HomeMy WebLinkAboutItem 12h - Assignment and Assumption Agreement
DATE: September 21, 2021
TO: Honorable Mayor and City Council
FROM: Tom Tait, Public Works Services Director
By: Jacquelyn Mercado, Senior Management Analyst
SUBJECT: ASSIGNMENT AND ASSUMPTION AGREEMENT BETWEEN
THE CITY OF ARCADIA, EAST PASADENA WATER COMPANY, AND
CALIFORNIA-AMERICAN WATER COMPANY
Recommendation: Approve
SUMMARY
The City of Arcadia and East Pasadena Water Company jointly constructed and
maintain a metered water interconnection that is located within Naomi Avenue at the
west City limits of Arcadia. The interconnection was established as an alternative water
source for East Pasadena Water Company to use in times of emergency. A formal
agreement was signed in 1982 and set terms for the delivery of water through the
interconnection and use of fire hydrants in the specified area.
The City was recently informed that California-American Water has entered into an
agreement to acquire the assets of East Pasadena Water Company. Following the
completion of the sale, California-American Water will become the new water provider
to approximately 10,000 residents in Temple City, Arcadia, and the east Pasadena
area. Due to the acquisition, East Pasadena Water Company is requesting to transfer
the existing interconnection agreement, with no changes to the terms and conditions, to
California-American Water Company for their future use.
It is recommended that the City Council approve, and authorize and direct the City
Manager to execute, the Assignment and Assumption Agreement between the City of
Arcadia, East Pasadena Water Company, and California-American Water Company.
BACKGROUND
East Pasadena Water Company is a privately owned class B utility with a long history of
serving their community from wells located in the Main San Gabriel Groundwater Basin.
In 1982, the City of Arcadia and East Pasadena Water Company jointly established an
interconnection between their respective water distribution systems. The purpose for
Assignment and Assumption Agreement
September 21, 2021
Page 2 of 3
establishing the interconnection was to aid East Pasadena Water Company by
providing a secondary source of supply, should their wells become inoperable due to
mechanical failure or natural disaster.
In 2019, American Water Works Company, announced that its subsidiary, California-
American Water had entered into an agreement to acquire the assets of East Pasadena
Water Company. California-American Water, through its existing distribution network,
serves nearly 690,000 people in California, including some areas of Duarte, San
Marino, and Rosemead. The completion of the sale will ensure that East Pasadena
Water Company’s existing customers will start receiving high-quality water services
from California-American Water.
DISCUSSION
Due to the acquisition, the proposed Assignment and Assumption Agreement is to
transfer the existing interconnection agreement, with no changes in the terms and
conditions, with East Pasadena Water Company to California-American Water
Company for their future use. The term of the Agreement is in perpetuity unless and
until both agencies agree in writing to terminate it. In no event will the City of Arcadia
become liable for failing to deliver the requested water if, in its sole discretion, the City
determines it is unable to do so for any reason. In the event the City of Arcadia
determines, in its sole discretion, that an emergency exists, the City may reduce flows
through the interconnection.
ENVIRONMENTAL ANALYSIS
The proposed action does not constitute a project under the California Environmental
Quality Act (“CEQA”) under Section 15061(b)(3) of the CEQA Guidelines, and it can be
seen with certainty that it will have no impact on the environment. Thus, this matter is
exempt under CEQA.
FISCAL IMPACT
There is no fiscal impact as a result of the approval of the Assignment and Assumption
Agreement between the City of Arcadia, East Pasadena Water Company, and
California-American Water Company.
RECOMMENDATION
It is recommended that the City Council determine that this action does not constitute a
project and is, therefore, exempt under the California Environmental Quality Act
(“CEQA”); and approve, and authorize and direct the City Manager to execute, the
Assignment and Assumption Agreement between the City of Arcadia, East Pasadena
Water Company, and California-American Water Company.
Assignment and Assumption Agreement
September 21, 2021
Page 3 of 3
Attachment: Assignment and Assumption Agreement
96996624V.2
ASSIGNMENT AND ASSUMPTION AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is entered
into as of September __, 2021 (the “Effective Date”) by and among East Pasadena Water Co., a
California corporation (“Seller”), California-American Water Company, a California corporation
(“Buyer”), and the City of Arcadia, a municipal corporation (“Arcadia”).
