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N.B. 1 VANDENBG WELL 02-18-92
A [9 F N r.Q�- DATE: FEBRUARY 10, 1992 WILLIAM A. HUSTON, CITY MANAGER TO: PUBLIC WORKS DEPARTMENT/WATER DIVISION NEW BUSINESS N0. 1 2-18-92 17R0T0- AGREEMENT FOR CONSTRUCTION AND FINANCING OF VANDENBURG WELL S U BJI ECT: THROUGH CITY PARTICIPATION IN THE ORANGE COUNTY WATER DISTRICT CONJUNCTIVE USE WELL CONSTRUCTION PROGRAM RECOMMENDATION: That the City Council, at its meeting of February 18, 1992, authorize the Mayor to execute an agreement with Orange County Water District for the construction and financing of Vandenburg Well. BACKGROUND: The Orange County Water District (OCWD) Board of Directors has adopted a financial plan designed to help its groundwater producers increase their pumping capacity. The plan is intended to assist agencies such as Tustin in taking advantage of the Metropolitan Water District (MWD) Seasonal Storage Program, a new water pricing program designed to reduce reliance on imported water during the summer months. The OCWD program provides loan and construction management assistance to groundwater producers. Each agency is eligible for construction of up to 3 wells, with a maximum loan of $750,000 per well. Loans are issued at 3.5% interest for up to 20 years. DISCUSSION: At its meeting of October 21, 1991, the City Council approved purchase of the Vandenburg Well easement and certified the Negative Declaration for acquisition of the land and construction of the well. Funding in the amount of $600,000 is currently budgeted for this project in the Water Division Capital Improvement Fund. If the City were to participate in the Conjunctive Use Program, repayment of this amount over a 20 year period at 3.5% interest would result in an annual payment of $42,240. The City also would have the option of paying off the balance of the loan at any time. Under this agreement, OCWD will prepare plans and contract documents for construction and drilling of the subsurface well facilities. The City has the right of review and approval of all plans and specifications. The City will be responsible for design and construction of the wellhead and appurtenant facilities, with costs to be reimbursed by OCWD, up to the maximum loan amount. AGREEMENT FOR CONSTRUCTION AND FINANCING Or VANDENBURG WELL THROUGH CITY PARTICIPATION IN THE ORANGE COUNTY WATER DISTRICT CONJUNCTIVE USE WELL CONSTRUCTION PROGRAM February 10, 1992 Page 2 Participation in this program should help expedite this project as OCWD has staff and consultants on line who are experienced in well construction. It may also result in more favorable construction prices, as OCWD will attempt to bid several projects on one contract. Per the agreement, the City has the right to review and reject construction bids if they are unfavorable. Bob Ledendecker Director of Public Works/City Engineer BL: GRV : cc Attachments Gary R. Veeh Water Service Manager ORIGINAL ORANGE COUNTY WELL CONSTRUCTION PROGRAM AGREEMENT CITY OF TUSTIN THIS AGREEMENT is entered into as of , 1991 by and between the ORANGE COUNTY WATER DISTRICT, a special governmental district Chapter 924 organized and existing pursuant to the Orange County Water District Act, Cha p Statutes of 1933, as amended (hereinafter OCWD ), and the CITY OF TUSTIN, organized and existing pursuant to the laws of the State of California (hereinafter referred to as "PRODUCER"). RECITALS A. OCWD is cooperating with qualifying groundwater producers within the boundaries of OCWD in a Conjunctive Use Well Construction Program (hereinafter, the "Program") in order to maximize participation by groundwater producers within the OCWD boundaries in the Seasonal Storage Program adopted by the Metropolitan Water District of Southern California (hereinafter, "MWD"). The goals of the Program are to increase eachq ualifying groundwater producer's pumping capabilities such that the OCWD basin would be capable of adequately sustaining water deliveries during drought and other emergency conditions, and to increase the extraction capacity from the groundwater basin to allow optimum participation in the MWD Seasonal Storage Program. B. PRODUCER owns and operates a water distribution system (hereinafter, .its "Water System") for the purpose of delivering potable water to the customers in its service area which is within the boundaries of OCWD. The water delivered and sold by PRODUCER includes groundwater produced. from the Orange County groundwater basin and imported water delivered by MWD. C. PRODUCER desires new and rehabilitated groundwater production wells, including a pump, motor and ancillary surface facilities, as designated in Exhibit A (here- inafter known as the "Well Facilities"), to be constructed in Tustin, California, and be included in the Program. D. This Agreement is a joint effort by PRODUCER and OCWD to improve water n PPY su 1 facilities. In order to increase the pumping capacity to both optimize participation in the MWD Seasonal Storage Program and sustain adequate water deliveries during drou ht and emergency conditions, OCWD and PRODUCER desire to enter into this g Agreement for the acquisition, construction, installation and operation of the Well Facilities. EXECUTORY AGREEMENTS NOW THEREFORE, in consideration of the facts recited above and the covenants, conditions and promises contained herein, the parties hereto hereby agree as follows: SECTION ONE: DESIGN OF WELL FACILITIES 1.1 All design criteria and final well design shall be subject to final approval by the PRODUCER'S Water Department and City Attorney. 