1 MICHAEL J.

AGUIRRE (SBN 60402)

MARIA C. SEVERSON (SBN 173967)
2 ELIJAH T. GAGLIO (SBN 324799)
AGUIRRE & SEVERSON, LLP
3 501 West Broadway, Suite 1050
San Diego, CA 92101
4 Telephone: (619) 876-5364
Facsimile: (619) 876-5368
5
Attorneys for Plaintiff
6

8 SUPERIOR COURT OF THE STATE OF CALIFORNIA

9 COUNTY OF SAN DIEGO
10

11 JOHN STUMP, an individual, Case No.

12 Plaintiff, COMPLAINT FOR WASTE AND
DISGORGEMENT OF PUBLIC FUNDS,
13 v. AND DECLARATORY RELIEF
14 CITY OF SAN DIEGO, a municipal
corporation; SAN DIEGO GAS &
15 ELECTRIC, a California corporation,
and DOES 1 to 50, Inclusive,
16
Defendants.
17

18 INTRODUCTION

19 1. This action is brought on behalf of City of San Diego citizens and taxpayers under

20 California Code of Civil Procedure § 526a to obtain a judgment restraining or preventing the

21 waste of public funds under an illegal contract between defendants City of San Diego (“City”)

22 and San Diego Gas & Electric (“SDG&E”) known as the RESERVATION OF RIGHTS

23 AGREEMENT (“ROR”)1 under which San Diego City officials agreed to have the City pay, or

24 the City actually has paid, SDG&E as much as $98.8 million to relocate utility equipment

25 SDG&E was required to pay for under Section 8 of the electric and natural gas franchise

26 agreements between SDG&E and the City of San Diego.

27 ///

28 1
The pertinent part of the ROR is attached hereto as Exhibit 1.
1
COMPLAINT UNDER CCP § 526A AND DECLARATORY RELIEF
 1 PARTIES AND KEY PLAYERS

2 2. Plaintiff John Stump operates a business and is a resident of the City of San Diego

3 who, since at least January 2018, has paid sales and property taxes that fund the City of San

4 Diego. Plaintiff Stump also pays water and wastewater rates to the City of San Diego.

5 3. Defendant City of San Diego is a California State municipal corporation.

6 4. Andy Renger is defendant SDG&E’s project manager for relocating SDG&E

7 utility equipment for the City’s Pure Water system project. On June 7, 2018, SDG&E’s Renger

8 demanded the City make an unlawful payment of City funds to pay for relocating the subject

9 utility equipment.

10 5. Brittany Applestein Syz is SDG&E’s Senior Real Estate Counsel who, on June 21,

11 2018, demanded the City make an unlawful payment of City funds to pay for relocating the

12 subject utility equipment.

13 6. The true names and capacities of those Defendants sued herein as DOES 1 through

14 50, inclusive, whether individual, corporate, associate or otherwise, are unknown to Plaintiff, who

15 sues those Defendants by such fictitious names. When the DOE parties’ true names and capacities

16 and their actual involvement in the matters alleged herein are ascertained, Plaintiff will amend

17 this complaint to accurately reflect the same.

18 7. Plaintiff is informed and believes and thereon alleges that each of the fictitiously

19 named defendants designated hereunder as a DOE is responsible in some manner for the

20 occurrences alleged herein, and that Plaintiff’s damages as herein alleged were proximately
21 caused or contributed to by their conduct.

22 8. Plaintiff is informed and believes and thereon alleges that at all relevant times

23 herein, each of the Defendants was the agent, employee, partner, joint venture, alter ego, and/or

24 co-conspirator of one or more of the remaining defendants and in doing the acts alleged herein,

25 was acting within the purpose, course and scope of such agency, employment joint venture or

26 conspiracy, and with the consent, permission or ratification of one or more remaining Defendants.
27 9. Plaintiff is informed and believes and thereon alleges that at all relevant times

28 herein, DOE DEFENDANTS 1-50, acted together on behalf of defendant SDG&E to obtain the
2
COMPLAINT UNDER CCP § 526A AND DECLARATORY RELIEF
 1 unlawful expenditure of City funds to pay to relocate the utility equipment that SDG&E is

2 required to pay.

3 JURISDICTION AND VENUE

4 10. This Court has jurisdiction over the action because this is a civil action wherein the

5 matter in controversy exceeds the jurisdictional minimum of the Court.

6 11. The acts and omissions complained of in this action took place in San Diego,

7 California. Venue is proper because the acts and/or omissions complained of took place, in whole

8 or in part, within the venue of this Court.

