TO: LINDA REICH, CITY MANAGER
FROM: HYE JIN LEE, PE, DIRECTOR OF PUBLIC WORKS
SUBJECT
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Settlement Agreement between the City of Chino and the Appropriative Pool.
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RECOMMENDATION
1) Approve ratification of the Settlement Agreement between the City of Chino and the Appropriative Pool; 2) approve to pay the settlement amount of $67,701.53; and 3) authorize the City Manager to execute the necessary documents on behalf of the City.
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FISCAL IMPACT
There are sufficient funds included in the FY2024-25 Water Services Program budget to pay the settlement amount of $67.701.53
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Public Service Excellence through Internal and External Partnerships
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Expenditure: 5207300 - 43605 |
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BACKGROUND
In 1978, the Chino Basin Watermaster was created by a court decree to oversee the groundwater production and replenishment of the Chino Groundwater Basin. The City of Chino is a stakeholder in the groundwater basin as an Appropriative Pool member. Currently, approximately 1/3 of the City’s drinking water comes from pumping from the Chino Groundwater Basin.
The June 2000 Peace Agreement between Chino Groundwater Basin stakeholders provides for members of the Appropriative Pool (retail water agencies, including the City of Chino) to pay the Watermaster - imposed annual assessments on groundwater produced by the Overlying Agricultural Pool (farms and dairies) in return for an early annual re-allocation of the Agricultural Pool’s under-utilized groundwater production rights. The Watermaster annual assessments cover the costs of Watermaster operations and Agricultural Pool special project costs including the cost of Agricultural Pool legal expenses.
Several years ago, a dispute related to the legitimacy of the amount of Agricultural Pool legal expenses arose between the Appropriative and Agricultural Pools which resulted in litigation. Since the time of the litigation, Chino, Ontario, and Monte Vista Water District (MVWD) have withheld full payment towards the Appropriative Pool’s account from which Agricultural Pool legal expenses and Appropriative Pool legal expenses are paid. Though the San Bernardino Superior Court ruled in favor of the Appropriators, discussions pertaining to the court’s ruling continued between members of the two Pools and produced a proposed settlement agreement (Terms of Agreement [TOA]). Chino, Ontario, and the Monte Vista Water District (MVWD) did not support the TOA, but a majority of the Appropriative Pool supported the TOA and the Superior Court ruled that the TOA was binding on Chino, Ontario, and MVWD by a majority rule of the Appropriative Pool. Chino, Ontario, and MVWD appealed the Superior Court ruling and the Court of Appeal upheld the Superior Court ruling in favor of a majority of the Appropriative Pool and against Chino/Ontario/MVWD. Consequently, Chino, Ontario, and MVWD have made payments for the previously disputed Agricultural legal expenses.
ISSUES/ANALYSIS
The Appropriative Pool has filed a motion with the Superior Court in which it requests the Court order Chino/Ontario/MVWD to pay the Appropriative Pool’s legal expenses related to the appeal and expenses described by some outstanding invoices for which Chino/Ontario/MVWD have continued to withhold full payment. The outstanding amount the Appropriative Pool ascribes to Chino is $67,701.53. City Administration and Special Legal Counsel have considered the potential risk if the City of Chino were to continue to litigate (oppose) the Appropriative Pool’s motion and recommend the City avoid that risk and pay the amount requested. The City’s Special Legal Counsel prepared a settlement agreement that provides for Chino to pay $67,701.53 to the Appropriative Pool while reserving all the City’s rights, and that proposed settlement agreement was approved by the Appropriative Pool.
Attachment: Exhibit A - Settlement Agreement