HomeMy WebLinkAbout13 - MOU with Laguna Beach County Water District for a New Water WellCITY OF
NEWPORT BEACH
City Council Staff Report
TO:
FROM:
PREPARED BY:
TITLE:
ABSTRACT:
September 24, 2024
Agenda Item No. 13
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
Mark Vukojevic, Utilities Director - 949-644-3011,
mvukojevic@newportbeachca.gov
Mark Vukojevic, Utilities Director
Memorandum of Understanding with Laguna Beach County Water
District for a New Water Well
As identified in the Water Master Plan, a new site is needed to build and pump additional
groundwater to meet the City of Newport Beach's current and future water needs. The
Utilities and Public Works Departments have been actively searching for strategically
located properties in the City of Fountain Valley (Fountain Valley). The Laguna Beach
County Water District (Laguna Beach) has located and purchased a vacant property with
potential for a new water well. Staff is interested in forming a partnership with Laguna
Beach and is seeking City Council approval on a memorandum of understanding (MOU).
The MOU outlines the intentions and understandings as the project begins to develop.
Further agreements with Laguna are expected as the project progresses.
Staff is also requesting an amendment with one of its engineering consultants to provide
additional engineering services on the City's water system, including preliminary efforts
for this water well project.
RECOMMENDATIONS:
a) Determine this action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) and Section 15060(c)(3) (the
activity is not a project as defined in Section 15378) of the CEQA Guidelines, California
Code of Regulations, Title 14, Chapter 3, because this action will not result in a
physical change to the environment, directly or indirectly;
b) Approve a Memorandum of Understanding with the Laguna Beach County Water
District for a new water well and authorize the Mayor and City Clerk to execute the
agreement; and
c) Approve Amendment No. Two to the On -Call Professional Service Agreement with
MKN & Associates (Contract No. 8908-1) for professional civil engineering planning,
design and construction support services in the amount of $200,000, and authorize
the Mayor and City Clerk to execute the amendment.
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MOU with Laguna Beach County Water District for a New Water Well
September 24, 2024
Page 2
DISCUSSION:
An additional water well for the City's water system has been a long-term goal to improve
water reliability, redundancy and local control over the City's water needs. The 2019
Water Master Plan reinforced the need and incorporated it into the 30-year plan. Water
supply reliability and local control are key tenets of a well -run water system.
The City of Newport Beach is a member of the Orange County groundwater basin, which
is managed by the Orange County Water District (OCWD). The groundwater basin is
strategically managed to maximize local water resources, enhance water reliability,
ensure high -quality water, prevent seawater intrusion and protect Orange County's water
rights. The region's imported water supplies - from Northern California and the Colorado
River - have become less available and more restricted. For the foreseeable future,
groundwater is the best path toward ensuring the City's water reliability.
The Utilities Department prepared a technical memorandum to document water system
operations and further explain the need for an additional groundwater well site
(Attachment A). As explained in the memorandum, investments in the groundwater basin
have made groundwater more reliable, more plentiful, and less expensive. The
memorandum also analyzes the proposed property at 17902 Bushard Street in Fountain
Valley and discusses the overall project cost.
Laguna Beach County Water District is a special water district that operates as a
subsidiary district of the City of Laguna Beach, with Laguna Beach City Council members
serving as ex-officio of the board of directors. Laguna Beach has recently purchased a
vacant property (17902 Bushard Street, Fountain Valley) that could serve as a new water
well site for both Newport Beach and Laguna Beach, which already share several pipeline
and groundwater agreements.
Newport Beach and Laguna Beach staff believe the Bushard Street site is a viable
groundwater location and could significantly improve both agencies' groundwater
capacity, even in a shared configuration. The Bushard Street site is situated in a highly
productive location within the groundwater basin and is approximately 1,700 feet away
from the City of Newport Beach's main 36-inch water transmission line, two key factors in
the search for a site. Additionally, a groundwater monitoring well located 500 feet away
has provided additional data supporting the proposed well location.
Staff believes that a partnership with Laguna Beach offers many benefits to
Newport Beach. Even with a shared capacity, Newport Beach would be entitled to pump
more water than Laguna Beach due to precedent water rights. The potential cost -sharing
of the overall project also greatly reduces Newport Beach's expenses. As with any site,
there will be cost risks associated with preparing it for water well use, and the quantity or
quality of new water is not guaranteed. However, the partnership reduces Newport
Beach's overall risk.
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MOU with Laguna Beach County Water District for a New Water Well
September 24, 2024
Page 3
Staff from both agencies have been in discussions and developed an MOU outlining the
roles and responsibilities of each agency. In general, the MOU is nonbinding and simply
states that each agency is interested in a partnership and will work on separate project
tasks, ultimately moving toward a formal partnership. Key points of the MOU include:
1) Laguna Beach has purchased the Bushard Street property; 2) Newport Beach will lead
the preliminary design, land use entitlements, and environmental efforts; 3) Newport
Beach staff estimated the initial water capacity and ownership assignments; 4) Newport
Beach staff outlined intentions for future reimbursements between each agency;
5) Newport Beach and Laguna Beach intend to enter into a formal Joint Powers
Agreement (JPA).
The overall project is expected to take three to four years to fully develop. If the MOU is
approved, Public Works and Utilities Department staff will begin the preliminary design
and entitlement efforts, which are expected to take one year. During that year, staff will
also develop the JPA between the agencies. Once the property entitlements are secured,
staff will return to the City Council with a full project scope, funding plan, and a request to
enter a JPA with Laguna Beach, thereby formalizing the City of Newport Beach's majority
ownership in the project.
The City Council approved a Professional Services Agreement with MKN & Associates
(MKN) on July 26, 2022, for planning, design and construction support services.
Amendment No. One was executed to increase the not -to -exceed amount by $75,000 to
provide for additional on -call services. Staff recommends approving Amendment No. Two
to the Professional Services Agreement with MKN & Associates in the amount of
$200,000 for additional planning, design and construction support services. Under this
on -call contract, MKN has provided various water system improvement services, such as
the Shorecliff's water main replacements and pressure regulators stations. It has also
assisted in the well siting efforts over the past year. MKN has provided exceptional
services to date and staff believes its continued services will be necessary as this well
project progresses at the anticipated pace proposed. If approved, the total not -to -exceed
amount would be $575,000.
FISCAL IMPACT:
The preliminary efforts identified in the MOU are estimated to cost $250,000, and the
adopted budget includes sufficient funding for these efforts. This will be funded from the
Water Enterprise Fund and expensed to the Public Works Department Capital
Improvement Program, Project 24W13. The preliminary opinion for the overall project is
estimated to be $30 million. Staff is preparing a project funding plan, which is anticipated
to include set aside capital water funds, use of water fund reserves, low interest loans
and funding from the Laguna Beach County Water District partnership.
