Title
Receive a report clarifying the reimbursement requirement of the Department of Water Resources Grant relating to the Inter-Lake Tunnel and Spillway Modification Project
Report
RECOMMENDATION:
It is recommended that the Board of Supervisors of the Monterey County Water Resources Agency:
Receive a report clarifying the reimbursement requirement of the Department of Water Resources Grant relating to the Inter-Lake Tunnel and Spillway Modification Project.
SUMMARY:
At the April 2018 Agency Finance Committee meeting, the question arose as to whether the Agency would be required to repay any or all of funds reimbursed to the Agency under the $10 million Department of Water Resources state grant (State Grant) if a Prop 218 vote on the Tunnel Project was unsuccessful. The County Counsel's Office was requested to clarify the provisions of the State Grant Agreement on this point. In brief, Agency would not be required to repay any State Grant reimbursements merely because the Tunnel Project did not receive sufficient votes in a Prop 218 vote. The Agency might be required to repay State Grant funds if the Agency abandoned the Tunnel Project without complying with the conditions precedent in the DWR Grant Agreement. The Agency might also be required to repay State Grant funds if the Agency defaults or breaches any material condition of the Grant Agreement.
DISCUSSION:
In February 2017, the Agency and DWR entered into the Grant Agreement. The Grant Agreement provides that the DWR will reimburse the Agency for certain eligible Project costs up to a maximum of $10 million. Section 9, Grant Agreement. (See Attachment A, DWR Grant Agreement.) In general, Agency Tunnel Project costs are reimbursable up to the point of a Proposition 218 vote. In other words, the Agency and DWR intended that the $10 million would assist the Agency in developing the engineering, acquisition, environmental and related costs anticipated to bring the Project to a Prop 218 vote.
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