9 GENERAL ALLEGATIONS

10 12. The City entered into Franchise Agreements with SDG&E on January 17, 1971 by

11 Ordinance Nos. 10465 and 10466. Under the Franchise Agreements, the City of San Diego

12 granted to defendant SDG&E franchises to install and operate gas and electric service facilities in

13 the City’s streets ("Gas Franchise" and "Electric Franchise," collectively the “Franchises.") The

14 Franchises have a term of fifty (50) years and were effective at all relevant times herein.

15 13. On April 26, 2014, the San Diego City Council adopted Resolution Number R-

16 308906 enacting and undertaking the Pure Water Program. The City Council found the Pure

17 Water Program Project (PWP) necessary to increase diversion of sewage flow away from the

18 Point Loma Wastewater Treatment Plant and the Pacific Ocean to the North City Water

19 Reclamation Plant (Plant) and planned Pure Water facilities and indirect potable use. The City of

20 San Diego PWP is estimated to cost $1.4 billion.

21 14. On November 27, 2018, the City of San Diego announced it was borrowing $614

22 million from the U.S. Environmental Protection Agency (EPA) to pay costs of the PWP. The

23 EPA agreed to make the $614 million loan under the federal Water Infrastructure Finance and

24 Innovation Act (WIFIA) to help finance its Pure Water project. The loan proceeds were supposed

25 to be used to assist in financing a portion of the costs of certain capital improvements to the

26 City’s PWP.
27 15. To obtain the $614 million loan, the City of San Diego represented to the EPA that

28 the City would use the loan proceeds to pay costs to construct the PWP, which was to produce 30
3
COMPLAINT UNDER CCP § 526A AND DECLARATORY RELIEF
 1 million of gallons per day of high-quality drinking water.

2 16. The City of San Diego told the EPA the additional drinking water supply would

3 save the City money through reduced imported water costs. The City told the EPA the PWP

4 would benefit the environment through reduced discharges into the ocean, and would provide a

5 reliable, sustainable, water supply for future generations.

6 17. The EPA made the $614 million loan to help San Diego significantly reduce flows

7 to the Point Loma Wastewater Treatment Plant and to make San Diego more water-independent.

8 The EPA made the loan to help pay for the City’s 20-year program to maintain regulatory

9 compliance for the wastewater system, and to provide a safe, secure and sustainable local potable

10 water supply for San Diego. Under the PWP, recycled water was to be turned into potable water

11 using water purification technology.

12 18. The PWP involves the construction of advanced water purification facilities near

13 the City’s North City Water Reclamation Plant. New pump stations and pipeline facilities will

14 convey flows to and from the treatment facilities for: 1) intercepting, diverting, and pumping

15 wastewater flows to water reclamation facilities; 2) conveying tertiary recycled water to advanced

16 water purification facilities; 3) conveying purified water from Pure Water facilities to local

17 reservoirs; and 4) transporting waste flows (brine and sludge) from treatment processes to solids

18 handling facilities or back into the Metro Wastewater System.

19 19. Section 8 of the subject Franchise Agreements reserves to the City the paramount

20 right to use the streets for any governmental purpose. Section 8 of each Franchise Agreement
21 provides that if in the City's necessary exercise of these rights a conflict exists with defendant

22 SDG&E's facilities, then within 90 days of receiving notice from the City, SDG&E must

23 commence the physical relocation of its facilities at its own expense whether or not they were

24 there first. Under the Franchise Agreements, SDG&E is required to remove and relocate such

25 facilities at SDG&E’s sole expense.

26 20. To complete the PWP, the City of San Diego determined there were several
27 locations where numerous SDG&E facilities had to be relocated for the Pure Water project to be

28 built. Indeed, as far back as 2016, the City identified for SDG&E locations of conflicts between
4
COMPLAINT UNDER CCP § 526A AND DECLARATORY RELIEF
 1 the PWP and SDG&E equipment and facilities. In a series of communications, the City sent

2 notice to SDG&E of the alignment conflicts and requested that SDG&E commence design and

3 relocation of its conflicting facilities.

4 21. Under Section 8 of Franchise Agreements with the City, SDG&E was required to

5 pay for any needed relocation costs.

6 22. Contrary to the terms of the Franchise Agreements between the City and SDG&E,

7 SDG&E refused to commence any relocation activity. Instead, SDG&E stated in a letter dated

8 June 7, 2018, that it will not pay the costs associated with the design and construction of the

9 relocations associated with the conflicts between its facilities and the City's Pure Water Program

10 facilities.

11 23. In breach of the Franchise Agreements, SDG&E refused to pay for any relocation

12 work associated with its conflicting facilities, or to perform the relocation work unless the City

13 paid for it. In breach of the Franchise Agreements, SDG&E continues to refuse to pay to relocate

14 the subject facilities or to otherwise pay the costs for relocation.

15 24. In response to SDG&E’s breach of the Franchise Agreements, as described above,

16 the City agreed to pay SDG&E’s obligation to pay for or to relocate the subject facilities. On

17 November 15, 2018, the San Diego City Council agreed to make an unlawful expenditure of

18 thirty-five million, six hundred and seventy-eight thousand, five hundred and twenty-one dollars

19 ($35,678,521) to pay the utility relocation costs that SDG&E is obligated to pay under Section 8

20 of the franchise agreement – a violation of California Code of Civil Procedure § 526a.