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MOU with Laguna Beach County Water District for a New Water Well
September 24, 2024
Page 4
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
► Is] IIs] I►Les
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — New Water Well Technical Memorandum
Attachment B — Memorandum of Understanding
Attachment C — Amendment No. Two to the Professional Services Agreement
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PO @ ATTACHMENT A
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Technical Memorandum
By: Mark Vukojevic, Utilities Department Director
Date: September 10, 2024
Utilities Department
RE: An additional water well for Newport Beach's water system
SUMMARY
As identified in the Water Master Plan, and Capital Improvement Project 24W13,
a new site is needed to build and pump additional groundwater to meet the City's
current and future water needs. The Utilities and Public Works Departments have
been actively searching for strategic properties in the City of Fountain Valley. The
attached technical memorandum, also known as a white paper, documents the
current water system operations, explains the need for a new water well and
discusses of planned improvements at a specific site.
BACKGROUND
The Utilities Department oversees, manages and maintains the City of Newport
Beach's (City) water system, ensuring a safe and reliable source of water for
drinking, irrigation, commercial use and fire protection. The Public Works
Department manages the engineering and Capital Improvement Program for the
system. The City is a retail water supplier, providing water to its residents and
businesses. The majority of the City's water comes from the local groundwater
basin, which is managed by the Orange County Water District (OCWD). The
remaining water supply is imported water from northern California and/or the
Colorado River, obtained from our regional wholesaler, the Municipal Water District
of Orange County (MWDOC).
The City's water service area covers most of the City's boundaries, with the
remaining areas served by Irvine Ranch Water District (IRWD) (predominately
Newport Coast) and Mesa Water District (Mesa Water) (along the Costa Mesa
border), as shown on the map below.
Utilities Department
The City's main source of water supply is groundwater from four strategically
located water wells in the City of Fountain Valley (Fountain Valley), which were
built in the 1990s. Imported water makes up the rest of the City's water supply
portfolio. The City's current use averages 14,000-15,000 acre-feet (AF) of water
per year. Approximately 20 years ago, the City used 20,000 AF of water per year.
Over the last 30 years, the allowable groundwater pumping varied from 62% to
75%.
Groundwater is significantly less expensive than imported MWDOC water, being a
local resource that is locally controlled. Groundwater is an important component of
the City's water reliability and resiliency. Additionally, OCWD's efforts in the
groundwater basin have increased the City's ability (and permissibility) to pump
more groundwater; steadily increasing from 75% and 77% to 85% now. OCWD
currently offers incentives for pumping over 85% and is also signaling that the
pumping percentage may increase to over 90%. This shift, which incrementally
increases the City's allowable groundwater withdrawal percentage, is likely to
continue many years into the future. Imported water is becoming increasingly
constrained, regulated, and scarce. After pumping costs, groundwater is at least
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$500/acre-foot less expensive than imported water. For example, an 8% shift from
imported to groundwater pumping saves $600,000 annually. If the City had to use
100% imported water, the increased cost would be $7.5 million annually.
Reviewing the financial forecasts for groundwater and imported costs, the cost
difference between the two is expected to stay at least $500/acre-foot.
The City's current groundwater wellfield, with an average capacity of 10,000
gallons per minute, is located in Fountain Valley, approximately five miles north of
the city. Groundwater is conveyed from the wellfield to the City via a seven -mile,
partially leased and partially owned, 30 to 36-inch pipeline that discharges into the
16th Street Reservoir (See Attachment A). From the reservoir, the water is
disinfected and pumped into the City's distribution system and into the 600 AF
storage facility at Big Canyon Reservoir.
Production volume from the City's existing four wells are gradually declining due
to age, even with regular rehabilitation. Redrilling new wells at the existing well
sites is not recommended because of site constraints, such as limited spacing and
separation requirements. To meet the previous production target of 77%
groundwater supply, the wells must be operated near their capacities. To obtain
85% supply, the wells need to be operated at maximum capacities (i.e. redline).
During the summer months, the existing four wells do not fully meet the summer
demands. The development of a new water well is identified and recommended in
the City's Water Master Plan to offset the loss in production from the existing wells,
provide additional water production, and create redundancy and continuity for the
system. Adding an additional well site will also allow the City to rely on 100%
groundwater if needed.
LAGUNA BEACH COUNTY WATER DISTRICT
In parallel efforts over the past two years, the City and Laguna Beach County
Water District (Laguna) have each been working to identify land to purchase in a
specific geographic area relative to the groundwater basin, to locate a new water
well site as close as possible to the City's pipeline infrastructure (See Attachment
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A). Very few properties in the geographic area have the potential to serve as a
water well, and none of those have been for sale. Laguna Beach County Water
District is a special dependent district and controlled by the City of Laguna Beach.
Laguna Beach City Council serve as ex-officio Board members for the District.
In 2015, the City and Laguna entered into an agreement that allows Newport
Beach to sell excess groundwater (also known as wheeling water) to Laguna. In
recent years, there has been very little excess water due to limited water well
capacities. However, a new well would generate additional water to both agencies,
and a partnership reduces the costs and risks associated with a new water well.
Laguna contacted City staff in spring of 2024 regarding a vacant property in
Fountain Valley (described below) and is asking the City to participate in the
purchase of this site for the development of a well.
17902 BUSHARD STREET, FOUNTAIN VALLEY
The property at 17902 Bushard Street in Fountain Valley (Property) is in escrow to
be purchased by Laguna. Situated west of the 405 Freeway, the Property is
located one block northeast from the intersection of Talbert Avenue and Bushard
Street, and approximately 1,700 feet east of the City's existing water transmission
line (See Attachment A). The Property is zoned residential and is vacant land,
containing approximately 22,172 square feet or 0.51 acres.
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The site is zoned for single-family residential use.
Laguna has entered into a purchase agreement to acquire the Property for
$2,750,000. The due diligence period has expired, and escrow is scheduled to
close on September 17, 2024.
PROPOSED SITE DESIGN & COSTS
A consultant will be hired to facilitate the development of the best design for this
site. Based on the City's existing water wells, a "dual -well" setup, or two wells at
one location, is preferred and recommended at this time. Dual -wells consist of a
deep and a shallow well, approximately 50-feet apart, which nearly double
production capacity and result in more efficient and reliable well operations. Dual -
wells are also more cost-effective for both construction and operations. The
additional capacity provide by this proposed site and the dual -well design will lower
the demand and pressure on the City's existing water wells.
There is significant benefit to increasing the capacity and improving the reliability
of the City's groundwater supply. The cost difference between pumped
groundwater versus imported water is approximately $500/AF. Assuming the
proposed site can produce 5,000-6,000 AF per year, the resulting cost differential
to both agencies is $2.5m per year (at 5,000 AF).
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Laguna has a maximum groundwater allocation of approximately 2,025 AF, while
the City's groundwater allocation is not bounded by this limit. The proposed site is
reasonably expected to produce 5,000-6,000 AF, with the City taking the excess
capacity.
Any site will have preliminary risks associated with preparing it for water well use,
and the success of a new well is not guaranteed. There is always a chance that a
site will not produce sufficient water or may not meet certain water quality
standards. However, given the proximity of the Property to the City's existing high -
producing water well sites, review of a nearby groundwater monitoring well and the
location relative to the City's water transmission pipeline, there is a high probability
of water hydrology and geotechnical success at this location. Additionally, OCWD
staff concurs with the probable success of locating new water wells at the Property.
