RESOLUTION NO. 2013-40  ARESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MARIA, CALIFORNIA, APPROVING A WHOLESALE WATER SUPPLY AGREEMENT WITH NIPOMO COMMUNITY SERVICES DISTRICT  WHEREAS, on September 7, 2004, the City Council entered into a Memorandum of Understanding with Nipomo Community Services District ("NCSD") to define the terms under which the City of Santa Maria ("City") and NCSD would negotiate for NCSD to purchase supplemental water from the City;  and  WHEREAS, on June 30, 2005, a majority of the parties in the Santa Maria Groundwater Litigation, including the City and NCSD, entered into a Stipulated  Agreement ("Stipulation"); and  WHEREAS, on June 25, 2008, the Superior Court of California (Santa Maria Groundwater Litigation Lead Case No. 1-97-CV-770214) entered into a  judgment incorporating the Stipulation; and  WHEREAS, on January 5, 2010, the City Council adopted a statement of overriding consideration and made findings of consistency regarding the Final  Environmental Impact Report on Resolution 2010-04; and  WHEREAS, on January 5, 2010, the City Council approved a Wholesale Water Supply Agreement ("Agreement) for the sale and delivery of supplemental.  water by the City to NCSD on Resolution 2010-04; and  WHEREAS, on May 9, 2012, the NCSD failed to achieve votes necessary to form an Assessment District to acquire approximately $30 million in funding to construct infrastructure to deliver the quantities of water specified in the initial  Agreement; and  WHEREAS, the NCSD desires to construct an interim project to deliver quantities of water greatly reduced from the original project, thereby reducing  delivery capacity; and  WHEREAS, the City and NCSD wish to revise the initial Agreement, notably to modify the Minimum Takedown Schedule (i.e. Quantity) to reflect the reduced delivery capacity, and to modify renegotiation language; and  WHEREAS, the proposed revision to the initial Agreement was approved by the NCSD Board of Directors at their regular meeting on' Wednesday, April 24,  2013; and    WHEREAS, all other terms in the Agreement approved on Resolution NOW, THEREFORE, IT IS HEREBY RESOLVED by the City Council of 1.) Authorize and direct the Director of Utilities to enter into a new Wholesale Water Supply Agreement with Nipomo Community Services District, hereto attached as Exhibit "A" and made a part of  2010-04 remain the same. the City of Santa Maria as follows:  this resolution; and  2.) Authorize and direct the Director of Utilities, or his designee, to enter into extensions and modifications to the Agreement, consistent with the terms of the Agreement, in order to carry out the project. PASSED AND ADOPTED at a regular meeting of the City Council of the  City of Santa Maria, California, held this 7h day of May 2013.  Is/ ALICE M. PATINO Mayor  ATTEST:  /s/ RHONDA M. GARIETZ, CMC Chief Deputy City Clerk  APROVEDASTOFORM ehsvagne SrA Asey Attorney APOVDAS/OCONTENT Rleyph  Sartment Head    WHOLESALE WATER SUPPLY, AGREEMENT  This Wholesale Water Supply Agreement ("Agreement") is made and entered into ("City"), a California municipal corporation and charter City, and NIPOMO COMMUNITY SERVICES DISTRICT ("NCSD"), an independent special district formed under and pursuant to Section 61000, et seq. of the California Government Code. City and NCSD are sometimes individually referred tol herein as a' "Party" and collectively as the' "Parties".  as of Ma72013,  by and between the CITY OF SANTA MARIA  RECITALS  WHEREAS, the City provides retail potable water service to customers within its service area in the Santa Maria Valley, in northern Santa Barbara County. The City holds a contract with the Central Coast Water Authority to receive water from the State Water Project ("SWP"). City also holds rights to recharge from Twitchell Reservoir and rights to pump groundwater from the Santa Maria Groundwater Basin ("Santa Maria Basin"); and WHEREAS, NCSD provides retail potable water service and sewer service within its established boundaries located in and around the Nipomo Mesa Management Area  ("NMMA") of the Santa Maria Basin; and  WHEREAS, both the City and the NCSD are Parties to a certain groundwater adjudication lawsuit commonly referred to as the Santa Maria Groundwater Litigation (Santa Maria Valley Water Conservation District VS. City of Santa Maria, et al.; Superior Court of California, County of Santa Clara Case no. 1-97-CV-770214) (referred to herein as "Basin Litigation"). On August 3, 2005, the Court approved a Settlement Stipulation (referred to herein as "Stipulation") that was signed by the Parties, related to the Basin Litigation which, among other things, provides that' "the NCSD and City shall employ their best efforts to timely implement the Nipomo Supplemental Water Project, subject to their quasi-judicial obligations specified for administrative action and in the California Environmental Quality Act."1 The Stipulation was later incorporated into the final Judgment;  and  WHEREAS, on a long term basis, City has water available for use in the NMMA that is surplus to that needed to serve City's current and long-term future anticipated  demands; and  WHEREAS, pursuant to the Stipulation, NCSD seeks to acquire a Supplemental Water supply (referred to herein as "Supplemental Water") to alleviate