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Resolution Number 21-11-02-01' RESOLUTION NO. 21-11-02-01 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, APPROVING THE FIRST AMENDMENT TO THE ANNEXATION AGREEMENT BETWEEN THE CITY AND THE SANTA MARGARITA WATER DISTRICT, DETERMINING THAT SUCH ACTION IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT, AND AUTHORIZING AND DIRECTING THE CITY MANAGER TO TAKE CERTAIN ACTIONS TO EFFECTUATE THE PURPOSE OF THIS RESOLUTION WHEREAS, the City of San Juan Capistrano ("City") and Santa Margarita Water District ("SMWD") entered into an Annexation Agreement, dated as of January 21, 2020, to: (i) set forth certain key terms to be incorporated into the Orange County Local Agency Formation Commission ("LAFCO") Application for annexation by, and transfer to SMWD of the City's water and wastewater utilities (Utilities Systems, as defined in the Annexation Agreement), and (ii) address how other matters pertaining to the annexation and transfer of the City's Utilities Systems to SMWD will be carried out by the City and SMWD. The Annexation Agreement defines the "Annexation Effective Date" as "the date to be agreed upon in writing by the City and SMWD subject to the terms of the LAFCO Approval (as defined in the Annexation Agreement), as the date on which the Utilities Systems will be ' transferred by the City to SMWD to consummate the annexation; WHEREAS, on August 19, 2021, LAFCO adopted its Resolution No. DA 20-01 approving the annexation ("LAFCO Resolution"). Paragraph "o" of Section 3 of the LAFCO Resolution provides that the effective date of the annexation may be a date agreed to by City and SMWD or the date of recordation of the LAFCO Certificate of Completion, whichever is later; WHEREAS, pursuant to the above-described provisions in the Annexation Agreement and the LAFCO Resolution, the City and SMWD now desire to establish a date as the Annexation Effective Date and make certain other amendments to the Annexation Agreement as more specifically described therein; WHEREAS, the City Council desires to authorize the City Manager to execute and deliver to SMWD the First Amendment to the Annexation Agreement and to do all things which he may deem necessary, proper, or both, to effectuate the purposes of the Annexation Agreement, as amended by the First Amendment to the Annexation Agreement; and WHEREAS, the First Amendment to the Annexation Agreement, in its substantial final form, is attached to this Resolution as Exhibit A and incorporated as a material part of this Resolution by this reference. 11/2/2021 NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San I Juan Capistrano that: 1. The above recitals are true and correct and are a substantive part of this Resolution. 2. The First Amendment to the Annexation Agreement has been reviewed by City staff and the City Council with respect to the applicability of the California Environmental Quality Act (Public Resources Code Section 21000 etseq.) ("CEQA"). The City Council hereby determines that approval of the First Amendment to the Annexation Agreement is exempt from additional review under CEQA because the activity to be undertaken by the First Amendment to the Annexation Agreement qualifies under various exemptions to CEQA. Those exemptions include the Class 19 Categorical Exemption (State CEQA Guidelines Section 15319(a)) because the First Amendment to the Annexation Agreement is to facilitate the annexation of existing City -owned and operated Utility Systems infrastructure into the boundaries, and operations, of SMWD and the Class 20 Categorical Exemption (State CEQA Guidelines Section 15320) because the annexation constitutes a change in organization of the Utility Systems rather than the development of new or additional utility systems. Furthermore, it is exempt from CEQA under the common sense exemption set forth in State CEQA Guidelines section 15061, subdivision (b)(3) as it can be seen with certainty that there is no possibility that the First Amendment to the Annexation Agreement may have a significant effect on the t environment. Additionally, approval of the First Amendment to the Annexation Agreement is not a "project" as defined by CEQA Guidelines Section 15378(b)(5) because it is merely an organizational or administrative activity of governments that will not result in direct or indirect physical changes to the environment, and thus approval of the agreement is not subject to CEQA. The City Council hereby determines that no substantial evidence exists to find that the exceptions to these exemptions apply. The City Council makes these determinations in the exercise of its independent judgment. 3. City Staff is hereby directed to prepare and post a notice of exemption pursuant to CEQA Guidelines Section 15062. 4. Based upon all of the findings and determinations contained in this Resolution, the First Amendment to the Annexation Agreement, attached hereto as Exhibit A, is hereby approved. 