STAFF REVIEW TO DATE
Staff from the Utilities Department, Public Works, Community Development and
the City Manager's Office have reviewed the Property and determined the general
location, size, and configuration to be sufficient and appropriate for the
development of a new water well site. Additionally, a Phase I Environmental Site
Assessment has been performed by the City's vendor, Partner Engineering, and
no recognized environmental conditions were identified based on the historical and
proximate site uses. No additional environmental investigation is recommended for
the proposed use.
OCWD maintains a 1000-foot-deep groundwater monitoring well known as M-45,
located approximately 500-feet away from the proposed site. The City hired an
independent consultant to review the near 10 years of groundwater data from the
monitoring well. The review concluded that hydrogeologic conditions for the site
were favorable and no fatal flaws were observed.
In addition to the risk related to the water hydrology, there are limited risks
associated with the success of the project related to the entitlements, and the
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property value versus acquisition costs. Staff has contacted Fountain Valley to
discuss the necessary entitlements needed to develop the Property as a water well
site. Preliminarily, it was determined that a zoning code amendment, general plan
amendment, and California Government Code exemption are likely required.
Feedback from Fountain Valley has generally been positive, indicating a path
forward. However, since this is not a typical request, the Fountain Valley City
Council may need to make discretionary approvals regarding the public benefit of
the project and will desire to have neighborhood support.
Construction of a new well is not common in existing residential neighborhoods,
and neighbors may be concerned about construction noise, potential for 24-hour
access, and pump noise. However, all modern wells will be constructed with the
best available equipment to minimize neighborhood impacts. Laguna staff has
spoken to several existing neighbors, and they verbally support the water well
project, especially in lieu of the potential for higher density housing on the existing
cul-de-sac.
An appraisal of the Property is underway. However, the deal terms negotiated by
Laguna for the purchase of the Property are at a premium based on staff's initial
evaluation. Laguna has agreed to a purchase price of $2,750,000 or $124 per
square foot. However, no comparable land in the area is available, potentially
negating the potential premium.
COSTS & FINANCING
Following are the preliminary costs estimates based on a recently constructed well
site in Orange County:
• Land ownership— City 51 %, Laguna 49%
o Acquisition costs - $2.75m
o Zoning/Land Use/Environmental, Prelim Engineering - $250,000
o Next steps engineering, hydrology, geotechnical - $200,000
o Final Engineering & Admin - $4m
o Drilling 2 wells - $3m
o Pipelines, off -site improvements - $2.5m
o Pump House & Well Equipment - $15m
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o Contingency & Inflation - $2.3mil
■ Overall approximate cost - $30 million
• Cost allocation based on forecasted capacities will still need to be
estimated; a preliminary expectation is Newport at 63% and Laguna 37%
split.
o City share - $18.9m
o Laguna share - $11.1 m
All of the Capital Improvements for the water system are funded by the water rates
and the Water Enterprise Fund has no debt. The original 1990s well development
project included debt financing to fund and construct the massive project. That
financing has been paid off.
Staff's recommended financing strategy is a joint project approach with Laguna,
which reduces the City's overall cost by a third. Although the new well was
identified in the Water Master Plan, the inflationary costs are significantly higher
than the 2019 estimate of $10 million. The full development of the project is
expected to take three to four years. Staff recommends funding the project as
development proceeds, using a combination of delayed planned capital
improvements and water fund reserves. OCWD may also consider offering the
City a low -interest loan. If necessary, once the property is purchased and entitled,
the construction of the project can be delayed accumulating the necessary funding.
NEXT STEPS
Staff is interested in pursuing the Property to develop a new water well site and
recommends negotiating a joint powers agreement with Laguna to purchase a
portion of the interest in the Property. Newport Beach will oversee the design,
construction, and operation of the new well site. Given the timelines under the
current purchase agreement, staff recommends getting involved after Laguna
closes escrow.
Prepared by
Mark Vukojevic
Utilities Director
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Attachment A — Water well and Pipeline site plan
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ATTACHMENT B
MEMORANDUM OF UNDERSTANDING BY AND BETWEEN
THE CITY OF NEWPORT BEACH AND
THE LAGUNA BEACH COUNTY WATER DISTRICT
FOR A WATER WELL FACILITY
This MEMORANDUM OF UNDERSTANDING ("MOU") is entered into as of this al day
of , 2024 ("Effective Date") by and between the Laguna Beach County
Water District ("Laguna Beach"), located at 306 Third Street, Laguna Beach, CA and the
City of Newport Beach, a California municipal corporation and charter city ("Newport
Beach"), located at 100 Civic Center Drive, Newport Beach, CA, with each individually
referred to as "Party" and collectively referred to as the "Parties."
PURPOSE
The purpose of this MOU is to establish a framework for collaboration between Laguna
Beach and Newport Beach for the acquisition, development, operation, and maintenance
of a new water well facility that would supply groundwater to the Parties' water customers.
RECITALS
A. Newport Beach is a municipal corporation duly organized and validly existing under
the laws of the State of California with the power to carry on its business as it is now
being conducted under the statutes of the State of California and the City Charter.
B. Newport Beach's Utilities Department oversees, manages, and maintains Newport
Beach's water system. Most of Newport Beach's water supply comes from the local
groundwater basin, which is sourced from four strategically located water wells in
Fountain Valley, CA. The remaining water supply is imported from Northern California
and/or the Colorado River through the Municipal Water District of Orange County
("MWDOC"), which is significantly more expensive than groundwater.
C. The City of Newport Beach Water Master Plan policies and goals include Future
Project F-13 which consists of developing a new water well to meet Newport Beach's
water supply needs.
D. Laguna Beach is a special district under California Water Code Section 30000 et seq.
that operates as a subsidiary district of the City of Laguna Beach while continuing to
exist as a special district.
E. In 2015, Newport Beach and Laguna Beach entered into an agreement allowing
Newport Beach to sell excess groundwater to Laguna Beach. In recent years, there
has been very little excess water due to limited water well capacities.
F. Laguna Beach's Fiscal Year 2023-24 Goals & Actions to implement its 2023-2028
Strategic Plan includes taking steps to develop groundwater as a reliable water source
by way of developing potential new well sites.
G. Laguna Beach purchased the property located at 17902 Bushard Street, Fountain
Valley, CA as legally described in Exhibit "A," and depicted in Exhibit "B," which
61824.00 10 1\42645299.5
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are attached hereto and incorporated by reference ("Property"). Newport Beach and
Laguna Beach wish to enter in this MOU to work cooperatively to develop a new water
well at the Property to supply ground water to both Parties' water customers.
H. As provided in Section 5, this MOU memorializes the Parties' intentions for the Project,
as defined below, through the phases set forth in Section 4.A through 4.C. The Parties
anticipate that they will memorialize their respective obligations in connection with the
phases of Project implementation consisting of Design and Permitting, Construction,
Operations and Maintenance ("Project Implementation") by way of a subsequent
agreement between the Parties.
NOW, THEREFORE, for and in consideration of the mutual covenants and
promises set forth herein, Newport Beach and Laguna Beach do hereby agree as follows:
1. PROJECT DESCRIPTION
The project consists of the development of two wells at the Property, which consist
of a deep and shallow well, approximately 50-feet apart, anticipated to produce 5,000-
6,000 acre feet ("AF") of groundwater to serve Newport Beach's and Laguna Beach's
water customers ("Project"). For the purposes of this MOU, "Well" refers to a dual -well
facility.
