HomeMy WebLinkAbout14 - Acquisition of 2015 Rule 20A Credits from the City of Mission ViejoCTY OF
F
NEWPORT BEACH
City Council Staff Report
May 26, 2015
Agenda Item No. 14
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: David A. Webb, Public Works Director- (949) 644 -3330,
dawebb @newportbeachca.gov
PREPARED BY: Raymund Reyes, Management Specialist
PHONE: (949) 644 -3325
TITLE: Acquisition of 2015 Rule 20A Credits from the City of Mission Viejo
ABSTRACT:
California Public Utilities Commission (CPUC) Rule 20A establishes program funding for the
undergrounding of overhead utilities by municipalities. The City of Mission Viejo (Mission Viejo) has
unallocated Rule 20A credits and is offering to sell them to the City of Newport Beach for $55,526.35. This
action will result in a $100,957.00 credit to the City's Southern California Edison (SCE) Rule 20A account.
RECOMMENDATION:
a) Upon approval of funding in the FY 2015/16 budget, authorize the City Manager to execute the
Memorandum of Understanding (MOU) between the City of Newport Beach and City of Mission Viejo
documenting details of transaction for the Rule 20A credit acquisition and to provide the City of Newport
Beach first right of refusal to purchase additional Rule 20A credits from the City of Mission Viejo, as it
becomes available, at a purchase rate of $0.55 on the dollar; and
b) Authorize staff to process the Rule 20A credit transfer between the City of Newport Beach and City of
Mission Viejo with SCE.
FUNDING REQUIREMENTS:
Funding will be available in the proposed FY15/16 Capital Improvement Program budget. Upon approval of
the budget, funds will be available for distribution after July 1 st.
Account Description Account Number Amount
Edison Rule 20A Credit 7014- C8002022 $ 55,526.35
DISCUSSION:
CPUC sets Rule 20 policies and procedures for the conversion of overhead utility facilities to underground.
Under Rule 20, underground utility projects may be financed by utility rate money, combined rate funds and
local tax proceeds; depending on whether the project is classified under the Rule 20A, Rule 20B, or Rule
20C provision. 14 -1
Rule 20A projects are paid for by the utility's ratepayers. To qualify for funding through these proceeds,
projects must produce a benefit to the general public, not just customers in the affected area. This may be
satisfied by one or more of the following criteria:
• The location has an unusually heavy concentration of overhead facilities;
• The location is heavily traveled;
• The location is an arterial or major collector road in a city's general plan; and /or
• The overhead equipment must be located within or pass through a civic, recreational, or scenic area.
Following negotiations and Council approval in July of 2013, the City entered into an MOU with Mission
Viejo in August of 2013 to purchase unallocated 20A credits totaling $169,968.00 at a cost of $0.55 on the
dollar, for a total purchase price of $93,482.40. In July 2014, Newport Beach purchased 20A credits totaling
$99,143.00 at a cost of $54,528.65. Mission Viejo also granted the City first right of refusal to purchase
future Rule20A allocations between July 1, 2014 and July 1, 2016 at the same rate of $0.55 on the dollar.
Mission Viejo has $100,957.00 in unallocated Rule 20A funds for calendar year 2015. The City has been
given the first opportunity to purchase these credits at the previously agreed upon rate for a total purchase
price of $55,526.35. This purchase is comparable to other Rule 20A transactions within the Orange County
region. SCE will transfer Mission Viejo's available credit to Newport Beach's account upon receipt of an
authorization letter from Mission Viejo.
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. In addition, any
undergrounding project funded by the acquired Rule 20A funds will be subject to environmental review.
NOTICING:
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:
Description
Attachment A - Memorandum of Understanding between the Cities of Mission Vie and Newport Beach
Attachment B - Letter from SCE Stating Rule 20A Allocation Balance
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ATTACHMENT A
MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding ( "MOU ") is entered into as of June ,
2015 ( "Effective Date "), by and between the City of Newport Beach, a California
municipal corporation with its principal place of business at 100 Civic Center Drive,
Newport Beach, California 92660 ( "Newport Beach "), and the City of Mission Viejo, a
California municipal corporation with its principal place of business at 200 Civic Center,
Mission Viejo, California 92691 ( "Mission Viejo "). Newport Beach and Mission Viejo are
sometimes individually referred to herein as "Party" and collectively as "Parties ".
RECITALS
A. Electric Utilities collect and annually allocate funds to communities to
convert overhead electric facilities to underground electric facilities ('Rule 20A Funds ").
