bureau of Labor Statistics, or
if the same shall no longer be published, the most nearly equivalent official index published by
said Bureau or its successor or equivalent government agency ( "IRWD's O &M
Contribution ").
1.6 Suspensions. IRWD may suspend operation of the Project due to emergency or
scheduled or unscheduled maintenance. IRWD shall notify the Funding Parties promptly of the
occurrence of unforeseen external operating expenses, regulatory conditions or major facility
failures that materially increase the O &M Costs over and above IRWD's O &M Contribution,
and shall identify the estimated additional O &M Costs, and may request that each Funding Party
indicate its willingness to fund its proportionate share of such increased O &M Costs as shown in
the column entitled "Flow -based Percentage" in Exhibit B. If IRWD has not received a
commitment pursuant to Section 6 from the Funding Parties to fund the additional O &M Costs
within 90 days of such notice, IRWD may suspend operation of the Project upon not fewer than
14 days prior written notice of suspension to the Funding Parties. During a suspension, each of
the Parties will be responsible for finding and arranging an alternate means of disposal of its
respective nitrogen and selenium discharges, and for payment of any fines, penalties or costs
incurred by that Party as the result of a suspension. In the event of a suspension, once the cause
of a suspension has been cured, IRWD shall use reasonable efforts to restore operation as soon
as reasonably possible.
1.7 Cost Accounting and Invoicing
1.7.1. Grant Funding Administration. In accordance with Section 4.1, IRWD
will prepare necessary documentation and coordinate with Irvine in preparation and submittal of
requests for reimbursement from the Grants.
1.7.2. Invoicing. IRWD will invoice the Funding Parties for their respective
Project Capital Cost Contribution set forth in Exhibit B in accordance with Section 5, and for
their respective shares of additional O &M Costs pursuant to Sections 1.6 and 6.
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1.7.3. Project Funds. IRWD shall hold and apply amounts paid by the Funding
Parties for Capital Costs in accordance with Section 5, and for O &M Costs in accordance with
Sections 1.6 and 6.
1.7.4. Records. IRWD shall keep records and accounts of O &M Costs to be
audited in accordance with Section 6.6.
1.8 Credits. In consideration of IRWD's performance of its obligations under this
Agreement, in addition to recovering its out -of- pocket O &M Costs in excess of IRWD's O &M
Contribution under Sections 1.6 and 6, IRWD shall receive Nitrogen and Selenium Credits, as
defined and described in Section 7.1.
1.9 Hazardous Materials ( "HM "). "HM -I" is defined as hazardous material
(including, but not limited to, hazardous waste) that may require removal and disposal pursuant
to federal or state law whether it is disturbed by the Project or not. "HM -2" is defined as
hazardous material (including, but not limited to, hazardous waste) that may require removal and
disposal pursuant to federal or state law only if disturbed by the Project. "HM Management
Activities" is defined as management activities related to either HM -1 or HM -2 including,
without limitation, any necessary manifest requirements and disposal facility designations.
If HM -1 or HM -2 is found during Project implementation, IRWD will immediately
notify Funding Parties. The Funding Parties are responsible for any HM -1 found within property
they own to the extent provided by applicable law, and entry into this Agreement shall not cause
that liability to be assumed by or transferred to any other Party. If HM -I is discovered, the
Parties will meet to determine the most cost- effective solution to deal with the HM -1 including,
but not limited to, changes to the Project. Unless otherwise mutually agreed by the Parties, other
Parties shall not be responsible for the cost of HM Management Activities related to HM -1 on
another Party's property, if any. If HM -2 is found within Project limits, IRWD will be
responsible for HM Management Activities related to HM -2 within the Project limits.
SECTION 2. PIPELINE CAPACITY
2.1 The Pipeline will be constructed to have an approximate minimum flow capacity
of 1,621 gallons per minute (gpm), based upon the good faith estimates provided by each of the
Funding Parties.
2.2 As a consideration for the financial contribution by the Funding Parties to the
construction, operation and maintenance of the Project and the Pipeline, IRWD shall permit
Caltrans, Irvine, Tustin and OCFCD to divert and discharge flows from the GWTF, Como
Channel, Edinger Circular Storm Drain and Valencia Storm Drain, at a minimum in the capacity
amounts described in Exhibit C for each Diversion Location, at no additional cost other than
what is provided for in this Agreement.
2.3 Subject to compliance with applicable law and permit requirements, each of the
Funding Parties shall be entitled to discharge into the Pipeline so long as the Pipeline remains in
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service pursuant to Section 14. If the collective amount of flow to the Pipeline is ever
anticipated to exceed its maximum flow capacity, the Funding Parties shall meet and confer to
equitably allocate the available capacity, taking into consideration Regulations applicable to
each and all of the Funding Parties.
SECTION 3. ALLOCATION OF COST -SHARE PERCENTAGES
The Estimated Project Cost shall be allocated among the Parties as set forth in the
Exhibit B column entitled "Project Capital Cost Contribution ". Further, Exhibit B sets forth the
partners in the Grants, and the role of the Grants in funding the Project. Annual O &M Costs
above the IRWD O &M Contribution shall be allocated among the Funding Parties upon
unanimous agreement of the Funding Parties in accordance with Sections 1.6 and 6 and at the
same percentages as set forth in Exhibit B, the column entitled "Flow -based Percentage ". The
"Total Project Contribution" values for each Party represent that Party's contribution to the
Project as set forth in Exhibit B, and shall include the values set forth in "Project Capital Cost
Contribution" and the values set forth in "IRWD O &M Contribution" for the duration of this
Agreement. The Parties acknowledge and agree that the values set forth in "Project Capital Cost
Contribution ", "IRWD O &M Contribution" and "Flow -based Percentage" reflect a fair and
reasonable allocation of Capital Costs and O &M Costs based upon the information available on
the Effective Date, notwithstanding the fact that IRWD's O &M Contribution may vary from the
estimate set forth in Exhibit B, and /or each Party's actual responsibility for discharges under
applicable Regulations may vary from year to year during the Term.
SECTION 4. PROJECT WORK AND REVIEW
4.1. Grant Funding. Consistent with Recital E, above, as the nominal "grantee ",
Irvine, will administer the Grants that it has obtained for the Project on behalf of the Parties.