1.2 OCWD shall prepare, or cause to be prepared, the design plans and specifications documents for the construction of the subsurface portion of theWell Facilities, including rehabilitation of existing wells and, for new wells, the drilling of the well hole and the installation of subsurface well casing (such subsurface portion of the Well Facilities is hereinafter referred to as the Subsurface Facilities", and the design plans and specifications for the Subsurface Facilities are hereinafter referred to as the "Subsurface Design Documents"). - For the purpose of this agreement, Well Facilities will include the design and construction of new wells, as well as rehabilitation of old wells. 1.2.1 OCWD shall prepare the Subsurface Design Documents based upon technical specifications, site information, and other factors provided and approved by PRODUCER. 1.2.2 Subsurface Design Documents shall be approved by PRODUCER prior to commencement of construction by OCWD. 1.2.3 The cost of preparing the Subsurface Design Documents shall be paid by OCWD. 1.3 PRODUCER shall prepare, or cause to be prepared,the design plans, P s ecifications, and cost estimate documents for the construction of the surface ortion of the Well Facilities, including the pump, motor, power source, well enclosures, controls, piping P to PRODUCER's water distribution system, and ancillary and appurtenant facilities (such surface portion of the Well Facilities is hereinafter referred to as the "Surface Facilities", and the design plans and specifications for the Surface Facilities are hereinafter collectively referred to as the Surface Design Documents"). 1.3.1 The Surface Design Documents shall be based upon the parameters set forth he environmental in, and shall incorporate the mitigation measures adopted by; the documentation prepared by PRODUCER pursuant to Paragraph 15 0,` 2 1.3.2 The cost of preparing the Surface Design Documents shall be initially paid by OCWD pursuant- to Paragraph 2.6 below and included in the Total Well Cost Statement set forth in Paragraph 2.7 below, and thereafter paid by PRODUCER to OCWD pursuant to Section Three below. 1.4 Upon completion of the Subsurface Design Documents, OCWD shall furnish to PRODUCER a copy of the Subsurface Design Documents as well as a preliminary cost estimate of the construction and installation of the Well Facilities (such preliminary cost estimate is hereinafter referred to as the Engineers Cost Estimate"). 1.4.1 Either OCWD or PRODUCER may terminate this Agreement within thirty (30) days s of the date of receipt by PRODUCER of the Subsurface Design Documents and the Engineer's Cost Estimate if OCWD or PRODUCER determines, in its sole discretion, either that the Engineers Cost Estimate renders the W ell Facilities infeasible, or that the Subsurface Design Documents is unacceptable. 1.4.2 Such determination of infeasibility and/or unacceptability shall be transmitted to the other party in writing . within thirty (30) days of the date of the receipt by PRODUCER from OCWD of the Subsurface Design Documents and the Engineer s Cost Estimate. 1.4.3 The Subsurface Design Documents and the Engineer's Cost Estimate shall be deemed approved if neither OCWD nor PRODUCER transmits written notice of termination within such thirty (30) day period. hall be responsible for complying with all requirements of the 15 PRODUCER shall California Environmental Quality Act ("CEQA") in connection with the construction, installation and operation of the Well Facilities. SECTIONTVYO. CONSTRUCTION AND INSTALLATION OF WELL • FACILITIES 2.1 Within a reasonable period of time following approval pursuant to Paragraph 1.4 above of the Subsurface Design Documents and the Engineers Cost Estimate, OCWD shall solicit bids, and award a contract or contracts, for the construWD of the Subsurface Facilities. The parties hereto acknowledge and agree that OC may solicit bids for, and award a contract or contracts to, one or more contl miors tes to drill and install numerous groundwater production wells, including but not li d to the Subsurface Facilities hereunder, in order to obtain greater cost efficiencies and er drillin and installation costs for the benefit of both OCWD and PROD , low g 2.1.1 OCWD shall be the contracting party for the construction and installation of the Subsurface Facilities, and shall be solely responsible for the awarding and letting 3 of all contracts and agreements, including change orders, for the acquisition, construction and installation of the Subsurface Facilities, subject to Paragraphs , 2.1.3, 2.1.4 and 2.1.5 hereinbelow. 2.1.2 After the receipt of bids, but prior to the award of the contract(s) for the construction and installation of the Subsurface Facilities, OCWD shall prepare both a written abstract of the bids, and a written recommendation regarding the lowest responsible bidder for the work. 2.1.2.1 OCWD shall furnish a copy of the abstract and recommendation to PRODUCER at least thirty (30) calendar days prior to the date on which OCWD intends to award the contract(s). 2.1.2.2 Within twenty-five (25) calendar days from the date of receipt of the written abstract and recommendation from OCWD, PRODUCER may, by written notice to OCWD, terminate this Agreement if PRODUCER determines, in its discretion, either that PRODUCER disagrees with OCWD'S recommendation regarding the lowest responsible bidder, or that the cost of the bids received for the installation of the Subsurface Facilities renders the construction of the Well Facilities infeasible. 2.1.2.3 Notwithstanding Paragraph 2.6 and Section Three below, PRODUCER shall be responsible for, and shall reimburse to OCWD, all costs incurred in the preparation of the Subsurface Design Documents in the event that this Agreement is terminated pursuant to this Paragraph 2.1.2. 2.1.3 Priorto executingany change order that, individually or in combination with Py reviousl executed change orders, increases the cost of the construction of the Subsurface Facilities by more than 10% of the estimated cost, OCWD shall obtain the prior written approval of PRODUCER, which approval shall not be unreasonably P PRODUCER shall be withheld. Because of critical timing during well construction, Written approval, as available to approve such change orders in a timely fashion. Wor similar herein defined, may take the form of a letter, FAX, speed memo instrument. 