INFRASTRUCTURE DEDICATION AGREEMENT
Exhibit 10
THIS
AGREEMENT made and entered into this 16th day of
October,
2007, by and between FISH SPRINGS RANCH, LLC, a Nevada limited liability
company, hereinafter referred to as “FSR,” and WASHOE COUNTY, a political
subdivision of the State of Nevada, hereinafter referred to as
“WASHOE.”
RECITALS
1. WASHOE
owns and operates a water distribution system located in the North Valleys
area
of Washoe County, Nevada and FSR owns certain water rights which may become
available in support of development within WASHOE’s water distribution service
area or the water distribution service area of the Truckee ▇▇▇▇▇▇▇ Water
Authority (“TMWA”); and
2. WASHOE
and TMWA have entered into agreements whereby WASHOE and TMWA cooperate in
the
provision of municipal water service; and
3. FSR
has approximately 28 existing monitoring and production ▇▇▇▇▇ on or near
the
Fish Springs Ranch for purposes of monitoring the impacts of ground water
pumping in the Honey Lake Hydrographic basin; and
4. FSR
has expanded the geographic extent of the United States Geological Survey
hydrologic model of the Nevada portion of the Honey Lake Hydrographic Basin,
which has been reviewed and accepted by the United States Geological Survey
(“U.S.G.S.”) for use in the Environmental Impact Statement issued by the Bureau
of Land Management for the FSR pipeline right of way; and
5. The
expanded hydrologic model of the groundwater basin, as accepted by U.S.G.S.,
indicates that the proposed export of 8,000 acre feet of groundwater from
the
Fish Springs Ranch is sustainable; and
6. Rulings
3786A and 3787A of the Nevada State Engineer, each issued on
January 17, 1991, have resulted in the granting by the State Engineer of
certain
Change Applications which have changed the place and manner of use of the
Dedicated Water Rights (as defined in Paragraph 7, below) for municipal purposes
in southern Washoe County and allowed WASHOE to obtain certain permits (the
“Municipal Permits”) for municipal use of the Dedicated Water Rights;
and
7. Pursuant
to a Water Banking Trust Agreement dated February 28, 2006 (the “Banking
Agreement”), FSR has transferred certain water rights (the “Dedicated Water
Rights”) to WASHOE, which are held by WASHOE subject to the Transfer and
Assignment by FSR of water rights credits, as defined in the
Banking Agreement, to be credited against the water rights dedication
requirement with respect to the issuance of “will-serve” commitments requested
from time to time by FSR, or its assignees, for water service. A copy of
the
Banking Agreement is attached as Exhibit “A”; and
8. FSR
has processed and received a Record of Decision and Right of Way in accordance
with the requirements of The National Environmental Policy Act of 1969, as
Amended, and related federal requirements, permitting the transportation
of
8,000 acre feet of the Dedicated Water Rights through a pipeline and related
facilities across an established utility corridor to the North Valleys area
of
Washoe County, Nevada; and
9. FSR
has diligently pursued the numerous required approvals and permits relative
to
the Fish Springs Ranch North Valleys Importation Project and to date has
received and obtained the following permits and authorizations:
· Special
Use Permit No. SW05-009, approved January 24, 2006 by the Washoe County Board
of
Commissioners
· Water
Banking Trust Agreement approved February 28, 2006 by the Washoe County Board
of
Commissioners
· Biological
Opinion issued by the U.S. Fish and Wildlife Service on May 16,
2006
· Record
of
Decision issued May 31, 2006 by the Bureau of Land Management for ROW
N-76800
· The
Nationwide Permit Number 12, 2004-008l8 confirmed July 5, 2006 by the
Environmental Protection Agency
· The
Right
of Way N-76800 issued August 10, 2006 by the Bureau of Land
Management
· Conditional
Dust Control Permit C06043 issued by Washoe County Health on August 30,
2006
· Conditional
Dust Control Permit D06003 issued by Washoe County Health Department on October
9, 2006
· The
Notice to Proceed issued by the Bureau of Land Management on October 11,
2006;
and
10. FSR
has transferred the Dedicated Water Rights by Water Rights Deed to WASHOE,
and
the Nevada State Engineer has issued the Municipal Permits, which shall be
held
by WASHOE in trust for the exclusive benefit of FSR and its assignees, pursuant
to the terms of the Banking Agreement, and credited against the water rights
dedication requirement in connection with requests for “will-serve” commitments
requested from time to time by FSR or its assignees; and
11. WASHOE
and FSR have agreed that, as to the Dedicated Water Rights, the provisions
of
TMWA’s Rule 7 (”Rule 7”) as they may be amended from time to time shall govern
the quantity of water rights required for dedication to support development
within WASHOE’s water service area; and
12. WASHOE
has accepted the Dedicated Water Rights in trust for the exclusive benefit
of
FSR and its assignees, pursuant to the terms of the Banking Agreement, for
future water rights dedication requirements within the utility service areas
of
WASHOE and/or TMWA, as those service areas may change from time to time,
and
subject to appropriate agreements between WASHOE and TMWA, on the condition
that
FSR, or its assignees, be responsible for all costs associated with the transfer
by FSR to WASHOE, and all costs associated with the maintenance of the Dedicated
Water Rights; and
13. WASHOE’s
acceptance of the Dedicated Water Rights has not, in and of itself, created
an
obligation to provide water service to FSR or its assignees, because such
water
service obligation will arise only after a “will-serve” request is made to
WASHOE and all conditions for such service have been satisfied; and
14. Pursuant
to the Banking Agreement, the parties anticipated the negotiation of an
Infrastructure Dedication Agreement in order to ensure adequate water
transmission infrastructure to deliver the Dedicated Water Rights to the
point
of delivery provided for in the Banking Agreement; and
15. In
furtherance of the Banking Agreement, FSR has planned, designed, permitted
and
is constructing certain Infrastructure which comprises the Project
Infrastructure, as defined in Section I, below, and WASHOE desires to accept
the
completed infrastructure necessary to deliver water to the designated Point
of
Delivery as provided for in the Banking Agreement and defined in Section
I,
below; and
16. FSR
agrees to dedicate and WASHOE agrees to accept the Project Infrastructure
pursuant to the terms hereof. All references to other writings,
instruments, agreements or laws, whether attached hereto or otherwise, should
be
reviewed in their entirety. Nothing herein contained is meant to modify,
amend,
expand or vary such other agreements.
