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HomeMy WebLinkAboutItem No. 10 Agrment Lake Elsinore Aeration and Mixing System LEAMSText File City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 17-190 Agenda Date: 5/23/2017 Status: Consent AgendaVersion: 1 File Type: ReportIn Control: City Council Agenda Number: 10) Page 1 City of Lake Elsinore Printed on 5/19/2017 Page 1 of 3 REPORT TO CITY COUNCIL To:Honorable Mayor and Members of the City Council From:Grant Yates, City Manager Prepared by:Nicole Dailey, Senior Management Analyst Date:May 23, 2017 Subject:Agreements for the Lake Elsinore Aeration and Mixing System (LEAMS) Recommendation Approve the Agreement for the Operation and Maintenance of the Lake Elsinore Aeration and Mixing System (LEAMS); and, Authorize the City Manager to Execute the Agreement, Subject to Minor Modifications as Approved by the City Attorney; and, Approve the Exclusive License Agreement for Excess Offset Credits Generated by the Lake Elsinore Aeration and Mixing System (LEAMS); and, Authorize the City Manager to Execute the Agreement, Subject to Minor Modifications as Approved by the City Attorney. Background The City of Lake Elsinore, in partnership with the Elsinore Valley Municipal Water District (EVMWD) and the County of Riverside, funds, maintains and operates two large in-lake remediation projects: the Axial Flow Water Pump Destratification System and the Lake Elsinore Phase II Aeration System. Both systems, constructed in 2004 and 2007 respectively, were designed and constructed to improve water quality and protect the beneficial uses of the Lake. These systems are intended to work together to improve water quality by increasing dissolved oxygen concentrations in the warmer spring and summer months. Collectively, the systems are referred to as the Lake Elsinore Aeration and Mixing System (LEAMS). After construction, the County, EVMWD, and City entered into two separate agreements to share equally in the annual cost of operating and maintaining both systems (estimated at $150,000 each per year); these agreements have been in place ever since. The City holds title and manages the agreement for the Axial Flow Water Pump Destratification System, or Mixing System, and the Elsinore Valley Municipal Water District holds title and manages the agreement for the Lake Elsinore Phase II Aeration System. Both agreements were amended and extended in 2015 through June 30, 2016. In addition to improving dissolved oxygen levels in the Lake, the operation of LEAMS results in reduced internal phosphorus and nitrogen loads which is a requirement of the State imposed Total Maximum Daily Load (TMDL). The Regional Water Quality Control Board recognizes these reductions from the long-term operation of LEAMS as an offset credit that can be used to LEAMS Agreements Page 2 of 3 demonstrate compliance with load reduction requirements as specified by the TMDL. However, the operation of LEAMS generates more offset credits than the City, County, and EVMWD need to demonstrate their own individual compliance. The offset credits can be purchased and used by other responsible agencies named in the TMDL through a limited licensing arrangement. Discussion To facilitate the licensing of these offset credits to other responsible parties within the TMDL, the Lake Elsinore & San Jacinto Watersheds Authority (LESJWA) created a new Agreement for the Operation and Maintenance of the LEAMS and an Exclusive License Agreement for Excess Offset Credits Generated by the LEAMS. The Agreement for the Operation and Maintenance of the LEAMS (Exhibit A) consolidates the two (2) current agreements; i.e., Agreement for the Operation and Maintenance of the Lake Elsinore Phase II Aeration System and Agreement for the Operation and Maintenance of the Axial Flow Pump Destratification System for Lake Elsinore and creates provisions that allow for the licensing of these excess offset credits. The basic conditions related to the operation and maintenance of the original agreement remain the same and duplication between the agreements have been eliminated. New to the Agreement are the provisions for licensing of the offset credits, wherein the City, County and EVMWD agree to license excess unused nutrient offset credits for a fee to other stakeholders named in the TMDL using LESJWA as their exclusive agent. The license fee per offset credit hour is $300 and was determined based on the total cost of the LEAMS operation as shown in Exhibit C. The fees generated by the licensing of these excess offset credits shall be used to defray the operations and maintenance costs of the LEAMS. The term of the new agreement is ten (10) years effective July 1, 2016 and expiring December 31, 2026. The proposed Exclusive License Agreement for Excess Offset Credits Generated by the LEAMS (Exhibit B) establishes the guidelines and provisions for the determination and sale of licenses for excess offset credits generated by LEAMS in the prior calendar year. The sale or purchase of LEAMS excess offset credits in any given year does not create an obligation to sell or buy licenses for excess offset credits in any other year and they are subject to availability each year. The City, County and EVMWD may elect to increase or decrease the number of available LEAMS excess offset credits at their sole discretion. In addition, due to the potential interest from numerous stakeholders within the TMDL, this agreement designates LESJWA as the exclusive agent to market and administer the licenses for any excess offset credits. All expenses incurred by LESJWA will be reimbursed solely from the sale of offset credit licenses and is not to exceed $20,000 in the first year of the license agreement and not to exceed $12,000 per year in subsequent years. The term of the agreement is through June 30, 2022. The license agreement was considered and approved by the LESJWA Board of Directors on April 19, 2017. Both the County and EVMWD are also completing their formal approval processes for both agreements. All parties and their attorneys have thoroughly reviewed and approved these agreements. LEAMS Agreements Page 3 of 3 Fiscal Impact The City will pay their original budgeted contribution based on the annual operating costs of the LEAMS for this fiscal year. No additional cost will be incurred with the approval of these Agreements; it is estimated that the licensing of offset credits could generate up to $127,824 in future fiscal years to be shared equally by the County, EVMWD, and City. Exhibits A – Agreement for the Operation and Maintenance of the Lake Elsinore Aeration and Mixing Systems (LEAMS) B – Exclusive License Agreement for Excess Offset Credits Generated by the Lake Elsinore Aeration and Mixing System (LEAMS) C – How LEAMS License Fee Was Determined 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 1 of 13 AGREEMENT FOR THE OPERATION AND MAINTENANCE OF THE LAKE ELSINORE AERATION AND MIXING SYSTEMS (AGREEMENT) THIS AGREEMENT is made by and among the COUNTY OF RIVERSIDE (COUNTY), the CITY OF LAKE ELSINORE (CITY) and the ELSINORE VALLEY MUNICIPAL WATER DISTRICT (DISTRICT). The COUNTY, CITY and DISTRICT are sometimes collectively referred to individually as “PARTY” and collectively as the "PARTIES." RECITALS A.The COUNTY, CITY and DISTRICT are Member Agencies of the Lake Elsinore and San Jacinto Watersheds Authority (LESJWA). LESJWA is a joint powers public agency formed for the purpose of implementing programs and projects to rehabilitate and improve water quality in Lake Elsinore and Canyon Lake and the rivers and streams that are tributary to these lakes. B.The STATE OF CALIFORNIA and U.S. ENVIRONMENTAL PROTECTION AGENCY (EPA) have determined that water quality in Lake Elsinore is impaired by elevated concentrations of nitrogen and phosphorus (aka nutrients) that contribute to excess algae growth in the lake. Excess algae tends to deplete dissolved oxygen levels in the lake which, in turn, increases the risk of fish kills. In addition, too much algae interferes with and detracts from beneficial uses in and near Lake Elsinore. These adverse effects severely impact tourism in the area and hurt the regional economy. C.In 2004, the SANTA ANA REGIONAL WATER QUALITY CONTROL BOARD (REGIONAL BOARD) adopted a Total Maximum Daily Load (TMDL) to restore and protect the beneficial uses of Lake Elsinore by controlling and restricting the discharge of nutrientsto the lake. The REGIONAL BOARD named the COUNTY, CITY and DISTRICT as three of several agencies responsible for implementing the TMDL. D.To improve water quality in Lake Elsinore, the PARTIES designed, constructed and operate two large in-lake remediation projects: the Axial Flow Water Pump Destratification System and the Lake Elsinore Phase II Aeration System constructed in 2004 and 2007, respectively. Both systems are intended to improve water quality by increasing dissolved oxygen concentrations in the lake and are collectively referred to as the Lake Elsinore Aeration and Mixing System (LEAMS). 