2. TERM
The term of this MOU shall commence on the Effective Date, and shall terminate
upon execution of a separate agreement between the Parties governing Project
Implementation, as defined in Recital H above, or &Q1 , 2026, whichever occurs first,
unless terminated earlier as set forth in Section 3.
3. TERMINATION
Either party may terminate this MOU by providing the other Party with not less than
sixty (60) calendar days' written notice to the other Party. Notwithstanding the foregoing,
the provisions of Section 9, Section 10, and Section 14.9 of this MOU shall survive the
expiration or early termination of this MOU.
4. PROJECT PHASING
The Project phases and Parties' obligations are set forth herein.
A. Land Acquisition — Costs, Proportionality and Timing
Laguna Beach purchased the Property for Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000.00).
Laguna Beach shall be solely responsible for maintaining the
Property prior to Newport Beach's Acquisition as set forth in Section
4.0 below and paying for all hard and soft costs of maintaining the
61824.0010 1\42645299.5
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=3
C.
Property subject to the maintenance cost sharing obligations set
forth in Section 4.C.ii.
Preliminary Design and Land Use Entitlements — Costs,
Proportionality, and Timing
i. The Project will be designed as a dual well facility (i.e. a deep and
shallow well similar to Newport Beach's other facilities) ("Preliminary
Design").
ii. The land use entitlements required for the Project include a general
plan amendment, zoning code amendment, and CEQA
determination through the City of Fountain Valley ("Land Use
Entitlements"), which will serve as the lead agency under CEQA.
iii. Newport Beach shall be solely responsible for processing the
Preliminary Design and applying for the Land Use Entitlements for
the Project, and for paying all hard and soft costs for these phases
as they become due subject to the cost sharing obligations set forth
in (iv) below.
iv. All costs related to developing the Preliminary Design and
processing, applying for, and obtaining all Land Use Entitlements
through final approval shall be shared equally between Newport
Beach and Laguna Beach except that Newport Beach is entitled to,
and shall add, an additional 15% charge to all hard costs' payable by
Laguna Beach to account for Newport Beach's staff time for the
Preliminary Design and Land Use Entitlement processing.
V. Laguna Beach and Newport Beach will reconcile and reimburse all
costs and amounts owed under this Section 4.B upon the successful
completion of the Newport Beach Acquisition of the Property as
provided in Section 4.0 below.
Newport Beach Acquisition of the Property — Costs, Proportionality
and Timing
Newport Beach intends to purchase a fifty-one percent (51 %)
interest in the Property from Laguna Beach for One Million Four
Hundred Two Thousand Five Hundred Dollars ($1,402,500.00)
("Newport Beach Acquisition") upon completion of the Conditions of
Purchase. "Conditions of Purchase" means final completion of the
Preliminary Design and approval of the Land Use Entitlements set
forth in Section 4.B above including expiration of any statute of
limitations challenging the approval of the Land Use Entitlements for
the Project, Newport Beach accepting conditions of title, execution
of a joint powers' agreement for the operation of the Project, and
recordation of a grant deed transferring fifty-one percent (51 %) of the
fee simple ownership interest in the Property to Newport Beach.
Laguna Beach shall pay all costs of maintaining the Property as they
become due except that Laguna Beach and Newport Beach will
share equally in all hard costs of maintaining the Property, including
61824.00101\42645299.5
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but not limited to, weed abatement, dust, fencing, security, dumping,
neighbor concerns etc.) except that Laguna Beach is entitled to, and
shall add, an additional 15% charge to all hard costs, incurred by
Laguna Beach as of the date title was transferred to Laguna Beach
through the Newport Beach Acquisition. The Parties shall reconcile
and reimburse all maintenance costs and amounts owed under
Sections 4.A through 4.0 upon the successful completion of the
Newport Beach Acquisition.
iii. All other hard or soft costs associated with acquiring the Property for
the Project shall be paid for by the Party incurring that cost. (For
example, escrow postponement initiated and paid for by Laguna
Beach; Phase 1 environmental assessment initiated and paid for by
Newport Beach.) "Hard cost" means costs and/or services which are
contracted for by the Party such as legal services or environmental
consultants. "Soft costs" shall mean the Party's staff time and/or
materials utilized towards the Project.
5. PROJECT IMPLEMENTATION
The Parties anticipate that they will memorialize their respective obligations in
connection with the Project Implementation in a subsequent agreement between the
Parties. A non -binding example of such obligations is attached hereto as Exhibit "C"
("Sample Implementation Terms") solely for reference, and the Parties do not intend to
execute, or agree to, the Sample Implementation Terms by attaching them to this MOU.
6. CAPACITY/OWNERSHIP
The Parties understand and agree that the Project should be designed so that
capacity/ownership of the Well shall be uninterruptible during well operations/flow.
Initially, the capacity/ownership shall be split 50-50 between Laguna Beach and Newport
Beach until Laguna Beach reaches its capacity cap of 2310 acre-feet per year ("AFY")
(2025 AFY plus one month of average demand of 285 AFM). Thereafter, all remaining
available production capacity/ownership shall belong to Newport Beach. The design
capacity of the Well will be the calculated design flow determined by the consulting
engineer, multiplied by a percentage reduction agreed upon by the Parties to account for
reductions in flow due to multiple wells flowing loss, resting and initial degradation. (For
example, assuming the design yields a flow of 5,000 gallons per minute ("gpm"), the well
could technically continuously produce 8,000 acre-feet. However, the design capacity
should be reduced by an agreed or industry standard percentage.) The official well
capacity shall be the post -Construction commissioning/testing capacity multiplied by a
percentage reduction to account for the reductions noted above. One year after
Construction is completed, the official Well production capacity shall be retested and
recertified as the 1-year post -Construction commissioning/testing capacity multiplied by
a percentage reduction to account for the reductions noted above. If and when the Well
production capacity is reduced by degradation, contamination, maintenance, or
construction activities, each Party will equally share the reduction on an annual basis.
Project costs, including property acquisition costs, will be recalculated based on the actual
61824.00 10 1 \42645299.5
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split of capacity between the Parties, and reimbursements will be made as necessary to
reconcile amounts owed.
7. REPORTING AND ACCOUNTING REQUIREMENTS
At all times during the term of this MOU, each Party shall maintain true, proper,
and complete books, records, and accounts (collectively, "Books and Records") in which
shall be entered fully and accurately all funds received and transactions completed for
the Project as well as the expenditure of any funds for the Project. Each Party shall
maintain the Books and Records in accordance with Generally Accepted Accounting
Principles ("GAAP"). Each Party shall make available to the other party copies of such
Books and Records upon five (5) working days of the other party's written request.
8. INDEPENDENT ENTITY
In the performance of this MOU, each Party, and the volunteers, agents and
employees of each Party, shall act in an independent capacity and are not officers,
employees or agents of the other Party. Nothing in this MOU shall be deemed to constitute
approval for either Party or any of either Party's directors, officers, volunteers, employees
or agents, to be the agents or employees of the other Party.
