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City Legal Action Seeks Clarification of Sewer JPA Obligations

City asking court to clarify funding obligations for member agencies


For Immediate Release
July 12, 2017

Contact: Debbie Ruddock
Mayor, City of Half Moon Bay
650-726-8266

Tony Condotti
City Attorney
831-423-8383


City Takes Legal Action to Clarify its Obligations as Member of
Joint Powers Authority for Sewer Services

Half Moon Bay, CA - The City of Half Moon Bay has filed an action in San Mateo County Superior Court, asking for "declaratory relief" - a court determination resolving legal uncertainties and affirming the rights, duties, and obligations of the City as a member of a joint powers authority. This Authority is comprised of the City of Half Moon Bay, the Granada Community Services District ("Granada") and the Montara Water and Sanitary District ("Montara"). It grants authority to the Sewer Authority Mid-Coastside ("SAM"), which provides wastewater treatment services for Half Moon Bay and the Granada and Montara coastside communities.

This action results from a disagreement among SAM members as to the responsibility for funding of a much-needed capital construction project. The Joint Exercise of Powers Agreement ("JPA") under which SAM was established obligates each member agency to fund capital improvements and replacements of facilities in proportion to their share of the benefit received from those facilities, and protects SAM members from any duty to fund projects which they do not use and from which they derive no benefit.

This particular project benefits only the Granada and Montara districts - Half Moon Bay derives no "capacity rights" or other benefits from this project, and in fact the project cannot accommodate wastewater generated in the City's sewer service area. Therefore, the City of Half Moon Bay maintains that it is not obligated to fund any portion of this project. However, Granada and Montara have taken the position that the City must contribute to the cost of this project, contrary to the language and intent of the JPA. These divergent positions have compelled the City to seek declaratory relief in the court.

"Half Moon Bay is committed to the fundamental goal of protecting the environment in and around our community, while providing for sewer and wastewater treatment services to the people here who pay for those services," said Half Moon Bay Mayor Debbie Ruddock, who also serves on the SAM Board of Directors. "At the same time, it is our absolute obligation and responsibility to protect Half Moon Bay rate payers, and ensure that the terms of the JPA are met so that our community members are not paying for services that they are not receiving."

The project in question is comprised of the replacement of portions of the Intertie Pipeline System ("IPS"), a sewer force main and related tanks, pumps, mechanical, and electrical components that transmits wastewater from El Granada and Montara to the SAM treatment facility in Half Moon Bay. The IPS serves only the Granada and Montara districts, since the City derives no "capacity rights" or other benefits. When the IPS was originally built, Granada and Montara funded its construction (aside from state and federal grants). At that time the City was correctly assigned no benefit from the IPS project, and thus no burden to fund it. The replacement of that IPS is no different - each member must fund the project in proportion to the benefit each receives. Half Moon Bay receives no benefit; Granada and Montara receive 100% of the benefit, and are therefore obligated to fund 100% of the construction costs.

Mayor Ruddock continued, "The Half Moon Bay representatives on the SAM Board have been asking for clarity around funding issues for years. We value our relationships with the JPA members, and we continue our discussions - but this action is necessary in order to achieve clarity and understanding around funding issues, once and for all."

The project cost is estimated at $4.4 million. Under a proposed SAM budget, Half Moon Bay would be responsible for approximately half of that cost (estimated $2.2 million). The City maintains that the project was inappropriately placed into SAM's general fund budget and identified as part of its "operations and maintenance" costs (for which Half Moon Bay typically pays 52%, based on sewer flow), instead of as a construction project. It is indisputable that this is a construction project, not part of regular "operations and maintenance."

"The IPS was built to be operated for its useful life, and the JPA acknowledged that it would eventually need to be replaced. After four decades of use, that time has come," said Magda González, Half Moon Bay City Manager. "Just as with the original project, those entities deriving benefit from this replacement project are obligated to entirely fund it. Those which derive no benefit are under no obligation to participate in funding."

Deborah Penrose, Half Moon Bay Vice Mayor and SAM Board member, stated that, "The JPA is written to ensure fairness and equity among the member agencies. Since the creation of the Authority, the City of Half Moon Bay has funded many capital projects, going above and beyond its legal obligations, and has been a consistent, responsible partner and environmental steward, taking all available measures to protect our unique, world-class coastal resources, as well as the infrastructure needs of our community."

The City's action asks the court for declarations supporting the City's position, based on the language of the JPA, and thereby provide clarity and understanding, by all agency members, of the relative obligations of the members as to the appropriate classification and funding of such projects.

Located 28 miles south of San Francisco, the City of Half Moon Bay is a community of about 11,300 people, situated on the peninsula between forested hills and some of the most beautiful coastlines that California has to offer. Its historic downtown is home to numerous shops, art galleries, restaurants, bed and breakfasts, and other businesses, and its celebrated beaches and parks are wonders of nature, accessible to pedestrians, bicyclists, and equestrians. With its many activities and events, beautiful natural scenery, old-town charm, and abundance of retail and commercial services, Half Moon Bay is a regional destination. The City's website is www.hmbcity.com.

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