San Jose Water Company, Modification of Agreement, March 11, 1987' . !
RESOLUTION NO. 9929
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CUPERTINO
AUTHORIZING EXECUTION OF "MODIFICATION OF AGREEMENT"
BETWEEN THE SAN JOSE WATER COMPANY AND THE
CITY OF CUPERTINO
WHEREAS, there has been presented to the City Council a "Modification of
Agreement" between the San Jose Water Company and the City of Cupertino, modifying
that certain agreement entered into by the two parties as of March 11, 1987, concerning
water service to separate areas within the boundaries of the city and known separately as
the Seven Springs development and the Rainbows End development; and
WHEREAS, the provisions of the "Modification of Agreement" have been
reviewed and approved by the Director of Public Works and the City Attorney.
NOW, THEREFORE, BE IT RESOLVED, that the "Modification of Agreement"
is hereby approved and the Mayor and . City Clerk are authorized to execute said
agreement on behalf of the City of Cupertino.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of
Cupertino this 18th day of August, 1997, by the following vote:
Vote Members of the Citv Council
A YES: Burnett, Chang, Dean, Sorensen, Bautista
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST: APPROVED:
/s/ Kimberly Smith /s/ John Bautista
City Clerk Mayor, City of Cupertino
, -"
MODIFICATION OF AGREEMENT
The Agreement, made and entered into as of March 11, 1987 by and between
the City of Cupertino ("City") and the San Jose Water Company ("Company"), is hereby
amended and modified as set forth below.
RECITALS
Whereas, the City and Company entered into a written agreement ("Agreement")
on March 11, 1987 concerning water service to separate areas within the boundaries of
the City and known separately as the Seven Springs development and the Rainbows
End development; and
Whereas, that Agreement, consisting of fifteen pages without exhibits (a copy of
which is attached as Exhibit A), i"S now in full force and effect and being implemented by
both parties; and
Whereas, under the terms of the Agreement the City has a ten year option to
purchase the Company's water facilities serving the Seven Springs development, and
Whereas, the commencement date of that option has been previously
determined and accepted by the parties as June 16, 1993; and
Whereas, the Company desires to continue to serve the Seven Springs
development now and for the foreseeable future, and Company desires to obtain
cancellation of the City's option to acquire the Seven Spring facilities:
NOW, THEREFORE, City and Company agree as follows:
1. The Company will pay the City the sum of one hundred and twenty-five
thousand dollars ($125,000) on or before August 1, 1997, and the City will issue its
receipt to the Company.
2. Upon receipt of the payment set forth above, the option of the City to
purchase the Seven Springs facilities as set forth in Paragraph 3 of the March 11, 1987
Agreement will be deemed null and void and of no further effect.
3. All remaining terms and conditions of the Agreement will continue in full force
and effect, and be read and interpreted in a manner consistent with this Modification.
4. City and Company both agree to cooperate fully in the preparation and
execution of any written instruments that may be deemed necessary to transfer full or
marketable title of the Seven Springs facilities to Company.
5. This document is a sufficient written instrument for amendment purposes as
contemplated by paragraph 6(b) of the Agreement.
IN WITNESS WHEREOF, the parties have caused this Modification to be
executed and made effective the later of the dates set forth below.
Dated: September 2, 1997
SAN JOSE WATER COMPANY,
A California Corporation
CITY OF CUPERTINO,
A California General Law City
ATTEST:
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AGREEMENT
.This Agreement is made and entered into as of
this 11th day of March , 1987, by and between the City
of Cupertino ("City") and San Jose Water Company ("Company").
RECITALS
A. The City is a general law city organized and
existing under the laws of the State of California. The City
operates its own water system within certain parts of the
City. The City's water system is not subject to the
jurisdiction of the California Public Utilities Commission
("PUC").
B. The Company is a privately-held public utility
water corporation organized and existing under the laws of the
State of California. The Company is subject to the
jurisdiction of the PUC.
C. The Gregory Group (''Developer") has proposed that
certain real property located within the City and known
commonly as Seven Springs Ranch ("Seven Springs") be developed
as a residential development. (The area outlined in r.ed on the
map attached as Exhibit A to this Agreement indicates the
boundaries of Seven Springs.) Pursuant to the California
Subdivision Map Act, the Developer has filed a tentative
EXHIBIT A
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subdivision map ("Tentative Map") with the City in connection
with the proposed subdivision of Seven Springs.
D. The City has previously approved the Tentative
Map on the condition, among others, that the City provide water
service to Seven Springs. The City currently provides water
service to a development near Seven Springs known commonly as
Rainbows End ("Rainbows End"). (The area outlined in green on
the map attached as Exhibit A to this Agreement indicates the
boundaries of Rainbows End.)