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 2 of 13 E.When it adopted the TMDL, the REGIONAL BOARD determined that long-term operation of LEAMS would improve dissolved oxygen concentrations in Lake Elsinore. This, in turn, would also reduce internal phosphorus loads released from the lake bottom sediments by 35% or approximately 11,606 kilograms per year. The Regional Board recognizes this reduction in phosphorus loads as an offset credit that can be used to demonstrate compliance with the load reduction requirements specified in the TMDL. F.The CITY holds title to the Axial Flow Water Pump Destratification System. The DISTRICT holds title to the Lake Elsinore Phase II Aeration System. All three PARTIES share equally the annual cost of operating and maintaining both systems. Therefore, all offset credits generated by LEAMS are owned collectively and exclusively by the PARTIES as tenants-in- common. G.Operation of LEAMS generates more offset credits than the PARTIES need in order to demonstrate their own individual compliance with the pollutant load reductions specified in TMDL. Therefore, the PARTIES desire to share some of these excess offset credits with other responsible agencies named in the TMDL, that have similar obligations to reduce nutrient loads to Lake Elsinore, through a limited licensing arrangement. H.The PARTIES previously formed a Technical Oversight Committee (TOC) to oversee operation and maintenance of LEAMS. The PARTIES intend to continue relying on the TOC to implement this AGREEMENT. I.The PARTIES have previously entered into several previous short-term agreements to govern the operation and maintenance (O&M) of LEAMS and to share the associated implementation costs. This AGREEMENT is intended to supersede and replace all previous agreements with one integrated, long-term O&M contract between and among the PARTIES. J.The purpose of this AGREEMENT is to describe the roles and responsibilities of the CITY, COUNTY and DISTRICT; the distribution of offset credits to each of the PARTIES; and the terms and conditions for licensing excess offset credits to other responsible agencies named in the TMDL. K.The PARTIES believe that long-term operation of LEAMS will improve water quality and protect beneficial uses in Lake Elsinore. Doing so will enhance recreational opportunities and the overall economy of the region. In addition, the PARTIES rely on LEAMS to demonstrate compliance with certain TMDL requirements. Consequently, entering into a long-term agreement to operate and maintain LEAMS is in the best interests of the PARTIES and their respective constituencies. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 3 of 13 NOW, THEREFORE, in consideration of the facts recited above, and the covenants, conditions and promise contained herein, the PARTIES set forth their mutual agreements. AGREEMENT 1.General Obligations. Subject to all of the provisions of this AGREEMENT, the PARTIES hereby agree to the following: a.Implement the AGREEMENT through the Technical Oversight Committee: As a means of ensuring the most optimal operation of LEAMS in order to maximize its benefits, the PARTIES agree to implement the Agreement through the previously established TOC. The TOC shall consist of one knowledgeable representative appointed by each PARTY. Each designated representative shall serve as a member of the TOC at the pleasure and expense of the PARTY making the appointment. The TOC shall meet at such times and places as its members may agree upon; but, shall convene at least once each year (in March or April) to review and approve a budget for the coming fiscal year (July 1st – June 30 th). The primary duties of the TOC are to: (i) oversee the operations and maintenance of activities related to LEAMS; (ii) develop and refine parameters, processes and procedures needed to maximize the efficiency and effectiveness of LEAMS; (iii) develop and approve an annual operating budget; (iv) review actual expenses compared to the approved budget; (v) establish a method for calculating the number of offset credits available, the number of offset credits needed by the PARTIES to assure their own TMDL compliance, and the number of offset credits that may be available for licensing to other stakeholders named in the TMDL; (vi) as well as the annual fee to license any available credits. b.Financial Contribution: The PARTIES agree to share equally the reasonable cost of managing, operating, monitoring, maintaining, repairing and replacing LEAMS in accordance with an annual budget approved by the PARTIES. Such costs include all reasonable expenses associated with collecting, analyzing and reporting data related to the operation and effectiveness of LEAMS that is required by federal or state authorities. c.Cooperation: The PARTIES shall cooperate with one another to implement this AGREEMENT and shall not unreasonably withhold such cooperation in a manner that interferes with effective operation and maintenance of LEAMS. d.Notification: The PARTIES shall notify one another as soon as practicable, in writing or by phone, whenever they become aware of any fact or circumstance that could adversely affect normal operation of LEAMS and which may jeopardize the availability of sufficient offset credits to assure the PARTIES ability to comply with any related TMDL requirements. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 4 of 13 2.DISTRICT's Obligations. Subject to all of the provisions of this AGREEMENT, the DISTRICT hereby agrees to: a.Hold Title to the Lake Elsinore Phase II Aeration System (Aeration System): To continue holding title to the Aeration System for the term of this AGREEMENT. b.Provision of Services: To provide, or cause to be provided, all labor, tools, equipment, vehicles, materials, supplies and qualified personnel necessary to manage, operate, monitor, maintain and repair the Aeration System in accordance with the annual budget approved by the PARTIES and the Standard Operating Procedures (SOP) established by the TOC. c.Regulatory Compliance: To comply with the federal and state statutes, rules, regulations and other requirements governing the Aeration System, and all direction given by the TOC. d.Monitoring and Remote Access to Data: To continue operating and maintaining the sampling and monitoring program that, among other things, measures dissolved oxygen concentrations and water temperature in Lake Elsinore in the manner specified by the TOC and approved by the REGIONAL BOARD. To supply a remote access internet site for displaying and summarizing the aforementioned monitoring data that is accessible by the PARTIES. This internet site shall include real-time data for the most recent 24 hours and shall be restricted to viewing purposes only (i.e. data cannot be revised or altered by a remote viewer). The real-time file will be updated approximately every 15 minutes unless the monitoring system is undergoing maintenance or repairs. In addition, all data collected by the monitoring system will be stored in a database maintained by the DISTRICT and accessible to the PARTIES on an FTP website. e.Reports: To prepare and submit annual reports summarizing the operation, maintenance and monitoring activities and other matters of interest as agreed by the PARTIES or otherwise required by federal or state authorities. At a minimum, the DISTRICT shall provide a report summarizing the daily hours of operation for the Aeration System. The DISTRICT shall also provide such other written or oral reports regarding the operation and maintenance of the Aeration System as may be reasonably requested by any of the other two PARTIES. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 5 of 13 f.Budget: To prepare, in cooperation with the TOC, and submit an annual proposed budget for continued operation and maintenance of the Aeration System in the forthcoming fiscal year (July 1st to June 30 th). Said budget must be submitted to the CITY and COUNTY for review and approval no later than 90 days (March 1 st) prior to the commencement of the new fiscal year. The budget shall estimate the expenditures necessary to operate and maintain the Aeration System in good working order. The budget should include a contingency fund, as agreed to by the TOC, to cover extraordinary and unforeseen expenses or to be used to replace, expand or otherwise enhance the Aeration System when mutually agreed. A template form for the budget proposal is attached as Exhibit 3 to this AGREEMENT. In the event that a budget acceptable to all PARTIES is not obtained prior to the start of the fiscal year, the DISTRICT shall continue to operate and maintain the Aeration system to the fullest extent possible, subject to the reasonable discretion and available resources of the DISTRICT and at the level of expenditure authorized by the most recently approved budget, and the PARTIES shall fund such budget until a new budget is approved. The DISTRICT may draw upon any available contingency funds that have been set aside in prior years, to support on-going operation of the Aeration System while a new budget is being reviewed and approved. g.Cost Accounting: To provide a financial statement itemizing and summarizing all expenses and charges incurred to operate and maintain the Aeration System for each calendar year. The DISTRICT will provide the financial statement at the same time the budget proposal is submitted on March 1st of each year. A template form for the financial statement is attached as Exhibit 4 to this AGREEMENT. The DISTRICT shall maintain copies of receipts as necessary to substantiate all cost accounting for a period of not less than 3 years after the expense is incurred and shall provide copies to PARTIES upon request. h.Books and Records: Maintain, and retain for a period of not less than three (3) years following the termination of this AGREEMENT, full and accurate books and accounts in accordance with the practices established by or consistent with those utilized by the Controller of the State of California for public agencies. Such books and accounts shall be maintained on a fiscal year basis (July 1st to June 30th). Such books and accounts shall be maintained by the DISTRICT as public records. All books and records developed in association with prior agreements between the PARTIES to share O&M costs for the Aeration System shall also continue to be preserved in accordance with the same terms and conditions specified for similar books and records generated in support of this AGREEMENT. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 6 of 13 i.Inspection: To permit inspection of the Aeration System by representatives of the COUNTY, CITY, LESJWA or other federal or state regulatory authorities upon request. j.Safety: The DISTRICT shall be responsible for the safety of all persons and property relative to the Aeration System. This responsibility shall be continuous and not be limited to normal working hours. The DISTRICT's duty to ensure safety shall include, without limitation, the placement of warning signs and markers (e.g. buoys and lights) to protect the Aeration System and all persons working or recreating in Lake Elsinore and along its shoreline (safety activities). Because the CITY has rights and responsibilities related to recreation on Lake Elsinore that are separate from those of the DISTRICT, including but not limited to enforcement of CITY ordinances and the Lake Elsinore Lake Use Guidelines, the DISTRICT shall coordinate all safety activities undertaken pursuant to this AGREEMENT, to the maximum extent practicable prior to commencing such activities. The PARTIES acknowledge that it may be necessary, from time to time, to modify existing CITY ordinances and the Lake Use Guidelines in order for the DISTRICT to implement necessary safety activities. The cost of such modifications, when needed, shall be shared equally among the PARTIES. 3.CITY's Obligations. Subject to all of the provisions of this AGREEMENT, the CITY hereby agrees to: a.Hold Title to the Axial Flow Water Pump Destratification System (Mixing System): To continue holding title to the Mixing System for the term of this AGREEMENT. b.Provision of Services: To provide, or cause to be provided, all labor, tools, equipment, vehicles, materials, supplies and qualified personnel necessary to manage, operate, monitor, maintain and repair the Mixing System in accordance with the annual budget approved by the PARTIES and the SOP established by the TOC. c.Regulatory Compliance: To comply with the federal and state statutes, rules, regulations and other requirements governing the MixingSystem, and all direction given by the TOC. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 7 of 13 d.Reports: To prepare and submit annual reports summarizing the operation, maintenance and monitoring activities and other matters of interest as agreed by the PARTIES or otherwise required by federal or state authorities. At a minimum, the CITY shall provide a report summarizing the daily hours of operation for the Mixing System. The CITY shall also provide such other written or oral reports regarding the operation and maintenance of the Mixing System as may be reasonably requested by any of the other two PARTIES. e.Budget: To prepare, in cooperation with the TOC, and submit an annual proposed budget for continued operation and maintenance of the Mixing System in the forthcoming fiscal year (July 1st to June 30 th). Said budget must be submitted to the DISTRICT and COUNTY for review and approval no later than 90 days (March 1st) prior to the commencement of the new fiscal year. The budget shall estimate the expenditures necessary to operate and maintain the Mixing System in good working order. The budget should include a contingency fund, as agreed to by the TOC, to cover extraordinary and unforeseen expenses or to be used to replace, expand or otherwise enhance the Mixing System when mutually agreed. A template form for the budget proposal is attached as Exhibit 3 to this AGREEMENT. In the event that a budget acceptable to all PARTIES is not obtained prior to the start of the fiscal year, the CITYshall continue to operate and maintain the Mixing System to the fullest extent possible, subject to the reasonable discretion and available resources of the CITY and at the level of expenditure authorized by the most recently approved budget, and the PARTIES shall fund such budget until a new budget is approved. The CITY may draw upon any available contingency funds that have been set aside in prior years to support on-going operation of the Mixing System while a new budget is being reviewed and approved. f.Cost Accounting: To provide a financial statement itemizing and summarizing all expenses and charges incurred to operate and maintain the Mixing System for each calendar year. The CITYwill provide the financial statement at the same time the budget proposal is submitted on March 1st of each year. A template form for the financial statement is attached as Exhibit 4 to this AGREEMENT. The CITYshall maintain copies of receipts as necessary to substantiate all cost accounting for a period of not less than 3 years after the expense is incurred and shall provide copies to PARTIES upon request. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 8 of 13 g.Books and Records: Maintain, and retain for a period of not less than three (3) years following the termination of this AGREEMENT, full and accurate books and accounts in accordance with the practices established by or consistent with those utilized by the Controller of the State of California for public agencies. Such books and accounts shall be maintained on a fiscal year basis (July 1st to June 30th). Such books and accounts shall be maintained by the CITY as public records. All books and records developed in association with prior agreements between the PARTIES to share O&M costs for the Mixing System shall also continue to be preserved in accordance with the same terms and conditions specified for similar books and records generated in support of this AGREEMENT. h.Inspection: To permit inspection of the Mixing System by representatives of the COUNTY, DISTRICT, LESJWA or other federal or state regulatory authorities upon request. i.Safety: The CITY shall be responsible for the safety of all persons and property relative to the Mixing System. This responsibility shall be continuous and not be limited to normal working hours. The CITY's duty to ensure safety shall include, without limitation, the placement of warning signs and markers (e.g. buoys and lights) to protect the Mixing System and all persons working or recreating in Lake Elsinore andalong its shoreline (safety activities). Because the CITY has rights and responsibilities related to recreation on Lake Elsinore that are separate from those of the DISTRICT, including but not limited to enforcement of CITY ordinances and the Lake Elsinore Lake Use Guidelines, the CITYshall coordinate all safety activities undertaken pursuant to this AGREEMENT, to the maximum extent practicable prior to commencing such activities. The PARTIES acknowledge that it may be necessary, from time to time, to modify existing CITY ordinances and the Lake Use Guidelines in order for the DISTRICT to implement necessary safety activities. The CITY shall not unreasonably withhold such modifications and will grant temporary authorization for the DISTRICT to implement necessary safety activities pending formal revision of related ordinances or Lake Use Guidelines for Lake Elsinore. 3.COUNTY's Obligations. Subject to all of the provisions of this AGREEMENT, the COUNTY hereby agrees to: a.Reports: Coordinate and supervise LESJWA's preparation of an annual report to (i) estimate the number of offset credits generated by LEAMS in the prior year; (ii) estimate the number of offset credits needed by each of the PARTIES to maintain compliance with the TMDL and their respective NPDES discharge permits; and (iii) estimate the number of excess, unused offset credits that may be available for licensing to other stakeholders named in the TMDL. Report shall be distributed to all PARTIES by March 1st each year. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 9 of 13 b.Coordinate with LESJWA to license any excess, unused offset credits that the TOC elects to make available to other stakeholders named in the TMDL. However, all such licenses must be approved by unanimous consent of the TOC. Such consent shall not be unreasonably withheld. c.Coordinate with the REGIONAL BOARD to ascertain what documentation is required to: (i) corroborate the number of offset credits generated by LEAMS; (ii) corroborate the number of offset credits required by each of the PARTIES to ensure on-going compliance with the TMDL and their respective NPDES discharger permits; (iii) the number of offset credits that may be made available for licensing to other stakeholders named in the TMDL; and (iv) determine the duration and period for which a given set of offset credits remains valid for the purpose of demonstrating compliance with the TMDL load allocations or wasteload allocations. d.Licensing Fees: Make periodic recommendations to the TOC regarding reasonable fees to license excess, unused offset credits. The final fee structure must be approved by the TOC prior to entering into any licensing agreement with LESJWA or any other stakeholders named in the TMDL. 4.Miscellaneous Provisions a.Independent Contractors:The PARTIES shall perform all duties under this AGREEMENT as independent contractors and NOT as employees of one another. b.Subcontractors: The PARTIES may employ competent and qualified professionals, consultants and subcontractors as they deem necessary to fulfill their duties and obligations under this AGREEMENT provided that all related costs remain within the approved budget. Costs which exceed the approved budget must be approved, in advance, by the TOC unless said costs are required to address a bona fide emergency condition. c.Assignment: Neither this AGREEMENT nor any part of LEAMS may be assigned or otherwise transferred without prior written consent from all PARTIES. d.Amendment: This AGREEMENT may only be amended by mutual written agreement of all PARTIES. This AGREEMENT may not be amended by verbal agreement or through separate written agreements not contemplated within the AGREEMENT. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 10 of 13 e.10-year Term: The duty to meet all obligations and responsibilities identified in this AGREEMENT commences on the effective date shown on page 1 (above) and, unless subsequently extended by mutual written agreement of all PARTIES, terminates on June 30, 2027. During this term, no PARTY may abandon, sell, lease, dispose or substantially discontinue the use of LEAMS without prior written consent of all PARTIES. f.Distribution of Surplus Funds: If, upon termination of this AGREEMENT without extension, there are any unexpended funds in the custody and control of the PARTIES, including but not limited to any contingency or replacement funds, these funds shall be distributed to the PARTIES in proportion to the respective original contributions to such funds. g.Early termination. Any PARTY may terminate their participation in this AGREEMENT by providing one year's written notice to the other PARTIES. However, if a PARTY elects to terminate their participation prior to June 30, 2027 that PARTY forfeits and waives any claim for reimbursement of unexpended contingency and replacement funds collected in all prior years. In the event one PARTY elects an early termination, the other two PARTIES shall continue to implement the terms of this AGREEMENT but shall be absolved of any on-going duty or obligation to the departing PARTY. h.Third Party Beneficiary. The PARTIES acknowledge that the Lake Elsinore San Jacinto Watershed Authority (LESJWA) shall be a third-party beneficiary to this AGREEMENT in so far as reliable operation and maintenance of LEAMS is necessary to fulfill the terms and conditions set forth in any Exclusive License Agreement for Excess Offset Credits executed between the PARTIES and LESJWA. There are no other third party beneficiaries to this AGREEMENT. i.Interpretation. All provisions of this AGREEMENT shall be construed in a manner which best assures the long-term viability of LEAMS. All PARTIES share equal responsibility for drafting the language of this AGREEMENT. j.Severability. If any term, clause, sentence, provision, or paragraph of this AGREEMENT shall be held invalid, such invalidity shall not affect the other provisions of the AGREEMENT which can be given effect without the invalid provision, and to this end, the remainder of the AGREEMENT shall remain in full force and effect. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 11 of 13 k.Budget Authority. All PARTIES acknowledge that final authority to accept and approve a final budget for LEAMS rests with their respective governing Boards, Commissions and Councils. Members of the TOC can make agreement to recommend specific budgets actions, but cannot bind, their respective governing authorities. Consequently, no budget shall be deemed final until it is approved by the governing authorities for each of the PARTIES. l.Arbitration: Any dispute which may arise by and between the PARTIES to this AGREEMENT shall be submitted to binding arbitration. Arbitration shall be conducted by the Judicial Arbitration and Mediation Services, Inc., or its successor, or any other neutral, impartial arbitration service that the PARTIES mutually agree upon in accordance with its rule in effect at the time of the commencement of the arbitration proceeding, and as set forth in this Paragraph. The arbitrator chosen must decide each and every dispute in accordance with the laws of the State of California, and all other applicable laws. The arbitrator's decision and award are subject to judicial review by a Superior Court of competent venue and jurisdiction, only for material errors of fact or law. Upon a showing of good cause, the arbitrator may permit limited discovery in the arbitration proceeding. Unless the PARTIES enter into a written stipulation to the contrary, prior to the appointment of the arbitrator, all disputes shall first be submitted to non-binding mediation, conducted by the Judicial Arbitration and Mediation Services, Inc., or its successor, or any other neutral, impartial mediation service that the PARTIES mutually agree upon in accordance with its rules for such mediation. m.Enforced Delay; Extension of Times of Performance: In addition to specific provisions of this AGREEMENT, performance by any party hereunder shall not be deemed to be in default, and all performance and other dates specified in this AGREEMENT shall be extended, where delays or defaults are due to war; terrorism, moratorium, insurrection, strikes; lockouts; riots; floods, earthquakes; fires; casualties; acts of God; acts of a public enemy; epidemics; quarantine restrictions; freight embargos;litigation;unusually severe weather;acts or failures to act of any other public or governmental agency or entity (other than the acts or failures to act of the PARTIES); or any other cause(s) beyond the control or without the fault of the PARTY claiming an extension of time to perform, provided such cause would prevent the claiming PARTY from performing the provisions of this AGREEMENT. Notwithstanding any to the contrary in this AGREEMENT, an extension of time for any such cause shall be for the period of the enforced delay and shall commence to run from the time of the commencement of the cause, or notice by the PARTY claiming such extension is sent to the other PARTIES with thirty (30) days of the commencement of the cause. 