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements and subject to the conditions hereinafter set forth it is hereby
agreed between FSR and WASHOE as follows:
I.
PROJECT
CHARACTERISTICS
Subject
to the terms hereof, the project infrastructure consists of pipeline, pump
stations, surge tanks, storage tanks, valves, collection pipelines, production
▇▇▇▇▇, well pumps, control systems, well houses, pump stations, telemetry,
fiber
optic lines, roadway easements, pipeline easements, production and monitoring
well easements, monitoring ▇▇▇▇▇, data loggers, weather stations, electrical
distribution line easements, whether above, under or across the easements
created for the Fish Springs Ranch water importation pipeline related
infrastructure improvements necessary to appropriate, transport and convey
a
minimum of 8,000 acre feet of water from the Fish Springs Ranch in northern
Washoe County to WASHOE’s Matterhorn Terminal Tank (the “Point of Delivery”) in
the North Valleys area of Washoe County. From the Point of Delivery
the pipeline connects through an additional four (4) miles of 30 inch ductile
iron pipe along Matterhorn Drive to Tupelo to Water Ash to Lemon Drive where
it
connects to a 12 inch water distribution line. This portion of the
improvements includes two (2) pressure reducing valves, telemetry and related
improvements (collectively, the “Project Infrastructure”).
II.
ADMINISTRATION
OF THE PROJECT
2.1 County
and Other Governmental Agency Permits. The Project Infrastructure has been
planned, designed, permitted, developed and constructed by FSR in accordance
with all applicable Washoe County approvals, ordinances and regulations.
As of
the date hereof, to the knowledge of FSR, FSR has, at its own expense, secured
all approvals and permits required by WASHOE or any other governmental authority
affected by the construction, development or work related to the Project.
WASHOE
agrees to cooperate and use its best efforts to provide all assistance necessary
to FSR in securing any additional approvals or permits.
2.2 Right
of Access. For the purposes of assuring compliance with this Agreement,
representatives of WASHOE shall continue to have the reasonable right of
access
to the Project Infrastructure without charges or fees and at normal construction
hours during the period of construction for the purposes of this Agreement,
including, but not limited to, the inspection of the work being performed
in
constructing the Project Infrastructure. Such representatives of WASHOE shall
be
those who are so identified in writing by the Director of Washoe County’s
Department of Water Resources. WASHOE shall indemnify FSR and hold it harmless
from any damage caused or liability arising out of this right to
access.
2.3 Further
Covenants. WASHOE shall not require any payments, contributions, economic
concession, other conditions for approvals, or authorizations or permits,
contemplated within or by this Agreement other than as provided
herein.
2.4 Mutual
Cooperation. WASHOE shall cooperate with FSR to obtain all necessary
approvals, permits or to meet other requirements that are or may be necessary
to
implement the approvals required for construction of the Project Infrastructure.
Nothing contained within this paragraph, however, shall require WASHOE or
its
employees to function on behalf of FSR nor shall this Agreement be construed
as
an implicit pre-approval of any further actions required by
WASHOE.
III.
PROJECT
INFRASTRUCTURE CONSTRUCTION REQUIREMENTS
3.1 Standards.
To the best knowledge of FSR, all construction of The Project Infrastructure
has
been done in accordance with the Standard Specifications for Public Works
Construction as adopted by WASHOE and all other applicable state and local
codes, ordinances and statutes except as otherwise provided in the project
approval process.
3.2 Grading
and Slope. FSR shall specify grading practices, extent of grading allowed at
one time, a dust suppression program, and erosion control and revegetation
measures that effectively mitigate blowing dust and soil erosion problems
associated with development of all portions of the Project Infrastructure
to the
satisfaction of WASHOE. If required by state law or regulation, FSR shall
obtain
an Air Quality permit and implement the approved plan and provide the State
of
Nevada or WASHOE with financial security for the required mitigation
measures.
3.3 Transfer
of Construction Warranties. FSR shall assign and transfer to WASHOE any and
all warranties, performance guarantees, product warranties, construction
guarantees that are in any way related to the Project
Infrastructure.
3.4 Cooperation.
FSR agrees to cooperate and use its best efforts to enforce construction
warranties, performance guarantees, product warranties or other related product
or construction indemnities, guarantees or warranties that are in any way
related to the Project Infrastructure.