pressure on the NMMA from groundwater pumping and to meet current needs and projected demands of  NCSD customers; and  WHEREAS, consistent with the Stipulation and Judgment, and subject to the terms and conditions of this Agreement, City is willing to sell and deliver to NCSD an established  quantity of Supplemental Water on a wholesale basis. and covenants contained herein, the Parties agree as follows:  NOW THEREFORE, in consideration of the foregoing recitals and the promises    1. Purpose. Consistent with the Stipulation and Judgment, the purpose of this Agreement is to formalize the terms and conditions by which City will provide Supplemental Water to NCSD, including an equivalent amount of capacity in City's water distribution system, for delivery to the NCSD water distribution system through the interconnection described in Paragraph 9, beginning on the Effective Date and continuing  each year thereafter for as long as this Agreement remains in effect.  2. Termination of MOU and Original Wholesale Water Supply Agreement. City and NCSD executed a Memorandum of Understanding ("MOU") on September 7, 2004, to provide for the reservation of a Supplemental Water supply of up to three thousand (3,000) acre-feet per year ("AFY") in anticipation of the negotiation of the original Wholesale Water Supply Agreement ("Original Agreement"), executed on January 5, 2010. This Agreement shall supersede the terms of the MOU and Original Agreement, which shall terminate and be of no further force or effect. The initial reservation payment of $37,500 made upon execution of the MOU has already been credited by City to the first  quarterly invoice for water delivery pursuant to Paragraph 8.  3. Term of Agreement  (a) Contract Term. The term of the Agreement shall commence on the Effective Date and end on June 30, 2085 ("Term"). Notwithstanding the Term, the delivery of Supplemental Water pursuant to this Agreement during any period on or after June 30, 2035, shall be subject to the renewal of the contract between the City and Central Coast Water Authority for SWP water. Furthermore, the terms of this Agreement shall be subject tor renegotiation as described below in the event that the SWP contract or any subsequent SWP contract is not renewed or is renegotiated by the City and Central Coast Water Authority prior to June 30, 2035, and the terms of such renegotiation or renewal either () substantially impair the ability of City to continue to provide Supplemental Water in the quantities set forth in this Agreement; or (i) the cost of continuing to provide Supplemental Water pursuant to the terms of this Agreement would create a significant financial burden on the City. In no event shall the City be required to deliver Supplemental Water at a financial loss following June 30, 2035, or in the event of a change in price due to a renegotiation occurring prior to June 30, 2035, as described in the foregoing sentence. Upon the occurrence of one oft the foregoing events and within thirty (30) days of a written request from City to NCSD requesting renegotiation, the Parties shall negotiate in good faith and use their best efforts to equitably amend the terms of this Agreement to allow for the continued delivery of Supplemental Water on terms that are mutually beneficial to the Parties for the duration of the Term. The parties will meet in good faith in 2085 to  determine whether to extend the term of the Agreement.  (b) Dispute Resolution. in the event of a dispute as to whether clause () and/or (i) of Paragraph 3(a) have been triggered as a result oft the renegotiation or non-renewal of the SWP contract, then such dispute shall be referred to the dispute resolution procedures referenced in Paragraph 19 of this Agreement. Ifa final finding is made as a result of such dispute resolution procedure that clause () and lor clause (i) have been triggered, then the Parties shall negotiate in good faith pursuant to Paragraph 3(a). Ifthe Parties cannot agree on the terms and conditions for equitably amending the terms oft this  2    Agreement to address a substantial impairment pursuant to clause () of Paragraph 3(a), then whether or not there is a feasible solution to address such substantial impairment may also be referred to the dispute resolution procedures referenced in Paragraph 19 of this Agreement. Notwithstanding the foregoing, the allocation of cost and/or any revision in the price of Supplemental Water to implement a solution or address the existence of an impairment or significant financial burden as set forth in Paragraph 3(a) shall be solely determined by the Parties on mutually acceptable terms and the dispute resolution procedure shall have no authority to order or impose any change with respect to such  terms.  (c) Effective Date. The "Effective Date" shall mean the date that the NCSD interconnection described in Paragraph 9 has been completed and approved by City's technical staff as operationally ready for commencement of delivery of Supplemental  Water.  (d) Delivery Year. Each "Delivery Year" shall commence on the Effective Date and any anniversary thereof during the Term and continue for a period of one (1) year.  4. Quantity of Supplemental Water.  (a) Minimum Delivery. In each Delivery Year during the Term of this Agreement, City shall deliver and NCSD shall purchase the following minimum quantity of  SupplementalWater ("Minimum Quantity"):  Delivery Years Minimum Delivery' Volume (AFY)  1 2-5 6-10 11-Term  645 800 1,000 2,500  Any portion of the Minimum Quantity of Supplemental Water that is available for delivery by City in accordance with the mutually agreeable to delivery schedule referenced in Paragraph 9(e) and that is not taken by NCSD during a given Delivery Year shall be forfeit and shall not roll over to the next year. In the event that City, in its sole and absolute discretion, agrees to deliver unused Supplemental Water in a subsequent Delivery Year, such late delivery shall be an accommodation to NCSD and shall not constitute a waiver  oramendment tot the terms of this Agreement.  (b) Additional Delivery. NCSD may request delivery of Supplemental Water in excess of the Minimum Quantity up to an additional thirty-two hundred (3,200) acre feet per year. NCSD shall give City no less than thirty (30) days written notice of its desire to purchase additional Supplemental Water and the proposed schedule for such delivery. City shall make a good faith effort to comply with such request subject to () the availability of excess Supplemental Water from sources used for delivery of water to City's retail customers; and () sufficient delivery capacity to fulfill such request at the NCSD interconnection using the City's existing water distribution system. Any such additional Supplemental Water shall be purchased and delivered on the same terms as the Minimum Quantity, provided, however, that if the cost of procuring and delivering  3    additional Supplemental Water exceeds the cost of delivering the Minimum Quantity, City shall have the right to impose a surcharge to compensate City for such additional cost as a condition to delivery. City shall notify NCSD oft the amount of any such surcharge prior to delivery of any additional Supplemental Water and NCSD shall have the right to withdraw its request. In no event shall City be required to undertake any capital cost or expansion of  its existing infrastructure to provide additional Supplemental Water.  5. Reservation of Minimum Quantity. Subject to the terms and conditions of this Agreement, City shall hold on reserve sufficient Supplemental Water each year, including an equivalent amount of capacity in City's water distribution system, for City to fulfill its obligation to deliver the Minimum Quantity to NCSD under this Agreement. City shall deliver such Supplemental Water to NCSD from sources used to provide water to City's retail customers. Notwithstanding the foregoing, during the term of the Agreement, City may substitute or combine new or additional replacement sources of water for the source of Supplemental Water, provided, however, that any substitute, combined or additional sources must be equivalent in deliverability, reliability, quality, pressure, and environmental impacts to the source being replaced. Disputes regarding this Paragraph  shall be resolved pursuant to Paragraph 19.  6. Purchase Price for Supplementa Water. The purchase price for Supplemental Water delivered by City to NCSD shall be based on the "Base Rate" oft the City's Water Consumption Rates. For fiscal year 2012-13, the Base Rate is two dollars and ninety seven cents ($2.97) per one hundred (100) cubic feet of water (or $1,293.73 per acre-foot of water). The Base Rate may be adjusted each fiscal year subject to approval by the City Council, consistent with applicable legal requirements. Any such adjustment int the purchase price shall go into effect in the next quarterly billing period. 7.Costs of Delivery. Except as expressly set forth in this Agreement, City shall be responsible for all costs and expenses related to providing Supplemental Water to NCSD at the NCSD interconnection pursuant to this Agreement. Notwithstanding the foregoing, the purchase price for Supplemental Water includes a cost component for energy costs incurred by City to supply Supplemental Water to the NCSD interconnection equal to two hundred and six dollars and eighty five cents ($206.85) per acre foot ("Base Energy Cost'). Int the event that the actual cost of energy incurred by City to supply Supplemental Water in any Delivery Year exceeds the Base Energy Cost, then City shall have the right to charge NCSD a premium equal to the difference between the actual cost and the Base Energy Cost. The Base Energy Cost shall be adjusted each Delivery Year by a percentage which is equivalent to fifty (50) percent of the increase or decrease, ifany, in the Consumer Price Index-Energy Services (Electricity and Natural Gas)-Los Angeles-  Riverside-Orange County or any successor index.  