IRWD will prepare necessary documentation of costs and coordinate with Irvine in preparation
and submittal of requests for Grant reimbursement consistent with the relevant Grant
agreements. As set forth and defined in Section 5.3, IRWD shall hold the First Installment and
the Second Installment in the Project Fund upon payment of the installments by the Funding
Parties. Beginning in July 2014, upon receipt of any Grant funds, Irvine shall promptly transfer
said funds to IRWD. If any Grant funds are received prior to expenditure and not as a
reimbursement, IRWD shall hold the funds in the Project Fund (as set forth and defined in
Section 5.3). If, because of the reimbursement terms of a Grant, there are not sufficient funds
available in the Project Fund to timely pay the cost of any approved Project invoice incurred by
IRWD with respect to the Project, IRWD shall pay such invoice for the account of the Funding
Parties and the amounts advanced by IRWD shall be reimbursed by the Grant funds as soon as
they are available and provided by Irvine to IRWD for use.
Upon IRWD's receipt of Grant funds to repay any costs of the Project advanced by
IRWD for the account of the Funding Parties pursuant to this Section 4.1, IRWD shall calculate
interest on the amount advanced for the total number of days that the advance remained
outstanding until repayment, which interest shall accrue at the same rate that IRWD earns on its
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general fund for the period that such funds are outstanding. Such interest shall be allocated to
and paid as Capital Costs by the Funding Parties up to the specified not -to- exceed monetary
amount for the Party's Project Capital Cost Contribution in accordance with the percentage of
Estimated Project Cost represented by each Party's Project Capital Cost Contribution set forth in
Exhibit B. In the event that interest assessed under this Section would cause an exceedance of
any Party's Project Capital Cost Contribution set forth in this Agreement, an amendment to this
Agreement is required to increase such Project Capital Cost Contribution. The Funding Parties
shall act in good faith and shall not unreasonably refuse to amend this Agreement to increase
their respective Project Capital Cost Contributions as reasonably required to fund Capital Cost
increases necessary to pay interest due to IRWD under this Section 4.1.
Upon establishing the amount of interest that may be properly allocated to and paid as
Capital Costs by the each of the Funding Parties on amounts advanced by IRWD in accordance
with this Section, including and completion of any amendment to this Agreement required for
payment of such interest pursuant to this Agreement, IRWD shall invoice the Funding Parties for
their respective shares of interest accrued hereunder. Such invoices shall be due and payable
upon receipt by the Funding Party, and shall be delinquent if not paid within 45 days after
receipt. Interest shall accrue on the portion of any payment that remains delinquent, which
interest shall be calculated on the outstanding delinquent balance at the same rate that IRWD
earns on its general fund for the period that such delinquency continues, and the delinquent
Party's right to use the Pipeline and Nitrogen and Selenium Offsets and /or Nitrogen and
Selenium Credits generated by the Project shall be suspended until such delinquent payment is
made in full, together with payment of any unpaid interest accrued on any portion of the
delinquent payment outstanding.
4.2. Project Work. A preliminary schedule of Project work is set forth in Exhibit D,
the Project Schedule. The Project consists of two phases: "Phase 1" — design, completion of
environmental review, including development of mitigation measures and projected associated
costs, and attainment of all regulatory approvals, and right -of -way, regulatory and entry permits;
and "Phase 2" — construction of the Pipeline.
4.3 Project Representatives. The IRWD General Manager, Irvine City Manager,
Tustin City Manager, Orange County Director of Public Works, and Caltrans Director, or their
respective designated representatives, (each separately a "Project Representative ") shall be
authorized to implement this Agreement on behalf of the Parties. Whenever a reference is made
herein to an action or approval to be undertaken by a Party, the Project Representative is
authorized to act on behalf of such Party unless specifically provided otherwise or the context
requires otherwise.
4.4. Permitting & Environmental Certification (Phase 1). IRWD shall be the lead
agency for purposes of CEQA, shall prepare the necessary environmental documents for the
Pipeline and shall undertake to secure all necessary resource agency permits for construction,
operation and maintenance of the Pipeline, except for any permits that must by their nature be
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secured by another Party. In the event that federal funding becomes incorporated into the
Project, Caltrans shall be the lead agency for purposes of NEPA.
4.4.1 The Parties shall comply with all of the commitments and conditions set
forth in the environmental documentation, environmental permits, approvals, and applicable
agreements obtained for the Project as those commitments and conditions apply to each Party's
responsibilities under this Agreement. Notwithstanding the foregoing sentence, each Party shall
review and approve all permit conditions and other resource agency approvals that affect the
operation of the Pipeline, construction of the Pipeline within its own property, and such Party's
compliance with applicable Regulations.
4.5 Right- of -Way. In order to reduce Project costs, and subject to compliance with
all permits and regulatory approvals, OCFCD, Tustin, Irvine and Caltrans shall allow the Project
to be constructed, operated and maintained during the Term within their respective properties.
Prior to the construction of the Project, IRWD shall obtain permits from OCFCD, Burlington
Northern Santa Fe, LLC, Tustin, Irvine, Caltrans and private land owners for use of their
respective properties for Pipeline right -of -way. OCFCD, Tustin, Irvine and Caltrans shall waive
any costs or fees with respect to the permits. The terms and conditions of the permits shall be
consistent with this Agreement, and in the case of a conflict, the terms and conditions of this
Agreement shall control. The Parties acknowledge that the main purpose of OCFCD property
used for Pipeline right -of -way is for flood control purposes. If future circumstances necessitate
relocation of the Pipeline, or if design requires additional right -of -way for the Project beyond
that anticipated to be provided by OCFCD, Tustin, Irvine and /or Caltrans, the Parties shall meet
and confer in good faith to identify a preferred location for such relocation or additional fight -of-
way within land that is owned by one or more of the Parties. Costs of relocation shall be the
responsibility of the Funding Parties, and shall be allocated among the Funding Parties pursuant
their mutual agreement.
4.6. Construction (Phase 2).
4.6.1 If the Parties have determined to move forward with the Project (after
compliance with CEQA and /or NEPA (if applicable)), then, upon final approval of the Plans per
Section 1.3, certification and approval of all necessary environmental documents, approval by all
of the Parties of associated mitigation requirements, receipt of all regulatory agency approvals,
and confirmation that the twenty percent (20 %) contingency built into the Estimated Project
Cost remains in full, then IRWD shall advertise a contract for construction of the Project for
formal bids per applicable sections of the California Public Contracts Code. IRWD shall not
advertise a contract for construction of the Project without the unanimous approval of all Project
Representatives. The Funding Parties shall have the opportunity to review all bids. If the lowest
responsive and responsible bid would cause the Estimated Project Cost shown in Exhibit B
(which includes the 20% contingency amount) to be exceeded, then the Funding Parties shall
meet and confer and mutually agree by unanimous vote whether (i) IRWD should award a
contract for construction of the Project to the lowest responsive and responsible bidder, (ii)
IRWD should reject all bids and re -bid the Project, or (iii) to terminate this Agreement.
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4.6.2 If all conditions precedent to construction of the Project set forth in this
Agreement have been satisfied, IRWD shall award a construction contract to the lowest
responsive, responsible bidder ( "Contractor ").