3.5 Dedication.
Subject to the terms hereof, the Project Infrastructure is being dedicated
to
WASHOE pursuant to this Agreement and as detailed in Paragraph 6.1
below. FSR makes no representations or warranty, express or implied,
other than those contained herein. FSR is not a guarantor of all or any
manufacturer or product provider warranties, representations, performance
guarantees, product warranties or construction guaranties.
IV.
RESERVED
RIGHTS OF FSR
4.1 It
is hereby expressly acknowledged and agreed between WASHOE and FSR that FSR
retains and holds the exclusive beneficial interest in certain additional
and
valuable water rights in the Honey Lake Basin, in excess of 8,000 acre feet,
as
set forth in Exhibit “A” to the Banking Agreement (the “Additional Water
Rights”). At such time as there is sufficient evidence of resource
sustainability, as provided in Paragraphs 2.2 and 3.2 of the Banking Agreement,
and all required permitting is obtained, it is the intent of FSR to import
the
Additional Water Rights owned by FSR, or other water rights which FSR may
subsequently acquire, into the Washoe County service area after completing
the
necessary and required system upgrades and expansions. Subject to the provisions
of Paragraph 5.2, below, FSR does hereby exclusively reserve,
retain and hold, and WASHOE does hereby agree to reserve, retain and hold,
all
of the capacity rights up to 13,000 acre feet in, including the ability to
expand the existing and future capacity of the Project Infrastructure up
to
13,000 acre feet, whether above, under or across the easements created for
the
Fish Springs Ranch water importation pipeline, for the purpose of transporting
the Dedicated Water Rights, including the Additional Water Rights and any
other
water rights which FSR may subsequently acquire up to 13,000 acre
feet. In utilizing its exclusive rights, FSR shall be solely
responsible for all costs and expenses in the upgrading, permitting,
construction and equipping of the Project Infrastructure as required to
transport all or a part of the Additional Water Rights or other water rights
subsequently acquired by FSR through the Project Infrastructure up to 13,000
acre feet. Any such upgraded infrastructure shall be dedicated to WASHOE
as
WASHOE may reasonably require.
4.2 The
failure to specify or detail any portion of the Project Infrastructure shall
not
impair or diminish in any way the right of FSR to fully utilize its exclusive
rights to the Project Infrastructure capacity as the same may be increased
for
the transmission of The Additional Water Rights or any other water rights
which
FSR may subsequently acquire up to 13,000 acre feet or pursuant to Paragraph
5.2, below.
4.3 Nothing
herein contained shall be construed as impacting or impairing WASHOE’s rights
pursuant to this Agreement, and Paragraph 3.4 of the Banking Agreement to
use
the Project Infrastructure and the Dedicated Water Rights for general temporary
purposes. FSR’s conveyance of the Project Infrastructure however, is expressly
and conditionally subject to FSR’s exclusive right to upgrade the Project
Infrastructure and to utilize the Project Infrastructure in order to convey
additional water as set forth above up to 13,000 acre feet or pursuant to
Paragraph 5.2, below.
4.4 WASHOE
and FSR agree to take such actions as reasonably necessary to ensure that
any
Additional Water Rights or future water entering the Project Infrastructure
meet
the drinking water standards established by WASHOE.
4.5 The parties
acknowledge and agree that FSR shall retain all of its rights under Paragraph
V
of that certain Line Extension Agreement with Sierra Pacific Power Company
dated
October 6, 2005 relating to the refund, if any, of monies paid for the
construction of the Fort Sage electrical substation.
V.
ADDITIONAL
USE OF PROJECT INFRASTRUCTURE CAPACITY
5.1 Subject
to FSR’s exclusive right set forth in Section IV above, until such time as the
full capacity of the Project Infrastructure is in use to satisfy will-serve
commitments issued through Water Rights Credits on the Dedicated Water Rights,
including the Additional Water Rights up to 13,000 acre feet, WASHOE shall
have
the exclusive right to utilize any unused Project Infrastructure capacity
for
any general temporary purposes.
5.2 FSR
and WASHOE may agree at any time by amending this Agreement, or by separate
written agreement, to expand the Project Infrastructure capacity above and
beyond 13,000 acre feet. The costs related to such additional capacity shall
be
allocated between and paid by each party in proportion to the additional
capacity received by each party. Any expansion pursuant to this Paragraph
5.2 shall include a reimbursement on a pro rata basis as
negotiated by the parties.
VI.
DEDICATION/OPERATION
AND MAINTENANCE
6.1 Upon
completion of the construction of the Fish Springs Ranch North Valleys
Importation Project and the determination by the Washoe County Department
of
Water Resources that construction of the Project Infrastructure is substantially
completed and the facility is acceptable for operations, FSR shall transfer
and
dedicate to WASHOE by ▇▇▇▇ of Sale, Assignment and this Agreement, all of
the
Project Infrastructure, subject to FSR’s reserved right to existing and future
Project Infrastructure capacity, as provided for in Sections IV and V,
above.
6.2 Subsequent
to the transfer of the Project Infrastructure, WASHOE shall be responsible
for
the day-to-day operation, maintenance, and repair of the Project Infrastructure
and complying with the terms and conditions of any and all related regulatory
permits, subject to the terms of this Agreement. All costs and expenses for
the
pumping of ▇▇▇▇▇, and operation, maintenance, and repair of the Project
Infrastructure shall be solely the responsibility of WASHOE.