21 25. According to SDG&E, the relocation costs as of June 2020 have grown from

22 $35,678,521 to $98.8 million through June 2020. In breach of the Franchise Agreements,

23 SDG&E continues to refuse to pay the subject relocation costs, or any portion thereof.

24 26. While it was borrowing the $614 million from the EPA, the City of San Diego

25 agreed to or has paid up to $98.8 million that SDG&E – not the City -- was required to pay under

26 Section 8 of the Franchise Agreements.

27 27. Rather than require SDG&E to pay relocation costs as required under the

28 Franchise Agreements, the City agreed to pay the subject relocation costs needed for the Pure
5
COMPLAINT UNDER CCP § 526A AND DECLARATORY RELIEF
 1 Water project. The City of San Diego entered into an illegal agreement, the RESERVATION

2 OF RIGHTS AGREEMENT, in which the City agreed to pay for the relocation costs. The ROR

3 is illegal because it provided for the City to make illegal use of City taxpayer funds to pay what is

4 SDG&E’s financial obligation under the Franchise Agreements.

5 FIRST CAUSE OF ACTION

6 Violation of CCP § 526a

7 (Against All Defendants)

8 28. Plaintiff realleges each allegation above as though set forth herein.

9 29. Plaintiff brings this action pursuant to CCP § 526a to cancel as void the illegal

10 Reservation of Rights Agreement because it was an agreement under which the City of San Diego

11 agreed to use taxpayer funds to pay SDG&E’s financial obligation that SDG&E was required to

12 pay under the Franchise Agreements.

13 30. Specifically, Plaintiff seeks to obtain a judgment restraining, preventing, and

14 ordering the recovery of any funds transferred to SDG&E under the Reservation of Rights

15 Agreement.

16 31. This action is brought pursuant to California Code of Civil Procedure section 526a

17 which permits private individuals and entities to bring an action to “obtain a judgment, restraining

18 and preventing any illegal expenditure of, waste of, or injury to, the estate, funds, or other

19 property of a local agency.”

20 SECOND CAUSE OF ACTION

21 Declaratory Relief, CCP § 1060

22 (Against All Named Defendants and DOES)

23 32. Plaintiff realleges each allegation above as though set forth herein.

24 33. Plaintiff as a City taxpayer is an interested person in the Reservation of Rights

25 Agreement and the Franchise Agreements that require SDG&E to pay for the relocation costs.

26 34. Plaintiff seeks a declaration of his rights as an interested person and as a San
27 Diego City taxpayer under the Reservation of Rights Agreement and the Franchise Agreements as

28 to SDG&E’s obligations to pay for the relocation costs.

6
COMPLAINT UNDER CCP § 526A AND DECLARATORY RELIEF
 1 35. Plaintiff seeks an order declaring the Reservation of Rights Agreement to be void

2 as an illegal contract because it requires the City of San Diego to pay what is an obligation of

3 SDG&E to pay for the the PWP relocation costs as provided in Section 8 of the Franchise

4 Agreements.

5 PRAYER FOR RELIEF

6 WHEREFORE, Plaintiff prays for judgment as follows:

7 1. For an order enjoining the City of San Diego from paying City taxpayer funds to

8 SDG&E under the Reservation of Rights Agreement which is in violation of Section 8 of the

9 Franchise Agreements;

10 2. For an order declaring the City of San Diego’s payment of funds to SDG&E to be

11 an illegal expenditure and waste of public funds in violation of CCP § 526a;

12 3. For an order to set aside the Reservation of Right Agreement as void or an illegal

13 contract;

14 4. For an order of the Court that requires SDG&E to disgorge the public funds it

15 received from the City of San Diego under the Reservation of Rights Agreement in violation of

16 CCP § 526a;

17 5. For attorney fees and costs against SDG&E and the City of San Diego under

18 California Code of Civil Procedure § 1021.5 because this action seeks to stop and to recover

19 illegal expenditures of City taxpayer funds to SDG&E. Recovery of the funds illegally paid to

20 SDG&E will vindicate an important right that will confer a significant pecuniary benefit on San
21 Diego City taxpayers; and

22 6. For any other further relief the Court deems just and proper.

23 AGUIRRE & SEVERSON, LLP

24

25 Dated: December 16, 2020 /s/Maria C. Severson

Maria C. Severson, Esq.
26 Attorneys for Plaintiff
27

28
7
COMPLAINT UNDER CCP § 526A AND DECLARATORY RELIEF
EXHIBIT 1
 RESERVATION OF RIGHTS AGREEMENT

This Reservation of Rights Agreem~nt ("Agreement") is entered into as of January 2, 2019,

by and between the City of San Diego, a municipal corporntion (''CI'.fY") and San Diego Gas &
Electdc Company, a California corporation ("SDG&E"). For purposes oJJ this Agreement, the
CITY and SDG&E shall be referred to collectively as the "Parties."

RECITALS

The Parties have existing between them a dispute arising out of the need to relocate
SDG&E facilities. The Parties dispute who is responsible for the cost of relocating SDG&E
facilities locate-cl in the public right-of-way in order to accommodate the design and constmction
of Phase I of the Pure Water Project (the "Project").

