STRADLING YOCCA CARLSON / RAUTH0 4
1 STRADLING YOCCA CARLSON & RAUTH
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
DENISE E. HERING 660 NEWPORT CENTER DRIVE, SUITE 1600
DIRECT DIAL: (949) 725-4165 NEWPORT BEACH, CALIFORNIA 92 66 0-644 1
DHERINGOHERINGOSYCR.COM TELEPHONE (949) 7254000
FACSIMILE (949) 725.4100
August 26, 2002
City of San Juan Capistrano, on behalf of Capistrano Valley Water District
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: George Scarborough, City Manager
San Juan Basin Authority
Moulton Niguel Water District
27500 La Paz Road
Laguna Niguel, CA 92677
Attn: Donald Martinson
SAN FRANCISCO OFFICE
44 MONTGOMERY STREET, SUITE 2950
SAN FRANCISCO. CALIFORNIA 94104
TELEPHONE (415)255-2240
FACSIMILE (415)255-2255
Re: City of San Juan Capistrano/Capistrano Valley Water District
San Juan Basin Authority DeSalter Project, Series 2002 Lease Revenue Bonds
Gentlemen:
We have been invited to represent the Capistrano Valley Water District (the "Water
District"), as an obligated party, and the San Juan Basin Authority, as issuer, in connection with the
financing of Phase I of the San Juan Basin Ground Water Recovery Plant (the "Ground Water
Recovery Plant") to be located in the City of San Juan Capistrano (the "City"). The Ground Water
Recovery Plant is proposed to be financed by means of an issue of tax-exempt base revenue bonds
(the "Bonds") currently expected to be issued by the San Juan Basin Authority (the "Authority"). In
the past, this Firm has represented all of the City, the Water District and the Authority in a number
of matters as specifically requested by each respective entity, and from time to time related to
various municipal finance matters. In light of these past representations and the currently proposed
representation relating to the Ground Water Recovery Plant and the Bonds, we believe it is necessary
to inform you of the potential conflict of interest and obtain a consent from each of you with respect
to such conflict.
Conflicts of Interests:
As we have previously explained, our representation of the Authority and the Water District
in connection with the Ground Water Recovery Plant and the Bonds could create certain conflicts of
interest, in that the interests and objectives of Authority may be in conflict with the objectives of the
616375.1122475.0007
DOCSOC\918800v 112265 8.0017
August 26, 2002
Page Two
Water District relative to the Ground Water Recovery Plant, its ownership and water production, or
other matters related to this transaction.
We have been engaged to represent the Authority in connection with the proposed financing
and negotiation of an agreement between the Authority and the Water District relating to the
ultimate ownership of the Ground Water Recovery Plant and water rights relative thereto (the "GRP
Agreement"), and we have been engaged by the Authority and the Water District to act as bond
counsel in connection with the Bonds and related matters to the financing of the Ground Water
Recovery Plant. The Water District has indicated that other counsel has been engaged by it for the
representation of the Water District in connection with the GRP Agreement.
While both the Water District and the Authority have stated that it does not believe that our
bond counsel services on behalf of both the Water District and the Authority, or our representation of
the Authority in connection with the GRP Agreement, involves a current or immediate conflict of
interest problem between clients being represented by us, and we do not believe representation of the
Water District and the Authority in connection with the bond issue or our representation of the
Authority in connection with the GRP Agreement will be compromised thereby, the interests of
either party in the above-described transactions could potentially be adverse to the other party.
Under the ethical standards discussed immediately below, we are required to bring this matter to
your attention and to obtain your consent before representing you in connection with the proposed
GRP Agreement and Bond financing.
Rules of Professional Conduct:
As attorneys, we are governed by specific rules relating to our representation of clients when
present or potential conflicts of interest exist. Rule 3-310 of the Rules of Professional Conduct of
the State Bar of California provides, in relevant part, as follows:
(A) If a member has or had a relationship with another party interested in the
representation, or has an interest in its subject matter, the member shall not accept or continue such
representation without all affected clients' informed written consent.
(B) A member shall not concurrently represent clients whose interest conflict,
except with their informed written consent.
(C) A member who represents two or more clients shall not enter into an
aggregate settlement of the claims of or against the clients, except with their informed written
consent.