5. The City Manager is hereby authorized and directed to execute and deliver to SMWD, for and in the name of the City, the First Amendment to the Annexation Agreement, in substantially such form as attached as Exhibit A, with such non -substantial modifications thereto as may be agreed to by the City Manager in consultation with the City's legal counsel. Approval of any non -substantial modifications shall be conclusively evidenced by the City Manager's execution and delivery of the First Amendment to the Annexation Agreement. , 2 11/2/2021 ' 6. This Resolution shall take effect from and after its passage and adoption by the City. PASSED, APPROVED AND ADOPTED this 2nd day of November 2021. JOHN TAYLOR, MAYOR ATTEST: MARIA MOfR ,CITY CLER, STATE OF CALIFORNIA ) ' COUNTY OF ORANGE ) ss. CITY OF SAN JUAN CAPISTRANO ) I, Maria Morris, appointed City Clerk of the City of San Juan Capistrano, do hereby certify that the foregoing Resolution No. 21-11-02-01 was duly adopted by the City Council of the City of San Juan Capistrano at a Regular meeting thereof, held the 2nd day of November 2021, by the following vote: AYES:1 COUNCIL MEMBERS: Reeve, Hart, Bourne, Farias and Mayor Taylor NOES:, OU CIL MEMBERS: None ABSENT: COUNCIL MEMBERS: None 3 11/2/2021 EXHIBIT A ' FIRST AMENDMENT TO THE ANNEXATION AGREEMENT Between the City of San Juan Capistrano and the Santa Margarita Water District 11/2/2021 I FIRST AMENDMENT TO THE ANNEXATION AGREEMENT BETWEEN THE CITY OF SAN JUAN CAPISTRANO AND THE SANTA MARGARITA WATER DISTRICT This First Amendment to the Annexation Agreement between the City of San Juan Capistrano and the Santa Margarita Water District, dated as of November 2021, (thus "Amendment"), is entered into by and between the City of San Juan Capistrano, a municipal corporation duly organized and existing under the laws of the State of California (the "City"), and the Santa Margarita Water District, a water district duly organized and existing under the California Water District Law (California Water Code Section 34000 et seg.) ("SMWD"). The City and SMWD are, together, referred to in this Agreement as the "Parties" and, individually, as a "Party." RECITALS A. The City and SMWD entered into an Annexation Agreement, dated as of January 21, 2020, to: (i) set forth certain key terms to be incorporated into a LAFCO Application, and (ii) address how other matters pertaining to the Annexation and transfer of the City's Utilities Systems to SMWD will be carried out by the Parties. The Annexation Agreement defines the "Annexation Effective Date" as "the date to be agreed upon in writing by the Parties subject to the terms of the LAFCO Approval, as the date on which the Utilities Systems will be transferred by the City to SMWD to consummate the Annexation." B. On August 19, 2021, LAFCO adopted LAFCO Resolution No. DA 20-01 approving the Santa Margarita Water District annexation of the San Juan Capistrano water and wastewater utilities (DA 20-01) subject to certain conditions. Paragraph `b" of Section 3 of LAFCO Resolution No. DA 20-01 provides that the effective date of the annexation may be a date agreed to by the parties or the date of recordation of the LAFCO Certificate of Completion, whichever is later. C. Pursuant to the above-described provisions in the Annexation Agreement and LAFCO Resolution No. DA 20-01, the Parties now desire to establish a date certain as the Annexation Effective Date and make certain other amendments to the Annexation Agreement as more specifically described herein. D. The Parties find and determine that this Amendment is consistent with and is intended to implement LAFCO Resolution No. DA 20-01, and that the modifications set forth in this Amendment are appropriate and necessary to efficiently effectuate the Annexation. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND CONDITIONS CONTAINED HEREIN; AND OTHER VALUABLE CONSIDERATION, THE ADEQUACY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS: 1. RECITALS The recitals set forth above are true and correct and are incorporated hereby this reference. 103060006\2574607v18.doc 2. DEFINITIONS Unless the context otherwise requires, capitalized terms used in this Amendment shall have the meanings set forth in the Annexation Agreement. 3. ANNEXATION EFFECTIVE DATE 3.1. The term "Annexation Effective Date" in Exhibit A of the Annexation Agreement is modified to read as set forth below: "Annexation Effective Date" has the meaning set forth in Section 1.2 of this Annexation Agreement." 3.2. Section 1 of the Annexation Agreement is amended to read as follows: "1. DEFINITIONS AND ANNEXATION EFFECTIVE DATE 1.1. Definitions in "Exhibit A." Unless the context otherwise requires, capitalized terms used in this Agreement shall have the meanings set forth in Exhibit A. 1.2 Annexation Effective Date. The Utilities Systems will be transferred by the City to SMWD to consummate the Annexation on the Annexation Effective Date. The Annexation Effective Date shall be November 15, 2021, unless on or before November 15, 2021, the City Manager and General Manager mutually agree in writing to a later date." 3.3. Paragraph (c) of Section 3.2 of the Annexation Agreement is deleted in its entirety and paragraph (d) of Section 3.2 is hereby re -lettered as paragraph (c). 