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Rand Poole letter to Water Contractors - Sept 15, 2000 September 15, 2000 Dear (official), The Sonoma County Water Agency's Board of Directors has directed me to begin to prepare the agreements that are needed to develop the future water supplies for the Agency customers that request such supplies. As you know, the Agency originally proposed to provide the future water supplies requested by our contractors by explaining the Agency's existing Transmission System. The institutional mechanism for completing the expansion was to be through an amendment to the Tenth Amended Agreement for Water Supply and Construction of the Russian River-Cotati Intertie Project (Tenth Amendment Agreement). However, at this time, it appears that all parties to the Tenth Amendment Agreement will remain in place and the Agency will continue to complete development of the 92 million gallon per day (mgd) plus 20 mgd standby water production and transmission facilities and will operate and maintain the Transmission System as required by that agreement. Other institutional agreements will necessary if the Agency is to provide additional water supplies to serve the increased populations authorized by existing local general plans. The enclosed Russian River - Kastania Water Project term sheet proposes a mechanism that would meet the currently identified future needs of certain Agency water contractors (the cities of Santa Rosa, Rohnert Park, Cotati, Petaluma and North Marin Water District), through development of new water production and conveyance facilities. Marin Municipal Water District could also be served, although the total amount of water to which MMWD is entitled would not change. Although the term sheet does not identify specific entitlements for Valley of the Moon Water District and the City of Sonoma, these two entities have the option to participate in constructing facilities now or could defer participation and address their future water needs either by future amendments to the Tenth Amendment Agreement, or by separate agreements. Forestville's Water District's future needs are projected to be satisfied under the Tenth Amended Agreement. The new system would be separate from the existing Transmission System but could be interconnected to the existing system to provide reliability and economy to both systems, to the extent authorized by the Tenth Amendment Agreement or any subsequent amendments to that agreement. Participants in the Russian River - Kastania Water Project will have specific monthly and annual entitlements. The capital costs of project facilities (funded by revenue bonds, state grants or loans, or cash contributions) will be allocated in proportion to the entitlements and paid twice a year as needed to service the debt. Operation and maintenance costs will be based on each participant's actual use and charged at rates set annually by the Board of Directors to cover reasonable service costs. The Agency will enter into separate contracts with each customer, but the contracts will not become operative until sufficient agreements are in place to constitute a viable project. The attached term sheet proposes specific entitlements based on the needs identified in the 1998 Water Supply and Transmission System Project Final Environment Impact Report (1998 EIR) and the two existing MMWD contracts. However, design capacities and costs of final project components will depend upon which customers elect to participate in the development of the system. The 1998 EIR will provide the basis for environmental analysis of facilities which will be constructed to implement the Russian River - Kastania Water Project , because the growth and cumulative impacts of serving growth under existing general plans have been analyzed in that document. Site specific analyses for project components, and any necessary updates to the 1998 EIR, will be prepared as needed. In order to move forward with timely development of the Russian River - Kastania Water Project, the Agency needs to know which potential customers wish to be served by the project. We request a letter of intent from your agency indicating your intention to participate in the proposed Russian River - Kastania Water Project. Receipt of this letter of intent by October 13, 2000 will allow the Agency to formulate, in a timely manner, the project to be constructed. Pamela Jeane, Water Agency Deputy Chief Engineer (521-1864), is available to discuss this project with your staff. Some of you have raised issues of regional significance during the course of discussing the proposed amendment to the Tenth Amended Agreement, including, including the importance of increasing our water conservation efforts. Development of separate agreements will not preclude discussion of these issues in appropriate forums. This week, The Agency's Board of Directors created a subcommittee consisting of Supervisors Mike Cale and Mike Kerns to meet with local representatives to discuss these issues. We recognize that our regional water supply depends not only on development of infrastructure necessary to deliver potable water to our customers, but also on increased conservation and reuse of treated wastewater by both municipal and industrial customers. Although many of these issues have been discussed at the Agency's Water Advisory Committee meetings, generally each local agency has been represented at these meetings only by their respective staffs. To increase the potential of reaching a consensus for future activities, it may be useful for each of you to create a subcommittee of elected officials, or designate one of your members, to confer with Supervisors Cale and Kerns or other elected officials. If you do so, please let Tim Anderson, Water Agency Government Affairs Coordinator (521-6208), know who you designate. We will be glad to work with you and Supervisors Cale and Kerns to facilitate discussions among Sonoma and Marin County elected officials on regional water supply issues. We look forward to hearing from each of you regarding your interest in participating in the Russian River - Kastania Water Project. Very Truly Yours, Enc. cc: Water Agency Board of Directors Russian River - Kastania Water Project 1. Potential customers of the Kastania Water Project are: Santa Rosa, Rohnert Park, Cotati, Petaluma, North Marin and Marin Municipal. The design capacities of the final project components will be determined by which potential customers decide to participate in the project. 2. Valley of the Moon and Sonoma's long-term supplemental water needs will be addressed in the future as their needs develop. Forestville's future needs are satisfied by service under the existing Tenth Amendment Agreement for Water Supply. 3. All capital costs of the Kastania Water Project will be financed either by revenue bonds or, at the option of customers, cash payments. Each customers share of the capital costs will be based on specific capital cost allocations as described in this term sheet, regardless of the amount of water taken by that customer from the Russian River - Kastania Water Project during any time period. 4. Each customer will have the option of paying its share of the capital costs with a cash payment, in lieu of making debt service payments. 5. Allocated debt service will be paid semiannually by customers to Agency. 6. Agency's Board of Directors will annually establish a uniform acre-foot water charge for the operation and costs of the Russian River - Kastania Water Project. 7. The Agency will execute a separate agreement with each customer. These agreements will not be operative until sufficient agreements are in place to provide for the financing of the capital costs of the entire Russian River - Kastania Water Project. 8. Existing agreements with Marin Municipal will be superseded by the Agency's new agreement with Marin Municipal and the MMWD will have capacity in the project dedicated to it. 9. Each customers new agreement will contain annual acre foot limits with the Agency will apply to total deliveries to that customer from the existing transmission system and the Russian River - Kastania Water Project. 10. Customers will be required to take delivery of Agency water first from the Russian River - Kastania Water Project to the maximum extent possible, and then from the existing transmission system. 11. If all potential customers participate in the Russian River - Kastania Water Project, then entitlements and cost allocations will be per the following tables. If only some of the potential customers participate in the project, then these tables will be adjusted appropriately: 12. The capital costs of the project will be allocated per the following: Entitlements (average per month) Customer Entitlement ------------------------- |