(D) A member shall not accept employment adverse to a client or former client
where, by reason of the representation of the client or former client, the member has obtained
confidential information material to the employment except with the informed written consent of the
client or former client.
DOCS00918800v 1\22658.0017
E
August 26, 2002
Page Three
(E) As used in this rule "informed" means full disclosure to the client of the
circumstances and advice to the client of any actual or reasonably foreseeable adverse effects of
those circumstances upon the representation.
Accordingly, we must request that each of you sign and return to us a copy of this letter
acknowledging that:
(1) You have been advised of Rule 3-310 and of the conflicts associated with your
respective interests;
(2) You have been advised of Stradling Yocca Carlson & Rauth's present and continuing
relationship with Authority on the one hand and the Water District on the other;
(3) Each of the Authority and the Water District nevertheless wants us to represent it in
connection with the matters discussed above;
(4) Authority consents to our representation of the Water District in connection with the
matters discussed above; and
(5) Water District consents to our representation of the Authority in connection with the
matters discussed above.
We want to stress that each of you remains completely free to seek independent counsel at
any time, even if you decide to sign the Consent set forth below. Should you have any questions
concerning this letter or the Consent, please discuss them with us before signing and returning the
enclosed copy of this letter.
If you have any questions or comments regarding the attached Consent, billing fees, or
otherwise, please do not hesitate to call me.
Very truly yours,
�STTRRA�DLING YOCCA CARLSON & RAUTH
Denise E. Hering, E
DEH:bk
Enclosure
cc: Fritz R. Stradling, Esq.
DOCSOCM 8800V 1\22658.0017
0
32400 PASEO ADELANTO
SAN JUAN CAPISTRANO, CA 92675
(949) 493-1171
(949) 493-1053 (FA)O
www.sanjuancapistrano.org
September 19, 2002
� fi I IA(IIIIIIIfI
61110Nf1 1961
{776
Denise E. Hering, Esq.
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Ste 1600
Newport Beach, CA 92660-6441
MEMBERS OF THE CITY COUNCIL
DIANE L. BATHGATE
COLLENE CAMPBELL
,JOHN S. GELFF
WYATT HAAT
DAVID M. SWERDLIN
CITY MANAGER
GEORGE SCARBOROUGH
Re: August 26, 2002 correspondence regarding the City of San Juan
Capistrano/Capistrano Valley Water District: San Juan Basin Authority DeSalter Project,
Series 2002 Lease Revenue Bonds, Consent
Dear M. Hering:
Please find enclosed an original Consent form related to representation by Stradling
Yocca Carlson & Rauth of both the Capistrano Valley Water District and the San Juan
Basin Authority in the above-described project.
The Consent was approved by the City Council on September 17, 2002, the motion
approved: Moved by Mayor pro tem Gelff, seconded by Council Member Hart and
carried 3-1-0 to approve the Consent Form allowing Stradling Yocca Carlson & Rauth
(SYCR) to represent the City on behalf of the Capistrano Valley Water District and the
San Juan Basin Authority regarding the ground Water Recovery Plant project legal
matters.
ROLL CALL
AYES: COUNCIL MEMBERS: Hart, Gelff and Mayor Bathgate
NOES: COUNCIL MEMBER: Swerdlin
ABSENT: COUNCIL MEMBER: Campbell
I can be reached at (949) 443-6308 if you have any questions.