8. Payments for Supplemental Water. City shall bill NCSD on a quarterly basis in arrears for Supplemental Water delivered to NCSD's interconnection during the previous three (3) months. The amount payable by NCSD to City shall be based on the total quantity in acre-feet of Supplemental Water delivered during the quarter just ended multiplied by the then-current purchase price (as determined in Paragraph 6), plus any costs payable by NCSD pursuant to this Agreement. Notwithstanding the foregoing, to the extent that NCSD has taken less than the Minimum Quantity as oft the final quarterly billing    for a Delivery Year, City shall bill NCSD for the remainder of the Minimum Quantity whether or not such Supplemental Water has been delivered, provided that such water was made available for delivery to NCSD as provided in Paragraph 9. All invoices billed to NCSD shall be payable within thirty (30) days of the invoice date, provided that no charges are disputed. City shall have the right to charge late fees of up toi five (5) percent of the overdue amount for any invoice that is not paid within such period. In the event NCSD disputes any charges on an invoice, the undisputed amount shall be paid consistent with this Paragraph and the original invoice shall be returned to City for correction and resubmission. If the parties are unable to reach an agreement regarding  disputed charges, disputes shall be resolved pursuant to Paragraph 19.  9. Delivery ofWater.  (a) Point of Delivery. The physical point of delivery of Supplemental Water pursuant to this Agreement shall be the proposed interconnection between the City water distribution system and the NCSD water distribution system located at Taylor Street and Blosser Road or such other alternative location as may be approved by City and NCSD. All facilities constructed by NCSD will be used solely for the purpose of delivering Supplemental Water to NCSD. NCSD shall cooperate with the reasonable requests of City with respect to taking any action necessary to preserve the integrity of the City's water distribution system and the City shall do likewise for NCSD. The operation and maintenance of the NSCD Interconnection will be detailed in an Operation Memorandum of Understanding that will be approved by the City and NCSD prior to connection. City shall waive any fees for City permits related to construction of facilities for delivery of the water. If the parties cannot agree on the terms of the Operations Memorandum of Understanding then the disputed terms will be subject tot the dispute resolution procedures  referenced in Paragraph 19 oft this Agreement.  (b) Facilities. NCSD shall be responsible for designing, constructing and operating the NCSD interconnect. The plans and specifications of the NCSD interconnect shall be subject to prior approval by City, which approval shall not unreasonably be withheld provided that such plans and specifications conform to applicable code provisions and any technical requirements imposed for connections to the City's water distribution system. NCSD shall also be responsible for obtaining any and all regulatory and environmental permits, licenses or other approvals necessary to construct and operate the NCSD interconnection. NCSD and/or any contractor working on the NCSD interconnect shall provide insurance coverage naming the City as an additional insured and the scope of such insurance coverage shall be subject to the reasonable approval of City's Risk  Manager prior to commencement of any work.  (c) Construction, Regulatory/Permit and Other Costs. NCSD shall be solely responsible for all costs related to the construction and operation of the NCSD interconnection with City's retail water distribution system. NCSD shall also be solely responsible for all regulatory and/or permit compliance and costs with respect to the  NCSD interconnection.  (d) City Streets: License to Use Easements and Rights of Way. The City shall provide NCSD a license, at no additional cost, to use such portions of City streets,  5    easements, and right of ways as are reasonably necessary to build the NCSD interconnect and deliver the Supplemental Water to NCSD. Such license shall be non- revocable during the Term of this Agreement and shall automatically terminate upon the termination of this Agreement. The foregoing licenses shall not include the right of NCSD to make any alteration or improvement within such City streets, easements and rights of  way except in compliance with Paragraph 9.  (e) Delivery Schedule. City will deliver the Supplemental Water to NCSD at the NCSD interconnection upon a mutually agreeable delivery schedule. The volume of delivery to the NCSD interconnection shall not exceed a maximum of two hundred seventy-five (275) acre-feet per month or a peak hour flow averaging twenty-five hundred (2,500) gallons per minute. Delivery pressure at the point of connection shall exceed sixty (60) psi during City's normal system operation, not including emergencies or incidents described in Paragraph 9(). Before delivery begins, the District and City shall agree to an Operation Memorandum of Understanding (OMOU) to describe the specific procedures  and limitation on the operations provided fori in this Agreement.  () Force Majeure. If by reason of acts of God, earthquakes, droughts, floods, storms, explosion, fires, labor troubles, strikes, insurrection, riots, acts oft the public enemy, ort federal, or state, order, rule, or regulation, the Cityi is prevented, in whole or in part, from the delivery of the Supplemental Water to NCSD, as provided herein, then City may reduce delivery of Supplemental Water up toi the same percentage the City reduces water  delivery to its retail customers.  (g) Suspension. The delivery of water may be suspended or curtailed during any period of public emergency or disaster that is declared by City. For the purposes of this Agreement, a public emergency or disaster shall not include ordinary measures taken  during periods of drought or water shortage.  (h) Obligations of City. For the purposes of this Agreement and subject the limitations contained in this Paragraph 9, City shall have fulfilled its obligation to make Supplemental Water available for delivery so long as the amount of Supplemental Water purchased by NCSD is available at the NCSD interconnection for NCSD to take delivery ofpursuant to a predetermined and mutually agreed upon delivery schedule.  10. Water Quality. City shall be responsible for ensuring that the quality of the Supplemental Water made available for delivery is of the same pressure and quality of water that City delivers to its residential customers. The quality of water which is delivered by the City to its residents complies with federal, state and local laws, regulations and permit requirements which are applicable to City, including standards applicable to wastewater discharge, as amended from time to time and subject to any compliance waiver granted to the City ("Quality Standards"). City shall provide NCSD with a copy of the Quality Standards (and any change thereto) which are applicable to City and NCSD shall be solely responsible for ensuring that the Quality Standards meet the federal, state and local laws, regulations and permit requirements for potable water delivery by NCSDI to its customers, including the discharge of such water. To the extent that the quality standards which are applicable to NCSD exceed the Quality Standards, then NCSD shall be responsible for any necessary additional treatment of the Supplemental Water. City  6    agrees to indemnify and hold NCSD harmless from any actual liability which arises as a result of the failure of Supplemental Water which is delivered to the NCSD interconnection to meet the Quality Standards. NCSD shall be solely responsible for any actual liability resulting from a change in water quality following the point of delivery (including any additional treatment undertaken by NCSD) and shall indemnify and hold City harmless from any actual liability which arises from any such change. City and NCSD shall promptly notify the other in the event that either becomes aware of a material adverse change in the quality of the Supplemental Water and shall cooperate to identify the cause of such  change.  11. Remarketing of Supplemental Water. NCSD shall be free to remarket the Supplemental Water to other Parties within the NMMA without restriction to price and terms. NCSD assumes all responsibility for delivery of Supplemental Water from the NCSD interconnection to its customers and contracting Parties. City's obligations under this Agreement are solely with NCSD and no customer of NCSD nor other third party shall have the right to enforce the terms oft this Agreement as a third party beneficiary. City shall not sell water to other parties or persons within NCSD's service area or sphere of influence, as amended from time to time, without first receiving the written approval of  NCSD.  12. Regulatory Requirements.  (a) Obligations of the City. The implementation of this Agreement shall be subject to satisfaction by City of the regulatory requirements set forth herein. City shall, if necessary, undertake the following: () Obtain all permits, consents, entitlements and approvals necessary to enable the City to reserve and sell, and NCSD to purchase, the Supplemental Water that is the subject of this Agreement; and (i) fully and completely comply with the requirements of the California Environmental Quality Act ("CEQA"), including, ifiti is determined that this transaction is subject to CEQA and not exempt from CEQA. The completion of an initial study, and (1) either (a) there shall have been adopted a negative declaration or a mitigated negative declaration, or (b) a final environmental impact report shall have been completed and certified, and (2) thet time shall have expired within which a judicial proceeding may be instituted challenging the validity or completeness of any such determination of exemption, or adoption of a negative declaration or of a mitigated negative declaration, or approval of a final environmental  impact report.  (b) Obligations of NCSD. NCSD shall be solely responsible for obtaining all regulatory approvals necessary in connection with purchasing and taking delivery of the  Supplemental Water.  13. Service Area Integrity. Nothing in this Agreement is intended nor shall it be interpreted to waive the right of City to provide water service to current or future areas  within or adjacent to its existing service area. representations, warranties, and covenants to NCSD:  14. Representations or Warranties of City. City makes the following  7    (a) Power and Authority to Execute and Perform this Agreement. The City has the power and authority to enter into this Agreement and to perform its obligations and all  necessary approvals and authorizations have been obtained.  (b) Availability of Resource. Based on information which is currently known to City and City's current forecast of future use, on a long-term basis, City has water and the necessary infrastructure available to fulfill City's obligations under this Agreement that is surplus to that needed to serve City's current and long-term future anticipated demand. (c)E Enforceability. This Agreement constitutes al legal, valid, and binding obligation oft the City, and is enforceable against the City in accordance with its terms. 