B. Newport Beach is actively planning one or more projects to underground
overhead electric facilities that qualify for the application of California Public Utilities
Commission ( "CPUC") Rule 20A Funds ('Projects "). Newport Beach desires to obtain
additional Rule 20A Funds allocation to finance such Projects.
C. Southern California Edison ( "SCE ") currently has designated and
dedicated a balance of $100,957.00 in Rule 20A Funds for the benefit of Mission Viejo
( "Mission Viejo Allocation "), and Mission Viejo currently has no active projects which
can make use of the Mission Viejo Allocation.
D. Mission Viejo has granted Newport Beach first right of refusal to purchase
Rule 20A allocations between July 1, 2014 and July 1, 2016.
E. Newport Beach desires to acquire, for consideration, the Mission Viejo
Allocation to use in connection with the Projects, and Mission Viejo desires to transfer
the Mission Viejo Allocation to Newport Beach to enable the Rule 20A Funds, which
have been allocated to Mission Viejo, to be used for their intended purpose of
undergrounding electric facilities and to derive economic benefit from the Mission Viejo
Allocation.
AGREEMENT
NOW, THEREFORE, the Parties hereto agree as follows:
1. Mission Viejo agrees to assign, for use by Newport Beach, its rights and
interests in the Mission Viejo Allocation to Newport Beach, and Newport Beach agrees
to acquire, for consideration, the Mission Viejo Allocation in accordance with the terms
of this MOU. This MOU shall be subject to the approval of each the City Council of
Newport Beach and the City Council of Mission Viejo and shall become effective on the
date when both such approvals have been obtained ( "Effective Date'). Notwithstanding
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the foregoing, if this MOU has not become effective as of September 30, 2015, then
either Party may terminate this MOU on five (5) business days' written notice to the
other Party without incurring any liability, costs or further obligations to the other party or
any third party.
2. Within fifteen (15) business days of the Effective Date, Newport Beach
shall make a payment to Mission Viejo in the amount of Fifty Five Thousand, Five
Hundred Twenty Six Dollars and Thirty -Five Cents ($55,526.35) ( "Acquisition Price ").
The Acquisition Price shall be made in immediately available funds via check or wire
transfer to an account designated by Mission Viejo. The Acquisition Price shall
constitute full consideration for the transfer and assignment of the Mission Viejo
Allocation.
3. Mission Viejo agrees to sell the Mission Viejo Allocation to Newport Beach
at a purchase rate of Fifty -Five Cents ($0.55) for every One Dollar ($1.00) of Rule 20A
Funds. Within ten (10) business days of Mission Viejo's receipt of the Acquisition Price
funds, Mission Viejo shall deliver a written request to SCE, with a copy to Newport
Beach, making a formal request to transfer and assign the entire balance of the Rule
20A Funds contained in the Mission Viejo Allocation to and for the benefit of Newport
Beach. Mission Viejo shall cooperate in good faith with Newport Beach to provide any
additional documentation or information that is reasonably requested by SCE to
complete the transfer. In the event that SCE is unable to complete the transfer, or only
complete a partial transfer, Mission Viejo shall return the unused Acquisition Price funds
to Newport Beach within ten (10) business days of Newport Beach's notification to
Mission Viejo.
4. Newport Beach acknowledges and agrees that it has conducted its own
investigation as to the applicability and transferability of the Mission Viejo Allocation for
use in the Projects and that Mission Viejo has not made any representation or warranty
to Newport Beach with respect to same. The actual use of the Mission Viejo Allocation
by Newport Beach shall be subject to the rules and procedures adopted by SCE,
CPUC, and such other conditions or requirements as are set forth in the Public Utilities
Code.
5. Newport Beach shall indemnify, defend, and hold harmless Mission Viejo,
its elected officials, officers, employees, and agents, from any claim, damage or liability
arising in connection with the use of Rule 20A Funds from the Mission Viejo Allocation
in connection with the construction of the Projects, including legal challenges of all types
or natures, including but not limited to administrative, judicial, or legislative actions.
6. In the event that either Party is in breach of its obligations as set forth in
this MOU, then the non - defaulting Party shall have the right to terminate this Agreement
on ten (10) business days' written notice to the defaulting Party unless the default is
cured, or cure has commenced, within the notice period. Upon termination for breach,
the non - defaulting Party may exercise any right or remedy which it may have under
applicable law. Within ten (10) business days of termination pursuant to this Section 7,
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Mission Viejo shall return to Newport Beach that portion of the Acquisition Price funds
applicable to that portion of the Mission Viejo Allocation not yet transferred by SCE to
Newport Beach.