6.3 At
such time as FSR assigns certain Water Rights Credits to third parties in
accordance with the Banking Agreement, WASHOE shall establish a rate schedule
that provides for a pro rata charge for operation and maintenance of the
Project
Infrastructure and the required reserves for repair and replacement of the
necessary portions of the Project Infrastructure. Based upon the dedication
of
the Project Infrastructure by FSR, WASHOE agrees not to assess any connection
or
user fees for the construction of the Project Infrastructure. FSR acknowledges
that WASHOE will charge connection or user fees for storage and transmission
facilities that WASHOE constructs, and that WASHOE will charge user fees
for the
operation, maintenance, repair and depreciation of the Project Infrastructure,
including fees for actual start up costs incurred by WASHOE in connecting
the
Project Infrastructure to WASHOE’s water system and bringing it on line for
service.
VII.
DEFAULTS
AND REMEDIES
7.1 Default.
Subject to extensions of time by mutual consent in writing, failure or
unreasonable delay in performing any term or provision of this Agreement
shall
constitute a default In the event of alleged material default or material
breach
of any terms or conditions of this Agreement, the party alleging such default
or
breach shall give the other party not less than thirty (30) days notice in
writing, specifying the nature of the alleged default and the manner in which
said default may be satisfactorily cured. During any such thirty (30) day
period, the party charged shall not be considered in default for purposes
of
institution of legal proceedings, or issuance of any building
permit.
After
notice and expiration of the thirty (30) day period, the non-defaulting party
to
this Agreement, at its option, may institute legal proceedings against the
defaulting party.
Evidence
of default may also arise in the course of periodic review of this Agreement.
If
either party determines that the other party is in default following the
completion of the normal periodic review, said party may give written notice
of
default of this Agreement as set forth in this section, specifying in said
notice the alleged nature of the default, and potential actions to cure said
default where appropriate. If the alleged default is not cured within thirty
(30) days or within such longer period specified in the notice, the other
party
may institute legal proceedings.
It
is
hereby acknowledged and agreed that any portion of the Project Infrastructure
which is the subject of a construction permit or other final entitlement
not be
affected by or jeopardized in any respect by any subsequent default affecting
the Project Infrastructure. In the event that WASHOE does not accept, review,
approve or issue necessary permits or entitlements for use in a timely fashion
as defined by this Agreement, or as otherwise agreed to by the parties, or
WASHOE otherwise defaults under the terms of this Agreement, WASHOE agrees
that
FSR shall not be obligated to proceed with or complete the Project
Infrastructure, or any portion or expansion thereof.
Except
as
otherwise expressly provided in this Agreement, any failure or delay by FSR
or
WASHOE in asserting any of its rights or remedies as to any default shall
not
operate as a waiver of any default or of any such rights or remedies or deprive
such party of its right to institute and maintain any actions or proceedings
which it may deem necessary to protect, assert or enforce any such rights
or
remedies.
Failure
of WASHOE to allow for the transfer of the Additional Water Rights, except
as
provided in Paragraphs 2.2 and 3.2 of the Banking Agreement shall result
in the
revocation of the Banking Agreement as to any Additional Water Rights not
acceptable to WASHOE for “will-serve” purposes, and FSR shall thereafter have
full ownership of such remaining Additional Water Rights and all of the rights
to utilize the Project Infrastructure as set forth herein.
7.2 Enforced
Delay, Extension of Time of Performance. In addition to specific provisions
of this Agreement, performance by either party hereunder shall not be deemed
to
be in default where delays or defaults are due to war, insurrection, strikes,
walk-outs, riots, floods, earthquakes, avalanches, inclement weather, fires,
casualties, acts of God, governmental restrictions imposed or mandated by
other
governmental entities, not parties to this Agreement, enactment of conflicting
state or federal laws or regulations, new or supplementary environmental
regulation, litigation, or similar bases for excused performance. If written
notice of such delay is given to WASHOE within thirty (30) days of the
commencement of such delay, an extension of time for such cause shall be
granted
in writing for the period of the enforced delay, as may be mutually agreed
upon.
As
provided herein, either party may institute legal action to cure, correct
or
remedy any default, to enforce any covenant or agreement herein, or to enjoin
any threatened or attempted violation.
VIII.
APPLICABLE
LAWS AND ATTORNEY’S FEES
8.1 Washoe
County Code. The Project Infrastructure shall be subject to all ordinances
and fees adopted by WASHOE, applied on a uniform basis to all resource
development projects in the North Valleys area of Washoe County in effect
as of
the date of this Agreement, and as they may be amended from time to
time,
8.2 Nevada
Law/Attorneys’ Fees. This Agreement shall be construed and enforced in
accordance with the laws of the State of Nevada. Should any legal
action be brought by either party relating to this Agreement or to enforce
any
provision herein, the prevailing party of such action shall be entitled to
reasonable attorneys’ fees, court costs and such other costs as may be fixed by
the court.
IX.
GENERAL
PROVISIONS
9.1 Notices,
Demands and Communications Between the Parties. Formal notices, demands and
communications between WASHOE and FSR shall be sufficiently given if dispatched
by registered or certified mail, postage prepaid, return receipt requested,
to
the principal offices of WASHOE and FSR as set forth below. Such written
notices, demands and communications may be sent in the same manner to such
other
addresses as either party may from time to time designate by mail.
9.2 Conflicts
of Interest. No official or employee of WASHOE shall have any
personal interest, direct or indirect, in this Agreement, nor shall any such
member, official or employee participate in any decision relating to this
Agreement that affects his or her personal interests or the interests of
any
corporation, partnership or association in which he or she is directly or
indirectly interested.