15. Representations or Warranties of NCSD. NCSD makes the following (a) Power and Authority to Execute and Perform this Agreement. NCSD has the power and authority to enter into this Agreement and to perform its obligations and all  representations, warranties, and covenants to City:  necessary approvals and authorizations have been obtained.  (b) Enforceability. This Agreement constitutes a legal, valid, and binding 16. Default and Termination by City. In the event NCSD fails to make any payment to City under this Agreement when due, or fails to perform any obligation otherwise required by this Agreement, City shall demand in writing that NCSD cure such non-performance. NCSD shall have thirty (30) days after receipt of such demand to cure. In the event NCSD fails to cure a default within the thirty (30) day period, City may suspend delivery of Supplemental Water and redirect such water to other uses for the duration of the suspension. City shall restore water delivery when NCSD has cured all outstanding defaults and paid all amounts due to the City in full. In the event that NCSD does not cure a default within one (1) year of suspension, then City may terminate this  obligation of NCSD, enforceable against NCSD in accordance with its terms.  Agreement at anyt time thereafter.  17. Default and Termination by NCSD. NCSD shall have the right to terminate this Agreement, without reçourse, if () the City is found to be in material breach of its obligations to deliver the Supplemental Water as set forth in this agreement; or (i) upon written notice to City that NCSD is unable to pay for the Supplemental Water due to the majority protest procedures or other procedures referenced in Proposition 218; or (ili) upon three (3) years prior written notice to City, provided, however, that no such termination without cause shall become effective until the thirtieth (30th) anniversary of the  Effective Date.  18. Expiration of Term. This Agreement shall terminate and be of no further force 19. Dispute Resolution. Except as otherwise limited by this Agreement, any dispute arising under this Agreement, including, without limitation, all disputes relating in any manner to the performance or enforcement of this Agreement, shall be resolved by  and effect as oft the expiration oft the Term.  8    binding arbitration in the County of Santa Barbara, Califomia, pursuant to the comprehensive arbitration rules and procedures of Judicial Arbitration and Mediation Services ("JAMS") or any successor thereto, as amended or as augmented in this Agreement (the "Rules"). Arbitration shall be initiated as provided by the Rules, although the written notice to the other party initiating arbitration shall also include a description of the claim(s) asserted and the facts upon which the claim(s) are based. Arbitration shall be final and binding upon the parties and shall be the exclusive remedy for all claims subject hereto, including any award of attorney's fees and costs. Either party may bring an action in court to compel arbitration under this Agreement and to enforce an arbitration award. All disputes shall be decided by a single arbitrator. The arbitrator shall be selected by mutual agreement of the parties within thirty (30) days of the effective date of the notice initiating the arbitration. If the parties cannot agree on an arbitrator, then the complaining party shall notify JAMS and request selection of an arbitrator in accordance with the Rules. The arbitrator shall have only such authority to award equitable relief, damages, costs, and fees as a court would have for the particular claim(s) asserted. Inno event shall the arbitrator award punitive damages of any kind. The parties acknowledge that one of the purposes of utilizing arbitration is to avoid lengthy and expensive discovery and allow for prompt resolution of the dispute. The arbitrator shall have the power to limit or deny a request for documents or a deposition if the arbitrator determines that the request exceeds those matters which are directly relevant to the claims in controversy. The parties may make a motion for protective order or motion to compel before the arbitrator with regard to the discovery, as provided in the Code of Civil Procedure. Notwithstanding the election by the parties to arbitrate their disputes, nothing contained herein shall prevent a party from filing an action in a court of competent jurisdiction to seek  any form of equitable remedy or relief.  20. Indemnity. NCSD, its successors and assigns, shall hold harmless, defend and indemnify City, its officials, employees, agents, successors and assigns (all of which are herein referred to as the "City Indemnified Parties") from and against all liabilities, obligations, claims, damages, losses, actions, judgments, suits, costs and expenses, including but not limited to reasonable attorneys' fees (collectively, "Damages"), which may be imposed on, incurred by, or asserted against City Indemnified Parties as a result of (1) a breach of NCSD's obligations; or (i) the conduct of NCSD's operations associated with the NCSD interconnection to City's retail distribution system and the subsequent delivery of Supplemental Water to NCSD's customers. Notwithstanding the foregoing, in no event shall NCSD be liable to indemnify a City Indemnified Party for () any Damages resulting from the negligence or willful misconduct of City; (i) any third party claim brought in connection with regulatory approvals; or (i) any claim brought in connection with the quality of the Supplemental Water as provided in Paragraph 10 above. This  indemnification shall survive termination of the Agreement.  