7. All notices to be given pursuant to this MOU shall be delivered in person
or by commercial overnight delivery to the address of the Party set forth above, and
addressed to the City Manager of such Party and shall be effective upon receipt.
8. This MOU shall be governed and construed in accordance with the laws of
the State of California, and any action brought relating to this Agreement shall be
adjudicated in a court of competent jurisdiction in the County of Orange.
9. Each Party shall at its own cost and expense comply with all statutes,
ordinances, regulations and requirements of all governmental entities, including federal,
state, county or municipal, whether now in force or hereinafter enacted.
10. 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.
11. Mission Viejo agrees to provide Newport Beach first right of refusal to
purchase future Rule 20A allocations between July 1, 2015 and July 1, 2017. If Mission
Viejo intends to transfer its Rule 20A allocation within said dates it shall notify Newport
Beach of fund availability and the proposed purchase price by another city if another city
is proposing a purchase price higher than the purchase rate of Fifty -Five Cents ($0.55)
for every One Dollar ($1.00) of Rule 20A Funds. If Newport Beach desires to acquire
said allocations by matching the price proposed by another city, it shall respond within
fifteen (15) business days of Mission Viejo's notification stating intent to purchase said
allocations at the proposed purchase price. Newport Beach agrees to enter into an
MOU with Mission Viejo to complete the transfer within ninety (90) days of said
notification to Mission Viejo.
12. The terms of this Agreement 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 Agreement or any other rule of construction which might
otherwise apply.
13. If any term or portion of this Agreement is held to be invalid, illegal, or
otherwise unenforceable by a court of competent jurisdiction, the remaining provisions
of this Agreement shall continue in full force and effect.
14. In the event of any dispute or legal action arising under this Agreement,
the prevailing Party shall not be entitled to attorney's fees.
Cl
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15. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one and the
same instrument.
16. Each Party signing this Agreement explicitly affirms and provides they
have the power and authority to bind their respective Party.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Parties hereto have executed this MOU as of the
dates indicated below.
CITY OF MISSION VIEJO,
A California municipal corporation
Date:
Dennis Wilberg
City Manager
ATTEST:
Date:
Karen Hamman
City Clerk
APPROVED AS TO FORM:
Date:
William P. Curley III
City Attorney
CITY OF NEWPORT BEACH,
A California municipal corporation
Date:
Dave Kiff
City Manager
ATTEST:
Date:
Leilani I. Brown
City Clerk
APPROVE AS TO FORM:
Date:
Aaron C. Harp
City Attorney 51��
[END OF SIGNATURES]
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ATTACHMENT B
SOUTHERN CALIFORNIA
EDISON`
An EDISON INTERNATIONALo, Company
April 17, 2015
Mr. Dennis Wilberg j"
City Manager RECEIVED
City of Mission Viejo l 'CPR 2 7 2015
200 Civic Center RECEIVED `
Mission Viejo, CA 92691 �',,.
SUBJECT: City of Mission Viejo 2015 Rule 20A Allocation Balance
Dear Mr. Wilberg:
Southern California Edison (SCE) has filed with the California Public Utilities Commission (CPUC) its annual
report of SCE's 2015 budget for capital spending under Tariff Rule 20A, Replacement of Overhead with
Underground Electric Facilities. For calendar year 2015, the budget is $40,000,474.
Pursuant to the formula set out in Tariff Rule 20A, the portion of this amount allocated to City of Mission Viejo
is $100,957. Under the tariff, allocations not committed to a qualifying project in one year are carried over to
the next year. As of this writing, City of Mission Viejo's allocations balance is $100,957.
CPUC Decision 01 -12 -009 (Decision) codified the opportunity for local governments to "mortgage" their
current year's allocation up to an additional five years in order to be able to undertake a qualifying Rule 20A
project sooner than they otherwise could.
In accordance with the Decision, and when requested by you, SCE will meet with you and community residents
at least once every six months when projects are in queue, and at least once every other month once a
conversion project is underway. The decision requires local government to give notice of the meetings and
provide the venue. Please feel free to call me any time to schedule such a community meeting or, if you have
any questions about Rule 20A or any other matters affecting our service to you.
Sincerely,
Frank Wasko
Local Public Affairs Region Manager
cc: Public Works Director — Mark Chagnon
Rule 20 Program Manager — Tony Mathis
Rule 20 LPA — Sylvia Hernandez
1325 S. Grand Ave.
Santa Ana, CA 92705
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