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HomeMy WebLinkAbout04/02/80 . ~. CITY /~'tG R. ; ,, C~TV ~-'~':~Y. WATER BOARD - CITY OF BA~RSFIELD WED~SDAY, APRIL 2, 1980 [~A~ Bi lgSO 4:00 P.M. Call meeting to order Roll Call- Board Members: Barton, Chairman; Payne, Ratty, Bergen, Hoagland 1. Approve minutes of regular board meeting of March 5, 1980. 2. Scheduled Public Statements. 3. Domestic Water - Fairhaven Acquisition. 4. Agricultural Water Consultants Report. 5. Staff Comments 6. Board Comments 7. Adjournment DISTRIBUTION APRIL 17, 1980 Mel McColloch, President Board of Directors Olcese Water District Dale Scales, Vice-President Board of Directors Olcese Water District Franklin%F~h'. Board of Directors Olcese Water District Dean Gay Board of Directors Olcese Water District Owen Goodman Board of Directors Olcese Water District, Secretary-Attorney Bud McNeil Board of Directors Olcese Water District George Nickel, President Nickel Enter'~rises MINUTES WATER BOARD - CITY OF BAKERSFIELD WEDNESDAY, APRIL 2, 1980 4:00 P.M. The meeting was called to order by Vice-Chairman Payne in the City Hall Caucus Room. The secretary called the roll as follows: Present: Payne, Ratty,~ Bergen, Hoagland Absent: Barton Staff Present: Bidwell, Chafin, Hansen, Hostmyer, Needham Others Present: Dean Gay, Board of Director Olcese Water District Owen Goodman, Attorney O!cese Water District Gail Scholtzer, The Bakersfield Californian The minutes from the regular meeting of March 5, 1980, were approved as presented. At this time Domestic Water Superintendent John tIansen brought the board up to date on the.Eairhaven Industrial Fire Protection District stating that their assessments have been spread and are being mailed out to the individual property owners. The average assessment is running $5,925.00 an acre. The Domestic Water Department has, also~ been in touch with E.D.A. (Economic Devel- opment Administration) and they are reviewing our Grant which should be completed by April 15, 1980, with. a recommendation then made to Washington, D.C. Mr. Hansen presented copies to each board member of the Design Report for Ashe Water System Two Mi'llion Gallon Domestic Water Storage System which was prepared by Boyle Engineering Corpora- tion, and the Master Plan Of~The Bakersfield Ashe Water Sys.tem prepared by Stetson Engineers, Inc. Item number four (4) Agricultural Water Consultants Report was deleted from the Agenda because the City. Consultants were unable to attend the meeting. At this time Water Manager Chafin informed the board that the Kern County Water Agency/Improvement District No. 4 has built a water spreading facility on City property in Sections 33 and 34 opposite of Park Stockdale for a total of approximately,.25 acres. They have moved a considerable amount of earth and built levees in the area indicated. Mr. Chafin checked with the City Attorney's office and learned that the property is owned by the City of Bakersfield but it is located in the County. Mr.,Chafin recommended that a letter be sent to the Kern County Water Agency regarding this matter. Mr. Bergen made a motion that the board send a letter to the Kern County Water Agency/Improvement District No. 4 regarding the above matter and, also, ask Thomas M. Stetson to evaluate the work that has been done and what effect it may have on the City. The motion was passed. There being no further business to come before the board, Vice- Chairman Payne adjourned the meeting at 4:15 P.M., to be con- tinued 'to 4:00 P.M./ Thursday, April 3, 1980, in the City Hall Caucus Room for the purpose of hearing the Agricultural Water Thomas A. Payne, Vi~ City of Bakersfield Water Board "~nda Hostm~[ Secre[-~-'~? City of Bakersfield Water Board MINUTES WATER BOARD - CITY OF BAKERSFIELD ADJOURNED REGULAR MEETING THURSDAY,. APRIL 3, 1980 4:00 P.M. The regular meeting of the City Of Bakersfield Water Board of April 2, 1980, was adjourned to be reconvened at this 'time. Chairman Barton called the meeting to order Thursday, April 3, 1980, at 4:15 P.M. in the City Hall Caucus Room. The secretary called.the roll as follows: Present: Barton, Ratty, Bergen Absent: Payne, Hoagland Staff Present: Bogart, Chafin, Hansen, Hatch, Hostmyer, Needham, Stetson, Tooker Others Present: Scott Brook, La Hacienda, Inc. Tom Clark, La Hacienda, Inc. Dean Gay, Board of Directors Olcese Water District Owen Goodman, Attorney Olcese Water District Gayle Scholtzer, The Bakersfield Californian Stephen E. Wall, Attorney C.H. Williams, Engineer-Manager North Kern Water Storage District At this time Stanley C. Hatch, Consulting Attorney for the City of Bakersfield