4.7 Design Change Variances and Contract Change Orders.
4.7.1 Approval by the respective Project Representatives shall be required for
any material design change variance in Phase 1 or a material change variance to the
environmental or design consultant contracts for construction support in either Phase 1 or 2
( "Design Change Variance "), or any material construction contract change order in Phase 2
( "Contract Change Order "). Subject to Sections 4.7.7 and 5.3, such decisions of the Project
Representatives shall require a majority vote of the Project Representatives, with each Project
Representative having a vote weighted according to the Exhibit B "Flow -based Percentage" of
the Funding Party he or she represents.
4.7.2. Reserved
4.7.3 A Design Change Variance shall be "material" if it would reduce the flow
capacity of the Project below 1,621 gpm, or would reduce the Nitrogen and Selenium Offsets or
the Nitrogen and Selenium Credits (as defined in Section 7) to be generated by the Project, or
would increase the cumulative total of not -to- exceed amounts established in the Phase 1
contracts by 10 percent or more; or would increase total Capital Costs for all Parties, combined,
by $60,000 or more; or would cause the total Capital Costs to exceed the Estimated Project Cost.
If such Design change Variance would cause an exceedance of the Estimated Project Cost, it
must be approved as set forth in Sections 4.7.7 and 5.3.
4.7.4 A Contract Change Order shall be "material" if it would reduce the flow
capacity of the Project below 1,621 gpm, or would reduce the Nitrogen and Selenium Offsets or
the Nitrogen and Selenium Credits to be generated by the Project, or would increase the Capital
Costs by 10 percent or more of the Contractor's bid amount, or would cause the total Capital
Costs to exceed the Estimated Project Cost. If such Contract Change Order would cause an
exceedance of the Estimated Project Cost, it must be approved as set forth in Sections 4.7.7 and
5.3.
4.7.5 Upon the issuance of a Contract Change Order in an amount that, together
with the amount of previously issued change orders, exceeds 10 percent the Contractor's bid
amount in the aggregate as calculated since the award of the contract, IRWD shall provide
written notification to the Funding Parties for approval of each individual Contract Change
Order that exceeds $100,000, which shall be deemed to be "material" and shall require approval
of the Project Representatives as set forth in Section 4.7.1 above, unless such change order
would cause the exceedance of the Estimated Project Cost, in which case such change order shall
be approved pursuant to Sections 4.7.7 and 5.3.
4.7.6 Subject to, and without limiting the rights of the Parties pursuant to
Section 8 of this Agreement, all additional charges to which the Design Consultant or
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Contractor is entitled pursuant to the terns of the design, construction support, construction
management, or construction contracts that are incurred as a result of the Parties' delay in the
approval of a Design Change Variance, Contract Change Order, or any amendment to this
Agreement will be included in Capital Costs.
4.7.7 Notwithstanding any other provision of this Agreement, any Design
Change Variance or Contract Change Order that would cause the total Capital Costs to exceed
the Estimated Project Cost will require an amendment to this Agreement approved by all Parties
as set forth in Section 5.3. In the event the Parties are unable to reach an agreement on an
amendment to approve a required Design Change Variance or Contract Change Order within 90
days after any requested Design Change Variance or Contract Change Order, or within 30 days
after the express rejection of any requested Design Change Variance or Contract Change Order
by a Funding Party, IRWD shall be permitted to take the following actions with respect to third
party Phase 1 and Phase 2 contracts affected by the Design Change Variance or Contract Change
Order:
(i) IRWD shall be permitted to continue with construction without the
inclusion of the proposed Design Change Variance or Contract Change
Order; or
(ii) IRWD, upon a majority vote of the Parties, may terminate third party
contracts (which exclude this Agreement).
The Funding Parties, and not IRWD, shall be responsible for all costs and fees, including legal
fees, associated with construction delays or the termination of third party Phase 1 or Phase 2
contracts due to failure of the Funding Parties to approve Design Change Variances or Contract
Change Orders, and such costs shall be considered Capital Costs as defined in Recital E of this
Agreement.
4.7.8 During construction, IRWD shall provide access to the Project site for
purposes of inspection by any Party authorizing use of its property for Pipeline right -of -way, to
ensure that the Project work is being performed in accordance with the approved Plans.
4.7.9 Prior to IRWD's acceptance of the Pipeline, each Project Representative
shall arrange a walk - through to promptly review the improvements and provide any comments.
Upon satisfaction of the comments, Project Representatives shall provide written approval and
acceptance of the Pipeline. The Funding Parties' review and approval shall be finalized within
fourteen (14) days from the time the Funding Parties receive IRWD's written notice of
completion of the Pipeline. Written approval shall only be withheld for work not completed in
accordance with the Plans.
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SECTION 5. PROJECT CAPITAL COSTS
5.1 Each Funding Party agrees to pay its Project Capital Cost Contribution, up to the
not -to- exceed amount specified in Exhibit B to fund Capital Costs. The Parties further agree
that funding received from the Grants shall be applied as stated in Exhibit B
5.2 IRWD will invoice the Funding Parties for their respective Project Capital Cost
Contribution set forth in Exhibit B in two installments, as provided in this Section. The first
installment will fund the Capital Costs of Phase 1 of the Project, in the amount of $ 1,000,000
( "First Installment ") and will be paid by Irvine, Tustin, and OCFCD /County. The second
installment will fund the remaining Capital Costs for Phase 2 of the Project as determined by the
Contractor's bid, less the aggregate amount of the Grants and less any balance of the First
Installment that was not expended for Phase 1 ( "Second Installment "). The Second Installment
will be paid by all Funding Parties in accordance with their respective Project Capital Cost
Contribution. IRWD shall invoice Irvine, Tustin, and OCFCD /County for the First Installment
following execution of this Agreement by all of the Parties. IRWD shall invoice the Funding
Parties for the Second Installment upon award of the construction contract.
5.3 IRWD shall hold the Grant Funds, and the amounts paid by the Parties as the
First Installment and the Second Installment in a separate account designated for the Project
( "Project Fund "), and shall pay Capital Costs out of the Project Fund. IRWD shall provide
each Party with a monthly statement of activity with respect to the Project Fund on or before the
10th day of each month for the immediately preceding month. Interest accrued on the Project
Fund shall be for the benefit of the Project Fund. In the event of any change in the Project
approved by the Parties with respect to which an increase in the Project Fund is reasonably
required, IRWD shall invoice each Party for its allocated share of such Capital Cost change in
accordance with such Party's Project Capital Cost Contribution set forth in Exhibit B, up to the
specified not -to- exceed amount. In the event of a reduction in Grants funding, or an increase in
Capital Costs (due to Design Change Variances, Contract Change Orders, or other factors) that
would cause an exceedance of the Funding Parties' respective Project Capital Cost Contribution
amount as specified in Exhibit B, which values are not -to- exceed amounts, the Funding Parties
shall not be required to pay the invoice until this Agreement is mutually amended by the Parties.