Recitals
A. Buyer and Seller are parties to that certain Asset Purchase Agreement dated as of
April 19, 2019 (the “Purchase Agreement”), pursuant to which Seller has agreed to sell, and
Buyer has agreed to purchase, all or substantially all of the assets of Seller that are used or held
for use in the operation of a water supply and distribution system that serves approximately
3,000 customers in Pasadena, California.
B. Seller and Arcadia are parties to that certain Agreement for Sale of Water and
Provision of Fire Hydrants dated October 15, 1982, a copy of which is attached hereto as
Annex A (the “Interconnection Agreement”).
C. Under the Purchase Agreement, Seller has agreed to assign to Buyer, and Buyer
has agreed to assume, the Interconnection Agreement.
D. Arcadia is willing to consent to the assignment and assumption of the
Interconnection Agreement, on the terms set forth in this Agreement.
Agreement
ACCORDINGLY, based on the foregoing and the mutual covenants set forth below, the
parties hereby agree as follows:
1. Assignment and Assumption. Seller does hereby sell, assign, transfer and convey
to Buyer, and Buyer does hereby, from and after the Effective Date, accept from Seller, all of
Seller’s right, title and interest in and to the Interconnection Agreement. Buyer does hereby,
from and after the Effective Date, assume from Seller and Buyer does hereby agree to pay,
perform and discharge, as and when due, all of Seller’s obligations under the Interconnection
Agreement.
2. Consent to Assignment and Assumption. Arcadia hereby consents to the
assignment and assumption of the Interconnection Agreement as provided in this Agreement,
and agrees that the Interconnection Agreement between Arcadia and Buyer shall remain in full
force and effect in accordance with its terms after the Effective Date, subject to the amendment
described in Section 3 of this Agreement.
3. Amendment. Section 8 (Notices) of the Interconnection Agreement hereby is
amended to replace the address for Seller with the following address for Buyer: California-
American Water Company, 655 W. Broadway, Suite 1410, San Diego, California 92101,
Attention: Vice President, Legal.
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96996624v.2
4. Further Assurances. Each of the parties hereto covenants and agrees to execute
and deliver, at the request of any other party, such further instruments of transfer and assignment
and to take such other action as any other party may reasonably request to more effectively
consummate the assignment and assumption contemplated by this Agreement.
5. Purchase Agreement. This Agreement is being delivered pursuant to the Purchase
Agreement and shall be construed consistently therewith. As between Buyer and Seller, in the
event of any conflict or ambiguity between the terms of the Purchase Agreement and the terms of
this Agreement, the terms of the Purchase Agreement shall control. This Agreement is not
intended to, and does not in any manner, enlarge, diminish or modify the rights and obligations
of the parties to the Purchase Agreement, including, without limitation, any representations,
warranties or indemnification obligations contained therein.
6. Successors and Assigns. This Agreement and all of the provisions hereof shall be
binding upon the parties hereto and their respective successors and permitted assigns, and shall
inure to the benefit of the parties hereto and their respective successors and permitted assigns.
7. Counterparts. This Agreement may be executed in any number of multiple
counterparts, each of which shall be deemed to be an original copy and all of which shall
constitute one agreement, binding on all parties hereto. A manual signature on this Agreement,
an image of which shall have been transmitted electronically, will constitute an original signature
for all purposes. The delivery of copies of this Agreement, including executed signature pages
where required, by electronic transmission will constitute effective delivery of this Agreement
for all purposes.
8. Governing Law. This Agreement is to be governed by and construed in
accordance with the laws of the State of California without regard to its conflicts of law
principles.
[SIGNATURE PAGES FOLLOW]
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96996624v.2
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be signed as
of the Effective Date.
EAST PASADENA WATER CO.
By:___________________________________
Name:__________________________
Title:___________________________
By:___________________________________
Name:__________________________
Title:___________________________
CALIFORNIA-AMERICAN WATER COMPANY
By:___________________________________
Name:__________________________
Title:___________________________
By:___________________________________
Name:__________________________
Title:___________________________
[SIGNATURES CONTINUED ON NEXT PAGE]
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96996624v.2
CITY OF ARCADIA
By:___________________________________
Name:__________________________
Title: Mayor, City of Arcadia
ATTEST:
By:___________________________________
Name:__________________________
Title:___________________________
APPROVED AS TO FORM:
By:___________________________________
City Attorney, City of Arcadia
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96996624v.2
ANNEX A
Interconnection Agreement
(Attached)
"ANNEX A"