The CITY believes, pursuant to Section 8 of the gas and electric franchise agreements
between the CITY and SDG&E ("Franchise Agryements''), SDG&E is required to relocate certain
SDG&E facilities in conflict with the Project in the public right,..of'."way at SDG&E's expense.
SDG&E disagrees that it is required to pay for the relocation of these facilitie·s because of the
nature of the Project. Neithe1· Party is disputing the need for such relocations. The "Dispute" is
further defined by letters between the Parties (See Letter from Andy Renger, SDG&E Project
Manager, dated June 7, 2018, and Letter from Thomas Zeleny, San Diego City Attorney's Office,
dated June 20, 2018; both attached hereto as Exhibit A). This Agreement does not address any
known or unknown utility disputes outside of the public right-of-way.
(
The CITY has provided designs for the Prnject to SDG&E indicating which SDG&E
facilities must be relocated to eliminate utility location conflicts and to accommodate the Project.
There are several areas of known conflict identified in the design, including but not limited to those
listed and/or shown on Exhibit.B. The Parties agi·ee that additional areas of conflict may arise and
that cunently identified areas of conflict may change during the course of the Project.

In Ol'der to move forward with the relocation work under Dispute, the Parties agree as
follows:

AGREEMENT

1. On November 15, 2018, the San Diego City Council approved a Resolution (R-2019-
213Cor.Copy) approving thirty-five million, six hundred and seventy-eight thousand, five hundred
and twenty-one dollars ($35,678,521) to be provided to SDG&E for desig11 and relocation work
for the Project. These funds and any subsequent fw1ds provided to SDG&E, all at the CITY's
discretion, are referred to herein as. "Funding." Once any portion of the Funding is received by
SDG&E, SDG&E will utilize such Ftmding to begin the· relocation of SDG&E gas and electric .
facilities'located in the public right of way to accommodate the 'Project (the "Work"). The Work
shall be phas:ed in accordan.ce with the CITY's Priority Work Schedule attached hereto as Exhibit
C a11d the terms of this Agreement; provided that the Priority Work Schedule shall be revised to
incorporate SDG&E's. designs upon completion,
2. Upon receipt of Funding, SDG&E shall perfonn the Work in accordance with SDG&E's f ·.
standard operating procedures, processes and methods, pursuant to the relocation designs for the
Work reasonably approved by the Parties in a prompt manner. SDG&E shall be solely in control
of the Work, and nothing in this Agreement shall require SDG&E to perform any Work in a manner
that SDG&E reasonably determines to be unsafe or in violation of applicable laws, including,
without limitation, detennining whether protect-in-place plans are adequate or requlre facility
relocation. The CITY does waive any rights to dispute a protect-in-place determination by SDG&E
and any right to reimbursement. SDG&E may perform the Work using its existing coritractors or
hire new contractors using SDG&E's customary selection process, in its discretion. SDG&E is
only obligated to perform Work for which it has received adequate funding as reasonably
determined by SDG&E.

3. The CITY may add or change its relocation priorities during the performance of the Work
by revising the Pl'iority Wodc Schedule as new information becomes available and providing such
revisions to SDG&E. in a format approved by the parties, provided that the CITY acknowledges
that SDG&B will require a reasonable amount of time to accommodate changes to the Priority
Work Schedule, and that changes to the Priority Woi'lc Schedule or the Worlc, especially changes
that require re-relocation of SDG&E's facilities, will increase the cost of the Work at the CITY's
expense..

4. SDG&E's calculation of the overall "Cost Estimate" for the Work is attached hereto as
Exhibit D.. The Cost Estimate approximates the cost of the Work, as calculated by SDG&E based
on information available on or around August 24., 2018. The CITY has not performed an ( .. '
independent confirmation of the Cost Estimate and, therefore, does not confom the accuracy of '
such estimate. The Parties aclmowledge that the Cost Estimate may increase or decrease depe11ding
on changes to Project design and other factors including, but not limited to, changes in SDG&E
.loaders, environmental requirements, taxes, conflicts not previously identified or encountered
during construction, design changes proving infeasible, and other factots.

5. The Work shall be billed on an actual cost basis, meaning that all costs will be reconciled
at compl~tion of the Work and SDG&E,will bill or refund to the CITY any differences• larger than
$100. SDG&E shall not perform any Wodc for which it has not received adequate advance payment
(other than limited Work at SDG&E's discretion); except to the extent a court with jurisdiction
over the Dispute determines otherwise, The timing of reconciliation of funds paid under this
Agreement does not apply to or override any applicable court order relating to payment of
relocation costs by either Party.

6. Upon receipt, SDG&E will c1·eate two budget codes (one each for gas and electric Work)
to track the Funding provided by CITY pursuant to this Agreement. SDG&E will provide the
following·information in co1111ectio11 with expenditure of the Funding:

a. On a monthly basis, SDG&E will submit a StUmnary of all the charges incurred for the
Worlc by any party, entity .or contractor to the CITY (example spreadsheet attached as
ExhibitE). .
b. Contributions in Aid of Construction, discussed in Section 8, will be documented ·
separately from the cost of the Work.
 (

7. The Parties do not dispute the existence of utility conflicts, as set forth in Exhibit B, and
the necessity to relocate SDG&E's .assets. This Agreement does not govern any relocations
odginating outside of the public right-of-way, new services necessary for the Project, or a,ny work
necessary to accommodate the Ptoject in any location (within the public right-of-way or otherwise)
that does not atise out of an actual cmiflict between Project facilities and.SDG&E facilities.