presented the Agricultural Water Consultant's Report to the board. Mr. Hatch stated that there were two things that should be discussed with the board: 1) Consultants responses to questions which have been asked relating to the Olcese annexa- tion, and various aspects of the Olcese spreading Contract, in- cluding the status of the promised transfer of water rights; and 2) The recent action and pending project of the Kern Delta Water District which has become enough of a problem that it needs Water Board attention. At this time Thomas M. Stetson, Consulting Engineer for the City Of Bakersfield outlined the status of the Olcese problem that re- sulted in the letter that was sent by the Water Board .to Mr. Nickel dated March 31, 1980. Mr. Stetson stated that Mr. Nickel approach- ed the City in late 1976 regarding the Rio Bravo Annexation and the possibility of developing a water supply for the area. A number of sources were mentioned at that time including Mr. Nickel's "Lower River Water Rights" Subsequently, in 1977, the City entered into an agreement with the Olcese Water District permitting the District to spread water on the city's 2800 acre spreading ground, and to subsequently recover that water, either for .exchange and indirect delivery to the Rio Bravo area, or in the extreme, to actually convey it to the Rio Bravo area. This was done on the expressed basis that Olcese would acquire from La Hacienda, Inc. or the Nickel family, the Lower River Water Rights including the Isabella storage rights. The City's consultants have been nego- tiating with Mr. Nickel for some time now to get that transfer made. Mr. Stetson stated he was instructed to develop a study and report that would be furnished to LAFCO (Local Agency Forma- tion Commission) in connection with the analysis of various sources of water available to the Rio Bravo annexation area. He f~rni'shed and submitted that report in mid 1979, and included some conditions under which water rights should be transferred to the Olcese Water District by La Hacienda, Inc., or other Nickel interests. Those included any overlying groundwater rights owned or controlled by them, certain Kern River riparian water rights owned or con- trolled by them in the Olcese area, and the Lower River Rights and its attendant Lake Isabella storage rights. The City has had many meetings with Mr. Nickel and his people over the past two years regarding these sources of supply and their transfer to the City. Recently documents were submitted to us, the most recent in about February of this year,purporting to sell water to Olcese under certain conditions, which were not acceptable. There was a December document regarding the transfer of ripar- ian water rights about which we have questions. There has been water spread at the 2800 acres but it was spread by La Hacienda, Inc. It was not spread by Olcese Water District and that leaves a serious question in connection with our agreement with the Olcese Water District and its right to spread its water at the 2800 acres. All of these issues are intertwined and this is what we are now trying to straighten out. Mr. Stetson felt that this summarizes where we have been for the past three and a half years and where we are now. Mr. Hatch stated on October 31, 1979, the City sent a letter to Mr. Nickel outlining a series: of concerns and questions the City had. We asked for responses and answers so we could proceed from there. That letter dealt with trying to establish the status, the nature and, the current ownership of the water rights, plans for transfer and so forth. Subsequently, very shortly thereafter, there was an indication that Olcese had attorneys working on this particular point and that they would be in touch with us. We did receive, without comment, the two (2) documents to which Mr. Stetson referred: the water agreement which is a sale of stored water apparently entered into between Mr. Nickel's Corporation and the Olcese Water District back in August of 1979. The City was not provided with a copy at that time. This Agreement has now been superseded by yet another agreement dated February 11, 1980. Another agreement dealing with riparian rights is actually an arrangement in which Mr. Nickel has the option to transfer some of his riparian rights, or the right to pump riparian water to the Olcese District. In return the Olcese District would have to do certain things about which we have some questions. We are not sure what the status of that agreement is. At this point, Mr. Hatch stated we have identified a number of issues which require resolution and we have, established the chronology