The Project Capital Cost Contribution amounts can be increased only by an amendment to this
Agreement. The Funding Parties shall act in good faith and shall not unreasonably refuse to
amend the Agreement to increase their respective Project Capital Cost Contribution as
reasonably required to fund Capital Cost increases or Grant funding reductions.
5.4 A final reconciliation and detailed accounting report will be provided by IRWD
upon completion of the Project work. Any excess funds remaining in the Project Fund after
completion of the Pipeline, minus any unexpended Grant funds, shall be reimbursed to the
Parties pro rata in accordance with their respective Exhibit B Flow -based Percentages within
forty -five (45) days of Project completion. Notwithstanding the foregoing, unexpended Grant
funds shall only be disbursed according to the Grant requirements. Subject to Sections 4.7.7 and
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5.3, IRWD shall invoice the Funding Parties for any shortfall in funding of Capital Costs in
accordance with their respective Flow -based Percentages set forth in Exhibit B.
5.5 All invoices issued pursuant Sections 5.2, 5.3 and 5.4 shall be payable when
received by the Party, and a Funding Party's payment shall be delinquent if such Funding Party
fails to pay the invoice within forty -five (45) days thereafter. If any Party does not make timely
payment(s) after being invoiced as set forth in this Section 5, such Party's right to use the
Pipeline and Nitrogen and Selenium Offsets and /or Nitrogen and Selenium Credits generated by
the Project shall be suspended until such payment is made in full, together with payment of any
unpaid interest accrued on the portion of the delinquent payment that remains outstanding,
calculated as set forth in Section 4.1.
SECTION 6. OPERATION AND MAINTENANCE COSTS
6.1. General. The O &M Costs shall be determined on the basis of Pipeline - specific
operational criteria or limitations, to be established in connection with the Funding Parties'
approval of the Project's final design. IRWD shall contribute toward O &M Costs the IRWD
O &M Contribution during each year of Pipeline operation. The balance of the O &M Costs
above the IRWD O &M Contribution in any year shall be shared by the Parties in accordance
with their respective Exhibit B "Flow -based Percentage" , provided all Parties have agreed to
their respective contribution to additional O &M Costs as described in Section 6.2. Caltrans will
require a "Supplemental Agreement" before committing funds for additional O &M Costs. A
"Supplemental Agreement" is a short document signed by an authorized agent of Caltrans that
authorizes the funding of any O &M Costs contributed by Caltrans for that fiscal year. Any
unused amount of IRWD's O &M Contribution shall be carried over from year -to -year and shall
be applied to pay any O &M Costs above the annual IRWD O &M Contribution in any given year
before allocating any annual O &M costs to the Funding Parties pursuant to this Section and
Section 6.2. O &M Costs shall include both fixed costs that do not vary with the quantity of
water diverted by the Pipeline, and variable costs that vary with the quantity of water diverted.
6.2. Fixed and Variable O &M Costs. Annually, by November 15 of each year, IRWD
shall prepare a budget for fixed and variable O &M Costs for the next budget year (July 1 — June
30) for review and approval by the Parties. The proposed budget shall indicate the balance, if
any, of IRWD's O &M Contribution from prior years that is available to pay O &M Costs for
such budget year. Variable O &M Costs, such as the cost of electricity, for all years after the first
year of operations shall be estimates based on O &M Costs incurred in previous years. Approval
of the budget for O &M Costs shall require unanimous approval of all Funding Parties. IRWD
shall provide the Funding Parties with a monthly statement of O &M Costs, indicating variance
from the budget. If the approved annual budget for a year exceeds the IRWD O &M
Contribution plus any unexpended amounts from IRWD's O &M Contribution remaining from
prior years, IRWD shall invoice the Funding Parties for the excess in accordance with their
respective "Flow -based Percentage."
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If during the course of a budget year it becomes evident that O &M Costs are higher than
budgeted, IRWD may notify the Funding Parties of the need for a reasonable supplement to
cover such overage if carry -over funds are not available. In such event, IRWD shall promptly
notify the Funding Parties pursuant to Section 1.6, and shall meet and confer with them to
address the reasons for any such O &M Cost overruns and implementation of any necessary
O &M Cost controls. IRWD shall not invoice an increase in O &M Costs without (i) first
applying any O &M unexpended amounts from the IRWD O &M Contribution remaining from
prior years to fund or reduce the cost overrun; and (ii) obtaining the prior unanimous written
approval of the Funding Parties, including a Supplemental Agreement from Caltrans for that
fiscal year. In the second and each subsequent budget year, any excess /shortfall in funds for
O &M Costs from the preceding budget year's deposits shall be subtracted from/added to the
current invoice or otherwise addressed as determined by the Funding Parties by unanimous
approval.
If the Funding Parties fail to approve a budget or supplemental request for O &M Costs
for ninety (90) days after submission to the Funding Parties, IRWD may suspend operation of
the Pipeline as set forth in Section 1.6 above if IRWD timely notifies the Funding Parties that (i)
the failure of the Funding Parties to approve a budget for O &M Costs is continuing and IRWD
has exhausted the IRWD O &M Contribution and any unused amount of the IRWD O &M
Contribution carried over from prior years, or (ii) any Project or Pipeline permit or approval
required to operate the Pipeline cannot be obtained, renewed and /or extended.
IRWD's rights to be reimbursed for funds advanced by IRWD to pay for budgeted O &M
Costs or O &M Costs exceeding the IRWD O &M Contribution prior to any suspension of this
Agreement, including all reasonable IRWD staff time, legal fees and settlement charges incurred
by IRWD in terminating active Project contracts, shall survive such suspension.
6.3 Invoices. Each Funding Party agrees to pay its Flow -based Percentage of the
O &M Cost above IRWD's O &M Contribution as reflected in a budget or supplemental request,
if such budget or supplemental request is approved according to Section 6.2. Each Funding
Party's share of O &M Costs approved as a result of a budget request for the budget year shall be
payable by each Funding Party in one annual payment , and shall be payable upon receipt by the
Party from IRWD of an invoice, and shall be delinquent if not paid forty -five (45) days after
receipt of the invoice. Caltrans' share of the O &M Costs for the budget year shall at no instance
exceed $12,000 without an amendment to this Agreement. Each Funding Party shall pay
invoices presented to it as a result of approval of a supplemental request for O &M Costs under
Sections 1.6 and 6.2 shall be payable upon receipt by the party, and shall be delinquent if not
paid within forty -five (45) days after receipt of the invoice. In the event that a Party fails to pay
the invoiced and previously approved additional O &M Cost charges within the period specified,
the Party shall be assessed interest as set forth in Section 4.1 above until the total outstanding
charges and unpaid interest are paid in full.