8. For purposes of this Agreement, payments made by the CITY to SDG&E for the Work are
cm:i.sidered "Contributi011.s In Aid of Construction" (''CIAC") for utility facilities by the California
Public Utilities Commission ("CPUC") and the Interrial Revenue Setvice, aiid considered taxable
income· to SDG&E under sectio_n l l 8(b) of the Internal Revenue Code. The CPUC has directed
investor-owned utilities, including SDG&E, to recoyei' frorn paities paying CIAC a specific
amount to compensate SDG&E fol' the diffete.rtce between the taxes paid by SDG&E on such
income and the time value of tax depreciation deductions received by SDG&E oVel' the life of the
property, collected through a tax gross up rate set by the CPUC for SDG&E} 'Yl1ich is ctll'rently Set
at 24% but may change over time: 1As CITY disagrees tha,t it is responsible for relocation payn'lents
to SDG&E relating to the Dispute, CITY also disag&es that it is responsible to pay CIAC taxes to
SDG&E because it believes ithas no duty to pay for the relocations in the first instanc:e, However,
for putposes of this Agreeme11t, the CITY agrees to pay SDG&E, in protest, such tax gross up rate
on all payments made by the CITY for the Work. Any such tax gross up payments sh1;J.l1 be
refundable to the CITY to the extent a court with jurisdiction over the Dispute determines th1;J.t
CITY is not responsible to SDG&E for telocatio11 woi'lc as described in the Dispute. Refund of the
monies paid by the CITY imd.er this paragraph is ilOt co11tihgent on a tax refund from any state,
local, or fedetal 1;J.gency or proceedings ot third-party corporate 01· fin.ancial aitangements.

9. ,;;::Art iplytif~fm'.1\t'atl&'6y'itliffGlTY'\f<Yi~'M' .o,i:l{f~i'~1ffiatl eitf1~~!'.;pi:9i~iff,lfhe CITY folly reserves

(and does not waive) all rights to make any and a,.ll legal, statutory,-co11fracl, franchise or regulatory
claims in any administrative or legal tribunai to recover the money and any damages arising out
of the CITYis payment to SDG&E under this Ag1'eement, including interest acci-uir1g to the CITY
for Ftindifig pi'ovided to SOG&E, subject to proof. Neither Party is waiving any claims it may
have against the other regarding the Dispute or other claims either Pll1ty may make u11der the
Franchise Agteen1ents. Nothing iri this Agreement is intended to or shl;J.11 be comtrued to meai1 that
either Party has a valid claiin or defei1se. 1tTHi&tAgreeine1.1tJdo:(5s'shotwt~§tn4~Ut!ix{f:,~rtip~,-;{1J1t1'1Y',
t~~;11mrrnifesorntJ.giiJ6'.f?sett1~Ni~11'Hofiitt1t'.1:D1tpurn1.iv.timo@ffiliffg',1ta1c.mnit1PfJ~i:l!ii1iii~ii:iitJv.¢~i2tr~!WSJ
provided that the Parties acknowledge that ai1y such resolution or settlement may requir~
regulatory approval.

10. The CITY and SDG&E will work together to update the Priority Work Schedule 011 a
tegular basis dudng the perfotmance of the Work to accouiit for the expenditure of CITY funds by
SDG&E with respect to each conflict desci'ibed thei'eir1 that is pa1t of the Dispute, including the
estimated percentage completion of the relocation Wcfrk for each conflict, the prime contractor
performing the Work, and the amount of fuilds spent. The CITY and SbG&'E will endeavor to
meet twice monthly to review and update the Priority Wo.rk Schedule, SDG&E 'shall notify the

1 SDG&E Advice Letter 3319-E/2727-G, dated December 7, 20 i 8.

,,,CITY when it reasonably mtticipates that the amount of CITY funds made availabkfto SDG&E to f~-
perform the Wqfk will not be sufficient to pay for the Wofk scheduled to be performedJn the next
90 days pursuant to the Pdodty ·work Schedule. In no event will SDG&E be obligated to perfmm
·any Work for which it has not received CITY funds except to the extent a court with jurisdiction
over the Dispute determines othe1wise.

11. The CITY will provide environmental coi1s\1.ltatioi1 and coordination to SDG&E as
requested. Although SDG&E will be responsible for its own environmei1tal cleata11ces it
dete.11nines to be necessary with respect to the pe1;forrn0,nce of the Work by SDG&E and its
contractors, the ·CI'I'Y is responsible for ensuring the Work is consistent with the CITY,s
environmental impact report (BIR) fot the Project at tbe CITY' s expense.