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 12 of 13 n.Attorney's Fees. In the event any of the PARTIES hereto shall bring an action to enforce any term of this AGREEMENT to recover any damages for and on account of any breach of any term or condition of this AGREEMENT, it is mutually agreed that the prevailing party in such action shall recover all costs thereof including reasonable attorneys' fees. O.COUNTERPART EXECUTION.This AGREEMENT may be executed simultaneously, or in any number of counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument. The AGREEMENT may be signed by fax or scanned by email signature. p.Effective Date. This AGREEMENT is deemed effective upon execution by all of the PARTIES and, for budgeting and funding purposes, is retroactive to July 1, 2016. IN WITNESS WHEREOF, the PARTIES acknowledge their acceptance of this AGREEMENT by affixing their signature(s) below. [SIGNATURE PAGE(S) TO FOLLOW] 4/12/2017 LEAMS O&M AGREEMENT (Ver. 2.2)Pg. 13 of 13 For the CITY OF LAKE ELSINORE: _____________________________________________________________________ Date Mayor Approved As To Form _____________________________________________________________________ Date Counsel for the City of Lake Elsinore For the ELSINORE VALLEY MUNICIPAL WATER DISTRICT _____________________________________________________________________ Date President, Board of Directors Approved As To Form _____________________________________________________________________ Date Counsel for EVMWD For the COUNTY OF RIVERSIDE _____________________________________________________________________ Date Chairman, Board of Supervisors Approved As To Form _____________________________________________________________________ Date Counsel for the County of Riverside Attested _____________________________________________________________________ Date Clerk for the Board of Supervisors Pg. 1 of 13 EXCLUSIVE LICENSE AGREEMENT for EXCESS OFFSET CREDITS1 GENERATED by the LAKE ELSINORE AERATION & MIXING SYSTEM (LEAMS)2 3 This EXCLUSIVE LICENSE AGREEMENT for EXCESS OFFSET CREDITS generated by the LAKE 4 ELSINORE AERATION & MIXING SYSTEM (LEAMS) (hereinafter the “License Agreement”) is 5 made by and among the COUNTY OF RIVERSIDE ("COUNTY"), the CITY OF LAKE ELSINORE 6 ("CITY"), the ELSINORE VALLEY MUNICIPAL WATER DISTRICT ("DISTRICT") and the LAKE 7 ELSINORE AND SAN JACINTO WATERSHEDS AUTHORITY ("AUTHORITY"). The COUNTY, CITY, 8 DISTRICT and AUTHORITY are hereinafter collectively referred to as the "PARTIES." This License 9 Agreement, once executed by all PARTIES, becomes effective on January 1, 2017.10 11 RECITALS12 13 a.The CITY, DISTRICT and COUNTY are individual member agencies of the Lake 14 Elsinore and San Jacinto Watersheds Authority. The AUTHORITY is a joint 15 powers public agency formed for the purpose of implementing programs and 16 projects to rehabilitate and improve water quality in Lake Elsinore and Canyon 17 Lake and the watersheds that are tributary to these lakes.18 19 b.The CITY holds title to and operates the Axial Flow Water Pump Destratification 20 System ("Mixing System") located in Lake Elsinore.21 22 c.The DISTRICT holds title to and operates the Lake Elsinore Phase II Aeration 23 System (“Aeration System”) located in Lake Elsinore.24 25 d.Collectively, the Mixing System and the Aeration System are known as the Lake 26 Elsinore Aeration and Mixing System ("LEAMS"). In general, the two systems are 27 run in tandem and operate on the same schedule.28 29 e.The annual costs to operate and maintain LEAMS is shared equally between the 30 CITY, DISTRICT and COUNTY pursuant to a separate Agreement for the Operation 31 and Maintenance of LEAMS (dated May 23, 2017). For the purpose of 32 implementing this License Agreement, these three cost-sharing partners are 33 identified collectively as the “OPERATORS.”34 35 f.The operation of LEAMS is intended to improve water quality in Lake Elsinore by 36 improving the average concentration of dissolved oxygen. This, in turn, helps 37 reduce the average concentration of nitrogen and phosphorus ("nutrients") in 38 the lake. Elevated nutrient concentrations contribute to excessive algae growth 39 and interferes with recreation in Lake Elsinore. In addition, too much algae 40 adversely affects the aquatic habitat and increases the risk of fish kills. LEAMS 41 was designed and implemented to help prevent and reduce these challenges.42 43 Pg. 2 of 13 44 g.The Santa Ana Regional Water Quality Control Board ("Regional Board") adopted 45 a Total Maximum Daily Load ("TMDL") to improve water quality in Lake Elsinore 46 by controlling the amount of nutrients in the lake. The CITY, DISTRICT, COUNTY,47 and numerous other stakeholders identified in the TMDL are obligated to limit 48 their nutrient contributions (called "loads") to Lake Elsinore.49 50 h.When the TMDL was adopted, the Regional Board acknowledged that operation 51 of LEAMS was expected to reduce internal phosphorus loads originating from 52 lake bottom sediments by 35% or approximately 11,606 kg/yr. Subsequent 53 studies, conducted at the direction of the Regional Board, also demonstrated 54 that the operation of LEAMS was reducing the total mass of nitrogen in Lake 55 Elsinore by an average of approximately 53,616 kg/yr.56 57 i.The Regional Board requires the DISTRICT to conduct additional studies, once 58 every three years, to reevaluate and confirm the overall effectiveness of LEAMS 59 at reducing nutrient concentrations in Lake Elsinore. The results are submitted 60 in a formal written report to the Regional Board. After the Regional Board 61 accepts that report, the nutrient reductions generated by LEAMS are considered 62 approved "offset credits" provided LEAMS is operated in accordance with the 63 requirements of the DISTRICT's NPDES permit.64 65 j.LEAMS is generally required to operate no less than 2,000 hours per year. 66 Therefore, on average, each hour of LEAMS operation generates approximately 67 3.5 kg of phosphorus reduction credits and 22 kg of nitrogen reduction credits.68 69 k.All credits generated by the operation of LEAMS are the exclusive property of the 70 OPERATORS, and are owned in joint tenancy by the OPERATORS, and may not be 71 sold or transferred without the unanimous written consent of the OPERATORS.72 73 l.The Regional Board allows LEAMS credits to be used to demonstrate compliance 74 with the Waste Load Allocations ("WLA") or Load Allocations ("LA") specified in 75 the TMDL. The Regional Board recognizes LEAMS as an approved offset program76 provided that LEAMS is operated in accordance with the DISTRICT's NPDES 77 permit.78 79 m.Based on experience to date, the operation of LEAMS typically generates more 80 offset credits than the OPERATORS need in order to assure their own compliance 81 with the TMDL's nutrient load restrictions. Therefore, the OPERATORS desire to 82 license some of the excess offset credits to other stakeholders named in the 83 TMDL so that these other stakeholders may rely on said credits to meet their 84 own TMDL compliance obligations subject to the review and approval of the 85 Regional Board.86 87 Pg. 3 of 13 n.Given the relatively large number of stakeholders that may be interested in 88 licensing excess offset credits to meet their own TMDL compliance obligations, 89 the OPERATORS determined it would be more efficient to administer all 90 licensing-related activity through the AUTHORITY.91 92 p.This document describes the Terms and Conditions under which the OPERATORS93 agree to license excess offset credits to other stakeholders named in the TMDL94 using the AUTHORITY as their exclusive agent.95 96 TERMS AND CONDITIONS97 98 1)THE AUTHORITY AS EXCLUSIVE AGENT99 100 a.The OPERATORS hereby designate the AUTHORITY as their exclusive agent to 101 market and administer limited-used licenses for any excess offset credits 102 generated by LEAMS to other stakeholders with TMDL compliance obligations. 