6.4 Sanitation District Disposal Charges. The Parties intend to utilize Sanitation
District's Urban Runoff Diversion Program. Per Resolution Number OCSD 13 -09, Sanitation
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District can accept eligible discharges up to 10 million gallons per day at no cost. If in the future
Sanitation District imposes charges for any portion of the discharge of Pipeline flow, each Party
shall be responsible for charges allocable to its own metered flow into the Pipeline. Irvine,
Tustin and OCFCD shall have shared responsibilities for the metered flows from Como Channel,
Valencia Storm Drain and Edinger Circular Storm Drain and shall meet and confer to allocate to
each such Party an agreed -upon share of the disposal costs from these Diversion Locations.
Caltrans shall be responsible for charges for metered flows from the GWTF.
6.5. Overhead. All O &M Costs allocated to the Parties under Sections 1.5, 1.6 and
this Section 6 shall include the cost of IRWD labor and equipment, determined on a time and
materials basis, using the actual number of man -hours and equipment -hours required (including
travel time to and from IRWD facilities), multiplied by the applicable rates for the crew
members and equipment deployed. After -hours services (defined as between 4:00 p.m. on a
working day and 6:30 a.m. on the next following working day; "working day" shall exclude
Saturdays, Sundays and IRWD - designated holidays) will be charged at time and a half The
equipment rates effective upon the execution of this Agreement are set forth in Exhibit F,
attached hereto and incorporated herein, and thereafter are subject to adjustment in accordance
with standard IRWD practices, without the need for an amendment to this Agreement.
The labor rates are comprised of a direct component that is adjusted periodically
whenever IRWD's Board of Directors approves a salary schedule adjustment (generally, one cost
of living adjustment and one competitive wage adjustment each year), and an indirect (general
and administrative overhead or "G &A ") component. The G &A component includes a "Benefits
Burden" and a "Contract Burden." A "Total Benefits and Contract Burden Rate" of 78.6
percent shall remain in effect through December 31, 2015, and thereafter is subject to adjustment
as unanimously agreed to by the Parties at five (5) year intervals.
Such Total Benefits and Contract Burden Rate shall be applied for each IRWD
employee used for Pipeline operations and maintenance:
Labor Rate =
base hourly salary + [base hourly salary X (Total Benefits and Contract Burden Rate)]
Services contracted by IRWD to others and /or materials used shall be at IRWD's direct
cost and shall not include an IRWD indirect G &A component.
6.6 Records. IRWD shall keep appropriate records and accounts of all O &M Costs.
Said records and accounts shall be provided by IRWD to the Parties annually, in advance of the
preparation of the annual budgets, and shall be subject to reasonable inspection by any
authorized representative of any Party at its expense and by any Grant funding authority.
Further, said accounts and records shall be audited annually by an independent certified public
accounting firm appointed by IRWD pursuant to generally accepted auditing standards as part of
IRWD's annual audit process.
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SECTION 7. ALLOCATION OF NITROGEN AND SELENIUM LOAD
REDUCTIONS
7.1 Nitrogen and Selenium Removal Credits.
7.1.1 As part of the Project and qualified offset program, the Parties intend to
divert nitrogen and selenium to the Pipeline and generate reductions in nitrogen and selenium
loads ( "Total Load Reductions ") that can be used by the Parties, traded among the Parties, or
collectively traded or sold to a third party to establish compliance with applicable Regulations
for a period of time to be determined by the Parties in consultation with the Regional Board (the
"Compliance Period ").
7.1.2 "Nitrogen and Selenium Offsets" are those Total Load Reductions
(measured in pounds) attained during the Compliance Period as a result of the diversion to the
Pipeline of a Party's discharge that is both: (i) directly discharged from the GWTF, Como
Channel, Edinger Circular Storm Drain, or Valencia Storm Drain to the Pipeline; and (ii) subject
to point source Regulations.
7.1.3 "Nitrogen and Selenium Credits" are those Total Load Reductions
(measured in pounds) attained during the Compliance Period determined by calculating the
difference between Total Load Reductions attained by the Pipeline minus Nitrogen and
Selenium Offsets.
7.1.4 For each Compliance Period, the Parties shall calculate the Total Load
Reductions attained by the Pipeline (measured in pounds of selenium and nitrogen) based on
discharge concentration and flow data measured at each Diversion Location. All Total Load
Reductions will be held collectively by the Parties.
7.1.5 For each Compliance Period, Total Load Reductions shall be allocated by
the Parties as follows:
i. First, Selenium and Nitrogen Offsets will be allocated to appropriate
Parties as necessary for those Parties to establish compliance of their
direct discharges to the Pipeline with applicable point source
Regulations.
ii. Then, the Excess Credit Parties will meet and confer regarding the
remaining available Selenium and Nitrogen Credits, and those
discharges that may require Selenium and Nitrogen Credits for
purposes of establishing regulatory compliance, and the efficient and
equitable use of available Selenium and Nitrogen Credits for
establishing regulatory compliance of the Excess Credit Parties. For
each Compliance Period, the Excess Credit Parties will first allocate
sufficient Selenium and Nitrogen Credits among the Excess Credit
Parties as necessary to establish compliance with applicable
Regulations for their discharges within the San Diego Creek
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watershed (including the San Joaquin Marsh complex) up to the total
available Selenium and Nitrogen Credit amount. In any given
Compliance Period when the total amount of Selenium and Nitrogen
Credits needed by Excess Credit Parties for compliance exceeds the
amount of Selenium and Nitrogen Credits available, the Selenium and
Nitrogen Credits will be allocated up to the amount required by each
Excess Credit Party in accordance with the percentages shown for
each Excess Credit Party in the column of Exhibit E entitled "Excess
Credit Party Share ".
iii. Any Selenium and Nitrogen Credits not used by the Excess Credit
Parties pursuant to subsection (ii) above ( "Excess Credits ") will be
available to the Excess Credit Parties as a group for third party trading
or sale. Proceeds from the trading or sale of any Excess Credits will
be held in common by the Excess Credit Parties and used for their
benefit.