Sincerely,
San Juan Capistrano: Preserving the Past to Enhance the Future
DRUG USE
IS
0
STRADLING YOCCA CAR
A PROFESSIONAL CORPC
ATTORNEYS AT LA
DENISE E. HERING 660 NEWPORT CENTER DRIVE
DIRECT DIAL: (949) 725-4165 NEWPORT BEACH, CALIFORNIA
DHERINGDHERING ySYCR.COM TELEPHONE (949) 725
FACSIMILE (949) 725 -
Vv
r
F7 -Oz-
City
0Z
August 26,'
City of San Juan Capistrano, on behalf of Capistrano Valley Water District
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: George Scarborough, City Manager
San Juan Basin Authority
Moulton Niguel Water District
27500 La Paz Road
Laguna Niguel, CA 92677
Attn: Donald Martinson
Re: City of San Juan Capistrano/Capistrano Valley Water District
San Juan Basin Authority DeSalter Project, Series 2002 Lease Revenue Bonds
Gentlemen:
We have been invited to represent the Capistrano Valley Water District (the "Water
District'), as an obligated party, and the San Juan Basin Authority, as issuer, in connection with the
financing of Phase I of the San Juan Basin Ground Water Recovery Plant (the "Ground Water
Recovery Plant') to be located in the City of San Juan Capistrano (the "City"). The Ground Water
Recovery Plant is proposed to be financed by means of an issue of tax-exempt base revenue bonds
(the "Bonds") currently expected to be issued by the San Juan Basin Authority (the "Authority"). In
the past, this Firm has represented all of the City, the Water District and the Authority in a number
of matters as specifically requested by each respective entity, and from time to time related to
various municipal finance matters. In light of these past representations and the currently proposed
representation relating to the Ground Water Recovery Plant and the Bonds, we believe it is necessary
to inform you of the potential conflict of interest and obtain a consent from each of you with respect
to such conflict.
Conflicts of Interests:
As we have previously explained, our representation of the Authority and the Water District
in connection with the Ground Water Recovery Plant and the Bonds could create certain conflicts of
interest, in that the interests and objectives of Authority may be in conflict with the objectives of the
616375.1\22475.0007
DOCSOC\918800V I\22658.0017
ICE
,TE 2950
94104
140
255
August 26, 2002
Page Two
Water District relative to the Ground Water Recovery Plant, its ownership and water production, or
other matters related to this transaction.
We have been engaged to represent the Authority in connection with the proposed financing
and negotiation of an agreement between the Authority and the Water District relating to the
ultimate ownership of the Ground Water Recovery Plant and water rights relative thereto (the "GRP
Agreement"), and we have been engaged by the Authority and the Water District to act as bond
counsel in connection with the Bonds and related matters to the financing of the Ground Water
Recovery Plant. The Water District has indicated that other counsel has been engaged by it for the
representation of the Water District in connection with the GRP Agreement.
While both the Water District and the Authority have stated that it does not believe that our
bond counsel services on behalf of both the Water District and the Authority, or our representation of
the Authority in connection with the GRP Agreement, involves a current or immediate conflict of
interest problem between clients being represented by us, and we do not believe representation of the
Water District and the Authority in connection with the bond issue or our representation of the
Authority in connection with the GRP Agreement will be compromised thereby, the interests of
either party in the above-described transactions could potentially be adverse to the other party.
Under the ethical standards discussed immediately below, we are required to bring this matter to
your attention and to obtain your consent before representing you in connection with the proposed
GRP Agreement and Bond financing.
Rules of Professional Conduct:
As attorneys, we are governed by specific rules relating to our representation of clients when
present or potential conflicts of interest exist. Rule 3-310 of the Rules of Professional Conduct of
the State Bar of California provides, in relevant part, as follows:
(A) If a member has or had a relationship with another party interested in the
representation, or has an interest in its subject matter, the member shall not accept or continue such
representation without all affected clients' informed written consent.
(B) A member shall not concurrently represent clients whose interest conflict,
except with their informed written consent.
(C) A member who represents two or more clients shall not enter into an
aggregate settlement of the claims of or against the clients, except with their informed written
consent.
(D) A member shall not accept employment adverse to a client or former client
where, by reason of the representation of the client or former client, the member has obtained
confidential information material to the employment except with the informed written consent of the
client or former client.
DOCSOC\918800v 1 \22658.0017
August 26, 2002
Page Three
(E) As used in this rule "informed" means full disclosure to the client of the
circumstances and advice to the client of any actual or reasonably foreseeable adverse effects of
those circumstances upon the representation.
Accordingly, we must request that each of you sign and return to us a copy of this letter
acknowledging that:
(1) You have been advised of Rule 3-310 and of the conflicts associated with your
respective interests;
(2) You have been advised of Stradling Yocca Carlson & Rautws present and continuing
relationship with Authority on the one hand and the Water District on the other;
(3) Each of the Authority and the Water District nevertheless wants us to represent it in
connection with the matters discussed above;
(4) Authority consents to our representation of the Water District in connection with the
matters discussed above; and
(5) Water District consents to our representation of the Authority in connection with the
matters discussed above.