9. INDEMNIFICATION
To the fullest extent permitted by law, Laguna Beach shall indemnify, defend and
hold harmless Newport Beach, its Council, boards and commissions, officers, agents,
volunteers, and employees (collectively, the "Newport Beach Indemnified Parties") from
and against any and all claims (including, without limitation, claims for bodily injury, death
or damage to property), demands, obligations, damages, actions, causes of action, suits,
losses, judgments, fines, penalties, liabilities, costs and expenses (including, without
limitation, attorney's fees, disbursements and court costs) of every kind and nature
whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any
manner relate (directly or indirectly) to the breach of this MOU by Laguna Beach,
maintenance of the Property prior to the Newport Beach Acquisition, or the negligent
and/or willful acts, errors and/or omissions of Laguna Beach, its principals, officers,
agents, employees vendors, suppliers, consultants, subcontractors, anyone employed
directly or indirectly by any of them or for whose acts they may be liable or any or all of
them in the performance of this MOU.
Likewise and to the fullest extent permitted by law, Newport Beach shall indemnify,
defend and hold harmless Laguna Beach, its boards and commissions, officers, agents,
volunteers, and employees (collectively, the "Laguna Beach Indemnified Parties") from
and against any and all Claims, which may arise from or in any manner relate (directly or
indirectly) to the performance or breach of this MOU by Newport Beach, or the negligent
and/or willful acts, errors and/or omissions of Newport Beach, its principals, officers,
agents, employees vendors, suppliers, consultants, subcontractors, anyone employed
directly or indirectly by any of them or for whose acts they may be liable or any or all of
them in the performance of this MOU.
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10. INSURANCE
Without limiting Laguna Beach's indemnification of Newport Beach, Laguna Beach
shall obtain, provide and maintain at its own expense during the term of this MOU or for
other periods as specified in this MOU, policies of insurance of the type, amounts, terms
and conditions described in the Insurance Requirements attached hereto as Exhibit "D,"
and incorporated herein by reference.
11. PROHIBITION AGAINST TRANSFER
Neither Party shall assign, sublease, hypothecate, or transfer this MOU, or any of
their respective rights or obligations, or any portion thereof, hereunder, directly or
indirectly, by operation of law or otherwise without prior written consent the other Party.
Any attempt to do so without prior written consent of the other Party shall be null and void.
12. NOTICES
All notices, demands, requests or approvals to be given under this MOU shall be
given in writing and conclusively shall be deemed served when delivered personally or
on the third business day after the deposit thereof in the United States mail, postage
prepaid, first class mail, addressed as hereinafter provided.
All notices, demands, requests or approvals from Laguna Beach to Newport Beach
shall be addressed to the Newport Beach at:
Attn: City Manager
City of Newport Beach
100 Civic Center Drive
P.O. Box 1768
Newport Beach, CA 92658-8915
All notices, demands, requests or approvals from Newport Beach to Laguna Beach
shall be addressed to Laguna Beach at:
Attn: Executive Director
Laguna Beach County Water District
306 Third Street
Laguna Beach, CA 92651
13. DISPUTE RESOLUTION
The Parties shall seek, in good faith and within a reasonable time, to resolve any
disputes regarding this MOU first by meeting and conferring among two designated staff
representatives, one from each Party. Any disputes that cannot be resolved by the staff
representatives may be referred by either Party to the Laguna Beach General Manager
and to the Newport Beach Utilities Director for resolution. Neither Party will pursue other
methods of dispute resolution, including mediation or litigation, until there is an impasse
between the General Manager and Utilities Director.
61824.0010 1\42645299.5
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14. STANDARD PROVISIONS
14.1 Compliance With all Laws. Each Party, shall at its own cost and expense
comply with all applicable statutes, ordinances, regulations and requirements of all
governmental entities related to its obligations under this MOU, including federal, state,
county or municipal, whether now in force or hereinafter enacted.
14.2 Cooperation. Newport Beach and Laguna Beach will work cooperatively to
complete the Project. Regular meetings shall be scheduled during the Project phases set
forth in Section 4 to discuss project status and obtain consensus on decision points. The
Parties shall meet on a monthly basis for such purposes during the Preliminary Design
and Entitlements Phase described in Section 4.0 herein. In the event Newport Beach
terminates this MOU and Newport Beach Acquisition set forth in Section 4.0 does not
occur, Newport Beach authorizes Laguna Beach to utilize the Preliminary Design plans,
drawings and/or specifications prepared for the Project subject to Laguna Beach
obtaining all required approvals from the architects, engineers, and consultants that
prepared the Preliminary Design plans, drawings, and/or specifications. Any use by
Laguna Beach will be at its sole risk and without liability to Newport Beach.
14.3 Waiver. A waiver by either Party of any breach, of any term, covenant or
condition contained herein shall not be deemed to be a waiver of any subsequent breach
of the same or any other term, covenant or condition contained herein, whether of the
same or a different character.
14.4 Integrated Contract. This MOU represents the full and complete
understanding of every kind or nature whatsoever between the Parties hereto with respect
to the subject matter of this MOU, and all preliminary negotiations and agreements of
whatsoever kind or nature are merged herein. No verbal agreement or implied covenant
shall be held to vary the provisions herein.
14.5 Interpretation. The terms of this MOU shall be construed in accordance with
the meaning of the language used and shall not be construed for or against either Party
by reason of the authorship of the MOU or any other rule of construction which might
otherwise apply.
14.6 Amendments. This MOU may be modified or amended only by a written
document executed by both Laguna Beach and Newport Beach and approved as to form
by the City Attorney of Newport Beach.
14.7 Severability. If any term or portion of this MOU is held to be invalid, illegal,
or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions
of this MOU shall continue in full force and effect.
14.8 Controlling Law and Venue. The laws of the State of California shall govern
this MOU and all matters relating to it and any action brought relating to this MOU shall
be adjudicated in a court of competent jurisdiction in the County of Orange, State of
California.
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14.9 No Attorney's Fees. In the event of any dispute or legal action arising under
this MOU, the prevailing party shall not be entitled to attorney's fees.
14.10 Counterparts. This MOU may be executed in two (2) or more counterparts,
each of which shall be deemed an original and all of which together shall constitute the
same instrument.
[SIGNATURES ON NEXT PAGE]
61824.00101 \42645299.5
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IN WITNESS WHEREOF, the parties have caused this MOU to be executed on
the dates written below.