2.1.4 OCWD shall have the right to retain a qualified consultant or consultants, he to provide field supervision. and inspection services in connection with t P � OCWD shall perform construction and installation of the Subsurface Facilities. Facilities, and OCWD project management services during construction of Subs services in the Total Well Cost ' shall not include the cost of such project management e cost of such consultant(s) shall be Statement pursuant to Paragraph 2.7 below. 2.6 below and included in the Total i initially paid by OCWD pursuantto Paragraph below, and thereafter paid by Well Cost Statement set forth n Paragraph 2.7 below. PRODUCER to OCWD pursuant to Section Three b 4 -- 2.1.5 Prior to the installation of the well casing for the Subsurface Facilities, OCWD shall recommend to PRODUCER for final approval the final well design, including but not limited to the depths- at which the well casing will be perforated. Producer shall have 24 hours to give final approval from the time PRODUCER receives the recommendation. 2.2 Within 180 days following the completion of Subsurface Facilities, PRODUCER shall solicit bids, and award a contract or contracts, for the con- struction of the Surface Facilities. 2.2.1 PRODUCER shall be the contracting party for the construction and installation of the Surface Facilities, and shall be solely responsible for the awarding and letting of all contracts and agreements, including change orders, for the acquisition, construction and installation of the Surface Facilities. 2.2.2 PRODUCER shall have the right to retain a qualified consultanto cosultants to provide project management and field supervision and inspection services in connection with the construction and installation -of the Surface Facilities. The cost of such consultant(s) shall be initially paid by OCWD pursuant to Paragraph 2.6 below and included in the Total Well Cost Statement set forth in Paragraph 2.7 below, and thereafter paid by PRODUCER to OCWD pursuant to Section Three below. 2.3 PRODUCER shall obtain a permanent easement entitling PRODUCER to construct the Well Facilities on the subject property prior to the date on which either Subsurface or Surface Facilities construction and installation bids are solicited by OCWD or PRODUCER pursuant to Paragraphs 2.1 and 2.2 above. 2.3. 1 PRODUCER shall provide to OCWD whatever access is required to complete the construction of Subsurface Facilities in a timely fashion. 2.3.2PRODUCER and OCWD shall at all times have the right to enter upon the . site of the Well Facilities to observe the progress and status of the construction and installation of the Surface Facilities. 2.3.3 OCWD shall have the right to enter upon the site of the well facilities in order to exercise an of its remedies in the event that PRODUCER defaults under this Agreement. 2.4 PRODUCER shall be solely responsible for obtaining all permits, licenses and y, approvals, if an necessary for the acquisition, construction and installation of the Well Facilities.Y An and all costs incurred by PRODUCER in connection with the application for or issuance of any such permits, licenses, and approvals shall i ll aid b OCWD pursuant to Paragraph 2.6 below and included in the Total snit a y p Y 5 Well Cost Statement set forth in Paragraph 2.7 below, and thereafter repaid by PRODUCER to OCWD pursuant to Section Three below. 2.5 OCWD and PRODUCER shall each comply with the following provisions in connection with the construction of the Well Facilities: 2.5.1 In accordance with California Attorney General Opinion No. 86-803, OCWD and PRODUCER acknowledge that the Well Facilities contemplated herein constitute a Public works project within the meaning of California Labor Code Section 17209 cl KQ- In connection with their respective construction and contract and responsibilities under Paragraphs 2.1 and 2.2 above, OCWDnd PRODUCER shall each comply with the requirements regarding payment of prevailing wages, es, and all of the other requirements governing public works g construction projects, set forth in Section 1720, rA IM, 1773.5, 1775, 1776, 1777.5 and 1810 of the California Labor Code. 2.5.2 Each and every contractor involved in the construction or installation of the Well Facilities shall be required to provide general liability insurancetoe in an then amount of not less than $2,000,000.00 naming OCWD and PRODUCER' 1 insured with their respective officers, employees and representatives, as additi t furnish on each such policy. Each such contractor shall also be required both to faithful builder's all-risk insurance and workers' compensation insurance, as w ellperformance and labor and materials bonds. 2.5.3 OCWD and PRODUCER shall use their best efforts to cause the acquisition, construction and installation of their respective portion of the Wel Facilitiescompleted to be so that the total project can be completed on or before December 31, 1992. 2.6 All costs incurred by OCWD and PRODUCER in connection with the design and construction of the Well Facilities shall initially be paid by OCWD, as follows. 2.6.1 OCWD shall receive and review all progress payment request(s) of the and copies of � invoices from consultants for work performed in contractor(s) P p with the construction and installation of the Subsurface Facilities. Upon connection vvi his determining that such requests and invoices are appropriate for payment under t Agreement, OCWD shall pay such progress payment requests and invoices. 