HomeMy WebLinkAboutSale of City's Capacity Rights in the San Joaquin Reservoir CITY OF HUNTINGTON BEAC lb?�
MEETING DATE: May 1, 2000 DEPARTMENT )NUMBER: PW 00-37
Council/Agency Meeting Held: 00 lore,
lo
Deferred/Continued to:
)<Approved L3 Conditionally Approved Q Denied �s- Si===--
City C41 '-s Signature
-74
Council Meeting ate: May 1, 2000 Department ID Number: PV"0-87
CITY OF HUNTINGTON BEACH
REQUEST FOR ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL
-,j >
SUBMITTED BY: RAY SILVER, CITY ADMINISTRATORo4c.,o
PREPARED BY: ROBERT F. BEARDSLEY, DIRECTOR OF PUBLIC WORKS
SUBJECT: AUTHORIZE THE SALE OF THE CITY'S CAPACITY RIGHTS IN THE
SAN JOAQUIN RESERVOIR
Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: The City and seven other agencies own capacity rights in the San
Joaquin Reservoir in Newport Beach. Extensive slope failures have rendered the reservoir
unusable for potable water storage, and rehabilitation is cost prohibitive. The Irvine Ranch
Water District (IRWD) has proposed converting the reservoir to reclaimed water storage and
has offered to purchase all of the capacity rights from the owners, including the City of
Huntington Beach.
Funding- Source: Potential revenue, not an expenditure.
Recommended Action: Motion to:
1. Authorize the sale, in concept, of the City's capacity in the San Joaquin Reservoir to
Irvine Ranch Water District based on the offer dated March 16, 2000.
2. Authorize staff to develop the terms of a purchase and sale agreement with the other co-
owners of the reservoir and Irvine Ranch Water District.
Alternative Action(s): Do not authorize the sale and instruct staff on how to proceed.
Analysis: Since the mid 1960's, Huntington Beach has had capacity rights in the San
Joaquin Reservoir (site map attached). Originally, these capacity rights were leased. In
1980, the City made a purchase payment of $185,333 to the Irvine Ranch Water District
(IRWD) and agreed to share in the existing debt service of $58,500 per year until 1992.
RCA for SJR sale -2- 4/20/00 2:57 PM
REQUEST FOR ACTION
MEETING DATE: May 1, 2000 DEPARTMENT ID NUMBER: PW 00-37
IRWD, Mesa Consolidated Water District, South Coast Water District, Laguna Beach Water
District, Newport Beach and the Irvine Company also own rights. Additionally, The
Metropolitan Water District of Southern California (MWD) is a co-owner, operates the
reservoir and serves as trustee.
The City's share in the reservoir is 13.11% or 400 acre-feet. Annual operations and
maintenance and capital improvement costs are split among the members based on
percentage of ownership. Huntington Beach's share.of Fiscal Year 1997-98 O&M and capital
costs was $142,290.
Over the past years, the reservoir experienced many water quality and structural problems.
Finally, after a landslide in 1995, the reservoir was dewatered and taken completely out of
service. Since that time, MWD has provided the required flows to each member agency and
maintained the pressure gradient and flow capacity at each turnout near the reservoir.
Therefore, the out of service status has had no effect on the City's water supply.
Estimates to rehabilitate the facility for potable water storage are in excess of $41 million,
prohibiting this as a viable option. The City's cost would be approximately $5.5million. IRWD
has proposed converting the reservoir to reclaimed water storage and has offered to
purchase capacity rights from the other owners of the reservoir. IRWD anticipates preparing
one agreement for sale in June 2000 that all parties would enter into with a price per acre-
foot consistent among the members.
IRWD's offer is to purchase the City's 400 acre-foot capacity for $360 per acre-foot, a total of
$144,000. This is a negotiated price. In addition, there are $800,000 in revenue surpluses
from operation and maintenance, held by MWD, of which the City's share is approximately
$104,000. This would be released at the same time, bringing the total payment to $248,000.
Staff is seeking approval of the sales price, in concept, and authorization from Council to
proceed with development of a master purchase and sale agreement with IRWD and the
other co-owners for the City's capacity rights in the San Joaquin Reservoir. Approval of the
sale will be brought to Council at a later date, pending the outcome of negotiations.
Environmental Status: Not applicable at this time.