We want to stress that each of you remains completely free to seek independent counsel at
any time, even if you decide to sign the Consent set forth below. Should you have any questions
concerning this letter or the Consent, please discuss them with us before signing and returning the
enclosed copy of this letter.
If you have any questions or comments regarding the attached Consent, billing fees, or
otherwise, please do not hesitate to call me.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH
Denise E. Hering, E q.
DEH:bk
Enclosure
cc: Fritz R. Stradling, Esq.
DOCSOCA918800V 1\22658.0017
1
CONSENT
Stradling Yocca Carlson & Rauth has explained to each of the undersigned that there exists
presently conflicting interests in the above-described matter and has informed each of us of the
possible consequences of these conflicts. We acknowledge the disclosure of Stradling Yocca
Carlson & Rauth's concurrent representation of Authority and the Water District and the additional
conflicts arising from such representation. We understand that we have the right to seek independent
counsel before signing this Consent, or at any future time. In addition, we acknowledge that we
have received the recommendation of Stradling Yocca Carlson & Rauth to seek such independent
counsel before signing this Consent.
The City of San Juan Capistrano on its own behalf and on behalf of the Capistrano Valley
Water District, nevertheless, desires representation by Stradling Yocca Carlson & Rauth to the
extent described above, and therefore, consents and gives approval to such representation and to the
representation by Stradling Yocca Carlson & Rauth of the Authority in connection with the facts
described above.
The Authority, nevertheless, desires representation by Stradling Yocca Carlson & Rauth to
the extent described above, and therefore, consents and gives approval to such representation and to
the representation by Stradling Yocca Carlson & Rauth of the Water District in connection with the
facts described above.
Dated:• 'I , 2002
Dated:
DOCSOC\918800v 1 \22658.0017
2002
CITY OF SAN JUAN CAPISTRANO
By:Jt
SAN JUAN BASIN AUTHORITY
ne foregoing instrument is t
this office. Attest: '
City Clerk of the City of San
of the originala file in
20 t3
no, &tv of orange,
0 9
3. WARRANTS DATED AUGUST 22, 2002, IN THE AMOUNT OF $900,843.93, AND
PAYROLL WARRANTS DATED AUGUST 29, 2002, IN THE AMOUNT OF
$226,406.70, RECEIVED AND FILED (300.30)
4. REPORT OF INVESTMENTS, MONTH ENDING JULY 31, 2002, RECEIVED AND
FILED (350.50)
5. STATUS OF NEW DEVELOPMENT APPLICATION RECEIVED AND FILED
(440.10)
6. RESOLUTION NO. 02-09-17-01 ADOPTED ENTITLED "A RESOLUTION OF THE
CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, TO
UPDATE THE CITY'S DISADVANTAGED BUSINESS ENTERPRISE (DBE)
PROGRAM FOR FISCAL YEAR 2002-2003" (820.25)
7. RESOLUTION NO. 02-09-17-02 ADOPTED ENTITLED "A RESOLUTION OF THE
CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, INITIATING PROCEEDINGS
FOR THE ABANDONMENT OF A PUBLIC EASEMENT FOR ROAD AND UTILITY
PURPOSES WITHIN LOT 10 OF TRACT 6402 AKA 32981 CALLE PERFECTO
(IHDE TRUST);" PUBLIC HEARING SCHEDULED FOR OCTOBER 15, 2002
(670.50)
8. RESOLUTION NO. 02-09-17-03 ADOPTED ENTITLED "A RESOLUTION OF THE
CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, INITIATING PROCEEDINGS
FOR THE ABANDONMENT OF A PUBLIC EASEMENT FOR DRAINAGE
PURPOSES WITHIN PARCELS 1 AND 2 OF PARCEL MAP 96-140, FORMERLY
LOTS 23 OF TRACT 13025 (LOONEY);" PUBLIC HEARING SCHEDULED FOR
OCTOBER 15, 2002 (670.50)
9. 100% FACILITY RENTAL FEE WAIVED ($300) FOR A CITY COUNCIL
CANDIDATE FORUM, TO BE HELD BY THE SAN JUAN COMMUNITY TASK