12. The Parties shall be respoitsible for their own attorneys' fees hi. coni.1ection with any lawsuit
i11volving the Dispute. ·

13. The Patiies agree that the ~'l}tming of time as to ai1y claim or causes of action regarding any
statute oflimitatiou,~, lache$, 01: oth~r pri11cif!l~gf!~gal "~_t,1;1.tutory, 01' equi!able limitations of action
('iTilne Defonse") w1Ii~h~'ay1iie'tifitft(f!i;¥lfi!~11Jutiffftlil4'1s}:,"1fetis'iff)ll~tflHttit!p~ri68.;ijP,:,IDrle:{3) ;r;
y. .~~'t-Sll#PJ1P.:t!itl1ts1A.Weemelit.{~[~\led Pedod"). This Agreement appifos to any defense, ..,.
1 or equita~ie, b~~ed upon the. lapse of timej Inclµding but not limited to the statute of
lim'itations, lacches, estop_pel, waiver or timely action or notl.ce. This tolling prov1sio11 does 11.ot
prevent or prohibit either Party from filing a claim or action relating to the Dispute ot seek any
remedy allowable by law dudng the Tolled Period.

14. State prevailing Wage laws ~pply to tbe Work to the extent paid fat by the CITY; SDG&E
and its contractors shall c6tnply with the prevailing wage reqtiirerhents set forth i11 E;xhibit F. For
the pmposes of co1i:ipliance with sttcb requirements., the CITY acknowledges and ~grees that
SDG&E is not a coi1.tractfor oftb.eCITY for any purpose i'elated to the Projec;t, The CJTYrepresents
that 110 '~Buy Amedca/n" Qr ~tber steel or iron putchas'ing requirements apply to the Work;
provided that ifthe CITY oecldes to obtain funds that 111.a:y hn_pose suchteqttireme1i:ts 011 the Work,
the CITY shall inunecliat(:)ly 110tify SDG&E afid the Pai-ties shall meet and confer regarding such
teqLLil'eli1ei1ts and come to agreement before such tegt1in:me~1ts are imposed, including, w'ithoi.1t
limitation, determination of applicable coni.pliance obligations associated with such funds, if ai1y.

t 15. This Agreement (includirig all Exhibits) is ,the final and entire agreei11e11t between the
Parties c;:onceming the Dispute. All agi'eemen:ts of the Pif.,!J1ies with respect to the s1.1bject mattet
he1:eofare in writing and supersede all prior written ancl oral agreements and understa11dh1gs oftbe
Pardes. T11is Agreement d(?es not supersede or ~m..end the· Franchise Agreeinents, but rather
provides a mechanisni to niove the Project forward while the Dispute is pending. Unless otherwise
specifically provided herein, this Ag1:e.einent ca1mot be modified except by a writtei1 document
signed by all of the Parties. None ofthe Pa1:-ties are relying upon any other negotiations, discussions
or agreements in connection with the subject matter of this Agreement. This is a fully integrated
Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any of the other provisions hereof, Whether similar, nor shall such waiver
constitute a continuing waiver.
 16. Nohvithstanding anything to the contrary contained herein, the Parties hereby stipulate and
agree that the Superior Coul't of the County of San Diego, State of California (the "Coul't,,) shall
have subject matter jurisdiction for the enforcement of this Agreement and personal jurisdiction
ove1· the Patties.

17. A finding of invalidity as to any provision of this Agreement or any portion the.reef only
voids that provision or a portion thereof and not any other, and the Agreement shall be interpreted
as if the invalid provision or a portion thereof were not contained in the Ag1·ee111ent.

18. The Parties hereby agree to execute such other documents and to take such other action as
may be reasonably necessary to forther the purpose of this Agreement, with the Parties to bear
their own costs and attorney's fees for these additional actions. This Agreement may be executed
by authorize representatives of the Parties in counterparts, including electronically.

[SIGNATURES ON FOLLOWING PAGE}

I
( I
·1
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AGREED TO AND ACCEPTED:

SAN DIEGO GAS & ELECTRIC COMPANY

i I

CITY OF SAN DIEGO

I hereby approve the fom1 of the foregoing Agreement this__l day of January;
2019.

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I hereby approve the form of the foregomg Agreement tlus (/"' day of Janucuy,
2019.

MARA W. ELLIOTT, City Attorney

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By WJY--Dv\, Q
Christine Leone
Deputy City Attorney
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Exhibit A - Letters

[attached]

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 OFFICE OF
SANNA R, SINGER CIVIL DIVISION
ASSIS'.I'ANT CITY ATIORNBY
( THE CITY ATTORNEY 1200 THIRD AVENUE, SUITE 1100
THOMAS C, ZELENY SANDIBO\), CALIFORNIA 92101
CHIEF DEPUTY CITY ATIORNEY CITY OF SAN DIEGO TELEPHONE (619) 533-5800
FAX (619) 533-5856
Mara W. Elliott
CITY ATTORNEY

June 20, 2018

Via email to: [email protected]

Brittany Applestein Syz

Senior Real Estate Counsel
San Diego Gas & Electric Company
8330 Ce1itury Park Court, CP32B
San Diego, CA 92123

Subject: Pure Water Project and SDG&E Utility Conflicts

Dear Ms. Syz:

It was a pleasure meeting you at the MCLE presentation at our Office last week. The regulatory
(_ framework SDG&E must navigate is more complex than many of us expected. Thank you for the
presentation.