Attachment(s):
City Clerk!s
Page Number Description
1 March 16, 2000 letter from IRWD General Manager Paul D. Jones II
2 1 Location map of San Joaquin Reservoir
RCA Author: Ken Dills, ext. 5055
RCA for SJR sale.doc -3- 04/20/00 4:48 PM
ATTACHMENT # 1
IRVINE PkN('H
R.11}:R UISMIT
IRI I NE RAU IRATE R NSTR IC 1 15600 Sand Canyon Ave..P.O.Box 57000.Irvine,CA 92619-7000.(714)453-5300
March 16, 2000
pEGE1VED
DEPT.OF PUSUC WORKS
Mr. Dennis Maclain MAR 2 2004
City of Huntington Beach
2000 Main Street WATER DIVISION
Huntington Beach, CA 92648 HUNTINGTON BEACH,CA
Subject: San Joaquin Reservoir Capacity Purchase
Dear Mr. Maclain:
As you know, Irvine Ranch Water District (IRWD) is interested in acquiring the remainder of
capacity in the.San Joaquin Reservoir we do not already own with the intention of performing
repairs and modifications to convert it to seasonal storage of reclaimed water. In our meeting
,held March 2, 2000, IRWD offered to purchase the 400 acre-feet of reservoir capacity owned by
the City of Huntington Beach (CHB) for$360.00 per acre-foot for a total of$144,000. The offer
of$360 per acre-foot is based on our estimate of the value of the reservoir, less the costs of
modifications and repairs necessary to make it serviceable as a reclaimed water reservoir. The
value of the reservoir to IRWD is in the increased yield of reclaimed water, which could be used
to replace untreated water we currently purchase from MWD. In addition, we understand that
approximately $800,000 in reserve funds are being held by Metropolitan Water District of
Southern California(MWD) for future reservoir repairs. We are awaiting confirmation from
MWD on the exact balance in the reserve account. Upon sale of the reservoir to IRWD, we
propose that these funds be distributed by MWD to each of the former owners in proportion to
their respective ownership interest. This would result in an additional payment to CHB of
approximately $260.00 per acre-foot, or $104,000, bringing the total payment for the CHB
capwg.j'tt al proxirnat)iy "245,000. vv C, dupe Lhis (ATer is satisfactory to your agency.
If you have any questions regarding this matter,please do not hesitate to contact me
Sing rely,
t-aul D. Jon I
General Manager
cc: Greg Heiertz
PDJ/GPH/clg
F:/grmhvrd/gph/chbltr.doc
r
ATTACHMENT #2
Location of San Joaquin Reservoir
A,e
o
WER No
al
jr-
3 �
oSAN7A 2_ �' -
� -r a
� K
� 3 e
kAm; �M
r
SAN RESER
...
t,_ 0 1 2 Miles
1� 0
ROUTING
R A SHEET
C
INITIATING DEPARTMENT: Public Works
SUBJECT: 4AuthorYze,tlie Sale'of`fhe Cif'.y's Capacity'Rights m the San;,
Joaquin Reservoir
COUNCIL MEETING DATE: , . May 1, 2000 #
RCA ATTACHMENTS STATUS
Ordinance (w/exhibits & legislative draft if applicable) Not Applicable
Resolution (w/exhibits & legislative draft if applicable) Not Applicable
Tract Map, Location Map and/or other Exhibits Attached
Contract/Agreement (w/exhibits if applicable)
(Signed in full by the City Attorney) Not Applicable
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attorney) Not Applicable
Certificates of Insurance (Approved by the City Attorney) Not Applicable
Financial Impact Statement (Unbudget, over $5,000) Not Applicable
Bonds (If applicable) Not Applicable
Staff Report (If applicable) Not Applicable
Commission, Board or Committee Report (If applicable) Not Applicable
Findings/Conditions for Approval and/or Denial Not Applicable
EXPLANATION FOR MISSING ATTACHMENTS
REVIEWED RETURNED FORWARDED
Administrative Staff 3 (A`� )
Assistant City Administrator (initial)
City Administrator (Initial) ( ) (I )
City Clerk
EXPLANATION FOR RETURN OF ITEM:
Only)(Below Space For City Clerk's Use
RCA Author: Ken Dills, ext. 5055