E. Seven Springs is located within the Company's
service area as shown on maps filed with the PUC. (The area
outlined in blue on the map attached as Exhibit A to this
Agreement indicates the Company's service area boundary in the
Seven Springs area.)
F. Both the City and the Company desire to provide
water service to Seven Springs. However,
the contingencies set forth in Section 5,
the City, subject to
is willing ( 1) to
amend the Tentative Map to permit the Company to serve Seven
Springs and (2) to permit the Company to also serve Rainbows
End in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, for valuable consideration, the
receipt and adequacy of which the parties acknowledge, the City
and the Company agree as follows:
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1. SERVICE T-0 SEYEN SPRINGS.
a. Extension of Syst.em to Seven Sp.rings. The
Company will extend its distribution system to and throughout
Seven Springs generally in accordance with its Rule 15 on file
with the PUC, subject, however, to certain deviations
substantially as provided in the form of the Rule 15 contract
attached hereto as Exhibit B.
b. Service to Seven Springs. The Company will
provide water service to any and all customers in seven Springs
at its rates and pursuant to its rules in effect and on file
with the PUC from time to time.
2. SERVICE TO RAINBOWS END.
a. Lease. For one dollar per annum and other
valuable consideration, the City agrees to lease to the
Company, and the Company agrees to lease from the City, all the
mains, appurtenances and other facilities (excluding meters)
used by the City to serve Rainbows End, which are described in
Exhibit C attached hereto ("Rainbows End Facilities"). This
section 2(a) is sometimes referred to in this Agreement as the
11 Lease 11
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Term. The term of the Lease shall run from the 30th
calendar day after the Effective Date, as defined in
Section 6(a), through either (1) the Option Exercise Date, as
defined in Section 3(e), or (2) the date one year after the
Option Termination Date, as defined in Section 3(b), whichever
comes first.
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Connection of Facilities. The Company may connect and
integrate the Rainbows End Facilities to the Company's
distribution system at any time in such manner and at such
location(s) as the Company deems appropriate in its sole
discretion. All the costs and expenses of connecting and
integratin-g the Rainbows End Facilities to the Company's
distribution system will be paid solely by the Company.
Operation, Maintenance, Repair and Replacement.
During the term of the Lease, the Company, at its sole cost and
expense, shall operate, maintain, repair and replace the
Rainbows End Facilities in accordance with its practices in
effect from time to time.
Hold Hgrmless. The Company agrees to indemnify,
defend and hold the City harmless from any damage or injury to
persons or property resulting from the operation of the
Rainbows End Facilities by the Company during the term of the
Lease, except any such damage or injury as may arise by reason
of the acts or omissions (whether intentional, negligent or
otherwise) of the City or its officers, agents or employees.
Change of Service. Prior to commencement of the
Lease and prior to termination of the Lease, the City and the
Company, .as the case may be, shall give the notices, follow the
procedures and have the rights and obligations specified in
Section 4.
b. Service to Rainbows End. From the date the
Lease commences through the date it is terminated, the Company
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will provide water service to any and all customers in Rainbows
End at its rates and pursuant to its rules in effect and on
file with the PUC from time to time.
c. Purchase of Rainbows End Facilities. If the
City does not exercise the Option, as defined in Section 3(a),
prior to its termination, the City and the Company will
negotiate in good faith for the sale to the Company at the end
of the Lease of the Rainbows End Facilities.
3. OPTION.
a. Option Grant. For valuable consideration,
the Company grants the City the right ("Option'') to purchase at
any time during the period specified in Section 3(b) for one
dollar on an "as is" basis (1) all the mains, appurtenances and
other facilities (excluding meters) installed by the Company
within Seven Springs and all related easements and rights of
way (collectively, the ''Seven Springs Facilities'') and (2) all
water rights (if any) within Seven Springs granted to the
Company by the Developer ("Water Rights").
Exercise of the Option by the City shall be in the
manner specified in Section 3(c) and shall be subject to:
(x) PUC approval of the Application, as defined
in Section 3(d), in its entirety, or if such approval is not
received, service on the Company of summons and complaint in an
appropriate eminent domain proceeding filed by the City with
respect to the Seven Springs Facilities and the Water Rights,
and
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(y) agreement by the Trustee ("Trustee") under
the Company's Mortgage of Chattels and Trust Indenture, as
amended, modified and supplemented (the "Indenture"), to
release the seven Springs Facilities and the water Rights from
the lien of the Indenture on the Option Exercise Date.
b. Option Period. The Option shall be
exercisable at any time during a period:
(1) whose coDlJllencement date shall be the fifth
anniversary of the date on which both of the following
conditions are satisfied:
(a) the Cupertino City Council has
approved a final subdivision map which permits,
by itself or in combination with other previously
approved final subdivision maps, the subdivision
of at least 90% of the land, other than that
dedicated to public use, within the Seven Springs
area, and
(b) either construction of improvements
has started on the land within the Seven Springs
area covered by such final subdivision map or
365 calendar days have passed since the date that
the condition in Section 3lb)(l)(a) was
satisfied, whichever occurs first; and
(2) whose termination date (the "Option Termination
Date") shall be the tenth anniversary of the commencement date.