7.2 Excess Credits.
7.2.1 The Excess Credit Parties shall develop mutually acceptable terms and
conditions for third party trades or sales of Excess Credits that are consistent with the principles
in this Agreement. These terms and conditions shall be developed by the Excess Credit Parties
concurrently with future development of the third party credit trading program described in the
2013 BMP Strategic Plan for the Santa Ana -Delhi and San Diego Creek Sub - watersheds.
7.2.2 The Excess Credit Parties shall only sell or trade Excess Credits jointly.
The proceeds from trade or sale of Excess Credits to third parties shall be held in common for
the benefit of the Excess Credit Parties. The Excess Credit Parties shall agree by majority vote
(with each voting Party's vote being weighted by that Party's "Excess Credit Party Share" as
shown in Exhibit E) on the terms and conditions for any trades or sales of Excess Credits. Uses
by the Excess Credit Parties of sale or trade proceeds shall be limited by any applicable
requirements of the Grants.
7.3 Regulatory Considerations. The use, trading or sale (as applicable) of Nitrogen
and Selenium Offsets, Nitrogen and Selenium Credits, and Excess Credits for purposes of
regulatory compliance is governed by the State Board, the Regional Board, and EPA. Should
the Regulations for any Party change, or should this Section 7 be determined by a regulatory
agency or court with jurisdiction to be inconsistent with federal or state law, the Parties shall
meet and confer to amend this Section 7 in a manner that the Parties agree is best suited to
attaining compliance with the Parties' regulatory obligations, including those regulatory
obligations resulting from any changed Regulations or other legal requirements.
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SECTION 8. INDEMNIFICATION; INSURANCE
8.1 In contemplation of the provisions of Section 895.2 of the California Government
Code imposing certain tort liability jointly upon public entities solely by reason of such entities
being parties to an agreement as defined by Section 895 of the Government Code, each Party,
pursuant to the authorization contained in Sections 895.4 and 895.6 of the Government Code,
hereby agrees to and shall indemnify and hold harmless the other Parties as provided in this
Section.
8.2 IRWD shall assume the defense of, indemnify and hold harmless the other Parties
and each of their officers, employees and agents from and against any and all actions, damages,
liability or claims for death, injury, loss, damage or expense to persons or property arising from
or related to, or claimed to have arisen from or be related to, the improper or negligent acts or
omissions of IRWD in the environmental compliance, design, construction, replacement, use,
operation, maintenance, and/ or repair, of the Pipeline, or result from IRWD's breach of its
obligations under the Agreement, except to the extent such actions, damages, claims, losses,
expenses or liabilities have arisen from or relate to the improper or negligent acts or omissions
of the indemnified Party, or result from such Party's breach of its obligation under the
Agreement.
8.3 IRWD shall require and ensure that the environmental consultants and mitigation
agents, Design Consultants, the Contractor, and all subcontractors of those persons and entities
shall name each Party as an additional insured and that the Project Design Consultants',
Contractor's, and all subcontractors' indemnity, defense, hold harmless and insurance obligations
under all applicable agreements with IRWD benefit the Parties in the same manner and to the
same extent as IRWD. With respect to operation and maintenance of the Pipeline, IRWD shall
maintain in full force and effect appropriate public liability and property damage insurance and
shall add the names of the Parties, their officers, agents and employees to such policies as
additional insureds. A proportionate amount of IRWD's cost of insurance relative to the
operation and maintenance of the Pipeline as herein provided shall be included within the fixed
O &M Costs.
8.4 Each of the Parties other than IRWD shall assume the defense of, indemnify and
hold harmless the other Parties and each of their officers, employees and agents from and against
any and all actions, damages, liability or claims for death, injury, loss, damage or expense to
persons or property arising from or related to, or claimed to have arisen from or be related to, the
improper or negligent acts or omissions of, or result from the breach of this Agreement by, such
Party in connection with its participation in the Project or use of the Pipeline, except to the
extent such actions, damages, claims, losses, expenses or liabilities have arisen from the
improper or negligent acts or omissions of, or result form the breach of this Agreement by, the
indemnified Party. If judgment is entered against all the Parties by a court of competent
jurisdiction because of the concurrent active negligence or improper acts of one or more Parties,
the Parties agree that liability will be apportioned as determined by the court. No Party shall
request a jury apportionment.
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SECTION 9. SUCCESSORS AND ASSIGNS
This Agreement shall inure to and be for the benefit of the successors and assigns of the
Parties hereto. A Party shall not assign or delegate its responsibilities or performance under this
Agreement, nor any part thereof, without the prior written consent of the non - assigning Parties.
Such consent shall not be unreasonably withheld. IRWD shall not assign, convey or encumber
its interest in the Pipeline without the express unanimous written consent of the Parties. Any
purported assignment, conveyance or encumbrance of the Pipeline without such unanimous
written consent shall be null and void. In the event of any assignment, conveyance, and /or
encumbrance of their respective interests in the Pipeline right -of -way that they own, Caltrans,
OCFCD, Tustin, and Irvine shall provide the other Parties three (3) months' notice of any
proposed assignment, conveyance and or encumbrance of such right -of -way, and the Parties
shall meet and confer to ensure that the Pipeline remains operational.
SECTION 10. ATTORNEY'S FEES
In any action or proceeding to enforce or interpret any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the Parties shall each bear their own
attorney's fees, costs and expenses.
SECTION 11. ENTIRE AGREEMENT; INTERPRETATION; AMENDMENT,
GOVERNING LAW; EXECUTION IN COUNTERPARTS
This Agreement and the Exhibits, as it may be amended from time to time, constitutes
the entire agreement between the Parties hereto and supersedes all prior agreements and
understandings, both written and oral, among the Parties with respect to the subject matter
hereof. California law shall govern the interpretation of this Agreement. Any action or
proceeding brought to enforce the Agreement, or related to the Agreement, shall be brought in
Orange County, California, notwithstanding the provisions of California Code of Civil
Procedure Section 394. Any amendment to this Agreement shall be made in writing and signed
by all of the Parties hereto. This Agreement shall be construed as if prepared by all Parties
hereto. The Agreement and any amendment hereto may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
SECTION 12. WAIVER OF JURY TRIAL
Each Party acknowledges that it is aware of and has had the opportunity to seek advice of
counsel of its choice with respect to its rights to trial by jury, and each Party, for itself and its
successors, creditors, and assigns, does hereby expressly and knowingly waive and release all
such rights to trial by jury in any action, proceeding or counterclaim brought by any Party hereto
against the other (and /or against its officers, directors, employees, agents, or subsidiary or
affiliated entities) on or with regard to any matters whatsoever arising out of or in any way
connected with this Agreement and /or any other claim of injury or damage.