9.3 No
Fees. FSR warrants that it has not paid or given, and will not pay or give,
any third person any money or other consideration for obtaining this
Agreement.
9.4 Nonliability
of WASHOE Officials and Employees. Except as provided for by applicable law,
no official or employee of WASHOE shall be personally liable to FSR in the
event
of any default or breach by the WASHOE or for any amount that may become
due to
FSR or on any obligations under the terms of this Agreement.
9.5 Amendments
to This Agreement. FSR and WASHOE agree to mutually consider reasonable
requests for amendments to this Agreement that may be made by the other party,
provided such requests are consistent with this Agreement and would not
substantially alter the basic business terms included herein.
X.
SUCCESSORS
AND ASSIGNS/CONSENT
The
parties hereto agree that the terms and conditions of this Agreement shall
bind
and inure to the benefit of the parties’ successors and assigns. Neither party
may assign or transfer all or any part of its interest in this Agreement
without
the prior written consent of the other party, which consent may not be
unreasonably withheld.
XI.
ENTIRE
AGREEMENT
This
Agreement constitutes the entire understanding between the parties with respect
to the subject matter hereof, and supersedes all other agreements, written
or
oral, between the parties with respect to dedication of the Project
Infrastructure.
XII.
HOLD
HARMLESS AND INDEMNIFICATION
FSR
hereby agrees to, and shall hold WASHOE, its elective and appointive boards,
commissions, officers, agents and employees harmless from any liability for
damage or claims for property damage which may arise from FSR’s or FSR’s
contractors’, subcontractors’, agents’, or employees’ operations under this
Agreement, whether such operations by FSR or by any of FSR’s contractors,
subcontractors, or by any one or more person directly or indirectly employed
by,
or acting as agent for FSR or any of FSR’s contractors or subcontractors. FSR
agrees to, and shall defend WASHOE, its elective and appointive boards,
commissions, officers, agents and employees, from any suits or actions at
law or
in equity for damage caused or alleged to have been caused by reason o the
aforesaid operations.
WASHOE
hereby agrees to, and shall hold FSR, its officers, directors, members, agents
and employees harmless from any liability for damage or claims for property
damage which may arise from WASHOE or WASHOE’s contractors’, subcontractors’,
agents’, or employees’ operations under this Agreement, whether such operations
by WASHOE or by any of WASHOE’s contractors, subcontractors, or by any one or
more person directly or indirectly employed by, or acting as agent for WASHOE
or
any of WASHOE’s contractors or subcontractors. WASHOE agrees to, and shall
defend FSR, its officers, directors, members, agents and employees, from
any
suits or actions at law or in equity for damage caused or alleged to have
been
caused by reason of the aforesaid operations.
XIII.
PROJECT
AS PRIVATE UNDERTAKING
It
is
specifically understood and agreed by and between the parties hereto that
the
subject Project Infrastructure is a private development and no partnership,
joint venture or other association of any kind is formed by this Agreement.
The
only relationship between WASHOE and FSR is that of a government entity
regulating the development of resources held by a private property owner
within
the parameters of applicable law and the owner of such private property and
receiving the dedication of completed infrastructure as part of its service
territory with the concomitant commitment to serve residents in accordance
with
its adopted rates and schedules.
XIV.
FURTHER
ASSURANCES
In
the
event of any legal action instituted by any third party or other government
entity or official challenging this Agreement or the Banking Agreement, or
the
May 30, 2007 Pyramid Lake Paiute Tribe Fish Springs Ranch Settlement Agreement
or any rights or duties of the parties thereto, including the provision of
municipal water service using the Project Infrastructure. WASHOE and
FSR shall jointly cooperate and use their respective best efforts in defending
any such action. FSR acknowledges that upon entry of a Court Order requiring
WASHOE to cease and desist from issuing “will-serve” commitments based on the
Dedicated Water Rights, “will-serve” commitments will not be issued until
dissolution of any such injunctive order or until such legal action is
resolved.
FSRWASHOE
FISH
SPRINGS RANCH, LLCWASHOE COUNTY
a
Nevada
limited liability companya political subdivision of the
State
of Nevada
By: __________________________ By: ________________
▇▇▇▇▇▇▇
▇▇▇▇▇▇-PALMERROBERT ▇. ▇▇▇▇▇▇
PRESIDENTCHAIRMAN
WASHOE
COUNTY
BOARD
OF COMMISSIONERS
Exhibit
“A”
Washoe
County
WATER
BANKING TRUST AGREEMENT
THE
PARTIES TO THIS
AGREEMENT are WASHOE COUNTY, a
political subdivision of the State of Nevada,
(hereinafter “Washoe”) and FISH SPRINGS RANCH,
LLC, a Nevada limited liability company,
(hereinafter “FSR”).