CITY OF NEWPORT BEACH, LAGUNA BEACH COUNTY WATER
a California municipal corporation DISTRICT, a California special district
Date: Date:
By:
Will O'Neill
Mayor
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date: `II U Z
By:
r n C. Harp -b4
City Attorney
Sue Kempf
President
APPROVED AS TO FORM:
Date:
go
Legal Counsel
ATTEST: ATTEST:
Date: Date:
By: By:
Leilani I. Brown Keith Van Der Maaten
City Clerk Secretary
[END OF SIGNATURES]
Attachments: Exhibit A —
Legal Description
Exhibit B
— Property Depiction
Exhibit C
— Sample Implementation Terms
Exhibit D
— Insurance
61824.00101 \42645299.5
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Exhibit A
Legal Description
All that certain real property situated in the County of Orange, State of California,
described as follows:
THAT PORTION OF PARCEL 2, IN THE CITY OF FOUNTAIN VALLEY, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 95, PAGES 41 TO
42 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER
OR SAID COUNTY, SHOWN AND DESCRIBED AS "NOT A PART" OF THE MAP OF
TRACT 16434, IN THE CITY OF FOUNTAIN VALLEY, COUNTY OF ORANGE, STATE
OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 851, PAGES 22 TO 23,
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
61824.00 10 1 \42645299.5
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Exhibit C
Sample Implementation Terms
A. Design and Permitting Phase — Costs, Proportionality, and Timing
i. Upon approval of the Land Use Entitlements, Project Implementation
will begin with the final design phase and permitting which shall
consist of the Preliminary Design as modified by the Land Use
Entitlements ("Design") and permitting by other governing agencies
including, but not limited to, Santa Ana Regional Water Quality
Control Board ("SARWQC"), Orange County Water District
("OCWD") and City of Fountain Valley ("Permitting").
ii. Newport Beach is designated as the Party responsible for the Design
and Permitting for the Project Implementation.
iii. During the Design and Permitting, Newport Beach will study if any
transmission or distribution upgrades are necessary or
recommended.
iv. All costs related to the Design and Permitting will be apportioned to
each Party according to the relative capacity of water projected to be
used by that Party except that Newport Beach is entitled to, and shall
add, an additional 15% charge to all hard costs' payable by Laguna
Beach to account for Newport Beach's staff time for the Design and
Permitting.
V. Laguna Beach and Newport Beach will reconcile and reimburse
costs on a quarterly basis during the Design and Permitting phase
with all costs to be reconciled and reimbursed before either Party is
obligated to proceed with any further phases of the Project
Implementation.
B. Construction Phase — Costs, Proportionality, and Timing
i. Upon completion of the Design and Permitting, the next phase of
Project Implementation will be construction of the Project.
ii. Newport Beach is designated as the Party responsible for soliciting
formal bids for construction of the Project, awarding the construction
contract, and overseeing the construction of the Project.
iii. All costs of construction, including, but not limited to, necessary
infrastructure upgrades as determined during Design and Permitting,
will be apportioned to each Party according to the relative capacity
of water projected to be used by that Party except that Newport
Beach is entitled to, and shall add, an additional 10% charge to all
hard costs to reimburse/account for the staff time efforts during the
phase.
iv. Initially the capacity and cost allocations will be based on the design
capacity.
V. Laguna Beach and Newport Beach will reconcile and reimburse
costs on a quarterly basis during the construction phase.
13-26
vi. All costs to be reconciled and reimbursed prior to operation of the
Well.
vii. The final capacity and cost allocations will be based on the
commissioning flow capacity of the Well.
C. Well Operations and Maintenance
i. Upon construction of the Project, Newport Beach will be responsible for
operation and maintenance of the Well.
ii. The operation and maintenance of the Well will be apportioned to each
Party according to the relative capacity of Well allocated to that Party
except that Newport Beach is entitled to, and shall add, an additional
15% charge to all hard costs' payable by Laguna Beach to account for
Newport Beach's staff time allocated to Operation and Maintenance.
iii. The Parties agree to review and update the current cost allocation
method as needed to reflect the new well and facilities.
iv. Any unused production capacity from the Well may be used by the other
Party as an interruptible supply, with costs reimbursed to make the other
Party whole.
V. Newport Beach shall provide Laguna Beach's uninterruptible supply
amount of 2310 AFY from the Well and/or any of Newport Beach's other
wells.
vi. Laguna Beach and Newport Beach will reconcile and reimburse costs
on a semi-annual basis during the Operations phase.
D. Annual Meetings and Capital Costs.
The Parties will meet annually before the end of each fiscal year to
determine necessary capital and operation and maintenance costs
("Capital Costs") for the well and associated appurtenances ("Well
Facilities") for the next fiscal year and to determine and agree upon the
official well capacity value for the year based on the flow reduction
percentage discussed above.
The Parties shall adopt all necessary budgets and make all necessary
appropriations sufficient to cover all amounts payable under this MOU,
including each Party's proportionate share of all Capital Costs, subject
to the approval of each Party's governing body.
E. Reporting and Emergency Operations Plan.
The City of Newport Beach will submit all necessary production reporting
for both Parties as required by Orange County Water District. Within the
first year of operation, the Parties agree to develop an emergency
operations plan to optimize the availability of well water and other
emergency supplies regionally available to either Party in the event of
loss of imported water.
61824.00 10 1\42645299.5
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Exhibit D
INSURANCE REQUIREMENTS
A. Provision of Insurance. Without limiting Laguna Beach's indemnification of
Newport Beach, and prior to commencement of Work, Laguna Beach shall obtain,
provide and maintain at its own expense during the term of this Memorandum of
Understanding ("MOU"), policies of insurance of the type and amounts described
below and in a form satisfactory to Newport Beach. Laguna Beach agrees to
provide insurance in accordance with requirements set forth here. If Laguna
Beach uses existing coverage to comply and that coverage does not meet these
requirements, Laguna Beach agrees to amend, supplement or endorse the
existing coverage.
B. Acceptable Insurers. All insurance policies shall be issued by an insurance
company currently authorized by the Insurance Commissioner to transact
business of insurance in the State of California, with an assigned policyholders'
Rating of A- (or higher) and Financial Size Category Class VII (or larger) in
accordance with the latest edition of Best's Key Rating Guide, unless otherwise
approved by Newport Beach's Risk Manager.
C. Laguna Beach's Coverage Requirements.
Workers' Compensation Insurance. Laguna Beach shall maintain Workers'
Compensation Insurance providing statutory benefits and Employer's Liability
Insurance with limits of at least two million dollars ($2,000,000) each employee
for bodily injury by accident and each employee for bodily injury by disease in
accordance with the laws of the State of California. In addition, Laguna Beach
shall require any and all subcontractors to similarly maintain Workers'
Compensation Insurance and Employer's Liability Insurance in accordance with
California law for all of the subcontractor's employees. The insurer issuing the
Workers' Compensation insurance shall amend its policy by endorsement to
waive all rights of subrogation against the City of Newport Beach, its City
Council, boards and commissions, officers, agents, volunteers, and employees.
Laguna Beach shall submit to Newport Beach, along with the certificate of
insurance, a Waiver of Subrogation endorsement in favor of City of Newport
Beach, its City Council, boards and commissions, officers, agents, volunteers,
and employees, and any person or entity owning or otherwise in legal control
of the property upon which Laguna Beach performs activities contemplated by
this MOU.
2. General Liability Insurance. Laguna Beach shall maintain commercial general
liability insurance, and if necessary excess/umbrella liability insurance, with
coverage at least as broad as provided by Insurance Services Office form CG
00 01, on an occurrence basis, in an amount not less than five million dollars
($5,000,000).