21. Third Party Claims. Promptly following notice of any "Third Party Claim" for which City is indemnified hereunder, City shall notify NCSD of such claim in writing. NCSD shall have a period of thirty (30) days following the receipt of such notice to notify City of whether NCSD elects to assume the defense thereof. If NCSD sO notifies City that ite elects to assume the defense, NCSD thereafter shall undertake and diligently pursue the defense of the Third Party Claim. NCSD shall not consent to entry of a judgment or enter into any settlement agreement, without the consent of City, which does not include a  9    complete and unconditional release of City or which imposes injunctive or other equitable relief against City. City shall be entitled to participate in, but not control, the defense thereof, with counsel of its choice and at its own expense. If NCSD does not give the requisite notice, or fails to assume and diligently pursue the defense of such Third Party Claim, City may defend against such Third Party Claim in such manner as it may deem appropriate, at NCSD's expense, including without limitation settlement thereof on such terms as City may deem appropriate, and to pursue such remedies as may be available to City against NCSD. Notwithstanding the foregoing, City shall not consent to entry of a judgment or enter into any settlement agreement, without the consent of NCSD, which  does noti include a complete and unconditional release of NCSD.  22. Notice of Claims. The Parties shall promptly notify each other within ten (10) days of City or NCSD becoming aware of: (1) any claims or suits brought against City or NCSD which involve this Agreement or water supplied to NCSD pursuant to this Agreement, (2) any Third Party Claims, and (3) any force majeure event. Any such notice shall conform to the requirements specified in Paragraph 28 oft this Agreement.  23. Remedies Not Exclusive. Remedies provided in this Agreement for enforcement of its terms are intended and shall be construed as cumulative rather than exclusive and shall not be deemed to deprive either Party from also using any other  remedies provided by this Agreement or by law.  24. No Transfer of Rights. The rights granted to NCSD hereunder constitute the right to take delivery of Supplemental Water only and shall not be interpreted as a sale,  transfer, or assignment of any of City's water rights.  25. Subject to Applicable Law. The Parties acknowledge and agree that this Agreement and the rights and obligations of the Parties shall be subject to the laws governing municipal corporations and special districts as they now exist and as they may  be amended or codified by the Legislature oft the State of California.  26. Entire Agreement This Agreement contains the entire understanding between NCSD and City with respect to its subject matter, and supersedes all prior agreements, oral or written, and all prior or contemporaneous discussions or negotiations between NCSD and City. This Agreement cannot be amended except in writing signed by  both Parties.  27. No Waiver. Any failure or delay on the part of either Party to exercise any right under this Agreement shall not constitute a waiver oft the right, and shall not preclude such Party from exercising or enforcing the right, or any other provision of this Agreement, on  any subsequent occasion.  28. Notices. All notices or other communications required or desired to be given pursuant to this Agreement shall be in writing and shall be hand-delivered or sent by a reputable overnight courier service providing delivery confirmation. Each such notice or communication shall be deemed to be duly given when hand-delivered or one (1) day after being deposited for next day delivery with an overnight courier. Each such notice or communication shall be addressed to the Parties at their respective addresses set forth  10    next to their signatures below, or such other address as a Party notifies the other in  writing.  29. Headings; Paragraph References. Captions and headings appearing in this Agreement are inserted solely as reference aids for the ease and convenience; they shall not be deemed to define or limit the scope or substance of the provisions they introduce, nor shall they be used in construing the intent or effect of such provisions.  30. Separability. If any provision of this Agreement is finally determined by a court to be invalid or unenforceable as written, the provision shall, if possible, be enforced to the extent reasonable under the circumstances and otherwise shall be deemed deleted from this Agreement. The other provisions of this Agreement shall remain in full force and effect sO long as the material purposes of the Agreement and understandings of the  Parties are not impaired.  