In anticipation of our meeting tomorrow, I want to briefly address some of the issues raised in a
letter dated June 7, 2018 fi:om Andy Renger, SDG&E Project Manager to Vic Bianes, the Public
Utilities Dfrector for the City. Mr. Renger says that the City is responsible for SDG&E's costs. of
relocating its facilities to accommodate the City's Pure Water project. He relies on a common
law mle that a municipality acting in a "proprietary capacity" must pay to relocate conflicting
utilities, and that SDG&E ratepayers should not bear the cost of a project that only benefits
''select residents" of the City.

The terms of both the electric and natural gas :franchises require SDG&E to start relocating its -
facilities within 90 days at its own expense when necessary to acconunodate the City's use of its
streets:

City reserves theright for itself to lay, construct, erect, install, use, operate, repair,
replace, 1·emove, relocate, regrade or maintain below surface or above surface
improvements of any type or description in, upon, along, across, tmder or over the
streets of the City. City ful'ther reserves the right to relocate, remove, vacate or
replace the streets themselves, If the necessary exercise of the aforementioned
reserve rights conflicts with any poles, wires, conduits, and appurte11ances of
Grantee constructed, maintained and used pursuant to the provisions of the
franchise granted hereby, whether previously constructed, maintained and used or
not. Grantee shall, without cost or expense to City within ninety (90) days after
 Ms. Syz
June 20, 2018
Page2

written notice from the City Manager, or his designated representative, and
request so to do, begin the physical field construction of changing the location of
all facilities or equipment so conflicting, Grantee shall proceed promptly to
complete such required work.

San Diego Ordinance No. 0-10466, Section 8(a) (Dec. 17, 1970); See also San Diego Ol'dinance
No. Q-10465, Section 8(a) (Dec. 17, 1970) [natural gas franchise l'elocationrequirement
applying to '.'pipes'' instead of "poles, wires, conduits."]

Municipalities providing water and sewer service are acting in their governmental capacities.
The South Pasadena and Hansen cases cited by Mr. Renge:r do not apply to this situation. South ·
Pasadena addressed a city's acquisition of a water utility franchise operating in a neighbol'ing
city ove1· 100 years ago. The controlling law is stated in Southern Califomia Gas Comp.any v.
· - City ofLos Angeles, 50 Cal. 2d 713, 717 (1958) ["The laying of sewers is a governmental as
distinct from a proprietary function under the foregoing rule."] The Hansen case, which allowed
municipal utilities to charge rates that realize a reasonable retum on investments, has been
superseded by Proposition 218. Green Valley Landowners Association v. Ctty of Vallejo, 241
Cal. App. 4th 425,439 (2015). .

Also, the Pure Water project is a regional project with two primary purposes. The first is to
offload wastewater from the Point Loma Wastewater Treatment Plant to help ensure the City will
receive future permits without expensive upgrades to the plant. Recognizing this benefit~ the (
following local agencies are dfrectly contributing to the cost of the Pure Water project: the cities . ·· ./
of Chula Vista, Coronado, Del Mar, El Cajon, Imperial Beach, Poway, and National City, the
Lemon Grove Sanitation District, the Padre Dam Municipal Water District, the Otay Water
District, and the San Diego County Sanitation District. The second purpose is to provide a local,
drought-resistant source of potable water. The Pure Water project has been incorporated into the
San Diego County Water Alithority's long-range water resource plans, postponing other
expensive capital projects to the. benefit of the Authority's 24 member agencies. Combined, the
· local agencies benefitting from the Plli'e Water p1'oject represent almost all of SDG&E's service
area, not just the City of San Diego.

Hopefully providing this .information in advance will help with our discussion tomo1mw. We
look forward to seeing you then.