for the resolution of those issues. First of all we still need the responses to the October 31, 1979, letter to Mr. Nickel. The Olcese Water District should respond directly to the City regarding matters affecting them. The first issue that has to be dealt with before anything else is the nature, the status, and the ownership of the Lower River, and Isabella storage rights. Mr. Hatch has been contacted since his letter has been sent by the Kronick, M~oskovitz, Tiedmann & Girard law firm in Sacramento. Mr. Kronick has indicated that he has been directed by Mr. Nickel to ge% involved in this aspect of the case, and to assist in expediting and working out some kind of an agreement. In that regard he informed Mr. Hatch that his firm has prepared an opinion relating to these issues which is in the mail. This is a positive step. We will now have some d6cumentation. The next step is to accomplish the transfer and warranty of the rights from whomever owns them, presumably, La Hacienda, Inc., to the Olcese District. There are three different kinds of rights to be transferred: 1) the Lower River and Isabella Storage rights, 2) certain upper river riparian rights, that is, riparian rights in the Olcese area which might be used by Olcese to serve the riparian land, and 3) certain overlying rights to pump groundwater and use it on overlying lands within the. Olcese District. Our basis interest is in avoiding having the City become the backup water supplier for this area. The area, is now in the City. If the Olcese Distri6t does not provide an adequate water -2- supply, that burden 6ould, in the future, fall on the City of Bakersfield. It was understood at the time of the annexation, as we read the documentation that the annexation area had to stand on its own feet and provide its own water. To make the annexation happen, Mr. Nickel indicated that he would provide these Lower River Rights making development feasible. On this point we have been given an August 1, 1979, agreement which purports to be executed by the Olcese Water District and the Nickel interests, which we are now told has now been superseded by a February 11, 1980, agreement. Again, both of these agree- ments are for the sale of stored water only. The original commit- ments in this case were for the transfer of the water rights as distinguished from actual water ifself. The agreements would not appear to be consistent with Mr. Nickel's prior commitments and we have no explanation as to why it is that they have been put together in this particular form. Hopefully, in any future discussions with the law fi~m who prepared this, we will be better able to understand this approach and will be.in a posi- tion to respond more intelligently. One of the problems with both of those documents is that the City had ...no~ prior opportunity to review them. It makes it very difficult to be handed a document that has already been executed and asked to comment. It would be more constructive in the long run to have documents which affect the City, be submitted to the City as part of the negotiations, prior to execution, so that the City can comment, and be assured that they are satisfactory before they become effective. As to the upper riparian rights, an agreement between the Olcese Water District and the Nickel interests has been given to us. Its status as to execution is unclear. The document does not actually transfer any riparian rights. It is an option on the part of the riparian landowners to do so, but in exchange for various obligations on the part of the Olcese Water District with which we have a number of problems. We raised those'pro- b~ems in the March 31 letter. These will be discussed in any furthernegotiations. As to the assignment of theoverlying rights, to the best of Mr. Hatch's knowledge no action of any kind has been taken. Mr. Hatch provided Mr. Tiedmann with a copy of a proposed assign- ment of overlying rights which have been used in other cases. Apparently that letter has been lost, and another copy has been requested. The package of transfers is basically the set of conditions which Mr. Stetson wrote into his report on the Olcese Mo. 2 Annexation, currently pending in LAFCO. The transfers are a Prerequisite to LAFCO approval or to the extent that the approval is given, it would be subject to complying with these.conditions. That pro- cedure would cause the transfers to be completed before the annexation can be formalized. This seems to be necessary by reason of the fact that the rights are designed to provide the water supply and water resources to serve future development in the area under Olcese