31. Binding Effect Assignment This Agreement shall be binding on and inure to the benefit of the Parties, and their respective successors and permitted assigns. NCSD shall have the right to assign its rights under this Agreement with the written consent of City, provided, however, that the City shall not unreasonably withhold such consent and further provided that the assignee agrees to be bound by all of the obligations of NCSD set forth herein. Notwithstanding the foregoing, no assignment permitted hereunder shall permit the delivery of Supplemental Water to any property or development other than the Property without the written consent of the City, ini its sole and  absolute discretion.  32. Opinions and Determinations: Good Faith. Where the terms of this Agreement provide for action to be based upon opinion, judgment, approval, review or determination of either party hereto, such terms are not intended to and shall never be construed to permit such opinion, judgment, approval, review or determination to be arbitrary, capricious or unreasonable. The City and the NCSD shall each act in good faith  inp performing their respective obligations as set forth in this Agreement.  33. Incorporation of Recitals. Recitals A through F are incorporated herein by 34. Attorneys Fees. In the event that any legal proceeding other than the dispute resolution procedures referenced in Paragraph 19, above, is brought to enforce one or more of the terms of this Agreement, to restrain an alleged violation of this Agreement, or to determine the validity of this Agreement or any part, the prevailing Party in any such action or proceeding shall be entitled to recover from the other its reasonable costs and attorneys' fees, in addition to any other remedies available to it in law or equity. If both Parties are successful in one or more causes of action during any such proceeding,  reference as though set forth atl length.  the costs and fees shall be apportioned as determined by the court.  35. Governing Law and Venue. This Agreement is a contract governed in accordance with the laws of the State of California. THE PARTIES HEREBY AGREE THAT VENUE FOR ANY ACTION BROUGHT TO ENFORCE THE TERMS OF THIS AGREEMENT SHALL BE IN A COURT OF COMPETENT JURISDICTION IN THE  11    COUNTY OF SANTA BARBARA OTHER THAN A COURT LOCATED WITHIN THE CITY OF SANTA MARIA OR THE NORTHERN PORTION OF SANTA BARBARA COUNTY, CALIFORNIA, AND CONSENT TOT THE JURISDICTION THEREOF.  INV WITNESS WHEREOF, the Parties have executed this agreement as oft the date  first written above.  CITY:  NCSD:  City of Santa Maria, a California municipal corporation and charter city  Nipomo Community Services District, a Califomia public agency  By: Name: Title: Address: Fax: Phone:  HAE Richard G. Sweet, P.E. Director of Utilities 2065 East Main Street Santa Maria, CA93454 (805)928-7240 (805)925-0951 ext. 7211  By: Name: Title: Fax: Phone:  Jim Harrison Alan President Nipomo, CA 93444 (805)929-1932 (805)929-1133  Address: Post Office Box 326  APPROVED AS TO FORM: Best, Best & Krieger LLP  APPROVED AS TO FORM: District Counsel  C Jilll Willis, Partner  By:  By:  Michael W. Seitz, DistrictCounsel  12    STATE OF CALIFORNIA COUNTY OF SANTA BARBARA )ss. CITY OF SANTA MARIA  I, RHONDA M. GARIETZ, CMC, Chief Deputy City Clerk of the  City of Santa Maria and ex officio Clerk of the City Council DO HEREBY CERTIFY that the foregoing is a full, true and correct copy of Resolution No. 2013-40 which was duly and regularly introduced and adopted by said City Council at a regular meeting held May 7, 2013, and carried on the following  vote:  AYES: NOES: ABSENT: None. ABSTAIN: None.  Councilmembers Boysen, Green, Orach, Zuniga,  and Mayor Patino. None.  Chief  AA  DeputyCity-Clerk of the City of Santa Maria and ex officio Clerk of the City Council    Santa) Maria Al-AmericaCily  CITY OF SANTA MARIA OFFICE OFTHE CITY MANAGER Records/City Clerk, Ext. 306  1101 EAST COOK STREET, ROOM #3. SANTA MARIA, CA 93454-5190- 805-925-0951  FAX 805-25-2243-vwwclsant-mariacaus  May 10, 2013  RECEIVED MAY 132013 NIPOMOCOMMUNICT SERVICES DISTRICT  Jim Harrison P.O. Box 326 Nipomo, CA 93444  Nipomo Community Services District  RE: WHOLESALE WATER SUPPLY AGREEMENT WITH NIPOMO COMMUNITY  SERVICES DISTRICT (NCSD)  Dear Mr. Harrison:  At its regular meeting held on Tuesday, May 7, 2013, the City Council of the City of Santa Maria entered into an Agreement with Nipomo Community Services District ('NCSD") an independent special district formed under and pursuant to Section 61000, et seq. of the California Government Code. Enclosed are two execution originals of the Please sign the Agreements where indicated. Once you have done sO, please return one fully executed original to me in the enclosed self-addressed envelope. You should A certified copy of the Resolution approving the agreement is also enclosed for your records. Should you have any questions regarding the Council's action, please do not hesitate to contact this office at 805-925-0951, Ext. 307 or the Utilities Department at  Agreement.  retain one fully executed original for your records.  Ext. 7211. Sincerely, Rhondal M. Garietz, CMC 4 Chief Deputy City Clerk Enclosure: Wholesale Water Supply Agreement x2 Resolution- Certified  pc: Utilities Department