FORCE AND LEAGUE OF WOMEN VOTERS OF CAPISTRANO BAY AREA ON
OCTOBER 9, 2002, AT THE SAN JUAN CAPISTRANO COMMUNITY CENTER
(390.30)
10. USE RESTRICTION AGREEMENT APPROVED WITH ROBERT AND DOROTHY
LARSEN FOR THE PRESERVATION OF THE EXTERIOR FACADE AT 31815
CAMINO CAPISTRANO; AND, THE CITY CLERK DIRECTED TO PROCESS
RECORDING OF DOCUMENT (600.30)
1. CONSENT FORM APPROVED ALLOWING STRADLING, YOCCA, CARLSON &
RAUTH TO REPRESENT THE CITY OF SAN JUAN CAPISTRANO ON BEHALF
OF THE CAPISTRANO VALLEY WATER DISTRICT AND SAN JUAN BASIN
AUTHORITY REGARDING CERTAIN GROUND WATER RECOVERY PLAN
PROJECT LEGAL MATTERS (600.30)
City Council Minutes A\,3 9-17-02
0 9
Project Description: The law firm of Stradling, Yocca, Carlson & Rauth propose to
perform certain legal services related to bonds, in connection with the ongoing
Ground Water Recovery Plan project, simultaneously on behalf of both the
Capistrano Valley Water District and the San Juan Basin Authority. The firm
requests the City of San Juan Capistrano, on behalf of the District, formally consent
to the dual legal representation in order to meet State requirements related to dual
representation.
Written Communication: Report dated September 17, 2002, from John R. Shaw,
City Attorney.
Presentation: John R. Shaw, City Attorney, reviewed the staff recommendation.
Council Comment:
Council Member Swerdlin felt the law firm should not provide legal services to both
the Capistrano Valley Water District and the San Juan Basin Authority for the same
project and did not support the item.
Council Action: Moved by Mayor pro tem Gelff, seconded by Council Member Hart
and carried 3-1-0 to approve the Consent form, allowing Stradling, Yocca, Carlson
& Rauth (SYCR) to represent the City on behalf of the Capistrano Valley Water
District and the San Juan Basin Authority regarding the Ground Water Recovery
Plan project legal matters.
ROLL CALL
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
Hart, Mayor pro tem Gelff and Mayor
Bathgate
Swerdlin
None
Campbell
12. MONTANEZ ADOBE CURATOR AGREEMENT STATUS REPORT RECEIVED
AND FILED WITH NO FURTHER ACTION TO BE TAKEN UNTIL THE CITY HAS
RETAINED A HISTORIC PRESERVATION MANAGER (600.30)
13. AGREEMENT WITH WEBB COMMUNITY MANAGEMENT, INC., APPROVED
FOR ADMINISTRATION OF THE CAPISTRANO VILLAS I, II AND III PARKING
PROGRAM FOR A ONE YEAR PERIOD, SEPTEMBER 17, 2002 THROUGH
SEPTEMBER 16, 2002; AND, CITY MANAGER AUTHORIZED TO EXECUTE THE
AGREEMENT (600.30)
City Council Minutes 4 9-17-02
9/17/2002
AGENDA ITEM p 1 1
TO: George Scarborough, City Manager
FROM: John R. Shaw, City Attorney
SUBJECT: Consideration of Approval of Consent Form Allowing Law Firm
of Stradling, Yocca, Carlson & Rauth to Represent The City of
San Juan Capistrano on Behalf of the Capistrano Valley Water
District and the San Juan Basin Authority in Regards to Certain
Ground Water Recovery Plant Project Legal Matters
RECOMMENDATION:
Consider and approve attached consent form from the law firm of Stradling, Yocca,
Carlson & Rauth (SYCR).
SITUATION:
The Stradling law firm is handling certain legal matters on behalf of the Capistrano Valley
Water District and San Juan Basin Authority in connection with the ongoing Ground Water
Recovery Plant Project. Those legal matters involve real property title issues and financing
for the project. Because the SYRC law firm is performing these legal services
simultaneously on behalf of both the District and the San Juan Basin Authority, the law firm
is now requesting that the City, on behalf of the District, formally consent to this dual legal
representation to conform to state conflict of interest rules.
