CITY COUNCIL REGULAR MEETING AGENDA PACKET 9-1-26

5298389.1 6.1 Operational Responsibility. Zone 7 shall be solely responsible for the operation, maintenance, repair, and replacement (“O&M”) of Project Facilities, including delivery of City’s Groundwater Supply, subject to the terms and conditions on such delivery set forth in this Agreement. Zone 7 shall conduct all O&M work in accordance with any and all applicable regulatory requirements, accepted professional standards, and best management practices. Zone 7 shall bear all costs and liabilities associated with O&M work, except as expressly provided in this Agreement. 6.2 Grant of Easement. To the extent City property is or becomes necessary for the construction of the Project and/or Zone 7’s O&M work (“Project Land”), City shall grant Zone 7 express easements in perpetuity over such Project Land (“Project Easements”) and, in recognition of the benefit of the Project to City, hereby waives all right to compensation for the Project Easements except as otherwise required by law. City shall cooperate with Zone 7 to negotiate the terms and scope of Project Easements, including access, exclusivity, and restoration provisions as appropriate. In obtaining Project Easements, Zone 7 shall comply with the requirements of the Public Park Preservation Act of 1971 (Public Resources Code, sections 5400– 5409), to the extent applicable. 6.3 Delivery of the Groundwater Supply. 6.3.1 Volume of Groundwater Supply. The City’s maximum entitlement to Groundwater Supply pursuant to this Agreement is governed by the definition of GPQ and related terms set forth in the Supply Contract. 6.3.2 In Lieu Supply Costs. During the design and construction phases of the Project, and until the Project is operational, Zone 7 shall supply City’s GPQ and associated maximum daily supply under the terms and costs of the Supply Contract. The Parties acknowledge that the target Project operational date set forth in this Agreement is an estimate. If the Project fails to achieve operation on or before the December 28, 2029 solely due to factors within Zone 7’s control, then for the period following December 28, 2029 and ending when the Project achieves operation, the cost of supplying City’s GPQ shall be reduced to the In-Lieu Treated Water Rate as defined in the Supply Contract. Thereafter, when the Project becomes operational, City’s GPQ costs shall revert to the costs outlined in this Agreement. In the event Project operationality is delayed due to factors within City’s control, the target Project operational date will be extended by the same period as the delay. 6.3.3 Delivery Schedule. City shall annually, on or before July 15 of each year, submit a delivery schedule for use of City’s GPQ for the following calendar year. City’s submittal shall be made in combination with its delivery schedule for water pursuant to the Supply Contract on forms provided by Zone 7. The delivery schedule for use of the City’s GPQ, in whole or in part, will include a five (5) year outlook and anticipated (1) monthly supply, (2) maximum daily supply, and (3) use of any GPQ roll-over. Page 280 of 344