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FINAL Peters Canyon Wash Pipeline Agreement _1 105 13 Clean
Page 20 of 33
SECTION 13. NOTICES
Any notices given pursuant to the Agreement or regarding matters contained within this
Agreement shall be deemed delivered upon personal delivery or five (5) days after deposit in the
United States Mail, first class, postage prepaid, addressed to the Project Representative of each
Party at the address included in the signature section. Notice under this Agreement shall be
given to each Party using the following contact information, unless any Project Representative
gives notice of a change in Project Representative or contact information pursuant to this
Section, in which case the new information shall be substituted for the information set forth in
this Section.
Irvine Ranch Water District
City of Irvine
Attn:
Paul Cook
Attn: Amanda Carr
General Manager
Water Quality Administrator
Address:
15600 Sand Canyon Avenue
Address: P.O. Box 19575
Irvine, CA 92618
Irvine, CA 92623 -9575
Phone:
(949) 453 -5300
Phone: (949) 724 -6315
Fax:
(949) 453 -1228
Fax: (949) 724 -6490
Email: acarr @cityofirvine.org
Email:
cook @irwd.com
City of Tustin
County of Orange
Attn:
Director of Public Works /City Engineer
Attn: Mary Anne Skorpanich
Address:
300 Centennial Way
Orange County Watersheds Manager
Tustin, CA 92780
Address: 2301 N. Glassell St.
Phone:
(714) 375 -3150
Orange, CA 92865
Fax:
(714) 734 -8991
Phone: (714) 955 -0601
Email:
dstack @tustinca.org
Fax:
Email: Maryanne.skorpanich @ocpw.ocgov.com
Orange County
Flood Control District
California Department Of Transportation
Attn:
Mary Anne Skorpanich
Attn: Tifini Tran, Project Manager
Orange County Watersheds Manager
Address: 3347 Michelson Dr., Suite 100
Address:
2301 N. Glassell St.
Irvine, CA 92612
Orange, CA 92865
Phone: (949) 756 -7871
Phone:
(714) 955 -0601
Fax: (949) 440 -4465
Fax:
Email: Tifini.Tran @dot.ca.gov
Email:
Maryanne.skorpanich@ocpw.ocgov.com
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FINAL Peters Canyon Wash Pipeline Agreement _1 l 05 13 Clean
Page 21 of 33
SECTION 14. TERM; DISCONTINUATION OF OPERATIONS; DEMOBILIZATION
Unless extended by amendment of this Agreement, IRWD's obligation to operate and
maintain the Pipeline pursuant to the terms of this Agreement shall expire twenty (20) years
from the date the Pipeline is placed in service. Prior to termination of IRWD's obligations, the
Funding Parties and IRWD shall meet and confer to determine how to proceed with respect to
continued use, closure, removal and /or abandonment in place of the Pipeline. If IRWD
continues to operate the Pipeline by mutual agreement of the Parties following the initial twenty
(20) year period, IRWD or such successor, assign, affiliate or other entity to whom IRWD
properly delegates operation of the Pipeline under Section 9, shall continue to accept the
Funding Parties' flows into the Pipeline as provided in Section 2 of this Agreement, and the
Funding Parties shall have the right to continue such discharges into the Pipeline.
If IRWD or its successor entity discontinues operation of the Pipeline after the initial 20-
year period, ownership of the Pipeline shall be transferred to the remaining Funding Parties, and
all Parties shall cooperate and take all actions reasonably necessary to transfer ownership and
continue operation of the Pipeline for the purposes set forth in this Agreement.
If the Parties unanimously agree to demobilize the Pipeline and sell any part of it, any
remaining O &M funds, the proceeds of such sale, the cost of removal of the Project components,
and the appropriate cost of returning the Pipeline property to a condition acceptable to the
property owner, shall be allocated among the Funding Parties pro rata in accordance with the
proportion their respective Project Capital Cost Contribution bears to the total Capital Costs.
SECTION 15. SEVERABILITY
If any covenant, term, condition, or provision of this Agreement shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement shall be valid and enforceable to the
fullest extent permitted by law unless that covenant, term, condition, or provision declared to be
invalid is so material that its invalidity deprives any Party of the basic benefit of its bargain or
renders the remainder of this Agreement meaningless.
SECTION 16. NO THIRD PARTY BENEFICIARIES
No customer, other person or entity other than the Parties shall be deemed to be a third
party beneficiary hereof, and nothing in this Agreement, either express or implied, is intended to
confer upon any other person or entity, other than the Parties and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
SECTION 17. DISPUTE RESOLUTION
The Parties desire to resolve as quickly and as amicably as possible any disputes as to the
meaning of any portion of this Agreement, the validity of any determination or calculation, or
the rights or obligations of the Parties pursuant hereto. Therefore, prior to initiation by a Party of
any litigation or other proceeding in connection with this Agreement, the Parties shall meet and
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FINAL _Peters Canyon Wash Pipeline Agreement _1 105 13 Clean
Page 22 of 33
make good -faith efforts to resolve any such disputes on an informal basis. The Party that first
raises a claim against any other Party in connection with a dispute shall be responsible for
providing written notice to such other Party or Parties and thereby initiating the informal dispute
resolution efforts. Such informal efforts may include mediation of the dispute if agreed by the
Parties involved in the dispute. Not sooner than thirty (30) days after diligent efforts to resolve a
dispute have been initiated, if the Parties have been unable to resolve the dispute on such
informal basis, any Party involved in the dispute may, in its discretion and after providing
written notice to the other Parties that the informal dispute - resolution efforts are being
terminated, proceed to take any and all such action to enforce or protect its rights as permitted by
law and/or this Agreement. If a Party initiates informal dispute resolution with respect to a
dispute, any statutory limitation for filing of a court action or commencement of any other
proceeding shall be tolled for a period of days equal to the number of days that elapsed between
delivery of the notice initiating informal dispute resolution and the notice terminating informal
dispute- resolution.
SECTION 18. TERMINATION
Unless otherwise mutually agreed by all Parties a Party may not unilaterally terminate its
obligations under this Agreement until completion of construction of the Pipeline, payment of
the First Installment and Second Installment, and commencement of Pipeline operation.
Thereafter, any Funding Party wishing to terminate its participation shall provide notice to all
other Parties by December 15 of its intent to withdraw effective July 1 of the following year
( "Effective Date of Termination'). The terminating Funding Party shall continue to be
responsible for its share of the financial obligations incurred up to the Effective Date of
Termination. IRWD cannot terminate its obligations under this Agreement during the initial 20-
year period, unless by mutual consent of all Parties. The allocation of Nitrogen and Selenium
Credits and Nitrogen and Selenium Offsets to the terminating Party shall expire upon
termination and no compensation shall be payable to any Party as a result of termination.