61824.00 10 1 \42645299.5
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The policy shall cover liability arising from premises, operations, products -
completed operations, personal and advertising injury, and liability assumed
under an insured contract (including the tort liability of another assumed in a
business contract) with no endorsement or modification limiting the scope of
coverage for liability assumed under a contract.
Laguna Beach shall submit to Newport Beach, along with a certificate of
insurance, additional coverage as stated in Section D. Laguna Beach's Other
Insurance Requirements.
3. Excess/Umbrella Liability Insurance. If any Excess or Umbrella Liability policies
are used to meet the limits of liability required by this contract, then said policies
shall be "following form" of the underlying policy coverage, terms, conditions,
and provisions and shall meet all of the insurance requirements stated in this
MOU, including, but not limited to, the additional insured and primary & non-
contributory insurance requirements stated herein. No insurance policies
maintained by the Newport Beach, whether primary or excess, and which also
apply to a loss covered hereunder, shall be called upon to contribute to a loss
until the Laguna Beach's primary and excess/umbrella liability policies are
exhausted.
Laguna Beach shall submit to Newport Beach, along with a certificate of
insurance, additional coverage as stated in Section D. Laguna Beach's Other
Insurance Requirements.
4. Property Insurance coverage shall be maintained on an "All Risk" basis equal
to the full replacement cost of Premises, including flood and earthquake, with
no coinsurance clause. Laguna Beach shall be solely responsible for the
payment of any deductible. Proceeds payable under the above insurance shall
be fully payable to the City as Loss Payee.
5. Crime insurance. Laguna Beach shall maintain crime coverage in an amount
not less than one -hundred thousand dollars ($100,000) covering public
employee theft, depositors forgery or alteration and computer and funds
transfer fraud.
6. Pollution Liability Insurance. Laguna Beach shall maintain a policy providing
Laguna Beach's pollution liability ("CPL") coverage with a total limit of liability
of no less than five -hundred thousand dollars ($500,000) per environmental
loss and in the aggregate per policy period. Claims -made policies require a 10-
year extended reporting period. The CPL policy shall include coverage for
cleanup costs, third -party bodily injury and property damage, including loss of
use of damaged property or of property that has not been physically injured or
destroyed, resulting from pollution conditions caused by contracting operations.
Coverage as required in this paragraph shall apply to sudden and non -sudden
pollution conditions resulting from the escape or release of smoke, vapors,
fumes, acids, alkalis, toxic chemicals, liquids, or gases, waste materials, or
other irritants, contaminants, or pollutants. The CPL shall also provide
61824.00 10 1 \42645299.5
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coverage for transportation and off -Site disposal of materials. The policy shall
not contain any provision or exclusion (including any so-called "insured versus
insured" exclusion or "cross -liability" exclusion) the effect of which would be to
prevent, bar, or otherwise preclude any insured or additional insured under the
policy from making a claim which would otherwise be covered by such policy
on the grounds that the claim is brought by an insured or additional insured
against an insured or additional insured under the policy.
Laguna Beach shall submit to Newport Beach, along with a certificate of
insurance, additional coverage as stated in Section D. Laguna Beach's Other
Insurance Requirements.
D. Laguna Beach's Other Insurance Requirements. The policies are to contain, or
be endorsed to contain, the following provisions:
1. Waiver of Subrogation. All insurance coverage maintained or procured
pursuant to this MOU shall be endorsed to waive subrogation against City of
Newport Beach, its City Council, boards and commissions, officers, agents,
volunteers, and employees, and any person or entity owning or otherwise in
legal control of the property upon which Laguna Beach performs activities
contemplated by this MOU or shall specifically allow Laguna Beach or others
providing insurance evidence in compliance with these requirements to waive
their right of recovery prior to a loss. Laguna Beach hereby waives its own right
of recovery against Newport Beach and shall require similar written express
waivers from each of its subcontractors.
2. Additional Insured Status. All liability policies including general liability,
products and completed operations, excess/umbrella liability, pollution liability,
and property insurance if required, shall provide or be endorsed to provide that
City of Newport Beach, its City Council, boards and commissions, officers,
agents, volunteers, and employees, and any person or entity owning or
otherwise in legal control of the property upon which Laguna Beach performs
the activities contemplated by this MOU shall be included as additional insureds
under such policies.
3. Primary and Non Contributory. Laguna Beach's insurance coverage shall be
primary insurance and/or the primary source of recovery with respect to City of
Newport Beach, its City Council, boards and commissions, officers, agents,
volunteers, and employees, and any person or entity owning or otherwise in
legal control of the property upon which Laguna Beach performs the activities
contemplated by this MOU. Any insurance or self-insurance maintained by
Newport Beach shall be excess of Laguna Beach's insurance and shall not
contribute with it.
4. Notice of Cancellation. All policies shall provide Newport Beach with thirty (30)
calendar days' notice of cancellation or nonrenewal of coverage (except for
nonpayment for which ten (10) calendar days' notice is required) for each
required coverage.
61824.00 10 1\42645299.5
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5. Subcontractors. Laguna Beach shall require and verify that all subcontractors
maintain insurance meeting all the requirements stated herein, and Laguna
Beach shall ensure that Newport Beach is an additional insured on insurance
required from subcontractors. For CGL coverage subcontractors shall provide
coverage with a format at least as broad as CG 20 38 04 13.
E. Additional Agreements Between the Parties. The parties hereby agree to the
following:
1. Evidence of Insurance. Laguna Beach shall provide certificates of insurance to
Newport Beach as evidence of the insurance coverage required herein, along
with a waiver of subrogation endorsement for workers' compensation and other
endorsements as specified herein for each coverage. Insurance certificates
and endorsements must be approved by Newport Beach's Risk Manager prior
to commencement of performance. Current certification of insurance shall be
kept on file with Newport Beach at all times during the term of this MOU. The
certificates and endorsements for each insurance policy shall be signed by a
person authorized by that insurer to bind coverage on its behalf. At least fifteen
(15) days prior to the expiration of any such policy, evidence of insurance
showing that such insurance coverage has been renewed or extended shall be
filed with the Newport Beach. If such coverage is cancelled or reduced, Laguna
Beach shall, within ten (10) days after receipt of written notice of such
cancellation or reduction of coverage, file with the Newport Beach evidence of
insurance showing that the required insurance has been reinstated or has been
provided through another insurance company or companies. Newport Beach
reserves the right to require complete, certified copies of all required insurance
policies, at any time.
2. Newport Beach's Right to Revise Requirements. Newport Beach reserves the
right at any time during the term of the MOU to change the amounts and types
of insurance required by giving Laguna Beach sixty (60) calendar days' advance
written notice of such change.
3. Right to Review Subcontracts. Laguna Beach agrees that upon request, all
agreements with subcontractors or others with whom Laguna Beach enters into
contracts with on behalf of Newport Beach will be submitted to Newport Beach
for review. Failure of Newport Beach to request copies of such agreements will
not impose any liability on Newport Beach, or its employees. Laguna Beach
shall require and verify that all subcontractors maintain insurance meeting all
the requirements stated herein, and Laguna Beach shall ensure that Newport
Beach is an additional insured on insurance required from subcontractors. For
CGL coverage, subcontractors shall provide coverage with a format at least as
broad as CG 20 38 04 13.