RECITALS
WHEREAS,
Washoe owns
and operates a water distribution system located in the North Valley area
of
Washoe County, Nevada and FSR owns pertain water rights which may become
available in support of development within Washoe’s water distribution service
area or the water distribution service area of the Truckee ▇▇▇▇▇▇▇ Water
Authority (“TMWA”); and
WHEREAS,
Washoe
and
TMWA both have “wholesale agreements” whereby Washoe and TMWA cooperate in the
provision of their respective water distribution service areas in order to
expedite water service to their respective customers; and
WHEREAS,
FSR is the
owner of certain irrigation water rights, consisting of Permits for the use
of
more than 13,000 acre feet of water all of which are more particularly described
on Exhibit “A” which is incorporated by this reference as if fully set forth
herein (collectively, “Dedicated Water Rights”); and
WHEREAS,
Ruling #3786A
and 3787A of the Nevada State Engineer, issued on January 17, 1991 approved
Washoe’s Interbasin Transfer applications allowing Washoe to obtain approval of
permits (the “Municipal Permits”) to change the place and manner of use of the
Dedicated Water Rights for municipal purposes in southern Washoe County:
and
WHEREAS,
FSR
has
processed and received an Environmental Impact Statement (EIS) in accordance
with the water requirements of the National Environmental Protection Act
and
related federal requirements, permitting the transportation of 8,000 acre
feet
of the Dedicated Water Rights through a pipeline and related facilities across
an established utility corridor to the North Valleys area of Washoe County,
Nevada: and
WHEREAS,
FSR
and its
predecessors have historically operated the Fish Springs Ranch as an active
farming operation for over twenty years pumping as much as 5000 acre feet
per
year in connection with the alfalfa hay production on the ranch;
and
WHEREAS,
Washoe County
has previously filed and defended the applications with
the Nevada State Engineer’s Office to put the water
from the Fish Springs Ranch to beneficial use within
the North Valleys area of southern
Washoe County; and
WHEREAS,
FSR has 26
existing monitoring and production ▇▇▇▇▇ on or near the Fish Springs Ranch
for
purposes of monitoring the impacts of ground water pumping in the basin;
and
WHEREAS,
FSR has
expanded the geographic extent of the United States Geological Survey hydrologic
model of the Nevada portion of the Honey Lake Basin, which has been reviewed
and
accepted by the United States Geological Survey for use in the Environmental
Impact Statement prepared by the Bureau of Land Management for the FSR pipeline
right of way; and
WHEREAS,
the expanded
hydrologic model of the groundwater basin indicates that the proposed export
of
8,000 acre feet of groundwater from the Fish Springs Ranch is sustainable
and
that the predicted drawdown of the water table will be approximately 1 foot
or
less at the California-Nevada state line and less than 30 feet in the well
field
area at the end of 100 years of production; and
WHEREAS,
the expanded
hydrologic model predicted results are consistent with the observed changes
in
the water table elevation over the past 20 years of agricultural use of the
water from Fish Springs Ranch; and
WHEREAS,
a
portion of
the terms and provisions of this Agreement will authorize Washoe to utilize
the
Dedicated Water Rights for conjunctive uses on a temporary basis. Such temporary
use will assist in replenishing the ground water basins in the North Valleys
area and allow for the confirmation and verification of the sustainability
of
ground water pumping from the Fish Springs Ranch; and
WHEREAS,
the banking
provisions provided for herein are intended to facilitate the compliance
with
the procedural requirements of the Nevada State Engineer’s office for permit
issuance and for the efficiency in the provision of water resources to the
North
Valleys area; and
WHEREAS,
FSR and
Washoe acknowledge that the Dedicated Water Rights end FSR’s subsequent
transfers and assignments of the beneficial interest therein as provided
hereunder are interests in real property and that the utilization of this
Agreement and the transfer of the ownership of the Dedicated Water Rights
to
Washoe in trust for FSR as provided hereunder for convenience and for the
ease
in the administration of the water rights as between FSR and its assignees,
Washoe, and the Nevada State Engineer’s Office; and
WHEREAS,
Washoe
intends to cause the Municipal Permits to be issued only after the Dedicated
Water Rights are transferred by deed to Washoe; and
WHEREAS,
FSR intends
to transfer the Dedicated Water Rights by Water Rights Deed to Washoe, which
shall serve as the basis for the Nevada State Engineer to issue the Municipal
Permits, which for purposes of convenience shall be held by Washoe in trust
for
the exclusive benefit of FSR and its assignees, and credited against the
water
rights dedication requirement in connection with requests for “will-serve”
commitments requested from time to time by FSR or its assignees;
and
WHEREAS,
Washoe has
adopted a Master Plan for the North Valleys area of Washoe County in order
to
provide for the orderly growth and development of the area; and
WHEREAS,
Washoe agrees
that, as to the Dedicated Water Rights, the provisions of TMWA’s Rule 7 (“Rule
7”) shall govern the quantity of water rights required for dedication to support
development within Washoe’s water service area; and
WHEREAS,
Washoe agrees
to accept the Dedicated Water Rights in trust for the exclusive benefit of
FSR
and its assignees, for future water rights dedication requirements within
the
utility service areas of Washoe and/or TMWA, as those service areas may change
from time to time, and subject to
appropriate
wholesale agreements between Washoe and TMWA, on the condition that FSR,
or its
assignees, be responsible for all costs associated with the transfer by FSR
to
Washoe, and all costs associated with the maintenance of the Dedicated Water
Rights; and
WHEREAS,
after the
Dedicated Water Rights are deeded to Washoe, as provided hereunder, FSR may
assign from time to time all or a portion of its beneficial interest in the
Dedicated Water Rights and resulting Water Rights Credits, as defined below,
to
future water service requirements for dedication of water rights in connection
with requests for “will-serve” commitments; and
WHEREAS,
the parties
anticipate that future infrastructure dedication agreement(s) will be entered
into for the purpose of providing for the planning, development, construction,
and maintenance of infrastructure necessary to deliver the Dedicated Water
Rights to the point of delivery; and
WHEREAS,
Washoe’s
acceptance of the Dedicated Water Rights will not, in and of itself, create
an
obligation to provide water service to FSR or its assignees, because such
water
service obligation will arise only after a “will-serve” request is made to
Washoe and all conditions for such service have been satisfied.
