AgdaPkt 2006-09-25 - Laserfiche WebLink

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6.2A Page 1 REPORT To the Honorable Mayor and City Council From the City Manager September 25, 2006 Subject Master Water Sales Contract - San Francisco Recommendation Adopt a resolution appointing the Bay Area Water Supply and Conservation Agency (BAWSCA) as authorized representative of the City in discussions/negotiations with San Francisco for an agreement to provide a reliable supply of high quality water at a fair price. Background 1. Existinq Water Contracts Will Expire in July. 2009 The Settlement Agreement and Master Water Sales Contract signed in 1984 by San Francisco and all wholesale customer agencies will expire on June 30,2009, The contracts are expiring at a time of change and uncertainty. San Francisco faces a challenge of unprecedented scale - rebuilding and improving the regional water system after decades of deferred maintenance to standards designed to withstand major earthquakes on the three faults that lie beneath the system's dams, pipelines, and treatment plants. A top priority for all residents, businesses and community organizations of the four-county service area is for San Francisco to complete this vital Water System Improvement Program (WSIP), on time (by 2014) and on budget ($4.3 billion). The multi-billion cost of the WSIP will also affect negotiations for a new agreement. Continued application of the cost allocation principles embedded in the current contact would result in a nearly 300% increase in wholesale water rates by 2015. And San Francisco has indicated that it may seek changes to the financial provisions of the Master Contract. One such change that has been mentioned would require wholesale agencies to contribute more quickly to the cost of capital projects, by sharing in debt service as soon as bonds are issued rather than waiting until projects are completed and placed into service. Page 1 of 3