jurisdiction. This brings us to the status of the 77-07 W.B. spreading contract between Olcese and the City. The transfer of water rights is a prerequisite to determining the status of that agreement. It includes a "whereas clause" which explicitly assumes that Olcese owns~o~' will own the water rights relating to the water which is to be spread. What has happened is that a significant amount of water has been spread by La Hacienda, Inc, but not by Olcese. La Hacienda does not have a contract with the City of Bakersfield. This creates some problems, maybe technical problems, but problems ngne the less. The failure to transfer the water rights has created an inability on the part of Olcese to perform under the existing contract. This must be straightened out. There are other problems relating to 77-07 W.B. which have been identified and which presumably need some resolution. One of th~se isthat the contract provides and requires Olcese to furnish a schedule of development, and plans for improvement, including the construction of wells within a reasonable time. I think it uses the words "due diligence". Twenty-one months later nothing apparently has been done in that regard. It would seem appropriate for Olcese to provide the schedule of development so everyone will --3-- know what they intend to do. The schedule is subject to approval by the City. There is, also, the requirement that they construct certain wells on the property, and again no wells have been con- structed. There is an. additional, fundamental problem which is raised in our letter. During this period of time, most of the contact with the Olcese District regarding these negotiations has been through Mr. Nickel. This has created a very definite p~ablem. The Olcese District is an independent governmental entity with its own board and it can only act through its Board of Directors. It is not clear as to how well the Olcese Board has been kept informed by Mr. Nickel or what authority Mr. Nickel has had to represent the Board. Mr. Hatch thinks that in any further negotiations its obvious the Olcese Board should be directly involved. They have '~dapendent functions and interests to be served which are not necessarily those of the City or those of Mr. Nickel. The City has requested (last summer) and subsequently spelled out in a letter dated October 31, 1979, the desire to modify the existing 77-07 W.B. Agreement. These modifications regard the place of use and the nature of the fee to be charged, (whether or not it is going to be a spreading fee, or an extraction fee). To date we have had no response to the question of the willingness of Olcese to modify the contract. We feel it is important that they respond to that issue.. The transfers of water rights and the clarification of the 77-07 W.B. contract status is a prerequisite to any future exchange agreement with the Buena Vista Water Storage District. Mr. Nickel has in- dicated that he has been negotiating with Buena Vista in this re- gard, but the preconditions for such an agreement have not yet occured. .There is a necessity for environmental review if addi- tional spreading is proposed for exchange purposes. There is, also, the necessity to establish an overall, master plan for the spreading grounds. Whatever is done regarding an.exchange agreement must be consistent with the City~'s overall plan of operation. You do not want to take one action, and then find that something has been done making it impossible for you to d6 something that you really want to do later. In any such exchange arrangement we think it is important that representa- tives of Olcese, the City and Mr. Nickel, all jointly participate· in these negotiations so we will not be in a situation where one of the parties provides executed documents for approval after the fact. The right way to go about it is to work it out prior to execution, and within the appropriate time sequence. It is necessary to accomplish the water rights transfer first, and make sure the spreading contract with Olcese is viable. Our October 31, 1979,. letter requested information regarding another item that came up as part of these negotiations in mid- summer, and that was an indication that the so called "Carmel Right" is being used in the Rio Bravo area'. As we understand it the Carmel Right is a Second Point right which, if it is being used above First Point, should at least be accounted for. There is no indication that there had been any notice of this to the Watermaster, or to the City as record keeper on the river. This creates a possibility that Carmel Right water could be delivered to Second Point at the