Sincerely,

. . ·· :ttomey

By

Chief De orney
cc: Vic Bianes, PUD Director
Doc.No: 1776582
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t:IJ~go.· ,('11CJW1Jfat th'/{ F\tr.~ W~t~r $1/St\'5111 C'"ltrnl~tf"J t:i;fl~. ·ci~t:etrnih.ed th.at. the cos.t: ·ofthe. u.tHlty
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by :~rodoe:tNg 'c:\emJt dtihkl~Js: watet\ W:e tmderstan'tf that i?ha'se, 1 of the cort.str(.rctfoli fof the
Pr:oJeoUs ~)tpecte·d.'to•be_gfh lrt aa:r,ly 20W,ancl ~onolud.e. fn'.lats,1021..
Pr:l9r tq· OJ.Ir fL!JJ E\tHifyS.I~ o.f'th.e c;u:rreht pr.opmsaf for the P'ro'J~ctt: dl'l Febtltar.y J%: 20.:l8> iSDG&E
sent~ l({t~er t.q M,s.•. ,Chri'$f:lt1e; :Lem:ie,, Oe:p,u.fy, .C:ttyl\Uoroe.yt sbitlh·g th~t .SPGIM~ns not r:asponsJbl.a
for fhe .utiJlty· .r.eJocatlon tosts refat·ed t:o the. Mor~tl?J P\1.mp ,$t:a.tto1:r ~nd: c:onv.!=Pt,°F.!tl.tf:1: :;yst.wm
;(."MPS(J .(wfil'.cb l1f'.1P~tt.of.th~ 'PtoJact)·, ihls d::etl!Iftti.iha'tlb'fi Was. rMlde. llecalls.ethe MPS :is not:a·
publla :street 11.l:'QJ~ct ·atid:t:he'~lilfbrElr tto.t 'Cti:ve:r.ed by tha::reloe:atlJ;:1.i1 ;P.ro:Vfsforns t>Hha fr:a:nchts:G
g8,feERtJ:e11,t; hliltW~'.en S.P<a&E: .~.n.d th~, City, tF)'.alJ:Ghls~l)i; NP.Ntthirtrw.e hav~ ana.l:yz:ed the. :C.kttr~nt
propose.d Profect, :SD8.&;6 ftnd~1·tht1t It I~ no.t re$P."Qn$lPl~. fqr gn_y lJ.tJOtitr~l:crc:atJ.<H.1 GO$tS'. in th-~
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.sy,stefri~, ev:en:Wl't'h'.h, {a-:dltY,'s·r awit HMlts, .a dt:y,·do.es, ncrt a·ct.ln Its• e;av.ernmentaf:cap:ad't<yi l;i.utln
a. pxe:i;irt~t:a:xt 'cap:a~lty" (Sau!Ih. .Pasat/.e.rt'(!l VJ. Pttsadentt land tt.nd Wt1t~:e Camp.fi.ny (::1$i'd8,l 15-t
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,shoul.d·haar.th,Hosts·to relocate1,remov~) ntrnhartd·on it~:fa!t,!!tt~~,. ,(PO.$(gf Tt.:/.~grgpb; •:~qb/~~c:o.-,.
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emhodled:.hi. C-alifor.nt~·i::ase 'law for ne~rly a c~ntury, and,. )mportanth1~ ha$ never b~:eJ:i, PVerr.uied
liythe, ,¢allfbrnl~ '$µp(eme Cb:U:rt. .

.,. Tb:tr.d~·$0$:$\Eil ·Fsr~11cht~:ew1tltthi:l, C(W at1thor-l:tes•.s·o.G.&t:to. ihstaU·uftnty fac'ill'tles.lt.l:t;b~1:p:9b.f:!c

,streets.• It efso requTres that tha t1ty a11d ..SD.G&E ~re~are a marH:taJ. 0P·adh'1tnlstr-ative :r.,ractrces:
'(Which s.h~.11- govern: th$: tnst~.lif:'t\on at'lct rerno.va:I -.of Gta:nteris facUlfl#s lh the• ·$tre:.e:ts./1
tfr.anch'l.se.. )cJt ,S:ertlon 7), .S.mih .rn:i;lnqaf ":$h~fl :gPvexn tfr1;1 p,ra~ti~f:!~· ·pf' tS:DG&Ej_ ln Jr$ :1.r1:-$t~lra.tlbn
~hd r'/;iW\QV~I' qf [?'P~&i}fsl'fat\.lkf¢s. lo th~ strt'lets qfth~ City/' (F.:r:$n~hls£;Jit.s·a~t[9h, 7).; The' .Cl:ty
:Ma_nuc;1l tif. Adh'llhfatrat:lve Practftes.'for UtllltY .r~stallatl6.n:t dated February 14j 1SB6i { M.a.r1o~WJ 11

tti~ffirriit the -City1,s. ,cti:rnm1t.tnent to, fh:e; -common :fow-govert1me;fntaJ~propde:taty dtstfri,cflo:n lit
c{eterm:l'qtn,g ··¼(bo•-.s.q:oqlq: he~'t' the to.st·s. .of utility re..1:PG~tJon~,. Th!:\; M1:i11'.t'Uti'l1-: whtoh w~:s: Jqtl)_tl:y
,!-'}ntere,d: int.◊ ~y the CJty'f$.,-t.1tffitl;e$' :{Jhc;Judtng th:1;r City'$' W~t~r o~·p~r~rn(;!ntj. al.lei prfv~:te (tt'fltty
:com:panie~: (fncludJn~ SOG..&E):,, exptes:sJy acknowfed:~$s; tha~ vv'her~ .f~c:'ill.~ie;1$; .or 1m~r0vem~11t.s
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f:atll:ltl'.es for-:a1 :~roJe'ct that. ·onl¥- l:iEil'leflt:s: selett ,City ofS,art 01.e:gp's: t.<3sldents. among the: 2B. o:th~r
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r~:to.ca.ti6.n:$:. · f.lcwv~v~ni th~, city .lfi· r@$:p:qo$)b.Je., fqr th~ :9.o·~ti, ,o.f-the :r.elo¢1Jtion$ '.t$qtt!t~d' by -the:
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