2.6.2 PRODUCER shall submit no more often than monthly the progress payment request(s) of the contractor(s) and copies of invoices from consultants for work he connection with preparing the Surface Design Documents and t performed in con together with a written construction and installation of the Surface Facilities, o progress payment requests recommendation of PRODUCER regarding whether such p of uch progress and invoices should be paid. Within thirty (30) days of receiptP 6 uch payment requests, invoices and recommendations, and upon determining that s requests and invoices are appropriate for payment under this Agreement, O WD shall pay to PRODUCER such amounts as may be necessary to reimburse PRODUCER for payment of such progress payment requests and invoices. PRODUCER shall be responsible for the actual payment of such amounts to such consultants and contractors. 2.6.3 For purposes of this Agreement, and as used in Paragraphs 2.6.1 and 2.6.2 hereinabove, costs that are "appropriate" for payment by OCWD shall relate directly to the construction of Well Facilities, and shall include all costs paid to consultants tants and contractors, all permit and engineering costs, and all other actual and direct incurred in the design and construction of the Well Facilities, but such costs shall exclude all costs incurred for land, rights-of-way and legal services, all penalties, sines and judgments, and all costs attributable to work or services performed by employees of PRODUCER or OCWD. 2.6.4 Notwithstanding any other provision of this Agreement to the contrary, OCWD shall not be responsible for the payment of any costs relating to the design or construction of the Well Facilities, including the Subsurface Facilities and the Surface Facilities, in excess of Seven Hundred Fifty Thousand Dollars ($750,000) per well, or Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) for all Well Facilities. Any and all costs' relating to the design or construction of the Well Facilities in excess of the above amounts shall be borne by PRODUCER. 2.7 Within 60 days of the acceptance of completion of construction of the Subsurface Facilities by OCWD and PRODUCER, and the acceptance of completion of construction of the Surface Facilities by PRODUCER, OCWD shall transmit to PRODUCER written notice of the completion of the Well Facilities (such notice, is hereinafter referred to as the "Well Facilities Completion Notice"), together with a certified statement of the total costs paid by OCWD pursuant to Paragraph 2.6 above for the design and construction of the Well Facilities, including all costs paid to con- sultants and contractors, all permit and engineering costs, and all other actual and direct costs incurred and/or paid by OCWD with respecttothe Subsurface Desi the Surface Design, the construction of the Subsurface Facilities, and the construction of the Surface Facilities, but excluding all costs incurred for land, rights-of-way and legal services, and all costs attributable to work or services performed by employees of PRODUCER or OCWD (such statement of the amount of the total costs paid by pursuant ursuant to Paragraph 2.6 above for the construction of the Well Facilities is hereinafter referred to as the "Total Well Cost Statement"). The Total Well Cost Statement shall serve as the basis for the amounts to be paid by PRODUCER to OCWD for the use by PRODUCER of the Well Facilities and the possible purchase by PRODUCER from OCWD of the Well Facilities pursuant to Section Three below. 7 -- 2.8 For a period of three (3) years from and after the date of completion of construction of the Well Facilities, OCWD and PRODUCER shall each maintain records and accounts of all costs incurred in the design, construction and installation of the Well Facilities, including all costs paid to consultants and to contractors and suppliers in connection with the Subsurface Design, the Surface Design, the construction of the Subsurface Facilities, and the construction of the Surface Facilities. 2.8.1 PRODUCER shall at all times have the right, upon reasonable notice to OCWD, to review and audit all such records and accounts maintained by OCWD. 2.8.2 OCWD shall at all times have the right, upon reasonable notice to PRODUCER, to review and audit all such records and accounts maintained by PRODUCER. SECTION THREE: OPERATION AND PURCHASE OF THE WELL FACILITIES 3.1 OCWD shall own the Well Facilities; but. PRODUCER shall purchase the Well Facilities from OCWD on an installment basis, and shall be entitled to all water produced from the Well Facilities, in accordance with the provisions of this Sectio Three. 3.2 PRODUCER shall comply with the following provisions regarding the operation and maintenance of the Well Facilities: 3.2.1 PRODUCER shall be responsible for all cost of operation and maintenance of the Well Facilities from the date of the Well Facilities Completion Notice a nd throughout the remainder of the term of this Agreement. 3. 2.2 PRODUCER shall be responsible for obtaining any and allpermits and approvals required for the operation of the Well Facilities and the distribution of water produced by the Well Facilities. 3.2.3 At all times during the term of this Agreement, PRODUCER shall take out and maintain in effect comprehensive general liability insurance ininjury, amount n ot less than One Million Dollars ($1,000,000) Per occurrence, for bodily deaf and property damage in any way resulting from the operation or maintenance of the Well. Facilities, or the delivery or use of water produced from the Well Facilities. PRODUCER shall name OCWD and its officers, employees and representatives as be additional insured under such policy. Such liability insurance coveragemay b maintained as part of or in conjunction with any other liability insurancecay PRODUCER. A certificate of insurance evidencing the liability insurance coverage �-o and endorsements as required herein shall be furnished to OCWD upon transmission of the Well Facilities Completion Notice pursuant to Paragraph 2.7 above, and shall be