Notwithstanding any termination of this Agreement, the Funding Parties must comply with all
terms and conditions of the Grants. In the event of a termination of this Agreement, each of the
Parties shall be responsible for finding and arranging an alternate means of disposal of its
respective nitrogen and selenium discharges, and for payment of any fines, penalties or costs
incurred by that Party as the result of a suspension or termination._
SECTION 19. SURVIVAL CLAUSE
The obligations regarding: document retention and audit (as set forth in Sections 1.7 and
6.6); obligations of the Funding Parties to pay IRWD for approved, agreed upon and invoiced
O &M Costs (as set forth in Sections 1.6, 4.7.7, and 6) and Capital Costs (as set forth in Sections
4.1, 4.5, 4.7.7, 5 and 14); environmental commitments (as set forth in Section 4.4.1);
indemnification (as set forth in Section 8); legal challenges (as set forth in Sections 11, 12 and
17); operation, maintenance, cost allocation and ownership (as set forth in Sections 14 and 18);
and specific performance (Section 21) shall survive the suspension and /or termination of the
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FINAL _Peters Canyon Wash Pipeline Agreement 11 05 13 Clean
Page 23 of 33
Agreement, as applicable, and shall remain in effect until terminated or modified in writing by
mutual agreement of all Parties or the applicable statute of limitations is reached.
SECTION 20. AVAILABILITY OF FUNDS
Notwithstanding Section 18, above, this Agreement is subject to the availability of funds
appropriated for this purpose, and nothing herein shall be construed as obligating the Parties to
expend, or as involving the Parties in any contract or other obligation for future payment of
money, in excess of appropriations authorized by law. All obligations of Caltrans are subject to
the State Budget Act and appropriation by the California State Legislature. Each Party shall in
good faith include the funding of its obligations under this Agreement in its annual budget for
consideration by its governing body.
SECTION 21. SPECIFIC PERFORMANCE
The Parties acknowledge that monetary damages would be an inadequate remedy for
breach of this Agreement, and that a Party's breach will result in immeasurable and irreparable
harm to the other Parties. Therefore, in addition to any other remedy to which it may be entitled
by reason of another Party's breach of this clause, the moving Party shall be entitled to seek
temporary, preliminary and permanent injunctive relief from any court of competent jurisdiction
restraining the other Parties from committing or continuing any breach. This clause shall survive
any termination of this Agreement.
SECTION 22. ATTACHMENT AND EXHIBITS.
EXHIBIT A- Project Map; EXHIBIT B- Estimated Project Cost, Project Capital Cost
Contribution, IRWD O &M Contribution, Flow -based Percentages and Installment Payments;
EXHIBIT C- Estimated Pipeline Capacity Table; EXHIBIT D- Anticipated Schedule for Project
Work; EXHIBIT E- Excess Credit Party Credit Shares; EXHIBIT F- Effective Equipment Rates,
are all attached to and made a part of this Agreement by reference. Any changes to the Exhibits
can become effective only upon amendment of this Agreement.
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FINAL Peters Canyon Wash Pipeline Agreement 11 05 13 Clean
Page 24 of 33
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
Effective Date hereinabove written.
IRVINE RANCH WATER DISTRICT, a
body corporate and politic
By:_
Name:
Title:
CITY OF IRVINE, a charter city
By:
Name:
CITY OF TUSTIN, a California municipal
corporation
By:
Name:
ORANGE COUNTY FLOOD CONTROL
DISTRICT, a body corporate and politic
By:
Name:
COUNTY OF ORANGE, a political
subdivision of the state of California
By:
Nar
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FINAL Peters Canyon Wash Pipeline Agreement_1 l 05 13 Clean
Page 25 of 33
CALIFORNIA DEPARTMENT OF
TRANSPORTATION, an agency of the State
of California
By:
Created on 11/5/2013 3:52:00 PM
FINAL Peters Canyon Wash Pipeline Agreement 11 05 13 Clean
Page 26 of 33
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EXHIBIT C
Estimated Pipeline Capacity Table
'Feasibility Study.
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FINAL Peters Canyon Wash Pipeline Agreement Ill 05 13 Clean
Estimated Discharge
Flows' (gallons per
minute)
Caltrans Groundwater Treatment Facility
491
Como Channel
492
Edinger Circular Storm Drain
123
Valencia Storm Drain
515
Estimated Pipeline Capacity'
1621
'Feasibility Study.
Created on 11/5/2013 3:52:00 PM
FINAL Peters Canyon Wash Pipeline Agreement Ill 05 13 Clean
EXHIBIT D
Anticipated Schedule for Project Work
Task
Date
Award of Project Design Contract
December 2013
Phase 1 - completion of environmental
review and all regulatory approvals,
and completion of design
June 2014
Phase 2 - Construction of Project
June 2014 -March 2015
Operations and Maintenance
March 2015 -June 2035
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FINAL—Peters Canyon Wash Pipeline Agreement_I 1 05 13 Clean
EXHIBIT E
Excess Credit Party Credit Shares
Party
Excess Credit
Party Share
County /OC Flood Control District
30.5%
City of Irvine
25.5%
City of Tustin
12.4%
Irvine Ranch Water District
31.6%
Total
100.00
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FINAL Peters Canyon Wash Pipeline Agreement 11 05 13 Clean
EXHIBIT F
Effective Equipment Rates
Light Duty Vehicles
(Pas. -eager cars, mall sport u+ Uty vehicles, small pick -up trucks Prius- Escape-
Tacoma)
Medium Duty Vehicles
(Media m p ck -up trucks an. port ut I ty vehicles. r -150 thru F -550,
Suburban, Tahok )
2013 rates
($ /hour) (11
$ 17.50
$ 18.98
Heavy Duty Vehicles $ 33.62
(Commercial trucks. Dump trucks, crane trucks, vactors, crew trucks. Any on-
road vehicle over 26,001 GVW and requiring commercial license)
Off Road Vehicles
(Self propelled off road equipment. Backhoes, loaders, excavators, small
utllity carts, Kawasaki Mules, Taylor Dunn Carts, gators)
Portable Equipment
(Small equipment. Pumps, small generators, tampers, chalnsaws, cut -off
saws, Jackhammers)
Communications Equipment/District Radio
(All distrlrt radio expenses and parts. Parts and equipment for v -hloes to
support bluetooth equipment and mobile comput!ng]
$ 24.90
Towed Equipment/Trailers $
(Any whee led equlpment towed by .nothervehick b ut exclu di ng e merge rtcy
equlpment)
Emergency Equipment
(Towed equipment- primarily generators -150 Wowatt and above- and pumps
reserved for use in emergencies)
(1) US Department of Transportation Standard Rates
Created on It 5.201.1 3 :51.00 I'M
FINAL._Peters Canyon Wash Pipeline Arrecment 1105 13 Clean
11.13
eta
111.11$
$ 75.74