For City Council and Rialto Utility Authority Meeting [November 15, 2022]
TO: Honorable Mayor and City Council
APPROVAL: Marcus Fuller, City Manager
FROM: Thomas J. Crowley, P.E., Utilities Manager
Title
Request City Council/Rialto Utility Authority Board to Approve the Water Replacement Order Agreement Extending the Agreement Between the City of Rialto and San Bernardino County for an Additional Three Years, Authorizing County to Continue Utilizing Up to 1,600 Acre-Feet of Water of the City of Rialto’s Water Rights from the Rialto Basin, and Authorizing the City Manager to Execute the Agreement and any Related Documents.
(ACTION)
Body
BACKGROUND
The City of Rialto, (Rialto) and the County of San Bernardino (County) previously entered into an agreement, dated May 20, 2000, wherein the County agreed to pay Rialto in consideration for the grant of water rights by Rialto to Fontana Union Water Company (FUWC) to pump 1,600 acre-feet of water in the Rialto/Colton Groundwater Basin. This action was necessary for the County to comply with Order No. 99-86 Revising Clean-up and Abatement Order No. 98-96 issued by the Regional Water Quality Control Board, Santa Ana Region (“Regional Board Order”). Rialto then entered into a Standby Water Lease with FUWC for the lease of 1,600 acre-feet of water in the Rialto/Colton Groundwater Basin dated May 9, 2000.
The original agreement between Rialto and the County expired on May 20, 2020, and the County requested a two-year extension of the agreement to be terminated on December 31, 2022. This extension was approved by the City Council on September 14, 2021, included as Attachment 1. The purpose of this extension was to allow the County to continue utilizing up to 1,600 acre-feet of water for compliance with the Regional Board Order for the current water year, commencing October 1, 2020, through September 30, 2021, and the subsequent water year, commencing October 1, 2021, through September 30, 2022, and to reimburse Rialto for such use of the water as set forth in the agreement.
In February of 2019, the Standby Water Lease Agreement between Rialto and FUWC was extended for another 20-year period. Rialto and FUWC agreed to jointly pursue the County to pay a Consumer Price Index (CPI) adjustment to the rates that were identified in the original agreement between the Rialto and the County. If for some reason, Rialto and FUWC were unable to get the County to agree to paying the CPI adjustment amount, FUWC agreed to pay the difference. As of today, the County has agreed to pay the CPI adjustment amounts. The adjustments were based upon the accumulative CPI from the beginning of the agreements and carried forward to current. The CPI is based upon the US Department of Labor Bureau of Labor Statistics’ Consumer Price Index for all Urban Consumers (CPI-U) and shall not exceed the annual increase of 5%.
ANALYSIS/DISCUSSION
The County is now asking for an Amendment to the Agreement entered into on September 14, 2021. The purpose is to provide an extension that would provide the County with enough time to engage in good faith discussions with FUWC and the Regional Board regarding whether the 1,600 acre-feet per year is still necessary to be pumped.
Amendment No. 1, included as Attachment 2, shall keep the original agreement in effect through December 2025.
As consideration for amending the agreement for an additional three years, the County will compensate the City for the 2022/2023 Water Year, by making a payment to Rialto in the amount of $56.57 per acre foot charged for making water rights available ($90,512) and an additional payment of $141.42 per acre foot for each acre foot of water drawn from or produced pursuant to such standby water rights (up to $226,272) for a total of $316,784.
For the 2023/2024 Water Year, the County shall make payment to Rialto in the amount of $59.40 per acre foot charged for making water rights available ($95,040) and an additional payment of $148.49 per acre foot for each acre foot of water drawn from or produced pursuant to such standby water rights (up to $237,584) for a total of $332,624.
For the 2024/2025 Water Year, the County shall make payment to Rialto the amount of $62.37 per acre foot charged for making water rights available ($99,792) and an additional payment of $155.92 per acre foot for each acre foot of water drawn from or produced pursuant to such standby water rights (up to $249,472) for a total of $349,264.
The increase provided in the above rates is a 5% increase per year, the maximum allowed under the Settlement Agreement with FUWC. The compensation for this water use is on average over the next three years of $208 per acre-foot which is similar to the Base Line Feeder replacement costs of $210 per acre-foot
The County will inform Rialto in writing within 30 days of the start of the water year that the County intends to utilize the standby water rights for water year 2022/23. For all three water years, the County will pay the respective amount per acre foot charge for making water rights available regardless of whether it utilizes the 1,600 acre-feet of standby water rights. The County shall make the required payments within sixty (60) days of receipt of an invoice from Rialto indicating the amount of water produced pursuant to the standby water rights.
ENVIRONMENTAL IMPACT
This request is not a “Project” as defined by the California Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. According to Section 15378(b), a Project does not include: (5) Organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.
GENERAL PLAN CONSISTENCY
The proposed action is consistent with Guiding Principle 3 in the General Plan:
Our City government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
Approval of the proposed action also complies with the following City of Rialto Goals and Policies:
Goal 2-28: Protect and enhance Rialto’s surface waters and groundwater basins.
Policy 2-28.1: Work with local water agencies and the State and Federal governments to clean up and mitigate perchlorate contamination within the basin.
Policy 2-28.5: Apply methodologies and assign responsibility to protect the quality of groundwater from pollution by landfills and industrial uses.
LEGAL REVIEW
The City Attorney has reviewed and supports the staff report.
FINANCIAL IMPACT:
Operating Budget Impact
For Water Year 2022/23, Rialto will receive $316,784 ($90,512 for making the 1,600 acre-feet available and up to $226,272 for the use of 1,600 acre-feet). For Water Year 2023/24, Rialto will receive $332,624 ($95,040 for making the 1,600 acre-feet available and up to $237,584 for the use of 1,600 acre-feet). For Water Year 2024/25, Rialto will receive $349,264 ($99,792 for making the 1,600 acre-feet available and up to $249,472 for the use of 1,600 acre-feet). These funds will be deposited into Water Fund Account No. 670-400-7960-7585 for the Municipal Water Sales.
The increase provided in the above rates is a 5% increase per year, the maximum allowed under the Settlement Agreement with FUWC. The compensation for this water use is on average over the next three years of $208 per acre-foot which is similar to the Base Line Feeder cost of $210 per acre-foot.
Capital Improvement Budget Impact
The Capital Improvement Budget will not be impacted by the proposed action.
Licensing
A business license application and Business License tax is not required with the proposed action.
RECOMMENDATION
Staff recommends that the City Council/Rialto Utility Authority Board:
• Approve the Water Replacement Order Agreement extending the agreement between the City of Rialto and San Bernardino County for an additional two years,
• Authorize San Bernardino County to continue utilizing up to 1,600 acre-feet of water of the City of Rialto’s water rights, and
• Authorize the City Manager to execute the agreement and any related documents.