same time it is being delivered under the Carmel Right, above First Point causing a double delivery of Second Point water. The City has asked for an indication as to the status of that right, its nature and its ownership and, whether it has been transferred to the Olcese Water District, who purports to be using it. We, need an indication of what the purposed method of operation will be to make sure, if it is going to be so used, that it will not cause serious problems for other water users on the stream, or adversley affect any other'interveining water users. These basically are the issues we have identified today. We have some recommendations based on our contacts with Mr. Kronick. -4- At this point maybe w'e should find out what anyone else might have to say. At this time Owen Goodman, Attorney for Olcese Water District, informed the board that he had an appointment next Monday, April 7, 1980, at 2:00 P.M. with Mr. Kronick to get into the matters that have been mentioned here today. He said he had actually seen, for the first time today, some of these letters that Mr. Hatch and Mr. Stetson have referred to here. He indicated that he was attending the meeting as an observer, and he hopes to be getting into some of these problems to try and get a resolution to them. Chairman Barton asked Mr. Goodman if there were any documents he did not have at this time, if so the City would supply him with those copies. Mr. Goodman indicated if he should need further documentation he would contact Mr. Chafin. Mr. Bergen suggested that Mr. Goodman be given copies of Mr. Stetson's Report. Mr. Hatch stated that he had talked briefly with Mr. Goodman prior to the meeting, and he indicated that after he has an opportunity to talk further with Mr. Kronick he would be happy to brief Mr. Go~odman on the information developed as to the City's concerns regarding Olcese provision of an adequate water supply for the area. Dr. Ratty at this time stated that he was concerned with the length of time that has been spent since 1976 with nothing being resolved. He feels we should bring everyone to the task of solving the problem as rapidly as possible, by possibly establishing a time frame for these objectives. Mr. Goodman stated that Mr. Nickel and the Olcese interests real- ize something has to be done and resolved, also, we do have repre- sentatives here today. Mr. Goodman indicated that he was speaking solely for Olcese, the March 31, 1980, letter was actually the first thing delivered to him as a representative of the Olcese Board and they have held a meeting since then and realize this thing must come to a head. Mr. Goodman stated he, also, now had a copy of the October 31, 1979, letter. He indicated they had a board ~majority who were not beholden to George Nickel. Mr. Stetson asked if Olcese had a copy of the report he filed with LAFCO last summer, if not the expanded version should be given to him. Mr. Goodman stated that he would like to see this matter formalized within not more than sixty (60) days. Mr. Hatch asked Tom Clark if he had any information for the board. Mr. Clark informed the board that he was representing La Hacienda, Inc., and stated that everything he had been hear- ing was constructive so he is very optimistic that things will be resolved soon. Mr. Hatch suggested that the City set a goal for draft documents, s~tisfactory 'fo-. the ~City and the other parties and ready for execution within sixty (60) days, regarding the water rights transfers. All parties should periodically keep their boards informed as we go along as to the status of the negotiations. Mr. Clark stated that (60) days was a reasonable length of time to accomplish the transfer of water rights. In regard to the October 31, 1979, letter Mr. Hatch suggested that a time limit of thirty (30) days be set for complete re- s}~onses on all questions asked in that letter, including those regarding modification of the contract. Mr. Bergen suggested that if Mr. Kronick or Mr. Goodman have any questions they should feel free to call Mr. Hatch or Mr. Stetson directly. Mr. Hatch indicated that he had a meeting scheduled with Mr. Kronick and Mr. Stetson in San Francisco on Monday, April 21, 1980. He suggested the Mr. Goodman~ also, attend that meeting. The following recommendations were made by Mr. Hatch: 1) That counsel for Mr. George Nickel and the Olcese Water District be requested to respond in detail -5- to Mr. Hatch's letter to Mr. Nickel dated October 31, 1979, within thirty (30) days. 2) That counsel for the City, Olcese water District, Mr. George Nickel and/or La Hacienda, Inc. draft documents relating