Accordingly, the firm has submitted the attached "consent form" to accomplish this
purpose. The form is in order and can be approved by the City. In addition, a letter dated
August 26, 2002 is attached from the firm providing further background information
regarding this request.
FINANCIAL CONSIDERATIONS:
None.
NOTIFICATION:
None.
FOR CITY COUNCIL AGENDA..�SJ�
.
AGENDA ITEM -2- September 17, 2002
ALTERNATE ACTIONS:
1. Approve Consent Form.
2. Do not approve Consent Form.
RECOMMENDATION:
Approve the Consent Form Allowing the law firm of Stradling, Yocca, Carlson & Rauth to
Represent the City of San Juan Capistrano, on behalf of the Capistrano Valley Water
District and the San Juan Basin Authority in regards to the Groundwater Recovery Plant
Project.
Respectful] Submitted,
IJoh R. Shaw
City Attorney
JRS:sc
Attachments: Consent Form
August 26, 2002 Letter
CONSENT
Stradling Yocca Carlson & Rauth has explained to each of the undersigned that there exists
presently conflicting interests in the above-described matter and has informed each of us of the
possible consequences of these conflicts. We acknowledge the disclosure of Stradling Yocca
Carlson & Rauth's concurrent representation of Authority and the Water District and the additional
conflicts arising from such representation. We understand that we have the right to seek independent
counsel before signing this Consent, or at any future time. In addition, we acknowledge that we
have received the recommendation of Stradling Yocca Carlson & Rauth to seek such independent
counsel before signing this Consent.
The City of San Juan Capistrano on its own behalf and on behalf of the Capistrano Valley
Water District, nevertheless, desires representation by Stradling Yocca Carlson & Rauth to the
extent described above, and therefore, consents and gives approval to such representation and to the
representation by Stradling Yocca Carlson & Rauth of the Authority in connection with the facts
described above.
The Authority, nevertheless, desires representation by Stradling Yocca Carlson & Rauth to
the extent described above, and therefore, consents and gives approval to such representation and to
the representation by Stradling Yocca Carlson & Rauth of the Water District in connection with the
facts described above.
CITY OF SAN JUAN CAPISTRANO
Dated: 2002 By:
SAN JUAN BASIN AUTHORITY
Dated: 2002 By:
DOCSOC\918800v1\22658.0017 ATTACHMENT 1
0
0
STRADLING YOCCA CARLSON & RAUTH
A PROFESSIONAL CORPORATION
ATTORNEYS AT LAW
DENISE E. HERING 660 NEWPORT CENTER DRIVE, SUITE 1600
DIRECT DIAL: (949) 725-4165 NEWPORT BEACH, CALIFORNIA 92660-6441
DHERINGDHERING@SYCR.COM TELEPHONE (949) 725-4000
FACSIMILE (949) 7254100
August 26, 2002
City of San Juan Capistrano, on behalf of Capistrano Valley Water District
32400 Paseo Adelanto
San Juan Capistrano, CA 92675
Attn: George Scarborough, City Manager
San Juan Basin Authority
Moulton Niguel Water District
27500 La Paz Road
Laguna Niguel, CA 92677
Attn: Donald Martinson
SAN FRANCISCO OFFICE
44 MONTGOMERY STREET, SUITE 2950
SAN FRANCISCO, CALIFORNIA 24104
TELEPHONE (415) 253-2240
FACSIMILE (415)253-2255
Re: City of San Juan Capistrano/Capistrano Valley Water District
San Juan Basin Authority DeSalter Project, Series 2002 Lease Revenue Bonds
Gentlemen:
We have been invited to represent the Capistrano Valley Water District (the "Water
District"), as an obligated party, and the San Juan Basin Authority, as issuer, in connection with the
financing of Phase I of the San Juan Basin Ground Water Recovery Plant (the "Ground Water
Recovery Plant") to be located in the City of San Juan Capistrano (the "City"). The Ground Water
Recovery Plant is proposed to be financed by means of an issue of tax-exempt base revenue bonds
(the "Bonds") currently expected to be issued by the San Juan Basin Authority (the "Authority"). In
the past, this Firm has represented all of the City, the Water District and the Authority in a number
of matters as specifically requested by each respective entity, and from time to time related to
various municipal finance matters. In light of these past representations and the currently proposed
representation relating to the Ground Water Recovery Plant and the Bonds, we believe it is necessary
to inform you of the potential conflict of interest and obtain a consent from each of you with respect
to such conflict.