103 The AUTHORITY shall have full and complete responsibility for marketing the 104 licenses for LEAMS credits and for collecting and remitting required license fees 105 to the OPERATORS. 106 107 b.All expenses incurred by the AUTHORITY to market and administer the LEAMS 108 offset credit licensing program shall be reimbursed solely from the sale of offset 109 credit licenses. The AUTHORITY is entitled to retain a sum, not to exceed 110 $20,000 in the first year of this License Agreement and not to exceed $12,000 in 111 any subsequent year of this License Agreement, from the proceeds received 112 from gross sales before remitting the remainder to the OPERATORS.113 114 c.In the event that the proceeds received from gross sales are insufficient to 115 reimburse the AUTHORITY's expenses, as described above, the OPERATORS have 116 no obligation to compensate the AUTHORITY for any difference or deficiency.117 118 d.The AUTHORITY shall have primary responsibility for filing annual reports to the 119 Regional Board detailing and summarizing the disposition of all LEAMS offset 120 credits. The AUTHORITY shall provide a copy of all such reports to the 121 OPERATORS at the same time these reports are submitted to the Regional Board. 122 The DISTRICT shall continue to have primary responsibility for developing the 123 documentation required to confirm the validity of the offset credits generated 124 by LEAMS and for reporting this information to the Regional Board in accordance 125 with the DISTRICT's NPDES permit.126 127 e.Any person, municipality, corporation, government agency or other legal entity128 acquiring a valid license from the AUTHORITY shall hereinafter be referred to as 129 a LICENSEE.130 Pg. 4 of 13 2)EXCLUSIVE LICENSES FOR EXCESS OFFSET CREDITS131 132 a.No later than April 15th of each year, the OPERATORS shall notify the AUTHORITY133 of the total number of excess offset credits, generated in the prior calendar year, 134 that are being made available for license to other TMDL stakeholders. The 135 AUTHORITY shall not offer any licenses for sale to others until officially notified 136 by the OPERATORS that excess offset credits are available, the amount of 137 nitrogen and phosphorus offset credit offered with each hour of LEAMS 138 operation and the annual fee required for each license hour. All notices shall be 139 in writing and directed as described in Section 5 of this License Agreement.140 141 b.Available excess offset credits shall be licensed in one hour blocks of LEAMS 142 operating time. Each available credit hour will be individually identified based on 143 the year the credit was generated and a unique sequential number (e.g. 2016-144 0129, 2019-0257, etc.). Each one hour block of LEAMS operating time 145 represents a volume of phosphorus and nitrogen reduction credits for the year 146 indicated by the block ID number as defined by the notification described in 147 §2(a) above. For 2015 and 2016 each hour of LEAMS operation conveys 3.5 kg of 148 phosphorus reduction credit and 22 kg of nitrogen reduction credit. However, 149 the OPERATORS reserve the right to revise the credit/hour ratio in future years.150 151 c.The AUTHORITY is authorized to offer other TMDL stakeholders an exclusive 152 license to purchase and use available LEAMS offset credits for any lawful 153 purpose subject to all of provisions of this License Agreement. Each individually-154 numbered one hour block of LEAMS offset credits may be licensed for a one-155 time license fee of $300.00. OPERATORS may also authorize the AUTHORITY to 156 market licenses for unused excess credits generated in calendar years prior to 157 2016, and to offer pro-rated discounts for credits generated in calendar years 158 2009 through 2015, subject to the written approval by the OPERATORS.159 160 d.The AUTHORITY shall provide an annual accounting report detailing all fees 161 collected for licenses sold in a given calendar year, and all marketing and 162 administration expenses for that same calendar year, to the OPERATORS by 163 January 31st of the following calendar year. Following receipt of this accounting 164 report, the OPERATORS shall provide the AUTHORITY with detailed instructions 165 on how to disperse the net proceeds from the sale of LEAMS offset credit 166 licenses in the prior calendar year.167 168 3)SALE OF LICENSES FOR EXCESS OFFSET CREDITS169 170 a.Ownership of all LEAMS facilities and of all offset credits generated by these 171 facilities shall remain with the OPERATORS. Only an exclusive license to use the 172 credits, as part of an approved offset program, is being offered by the 173 OPERATORS pursuant to this License Agreement.174 Pg. 5 of 13 b.The sale or purchase of LEAMS excess offset credits in any given year does not 175 create an obligation to sell or buy licenses for LEAMS excess offset credits in any 176 other year. OPERATORS may elect to increase or decrease the number of 177 available LEAMS excess offset credits at their sole discretion. However, 178 OPERATORS shall not retroactively reduce the number of LEAMS excess offset 179 credit licenses available for sale in any given year below the number of licenses 180 already sold for that same year.181 182 c.LEAMS excess offset credit licenses may not be bought, sold, leased, loaned, 183 borrowed or transferred except through the AUTHORITY acting as the Exclusive 184 Agent for the OPERATORS. Any attempt to do so automatically and irrevocably 185 invalidates each specific license involved without recourse to the LICENSEE.186 187 d.Neither the OPERATORS or the AUTHORITY offer any warranty whatsoever 188 regarding the use of LEAMS excess offset credits. It is the sole responsibility of 189 each prospective LICENSEE to determine for itself and to its own satisfaction, 190 through direct consultation with the Regional Board, how LEAMS excess offset 191 credits may be lawfully used to demonstrate compliance with the TMDL or any 192 related provisions of state and federal waste discharge requirements BEFORE 193 purchasing any excess offset license. Prospective LICENSEES are expressly 194 warned not to rely on any statements or representations made in this License 195 Agreement without further confirmation by the Regional Board.196 197 e.Although each excess offset credit block is governed by a license, only the 198 Regional Board can determine the length of time any given block of excess offset 199 credits may be used to compute compliance. The OPERATORS and the 200 AUTHORITY make no representation or warranty concerning the length of time 201 any given block of excess offset credits may be used for compliance.202 203 f.Fees paid to license LEAMS excess offset credits are non-refundable.204 205 g.OPERATORS prepare and approve annual operating budgets and summaries of 206 actual annual expenses in accordance with their separate Operations and 207 Maintenance Agreement for LEAMS (dated May 23, 2017). Copies of these 208 accounting documents shall be provided to the AUTHORITY no later than 30 days 209 after they have been approved by the OPERATORS.210 211 212 Pg. 6 of 13 h.Fees paid to license LEAMS excess offset credits shall become the sole property 213 of the OPERATORS. Said fees may be used to offset past or future LEAMS 214 operating expenses, effect LEAMS repairs, replace or expand LEAMS, held for a 215 LEAMS contingency, or any other lawful purpose related to LEAMS at the sole 216 discretion of the OPERATORS. The OPERATORS shall not be required to account 217 for the expenditure of any fees received from the sale of licenses for excess 218 offset credits.219 220 i.The OPERATORS