4. TRANSFER OF CERTAIN FUNDS 4.1. A new paragraph (e) is added to Section 6.2 of the Annexation Agreement to read as follows: "(e) Notwithstanding the preceding paragraphs of this Section 6.2, the Parties agree that the City shall retain an amount of funds after the Annexation Effective Date, as specified in the Assignment Agreement, in the accounts related to the Utility Systems for the payment by the City of outstanding checks issued in connection with the Utilities Systems and estimated accruals and interfund allocations in connection with the Utilities Systems. An accounting of the disposition of the retained funds shall be provided by the City to SMWD, along with any unexpended retained funds, within 90 days after the Annexation Effective Date. Nothing in this paragraph shall be interpreted to alter or eliminate any obligation of SMWD to pay for, or reimburse the City for costs and expenses as otherwise provided in this Agreement or any Collateral Agreement." 10306-0006\2574607v18.doc ' 4.2. Section 12.1 of the Annexation Agreement is amended to read as follows: "12.1. Transfer of Unexpended Cash Balances. All unexpended cash balances in the Water Fund and the Sewer Fund shall be transferred to SMWD on the Annexation Effective Date, unless retained pursuant to Section 6.2." 5. COSTS FOR ADJUSTING UTILITY FACILITIES A new Section 7.5 is added to the Annexation Agreement to read as follows: "7.5. SMWD's shall pay for, or reimburse the City for, the cost of (i) adjusting SMWD- owned sewer manholes, water valve boxes and covers, water meter boxes, and other street level utility structures within paved streets to the new pavement grade when the City resurfaces the streets; or (ii) relocating or removing any SMWD owned sewer or water facility within a public street right-of-way to accommodate any public improvement made by the City, when made necessary by any lawful change of grade, alignment, or width of any public street, way, alley, or place. For purposes of applying applicable law including but not limited to Public Utility Code Section 12808, the Parties agree that the City's public streets, ways, alleys or places that existed on the Annexation Effective Date shall be treated as first -in -time and prior -in -right to the Utilities Systems transferred in this Annexation and accordingly, the Utilities Systems transferred in this Annexation shall be deemed second -in -time under the applicable law." ' 6. SCWD ADMINISTRATIVE COMPLAINT Section 9.3 of the Annexation Agreement is amended to add the following sentence at the end of that section: "The Parties acknowledge the receipt of the "Report of Investigation (INV 7806) and Notice of Violation Regarding Complaint Against San Juan Basin Authority Alleging Violation of Permit Terms 17 and 23, San Juan Creek, Orange County" dated August 27, 2021, related to the SCWD Administrative Complaint, which shall be addressed and resolved consistent with the terms of this Agreement." 7. OCERS PAYMENT Section 11.2 of the Annexation Agreement is amended to read as follows: "11.2. Payment by CITY on Behalf of SMWD. To address this retained cost, the Parties agree that the City shall, on behalf of SMWD, pay the OCERS Obligation in total on the Annexation Effective Date from the Water Fund." 8. CUSTOMER PAYMENT AT CITY HALL AFTER TRANSFER Section 17 of the Annexation Agreement is amended to read as follows: "17.1. Maintenance of Bill -Pay Presence at City Hall. SMWD and the City shall cooperate to make available to the Customers a means to pay their water and wastewater 10306-0006\2574607v18.doc bills at City Hall for a minimal transition period to be mutually agreed upon by SMWD and the City, not to exceed two years from the Annexation Effective Date. SMWD and the ' City shall cooperate in addressing SMWD concerns related to the transition of Customer billing and use all efforts reasonably necessary to facilitate the transition of the billing system. The City shall take all reasonable action requested by SMWD concerning the transition of the billing system to SMWD including assisting SMWD, when requested, with the dissemination of information related to the transition of customer billing to SMWD. 17.2. SMWD to Provide Personnel at City Hall. SMWD shall provide personnel to collect payments at City Hall for the minimal transition period described in Section 17.1. 17.3. SMWD to Reimburse City Costs and Expenses. SMWD shall reimburse the City for reasonable costs and expenses, including costs and expenses of City employee time, relating to the provision of Customer's bill -paying access and assistance." 9. PERSONNEL TRANSFER ON ANNEXATION EFFECTIVE DATE A new Section 18.3 is added to the Annexation Agreement to read as follows: "18.3. Personnel Transfer on Annexation Effective Date. Unless otherwise agreed to by the Parties in writing, employees of the City that are hired by SMWD pursuant to this Section 18 shall become employees of SMWD for all purposes, including compensation and benefits, as of 12:01 a.m. on the Annexation Effective Date." ' 10. CONTINUATION OF TERMS AND CONDITIONS OF THE ANNEXATION AGREEMENT Except as expressly set forth herein, all provisions of the Annexation Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the Parties to this Amendment have caused the same to be executed by each of their duly authorized officers as follows: CITY OF SAN JUAN CAPISTRANO By: Benjamin Siegel, City Manager ATTEST: Maria Morris, City Clerk 10306-0006\2574607v18.doc APPROVED AS TO FORM: Kevin G. Ennis, Special Counsel SANTA MARGARITA WATER DISTRICT Charles T. Gibson, President of Board of Directors ATTEST: Kelly Radvansky, Board Secretary APPROVED AS TO FORM: DeeAnne Gillick, Special Counsel 10306-0006\2574607v18.doc