Conflicts of Interests:
As we have previously explained, our representation of the Authority and the Water District
in connection with the Ground Water Recovery Plant and the Bonds could create certain conflicts of
interest, in that the interests and objectives of Authority may be in conflict with the objectives of the
616375.1\22475.0007
DOCS009I 8800v 1122658.0017
ATTACHMENT
August 26, 2002
Page Two
Water District relative to the Ground Water Recovery Plant, its ownership and water production, or
other matters related to this transaction.
We have been engaged to represent the Authority in connection with the proposed financing
and negotiation of an agreement between the Authority and the Water District relating to the
ultimate ownership of the Ground Water Recovery Plant and water rights relative thereto (the "GRP
Agreement"), and we have been engaged by the Authority and the Water District to act as bond
counsel in connection with the Bonds and related matters to the financing of the Ground Water
Recovery Plant. The Water District has indicated that other counsel has been engaged by it for the
representation of the Water District in connection with the GRP Agreement.
While both the Water District and the Authority have stated that it does not believe that our
bond counsel services on behalf of both the Water District and the Authority, or our representation of
the Authority in connection with the GRP Agreement, involves a current or immediate conflict of
interest problem between clients being represented by us, and we do not believe representation of the
Water District and the Authority in connection with the bond issue or our representation of the
Authority in connection with the GRP Agreement will be compromised thereby, the interests of
either party in the above-described transactions could potentially be adverse to the other party.
Under the ethical standards discussed immediately below, we are required to bring this matter to
your attention and to obtain your consent before representing you in connection with the proposed
GRP Agreement and Bond financing.
Rules of Professional Conduct:
As attorneys, we are governed by specific rules relating to our representation of clients when
present or potential conflicts of interest exist. Rule 3-310 of the Rules of Professional Conduct of
the State Bar of California provides, in relevant part, as follows:
(A) If a member has or had a relationship with another party interested in the
representation, or has an interest in its subject matter, the member shall not accept or continue such
representation without all affected clients' informed written consent.
(B) A member shall not concurrently represent clients whose interest conflict,
except with their informed written consent.
(C) A member who represents two or more clients shall not enter into an
aggregate settlement of the claims of or against the clients, except with their informed written
consent.
(D) A member shall not accept employment adverse to a client or former client
where, by reason of the representation of the client or former client, the member has obtained
confidential information material to the employment except with the informed written consent of the
client or former client.
DOCSOC\918800v I X2265 8.0017
E
August 26, 2002
Page Three
i
(E) As used in this rule "informed" means full disclosure to the client of the
circumstances and advice to the client of any actual or reasonably foreseeable adverse effects of
those circumstances upon the representation.
Accordingly, we must request that each of you sign and return to us a copy of this letter
acknowledging that:
(1) You have been advised of Rule 3-310 and of the conflicts associated with your
respective interests;
(2) You have been advised of Stradling Yocca Carlson & Rauth's present and continuing
relationship with Authority on the one hand and the Water District on the other;
(3) Each of the Authority and the Water District nevertheless wants us to represent it in
connection with the matters discussed above;
(4) Authority consents to our representation of the Water District in connection with the
matters discussed above; and
(5) Water District consents to our representation of the Authority in connection with the
matters discussed above.
We want to stress that each of you remains completely free to seek independent counsel at
any time, even if you decide to sign the Consent set forth below. Should you have any questions
concerning this letter or the Consent, please discuss them with us before signing and returning the
enclosed copy of this letter.
If you have any questions or comments regarding the attached Consent, billing fees, or
otherwise, please do not hesitate to call me.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH
Denise E. Herin4Eq.—
,
DEH:bk
Enclosure
cc: Fritz R. Stradling, Esq.
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