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Agenda Item 24.

City Council Meeting

Meeting Date:	06/02/2020
FROM:	Bill Gallardo

Subject:

Lease Agreements between the City of Brea and the Tomlinson Families for use of California Domestic Water Company Stock

RECOMMENDATION

Approve lease agreements

BACKGROUND/DISCUSSION

For the last 39 years, the City of Brea has leased water shares from the Tomlinson Families, who currently own 188 shares of California Domestic Water Company (Cal Domestic) stock. The lease of these shares allows the City to purchase Cal Domestic water to supplement the water the City of Brea imports from the Municipal Water District of Orange County (MWDOC). The Cal Domestic water is less costly to purchase than the water provided by MWDOC and, as such, the City seeks to secure the rights to purchase this water whenever possible.

There are two agreements for this transaction. One agreement is for eight (8) shares and the other agreement is for one hundred and eighty (180) shares. The individual Tomlinson family members are named within each respective agreement. Both current lease agreements were executed in March 2001 and expire on June 30, 2020. Staff is recommending to enter into agreements with the Tomlinson Families effective July 1, 2020 through June 30, 2035 in order to formalize the use of this water stock and ensure that the water rate payers of the City of Brea receive the best possible value.

COMMISSION/COMMITTEE RECOMMENDATION

The Finance Committee reviewed staff’s recommendation at their May 26, 2020 meeting and recommended to proceed.

FISCAL IMPACT/SUMMARY

Approval of these Lease Agreements will result in long-term savings to the water rate payers of the City of Brea. The savings will vary each year, but will be approximately $29,000 per year. Payment for leasing of shares will come from the Water Fund and there is no impact to the General Fund. The methodology for calculation of annual lease payment amount is included in Exhibit A of the agreements.

RESPECTFULLY SUBMITTED:

William Gallardo, City Manager
Prepared by: Rudy Correa, Interim Superintendent
Concurrence: Tony Olmos, P.E., Public Works Director

Attachments
Agreement - 8 Shares
Agreement - 180 Shares