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United States v. Alisal Water Corp.

November 17, 2010

UNITED STATES OF AMERICA, PLAINTIFF,
v.
ALISAL WATER CORPORATION, ET AL., DEFENDANTS.



ORDER AUTHORIZING RECEIVER TO EXECUTE PURCHASE AND SALE AGREEMENT

[No Hearing Requested]

Based upon the Ex Parte Application For Entry of Order Authorizing Receiver to Execute Purchase and Sale Agreement filed by John W. Richardson, Receiver appointed in the above- referenced case ("Receiver") and good cause appearing, and good cause appearing therefor, it is ORDERED as follows:

1. The Receiver's Ex Parte Application is approved.

2. The Receivership is authorizing to execute the Purchase and Sale Agreement between County of Monterey, Boronda County Sanitation District and San Jerardo Water System, a copy of which is attached as Exhibit A.

PURCHASE AND SALE AGREEMENT between COUNTY OF Monterey County and SAN JERARDO WATER SYSTEM

THIS PURCHASE AND SALE AGREEMENT ("Agreement"), is made and entered into as of OctoberAugust ____, 2010, by and between the County of Monterey, Boronda County Sanitation District (hereinafter, "County"), and the SAN JERARDO WATER SYSTEM, by and through John W. Richardson, in his capacity of federally appointed Receiver for San Jerardo Water System (hereinafter, "Receiver") and not in his personal capacity, with reference to the following facts:

A. County is a political subdivision of the State of California. Among County's important and fundamental goals are to protect and provide for the health and safety of its residents, and to preserve and improve the supply of housing affordable to residents of low and moderate income.

B. Receiver controls a domestic water enterprise currently furnishing service to customers in the San Jerardo Housing Cooperative, Inc. Community (hereafter, "San Jerardo Community") and is under a Receivership ordered by the United States District Court in the matter entitled, United States of America v. Alisal Water Corporation, Case No. C97-20099 (JF) (the "Action"). Pursuant to an April 9, 2002 Order, inter alia, John W. Richardson was appointed as the Receiver for the San Jerardo Water System (hereafter, "System"). Said Order is attached hereto as Exhibit "A" and incorporated by this reference. Receiver is charged with managing the affairs of the System, as noted in the Action, until discharged by the United States District Court ("District Court"). All actions herein shall be taken by Receiver.

C. Among other things, Receiver has been ordered to facilitate the improvement and sale of the System, located in the County of Monterey. The System serves a farmworker Community located at the former military base known as Camp McCalum, approximately 5.3 miles southeast of the City of Salinas. The San Jerardo Community is predominately characterized by households of low income.

D. The existing source of water for the System has shown a steady increase in nitrates, and is in violation of State water quality standards. Testing has also shown the presence of 1,2,3 trichloropropane in amounts that exceed the notification level set by the California Department of Public Health. The System also fails to comply with County water standards requiring at least two (2) reliable sources of drinkable water supply. Prior to County's installation of an Interim Filtration System pursuant to the Court approved Interim Filtration Agreement and Amendments 1 and 2, the System was required to provide bottled water to all residents of the San Jerardo Community for drinking purposes.

EXHIBIT A

E. County desires to facilitate the remedying of water quality and water supply issues relating to the System, in order to alleviate conditions, which risk the health and safety of residents of the San Jerardo Community.

F. On January 26, 2007 the County and Receiver entered into a Predevelopment Agreement, approved by the Court on or about January 29, 2007 to set forth the terms of the Purchase and Sale Agreement and to provide for financing of the System Improvements to allow the development and completion of a safe and suitable water system for the San Jerardo Community. Said Predevelopment Agreement and related amendments and attachments are attached and incorporated by this referenced as Exhibit "BD."

G. In furtherance of the terms of the Predevelopment Agreement, and subject to the approval of grant funding, the County prepared an Request For Proposals (RFP) for the construction of improvements to the San Jerardo Water System. Said RFP was approved by the Board on or about October 6, 2009. Said RFP included the Project Description. Said Project Description and Location Map are attached and incorporated by this reference as Exhibit "CB."

H. Pursuant to the terms of the Court approved Predevelopment Agreement, and subject to the receipt of State Grant Funds, County and Receiver agreed to execute a formal Purchase and Sale Agreement containing substantially the terms set forth below, and to initiate the process for transfer with the California Public Utilities Commission.

I. On July 9, 2009, the Board of Supervisors approved Ordinance No. 5134, An Ordinance of the County of Monterey, State of California, Relating to Water Facilities of the Boronda County Sanitation District which became effective on *******. Ordinance No. 5134 is attached hereto and incorporated by thie reference as Exhibit "D."

JI. On September 24, 2009 the California Public Utilities Commission approved the transfer of the System to the County pursuant to Resolution No. W-4786. Said Resolution is attached hereto and incorporated by this reference as Exhibit "EDC."

