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Mr. Skow stated that the Diamond Shamrock agreement anticipated sales both inside and outside the City and if the capacity is to be transferred outside the City, SBSA and the City must approve. In 1993 SBSA agreed to the transfer and Rohm and Haas has been attempting to get the City's approval for two years. Mr. Skow stated they were only asking that the City consent to the transfer pursuant to the agreement that governs the conduct of the capacity rights not a determination on the Pacific Shores project. Mr. Skow said his overriding interest was that the willing buyer of the capacity rights, Pacific Shores Limited, had great concern regarding the two conditions the City had included in the resolution, the annexation and the attachment conditions, and Pacific Shores Limited had indicated it might not go forward with the transaction if those conditions remain. Mr. Skow referred to the FAX he had sent to each Council Member and stated he would not be opposed to a one week continuance as the Council studied the matter further. In response to Council questions, Mr. Skow stated they objected to the proposed restriction that if Pacific Shores received the capacity rights they could not utilize it outside the City of Redwood City. Also, they did not want a restriction on the subdivision of sewerage capacity. They did not want the right to resell portions of it to others to be restricted. Mr. Skow asserted that once it is used it is attached, but the question is, prior to the time it is used, can there be subsequent transfer if they have over purchased. Mr. Skow stated there is no reversionary clause to non-grant capacity rights. In response to Council questions regarding the City's interest in this private matter, City Attorney Schricker advised that the agreement provided that with non-grant sewerage capacity the City Council must review the request for transfer and approve it subject to reasonable conditions. He added that prior Councils on three occasions had approved transfers of capacity and this would be number four. John Sanger, Sanger and Olson, representing Pacific Shores Center Limited Partnership, advised that the legal descriptions on the exhibits to the resolution are incorrect and are being changed. Mr. Sanger advised that if Mr. Schricker agreed with his interpretation the question about attachment or ability to divide rights for purposes of resale may not be an issue at all. They recognize that upon first sewer connection or use that the rights pursuant to the original Rohm and Haas agreement with the City would then be extinguished as separate rights. Mr. Sanger asked for clarification regarding this wording. Mr. Sanger stated that the annexation condition is the only issue. When Pacific Shores looked for capacity rights four years ago SBSA did not have plans for expansion of their plant and they therefore entered into a contract with Rohm and Haas for their rights. Pacific Shores wants and needs to obtain sewerage capacity rights for the subject property no matter what use is made of it in the future, whether by the City or the County, and has a right to obtain it. Mr. Sanger stated they were forced to register an objection to the annexation condition. He stated that he understood the City would like to control properties within their sphere of influence, but the problem imposed a very expensive risk to Pacific Shores Center. It would have MINUTE BOOK NO. 53 Regular Meeting Minutes Page No. 346 September 25, 1995 Page 10