NOW,
THEREFORE, in
consideration of the following terms, conditions, and covenants it is hereby
agreed between FSR and Washoe as follows:
1. DEDICATED
WATER RIGHTS
1.1 Subject
and pursuant to the following terms and conditions of this Agreement, and
any
terms, conditions and restrictions imposed by the State Engineer, FSR hereby
agrees to convey the Dedicated Water Rights to Washoe, in trust, by execution
and delivery of a Water Rights Deed in a form acceptable to Washoe. Washoe
has
reviewed and approved the type and quantity of the Dedicated Water Rights
and
agrees to accept the dedication of the Dedicated Water Rights, in trust,
and to
seek the Municipal Permits under all applicable State Engineer Rulings, and
to
hold and reserve, exclusively for the account of FSR or its assignees, a
quantity of water rights credits (the “Water Rights Credit”) equal to the amount
of the Municipal Permits issued by the State Engineer, for credit against
the
requirement for the dedication of water rights in connection with requests
for
“will-serve” commitments by FSR or its assignees.
1.2 Water
Rights Credits available as the result of the issuance of the Municipal Permits
will be placed to beneficial use within the service areas of Washoe and/or
TMWA,
subject to appropriate wholesale agreements between Washoe and TMWA. Washoe
will
file, if necessary, applications for extensions of time, proofs and other
appropriate documents for the purpose of maintaining the validity of the
Dedicated Water Rights and for obtaining the maximum use of the Dedicated
Water
Rights. During the time the Water Rights Credits remain uncommitted and
unallocated to an approved project, all direct costs, and filing fees paid
by
Washoe shall be reimbursed by FSR or its assignees.
1.3 Prior
to the Water Rights Credits being available for use within the service areas
of
Washoe and/or TMWA, FSR or its assignees, shall be responsible for design
and
construction of the water transmission infrastructure necessary to appropriate,
pump and convey the water evidenced by the Dedicated Water Rights to the
point
of delivery which is to be Washoe’s Matterhorn Terminal Tank location, (the
“Point of Delivery”) located in the North Valleys area of Washoe County. In
order to ensure adequate water transmission infrastructure to deliver the
water
represented by the Water Rights Credits to the Point of Delivery, the parties
anticipate the completion and execution of a separate Infrastructure Dedication
Agreement between FSR and/or its assignees and Washoe.
2. TRANSFER
AND ASSIGNMENT
2.1 FSR
may, at any time following issuance of the Municipal Permits, transfer and
assign its right to unallocated Water Rights Credits by the execution and
delivery to Washoe of an Assignment of Water Rights Credits (“Assignment” or
“Assignments”) as provided for herein. The Assignments shall be in
the form attached hereto as Exhibit B which will be provided to Washoe by
FSR in
favor of its assignees, evidencing the signature of the Manager of FSR and
the
signature of each assignee of FSR. The Assignments shall be dated, identify
the
assignee of FSR, specifically describe the quantity of Water Rights Credits
being assigned and indicate that Washoe may rely upon the face value
representations of validity of the Assignment without the duty to inquire
beyond
the Assignment. The Assignment shall expressly state that it is
subject to the terms, conditions and restrictions of the Municipal
Permits.
2.2 The
initial Assignments of the Water Rights Credits shall be limited to 8,000
acre
feet. The remaining Water Rights Credits resulting from the Municipal Permits
shall be held by Washoe pursuant to the terms and conditions of this Agreement,
and no further Assignments may be made by FSR until such time as all necessary
permits have been obtained by FSR and the parties have agreed upon the amount
of
such future Assignments.
2.3 Washoe
and FSR and/or its assignees shall annually agree upon the accounting and
reconciliation of the total Water Rights Credits transferred and assigned
by
means of an accounting presented by FSR and/or its assignees in a format
or
schedule acceptable to Washoe. The termination, default or other action related
to one assignee shall not affect the rights or obligations of any other
assignee.
3. WILL
SERVE/TEMPORARY USE
3.1 At
such time as the Dedicated Water Rights have been conveyed in trust to Washoe
as
provided for in Paragraph 1.3 above and the Municipal Permits have been issued
the State Engineer, FSR and/or its assignees, may request “will-serve”
commitments for up to 8,000 acre feet of Water Rights
Credits. Additional “will-serve” commitments are subject to the
limitations of Paragraph 2.2 above. The Water Rights Credits will be held
in an
account as a credit for FSR and/or its assignees as provided in this Agreement.
The quantity of Water Rights Credits to be applied to and credited against
any
such “will-serve” commitment shall be based upon Rule 7 as adopted by TMWA and
implemented by Washoe and TMWA for their respective service
areas. Washoe agrees that the Assignments will be accepted in
satisfaction of the requirements for dedication of water rights in connection
with requests for “will-serve” commitments.
3.2 The
parties agree that the Washoe is the final authority in determining the number
of will-serves which may be granted by Washoe.