The City shall notify the Company in writing within
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30 calendar days of the date on which the Option commences;
provided that the City's failure to do so shall not affect in
any manner the commencement of the Option.
c. Option Exercise Procedure. In order to
exercise the Option, the City shall give the Company before the
Option Termination Date written notice (the "Option Notice") of
the City's intent to exercise the Option, together with its
written representation to the Company that the City is able on
the date of the Option Notice to connect the Seven Springs
Facilities to the City's then existing distribution system.
d. Application; Trustee's Agreement. Following
delivery of the Option Notice, the City shall cooperate with
the Company in preparing, and, if appropriate, in executing,
any application (the "Application") to the PUC required from
the Company in connection with (1) the Company's sale of the
Seven Springs Facilities and the Water Rights and
(2) termination of the Company's obligation to serve any
customers in Seven Springs and Rainbows End.
In addition, following receipt of the Option Notice,
the Company shall promptly request the Trustee to agree to
release the Seven Springs Facilities and the Water Rights from
the lien of the Indenture on the Option Exercise Date.
The City shall promptly reimburse the Company on
demand for all the Company's costs and expensas (including
without limitation attorneys' fees) in connection with the
Application, any eminent domain proceeding instituted by the
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City and the Company's request to the Trustee to agree to
release the lien of the Indenture on the Option Exercise Date.
e. Closing. The Company shall notify the City
promptly after (1) its receipt of PUC approval of the
Application in its entirety (or if such approval is not
received, --~he Company's receipt of summons and complaint in
connection with the City's eminent domain proceeding with
respect to the Seven Springs Facilities and the Water Rights)
and (2) its receipt of the Trustee's agreement to release the
Seven Springs Facilities and the Water Rights from the lien of
the Indenture on the Option Exercise Date. After its receipt
of such notices from the Company, the City shall give the
Company at least 60 calendar days prior written notice of a
closing date (the "Option Exercise Date''), closing time and
closing location.
On the Option Exercise Date, the City shall deliver to
the Company the sum of one dollar, together with its written
agreement in form and substance reasonably satisfactory to the
Company to indemnify, defend and hold the Company harmless from
any damage or injury to persons or property resulting from the
operation by the City of the Seven Springs Facilities and the
Rainbows End Facilities. The City shall also deliver to the
Company its written agreement in form and substance reasonably
satisfactory to the Company to (1) serve any and all customers
in Seven Springs and. Rainbows End in accordance with the City's
applicable rates and rules in effect from time to time, (2) not
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discriminate in any manner in providing service to such
customers and (3) not impose any connection charges on such
customers. The Company shall simultaneously convey by such
documents and instruments as appropriate all its right, title
and interest in and to the Seven Springs Facilities and the
Water Rights, free and clear from any liens or encumbrances.
Both parties shall also execute and deliver any further
documents, instruments and agreements, and shall take any other
action, reasonably requested by the other parti in connection
with the exercise of the Option. All costs and expenses
relating to the sale of the Seven Springs Facilities and the
Water Rights to the City (including without limitation escrow
fees, title costs, transfer taxes, closing costs and attorneys'
fees) shall be borne solely by the City. The City shall
reimburse the Company promptly upon demand for such costs and
expenses.
In addition, on the Option Exercise Date, if the City
has filed an eminent domain proceeding with respect to the
Seven Springs Facilities and the Water Rights, the City and the
Company shall execute and deliver a settlement agreement with
respect to such proceeding, pursuant to which (i) the Company
shall agree that the consideration received by the Company
pursuant to the preceding paragraph constitutes full payment of
all consideration owed by the City in connection with its
eminent domain proceeding and (ii) the City shall agree to
promptly dismiss with prejudice its eminent domain proceeding.
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f. Change of Service. Prior to the Option
Exercise Date, the Company and the City, as the case may be,
shall give the notices, follow the procedures and have the
rights and obligations specified in Section 4.
4. CHANGEOYER PROCESS
Whenever service to either Seven Springs or
Rainbows End (the "Affected Area") is to be changed from one
party to the other party pursuant to this Agreement, the
parties' rights and obligations with respect to such change of
service are governed by this Section.
a. Notice. At least 30 calendar days prior to
any change of service from one party to the other, the party
ceasing service ("Terminating Party") will provide at its sole
expense written notice to each of its customers in the Affected
Area, which notice will contain:
1. The then current tariff schedules of
the party commencing service
("Commencing Party").
2. A description of any water service
changes, such as pressure or other
changes that will affect water service,
resulting from the change of the party
providing water service to the Affected
Area.
3. The effective date of the change of the
party providing water service to the
Affected Area ..
The Commencing Party agrees t.o provide the Terminating Party
with a copy of its then current tariff schedules and all other
information necessary for the Terminating Party to give the
notice specified above.
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b. Rights and Obligations. ·Upon a change of
service, -the Terminating Party will be entitle<l to all unbilled
revenue and accounts receivable relating to water service
provided by such party to the Affected Area prior to the
effective date of change of service. After such date, the
Terminating Party will continue to have the right to bill and
collect for all water service provided by it to the Affected
Area prior to the effective date of change of service. Meter
readings will be taken jointly by the City and the Company with
respect to customers in the Affected Area on the effective date
of change of service. Subsequent to such meter readings, the
Commencing Party will install at its sole expense its own
meters in place of the meters of the Terminating Party and will
return the disconnected meters to the Terminating Party;
provided that, in lieu of such actions, the City may (when it
is the Commencing Party) purchase the Company's meters at a
mutually agreeable price.
5. CONDITION.
The Company's and the City's obligations to perform
under this Agreement are contingent upon approval by the PUC of
the agreement between the Developer and the Company
substantially in the form of Exhibit B attached hereto for the
extension of the Company's distribution system to and
throughout Seven Springs. Promptly after, the execution of this
Agreement, the Company shall, at its sole expense, prepare and
file an application seeking such PUC approval. In addition,
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the Company's and the City's obligations to perform are
contingent upon approval by the Cupertino City Council of an
amendment to the existing tentative and/or final subdivision
map for the Seven Springs permitting the Developer to obtain
water from the Company.
6. MISCELLANEOUS.
a. Effective Date. This Agreement shall become
effective (the "Effective Date") on the date all the conditions
in Section 5 have been satisfied. The Company and the City
will notify each other promptly after the satisfaction of such
conditions.
b. Waiver and Modification. This Agreement may
be amended or supplemented only by a written instrument signed
by the party against whom the amendment or supplement is sought
to be enforced. The party benefited by any condition or
obligation may waive the same, but such waiver shall not be
enforceable by another party unless made by written instrument
signed by the waiving party.
c. Further Assurances. Each party shall at its
own expense execute, acknowledge and deliver any further
assignments, documents and instruments reasonably requested by
the other party and will take any other action consistent with
the terms of this Agreement that may reasonably be requested by
the other party.
d. Recovery of Litigation Costs. If any legal
action or any arbitration or other proceeding is brought to
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enforce this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any
provision of this Agreement, the successful or prevailing party
shall be entitled to recover actual attorneys' fees and other
costs (including but not limited to those incurred on appeal)
incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.
e. Notices. Any notice under or relating to
this Agreement shall be given in writing and shall be deemed
sufficiently given and served for all purposes when personally
delivered or three business days after a writing is deposited
in the United States mail, first class postage or other charges
prepaid and registered, addressed as follows:
(1) If to the Company:
San Jose water Company
374 West Santa Clara
P.O. Box 229
San Jose, CA 95196
Attn: Fred R. Meyer
Chief Financial Officer
With a copy to:
A. Crawford Greene, Esq.
Mccutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, CA 94111
(2) If to the City:
City of Cupertino
P.O. Box 580
Cupertino, CA 95015
Attn: Bert Viskovich
Director of Public Works
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Either party may change its address in the same manner as
required for delivery of notices.
f. Assignment; Successors. Neither party may
assign this Agreement or any right or interest herein without
the other party's prior written consent; provided that the
Company max assign this Agreement and its rights and interest
herein to any purchaser of all or substantially all of its
distribution system without the prior written consent of the
City. Subject to the preceding sentence, this Agreement and
the various rights and obligations arising hereunder shall bind
and benefit the administrators, legal representatives,
successors and assigns of the parties to this Agreement, and,
if assigned pursuant to this provision, will inure to the
benefit of such assigns.
g. Time of Essence. Time is of the essence of
this Agreement and all of the terms, conditions and provisions
of this Agreement.
h. Severability. In case any provision of this
Agreement or any application of any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall
not in any way be affected or impaired.
i. Headings. The headings used in this
Agreement are provided for convenience only and this Agreement
shall be interpreted as though they did not appear in this
Agreement.
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IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed and delivered as of the date first
above written.
Approved as to form:
CITY OF CUPERTINO, a California general
law city
:~, 4'f //~ft ~~0rc
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