maintained throughout the term of this Agreement. PRODUCER shall provide written notice to OCWD of any change in the status of PRODUCER'S insurance during the term of this Agreement within thirty (30) days of the effective date of such change. In the event that PRODUCER currently is self-insuring, or determines during the term of this Agreement -to self -insure, PRODUCER may self -insure for losses and liabilities relating to the performance of the Well Facilities by providing written notice thereof to OCWD. 3.2.4 PRODUCER shall take out and maintain at all times during the term of this Agreement property casualty insurance on the Well Facilities in an amount at least g equal to the amount set forth in the Total Well Cost include pursuant to Paragraph 2.7 above. Such property casualty insurance shall coverage against damage to or loss of the Well Facilities by reason of fire, smoke, lightning, vandalism, malicious mischief, or explosion. 3.2.5 OCWD and PRODUCER shall require contracting party for subsurface and surface work respectively to maintain insurance coverages acceptable to OCWD and PROVIDER during construction. 3.2.6 OCWD and PRODUCER shall require contracting party for subsurface and surface work respectively to endorse such insurance coverage, limits, and other provisions in a form to be approved by OCWD and PRODUCER. 3.3 For and in consideration of the purchase by PRODUCER of the Well Facilities and the services provided by OCWD, PRODUCER shall pay OCWD installmentP ayments for the Well Facilities with interest as shown on Exhibit The first installment shall consist of the interest at the rate of 3-1/2 percent per the annum on the funds advanced to PRODUCER during the construction of facilities. The remaining equal annual installments shall amortize the final tots Facilities cost as certified per Section 2.7 over a 20 -year period at 3-1/2 percent st. The first installment is due 75 days after the Notice of Completion has been interest. The remaining filed for last Facility completed in accord with Section 2.7• Thein the year installments shall be paid annually on or before September 15th, beg b OCWD following payments of the first installment. Exhibit B shall be prepared y Y no later than 60 days after the completion of the Well Facilities and shall be provided immediate) to PRODUCER for inclusion in the agreement and for payment purposes. oses. Ownership of individual wells shown on Exhibit A shall be N transferred to PRODUCER in accordance with the schedule set forth in Exhibit as payments are made. 9 3.4 The obligation of PRODUCER to make installment payments hereunder when due is absolute and unconditional, and until such time as such installment payments shall have been paid in full (or provision for the payments thereof shall have been made pursuant to Paragraph 3.8). PRODUCER shall not discontinue or suspend any such installment payments when due, whether or not the Well Facilities or any part thereof is operating or operable, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to reduction whether by offset or otherwise. 3.5 Each payment under the. Well Facilities Agreement shall be paid in lawful money of the United States to or upon the order of OCWD. Any such payment which shall not be paid when due shall bear interest at the rate of one percent (1%) ) per month for each month or portion thereof that the payment remains delinquent, or the legal maximum interest rate, whichever is lower. 3.6 OCWD's remedies in the event the PRODUCER does not pay when due any payment under Paragraph 3.3 hereinabove are as follows: a. By notice in writing to PRODUCER, declare the entire principal amount of the unpaid installment payments and the accrued interest thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything contained herein to the contrary notwithstanding, provided, however, that if at any time after the entire principal amount of the unpaid installment payments and the accrued interest thereon shall have been so declared due and payable and before any judgem e t to decree for the payment of the monies due shall have been obtain entered, PRODUCER shall deposit with OCWD a sum sufficient to r pay the unpaid principal amount of the installment payments due prior to such declaration and the accrued interest thereon, with intereston such overdue installments as provided herein, and any and all other defaults known to OCWD shall have been made good or cured to the satisfaction of OCWD or provision deemed by OCWD to be adequate shall have been made therefor, then and in every such case OCWD, by written notice to PRODUCER, may rescindand annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default or shall impair o exhaust any right or power consequent thereon; b. By any n . action, proceeding, or suit, at law or in equity, to enforce its rights against PRODUCER, and to compel PRODUCER to carry out its duties under the the law and the agreements and covenant required to be performed by it, contained herein; 10 C. By suit in equity to enjoin any acts or things which are unlawful or violate the rights of OCWD; d. Take possession of the Well Facilities and at thesole discretion of OCWD, either operate and maintain the Well Facilities for the benefit of OCWD, or shut down the Well Facilities, terminate the introduction into PRODUCER's Water System of groundwater produced from the Well Facilities, and remove the Well Facilities. No remedy herein conferred upon or reserved to OCWD is intended to be exclusive and every such remedy shall be .cumulative and shall be in addition to every other remedy given to OCWD under this Agreement, or. otherwise at law or in equity. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed tobe a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient by OCWD. 3.7 From the date of the Well Facilities Completion Notice pursuant to Paragraph 2.7 and continuing during the remainder of the term of thise Agre m th PRODUCER shall assume all risk of loss and damageto the Well Facilities. in e event of any such loss of or damage to the Well Facilities, PRODUCER shall, timely manner, repair or replace Well Facilities and return it to operational status. PRODUCER shall not be obligated to put the well facility back into operational service if the concensus of PRODUCER and OCWD is that it is not financially or physically feasible to do so. No loss of or damage to the Well Facilities shall impair any obligation of PRODUCER under this Agreement, which shall continue in ll force and effect. 3,8 PRODUCER may exercise the option to acquire all of OCWD's interest in, andP urchase, the Well Facilities at any time prioris or at the conclusion of the term of this Agreement, provided that PRODUCER s not in default under any fthe terms or conditions of this Agreement. The option price shall be the principal amount of the remaining installment payments together withinterest accrued from the date of the last installment. payment, as shown on Exhibit "B", to such date. Upon full payment of such amount to OCWD by PRODUCER, PRODUCER shall be vested all right, title and interest in and to the Well Facilities, this be ves g Agreement shall be deemed terminated, and OCWD shall execute and tender to PRODUCER any instrument reasonably requested by PRODUCER to document the transfer to title to the Well Facilities from OCWD to PRODUCER. 3.9 ThisP aragraph 3.9 is included for the purpose of maintaining the Tax Exempt Status of OCWD's obligations that were the source of funds for the Well Facilities. The covenants contained in this Paragraph 3.9 shall survive the discharge of and shall continue in full force PRODUCER's obligation pursuant to this Agreement 11 and effect until OCWD's obligations that were the source of the funds for the Well Facilities subject to this Agreement are no longer outstanding for purposes of any Federal income taxation. PRODUCER hereby covenants that, notwithstanding a other provision of this Agreement, it shall not intentionally or knowledgy do any of the following: a. PRODUCER shall not take any action or omit to take any action with respect to the Well Facilities, which action or omission, if reasonably expected on the date of initial delivery of anyobligations of OCWD, would result in a loss of exclusion from gross income for purposes of Federal income taxation of interest on such obligations under section 103(a) of the Internal Revenue Code of 1986 (hereinafter, the "Code"); b. PRODUCER shall not use the Well Facilities to acquire "investment ha 1 property; $ as defined in section 148 of the Code, nn ion PRODUCER permit the use of the WellFacilities or take any act or fail to take any action, which use, action or omission would cause OCWD's obligations that were the source of such funds to be "arbitrage bonds" as defined in section 148 of the Code; C. PRODUCER shall not use or permit the use of the Well Facilities by any person or entity in such a manner or to such an extent as would result in either private business use or private loans under sections 141(b)(6) or 141(c) of the Code, respectively, unless PRODUCER receives prior written approval from OCWD, which prior approval shall be granted in the sole discretion of OCWD; d. PRODUCER shall not use the Well Facilities in a manner that would cause OCWD's obligations that were the source of such funds to be considered "federally guaranteed" as that term is defined in section 149 of the Code; and e. Neither PRODUCER nor any related entity shall purchase, pursuant to any arrangement, formal or informal, OCWD obligations that were the source of the funds used in whole or in part to finance the Wel Facilities in an amount related to the purchase price of the Well Facilities as described in Section Three of this Agreement. OCWD and 3.10 Notwithstanding any other provision of this Agreement, ODUCER to PRODUCER understand and agree that all amounts payable revenues received o OCWD under this Agreement shall be paid only from the reve eay PRODUCER from PRODUCER's water system, and shall n anyin ane applicable waybb construed to be a debt of PRODUCER in contravention of creation of constitutional or statutory limitation or requirement concerning t he 12 indebtedness b PRODUCER, the State of California, or any political subdivisi of in y thereof; nor shall anything contained in this Agreement constitute a pledge general revenues, funds or moneys of PRODUCER or an obligation of PRODUCER for which PRODUCER is obligated to levy or pledge any form of taxation or for which PRODUCER has levied or pledged any form of taxation. PRODUCER shall fix, prescribe and collect rates and charges for the water system which will be at least sufficient to yield during each fiscal year water system re venues sufficient to pay the installment payments due hereunder. SECTION FOUR: MISCELLANEOUS 4.1 N i An notice, instrument, payment or document required to be given � : Y or delivered under this Agreement shall be given or delivered by personal delivery rb depositing the same in a United States mail depository, first class postage prepaid, registered or certified, and addressed as follows. P g If o O WD: Orange County Water District 10500 Ellis Avenue Post Office Box 8300 Fountain Valley, California 92728-2300 Attention: General Manager If to PRODUCER: City of Tustin Water Service 235 E. Main Street P.O. Box 466 Tustin, CA 92681 Attention: Water Services Manager or such other address as either party may direct in writing to the other. 4.2 Hold H armle • Neither PRODUCER nor OCWD shall be liable for the acts s M. or omissions of the other. PRODUCER and OC" shall each protect, defend, indemnify an • d hold the other and its respective officers and employees harmless from one and against any and all claims, actions, expenses, liabilities and losses incurred by of the parties hereto as a result of any property damage or personal injury, including lle edl suffered by any person, and caused by any wrongfulact death, suffered ora g Y or omission of the other party. 