3.3 Washoe,
subject to the terms and conditions of the Municipal Permits, is also the
final
authority regarding the dedication rate associated with “will-serve” commitments
which may be issued from the Water Rights Credits.
3.4 Prior
to the time when all of the Water Rights Credits are in actual use for municipal
service, Washoe, at it’s sole cost and expense, may utilize some or all of the
water rights associated with the Water Rights Credits that have not been
called
upon as the basis “will-serve” commitments for it’s general
temporary purposes, including groundwater recharge or conjunctive use
management. Washoe’s use of the Water Rights Credits is strictly
limited to temporary uses that will not diminish or have adverse quantitative
effect on the rights of FSR or its assignees to put the full amount of the
Water
Rights Credits hereunder to beneficial use, to the limitations of Paragraph
2.2
above.
3.5 It
is specifically agreed and understood that Washoe will wholesale water to
TMWA,
subject to appropriate wholesale agreements between Washoe and TMWA, and
that
such wholesale water after it is provided to TMWA shall be served to TMWA
customers in accordance with the rate schedule and charges established for
TMWA
customers.
4. TERMINATION
4.1 This
Agreement may be amended or terminated only by written agreement between
parties, except as provided in Paragraph 4.2 below.
4.2 This
Agreement will terminate at its own accord at such time as the total amount
of
Water Rights Credits provided for herein have been assigned by FSR and put
into
actual use for municipal service.
5. MISCELLANEOUS
5.1 Assignment: FSR’s
rights and obligations contained within this Agreement may be freely
assigned. All of the parties’ rights inure to, and the obligations
are binding upon, the parties’ successors in interest. Washoe may not
assign this agreement without the express consent of FSR.
5.2 Survival: This
Agreement and the covenants, warranties and representations contained herein
shall survive the execution of this Agreement.
5.3 Entire
Agreement: This Agreement, together with any exhibits and other
matters attached hereto and/or incorporated herein by reference, constitutes
the
entire agreement between the parties. All terms, conditions, representations,
warranties, understandings and interpretations contained in any other written
or
oral communications between the parties are superseded. In executing this
Agreement, the parties acknowledge that they are relying solely on the matters
set forth herein and not on any other inducements, written or oral, by the
other
party or any agent, employee or representative thereof.
5.4 Severability:
if any term, covenant, condition, or provision of this Agreement is held
by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, covenants, conditions, and provisions shall remain
in
full force and effect, and shall in no way be affected, impaired or invalidated.
The rights and obligations of the parties hereto shall be governed by and
construed in accordance with the laws of the State of Nevada.
5.5 Notice No
notice, request, demand, instruction or other document to be given hereunder
to
any Party shall be effective for any purpose unless personally delivered
to the
person at the appropriate address set forth below (in which event such notice
shall be deemed effective only upon such
delivery) delivered by air
courier next-day delivery (e.g., Federal
Express), or delivered by U.S. mail, sent by registered or certified mail,
return receipt requested as follows:
If
to
FSR,
to: Fish
Springs Ranch, LLC
Attention: ▇▇▇▇▇▇▇
▇.
▇▇▇▇▇▇-▇▇▇▇▇▇
▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
If
to
Washoe,
to: Director
Department
of Water
Resources
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Notices
delivered by air courier shall
be deemed to have been given the next business day after deposit with the
courier and notices mailed shall be deemed to have been given on the second
day
following deposit of same in any United States Post Office mailbox in the
state
to which notice is addressed or on the third day following deposit in any
such
post office box other than in the state to which the notice is addressed,
postage prepaid, addressed as set forth above. The addresses and
addressees, for the purpose of this Paragraph, may be changed by giving written
notice of such change in the manner herein provided for giving notice. Unless
and until such written notice of change is received, the last address and
addressee stated by written notice, or provided herein if no such written
notice
of change has been received, shall be deemed to continue in effect
for all purposes hereunder.
5.6 Counterpart: This
Agreement maybe executed in one or more counterparts. Each of which shall
be
deemed an original but all of which shall constitute one and the same
instrument.
Dated
this 28th
day of February, 2006.
FSR: WASHOE:
FISH
SPRINGS RANCH,
LLC WASHOE
COUNTY
By: /s/▇▇▇▇▇▇▇
▇.
▇▇▇▇▇▇-▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇.
▇▇▇▇▇▇-▇▇▇▇▇▇ Chairman
of the Board of
Chief
Operating
Officer County
Commissioners
Attest: /s/▇▇▇
▇▇▇▇▇▇
Washoe
County Clerk
STATE
OF
NEVADA
)
) ss.
COUNTY
OF
▇▇▇▇▇▇ )
On
this 28th
day of February, 2006, personally appeared before me, a Notary Public,
_______Dorothy ▇. ▇▇▇▇▇▇-▇▇▇▇▇▇ ___ , personally
known to me to be the person whose name is subscribed to the above instrument,
who acknowledged to me that he/she executed the above instrument on behalf
of
Fish Springs Ranch, LLC.
/s/
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇
NOTARY
PUBLIC
STATE
OF
NEVADA )
) ss.
COUNTY
OF
WASHOE )
On
this 28th
day of February, 2006, personally appeared before me, a Notary Public,
________Robert ▇.
▇▇▇▇▇▇ __ , personally known
to me to be the person whose name is subscribed to the above instrument,
who
acknowledged to me that he/she executed the above instrument on behalf of
Washoe
County.
/s/▇▇▇▇
Lencioni_______________
NOTARY
PUBLIC