4. Enforcement of Contract Provisions. Laguna Beach acknowledges and agrees
that any actual or alleged failure on the part of Newport Beach to inform Laguna
Beach of non-compliance with any requirement imposes no additional
61824.0010 1\42645299.5
13-31
obligations on Newport Beach nor does it waive any rights hereunder.
5. Requirements not Limiting. Requirements of specific coverage features or
limits contained in this Exhibit D are not intended as a limitation on coverage,
limits or other requirements, or a waiver of any coverage normally provided by
any insurance. Specific reference to a given coverage feature is for purposes
of clarification only as it pertains to a given issue and is not intended by any
party or insured to be all inclusive, or to the exclusion of other coverage, or a
waiver of any type. If Laguna Beach maintains higher limits than the minimums
shown above, Newport Beach requires and shall be entitled to coverage for
higher limits maintained by Laguna Beach. Any available insurance proceeds
in excess of the specified minimum limits of insurance and coverage shall be
available to Newport Beach.
6. Self -Insured Retentions. Laguna Beach agrees not to self -insure or to use any
self -insured retentions on any portion of the insurance required herein and
further agrees that it will not allow any indemnifying party to self -insure its
obligations to Newport Beach. If Laguna Beach's existing coverage includes a
self -insured retention, the self -insured retention must be declared to Newport
Beach. Newport Beach may review options with Laguna Beach, which may
include reduction or elimination of the self -insured retention, substitution of
other coverage, or other solutions. Laguna Beach agrees to be responsible for
payment of any deductibles on their policies.
7. Newport Beach Remedies for Non Compliance. If Laguna Beach or any
subcontractor fails to provide and maintain insurance as required herein, then
Newport Beach shall have the right but not the obligation, to purchase such
insurance, to terminate this MOU, or to suspend Laguna Beach's right to
proceed until proper evidence of insurance is provided. Any amounts paid by
Newport Beach shall, at Newport Beach's sole option, be deducted from
amounts payable to Laguna Beach or reimbursed by Laguna Beach upon
demand.
8. Timely Notice of Claims. Laguna Beach shall give Newport Beach prompt and
timely notice of claims made or suits instituted that arise out of or result from
Laguna Beach's performance under this MOU, and that involve or may involve
coverage under any of the required liability policies. Newport Beach assumes
no obligation or liability by such notice but has the right (but not the duty) to
monitor the handling of any such claim or claims if they are likely to involve
Newport Beach.
9. Coverage not Limited. All insurance coverage and limits provided by Laguna
Beach and available or applicable to this Contract are intended to apply to the
full extent of the policies. Nothing contained in this MOU or any other
agreement relating to Newport Beach or its operations limits the application of
such insurance coverage.
10. Coverage Renewal. Laguna Beach will renew the coverage required here
61824.00 10 1 \42645299.5
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annually as long as Laguna Beach continues to provide any Work under this or
any other MOU or agreement with Newport Beach. Laguna Beach shall provide
proof that policies of insurance required herein expiring during the term of this
MOU have been renewed or replaced with other policies providing at least the
same coverage. Proof that such coverage has been ordered shall be submitted
prior to expiration. A coverage binder or letter from Laguna Beach's insurance
agent to this effect is acceptable. A certificate of insurance and/or additional
insured endorsement as required in these specifications applicable to the
renewing or new coverage must be provided to Newport Beach within five (5)
calendar days of the expiration of the coverages.
11. Maintenance of General Liability Coverage. Laguna Beach agrees to maintain
commercial general liability coverage for a period of ten (10) years after
completion of the Project/MOU or to obtain coverage for completed operations
liability for an equivalent period.
12. Laguna Beach's Insurance. Laguna Beach shall also procure and maintain, at
its own cost and expense, any additional kinds of insurance, which in its own
judgment may be necessary for its proper protection and prosecution of the
services provided under this MOU.
61824.00101 \42645299.5
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ATTACHMENT C
AMENDMENT NO. TWO TO
ON -CALL PROFESSIONAL SERVICES AGREEMENT
WITH MICHAEL K. NUNLEY & ASSOCIATES, INC. FOR
CIVIL ENGINEERING SERVICES
THIS AMENDMENT NO. TWO TO ON -CALL PROFESSIONAL SERVICES
AGREEMENT ("Amendment No. Two") is made and entered into as of this 24th day of
September, 2024 ("Effective Date"), by and between the CITY OF NEWPORT BEACH, a
California municipal corporation and charter city ("City"), and MICHAEL K. NUNLEY &
ASSOCIATES, INC., a California corporation ("Consultant"), whose address is 530
Paulding Circle B, Arroyo Grande, CA 93420, and is made with reference to the following:
RECITALS
A. On July 26, 2022, City and Consultant entered into a Professional Services
Agreement ("Agreement") to provide civil engineering and related services on an
on-call/as-needed basis. ("Project").
B. On July 25, 2024, City and Consultant entered into Amendment No. One to the
Agreement ("Amendment No. One") to extend the term of the Agreement, and to
increase the total compensation.
C. The parties desire to enter into this Amendment No. Two to increase the total
compensation.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties
as follows:
1. COMPENSATION TO CONSULTANT
Section 4.1 of the Agreement is amended in its entirety and replaced with the
following: "City shall pay Consultant for the Services on a time and expense not -to -
exceed basis in accordance with the provisions of this Section and the Schedule of Billing
Rates attached hereto as Exhibit B and incorporated herein by reference. Consultant's
compensation for all Work performed in accordance with this Agreement, including all
reimbursable items and subconsultant fees, shall not exceed Five Hundred Seventy
Five Thousand Dollars and 00/100 ($575,000.00), without prior written authorization
from City. No billing rate changes shall be made during the term of this Agreement without
the prior written approval of City."
The total amended compensation reflects Consultant's additional compensation
for additional Services to be performed in accordance with this Amendment No. Two,
including all reimbursable items and subconsultant fees, in an amount not to exceed Two
Hundred Thousand Dollars and 00/100 ($200,000.00).
Michael K. Nunley & Associates, Inc. Page 1 13-34
2. INTEGRATED CONTRACT
Except as expressly modified herein, all other provisions, terms, and covenants
set forth in the Agreement shall remain unchanged and shall be in full force and effect.
[SIGNATURES ON NEXT PAGE]
Michael K. Nunley & Associates, Inc. Page 2 13-35
IN WITNESS WHEREOF, the parties have caused this Amendment No. Two to be
executed on the dates written below.
APPROVED AS TO FORM:
CITY ATT� � � Y'S OFFICE
Date: 7 2DZ'�l
CITY OF NEWPORT BEACH,
a California municipal corporation
Date:
B ,z BY:
,„/A ron C. Harp A1� Wifl O'Neill
City Attorney 9/��z� Mayor
ATTEST:
Date:
By:
Leilani I. Brown
City Clerk
CONSULTANT: MICHAEL K. NUNLEY
& ASSOCIATES, INC., a California
corporation
Date:
By:
Michael K. Nunley
Chief Executive Officer, Secretary,
Chief Financial Officer
[END OF SIGNATURES]
Michael K. Nunley & Associates, Inc. Page 3 13-36