to the-various water rights transfers spelled out in the proposed LAFCO con- dition to Olcese annexation No. 2, and present such documents to the City in a form ready for execution and satisfactory to the City and other parties within sixty (60) days. 3) That the Olcese District be requested, pursuant to 77-07 W.B., as modified, to submit a detailed schedule of developments and plan of improvement for City approval within thirty (30) days. Mr. Ratty at this time made a motion that the above be accom- plished. The motion was passed unanimously. Mr. Bergen sug- gested that copies of the minutes of the Water Board today be provided to the Olcese Board. At this time Dean Gay introduced himself and Mr. Fish of the Board of Directors of Olcese Water District. He indicated that he was very familiar with the area that had been discussed here today. He stated he did not want the City to get the wrong impression of the members of the Olcese Board. He feels there might be a lack of communication between the City and the Olcese Board itself. We had felt the City and Mr. Nickel were doing the negotiations, and we now feel that assumption was wrong. We are prepared to do the things necessary to accomplish these things, and we feel this is an excellent program for the City of Bakersfield. The next issue on which Mr. Hatch thinks the board should be brought up to date is the problem associated with Kern Delta Water District's 1979 Systems Improvement Project. The pro- ject is currently in the environmental review stage. On April 17, 1980, the Kern Delta Board will be meeting to certify the EIR on the project, and to make a decision as to whether or not they will go ahead with it. The project involves the improvement of certain canals, to increase capacity and, also, it involves increasing or creating new spreading areas and reservoir capacity. The apparent purpose of these actions is to increase the amount of Kern River Water that can be used in the Kern Delta District. This upsets the status quo on the river. First Point rights have been divided between the Kern Delta District, the North Kern District and the City. They are being fully used by these entities. Any increased diversion above historic levels of use by Kern Delta will result in the decreased diversion of that same water by North Kern and the City. A First Point Committee has been set up to discuss potential future problems between the three entities. The committee is attempting to identify various issues and come up with solutions to them so that litigation might be avoided. As of this moment, however, the Kern Delta action creates a very difficult problem. If they proceed with construction and build facilities to use water under rights which are subject to question, it puts them in the position of attempting to justify the use of those facil- ities by insisting on those rights in the negotiations. This would make it virtually impossible to work anything out with them. Secondly, once these facilities have been built, the policing on their diversions becomes exceedingly difficult. As a consequence, Mr. Chafin filed comments on the Kern Delta Project Environmental Impact Report. His March 14 letter to the Kern Delta Board indicated the problems that were involved in going forward with the construction at this time. Whether or not this will have any effect is not clear. North Kern has written a similar letter to the Kern Delta Board urging them not to take this action at this time. We are told there -6- are planned meetings~be~een the North Kern and Kern Delta Districts, and there is some~indication that they may want the City to become involved in those discussions. Mr. Hatch thinks the City may wish to r~iterate, their position prior to the April 17, 1980, meeting should that become necessary. and alert the City's contractors. His recommendation in thiS regard was that the board declare its position by ratifying the Chafin letter of March 14, 1980. He also suggested that the staff be authorized to take further action consistent with that letter, and, if necessary to forcefully reiterate the City's position that such construction, upsetting the status quo on the River, is not acceptable and will not be permitted by the City. Mr. Bergen made a motion that the board ratify the Chafin letter of March 14, 1980, and authorize staff action as recommended by Mr. Hatch. The motion was passed. There being no further business to come before the board, Chair- man Barton adjourned the meeting at 5:16 P.M. Thomas A. Payne, V~e-Chairman City of Bakersfield Water Board Linda Hostmyer, Secretary City of Bakersfield/Water Board -7-