I. RECOMMENDATION:
Council Adoption of Resolution No. 3949 Authorizing A One-time Water Sale to Members of Pleasant Valley Water Conveyance Partners, LLC
II. BACKGROUND:
The City has a long history already of providing excess USBR water to Harris Feeding Company, and more recently to Pleasant Valley Water Conveyance Partners, LLC. During the 2019/20 water year, the City has received its full allotment of 10,000 acre-feet of USBR water. Presently, the City is projected to have a surplus of approximately 1,000 acre-feet of water at the end of the water year on February 29, 2020.
III. DISCUSSION:
Pleasant Valley Water Conveyance Partners, LLC, (Farmers) consists of Jim Anderson of William J. Mouren Farming, Dave Wood, Don Devine, Rod Stiefvater, Chuck Nichols, and Ken Kreyenhagen. The City has an existing water agreement with the Farmers for ongoing monthly sales within Pleasant Valley, which is outside the Westlands Water District. This proposed one-time sale is for USBR water belonging to Coalinga that will be transferred to Westlands Water District by Coalinga, then sold by Coalinga to the Farmers for use within Westlands Water District.
The sale of year-end excess USBR water is beneficial to the City, and specifically to water ratepayers, because the sale price covers all of Coalinga’s USBR costs, including the embedded $19 per acre-foot construction component that pays off debt for which the City is responsible.
The effort required by the City for water sale to the Farmers is administrative and financial only. The contract must be prepared and executed. The financial aspect is that the City will take title to and pay for the additional USBR water going to the Farmers. In order to assure payment to the City of amounts due, the proposed contract specifies that any one farmer is responsible for the full amount, or an equivalent level of guarantee will be provided in the contract.
The proposed resolution approves the sales agreement for the Mayor’s signature and authorizes the City Manager to approve the transfer of the water to Westlands Water District.
IV. ALTERNATIVES:
The alternative is not to sell excess USBR water. If so, the City will lose further rights to the excess water after February 29th because the City cannot carry over the water.
V. FISCAL IMPACT:
Assuming 1,000 AF of sales to the farmers group, the benefit is the contribution to the construction debt owed USBR by the City. For this transaction based on 1,000 AF, the amount is: 1,000 AF x $19 = $19,000
The agreement specifies that if any of the cost components change that the price to the Farmers will be adjusted accordingly such that the revenue to the city is protected. There will likely be an adjustment to the price based on the cost of conversion from “Municipal and Industrial” water to “Agricultural” water. |