CONTRACT 2382 Memorandum of UnderstandingCONTRACT
2382
MEMORANDUM OF UNDERSTANDING
WHEREAS, the City of Los Angeles ( "Los Angeles ") provides wastewater disposal and
treatment services to the City of El Segundo ( "Agency "), which has been sued by Los Angeles as
a result of failure to pay outstanding wastewater bills pursuant to existing service agreements
between Los Angeles and the Agency; and
WHEREAS, the Agency disputes the total amount of charges for wastewater service provided
by Los Angeles as well as Los Angeles' method of calculating such charges; and
WHEREAS, both the Agency and Los Angeles desire to resolve the dispute without further
litigative proceedings and have engaged in an extended course of discussion and negotiations toward
that mutual purpose; and
WHEREAS, Los Angeles has proposed to reduce the charges for the Agency for the period
from July 1, 1984 to June 30, 1994 (the "Period ") for the purposes of implementing a comprehensive
settlement to the on -going litigation, provided the Agency and the City ultimately agree to a
comprehensive settlement (the "Comprehensive Settlement ") that establishes a new charge system
for the Agency's use of the Los Angeles wastewater system and resolves a number of the issues
raised in the pending litigation; and
WHEREAS, in the absence of a Comprehensive Settlement that is acceptable to the Agency
and Los Angeles, the proposals by Los Angeles to reduce Agency's wastewater charges for the Period
shall not be construed as a recalculation, correction, amendment or acknowledgment regarding either
the costs incurred by Los Angeles to provide to the Agency wastewater services for the Period, or
the charges to the Agency for wastewater services for the Period pursuant to the existing service
agreements; and
WHEREAS, the Agency and Los Angeles have reached tentative agreement regarding certain
principles and concepts to be set forth in the Comprehensive Settlement, which includes the
framework for a new service agreement. The negotiated principles and concepts, if ultimately
incorporated into the Comprehensive Settlement, resolve.non- monetary issues raised in the on -going
litigation, the basic structure of a new charge system for Los Angeles' wastewater services, and the
method of calculating Agency charges for wastewater treatment services provided by Los Angeles
in the future; and
WHEREAS, the Agency and Los Angeles have not yet reached agreement as to the charges
and charge method for the Agency's use of Los Angeles' wastewater conveyance system and are
continuing to negotiate regarding such issues; and
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March 2, 1995
WHEREAS, Los Angeles' efforts to control wastewater system costs have greatly contributed
to the Agency's decision to pursue a settlement of the outstanding claims.
NOW THEREFORE, the undersigned Agency and Los Angeles representatives agree to the
following:
1. On March 3, 1995, Los Angeles received from the Agency the sum of $10,346,000
which is equal to (1) the full amount of the Agency's proposed reduced treatment
charge for the Period, calculated in accordance with the tentative agreement regarding
wastewater treatment service, plus (2) two- thirds of the amount estimated for a
conveyance charge, estimated in accordance with the Los Angeles proposal regarding
the wastewater conveyance issues, less (3) any payments previously received by Los
Angeles from the Agency for wastewater treatment or conveyance services provided
during the Period.
2. Los Angeles will complete in February 1995 technical studies relative to its
wastewater conveyance system to assist with the negotiation of a new cost- sharing
formula for charges payable by the Agency to Los Angeles for the Agency's use of
the conveyance system.
3. Los Angeles and the Agency will jointly prepare a settlement agreement to address
the principles and concepts negotiated. Among many negotiated items, some of the
negotiated items include the following:
a. Method to determine and assess past, current and anticipated Agency
wastewater charges according to, but not limited to, flow and strength
measurements.
b. Method to assess, collect and distribute among the Agency, Los Angeles, and
the other agencies, the revenue from charges for future connections to the Los
Angeles wastewater System.
c. Establishment of a committee of representatives of each agency and Los
Angeles to meet regularly to receive information on (1) Los Angeles's
wastewater programs and costs; (2) Los Angeles' efforts to reduce future
capital expenditures for the wastewater system; and (3) other related matters.
d. A limited dispute resolution process.
The foregoing items may be refined, clarified or modified during the process of
preparing the proposed settlement agreement.
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March 2, 1995
4. Upon resolution of the cost- sharing formula for Los Angeles' wastewater conveyance
system and upon completion of the proposed Comprehensive Settlement in form
acceptable to the parties, each party shall submit the proposed Comprehensive
Settlement to its respective governing council or board for consideration and action.
5. If the parties approve the Comprehensive Settlement, all sums paid by the Agency to
Los Angeles shall be applied by Los Angeles to charges accrued for the Period in
accordance with the Comprehensive Settlement. If the parties, for any reason, fail to
reach agreement regarding the Comprehensive Settlement, the full amount of
$10,346,000 received by the Los Angeles from the Agency on March 3, 1995, shall
be applied by the Los Angeles to the wastewater charges outstanding at the time of
said payment by the Agency.
I. 4 - r, G. a, Date:_ 3
J oh r " "erraro, President
geles City Council
Carl Jacobsc y
ar
City of El Segundo
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Date: 3 /11,02. /� 5
joa:\n: \wastwatr mou
March 2, 1995