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HomeMy WebLinkAboutAGENDA REPORT 2017 0503 CCSA REG ITEM 10J ITEM 10.J. crry OF MOORPARK,CAUFORNIA City Council Meeting MOORPARK CITY COUNCIL 5-3 �0/7 c�ioi�: AGENDA REPORT TO: Honorable City Council FROM: Kevin G. Ennis, City Attorney05 DATE: April 25, 2017 (CC Meeting of 5/3/17) SUBJECT: Tolling Agreement with Waterworks District No. 1 Regarding Water Rates DISCUSSION The City of Moorpark and the Ventura County Waterworks District No. 1 intend to explore options to resolve differences over water rates adopted by the District Board on March 14, 2017. One of the issues to be addressed is how the District may recoup the amount of a subsidy in water rates provided to agricultural users over time. The proposed Tolling Agreement, attached to this Report, is intended to allow the parties time to explore this and other issues outside of litigation while preserving the City's ability to bring litigation in the event the matter is not resolved to the satisfaction of the City. The proposed Tolling Agreement would postpone to March 2, 2018, the City's deadline for bringing a challenge to the District's water rates, unless further extended by the parties. BACKGROUND On November 21, 2016, staff of Waterworks District No. 1 provided notice to customers that it intended to change its water rate structure and increase some of its water rates as described in the notice. The notice set a public hearing on those rates for January 10, 2017. On January 10, 2017, the District Board continued the hearing to February 28, 2017. On February 28, 2017, the District held the continued public hearing on the proposed rate increase. At that hearing, Jeremy Laurentowski appeared as the City's representative and submitted a letter objecting to and opposing the proposed rate structure and rates. He also spoke in opposition to the rate adjustments. After receipt of the City's letter and Mr. Laurentowski's testimony, the District Board continued the public hearing to a date unspecified. The District staff thereafter placed the water rate adjustment on the District's March 14, 2017 agenda. At that March 14, 2017 District meeting, the District held a continued hearing on the water rate matter. City Manager 284 Honorable City Council Regular Meeting of May 3, 2017 Page 2 Steve Kueny appeared at that meeting and spoke in opposition to the proposed rates and rate-making procedure, including the lack of notice required in connection with the continuation of the public hearing from February 28th to March 14th. After the conclusion of the continued public hearing on March 14, 2017, the District Board approved and adopted staffs recommended new water rate structure and rates. A few days before the March 14, 2017 continued hearing date and then thereafter, City staff and representatives of the Waterworks District engaged in discussions to address the City's concerns. Arising out of those discussions was a proposal for the District to study how rate subsidies provided to agricultural users could be recouped over time. Also discussed was the concept that the parties would enter into a Tolling Agreement to allow the parties to address the subsidy issue before the City would need to file a lawsuit to preserve its rights to contest the matter in court if the matter is not resolved. TERMS OF TOLLING AGREEMENT Attorneys in the City Attorney's Office and in the County Counsel's office have negotiated a proposed Tolling Agreement. The proposed Tolling Agreement would stop the running of any statute of limitations on any claim or lawsuit for the period from March 24, 2017 through January 31, 2018. The Agreement could be terminated upon 30-day notice by either party. During the term of the Tolling Agreement, the City would forego filing a lawsuit challenging the water rates and the County would not be allowed to count the period between March 24, 2017 and January 31, 2018 in the calculation of time for the running of any statute of limitation. Upon the expiration or termination of the Tolling Agreement and in the absence of an acceptable resolution of the underlying issues, the City could then commence legal action to challenge the water rates established by the District on March 14, 2017. FISCAL IMPACT Some attorney time and staff time has been incurred in negotiating this Tolling Agreement. The approval of the Agreement will postpone and potentially assist in avoiding the incursion of additional attorney fees in filling a lawsuit challenging the District's new rate structure. STAFF RECOMMENDATION The City Attorney and staff recommend that the City Council approve the Tolling Agreement, attached hereto as Exhibit A to this staff report, and authorize the Mayor to execute the Agreement, subject to changes that are deemed to be in the interests of the City which are approved by the City Manager and City Attorney. Exhibit A— Tolling Agreement 285 DRAFT EXHIBIT A TOLLING AGREEMENT BETWEEN THE CITY OF MOORPARK AND VENTURA COUNTY WATERWORKS DISTRICT NO. 1 This Tolling Agreement ("Agreement") is made by and between City of Moorpark, a California municipal corporation ("Moorpark") and Ventura County Waterworks District No. 1 ("District"). Moorpark and the District are collectively hereinafter referred to as the "Parties". RECITALS A. On or about November 21, 2016, the District staff provided notice to District customers that it intended to change its water rate structure and increase some of its water rates as described in the notice. The notice provided that a public hearing would be held on these proposed changes on January 10, 2017. B. On or about January 5, 2017, the District provided public notice that it would seek to continue this hearing to February 28, 2017. On January 10, 2017, the District continued the hearing to February 28, 2017. C. On February 28, 2017, the District heard and considered public comment concerning its proposed new water rates and rate structure. At the hearing, Moorpark submitted a letter objecting to, or opposing, the proposed rate structure and rates and a Moorpark representative spoke in opposition to staffs proposed rate structure and rates. After hearing all public comments, the Board of the District again continued the hearing, so that District Counsel could review Moorpark's written objections and opposition to the proposed rates. D. On March 14, 2017, the District heard and considered further