13 4.3 Term: The term of this Agreement shall terminate upon the earlier of the following events: a. The exercise by PRODUCER of its option to acquire the interest of OCWD in the Well Facilities pursuant to the provisions of Paragraph 3.8 above; or b. The payment by PRODUCER of alla ents as required in the Payment Schedule included in Exhibit "B" hereto. Upon full payment of such amount to OCWD by PRODUCER, PRODUCER shall be vested with all right, title and interest in and to the Well Facilities, this Agreement shall be deemed terminated, and OCWD shall execute and tender to PRODUCER any instrument reasonably requestedby PRODUCER to document the transfer of title to the Well Facilities from OCWD to PRODUCER. 4. 40 Waiver of Breach: No failure to exercise or delay in exercising any right, ower or remedy accruing to either party on any breach or default of the other hereunder shall impair any such right, p i p ower or remedy, or be construed as a waiver er of an such breach or default, and no waiver of any single breach or default shall be construed as a waiver of any other breach or default theretofore or thereafter occurring. 4.5 Parti 1 Inv li i : If any one or more of the agreements or covenacovenants or — portions thereof required hereby to be performed by or on the part of PRODUCER ch or OCWD shall be contrary to law, then such agreement or agreements, su covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof in no way affect the validity hereof. PRODUCER and OCWD declare that and shally e would have executed this Agreement, and each and every o paragraphsubdivision, sentence, clause and phrase hereof, irrespective oft e , that an one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstances may be held to be unconstitutional, unenforceable or invalid. 4.6 Execution in Co me ar : This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 4,7 Amendments Perini ted: This Agreement and the rights and obligations of PRODUCER and OCWD may be modified oramended at any time by an amendment hereto which shall become binding with the written consents of the parties hereto. No such modification or amendment shall extend the payment dates, or reduce the rate of interest represented thereby, or extend the time of payment o 14 interest, or reduce the amount of principal represented thereby, or reduce any premium payable on the prepayment thereof. 4.8 Integration n on ion: This Agreement represents the entire understanding of OCWD and PRODUCER as to those matters contained herein. No prior oral or written understanding shall be of any force or effect with respected and those matters covered by this Agreement. This Agreement shall be c nd hall be ru governed in accordance with the laws of the State of California, a construed as if drafted by both OCWD and PRODUCER. 4.9 Suc gcessors and gns: AssiNeither this Agreement nor any of therights or obligations hereunder shall be assigned or conveyed by PRODUCER without the a prior written consent of OCWD; and this Agreement and any rights hereunder he be assigned by OCWD, in whole or in part, withoutthe necessity of obtaining prior consent of PRODUCER. Subject to the foregoing, all of the terms, conditions andP rovisions of this Agreement shall inure to the benefit of, and be binding upon, OCWD, PRODUCER and their respective successors and assigns. 15 IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written above. APPROVED AS TO FORM: By General Counsel, Orange County Water District City AS TO FORM: ORANGE COUNTY WATER DISTRICT By President By General Manager CITY OF TUSTIN, a Municipal Corporation 4 � Rourke Charles E. Puckett rney Mayor ATTEST: Valerie Whiteman Chief Deputy City Clerk 16 EXHIBIT "A" 17 1;11 _ I �l • _•� - 4�( 1 �,y�� 1 a •�; `vim _ �J x711 rl TIMI' ♦ ' \. �`, wvl •rr•IG.,u,A, i ( •i.•1—. 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BE,Q� W c -ZZ T� a� �# Man 7 1 a 832 0825 PAGE . 003 Principal Year Amoun 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 EXHIBIT "B" PAYMENT SCHEDULE City of Tustin z Interest Payment Amount Amo n 18 Transfer of Ownership (Name of ORANGE COUNTY WATER DISTRICT - Guidelines for the Conjunctive Use Well Construction Program I. INTRODUCTION The present conditions in Southern California and the population projections for the area warrant efforts which would significantly improve the reliability of local water supplies. With these things in mind, the Metropolitan Water District (MWD) has adopted a Seasonal Storage Service Program which has the following objectives: • To promote greater conjunctive use of imported and local supplies. • To encourage construction of additional local production facilities. • To reduce member agencies' dependence on MWD deliveries during the summer period. • To increase MWD's ability to capture excess surface flows from both the State Water Project and the Colorado River. To improve local groundwater production capabilities and to increase local reservoir capacities to sustain water service during periods of droughts and emergencies. Under the MWD Seasonal Storage Program, imported water rates will be reduced to.