KJ. On October 29, 2009, the United States District Court for the Northern District of California approved the transfer of the System to the County pursuant to the Order (1) extending Receivership for Limited Purpose; and (2) Addressing Matters Heard on October 2 2009. Said Order (1) extending Receivership for Limited Purpose; and (2) Addressing Matters Heard on October 2 2009 is attached and incorporated by this reference as Exhibit "FE."

NOW, THEREFORE, the Parties agree as follows:

ARTICLE 1 DEFINITIONS AND EXHIBITS

EXHIBIT A

Section 1.1 Definitions

The following capitalized terms have the meaning set forth in this Section 1.1 wherever used in this Agreement, unless otherwise provided:

(a) "Agreement" shall mean this Purchase and Sale Agreement.

(b) "ARRA" shall mean American Recovery and Reinvestment Act.

(c) "CDBG Funds" shall mean funds available under Community Development Block Grant Program.

(d) "County" shall mean the County of Monterey, a political subdivision of the State of California and/or the Boronda County Sanitation District (BCSD), a dependent Special District, staffed by the Department of Public Works (DPW) and governed by the Board of Supervisors of the County of Monterey.

(e) "Default" shall have the meaning set forth in Section 6.1 below.

(f) "Predevelopment Funding" shall mean the provision of County funds pursuant to the Court approved Predevelopment Agreement in the amount of Three Hundred Thousand dollars ($300,000).

(g) "Project" shall mean the course of action as described in the attached Project Description, incorporated by this reference as Exhibit "B".

(h) "Purchase and Sale Agreement" shall mean this Agreement for the County's acquisition of the System.

(i) "Receiver" shall mean John W. Richardson, in his capacity as Court-ordered receiver of the Water System, domestic water enterprises operating under an order or receivership in United States District Court Case No. 97-20099; United State of America v. Alisal Water Corporation, et. al. and not in his personal capacity.

(j) "State Grant Funds" shall mean all grant or other moneys which may be

(j) "State Grant Funds" shall mean all grant or other moneys from governmental agencies which may be used for the improvement of the System's supply and quality, including, but not limited to, the California Department of Public Health's Safe Drinking Water State Revolving Fund ("SRF"), but not including CDBG Funds or ARRA Stimulus Funds.

(k) "System" shall mean the San Jerardo Water System.

(l) "Transfer" shall have the meaning set forth in Section 4.4 below.

Section 1.2 Exhibits

EXHIBIT A

The following exhibits are attached to this Agreement and incorporated into this Agreement by this reference:

EXHIBIT A: Order Appointing Equitable Receiver in Case No. C97-20099 JF (EAI), dated April 9, 2002.

EXHIBIT B: PREDEVELOPMENT AGREEMENT AND EXHIBITS

EXHIBIT CB: PROJECT DESCRIPTION AND LOCATION MAP.

EXHIBIT D: ORDINANCE NO. 5134: AN ORDINANCE OF THE COUNTY OF MONTEREY, STATE OF CALIFORNIA, RELATING TO WATER FACILITIES TO THE BORONDA COUNTY SANITATION DISTRICT

EXHIBIT EDC: CALIFORNIA PUBLIC UTILITIES COMMISSION RESOLUTION NO. W-4786.

EXHIBIT D: PREDEVELOPMENT AGREEMENT AND RELATED AMENDMENTS AND ATTACHMENTS

EXHIBIT FE: ORDER (1) EXTENDING RECEIVERSHIP FOR LIMITED PURPOSE; AND (2) ADDRESSING MATTERS HEARD ON OCTOBER 2, 2009

EXHIBIT F: ORDINANCE NO. 5134: AN ORDINANCE OF THE COUNTY OF MONTEREY, STATE OF CALIFORNIA, RELATING TO WATER FACILITIES TO THE BORONDA COUNTY SANITATION DISTRICT

ARTICLE 2 COUNTY TO ACT AS LEAD AGENT FOR RECEIVER IN OBTAINING GRANT MONEYS AND PROJECT IMPLEMENTATION

Section 2.1 County to Act as Lead Agent for Receiver in Actions to Obtain State Grant Moneys; Assignment of Grant Application by Receiver To County

The parties understand and agree that in order to facilitate the award and implementation of State Grant Funds, as well as the ultimate transition of the System from the Federal Receivership to the care and operation of the County, Receiver shall consult with, and utilize the services of County in the actions remaining to comply with any and all State or Federal grant funding requirements. Receiver hereby assigns all rights, title and interests in the State and Federal Grant Funds for the System to County.

Section 2.2 County to Act as Lead Agent for Implementation of State Grants

The parties understand and agree that pursuant to the terms of the Predevelopment Agreement, County has acted as the Receiver's agent in all respects to the pursuit and implementation of the State Grants, CDBG awards, and any other funding, as well as the construction of improvements. Such work has included, but has not been limited to, the bidding of contracts and hiring of contractors, overseeing the work, and taking such action as necessary to construct the ...


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