warrant that LEAMS was operated in accordance with 221 requirements established by the Regional Board and in a manner that they 222 reasonably believe generated the nutrient reduction credits now made available 223 for licensing by others. The operating reports, water quality monitoring data and 224 special studies used to support the estimated credit calculations are regularly 225 submitted to the Regional Board under penalty of perjury. A copy of all such 226 documents shall be provided to the AUTHORITY no later than 30 days after these 227 documents are submitted to the Regional Board.228 229 j.Because the licenses offered are for excess offset credits generated by LEAMS in 230 the prior calendar year, the purchase of such licenses imposes no further 231 obligation on the LICENSEE to operate, maintain, fund or support LEAMS in any 232 other way. The OPERATORS, and not the AUTHORITY, bear sole responsibility for 233 affirming the validity of all offset credits declared and reported to the Regional 234 Board.235 236 k.Because licenses are purchased for excess offset credits generated in the prior 237 calendar year, and the LICENSEES had no role or responsibility whatsoever for 238 the day-to-day operations of LEAMS, the LICENSEES are not liable for injury or 239 damages which may occur as a result of the actions or omissions of the 240 OPERATORS as these credits were being generated. The OPERATORS, and not 241 the AUTHORITY, shall indemnify and defend the LICENSEES against any and all 242 claims for injuries or damages related to the operation of LEAMS.243 244 l.OPERATORS are not responsible for any cost, expense, loss or other 245 consequential damages that may be incurred by LICENSEES in the event the 246 excess offset credit program is subsequently ruled invalid or illegal by any state 247 or federal regulatory agency or by a court of competent jurisdiction.248 249 m.The AUTHORITY shall provide a full and complete copy of this License Agreement 250 to any prospective LICENSEE. Furthermore, each prospective LICENSEE must 251 provide written and dated confirmation that it has received, read and 252 understood the entirety of this License Agreement as a prerequisite condition for 253 purchasing a license for excess offset credits.254 255 Pg. 7 of 13 n.The PARTIES are required to notify one another as soon as is reasonably possible 256 if and when either becomes aware of any change in conditions that may 257 materially and adversely affect the validity of the LEAMS excess offset credits or 258 the ability of LICENSEES to rely on such credits to meet TMDL compliance 259 obligations. The AUTHORITY is solely responsible for notifying each individual 260 LICENSEE as described below.261 262 o.The AUTHORITY and each LICENSEE are required to notify one another as soon 263 as is reasonably possible if and when either becomes aware of any change in 264 conditions that may materially and adversely affect the validity of the LEAMS 265 offset credits or the ability of LICENSEES to rely on such credits to meet TMDL 266 compliance obligations. Individual LICENSEES may, but are not required to, 267 provide similar notice to other individual LICENSEES.268 269 p.The AUTHORITY and all LICENSEES are entitled to inspect the LEAMS facilities 270 and may do so, upon request, at a time that is mutually convenient with the 271 OPERATORS.272 273 q.The OPERATORS are not entitled to reclaim any previously licensed excess offset 274 credits without written consent of the LICENSEE.275 276 277 4.GENERAL PROVISIONS278 279 a.Jurisdiction. This License Agreement shall be deemed to have been made in 280 Riverside County, California regardless of the order of the signatures of the 281 PARTIES affixed hereto. Any litigation or other legal proceedings which arise in 282 connection with this License Agreement shall be conducted in a federal or state 283 court located within or for Riverside County, California. All PARTIES hereby 284 waive any defenses or objections based on the Doctrine of Forum Non-285 conveniens.286 287 b.Property Rights. No property rights are created or changed by this License 288 Agreement.289 290 c.Third Parties. There are no third-party beneficiaries created, intended or 291 recognized by this License Agreement.292 293 d.Entire Agreement. This written License Agreement constitutes the full and 294 complete agreement between PARTIES. This License Agreement supersedes any 295 and all previous agreements, either oral or written, between the PARTIES hereto 296 and contains all of the terms, conditions and agreements between the PARTIES297 with respect to the subject matter of this License Agreement.298 Pg. 8 of 13 e.Amendments. This License Agreement may only be amended by written 299 consent of all PARTIES. However, the terms and conditions of any previously 300 issued license may not be revised retroactively without the additional written 301 consent of the LICENSEE.302 303 f.Regional Board Review. A full and complete copy of this License Agreement has 304 been provided to the Regional Board staff for review to ensure consistency with 305 the assumptions and requirements of the TMDL and the Comprehensive 306 Nutrient Reduction Plan (CNRP). Any changes proposed by the Regional Board 307 must be approved, in writing, as formal amendments to this License Agreement. 308 All amendments to this License Agreement shall also be submitted to the 309 Regional Board for review.310 311 g.Cooperation. The PARTIES agree to cooperate with one another to fulfill all 312 regulatory and contractual obligations related to this License Agreement. The 313 PARTIES further agree not to engage in any activities that undermine or 314 jeopardize the validity of the LEAMS offset credits or the related licenses offered 315 for sale to others.316 317 h.Waivers. Failure to exercise any right or remedy related to this License 318 Agreement shall not be construed as a waiver of that right or remedy.319 320 i.Severability. Any provision of this License Agreement that is subsequently found 321 to be unconstitutional, illegal, or otherwise unenforceable shall be deemed void 322 without subsequent effect on any of the remaining provisions in the License 323 Agreement which shall continue to be implemented as originally intended.324 325 j.Term. This License Agreement shall expire on June 30, 2022 unless the PARTIES326 agree, in writing, to extend that date. However, all licenses purchased prior to 327 the expiration date of this License Agreement shall remain valid.328 329 k.Default. Failure by a Party to comply with and observe any of the conditions, 330 terms, or covenants set forth in this License Agreement, if such failure remains 331 uncured within thirty (30) days after written notice of such failure from the other 332 Party in the manner provided herein or, with respect to a default that cannot be 333 cured within thirty (30) days, if the Party in default fails to commence such cure 334 within such thirty (30) day period or thereafter fails to diligently and 335 continuously proceed with such cure to completion. However, if a different cure 336 period is specified under any other section of this License Agreement, then the 337 specific cure period shall control.338 339 Pg. 9 of 13 l.Independent Contractor. In performing under this License Agreement, it is 340 mutually understood that the AUTHORITY is acting as an independent 341 contractor, and not as an agent of the OPERATORS. The OPERATORS shall have 342 no responsibility for payment to any contractor, subcontractor or supplier of the 343 AUTHORITY. Nothing herein contained shall be deemed to create an agency, 344 joint venture, partnership or franchise relationship between the PARTIES hereto, 345 or between the PARTIES and any contractor retained by the OPERATORS in 346 connection with the services provided under this License Agreement, or between 347 the PARTIES and any person or organization that purchases a license for excess 348 offset credit pursuant to this License Agreement. 