$115.00 per acre-foot for untreated water and $135.00 for treated water. In assisting MWD with achieving its goals and in recognizing the importance of increasing groundwater production capabilities, OCWD is encouraging its producers to participate in a Well Construction Program. II. GOALS OF THE PROGRAM The goals of the OCWD Well Construction Program are: • To increase each producer's pumping capabilities such that the OCWD basin would be capable of adequately sustaining water deliveries during drought and other emergency conditions. -- • To increase the extraction capacity from the in the groundwater basin to allow optimum participation MWD Seasonal Storage Program. NLR:R-Guide 1 III. BACKGROUND Currently, the OCWD Basin Production Percentage is set at 70 percent. Yet, some producers do not have the local capabilities of supplying 70 percent of the water demands and most producers do not have adequate pumping capabilities to maintain near normal deliveries in the event of a significant reduction of imported supplies. These restrictions limit a producer's level of participation in the MWD Seasonal Storage Program. Furthermore, water supply and demand projections indicate that imported and local supplies will be insufficient to accommodate future demands, which will result in increased usage of the groundwater supplies. It has been estimated that approximately 40 to 50 additional wells are required to completely achieve the goals of the OCWD Well Construction Program. Recently, MWD implemented provides a discount in the purchased during October 1 replenishment water. The are $95 per acre foot and noninterruptible water and respectively. . IV. PROGRAM DESCRIPTION a seasonal storage program which price of in -lieu waters through April 30, including discounts offered at this time $38 per acre foot for treated untreated interruptible water, OCWD proposes two distinct programs under its Well Construction Program: the Assisted and Unassisted Program, which are described in detail in the following section. It should be noted that producers will be allowed to participate in the Assisted and Unassisted Program, concurrently. Enrollment in the OCWD Well Construction Program will continue for a three-year period, following approval of the Program by OCWD's Board of At the end of the three-year period, the -Program will be re- evaluated to determine its progress in achieving its goals. Assisted Program Under this Program, funds will be made available to producers for well construction or well rehabilitation projects at afor fdiscounted fixed rate of 3:5 percent. The.repll bymanmaximumaof 20 years and unds distributed under this program payments shall be submitted to OCWD bi-annually. To be eligible for this Program, producers must already have capabilities to pump 50$ of their annual water demands. Additionally, in order to construct the approved wells in a timely manner, prioritization for participating in the Program will be based on the individual needs of the producers and their role in the overall management of the groundwater basin. NLR:R-Guide 2 The Assisted Program will be administered according to the following guidelines. 1. Producers must complete and submit a "Well Construction Program" application form. 2. With the application form, producers must submit a plan which summarizes their commitments to participate in the MWD Seasonal*Storage Program. 3, The Program will be limited to agencies which currently supply over 500 acre-feet of water per yea. 4. Each applicant must have system capabilities toduring a significant amount of its watessupply30. the period from October 1 throughApril 5. OCWD will fund activities directlyrelated to facilities, construction or rehabilitation of e wellexcluding purchase of land and legal fees or.fines. 6. The OCWD funding limitation for each well construction or well rehabilitation project is $750,000. 7. Prior to allocation of funds, each applicant must provide documentation which satisfy the requirements of the California Environmental Quality Act (C Q ) . 8. Applicants must also submit documentation for all necessary local and state permits. 9. Each application form shall include statements which support the applicant's financial capability to repay the funds requested. 10. Producers are limited to a total of 3 wells in this program. 11. The Program shall be.administered by OCWD at the discretion of its General Manager. Unassisted Program r this Program, OCWD will offer funds at its current bond te Under for the co bond issuance (currently about 7.35 5necessary to increase local and rehabilitation of wells dee production capabilities. The criteria for this ed Programare with the similar to those developed forAthlicantstfor the Unassisted exception of requirement #4. PP Pr o ram do not have to have current capabilities to su9h1A1ri1t30 import its water supply demands during e,r Additionally or to pump 50% of their annual water demands producers are not limited in the number of wells in this NLR:R-Guide 3 Program. The repayment of funds distributed under this Program will be 20 years and payments shall be submitted to OCWD bi- annually. V. PAYMENT SCHEDULE It is anticipated that the requirements of each producer who qualifies for financing under the gram l be unique. Thus, OCWD and the qualified producer will develop an agreement for each well, which will includethe details for distribution of payment. Most likely, OCWD distribute the funds according to a proposed schedule that highlights milestone completion dates. VI. ANNUAL REPORT OF PROGRAM STATUS At the end of each OCWD fiscal year,. OCWD will prepare a report to its Hoard of Directors which includeso alist of the Program's participants, the financial status participant as related to the Program, and the available funds in the Program. NLR:R-Guide 4 OCWD CONJUNCTIVE USE WELL CONSTRUCTION PROGRAM * Did not respond to survey. V NLR:T-Conjunct Number of Wells Participate Assisted Unassiste CITY/AGENCY in Program Program Program Anaheim Yes 3 1 Buena Park Yes• 2 0 East Orange WD No 0 0 Fountain Valley Yes Not sure• None this year Fullerton Yes 2 0 Garden Grove - No 0 0 Huntington Beach Yes 2 0 IRWD Yes 3 6 La Palma Yes 1 0 Mesa Yes 3 0 Newport Beach Yes 3 2 Orange No 0 0 Santa Ana Yes 3 1 Seal Beach Yes 1 0 Serrano Yes 1 0 So. Cal. WC Yes 2 0 Tustin Yes 1 0 Yorba Linda CWD 27 10 TOTAL * Did not respond to survey. V NLR:T-Conjunct