public comment concerning its proposed new water rates and rate structure. A representative from Moorpark appeared and objected and spoke in opposition to the proposed rates and rate-making procedure. After the conclusion of public comment, the District Board approved and adopted staff's recommended new water rate structure and rates. E. The Parties do not wish to become involved in litigation concerning the District's water rates and rate structure at this time. F. The Parties wish to reserve their respective rights to initiate or defend any legal proceedings to enforce their claims until afterthe expiration or termination of this Agreement. AGREEMENT Accordingly, the Parties agree as follows: 1. The Parties agree to toll any applicable statutes of limitations, statutes of repose or periods of limitations for any and all potential claims of any kind that did not expire on or before March 24, 2017 concerning or arising from or related to the District's adoption of its current water rates and rate structure, including its process adopting these rates, including, without limitation, the content and timing of all notices and notices of continued hearing dates and the statute of limitations for initiation of an inverse validation action pursuant to Code of Civil Procedure sections 860, et seq. 1 12853-0040\2064237v3.doc 286 DRAFT Any statute of limitations, statute of repose or period of limitation is tolled until thirty (30) days after this Agreement expires or is terminated. 2. Unless earlier terminated, this Agreement shall expire on January'31, 2018. Any Party may terminate this Agreement by giving all other Parties written notice of termination at least thirty (30) days prior to the effective date of termination. All other rights and duties of the Parties shall continue during the notice period. 3. The Parties' forbearance from filing litigation on the claims, forbearance from asserting cross-claims, and mutual interest in attempting to explore resolution of the claims during the pendency of this Agreement, shall be adequate consideration for this Agreement. 4. Any statute of limitations, statute of repose, or period of limitation applicable to the matters described in paragraph 1 of this Agreement and that had not expired as of March 24, 2017, shall recommence running thirty (30) days after the expiration or termination of this Agreement. For example, if a limitations period on a claim would have otherwise expired on May 13, 2017, and this Agreement terminates on January 31, 2018 then the limitations for this claim period would be extended to March 2, 2018 (thirty days after January 31). 5. Any written notice of termination shall be addressed and mailed as follows: For the District: Leroy Smith Office of the County Counsel County of Ventura 800 South Victoria Avenue Ventura, California 93009 Telephone: (805) 654-2594 Andrew.Gschwind@ventura.org For Moorpark: Kevin G. Ennis, City Attorney City of Moorpark Richards, Watson &Gershon, a P.C. 355 S. Grand Avenue, Suite 3800 Los Angeles, California 90071 Telephone: (213) 626-8484 kennis@rwglaw.com Steve Kueny City Manager City of Moorpark 799 Moorpark Ave. Moorpark, CA 93021 Telephone: (805) 517-6200 SKueny@MoorparkCA.gov 6. The Parties to this Tolling Agreement may agree, in a signed writing, to extend the provisions of this Tolling Agreement. In that event, the terms of this Tolling Agreement will receive legal effect beyond the current termination date of January 31, 2018, as agreed upon by the Parties. 2 12853-0040\2064237v3.doc 2 8 7 DRAFT 7. The Parties have cooperated in the preparation of this Tolling Agreement and have had the benefit of advice from counsel of their choice and, therefore, agree that this Tolling Agreement shall not be construed for or against any Party. Nothing in this Tolling Agreement shall be construed as an admission of liability by, or declaration against the interest of, any of the Parties hereto. 8. This Tolling Agreement shall be interpreted and governed under the laws of the State of California. 9. Except to enforce this Tolling Agreement, no Party may use this Tolling Agreement as evidence in a proceeding concerning the disputes between the Parties. 10. No admission is made by any Party as a result of the execution or performance of this Tolling Agreement. Nothing contained in this Tolling Agreement shall be construed as an admission by any Party of any liability to any other Party, nor shall anything in this Tolling Agreement be construed as a waiver, retraction, or modification of the positions of any Party except as expressly provided herein. The Parties further acknowledge that all preceding discussions concerning this Tolling Agreement shall be considered settlement discussions protected under Evidence Code § 1152. 11. This Tolling Agreement may be modified, amended, supplemented or extended only by an agreement in writing, duly executed by all Parties hereto. No provision of the Tolling Agreement may be waived unless in writing and signed by the Party or Parties whose rights are thereby waived. Waiver of one provision of this Tolling Agreement shall not be deemed to be a waiver of any other provision. 12. This Tolling Agreement contains the entire agreement between the Parties with respect to the matters referred to herein. No other representations, covenants, undertakings or other prior or contemporaneous agreements, oral or written, respecting those matters, which are not specifically incorporated herein, may be deemed in any way to exist or to bind any of the Parties. Each Party acknowledges that it has not executed this Tolling Agreement in reliance on any such promise, representation or warranty. 13. This Tolling Agreement may be executed in multiple counterparts and signatures exchanged by facsimile or electronically, each of which shall be deemed to be an original document, and all of which together shall constitute one and the same document. 14. This Tolling Agreement will be effective as of the date it is signed by the last of the signatories below. IN WITNESS WHEREOF, the Parties hereto execute this Tolling Agreement. [SIGNATURES ON FOLLOWING PAGE] • 3 12853-0040\2064237v3.doc 2 8 8 DRAFT VENTURA COUNTY WATERWORKS DISTRICT NO. 1 DATED: By: Chair of the Board of Ventura County Waterworks District No. 1 Attest: Clerk of the Board CITY OF MOORPARK DATED: By: Janice Parvin, Mayor Attest: City Clerk 4 12853-0040\2064237v3.doc 28 9