349 350 m.Authority and Requisite Action. The individuals executing this License 351 Agreement (the “Signatories”) covenant that they have the legal power, right 352 and authority to enter into this License Agreement and to bind their respective 353 principals/entities to the terms and conditions set forth herein. Furthermore, 354 the Signatories covenant that all requisite action has been taken by their 355 respective principals/entities in connection with the entering into this License 356 Agreement and the instruments referenced herein, and the consummation of 357 the transactions contemplated hereby.358 359 n.Maintenance and Inspection. The AUTHORITY shall maintain complete and 360 accurate records with respect to all licenses and fees under this License 361 Agreement. All such records shall be clearly identifiable. The AUTHORITY shall 362 allow a representative of OPERATORS to examine, audit, and make transcripts or 363 copies of such records and any other documents created pursuant to this License 364 Agreement during normal business hours. The AUTHORITY shall allow inspection 365 of all work, data, documents, proceedings, and activities related to the License 366 Agreement for a period of three (3) years from the date of final payment under 367 this License Agreement.368 369 o.Prohibited Interests. The AUTHORITY maintains and warrants that it has not 370 employed nor retained any company or person, other than a bona fide employee 371 working solely for the AUTHORITY, to solicit or secure this License Agreement. 372 Further, the AUTHORITY warrants that it has not paid nor has it agreed to pay 373 any company or person, other than a bona fide employee working solely for the 374 AUTHORITY, any fee, commission, percentage, brokerage fee, gift or other 375 consideration contingent upon or resulting from the award or making of this 376 License Agreement. For breach or violation of this warranty, OPERATORS shall 377 have the right to rescind this License Agreement without liability. For the term 378 of this License Agreement, no official, officer or employee of the OPERATORS, 379 during the term of his or her service with the OPERATORS, shall have any direct 380 interest in this License Agreement, or obtain any present or anticipated material 381 benefit arising therefrom.382 383 Pg. 10 of 13 384 p.Dispute Resolution. Any dispute which may arise by and between the parties to 385 this License Agreement shall be submitted to non-binding mediation. Such 386 mediation shall be conducted by any neutral, impartial mediation service that 387 the Parties mutually agree upon, in writing, and in accordance with its rules in 388 effect at the time of the commencement of the mediation proceeding.389 390 q.Attorney's Fees. The prevailing party in any action to enforce any provision of 391 this License Agreement shall be entitled to its reasonable attorney's fees and 392 costs. 393 394 r.Counterpart Execution. This License Agreement may be signed in separate 395 counterparts, each of which is an original and all of which, taken together, form 396 one single binding document.397 398 399 5.NOTIFICATIONS400 401 402 a.All notifications made pursuant to this License Agreement shall be in writing.403 404 405 b.Notifications to the City of Lake Elsinore shall be directed to:406 407 Name: Grant Yates408 Title: City Manager409 Address: 130 S. Main Street410 Addl. Address:____________________________________________________411 City, State, Zip: Lake Elsinore, CA 92530412 Main Office Phone: (951) 674-3124413 Email Address:____________________________________________________414 Alternate Name:__________________________________________________415 Alternate Phone:__________________________________________________416 Alternate Email:___________________________________________________417 418 419 Pg. 11 of 13 420 c.Notifications to Elsinore Valley Municipal Water District shall be directed to:421 Name:___________________________________________________________422 Title:____________________________________________________________423 Address:_________________________________________________________424 Addl. Address:_____________________________________________________425 City, State, Zip:____________________________________________________426 Main Office Phone:_________________________________________________427 Email Address:_____________________________________________________428 Alternate Name:___________________________________________________429 Alternate Phone:___________________________________________________430 431 d.Notifications to the County of Riverside shall be directed to:432 Name: Steve Horn433 Title: Principal Management Analyst434 Address: 4080 Lemon Street, 4 th Floor435 City, State, Zip: Riverside, CA 92501436 Main Office Phone: 951-955-1110437 Email Address: shorn@rivco.org438 Alternate Name: Alex Gann439 Alternate Phone: 951-955-1110440 Alternate Email: agann@rivco.org441 442 e.All notifications to Lake Elsinore San Jacinto Watersheds Authority (LESJWA) 443 shall be directed to:444 445 Name:___________________________________________________________446 Title:____________________________________________________________447 Address:_________________________________________________________448 Addl. Address:_____________________________________________________449 City, State, Zip:____________________________________________________450 Main Office Phone:_________________________________________________451 Pg. 12 of 13 Email Address:_____________________________________________________452 Alternate Name:___________________________________________________453 Alternate Phone:___________________________________________________454 455 456 f.The AUTHORITY shall maintain a directory of all past and present LICENSEES with 457 current contact information similar to that shown above and distribute an 458 updated copy of that directory at least once a year to the OPERATORS and the 459 Regional Board.460 461 462 Pg. 13 of 13 IN WITNESS WHEREOF, the OPERATORS and the AUTHORITY have affixed their signatures and 463 caused this License Agreement to be effective as of the date shown on the first page of this 464 document:465 466 For the CITY OF LAKE ELSINORE:467 468 _____________________________________________________________________469 Date Mayor470 Approved As To Form:471 _____________________________________________________________________472 Date City Attorney473 474 For the ELSINORE VALLEY MUNICIPAL WATER DISTRICT (EVMWD)475 476 _____________________________________________________________________477 Date President, Board of Directors478 Approved As To Form:479 _____________________________________________________________________480 Date Counsel for EVMWD481 482 For the COUNTY OF RIVERSIDE483 484 _____________________________________________________________________485 Date Chairman, Board of Supervisors486 Approved As To Form:487 _____________________________________________________________________488 Date Counsel for the County of Riverside489 490 Attested:491 _____________________________________________________________________492 Date Clerk for the Board of Supervisors493 494 For the LAKE ELSINORE SAN JACINTO WATERSHEDS AUTHORITY495 496 _____________________________________________________________________497 Date Chairman, Board of Directors498 Approved As To Form499 _____________________________________________________________________500 Date Counsel for LESJWA501 How was the $300/hour license fee determined? 1) The total cost of LEAMS operation is approximately $500,000/year. 2) LEAMS must operate a minimum of 2,000 hours/year. 3) Therefore, the baseline O&M cost is about $250/hour ($500,000 / 2000 hrs.) 4) The three original project partners are need a total of 1,280 hours/year to meet their own compliance obligations. 5) 1,280 hours * $250/hr. = $320,000/year ($106,667 each). 6) $500,000 - $320,000 = $180,000 7) Estimated number of offset credit hours likely to be sold = 600 hours/year 8) $180,000 / 600 hours = $300 per offset credit hour. Why do licensees pay a higher hourly rate than the three original project partners? 1) Because the original project partners must bear 100% of the cost and 100% of the risk of operating the project for a full year (2,000) before licenses are offered for sale. 2) Because the original project partners have no guarantee regarding the number of offset credit hours likely to be licensed. 3) Because the original project partners provided nearly $1,000,000 in capital cost to help construct the project. 4) Because the original project partners bore 100% of the operating costs for the first 8 years of the project and incurred 100% of the expense associated with validating the effectiveness of LEAMS (and, thus, the availability of offset credits).