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Home My WebLink AboutCC 14 NITRATE REMOVAL 11-06-89DATE: ~$. ~ -- 11-6-89 OCTOBER 24, 1989 Inter Corn CONSENT CALENDAR NO. 14 TO: WILLIAM HUSTON, CITY MANAGER' FROM: PUBLIC WORKS DEPARTMENT/WATER SERVICES DIVISION SUBJECT: THIRD SUPPLEMENTAL AGREEMENT TO OCWD/CITY OF TUSTIN NITRATE REMOVAL DEMONSTRATION PROJECT AGREEMENT RECOMMENDATION: That the Tustin City Council at their meeting of November 6, 1989 approve the Third Supplemental Agreement to OCWD/City of Tustin Nitrate Removal Demonstration Project Agreement and authorize the Mayor to execute said agreement. BACKGROUND: Orange County Water District (OCWD) and the City entere~ into an agreement in January 1985 for the construction and operation of a Nitrate Removal Demonstration Project. This original agreement has been augmented by two supplemental agreements dated May 1985 and June 1987. The original project completion date was April 18, "1988, but due to problems encountered during construction, the estimated completion date has been extended to December 1989. DISCUSSION: The Board of Directors of'OCWD has historically.assigned Tustin a basin production percentage of 60% ' As a result of the original anticipated completion date of the project, the OCWD Board assigned a new basin pro- duction percentage of 70% for the period of July 1, 1988 to June 30, 1989. . The basin equity assessment ($140/Acre-feet) is defined as a payment from OCWD to the water retailer for maintaining the assigned basin production percentage. If the OCWD had assigned Tustin a 60% basin production percentage fOr 1988-89, the City would have received a payment amount of $185,458. As' a result of the assignment of the 70% basin production percentage in the 1988-89 period, the City has forgone the $185,458 ~payment from the District by not meeting the assigned~.-percentage. Tustin was unable to meet the assigned 70% due to the non-completion of the Nitrate Removal Demonstration Project. This third supplemental agreement, provides the OCWD the vehicle to credit the City in the amount of $185,458 toward the City's obligation for capital reimbursement to the District for the Nitrate Removal Demonstration Project. Staff has reviewed the'usage figures of 13,246.6 acre-feet for 1988-89 and concurs with the dollar amount of the proposed credit. Bob Ledendecker Director of Public Works/City Engineer Directors PHILIP L. ANTHONY KATHRYN L. BARR JOHN V. FONLEY JOHN GARTHE DONN HALL LAWRENCE P. KRAEMER JR. AUGUST F LENAIN GEORGE OSBORNE LANGDON W. OWEN NOBLE J. WAITE /"~IJU i S 1,J~.'~, Officers LAWRENCE R KRAEMER JR. President TUSTIN PUBLIC WORKS DEPT. KATHRYN L. BARR First Vice President LANGDON W. OWEN Second Vice President WILLIAM R. MILLS JR. Genera/Manager ORANGE COUNTY WATER DISTRICT MARY E. JOHNSON District Secretary August 17, 1989 Mr. Robert Ledendecker City Engineer City of Tustin 300 Centennial Way Tustin, CA 92680 Dear Mr. Ledendecker: Third Supplemental Agreement to OC~/D/City ot Tustin Nitrate Demonstration Project Agreement The purpose of this letter is to establish agreement on the means for mitigation of financial impacts on the City of Tustin for late completion of the Tustin Nitrate Removal Demonstration Project. The originally scheduled project completion date was April 18, 1988, however, due to problems encountered during construction, the estimated project completion date has been extended to September 30, 1989. The .City of Tustin has historically experienced high nitrate concentrations in its groundwater, which, consequently, has impacted the City's groundwater production capability. The Orange County Water District Board of Directors historically assigned Tustin a Basin Production Percentage of 60%. However, for the year July 1, 1988 to June 30, 1989, the OCWD Board assigned Tustin a Basin Production Percentage of 70%, based on the originally anticipated completion date and the increased groundwater production capacity that the project would provide. During the year July I, I988 to June 30, I989, the City's total water use was 13,246.6 acre-feet. For that period, the Basin Equity Assessment was $140/acre-foot. Had the OCWD Board assigned the City of Tustin a 60% basin production percentage for that period, the City would have received a Basin Equity Assessment payment from the District in the amount of $185,458. Thus, due to the assignment of the 70% Basin Production Percentage in the 1988-1989 water year, the City has foregone the $185,458 payment from the District, without the benefit of additional potable groundwater being available to the City. In recognition of this occurrence, the District hereby agrees to credit the City $185,458 toward the City's obligation for capital reimbursement to the District for the Tustin Nitrate Removal Project per the agreement dated January 16, MAILING ADDRESS: RO. BOX 8300 FOUNTAIN VALLEY, CA 92728-8300 - 10500 ELLIS AVENUE, FOUNTAIN VALLEY TELEPHONE (714) 963-5661 FAX (714) 963-7472 Mr. Robert Ledendecker August 17, 1989 Page 2 1985, as augmented by the Supplemental Agreement dated May 6, 1985, and the Supplemental Agreement dated 3une l, 1987. This credit will be in the form of a reduction of $92,729 each in the initial lump sum payment requirements of Tustin under sections 5.1.1 and 5.2.1 of the Supplemental Agreement dated 3une l, 1987. Alternatively, in the event that either the ion exchange or the reverse osmosis facility is determined infeasible, the credit will be in the form of a reduction of $185,#58 in the initial lump sum payment requirement for the remaining feasible facility. The Orange County Water District believes that this is fair, adequate and sufficient mitigation of financial impacts on the City of Tustin for late completion of the Tustin Nitrate Removal Demonstration Project. If the City of Tustin agrees that this letter accomplishes its purpose, please sign the enclosed duplicate and return it to OCWD. Very truly yours, General Manager /meh ACCEPTANCE The City of Tustin hereby accepts the above means for mitigation of financial impacts on the City of Tustin for water year 1988-1989 for late completion of the Tustin Nitrate Removal Demonstration Project. . By: Dated: