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HomeMy WebLinkAboutResolution 2015-076 Approving Agreement with B.K.W. Farms in Lieu Water Deliveries and StorageMARANA RESOLUT10N .NO. 2015 -076 RELATING TO UTILITIES; APPROVING AND AUTHORIZING THE MAYOR TO EXECUTE AN AGREEMENT WITH B.K.W. FARMS, INC. FOR IN LIEU WATER DELIVERIES AND STORAGE WHEREAS B.K.W. Farms, Inc. ( "BKW ") possesses a Groundwater Savings Facility Permit from the Arizona Department of Water Resources authorizing the storage of 14,351 acre feet per year of Central Arizona Project ("CAP") water; and WHEREAS the Town has a contract with the Central Arizona Water Conservation District (CAWCD) for the purchase of CAP water; and WHEREAS the Town desires to maximize the use of its CAP water to reduce or offset the Town's use of groundwater within the Tucson Active Management Area; and WHEREAS the proposed agreement with BKW for in lieu water deliveries and storage would allow the Town to receive in -lieu credit for CAP water delivered to BKW at its Groundwater Savings Facility, and allows BKW to use CAP water for its irrigation needs in order to reduce its groundwater use, in accordance with its Groundwater Savings Facility Permit; and WHEREAS the Mayor and Council of the Town of Marana find that the best interests of Marana and its citizens are served by entering into this agreement. NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR ANI) COUNCIL OF THE TOWN OI' MARANA, that the agreement with B.K.W. Farms, Inc. for in lieu water deliveries and storage in substantially the form attached to this resolution as Exhibit A is hereby approved, and the Mayor is authorized to execute it for and on behalf of the Town of Marana. IT IS FURTHER RESOLVED that the Town Manager and staff are hereby directed and authorized to undertake all other and further tasks required or beneficial to carry out the terms, obligations, conditions and objectives of the agreement. PASSED AND ADOPTED by the Mayor and Council of the Town of Marana, Arizona, this 30th day of June, 2015. �', ri ... MARANA Mayor EN Honea ATTEST: ��� 4 0A.) J celyn ronson, Town Clerk ( 00042323. DOCX 1) Marana Resolution No. 2015 -076 APPROV FORM: 6/25/2015 11:52 AM FJC AGREEMENT BETWEEN THE TOWN OF MARANA AND B.R.W. FARMS, INC. FOR IN -LIEU 'WATER DELIVERIES AND STORAGE THIS AGREEMENT is made by and between the TOWN OF MARANA (the "Town "), an Arizona municipal corporation, and B.K.W. FARMS, INC. ( "BKW "), an .Arizona corporation, for the delivery and storage of In -Lieu Water at a Groundwater Savings Project pursuant to A.R.S. § 45- 812.01 et seq Recitals A. BKW possesses a Groundwater Savings Facility Permit fromt. the Arizona Department of Water Resources authorizing the storage of 14,351 acre feet per year of Central Arizona Project ( "CAP ") water. B. The Town is a party to a contract with the Central Arizona 'Water Conservation District (CAWCD) enabling it to purchase CAP water. C. The Town desires to maximize the use of its CAP water to reduce or offset the Town's use of groundwater within the Tucson Active Management Area. D. The Town desires to deliver CAP water to BKW at its Groundwater Savings Facility for which the Town shall acquire a Water Storage Permit. E. BKW desires to use CAP water for its irrigation needs in order to reduce its groundwater use, in accordance with its Groundwater Savings Facility Permit. F. BKW desires to purchase CAP water from the Town and the Town desires to sell BKW such CAP water under the terms and conditions of this Agreement. Agreement NOW, THEREFORE, for and in consideration of, the mutual covenants set forth in this Agreement, the Town and BKW agree as follows: 1. Definitions. The following terms have the following meanings for purposes of this Agreement: "ADWR." shall mean the Arizona Department of Water Resources. "CAP water" shall mean the Central Arizona Project water that the Town has the legal right to purchase and use. "CAWCD" shall mean the Central Arizona Water Conservation District. "Delivery" or "Delivered" shall mean CAP water purchased by the Town, made available in the CAWCD canal at the designated point specified by BKW and received by BKW. ( 00042306. DoCX 13) - 1 6/25/2015 12:12 PM Exhibit "A" "Facility Permit" shall mean Permit No. 72-538133.0005 (or the active Permit Number subsequent to modification) issued by ADWR to BKW to operate a groundwater savings facility pursuant to A.R.S. § 45- 801.01 et seq. "Groundwater Savings Facility" shall mean a groundwater savings facility pursuant to A.R.S. § 45 -81 2.01, for which a Facility Permit has been issued. "In -Lieu Water" shall mean CAP water as defined in A.R.S. § 45- 802.01(9), purchased by the Town for Delivery to BKW under this Agreement. "Pumped Groundwater" shall mean water withdrawn from any of the wells listed in the plan of operation incorporated in the Facility Permit and designated by the ADWR as pumping groundwater for the purpose of Title 45 of A.R.S., Chapter 3.1. "Recovery Well Permit" shall mean Permit No. 74-211278, issued by ADWR to the Town for recovery of water stored in a storage facility, pursuant to a storage permit. "Water Storage Permit" shall mean the permit issued by ADWR to the Town for storage of In-Lieu Water at the Groundwater Savings Facility pursuant to A.R.S. § 45-801.01, et seq "Long -Term Storage Credits" shall mean those credits accrued by the Town's Account LTS #70 -41 1220 from InwLieu Water stored pursuant to this Agreement, as determined by the requirements of A.R.S. § 45- 852.01. 2. obligations of BKW 2.1. Purpose of Use BKW shall use the In -Lieu Water Delivered under this Agreement for agricultural irrigation, to replace, on a gallon- for - gallon basis, pumped groundwater within the area designated on the Facility Permit. 2.2. Quantity of In -Lieu Water. Pursuant to applicable Facility and Water Storage Permits issued by the ADWR, BKW shall request that the Town order a minimum of 500 acre feet of In- Lieu Water from the Town's CAP water during the term of this Agreement, provided, however that if BKW desires to order additional of CAP water, the Town may do so upon the mutual agreement of the Town and BKW. BKW shall take Delivery of any and all In -Lieu Water ordered by the Town on B KW' s behalf. 2.3. Notice of Order 2.3.1. Annual On or before July 15 of each year, BKW shall submit a preliminary order to the Town for In -Lieu Water for the following year. The order shall indicate, by month, the number of acre-feet of In -Lieu Water requested by BKW to be Delivered for the ensuing 1.2- month period. 2.3.2. Town Recharge Quantification. On or before September 1 of each year, the Town shall notify BKW, in writing, of the amount of In -Lieu Water the Town has elected to purchase for delivery to BKW in the following calendar year. Concurrently with its order, the Town shall notify BKW whether it has elected to have CAP water delivered pursuant to its contract with CAWCD. 2.4. Monthly Meter Reading All water Delivered from the water supply system shall be measured with equipment furnished and installed by BKW and operated and maintained by (00042306.DCCX 13) -2- 6/25/2015 12:12 PM BKW in accordance with ADWR standards and requirements. The results of such measurement shall be subject to monitoring and verification, in cooperation with BKW, from time to time by the Town. 2.5. Points of Deiive Y . BKW shall take Delivery of the In -Lieu Water at such points along the CAP canal as may be agreed upon in writing by CAWCD and BKW. 2.6. Water Quality Standard. BKW shall be responsible for meeting all applicable federal, state, or local water quality standards for its use of the In -Lieu Water and for reasons beyond BKW's control may decline to take Delivery of any In --Lieu Water BKW determines to be unsuitable for irrigation use under said standards. In -Lieu Water determined to be unsuitable for irrigation shall be included in calculating BKW's compliance with the minimum order requirement of Section 2.2 of this Agreement, but shall not be subject to the payment obligation of Sections 2.7 and 3.5 of this Agreement, except to the extent BKW takes Delivery of the In- Lieu Water. 2.7. In -Lieu Water Charge Per Acre - Toot. BKW shall pay the Town $12.00 per acre-foot for In -Lieu Water Delivered from the Town's CAP water. If BKW fails to accept Delivery of In- Lieu Water ordered front. CAWCD by or on BKW's behalf in accordance with Sections 2.3.1 and 3.3 of this Agreement, BKW shall nonetheless pay the Town the actual cost of such ordered but not Delivered In -Lieu Water, except as provided by Sections 2.6 (except to the extent BKW takes Delivery of the In -Lieu Water), 2. 10, and 2.11 of this Agreement. 2.8. Deliver S stems and other Costs. BKW shall be responsible for the design, construction and costs of any necessary delivery systems required to be constructed on property owned or controlled by BKW to accept Delivery of In -Lieu Water under the terms of this Agreement. BKW shall be solely responsible for any costs arising out of the use of the In -Lieu Water, the operation or maintenance of the delivery systems described in this paragraph or the construction, operation and maintenance of any treatment system or other delivery system. Nothing herein shall be construed as requiring BKW to construct, replace, operate or maintain any delivery system or portion thereof. 2.9. Maintain of Records; Re ortin . BKW shall maintain all records and accounts of deliveries, storage and uses of the In -Lieu Water under this Agreement. BKW shall provide the Town, annually, all records, accounts, reports, and plans necessary for the Town to file any reports or other documentation required under the terms of its Water Storage permit. BKW shall file all reports and documentation required under the Facility Permit. Copies of all such records, accounts, reports, plans or other documents shall be made available to the Town. 2.10. Ineligible In -Lieu Water. Instead. of the fee set forth in Section 2.7 of this Agreement, if ADWR determines that any In -Lieu Water Delivered was not used on a gallon- for - gallon basis in -lieu of groundwater under A.R.S. § 45- 852.01(0 )(2), BKW shall reimburse the Town $12.00 an acre foot for such In -Lieu Water from the Town's CAP water if such determination is based on AD WR's finding that the In -Lieu Water does not qualify as "water that cannot reasonably be used directly" under A.R.S. § 45-801.01(21)(b) or does not qualify for some other reason beyond BKW's control. If the Town fails to receive Long -Term Storage Credits due to reasons within BKW's control; BKW shall pay the Town the Town's actual cost for such ineligible Delivered In -Lieu Water. (00042306.DDCX 13) -3 - 6/25/2015 12:12 AM 2.11. Interru tibilit of In -Lieu Water Deliveries• Curtailments. BKW acknowledges the interruptible nature of the In-Lieu Water supply to be furnished under this Agreement. The Town shall not be liable for any damages to BKW resulting from curtailment, interruptions, discontinuances or reductions in supply or undeliverable water that are beyond the control of the Town. In -Lieu Water deliveries curtailed, interrupted, discontinued or reduced by someone other than BKW shall still count toward BK.W's obligation to order under Section 2.2 of this Agreement, and BKW shall only be obligated to pay the fees set forth in Section 2.7 of this Agreement for the amount of the actual In -Lieu Water Delivered due to the curtailment, interruption, discontinuance or reduction. 2.12. Interference with Contract Nothing herein shall preclude BKW from entering into agreements to accept water and/or effluent for storage by others; provided, however, any such agreement executed after the effective date of this Agreement shall not adversely affect the Town's rights under this Agreement or cause BKW to otherwise act in any manner that is inconsistent with this Agreement or BKW's obligations under this Agreement. 3. obligations of the Town 3.1. Water Stora e Permit. The Town shall be responsible for maintaining a Water Storage Permit before any In -Lieu Water is Delivered to the Groundwater Savings Facility. 3.2. In -Lieu Water order By October I of each year, the Town shall order from CAWCD the In -Lieu Water the Town has elected to purchase pursuant to Section 2.3.2 for delivery to BKW the next year. 3.3. Deliver of In-Lieu Water. During the term of this Agreement, the Town shall order and arrange for the Delivery of a minimumE. of 500 acre -feet of In -Lieu Water to be Delivered through the CAP aqueduct to BKW. The Town shall provide assistance reasonably required to achieve Delivery of any ordered In -Lieu Water to BKW. By mutual agreement, the parties may agree to the Delivery of additional amounts of In --Lieu Water under the terms and conditions herein.. 3.4. Quality....of In -Lieu Water The Town makes no representations or warranties as to the quality of any In -Lieu Water Delivered hereunder and is under no obligation to construct or furnish water treatment facilities to maintain or improve the quality of any In -Lieu Water Delivered pursuant to this Agreement. 3.5. Billin . Upon receipt of a monthly statement from CAWCD indicating the amount of In- Lieu Water billed to the Town, the Town shall issue a bill to BKW monthly for the In -Lieu Water to be Delivered under this Agreement. The bill will be for the actual amount of In -Lieu Water for which the Town has been billed by CAWCD. The amount billed shall be paid within 45 days from the date of the bill. Late payments shall incur interest at the rate of (a) 12% per annum from and after the date of delinquency of any such payment, or (b) 4% over Bank of America — Arizona's then applicable prime interest rate, whichever is lower. 3.6. Accounting Within 30 days of the Town's receipt of its long -term storage account report from ADWR reflecting the In -Lieu Water stored pursuant to this Agreement, the Town shall prepare an accounting of all In -Lieu Water ordered and Delivered to and all payments for In- Lieu Water paid by BKW under Section 3.5 of this Agreement, adjusted as appropriate pursuant to Sections 2.6, 2. 10, and 2.11 of this Agreement. BKW shall pay the "town within 10 days of receipt of said accounting any amounts due pursuant to this Agreement. The Town shall refund any overpayments made by BKW. {0004230G.DOCX / 3} -4- 6/25/2015 12:121'M 3.7. Accrual of Credits Pursuant to its Water Storage Permit, the Town shall recover credits annually pursuant to its Recovery Well Permit or accrue Long -Term Storage Credits in its storage account LTS #70µ411220 for the In -Lieu Water Delivered to BKW and may use there at its sole discretion. If BKW enters into agreements with other persons to store In -Lieu Water at the same Groundwater Savings Facility, the In -Lieu Water Delivered pursuant to this Agreement shall be deemed to have been Delivered and stored in the same order of priority and sequence as the execution of this Agreement as compared to any other agreements or amendments thereof entered into by BKW and other third parties. 3.8. Recovery of Credits The Town may recover its Long -Term Storage Credits from any location and at any time as may be permitted by ADWR; provided, however, that such credits shall not be recovered from any lands controlled by BKW without the approval of BKW, and under such terms and conditions as may be mutually agreed to hereafter. 3.9. No Interference with BKW Nothing in this Agreement shall be construed to require BKW to construct or replace any facility to take, deliver or recharge In -Lieu Water under this Agreement or to construct, replace, or operate any well or water related facility to recover water stored at the Groundwater Savings Facility. Nothing in this Agreement shall be construed as BKW's consent to the establishment of any recovery well or any recovery activity underlying BKW's Groundwater Savings Facility. Notwithstanding the foregoing, BKW shall be obligated to pay any costs incurred by the Town for In -Lieu Water as a result of BKW's failure to take Delivery of such In -Lieu Water due to BKW's decision not to construct or replace any facility necessary to take Delivery of such In -Lieu Water. 4. Term and Termination 4.1. Term This Agreement shall become effective on the last party's signature date and shall be operative up to and including December 31, 2020, unless terminated sooner as provided by this Agreement. 4.2. The Town's Termination Right. The Town may terminate this Agreement without further obligation or consequence upon written notice to BKW if any of the following occurs: 4.2.1. The Town cannot secure In -Lieu Water, or 4.2.2. The Town is no longer eligible to obtain Long -Term Storage Credits, or 4.2.3. The Town determines that the In -Lieu Water Charge Per Acre -Foot payable by BKW pursuant to this Agreement (Section 2.7) does not match the market price based on the charge per acre -foot paid by other in -lieu water providers, or 4.2.4. The Town is for any reason regularly or routinely not receiving gallon -for- gallon credits for In -Lieu Water, whether the cause is within BKW's control or not; or 4.2.5. The Town determines that this Agreement is impracticable or not feasible due to regulatory or financial reasons, including but not limited to changes in ADWR's current calculation of the accrual of Long -Term Storage Credits for groundwater savings facilities. 4.3. BKW's Termination Right. ht. Provided that BKW pays the Town for all costs incurred by the Town for the In -Lieu Water ordered under Sections 2.3.1 and 3.3 of this Agreement but not Delivered, BKW may terminate this Agreement without further obligation or consequence upon written notice to the Town if BKW is unable to utilize In -Lieu Water due to any of the following: f 00042306.DOCX 13) - 5 - 6/25/2015 12:12 PM 4.3. L BKW determines that the In -Lieu Water Charge Per Acre -Foot payable by BKW pursuant to this Agreement (Section 2.7) does not match the market price based on the charge per acre -foot paid by other in -lieu water providers, or 4.3.2. The Torn is for any reason regularly or routinely not receiving gallon -for- gallon credits for In -Lieu Water, whether the cause is within BKW's control or not; or 4.33. Regulatory changes, or 4.3.4. Unsuitability of water for irrigation, or 4.3.5. Weather conditions, or 4.3.6. Acts of nature or God, or 4.3.7. Flooding, or 4.3.8. Crop failure, or 4.3.9. Other natural disaster. 4.4. Insolvency or Bankru tc . Notwithstanding any of the above, this Agreement shall automatically terminate if BKW becomes insolvent or initiates bankruptcy proceedings, loses its Facility Permit, or fails to meet its operating or Groundwater Savings Facility plan of operation. 5. Assignment 5. 1. Assignment by. Town The Town may assign all or a portion of its obligations and rights under this Agreement to any successors or assigns without prior written consent of BKW, provided that each such successor in interest or assignee is bound by each and every term and condition of this Agreement applicable to the Town. 5.2. Assignment of Lon Term Storage Credits. The Town, in its sole discretion, may assign its Long -Term Storage Credits without prior consent of BKW; provided, however, that the Town shall not. assign credits for recovery of stored water underlying the exterior boundaries of the BK.W's Groundwater Savings Facility without the written consent of BKW and upon terms and conditions acceptable to BKW. 5.3. Assignment by BKW BKW may not assign all or a portion of its rights and obligations under this Agreement to any successors or assigns without the prior written consent of the Town and the Town shall not unreasonably withhold its consent. Further, BKW shall not sell or transfer the In -Lieu Water Delivered under this Agreement to others or allow the use by others of the In -Lieu Water outside the areas included in the Facility Permit without prior written consent of the Town. BKW may sell, transfer or allow others to use the In -Lieu Water within the area included in the Facility Permit. 6. Indemnification 6.1. BKW shall hold the United States, CAWCD, and the Town harmless from any darnage or claim of damage of any nature whatsoever for which there is legal responsibility, including property damage, personal injury, or death arising out of or connected with BK.W's control, carriage, handling, use, disposal, or distribution of In -Lieu Water Delivered pursuant to this Agreement. Nothing in this Agreement shall make BKW responsible for or require BKW to indemnify anyone, including the Town, for any degradation of the aquifer associated with use of In -Lieu Water instead of Pumped Groundwater. X00042306 DOCX 13) -6- 0/25/2015 12:12 PM 6.2. The Town shall hold BKW harmless from any damage or claim of damage of any nature whatsoever for which there is legal responsibility, including property damage, personal injury, or death arising out of or connected with the Town's control, carriage, handling, use, disposal, or distribution of In --Lieu Water Delivered pursuant to this Agreement. Nothing in this Agreement shall make the Town responsible for or require the Town to indemnify others, including BKW, for any degradation of the aquifer associated with the use of In -Lieu water instead of Pumped Groundwater. 6.3. The Town and BMW shall work together to mitigate any costs incurred by either party for any In -Lieu Water ordered, but not Delivered due to the conditions set forth in Sections 2.6, 2.10, or 2.11. 7. Miscellaneous 7.1. Notices. Any notice, demand or request authorized or required by this Agreement shall be deemed to have been given when mailed, postage prepaid, or delivered as follows: If to the Town: Water Department Director Town of Marana 5100 W. Ina Road Marana, Az 85743 If to BKW: BKW Farms, Inc. P.O. Box 638 Marana, Arizona 85653-0638 7.2. Conflict of Interest. This Agreement is subject to the provisions of A.R.S. § 38-511, which provides for cancelation of contracts in certain instances involving conflicts of interest. 7.3. Governing Law. This Agreement and the rights, duties and obligations of the parties hereto shall be governed and construed in accordance with the substantive laws of the State of Arizona. The characterization hereunder, or by the Director of ADWR, of Pumped Groundwater as groundwater is not binding for any other purpose and is not intended for use and shall not be used as evidence of the validity, invalidity, nature, legal character, extent or relative priority of any water right or source of water in any administrative or judicial proceeding except one arising directly from the Director's determination pursuant to Chapter 3.1, Title 45, Arizona Revised Statutes, regarding whether In -Lieu water Delivered pursuant to this Agreement was Delivered on a gallon - for - gallon substitute basis in lieu of groundwater that otherwise would have been pumped by recipient BKW from the Tucson Active Management Area. 7.4. Modifications. This Agreement shall only be amended or modified upon the written agreement of the parties; provided, however, that if there are changes in A.DWR.'s current calculation of the accrual of Long -Term Storage Credits at groundwater savings facilities, the parties shall renegotiate the charge for In -Lieu Water payable under this Agreement. (00042306,DOCx 13 ) - 6/25/2015 12:12 PM IN WITNESS WHEREOF, the Parties have executed this Agreement as of the last date set forth below their respective signatures. The "Town ": TOWN OF MARANA, an Arizona municipal corporation _ / "B KW" : B.K.W. FARMS, INC., an Arizona corporation Mayor E4 I -Ionea Brian K. Wong, President ATTEST: JJocely . Bronson, Town Clerk A.PPRO D To ORM: 1 4 rank C 'dy, Town Attor y (00042306.DOCX 13) -8- 6/25/2015 12:12 PM